All right, we're going to go ahead and get started. I'm Stephen Willey, one of the senior biotech analysts here at Stifel, and glad to have with us in the next session from Liquidia. We have the COO and CFO, Michael Kaseta, and to his right, we have Jason Adair, who is the Chief Business Officer.
Business Officer.
Oh, Chief Business Officer. I'm sorry, Jason. It's been a long day. We're going to have a discussion. It's going to be informal. If anyone has a question, feel free to raise your hand. We'll get your question hopefully acknowledged and answered. Before we jump into Q&A, is there any kind of opening comments you want to make?
Yeah, Steve, first, I want to thank you for having us here today. Really appreciate it. We're at an exciting time for Liquidia. Just to give people some background, we're a company that develops and commercializes therapeutic products focused on rare cardiopulmonary disease, and specifically in pulmonary hypertension using our PRINT technology. We have two product candidates. The first candidate is Yutrepia, for which we received tentative approval from the FDA in August in both PAH and PH-ILD, which we plan to launch hopefully by the end of May, if not sooner. And then our second product is L606, which is a sustained-release liposomal formulation of treprostinil that will be administered twice a day using a handheld next-generation nebulizer. So really exciting time for Liquidia, and looking forward to talking with you here today.
All right. I'm sure, as you're probably used to, I'm going to start with a couple of the requisite legal questions.
Of course.
But I think there's a lot more interesting material behind that.
Absolutely.
I'm going to talk about. So just to cover the basics here, right, so you've had this protracted multi-year battle with UTHR. I think we've seen a number of positive developments here, both on the regulatory and the legal fronts over the past few months. You now have this clarity, like you talked about, into a May 2025 launch for Yutrepia. I think there is a scenario where there's some upside to that launch date. So can you just kind of talk about the genesis of the FDA lawsuit that you have, the potential range of outcomes that's associated with the hearing that is scheduled, I think, for next month, and then just any sense of when you might have that outcome in hand?
Yeah, no, great question. So just to give everyone some background, we received tentative approval from the FDA on our amendment to a previously tentatively approved product of Yutrepia and PAH to include PH-ILD in our label. So we received that tentative approval back in August, which was a significant clearing event for us, de-risking event. Unfortunately, as part of that tentative approval, they granted Tyvaso DPI a three-year marketing exclusivity that will expire on May 23, 2025. So we were obviously happy by the fact that we got approval, tentative approval, but very disappointed that they were granted a three-year marketing exclusivity as a new chemical entity exclusivity. We did not feel that that was appropriate.
We had actually even confirmed with the agency back in 2022 that they had decided that United was not entitled to that three-year marketing exclusivity, and then at the last second made a change in decision and granted them that three-year exclusivity. So after receiving that tentative approval, we filed a lawsuit against the FDA, saying that their decision to grant that three-year marketing exclusivity was both arbitrary and capricious. We've had a lot of back and forth with the agency, with the courts. We've agreed to move straight to summary judgment. That summary judgment hearing, as you said earlier, is scheduled for December 5, at which point in time, either at court that day or probably more likely in a written decision a month or two later, the judge will decide what can happen.
Our base case is that we will launch in May of 2025, but there is the possibility and the upside that we could launch earlier depending on how the judge rules, which we would expect him to rule, like I said, probably has the ability to rule from the bench, but probably more likely will rule in a written opinion a month or two afterward.
Okay, and so you mentioned how access to PH-ILD is, I guess, maybe still being challenged by Uther.
Correct.
I know that they filed, I think, some cross-claims as part of the FDA lawsuit.
They did.
And then there's also this kind of dispute over the validity of the method of treatment patent that I think they're still asserting against you, '327, which isn't scheduled to go to trial until June of next year, right? So presuming you get the green light, what's your level of confidence, A, in a favorable outcome around the June litigation, the '327 patent? But if you don't yet have that clarity in hand around the '327 patent, would you look to potentially launch at risk into PH-ILD?
Yeah, so we'll take those one at a time. As you had mentioned, United Therapeutics had filed a lawsuit against the FDA challenging our amendment to add PH-ILD. By granting us tentative approval in August, the agency has decided that the amendment was appropriate. We've felt this from the get-go that this was appropriate. We had had conversations with the FDA. There's precedent for this. United Therapeutics is still challenging that through the cross-claim that you mentioned. We expect that to be adjudicated in the intervening months between now and when that exclusivity period expires in May. But again, we're very confident on those facts. Related specifically about the '327, the '327 patent, to your point, was issued in the summer of 2023 in the treatment of PH-ILD. That was asserted against us.
We filed a counterclaim against United Therapeutics, saying that they used inequitable conduct by not providing certain pertinent information to the patent office that would have been important in determining the validity of that patent. That trial, as you stated, is in June of 2025. It is not a gating item for approval for us. We are confident that we should be able to get approval on or around the expiration of that exclusivity period. To your point about launching at risk, what we have continued to say and will continue saying is if we do not believe that there is a valid patent in the way of us launching, we would not hesitate to launch. On top of that, we do not believe that the '327 patent is a valid patent.
Okay. All right. So you've been ready to launch this product for a while now. So maybe you can just kind of talk about some of the work that you've done on the reimbursement front. And what does that work suggest to you in terms of the coverage access that you'll have at time of launch?
Yeah, so just in terms of launch preparations, just to give everyone an idea, we've been manufacturing commercial product since 2021. We were ready to launch this product in April of 2024. We were ready to launch this product here in the last couple of months when we received tentative approval. So the bottom line is we're going to be ready to launch this product whenever we get the go-ahead. Part of the time since we received tentative approval in PAH in 2021, we've been building relationships with the payers, focused primarily on driving the value proposition that Yutrepia will bring to patients to the healthcare system. We feel that we've been successful there. So while we'll have to wait to get full approval, our goal, our stated goal has been patients have not had choice in inhaled treprostinil since Tyvaso was launched.
We want to make sure that every patient that wants to use Yutrepia, every doctor that wants to prescribe Yutrepia, will have that access. So that is what we are committed to. We feel confident in our ability to get there and look forward to approval when we can memorialize that.
Okay. And I'm guessing even though the approval date was, I guess, back in 2021, there's no product-specific J-code as of yet, is there, or?
This is not a J-code. This is a Medicare Part D product.
Part D product.
So this will go through traditional Part D payers' PBM, so it's a little bit of a different reimbursement process.
Got it. And then have you said anything just around what your thoughts are on pricing? Again, I know you kind of rarely see second-to-market competitors trying to differentiate on price. I think this is probably even more true in this situation, given that this is a market that really hasn't demonstrated much in the way of price sensitivity, and you seem to have arguably a better value proposition. But is there an argument to be made that you can price at a discount, maximize near-term share gains, and do that specifically with kind of this longer-term view towards L606, which we'll talk about in a little bit?
Yeah, so our pricing strategy is a critical part of our overall go-to-market strategy. For obvious reasons, we won't talk about specifics there. But what we'll say is access is important. Making sure that we position ourselves to succeed and to have a successful launch, everything you just said goes into that decision-making. And ultimately, we feel confident in our pricing strategy that we will be able to maximize and enhance and accelerate our launch trajectory here as we get to market, hopefully, in the next six months.
Okay. And so as you go out and message and detail the product, how do you summarize the value proposition of Yutrepia relative to Tyvaso DPI?
Yeah, so I think there's a lot of ways to talk about this. We'd like to talk about the three Ds, and those three Ds are the delivery, the device, and the dose. And from a delivery point of view, our PRINT technology, which allows us to formulate particles of uniform size and shape that we have designed specifically to reach the deep respirable range, attain deep lung deposition, that allows us, as these particles being monodispersed, that allows us to use a device that is of low resistance. Low resistance is important because it does not take as much inspiratory capacity, especially patients with PH-ILD who have significant lung dysfunction. We've been able to use an off-the-shelf device that's been used for years and years in both COPD and asthma. And the vast majority of products currently being developed in PAH are using a version of this low-resistance device.
What that then allows us to do as we move on to our dose is what we're trying to show is our ability to titrate to higher doses. Tyvaso Nebulizer has traditionally been functioning in a range of nine to 12 breath equivalents. We feel that we can get to far above those levels. What's undisputed is that more treprostinil is better. The ability to get to titrate to higher doses increases the patient experience. And we have launched a phase IV study in PH-ILD using Yutrepia. It's the first prospective study in PH-ILD in a DPI. And what we've seen, we talked about last week in our earnings call, we've shown, and again, it's the first 13 patients that have enrolled at the eight-week milestone. We've seen patients titrate to doses above that nine to 12 breaths.
We've actually had a patient that has gone three times that, over three times that amount. So we feel very comfortable that a combination, like I said, our ability to deliver the device that we're able to use and the dose we're able to obtain, we are confident that Yutrepia can be very successful and fill an unmet need that we feel definitely exists with these patients.
Okay. And so this is the ASCENT trial, correct?
Correct.
Okay. And you've kind of taken this time that you have, I guess, pre-launch to launch this and to gain some of the experience. And so what are you hoping to learn from this trial? Is there a specific number of patients that you're targeting for enrollment? You said 13 so far.
Yeah. So we are over a third enrolled. We're going to get up to 60 patients. We hope to be fully enrolled by the early part of next year. We are going to be observing these patients for a total of 52 weeks, but it is an open-label study. We will be able to show interim data. But ultimately, we feel that primary endpoint is safety. We are measuring six-minute walk. But being able to show safety in higher doses, titrating to higher doses, again, being the first prospective study in PH-ILD using a DPI for inhaled treprostinil, we think it'll be critical for as we get into the as we get to approval and start to detail Yutrepia, we feel that this data will be incredibly important as we look to differentiate and hopefully have a successful launch.
Okay. So the goal here would be to demonstrate that this fold increase in daily Yutrepia dose above and beyond what you typically see with Tyvaso is leading to improved clinical outcomes.
Its primary endpoint is safety. We are going to look at six-minute walk. We believe, again, more treprostinil is better. You have oral, you have inhaled, you have parenteral. Obviously, parenteral has issues from a side effect point of view. But as patients progress through the disease, many of them are forced to use parenteral. If we can continue patients on inhaled for a longer period of time, it'll be better for the patient. Ultimately, being able to keep patients on inhaled therapy for a longer period of time, we think will be very helpful, so.
Okay. And then was there any thought to trying to maybe replicate that Ascent exercise within the setting of PAH?
Yeah. So I mean, I think the focus.
I guess I asked the question, right? Because I know six-minute walk distance is obviously a very clinically heterogeneous endpoint. It would seem to me that you could run a PAH study like that, look at the fold increase in total daily dose, and then probably get a hard and fast PVR reduction that you could compare to, I guess, IV treprostinil, right? Because I don't think we have a Tyvaso DPI or a Tyvaso nebulized.
Sure. I think we want to be clear. We ran the INSPIRE study. That was our study for PAH, 121 patients. We're continuing to treat patients under that for over six years. And so that was a study where we demonstrated that we could dose patients to very high doses. In that, we also took secondary endpoints that included six-minute walk and other measures of potential efficacy, like change in functional class and quality of life. And all of those trended in the right direction. So we don't have a particular reason to do another study in PAH with Yutrepia. The reason we're doing the Ascent study is to ask ourselves, will these patients titrate the drug differently, right? We know that treprostinil is safe and effective. So the question in PH-ILD is, will they look different in terms of how they titrate?
What we discussed on the earnings call last week is no. In fact, those first 13 patients at eight weeks, they've gotten to higher doses. We don't believe that there's a reason to think that patients have to start on a nebulized treprostinil because we're already seeing that patients on our product in PH-ILD are having a positive impact.
Okay. So what are you seeing in the marketplace with respect to how patients are self-selecting between the different formulations of Tyvaso, right? I guess if you were to look at the most recent Uther quarter, it kind of looks like both DPI and the nebulized versions are kind of growing at the same 30% year-over-year clip. So do you think that you're going to be taking share from both of these formulations?
Yeah. I mean, I think what I'll say is I think we're surprised by the split. What we've seen in our Inspire trial, patient satisfaction using the DPI was exceedingly high. We're hearing anecdotally, sometimes specifically from Uther, that doctors are starting patients on nebulizer, then transitioning to DPI. We've heard that through the study that was published by National Jewish that the discontinuation rate in PH-ILD in Tyvaso DPI was exceedingly high. We feel that as we come to market, there's still an unmet need here because something is amiss. And we feel confident that Yutrepia can fill that need. We would have expected that the split between DPI and nebulized would be much more of a stark difference that would weigh heavily towards DPI. And we're obviously not seeing that. So we're eager to come to market. We feel that we have a great value proposition.
We're excited just to get out there as we feel we can have a very successful launch and accelerate that launch curve based on what we believe Yutrepia is going to bring to patients, but also for the unmet need that we still feel exists.
Okay. So obviously within PAH, sotatercept is going to have a big impact on the treatment landscape. I know that there's been some concern. I think if you look at the FDA review document for sotatercept, right, I think there's concern regarding whether or not systemically administered treprostinil can exacerbate some of the side effects of that drug, I think namely platelet reductions. I think we've sensed a little bit of that from the treatment community. So do you think that having sotatercept now as a treatment option within PAH becomes a bit of a tailwind for these inhaled formulations?
Yeah. I mean, I think, as Roger Jeffs, CEO, has always said treprostinil is always going to be part of the standard of care. Sotatercept was studied in combination. We feel obviously they're very early in their launch. It's great for patients to have innovation here. But we feel confident that within the treatment paradigm within PAH, and again, sotatercept is only approved in PAH, that treprostinil will still remain part of the standard of care. And to your point, could, and a lot will have to play out here in the coming months and years, but could even act as a tailwind, as you said, as we move forward.
Because the oral class of treprostinil is still large, right? I mean.
Yeah. I mean, the oral class. I mean, if you look at Uptravi and Orenitram, it's almost $2 billion. That is another target for us with Yutrepia. Those oral treprostinil products have systemic side effects, GI side effects that are very difficult. New patients take a long time to titrate to therapeutic doses. We've said that we'd like to be the prostacyclin and a first choice. Part of that is potentially going in ahead of orals and supplanting orals because we feel that the benefits that we can bring with Yutrepia, if we can avoid some of the side effects that patients are seeing in oral treprostinil, we think there's a value proposition there as well.
Okay. Maybe we can switch gears to L606. This is the sustained-release formulation of treprostinil that you're administering via nebulization, I think twice a day. So you have generated kind of a small amount of phase I data, both PAH, PH-ILD patients. What does this data tell you thus far about what safety tolerability looks like and then the exposures that you're able to achieve in these patients?
Sure. I'll take that. So we have been treating patients in an open-label study in the United States in PAH and PH-ILD. We licensed this program from Formosa, who are experts at liposomal formulation. And what we've demonstrated through a phase I PK study and now the safety study is that patients are able to not only reach the perceived therapeutic dose of inhaled treprostinil, but exceed that. So just as we've been talking about with Yutrepia, we're seeing that now, but in twice-daily dosing with a nebulizer that allows you to deliver the drug in about one to two minutes. So we haven't seen any adverse events that are limiting to that dose titration. And we've seen patients staying on therapy, many of which over for a year now.
So when we met with the agency at the end of last year to say, what will it take to get the drug approved, it takes three data sets: the PK comparability study versus Tyvaso, which we have, showing that we essentially have a release profile of about 12 hours. We need the open-label safety study in PAH and PH-ILD, and then we need one controlled study, and we can pick the disease. We picked PH-ILD for the global study, the pivotal study. But if we submit this data and it's robust, then we can have an indication that gives us both PAH and PH-ILD. So we feel really excited by this, not just because of the data, but to run this study, it will be global. And the ex-US community or the global community is very excited to have access to a drug like this.
Okay, so maybe you can talk a little bit about what that phase III in PAH ILD is going to look like in terms of just number of patients, number of trial sites, geographical footprint, and then, I guess, endpoint selection?
Sure. So we'll talk a lot more details once we are able to list the trial in clinicaltrials.gov, which will be sometime next year. As we indicated, we intend to initiate the study in the first half of next year, but roughly speaking, there is the INCREASE study that United ran with nebulized Tyvaso, and so we're going to be in a similar design in terms of it's placebo-controlled. So we can demonstrate efficacy. Six-minute walk will be the primary endpoint. There'll be other endpoints secondary that we'll be collecting, and so the reason that we need to do that is not to reprove that treprostinil is safe and effective, but that we don't lose any potential efficacy with that twice-daily dosing.
That said, we actually think we may have an opportunity to increase clinical utility because one of the reasons we like L606 is the twice-daily dosing provides more consistent 24-hour PK exposure. So if we think about the origin of prostacyclin therapy, the most effective therapies were continuously delivered epoprostenol and treprostinil and iloprost. So ever since then, it's been an optimization of efficacy, safety, and convenience. So with twice-daily dosing, can we lift the overall exposure over 24 hours and potentially get more efficacy out of it? It's not a requirement for approval, but we hope to see that. So we'll do it in a few hundred patients. We'll do it in a couple dozen countries. And we look forward to rolling that study out with the device in the first half of next year.
Okay. And then on the device side, I think you had recently announced that per your collaboration with Formosa, that you have access now to a next-gen nebulizer. Can you talk a little bit about how this tech is different than what was used in the phase I? And I guess, is there anything that you need to do from a comparability perspective before you take that into phase III?
Sure. So the technology itself is the same from all of the studies that Formosa has done, right? So they're a liposomal formulation company that's been working on inhaled formulations since their start. They have other programs. So we have a lot of data here on how the formulation can be used between different devices. We're not talking in detail about the devices right now. We just licensed it. We want to get some things in place before we debut it. But from the performance, the device performs as expected. However, as a global study, right, with a drug-device combination, we have some additional work that we need to do to make the regulatory submissions. So it's less about testing the performance of the device and more about getting ready to put that device into the clinic. And so that's why we've shifted the start into next year.
Okay. And then how would you compare and contrast L606 to Insmed's TPIP, which is the DPI version of treprostinil administered QD? It's a liposomal formulation.
So I think the first thing is we're never going to stop developing better products. And so the idea with inhaled is if you could do it in less frequent, instead of four times a day, two times a day, or in their case, one time a day, that could be better. The main differences are these. That's a pro drug, whereas we're free treprostinil in a liposomal solution. The second is they're a DPI, and we are a nebulizer. But our nebulizer is more like DPI-like portability. So the height or size of it is actually shorter than an iPhone. So when we think of these patients and we say, what's the difference between taking something once a day versus twice a day?
If there's a benefit to taking it, that second dose while you're sleeping and you're treating during those sleeping hours, that actually may be preferred than to a once-daily treatment. There's a lot to be learned from the Insmed program. We understand that there's going to be a plan maybe in the second half of 2025 to figure out how they're going to develop that based on the data that they see from their studies in PAH. They have a little bit of data in PH-ILD. Treprostinil works. We don't know the full product profile there. But what we can say is this: we're in the front. We're getting ready to go into a study right now. We have a very clear regulatory path to getting the product approved.
We're moving as quickly as we can to demonstrate the value that we already see from the current U.S. study.
Yep. And I think they're also doing some work to figure out how much drug they can actually concentrate into an individual capsule as well, right? So it might be a DPI that requires multiple administrations.
Again, I don't know the details of it. But to your point, because we have this small nebulizer, the way that we increase dose is by putting maybe an additional amount from an ampule. So we haven't reached the limit. And in fact, in that particular study, we're at the upper end of the current study of about comparable breaths would be 26 to 28 breaths of Tyvaso. But we're doing that amount of treprostinil in about one minute twice a day.
Okay. So I know both L606, TPIP, philosophically are both trying to minimize systemic exposure, maximize distribution of the drug and residence time in the lung. I know we've had a couple of conversations with physicians who seem to believe that in order to maximize clinical benefit, that you need to have some systemic exposure. And they point to the fact that continuously administered treprostinil, whether sub-Q or IV pump, whatever the formulation is or device, that you get better PVR reductions than you do with inhaled. So just any thoughts on that in terms of this kind of systemic exposure role to maximizing PVR reduction data in PAH?
I don't think that Liquidia presented itself as an expert in the mechanism of action of prostacyclin. But I think we can say this: the delivery of inhaled treprostinil has not met expectations. And we know that because the higher you dose, the potential for better outcomes, as Mike explained. And we've seen that in a 5,000-patient retrospective analysis of Tyvaso. We've seen that in the INSPIRE study that United ran that patients that had 10 or more breaths actually drove the endpoint of that study. So here's what we know. We need to improve the ability to deliver higher doses to the lung. And if you do that, you might get more clinical utility out of it. So that's what our focus is right now: less about proving what is the level of systemic versus local and saying, have we fully optimized inhaled.
That's kind of where we're focused on.
Okay. Would you inspect the phase III trial that you're going to be launching in PH-ILD to secure regulatory approvals both in the U.S. and ex-U.S.?
We're running a very robust study with that intent in mind. We have met with the EMA. We do have advice on that study design. We're moving very rapidly, as I mentioned, into many different countries. That would be the intent.
Okay. And then how strategically important do you view the ex-U.S. opportunity, right? Because I don't think Tyvaso has a label outside of the United States.
Tyvaso is available in a select few countries. But as you said, it's not broadly available, like for example, EMA approval. So we believe two things. One, we're running a global study so that we can ensure that we get the U.S. approval and we can execute it efficiently because PH-ILD isn't well treated outside the United States. Second, we want to kind of practice what we preach. We're committed to patients. And so not only are we going to go into these countries to hopefully enroll them in a study that meets U.S. criteria, but we want to ensure that those physicians feel like that we have skin in the game when it comes to commercializing in those countries. So this study will take us three to four years to complete and hopefully have an approval.
Hopefully at the end of that, we'll be well positioned to commercialize that in any territory we choose.
Okay. And so does your existing collaboration with Formosa by default make them your ex-US commercialization partner, or is that just a tech access collaboration that you have?
So we've licensed select territories from them. So the major territories, for example, that we have are North America, Europe, Japan, and many other countries where they've retained certain territories for themselves. So it's been a great working relationship so far, again, using their expertise, which is around formulation and device design, whereas our expertise is really understanding clinical trial development and the network of clinicians to help get this product to the end.
Okay, and then assuming that you are successful in the PH-ILD study, you get an EMA approval, how are you thinking longer term from a strategic perspective what that ex-U.S. commercialization process looks like for you in those territories that you have rights to?
It's a fair question. It's one that we can answer in the future, right? There's plenty of examples, not only experience within our company, but other companies in the rare disease space of how you can efficiently commercialize that on your own or through partnerships. But the main point is this: get the study started, get the data, and in between now and then, we can kind of finalize what that commercial plan looks like.
Okay, and maybe just last question, if you can just kind of speak to what cash runway currently looks like and what that allows you to execute on.
Yeah. So we ended Q3 with $204.4 million, which is the most cash that Liquidia has ever had on its balance sheet at the end of any quarter in our existence. What we've said publicly and we'll continue to say is that that capital, assuming we launch in the May-June timeframe, can take us into 2026. With that being said, we also believe that assuming a launch in May or June, that we could be profitable as a company within three or four quarters after launch. So we feel that there's a significant inflection in value that will come upon approval and launch. But whatever we're solving for is probably more nominal in nature based on where we are.
This current capital allows us to achieve all of our objectives, as we've talked about today, of continuing to be ready and launching Yutrepia in the middle of next year and also getting L606 Global Pivotal Study off the ground in 2025 as well.
All right. That's all we have for time. Michael, Jason, thank you very much. Appreciate it.