Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Mar. 02, 2023 | Jun. 30, 2022 | |
Document and Entity Information | |||
Entity Central Index Key | 0001819576 | ||
Entity Registrant Name | LIQUIDIA CORPORATION | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2022 | ||
Document Type | 10-K | ||
Document Annual Report | true | ||
Document Period End Date | Dec. 31, 2022 | ||
Document Transition Report | false | ||
Entity File Number | 001-39724 | ||
Entity Incorporation, State or Country Code | DE | ||
Entity Tax Identification Number | 85-1710962 | ||
Entity Address, Address Line One | 419 Davis Drive, Suite 100, | ||
Entity Address, City or Town | Morrisville | ||
Entity Address, State or Province | NC | ||
Entity Address, Postal Zip Code | 27560 | ||
City Area Code | 919 | ||
Local Phone Number | 328-4400 | ||
Title of 12(b) Security | Common stock, $0.001 par value per share | ||
Trading Symbol | LQDA | ||
Security Exchange Name | NASDAQ | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Interactive Data Current | Yes | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity Small Business | true | ||
Entity Emerging Growth Company | true | ||
Entity Ex Transition Period | true | ||
ICFR Auditor Attestation Flag | false | ||
Entity Shell Company | false | ||
Entity Public Float | $ 205,436,978 | ||
Entity Common Stock, Shares Outstanding | 64,688,314 | ||
Auditor Firm ID | 238 | ||
Auditor Name | PricewaterhouseCoopers LLP | ||
Auditor Location | Raleigh, North Carolina |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Current assets: | ||
Cash and cash equivalents | $ 93,283 | $ 57,494 |
Accounts receivable, net | 5,017 | 2,990 |
Prepaid expenses and other current assets | 1,511 | 792 |
Total current assets | 99,811 | 61,276 |
Property, plant and equipment, net | 4,151 | 5,017 |
Operating lease right-of-use assets, net | 2,101 | 2,412 |
Indemnification asset, related party | 6,595 | 6,282 |
Contract acquisition costs, net | 8,604 | 10,138 |
Intangible asset, net | 3,726 | 4,390 |
Goodwill | 3,903 | 3,903 |
Other assets | 307 | 311 |
Total assets | 129,198 | 93,729 |
Current liabilities: | ||
Accounts payable | 2,197 | 1,070 |
Accrued expenses and other current liabilities | 5,522 | 5,171 |
Current portion of operating lease liabilities | 900 | 775 |
Current portion of finance lease liabilities | 181 | 311 |
Total current liabilities | 8,800 | 7,327 |
Litigation finance payable | 6,594 | 6,143 |
Long-term operating lease liabilities | 3,332 | 4,232 |
Long-term finance lease liabilities | 171 | 352 |
Long-term debt | 19,879 | 10,410 |
Total liabilities | 38,776 | 28,464 |
Commitments and contingencies (Note 15) | ||
Stockholders' equity: | ||
Preferred stock - 10,000,000 shares authorized, none outstanding | ||
Common stock - $0.001 par value, 80,000,000 shares authorized, 64,517,912 and 52,287,737 shares issued and outstanding as of December 31, 2022 and December 31, 2021, respectively | 64 | 52 |
Additional paid-in capital | 440,954 | 374,794 |
Accumulated deficit | (350,596) | (309,581) |
Total stockholders' equity | 90,422 | 65,265 |
Total liabilities and stockholders' equity | $ 129,198 | $ 93,729 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parentheticals) - $ / shares | Dec. 31, 2022 | Dec. 31, 2021 |
Consolidated Balance Sheets | ||
Preferred stock, shares authorized (in shares) | 10,000,000 | 10,000,000 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized (in shares) | 80,000,000 | 80,000,000 |
Common stock, shares issued (in shares) | 64,517,912 | 52,287,737 |
Common stock, shares outstanding (in shares) | 64,517,912 | 52,287,737 |
Consolidated Statements of Oper
Consolidated Statements of Operations and Comprehensive Loss - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Consolidated Statements of Operations and Comprehensive Loss | ||
Revenue | $ 15,935 | $ 12,853 |
Costs and expenses: | ||
Cost of revenue | 2,859 | 3,023 |
Research and development | 19,435 | 20,517 |
General and administrative | 32,411 | 23,110 |
Total costs and expenses | 54,705 | 46,650 |
Loss from operations | (38,770) | (33,797) |
Other income (expense): | ||
Interest income | 1,090 | 33 |
Interest expense | (2,338) | (762) |
Loss on extinguishment of debt | (997) | (53) |
Total other expense, net | (2,245) | (782) |
Net loss and comprehensive loss | $ (41,015) | $ (34,579) |
Net loss per common share, basic (in dollars per share) | $ (0.67) | $ (0.70) |
Net loss per common share, diluted (in dollars per share) | $ (0.67) | $ (0.70) |
Weighted average common shares outstanding, basic (in shares) | 60,958,862 | 49,677,737 |
Weighted average common shares outstanding, diluted (in shares) | 60,958,862 | 49,677,737 |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Equity - USD ($) $ in Thousands | Common Stock | Additional Paid-in Capital | Accumulated Deficit | Total |
Balance at Dec. 31, 2020 | $ 43 | $ 346,045 | $ (275,002) | $ 71,086 |
Balance (in shares) at Dec. 31, 2020 | 43,336,277 | |||
Issuance of common stock upon exercise of stock options | 41 | 41 | ||
Issuance of common stock upon exercise of stock options (in shares) | 14,699 | |||
Issuance of common stock upon vesting of restricted stock units (in shares) | 40,539 | |||
Issuance of common stock under employee stock purchase plan (in shares) | 270,185 | |||
Equity consideration for acquisition | 261 | 261 | ||
Sale of common stock, net | $ 9 | 21,701 | 21,710 | |
Sale of common stock, net (in shares) | 8,626,037 | |||
Stock-based compensation | 6,746 | 6,746 | ||
Net loss | (34,579) | (34,579) | ||
Balance at Dec. 31, 2021 | $ 52 | 374,794 | (309,581) | 65,265 |
Balance (in shares) at Dec. 31, 2021 | 52,287,737 | |||
Issuance of common stock upon exercise of stock options | 838 | $ 838 | ||
Issuance of common stock upon exercise of stock options (in shares) | 232,877 | 233,356 | ||
Issuance of common stock upon vesting of restricted stock units (in shares) | 54,181 | |||
Issuance of common stock under employee stock purchase plan | 258 | $ 258 | ||
Issuance of common stock under employee stock purchase plan (in shares) | 51,941 | |||
Issuance of warrants | 1,317 | 1,317 | ||
Equity consideration for acquisition | $ 1 | (1) | ||
Equity consideration for acquisition (in shares) | 616,666 | |||
Sale of common stock, net | $ 11 | 54,450 | 54,461 | |
Sale of common stock, net (in shares) | 11,274,510 | |||
Stock-based compensation | 9,298 | 9,298 | ||
Net loss | (41,015) | (41,015) | ||
Balance at Dec. 31, 2022 | $ 64 | $ 440,954 | $ (350,596) | $ 90,422 |
Balance (in shares) at Dec. 31, 2022 | 64,517,912 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Operating activities | ||
Net loss | $ (41,015) | $ (34,579) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Stock-based compensation | 9,298 | 6,746 |
Depreciation and amortization | 3,647 | 5,612 |
Non-cash lease expense | 311 | 237 |
Loss on disposal of property and equipment | 4 | 44 |
Loss on extinguishment of debt | 997 | 53 |
Non-cash interest expense | 328 | 232 |
Changes in operating assets and liabilities: | ||
Accounts receivable, net | (2,027) | (2,990) |
Prepaid expenses and other current assets | (719) | (40) |
Other non-current assets | 4 | 80 |
Accounts payable | 814 | (7,559) |
Accrued expenses and other current liabilities | 545 | 563 |
Refund liability | (1,769) | |
Operating lease liabilities | (775) | (665) |
Net cash used in operating activities | (28,588) | (34,035) |
Investing activities | ||
Purchases of property, plant and equipment | (592) | (107) |
Proceeds from the sale of property, plant and equipment | 5 | |
Net cash used in investing activities | (587) | (107) |
Financing activities | ||
Principal payments on finance leases | (311) | (477) |
Principal payments on long-term debt | (10,500) | (10,353) |
Proceeds from issuance of long-term debt with warrants, net | 19,767 | 10,410 |
Receipts from litigation financing | 451 | 4,989 |
Proceeds from sale of common stock, net of underwriting fees and commissions | 54,461 | 21,710 |
Proceeds from issuance of common stock under stock incentive plans | 1,096 | 41 |
Net cash provided by financing activities | 64,964 | 26,320 |
Net increase (decrease) in cash and cash equivalents | 35,789 | (7,822) |
Cash and cash equivalents, beginning of period | 57,494 | 65,316 |
Cash and cash equivalents, end of period | 93,283 | 57,494 |
Supplemental disclosure of cash flow information | ||
Cash paid for interest | 1,626 | 423 |
Cash paid for operating lease liabilities | 1,244 | 1,208 |
Reduction of lease liability and right-of-use asset from lease modification | 39 | |
Non-cash increase in property, plant and equipment through accounts payable | 139 | |
Non-cash increase in indemnification asset through accounts payable | $ 313 | $ 4,895 |
Business
Business | 12 Months Ended |
Dec. 31, 2022 | |
Business | |
Business | 1. Business Description of the Business Liquidia Corporation (“Liquidia” or the “Company”) is a biopharmaceutical company focused on the development, manufacture, and commercialization of products that address unmet patient needs, with current focus directed towards the treatment of pulmonary hypertension (“PH”). Liquidia Corporation operates through its wholly owned operating subsidiaries, Liquidia Technologies, Inc. (“Liquidia Technologies”) and Liquidia PAH, LLC (“Liquidia PAH”), formerly known as RareGen, LLC (“RareGen”). The Company generates revenue primarily pursuant to a promotion agreement between Liquidia PAH and Sandoz Inc. (“Sandoz”), dated as of August 1, 2018, as amended (the “Promotion Agreement”), sharing profit derived from the sale of Sandoz’s substitutable generic treprostinil injection (“Treprostinil Injection”) in the United States. Liquidia PAH has the exclusive rights to conduct commercial activities to encourage the appropriate use of Treprostinil Injection. The Company employs a targeted sales force calling on physicians and hospital pharmacies in the treatment of pulmonary arterial hypertension (“PAH”), as well as key stakeholders involved in the distribution and reimbursement of Treprostinil Injection. Strategically, the Company believes that its commercial presence in the field will enable an efficient base to expand from for the launch of YUTREPIA upon final approval, leveraging existing relationships and further validating its reputation as a company committed to supporting PAH patients. The Company conducts research, development and manufacturing of novel products by applying its subject matter expertise in cardiopulmonary diseases and our proprietary PRINT® technology, a particle engineering platform that enables precise production of uniform drug particles designed to improve the safety, efficacy, and performance of a wide range of therapies. Through development of the Company’s own products and research with third parties, the Company has experience applying PRINT across multiple routes of administration and drug payloads including inhaled therapies, vaccines, biologics, nucleic acids and ophthalmic implants, among others. The Company’s lead product candidate, for which it holds worldwide commercial rights, is YUTREPIA for the treatment of PAH. YUTREPIA is an inhaled dry powder formulation of treprostinil designed with PRINT to improve the therapeutic profile of treprostinil by enhancing deep lung delivery while using a convenient, low resistance dry-powder inhaler (“DPI”) and by achieving higher dose levels than the labelled dose of current inhaled therapies. The Company’s New Drug Application (“NDA”) for YUTREPIA was tentatively approved by the U.S. Food and Drug Administration (“FDA”) for the treatment of PAH in November 2021. The FDA also confirmed that the clinical data in the NDA would support the Company’s pursuit of a supplemental NDA to treat patients with pulmonary hypertension and interstitial lung disease (PH-ILD) upon the expiration of regulatory exclusivity for the nebulized form of treprostinil in March 2024. Recent Developments On January 9, 2023, the Company entered into a Revenue Interest Financing Agreement (the “RIFA”) with HealthCare Royalty Partners IV, L.P. (“HCR”) and HealthCare Royalty Management, LLC. Pursuant to the RIFA and subject to customary closing conditions, HCR has agreed to pay the Company an aggregate investment amount of up to $100.0 million (the “Investment Amount”). Under the terms of the RIFA, $32.5 million of the Investment Amount was funded on January 27, 2023 (the “Initial Investment Amount”), $22.4 million of which was used to satisfy in full and retire the Company’s indebtedness under the Amended and Restated Loan and Security Agreement with Silicon Valley Bank, with the excess proceeds less transaction costs of approximately $0.7 million funded to the Company. Under the RIFA, an additional $35.0 million of the Investment Amount will be funded fifteen business days after the earlier of regulatory approval of YUTREPIA or a favorable determination relating to the asserted patents in the ongoing patent litigation with United Therapeutics Corporation and $25.0 million of the Investment Amount will be funded fifteen business days after the mutual agreement of HCR and the Company to fund such amount. See Note 16 for further information. Risks and Uncertainties The Company is subject to risks and uncertainties common to companies in the biotechnology industry, including, but not limited to, development by competitors of new technological innovations, dependence on third parties and key personnel, protection of proprietary technology, compliance with government regulations, and the ability to secure additional capital to fund operations. The current global macro-economic environment is volatile, which may result in supply chain constraints and elevated rates of inflation. In addition, the Company operates in a dynamic and highly competitive industry and believes that changes in any of the following areas could have a material adverse effect on the Company’s future financial position, results of operations, or cash flows: the ability to obtain future financing; advances and trends in new technologies and industry standards; results of clinical trials; regulatory approval and market acceptance of the Company’s products; development of sales channels; certain strategic relationships; litigation or claims against the Company related to intellectual property, product, regulatory, or other matters; and the Company’s ability to attract and retain employees necessary to support its growth. Product candidates developed by the Company require approval from the FDA and/or other international regulatory agencies prior to commercial sales. There can be no assurance that the Company's product candidates will receive the necessary approvals. If the Company is denied approval, approval is delayed, or the Company is unable to maintain approval, it could have a material adverse impact on the Company. The Company relies on single source manufacturers and suppliers for the supply of its product candidates. This adds to the manufacturing risks faced by the Company, which could be left without backup facilities in the event of any failure by a supplier. Any disruption from these manufacturers or suppliers could have a negative impact on the Company’s business, financial position and results of operations. Liquidity The Company expects to incur significant expenses and operating losses for the foreseeable future as it seeks regulatory approval and prepares for commercialization of any approved product candidates. These efforts require significant amounts of capital, adequate personnel and infrastructure, and extensive compliance-reporting capabilities. Even if the Company's development efforts are successful, it is uncertain when, if ever, the Company will realize significant revenue from product sales. The Company may require additional capital in advance of a potential commercial launch of YUTREPIA. If the Company is unable to access the contingent Investment Amounts from the RIFA or generate substantial YUTREPIA product revenue by the second quarter of 2024, the Company will require additional capital. The Company may also require additional capital to pursue in-licenses or acquisitions of other product candidates. If the Company concludes it requires but is unable to obtain funding, the Company could be required to delay, reduce, or eliminate research and development programs, product portfolio expansion, or future commercialization efforts, which could adversely affect its business prospects. In accordance with Accounting Standards Update (“ASU”) 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (Subtopic 205-40) Amounts from the RIFA and future YUTREPIA product revenue, its cash and cash equivalents will be sufficient to fund operations and capital expenditure requirements and allow it to remain in compliance with its minimum cash covenants pursuant to the RIFA for at least twelve months from the issuance date of these consolidated financial statements. If the Company is unable to access additional Investment Amounts from the RIFA, there could be substantial doubt about the Company’s ability to continue as a going concern as of the date of the issuance of the Company’s second quarter 2023 financial statements. The Company has based these estimates on assumptions that may differ from actual results, and it could use its available resources sooner than expected. |
Basis of Presentation and Summa
Basis of Presentation and Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2022 | |
Basis of Presentation and Summary of Significant Accounting Policies | |
Basis of Presentation and Summary of Significant Accounting Policies | 2. Basis of Presentation and Summary of Significant Accounting Policies Basis of Presentation The Company has prepared the accompanying financial statements in conformity with generally accepted accounting principles in the United States of America (“GAAP”). Such financial statements reflect all adjustments that are, in management’s opinion, necessary to present fairly, in all material respects, the Company’s financial position, results of operations and cash flows and are presented in U.S. Dollars. Consolidation The accompanying consolidated financial statements include the Company’s wholly owned subsidiaries, Liquidia Technologies and Liquidia PAH. All intercompany accounts and transactions have been eliminated. Use of Estimates The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and the disclosure of contingent assets and liabilities, at the date of the financial statements, as well as the reported amounts of revenues and expenses during the period. These estimates are based on historical experience and various other assumptions believed reasonable under the circumstances. The Company evaluates its estimates on an ongoing basis, including those related to the valuation of stock-based awards, certain accruals, and intangible and contract acquisition cost amortization, and makes changes to the estimates and related disclosures as experience develops or new information becomes known. Actual results will most likely differ from those estimates. Summary of Significant Accounting Policies Cash The Company considers all highly liquid investments with a maturity of three months or less at the date of purchase to be cash equivalents. Financial instruments that potentially subject the Company to concentrations of credit risk consist of cash and cash equivalents. The Company is exposed to credit risk, subject to federal deposit insurance, in the event of default by the financial institutions holding its cash and cash equivalents to the extent of amounts recorded on the consolidated balance sheet. As of December 31, 2022 all of the Company’s cash and cash equivalents were held with Silicon Valley Bank (“SVB”). Following the March 10, 2023 closure of SVB, substantially all of the Company’s cash and cash equivalents were moved to a different accredited financial institution. The Company has not experienced any losses on such accounts and does not believe that it is subject to unusual credit risk beyond the normal credit risk associated with commercial banking relationships. Such deposits have and will continue to exceed federally insured limits. Accounts Receivable Accounts receivable are stated at net realizable value and net of an allowance for credit losses as of each balance sheet date, if applicable. One customer accounted for 99% and 98% of accounts receivable at December 31, 2022 and 2021, respectively. As of December 31, 2022 and 2021, the Company has not recorded an allowance for credit losses. Leases ASC 842 Leases Property, Plant and Equipment Property, plant and equipment are stated at cost. Depreciation of property, plant and equipment is computed using the straight-line method over the estimated useful lives of the assets beginning when the assets are placed in service. Estimated useful lives for the major asset categories are: Lab and build-to-suit equipment (years) 5 - 7 Office equipment (years) 5 Furniture and fixtures (years) 10 Computer equipment (years) 3 Leasehold improvements Lesser of life of the asset or remaining lease term Major renewals and improvements are capitalized to the extent that they increase the useful economic life or increase the expected economic benefit of the underlying asset. Maintenance and repairs are charged to operations as incurred. When items of property, plant and equipment are sold or retired, the related cost and accumulated depreciation or amortization is removed from the accounts, and any gain or loss is included in operating expenses in the accompanying Statements of Operations and Comprehensive Loss. Long-Lived Assets The Company reviews long-lived assets for realizability on an ongoing basis. Changes in depreciation and amortization, generally accelerated depreciation and variable amortization, are determined and recorded when estimates of the remaining useful lives or residual values of long-term assets change. The Company also reviews for impairment when conditions exist that indicate the carrying amount of the assets may not be fully recoverable. In those circumstances, the Company performs undiscounted operating cash flow analyses to determine if an impairment exists. When testing for asset impairment, the Company groups assets and liabilities at the lowest level for which cash flows are separately identifiable. Any impairment loss is calculated as the excess of the asset’s carrying value over its estimated fair value. Fair value is estimated based on the discounted cash flows for the asset group over the remaining useful life or based on the expected cash proceeds for the asset less costs of disposal. Any impairment losses would be recorded in the consolidated statements of operations. To date, no such impairments have occurred. Goodwill The Company assesses goodwill for impairment at least annually as of July 1 or whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. For example, significant and unanticipated changes or our inability to obtain or maintain regulatory approvals for our product candidates, including the NDA for YUTREPIA, could trigger testing of our goodwill for impairment. The Company has one reporting unit. The Company has the option to first assess qualitative factors to determine whether events or circumstances indicate it is more likely than not that the fair value of a reporting unit is greater than its carrying amount, in which case a quantitative impairment test is not required. Per ASC 350 Intangibles-Goodwill and Other The Company completed its annual goodwill impairment test as of July 1, 2022. There have been no significant events or circumstances affecting the valuation of goodwill subsequent to the assessment. Revenue Recognition from Promotion Agreements The Company recognizes revenue in accordance with ASU 2014-09, Revenue from Contracts with Customers (Topic 606) ● Step 1: Identify the contract with the customer ● Step 2: Identify the performance obligations in the contract ● Step 3: Determine the transaction price ● Step 4: Allocate the transaction price to the performance obligations in the contract ● Step 5: Recognize revenue when the company satisfies a performance obligation In order to identify the performance obligations in a contract with a customer, the Company assesses the promised goods or services in the contract and identifies each promised good or service that is distinct. If a good or service is not distinct, the good or service is combined with other promised goods or services until a bundle of goods or services is identified that is distinct. The transaction price is the amount of consideration to which an entity expects to be entitled in exchange for transferring promised goods or services to a customer. The consideration promised in a contract with a customer may include fixed amounts, variable amounts, or both. Variable consideration is included in the transaction price only to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved. The Company evaluates any non-cash consideration, consideration payable to the customer, potential returns and refunds, and whether consideration contains a significant financing element in determining the transaction price. Revenue is measured based on consideration specified in a contract with a customer. The Company recognizes revenue when it satisfies a performance obligation by transferring control over a service to a customer. The amount of revenue recognized reflects estimates for refunds and returns, which are presented as a reduction of Accounts receivable where the right of setoff exists. On August 1, 2018, the Company partnered with Sandoz in the Promotion Agreement to launch the first-to-file generic of Treprostinil Injection for the treatment of patients with PAH. Under the Promotion Agreement, the Company provides certain promotional and nonpromotional activities on an exclusive basis for the product in the United States of America for the treatment of PAH, in exchange for a share of Sandoz’s net profits, as defined within the Promotion Agreement. In addition, the Company paid Sandoz $20.0 million at the inception of the Promotion Agreement, in consideration for the right to conduct the promotional activities for the product. In exchange for its services, the Company is entitled to receive a portion of net profits based on specified profit levels associated with the product. The Company determined that certain activities within the contract are within the scope of ASC 808, Collaborative Arrangements In addition, the Company determined that the services provided under the Promotion Agreement fall within the scope of Topic 606. The promotional activities the Company performs are one of the services the Company expects to provide as part of its ordinary activities, and it is receiving consideration for this service from Sandoz in the form of a share of “Net Profits” (as defined in the Promotion Agreement). The Company has one combined performance obligation under the Promotion Agreement, which is to perform promotional and non-promotional activities to encourage the appropriate use of the product in accordance with the product labeling and applicable law. As such, and in accordance with ASU 2018-18: Clarifying the Interaction between Topic 808 and Topic 606 Segment Information U.S. GAAP requires segmentation based on an entity’s internal organization and reporting of revenue and operating income based upon internal accounting methods commonly referred to as the “management approach.” Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker (CODM), or decision making group, in deciding how to allocate resources and in assessing performance. The Company’s CODM is its Chief Executive Officer. The Company has determined that it has one operating and reporting segment. Research and Development Expense Research and development costs are expensed as incurred and include direct costs incurred to third parties related to the salaries of, and stock-based compensation for, personnel involved in research and development activities, contractor fees, administrative expenses and allocations of research-related overhead costs. Administrative expenses and research-related overhead costs included in research and development expense consist of allocations of facility and equipment lease charges, depreciation and amortization of assets and insurance directly related to research and development activities. Patent Maintenance The Company is responsible for all patent costs, past and future, associated with the preparation, filing, prosecution, issuance, maintenance, enforcement and defense of United States patent applications. Such costs are recorded as general and administrative expenses as incurred. To the extent that the Company’s licensees share these costs, such benefit is recorded as a reduction of the related expenses. Stock-Based Compensation The Company estimates the grant date fair value of its stock-based awards and amortizes this fair value to compensation expense over the requisite service period or vesting term (see Note 8). Net Loss Per Share Basic net loss per share is calculated by dividing net loss attributable to common stockholders by the weighted average shares outstanding during the period, without consideration of common stock equivalents. Diluted net loss per share is calculated by adjusting weighted average shares outstanding for the dilutive effect of common stock equivalents outstanding for the period, determined using the treasury-stock method. Due to their anti-dilutive effect, the calculation of diluted net loss per share excludes the following common stock equivalent shares: Year Ended December 31, 2022 2021 Stock Options 7,757,017 5,234,582 Restricted Stock Units 399,349 259,705 Warrants 445,205 168,767 Total 8,601,571 5,663,054 Certain common stock warrants are included in the calculation of basic and diluted net loss per share since their exercise price is de minimis. Fair Value of Financial Instruments The carrying amounts reflected in the Company's consolidated balance sheets for cash, accounts receivable, prepaid expenses and other current assets, accounts payable and accrued expenses and other liabilities approximate their fair values due to their short-term nature. The Company’s valuation of financial instruments is based on a three-tiered approach, which requires that fair value measurements be classified and disclosed in one of three tiers. The fair value hierarchy defines a three-level valuation hierarchy for disclosure of fair value measurements as follows: Level 1 — Quoted prices in active markets for identical assets or liabilities; Level 2 — Other than quoted prices included in Level 1 inputs that are observable for the asset or liability, either directly or indirectly; and Level 3 — Unobservable inputs for the asset and liability used to measure fair value, to the extent that observable inputs are not available. The categorization of a financial instrument within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The following tables present the placement in the fair value hierarchy of financial liabilities measured at fair value: Quoted Significant Prices in Other Significant Active Observable Unobservable Markets Inputs Inputs Carrying December 31, 2022 (Level 1) (Level 2) (Level 3) Value Assets Money market mutual funds (cash equivalents) $ 92,283 $ — $ — $ 92,283 Liabilities A&R Silicon Valley Bank term loan $ — $ 18,853 $ — $ 19,879 Quoted Significant Prices in Other Significant Active Observable Unobservable Markets Inputs Inputs Carrying December 31, 2021 (Level 1) (Level 2) (Level 3) Value Assets Money market mutual funds (cash equivalents) $ 56,494 $ — $ — $ 56,494 Liabilities Silicon Valley Bank term loan $ — $ 10,021 $ — $ 10,410 Money market mutual funds are included in cash and cash equivalents on the Company's consolidated balance sheets. They are valued using quoted market prices and therefore are classified within Level 1 of the fair value hierarchy. The fair value of debt is measured in accordance with ASC 820, Financial Instruments The fair value is determined based on the remaining years to maturity, interest and principal payments, as well as an interest rate consistent with the Company’s current estimated cost of debt. Income Taxes The asset and liability method is used in the Company’s accounting for income taxes. Under this method, deferred tax assets and liabilities are determined based on differences between financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that are expected to be in effect when the differences are expected to reverse. The Company records a valuation allowance against deferred tax assets when realization of the tax benefit is uncertain. A valuation allowance is recorded, if necessary, to reduce net deferred taxes to their realizable values if management believes it is more likely than not that the net deferred tax assets will not be realized. The Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position are measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. Recent Accounting Pronouncements In August 2020, the FASB issued ASU 2020-06, Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity In May 2021, the FASB issued ASU 2021-04, Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options . This guidance clarifies and reduces diversity in the accounting for modifications or exchanges of freestanding equity-classified written call options (for example warrants) that remain equity classified after modification or exchange. Effective January 1, 2022, the Company adopted ASU 2021-04, which had no impact on the Company’s financial statements and related disclosures. |
Property, Plant and Equipment
Property, Plant and Equipment | 12 Months Ended |
Dec. 31, 2022 | |
Property, Plant and Equipment | |
Property, Plant and Equipment | 3. Property, Plant and Equipment Property, plant and equipment consisted of the following: December 31, December 31, 2022 2021 Lab and build-to-suit equipment $ 6,257 $ 6,600 Office equipment 19 19 Furniture and fixtures 134 177 Computer equipment 291 347 Leasehold improvements 11,409 11,457 Construction-in-progress 155 — Total property, plant and equipment 18,265 18,600 Accumulated depreciation and amortization (14,114) (13,583) Property, plant and equipment, net $ 4,151 $ 5,017 The Company recorded depreciation and amortization expense of $1.4 million and $1.8 million for the years ended December 31, 2022 and 2021, respectively. Maintenance and repairs are expensed as incurred and were $0.3 million and $0.1 million for the years ended December 31, 2022 and 2021, respectively. |
Contract Acquisition Costs and
Contract Acquisition Costs and Intangible Asset, and Goodwill | 12 Months Ended |
Dec. 31, 2022 | |
Contract Acquisition Costs and Intangible Asset, and Goodwill | |
Contract Acquisition Costs and Intangible Asset, and Goodwill | 4. Contract Acquisition Costs and Intangible Asset, and Goodwill Contract acquisition costs and intangible asset are summarized as follows: December 31, 2022 December 31, 2021 Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Amount Contract acquisition costs $ 12,980 $ (4,376) $ 8,604 $ 12,980 $ (2,842) $ 10,138 Intangible asset $ 5,620 $ (1,894) 3,726 $ 5,620 $ (1,230) 4,390 The Company is amortizing the value of the contract acquisition costs and customer relationship intangible asset on a pro-rata basis based on the estimated total revenue or net profits to be recognized over the period from November 18, 2020 through December 2032, the termination date of the Promotion Agreement (see Note 2-Revenue Recognition). Amortization of contract acquisition costs is recorded as a reduction of revenue and amortization of the intangible asset is recorded as cost of revenue. The Company recorded amortization related to the contract acquisition costs of $1.5 million and $2.7 million for the years ended December 31, 2022 and 2021, respectively. The Company recorded amortization related to the intangible asset of $0.7 million and $1.1 million for the years ended December 31, 2022 and 2021, respectively. Annual amortization over the next five years is expected to be lower than prior years primarily due to an amendment to the Sandoz Agreement entered into during the fourth quarter of 2022, which extended the term of the Agreement by five years. During the year ended December 31, 2020 the Company recorded goodwill of $3.9 million, which primarily represents the Liquidia PAH assembled workforce and the residual value of the purchase consideration and assumed liabilities that exceeded the assets acquired (see Note 2-Goodwill). As of December 31, 2022, the Company concluded that there were no events or changes in circumstances that indicated that the carrying amount of goodwill was not recoverable. |
Indemnification Asset with Rela
Indemnification Asset with Related Party and Litigation Finance Payable | 12 Months Ended |
Dec. 31, 2022 | |
Indemnification Asset with Related Party and Litigation Finance Payable | |
Indemnification Asset with Related Party and Litigation Finance Payable | 5. Indemnification Asset with Related Party and Litigation Finance Payable On June 3, 2020, Liquidia PAH entered into a litigation financing arrangement (the “Financing Agreement”) with Henderson SPV, LLC (“Henderson”). Liquidia PAH, along with Sandoz (collectively the “Plaintiffs”), are pursuing litigation against United Therapeutics Corporation (“United Therapeutics”) and, prior to entering into a binding settlement term sheet with Smiths Medical ASC in November 2020, were pursuing litigation against Smiths Medical. Under the Financing Agreement, Henderson will fund Liquidia PAH’s legal and litigation expenses (referred to as “Deployments”) in exchange for a share of certain litigation or settlement proceeds. Deployments received from Henderson are recorded as a Litigation finance payable. Litigation proceeds will be split equally between Liquidia PAH and Sandoz. Unless there is an event of default by Henderson, litigation proceeds received by Liquidia PAH must be applied first to repayment of total Deployments received. Litigation proceeds in excess of Deployments received are split between Liquidia PAH and Henderson according to a formula. Unless there is an event of default by PBM, all proceeds received by Liquidia PAH are due to PBM as described further below. On November 17, 2020, Liquidia PAH entered into a Litigation Funding and Indemnification Agreement (“Indemnification Agreement”) with PBM. PBM is considered to be a related party as it is controlled by a major stockholder (which beneficially owns approximately 9.3% of Liquidia Corporation Common Stock as of March 1, 2023) who is also a member of the Company’s Board of Directors. Under the terms of the Indemnification Agreement, PBM now controls the litigation, with Liquidia PAH’s primarily responsibility being to cooperate to support the litigation proceedings as needed. The Indemnification Agreement provides that Liquidia PAH and its affiliates will not be entitled to any proceeds resulting from, or bear any financial or other liability for, the United Therapeutics and Smiths Medical ASC litigation unless there is an event of default by PBM. Any Liquidia PAH litigation expenses not reimbursed by Henderson under the Financing Agreement will be reimbursed by PBM. Any proceeds received which Henderson is not entitled to under the Financing Agreement will be due to PBM. The Indemnification Asset is increased as the Company records third party legal and litigation expenses related to the United Therapeutics and Smiths Medical ASC litigation. As of December 31, 2022, the Indemnification Asset and Litigation Finance Payable were classified as long-term assets and liabilities, respectively as it is considered unlikely that the litigation will conclude prior to December 31, 2023. |
Accrued Expenses and Other Curr
Accrued Expenses and Other Current Liabilities | 12 Months Ended |
Dec. 31, 2022 | |
Accrued Expenses and Other Current Liabilities | |
Accrued Expenses and Other Current Liabilities | 6. Accrued Expenses and Other Current Liabilities Accrued expenses and other current liabilities consisted of the following: December 31, December 31, 2022 2021 Accrued compensation $ 2,862 $ 3,157 Accrued research and development expenses 1,757 344 Accrued other expenses 903 1,670 Total accrued expenses and other current liabilities $ 5,522 $ 5,171 |
Stockholders' Equity
Stockholders' Equity | 12 Months Ended |
Dec. 31, 2022 | |
Stockholders' Equity | |
Stockholders' Equity | 7. Stockholders’ Equity Authorized Capital As of December 31, 2022, the authorized capital of the Company consists of 90,000,000 shares of capital stock, $0.001 par value per share, of which 80,000,000 shares are designated as common stock and 10,000,000 shares are designated as preferred stock. Common Stock Upon any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Company, the holders of the common stock shall be entitled to receive that portion of the remaining funds to be distributed to the stockholders, subject to the liquidation preferences of any outstanding preferred stock, if any. Such funds shall be paid to the holders of common stock on the basis of the number of shares so held by each of them. Issuance of Common Stock on April 18, 2022 from an Underwritten Public Offering On April 12, 2022, the Company sold 11,274,510 shares of the Company’s common stock in an underwritten registered public offering at an offering price of $5.10 per share (the “Offering”). The Offering closed on April 18, 2022, and the Company received net proceeds of approximately $54.5 million from the sale of the shares, after deducting the underwriting discounts and commissions and other offering expenses. Caligan Partners LP (“Caligan”), the Company’s largest stockholder, and Paul B. Manning, a member of the Company’s board of directors, participated in the Offering and purchased shares of common stock in an aggregate amount of $11.0 million at the public offering price per share and on the same terms as the other purchasers in the Offering. Caligan purchased 1,764,705 shares of common stock in the Offering for an aggregate purchase price of $9.0 million and Paul B. Manning purchased 392,156 shares of common stock in the Offering for an aggregate purchase price of $2.0 million. Issuance of Common Stock on March 31, 2022 from Merger Transaction On November 18, 2020 (the “Closing Date”), the Company completed the acquisition of RareGen as contemplated by that certain Agreement and Plan of Merger, dated as of June 29, 2020, as amended by a Limited Waiver and Modification to the Merger Agreement, dated as of August 3, 2020 (the “Merger Agreement”). On the Closing Date, an aggregate of 5,550,000 shares of the Company’s common stock, were issued to RareGen members in exchange for all of the issued and outstanding RareGen equity. On March 31, 2022, an aggregate of 616,666 shares of the Company’s common stock, which were held back on the Closing Date for indemnification purposes, were issued to RareGen members. Issuance of Common Stock on April 13, 2021 from a Private Placement On April 12, 2021, the Company entered into a Common Stock Purchase Agreement (the “Purchase Agreement”) with a fund and account managed by Caligan Partners LP and certain other accredited investors for the sale by the Company in a private placement (the “Private Placement”) of an aggregate of 8,626,037 shares of the Company’s Common Stock at a purchase price of $2.52 per share. The Private Placement closed on April 13, 2021 and the Company received gross proceeds of approximately $21.7 million. Warrants During the year ended December 31, 2022, no warrants to purchase shares of common stock were exercised. During the year ended December 31, 2021, 40,702 warrants to purchase shares of common stock were exercised. As of December 31, 2022, outstanding warrants consisted of the following: Number of warrants Exercise Price Expiration Date A&R SVB Warrant - Initial Tranche (see Note 12) 250,000 $ 5.14 January 6, 2032 SVB Warrant - Initial Tranche (see Note 12) 100,000 $ 3.05 February 26, 2031 SVB Warrant - Term B and Term C Tranches (see Note 12) 100,000 $ n/a February 26, 2031 Other warrants 65,572 $ 0.02 December 31, 2026 |
Stock-Based Compensation
Stock-Based Compensation | 12 Months Ended |
Dec. 31, 2022 | |
Stock-Based Compensation. | |
Stock-Based Compensation | 8. Stock-Based Compensation 2020 Long-Term Incentive Plan The Company’s 2020 Long-Term Incentive Plan (the “2020 Plan”) provides for the granting of stock options, appreciation rights, stock awards, stock units, and other stock-based awards and for accelerated vesting under certain change of control transactions. The number of shares of the Company’s common stock available for issuance under the 2020 Plan will automatically increase on January 1 of each year through 2030, by an amount equal to the smaller of (a) 4% of the number of shares of common stock issued and outstanding on the immediately preceding December 31, or (b) an amount determined by the Board of Directors (the “Evergreen Provision”). On January 1, 2023, the number of shares of common stock available for issuance under the 2020 Plan automatically increased by 2,580,716 shares to 2,851,611 shares pursuant to the Evergreen Provision. As of December 31, 2022, there were 270,895 shares available for future grants under the 2020 Plan. The 2020 Plan replaced the Company’s prior equity award plans and such plans have been discontinued, however, the outstanding awards will continue to remain in effect in accordance with their terms. Shares that are returned under these prior plans upon cancellation, termination or expiration of awards outstanding will not be available for grant under the 2020 Plan. As of December 31, 2022, the Company had a total of 673,880 shares of common stock reserved for issuance related to the remaining outstanding equity awards granted under the prior plans. 2022 Inducement Plan On January 25, 2022, the Board approved the adoption of the Company’s 2022 Inducement Plan (the “2022 Inducement Plan”). The 2022 Inducement Plan was recommended for approval by the Compensation Committee of the Board (the “Compensation Committee”), and subsequently approved and adopted by the Board without stockholder approval pursuant to Rule 5635(c)(4) of the rules and regulations of The Nasdaq Stock Market, LLC (the “Nasdaq Listing Rules”). The Company reserved 310,000 shares of the Company's common stock for issuance pursuant to equity awards granted under the 2022 Inducement Plan, and the 2022 Inducement Plan will be administered by the Compensation Committee. In accordance with Rule 5635(c)(4) of the Nasdaq Listing Rules, equity awards under the 2022 Inducement Plan may only be made to an employee who has not previously been an employee or member of the Board (or any subsidiary of the Company), or following a bona fide period of non-employment by the Company (or a subsidiary of the Company), if he or she is granted such equity awards in connection with his or her commencement of employment with the Company or a subsidiary and such grant is an inducement material to his or her entering into employment with the Company or such subsidiary. As of December 31, 2022, the Company had a total of 12,800 shares available to issue under the 2022 Inducement Plan. Employee Stock Purchase Plan In November 2020, stockholders approved the Liquidia Corporation 2020 Employee Stock Purchase Plan (the “ESPP”). The ESPP allows eligible employees to purchase shares of the Company’s common stock at a discount through payroll deductions, subject to plan limitations. Unless otherwise determined by the administrator, the Company’s common stock will be purchased for the accounts of employees participating in the ESPP at a price per share that is 85% of the lesser of the fair market value of the Company’s common stock on the first and last trading day of the offering period. During the year ended December 31, 2022, 51,941 shares of common stock were issued under the ESPP. As of December 31, 2022, a total of 548,059 shares of the Company’s common stock are reserved for issuance under the ESPP. On January 1, 2023, in connection with an evergreen provision contained in the ESPP, an additional 150,000 shares of the Company’s common stock were reserved for issuance under the ESPP. CEO Options During December 2020, the Company issued a stock option grant to its then new Chief Executive Officer, Damian deGoa, to purchase up to 2,000,000 shares of the Company’s common stock (the “CEO Option”) at the exercise price on the grant date of $3.00 per share. The CEO Option was issued outside of the 2020 Plan and 1,375,000 options vested in the fourth quarter of 2021 upon achievement of certain milestones and the passage of time, and ceased vesting upon the termination of Mr. deGoa’s employment on January 31, 2022. However, the CEO Option will remain exercisable so long as Mr. deGoa remains a director of the Company in accordance with his Separation Agreement. This change to vesting terms was treated as a modification of the original award resulting in a stock-based compensation charge of $2.9 million during the year ended December 31, 2022. On June 16, 2022, pursuant to Roger Jeffs’s executive employment agreement dated January 3, 2022 (the “Jeffs Employment Agreement”), the Company granted Dr. Jeffs 931,745 nonstatutory stock options (the “Second Tranche Option”), with an exercise price per share equal to the closing price of a share of common stock on the date of grant. The Second Tranche Option is subject to the following vesting schedule: 25% of the grant vested and became exercisable on January 3, 2023, and the remaining portion of the grant will become vested and exercisable, as applicable, in equal monthly installments over the following thirty-six months, subject to Dr. Jeffs’ continuous employment with the Company on each such vesting date. Notwithstanding the foregoing, in the event of a Change in Control (as defined in the 2020 Plan), 100% of the unvested portion of the Options shall become vested and exercisable as of the closing date of such Change in Control, provided that Dr. Jeffs is actively employed with the Company on such date. Stock-Based Compensation Valuation and Expense Total stock-based compensation expense recognized for employees and non-employees was as follows: Year Ended December 31, By Expense Category: 2022 2021 Research and development $ 1,409 $ 1,923 General and administrative 7,889 4,823 Total stock-based compensation expense $ 9,298 $ 6,746 The following table summarizes the unamortized compensation expense and the remaining years over which such expense would be expected to be recognized, on a weighted-average basis, by type of award: As of December 31, 2022 Weighted Average Remaining Recognition Unamortized Period Expense (Years) Stock options $ 15,532 2.9 Restricted stock units $ 1,723 2.9 The Company accounts for its employee stock-based compensation plans using the fair value method. The fair value method requires the Company to estimate the grant-date fair value of its stock-based awards and amortize this fair value to compensation expense over the requisite service period or vesting term. The Company uses the Black-Scholes option-pricing model to estimate the fair value of stock options granted and purchase rights issued under the ESPP. For restricted stock units (“RSUs”), the grant-date fair value is based upon the market price of the Company’s common stock on the date of the grant. This fair value is then amortized to compensation expense over the requisite service period or vesting term. The following table summarizes the assumptions used for estimating the fair value of stock options granted under the Black-Scholes option-pricing model during the years ended December 31, 2022 and 2021: Year Ended December 31, 2022 2021 Expected dividend yield — — Risk-free interest rate 1.46% - 3.96% 0.62% - 1.67% Expected volatility 90% - 95% 91% - 96% Expected life (years) 5.8 - 6.1 5.2 - 6.1 The following table summarizes the assumptions used for estimating the fair value purchase rights granted to employees under the ESPP under the Black-Scholes option-pricing model during the year ended December 31, 2022: Year Ended December 31, 2022 Expected dividend yield — Risk-free interest rate 0.69% - 3.92% Expected volatility 80% - 129% Expected life (years) 0.50 The following describes the Company’s methodology for determining each assumption: Expected Dividend Yield: The dividend yield percentage is zero because the Company has not historically paid dividends and does not expect to for the foreseeable future. Risk-Free Interest Rate: The risk-free interest rate is based on the U.S. Treasury yield curve approximating the term of the expected life of the award in effect on the date of grant. Expected Volatility: Expected stock price volatility is based on a weighted average of several peer public companies and the historical volatility of the Company’s common stock during the period for which it has traded since the initial public offering. For purposes of identifying peer companies, the Company considered characteristics such as industry, length of trading history and similar vesting terms. Expected Life: The expected life represents the period the awards are expected to be outstanding. The Company’s historical share option exercise experience does not provide a reasonable basis upon which to estimate an expected term because of a lack of sufficient data. Therefore, the Company estimates the expected term by using the simplified method. Stock Options The following table summarizes the Company’s stock option activity during the year ended December 31, 2022: Weighted Weighted Average Average Contractual Aggregate Number of Exercise Term Intrinsic Shares Price (in years) Value Outstanding as of December 31, 2021 5,598,009 $ 4.19 Granted 4,489,277 5.22 Exercised (233,356) 3.60 Cancelled (1,455,668) 5.73 Outstanding as of December 31, 2022 8,398,262 $ 4.49 8.5 $ 17,628 Exercisable as of December 31, 2022 3,327,055 $ 4.03 7.8 $ 9,442 Vested and expected to vest as of December 31, 2022 7,914,670 $ 4.47 8.5 $ 16,849 The weighted average fair value for options granted during the years ended December 31, 2022 and 2021 was $3.94 and $2.23 per share, respectively. The aggregate intrinsic value of stock options in the table above represents the difference between the $6.37 closing price of the Company’s common stock as of December 31, 2022 and the exercise price of outstanding, exercisable, and vested and expected to vest in-the-money stock options. Additional information related to our stock options is summarized below: December 31, 2022 2021 Cash proceeds from options exercised $ 837 $ 41 Aggregate intrinsic value of options exercised $ 553 $ 21 Fair value of options vested $ 4,427 $ 6,169 Restricted Stock Units Restricted Stock Units (“RSUs”) represent the right to receive shares of common stock of the Company at the end of a specified time period or upon the achievement of a specific milestone. RSUs can only be settled in shares of the Company’s common stock. During the year ended December 31, 2022, the Board of Directors approved grants of an aggregate of The following table summarizes the Company’s RSU activity during the year ended December 31, 2022: Weighted Average Grant-Date Number of Fair Value RSUs (per RSU) Unvested as of December 31, 2021 15,204 $ 3.31 Granted 503,403 5.64 Vested (54,181) 4.91 Forfeited (56,700) 6.25 Unvested as of December 31, 2022 407,726 $ 5.57 |
Revenue From Contracts With Cus
Revenue From Contracts With Customers | 12 Months Ended |
Dec. 31, 2022 | |
Revenue From Contracts With Customers | |
Revenue From Contracts With Customers | 9. Revenue From Contracts With Customers On August 1, 2018, the Company partnered with Sandoz in the Promotion Agreement to launch the first-to-file generic of Treprostinil Injection for the treatment of patients with PAH. Under the Promotion Agreement, the Company provides certain promotional and nonpromotional activities on an exclusive basis for the product in the United States of America for the treatment of PAH. The Company paid Sandoz $20.0 million at the inception of the Promotion Agreement, in consideration for the right to conduct the promotional and nonpromotional activities for the product. In exchange for its services, the Company is entitled to receive a portion of net profits, as defined within the Promotion Agreement, based on specified profit levels associated with the product. See Note 2 for Revenue Recognition accounting policy. In accordance with the Promotion Agreement, Liquidia PAH receives consideration from Sandoz in the form of a share of Net Profits for the promotional activities it performs. The share of Net Profits received is subject to adjustments from Sandoz for items such as distributor chargebacks, rebates, inventory returns, inventory write-offs and other adjustments (the “Net Profits Adjustment”). The Company expects to refund certain amounts to Sandoz through a reduction of the cash received from future Net Profits generated under the Promotion Agreement. As of December 31, 2022 and 2021, a $0.5 million refund liability is offset against accounts receivable from Sandoz. The Company derived approximately 98% and 99% of its revenue from the Promotion Agreement for the years ended December 31, 2022 and 2021, respectively. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2022 | |
Income Taxes | |
Income Taxes | 10. Income Taxes No provision for federal and state income tax expense has been recorded for the years ended December 31, 2022 and 2021 due to the valuation allowance recorded against the net deferred tax asset and recurring losses. Deferred income taxes reflect the net tax effect of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company’s deferred tax assets and liabilities are as follows as of December 31, 2022 and 2021: 2022 2021 Deferred income tax assets: Tax loss carryforwards $ 59,241 $ 57,302 Research and development credits 3,942 4,204 R&D section 174 costs 4,584 — Share-based compensation 4,637 3,213 Lease liability 1,157 1,627 Compensation 621 800 Fixed assets 369 250 Patent amortization 476 325 Accrued litigation costs 1,546 1,641 Settlement reserve 123 141 Other 2 1 Valuation allowance (74,549) (66,987) Total deferred income tax assets 2,149 2,517 Deferred income tax liabilities: Section 481(a) adjustment 21 48 Intangible assets 1,546 1,679 Right of use asset 582 790 Total deferred income tax liabilities 2,149 2,517 Total net deferred tax $ — $ — As of December 31, 2022 and 2021, the Company has established a full valuation allowance against its net deferred tax assets since, at the time, the Company could not assert that it was more likely than not that its deferred tax assets would be realized. As a result, there was an increase in the valuation allowance in 2022 of approximately $7.6 million. As of December 31, 2022, the Company had federal and state income tax loss carryforwards of $278.7 million and $304.1 million, respectively, which begin to expire in 2024 for federal purposes and in 2023 for state purposes. In addition, the Company has tax credit carryforwards for federal tax purposes of approximately $4.3 million as of December 31, 2022, which begin to expire in 2026. The utilization of net operating loss and tax credit carryforwards to reduce future income taxes will depend on the Company’s ability to generate sufficient taxable income prior to the expiration of the loss carryforwards. The Internal Revenue Code of 1986, as amended, contains provisions which limit the ability to utilize the net operating loss carryforwards in the case of certain events, including significant changes in ownership interests. If the Company’s net operating loss carryforwards are limited, and the Company has taxable income which exceeds the permissible yearly net operating loss carryforwards, the Company would incur a federal income tax liability even though net operating loss carryforwards would be available in future years. The reasons for the difference between actual income tax expense for the years ended December 31, 2022 and 2021 and the amount computed by applying the statutory federal income tax rate to income before income tax are as follows: 2022 2021 % of % of Pretax Pretax Amount Earnings Amount Earnings Income tax benefit at statutory rate $ (8,613) 21.0 % $ (7,261) 21.0 % State income taxes, net of federal tax benefit (1,787) 4.4 (2,626) 7.6 Non-deductible expenses 1 — — — Stock-based compensation 310 (0.8) 286 (0.8) Credits — — (262) 0.8 Deferred tax true-up 1,159 (2.9) — — Change in state rate 1,368 (3.3) 4,454 (12.9) Other — — 18 (0.1) Change in valuation allowance 7,562 (18.4) 5,391 (15.6) Provision for income taxes $ — — % $ — — % The Company has determined that there may be a future limitation on the Company’s ability to utilize its entire federal R&D credit carryover. Therefore, the Company recognized an uncertain tax benefit associated with the federal R&D credit carryover during the years ended December 31, 2022 and 2021, as follows: Balance at December 31, 2020 $ 403 Increases related to 2021 52 Balance at December 31, 2021 455 Decreases related to 2022 (65) Balance at December 31, 2022 $ 390 The Company recognizes the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities based on the technical merits of the position. The Company has determined that it had no other material uncertain tax benefits for the year ended December 31, 2022. The Company’s policy for recording interest and penalties related to uncertain tax provisions is to record them as a component of the provision for income taxes. The Company did not have any accrued interest or penalties associated with any unrecognized tax positions as of December 31, 2022 and 2021, and there were no such interest or penalties recognized during the years ended December 31, 2022 and 2021. On November 18, 2021, North Carolina enacted the 2021 Appropriations Act, which included a gradual corporate income tax rate decrease from the current 2.5% to 0% by 2030. The Company is in a cumulative loss position and does not have significant deferred tax liabilities that can be utilized as a source of taxable income in the future. Therefore, in 2021, the Company reduced its deferred tax asset related to North Carolina NOLs to zero, as no benefit is expected to be realized from these deferred tax assets prior to 2030 when there would be no income tax in North Carolina. The reduction in the value of the deferred tax assets resulted in $5.7 million of cumulative tax expense, which is fully offset by the reduction in the corresponding valuation allowance. If the Company becomes profitable prior to 2030, the Company will recognize an income tax benefit related to the portion of its deferred tax asset related to North Carolina NOLs utilized. The Company has all tax years open to examination by federal tax and state tax jurisdictions. No income tax returns are currently under examination by taxing authorities. |
Leases
Leases | 12 Months Ended |
Dec. 31, 2022 | |
Leases | |
Leases | 11. Leases The Company leases certain laboratory space, office space, and equipment. Leases with an initial term of 12 months or less are not recorded on the balance sheet; the Company recognizes lease expense for these leases on a straight-line basis over the lease term. For lease agreements entered into or reassessed after the adoption of Topic 842, the Company combines lease and non-lease components, if any. Most leases include one or more options to renew. The exercise of lease renewal options is at the Company’s sole discretion. Certain leases also include options to purchase the leased property. Consistent with past practice and current intent, the Company has recognized all such purchase options as part of its right-of-use assets and lease liabilities. The depreciable life of assets and leasehold improvements are limited by the expected lease term unless there is a transfer of title or purchase option reasonably certain of exercise. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants. The Company conducts its operations from leased facilities of approximately 45,000 square feet in Morrisville, North Carolina with a lease expiration date of October 31, 2026. In addition, the Company leases specialized laboratory equipment under finance leases. The related right-of-use assets are amortized on a straight-line basis over the lesser of the lease term or the estimated useful life of the asset. The Company does not have access to certain inputs used by its lessors to calculate the rate implicit in its finance leases. As such, the Company utilized its estimated incremental borrowing rate for the discount rate applied to its finance leases. The original incremental borrowing rate used on finance leases was 7.5%. During February 2021, the Company exercised the lease purchase option for certain finance leases that had expired and entered into a lease modification agreement with its existing lessor for certain other finance leases. The modification resulted in an increase in the remaining lease term of between 24 and 48 months as well as a decrease in the monthly payments associated with the respective modified leases. The incremental borrowing rate used on the modified leases was 6.5%. The lease modification had an immaterial impact on the Company’s 2021 consolidated financial statements. The Company’s lease cost is reflected in the accompanying Statements of Operations and Comprehensive Loss as follows: Year Ended December 31, Classification 2022 2021 Operating lease cost: Fixed lease cost Research and development $ 702 $ 702 Fixed lease cost General and administrative 78 78 Finance lease cost: Amortization of lease assets Research and development 135 267 Interest on lease liabilities Interest expense 32 43 Total Lease Cost $ 947 $ 1,090 The weighted average remaining lease term and discount rates as of December 31, 2022 were as follows: Weighted average remaining lease term (years): Operating leases 3.8 Finance leases 1.9 Weighted average discount rate: Operating leases 10.3 % Finance leases 6.5 % The discount rate for operating leases was estimated based upon market rates of collateralized loan obligations of comparable companies on comparable terms. The future minimum lease payments as of December 31, 2022 were as follows: Operating Finance Year ending December 31: Leases Leases Total 2023 $ 1,283 $ 195 $ 1,478 2024 1,317 115 1,432 2025 1,356 64 1,420 2026 1,158 — 1,158 Total minimum lease payments 5,114 374 5,488 Less: Interest (882) (22) (904) Present value of lease liabilities $ 4,232 $ 352 $ 4,584 |
Long-Term Debt
Long-Term Debt | 12 Months Ended |
Dec. 31, 2022 | |
Long-term Debt | |
Long-term Debt | 12. Long-Term Debt Long-term debt consisted of the following: December 31, December 31, Maturity Date 2022 2021 A&R Silicon Valley Bank term loan December 1, 2025 $ 19,879 $ — Silicon Valley Bank term loan September 1, 2024 — 10,410 Long-term debt $ 19,879 $ 10,410 On January 9, 2023, the Company entered into a Revenue Interest Financing Agreement (the “RIFA”) with HealthCare Royalty Partners IV, L.P. (“HCR”) and HealthCare Royalty Management, LLC, pursuant to which and subject to the terms and conditions contained therein, the HCR agreed to pay the Company an aggregate investment amount of up to $100.0 million (the “Investment Amount”). $32.5 million of the Investment Amount was funded on January 27, 2023, $22.4 million of which was used to satisfy the Company’s existing obligations under the A&R SVB LSA (defined below), with the excess proceeds funded to the Company. Note 16. Subsequent Events for more information. Amended and Restated Loan and Security Agreement dated January 7, 2022 On January 7, 2022 (the “A&R SVB LSA Effective Date”), the Company entered into an Amended and Restated Loan and Security Agreement with SVB and SVB Innovation Credit Fund VIII, L.P. (“Innovation”) (the “A&R SVB LSA”). The A&R SVB LSA established a term loan facility in the aggregate principal amount of up to $40.0 million available in three tranches. Extinguishments of Liabilities The A&R SVB LSA was to mature on December 1, 2025 and consisted of interest-only payments through December 31, 2023. The outstanding principal amount of the term loans accrued interest at a floating rate per year equal to the greater of 7.25 % and the prime rate of interest plus 4.0 %. The A&R SVB LSA contains customary affirmative and negative covenants, including but not limited to certain financial covenants, protection of intellectual property rights, the disposition of certain assets, and material adverse changes. The Company was in compliance with all such covenants at December 31, 2022. As an inducement to enter into the A&R SVB LSA, the Company issued SVB, Innovation, and Innovation Credit Fund VIII-A L.P. (“Innovation Credit”) certain warrants to purchase shares of the Company’s common stock pursuant to the Warrant to Purchase Stock agreements by and between the Company and each recipient (collectively, the “A&R SVB Warrants”). The respective A&R SVB Warrants provided recipients the right to obtain a total of 250,000 shares of the Company’s stock at an exercise price of $5.14 per share. The A&R SVB Warrants provide an option for a cashless exercise. In accordance with ASC 470, Debt million was allocated to the A&R SVB LSA. In addition, the Company incurred fees of less than million, which were recorded as debt issuance costs. The debt discount and debt issuance costs are being amortized to interest expense and the Final Payment Fee is being accreted using the effective interest method over the term of the A&R SVB LSA. The Company evaluated the features of the A&R SVB LSA and A&R SVB Warrants in accordance with ASC 480, Distinguishing Liabilities from Equity , Derivatives and Hedging . The Company determined that the A&R SVB LSA and A&R SVB Warrants did not contain any features that would qualify as a derivative or embedded derivative. In addition, the Company determined that the A&R SVB Warrants should be classified as equity. The estimated fair value of the A&R SVB Warrant was calculated using the Black-Scholes Option Pricing Model based on the following inputs: Expected dividend yield — Risk-free interest rate 1.76% Expected volatility 97.2% Expected life (years) 10.0 Loan and Security Agreement dated February 26, 2021 The Company entered into a Loan and Security Agreement with SVB on February 26, 2021 (the “Effective Date”) and a First Loan Modification Agreement with SVB on August 26, 2021 (the “SVB LSA”). The SVB LSA established a term loan facility in the aggregate principal amount of up to $20.5 million, of which $10.5 million was funded on March 1, 2021 and was used to satisfy the Company’s existing obligations of $9.4 million, with the excess proceeds funded to the Company. The Company accounted for the repayment of the loan obligation in accordance with ASC 405-20, Extinguishments of Liabilities In connection with the Loan Agreement, the Company issued to SVB a warrant, dated as of the Effective Date to purchase 200,000 shares of common stock (the “SVB Warrant”), of which 100,000 shares vested on the Effective Date, with an exercise price per share equal to $3.05 (the “Initial Tranche”). The remaining 100,000 shares did not vest as additional amounts were not funded under the SVB LSA (the “Term B and C Tranches”). The Company evaluated the features of the SVB LSA and SVB Warrant in accordance with ASC 480, Distinguishing Liabilities from Equity , Derivatives and Hedging . The Company determined that the Loan Agreement and Warrant did not contain any features that would qualify as a derivative or embedded derivative. In addition, the Company determined that the SVB Warrant should be classified as equity. The estimated fair value of the SVB Warrant of was calculated using the Black-Scholes Option Pricing Model based on the following inputs: Expected dividend yield — Risk-free interest rate 1.43% Expected volatility 90.8% Expected life (years) 10.0 |
Defined Contribution Retirement
Defined Contribution Retirement Plan | 12 Months Ended |
Dec. 31, 2022 | |
Defined Contribution Retirement Plan | |
Defined Contribution Retirement Plan | 13. Defined Contribution Retirement Plan The Company maintains a defined contribution 401(k) retirement plan for its employees, pursuant to which employees may elect to contribute a portion of their compensation on a tax-deferred basis. The Company matches 100% of eligible employee contributions up to 4% of an employee’s salary, subject to the maximum amount permitted by the Internal Revenue Code. The Company’s matching contributions were $0.4 million and $0.3 million for the years ended December 31, 2022 and 2021, respectively. |
Legal Proceedings
Legal Proceedings | 12 Months Ended |
Dec. 31, 2022 | |
Legal Proceedings | |
Legal Proceedings | 14. Legal Proceedings YUTREPIA-Related Litigation In June 2020, United Therapeutics filed a complaint for patent infringement against the Company in the U.S. District Court for the District of Delaware (Case No. 1:20-cv-00755-RGA) (the “Hatch-Waxman Litigation”), asserting infringement by the Company of U.S. Patent Nos. 9,604,901, entitled “Process to Prepare Treprostinil, the Active Ingredient in Remodulin®” (the “‘901 Patent”), and 9,593,066, entitled “Process to Prepare Treprostinil, the Active Ingredient in Remodulin®” (the “‘066 Patent”), relating to United Therapeutics’ Tyvaso®, a nebulized treprostinil solution for the treatment of PAH. United Therapeutics’ complaint was in response to the Company’s NDA for YUTREPIA, filed with the FDA, requesting approval to market YUTREPIA, a dry powder inhalation of treprostinil for the treatment of PAH. The YUTREPIA NDA was filed under the 505(b)(2) regulatory pathway with Tyvaso® as the reference listed drug. In July 2020, the U.S. Patent and Trademark Office (the “USPTO”) issued U.S. Patent No. 10,716,793 (the “‘793 Patent”), entitled “Treprostinil Administration by Inhalation”, to United Therapeutics. In July 2020, United Therapeutics filed an amended complaint in the Hatch-Waxman Litigation asserting infringement of the ‘793 Patent by the practice of YUTREPIA. In June 2021, the Court held a claim construction hearing. Based on the Court’s construction of the claim terms, United Therapeutics filed a stipulation of partial judgment with respect to the ‘901 Patent in December 2021 under which United Therapeutics agreed to the entry of judgment of the Company’s non-infringement of the ’901 Patent. United Therapeutics preserved its appellate rights with respect to the ‘901 Patent in the event the Court’s construction of those terms is reversed. Trial proceedings in the Hatch-Waxman Litigation were held in March 2022. In August 2022, Judge Andrews, who was presiding over the Hatch-Waxman Litigation, issued an opinion that claims 1, 2, 3, 6 and 9 of the ‘066 Patent were invalid, that the remaining asserted claims of the ‘066 Patent were not infringed by the Company, and that all of the asserted claims of the ‘793 Patent were both valid and infringed by the Company, based on the arguments presented by the Company in the Hatch-Waxman Litigation. In September 2022, Judge Andrews entered a final judgment in the Hatch-Waxman Litigation that incorporated the findings from his opinion and ordered that the effective date of any final approval by the FDA of YUTREPIA shall be a date which is not earlier than the expiration date of the ’793 Patent, which will be in 2027. Both the Company and United Therapeutics have appealed Judge Andrews’ decision to the United States Court of Appeals for the Federal Circuit. The appeal remains pending. In September of 2022, following entry of final judgment, the Company filed a motion requesting that Judge Andrews stay enforcement of the order delaying the effective date of any final approval by the FDA of YUTREPIA until the expiration of the ’793 Patent. Briefing on the motion for stay of enforcement is complete, and the motion remains pending with the Court. In March 2020, the Company filed two petitions for inter partes inter partes inter partes inter partes October 2021, the PTAB issued a final written decision concluding that seven of the claims in the ‘901 patent were unpatentable, leaving only the narrower dependent claims 6 and 7, both of which require actual storage at ambient temperature of treprostinil sodium. In November 2021, United Therapeutics submitted a rehearing request with respect to the PTAB’s decision in the inter partes review of the ‘901 Patent. The rehearing request was denied in June 2022. In August 2022, United Therapeutics appealed the decision of the PTAB with respect to the ‘901 Patent to the United States Court of Appeals for the Federal Circuit. The appeal remains pending. In January 2021, the Company filed a petition for inter partes inter partes ruled in the Company’s favor, concluding that based on the preponderance of the evidence, all the claims of the ’793 Patent have been shown to be unpatentable. In August 2022, United Therapeutics submitted a rehearing request with respect to the PTAB’s decision in the inter partes review of the ‘793 Patent. The rehearing request was denied in February 2023. United Therapeutics has publicly stated that it will appeal the PTAB’s decision with respect to the ‘793 Patent. The PTAB’s decision with respect to the ‘793 Patent will not override Judge Andrews’ order in the Hatch-Waxman Litigation that YUTREPIA may not be approved due to infringement of the ‘793 Patent unless and until the decision of the PTAB is affirmed on appeal. Trade Secret Litigation In December 2021, United Therapeutics filed a complaint in the Superior Court in Durham County, North Carolina, alleging that the Company and a former United Therapeutics employee, who later joined the Company as an employee many years after terminating his employment with United Therapeutics, conspired to misappropriate certain trade secrets of United Therapeutics and engaged in unfair or deceptive trade practices. In January 2022, the Company’s co-defendant in the lawsuit removed the lawsuit to the United States District Court for the Middle District of North Carolina. Subsequently, in January 2022, United Therapeutics filed an amended complaint eliminating their claim under the federal Defend Trade Secrets Act and a motion seeking to have the case remanded to North Carolina state court. In April 2022, the Court granted United Therapeutics’ motion to have the case remanded to North Carolina state court. In May 2022, the Company filed a motion to dismiss all of the claims made by United Therapeutics in the lawsuit. The motion was denied by the Court in October 2022. Discovery in the case is ongoing. RareGen Litigation In April 2019, Sandoz and Liquidia PAH (then known as RareGen) filed a complaint against United Therapeutics and Smiths Medical in the District Court of New Jersey (Case No. No. 3:19-cv-10170), (the “RareGen Litigation”), alleging that United Therapeutics and Smiths Medical violated the Sherman Antitrust Act of 1890, state law antitrust statutes and unfair competition statutes by engaging in anticompetitive acts regarding the drug treprostinil for the treatment of PAH. In March 2020, Sandoz and Liquidia PAH filed a first amended complaint adding a claim that United Therapeutics breached a settlement agreement that was entered into in 2015, in which United Therapeutics agreed to not interfere with Sandoz’s efforts to launch its generic treprostinil, by taking calculated steps to restrict and interfere with the launch of Sandoz’s competing generic product. United Therapeutics developed treprostinil under the brand name Remodulin® and Smiths Medical manufactured a pump and cartridges that are used to inject treprostinil into patients continuously throughout the day. Sandoz and Liquidia PAH allege that United Therapeutics and Smiths Medical entered into anticompetitive agreements (i) whereby Smiths Medical placed restrictions on the cartridges such that they can only be used with United Therapeutics’ branded Remodulin® product and (ii) requiring Smiths Medical to enter into agreements with specialty pharmacies to sell the cartridges only for use with Remodulin®. In November 2020, Sandoz and Liquidia PAH entered into a binding term sheet (the “Term Sheet”) with Smiths Medical in order to resolve the outstanding RareGen Litigation solely with respect to disputes between Smiths Medical, Liquidia PAH and Sandoz. In April 2021, Liquidia PAH and Sandoz entered into a Long Form Settlement Agreement (the “Settlement Agreement”) with Smiths Medical to further detail the terms of the settlement among such parties as reflected in the Term Sheet. Pursuant to the Term Sheet and the Settlement Agreement, the former RareGen members and Sandoz received a payment of $4.25 million that was evenly split between the parties. In addition, pursuant to the Term Sheet and Settlement Agreement, Smiths Medical disclosed and made available to Sandoz and Liquidia PAH certain specifications and other information related to the cartridge that Smiths Medical developed and manufactures for use with the CADD-MS 3 infusion pump (the “CADD-MS 3 Cartridge”). Pursuant to the Settlement Agreement, Smiths Medical also granted Liquidia PAH and Sandoz a non-exclusive, royalty-free license in the United States to Smiths Medical’s patents and copyrights associated with the CADD-MS 3 Cartridge and certain other information for use of the CADD-MS 3 pump and the CADD-MS 3 Cartridges. Smiths also agreed in the Settlement Agreement to provide information and assistance in support of Liquidia PAH’s efforts to receive FDA clearance for the RG 3ml Medication Cartridge (the “RG Cartridge”) and to continue to service certain CADD-MS 3 pumps that are available for use with the Treprostinil Injection through January 1, 2025. Liquidia PAH and Sandoz agreed, among other things, to indemnify Smiths from certain liabilities related to the RG Cartridge. In September 2021, United Therapeutics filed a motion for summary judgment with respect to all of the claims brought by Sandoz and Liquidia PAH against United Therapeutics. At the same time, Sandoz filed a motion for summary judgment with respect to the breach of contract claim. In March 2022, the Court issued an order granting partial summary judgment to United Therapeutics with respect to the antitrust and unfair competition claims, denying summary judgment to United Therapeutics with respect to the breach of contract claim, and granting partial summary judgment to Sandoz with respect to the breach of contract claim. The RareGen Litigation will now proceed to a trial to determine the amount of damages due from United Therapeutics to Sandoz with respect to the breach of contract claim. The Court has ordered that a three-day bench trial will be scheduled for summer of 2023. Under the Promotion Agreement, all proceeds from the litigation will be divided evenly between Sandoz and Liquidia PAH. Under the litigation finance agreements that Liquidia PAH has entered into with Henderson and PBM, any net proceeds received by Liquidia PAH with respect to the RareGen Litigation will be divided between Henderson and PBM. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2022 | |
Commitments and Contingencies. | |
Commitments and Contingencies | 15. Commitments and Contingencies Mainbridge Health Care Device Development and Supply Agreement On December 1, 2022, the Company entered into a Device Development and Supply Agreement (the “Pump Development Agreement”) with Mainbridge Health Partners, LLC (“Mainbridge”) and Sandoz Inc. (“Sandoz”). The Pump Development Agreement provides for the cooperation between the Company, Sandoz and Mainbridge to develop a new pump that is suitable for the subcutaneous administration of Treprostinil Injection. Mainbridge will perform all development, validation and testing activities required for the pump and related consumables in anticipation of submitting a 510(k) clearance application for the pump to the FDA in 2023. In connection with the Pump Development Agreement, the Company and Sandoz have agreed to pay Mainbridge certain future contingent milestone payments in accordance with the terms and conditions set forth therein. UNC License Agreement The Company performs research under a license agreement with The University of North Carolina at Chapel Hill (“UNC”) as amended to date (the “UNC License Agreement”). As part of the UNC License Agreement, the Company holds an exclusive license to certain research and development technologies and processes in various stages of patent pursuit, for use in its research and development and commercial activities, with a term until the expiration date of the last to expire patent subject to the UNC License Agreement, subject to industry standard contractual compliance. Under the UNC License Agreement, the Company is obligated to pay UNC royalties equal to a low single digit percentage of all net sales of drug products whose manufacture, use or sale includes any use of the technology or patent rights covered by the UNC License Agreement, including YUTREPIA. The Company may grant sublicenses of UNC licensed intellectual property in return for specified payments based on a percentage of any fee, royalty or other consideration received. Chasm Technologies In March 2012, the Company entered into an agreement, as amended, with Chasm Technologies, Inc. for manufacturing consulting services related to the Company’s manufacturing capabilities during the term of the agreement. The Company agreed to pay future contingent milestones and royalties on net sales totaling no more than $1.5 million, none of which has been earned as of December 31, 2022. Employment Agreements The Company has agreements with certain employees which require the funding of a specific level or payments if certain events, such as a change in control or termination without cause, occur. Purchase Obligations The Company enters into contracts in the normal course of business with contract service providers to assist in the performance of research and development and manufacturing activities. Subject to required notice periods and obligations under binding purchase orders, the Company can elect to discontinue the work under these agreements at any time. As of December 31, 2022, the Company has non-cancelable commitments for product manufacturing costs of approximately $3.7 million for the year ending 2023. In addition, the Company has entered into a multi-year supply agreement with LGM Pharma, LLC (LGM) to produce active pharmaceutical ingredients for YUTREPIA. Under the supply agreement with LGM, the Company is required to provide rolling forecasts, a portion of which will be considered a binding, firm order, subject to an annual minimum purchase commitment of $2.7 million for the term of the agreement. The agreement expires five years from the first marketing authorization approval of YUTREPIA. Other Contingencies and Commitments The Company from time-to-time is subject to claims and litigation in the normal course of business, none of which the Company believes represent a risk of material loss or exposure. See Note 14 for further discussion of pending legal proceedings. In addition to the commitments described above, the Company is party to other commitments, including non-cancelable leases and long-term debt, which are described elsewhere in these financial statements. |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2022 | |
Subsequent Events | |
Subsequent Events | 16. Subsequent Events Revenue Interest Financing Agreement On January 9, 2023, the Company entered into a Revenue Interest Financing Agreement (the “RIFA”) with HealthCare Royalty Partners IV, L.P. (“HCR”) and HealthCare Royalty Management, LLC. Pursuant to the RIFA and subject to customary closing conditions, HCR has agreed to pay the Company an aggregate investment amount of up to $100.0 million (the “Investment Amount”). Under the terms of the RIFA, $32.5 million of the Investment Amount was funded on January 27, 2023 (the “Initial Investment Amount”), $22.4 million of which was used to satisfy in full and retire the Company’s indebtedness under the A&R SVB LSA, with the excess proceeds less transaction costs of approximately $0.7 million funded to the Company. An additional $7.5 million of the Investment Amount will be funded fifteen business days after a request made by the Company to HCR to fund acquisition of rights, whether in the form of an acquisition, license, joint venture or similar transaction, to a clinical stage or commercial stage biopharmaceutical product to diagnose, prevent, or treat pulmonary hypertension, an additional $35.0 million of the Investment Amount will be funded fifteen business days after the earlier of regulatory approval of YUTREPIA or a favorable determination relating to the asserted patents in the ongoing patent litigation with United Therapeutics, and the remaining $25.0 million of the Investment Amount will be funded fifteen business days after the mutual agreement of HCR and the Company to fund such amount (the “Fourth Investment Amount”). As consideration for the Investment Amount and pursuant to the RIFA, the Company has agreed to pay HCR a tiered royalty on annual net revenue of the Company after the first commercial sale of YUTREPIA (the “Revenue Interests”). Except as may otherwise be mutually agreed to in connection with the funding of the Fourth Investment Amount, the applicable tiered percentage will range from 3.60% to 10.00% on the first $250 million on annual net revenue, 1.44% to 4.00% on the next $250 million in annual net revenue, and 0.36% to 1.00% on all annual net revenue in excess of $500 million. The specific royalty rate within such ranges will depend upon the total amount advanced by the HCR and the Company’s achievement of a certain annual net revenue threshold for the calendar year 2025. The Company will also make certain fixed quarterly payments to HCR, plus an additional amount on a ratable basis to reflect the funding of additional amounts by HCR under the RIFA. The Company will be required to make additional payments to HCR in the event that the first commercial sale of YUTREPIA does not occur by June 30, 2025 and certain minimum quarterly royalty payments beginning in 2026. If HCR has not received cumulative minimum payments from the Company equal to 60% of the amount funded to date by December 31, 2026 or 100% of the amount funded to date by December 31, 2028, the Company must make a cash payment immediately following each applicable date to HCR sufficient to gross HCR up to such minimum amounts after giving full consideration of the cumulative amounts paid to HCR by the Company through each date. The net sale thresholds described above are not to be interpreted as financial guidance or projections for future net sales of the Company. HCR’s rights to receive the Revenue Interests will terminate on the date on which HCR has received payments equal to 175% of funded portion of the Investment Amount less the aggregate amount of all payments made to HCR as of such date (the “Hard Cap”), plus an amount, if any, that HCR would need to receive to yield an internal rate of return on the funded Investment Amount equal to 18% (the “IRR True-Up Payment”), unless the RIFA is earlier terminated. If a change of control of the Company occurs, HCR may accelerate payments due under the RIFA up to the Hard Cap, plus the IRR True-Up Payment, plus any other obligations payable under the RIFA. Upon the occurrence of an event of default, HCR may accelerate payments due under the RIFA up to the Hard Cap, plus the IRR True-Up Payment, plus any other obligations payable under the RIFA. The RIFA contains customary affirmative and negative covenants and customary events of default and other events that would cause acceleration, including, among other things, the occurrence of certain material adverse events or the material breach of certain representations and warranties and specified covenants, in which event HCR may elect to terminate the RIFA and require the Company to make payments to HCR equal to the lesser of the Hard Cap, plus any other obligations payable under the RIFA, or the funded portion of the Investment Amount, minus payments received by HCR in respect of the Revenue Interests, plus the IRR True-Up Payment. If the FDA grants final approval to an inhaled treprostinil product therapeutically equivalent to YUTREPIA and HCR has not received 100% of the amount funded by HCR to date, then the Company will be required to make payments to HCR equal to 100% of the amount funded by HCR to date, minus payments received by HCR in respect of the Revenue Interests. In addition, the RIFA contains a financial covenant that requires us to maintain cash and cash equivalents in an amount at least equal to $7.5 million during the calendar year beginning on January 1, 2024 and at least equal to $15.0 million for the remainder of the payment term after the calendar year ended December 31, 2024. As of the filing date of this Annual Report on Form 10-K, the Company was not aware of any breach of covenants, occurrence of material adverse event, nor had it received any notice of event of default from HCR. |
Basis of Presentation, Summary
Basis of Presentation, Summary of Significant Accounting Policies and Going Concern (Policies) | 12 Months Ended |
Dec. 31, 2022 | |
Basis of Presentation and Summary of Significant Accounting Policies | |
Basis of Presentation | Basis of Presentation The Company has prepared the accompanying financial statements in conformity with generally accepted accounting principles in the United States of America (“GAAP”). Such financial statements reflect all adjustments that are, in management’s opinion, necessary to present fairly, in all material respects, the Company’s financial position, results of operations and cash flows and are presented in U.S. Dollars. |
Consolidation | Consolidation The accompanying consolidated financial statements include the Company’s wholly owned subsidiaries, Liquidia Technologies and Liquidia PAH. All intercompany accounts and transactions have been eliminated. |
Use of Estimates | Use of Estimates The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and the disclosure of contingent assets and liabilities, at the date of the financial statements, as well as the reported amounts of revenues and expenses during the period. These estimates are based on historical experience and various other assumptions believed reasonable under the circumstances. The Company evaluates its estimates on an ongoing basis, including those related to the valuation of stock-based awards, certain accruals, and intangible and contract acquisition cost amortization, and makes changes to the estimates and related disclosures as experience develops or new information becomes known. Actual results will most likely differ from those estimates. |
Cash | Cash The Company considers all highly liquid investments with a maturity of three months or less at the date of purchase to be cash equivalents. Financial instruments that potentially subject the Company to concentrations of credit risk consist of cash and cash equivalents. The Company is exposed to credit risk, subject to federal deposit insurance, in the event of default by the financial institutions holding its cash and cash equivalents to the extent of amounts recorded on the consolidated balance sheet. As of December 31, 2022 all of the Company’s cash and cash equivalents were held with Silicon Valley Bank (“SVB”). Following the March 10, 2023 closure of SVB, substantially all of the Company’s cash and cash equivalents were moved to a different accredited financial institution. The Company has not experienced any losses on such accounts and does not believe that it is subject to unusual credit risk beyond the normal credit risk associated with commercial banking relationships. Such deposits have and will continue to exceed federally insured limits. |
Accounts Receivable | Accounts Receivable Accounts receivable are stated at net realizable value and net of an allowance for credit losses as of each balance sheet date, if applicable. One customer accounted for 99% and 98% of accounts receivable at December 31, 2022 and 2021, respectively. As of December 31, 2022 and 2021, the Company has not recorded an allowance for credit losses. |
Leases | Leases ASC 842 Leases |
Property, Plant and Equipment | Property, Plant and Equipment Property, plant and equipment are stated at cost. Depreciation of property, plant and equipment is computed using the straight-line method over the estimated useful lives of the assets beginning when the assets are placed in service. Estimated useful lives for the major asset categories are: Lab and build-to-suit equipment (years) 5 - 7 Office equipment (years) 5 Furniture and fixtures (years) 10 Computer equipment (years) 3 Leasehold improvements Lesser of life of the asset or remaining lease term Major renewals and improvements are capitalized to the extent that they increase the useful economic life or increase the expected economic benefit of the underlying asset. Maintenance and repairs are charged to operations as incurred. When items of property, plant and equipment are sold or retired, the related cost and accumulated depreciation or amortization is removed from the accounts, and any gain or loss is included in operating expenses in the accompanying Statements of Operations and Comprehensive Loss. |
Long-Lived Assets | Long-Lived Assets The Company reviews long-lived assets for realizability on an ongoing basis. Changes in depreciation and amortization, generally accelerated depreciation and variable amortization, are determined and recorded when estimates of the remaining useful lives or residual values of long-term assets change. The Company also reviews for impairment when conditions exist that indicate the carrying amount of the assets may not be fully recoverable. In those circumstances, the Company performs undiscounted operating cash flow analyses to determine if an impairment exists. When testing for asset impairment, the Company groups assets and liabilities at the lowest level for which cash flows are separately identifiable. Any impairment loss is calculated as the excess of the asset’s carrying value over its estimated fair value. Fair value is estimated based on the discounted cash flows for the asset group over the remaining useful life or based on the expected cash proceeds for the asset less costs of disposal. Any impairment losses would be recorded in the consolidated statements of operations. To date, no such impairments have occurred. |
Goodwill | Goodwill The Company assesses goodwill for impairment at least annually as of July 1 or whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. For example, significant and unanticipated changes or our inability to obtain or maintain regulatory approvals for our product candidates, including the NDA for YUTREPIA, could trigger testing of our goodwill for impairment. The Company has one reporting unit. The Company has the option to first assess qualitative factors to determine whether events or circumstances indicate it is more likely than not that the fair value of a reporting unit is greater than its carrying amount, in which case a quantitative impairment test is not required. Per ASC 350 Intangibles-Goodwill and Other The Company completed its annual goodwill impairment test as of July 1, 2022. There have been no significant events or circumstances affecting the valuation of goodwill subsequent to the assessment. |
Revenue Recognition from Promotion Agreements | Revenue Recognition from Promotion Agreements The Company recognizes revenue in accordance with ASU 2014-09, Revenue from Contracts with Customers (Topic 606) ● Step 1: Identify the contract with the customer ● Step 2: Identify the performance obligations in the contract ● Step 3: Determine the transaction price ● Step 4: Allocate the transaction price to the performance obligations in the contract ● Step 5: Recognize revenue when the company satisfies a performance obligation In order to identify the performance obligations in a contract with a customer, the Company assesses the promised goods or services in the contract and identifies each promised good or service that is distinct. If a good or service is not distinct, the good or service is combined with other promised goods or services until a bundle of goods or services is identified that is distinct. The transaction price is the amount of consideration to which an entity expects to be entitled in exchange for transferring promised goods or services to a customer. The consideration promised in a contract with a customer may include fixed amounts, variable amounts, or both. Variable consideration is included in the transaction price only to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved. The Company evaluates any non-cash consideration, consideration payable to the customer, potential returns and refunds, and whether consideration contains a significant financing element in determining the transaction price. Revenue is measured based on consideration specified in a contract with a customer. The Company recognizes revenue when it satisfies a performance obligation by transferring control over a service to a customer. The amount of revenue recognized reflects estimates for refunds and returns, which are presented as a reduction of Accounts receivable where the right of setoff exists. On August 1, 2018, the Company partnered with Sandoz in the Promotion Agreement to launch the first-to-file generic of Treprostinil Injection for the treatment of patients with PAH. Under the Promotion Agreement, the Company provides certain promotional and nonpromotional activities on an exclusive basis for the product in the United States of America for the treatment of PAH, in exchange for a share of Sandoz’s net profits, as defined within the Promotion Agreement. In addition, the Company paid Sandoz $20.0 million at the inception of the Promotion Agreement, in consideration for the right to conduct the promotional activities for the product. In exchange for its services, the Company is entitled to receive a portion of net profits based on specified profit levels associated with the product. The Company determined that certain activities within the contract are within the scope of ASC 808, Collaborative Arrangements In addition, the Company determined that the services provided under the Promotion Agreement fall within the scope of Topic 606. The promotional activities the Company performs are one of the services the Company expects to provide as part of its ordinary activities, and it is receiving consideration for this service from Sandoz in the form of a share of “Net Profits” (as defined in the Promotion Agreement). The Company has one combined performance obligation under the Promotion Agreement, which is to perform promotional and non-promotional activities to encourage the appropriate use of the product in accordance with the product labeling and applicable law. As such, and in accordance with ASU 2018-18: Clarifying the Interaction between Topic 808 and Topic 606 |
Segment Information | Segment Information U.S. GAAP requires segmentation based on an entity’s internal organization and reporting of revenue and operating income based upon internal accounting methods commonly referred to as the “management approach.” Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker (CODM), or decision making group, in deciding how to allocate resources and in assessing performance. The Company’s CODM is its Chief Executive Officer. The Company has determined that it has one operating and reporting segment. |
Research and Development Expense | Research and Development Expense Research and development costs are expensed as incurred and include direct costs incurred to third parties related to the salaries of, and stock-based compensation for, personnel involved in research and development activities, contractor fees, administrative expenses and allocations of research-related overhead costs. Administrative expenses and research-related overhead costs included in research and development expense consist of allocations of facility and equipment lease charges, depreciation and amortization of assets and insurance directly related to research and development activities. |
Patent Maintenance | Patent Maintenance The Company is responsible for all patent costs, past and future, associated with the preparation, filing, prosecution, issuance, maintenance, enforcement and defense of United States patent applications. Such costs are recorded as general and administrative expenses as incurred. To the extent that the Company’s licensees share these costs, such benefit is recorded as a reduction of the related expenses. |
Stock-Based Compensation | Stock-Based Compensation The Company estimates the grant date fair value of its stock-based awards and amortizes this fair value to compensation expense over the requisite service period or vesting term (see Note 8). |
Net Loss Per Share | Net Loss Per Share Basic net loss per share is calculated by dividing net loss attributable to common stockholders by the weighted average shares outstanding during the period, without consideration of common stock equivalents. Diluted net loss per share is calculated by adjusting weighted average shares outstanding for the dilutive effect of common stock equivalents outstanding for the period, determined using the treasury-stock method. Due to their anti-dilutive effect, the calculation of diluted net loss per share excludes the following common stock equivalent shares: Year Ended December 31, 2022 2021 Stock Options 7,757,017 5,234,582 Restricted Stock Units 399,349 259,705 Warrants 445,205 168,767 Total 8,601,571 5,663,054 Certain common stock warrants are included in the calculation of basic and diluted net loss per share since their exercise price is de minimis. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The carrying amounts reflected in the Company's consolidated balance sheets for cash, accounts receivable, prepaid expenses and other current assets, accounts payable and accrued expenses and other liabilities approximate their fair values due to their short-term nature. The Company’s valuation of financial instruments is based on a three-tiered approach, which requires that fair value measurements be classified and disclosed in one of three tiers. The fair value hierarchy defines a three-level valuation hierarchy for disclosure of fair value measurements as follows: Level 1 — Quoted prices in active markets for identical assets or liabilities; Level 2 — Other than quoted prices included in Level 1 inputs that are observable for the asset or liability, either directly or indirectly; and Level 3 — Unobservable inputs for the asset and liability used to measure fair value, to the extent that observable inputs are not available. The categorization of a financial instrument within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The following tables present the placement in the fair value hierarchy of financial liabilities measured at fair value: Quoted Significant Prices in Other Significant Active Observable Unobservable Markets Inputs Inputs Carrying December 31, 2022 (Level 1) (Level 2) (Level 3) Value Assets Money market mutual funds (cash equivalents) $ 92,283 $ — $ — $ 92,283 Liabilities A&R Silicon Valley Bank term loan $ — $ 18,853 $ — $ 19,879 Quoted Significant Prices in Other Significant Active Observable Unobservable Markets Inputs Inputs Carrying December 31, 2021 (Level 1) (Level 2) (Level 3) Value Assets Money market mutual funds (cash equivalents) $ 56,494 $ — $ — $ 56,494 Liabilities Silicon Valley Bank term loan $ — $ 10,021 $ — $ 10,410 Money market mutual funds are included in cash and cash equivalents on the Company's consolidated balance sheets. They are valued using quoted market prices and therefore are classified within Level 1 of the fair value hierarchy. The fair value of debt is measured in accordance with ASC 820, Financial Instruments The fair value is determined based on the remaining years to maturity, interest and principal payments, as well as an interest rate consistent with the Company’s current estimated cost of debt. |
Income Taxes | Income Taxes The asset and liability method is used in the Company’s accounting for income taxes. Under this method, deferred tax assets and liabilities are determined based on differences between financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that are expected to be in effect when the differences are expected to reverse. The Company records a valuation allowance against deferred tax assets when realization of the tax benefit is uncertain. A valuation allowance is recorded, if necessary, to reduce net deferred taxes to their realizable values if management believes it is more likely than not that the net deferred tax assets will not be realized. The Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position are measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In August 2020, the FASB issued ASU 2020-06, Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity In May 2021, the FASB issued ASU 2021-04, Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options . This guidance clarifies and reduces diversity in the accounting for modifications or exchanges of freestanding equity-classified written call options (for example warrants) that remain equity classified after modification or exchange. Effective January 1, 2022, the Company adopted ASU 2021-04, which had no impact on the Company’s financial statements and related disclosures. |
Basis of Presentation, Summar_2
Basis of Presentation, Summary of Significant Accounting Policies and Going Concern (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Basis of Presentation and Summary of Significant Accounting Policies | |
Schedule of Property, Plant and Equipment, Useful Life | Lab and build-to-suit equipment (years) 5 - 7 Office equipment (years) 5 Furniture and fixtures (years) 10 Computer equipment (years) 3 Leasehold improvements Lesser of life of the asset or remaining lease term |
Summary of calculation of diluted net loss per share | Year Ended December 31, 2022 2021 Stock Options 7,757,017 5,234,582 Restricted Stock Units 399,349 259,705 Warrants 445,205 168,767 Total 8,601,571 5,663,054 |
Summary of financial assets and liabilities measured at fair value | Quoted Significant Prices in Other Significant Active Observable Unobservable Markets Inputs Inputs Carrying December 31, 2022 (Level 1) (Level 2) (Level 3) Value Assets Money market mutual funds (cash equivalents) $ 92,283 $ — $ — $ 92,283 Liabilities A&R Silicon Valley Bank term loan $ — $ 18,853 $ — $ 19,879 Quoted Significant Prices in Other Significant Active Observable Unobservable Markets Inputs Inputs Carrying December 31, 2021 (Level 1) (Level 2) (Level 3) Value Assets Money market mutual funds (cash equivalents) $ 56,494 $ — $ — $ 56,494 Liabilities Silicon Valley Bank term loan $ — $ 10,021 $ — $ 10,410 |
Property, Plant and Equipment (
Property, Plant and Equipment (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Property, Plant and Equipment | |
Schedule of Property, plant and equipment | December 31, December 31, 2022 2021 Lab and build-to-suit equipment $ 6,257 $ 6,600 Office equipment 19 19 Furniture and fixtures 134 177 Computer equipment 291 347 Leasehold improvements 11,409 11,457 Construction-in-progress 155 — Total property, plant and equipment 18,265 18,600 Accumulated depreciation and amortization (14,114) (13,583) Property, plant and equipment, net $ 4,151 $ 5,017 |
Contract Acquisition Costs an_2
Contract Acquisition Costs and Intangible Asset, and Goodwill (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Contract Acquisition Costs and Intangible Asset, and Goodwill | |
Schedule of contract acquisition costs and intangible asset | December 31, 2022 December 31, 2021 Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Amount Contract acquisition costs $ 12,980 $ (4,376) $ 8,604 $ 12,980 $ (2,842) $ 10,138 Intangible asset $ 5,620 $ (1,894) 3,726 $ 5,620 $ (1,230) 4,390 |
Accrued Expenses and Other Cu_2
Accrued Expenses and Other Current Liabilities (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Accrued Expenses and Other Current Liabilities | |
Schedule of Accrued expenses and other current liabilities | Accrued expenses and other current liabilities consisted of the following: December 31, December 31, 2022 2021 Accrued compensation $ 2,862 $ 3,157 Accrued research and development expenses 1,757 344 Accrued other expenses 903 1,670 Total accrued expenses and other current liabilities $ 5,522 $ 5,171 |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Stockholders' Equity | |
Schedule of outstanding warrants | As of December 31, 2022, outstanding warrants consisted of the following: Number of warrants Exercise Price Expiration Date A&R SVB Warrant - Initial Tranche (see Note 12) 250,000 $ 5.14 January 6, 2032 SVB Warrant - Initial Tranche (see Note 12) 100,000 $ 3.05 February 26, 2031 SVB Warrant - Term B and Term C Tranches (see Note 12) 100,000 $ n/a February 26, 2031 Other warrants 65,572 $ 0.02 December 31, 2026 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Schedule of stock-based compensation expense recognized for employees and non-employees | Year Ended December 31, By Expense Category: 2022 2021 Research and development $ 1,409 $ 1,923 General and administrative 7,889 4,823 Total stock-based compensation expense $ 9,298 $ 6,746 |
Schedule of unamortized compensation expense and weighted average remaining recognition period | As of December 31, 2022 Weighted Average Remaining Recognition Unamortized Period Expense (Years) Stock options $ 15,532 2.9 Restricted stock units $ 1,723 2.9 |
Schedule of assumptions used for estimating the fair value of stock options | Year Ended December 31, 2022 2021 Expected dividend yield — — Risk-free interest rate 1.46% - 3.96% 0.62% - 1.67% Expected volatility 90% - 95% 91% - 96% Expected life (years) 5.8 - 6.1 5.2 - 6.1 |
Schedule of stock option activity | Weighted Weighted Average Average Contractual Aggregate Number of Exercise Term Intrinsic Shares Price (in years) Value Outstanding as of December 31, 2021 5,598,009 $ 4.19 Granted 4,489,277 5.22 Exercised (233,356) 3.60 Cancelled (1,455,668) 5.73 Outstanding as of December 31, 2022 8,398,262 $ 4.49 8.5 $ 17,628 Exercisable as of December 31, 2022 3,327,055 $ 4.03 7.8 $ 9,442 Vested and expected to vest as of December 31, 2022 7,914,670 $ 4.47 8.5 $ 16,849 |
Schedule of additional information related to stock options | December 31, 2022 2021 Cash proceeds from options exercised $ 837 $ 41 Aggregate intrinsic value of options exercised $ 553 $ 21 Fair value of options vested $ 4,427 $ 6,169 |
Schedule of non vested RSU awards outstanding | Weighted Average Grant-Date Number of Fair Value RSUs (per RSU) Unvested as of December 31, 2021 15,204 $ 3.31 Granted 503,403 5.64 Vested (54,181) 4.91 Forfeited (56,700) 6.25 Unvested as of December 31, 2022 407,726 $ 5.57 |
Employee Stock Purchase Plan | |
Schedule of assumptions used for estimating the fair value of stock options | Year Ended December 31, 2022 Expected dividend yield — Risk-free interest rate 0.69% - 3.92% Expected volatility 80% - 129% Expected life (years) 0.50 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Income Taxes | |
Schedule of deferred tax assets and liabilities | 2022 2021 Deferred income tax assets: Tax loss carryforwards $ 59,241 $ 57,302 Research and development credits 3,942 4,204 R&D section 174 costs 4,584 — Share-based compensation 4,637 3,213 Lease liability 1,157 1,627 Compensation 621 800 Fixed assets 369 250 Patent amortization 476 325 Accrued litigation costs 1,546 1,641 Settlement reserve 123 141 Other 2 1 Valuation allowance (74,549) (66,987) Total deferred income tax assets 2,149 2,517 Deferred income tax liabilities: Section 481(a) adjustment 21 48 Intangible assets 1,546 1,679 Right of use asset 582 790 Total deferred income tax liabilities 2,149 2,517 Total net deferred tax $ — $ — |
Schedule of federal income tax rate | 2022 2021 % of % of Pretax Pretax Amount Earnings Amount Earnings Income tax benefit at statutory rate $ (8,613) 21.0 % $ (7,261) 21.0 % State income taxes, net of federal tax benefit (1,787) 4.4 (2,626) 7.6 Non-deductible expenses 1 — — — Stock-based compensation 310 (0.8) 286 (0.8) Credits — — (262) 0.8 Deferred tax true-up 1,159 (2.9) — — Change in state rate 1,368 (3.3) 4,454 (12.9) Other — — 18 (0.1) Change in valuation allowance 7,562 (18.4) 5,391 (15.6) Provision for income taxes $ — — % $ — — % |
Schedule of recognized uncertain tax benefit | Balance at December 31, 2020 $ 403 Increases related to 2021 52 Balance at December 31, 2021 455 Decreases related to 2022 (65) Balance at December 31, 2022 $ 390 |
Leases (Tables)
Leases (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Leases | |
Lease cost | Year Ended December 31, Classification 2022 2021 Operating lease cost: Fixed lease cost Research and development $ 702 $ 702 Fixed lease cost General and administrative 78 78 Finance lease cost: Amortization of lease assets Research and development 135 267 Interest on lease liabilities Interest expense 32 43 Total Lease Cost $ 947 $ 1,090 Weighted average remaining lease term (years): Operating leases 3.8 Finance leases 1.9 Weighted average discount rate: Operating leases 10.3 % Finance leases 6.5 % |
Lease Liability Maturity | Operating Finance Year ending December 31: Leases Leases Total 2023 $ 1,283 $ 195 $ 1,478 2024 1,317 115 1,432 2025 1,356 64 1,420 2026 1,158 — 1,158 Total minimum lease payments 5,114 374 5,488 Less: Interest (882) (22) (904) Present value of lease liabilities $ 4,232 $ 352 $ 4,584 |
Long-term Debt (Tables)
Long-term Debt (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Long-Term Debt | |
Schedule of Long-Term Debt | December 31, December 31, Maturity Date 2022 2021 A&R Silicon Valley Bank term loan December 1, 2025 $ 19,879 $ — Silicon Valley Bank term loan September 1, 2024 — 10,410 Long-term debt $ 19,879 $ 10,410 |
A&R SVB Warrants | |
Long-Term Debt | |
Schedule of Inputs used to Estimate Fair Value of Warrants | Expected dividend yield — Risk-free interest rate 1.76% Expected volatility 97.2% Expected life (years) 10.0 |
SVB Warrant | |
Long-Term Debt | |
Schedule of Inputs used to Estimate Fair Value of Warrants | Expected dividend yield — Risk-free interest rate 1.43% Expected volatility 90.8% Expected life (years) 10.0 |
Business (Details)
Business (Details) $ in Thousands | 12 Months Ended | |||
Jan. 27, 2023 USD ($) | Jan. 09, 2023 USD ($) D | Dec. 31, 2022 USD ($) | Dec. 31, 2021 USD ($) | |
Business | ||||
Net loss | $ 41,015 | $ 34,579 | ||
Accumulated deficit | $ 350,596 | $ 309,581 | ||
Subsequent Events. | Revenue Interest Financing Agreement | ||||
Business | ||||
RIFA, maximum investment amount | $ 100,000 | |||
RIFA, initial investment amount | $ 32,500 | |||
RIFA, additional investment amount | $ 35,000 | |||
Minimum number of days for grant of additional investment amount | D | 15 | |||
RIFA, remaining investment amount | $ 25,000 | |||
Minimum number of days for grant of remaining investment amount | D | 15 | |||
Subsequent Events. | Revenue Interest Financing Agreement | A&R Silicon Valley Bank Term Loan | ||||
Business | ||||
Amount of debt repaid with initial investment from RIFA | 22,400 | |||
Excess proceeds less transaction costs funded to the Company | $ 700 |
Basis of Presentation, Signific
Basis of Presentation, Significant Accounting Policies and Going Concern - Other (Details) | 12 Months Ended | ||
Aug. 01, 2018 USD ($) | Dec. 31, 2022 USD ($) segment customer | Dec. 31, 2021 customer | |
Number of reporting units | 1 | ||
Impairment of long-lived assets | $ 0 | ||
Number of operating segments | segment | 1 | ||
Sandoz | |||
Fees paid related to the Promotion Agreement | $ 20,000,000 | ||
Credit Concentration Risk | Accounts Receivable | Customer One | |||
Concentration risk, percentage | 99% | 98% | |
Number of customers | customer | 1 | 1 |
Basis of Presentation, Signif_2
Basis of Presentation, Significant Accounting Policies and Going Concern - Estimated Useful Lives for Major Asset Categories (Details) | 12 Months Ended |
Dec. 31, 2022 | |
Lab and build-to-suit equipment | Minimum | |
Property, Plant and Equipment, Useful life (Year) | 5 years |
Lab and build-to-suit equipment | Maximum | |
Property, Plant and Equipment, Useful life (Year) | 7 years |
Office equipment | |
Property, Plant and Equipment, Useful life (Year) | 5 years |
Furniture and fixtures | |
Property, Plant and Equipment, Useful life (Year) | 10 years |
Computer equipment | |
Property, Plant and Equipment, Useful life (Year) | 3 years |
Leasehold improvements | |
Property, Plant and Equipment, Estimated Useful life | Lesser of life of the asset or remaining lease term |
Basis of Presentation, Signif_3
Basis of Presentation, Significant Accounting Policies and Going Concern - Common Stock Equivalent Shares Excluded From Calculation of Diluted Net Loss Per Share (Details) - shares | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Anti-dilutive Shares Excluded from Calculation of Diluted Net Loss Per Share (in shares) | 8,601,571 | 5,663,054 |
Stock Options | ||
Anti-dilutive Shares Excluded from Calculation of Diluted Net Loss Per Share (in shares) | 7,757,017 | 5,234,582 |
Restricted Stock Units | ||
Anti-dilutive Shares Excluded from Calculation of Diluted Net Loss Per Share (in shares) | 399,349 | 259,705 |
Warrants | ||
Anti-dilutive Shares Excluded from Calculation of Diluted Net Loss Per Share (in shares) | 445,205 | 168,767 |
Basis of Presentation, Signif_4
Basis of Presentation, Significant Accounting Policies and Going Concern - Fair Value of Financial Assets and Financial Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
A & R Silicon Valley Bank term loan | Reported Value Measurement | ||
Fair Value of Financial Instruments | ||
Fair value of long-term debt | $ 19,879 | |
A & R Silicon Valley Bank term loan | Fair Value, Inputs, Level 2 | Estimate of Fair Value Measurement | ||
Fair Value of Financial Instruments | ||
Fair value of long-term debt | 18,853 | |
Money market mutual funds (cash equivalents) | Reported Value Measurement | ||
Fair Value of Financial Instruments | ||
Money market funds | 92,283 | $ 56,494 |
Money market mutual funds (cash equivalents) | Fair Value, Inputs, Level 1 | Estimate of Fair Value Measurement | ||
Fair Value of Financial Instruments | ||
Money market funds | $ 92,283 | 56,494 |
Silicon Valley Bank Term Loan | Reported Value Measurement | ||
Fair Value of Financial Instruments | ||
Debt | 10,410 | |
Silicon Valley Bank Term Loan | Fair Value, Inputs, Level 2 | Estimate of Fair Value Measurement | ||
Fair Value of Financial Instruments | ||
Debt | $ 10,021 |
Property, Plant and Equipment -
Property, Plant and Equipment - Schedule of Property, plant and equipment (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Total property, plant and equipment | $ 18,265 | $ 18,600 |
Accumulated depreciation and amortization | (14,114) | (13,583) |
Property, Plant and Equipment, Net, Total | 4,151 | 5,017 |
Lab and build-to-suit equipment | ||
Total property, plant and equipment | 6,257 | 6,600 |
Office equipment | ||
Total property, plant and equipment | 19 | 19 |
Furniture and fixtures | ||
Total property, plant and equipment | 134 | 177 |
Computer equipment | ||
Total property, plant and equipment | 291 | 347 |
Leasehold improvements | ||
Total property, plant and equipment | 11,409 | 11,457 |
Construction-in-progress | ||
Total property, plant and equipment | $ 155 | $ 0 |
Property, Plant and Equipment_2
Property, Plant and Equipment - Expense (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Property, Plant and Equipment | ||
Depreciation, Depletion and Amortization, Nonproduction, Total | $ 1.4 | $ 1.8 |
Cost of Property Repairs and Maintenance | $ 0.3 | $ 0.1 |
Contract Acquisition Costs an_3
Contract Acquisition Costs and Intangible Asset, and Goodwill (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Contract Acquisition Costs and Intangible Asset, and Goodwill | ||||
Business Combination, Amortization Expense | $ 1,500 | $ 2,700 | ||
Amortization of Intangible Assets, Total | 700 | 1,100 | ||
Goodwill | $ 3,903 | $ 3,903 | $ 3,903 | |
Sandoz Agreement | Contract acquisition costs | ||||
Contract Acquisition Costs and Intangible Asset, and Goodwill | ||||
Term of Agreement | 5 years | |||
Merger With RareGen LLC | ||||
Contract Acquisition Costs and Intangible Asset, and Goodwill | ||||
Goodwill | $ 3,900 |
Contract Acquisition Costs an_4
Contract Acquisition Costs and Intangible Asset, and Goodwill - Contract acquisition costs and intangible asset (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Contract Acquisition Costs and Intangible Asset, and Goodwill | ||
Contract acquisition costs, Gross Carrying Amount | $ 12,980 | $ 12,980 |
Intangible asset, Gross Carrying Amount | 5,620 | 5,620 |
Contract acquisition costs, Accumulated Amortization | (4,376) | (2,842) |
Intangible asset, Accumulated Amortization | (1,894) | (1,230) |
Contract acquisition costs, Net Carrying Amount | 8,604 | 10,138 |
Intangible asset, Net Carrying Amount | $ 3,726 | $ 4,390 |
Indemnification Asset with Re_2
Indemnification Asset with Related Party and Litigation Finance Payable (Details) | Mar. 04, 2023 |
PBM | |
Indemnification Asset with Related Party and Litigation Finance Payable | |
Major stockholder ownership percentage of Liquidia Corporation Common Stock | 9.30% |
Accrued Expenses and Other Cu_3
Accrued Expenses and Other Current Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Accrued Expenses and Other Current Liabilities | ||
Accrued compensation | $ 2,862 | $ 3,157 |
Accrued research and development expenses | 1,757 | 344 |
Accrued other expenses | 903 | 1,670 |
Total accrued expenses and other current liabilities | $ 5,522 | $ 5,171 |
Stockholders' Equity (Details)
Stockholders' Equity (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | |||||||
Apr. 18, 2022 | Apr. 12, 2022 | Mar. 31, 2022 | Apr. 13, 2021 | Nov. 18, 2020 | Dec. 31, 2022 | Dec. 31, 2021 | Feb. 26, 2021 | |
Common Stock and Preferred Stock, Shares Authorized (in shares) | 90,000,000 | |||||||
Common Stock and Preferred Stock, Par or Stated Value Per Share (in dollars per share) | $ 0.001 | |||||||
Common Stock, Shares Authorized (in shares) | 80,000,000 | 80,000,000 | ||||||
Preferred Stock, Shares Authorized (in shares) | 10,000,000 | 10,000,000 | ||||||
Value of shares sold | $ 54,461 | $ 21,710 | ||||||
Merger With RareGen LLC | ||||||||
Number of common shares issued to RareGen's members | 5,550,000 | |||||||
Merger With RareGen LLC | Holdback Shares | ||||||||
Number of common shares issued to RareGen's members | 616,666 | |||||||
A&R SVB Warrants Initial Tranche | ||||||||
Class of Warrant or Right, Outstanding (in shares) | 250,000 | |||||||
Class of Warrant or Right, Exercise Price of Warrants or Rights (in dollars per share) | $ 5.14 | |||||||
SVB Warrant Initial Tranche | ||||||||
Class of Warrant or Right, Outstanding (in shares) | 100,000 | |||||||
Class of Warrant or Right, Exercise Price of Warrants or Rights (in dollars per share) | $ 3.05 | $ 3.05 | ||||||
SVB Warrant - Term B and Term C Tranches | ||||||||
Class of Warrant or Right, Outstanding (in shares) | 100,000 | |||||||
Other Warrants | ||||||||
Class of Warrant or Right, Outstanding (in shares) | 65,572 | |||||||
Class of Warrant or Right, Exercise Price of Warrants or Rights (in dollars per share) | $ 0.02 | |||||||
Warrants to Purchase Common Stock | ||||||||
Class of Warrant or Right, Exercised During Period (in shares) | 0 | 40,702 | ||||||
Private Placement | ||||||||
Stock Issued During Period, Shares, New Issues (in shares) | 8,626,037 | |||||||
Shares Issued, Price Per Share (in dollars per share) | $ 2.52 | |||||||
Proceeds from Issuance of Common Stock | $ 21,700 | |||||||
Underwritten Public Offering | ||||||||
Stock Issued During Period, Shares, New Issues (in shares) | 11,274,510 | |||||||
Shares Issued, Price Per Share (in dollars per share) | $ 5.10 | |||||||
Proceeds from Issuance of Common Stock | $ 54,500 | |||||||
Underwritten Public Offering | Caligan and Paul B. Manning | ||||||||
Value of shares sold | $ 11,000 | |||||||
Underwritten Public Offering | Caligan | ||||||||
Stock Issued During Period, Shares, New Issues (in shares) | 1,764,705 | |||||||
Value of shares sold | $ 9,000 | |||||||
Underwritten Public Offering | Mr. Paul B. Manning | ||||||||
Stock Issued During Period, Shares, New Issues (in shares) | 392,156 | |||||||
Value of shares sold | $ 2,000 |
Stock-Based Compensation - Othe
Stock-Based Compensation - Other (Details) - USD ($) $ / shares in Units, $ in Thousands | 1 Months Ended | 3 Months Ended | 12 Months Ended | ||||
Jan. 01, 2023 | Jun. 16, 2022 | Dec. 31, 2020 | Dec. 31, 2021 | Dec. 31, 2022 | Dec. 31, 2021 | Jan. 25, 2022 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross (in shares) | 4,489,277 | ||||||
Share-based Compensation Arrangements by Share-based Payment Award, Options, Grants in Period, Weighted Average Exercise Price (in dollars per share) | $ 5.22 | ||||||
Stock-based compensation expense | $ 9,298 | $ 6,746 | |||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period (in shares) | 233,356 | ||||||
Cash proceeds from options exercised | $ 837 | $ 41 | |||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period (in shares) | 503,403 | ||||||
Vested (in shares) | 54,181 | ||||||
Restricted Stock Units | |||||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period (in shares) | 503,403 | ||||||
Common Stock | |||||||
Total shares issued | 51,941 | 270,185 | |||||
Share Price (in dollars per share) | $ 6.37 | ||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period (in shares) | 232,877 | 14,699 | |||||
Chief Executive Officer | |||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross (in shares) | 2,000,000 | ||||||
Share-based Compensation Arrangements by Share-based Payment Award, Options, Grants in Period, Weighted Average Exercise Price (in dollars per share) | $ 3 | ||||||
Chief Executive Officer | Stock Options | |||||||
Modified stock-based compensation | $ 2,900 | ||||||
Chief Executive Officer | Second Tranche Option | |||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross (in shares) | 931,745 | ||||||
Percent of Shares Vested and Exercisable on Closing Date of Change in Control | 100% | ||||||
Chief Executive Officer | Share-based Payment Arrangement, Tranche One | Restricted Stock Units | |||||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period (in shares) | 63,230 | ||||||
Chief Executive Officer | Share-based Payment Arrangement, Tranche One | Stock Options | |||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested, Number of Shares | 1,375,000 | ||||||
Chief Executive Officer | Share-based Payment Arrangement, Tranche One | Second Tranche Option | |||||||
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Rights, Percentage | 25% | ||||||
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period | 36 months | ||||||
Chief Executive Officer | Share-based Payment Arrangement, Tranche Two | Restricted Stock Units | |||||||
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period | 4 years | ||||||
Vested (in shares) | 346,339 | ||||||
Dr Saggar | Restricted Stock Units | |||||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period (in shares) | 93,834 | ||||||
Dr Saggar | Share-based Payment Arrangement, Tranche One | Restricted Stock Units | |||||||
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Rights, Percentage | 50% | ||||||
The 2020 Plan | |||||||
Share-based Compensation Arrangement by Share-based Payment Award, Percent Annual Increase in Capital Shares Reserved for Future Issuance | 4% | ||||||
Share-based Compensation Arrangement by Share-based Payment Award, Number of Additional Shares Authorized (in shares) | 2,580,716 | ||||||
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized (in shares) | 2,851,611 | ||||||
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant (in shares) | 270,895 | ||||||
Inducement Plan 2022 | |||||||
Common Stock, Capital Shares Reserved for Future Issuance ( in shares) | 12,800 | 310,000 | |||||
Employee Stock Purchase Plan | |||||||
Common Stock, Capital Shares Reserved for Future Issuance ( in shares) | 150,000 | 548,059 | |||||
Total shares issued | 51,941 | ||||||
Share-based Compensation Arrangement by Share-based Payment Award, Purchase Price of Common Stock, Percent | 85% | ||||||
Prior Equity Award Plans | |||||||
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant (in shares) | 673,880 |
Stock-Based Compensation - Stoc
Stock-Based Compensation - Stock-based Compensation Expense (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Stock-based compensation expense | $ 9,298 | $ 6,746 |
Research and Development Expense | ||
Stock-based compensation expense | 1,409 | 1,923 |
General and Administrative Expense | ||
Stock-based compensation expense | $ 7,889 | $ 4,823 |
Stock-Based Compensation - Unam
Stock-Based Compensation - Unamortized Compensation Expense (Details) $ in Thousands | 12 Months Ended |
Dec. 31, 2022 USD ($) | |
Stock Options | |
Stock-based awards, unamortized expense | $ 15,532 |
Stock-based awards, weighted average remaining recognition period (Year) | 2 years 10 months 24 days |
Restricted Stock Units | |
Stock-based awards, unamortized expense | $ 1,723 |
Stock-based awards, weighted average remaining recognition period (Year) | 2 years 10 months 24 days |
Stock-Based Compensation - Fair
Stock-Based Compensation - Fair Value of Stock Options Granted and Purchase Rights Issued under the ESPP (Details) - $ / shares | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Expected dividend yield | 0% | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Weighted Average Grant Date Fair Value (in dollars per share) | $ 3.94 | $ 2.23 |
Employee Stock Purchase Plan | Stock Options | ||
Expected dividend yield | ||
Risk-free interest rate, minimum | 1.46% | 0.62% |
Risk-free interest rate, maximum | 3.96% | 1.67% |
Expected Volatility, minimum | 90% | 91% |
Expected Volatility, maximum | 95% | 96% |
Employee Stock Purchase Plan | Stock Options | Minimum | ||
Expected life (years) | 5 years 9 months 18 days | 5 years 2 months 12 days |
Employee Stock Purchase Plan | Stock Options | Maximum | ||
Expected life (years) | 6 years 1 month 6 days | 6 years 1 month 6 days |
Employee Stock Purchase Plan | Employee Purchase Rights | ||
Expected dividend yield | ||
Risk-free interest rate, minimum | 0.69% | |
Risk-free interest rate, maximum | 3.92% | |
Expected Volatility, minimum | 80% | |
Expected Volatility, maximum | 129% | |
Expected life (years) | 6 months |
Stock-Based Compensation - St_2
Stock-Based Compensation - Stock Option Activity (Details) $ / shares in Units, $ in Thousands | 12 Months Ended |
Dec. 31, 2022 USD ($) $ / shares shares | |
Stock-Based Compensation. | |
Outstanding, number of shares (in shares) | shares | 5,598,009 |
Outstanding, weighted average exercise price (in dollars per share) | $ / shares | $ 4.19 |
Granted, number of shares (in shares) | shares | 4,489,277 |
Granted, weighted average exercise price (in dollars per share) | $ / shares | $ 5.22 |
Exercised, number of shares (in shares) | shares | (233,356) |
Exercised, weighted average exercise price (in dollars per share) | $ / shares | $ 3.60 |
Cancelled, number of shares (in shares) | shares | (1,455,668) |
Cancelled, weighted average exercise price (in dollars per share) | $ / shares | $ 5.73 |
Outstanding, number of shares (in shares) | shares | 8,398,262 |
Outstanding, weighted average exercise price (in dollars per share) | $ / shares | $ 4.49 |
Outstanding, weighted average contractual term (Year) | 8 years 6 months |
Outstanding, aggregate intrinsic value | $ | $ 17,628 |
Exercisable, number of shares (in shares) | shares | 3,327,055 |
Exercisable, weighted average exercise price (in dollars per share) | $ / shares | $ 4.03 |
Exercisable, weighted average contractual term (Year) | 7 years 9 months 18 days |
Exercisable, aggregate intrinsic value | $ | $ 9,442 |
Vested and expected to vest, number of shares (in shares) | shares | 7,914,670 |
Vested and expected to vest, weighted average exercise price (in dollars per share) | $ / shares | $ 4.47 |
Vested and expected to vest, weighted average contractual term (Year) | 8 years 6 months |
Vested and expected to vest, aggregate intrinsic value | $ | $ 16,849 |
Stock-Based Compensation - Addi
Stock-Based Compensation - Additional Information (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Stock-Based Compensation. | ||
Cash proceeds from options exercised | $ 837 | $ 41 |
Aggregate intrinsic value of options exercised | 553 | 21 |
Fair value of options vested | $ 4,427 | $ 6,169 |
Stock-Based Compensation - Rest
Stock-Based Compensation - Restricted Stock Units (Details) | 12 Months Ended |
Dec. 31, 2022 $ / shares shares | |
Nonvested, number (in shares) | 15,204 |
Nonvested , weighted average grant date fair value (in dollars per share) | $ / shares | $ 3.31 |
Granted, number (in shares) | 503,403 |
Granted , weighted average grant date fair value (in dollars per share) | $ / shares | $ 5.64 |
Vested , number (in shares) | (54,181) |
Vested , weighted average grant date fair value (in dollars per share) | $ / shares | $ 4.91 |
Forfeited, number (in shares) | (56,700) |
Forfeited , weighted average grant date fair value (in dollars per share) | $ / shares | $ 6.25 |
Nonvested , number (in shares) | 407,726 |
Nonvested , weighted average grant date fair value (in dollars per share) | $ / shares | $ 5.57 |
Restricted Stock Units | |
Granted, number (in shares) | 503,403 |
Revenue From Contracts With C_2
Revenue From Contracts With Customers (Details) - Sandoz - USD ($) $ in Millions | 12 Months Ended | ||
Aug. 01, 2018 | Dec. 31, 2022 | Dec. 31, 2021 | |
Promotion Agreement, Payment | $ 20 | ||
Percentage of Revenue from Promotion Agreement | 98% | 99% | |
Contract with Customer, Refund Liability | $ 0.5 | $ 0.5 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Income Tax Expense (Benefit), Total | $ 0 | $ 0 |
Valuation Allowance, Deferred Tax Asset, Increase (Decrease), Amount | 7,600,000 | |
Unrecognized Tax Benefits, Income Tax Penalties and Interest Accrued, Total | 0 | 0 |
Unrecognized Tax Benefits, Income Tax Penalties and Interest Expense, Total | 0 | 0 |
Federal Income Tax | ||
Income Tax Expense (Benefit), Total | 0 | 0 |
Operating Loss Carryforwards, Subject to Expiration | 278,700,000 | |
Tax Credit Carryforward, Amount | 4,300,000 | |
State Income Tax | ||
Income Tax Expense (Benefit), Total | $ 0 | 0 |
Operating Loss Carryforwards, Subject to Expiration | $ 304,100,000 |
Income Taxes - Components of De
Income Taxes - Components of Deferred Assets and Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Income Taxes | ||
Tax loss carryforwards | $ 59,241 | $ 57,302 |
Research and development credits | 3,942 | 4,204 |
R&D section 174 costs | 4,584 | 0 |
Share-based compensation | 4,637 | 3,213 |
Lease liability | 1,157 | 1,627 |
Compensation | 621 | 800 |
Fixed assets | 369 | 250 |
Patent amortization | 476 | 325 |
Accrued litigation costs | 1,546 | 1,641 |
Settlement reserve | 123 | 141 |
Other | 2 | 1 |
Valuation allowance | (74,549) | (66,987) |
Total deferred income tax assets | 2,149 | 2,517 |
Section 481(a) adjustment | 21 | 48 |
Intangible assets | 1,546 | 1,679 |
Right of use asset | 582 | 790 |
Total deferred income tax liabilities | 2,149 | 2,517 |
Total net deferred tax | $ 0 | $ 0 |
Income Taxes - Income Tax Expen
Income Taxes - Income Tax Expense (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Income Taxes | ||
Income tax benefit at statutory rate | $ (8,613,000) | $ (7,261,000) |
Income tax benefit at statutory rate, percentage | 21% | 21% |
State income taxes, net of federal tax benefit | $ (1,787,000) | $ (2,626,000) |
State income taxes, net of federal tax benefit, percentage | 4.40% | 7.60% |
Non-deductible expenses | $ 1,000 | $ 0 |
Non-deductible expenses, percentage | 0% | 0% |
Share-based compensation | $ 310,000 | $ 286,000 |
Share-based compensation, percentage | (0.80%) | (0.80%) |
Credits | $ 0 | $ (262,000) |
Credits, percentage | 0% | 0.80% |
Deferred tax true-up | $ 1,159,000 | $ 0 |
Deferred tax true-up, percentage | (2.90%) | 0% |
Change in state rate | $ 1,368,000 | $ 4,454,000 |
Change in state rate, percentage | (3.30%) | (12.90%) |
Other | $ 0 | $ 18,000 |
Other, percentage | 0% | (0.10%) |
Change in valuation allowance | $ 7,562,000 | $ 5,391,000 |
Change in valuation allowance, percentage | (18.40%) | (15.60%) |
Provision for income taxes | $ 0 | $ 0 |
Provision for income taxes, percentage | 0% | 0% |
Income Taxes - Uncertain Tax Be
Income Taxes - Uncertain Tax Benefit (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Income Taxes | ||
Beginning balance | $ 455 | $ 403 |
Increases related to current period | 52 | |
Decreases related to current period | (65) | |
Ending balance | $ 390 | $ 455 |
North Carolina corporate income tax rate | 2.50% | |
North Carolina corporate income tax rate expected by 2030 | 0% | |
Income tax expense due to the reduction in value of the North Carolina deferred tax assets as a result of the 2021 Appropriations Act | $ 5,700 |
Leases - Other (Details)
Leases - Other (Details) - ft² | Dec. 31, 2022 | Feb. 28, 2021 | Jan. 31, 2021 |
Leases | |||
Lessee, Finance Lease, Discount Rate | 6.50% | 7.50% | |
Minimum | |||
Leases | |||
Lessee, Finance Lease, Remaining Lease Term | 24 months | ||
Maximum | |||
Leases | |||
Lessee, Finance Lease, Remaining Lease Term | 48 months | ||
Primary Building in Morrisville, North Carolina | |||
Leases | |||
Area of Real Estate Property (Square Foot) | 45,000 |
Leases - Cost (Details)
Leases - Cost (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Leases | ||
Total Lease Cost | $ 947 | $ 1,090 |
Research and Development Expense | ||
Leases | ||
Fixed lease cost | 702 | 702 |
Amortization of lease assets | 135 | 267 |
General and Administrative Expense | ||
Leases | ||
Fixed lease cost | 78 | 78 |
Interest Expense | ||
Leases | ||
Interest on lease liabilities | $ 32 | $ 43 |
Leases - Remaining Lease Term a
Leases - Remaining Lease Term and Discount Rates (Details) | Dec. 31, 2022 |
Leases | |
Weighted average remaining lease term, Operating leases | 3 years 9 months 18 days |
Weighted average remaining lease term, Finance leases | 1 year 10 months 24 days |
Weighted average discount rate, Operating leases | 10.30% |
Weighted average discount rate, Finance leases | 6.50% |
Leases - Future Minimum Lease P
Leases - Future Minimum Lease Payments (Details) $ in Thousands | Dec. 31, 2022 USD ($) |
Operating Leases | |
2023 | $ 1,283 |
2024 | 1,317 |
2025 | 1,356 |
2026 | 1,158 |
Total minimum lease payments | 5,114 |
Less: Interest | (882) |
Present value of lease liabilities | 4,232 |
Finance Leases | |
2023 | 195 |
2024 | 115 |
2025 | 64 |
2026 | 0 |
Total minimum lease payments | 374 |
Less: Interest | (22) |
Present value of lease liabilities | 352 |
Total | |
2023 | 1,478 |
2024 | 1,432 |
2025 | 1,420 |
2026 | 1,158 |
Total minimum lease payments | 5,488 |
Less: Interest | (904) |
Present value of lease liabilities | $ 4,584 |
Long-term Debt - Summary (Detai
Long-term Debt - Summary (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Long-Term Debt | ||
Long-term debt | $ 19,879 | $ 10,410 |
A&R Silicon Valley Bank Term Loan | ||
Long-Term Debt | ||
Long-term debt | $ 19,879 | |
Silicon Valley Bank Term Loan | ||
Long-Term Debt | ||
Long-term debt | $ 10,410 |
Long-term Debt - Terms (Details
Long-term Debt - Terms (Details) $ / shares in Units, $ in Thousands | 9 Months Ended | 12 Months Ended | |||||||
Jan. 27, 2023 USD ($) | Jan. 09, 2023 USD ($) | Jan. 07, 2022 USD ($) tranche $ / shares shares | Mar. 01, 2021 USD ($) | Feb. 26, 2021 USD ($) $ / shares shares | Sep. 30, 2022 USD ($) | Sep. 30, 2021 USD ($) | Dec. 31, 2022 USD ($) $ / shares shares | Dec. 31, 2021 USD ($) | |
Long-Term Debt | |||||||||
Loss on extinguishment of debt | $ 997 | $ 53 | |||||||
Repayments of debt | 10,500 | 10,353 | |||||||
Long-term debt, noncurrent | $ 19,879 | $ 10,410 | |||||||
Subsequent Events. | Revenue Interest Financing Agreement | |||||||||
Long-Term Debt | |||||||||
Revenue Interest Financing Agreement, Maximum Investment Amount | $ 100,000 | ||||||||
Revenue Interest Financing Agreement, Initial Investment Amount | $ 32,500 | ||||||||
A&R SVB Warrants | |||||||||
Long-Term Debt | |||||||||
Warrants included in additional paid-in capital | $ 1,300 | ||||||||
Gain (loss) extinguishment component | 700 | ||||||||
Debt discount | $ 600 | ||||||||
A&R SVB Warrants | SVB | |||||||||
Long-Term Debt | |||||||||
Class of Warrant or Right, Number of Securities Called by Warrants or Rights (in shares) | shares | 250,000 | ||||||||
Class of Warrant or Right, Exercise Price of Warrants or Rights (in dollars per share) | $ / shares | $ 5.14 | ||||||||
SVB Warrant | |||||||||
Long-Term Debt | |||||||||
Class of Warrant or Right, Number of Securities Called by Warrants or Rights (in shares) | shares | 200,000 | ||||||||
SVB Warrant Initial Tranche | |||||||||
Long-Term Debt | |||||||||
Class of Warrant or Right, Number of Securities Vested (in shares) | shares | 100,000 | ||||||||
Class of Warrant or Right, Exercise Price of Warrants or Rights (in dollars per share) | $ / shares | $ 3.05 | $ 3.05 | |||||||
Class of Warrant or Right, Outstanding (in shares) | shares | 100,000 | ||||||||
SVB Warrant Term B and Term C Tranche | |||||||||
Long-Term Debt | |||||||||
Class of Warrant or Right, Outstanding (in shares) | shares | 100,000 | ||||||||
Pacific Western Bank Term Loan | |||||||||
Long-Term Debt | |||||||||
Repayments of Debt | $ 9,400 | ||||||||
Pacific Western Bank Term Loan | Maximum | |||||||||
Long-Term Debt | |||||||||
Loss on extinguishment of debt | $ 100 | ||||||||
Loan and Security Agreement with SVB | |||||||||
Long-Term Debt | |||||||||
Loss on extinguishment of debt | $ 1,000 | ||||||||
Repayments of debt | $ 10,500 | ||||||||
Silicon Valley Bank Term Loan | |||||||||
Long-Term Debt | |||||||||
Maximum Borrowing Capacity | $ 20,500 | ||||||||
Long-term debt, noncurrent | $ 19,400 | ||||||||
Number of Tranches in Debt Facility | tranche | 3 | ||||||||
Interest rate threshold used in determining the floating interest rate at which interest accrues on the debt instrument | 7.25% | ||||||||
Prime interest rate threshold used in determining the floating interest rate at which interest accrues on the debt instrument | 4% | ||||||||
Term A Loan | |||||||||
Long-Term Debt | |||||||||
Debt Instrument, Face Amount | $ 10,500 | ||||||||
A&R Silicon Valley Bank Term Loan | |||||||||
Long-Term Debt | |||||||||
Maximum Borrowing Capacity | $ 40,000 | ||||||||
A&R Silicon Valley Bank Term Loan | Subsequent Events. | Revenue Interest Financing Agreement | |||||||||
Long-Term Debt | |||||||||
Repayments of Debt | $ 22,400 | ||||||||
A&R Silicon Valley Bank Term Loan | Maximum | |||||||||
Long-Term Debt | |||||||||
Debt Issuance Costs, Noncurrent, Net | 100 | ||||||||
Amended and Restated Loan and Security Agreement Tranche One | |||||||||
Long-Term Debt | |||||||||
Proceeds from Lines of Credit | $ 20,000 |
Long-term Debt - SVB Warrant Fa
Long-term Debt - SVB Warrant Fair Value (Details) | Dec. 31, 2022 Y |
A&R SVB Warrants | Measurement Input, Risk-free interest rate | |
Long-Term Debt, Fair Value of Warrant | |
Warrants and Rights Outstanding, Measurement Input | 1.76 |
A&R SVB Warrants | Measurement Input, Expected volatility | |
Long-Term Debt, Fair Value of Warrant | |
Warrants and Rights Outstanding, Measurement Input | 97.2 |
A&R SVB Warrants | Measurement Input, Expected life (years) | |
Long-Term Debt, Fair Value of Warrant | |
Warrants and Rights Outstanding, Measurement Input | 10 |
SVB Warrant | Measurement Input, Risk-free interest rate | |
Long-Term Debt, Fair Value of Warrant | |
Warrants and Rights Outstanding, Measurement Input | 1.43 |
SVB Warrant | Measurement Input, Expected volatility | |
Long-Term Debt, Fair Value of Warrant | |
Warrants and Rights Outstanding, Measurement Input | 90.8 |
SVB Warrant | Measurement Input, Expected life (years) | |
Long-Term Debt, Fair Value of Warrant | |
Warrants and Rights Outstanding, Measurement Input | 10 |
Defined Contribution Retireme_2
Defined Contribution Retirement Plan (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Defined Contribution Retirement Plan | ||
Defined Contribution Plan, Employer Matching Contribution, Percent of Match | 100% | |
Maximum percentage of an employee's salary matched by the Company | 4% | |
Defined Contribution Plan, Cost | $ 0.4 | $ 0.3 |
Legal Proceedings (Details)
Legal Proceedings (Details) $ in Thousands | Nov. 06, 2020 USD ($) |
Liquidia PAH and Sandoz | UTC and Smiths Medical Litigation | Pending Litigation | |
Legal Proceedings | |
Proceeds from Legal Settlements | $ 4,250 |
Commitments and Contingencies (
Commitments and Contingencies (Details) | 12 Months Ended |
Dec. 31, 2022 USD ($) | |
Maximum Net Sales Threshold As Basis For Payment Of Future Contingent Royalties | $ 1,500,000 |
Net sales earned relating to payment of future contingent royalties | 0 |
Non-cancelable commitments for product manufacturing costs | 3,700,000 |
Agreement With LGM Pharma, LLC | |
Purchase Commitment, Remaining Minimum Amount Committed | $ 2,700,000 |
Subsequent Events (Details)
Subsequent Events (Details) $ in Millions | Jan. 27, 2023 USD ($) | Jan. 09, 2023 USD ($) D |
On First Two Hundred and Fifty Million Annual Revenue | Subsequent Events. | ||
Subsequent Events | ||
RIFA, annual net revenue, threshold | $ 250 | |
On Second Two Hundred and Fifty Million Annual Revenue | Subsequent Events. | ||
Subsequent Events | ||
RIFA, annual net revenue, threshold | 250 | |
In Excess of Five Hundred Million Annual Revenue | Subsequent Events. | ||
Subsequent Events | ||
RIFA, annual net revenue, threshold | $ 500 | |
Funding Amount by December 31, 2026 | Subsequent Events. | ||
Subsequent Events | ||
RIFA, minimum payment to be made, percentage | 60 | |
Minimum | Subsequent Events. | ||
Subsequent Events | ||
RIFA, percentage of royalty payment on annual net revenue | 3.60 | |
Minimum | On Second Two Hundred and Fifty Million Annual Revenue | ||
Subsequent Events | ||
RIFA, minimum payment to be made, percentage | 1.44 | |
Maximum | Subsequent Events. | ||
Subsequent Events | ||
RIFA, percentage of royalty payment on annual net revenue | 10 | |
Maximum | On Second Two Hundred and Fifty Million Annual Revenue | ||
Subsequent Events | ||
RIFA, minimum payment to be made, percentage | 4 | |
Revenue Interest Financing Agreement | Subsequent Events. | ||
Subsequent Events | ||
RIFA, maximum investment amount | $ 100 | |
RIFA, initial investment amount | $ 32.5 | |
Revenue Interest Financing Agreement, Additional Investment Amount to Obtain Acquisition of Rights | $ 7.5 | |
Minimum Number of Days For Grant of Additional Investment Amount to Obtain Acquisition of Rights | D | 15 | |
RIFA, additional investment amount | $ 35 | |
Minimum number of days for grant of additional investment amount | D | 15 | |
RIFA, remaining investment amount | $ 25 | |
Minimum number of days for grant of remaining investment amount | D | 15 | |
RIFA, Hard Cap percentage | 175 | |
Percentage of investment amount to be repaid on final approval | 100 | |
Percentage of investment amount to be paid | 100 | |
RIFA, internal rate of return | 18% | |
Minimum cash and cash equivalents required to be maintained during year two | $ 7.5 | |
Minimum cash and cash equivalents required to be maintained after year two | $ 15 | |
Revenue Interest Financing Agreement | Funding Amount by December 31, 2026 | Subsequent Events. | ||
Subsequent Events | ||
RIFA, minimum payment to be made, percentage | 100 | |
Revenue Interest Financing Agreement | Minimum | In Excess of Five Hundred Million Annual Revenue | Subsequent Events. | ||
Subsequent Events | ||
RIFA, Hard Cap percentage | 0.36 | |
Revenue Interest Financing Agreement | Maximum | In Excess of Five Hundred Million Annual Revenue | Subsequent Events. | ||
Subsequent Events | ||
RIFA, Hard Cap percentage | 1 | |
A&R Silicon Valley Bank Term Loan | Revenue Interest Financing Agreement | Subsequent Events. | ||
Subsequent Events | ||
Amount of debt repaid with initial investment from RIFA | 22.4 | |
Excess proceeds less transaction costs funded to the Company | $ 0.7 |