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Michael Kaseta

Thank you, Roger, and good morning, everyone. Before we review our full year 2024 financial results, I'm happy to highlight yesterday's announcement regarding expansion of our financing agreement with HealthCare Royalty Partners, which will provide Liquidia up to an additional $100 million of financing in three tranches, including the $25 million tranche fund at closing.
We are grateful for the trust, commitment, and confidence that HealthCare Royalty Partners has demonstrated over the years, and we are optimistic that these proceeds and a successful launch of YUTREPIA following the expiration of exclusivity this May could lead to our reaching profitability without the need for additional capital.
Turning to our full year 2024 financial results, which can be found in the press release, you will see that revenue was $14 million for the year ended December 31, 2024, compared with $17.5 million for the year ended December 31, 2023. Revenue related primarily to the promotion agreement.
The decrease of $3.5 million was primarily due to lower sales quantities, driven by limitations on the availability of pumps used to administer Treprostinil injections subcutaneously. Sales quantities will continue to be impacted or at risk until alternative pumps are available.
Cost of revenue was $5.9 million for the year ended December 31, 2024, compared with $2.9 million for the year ended December 31, 2023. Cost of revenue related to the promotion agreement as noted above. The increase from the prior year was primarily due to our salesforce expansion during the fourth quarter of 2023.
Research and development expenses were $47.8 million for the year ended December 31, 2024, compared with $43.2 million for the year ended December 31, 2023. The increase of $4.6 million or 11% was primarily due to one, a $6.1 million increase in expenses related to our L606 program. Two, a $5.3 million increase in expenses related to YUTREPIA research and development activities, including the assent trial.
Three, a $5.1 million dollar increase in personnel expenses, including stock-based compensation related to increased headcounts. And four, a $3.5 million upfront license fee due to Formosa for the exclusive license in Europe to develop and commercialize L606 recorded during the year end of December 31, 2024, offset by one, $5.1 million in lower commercial manufacturing expenses, reflecting the impact of expensing the YUTREPIA inventory costs in the prior year.
And two, a $10 million upfront license fee due to Formosa for the exclusive license in North America to develop and commercialize L606 during the year ended December 31, 2023. General administrative expenses were $81.6 million for the year ended December 31, 2024 compared with $44.7 million for the year ended December 31, 2023.
The increase of $36.9 million or 82%, was primarily due to one, a $19.7 million increase in personnel expenses, including stock-based compensation, driven by higher headcount and expansion of our sales force in the fourth quarter of 2023. Two, a $7.9 million increase in legal fees related to our ongoing YUTREPIA-related litigation, and three, a $6.8 million increase in commercial expenses in preparation for the potential commercialization of YUTREPIA.
In summary, we incurred a net loss for the 12 months ended December 30, 2024, of $130.4 million or $1.66 per basic and diluted share compared to a net loss of $78.5 million or $1.21 per basic and diluted share for the 12-month ended December 31, 2023. With that, I would now like to turn the call back over to Roger.

Roger Jeffs

Thank you, Mike. As you can see, we're well positioned clinically, commercially and financially for the potential launch of our first product based on our proprietary print technology, which will serve as the growth engine for our continued evolution and inflection. I now I'd like to open the call for questions. Operator, first question, please.

Question and Answer Session

Operator

(Operator Instructions)
Julian Harrison, BTIG

Julian Harrison

Hi, good morning. Thank you for taking my questions. Roger, you touched on this a little in your prepared remarks, but just wondering if you could talk more about the administrative sequence and timeline to convert YUTREPIA's tentative approvals in PAH and PH-ILD to full approvals.

Roger Jeffs

Yes, so as we said in the opening, thank you, Julian, and great to talk to you. So, as we said in the opening, we plan to request final approval in the coming weeks. In the tentative approval label that we received in August, it was recommended and suggested that we apply for final approval either two or six months ahead of the action date,
which would be May 23, given we view this as a class one resubmission because no new data will be required for approval. We have been in concert with the agency working to deliver that letter, around the March 24 time frame so that we can be granted final approval around May 23 in that specifically addresses what you're seeking.

Julian Harrison

Yeah, absolutely. That's very helpful. Thank you. And then a follow up if I may, on L606. I'm curious what the physician feedback has been so far for a lower Cmax, broader AUC, longer half-life alternative to nebulized Tyvaso. And then sorry if I missed it. I'm wondering also when specific specifically you plan to initiate the Phase 3 of the Spier trial.

Roger Jeffs

Yeah, great, and we, we're fortunate to have Doctor Rajeev Saggar on the call today. So, Rajeev, if you wouldn't mind.

Rajeev Saggar

Yeah, thanks, Julian for the question. So, first of all, I think you know the current open label study continues to gate very well. We have long term safety data that is accrued since the inception of the study. The clear feedback is twice a day dosing is an absolute game changer for these patients when you inhale Treprostinil. I think that's first and foremost.
Second of all, I think that the use of the liposome itself has showcased some what we believe is some highlights some impressive safety advantages and finally, further reducing the Cmax with the twice a day dosing profile and the sustained release formulation of the liposome itself does.
We have noted that systemic side effects continue also to be further abated, even beyond what we initially desired. So, I think the combination of both of those are going to be highly encouraging for as we advance forward with the respire study.
In regards to initiating the Respire study, we're working full steam ahead to prepare to initiate the study by year's end. We're -- it's around March right now and so we look forward to providing further information as we get closer to that time frame and near the end of the year.

Julian Harrison

Okay, great, thank you again and congrats on all the progress.

Roger Jeffs

Thank you, Julian.

Operator

Jason Gerberry, Bank of America

Hey, good morning. This is Babin Patel on for Jason. Two questions from us. The first is given the green space in PH-ILD, what's Liquidia's strategy to drive early market penetration for YUTREPIA ? Can you share the market marketing differentiation that you plan to promote to doctors and then, given the 505(b) (2) pathway, should we expect any differences in the label for YUTREPIA versus Tyvaso DPI?
I know in the past you've mentioned demonstrating titration to 3 times higher doses compared to Tyvaso DPI.

Roger Jeffs

Yeah, so I'll answer the second question first, and then I'll ask Scott, our Chief Commercial Officer, if he would address the launch dynamics around PH-ILD and differentiation that we intend to emphasize. So, you're exactly correct, and I think the label, it is a 505(b) (2).
So, we share obviously the indication claims and things like that, but where we differ from the label is in the dose titration table because in our study that we used to bridge, we showed that we could escalate the doses, as you mentioned, up to 3 times higher than the target therapeutic dose of the brand.
So, that will be in the label, and I think it's an important point of differentiation because it's what, it's print enabled using our proprietary print technology to drive the particles to the lower airway preferentially and avoid the toxicities associated with upper airway deposition. It's going to help us drive a maximal outcome for these patients as they continue to progress, and it's therefore help us keep those patients on therapy longer is our presumption.
So, we think these are important and critical aspects, if you go across any route of administration across the cycling, those matters, and the ability to drive do usually predicts the sort of therapeutic utility of that therapy, and that's why as labeled has had limitations in dosing and it's also why other drugs like YUTREPIA and oral formulation which is do limited and those ceiling also has limitations over the long and chronic treatment course of these patients.
So, lots of opportunity there from us from a labeling and dosing standpoint. So Scott, if you could talk a little bit about kind of how we want to approach this market without giving away the shop too much.

Scott Moomaw

Sure. Good morning. So, if you think about it, we have the usual designation between centers and communities and we're going, we are approaching and we will continue to approach both, especially after launch, and the situation in the centers is that the patients are really flowing in, there's an increasing number of patients flowing in as the awareness of PH-ILD increases, and we will obviously only add fuel to that fire.
So, we're in the centers and we're going to make sure that we ensure that YUTREPIA is the first-choice prostacyclin for those patients that have PH-ILD for a lot of the reasons that Roger just outlined, and you've heard us talk about before. So, you know we're going to harvest those patients immediately.
The thing we're doing is in the community and there's many patients out there that doctors don't even know exist. They have ILD, the doctors aren't looking for PAH. We need to help increase awareness; we need to help increase diagnosis.
And then either get that doctor to prescribe or to refer that patient into one of the centers and we've actually been doing that over the last six months or year going deeper and deeper into the community, educating on PH-ILD even before we get on the market because we know that that's only going to behoove us once we do get on the market because we do believe we have the superior product.

Roger Jeffs

Great thank you thank you so much.

Operator

Serge Belanger, Needham & Company Inc.

Serge Belanger

Hi, good morning. A couple of commercially related questions, probably for Scott. Just, can you remind us the breakdown between commercial and Medicare coverage for both PAH and PH-ILD, and then, assuming we're going to get approval here in a couple of months, can you talk about what you expect in terms of the ramp up in coverage across both commercial and Medicare, I guess over the next 12 months or so.

Roger Jeffs

Yeah, great question, Serge. It's Scott.

Scott Moomaw

Yeah, good morning, Serge. So, in terms of the breakdown, it generally think of it as, Medicare is the biggest, so 50% Medicare, probably 30% to 40% commercial, and then the rate the remaining is Medicare, other DOD, etc.
In terms of the coverage over the first year, I, as you probably know, we're not commenting on, our strategies, I will say that we have been working with the payers closely for quite some time, and we feel like we have great relationships with us. They have the desire to make sure that, we maximize access. So, we share that desire, and I think you'll see when we launched that, we're very sound on that front.

Roger Jeffs

Great, thanks Scott. Operator, next question.

Operator

Ryan Deschner, Raymond James

Ryan Deschner

Hi, good morning. Remind us of at key readouts we should be focusing on for the study and what specifically we can expect in the data coming at ATS and I will follow up.

Roger Jeffs

Yeah, thank you, Ryan, Rajiv, if you wouldn't mind answering that one.

Rajeev Saggar

Yeah, thanks, Ryan. So, as Roger talked about in the prepared remarks today, one of the highlights that we spoke about was the walk effect that was observed in the first 20 patients treated within eight weeks, which was, which showed an observed mean improvement of around 26.4 m.
Now I think that that first and foremost highlights a few key processes first that we can get patients to what we believe is a new therapeutic goal that surpasses the traditional 9 to 12 breaths that have typically been the sort of the ceiling effect of Tyvaso since 2009. We've highlighted that we're able to achieve doses in the overwhelming majority of patients by week eight that's equivalent to greater than or equal to 15 breaths by this time.
So, we can get patients up to what we believe is a very effective dose and even higher at an earlier time point and then allow further titration to further doses to stabilize the patient and plateau them out. So, I think that's what's going to be quite encouraging. At [Medi] we're going to showcase more regarding the data sets regarding how we dose the patients. We're going to talk a little bit about our effects in terms of some quality-of-life questionnaires as well.
And in the future our plan is to, as we've talked about, the study will be fully enrolled within the next few weeks here. So, we're really excited about that. And then we do plan to prepare and submit for the final data set later in the year and present that at a major respiratory conference in the future

Roger Jeffs

Great thank you Rajeev.

Ryan Deschner

That's helpful. Thank you very much. And will you be doing additional hiring for the commercial field team after potential approval and both indications is confirmed? And what is the status of the current field team with regards to both hiring and training? Thank you.

Roger Jeffs

Yeah, so Scott, if you wouldn't mind.

Scott Moomaw

Yeah, sure. So the status, I'll start with that one. The status of the current sales team is that they're locked and loaded and ready. We've had the team on board for 14 months now, and these were experienced, mostly PAH, all rare disease folks to begin with, and so they've been out in the field strengthening relationships. They've been training, they are absolutely ready to go and very excited.
On the future front, we actually just went through another exercise, over the course of the last few months to take a look at our salesforce sizing strategy. We think we're well suited to launch, as I mentioned earlier. We will take another look at that once we get out and start to understand sort of the sensitivity factor for the number of reps and then, we'll look at potentially expanding if that makes sense in the future.

Roger Jeffs

Another thing I would add is we are adequately sized for launching in May in both indications and then as Scott said, obviously as we continue to build and present the unique benefits of YUTREPIA, I think we want to articulate that even broader. So, we could upsize our sales force probably in the 26-time frame if necessary. To operator is there another question?

Operator

Greg Harrison, Scotiabank

Greg Harrison

Hey, good morning, guys. Thanks for taking the questions. Wondering if you can comment on your updated cash runway following your recent financing and what assumptions go into that estimate that you could reach profitability with your current balance sheet and then if you could also comment on which factors play into your decision on pricing given your view of YUTREPIA's profile relative to the competitor. Thanks.

Roger Jeffs

Great. I think both of those questions are would be well answered by Mike.

Michael Kaseta

Yeah, Greg, great to talk to you again. As it relates to runway, as we said, with this $100 million of additional financing from healthcare royalties, $25 million we receive, we received at closing $50 million will be received upon the first commercial sale of YUTREPIA, and the final $25 million will be at mutual option once we reach a cumulative $100 million in net sales of YUTREPIA. I think it's pretty simple.
We have, we're very excited about the launch of YUTREPIA, as Roger said and Scott has said, we are, fully ready from a commercial readiness point of view, from a supply point of view, we feel very bullish about our ability to launch this successfully, and we feel that if, assuming, as Roger said we for full approval here coming up, we get full approval on or near the expiration of the exclusivity date.
We feel confident if we hit our goals and hit our targets that we can be profitable on this current balance sheet and like I said, fully support the L606 program, all of our, Phase 4 studies we're doing on YUTREPIA while also the ongoing commercial readiness. So, we're very excited, we're very confident, we're very happy to have a great partner like Healthcare Royalties, on this journey and we look forward to launching.
As to the second question, we're not going to talk about pricing strategy. I think what I would say is as we've demonstrated or continue to demonstrate and what we feel our ascent early results on ascent only reinforce that that we feel that we have a superior product profile and based on that we want to make sure that we are always balancing patient access while also fulfilling the value proposition that YUTREPIA can bring.
So, we're not going to talk specifically about, pricing strategies in totality, but I think we're very confident as we come to the market that we will have the right strategy to make sure that patients have choice as we as we move forward.

Greg Harrison

Great, that's helpful. Thanks so much.

Roger Jeffs

Thanks for the question, Greg. Operator, next question.

Operator

Cory Jubinville, LifeSci Capital

Cory Jubinville

Good morning and thanks for taking our questions and congrats on this new efficacy data with the science. It's really exciting. Just kind of following the theme of more drug is better, I recognize that the sample size here is still relatively small, but have you had any type of dose response among patients, are those who are reaching two to three fold the Tyvaso equivalent dose achieving better outcomes than those in the study
who might be, kind of in the lower range equivalent to the existing standard of care and this also might be a naive question, but is it possible to get these efficacy data on label and how would you go about marketing the six-minute walk to prescribers post-approval?

Roger Jeffs

Yeah, I'll take the second question and then Rajeev can say what he can about the dose versus effect curve. So, it's not the data would not be available for indication claims per say because it's an open label safety study. I think it would be part of an annual update to the label once approved where we could update the clinical pharmacology section to describe the data both in terms of safety and potentially in terms of efficacy,
but again that's a negotiation with the FDA about what we could then include in the clinical pharmacology section of the label. So, I'll reserve a sort of commitment on that, and we'll do the best we can to get it in there, but I think, certainly we will abstract and then publish the data, and I think as we're seeing there's tremendous inbound interest based on what we're describing and there's over 20 doctors doing this current ascent study.
Many of them are the are the seminal thought leaders, and I think the fact that they're doing the study and we're seeing the results that we're seeing is going to help highlight the data when they lead the panel sessions, etc. because now they're seeing the true value of print as it relates to the YUTREPIA.
So, and then I will just comment on those response before turning it over to the regime. It's very hard in a small sample of patients to show those response, frankly, plus we're allowing patients to individually titrate to do.
So, we're not sort of pre-defining what those level patients should titrate to and then measuring that versus effect. So, it's a continuum, so that's a difficult paradigm to show those response in, but I don't know if you have additional comment there.

Rajeev Saggar

Yeah, Cory, I think just I think a few things to highlight. First of all, the patients that were rolling in ascent are quite heterogeneous. We purposefully designed the study to showcase safety and tolerability of YUTREPIA. So, we not only include patients with mild hemodynamic limitations with their pal hypertension but also patients with severe hemodynamic impairments with various levels of complexity with the interstitial lung disease and their respiratory physiological impairments.
But I think despite that heterogeneity, I think what the data is showing, despite, these small numbers, but even though you know the study continues to enroll and continue to highlight a few things, number one, clearly the low resistance inhaler combined with a print formulation is absolutely allowing these patients to titrate YUTREPIA to again to what I believe are actually new therapeutic levels, and that's very important because it's well known that proteinoids therapies are titratable.
It is dose related, so it tends to effects tend to improve as dose is escalated. The problem with current therapies on the market, including oral and systemic parental therapies, is that they're just significantly limited by terrible systemic side effects, especially in the oral therapies with the GI side effects and of course the parentals with indwelling lines or subcutaneous complications.
I think with the current inhale therapies on the market today, we know that at least in the increased study what was very interesting relative to the scent study is by eight weeks only 50% of the patients in the Tyvaso nebulized study for increase of PH-ILD were able to reach the 10 to 12 breath levels versus in the scent study, despite the heterogeneity in the patient population we're able to get patients,
the majority, overwhelming majority of patients up to more than or equal to 15 breath equivalents. So again, I think that what the assent data is going to show at ATS and what [KOLs] are going to see is that this that YUTREPIA is very well tolerated and titratable and that they can customize to whatever needs their patients have with both PAH and PH-ILD in the very near future.

Roger Jeffs

And Cory, that's a great answer. Thank you. I think one way we're going to take on this dose issue directly. We're going to do a directed transition study from patients on Tyvaso and Tyvaso DPI that are underserved by those therapies, probably because of those limitations, we'll transition them to YUTREPIA, improve their dose, and then, and if we show, therefore an improved outcome, we've shown not only is dose related to outcome.
But we've also differentiated the products, even in a different way and a helpful way for YUTREPIA. So, look for that study to start up in the near future as well. So, operate next question please.

Operator

Thank you and I'm currently showing no further questions at this time. I'd like to hand the call back over to Roger Jeffs for closing remarks.

Roger Jeffs

Thank you very much. So, we really appreciate everyone joining us today and we look forward to speaking again soon. Bye-bye.

Operator

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