0001558370-23-014376 | 10-Q | XBRL Viewer

Long-term Debt (Tables)

6 Months Ended

Jun. 30, 2023


		June 30,		December 31,
	Maturity Date	2023		2022
A&R Silicon Valley Bank term loan	December 1, 2025	$	—	$	19,879

SVB Warrant

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

- 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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+ Details

Stock-Based Compensation

6 Months Ended

Jun. 30, 2023

Stock-Based Compensation.

Stock-Based Compensation

8. Stock-Based Compensation

2020 Long-Term Incentive Plan

Our 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 our common stock available for issuance under the 2020 plan will automatically increase on January 1 of each year through 2030, by an amount equal to the smaller of (a) 4% of the number of shares of common stock issued and outstanding on the immediately preceding December 31, or (b) an amount determined by the Board of Directors (the “Evergreen Provision”). On January 1, 2023, the number of shares of common stock available for issuance under the 2020 Plan automatically increased by 2,580,716 shares pursuant to the Evergreen Provision. As of June 30, 2023, 209,087 shares of common stock were available for issuance under the 2020 Plan.

The 2020 Plan replaced all 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, 2023, a total of 669,576 shares of common stock were reserved for issuance related to the remaining outstanding equity awards granted under the prior plans.

2022 Inducement Plan

On January 25, 2022, the Board of Directors approved the adoption of our 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 of Directors without stockholder approval pursuant to Rule 5635(c)(4) of the rules and regulations of The Nasdaq Stock Market, LLC (the “Nasdaq Listing Rules”).

310,000 shares of our common stock were reserved for issuance pursuant to equity awards that may be 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 of Directors, or following a bona fide period of non-employment by us, if he or she is granted such equity awards in connection with his or her commencement of employment with us and such grant is an inducement material to his or her entering into employment with us. As of June 30, 2023, a total of 21,650 shares were available for issuance under the 2022 Inducement Plan.

Employee Stock Purchase Plan

In November 2020, stockholders approved the Liquidia Corporation 2020 Employee Stock Purchase Plan (the “ESPP”). The number of shares of our common stock available for issuance under the ESPP will automatically increase by the lesser of (a) 1.0% of the number of shares of common stock issued and outstanding on the immediately, (b) 150,000 shares, or (c) an amount determined by the Board of Directors. On January 1, 2023, the number of shares of common stock available for issuance under the ESPP increased by 150,000 shares. As of June 30, 2023, a total of 616,778 shares of common stock are reserved for issuance under the ESPP. The ESPP allows eligible employees to purchase shares of our common stock at a discount through payroll deductions, subject to plan limitations. Unless otherwise determined by the administrator, the 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 our common stock on the first and last trading day of the offering period. During the six months ended June 30, 2023 and 2022, 81,281 and 5,017 shares were issued under the ESPP, respectively.

CEO Options

During December 2020, we issued a stock option grant to our then new Chief Executive Officer, Damian deGoa, to purchase up to 2,000,000 shares of our common stock (the “CEO Option”) at an exercise price 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

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 member of our Board of Directors 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.

Stock-Based Compensation Valuation and Expense

We account for employee stock-based compensation plans using the fair value method. The fair value method requires us to estimate the grant-date fair value of 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 our 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:	2023		2022		2023		2022
Research and development	$	578	$	337	$	1,159	$	720
General and administrative		1,921		1,310		3,892		5,112
Total stock-based compensation expense	$	2,499	$	1,647	$	5,051	$	5,832

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, 2023
			Weighted
			Average
			Remaining
			Recognition
	Unamortized		Period
	Expense		(Years)
Stock options	$	18,455	2.7
Restricted stock units	$	9,634	3.4

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

We use 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,
	2023	2022
Expected dividend yield	—	—
Risk-free interest rate	3.46% - 3.99%	1.46% - 2.34%
Expected volatility	91% - 95%	90% - 93%
Expected life (years)	5.8 - 6.1	5.8 - 6.1

The weighted average fair value for options granted during the six months ended June 30, 2023 and 2022 was $5.09 and $4.19 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:


	Six Months Ended
	June 30,
	2023	2022
Expected dividend yield	—	—
Risk-free interest rate	5.20%	0.69%
Expected volatility	64%	80%
Expected life (years)	0.50	0.50

The following table summarizes stock option activity during the six months ended June 30, 2023:


				Weighted
		Weighted		Average
		Average		Contractual	Aggregate
	Number of	Exercise		Term	Intrinsic
	Shares	Price		(in years)	Value
Outstanding as of December 31, 2022	8,398,262	$	4.49
Granted	1,373,746		6.56
Exercised	(31,620)		3.50
Cancelled	(145,554)		5.58
Outstanding as of June 30, 2023	9,594,834	$	4.77	8.2	$	30,939
Exercisable as of June 30, 2023	4,817,133	$	4.34	7.6	$	18,171
Vested and expected to vest as of June 30, 2023	9,264,881	$	4.77	8.2	$	29,949

The aggregate intrinsic value of stock options in the table above represents the difference between the $7.85 closing price of our common stock as of June 30, 2023 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 our common stock at the end of a specified time period or upon the achievement of a specific milestone. RSUs can only be settled in shares of our common stock. RSUs generally vest over a four-year period similar to stock options granted to employees.

A summary of unvested RSU awards outstanding as of June 30, 2023 and changes during the six months ended June 30, 2023 is as follows:


		Weighted
		Average
		Grant-Date
	Number of	Fair Value
	RSUs	(per RSU)
Unvested as of December 31, 2022	407,726	$	5.57
Granted	1,483,166		6.48
Vested	(109,569)		6.00
Forfeited	(56,034)		6.22
Unvested as of June 30, 2023	1,725,289	$	6.30

Business	6 Months Ended
Jun. 30, 2023
Business
Business	1. Business Description of the Business We are 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”). We operate through our wholly owned operating subsidiaries, Liquidia Technologies, Inc. (“Liquidia Technologies”) and Liquidia PAH, LLC (“Liquidia PAH”), formerly known as RareGen, LLC (“RareGen”). We currently generate revenue pursuant to a promotion agreement between Liquidia PAH and Sandoz Inc. (“Sandoz”), dated as of August 1, 2018, as amended (the “Promotion Agreement”), sharing profit derived from the sale of Sandoz’s substitutable generic treprostinil injection (“Treprostinil Injection”) in the United States. Liquidia PAH has the exclusive rights to conduct commercial activities to encourage the appropriate use of Treprostinil Injection. We employ 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, we believe that our 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 our reputation as a company committed to supporting PAH patients. We conduct research, development and manufacturing of novel products by applying our subject matter expertise in cardiopulmonary diseases and our 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. Through development of our own products and research with third parties, we have experience applying PRINT across multiple routes of administration and drug payloads including inhaled therapies, vaccines, biologics, nucleic acids and ophthalmic implants, among others. Our lead product candidate is YUTREPIA for the treatment of PAH. YUTREPIA is an inhaled dry powder formulation of treprostinil designed with PRINT to improve the therapeutic profile of treprostinil by enhancing deep lung delivery while using a convenient, low resistance dry-powder inhaler (“DPI”) and by achieving higher dose levels than the labeled doses of current inhaled therapies. The United States Food and Drug Administration (“FDA”) tentatively approved our New Drug Application (“NDA”) for YUTREPIA for the treatment of PAH in November 2021. The FDA also confirmed that the clinical data in the NDA would support our pursuit of an amendment to our NDA to treat patients with pulmonary hypertension and interstitial lung disease (PH-ILD) upon the expiration of regulatory exclusivity in March 2024. We filed an amendment to our NDA to include PH-ILD as a labelled indication on July 24, 2023. We are also developing L606, an investigational, liposomal formulation of treprostinil administered twice-daily with a short-duration next-generation nebulizer, which we licensed from Pharmosa. L606 is currently being evaluated in an open-label study in the United States for treatment of PAH with a planned pivotal study for the treatment of PH-ILD. Risks and Uncertainties We are 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, we operate in a dynamic and highly competitive industry and believes that changes in any of the following areas could have a material adverse effect on our 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 our products; development of sales channels; certain strategic relationships; litigation or claims against our related to intellectual property, product, regulatory, or other matters; and our ability to attract and retain employees necessary to support our growth. Product candidates we develop require approval from the FDA and/or other international regulatory agencies prior to commercial sales. There can be no assurance that our product candidates will receive the necessary approvals. If we are denied approval, approval is delayed, or we are unable to maintain approval, it could have a material adverse impact on our business, financial position and results of operations. We rely on single source manufacturers and suppliers for the supply of our product candidates, which adds to the manufacturing risks we face. In the event of any failure by a supplier, we could be left without backup facilities. Any disruption from these manufacturers or suppliers could have a negative impact on our business, financial position and results of operations. Recent Events License Agreement with Pharmosa Biopharm In June 2023, we entered into a License Agreement with Pharmosa Biopharm Inc (“Pharmosa”) pursuant to which we were granted an exclusive license in North America to develop and commercialize L606, an inhaled, sustained-release formulation of treprostinil currently being evaluated in a clinical trial for the treatment of pulmonary arterial hypertension (PAH) and pulmonary hypertension associated with interstitial lung disease (PH-ILD), and a non-exclusive license for the manufacture, development and use (but not commercialization) of such licensed product in most countries outside North America (the “Pharmosa License Agreement”). Under the terms of the Pharmosa License Agreement, we will be responsible for development, regulatory and commercial activities of L606 in North America. Pharmosa will manufacture clinical and commercial supplies of the liposomal formulation through its global supply chain and support us in establishing a redundant global supply chain. In consideration for these exclusive rights, we paid Pharmosa an upfront license fee of $10 million and will pay Pharmosa potential development milestone payments tied to PAH and PH-ILD indications of up to $30 million, potential sales milestones of up to $185 million and two tiers of low, double-digit royalties on net sales of L606. Pharmosa will also receive a $10 million milestone payment for each additional indication approved after PAH and PH-ILD and each additional product approved under the license. We also retain the first right to negotiate for development and commercialization of L606 in Europe and other territories should Pharmosa seek a partner, subject to satisfaction of certain conditions as set forth in the Pharmosa License Agreement. Concurrently with the execution of the Pharmosa License Agreement, we also entered into an Asset Transfer Agreement with Pharmosa pursuant to which Pharmosa will transfer its physical materials so that we can perform the necessary actions contemplated under the Pharmosa License Agreement. Second and Third Amendments to Revenue Interest Financing Agreement In June 2023 and July 2023, we entered into a Second Amendment and Third Amendment, respectively, to the Revenue Interest Financing Agreement (“RIFA”) with HealthCare Royalty Partners IV, L.P. (“HCR”), pursuant to which HCR moved $2.5 million from the fourth tranche to the second tranche such that HCR would fund a total of $10.0 million of the Investment Amount (as defined in the RIFA) under the second tranche. The $10.0 million was funded on July 27, 2023 and was used for the upfront license fee due to Pharmosa in connection with the transactions contemplated by the Pharmosa License Agreement. In addition, pursuant to the amendments, the third tranche of $35.0 million and fourth tranche of $22.5 million will now be funded only upon the mutual agreement of both HCR and us.

Business

6 Months Ended

Jun. 30, 2023

Business

Business

1. Business

Description of the Business

We are 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”). We operate through our wholly owned operating subsidiaries, Liquidia Technologies, Inc. (“Liquidia Technologies”) and Liquidia PAH, LLC (“Liquidia PAH”), formerly known as RareGen, LLC (“RareGen”).

We currently generate revenue pursuant to a promotion agreement between Liquidia PAH and Sandoz Inc. (“Sandoz”), dated as of August 1, 2018, as amended (the “Promotion Agreement”), sharing profit derived from the sale of Sandoz’s substitutable generic treprostinil injection (“Treprostinil Injection”) in the United States. Liquidia PAH has the exclusive rights to conduct commercial activities to encourage the appropriate use of Treprostinil Injection. We employ 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, we believe that our 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 our reputation as a company committed to supporting PAH patients.

We conduct research, development and manufacturing of novel products by applying our subject matter expertise in cardiopulmonary diseases and our 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. Through development of our own products and research with third parties, we have experience applying PRINT across multiple routes of administration and drug payloads including inhaled therapies, vaccines, biologics, nucleic acids and ophthalmic implants, among others.

Our lead product candidate is YUTREPIA for the treatment of PAH. YUTREPIA is an inhaled dry powder formulation of treprostinil designed with PRINT to improve the therapeutic profile of treprostinil by enhancing deep lung delivery while using a convenient, low resistance dry-powder inhaler (“DPI”) and by achieving higher dose levels than the labeled doses of current inhaled therapies. The United States Food and Drug Administration (“FDA”) tentatively approved our New Drug Application (“NDA”) for YUTREPIA for the treatment of PAH in November 2021. The FDA also confirmed that the clinical data in the NDA would support our pursuit of an amendment to our NDA to treat patients with pulmonary hypertension and interstitial lung disease (PH-ILD) upon the expiration of regulatory exclusivity in March 2024. We filed an amendment to our NDA to include PH-ILD as a labelled indication on July 24, 2023.

We are also developing L606, an investigational, liposomal formulation of treprostinil administered twice-daily with a short-duration next-generation nebulizer, which we licensed from Pharmosa. L606 is currently being evaluated in an open-label study in the United States for treatment of PAH with a planned pivotal study for the treatment of PH-ILD.

Risks and Uncertainties

We are 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, we operate in a dynamic and highly competitive industry and believes that changes in any of the following areas could have a material adverse effect on our 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 our products; development of sales channels; certain strategic relationships; litigation or claims against our related to intellectual property, product, regulatory, or other matters; and our ability to attract and retain employees necessary to support our growth.

Product candidates we develop require approval from the FDA and/or other international regulatory agencies prior to commercial sales. There can be no assurance that our product candidates will receive the necessary approvals. If we are denied approval, approval is delayed, or we are unable to maintain approval, it could have a material adverse impact on our business, financial position and results of operations.

We rely on single source manufacturers and suppliers for the supply of our product candidates, which adds to the manufacturing risks we face. In the event of any failure by a supplier, we could be left without backup facilities. Any disruption from these manufacturers or suppliers could have a negative impact on our business, financial position and results of operations.

Recent Events

License Agreement with Pharmosa Biopharm

In June 2023, we entered into a License Agreement with Pharmosa Biopharm Inc (“Pharmosa”) pursuant to which we were granted an exclusive license in North America to develop and commercialize L606, an inhaled, sustained-release formulation of treprostinil currently being evaluated in a clinical trial for the treatment of pulmonary arterial hypertension (PAH) and pulmonary hypertension associated with interstitial lung disease (PH-ILD), and a non-exclusive license for the manufacture, development and use (but not commercialization) of such licensed product in most countries outside North America (the “Pharmosa License Agreement”).

Under the terms of the Pharmosa License Agreement, we will be responsible for development, regulatory and commercial activities of L606 in North America. Pharmosa will manufacture clinical and commercial supplies of the liposomal formulation through its global supply chain and support us in establishing a redundant global supply chain. In consideration for these exclusive rights, we paid Pharmosa an upfront license fee of $10 million and will pay Pharmosa potential development milestone payments tied to PAH and PH-ILD indications of up to $30 million, potential sales milestones of up to $185 million and two tiers of low, double-digit royalties on net sales of L606. Pharmosa will also receive a $10 million milestone payment for each additional indication approved after PAH and PH-ILD and each additional product approved under the license. We also retain the first right to negotiate for development and commercialization of L606 in Europe and other territories should Pharmosa seek a partner, subject to satisfaction of certain conditions as set forth in the Pharmosa License Agreement.

Concurrently with the execution of the Pharmosa License Agreement, we also entered into an Asset Transfer Agreement with Pharmosa pursuant to which Pharmosa will transfer its physical materials so that we can perform the necessary actions contemplated under the Pharmosa License Agreement.

Second and Third Amendments to Revenue Interest Financing Agreement

In June 2023 and July 2023, we entered into a Second Amendment and Third Amendment, respectively, to the Revenue Interest Financing Agreement (“RIFA”) with HealthCare Royalty Partners IV, L.P. (“HCR”), pursuant to which HCR moved $2.5 million from the fourth tranche to the second tranche such that HCR would fund a total of $10.0 million of the Investment Amount (as defined in the RIFA) under the second tranche. The $10.0 million was funded on July 27, 2023 and was used for the upfront license fee due to Pharmosa in connection with the transactions contemplated by the Pharmosa License Agreement. In addition, pursuant to the amendments, the third tranche of $35.0 million and fourth tranche of $22.5 million will now be funded only upon the mutual agreement of both HCR and us.

Revenue Interest Financing Payable - Summary (Details) $ in Thousands	6 Months Ended
	Jun. 30, 2023 USD ($)
Revenue Interest Financing Payable
Balance as of January 27, 2023 closing	$ 32,500
Issuance costs	(836)
Non-cash interest expense	2,328
Amortization of issuance costs	48
Payments on revenue interest financing liability	(500)
Balance as of end of period	33,540
Less: current portion of revenue interest financing payable	(1,741)
Long-term portion of revenue interest financing payable	$ 31,799

Stockholders' Equity (Details) - USD ($) $ / shares in Units, $ in Thousands					3 Months Ended	6 Months Ended
	Apr. 18, 2022	Apr. 12, 2022	Mar. 31, 2022	Nov. 18, 2020	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022
Common stock, shares authorized (in shares)						100,000,000		80,000,000
Preferred stock, shares authorized (in shares)						10,000,000		10,000,000
Sale of common stock, net					$ 54,461
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 Warrant
Class of Warrant or Right, Outstanding (in shares)						250,000
Class of Warrant or Right, Exercise Price of Warrants or Rights (in dollars per share)						$ 5.14
SVB Warrant Initial Tranche
Class of Warrant or Right, Outstanding (in shares)						100,000
Class of Warrant or Right, Exercise Price of Warrants or Rights (in dollars per share)						$ 3.05
SVB Warrant - Term B and Term C Tranches
Class of Warrant or Right, Outstanding (in shares)						100,000
Other Warrants
Class of Warrant or Right, Outstanding (in shares)						65,572
Class of Warrant or Right, Exercise Price of Warrants or Rights (in dollars per share)						$ 0.02
Warrants to Purchase Common Stock
Class of Warrant or Right, Exercised During Period (in shares)						0	0
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
Sale of common stock, net	$ 11,000
Underwritten Public Offering \| Caligan
Stock Issued During Period, Shares, New Issues (in shares)	1,764,705
Sale of common stock, net	$ 9,000
Underwritten Public Offering \| Mr. Paul B. Manning
Stock Issued During Period, Shares, New Issues (in shares)	392,156
Sale of common stock, net	$ 2,000

Commitments and Contingencies (Details) - USD ($) $ in Thousands		1 Months Ended	6 Months Ended
	Jul. 14, 2023	Jun. 30, 2023	Jun. 30, 2023
Upfront license fee to be paid		$ 10,000	$ 10,000
Maximum Net Sales Threshold As Basis For Payment Of Future Contingent Royalties			1,500
Net sales earned relating to payment of future contingent royalties			0
Non-cancelable commitments for product manufacturing costs		4,300	4,300
Agreement With LGM Pharma, LLC
Purchase Commitment, Remaining Minimum Amount Committed		2,700	2,700
Annual minimum, amount paid to date			$ 1,300
Expiration term of agreement			5 years
Amended and Restated Commercial Manufacturing Services and Supply Agreement with Lonza Tampa LLC
Initial term	5 years
Termination term for FDA rejection	60 days
Termination term for FDA delay	120 days
Percentage of reimburse	50.00%
Aggregate exceed	$ 2,500
Term of submission	24 months
Initial term	12 months
Pharmosa License Agreement
Upfront license fee to be paid		10,000	$ 10,000
Maximum potential development milestone payments		30,000
Maximum potential sales milestones		185,000
Milestone payments Pharmosa is to receive per terms of the license agreement		$ 10,000	$ 10,000

Business - Recent Events (Details) - USD ($) $ in Thousands		1 Months Ended
Business - Recent Events (Details) - USD ($) $ in Thousands	Jul. 27, 2023	Jul. 27, 2023	Jun. 30, 2023
Recent Events
Upfront license fee to be paid			$ 10,000
Pharmosa License Agreement
Recent Events
Upfront license fee to be paid			10,000
Maximum potential development milestone payments			30,000
Maximum potential sales milestones			185,000
Milestone payments Pharmosa is to receive per terms of the license agreement			$ 10,000
Second and Third Amendments to Revenue Interest Financing Agreement
Recent Events
Amount moved from fourth tranche to second tranche		$ 2,500
Amount to be funded under the second tranche.		10,000
Amount to be funded under third tranche		35,000
Amount to be funded under fourth tranche		$ 22,500
Second and Third Amendments to Revenue Interest Financing Agreement \| Subsequent Events.
Recent Events
Amount funded under the second tranche	$ 10,000

Property, Plant, and Equipment - Expense (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Property, Plant and Equipment
Depreciation, Depletion and Amortization, Nonproduction, Total	$ 0.3	$ 0.4	$ 0.6	$ 0.8

Leases

6 Months Ended

Jun. 30, 2023

Leases

Leases

10. Leases

Operating Leases

We are party to a non-cancelable operating lease for our laboratory and office space in Morrisville, North Carolina. The lease expires on October 31, 2026 with an option to extend for an additional period of five years with appropriate notice. We have not included the optional extension period in the measurement of lease liabilities because it is not reasonably certain that we will exercise the option to extend. The payments under this lease are subject to escalation clauses. Operating lease cost is allocated between research and development and general and administrative expenses based on the usage of the leased facilities. 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.

Finance Leases

We lease specialized laboratory equipment under finance leases. We do not have access to certain inputs used by our lessors to calculate the rate implicit in its finance leases and, as such, use our estimated incremental borrowing rate at the time of lease inception for the discount rate applied to our finance leases. The incremental borrowing rate used on finance leases was 6.5%. Certain finance leases also include options to purchase the leased property. We recognize all such purchase options as part of our right-of-use assets and lease liabilities if we are reasonably certain that such purchase options will be exercised.

Lease Balances, Costs, and Future Minimum Payments

Leases with an initial term of 12 months or less are not recorded on the balance sheet. As of June 30, 2023, we have not entered into any short-term leases. For lease agreements entered into or reassessed after the adoption of ASC 842 Leases, we combine lease and non-lease components, if any. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants.

Our 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	2023		2022		2023		2022
Operating lease cost:
Fixed lease cost	Research and development	$	175	$	175	$	351	$	351
Fixed lease cost	General and administrative		20		20		39		39
Finance lease cost:
Amortization of lease assets	Research and development		22		36		52		74
Interest on lease liabilities	Interest expense		4		9		9		19
Total Lease Cost		$	221	$	240	$	451	$	483

The weighted average remaining lease term and discount rates as of June 30, 2023 were as follows:


Weighted average remaining lease term (years):
Operating leases	3.3
Finance leases	1.8
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 at the time of lease inception.

The future minimum lease payment as of June 30, 2023 were as follows:


	Operating		Finance
Year ending December 31:	Leases		Leases		Total
2023 (six months remaining)	$	646	$	57	$	703
2024		1,317		115		1,432
2025		1,356		64		1,420
2026		1,158		—		1,158
Total minimum lease payments		4,477		236		4,713
Less: interest		(679)		(14)		(693)
Present value of lease liabilities	$	3,798	$	222	$	4,020

Long-term Debt - Terms (Details) - USD ($)				3 Months Ended	6 Months Ended
Long-term Debt - Terms (Details) - USD ($)	Jan. 27, 2023	Jan. 09, 2023	Jan. 07, 2022	Mar. 31, 2022	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022
Long-Term Debt
Repayments of Debt					$ 2,190,000	$ 0
Loss on extinguishment of debt					2,311,000	997,000
Repayments of debt					$ 20,000,000	10,500,000
Warrants included in additional paid-in capital				$ 1,317,000
Long-term debt, noncurrent							$ 19,879,000
Revenue Interest Financing Agreement.
Long-Term Debt
Revenue Interest Financing Agreement, Maximum Investment Amount		$ 100,000,000.0
Revenue Interest Financing Agreement, Initial Investment Amount	$ 32,500,000
A&R SVB Warrants
Long-Term Debt
Warrants included in additional paid-in capital			$ 1,300,000
Gain (loss) extinguishment component			700,000
Debt discount			$ 600,000
A&R SVB Warrants \| SVB
Long-Term Debt
Class of Warrant or Right, Number of Securities Called by Warrants or Rights (in shares)			250,000
Class of Warrant or Right, Exercise Price of Warrants or Rights (in dollars per share)			$ 5.14
SVB Warrant Initial Tranche
Long-Term Debt
Class of Warrant or Right, Exercise Price of Warrants or Rights (in dollars per share)					$ 3.05
Class of Warrant or Right, Outstanding (in shares)					100,000
Loan and Security Agreement with SVB
Long-Term Debt
Loss on extinguishment of debt						$ 1,000,000.0
Repayments of debt			$ 10,500,000
Silicon Valley Bank Term Loan
Long-Term Debt
Long-term debt, noncurrent			$ 19,400,000
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
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%
A&R Silicon Valley Bank Term Loan \| Revenue Interest Financing Agreement.
Long-Term Debt
Repayments of Debt	$ 22,200,000
A&R Silicon Valley Bank Term Loan \| Maximum
Long-Term Debt
Debt Issuance Costs, Noncurrent, Net			$ 100,000
Amended and Restated Loan and Security Agreement Tranche One
Long-Term Debt
Proceeds from Lines of Credit			$ 20,000,000.0

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

6 Months Ended

Jun. 30, 2023

Basis of Presentation, Significant Accounting Policies and Fair Value Measurements

Basis of Presentation

The unaudited interim condensed consolidated financial statements as of June 30, 2023 and for the three and six months ended June 30, 2023 have been prepared 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 our audited consolidated financial statements but does not include all disclosures required by GAAP. Operating results for the three and six months ended June 30, 2023 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2023. 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. Our 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 our audited consolidated financial statements for the year ended December 31, 2022, which are included in 2022 Annual Report on Form 10-K for the fiscal year ended December 31, 2022 (the “2022 Annual Report on Form 10-K”).

Going Concern

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), we have evaluated whether there are conditions and events, considered in the aggregate, that raise substantial doubt about our ability to continue as a going concern within one year after the date that the condensed consolidated financial statements are issued.

Since inception, we have incurred recurring losses, including a net loss of $35.3 million for the six months ended June 30, 2023 and we had an accumulated deficit of $385.9 million as of June 30, 2023. We expect to incur significant expenses and operating losses for the foreseeable future as we seek regulatory approval and prepare for commercialization of any approved product candidates. These efforts require significant amounts of capital, adequate personnel and infrastructure, and extensive compliance-reporting capabilities. Even if our development efforts are successful, it is uncertain when, if ever, we will realize significant revenue from product sales. Additionally, the RIFA contains minimum cash covenants that requires us to maintain cash and cash equivalents in an amount at least equal to $7.5 million during the calendar year beginning on January 1, 2024 and at least equal to $15.0 million for the remainder of the payment term after the calendar year ended December 31, 2024. These conditions raise substantial doubt regarding our ability to continue as a going concern within one year after the date these consolidated condensed financial statements are issued.

Our future funding requirements will be heavily determined by the timing of the potential commercialization of YUTREPIA and the resources needed to support development of our product candidates. If we are unable to access the contingent Investment Amounts from the RIFA (see Note 11) or generate meaningful YUTREPIA product revenue by the second quarter of 2024, we will require additional capital. We have based these estimates on assumptions that may differ from actual results, and we could use our available resources sooner than expected. We may also require additional capital to pursue in-licenses or acquisitions of other product candidates. If we conclude that we require additional funding but are unable to obtain such funding, we could be required to delay, reduce, or eliminate research and development programs, product portfolio expansion, or future commercialization efforts, which could adversely affect our business prospects, or we may be unable to continue operations.

Use of Estimates

The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and the disclosure of contingent assets and liabilities, at the date of the financial statements, as well as the reported amounts of revenues and expenses during the period. These estimates are based on historical experience and various other assumptions believed to be reasonable under the circumstances. We evaluate our estimates on an ongoing basis, including those related to the valuation of stock-based awards, certain accruals, the revenue interest financing payable, and intangible and contract acquisition cost amortization, and makes changes to the estimates and related disclosures as our experience develops or new information becomes known. 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. Our CODM is our Chief Executive Officer. We have determined that we have one operating and reporting segment.

Recent Accounting Pronouncements

From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board under its accounting standards codifications (ASC) or other standard setting bodies and are adopted by us as of the specified effective date. For the six months ended June 30, 2023, there were no newly adopted accounting pronouncements that had a material impact on our condensed consolidated financial statements. As of June 30, 2023, there are no recently issued but not yet adopted accounting pronouncements that are expected to materially impact our condensed consolidated financial statements.

Cash, Cash Equivalents, and Concentration of Credit Risk

We consider 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 us to concentrations of credit risk consist of cash and cash equivalents. We are exposed to credit risk, subject to federal deposit insurance, in the event of default by the financial institutions holding our cash and cash equivalents to the extent of amounts recorded on the condensed consolidated balance sheet. As of December 31, 2022, all of our cash and cash equivalents were held with Silicon Valley Bank (“SVB”). Following the March 10, 2023 Federal Deposit Insurance Corporation takeover of SVB, substantially all of our cash and cash equivalents were moved to a different accredited financial institution. We have not experienced any losses on such accounts and do not believe that we are subject to unusual credit risk beyond the normal credit risk associated with commercial banking relationships. Such deposits have exceeded and will continue to exceed federally insured limits.

Accounts Receivable

Accounts receivable are stated at net realizable value and net of an allowance for credit losses as of each balance sheet date, if applicable. One customer accounted for 99% of our accounts receivable, net at June 30, 2023 and December 31, 2022. As of June 30, 2023 and December 31, 2022, we have not recorded an allowance for credit losses.

Long-Lived Assets

We review 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. We also review for impairment when conditions exist that indicate the carrying amount of the assets may not be fully recoverable. In those circumstances, we perform undiscounted operating cash flow analyses to determine if an impairment exists. When testing for asset impairment, we group 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

We assess 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. We have one reporting unit. We have 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, 2023, we concluded there were no events or changes in circumstances which indicated that the carrying amount of goodwill was not recoverable. We completed our annual impairment test as of July 1, 2023 and concluded that no impairments had occurred.

Royalty Interest Financing Payable

In January 2023, we recognized a liability related to the Revenue Interest Financing Agreement (the “RIFA”) with HealthCare Royalty Partners IV, L.P. (“HCR”) and HealthCare Royalty Management, LLC under ASC 470-10, Debt and ASC 835-30, Interest - Imputation of Interest. We recorded the initial funds received from HCR under the terms of the RIFA as a liability which will be accreted under the effective interest method upon the estimated amount of future royalty payments to be made pursuant to the RIFA. The issuance costs were recorded as a deduction to the carrying amount of the liability and will be amortized under the effective interest method over the estimated period in which the liability will be repaid. We have estimated the total amount of future revenue to be generated over the life of the RIFA, and a significant increase or decrease in these estimates could materially impact the liability balance and related interest expense. If the timing or amounts of any estimated future revenue and related payments change, we will prospectively adjust the effective interest and the related amortization of the liability and related issuance costs.

Revenue Recognition

We recognize 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, we assess the promised goods or services in the contract and identify 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. We evaluate 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. We recognize 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.

Research and Development Expense

Research and development costs are expensed as incurred and include direct costs incurred to third parties related to the salaries of, and stock-based compensation for, personnel involved in research and development activities, contractor fees, administrative expenses and allocations of research-related overhead costs. Administrative expenses and research-related overhead costs included in research and development expense consist of allocations of facility and equipment lease charges, depreciation and amortization of assets and insurance directly related to research and development activities. In-process research and development assets with no future alternative use acquired are expensed under the in accordance with ASC 730, Research and Development.

Research and Development Expense

Stock-Based Compensation

We estimate the grant date fair value of stock-based awards and amortize this fair value to compensation expense over the requisite service period or the vesting period of the respective award. In arriving at stock-based compensation expense, we estimate the number of stock-based awards that will be forfeited due to employee turnover. The forfeiture assumption is based primarily on turn-over historical experience. If the actual forfeiture rate is higher than the estimated forfeiture rate, then an adjustment will be made to increase the estimated forfeiture rate, which will result in a decrease to the expense recognized in our financial statements. If the actual forfeiture rate is lower than the estimated forfeiture rate, then an adjustment will be made to lower the estimated forfeiture rate, which will result in an increase to expense

recognized in our financial statements. The expense we recognize in future periods will be affected by changes in the estimated forfeiture rate and may differ from amounts recognized in the current period. See Note 8.

Net Loss Per Share

Basic net loss per share is calculated by dividing net loss attributable to common stockholders by the weighted average shares outstanding during the period, without consideration of common stock equivalents.

Diluted net loss per share is calculated by adjusting weighted average shares outstanding for the dilutive effect of common stock equivalents outstanding for the period, determined using the treasury-stock method. Due to their anti-dilutive effect, the calculation of diluted net loss per share excludes the following common stock equivalent shares:


	Three Months Ended		Six Months Ended
	June 30,		June 30,
	2023	2022	2023	2022
Stock Options	9,506,827	7,131,419	9,454,756	7,093,120
Restricted Stock Units	1,773,919	401,035	1,682,701	383,307
Warrants	450,000	450,000	450,000	440,331
Total	11,730,746	7,982,454	11,587,457	7,916,758

Certain common stock warrants are included in the calculation of basic and diluted net loss per share since their exercise price is de minimis.

Fair Value Measurements

ASC 825 Financial Instruments defines fair value as the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants (an exit price). As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. ASC 825 establishes a three-tiered approach for valuation of financial instruments, which requires that fair value measurements be classified and disclosed in one of three tiers, whether or not recognized on our condensed consolidated balance sheets at fair value. 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 table presents the placement in the fair value hierarchy of financial assets and liabilities measured at fair value as of June 30, 2023 and December 31, 2022:

Quoted

Significant

Prices in

Other

Significant

Active

Observable

Unobservable

Markets

Inputs

Carrying

June 30, 2023

(Level 1)

(Level 2)

(Level 3)

Value

Money market funds (cash equivalents)

82,270

—

82,270

Quoted

Significant

Prices in

Other

Significant

Active

Observable

Unobservable

Markets

Inputs

Carrying

December 31, 2022

(Level 1)

(Level 2)

(Level 3)

Value

Money market funds (cash equivalents)

92,283

—

92,283

Money market funds are included in cash and cash equivalents on our condensed consolidated balance sheet and are classified within Level 1 of the fair value hierarchy since they are valued using quoted market prices.

The carrying amounts reflected in our condensed consolidated balance sheets for cash, accounts receivable, prepaid expenses and other current assets, accounts payable and accrued expenses and other liabilities approximate their fair values due to their short-term nature. The carrying value of long-term debt and the revenue interest financing payable approximate fair value as the respective interest rates are reflective of current market rates on debt with similar terms and conditions. In addition, the revenue interest financing payable is updated with the expected amount to be paid back each reporting period based on the contractual terms and current projections.

Indemnification Asset with Related Party and Litigation Finance Payable

6 Months Ended

Jun. 30, 2023

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, 2023) who is also a member of our 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 we record third party legal and litigation expenses related to the United Therapeutics and Smiths Medical litigation.

As of June 30, 2023 and December 31, 2022, the Indemnification Asset and Litigation Finance Payable were classified as long-term assets and liabilities, respectively as it is considered unlikely that the RareGen Litigation would conclude prior to June 30, 2024.

Revenue From Contracts With Customers (Details) - Sandoz - USD ($) $ in Millions	1 Months Ended	3 Months Ended	6 Months Ended
	Aug. 31, 2018	Jun. 30, 2023	Jun. 30, 2023
Promotion Agreement, Payment	$ 20.0
Percentage of Revenue from Promotion Agreement		99.00%	99.00%
Contract with Customer, Refund Liability		$ 0.5	$ 0.5

Stock-Based Compensation - Fair Value of Stock Options Granted and Purchase Rights Issued under the ESPP (Details) - $ / shares	6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Weighted Average Grant Date Fair Value (in dollars per share)	$ 5.09	$ 4.19
Employee Stock Purchase Plan \| Stock Options
Expected dividend yield
Risk-free interest rate, minimum	3.46%	1.46%
Risk-free interest rate, maximum	3.99%	2.34%
Expected Volatility, minimum	91.00%	90.00%
Expected Volatility, maximum	95.00%	93.00%
Employee Stock Purchase Plan \| Stock Options \| Minimum
Expected life (years)	5 years 9 months 18 days	5 years 9 months 18 days
Employee Stock Purchase Plan \| Stock Options \| Maximum
Expected life (years)	6 years 1 month 6 days	6 years 1 month 6 days
Employee Stock Purchase Plan \| Employee Purchase Rights
Expected dividend yield
Risk-free interest rate	5.20%	0.69%
Expected volatility	64.00%	80.00%
Expected life (years)	6 months	6 months

Contract Acquisition Costs and Intangible Asset

6 Months Ended

Jun. 30, 2023

Contract Acquisition Costs and Intangible Asset

Contract Acquisition Costs and Intangible Asset

4. Contract Acquisition Costs and Intangible Asset

Contract acquisition costs and intangible asset are summarized as follows:


	June 30, 2023						December 31, 2022
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Contract acquisition costs	$	12,980	$	(4,773)	$	8,207	$	12,980	$	(4,376)	$	8,604
Intangible asset	$	5,620	$	(2,066)	$	3,554	$	5,620	$	(1,894)	$	3,726

We are 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 December 2032, the termination date of the Promotion Agreement (see Note 2-Revenue Recognition for our accounting policies). Amortization of contract acquisition costs is recorded as a reduction of revenue and amortization of the intangible asset is recorded as cost of revenue.

We recorded amortization related to the contract acquisition costs of $0.2 million and $0.4 million for the three months ended June 30, 2023 and 2022, respectively, and of $0.4 million and $0.8 million for the six months ended June 30, 2023 and 2022, respectively. We recorded amortization related to the intangible asset of $0.1 million and $0.2 million for the three months ended June 30, 2023 and 2022, respectively, and of $0.2 million and $0.3 million for the six months ended June 30, 2023 and 2022, respectively. Annual amortization over the next five years is expected to be lower than prior years primarily due to an amendment to the Promotion Agreement entered into during the fourth quarter of 2022, which extended the term of the Promotion Agreement by five years.

Leases - Remaining Lease Term and Discount Rates (Details)	Jun. 30, 2023
Leases
Weighted average remaining lease term, Operating leases	3 years 3 months 18 days
Weighted average remaining lease term, Finance leases	1 year 9 months 18 days
Weighted average discount rate, Operating leases	10.30%
Weighted average discount rate, Finance leases	6.50%

Leases (Tables)

6 Months Ended

Jun. 30, 2023

Leases

Schedule of lease cost


		Three Months Ended June 30,				Six Months Ended June 30,
	Classification	2023		2022		2023		2022
Operating lease cost:
Fixed lease cost	Research and development	$	175	$	175	$	351	$	351
Fixed lease cost	General and administrative		20		20		39		39
Finance lease cost:
Amortization of lease assets	Research and development		22		36		52		74
Interest on lease liabilities	Interest expense		4		9		9		19
Total Lease Cost		$	221	$	240	$	451	$	483


Weighted average remaining lease term (years):
Operating leases	3.3
Finance leases	1.8
Weighted average discount rate:
Operating leases	10.3	%
Finance leases	6.5	%

Schedule of lease liability maturity


	Operating		Finance
Year ending December 31:	Leases		Leases		Total
2023 (six months remaining)	$	646	$	57	$	703
2024		1,317		115		1,432
2025		1,356		64		1,420
2026		1,158		—		1,158
Total minimum lease payments		4,477		236		4,713
Less: interest		(679)		(14)		(693)
Present value of lease liabilities	$	3,798	$	222	$	4,020

Legal Proceedings (Details) $ in Thousands	1 Months Ended
Legal Proceedings (Details) $ in Thousands	Apr. 30, 2021 USD ($)
Liquidia PAH and Sandoz \| UTC and Smiths Medical Litigation \| Pending Litigation
Legal Proceedings
Proceeds from Legal Settlements	$ 4,250

Basis of Presentation, Significant Accounting Policies and Fair Value Measurements

6 Months Ended

Jun. 30, 2023

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

Going Concern

Use of Estimates

Segment Information

Summary of Significant Accounting Policies

Our significant accounting policies are disclosed in Note 2 of the consolidated financial statements for the years ended December 31, 2022 and 2021, which are included in our 2022 Annual Report on Form 10-K. There have been no material changes to our significant accounting policies during the six months ended June 30, 2023.

Recent Accounting Pronouncements

Cash, Cash Equivalents, and Concentration of Credit Risk

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

Accounts Receivable

Long-Lived Assets

Goodwill

Royalty Interest Financing Payable

Revenue Recognition

●

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, we assess the promised goods or services in the contract and identify 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.

Research and Development Expense

Stock-Based Compensation

Net Loss Per Share


	Three Months Ended		Six Months Ended
	June 30,		June 30,
	2023	2022	2023	2022
Stock Options	9,506,827	7,131,419	9,454,756	7,093,120
Restricted Stock Units	1,773,919	401,035	1,682,701	383,307
Warrants	450,000	450,000	450,000	440,331
Total	11,730,746	7,982,454	11,587,457	7,916,758

Certain common stock warrants are included in the calculation of basic and diluted net loss per share since their exercise price is de minimis.

Fair Value 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

Carrying

June 30, 2023

(Level 1)

(Level 2)

(Level 3)

Value

Money market funds (cash equivalents)

82,270

—

82,270

Quoted

Significant

Prices in

Other

Significant

Active

Observable

Unobservable

Markets

Inputs

Carrying

December 31, 2022

(Level 1)

(Level 2)

(Level 3)

Value

Money market funds (cash equivalents)

92,283

—

92,283

Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022
Operating activities
Net loss	$ (35,262)	$ (25,390)
Adjustments to reconcile net loss to net cash used in operating activities:
Acquired in-process research and development	10,000
Stock-based compensation	5,051	5,832
Depreciation and amortization	1,158	1,953
Non-cash lease expense	187	146
Loss (gain) on disposal of property and equipment	(2)	1
Loss on extinguishment of debt	2,311	997
Non-cash interest expense (income)	2,376	109
Changes in operating assets and liabilities:
Accounts receivable, net	922	(763)
Prepaid expenses and other current assets	760	(115)
Other noncurrent assets	47	4
Accounts payable	(380)	111
Accrued expenses and other current liabilities	(755)	(721)
Operating lease liabilities	(434)	(375)
Net cash used in operating activities	(14,021)	(18,211)
Investing activities
Purchases of property, plant and equipment	(609)	(7)
Proceeds from the sale of property, plant and equipment	2	5
Net cash used in investing activities	(607)	(2)
Financing activities
Proceeds from revenue interest financing, net	31,814	0
Principal payments on long-term debt	(20,000)	(10,500)
Payments for debt prepayment and extinguishment costs	(2,190)	0
Payments on revenue interest financing liability	(500)
Proceeds from issuance of long-term debt with warrants, net	0	19,767
Principal payments on finance leases	(130)	(160)
Receipts from litigation financing	101	369
Proceeds from sale of common stock, net of underwriting fees and commissions	0	54,461
Proceeds from issuance of common stock under stock incentive plans	446	622
Net cash provided by financing activities	9,541	64,559
Net increase (decrease) in cash and cash equivalents	(5,087)	46,346
Cash and cash equivalents, beginning of period	93,283	57,494
Cash and cash equivalents, end of period	88,196	103,840
Supplemental disclosure of cash flow information
Cash paid for interest	360	650
Cash paid for operating lease liabilities	637	619
Non-cash increase in indemnification asset through accounts payable	$ 101	$ 231

Leases - Cost (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
Leases - Cost (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Leases
Total Lease Cost	$ 221	$ 240	$ 451	$ 483
Research and Development Expense
Leases
Fixed lease cost	175	175	351	351
Amortization of lease assets	22	36	52	74
General and Administrative Expense
Leases
Fixed lease cost	20	20	39	39
Interest Expense
Leases
Interest on lease liabilities	$ 4	$ 9	$ 9	$ 19

Long-Term Debt

6 Months Ended

Jun. 30, 2023

Long-term Debt

Long-term Debt

12. Long-Term Debt

Long-term debt consisted of the following:


		June 30,		December 31,
	Maturity Date	2023		2022
A&R Silicon Valley Bank term loan	December 1, 2025	$	—	$	19,879

Concurrent with the closing of the RIFA on January 27, 2023 (see Note 11), we repaid the amounts due under the SVB A&R LSA (as defined below), including termination fees and the Final Payment Fee, in full. This repayment resulted in a loss on extinguishment during the six months ended June 30, 2023 of $2.3 million.

On January 7, 2022 (the “A&R SVB LSA Effective Date”), we 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”). under which $20.0 million was funded on the A&R SVB LSA Effective Date. $10.5 million of the proceeds were used to satisfy its existing obligations with SVB and such obligations are considered fully repaid and terminated as of that date. We accounted for such repayment 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 A&R SVB LSA was to mature on December 1, 2025, and consisted of interest-only payments equal to the greater of 7.25% and the prime rate of interest plus 4.0% of the outstanding principal amount. The SVB A&R LSA also provided 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.

As an inducement to enter into the A&R SVB LSA, we issued SVB, Innovation, and Innovation Credit Fund VIII-A L.P. (“Innovation Credit”) warrants to purchase an aggregate of 250,000 shares of our common stock at an exercise price of $5.14 per share. The A&R SVB Warrants provide an option for a cashless exercise.

We 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 and determined that they did not contain any features that would qualify as a derivative or embedded derivative. In addition, we determined that the A&R SVB Warrants should be classified as equity.

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, we incurred fees of less than $0.1 million, which were recorded as debt issuance costs. The debt discount and debt issuance costs were being amortized to interest expense and the Final Payment Fee was being accreted using the effective interest method over the term of the A&R SVB LSA.

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

Revenue Interest Financing Payable - Terms (Details) $ in Thousands			1 Months Ended	3 Months Ended	6 Months Ended
	Jan. 27, 2023 USD ($)	Jan. 09, 2023 USD ($) D	Jul. 27, 2023 USD ($)	Jun. 30, 2023	Jun. 30, 2023 USD ($)	Jun. 30, 2022 USD ($)
Revenue Interest Financing Payable
Amount of debt repaid with initial investment from RIFA					$ 2,190	$ 0
Issuance costs					836
Minimum
Revenue Interest Financing Payable
RIFA, percentage of royalty payment on annual net revenue		3.60
RIFA, minimum payment to be made, percentage		1.44
RIFA, Hard Cap percentage		0.36
Maximum
Revenue Interest Financing Payable
RIFA, percentage of royalty payment on annual net revenue		10.28
RIFA, minimum payment to be made, percentage		4.11
RIFA, Hard Cap percentage		1.03
On First $250 Million of Annual Net Revenue
Revenue Interest Financing Payable
RIFA, annual net revenue, threshold		$ 250,000
On Second $250 Million of Annual Net Revenue
Revenue Interest Financing Payable
RIFA, annual net revenue, threshold		250,000
In Excess of $500 Million of Annual Net Revenue
Revenue Interest Financing Payable
RIFA, annual net revenue, threshold		$ 500,000
Funding Amount by December 31, 2026
Revenue Interest Financing Payable
RIFA, minimum payment to be made, percentage		60
Revenue Interest Financing Agreement.
Revenue Interest Financing Payable
RIFA, maximum investment amount		$ 100,000
RIFA, initial investment amount	$ 32,500
Minimum number of days for grant of remaining investment amount \| D		15
RIFA, Hard Cap percentage		175
Percentage of investment amount to be repaid on final approval		100
Percentage of investment amount to be paid		100
RIFA, internal rate of return		18.00%
Minimum cash and cash equivalents required to be maintained during year two		$ 7,500
Minimum cash and cash equivalents required to be maintained after year two		$ 15,000
Issuance costs					$ 800
Effective annual interest rate				17.00%	17.00%
Revenue Interest Financing Agreement. \| Funding Amount by December 31, 2026
Revenue Interest Financing Payable
RIFA, minimum payment to be made, percentage		100
Revenue Interest Financing Agreement. \| A&R Silicon Valley Bank Term Loan
Revenue Interest Financing Payable
Amount of debt repaid with initial investment from RIFA	$ 22,200
Second and Third Amendments to Revenue Interest Financing Agreement
Revenue Interest Financing Payable
Amount moved from fourth tranche to second tranche			$ 2,500
Amount to be funded under the second tranche.			10,000
Amount to be funded under third tranche			35,000
Amount to be funded under fourth tranche			$ 22,500

Long-term Debt - SVB Warrant Fair Value (Details) - A&R SVB Warrants	Jun. 30, 2023 Y
Measurement Input, Risk-free interest rate
Long-Term Debt, Fair Value of Warrant
Warrants and Rights Outstanding, Measurement Input	0.0176
Measurement Input, Expected volatility
Long-Term Debt, Fair Value of Warrant
Warrants and Rights Outstanding, Measurement Input	0.972
Measurement Input, Expected life (years)
Long-Term Debt, Fair Value of Warrant
Warrants and Rights Outstanding, Measurement Input	10.0

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

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

6 Months Ended

Jun. 30, 2023

Basis of Presentation, Significant Accounting Policies and Fair Value Measurements

Summary of calculation of diluted net loss per share


	Three Months Ended		Six Months Ended
	June 30,		June 30,
	2023	2022	2023	2022
Stock Options	9,506,827	7,131,419	9,454,756	7,093,120
Restricted Stock Units	1,773,919	401,035	1,682,701	383,307
Warrants	450,000	450,000	450,000	440,331
Total	11,730,746	7,982,454	11,587,457	7,916,758

Summary of financial assets and liabilities measured at fair value

Quoted

Significant

Prices in

Other

Significant

Active

Observable

Unobservable

Markets

Inputs

Carrying

June 30, 2023

(Level 1)

(Level 2)

(Level 3)

Value

Money market funds (cash equivalents)

82,270

—

82,270

Quoted

Significant

Prices in

Other

Significant

Active

Observable

Unobservable

Markets

Inputs

Carrying

December 31, 2022

(Level 1)

(Level 2)

(Level 3)

Value

Money market funds (cash equivalents)

92,283

—

92,283

Accrued Expenses and Other Current Liabilities

6 Months Ended

Jun. 30, 2023

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,
	2023		2022
Accrued compensation	$	2,191	$	2,862
Accrued research and development expenses		1,181		1,757
Accrued upfront license fee		10,000		—
Accrued other expenses		1,395		903
Total accrued expenses and other current liabilities	$	14,767	$	5,522

Condensed Consolidated Statements of Operations and Comprehensive Loss - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Condensed Consolidated Statements of Operations and Comprehensive Loss
Revenue	$ 4,786	$ 3,918	$ 9,279	$ 7,410
Costs and expenses:
Cost of revenue	671	731	1,325	1,425
Research and development	17,695	5,219	22,973	9,947
General and administrative	9,245	6,938	17,038	19,480
Total costs and expenses	27,611	12,888	41,336	30,852
Loss from operations	(22,825)	(8,970)	(32,057)	(23,442)
Other income (expense):
Interest income	734	65	1,656	69
Interest expense	(1,426)	(542)	(2,550)	(1,020)
Loss on extinguishment of debt			(2,311)	(997)
Total other expense, net	(692)	(477)	(3,205)	(1,948)
Net loss and comprehensive loss	$ (23,517)	$ (9,447)	$ (35,262)	$ (25,390)
Net loss per common share, basic (in dollars per share)	$ (0.36)	$ (0.15)	$ (0.54)	$ (0.44)
Net loss per common share, diluted (in dollars per share)	$ (0.36)	$ (0.15)	$ (0.54)	$ (0.44)
Weighted average common shares outstanding, basic (in shares)	64,788,482	62,179,305	64,722,818	57,349,129
Weighted average common shares outstanding, diluted (in shares)	64,788,482	62,179,305	64,722,818	57,349,129

Accrued Expenses and Other Current Liabilities (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Accrued Expenses and Other Current Liabilities
Accrued compensation	$ 2,191	$ 2,862
Accrued research and development expenses	1,181	1,757
Accrued upfront license fee	10,000
Accrued other expenses	1,395	903
Total accrued expenses and other current liabilities	$ 14,767	$ 5,522

Property, Plant, and Equipment (Tables)

6 Months Ended

Jun. 30, 2023

Property, Plant and Equipment

Schedule of Property, plant and equipment


	June 30,		December 31,
	2023		2022
Lab and build-to-suit equipment	$	6,603	$	6,257
Office equipment		19		19
Furniture and fixtures		134		134
Computer equipment		457		291
Leasehold improvements		11,409		11,409
Construction-in-progress		252		155
Total property, plant and equipment		18,874		18,265
Accumulated depreciation and amortization		(14,703)		(14,114)
Property, plant and equipment, net	$	4,171	$	4,151

Stock-Based Compensation - Stock Option Activity (Details) - USD ($) $ / shares in Units, $ in Thousands	6 Months Ended
	Jun. 30, 2023
Stock-Based Compensation.
Outstanding, number of shares (in shares)	8,398,262
Outstanding, weighted average exercise price (in dollars per share)	$ 4.49
Granted, number of shares (in shares)	1,373,746
Granted, weighted average exercise price (in dollars per share)	$ 6.56
Exercised, number of shares (in shares)	(31,620)
Exercised, weighted average exercise price (in dollars per share)	$ 3.50
Cancelled, number of shares (in shares)	(145,554)
Cancelled, weighted average exercise price (in dollars per share)	$ 5.58
Outstanding, number of shares (in shares)	9,594,834
Outstanding, weighted average exercise price (in dollars per share)	$ 4.77
Outstanding, weighted average contractual term (Year)	8 years 2 months 12 days
Outstanding, aggregate intrinsic value	$ 30,939
Exercisable, number of shares (in shares)	4,817,133
Exercisable, weighted average exercise price (in dollars per share)	$ 4.34
Exercisable, weighted average contractual term (Year)	7 years 7 months 6 days
Exercisable, aggregate intrinsic value	$ 18,171
Vested and expected to vest, number of shares (in shares)	9,264,881
Vested and expected to vest, weighted average exercise price (in dollars per share)	$ 4.77
Vested and expected to vest, weighted average contractual term (Year)	8 years 2 months 12 days
Vested and expected to vest, aggregate intrinsic value	$ 29,949

Contract Acquisition Costs and Intangible Asset (Details) - USD ($) $ in Millions	3 Months Ended			6 Months Ended
	Jun. 30, 2023	Dec. 31, 2022	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Contract Acquisition Costs and Intangible Asset, and Goodwill
Business Combination, Amortization Expense	$ 0.2		$ 0.4	$ 0.4	$ 0.8
Amortization of Intangible Assets, Total	$ 0.1		$ 0.2	$ 0.2	$ 0.3
Sandoz Agreement \| Contract acquisition costs
Contract Acquisition Costs and Intangible Asset, and Goodwill
Term of Agreement		5 years

Contract Acquisition Costs and Intangible Asset - Contract acquisition costs and intangible asset (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Contract Acquisition Costs and Intangible Asset
Contract acquisition costs, Gross Carrying Amount	$ 12,980	$ 12,980
Intangible asset, Gross Carrying Amount	5,620	5,620
Contract acquisition costs, Accumulated Amortization	(4,773)	(4,376)
Intangible asset, Accumulated Amortization	(2,066)	(1,894)
Contract acquisition costs, Net Carrying Amount	8,207	8,604
Intangible asset, Net Carrying Amount	$ 3,554	$ 3,726

Revenue Interest Financing Payable (Tables)

6 Months Ended

Jun. 30, 2023

Revenue Interest Financing Payable

Schedule of changes in the liability related to RIFA


	June 30,
	2023
Balance as of January 27, 2023 closing	$	32,500
Issuance costs		(836)
Non-cash interest expense		2,328
Amortization of issuance costs		48
Payments		(500)
Balance as of June 30, 2023	$	33,540
Less: current portion of revenue interest financing payable		(1,741)
Long-term portion of revenue interest financing payable	$	31,799

Stockholders' Equity (Tables)

6 Months Ended

Jun. 30, 2023

Stockholders' Equity

Schedule of outstanding warrants

Outstanding warrants consisted of the following as of June 30, 2023:


	Number of
	warrants	Exercise Price		Expiration Date
A&R SVB Warrant (see Note 12)	250,000	$	5.14	January 6, 2032
SVB Warrant - Initial Tranche (see Note 12)	100,000	$	3.05	February 26, 2031
SVB Warrant - Term B and Term C Tranches (see Note 12)	100,000	$	n/a	February 26, 2031
Other warrants	65,572	$	0.02	December 31, 2026

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, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Anti-dilutive Shares Excluded from Calculation of Diluted Net Loss Per Share (in shares)	11,730,746	7,982,454	11,587,457	7,916,758
Stock Options
Anti-dilutive Shares Excluded from Calculation of Diluted Net Loss Per Share (in shares)	9,506,827	7,131,419	9,454,756	7,093,120
Restricted Stock Units
Anti-dilutive Shares Excluded from Calculation of Diluted Net Loss Per Share (in shares)	1,773,919	401,035	1,682,701	383,307
Warrants
Anti-dilutive Shares Excluded from Calculation of Diluted Net Loss Per Share (in shares)	450,000	450,000	450,000	440,331

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Current assets:
Cash and cash equivalents	$ 88,196	$ 93,283
Accounts receivable, net	4,095	5,017
Prepaid expenses and other current assets	601	1,511
Total current assets	92,892	99,811
Property, plant and equipment, net	4,171	4,151
Operating lease right-of-use assets, net	1,914	2,101
Indemnification asset, related party	6,696	6,595
Contract acquisition costs, net	8,207	8,604
Intangible asset, net	3,554	3,726
Goodwill	3,903	3,903
Other assets	260	307
Total assets	121,597	129,198
Current liabilities:
Accounts payable	1,918	2,197
Accrued expenses and other current liabilities	14,767	5,522
Revenue interest financing payable, current	1,741
Operating lease liabilities, current	965	900
Finance lease liabilities, current	104	181
Total current liabilities	19,495	8,800
Litigation finance payable	6,695	6,594
Revenue interest financing payable, noncurrent	31,799
Operating lease liabilities, noncurrent	2,833	3,332
Finance lease liabilities, noncurrent	118	171
Long-term debt		19,879
Total liabilities	60,940	38,776
Commitments and contingencies (Note 13)
Stockholders' equity:
Preferred stock - 10,000,000 shares authorized, none outstanding	0	0
Common stock - $0.001 par value, 100,000,000 and 80,000,000 shares authorized as of June 30, 2023 and December 31, 2022, respectively, 64,740,382 and 64,517,912 shares issued and outstanding as of June 30, 2023 and December 31, 2022, respectively	65	64
Additional paid-in capital	446,450	440,954
Accumulated deficit	(385,858)	(350,596)
Total stockholders' equity	60,657	90,422
Total liabilities and stockholders' equity	$ 121,597	$ 129,198

Stockholders' Equity

6 Months Ended

Jun. 30, 2023

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, we sold 11,274,510 shares of our 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 we received net proceeds of approximately $54.5 million from the sale of the shares, after deducting the underwriting discounts and commissions and other offering expenses.

Caligan Partners LP (“Caligan”), our largest stockholder, and Paul B. Manning, a member of our 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”), we 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 our 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 our common stock, which were held back on the Closing Date for indemnification purposes, were issued to RareGen members.

Warrants

During the six months ended June 30, 2023 and 2022, no warrants to purchase shares of common stock were exercised.

Outstanding warrants consisted of the following as of June 30, 2023:


	Number of
	warrants	Exercise Price		Expiration Date
A&R SVB Warrant (see Note 12)	250,000	$	5.14	January 6, 2032
SVB Warrant - Initial Tranche (see Note 12)	100,000	$	3.05	February 26, 2031
SVB Warrant - Term B and Term C Tranches (see Note 12)	100,000	$	n/a	February 26, 2031
Other warrants	65,572	$	0.02	December 31, 2026

- 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

Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
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+ Details

Leases - Other (Details)	6 Months Ended
Leases - Other (Details)	Jun. 30, 2023
Leases
Lessee, Finance Lease, Discount Rate	6.50%
Renewal term	5 years
Lessee, Operating Lease, Existence of Option to Extend [true false]	true

Long-term Debt - Summary (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
A&R Silicon Valley Bank Term Loan
Long-Term Debt
Long-term debt	$ 0	$ 19,879

- Definition

Amount, excluding unamortized premium (discount) and debt issuance cost, of long-term debt. Excludes lease obligation.

+ References + Details

Legal Proceedings

6 Months Ended

Jun. 30, 2023

Legal Proceedings

Legal Proceedings

14. Legal Proceedings

YUTREPIA-Related Litigation

In June 2020, United Therapeutics filed a complaint for patent infringement against the Company in the U.S. District Court for the District of Delaware (Case No. 1:20-cv-00755-RGA) (the “Hatch-Waxman Litigation”), asserting infringement by the Company of U.S. Patent Nos. 9,604,901, entitled “Process to Prepare Treprostinil, the Active

Ingredient in Remodulin®” (the “‘901 Patent”), and 9,593,066, entitled “Process to Prepare Treprostinil, the Active Ingredient in Remodulin®” (the “‘066 Patent”), relating to United Therapeutics’ Tyvaso®, a nebulized treprostinil solution for the treatment of PAH. United Therapeutics’ complaint was in response to the Company’s NDA for YUTREPIA, filed with the FDA, requesting approval to market YUTREPIA, a dry powder formulation of treprostinil for the treatment of PAH. The YUTREPIA NDA was filed under the 505(b)(2) regulatory pathway with Tyvaso® as the reference listed drug.

In July 2020, the U.S. Patent and Trademark Office (the “USPTO”) issued U.S. Patent No. 10,716,793 (the “‘793 Patent”), entitled “Treprostinil Administration by Inhalation”, to United Therapeutics. In July 2020, United Therapeutics filed an amended complaint in the Hatch-Waxman Litigation asserting infringement of the ‘793 Patent by the practice of YUTREPIA.

In June 2021, the Court held a claim construction hearing. Based on the Court’s construction of the claim terms, United Therapeutics filed a stipulation of partial judgment with respect to the ‘901 Patent in December 2021 under which United Therapeutics agreed to the entry of judgment of the Company’s non-infringement of the ’901 Patent. United Therapeutics did not file an appeal with respect to the ‘901 Patent.

Trial proceedings in the Hatch-Waxman Litigation were held in March 2022. In August 2022, Judge Andrews, who was presiding over the Hatch-Waxman Litigation, issued an opinion that claims 1, 2, 3, 6 and 9 of the ‘066 Patent were invalid, that the remaining asserted claims of the ‘066 Patent were not infringed by the Company, and that all of the asserted claims of the ‘793 Patent were both valid and infringed by the Company, based on the arguments presented by the Company in the Hatch-Waxman Litigation. In September 2022, Judge Andrews entered a final judgment in the Hatch-Waxman Litigation that incorporated the findings from his opinion and ordered that the effective date of any final approval by the FDA of YUTREPIA shall be a date which is not earlier than the expiration date of the ’793 Patent, which will be in 2027. Both the Company and United Therapeutics appealed Judge Andrews’ decision to the United States Court of Appeals for the Federal Circuit. On July 24, 2023, the United States Court of Appeals for the Federal Circuit affirmed Judge Andrews’ decision with respect to both the ‘066 patent and the ‘793 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. 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 in June 2022. In August 2022, United Therapeutics appealed the decision of the PTAB with respect to the ‘901 Patent to the United States Court of Appeals for the Federal Circuit. The appeal remains pending.

In January 2021, the Company filed a petition for inter partes 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. 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. In August 2022, United Therapeutics submitted a rehearing request with respect to the PTAB’s decision in the inter partes review of the ‘793 Patent. The rehearing request was denied in February 2023. In April 2023, United Therapeutics appealed the decision of the PTAB with respect to the ‘793 Patent to the United States Court of Appeals for the Federal Circuit. The appeal remains pending. The PTAB’s decision with respect to the ‘793 Patent will not override Judge Andrews’ order in the Hatch-Waxman Litigation that YUTREPIA may not be approved due to infringement of the ‘793 Patent unless and until the decision of the PTAB is affirmed on appeal.

Trade Secret Litigation

In December 2021, United Therapeutics filed a complaint in the Superior Court in Durham County, North Carolina, alleging that the Company and a former United Therapeutics employee, who later joined the Company as an employee many years after terminating his employment with United Therapeutics, conspired to misappropriate certain trade secrets of United Therapeutics and engaged in unfair or deceptive trade practices. In January 2022, the Company’s co-defendant in the lawsuit removed the lawsuit to the United States District Court for the Middle District of North Carolina. Subsequently, in January 2022, United Therapeutics filed an amended complaint eliminating their claim under the federal Defend Trade Secrets Act and a motion seeking to have the case remanded to North Carolina state court. In April 2022, the Court granted United Therapeutics’ motion to have the case remanded to North Carolina state court. In May 2022, the Company filed a motion to dismiss all of the claims made by United Therapeutics in the lawsuit. The motion was denied by the Court in October 2022. Discovery in the case is ongoing.

RareGen Litigation

In April 2019, Sandoz and Liquidia PAH (then known as RareGen) filed a complaint against United Therapeutics and Smiths Medical in the District Court of New Jersey (Case No. No. 3:19-cv-10170), (the “RareGen Litigation”), alleging that United Therapeutics and Smiths Medical violated the Sherman Antitrust Act of 1890, state law antitrust statutes and unfair competition statutes by engaging in anticompetitive acts regarding the drug treprostinil for the treatment of PAH. In March 2020, Sandoz and Liquidia PAH filed a first amended complaint adding a claim that United Therapeutics breached a settlement agreement that was entered into in 2015, in which United Therapeutics agreed to not interfere with Sandoz’s efforts to launch its generic treprostinil, by taking calculated steps to restrict and interfere with the launch of Sandoz’s competing generic product. United Therapeutics developed treprostinil under the brand name Remodulin® and Smiths Medical manufactured a pump and cartridges that are used to inject treprostinil into patients continuously throughout the day. Sandoz and Liquidia PAH allege that United Therapeutics and Smiths Medical entered into anticompetitive agreements (i) whereby Smiths Medical placed restrictions on the cartridges such that they can only be used with United Therapeutics’ branded Remodulin® product and (ii) requiring Smiths Medical to enter into agreements with specialty pharmacies to sell the cartridges only for use with Remodulin®.

In November 2020, Sandoz and Liquidia PAH entered into a binding term sheet (the “Term Sheet”) with Smiths Medical in order to resolve the outstanding RareGen Litigation solely with respect to disputes between Smiths Medical, Liquidia PAH and Sandoz. In April 2021, Liquidia PAH and Sandoz entered into a Long Form Settlement Agreement (the “Settlement Agreement”) with Smiths Medical to further detail the terms of the settlement among such parties as reflected in the Term Sheet. Pursuant to the Term Sheet and the Settlement Agreement, the former RareGen members and Sandoz received a payment of $4.25 million that was evenly split between the parties. In addition, pursuant to the Term Sheet and Settlement Agreement, Smiths Medical disclosed and made available to Sandoz and Liquidia PAH certain specifications and other information related to the cartridge that Smiths Medical developed and manufactures for use with the CADD-MS 3 infusion pump (the “CADD-MS 3 Cartridge”). Pursuant to the Settlement Agreement, Smiths Medical also granted Liquidia PAH and Sandoz a non-exclusive, royalty-free license in the United States to Smiths Medical’s patents and copyrights associated with the CADD-MS 3 Cartridge and certain other information for use of the CADD-MS 3 pump and the CADD-MS 3 Cartridges. Smiths also agreed in the Settlement Agreement to provide information and assistance in support of Liquidia PAH’s efforts to receive FDA clearance for the RG 3ml Medication Cartridge (the “RG Cartridge”) and to continue to service certain CADD-MS 3 pumps that are available for use with the Treprostinil Injection through January 1, 2025. Liquidia PAH and Sandoz agreed, among other things, to indemnify Smiths from certain liabilities related to the RG Cartridge.

In September 2021, United Therapeutics filed a motion for summary judgment with respect to all of the claims brought by Sandoz and Liquidia PAH against United Therapeutics. At the same time, Sandoz filed a motion for summary judgment with respect to the breach of contract claim. In March 2022, the Court issued an order granting partial summary judgment to United Therapeutics with respect to the antitrust and unfair competition claims, denying summary judgment to United Therapeutics with respect to the breach of contract claim, and granting partial summary judgment to Sandoz with respect to the breach of contract claim. The RareGen Litigation will now proceed to a trial to determine the amount of damages due from United Therapeutics to Sandoz with respect to the breach of contract claim. The Court had

expressed a goal of holding a three-day bench trial to be scheduled for the summer of 2023. However, no trial date has been set.

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.

Subsequent Events (Details) - USD ($) $ in Thousands	Jul. 27, 2023	Jun. 30, 2023
Subsequent Events
Accrued upfront license fee		$ 10,000
Pharmosa License Agreement
Subsequent Events
Accrued upfront license fee		$ 10,000
Second and Third Amendments to Revenue Interest Financing Agreement [Member] \| Subsequent Events.
Subsequent Events
Amount funded under the second tranche	$ 10,000

Stock-Based Compensation - Unamortized Compensation Expense (Details) $ in Thousands	6 Months Ended
	Jun. 30, 2023 USD ($)
Stock Options
Stock-based awards, unamortized expense	$ 18,455
Stock-based awards, weighted average remaining recognition period (Year)	2 years 8 months 12 days
Restricted Stock Units
Stock-based awards, unamortized expense	$ 9,634
Stock-based awards, weighted average remaining recognition period (Year)	3 years 4 months 24 days

Stock-Based Compensation (Tables)

6 Months Ended

Jun. 30, 2023

Schedule of stock-based compensation expense recognized for employees and non-employees


	Three Months Ended				Six Months Ended
	June 30,				June 30,
By Expense Category:	2023		2022		2023		2022
Research and development	$	578	$	337	$	1,159	$	720
General and administrative		1,921		1,310		3,892		5,112
Total stock-based compensation expense	$	2,499	$	1,647	$	5,051	$	5,832

Schedule of unamortized compensation expense and weighted average remaining recognition period


	As of June 30, 2023
			Weighted
			Average
			Remaining
			Recognition
	Unamortized		Period
	Expense		(Years)
Stock options	$	18,455	2.7
Restricted stock units	$	9,634	3.4

Schedule of assumptions used for estimating the fair value of stock options


	Six Months Ended
	June 30,
	2023	2022
Expected dividend yield	—	—
Risk-free interest rate	3.46% - 3.99%	1.46% - 2.34%
Expected volatility	91% - 95%	90% - 93%
Expected life (years)	5.8 - 6.1	5.8 - 6.1

Schedule of stock option activity


				Weighted
		Weighted		Average
		Average		Contractual	Aggregate
	Number of	Exercise		Term	Intrinsic
	Shares	Price		(in years)	Value
Outstanding as of December 31, 2022	8,398,262	$	4.49
Granted	1,373,746		6.56
Exercised	(31,620)		3.50
Cancelled	(145,554)		5.58
Outstanding as of June 30, 2023	9,594,834	$	4.77	8.2	$	30,939
Exercisable as of June 30, 2023	4,817,133	$	4.34	7.6	$	18,171
Vested and expected to vest as of June 30, 2023	9,264,881	$	4.77	8.2	$	29,949

Schedule of non vested RSU awards outstanding


		Weighted
		Average
		Grant-Date
	Number of	Fair Value
	RSUs	(per RSU)
Unvested as of December 31, 2022	407,726	$	5.57
Granted	1,483,166		6.48
Vested	(109,569)		6.00
Forfeited	(56,034)		6.22
Unvested as of June 30, 2023	1,725,289	$	6.30

Employee Stock Purchase Plan

Schedule of assumptions used for estimating the fair value of stock options


	Six Months Ended
	June 30,
	2023	2022
Expected dividend yield	—	—
Risk-free interest rate	5.20%	0.69%
Expected volatility	64%	80%
Expected life (years)	0.50	0.50

Stock-Based Compensation - Other (Details) - USD ($) $ / shares in Units, $ in Millions		1 Months Ended		3 Months Ended			6 Months Ended
	Jan. 01, 2023	Dec. 31, 2020	Nov. 30, 2020	Mar. 31, 2023	Mar. 31, 2022	Dec. 31, 2021	Jun. 30, 2023	Jun. 30, 2022	Jan. 25, 2022
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross (in shares)							1,373,746
Share-based Compensation Arrangements by Share-based Payment Award, Options, Grants in Period, Weighted Average Exercise Price (in dollars per share)							$ 6.56
Number of shares issued			1.00%
Number of common stock shares outstanding			150,000
Available of issuance under the ESPP	150,000
Restricted Stock Units
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period							4 years
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period (in shares)							1,483,166
Vested (in shares)							109,569
Common Stock
Issuance of common stock under employee stock purchase plan (in shares)				81,281	5,017
Share Price (in dollars per share)							$ 7.85
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					$ 2.9
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
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)	2,580,716
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant (in shares)							209,087
Inducement Plan 2022
Common Stock, Capital Shares Reserved for Future Issuance ( in shares)							21,650		310,000
Employee Stock Purchase Plan
Common Stock, Capital Shares Reserved for Future Issuance ( in shares)							616,778
Issuance of common stock under employee stock purchase plan (in shares)							81,281	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)							669,576

Revenue From Contracts With Customers

6 Months Ended

Jun. 30, 2023

Revenue From Contracts With Customers

Revenue From Contracts With Customers

9. Revenue From Contracts With Customers

In August 2018, we entered into a Promotion Agreement with Sandoz under which have the exclusive rights to conduct commercial activities to encourage the appropriate use of Treprostinil Injection for the treatment of patients with PAH in the United States. We paid Sandoz $20 million at the inception of the Promotion Agreement in consideration for these rights. In exchange for conducting these commercial activities, we are entitled to receive a share of Net Profits (as defined within the Promotion Agreement) based on specified profit levels. The share of Net Profits received is subject to adjustments from Sandoz for certain items such as distributor chargebacks, rebates, inventory returns, inventory write-offs and other adjustments. We expect 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, 2023, a $0.5 million refund liability is offset against accounts receivable from Sandoz related to expected refund amounts. Approximately 99% of revenue during three and six months ended June 30, 2023 was generated from the Promotion Agreement.

- 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 https://asc.fasb.org/topic&trid=49130388

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
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-Name Accounting Standards Codification
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-URI https://asc.fasb.org/extlink&oid=126920106&loc=SL49130554-203045

+ Details

Stock-Based Compensation - Stock-based Compensation Expense (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Total stock-based compensation expense	$ 2,499,000	$ 1,647,000	$ 5,051	$ 5,832
Research and development
Total stock-based compensation expense	578,000	337,000	1,159	720
General and administrative
Total stock-based compensation expense	$ 1,921,000	$ 1,310,000	$ 3,892	$ 5,112

Property, Plant, and Equipment - Schedule of Property, plant and equipment (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Total property, plant and equipment	$ 18,874	$ 18,265
Accumulated depreciation and amortization	(14,703)	(14,114)
Property, plant and equipment, net	4,171	4,151
Lab and build-to-suit equipment
Total property, plant and equipment	6,603	6,257
Office equipment
Total property, plant and equipment	19	19
Furniture and fixtures
Total property, plant and equipment	134	134
Computer equipment
Total property, plant and equipment	457	291
Leasehold improvements
Total property, plant and equipment	11,409	11,409
Construction-in-progress
Total property, plant and equipment	$ 252	$ 155

Property, Plant, and Equipment

6 Months Ended

Jun. 30, 2023

Property, Plant and Equipment

Property, Plant and Equipment

3. Property, Plant, and Equipment

Property, plant and equipment consisted of the following:


	June 30,		December 31,
	2023		2022
Lab and build-to-suit equipment	$	6,603	$	6,257
Office equipment		19		19
Furniture and fixtures		134		134
Computer equipment		457		291
Leasehold improvements		11,409		11,409
Construction-in-progress		252		155
Total property, plant and equipment		18,874		18,265
Accumulated depreciation and amortization		(14,703)		(14,114)
Property, plant and equipment, net	$	4,171	$	4,151

We recorded depreciation and amortization expense related to property, plant and equipment of $0.3 million and $0.4 million for the three months ended June 30, 2023 and 2022, respectively, and of $0.6 million and $0.8 million for the six months ended June 30, 2023 and 2022, respectively.

Subsequent Events

6 Months Ended

Jun. 30, 2023

Subsequent Events

Subsequent Events

15. Subsequent Events

On July 27, 2023, HCR funded us $10.0 million of the Investment Amount from the second tranche of the RIFA, the entire amount of which was used to pay the amount due to Pharmosa at June 30, 2023 for the $10.0 upfront license fee under the Pharmosa License Agreement.

Basis of Presentation, Significant Accounting Policies and Fair Value Measurements - Fair Value of Financial Assets and Financial Liabilities (Details) - Money market mutual funds (cash equivalents) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Reported Value Measurement
Fair Value of Financial Instruments
Money market funds	$ 82,270	$ 92,283
Fair Value, Inputs, Level 1 \| Estimate of Fair Value Measurement
Fair Value of Financial Instruments
Money market funds	$ 82,270	$ 92,283

Commitments and Contingencies

6 Months Ended

Jun. 30, 2023

Commitments and Contingencies.

Commitments and Contingencies

13. Commitments and Contingencies

Pharmosa License Agreement and Asset Transfer Agreement

Under the terms of the Pharmosa License Agreement, we will be responsible for development, regulatory and commercial activities of L606 in North America. Pharmosa will manufacture clinical and commercial supplies of the liposomal formulation through its global supply chain and support us in establishing a redundant global supply chain. In consideration for these exclusive rights, we will pay Pharmosa an upfront license fee of $10 million and will pay Pharmosa potential development milestone payments tied to PAH and PH-ILD indications of up to $30 million, potential sales milestones of up to $185 million and two tiers of low, double-digit royalties on net sales of L606. Pharmosa will also receive a $10 million milestone payment for each additional indication approved after PAH and PH-ILD and each additional product approved under the license. We also retain the first right to negotiate for development and commercialization of L606 in Europe and other territories should Pharmosa seek a partner, subject to satisfaction of certain conditions as set forth in the Pharmosa License Agreement.

Concurrently with the execution of the Pharmosa License Agreement, we also entered into an Asset Transfer Agreement with Pharmosa pursuant to which Pharmosa will transfer its inventory of physical materials.

Mainbridge Health Care Device Development and Supply Agreement

In December 2022, we entered into a Device Development and Supply Agreement (the “Pump Development Agreement”) with Mainbridge Health Partners, LLC (“Mainbridge”) and Sandoz Inc. (“Sandoz”). The Pump Development Agreement provides for the cooperation between us, Sandoz and Mainbridge to develop a new pump that is suitable for the subcutaneous administration of Treprostinil Injection. Mainbridge will perform all development, validation and testing activities required for the pump and related consumables in anticipation of submitting a 510(k) clearance application for the pump to the FDA in 2023. In connection with the Pump Development Agreement, we and Sandoz have agreed to pay Mainbridge certain future contingent milestone payments in accordance with the terms and conditions set forth therein.

UNC License Agreement

We perform 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, we hold 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, we are 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. We may grant sublicenses of UNC licensed intellectual property in return for specified payments based on a percentage of any fee, royalty or other consideration received.

Chasm Technologies

In March 2012, we entered into an agreement, as amended, with Chasm Technologies, Inc. for manufacturing consulting services related to our manufacturing capabilities during the term of the agreement. We agreed to pay future contingent milestones and royalties on net sales totaling no more than $1.5 million, none of which has been earned as of June 30, 2023.

Employment Agreements

We have agreements with certain employees which require payments if certain events, such as a change in control or termination without cause, occur.

Purchase Obligations

We enter into contracts in the normal course of business with contract service providers to assist in the performance of research and development and manufacturing activities. Subject to required notice periods and obligations under binding purchase orders, we can elect to discontinue the work under these agreements at any time.

On July 14, 2023, we entered into an Amended and Restated Commercial Manufacturing Services and Supply Agreement with Lonza Tampa LLC (“Lonza”) (the “CSA”). Lonza is our sole supplier for encapsulation and packaging services for YUTREPIA. Pursuant to the terms of the CSA, we will deliver bulk treprostinil powder, manufactured using our proprietary PRINT^® technology, and Lonza will encapsulate and package it. The CSA is effective upon signing and will be in effect for an initial term of 5 years from receipt of regulatory approval of YUTREPIA by the FDA (“Regulatory Approval”) absent termination by either party in accordance with the terms of the CSA. We may terminate the CSA upon 60 days’ written notice to Lonza in the event that the application for regulatory approval is rejected by the FDA and such FDA decision is not caused by the fault of the Company (the “Termination for FDA Rejection”). Lonza may terminate the CSA upon 120 days written notice if we do not receive regulatory approval by December 31, 2024 (the “Termination for FDA Delay”). Upon any Termination for FDA Rejection or Termination for FDA Delay, we would reimburse Lonza for 50% of its documented out-of-pocket expenditures for any capital equipment that is purchased by Lonza after the effective date of the Agreement to perform the services for us, not to exceed $2.5 million in the aggregate.

We are required to provide Lonza with quarterly forecasts of our expected production requirements for the following 24 month period, the first twelve months of which is considered a binding, firm order. We are required to purchase certain minimum annual order quantities, which may be adjusted by us after the thirteenth month after receipt of regulatory approval (as defined in the CSA). The CSA provides for tiered pricing depending upon the batch size ordered. As of June 30, 2023, we have non-cancelable commitments with Lonza Tampa LLC for product manufacturing costs of approximately $4.3 million for the year ending 2023.

In addition, we are party to a multi-year supply agreement with LGM Pharma, LLC (LGM) to produce active pharmaceutical ingredients for YUTREPIA. Under the supply agreement with LGM, we are required to provide rolling forecasts, a portion of which will be considered a binding, firm order, subject to an annual minimum purchase commitment of $2.7 million for the term of the agreement. As of June 30, 2023, we have incurred and paid $1.3 million of the annual minimum purchase commitment. The agreement expires five years from the first marketing authorization approval of YUTREPIA.

Other Contingencies and Commitments

From time-to-time we are subject to claims and litigation in the normal course of business, none of which do we believe represent a risk of material loss or exposure. See Note 14 for further discussion of pending legal proceedings.

In addition to the commitments described above, we are party to other commitments, including non-cancelable leases and long-term debt, which are described elsewhere in these notes to the consolidated condensed financial statements.

Accrued Expenses and Other Current Liabilities (Tables)

6 Months Ended

Jun. 30, 2023

Accrued Expenses and Other Current Liabilities

Schedule of Accrued expenses and other current liabilities


	June 30,		December 31,
	2023		2022
Accrued compensation	$	2,191	$	2,862
Accrued research and development expenses		1,181		1,757
Accrued upfront license fee		10,000		—
Accrued other expenses		1,395		903
Total accrued expenses and other current liabilities	$	14,767	$	5,522

Condensed Consolidated Statements of Stockholders' Equity - USD ($) $ in Thousands	Common Stock	Additional Paid-in Capital	Accumulated Deficit	Total
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
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
Balance at Dec. 31, 2022	$ 64	440,954	(350,596)	90,422
Balance (in shares) at Dec. 31, 2022	64,517,912
Issuance of common stock upon exercise of stock options		79	0	79
Issuance of common stock upon exercise of stock options (in shares)	21,447
Issuance of common stock upon vesting of restricted stock units	$ 1	(1)	0
Issuance of common stock upon vesting of restricted stock units (in shares)	89,804
Issuance of common stock under employee stock purchase plan		335	0	335
Issuance of common stock under employee stock purchase plan (in shares)	81,281
Stock-based compensation		2,552	0	2,552
Net loss			(11,745)	(11,745)
Balance at Mar. 31, 2023	$ 65	443,919	(362,341)	81,643
Balance (in shares) at Mar. 31, 2023	64,710,444
Balance at Dec. 31, 2022	$ 64	440,954	(350,596)	$ 90,422
Balance (in shares) at Dec. 31, 2022	64,517,912
Issuance of common stock upon exercise of stock options (in shares)				31,620
Net loss				$ (35,262)
Balance at Jun. 30, 2023	$ 65	446,450	(385,858)	60,657
Balance (in shares) at Jun. 30, 2023	64,740,382
Balance at Mar. 31, 2023	$ 65	443,919	(362,341)	81,643
Balance (in shares) at Mar. 31, 2023	64,710,444
Issuance of common stock upon exercise of stock options		32	0	32
Issuance of common stock upon exercise of stock options (in shares)	10,173
Issuance of common stock upon vesting of restricted stock units			0
Issuance of common stock upon vesting of restricted stock units (in shares)	19,765
Stock-based compensation		2,499	0	2,499
Net loss			(23,517)	(23,517)
Balance at Jun. 30, 2023	$ 65	$ 446,450	$ (385,858)	$ 60,657
Balance (in shares) at Jun. 30, 2023	64,740,382

Contract Acquisition Costs and Intangible Asset (Tables)

6 Months Ended

Jun. 30, 2023

Contract Acquisition Costs and Intangible Asset

Schedule of contract acquisition costs and intangible asset


	June 30, 2023						December 31, 2022
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Contract acquisition costs	$	12,980	$	(4,773)	$	8,207	$	12,980	$	(4,376)	$	8,604
Intangible asset	$	5,620	$	(2,066)	$	3,554	$	5,620	$	(1,894)	$	3,726

Document and Entity Information - shares	6 Months Ended
Document and Entity Information - shares	Jun. 30, 2023	Aug. 01, 2023
Document and Entity Information
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Jun. 30, 2023
Document Transition Report	false
Entity File Number	001-39724
Entity Registrant Name	LIQUIDIA CORPORATION
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		64,741,096
Entity Central Index Key	0001819576
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2023
Document Fiscal Period Focus	Q2
Amendment Flag	false

Condensed Consolidated Balance Sheets (Parentheticals) - $ / shares	Jun. 30, 2023	Dec. 31, 2022
Condensed 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)	100,000,000	80,000,000
Common stock, shares issued (in shares)	64,740,382	64,517,912
Common stock, shares outstanding (in shares)	64,740,382	64,517,912

Basis of Presentation, Significant Accounting Policies and Fair Value Measurements - Other (Details)		3 Months Ended				6 Months Ended		12 Months Ended
	Jul. 01, 2023 USD ($)	Jun. 30, 2023 USD ($)	Mar. 31, 2023 USD ($)	Jun. 30, 2022 USD ($)	Mar. 31, 2022 USD ($)	Jun. 30, 2023 USD ($) customer segment	Jun. 30, 2022 USD ($)	Dec. 31, 2022 USD ($) customer
Net loss		$ 23,517,000	$ 11,745,000	$ 9,447,000	$ 15,943,000	$ 35,262,000	$ 25,390,000
Accumulated deficit		$ 385,858,000				$ 385,858,000		$ 350,596,000
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						99.00%		99.00%
Number of customers \| customer						1		1

Stock-Based Compensation - Restricted Stock Units (Details) - Restricted Stock Units	6 Months Ended
	Jun. 30, 2023 $ / shares shares
Unvested, number (in shares) \| shares	407,726
Unvested , weighted average grant date fair value (in dollars per share) \| $ / shares	$ 5.57
Granted, number (in shares) \| shares	1,483,166
Granted , weighted average grant date fair value (in dollars per share) \| $ / shares	$ 6.48
Vested , number (in shares) \| shares	(109,569)
Vested , weighted average grant date fair value (in dollars per share) \| $ / shares	$ 6.00
Forfeited, number (in shares) \| shares	(56,034)
Forfeited , weighted average grant date fair value (in dollars per share) \| $ / shares	$ 6.22
Unvested , number (in shares) \| shares	1,725,289
Unvested , weighted average grant date fair value (in dollars per share) \| $ / shares	$ 6.30

Leases - Future Minimum Lease Payments (Details) $ in Thousands	Jun. 30, 2023 USD ($)
Operating Leases
2023 (nine months remaining)	$ 646
2024	1,317
2025	1,356
2026	1,158
Total minimum lease payments	4,477
Less: Interest	(679)
Present value of lease liabilities	3,798
Finance Leases
2023 (nine months remaining)	57
2024	115
2025	64
2026	0
Total minimum lease payments	236
Less: Interest	(14)
Present value of lease liabilities	222
Total
2023 (nine months remaining)	703
2024	1,432
2025	1,420
2026	1,158
Total minimum lease payments	4,713
Less: Interest	(693)
Present value of lease liabilities	$ 4,020

Revenue Interest Financing Payable

6 Months Ended

Jun. 30, 2023

Revenue Interest Financing Payable

Revenue Interest Financing Payable

11. Revenue Interest Financing Payable

On January 9, 2023, we entered into the RIFA with HCR and HealthCare Royalty Management, LLC, pursuant to which and subject to the terms and conditions contained therein, HCR agreed to pay us an aggregate investment amount of up to $100.0 million (the “Investment Amount”) in four tranches. On January 27, 2023, $32.5 million of the Investment Amount was funded from the first tranche, $22.2 million of which was used to satisfy our existing obligations under the A&R SVB LSA (see Note 12).

On June 28, 2023 and July 27, 2023, we entered into the Second Amendment to the RIFA and Third Amendment to the RIFA, respectively, pursuant to which HCR moved $2.5 million from the fourth tranche to the second tranche such that HCR would fund a total of $10.0 million of the Investment Amount under the second tranche. The second tranche was funded on July 27, 2023. Additional tranches of $35.0 million (the “Third Investment Amount”) and $22.5 million (the “Fourth Investment Amount”) of the Investment Amount will be funded fifteen business days after the mutual agreement of HCR and us to fund such amounts.

As consideration for the Investment Amount and pursuant to the RIFA, we have agreed to pay HCR either quarterly fixed payments or a tiered royalty on our annual net revenue after the first commercial sale of YUTREPIA (the “Revenue Interests”) depending on whether the Third Investment Amount has been funded. The applicable tiered percentage will range from 3.60% to 10.28% on the first $250 million on annual net revenue, 1.44% to 4.11% on the next $250 million in annual net revenue, and 0.36% to 1.03% on all annual net revenue in excess of $500 million. The specific royalty rate within such ranges will depend upon the total amount advanced by HCR and our achievement of a certain annual net revenue threshold for the calendar year 2025. We will also make certain fixed quarterly payments to HCR, plus an additional amount on a ratable basis to reflect the funding of additional amounts by HCR under the RIFA. We will be required to make additional payments to HCR in the event that the Third Investment Amount has not been funded by June 30, 2025 and certain minimum quarterly royalty payments beginning in 2026.

If HCR has not received cumulative payments equaling at least 60% of the amount funded to date by December 31, 2026 or at least 100% of the amount funded to date by December 31, 2028, we will be obligated to make a cash payment to HCR immediately following each applicable date in an amount sufficient to achieve such percentage funded amounts to HCR giving full consideration of the cumulative amounts paid to HCR by us through each date.

HCR’s rights to receive the Revenue Interests will terminate on the date on which HCR has received payments equal to 175% of funded portion of the Investment Amount less the aggregate amount of all payments made to HCR as of such date (the “Hard Cap”), plus an amount, if any, that HCR would need to receive to yield an internal rate of return on the funded Investment Amount equal to 18% (the “IRR True-Up Payment”), unless the RIFA is earlier terminated. If a change of control occurs or upon the occurrence of an event of default, HCR may accelerate payments due under the RIFA up to the Hard Cap, plus the IRR True-Up Payment, plus any other obligations payable under the RIFA.

The RIFA contains customary affirmative and negative covenants and customary events of default and other events that would cause acceleration, including, among other things, the occurrence of certain material adverse events or the material breach of certain representations and warranties and specified covenants, in which event HCR may elect to terminate the RIFA and require us to make payments to HCR equal to the lesser of (a) the Hard Cap, plus any other obligations payable under the RIFA, or (b) the funded portion of the Investment Amount, minus payments received by HCR in respect of the Revenue Interests, plus the IRR True-Up Payment. If the FDA grants final approval to an inhaled treprostinil product therapeutically equivalent to YUTREPIA and HCR has not received 100% of the amount funded by HCR to date, then we will be required to make payments to HCR equal to 100% of the amount funded by HCR to date, minus payments received by HCR in respect of the Revenue Interests.

The RIFA contains certain restrictions on our ability, among other things, to incur additional debt, grant or permit additional liens, make investments and acquisitions, dispose of assets, pay dividends and distributions, subject to certain exceptions. In addition, the RIFA contains a financial covenant that requires us to maintain cash and cash equivalents in an amount at least equal to $7.5 million during the calendar year beginning on January 1, 2024 and at least equal to $15.0 million for the remainder of the payment term after the calendar year ended December 31, 2024.

As of the filing date of these condensed consolidated financial statements, we are not aware of any breach of covenants, or the occurrence of any material adverse event, nor have we received any notice of event of default from HCR.

We recorded the initial funds received from HCR of $32.5 million under the terms of the RIFA as a liability. The issuance costs, consisting primarily of legal fees, totaled $0.8 million and were recorded as a deduction of the carrying amount of the liability and will be amortized under the effective interest method over the estimated period the liability will be repaid. We estimated the total amount of future revenue to be generated over the life of the RIFA to determine the non-cash interest expense to record to accrete the liability to the amount ultimately due. For the three and six months ended June 30, 2023, we estimated an effective annual interest rate of approximately 17%. Over the course of the RIFA, the actual interest rate will be affected by the amount and timing of net revenue recognized and changes in the amount and timing of forecasted net revenue. On a quarterly basis, we will reassess the expected amount and timing of the net revenue, recalculate the amortization and effective interest rate and adjust the accounting prospectively as needed.

The following table presents the changes in the liability related to RIFA during the six months ended June 30, 2023:


	June 30,
	2023
Balance as of January 27, 2023 closing	$	32,500
Issuance costs		(836)
Non-cash interest expense		2,328
Amortization of issuance costs		48
Payments		(500)
Balance as of June 30, 2023	$	33,540
Less: current portion of revenue interest financing payable		(1,741)
Long-term portion of revenue interest financing payable	$	31,799