Liquidia Corporation — FY2021 Form 10-K
Reporting period: Year ended December 31, 2021; comparisons are with FY2020. This is an annual report, not a standalone fourth-quarter filing. Liquidia is a biopharmaceutical company focused on pulmonary hypertension. Its reported revenue primarily comes from sharing profits on Sandoz’s generic treprostinil injection; its principal development asset is YUTREPIA, a dry-powder treprostinil inhalation product.
Financial performance and liquidity
Amounts below are in U.S. dollars; millions unless stated otherwise.
| Metric | FY2021 / Dec. 31, 2021 | FY2020 / Dec. 31, 2020 |
|---|---|---|
| Revenue | $12.85 | $0.74 |
| Cost of revenue | $3.02 | $0.24 |
| Research and development | $20.52 | $32.22 |
| General and administrative | $23.11 | $27.37 |
| Operating loss | $(33.80) | $(59.09) |
| Net loss | $(34.58) | $(59.76) |
| Net loss per share, basic and diluted | $(0.70) | $(1.76) |
| Cash used in operating activities | $(34.04) | $(54.14) |
| Cash and cash equivalents | $57.49 | $65.32 |
| Long-term debt | $10.41 | $10.29 |
Revenue less cost of revenue was approximately $9.83 million, or 76.5% of revenue; this is a simple calculation, not a separately reported company margin. At year-end, current assets were $61.28 million and current liabilities $7.33 million. Total liabilities were $28.46 million, including lease liabilities and litigation financing payable; reported long-term debt was $10.41 million. Accumulated deficit was $309.58 million.
Changes versus the prior year
- Revenue increased substantially because FY2021 included a full year of the Sandoz promotion arrangement after Liquidia acquired Liquidia PAH in November 2020. The comparison is therefore not like-for-like; one customer accounted for 99% of FY2021 revenue.
- R&D expense fell 36.3% to $20.52 million, principally because YUTREPIA’s clinical program was largely completed before the NDA filing. Reported YUTREPIA-related expense decreased to $6.6 million from $17.4 million.
- G&A expense declined 15.6% to $23.11 million, as lower corporate consulting and professional fees were partly offset by higher YUTREPIA litigation costs and stock-based compensation.
- Operating cash use improved by approximately $20.1 million, but cash declined $7.82 million overall. Financing activities included $21.7 million of net proceeds from an April 2021 private placement.
Outlook, risks and notable items
- YUTREPIA approval and launch: FDA granted tentative approval in November 2021, but the product could not be marketed without final approval. United Therapeutics litigation triggered a regulatory stay then expected to run through October 2022, absent an earlier favorable court decision. A March 2022 trial was scheduled on the remaining patent basis for the stay. The filing also describes separate patent and trade-secret disputes. Outcomes and timing are uncertain.
- Competitive and exclusivity risk: United Therapeutics’ Tyvaso DPI was a competing dry-powder product under FDA review. The filing warns that approval and potential exclusivity for a competitor could affect YUTREPIA’s approval timing or competitive position. Generic competition also pressures treprostinil injection pricing.
- Going concern and funding: The auditor’s report highlights substantial doubt about Liquidia’s ability to continue as a going concern, based on recurring losses and negative operating cash flows. Management estimated year-end cash and available borrowings would fund operations and meet the $27.5 million minimum-cash covenant into Q4 2022, excluding contingent loan tranches and future YUTREPIA revenue. Additional financing may be needed; availability and terms are uncertain.
- Subsequent debt facility: On January 7, 2022, Liquidia amended and restated its SVB facility for up to $40 million. A $20 million initial tranche was funded, used to repay the prior facility and add $9.5 million to cash. Further draws depend partly on final YUTREPIA approval and sales milestones. The facility matures December 1, 2025, has a floating interest rate with a 7.25% floor, and includes covenants and collateral provisions.
- Business concentration and supply: Sandoz controls the generic injection’s regulatory approval and supply, and is responsible for manufacturing and distribution. YUTREPIA relies on single suppliers for treprostinil API, inhaler device, and encapsulation and packaging services. Disruptions could delay commercialization.
- Other unusual items: Stock-based compensation rose to $6.75 million from $3.95 million, including accelerated vesting tied to tentative FDA approval and cartridge availability. The company reported no goodwill impairment. Prior-year internal-control material weaknesses were reported remediated as of December 31, 2021; management judged disclosure controls and internal control over financial reporting effective.
- Management outlook: Liquidia expected near-term R&D expense to remain broadly consistent with FY2021 and anticipated higher payroll and expenses as it prepared for potential commercialization. It cautioned that estimates depend on uncertain assumptions and that it may need additional capital.
Key facts for investors to verify
- Current status and outcome of the United Therapeutics patent and trade-secret litigation, associated appeals or reviews, and any effect on YUTREPIA’s final approval and launch timing.
- YUTREPIA’s final FDA approval, labeling and exclusivity status, as well as the regulatory and commercial position of competing inhaled products.
- Cash runway, covenant compliance, debt balances and costs, and whether milestone-dependent SVB tranches or other financing are available on the expected terms.
- Revenue and profit-sharing trends under the Sandoz agreement, including customer concentration, generic competition, and the effect of the contractual profit split.
- Readiness and reliability of YUTREPIA’s sole-source suppliers, manufacturing scale-up, and any additional capital required for launch.