Liquidia Corporation ($LQDA)

My name is Jason Gerberry. I cover pharma and biotech at BofA. I'm pleased to be introducing Liquidia. And joining us is Mike Kaseta, CFO and COO; and Jason Adair, Chief Business Officer.

So gentlemen, thanks for joining us. Liquidia is -- has one of the more interesting commercial launches in biopharma since, I believe, June of last year. And so we'll talk about that, your drug YUTREPIA for pulmonary arterial hypertension and PH-ILD. We'll talk a little bit about pipeline as well. So maybe we'll just start off and talk a little bit about YUTREPIA now, which 3 full quarters under your belt, where you're at, what's exceeding expectation? And if you can talk a little bit about the opportunity on the come.

Yes. Thanks, Jason, and thanks for having us and hosting us here today. Liquidia is a great place to be right now. And as you said, we launched our product back in June of 2025, and we've really just knocked the launch out of the park. We -- in Q1, we recorded $130 million of revenue. And execution is not just on the commercial front. It's the discipline that we show financially. We recorded $70 million of adjusted EBITDA. We've added $30 million of cash to our balance sheet in the quarter. So we are really executing on everything that we set out at the launch. We couldn't be happier with the launch. YUTREPIA, as we -- as Roger, our CEO, has talked about, our goal is to be the prostacyclin of first choice, and I think we're well on our way there. If you just look at our market share from a revenue point of view, in our first quarter of launch, we had about a 10% market share. Second quarter, we went up to about 16%. And in this most recent first quarter of 2026, we're at over 23% market share. So we are growing quickly. We're excited for where we're going and really excited for 2026 and beyond. And one of the things that we've talked about is we believe we're going to be a $1 billion product in 2027, and we're on that trajectory to get there.

Great. So you launched YUTREPIA into these 2 indications as a 505(b)(2) reference brand, the reference brand being United Therapeutics Tyvaso. Can you talk a little bit about the attributes of YUTREPIA that are resonating most with healthcare providers? And what's driving this strong adoption dynamic?

Yes. I mean I think what we've always thought and hypothesized prior to launch is that we have a superior product profile. And I think what we're seeing in the field is exactly that playing out. And what we like to do is we talk about the 3 Ds. And the first D is being able to achieve deep lung deposition. And for those who don't know, we have a proprietary technology, formulation technology called PRINT. It allows us to manufacture particles of uniform size and shape. That size was specifically designed to bypass the back of the throat and the upper airways and achieve that deep lung deposition. By also having these monodispersed particles, we're able to use an easy-to-use low-resistance device that's been used for years and years all over the world, which is low resistance, easier to inhale, especially with patients who have lung dysfunction. And the last piece of this that it's all tied together allows us to get to higher doses. So we're able to dose YUTREPIA at 2x, 3x of what the normal dose of Tyvaso is. And one thing that is noncontroversial is more prostacyclin is always better. And our ability to titrate to those higher doses is really what's resonating with doctors, with patients and ultimately has contributed greatly to our early successes of the launch.

Got it. And are those points of value proposition sort of equally shared in PH-ILD? Because I know with like PH-ILD, right, like parenterals never got traction in ILD. So I don't know, does the added dose response matter as much in PH-ILD versus PAH?

Yes, you want to take that?

Sure. I think the answer is yes, right? So we've known for a while in the class of prostacyclin analogs that exposure can drive improved activity. And so we're treating the pulmonary hypertension in that ILD patient. And what's more interesting is we actually did a prospective study that we call the ASCENT study. And this was a Phase IV study where we were looking to see does the dose titration in PH-ILD patients look different than what we had studied in INSPIRE in PAH. But with the safety data that we had generated in INSPIRE, we said, let's see if we can have a more directed dose titration in PH-ILD. So the ASCENT study looked to not just go to higher doses than what the previous thought therapeutic target, but do it faster. And we did so in a way where we didn't exacerbate the background cough. So to the point of is more better, that's consistent with the class, but it needs to be tolerable. And I think that's what we're showing in the market and in the studies.

Okay. So maybe let's talk numbers, right? You you're almost close to 5,000 unique prescription written since the time of the June launch. And I think the messaging has been it's a rough split maybe between the 2 indications. And so how do you think longer term, like, in terms of growth sources? Because by our math, I think Tyvaso, which was nearing $2 billion at roughly 200,000 a year, implies about 10,000 patients. So that's a pretty impressive number given where the incumbent product was.

Yes. I mean, like I said earlier, we couldn't be happier with the launch. The uptake has been significant. As you said, from a disease breakdown. We've seen roughly since the launch, and it's been pretty consistent, about 50-50 between PAH and PH-ILD. I think the interesting thing about the opportunity going forward is what we believe is that we're just scratching the surface here. So if you look at the prostacyclin market in PAH, it's about $3 billion total, broken out by the oral prostacyclin market, which is about $2 billion and 10,000 patients. The traditional inhaled market was around $500 million, and then the parenteral market was also around $500 million. So that total opportunity is $3 billion. And that's something -- and when you ask about what surprised us at the launch is one thing that we've seen based on what we talked about, the attributes of our product, the dosing flexibility of our product, we believe we can access that entire market or the vast majority of that market. As Jason had said, we've done the ASCENT study in PH-ILD. We're always looking to improve the product profile of YUTREPIA, putting more data in the hands of physicians, which is why we're planning additional studies here in 2026 to look at oral transitions from selexipag, which is UPTRAVI and also looking at a study to transition patients from parenteral treatment who are also on sotatercept. So when you look at the longer-term opportunity, we think that opportunity in PAH is a $3 billion opportunity, not a $500 million opportunity like many people thought when we launched. Now PH-ILD is a little different because it's relatively new. The first product was approved in 2021. We believe that the market penetration in PH-ILD is probably still less than 20%. So there is a massive market building opportunity in PH-ILD, which we are working on. We've always looked at that as a longer-term opportunity. We also have announced that we're increasing the size of our sales force by 33%. The focus on that is going to get a deeper reach into local community physicians and centers where a lot of these PH-ILD patients are sitting, sometimes even undiagnosed. So there's an education on disease education, diagnosis, ways to diagnose. And we think as we move through 2026 and beyond that, that PH-ILD opportunity as a total market could be $3 billion, $4 billion, $5 billion.

Okay. And I think you framed about 75% of use, new patient, 25% switches. Is the right way to think about that number that most of that new patient is PH-ILD, whereas most of that switch market is PAH because PAH is a more mature category. PH-ILD is underpenetrated. That's at least in my mind, where I would expect more of the market expansion to be occurring.

Yes. I mean I think intuitively, I think that makes sense as largely PH-ILD is a market building exercise, and the vast majority of those would be new starts. That's not to say we aren't seeing switches in PH-ILD. But as you said, in a more mature market in PAH, that market is growing probably more slowly as we go. You have patients who are progressing through the disease and new patients coming in. But I think that the funnel, the top of the funnel on new patients is probably is going to be much bigger on PH-ILD than it is on PAH at this point.

Yes. I believe you've expanded the sales force. Can you talk a little bit about the rationale there? Is that driving -- is the intent there to drive greater breadth of use in the community or just or depth of utilization?

Yes. So one of the benefits, and as I said in the open, we're a unique company in the sense that we're in our third quarter of launch. We're generating positive cash flow. We've been financially disciplined from the beginning. This is all while we're planning or executing on clinical studies. We're building a new manufacturing facility in North Carolina to almost triple the capacity of YUTREPIA. But one of the opportunities we're always going to look to is to invest into the opportunity. And one area that we're investing into is the sales force, like we said. We're going to -- we've increased that by 33%. These people are all on board. They're in the process of training, and the plan is to have them in the field in June. Now the goal for that is really to expand our reach to get deeper into the local community where we're really addressing PH-ILD. Now when you talk about breadth and depth, we've given a lot of stats -- statistics of our launch through the entire launch. And just to reiterate some things that we've talked about, we provided data as of the end of February and then again at the end of April earlier this week at our earnings call. If you just look at the increase from February to April, the amount of prescribers who have prescribed 5 or more prescriptions increased by almost 25% just from the end of February. The amount of new prescribers just from the end of February has increased by 15%. So the goal here is we know in order for us to achieve the goals that we're looking to achieve, expanding both the breadth and the depth is going to be critical, and we're doing everything we need to do to expand both of those metrics.

Can you put those metrics into more context in terms of oftentimes, early launches could get driven by a subset of high prescriber. Is that a pretty broad number relative to what you envision as like the total prescriber base longer term?

Yes. I mean, listen, we couldn't be happier. At launch, we were targeting about 6,500 physicians. So we are just still scratching the surface, which -- it's really what excites us about the overall opportunity. We feel that there is still a tremendous opportunity, obviously, in local community on the PH-ILD side, but even in the centers, we are -- we feel that we are getting entrenched there. Physicians are getting great experience with YUTREPIA. They're seeing the benefits it's having to their patients. And ultimately, like I said and what Roger has said all along is we want to be the prostacyclin of first choice. And that's both from traditional inhaled patients and also those who could be switching from other therapy. So everything has met our expectations. Like I said, some have exceeded our expectations, especially the opportunity on the oral front. But the bottom line is we are extremely focused. We are building great relationships across the physician space. We have a best-in-class commercial organization. We have a best-in-class market access organization. Our pull-through rate is over 85%, which for those who've been in pharma for a long time, if you had a mature product 10 years into launch and you were at 85% pull-through of referral to first fill, I think people would be happy. And we've seen that from the get-go. So we could not be executing any better at this point. We're always looking to improve but the bottom line is, I think we are -- we have had a tremendous uptake, and we're looking for a lot more here in the years to come.

Yes. Okay. And so I think you indicated in your most recent 1Q update something like 4,700 or so unique prescription.

4,500.

4,500. Sorry, with a very high conversion rate to turning that into a paid script. Correct. Right? So your 2027 outlook is $1 billion plus right? And so...

$1 billion.

$1 billion flat. Okay. Because it doesn't take an MIT scholar to figure out the 5,000 patients would get you to $1 billion. So I guess what I'm asking is, is that $1 billion conservative?

It's interesting that we're here talking about whether $1 billion in our second year of launch is conservative, but I take that as a compliment. Listen, there are other nuances. We do have a component of free drug. We do have a patient assistance program. We have a best-in-class patient support services, which includes a patient assistance program that roughly 10% of patients are participating in, which is pretty standard in this space. We also have a voucher program for any patient, their first 28-day script is free -- can be free, and we've seen utilization of over 50% on that. So we are -- we have been on a trajectory that if you look at patient starts from the launch to end of April, where we've given our last data, it has literally been a linear curve. And so for us to stay on that trajectory, just staying on that trajectory is going to achieve this goal. There is no bolus that has to happen. There is no hockey stick that needs to happen in order for us to achieve that $1 billion. So we're confident. I think we've taken pride on talking about when we succeed and we execute, we'll tell you about it. We're not making these bold predictions and whatnot. But we feel that $1 billion in '27 is definitely within reach and within sight and part of our operating plan as we move forward.

Okay. And then 2 dynamics. I'm just curious, do you envision sort of the 10% free drug is a good ratio in the next few years? I know that maybe comparable drugs, I've heard similar metrics, and so that makes sense to me. And then have you any learnings at this point around how long patients are staying on and what the discontinuation profile looks like?

Yes. I mean we're still very early. We're still 10, 11 months into a launch. So I think to talk about persistence and durability, it's probably a little early. I think what's important to understand, though, is these are very sick patients, and these are very sick patients that progress through these diseases, both PAH and PH-ILD. We believe our product profile is best-in-class. So to say that there are no discontinuations, that would -- that obviously is not the case. But we're very happy with where we are. We're providing patients with a choice. Our ability to titrate to higher doses, I think, is helpful to help deal with the disease progression, something that these patients have not seen before, given the limited dose capacity or what we've seen traditionally with competitive products. But it's something that we'll monitor and continue to monitor. And we're not prepared to talk about that specifically now but we're very happy with the product profile of YUTREPIA and the success that it's going to bring and the relief it's bringing to patients.

Got it. And getting to that $1 billion, I think you flagged a couple of sources, new patient adds, oral inhale switches, PH-ILD white space and then depth per prescriber. So when we sit here today and think about these things, which of those need to accelerate just versus what needs to persist?

I think if we stay on the plan that we're on and the trajectory we're on, I think things will work itself out. And I think when we launched, a lot of people said, "Oh, there'll be a bolus of patients. There's warehoused patients and then it will flatten out. We've seen no flattening out. We've seen a continued trajectory. Like I said earlier, if we stay on that same trajectory, which we see no reason why we can't, but we also talked about that we think this could be a $6 billion, $7 billion opportunity in PAH and PH-ILD that there is a massive, massive opportunity. We have the flexibility to have capital. We have over $220 million of cash on our balance sheet to invest where we see opportunities to invest. We've never hesitated to do that. As I also said earlier, we're planning additional studies, both in new indications but those that will improve the product profile of YUTREPIA here in the short term, where we hope and plan to have a steady stream of data starting in 2027. in oral transitions, in Tyvaso transitions, in transitions from parenteral on sotatercept. So we feel very happy. We're putting ourselves in the best position to succeed. We're putting -- we want to support this patient population that has always been our -- we're here to benefit patients, and we want to put as much data in the hands as we can. But the bottom line is staying on the trajectory, nothing crazy has to happen in order for us to achieve that goal. If we stay on the same trajectory that we've been on for the first 10 months of launch, we're very confident that we can achieve that.

Okay. I know Rusty is not here, but I have to ask the question. Just around freedom to operate in the litigation matter on the 327 patent, it's really dragged on. And now it creates a -- if the judge were to reach certain decisions, it creates a very problematic issue for all these patients now who are on YUTREPIA. So anything you can offer around just freedom to operate in scenarios?

We're probably the wrong people to ask because if you asked us in July, we would have said we thought a decision was coming in September or October. Now it may be September, October, it could be 2027. But the bottom line is we expect a ruling any day like we've said from the get-go. Obviously, it's frustrating living with that but we're just focused on execution now. There's nothing we can do about it at this point. We are focused on our pipeline. We're focused on the YUTREPIA launch. We do expect a decision at any time. We are confident. We believe the facts are on our side. We believe we should win the case but we're waiting like everybody else. And the only thing I'll leave you with is, like any good management team, you're going to be prepared for any results. So we have war-gamed this. We've had conversations with -- internally, externally. Whatever the decision is, we'll be ready to move forward. And we feel very confident in the arguments that we've made. We feel confident in the facts of the case, but we await like everybody else.

Okay. Maybe we can just talk a little bit about future plans, sales and marketing investments, be it on Phase IV data generation or I know that with PH-ILD, the diagnosis was something that at least your competitor flagged as something doctors needed perhaps more education on to identify these patients. And so if you think about some of the initiatives on the come for accelerating growth?

Yes. I mean, on PH-ILD, education is very important. So expanding our sales force by the 33% like we talked about is critically important, getting them into the field, building new relationships. And as you said, educating these physicians, both on disease identification but then also on diagnosis is critically important. We also, like we said, our successful launch has been amazing. The ASCENT data that we generated in PH-ILD, I think, was critical to that success. And we're looking to mirror that through these other Phase IV studies, like I said earlier, a transition study from Tyvaso and Tyvaso DPI, an oral transition study in PAH, a parenteral transition study against -- alongside sotatercept. We think all of this will add to the product profile, putting more data in doctors' hands, making them more comfortable on how to initiate YUTREPIA for these patients, we think, is all going to go a long way. If there are other opportunities for us to do that, we've afforded ourselves the opportunity to be able to invest further based on how we have invested into the launch, the amount of cash generation that has occurred, I think, puts us in a really good place. Roger has said from the get-go, our goal is to grow profitability quarter-on-quarter every quarter and reinvest part of that profitability back in the business. So the idea that we're able to be 10 months into launch, be able to plan be either executing on, planning, initiating 8 clinical trials while also still generating positive cash flow, I think, makes us extremely attractive from an investment point of view. And the sky is the limit for us here as we get through the end of '26 and into '27.

Okay. Let's talk about just price and access dynamics. 2-player inhalation market doesn't appear that you're driving a ton of switch from your competitors. So that would suggest to me there's price rational behavior and that we should think about this as a relatively price stable market that won't impede the volume growth that we expect YUTREPIA to enjoy. But is that the right way to think about it? I know there was -- you alluded to some gross to net uptick in '26 as you build out better access. But I'm just wondering, is that modest ultimately? And just how to think about those dynamics?

Yes. I mean I think if you look at one of our goals prior to launch, and we always talked about this, was to making sure that patients had a choice. We wanted to make sure that if patients and doctors wanted to choose YUTREPIA that there would not be hurdles placed in front of them. And through the work of our -- like I said, our best-in-class market access team, we have achieved that goal. We have achieved that goal that if patients want to try YUTREPIA, they're able to try YUTREPIA. We had said previously that there were some standard new-to-market blocks that had existed at launch that is very standard across the payer landscape. As those have come off through the back end of '25 and the early part of '26, there would be a natural slight degradation in our gross to net, which we had fully expected. So I can't speak to what our competitors do. Our goal, as I said, is to have access. We've achieved that access. And we think that for -- everything obviously can change at any time, but we feel very comfortable that most importantly, that we've talked about the value proposition that YUTREPIA brings to patients and the health care system as a whole. I think that has largely been adopted. And ultimately, we feel that we're in a really good place from a pricing point of view.

Okay. Can you talk a little bit about the dynamics in PH and where inhalers are now playing because Merck's WINREVAIR after the HYPERION data, it does seem like it's getting more traction in a newly diagnosed patient after they get their generic doublet. It seems like there's an earlier push to go to WINREVAIR. And so what does that mean for the sequencing of inhaled versus oral versus parenteral?

So it's a great question, and it's an exciting time for the market because these better medicines are coming to treat patients. And so the medical community will figure out the best way to use them. And it's even happening outside of our control, meaning we can do a study that looks at using YUTREPIA with sotatercept, but it's actually happening out there. There's a poster at ATS where a hospital has tried this in multiple cases. So we're looking forward to seeing what that looks like as they think about the use of background medicine in patients who might be on an IV or subcu treprostinil moving them to inhaled. So when you think about sotatercept, the prospective data and the real-world data suggests that you want to use it with a prostacyclin. There isn't anything that says you shouldn't use the prostacyclin. So then the question is, what is the highest dose, most tolerable, convenient way to do that. And we think it's going to be inhaled treprostinil. And currently in the market, YUTREPIA is quickly gathering share because it is very tolerable at high doses and it's convenient to take.

So by that logic, then perhaps the success of WINREVAIR may pull forward inhaled at the expense of parenteral oral even oral?

Yes. That may happen even regardless of sotatercept. As Mike said, we're seeing transitions from oral right now, right? We're seeing transitions in the field of IV to inhaled. And so if sotatercept is a vehicle to improve patient care, yes, we think inhaled prostacyclins may be the best. And currently, we believe our product is that product.

Yes. Okay. Maybe shifting gears to just competition. There's obviously Insmed's TPIP, a once-daily inhaler. You have your BID inhaler. There's been more recent disclosures by United about both a soft mist inhaler that will have some healthy volunteer data. And then there's ralinepag DPI as well. And not much is known about these products. So it's a bit of an unfair question, and I can see that. But nonetheless, I guess you guys have at least made some public statements about the micron size with soft mist inhaler. And so that raises some questions at least around what the tolerability differentiation could be of an approach like that. What do we know about ralinepag DPI? Is there much out there?

Well, I mean, it is a question that we're getting asked a lot because we're happy to talk about anything. But I think we bring it back to what is the bar and what is the comparison of any new product. YUTREPIA has lifted the bar for what inhaled prostacyclin can be with treprostinil, meaning high doses in a convenient way that's tolerable. So everything else that's coming along is going to have to meet that bar. But we recognized that a few years ago, and it's why we licensed L606, a twice daily, even more tolerable way of inhaling treprostinil to lift that bar. So it's interesting that all of a sudden, these new products are coming along with no data to tell a story that isn't even compared against what the best product in the market is today, which is YUTREPIA or against what's coming. So I mean, ralinepag, we've seen some data. It doesn't appear to be safer than selexipag and may be worse from a tox profile. And it's being developed, as we understand, on the MannKind platform, which we're currently competing against in the market today, and we don't believe that, that's more tolerable. So we don't put much thought into ralinepag DPI. And the soft mist inhaler, while it is an interesting idea, is not a new idea. It's been around for decades. And in fact, we look at that more as a way of trying to make nebulized treprostinil or Tyvaso more attractive in that product format. Again, we're focused on our business, which is how do we ensure that the market understands the benefits of YUTREPIA.

Understood. So -- and of those, I guess, the most tangible update in theory could be soft mist inhaler approvability sometime next year, right, if the company is able to deliver on their timelines. It sounds like you don't see that as a material market-changing event.

Not from our perspective. I think the other thing you have to remember is you get what you study. So if you study something really fast, you may not be generating the data that the medical community would want. And that's, again, why we're making choices to prospectively study questions that are interesting to the community. It's why we did the ASCENT study in PH-ILD. It's why we're doing the transition studies. And ultimately, that is what builds trust, right? So it's not speed to market. It's give me the information that I can trust when I'm treating a lethal disease, and that's what we're focused on.

Yes. Okay. Ahead of ATS, is there anything you guys would flag that you think is interesting? What are you guys really keying in on here?

Well, I mean, it's a great conference for physicians who treat pulmonary hypertension. We're going to be looking to see what new data is being presented both by competitors, but also what's coming out of centers. I mentioned that there is a poster that we're interested in seeing related to how patients might be transitioned from IV to YUTREPIA, and that's being done outside of our control. So that's what we're excited by. If we can put good information into the medical community, they'll get to choose the types of studies that they might run themselves.

Yes. Okay. I guess lastly, just with L606, do you view this more as life cycle management or something that could expand the opportunity even beyond what you're realizing with YUTREPIA?

Well, so it's an interesting question. So if we just stick with PAH and PH-ILD, I think our goal is to make sure that we're continually optimizing the benefit of that drug in that route, right? So L606, twice daily, gives us more continual exposure, which is the goal, right, at lower Cmax, so a better tolerability profile. In fact, we think the most tolerable of any prostacyclin study to date in the inhaled route. And that's what we're kind of focused on. So it's hard to suggest that any other product is going to do better than that in those diseases. But at the same time, we're looking to expand into other diseases. So we've mentioned that we have a PH-COPD study that we're interested in. We've mentioned systemic sclerosis with Raynaud's phenomenon. So the idea is, where else can we take inhaled prostacyclin. So not just in the current diseases, but potentially new diseases in terms of the growth.

Okay. We're out of time. So, gentlemen, thanks so much for joining us.

Thanks for having us, Jason.

Thanks, Jason.