Liquidia (LQDA) Q3 2026 Earnings Call Transcript

Image source: The Motley Fool.

DATE

Nov. 10, 2026

CALL PARTICIPANTS

• Chief Business Officer - Jason Adair
• Chief Executive Officer - Dr. Roger Jeffs
• Chief Operating Officer and Chief Financial Officer - Michael Kaseta
• Chief Medical Officer - Dr. Rajeev Saggar
• Chief Commercial Officer - Scott Moomaw
• General Counsel - Rusty Schundler

TAKEAWAYS

• Net Product Sales -- $222.7 million in the third quarter, representing 31% growth compared to the second quarter due to higher YUTREPIA volume.
• Paid Patient Demand -- $212.2 million, reflecting the value of drug shipments to patients excluding voucher and patient access programs.
• Adjusted EBITDA -- $140.5 million, marking the fifth consecutive quarterly increase following the product launch.
• Litigation Settlement Charge -- $389.7 million, recorded in the third quarter as a onetime charge to resolve all pending legal disputes with United Therapeutics.
• Cash and Cash Equivalents -- $396.1 million as of Sept. 30, which management stated is sufficient to fund all planned objectives and settlement obligations.
• Settlement Cash Liability -- $380.7 million, which the company agreed to pay in multiple installments through April 2027.
• Gross Margin -- Approximately 94%, remaining stable relative to the second quarter.
• SG&A Efficiency -- 26% of revenue in the third quarter, down from 33% in the second quarter, highlighting increased operating leverage.
• R&D Expense Growth -- $25.3 million, a 47% increase compared to the previous quarter driven by ramped enrollment in the Re-Spire and AMPLIFY-PAH studies.
• PAH Prescription Mix -- Over 70% of September prescriptions included a PAH diagnosis, an increase from the 60% average recorded since launch.
• October Referral Rate -- Greater than 75% of the daily rate recorded in the third quarter, which management noted occurred despite market ambiguity following a court ruling.
• Patient Conversion Rate -- Greater than 87%, representing the percentage of monthly referrals successfully converted to patient starts.
• Total Prescriber Base -- Approximately 1,300 total health care providers, with more first-time prescribers added in October than in September.
• Branded Prostacyclin Market -- Approximately $4.9 billion in U.S. sales over the last four quarters, with PAH patients accounting for 80% of total usage.
• L606 Development Timeline -- 2029, the target year for a 505(b)(1) NDA submission following the completion of pivotal studies in PH-ILD and PAH.
• Prescriber Concentration -- 60% of YUTREPIA prescribers have written for two or more patients, while more than 30% have written for at least five patients.
• Channel Inventory Impact -- Approximately $10.5 million, representing the difference between net sales and paid demand as inventory value rose with increased demand.

Need a quote from a Motley Fool analyst? Email pr@fool.com

RISKS

• Jeffs stated, "This speculative information created a slight pause in referrals at select centers," referring to communication from a competitor regarding the potential removal of YUTREPIA from the market.

SUMMARY

Liquidia Corporation (NASDAQ:LQDA) reported a 31% sequential increase in net product sales and finalized a global settlement to resolve multiyear litigation with United Therapeutics. Management stated that the settlement agreement secures the long-term commercial availability of YUTREPIA and eliminates the legal overhang regarding the treatment of PH-ILD. The company reported that October patient shipments reached record levels, supported by a conversion rate above 87% and a widening prescriber base. Liquidia is advancing its clinical pipeline with planned pivotal studies for L606 in pulmonary hypertension associated with chronic obstructive pulmonary disease and systemic sclerosis in 2027. The company ended the quarter with $396.1 million in cash, which management indicated will fully fund all operational plans and settlement obligations through April 2027.

• CEO Jeffs stated, "In October, the first full month after the recent ruling, total monthly shipments to patients reached their highest level since launch."
• Management indicated that the settlement requires a payment of $380.7 million but ensures that existing patients are not required to switch therapies.
• The company plans to initiate the EASY-PAH registry study in 2027 to collect real-world data on YUTREPIA usage and longitudinal clinical outcomes.
• Chief Medical Officer Saggar stated that the L606 liposomal formulation is delivered via a breath-actuated nebulizer that is designed to limit potential upper respiratory irritability.
• Liquidia received Fast Track designation for YUTREPIA in systemic sclerosis associated with Raynaud’s phenomenon and expects to complete the RE-WARM dose-finding study in the first half of 2027.
• Management noted that the settlement agreement includes mutual releases without admission of liability by either party and does not require ongoing royalty payments.

INDUSTRY GLOSSARY

• PAH: Pulmonary arterial hypertension, a rare disease caused by hardening and narrowing of the pulmonary arteries.
• PH-ILD: Pulmonary hypertension associated with interstitial lung disease.
• YUTREPIA: Liquidia's inhaled dry powder formulation of treprostinil delivered via a palm-sized device.
• L606: An investigational, extended-release liposomal formulation of treprostinil administered twice daily.
• PRINT Technology: Liquidia's proprietary particle engineering platform used to create precise and uniform drug particles.
• SSc-RP: Systemic sclerosis-associated Raynaud's phenomenon.
• PH-COPD: Pulmonary hypertension associated with chronic obstructive pulmonary disease.
• PVR: Pulmonary vascular resistance, a measurement used to assess the severity of pulmonary hypertension.

Full Conference Call Transcript

Operator: Good morning and welcome to the Liquidia Corporation Third Quarter 2026 Financial Results and Corporation Update Conference Call. My name is Lisa and I will be your operator today. [Operator Instructions] Please note that today's call is being recorded. I will now turn the call over to Jason Adair, Liquidia's Chief Business Officer.

Jason Adair: Thank you and good morning, everyone. It's my pleasure to welcome you to our third quarter 2026 financial results and corporate update call. Joining me today are Dr. Roger Jeffs, Chief Executive Officer; Michael Kaseta, Chief Operating Officer and Chief Financial Officer; Dr. Rajeev Saggar, Chief Medical Officer; Scott Moomaw, Chief Commercial Officer; and Rusty Schundler, General Counsel. Before we begin, please note that today's discussion will include forward-looking statements, including statements regarding future results, our revenue outlook, product performance and ongoing clinical or commercial activities. These statements are subject to risks and uncertainties that may cause actual results to differ materially. For further information, please refer to our filings with the SEC, which are available on our website.

Please also note that our earnings release and our commentary include non-GAAP financial measures. Reconciliations of these non-GAAP financial measures to the most comparable GAAP measure can be found in our earnings press release. With that, I'll turn the call over to Roger.

Roger Jeffs: Thank you, Jason, and good morning, everyone. Today's call comes at an important moment for Liquidia and I want to be direct about what connects our extraordinary performance since launch to what lies ahead. Very simply, we see continued growth based on a differentiated product profile that provides unmatched advantages. As reported this morning, YUTREPIA has delivered 5 consecutive quarters of growth in prescriptions, revenue and adjusted EBITDA. That trajectory is built on a product profile that delivers on our promise to improve how treprostinil reaches patients. With last month's settlement; the litigation overhang is behind us, YUTREPIA's future is secure and we can focus entirely on the business and let me be clear, the business is strong.

Third quarter net product sales grew 31% to $222.7 million. PAH has been the core of that growth. From launch through the end of September, more than 60% of the prescriptions included a PAH diagnosis and in the month of September, it rose to over 70%. In October, the first full month after the recent ruling, total monthly shipments to patients reached their highest level since launch. Our settlement agreement does not require existing patients with PH-ILD to switch away from YUTREPIA and we see no indication that providers, payers or pharmacies have any desire to move PH-ILD patients benefiting from YUTREPIA to alternative therapies.

Despite the disruption from the litigation and the temporary market ambiguity that it created, new referrals have held up well. In October, which we believe will be the month of greatest uncertainty, the daily referral rate was more than 75% of the daily rate in Q3. It should be noted that during the period between the court's ruling and our settlement, our competitor intentionally exacerbated prescriber uncertainty by sending the Dear health care provider letter suggesting that the ruling may require removal of YUTREPIA from the U.S. market entirely until the updated PAH-only label is approved by the FDA.

This speculative information created a slight pause in referrals at select centers, but we believe referrals will recover in the near term now that we have provided corrected communication directly to prescribers following the settlement and thus October represents a floor and not a trend. And with no change in formulary status or coverage, conversion rates remain greater than 87%, which we expect to continue. Of note, our prescriber base has continued to broaden and deepen since our lastearnings callwith approximately 1,300 total prescribers. We were pleased to see more first-time prescribers in October than in September while repeat prescribers continue to increase.

Roughly 60% of our YUTREPIA prescribers have written for 2 or more patients and more than 30% have written for at least 5 patients. Among our Top 100 prescribers, average monthly referrals rose in October. Lastly, launch to date, 77% of prescribers are written for at least 1 PAH patient. Together, these prescribing trends give us confidence in YUTREPIA's continued growth and broad uptake. That confidence is grounded in the fact that YUTREPIA's product profile has not changed. Physicians choose YUTREPIA because it allows therapy to be individualized. They can titrate each patient's dose across a wide range, adjust the pace of titration based on each patient's experience.

And unlike Tyvaso and Tyvaso DPI, YUTREPIA's label supports tailoring dose frequency to 3, 4 or 5 times daily based on the patient's needs, all of which can be delivered with a low effort palm-sized inhaler. YUTREPIA's flexibility is why we are growing our share in the PAH market, which continues to account for the majority of prostacyclin use. We estimate that approximately 80% of the roughly $4.9 billion in U.S. branded prostacyclin sales over the last 4 quarters was used to treat patients who have PAH. In fact the PAH market is growing faster than many appreciate.

That's partly because more patients are being identified, but more importantly, because the standard of care is shifting toward earlier goal-oriented combination therapy and the prostacyclin pathway is central to that shift. The WORLDSymposium algorithm recommends that an inhaled prostacyclin for patients who remain intermediate low risk and prostacyclin containing triple therapy for patients who are higher risk. New mechanisms are being positioned as add-ons to background therapy not replacements for it.

We see this multimodal approach as additive to the prostacyclin market as patients are living longer on therapy, all of which bodes well for YUTREPIA's continued growth as the field moves toward inhaled formulations that offer greater tolerability, dosing flexibility and ease of use; which is the profile YUTREPIA was designed to deliver. To support continued growth, we also intend to keep building the evidence behind YUTREPIA's product profile. Our Phase IV studies in PAH will continue focused on dose flexibility, including 3 times daily dosing.

We're actively screening patients into our study to define a transition algorithm from oral selexipag and in 2027, we plan to launch EASY-PAH, a registry study that will collect real-world data on the usage of YUTREPIA in PAH. Beyond PAH, we are studying YUTREPIA where patients have no approved option. For example, in systemic sclerosis associated with Raynaud's phenomenon, we are currently enrolling patients in RE-WARM, our dose-finding study, which we expect to complete in the first half of 2027. If successful, this would enable a pivotal study during the following winter seasons. We are also rapidly progressing studies of L606, our extended release liposomal treprostinil dosed twice daily with the next-generation nebulizer.

Re-Spire, our global pivotal study in PH-ILD, continues as planned with enrollment expected to complete in 2028. In parallel, our pivotal study in PAH called AMPLIFY-PAH will initiate in 2027 and help strengthen L606's competitive position in the market. Both studies are expected to advance on a similar time line with data expected to support a 505(b)(1) NDA submission in 2029. Lastly, we continue to actively prep for new studies in 2027 in indications where we believe our inhaled products will be the first or best choice for patients seeking treatment for pulmonary hypertension like PH-COPD, for which we plan to initiate a pivotal study in the second half of next year.

With that, I'll turn the call over to Mike to share more detail on our financials and operating plan.

Michael Kaseta: Thank you, Roger. As stated earlier, the third quarter continued the growth trajectory delivered since launch. Net product sales of YUTREPIA were $222.7 million, up $52 million or 31% from last quarter. Of the total $222.7 million in total YUTREPIA sales, $212.2 million were paid patient demand sales demonstrating strong product pull-through. On the expense side, cost of product sales grew in proportion to sales and gross margin was similar to last quarter at approximately 94%. R&D expenses increased to $25.3 million, 47% higher than last quarter as enrollment ramped in Re-Spire and new YUTREPIA studies started, but in line with guidance for the year. SG&A expenses were nearly flat compared to second quarter.

As a percentage of revenue, SG&A fell from 33% in the second quarter to 26% in the third quarter helping to highlight the operating leverage in our business. Cash and cash equivalents continued to build through the third quarter ending with $396.1 million prior to the settlement payments, up $111.9 million from second quarter. This is nearly double the increase we saw between first and second quarter and further highlights the efficiency of our business. In total for the quarter, we reported a GAAP net loss of $236.3 million, which reflects a onetime settlement charge of $389.7 million, of which $380.7 million is payable in cash through April of 2027.

Looking at non-GAAP measures, we saw adjusted EBITDA grow again to $140.5 million, our fifth consecutive quarterly increase. The strength of our balance sheet and our business will allow us to fully fund our objectives and payment obligations. We have no need to raise extra capital and we are not changing our operating plan. With the final settlement payment in April and no royalty or ongoing payments due to United, the full benefit of YUTREPIA's growth in PAH will accrue to Liquidia and its shareholders. With that, I'll turn it back to Roger.

Roger Jeffs: Thanks, Mike. We recognize that for some investors, Liquidia is now a show-me story. We welcome that. We have what we believe is the best-in-class product in PAH, physicians who value its profile and the resources to keep growing the sales line and the value of our pipeline. We look forward to sharing fourth quarter results in early January. Operator, please open the line for questions.

Operator: [Operator Instructions] First question of today is going to be coming from the line of Ryan Deschner of Raymond James.

Ryan Deschner: Congrats on all the progress. At this point in your launch, can you give us an idea of how you're thinking about the prevalence of patients in your addressable market that could be considered to have disease characteristics associated with both PAH and PH-ILD? And I have a follow-up question.

Roger Jeffs: Ryan, appreciate the question. Maybe this gives us an opportunity for Rajeev, if you don't mind, if you could just sort of opine on kind of how prescribers, given that you are one, look to diagnose and treat patients with PAH.

Rajeev Saggar: Yes. Thanks for the question, Ryan. So I think a few things we want to emphasize on this call. One thing we're making clear is that YUTREPIA, as stated, continues to be approved for the treatment of Group 1 pulmonary arterial hypertension in both primary and secondary or otherwise what's known as associated forms of this condition. When the provider wishes to prescribe YUTREPIA, the form that they receive will allow for a standard titration to a goal of at least 159 micrograms 4 times a day or even higher or they can customize it to a schedule that adapts to a patient's clinical needs and our tolerability. I think that's first and foremost.

The second thing is that how do you define pulmonary hypertension and this will answer part of your question. As we all know, the diagnosis of pulmonary arterial hypertension is defined by right heart catheterization that confirms the presence of precapillary pulmonary hypertension, which is now a hemodynamic threshold that's been modified to include now even a lower mean pulmonary artery pressure of greater than 20 millimeters of mercury, pulmonary wedge pressure of less than or equal to 15 millimeters of mercury and pulmonary vascular resistance greater than 2 Wood units. And the reason why this is important is because YUTREPIA is geared and approved to directly treat the precapillary pulmonary hypertension.

But we know that patients with Group 1 PAH also have coexisting comorbidities. And the most recent guidelines in fact suggest that patients should be evaluated for these concomitant risk factors that are typically associated with these Group 1 PAH phenotypes such as connective tissue disease, specific drug exposures or even prior smoking or even underlying cardiac morbidities. And so while YUTREPIA is geared to specifically treat the precapillary pulmonary hypertension in its attempt to improve exercise capacity, the management of these comorbidities I think are also integral. And so ultimately when the provider sees the patient, they are the ultimate adjudicator of the type of pulmonary hypertension.

And if it's deemed that the patient's phenotype, as I described above, is consistent with WHO Group 1 PAH, then they have the ability to prescribe YUTREPIA as stated above and they will get all the best-in-class suite of services, the best-in-class prostacyclin offered to their patient and provider. So I think that should answer that our view and what we're going to be promoting towards. But the ultimate adjudicator of the pulmonary vascular phenotype will rely on the provider itself based on what I set forth on this explanation. Roger?

Roger Jeffs: Yes. I think in terms of prevalence, I think maybe one more information on opportunity value here. So there's roughly 50,000 patients treated today. Only half of those patients are on a prostacyclin and it could be oral inhaled or parenteral. So as we said earlier, that's about a $4 billion market in PAH alone just for prostacyclins. We currently have a significant portion of that, but still fairly small in terms of penetration value. So what we're looking to do is go after all of that.

So the directed transition studies with Uptravi for example where we're looking to show that we can take those patients off, remove the off-target side effects and benefit them through a titratable inhaled therapy. And then also we're going after every inhaled patient. I think clearly we've got the best-in-class differentiated product. I think the market adoption has proven that to be true. And so we're going to continue to go after every single patient that's on an inhaled therapy that's not YUTREPIA. And then finally, even with the parenteral, we're seeing that with sotatercept addition that as those patients deescalate their parenteral therapy, they do need a substitution and YUTREPIA is there to substitute for the prostacyclin pathway.

So 25,000 patients available, you've seen our past numbers, so we have only a small portion of that. So lots of upside remains in front of us and lots of growth opportunity. And then I know you said you had one more question, Ryan.

Ryan Deschner: Yes. Your competitor mentioned in a press release that they offered Liquidia a settlement prior to the 327 ruling that would have kept YUTREPIA available for both PAH and PH-ILD patients and that Liquidia opted to instead let the court proceedings to play out. I'm curious if you can give us any color on what specifically was in the settlement offer from United and what drove your decision to reject it.

Roger Jeffs: Yes. Thanks for the question. And that information came from a letter they actually sent to prescribers. So we'll talk about -- I won't talk too much about the settlement. They made one settlement offer to us. So while it is technically true that they made a settlement offer, it's grossly misleading to say that it was reasonable. So the offer itself was they wanted 100% of PH-ILD revenue through 2042 so through the expiry of the patent. That would actually be a loss leader for us because it costs us to make the drug, distribute it to patients and then they take 100% of the profit. And they also wanted 50% of the non-infringing PAH revenue.

So obviously none of that makes sense. It was nowhere near any sort of a reasonable proxy for what's considered normal, but that was the only offer they made. So while what they said was technically true, as I said, it's grossly misleading and has no credibility. So I think when you hear things from them, you have to sort of do a double check first before you would like to believe it. But that's the truth. That's the transparency of what happened in that particular conversation and that's why we did not agree to that at all.

Operator: And our next question is coming from the line of Manoj Eradath of Jefferies.

Manoj Eradath: So just one from our end. What magnitude of pulmonary vascular resistance improvement in SPRINT would be clinically meaningful and further support a best-in-class, first-in-choice claim for YUTREPIA? And can EASY-PAH establish that a less frequent dosing or higher achieved doses improve the persistence or outcome? And when can we see a kind of earliest data point from that trial?

Roger Jeffs: Manoj, I'm going to confess I'm not sure I heard all of the questions at all.

Rajeev Saggar: I heard it, Roger. So Manoj, I think it's a 3-part question. The first part is what is a reasonable reduction in pulmonary vascular resistance that can showcase YUTREPIA's potency and I think you're specifically referencing we're running a study called SPRINT. This is in Group 1 PAH. This study will be looking at -- it's an open-label study looking at patients with Group 1 pulmonary arterial hypertension that received YUTREPIA on top of background therapy. There'll be 2 arms to the study. One will be 3 times a day dosing. The second arm will be 4 times a day dosing.

It's our belief that and consistent with our label that these likely will show non-inferiority to each other and that's specifically because we're aiming to dose patients up to 212 micrograms 4 times a day. In the history of inhaled treprostinil since 2006 when the first hemodynamic and only hemodynamic studies were done in a placebo-controlled fashion, that was done at the current recommended dose for Tyvaso, which is around 9 breaths or 54 micrograms, which we believe is a minimally effective therapeutic dose and we believe is actually why that drug has been limited in its utility. I think one of the successes we've had with YUTREPIA is our high dose strategy.

And if you actually think about compressing a high dose version of YUTREPIA so for example you can take 212 micrograms 3 times a day and that will be still roughly equivalent to slightly a reduction dose of 4 times a day if you look at the totality of dose received. So the study itself is looking to achieve at least a 20% to 25% change in PVR. That's consistent with I think what KOLs would expect to be a robust response. We anticipate that we can do actually better with that. But obviously the study is going to bore out and lead to that. I think your second question was?

Manoj Eradath: EASY-PAH, the less frequent dosing arm.

Rajeev Saggar: Yes. So I mean again I think the SPRINT study will address whether consistent with our label, you can customize the dosing to 3 times a day plus PRN, you could do it 4 times a day plus an additional dose or you could do it 5 times a day. And I think that's what makes the flexibility of YUTREPIA so unique and what I think is very attractive to providers in the United States currently. Again I think that the SPRINT study will once again showcase that as you dose higher with YUTREPIA with the 3 times a day dosing strategy, you can achieve the same robust hemodynamic changes as what would be anticipated with 4 times a day.

So that study is going to be initiating at the end of this year and we look forward to showcasing those results as we come forward.

Roger Jeffs: Maybe just to bottom line it. I think the value in these 3 times a day studies is, as Rajeev pointed out, that we can compress a 4 times a day total daily dose into a 3 times a day regimen given our high tolerability. So I think we're going to be unique in the ability to do that and still drive good efficacy.

Operator: Our next question is coming from the line of Julian Harrison of U.S. Bancorp BTIG.

Julian Harrison: I have 3, I'll just ask them all at once. First, can you clarify heading into October what your PAH versus PH-ILD patient mix was for YUTREPIA? Then second, I'm curious at what point do you expect to be in a position to maybe provide a forward guide on PAH revenue? Is there anything you need to see stabilize before providing that? And then finally on L606, I noticed you're still very steadfast on development in PH-ILD. Can you talk to us about the opportunity you see there both from a therapeutic index and legal standpoint?

Roger Jeffs: Julian, thanks for the question. So maybe, Mike, if you'll answer the first 2; and Rusty, if you want to answer the third question on freedom to operate for L606. So Mike?

Michael Kaseta: Great. Good to talk to you, Julian. So first as Roger said in his prepared remarks that as you looked in August and September that the amount of patients that were on PAH were -- of our scripts that patients had PAH was over 70%. As we look forward through the rest of the year, we told you that our daily referral rate was over 75% in October as it was in Q3. So we are very confident in where we are. As we look forward to future revenue projections, the existing patient base is stable. Even United Therapeutics acknowledged on the call that existing patients are not required to switch therapy.

We also shipped to more patients in October than any month since launch. And we're very encouraged by the fact that referrals in October had come in at over 75% of the referrals for Q3. So we feel that this is the new baseline from which we will grow from. With that being said, we're very much a data-driven company. We'd like to see a little more data before putting any guidance out related to 2027. And I think our expectation is that we would do that in early January.

So a busy couple of months here as we get to the end of the year; but we're very confident in our business, very confident in our ability to grow not only grow on our top line, but also grow profitability quarter-on-quarter as we continue through our launch period. But very excited for what YUTREPIA can bring and, like I said, we'll provide more information about what we expect in 2027 probably in early January.

Roger Jeffs: Rusty, if you can talk about L606.

Russell Schundler: Sure. Thanks for the question, Julian. As to the legal aspects of moving forward with L606 in PH-ILD, I think the important thing to remember when you're looking at the 327 patent is it's very much drafted with an eye towards how the Tyvaso nebulizer works. So Tyvaso, the way it's dosed is that the patients get a consistent 6 micrograms of treprostinil per breath and that's the way the claim is written as well.

The nebulizer we're using for L606 works in a fundamentally different manner where the patient is just nebulizing the entire amount that goes into the device and so it's not measured on per breath basis, which again fundamentally affects how the claims in the 327 patent do or don't apply to our product. So we don't see the 327 patent as being a roadblock to L606 moving forward in PH-ILD at all.

Operator: Our next question is coming from the line of Serge Belanger of Needham.

Serge Belanger: I guess the first one, Roger, you mentioned there was the highest total shipments in October. Just curious if that was a continuance of the existing trend or there was some change to that trend after the events in late September? And then secondly, you also mentioned you expected some volatility in the near term here. Just curious how long you expect that volatility to last until things stabilize?

Roger Jeffs: Yes. So I'll give some comments and then, Mike, I'll let you talk about shipments. So in terms of the volatility, like we said, there was a bit of a pause at some of the centers given the ambiguity and the intentional sort of noise that was put into the space between the opinion and the settlement. I think we've spent a lot of the time since the settlement speaking to every prescriber, also visiting them. I think I myself have talked to hundreds.

So I think all we've tried to do is sort of just lay the groundwork for what the new reality is in terms of the fact that we're indicated for PAH only, but that we'll be there to support those patients fully both in terms of supply and support services. So I think there's been a brief period of unsteadiness and I think that will reverse. And as we said, we did just over 75% in October of what we scripted and got referrals in September. So there has been a bit of a pause at some centers, but it's my assumption that those centers will again become active and that we'll catch back up in the near future.

Mike, I don't know if you want to add to that and then if you can talk about shipments.

Michael Kaseta: Yes. Related to shipment, Serge, what has happened each quarter is you've seen consistent growth each quarter and we've talked about this throughout the launch that the stacking of patients where existing patients get refilled, we add new patients. And that's what we've seen in October versus September. We've continued that trend and that trajectory and we'd expect that trajectory to continue as we move forward. As Roger said, there was a little bit of volatility here in October. But like I said, we're very encouraged with what we've seen.

And as I said earlier in the call, we expect to continue to grow and continue to stack patients and ultimately get to the goals that we want to achieve here and to grow that profitability quarter-on-quarter.

Roger Jeffs: Yes. And I think, Serge, at the end of the day, nothing has changed with the product profile. So you can't litigate that away, you can't fearmonger that away. I think the broad adoption and affinity for the product remains. So I'm confident that we'll catch right back up to where we were.

Operator: Our next question will be coming from the line of Gaurav Maini of LifeSci Capital.

Phillip Eckert: This is Phillip jumping in for Gaurav. So I guess I was curious on the PH-COPD pivotal plan for the second half of next year with L606. We know that the inhaled treprostinil was discontinued in PH-COPD after the PERFECT study. So wanted to ask what gives you confidence that L606 can succeed there? And then how will patient selection, dosing or endpoints differ in that trial?

Roger Jeffs: Yes. Thanks for the question, Phillip. Maybe Rajeev, if you could opine on why the PERFECT study was perhaps imperfect.

Rajeev Saggar: Yes, Phillip, thanks for the question. So the PERFECT study was run -- well, first of all, the PERFECT study for those that don't know is the use of Tyvaso in the setting of PH-COPD and the trial was actually stopped by the DSMB for safety reasons. It was complicated for sure by the COVID time period. But I think one thing is for sure is that it remains clear that the use of free treprostinil in a short-acting formulation is likely not to be successful. It's for those very reasons why we actually decided to use the L606 product, which is our liposomal formulation, which is a sustained release formulation which is delivered twice a day.

And fundamentally, although both are treprostinil-based products, fundamentally the formulation is quite different. The liposome itself limits we believe the potential upper respiratory irritability that is typically seen especially by Tyvaso and which was seen significantly during the PERFECT study as a major side effect. So first of all, I think moving to a different formulation is critical to ensure success of the study from a safety standpoint. The second thing is we spent the past 1.5 years really studying this market and understanding what is the best trial design for the success of the study. We've worked globally with some of the world's experts both in COPD and in PH-COPD to assess that trial design.

And I think when we do showcase the final design, I think you would feel very comfortable that this has been well thought out both in the patient selection, the actual trial design itself and the endpoints. The endpoints that are typically used are very consistent with those in WHO Group 1 and WHO Group 3. So those types of endpoints are not really the surprise. It's actually the uniqueness of our trial design that we feel comfortable moving forward. And as we showed in our prepared remarks and in the slides, we anticipate to initiate the study in the second half of next year and we look forward to providing you more input at that time.

Operator: Our next question will be coming from the line of Benjamin Burnett of Wells Fargo.

Benjamin Burnett: I wanted to ask about the RE-WARM study, the Raynaud's phenomenon study. I guess what would define success here in Q1 of next year?

Roger Jeffs: Yes. Rajeev, again for you.

Rajeev Saggar: Yes. So for those of you who may not know what RE-WARM really is, it's really we're here to study the use of YUTREPIA in patients with systemic sclerosis who have symptomatic Raynaud's phenomenon more on the moderate to severe form of their attacks and as we know, there is no approved therapy for this rare orphan condition. We've received Fast Track designation. And the purpose of the Phase II study that we're running is to enroll these very patients and they will be enrolled into 2 different treatment arms, both will be active. One is a fixed dose regimen -- fixed low-dose regimen and the second one is a titratable dose regimen.

The primary outcome of the study is to look at safety and pharmacodynamics of this population. So for example once we understand safety and dosing, the other exploratory endpoints would be considerations for looking at frequency of symptomatic Raynaud's attacks or proportion of days without a symptomatic attack and there's a few other key endpoints that we'll be looking at. As Roger noted in the prepared remarks, the RE-WARM study will be conducted during winter and so the results will be learned actually in a very short order as the study ends after the first quarter.

And we will take those findings as we are already in the process of designing the Phase III study and incorporate from a statistical methodology and make sure that primary endpoints are well understood before we finalize that protocol. But that's what gives us confidence that we can move forward especially given the fact that prostacyclin still remains although "off-label" the backbone of the treatment of these patients when they have severe disease as a stabilizer for this condition.

Operator: The next question will be coming from the line of Jason Gerberry of Bank of America.

Jason Gerberry: A couple for me. Just some of the language around the settlement talks about like physician attestation around like scripts. And I'm just wondering if you can articulate how cumbersome, if at all, that will be for the doctor and if that could lead to any kind of issues with kind of fulfillment of the script. And then your comments on payors not looking to drive any switches of the legacy patients who are getting YUTREPIA for PH-ILD. I'm just wondering will most need to go through a reauth process at the start of the calendar year?

I know that the reauth stuff was flagged and so I just wanted to get your sense of your expectation how the reauthorization process will work with grandfathered patients kind of migrating through the start of the year and how we should be kind of thinking about modeling any headwinds to patient volumes going through a reauth process.

Roger Jeffs: Yes. So Scott, if you'll talk about the attestation that prescribers need to do and then maybe, Mike, if you'll handle the reauth question with payors.

Scott Moomaw: Yes. So with regard to the attestation, it's actually the form that it takes is basically a check box on what we call the referral form, the prescription intake form that physicians and their staff fill out. And it's fairly common to have that kind of attest patient on there saying that this treatment is medically necessary. Now we kind of worded it according to the settlement and what was required. But I think in terms of the overall impact, I think physicians and HCPs are pretty used to signing this kind of thing.

Roger Jeffs: Mike?

Michael Kaseta: Yes. And Jason, as it relates to payors, physician payors and pharmacies are able to continue to support active patients that have already prescribed YUTREPIA regardless of disease. There's been no change to formulary position on our payor contracts as a result of the settlement. All of our contracts remain in place. We've received no indications. We've been in contact with all of the payors that patients are being proactively moved off of YUTREPIA. We're not expecting any changes to reauthorizations. Could there be a limited impact? Theoretically, yes. But we feel very confident in our ability to serve these patients. We believe we provide the best product profile for these patients.

And for a doctor, we would not expect that physicians would look to move these patients off of the product, which we believe would be the driving force of any changes. So we're very confident in our ability to continue to serve these patients and continue to grow YUTREPIA quarter-on-quarter.

Rajeev Saggar: Jason, if I could just give a final impression. As someone who has prescribed pulmonary hypertension drugs for over 15 years, the enrollment forms regardless of the company always require a provider certification signature. That is standard. This is no different. There seems to be a misinformation that the attestation is anything different than any enrollment form for any drug that requires this level of involvement regardless of PAH or other diseases. And in regards to re-enrollment, again I think there's some misinformation. Re-enrollment occurs every year for every drug and again usually there's a standard request of information that is requested to the provider. For example is the patient still on the drug? What is the dose?

Do you agree that the patient should continue the drug? So standardized questions like that. So again, these are things that the provider ultimately has the fundamental adjudication to decide whether to continue the patient on whatever drug they choose, including YUTREPIA.

Jason Gerberry: Great. If I could just squeeze in a follow-up. The roughly $11 million gap in the 2 sales numbers provided, I know in the past you guys have talked about sort of, what, like maybe 10% free drug. Can you explain maybe that delta a little bit? Just wanted to maybe understand those 2 sales numbers and channel inventory or timing effects there.

Roger Jeffs: Yes, Mike.

Michael Kaseta: Yes. Jason, thanks for the follow-up. It's very simply the amount, the $212 million that I referenced in the prepared remarks, related to shipments to patients of paid drug for the quarter. So it has nothing to do with our voucher program, has nothing to do with our [ PAH ] program or any type of free drug. The difference between the $222 million and the $212 million is really just the stocking that you talked about. While our inventory levels have stayed very stable; as you grow, the value of a week of inventory does increase as demand goes up. So that split between the $212 million and the $222 million is just that phenomenon.

And I think showing what our true demand sales were for the quarter was important and it will clearly be important as we move forward as well, which is why we disclosed it that way.

Operator: And our next question is coming from the line of Matthew Caufield of H.C. Wainwright & Company.

Matthew Caufield: Could you further break down the YUTREPIA growth between the new patient starts, possible switches from Tyvaso DPI or nebulized and growth from existing patients? And then just separately on L606, is there any risk the second-gen nebulizer is any less physically convenient for patients compared to current DPI delivery?

Roger Jeffs: Yes. So I'll split that up. So Mike, if you don't mind giving the demographics around growth. And then L606, I think Rajeev, you can talk about the next-gen nebulizer that we're using.

Michael Kaseta: Yes. So thanks, Matthew, for the question. As it relates to our growth, I think we've maintained in Q3 a very similar allocation across disease as we've seen in prior quarters even though what we also talked about was that 70% of our prescriptions in September had evidence of PAH. But if you look at existing patients versus new patients, I just want to make sure everyone is aware, we're still showing as part of our patient support services, first-time patients are able to have a voucher and that utilization is still over 50%.

So if you look at revenue in Q3 as an example, the vast, vast majority of that revenue will relate to ongoing patients, the patient stacking that I talked about earlier. As new patients, over 50% of them in the first month are getting a free script so they're not getting a paid script until their second month of treatment anyway. So when you look at revenue on a quarterly basis especially as we move further away from the launch and we add more active patients, existing patients are going to take on an increasing percentage of overall revenue as we get through the launch and we'd expect that to continue as we go forward.

Roger Jeffs: Rajeev, you want to talk about the nebulizer?

Rajeev Saggar: Yes, sure. So in the Re-Spire study for PH-ILD, the L606 is delivered using a next-gen nebulizer. This nebulizer is a breath actuated nebulizer in which the drug is inserted into the chamber and then you obviously have to trigger the breath. Now we are a titratable drug. But in the end, we are really excited because this is not your ordinary nebulizer. I mean compared to Tyvaso nebulizer, which is a static device, it's about the size of a YETI tumbler mug that holds 20 ounces. It's quite large and it takes probably up to 4 minutes to deliver 4 times a day.

The L606 program using our next-generation device should be on average delivering the drug in about 1 minute. And compared to all the other various nebulizers out there, we believe this is actually one of the most sophisticated and quickest ways to deliver a medication. As a practicing pulmonologist for 20 years, I've never seen a nebulizer being able to deliver a drug regardless of the indication as quickly. I think in regards to the comparison of DPI, I don't think this is the goal. The first and foremost goal is to deliver the most tolerable and effective drug to patients.

Whether you deliver that once a day or twice a day is not where providers or patients who have a disease that has a mortality at 3 years greater than 50%, I think the goal is they want the most effective and tolerable drug to be delivered. And we believe twice-a-day formulation with L606 will have the best chance to succeed and put the patient -- to allow patients to have the best drug possible for their conditions, whether it's in PAH or PH-ILD.

Roger Jeffs: Great. And I think the other thing to add about the device because it's a breath-actuated nebulizer, patients can take a break if they need to and it only delivers the drug when they're breathing. So very sophisticated in how it behaves. And as Rajeev said, I think we're delivering a liposomal formulation that will reduce cough to levels never seen before, which will then result in doses never achieved before, which will result in outcomes never seen before. So excited about all aspects of what L606 can do not only in PH-ILD, but all indications in which we're pursuing it. So operator, any more questions?

Operator: No. This does conclude today's Q&A session. I'd like to turn the call back over to Roger for closing remarks.

Roger Jeffs: Well, we appreciate everybody's enthusiasm this morning and the abundance of questions. We look forward to speaking again with many of you next week at Jefferies where we'll be presenting a fireside chat on Tuesday afternoon. Thank you, everyone.

Operator: This does conclude today's program and thank you for joining. You may now disconnect.

Should you buy stock in Liquidia right now?

Before you buy stock in Liquidia, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Liquidia wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $344,878!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,097,846!*

Now, it’s worth noting Stock Advisor’s total average return is 852% — a market-crushing outperformance compared to 208% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors.

See the 10 stocks »

*Stock Advisor returns as of November 10, 2026.

This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. Parts of this article were created using Large Language Models (LLMs) based on The Motley Fool's insights and investing approach. It has been reviewed by our AI quality control systems. Since LLMs cannot (currently) own stocks, it has no positions in any of the stocks mentioned. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability.

The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.