Liquidia Corp(LQDA) - 2024 Q2 - Quarterly Report

Financial Performance - Revenue for Q2 2024 was $3.659 million, a decrease from $4.786 million in Q2 2023[16] - Net loss for Q2 2024 was $27.942 million, compared to $23.517 million in Q2 2023[16] - Net loss for the six months ended June 30, 2024 was $68.9 million[20] - Accumulated deficit as of June 30, 2024 was $497.968 million, compared to $429.098 million as of December 31, 2023[17] - Accumulated deficit as of June 30, 2024 was $498.0 million[30] - Total stockholders' equity as of June 30, 2024 was $62.722 million, down from $47.293 million as of December 31, 2023[17] Expenses and Costs - Research and development expenses for Q2 2024 were $9.420 million, down from $17.695 million in Q2 2023[16] - General and administrative expenses for Q2 2024 were $19.943 million, up from $9.245 million in Q2 2023[16] - Total costs and expenses for Q2 2024 were $30.856 million, compared to $27.611 million in Q2 2023[16] - Stock-based compensation for the six months ended June 30, 2024 was $8.9 million[20] - Total stock-based compensation expense for the six months ended June 30, 2024 was $8,896, compared to $5,051 for the same period in 2023[81] Cash and Liquidity - Cash and cash equivalents at the end of June 30, 2024 were $133.1 million[20] - Net cash used in operating activities for the six months ended June 30, 2024 was $47.5 million[20] - Proceeds from sale of common stock, net of issuance costs, were $74.9 million for the six months ended June 30, 2024[20] - The company must maintain minimum cash covenants of $7.5 million in 2024 and $15.0 million thereafter[31] - Substantial doubt exists about the company's ability to continue as a going concern beyond one year[33] Revenue and Accounts Receivable - Accounts receivable from one customer accounted for 95% and 99% of total accounts receivable as of June 30, 2024 and December 31, 2023, respectively[42] - Approximately 97% of revenue during the six months ended June 30, 2024 was generated from the Promotion Agreement with Sandoz[90] - Revenue is recognized in accordance with ASC 606, which involves a five-step process to identify contracts, performance obligations, transaction price, and revenue recognition timing[48] Research and Development - L606 is being evaluated in an open-label study for PAH and PH-ILD treatment[26] - Research and development costs are expensed as incurred and include facility-related costs, third-party direct costs, and employee-related expenses[52] - The company estimates accrued research and development expenses based on services performed and associated costs, with adjustments made as necessary[53] Stock and Compensation - Weighted average common shares outstanding for Q2 2024 were 76,435,831, up from 64,788,482 in Q2 2023[16] - As of June 30, 2024, 639,155 shares of common stock were reserved for issuance under the Employee Stock Purchase Plan (ESPP)[80] - The number of shares available for issuance under the ESPP increased by 150,000 shares on January 1, 2024[80] - 67,982 shares were issued under the ESPP during the six months ended June 30, 2024, down from 81,281 shares in the same period of 2023[80] - As of June 30, 2024, 3,193,741 restricted stock units (RSUs) were unvested, with a weighted average grant-date fair value of $10.48 per RSU[89] - The aggregate intrinsic value of stock options outstanding as of June 30, 2024 was $67,980[87] - The weighted average fair value for options granted during the six months ended June 30, 2024 was $9.84 per share, up from $5.09 per share in 2023[84] Fair Value and Assets - Fair value measurements are classified into three levels based on the availability of observable inputs, with Level 1 being the most reliable[57] - Money market funds (cash equivalents) valued at $127,294 as of June 30, 2024, classified within Level 1 of the fair value hierarchy[58] - Money market funds (cash equivalents) valued at $79,912 as of December 31, 2023, classified within Level 1 of the fair value hierarchy[60] - Inventory valued at $7,212 as of June 30, 2024, including raw materials and work in process[62] - Total property, plant, and equipment valued at $21,981 as of June 30, 2024, with net value of $6,387[64] - Contract acquisition costs and intangible asset net carrying amounts of $7,621 and $3,300 respectively as of June 30, 2024[65] - Litigation finance payable and indemnification asset classified as long-term assets and liabilities as of June 30, 2024[70] Agreements and Contracts - The company entered into a Revenue Interest Financing Agreement (RIFA) with HCR for up to $100 million, with $42.5 million funded as of June 30, 2024[96][97] - Quarterly fixed payments to HCR are $4.2 million as of June 30, 2024, potentially increasing to $5.8 million in Q3 2025 if the Third Investment Amount is not funded[98] - The company recorded a loss on extinguishment of $11.5 million during Q1 2024 due to the Fourth Amendment to the RIFA[104] - The effective annual interest rate for the RIFA is estimated at 12.3% as of June 30, 2024[105] - Expected annual payments on the RIFA payable as of June 30, 2024 total $114.8 million, with $37.5 million due in 2025 and $23.2 million annually from 2026 to 2028[108] - The company entered into a License Agreement with Pharmosa for L606, paying an upfront fee of $10 million and potential milestone payments up to $215 million[109][110] - The company is obligated to pay UNC royalties equal to a low single-digit percentage of net sales for products using licensed technology[113] - The company has agreements with Chasm Technologies for manufacturing consulting services, with future contingent milestones and royalties totaling up to $1.5 million[114] - Company entered into a 5-year Amended and Restated Commercial Manufacturing Services and Supply Agreement with Lonza Tampa LLC for YUTREPIA encapsulation and packaging services[117] - Company must provide Lonza with quarterly forecasts for 24-month production requirements, with the first 12 months as binding orders[118] - Company has a multi-year supply agreement with LGM Pharma, LLC with an annual minimum purchase commitment of $2.7 million[119] - Non-cancelable commitments for product manufacturing and supply costs as of June 30, 2024, total approximately $3.5 million[119] Litigation and Legal Matters - FDA approval for YUTREPIA is delayed until at least 2027 due to patent litigation involving the '793 Patent[124] - Company filed a motion to set aside the injunction on YUTREPIA FDA approval, which was granted in March 2024[127] - United Therapeutics filed a second patent infringement lawsuit in September 2023, asserting infringement of the '793 and '327 Patents[128] - Judge Andrews denied United Therapeutics' motion for a preliminary injunction against YUTREPIA for PH-ILD treatment in May 2024[130] - United Therapeutics filed a complaint against the FDA in February 2024, challenging the FDA's acceptance of the amended NDA for YUTREPIA[131] - Company filed a motion to dismiss all claims in a trade secret litigation filed by United Therapeutics in July 2024[133] - United Therapeutics was granted partial summary judgment on antitrust and unfair competition claims, while Sandoz was granted partial summary judgment on the breach of contract claim[137] - A trial to determine damages from United Therapeutics to Sandoz for the breach of contract claim was held from late April to early May 2024[137] - Proceeds from the litigation will be divided evenly between Sandoz and Liquidia PAH under the Promotion Agreement[138] - Net proceeds received by Liquidia PAH from the RareGen Litigation will be divided between Henderson and PBM[138] Product Development and Approvals - YUTREPIA received tentative FDA approval for PAH treatment in November 2021[25] - L606 is being evaluated in an open-label study for PAH and PH-ILD treatment[26] - The company capitalized $7.2 million of prelaunch inventory as of June 30, 2024, compared to none as of December 31, 2023[43] - Capitalized costs of $7.2 million associated with the manufacture of YUTREPIA during the six months ended June 30, 2024[63] Internal Controls and Procedures - The Company's disclosure controls and procedures were effective at the reasonable assurance level as of June 30, 2024[195] - No changes in internal control over financial reporting during the quarter ended June 30, 2024 materially affected the company's internal control[196] Leases and Commitments - The weighted average remaining lease term for operating leases as of June 30, 2024 was 2.3 years[94] - The weighted average discount rate for finance leases as of June 30, 2024 was 6.5%[94] - Future minimum lease payments as of June 30, 2024 total $3,297 million, with $719 million due in 2024, $1,420 million in 2025, and $1,158 million in 2026[95] Other Financial Information - Interest income for Q2 2024 was $1.855 million, up from $734,000 in Q2 2023[16] - Interest expense for Q2 2024 was $2.600 million, compared to $1.426 million in Q2 2023[16] - Total stock options, restricted stock units, and warrants amounted to 12,959,258 as of June 30, 2024[59] - Total accrued expenses and other current liabilities amounted to $13,100 as of June 30, 2024[72] - The company completed its annual goodwill impairment test as of July 1, 2024 and concluded that no impairments had occurred[46] - The company recognized a liability related to amounts received in January 2023, July 2023, and January 2024 pursuant to the RIFA[47] - Stock-based compensation expense is estimated based on the grant date fair value of awards and amortized over the vesting period, with adjustments for forfeiture rates[55] - Basic and diluted net loss per share are calculated by dividing net loss by weighted average shares outstanding, excluding anti-dilutive common stock equivalents[56] - Sandoz and Liquidia PAH received a payment of $4.25 million evenly split between the parties[136] - Smiths Medical granted Liquidia PAH and Sandoz a non-exclusive, royalty-free license in the United States for patents and copyrights associated with the CADD-MS 3 Cartridge[136] - Smiths Medical agreed to provide information and assistance for FDA clearance of the RG 3ml Medication Cartridge until January 1, 2025[136]