LIQUIDIA CORPORATION
| PART I | | 4 |
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| Item 1. | Business | 4 |
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| Item 1A. | Risk Factors | 30 |
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| Item 1B. | Unresolved Staff Comments | 73 |
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| Item 1C. | Cybersecurity | 74 |
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| Item 2. | Properties | 75 |
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| Item 3. | Legal Proceedings | 75 |
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| Item 4. | Mine Safety Disclosures | 75 |
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| PART II | | 76 |
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| Item 5. | Market For Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities | 76 |
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| Item 6. | [Reserved] | 76 |
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| Item 7. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 77 |
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| Item 7A. | Quantitative and Qualitative Disclosures About Market Risk | 87 |
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| Item 8. | Financial Statements and Supplementary Data | 87 |
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| Item 9. | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure | 87 |
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| Item 9A. | Controls and Procedures | 87 |
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| Item 9B. | Other Information | 89 |
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| Item 9C. | Disclosure Regarding Foreign Jurisdictions that Prevent Inspections | 90 |
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| PART III | | 91 |
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| Item 10. | Directors, Executive Officers and Corporate Governance | 91 |
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| Item 11. | Executive Compensation | 91 |
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| Item 12. | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters | 92 |
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| Item 13. | Certain Relationships and Related Transactions, and Director Independence | 93 |
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| Item 14. | Principal Accounting Fees and Services | 93 |
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| PART IV | | 94 |
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| Item 15. | Exhibits and Financial Statement Schedules | 94 |
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This Annual Report on Form 10-K, or this Annual Report, includes our trademarks, trade names and service marks, such as Liquidia, the Liquidia logo, YUTREPIA and PRINT, or Particle Replication In Non-wetting Templates, which are protected under applicable intellectual property laws and are the property of Liquidia Technologies, Inc. This Annual Report also contains trademarks, trade names and service marks of other companies, which are the property of their respective owners. Solely for convenience, trademarks, trade names and service marks referred to in this Annual Report on Form 10-K may appear without the ®, ™ or SM symbols, but such references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights or the right of the applicable licensor to these trademarks, trade names and service marks. We do not intend our use or display of other parties’ trademarks, trade names or service marks to imply, and such use or display should not be construed to imply, a relationship with, or endorsement or sponsorship of us by, these other parties.
Cautionary Note Regarding Forward-Looking Statements
This Annual Report on Form 10-K contains forward-looking statements. All statements other than statements of historical facts contained in this Annual Report may be forward-looking statements. The forward-looking statements are contained principally in the sections entitled “Risk Factors,” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, but are also contained elsewhere in this Annual Report. In some cases, you can identify forward-looking statements by terms such as “may,” “might,” “will,” “should,” “expects,” “plans,” “anticipates,” “could,” “would,” “intends,” “targets,” “projects,” “contemplates,” “believes,” “estimates,” “predicts,” “potential” or “continue” or the negative of these terms or other similar expressions. Forward-looking statements involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Forward-looking statements include, but are not limited to, statements about:
| ● | the timing of and our ability to obtain and maintain regulatory approvals for our product candidates, including YUTREPIA, the potential for, and timing regarding, eventual final approval by the FDA (as defined below) of and our ability to commercially launch YUTREPIA, including the potential impact of regulatory review, approval, and exclusivity developments which may occur for competitors; |
| ● | the timeline or outcome related to our patent litigation with United Therapeutics that was filed in the U.S. District Court for the District of Delaware, the inter partes reviews with the Patent Trial and Appeal Board of the U.S. Patent and Trademark Office, our trade secret litigation with United Therapeutics that was filed in the Superior Court for Durham County, North Carolina, the lawsuit filed by United Therapeutics against the FDA in the U.S. District Court for the District of Columbia, or any future litigation with United Therapeutics or any other third party, including any related rehearings or appeals; |
| ● | the timing and our business partners’ ability to obtain and maintain regulatory clearance for the infusion pump that we are developing with Sandoz (as defined below) and Mainbridge (as defined below); |
| ● | the timing and our ability to obtain and maintain regulatory approval for L606, an investigational, liposomal formulation of treprostinil that we licensed from Pharmosa (as defined below); |
| ● | our ability to continue operations as a going concern without obtaining additional funding; |
| ● | our expectations regarding the size of the patient populations for, market acceptance and opportunity for those drug products that we commercialize in collaboration with third parties, including Sandoz’s first-to-file fully substitutable generic treprostinil injection; |
| ● | the availability and market acceptance of medical devices and components of medical devices used to administer our drug products and drug products that we commercialize with third parties, including Smiths Medical’s CADD-MS 3 infusion pump, the RG 3ml Medication Cartridge that we developed in collaboration with Chengdu Shifeng Medical Technologies LTD. used for the subcutaneous administration of Sandoz’s generic treprostinil injection, Smiths Medical’s CADD Legacy and CADD-Solis infusion pumps used for the intravenous administration of Sandoz’s generic treprostinil injection, the infusion pump that we are developing with Sandoz and Mainbridge for the subcutaneous administration of Sandoz’s generic treprostinil injection, Plastiape’s RS00 Model 8 dry powder inhaler, which we plan to use for the administration of YUTREPIA, and any devices used for the administration of L606; |
| ● | our ability to draw down on our financing facility with HCR (as defined below) and our ability to satisfy the covenants contained in the RIFA (as defined below); |
| ● | our ability to retain, attract and hire key personnel; |
| ● | prevailing economic, market and business conditions; |
| ● | our ability to predict, foresee, and effectively address or mitigate future developments resulting from health epidemics, such as the COVID-19 pandemic, or other global shutdowns, which could include a negative impact on the availability of key personnel, the temporary closure of our facility or the facilities of our business partners, suppliers, third-party service providers or other vendors, or delays in payments or purchasing decisions, or the interruption of domestic and global supply chains, the economy and capital or financial markets; |
| ● | the cost and availability of capital and any restrictions imposed by lenders or creditors; |
| ● | changes in the industry in which we operate; |
| ● | the failure to renew, or the revocation of, any license or other required permits; |
| ● | unexpected charges or unexpected liabilities arising from a change in accounting policies, including any such changes by third parties with whom we collaborate and from whom we receive a portion of their net profits, or the effects of acquisition accounting varying from our expectations; |
| ● | the risk that the credit ratings of our company or our subsidiaries may be different from what the companies expect, which may increase borrowing costs and/or make it more difficult for us to pay or refinance our debts and require us to borrow or divert cash flow from operations in order to service debt payments; |
| ● | fluctuations in interest rates; |
| ● | adverse outcomes of pending or threatened litigation or governmental investigations, including our ongoing litigation with United Therapeutics and any future litigation with United Therapeutics or any other third party; |
| ● | the effects on our company or our subsidiaries of future regulatory developments or legislative actions, including changes in healthcare, environmental and other laws and regulations to which we are subject; |
| ● | conduct of and changing circumstances related to third-party relationships on which we rely, including the level of credit worthiness of counterparties; |
| ● | the volatility and unpredictability of the stock market and credit market conditions; |
| ● | conditions beyond our control, such as natural disasters, global pandemics (including COVID-19), or acts of war or terrorism; |
| ● | variations between the stated assumptions on which forward-looking statements are based and our actual experience; |
| ● | other legislative, regulatory, economic, business, and/or competitive factors; |
| ● | our plans to develop and commercialize our product candidates; |
| ● | our planned clinical trials for our product candidates; |
| ● | the timing of the availability of data from our clinical trials; |
| ● | the timing and related contents of our planned regulatory filings and/or applications; |
| ● | the timing of and our ability to obtain and maintain regulatory approvals for our product candidates; |
| ● | the clinical utility of our product candidates and their potential advantages compared to other treatments; |
| ● | our commercialization, marketing and distribution capabilities and strategy; |
| ● | our ability to establish and maintain arrangements for the manufacture of our product candidates and the ability and sufficiency of our current manufacturing facilities to produce development and commercial quantities of our product candidates; |
| ● | our ability to establish and maintain collaborations; |
| ● | our estimates regarding the market opportunities for our product candidates; |
| ● | our intellectual property position and the duration of our patent rights; |
| ● | fluctuations in the trading price of our common stock; |
| ● | our estimates regarding future expenses, capital requirements and needs for additional financing; and |
| ● | our expected use of proceeds from prior public offerings and the period over which such proceeds, together with our available cash, will be sufficient to meet our operating needs. |
You should refer to the “Risk Factors” section of this Annual Report on Form 10-K for a discussion of important factors that may cause our actual results to differ materially from those expressed or implied by our forward-looking statements. The forward-looking statements in this Annual Report on Form 10-K are only predictions, and we may not actually achieve the plans, intentions or expectations included in our forward-looking statements. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we
believe may affect our business, financial condition and results of operations. Because forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified, you should not rely on these forward-looking statements as predictions of future events. The events and circumstances reflected in our forward-looking statements may not be achieved or occur and actual results could differ materially from those projected in the forward-looking statements.
These forward-looking statements speak only as of the date of this Annual Report on Form 10-K. While we may elect to update these forward-looking statements at some point in the future, we have no current intention of doing so except to the extent required by applicable law. You should therefore not rely on these forward-looking statements as representing our views as of any date subsequent to the date of this Annual Report on Form 10-K.
Unless the context otherwise requires, references in this Annual Report on Form 10-K to“we,” “us”,“our”,“Liquidia”* and the*“Company”* refer to Liquidia Corporation, a Delaware corporation, and unless specified otherwise, include our wholly owned subsidiaries, Liquidia Technologies, Inc., a Delaware corporation, or Liquidia Technologies, and Liquidia PAH, LLC (formerly known as RareGen, LLC, or RareGen), a Delaware limited liability company, or Liquidia PAH.*
