Thank you, Katherine. And good morning.

Welcome to Liquidia's fourth quarter and full-year 2019 financial results and corporate update conference call. Today's call will include forward-looking statements pursuant to the Private Securities Litigation Reform Act of 1995 based on current expectations.

Such statements represent management's judgment as of today and may involve significant risks and uncertainties that could cause actual results to differ materially from expected results. Please refer to Liquidia's filings with the SEC, which are available from the SEC at www.sec.gov, or from Liquidia's website at liquidia.com for information concerning risk factors that could cause such differences and otherwise affect the company.

I would now like to turn the call over to Neal Fowler, CEO of Liquidia.

Good morning to everyone and thank you for joining us. On the call with me today are Rich Katz, our Chief Financial Officer; Dr.

Rob Roscigno, Senior Vice President of Product Development and Program Lead for LIQ861; and Jeri Thomas, Senior Vice President of Commercial. This morning, I will summarize our recent accomplishments and provide an update on our two pipeline programs, LIQ861 and LIQ865.

Rich will provide a brief summary of financial results for the fourth quarter and for full-year 2019, and then I'll conclude our prepared remarks and open the call for your questions. 2019 was a year of tremendous progress for the company and its lead program LIQ861.

As a reminder, 861 is an inhaled dry powder formulation of treprostinil, a prostacyclin analog used to treat pulmonary arterial hypertension, or PAH, by targeting the pulmonary arteries. We believe that 861 has the potential to maximize the therapeutic benefits of treprostinil by safely delivering higher doses directly into the lungs using a convenient palm-sized dry powder inhaler.

Over the course of the year, we steadily executed on our clinical, operational and regulatory activities, ultimately leading to the company's first FDA submission in January of this year. We believe that the clinical information included in the NDA addresses the FDA's guidance for potential approval under the 505(b)(2) pathway.

Specifically, our INSPIRE trial enrolled more than 100 PAH patients and clearly established the safety and tolerability profile of our PRINT-enabled dry powder formulation of treprostinil. By including patients naïve to prostacyclin and those switching from Tyvaso, we helped establish that LIQ861 can be comfortably added at different stages of a patient's disease and treatment regimen.

We also collected safety data on a wide range of doses, including dose levels that are comparable to twice the amount than the maximum recommended dose of Tyvaso. We believe the convenience and dose range of 861 will enable patients to easily initiate and maximize the length of treatment on inhaled therapy.

Secondly, we confirm that treprostinil exposure from LIQ861 is comparable to Tyvaso, the reference listed drug. We recently presented data at the 14th Annual Pulmonary Vascular Research Institute, or PVRI, Conference that demonstrates a 79.5 microgram dose of LIQ861 is comparable to nine breaths of Tyvaso.

This positive pharmacokinetic comparison in healthy human subjects may also be reflected in the high rate of sustained treatment that we observe in the Tyvaso transition patients from INSPIRE. And finally, we included several exploratory endpoints to help inform the FDA and the medical community on the potential treatment benefit using LIQ861.

We saw positive trends in duration of treatment, quality of life, six-minute walk distance and assessment of changes to New York Heart Association Functional Class. We will be sharing complete sets of these data at upcoming annual medical conferences and publish manuscripts later this year, including an oral presentation in April at the 40th Annual Meeting of the International Society for Heart and Lung Transplantation and a recently accepted late-breaker poster at American Thoracic Society in May.

With the INSPIRE data closed and the NDA submitted, we will continue to actively treat US patients in an open label extension study and European patients in a study to assess their hemodynamic dose response relationship to 861. Concurrent to these ongoing studies, we are diligently preparing for the FDA's response to our NDA submission and successive interactions to support the approval of 861.

We feel well prepared to address the FDA's questions having had the benefit of previous on-site interactions during their visit as part of the emerging technologies program, as well as the clear responses to our questions in the pre-NDA meeting correspondence. While 861 represents the near-term value for Liquidia, we have continued to advance our pipeline.

LIQ865 is a PRINT formulation of bupivacaine to treat local post-operative pain for three to five days with a single administration. During 2019, we completed our initial non-clinical studies in soft tissues and bone healing.

Results were acceptable and not statistically different from controls in multiple soft tissue studies. However, as we reported last quarter, we're conducting additional studies to help determine a no adverse effect level on bone healing.

Complete results in ongoing non-clinical studies are expected during the second half of 2020 and will inform our ability to initiate Phase II proof of concept studies. Additionally, we have recently initiated a new program to develop an inhaled product leveraging the proof of concept as demonstrated with LIQ861, in which each PRINT particle has a precise, uniform, aerodynamic size and shape for deep-lung delivery.

We are evaluating multiple molecules in early stage formulation and will provide an update when a lead candidate has been identified. I would now like to turn the call over to Rich to review our fourth quarter and full-year financial summaries.

Thank you, Neal. I'll start with the fourth quarter results.

Revenues for the three months ended December 31, 2019 were zero. That compared $0.6 million for the comparable period in the prior year.

The decrease, I think everyone will remember, we recognized fully the $8.1 million of deferred revenue in connection with our GSK collaboration during the second quarter of 2019. R&D expenses increased slightly to $8.2 million from $8 million, and that was primarily due to a modest increase in non-clinical expenses related to 865.

G&A increased significantly from $2.3 million, up to $5.8 million. And that was driven by commercial-related spending for the 861 program.

So in summary then, our loss from ops was $14 million this quarter versus $9.8 million in the comparable period last year, again, mostly related to the commercial expenses from 861 and then some increase in non-clinical expenses from 865. Interest income was $0.1 million, and that compared to $0.2 million in the comparable period last year.

Interest expense was $0.6 million and that compared $0.2 million in the comparable period in the prior year. So, in total then, net loss was $14.5 million versus $9.7 million as a result of the factors I mentioned above.

We ended the year with cash and cash equivalents totaling $55.8 million, and that reflected the completion of our ATM sales as well as our private placement towards the end of the year, which collectively brought in just north of $30 million on a gross basis. I'll turn now to the full-year results, which I'll just recap briefly.

Revenues for the year were $8.1 million, and that compared to $2.7 million for the prior year. As I mentioned, we recognized the full remaining deferred balance of deferred revenue of $8.1 million related to our GSK collaboration in the second quarter of 2019.

And that then was reflected in the cost of sales line as well because we have licensed payments due to UNC. So, that number was $0.8 million for 2019 as opposed to $0.1 million for 2018.

R&D expenses were $40.5 million for the year. That compared to $28.7 million for the prior year, and that was driven primarily by 861 clinical program expenses, as well as some increase in the 865 program expenses, but predominantly 861.

G&A for the year was $13.6 million – that compared to $8.8 million – again, primarily related to commercial spending on 861. Loss from ops then was $46.8 million.

And that compared to $34.9 million as a result of the factors that I just mentioned. Interest income, $0.6 million.

That compared to $0.3 million in the prior year. Interest expense, $1.4 million.

That was compared to $19 million for 2018, but that $19 million was an anomaly. It reflected in large part the conversion of 27.4 million of convertible notes into shares of Series D preferred stock prior to the IPO.

So, net loss then in total for 2019 decreased to $47.6 million from $53.1 million. That was driven then by the interest expense that I mentioned, the increase in revenues and partially offset, of course, by increased expenses related to 861, both R&D and commercial, as well as an increase in non-clinical expenses for 865.

In addition, I would just like to mention that, looking ahead into 2020, we will seek to continue to strengthen the balance sheet by evaluating multiple funding options, including non-dilutive financings, issuance of new equity and potential partnerships with companies that could offer strategic and commercial synergies with 861. And I'll turn the call now back to Neal.

Thanks, Rich. Having reflected on the major accomplishments in 2019, the company is laser focused on our task at hand in 2020, which is to seek FDA approval of 861 as the first dry powder inhaler for the treatment of PAH.

We're very excited for the year ahead and look forward to sharing more details of progress. Specifically, we intend to first seek FDA acceptance and filing of 861 NDA submission, present and publish full data sets from the INSPIRE trial throughout 2020, prepare for commercialization of 861, and advance our pipeline programs to their individual key stage gates.

So, with those objectives in mind, I'll now turn the call over to the operator and we're happy to take your questions.

Thank you for taking my questions. And congratulations on your progress.

Thanks, Liana.

Can you just remind us, for the 79.5 micrograms of 861, how many inhalations does it take to get to that level?

Rob, you want to take this question?

Yes. Good morning, Liana.

In our studies, we advise one to two breaths per capsule inhalation.

Okay. And then, the patients that have been on it for 18 months, have they plateaued in their response or do they continue to improve?

We continue to analyze that data as it comes in. And right now, we believe the patients who are on 861 chronically are receiving clinical benefit.

Okay. And then, for the European trial mentioned in the press release, can you estimate the time to data?

Yes. It's Rob again.

So, we are actively enrolling patients in both France and Germany and we are targeting completion by the end of 2021 for the chronic portion of this study and the acute portion having to be completed in the first half of 2021.

Okay. And then, how should we think about OpEx in 2020 versus 2019?

In 2020, you can expect operating expenses to increase somewhat. We'll be doing some work on the commercial side, as I alluded to.

And so, that will drive up G&A somewhat. R&D will be – it depends on exactly what studies we undertake, exactly what times, but right now, Liana, I think it's safe to assume maybe somewhat down, but ballpark roughly even.

Okay. And then, my last question is, for the preclinical deep lung candidate, what's your purpose for that?

What kind of disease are you looking for?

Well, Liana, somewhat consistent with what we've done with 861. These would be 505(b)(2) high value candidates.

And so, we want to build off of the expertise we've built with 861 and capitalize on that, and we're looking at several candidates and we'll keep you posted as we continue to make advancements there.

So, you're thinking of pulmonary hypertension?

That and other areas. So, it's not specific to any one area, but we're looking at what we consider high unmet need areas that potentially can change the landscape with our technology, like we're doing with 861.

Okay. Thank you very much.

Hey, guys. Congrats on all the progress and for the exciting year coming up.

I just was wondering if you could help frame for us what it would take for you all to bring 861 to market on your own in terms of sales force size? Can we do a real efficient launch here?

Can we do things a little bit differently, so that you're able to bring it to market without partnering? And then also, United Therapeutics does seem to be continuing to study Tyvaso and had some interesting results in the interstitial lung disease population.

And that seems like, to someone naïve like me, a good opportunity potentially for you all as well. So, can you talk about what it would take to be able to piggyback on that type of data?

Could you get your label expanded? Or what kind of study would you have to do to be able to capitalize on that opportunity as well?

Thanks so much.

Hey, Ken. Hey, good morning.

It's Neal. I'll take the first question you popped out there and I'll kind of segue in and let Rob handle the second one.

To kind of start out with, we're very excited about the commercial opportunity here ahead of us with 861. From the beginning, and as you know, one of the things that's been intriguing, as you stack this up against other pharma launches, this would be in the realm of what we would call a commercially efficient launch.

Depending on who you benchmark and how you do that, this looks like on an order of 50 or less kind of sales representatives. But we're looking at that very closely to see what would be optimal there.

Obviously, it's the thread-the-needle approach of making sure we're doing what we need to do from a sales and marketing standpoint, and at the same time watching our expenses. But Jeri Thomas and her team have been on this for quite some time.

And we feel very well prepared as we move down this pike. We've, as you would imagine, already had extensive market research and execution types of discussions as we move into this year and are really looking forward to next year.

We are very encouraged – I'll kind of segue into your second question. Very encouraged by the work that just recently came out from United on the group three population.

We think that's a step forward for patients based on what we know. And I'll let Rob speak to that in a little more detail.

Good morning, Ken. Yeah, to echo Neal, when we heard the top line data, the first thing I thought about what a great day for patients if the top line data supporting benefit in this very difficult-to-treat form of pulmonary hypertension and we are encouraged because we believe this suggests that inhaled delivery treprostinil, the local inhaled delivery of treprostinil is showing benefit where other drugs have failed in the past.

I am and the company is interested in seeing the detailed data, obviously, especially how they dosed and what kind of adverse events were seen and the details with the data. And as far as Liquidia is concerned, we'll discuss this with the FDA once we complete our current group one NDA review.

Right now, we're focused on getting 861 approved for group one PAH.

Thanks so much.

Hi, good morning. And thanks for taking my questions.

Can you talk a little bit more about the extension study for the INSPIRE trial? I guess, how many patients have moved on to that part of the trial and what you're tracking besides safety?

Sure. This is Rob again.

Good morning, Serge. So, as you know, most of our patients chose to continue treatment with 861 and the extension study.

We assume they're pleased with the benefits they're receiving, the ease of administration and also their continued maintenance. As we reported earlier, 80% of our INSPIRE patients remain on drug beyond month four.

And in fact, some, as Neal had mentioned earlier, past 18 months. This data will be shared as we report data out later in the year.

These patients continue to do well. I just want to emphasize that.

Okay. And then, can you just talk about the – I guess, the continuation of Ken's question on Tyvaso, just the current market opportunity.

Tyvaso sales have been pretty stable for the last years. So, how do you think 861 can disrupt that market?

And how do you approach that?

Yeah. Hey, good morning, Serge.

It's Neal. So, obviously, we continue to look at kind of the same thing.

You are there and it's been encouraging to see the stability of Tyvaso through time. We've seen 861 as a big step forward for patients kind of on two fronts.

One, obviously convenience. The ability to use a simple-to-use dry powder inhaler versus a nebulizer today is a real step forward for patients.

But I think really encouraging to us is not only that, but the whole treatment paradigm is demonstrated by the INSPIRE study. We've had really robust data to show that patients are willing to use a dry powder inhaler earlier in the disease process when you think about trying to get an inhaled prostacyclin locally into the lung, which is ideally where you want to be to begin with.

As Rob shared, that add-on segment of patients and the data that came from that were very encouraging to show earlier use than maybe what a patient would consider with a nebulizer. And obviously, the downstream impact is tremendous too, we feel, based on our ability to dose higher.

So, from a quality of life, as we've demonstrated some of our exploratory endpoints, patients can continue forward with a simple-to-use dry powder inhaler to deliver prostacyclin for a longer period of time before having to be tethered to some form of perineural medication in later stage disease. So, we see it as not just kind of a static opportunity today that we see with the sales that we're looking, but also an ability to expand beyond that with clinical use based on the data that we have from INSPIRE.

Thank you.

Thank you.

Thanks very much to everyone for joining us on the call today. We appreciate everyone's continued interest and investment in Liquidia.

And we will update you on our progress throughout the year. So, hope everyone has a great day.

And thanks again.