Good afternoon and welcome to Needham's 23rd Annual Healthcare Conference. I'm Serge Belanger, one of the analysts at Needham, and we're happy to have with us this afternoon the Liquidia team. The company is nearing the approval of their Yutrepia product, and with us to talk about this afternoon we have the company's CEO Roger Jeffs, the Chief Business Officer Jason Adair, and then Mike Kaseta, the Chief Operating Officer and Chief Financial Officer. Before I hand it over to Roger for a quick overview and update on the company, just want to remind viewers that they can submit questions on the portal on which they're watching the presentation on, and we'll take those questions as they come in. So thanks for joining us, gentlemen, and Roger, if you want to start with a quick overview of the company before we jump into some questions.
Yeah, thanks very much, Serge. We're thrilled to be here today with Needham and yourself, and appreciate the coverage that you provide to the company. I thought what we'd do today is just do a quick overview and primer for those who may not know the Liquidia story as well as others, and then really spend most of the time, Serge, answering questions from you and just having a chat about the business and the prospects ahead. So just in general, we're really excited about where we are currently. We're accelerating our mission to advance therapies, best-in-class therapies for patients with pulmonary hypertension.
Our therapies are based on a proprietary platform technology called PRINT, which is Particle Replication In Non-wetting Templates, which allows for the very precise manufacturing of particles with uniform, geometric shapes and size, which we can fine-tune within the respiratory range and, in this case, into the lower end of the respiratory range to optimize delivery to the lower airways. The first product that we've developed in-house that we've applied the PRINT technology platform towards is Yutrepia . As advantaged by PRINT, Yutrepia has allowed for a therapy that is highly portable as a dry powder formulation. It's highly tolerable, which has allowed for titratability, and it's durable both in terms of its duration of therapy and its ease of use through a low-resistance device.
The benefits of the PRINT and this delivery modality is that it has changed the therapeutic index of inhaled prostacyclin as it was known, in the sense that it has allowed for a higher dose achieved to advance clinical benefit while minimizing the side effects. Therefore, the therapeutic index and the range of that benefit is improved. We are studying the benefit of that. We have studied the benefit of Yutrepia in PAH patients formerly, and are now in the ASCENT study studying that in an open-label phase IV study in PH-ILD patients, trying to show that we can derive the dosing benefits in PH-ILD patients similar to what we've seen and observed in PAH patients, where we achieved more than a three-times dose excess to classical inhaled Tyvaso. Our markets that we're addressing are both PAH or WHO Group I and PH-ILD, WHO Group III.
These are estimated to be in WHO Group I, $1.2 billion in annualized revenue, excuse me, across both the inhaled treprostinil and treprostinil DPI formats, and then with oral formulations in PAH, a $1.6 billion opportunity. So again, and then in that $3 billion is sort of a baseline level now. We know in PH-ILD that market is just marginally penetrated, and we think there's lots of additional upside there. And then where are we today with advancing to the market? So recent legal wins have cleared the path for FDA action. Three important things have happened within the last month. The injunction was removed by the district judge, Judge Andrews. The preliminary motion against the FDA by United Therapeutics was denied, and the PH-ILD exclusivity expired.
So we think that our amendment as filed for both PAH and PH-ILD is appropriate and that all elements are in place for approval of both indications, but we await the FDA's decision on that. So with that preview, Serge, I'll turn it over to you for questions.
Great. Thank you. I guess I'll start with the legal stuff. At this point, is there anything that's gating the FDA for approval of Yutrepia in both PAH and PH-ILD?
No. So we again, as I said, I think with the three gated elements now taken care of, we feel the FDA has everything they need to advance a decision, and we are awaiting their action. That action could happen today or at any time after today. There's really nothing that we view as gating at this point.
Okay. And if I remember, around the, I think it was around Easter. That's when all the legal proceedings were occurring. There was an additional hearing, the Monday or Tuesday after the Easter weekend. Could that have any impact on how the FDA deals with approval here?
Yeah. So I think that was more of a procedural discussion with the district judge in D.C. with the federal judge in D.C. And I think the only thing that remains is that his request that a three-day notification period is in place, and that notification is that the FDA must notify the judge that a decision has been made and will be forthcoming within three days. The content of that decision will not be known. It's just he wants notification that a decision has been made. I think he's just trying to get ahead of the rush of things that may occur in advance of that decision.
Okay. Regarding the United Therapeutics lawsuit versus the FDA that I think Liquidia has joined, since there's no injunction since the injunction was denied, there shouldn't be any impact to any FDA approval at this point?
No, no. Like, exactly. So I think that's denied. It was denied on the lack of standing that it was prematurely filed. Certainly, it does appear that United Therapeutics will request another injunction once there is standing, i.e., if a positive action's taken. But I think that, you know, that case has been briefed and that the judge is well prepared to handle that situation even when it occurs.
Okay. So from a Liquidia standpoint, it's really a question of when and just being ready for the launch of the product when you get the green light.
Yeah. I think we, you know, we're actively engaged with the FDA trying to accelerate a positive decision. You know, we can't predict exactly when that will be. It can occur now. It's been a week or so since everything has, quote-unquote, "unwound" from a legal standpoint, so we still await, somewhat patiently but not too patiently, and are hopeful that it will come soon.
Okay. And this would be approval for, for both indications?
Yeah. So the amendment as filed, which we, again, feel was appropriate, was both for PAH and PH-ILD simultaneously. So that's the approval that we're seeking.
Okay. And I think in the past you've said your expanded sales force was already in the field. So you could launch this product rather quickly after approval?
Yeah. So we, we onboarded about 50 sales reps in October, put them through internal training, compliance, and all that. They've been in the field roughly since mid-November. They've been surveilling their centers, introducing Liquidia as a company, and talking about the PRINT platform technology and the advantages that that would have just as a scientific effort. We obviously can't promote Yutrepia as a branded product until we're approved. Then, once we do get approval, there will be a period of time where we'll have to do our final packaging. Obviously, we're trying to get as ahead of that as much as we can, but to label and kit the packaging will take us a few weeks, 2-4 weeks, to get done.
I think Merck, for example, just announced with sotatercept that they're taking a month from approval to first distribution to pharmacies. So I think a similar timeframe for us would not be unreasonable.
Okay. And I guess we'll have to wait till approval until we get a better idea of pricing unless you want to just provide more details on that. But, besides that payer coverage, you know, how quickly does that come on board, once you have an approval?
Yeah. So pleased to have Mike who's overseeing that aspect, Mike, if you wouldn't mind commenting.
Yeah, Serge. So great question. You know, obviously, we've been preparing for this launch, really since 2022. We've had ongoing dialogue with the payers. We're not going to talk about any specific pricing, both either a WAC or a rebating strategy. You know, our goal is for patients to have access and patients to have choice. And in order for us to ensure that they have choice, we want to make sure that they have access. And we're confident that at or near, at, at or near launch, we will achieve that goal, and, and make sure for, for patients and doctors who want to choose Yutrepia that there aren't any hurdles in the way for them to do that.
Okay. And in terms of a go-to-market strategy, plan on focusing more on PAH at, you know, the initial launch, or both PAH and PH-ILD will be, kind of an equal target, upon that launch?
Yeah. So assuming approval in both indications, we've already identified our target list for both PAH and PH-ILD. We think there's roughly just over 6,000 patients, prescribers that are sort of our primary targets in the initial phase of launch. There's some degree of overlap, maybe a third of the centers, script for both. But assuming approval in both indications, you know, our target list will be in that 6,000-doctor range, really focusing on the centers of excellence and the higher decile prescribers initially.
Okay. So let's start with PAH. I think it's a more established market. How do you think Yutrepia will be positioned there? Obviously, Tyvaso is probably your main competitor. But how do you position the product to gain market share?
Yeah. So I think, you know, I think the advantages of Yutrepia , which I tried to talk about a little bit in the intro, are its ability, it's dosing flexibility principally, and the fact that it's changing the utility of inhaled treprostinil in general by allowing higher doses. So that's going to manage patients' inexorable decline to a greater extent over time than current therapies. But the reality is we need to get some, you know, physicians need experience. So how are we going to try to attempt to give them that? I think we'll focus on new patient starts initially so that they get to sort of see one, do one. Once they then get comfortable with that, we'd like them to see another, do another, and just work on prescribing depth.
I think the thing that we'll do that is unique to us because we don't have an oral product is we will then try to position Yutrepia against orals as first-line prostacyclin use. And the reason I say that's possible is we're going direct to the site of action. By doing that, we limit the off-target effects. So, for example, with oral therapies Uptravi and Orenitram, there's significant GI distress, nausea, diarrhea, emesis. So if we can avoid that, yet still retain the dosing flexibility and titratability, then we think we can displace the oral share. Our competitor hasn't been able to do that because, obviously, they have an oral therapy.
They have one in development, and they wouldn't want to, quote-unquote, "set the table for us." But that's something that as a secondary effort after we try to become the best-in-class inhaled treprostinil, we want to become the first-in-choice prostacyclin and PAH. In PH-ILD, it'll be a similar pattern, but again, it'll just be focused on becoming the best-in-class therapy for patients with PH-ILD since inhaled treprostinil is the only therapy that will be currently available.
Talked about physicians gaining experience. From your experience in PAH, you know, what does that process look like? Do they want to see a handful of patients on drug for a certain number of months before they, they're comfortable, or does it go longer than that?
I think they'll want to see the product attributes play out. So I think that's going to take, you know, a month or two for them to start patients, titrate them up to effect, and get beyond the classical 9-12 breaths therapeutic target. So in our label, we will have doses more than 2.5 times that. So again, a differentiator. And until, I think, until physicians see that the product performs as we've described it, then they'll be hesitant to switch. But once they do see that it works, then I think we can become, again, the first-in-choice prostacyclin both against Tyvaso and oral modalities as well as potentially switch patients. So, you know, there are, for example, in PH-ILD, centers that are having difficulty with Tyvaso DPI.
The National Jewish Health published data in September about that. If we could take those patients, transition them to Yutrepia , and get a different outcome for those patients, then I think that would meaningfully shift the treatment paradigm towards Yutrepia .
Okay. Maybe highlight some of those issues that they have reported. I think it was tolerability. But.
Yeah. It was actually clinical worsening. So if you look at the, and I think it was, again, from memory, it was a cohort of patients, around, I think 50 or 60 patients, both from; they were both naive to prostacyclin or transitioned from nebulized Tyvaso. Those two subsets started and came off therapy on average within 30-45 days, depending on which group they were in, and the main reason was clinical worsening. And my view of that is that they weren't able to achieve a therapeutic dose. So the patients worsened even though they were given therapy. So the opportunity that exists for us is to treat patients similar to those but continue to dose them. And what we're doing now, prospectively, is the ASCENT trial where we're looking at Yutrepia in PH-ILD patients.
The goal there is to show, just as we did in PAH, that we can dose escalate those patients to good effect and maintain them in a durable way. We've submitted abstracts for fall conferences. There'll be a presentation at CHEST in the fall where you'll get your first data cut of Yutrepia in PH-ILD. But we're trying to do it prospectively. I think two other studies that we're interested in doing, one will be to advance the switch patients from oral and maybe subcutaneous therapies. So again, patients that are well managed but are having difficulty with the treatment side effects, so route-specific effects. Can we switch them to Yutrepia ? So could you take a sub-Q patient with pain and site pain and erythema, move them to Yutrepia , avoid the site pain and erythema, but actually either continue or magnify the benefit of that therapy?
Same, same with oral therapy. Avoid all the GI toxicities, but then titrate to them to effect so that we can maintain and maybe improve upon those patients. So that's a directed positional, phase four marketing study we're looking to do post-approval. Excuse me. Another one that we're interested in doing and the way I'll, I'll talk about this is we want to move therapy to what, what I'll call a future state. So current state is most patients start on a ETRA or a PDE5. They take it in separate pills. There's separate combinations. Then they have to decide over time, when do they add soluble guanylate cyclase inhibitor? When do they add a prostacyclin? Do they add an oral, inhaled, or parenteral? And then now there's going to be sotatercept added on as a third or fourth-line therapy.
What I think is possible in future state is that with the new combo pill by J&J, which is Uptravi and tadalafil, could then from the first point of care or diagnosis add Yutrepia along with that and then possibly sotatercept at some point thereafter. So you've taken a fairly, like, a high choice set and really funneled it down to a pretty slim choice set. And I think that for patients will be easy. For physicians, it'll be an easy algorithm to follow. And I also think it'll be the most effective algorithm to follow.
Okay.
Those are studies in phase 4 that we'll do to show that early upfront addition, triple combination basically, with Yutrepia , a PDE5, and an ETRA leads to better outcome than previously with just dual, ETRA and PDE5.
Yeah. Should we expect these studies to be similar in size to the ASCENT trial?
Yeah, exactly, Serge. So they'll probably, again, we're just looking for critical mass here, open-label studies, 50-60 patients. There'll be outcome measures, and we can do statistics around change from baseline, but they'll be open-label, uncontrolled studies.
Okay. And just going back to the differentiation of Yutrepia , versus Tyvaso, and you hinted at a couple of them, being able to dose at higher levels and titration is also easier. I know there's been a lot of talk about a high-resistant device, low-resistant device, and, you know, if you can give more color on that and what does that really mean and whether it's advantageous or not.
Yeah. So just let me talk about the rationale for why one needs a high-resistance device or doesn't. So the competitive product, Tyvaso DPI, needs a high-resistance device because the energy from that high resistance is required to de-agglomerate the product. So that product agglomerates and needs to be broken up during inspiration. And then it becomes a polydispersed product within the respiratory range. That's quite different than Yutrepia , which comes as a monodispersed formulation in a precise geometric composition in the lowest end of the respiratory range in the 1.2 micron MMAD. So we don't need a high-resistance device because we don't need that energy to break up anything. And the consequence of that is that our product preferentially flows to the lower airway.
So there's been a lot of back and forth around flow, but the conversations around flow need to encompass the technology. So if you had a high-resistance low flow but didn't have the PRINT capability, then it is possible that the drug product could stick to the upper airway. But with PRINT, we avoid that, go to the distal airway, and get the effects and titration and tolerability that we've observed. That's the difference. And it's gotten quite confused, maybe purposefully. But I want to unwind that a little bit because it's quite simple.
Yeah. Okay. Right now, the inhaled treprostinil market is, I think, the run rate's about $1.2-$1.3 billion. I know you're, you're not going to. I'm not expecting you to give sales guidance on Yutrepia , but maybe if you want to talk about the overall market potential here, and how, how large it can grow for inhaled prostacyclin treprostinil.
Yeah. So let me take a step back in time. If you go back to 2018 before PH-ILD was approved and before Tyvaso DPI came to market, there was a pretty constant run rate for Tyvaso of around $400 million. In the US now, it's $1.2 billion, and globally, it's about $1.3 billion. We think most of not all of that growth is coming from the PH-ILD segment, WHO Group III, and certainly the availability of a more portable DPI formulation is, it has helped that. So, you know, in PAH, that's a bit more of a penetrated market and more stagnant, if you will. But again, as I've said, we're going to go after all new starts for PAH patients who need inhaled treprostinil, and we're going to try to displace orals, which is a $1.6 billion market opportunity today in PAH.
But where the real juice can be is in PH-ILD population. We feel that it's about a 60,000-plus patient addressable market. United Therapeutics has said it's 30,000, but I think even recently, they're now lifting their census up towards the 60,000 range. And we've recently heard physicians talking about it could be a 100,000-plus market. So it's our view that it's only marginally penetrated, the PH-ILD opportunity, even though the growth that we've seen with Tyvaso has been in the PH-ILD market. So $3 billion aggregate market today growing incrementally, and we think we'll go quite quickly, particularly with the second entrant us coming to market.
Why such a large discrepancy in the number of the estimated patient population? And are they treated with anything right now, or?
No. I mean, we've used syndicated academic research to get to numbers. So it's we can support by literature the 60,000-plus. I think, again, people weren't really looking for it and diagnosing it because there was nothing to treat it. But as physicians now have a treatment choice, I think you'll see a much greater higher fidelity around and precision around estimating what that prevalence is.
Okay. So that could be a reason to expand the sales force, the commercial effort over time just because this is significantly larger than the PAH opportunity.
Yeah, 100%. And I think what we'll focus on is those higher-decile prescribers initially, make sure that the thought leaders and the influence that they can convey is highly aware of the benefits of Yutrepia . But then as United Therapeutics is doing, we'll then go into the community, probably with a larger sales force over time. But we think we're adequately sized now for launch, and we can, you know, maximize our penetrance in the early phase one of launch with the 50 sales reps that we've deployed and the ancillary people, including the med affairs team that we have around them.
But over time, it should not surprise anybody that we'd expand that sales force because, again, if the market's in the community, we need to go to the community and do the education there as well.
Okay. Wanted to talk about your other treprostinil product in development, L606. Maybe just give us an overview how it differentiates itself from Yutrepia and what, you know, what additional benefits it could provide to patients.
Yeah. I'm very excited about it. And, you know, I'm glad that Jason's on the call because he was sort of the one that mined that opportunity for us and brought it home. So excited about L606. It's a twice-a-day liposomal encapsulated formulation of treprostinil. The liposomal encapsulation gives it a sustained release profile so that it provides for a two-times dosing format, two-times-a-day dosing format. And we can show that over 0 to 24 hours with a two-times-a-day dosing, we can match AUC. But by doing that, we lower the Cmax sevenfold. The implication of that is we'll lower the whatever adverse events there may be from L606, cough and throat irritation, for example, but retain the benefit but do it in a twice-a-day regimen. So while we're tremendously excited about Yutrepia , it provides portability, tolerability, and titrability as well as durability.
What it didn't change was regimen. So it was still it's still 4 times a day, similar to the older Tyvaso nebulized formulation. What L606 will do will port all of those same benefits, but now do it in a twice-a-day format. And we already know that we have proof of concept for that because we have a phase ongoing phase 2, 3 study that's open-label where we have shown that patients and there'll be a presentation at ATS where patients are achieving 25 breath equivalents of L606 and they're maintaining their clinical status. And those are patients switch from either Tyvaso nebulized or Tyvaso DPI. So very good outcome in a population of patients switch from current therapy.
Okay. And you already had your Type C Meeting with the FDA, so you have an idea what the, the path looks like. Does it look similar to what you had to do for Yutrepia ?
A little bit different here, Serge. So it is 505(b)(2), but because of the liposomal formulation, the agreement is that we'll need to do a single phase 3 randomized controlled trial in addition to the PK bridging study that's already been done and this open-label safety study. So the intent here is we're going to do a global phase 3 PH-ILD study that will start in end of this year. And again, just these are rough, rough estimates for now. Start to finish is about 4 years. So everything going well, we would be looking to bring L606 to market in the end of 2028 timeframe.
That would be for both PH, PH-ILD?
Yeah. So yes, it's a good, good question. So one trial serves for approval of both indications in the U.S. for both PH and PH-ILD.
Okay. Before we talk about financials, anything else regarding the treprostinil programs that you think is still underappreciated or misunderstood at this point?
No. I just think again, I think it's the broader applicability of Yutrepia to actually not only gain share in the inhaled market, but also steal share from the oral market that's maybe undervalued. And we'll look to shift that. And then I think as we get more resonance around what the actual opportunity is in PH-ILD, I think that may be eye-opening as it's probably bigger than we all think. And then, Mike, if you want to talk about financials, if you have any questions there, Serge.
Yeah. Yeah, Mike, if you just want to give us an updated cash balance. I know there were some transactions that were completed, early in the year to bolster the balance sheet, and the operational.
Absolutely. So, as you mentioned, we did raise some capital in December. We raised approximately $25 million through a secondary offering. And then in early January, we did a $75 million PIPE with a fund led by Patient Square Capital. And we also drew a tranche from the facility we have with Healthcare Royalty Partners for an additional $25 million. So at the end of the year, we had roughly $85 million of cash on the balance sheet. We added that $100 million that I just mentioned. We haven't disclosed the cash we have at the end of March; we'll do that as we do our Q1 earnings. But we are very confident. We have never been in a better financial position than we are right now. As Roger had said, we've really leaned into the launch. We've been manufacturing commercial products since 2022.
We onboarded the sales force in October. We brought on L606. So what we said previously is we're confident that if, if we're able to launch in April, and we are in April, obviously, that we feel that we could bridge profitability in our with our current cash balance. With that being said, we're going to evaluate the situation where we are. We're very confident in our position right now and, and look forward to the day that we're able to launch Yutrepia , hopefully, very soon. And we can put that, that capital to work to, you know, to really help bend that launch curve that, that we've been preparing for, for the last couple of years.
Okay. Maybe just to wrap up, can you just highlight milestone and catalyst for the year? Obviously, the Yutrepia approval sounds like it's imminent, but what other additional data, I think, from ASCENT? When's that expected? And if there's another catalyst that we should look forward to?
Yeah. So, clearly, everybody is looking towards final FDA action. So, I think in getting to market, I think then people will look for sequential, you know, build of Yutrepia in terms of sales. I think one thing just from a legal standard that people may or may not be aware of, but on April 23rd of this month, there's an oral hearing. Judge Andrews has asked for an oral hearing on the '327 patent, so that's been mostly briefed. I think United still has one more brief, but Judge Andrews obviously wants to get ahead of that, ahead of what he feels must be a pending action from the FDA. So, I think he's looking to rule on that preliminary injunction fairly quickly after 4/23. We won't have a lot of data available on the ASCENT study until, I think, the fall.
But I think, you know, stay tuned. We tried to preview a little bit of that here, but excited to present that data publicly, as it progresses. I think we have less than 10 patients now, approaching 10 patients, but, you know, hopefully by then, we'll update with the full cohort of patients that we have, through that point in time. I think the other thing is we'll start these additional phase four studies that I talked about. Just again, we're trying to move directionally to future state where Yutrepia is the one of the hallmark therapies for all, all patients with PAH and PH-ILD. Then for the team, it's just being efficient, how we allocate capital and expenditures.
All right. Well, thanks for the great overview and for spending time with us this afternoon. Appreciate it. And obviously, we'll be keeping our eyes out on some imminent FDA action.
Thank you, Serge. Always appreciate it.