Okay, welcome everyone. I'm Jennifer Kim, one of the biotech analysts at Cantor, and I'm looking forward to hosting this fireside chat with Liquidia. I'm joined by Michael Kaseta, COO and CFO, and Jason Adair, CBO. Thanks to you both for being here.
Really appreciate you having us. Yeah. Thanks, Jennifer.
Maybe to kick things off, can you give a quick snapshot of Liquidia?
Yeah. So we're at a really pivotal time at Liquidia. We're really excited first to be here and excited for where we are. You know, we're on the brink of launching our first product using our proprietary PRINT technology, which allows us to manufacture particles at uniform size and shape, and our first product, YUTREPIA, received tentative approval from the FDA on August 16th, which clears the path for us to launch at the end of May 2025.
Okay, and your path to launching YUTREPIA, obviously a key focus for investors. Can you walk through, maybe big picture first, the potential opportunities here. What does the inhaled treprostinil market look like today? Where is it going, and where does YUTREPIA fit in?
Yeah, so, we're really excited. In our tentatively approved label, we'll be able to launch in both PAH and PH-ILD. We think both opportunities are, you know, very attractive. Starting with PH-ILD, it's a massive opportunity. It's a patient population that has been underserved for several years. You know, we believe that this patient population, this addressable market, is over sixty thousand patients. There are others who believe that this market could be over a hundred thousand patients. Analysts have talked about a market size of $2 billion- $3 billion- $4 billion, and we agree with that. You know, there's only one product approved at this point. When we get full approval, we'll be the second.
There is a lot of white space opportunity here, and really are excited about our ability to launch YUTREPIA in PH-ILD, but, you know, also serve this patient population that has not had treatment options until the last couple of years. PAH, on the other hand, is a very mature market. It's a mature market that inhaled treprostinil is really part of the standard of care. We believe that inhaled treprostinil will continue to be the standard-- a part of the standard of care.
Where we look at YUTREPIA fitting in is the opportunity where Tyvaso fits in right now, but we are also gonna target the oral opportunity. The oral market is close to $2 billion. These are products that have systemic side effects, take a long time to titrate to therapeutic doses. So we feel the opportunity of YUTREPIA coming into the, you know, both the PAH and PH-ILD market, is really a massive opportunity that we are excited to launch into here in May of 2025.
Okay, and what is, how do you think about your ability to compete against those competitors? Is it from a product profile standpoint or a competitive strategy standpoint?
Yeah, I mean, I think competitively, Tyvaso is well entrenched. Tyvaso nebulizer's been on the market, you know, since the mid-2000s. Tyvaso DPI was launched in 2022. We believe our product profile will compete favorably there. I think specifically where we have developed YUTREPIA of being able to, as I said earlier, manufacture particles at uniform size and shape, will allow us to, you know, that size that we have targeted will allow us to get into the respirable range, get deep lung deposition, which will hopefully avoid, you know, powder being stuck in the upper airways and back of the throat.
We've been able to, you know, in developing YUTREPIA, using a device that is an off-the-shelf device that is low resistance, especially in PH-ILD, where these patients have lung, you know, lung impairment. The ability to have a low resistance device that will allow easy breaths to inhale our product to get into that deep lung, we feel ultimately can be a differentiating factor in PAH and especially in PH-ILD.
Okay, let's talk about litigation. It seems like we see something new every other week when it comes to some of the litigation that's been going on. Maybe to start, can you summarize the latest decision regarding the FDA's tentative approval, and where does everything stand?
Yeah. So you know, August 16th was a bittersweet day. We feel that we significantly de-risked YUTREPIA by clearing the regulatory path. Obviously, we were hoping for full approval. We were disappointed and surprised that we received tentative approval. As part of that tentative approval, Tyvaso DPI was granted a three-year marketing exclusivity in both PAH and PH-ILD. We have, you know. Since that date, we have filed suit against the FDA as that we view that decision as both arbitrary and capricious. The reason we feel that way is we had done a FOIA request in 2022 about the status of that exclusivity.
They complied with that request and provided us documentation that showed that the agency had considered that exclusivity and had concluded that they were not eligible for that exclusivity, and, you know, as it did not fit the definition of a new clinical investigation. As you can imagine, based on having that information when we were notified in August, on August 16th, that they were granted that exclusivity, we were surprised and disappointed, and as a result, we filed litigation against the FDA on that ruling. What I'll say is, eight months is not far away, which is when we believe our launch time would be based on the expiration of that exclusivity.
However, we do see a pathway where we could get to an earlier decision and an earlier launch. We've agreed to the FDA to move to summary judgment, so briefing will occur over the next couple of months. Briefing will end in the middle of November. A hearing date has been scheduled for December 5th. The judge could theoretically rule from the bench. We expect that he probably will write an opinion, so we would expect an opinion, you know, a month or two after that hearing date on December 5th. But all of our focus is being ready for a launch in May of 2025, with potential upside of an earlier launch if things go our way on the court side.
In the base case scenario of that eight-month delay, how does that change your view of the opportunity for YUTREPIA?
It really doesn't change the opportunity at all. As, as I said earlier, this is a massive market, especially in PH-ILD. I believe if you look at that, you know, analysis that's been done, and even comments that UTHR has made, they've penetrated probably 10%-15% of that market. They've done a very nice job. They've increased Tyvaso revenue from $400 million prior to PH-ILD indication, have increased that to a run rate of about $1.5 billion, so they've grown considerably.
But there's still a lot of growth to occur and, you know, we feel that that white space opportunity of finding additional patients and treating those patients, you know, we feel that the overall opportunity, although, you know, bitterly disappointed that we were unable to launch, as we've, you know, as patients have been denied choice here, which ultimately is the reason we're sitting up here, we feel that the overall opportunity and market opportunity for Liquidia and YUTREPIA really remains unchanged.
Okay, and can you talk about sort of the other pockets of litigation that are going on and how that fits into YUTREPIA's launch?
Yeah, I mean, I think the other big piece of litigation is around the 327 patent, which was a PH-ILD patent that, UTHR, was granted in the middle of 2023. They asserted that against us in early 2024. We feel, you know, we feel confident that this patent should never have been issued. We feel that, you know, we have a trial in June of 2025 on this 327 patent. We feel confident that we will prevail here.
This does not have any gating impact on our approval and launch of YUTREPIA, but it's something that we will be focusing on here in as we move into 2025 and prepare for a trial in June of 2025 .
So would you launch at risk ahead of the trial?
So I think what we will say is, when we get full approval, we'll evaluate the situation, the landscape. But I think we would not allow what we would believe a bad patent to prevent us from launching YUTREPIA.
Okay, and then, 793, where do things stand there?
793, we had gone through a process with the patent office to invalidate that patent. We were successful in invalidating the patent. United Therapeutics appealed that to the Federal Circuit Court in D.C. The Federal Circuit ruled unanimously in a non-precedential opinion that the patent was indeed invalid. United has, in turn, filed an appeal with the U.S. Supreme Court. As part of that filing and as part of that appeal, they tried to make this a Chevron issue, which is a big issue around the Supreme Court. As everyone knows, the Supreme Court in effect invalidated the Chevron doctrine in their last session. United has tried to make this a Chevron issue.
I think our opinion, both from a point of view that this was a non-precedential opinion and the fact that the opinion that was written did not reference Chevron, nor did any of the cases cited reference Chevron. We feel that this is not a Chevron issue, and therefore, we do not believe that the Supreme Court will grant cert, and we will find that out in, we believe, in the first week of October, if they, you know, where they decide.
What are the steps afterward?
If they don't grant cert, the 793 patent will be invalidated, removed from the Orange Book. There will be no further litigation there. If they grant cert, there will be a process of briefings will be scheduled, and then a hearing will be scheduled. We would expect that to happen sometime in 2025. Again, we do not expect this to be the outcome as we feel that the 793 patent is invalid, and the court did act appropriately.
Okay. Thinking ahead to the launch, you took steps to be commercial-ready for a potential launch this year. Can you remind us what investments you've made already, and what are you doing with those investments ahead of launch now?
Yeah, I mean, I think since you know since we received tentative approval in 2021 , we were hoping for a launch to have already launched. We've invested significantly in manufacturing, so had we been able to launch in September of 2024, we would have been ready for a launch with commercial supply. We will continue to manufacture. We will be ready to launch in May of 2025 or earlier, if necessary. What we've also done is we've onboarded a full sales force. We onboarded them in Q4 of 2023 . They've been in the field since Q4 of 2023 .
They have been building relationships with doctors, both PAH, PH-ILD, PAH centers, both cardiologists and pulmonologists. They're talking about Liquidia, talking about our PRINT technology. Obviously, they can't detail specifically about YUTREPIA, but building those relationships, we have an extremely experienced sales force, what we feel is best-in-class, that has, you know, on average, almost 10 years of rare disease experience. The vast majority of them have PAH-specific experience. So we're really gonna. We've been taking advantage of the time, and will continue to take advantage of the time to build those relationships, so when we are able to launch, which we assume will be in May of 2025 , that we will be ready to hit the ground running and really get off on that growth trajectory of a launch.
Okay, and then earlier this month, you executed on some additional financings. How does that help you get through the goalpost, and what does your runway look like now?
Yeah. So, we've always been opportunistic in our financing. So what we did is, we raised $100 million, which was a combination of pulling down the remaining $32.5 million that we have on a facility with HealthCare Royalty. So HealthCare Royalty has been part of our story since January of 2023. This is the fourth time that they have deployed capital, so it gives us confidence, and I think gives the market confidence, in their belief and the opportunity that YUTREPIA has, on the market when we launch. We also raised $67.5 million in equity as part of this transaction. We were targeting $50 million.
We upsized it to $67 million based on demand and the fact that we were able to raise the equity at the market price. So we're very excited about the cash that we have on our balance sheet. We feel assuming that we're able to launch YUTREPIA in May of 2025, we feel that this capital can get us into 2026, so it can get us well through a launch of YUTREPIA. We've also said and previously stated and still believe that we think we can get to profitability as a company within three or four quarters after launch.
So if you do the math of a May launch, that capital can get us into 2026, three to four quarters after May/June of 2025. We feel confident that whatever we would be solving for would be relatively nominal in value, and we feel very confident in our cash position, where we sit today, to allow us to achieve all of our objectives as we go through the rest of 2024 and into a launch of YUTREPIA in May of 2025.
And since you are preparing for a possible launch this year, you've done the sort of pricing versus access work. What have you said in terms of your pricing strategy, and what... How have your conversations been with payers on the commercial side, but also the Medicare side?
Yeah. So obviously, any launch strategy, your pricing strategy is critically important, and for obvious reasons, we're not gonna get into any details about that pricing strategy. I think what we would say is, you know, first and foremost, we have a commitment to patients, and in order for it to have a commitment to patients, we want patients to be able to have choice. And in order for patients to have choice, our goal is that no patient that we are not disadvantaged for any patient from a payer point of view.
We need to make sure that patients have access to our product, and that has really been the goal over the last couple of years, as we've been able to build relationships with payers, talk to both commercial payers, Part D payers, talk about the value proposition that YUTREPIA can bring and will bring to patients, doctors, and the payers alike. We feel that we've been successful. Obviously, those discussions, as we approach approval, will accelerate. We're confident that we've done the legwork to bring the confidence and bring discussion around the value proposition, and we feel confident that we can achieve a goal that no patient will be disadvantaged if they want to choose Liquidia.
Okay, and then when we're thinking about the launch trajectory, what could that look like in terms of slow versus fast build, and does it look different in PAH versus PH-ILD?
Yeah. So I mean, I think if we look at it in total, we're excited about a launch. We think the opportunity here, like I said, we believe the PH-ILD opportunity as others have stated, could be $2 billion-$4 billion. We agree with that. We also think PAH has a tremendous opportunity for us, as I had said earlier, whether it's, you know, current inhaled treprostinil user patients, new patients, as you know, as they were identified, or even switches from orals. We're very confident in both PAH and PH-ILD. You know, we think we're gonna have a very successful launch.
Now, how that looks will allow the, you know, how people perceive that, that's for others to decide, but I think we're confident, and as I stated earlier, we feel that we could be profitable in, you know, three to four quarters after launch. That includes a fully burdened P&L, that includes, you know, full commercial support, medical affairs support. But also, we're launching into and initiating our global L606 trial in PH-ILD, and that includes those fully burdened costs, where we will, you know, as I said, initiate that trial by the end of this year. We will have increasing costs on the clinical, and regulatory side into 2025 and beyond.
I think that gives us our comfort level and our confidence that we can still bridge to profitability, knowing that we'll be supporting a global Phase III study on top of everything else. We're very bullish and excited about YUTREPIA and feel that it can bring tremendous value, both most importantly to patients, but also to shareholders and stakeholders as well.
Okay. Maybe we can turn to L606. This is in your asset, in your pipeline. Can you give a quick recap of how you came about this asset, and what data has been presented so far?
So I'll just start. A lot of hard work. You know, the team has you know really scoured the landscape of what opportunities are in. And Jason here, who's sitting next to me, was really the person who identified this, built the relationships, and allowed him to get into this here.
Sure. Thanks, Mike. So I think the first thing is, what is our plan? And it's to leverage our competitive advantage. And what we think that is, is a deep expertise in how to develop rare cardio, pulmonary products. When you look at our CEO, and Dr. Roger Jeffs, our Chief Medical Officer, Dr. Saggar, right? These people have been working for decades in this field. So taking that and then thinking about the future, we always want to be looking to innovate. Our YUTREPIA product was the very first dry powder formulation of treprostinil to be developed and tentatively approved, but we're not gonna stop. What are the other products? So we were specifically looking for sustained release treprostinil formulations, and that's what L606 is.
It uses a liposomal technology that allows the drug to be delivered twice a day, once in the morning and once in the afternoon, or excuse me, evening, using a nebulizer, a small, next generation, rapid nebulizer. We licensed the program from a company called Pharmosa, based in Taiwan, and they've been a great partner for us, as we're opening up the North American markets. What we know about this product right now is that it works.
We're running an open label study in PAH and PH-ILD patients in the United States. So when we license this in 2023, we have lots of data to look at. It's kind of under the radar. We actually see it as the most advanced sustained release treprostinil inhaled product that's out there. And to the point that Mike said, we'll be entering in a pivotal study later this year. That will be a global study.
And the Phase III program in PH-ILD, can you walk through your regulatory strategy?
Sure. So, there are three data sets that the FDA confirmed that we need, for approval. The first is complete, and that's a comparison to Tyvaso nebulized in the market today, which is delivered four times a day. So we have that data. We've published some of that data. The second is open label safety data in PAH and PH-ILD patients. We have that. And then the third is a placebo-controlled efficacy trial to demonstrate that we don't lose any efficacy by moving to twice a day formulation. So that's really the pivotal trial.
We could pick the disease, that we wanted to study. We picked PH-ILD because we think that will allow us to execute more rapidly in a global study. Running that study successfully will actually allow us to get approval of both PAH and PH-ILD on a single study. So we're pretty excited about getting that up and running through 2025.
Has the advice or feedback that you've gotten from outside the U.S. regulatory bodies been similar to what you've heard from the FDA?
So we have approached the EMA for scientific advice and confirmed that the trial that we want to conduct would be appropriate. I would even go a step further. We see the international community as kind of having been ignored when it comes to the inhaled treprostinil field. So they don't currently have access to most countries don't have access to Tyvaso or Tyvaso DPI. So not only are we gonna bring a inhaled product, but it's potentially a more attractive inhaled product with twice daily dosing. So the European and the international community is very excited for us to get the study started.
We'll learn more later this year, but what can you tell us about the design of that trial?
We are not talking too much about the design. It will be listed in clinical trials, and once we put it out there, we'll talk about it openly. It is a large placebo-controlled efficacy trial. It would be similar in intent to other trials that have been conducted in the same indication. You know, what we wanna make sure is that there's no doubt that the data that we produce has a robust signal in patients because it will be covering both PAH and PH-ILD, so we look forward to talking in more detail about that in the coming years, or excuse me, next year. The focus of the company, though, is YUTREPIA, so while we're running this large study over the next few years, it's really gonna be about the YUTREPIA story.
And you pointed this out, but in terms of U.S. versus ex-U.S. sites, ease of enrollment, sort of interest from investigators, what do you expect in terms of sort of the characteristics between those types of sites?
So, I mean, fortunately for patients in the United States, they have a treatment option currently in the market, which is Tyvaso and Tyvaso DPI. So to run a placebo-controlled trial in the U.S. might provide some dilemma for certain physicians. So we really will be recruiting most of the patients from outside the United States. That said, there are sites, you know, chomping at the bit for us to get this study up and running in the United States, because of the real-world experience that we already have in the United States. You know, patients actually are benefiting in the morning because the whole kind of advantage to twice daily, not only are you lowering the Cmax so that you have an easier to inhale product, but you're providing more consistent 24-hour coverage, and that is ultimately the goal.
We know that parenteral is the most effective way of delivering epoprostenol, and everything since epoprostenol has been this balance of, you know, efficacy, safety, and convenience for patients. The potential in this study to even improve the efficacy of twice daily dosing because we have that more consistent coverage. That's not the goal. The goal is to make sure that we haven't lost any efficacy by moving to twice a day.
Okay, and you're not the only one developing sort of a more convenient less administered dose inhaled therapy. Insmed's TPIP gets a lot of attention as well. I guess first, do you see 606 being a growing part of your story, and where does it fit in alongside TPIP?
You know, I'm not Insmed, so I can't speak too much about TPIP, but what I would say is, it's a prodrug. It has a different regulatory path. I'm not familiar how they will get both indications. We haven't seen any kind of large dataset published yet from that study. So from that perspective, we're not in a different spot. In fact, we feel very encouraged by the data that we have. I would point out that that's a dry powder inhaler. And there are many good advantages with dry powder inhalers, but ultimately, it's what is the best way to deliver the drug in a way that the patient finds convenient? And we haven't seen anything with twice-daily dosing with this rapid nebulizer that would say that twice daily will somehow be inferior to a once daily product.
Last thing I would say is that what's happening, at least based on our observations with YUTREPIA, is that the field is moving to understand that the higher inhaled dose you can deliver, the better off the patient will be. Not only would they potentially get more vasodilation, but with a wider dose range, you can keep patients on therapy longer. And what we know about L606 is that within the current confines of the design of the open label study, we're dosing patients that would be at an equivalent of 26- 28 breaths, 4 times a day with Tyvaso, but we're doing that in two short nebulized sessions with, again, I say, a pocket-sized nebulizer. The nebulizer is not approved, so that's part of our regulatory strategy to bring a better next gen product to the market.
Have you talked about how many sites you expect to enroll, and where are you in terms of identifying those sites?
We have not, but a good question, and that will all be in our clinical trials listing when we get it posted.
Okay. I mean, that should be pretty soon, so looking forward to it.
By the end of the year is the goal.
Okay. So we're getting to the end of our time. Are any closing remarks that you'd like to share, and what should people keep an eye on?
Yeah, I mean, I guess the only closing remarks is, you know, August 16th was an important day for us at Liquidia. What we feel is we're on a clear path to launch in May of 2025. You know, our objectives are clear, be ready commercially to launch YUTREPIA, initiate our global L606 study. We also have a Phase IV study in PH-ILD in YUTREPIA that is gonna be critically important, especially as we launch, as it'll be the first prospective, you know, clinical study of dry powder treprostinil in this patient population, and we think will bring valuable data that we'll be able to use as we launch YUTREPIA. So we are tremendously excited about the opportunity.
We feel now we are well capitalized to get to and through that launch and you know get us on a path to profitability and you know really excited for what's to come here as we feel there's a massive opportunity, and you know our goal is to be the treprostinil of first choice here in you know with Liquidia and YUTREPIA, and can't be more excited about the opportunity, can't be more excited for patients who will be given the choice then.
Looking forward as well. Michael, Jason, thanks again for a great discussion. This ends the fireside chat. Enjoy the rest of the conference.
Thank you, Jennifer.