Executive Summary / Key Takeaways

• Transformational Commercial Launch: Liquidia Corporation has initiated a highly successful commercial launch of YUTREPIA, its PRINT-enabled inhaled treprostinil, for PAH and PH-ILD, achieving over 900 unique prescriptions and 550 patient starts in just 11 weeks, a pace unprecedented in the treprostinil space.
• Differentiated Product Profile & Technology: YUTREPIA's proprietary PRINT technology enables superior deep lung delivery, leading to favorable tolerability (only 18.5% discontinuation at week 16 in ASCENT study) and the ability to titrate to significantly higher doses (up to 3x nebulized Tyvaso target), translating into robust efficacy with a median 6-minute walk distance improvement of 31.5 meters at week 16.
• Robust Pipeline & Future Growth: The company is advancing L606, a next-generation, twice-daily liposomal treprostinil, which promises further improved tolerability and convenience, with a global Phase III study for PH-ILD planned for initiation by year-end 2025.
• Strengthened Financial Position: Liquidia closed Q2 2025 with $173.4 million in cash and cash equivalents, bolstered by recent financings, providing sufficient liquidity for at least the next twelve months and supporting its path to potential profitability without further capital raises, assuming YUTREPIA's continued commercial success.
• Intense Competitive & Legal Landscape: Despite strong early commercial traction, Liquidia faces significant ongoing patent and trade secret litigation from United Therapeutics (UTHR), which seeks to enjoin YUTREPIA sales, alongside competition from established players and emerging therapies.

Setting the Stage for a Pulmonary Revolution

Liquidia Corporation, founded in 2004, has steadily evolved into a biopharmaceutical company focused on addressing critical unmet needs in rare cardiopulmonary diseases, particularly pulmonary arterial hypertension (PAH) and pulmonary hypertension associated with interstitial lung disease (PH-ILD). The company's foundational strength lies in its proprietary PRINT (Particle Replication In Non-wetting Templates) technology, a particle engineering platform designed to precisely produce uniform drug particles. This technology is central to Liquidia's strategy, aiming to deliver differentiated therapeutic profiles that improve patient outcomes and convenience.

The broader biopharmaceutical industry, particularly in rare diseases, is characterized by high R&D costs, stringent regulatory pathways, and intense competition. While larger players like United Therapeutics, Johnson & Johnson (JNJ), and Gilead Sciences (GILD) dominate the PAH market with established therapies, Liquidia positions itself as an innovator, leveraging its unique technology to challenge existing standards of care. The market for inhaled treprostinil alone represents a multi-billion dollar opportunity, with additional significant potential in oral prostacyclins, creating a fertile ground for disruptive innovation.

PRINT Technology: The Core Differentiator

Liquidia's PRINT technology is not merely an incremental improvement; it is a fundamental differentiator that underpins the core investment thesis. This particle engineering platform enables the precise production of uniform drug particles, which is critical for optimal drug delivery in inhaled therapies. For YUTREPIA, this translates into tangible and quantifiable benefits for patients.

The technology enhances deep lung delivery while utilizing a convenient, low-effort dry-powder inhaler (DPI). This design allows for significantly higher dose levels than currently marketed inhaled treprostinil therapies. In the open-label ASCENT study in PH-ILD patients, YUTREPIA demonstrated remarkable tolerability, with only 18.5% of patients discontinuing the study at week 16, and no discontinuations due to serious or drug-related adverse events, including cough. This contrasts sharply with a prospective study of Tyvaso DPI, where 69% of treatment-naive PH-ILD patients discontinued therapy in a median of just 40 days, primarily due to cough and clinical worsening.

Furthermore, patients in the ASCENT study were able to titrate to a median dose of 132.5 micrograms (approximately 15 breath equivalents to Tyvaso) at week 8, escalating to 159 micrograms (approximately 18 breath equivalents) at week 16, with the highest exposure reaching 380 micrograms (comparable to approximately 36 breaths of Tyvaso nebulizer four times daily). These doses are up to three times higher than the labeled target dose of nebulized Tyvaso. The ability to achieve higher, more effective doses, coupled with favorable tolerability, correlated with robust efficacy, showing a median improvement in 6-minute walk distance of 21.5 meters at week 8, further increasing to 31.5 meters at week 16. This data suggests that PRINT technology directly addresses a critical unmet need by allowing patients to reach therapeutic doses more effectively and with fewer side effects. For investors, this technological edge translates into a strong competitive moat, potential for superior market share capture, and enhanced pricing power due to a clearly differentiated and patient-preferred product.

YUTREPIA's Commercial Launch: An Unprecedented Sprint

The culmination of Liquidia's development efforts arrived with the FDA approval of YUTREPIA on May 23, 2025, for both PAH and PH-ILD. The commercial launch on June 2, 2025, marked a pivotal moment, with first commercial shipments made within five business days of approval. This rapid market entry has been met with an "unprecedented pace of adoption" in the treprostinil space.

In just 11 weeks since launch, specialty pharmacies reported over 900 unique patient prescriptions, leading to more than 550 patient starts on YUTREPIA. This early momentum, achieved despite customary new-to-market blocks and non-formulary positioning, underscores the product's value proposition. The company observed a 75% script-to-start conversion rate during the first six weeks of launch, indicating strong physician and patient acceptance. Demand has been broad, originating from both cardiologists and pulmonologists in specialty centers and community practices, treating a diverse patient population including prostacyclin-naive individuals, those transitioning from Tyvaso and Tyvaso DPI, and even patients moving from oral prostacyclins. The ability to address the "large number of patients with intolerant cough who remain on Tyvaso DPI but are parked at low dose" represents a significant incremental upside.

Liquidia's commercial readiness includes a 50-person sales force with extensive rare disease and PH experience, in the field for approximately 18 months prior to launch, ensuring significant "share of voice" from day one. The company has also implemented a comprehensive suite of patient support services and has signed contracts with major commercial payers, anticipating "parity access" soon. To support anticipated growth, Liquidia leased a second laboratory and office space in June 2025, targeted for occupancy in October 2026, with the potential to triple YUTREPIA's production capacity.

Expanding the Horizon: The Promise of L606

Beyond YUTREPIA, Liquidia is actively developing L606, an investigational liposomal formulation of treprostinil licensed from Pharmosa Biopharm Inc. This next-generation therapy is designed for twice-daily administration using a novel, short-duration nebulizer, representing a strategic evolution in inhaled prostacyclin delivery.

L606's technological advantage lies in its sustained-release profile, which reduces the CMAX (peak concentration) by seven-fold while retaining the overall AUC (area under the curve) over 24 hours. This is expected to further diminish off-target effects in the upper airway, such as cough and throat irritation, which are common with inhaled therapies. The improved tolerability, coupled with the sustained exposure, is anticipated to allow for higher, more beneficial dosing in a convenient twice-daily format, a significant improvement over current four-times-daily regimens. In ongoing open-label studies, L606 has been well-tolerated, with some patients reaching a maximum dose of 378 micrograms twice daily, approximately three times higher than comparable doses of Tyvaso in the INCREASE study. The company has also secured rights to an "iPhone-sized, breath-actuated, rechargeable, highly portable" nebulizer for L606, which promises precise and efficient drug delivery. Liquidia plans to initiate a placebo-controlled global Phase III study (RESPIRE) for PH-ILD by year-end 2025, enrolling 300-400 patients, primarily from ex-U.S. territories where unmet need is substantial. The estimated timeline from study initiation to regulatory decision is approximately 3.5 to 4 years, with management aiming for an expedited timeline. This pipeline asset positions Liquidia for long-term leadership in the PAH space, building on YUTREPIA's success with a potentially even more patient-friendly and effective treatment option.

Financial Performance and Liquidity: Fueling Growth

Liquidia's financial performance in the first half of 2025 reflects its transition to a commercial-stage company. For the three months ended June 30, 2025, total revenue was $8.84 million, with YUTREPIA product sales contributing $6.52 million following its June launch. Service revenue from the Sandoz (SNDZ) Promotion Agreement decreased by $1.40 million to $2.32 million in Q2 2025, and by $1.20 million to $5.44 million for the six months ended June 30, 2025. This decline was primarily due to unfavorable gross-to-net adjustments and lower sales volumes, exacerbated by limitations in the availability of CADD-MS 3.00 infusion pumps for subcutaneous treprostinil injection.
The company reported a net loss of $41.58 million for Q2 2025 and $79.95 million for the six months ended June 30, 2025, contributing to an accumulated deficit of $637.30 million.

Research and development expenses decreased by 36% in Q2 2025 and 33% in H1 2025, primarily due to a strategic shift of personnel and activities towards YUTREPIA commercialization. However, R&D expenses related to the L606 program increased, and management anticipates further increases as the pivotal study for L606 progresses. Selling, general, and administrative (SG&A) expenses saw a significant increase of 95% in Q2 2025 and 71% in H1 2025, driven by higher headcount, YUTREPIA commercialization efforts, and increased legal fees.

As of June 30, 2025, Liquidia maintained a strong liquidity position with $173.42 million in cash and cash equivalents. This was significantly bolstered by an additional $50.00 million received from HealthCare Royalty Partners (HCRx) in June 2025, triggered by YUTREPIA's first commercial sale. An additional $25.00 million is available from HCRx upon achieving $100.00 million in cumulative net sales of YUTREPIA by June 30, 2026. The HCR Agreement includes fixed quarterly payments and a minimum cash covenant of $15.00 million until 2033. Management believes current cash and anticipated YUTREPIA sales will provide sufficient liquidity for at least the next twelve months, with the potential to reach profitability without additional capital if launch goals are met.

However, the company faces substantial long-term debt obligations, with expected annual payments totaling $294.77 million as of June 30, 2025, including $16.11 million remaining for 2025 and $58.41 million in 2026.

Competitive Landscape and Strategic Positioning

Liquidia operates in a highly competitive biopharmaceutical landscape, with key direct competitors including United Therapeutics, Johnson & Johnson, and Gilead Sciences. These companies have established market presence and diversified portfolios in PAH.

• United Therapeutics: UTHR is a dominant player with products like Tyvaso, Tyvaso DPI, Remodulin, and Orenitram. UTHR's TTM Gross Profit Margin is 89%, Operating Profit Margin is 48%, and Net Profit Margin is 42%, significantly outperforming Liquidia's TTM Gross Profit Margin of 70.36%, Operating Profit Margin of -715.38%, and Net Profit Margin of -516.98%. Liquidia's YUTREPIA directly challenges UTHR's inhaled treprostinil franchise, particularly Tyvaso DPI. Liquidia's PRINT technology offers a distinct advantage in tolerability and titratability, addressing the high discontinuation rates (69%) seen with Tyvaso DPI due to cough. The ability to escalate YUTREPIA doses up to three times higher than Tyvaso's target dose directly impacts UTHR's market share by offering a superior patient experience.
• Johnson & Johnson and Gilead Sciences: JNJ, through its Janssen subsidiary, markets Uptravi, an oral prostacyclin, while GILD offers Letairis. Both are large, diversified pharmaceutical companies with robust financial metrics (JNJ TTM Gross Profit Margin 69%, Operating Profit Margin 25%; GILD TTM Gross Profit Margin 78%, Operating Profit Margin 6%). Liquidia views the $2 billion oral prostacyclin market as a significant opportunity, aiming to attract patients dissatisfied with the "significant off-target effects" and "duress" associated with oral therapies. Liquidia's L606, with its twice-daily dosing and reduced CMAX, is designed to offer a more convenient and tolerable alternative to existing nebulized and oral treatments.
• Emerging Threats: Merck Co. (MRK)'s injectable sotatercept (Winrevair), approved in March 2024, represents a first-in-class therapy that could alter the standard of care for PAH, potentially impacting the market potential for prostacyclin therapies like YUTREPIA and L606 if used earlier in treatment paradigms.
• Liquidia's Strategic Response: Liquidia's strategy is to leverage YUTREPIA's differentiated product profile to capture new patient starts and switches from less tolerable or effective therapies. Its commercial team is focused on educating healthcare providers on YUTREPIA's benefits, emphasizing its ease of use, tolerability, and dosing flexibility. The company's pipeline, particularly L606, aims to further solidify its competitive edge by offering next-generation solutions that improve patient convenience and outcomes. However, Liquidia's smaller scale and reliance on single-source suppliers for key components of YUTREPIA and L606, as well as dependence on third-party medical devices for Sandoz's generic treprostinil, represent vulnerabilities compared to its larger, more diversified competitors. The ongoing legal battles with United Therapeutics, seeking injunctive relief and damages, pose a significant risk to YUTREPIA's commercialization and market share.

Risks and Challenges

Despite the promising launch of YUTREPIA and a robust pipeline, Liquidia faces several material risks. The most immediate and significant challenge is the ongoing multi-front litigation with United Therapeutics. These lawsuits, alleging patent infringement and trade secret misappropriation, seek injunctive relief that could force YUTREPIA's removal from the market or the restriction of its PH-ILD indication. The outcome of the 327.00 patent litigation trial, held in June 2025, remains pending, creating substantial uncertainty.

Operational risks include dependence on third-party medical devices, such as the CADD-MS 3.00 infusion pump for Sandoz's treprostinil injection, which is no longer manufactured or supported by ICU Medical (ICUI), potentially constraining sales until an alternative pump receives FDA clearance. Similarly, the development of L606 relies on the successful evaluation and regulatory clearance of a new nebulizer. Liquidia also relies on single-source suppliers for critical components of both YUTREPIA and L606, making it vulnerable to supply chain disruptions. Furthermore, the volatile global macro-economic environment, including inflation and potential changes in healthcare policies (e.g., the Inflation Reduction Act's drug price negotiation program), could impact pricing and profitability. Regulatory delays, potentially exacerbated by FDA layoffs or reorganization, could also affect timely approvals or manufacturing changes. Finally, the rapidly evolving regulatory landscape for AI technologies, which Liquidia may incorporate into its operations, could introduce new compliance costs and liabilities.

Conclusion

Liquidia Corporation stands at a pivotal juncture, transforming from a development-stage entity into a commercial biopharmaceutical company. The successful launch of YUTREPIA, driven by its differentiated PRINT technology, represents a significant inflection point, offering a compelling alternative for patients with PAH and PH-ILD who are underserved by existing therapies. The early commercial traction, coupled with strong clinical data demonstrating superior tolerability and dose escalation, validates Liquidia's patient-centric approach and positions YUTREPIA as a potential "first-in-choice" prostacyclin.

The company's strategic vision extends beyond YUTREPIA, with the L606 program poised to deliver a next-generation, twice-daily inhaled treprostinil, further solidifying Liquidia's leadership in rare cardiopulmonary diseases. While the path ahead is fraught with intense legal battles against United Therapeutics and the inherent complexities of the biopharmaceutical market, Liquidia's strengthened financial position and commitment to innovation provide a foundation for sustained growth. The ability to effectively navigate these competitive and legal challenges, while continuing to leverage its technological advantages to meet unmet patient needs, will be critical to realizing its long-term potential and delivering substantial value to investors.