Good morning, and welcome, everyone, to the Liquidia Corporation Second Quarter 2025 Financial Results and Corporate Update Conference Call. My name is Nadia, and I will be your conference operator today. [Operator Instructions] I would like to remind everyone that this conference call is being recorded. I will now hand the conference call over to Jason Adair, Chief Business Officer. Please go ahead, sir. Jason Ad

Thank you, operator, and good morning, everyone. It's my pleasure to welcome you to the Liquidia Corporation Second Quarter 2025 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 regarding future results, unaudited and forward-looking financial information and the company's future performance and/or achievements. These statements are subject to known and unknown risks and uncertainties, which may cause actual results or performance to differ materially. For more information, please refer to the documents filed with the SEC available on our website. With that, I'd like to turn the call over to Roger for our prepared remarks. Roger?

Thanks, Jason, and good morning, everyone. We are very pleased and excited to share our first commercial data for YUTREPIA with everyone this morning. It's been a spectacular beginning. Just over 11 weeks ago, we were proud to introduce YUTREPIA for the treatment of patients with pulmonary arterial hypertension, PAH, and pulmonary hypertension associated with interstitial lung disease, PH-ILD. Within 1 week of approval, we were live and in the market, shipping product, supporting physicians and most importantly, delivering therapy to patients. This wasn't simply a product introduction. It was a launch executed with purpose and precision and one that has been extremely well received by the physician and patient communities that we now serve. Today, we will share data and as promised, provide additional granularity around key metrics to improve transparency regarding this early launch period. Since May, specialty pharmacies have reported over 900 unique patient prescriptions, leading to more than 550 patient starts on YUTREPIA. That pace of adoption is unprecedented in the treprostinil space and underscores the power of our PRINT-enabled prostacyclin product. We had no doubt about the key attributes of YUTREPIA's profile to enhance deep lung delivery with an easy-to-use, low- effort device, enabling a wide range of doses. I can honestly say in all my years of launching drugs in this space, this has truly outpaced all expectations, even mine, which were very, very high. Not only does this signal the value of what we have developed, but also that existing products fall short in addressing the needs of many patients. In conversations with prescribers and in communication from patients, the ease of use, tolerability, especially with regard to cough and ability to escalate dose to clinical effect represents a marked and meaningful improvement in the quality of care. YUTREPIA's differentiated product profile, paired with the commercial success in driving brand awareness has led to an early and enthusiastic uptake as you have seen in the prescription and start numbers. In fact, it's been an unabated sprint since day 1 of launch. We've seen broad demand from cardiologists and pulmonologists with prescriptions occurring at both specialty centers and community practices, and they are treating a broad group of patients across both diseases who are prostacyclin naive, transitioning from TYVASO and TYVASO DPI and even moving from oral prostacyclins. YUTREPIA is truly off to a strong start and quickly positioning itself as potentially the best-in-class and first-in-choice option for patients in need of a prostacyclin therapy. Anticipating the strong interest, our market access team prepared premium white glove services and reimbursement support to allow patients to gain early access to YUTREPIA. Health care providers have responded positively to the program's co-pay assistance and 28-day free vouchers, a first for an inhaled prostacyclin therapy. As a way of providing some insight, prescriptions received during the first 6 weeks of launch had a 75% script-to-start conversion rate. It's especially noteworthy that this early momentum has been achieved in spite of the customary period of new-to-market blocks and non-formulary positioning. We see the potential for accelerating growth and possibly higher conversion rates as we continue to expand market access during the third and fourth quarters. While the commercial team has been driving YUTREPIA's robust update, our clinical team has been analyzing maturing data from the ongoing open-label ASCENT study, which was fully enrolled with 54 PH-ILD patients in March. This analysis includes the safety and observational exploratory efficacy data up to week 16. The ASCENT study was intentionally designed to include a real-world PH-ILD population treated with YUTREPIA. In particular, we treated patients ranging from mild pulmonary hypertension to those with more advanced hemodynamic and forced vital capacity impairments and even patients listed for lung transplantation. The observations at week 8 and week 16 are indeed impressive. The tolerability remains very favorable, as evidenced by the fact that only 18.5% of patients discontinued the study at week 16 with no discontinuations for serious or drug-related adverse events including cough. For context, this favorable tolerability is juxtaposed by prospective data of TYVASO DPI from the National Jewish Health Center, a [ peraminent ] pulmonary care center or 69% of treatment-naive patients discontinued Tyvaso DPI in a median time of only 40 days with the primary reasons for discontinuation being cough and clinical worsening. Taking a slightly deeper look at the favorable tolerability that we are observing in the [ ASCENT ] study of those patients that reported a treatment-related call, the vast majority or 24 of 26 patients reported mild call and only 2 patients reported a moderate cost. However, it should also be noted that in the longitudinal analysis, the main data and simplified cost scores remained essentially unchanged from baseline through week 16, suggesting the cough overall tended to be transit in nature and not worsened with the addition of [ YUTREPIA, ] even with escalating doses and therefore, likely similar to these patients' historical cough that is associated with their underlying interstitial lung disease. This tolerability is helping patients escalate to higher doses. The median dose at week 8 was 132.5 micrograms or approximately 15 breath equivalents to Tyvaso and 159 micrograms at week 16, approximately 18 breadth equivalents to Tyvaso with the highest exposure of 380 micrograms comparable to approximately 36 breath 4 times per day of Tyvaso nebulizer. The net result of greater tolerability and higher achieved doses also correlates with a robust efficacy result with the observed median improvements in 6-minute walk distance of 21.5 meters at week 8, that increased further to 31.5 meters at week 16. Overall, this data set continues to highlight the robust efficacy and durability of [ YUTREPIA ] in a real-world population of PHL D patients. We look forward to sharing the detailed data with the medical community targeting the PH Professional Network Symposium Conference in mid-September and a major respiratory conference in October. Now I will pass the call to Mike who continues to guide the company with a firm hand on the financials and with an eye towards supporting continued growth.

Thank you, Roger, and good morning, everyone. In order to save time for more of your questions, I'd just like to hit headlines on the financial statements filed this morning with the SEC and in our press release. We closed the quarter with over $173 million in cash and cash equivalents on the balance sheet. A solid position that will help us bridge to profitability over the coming quarters as we continue the commercial rollout of [ YUTREPIA, ] invest in our pipeline and expand operational capabilities. On the revenue side, we generated $8.8 million in the second quarter, of which $6.5 million came from [ YUTREPIA ] product sales, which began shipping in June. The additional $2.3 million in service revenue related to our ongoing promotion agreement of treprostinil injection with Sandoz. Expenses for the quarter were in line with our expectations as we fully transitioned into commercialization mode. Looking forward to the end of the year, we anticipate increases in quarterly R&D expenses as we continue ongoing label studies and prepare to initiate the pivotal study of L-606. SG&A expenses after excluding noncash and variable costs associated with the treprostinil should remain flat over the next few quarters. Our planned commercial spending supports the launch -- but that said, any increase would be targeted to further acceleration in [ YUTREPIA ] adoption. Lastly, with YUTREPIA approved, we are expanding our footprint in North Carolina and have signed a lease for additional manufacturing space to support continuing growth, potentially tripling our production capacity. Targeted for occupancy in 2026 this state-of-the-art facility will include production space to house additional print manufacturing lines and analytical labs to support additional [ YUTREPIA ] manufacturing. We are continuing to execute on our plan and our cash position gives us the flexibility to keep moving forward with confidence. With that, I'll hand it back to Roger.

Thanks, Mike. In just over 2 months [indiscernible] has delivered on every front with brand awareness growing, prescriptions rapidly escalating, payer access, expanding and clinical data maturing. With a clear and differentiated product profile, we are building a foundation, not just for a successful launch but for long-term leadership in the prostacyclin market. I would like to thank our entire team who like our product, are best-in-class. One final note before we begin the Q&A session. We plan to host an R&D Day in the fall where we will provide an update on our open-label L-606 study, which will include data for patients who have been on L-606 for up to a year. We are as excited about L606 as we are [indiscernible] but today is a [indiscernible] stay in the spotlight plus L-606 to serve its own stage to properly highlight its own unique product profile. With that, operator, first question, please.

[Operator Instructions] And now we're going to take our first question from Julian Harrison from BTIG.

Congrats on the strong launch. These are very impressive numbers. Three questions from us. First, on a weekly basis, has the trap growth generally look sequential or was there some bolus effect early on? Second, PAH versus PH PLD mix, along with percentage of patients diagnosed with underlying IPF. Are you able to disclose those numbers now? And finally, on [ Ascent, ] it was great to see the very strong 6-minute walk data out or through 16 weeks. I'm curious if you could talk more about your decision to lead with the median 6-minute walk changes instead of the average -- why are the median changes may be more appropriate here? And how does that compare to the competitive landscape?

Great. Julian, thanks for the questions. So in terms of uptake, what we said in the script is that we've had accelerating uptake over time. So as we've been in the market, again, still just for 11 weeks, each week seems to be a little bit better than the 1 before. And we think that trend hopefully will continue, particularly as we continuing to evolve the payer landscape and remove some of the things like new to market blocks that existed when you first launch drugs. So awareness is driving a lot of that. I think we had a focus on the centers of excellence, the key centers. And certainly, the adoption there has been rapid. I think the messages have been resonating very quickly, and that's the result of that, as you see that in the referrals and the script rate. We're not going to give the PAH versus PH-ILD split today. We want to make sure if we were to do that, that we had absolute clarity on what that is. And just because of the way some of that data has been collected, we can't really confirm exactly and precisely what the therapeutic split would be. And then for the ASCENT trial, Yes. Maybe I'll hand that over to Rajeev to talk about why we think median data is most appropriate and more reflective. But the simple answer is, and I'll give it to Rajeev, is that it minimizes the impact out -- so particularly in an open-label study, you really want to look at medians to give a more, I think, accurate and reflective results from a population that we've studied. So Rajeev, any other comment on that?

Yes, Roger, Julian, it's here from you. I completely agree. I think it's less susceptible to being skewed to outliers or extreme values. It's important to provide the central tendency in these situations, especially with small samples. And I think it also is more akin to how larger data sets are usually conveyed. I will state that we will be showing more granular detail at the upcoming conference at PPN and in the upcoming conference in October. But I think we could say with a high degree of confidential with the high degree of certainty that the mean and median values are fairly near each other. So I think that's really important to note as well.

Very helpful. All around, congrats again.

The question comes from line of Ryan Deschner from Raymond James.

Congratulations on a strong start to your trip launch and the Ascent results. What proportion of paid drugs associated with the reported patient starts? And is this in line with your expectations? And what proportion of patient starts are switches from Tyvaso DPI or other inhaled or oral treprostinil products?

Yes. So Rajeev, Mike, if you wouldn't mind answering the paid drug question and Scott, our Chief Commercial Officer, you can talk about proportions as you can.

Yes. Thanks, Roger. And Ryan, great to talk to you. In terms of proportion of paid versus new start -- I'm sorry, as free drug. As we -- as everyone knows, we have a couple of programs we have about voucher program that provides the first 28 days free drug for new patients. Then we also have a bridge program that provides an additional 28 days supply at any time during -- one time during a patient's journey. So what I would say is specifically in the amount of paid versus free drug, especially through the usage of the voucher program, it's in line with our expectations of what we've seen in other launches. Less than 50% have been on free voucher drugs. But again, we wanted to make sure we gave patients an opportunity to try our drug immediately to see if it's something that works for them and allows us to start that insurance adjudication process as we go. But we're very happy with the services that we provide, the market access services, specifically that Scott and his team have provided, and I think have been very helpful for us as we've gotten [indiscernible]

Great. And Scott, if you'll handle the second question.

Sure. So in terms of switches versus new to prostacyclin patients, I think we said in the past that our primary focus is the new to prostacyclin patients. And so commensurate with that, we've certainly the preponderance of the patients that are coming in -- we have seen switches. I think it's no secret that there are many patients out there who've been on a DPI or nebulized inhaled and are either on that and are dissatisfied or came off of it. And so I think as Roger said in the prepared remarks, we have been surprised, let's say, with the volume of those. We're not going to get into the exact numbers. And we are also seeing, as I think Roger mentioned some oral prostacyclin switches as well. So we'll keep an eye on that as time goes along and get a feel for what the run rate is for that, but that's kind of how it's playing out currently.

Thanks, Scott. And I think the only thing I would add to that is where we said we -- even I was surprised by the upside here, I think it was because of the switches. What we found is that there is a large number of patients with intolerant cough who remain on Tyvaso DPI but are parked at low dose. So aren't really getting the benefit of the prostacyclin that they deserve and those patients have readily looked forward to receiving Nutria -- so that's been where the incremental upside has been in this near term. And I think that will continue to grow, particularly as the experience in the new patient arena sort of shows prescribers and patients that this drug is very, very effective and is the therapeutic protege that we hoped it would be. Next question, please?

And the question comes to the line of Jason Gerberry from Bank of America.

And congrats on the launch as well. My question, thinking about second half in these patients that have started on TEPA, how should we think about sort of the gross to net? Presumably, they've already kind of gone through their 28 days voucher. And so I'm just kind of curious like if that -- those patients are going to flow through at full lack or gross to net assumption that we should assume for those patients plus those that maybe convert from the prescription referral to a start. And that 75% conversion rate, the other 25% that haven't converted, is that just a function of time? Or is there anything structural or gating for those patients? Just trying to get a sense of what that process is like and the typical time from starting the prior authorization process to ensuring coverage.

Great. Thank you, Jason. Great questions. Mike, if you don't mind answering those questions.

Mike, you might be on mute.

Sorry. As it relates to gross to net, it's not something that we've talked about in terms of project water gross nets to be. I mean I think what we said all along is from a payer point of view, we want to make sure patients have an opportunity to choose [ YUTREPIA. ] As Roger said earlier, there have been new to market blocks, especially in areas where our competitors contracted specifically in the commercial space. We now have signed contracts with all of the major commercial payers. We expect those new to market blocks to be removed shortly. So we would expect, like I said, more prescriptions as we move through the year to be subject to rebates but again, we're very confident in our ability for [ YUTREPIA ] to win in this space. I'm very confident for us to be at parity access. And our stated goal from the very beginning was that we would -- we want to make sure patients have a choice. And I think Scott and his team have done a great job of working towards that, and we look forward to further development there here in the second half of the year. The second question around the convert rate -- what I would say is, again, the patient support services that we put in place, which includes reimbursement specialists to navigate this landscape. We expect -- when you look at industry standards, I think that's a very, very good percentage -- as again, as Roger said, there were some headwinds early on as it relates to these new to market blocks, is those released? We think that, that could be an accelerant as we get through the back end of the year here. And as we move forward to -- again, to make sure patients have the ability to choose and we feel very confident in our ability to deliver on that.

And Mike, if I could just squeeze a follow-up and just any commentary regarding Symphony data on a go-forward basis? Should we look at it? Have you guys interrogated that and how we should interpret that on a go-forward basis?

Yes. So what I would say is, as is pretty standard in the industry, this information is usually not available. We obviously have seen the data like you have. I would not expect to see future data to come out, and we look forward to sharing our results as we go through each quarterly earnings call.

And the question comes the line of Cory Jubinville from LifeSci Capital.

Congrats on all the progress. It seems like traction has been really great so far. As we think about launch plans throughout the rest of the year, what kind of near-term levers are there to pull to accelerate growth? And again, given the traction you've seen so far as a plan? Or is the plan to kind of largely stay on course versus pull some of these levers. And you also mentioned that you've signed contracts with the 3 major commercial players. When do those contracts kick in and you start to get reimbursement through that?

Yes. Thanks for the question, Cory. So what we -- I'll take the second question first, and then Scott, if you'll comment on the launch plans and levers that we could pull going forward. But I guess we're going to stick to the script like in the coming quarters. We think the payer landscape will improve. And then so that's going to be in place to happen and be an accelerant as we've said. And Scott, maybe you can talk about the levers that could be pulled going forward in terms of launch.

Yes, sure. So the first thing I'd point out is that I think we have immense opportunity both from a breadth and for a depth standpoint to capitalize on. So to take, for example, the amount of breadth, I think we said 350 prescribers have prescribed thus far. But we've also said in the past that we have 6,500 targets across the country. So there's well over 6,000 out there who have not had the opportunity to use [indiscernible] and from a breadth standpoint, we're just getting started. I mean we've been pleased to have physicians with 1, 2, 3, 4, 5-plus patients, but many more of them can't have that depth and will have that depth. From an activity sort of lever standpoint, I think one is just fuel the fire. We're going to continue to work with the centers on [indiscernible] we have had community physicians for sure to prescribe, but we will now start to kind of work our way back out into the community to get PAH patients, but also to start to get PH-ILD patients. And then strictly from a tactical perspective, I mean we'll be at all the major conferences. We'll be loved from an electronic standpoint. We still have a full suite of launch marketing that's going on right now and we'll certainly continue to go on for the rest of the year.

And Scott, maybe I'll add in terms of like I think all of those activities are clearly going to be beneficial to the brand. I think in terms of the levers, I can think of 5 just off the top of my head, it's like, as Scott said, continue to increase breadth and depth of prescribers, especially as we go out into the community centers more. Because I think in this initial phase, we were somewhat focused on the major centers. as we've said, we'll get acceleration from payer engagement and coverage. The third would be that now that there's traction in switch opportunity maybe try to leverage that more broadly and talk about that experience more widely with prescribers so that they, too, can benefit from the transition with their patients. I think the fourth level lever would be to focus on [ YUTREPIA's ] dosing flexibility to drive durability. I think just as important as starting patients is keeping patients on therapy, and that's obviously going to be a key focus for our commercial enterprise going forward. And then I think we should also now begin to capture this initial data from oral transitions, particularly as they come off of TYVASO what we've seen early and begin to focus potentially on an initiative to support that in terms of how to inform doctors how to do that. So lots of levers that we can pull all will drive future business. So I think this is a very levered business in terms of what we can accomplish going forward.

Now we're going to take our next question and it comes from the line of Serge Belanger from Needham.

Congrats on a great start. Had some technical difficulties this morning. So apologies if you've covered this already. So first of all, on the $6.5 million, can you give us a split between channel inventory and patient demand. Secondly, regarding payer coverage, can you tell us where you're currently at and where you expect to be by the next quarter? And is the coverage similar to Tyvaso. I have another follow-up, but I'll start there.

Thank you, Serge. Mike, can you answer those questions, please?

Yes, Serge, thanks for your question. Specifically on the breakdown on revenue, I'd say, especially for first quarter of launch, the vast, vast majority of that revenue was loaded in the channel. As you can imagine, as we previously talked about, we put product into the channel, the first week of June. We dosed our first patient shortly thereafter. But just from a pure timing point of view, there would be a lot of that initial revenue would be loading the channel -- with that being said, obviously, with the accelerating patient numbers that we've seen, we start seeing stacking of patients as we move into second scripts. The vast majority of that has already been absorbed as we move into Q3. as we -- related to payer coverage, again, like we've always said, we want to make sure that patients have choice in order for patients to have choice. We need to make sure they have access to TPI. As I said earlier, we signed contracts with 3 major commercial payers. And as those NDC blocks are removed, we feel very confident, as we said, the product profile of [indiscernible] to win and to be the [indiscernible] of first choice, as Roger has stated, being in a parity situation with United Therapeutics, where we are not disadvantaged. And as those kick in, we feel very confident that, that will be the place that we land and feel very confident in our ability to grow.

And maybe one for Rusty. Just an update on the 327 pet litigation. I think there was a hearing a few weeks ago. I guess when you expect potential decision and what the potential outcomes could be?

Yes. Thanks for the question, Serge. So as you know, trial was held back at the end of June. At this point, all post-trial briefing is complete. The judge set a relatively accelerated post-trial briefing schedule. So post-trial briefing is now complete. As far as when we get a decision, it's always hard to predict how quickly courts are going to roll on things. I think in the first [ Hatch-Waxman ] trial in front of Judge Andrews, it was about 2.5 months between the completion of post-trial briefing and his decision Obviously, here, he said an accelerated time line for the post-trial briefing that could indicate that his decision will similarly be a little bit faster than the last time, but again, hard to predict with any a degree of precision. And then finally, as to the potential outcomes, the same outcomes we've been talking about all along. Again, as with litigations, we won't probabilitize what the outcome is going to be or try to get in front of the judge and guess how he's going to rule. But it's sort of the full range of these potential outcomes consistent with any Hatch-Waxman litigation. Thank you.

[Operator Instructions] And the question comes from the line of Tiago Fauth from Wells Fargo.

Let me just add my congratulations as well. A quick one for me. Just thinking about United [indiscernible] read through. Kind of what are some of the implications potentially going forward, on the beta on orphan drug exclusivity. Any implications for you tractor for the development path for 606, basically how you guys are thinking about that if that trial reads out positively.

Thanks, Tiago. I'll take that. So I think they've said they're expecting that result in September. So there's really no sense in me trying to predict what that trial result will or won't be. I think if they are successful, they will have some orphan protection for that for a period of time. So I think for us, it would be a matter of developing L 606 for that indication. So that once that orphan exco exclusivity expired that we could benefit from that market to if they are to be successful. But we'll soon see where that lands.

Thank you. [Operator Instructions] Dear speakers there are no further questions for today. I would now like to hand the conference over to Roger Jeffs for any closing remarks.

Thank you, everyone, for joining today's call. We appreciate your enthusiasm for this initial phase of launch. We remain laser-focused on the execution in the back half of the year and look forward to driving continued uptake expanding payer access and laying the groundwork for our broader pipeline. And we look forward to speaking with you very, very soon, especially in the fall when we have our R&D Day for L606. Thank you again.

This concludes today's conference call. Thank you for participating. You may now all disconnect. Have a nice day.