Next company presenter at the BofA Annual Healthcare Conference, Liquidia Corporation, joined by Michael Kaseta, Chief Operating Officer and CFO, and Rajeev Saggar, Chief Medical Officer. Gentlemen, thanks for joining us. Thanks for having us. And for those on the line, my name is Jason Gerberry. I'm one of the healthcare biotech analysts at BofA. And, you know, I don't know if you guys, you guys just reported your quarter this morning. Any introductory remarks you wanna offer up to maybe get things started in terms of the latest and greatest? I know there's a lot of focus right now on your lead product, Yutrepia, and t he FDA situation, so why don't we start there? So Jason, really appreciate you having us. We're excited to be here. It is a really exciting time to be at Liquidia. We are on the precipice of launching our first product, Yutrepia, in both PH-ILD and PAH. You know, we have a dry powder formulation of treprostinil that utilizes our proprietary formulation technology, that allows us to manufacture and produce particles of a uniform shape and size, that allows us to get to the lower range of the respirable range, which we feel really will be beneficial to both PAH and PH-ILD patients who've who are looking for choice in inhaled treprostinil. And excited to launch in both PAH and the emerging PH-ILD space, where there's a tremendous amount of patient need there. Got it. And so you've gotten tentative approval, you've run a clinical study in PAH. Maybe what, in terms of your understanding or kinda like the key issues outstanding as it pertains to Yutrepia, securing final approval for a broad label, but for the product that it references as a 505(b)(2) reference to Tyvaso? A s of April 1st, we have no legal impediments to prevent from getting approval in both PAH and PH-ILD. So we filed an amendment to our original NDA to include both PAH and PH-ILD back in July. It was accepted by the FDA in September, and we are, as of April 1st, able to get approval in both PAH and PH-ILD. We are awaiting. We are in dialogue with the FDA. We are awaiting that final approval. We are ready to launch. We have built up both our commercial infrastructure, our sales force, also our commercial supply, to be ready to launch immediately thereafter, that final approval. I know there's not, like, much you can do to speculate in terms of kinda where FDA is at, in terms of their, their process and whatnot. Maybe if you wanna address the United Therapeutics Citizens Petition that was filed, and making allegations regarding your, your, your API manufacturing source, and to the extent that that could be a limiting factor to approval, or just a non-issue from your perspective. So just to give some background, United Therapeutics filed a citizens petition to raise awareness at the FDA of a consent decree that an importer that is part of our supply chain was issued in January of 2023. What I'll say, plain and simple, is it's just another desperate last-ditch effort for UTHR to keep Yutrepia off the market. What we know is, one, that the consent decree had nothing to do with treprostinil. They manufacture or they import several products. Treprostinil was not one of those. To be clear, LGM, which is the party that was granted the... or was issued the consent decree, is an importer, is not a manufacturer. On top of that, this consent decree was entered into in January of 2023, so almost 18 months ago. We are aware, the FDA is aware, and all I can say is, at this point, that we have no open, you know, no open request with the FDA, so, you know, we feel that this should not be an impediment for us to, to launch. A nd so I believe typically there's, like, a status indication for your fill finish and then your API supplier. And your point is that the API supplier and the manufacturer is actually in good standing with FDA, and thus, you, whoever is the importer, as a go-through is irrelevant to the review of the product? Well, I think ultimately this is, you know, we've been aware, the FDA has been aware of this for over a year, so this is not a new issue for us. I understand. and we feel it should be should not impact our, the amendment that we filed, and we should be able to be approved. Great. And so I guess along those lines, then, you know, ideally, then, the pathway forward, hopefully, is approval, and then in the statutory, what is it, 4- to 6-month timeline, that CP just gets shut down, and that's how those events could play out. So we're focusing on approval, and like I said, I think we feel that this should, you know, not be an impediment. As I said, we have no open requests with the FDA, and we feel that the amendment is approvable, and, you know, we're just waiting for that final notice from the FDA. Got it. Maybe let's shift to the product, right, and the opportunity that's in front of you with Yutrepia, assuming timely approval here. The revenue opportunity. You've talked about PAH and PH-ILD and, you know, if you are able to get a broad label, I believe, you know, PH-ILD more of a white space opportunity, PAH more of a share, a share battle, although I know you guys have talked about the oral market as a potential area to make inroads. So as you think about the peak sales opportunity, how would you dimensionalize that? So we think it's a tremendous opportunity both in PH-ILD and PAH. Now, you know, to start on the PH-ILD front, as you said, it's largely a white space area. We've talked about an addressable market of at least 60,000 patients. We feel that that market is largely untapped at this point. United Therapeutics is on a run rate of about $1.5 billion, a little under $1.5 billion of an annual run rate, right, and growing. So we think there's a tremendous opportunity in PH-ILD. Now, in PAH, we think there's also a great opportunity there. You know, our goal is to be the prostacyclin of first choice. You know, with the oral and parenteral prostacyclin markets, there are systemic side effect issues that the current products have, and as a result, we feel Yutrepia, based on our ability to titrate, based on how portable it is, and the tolerability of Yutrepia, that we feel that we could be the prostacyclin of first choice and really replace both the oral and the parenteral markets. Especially with our ability to titrate to therapeutic doses in a relatively short amount of time, we feel very confident that we can... you know, we really can play there in the PAH market and take sizable share from United, and as new patients come on, be that prostacyclin of first choice. Do you see one market segment as, as a bigger opportunity for you, given where you're at in the launch cycle of where those markets are and, and their stages? I think if you look at PH-ILD, as you said, and I repeat it, it's largely a white space with a very large addressable market. You know, a lot of education will be required. This is an area where I think, with United Therapeutics and you know, both at the PAH centers but also in community docs, we feel really confident that that opportunity is really large. But obviously, also the PAH opportunity is significant, although there is a lot more competition there. W hat do you look at, maybe if we were to isolate to PAH, any market analogs for 505(b)(2)s that maybe investors should look to? Or maybe you just look more broadly, right, at brands that you feel like are step-change improvements in certain, you know, aspects or elements of the product profile. You want to take it? Y ou're talking about Group 1 PAH. I mean, I think, first of all, you have to I think we acknowledge that the prostacyclin market is quite large. I mean, I think the totality of all prostacyclin orals, inhaled and parenterals probably exceed $2 billion. I think the problem is each of them have a dose-limiting effect. The therapeutic index is quite narrow in range. If we talk about the oral prostacyclin market, the orals are limited substantially by their dose-limiting side effects, mostly of GI and headaches. Parenterals are limited by indwelling catheters and complexity of that therapy for patients being on a pump. And inhaled, since 2009, has been limited by its dosing potentiality, which is limited at around 9-12 breaths. So I think we feel that the strategy of Yutrepia, which was brought in, it was studied in patients with PAH that were transitioned from Tyvaso as long as patients naive to prostacyclin. I think what we did is we showcased that we can move that therapeutic index past the 9-12 breaths. What that does is that allows a singular therapy, such as Yutrepia, to come in, offer a singular option, to not only providers but also to the patients. It's customizable to the clinical strata. So if a patient is doing well and they're low risk, we can customize that therapy to a certain dose range. If the patient is advancing, you don't need to transition them to a parenteral agent, you can continue to titrate Yutrepia. I think the fundamental pillars of Yutrepia being tolerability, titratability, and long-term durability, I think, will, I think, be met quite well for patients and providers to come. That's not been offered right now to patients. When you think about communicating this value proposition, and are there any important aspects of a product label that you think are gonna be important to telling that story succinctly to prescribers or will that be in medical literature? Can you kinda just maybe kinda highlight any specific facets of the product labeling that's important here? So, you know, if you think about how Yutrepia was approved, right? This all comes down to its PRINT formulation and the low resistance device, and I think that's really what's gonna set the tone. We first had to do a healthy volunteer study, right, which showcased our biocompatibility directly to Tyvaso at our 79.5, compared to their 9-12 breath formulation. The second thing is that we then launched into a long-term, open-label safety study, again, in PH patients that transitioned from Tyvaso, about 45% and 55% in those that were naive to prostacyclin. So the first of all, what we do is we understand our side effect profile that's gonna be in the label. We know that when we transition patients from Tyvaso to Yutrepia, you know, people are really worried about cough 'cause inhalation therapy. We show that at eight weeks, our cough was 27%. And this is important because Tyvaso DPI, when they did a very similar study, when they transitioned from Tyvaso nebulizer to their DPI, at three weeks, their cough rate was 55%. So that right away is gonna be in our label. It shows that this is a very tolerable medication. The second thing the label will show is that we have four strengths of Yutrepia, right? Four capsule strengths, 26.5 microgram increments that go all the way up to 106 micrograms. But within that, within the trial and the label itself, we showcase that you can either use one capsule per strength or you combine the capsules upwards of 202 microgram- 212 micrograms, which is equivalent to 24 or double the therapeutic index typically seen of Tyvaso. And most, most importantly, that label will also indicate that there's no maximum tolerated dose available, so you can actually go higher. To that end, we're actually conducting a study in PH-ILD. With Yutrepia, we've now achieved 318 micrograms, which is now triple the therapeutic index of, of, now 36 breaths of Tyvaso nebulizer or greater. So that, that will all be constructed within the label to allow, that flexibility. Of course, the label will also have the, the, the primary efficacy that is on the reference drug of Tyvaso. So we'll have the 12-week PAH 6-minute walk change that Tyvaso has. We'll also have the change in 16 weeks that Tyvaso has in six, in 6-minute walk for PH-ILD. To your point, I think what we're really focused on is continuing to get out, enough literature about, Yutrepia. That's why the ASCENT protocol currently, is being highlighted in our quarterly calls today. That study is enrolling up to 60 patients with PH-ILD. We do anticipate that completing at the end of 2024, but within that time, we will showcase intermittent cuts to that data sets a gain, to showcase tolerability and titration profile of the drug. Right, and given that there's no comparator arm in that data set, would you focus investors in just on the relative tolerability profile versus maybe what's been achieved with Tyvaso at max doses? Like, how would you lear those expectations? I think it's a very important question. As you know, there has been no prospective study done today with the dry powder inhaler, and albeit that it's open label, I think it's something that, you know, the KOLs, both in academia and communities, are actually asking for. One thing we do know, right, the only literature that's out there about the impact of Tyvaso DPI really comes from the National Jewish Center, and their initial blush with Tyvaso DPI is when they initiated Tyvaso DPI in patients with PH-ILD, you know, 69% of the patients unfortunately discontinued within a median of 40 days, and of those, about 40% transitioned back to the nebulizer. So we know there's a tolerability issue with Tyvaso DPI that exists at least in, on the only published data set to date. So what we wanna do is we wanna showcase Yutrepia's PRINT formulation and its low resistance inhaler, which we think that combination is actually gonna be actually enthusiastically adopted by patients with impaired lung function, in this case, PH-ILD. And so it's very important to complete the ASCENT study to enroll these patients, showcase the tolerability, the titratability. Within the study, we will also have many clinical efficacy variables that will start to showcase once these time points are met. Maybe if we can shift to your just go-to-market strategy. I imagine it's still too early to talk about price, but just directionally, price discounting strategies in biopharma just don't seem like perhaps an approach that's commonly employed here. And so, I mean, you know, is directionally, you know, some of the reference points that are out there an appropriate way to be thinking about this, and do you wanna be— do you see price cutting as a viable strategy at all, or do you really wanna focus on the value proposition that the drug has and offer price parity? So I think what's most important to us is for patients to have a choice, and patients and doctors alike have been looking for choice for a long time. In order for us to achieve choice, patients need to have access. And, you know, we've been spending, you know, for the last couple of years, building dialogue, building relationships with payers, really showing the value proposition that Yutrepia can bring to patients, to the healthcare system. And ultimately, in order for patients to have that choice, they're gonna need that access. We are confident that as we get to market, and we won't talk specifically about our pricing strategy, we'll disclose that once we have full approval, but our goal is to make sure that we have broad access for patients, and we're building those relationships both on the commercial front, on the Part D front, in order to execute on that strategy. You know, once we get approval, you know, we're able to launch Yutrepia, we'll obviously talk more about that. Sounds like, not to put words in your mouth, right, but, it'll be hard for investors to discern that from a list price, right? Usually, things that enable access that happen behind the scenes are more reflected in gross to net assumptions. Is that- That, that is correct. O ur WAC price is, is one thing. Getting access for patients through, you know, payer contracts is, is something else. So like I said, our goal is to have broad access for patients- and we will talk about that as we launch the product. Yep. Now, you guys deployed a sales force in October. Can you talk a little bit about the reason why you did that at that point in time, and what were some of the goals and things you hoped to accomplish by getting a field force out in front of the actual full approval? So, onboarding the sales force early was important. You know, making sure we onboarded approximately 50 sales reps. It's a national sales force that will cover both PAH centers and also community doctors, both on the PAH and the PH-ILD front. What's important is that they're able to build relationships. They've been in the field since December. They've been talking about Liquidia, have been talking about our PRINT technology. As Rajeev had said, it's what we feel is really gonna differentiate us, that with our low resistance device. They've been able to talk about, which is really the precursor to then, once we have full approval, to be able to do a full product detailing. So the bottom line is, from a building relationships, building awareness with doctors, this has been a critical time for us to build that foundation. And when we you know, our goal is we need to make sure that we can hit the ground running as soon as we're approved. We've been building commercial inventories on top of that, so as soon as we get approval, we will be able to ship product within a week or two after that to really hit that ground running. Our goal is to bend that launch curve. nd onboarding a sales force, you know, back in Q4 of 2023 was part of that strategy. And I'll apologize in advance 'cause I'm somewhat newer to the story, but is 50 where you see kinda more steady state, the sales force, or does that need to get upsized at some point as you start to realize commercial success to reach the broader audience for both PAH and PHLD? I think we're very confident in the size of the sales force now. Now, with that being said, if we feel there's an opportunity and there's a return on investment in order to increase the size of that sales force, we won't hesitate to do that evaluation. And if, and if that means increasing the size of the sales force, we wouldn't hesitate to do that. But we did feel, based on where we are at launch, that the, that a 50-person size sales force was the appropriate size. All right. Now, with PH-ILD, I guess that's the newer market segment and some of the things that we hear, especially from, quote, unquote, "KOLs," right? Is that the diagnosis rates and treatment rates are still very low. There's a challenge for diagnosis. So what role do you guys see playing in that? When you look at the dynamics between you and you know, United, is it do you kinda see there being enough room for multiple players such that it's not zero-sum game in that space? I mean, listen, first of all, you know, PH-ILD is a very uncommon disease. It's extremely deadly. It has a mortality rate of 60%-70% at three years without any treatment, leaving lung transplant the only viable option. As a company, I think we're absolutely focused on, first and foremost, access to the proper therapeutics, such as Yutrepia, to allow us to hopefully modify that disease, that disease trajectory, over time. The second thing is to continue to help drive education into the market. You know, this always initially first starts off at, you know, the large centers that are, you know, accredited, both on a regional level and, and on an academic level. But, you know, that education actually has been going on since 2021, after the approval of, of Tyvaso for PH-ILD. So we're walking into a market that is, that I think has just begun that process. We will, we will, I think, hyper-focus on that, enhance that, trajectory learning curve. We will continue to educate, providers, not only just in large academic and community centers, but also, into the broader community itself. This will allow you know, patients to be appropriately diagnosed. What are the, what are the right testings to be done to properly diagnose and characterize those patients, properly diagnose the degree of pulmonary hypertension, and then, and then give them access to the right therapies. The sooner, the better, because of the, the poor, the poor survival of this patient population. And just to... You know, we talked about it this morning on our earnings call. You know, we believe this is a $3 billion-plus market opportunity, so we absolutely believe that there's room for more than one player. You know, having two companies detailing in this type of complicated environment is only gonna be helpful to both, and, you know, we feel very excited to get that approval and hit the ground running. W hen we try to back into some of the numbers for what Tyvaso is doing in PH-ILD, it seems like maybe mid-single digit, maybe a high single-digit penetration into that market. What do you think, you know, understanding, looking at rare disease analogues, looking at PAH maybe as a corollary, in terms of the penetration that inhaled prostacyclins achieved in that setting, which I think is closer to 20% in PAH. But maybe there are alternatives, right? There's orals, there's- infused. Maybe you need to be looking at it on an all forms of prostacyclin basis, and then, and then it gets to a much bigger penetration rate. So, I, I mean, how are you guys thinking about that dynamic and, and where you think a steady state penetration level is? I mean, I think the way we look at it is this is a massive opportunity. It's a massive opportunity with white space, and we feel that we have a product profile that will be preferred for PH-ILD patients and PAH patients. But as it relates specifically to PH-ILD, as I said, we think it's a massive opportunity for us to come in and compete, and our goal, like, as our CEO, Roger, says all the time: "We wanna be the prostacyclin of first choice." And with PH-ILD, it will just be, assuming we get approval in PH-ILD, that there will be two products approved, just Tyvaso and Yutrepia, and we and we are ready to go to battle there and, and really excited to launch the product, give a solution to patients, and I think the opportunity will present itself that way. You mentioned the challenging prognosis that these patients face in the PH-ILD setting. Does this end up looking like somewhat of an acute treatment market, where patients, they're not living that long, right? They're... How long are they able to stay on an inhaled therapeutic, and is this like you're constantly fighting for new starts to kinda build that total market share dynamic? Just wondering how to think through that. It's one question I think a lot of investors that we've talked to wonder about, is that prognosis dynamic, and are patients able to stay on therapy that long? W e can extrapolate a lot from what is now, I think, a well-understood market in Group 1 PH. If you go back when the first orals were created for PH, the average survival time was around 2-3 years. Now the median survival is approaching close to, you know, 7-10 years, depending on, you know, whose data sets you use, right? With the advent of additional therapies. But first and foremost, the way you're gonna bend survival is getting patients earlier diagnosed. Getting him to providers who are going to properly characterize the disease and initiate therapy as soon as possible. Now, the next step, of course, is to determine, likely through registry data, including when Yutrepia launches, for example, you know, what happens to overall survival? Similar to what happened in Group 1 PH, I would have to, you know, just hypothesize that when these patients do go on therapy, we're probably actually modifying the disease in some way. We likely will see, you know, improvements overall, and that we do anticipate that potentially could improve survival rates over time. But, you know, the next step, of course, is to continue to know how do we treat these patients? As we talked about with Yutrepia, I think the ASCENT study that we're doing right now is gonna really bring to light, understanding that when you give a drug like Yutrepia to patients with pretty advanced diseases of PH-ILD, can we actually show that long-term durability? Our study is actually 1 year long. Remember, the original Tyvaso study was only 16 weeks. So, you know, it would be wonderful if we can show that the substantial majority of those patients are still remaining on Yutrepia after 1 year. I think that, that itself alone, I think, would create a lot of excitement within the communities. A nd then I guess just lastly on PH, as a market share battle, I mean, how much bigger do you think that the, you know, inhaled prostacyclins can get as a proportion of the market? Like, or do you... Because it sounds like you believe that this is gonna make serious inroads into the oral therapeutic segment, both Orenitram and Uptravi. You see as a big opportunity to garner some volume from those options? You want me to take that? Yep. I think as far as I'm concerned, I think, you know, if you, if you look at... Again, I want to start back and say, people say, "Well, why hasn't inhaled Tyvaso in Group 1 taken a larger share of the market?" Again, I think it's really because of its own dose-limiting therapeutic index, right? And the overall just maybe cumbersome nature of having that nebulizer. Again, with the dry powder handheld inhaler, changing that therapeutic index, hyper accentuating really the safety and tolerability profile of the drug, you know, the choice now for a prostacyclin, where instead it would be an oral where you were concerned about dose-limiting side effects, inhaled, same concepts, parenteral, which obviously is a last ditch effort. I think this is really the opportunity to try to garner as much as we can in terms of that share. You know, quantifiably, you know, I can't really give a number. Mike maybe is better at that, but I think the sooner we launch, the more inroads we're gonna make into that market. Where do you stand on this argument or debate about, with Merck's sotatercept, Winrevair, the rollout, that that's actually going to be a tailwind for inhaled prostacyclins because patients are gonna be doing better, living longer, and on oral inhaled therapeutics longer? I think, listen, you know, sotatercept, you know, where it's gonna lie within the guidelines, you know, is soon to be determined. You know, the guidelines are convening, you know, later on in June this year. I anticipate that based on the evidence, it's gonna be a third or fourth-line therapy, just like it was used in the clinical studies. I think what it also shows is that what providers and patients are looking for is ease of use, tolerable drugs that have the most clinical benefit. Again, prostacyclins have always emerged to be the best-in-class therapy. As far as we're concerned, that's where Yutrepia lies as its opportunity. And, you know, sotatercept's given on top of that, we welcome that. Got it. And remind me on your BID nebulizer program, maybe what could you see as the next big update there for you guys? T his is the first time we really highlighted, you know, we're gonna showcase our first abstract, clinical abstract with L606 at ATS on Wednesday. This will describe the first 24 patients that had been treated in an open-label fashion with L606, which is our liposomal suspension that's delivered twice a day. I think what you're gonna see is a tolerability profile that is extremely enthusiastic. Obviously, by using the liposomal formulation, the hypothesis is that it would limit the irritability within the lung, and that would turn out to be less cough issues, you know, and urgency in the lung. I think that's exactly what we're getting for. Secondly, you know, although we didn't ask providers to titrate at a specific rate, it was really dependent on the, how the provider wanted to titrate. We were very encouraged by where patients were able to titrate to. The average dose in L606 is around 15 breath equivalents of Tyvaso. So again, shifting that therapeutic index, we have patients that have reached our maximum dose allowed in the study, which is 378 micrograms twice a day. You know, and that's equivalent to 26-28 breaths of Tyvaso. So, I mean, we're extremely excited. Where this does, it gives us enough confidence in the drug that we are now moving forward with our pivotal placebo-controlled efficacy study, that's global in nature. The study will be initiated by the end of 2024, specifically in patients with PH-ILD. However, as we alluded to with our discussions with the agency, when that study succeeds, that will give us approval in both indications for PAH and PH-ILD. Okay. Well, we're past time, but, gentlemen, thanks so much for joining us at the conference, and hope you have a good rest of your time here. Thanks, Jason. Thanks, Jason. Thanks, Jason, for your time.