Liquidia Corp

Previous wording

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations is intended to provide information necessary to understand our condensed consolidated financial statements and highlight certain other information which, in the opinion of management, will enhance a reader’s understanding of our financial condition, changes in financial condition, results of operations, and cash flows. In particular, the discussion is intended to provide an analysis of significant trends and material changes in our financial position and the operating results of our business during the three months ended March 31, 2026 as compared to the three months ended March 31, 2025. This discussion should be read in conjunction with our condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q as well as our Annual Report on Form 10-K for the fiscal year ended December 31, 2025, which includes detailed discussions of various items impacting our business, results of operations and financial condition.

Current wording

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations is intended to provide information necessary to understand our condensed consolidated financial statements and highlight certain other information which, in the opinion of management, will enhance a reader’s understanding of our financial condition, changes in financial condition, results of operations, and cash flows. In particular, the discussion is intended to provide an analysis of significant trends and material changes in our financial position and the operating results of our business during the three and six months ended June 30, 2026 as compared to the three and six months ended June 30, 2025. This discussion should be read in conjunction with our condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q as well as our Annual Report on Form 10-K for the fiscal year ended December 31, 2025, which includes detailed discussions of various items impacting our business, results of operations and financial condition.

Previous wording

daily with a short-duration next-generation nebulizer. L606 is currently being evaluated in an open-label study in the United States for treatment of PAH and PH-ILD, and we have initiated a worldwide, placebo-controlled pivotal study for the treatment of PH-ILD. We are also planning to conduct clinical studies to evaluate YUTREPIA for the treatment of pulmonary hypertension associated with chronic obstructive pulmonary disease (“PH-COPD”), idiopathic pulmonary fibrosis (“IPF”), progressive pulmonary fibrosis (“PPF”) and Raynaud’s phenomenon associated with systemic sclerosis (“SSc-RP”).

Current wording

daily with a short-duration next-generation nebulizer. L606 is currently being evaluated in an open-label study in the United States for treatment of PAH and PH-ILD and in a worldwide, placebo-controlled pivotal study for the treatment of PH-ILD. We are also planning to conduct clinical studies to evaluate YUTREPIA for the treatment of pulmonary hypertension associated with chronic obstructive pulmonary disease (“PH-COPD”), idiopathic pulmonary fibrosis (“IPF”), progressive pulmonary fibrosis (“PPF”) and Raynaud’s phenomenon associated with systemic sclerosis (“SSc-RP”).

Previous wording

We have historically incurred significant annual operating losses. Our net losses were $68.9 million and $128.3 million for the years ended December 31, 2025 and 2024, respectively. As of March 31, 2026, we had an accumulated deficit of $573.5 million. We expect to incur significant expenses for the foreseeable future as we continue commercialization of YUTREPIA and advance our product candidates through clinical trials, seek regulatory approval of such product candidates and pursue commercialization of any such approved product candidates. These efforts require significant amounts of capital, adequate personnel and infrastructure, and extensive compliance-reporting capabilities. It is uncertain whether we will be able to generate sustained revenue from YUTREPIA sales and, even if our development efforts are successful with other product candidates, whether and when, if ever, we will realize sustained revenue from sales of such additional product candidates. Additionally, our HCR Agreement contains fixed quarterly payments and minimum cash covenants that require us to maintain cash and cash equivalents in an amount at least equal to $15.0 million for the remainder of the payment term, which based on amounts funded as of March 31, 2026, is expected to conclude in 2033.

Current wording

We have historically incurred significant annual operating losses. Our net losses were $68.9 million and $128.3 million for the years ended December 31, 2025 and 2024, respectively. As of June 30, 2026, we had an accumulated deficit of $498.7 million. We expect to incur significant expenses for the foreseeable future as we continue commercialization of YUTREPIA and advance our product candidates through clinical trials, seek regulatory approval of such product candidates and pursue commercialization of any such approved product candidates. These efforts require significant amounts of capital, adequate personnel and infrastructure, and extensive compliance-reporting capabilities. It is uncertain whether and when, if ever, we will realize sustained revenue from sales of such additional product candidates. Additionally, our HCR Agreement contains fixed quarterly payments and minimum cash covenants that require us to maintain cash and cash equivalents in an amount at least equal to $15.0 million for the remainder of the payment term, which based on amounts funded as of June 30, 2026, is expected to conclude in 2033.

Previous wording

We primarily generate service revenue pursuant to the Promotion Agreement, under which we receive a 50% share in the profit derived from the sale of Treprostinil Injection in the United States. Liquidia PAH has the exclusive rights to conduct commercial activities to encourage the appropriate use of Treprostinil Injection. To administer Treprostinil Injection through subcutaneous injection, patients currently must use the CADD-MS 3 infusion pump manufactured by ICU Medical. ICU Medical no longer manufactures or supports the CADD-MS 3 infusion pump. Although we believe that the number of available CADD-MS 3 infusion pumps will be sufficient to serve patients through at least the end of 2026, it is possible that the availability of CADD-MS 3 infusion pumps could end earlier. Due to this limitation in the availability of pumps, specialty pharmacies will limit the number of patients that they place on subcutaneous Treprostinil Injection therapy in order to ensure that patients placed on subcutaneous administration of Treprostinil Injection will not have to discontinue such treatment due to the unavailability of CADD-MS infusion pumps. Until we and/or Sandoz are able to obtain a pump to replace the CADD-MS 3 infusion pump, if ever, the number of patients that can receive

Current wording

We primarily generate service revenue pursuant to the Promotion Agreement, under which we receive a 50% share in the profit derived from the sale of Treprostinil Injection in the United States. Liquidia PAH has the exclusive rights to conduct commercial activities to encourage the appropriate use of Treprostinil Injection. To administer Treprostinil Injection through subcutaneous injection, patients currently must use the CADD-MS 3 infusion pump manufactured by ICU Medical. ICU Medical no longer manufactures or supports the CADD-MS 3 infusion pump. Although we believe that the number of available CADD-MS 3 infusion pumps will be sufficient to serve patients through at least the end of 2026, it is possible that the availability of CADD-MS 3 infusion pumps could end earlier. Due to this limitation in the availability of pumps, specialty pharmacies will limit the number of patients that they place on subcutaneous Treprostinil Injection therapy in order to ensure that patients placed on subcutaneous administration of Treprostinil Injection will not have to discontinue such treatment due to the unavailability of CADD-MS infusion pumps. Until we and/or Sandoz are able to obtain a pump to replace the CADD-MS 3 infusion pump, if ever, the number of patients that can receive subcutaneous administration of Treprostinil Injection will continue to be constrained. Revenue will continue to be impacted unless and until alternative pumps are available.

Previous wording

Comparison of the Three Months Ended March 31, 2026 and 2025

Current wording

Comparison of the Three and Six Months Ended June 30, 2026 and 2025

Previous wording

Product sales, net, were $129.9 millionfor the three months ended March 31, 2026. We began shipping YUTREPIA to our customers in the United States in June 2025, following receipt of full FDA approval for YUTREPIA on May 23, 2025. We did not recognize any revenue from product sales during the three months ended March 31, 2025.

Current wording

Product sales, net, were $170.4 million for the three months ended June 30, 2026, compared to $6.5 million for the three months ended June 30, 2025. We began shipping YUTREPIA to our customers in the United States in June 2025, following receipt of full FDA approval for YUTREPIA on May 23, 2025. The increase of $163.9 million was due to higher volume of YUTREPIA sales.

Previous wording

Service revenue, net, was $3.0 million for the three months ended March 31, 2026, compared to $3.1 million for the three months ended March 31, 2025. Service revenue, net was related primarily tothe Promotion Agreement. The decrease of $0.1 million was primarily due to the impact of unfavorable gross-to-net chargeback and managed care adjustments.

Current wording

Service revenue, net, was $1.3 million for the three months ended June 30, 2026, compared to $2.3 million for the three months ended June 30, 2025. Service revenue, net was related primarily to the Promotion Agreement. The decrease of $1.0 million was primarily due to the impact of unfavorable gross-to-net adjustments.

Previous wording

Cost of product sales was $11.1 million for the three months ended March 31, 2026. Cost of products sales is related to sales of YUTREPIA. We did not record any cost of product sales during the three months ended March 31, 2025.

Current wording

Cost of product sales was $10.8 million for the three months ended June 30, 2026, compared to $0.2 million for the three months ended June 30, 2025. Cost of products sales is related to sales of YUTREPIA. The increase of $10.6 million was primarilydue to higher volume of YUTREPIA sales.

Previous wording

Cost of service revenue was $0.8 million for the three months ended March 31, 2026, compared to $1.5 million for the three months ended March 31, 2025. The decrease from 2025 to 2026 reflects a lower allocation of the cost of our commercial field force to Treprostinil Injection resulting from the commercial launch of YUTREPIA in the second quarter of 2025.

Current wording

Cost of service revenue was $0.8 million for the three months ended June 30, 2026, compared to $1.3 million for the three months ended June 30, 2025. The decrease from 2025 to 2026 reflects a lower allocation of the cost of our commercial field force to Treprostinil Injection resulting from the commercial launch of YUTREPIA in the second quarter of 2025.

Previous wording

Research and development expenses were $12.6 million for the three months ended March 31, 2026, compared to $7.0 million for the three months ended March 31, 2025. The increase of $5.6 million or 80% was due primarily to a $2.5 million increase in clinical expenses for our L606 program, a $1.8 million increase in expenses related to our YUTREPIA research and development activities, and a $1.1 million increase in personnel expenses driven by higher headcount.

Current wording

Research and development expenses were $17.2 million for the three months ended June 30, 2026, compared to $6.0 million for the three months ended June 30, 2025. The increase of $11.2 million or 185% was primarily due to a $7.0 million increase in expenses for our L606 program, a $2.0 million increase in expenses related to our YUTREPIA research and development activities, $0.9 million increase in personnel expenses driven by higher headcount, and a $1.0 million L606 development milestone recognized during the second quarter of 2026.

Previous wording

Selling, general and administrative expenses were $46.9 million for the three months ended March 31, 2026, compared to $30.1 million for the three months ended March 31, 2025. The increase of $16.8 million or 56% was primarily due toan $8.6 million increase in personnel expenses and a $1.7 million increase in stock-based compensation driven by higher headcount, a $7.9 million increase in commercial and consulting expenses to support the commercialization of YUTREPIA, and a $1.0 million increase in facilities and infrastructure expenses. These increases were partially offset by a $3.7 million decrease in legal fees related to our ongoing YUTREPIA-related litigation.

Current wording

Selling, general and administrative expenses were $104.4 million for the six months ended June 30, 2026, compared to $68.9 million for the six months ended June 30, 2025. The increase of $35.5 million or 52% was primarily due to a $18.6 million increase in personnel expenses and a $4.8 million increase in stock-based compensation driven by higher headcount, a $16.5 million increase in commercial and consulting expenses to support the commercialization of YUTREPIA, and a $1.2 million increase in facilities and infrastructure expenses. These increases were partially offset by a $9.1 million decrease in legal fees related to our ongoing YUTREPIA-related litigation.

Previous wording

Total other expense, net was $4.7 million for the three months ended March 31, 2026, compared to $2.9 million for the three months ended March 31, 2025. The increase of $1.8 million was primarily attributable to the higher borrowings under the HCR Agreement.

Current wording

Total other expense, net was $3.8 million for the three months ended June 30, 2026, compared to $4.1 million for the three months ended June 30, 2025. The decrease of $0.3 million was primarily attributable to higher money market balances offset by higher borrowings under the HCR Agreement.

Previous wording

Income tax expense was $3.9 million for the three months ended March 31, 2026. We did not recognize any income tax expense during the three months ended March 31, 2025.

Current wording

Income tax expense was $7.0 million for the three months ended June 30, 2026. We did not recognize any income tax expense during the three months ended June 30, 2025.

Previous wording

We have financed our growth and operations through a combination of funds generated from revenues, the issuance of convertible preferred stock and common stock, bank borrowings, the issuance of convertible notes, and other long-term debt. Our principal uses of cash have been for working capital requirements and capital expenditures. As of March 31, 2026, we had cash and cash equivalents of $222.8 million, stockholders’ equity of $108.6 million, and an accumulated deficit of $573.5 million.

Current wording

We have financed our growth and operations through a combination of funds generated from revenues, the issuance of convertible preferred stock and common stock, bank borrowings, the issuance of convertible notes, and other long-term debt. Our principal uses of cash have been for working capital requirements and capital expenditures. As of June 30, 2026, we had cash and cash equivalents of $284.2 million, stockholders’ equity of $195.1 million, and an accumulated deficit of $498.7 million.

Previous wording

In January 2023, we entered into the HCR Agreement, as amended, pursuant to which HCR has paid us an aggregate investment amount of $175.0 million (the “Investment Amount”). $25.0 million remains available for funding upon mutual agreement of HCR and us. See Note 11Long-term Debt to the condensed consolidated financial statements appearing elsewhere in this Quarterly Report on Form 10-Q for further information.

Current wording

In January 2023, we entered into the HCR Agreement, as amended, pursuant to which HCR has paid us an aggregate investment amount of $175.0 million. $25.0 million remains available for funding upon mutual agreement of HCR and us. See Note 11Long-term Debt to the condensed consolidated financial statements appearing elsewhere in this Quarterly Report on Form 10-Q for further information.

Previous wording

Net cash provided by operating activities increased $83.7 million to $53.0 million for the three months ended March 31, 2026, compared to net cash used in operating activities of $30.7 million for the three months ended March 31, 2025. The increase was primarily due to $94.4 million higher net income adjusted for non-cash items offset by unfavorable working capital changes of $10.7 million.

Current wording

Net cash provided by operating activities increased $203.4 million to $133.2 million for the six months ended June 30, 2026, compared to net cash used in operating activities of $70.2 million for the six months ended June 30, 2025. The increase was primarily due to $216.1 million higher net income adjusted for non-cash items offset by unfavorable working capital changes of $12.8 million.

Previous wording

Net cash used in investing activities was $2.8 million for the three months ended March 31, 2026, compared to $0.3 million for the three months ended March 31, 2025. During the three months ended March 31, 2026 and 2025, net cash used in investing activities related to property, plant and equipment purchases.

Current wording

Net cash used in investing activities was $15.1 million for the six months ended June 30, 2026, compared to $1.4 million for the six months ended June 30, 2025. During the six months ended June 30, 2026, we used $14.1 million to purchase property, plant and equipment and paid a $1.0 million L606 development milestone payment. During the six months ended June 30, 2025, net cash used in investing activities related to property, plant, and equipment purchases.

Previous wording

ended March 31, 2026, we made $20.0 million in payments under the HCR Agreement. These outflows were offset by $1.8 million from the issuance of common stock under stock incentive plans. During the three months ended March 31, 2025, we received $25.0 million net proceeds from the HCR Agreement and $1.3 million from the issuance of common stock under stock incentive plans. These inflows were offset by $2.1 million in payments under the HCR Agreement.

Current wording

Net cash used in financing activities was $24.7 million during the six months ended June 30, 2026, compared to $72.0 million provided by financing activities during the six months ended June 30, 2025. During the six months ended June 30, 2026, we made $28.0 million in payments under the HCR Agreement. These outflows were offset by $3.2 million received from the issuance of common stock under stock incentive plans. During the six months ended June 30, 2025, we received $75.0 million net proceeds from the HCR Agreement and $1.4 million from the issuance of common stock under stock incentive plans. These inflows were offset by $5.0 million in payments under the HCR Agreement.

Previous wording

Under the UNC License Agreement, the Company is obligated to pay UNC royalties equal to a low single digit percentage of all net sales, as defined in the UNC License Agreement, 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.

Current wording

Under the UNC License Agreement, we are obligated to pay UNC royalties equal to a low single digit percentage of all net sales, as defined in the UNC License Agreement, 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.

Previous wording

In June 2023, we entered into a License Agreement with Pharmosa pursuant to which we were granted an exclusive license in North America to develop and commercialize L606, an inhaled, sustained-release liposomal formulation of treprostinil currently being evaluated in a clinical trial for the treatment of PAH and PH-ILD. In October 2024, we and Pharmosa amended the agreement to expand our licensed territory to include key markets in Europe, Japan and elsewhere, in addition to licensing proprietary nebulizers controlled by Pharmosa and being evaluated for use in a planned global pivotal study for the treatment of PH-ILD. In consideration for these exclusive rights, we will pay Pharmosa potential development milestone payments tied to clinical development and approvals in PAH and/or PH-ILD of up to $37.75 million, potential sales milestones of up to $185 million in North America and $150 million outside North American 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 by the FDA after PAH and PH-ILD and each additional product approved by the FDA under the license, a $2 million milestone payment for each additional indication approved by the EMA after PAH and PH-ILD, and a $0.5 million milestone payment for each additional indication approved by the PMDA after PAH and PH-ILD. As of March 31, 2026, no development milestones have been achieved under the Pharmosa License Agreement.

Current wording

Under the Pharmosa License Agreement, we were granted an exclusive license in North America to develop and commercialize L606, an inhaled, sustained-release liposomal formulation of treprostinil currently being evaluated in a clinical trial for the treatment of PAH and PH-ILD. Under the First Amendment, we expanded our licensed territory to include key markets in Europe, Japan and elsewhere, in addition to licensing proprietary nebulizers controlled by Pharmosa and being evaluated for use in a global pivotal study for the treatment of PH-ILD. In consideration for these exclusive rights, we will pay Pharmosa potential development milestone payments tied to clinical development and approvals in PAH and/or PH-ILD of up to $37.75 million, potential sales milestones of up to $185 million in North America and $150 million outside North American 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 by the FDA after PAH and PH-ILD and each additional product approved by the FDA under the license, a $2 million milestone payment for each additional indication approved by the EMA after PAH and PH-ILD, and a $0.5 million milestone payment for each additional indication approved by the PMDA after PAH and PH-ILD. As of June 30, 2026, no development milestones have been achieved under the Pharmosa License Agreement.

Previous wording

In October 2025, we entered into an exclusive licensing agreement (the “Vectura License Agreement”) with Vectura Limited (“Vectura”), which provided for, among other things, (i) the exclusive right for us to develop, manufacture and commercialize for use in the United States (the “Territory”) products containing treprostinil, including L606, administered via Vectura’s nebulizer device (the “Vectura Device”) for treatment in the field of hypertension and interstitial lung diseases, including PAH and PH-ILD and (ii) that Vectura shall be responsible for manufacturing and supplying us with clinical and commercial supplies of the Vectura Device. Under the Vectura License Agreement, we paid Vectura an upfront payment of $2.0 million and will pay (i) certain development milestone payments of up to $12.0 million; (ii) certain sales milestone payments of up to $92.5 million tied to commercial sales in the Territory and (iii) royalty payments with royalty rates ranging in the middle single digits tied to commercial sales in the Territory. As of March 31, 2026, no development milestones have been achieved under the Vectura License Agreement. The Vectura License Agreement also provides us with rights of first negotiation to add additional territories and indications during the term thereof.

Current wording

The Vectura License Agreement provides for, among other things, (i) the exclusive right for us to develop, manufacture and commercialize for use in the Vectura Territory products containing treprostinil, including L606, administered via the Vectura Device for treatment in the field of hypertension and interstitial lung diseases, including PAH and PH-ILD, and (ii) that Vectura shall be responsible for manufacturing and supplying us with clinical and commercial supplies of the Vectura Device. Under the Vectura License Agreement, we paid Vectura an upfront payment of $2.0 million and will pay (i) certain development milestone payments of up to $12.0 million; (ii) certain sales milestone payments of up to $92.5 million tied to commercial sales in the Vectura Territory and (iii) royalty payments with royalty rates ranging in the middle single digits tied to commercial sales in the Vectura Territory. As of June 30, 2026, development milestones of $1.0 million has been achieved and paid under the Vectura License Agreement. The Vectura License Agreement also provides us with rights of first negotiation to add additional territories and indications during the term thereof.

Previous wording

On July 14, 2023, we entered into an Amended and Restated Commercial Manufacturing Services and Supply Agreement with Lonza, which was amended on January 7, 2025 (collectively, the “CSA”). Pursuant to the terms of the CSA, we deliver bulk treprostinil powder, manufactured using our proprietary PRINT technology, and Lonza encapsulates and packages it. The CSA was effective upon signing and will be in effect until December 31, 2028 and may thereafter be extended upon the mutual written agreement of the parties in accordance with the terms of the CSA. We are required to provide Lonza with quarterly forecasts of our expected production requirements for the following 24-

Current wording

Under the CSA, we deliver bulk treprostinil powder, manufactured using our proprietary PRINT technology, and Lonza encapsulates and packages it. The CSA was effective upon signing and will be in effect until December 31, 2028 and may thereafter be extended upon the mutual written agreement of the parties in accordance with the terms of the CSA. 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

Previous wording

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 of YUTREPIA. The CSA provides for tiered pricing depending upon the batch size ordered.

Current wording

minimum annual order quantities, which may be adjusted by us after the thirteenth month after receipt of regulatory approval of YUTREPIA. The CSA provides for tiered pricing depending upon the batch size ordered.

Previous wording

In addition, on January 10, 2020, we entered into a multi-year supply agreement with LGM to supply 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. The agreement expires five years from the first marketing authorization approval of YUTREPIA.

Current wording

In addition, on January 10, 2020, we entered into a multi-year supply agreement with LGM to supply APIs 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. The agreement expires five years from the first marketing authorization approval of YUTREPIA.

Previous wording

As of March 31, 2026, we have non-cancelable commitments for product manufacturing and supply costs of approximately $58.1 million.

Current wording

As of June 30, 2026, we have non-cancelable commitments for product manufacturing and supply costs of approximately $69.1 million.

Previous wording

We are party to three operating leases for laboratory, manufacturing, and office space. These leases expire on January 31, 2028, with an option to extend for an additional year with appropriate notice; December 31, 2031, with an option to extend for an additional period of five years with appropriate notice; and on November 1, 2036, with the option to extend for two additional periods of five years each with appropriate notice. Minimum operating lease payments under these leases are $1.8 million in the remaining nine months of 2026, $5.1 million in 2027, $5.0 million in 2028, $5.1 million in 2029, $5.3 million in 2030, and $24.3 million thereafter.

Current wording

We are party to three operating leases for laboratory, manufacturing, and office space. These leases expire on January 31, 2028, with an option to extend for an additional year with appropriate notice; December 31, 2031, with an option to extend for an additional period of five years with appropriate notice; and on November 1, 2036, with the option to extend for two additional periods of five years each with appropriate notice. Minimum operating lease payments under these leases are $1.4 million in the remaining six months of 2026, $5.1 million in 2027, $5.0 million in 2028, $5.1 million in 2029, $5.3 million in 2030, and $24.3 million thereafter.

Previous wording

Net product revenues from the sale of YUTREPIA are recorded at the transaction price, which reflects gross product sales reduced by corresponding gross-to-net (“GTN”) adjustments, including estimated discounts, government chargebacks, government rebates, specialty distributor fees, copay assistance, and returns. These GTN adjustments represent variable consideration under ASC 606 and are estimated using the expected value method or most likely amount method and are recorded when revenue is recognized on the sale of the product. GTN adjustments are based on available information including the contractual terms with customers, historical trends, industry analogs, communications with customers, and the levels of inventory remaining in the distribution channel, as well as expectations about the market for the product and anticipated introduction of competitive products, in combination with management’s informed judgments. Overall, these reserves reflect our best estimates of the amount of net cash proceeds we expect to realize from collection of current period gross sales less fees, discounts, and allowances and future

Current wording

Net product revenues from the sale of YUTREPIA are recorded at the transaction price, which reflects gross product sales reduced by corresponding gross-to-net (“GTN”) adjustments, including estimated discounts, government chargebacks, government rebates, specialty distributor fees, copay assistance, and returns. These GTN adjustments represent variable consideration under ASC 606 and are estimated using the expected value method or most likely amount method and are recorded when revenue is recognized on the sale of the product. GTN adjustments are based on available information including the contractual terms with customers, historical trends, industry analogs, communications with customers, and the levels of inventory remaining in the distribution channel, as well as expectations about the market for the product and anticipated introduction of competitive products, in combination with management’s informed judgments. Overall, these reserves reflect our best estimates of the amount of net cash proceeds we expect to realize from collection of current period gross sales less fees, discounts, and allowances and future estimated cash disbursements for the various GTN categories. These estimates are determined using a complex process which requires significant judgment and variances between actual and estimated amounts could have a material impact on our condensed consolidated financial statements.