Good morning and welcome everyone, to the Liquidia Corporation Full Year 2021 Financial Results and Corporate Update Conference Call. My name is Josh, and I’ll be your conference operator today. Currently, 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 questions. I would like to remind everyone that today’s conference call is being recorded. I will now hand the call over to Jason Adair, Senior Vice President, Corporate Development and Strategy.

Thank you, Josh. It’s my pleasure to welcome everyone to today’s call to discuss our full year results for 2021 and to provide a business update. Before we begin, I’d like to remind everyone that today’s call will contain forward-looking statements based on current expectations. Such statements may involve risks and uncertainties that may cause actual results to differ materially from these stated expectations. For further information on the company’s risk factors, please see Liquidia’s filings with the Securities and Exchange Commission or on Liquidia’s website. Joining the call today are Chief Executive Officer, Roger Jeffs; Chief Financial Officer, Mike Kaseta; Senior Vice President and General Counsel, Rusty Schundler; and other members of Liquidia management. I would now like to turn the call over to Roger for our prepared remarks, after which he will open the call for your questions.

Thank you Jason and good morning everyone. It’s a pleasure to be speaking with you today. 2021 was a better year for Liquidia, a year to focus on optimizing the company’s core initiatives as we began to shift our full efforts towards the launch of YUTREPIA at the end of this year. 2021 included multiple major accomplishments. Some highlights are, firstly, in November we received tentative approval of YUTREPIA with labeling. We view the labeling as highly favorable as it includes description of use for both patients switching from Tyvaso as well as prostacyclin naive patients, with no new safety issues identified. We are excited to bring this portable, titratable, and durable therapy to patients, some of whom have been using YUTREPIA for more than three years at doses approximately three times that of Tyvaso’s therapeutic dose. This therapeutic profile represents a potential game changer for PAH patients and positions YUTREPIA to become the prostacyclin of first choice. Secondly, in April we expanded the use of trepostinil injection into the subcutaneous market. As a result, we more than doubled the number of patients on trepostinil injection, with approximately 500 patients currently on therapy based on specialty pharmacy reporting. Approximately 400 unique prescribers have switched patients from brand to generic, including approximately 150 unique prescribers since our subcutaneous launch in April of 2021. We expect to see continued demand growth as new generic mandates from payers are increasingly being issued from large payers to cover tens of millions of lives. Thirdly, we have significantly advanced our ongoing litigation with United Therapeutics, including a final written decision in the IPR for the 901 patents that found seven of the nine claims unpatentable. Additionally, based on United Therapeutics stipulation of Liquidia’s non-infringement of the Level 2 claims of 901 patent, that patent will no longer be part of the Hatch-Waxman trial, which is scheduled for the end of this month. An IPR was also instituted for the 793 patent with the PTAB stating that Liquidia demonstrated a reasonable likelihood of prevailing in its assertion that all of the claims of the 793 patent are unpatentable as obvious over the combination of certain prior art. And while last Friday’s summary judgment decision did not go as we hoped, it is important to note that the issue before the court in summary judgment was not the same issue that will be before the court at trial. Judge Hall specifically noted that she would not comment on the validity of these asserted claims in the 901 and 066 patents or the likelihood that the Delaware Court may find the claims invalid based on the same reason that led the PTAB previously to invalidate United Therapeutics 393 patent. In fact, given that Judge Hall’s recommendation was based solely on technicalities that applied only to our collateral estoppel arguments and not on the substance of arguments regarding the scope of the 066 and 901 patents, we are, if anything, more confident than before in our positions of invalidity and non-infringement that will be presented at trial. Finally, we strengthened our balance sheet through business optimization initiatives and the refinancing of our credit facility with SBD, providing funding through key legal milestones in the early launch days of YUTREPIA, as Mike Kaseta will now describe in more detail for you. Mike, over to you.

Thank you, Roger, and good morning everyone. Our full year 2021 financial results can be found in the press release issued earlier today and on our Form 10-K to be filed with the SEC after market closes today. In this document, you will see that first, revenue was $12.9 million for the full year of 2021 compared with $700,000 for the full year of 2020. The increase was driven by recording a full year of revenue related to the promotion of Trepostinil injection following the acquisition of RareGen in November of 2020. Revenue recognized under the promotion agreement in 2021 is net of $2.7 million of amortization of the contract acquisition costs associated with the promotion agreement. Cost of revenue was $3 million for the full year 2021 compared with $200,000 for the prior year. 2021 included a full year of sales force-related costs as well as amortization of the intangible assets associated with the promotion agreement. Research and development costs decreased in 2021 to $20.5 million for the full year compared with $32.2 million the prior year. The 36% decrease primarily related to lower expenses from our YUTREPIA clinical program, which was substantially completed prior to filing the NDA in 2020 and lower employee and consulting expenses. General and administrative expenses were $23.1 million for the full year 2021 compared to $27.4 million for the prior year. The decrease of $4.3 million or approximately 60% was due to a $9.1 million decrease in consulting personnel and commercial expenses and offset by a $5.1 million increase in legal fees related to our ongoing YUTREPIA-related litigation and a $2 million increase in stock-based compensation upon tentative approval of YUTREPIA last November. In summary, we've incurred a net loss of $34.6 million or $0.70 per basic and diluted share compared to a net loss of $59.8 million or $1.76 per basic and diluted share for the year ended December 31, 2020. Turning to our balance sheet, we ended the year in a strong position. We ended 2021 with $57.5 million of cash on hand. In early 2022, we also increased our debt facility with Silicon Valley Bank to provide immediate access to an additional $15 million of cash in 2022, with additional capital available pending certain milestones. When combined with the continued revenue from the Trepostinil injection, the company will be well-positioned to launch YUTREPIA, pending its final FDA approval. With that, I'd now like to turn the call back over to Roger.

Thank you Mike. Moving forward, we are extremely excited about the growth prospects for the company. As Jason mentioned, Mike and I are joined by other key members of our leadership team, and we will now open it up for questions. Operator, first question please.

[Operator Instructions]. Our first question comes from Kambiz Yazdi with Jefferies. You may proceed with your questions.

Good morning everyone. Hey Roger and team. Kambiz on for Chris here. Three questions for me. First of all, why do you think YUTREPIA can expand the inhaled PAH market to a billion from where it currently stands today? Second question, how have payers responded to the availability of generics subcutaneous Trepostinil? And then thirdly, was there any of the United strategy revealed during these summary judgment proceedings? Thank you.

Thank you Kambiz for the questions. I'll address the first one about the market opportunity for YUTREPIA and why we think it's a growing opportunity. YUTREPIA's potential will be driven by four key levers: portability, tolerability, titratability, and durability. The Group 1 PAH market is estimated to be around $500 million, and we believe that the value of a dry powder formulation like YUTREPIA will transition that market rapidly from nebulized formulations to dry powder formulations. By offering a small, portable device requiring only two breaths per session, we believe that YUTREPIA will significantly change the paradigm. In addition, our PRINT formulation allows better aerodynamic performance, which translates into lower adverse events related to deposition in the throat. This has been demonstrated in our early studies, which showed that patients can be dosed effectively, improving durability and opening the door for earlier use and greater demand in the market. We believe we can expand the inhaled PAH market significantly due to these factors. Mike, could you address the questions about generics?

Yes, absolutely. Thanks, Roger, and thanks Kambiz. The subcutaneous approval was critical from a payer perspective. It simplified the administrative burden for payers who previously had to differentiate between injectable and subcutaneous options. As Roger mentioned, we have approximately 500 patients on therapy, which has more than doubled since the subcutaneous approval in April 2021. Several payers have mandated generic fill, contributing significantly to this increase. For 2022, while we are not providing revenue guidance, two large national payers covering approximately 50 million lives will require the use of generic Trepostinil injection, and we expect an uptick as we move into Q2 and beyond 2022.

Great, thank you, Mike. Rusty, can you share insights on what we learned regarding legal strategy?

Sure. Thanks, Roger, and thanks for the question. The summary judgment is based on collateral estoppel, which is a separate issue from the general non-infringement and invalidity arguments that will be made at trial. It’s important to note that the core arguments we made in support of summary judgment addressed the scope of the 066 and 901 patents and compared these to the previously invalidated 393 patent. The judge did not reject or disagree with our arguments, which we believe is noteworthy. However, it's difficult to draw conclusions about what this means for United Therapeutics' strategy moving forward.

Okay, thank you so much for your answers.

Thank you. Operator, next question please.

Thank you. Our next question comes from Serge Belanger with Needham & Company. You may proceed with your questions.

Hi, good morning. A couple of questions for me. I guess the first one for Roger. Can you just outline some of the key decisions on the patent trial front as well as the IPR process that we should expect and how these will guide or determine your prelaunch commercial activities for YUTREPIA? And then the second question, I guess for Mike. Can you just talk about the cash runway and a potential ramp-up in OPEX for 2022? It looks like SG&A went up pretty significantly in the fourth quarter; were those mostly just one-time items or legal expenses? Just trying to get some clarification. Thanks.

Thanks for the questions, Serge. In terms of how the legal case will drive our prelaunch preparation, we are taking all legal measures to ensure that we can remove any unwarranted barriers. As soon as we are free and clear to market, we will move forward with our marketing and launch efforts. Rusty, could you talk about key decisions in the IPR process that will occur this year?

Yes. To give a preview of some key dates: the trial is scheduled for the end of this month, from the 28th to 30th, in the District Court in Wilmington, Delaware. Closing arguments will take place on March 31st. We expect a hearing in the 793 IPR sometime in mid-May, followed by a final written decision from the IPR around mid-August. Regarding the decision from the Hatch-Waxman trial, we anticipate that we'll likely receive a decision prior to the end of the 30-month stay. Beyond that, it's hard to provide much guidance because the courts are busy.

Great, thank you, Rusty. Mike, can you address the questions around cash?

Yes, absolutely. Thanks for the question, Serge. From a cash perspective, we feel quite positive about our current position. As Roger mentioned, with the expansion of the SVB facility, we now have immediate access to an additional $15 million of capital, along with additional funding upon achieving certain milestones. We are optimistic that our cash position will support us through the launch of YUTREPIA in Q4 of 2022 and into Q1 of 2023. Regarding your question on Q4 expenses, the increase in SG&A was driven by one-time costs associated with stock compensation and an increase in legal expenses as we prepare for trial. These are the main drivers for the SG&A increase.

Okay, great. Thank you.

Thank you, Serge. Operator, next question please.

[Operator Instructions]. Our next question comes from Andreas Argyrides with Wedbush. You may proceed with your questions.

Yeah, good morning. And thanks for taking our questions. A couple of them from us here. Can you provide some details around the launch preparations? How many reps do you plan to hire and at what point in time would that happen? Also, if the litigation isn't resolved by the expiry of the 30-month stay, are you planning to launch at risk? Additionally, how are you thinking about expanding the PRINT technology pipeline going forward and the timing around that?

Thanks for the question, Andreas. I’ll address the PRINT expansion first, and then have Mike talk about launch preparations, while Rusty can discuss the litigation and risk. With respect to PRINT, now that we have tentative approval for YUTREPIA, we have validated the platform and are looking to leverage this expertise for next-generation longer-acting forms of YUTREPIA. We plan to explore opportunities in niche and complementary areas for PRINT applications beyond pulmonary hypertension. If executed successfully, we believe this can translate into significant growth. Mike, please discuss launch preparations.

Yes, absolutely. Thanks, Roger, and thank you for the question. The RareGen acquisition has not only provided positive cash flow but also brought in existing commercial infrastructure and a small targeted salesforce. We are currently in full-scale preparation mode for the launch of YUTREPIA. We have recently hired a Head of Sales and are building out our medical affairs team to ensure we are positioned for success. While we won’t disclose specifics on the size of our salesforce, we are confident it will be effective in competing for market share.

Thank you, Mike. Rusty, can you address the litigation strategy and launch at risk?

Sure. Regarding whether we would launch at risk if we haven't received a decision by the end of the 30-month stay, that decision won't be made until that time. It will depend on various data points that we currently do not possess. The outcomes of the trial and the 793 IPR will be key in informing our decision as we approach that timeline.

Thank you for your questions, Andreas. Operator, next question please.

Thank you. Our next question comes from Julian Harrison with BTIG. You may proceed with your questions.

Hi, good morning. Thank you for taking my questions. Can you confirm that the FDA has not requested that a risk evaluation mitigation strategy be implemented for YUTREPIA, assuming you gain freedom to operate later this year?

Yes, that's an easy one. The answer is no, they have not. We have draft labeling in hand, and the product has been declared safe and effective. There’s nothing related to the formulation that would raise any concerns.

Excellent, thanks very much.

Thank you. And I'm not showing any further questions at this time. I would now like to turn the call back over to Roger Jeffs for any further remarks.

Great. Thank you, operator. We want to thank everyone for joining us on the call today. We greatly appreciate your continued interest in Liquidia and look forward to updating you about our progress throughout the year. Have a great day. Bye-bye.

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