Liquidia Corporation (NASDAQ:LQDA) Q1 2024 Earnings Conference Call May 14, 2024 8:30 AM ET

Company Participants

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

Conference Call Participants

Jason Gerberry - Bank of America
Serge Belanger - Needham
Julian Harrison - BTIG
Kambiz Yazdi - Jefferies
Matt Kaplan - Ladenburg Thalmann

Operator

Good morning. And welcome everyone to the Liquidia Corporation First Quarter 2024 Financial Results and Corporate Update Conference Call. My name is Michelle, and I’ll be your conference operator today. Currently all participants are in listen-only mode. Following the presentation, we will conduct a question-and-answer session. Instructions will be provided at that time for you to queue up for questions. I would like to remind everyone that this call is being recorded.

I’ll now hand the call over to Jason Adair, Chief Business Officer.

Jason Adair

Thank you, Michelle. It’s my pleasure to welcome everyone to the Liquidia Corporation’s first quarter 2024 financial results and corporate update call. Joining the call today are Chief Executive Officer, Dr. Roger Jeffs; Chief Operating Officer and CFO, Michael Kaseta; Chief Medical Officer, Dr. Rajeev Saggar; Chief Commercial Officer, Scott Moomaw; and General Counsel, Rusty Schundler.

Before we begin, please note that today’s conference call will contain forward-looking statements, including those statements regarding future results, unaudited and forward-looking financial information, as well as the company’s future performance and or achievements.

These statements are subject to known and unknown risks and uncertainties, which may cause our actual results or performance to be materially different from any future results or performance expressed or implied on this call.

For additional information, including a detailed discussion of our risk factors, please refer to the company’s documents filed with the Securities and Exchange Commission, which can be accessed on our website.

I would now like to turn the call over to Roger for our prepared remarks, after which he’ll open the call for your questions.

Dr. Roger Jeffs

Thank you, Jason. Good morning, everyone, and thank you for joining us today. In the nine weeks since our last earnings call, we have continued to advance what we believe will be the industry-leading portfolio of inhaled treprostinil products.

YUTREPIA, our dry powder formulation of treprostinil, currently awaits final FDA approval to treat both pulmonary hypertension, arterial hypertension or PAH and pulmonary hypertension associated with interstitial lung disease or PH-ILD.

We have continued to optimize our commercial preparations in anticipation of potential FDA final action and launch. In the clinic, we are seeing encouraging initial data from our ASCENT trial of YUTREPIA and PH-ILD. In addition, our sustained release liposomal formulation of treprostinil, L606, also continues to generate encouraging data in our open-label safety study in both PAH and PH-ILD patients.

Rajeev and Rusty will provide updates in greater detail on the clinical, regulatory and legal fronts in a moment. But first, I think it is important to reflect on what is happening in the market and why we are so committed to these programs and the patients we seek to treat.

We believe the market for inhaled treprostinil in PAH and PH-ILD can eclipse $3 billion at peak sales. And this is validated by Tyvaso’s total current annual run rate of approximately $1.5 billion, which continues to grow at an appreciable rate. This growth is driven by the expanded PH-ILD market, which is only marginally penetrated at this time, along with the availability of the more portable dry powder inhaler option.

However, what we also see in our competitive sales data is continued unmet need. In our study of YUTREPIA, 100% of patients who transitioned to YUTREPIA from Tyvaso preferred YUTREPIA after four months of use. Yet, approximately 40% of UTHR sales continue to come from nebulized Tyvaso with its bulky, challenging and dose-limiting nebulizer.

We do not have any direct knowledge of the totality of issues that may be preventing a more complete conversion of patients from Tyvaso to Tyvaso DPI. But the continued prevalence of Tyvaso seems illogical, given the clear portability and use advantages of the DPI.

In this regard, data from the National Jewish Health Pulmonary Hypertension Program may be broadly informative. In September, these experts presented a single-center perspective observational study in patients with PH-ILD who were initiated on treprostinil DPI. Of the 26 patients with PH-ILD initiated on Tyvaso DPI, 69% of these patients discontinued this treatment after a mean of only 78 days or a median of 40 days. Of importance, 11 or 42.3% of these patients, transitioned to the Tyvaso nebulizer upon discontinuation of DPI therapy. This is highly consistent with our competitor sales data, highlighting that nearly 40% of its patient base continues to use the more cumbersome nebulizer for Tyvaso administration.

From our perspective, clearly it is not a molecule treprostinil, but rather the limitation of the formulation and the very high resistance DPI utilized with Tyvaso DPI, especially when treating patients with lung impairment in PH-ILD. That’s why we believe that physicians and patients are eager for a new choice, one that delivers a readily titratable and durable inhaled formulation of treprostinil using a portable, patient-friendly, low-resistance dry powder inhaler with demonstrated high patient preference and satisfaction. YUTREPIA is that choice and has the very real potential to become the first in choice in best-in-class process cyclin in this growing market opportunity.

With that, I’d like to ask Rajeev to share more about FDA interactions and our observations in the ongoing clinical studies with YUTREPIA and L606. Rajeev?

Dr. Rajeev Saggar

Thanks, Roger. I’d like to address three of the most common questions I have received related to our programs. First, where does the FDA stand in its review of YUTREPIA? Second, what observations are emerging from the ASCENT trial, our open-label study of YUTREPIA in PH-ILD patients, to better understand dosing and titration in that patient population? And third, when can we expect to see more data on the L606 program? I will take each in turn.

Regarding the first question, while we cannot speak to a specific action date, the FDA’s review division has maintained an active dialogue with Liquidia on the development of YUTREPIA since it entered the clinic as a first-drive powder formulation of treprostinil.

During the course of its review of the NDA for PAH, the FDA has confirmed multiple times over the last three years that submitting an amendment to the NDA would be an appropriate way to add PH-ILD indication. Also, throughout this process, the FDA consistently affirmed that no additional clinical data would be required to add the PH-ILD indication.

We are disappointed that the FDA did not issue an action letter promptly following the expiration of the March 31st clinical investigation exclusivity granted to Tyvaso to treat PH-ILD. Nevertheless, we remain hopeful that the FDA will issue final action very soon, given the lack of any legal barriers to our approval.

Regarding the second question, we initiated the open-label ASCENT trial in late December to help physicians understand the safety, tolerability, and titratability of YUTREPIA in patients with PH-ILD. We have enrolled seven patients to-date and have several additional sites initiating the study over the next 30 days.

Of the seven patients, the median dose was 106 micrograms during week four and 132.5 micrograms during week eight, which are comparable to nebulized Tyvaso of about 12 breaths per session to 15 breaths per session, respectively. The highest dose of YUTREPIA achieved to-date in the study is 318 micrograms, which is at least 36 breaths per session of Tyvaso nebulizer.

While early and a small sample size, we are encouraged at the tolerability and titratability profile in patients with PH-ILD and remain confident that we can complete enrollment of the study by the end of the year. We look forward to presenting a more robust clinical data at a future medical conference later this year.

Finally, regarding the third question, next week at the American Thoracic Society Conference, we will present an abstract focusing on the clinical data of our liposomal sustained release formulation of treprostinil L6O6 from the open-label safety study in the first 24 patients enrolled with PAH and PH-ILD.

We continue to observe a favorable tolerability and titratability profile of L6O6 given the seven-fold lower Cmax and twice daily dosing using a rapid breath-accentuated nebulizer. To-date, patients have titrated to our maximum dose allowed in the study of 378 micrograms twice daily, a dosage that would be comparable to 26 to 28 breaths of Tyvaso nebulized administered four times daily. We will publish the poster to our website once presented and look forward to discussing the observation in future calls.

In addition, we are vigorously engaging in startup activities to enable initiation of our Phase 3 randomized controlled study. The single pivotable study will enable indications to treat both PH-ILD and PAH. Physician interest globally is robust and we look forward to interacting with regulatory agencies in the next few months as we prepare to initiate the study later this year.

At this time, I would like to ask Rusty to summarize the recent legal actions of the last few months. Rusty?

Rusty Schundler

Thank you, Rajeev. The first quarter of 2024 saw significant progress on the legal front. This is the first earnings call in which we can say that there are no legal barriers preventing the FDA from issuing a final action on the amended NDA for YUTREPIA. The combination of District Court, PTAB, and federal circuit rulings have led to the removal of the previous injunction issued in 2022.

In addition, United Therapeutics regulatory exclusivity tied to PH-ILD expired on March 31st. Thus, since April 1st, the FDA has had the legal authority to take final action on our NDA for YUTREPIA.

While we cannot comment on when the FDA will take that final action, we can clarify the status of two ongoing lawsuits brought by United Therapeutics against Liquidia and the FDA, each with the same intent to stop the launch of YUTREPIA and PH-ILD.

Neither of these lawsuits currently impact the FDA’s ability to approve YUTREPIA for both indications, and even in the worst case, neither lawsuit will ultimately impact our ability to treat PAH patients.

In the first of these lawsuits, United Therapeutics has filed a lawsuit alleging infringement of the 327 patent based on our request for approval of the PH-ILD indication. In this lawsuit, United Therapeutics has filed a motion for preliminary injunction.

Judge Andrews in the United States District Court for the District of Delaware heard oral arguments from both parties on April 23rd regarding the preliminary injunction, and may issue a written ruling at any time.

We remain confident in our arguments as briefed and argued, and continue to believe there are substantial questions regarding the validity of the 327 patent, which generally covers treatment of PH-ILD patients with Tyvaso in accordance with the Tyvaso label, something that physicians have been doing for more than a decade, as evidenced by multiple publications describing positive results in PH-ILD patients over that period.

In the second of these lawsuits, United Therapeutics is seeking to bar the FDA from accepting and approving our amendment to add PH-ILD to the label for YUTREPIA, pursuant to the administrative procedure set.

Judge Bates in the United States District Court for the District of Columbia rejected United Therapeutics’ motion for a temporary restraining order and preliminary injunction on March 29th, indicating that the FDA’s acceptance of our amendment for review did not constitute final agency action.

Judge Bates has retained jurisdiction, though, and ordered the FDA to provide the court and both United Therapeutics and Liquidia notice three days prior to taking any final action on the YUTREPIA NDA. Additionally, last week, both we and the FDA filed motions to dismiss the entire lawsuit in briefing on the motion of dismissal in progress.

We remain confident that both our amendment was properly filed and that United Therapeutics does not have the necessary standing to challenge the FDA’s decision. Our priority has been and remains prompt approval of YUTREPIA so that we can make it available to patients. We will continue to vigorously defend our ability to do so.

I will now turn the call over to Mike.

Michael Kaseta

Thank you, Rusty, and good morning, everyone. We ended the first quarter in the strongest financial position in the company’s history. Not only do we have the cash on the balance sheet to achieve our objectives, but we’re also poised to launch into one of the fastest-growing rare disease markets with what we believe will be a differentiated product for PAH and PH-ILD patients.

Our team is fully in place, our commercial inventories are ready and expanding, our relationships with all key stakeholders are sound and active; and our sales team is fully engaged and ready to launch. We continue to believe that the approval and launch of YUTREPIA this quarter in both indications will enable a rapid transformation in the company’s P&L.

Turning to our financial results, which can be found in the press release, you will see that revenue was $3 million for the first quarter 2024, compared with $4.5 million in the same quarter for 2023. Revenue is tied to our promotion agreement with Sandoz to commercialize treprostinil injection. The decrease was primarily due to favorable growth-to-net rebate adjustments recorded in the prior year and the impact of lower sales quantities in the current year as compared to the same period in the prior year.

Cost of revenue increased to $1.5 million for the first quarter 2024, compared to $0.7 million in the same quarter for 2023. Cost of revenue relates to our promotion agreement, with the increase being primarily due to our salesforce expansion during the fourth quarter of 2023.

Research and development expenses were $10.1 million in the first quarter 2024, compared with $5.3 million in first quarter 2023. The increase of $4.8 million or 91%, was primarily due to a $2 million increase in personnel expenses, which includes stock-based compensation, related to higher headcount and a $1.7 million increase in clinical expenses related to our L606 program. Additionally, there was a $1.3 million increase in expenses related to our YUTREPIA program, driven by higher clinical and supply expenses related to our ASCENT study.

General and administrative expenses were $20.2 million in the first quarter of 2024, compared to $7.8 million in the same quarter for 2023. The increase of $12.4 million was primarily due to increases in legal fees related to our ongoing YUTREPIA-related litigation, increase in personnel expenses, and increases in commercial and consulting expenses in preparation for the potential commercialization of YUTREPIA.

In summary, we incurred a net loss for the three-month end of March 31, 2024 of $40.9 million or $0.54 per basic and diluted share, compared to a net loss of $11.7 million or $0.18 per basic and diluted share for the three-month ended March 31, 2023.

We ended the first quarter with $157.9 million cash on hand, which included $100 million in gross proceeds between a private placement of equity to a single investor and a third advance from healthcare royalty under our agreement.

In summary, we are well-positioned financially to achieve our corporate objectives in 2024.

I would now like to turn the call back over to Roger.

Dr. Roger Jeffs

Thank you, Mike. Operator, with that, I’d like to now open the call for questions. First question, please.

Question-and-Answer Session

Operator

Thank you. [Operator Instructions] Our first question comes from Jason Gerberry with Bank of America. Your line is open.

Jason Gerberry

Hey, guys. Thanks for taking my question. I guess just on last week’s filing to dismiss by both UTHR and the FDA, do you have a sense of how quickly Judge Bates may move here? This seems like maybe the one new variable here. If FDA is being asked to give three days’ notice, they don’t want to give three days’ notice, they want this dismissed. I’m just kind of curious how to put this in proper context. And the, ultimately, if you’re able to secure approval, broad approval, both PAH and PH-ILD, I’m just wondering if there are any specific label variables you might call out that could really impact the commercial opportunity beyond just getting those two indications, how we might think about the label looking different than today? Thanks.

Dr. Roger Jeffs

Hey, Jason. Good morning. Thanks for the question. I’ll take the second question first, if I can, and then I’ll ask Rusty to speak about his perspectives around the timing of the motion to dismiss case.

So, great question, Jason. Again, what we talk about with YUTREPIA in terms of being differentiated are around its pillars, which are tolerability, titratability, durability and usability, and all of that is sort of dictated by the PRINT formulation. So, again, with the ability to make precise and uniform particles in the lower end of the respirable range, it allows for a highly tolerable therapy, which is readily titratable, and then will be durable and usable through the low-resistance device, so friendly for both PAH and PH-ILD patients to use.

The differentiation that we will see in the label in that regard will be specifically related to the exposures that we’ve seen in our clinical work versus what’s in their labels. So, we will have up to 212 micrograms four times a day described in our label. So, again, we’re talking about 24, 25 breath equivalents, so much higher than what’s in the Tyvaso DPI. And as we know from historical standards, across all routes, across the cycle of delivery, dose matters.

So, the higher the dose and the more flexibility in driving dose, the more capable that therapy will be. So, that’s why we think that YUTREPIA has a -- will have a clear chance to become best-in-class and first-in-choice prostacyclin, not only to compete with inhaled treprostinil in the Tyvaso formats, but also when physicians are seeking to think about starting therapy, we think they should think about using YUTREPIA as the first choice, not -- and do that in sort of in place of oral therapies like Orenitram and Uptravi.

And then also, in terms of sub-cue, where those patients are going to have a pretty burdensome time getting to a therapeutic dose of drug because of the off-target effects for both the oral and the parenteral formulation. So, again, tremendous market opportunity, looking forward to launch, but I think we’ll have very clear and distinguishable differentiation at the point of launch. And with that, Rusty, maybe if you could speak about the logistics around the legal case.

Rusty Schundler

Sure. So, Jason, thank you for the question. So, the motion to dismiss and briefs that went in last week is the first round of briefs on the motion to dismiss. Briefing will continue through June 25th, and then from there, we don’t have visibility as to what the judge will do and how long it would take him to rule. It’s possible that at that point he’ll schedule a hearing, or it’s possible he’ll just rule on the briefs, but obviously federal judges, it’s hard to predict exactly how long they would take to issue a ruling. So, thank you for the question.

Dr. Roger Jeffs

And just a reminder, Jason, that decision is not needed for the FDA to take final action, as Rusty said in his comments.

Jason Gerberry

Thank you.

Dr. Roger Jeffs

Next question, please.

Operator

Thank you. Our next question comes from Julian Harrison with BTIG. Your line is open. Julian Harrison, your line is open. Our next question comes from Serge Belanger with Needham. Your line is open.

Serge Belanger

Hi. Good morning. Thanks for taking my questions. I guess the first one, Roger, you mentioned targeting the oral treprostinil market. If you can just maybe elaborate on that in terms of the market opportunity, and I think this would be another differentiated aspect of YUTREPIA, because I don’t think your competitor has positioned their DPI product for that segment. And then secondly, can you just talk about payer coverage? In the past, you’ve highlighted how you’re launch-ready, the sales force has been expanded and are in the field, but maybe if you can talk about how quickly you think you can get YUTREPIA on formulary post-approval? Thanks.

Dr. Roger Jeffs

Yeah. Thanks. Great question. So I’ll take the first one around how we hope to cannibalize the oral market, and then Mike, if you’ll talk about the payer landscape, if you will. So in terms of oral prostacyclins, currently, and again, these are just sort of generalized estimates, Orenitram is doing about $400 million per annum and Uptravi is doing about $1.2 billion per annum.

Both -- they’re different, they’re both prostacyclins different in their sort of mechanistic approach, but Orenitram, it’s difficult to titrate, it takes weeks, if not months, to get to a therapeutic dose, causes a lot of off-target GI effects and those GI effects are the predominant reason that patients discontinue that therapy and then progress to other therapies, which in the past typically has been parenteral therapy.

Uptravi has a pretty tight and narrow dose titration curve, pretty much has a dose ceiling, so patients titrate to their top tolerated dose and they’re held on that dose and then removed from therapy once their disease progresses beyond the capabilities of the dose that they’re on and also comes with the off-target effects.

So we think that we could position YUTREPIA, particularly given its titratability, so again, what YUTREPIA has done through the PRINT-enabled formulation, it’s allowed for a titratable inhaled treprostinil formulation for the first time, so it has a lot more flexibility and can become a much more rigorous and durable choice for physicians and their patients.

Now, you ask that, why has United not pointed this out? Well, again, it might be that they don’t quite have the flexibility that we do in terms of dosing, so it has limitations in that regard. I think the other aspect here is because they have an oral prostacyclin, they don’t want to sort of detail against themselves, and in fact, had they done that, it would have set the table for us quite nicely in terms of what we want to do as I just described.

So you can understand why they’re not doing that, but we will not be hindered in any way from that search. So, we certainly are going to go after both the totality of the inhaled market and the totality of the prostacyclin market, particularly those patients that are having issues more with off-target effects like GI side effects, which are significant and parenteral effects like subcutaneous pain and everything.

So, again, attractive markets, $1.6 billion, but the $1.5 billion with Tyvaso aggregated opportunity now, so you’re already at a $3 billion opportunity if we aggregate all of those markets together and that’s where the pH value is, as I said in my comments, only marginally penetrated at this point. So, really, really nice opportunity.

I think the other thing I will say, and this is not, if you talk about inhaled treprostinil, it’s not a net zero sum game. I think sometimes people try to position us antagonistically against users’ opportunity.

I think in PH-ILD in particular, again, there’s lots of patients there. There’s lots of opportunity for both companies to do well and we look forward to launching in the near future and presenting the choice and that’s what we’re about. So, Mike, if you’ll talk about pair coverage.

Michael Kaseta

Yeah. Serge. Thanks so much for the question. I think what’s important to know is the overwhelming feedback we’ve received from doctors and patients is they’re wanting choice, and having YUTREPIA available will provide that choice, but we also understand in order to truly have that choice, access is critically important.

So, we’ve been engaging with payers. We received tentative approval in PAH back in November of 2021. We’ve been engaging with payers since that time to discuss the value proposition of YUTREPIA, and I think, we are confident that once we get full approval from the FDA, that we will be able to work through that and make sure patients have that choice and to have that choice and to have access.

So, we are confident that we will achieve that, but until we get approval, obviously, none of that will be formalized, but we’ve had really good conversations with payers and feel very confident that patients will be afforded that choice to choose YUTREPIA through an insurance platform where YUTREPIA is on formula.

Serge Belanger

Yeah. Thank you.

Operator

Thank you. Our next question comes from Julian Harrison with BTIG. Your line is open.

Julian Harrison

Hi, guys. Can you hear me?

Dr. Roger Jeffs

Yes. We can, Julian. Good morning.

Julian Harrison

All right. Sorry about that before. Thank you for taking my questions. Rusty, you highlighted that there are no lawsuits that directly prevent the FDA from making a potential approval decision at this time. I understand you can’t comment on when specifically, the FDA is expected to make a decision, but are you able to comment on what they could be waiting on at this point? I understand that that might be too speculative of a question and completely understand if you can’t comment on that. And then, can you also remind us on where manufacturing stands? Have there been any additional inspections required by the FDA in the current cycle?

Dr. Roger Jeffs

Yes. Julian, thanks for your persistence in getting through the call. Rusty can answer the first question and then Mike will address the supply chain question.

Rusty Schundler

Thank you, Julian. Thank you for the question. So, first, we don’t want to speculate on what the FDA, where they are in their process, nor do we want to comment publicly on our interactions with the FDA to-date. So, again, as I said before, there is no legal impediment to them taking final action on our NDA. We are awaiting that final action. But again, we can’t really speak to any specific timing.

Michael Kaseta

Yes. And Julian, relating to supply, we’ve been anticipating a launch, obviously, for a long time now. We’ve been building commercial inventories through that entire time. So once the FDA grants final approval, we will be ready to hit the ground running immediately in all strength of our product.

Related to the inspection, as part of our tentative approval in November of 2021, the FDA did a preapproval inspection in August of 2021 and that was included in our tentative approval. So all preapproval inspections have been completed. And as I said, we’ve been building up commercial inventory since then and look forward to, hopefully, an imminent launch here.

Julian Harrison

Very helpful. Thank you.

Operator

Thank you. Our next question comes from Kambiz Yazdi with Jefferies. Your line is open.

Kambiz Yazdi

Good morning, team. Thank you for sharing some of the ASCENT data to-date. So I guess my question on that open-label study is kind of what titration schemes are you looking to assess? And then as a second question, in terms of that overall projected $3 billion inhaled nebulized treprostinil market, sorry, inhaled treprostinil market, what do you see the split between the different indications in that market and is that also kind of including some cannibalization of the oral treprostinil market? Thank you.

Dr. Roger Jeffs

Hey, Kambiz. I’ll speak to the market question and then Rajeev, you’re going to talk about what we’re trying to achieve and what we feel is the first company-sponsored DPI test in PH-ILD patients.

So I think, Kambiz, when you look at the market opportunity here, again, we’re just going to say that eclipse is $3 billion and growing. There is -- I think UTHR has said that of their $1.5 billion on their last earnings call, they intimated that PH-ILD represented nearly a billion of that or was approaching a billion in terms of indication opportunity and that’s with marginal penetration.

So we think that market, again, if you believe it’s $60,000, some people say $100,000. I think UTHR says $30,000, but that number, I think they’re taking north now. But let’s just split the difference and call it $60,000. They’re probably at high-single digits, low double-digit penetration, so just marginally penetrated. So lots and lots of room to grow there alone. So that’s a multi-billion-dollar opportunity in PH-ILD, for sure, with an inhaled prostacyclin moiety.

With the orals, again, that’s cannibalization and that may take a little bit more time to move along, but YUTREPIA behaves the way we think it can in the real world, then we think we can really infringe on the oral markets. So we also think that for YUTREPIA specifically, that’s a $1 billion opportunity as well. So when you aggregate those together, our share of the inhaled, our share of the oral, we think we can have a multi-billion-dollar product or more.

So I think, again, we need to prove that out. We need to generate the launch dynamics that we hope to do to support that to be true, but the first thing is to get the approval and we’re working hard to do that. So Rajeev, if you’ll talk about some of the things we’re trying to achieve in terms of dosing, which will help us achieve this multi-billion-dollar opportunity.

Dr. Rajeev Saggar

Yeah. Thank you, and Kambiz, good morning. So first of all, I think, one thing we’re highlighting here is that this is the first open-label prospective study in PH-ILD using a dry powder inhaler with YUTREPIA in this regard.

Remember, we’ve already conducted the INSPIRE study in 121 patients, so we really understand the tolerability profile and the titratability of YUTREPIA, and so we took those learnings and we brought it into patients with PH-ILD that have no -- that have never been treated in the past.

In this regard, as I highlighted, we have seven patients that have enrolled to-date, and one thing that you had asked is, what is the dosing recommendation for this patient population? Well, clearly, I think the primary objective is that, one, can the tolerability profile that we saw in the INSPIRE study in PAH patients be replicated in PH-ILD and I think the early small sample sizes answer is yes, it can.

Clearly, what needs to happen is dose matters, right? So the increased study used in Tyvaso suggested that patients who get to at least nine breath equivalents of Tyvaso nebulizer portend to have a better clinical effect, but actually patients who can get actually higher to 11 to 12 breaths, it looks like the signal actually gets a bit stronger.

So the priority of this study is to titrate the patient at least to nine to 12 breaths, which is the traditional therapeutic goal of inhaled treprostinil, but more importantly, to exceed that in the right patient profile, right? So some patients may need nine to 12 breaths, maybe the majority of these actually need somewhere more than that.

One thing I think is really intriguing is that I highlighted in the call that the median dose at week eight is now 132 micrograms of YUTREPIA, which is now equivalent to greater or equal to 15 breaths of Tyvaso. So I think the early findings from the study are quite encouraging and we look forward to completing enrollment in the study by the end of the year.

Dr. Roger Jeffs

So, Kambiz, I think when we finish the study, the important data for investors to look at would be what were the -- what’s our ability to titrate, which as Rajeev said, at least in the early data, we’re seeing good evidence that we can do that quite aggressively.

And then the other question would be how durable is it? And so far, those patients are remaining on study. So remember, as I stated in the preamble, it was only a median of 40 days where people who had started Tyvaso DPI within the National Jewish Center data were unable to continue that drug and 50% of those patients dropped off within that 40-day median timeframe.

So we’re trying to make a contradictory statement to that to show that YUTREPIA is much more titratable and much more durable. The reasons that patients predominantly came off in the National Jewish Center experience was for clinical worsening, which I would assume is due to a lack of ability to provide a therapeutic dose, otherwise they wouldn’t worsen. And we’re trying to basically show that YUTREPIA can perform in a very different way, and obviously, that speaks to its differentiated capabilities and market opportunities. So, so far, so good, but more to come there. Operator?

Operator

Thank you. Our next question comes from Matt Kaplan with Ladenburg Thalmann. Your line is open.

Matt Kaplan

Hi. Good morning, guys. Thanks for taking the questions. Just in terms of your commercial prep and readiness, how soon after approval will you launch the drug? Thanks.

Dr. Roger Jeffs

Thanks. Mike, would you like to answer that question, please?

Michael Kaseta

Yeah. So, Matt, thanks for the question. Obviously, once we get full approval, it’ll take a little bit of time to list our price in compendia. But from a commercial availability, what I can say is our commercial team, our sales force is literally ready to go immediately thereafter. Our commercial inventory will be ready to go within days after of final approval. So, I know a lot of companies take 30 days to 45 days to launch after they get full approval. We will be ready to go literally within days or a week after final approval regardless of when that time comes.

Matt Kaplan

Okay. Okay. Thanks. And I know we’re all focused and waiting for YUTREPIA’s approval, but thinking out a little bit into the future, can you tell us a little bit more about 606 and L606 and what role and position you think that will play in terms of the inhaled precaution market?

Dr. Roger Jeffs

Yeah. I’ll answer that. Thanks for the question, Matt. So, I think when you look at YUTREPIA in terms of what it solves for, it’s taken what was a, if you look at just Tyvaso -- nebulized Tyvaso, it was a fixed dose or a non-readily titratable therapy. So, we really transformed therapeutic index and we’ve made it much more titratable. So, we can get the higher effective dose while keeping the AD profile the same. So, you have a better therapeutic index for YUTREPIA than you do with, for instance nebulized Tyvaso as an example. What we didn’t do was solve for the 4 times a day treatment regimen and that’s the same, that’s also true for Tyvaso DPI.

So, improved on the therapeutic profile of inhaled treprostinil, but still requires four times a day administration. So, what L606 will do is address that final point and really pull on that lever to make the market, instead of just sharing the market with our competitor, we look to then basically dominate the market.

So, if we had a formulation that behaved the same as YUTREPIA, but you could do that in a twice-a-day format and essentially solve for the overnight removal of therapy, which happens because before you go to sleep, the half lasts four hours, if you sleep eight hours, by the time you wake up, the therapy’s gone. We will solve for that, provide a more steady state exposure, which we think will also be better for patient outcome.

And then, as Rajeev said, in the open-label trial, we’re seeing just that. We’re seeing that L606 is extremely well-tolerated and that’s because it has a, as Rajeev said, a 7 times lower Cmax, and that its AUC, zero to 24 hours, is the same as, given BID, is the same as 4 times a day inhaled treprostinil.

So, its target profile in open-label work, so far, is exactly what we’d want this to be. And now, we’re just going to try to replicate the Tyvaso increased study with L606. We’ll start that at the end of this year, work hard to get that done and improve sometime in the 2028 timeframe, but at that point in time, we think that will become the preferred therapeutic, because it’s solved for regimen, while still giving all the benefits that YUTREPIA does.

Matt Kaplan

Thanks, Roger.

Dr. Roger Jeffs

Thank you, Matt. Operator, next question, if any?

Operator

Thank you. There are no further questions. I’d like to turn the call back over to Roger for closing remarks.

Dr. Roger Jeffs

Great. Thank you, Operator, and thank you very much for the questions this morning. My hope is that the next time we address you on our earnings call, we will be providing to patients what we feel is a preferred product for inhaled treprostinil, and it will come at a critical time as the market for inhaled treprostinil rapidly expands. Thank you for joining us today and we look forward to speaking soon. Bye-bye.

Operator

Thank you for your participation. This does conclude the program. You may now disconnect. Everyone, have a great day.