Liquidia Corp (LQDA) 2019 Q1 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the Liquidia First Quarter 2019 Financial Results and Corporate Update Conference Call. (Operator Instructions)

I would now like to introduce your host for today's conference, Ms. Jenny Kobin. You may begin.

Thank you, and good morning. Welcome to Liquidia Technologies First Quarter 2019 Financial Results and Corporate Update.

Today's call will include forward-looking statements pursuant to the Private Securities Litigation Reform Act of 1995 based on current expectations. Such statements represent management's judgment as of today and may involve significant risks and uncertainties that could cause actual results to differ materially from expected results.

Please refer to Liquidia's filings with the SEC, which are available from the SEC at sec.gov or from Liquidia's website, at liquidia.com, for information concerning risk factors that could cause such differences and otherwise affect the company.

I would now like to turn the call over to Neal Fowler, CEO of Liquidia.

Good morning, everyone, and thank you for joining us. On the call with me today are Tim Albury, Interim Chief Financial Officer; and Dr. Rob Roscigno, Senior Vice President of Product Development and Program Lead for LIQ861.

This morning, I will summarize our recent accomplishments and provide an update on our 2 pipeline programs, LIQ861 and LIQ865. Tim will provide a summary of our financial results for the first quarter of 2019, and then I will wrap up with an update on our upcoming key milestones. After our prepared remarks, we will open the call for your questions.

We've had a productive quarter and continue to execute as planned. I'd like to summarize the accomplishments since our last earnings call. We completed enrollment of the INSPIRE study, our single pivotal Phase III trial evaluating LIQ861 in patients diagnosed with pulmonary arterial hypertension or PAH. We met the primary endpoint of the INSPIRE study by demonstrating safety and tolerability of 861 at the 2-month time point. We presented top line data in April from the INSPIRE study at the 39th International Society for Heart and Lung Transplantation meeting, including preliminary data on exploratory end points supporting functional and patient outcomes.

We initiated Phase II enabling toxicology studies for LIQ861, an injectable, nonopioid, sustained-release formulation of bupivacaine for the management of local postoperative pain. And we strengthened our capital resources, adding $34.5 million in gross funding.

The rapid succession of these accomplishments is an excellent indicator of our team's ability to focus and execute. And with those highlights in mind, I'd like to provide some additional details on our 2 current pipeline programs starting with LIQ861.

As a reminder, 861 is an inhaled dry-powder formulation of treprostinil, a prostacyclin analog used to treat PAH by targeting the pulmonary arteries.

Like approved nebulized products, 861 combines the demonstrated benefits of prostacyclin therapy with fewer systemic toxicities than oral or infused options.

By applying our PRINT technology, we believe that 861 has the potential to maximize the therapeutic benefits of treprostinil by safely delivering higher doses into the lungs, using a convenient palm-sized disposable inhaler.

Having reached the primary endpoint of the INSPIRE trial, I would like to highlight some key takeaways to date.

First, we believe LIQ861 is safe, well-tolerated and has utility as a first-line prostacyclin in PAH. As reported in March, of 109 patients enrolled in INSPIRE, 60% were naive to prostacyclin therapy, known as add-ons, with the remaining 40% being in the Tyvaso transition group.

We did not observe any drug-related serious adverse events in either group and most treatment-related adverse events were mild to moderate, consistent with prostacyclin therapy and observed in the first 2 weeks of treatment. Both patient groups remained on therapy with 93% of patients completing 2 months of treatment.

Second, we believe that LIQ861 may increase the therapeutic window for dosing treprostinil directly to the lung.

In 1 to 2 breaths, we have delivered 861 at doses that are comparable to 9 breaths of Tyvaso, its maximum recommended dose. To date, we have not yet reached the maximum tolerated dose of 861, having administered doses exceeding 150-microgram capsule strength.

We are confident that patients can easily administer 861 and avoid some of the systemic toxicities seen with oral and infused prostacyclin analogs.

And third, our preliminary data on exploratory endpoints suggest that LIQ861 is being dosed at therapeutic levels as demonstrated by favorable functional and patient-reported outcomes. Specifically, at the 2-month time point, the functional measure of median 6-minute-walk distance was maintained or improved in both the add-on and Tyvaso transition groups.

Additionally, patients in both groups reported physical and emotional improvements in quality of life as measured by the Minnesota Living with Heart Failure Questionnaire.

Thus with the 2-month data from INSPIRE in hand, we remain on track to submit the NDA in 2019. Along with safety data, we will submit an assessment of the bioavailability and pharmacokinetics of 861 in patients who are transitioned from Tyvaso. As previously disclosed, results from that assessment are on track to be reported later this quarter.

Going forward, we will continue to treat patients in the INSPIRE trial, collecting longitudinal data to support our future commercial activities and to share in scientific disclosures at upcoming congresses and peer review publications.

Our next presentation of data will be a poster on May 21 at the upcoming American Thoracic Society Conference in Dallas, Texas.

Outside of the U.S., we will continue -- we will conduct an additional clinical trial, exploring the hemodynamic effects of 861 in PAH patients. Though this data is not required or expected to be included for U.S. registration, it will help inform the medical community of 861's impact on right heart function.

With this recent clinical data and positive feedback from clinicians, we're increasingly confident that 861 has potential to expand the treatment options for PAH patients. We are laser-focused in our plans to submit an NDA in late 2019. As we prepare that submission, we will work closely with FDA, including the FDA's emerging technology program, which provides Liquidia the opportunity to engage on manufacturing and other detailed plans related to 861, PRINT technology and our novel manufacturing processes.

Now let's move on to LIQ865, our second product candidate, which is an injectable formulation of the nonopioid anesthetic bupivacaine to treat local postoperative pain for 3 to 5 days with the single administration. The opportunity for 865 is to increase the options for safe, effective pain relief that can reduce the need for opioids in the early days following surgery.

As the next step in our program, we've initiated the toxicology program in March, which will support the first Phase II clinical trial. Our goal is to have 865 Phase II ready by the end of 2019.

In summary, we've made meaningful progress across our clinical programs and are keenly focused on delivering on the next set of milestones.

I would now like to turn the call over to Tim to review our first quarter financial summary.

Thank you, Neal, and good morning, everyone. Our first quarter 2019 financial results can be found in the press release issued earlier today, which is available also on our website. We will also file our quarterly 10-Q with the SEC later today.

I'll briefly summarize the results now.

We reported no revenue for the first quarter 2019 compared to $0.9 million for the year-ago quarter. Our historic revenue was primarily derived from collaborating and licensing our proprietary PRINT technology to pharmaceutical companies. The decrease in revenues was as expected, given our shift towards prioritizing development of our own pharmaceutical products, 861 and 865.

Research and development expenses were $10.7 million for the first quarter of 2019 compared to $7.6 million for the year ago quarter. R&D expenses increased, as we expected, primarily due to our ongoing INSPIRE Phase III clinical trial for 861, which commenced in December 2017.

General and administrative expenses were $3 million for the first quarter of 2019 compared to $2.1 million for the year ago quarter. The increase is primarily due to employee-related expenditures, including stock-based compensation and public company costs, partially offset by a decrease in professional fees.

Interest expense was $0.2 million for the first quarter 2019 compared to $17.9 million for the year-ago quarter. The decrease is primarily due to lower levels of debt as a result of the conversion of convertible notes into shares of series D preferred stock in February 2018.

The net loss for the quarter of 2019 was $13.8 million compared to $27.5 million for the year-ago quarter. The change is primarily due to lower interest expense, which was partially offset by decreased revenues and increased R&D and G&A expenses.

Moving on to the balance sheet. As of March 31, 2019, cash totaled $60.8 million, and there were 18.6 million shares of common stock outstanding. In March, we completed an offering of 3 million shares of our common stock for gross proceeds of $34.5 million or approximately $31.7 million net of underwriting discounts, commissions and operating expenses.

I would now like to turn the call back over to Neal.

Thanks, Tim. 2019 is a pivotal year for Liquidia. And as we prepared to submit an NDA for LIQ861 and plan for commercial success, our key upcoming milestones will be to report 861 bioavailability and PK properties of treprostinil in the second quarter, initiate a European trial to assess the effects of 861 on acute and chronic hemodynamic measurements, submit an NDA for 861 in late 2019, present longitudinal data on 861 at key medical conferences and complete toxicology studies that support 865 being Phase II ready by the end of the year.

We're excited about opportunities before us to make a difference for patients and create stockholder value. Liquidia has innovative technology, strong resources and an outstanding team with a track record of delivering on our plans.

We look forward to updating you on our progress in the coming months, including presentations at the Jefferies Healthcare Conference in June and the Wedbush Healthcare Conference in August, both in New York City.

Thank you for your interest and continued support. I will now turn the call over to the operator to take your questions.

(Operator Instructions) Our first question comes from Stacy Ku with Cowan & Company.

So acknowledging the headers in [area] of the PAH population, could you comment on the average dose of 861 for the 2 cohorts in the INSPIRE study? What proportions of PAH patients were dosed up to the higher doses? And I have a follow-up.

Stacy, this is Rob. At this time, we have not disclosed the dosing information for the study. We're still tabulating that. And over time, we will be sharing that.

Okay. And so we tend to get the feeling from commissions that each of these PAH patients often have a pretty unique treatment scheme. Can you help us understand the nuances better to clarify kind of maybe for the add-on cohort where they're typically on 1 or 2 more -- 1 agent or 2 or more agents?

Sure. It's a very good question. So with the PAH patients that we studied in the INSPIRE study, the add-on patients typically came from those patients who were either on 1 or 2 approved nonprostanoid oral PAH -- approved PAH drugs. Many of them were on what's known as the AMBITION protocol combination, which in an ERA plus a PDE5. That's standard practice when those products are available to the clinicians that they would start those patients.

And with 861, 861 would be added starting at a 25-microgram dose, 4 times a day and increase to manage symptom relief, balanced with tolerability. Regarding the transition patients, transition patients are typically started at a dose -- slightly lower dose than their Tyvaso dose and then titrated the same way to manage symptom relief and balance that with tolerability.

Our next question comes from Liana Moussatos with Wedbush Securities.

What are the plans and timing for European regulatory submission and commercialization of 861? And then will you be able for 865 to start Phase II in the first half of 2020? And can you give us any insights on the Phase II design?

Liana, it's Neal. Thanks for your questions, both of them. On the first one, with regard to Europe. Again, we will -- our hemodynamic study, that I referred to earlier, will be our first kind of foray or footprint into Europe. Obviously that -- those data are not required by FDA here, but they will obviously help our story as it pertains in a global sense.

Our plans in Europe are to obtain a co-development partner and ultimately, someone to market the product in Europe. And given the fact that Tyvaso is not approved in Europe, that development time line will be longer than what we've seen here in the U.S. But we're very encouraged by the opportunity in Europe and plan to move accordingly toward that with a partner.

As it pertains to 865, we're not giving any guidance yet with regard to exactly when we'll do that study. We want to get our toxicology data in, as I indicated, this year. But rest assured that our plans are to move into Phase II as soon as possible. We are very encouraged by the market opportunity that is there, a tremendous amount of unmet need. And we have a product, in our opinion, that will definitely address that need.

Our next question comes from Serge Belanger with Needham & Company.

My first question is about the upcoming readout on the bioavailability and PK data later this quarter. Just given your experience in INSPIRE with the Tyvaso add-ons, what do you expect for this data? And is there any read through from INSPIRE that we can look forward to here?

Serge, it's Rob again. So we plan to release the data when it's available as we've previously stated. And we are encouraged already exactly by what you were speaking to, the preliminary end -- exploratory endpoint data we released earlier in this quarter as well as what presented at ISHLT is a good indicator that 861 is being dosed at therapeutic level. And we expect that to be reflected in the data.

So is success showing a similar bioavailability of PK than to Tyvaso?

The definition of comparative bioavailability by the agency is less stringent than that. And I want to remind everyone we are not being held to the level of bioequivalence.

Right. And then just the -- I think you announced, you'll be presenting data at the American Thoracic Society meeting, will this be some of the INSPIRE data, an additional set that we haven't seen yet?

It will be a deeper dive into what was 2-month data.

At this time I'm showing no further questions. I'd like to turn the call back over to Mr. Fowler for closing remarks.

Thank you very much. And thanks to everyone for joining us on the call today. We appreciate your interest and investment in Liquidia. And we look forward to being in touch and updating you on our continued progress. Now thanks to everyone, and have a great day.

Ladies and gentlemen, thank you for your participation in today's conference. This does conclude the program. You may now disconnect. Everyone, have a great day.