Liquidia Corp
For the period ended Jun 30, 2025. Filed Aug 12, 2025.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2025 · Filed Aug 12, 2025
LQDA$44.40-0.2%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2025-03-31; filed 2025-05-08.
0001558370-25-006848
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-06-30; filed 2025-08-12.
0001558370-25-011139
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 91 previous paragraphs and 97 current paragraphs.
31 unchanged; 40 reworded; 23 added; 18 removed; 2 previous and 3 current paragraphs rearranged.
Tables are not compared: 23 previous and 12 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (23)
Current report
We currently generate revenue through the sale YUTREPIA (treprostinil) inhalation powder (“YUTREPIA”) and pursuant to a promotion agreement with Sandoz Inc. (“Sandoz”), dated as of August 1, 2018, as amended (the “Promotion Agreement”), under which we share profit derived from the sale of Sandoz’s generic treprostinil injection (“Treprostinil Injection”) in the United States.
Current report
Treprostinil Injection is a fully-substitutable generic treprostinil for parenteral administration in the United States. We have the exclusive rights to conduct commercial activities for Treprostinil Injection and work jointly with Sandoz on commercial strategy for the product. Sandoz retains all rights in and to Treprostinil Injection and holds the Abbreviated New Drug Application (“ANDA”) for Treprostinil Injection.
Current report
Recent Events
Current report
On May 23, 2025, YUTREPIA was approved by the FDA for the treatment of PAH and PH-ILD.
Current report
On June 23, 2025, HCR funded an additional $50.0 million under the HCR Agreement.
Current report
We began generating revenue from the sales of YUTREPIA in June 2025, following the FDA approval on May 23, 2025, for the treatment of PAH and PH-ILD. Revenues from product sales are recognized net of variable consideration due to rebates, chargebacks, trade discounts and allowances, sales returns, and other incentives. Provisions for estimated reductions to revenue are provided for in the same period the related sales are recorded and are based on contractual terms, actual utilization data, forecasted payor mix, total prescriptions and industry data. We expect product sales to increase if we are able to maintain FDA approval for YUTREPIA, gain market share and YUTREPIA obtains insurance coverage from third-party payors.
Current report
Cost of Product Sales
Current report
Cost of product sales includes direct and indirect costs related to the manufacturing of inventory products sold, including third-party manufacturing costs, packaging services, freight, storage costs, allocation of overhead costs of employees involved with manufacturing and net sales-based royalty expense. We expect to use inventory previously expensed to research and development within the next six months, and accordingly, we expect our cost of product sales of YUTREPIA to increase as a percentage of product sales in future periods as we produce and sell inventory that reflects the full cost of manufacturing YUTREPIA.
Current report
Cost of Service Revenue
Current report
Selling, General and Administrative Expenses
Current report
Product sales, net, were$6.5 millionfor the three and six 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. We did not recognize any revenue from product sales during the three and six months ended June 30, 2024.
Current report
Service revenue, net, was $5.4 million for the six months ended June 30, 2025, compared to $6.6 million for the six months ended June 30, 2024. Service revenue, net related primarily tothe Promotion Agreement. The decrease of $1.2 million was primarily due to lower sales volumes in the current year.
Current report
Cost of Product Sales
Current report
Cost of product sales was $0.2 million for the three and six months ended June 30, 2025 and related to sales of YUTREPIA. We did not record any cost of product sales for three and six months ended June 30, 2024.
Current report
Cost of Service Revenue
Current report
Research and development expenses were $13.0 million for the six months ended June 30, 2025, compared to $19.5 million for the six months ended June 30, 2024. The decrease of $6.5 million or 33% was primarily due to a $6.3 million decrease in personnel expenses (including stock-based compensation) due to a shift from activities related to research and development to the commercialization of YUTREPIA, a $1.5 million decrease in expenses related to our YUTREPIA research and development activities, and a $0.9 million decrease in facilities and infrastructure expenses. These decreases were offset by a $2.8 million increase in clinical expenses for our L606 program, primarily related to our planned global pivotal study for the treatment of PH-ILD.
Current report
Selling, General, and Administrative Expenses
Current report
Selling, general and administrative expenses were $38.8 million for the three months ended June 30, 2025, compared to $19.9 million for the three months ended June 30, 2024. The increase of $18.9 million or 95% was primarily due to a $8.8 million increase in personnel expenses (including stock-based compensation) driven by higher headcount and a shift from activities related to research and development to the commercialization of YUTREPIA, a $5.8 million increase in legal fees related to our ongoing YUTREPIA-related litigation, a $2.3 million increase in commercial and consulting expenses to support the commercialization of YUTREPIA, and a $1.3 million increase in facilities and infrastructure expenses.
Current report
Total other expense, net was $7.0 million for the six months ended June 30, 2025, compared with $2.8 million for the six months ended June 30, 2024. The increase of $4.2 million was primarily driven attributable to the higher borrowings under the HCR Agreement.
Current report
We believe we will have sufficient cash and cash equivalents to meet our financial obligations and minimum cash covenants for at least the next twelve months. Included in our assessment are anticipated cash inflows from YUTREPIA product sales. We cannot guarantee our estimates regarding our ability to generate significant revenue from YUTREPIA and the resources needed to support development of L606 are accurate. We have based our estimates on assumptions that
Current report
may prove to be wrong, and we could be limited in our ability to continue to commercialize YUTREPIA and/or use our available capital resources sooner than we currently expect. In the event revenues from YUTREPIA are insufficient to support our business operations and future capital needs, we expect that we would need further financing or we could be forced to delay, limit, reduce or terminate clinical studies or other ongoing activities, which could have a material adverse effect on our business, results of operations, and financial condition.
Current report
Revenue Recognition
Current report
Net product revenues from the sale of YUTRPEPIA 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.
Removed paragraphs (18)
Previous report
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.
Previous report
after expiry of the three-year regulatory exclusivity for Tyvaso DPI on May 23, 2025. In March 2025, we resubmitted a request for final approval of YUTREPIA for both PAH and PH-ILD. The FDA has confirmed that the resubmission was a complete, Class 1 response to the previous action letter and has set a PDUFA goal date of May 24, 2025.
Previous report
Revenue
Previous report
Cost of Revenue
Previous report
Our expenditures are subject to additional uncertainties, including the terms and timing of regulatory approvals. We may never succeed in achieving regulatory approval for any of our product candidates. We may obtain unexpected results from our clinical trials. We may elect to discontinue, delay or modify clinical trials of some product candidates or focus on others. A change in the outcome of any of these variables with respect to the development of a product candidate could mean a significant change in the costs and timing associated with the development of that product candidate. For example, if the FDA or other regulatory authorities were to require us to conduct clinical trials beyond those that we currently anticipate, or if we experience significant delays in enrollment in any of our clinical trials, or our ability to manufacture and supply product, we could be required to expend significant additional financial resources and time on the completion of clinical development. Drug commercialization can take several years and millions of dollars in development costs.
Previous report
General and Administrative Expenses
Previous report
Revenue
Previous report
Cost of Revenue
Previous report
General and Administrative Expenses
Previous report
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. Based on current operating plans and excluding any external financing and potential YUTREPIA sales, we will not have sufficient cash and cash equivalents to fund operating expenses and capital requirements and meet our minimum cash covenants beyond one year from the issuance of these consolidated financial statements included in this Quarterly Report on Form 10-Q, and therefore, we have concluded that there is substantial doubt about our ability to continue as a going concern. Without factoring in potential cash generated from the sales of YUTREPIA and the additional contingent tranche that would become available under the HCR Agreement following first commercial sale and approval of YUTREPIA in PAH and PH-ILD, we will require additional funding over the next twelve months to continue our operations and maintain compliance with debt covenants, and could be required to delay, reduce, or eliminate research and development programs, product portfolio expansion, or commercialization efforts, which could adversely affect our business prospects, or potentially force us to cease operations. See Note 1 “Business” to the condensed consolidated financial statements appearing elsewhere in this Quarterly Report on Form 10-Q for information regarding our ability to continue as a going concern.
Previous report
In December 2022, we entered into a Pump Development Agreement with Mainbridge and 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 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 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.
Previous report
Long-term Debt
Previous report
We recognized a liability related to amounts received pursuant to the HCR Agreement under ASC 470-10,Debt and ASC 835-30,Interest – Imputation of Interest. The liability will be accreted under the effective interest method based upon the amount of contractual future payments to be made pursuant to the HCR Agreement. Amendments are assessed under ASC 470 to determine the appropriate treatment as troubled debt restructurings, extinguishments or modifications. If the timing or amounts of any future payments change, we will prospectively adjust the effective interest and the related amortization of the liability. See Note 12 “Long-term Debt” to the condensed consolidated financial statements appearing elsewhere in this Quarterly Report on Form 10-Q for additional information.
Previous report
Prelaunch Inventory
Previous report
We capitalize prelaunch inventory prior to receiving regulatory approval if regulatory approval and subsequent commercialization of a product is probable and we also expect future economic benefit from the sales of the product to be realized. Prior to this conclusion, we expense prelaunch inventory as research and development expense in the period incurred. For prelaunch inventory that is capitalized, we consider a number of specific facts and circumstances, including the product’s historical shelf life, the product's current status in the development and regulatory approval process, results from related clinical trials, results from meetings with relevant regulatory agencies prior to the filing of regulatory applications, potential obstacles to the approval process, viability of commercialization and market trends. In late 2023, based on our assessment of the legal and regulatory process related to YUTREPIA, we concluded that we met the criteria to capitalize expenditures for prelaunch inventory. We capitalized $16.6 million of prelaunch inventory as of March 31, 2025 and $10.8 million as of December 31, 2024. We do not have an allowance for inventory obsolescence as of March 31, 2025 and as of December 31, 2024. If either regulatory approval or market acceptance post-approval of YUTREPIA do not occur at all or on a timely basis prior to the inventory shelf-life expiration, we may be required to write-off some or all prelaunch inventory, which could affect our financial condition and financial results.
Previous report
Smaller Reporting Company
Previous report
As a “smaller reporting company,” as defined under Rule 12b-2 of the Exchange Act, in addition to providing reduced disclosure about our executive compensation arrangements and business developments, among other reduced disclosure requirements available to smaller reporting companies, we present only two years of audited financial statements in addition to any required unaudited interim financial statements with correspondingly reduced “Management’s Discussion and Analysis of Financial Condition and Results of Operations” disclosure.
Previous report
We will be able to take advantage of these scaled disclosures for so long as (i) our common stock held by non-affiliates is less than $250 million measured on the last business day of our second fiscal quarter, or (ii) our annual revenue is less than $100 million during the most recently completed fiscal year and our common stock held by non-affiliates is less than $700 million measured on the last business day of our second fiscal quarter. To the extent we take advantage of any reduced disclosure obligations, it may make it harder for investors to analyze the Company’s results of operations and financial prospectus in comparison with other public companies. Until we cease to be a smaller reporting company, the scaled-back disclosure in our SEC filings will result in less information about our company being available than for other public companies.
Reworded paragraphs (40)
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, 2025 as compared to the three months ended March 31, 2024. 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, 2024 (except for Part II, Item 8. “Financial Statements and Supplementary Data,” which have been revised in Exhibit 99.1 to our Current Report on Form 8-K filed on May 8, 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, 2025 as compared to the three and six months ended June 30, 2024. 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, 2024 (except for Part II, Item 8. “Financial Statements and Supplementary Data,” which have been revised in Exhibit 99.1 to our Current Report on Form 8-K filed on May 8, 2025), which includes detailed discussions of various items impacting our business, results of operations and financial condition.
Previous wording
We are a biopharmaceutical company focused on the development, manufacture, and commercialization of products that address unmet patient needs, with current focus directed towards rare cardiopulmonary diseases such as PAH and PH-ILD. We operate through our wholly owned operating subsidiaries, Liquidia Technologies and Liquidia PAH, formerly known as RareGen.
Current wording
We are a biopharmaceutical company focused on the development, manufacture, and commercialization of products that address unmet patient needs, with current focus directed towards rare cardiopulmonary diseases such as pulmonary arterial hypertension (“PAH”) and pulmonary hypertension associated with interstitial lung disease (“PH-ILD”). We operate through our wholly owned operating subsidiaries, Liquidia Technologies, Inc. and Liquidia PAH, LLC, formerly known as RareGen.
Previous wording
We currently generate revenue pursuant to the Promotion Agreement between Liquidia PAH and Sandoz, dated as of August 1, 2018, as amended, sharing profit derived from the sale of Sandoz’s 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 PAH and PH-ILD in the United States, as well as key stakeholders involved in the distribution and reimbursement of medicines to treat these patients. We established our commercial presence in the field to support Treprostinil Injection and have since expanded our presence to support the potential launch of YUTREPIA, further validating our reputation as a company committed to supporting PAH and PH-ILD patients.
Current wording
We employ a targeted commercial force calling on healthcare providers involved in the treatment of PAH and PH-ILD in the United States, as well as key stakeholders involved in the distribution and reimbursement of medicines to treat these patients.
Previous wording
Our lead product candidate is YUTREPIA for the treatment of PAH and PH-ILD. 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 effort DPI and by achieving higher dose levels than the labeled doses of current inhaled therapies. On August 16, 2024, the FDA (i) granted tentative approval for our NDA for YUTREPIA for the treatment of PAH and PH-ILD and (ii) simultaneously determined that Tyvaso DPI, approved on May 23, 2022, qualifies for a three-year New Clinical Investigation exclusivity for the chronic use of dry powder formulations of treprostinil for the approved indications. As a result, final approval of YUTREPIA for PAH and PH-ILD is delayed until
Current wording
YUTREPIA is an inhaled dry powder formulation of treprostinil designed with our proprietary PRINT® technology, a particle engineering platform, which enables precise production of uniform drug particles designed to improve the therapeutic profile of treprostinil by enhancing deep lung delivery while using a convenient, low effort dry-powder inhaler (“DPI”) and by achieving higher dose levels than the labeled doses of currently marketed inhaled treprostinil therapies. YUTREPIA was approved by the U.S. Food and Drug Administration (“FDA”) on May 23, 2025 for the treatment of both PAH and PH-ILD, and was commercially launched on June 2, 2025.
Previous wording
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 and PH-ILD with a planned pivotal study for the treatment of PH-ILD.
Current wording
We also conduct research, development and manufacturing of novel products by applying our subject matter expertise in cardiopulmonary diseases. For example, we are currently developing L606, an investigational, liposomal formulation of treprostinil administered twice-daily with a short-duration next-generation nebulizer, which we licensed from Pharmosa Biopharm Inc. (“Pharmosa”). L606 is currently being evaluated in an open-label study in the United States for treatment of PAH and PH-ILD with a planned pivotal study for the treatment of PH-ILD.
Previous wording
Since inception, we have incurred significant operating losses. Our net loss was $38.4 million for the three months ended March 31, 2025 and $128.3 million and $78.5 million for the years ended December 31, 2024 and 2023, respectively. As of March 31, 2025, we had an accumulated deficit of $595.8 million. We expect to incur significant expenses and operating losses for the foreseeable future as we advance our product candidates through clinical trials, seek regulatory approval of such product candidates and pursue 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, 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, 2025, is expected to conclude in 2031.
Current wording
Since inception, we have incurred significant operating losses. Our net loss was $79.9 million for the six months ended June 30, 2025 and $128.3 million and $78.5 million for the years ended December 31, 2024 and 2023, respectively. As of June 30, 2025, we had an accumulated deficit of $637.3 million. We expect to incur significant expenses for the foreseeable future as we initiate 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 realize significant revenue from YUTREPIA sales and, even if our development efforts are successful with other product candidates, whether and when, if ever, we will realize significant 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, 2025, is expected to conclude in 2033.
Previous wording
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. Based on current operating plans and excluding any external financing and potential YUTREPIA sales, we will not have sufficient cash and cash equivalents to fund operating expenses and capital requirements and meet our minimum cash covenants beyond one year from the issuance of these consolidated financial statements included in this Quarterly Report on Form 10-Q, and therefore, we have concluded that there is substantial doubt about our ability to continue as a going concern. Without factoring in potential cash generated from the sales of YUTREPIA and the additional contingent tranche that would become available under the HCR Agreement following first commercial sale and approval of YUTREPIA in PAH and PH-ILD, we will require additional funding over the next twelve months to continue our operations and maintain compliance with debt covenants, and could be required to delay, reduce, or eliminate research and development programs, product portfolio expansion, or commercialization efforts, which could adversely affect our business prospects, or potentially force us to cease operations.
Current wording
Our future funding requirements will be heavily determined by whether we are able to successfully maintain FDA approval for and commercialize YUTREPIA and the resources needed to support further development of our products and product candidates. Based on current operating plans and excluding any additional external financing, we will have sufficient cash and cash equivalents to fund operating expenses and capital requirements and meet our minimum cash covenants beyond one year from the issuance of these consolidated financial statements included in this Quarterly Report on Form 10-Q. We have based this estimate on assumptions that may prove to be wrong, and we could utilize our available capital resources sooner than we currently expect, which would have a material impact on our operations.
Previous wording
We primarily generate 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 2025, 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 are able to obtain a pump to replace the CADD-MS 3 infusion pump, the number of patients that can receive subcutaneous administration of Treprostinil Injection will continue to be constrained. Revenue will continue to be impacted or at risk until alternative pumps are available.
Current wording
We primarily generate 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
Previous wording
Cost of revenue consists of (i) an allocation of the cost of our sales force associated with calling on physicians and hospital pharmacies involved in the treatment of PAH with Treprostinil Injection, as well as key stakeholders involved in the distribution and reimbursement of Treprostinil Injection and (ii) amortization of the intangible asset associated with the Promotion Agreement. We amortize the intangible asset associated with the Promotion Agreement in a manner consistent with our recognition of the related revenue.
Current wording
Cost of service revenue consists of (i) an allocation of the cost of our commercial field force associated with calling on healthcare providers involved in the treatment of PAH with Treprostinil Injection, as well as key stakeholders involved in the distribution and reimbursement of Treprostinil Injection and (ii) amortization of the intangible asset associated with the Promotion Agreement. We amortize the intangible asset associated with the Promotion Agreement in a manner consistent with our recognition of the related revenue.
Previous wording
Research and development expenses consist of expenses incurred in connection with the development of our product candidates. We expense research and development costs as incurred. These expenses include:
Current wording
Research and development expenses are incurred in connection with the development of our products and product candidates. We expense research and development costs as incurred.These expenses include employee-related expenses and stock-based compensation for personnel in research and development functions as well as regulatory costs, third-party costs related to conducting clinical trials, such as expenses incurred under agreements with contract research organizations and the cost of clinical trial materials. Research and development expenses also include costs of acquired product licenses and related technology rights where there is no alternative future use.
Previous wording
Product candidates in later stages of clinical development generally have higher development costs than those in earlier stages of clinical development, primarily due to the increased size and duration of later-stage clinical trials. In the near term we expect that our research and development expenses to increase as we complete manufacturing activities, conduct existing clinical trials, and initiate potential clinical trials. However, levels of research and development spending are highly dependent upon the selection and progression of product candidates. The successful development of our product candidates is highly uncertain. At this time, we cannot reasonably estimate or know the nature, timing and costs of the efforts that will be necessary to complete the remainder of the development of, or when, if ever, material net cash inflows may commence from any of our product candidates. This uncertainty is due to the numerous risks and uncertainties associated with the duration and cost of clinical trials, which vary significantly over the life of a project as a result of many factors, including:
Current wording
We expect our research and development expenses to increase related to planned clinical trials and development of L606, however, levels of research and development spending are inherently uncertain and highly dependent upon the progression of projects and may vary . This uncertainty is due to the numerous risks and uncertainties associated with the duration and cost of clinical trials and the terms and timing of regulatory approvals.
Previous wording
General and administrative expenses consist principally of salaries and related costs, including stock-based compensation, for personnel in executive, administrative, finance, legal, commercial and technical operations functions. Other general and administrative expenses include corporate infrastructure and software costs, patent filing and prosecution costs and professional fees for marketing, legal, auditing and tax services and insurance costs.
Current wording
Selling, general and administrative expenses primarily consist of salaries and related costs, including stock-based compensation, for personnel in executive, administrative, finance, legal, commercial and technical operations functions. Selling, general and administrative expenses also include corporate infrastructure and software costs, patent filing and prosecution costs and professional fees for marketing, litigation, auditing and tax services and insurance. Commercial costs include bona fide service fees related to distribution of YUTREPIA and the cost of certain patient support programs.
Previous wording
Other income (expense) is comprised of interest income and expense. Interest income consists of interest earned on our cash equivalents. Interest expense consists of interest charges on finance leases and long-term debt. These charges include monthly recurring interest on such obligations in addition to interest accretion and amortization of debt discounts and issuance costs to interest expense.
Current wording
Other income (expense) is comprised of interest income and expense. Interest income consists of interest earned on our cash equivalents. Interest expense consists of non-cash interest charges on long-term debt.
Previous wording
Three Months Ended March 31, 2025 compared with the Three Months Ended March 31, 2024
Current wording
Three and Six Months Ended June 30, 2025 compared with the Three and Six Months Ended June 30, 2024
Previous wording
The following table summarizes the results of our operations for the three months ended March 31, 2025 and 2024, together with the changes in those items in dollars and as a percentage (in thousands, except for percentages):
Current wording
The following table summarizes the results of our operations for the three and six months ended June 30, 2025 and 2024, together with the changes in those items in dollars and as a percentage (in thousands, except for percentages):
Previous wording
Revenue was $3.1 million for the three months ended March 31, 2025, compared to $3.0 million for the three months ended March 31, 2024. Revenue related primarily tothe Promotion Agreement. The increase of $0.1 million was primarily due to the impact of unfavorable gross-to-net returns adjustments recorded in the prior year offset by lower sales volumes in the current year.
Current wording
Service revenue, net, was $2.3 million for the three months ended June 30, 2025, compared to $3.7 million for the three months ended June 30, 2024. Service revenue, net related primarily to the Promotion Agreement. The decrease of $1.4 million wasprimarily due to the impact of unfavorable gross-to-net returns and managed care adjustments recorded in the current year.
Previous wording
Cost of revenue was $1.5 million for each of the three months ended March 31, 2025 and 2024. Cost of revenue related to the Promotion Agreement as noted above.
Current wording
Cost of service revenue was $1.3 million for the three months ended June 30, 2025, compared to $1.5 million for the three months ended June 30, 2024 and $2.8 million for the six months ended June 30, 2025, compared to $3.0 million for the six months ended June 30, 2024. Cost of service revenue related to the Promotion Agreement as noted above.
Previous wording
Research and development expenses were $7.0 million for the three months ended March 31, 2025, compared to $10.1 million for the three months ended March 31, 2024. The decrease of $3.1 million or 31% was primarily due to a $3.6 million decrease in personnel expenses (including stock-based compensation) due to a shift from activities related to research and development to preparation for the potential commercialization of YUTREPIA. These decreases were offset by a $1.7 million increase in clinical expenses related to our L606 program, and a $0.4 million decrease in expenses related to our YUTREPIA research and development activities.
Current wording
Research and development expenses were $6.0 million for the three months ended June 30, 2025, compared to $9.4 million for the three months ended June 30,2024. The decrease of $3.4 million or 36% was primarily due to a $2.7 million decrease in personnel expenses (including stock-based compensation) due to a shift from activities related to research and development to the commercialization of YUTREPIA, a $1.0 million decrease in expenses related to our YUTREPIA research and development activities, and a $0.4 million decrease in facilities and infrastructure expenses. These decreases were offset by a $1.1 million increase in clinical expenses for our L606 program, primarily related to our planned global pivotal study for the treatment of PH-ILD.
Previous wording
General and administrative expenses were $30.1 million for the three months ended March 31, 2025, compared to $20.2 million for the three months ended March 31, 2024. The increase of $9.9 million or 48% was primarily due toa $8.1 million increase in personnel expenses (including stock-based compensation) driven by higher headcount and a shift from activities related to research and development to preparation for the potential commercialization of YUTREPIA, a $0.6 million increase in legal fees related to ourongoing YUTREPIA-related litigation, and a $0.6 million increase in facilities and infrastructure expenses.
Current wording
Selling, general and administrative expenses were $68.9 million for the six months ended June 30, 2025, compared to $40.2 million for the six months ended June 30, 2024. The increase of $28.7 million or 71% was primarily due toa $17.0 million increase in personnel expenses (including stock-based compensation) driven by higher headcount and a shift from activities related to research and development to the commercialization of YUTREPIA, a $6.4 million increase in legal fees related to ourongoing YUTREPIA-related litigation, a $1.9 million increase in facilities and infrastructure expenses, a $1.7 million increase in commercial and consulting expenses to support the commercialization of YUTREPIA.
Previous wording
Total other expense, net was $2.9 million for the three months ended March 31, 2025, compared with $1.3 million for the three months ended March 31, 2024. The increase of $1.6 million was primarily driven by a $1.5 million increase in interest expense attributable to the higher borrowings under the HCR Agreement.
Current wording
Total other expense, net was $4.1 million for the three months ended June 30, 2025, compared with $1.5 million for the three months ended June 30, 2024. The increase of $2.6 million was primarily attributable to the higher borrowings under the HCR Agreement.
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, 2025 and December 31, 2024, we had cash and cash equivalents of $169.8 million and $176.5 million, respectively. As of March 31, 2025, we had stockholders’ equity of $49.7 million and an accumulated deficit of $595.8 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, 2025 and December 31, 2024, we had cash and cash equivalents of $173.4 million and $176.5 million, respectively. As of June 30, 2025, we had stockholders’ equity of $15.2 million and an accumulated deficit of $637.3 million.
Previous wording
In January 2023, we entered into the HCR Agreement, pursuant to which HCR has paid us an aggregate investment amount of $125.0 million (the “Investment Amount”). Of the additional funds available under the HCR Agreement, HCR will fund $50.0 million after the first commercial sale of YUTREPIA following receipt of final FDA approval for the treatment of PAH and PH-ILD, so long as no injunction has been issued prohibiting Liquidia from commercializing YUTREPIA for either or both of PAH and PH-ILD and will fund an additional $25.0 million upon mutual agreement of HCR and us if we achieve aggregate net sales of YUTREPIA in excess of $100.0 million at any time on or prior to June 30, 2026. See Note 12 “Long-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, 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 if we achieve aggregate net sales of YUTREPIA in excess of $100.0 million at any time on or prior to June 30, 2026. 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
Prior to the potential FDA approval of YUTREPIA and until such time as we can generate significant revenues from its sale, if ever, we anticipate we will incur net operating losses and negative cash flows from operations. We plan to focus in the near-term on preparations for the potential commercial launch of YUTREPIA, continuing promotion of Treprostinil Injection, investing in research and development efforts for our YUTREPIA and L606 programs, and expanding our corporate infrastructure. We may not be able to complete the development and initiate commercialization of these programs if, among other things, our clinical trials are not successful or if the FDA does not approve our product candidates when we expect, or at all.
Current wording
Until such time as we can generate significant revenues from the sale of YUTREPIA, if ever, we anticipate we will incur net operating losses and negative cash flows from operations. We plan to focus in the near-term on the commercial launch of YUTREPIA, continuing promotion of Treprostinil Injection, investing in research and development efforts for our YUTREPIA and L606 programs, and expanding our corporate infrastructure. We may not be able to complete the development and initiate commercialization of these programs if, among other things, our clinical trials are not successful or if the FDA does not approve our product candidates when we expect, or at all, or if the FDA withdraws approval of any of our products that have received approval, including YUTREPIA.
Previous wording
Our primary uses of capital are, and we expect will continue to be, compensation and related personnel expenses, clinical costs, manufacturing process development costs, external research and development services, laboratory and related supplies, regulatory expenses, legal costs, administrative and overhead costs and repayments under the HCR Agreement. We also expect to incur significant commercialization expenses related to product manufacturing, sales, marketing and distribution as we prepare to potentially receive regulatory approval for YUTREPIA.
Current wording
Our primary uses of capital are, and we expect will continue to be, compensation and related personnel expenses, clinical costs, manufacturing process development costs, external research and development services, laboratory and related supplies, regulatory expenses, legal costs, administrative and overhead costs and repayments under the HCR Agreement. We also expect to incur significant commercialization expenses related to product manufacturing, sales, marketing and distribution as we commercially launch YUTREPIA.
Previous wording
Because of the numerous risks and uncertainties associated with research, development and commercialization of pharmaceuticals, we are unable to estimate the exact amount of our working capital requirements. Our future funding requirements will depend on many factors, including:
Current wording
There are numerous risks and uncertainties associated with research, development and commercialization of pharmaceuticals and our future funding requirements will depend on many factors, including:
Previous wording
The following table summarizes our sources and uses of cash and cash equivalents:
Current wording
The following table summarizes our sources and uses of cash, cash equivalents, and restricted cash:
Previous wording
Net cash used in operating activities increased $5.8 million to $30.7 million for the three months ended March 31, 2025 compared to $24.9 million for the three months ended March 31, 2024. The increase was primarily due to $4.0 million higher net loss adjusted for non-cash items and unfavorable working capital changes of $1.8 million.
Current wording
Net cash used in operating activities increased $22.7 million to $70.2 million for the six months ended June 30, 2025 compared to $47.5 million for the six months ended June 30, 2024. The increase was primarily due to $12.3 million higher net loss adjusted for non-cash items and unfavorable working capital changes of $10.3 million.
Previous wording
Net cash used in investing activities was $0.3 million for the three months ended March 31, 2025 compared to $0.6 million for the three months ended March 31, 2024. During the three months ended March 31, 2025 and 2024, net cash used in investing activities related to property, plant and equipment purchases.
Current wording
Net cash used in investing activities was $1.4 million for the six months ended June 30, 2025 compared to $1.9 million for the six months ended June 30, 2024 andrelated to property, plant and equipment purchases.
Previous wording
Net cash provided by financing activities was $24.3 million during the three months ended March 31, 2025, compared to $99.7 million during the three months ended March 31, 2024. 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. During the three months ended March 31, 2024, we received $74.9 million net proceeds from the 2024 Private Placement which closed on January 8, 2024, $25.0 million net proceeds from the HCR Agreement, and $0.5 million from the issuance of common stock under stock incentive plans. These inflows were offset by $0.7 million in payments under the HCR Agreement.
Current wording
Net cash provided by financing activities was $72.0 million during the six months ended June 30, 2025, compared to $98.9 million during the six months ended June 30, 2024. 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. During the six months ended June 30, 2024, we received $74.9 million net proceeds from the 2024 Private Placement which closed on January 8, 2024, $25.0 million net proceeds from the HCR Agreement, and $0.5 million from the issuance of common stock under stock incentive plans. These inflows were offset by $1.7 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 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, 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.
Previous wording
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, totaling no more than $1.5 million, $0.2 million of which was accrued as of March 31, 2025.
Current wording
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 royalties on net sales of YUTREPIA totaling no more than $1.3 million.
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 may terminate the CSA upon 60 days’ written notice to Lonza in the event that the application for regulatory approval of YUTREPIA 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 of YUTREPIA from the FDA by December 31, 2025 (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
Current 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-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.
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
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, 2025, we have non-cancelable commitments for product manufacturing and supply costs of approximately $20.4 million.
Current wording
As of June 30, 2025, we have non-cancelable commitments for product manufacturing and supply costs of approximately $14.2 million.
Previous wording
We are party to a non-cancelable operating lease for our laboratory and office space. The lease expires on December 31, 2031, with an option to extend for an additional period of five years with appropriate notice. Minimum operating lease payments are $1.0 million in the remaining nine months of 2025, $1.4 million in 2026, $1.6 million in 2027, $1.7 million in 2028, $1.7 million in 2029, and $3.6 million thereafter.
Current wording
We are party to two non-cancelable operating leases for laboratory, manufacturing, and office space. These leases expire on 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 $0.7 million in the remaining six months of 2025, $2.0 million in 2026, $4.8 million in 2027, $5.0 million in 2028, $5.1 million in 2029, and $29.6 million thereafter.
Previous wording
We from time-to-time are subject to claims and litigation in the normal course of business, none of which we believe represent a risk of material loss or exposure.
Current wording
We from time-to-time are subject to claims and litigation in the normal course of business. See Note 13Legal Proceedings for further discussion of pending legal proceedings.
Previous wording
We have agreements with certain employees and an Executive Severance and Change in Control Plan which covers certain other employees which require payments if certain events, such as a change in control or termination without cause, occur.
Current wording
We have an Executive Severance and Change in Control Plan which covers certain employees and requires payments if certain events, such as a change in control or termination without cause, occur.
Previous wording
While we describe our significant accounting policies in Note 2 “Basis of Presentation, Significant Accounting Policies and Fair Value Measurements” to the condensed consolidated financial statements appearing elsewhere in this Quarterly Report on Form 10-Q, we have identified the following critical accounting estimates:
Current wording
While we describe our significant accounting policies in Note 2Basis of Presentation, Significant Accounting Policies and Fair Value Measurements to the condensed consolidated financial statements appearing elsewhere in this Quarterly Report on Form 10-Q, we have identified the following critical accounting estimates:
Previous wording
As part of the process of preparing our condensed consolidated financial statements, we are required to estimate our incurred expenses. This process involves reviewing quotations and contracts, identifying services that have been performed on our behalf and estimating the level of service performed and the associated cost incurred for the service when we have not yet been invoiced or otherwise notified of the actual cost. The majority of our service providers invoice us monthly in arrears for services performed or when contractual milestones are met. We make estimates of our accrued expenses as of each balance sheet date in our condensed consolidated financial statements based on facts and circumstances known to us at that time. We periodically confirm the accuracy of our estimates with the service providers and make adjustments if necessary. The significant estimates in our accrued research and development expenses are related to expenses incurred with respect to CROs, CMOs and other vendors in connection with research and development and manufacturing activities.
Current wording
performed on our behalf and estimating the level of service performed and the associated cost incurred for the service when we have not yet been invoiced or otherwise notified of the actual cost. The majority of our service providers invoice us monthly in arrears for services performed or when contractual milestones are met. We make estimates of our accrued expenses as of each balance sheet date in our condensed consolidated financial statements based on facts and circumstances known to us at that time. We periodically confirm the accuracy of our estimates with the service providers and make adjustments if necessary. The significant estimates in our accrued research and development expenses are related to expenses incurred with respect to CROs, CMOs and other vendors in connection with research and development and manufacturing activities.
Previous wording
activities on our behalf. The financial terms of these agreements are subject to negotiation, vary from contract to contract and may result in uneven payment flows. There may be instances in which payments made to our vendors will exceed the level of services provided and result in a prepayment of the applicable research and development or manufacturing expense. In accruing service fees, we estimate the time period over which services will be performed and the level of effort to be expended in each period. If the actual timing of the performance of services or the level of effort varies from our estimate, we adjust the accrual or prepaid expense accordingly. Although we do not expect our estimates to be materially different from amounts actually incurred, our understanding of the status and timing of services performed relative to the actual status and timing of services performed may vary and could result in us reporting amounts that are too high or too low in any particular period. There have been no material changes in estimates for the periods presented within this Quarterly Report on Form 10-Q.
Current wording
We base our expenses related to CROs and CMOs on our estimates of the services received and efforts expended pursuant to quotations and contracts with such vendors that conduct research and development and manufacturing activities on our behalf. The financial terms of these agreements are subject to negotiation, vary from contract to contract and may result in uneven payment flows. There may be instances in which payments made to our vendors will exceed the level of services provided and result in a prepayment of the applicable research and development or manufacturing expense. In accruing service fees, we estimate the time period over which services will be performed and the level of effort to be expended in each period. If the actual timing of the performance of services or the level of effort varies from our estimate, we adjust the accrual or prepaid expense accordingly. Although we do not expect our estimates to be materially different from amounts actually incurred, our understanding of the status and timing of services performed relative to the actual status and timing of services performed may vary and could result in us reporting amounts that are too high or too low in any particular period. There have been no material changes in estimates for the periods presented within this Quarterly Report on Form 10-Q.
Rearranged current paragraphs (3)
Current report — wording carried from elsewhere
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 are able to obtain a pump to replace the CADD-MS 3 infusion pump, the number of patients that can receive subcutaneous administration of Treprostinil Injection will continue to be constrained. Revenue will continue to be impacted until alternative pumps are available.
Current report — wording carried from elsewhere
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
Current report — wording carried from elsewhere
As part of the process of preparing our condensed consolidated financial statements, we are required to estimate our incurred expenses. This process involves reviewing quotations and contracts, identifying services that have been
Rearranged previous paragraphs (2)
Previous report — wording carried elsewhere
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 report — wording carried elsewhere
We base our expenses related to CROs and CMOs on our estimates of the services received and efforts expended pursuant to quotations and contracts with such vendors that conduct research and development and manufacturing