Prepared remarks
Good morning, and welcome to the Liquidia Corporation Second Quarter 2026 Financial Results and Corporate Update Conference Call. My name is Daniel, and I will be your operator today. Please note that today's call is being recorded. I'll now turn the call over to Jason Adair, Liquidia's Chief Business Officer.
Thank you, and good morning, everyone. It's my pleasure to welcome you to our second 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, 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 measures can be found in our earnings press release. With that, I'll turn the call over to Roger.
Thanks, Jason, and good morning, everyone. We're delighted to share our business results and clinical progress with you today. One year ago, we launched YUTREPIA and believed the medical community would find value in our differentiated approach to inhaled treprostinil. One year later, we have the answer. Physicians are prescribing it; patients are starting to switch to it and referrals and starts continue to accrue at a robust and sustained pace. As you saw in our numbers this morning, as of July 31, we have received approximately 5,900 unique patient prescriptions, started more than 5,000 patients on therapy and had more than 1,100 physicians write for the product. Thirty percent of those physicians have prescribed to five or more patients. What's especially notable is where that growth is coming from. The overall inhaled prostacyclin market grew again this quarter from $573 million in Q1 to $607 million in Q2, or approximately 6%. And YUTREPIA's growth alone was larger than the growth of the entire category, even as we saw flat to declining use of oral, infused and competing inhaled formulations. That tells us something important. Not only are the numbers of new starts for inhaled treprostinil growing, YUTREPIA has taken an ever-growing share of the total market for inhaled treprostinil. On a net revenue basis, YUTREPIA is approaching 30% of the entire inhaled market, a tremendous result just over a year into launch, especially as the market is growing in concert with YUTREPIA's growth. This implies the majority of new patient starts are coming to YUTREPIA. What matters more than the numbers is the impact we're seeing in patient lives. I spent my career in this field and have watched the delivery of prostacyclin move from complex IV and subcutaneous infusion to cumbersome nebulized therapy to intolerable oral formulations and now to inhaled dry powder delivery. Across that history, one simplistic but guiding principle has remained constant: better tolerability enables higher dosing, higher dosing can drive greater efficacy and greater efficacy can support durable clinical benefit. The linchpin in this therapeutic chain is solving first and foremost for tolerability, as the ability to drive dose and improve symptoms while minimizing both off- and on-target adverse events is the holy grail. That's the lesson I've learned from my 30-plus years in the field, and to me, explains why YUTREPIA has had such broad adoption and early commercial success to date as it offers all of these attributes. This critical link between tolerability, dose and efficacy was beautifully demonstrated in our 24-week ASCENT study in PH-ILD patients. Specifically, progressively higher median doses of YUTREPIA at weeks 8, 16 and 24 was accompanied by progressive improvements in 6-minute walk distance of 21.5, 31.5 and 41 meters, respectively, without worsening cough scores. The only caveat is that YUTREPIA requires a four-times-daily dosing regimen, which is why we are going from strength to strength and aggressively building on these same principles with twice-daily L606, which we believe has the potential to raise the tolerability bar even further. As we've previously shown in our 48-week open-label study, L606 patients titrated across a broad range while incurring a low burden of adverse events, most notably the lowest incidence of cough we are aware of in any study of an inhaled treprostinil formulation, and we were able to observe enduring clinical benefit as peak 6-minute walk improvements were preserved at trough, or said another way, throughout the dosing interval. These results are especially impressive when you consider that patients enrolled reflected the prevalent population in the U.S. and were on combination background standard of care. We are not aware of any other product in clinical development that has matched the dose range, tolerability and durability that we have already seen with L606. We believe YUTREPIA and L606 have significantly raised the bar that every current and future product in this space will be measured against. And it is with this confidence that we've stood up a thoughtful R&D plan to best elucidate the current and future uses of inhaled treprostinil across a wide array of indications. In fact, between YUTREPIA and L606, we now have 10 clinical studies either underway or planned to begin over the next 12 months. And as Mike will explain, we can confidently make these investments because of the cash flow that this business now generates. With that, I'll turn it over to Mike.
Thank you, Roger, and good morning, everyone. I'm pleased to say the second quarter financial performance continued to reflect the growth trajectory for YUTREPIA we've described to date. Quarterly sales of YUTREPIA have more than tripled over the last three quarters, and we've gone from reporting a net loss in Q2 2025 to four consecutive quarters of increasing profitability. Looking specifically at the second quarter of 2026, net product sales of YUTREPIA were $170.4 million, up over $40 million, or 31% quarter-over-quarter. Net income increased to approximately $74.7 million and non-GAAP adjusted EBITDA increased to approximately $96.3 million. Turning to cash: we ended the quarter with approximately $284.2 million in cash and cash equivalents, up $61.4 million from the first quarter and nearly $93.5 million since the start of the year, a clear sign how we are seeing the operating leverage inherent in our business flow through to the balance sheet. I'd also like to note a few other financial metrics. As we had previously forecasted to you, R&D and SG&A expenses both increased this quarter to support continued investment in our pipeline and the ongoing commercialization of YUTREPIA, which includes the expanded sales team that hit the field in June and additional patient support services. Going forward, I'd note these two lines will behave differently. SG&A will increase as we scale commercially with certain components moving in proportion to revenue. We also expect R&D to increase in the coming quarters as enrollment ramps up in Re-Spire and we initiate multiple studies to inform the current and future use of YUTREPIA. More specifically, we expect R&D expense in the second half of 2026 to be double the expense in the first half of the year and to increase again in 2027 as we build the best inhaled treprostinil products for future and current patients. In closing, we expect to continue to grow revenue, consistent with quarterly growth we've observed to date, increase our investment in our pipeline and even with that investment, continue to grow profitability at the same time. We have a commercial product that generates significant cash flow and a clear set of priorities for where we will invest it. With that, Roger, back to you.
Thanks, Mike, for that summary. These results give us confidence that we're well on our way to more than $1 billion in net revenue in 2027. And just as importantly, confidence that we're building the right foundation for the next decade of this franchise. We look forward to updating you on our progress in the quarters ahead. With that, operator, please open the line for questions.
Questions and answers
And our first question comes from Amy Li with Jefferies.
Congrats on all the continued momentum. I just wanted to start with two non-launch-related questions. The first one, on your 75-patient RE-WARM Raynaud's study: what efficacy signal would you need to see to move this directly into a registrational trial? And how should we think about the design in that context? Was the low-dose arm primarily driven by tolerability considerations in this population? Or is there a reason to believe that the efficacy threshold in Raynaud's may be below the dose needed than PAH and PH-ILD? And then finally, on L606, you suggested that the competitive advantage isn't just the BID dosing, but also the combination of exposure and tolerability. So what evidence have you seen that higher achievable exposure and 24-hour coverage could translate to a clinically meaningful advantage compared to other long-acting inhaled treprostinil approaches? And what should we look for in the Phase III to validate that thesis?
Thank you very much for the question. For the RE-WARM study on efficacy and dose, I'll ask Rajeev to answer that, and then I'll answer the question around L606 and more how we're thinking about that from a dose comparison versus anything else. So Rajeev, if you could talk about the RE-WARM study, please?
Sure. Thanks, Roger, and thanks, Amy, for the question. So maybe just to step back, the RE-WARM study is going to be evaluating patients with systemic sclerosis associated with Raynaud's phenomenon. Just for many that don't know, systemic sclerosis, of course, is a very rare autoimmune disease in which Raynaud's phenomenon effectively manifests in around 90% of those patients. And consistent with other conditions that affect arteriopathy and systemic sclerosis such as PAH and PH-ILD, Raynaud's is also a vasculopathy of the small digits, usually of the bilateral hands in nature. What's really interesting about this condition is that there's no FDA-approved therapies. However, there is decades of experience with prostacyclin and prostacyclin analogs that have been studied in this condition, including treprostinil. Many of those are actually used off-label to treat the moderate and severe complications of Raynaud's that manifest. So these are life-saving therapies. One of the challenges with studies that have used prostacyclins is the tolerability of those varied medications, including parenteral and oral prostacyclins, which in those studies have been limited by dose tolerability issues. So the purpose of RE-WARM, first and foremost, is to evaluate the typical doses that we use in YUTREPIA in both PAH and in PH-ILD and to assess the tolerability profile. At the same time, we compare a lower dose versus maximizing the dose titration of YUTREPIA in the study and see what the clinical response to those doses is; that will inform us of how to appropriately lead into the Phase III study, depending on the results that we see. But we have a strong clinical suspicion that we anticipate a very similar dosing profile will be used eventually in the management of symptoms associated with Raynaud's phenomenon.
Thank you, Rajeev, on that. So Amy, maybe what I'll do is kind of go back to the script a little bit when we make comparisons to TPIP and that it's — again, it's tolerability drives dose which drives durability and the linchpin being tolerability. And the only way to kind of make comparisons is to sort of match on dose equivalents. And typically, that's been done to date through labeling with YUTREPIA, for example, through breath equivalent to Tyvaso and Tyvaso DPI. So maybe just to clarify because I think there might be some confusion in the field around TPIP. If you look at TPIP, if you took the 640-microgram dose, really only 64% of that is treprostinil mass because the 16‑carbon palmitoyl lipophilic chain contributes about 35% of the mass. And then there's about an 85% emitted dose from the capsule. So you have to subtract that as well. So when you look at the 640, and we know that one breath of Tyvaso is 6 micrograms, so 15 breaths would be 90 micrograms. The 640 essentially, if you do 640 times 0.64 times 0.85 you get to approximately 90 micrograms or 15 breath equivalents. So that's what they're delivering with the 640 and then the 1,280 obviously will be twice that or 30 breath equivalents. Now when you look at our open-label study, 71% of patients had 15 breath equivalents or more and 21% of patients had 30 breath equivalents or more. So how does that compare to TPIP? Well, they only had 21% above 640, or 15 breath equivalents, and only 8% reached 1,280, or 30 breath equivalents. So significantly lower dose attainment on a percentage basis between the two trials. Now I'm making cross-study comparisons, and it's difficult and perhaps inappropriate in particular to talk about efficacy comparisons because efficacy is going to be driven by the sample that you're studying and what the selection bias is. Their study was ex-U.S. studies, perhaps not on background therapy and with a lower baseline walk, whereas ours was a prevalent population in the U.S. who had transitioned essentially from Tyvaso or Tyvaso DPI. So those comparisons get complicated. But I think if you believe the paradigm that tolerability drives dose, then what you can see with L606 is that we've already shown a favorable profile vis-à-vis TPIP and the rest will sort itself out because as you achieve dose, you will get effect and as you achieve effect, you will get durability. So we feel very confident that L606 is extremely well positioned in our Phase III Re-Spire trial to be successful and actually be incrementally advantaged in development. So that's kind of how we look at it today. And certainly, I don't want to make any performative statements around how we'll share market or not until we get the Phase III results. But I think, again, we feel very confident about what we're building and very happy that the Phase III Re-Spire study is already enrolling patients and on target to meet its timeline.
Our next question comes from Julian Harrison with BTIG.
Congrats on the progress. I have three, and I'll just ask them all at once. First, considering your recently expanded sales force, I'm wondering how you're thinking about the balance between deepening relationships with existing prescribers of YUTREPIA versus expanding your prescriber base going forward. Second, with a little more than a year into YUTREPIA's launch, can you give us an update on where payer coverage stands? Wondering if you're satisfied with where access is today and if there are any remaining gaps or hurdles that when resolved could maybe even accelerate growth further? Third, can you maybe give a refresher on the range of outcomes you're prepared for in the 327 trial? And do you have any updated expectations in the timing of decisions there?
Great. Good to hear from you, Julian. So Scott, if you wouldn't mind giving your view on the sales force expansion and where we currently are with payer coverage and then Russell, if you'll update on the legal.
Julian, on the sales force expansion, I think the good news is we have a lot of opportunity both on the existing customer front as well as the expanding front as you phrased it. So we will be able to get more visits, more frequency on the current customers, and we will be able to get deeper in the community, which is sort of our stated intent of doing the expansion. When you look at PAH centers, we still feel like we have an amazing amount of opportunity there to get in front of the oral prostacyclins and the inhaled prostacyclins to be the first PAH prostacyclin of choice. In the PH-ILD centers, there's both opportunity to get in front of the other inhaled prostacyclins and also patient identification. We still feel like those academic PH-ILD centers can do a better job of diagnosing the patients. And then finally is the community, which was, as I mentioned, one of the main reasons we did the expansion, and this enables us to get further out into the community deeper where we know many of these 60,000 patients are; they just need to be identified and usually referred, but if they will diagnose them and treat them in that venue, then that's great as well. So I think the answer is it's a combination: we have opportunities on both fronts. From the payer perspective, I think we feel good where we are. I think we've reached sort of a stasis. We have, I would say, very good availability across the board. I would say we are generally at parity across the board. And therefore, it just comes down to product choice. And as you can see from our numbers and the revenue growth, we feel like folks are taking advantage of that product choice and choosing YUTREPIA.
Our next question comes from Ben Burnett with Wells Fargo.
This is TianQi calling in for Ben. Congratulations on the quarter. I have a question regarding the new patient adds. Based on our back-of-the-envelope math, new patient adds during this period are still showing about mid-single-digit acceleration versus the last period. So thinking about the remainder of the year, how should that growth trend for the rest of the year? And where do you see it landing over the long term?
Yes. I appreciate the question. Maybe first, Russell, if you could answer Julian's question around the 327 update. And then, Mike, if you'll talk about patient numbers going forward.
Sure, happy to. And thanks for the question. As for the two questions you asked me. First, on the range of outcomes, no change there. It's the same things we've been talking about for over a year now. Obviously, in the upside scenario where we win on all claims, we continue forward as is, unimpeded. If the ruling goes against us, it's the full range of outcomes we've been talking about in the past. It could be a royalty, it could be some form of injunctive or other relief. So again, no change on that front. We don't have visibility into the judge's workload or where he is in his process. Looking at past data as to how long it typically has taken Judge Andrews to reach decisions following a bench trial, I'd say our expectation is we could see a decision any day now. But again, it's hard for us to provide much more color than that because we don't have visibility into this process.
Yes, and I would add that nothing has changed in our confidence based on the probability of success and the arguments that we made in court. So, Mike, if you want to talk about how we look at patient adds going forward and the implications that may have down the road?
Yes. Thanks, Roger, and thanks for the question. What we've seen since launch is really a linear trajectory of referrals and new patient starts since the beginning of the launch last June. So we're very confident in what we're doing, as Scott spoke about earlier: increasing the size of our sales force and looking to increase our patient support services. We feel very confident that we can stay on the same trajectory that we're on right now. Roger has said in the prepared statements that we believe we'll be more than $1 billion in sales in 2027. We say that with confidence and believe that we will stay on the same trajectory and see significant increases as we move forward.
Our next question comes from Ryan Deschner with Raymond James.
Congrats on the impressive results this quarter. Two for me. Where are you seeing the biggest areas of script growth in terms of specific patient subpopulations in both PAH and PH-ILD at this point? And then also, in one of your PAH posters this year, you cite the diverse responsibilities of the pharmacists in supporting PAH patients, including assistance with transitioning patients across different prostacyclins. How have those findings changed your commercial strategy with respect to pharmacist interactions?
Great. So Scott, I think both of those are directed in your field.
So in terms of the growth, I think there's a short- and long-term aspect to this. The short term is we still have loads of opportunity in the centers where these patients are coming in today and tomorrow. The flywheel of YUTREPIA is turning only more strongly as time goes along and more prescribers get a chance to try it. We have many examples of when one prescriber who's tried it and really found it to be satisfying has talked to another prescriber and said, 'Look, it's not the same. You really need to try this.' As that flywheel turns more in the short term, those physicians who are using prostacyclins and treating PAH, whether that's PAH or PH-ILD, there's a lot of opportunity there, and of course those patients are coming in right now. Longer term is the patients out in the community and that tide will raise as the education around that takes place and as we get deeper out. It is rising right now. A lot of the PH-ILD academic centers are being overwhelmed by the number of patients that are coming in from the community because there's more awareness around this. So it's starting, it's happening right now, but it's going to continue to happen. On the pharmacist question, we have a very expansive care model. We work with the specialty pharmacies who are high touch with the patients and in touch with the patients all the time. One of the things we found early on is they were almost stuck in the old paradigm of tolerability and dosing. As those pharmacists have experienced the new paradigm where dosing and tolerability are better—leading to the efficacy that Roger mentioned—I think the lights have gone on there a little bit as well. They've become believers as well.
Ryan, I can add that the care team providing care to patients with Group 1 PH and PH-ILD is multifactorial: physician, nurse practitioner, pharmacist and PH coordinators. One of the key things we're doing on the ground is heavy education about the benefits of YUTREPIA, the ease of prescribability and titratability of the drug in both conditions. The pharmacists are critical in many of the larger programs. They help coordinate care, manage the side effect profile and support how to titrate those patients. So it's a key target for us, and the results have spoken to that, as you see in our commercial progress.
I think we're taking a fulsome approach to the centers—not just physicians, but pharmacists and nurse practitioners who are critical to therapeutic success in this category. If you look at the numbers, inhaled category is now about a $600 million run rate. The total prostacyclin pathway is about $1.2 billion on a quarterly basis. So you're getting into a multi-billion-dollar market and roughly half of that is the inhaled segment, which is growing. The inhaled segment is starting to infringe on the oral and parenteral categories. If you look at oral categories between Uptravi and Orenitram, it's about $500 million, and Remodulin is about $100 million, and those are shrinking or flat. The only growth you're seeing is in the inhaled category, and the principal driver of that growth is YUTREPIA's launch. So we're broadly taking share not only from competitive inhaled brands but also from oral and parenteral as people figure out that tolerability is key and the linchpin to success for these patients. This is where the field is moving—very attractive opportunity in PAH and PH-ILD, which is still effectively white space. Lots of upside, and in the current indications that are approved, there's opportunity to grow beyond what's here today. So it's a very attractive market, especially with a strong product like YUTREPIA.
Our next question comes from Serge Belanger with Needham.
I guess just one for probably Rajeev. What is the current thinking for the development and regulatory path to potentially expand YUTREPIA usage to progressive pulmonary fibrosis and IPF?
Thanks for the question. First, remember that the safety profile of YUTREPIA has been studied in patients with pulmonary hypertension associated with a broad range of underlying interstitial lung disease, inclusive of IPF, autoimmune disease and likely progressive pulmonary fibrosis given the definition of that condition. So I think there's a lot of confidence in the safety profile of YUTREPIA in these patients. We are advancing a study in the first half of 2027 evaluating safety, efficacy and dose titratability of YUTREPIA. This is critical because every study that's been done to date with inhaled treprostinil continues to highlight that dose absolutely matters. If you extrapolate what we saw in the INCREASE study as well as in the TETON study, there is at least a minimally acceptable dose and anything above that still needs to be studied. This is where we believe we can shine: evaluating how high a dose we should use to treat those patients will be critical. We also acknowledge that the antifibrotic world with oral therapies has advanced, and we want to see how YUTREPIA will respond on top of some of these therapies so we can adequately power future studies and modify inclusion/exclusion criteria. We're taking a sophisticated approach and have a lot of support through KOLs in the U.S. and globally to help guide us to the best trial design.
Our next question comes from Jason Gerberry with Bank of America.
Congrats on the quarter. I got a few. First, is it fair to say that most of the growth is coming from category expansion and limited more on the switch from inhaled competitor agents? Second, as we think about the expanded pool of patients, do you have any anecdotes or commentary on the extent to which patients with comorbid IPF are seeking treatment with inhaled options and that might be expanding the pie? And lastly, a question around adherence: you have 5,000 patients treated roughly since the launch. If we think about 10% free drug and maybe 10% drop off, it gets you into that sort of patient number that could support the sales number for the quarter. Are those the right ways to think about patient adherence for some of those early patients who started drug at the early point of launch?
Maybe I'll pick on the adherence, and then Scott and Mike can talk about growth. I will say, though, I don't think IPF is yet expanding the market. I think what we're seeing is on-label expansion in PH-ILD. There is certainly future interest in seeing what the value of YUTREPIA could be in IPF, but nothing definitive at this time. In terms of drug adherence, we aren't talking about it much in granular detail yet. We've said repeatedly that the tolerability of our therapy is best-in-class, and because of that, we expect adherence to be better than competitive inhaled agents. We would expect discontinuation rates to be lower than competitors, but we need more time to be granular about that. Adverse events typically manifest at first exposure; if somebody is going to be intolerant, it's usually within the first one to three months. These are life-threatening diseases; patients are severely ill and with ILD have comorbid disease. Patients do die or clip off because of other comorbidities, so you can't make a simple back-of-the-envelope equivalence from early launch numbers. Nothing is concerning in terms of our discontinuation rate, and again, because of our PRINT-enabled formulation we're seeing fewer discontinuations due to adverse events than competitive agents. That's all good news. We can grow revenue by stacking on patients quarter-over-quarter, and that's what you're seeing in the linear trajectory.
Jason, on the switch question: we absolutely are still seeing switches from other inhaled therapies for the reasons we've been outlining since before launch, and we are seeing switches from oral prostacyclins as well, generally due to tolerability and inability to titrate to effect. There's also decreased promotion in that sector from other players, which has an effect. On market expansion: if you walk through Roger's math, you have to say we're expanding the market from a revenue standpoint. When I'm in the market talking to folks, the dynamic is that some switches occur when patients are moved, but more often it's prescribers who used to use another inhaled or oral prostacyclin first and who have come around to the idea that YUTREPIA is a better first therapy. So they're putting us ahead in their algorithm, and that's how we gain share. Both switching and market expansion are happening, and I'm seeing it every day in the market.
Jason, one last comment: the hemodynamic definition of pulmonary hypertension changed under two years ago. That education is becoming more universal across centers and the community. Studies like PHINDER show that the prevalence of pulmonary hypertension in ILD when proactively assessed is higher than previously appreciated. Those proactive right heart catheterizations suggested diagnosis of pulmonary hypertension was on the order of over 70%, with pre-capillary pulmonary hypertension using the new definition around 55%. That highlights the market growth potential here. Because of the safety profile of YUTREPIA and the ability to titrate to higher doses, uptake is being well received in the marketplace and we continue to focus on this growth.
Our next question comes from Gaurav Maini with LifeSci Capital.
Congrats on another great quarter. As we think about YUTREPIA growth moving forward, can you give a refresher on the patient setting plan as we think about targets? Do you see the community setting as still relatively underpenetrated, and is this going to be a key area of growth? Put another way, could we potentially see acceleration in patient adds as community penetration increases, especially with the recent sales force expansion?
Scott, could you speak to that?
There is absolutely a lot of room for growth in the community. We know those patients are out there. Rajeev referenced prevalence estimates; clearly, among ILD patients a substantial proportion have PH-ILD. In all of those patients there is opportunity to better identify, diagnose and refer or treat. We are doing that with the sales force expansion. In terms of patient numbers, I don't think we're ready to say that the pace will immediately accelerate because of the expansion, but clearly there is a lot of room in those roughly 60,000 patients that are out there in the community that just haven't been identified yet.
I'm showing no further questions at this time. I would now like to turn it back to Dr. Roger Jeffs for closing remarks.
Great. Thank you, everyone, for joining the call. We're very excited about the results and clinical update that we could provide today and look forward to updating you again in the near future. Bye-bye.
This concludes today's conference call. Thank you for participating. You may now disconnect.