Liquidia, and we're joined by two members of the management team: Mike Kaseta, Chief Operating Officer and Chief Financial Officer, operating in dual roles, and Rajeev Saggar, Chief Medical Officer. Gentlemen, thanks so much for joining us. Mike, I think you had a few introductory remarks about Liquidia, which is a pre-commercial for now biotech company in the cardiopulmonary space, but maybe just the latest and greatest for investors to orient themselves to the Liquidia story. Then we'll go into more specific questions.
Yeah, Jason, thanks so much for having us. Rajeev and I are really happy to be here to tell our story. You know what I'll say? It's an exciting time right now. We are exactly 11 days away from our PDUFA date, where we are hopefully going to get approval for our lead product, YUTREPIA, for the treatment of PAH and PH-ILD. YUTREPIA is our lead product, which is a dry powder formulation of Treprostinil that utilizes our proprietary PRINT technology that allows us to formulate particles of uniform size and shape, which allows us to—these monodispersed particles are able to achieve deep lung deposition. As a result, it allows us to be able to titrate to high doses and have what we believe is superior tolerability.
Over the last eight months, since we received tentative approval on YUTREPIA from the FDA, we've been working hard on our five launch strategies. Those five strategies are, first, really developing our product profile. Rajeev and his team have fully enrolled our ASCENT trial, which is an open-label study treating PH-ILD patients, the first prospective study of a DPI to study PH-ILD. He's also about to launch a second cohort of ASCENT, which I'm sure he'll be happy to get into as we go through this chat. The second launch strategy that we have is around our sales force. We are looking forward. We have a best-in-class sales force that we will be able to launch upon approval to make sure that we have a competitive share of voice in the market.
Our third pillar here is around our developing and finalizing a full service of patient support services, which, again, upon launch, we will be able to launch for patients to get everything that they've come to expect as patients, plus some additional benefits that we can talk about after launch. Fourth is around product availability. We've been manufacturing commercial product for the last three years. We look forward to having sufficient supply in order to support a successful launch, and that will enable us to have product in the channel within two or three weeks after approval. The last part, and arguably the most important, is working with payers to make sure that we achieve broad access for patients, something that we hope to be able to achieve at or near launch.
Great. Utrepia is a 505(b)(2) filing referencing United Therapeutics' Tyvaso brand. There is a long backstory, and we do not need to go into all the nitty-gritty, but there have been various litigation matters, things to sort of potentially slow access to market. Where do we stand? There was a recent suit. Does that in any way surprise you at all? How would you kind of frame those efforts ahead of a near-term PDUFA? I imagine that is top of mind for investors.
Yeah. So what I would say first and foremost is our legal team is monitoring United's patent portfolio on a daily basis. We were aware, as you said, United filed a suit against us last Friday on an additional patent. We were aware of this patent when it was issued nearly three years ago. Ironically, this patent was issued almost a year before the 327 patent, which they asserted against us about 18 months ago. We were aware of the patent, obviously, long before they asserted against us. Just to put things in perspective and put it in context, since 2020, when we filed our NDA, United has asserted five patents against us in federal court. They have sued the FDA twice to prevent the approval of YUTREPIA. They have filed a citizens' petition to the FDA against YUTREPIA to prevent the approval.
They've asked for two preliminary injunctions on the patent cases, and they've asked for two preliminary injunctions against the FDA. If you're not counting at home, that is 12 unique instances of them trying to prevent YUTREPIA from getting to market. To answer your question specifically, are we surprised that they brought this suit two weeks before our PDUFA date? We are absolutely not. The only last thing I'll say about this is our legal team has done an amazing job to even put us in a position to have a PDUFA date, to have an unencumbered launch of YUTREPIA here in 11 days. What I'll say is we will continue to defend the rights of patients who are seeking alternative treatments for PAH and PH-ILD.
This is a right that United Therapeutics, which is a public benefit corporation, has continued and will probably continue to try to deny. We are working hard. We are excited for the opportunity. Most importantly, we've made a commitment to this patient population in PAH and PH-ILD, and we look to deliver on that commitment here, hopefully with an approval in 11 days.
Okay. And so 11 days and counting, maybe to the extent you're comfortable sharing, what have been sort of the FDA interactions? I know there's a lot of focus externally with headcount reductions at FDA, and this is a question we're asking a lot of our companies that have situations with FDA ongoing. So anything you can share with us as it pertains to the process and kind of what underpins maybe confidence that things are going in the right direction ahead of that?
Yeah. As I said earlier, we did get tentative approval on both PAH and PH-ILD last August. We filed for full approval at the end of March. Four days after we applied, we did receive a class one submission, which is a two-month review. Our PDUFA date is Saturday, May 24. All I'll say is we've had good dialogue with the FDA. We feel very confident where the NDA sits, and we're hopeful that we will get approved here in the next, say, 11 days.
Yeah. Are there any label variables, in your view, that matter to the commercial rollout of YUTREPIA and how you want to promote the product to clinicians?
Yeah. So we can talk about product profile. I think when you talk about label, we did go through, as you said earlier, a 505(b)(2) path. By following that path, obviously, our label between us and Tyvaso are very similar. I think there will be nuances that are different from a label from a dosing point of view, but by and large, the labels will be generally the same. Rajeev, I do not know if you have any demand on that.
Yeah. I mean, obviously, it would highlight our Inspire study, which showcases our safety profile of the drug. It will also provide guidance to clinicians about what dose to initiate naive patients on. When they want to transition patients from Tyvaso to YUTREPIA, what is the dose transitions that they should be looking for? It does set up a really nice guideline for them. I think another key aspect is, just to reiterate, we do not have a max dose ceiling with YUTREPIA.
Okay. So let's talk market here. The reference brand, I believe sales are close to $2 billion-ish run rate. Sort of, I think if you listen to United, maybe that characterization is sort of a 50/50 split of ILD and PAH. You may have a different view on that. But directionally, is there a more attractive segment of those markets? Do you see one as maybe more amenable to switch, or is this launch really about a lot of white space in ILD and sort of building and growing that space, which since Tyvaso was launched there, I think estimates continue to maybe grow in terms of how big ILD could be as a market?
Yeah. I'll start, and Rajeev can add in. PH-ILD is, Tyvaso and Tyvaso DPI were the first products to be approved in PH-ILD. When you look at the white space that you referred to, United has said on multiple occasions that they've penetrated probably less than 20% of that market. We've characterized that market to be at least 60,000 patients. There is a tremendous amount of white space in PH-ILD. They've done a very nice job in their initial launch. As you said, they're approaching a $2 billion run rate. We're very excited about the opportunities in PH-ILD. At the same time, we're also excited about the opportunity in PAH. PAH obviously is a very crowded market. There are three forms of prostacyclins in oral, inhaled, and parenteral. What our goal is to be the prostacyclin, the first choice.
Specifically, the parenterals and the oral have very difficult off-target side effects. We believe our ability to be able to titrate to higher doses will be a, a look at current inhaled patients, but then also looking at oral patients and parenteral patients, we think there's a great opportunity there. In our estimation, there's about 18,000 patients on prostacyclin therapy. We think that turns over about every three years. You are talking about 6,000 new scripts every year, new patients coming in. We feel that our offering of YUTREPIA, our being able to titrate to higher doses, showed the tolerability of what we believe is the nebulized version will really attract all patients, both new to therapy, but also transitions from current inhaled, but also oral and potentially parenteral.
Remind me, for PH at 18,000, all forms of prostacyclin, that's against a group three, four, typical TAM, right? What's the penetration rate of all prostacyclins? I'm just wondering if that's a good analog to think about a steady state penetration in ILD, which sits at like 20% now, and where that could go.
Yeah. There's roughly about 45,000 patients in group one that are treated with medications at this point in time out of a potential about 100,000. So about a 45% treatment rate. Roughly 18,000 patients are on a background of prostacyclin. I think one of the things that I think Mike is trying to allude to is we're going to be launching into both PAH and in PH-ILD with a very uniform message that is applicable not only to PAH patients, but to PH-ILD. In other words, the story is very simplified. The drug is safe. It's effective. It reduces off-target systemic side effects. It's customizable to the demands of the patient, whether you're on background therapy in group one PAH on top of XYZ medications, or you're a newly diagnosed patient with PH-ILD. I think that message is going to be well received in the commercial market.
Within ILD, are orals or parenterals used at all? I know it's not been studied or approved, but given the validation of prostacyclin, the idea of pushing dose, I just wonder, do those forms of therapies get traction there?
Yeah. So I think prior to the approval of inhaled treprostinil, I mean, things were always tried off-label. I think now with the approval, I would be pretty—I think it's safe to say that the overwhelming majority, if not almost virtually all patients, are now treated with inhaled therapies only in PH-ILD. I don't anticipate that to change. Again, the opportunity in PH-ILD is quite tremendous and vast, and it's something that we're extremely excited about.
Okay. It sounds like if you view both segments as equally attractive within PAH, the opportunity to maybe penetrate into parenterals or orals, right, gives you a nice kind of landscape of new starts to penetrate into in a given year versus ILD. It is just a much more expansive landscape.
Yeah. I mean, I think undoubtedly the PH-ILD market, which we've read, we've seen that people think this market could grow to $3 billion, $4 billion, $5 billion if United has only penetrated less than 20%. There's a massive, massive opportunity. We will help each other. We will have boots on the ground, both companies, disease education, identifying patients, diagnosing patients, and ultimately treating patients. The focus, we will be focused on new patients. We will be focused in both PAH and PH-ILD. I think the PH-ILD opportunity, when you look at the size of the market and how relatively unpenetrated it is, we are really excited about that.
Maybe just a final piece on a great analog for the PH-ILD market is if you just look at the IPF market.
I was just thinking about that. Yeah.
Yeah. The IPF market obviously has two drugs available. If you look at—so there's roughly about 100,000 patients or so that have IPF. The market penetration, depending on what real-world data set you use, is anywhere from around 40%-45% upwards of 70%. If we think—if we believe the market is 60,000-plus, we know that United Therapeutics has at least 6,000 people on active therapy. You're just in the first of 10 innings. I know that's not correct in terms of baseball. I'm a cricket lover anyway, but just keep that in mind.
Yeah. Within PAH, I get the sense if you talk about sort of this dynamic in-play market of 6,000 patients, sort of the key is intercepting that patient before they go on to parenteral or, say, a Treprostinil to go on to YUTREPIA as opposed to trying to drive a switch. Is that a fair synopsis, or?
Yeah. I think, again, I think the way inhaled in group one has been, at least I think the incumbent, what their view is, is that it's an intermediary in the not-so-sick. I think that's because their tolerability profile and ability to titrate is capped because of tolerability concerns. Now we're going to go into the market and saying, "We can customize it to the demands of the patient's needs." If you're really sick, we can rapidly escalate the therapy. If you're hopefully in a more stable state, we can adapt the therapy accordingly.
Yep. Okay. So you've had this 50-person sales force in place for about 18 months, I believe. Maybe talk about any unbranded promotional efforts that have occurred and how you think that could maybe help as you roll out the product, presumably sometime in late May, hopefully.
Yeah. We are very excited about our sales force. It is a highly experienced sales force. The vast majority of them have PAH experience, over 10 years of experience in rare disease. They have really focused their last, say, 15-18 months on building relationships both at large centers, but also with the local community physicians, pulmonologists, where we believe a lot of PH-ILD patients sit. Obviously, they have not been able to detail YUTREPIA, but they have been able to do a couple of things. One is they have been able to talk about and educate doctors on PRINT technology. The PRINT technology that I talked about earlier is what we feel is one of the differentiating factors that YUTREPIA is going to bring.
In addition, there's a lot of disease state education where a lot of these doctors, there hadn't been any treatment options for these patients until 2021, especially in local communities. Doing that education, building those relationships with these doctors and these doctors' offices, I think, is really going to pay off once we do get approval and we'll be able to detail YUTREPIA. It won't be our first time in the office. We've spent countless times in offices already. Ultimately, we feel we'll accelerate our launch curve here.
How does that sales force maybe compare in size to some of the others that have been standalone sort of cardiopulmonary plays in the past, like Tillian or even United? Would there be a need to right-size it for any further commercial success and adoption?
Yeah. We have always been financially disciplined, but we also want to invest into an opportunity. We have done a detailed sizing exercise multiple times to make sure that we are targeting the right doctors. We feel that the sales force that we have right now is appropriately sized to go to large centers, also, like I said, these local community physicians. As we get into the launch and through the initial phase of the launch, if we feel an expansion of the sales force is appropriate, we will not hesitate to do so. We feel very confident that our share of voice that we have will be competitive. The one advantage we have is a lot of these sales reps for these other companies have multiple products in their bags, have different messaging. We can be very focused, as Rajeev said.
The message we can give for PAH and PH-ILD is very similar, and we feel will be very effective.
Okay. Let's see. Manufacturing has been something that has been maybe a legacy issue with others in the space, and DPIs, they're not the cheapest or the easiest thing to scale up. How have you approached that? Do you have a—what is your product shelf life? Have you kind of built up inventory ahead of the launch?
Yeah. One of the advantages of having tentative approval, we've been preparing for launch for several years, is we've been able to manufacture commercial supply. We feel very confident in the levels of supply that we'll have at launch. Our product has three years' dating, so that is also very helpful. I think what's important to understand is we have a very proprietary process to manufacture our bulk powder, but our excipients are off the shelf. Our devices are off the shelf. Our DPI is manufactured in the millions by Plastiape, is familiar to doctors all across the world. We purchase a very small percentage of their overall output. We're very confident in our continuity of supply and our level of supply, and ultimately in our ability to supply this market as we approach launch.
Okay. I know, obviously, you guys have had discussions with payers. And maybe help us think about this space in terms of channel mix, how much is Medicare Part D when you roll out, your thoughts on access. I think historically, Tyvaso or, I guess, United didn't contract that much, but still had broad general access. And so as you kind of roll out, thoughts on, would this be parity access with the other brand? And how do you think about that rollout?
Yeah. What I would say historically, this is a field, especially with Tyvaso, that generally did not contract. Where that is important is these doctors' offices, these physicians are used to going through the process of getting claims adjudicated. That is very important. As you said, United has, in the last several months, started to contract. We believe they are contracting in the commercial space. To get back to your first question, when you look at the market, we believe that Part D is probably about 50% of the market. We think commercial is somewhere in the 35%-40% market. If you look at the mandated channels like Medicaid, VA/DoD, 340B, things like that, those are somewhere between 10%-15% of the market. Our goal, as I said at the beginning, is to make sure that we have broad access.
It's important that if patients want to be able to choose YUTREPIA, that they have the ability to choose YUTREPIA. We've worked exceedingly hard over the last couple of years to build relationships with payers, both in the commercial space and the Part D space. We've accelerated those conversations as far as we can until we get full approval. Our goal is that we will have broad access across commercial and Part D at or near launch. We're confident that we'll be able to achieve that.
Okay. How would you compare the sort of easy-use profile of YUTREPIA, Tyvaso on the DPI side specifically? There's some debate out there with investors. There's one bigger or one requires cleaning, just different things that will play into the patient ease-of-use experience.
Yeah. I'll let Rajeev get into details. I mean, I think we will offer a product that is easy to use, is going to be tolerable, and an ability to titrate to higher doses. We do not require refrigeration for a patient to use the device. They can inhale their YUTREPIA within seconds, four times a day, can fit it in their front pocket, their full day's worth of dose in their front pocket along with their DPI. We feel very confident from an ease-of-use that we believe it will be part of what differentiates us versus Tyvaso. Again, until we get out on the playing field, we'll have to prove that. We believe when given the opportunity that patients and doctors alike will agree with that.
Yeah. What I would add is just to reiterate that the device, the low-effort device and low-resistance device we're using has been in the hands of pulmonologists. I mean, since I was practicing over 15 years ago, the capsule technology is very familiar with pulmonologists who treat simple diseases, not simple, but common diseases like COPD and asthma. It is going to be very familiar when they instruct their patients on how to use this. In terms of cleaning and those processes, very simple, will not affect really any sort of meaningful time for the patient, right? Within seconds, this is really done. The capsule is discharged, and it is cleaned, and you are done. I would finally state that one thing that I find quite interesting is that the penetrance of DPI in the market has only reached around, let's say, 70%.
This means that 30% of the market share still is dependent on the nebulizer. For the comparison of a nebulizer, which is not portable, it's very large, it's cumbersome, not to be limited to maybe less than 10%, to me suggests that the dry powder form of Tyvaso has real limitations in real life. The reason we feel this way and what we know is that dose matters. We keep talking about our titratability and tolerability profile. It's because Tyvaso has been shown that it's most effective when you get to 10-12 breaths. What we're going to showcase in our upcoming American Thoracic Society meeting here just actually next week is that our median dose for patients with PH-ILD that's in our ASCENT study is at 132.5 micrograms, which is 15 breath equivalents or higher.
The construct is that we have a very low resistance, low effort, very well-familiar device that will be in the hands of practitioners and patients, and that we're going to back that up with data in the only study to be done to showcase that we can get to the levels where clinicians want us to be and even higher if needed for those patients that need to advance to higher doses.
That's a good segue. When we think about your data generation and specifically the upcoming ATS medical meeting, I think it's going to be 20 patients, eight weeks. If you can maybe preview that a little bit, what investors could expect there in terms of exploratory endpoints and other measures to focus in on?
Yeah. So we took upon our initiative to initiate the first study in newly diagnosed patients with PH-ILD to be treated with YUTREPIA. This study fully enrolled at the end of first quarter. The study is actually one year long. We're going to show it next week. We're going to highlight the first eight weeks in the first 20 patients that are enrolled. It is open label, so we'll present more data cuts as time goes on. The first thing we wanted to showcase is what is the safety, how safe is the drug, its tolerability profile. Most importantly, what people want to see is, well, is the drug effective? We're going to highlight what happens in terms of change from baseline in terms of six-minute walk. We're also going to showcase patient-reported outcomes with certain quality of life indicators, which we're very excited about.
Most importantly, we're also going to show how the interaction between dose and walk effects are seen at a very early time point, which is eight weeks. Remember, the signatory study that got Tyvaso approved in PH-ILD was at 16 weeks. One of the things we're excited to show is sort of that ramp-up of dose and the dose response to the effect in terms of walk.
Okay. I guess as the market's priming for more data in this space, I think there's sort of a focus in smaller studies on hemodynamics over a six-minute walk. And so when you kind of measure those and weigh the importance of what you'll see on the hemodynamics versus six-minute walk, is it fair to say that maybe the focus should be on the hemodynamics, or do you maybe disagree with that?
I mean, I think everything's important in this condition. But what is most important is you can have—I mean, there are drugs that I can give you acutely that drop your pulmonary pressures but have no absolute effect on your ability to function. So I personally think what is most important is what is the response to the patient to the drug in terms of how it changes their lifestyle. PH-ILD patients, unlike group 1 PH, the majority, around 70%-80%, are dependent on oxygen 24 hours a day, seven days a week. They are short of breath when walking from the stage to the end of that doorway.
To be able to give a patient YUTREPIA and to say that they can walk that distance and walk back and be less short of breath or do more activities with less use of energy, I think that is the most important thing. That's actually when they sit down with their clinician, the clinician is not going to brag their hemodynamics are gone down. They're going to have that discussion saying, "How does this affect your daily life?" If they can show the patient's walking significantly farther and the patient has that positive affirmation on their daily life, that's what I think is going to be most important.
Yep. Okay. So we focused a lot on the near term, right? For the long term, which will be kind of an investor focus as well, maybe just how are you thinking about L606, TPIP, and then I think United on their most recent earnings call talked about a preclinical once-daily NCE that could maybe be a replacement product for Tyvaso. I do not know if there is much out there that we can discern as to what that might be. Maybe, obviously, L606 sounds like a very easy-to-use nebulized bid offering. Any drug that gets developed in the space has a pretty long lead time to get developed in phase three. Yeah, how do you think you are positioned for the long term with what you got?
Yeah. I think we're singularly fixed on maximizing the benefit of inhaled treprostinil. We think YUTREPIA is here to take advantage of the present time. The thing we haven't solved is the four times a day. L606 is our liposomal sustained-release formulation that's delivered twice a day. So we solve for daily amounts to twice a day. We specifically, because of the suspension formula, picked a nebulizer. That nebulizer, we believe, has to be portable. It has to be next generation. It has to be quick and effective. This is a 505(b)(2) pathway. We're going to run our phase three study initiating at the end of the year specifically in patients with PH-ILD because the background is placebo, true placebo.
When that study reads out and if it's positive, that singular study can be used for approval for both group 1 PAH and the PH-ILD because of the 505(b)(2) pathway. We think that we're charged, we're ready, and we're ready to initiate that study. I think we believe that we're primed to be first in that next generation of products.
Okay. I guess lastly, about a minute here, just on the legal front, I think the District Court of Columbia case threw out a cross-claim from your competitor that would have looked to, I guess, challenge the nature of the amendment. We do not have to get into the technical details of that. How key was that? I think the stock really reacted favorably on that news that that might be. What else is out there in terms of litigation?
Yeah. I mean, as our general counsel says, you can have an infinite number of bad arguments and only a finite number of good arguments. I think what you've seen in the track record, you've seen what's happened. We're anticipating what they can do. We're expecting they clearly don't want us on the market. We have a PDUFA in 11 days. We look forward to full approval. We look forward to fulfilling our commitment to this patient population to provide an alternative treatment option for these debilitating diseases. We feel very confident in our ability to get there.
Great. We're out of time. So gentlemen, thank you for joining us.
Thank you.