0001558370-22-013274 | 10-Q | XBRL Viewer

Property, Plant and Equipment

6 Months Ended

Jun. 30, 2022

3. Property, Plant, and Equipment

Property, plant and equipment consisted of the following:


	June 30,		December 31,
	2022		2021
Lab and build-to-suit equipment	$	6,548	$	6,600
Office equipment		19		19
Furniture and fixtures		177		177
Computer equipment		347		347
Leasehold improvements		11,457		11,457
Total property, plant and equipment		18,548		18,600
Accumulated depreciation and amortization		(14,329)		(13,583)
Property, plant and equipment, net	$	4,219	$	5,017

The Company recorded depreciation and amortization expense related to property, plant and equipment of $0.4 million for both the three months ended June 30, 2022 and 2021, and of $0.8 million and $0.9 million for the six months ended June 30, 2022 and 2021, respectively.

Long-Term Debt

6 Months Ended

Jun. 30, 2022

Long-term Debt

Long-term Debt

11. Long-Term Debt

Long-term debt consisted of the following as of June 30, 2022 and December 31, 2021:


		June 30,		December 31,
	Maturity Date	2022		2021
A&R Silicon Valley Bank term loan	December 1, 2025	$	19,606	$	—
Silicon Valley Bank term loan	September 1, 2024		—		10,410
Long-term debt		$	19,606	$	10,410

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. Under the terms of the A&R SVB LSA, SVB and Innovation will make loans available in three tranches, with $20.0 million from the first tranche funded on the A&R SVB LSA Effective Date. The Company used $10.5 million of the first tranche proceeds to satisfy its existing obligations under the SVB LSA (see below) and such obligations are considered fully repaid and terminated as of that date. The Company accounted for the repayment of the SVB LSA in accordance with ASC 405-20, Extinguishments of Liabilities, which resulted in a loss on extinguishment during the six months ended June 30, 2022 of $1.0 million.

The first tranche also provides the option of drawing an additional $5.0 million at the Company’s discretion through December 31, 2022. A second tranche of $7.5 million is available to fund immediately upon receipt of final and unconditional approval by the FDA for YUTREPIA by December 31, 2022. The third tranche of $7.5 million will be available through August 31, 2023, upon generating trailing six-month net product sales of YUTREPIA of $27.5 million by June 30, 2023. The debt facility will mature on December 1, 2025, and will consist of interest-only payments through December 31, 2023, unless the third tranche milestone is achieved, in which case interest-only payments will continue

through December 31, 2024. The outstanding principal amount of the term loans shall accrue interest at a floating rate per year equal to the greater of 7.25% and the prime rate of interest plus 4.0%. The SVB A&R LSA also provides for a “Final Payment Fee” of 5.0% of the aggregate original principal amount of all loans made and a payment solely to SVB of $185,000 due on the earliest of the maturity date, the repayment of the debt in full, any optional prepayment or mandatory prepayment, or the termination of the A&R SVB LSA.

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 June 30, 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 initial right to obtain a total of 250,000 shares of the Company’s stock at an exercise price of $5.14 per share, and there is an opportunity for the recipients to obtain up to 100,000 more warrants based on certain loans that may be made under the A&R SVB LSA. The A&R SVB Warrants provide an option for a cashless exercise.

In accordance with ASC 470, Debt, the value of the A&R SVB Warrants and A&R SVB LSA was allocated using a relative fair value allocation. The fair value of the A&R SVB Warrants was determined to be $1.3 million and included in additional paid-in-capital, of which $0.7 million was recognized as a component of the loss on extinguishment and $0.6 million as a debt discount. The remaining $19.4 million was allocated to the A&R SVB LSA. In addition, the Company incurred fees of less than $0.1 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 and ASC 815, 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 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, which resulted in a loss on extinguishment during the six months ended June 30, 2021 of less than $0.1 million.

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 and ASC 815, 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

Scheduled annual maturities of long-term debt as of June 30, 2022 are as follows:


Year ending December 31:
2022 (six months remaining)	$	—
2023		—
2024		10,000
2025		10,000
Total		20,000
Less: Unamortized discount, debt issuance costs and accretion		(394)
Long-term debt, noncurrent	$	19,606

Leases - Cost (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
Leases - Cost (Details) - USD ($) $ in Thousands	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Leases
Total Lease Cost	$ 240	$ 251	$ 482	$ 594
General and Administrative Expense
Leases
Operating lease cost	195	195	390	390
Amortization of lease assets	36	42	74	185
Interest Expense
Leases
Interest on lease liabilities	$ 9	$ 14	$ 18	$ 19

Stock-Based Compensation (Tables)

6 Months Ended

Jun. 30, 2022

Share-based Payment Arrangement, Expensed and Capitalized, Amount [Table Text Block]


	Three Months Ended				Six Months Ended
	June 30,				June 30,
By Expense Category:	2022		2021		2022		2021
Research and development	$	337	$	278	$	720	$	529
General and administrative		1,310		675		5,112		1,169
Total stock-based compensation expense	$	1,647	$	953	$	5,832	$	1,698

Share-based Payment Arrangement, Nonvested Award, Cost [Table Text Block]


	As of June 30, 2022
			Weighted
			Average
			Remaining
			Recognition
	Unamortized		Period
	Expense		(Years)
Stock options	$	15,385	3.2
Restricted stock units	$	1,950	3.2

Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions [Table Text Block]


	Six Months Ended
	June 30,
	2022	2021
Expected dividend yield	—	—
Risk-free interest rate	1.46% - 3.34%	0.62% - 1.67%
Expected volatility	90% - 93%	92% - 96%
Expected life (years)	5.8 - 6.1	5.8

Share-based Payment Arrangement, Option, Activity [Table Text Block]


				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	3,611,677		5.29
Exercised	(143,891)		4.15
Cancelled	(1,203,916)		5.73
Outstanding as of June 30, 2022	7,861,879	$	4.46	8.7	$	5,447
Exercisable as of June 30, 2022	3,075,103	$	4.12	7.7	$	3,541
Vested and expected to vest as of June 30, 2022	7,149,487	$	4.44	8.7	$	5,131

Schedule of Nonvested Restricted Stock Units Activity [Table Text Block]


		Weighted
		Average
		Grant-Date
	Number of	Fair Value
	RSUs	(per RSU)
Nonvested as of December 31, 2021	15,204	$	3.31
Granted	409,569		6.08
Vested	(19,186)		4.82
Nonvested as of June 30, 2022	370,137	$	6.01

Employee Stock Purchase Plan 2020

Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions [Table Text Block]


Expected dividend yield		—
Risk-free interest rate		0.69%
Expected volatility		80%
Expected life (years)		0.50

Basis of Presentation, Significant Accounting Policies and Fair Value Measurements - Common Stock Equivalent Shares Excluded From Calculation of Diluted Net Loss Per Share (Details) - shares	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Anti-dilutive Shares Excluded from Calculation of Diluted Net Loss Per Share (in shares)	7,982,454	5,556,597	7,916,758	5,375,250
Stock Options
Anti-dilutive Shares Excluded from Calculation of Diluted Net Loss Per Share (in shares)	7,131,419	5,036,581	7,093,120	4,923,565
Restricted Stock Units (RSUs)
Anti-dilutive Shares Excluded from Calculation of Diluted Net Loss Per Share (in shares)	401,035	320,016	383,307	314,669
Warrants
Anti-dilutive Shares Excluded from Calculation of Diluted Net Loss Per Share (in shares)	450,000	200,000	440,331	137,016

Stock-Based Compensation - Nonvested RSU Awards Outstanding (Details) - Restricted Stock Units (RSUs)	6 Months Ended
	Jun. 30, 2022 $ / shares shares
Nonvested, number (in shares) \| shares	15,204
Nonvested , weighted average grant date fair value (in dollars per share) \| $ / shares	$ 3.31
Granted, number (in shares) \| shares	409,569
Granted , weighted average grant date fair value (in dollars per share) \| $ / shares	$ 6.08
Vested , number (in shares) \| shares	(19,186)
Vested , weighted average grant date fair value (in dollars per share) \| $ / shares	$ 4.82
Nonvested , number (in shares) \| shares	370,137
Nonvested , weighted average grant date fair value (in dollars per share) \| $ / shares	$ 6.01

Basis of Presentation, Significant Accounting Policies and Fair Value Measurements

6 Months Ended

Jun. 30, 2022

Basis of Presentation, Significant Accounting Policies and Fair Value Measurements

Basis of Presentation, Significant Accounting Policies and Fair Value Measurements

2. Basis of Presentation, Significant Accounting Policies and Fair Value Measurements

Basis of Presentation

The unaudited interim condensed consolidated financial statements as of June 30, 2022 and for the three and six months ended June 30, 2022 and 2021 have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (SEC) for interim financial reporting. These condensed consolidated financial statements are unaudited and, in the opinion of management, include all adjustments (consisting only of normal recurring adjustments and accruals) necessary for a fair statement of the results for the periods presented in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The year-end condensed consolidated balance sheet data was derived from the Company’s audited consolidated financial statements but does not

include all disclosures required by GAAP. Operating results for the six months ended June 30, 2022 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2022. Certain information and footnote disclosures normally included in the annual consolidated financial statements prepared in accordance with GAAP have been omitted in accordance with the SEC’s rules and regulations for interim reporting. Certain amounts have been reclassified from the prior year presentation to conform to current presentation. The Company’s financial position, results of operations and cash flows are presented in U.S. Dollars.

The accompanying unaudited condensed consolidated financial statements and related notes should be read in conjunction with the Company’s audited consolidated financial statements for the year ended December 31, 2021, which are included in the Company’s 2021 Annual Report on Form 10-K.

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. The Company evaluates its estimates on an ongoing basis, including those related to the valuation of stock-based awards and certain accruals, and makes changes to the estimates and related disclosures as experience develops or new information becomes known. These estimates are based on historical experience and various other assumptions believed reasonable under the circumstances. Actual results will most likely differ from those estimates.

Segment Information

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.

Summary of Significant Accounting Policies

The Company’s significant accounting policies are disclosed in Note 2 of the consolidated financial statements for the years ended December 31, 2021 and 2020, which are included in the Company’s 2021 Annual Report on Form 10-K. There have been no material changes to the Company’s significant accounting policies during the six months ended June 30, 2022.

Cash, Cash Equivalents, and Concentration of Credit Risk

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 condensed consolidated balance sheet. All of the Company’s cash and cash equivalents are held with Silicon Valley Bank (“SVB”).

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 98% and all of accounts receivable at June 30, 2022. As of June 30, 2022 and December 31, 2021, the Company has not recorded an allowance for credit losses.

Long-Lived Assets

The Company reviews long-lived assets, including definite-life intangible 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 at an interim date. 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 quantitative goodwill impairment test is performed by comparing the fair value of the reporting unit with its carrying amount, including goodwill. If the fair value of the reporting unit exceeds its carrying amount, goodwill is not impaired. An impairment loss is recognized for any excess of the carrying amount of the reporting unit’s goodwill over the fair value up to the amount of goodwill allocated to the reporting unit. Income tax effects from any tax-deductible goodwill on the carrying amount of the reporting unit are considered when measuring the goodwill impairment loss, if applicable.

As of June 30, 2022, the Company concluded there were no events or changes in circumstances that indicated that the carrying amount of goodwill was not recoverable. The Company completed its last annual impairment test as of July 1, 2022 and concluded that no impairments have occurred.

Revenue Recognition

The Company recognizes revenue in accordance with ASC 606 Revenue from Contracts with Customers (“ASC 606”). The core principle of ASC 606 is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. The following five steps are applied to achieve that core principle:

●

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.

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 the vesting period of the respective award (see Note 6).

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 for the three and six months ended June 30, 2022 and 2021 does not include the following common stock equivalent shares:


	Three Months Ended		Six Months Ended
	June 30,		June 30,
	2022	2021	2022	2021
Stock Options	7,131,419	5,036,581	7,093,120	4,923,565
Restricted Stock Units	401,035	320,016	383,307	314,669
Warrants	450,000	200,000	440,331	137,016
Total	7,982,454	5,556,597	7,916,758	5,375,250

For the three and six months ended June 30, 2022 and 2021, certain common stock warrants are included in the calculation of basic and diluted net loss per share since their exercise price is de minimis.

Recent Accounting Pronouncements

In August 2020, the FASB issued ASU 2020-06, Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. This guidance simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts in an entity’s own equity. Effective January 1, 2022, the Company adopted ASU 2020-06, which had no impact on the Company’s financial statements and related disclosures.

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.

Fair Value Measurements

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 — Inputs other than quoted prices included in active markets 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 assets and liabilities measured at fair value as of June 30, 2022 and December 31, 2021:


	Quoted		Significant
	Prices in		Other		Significant
	Active		Observable		Unobservable
	Markets		Inputs		Inputs		Carrying
June 30, 2022	(Level 1)		(Level 2)		(Level 3)		Value
Assets
Money market mutual funds (cash equivalents)	$	102,840	$	—	$	—	$	102,840
Liabilities
A&R Silicon Valley Bank term loan	$	—	$	19,147	$	—	$	19,606
Total	$	—	$	19,147	$	—	$	19,606


	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 condensed consolidated balance sheets. They are valued using quoted market prices and therefore are classified within Level 1 of the fair value hierarchy.

The carrying amounts reflected in the Company's condensed consolidated balance sheets for cash, 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 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.

Leases (Tables)

6 Months Ended

Jun. 30, 2022

Leases

Lease, Cost [Table Text Block]


		Three Months Ended June 30,				Six Months Ended June 30,
	Classification	2022		2021		2022		2021
Operating lease cost	General and administrative	$	195	$	195	$	390	$	390
Finance lease cost:
Amortization of lease assets	General and administrative		36		42		74		185
Interest on lease liabilities	Interest expense		9		14		18		19
Total Lease Cost		$	240	$	251	$	482	$	594


Weighted average remaining lease term (years):
Operating leases	4.3
Finance leases	2.1
Weighted average discount rate:
Operating leases	10.3	%
Finance leases	6.5	%

Lease Liability Maturity [Table Text Block]


	Operating		Finance
Year ending December 31:	Leases		Leases		Total
2022 (six months remaining)	$	625	$	165	$	790
2023		1,283		195		1,478
2024		1,317		115		1,432
2025		1,356		64		1,420
2026		1,158		—		1,158
Thereafter		—		—		—
Total minimum lease payments		5,739		539		6,278
Less: Interest		(1,107)		(36)		(1,143)
Present value of lease liabilities	$	4,632	$	503	$	5,135

Basis of Presentation, Significant Accounting Policies and Fair Value Measurements - Fair Value of Financial Assets and Financial Liabilities (Details) - USD ($) $ in Thousands	Jun. 30, 2022	Dec. 31, 2021
Reported Value Measurement
Fair Value of Financial Instruments
Total financial instruments	$ 19,606
Fair Value, Inputs, Level 2 \| Estimate of Fair Value Measurement
Fair Value of Financial Instruments
Total financial instruments	19,147
A & R Silicon Valley Bank term loan \| Reported Value Measurement
Fair Value of Financial Instruments
Fair value of long-term debt	19,606
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	19,147
Money market mutual funds (cash equivalents) \| Reported Value Measurement
Fair Value of Financial Instruments
Money market funds	102,840	$ 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	$ 102,840	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

Indemnification Asset with Related Party and Litigation Finance Payable (Details)	Aug. 01, 2022
PBM \| Subsequent Events.
Indemnification Asset with Related Party and Litigation Finance Payable
Major stockholder ownership percentage of Liquidia Corporation Common Stock	9.30%

Stock-Based Compensation (Details) - USD ($)			1 Months Ended		3 Months Ended					6 Months Ended
Stock-Based Compensation (Details) - USD ($)	Jun. 16, 2022	Jan. 01, 2022	Dec. 31, 2020	Nov. 30, 2020	Jun. 30, 2022	Mar. 31, 2022	Dec. 31, 2021	Jun. 30, 2021	Mar. 31, 2021	Jun. 30, 2022	Jun. 30, 2021	Jan. 25, 2022
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross (in shares)										3,611,677
Share-based Compensation Arrangements by Share-based Payment Award, Options, Grants in Period, Weighted Average Exercise Price (in dollars per share)										$ 5.29
Stock-based compensation expense					$ 1,647,000			$ 953,000		$ 5,832	$ 1,698
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Weighted Average Grant Date Fair Value (in dollars per share)										$ 4.19	$ 2.08
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period (in shares)										143,891
Restricted Stock Units (RSUs)
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period (in shares)										409,569
Vested (in shares)										19,186
Stock Options
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Dividend Rate
Quarterly Bonus
Stock-based compensation expense						$ 56,000
Bonus Payable					$ 0					$ 0
Common Stock
Total shares issued						5,017
Share Price (in dollars per share)					$ 4.36					$ 4.36
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period (in shares)					364	143,048			281
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)			$ 3.00
Chief Executive Officer \| Stock Options
Modified stock-based compensation						$ 2,900,000
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	100.00%
Chief Executive Officer \| Share-based Payment Arrangement, Tranche One \| Restricted Stock Units (RSUs)
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	25.00%
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 (RSUs)
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period										4 years
Vested (in shares)										346,339
The 2020 Plan
Share-based Compensation Arrangement by Share-based Payment Award, Percent Annual Increase in Capital Shares Reserved for Future Issuance				4.00%
Share-based Compensation Arrangement by Share-based Payment Award, Number of Additional Shares Authorized (in shares)	1,600,000	2,091,509
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant (in shares)					879,027					879,027
Inducement Plan 2022
Common Stock, Capital Shares Reserved for Future Issuance (in shares)					219,800					219,800		310,000
Employee Stock Purchase Plan 2020
Common Stock, Capital Shares Reserved for Future Issuance (in shares)		150,000			594,983					594,983
Total shares issued										5,017
Share-based Compensation Arrangement by Share-based Payment Award, Purchase Price of Common Stock, Percent										85.00%
Prior Equity Award Plans
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant (in shares)					794,060					794,060

Long-term Debt (Tables)

6 Months Ended

Jun. 30, 2022

Long-Term Debt

Schedule of Long-Term Debt


		June 30,		December 31,
	Maturity Date	2022		2021
A&R Silicon Valley Bank term loan	December 1, 2025	$	19,606	$	—
Silicon Valley Bank term loan	September 1, 2024		—		10,410
Long-term debt		$	19,606	$	10,410

Schedule of Annual Maturities of Long-Term Debt


Year ending December 31:
2022 (six months remaining)	$	—
2023		—
2024		10,000
2025		10,000
Total		20,000
Less: Unamortized discount, debt issuance costs and accretion		(394)
Long-term debt, noncurrent	$	19,606

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

- Definition

Tabular disclosure of long-debt instruments or arrangements, including identification, terms, features, collateral requirements and other information necessary to a fair presentation. These are debt arrangements that originally required repayment more than twelve months after issuance or greater than the normal operating cycle of the entity, if longer.

+ References

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Reference 2: http://www.xbrl.org/2009/role/commonPracticeRef
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-Topic 235
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-Subparagraph (SX 210.12-04(a))
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Reference 10: http://fasb.org/us-gaap/role/ref/legacyRef
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-URI http://asc.fasb.org/extlink&oid=123599511&loc=d3e64711-112823

Reference 11: http://fasb.org/us-gaap/role/ref/legacyRef
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+ Details

Stockholders' Equity (Tables)

6 Months Ended

Jun. 30, 2022

Stockholders' Equity

Schedule of Stockholders' Equity Note, Warrants or Rights [Table Text Block]


	Number of
	warrants	Exercise Price		Expiration Date
A&R SVB Warrant - Initial Tranche (see Note 11)	250,000	$	5.14	January 6, 2032
SVB Warrant - Initial Tranche (see Note 11)	100,000	$	3.05	February 26, 2031
SVB Warrant - Term B and Term C Tranches (see Note 11)	100,000	$	n/a	February 26, 2031
Other warrants	65,572	$	0.02	December 31, 2026

Stock-Based Compensation - Fair Value of Purchase Rights Granted to Employees Under the ESPP (Details) - Employee Stock Purchase Plan 2020 - Employee Purchase Rights	6 Months Ended
	Jun. 30, 2022
Expected dividend yield
Risk-free interest rate	0.69%
Expected volatility	80.00%
Expected life (years)	6 months

Stock-Based Compensation - Unamortized Compensation Expense (Details) $ in Thousands	6 Months Ended
	Jun. 30, 2022 USD ($)
Stock Options
Stock-based awards, unamortized expense	$ 15,385
Stock-based awards, weighted average remaining recognition period (Year)	3 years 2 months 12 days
Restricted Stock Units (RSUs)
Stock-based awards, unamortized expense	$ 1,950
Stock-based awards, weighted average remaining recognition period (Year)	3 years 2 months 12 days

Leases - Future Minimum Lease Payments (Details) $ in Thousands	Jun. 30, 2022 USD ($)
Operating Leases
2022 (six months remaining)	$ 625
2023	1,283
2024	1,317
2025	1,356
2026	1,158
Total minimum lease payments	5,739
Less: Interest	(1,107)
Present value of lease liabilities	4,632
Finance Leases
2022 (six months remaining)	165
2023	195
2024	115
2025	64
2026	0
Thereafter	0
Total minimum lease payments	539
Less: Interest	(36)
Present value of lease liabilities	503
Total
2022 (six months remaining)	790
2023	1,478
2024	1,432
2025	1,420
2026	1,158
Total minimum lease payments	6,278
Less: Interest	(1,143)
Present value of lease liabilities	$ 5,135

Contract Acquisition Costs and Intangible Asset (Details) - Merger With RareGen LLC - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Contract Acquisition Costs and Intangible Asset
Business Combination, Amortization Expense	$ 0.4	$ 0.8	$ 0.8	$ 1.6
Amortization of Intangible Assets, Total	$ 0.2	$ 0.4	$ 0.3	$ 0.7

Leases - Other (Details) - ft²	Jun. 30, 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

Consolidated Statements of Cash Flows - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021
Operating activities
Net loss	$ (25,390)	$ (15,734)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation	5,832	1,698
Depreciation and amortization	1,953	3,195
Non-cash lease expense	146	110
Loss on disposal of property and equipment	1	29
Loss on extinguishment of debt	997	53
Non-cash interest (income) expense	109	77
Changes in operating assets and liabilities:
Accounts receivable, net	(763)	(2,992)
Prepaid expenses and other current assets	(115)	313
Other non-current assets	4	72
Accounts payable	111	(4,143)
Accrued expenses and other current liabilities	(721)	(1,233)
Refund liability	0	(1,769)
Operating lease liabilities	(375)	(321)
Net cash used in operating activities	(18,211)	(20,645)
Investing activities
Purchases of property, plant and equipment	(7)	(87)
Proceeds from the sale of property, plant and equipment	5	0
Net cash used in investing activities	(2)	(87)
Financing activities
Principal payments on finance leases	(160)	(307)
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	369	1,845
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	622	1
Net cash provided by financing activities	64,559	23,306
Net increase in cash and cash equivalents	46,346	2,574
Cash and cash equivalents, beginning of period	57,494	65,316
Cash and cash equivalents, end of period	103,840	67,890
Supplemental disclosure of cash flow information
Cash paid for interest	650	195
Cash paid for operating lease liabilities	619	601
Reduction of lease liability and right-of-use asset from lease modification	0	39
Non-cash increase in indemnification asset through accounts payable	$ 231	$ 2,956

Long-term Debt - Maturities (Details) - USD ($) $ in Thousands	Jun. 30, 2022	Dec. 31, 2021
Scheduled annual maturities of long-term debt
2022 (six months remaining)
2023
2024	10,000
2025	10,000
Total	20,000
Less: Unamortized discount, debt issuance costs and accretion	(394)
Long-term debt, noncurrent	$ 19,606	$ 10,410

Property, Plant and Equipment (Tables)

6 Months Ended

Jun. 30, 2022

Property, Plant and Equipment

Property, Plant and Equipment [Table Text Block]


	June 30,		December 31,
	2022		2021
Lab and build-to-suit equipment	$	6,548	$	6,600
Office equipment		19		19
Furniture and fixtures		177		177
Computer equipment		347		347
Leasehold improvements		11,457		11,457
Total property, plant and equipment		18,548		18,600
Accumulated depreciation and amortization		(14,329)		(13,583)
Property, plant and equipment, net	$	4,219	$	5,017

Basis of Presentation, Significant Accounting Policies and Fair Value Measurements (Policies)

6 Months Ended

Jun. 30, 2022

Basis of Presentation, Significant Accounting Policies and Fair Value Measurements

Basis of Presentation

Use of Estimates

Segment Information

Cash, Cash Equivalents, and Concentration of Credit Risk

The Company considers all highly liquid investments with a maturity of three months or less at the date of purchase to be cash equivalents.

●

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

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.

Stock-Based Compensation

Net Loss Per Share


	Three Months Ended		Six Months Ended
	June 30,		June 30,
	2022	2021	2022	2021
Stock Options	7,131,419	5,036,581	7,093,120	4,923,565
Restricted Stock Units	401,035	320,016	383,307	314,669
Warrants	450,000	200,000	440,331	137,016
Total	7,982,454	5,556,597	7,916,758	5,375,250

Recent Accounting Pronouncements

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.

Fair Value Measurements

Level 1 — Quoted prices in active markets for identical assets or liabilities;

Level 2 — Inputs other than quoted prices included in active markets 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.


	Quoted		Significant
	Prices in		Other		Significant
	Active		Observable		Unobservable
	Markets		Inputs		Inputs		Carrying
June 30, 2022	(Level 1)		(Level 2)		(Level 3)		Value
Assets
Money market mutual funds (cash equivalents)	$	102,840	$	—	$	—	$	102,840
Liabilities
A&R Silicon Valley Bank term loan	$	—	$	19,147	$	—	$	19,606
Total	$	—	$	19,147	$	—	$	19,606


	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

Long-term Debt - Terms (Details) $ / shares in Units, $ in Thousands				3 Months Ended		6 Months Ended
	Jan. 07, 2022 USD ($) tranche $ / shares shares	Mar. 01, 2021 USD ($)	Feb. 26, 2021 USD ($) $ / shares shares	Mar. 31, 2022 USD ($)	Mar. 31, 2021 USD ($)	Jun. 30, 2022 USD ($) $ / shares shares	Jun. 30, 2021 USD ($)	Dec. 31, 2021 USD ($) $ / shares
Long-Term Debt
Loss on extinguishment of debt						$ 997	$ 53
Repayments of debt						10,500	10,353
Proceeds from Issuance of Long-term Debt, Total						19,767	10,410
Long-term Debt, Gross						$ 20,000
Common Stock, Par or Stated Value Per Share (in dollars per share) \| $ / shares						$ 0.001		$ 0.001
Warrants included in additional paid-in capital				$ 1,317	$ 261
Long-term debt, noncurrent						$ 19,606		$ 10,410
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
Class of Warrant or Right, Additional Warrants Issued Under Loan Agreement \| shares	100,000
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
A&R Silicon Valley Bank Term Loan \| Maximum
Long-Term Debt
Debt Issuance Costs, Noncurrent, Net	$ 100
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
Term A Loan
Long-Term Debt
Debt Instrument, Face Amount		$ 10,500
Amended and Restated Loan and Security Agreement
Long-Term Debt
Debt Instrument, Final Payment Fees, Percentage	5.00%
Debt instrument, final payment	$ 185,000
A&R Silicon Valley Bank Term Loan
Long-Term Debt
Maximum Borrowing Capacity	$ 40,000
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	4.00%
Amended and Restated Loan and Security Agreement Tranche One
Long-Term Debt
Proceeds from Lines of Credit	$ 20,000
Line of Credit Facility, Additional Borrowing Capacity	5,000
Amended and Restated Loan and Security Agreement Tranche Two
Long-Term Debt
Maximum Borrowing Capacity	7,500
Amended and Restated Loan and Security Agreement Tranche Three
Long-Term Debt
Maximum Borrowing Capacity	$ 7,500
Line of Credit Facility, Trailing Sales Period	6 months
Amount of net product sales required to be generated to trigger additional borrowing capacity	$ 27,500

Long-term Debt - SVB Warrant Fair Value (Details)	Jun. 30, 2022 USD ($) Y
A&R SVB Warrants \| Measurement Input, Risk Free Interest Rate
Long-Term Debt, Fair Value of Warrant
Warrants and Rights Outstanding, Measurement Input	0.0176
A&R SVB Warrants \| Measurement Input, Price Volatility
Long-Term Debt, Fair Value of Warrant
Warrants and Rights Outstanding, Measurement Input	0.972
A&R SVB Warrants \| Measurement Input, Expected Life
Long-Term Debt, Fair Value of Warrant
Warrants and Rights Outstanding, Measurement Input \| Y	10.0
SVB Warrant \| Measurement Input, Risk Free Interest Rate
Long-Term Debt, Fair Value of Warrant
Warrants and Rights Outstanding, Measurement Input \| $	0.0143
SVB Warrant \| Measurement Input, Price Volatility
Long-Term Debt, Fair Value of Warrant
Warrants and Rights Outstanding, Measurement Input \| $	0.908
SVB Warrant \| Measurement Input, Expected Life
Long-Term Debt, Fair Value of Warrant
Warrants and Rights Outstanding, Measurement Input \| Y	10.0

Business

6 Months Ended

Jun. 30, 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 the first-to-file fully 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 involved in the treatment of pulmonary arterial hypertension (PAH) in the United States, 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 proprietary PRINT® technology, a particle engineering platform, to enable precise production of uniform drug particles designed to improve the safety, efficacy and performance of a wide range of therapies.

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 to improve the therapeutic profile of treprostinil by enhancing deep lung delivery and achieving higher dose levels than current inhaled therapies. The Company’s New Drug Application (NDA) for YUTREPIA was tentatively approved by the FDA in November 2021.

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.

The COVID-19 pandemic continues to adversely affect global economies, financial markets and the overall environment.

The Company does not believe its financial results were materially affected by the COVID-19 pandemic during the six months ended June 30, 2022. However, the extent to which the COVID-19 pandemic may affect the Company’s future financial results and operations will depend on future developments which are highly uncertain and cannot be predicted, including new information which may emerge concerning the pandemic, the availability and effectiveness of vaccines and treatment options, and current or future domestic and international actions to contain it and treat it. The Company continues to evaluate the potential impact of the COVID-19 pandemic on its business, including the potential impact of the pandemic on the potential commercial launch of YUTREIPA and any potential supply-chain challenges.

Liquidity

The Company expects to incur significant expenses and operating losses for the foreseeable future as it seeks regulatory approval and pursues commercialization of any approved product candidates. In addition, if the Company obtains marketing approval for any of its current or future product candidates, it would incur significant commercialization expenses related to product manufacturing, marketing, sales and distribution. 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. If the Company determines 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), the Company has evaluated whether there are conditions and events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the condensed consolidated financial statements are issued. The Company has financed its growth and operations through a combination of funds generated from revenues, the issuance of convertible preferred stock and common stock, finance leases, bank borrowings, bank borrowings with warrants and the issuance of convertible notes and warrants. Since inception, the Company has incurred recurring losses, including net loss of $25.4 million for the six months ended June 30, 2022 and the Company had an accumulated deficit of $335.0 million as of June 30, 2022. Although the Company expects to continue to generate operating losses for the foreseeable future, management anticipates that cash and cash equivalents will be sufficient to fund operations and remain in compliance with financial covenants into 2024. The Company has based these estimates on assumptions that may differ from actual results, and it could use its available resources sooner than expected.

The Company expects that its cash and cash equivalents will be sufficient to fund its operating expenses and capital expenditure requirements for at least twelve months from the issuance date of these unaudited interim condensed consolidated financial statements.

Accrued Expenses and Other Current Liabilities

6 Months Ended

Jun. 30, 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:


	June 30,		December 31,
	2022		2021
Accrued compensation	$	1,917	$	3,157
Accrued research and development expenses		1,146		344
Accrued other expenses		1,247		1,670
Total accrued expenses and other current liabilities	$	4,310	$	5,171

Contract Acquisition Costs and Intangible Asset

6 Months Ended

Jun. 30, 2022

Contract Acquisition Costs and Intangible Asset

Contract Acquisition Costs and Intangible Asset

4. Contract Acquisition Costs and Intangible Asset

The Company is amortizing the value of the contract acquisition costs and 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 May 2027, the termination date of the Promotion Agreement (see Note 2-Revenue Recognition for accounting policy). 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 $0.4 million and $0.8 million for the three months ended June 30, 2022 and 2021, respectively, and of $0.8 million and $1.6 million for the six months ended June 30, 2022 and 2021, respectively. The Company recorded amortization related to the intangible asset of $0.2 million and $0.4 million for the three months ended June 30, 2022 and 2021, respectively, and of $0.3 million and $0.7 million for the six months ended June 30, 2022 and 2021, respectively.

Commitments and Contingencies

6 Months Ended

Jun. 30, 2022

Commitments and Contingencies

Commitments and Contingencies

12. Commitments and Contingencies

License Agreements

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.

Employment Agreements and Other Arrangements

The Company has agreements with certain employees which require the funding of specific level or payments, if certain events, such as a change in control or termination without cause occur.

The Company enters into contracts and purchase commitments in the normal course of business with contract service providers to assist in the performance of research and development, manufacturing, and corporate activities. Subject to required notice periods and obligations, the Company can elect to discontinue work under these agreements at any time. There were no new material commitments entered into during the six months ended June 30, 2022.

Legal Proceedings

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.

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. In July 2020, the Company filed an answer to United Therapeutics’ complaint and also included counterclaims of invalidity, non-infringement, and Orange Book de-listing of the ‘901 Patent and ‘066 Patent. United Therapeutics seeks a judgment that the asserted patents are infringed and an injunction of FDA final approval and subsequent commercial launch of YUTREPIA product until after the latest to expire asserted patent. United Therapeutics’ complaint is 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. Under the Hatch-Waxman Act, the FDA is automatically precluded from approving the YUTREPIA NDA for up to 30 months until October 2022, absent an earlier judgment unfavorable to United Therapeutics by the court. Although the Company believes its YUTREPIA dry powder inhaler for the treatment of PAH is highly differentiated from Tyvaso®, since the Company is seeking approval of the YUTREPIA NDA under the 505(b)(2) regulatory pathway, the YUTREPIA NDA is subject to the provisions of the Hatch-Waxman Act.

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. The infringement allegation of the ‘793 Patent is separate from the 30-month regulatory stay on final approval of the NDA for YUTREPIA, which is only associated with the infringement allegations of the ‘901 Patent and the ‘066 Patent. United Therapeutics’ motion to dismiss the Company’s invalidity defenses and counterclaims concerning the ‘793 Patent was denied by the U.S. District Court for the District of Delaware in November 2020.

In June 2021, the Court held a claim construction hearing. Following the claim construction hearing, the Court issued orders that three of the terms under consideration would be given their plain and ordinary meaning and ruling in the Company’s favor regarding the other two terms. Based on the Court’s construction of the 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 from March 28-31, 2022. At the conclusion of the trial, the Court set a post-trial briefing schedule, which was completed on June 15, 2022. The Company currently expects that a decision regarding the Hatch-Waxman Litigation will be issued prior to the expiration of the 30-month regulatory stay in October 2022.

At trial, the Company presented evidence of non-infringement and invalidity with respect to both the’066 patent and the ‘793 patent, the two patents that remain at issue in the Hatch-Waxman Litigation. In the event that the Court finds all of the asserted claims of both the ‘066 patent and the ‘793 patent are either not infringed or invalid, then the 30-month stay will be lifted and the FDA will be able to grant final FDA approval of YUTREPIA. In the event that the Court finds any of the asserted claims of the ‘066 patent or ‘793 patent are valid and infringed, then the Court is expected to issue an order that the effective date of final YUTREPIA approval will not be earlier than the date of expiration of the patent that has been found to be valid and infringed, which would be in the year 2027 in the case of the ‘793 patent and in the year 2028 in the case of the ‘066 patent.

In March 2020, the Company filed two petitions for inter partes review with the Patent Trial and Appeal Board (the “PTAB”) of the USPTO. One petition was for inter partes review of the ‘901 Patent, and sought a determination that the claims in the ‘901 Patent are invalid, and a second petition was for inter partes review of the ‘066 Patent, and sought a determination that the claims in the ‘066 Patent are invalid. Both the ‘901 Patent and ‘066 Patent are owned by United

Therapeutics, and both patents are related to U.S. Patent No. 8,497,393 which was granted to United Therapeutics and subsequently invalidated by the USPTO in an inter partes review instituted in 2016 by SteadyMed Ltd. In October 2020, the PTAB instituted an inter partes review of the ‘901 Patent and concurrently denied institution on the ‘066 Patent, stating that the ‘066 petition has not established a reasonable likelihood that it would prevail in showing that at least one of the challenged claims is unpatentable. In 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 on June 14, 2022. The Company expects that United Therapeutics will file for an appeal of the PTAB’s decision, which is due on August 16, 2022.

In January 2021, the Company filed a petition for inter partes review with the PTAB relating to the ‘793 patent, seeking a determination that the claims in the ‘793 patent are invalid. In August 2021, the PTAB instituted an inter partes review of the ‘793 Patent, finding that the Company had demonstrated a reasonable likelihood that it would prevail with respect to showing that at least one challenged claim of the ‘793 patent is unpatentable as obvious over the combination of certain prior art cited by the Company in its petition to the PTAB. Oral argument with respect to the inter partes review of the ‘793 patent was held in May 2022. In July 2022, the PTAB 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. The PTAB’s decision would not override an order of the Court 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. On May 10, 2022, the Company filed a motion to dismiss all of the claims made by United Therapeutics in the lawsuit. The motion remains pending with the Court.

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 January 2020, the Court denied Liquidia PAH’s and Sandoz’s motion for a preliminary injunction and United Therapeutics’ and Smiths Medicals’ motion to dismiss. 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.

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.

Property, Plant and Equipment (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Property, Plant and Equipment
Depreciation, Depletion and Amortization, Nonproduction, Total	$ 0.4	$ 0.4	$ 0.8	$ 0.9

Leases - Remaining Lease Term and Discount Rates (Details)	Jun. 30, 2022
Leases
Weighted average remaining lease term, Operating leases	4 years 3 months 18 days
Weighted average remaining lease term, Finance leases	2 years 1 month 6 days
Weighted average discount rate, Operating leases	10.30%
Weighted average discount rate, Finance leases	6.50%

Property, Plant and Equipment - Property, Plant and Equipment (Details) - USD ($) $ in Thousands	Jun. 30, 2022	Dec. 31, 2021
Total property, plant and equipment	$ 18,548	$ 18,600
Accumulated depreciation and amortization	(14,329)	(13,583)
Property, Plant and Equipment, Net, Total	4,219	5,017
Lab and build-to-suit equipment
Total property, plant and equipment	6,548	6,600
Office equipment
Total property, plant and equipment	19	19
Furniture and fixtures
Total property, plant and equipment	177	177
Computer equipment
Total property, plant and equipment	347	347
Leasehold improvements
Total property, plant and equipment	$ 11,457	$ 11,457

Revenue From Contracts With Customers (Details) - Sandoz - USD ($) $ in Millions		3 Months Ended	6 Months Ended
	Aug. 01, 2018	Jun. 30, 2022	Jun. 30, 2022
Promotion Agreement, Payment	$ 20.0
Percentage of Revenue from Promotion Agreement		98.00%	98.00%
Contract with Customer, Refund Liability		$ 0.5	$ 0.5

Consolidated Statements of Operations and Comprehensive Loss - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Consolidated Statements of Operations and Comprehensive Loss
Revenue	$ 3,918	$ 3,376	$ 7,410	$ 6,460
Costs and expenses:
Cost of revenue	731	714	1,425	1,407
Research and development	5,219	4,595	9,947	10,649
General and administrative	6,938	4,421	19,480	9,758
Total costs and expenses	12,888	9,730	30,852	21,814
Loss from operations	(8,970)	(6,354)	(23,442)	(15,354)
Other income (expense):
Interest income	65	5	69	25
Interest expense	(542)	(203)	(1,020)	(352)
Loss on extinguishment of debt			(997)	(53)
Total other income (expense), net	(477)	(198)	(1,948)	(380)
Net loss and comprehensive loss	$ (9,447)	$ (6,552)	$ (25,390)	$ (15,734)
Net loss per common share, basic (in dollars per share)	$ (0.15)	$ (0.13)	$ (0.44)	$ (0.33)
Net loss per common share, diluted (in dollars per share)	$ (0.15)	$ (0.13)	$ (0.44)	$ (0.33)
Weighted average common shares outstanding, basic (in shares)	62,179,305	50,847,126	57,349,129	47,165,696
Weighted average common shares outstanding, diluted (in shares)	62,179,305	50,847,126	57,349,129	47,165,696

Basis of Presentation, Significant Accounting Policies and Fair Value Measurements - Other (Details)		6 Months Ended
	Jul. 01, 2021 USD ($)	Jun. 30, 2022 USD ($) customer segment	Dec. 31, 2021 USD ($)
Cash and cash equivalents		$ 103,840,000	$ 57,494,000
Number of reporting units		1
Impairment of long-lived assets		$ 0
Impairment of goodwill	$ 0
Number of operating segments \| segment		1
Credit Concentration Risk \| Accounts Receivable \| Customer One
Concentration risk, percentage		98.00%
Number of customers \| customer		1

Business (Details) - USD ($) $ in Thousands	3 Months Ended				6 Months Ended
Business (Details) - USD ($) $ in Thousands	Jun. 30, 2022	Mar. 31, 2022	Jun. 30, 2021	Mar. 31, 2021	Jun. 30, 2022	Jun. 30, 2021	Dec. 31, 2021
Business
Net loss	$ 9,447	$ 15,943	$ 6,552	$ 9,183	$ 25,390	$ 15,734
Accumulated deficit	$ 334,971				$ 334,971		$ 309,581

- Definition

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

+ References

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+ Details

- Definition

The cumulative amount of the reporting entity's undistributed earnings or deficit.

+ References + Details

Accrued Expenses and Other Current Liabilities (Tables)

6 Months Ended

Jun. 30, 2022

Accrued Expenses and Other Current Liabilities

Schedule of Accrued Expenses and Other Current Liabilities [Table Text Block]

Accrued expenses and other current liabilities consisted of the following:


	June 30,		December 31,
	2022		2021
Accrued compensation	$	1,917	$	3,157
Accrued research and development expenses		1,146		344
Accrued other expenses		1,247		1,670
Total accrued expenses and other current liabilities	$	4,310	$	5,171

Consolidated Balance Sheets (Parentheticals) - $ / shares	Jun. 30, 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)	64,346,528	52,287,737
Common stock, shares outstanding (in shares)	64,346,528	52,287,737

Stock-Based Compensation - Fair Value Assumptions (Details) - Stock Options	6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021
Expected dividend yield
Risk-free interest rate, minimum	1.46%	0.62%
Risk-free interest rate, maximum	3.34%	1.67%
Expected Volatility, minimum	90.00%	92.00%
Expected Volatility, maximum	93.00%	96.00%
Minimum
Expected life (years)	5 years 9 months 18 days
Maximum
Expected life (years)	6 years 1 month 6 days

Leases

6 Months Ended

Jun. 30, 2022

Leases

Leases

10. 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 ASC 842 Leases, 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 condensed consolidated financial statements.

The Company’s lease cost is reflected in the accompanying condensed statements of operations and comprehensive loss as follows:


		Three Months Ended June 30,				Six Months Ended June 30,
	Classification	2022		2021		2022		2021
Operating lease cost	General and administrative	$	195	$	195	$	390	$	390
Finance lease cost:
Amortization of lease assets	General and administrative		36		42		74		185
Interest on lease liabilities	Interest expense		9		14		18		19
Total Lease Cost		$	240	$	251	$	482	$	594

The weighted average remaining lease term and discount rates as of June 30, 2022 were as follows:


Weighted average remaining lease term (years):
Operating leases	4.3
Finance leases	2.1
Weighted average discount rate:
Operating leases	10.3	%
Finance leases	6.5	%

The discount rate for leases was estimated based upon market rates of collateralized loan obligations of comparable companies on comparable terms.

The future minimum lease payment as of June 30, 2022 were as follows:


	Operating		Finance
Year ending December 31:	Leases		Leases		Total
2022 (six months remaining)	$	625	$	165	$	790
2023		1,283		195		1,478
2024		1,317		115		1,432
2025		1,356		64		1,420
2026		1,158		—		1,158
Thereafter		—		—		—
Total minimum lease payments		5,739		539		6,278
Less: Interest		(1,107)		(36)		(1,143)
Present value of lease liabilities	$	4,632	$	503	$	5,135

Stockholders' Equity

6 Months Ended

Jun. 30, 2022

Stockholders' Equity

Stockholders' Equity

7. Stockholders’ Equity

Common Stock

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. The Company intends to use the net proceeds from this Offering for ongoing commercial development of YUTREPIA, for continued development of YUTREPIA in other clinical trials, including but not limited to, trials for WHO Group 3 patients and pediatric patients, for pre-clinical pipeline activities and for general corporate purposes.

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 six months ended June 30, 2022 and 2021, no warrants to purchase shares of common stock were exercised.

As of June 30, 2022, outstanding warrants consisted of the following:


	Number of
	warrants	Exercise Price		Expiration Date
A&R SVB Warrant - Initial Tranche (see Note 11)	250,000	$	5.14	January 6, 2032
SVB Warrant - Initial Tranche (see Note 11)	100,000	$	3.05	February 26, 2031
SVB Warrant - Term B and Term C Tranches (see Note 11)	100,000	$	n/a	February 26, 2031
Other warrants	65,572	$	0.02	December 31, 2026

- Definition

The entire disclosure for shareholders' equity comprised of portions attributable to the parent entity and noncontrolling interest, including other comprehensive income. Includes, but is not limited to, balances of common stock, preferred stock, additional paid-in capital, other capital and retained earnings, accumulated balance for each classification of other comprehensive income and amount of comprehensive income.

+ References

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Reference 2: http://www.xbrl.org/2003/role/disclosureRef
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+ Details

Document and Entity Information - shares	6 Months Ended
Document and Entity Information - shares	Jun. 30, 2022	Aug. 01, 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	Q2
Document Fiscal Year Focus	2022
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Jun. 30, 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 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
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		64,362,336

Long-term Debt - Summary (Details) - USD ($) $ in Thousands	Jun. 30, 2022	Dec. 31, 2021
Long-Term Debt
Long-term debt	$ 19,606	$ 10,410
A&R Silicon Valley Bank Term Loan
Long-Term Debt
Long-term debt	$ 19,606
Silicon Valley Bank Term Loan
Long-Term Debt
Long-term debt		$ 10,410

- Definition

Amount, after unamortized (discount) premium and debt issuance costs, of long-term debt. Includes, but not limited to, notes payable, bonds payable, debentures, mortgage loans and commercial paper. Excludes capital lease obligations.

+ References + Details

Commitments and Contingencies (Details) $ in Thousands	Nov. 06, 2020 USD ($)
Liquidia PAH and Sandoz \| UTC and Smiths Medical Litigation \| Pending Litigation
Commitments and Contingencies
Proceeds from Legal Settlements	$ 4,250

Stock-Based Compensation - Stock Option Activity (Details) - USD ($) $ / shares in Units, $ in Thousands	6 Months Ended
	Jun. 30, 2022
Stock-Based Compensation.
Outstanding, number of shares (in shares)	5,598,009
Outstanding, weighted average exercise price (in dollars per share)	$ 4.19
Granted, number of shares (in shares)	3,611,677
Granted, weighted average exercise price (in dollars per share)	$ 5.29
Exercised, number of shares (in shares)	(143,891)
Exercised, weighted average exercise price (in dollars per share)	$ 4.15
Cancelled, number of shares (in shares)	(1,203,916)
Cancelled, weighted average exercise price (in dollars per share)	$ 5.73
Outstanding, number of shares (in shares)	7,861,879
Outstanding, weighted average exercise price (in dollars per share)	$ 4.46
Outstanding, weighted average contractual term (Year)	8 years 8 months 12 days
Outstanding, aggregate intrinsic value	$ 5,447
Exercisable, number of shares (in shares)	3,075,103
Exercisable, weighted average exercise price (in dollars per share)	$ 4.12
Exercisable, weighted average contractual term (Year)	7 years 8 months 12 days
Exercisable, aggregate intrinsic value	$ 3,541
Vested and expected to vest, number of shares (in shares)	7,149,487
Vested and expected to vest, weighted average exercise price (in dollars per share)	$ 4.44
Vested and expected to vest, weighted average contractual term (Year)	8 years 8 months 12 days
Vested and expected to vest, aggregate intrinsic value	$ 5,131

Accrued Expenses and Other Current Liabilities (Details) - USD ($) $ in Thousands	Jun. 30, 2022	Dec. 31, 2021
Accrued Expenses and Other Current Liabilities
Accrued compensation	$ 1,917	$ 3,157
Accrued research and development expenses	1,146	344
Accrued other expenses	1,247	1,670
Total accrued expenses and other current liabilities	$ 4,310	$ 5,171

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			0
Issuance of common stock upon exercise of stock options (in shares)	281
Issuance of common stock upon vesting of restricted stock units			0
Issuance of common stock upon vesting of restricted stock units (in shares)	10,366
Issuance of warrant		261	0	261
Stock-based compensation		745	0	745
Net loss			(9,183)	(9,183)
Balance at Mar. 31, 2021	$ 43	347,051	(284,185)	62,909
Balance (in shares) at Mar. 31, 2021	43,346,924
Balance at Dec. 31, 2020	$ 43	346,045	(275,002)	71,086
Balance (in shares) at Dec. 31, 2020	43,336,277
Net loss				(15,734)
Balance at Jun. 30, 2021	$ 52	369,706	(290,737)	79,021
Balance (in shares) at Jun. 30, 2021	51,975,049
Balance at Mar. 31, 2021	$ 43	347,051	(284,185)	62,909
Balance (in shares) at Mar. 31, 2021	43,346,924
Issuance of common stock upon vesting of restricted stock units			0
Issuance of common stock upon vesting of restricted stock units (in shares)	2,088
Sale of common stock, net	$ 9	21,702	0	21,711
Sale of common stock, net (in shares)	8,626,037
Stock-based compensation		953	0	953
Net loss			(6,552)	(6,552)
Balance at Jun. 30, 2021	$ 52	369,706	(290,737)	79,021
Balance (in shares) at Jun. 30, 2021	51,975,049
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		593	0	593
Issuance of common stock upon exercise of stock options (in shares)	143,048
Issuance of common stock upon vesting of restricted stock units			0
Issuance of common stock upon vesting of restricted stock units (in shares)	1,690
Issuance of common stock under employee stock purchase plan		28	0	28
Issuance of common stock under employee stock purchase plan (in shares)	5,017
Issuance of warrant		1,317	0	1,317
Equity consideration for acquisition	$ 1	(1)	0
Equity consideration for acquisition (in shares)	616,666
Stock-based compensation		4,129	0	4,129
Net loss			(15,943)	(15,943)
Balance at Mar. 31, 2022	$ 53	380,860	(325,524)	55,389
Balance (in shares) at Mar. 31, 2022	53,054,158
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 (in shares)				143,891
Net loss				$ (25,390)
Balance at Jun. 30, 2022	$ 64	437,014	(334,971)	102,107
Balance (in shares) at Jun. 30, 2022	64,346,528
Balance at Mar. 31, 2022	$ 53	380,860	(325,524)	55,389
Balance (in shares) at Mar. 31, 2022	53,054,158
Issuance of common stock upon exercise of stock options		1	0	1
Issuance of common stock upon exercise of stock options (in shares)	364
Issuance of common stock upon vesting of restricted stock units			0
Issuance of common stock upon vesting of restricted stock units (in shares)	17,496
Sale of common stock, net	$ 11	54,450	0	54,461
Sale of common stock, net (in shares)	11,274,510
Stock-based compensation		1,703	0	1,703
Net loss			(9,447)	(9,447)
Balance at Jun. 30, 2022	$ 64	$ 437,014	$ (334,971)	$ 102,107
Balance (in shares) at Jun. 30, 2022	64,346,528

Indemnification Asset with Related Party and Litigation Finance Payable

6 Months Ended

Jun. 30, 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 (“Smiths Medical”) in November 2020, were pursuing litigation against Smiths Medical (collectively, the “RareGen Litigation”). 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, 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 August 1, 2022) 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 primary 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 RareGen 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 litigation.

As of June 30, 2022 and December 31, 2021, the Indemnification Asset and Litigation Finance Payable were classified as long-term assets and liabilities, respectively as it is considered unlikely that the RareGen Litigation would conclude prior to June 30, 2023.

Stock-Based Compensation

6 Months Ended

Jun. 30, 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 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, 2022, the number of shares of common stock available for issuance under the 2020 Plan automatically increased by 2,091,509 shares pursuant to the Evergreen Provision. On June 16, 2022, the number of shares of common stock available for issuance under the 2020 Plan increased by 1,600,000 shares pursuant to an amendment to the 2020 Plan, which was approved by the Company’s stockholders. As of June 30, 2022, the Company had 879,027 shares of common stock available to issue 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 June 30, 2022, the Company had a total of 794,060 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 June 30, 2022, the Company had a total of 219,800 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”). On January 1, 2022, 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. As of June 30, 2022, a total of 594,983 shares of the Company’s common stock are reserved for issuance under 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 six months ended June 30, 2022 a total of 5,017 shares were issued 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 the Company’s 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 three months ended March 31, 2022.

Quarterly Bonus and Second Tranche Options

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 will become vested and 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.

The Jeffs Employment Agreement also entitled Dr. Jeffs to a quarterly cash bonus equal in the aggregate to the difference (only if positive) between the per share closing price of the Company’s common stock on the date which the Second Tranche Option is granted minus the per share closing price of common stock on January 3, 2022 (the “Quarterly Bonus”). The Company previously concluded that the Quarterly Bonus was a liability classified cash-settled stock appreciation right under ASC 718-10-25-11 that would be expensed over the service period. During the three months ended March 31, 2022 the Company recorded a stock-based compensation charge of $56,000 related to the Quarterly Bonus. This charge was reversed during the three months ended June 30, 2022 since no Quarterly Bonus will be payable as the per share closing price of common stock on the grant date of Second Tranche Option was less than the per share closing price on January 3, 2022.

Stock-Based Compensation Valuation and Expense

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 fair value of each option grant is estimated using a Black-Scholes option-pricing model.

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.

Total stock-based compensation expense recognized for employees and non-employees was as follows:


	Three Months Ended				Six Months Ended
	June 30,				June 30,
By Expense Category:	2022		2021		2022		2021
Research and development	$	337	$	278	$	720	$	529
General and administrative		1,310		675		5,112		1,169
Total stock-based compensation expense	$	1,647	$	953	$	5,832	$	1,698

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 June 30, 2022
			Weighted
			Average
			Remaining
			Recognition
	Unamortized		Period
	Expense		(Years)
Stock options	$	15,385	3.2
Restricted stock units	$	1,950	3.2

Fair Value of Stock Options Granted and Purchase Rights Issued under the ESPP

The Company uses the Black-Scholes option-pricing model to determine the fair value of stock options granted and purchase rights issued under the ESPP.

The following table summarizes the assumptions used for estimating the fair value of stock options granted under the Black-Scholes option-pricing model:


	Six Months Ended
	June 30,
	2022	2021
Expected dividend yield	—	—
Risk-free interest rate	1.46% - 3.34%	0.62% - 1.67%
Expected volatility	90% - 93%	92% - 96%
Expected life (years)	5.8 - 6.1	5.8

The weighted average fair value for options granted during the six months ended June 30, 2022 and 2021 was $4.19 and $2.08 per share, respectively.

The following table summarizes the assumptions used for estimating the fair value of purchase rights granted to employees under the ESPP under the Black-Scholes option-pricing model during the six months ended June 30, 2022:


Expected dividend yield		—
Risk-free interest rate		0.69%
Expected volatility		80%
Expected life (years)		0.50

The following table summarizes the Company’s stock option activity during the six months ended June 30, 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	3,611,677		5.29
Exercised	(143,891)		4.15
Cancelled	(1,203,916)		5.73
Outstanding as of June 30, 2022	7,861,879	$	4.46	8.7	$	5,447
Exercisable as of June 30, 2022	3,075,103	$	4.12	7.7	$	3,541
Vested and expected to vest as of June 30, 2022	7,149,487	$	4.44	8.7	$	5,131

The aggregate intrinsic value of stock options in the table above represents the difference between the $4.36 closing price of the Company’s common stock as of June 30, 2022 and the exercise price of outstanding, exercisable, and vested and expected to vest in-the-money stock options.

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 six months ended June 30, 2022, the Board of Directors approved grants of an aggregate of 409,569 time-based RSUs to employees. 63,230 of these RSUs were issued to Dr. Jeffs pursuant to his employment agreement and vest quarterly through January 2023. The remaining 346,339 RSUs vest over a four-year period similar to stock options granted to employees.

A summary of nonvested RSU awards outstanding as of June 30, 2022 and changes during the six months ended June 30, 2022 is as follows:


		Weighted
		Average
		Grant-Date
	Number of	Fair Value
	RSUs	(per RSU)
Nonvested as of December 31, 2021	15,204	$	3.31
Granted	409,569		6.08
Vested	(19,186)		4.82
Nonvested as of June 30, 2022	370,137	$	6.01

Revenue From Contracts With Customers

6 Months Ended

Jun. 30, 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. In addition, the Company paid Sandoz $20 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 June 30, 2022, a $0.5 million refund liability is offset against accounts receivable from Sandoz.

The Company derived approximately 98% and all of its revenue from the Promotion Agreement during three and six months ended June 30, 2022, respectively.

- Definition

The entire disclosure of revenue from contract with customer to transfer good or service and to transfer nonfinancial asset. Includes, but is not limited to, disaggregation of revenue, credit loss recognized from contract with customer, judgment and change in judgment related to contract with customer, and asset recognized from cost incurred to obtain or fulfill contract with customer. Excludes insurance and lease contracts.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-URI http://asc.fasb.org/topic&trid=49130388

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 10
-URI http://asc.fasb.org/extlink&oid=123351226&loc=SL49130551-203045

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 13
-Subparagraph (b)(2)
-URI http://asc.fasb.org/extlink&oid=123351226&loc=SL49130556-203045

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 12
-Subparagraph (b)
-URI http://asc.fasb.org/extlink&oid=123351226&loc=SL49130554-203045

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 9
-URI http://asc.fasb.org/extlink&oid=123351226&loc=SL49130550-203045

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 12
-Subparagraph (e)
-URI http://asc.fasb.org/extlink&oid=123351226&loc=SL49130554-203045

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 12
-Subparagraph (a)
-URI http://asc.fasb.org/extlink&oid=123351226&loc=SL49130554-203045

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 12
-Subparagraph (d)
-URI http://asc.fasb.org/extlink&oid=123351226&loc=SL49130554-203045

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 15
-URI http://asc.fasb.org/extlink&oid=123351226&loc=SL49130558-203045

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 12
-Subparagraph (c)
-URI http://asc.fasb.org/extlink&oid=123351226&loc=SL49130554-203045

+ Details

Consolidated Balance Sheets - USD ($) $ in Thousands	Jun. 30, 2022	Dec. 31, 2021
Current assets:
Cash and cash equivalents	$ 103,840	$ 57,494
Accounts receivable, net	3,753	2,990
Prepaid expenses and other current assets	907	792
Total current assets	108,500	61,276
Property, plant and equipment, net	4,219	5,017
Operating lease right-of-use assets, net	2,266	2,412
Indemnification asset, related party	6,513	6,282
Contract acquisition costs, net	9,333	10,138
Intangible asset, net	4,041	4,390
Goodwill	3,903	3,903
Other assets	307	311
Total assets	139,082	93,729
Current liabilities:
Accounts payable	1,412	1,070
Accrued expenses and other current liabilities	4,310	5,171
Current portion of operating lease liabilities	834	775
Current portion of finance lease liabilities	281	311
Total current liabilities	6,837	7,327
Litigation finance payable	6,512	6,143
Long-term operating lease liabilities	3,798	4,232
Long-term finance lease liabilities	222	352
Long-term debt	19,606	10,410
Total liabilities	36,975	28,464
Commitments and contingencies
Stockholders' equity:
Preferred stock - 10,000,000 shares authorized, none outstanding	0	0
Common stock - $0.001 par value, 80,000,000 shares authorized, 64,346,528 and 52,287,737 shares issued and outstanding as of June 30, 2022 and December 31, 2021, respectively	64	52
Additional paid-in capital	437,014	374,794
Accumulated deficit	(334,971)	(309,581)
Total stockholders' equity	102,107	65,265
Total liabilities and stockholders' equity	$ 139,082	$ 93,729

Stock-Based Compensation - Stock-based Compensation Expense (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Stock-based compensation expense	$ 1,647,000	$ 953,000	$ 5,832	$ 1,698
Research and Development Expense
Stock-based compensation expense	337,000	278,000	720	529
General and Administrative Expense
Stock-based compensation expense	$ 1,310,000	$ 675,000	$ 5,112	$ 1,169

Basis of Presentation, Significant Accounting Policies and Fair Value Measurements (Tables)

6 Months Ended

Jun. 30, 2022

Basis of Presentation, Significant Accounting Policies and Fair Value Measurements

Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share [Table Text Block]


	Three Months Ended		Six Months Ended
	June 30,		June 30,
	2022	2021	2022	2021
Stock Options	7,131,419	5,036,581	7,093,120	4,923,565
Restricted Stock Units	401,035	320,016	383,307	314,669
Warrants	450,000	200,000	440,331	137,016
Total	7,982,454	5,556,597	7,916,758	5,375,250

Fair Value, Liabilities Measured on Recurring and Nonrecurring Basis [Table Text Block]


	Quoted		Significant
	Prices in		Other		Significant
	Active		Observable		Unobservable
	Markets		Inputs		Inputs		Carrying
June 30, 2022	(Level 1)		(Level 2)		(Level 3)		Value
Assets
Money market mutual funds (cash equivalents)	$	102,840	$	—	$	—	$	102,840
Liabilities
A&R Silicon Valley Bank term loan	$	—	$	19,147	$	—	$	19,606
Total	$	—	$	19,147	$	—	$	19,606


	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

Stockholders' Equity (Details) - USD ($) $ / shares in Units, $ in Thousands						3 Months Ended		6 Months Ended
	Apr. 18, 2022	Apr. 12, 2022	Mar. 31, 2022	Apr. 13, 2021	Nov. 18, 2020	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021	Dec. 31, 2021	Feb. 26, 2021
Common Stock, Shares Authorized (in shares)						80,000,000		80,000,000		80,000,000
Preferred Stock, Shares Authorized (in shares)						10,000,000		10,000,000		10,000,000
Value of shares sold						$ 54,461	$ 21,711
Common Stock, Par or Stated Value Per Share (in dollars per share)						$ 0.001		$ 0.001		$ 0.001
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		250,000
Class of Warrant or Right, Exercise Price of Warrants or Rights (in dollars per share)						$ 5.14		$ 5.14
SVB Warrant Initial Tranche
Class of Warrant or Right, Outstanding (in shares)						100,000		100,000
Class of Warrant or Right, Exercise Price of Warrants or Rights (in dollars per share)						$ 3.05		$ 3.05			$ 3.05
SVB Warrant - Term B and Term C Tranches
Class of Warrant or Right, Outstanding (in shares)						100,000		100,000
Other Warrants
Class of Warrant or Right, Outstanding (in shares)						65,572		65,572
Class of Warrant or Right, Exercise Price of Warrants or Rights (in dollars per share)						$ 0.02		$ 0.02
Warrants to Purchase Common Stock
Class of Warrant or Right, Exercised During Period (in shares)								0	0
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