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What changed in Liquidia Corp's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Liquidia Corp's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+636 added−493 removedSource: 10-K (2024-03-13) vs 10-K (2023-03-20)

Top changes in Liquidia Corp's 2023 10-K

636 paragraphs added · 493 removed · 406 edited across 5 sections

Item 1. Business

Business — how the company describes what it does

122 edited+58 added−25 removed195 unchanged
Biggest changeTyvaso is the reference listed drug in our NDA for YUTREPIA. Following patent litigation, United Therapeutics and Watson Pharmaceuticals reached a settlement whereby Watson Pharmaceuticals will be permitted to enter the market with a generic version of Tyvaso beginning on January 1, 2026.
Biggest changeFollowing patent litigation, United Therapeutics and Watson Pharmaceuticals reached a settlement whereby Watson Pharmaceuticals will be permitted to enter the market with a generic version of Tyvaso beginning on January 1, 2026. ● Tyvaso DPI (treprostinil) is a dry-powder formulation of treprostinil, licensed from MannKind by United Therapeutics, that was approved for the treatment of PAH in the United States in May 2022. ● Treprostinil Palmitil Inhalation Powder (TPIP), is a dry-powder formulation of a treprostinil prodrug being developed by Insmed.
For example, we currently rely on a sole supplier, LGM Pharma, LLC, for treprostinil, the active pharmaceutical ingredient of YUTREPIA, and we currently rely on a sole supplier, Plastiape S.p.A (“Plastiape”), for RS00 Model 8 DPI, the device used to administer YUTREPIA. We also rely on a sole supplier, Lonza Tampa LLC, for encapsulation and packaging services.
For example, we currently rely on a sole supplier, LGM Pharma, LLC, for treprostinil, the active pharmaceutical ingredient of YUTREPIA, and we currently rely on a sole supplier, Plastiape S.p.A (“Plastiape”), for RS00 Model 8 DPI, the device used to administer YUTREPIA. We also rely on a sole supplier, Lonza Tampa LLC, for encapsulation and packaging services for YUTREPIA.
Liquidia PAH’s activities and obligations related to regulatory matters conducted under the Promotion Agreement include: promotional and non-promotional activities, including sales and marketing activities for treprostinil, and engagement of healthcare professionals for advisory boards; developing, with prior written approval from Sandoz, marketing and educational materials consistent with FDA approved labeling and applicable laws; notifying Sandoz of notices from governmental authorities about adverse event reports or regulatory inquiries related to the safety of treprostinil, product complaints or alleged defects, unsolicited requests for off-label medical information; providing certain data and information to Sandoz in order to fulfill its transparency and reporting obligations under the Physician 9 Table of Contents Payment Sunshine Act; complying with applicable laws relevant to the activities conducted under the Promotion Agreement; establishing a compliance program and mechanism for disclosure of any violations of Liquidia PAH policies and procedures and submission of an annual report and certification to Sandoz of its compliance activities; and managing, with oversight and participation from Sandoz, negotiations and arrangements for managed care activities.
Liquidia PAH’s activities and obligations related to regulatory matters conducted under the Promotion Agreement include: promotional and non-promotional activities, including sales and marketing activities for treprostinil, and engagement of healthcare professionals for advisory boards; developing, with prior written approval from Sandoz, marketing and educational materials consistent with FDA approved labeling and applicable laws; notifying Sandoz of notices from governmental authorities about adverse event reports or regulatory inquiries related to the safety of treprostinil, product complaints or alleged defects, and unsolicited requests for off-label medical information; providing certain data and information to Sandoz in order to fulfill its transparency and reporting obligations under the Physician Payment Sunshine Act; complying with applicable laws relevant to the activities conducted under the Promotion Agreement; establishing a compliance program and mechanism for disclosure of any violations of Liquidia PAH policies 12 Table of Contents and procedures and submission of an annual report and certification to Sandoz of its compliance activities; and managing, with oversight and participation from Sandoz, negotiations and arrangements for managed care activities.
To date, our internal pipeline has focused on the development of improved and differentiated drug products containing FDA-approved active pharmaceutical ingredients (“APIs”) with established efficacy and safety profiles, which we believe are eligible for the 505(b)(2) regulatory pathway to seek marketing approval in the U.S.
To date, our pipeline has focused on the development of improved and differentiated drug products containing FDA-approved active pharmaceutical ingredients (“APIs”) with established efficacy and safety profiles, which we believe are eligible for the 505(b)(2) regulatory pathway to seek marketing approval in the U.S.
The combination of data form both patient groups provide confidence that a physician may prescribe YUTRPEIA across a continuum of PAH and PH-ILD patients. We have developed YUTREPIA under the 505(b)(2) regulatory pathway using the nebulized form of treprostinil, Tyvaso, as the reference listed drug.
The combination of data from both patient groups provide confidence that a physician may prescribe YUTRPEIA across a continuum of PAH and PH-ILD patients. We have developed YUTREPIA under the 505(b)(2) regulatory pathway using the nebulized form of treprostinil, Tyvaso, as the reference listed drug.
We intend to focus our commercial efforts initially on the U.S. market in the treatment of PAH and PH-ILD. We currently employ a small, targeted sales force for Treprostinil Injection calling on physicians involved in the treatment of PAH in the U.S., as well as key stakeholders involved in the distribution and reimbursement of Treprostinil Injection.
We intend to focus our commercial efforts initially on the U.S. market in the treatment of PAH and PH-ILD. We currently employ a targeted sales force for Treprostinil Injection, calling on physicians involved in the treatment of PAH in the U.S., as well as key stakeholders involved in the distribution and reimbursement of Treprostinil Injection.
Prostacyclin-naïve patients achieved comparable dosing to the transition patients within first two months of treatment. Patients on a stable dose of Tyvaso successfully transition to YUTREPIA while maintaining or improving clinical outcomes as measured by exploratory endpoints.
Prostacyclin-naïve patients achieved comparable dosing to the transition patients within the first two months of treatment. Patients on a stable dose of Tyvaso successfully transitioned to YUTREPIA while maintaining or improving clinical outcomes as measured by exploratory endpoints.
Patent Term Restoration Depending upon the timing, duration and specifics of FDA approval of the use of our product candidates, some of our U.S. patents may be eligible for limited PTE under the Hatch-Waxman Act.
Patent Term Restoration Depending upon the timing, duration and specifics of FDA approval of the use of our product candidates, some of our U.S. patents may be eligible for limited patent term extension (PTE) under the Hatch-Waxman Act.
The process required by the FDA before a drug may be marketed in the United States generally involves the following: ● completion of preclinical laboratory tests, animal studies and formulation studies according to Good Laboratory Practices regulations; ● submission to the FDA of an Investigational New Drug application (IND) which must become effective before human clinical studies may begin; ● approval by an independent IRB at each clinical site before each trial may be initiated; ● performance of adequate and well-controlled human clinical studies according to Good Clinical Practice (GCP), regulations, to establish the safety and efficacy of the proposed drug for its intended use; 15 Table of Contents ● preparation and submission to the FDA of an NDA, containing the results of product development, preclinical studies and clinical trials, along with descriptions of the manufacturing process, analytical tests conducted on the drug product, proposed labeling and other relevant information, to request approval to market the drug product; ● satisfactory completion of an FDA inspection of the manufacturing facility or facilities at which the drug product, or components thereof, are produced to assess compliance with cGMP to assure that the facilities, methods and controls are adequate to preserve the drug’s identity, strength, quality and purity; ● satisfactory completion of FDA audits of clinical trial sites to assure compliance with GCPs and the integrity of clinical data; ● FDA review and approval of the NDA; ● payment of fees, including annual program fees for each drug product on the market; and ● ongoing compliance with any post approval requirements, including risk evaluation and mitigation strategy (REMS) and post approval studies required by the FDA.
The process required by the FDA before a drug may be marketed in the United States generally involves the following: ● completion of preclinical laboratory tests, animal studies and formulation studies according to Good Laboratory Practices regulations; ● submission to the FDA of an Investigational New Drug application (IND) which must become effective before human clinical studies may begin; ● approval by an independent institutional review board, or IRB, at each clinical site before each trial may be initiated; ● performance of adequate and well-controlled human clinical studies according to Good Clinical Practice (GCP), regulations, to establish the safety and efficacy of the proposed drug for its intended use; ● preparation and submission to the FDA of an NDA, containing the results of product development, preclinical studies and clinical trials, along with descriptions of the manufacturing process, analytical tests conducted on the drug product, proposed labeling and other relevant information, to request approval to market the drug product; ● satisfactory completion of an FDA inspection of the manufacturing facility or facilities at which the drug product, or components thereof, are produced to assess compliance with cGMP to assure that the facilities, methods and controls are adequate to preserve the drug’s identity, strength, quality and purity; ● satisfactory completion of FDA audits of clinical trial sites to assure compliance with GCPs and the integrity of clinical data; ● FDA review and approval of the NDA; ● payment of fees, including annual program fees for each drug product on the market; and ● ongoing compliance with any post approval requirements, including risk evaluation and mitigation strategy (REMS) and post approval studies required by the FDA.
Recent court decisions have impacted FDA’s enforcement activity regarding off-label promotion in the light of First Amendment considerations; however, there are still significant risks in this area in part due to the potential for False Claims Act exposure. Further, the FDA as not materially changed its position on off-label promotion following legal setbacks on First Amendment grounds and the U.S.
Recent court decisions have impacted FDA’s enforcement activity regarding off-label promotion in the light of First Amendment considerations; however, there are still significant risks in this area in part due to the potential for False Claims Act exposure. Further, the FDA has not materially changed its position on off-label promotion following legal setbacks on First Amendment grounds and the U.S.
We believe YUTREPIA can become the prostacyclin of first choice across the disease continuum in PAH and PH-ILD because of its convenience, low-resistance device and the ability to titrate to higher doses. Each particle of YUTREPIA has been designed using our PRINT technology to have uniform size and shape to achieve enhanced aerosolization and deposition in the lungs.
We believe YUTREPIA can become the prostacyclin of first choice across the disease continuum in PAH and PH-ILD because of its convenience, low-effort device and the ability to titrate to higher doses. Each particle of YUTREPIA has been designed using our PRINT technology to have uniform size and shape to achieve enhanced aerosolization and deposition in the lungs.
Transition patients started at a dose comparable to their prior nebulized treprostinil dose and were titrated to higher doses as warranted by their clinical disease. Prostacyclin Naïve patients started on a dose of 26.5 mcg of YUTREPIA, with most (>80%) titrating to a 79.5 mcg dose or higher within the first 5 Table of Contents two months of treatment.
Transition patients started at a dose comparable to their prior nebulized treprostinil dose and were titrated to higher doses as warranted by their clinical disease. Prostacyclin Naïve patients started on a dose of 26.5 mcg of YUTREPIA, with most (>80%) titrating to a 79.5 mcg dose or higher within the first two months of treatment.
Competition with prostacyclin-targeted treatments Within the prostacyclin pathway, our products face competition from specific products and development programs described below. The Treprostinil Injection product faces competition primarily from the continued use of the branded Remodulin® sold by United Therapeutics as well as additional generic treprostinil products offered by Teva, Par Pharmaceutical, Dr. Reddy’s and Alembic.
Competition with prostacyclin-targeted treatments in PAH Within the prostacyclin pathway, our products face competition in PAH from specific products and development programs described below. The Treprostinil Injection product faces competition primarily from the continued use of the branded Remodulin® sold by United Therapeutics as well as additional generic treprostinil products offered by Teva, Par Pharmaceutical, Dr. Reddy’s and Alembic.
Through development of our own products and research with third parties, we have experience applying PRINT across multiple routes of administration and drug payloads including inhaled therapies, vaccines, biologics, nucleic acids and ophthalmic implants, among others. Our lead product candidate is YUTREPIA for the treatment of PAH.
Through development of our own products and research with third parties, we have experience applying PRINT across multiple routes of administration and drug payloads including inhaled therapies, vaccines, biologics, nucleic acids and ophthalmic implants, among others. Our lead product candidate is YUTREPIA for the treatment of PAH and PH-ILD.
Department of Justice has consistently asserted in False Claims Act briefings that “speech serves as a conduit for violations of the law is not constitutionally protected.” 22 Table of Contents The distribution of commercial prescription drugs is subject to the Drug Supply Chain Security Act (DSCSA), which regulates the distribution of the products at the federal level, and sets certain standards for federal or state registration and compliance of entities in the supply chain and regulation of manufacturers and repackagers, wholesale distributors, third-party logistics providers, and dispensers.
Department of Justice has consistently asserted in False Claims Act briefings that “speech serves as a conduit for violations of the law is not constitutionally protected.” The distribution of commercial prescription drugs is subject to the Drug Supply Chain Security Act (DSCSA), which regulates the distribution of the products at the federal level, and sets certain standards for federal or state registration and compliance of entities in the supply chain and regulation of manufacturers and repackagers, wholesale distributors, third-party logistics providers, and dispensers.
As of December 31, 2022, we had an exclusive, worldwide license from UNC to 19 U.S. patents and 52 foreign patents, as well as three additional patent applications in the United States or selected foreign jurisdictions. Five of the patents in the portfolio licensed from UNC are jointly owned by us.
As of December 31, 2023, we had an exclusive, worldwide license from UNC to 19 U.S. patents and 52 foreign patents, as well as three additional patent applications in the United States or selected foreign jurisdictions. Five of the patents in the portfolio licensed from UNC are jointly owned by us.
YUTREPIA is an inhaled dry powder formulation of treprostinil designed to improve the therapeutic profile of treprostinil by enhancing deep lung delivery and achieving higher dose levels than current inhaled therapies while using a convenient, easy-to-use dry-powder inhaler, the RS00 Model 8 DPI.
YUTREPIA is an inhaled dry powder formulation of treprostinil designed to improve the therapeutic profile of treprostinil by enhancing deep lung delivery and achieving higher dose levels than the labeled doses of current inhaled therapies while using a convenient, easy-to-use dry-powder inhaler, the RS00 Model 8 DPI.
Strategically, we believe that our commercial presence in the field will enable an efficient launch of YUTREPIA if and when we obtain final approval, leveraging existing relationships and further validating our reputation as a company committed to supporting PAH patients.
Strategically, we believe that our commercial presence in the field will enable an efficient launch of YUTREPIA if and when we obtain final approval, leveraging existing relationships and further validating our reputation as a company committed to supporting PAH and PH-ILD patients.
Liquidia PAH works jointly with Sandoz on commercial strategy for Treprostinil Injection and has responsibility for identifying, manufacturing and developing medical devices, including pumps and cartridges, that may be used to administer the Product. Sandoz retains all rights in and to the Product. Sandoz is the holder of the ANDA for the Product.
Liquidia PAH works jointly with Sandoz on commercial strategy for Treprostinil Injection and on identifying, manufacturing and developing medical devices, including pumps and cartridges, that may be used to administer the Product. Sandoz retains all rights in and to the Product. Sandoz is the holder of the ANDA for the Product.
Patients from INSPIRE had the option of rolling into the LTI-302 extension study to remain on treatment. Patients in LTI-302 continued to titrate doses upwards as needed with no observed maximum tolerated dose and the highest dose delivered being 238 mcg.
Patients from INSPIRE had the option of rolling into the LTI-302 extension study to remain on treatment. Patients in LTI-302 continued to titrate doses upwards as needed with no observed maximum tolerated dose and the highest dose delivered being 265 mcg.
Other potential consequences include, among other things: ● restrictions on the marketing or manufacturing of the product, complete withdrawal of the product from the market or product recalls; ● warning letters or holds on post-approval clinical trials; ● refusal of the FDA to approve pending NDAs or supplements to approved NDAs, or suspension or revocation of product license approvals; ● product seizure or detention, or refusal to permit the import or export of products; or ● injunctions or the imposition of civil or criminal penalties.
Other potential consequences include, among other things: ● restrictions on the marketing or manufacturing of the product, complete withdrawal of the product from the market or product recalls; ● warning letters or holds on post-approval clinical trials; 25 Table of Contents ● refusal of the FDA to approve pending NDAs or supplements to approved NDAs, or suspension or revocation of product license approvals; ● product seizure or detention, or refusal to permit the import or export of products; or ● injunctions or the imposition of civil or criminal penalties.
The FDA conducted on-site pre-approval inspections of two U.S. manufacturing facilities: the Company’s Morrisville, North Carolina facility and the facility of the third-party provider of encapsulation and packaging services for YUTREPIA in August 2021 and October 2021, respectively.
The FDA conducted on-site pre-approval inspections of two U.S. manufacturing facilities: our Morrisville, North Carolina facility and the facility of the third-party provider of encapsulation and packaging services for YUTREPIA in August 2021 and October 2021, respectively.
These beneficial product characteristics are in contrast to the recently approved Tyvaso DPI (May 2022), which uses a high resistance device and has only been used previously in patients with diabetes. The different combinations of YUTREPIA’s four proposed capsule-strengths, if approved, would allow customized dosing and easier titration based on a patient’s disease progression.
These beneficial product characteristics are in contrast to Tyvaso DPI, which uses a high resistance device and has only been used previously in patients with diabetes. The different combinations of YUTREPIA’s four proposed capsule-strengths, if approved, would allow customized dosing and easier titration based on a patient’s disease progression.
For some drugs, including locally acting drugs such as topical anti-fungals, other means of demonstrating bioequivalence may be required by the 19 Table of Contents FDA, especially where rate and/or extent of absorption are difficult or impossible to measure. In addition to the bioequivalence data, an ANDA must contain patent certifications and chemistry, manufacturing, labeling and stability data.
For some drugs, including locally acting drugs such as topical anti-fungals, other means of demonstrating bioequivalence may be required by the FDA, especially where rate and/or extent of absorption are difficult or impossible to measure. In addition to the bioequivalence data, an ANDA must contain patent certifications and chemistry, manufacturing, labeling and stability data.
Manufacturing and Supply We operate from a 45,000 square foot facility in Morrisville, North Carolina in which we design, formulate and manufacture engineered drug particles using PRINT particle fabrication lines as well as supportive activity including research and development, analytical development, quality control and production of mold templates that enable our 8 Table of Contents production processes.
Manufacturing and Supply We operate from a 45,000 square foot facility in Morrisville, North Carolina in which we design, formulate and manufacture engineered drug particles using PRINT particle fabrication lines as well as supportive activity including research and development, analytical development, quality control and production of mold templates that enable our production processes.
The figures below depict 7 Table of Contents YUTREPIA, with the figure on the left showing size and shape consistency among particles and the figure on the right showing their trefoil shape: Development, Regulatory and Commercial Strategy We intend to develop and commercialize a pipeline of drugs by applying our expertise in the development of cardio-pulmonary medicines and leveraging the advantages of our proprietary PRINT technology.
The figures below depict YUTREPIA, with the figure on the left showing size and shape consistency among particles and the figure on the right showing their trefoil shape: Development, Regulatory and Commercial Strategy We intend to develop and commercialize a pipeline of drugs by applying our expertise in the development of cardio-pulmonary medicines and leveraging the advantages of our proprietary PRINT technology.
Our three operational PRINT particle fabrication lines are located within class ISO7 clean rooms that operate under applicable ISO and current good manufacturing practices (cGMP) air quality and environmental requirements. Our current operational fabrication lines are scaled and capable of producing the necessary materials to support our clinical trials and, if approved, commercial demand for our products.
Our three operational PRINT particle fabrication lines are located within class ISO7 clean rooms that operate under applicable ISO and current good manufacturing practices (cGMP) air quality and environmental requirements. Our current operational fabrication lines are scaled and capable of producing the necessary materials to support our clinical trials and, if approved, initial commercial demand for YUTREPIA.
In March 2021, the FDA approved Tyvaso ® as the only treatment for PH-ILD, later adding Tyvaso DPI as a treatment option upon its approval by the FDA in May 2022. Systemic delivery of prostacyclin has proven effective but challenging, especially in those patients who have progressed to more severe forms of PAH.
In March 2021, the FDA approved Tyvaso ® as the only treatment for PH-ILD, later adding Tyvaso DPI as a treatment option upon its approval by the FDA in May 2022. 5 Table of Contents Systemic delivery of prostacyclin has proven effective but challenging, especially in those patients who have progressed to more severe forms of PAH.
Protocols detail, among other things, the objectives of the clinical study, dosing procedures, subject selection and exclusion criteria and the parameters to be used to monitor subject safety. 16 Table of Contents Information about certain clinical trials must be submitted within specific timeframes to the National Institutes of Health (NIH) for public dissemination on their ClinicalTrials.gov website.
Protocols detail, among other things, the objectives of the clinical study, dosing procedures, subject selection and exclusion criteria and the parameters to be used to monitor subject safety. Information about certain clinical trials must be submitted within specific timeframes to the National Institutes of Health (NIH) for public dissemination on their ClinicalTrials.gov website.
The sponsor must also include a protocol detailing, among other things, the objectives of the initial clinical study, the parameters to be used in monitoring safety and the effectiveness criteria to be evaluated if the initial clinical study lends itself to an efficacy evaluation. Some preclinical testing may continue even after the IND is submitted.
The sponsor must also include a protocol 19 Table of Contents detailing, among other things, the objectives of the initial clinical study, the parameters to be used in monitoring safety and the effectiveness criteria to be evaluated if the initial clinical study lends itself to an efficacy evaluation. Some preclinical testing may continue even after the IND is submitted.
Due to the volatility in the current economic and market dynamics, we are unable to predict the impact of any unforeseen or unknown legislative, regulatory, payor or policy actions, which may include cost containment and healthcare reform measures. Such policy actions could have a material adverse impact on our profitability.
Due to the volatility in the current economic and market dynamics, we are unable to predict the impact of any unforeseen or 29 Table of Contents unknown legislative, regulatory, payor or policy actions, which may include cost containment and healthcare reform measures. Such policy actions could have a material adverse impact on our profitability.
Our Collaboration and Licensing Agreements Sandoz Promotion Agreement Liquidia PAH entered into a Promotion Agreement with Sandoz on August 1, 2018, as amended on May 8, 2020, September 4, 2020, November 18, 2022, and March 10, 2023, which engaged Liquidia PAH on an exclusive basis to promote the appropriate use of Sandoz’s treprostinil, Treprostinil Injection, referred to as the “Product” in the Promotion Agreement, for the treatment of PAH in the United States, including its commonwealths, territories, possessions and military bases.
Sandoz Promotion Agreement Liquidia PAH entered into a Promotion Agreement with Sandoz on August 1, 2018, as amended on May 8, 2020, September 4, 2020, November 18, 2022, and March 10, 2023, which engaged Liquidia PAH on an exclusive basis to promote the appropriate use of Sandoz’s treprostinil, Treprostinil Injection, referred to as the “Product” in the Promotion Agreement, for the treatment of PAH in the United States, including its commonwealths, territories, possessions and military bases.
We continue to monitor the potential impact of proposals to lower prescription drug costs at the federal and state level, and anticipate that current and future U.S. federal and state legislative proposals may result in additional downward pressure on drug pricing and reimbursement, which could have a significant impact on our business.
We continue to monitor the potential impact of proposals to lower prescription drug costs at the federal 28 Table of Contents and state level, and anticipate that current and future U.S. federal and state legislative proposals may result in additional downward pressure on drug pricing and reimbursement, which could have a significant impact on our business.
We conduct research, development, and manufacturing of novel products by applying our subject matter expertise in cardiopulmonary diseases and our proprietary PRINT® technology, a particle engineering platform that enables precise production of uniform drug particles designed to improve the safety, efficacy, and performance of a wide range of therapies.
We conduct research, development and manufacturing of novel products by applying our subject matter expertise in cardiopulmonary diseases and our proprietary PRINT® technology, a particle engineering platform, to enable precise production of uniform drug particles designed to improve the safety, efficacy and performance of a wide range of therapies.
By expanding the dose range of inhaled treprostinil, YUTREPIA may be able to keep patients on therapy longer before transitioning to parenteral therapies. In clinical studies required for approval, YUTREPIA has proven to be safe, well-tolerated and effective regardless of a patient’s previous exposure to treprostinil.
By expanding the dose range of inhaled treprostinil, YUTREPIA may be able to keep patients on therapy longer before transitioning to parenteral therapies. 6 Table of Contents In clinical studies required for approval, YUTREPIA has proven to be safe, well-tolerated and effective regardless of a patient’s previous exposure to treprostinil.
Many of our competitors have greater financial and other resources than we have, such as more commercial resources, larger research and development staffs and more extensive marketing and manufacturing organizations. As a result, these companies 12 Table of Contents may obtain marketing approval more rapidly than we are able and may be more effective in selling and marketing their products.
Many of our competitors have greater financial and other resources than we have, such as more commercial resources, larger research and development staffs and more extensive marketing and manufacturing organizations. As a result, these companies may obtain marketing approval more rapidly than we are able and may be more effective in selling and marketing their products.
Among other things, the IRA requires manufacturers of certain drugs to engage in price negotiations with Medicare (beginning in 2026), imposes rebates under Medicare Part B and Medicare Part D to penalize price increases that outpace inflation (first due in 2023), and replaces the Part D coverage gap discount program with a new discounting program (beginning in 2025).
Among other things, the IRA requires manufacturers of certain drugs to engage in price negotiations with Medicare (beginning in 2026), imposes rebates under Medicare Part B and Medicare Part D to penalize price increases that outpace inflation, and replaces the Part D coverage gap discount program with a new discounting program (beginning in 2025).
As a result, our PRINT formulation does not require deagglomeration by a patient actuated breath and can be effectively delivered using of a low-resistance, patient-friendly device and minimal inspiratory effort.
As a result, our PRINT formulation does not require deagglomeration by a patient actuated breath and can be effectively delivered using a low-effort, patient-friendly device and minimal inspiratory effort.
FDA law prohibits “misbranding” of drugs and establishes related rules and policies on communications about promotional and non-promotional (educational, scientific) communications. Interactions with or communications directed to healthcare professionals (HCPs), patients or patient- or disease-advocates or advocacy groups, and payors, are subject to heightened scrutiny by the FDA.
FDA law prohibits “misbranding” of drugs and establishes 20 Table of Contents related rules and policies on communications about promotional and non-promotional (educational, scientific) communications. Interactions with or communications directed to healthcare professionals (HCPs), patients or patient- or disease-advocates or advocacy groups, and payors, are subject to heightened scrutiny by the FDA.
Five-year and three-year exclusivity will not 23 Table of Contents delay the submission or approval of a full NDA. However, an applicant submitting a full NDA would be required to conduct or obtain a right of reference to all of the preclinical studies and adequate and well-controlled clinical studies necessary to demonstrate safety and effectiveness.
Five-year and three-year exclusivity will not delay the submission or approval of a full NDA. However, an applicant submitting a full NDA would be required to conduct or obtain a right of reference to all of the preclinical studies and adequate and well-controlled clinical studies necessary to demonstrate safety and effectiveness.
Such extensions will depend on the length of the regulatory review; however, there can be no assurance that any such extension will be granted to us. Marketing Exclusivity Market exclusivity provisions under the FDCA can also delay the submission or the approval of certain applications.
Such extensions will depend on the length of the regulatory review; however, there can be no assurance that any such extension will be granted to us. 26 Table of Contents Marketing Exclusivity Market exclusivity provisions under the FDCA can also delay the submission or the approval of certain applications.
These oral products are perceived to be more convenient than infused products, although their use is targeted earlier in a patient’s disease progression. 13 Table of Contents Systemically delivered treatments also compete with localized, inhaled treatments In addition to oral and parenteral options, we expect that YUTREPIA will face competition from the following inhaled treprostinil therapies that are either currently marketed or in clinical development. ● Tyvaso, marketed by United Therapeutics, has been approved for the treatment of PAH in the United States since 2009.
These oral products are perceived to be more convenient than infused products, although their use is targeted earlier in a patient’s disease progression. 16 Table of Contents Systemically delivered treatments also compete with localized, inhaled treatments in PAH In addition to oral and parenteral options, we expect that our products for the treatment of PAH will face competition from the following inhaled prostacyclin analog therapies that are either currently marketed or in clinical development. ● Tyvaso (treprostinil), marketed by United Therapeutics, has been approved for the treatment of PAH in the United States since 2009.
We utilize contract manufacturers to finish production and package our drug product for clinical and commercial use. We depend on third-party suppliers for commercial inventory and clinical supplies, including active pharmaceutical ingredients which are used in our product candidates.
We utilize contract manufacturers to finish production and package our drug product for clinical and commercial use. We depend on third-party suppliers and CMOs for commercial inventory and clinical supplies of YUTREPIA, including active pharmaceutical ingredients which are used in our product candidates.
This device and its variants have been 4 Table of Contents used in at least eight marketed products globally since 2001, including Novartis’s Foradil Aerolizer ® for the treatment of asthma and chronic obstructive pulmonary disease (COPD).
This device and its variants have been used in at least eight marketed products globally since 2001, including Novartis’s Foradil Aerolizer ® for the treatment of asthma and chronic obstructive pulmonary disease (COPD).
We have a total of 145 patents and pending patent applications in our patent portfolio which protect our PRINT technology and drug products in development.
We have a total of 156 patents and pending patent applications in our patent portfolio which protect our PRINT technology and drug products in development.
For example, U.S. federal prosecutors have issued subpoenas to pharmaceutical companies seeking information about pricing practices in connection with an investigation into pricing practices being conducted by the DOJ. Several state attorneys general also 24 Table of Contents have commenced drug pricing investigations and filed lawsuits against pharmaceutical companies, and the U.S.
For example, U.S. federal prosecutors have issued subpoenas to pharmaceutical companies seeking information about pricing practices in connection with an investigation into pricing practices being conducted by the DOJ. Several state attorneys general also have commenced drug pricing investigations and filed lawsuits against pharmaceutical companies, and the U.S.
On May 21, 2021, Liquidia PAH’s manufacturing partner, Chengdu Shifeng Medical Technologies LTD (“Chengdu”) began selling the RG 3ml Medication 6 Table of Contents Cartridge, which now may be used to supply Treprostinil Injection to PAH patients with the CADD-MS 3 pump manufactured by Smiths Medical.
On May 21, 2021, Liquidia PAH’s manufacturing partner, Chengdu Shifeng Medical Technologies LTD (“Chengdu”) began selling the RG 3ml Medication Cartridge, which now may be used to supply Treprostinil Injection to PAH patients with the CADD-MS 3 pump manufactured by Smiths Medical.
YUTREPIA is an inhaled dry powder formulation of treprostinil designed with PRINT to improve the therapeutic profile of treprostinil by enhancing deep lung delivery while using a convenient, low resistance dry-powder inhaler (“DPI”) and by achieving higher dose levels than the labelled doses of current inhaled therapies.
YUTREPIA is an inhaled dry powder formulation of treprostinil designed with PRINT to improve the therapeutic profile of treprostinil by enhancing deep lung delivery while using a convenient, low effort dry-powder inhaler (“DPI”) and by achieving higher dose levels than the labeled doses of current inhaled therapies.
Smaller or early-stage companies may also prove to be significant competitors, particularly through collaboration arrangements with large, established companies. Any product candidates that we successfully develop and commercialize will compete with existing therapies and new therapies that may become available in the future.
Smaller or early-stage companies may also prove to be significant competitors, particularly through collaboration arrangements with large, established companies. 15 Table of Contents Any product candidates that we successfully develop and commercialize will compete with existing therapies and new therapies that may become available in the future.
Before approving an NDA, the FDA often will inspect the facility or facilities where the product is or will be manufactured. 18 Table of Contents The FDA may refer the NDA to an advisory committee for review, evaluation and recommendation as to whether the application should be approved and under what conditions.
Before approving an NDA, the FDA often will inspect the facility or facilities where the product is or will be manufactured. The FDA may refer the NDA to an advisory committee for review, evaluation and recommendation as to whether the application should be approved and under what conditions.
See Item 1A. Risk Factors – General Risks Related to Healthcare Regulation. 25 Table of Contents Healthcare Reform A primary trend in the U.S. healthcare industry and elsewhere is cost containment.
See Item 1A. Risk Factors – General Risks Related to Healthcare Regulation. Healthcare Reform A primary trend in the U.S. healthcare industry and elsewhere is cost containment.
Even with submission of additional information, the FDA ultimately may decide that the application does not satisfy the regulatory criteria for approval. If and when those conditions have been met to the FDA’s satisfaction, the FDA will typically issue an approval letter. An approval letter authorizes commercial marketing of the drug with specific prescribing information for specific indications.
Even with submission of additional information, the FDA ultimately may decide that the application does not satisfy the regulatory criteria for approval. If and when those conditions have been met to the FDA’s satisfaction, the FDA will typically issue an approval letter.
In addition to the patents and patent applications owned solely by us, our patent portfolio also includes 72 patents and 3 patent applications licensed from third parties.
In addition to the patents and patent applications owned solely by us, our patent portfolio also includes 76 patents and 10 patent applications licensed from third parties.
About Pulmonary Hypertension (PH) Diseases PH is divided into five groups based on the criteria of the World Health Organization (“WHO”) as defined at the 5th World Symposium on Pulmonary Hypertension in Nice, France. WHO Group I is comprised of individuals with PAH.
About Pulmonary Arterial Hypertension (PAH) and Pulmonary Hypertension Associated with Interstitial Lung Disease (PH-ILD) Diseases PH is divided into five groups based on the criteria of the World Health Organization (“WHO”) as defined at the 5th World Symposium on Pulmonary Hypertension in Nice, France. WHO Group I is comprised of individuals with PAH.
We value diversity at all levels. 14 Table of Contents Facilities Our corporate headquarters is located in Morrisville, North Carolina, and consist of approximately 45,000 square feet of space under a lease that expires on October 31, 2026 and includes an option for us to renew the lease for an additional five years through October 31, 2031, as amended.
Facilities Our corporate headquarters is located in Morrisville, North Carolina, and consist of approximately 45,000 square feet of space under a lease that expires on October 31, 2026 and includes an option for us to renew the lease for an additional five years through October 31, 2031, as amended.
YUTREPIA can be safely titrated to doses far beyond the target dose of nebulized Tyvaso (9-12 breaths) and the doses described in the label for Tyvaso DPI (up to 80 mcg QID). YUTREPIA has been studied up to 238.5 mcg QID, which is comparable to 27 breaths of nebulized Tyvaso.
YUTREPIA can be safely titrated to doses far beyond the target dose of nebulized Tyvaso (9-12 breaths) and the doses described in the label for Tyvaso DPI (up to 64 mcg QID). YUTREPIA has been studied up to 265 mcg QID, which is comparable to 30 breaths of nebulized Tyvaso.
As of December 31, 2022, we were the sole owner of 16 patents in the United States and 41 patents in foreign jurisdictions, as well as 12 additional pending patent applications, including provisional patent applications, in the United States, Europe, Japan and other jurisdictions.
As of December 31, 2023, we were the sole owner of 20 patents in the United States and 41 patents in foreign jurisdictions, as well as nine additional pending patent applications, including provisional patent applications, in the United States, Europe, Japan and other jurisdictions.
If and when we receive final marketing approval for our product candidates, we may, from time to time, rely on third-party CMOs to manufacture, package and distribute some or all of our approved drug products on a commercial scale.
If and when we receive final marketing approval for YUTREPIA, we may, from time to time, rely on third-party CMOs to manufacture, package and distribute some or all of our supply of YUTREPIA on a commercial scale.
We anticipate that Mainbridge will submit a 510(k) in 2023 for FDA clearance. Sandoz and Liquidia will split equally the development costs. Separately, Smiths Medical has announced that it will discontinue support of the CADD Legacy pump, which is used to administer Treprostinil Injection intravenously, starting in 2028.
We anticipate that Mainbridge will submit a 510(k) in the first half of 2024 for FDA clearance. We and Sandoz are splitting the development costs equally. 8 Table of Contents Separately, Smiths Medical has announced that it will discontinue support of the CADD Legacy pump, which is used to administer Treprostinil Injection intravenously, starting in 2028.
Market In 2022, the total reported net revenue of branded therapies approved to treat PAH and PH-ILD in the United States exceeded $4.6 billion, of which $2.7 billion targeted the prostacyclin pathway.
Market In 2023, the total reported net revenue of branded therapies approved to treat PAH and PH-ILD in the United States exceeded $5.5 billion, of which $3.4 billion targeted the prostacyclin pathway.
In addition, in December 2022, we entered a collaboration with Sandoz and Mainbridge Health Partners LLC (“Mainbridge”) to support the development of a new subcutaneous pump for infusion of Treprostinil Injection in order to alleviate the single-source dependence on the existing CADD-MS 3 system. Mainbridge will perform all development, validation and testing activities required for the pump and related consumables.
In December 2022, we entered a collaboration with Sandoz and Mainbridge Health Partners LLC (“Mainbridge”) to support the development of a new subcutaneous pump for infusion of Treprostinil Injection in order to replace the existing CADD-MS 3 system. Mainbridge is performing all development, validation and testing activities required for the pump and related consumables.
In addition, under the Pediatric Research Equity Act of 2003 (PREA) an NDA application (or a supplement to an application) for a new active ingredient, new indication, new dosage form, new dosing regimen or new route of administration must contain a Pediatric Assessment.
The sponsor of an approved NDA is also subject to annual program user fees. In addition, under the Pediatric Research Equity Act of 2003 (PREA) an NDA application (or a supplement to an application) for a new active ingredient, new indication, new dosage form, new dosing regimen or new route of administration must contain a Pediatric Assessment.
Many states still have in place licensure and other requirements for manufacturers and distributors of drug products. The distribution of product samples continues to be regulated under the PDMA, and some states also impose regulations on drug sample distribution.
Product identifier information (an aspect of the product tracing scheme) is also now required. Many states still have in place licensure and other requirements for manufacturers and distributors of drug products. The distribution of product samples continues to be regulated under the PDMA, and some states also impose regulations on drug sample distribution.
PAH is a rare, chronic, progressive disease caused by hardening and narrowing of the pulmonary arteries that can lead to right heart failure and eventually death, with an estimated diagnosed, treated prevalence in the United States of approximately 30,000 to 45,000 patients.
PAH is a rare, chronic, progressive disease caused by hardening and narrowing of the pulmonary arteries that can lead to right heart failure and eventually death, with an estimated diagnosed, treated prevalence in the United States of approximately 30,000 to 45,000 patients. PH-ILD is the second most prevalent form of Group 3 PH (precapillary PH due to lung disease).
In addition, the FDA may require post-approval studies, including Phase 4 clinical studies, to further assess safety and effectiveness after approval and may require testing and surveillance programs to monitor the safety of approved products that have been commercialized.
Further, the FDA may require that certain contraindications, warnings or precautions be included in the product labeling. In addition, the FDA may require post-approval studies, including Phase 4 clinical studies, to further assess safety and effectiveness after approval and may require testing and surveillance programs to monitor the safety of approved products that have been commercialized.
Much of our success is rooted in the diversity of our teams and our commitment to equity and inclusion.
Much of our success is rooted in the diversity of our teams and our commitment to equity and inclusion. We value diversity at all levels.
Pharmaceutical Coverage, Pricing and Reimbursement In the United States, sales of any products for which we may receive regulatory approval for commercial sale will depend in part on the availability of coverage and reimbursement from third-party payors. Third-party payors include government authorities, managed care providers, private health insurers and other organizations.
Pharmaceutical Coverage, Pricing and Reimbursement In the United States, sales of any products for which we may receive regulatory approval for commercial sale will depend in part on the availability of coverage and reimbursement from third-party payors.
Issuance of a federally registered trademark creates a rebuttable presumption of ownership of the mark; however, it is subject to challenge by others claiming first use in the mark in some or all the areas in which it is used.
We hold multiple U.S. trademark registrations and have numerous pending trademark applications. Issuance of a federally registered trademark creates a rebuttable presumption of ownership of the mark; however, it is subject to challenge by others claiming first use in the mark in some or all the areas in which it is used.
A device with the primary purpose of delivering or aiding in the delivery of a drug and that is distributed without the drug (i.e., unfilled) is typically evaluated by the FDA’s Center for Devices and Radiological Health and CDER, respectively, unless the intended use of the two products, through labeling, creates a combination product.
A device with the primary purpose of delivering or aiding in the delivery of a drug and that is distributed without the drug (i.e., unfilled) is typically evaluated by the FDA’s Center for Devices and Radiological Health and CDER, respectively, unless the intended use of the two products, through labeling, creates a combination product. 24 Table of Contents The FDA has indicated that dry powder inhalers, such as our lead product candidate, YUTREPIA, are drug/device combination products.
Review and Approval Processes Assuming successful completion of the required clinical testing, the results of product development, preclinical studies and clinical studies, along with descriptions of the manufacturing process, analytical tests conducted on the drug, proposed labeling and other relevant information, are submitted to the FDA as part of an NDA for a new drug, requesting approval to market the product. 17 Table of Contents The submission of an NDA is subject to the payment of a substantial application user fee although a waiver of such fee may be obtained under certain limited circumstances.
Review and Approval Processes Assuming successful completion of the required clinical testing, the results of product development, preclinical studies and clinical studies, along with descriptions of the manufacturing process, analytical tests conducted on the drug, proposed labeling and other relevant information, are submitted to the FDA as part of an NDA for a new drug, requesting approval to market the product.
Item 1. Business. Overview We are a biopharmaceutical company focused on the development, manufacture, and commercialization of products that address unmet patient needs, with current focus directed towards the treatment of pulmonary hypertension (“PH”). We operate as a single entity through our two wholly owned operating subsidiaries, Liquidia Technologies and Liquidia PAH.
Item 1. Business. Overview We are a biopharmaceutical company focused on the development, manufacture, and commercialization of products that address unmet patient needs, with current focus directed towards rare cardiopulmonary diseases such as pulmonary arterial hypertension (“PAH”) and pulmonary hypertension associated with interstitial lung disease (“PH-ILD”). We operate through our wholly owned operating subsidiaries, Liquidia Technologies, Inc.
We recently became aware of a shortage of a critical component of the CADD-MS 3 infusion pump that has caused the number of CADD-MS 3 infusion pumps available for the subcutaneous administration of Treprostinil Injection to be limited.
We have also experienced shortages of critical components of the CADD-MS 3 infusion pump that has caused the number of CADD-MS 3 infusion pumps available for the subcutaneous administration of Treprostinil Injection to be limited.
Our Products and Product Candidates YUTREPIA TM (treprostinil) Inhalation Powder to Treat PAH Our lead investigational drug, YUTREPIA™ (treprostinil) inhalation powder was tentatively approved by the FDA in November 2021.
Our Products and Product Candidates YUTREPIA TM (treprostinil) Inhalation Powder to Treat PAH Our lead investigational drug, YUTREPIA™ (treprostinil) inhalation powder was tentatively approved by the FDA in November 2021. In July 2023, we filed an amendment to our NDA to add PH-ILD to the label for YUTREPIA.
Outside of the U.S., we may pursue regulatory approval and commercialization of our product candidates in collaboration with pharmaceutical companies with regional expertise. We intend to manufacture our product candidates using in-house capabilities. Where appropriate, we will rely on contract manufacturing organizations (“CMOs”) to produce, package and distribute our approved drug products on a commercial scale.
Outside of the U.S., we may pursue regulatory approval and commercialization of our product candidates in collaboration with pharmaceutical companies with regional expertise. We intend to manufacture our product candidates using a combination of in-house capabilities and external contract manufacturing organizations (“CMOs”), depending on the program requirements.
We collaborate with Sandoz on a regular basis to plan appropriate inventory production and management based on the demand for Treprostinil Injection and observations in the field. Additionally, we have contracted with our manufacturing partner Chengdu to supply the RG 3mL Medication Cartridge for use with CADD-MS ® 3 (MS-3) ambulatory infusion pumps and enable subcutaneous administration of Treprostinil Injection.
Additionally, we have contracted with our manufacturing partner Chengdu to supply the RG 3mL Medication Cartridge for use with CADD-MS ® 3 (MS- 3) ambulatory infusion pumps and enable subcutaneous administration of Treprostinil Injection.
The re-submitted application also is subject to review before the FDA accepts it for filing. Once the submission is accepted for filing, the FDA begins an in-depth substantive review.
The FDA may request additional information rather than accept an application for filing. In this event, the application must be re-submitted with the additional information. The re-submitted application also is subject to review before the FDA accepts it for filing. Once the submission is accepted for filing, the FDA begins an in-depth substantive review.
The Remunity pump also has a water-resistant casing, which may be considered more convenient than the CADD-MS3 currently used to deliver treprostinil subcutaneously. United Therapeutics is also developing RemoPro™, a prodrug of treprostinil designed to be inactive in the subcutaneous tissue and activated once metabolized in the blood, decreasing site pain currently associated with subcutaneous Remodulin (treprostinil).
The Remunity pump also has a water-resistant casing, which may be considered more convenient than the CADD-MS3 currently used to deliver treprostinil subcutaneously. During 2023, United Therapeutics terminated the RemoPro program, a prodrug form of Remodulin that may decrease site pain currently associated with subcutaneous Remodulin.
The United States Food and Drug Administration (“FDA”) tentatively approved our New Drug Application (“NDA”) for YUTREPIA for the treatment of PAH in November 2021.
In November 2021, the United States Food and Drug Administration (“FDA”) tentatively approved our New Drug Application (“NDA”) for YUTREPIA for the treatment of PAH. In July 2023, we filed an amendment to our NDA to add PH-ILD to the label for YUTREPIA.
Clinical results from the PK and pivotal studies of YUTREPIA have been presented at various international scientific meetings such as the American Thoracic Society (ATS), International Society of Heart Lung Transplantation (ISHLT), Pulmonary Vascular Research Institute (PVRI), American College of Chest Physicians (ACCP) in 2019 and 2020.
Clinical results from the PK, pivotal and extension studies of YUTREPIA have been presented at various international scientific meetings such as the American Thoracic Society (ATS), International Society of Heart Lung Transplantation (ISHLT), Pulmonary Vascular Research Institute (PVRI), American College of Chest Physicians (ACCP) from 2019 through 2023. 7 Table of Contents We are actively conducting and considering other clinical trials to generate additional data to support the use of YUTREPIA.
Insmed announced the completion of an initial Phase 1 study in February 2021 which demonstrated that TPIP was generally safe and well tolerated, with a pharmacokinetic profile that supports once-daily dosing. Insmed initiated Phase 2 trials studying patients diagnosed with PAH and PH-ILD in May 2021 and December 2022, respectively.
A Phase 1 study demonstrated that TPIP was generally safe and well tolerated, with a pharmacokinetic profile that supports once-daily dosing. Insmed initiated Phase 2 trials studying patients diagnosed with PAH.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeAt the same time, arrangements with healthcare providers, physicians, third-party payors and customers, and our sales, marketing and educational activities, may expose us to broadly applicable fraud and abuse and other healthcare laws and regulations that may constrain our business or financial arrangements and relationships. ​ The degree of market acceptance of Treprostinil Injection will depend on a number of factors, including: ​ ● the efficacy, safety and potential advantages compared to alternative treatments; ● our ability to offer Treprostinil Injection for sale at competitive prices (generic drug prices, after initial generic entry, have been observed to decline with the entrance of additional generic competition); ● the convenience and ease of administration compared to alternative treatments; ● product labeling or product insert requirements of the FDA or foreign regulatory authorities, including any limitations or warnings contained in a product’s approved labeling, including any black box warning; ● the willingness of the target patient population to try new treatments, including the generic version of a brand, and of physicians to prescribe such treatments; ● our ability to hire and retain sales and marketing personnel and their ability to support Sandoz under the Promotion Agreement; ● the strength of Sandoz’s manufacturing and distribution support; ● the requirement by third-party payors to use generic treprostinil for parenteral administration in place of Remodulin; ● the availability of third-party coverage and adequate reimbursement for Treprostinil Injection; ● the prevalence and severity of any side effects; ● any restrictions on the use of Treprostinil Injection together with other medications; ● our and Sandoz’s ability to maintain relationships with the specialty pharmacies; and ● the services provided by specialty pharmacies related to use of Treprostinil Injection. ​ Our business may also be impacted by the need to maintain compliant operations (including oversight and monitoring of personnel and our activities) in relation to interactions with the persons and parties noted above, relative to FDA and healthcare law requirements, and with consideration of government and industry compliance best practices. 32 Table of Contents Medical devices, which we do not control, are necessary for the administration of Treprostinil Injection.
Biggest changeThe degree of market acceptance of Treprostinil Injection will depend on a number of factors, including: ● the efficacy, safety and potential advantages compared to alternative treatments; ● our ability to offer Treprostinil Injection for sale at competitive prices (generic drug prices, after initial generic entry, have been observed to decline with the entrance of additional generic competition); ● the convenience and ease of administration compared to alternative treatments; ● product labeling or product insert requirements of the FDA or foreign regulatory authorities, including any limitations or warnings contained in a product’s approved labeling, including any black box warning; ● the willingness of the target patient population to try new treatments, including the generic version of a brand, and of physicians to prescribe such treatments; ● our ability to hire and retain sales and marketing personnel and their ability to support Sandoz under the Promotion Agreement; ● the strength of Sandoz’s manufacturing and distribution support; ● the requirement by third-party payors to use generic treprostinil for parenteral administration in place of Remodulin; ● the availability of third-party coverage and adequate reimbursement for Treprostinil Injection; ● the prevalence and severity of any side effects; ● any restrictions on the use of Treprostinil Injection together with other medications; ● our and Sandoz’s ability to maintain relationships with the specialty pharmacies; and ● the services provided by specialty pharmacies related to use of Treprostinil Injection.
Due to this limitation in the availability of pumps, specialty pharmacies are not currently placing new patients on to subcutaneous Treprostinil Injection therapy in order to preserve the available pumps for those patients already receiving subcutaneous administration of Treprostinil Injection.
Due to this limitation in the availability of pumps, specialty pharmacies are not currently placing new patients on subcutaneous Treprostinil Injection therapy in order to preserve the available pumps for those patients already receiving subcutaneous administration of Treprostinil Injection.
Insmed announced the completion of an initial Phase 1 study in February 2021 which demonstrated that TPIP was generally safe and well tolerated, with a pharmacokinetic profile that supports once-daily dosing. Insmed initiated a Phase 2 trials studying patients diagnosed with PAH and PH-ILD in May 2021 and December 2022, respectively.
Insmed announced the completion of an initial Phase 1 study in February 2021 which demonstrated that TPIP was generally safe and well tolerated, with a pharmacokinetic profile that supports once-daily dosing. Insmed initiated Phase 2 trials studying patients diagnosed with PAH and PH-ILD in May 2021 and December 2022, respectively.
In August 2022, prior to the expiration of the 30-month stay, the Court found that the asserted claims of one of the patents, the ‘793 Patent, were both valid and infringed by the Company and ordered that the effective date of any final approval by the FDA of YUTREPIA shall be a date which is not earlier than the expiration date of the ‘793 Patent.
In August 2022, prior to the expiration of the 30-month stay, the Court found that the asserted claims of one of the patents, the ‘793 Patent, were both valid and infringed by the Company and ordered that the effective date of any final approval by the FDA of YUTREPIA shall be a date which is not earlier than the expiration date of the ‘793 Patent.
The laws that may affect our ability to operate include, but are not limited to, the following examples: ● The federal Anti-Kickback Statute (AKS) prohibits, among other things, persons and entities including pharmaceutical manufacturers from, among other things, knowingly and willfully soliciting, receiving, offering or paying remuneration, directly or indirectly, overtly or covertly, in cash or in kind, to induce or reward, or in return for, either the referral of an individual for or the purchase, lease, or order of, or the arranging for an item or service for which payment may be made, in whole or in part, under federal healthcare programs such as the Medicare and Medicaid programs. ● The federal civil and criminal false claims laws and civil monetary penalty laws impose a range of prohibitions and compliance considerations.
The laws that may affect our ability to operate include, but are not limited to, the following examples: ● The federal Anti-Kickback Statute, or AKS, prohibits, among other things, persons and entities including pharmaceutical manufacturers from, among other things, knowingly and willfully soliciting, receiving, offering or paying remuneration, directly or indirectly, overtly or covertly, in cash or in kind, to induce or reward, or in return for, either the referral of an individual for or the purchase, lease, or order of, or the arranging for an item or service for which payment may be made, in whole or in part, under federal healthcare programs such as the Medicare and Medicaid programs. ● The federal civil and criminal false claims laws and civil monetary penalty laws impose a range of prohibitions and compliance considerations.
For example, the False Claims Act (FCA) prohibits individuals or entities from, among other things, knowingly presenting, or causing to be presented, claims for payment to, or approval by, the federal government that are false, fictitious or fraudulent or knowingly making, using or causing to be made or used, a false record or statement material to a false or fraudulent claim to avoid, decrease or conceal an obligation to pay money to the federal government.
For example, the False Claims Act, or the FCA, prohibits individuals or entities from, among other things, knowingly presenting, or causing to be presented, claims for payment to, or approval by, the federal government that are false, fictitious or fraudulent or knowingly making, using or causing to be made or used, a false record or statement material to a false or fraudulent claim to avoid, decrease or conceal an obligation to pay money to the federal government.
The extent to which the COVID-19 pandemic impacts our business and operations, including our clinical development and regulatory efforts, will depend on future developments that are highly uncertain and cannot be predicted with confidence at the time of this Annual Report on Form 10-K, such as the ultimate geographic spread of the disease, the severity and duration of future outbreaks (including from the spread of COVID-19 variants or mutant strains), the duration and effect of business disruptions and the short-term effects, the administration, availability and efficacy of vaccination programs and the ultimate effectiveness of travel restrictions, quarantines, social distancing requirements and business closures in the United States and other countries to contain and treat the disease.
The extent to which the COVID-19 pandemic impacts our business and operations, including our clinical development and regulatory efforts, will depend on future developments that are highly uncertain and cannot be predicted with confidence at the time of this Annual Report on Form 10-K, such as the severity and duration of future outbreaks (including from the spread of COVID-19 variants or mutant strains), the duration and effect of business disruptions and the short-term effects, the administration, availability and efficacy of vaccination programs and the ultimate effectiveness of travel restrictions, quarantines, social distancing requirements and business closures in the United States and other countries to contain and treat the disease.
Payments and transfers of value made to certain other providers such as nurse practitioners and physician assistants will also need to be reported under the Sunshine Act. ​ ● For both investigational and commercialized products, interactions with or communications directed to healthcare professionals (HCPs), patients or patient- or disease-advocates or advocacy groups, and payors, are subject to heightened scrutiny by the FDA.
Payments and transfers of value made to certain other providers such as nurse practitioners and physician assistants will also need to be reported under the Sunshine Act. ● For both investigational and commercialized products, interactions with or communications directed to healthcare professionals, patients or patient- or disease-advocates or advocacy groups, and payors, are subject to heightened scrutiny by the FDA.
With our April 2022 public equity offering, the closing of the RareGen acquisition in November 2020, our July 2020 equity offering, our December 2019 private placement, issuances under our prior at-the-market facility, our March 2019 follow-on equity offering and our July 2018 initial public offering, as well as other past transactions, we may have already triggered an “ownership change” limitation.
With our April 2022 public equity offering, our 2021 private placement, the closing of the RareGen acquisition in November 2020, our July 2020 public equity offering, our December 2019 private placement, issuances under our prior at-the-market facility, our March 2019 follow-on equity offering and our July 2018 initial public offering, as well as other past transactions, we may have already triggered an “ownership change” limitation.
If approved, it is possible that it may be used prior to prostacyclin therapies, which may have an adverse effect on the market potential for YUTREPIA. ​ There are a number of competitors seeking marketing approval and/or regulatory exclusivity with respect to products that are or would be competitive to our product candidate.
If approved, it is possible that it may be used prior to prostacyclin therapies, which may have an adverse effect on the market potential for YUTREPIA and/or L606. There are a number of competitors seeking marketing approval and/or regulatory exclusivity with respect to products that are or would be competitive to our product candidate.
In August 2022, Judge Andrews, who was presiding over the Hatch-Waxman Litigation, issued an opinion that claims 1, 2, 3, 6 and 9 of the ‘066 Patent were invalid, that the remaining asserted claims of the ‘066 Patent were not infringed by us, and that all of the asserted claims of the ‘793 Patent were both valid and infringed by us, based on the arguments we presented in the Hatch-Waxman Litigation.
In August 2022, Judge Andrews, who was presiding over the Original Hatch-Waxman Litigation, issued an opinion that claims 1, 2, 3, 6 and 9 of the ‘066 Patent were invalid, that the remaining asserted claims of the ‘066 Patent were not infringed by us, and that all of the asserted claims of the ‘793 Patent were both valid and infringed by us, based on the arguments we presented in the Original Hatch-Waxman Litigation.
Product candidates that the FDA deems to be combination products, such as YUTREPIA, or that otherwise rely on innovative drug delivery systems, may face additional challenges, risks and delays in the product development and regulatory approval process. Additionally, the FDA could delay approval of YUTREPIA even if approvable after completing its review.
Product candidates that the FDA deems to be combination products, such as YUTREPIA and L606, or that otherwise rely on innovative drug delivery systems, may face additional challenges, risks and delays in the product development and regulatory approval process. Additionally, the FDA could delay approval of YUTREPIA and/or L606 even if approvable after completing its review.
Human clinical trials are very expensive and difficult to design and implement, in part because they are subject to rigorous regulatory requirements. The clinical trial process is also time-consuming. We cannot provide any assurance or certainty regarding when we might receive regulatory approval for our products, including YUTREPIA.
Human clinical trials are very expensive and difficult to design and implement, in part because they are subject to rigorous regulatory requirements. The clinical trial process is also time-consuming. We cannot provide any assurance or certainty regarding when we might receive regulatory approval for our products, including YUTREPIA and L606.
For example, the FDIC took control of Silicon Valley Bank (“SVB”), where we previously held all of our cash and cash equivalents, on March 10, 2023. The Federal Reserve subsequently announced that account holders would be made whole, and we were able to move substantially all of our cash and cash equivalents to another financial institution.
For example, the FDIC took control of Silicon Valley Bank, where we previously held all of our cash and cash equivalents, on March 10, 2023. The Federal Reserve subsequently announced that account holders would be made whole, and we were able to move substantially all of our cash and cash equivalents to another financial institution.
Risks Related to the Manufacturing of our Product Candidates Our product candidates are based on our proprietary, novel technology, PRINT, which has not been used to manufacture any products that have been previously approved by the FDA, making it difficult to predict the time and cost of development and of subsequently obtaining final regulatory approval.
Risks Related to the Manufacturing of our Product Candidates Our product candidates are based on our proprietary, novel technology, which has not been used to manufacture any products that have been previously approved by the FDA, making it difficult to predict the time and cost of development and of subsequently obtaining final regulatory approval.
In September 2022, Judge Andrews entered a final judgment in the Hatch-Waxman Litigation that incorporated the findings from his opinion and ordered that the effective date of any final approval by the FDA of YUTREPIA shall be a date which is not earlier than the expiration date of the ’793 Patent, which will be in 2027.
In September 2022, Judge Andrews entered a final judgment in the Original Hatch-Waxman Litigation that incorporated the findings from his opinion and ordered that the effective date of any final approval by the FDA of YUTREPIA shall be a date which is not earlier than the expiration date of the ’793 Patent, which will be in 2027.
Relative to nonpromotional communications, for example, there are specific and limited FDA accommodations for nonpromotional, truthful and non-misleading sharing of information regarding products in development and off-label uses including dissemination of peer-reviewed reprints, support of independent continuing medical education (CME), and healthcare economic discussions with payors.
Relative to nonpromotional communications, for example, there are specific and limited FDA accommodations for nonpromotional, truthful and non-misleading sharing of information regarding products in development and off-label uses including dissemination of peer-reviewed reprints, support of independent continuing medical education, and healthcare economic discussions with payors.
Patent No. 10,716,793 (the “‘793 Patent”), entitled “Treprostinil Administration by Inhalation”, to United Therapeutics. In July 2020, United Therapeutics filed an amended complaint in the Hatch-Waxman Litigation asserting infringement of the ‘793 Patent by the practice of YUTREPIA. In June 2021, the Court held a claim construction hearing.
Patent No. 10,716,793 (the “‘793 Patent”), entitled “Treprostinil Administration by Inhalation”, to United Therapeutics. In July 2020, United Therapeutics filed an amended complaint in the Original Hatch-Waxman Litigation asserting infringement of the ‘793 Patent by the practice of YUTREPIA. In June 2021, the Court held a claim construction hearing.
Furthermore, if we fail to obtain additional financing on terms that are acceptable to us, we may forgo or delay the pursuit of opportunities presented by other potential product candidates or indications that may later prove to have greater commercial potential than the product candidates and indications that we have chosen to pursue.
Furthermore, if we need additional financing and fail to obtain additional financing on terms that are acceptable to us, we may forgo or delay the pursuit of opportunities presented by other potential product candidates or indications that may later prove to have greater commercial potential than the product candidates and indications that we have chosen to pursue.
Significant and unanticipated changes or our inability to obtain or maintain regulatory approvals for our product candidates, including the NDA for YUTREPIA, could require a non-cash charge for impairment in a future period, which may significantly affect the Company’s results of operations in the period of such charge.
Significant and unanticipated changes or our inability to obtain or maintain regulatory approvals for our product candidates, including the NDA for YUTREPIA, could require a non-cash charge for impairment in a future period, which may significantly affect our results of operations in the period of such charge.
In that case, as stated above, there is the possibility that such a competitor would be able to prevent us from obtaining approval of and marketing our product candidate until the expiration of the competitor’s term of FDA regulatory exclusivity, which could be a term of three years for so-called New Clinical Study exclusivity, or could conceivably be for longer periods of time if the competitor is successful in being granted other forms of FDA regulatory exclusivity which might include, for example, Orphan Disease Designation exclusivity (seven years), New Chemical Entity exclusivity (five years), or Pediatric exclusivity (six months beyond other existing exclusivities or patent terms).
In that case, as stated above, there is the possibility that such a competitor would be able to prevent us from obtaining approval of and marketing our product candidate until the expiration of the competitor’s term of FDA regulatory exclusivity, which could be a term of three years for so-called New Clinical Investigation exclusivity, or could conceivably be for longer periods of time if the competitor is successful in being granted other forms of FDA regulatory exclusivity which might include, for example, Orphan Disease Designation exclusivity (seven years), New Chemical Entity exclusivity (five years), or Pediatric exclusivity (six months beyond other existing exclusivities or patent terms).
Once an NDA is approved, the drug product covered will be listed as a reference listed drug in the FDA’s Orange Book. In the United States, manufacturers of drug products may seek approval of generic versions of reference listed drugs through the submission of abbreviated new drug applications (ANDAs).
Once an NDA is approved, the drug product covered will be listed as a reference listed drug in the FDA’s Orange Book. In the United States, manufacturers of drug products may seek approval of generic versions of reference listed drugs through the submission of abbreviated new drug applications, or ANDAs.
In addition to these other inhaled treprostinil therapies, we expect that YUTREPIA will also face competition from other treprostinil-based drugs, including Orenitram, which is administered orally, and Remodulin, which is administered parenterally, both of which are marketed by United Therapeutics.
In addition to these other inhaled treprostinil therapies, we expect that YUTREPIA and L606 will also face competition from other treprostinil-based drugs, including Orenitram, which is administered orally, and Remodulin, which is administered parenterally, both of which are marketed by United Therapeutics.
Our certificate of incorporation provides that, to the fullest extent permitted by law, the Court of Chancery of the State of Delaware will be the sole and exclusive forum for: (i) any derivative action or proceeding brought on our behalf; (ii) any action asserting a claim of breach of a fiduciary duty owed by any of our directors or officers to us or our stockholders; (iii) any action asserting a claim against us arising pursuant to any provision of the DGCL, our certificate of incorporation or our bylaws; or (d) any action asserting a claim against us governed by the internal affairs doctrine; provided , that, this provision would not apply to suits brought to enforce a duty or liability created by the Securities Act or Exchange Act.
Our certificate of incorporation provides that, to the fullest extent permitted by law, the Court of Chancery of the State of Delaware will be the sole and exclusive forum for: (i) any derivative action or proceeding brought on our behalf; (ii) any action asserting a claim of breach of a fiduciary duty owed by any of our directors or officers to us or our stockholders; (iii) any action asserting a claim against us arising pursuant to any provision of the DGCL, our certificate of incorporation or our bylaws; or (iv) any action asserting a claim against us governed by the internal affairs doctrine; provided , that, this provision would not apply to suits brought to enforce a duty or liability created by the Securities Act or Exchange Act.
Sandoz holds the FDA approval (the ANDA) for and controls Treprostinil Injection and is responsible among other things for the compliant manufacture, distribution, labeling, and advertising of Treprostinil Injection. Our role is one of a specialized service provider to Sandoz.
Sandoz holds the FDA approval, or the ANDA, for and controls Treprostinil Injection and is responsible among other things for the compliant manufacture, distribution, labeling, and advertising of Treprostinil Injection. Our role is one of a specialized service provider to Sandoz.
Generic version of bosentan and ambrisentan are currently available. ● PDE-5 inhibitors , such as tadalafil, marketed by United Therapeutics, and sildenafil, marketed by Pfizer Inc. Generic versions of both tadalafil and sildenafil are currently available. ● Soluble guanylate cyclase (sGC) stimulator, such as riociguat marketed by Bayer.
Generic versions of bosentan and ambrisentan are currently available. ● PDE-5 inhibitors , such as tadalafil, marketed by United Therapeutics, and sildenafil, marketed by Pfizer Inc. Generic versions of both tadalafil and sildenafil are currently available. ● Soluble guanylate cyclase (sGC) stimulator , such as riociguat marketed by Bayer.
We depend on third-party suppliers for clinical and commercial supplies for the supply of materials and components necessary for clinical and commercial production of YUTREPIA, including the active pharmaceutical ingredients which are used in our product candidates.
We depend on third-party suppliers for clinical and commercial supplies for the supply of materials and components necessary for clinical and commercial production of YUTREPIA and L606, including the active pharmaceutical ingredients which are used in our product candidates.
If we fail to comply with applicable regulatory requirements, a regulatory agency or enforcement authority may, among other things: ● issue warning letters asserting that we are in violation of the law; ● seek an injunction or impose civil or criminal penalties or monetary fines; ● suspend or withdraw regulatory approval; ● suspend any of our ongoing clinical trials; ● refuse to approve pending applications or supplements to approved applications submitted by us or our strategic partners; ● restrict the marketing or manufacturing of our products; ● seize or detain products, or require a product recall; ● refuse to permit the import or export of our product candidates; or ● refuse to allow us to enter into government contracts. ​ Any government investigation of alleged violations of law could require us to expend significant time and resources in response and could generate negative publicity.
If we fail to comply with applicable regulatory requirements, a regulatory agency or enforcement authority may, among other things: ● issue warning letters asserting that we are in violation of the law; ● seek an injunction or impose civil or criminal penalties or monetary fines; ● suspend or withdraw regulatory approval; ● suspend any of our ongoing clinical trials; ● refuse to approve pending applications or supplements to approved applications submitted by us or our strategic partners; ● restrict the marketing or manufacturing of our products; ● seize or detain products, or require a product recall; ● refuse to permit the import or export of our product candidates; or ● refuse to allow us to enter into government contracts. 70 Table of Contents Any government investigation of alleged violations of law could require us to expend significant time and resources in response and could generate negative publicity.
We do not have control over Sandoz’s compliance with laws and regulations applicable to drug manufacturers and ANDA holders (for example, applicable current good manufacturing practices (GMPs); FDA labeling, promotional labeling, and advertising requirements; pharmacovigilance and adverse event reporting; and other ongoing FDA reporting and submission requirements), nor over its compliance with healthcare compliance and fraud, waste, and abuse laws, or similar regulatory requirements and other laws and regulations, such as those related to environmental health and safety matters.
We do not have control over Sandoz’s compliance with laws and regulations applicable to drug manufacturers and ANDA holders (for example, applicable current good manufacturing practices, or cGMPs; FDA labeling, promotional labeling, and advertising requirements; pharmacovigilance and adverse event reporting; and other ongoing FDA reporting and submission requirements), nor over its compliance with healthcare compliance and fraud, waste, and abuse laws, or similar regulatory requirements and other laws and regulations, such as those related to environmental health and safety matters.
We currently rely on, and plan to continue to rely on, third-party contract research organizations (CROs) to monitor and manage data for our preclinical studies and clinical trials.
We currently rely on, and plan to continue to rely on, third-party contract research organizations, or CROs, to monitor and manage data for our preclinical studies and clinical trials.
For example, YUTREPIA may not achieve a sufficient level of market acceptance, or we may not be able to effectively build our marketing and sales capabilities or scale our manufacturing operations to meet commercial demand. The successful commercialization of YUTREPIA will also, in part, depend on factors that are beyond our control.
For example, they may not achieve a sufficient level of market acceptance, or we may not be able to effectively build our marketing and sales capabilities or scale our manufacturing operations to meet commercial demand. The successful commercialization of YUTREPIA and L606 will also, in part, depend on factors that are beyond our control.
Also, as has been the experience of others in our industry, our competitors may file citizens’ petitions with the FDA to contest approval of our NDA, which may delay or even prevent the FDA from approving any NDA that we submit under the 505(b)(2) regulatory pathway.
Also, as has been the experience of others in our industry, our competitors may file citizens’ petitions or other correspondence with the FDA to contest approval of our NDA, which may delay or even prevent the FDA from approving any NDA that we submit under the 505(b)(2) regulatory pathway.
In the event that UNC terminates our license and we have a product that relies on that license, it may bring a claim against us, and if they are successful, we may be required to compensate UNC for the unauthorized use of their patent rights through the payment of royalties.
In the event that UNC terminates our license and we have a product that relies on that license, including YUTREPIA, it may bring a claim against us, and if they are successful, we may be required to compensate UNC for the unauthorized use of their patent rights through the payment of royalties.
Based on the Court’s construction of the claim terms, United Therapeutics filed a stipulation of partial judgment with respect to the ‘901 Patent in December 2021 under which United Therapeutics agreed to the entry of judgment of our non-infringement of the ’901 Patent. United Therapeutics did not appeal the Court’s construction of the claim terms of the ‘901 Patent.
Based on the Court’s construction of the claim terms, United Therapeutics filed a stipulation of partial judgment with respect to the ‘901 Patent in December 2021 under which United Therapeutics agreed to the entry of judgment of our non-infringement of the ‘901 Patent. United Therapeutics did not file an appeal with respect to the ‘901 Patent.
The failure to obtain further financing may also prevent us from capitalizing on other potential product candidates or indications which may be more profitable than YUTREPIA or for which there may be a greater likelihood of success.
The failure to obtain further financing may also prevent us from capitalizing on other potential product candidates or indications which may be more profitable than YUTREPIA and/or L606 or for which there may be a greater likelihood of success.
Once we register the offer and sale of shares for the holders of registration rights, they can be freely sold in the public market upon issuance or resale (as applicable), subject to lock-up agreements, if any. We expect that the market price of our common stock may be volatile, and you may lose all or part of your investment.
Once we register the offer and sale of shares for the holders of registration rights, they can be freely sold in the public market upon issuance or resale (as applicable), subject to lock-up agreements, if any. 59 Table of Contents We expect that the market price of our common stock may be volatile, and you may lose all or part of your investment.
In addition to treprostinil-based therapies, other classes of therapeutic agents for the treatment of PAH include the following: ​ ● IP-agonists , such as selexipag, marketed by Actelion, and ralinepeg, licensed from Arena Pharmaceuticals, Inc. by United Therapeutics, which is currently in clinical development; ● Endothelin receptor antagonists , such as bosentan and macitentan, both marketed by Actelion, and ambrisentan, marketed by Gilead.
In addition to treprostinil-based therapies, other classes of therapeutic agents for the treatment of PAH include the following: ● IP-agonists , such as selexipag, marketed by Actelion, and ralinepeg, licensed from Arena Pharmaceuticals, Inc. by United Therapeutics, which is currently in clinical development. 41 Table of Contents ● Endothelin receptor antagonists , such as bosentan and macitentan, both marketed by Actelion, and ambrisentan, marketed by Gilead.
In February 2022, a full-scale military invasion of Ukraine by Russian troops began. Although the length and impact of the ongoing military conflict is highly unpredictable, the conflict in Ukraine has led to market disruptions, including significant volatility in commodity prices, credit and capital markets, as well as supply chain interruptions, which has contributed to record inflation globally.
In February 2022, a full-scale military invasion of Ukraine by Russian troops began. Although the length and impact of the ongoing military conflict is highly unpredictable, the conflict in Ukraine has led to market disruptions, including significant volatility in commodity prices, credit and capital markets, as well as supply chain interruptions, which has contributed to periods of high inflation globally.
Contract acquisition costs and amortizing intangible assets will be assessed for impairment in the event of an impairment indicator. The valuation of goodwill depends on a variety of factors, the success of the Company’s business, including our ability to obtain regulatory approval for YUTREPIA, global market and economic conditions, earnings growth and expected cash flows.
Contract acquisition costs and amortizing intangible assets will be assessed for impairment in the event of an impairment indicator. The valuation of goodwill depends on a variety of factors, the success of the Company’s business, including our ability to obtain regulatory approval for YUTREPIA, 62 Table of Contents global market and economic conditions, earnings growth and expected cash flows.
Regulatory authorities may delay, limit or deny approval of our product candidates for many reasons, including, but not limited to, the following: ​ ● the FDA or comparable regulatory authorities may, for a variety of reasons, take the view that the data collected from our preclinical and clinical trials and human factors testing, or data that we otherwise submit or reference to support an application, are not sufficient to support approval of a product candidate; ​ ● the FDA or comparable regulatory authorities in other countries may ultimately conclude that our manufacturing processes or facilities or those of our third-party manufacturers do not sufficiently demonstrate compliance with current good manufacturing practices (cGMP) to support approval of a product candidate; or 58 Table of Contents that the drug CMC data or device biocompatibility data for our product candidates otherwise do not support approval; ​ ● we may be unable to demonstrate to the satisfaction of the FDA or comparable regulatory authorities in other countries that our product candidate is safe and effective for its proposed indication, or that its clinical and other benefits outweigh its safety risks; ​ ● the approval policies of the FDA or comparable regulatory authorities in other countries may change in a manner that renders our data insufficient for approval.
Regulatory authorities may delay, limit or deny approval of our product candidates for many reasons, including, but not limited to, the following: ● the FDA or comparable regulatory authorities may, for a variety of reasons, take the view that the data collected from our preclinical and clinical trials and human factors testing, or data that we otherwise submit or reference to support an application, are not sufficient to support approval of a product candidate; ● the FDA or comparable regulatory authorities in other countries may ultimately conclude that our manufacturing processes or facilities or those of our third-party manufacturers do not sufficiently demonstrate compliance with cGMP to support approval of a product candidate, or that the drug CMC data or device biocompatibility data for our product candidates otherwise do not support approval; ● we may be unable to demonstrate to the satisfaction of the FDA or comparable regulatory authorities in other countries that our product candidate is safe and effective for its proposed indication, or that its clinical and other benefits outweigh its safety risks; ● the approval policies of the FDA or comparable regulatory authorities in other countries may change in a manner that renders our data insufficient for approval.
As a result, capital appreciation, if any, of our equity securities will likely be your sole source of gain for the foreseeable future. ​ 56 Table of Contents An impairment of our long-lived contract acquisition costs and intangible assets, including goodwill, could have a material non-cash adverse impact on our results of operations.
As a result, capital appreciation, if any, of our equity securities will likely be your sole source of gain for the foreseeable future. An impairment of our long-lived contract acquisition costs and intangible assets, including goodwill, could have a material non-cash adverse impact on our results of operations.
Furthermore, if microbial, viral or other contaminations are discovered in our product candidates or in the manufacturing facilities in which our product candidates are made, such manufacturing facilities may need to be closed for an extended period of time to investigate and remedy the contamination. 64 Table of Contents Compliance with these regulatory standards often requires significant expense and effort.
Furthermore, if microbial, viral or other contaminations are discovered in our product candidates or in the manufacturing facilities in which our product candidates are made, such manufacturing facilities may need to be closed for an extended period of time to investigate and remedy the contamination. Compliance with these regulatory standards often requires significant expense and effort.
Failure by us or third parties to successfully develop or supply the medical equipment or to obtain or maintain regulatory approval or clearance of such medical equipment could negatively impact the market acceptance of and sales of Treprostinil Injection. 33 Table of Contents We maintain our cash at financial institutions, often in balances that exceed federally insured limits.
Failure by us or third parties to successfully develop or supply the medical equipment or to obtain or maintain regulatory approval or clearance of such medical equipment could negatively impact the market acceptance of and sales of Treprostinil Injection. We maintain our cash at financial institutions, often in balances that exceed federally insured limits.
We may not be able to build a commercial operation, including establishing and maintaining marketing and sales capabilities or enter into agreements with third parties to market and sell our drug products.
We may not be able to build a commercial operation, including establishing and maintaining marketing and sales capabilities or entering into agreements with third parties to market and sell our drug products.
The FDA’s tentative approval of YUTREPIA was based on information available to FDA at the time of the tentative approval letter (i.e., information in the application and the status of current good manufacturing practices of the facilities used in the manufacturing and testing of the drug product) and is therefore subject to change on the basis of new information that may come to FDA’s attention.
The FDA’s tentative approval of YUTREPIA for the treatment of PAH was based on information available to FDA at the time of the tentative approval letter (i.e., information in the application and the status of current good manufacturing practices of the facilities used in the manufacturing and testing of the drug product) and is therefore subject to change on the basis of new information that may come to FDA’s attention.
The following is a summary of the principal risk factors described in this section: ● We expect to incur significant expenses and operating losses for the foreseeable future as we advance our product candidates through clinical trials, seek regulatory approval and pursue commercialization of any 26 Table of Contents approved product candidates.
The following is a summary of the principal risk factors described in this section: ● We expect to incur significant expenses and operating losses for the foreseeable future as we advance our product candidates through clinical trials, seek regulatory approval and pursue commercialization of any approved product candidates.
Furthermore, we are aware of a number of therapies for PAH that are being developed or that are already available on the market, and we expect to face competition from these investigational drugs or approved drugs for potential subjects in our clinical trials, which may delay enrollment in our planned clinical trials.
Furthermore, we are aware of a number of therapies for PAH that are being developed or that are already available on the market, and we expect to face competition from these investigational drugs or approved drugs for potential subjects in our clinical trials, including planned clinical trials for YUTREPIA and L606, which may delay enrollment in our planned clinical trials.
If the trademarks, trade names and service marks we use are found to infringe upon the trademarks, trade names or service marks of another company, we could be liable for damages and be forced to stop using those trademarks, trade names or service marks, and as a result, we could lose all the name recognition that has been developed in those trademarks, trade names or service marks.
If the 57 Table of Contents trademarks, trade names and service marks we use are found to infringe upon the trademarks, trade names or service marks of another company, we could be liable for damages and be forced to stop using those trademarks, trade names or service marks, and as a result, we could lose all the name recognition that has been developed in those trademarks, trade names or service marks.
A failure to comply with the applicable regulations in the conduct of the preclinical studies and clinical trials for our product candidates may require us to repeat such studies or trials, which would delay the process of obtaining marketing approval for our product candidates and have a material and adverse effect on our business and prospects.
A failure to comply with the applicable regulations in the conduct of the preclinical studies and clinical trials for our product candidates may require us to repeat such studies or trials, 69 Table of Contents which would delay the process of obtaining marketing approval for our product candidates and have a material and adverse effect on our business and prospects.
These risks exist even if a product is approved for commercial sale by the FDA or comparable regulatory authorities in other countries and manufactured in licensed facilities. Our current product candidate, YUTREPIA, and Treprostinil Injection are designed to affect important bodily functions and processes.
These risks exist even if a product is approved for commercial sale by the FDA or comparable regulatory authorities in other countries and manufactured in licensed facilities. Our current product candidates, YUTREPIA and L606, and Treprostinil Injection are designed to affect important bodily functions and processes.
In addition, we have no control over the ability of Sandoz to maintain adequate quality control, quality assurance and 31 Table of Contents qualified personnel, or other personnel with roles related to the regulatory compliance of Treprostinil Injection and its labeling, promotion, and advertising or of Sandoz’s activities in relation to government healthcare programs.
In addition, we have no control over the ability of Sandoz to maintain adequate quality control, quality assurance and qualified personnel, or other personnel with roles related to the regulatory compliance of Treprostinil Injection and its labeling, promotion, and advertising or of Sandoz’s activities in relation to government healthcare programs.
If we are unable to identify, develop and obtain any required FDA clearance for new pumps for the subcutaneous and intravenous administration of Treprostinil Injection prior to the unavailability of the CADD-MS 3 and CADD Legacy pumps, respectively, we may no longer be able to serve patients with Treprostinil Injection through the applicable route of administration.
If we are unable to identify, develop and obtain any required FDA clearance for new pumps for the subcutaneous and intravenous administration of Treprostinil Injection prior to the unavailability of the CADD-MS 3, we may no longer be able to serve patients with Treprostinil Injection through the subcutaneous route of administration.
Moreover, such proceedings could put our patents at risk of being invalidated or interpreted narrowly and 48 Table of Contents our patent applications at risk of not being issued. We also may not prevail in any lawsuits that we initiate and the damages or other remedies awarded, if any, may not be commercially meaningful.
Moreover, such proceedings could put our patents at risk of being invalidated or interpreted narrowly and our patent applications at risk of not being issued. We also may not prevail in any lawsuits that we initiate and the damages or other remedies awarded, if any, may not be commercially meaningful.
In addition, if one of our suppliers experiences a similar disaster or unforeseen event, we could face significant loss of our inventory and significant delays in obtaining our supplies or be required to source supplies from an alternative supplier and may incur substantial costs as a result.
In addition, if one of our suppliers experiences a similar disaster or unforeseen event, we could face significant loss of our inventory and significant delays in obtaining our supplies or be required to source supplies from an 58 Table of Contents alternative supplier and may incur substantial costs as a result.
Such actions may be time-consuming and costly and may divert our management’s attention from our 63 Table of Contents core business and reduce the resources available for our clinical development, manufacturing and marketing activities, and consequently have a material and adverse effect on our business and prospects, regardless of the outcome.
Such actions may be time-consuming and costly and may divert our management’s attention from our core business and reduce the resources available for our clinical development, manufacturing and marketing activities, and consequently have a material and adverse effect on our business and prospects, regardless of the outcome.
If the RG Cartridge does not achieve an adequate level of acceptance or if the RG Cartridge experiences any quality problems, recalls or other adverse events, our ability to provide Treprostinil Injection to patients who receive Treprostinil through subcutaneous injection will be limited.
If the RG Cartridge does not achieve an adequate level of acceptance or if the RG Cartridge experiences any quality problems, 36 Table of Contents recalls or other adverse events, our ability to provide Treprostinil Injection to patients who receive treprostinil through subcutaneous injection will be limited.
We currently also have not identified any collaborators to market our products outside of the United States and cannot assure you that such collaborators, even if identified, will be able to successfully obtain marketing approval for our product candidates outside of the United States.
We currently also have not identified any collaborators to market our products 65 Table of Contents outside of the United States and cannot assure you that such collaborators, even if identified, will be able to successfully obtain marketing approval for our product candidates outside of the United States.
If a regulatory agency discovers previously unknown problems with a product, such as adverse events of unanticipated severity or frequency, or disagrees with the 62 Table of Contents promotion, marketing or labeling of a product, such regulatory agency may impose restrictions on that product or us, including requiring withdrawal of the product from the market.
If a regulatory agency discovers previously unknown problems with a product, such as adverse events of unanticipated severity or frequency, or disagrees with the promotion, marketing or labeling of a product, such regulatory agency may impose restrictions on that product or us, including requiring withdrawal of the product from the market.
Quality or design concerns with the delivery system, or commercial disputes with these third parties, could delay or prevent regulatory approval and commercialization of our product candidates. We are pursuing the FDA 505(b)(2) pathway for our current product candidates.
Quality or design concerns with the delivery system, or commercial disputes with these third parties, could delay or prevent regulatory approval and commercialization of our product candidates. 49 Table of Contents We are pursuing the FDA 505(b)(2) pathway for our current product candidates.
Trial proceedings in the Hatch-Waxman Litigation were held in March 2022.
Trial proceedings in the Original Hatch-Waxman Litigation were held in March 2022.
We are subject to risks and uncertainties common to early-stage companies in the biotechnology industry, including, but not limited to, development by competitors of new technological innovations, dependence on key personnel, protection of proprietary technology, compliance with government regulations, the impact of the COVID-19 pandemic, and the ability to secure additional capital to fund operations.
We are subject to risks and uncertainties common to early-stage companies in the biotechnology industry, including, but not limited to, development by competitors of new technological innovations, dependence on key personnel, protection of proprietary technology, compliance with government regulations, and the ability to secure additional capital to fund operations.
Our competitors may also invest heavily in the discovery and development of novel drug products that could make our product candidates less competitive or may file FDA citizen petitions which may delay the approval process for our product candidates.
Our competitors may also invest heavily in the discovery and development of novel drug products that could make our product candidates less competitive or may file FDA citizen petitions or other correspondence with the FDA which may delay the approval process for our product candidates.
The enforceability of patents in the pharmaceutical industry involves complex legal and 49 Table of Contents scientific questions and can be uncertain. Accordingly, we cannot assure you that third parties will not successfully challenge the validity, enforceability or scope of our patents.
The enforceability of patents in the pharmaceutical industry involves complex legal and scientific questions and can be uncertain. Accordingly, we cannot assure you that third parties will not successfully challenge the validity, enforceability or scope of our patents.
Approval processes vary among countries and additional product testing and validation, or additional administrative review periods, may be required from one country to the next. 59 Table of Contents Seeking marketing approval in countries other than the United States could be costly and time-consuming, especially if additional preclinical studies or clinical trials are required to be conducted.
Approval processes vary among countries and additional product testing and validation, or additional administrative review periods, may be required from one country to the next. Seeking marketing approval in countries other than the United States could be costly and time-consuming, especially if additional preclinical studies or clinical trials are required to be conducted.
If we conclude that we require additional financing and fail to obtain it on terms that are favorable to us, we will not be able to implement our growth plans, and we may be required to significantly curtail, delay or discontinue one or more of our research, development or manufacturing programs or the commercialization of any approved product.
If we need additional financing and fail to obtain financing on terms that are favorable to us, we will not be able to implement our growth plans, and we may be required to significantly curtail, delay or discontinue one or more of our research, development or manufacturing programs or the commercialization of any approved product.
We have pursued this pathway for our current product candidate, YUTREPIA. Even if the FDA allows us to rely on the 505(b)(2) regulatory pathway for a given product candidate, we cannot assure you that marketing approval will be obtained in a timely manner, or at all.
We have pursued this pathway for our current product candidate, YUTREPIA, and are pursuing this pathway for L606. Even if the FDA allows us to rely on the 505(b)(2) regulatory pathway for a given product candidate, we cannot assure you that marketing approval will be obtained in a timely manner, or at all.
If the previously approved drugs referenced in an applicant’s 505(b)(2) NDA are protected by patent(s) listed in the Orange Book, the 505(b)(2) applicant is required to make a claim after filing its NDA that each such patent is invalid, unenforceable or will not be infringed.
If the previously approved drugs referenced in an applicant’s 505(b)(2) NDA are protected by patent(s) listed in the Orange Book, the 505(b)(2) applicant is required to make a claim after filing its NDA or certain types of amendments to its NDA that each such patent is invalid, unenforceable or will not be infringed.
Furthermore, YUTREPIA has, to date, been tested only in relatively small study populations and, accordingly, the results from our earlier clinical trials may be less reliable than results achieved in larger clinical trials, if required.
Furthermore, YUTREPIA and L606 have, to date, been tested only in relatively small study populations and, accordingly, the results from our earlier clinical trials may be less reliable than results achieved in larger clinical trials, if required.
We and any contract manufacturers that we may engage in the future must comply with cGMP requirements. Manufacturers of pharmaceutical products often encounter difficulties in production, particularly in scaling up and validating initial production and contamination controls.
We and any contract 72 Table of Contents manufacturers that we may engage in the future must comply with cGMP requirements. Manufacturers of pharmaceutical products often encounter difficulties in production, particularly in scaling up and validating initial production and contamination controls.
For example, if a competing product comprised of an inhaled dry-powder formulation of treprostinil, such as Tyvaso DPI, is granted three years of market exclusivity, that could delay the final approval of YUTREPIA until said exclusivity expires. Moreover, the applicable requirements for approval may differ from country to country.
For example, if a competing product comprised of an inhaled dry-powder formulation of treprostinil, such as Tyvaso DPI, is granted regulatory exclusivity, that could delay the final approval of YUTREPIA until said exclusivity expires. Moreover, the applicable requirements for approval may differ from country to country.
Furthermore, failure can occur at any stage of the process, and we could encounter problems that cause us to abandon an NDA filed with the FDA or repeat clinical trials.
Furthermore, failure can occur at any stage of the process, and we could encounter problems that cause us to abandon an NDA filed with the FDA or 47 Table of Contents repeat clinical trials.
For example, we are currently subject to certain restrictions with regard to our ability to enter into collaboration arrangements for the development of inhaled therapeutics based upon our PRINT technology with third parties pursuant to our collaboration with GSK; ● our collaborators may not properly maintain or defend our intellectual property rights or may use our intellectual property or proprietary information in a way that gives rise to actual or threatened litigation that could jeopardize or invalidate our intellectual property or proprietary information or expose us to potential liability; ● disputes may arise between us and our collaborators, which may cause a delay in or the termination of our research, development or commercialization activities; ● our collaboration and licensing arrangements may be terminated, and if terminated, may result in our need for additional capital to pursue further drug product development or commercialization.
For example, we are currently subject to certain restrictions with regard to our ability to enter into collaboration arrangements to use PRINT for the development of inhaled therapeutics using certain identified compounds pursuant to our collaboration with GSK; ● our collaborators may not properly maintain or defend our intellectual property rights or may use our intellectual property or proprietary information in a way that gives rise to actual or threatened litigation that could jeopardize or invalidate our intellectual property or proprietary information or expose us to potential liability; ● disputes may arise between us and our collaborators, which may cause a delay in or the termination of our research, development or commercialization activities; ● our collaboration and licensing arrangements may be terminated, and if terminated, may result in our need for additional capital to pursue further drug product development or commercialization.
General Risk Factors General Risks Related to the Commercialization of our Product Candidates Our business and operations may be adversely affected by the effects of health epidemics, including the continued spread of the COVID-19 global pandemic.
General Risk Factors General Risks Related to the Commercialization of our Product Candidates Our business and operations may be adversely affected by the effects of health epidemics, including the COVID-19 pandemic.
In June 2020, United Therapeutics, as the holder of such patents, asserted a patent challenge directed to the ‘901 Patent and the ‘066 Patent by filing a complaint against us in the U.S. District Court for the District of Delaware (Case No. 1:20-cv-00755-RGA) (the “Hatch-Waxman Litigation”). In July 2020, the U.S. Patent and Trademark Office (the USPTO) issued U.S.
In June 2020, United Therapeutics, as the holder of such patents, asserted a patent challenge directed to the ‘901 Patent and the ‘066 Patent by filing a complaint against us in the U.S. District Court for the District of Delaware (Case No. 1:20-cv-00755-RGA) (the “Original Hatch-Waxman Litigation”). In July 2020, the U.S. Patent and Trademark Office (the “USPTO”) issued U.S.
We also rely on a sole supplier for encapsulation and packaging services, with whom we have a long-term contract. Furthermore, YUTREPIA is administered using the 46 Table of Contents RS00 Model 8 DPI, which is manufactured by Plastiape, which is located in Italy.
We also rely on a sole supplier for encapsulation and packaging services, with whom we have a long-term contract. Furthermore, YUTREPIA is administered using the RS00 Model 8 DPI, which is manufactured by Plastiape, which is located in Italy.
Violations of these statutes is a felony and may result in fines, imprisonment or exclusion from governmental programs. ​ 60 Table of Contents ● Privacy and data security laws may apply to our business.
Violations of these statutes is a felony and may result in fines, imprisonment or exclusion from governmental programs. ● Privacy and data security laws may apply to our business.
This may be costly, and our investment would be lost if we cannot retain or reposition our sales and marketing personnel. ​ Factors that may impact our efforts to commercialize our drug candidates on our own and generate product revenues include: ​ ● our inability to recruit and retain adequate numbers of effective sales and marketing personnel over a large geographic area; ● the costs and time associated with the initial and ongoing training of sales and marketing personnel on legal and regulatory compliance matters and monitoring their actions; ● understanding and training relevant personnel on the limitations on, and the transparency and reporting requirements applicable to, remuneration provided to actual and potential referral sources; ● the clinical indications for which the products are approved and the claims that we may make for the products; 39 Table of Contents ● limitations or warnings, including distribution or use restrictions, contained in the products’ approved labeling; ● the inability of sales personnel to obtain access to physicians or to effectively promote any future drugs; ● our ability to appropriately market, detail and distribute products in light of healthcare provider facility closures, quarantine, travel restrictions and other governmental restrictions caused by COVID-19; ● the lack of complementary drugs to be offered by sales personnel, which may put us at a competitive disadvantage relative to companies with more extensive product lines; ● any distribution and use restrictions imposed by the FDA or to which we agree; ● liability for sales and marketing personnel who fail to comply with the applicable legal and regulatory requirements; ● our ability to maintain a healthcare compliance program including effective mechanisms for compliance monitoring; and ● unforeseen costs and expenses associated with creating a sales and marketing organization. ​ In the future, we may choose to participate in sales activities with collaborators for some of our drug candidates.
Factors that may impact our efforts to commercialize our drug candidates on our own and generate product revenues include: ● our inability to recruit and retain adequate numbers of effective sales and marketing personnel over a large geographic area; ● the costs and time associated with the initial and ongoing training of sales and marketing personnel on legal and regulatory compliance matters and monitoring their actions; ● understanding and training relevant personnel on the limitations on, and the transparency and reporting requirements applicable to, remuneration provided to actual and potential referral sources; ● the clinical indications for which the products are approved and the claims that we may make for the products; ● limitations or warnings, including distribution or use restrictions, contained in the products’ approved labeling; ● the inability of sales personnel to obtain access to physicians or to effectively promote any future drugs; ● our ability to appropriately market, detail and distribute products in light of any healthcare provider facility closures, quarantine, travel restrictions and other governmental restrictions caused by COVID-19; ● the lack of complementary drugs to be offered by sales personnel, which may put us at a competitive disadvantage relative to companies with more extensive product lines; ● any distribution and use restrictions imposed by the FDA or to which we agree; ● liability for sales and marketing personnel who fail to comply with the applicable legal and regulatory requirements; ● our ability to maintain a healthcare compliance program including effective mechanisms for compliance monitoring; and ● unforeseen costs and expenses associated with creating a sales and marketing organization.
Our future success depends on the successful development of our novel PRINT technology and products based on it, including YUTREPIA. To our knowledge, no regulatory authority has granted final approval to market or commercialize drugs made using our PRINT technology.
Our future success depends on the successful development of our novel PRINT technology and products based on it, including YUTREPIA, and the development of L606 using Pharmosa’s proprietary liposomal technology. To our knowledge, no regulatory authority has granted final approval to market or commercialize drugs made using our PRINT technology or Pharmosa’s liposomal technology.
Our business, financial condition and results of operations could be materially adversely affected by any negative impact on the global economy and capital markets resulting from the conflict in Ukraine, geopolitical tensions, or record inflation. ​ U.S. and global markets are experiencing volatility and disruption following the escalation of geopolitical tensions and the start of the military conflict between Russia and Ukraine.
Our business, financial condition and results of operations could be materially adversely affected by any negative impact on the global economy and capital markets resulting geopolitical tensions. U.S. and global markets are experiencing volatility and disruption following the escalation of geopolitical tensions and the start of the military conflict between Russia and Ukraine.
Claims resulting from a violation of the federal AKS constitute a false or fraudulent claim for purposes of the federal False Claims Act.
Claims resulting from a violation of the federal AKS constitute a false or fraudulent claim for purposes of the FCA.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeThe primary use of this location is general office, laboratory, research and development and light manufacturing. We believe that our facilities are adequate for our current needs, however, we will continue to seek additional space as needed to accommodate our growth. ​
Biggest changeThe primary use of this location is general office, laboratory, research and development and light manufacturing. We believe that our facilities are adequate for our current needs. However, we will continue to seek additional space as needed to accommodate our growth. ​ Item 3. Legal Proceedings.
Added
For information on our legal proceedings, see Note 15 “Legal Proceedings” included in our financial statements beginning on page F-30 of this Annual Report on Form 10-K. ​ Item 4. Mine Safety Disclosures. Not applicable. ​ 75 Table of Contents PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changePurchases of Equity Securities by the Issuer and Affiliated Purchasers We did not repurchase any of our securities during the year ended December 31, 2022. ​ Item 6. [Reserved]. ​
Biggest changePurchases of Equity Securities by the Issuer and Affiliated Purchasers We did not repurchase any of our securities during the year ended December 31, 2023. ​ Item 6. [Reserved]. ​ 76 Table of Contents
Holders As of March 2, 2023, there were 62 record holders of our common stock, based upon information received from our transfer agent. However, this number does not include beneficial owners whose shares were held of record by nominees or broker dealers. We estimate that there are more than 1,000 beneficial owners of our common stock.
Holders As of March 1, 2024, there were 55 record holders of our common stock, based upon information received from our transfer agent. However, this number does not include beneficial owners whose shares were held of record by nominees or broker dealers. We estimate that there are more than 1,000 beneficial owners of our common stock.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeIn connection with the Pump Development Agreement, we and Sandoz have agreed to pay Mainbridge certain future contingent milestone payments in accordance with the terms and conditions set forth therein. ​ Fourth Amendment to the Sandoz Promotion Agreement On March 10, 2023, we entered into a Fourth Amendment to the Sandoz Promotion Agreement, which provides for, among other things, (i) an agreement between us and Sandoz to enter into an agreement with a third party for the repair and servicing of CADD-MS 3 pumps (the “New Agreement”), (ii) an agreement to split all payments due under the New Agreement evenly between us and Sandoz, and (iii) to clarify certain terms and conditions related to the profit sharing between us and Sandoz under the Promotion Agreement.
Biggest changeIn connection with the Pump Development Agreement, we and Sandoz have agreed to pay Mainbridge certain future contingent milestone payments in accordance with the terms and conditions set forth therein. In June 2023, we entered into a License Agreement with Pharmosa Biopharm Inc.
We also expect to incur significant commercialization expenses related to product manufacturing, sales, marketing and distribution as we prepare to potentially receive regulatory approval for YUTREPIA. Our future funding requirements will be heavily determined by the timing of the potential commercialization of YUTREPIA and the resources needed to support development of our product candidates.
We also expect to incur significant commercialization expenses related to product manufacturing, sales, marketing and distribution as we prepare to potentially receive regulatory approval for YUTREPIA. Our future funding requirements will be heavily determined by the timing of the potential commercialization of YUTREPIA and the resources needed to support the development of our product candidates.
Lease Obligations We have operating lease obligations including rental amounts due on leases of certain laboratory, manufacturing and office space and equipment under the terms of non-cancelable operating leases. These leases expire at various times through October 2026. Minimum operating lease payments are $1.3 million in 2023, $1.3 million in 2024, $1.4 million in 2025, and $1.2 million in 2026.
Lease Obligations We have operating lease obligations including rental amounts due on leases of certain laboratory, manufacturing and office space and equipment under the terms of non-cancelable operating leases. These leases expire at various times through October 2026. Minimum operating lease payments are $1.3 million in 2024, $1.4 million in 2025, and $1.2 million in 2026.
Our future funding requirements will depend on many factors, including: ● the number and characteristics of the product candidates we pursue; 74 Table of Contents ● the scope, progress, results and costs of researching and developing our product candidates, and conducting preclinical studies and clinical trials; ● the timing of, and the costs involved in, obtaining regulatory approvals for our product candidates; ● the cost of manufacturing our product candidates and any product we successfully commercialize; ● our ability to establish and maintain strategic collaborations, licensing or other arrangements and the financial terms of such agreements; ● the costs involved in preparing, filing, prosecuting, maintaining, defending and enforcing patent claims, including litigation costs and the outcome of such litigation; and ● the timing, receipt and amount of sales of, or milestone payments related to or royalties on, our current or future product candidates, if any.
Our future funding requirements will depend on many factors, including: ● the number and characteristics of the product candidates we pursue; ● the scope, progress, results and costs of researching and developing our product candidates, and conducting preclinical studies and clinical trials; ● the timing of, and the costs involved in, obtaining regulatory approvals for our product candidates; ● the cost of manufacturing our product candidates and any product we successfully commercialize; ● our ability to establish and maintain strategic collaborations, licensing or other arrangements and the financial terms of such agreements; ● the costs involved in preparing, filing, prosecuting, maintaining, defending and enforcing patent claims, including litigation costs and the outcome of such litigation; and ● the timing, receipt and amount of sales of, or milestone payments related to or royalties on, our current or future product candidates, if any.
Other general and administrative expenses include facility-related costs, patent filing and prosecution costs and professional fees for marketing, legal, auditing and tax services and insurance costs. Other Income (Expense) Other income (expense) is comprised of interest income and expense and loss on extinguishment of debt. Interest income consists of interest earned on our cash deposits.
Other general and administrative expenses include facility-related costs, patent filing and prosecution costs and professional fees for marketing, legal, auditing and tax services and insurance costs. Other Income (Expense) Other income (expense) is comprised of interest income and expense and loss on extinguishment of debt. Interest income consists of interest earned on our cash equivalents.
This discussion should be read in conjunction with our consolidated financial statements for the two-year period ended the year ended December 31, 2022 and related notes included elsewhere in this Annual Report on Form 10-K.
This discussion should be read in conjunction with our consolidated financial statements for the two-year period ended the year ended December 31, 2023 and related notes included elsewhere in this Annual Report on Form 10-K.
In particular, the discussion is intended to provide an analysis of significant trends and material changes in our financial position and the operating results of our business during the year ended December 31, 2022, as compared to the year ended December 31, 2021.
In particular, the discussion is intended to provide an analysis of significant trends and material changes in our financial position and the operating results of our business during the year ended December 31, 2023, as compared to the year ended December 31, 2022.
Drug commercialization will take several years and millions of dollars in development costs. General and Administrative Expenses General and administrative expenses consist principally of salaries and related costs for personnel in executive, administrative, finance and legal functions, including stock-based compensation.
Drug commercialization can take several years and millions of dollars in development costs. General and Administrative Expenses General and administrative expenses consist principally of salaries and related costs for personnel in executive, administrative, finance and legal functions, including stock-based compensation.
We conduct research, development, and manufacturing of novel products by applying our subject matter expertise in cardiopulmonary diseases and our proprietary PRINT® technology, a particle engineering platform which enables precise production of uniform drug particles designed to improve the safety, efficacy, and performance of a wide range of therapies.
We conduct research, development and manufacturing of novel products by applying our subject matter expertise in cardiopulmonary diseases and our proprietary PRINT® technology, a particle engineering platform, to enable precise production of uniform drug particles designed to improve the safety, efficacy and performance of a wide range of therapies.
We may not be able to complete the development and initiate commercialization of these programs if, among other things, our clinical trials are not successful or if the FDA does not approve our product candidates when we expect, or at all.
We may not be able to complete the development and initiate commercialization of these programs if, 82 Table of Contents among other things, our clinical trials are not successful or if the FDA does not approve our product candidates when we expect, or at all.
YUTREPIA is an inhaled dry powder formulation of treprostinil designed with PRINT to improve the therapeutic profile of treprostinil by enhancing deep lung delivery while using a convenient, low resistance dry-powder inhaler (“DPI”) and by achieving higher dose levels than current inhaled therapies.
YUTREPIA is an inhaled dry powder formulation of treprostinil designed with PRINT to improve the therapeutic profile of treprostinil by enhancing deep lung delivery while using a convenient, low effort dry-powder inhaler (“DPI”) and by achieving higher dose levels than the labeled doses of current inhaled therapies.
We recently became aware of shortages of critical components of the CADD-MS 3 pump that have caused the number of CADD-MS 3 infusion pumps available for the subcutaneous administration of Treprostinil Injection to be limited.
We are aware of shortages of critical components of the CADD-MS 3 pump that have caused the number of CADD-MS 3 infusion pumps available for the subcutaneous administration of Treprostinil Injection to be limited.
Through development of our own products and research with third parties, we have developed expertise in applying PRINT across multiple routes of administration and drug payloads including inhaled therapies, vaccines, biologics, nucleic acids and ophthalmic implants, among others. Our lead product candidate is YUTREPIA for the treatment of PAH.
Through development of our own products and research with third parties, we have experience applying PRINT across multiple routes of administration and drug payloads including inhaled therapies, vaccines, biologics, nucleic acids and ophthalmic implants, among others. Our lead product candidate is YUTREPIA for the treatment of PAH and PH-ILD.
In April 2022, we sold 11,274,510 shares of our common stock in an underwritten registered public offering at an offering price of $5.10 per share (the “Offering”). The Offering closed on April 18, 2022, and we received net proceeds of approximately $54.5 million from the sale of the shares, after deducting the underwriting discounts and commissions and other offering expenses.
In April 2022, we sold 11,274,510 shares of our common stock in an underwritten registered public offering at an offering price of $5.10 per share for net proceeds of approximately $54.5 million from the sale of the shares, after deducting the underwriting discounts and commissions and other offering expenses.
While we describe our significant accounting policies in Note 2 to the consolidated financial statements appearing elsewhere in this Annual Report on Form 10-K, we have identified the following critical accounting estimates: Research and Development Expenses As part of the process of preparing our consolidated financial statements, we are required to estimate our incurred expenses.
Actual results could differ from those estimates and assumptions. 85 Table of Contents While we describe our significant accounting policies in Note 2 to the consolidated financial statements appearing elsewhere in this Annual Report on Form 10-K, we have identified the following critical accounting estimates: Research and Development Expenses As part of the process of preparing our consolidated financial statements, we are required to estimate our incurred expenses.
The gross proceeds from the sale of the Private Placement Shares were $21.7 million. Future Funding Requirements Prior to the potential FDA approval of YUTREPIA and until such time as we can generate significant revenues from its sale, if ever, we anticipate we will incur net losses and negative cash flows.
Future Funding Requirements Prior to the potential FDA approval of YUTREPIA and until such time as we can generate significant revenues from its sale, if ever, we anticipate we will incur net losses and negative cash flows.
We plan to focus in the near-term on preparations for the potential commercial launch of YUTREPIA, continuing promotion of Treprostinil Injection, expanding our corporate infrastructure, and continuing to invest in research and development efforts to explore additional product candidates.
We plan to focus in the near-term on preparations for the potential commercial launch of YUTREPIA, continuing promotion of Treprostinil Injection, investing in research and development efforts for our YUTREPIA and L606 programs, and expanding our corporate infrastructure.
Cost of Revenue Cost of revenue consists of (i) the cost of employing a targeted sales force calling on physicians and hospital pharmacies involved in the treatment of PAH, as well as key stakeholders involved in the distribution and reimbursement of Treprostinil Injection and (ii) a portion of the amortization of the intangible asset associated with the Promotion 70 Table of Contents Agreement.
Cost of Revenue Cost of revenue consists of (i) an allocation of the cost of our sales force associated with calling on physicians and hospital pharmacies involved in the treatment of PAH with Treprostinil Injection, as well as key stakeholders involved in the distribution and reimbursement of Treprostinil Injection and (ii) amortization of the intangible asset associated with the Promotion Agreement.
We may choose to take advantage of some but not all of these exemptions. 77 Table of Contents Smaller Reporting Company As a “smaller reporting company,” as defined in Rule 12b-2 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), in addition to providing reduced disclosure about our executive compensation arrangements and business developments, among other reduced disclosure requirements available to smaller reporting companies, we present only two years of audited financial statements in addition to any required unaudited interim financial statements with correspondingly reduced “Management’s Discussion and Analysis of Financial Condition and Results of Operations” disclosure. ​ ​ Item 7A.
Smaller Reporting Company As a “smaller reporting company,” as defined in Rule 12b-2 of the Securities Exchange Act of 1934, as amended, or the Exchange Act, in addition to providing reduced disclosure about our executive compensation arrangements and business developments, among other reduced disclosure requirements available to smaller reporting companies, we present only two years of audited financial statements in addition to any required unaudited interim financial statements with correspondingly reduced “Management’s Discussion and Analysis of Financial Condition and Results of Operations” disclosure.
The preparation of these financial statements requires the use of estimates, judgments and assumptions that affect the reported amounts of assets and 76 Table of Contents liabilities at the date of the financial statements and reported amounts of revenues and expenses during the periods presented. Actual results could differ from those estimates and assumptions.
The preparation of these financial statements requires the use of estimates, judgments and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the periods presented.
In such an event, the ownership of our existing shareholders will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights associated with holdings of our common stock.
We may raise additional capital through licensing activities, other business arrangements or the sale of equity or convertible debt securities. In such an event, the ownership of our existing shareholders will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights associated with holdings of our common stock.
On May 21, 2021, Liquidia PAH’s manufacturing partner, Chengdu Shifeng Medical Technologies LTD (“Chengdu”) began selling the RG Cartridge, which may be used to supply medications to PAH patients with the CADD-MS 3 pump manufactured by Smiths Medical ASD, Inc.
Liquidia PAH has the exclusive rights to conduct commercial activities to encourage the appropriate use of Treprostinil Injection. In May 2021, Liquidia PAH’s manufacturing partner, Chengdu Shifeng Medical Technologies LTD (“Chengdu”) began selling the RG Cartridge, which may be used to supply medications to PAH patients with the CADD-MS 3 pump manufactured by Smiths Medical ASD, Inc.
During the year ended December 31, 2022, we received $54.5 million net proceeds from the Offering which closed on April 18, 2022, $9.3 million excess proceeds from the refinancing of our long-term debt in January 2022, $1.1 million from the issuance of common stock under stock incentive plans, and $0.5 million in litigation financing deployments.
During the year ended December 31, 2022, we received $54.5 million net proceeds from the sale of common stock, $9.3 million excess proceeds from the refinancing of long-term debt, and $1.1 million from the issuance of common stock under stock incentive plans.
Due to this limitation in the availability of pumps, specialty pharmacies are not currently placing new patients on to subcutaneous Treprostinil Injection therapy in order to preserve the available pumps for those patients already receiving subcutaneous administration of Treprostinil Injection. As a result of these shortages, future revenue may be impacted until new components or alternative pumps are available.
Due to this limitation in the availability of pumps, specialty pharmacies are not currently placing new patients on to subcutaneous Treprostinil Injection therapy in order to preserve the available pumps for those patients already receiving subcutaneous administration of Treprostinil Injection.
Contractual Obligations and Commitments Milestone and Royalty Obligations Under the UNC License Agreement, the Company is obligated to pay UNC royalties equal to a low single digit percentage of all net sales of drug products whose manufacture, use or sale includes any use of the technology or patent rights covered by the UNC License Agreement, including YUTREPIA. ​ In March 2012, the Company entered into an agreement, as amended, with Chasm Technologies, Inc. for manufacturing consulting services related to the Company’s manufacturing capabilities during the term of the agreement.
Contractual Obligations and Commitments Milestone and Royalty Obligations Under the UNC License Agreement, the Company is obligated to pay UNC royalties equal to a low single digit percentage of all net sales of drug products whose manufacture, use or sale includes any use of the technology or patent rights covered by the UNC License Agreement, including YUTREPIA.
Overview We are a biopharmaceutical company focused on the development, manufacture, and commercialization of products that address unmet patient needs, with current focus directed towards the treatment of pulmonary hypertension (PH). We operate as a single entity through our two wholly owned operating subsidiaries, Liquidia Technologies and Liquidia PAH.
Overview We are a biopharmaceutical company focused on the development, manufacture, and commercialization of products that address unmet patient needs, with current focus directed towards rare cardiopulmonary diseases such as pulmonary arterial hypertension (“PAH”) and pulmonary hypertension associated with interstitial lung disease (“PH-ILD”). We operate through our wholly owned operating subsidiaries, Liquidia Technologies, Inc.
Under our supply agreement with LGM, we are required to provide rolling forecasts, a portion of which will be considered a binding, firm order, subject to an annual minimum purchase commitment of $2.7 million for the term of the agreement. The agreement expires five years from the first marketing authorization approval of YUTREPIA.
Under our supply agreement with LGM, we are required to provide rolling forecasts, a portion of which will be considered a binding, firm order, subject to an annual minimum purchase commitment of $2.7 million for the term of the agreement. As of December 31, 2023, we have incurred and paid the full annual purchase commitment for 2023 of $2.7 million.
We believe based on our current operating plan, excluding any potential contingent Investment Amounts from the RIFA and future YUTREPIA product revenue, that cash and cash equivalents will be sufficient to fund operations and capital expenditure requirements and allow us to remain in compliance with our minimum cash covenants pursuant to the RIFA for at least twelve months from the issuance date of this Annual Report on Form 10-K.
Although we expect to continue to generate operating losses for the foreseeable future, we believe that based on our current operating plan, excluding any future YUTREPIA product revenue, our cash and cash equivalents will be sufficient to fund operations, capital expenditures, and RIFA quarterly fixed payment requirements and allow us to remain in compliance with our minimum cash covenants pursuant to the RIFA for at least twelve months from the issuance date of these consolidated financial statements.
We lease specialized laboratory equipment under finance leases expiring in 2024. Minimum finance lease payments are $0.2 million in 2023, and $0.1 million in 2024. Other Obligations and Contingencies We from time-to-time are subject to claims and litigation in the normal course of business, none of which we believe represent a risk of material loss or exposure.
Other Obligations and Contingencies We from time-to-time are subject to claims and litigation in the normal course of business, none of which we believe represent a risk of material loss or exposure.
Our expenditures are subject to additional uncertainties, including the terms and timing of regulatory approvals, and the expense of filing, prosecuting, defending and enforcing any patent claims or other intellectual property rights. We may never succeed in achieving regulatory approval for any of our product candidates. We may obtain unexpected results from our clinical trials.
Our expenditures are subject to additional uncertainties, including the terms and timing of regulatory approvals. We may never succeed in achieving regulatory approval for any of our product candidates. We may obtain unexpected results from our clinical trials. We may elect to discontinue, delay or modify clinical trials of some product candidates or focus on others.
Product candidates in later stages of clinical development generally have higher development costs than those in earlier stages of clinical development, primarily due to the increased size and duratio n of later-stage clinical trials. In the near term we expect that our research and development expenses to increase as we complete manufacturing activities and explore potential clinical trials.
Product candidates in later stages of clinical development generally have higher development costs than those in earlier stages of clinical development, primarily due to the increased size and duratio n of later-stage clinical trials.
These expenses include: ● expenses incurred under agreements with contract research organizations as well as investigative sites and consultants that conduct our clinical trials and preclinical studies; ● manufacturing process development and scale-up expenses and the cost of acquiring and manufacturing preclinical and clinical trial materials and commercial materials, including manufacturing validation batches; ● outsourced professional scientific development services; ● employee-related expenses, which include salaries, benefits and stock-based compensation for personnel in research and development functions; ● expenses relating to regulatory activities, including filing fees paid to regulatory agencies; ● laboratory materials and supplies used to support our research activities; and ● allocated expenses for utilities and other facility-related costs.
These expenses include: ● expenses incurred under agreements with contract research organizations as well as investigative sites and consultants that conduct our clinical trials and preclinical studies; ● manufacturing process development and scale-up expenses and the cost of acquiring and manufacturing preclinical and clinical trial materials and commercial materials unless objective and persuasive evidence exists that regulatory approval subsequent commercialization of a product candidate is probably and where we also expect the future economic benefit from the sales of the product candidate to be realized; ● outsourced professional scientific development services; ● employee-related expenses, which include salaries, benefits and stock-based compensation for personnel in research and development functions; ● expenses relating to regulatory activities, including filing fees paid to regulatory agencies; ● laboratory materials and supplies used to support our research activities; 79 Table of Contents ● costs of acquired product licenses and related technology rights where there is no alternative future use; and ● allocated facility-related costs.
Cash Flows The following table summarizes our sources and uses of cash: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ December 31, ​ 2022 2021 Net cash provided by (used in): ​ ​ ​ ​ Operating activities ​ $ (28,588) ​ $ (34,035) Investing activities ​ (587) ​ (107) Financing activities ​ 64,964 ​ 26,320 Net increase (decrease) in cash and cash equivalents ​ $ 35,789 ​ $ (7,822) ​ Operating Activities Net cash used in operating activities decreased $5.4 million to $28.6 million for the year ended December 31, 2022, from $34.0 million for the year ended December 31, 2021.
Cash Flows The following table summarizes our sources and uses of cash: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ December 31, ​ 2023 2022 Net cash provided by (used in): ​ ​ ​ ​ Operating activities ​ $ (41,564) ​ $ (28,588) Investing activities ​ (11,288) ​ (587) Financing activities ​ 43,248 ​ 64,964 Net increase (decrease) in cash and cash equivalents ​ $ (9,604) ​ $ 35,789 ​ 83 Table of Contents Operating Activities Net cash used in operating activities increased $13.0 million to $41.6 million for the year ended December 31, 2023, from $28.6 million for the year ended December 31, 2022.
We expect to incur significant expenses and operating losses for the foreseeable future as we advance product candidates through clinical trials, seek regulatory approval and prepare for commercialization of any approved product candidates.
As of December 31, 2023, we had an accumulated deficit of $429.1 million. We expect to incur significant expenses and operating losses for the foreseeable future as we conduct clinical development of product candidates and seek regulatory approval and prepare for commercialization of any approved product candidates.
If we conclude that we require but are unable to obtain additional funding, we could be required to delay, reduce, or eliminate research and development programs, product portfolio expansion, or future commercialization efforts, which could adversely affect business prospects. We may raise additional capital through licensing activities, other business arrangements or the sale of equity or convertible debt securities.
If we determine we require but are unable to obtain additional funding, we could be required to delay, reduce, or eliminate research and development programs, product portfolio expansion, or future commercialization efforts, which could adversely affect our business prospects, or we may be unable to continue operations.
The United States Food and Drug Administration (FDA) tentatively approved our New Drug Application (NDA) for YUTREPIA for the treatment of PAH in November 2021.
In November 2021, the United States Food and Drug Administration (“FDA”) tentatively approved our New Drug Application (“NDA”) for YUTREPIA for the treatment of PAH. In July 2023, we filed an amendment to our NDA to add PH-ILD to the label for YUTREPIA.
The Pump Development Agreement provides for the cooperation between us, Sandoz and Mainbridge to develop a new pump that is suitable for the subcutaneous administration of Treprostinil Injection. Mainbridge will perform all development, validation and testing activities required for the pump and related consumables in anticipation of submitting a 510(k) clearance application for the pump to the FDA in 2023.
Mainbridge will perform all development, validation and testing activities required for the pump and related consumables in anticipation of submitting a 510(k) clearance application for the pump to the FDA in the first half of 2024.
We may elect to discontinue, delay or modify clinical trials of some product candidates or focus on others. A change in the outcome of any of these variables with respect to the development of a product candidate 71 Table of Contents could mean a significant change in the costs and timing associated with the development of that product candidate.
A change in the outcome of any of these variables with respect to the development of a product candidate could mean a significant change in the costs and timing associated with the development of that product candidate.
If we are unable to access additional Investment Amounts from the RIFA, there could be substantial doubt about our ability to continue as a going concern as of the date of the issuance of our second quarter 2023 financial statements.
If we have not received full FDA approval and begun product sales of YUTREPIA or are unable to access additional capital by the date of issuance of our second quarter 2024 financial statements, there could be substantial doubt about our ability to continue as a going concern as of that date.
In accruing service fees, we estimate the time period over which services will be performed and the level of effort to be expended in each period. If the actual timing of the performance of services or the level of effort varies from our estimate, we adjust the accrual or prepaid expense accordingly.
If the actual timing of the performance of services or the level of effort varies from our estimate, we adjust the accrual or prepaid expense accordingly.
Investing Activities Net cash used in investing activities was $0.6 million for the year ended December 31, 2022 compared to $0.1 million for the year ended December 31, 2021 and consisted primarily of property, plant and equipment purchases.
During the year ended December 31, 2022, net cash used in investing activities related to property, plant and equipment purchases. Financing activities Net cash provided by financing activities was $43.2 million during the year ended December 31, 2023 compared with $65.0 million provided by financing activities the year ended December 31, 2022.
As a result of many factors, including those factors set forth in the “ Risk Factors ” section of this Annual Report on Form 10-K, our actual results could differ materially from the results described in, or implied by, the forward-looking statements contained in the following discussion and analysis. 68 Table of Contents Objective The following Management’s Discussion and Analysis of Financial Condition and Results of Operations is intended to provide information necessary to understand our audited consolidated financial statements for the two-year period ended December 31, 2022 and highlight certain other information which, in the opinion of management, will enhance a reader’s understanding of our financial condition, changes in financial condition, results of operations, and cash flows.
Objective The following Management’s Discussion and Analysis of Financial Condition and Results of Operations is intended to provide information necessary to understand our audited consolidated financial statements for the two-year period ended December 31, 2023 and highlight certain other information which, in the opinion of management, will enhance a reader’s understanding of our financial condition, changes in financial condition, results of operations, and cash flows.
We do not currently capitalize costs associated with the production of YUTREPIA. We base our expenses related to CROs and CMOs on our estimates of the services received and efforts expended pursuant to quotations and contracts with such vendors that conduct research and development and manufacturing activities on our behalf.
We base our expenses related to CROs and CMOs on our estimates of the services received and efforts expended pursuant to quotations and contracts with such vendors that conduct research and development and manufacturing activities on our behalf. The financial terms of these agreements are subject to negotiation, vary from contract to contract and may result in uneven payment flows.
We employ a targeted sales force calling on physicians and hospital pharmacies in the treatment of pulmonary arterial hypertension (PAH), as well as key stakeholders involved in the distribution and reimbursement of Treprostinil Injection.
Liquidia PAH has the exclusive rights to conduct commercial activities to encourage the appropriate use of Treprostinil Injection. We employ a targeted sales force calling on physicians and hospital pharmacies involved in the treatment of PAH and PH-ILD in the United States, as well as key stakeholders involved in the distribution and reimbursement of medicines to treat these patients.
Device Development and Supply Agreement with Mainbridge and Sandoz On December 1, 2022, we entered into a Device Development and Supply Agreement (the “Pump Development Agreement”) with Mainbridge Health Partners, LLC (“Mainbridge”) and Sandoz Inc. (“Sandoz”).
In December 2022, we entered into a Device Development and Supply Agreement (the “Pump Development Agreement”) with Mainbridge Health Partners, LLC (“Mainbridge”) and Sandoz Inc. (“Sandoz”). The Pump Development Agreement provides for the cooperation between us, Sandoz and Mainbridge to develop a new pump that is suitable for the subcutaneous administration of Treprostinil Injection.
The financial terms of these agreements are subject to negotiation, vary from contract to contract and may result in uneven payment flows. There may be instances in which payments made to our vendors will exceed the level of services provided and result in a prepayment of the applicable research and development or manufacturing expense.
There may be instances in which payments made to our vendors will exceed the level of services provided and result in a prepayment of the applicable research and development or manufacturing expense. In accruing service fees, we estimate the time period over which services will be performed and the level of effort to be expended in each period.
This decrease in profit split percentage was offset by an increase in the number of units sold. 72 Table of Contents Cost of Revenue Cost of revenue was $2.9 million for the year ended December 31, 2022, compared with $3.0 million for the year ended December 31, 2021. Cost of revenue related to the Promotion Agreement as noted above.
Cost of Revenue Cost of revenue was $2.9 million for the year ended December 31, 2023, compared with $2.9 million for the year ended December 31, 2022. Cost of revenue related to the Promotion Agreement as noted above. During the fourth quarter of 2024, our sales force expanded in size, however, this increase was offset by a decrease in amortization.
We currently generate revenue pursuant to a Promotion Agreement between Liquidia PAH and Sandoz Inc. (“Sandoz”) sharing profit derived from the sale of the first-to-file fully substitutable generic treprostinil injection (“Treprostinil Injection”) in the United States. Liquidia PAH has the exclusive rights to conduct commercial activities to encourage the appropriate use of Treprostinil Injection.
(“Liquidia Technologies”) and Liquidia PAH, LLC (“Liquidia PAH”), formerly known as RareGen, LLC (“RareGen”). We currently generate revenue pursuant to a promotion agreement between Liquidia PAH and Sandoz Inc. (“Sandoz”), dated as of August 1, 2018, as amended (the “Promotion Agreement”), sharing profit derived from the sale of Sandoz’s substitutable generic treprostinil injection (“Treprostinil Injection”) in the United States.
In addition, we have entered into a multi-year supply agreement with LGM Pharma, LLC (“LGM”) to produce active pharmaceutical ingredients for YUTREPIA.
As of December 31, 2023, we had non-cancelable commitments with Lonza Tampa LLC for product manufacturing costs of approximately $4.1 million for the year ending December 31, 2024. In addition, we have entered into a multi-year supply agreement with LGM Pharma, LLC (“LGM”) to produce active pharmaceutical ingredients for YUTREPIA.
We have based these estimates on assumptions that may prove to be wrong, and we could use our available capital resources sooner than we expect. We may also require additional capital to pursue in-licenses or acquisitions of other product candidates.
We have based this estimate on assumptions that may prove to be wrong, and we could utilize our available capital resources sooner than we currently expect.
Strategically, we believe that our commercial presence in the field will enable an efficient base to expand from for the launch of YUTREPIA upon approval, leveraging existing relationships and further validating our reputation as a company committed to supporting PAH patients.
We established our commercial presence in the field to support Treprostinil Injection, and have since expanded our presence to support the launch of YUTREPIA upon final approval, further validating our reputation as a company committed to supporting PAH and PH-ILD patients.
Research and Development Expenses Research and development expenses were $19.4 million for the year ended December 31, 2022 compared with $20.5 million for the year ended December 31, 2021. The decrease of $1.1 million or 5% was primarily due to a $0.9 million decrease in personnel, consulting, and stock-based compensation expenses.
The increase of $12.3 million or 38% was primarily due to a $9.8 million increase in personnel and consulting expenses, including stock-based compensation, and a $1.4 million increase in commercial expenses in preparation for the potential commercialization of YUTREPIA. 81 Table of Contents Other Income (Expense) Total other expense, net was $5.1 million for the year ended December 31, 2023, compared with $2.2 million for the year ended December 31, 2022.
The increase of $1.4 million was primarily due to a $1.0 million loss on extinguishment of debt related to the refinance of our long-term debt during January 2022 and a $1.6 million increase in interest expense due to a higher debt balance and higher interest rate on our debt from the A&R SVB LSA, offset by a $1.1 million increase in interest income from higher cash and cash equivalents balances.
The increase of $2.9 million was primarily due to a $3.9 million increase in interest expense attributable to the higher borrowings under the RIFA as compared to balances outstanding under the A&R SVB LSA and a $1.3 million increase in loss on extinguishment of debt due offset by a $2.4 million increase in interest income attributable to higher money market yields.
In April 2021, we entered into a Common Stock Purchase Agreement (the “Purchase Agreement”) with certain institutional, accredited investors (the “Purchasers”) for the sale by us in a private placement (the “Private Placement”) of an aggregate of 8,626,037 shares (the “Private Placement Shares”) of our common stock, at a purchase price of $2.52 per Private Placement Share.
Private Placement On January 4, 2024, we entered into a Common Stock Purchase Agreement with Legend Aggregator, LP, for the sale by us in a private placement (the “2024 Private Placement”) of an aggregate of 7,182,532 shares of our common stock at a purchase price of $10.442 per share.
H owever, levels of research and development spending are highly dependent upon the selection and progression of product candidates. The successful development of our product candidates is highly uncertain.
In the near term we expect that our research and development expenses to increase as we complete manufacturing activities, conduct existing clinical trials, and initiate potential clinical trials. However, levels of research and development spending are highly dependent upon the selection and progression of product candidates. The successful development of our product candidates is highly uncertain.
During the year ended December 31, 2022 ended, we incurred $7.0 million related to YUTREPIA compared to $6.7 million during the year ended December 31, 2021. General and Administrative Expenses General and administrative expenses were $32.4 million for the year ended December 31, 2022, compared with $23.1 million for the year ended December 31, 2021.
Personnel and consulting expenses, including stock compensation expense, increased $5.1 million primarily due to increased headcount to support the potential commercialization of YUTREPIA. General and Administrative Expenses General and administrative expenses were $44.7 million for the year ended December 31, 2023, compared with $32.4 million for the year ended December 31, 2022.
Under the terms of the RIFA, $32.5 million of the Investment Amount was funded on January 27, 2023 (the “Initial Investment Amount”), $22.4 million of which was used to satisfy in full and retire our indebtedness under the Amended and Restated Loan and Security Agreement with Silicon Valley Bank (“SVB”) and SVB Innovation Credit Fund VIII, L.P.
(“HCR”), as amended (the “RIFA”), pursuant to which HCR has agreed to pay us an aggregate investment amount of up to $100.0 million (the “Investment Amount”). $32.5 million of the Investment Amount was funded on January 27, 2023 (the “Initial Investment Amount”), $22.2 million of which was used to satisfy in full and retire the Company’s indebtedness with Silicon Valley Bank with the excess proceeds funded to the Company.
Comparison of the Years Ended December 31, 2022 and 2021 The following table summarizes our results of operations: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ ​ ​ ​ ​ ​ December 31, ​ $ ​ % ​ 2022 2021 Change Change Revenue ​ $ 15,935 ​ $ 12,853 ​ $ 3,082 ​ 24 % Costs and expenses: ​ ​ ​ ​ ​ ​ ​ ​ Cost of revenue ​ 2,859 ​ 3,023 ​ ​ (164) ​ (5) % Research and development ​ 19,435 ​ 20,517 ​ ​ (1,082) ​ (5) % General and administrative ​ 32,411 ​ 23,110 ​ ​ 9,301 ​ 40 % Total costs and expenses ​ 54,705 ​ 46,650 ​ ​ 8,055 ​ 17 % Loss from operations ​ (38,770) ​ (33,797) ​ ​ (4,973) ​ 15 % Other income (expense): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest income ​ 1,090 ​ 33 ​ ​ 1,057 ​ 3,203 % Interest expense ​ (2,338) ​ (762) ​ ​ (1,576) ​ 207 % Loss on extinguishment of debt ​ (997) ​ (53) ​ ​ (944) ​ 1,781 % Total other expense, net ​ ​ (2,245) ​ ​ (782) ​ ​ (1,463) ​ 187 % Net loss and comprehensive loss ​ $ (41,015) ​ $ (34,579) ​ $ (6,436) ​ 19 % ​ Revenue Revenue was $15.9 million for the year ended December 31, 2022, compared with $12.9 million for the year ended December 31, 2021.
These charges include monthly recurring interest on such obligations in addition to interest accretion and amortization of debt discounts and issuance costs to interest expense. 80 Table of Contents Comparison of the Years Ended December 31, 2023 and 2022 The following table summarizes our results of operations: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ ​ ​ ​ ​ ​ December 31, ​ $ ​ % ​ 2023 2022 Change Change Revenue ​ $ 17,488 ​ $ 15,935 ​ $ 1,553 ​ 10 % Costs and expenses: ​ ​ ​ ​ ​ ​ ​ ​ Cost of revenue ​ 2,888 ​ 2,859 ​ ​ 29 ​ 1 % Research and development ​ 43,242 ​ 19,435 ​ ​ 23,807 ​ 122 % General and administrative ​ 44,742 ​ 32,411 ​ ​ 12,331 ​ 38 % Total costs and expenses ​ 90,872 ​ 54,705 ​ ​ 36,167 ​ 66 % Loss from operations ​ (73,384) ​ (38,770) ​ ​ (34,614) ​ 89 % Other income (expense): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest income ​ 3,466 ​ 1,090 ​ ​ 2,376 ​ 218 % Interest expense ​ (6,273) ​ (2,338) ​ ​ (3,935) ​ 168 % Loss on extinguishment of debt ​ (2,311) ​ (997) ​ ​ (1,314) ​ 132 % Total other expense, net ​ ​ (5,118) ​ ​ (2,245) ​ ​ (2,873) ​ 128 % Net loss and comprehensive loss ​ $ (78,502) ​ $ (41,015) ​ $ (37,487) ​ 91 % ​ Revenue Revenue was $17.5 million for the year ended December 31, 2023, compared with $15.9 million for the year ended December 31, 2022.
Components of Statements of Operations Revenue We primarily generate revenue pursuant to the Promotion Agreement, under which we receive a 50% share in the profit derived from the sale of Treprostinil Injection in the United States. Liquidia PAH has the exclusive rights to conduct commercial activities to encourage the appropriate use of Treprostinil Injection.
The 2024 Private Placement closed on January 8, 2024, and we received gross proceeds of approximately $75.0 million, before deducting offering costs of less than $0.1 million. 78 Table of Contents Components of Statements of Operations Revenue We primarily generate revenue pursuant to the Promotion Agreement, under which we receive a 50% share in the profit derived from the sale of Treprostinil Injection in the United States.
Subject to required notice periods and our obligations under binding purchase orders, we can elect to discontinue the work under these agreements at any time. As of December 31, 2022, the Company has non-cancelable commitments for product manufacturing costs of approximately $3.7 million for the year ending December 31, 2023.
Subject to required notice periods and our obligations under binding purchase orders, we can elect to discontinue the work under these agreements at any time. On July 14, 2023, the Company entered into an Amended and Restated Commercial Manufacturing Services and Supply Agreement with Lonza Tampa LLC.
In addition, we may incur expenses in connection with the in-license or acquisition of additional product candidates. 69 Table of Contents Recent Events Revenue Interest Financing Agreement On January 9, 2023, we entered into a Revenue Interest Financing Agreement (the “RIFA”) with HealthCare Royalty Partners IV, L.P. (“HCR”) and HealthCare Royalty Management, LLC.
In January 2023, we entered into a Revenue Interest Financing Agreement with HealthCare Royalty Partners IV, L.P.
The decrease was primarily due to working capital changes of $10.2 million offset by $4.8 million higher net loss adjusted for non-cash items. The increase in working capital was primarily driven by the timing of receipts from Sandoz in connection with the Promotion Agreement and the timing of vendor payments.
The increase was primarily due to $21.0 million higher net loss adjusted for non-cash items offset by unfavorable working capital changes of $8.0 million. Investing Activities Net cash used in investing activities was $11.3 million for the year ended December 31, 2023 compared to $0.6 million for the year ended December 31, 2022.
Under the terms of the RIFA, $32.5 million of the Investment Amount was funded on January 27, 2023 (the “Initial Investment Amount”), $22.4 million of which was used to satisfy in full and retire the Company’s indebtedness under the A&R SVB LSA. See “Recent Events” above for further information.
An additional $10.0 million of the Investment Amount was funded on July 27, 2023 (the “Second Tranche Amount”), which was used to fund payment of the $10.0 million upfront license fee due under the Pharmosa License Agreement. $25.0 million of the Investment Amount was funded on January 4, 2024. See “Recent Events” above for further information.
Other Income (Expense) Total other expense, net was $2.2 million for the year ended December 31, 2022, compared with $0.8 million for the year ended December 31, 2021.
Research and Development Expenses Research and development expenses were $43.2 million for the year ended December 31, 2023 compared with $19.4 million for the year ended December 31, 2022.
The Company agreed to pay future contingent milestones and royalties on net sales totaling no more than $1.5 million, none of which has been earned as of December 31, 2022. Purchase Obligations We enter into contracts in the normal course of business with contract service providers to assist in the performance of our research and development and manufacturing activities.
In March 2012, we entered into an agreement, as amended, with Chasm Technologies, Inc. for manufacturing consulting services related to our manufacturing capabilities during the term of the agreement. We agreed to pay future contingent milestones and royalties, totaling no more than $1.5 million, $0.2 million of which was accrued as of December 31, 2023.
These inflows were offset by $0.3 million in principal payments on our finance leases. During the year ended December 31, 2021, we received $21.7 million net proceeds from the Private Placement which closed on April 13, 2021 , $5.0 million in litigation financing deployments, and $0.1 million excess proceeds from the refinancing of our long-term debt.
These inflows were offset by $1.7 million in payments under the RIFA and $0.1 million in principal payments on our finance leases.
Interest expense consists of interest charges on finance leases and debt. These charges include monthly recurring interest on such obligations in addition to non-cash charges. Non-cash charges include interest accretion, expensing of debt issuance costs and amortization of discounts on long-term debt to interest expense.
Interest expense consists of interest charges on the revenue interest financing payable, finance leases and long-term debt.
Our net loss was $41.0 million and $34.5 million for the years ended December 31, 2022 and 2021, respectively. As of December 31, 2022, we had an accumulated deficit of $350.6 million.
L606 is currently being evaluated in an open-label study in the United States for treatment of PAH and PH-ILD with a planned pivotal study for the treatment of PH-ILD. Since our inception, we have incurred significant operating losses. Our net loss was $78.5 million and $41.0 million for the years ended December 31, 2023 and 2022, respectively.
Removed
The FDA also confirmed that the clinical data in the NDA would support our pursuit of a supplemental NDA to treat patients with pulmonary hypertension and interstitial lung disease (PH-ILD) upon the expiration of regulatory exclusivity for the nebulized form of treprostinil in March 2024. Since our inception, we have incurred significant operating losses.
Added
As a result of many factors, including those factors set forth in the “ Risk Factors ” section of this Annual Report on Form 10-K, our actual results could differ materially from the results described in, or implied by, the forward-looking statements contained in the following discussion and analysis.
Removed
Pursuant to the RIFA and subject to customary closing conditions, HCR has agreed to pay us an aggregate investment amount of up to $100.0 million (the “Investment Amount”).
Added
Final FDA approval of 77 Table of Contents YUTREPIA can occur for both PAH and PH-ILD after the new clinical investigation exclusivity granted to Tyvaso in PH-ILD expires on March 31, 2024. We are also developing L606, an investigational, liposomal formulation of treprostinil administered twice-daily with a short-duration next-generation nebulizer, which we licensed from Pharmosa Biopharm.
Removed
(“Innovation”) (the “A&R SVB LSA”), with the excess proceeds funded to the Company. See Note 16 to the consolidated financial statements appearing elsewhere in this Annual Report on Form 10-K for information regarding repayment.
Added
These efforts require significant amounts of capital, adequate personnel and infrastructure, and extensive compliance-reporting capabilities. Even if our development efforts are successful, it is uncertain when, if ever, we will realize significant revenue from product sales. Additionally, the Revenue Interest Financing Agreement with HealthCare Royalty Partners IV, L.P.
Removed
During the year ended December 31, 2022 , the profit split percentage we received under the Promotion Agreement was 50%, whereas during the year ended December 31, 2021 the profit split percentage decreased from 80% to 50% as a result of achievement of predetermined cumulative sales thresholds.
Added
(“HCR”) dated January 9, 2023, as amended (the “RIFA”) contains fixed quarterly payments and minimum cash covenants that require us to maintain cash and cash equivalents in an amount at least equal to $7.5 million during the calendar year beginning on January 1, 2024 and at least equal to $15.0 million for the remainder of the payment term after the calendar year ended December 31, 2024.
Removed
The increase of $9.3 million or 40% was primarily due to a $4.2 million increase in commercial, marketing, and personnel expenses in preparation for the potential commercialization of YUTREPIA and a $3.1 million increase in stock-based compensation expense driven by an option modification charge recorded in March 2022.
Added
Our future funding requirements will be heavily determined by the timing of the potential commercialization of YUTREPIA and the resources needed to support the development of our product candidates. We may require additional capital to fund operations as well as to pursue in-licenses or acquisitions of other product candidates.
Removed
As of December 31, 2022, we had cash and cash equivalents of $93.3 million, stockholders’ equity of $90.4 million and an accumulated deficit of $350.6 million. In January 2023, we entered into a Revenue Interest Financing Agreement (the “RIFA”) with HealthCare Royalty Partners IV, L.P. (“HCR”) and HealthCare Royalty Management, LLC.
Added
Recent Events Fourth Amendment to Revenue Interest Financing Agreement On January 3, 2024, we entered into the Fourth Amendment to the RIFA pursuant to which HCR moved $25.0 million from the third tranche to the second tranche, such that HCR will have funded a total of $35.0 million under the second tranche.

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