Liquidia Corp - Earnings Call - Q3 2019

Transcript

Speaker 0

Good morning ladies and gentlemen. My name is Shannon and I will be your conference operator today. I would like to welcome everyone to the Liquidia Technologies Third Quarter twenty nineteen Financial Results and Corporate Update Conference Call. At this time all participants are in a listen only mode. Following the presentation we will conduct a question and answer session.

Instructions will be provided at that time for you to queue up for your questions. I would like to remind everyone that this conference call is being recorded. I will now hand the call over to Jason Adair, Vice President, Corporate Development and Strategy.

Speaker 1

Thank you, and good morning. Welcome to Liquidia Technologies third quarter twenty nineteen financial results and corporate update conference call. 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 www.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.

Speaker 2

Good morning, everyone, and thank you for joining us. On the call with me today are Rich Katz, our Chief Financial Officer and Doctor. Rob Rasigno, 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 two pipeline programs, LIQ861 and LIQ865. Rich will provide a brief summary of financial results for the 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. Important highlights include, we completed the registrational studies of August to support our NDA submission, including the comparable PK program. We initiated clinical studies to evaluate long term safety, tolerability, and hemodynamic effects of eight sixty one. We are engaged in pre NDA meetings with FDA in preparation for the NDA submission targeted for the 2020.

And we continue the tox studies for eight sixty five with the goal of supporting a Phase II clinical program. With those highlights in mind, I'd like to provide some additional details on our activity in the last quarter, starting with our lead program eight sixty one. As a reminder, eight sixty one is an inhaled dry powder formulation of treprostinil, a prostacyclin analog used to treat PAH by targeting the pulmonary arteries. It combines the demonstrated benefits of inhaled prostacyclin therapy with fewer systemic toxicities than oral or infused options. We believe that eight sixty one has the potential to maximize the therapeutic benefits of treprostinil by safely delivering higher doses directly into the lungs using a convenient palm sized disposable dry powder inhaler.

To date, we have generated a robust set of information on the safety, tolerability, and clinical benefit that eight sixty one may provide PAH patients transitioning from Tyvaso or those naive to prostacyclin therapy. As we evaluate the totality of the data collected, I wanted to point out a few highlights from the program today. Final enrollment in the pivotal INSPIRE trial to assess safety and tolerability through month two included one hundred and twenty one PAH patients in two groups. Fifty five patients transitioned from a stable dose of Tyvaso or transition patients. And sixty six patients who were prostacyclin naive and stable on less than two approved oral PAH therapies, known as add on patients.

Consistent with preliminary data presented in the 2019, August was observed to be well tolerated. Treatment emergent adverse events were mostly mild to moderate in nature, even at the highest dose studied, the one hundred and fifty microgram capsule strength of eight sixty one. Most patients remained on treatment throughout the study, with ninety six percent of transition patients and ninety one percent of add on patients receiving treatment to month two. More than eighty percent of add on patients titrated to the seventy five microgram capsule strength of eight sixty one or higher within the first two months of treatment. More than ninety percent of all patients who completed two months of treatment maintained or improved their New York Heart Association functional class.

And lastly, both patient groups saw improvement in exploratory measures of six minute walk distance and quality of life, as measured by the Minnesota Living with Heart Failure questionnaire. Though the primary endpoint of INSPIRE was at the month two time point, We continued to treat patients who chose to remain on LIQ861. We were pleased to see that more than eighty percent of INSPIRE patients remained on study drug at month four, with no significant changes in safety or tolerability compared to month two. In addition to completing the INSPIRE study, we were also pleased to complete a second supplemental PK study. The results further confirmed the comparative bioavailability of the seventy five microgram capsule strength of eight sixty one to fifty four micrograms or nine breaths of Tyvaso, the reference listed drug.

We expect to present the clinical data from INSPIRE and the PK studies in greater detail at medical conferences and in publications during the course of 2020. With the INSPIRE study closed, we are actively managing two clinical trials with eight sixty one. First, we have transitioned INSPIRE patients who wish to continue eight sixty one treatment into an open label extension study, which we plan to continue until potential FDA approval. And secondly, we are also enrolling patients in a clinical study in Europe to characterize the hemodynamic dose response relationship to eight sixty one. The company is now preparing to submit the NDA for eight sixty one.

To that end, we have actively engaged the FDA in pre NDA meetings. During the third quarter, we hosted the FDA at our site as part of their Emerging Technologies program. Their visit helped facilitate the pre NDA CMC meeting a month later, where we confirmed no new CMC requirements for an NDA submission. Our pre NDA meeting to discuss clinical and non clinical matters of the NDA will be conducted later in the fourth quarter. Pending a successful meeting, we continue to target an NDA submission in the 2020.

With regard to LIQ865, significant progress has been made with our lead program, as I mentioned before. And we continue to advance our second program, eight sixty five, which is a print formulation of bupivacaine, to treat local postoperative pain for three to five days with single administration. In preparation for phase two studies, we're conducting a toxicology program to assess eight sixty five in multiple non clinical tissue models. In one study to assess incision tensile strength after healing, results were acceptable and not statistically significant from controls. In a second study to assess bone fracture healing, we observed dose dependent delayed healing at the two eight sixty five doses studied.

However, there were no adverse effects noted on the surrounding soft tissues. We're planning to study lower doses of eight sixty five to determine no adverse effect level on bone healing. And lastly, we expect results from an additional soft tissue toxicology study later in the fourth quarter. Results from all of the toxicology studies will be reviewed. And if supportive, we intend to initiate Phase II program in 2020.

I would like to turn the call over now to Rich to review our third quarter financial summary.

Speaker 3

Thanks, Neal. Revenues, there were no revenues that were recorded during the third quarter of 'nineteen. That compared to $200,000 for the 2018. That decrease, you will recall, was related to the full recognition in the second quarter of twenty nineteen of the $8,100,000 of previously deferred revenue in connection with our collaboration with GSK. R and D expenses were 10,900,000.0 That compared with 7,200,000.0 in the prior comparable quarter.

The increase was primarily due to the continued development of eight 60 one. G and A was 2.4 compared to 2.3, a slight increase, mostly employee related and professional fees. Interest expense, 300,000.0 versus 600,000.0 in the comparable quarter of 'eighteen, and that was driven by a decrease in our debt outstanding. In summary then, our net loss for the quarter was 13.4. That compared to 9.7.

And again, the difference was driven pretty much entirely by the increase in the R and D expenses related to August. I would also note that we're looking to bolster the balance sheet, of course, as we move into 2020. We are exploring all funding options, including a potential partnership around August. And we're pleased to be working with Jefferies on that effort. I'll turn the call back to Neil.

Speaker 2

Thanks, Rich. Twenty nineteen has been an amazing year for Liquidia. We've advanced our pipeline. We've further demonstrated the benefits of our print technology. And in the process, increased the potential for positively impacting patients' lives into the future.

With clear and meaningful progress against our goals in 2019, we're very excited for the year ahead. Specifically, we intend to submit the NDA for August in the 2020. We'll continue to present and publish clinical data from the eight sixty one program and complete our eight sixty five toxicology studies with the goal of initiating our Phase II program in 2020. We look forward to updating you on our progress in the coming months. We thank everyone for their interest and continued support.

And I will now turn the call over to the operator to take your questions.

Speaker 0

Our first question comes from Liana Moussatos with Wedbush. Your line is open.

Speaker 4

Thank you for taking my questions. Can you tell us what the steps are to submitting the NDA and if any are rate limiting? And remind us the FDA has sixty days to respond and you don't expect an AdCom because it's five zero five(two)?

Speaker 2

Yeah, Liana. Good morning. This is Neil. Yeah, really our final remaining step in the process from here with regard to direct FDA contact will be a meeting that we have later in the quarter that will review our clinical and non clinical tox program. And from that, it's essentially an internal process of finishing up the final documents to submit the NDA in the first quarter.

Speaker 4

And the FDA has sixty days to respond after you submit?

Speaker 5

Yes. That's the refuse to file period. And we don't anticipate an advisory board being conducted for our product at this time.

Speaker 4

Okay. Then remind us of your prelaunch commercial plans and the current status.

Speaker 2

Yes. So you may recall, Liana, we began to assemble a commercial team last year with regard to preparing ourselves for a launch. The program is right on track. We're doing all of the necessary work to be commercial ready. In particular, we've spent a lot of time this year everything from name of compound to working with payers to assessing all of the requisite kind of sales and marketing efforts that will be needed there.

And we feel very good about where we are right now in process on that.

Speaker 4

Okay. And are you in talks with potential commercial partners now?

Speaker 2

That is correct. To Rich's earlier point, as you would imagine and I've said this before when you begin to get a much more advanced kind of further derisk Phase III product, the good news is it brings folks into conversation with you about that. We have begun entertaining conversations around that. I don't want to give guidance that we're definitely going to do a commercial partnership by any means, but we're looking at all alternatives here. Part of that, to Rich's point, has to do with our balance sheet.

So we want to be smart about thinking about the opportunities there. But also, as you would imagine, be very attuned to making sure that we optimize eight sixty one for its commercial success with the right partner that together we could optimize what the product does.

Speaker 4

And how many patients transitioned to the open label extension?

Speaker 5

Yeah, the majority of the INSPIRE patients transitioned into the extension study. We're not really commenting on enrollment. As right now, we're just collecting long term safety data from that study.

Speaker 4

And you would view those as low hanging fruit for commercialization?

Speaker 5

Those patients are eligible at the time of August approval to transition to commercial patients.

Speaker 4

Okay. My last question. What's the manufacturing status and inventory that you anticipate at launch?

Speaker 2

Yes. So Liana, I guess what I would just say to that is we are in great shape with regard to commercial readiness on the manufacturing piece. We don't stipulate exactly what type of scale we have on supply on that. But suffice it to say, we're well ahead of where we would need to be with regard to that. And supply in the commercial market is not an issue here.

Speaker 4

Thank you very much.

Speaker 0

Thank you. Our next question comes from Your line is open.

Speaker 6

Hey, good morning, guys. Congrats on all the progress. Just wanted to see if you could put some perspective around the discontinuation rates that you saw two months and four months. So maybe some of the reasons if they're kind of standard and what it would look like compared to Tyvaso. So that would be question one.

And then in terms of the potential partnering program, can you just try to frame for us what would be of interest to you? Do you want to retain a little bit of a smaller sales force, or would you like a bit of an upfront to be able to also participate in market? I know you're in the middle of having conversations, but give us a sense of what you'd like to see, out of the outcome of some of these types of discussions. Thank you.

Speaker 2

Sure, Ken. This is Neil. Thanks a lot. I'll let Rob handle your first question, and I'll come

Speaker 5

back in on the second. So Rob? Hi, Ken. So we were really encouraged by the high rate of continuation greater than 80% at month four. Really, the adverse events were not really that different that we've seen at month two versus month four.

And the reasons for discontinuation come in a number of buckets, some adverse events, some patient requests or physician decision. And these are pretty common in all studies with prostacyclin, all studies with PAH. As you know, these patients do progress in disease. We have not seen too many disease progression at month four, which is important. And also the primary endpoint of the study was at two months, so for various reasons, patients that discontinued after that point.

As far as it compares with Tyvaso, Tyvaso was in a different age. The types of AEs were similar, obviously. But with Tyvaso, patients were either on one oral background therapy, and the next stop, if you will, in their treatment regimen was parenteral prostacyclin. And in today's world, there's a lot more options for patients, too. So it's a difficult comparison to make.

Speaker 2

And Ken, with regard to your second question, not to be vague, but it somewhat depends. I mean, we're fielding an array of opportunities here. And what I would say is in general on deal structure, as you would imagine, the more control you give up with that is going to require more of an upfront. So it's a little bit of a hydraulics exercise in the amount of the upfront threaded with the downstream that comes with that. And so we're assessing that.

Again, I don't want to give guidance that we're going to take one model or the other because everything's on the table with regard to that. We've got enviable issue here of a really great opportunity in our pipeline. And so we're trying to weigh through what the right thing to do for August is in terms of involvement and control as well as kind of the future in terms of all the opportunities that we have. And it's going to take us a few weeks to kind of go through that process. But we'll obviously keep you guys posted as we come to conclusions on that.

Speaker 1

861.

Speaker 2

I'm sorry, I said that's 865. Sorry if I said 8. Yes, sorry, meant 861, Ken. Great, thank you. Sure.

Speaker 0

Thank you. Our next question comes from Serge Belanger with Needham. Your line is open.

Speaker 7

Hi, good morning.

Speaker 2

Hi, Serge.

Speaker 7

A couple of questions on 861. First, can you just, I guess, talk about how you addressed the comparative PK sub study. I think during your last update you had talked about potentially repeating all of it or part of it. And then should we expect any additional longitudinal data before year end here? And last question is talk a little bit more about the hemodynamic response trial that you're initiating in Europe and how that could play in either with labeling here in The U.

S. Or maybe European regulatory plans?

Speaker 5

Sure, Serge. This is Rob. I was just taking some notes on that. So with the PK, if you recall, we did previously state that we did repeat the PK study in healthy volunteers, and it confirmed the comparative bioavailability of the seventy five microgram capsule strength of eight sixty one when compared to the fifty four microgram dose or nine breaths of Tyvaso, looking at comparable treprostinil systemic exposures. We believe that this does support the requirements for a PK bridge in our five zero five(two) submission.

And we intend to present this data at upcoming medical conference. So that's the PK. With regards to the additional data before year end, we've actually prepared and plan on presenting this data at upcoming medical conferences. So as they are accepted, we clarify for you guys when they're coming out. But both the three zero one data and the PK data, our plan is to present as accepted.

Finally, with regards to the hemodynamic study, I'm glad you asked me that question. So that study has started. We're enrolling patients in that study. We're excited because this will show us the impact of eight sixty one on right heart function as assessed by both acute and chronic hemodynamic measurements. Now, that data is not required or expected to be in the NDA submission that we're putting in shortly, but that data will be very useful to support the therapeutic benefits of eight sixty one.

There's always opportunity potentially for that study to be included in a later label update. We do look at this study as a first study outside The US. And while we're not focused on pursuing European approval now, that study will lay a good groundwork for future development work.

Speaker 7

Okay. And then just one quick one on eight sixty five. I guess what are you looking to see in these next toxicology studies? And assuming you initiate a Phase II program next year, would that entail a soft tissue procedure study as well as a bone procedure study?

Speaker 2

Yes, Serge. Thanks for the question. So there are kind of two pieces that are still kind of out there for us on the tox piece. As I indicated, one of those we're still waiting to get the soft tissue tox data in. We need to do a little additional bone work with regard to dosing.

So we want to look at that. We're going to look at lower doses. We went in at high doses. We want to look at lower doses there and see what that response effect would be. And as it pertains to Phase two, while we're not giving guidance about which studies exactly and that kind of thing, because I think we're still working through that too.

We want to be informed by the data. If we just look at a roadmap of what's been out there with regard to the Pacira and Heron development stories, it would indicate that most likely it would be a bone and a soft tissue study at some point in our horizon. And exactly the timing and sequencing of that will all be led by the tox data. Got it. Thank you.

Sure.

Speaker 0

Thank you. Our next question comes from Roger Song with Jefferies. Your line is open.

Speaker 8

Hey, thank you for taking the question. Maybe just a few quick ones from us. So first of all, the kind of open label extension study, do you expect or how much do you expect the long term follow-up needed for the approval?

Speaker 5

So for approval, Roger, hi, this is Robert again. FDA, if you recall, only asked for two weeks of safety data, two weeks of exposure. The primary endpoint of INSPIRE, which is the main clinical study in our NDA package, shows a two month endpoint. The open label extension was provided for those patients who may be benefiting from eight sixty one that would give them the opportunity to stay on eight sixty one long term and allow us to collect longitudinal data, not so much for FDA, but more for the clinician, the medical community, to understand the long term safety profile, as well as potential benefits of eight sixty one. And those patients would be eligible to stay on eight sixty one all the way through potential FDA approval.

Speaker 8

Got it. Thank you. So maybe next question related to the competitor. So we noticed MannKind and United Therapeutics, they just launched the phase phase three, phase one study for TRAP T. And they're very interesting.

They focused on the Tyvaso switcher or transitioner. And so first of all, what's your view on their program? And how do you think the eight sixty one will have a differentiated label or potential profile compared to CAR T?

Speaker 5

So we don't want to speak any way, shape, or form on behalf of MannKind or United about their program. What we have seen from their data in terms of their pharmacokinetics was limited in their Phase As you recall, in our earlier study of Phase I, we actually dosed to one hundred and fifty micrograms, which was approximately double of the recommended dose of Tyvaso. We can't really say too much about their program. They're focusing on one population. We're focused on both the traditional inhaled population space, where Tyvaso's the main drug of choice, But also because we're looking at add on patients, we're looking at patients who are upstream and patients who are less sick.

And if they can start a product such as eight sixty one earlier, then we could potentially be an alternative not only to the inhaled therapies, but also some of the oral therapies.

Speaker 8

Yep, got it. Thank you. Maybe just one last question regarding the H55. So are you surprised about the delayed bone healing at all? Is that related to print technology or bupivacaine the molecule per se?

Speaker 2

Roger, thanks. We're not surprised per se. I mean there has been some evidence that that with bupivacaine is out there and we want to understand that. That's in essence why we want to kind of go in and look at some of the dosing data on that. So I think it's too early to draw any conclusions.

That's why we want to do some additional work and look at that. And obviously, we'll keep you guys informed as that goes forward.

Speaker 8

Got it. Thank you. That's all from me. Sure.

Speaker 2

Thank you.

Speaker 0

Thank you. Our next question is a follow-up from Liana Moussatos with Wedbush. Your line is open.

Speaker 4

Thank you. My question was just asked and answered.

Speaker 2

Thanks Liana.

Speaker 0

Thank you. And I'm currently showing no further questions. I'd like to turn the call back over to Neal Fowler for closing remarks.

Speaker 2

Thank you very much. I just want to thank everyone again briefly for your time this morning and your interest as always. And we look forward to the months ahead, and we'll keep you guys informed as progress continues. So thanks again. And everyone, have a good day.

Speaker 0

Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.