Good morning and welcome everyone to Liquidia Corporation Third Quarter 2024 Financial Results and Corporate Update Conference Call. My name is Michelle [ph] and I will be your conference operator today. Currently all participants are in a listen-only mode. Following the presentation, we will conduct a question-and-answer session. Instructions will be provided at that time to queue up for questions. I would like to remind everyone that this conference call is being recorded. I would now like to hand the conference over to Jason Adair, Chief Business Officer. Please go ahead. Mr. Adair, you can go ahead.

Thank you, Michelle [ph]. It's my pleasure to welcome everybody today to the Liquidia Corporation third quarter 2024 financial results and corporate update call. Joining the call today are Chief Executive Officer, Dr. Roger Jeffs; Chief Operating Officer and CFO, Michael Kaseta; Chief Medical Officer, Dr. Rajeev Saggar; Chief Commercial Officer, Scott Moomaw; and General Counsel, Rusty Schundler. Before we begin, please note that today's conference call will contain forward-looking statements, including those statements regarding future results, unaudited and forward-looking financial information as well as the company's future performance and/or achievements. These statements are subject to known and unknown risks and uncertainties which may cause our actual results or performance to be materially different from any future results or performance expressed or implied on this call. For additional information, including a detailed discussion of our risk factors, please refer to the company's documents filed with the Securities and Exchange Commission which can be accessed on our website. I'd now like to turn the call over to Roger for our prepared remarks, after which he will open the call for your questions.

Good morning, everyone. We're pleased to be speaking with you today. With the significant progress made over the last few months, we now have a clear line of sight to seeking final approval of YUTREPIA for both PAH and PH-ILD patients. Final approval could occur following the expiration of TYVASO DPI's clinical exclusivity on May 23, 2025, or in just 6 months' time. Critical wins that underpinned the significant milestone included the following: first, the FDA confirmed that the amended NDA to add PH-ILD to the tentatively approved label for YUTREPIA was proper and therefore, had to determine that we have met the regulatory requirements for approval for PAH and PH-ILD, pending the expiration of TYVASO DPI's clinical exclusivity. And second, with the Supreme Court's decision in September to deny serve, the legal process with respect to the 3 patents originally asserted against us, has been fully exhausted and these 3 patents no longer provide any impediment to the commercialization of YUTREPIA. As mentioned, the sole item cited by the FDA that is blocking final approval of YUTREPIA is the new clinical investigation exclusivity that was granted to TYVASO DPI which will expire in May of '25 or earlier if we are successful in our lawsuit against the FDA. Rusty will speak more specifically about this lawsuit in a minute. In clinical firm, we remain active and productive in advancing our clinical programs that we have developed to prospectively demonstrate the differentiated value of YUTREPIA in PH-ILD patients as well as advancing our next-generation sustained release program, L606. We feel the combination of YUTREPIA and L606 gives us a compelling portfolio of treatment options for the delivery of inhaler, treprostinil to treat PAH and PH-ILD patients, both now and in the future. On a related business front, in this quarter, we have expanded our relationship with Pharmosa with respect to L606, amending our license agreement to include the EU and other territories outside of North America. We have also entered into a device license agreement with Pharmosa to secure rights to proprietary next-generation nebulizers or administration of L606 in a small, portable breath-actuated nebulizer, the size of an iPhone. Rajeev will speak to the clinical progress of both programs and share excitement that is building within the community based on our prospective studies. And finally, we have also strengthened our balance sheet, having closed several simultaneous financings in September. Mike will offer more insight on our balance sheet later in the call. But there is no doubt in my mind that we have the team, capital, the products, the vision and especially, the determination to change the treatment landscape of pulmonary hypertension patients in the near and long term. With that, I will ask Rusty to share some more details.

Thank you, Roger. As Roger briefly mentioned, in August, we filed a lawsuit challenging the FDA's decision to grant new clinical investigation exclusivity to TYVASO DPI which has delayed the final approval of YUTREPIA. This is not a decision we took lightly. And I note that we did not previously challenged the FDA's prior award of new clinical investigation exclusivity to nebulized TYVASO in PH-ILD that was based on the INCREASE trial which studied safety and efficacy of nebulized TYVASO in PH-ILD patients. Unlike the INCREASE trial, we do not believe the BREATH study, the clinical trial upon which this new clinical exclusivity was based, is the type of clinical trial for which exclusivity can be granted. This belief is bolstered by the FDA's own initial decision not to grant any exclusivities to TYVASO DPI when it was first approved in 2022. For this reason, we continue to believe that the FDA's decision should be vacated and liquidity should be allowed to bring YUTREPIA to market for the benefit of patients immediately. We and the FDA have agreed to an expedited briefing schedule in anticipation of a hearing on our respective motions for summary judgment on December 5, 2024. And regardless of the outcome of the lawsuit though, nothing can delay the scheduled expiration of the exclusivity for TYVASO DPI on May 23, 2025. As part of our lawsuit against the FDA, United Therapeutics has filed cross-claims challenging again the appropriateness of the amendment to add PH-ILD to the YUTREPIA label. These are essentially the exact same claims that were previously brought and then voluntarily dismissed by United Therapeutics in the lawsuit they initiated against the FDA back in February. We continue to believe that these cross-claims have no merit and that liquidity have properly amended the NDA for YUTREPIA…

Thanks, Rusty. I'm excited to report on the continued positive momentum in Liquidia's clinical programs with YUTREPIA and L606. First, let me provide an update on the open-label ASCENT study which is evaluating the safety, tolerability and efficacy of YUTREPIA in patients with PH-ILD. We have now doubled the number of clinical sites during the past quarter, with 21 of the 22 plant sites now active. To date, we have enrolled over 1/3 of the patients which keeps us firmly on track to complete enrollment in the first quarter of 2025. The preliminary data emerging from the ASCENT study in PH-ILD patients is highly encouraging in regards to tolerability and titratability. And it is generally consistent with the observations from our pivotal Phase III INSPIRE study in PAH patients. As anticipated, with our print formulation, coupled with our low effort dry powder inhaler, patients who have completed 8 weeks of treatment have been able to tolerate and titrate YUTREPIA to an average dose of 152.5 micrograms [ph], with almost 1/4 of the patients reaching 159 micrograms 4 times a day by week 8. This dosing observed in the ASCENT study through week 8 is up to 2x higher than the comparable doses administered in both the INCREASE study with nebulized TYVASO at 16 weeks and what is typically used in clinical practice. While still early, we remain very encouraged by the positive trends noted in the key efficacy endpoints, including change in 6-minute walk distance and patient-reported outcomes. After week 8, patients have continued to titrate higher and we look forward to reporting the full data set from the study when it completes next year. Now turning our attention to L606, our sustained-release liposomal treprostinil suspension formulation delivered twice daily, we are now solely focused on initiating our placebo-controlled global Phase III study in PH-ILD called, RESPIRE. Given the favorable safety and tolerability data observed to date in the open-label U.S. trial in PAH and PH-ILD patients, we have decided to stop enrollment in this very study with a total of 28 patients enrolled. L606 continues to be well tolerated, with some patients reaching our maximum dose of 378 micrograms twice daily which is approximately 3x higher than comparable doses of TYVASO administered in the INCREASE study. As Roger mentioned, we have also secured rights to a more streamlined rechargeable, handheld, breath-actuated nebulizer that is capable of delivering doses of L606 inhalation session of less than 1 to 2 minutes. We've decided to use this new device in our pivotal study which will push initiation into the first half of 2025. More details on the pivotal study design and the device will be shared in the near future. I would now like to pass the call to Mike Kaseta to review the financial performance for the third quarter. Mike?

Thank you, Rajeev and good morning, everyone. I'm pleased to say that Liquidia is well prepared to launch its first product, YUTREPIA, in 2025 as soon as we receive final FDA approval. To further support our preparedness, we added even more strength to the balance sheet in the third quarter by executing simultaneously on 3 transactions that brought approximately $100 million into the company as announced in September. We ended the third quarter of 2024 with $204.4 million cash on hand and remain well positioned to achieve our corporate objectives culminating in our potential launch of YUTREPIA. I will now briefly address our third quarter financial results found in today's press release. First, revenue was $4.4 million for the third quarter of 2024 compared with $3.7 million in the same quarter 2023. Revenue related primarily to our promotion agreement with Sandoz to commercialize treprostinil injection. The increase of $0.7 million was primarily due to the impact of higher sales quantities in the current year as compared to the same period in the prior year. Cost of revenue remained consistent at $1.7 million for the third quarter 2024 compared to $0.6 million in the same quarter for 2023. Cost of revenue related to the promotion agreement mentioned earlier. The increase from the prior year was primarily due to our sales force expansion during the fourth quarter of 2023. Research and development expenses were $11.9 million in third quarter of '24 compared with $7.4 million in the same quarter for 2023. The increase of $4.5 million or 60% was primarily due to a $2.1 million increase in personnel expenses, including stock-based compensation related to increased headcount, a $1.3 million increase in clinical expenses related to our L606 program and a $2.5 million increase in expenses related to YUTREPIA research and development activities, including the ASCENT trial, offset by $1.5 million lower commercial manufacturing expenses, reflecting the impact of expensing YUTREPIA inventory costs in the prior year. Moving on to general and administrative expenses. They were $20.2 million in the third quarter 2024 compared to $10.6 million in the same quarter for 2023. The increase of $9.6 million or 91% was primarily due to a $6.7 million increase in personnel expenses, including stock-based compensation, driven by higher headcount and expansion of our sales force in the fourth quarter of '23, a $1.5 million increase in legal fees relating to our ongoing YUTREPIA-related litigation and a $0.5 million increase in commercial expenses in preparation for potential commercialization of YUTREPIA. In summary, we incurred a net loss for the 3 months ended September 30, 2024, of $23.2 million or $0.30 per basic and diluted share compared to a net loss of $15.8 million or $0.24 per basic and diluted share for the 3 months ended September 30, 2023. With that, I'd like to -- now like to turn the call back over to Roger. Roger?

Thank you, Mike and thank you, Rusty and Rajeev, for also sharing those insights. Operator, I would like to now open the call for questions, please.

[Operator Instructions] Our first question is going to come from Julian Harrison with BTIG.

First, regarding the summary judgment hearing in December. I'm wondering if you have a good sense for how soon a decision could be delivered from there? And can you maybe talk about the range of outcomes you're contemplating right now from that hearing?

Nice to hear from you. Rusty, if you could comment on that, please.

Sure. Julian, thanks for the question. So as far as timing for response, typical with any proceedings with the judge, it's hard to predict in advance. There's no set time line or deadline for judges to rule and so it's really hard to give any guidance on that point. As far as the range of outcomes, they're the typical range of outcomes for any Administrative Procedures Act proceeding. Obviously, the judge could uphold the decision. The judge could just outright -- overrule the decision or the judge could remand back to the FDA for further consideration. And there are all sort of iterations even with those but those are the main 3 pathways.

Okay. Great. That's very helpful. And then quickly on the ASCENT trial, great to hear enrollment completion is expected in first quarter next year. Sorry if I missed it but wondering what your expectation for data disclosure is from there? Do you maybe plan to disclose the data at a conference? Any color on the timing to data would be great.

Yes. Thanks again for the question. Rajeev, if you could comment on the timing of the data disclosure.

Yes. Thanks, Julian. Good to hear from you. So we -- as you know, this is an open-label study. We continue to look at the data sets and every -- with a certain amount of frequency, we will submit the data to various congresses coming up. So we have submitted a set of data to Congress. And if accepted, then we anticipate showcasing that data in the first half of 2025.

Great. Thanks for that, Rajeev. And the thing I would add to that, Julian, is I think you're going to see some critically important information that differentiates the value of YUTREPIA, particularly as it relates to dose, the ability to quickly get to dose -- the impact of driving that dose in terms of clinical outcomes. And then also, we'll disclose data on the persistence and durability of treatment within that patient subset. So I think if we can show tolerability, titratability and durability, all through the patient-friendly, low-resistance device which we think will lead to greater persistence, then I think that is a differentiated data set, particularly when you look at some of the data sets that have been put out there for the competitive molecule, TYVASO DPI, to this point.

Our next question is going to come from the line of Jason Gerberry with BofA.

A couple for me. Just -- as you think about the YUTREPIA launch, just wondering if we should be thinking about any points of friction on the coverage access side as you launch that product? Or your confidence level that you'll have parity access pretty early in the launch period? Any color you can provide there would be helpful. And then on the L606 update, in terms of the plan to go direct to pivotal at ILD next year, if I got that right, I don't know if the design is not formalized but should we generally think about increase is providing a good framework for a type of study that you'd be running?

Great. So I think, for the first question, in terms of coverage access, I'll ask Mike to answer that one. And on the second question, Rajeev can speak to the L606 pivotal plan and timing.

Yes, Jason, thanks for the question. Relating to access, we've been prepared to launch YUTREPIA since we released kind of approval in 2021. We've been engaging with payers to talk about the value proposition that YUTREPIA brings. As a result of those conversations, I think we feel confident that access is obviously our goal and something that we're confident that we're going to be able to obtain. But as we get closer to a launch, we'll continue to have those conversations but we are working towards having access as close to launch as possible.

Thanks, Mike. So Rajeev, maybe you can speak to how similar our design is to the INCREASE study? And then kind of what we're thinking about in terms of sample size and timing?

Yes, sure. Thanks, Jason. So again, as I stated in the prepared remarks, I think the key here is that the open-label study for L606 really gave us the confidence about our safety and tolerability and our dosing profile. I think the twice-a-day format for L606 is quite game-changing here in terms of the patients, in terms of compliance and performance. The next step is really to ensure that the nebulizer is the right one for the patient. I think the nebulizer that we have chosen absolutely will ensure that the key motif for any nebulizer is drug deposition. So we believe we've hit that target. We think that's going to maximize our performance for L606 in patients with PH-ILD. In regards to the overall patient -- sorry, the trial format, I think using INCREASE as a replicable study is important to note. I think understanding that these patients can improve 6-minute walk distance within certain time periods is going to be critical. So I think we use that as a rough estimate. In terms of the sample size overall, I think we've said the sample size is going to be somewhere between 300 to 400 patients. Again, this is a global study. This will be enrolled in multiple countries to ensure that we can achieve success overall in an appropriate time frame.

Right. And the only thing I'd add to that, Jason, is that even with L606, because the CMAX is reduced by 7x, we're retaining the AUC over 24 hours, that should further diminish the off-target effects in the upper airway, cough and throat irritation in particular which then means we should be able to titrate to higher doses which should lead to higher benefit. So we're going to power around the same assumptions used in increase but my expectation is we'll have a better outcome than that study if all of this holds true.

Our next question is going to come from the line of Greg Harrison with Scotiabank.

It looks like the YUTREPIA launch is pretty well set and preparations are ready. So I wanted to ask about L606. Can you help us frame expectations for time lines for development overall, enrollment, just given the global nature and what you can do to expedite this? And then how you view the opportunity for this asset, especially with respect to ex U.S.?

Yes, I'll take that one. So I think it's always hard to talk about timing when we haven't started, Greg. So I want to be a little bit cautious here and not sort of predict things too early. But as Rajeev said in his opening comments, we plan to start the trial -- initiate the trial in the first half of '25. It's our expectation that we can enroll the trial in, say, 18 to 24 months. And then it would take 6 months to run them through the study, the last patient through 3 months to assimilate the data, file it and then you have your typical 10-month review. So if you just put all that together, just in sort of in a generalized sense, you're talking from start to finish, 4 years. I think we can beat that. And the reason I'd say that is we're going to do this -- most of the enrollment will come from ex U.S. territories, where TYVASO and TYVASO DPI are not available. i.e., in the EU, China, South America, Australia, et cetera. So it's a massive effort, certainly and I think our development team is up for the challenge. We're well positioned in terms of logistics to get it done. We certainly have a lot of experience -- management experience in doing these types of trials for sure. So I'm not -- I'm confident that once we start, we'll get the goal. The reason I think we could potentially beat the time line is because of the massive unmet need for these patients with PH-ILD. And as we maybe didn't say on this call but I have said before, this study will serve for approval in the U.S. for both PAH and PH-ILD. That's the agreement we have with the FDA…

Our next question comes from the line of Kambiz Yazdi with Jefferies.

For L606, for the open-label safety study, how many patients achieved greater than 100-microgram twice daily dose? Have there -- have AEs been consistent with prior treprostinil studies? And then maybe a question on launch. Can you remind us on the device side, how robust your supply of your DPI inhaler is?

Yes. So the first question on dosing, Rajeev, if you can provide what we're going to be able to speak to at this time. And then Mike, if you could talk about supply going forward after that. Rajeev?

Yes, sure, Kambiz. Thanks for the question. So in regards to achieve greater than 100 micrograms twice a day, I would say the overwhelming majority of patients is not -- I mean close to almost all of the patients have achieved that dosing profile. So again, that dosing profile will be early in the titration phase. We have shown at our ATS poster in 2024 in May the overall median dose has exceeded 200 micrograms for the majority of patients. So I think as Roger pointed out, I think the key motif here is the liposome itself and the sustained release process has lend itself to be quite tolerable for these patients in both PAH and PH-ILD patients. And I think that's what's leading to the overall titratability of this -- of L606 in both populations. So we remain quite confident about the overall safety and tolerability profile of this drug.

Yes. And I think just in terms of breath equivalents, Kambiz, I think we're at 2 to 3x the therapeutic target for TYVASO as a nebulized solution. So again, a different profile, much like YUTREPIA where YUTREPIA is formulated is discrete dry particles in the lower end of the respiratory range, that delivers to the lower lung to avoid upper airway deposition and AEs. Here, the liposomal formulation diminishes the CMAX so that you don't have as many peak AEs at CMAX but then can sustain the benefit. So in a different way, does the same thing. It retains the titratability aspect which is critical and then allows for higher doses, higher benefit and we think higher persistence but does it in a twice-a-day format. So it has all of the good of YUTREPIA but builds on it by taking it from a 4 times a day therapy to a twice a day therapy. So that's why we're very, very excited about this program. Mike, if you could talk about the device supply?

Yes, absolutely. Great to talk to you, Kambiz. So we've been preparing to launch since we received FDA approval in November of 2021. We've been manufacturing commercial supply since the early part of '22. We are-- we will be ultra-prepared for a launch here upon the expiration of the 3-year marketing exclusivity that United received. We continue to be -- to manufacturing at full capacity and we'll be ready to launch whenever that time comes in the May, June time frame. So we have no concern there and feel very confident that we can have a very successful launch with sufficient supply.

Our next question comes from the line of Cory Jubinville with LifeSci Capital.

I guess, can you provide us some more context in regard to the time lines to launch in regard to the 2 ongoing suits? I guess on the FDA hearing in December, assuming the case is ruled in Liquidia's favor, in an optimistic scenario, how quickly would this expedite time lines in relation to the May 23 tentative approval date? And then across the 2 indications on the '793 patent decision, is it fair to say now that the YUTREPIA launch is specifically in PAH now totally unencumbered following that May 23 tentative approval date? And if so, is the plan to launch in PAH immediately but in PH-ILD, is there plans to wait on the '327 decision to launch? Or do you anticipate launching at risk there given the recent updates?

Yes. Great question. Rusty, if you wouldn't mind?

Sure. Cory, thanks for the question. So on the -- just taking the questions in turn. As far as the effect of the FDA lawsuit, it's hard to fully answer that question because it's highly dependent on the timing of when we would get a decision and then exactly what the decision is. For instance, if a decision was to narrow the exclusivity versus just eliminate the exclusivity, we would have to assess what that means as to the label on our product and a number of other things. So again, it's hard to know the answer to that question until we see what the decision and when it comes in. But I think the main takeaway from our standpoint on the FDA decision is we know the exclusivity ends in May of 2025. Obviously, we're pursuing that litigation in the hopes that we can accelerate that approval date. And if we can, we'll have to assess at the time sort of what that looks like. As to the second question on the '793 decision, you're correct with that making its decision to deny [indiscernible]. That means that the first 3 patents that were asserted against us are no longer -- that litigation is now dead. There are no claims that United Therapeutics is asserting against us or the FDA related to approval of PAH. So from our perspective, there's really nothing at all encumbering PAH at all. As to the final question on whether we would launch at risk, as we said consistently, I think, over time, that's an assessment we will make when the time comes when we get FDA approval. We'll have to make a decision whether to launch at risk. But the other thing I'd say and I think we've said consistently, is if we get to that point in time and we look at the patent landscape and don't see any patents that we think are valid and infringed by our products, I don't think we're going to hesitate to launch. So again, that's an assessment we'll make at the time. And obviously, we're going through discovery in the '327 patent case. But as I said before, our belief is there's substantial prior art out there that predates the '327 patent and that certainly would weigh heavily in any decision we make at that time.

Operator, I think we have time for one more question, if there's any.

And it looks like our next question is going to come from the line of Matt Kaplan with Ladenburg Thalman.

Most of my questions have been asked. Just in terms of launch preparation, given the near-term opportunity here at the end of May next year, can you talk a little bit about how we should think about coming to market size of sales force, et cetera, in terms of your commercial footprint when you're launching?

Yes. And we're fortunate to have Scott Moomaw, our Chief Commercial, on the call. So Scott, maybe if you could talk about kind of how we think about the calling space for both PH and PH-ILD and sales force sizing around that?

Yes, absolutely. So we've actually had the sales team on board for about a year now actually. Our sales team is extremely experienced in rare disease. Most of them are from the PH space and have launched multiple products in PH. So we're very excited about the depth of experience with them. They're sized -- from a general standpoint; they're sized to cover the entire market. And by that, I mean both the PH centers -- large academic PH centers as well as the community and in the community, it would be PH treaters but also we've included ILD prescribers. So there's pulmonologists out there. We don't currently prescribe PH medications but certainly have PH-ILD patients in the pool in their offices. And so we've sized our sales force to be able to get into those offices as well, help them be aware of PH-ILD, diagnosed PH-ILD. And then if the time is right, either treat those patients or forward them into a center that will be willing to treat them. So we think there are probably about 6,000 to 7,000 targets in the market. We're sized to address that entire market. We also have some other pieces that we have in place, such as a team of key account directors, who are under the commercial umbrella and they are completely focused on the largest, most key academic medical centers, the PH centers and so we can go very deep there as well. So we're excited. We just want to get to May and really let these folks loose.

Great. Thanks, Scott. So as you can hear, we're going to have significant share of voice from the day of launch. So operator, I believe there's another question that we can take?

Our last question is going to come from the line of Ryan Deschner with Raymond James.

I was wondering if you could give us a little more detail on the next-generation nebulizer that's a party to the latest Pharmosa agreement. Where is the nebulizer in terms of, I guess, its own development? And is this nebulizer currently something that's used with commercial products?

Yes. I'll answer that quickly. So Ryan, I think, at this time, it's a proprietary nebulizer that we have exclusive rights to. We're looking to secure some of our own IP around that. So we're not going to really discuss specifically what the nebulizer is that we're going to use through the trial. Certainly, in the coming quarters, we'll disclose that to you. But I think Rajeev nicely described the important aspects of it, that it's an iPhone-sized breath-actuated, rechargeable, highly portable nebulizer that's very good at the delivery of the drug and precise -- in the precise dosing aspects that we need. So I'm sorry, I can't give you more at this time but we'll provide that information in the coming quarters.

And I would now like to turn the conference back over to Roger Jeffs for any closing remarks.

Great. Well, we really appreciate the questions this morning. It's very pleasing to have the analysts that cover -- asking so many questions and we look forward to providing further updates in the coming quarters as we continue to advance our march towards launch of YUTREPIA. Thank you, everyone.

This concludes today's conference call. Thank you for participating. You may now disconnect.