Good morning, and welcome to the Liquidia Corporation Third Quarter 2025 Financial Results and Corporate Update Conference Call. My name is Carmen, and I will be your operator today. Please note that today's call is being recorded. I now turn the call over to Jason Adair, Chief Business Officer.

Thank you, Carmen, and good morning, everyone. It's my pleasure to welcome you to Liquidia's Third Quarter 2025 Financial Results and Corporate Update Conference Call. Joining me today are Dr. Roger Jeffs, Chief Executive Officer; Michael Kaseta, Chief Operating Officer and Chief Financial Officer; Dr. Rajeev Saggar, Chief Medical Officer; Scott Moomaw, Chief Commercial Officer; and Rusty Schundler, General Counsel. Before we begin, please note that today's discussion will include forward-looking statements, including statements regarding future results, product performance and ongoing clinical or commercial activities. These statements are subject to risks and uncertainties that may cause actual results to differ materially. For further information, please refer to our filings with the SEC available on our website. Please note that our earnings release, our commentary and our slide deck accompanying this call include non-GAAP financial measures. Reconciliations of these non-GAAP financial measures to the most comparable GAAP measures can be found in our earnings release and the slide deck accompanying this call. With that, I'll turn the call over to Roger Jeffs, our Chief Executive Officer. Roger?

Thanks, Jason, and good morning, everyone. This morning, I want to begin by expressing just how proud we are of what Liquidia has accomplished in a remarkably short period of time. Over the last 5 months, we've not only brought a new and meaningful medicine in YUTREPIA to patients living with PAH and PH-ILD, but we've also begun to influence the way physicians consider how to best introduce a prostacyclin into various treatment regimens. Every day, we hear stories from physicians and patients who are thankful to now have an inhaled prostacyclin that fits their lives, one that's simple and well tolerated. For too long, patients faced limited and difficult choices. YUTREPIA is offering them an attractive alternative. The results speak for themselves. In the third quarter, YUTREPIA continued to exceed expectations on every front. As of October 30, we've received more than 2,000 unique prescriptions, initiated therapy for over 1,500 patients, and have over 600 healthcare practitioners who have prescribed YUTREPIA across the U.S. In fact, October is our highest month yet for referrals. Through the third quarter, the vast majority of prescriptions are converting to active patient starts, with the referral-to-start ratio hovering around 85%, an incredible figure for a new-to-market therapy and a true testament to the strength of our commercial and market access infrastructure. We've seen broad application of YUTREPIA, and I'd like to share some details on usage patterns. PAH has accounted for a majority of total prescriptions, with the use in PH-ILD growing steadily. Approximately 3 out of 4 patients starting YUTREPIA are new to treprostinil, while about 1 in 4 are transitioning from other prostacyclin therapies, typically inhaled. Switches from Tyvaso products are similar for both indications at roughly 25% of prescriptions. Notably, around 10% of PAH prescriptions represent switches from oral therapies, a meaningful indicator that physicians may be starting to view YUTREPIA as a viable option to improve exposure and tolerability for patients who are struggling with systemic side effects from their oral prostacyclin therapy. This balance of naive and transition patients demonstrates the flexibility of YUTREPIA across real-world settings in specialized centers and community practices. The feedback we're hearing has been consistent. Many physicians find YUTREPIA easy to initiate, faster to titrate, and better tolerated than other available options while patients appreciate the convenience and confidence that come with a palm-sized, low-effort device. YUTREPIA isn't just gaining traction; it's redefining expectations for inhaled delivery of treprostinil where exposure drives efficacy, tolerability drives durability, and convenience drives compliance. We intend to translate this early commercial success into long-term sustainable growth. As Mike will explain, Liquidia achieved profitability in its first full quarter following launch, and we are well positioned to reinvest in innovation without compromising our financial discipline. Our clinical strategy in the near term intends to broaden YUTREPIA's clinical utility. We are actively planning niche open-label studies to further strengthen the product profile. For example, to help inform what we are already seeing in the field, we will initiate a study in PAH patients transitioning from oral prostacyclins to YUTREPIA. And considering the recent interest in ILD indications, we are evaluating the feasibility of proof-of-concept studies with YUTREPIA in IPF and PPF. We will also explore how YUTREPIA may be used to treat other diseases where patients have unmet needs and smart trial design can expand the value of well-tolerated inhaled treprostinil, with opportunities in PH-COPD and Raynaud's phenomenon as examples. And as you heard during our R&D Day, we will further optimize inhaled treprostinil with L606, our sustained release formulation that is rapidly delivered twice daily with a palm-sized nebulizer. We believe that the week 48 data from our U.S. clinical study already demonstrates that L606 may be the most tolerable inhaled treprostinil developed, with clear signals of efficacy in PAH and PH-ILD patients, whether transitioning from Tyvaso or naive to prostacyclin. Our global pivotal study called RESPIRE will initiate later this year and planned enrollment to start in the first half of '26. Now let me hand the call over to Mike to explain how we can maintain our trajectory for increasing the overall value of the company.

Thank you, Roger, and good morning, everyone. The third quarter of 2025 was truly a breakthrough quarter for Liquidia, both operationally and financially. During the quarter, our first full quarter of launch, we delivered $51.7 million in net product sales of YUTREPIA. We accomplished this while total R&D and SG&A expenses remained relatively flat compared to the second quarter of 2025. For the quarter, the company recorded a net loss of $3.6 million. However, when viewed on a non-GAAP basis, we generated positive adjusted EBITDA of $10.1 million in the first full quarter of YUTREPIA sales, much earlier than our previous guidance of profitability within 3 to 4 quarters post-launch. Cash on hand at the end of the quarter totaled $157.5 million. Of particular note, I'm especially pleased to say that September marked our first month of positive net cash flow, a major operational milestone that highlights both our rapid success and disciplined approach to cash management. During September, we added $5 million in net cash, and we've continued to build on that momentum with additional gains in October. Looking ahead, we expect this positive trend to extend into 2026 as we stay focused on driving profitability while reinvesting in R&D to support sustained long-term growth. Roger, back over to you.

Thanks, Mike. And as we close out this quarter, I want to emphasize the three key foundational elements that are truly defining the success of Liquidia both now and into the future. One, we have a product in YUTREPIA that is rapidly influencing the standard of care. Two, we have quickly established a strong profitable operating foundation; and three, we have a disciplined growth strategy focused on expanding indications and value for YUTREPIA while also advancing our next-generation product, L606. These pillars—innovation, execution, and reinvestment—are what will guide us as we end this year and enter 2026. Above all, I want to thank our team, our clinical partners, and the patients who trust us. They are the reason we continue to deliver with both passion and precision. With that, operator, please open the line for questions.

Comes from the line of Amy Li with Jefferies.

Congrats on the incredible launch. Based on our back-of-the-envelope math, we're getting to around 1,000 patient adds this quarter, which is doubling what Tyvaso reported in their 500 quarter-over-quarter adds earlier in their launch. Can you give us a sense of what's driving this uptake? And in particular, the breakdown between PAH and PH-ILD? And then finally, how are you thinking about the trajectory of patient adds going forward?

Amy, thanks for the question. So again, we won't really comment more specifically than what we already have in the earnings release on numbers. But I think what you're seeing is very strong demand in the first 5 months of launch, completely driven by the product profile of YUTREPIA, which is unique and certainly is well on its way to becoming the established prostacyclin of first choice, not only in the inhaled market, but as we alluded to, we're starting to see oral transitions, so we can offset some of the gastrointestinal toxicities with the oral. And then what we're also seeing somewhat is in the patients that have added sotatercept and maybe normalizing as they de-escalate the parenteral therapy; they're replacing that with YUTREPIA so that they can keep the prostacyclin pathway addressed. So there's a lot of, I would say, growing opportunity. I think if you look at the first 5 months, we've obviously seen very strong demand based on the profile. October, as we said, has had a slight uptick versus the previous month, so we're still on an attractive runway. And while we can't predict growth in the future, and certainly, there will be some seasonality and I think some ordering choppiness at the early phase of launch, I think we'll continue to execute well, and we feel very good about our future prospects. Maybe, Scott, if I could ask you to highlight some of the things that you think as Chief Commercial Officer have highlighted the quarter and address more specifically some of Amy's questions.

Yes. I think that the things that we're focused on right now are, one, we're continuing to increase breadth. So we're still in launch phase. We're still out there getting awareness and trial. We feel like we have an amazing opportunity still to drive to new prescribers. At the same time, we're still looking at depth from the current prescribers. With each day, we have new prescribers that are over the 5 prescription mark, which shows, I think, an amazing amount of investment at those centers. So we think there's a lot of opportunity left out there. I think, Amy, I think you asked about the PAH, PH-ILD split. One thing we will comment on there is we have seen that PAH is a majority of the prescriptions. However, PH-ILD is definitely growing steadily, which is kind of what you would expect. I think PAH was probably a little bit more the, if you will, the lower-hanging fruit, and PH-ILD is a growing market, as we all know, and the sky is the limit as far as that goes.

One moment for our next question that comes from Cory Jubinville with LifeSci Capital.

Congrats on this really exciting update. I guess, can you just speak to what percentage of revenues might be associated with contracted versus non-contracted reimbursement? I mean, at this point, are you on the formularies for the 3 major PBMs? I'd say the script volume and the prescriber count is strong, of course. But I think the revenues being recognized to this magnitude this early definitely far exceeds expectations. So just trying to get a sense of what some of those key drivers were in order for you to convert volume to revenues this quickly.

Great question. And we've certainly spent a lot of effort and energy on the market access initiatives. Mike, if I could ask you to comment on the specific question.

Yes. Thanks, Roger, and thanks for your question, Cory. Specifically around payers, I think it is also a testament to where we are right now on our pull-through. And as we said, we've pulled through approximately 85% of referrals have converted into a script. And that's a testament to what we had talked about the launch of building these patient support services that will enable that smooth transition, and we're very proud of what we've done there. Now as it relates to payers, as we've previously stated, we signed contracts with the 3 major commercial payers. We are—the new-to-market blocks that we referred to previously have or will be removed here in the coming weeks. So as it relates to what is contracted and what is not contracted, to date, as you know, there is no contracting in Medicare Part D. So we are on even footing there. In commercial, we have contracted and started to receive rebates there. But as we move forward, as we've always said, we wanted to make sure that patients had the ability to make a choice, and we feel that we have achieved that now and look forward to the future where if a patient wants to choose YUTREPIA, they will not be blocked by virtue of a contracting issue.

Our next question is from Julian Harrison with BTIG.

Congrats on the quarter. Of the 1,500 patients on YUTREPIA at the end of last week, are you able to say how many were in the 28-day voucher period at that time? And also average time from prescription written to YUTREPIA being shipped to a patient, what is that currently looking like?

Yes. Julian, it was good to see you last week at the R&D Day. Mike, if you could answer the question, please?

Yes. So thanks, Julian. In terms of average time from prescription written to when it's filled, what we're seeing is it's usually within a few weeks, which is pretty customary for specialty pharmacies. We have a cross-functional focus on pulling through every prescription from market access to field reimbursement managers with the specialty pharmacies, which is in constant coordination with the HCP office. Now as it relates to our voucher program, again, the voucher program that we offer patients to give them an opportunity to try YUTREPIA with a free 28-day first shipment. That has ticked up a bit. We are now a bit over 50% of our new patients using the voucher program, which was slightly higher from where we were when we had our call in August. But we feel it's a great opportunity for patients and doctors to trial YUTREPIA. And if it works for them, then they can continue on their journey. But for now, the expectation and where we are is slightly over 50% are using the voucher program.

Excellent. And just to clarify, 50% have utilized the voucher program or were using it as of the end of last week.

So from launch to date, we were slightly over 50%. Yes.

Our next question is from Ryan Deschner with Raymond James.

Congrats on the quarter. In the second quarter, you reported an elevated level of channel loading, and I just wanted to ask how this metric is trending in the third quarter and into October. And then I may have missed it at the beginning, if you could comment again on naive versus treprostinil experienced patients.

Yes. Ryan, so I'm not sure specifically what you're asking about channel loading because I don't think we commented on that specifically in the prior quarter. In terms of naive versus transition patients, it's been about 75% have been new to prostacyclin therapies and 25% have been transitions, typically from inhaled, although you can see in PAH, where the orals are only approved and not in PH-ILD, we are seeing 10% transitions there. I think one thing that question is related to is kind of are we growing the market versus just taking share. And I think the correct answer is, yes, we are—I think the market is growing now with a second company in there driving awareness. And I think—but when you look at things sequentially, I'd say, from the second quarter to the third quarter, I think we're capturing the lion's share of this new opportunity. For example, I think it was reported last week that Tyvaso increased in aggregate across the nebulized and Tyvaso DPI franchise by $14.8 million, whereas we're now from Q2 to Q3, we've grown by $45.2 million. So that represents the revenue growth. And of that revenue growth, we've captured 75% of that, which we're very, very pleased about. So a lot of opportunity here to grow the market. And I think with the product profile, the commercial acumen and the ability that we've had to drive immediate awareness around the value of YUTREPIA, you're seeing that the uptake is leaning in a one-sided manner towards YUTREPIA. So again, I don't think we've commented on channel loading, but we can get back to you on that later if that's helpful.

Our next question is from Serge Belanger with Needham.

Congrats on the first quarter of launch. First question regarding payer coverage. Can you kind of give us an update on when you expect to be at a steady state of coverage? And I believe your competitor had entered some contracts with some commercial plans. Just curious if that has led to some headwinds for coverage of YUTREPIA. And then lastly, maybe just expand a little bit on your plans to explore YUTREPIA usage in IPF and PPF.

Great. Mike handles payer access questions; you'll handle the first question. And then, Rajeev, if you wouldn't mind speaking to our explorations in IPF.

Yes, Serge, great to hear from you, and thanks for the question. As it relates to payers, and you referenced United's comments that they had contracted in the commercial space, which we've spoken previously about that they contracted at a parity level. As I said earlier, we have signed commercial contracts with the 3 largest payers. New-to-market blocks have been removed or in the process of being removed. So as a result of that, we feel that we will be on equal footing with United as it relates to that. So we feel very confident in our strategy, very confident in where we sit right now that will enable us to have future growth. One other point I just want to go back to is around the channel loading. Obviously, at launch, the channel loading prior to launch, specialty pharmacies are making an assumption of what's needed. What I would say is we have settled into where I believe is a normal level of inventory. If you want to say that specialty pharmacies hold somewhere between 3 and 4 weeks of inventory. We have leveled off there. We have great relationships with the specialty pharmacies to understand where ordering patterns are. So we're very confident in—as we move forward that can be managed appropriately and feel that we are in line with what our expectations would be.

Yes. Thanks, Serge, for the question. So I think there are a few lessons coming out of TETON-2 that highlight that inhaled treprostinil appears to slow the progression of forced vital capacity in patients with—inhalation specifically with IPF over a course of 52 weeks. I think the other thing that continues to be something that we, as a company and with YUTREPIA are in full agreement is that dose matters. And once again, that will hold; it strongly suggests in TETON-2 that if you can dose the patient as high as up to 12 breaths, these patients did much better than if the patient cannot get to at least a minimum of 9 breaths. I think, obviously, our ASCENT study strongly suggests that if we can even dose even higher to that, we actually and earlier, we potentially can improve overall patients in regards to exercise capacity, at least in PH-ILD. So if you take the entirety of that situation, and of course, the PPF study is not read out yet, but this suggests that I think YUTREPIA has a very strong product profile that may have some significant advantages over nebulized Tyvaso in regards to potentially ease of use, dosing, and titratability and overall tolerability effect. So I think as an organization, we're extremely interested in evaluating and considering this pathway as we move forward.

Thank you, Rajeev. As you stated, this is a real period of renaissance for inhaled treprostinil. And I think the value that YUTREPIA brings and the market opportunity expansion is immense. And with L606, we have a next-generation opportunity to really complete this paradigm shift over time.

Our next question is from Andrew Fein with H.C. Wainwright.

Congratulations. I guess, the strong sales are always a great thing and patient demand is always a great thing. Maybe you can speak to the heightened importance of it in the context of the ongoing litigation with United Therapeutics and the read-through of the strength of sales and strength of patient demand and clear perceived differentiation in the products as we think...

Yes, Andrew, it was a little bit difficult to hear the question specifically. I could hear that you were asking about the litigation and how that's...

Read to the robust commercial environment to the litigation.

Yes. I think the simple answer to that is physicians and prescribers in general aren't that aware of the litigation. And their only concern is patient benefit. So I think when our goal has been to expose the centers to the value of YUTREPIA, get them to try it, particularly within the centers of excellence and then drive further demand. I think that's their concern. What happens in a court of law is outside of their jurisdiction, so they don't technically pay any attention to it. So to me, there's not a lot of read-through in terms of how that litigation has impacted the uptake. And as you can see, we have been robust...

How does it impact the landscape of thought processes Judge Young might go through in deciding the outcome of the litigation. So more of the commercial impact that Judge Young...

Yes. Yes. Understood. Okay. Maybe, Rusty, you can comment on the balance of equities and harm.

Yes. So we don't—again, it's hard to predict how a judge is going to consider or even whether he will consider commercial results, if that's the question. I think the judge is going to be thorough in thinking through the evidence that was presented to him and evaluate and come up with a decision. So again, I don't think he's going to be taking into account what's happening in the marketplace sort of post-trial and coming up with his decision. That was the question.

Yes. I would maybe just take this opportunity to just remind listeners today that the value of the opportunity in PAH alone. I think the oral therapies are doing around $2 billion currently. The inhaled—if you just split the Tyvaso revenue in half, you'd say it's close to $1 billion, and then orals are around—I mean, parenterals are around $500 million. So you can easily get to a $3.5 billion current day revenue opportunity in PAH alone. And as you can see, we think the attractiveness that YUTREPIA offers can lead to a leading position across all three of those segments: the oral, inhaled, and the still parenteral share. So again, I know there's some concern around what may or may not happen with 327, but I think even if you took it in isolation, this is a tremendous opportunity that we have in front of us.

Our question is from Ben Burnett with Wells Fargo.

Congrats on the quarter. I just want to follow up on that last question. I guess I think we were maybe anticipating an update from a legal update. I'm just curious if the timing from what you're hearing on your end is any change? And I guess maybe could you also just remind us as to what exactly we'll get? Like should we get an understanding of any sort of ramifications? Or is this just purely a decision around this patent that you mentioned?

Yes. Thanks, Ben. Rusty?

Yes. So I mean, as far as timing goes, let me address that first. Obviously, there's no deadline for judges to rule in cases. I think the judge—the caseload in Delaware is pretty high. I think the judge is going to be thorough in his opinion, but we don't have visibility as to when that decision will come. I think if you look at the time it took him to render a decision in the first Hatch-Waxman case a few years ago, I'd say we're in the window of when we'd expect an opinion, but the window is a pretty wide window. I think any time between now and sometime in the first quarter even wouldn't be unexpected. Then as far as sort of what we would hear from the judge, I think, again, if you look at the last case as a proxy, I think what we expect here first is just a decision essentially as to who won. And then typically, there's then a second step where the parties then put in front of the judge what they propose the consequence of that decision is one way or the other. And then if there's a disagreement between the parties, there's potentially additional hearings or whatever the judge wants to do to work through that. So at least as far as the initial step is, our expectation is just going to be an opinion as to who won, who lost.

Our last question comes from the line of Jason Gerberry with Bank of America.

One litigation follow-up. Do you have a sense whether a royalty is a possible remedy depending on outcomes of the case as opposed to—I think there's a lot of thought that perhaps like an outcome if there was patent infringement would just be removing ILD from the label. So I just would love to get your perspective on that. And then as we look to 2026, why wouldn't it be reasonable to assume there's at least 2,000 patients on paid drug next year, just given the trends and what we're seeing? Just love to get your perspective on that.

Yes. Rusty, you'll answer the litigation question, please.

Yes. I think there's a wide range of possible remedies here. It just is very dependent on exactly what the judge rules. I think it decides to put in arguments—the consequence ranges from YUTREPIA being removed from the market to a royalty, and those are all in sort of the downside scenarios. So again, it's just highly dependent on exactly how the judge rules. I think depending on which claims he finds are infringed, the basis for the infringement, the consequences could be different. So I think it's hard to comment on that now. I mean, obviously, once we have the opinion, we'll have a more informed take on what we think the likely outcomes are. But at this point, I think, as we've said consistently in our 10-Qs and other releases, I think we have a wide range of potential outcomes. We're just waiting to see what the judge says.

Great. And on the last question, obviously, we're not going to forecast patient numbers. I think what we have highlighted is that we've driven brand awareness very quickly. There's been significant uptake of YUTREPIA in our early launch phase and that our pull-through rate is very, very high at 85%. And we don't see any further impediments to that. So we're going to continue to try to position YUTREPIA as the best-in-class and first in choice prostacyclin and do what we need to do to benefit every patient that we can possibly benefit. So with that, I think we'll end the call. I'd like to thank everyone for joining us today. We're really proud of the progress we've made in just a few short months and even more excited about what lies ahead. I hope everyone has a great day. Thank you.

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