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What changed in Liquidia Corp's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Liquidia Corp's 2023 and 2024 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 2024 report.

+882 added−747 removedSource: 10-K (2025-03-19) vs 10-K (2024-03-13)

Top changes in Liquidia Corp's 2024 10-K

882 paragraphs added · 747 removed · 386 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

174 edited+353 added−25 removed176 unchanged
Biggest changeSandoz 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.
Biggest changePharmosa will also receive a $10 million milestone payment for each additional indication approved by the FDA after PAH and PH-ILD and each additional product approved by the FDA under the license, a $2 million milestone payment for each additional indication approved by the EMA after PAH and PH-ILD, and a $0.5 million milestone payment for each additional indication approved by Japan’s Pharmaceuticals and Medical Devices Agency (“PMDA”) after PAH and PH-ILD. 12 Table of Contents 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 Injection for the treatment of PAH in the United States, including its commonwealths, territories, possessions and military bases.
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.
Strategically, we believe that our existing 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.
After approval, most changes to the approved product, such as adding new indications or other labeling claims are subject to prior FDA review and approval. There are also, under The Prescription Drug User Fee Act, continuing, annual FDA “program fee” requirements for products once they are approved, as well as new application fees for supplemental applications with clinical data.
After approval, most changes to the approved product, such as adding new indications or other labeling claims are subject to prior FDA review and approval. Under the Prescription Drug User Fee Act, there are also continuing, annual FDA “program fee” requirements for products once they are approved, as well as new application fees for supplemental applications with clinical data.
If a product that has orphan designation subsequently receives either the first FDA approval for the disease or condition for which it has such designation or, if not the first FDA approval for such drug for the treatment of such disease or condition, such drug is clinically superior to any already approved or licensed drug that is the same drug for such disease or condition, the product is entitled to orphan product exclusivity, which means that the FDA may not approve any other applications to market the same drug or biological product for the same indication for seven years, except in limited circumstances, such as a showing of clinical superiority to the product with orphan exclusivity or inability to manufacture the product in sufficient quantities.
If a product that has orphan designation subsequently receives either the first FDA approval for the disease or condition for which it has such designation or, if not the first FDA approval for such drug for the treatment of such disease or condition, such drug is clinically superior to any already approved or licensed drug that is the same drug for such disease or condition, the product is entitled to orphan product marketing exclusivity, which means that the FDA may not approve any other applications to market the same drug or biological product for the same indication for seven years, except in limited circumstances, such as a showing of clinical superiority to the product with orphan exclusivity or inability to manufacture the product in sufficient quantities.
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).
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 45,000 patients. PH-ILD is the second most prevalent form of Group 3 PH (precapillary PH due to lung disease).
The USPTO, in consultation with the FDA, reviews and approves the application for any PTE or restoration. In the future, we may apply for PTEs, defined as the length of the regulatory review of products covered by our granted patents, for some of our currently owned or licensed applications and patents to add patent life beyond their current expiration dates.
The USPTO, in consultation with the FDA, reviews and approves the application for any PTE. In the future, we may apply for PTEs, defined as the length of the regulatory review of products covered by our granted patents, for some of our currently owned or licensed applications and patents to add patent life beyond their current expiration dates.
(“Smiths Medical”) manufactured the pumps used by most patients in the United States to administer Remodulin, including the CADD-MS ® 3 pump used to deliver subcutaneous Remodulin, and the CADD-Legacy ® pump to deliver intravenous Remodulin. An estimated 3,000 patients are treated annually with parenteral, infused treprostinil split between the two routes of administration.
(“Smiths Medical”) manufactured the pumps used by most patients in the United States to administer Remodulin, including the CADD-MS 3 infusion pump used to deliver subcutaneous Remodulin, and the CADD-Legacy ® pump to deliver intravenous Remodulin. An estimated 3,000 patients are treated annually with parenteral, infused treprostinil split between the two routes of administration.
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.
About Pulmonary Arterial Hypertension and Pulmonary Hypertension Associated with Interstitial Lung Disease 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.
During the exclusivity period, the FDA may not accept for review an ANDA or a 505(b)(2) NDA submitted by another company for another version of such drug where the applicant does not own or have a legal right of reference to all the data required for approval.
During the NCE exclusivity period, the FDA may not accept for review an ANDA or a 505(b)(2) NDA submitted by another company for another version of such drug where the applicant does not own or have a legal right of reference to all the data required for approval.
In August 2021, the FDA completed an on-site Pre-Approval Inspection (PAI) of our Morrisville, North Carolina facility in connection with the review of the YUTREPIA NDA. The 5-day PAI concluded with no Form 483 Inspectional Observations issued. This was our first inspection of the Morrisville site by the FDA.
In August 2021, the FDA completed an on-site Pre-Approval Inspection (“PAI”) of our Morrisville, North Carolina facility in connection with the review of the YUTREPIA NDA. The 5-day PAI concluded with no Form 483 Inspectional Observations issued. This was our first inspection of the Morrisville site by the FDA.
When first launched in April 2019, Treprostinil Injection was only available for intravenous administration. The cartridges required to operate the CADD-MS 3 pump for subcutaneous administration were not available to patients using Treprostinil Injection due to restrictions imposed by other companies.
When first launched in April 2019, Treprostinil Injection was only available for intravenous administration. The cartridges required to operate the CADD-MS 3 infusion pump for subcutaneous administration were not available to patients using Treprostinil Injection due to restrictions imposed by other companies.
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.
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 2024. 7 Table of Contents We are actively conducting and considering other clinical trials to generate additional data to support the use of YUTREPIA.
A drug is a new chemical entity if the FDA has not previously approved any other new drug containing the same active moiety, which is the molecule or ion responsible for the action of the drug substance.
A drug is a new chemical entity (“NCE”) if the FDA has not previously approved any other new drug containing the same active moiety, which is the molecule or ion responsible for the action of the drug substance.
Thus approval of a 505(b)(2) NDA or ANDA can be prevented until all the listed patents claiming the referenced product have expired, until any non-patent exclusivity, such as exclusivity for obtaining approval of a new chemical entity, listed in the Orange Book for the referenced product has expired, and, in the case of a Paragraph IV certification and subsequent patent infringement suit, until the earlier of 30 months, settlement of the lawsuit or a decision in the infringement case that is favorable to the ANDA or 505(b)(2) applicant.
Thus approval of a 505(b)(2) NDA or ANDA can be prevented until all the listed patents claiming the referenced product have expired, until any non-patent exclusivity, such as exclusivity for obtaining approval of a new chemical entity, has expired, and, in the case of a Paragraph IV certification and subsequent patent infringement suit, until the earlier of 30 months, settlement of the lawsuit or a decision in the infringement case that is favorable to the ANDA or 505(b)(2) applicant.
A third alternative is a special type of NDA, commonly referred to as a 505(b)(2) NDA, which enables the applicant to rely, in part, on the FDA’s findings of safety and efficacy of an existing product, or published literature, in support of its application. 505(b)(2) NDAs often provide an alternate path to FDA approval for new or improved formulations or new uses of previously approved products.
A third alternative for obtaining FDA marketing approval is a special type of NDA, commonly referred to as a 505(b)(2) NDA, which enables the applicant to rely, in part, on the FDA’s findings of safety and efficacy of an existing product, or published literature, in support of its application. 505(b)(2) NDAs often provide an alternate path to FDA approval for new or improved formulations or new uses of previously approved products.
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.
Liquidia PAH’s activities and obligations related to 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 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.
L606 may provide best-in-class treprostinil exposure over a 24-hour period, including during sleeping hours, which could translate to improved efficacy, tolerability, and patient outcomes. Liposomes as a pulmonary drug delivery system have been reported to enhance the therapeutic benefits of drugs and to reduce the potential for systemic adverse effects.
We believe L606 may provide best-in-class treprostinil exposure over a 24-hour period, including during sleeping hours, which could translate to improved efficacy, tolerability, and patient outcomes. Liposomes as a pulmonary drug delivery system have been reported to enhance the therapeutic benefits of drugs and to reduce the potential for systemic adverse effects.
In order to facilitate pre-market review of combination products, the FDA designates one of its centers to have primary jurisdiction for the pre-market review and regulation of the overall product based upon a determination by FDA of the primary mode of action of the combination product, and typically one application, such as for a drug/device combination product assigned to the FDA’s Center for Drug Evaluation and Research (CDER) an NDA, will be made.
In order to facilitate pre-market review of combination products, the FDA designates one of its centers to have primary jurisdiction for the pre-market review and regulation of the overall product based upon a determination by FDA of the primary mode of action of the combination product, and typically one application, such as for a drug/device combination product assigned to the FDA’s Center for Drug Evaluation and Research (“CDER”) an NDA, will be made.
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.
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.
Failure to comply with requirements under the drug price negotiation program or pay the identified rebates is subject to an excise tax and/or a civil monetary penalty. The IRA permits the Secretary of the Department of Health and Human Services (HHS) to implement many of these provisions through guidance, as opposed to regulation, for the initial years.
Failure to comply with requirements under the drug price negotiation program or pay the identified rebates is subject to an excise tax and/or a civil monetary penalty. The IRA permits the Secretary of the Department of Health and Human Services (“HHS”) to implement many of these provisions through guidance, as opposed to regulation, for the initial years.
Liquidia PAH may terminate the Promotion Agreement on not more than 90 days’ written notice after the conclusion of any full 12-month calendar year in the event that Liquidia PAH’s share of the Net Profits in such calendar year are less than or equal to Liquidia PAH’s operating expenses relating to the Product for such calendar year; provided , however , that Liquidia PAH may not terminate the Promotion Agreement in such instance if both (x) Net Profits or its operating expenses relating to the Product were adversely affected in such calendar year by a temporary event or circumstance and (z) the joint steering committee makes a determination that Liquidia PAH’s share of the Net Profits is not likely to continue to be less than its operating expenses relating to the Product in the subsequent calendar year.
Liquidia PAH may terminate the Promotion Agreement on not more than 90 days’ written notice after the conclusion of any full 12 month calendar year in the event that Liquidia PAH’s share of the Net Profits in such calendar year are less than or equal to Liquidia PAH’s operating expenses relating to Treprostinil Injection for such calendar year; provided, however, that Liquidia PAH may not terminate the Promotion Agreement in such instance if both (x) Net Profits or its operating expenses relating to Treprostinil Injection were adversely affected in such calendar year by a temporary event or circumstance and (z) the joint steering committee makes a determination that Liquidia PAH’s share of the Net Profits is not likely to continue to be less than its operating expenses relating to Treprostinil Injection in the subsequent calendar year.
Bioequivalence is established when there is an absence of a significant difference in the rate and extent for absorption of the generic product and the listed drug.
Bioequivalence is established when there is an absence of a significant difference in the rate and extent for absorption of the generic product and the reference listed drug.
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.
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.
There have been a number of federal and state proposals during the last few years regarding the pricing of pharmaceutical and biopharmaceutical products, limiting coverage and reimbursement for drugs and other medical products, government control and other changes to the healthcare system in the United States including the Patient Protection and Affordable Care Act (ACA).
There have been a number of federal and state proposals during the last few years regarding the pricing of pharmaceutical and biopharmaceutical products, limiting coverage and reimbursement for drugs and other medical products, government control and other changes to the healthcare system in the United States including the Patient Protection and Affordable Care Act (“ACA”).
Relative to non-promotional communications, for example, there are specific and limited FDA accommodations for non-promotional, 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 non-promotional communications, for example, there are specific and limited FDA accommodations for non-promotional, 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.
Generic drug prices may decline dramatically as competitors seek to secure preferential utilization though the specialty pharmacy and hospital distribution channels in which parenteral prostacyclin products are sold. Other parenteral agents that utilize the prostacyclin pathway include parenteral epoprostenol, which is marketed by multiple companies as generic and branded products.
Generic drug prices may decline dramatically as competitors seek to secure preferential utilization though the specialty pharmacy and hospital distribution channels in which parenteral prostacyclin products are sold. Other parenteral agents that utilize the prostacyclin pathway include parenteral iloprost and epoprostenol, which are marketed by multiple companies as generic and branded products.
Securities and Exchange Commission (SEC). Such filings are also available to the public on the internet at the SEC’s website at www.sec.gov.
Securities and Exchange Commission (“SEC”). Such filings are also available to the public on the internet at the SEC’s website at www.sec.gov.
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.
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.
If tentative approval is granted, then once such listed patents, 30-month stay or other regulatory exclusivity have expired or, in the case of patents that are subject to a patent infringement suit, been found to be invalid or not infringed, the applicant may seek final approval by submitting an amendment that, among other things, includes a safety update and any other changes, if any, in the conditions under which the product was tentatively approved.
If tentative approval is granted, then once such listed patents, 30-month stay or other regulatory exclusivity have expired or, in the case of patents that are subject to a patent infringement suit, been found to be invalid or not infringed, the applicant may seek final approval by submitting an amendment that, among other things, 24 Table of Contents includes a safety update and any other changes, if any, in the conditions under which the product was tentatively approved.
The DSCSA preempts certain previously enacted state pedigree laws and upon taking effect superseded the pedigree requirements of the Prescription Drug Marketing Act (PDMA). Trading partners within the drug supply chain must now ensure certain product tracing requirements are met, and are required to exchange transaction information, transaction history, and transaction statements.
The DSCSA preempts certain previously enacted state pedigree laws and upon taking effect superseded the pedigree requirements of the Prescription Drug Marketing Act (“PDMA”). Trading partners within the drug supply chain must now ensure certain product tracing requirements are met, and are required to exchange transaction information, transaction history, and transaction statements.
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.
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.
The vibrating mesh technology generates fine-particle aerosols of the L606 formulation. Pharmosa has demonstrated clinically that L606 can be used with devices supplied by different manufacturers, providing us the option to improve the patient device experience without changing the intended dose administered. We intend to develop L606 through the 505(b)(2) registration pathway.
The vibrating mesh technology generates fine-particle aerosols of the L606 formulation. Pharmosa has demonstrated clinically that L606 can be used with devices supplied by different manufacturers, providing us the option to improve the patient device experience without changing the intended dose administered. We intend to develop L606 through the 505(b)(2) registration pathway in the United States.
Since 2019, reported annual sales of products in the Tyvaso franchise have increased from $400 million to $1.2 billion, correlating with the expansion into the PH-ILD indication in 2021 and addition of Tyvaso DPI in 2022.
Since 2019, reported annual sales of products in the Tyvaso franchise have increased from $400 million to $1.6 billion, correlating with the expansion into the PH-ILD indication in 2021 and addition of Tyvaso DPI in 2022.
The prevalence of PH in many of these underlying ILD diseases is not yet known due to factors including underdiagnosis and lack of approved treatments until recently. Treatments There is currently no cure for PAH or PH-ILD, so the goals of existing treatments are to alleviate symptoms, maintain or improve functional class, delay disease progression and improve quality of life.
The prevalence of PH in many of the underlying ILD diseases is not yet known due to factors including underdiagnosis and lack of approved treatments until 2021. Treatments There is currently no cure for PAH or PH-ILD, so the goals of existing treatments are to alleviate symptoms, maintain or improve functional class, delay disease progression and improve quality of life.
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.
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: 10 Table of Contents 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 specific scope varies, but fundamentally the FDCA provides a five-year period of non-patent marketing exclusivity within the United States to the first applicant to gain approval of an NDA for a new chemical entity.
The specific scope varies, but fundamentally the FDCA provides a five-year period of non-patent data exclusivity within the United States to the first applicant to gain approval of an NDA for a new chemical entity.
Liquidia PAH paid Sandoz an initial payment of $10 million on August 1, 2018 and, upon the successful quality release by Sandoz of 9,000 units of the Product on August 3, 2018, Liquidia PAH paid Sandoz an additional $10 million as further consideration for the right to conduct the activities as contemplated in the Promotion Agreement and to receive a portion of the “Net Profits” (as defined in the Promotion Agreement).
Liquidia PAH paid Sandoz an initial payment of $10 million on August 1, 2018 and, upon the successful quality release by Sandoz of 9,000 units of Treprostinil Injection on August 3, 2018, Liquidia PAH paid Sandoz an additional $10 million as further consideration for the right to conduct the activities as contemplated in the Promotion Agreement and to receive a portion of the “Net Profits” (as defined in the Promotion Agreement).
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.
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.
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.
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.
Foreign Regulation of Drugs In order to market any product outside of the United States, we will need to comply with numerous and varying regulatory requirements of other countries and jurisdictions regarding development, approval, commercial sales and distribution of our products, and governing, among other things, clinical trials, marketing authorization, commercial sales and distribution of our products, if approved.
Government Regulation Outside of the United States In order to market any product outside of the United States, we will need to comply with numerous and varying regulatory requirements of other countries and jurisdictions regarding development, approval, commercial sales and distribution of our products, and governing, among other things, clinical trials, marketing authorization, commercial sales and distribution of our products, if approved.
Liquidia PAH and Sandoz may terminate the Promotion Agreement for cause upon a number of customary events, such as a material breach of the Promotion Agreement that remains uncured, complete withdrawal of marketing approval of the Product or upon the filing or institution of bankruptcy, reorganization, liquidation or receivership proceedings with respect to the other party.
Liquidia PAH and Sandoz may terminate the Promotion Agreement for cause upon a number of customary events, such as a material breach of the Promotion Agreement that remains uncured, complete withdrawal of marketing approval of Treprostinil Injection or upon the filing or institution of bankruptcy, reorganization, liquidation or receivership proceedings with respect to the other party.
We provide our employees with competitive salaries and bonuses, opportunities for equity ownership, development programs that enable continued learning and growth and a robust employment package that promotes well-being across all aspects of their lives, including health care, retirement planning and paid time off.
We provide our employees with competitive salaries and bonuses, opportunities for equity ownership, 18 Table of Contents development programs that enable continued learning and growth and a robust employment package that promotes well-being across all aspects of their lives, including health care, retirement planning and paid time off.
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 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.
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. ● 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.
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. ● Tyvaso DPI (treprostinil), licensed from MannKind by United Therapeutics, is a dry-powder formulation of treprostinil that was approved for the treatment of PAH and PH-ILD in the United States in May 2022. ● TPIP is a dry-powder formulation of a treprostinil prodrug being developed by Insmed.
For example, our current plans are for the dry powder formulation of YUTREPIA to be manufactured internally using PRINT Technology and for CMOs to 10 Table of Contents produce, package and distribute YUTREPIA finished goods on a commercial scale. Conversely, L606 is planned to be manufactured exclusively by CMOs using the proprietary formulation methods provided by Pharmosa.
For example, our current plans are for the dry powder formulation of YUTREPIA to be manufactured internally using PRINT Technology and for CMOs to produce, package and distribute YUTREPIA finished goods on a commercial scale. Conversely, L606 is planned to be manufactured exclusively by CMOs using the proprietary formulation methods provided by Pharmosa.
In November 2021, the FDA issued a tentative approval of YUTREPIA which indicated that the NDA had met all the requirements for final approval but cannot yet be marketed. In July 2023, we filed an amendment to our NDA to add PH-ILD to the label for YUTREPIA.
In November 2021, the FDA issued a tentative approval of YUTREPIA which indicated that the NDA had met all the requirements for final approval but cannot yet be marketed. In July 2023, we filed an amendment to our NDA to add PH-ILD to the labeled indications for YUTREPIA.
Government Regulation Government Regulation and Product Approval Government authorities in the United States at the federal, state and local level and in other countries, extensively regulate, among other things, the research, development, testing, manufacture, (including manufacturing changes), quality control, approval, labeling, packaging, storage, record-keeping, promotion, advertising, distribution, marketing, export and import of products such as those we are developing.
Government Regulation Government authorities in the United States at the federal, state and local level, the European Union, the United Kingdom and in other countries, extensively regulate, among other things, the research, development, testing, manufacture, (including manufacturing changes), quality control, approval, labeling, packaging, storage, record-keeping, promotion, advertising, distribution, marketing, export and import of products such as those we are developing.
The FDA reviews an NDA to determine whether a product is safe and effective for its intended use, which includes assessment of preclinical and clinical data; proposed labeling; CMC data; and an assessment of whether the manufacturing processes and facilities meet the appropriate requirements and comply with the applicable regulations (including cGMP requirements and adequate assurance for consistent commercial production of the product within required specifications).
The FDA reviews an NDA to determine whether a product is safe and effective for its intended use, which includes assessment of preclinical and clinical data; proposed labeling; chemistry, manufacturing, and control (“CMC”) data; and an assessment of whether the manufacturing processes and facilities meet the appropriate requirements and comply with the applicable regulations (including cGMP requirements and adequate assurance for consistent commercial production of the product within required specifications).
The 505(b)(2) regulatory pathway can be capital efficient and potentially enable a shorter time to approval, subject to certain risks associated with this regulatory pathway. If our product candidates receive marketing approval, we plan to commercialize them in the U.S. either by ourselves or through partnership or licensing arrangements with other pharmaceutical companies.
The 505(b)(2) regulatory pathway can be capital efficient and potentially enable a shorter time to approval, subject to certain risks associated with this regulatory pathway. If our product candidates receive marketing approval, we plan to commercialize them in the United States either by ourselves or through partnership or licensing arrangements with other pharmaceutical companies.
A sponsor who is planning to submit a marketing application for a drug product that is subject to the PREA requirements must submit an initial Pediatric Study Plan (PSP).
A sponsor who is planning to submit a marketing application for a drug product that is subject to the PREA requirements must submit an initial Pediatric Study Plan (“PSP”).
For products not intended for such illnesses, the FDA recommends that sponsors submit and discuss the PSP no later than the End-of-Phase 2 (EOP2) meeting.
For products not intended for such illnesses, the FDA recommends that sponsors submit and discuss the PSP no later than the End-of-Phase 2 (“EOP2”) meeting.
We are also responsible for the costs of all expenses associated with the prosecution and maintenance of 13 Table of Contents the patents and patent applications. Such filings and prosecution will be carried out by UNC and in UNC’s name but under our control.
We are also responsible for the costs of all expenses associated with the prosecution and maintenance of the patents and patent applications. Such filings and prosecution will be carried out by UNC and in UNC’s name but under our control.
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.
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 United States.
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.
We have a total of 127 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 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 30 Table of Contents have commenced drug pricing investigations and filed lawsuits against pharmaceutical companies, and the U.S.
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.
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.
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.
Outside of the United States, 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.
Only one patent applicable to an approved drug is eligible for the extension. Extensions are not granted as a matter of right and the extension must be applied for prior to expiration of the patent and within a sixty-day period from the date the product is first approved for commercial marketing.
Only one patent applicable to an approved drug is eligible for PTE. PTEs are not granted as a matter of right and must be applied for prior to expiration of the patent and within a sixty-day period from the date the product is first approved for commercial marketing.
WHO Group III includes patients with pulmonary hypertension caused by hypoxia and/or lung diseases, mostly interstitial lung disease (“ILD”), COPD and sleep-disordered breathing. Our current products seek to address unmet needs to treating patients diagnosed with PAH and PH-ILD.
WHO Group III includes patients with pulmonary hypertension caused by hypoxia and/or lung diseases, mostly interstitial lung disease (“ILD”), Chronic Obstructive Pulmonary Disease (“COPD”) and sleep-disordered breathing. Our current products seek to address unmet needs to treating patients diagnosed with PAH and PH-ILD.
Further, either party may terminate the Promotion Agreement upon written notice to the other party at any time after the current term in the event Sandoz is then procuring 100% of its supply of Product from a single third party upon (a) expiration of the supply agreement with such third party and (b) Sandoz’s failure, after exercise of commercially reasonable efforts, to secure continued supply of the Product from such third party or other third parties within 12 months of the termination of such supply agreement.
Further, either party may terminate the Promotion Agreement upon written notice to the other party at any 13 Table of Contents time after the current term in the event Sandoz is then procuring 100% of its supply of Treprostinil Injection from a single third party upon (a) expiration of the supply agreement with such third party and (b) Sandoz’s failure, after exercise of commercially reasonable efforts, to secure continued supply of Treprostinil Injection from such third party or other third parties within 12 months of the termination of such supply agreement.
Combination Products Medical products containing a combination of new drugs, biological products, or medical devices are regulated as “combination products” in the United States. A combination product generally is defined as a product comprised of components from two or more regulatory categories, such as drug/device, device/biologic or drug/biologic.
Combination Products Medical products containing a combination of drugs, biological products, or medical devices may be regulated as “combination products” in the United States. A combination product generally is defined as a product comprised of components from two or more regulatory categories, such as drug/device, device/biologic or drug/biologic.
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.
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.
L606 is supplied in six different dose strengths in disposable ampules, packaged as fourteen ampules in a foil pouch representing one week’s supply of drug. L606 is administered with the L606 inhalation system (mesh-vibrating nebulizer).
L606 is supplied in six different dose strengths in disposable ampules, packaged as fourteen ampules in a foil pouch representing one week’s supply of drug. L606 is administered with the L606 inhalation system (mesh-vibrating nebulizer), which is currently undergoing testing.
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.
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, calling on physicians 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 therapies for PAH and PH-ILD.
This Annual Report and all of our filings under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), including copies of annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and any amendments to those reports, are available free of charge through our website on the date we file those materials with, or furnish them to, the U.S.
This Annual Report on Form 10-K and all of our filings under the Exchange Act, including copies of annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and any amendments to those reports, are available free of charge through our website on the date we file those materials with, or furnish them to, the U.S.
Similarly, an IRB can suspend or terminate approval of a clinical study at its institution if the clinical study is not being conducted in accordance with the IRB’s requirements or if the drug has been associated with unexpected serious harm to patients. There are FDA-imposed limitations on communications about investigational drugs.
Similarly, IRBs, DSMBs, or ECs can suspend or terminate approval of a clinical study at its institution if the clinical study is not being conducted in accordance with the requirements of IRBs, DSMBs, or ECs or if the drug has been associated with unexpected serious harm to patients. There are FDA-imposed limitations on communications about investigational drugs.
Under the terms of the Pharmosa License Agreement, we will be responsible for development, regulatory and commercial activities of L606 in North America. Pharmosa will manufacture clinical and commercial supplies of the liposomal formulation through its global supply chain and support us in establishing a redundant global supply chain.
Under the terms of the Pharmosa License Agreement, as amended, we will be responsible for development, regulatory and commercial activities of L606 in the Territory. Pharmosa will manufacture clinical and commercial supplies of the liposomal formulation through its global supply chain and support us in establishing a redundant global supply chain.
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.
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 infusion pump manufactured by Smiths Medical. Smiths Medical no longer manufactures or supports the CADD-MS 3 infusion pump.
Peak and total exposure of treprostinil increased with increasing dose. We are currently conducting in the U.S. an open-label study to assess the safety of L606 in up to 60 patients with PAH and patients with PH-ILD transitioning from Tyvaso (nebulizer or dry-powder inhaler) or patients with PAH naïve to prostacyclins.
Peak and total exposure of treprostinil increased with increasing dose. We are currently conducting in the United States an open-label study to assess the safety of L606 in patients with PAH and patients with PH-ILD transitioning from Tyvaso (nebulizer or dry-powder inhaler) or patients with PAH naïve to prostacyclins.
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 December 31, 2031 and includes an option for us to renew the lease for an additional five years through December 31, 2036.
L606 resulted in a similar systemic exposure (AUCinf) compared with the equivalent dose of Tyvaso, with a significantly reduced peak plasma concentration (Cmax), approximately 7.3-fold lower for L606 than for Tyvaso. L606 demonstrated extended plasma concentrations up to 12 hours after a single dose, supporting a reduction in dosing frequency to twice daily, or every 12 hours.
L606 resulted in a similar systemic exposure (“AUCinf”) compared with the equivalent dose of Tyvaso, with a significantly reduced peak plasma concentration (“Cmax”), approximately 7.3-fold lower for L606 than for Tyvaso. 9 Table of Contents L606 demonstrated extended plasma concentrations up to 12 hours after a single dose, supporting a reduction in dosing frequency to twice daily, or every 12 hours.
Branded Remodulin generated U.S. revenue of approximately $408 million and $423 million in 2022 and 2021, respectively. In August 2018, Sandoz partnered with Liquidia PAH (then known as RareGen) on an exclusive basis to market and commercialize its generic Treprostinil Injection, which was subsequently launched as the first-to-file, fully-substitutable generic treprostinil for parenteral administration in March 2019.
Branded Remodulin generated U.S. revenue of approximately $464 million and $415 million in 2024 and 2023, respectively. In August 2018, Sandoz partnered with Liquidia PAH (then known as RareGen) on an exclusive basis to market and commercialize its generic Treprostinil Injection, which was subsequently launched as the first-to-file, fully-substitutable generic treprostinil for parenteral administration in March 2019.
These regulations include the requirement that all research subjects provide informed consent in writing before their participation in any clinical study. Further, an IRB must review and approve the plan for any clinical study before it commences at any institution, and the IRB must conduct continuing review and reapprove the study at least annually.
These regulations include the requirement that all research subjects provide informed consent in writing before their participation in any clinical study. Further, IRBs, DSMBs, or ECs must review and approve the plan for any clinical study before it commences at any institution, and the IRBs must conduct continuing review and reapprove the study at least annually.
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.
The process required by the FDA before a new 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 (“IRB”), data safety monitoring boards (“DSMBs”) or ethics committees (“ECs”) at each clinical site before each trial may be initiated or continued; 19 Table of Contents ● 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 FDA inspections 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 study commitments or requirements by the FDA.
This regulatory pathway allows us to rely in part on the FDA’s previous findings of efficacy and safety of Tyvaso and the active ingredient treprostinil. We submitted the New Drug Application (“NDA”) for YUTREPIA in January 2020.
This regulatory pathway allows us to rely in part on the FDA’s previous findings of efficacy and safety of Tyvaso and the active ingredient treprostinil. We submitted NDA for YUTREPIA in January 2020.
Drug Price Competition and Patent Term Restoration Act of 1984, as amended (the “Hatch-Waxman Act”), amendments to the FDCA established a statutory procedure for submission and FDA review and approval of ANDAs for generic versions of branded drugs previously approved by the FDA (such previously approved drugs are also referred to as listed drugs).
Relevant to ANDAs, the U.S. Drug Price Competition and Patent Term Restoration Act of 1984 (the “Hatch-Waxman Act”) amended the FDCA to establish a statutory procedure for submission and FDA review and approval of ANDAs for generic versions of branded drugs previously approved by the FDA (such previously approved drugs are also referred to as reference listed drugs).
Final FDA approval and launch may also be impacted by other litigation commenced by United Therapeutics in which it is seeking to enjoin approval and launch of YUTREPIA as described further in Item 3 Legal Proceedings .
Final FDA approval and launch may be impacted by litigation commenced by United Therapeutics in which it may seek to enjoin approval and launch of YUTREPIA as described further in Item 3 Legal Proceedings .
We established our commercial presence in the field to support Treprostinil Injection, and have since expanded our presence to support the potential launch of YUTREPIA upon final approval, further validating our reputation as a company committed to supporting PAH and PH-ILD patients.
We established our commercial presence in the field to support Treprostinil Injection and have since expanded our presence to support the potential launch of YUTREPIA (treprostinil) inhalation powder (“YUTREPIA”), further validating our reputation as a company committed to supporting PAH and PH-ILD patients.
The Hatch-Waxman Act permits a patent restoration term of up to five years as compensation for patent term effectively lost during product development and the FDA regulatory review process. However, patent term restoration cannot extend the remaining term of a patent beyond a total of 14 years from the product’s approval date.
The Hatch-Waxman Act permits the extension of a patent term by up to five years as compensation for patent term 28 Table of Contents effectively lost during product development and the FDA regulatory review process. However, PTE cannot extend the remaining term of a patent beyond a total of 14 years from the product’s approval date.
If an orphan designated product receives marketing approval for an indication broader than what is designated, it may not be entitled to orphan exclusivity.
If an orphan designated product receives marketing approval for an indication broader than what is designated, it may not be 29 Table of Contents entitled to orphan exclusivity.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeMoreover, our preclinical studies and clinical trials may be delayed or halted due to various factors, including, among others: ● delays in raising the funding necessary to initiate or continue a clinical trial; ● delays in manufacturing sufficient quantities of product candidates for clinical trials; ● delays in reaching agreement on acceptable terms with prospective contract research organizations (CROs) and clinical trial sites; ● delays in obtaining institutional review board approval at clinical trial sites; ● delays in recruiting suitable patients to participate in a clinical trial; ● delays in patients’ completion of clinical trials or their post-treatment follow-up; ● regulatory authorities’ interpretation of our preclinical and clinical data; and ● unforeseen safety issues, including a high and unacceptable severity, or prevalence, of undesirable side effects or adverse events caused by our product candidates or similar drug products or product candidates.
Biggest changeMoreover, our preclinical studies and clinical trials may be delayed or halted due to various factors, including, among others: ● delays in raising the funding necessary to initiate or continue a clinical trial; ● delays in manufacturing sufficient quantities of product candidates for clinical trials; ● delays in obtaining suitable medical devices for the conduct of a clinical trial; ● delays in reaching agreement on acceptable terms with prospective contract research organizations (“CROs”) and clinical trial sites; ● delays in obtaining approvals from IRBs, DSMBs, and ECs at clinical trial sites; ● delays in recruiting suitable patients to participate in a clinical trial; ● delays in patients’ completion of clinical trials or their post-treatment follow-up; ● regulatory authorities’ interpretation of our preclinical and clinical data; ● delays in regulatory authorities’ review and approval of products caused by government funding shortages, government shutdowns, government personnel shortages, global health emergencies or other disruptions; and ● unforeseen safety issues, including a high and unacceptable severity, or prevalence, of undesirable side effects or adverse events caused by our product candidates or similar drug products or product candidates. ​ If our preclinical studies or clinical trials are delayed, the commercialization of our product candidates will be delayed and, as a result, we may incur substantial additional costs or not be able to recoup our investment in the development of our product candidates, which would have a material and adverse effect on our business. 54 Table of Contents Clinical trials and data analysis can be expensive, time-consuming and difficult to design and implement.
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.
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.
It would be difficult, costly and time-consuming to transfer resources from one facility to another, to repair or replace our facility or to replace inventory in the event that it is significantly damaged.
It would be difficult, costly and time-consuming to transfer resources from one facility to another, to repair or replace our facility or to replace inventory or equipment in the event that it is significantly damaged.
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.
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, our development and licensing agreement with G&W Laboratories, Inc., was mutually terminated in April 2018; ● our collaborators may own or co-own certain intellectual property arising from our collaboration and licensing arrangements with them, which may restrict our ability to develop or commercialize such intellectual property; and ● our collaborators may alter the strategic direction of their business or may undergo a change of control or management, which may affect the success of our collaboration arrangements with them. 53 Table of Contents Risks Related to our Intellectual Property We may be subject to claims from third parties that our products infringe their intellectual property rights.
For example, our development and licensing agreement with G&W Laboratories, Inc., was mutually terminated in April 2018; ● our collaborators may own or co-own certain intellectual property arising from our collaboration and licensing arrangements with them, which may restrict our ability to develop or commercialize such intellectual property; and ● our collaborators may alter the strategic direction of their business or may undergo a change of control or management, which may affect the success of our collaboration arrangements with them. ​ Risks Related to our Intellectual Property We may be subject to claims from third parties that our products infringe their intellectual property rights.
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.
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 76 Table of Contents our supplies or be required to source supplies from an alternative supplier and may incur substantial costs as a result.
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.
If a competing product comprised of an inhaled dry-powder formulation of treprostinil, such as Tyvaso DPI, is granted additional 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.
We may be unable to continually develop a pipeline of product candidates, which could affect our business and prospects. A key element of our long-term strategy is to continually develop a pipeline of product candidates by developing products for the treatment of pulmonary hypertension and proprietary innovations to FDA-approved drug products using our PRINT technology.
We may be unable to continually develop a pipeline of product candidates, which could affect our business and prospects. A key element of our long-term strategy is to continually develop a pipeline of product candidates by developing products for the treatment of pulmonary hypertension and proprietary innovations to drug products using our PRINT technology.
Risk Factors - We face significant competition from large pharmaceutical companies, among others, in developing our products and in gaining regulatory approval to bring them to market in time to achieve commercial success, and our operating results will suffer if we are unable to compete effectively.
Item 1A. Risk Factors—We face significant competition from large pharmaceutical companies, among others, in developing our products and in gaining regulatory approval to bring them to market in time to achieve commercial success, and our operating results will suffer if we are unable to compete effectively.
If an FDA decision or action relative to our product candidate, or the FDA’s interpretation of Section 505(b)(2) more generally, is successfully challenged, it could result in delays or even prevent the FDA from approving a 505(b)(2) application for our product candidates.
If an FDA decision or action relative to our product candidate, or the FDA’s interpretation of Section 505(b)(2) more generally, is successfully challenged, it could result in delays or even prevent the FDA from approving a 505(b)(2) application for our product candidates or for certain indications for our product candidates.
In addition, in connection with an amendment to our NDA filed in July 2023 to add PH-ILD as an indication for YUTREPIA, a new notice of the paragraph IV certification was provided to United Therapeutics as the owner of the patents that are the subject of the certification to which the NDA for YUTREPIA refers.
For example, in connection with an amendment to our NDA filed in July 2023 to add PH-ILD as an indication for YUTREPIA, a new notice of the paragraph IV certification was provided to United Therapeutics as the owner of the patents that are the subject of the certification to which the NDA for YUTREPIA refers.
In the United States, the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Affordability Reconciliation Act, or collectively the ACA, is a sweeping law intended to broaden access to health insurance, reduce or constrain the growth of healthcare spending, enhance remedies against fraud and abuse, add new transparency requirements for the healthcare and health insurance industries, impose taxes and fees on the health industry and impose additional health policy reforms.
In the United States, the Patient Protection and Affordable Care Act of 2010, as amended by the Health Care and Education Affordability Reconciliation Act (collectively, the “ACA”), is a sweeping law intended to broaden access to health insurance, reduce or constrain the growth of healthcare spending, enhance remedies against fraud and abuse, add new transparency requirements for the healthcare and health insurance industries, impose taxes and fees on the health industry and impose additional health policy reforms.
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.
We also rely on a sole supplier located in Tampa, Florida 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.
Claims resulting from a violation of the federal AKS constitute a false or fraudulent claim for purposes of the FCA.
Claims resulting from a violation of the federal AKS or the FDCA constitute a false or fraudulent claim for purposes of the FCA.
Although we believe we have completed clinical development for YUTREPIA, we have not yet obtained final approval for or commercialized any of our own product candidates and as a result do not have a track record of successfully bringing our own product candidates to market.
Although we believe we have completed clinical development for YUTREPIA and believe we have completed preclinical development of L606, we have not yet obtained final approval for or commercialized any of our own product candidates and as a result do not have a track record of successfully bringing our own product candidates to market.
We currently intend to retain all of our future earnings, if any, to finance the growth and development of our business. In addition, the terms of our existing RIFA with HCR preclude us, and the terms of any future debt or financing agreement may preclude us, from paying dividends.
We currently intend to retain all of our future earnings, if any, to finance the growth and development of our business. In addition, the terms of our existing HCR Agreement preclude us, and the terms of any future debt or financing agreement may preclude us, from paying dividends.
Further, since certain patent applications are confidential until patents are issued, third parties may have filed patent applications for subject matters covered by our pending patent applications without us being aware of such applications, and our patent applications may not have priority over patent applications of others.
Further, since certain patent applications are confidential until patents are issued, third parties may have filed patent applications for subject matter covered by our pending patent applications without us being aware of such applications, and our patent applications may not have priority over patent applications of others.
The length of time required to conduct the required studies and trials may vary substantially according to the type, complexity, novelty and intended use of the product candidate. A single clinical trial may take up to several years to complete.
The length of time required to prepare for and conduct the required studies and trials may vary substantially according to the type, complexity, novelty and intended use of the product candidate. A single clinical trial may take up to several years to complete.
A successful challenge to our patents may lead to generic versions of our drug products being launched before the expiry of our patents or otherwise limit our ability to stop others from using or commercializing similar or identical products and technology.
A successful challenge to our patents may lead to generic versions of our drug products being launched before the expiration of our patents or otherwise limit our ability to stop others from using or commercializing similar or identical products and technology.
License agreements generally impose various diligence, milestone payments, royalty, insurance and other obligations on us, and if we fail to comply with these obligations, our licensors may have the right to terminate these license agreements.
License agreements generally impose various diligence, milestone payment, royalty, insurance and other obligations on us, and if we fail to comply with these obligations, our licensors may have the right to terminate these license agreements.
However, we cannot assure you that our drug products will, in preclinical studies and clinical trials, demonstrate safety and efficacy as 46 Table of Contents necessary to obtain marketing approval. Due to the nature of drug product development, many product candidates, especially those in early stages of development, may be terminated during development.
However, we cannot assure you that our drug products will, in preclinical studies and clinical trials, demonstrate safety and efficacy as necessary to obtain marketing approval. Due to the nature of drug product development, many product candidates, especially those in early stages of development, may be terminated during development.
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.
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.
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.
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.
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.
Moreover, such proceedings could put our patents at risk of being invalidated or interpreted narrowly and 70 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.
Even if we have been or are able to obtain patent protection for our product candidates or PRINT technology, if the scope of such patent protection is not sufficiently broad, we may not be able to rely on such patent protection to prevent third parties from developing or commercializing product candidates or technology that may copy our product candidates or technology.
Even if we have been or are able to obtain patent protection for our product candidates or PRINT technology, if the scope of such patent protection is not sufficiently broad, we may not be able to rely on such patent protection to prevent 71 Table of Contents third parties from developing or commercializing product candidates or technology that may copy our product candidates or technology.
Under Section 5(a) of the Federal Trade Commission Act, the Federal Trade Commission expects a company’s data security measures to be reasonable and appropriate in light of the sensitivity and volume of consumer information it holds, the size and complexity of 66 Table of Contents its business, and the cost of available tools to improve security and reduce vulnerabilities.
Under Section 5(a) of the Federal Trade Commission Act, the Federal Trade Commission expects a company’s data security measures to be reasonable and appropriate in light of the sensitivity and volume of consumer information it holds, the size and complexity of its business, and the cost of available tools to improve security and reduce vulnerabilities.
However, the applicable authorities, including the FDA and the USPTO, in the United States, and comparable regulatory authorities in other countries, may not agree with our assessment of whether such extensions are available, and may refuse to grant extensions to our patents, or grant more limited extensions than we had requested.
However, the applicable authorities, including the FDA and the USPTO, in the United States, and comparable regulatory authorities in other countries, may not agree with our assessment of whether such 72 Table of Contents extensions are available, and may refuse to grant extensions to our patents, or grant more limited extensions than we had requested.
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.
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.
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.
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, 59 Table of Contents including requiring withdrawal of the product from the market.
When evaluating products that utilize a specific drug delivery system or device, the FDA will evaluate the characteristics of that delivery system and its functionality, as well as the potential for undesirable interactions between the drug and the delivery system, including the potential to negatively impact the safety or effectiveness of the drug.
When evaluating products that utilize a specific drug delivery system or device, the FDA will evaluate the characteristics of that delivery system and its functionality, as well as the potential for undesirable interactions between the drug and the delivery system, including the potential to negatively impact the safety or 56 Table of Contents effectiveness of the drug.
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.
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.
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.
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 our business, including our ability to obtain regulatory approval for YUTREPIA, global market and economic conditions, earnings growth and expected cash flows.
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.
Also, as has been the experience of others in our industry, our competitors may file citizen petitions or other correspondence with the FDA or lawsuits against 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.
Impairments may be caused by factors outside the Company’s control, such as actions by the FDA, increasing competitive pricing pressures, and various other factors.
Impairments may be caused by factors outside our control, such as actions by the FDA, increasing competitive pricing pressures, and various other factors.
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.
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.
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.
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.
With respect to our commercial manufacturing, if problems are not discovered before the product is released to the market, we may be subject to regulatory actions, including product recalls, product seizures, injunctions to halt manufacture and distribution, restrictions on our operations, civil sanctions, including monetary sanctions, and criminal actions.
With respect to our commercial manufacturing, if problems are not discovered before the product is released to the market, we may be subject to regulatory actions, 75 Table of Contents including product recalls, product seizures, injunctions to halt manufacture and distribution, restrictions on our operations, civil sanctions, including monetary sanctions, and criminal actions.
Shares issued upon the exercise of stock options outstanding under our equity incentive plans or pursuant to future awards granted under those plans will become available for sale in the public market to the extent permitted by the provisions of applicable vesting schedules, any applicable market standoff and lock-up agreements, and Rule 144 and Rule 701 under the Securities Act.
Shares issued upon purchase under the employee stock purchase plan or upon the exercise of stock options or vesting of restricted stock units outstanding under our equity incentive plans or pursuant to future awards granted under those plans will become available for sale in the public market to the extent permitted by the provisions of applicable vesting schedules, any applicable market standoff and lock-up agreements, and Rule 144 and Rule 701 under the Securities Act.
In connection with an amendment to our NDA filed in July 2023 to add PH-ILD as an indication for YUTREPIA, we provided a new notice of the paragraph IV certification to United Therapeutics as the owner of the patents that are the subject of the certification to which the NDA for YUTREPIA refers.
Also, in connection with an amendment to our NDA filed in July 2023 to add PH-ILD as an indication for YUTREPIA, we provided a new notice 57 Table of Contents of the paragraph IV certification to United Therapeutics as the owner of the patents that are the subject of the certification to which the NDA for YUTREPIA refers.
For example, in order for the FDA to accept data from such a foreign clinical trial, the study must have been conducted in accordance with Good Clinical Practice (GCP) including review and approval by an independent ethics committee and obtaining the informed consent from subjects of the clinical trials.
In order for the FDA to accept data from a foreign clinical trial, the study must have been conducted in accordance with GCP including review and approval by an independent ethics committee and obtaining the informed consent from subjects of the clinical trials.
Any such incident could, among other things, lead to increased costs, lost revenue, damage to our reputation and relationships with patients, health care providers and payers, time and expense spent investigating the cause and, depending on the cause, similar losses with respect to other batches.
Any such incident could, among other things, lead to increased costs, lost revenue, damage to our reputation and relationships with patients, health care providers and third-party payors, time and expense spent investigating the cause and, depending on the cause, similar losses with respect to other batches.
We expect that other healthcare reform measures that may be adopted in the future may result in additional reductions in Medicare and other healthcare funding, more rigorous coverage criteria, new payment methodologies and in additional downward pressure on the price 68 Table of Contents that we receive for any approved product.
We expect that other healthcare reform measures that may be adopted in the future may result in additional reductions in Medicare and other healthcare funding, more rigorous coverage criteria, new payment methodologies and in additional downward pressure on the price that we receive for any approved product.
Among other things, the certificate of incorporation and bylaws: ● permit the Board to issue up to 10 million shares of preferred stock, with any rights, preferences and privileges as they may designate; ● provide that the authorized number of directors may be changed only by resolution of our Board; ● provide that all vacancies, including newly created directorships, may, except as otherwise required by law, be filled by the affirmative vote of a majority of directors then in office, even if less than a quorum; ● require that any action to be taken by our stockholders must be effected at a duly called annual or special meeting of stockholders and may not be taken by written consent; ● create a staggered board of directors such that all members of our Board are not elected at one time; ● allow for the issuance of authorized but unissued shares of our capital stock without any further vote or action by our stockholders; and ● establish advance notice requirements for nominations for election to the Board or for proposing matters that can be acted upon at stockholders’ meetings. 61 Table of Contents In addition, because we are incorporated in Delaware, we are governed by the provisions of Section 203 of the Delaware General Corporation Law (“DGCL”) which generally prohibits a Delaware corporation from engaging in any of a broad range of business combinations with any stockholder owning in excess of 15% of our outstanding stock for a period of three years following the date on which the stockholder obtained such 15% equity interest in us.
Among other things, the certificate of incorporation and bylaws: ● permit the Board to issue up to 10 million shares of preferred stock, with any rights, preferences and privileges as they may designate; ● provide that the authorized number of directors may be changed only by resolution of our Board; ● provide that all vacancies, including newly created directorships, may, except as otherwise required by law, be filled by the affirmative vote of a majority of directors then in office, even if less than a quorum; ● require that any action to be taken by our stockholders must be effected at a duly called annual or special meeting of stockholders and may not be taken by written consent; ● create a staggered board of directors such that all members of our Board are not elected at one time; ● allow for the issuance of authorized but unissued shares of our capital stock without any further vote or action by our stockholders; and ● establish advance notice requirements for nominations for election to the Board or for proposing matters that can be acted upon at stockholders’ meetings. ​ In addition, because we are incorporated in Delaware, we are governed by the provisions of Section 203 of the Delaware General Corporation Law (“DGCL”) which generally prohibits a Delaware corporation from engaging in any of a broad range of business combinations with any stockholder owning in excess of 15% of our outstanding stock for a period of three years following the date on which the stockholder obtained such 15% equity interest in us. 80 Table of Contents The terms of our authorized preferred stock selected by our Board at any point could decrease the amount of earnings and assets available for distribution to holders of our common stock or adversely affect the rights and powers, including voting rights, of holders of our common stock without any further vote or action by the stockholders.
We also may not be able to find acceptable collaborators to manufacture our drug products, if and when approved, in commercial quantities and at acceptable prices, or at all. 48 Table of Contents We may encounter difficulties in enrolling patients in our clinical trials.
We also may not be able to find acceptable collaborators to manufacture our drug products, if and when approved, in commercial quantities and at acceptable prices, or at all. We may encounter difficulties in enrolling patients in our clinical trials.
While we strive to improve our ESG performance, we risk negative stockholder reaction, including from proxy advisory services, as well as damage to our brand and reputation, if we do not act responsibly, or if we are perceived to not be acting responsibly in key ESG areas, including equitable access to medicines and vaccines, product quality and safety, diversity and inclusion, environmental stewardship, support for local communities, corporate governance and transparency, and addressing human capital factors in our operations.
While we strive to improve our ESG performance, to the extent such ESG-related regulations and policies remain in place, we risk negative stockholder reaction, including from proxy advisory services, as well as damage to our brand and reputation, if we do not act responsibly, or if we are perceived to not be acting responsibly in key ESG areas, including equitable access to medicines and vaccines, product quality and safety, diversity and inclusion, environmental stewardship, support for local communities, corporate governance and transparency, and addressing human capital factors in our operations.
Further, in March 2021, the American Rescue Plan Act of 2021 was signed into law, which, among other things, eliminated the statutory cap on drug manufacturers' Medicaid Drug Rebate Program rebate liability, effective January 1, 2024.
Further, in March 2021, the American Rescue Plan Act of 2021 was signed into law, which, among other things, eliminated the statutory cap on drug manufacturers’ Medicaid Drug Rebate Program rebate liability, effective January 1, 2024, removing the 100% cap that was established in the ACA.
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.
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.
Competitors may infringe our patents or misappropriate or otherwise violate our intellectual property rights. To counter infringement or unauthorized use, we may engage in litigation to, among others, enforce or defend our intellectual property rights, determine the validity or scope of our intellectual property rights and those of third parties, and protect our trade secrets.
To counter infringement or unauthorized use, we may engage in litigation to, among others, enforce or defend our intellectual property rights, determine the validity or scope of our intellectual property rights and those of third parties, and protect our trade secrets.
The market price for our common stock may be influenced by many factors, including: ● results of any clinical trials of any product candidate we may develop, including L606, or those of our competitors; ● the success of Sandoz’s Treprostinil Injection to which we have commercial rights to pursuant to the Promotion Agreement; ● the market acceptance of the RG Cartridge for the subcutaneous administration of Treprostinil Injection; ● whether Mainbridge is able to complete the development of a new pump for the subcutaneous administration of Treprostinil Injection and obtain FDA clearance on a timely basis or at all; ● our cash resources; ● the approvals or success of competitive products or technologies; ● potential approvals of any product candidate we may develop, including YUTREPIA and L606, for marketing by the FDA or equivalent foreign regulatory authorities or any failure to obtain such approvals; ● our involvement in significant lawsuits, such as stockholder litigation, litigation involving the FDA, including the FDA Litigation, or patent litigation, including inter partes review proceedings and Hatch-Waxman litigation with originator companies or others which may hold patents, including the ongoing litigation in connection with the patents that United Therapeutics has asserted against us; ● regulatory or legal developments in the United States and other countries; ● the results of our efforts to commercialize any product candidate we may develop, including YUTREPIA and L606, in the event we receive final approval from the FDA; ● developments or disputes concerning patents or other proprietary rights; ● the recruitment or departure of key personnel; ● the level of expenses related to any of our product candidates or clinical development programs; ● the results of our efforts to discover, develop, acquire or in-license additional product candidates or products; ● actual or anticipated changes in estimates as to financial results, development timelines or recommendations by securities analysts; ● variations in our financial results or those of companies that are perceived to be similar to us; ● changes in the structure of healthcare payment systems; ● market conditions in the pharmaceutical and biotechnology sectors and issuance of new or changed securities analysts’ reports or recommendations; ● general economic, industry and market conditions; and ● the other factors described in this “Risk Factors” section.
The market price for our common stock may be influenced by many factors, including: ● results and timing of commencement or completion of any clinical trials of any product candidate we may develop, including L606, or those of our competitors; ● the success of Sandoz’s Treprostinil Injection to which we have commercial rights pursuant to the Promotion Agreement; ● the market acceptance of the RG Cartridge for the subcutaneous administration of Treprostinil Injection; ● whether we and Sandoz are able to complete the development of a new pump for the subcutaneous administration of Treprostinil Injection and obtain FDA clearance on a timely basis or at all; ● our cash resources; ● the approvals or success of competitive products or technologies; ● potential approvals of any product candidate we may develop, including YUTREPIA and L606, for marketing by the FDA or equivalent foreign regulatory authorities (and, if approved, the scope of the indications for which such product candidates are approved) or any failure to obtain such approvals; ● our involvement in significant lawsuits, such as stockholder litigation, litigation involving the FDA, including the New FDA Litigation, or litigation related to intellectual property, including inter partes review proceedings and Hatch-Waxman litigation with originator companies or others which may hold patents, including the ongoing litigation in connection with the patents, trade secrets and confidential information that United Therapeutics has asserted against us; ● regulatory or legal developments in the United States and other countries; 78 Table of Contents ● the results of our efforts to commercialize any product candidate we may develop, including YUTREPIA and L606, in the event we receive final approval from the FDA; ● developments or disputes concerning patents or other proprietary rights; ● the recruitment or departure of key personnel; ● the level of expenses related to any of our product candidates or clinical development programs; ● the results of our efforts to discover, develop, acquire or in-license additional product candidates or products; ● actual or anticipated changes in estimates as to financial results, development timelines or recommendations by securities analysts; ● variations in our financial results or those of companies that are perceived to be similar to us; ● changes in the structure of healthcare payment systems; ● market conditions in the pharmaceutical and biotechnology sectors and issuance of new or changed securities analysts’ reports or recommendations; ● general economic, industry and market conditions; and ● the other factors described in this “Risk Factors” section. ​ The stock market in general, and market prices for the securities of pharmaceutical companies like ours in particular, have from time to time experienced volatility that often has been unrelated to the operating performance of the underlying companies.
In the event that the licenses we rely on are not available to us on commercially acceptable terms, or at all, our ability to commercialize our PRINT technology or product candidates, and our business and prospects, may be materially and adversely affected. We may not be able to enforce our intellectual property rights throughout the world.
In the event that the licenses we rely on are not available to us on commercially acceptable terms, or at all, our ability to commercialize our PRINT technology or product candidates, and our business and prospects, may be materially and adversely affected.
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.
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. 81 Table of Contents Item 1B. Unresolved Staff Comments. None. ​
On August 29, 2023, HHS announced the list of the first ten drugs that will be subject to price negotiations, although the Medicare drug price negotiation program is currently subject to legal challenges.
On August 29, 2023, HHS announced the list of the first ten drugs that will be subject to price negotiations, and HHS announced another 15 drugs subject to negotiations in January 2025. The Medicare drug price negotiation program is currently subject to legal challenges.
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.
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, that the drug CMC data or device biocompatibility data for our product candidates otherwise do not support approval or that additional CMC data or information for our product candidates must be submitted for review; ● 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. 55 Table of Contents Even if we obtain marketing approval, the FDA or comparable regulatory authorities in other countries may approve our product candidates for fewer or more limited indications than those for which we requested approval or may include safety warnings or other restrictions that may negatively impact the commercial viability of our product candidates.
Such problems could affect production of a single batch or a series of batches, requiring the destruction of products, or could halt manufacturing operations altogether. For instance, as we scale up the manufacture of YUTREPIA, we are adjusting the speed and temperature at which our blister packs are sealed to reduce the risk of the product being exposed to moisture.
Such problems could affect production of a single batch or a series of batches, requiring the destruction of products, or could halt manufacturing operations altogether. For instance, as we scale up the manufacture of YUTREPIA, we are adjusting the speed and scale at which our bulk powder is manufactured and at which blister packs are sealed.
We may enter into strategic collaboration arrangements with third parties to commercialize our product candidates outside of the United States. In order to market any product candidate outside of the United States, we or our collaborators will be required to comply with numerous and varying regulatory requirements of other countries regarding safety and efficacy.
In order to market any product candidate outside of the United States, we or our collaborators will be required to comply with numerous and varying regulatory requirements of other countries regarding safety and efficacy.
In addition, any future testing by us conducted in connection with Section 404 of the Sarbanes-Oxley Act of 2002, as amended (the “Sarbanes-Oxley Act”) or the subsequent testing by our independent registered public accounting firm, may reveal deficiencies in our internal controls over financial reporting that are deemed to be material weaknesses or that may require prospective or retroactive changes to our consolidated financial statements or identify other areas for further attention or improvement.
In addition, any future testing by us conducted in connection with Section 404 of the Sarbanes-Oxley Act of 2002, as amended (the “Sarbanes-Oxley Act”) or the subsequent testing by our independent registered public accounting firm, may reveal deficiencies in our internal controls over financial reporting that are deemed to be material weaknesses or that may require prospective or retroactive changes to our consolidated financial statements or identify other areas for further attention or improvement. 79 Table of Contents As required by the Sarbanes Oxley Act and commencing with the fiscal year ended December 31, 2019, we were required to furnish a report by management on, among other things, the effectiveness of our internal controls over financial reporting.
Patient enrollment may be affected by, among others: ● the severity of the disease under investigation; ● the design of the clinical trial protocol and amendments to a protocol; ● the size and nature of the patient population; ● eligibility criteria for the clinical trial in question; ● the perceived risks and benefits of the product candidate under clinical testing, including a high and unacceptable severity, or prevalence, of undesirable side effects or adverse events caused by our product candidates or similar products or product candidates; ● the existing body of safety and efficacy data in respect of the product candidate under clinical testing; ● the proximity of patients to clinical trial sites; ● the number and nature of competing therapies and clinical trials; and ● other environmental factors such as the ongoing COVID-19 pandemic or other natural or unforeseen disasters.
Patient enrollment may be affected by a variety of factors, including, among others: ● the severity of the disease under investigation; ● the design of the clinical trial protocol and amendments to a protocol; ● the size and nature of the patient population; ● eligibility criteria for the clinical trial in question; ● the perceived risks and benefits of the product candidate under clinical testing, including a high and unacceptable severity, or prevalence, of undesirable side effects or adverse events caused by our product candidates or similar products or product candidates; ● the existing body of safety and efficacy data in respect of the product candidate under clinical testing; ● the proximity of patients to clinical trial sites; ● the number and nature of competing therapies and clinical trials; and ● other environmental factors such as natural and man-made disasters and global health emergencies, such as pandemics and epidemics. ​ Any negative results we may report in clinical trials of our product candidates may also make it difficult or impossible to recruit and retain patients in other clinical trials of that same product candidate.
Our use of technology is critical to our continued operations. We are susceptible to operational, financial and information security risks resulting from cyber-attacks or technological malfunctions.
Our use of technology, infrastructure and data is critical to our continued operations. We are susceptible to operational, financial and information security risks resulting from security breaches, loss or leakage of data, technological malfunctions or other disruptions.
The false statements statute prohibits knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false, fictitious or fraudulent statement in connection with the delivery of or payment for healthcare benefits, items or services.
The false statements statute prohibits knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false, fictitious or fraudulent statement in connection with the delivery of or payment for healthcare benefits, items or services. Violations of these statutes is a felony and may result in fines, imprisonment or exclusion from governmental programs.
Even if the FDA ultimately denies such a petition or the actions requested in such correspondence and prevails in any related litigation, the FDA may substantially delay approval while it considers and responds to the petition or correspondence and is engaged in litigation or the FDA may be temporarily enjoined by a court from granting approval until the court has ruled on United Therapeutics’ requests.
Even if the FDA ultimately prevails in such litigation, the FDA may substantially delay approval while it is engaged in litigation or the FDA may be temporarily enjoined by a court from granting approval until the court has ruled on United Therapeutics’ request.
Among the provisions of the ACA of importance to our product candidates are the following: ● establishment of a new pathway for approval of lower-cost biosimilars to compete with biologic products; ● an annual, nondeductible fee payable by any entity that manufactures or imports specified branded prescription drugs and biologic agents; ● an increase in the statutory minimum rebates a manufacturer must pay under the Medicaid Drug Rebate Program; ● a new Medicare Part D coverage gap discount program, in which manufacturers must agree to offer point-of-sale discounts off negotiated prices; ● extension of manufacturers' Medicaid rebate liability; ● expansion of eligibility criteria for Medicaid programs; ● expansion of the entities eligible for discounts under the Public Health Service pharmaceutical pricing program; ● a new requirement to annually report drug samples that manufacturers and distributors provide to physicians; and ● a new Patient-Centered Outcomes Research Institute to oversee, identify priorities in and conduct comparative clinical effectiveness research, along with funding for such research.
Among the provisions of the ACA of importance to our product candidates are the following: ● establishment of a new pathway for approval of lower-cost biosimilars to compete with biologic products; ● an annual, nondeductible fee payable by any entity that manufactures or imports specified branded prescription drugs and biologic agents; ● an increase in the statutory minimum rebates a manufacturer must pay under the Medicaid Drug Rebate Program; 63 Table of Contents ● a new Medicare Part D coverage gap discount program, in which manufacturers must agree to offer point-of-sale discounts off negotiated prices, now reformed as a result of the IRA; ● expansion of manufacturers’ Medicaid rebate liability; and ● expansion of the entities eligible for discounts under the Public Health Service pharmaceutical pricing program.
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.
Status as a combination product, as is the case for YUTREPIA and L606, may complicate or delay the FDA review process. 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.
Before we are able to commercialize our drug products, we are required to undertake extensive preclinical studies and clinical trials to demonstrate that our drug products are safe and effective for their intended uses.
Results of previous clinical trials or interim results of ongoing clinical trials may not be predictive of future results. Before we are able to commercialize our drug products, we are required to undertake extensive preclinical studies and clinical trials to demonstrate that our drug products are safe and effective for their intended uses.
Promotion that is deemed to be “off label” can be the basis of FCA exposure. ● Federal law includes provisions (established under the Health Insurance Portability and Accountability Act of 1996) addressing healthcare fraud and false statements relating to healthcare matters.
Promotion that is deemed to be “off label” can also be the basis of FCA exposure. ● Federal law includes provisions established under the Health Insurance Portability and Accountability Act of 1996 (“HIPAA”), as amended by the Health Information Technology for Economic and Clinical Health Act of 2009 (“HITECH”) and its implementing regulations addressing healthcare fraud and false statements relating to healthcare matters.
For example, such authorities may disagree with the design, scope or implementation of our clinical trials, or with our interpretation of data from our preclinical studies or clinical trials. Further, there are numerous FDA personnel assigned to review different aspects of an NDA, and uncertainties can be presented by their ability to exercise judgment and discretion during the review process.
For example, such authorities may disagree with the design, scope or implementation of our clinical trials, or with our interpretation of data from our preclinical studies or clinical trials. Further, there are numerous FDA personnel assigned to review different aspects of an NDA and there may be turnover and/or vacancies at the FDA, which may delay review of our NDA.
It is unclear whether the models will be utilized in any health reform measures in the future. Legally mandated price controls on payment amounts by third-party payors or other restrictions could harm our ability to price our products appropriately, which could negatively impact our business, results of operations, financial condition and prospects.
Legally mandated price controls on payment amounts by third-party payors or other restrictions could harm our ability to price our products appropriately, which could negatively impact our business, results of operations, financial condition and prospects.
We may not be successful in our efforts to establish collaboration or other alternative arrangements should we so choose to enter into such arrangements.
Collaboration and licensing arrangements are complex and time-consuming to negotiate, document, implement and maintain. We may not be successful in our efforts to establish collaboration or other alternative arrangements should we so choose to enter into such arrangements.
We have also registered the offer and sale of all shares of common stock that we may issue under our equity compensation plans, including the employee stock purchase plan.
We have registered the offer and sale of all shares of common stock that we may issue under our equity compensation plans, including the employee stock purchase plan. We expect that the market price of our common stock may be volatile, and you may lose all or part of your investment.
The commencement and completion of clinical trials for any current or future development product candidate may be delayed by several factors, including: ● unforeseen safety issues; ● determination of dosing issues; ● lack of effectiveness during clinical trials; ● slower than expected rates of patient recruitment; ● inability to monitor patients adequately during or after treatment; and ● inability or unwillingness of medical investigators to follow our clinical protocols or amendments to our protocols.
The commencement and completion of clinical trials for any current or future development product candidate may be delayed by several factors, including: ● unforeseen safety issues; ● determination of dosing issues; ● lack of effectiveness during clinical trials; ● slower than expected rates of patient recruitment; ● inability to monitor patients adequately during or after treatment; and ● inability or unwillingness of medical investigators to follow our clinical protocols or amendments to our protocols. ​ In addition, the FDA or IRBs, DSMBs, or ECs may suspend our clinical trials at any time if it appears that we are exposing participants to unacceptable health risks or if the FDA finds deficiencies in our IND submissions or the conduct of these trials.
Stock prices of many pharmaceutical companies have fluctuated in a manner unrelated or disproportionate to the operating performance of those companies. In several recent situations when the market price of a stock has been volatile, holders of that stock have instituted securities class action litigation against the company that issued the stock.
In several recent situations when the market price of a stock has been volatile, holders of that stock have instituted securities class action litigation against the company that issued the stock.
Patent Number 11,723,887, and may seek to enjoin the FDA from granting final approval to YUTREPIA or enjoin us from launching YUTREPIA, including through temporary restraining order they are seeking in the FDA Litigation. 54 Table of Contents In the event of a successful infringement claim against us, including an infringement claim filed in response to a paragraph IV certification, we may be required to pay damages, cease the development or commercialization of our drug products or product candidates, re-engineer or redevelop our drug products or product candidates or enter into royalty or licensing agreements, any of which could have a material and adverse impact on our business, financial condition and results of operations.
In the event of a successful infringement claim against us, including an infringement claim filed in response to a paragraph IV certification, we may be required to pay damages, cease the development or commercialization of our drug products or product candidates, limit the label of our products to fewer indications than intended, re-engineer or redevelop our drug products or product candidates or enter into royalty or licensing agreements, any of which could have a material and adverse impact on our business, financial condition and results of operations.
These risks could disrupt our operations and its supply chain, which may result in increased costs. New legal or regulatory requirements may be enacted to prevent, mitigate, or adapt to the implications of a changing climate and its effects on the environment.
New legal or regulatory requirements may be enacted to prevent, mitigate, or adapt to the implications of a changing climate and its effects on the environment.
Ensuring that our business and business arrangements with third parties comply with applicable healthcare laws, as well as responding to possible investigations by government authorities, can be time- and resource-consuming and can divert management’s attention from the business, even if the government ultimately finds that no violation has occurred.
Participation in such programs and compliance with their requirements may subject us to increased infrastructure costs and potentially limit our ability to price our drug products. 62 Table of Contents Ensuring that our business and business arrangements with third parties comply with applicable healthcare laws, as well as responding to possible investigations by government authorities, can be time- and resource-consuming and can divert management’s attention from the business, even if the government ultimately finds that no violation has occurred.
In addition, we may face Hatch-Waxman litigation in relation to our NDAs submitted under the 505(b)(2) regulatory pathway, which may further delay or prevent the approval of our product candidates.
Also, a drug approved via this pathway may be subject to the same post-approval limitations, conditions and requirements as any other drug. In addition, we may face Hatch-Waxman litigation in relation to our NDAs submitted under the 505(b)(2) regulatory pathway, which may further delay or prevent the approval of our product candidates.
Any adverse regulatory action taken against us could subject us to significant liability and harm our business and prospects. ​ Item 1B. Unresolved Staff Comments. None. ​ ​ 73 Table of Contents
Any adverse regulatory action taken against us could subject us to significant liability and harm our business and prospects.
For L606, we rely upon single sources of supply for the active pharmaceutical ingredient, manufacture of bulk drug product and packaging. Some of these suppliers are located in Taiwan.
Chengdu, which manufactures and supplies RG Cartridges for the subcutaneous administration of Treprostinil Injection, has facilities and suppliers located in China. For L606, we rely upon single sources of supply for the active pharmaceutical ingredient, the device, manufacture of bulk drug product and packaging, some of which are located in Taiwan.
Risks Related to our Common Stock Future sales of our common stock or securities convertible into our common stock in the public market could cause our stock price to fall. Our stock price could decline as a result of sales of a large number of shares of our common stock or the perception that these sales could occur.
Our stock price could decline as a result of sales of a large number of shares of our common stock or the perception that these sales could occur.
In addition, given the amount of time required for the development, clinical testing and regulatory review of new product candidates, any patents protecting our product candidates may expire before or shortly after such product candidates might become approved for commercialization. 55 Table of Contents Moreover, the issuance of a patent is not conclusive as to the inventorship of the patented subject matter, or its scope, validity or enforceability.
In addition, given the amount of time required for the development, clinical testing and regulatory review of new product candidates, any patents protecting our product candidates may expire before or shortly after such product candidates might become approved for commercialization.
In the event that Pharmosa terminates our license and we have a product that relies on that license, including L606, it may bring a claim against us, and if they are 56 Table of Contents successful, we may be required to compensate Pharmosa for the unauthorized use of their patent rights through the payment of royalties.
In the event that Pharmosa terminates our license and we have a product that relies on that license, including L606, it may bring a claim against us, and if they are successful, we may be required to compensate Pharmosa for the unauthorized use of their patent rights through the payment of royalties. 73 Table of Contents Also, the agreements under which we license patent rights may not give us control over patent prosecution or maintenance, so that we may not be able to control which claims or arguments are presented and may not be able to secure, maintain or successfully enforce necessary or desirable patent protection from those patent rights.
Filing, prosecuting, enforcing and defending patents on our PRINT technology and our product candidates throughout the world may be prohibitively expensive and may not be financially or commercially feasible. In countries where we have not obtained patent protection, our competitors may be able to use our proprietary technologies to develop competing product candidates.
We may not be able to enforce our intellectual property rights throughout the world. Filing, prosecuting, enforcing and defending patents on our PRINT technology and our product candidates throughout the world may be prohibitively expensive and may not be financially or commercially feasible.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeRisk Factors - We are subject to risks related to information technology systems, including cyber-security risks; successful cyber-attacks or technological malfunctions can result in, among other things, financial losses, the inability to process transactions, the unauthorized release of confidential information and reputational risk, all of which would negatively impact our business, financial condition or results of operations . 74 Table of Contents Governance Board Oversight of Cybersecurity Threats The Board has oversight responsibility for the Company’s overall risk management framework.
Biggest changeRisk Factors – We are subject to information technology systems failures, security breaches, loss or leakage of data, technological malfunctions or other disruptions, which could 82 Table of Contents result in, among other things, material disruption of our product development programs, financial losses, the inability to process transactions, the unauthorized release of confidential information and reputational risk, restrictions on accessing critical information and potential exposure to liability, all of which would negatively impact our business, financial condition or results of operations.
The information technology organization also engages legal and cybersecurity professionals with appropriate subject matter expertise in support of its cybersecurity efforts. The information technology organization manages and continually enhances the Company’s enterprise security structure with the goal of preventing cybersecurity incidents to the extent feasible, while simultaneously increasing our system resilience to minimize the business impact should an incident occur.
The information technology organization also engages legal and cybersecurity professionals with appropriate subject matter expertise in support of its cybersecurity efforts. The information technology organization manages and continually enhances our enterprise security structure with the goal of preventing cybersecurity incidents to the extent feasible, while simultaneously increasing our system resilience to minimize the business impact should an incident occur.
Role of Management Our management and information technology teams, collectively, have decades of experience in the areas of information technology, finance, legal, human resources, data privacy and risk management. Our internal information technology organization, overseen by our Chief Financial Officer (the “CFO”), is responsible for our overall information security strategy, policy, security engineering, operations and cyber threat detection and response.
Role of Management Our management and information technology teams, collectively, have decades of experience in the areas of information technology, finance, legal, human resources, data privacy and risk management. Our internal information technology organization, overseen by our Controller, is responsible for our overall information security strategy, policy, security engineering, operations and cyber threat detection and response.
Engagement of Third-party Support We engage third-party service providers to conduct evaluations of our security controls, whether through penetration testing, independent audits or consulting on best practices to address new challenges. These evaluations include testing both the design and operational effectiveness of cybersecurity controls.
Engagement of Third-party Support To further improve the effectiveness of our cybersecurity risk management program, we engage third-party service providers to conduct evaluations of our security controls, whether through penetration testing, independent audits or consulting on best practices to address new challenges. These evaluations include testing both the design and operational effectiveness of cybersecurity controls.
As an important component of the Company’s risk management process, management reviews risks from cybersecurity threats and the Company’s programs for evaluating, mitigating and educating its employees regarding cybersecurity risks.
As an important component of our risk management process, management reviews risks from cybersecurity threats and our programs for evaluating, mitigating and educating its employees regarding cybersecurity risks.
Our CFO provides regular updates to the Audit Committee concerning the Company’s technology and cybersecurity programs, associated risks and the Company’s efforts to help mitigate those risks. ​
Management provides regular updates to the Audit Committee and the Board concerning the Company’s technology and cybersecurity programs, associated risks and our efforts to help mitigate those risks. ​
The day-to-day activities of our information technology organization are managed by our current head of information technology director, who has more than 20 years of experience in information technology systems and cybersecurity, including experience in safeguarding and monitoring networks and systems, responding to incidents, and reducing the risk of business exposure.
The day-to-day activities of our information technology organization are managed by our current head of information technology, who has more than 30 years of experience in information technology systems and cybersecurity, including experience in safeguarding and monitoring networks and systems, responding to incidents, and reducing the risk of business exposure, and holds multiple industry-recognized certifications.
We employ a range of tools and services, including regular network and endpoint monitoring, managed detection and response, system patching, managed security services, server and endpoint scheduled backups, awareness training and testing, periodic vulnerability assessments and penetration testing, to update our ongoing cybersecurity risk identification and mitigation efforts.
The program includes a comprehensive set of security policies and procedures, including regular network and endpoint monitoring, managed detection and response, system patching, managed security services, server and endpoint scheduled backups, awareness training and testing, periodic vulnerability assessments and penetration testing, to update our ongoing cybersecurity risk identification and mitigation efforts.
In the event of a cybersecurity incident, our General Counsel is responsible for convening a materiality incident response team to assess the materiality of cybersecurity incidents meeting certain escalation criteria.
In the event of a cybersecurity incident, our General Counsel is responsible for convening a materiality incident response team to assess the materiality of cybersecurity incidents meeting certain escalation criteria. Through ongoing communications with the incident response team, management is informed about and monitors the prevention, detection, mitigation and remediation of cybersecurity incidents and progress on cybersecurity initiatives.
Under this policy, cybersecurity risks are identified and evaluated as part of the selection and oversight of applicable third-party service providers. Impact of Risks from Cybersecurity Threats We do not believe that any of the risks from cybersecurity threats we have faced to date have materially affected the Company, our business strategy, results of operations or financial condition.
Impact of Risks from Cybersecurity Threats We do not believe that any of the risks from cybersecurity threats we have faced to date have materially affected, or currently viewed as reasonably likely to materially affect, the Company, our business strategy, results of operations or financial condition.
The Board, acting primarily through the Audit Committee, is also responsible for oversight of our risk management practices, including as to cybersecurity, while management is responsible for the day-to-day risk management processes. Through our Chief Executive Officer and other members of management, the Board receives periodic reports regarding the risks facing the Company, including as to cybersecurity risks.
Governance Board Oversight of Cybersecurity Threats The Board has oversight responsibility for the Company’s overall risk management framework. The Board, acting primarily through the Audit Committee , is also responsible for oversight of our risk management practices, including as to cybersecurity, while management is responsible for the day-to-day risk management processes.
Under our cybersecurity incident response plan, we have appointed an incident response team, consisting of our Chief Executive Officer, Chief Financial Officer, General Counsel, head of information technology and head of human resources.
Incident responses under our cybersecurity incident response plan are led by our incident response team, consisting of our Chief Executive Officer (the “CEO”), Chief Financial Officer (the “CFO”), General Counsel, head of information technology and head of human resources, and supported by Legal, Compliance and other functions as appropriate.
Item 1C. Cybersecurity. Risk Management and Strategy Integrated Risk Management Management is responsible for the day-to-day management of the Company’s risk exposure, subject to the direction and objectives established by our Board of Directors (the “Board”).
Our Board, acting primarily through the Audit Committee, actively oversees the strategic direction, objectives and effectiveness of our risk management practices, including cybersecurity risk management, while management is responsible for the day-to-day management of the Company’s risk exposure, subject to the direction and objectives established by our Board.
As part of our cybersecurity risk management, we have adopted a cybersecurity incident response plan to identify and manage cybersecurity threats and incidents, including but not limited to those that touch on operational risk, intellectual property theft, reputational risks, fraud and extortion, harm to the personal identifying data of employees or customers, violations of laws, and other risks.
We have also implemented a well-established incident response plan to address cybersecurity threats and incidents related to operational risk, intellectual property theft, reputational risks, fraud and extortion, harm to the personal identifying data of employees or customers, violations of laws, and other risks, including procedures for (i) detection and analysis, (ii) containment and eradication, (iii) remediation and (iv) preparation for future incidents.
Third-party Risk Management We have adopted a third-party due diligence assessment policy to define the procedures for assessing and identifying risk from cybersecurity threats associated with the use of any third-party vendor who interacts with Liquidia’s technology infrastructure or Liquidia’s confidential, proprietary, or personally identifiable information.
Third-party Risk Management We also implement third-party risk assessments to identify, assess and monitor material risks from cybersecurity threats associated with the use of any third-party vendor who interacts with our technology infrastructure or our confidential, proprietary, or personal information, or is otherwise part of our supply chain.
In addition, the Audit Committee assists the Board in its oversight role by receiving periodic reports regarding our risk and control environment, including by receiving regular reports regarding cybersecurity risks and initiatives.
In addition, the Audit Committee assists the Board in its oversight role by receiving regular reports from management regarding risks associated with technology, information systems and controls and security, including risks related to data security, cybersecurity and data privacy and the effectiveness of the Company’s security controls, systems and policies .
However, as discussed under “Risk Factors” in Part I, Item 1A of this Annual Report, cybersecurity threats pose multiple risks to us, including potentially to our results of operations and financial condition. See Item 1A.
For a description of the risks from cybersecurity threats that may materially affect us, including our results of operations and financial condition, see Item 1A.
Removed
In the event of a cybersecurity incident, the Company is equipped with an incident response plan that includes: (i) detection and analysis, (ii) containment and eradication, (iii) remediation and (iv) preparation for future incidents. Incident responses will be led by our incident response team and supported by Legal, Compliance and other functions as appropriate.
Added
Item 1C. Cybersecurity. Risk Management and Strategy Integrated Risk Management Our cybersecurity risk management program is an important component of, and is integrated into, our overall risk management process.
Added
These processes are aligned with standard industry frameworks, such as the National Institute of Standards and Technology, Committee of Sponsoring Organizations and International Organization for Standardization 27001, and other industry standards.
Added
These assessments include identifying and evaluating cybersecurity risks as part of the due diligence conducted prior to the selection of third-party service providers, recurring risk assessments to ensure such third-party vendors have acceptable levels of cybersecurity controls in place and ongoing monitoring to address material cybersecurity risks that may arise from such third-party relationships.
Added
However, the scope and impact of any future cybersecurity threats cannot be predicted and there can be no assurance that our cybersecurity risk management program will be effective in preventing material cybersecurity threats in the future.
Added
Through our CEO and other members of management, the Board receives periodic reports regarding the risks facing the Company, including as to cybersecurity risks.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeItem 2. Properties. 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 for an additional five years through October 31, 2031, as amended.
Biggest changeItem 2. Properties. 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 December 31, 2031 and includes an option for us to renew the lease for an additional five years through December 31, 2036.
The 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.
The 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. ​ 83 Table of Contents
Removed
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, 2023. ​ Item 6. [Reserved]. ​ 76 Table of Contents
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, 2024. ​ 84 Table of Contents Item 6. [Reserved]. ​
In addition, the terms of our RIFA with HCR precludes us from paying cash dividends, except in certain prescribed circumstances, without the prior written consent of HCR. Therefore, we do not expect to pay cash dividends for the foreseeable future.
In addition, the terms of our HCR Agreement precludes us from paying cash dividends, except in certain prescribed circumstances, without the prior written consent of HCR. Therefore, we do not expect to pay cash dividends for the foreseeable future.
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.
Holders As of March 10, 2025, there were 54 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 changeThe increase of $23.8 million or 122% was driven largely by the $10.0 million upfront license fee payment to Pharmosa for the exclusive license in North America to develop and commercialize L606. We incurred an additional $2.6 million in expenses related to our L606 program during the year ended December 31, 2023.
Biggest changeThe increase of $4.6 million or 11% was primarily due to (i) a $6.1 million increase in expenses related to our L606 program, (ii) a $5.3 million increase in expenses related to YUTREPIA research and development activities, including the ASCENT trial, (iii) a $5.1 million increase in personnel expenses (including stock-based compensation) related to increased headcount, and (iv) a $3.5 million upfront license fee due to Pharmosa for the exclusive license in Europe to develop and commercialize L606 recorded during the year ended December 31, 2024, offset by (i) $5.1 million lower commercial manufacturing expenses reflecting the impact of expensing YUTREPIA inventory costs in the prior year and (ii) a $10.0 million upfront license fee due to Pharmosa for the exclusive license in North America to develop and commercialize L606 recorded during the year ended December 31, 2023.
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.
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.
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.
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, 2024 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.
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.
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 and subsequent commercialization of a product candidate is probable 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; ● costs of acquired product licenses and related technology rights where there is no alternative future use; and ● allocated facility-related costs.
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 operating losses and negative cash flows from operations.
This uncertainty is due to the numerous risks and uncertainties associated with the duration and cost of clinical trials, which vary significantly over the life of a project as a result of many factors, including: ● the number of clinical sites included in the trials; ● the length of time required to enroll suitable patients; ● the number of patients that ultimately participate in the trials; ● the number of doses patients receive; ● the duration of patient follow-up; and ● the results of our clinical trials.
This uncertainty is due to the numerous risks and 87 Table of Contents uncertainties associated with the duration and cost of clinical trials, which vary significantly over the life of a project as a result of many factors, including: ● the number of clinical sites included in the trials; ● the length of time required to enroll suitable patients; ● the number of patients that ultimately participate in the trials; ● the number of doses patients receive; ● the duration of patient follow-up; and ● the results of our clinical trials.
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.
This discussion should be read in conjunction with our consolidated financial statements for the two-year period ended the year ended December 31, 2024 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, 2023, as compared to the year ended December 31, 2022.
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, 2024, as compared to the year ended December 31, 2023.
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.
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 DPI and by achieving higher dose levels than the labeled doses of current inhaled therapies.
During the year ended December 31, 2023, we received $41.7 million net proceeds from the revenue interest financing agreement of which $22.2 million was used to repay existing indebtedness with Silicon Valley Bank, $24.2 million aggregate net proceeds from the sale of common stock in a public offering and a public private placement, and $1.2 million from the issuance of common stock under stock incentive plans.
During the year ended December 31, 2023, we received $41.7 million net proceeds from the HCR Agreement of which $22.2 million was used to repay existing indebtedness with Silicon Valley Bank, $24.2 million aggregate net proceeds from the sale of common stock in a public offering and a public private placement, and $1.2 million from the issuance of common stock under stock incentive plans.
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.
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.
Our primary uses of capital are, and we expect will continue to be, compensation and related personnel expenses, clinical costs, manufacturing process development costs, external research and development services, laboratory and related supplies, regulatory expenses, legal costs, administrative and overhead costs and repayments under the RIFA.
Our primary uses of capital are, and we expect will continue to be, compensation and related personnel expenses, clinical costs, manufacturing process development costs, external research and development services, laboratory and related supplies, regulatory expenses, legal costs, administrative and overhead costs and repayments under the HCR Agreement.
During the year ended December 31, 2023, we made a $10.0 million upfront license fee payment to Pharmosa for the exclusive license in North America to develop and commercialize L606 and paid $1.3 million for the acquisition of property, plant and equipment.
During the year ended December 31, 2023, we made a $10.0 million upfront license fee payment to Pharmosa for the exclusive license in North America to develop and commercialize L606 and paid $1.3 million for property, plant and equipment purchases.
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.
Smaller Reporting Company As a “smaller reporting company,” as defined under Rule 12b-2 of 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.
Under the terms of the Agreement, we have agreed that upon any Termination for FDA Rejection or Termination for FDA Delay, we would reimburse Lonza for 50% of its documented out-of-pocket expenditures for any capital equipment that is purchased by Lonza after the effective date of the Agreement to perform the services for us, not to exceed $2.5 million in the aggregate.
Upon any Termination for FDA Rejection or Termination for FDA Delay, we would reimburse Lonza for 50% of its documented out-of-pocket expenditures for any capital equipment that is purchased by Lonza after the effective date of the Agreement to perform the services for us, not to exceed $2.5 million in the aggregate.
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.
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 92 Table of Contents milestones and royalties, totaling no more than $1.5 million, $0.2 million of which was accrued as of December 31, 2024.
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.
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 duration of later-stage clinical trials.
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.
We established our commercial presence in the field to support Treprostinil Injection and have since expanded our presence to support the potential launch of YUTREPIA, further validating our reputation as a company committed to supporting PAH and PH-ILD patients.
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.
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 inception, we have incurred significant operating losses. Our net loss was $130.4 million and $78.5 million for the years ended December 31, 2024 and 2023, respectively.
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.
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. 91 Table of Contents See “Risk Factors” for additional risks associated with our substantial capital requirements.
Liquidity and Capital Resources Sources of Liquidity We have financed our growth and operations through a combination of funds generated from revenues, the issuance of convertible preferred stock and common stock, bank borrowings, the issuance of convertible notes, and revenue interest financing. Our principal uses of cash have been for working capital requirements and capital expenditures.
Liquidity and Capital Resources Sources of Liquidity We have financed our growth and operations through a combination of funds generated from revenues, the issuance of convertible preferred stock and common stock, bank borrowings, the issuance of convertible notes, and other long-term debt. Our principal uses of cash have been for working capital requirements and capital expenditures.
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.
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 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.
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. Actual results could differ from those estimates and assumptions.
There have been no material changes in estimates for the periods presented within this Annual Report on Form 10-K. Revenue Interest Financing Agreement We recognized a liability related to amounts received in January 2023 and July 2023 pursuant to the RIFA with HCR under ASC 470-10, Debt and ASC 835-30 Interest - Imputation of Interest.
There have been no material changes in estimates for the periods presented within this Annual Report on Form 10-K. 94 Table of Contents Long-term Debt We recognized a liability related to amounts received in January 2023, July 2023, January 2024, and September 2024 pursuant to the HCR Agreement under ASC 470-10, Debt and ASC 835-30, Interest – Imputation of Interest .
In December 2022, we entered into a Device Development and Supply Agreement (the “Pump Development Agreement”) with Mainbridge Health Partners, LLC (“Mainbridge”) and 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.
In December 2022, we entered into a Pump Development Agreement with Mainbridge and 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.
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.
Under the 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.
Interest expense consists of interest charges on the revenue interest financing payable, finance leases and long-term debt.
Interest expense consists of interest charges on finance leases and long-term debt.
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.
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.
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.
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.
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.
The increase was primarily due to $41.2 million higher net loss adjusted for non-cash items and unfavorable working capital changes of $10.7 million. Investing Activities Net cash used in investing activities was $8.4 million for the year ended December 31, 2024 compared to $11.3 million for the year ended December 31, 2023.
We also have employment agreements with certain employees which require the funding of a specific level of payments, if certain events, such as a change in control or termination without cause, occur. Critical Accounting Estimates We prepare our consolidated financial statements in conformity with U.S. GAAP.
We have agreements with certain employees and an Executive Severance and Change in Control Plan which covers certain other employees which require payments if certain events, such as a change in control or termination without cause, occur. Critical Accounting Estimates We prepare our consolidated financial statements in conformity with U.S. GAAP.
In consideration for these exclusive rights, we will pay Pharmosa potential development 84 Table of Contents milestone payments tied to PAH and PH-ILD indications of up to $30 million, potential sales milestones of up to $185 million and two tiers of low, double-digit royalties on net sales of L606.
In consideration for these exclusive rights, we will pay Pharmosa potential development milestone payments tied to clinical development and approvals in PAH and/or PH-ILD of up to $37.75 million, potential sales milestones of up to $185 million in North America and $150 million outside North American and two tiers of low, double-digit royalties on net sales of L606.
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.
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 PAH and PH-ILD. We operate through our wholly owned operating subsidiaries, Liquidia Technologies and Liquidia PAH, formerly known as RareGen.
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.
As of December 31, 2024, we had an accumulated deficit of $559.5 million. 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 of such product candidates and pursue commercialization of any approved product candidates.
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.
Research and Development Expenses Research and development expenses were $47.8 million for the year ended December 31, 2024 compared to $43.2 million for the year ended December 31, 2023.
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.
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 December 2031.
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.
Cash Flows The following table summarizes our sources and uses of cash and cash equivalents: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ December 31, ​ 2024 2023 Net cash provided by (used in): ​ ​ ​ ​ Operating activities ​ $ (93,422) ​ $ (41,564) Investing activities ​ (8,441) ​ (11,288) Financing activities ​ 194,663 ​ 43,248 Net increase (decrease) in cash and cash equivalents ​ $ 92,800 ​ $ (9,604) ​ Operating Activities Net cash used in operating activities increased $51.8 million to $93.4 million for the year ended December 31, 2024, from $41.6 million for the year ended December 31, 2023.
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.
An additional $10.0 million of the Investment Amount was funded on July 27, 2023, which was used to fund payment of the $10.0 million upfront license fee due under the Pharmosa License Agreement. On January 5, 2024 and September 12, 2024 an additional $25.0 million and $32.5 million of the Investment Amount was funded, respectively.
(“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.
In January 2023, we entered into the HCR Agreement, pursuant to which HCR has paid us an aggregate investment amount of $100.0 million (the “Investment Amount”). $32.5 million of the Investment Amount was funded on January 27, 2023, $22.2 million of which was used to satisfy in full and retire our previously outstanding debt with Silicon Valley Bank.
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.
Cost of Revenue Cost of revenue was $5.9 million for the year ended December 31, 2024, compared to $2.9 million for the year ended December 31, 2023. Cost of revenue related to the Promotion Agreement as noted above. The increase from the prior year was primarily due to our sales force expansion during the fourth quarter of 2023.
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.
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.
As of December 31, 2023, we had cash and cash equivalents of $83.7 million, stockholders’ equity of $47.3 million, and an accumulated deficit of $429.1 million.
As of December 31, 2024, we had cash and cash equivalents of $176.5 million, stockholders’ equity of $77.3 million, and an accumulated deficit of $559.5 million.
(“Pharmosa”) pursuant to which we were granted an exclusive license in North America to develop and commercialize L606, an inhaled, sustained-release formulation of treprostinil currently being evaluated in a clinical trial for the treatment of pulmonary arterial hypertension (PAH) and pulmonary hypertension associated with interstitial lung disease (PH-ILD), and a non-exclusive license for the manufacture, development and use (but not commercialization) of such licensed product in most countries outside North America.
In June 2023, we entered into a License Agreement with Pharmosa pursuant to which we were granted an exclusive license in North America to develop and commercialize L606, an inhaled, sustained-release liposomal formulation of treprostinil currently being evaluated in a clinical trial for the treatment of PAH and PH-ILD.
(“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.
We currently generate revenue pursuant to the Promotion Agreement between Liquidia PAH and Sandoz, dated as of August 1, 2018, as amended, sharing profit derived from the sale of Sandoz’s Treprostinil Injection in the United States. Liquidia PAH has the exclusive rights to conduct commercial activities to encourage the appropriate use of Treprostinil Injection.
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.
As a result, final approval of YUTREPIA for PAH and PH-ILD is delayed until after expiry of the three-year regulatory exclusivity for Tyvaso DPI on May 23, 2025. 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.
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.
Accordingly, we will require additional funding over the next twelve months to continue our operations and maintain compliance with debt covenants, and could be required to delay, reduce, or eliminate research and development programs, product portfolio expansion, or commercialization efforts, which could adversely affect our business prospects, or potentially force us to cease operations.
These inflows were offset by $1.7 million in payments under the RIFA and $0.1 million in principal payments on our finance leases.
These inflows were offset by $1.7 million in payments under the HCR Agreement.
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.
Financing activities Net cash provided by financing activities was $194.7 million during the year ended December 31, 2024 compared to $43.2 million provided by financing activities the year ended December 31, 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.
Mainbridge will perform 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 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.
Accordingly, the information contained herein may be different from the information you receive from other public companies in which you hold stock. 86 Table of Contents Off-Balance Sheet Arrangements We did not have during the periods presented, and we do not currently have, any off-balance sheet arrangements, as defined in the rules and regulations of the SEC. ​ Item 7A.
Off-Balance Sheet Arrangements We did not have during the periods presented, and we do not currently have, any off-balance sheet arrangements, as defined in the rules and regulations of the SEC. ​ Item 7A. Quantitative and Qualitative Disclosures About Market Risk Not applicable. ​ 95 Table of Contents
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.
During the year ended December 31, 2024, we received $138.6 million net proceeds from the sale of common stock primarily relating to the 2024 Offering and 2024 Private Placement, $57.5 million net proceeds from the HCR Agreement, and $3.0 million from the issuance of common stock under stock incentive plans.
(“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.
Additionally, our HCR Agreement contains fixed quarterly payments and minimum cash covenants that require us to maintain cash and cash equivalents in an amount at least equal to $15.0 million for the remainder of the payment term, which is expected to conclude in 2031.
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.
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. 88 Table of Contents Comparison of the Years Ended December 31, 2024 and 2023 The following table summarizes our results of operations: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ ​ ​ ​ ​ ​ December 31, ​ $ ​ % ​ 2024 2023 Change Change Revenue ​ $ 13,996 ​ $ 17,488 ​ $ (3,492) ​ (20) % Costs and expenses: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Cost of revenue ​ 5,879 ​ 2,888 ​ ​ 2,991 ​ 104 % Research and development ​ 47,842 ​ 43,242 ​ ​ 4,600 ​ 11 % General and administrative ​ 81,569 ​ 44,742 ​ ​ 36,827 ​ 82 % Total costs and expenses ​ 135,290 ​ 90,872 ​ ​ 44,418 ​ 49 % Loss from operations ​ (121,294) ​ (73,384) ​ ​ (47,910) ​ 65 % Other income (expense): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest income ​ 7,654 ​ 3,466 ​ ​ 4,188 ​ 121 % Interest expense ​ (12,486) ​ (6,273) ​ ​ (6,213) ​ 99 % Gain (loss) on extinguishment of debt ​ (4,268) ​ (2,311) ​ ​ (1,957) ​ 85 % Total other income (expense), net ​ ​ (9,100) ​ ​ (5,118) ​ ​ (3,982) ​ 78 % Net loss and comprehensive loss ​ $ (130,394) ​ $ (78,502) ​ $ (51,892) ​ 66 % ​ Revenue Revenue was $14.0 million for the year ended December 31, 2024, compared to $17.5 million for the year ended December 31, 2023.
Because of the numerous risks and uncertainties associated with research, development and commercialization of pharmaceuticals, we are unable to estimate the exact amount of our working capital requirements.
See Note 1 to the consolidated financial statements appearing elsewhere in this Annual Report on Form 10-K for information regarding our ability to continue as a going concern. Because of the numerous risks and uncertainties associated with research, development and commercialization of pharmaceuticals, we are unable to estimate the exact amount of our working capital requirements.
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.
Concurrently with the 2024 Offering referenced above, we entered into a common stock purchase agreement with funds managed by Caligan Partners LP (“Caligan”), our largest stockholder, for the sale by us in a private placement of an aggregate of 1,123,595 shares of our common stock at a purchase price of $8.90 per share for gross and net proceeds of approximately $10.0 million (the “Caligan 2024 Private Placement”).
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.
Additionally, there was a $6.2 million increase in interest expense attributable to the higher borrowings under the HCR Agreement compared to the prior year and a $4.2 million increase in interest income attributable to higher money market balances.
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.
The minimum rates of return for the three new tranches are 16%, 13% and 12%, respectively. 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.
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 will limit the number of patients that they place on subcutaneous Treprostinil Injection therapy in order to ensure that patients placed on subcutaneous administration of Treprostinil Injection will not have to discontinue such treatment due to the unavailability of CADD-MS infusion pumps.
Pharmosa will also receive a $10 million milestone payment for each additional indication approved after PAH and PH-ILD and each additional product approved under the license. 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.
Pharmosa will also receive a $10 million milestone payment for each additional indication approved by the FDA after PAH and PH-ILD and each additional product approved by the FDA under the license, a $2 million milestone payment for each additional indication approved by the EMA after PAH and PH-ILD, and a $0.5 million milestone payment for each additional indication approved by the PMDA after PAH and PH-ILD.
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.
Until we are able to obtain a pump to replace the CADD-MS 3 infusion pump, the number of patients that can receive subcutaneous administration of Treprostinil Injection will continue to be constrained. Revenue will continue to be impacted or at risk until alternative pumps are available.
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.
Purchase Obligations We enter into contracts in the normal course of business with contract third-party service providers to assist in the performance of research and development and manufacturing activities. Subject to required notice periods and obligations under binding purchase orders, we can elect to discontinue the work under these agreements at any time.
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.
General and Administrative Expenses General and administrative expenses were $81.6 million for the year ended December 31, 2024, compared to $44.7 million for the year ended December 31, 2023.
Pursuant to the terms of the Agreement, Lonza provides us with manufacturing and storage services for YUTREPIA inhalation powder. We will deliver bulk treprostinil powder, manufactured using our proprietary PRINT® technology, and Lonza will encapsulate and package the Product.
On July 14, 2023, we entered into an Amended and Restated Commercial Manufacturing Services and Supply Agreement with Lonza, which was amended on January 7, 2025 (collectively, the “CSA”). Pursuant to the terms of the CSA, we deliver bulk treprostinil powder, manufactured using our proprietary PRINT® technology, and Lonza encapsulates and packages it.
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.
Liquidia PAH has the exclusive rights to conduct commercial activities to encourage the appropriate use of Treprostinil Injection. To administer Treprostinil Injection through subcutaneous injection, patients currently must use the CADD-MS 3 infusion pump manufactured by ICU Medical. ICU Medical no longer manufactures or supports the CADD-MS 3 infusion pump.
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.
In September 2024, we sold 6,460,674 shares of our common stock in an underwritten registered public offering at an offering price of $8.90 per share (the “2024 Offering”) for gross proceeds of approximately $57.5 million, before deducting offering costs of approximately $3.8 million. A fund affiliated with Paul B.
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 $36.9 million or 82% was primarily due to (i) a $19.7 million increase in personnel expenses (including stock-based compensation) driven by higher headcount and expansion of our sales force in the fourth quarter of 2023, (ii) a $7.9 million increase in legal fees related to our ongoing 89 Table of Contents YUTREPIA-related litigation, and (iii) a $6.8 million increase in commercial expenses in preparation for the potential commercialization of YUTREPIA.
If the timing or amounts of any estimated future payments change, we will prospectively adjust the effective interest and the related amortization of the liability and related issuance costs. A significant increase or decrease in these estimates could materially impact the liability balance and related interest expense.
If the timing or amounts of any future payments change, we will prospectively adjust the effective interest and the related amortization of the liability. See Note 13 to the consolidated financial statements appearing elsewhere in this Annual Report on Form 10-K for additional information.
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.
Recent Event On March 17, 2025, we entered into the Sixth Amendment to the HCR Agreement pursuant to which HCR made an additional $100.0 million available for funding under the second tranche. An additional $25.0 million from the second tranche was funded on March 17, 2025.
The liability will be accreted under the effective interest method based upon the estimated amount of future payments to be made pursuant to the RIFA. The issuance costs were recorded as a deduction to the carrying amount of the liability and will be amortized under the effective interest method over the estimated period in which the liability will be repaid.
The liability will be accreted under the effective interest method based upon the amount of contractual future payments to be made pursuant to the HCR Agreement. Amendments are assessed under ASC 470 to determine the appropriate treatment as troubled debt restructurings, extinguishments or modifications.
Removed
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.
Added
On August 16, 2024, the FDA (i) granted tentative approval for our NDA for YUTREPIA for the treatment of PAH and PH-ILD and (ii) simultaneously determined that Tyvaso DPI, approved on May 23, 2022, qualifies for a three-year New Clinical Investigation exclusivity for the chronic use of dry powder formulations of 85 Table of Contents treprostinil for the approved indications.
Removed
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.
Added
Based on current operating plans and excluding any external financing, we will not have sufficient cash and cash equivalents to fund operating expenses and capital requirements and meet our minimum cash covenants beyond one year from the issuance of these consolidated financial statements, and therefore, we have concluded that there is substantial doubt about its ability to continue as a going concern.
Removed
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.
Added
An additional $50.0 million may be funded upon the first commercial sale of YUTREPIA following receipt of final FDA approval for the treatment of PAH and PH-ILD, so long as no injunction has been issued prohibiting Liquidia from commercializing YUTREPIA for either or both of PAH and PH-ILD, and an addition $25.0 million upon the mutual agreement of the parties after achieving aggregate net sales of YUTREPIA in excess of $100 million at any time on or prior to June 30, 2026.
Removed
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.
Added
As consideration for the additional $25.0 million funded at closing, Liquidia has agreed to a fixed payment schedule that terminates in 2032. Payments on the last two tranches, when funded, would also follow a fixed payment schedule.
Removed
The additional $25.0 million from the second tranche was funded on January 4, 2024. The remaining third tranche of $10.0 million and fourth tranche of $22.5 million can be funded in the future upon the mutual agreement of both parties. See Note 12 for further information.
Added
As further discussed in Note 13 “Long-term debt” to the accompanying financial statements, aggregate payments to HCR are capped at 175% of the total amounts advanced by under the HCR Agreement plus a potential true-up payment to be made by us if HCR’s internal rate of return is less than a minimum rate of return on the date the cap is reached.
Removed
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. Future revenue will continue to be impacted until new components or alternative pumps are available.

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