All right, perfect. I'm Thiago Fouche. I'm a biotech analyst here at Wells Fargo. Thanks, everyone, for joining us today. We have Liquidia for a fireside chat with us today. So, a ton of news recently, so a lot to talk about. But I always like to give you guys some time just to give the overall setup on the story, and then we can sort through some of the more recent debates. But yeah.
Thiago, really appreciate you having us. Very excited to tell the Liquidia story. So just to give a little background, you know, we're built on the backbone of our proprietary PRINT technology, which is a formulation technology that allows us to manufacture particles at uniform size and shape. And we've utilized that technology to develop our first product called Yutrepia, which we've recently received tentative approval from the FDA in both PAH and PH-ILD. That PRINT technology enables us to, as I said, manufacture particles of uniform size and shape, that allows us to get deep lung deposition, which we feel will be very helpful for both PAH and PH-ILD patients.
We also have a second product called L606, which we're excited to be able to initiate our global phase 3 trial here by the end of the year, which will be a twice-daily inhaled treprostinil using a liposomal formulation that will treat both PAH and PH-ILD. So we're very excited for where we're heading. Very excited for the tentative approval that we received. And we will plan, you know, to launch this product, to launch Yutrepia here in the second quarter of 2025.
Got it. And again, before we lost on the minutiae of litigation and FDA decisions, perhaps let's take a step back, right? So again, inhaled treprostinil is one of the treatment options in PAH, the only treatment option in PH-ILD so far. So can you give us some background on some of those markets? What are some of the key dynamics? How are you thinking about the opportunity on both of those?
Yeah, no, we're very excited about both opportunities, so talking about PAH first, it's a well-established market. Inhaled treprostinil is firmly entrenched in the standard of care. You know, there are three forms of treprostinil: oral, inhaled, and parenteral. When Yutrepia comes to market in PAH, we're very excited about the opportunity. We feel there's a real opportunity, both in the inhaled but also in the oral market. The oral agents are tough agents, significant side effects, difficulty getting titrating up to therapeutic doses, so we really are gonna target that oral market as well, on top of you know the established inhaled market. In PH-ILD, very excited about PH-ILD. It really is a wide space of opportunity.
As you said, Tyvaso is the only product approved in PH-ILD. We feel that this market is at least 60,000 patients. The penetration rates to date are very low, and we feel the opportunity there is really a massive market opportunity. We've heard, you know, people say it could be a multi-billion, $3-4 billion market, and we're excited to, you know, get on that journey and, you know, look to develop that market and ultimately, you know, ultimately find these patients who are suffering, who have had no other options up until Tyvaso was approved, and feel that that opportunity, both for us and for patients alike, is really massive.
I think that's fair. And again, those market estimates using PAH as a comp seem reasonable, and not heroic necessarily. But just talking a little bit more about PH-ILD, and again, you haven't launched, but I'm assuming you've done a lot of work on that space. Where are these patients being treated today? Like, what are some of the key drivers that can get us from Tyvaso, where it is today, which is a fairly robust launch on this indication, to that potential multi-billion dollar opportunity? What are some of the key things from a market build-up perspective, I guess, before going to the product?
Yeah. I think what's most important is education. You know, these patients are spread around. A lot of local community physicians are treating these patients. But first, we need to diagnose these patients. You know, United has had tremendous success of penetrating to date. Tyvaso has grown from $400 million just a few years ago to being on a run rate of about $1.5 billion based on their last quarter results. We think the vast majority, if not all of that growth, is coming in PH-ILD, so that effort is ongoing to penetrate that market.
We feel once we get to market, having both companies out in the market, doing that educating, finding those patients, diagnosing those patients, and ultimately treating those patients, is gonna be critical in order for us to reach those market sizes that we talked about.
Got it. That seems really fair. Let's dive into the product profile then. Of course, we're going to use Tyvaso as a proxy because that will be the most comparable and product profile. What are some features for you from Yutrepia that you think are differentiated and might be appealing to a prescriber to pursue Yutrepia versus Tyvaso by the time you actually launch the drug?
Yeah, I mean, I think there's three critical factors. That is, delivery, device, and dose, and I think they're all interrelated, but, you know, first, from a delivery point of view, as I mentioned earlier, our PRINT technology enables us to manufacture these, you know, uniform particles, you know, uniform size and shape particles. That allows us to get deep lung deposition. No deagglomeration is needed in the device in order to separate those particles to limit the amount of irritation in the upper airways and the back of the throat. By us being able to utilize that technology, we're able to use a low resistance device.
And our low resistance device, especially for patients in PH-ILD who have compromised lung function, that inspiratory force that is required is much lower, and as a result, will allow them to be more successful getting our product, Yutrepia, into their deep lungs, where it is required. And then that leads to dose. I think, you know, one thing that is not controversial is that more treprostinil is better. The higher you're able to titrate doses, the better efficacy you get. Our ability through our phase three trial that we did in PAH, the early returns on our phase four trial that we're doing in PH-ILD, our ability to titrate to those higher doses, ease of use, our formulation technology allows us to titrate to those higher doses, which we ultimately feel will benefit patients.
Got it. I think that's fair, and again, I feel like the therapeutic hypothesis of more treprostinil likely leads to better benefits, well recognized, makes a lot of sense. One pushback, perhaps, and again, I asked the same question to United Therapeutics, but both of you guys are using commercially available devices that have been successful in different indications, and so how much of that can play a role in differentiation in terms of actually driving the prescription? Is it just about the device? Is that enough to change prescribing habits? Like, I'm curious about how much... What's the pitch when you go into a physician's office to choose Yutrepia?
I'm assuming that we'll have some additional data that you're generating at some point, but like, I'm curious if the device differentiation and the dose is enough, in your view, to drive that conversion potentially?
Yeah, I mean, I think, you know, patient satisfaction is important. Treprostinil is treprostinil. The powder itself, you know, we feel a combination of our formulation and our device, what we've been able to show to titrate to those high doses, will be attractive to doctors and patients alike. You know, it's a massive opportunity. We think it's a large opportunity in PAH, but also a huge opportunity in PH-ILD. You know, we feel our goal, and Roger, our CEO, Roger Jeffs, our CEO, says it all the time, "We want to be the prostacyclin and the first choice." We feel that we have the product profile to get there. Obviously, it's gonna take time, experience with doctors.
Like I said, our phase four ASCENT trial in PH-ILD, which by the way, is the first prospective trial done in PH-ILD in a DPI inhaled treprostinil. We feel that that's critically important. There's a lot of doctors who want to see clinical data of how the product reacts, and, you know, that is an important data set that we have. Our goal is to have that trial fully enrolled up to 60 patients by the end of this year. Assuming that we launch in the middle of next year, we will have important data that we will be able to bring with us to show the benefits of titration, to show the benefits within PH-ILD. So again, we feel very confident in our product profile.
We feel very confident that we can differentiate, and we just look forward to the opportunity to launch the product.
And we've been dancing around exactly that topic so far, so let's dive right in. So what's currently the status for Yutrepia in terms of approval? Like, how would you characterize that right now?
Yeah. So I think the way we would characterize approval in Yutrepia is that we have date certainty. We received tentative approval on August sixteenth in both PAH and PH-ILD, and the only thing gating that launch is the expiration of a three-year marketing exclusivity that the FDA granted to Tyvaso DPI that will expire in May of 2025.
And, again, to be fair, like, we were not expecting that to be the case, right? I don't think most investors were thinking that the Tyvaso DPI exclusivity was the thing that was gonna resolve some of these issues. I'm curious, when you were thinking about the outcomes that were possible, was this a high likelihood scenario or not? And again, how do you feel about that decision to grant three-year additional exclusivity based on the data they generated? I know you're contesting some of that already, so can you give us some more background on that?
Yeah, so I think some background on that is first, we didn't expect that to be the outcome because the FDA told us it was not going to be the outcome. We filed suit against the FDA the week after our tentative approval. We filed for a preliminary injunction last week. As part of that, we filed several exhibits, one of which included some documentation that the FDA provided us through a FOIA request in 2022, that clearly stipulated that the bridging study that Tyvaso did was a bioavailability study, and therefore was not eligible for a three-year marketing exclusivity. So based on that, we were bitterly disappointed that that three-year marketing exclusivity was granted with no explanation or reconciliation from a prior decision. You know, so the bottom line is, you know, we were disappointed.
You know, very disappointed, but the bottom line is, you know, we are working through the process. As I said, we had filed suit. We have, we are at a point now where we've agreed with the FDA to move straight to a summary judgment. Briefing will occur over the next couple of months, and a hearing has been scheduled by the judge on December fifth, and we would expect a ruling on that sometime thereafter. You know, the bottom line is, the FDA has denied patients choice here, and, you know, we are gonna do everything we can to fight for those patients, and ultimately try to, you know, accelerate a launch date.
But as I said earlier, I think we feel from a planning point of view and from a date certainty point of view, I think we're confident that we should be able to launch no later than the latter part of Q2 of 2025.
Yeah, and I guess that was kind of the natural... So you have March of, sorry, May of twenty twenty-five now as kind of a goal date for that exclusivity to end. You're contesting so that the FDA decision, so I guess that's upside to current timelines. But right now, worst-case scenario, you're saying Q2 of twenty twenty-five.
Yeah. I mean, I think our base case is that we'll launch in May of two thousand and twenty-five. We feel very confident in our arguments. I think the issue is time. You know, we're now inside of nine months in order for this to play out through the court system. You know, that will take some time. So we were ready to launch in September of two thousand and twenty-four, and we will continue that commercial readiness and make sure that we will be ready, whether it's earlier than May twenty twenty-five or at May of twenty twenty-five.
Got it. And a related question right now, 'cause one of the key debates was if you're gonna get a broad label for both PAH and PH-ILD or if it's just PAH, can United prevent you from getting that on your label? But again, it sounds from the FDA decision that PH-ILD is an indication. You got a tentative approval for both indications. Like, is there any risk on eventually you having to launch with a narrower label as of this moment? Like, I can't really think of any comps for that, but I'm curious how confident you are that that's gonna end up being the final label with the two indications, by the time you launch a drug in May.
Listen, we're confident that the FDA gave us tentative approval in PAH and PH-ILD, and feel that the only thing holding back full approval and launch is the expiration of that marketing exclusivity. So while we were, as I said, bitterly disappointed that we're unable to launch now, we absolutely de-risked our program on August sixteenth by getting full approval in both PAH and PH-ILD. The FDA, you know, as expected, we worked with the FDA, consulted with the FDA on the process of using an amendment. They accepted that amendment in September of twenty twenty-three.
Obviously, they missed their PDUFA date, but on August sixteenth, they gave us full tentative approval in both PAH and PHILD, and we feel very, you know, confident that a launch upon expiration of that marketing exclusivity in May of 2025 is our base case.
Got it. And again, that, that feels pretty definitive, but you still have some ongoing litigation with UT. So I'm curious, what's the status on those? And again, if you feel like that could be any sort of impediment to your potential launch. So we can start with the seven nine three process first, I guess. Where you currently stand, is that right now a potential impediment to a potent... Like, again, hard for me to connect the dots there, but I'm curious how you're perceiving that to be the case.
Yeah. So just a little background on '793. The PTAB invalidated that patent. United Therapeutics appealed that to the Federal Circuit Court. Federal Circuit Court last December ruled against United Therapeutics. They asked for a rehearing. That rehearing request was denied. United subsequently appealed to the U.S. Supreme Court. The U.S. Supreme Court in August asked us to respond to that appeal. We filed our brief in the last two weeks. We expect that to be considered by the Supreme Court when they go back into their next session at the end of September, and we should hear in early October.
We think it's very clear, the arguments raised in their appeal was Chevron, which obviously is a hot topic with the U.S. Supreme Court, where they overturned the Chevron doctrine in their last session. I think the issue is this is not a Chevron issue. In the Federal Circuit opinion, they did not cite Chevron, nor did any of the cases they cite cite Chevron. So we are confident that this should not be granted cert, but we will learn by the end of September or early October if what the U.S. Supreme Court decides.
Got it. But again, if even if that decision doesn't go your way, I'm assuming that leads to a new initialization of the process of actually-
Yeah
contrasting some of those decisions. So that by itself should not be necessarily.
Yeah, depending on how the-
You know.
You know, them granting cert itself, they would have to overturn the decision when the case is heard. Like I said, we feel very confident that that should not be heard and should not be an impediment for us to launch in May of 2025.
Got it. And again, correct me if I'm wrong, but so the three two seven.
Yeah
... That, that's the one that I think folks are most concerned, 'cause that could theoretically, at least the argument was, give you, like, a thirty-month stay on the PH-ILD part of the-
No thirty-month stay.
Yeah.
So it's not eligible for a thirty-month stay.
Exactly. So-
But, to your point, the '327 patent was a patent that was granted in 2023, relating to PH-ILD. They filed suit against us. That trial is set in Delaware in June of 2025. To give some additional background, United Therapeutics sought for a preliminary injunction, and in June, were denied of that preliminary injunction. Now, in order to obtain a preliminary injunction, there are certain criteria that need to be met, and I think for purposes of this, what's important is, whether or not Liquidia, in its defense, has raised a reasonable likelihood of success-...
And the judge, in his opinion, wrote that the arguments that we made, specifically on anticipation, were, you know, he believed were a reason to reject that preliminary injunction, and as a result, we will go to trial in June of next year. That trial in and of itself will not block the approval process with the FDA, so it poses no legal impediment for us from getting approved once that marketing exclusivity expires.
Got it. So again, just to recap, there is some ongoing litigation, but it's your view that that should not impact your May 2025 potential launch, right? And basically, there's some upside, maybe from the FDA litigation to those timelines, but it feels like we finally got a clearer path to a potential launch. Is that a fair characterization, like-
Yeah. So we feel as a result of August sixteenth, that we got the certainty around the launch of Yutrepia, which is extremely important. And then just one piece on the back to the three two seven, we feel that this is a bad patent. We feel that there is a tremendous amount of prior art, and ultimately, when we have this trial, that we will be successful, knowing that the trial won't happen until June twenty-five. But going back to what you said, yes, we are, you know, we feel by getting tentative approval, it provides date certainty, and we are fully expecting to launch the product in, you know, say, the latter part of Q2 next year.
Got it. Perfect. Anyways, we spent a lot of time on that. Let's move to the more interesting part, which is, again, bigger picture, how you expect to compete on that market. So can we briefly discuss our go-to-market strategy? Again, we touched upon it a little bit, just thinking about the differentiation of the device and things like that. One question I get all the time is pricing. Like, is this a market where you should compete on pricing to get formulary placement? I'm curious how you're thinking about that as a potential lever or not. Yeah, we can start there, and I'll pull apart some additional drivers-
Yeah.
- on the launch path.
Yeah, so, you know, obviously, pricing strategy is a critical component, you know, to our launch strategy. Unfortunately, it's not something we're gonna talk about today. It, you know, I think what's important, what's most important is the value proposition that Yutrepia will bring to, to patients, to doctors, and ultimately, to the healthcare system. What's important for us is that patients have choice. Patients haven't had choice, have never had choice. It's important that patients have choice. So for us, the way we look at success is patients have access. And it's important for us to, you know, what we've been able to do over the last couple of years, is build relationships with payers, both in commercial and Part D settings.
And what our goal is to be able to talk about and drive home the value proposition that Yutrepia will bring to patients, to doctors, to payers. And, you know, we'll leave it at that, but the bottom line is, you know, we feel confident in our. Really, our goal is to make sure patients have choice, and that will, you know, that will be part of what our strategy is, both from a pricing and payer strategy.
Got it. And thinking about the actual build-out of the sales force and associated OpEx with that, like, how big of a sales force do you expect to need to have to reach this market? And how do you plan around the hiring and timing of that sales force?
Yeah, so you know, we were fully anticipating a launch in the first half of 2024, so we onboarded our sales force in Q4 of 2023. We've built a 50-person sales force that is a, it's a national sales force that will focus both on PAH centers and also local community physicians where a lot of PH-ILD patients reside. So they've been in the field since the latter part of Q4 of 2023. Obviously, they can't detail Yutrepia, but they're talking about Liquidia, they're talking about our print technology, doing disease education. And, you know, we feel very confident in the sales force that we have.
And ultimately, when you know, when we get the green light to launch, you know, our plan is to be able to hit the ground running and having a sales force that has already been in market, building relationships, puts us in that best position.
No, no, I think that's fair, and supply, again, because the timelines changed a little bit. I don't know, from a CMC perspective, like, how you're thinking about the lots and by when they're gonna have an expiration date, so on and so forth. So, is supply potentially a bottleneck on the launch at all, or not, not really?
No, not at all. You know, as I said, we've been preparing to launch this product for a long time. We know we will have a formidable competitor, and having sufficient supply is critical to any launch, and specifically for ours, so we have been building commercial supply. We have commercial supply. We were ready to launch this product now, so we will continue to be ready. We are manufacturing at full capacity. We have great downstream partners, and ultimately, like I said, if it's May of 2025 or sometime earlier, we will absolutely be ready with sufficient supply to launch.
Okay, and just to wrap up the discussion on the ASCENT trial, because you've emphasized that as being particularly important for the PH-ILD patient population. So what is the kind of data you're hoping to generate versus whatever UT has been able to generate for Tyvaso DPI in PH-ILD patients? Why do you think that piece of trial data from that trial might be an important part of the differentiation story?
As I said earlier, this is the first prospective trial of a DPI intrapulmonary that's ever that has taken place. There's been no clinical data generated, so we feel our commitment to this patient population, our commitment to learning more about PH-ILD, how DPI can work, how titration can work, we're very excited to do this. Like I said, we will be the first to do it. I think that will go a long way. And ultimately, our goal is to fully enroll this trial. It's an open label trial. Our goal is up to 60 patients, and the goal is to have that fully enrolled by the end of the year.
So if we launch in, you know, the end of Q2 of two thousand and twenty-five, we will have a significant amount of data at that point that we would be able to share, that I think will be very helpful in getting doctors comfortable, patients comfortable, and ultimately help that ramp, that launch trajectory of Yutrepia.
Got it. No, and cover a lot of ground. Perhaps let's pivot a little bit to the pipeline. So you were talking about L606. I don't think folks are talking too much about that product just yet. Can you just give us some background on what the formulation is, where do you source it from? What's the current stage for L606 there?
Sure, Thiago, I'll take that question. So L606 is a liposomal formulation of treprostinil, that we licensed last summer of 2023, from a partner based in Taiwan. That liposomal formulation has been designed to release treprostinil over a twelve-hour period, which enables twice-daily dosing, through a nebulizer that's next generation. Meaning, unlike the current nebulizer in the market, this is a small portable device that can be rapidly deliver the dose, using the patient's own breathing patterns. So it's like continuing to innovate. Why did we license this program? I think it comes back to kind of what are our core competencies as a company. First, it's formulation, as you heard Mike talk about with how do we use DPI. But the other is the deep expertise in pulmonary hypertension, when you look at the executive team and what we've built.
And what we will always do is to find products for patients that meet unmet needs. So the current inhaled formulations have problems: four times a day dosing, and that the pharmacokinetics of treprostinil are not there at night when the patient's sleeping. So with the twice daily formulation, we can treat once in the morning and once at night to ensure that they're getting optimal twenty-four-hour coverage of treprostinil. We know this is important because of what we know from the parenteral continuous delivery with the best efficacy. So we're excited to bring this into the next stage, which is a phase three program that we'll initiate by the end of this year, that's encouraged by the existing data that we get from the U.S. study in patients in an open-label study now.
And what's the design of that, that phase three? Like, what do you feel like is the regulatory path for, for L606? Because, again, that, that feels like it's a more expedited timeline relative to, let's say, TPIP or, or some other inhaled products that are out there.
Correct. So, what we've said before is, and we've confirmed this with the FDA, that our path to approval in the United States is to provide three sets of data. First is a comparison in pharmacokinetics, which we've done against Tyvaso, the nebulized. The second is an open-label safety trial, which we're in the process of doing. That includes both PAH and PH-ILD patients. And the third is the pivotal study, which will be a placebo-controlled study that will run globally, looking to ensure that not only is the product safe, but we're not losing any efficacy by changing the dosing frequency to twice a day. So we're getting that study up and running. Hope to initiate by the end of the year, but it will be a global study and take us a few years to complete.
Got it. Since I briefly mentioned that, I don't know how you guys are thinking longer term about other competitors in the PAH and PH-ILD inhaled space. I think, again, for TPIP, that's the only product that folks are talking a little bit more about, but not a whole lot of available data so far, but technically a once daily versus Tyvaso four times a day, and L606 could be twice a day, perhaps. How do you think about that product profile as a potential competitor in the future?
You know, it's a fair question. There's only two sustained release programs in development, of which we have one that's more advanced and we think will be entering the clinic soon. There's a lot of attention being paid to once a day versus twice a day. But I'd like to bring it back to: what is the goal? The goal is to try to get the most clinical utility out of the product. So twice-daily dosing may give us better coverage over that twenty-four-hour period to potentially show improved efficacy. Regardless, twice-daily dosing with an easy-to-use device is not really a barrier versus once daily, and what we would point out is it's a nebulizer.
In the PH-ILD category, which we'll be running the study, you know, if there is any concern about the patient's lung function, you know, using a nebulizer is the best way to do that. A lot remains to be seen with the TPIP product, but what's clear for us is based on the data that we have in the U.S. right now, you know, we're moving forward, not just in the U.S., but we have favorable advice from the EMA as well, as we think about how to open that study broadly.
Got it. Perfect. I know it's not a big part of the business overall, but I feel like just a quick question on generic Remodulin or parenteral treprostinil. Again, historically, not a huge area of focus. I'm curious how you're thinking about that niche. How important is that going forward? What's gonna be the... It feels like Yutrepia is the key driver here, but just to check that box, I'm curious how you guys are looking at that part of the business.
Yeah. So, you know, generic treprostinil is, you know, strategically very important. You know, it brought us our RareGen acquisition. It brought us an entry to have discussions with payers, with doctors. It shows our commitment to the patient population and to doctors alike. From a financial point of view, what we've always said is we look at generic treprostinil as an annuity. And like I said, you know, to date, been critically important to us. In the future, it'll remain critically important to us as we build out our portfolio of having an inhaled product in DPI, developing an inhaled product with a nebulizer, having a parenteral product on the market.
You know, it's very important to us as we move forward here, we'll continue to look to develop a new pump. We hope to have more information on that soon. But the bottom line is that, you know, our commitment to the PAH patient population and, you know, obviously, the PH-ILD patient population with Yutrepia, and L606, is of critical importance to us, and you know, generic treprostinil will remain there.
Got it. And perhaps one last one for me. Given the change of timelines, how should we think about your current cash and runway? If you need to bolster a balance sheet, what are some options into that launch in Q2 of 2025?
Yeah. So, you know, we've always taken pride of having a strong balance sheet. We did a couple of equity raises and a transaction with HealthCare Royalty at the end of 2023 and 2024. Those transactions have put us in the position that we're in now. We ended Q2 with $133 million. We've always been disciplined with our investments. We feel like we're in a very strong position right now with our balance sheet. You know, now with that being said, we will always be opportunistic. But the bottom line is, we're looking to deliver on really three objectives as we move into next year.
As we've already stated, getting Yutrepia launched, being commercially ready, initiating our global phase 3 on L606, and fully enrolling our ASCENT trial in PH-ILD. We feel confident in our cash position now, and you know, we will continue to evaluate that as we move forward.
Kind of perfect. I think that's a natural stopping point, I guess. But no, again, we covered a lot of details here. So again, I appreciate you guys making the trip and giving us your time.
Really appreciate it, Thiago.
Awesome. Thank you, Thiago.
Thank you.