Liquidia Q2 2026 Earnings Call Transcript

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Provided by Quartr
August 12, 2026

Key Takeaways

  • Positive Sentiment: YUTREPIA continued strong commercial growth, with approximately 5,900 unique prescriptions, more than 5,000 patients started, and over 1,100 prescribing physicians as of July 31. Q2 net product sales reached $170.4 million, up 31% sequentially, and YUTREPIA represented nearly 30% of the inhaled treprostinil market.
  • Positive Sentiment: Liquidia reported improving profitability and cash generation, including $74.7 million of net income, $96.3 million of adjusted EBITDA, and $284.2 million in cash and equivalents. Management reiterated confidence in exceeding $1 billion in net revenue in 2027 while continuing to fund pipeline investments.
  • Positive Sentiment: The company is expanding its commercial organization and believes substantial opportunity remains in community-based PAH and PH-ILD diagnosis and treatment, as well as switches from competing inhaled, oral, and parenteral prostacyclin therapies. Payer access was described as broadly available and generally at parity.
  • Neutral Sentiment: Liquidia plans significant R&D expansion, with second-half 2026 R&D expense expected to be double the first half and additional increases anticipated in 2027. The company has 10 YUTREPIA and L606 studies underway or planned, including the Phase III RESPIRE trial for twice-daily L606 and future studies in Raynaud’s phenomenon and progressive pulmonary fibrosis.
  • Negative Sentiment: The company is still awaiting a decision in the ’327 litigation, with management saying a ruling could come at any time and acknowledging possible outcomes including royalties or injunctive relief if the decision goes against Liquidia.
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Earnings Conference Call
Liquidia Q2 2026
00:00 / 00:00

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Operator

Good morning, and welcome to the Liquidia Corporation second quarter 2026 financial results and corporate update conference call. My name is Daniel, and I will be your operator today. All participants are currently in listen-only mode. Following the presentation, we will conduct a question-and-answer session. Instructions for joining the queue will be provided at that time. Please note that today's call is being recorded. I'll now turn the call over to Jason Adair, Liquidia's Chief Business Officer.

Jason Adair
Jason Adair
Chief Business Officer at Liquidia

Thank you, and good morning, everyone. It's my pleasure to welcome you to our second quarter 2026 financial results and corporate update call. Joining me today are Dr. Roger Jeffs, Chief Executive Officer, Michael Kaseta, Chief Operating Officer and Chief Financial Officer, Dr. Rajeev Saggar, Chief Medical Officer, Scott Moomaw, Chief Commercial Officer, and Rusty Schundler, General Counsel. Before we begin, please note that today's discussion will include forward-looking statements, including statements regarding future results, product performance, and ongoing clinical or commercial activities. These statements are subject to risks and uncertainties that may cause actual results to differ materially. For further information, please refer to our filings with the SEC, which are available on our website. Please also note that our earnings release and our commentary include non-GAAP financial measures. Reconciliations of these non-GAAP financial measures to the most comparable GAAP measures can be found in our earnings press release.

Jason Adair
Jason Adair
Chief Business Officer at Liquidia

With that, I'll turn the call over to Roger.

Roger Jeffs
Roger Jeffs
CEO at Liquidia

Thanks, Jason, and good morning, everyone. We're delighted to share our business results and clinical progress with you today. One year ago, we launched YUTREPIA and believed the medical community would find value in our differentiated approach to inhaled treprostinil. One year later, we have the answer. Physicians are prescribing it, patients are starting to switch to it, and referrals and starts continue to accrue at a robust and sustained pace. As you saw in our numbers this morning, as of July 31, we have received approximately 5,900 unique patient prescriptions, started more than 5,000 patients on therapy, and had more than 1,100 physicians write for the product. 30% of those physicians have prescribed to five or more patients. What's especially notable is where that growth is coming from.

Roger Jeffs
Roger Jeffs
CEO at Liquidia

The overall inhaled prostacyclin market grew again this quarter from $573 million in Q1 to $607 million in Q2, or approximately 6%. YUTREPIA's growth alone was larger than the growth of the entire category, even as we saw flat to declining use of oral and fused and competing inhaled formulations. That tells us something important. Not only are the numbers of new starts for inhaled treprostinil growing, YUTREPIA has taken an ever-growing share of the total market for inhaled treprostinil. On a net revenue basis, YUTREPIA is approaching 30% of the entire inhaled market, a tremendous result just over a year into launch, especially as the market is growing in concert with YUTREPIA's growth. This implies the majority of new patient starts are coming to YUTREPIA. What matters more than the numbers is the impact we're seeing in patient lives.

Roger Jeffs
Roger Jeffs
CEO at Liquidia

I spent my career in this field, and I've watched the delivery of prostacyclins move from complex IV and subcutaneous infusion to cumbersome nebulized therapy to intolerable oral formulations, and now to inhaled dry powder delivery. Across that history, one simplistic but guiding principle has remained constant. Better tolerability enables higher dosing. Higher dosing can drive a greater efficacy, and greater efficacy can support durable clinical benefit. The linchpin in this therapeutic chain is solving first and foremost for tolerability, as the ability to drive dose and improve symptoms while minimizing both off and on-target adverse events is the Holy Grail. That's the lesson I've learned from my 30+ years in the field, and to me, explains why YUTREPIA has had such broad adoption and early commercial success to date as it offers all of these attributes.

Roger Jeffs
Roger Jeffs
CEO at Liquidia

This critical link between tolerability, dose, and efficacy was beautifully demonstrated in our 24-week ASCEND study in PH-ILD patients. Specifically, progressively higher median doses of YUTREPIA at weeks eight, 16, and 24 was accompanied by progressive improvements in 6-Minute Walk distance of 21.5, 31.5, and 41 meters respectively, without worsening cough scores. The only caveat is that YUTREPIA requires a four-times-daily dose regimen, which is why we are going from strength to strength and aggressively building on these same principles with twice-daily L606, which we believe has the potential to raise the tolerability bar even further. As we've previously shown in our 48-week open-label study, L606 patients titrated across a broad range while incurring a low burden of adverse events.

Roger Jeffs
Roger Jeffs
CEO at Liquidia

Most notably, the lowest incidence of cough we are aware of in any study of an inhaled treprostinil formulation, and we were able to observe enduring clinical benefit as peak 6-Minute Walk improvements were preserved at trough, or said another way, throughout the dosing interval. These results are especially impressive when you consider that patients enrolled reflected a prevalent population in the U.S. and were on combinatory background standard of care. We are not aware of any other product in clinical development that has matched the dose range, tolerability, and durability that we have already seen with L606.

Roger Jeffs
Roger Jeffs
CEO at Liquidia

We believe YUTREPIA and L606 have significantly raised the bar that every current and future product in this space will be measured against. It is with this confidence that we have stood up a thoughtful R&D plan to best elucidate the current and future uses of inhaled treprostinil across a wide array of indications. In fact, between YUTREPIA and L606, we now have 10 clinical studies either underway or planned to begin over the next 12 months. As Mike will explain, we can confidently make these investments because of the cash flow that this business now generates. With that, I will turn it over to Mike.

Michael Kaseta
Michael Kaseta
COO and CFO at Liquidia

Thank you, Roger, and good morning, everyone. I am pleased to say the second quarter financial performance continued to reflect the growth trajectory for YUTREPIA we have described to date.

Michael Kaseta
Michael Kaseta
COO and CFO at Liquidia

Quarterly sales of YUTREPIA have more than tripled over the last three quarters, and we have gone from reporting a net loss in Q2 2025 to four consecutive quarters of increasing profitability. Looking specifically at the second quarter of 2026, net product sales of YUTREPIA were $170.4 million, up over $40 million or 31% QoQ. Net income increased to approximately $74.7 million, and non-GAAP Adjusted EBITDA increased to approximately $96.3 million. Turning to cash, we entered the quarter with approximately $284.2 million in cash and cash equivalents, up $61.4 million from the first quarter and nearly $93.5 million since the start of the year, a clear sign how we are seeing the operating leverage inherent in our business flow through to the balance sheet. I would also like to note a few other financial metrics.

Michael Kaseta
Michael Kaseta
COO and CFO at Liquidia

As we had previously forecasted to you, R&D and SG&A expenses both increased this quarter to support continued investment in our pipeline and the ongoing commercialization of YUTREPIA, which includes the expanded sales team that hit the field in June and additional patient support services. Going forward, I would note these two lines will behave differently. SG&A will increase as we scale commercially, with certain components moving in proportion to revenue. We also expect R&D to increase in the coming quarters as enrollment ramps up in RESPIRE and we initiate multiple studies to inform the current and future use of YUTREPIA. More specifically, we expect R&D expense in the second half of 2026 to be double the expense in the first half of the year and to increase again in 2027 as we build the best inhaled treprostinil products for future and current patients.

Michael Kaseta
Michael Kaseta
COO and CFO at Liquidia

In closing, we expect to continue to grow revenue consistent with quarterly growth we've observed to date, increase our investment in our pipeline, and even with that investment, continue to grow profitability at the same time. We have a commercial product that generates significant cash flow and a clear set of priorities for where we will invest it. With that, Roger, back to you.

Roger Jeffs
Roger Jeffs
CEO at Liquidia

Thanks, Mike, for that summary. These results give us confidence that we're well on our way to more than $1 billion in net revenue in 2027, and just as importantly, confidence that we're building the right foundation for the next decade of this franchise. We look forward to updating you on our progress in the quarters ahead. With that, operator, please open the line for questions.

Operator

Thank you. We will now begin the question and answer session. To ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Please stand by while we compile the Q&A roster. Our first question comes from Amy Li with Jefferies. Your line is open.

Amy Li
Amy Li
Analyst at Jefferies

Hey, thanks for taking our question and congrats on all the continued momentum. I just wanted to start with two non-launch related questions. The first one, on your 75-patient REWARM Raynaud study, what efficacy signal would you need to see to move this directly into a registrational trial? How should we think about the design in that context? Was the low dose arm primarily driven by tolerability considerations in this population, or is there a reason to believe that the efficacy threshold in Raynaud's may be below the dose needed, than PAH and PH-ILD? Then finally on L606, you've suggested that the competitive advantage isn't just the BID dosing, but also the combination of exposure and tolerability. So what evidence have you seen that higher achievable exposure and 24-hour coverage could translate to a clinically meaningful advantage compared to other long-acting inhaled treprostinil approaches?

Amy Li
Amy Li
Analyst at Jefferies

What should we look for in the phase III to validate that thesis? Thanks so much.

Roger Jeffs
Roger Jeffs
CEO at Liquidia

Hi, Amy. Good morning. Thank you very much for the question. For the REWARM study on efficacy and dose, I will ask Rajeev to answer that and then I will answer the question around L606 and more how we are thinking about that from a dose comparison versus anything else. Rajeev, if you could talk about the REWARM study, please.

Rajeev Saggar
Rajeev Saggar
Chief Medical Officer at Liquidia

Sure. Thanks, Roger, and thanks, Amy, for the question. Maybe just to step back, the REWARM study is going to be evaluating patients with systemic sclerosis associated with Raynaud's phenomenon. Just for many that do not know, systemic sclerosis, of course, is a very rare autoimmune disease in which Raynaud's phenomenon effectively manifests in around 90% of those patients. Consistent with other conditions that affect our therapy in systemic sclerosis, such as PAH and PH-ILD, Raynaud's is also a vasculopathy of the small digits, usually of the bilateral hands in nature. What is really interesting about this condition is that there is no FDA-approved therapies. However, there is plenty decades of experience with prostacyclin and prostacyclin analogs that have been studied in this condition, including treprostinil, and many of those are actually used off-label to treat the moderate and severe complications of Raynaud's that manifest. These are life-saving therapies.

Rajeev Saggar
Rajeev Saggar
Chief Medical Officer at Liquidia

One of the challenges with studies that have used prostacyclins is the tolerability of those very medications, including parenteral and oral prostacyclins, which in those studies have been limited by dose tolerability issues. The purpose of REWARM, first and foremost, is to evaluate the typical doses that we use in YUTREPIA in both PAH and in PH-ILD and to assess the tolerability profile. At the same time, we compare it against the lowest dose versus maximizing the dose titration of YUTREPIA in the study and seeing what is the clinical response.

Rajeev Saggar
Rajeev Saggar
Chief Medical Officer at Liquidia

To those doses, that will inform us of how to appropriately lead into the phase III study, depending on the results that we see. But we have a high, strong clinical suspicion that we anticipate that a very similar dosing profile will be used eventually in the management of symptoms associated with Raynaud's phenomenon.

Roger Jeffs
Roger Jeffs
CEO at Liquidia

Great. Thank you, Rajeev, on that. Amy, maybe what I'll do is go back to the script a little bit when we make comparisons to TPIP, and that it's, again, it's tolerability drives dose efficacy, drives durability, and the linchpin being tolerability. The only way to make comparisons is to sort of match on dose equivalents. Typically, that's been done today through labeling with YUTREPIA, for example, through breath equivalents to TYVASO and TYVASO DPI. Maybe just to clarify, because I think there might be some confusion in the field around TPIP dosing. If you look at TPIP, if you took the 640 µg dose, really only 64% of that is treprostinil mass because the 16-chain palmitoyl lipophilic carbon chain contributes about 35% of the mass. Then there's about an 85% emitted dose from the capsule, so you have to subtract that as well.

Roger Jeffs
Roger Jeffs
CEO at Liquidia

When you look at the 640 µg, and we know that one breath of TYVASO is 6 µg, so 15 breaths would be 90 µg. The 640 µg, essentially, if you do the 640 times 0.64 times 0.85, you get to just about 90 equivalents, 90 µg or 15 breath equivalents. So that's what they're delivering with the 640, and then the 1,280 obviously would be twice that, or 30 breath equivalents. Now, when you look at 15 breath equivalents. Above that would be more. When you then make a comparison for R210, 15 breath equivalents in our open label study, 21% of patients had a I'm sorry. 71% of patients had a 15 breath equivalents or more, and 21% of patients had 30 breath equivalents or more. So how does that compare to TPIP?

Roger Jeffs
Roger Jeffs
CEO at Liquidia

Well, they only had 21% above 640 or 15 breath equivalents, and only 8% reached 1,280 or 30% equivalent. Significantly lower dose attainment on a percentage basis between the two trials. Now I'm making cross-study comparisons, and it's difficult, and I think it's probably inappropriate in particular to talk about efficacy comparisons because the efficacy is going to be driven by the sample that you're studying and what the selection bias is. Obviously, as we said, ours was a prevalent population in the U.S. who had transitioned essentially from TYVASO or TYVASO DPI versus theirs, which was ex-U.S. studies, perhaps not on background therapy and with a lower baseline walk. Those comparisons get complicated.

Roger Jeffs
Roger Jeffs
CEO at Liquidia

But I think if you believe the paradigm that tolerability drives dose, then what you can see with L606 is that we've already shown a favorable profile vis-a-vis TPIP, and the rest will sort itself out. Because as you achieve dose, you will get effect, and as you achieve that effect, you will get durability. So we feel very confident that L606 is extremely well-positioned in our phase III RESPIRE trial to be successful and actually be incrementally in development. So that's how we look at at least for today. And certainly, I don't want to make any performative statements around how we'll share market or not until we get the phase III results. But I think, again, we feel very confident about what we're building and very happy that the phase III RESPIRE study is already enrolling patients and on target to meet its timeline. Next question, please.

Operator

Thank you. Our next question comes from Julian Harrison with BTIG. Your line is open.

Julian Harrison
Julian Harrison
Analyst at BTIG

Hi, good morning. Congrats on the progress and thanks for taking the questions. I have three, and I'll just ask them all at once. First, considering your recently expanded sales force, I'm wondering how you're thinking about the balance between deepening relationships with existing prescribers of YUTREPIA versus expanding your prescriber base going forward. Second, with a little more than a year into YUTREPIA's launch, can you give us an update on where payer coverage stands? I'm wondering if you're satisfied where access is today, and if there are any remaining gaps or hurdles that when resolved could maybe even accelerate growth further. Third, maybe a refresher type of question, but can you walk us through the range of outcomes you're prepared for in the '327 trial? And do you have any updated expectations in the timing of decisions there?

Roger Jeffs
Roger Jeffs
CEO at Liquidia

Great. Good to hear from you, Julian. Good morning. Scott, if you wouldn't mind asking your view on the sales force expansion and where we currently are with payer coverage, and then Rusty, if you'll update on legal.

Scott Moomaw
Scott Moomaw
Chief Commercial Officer at Liquidia

Yeah, good morning. Hi, Julian. On the sales force expansion, I think the good news is we have a lot of opportunity both on the existing customer front as well as the expanding front, as you phrased it, Julian. We will be able to get more visits, more frequency, if you will, on the current customers. And we will be able to get deeper in the community, which is our stated intent of doing the expansion. When you look at PAH centers, we still feel like we have an amazing amount of opportunity there to get in front of the oral prostacyclins and the inhaled prostacyclins to be the first PAH prostacyclin of choice. In the PH-ILD centers, there is both opportunity to get in front of the other inhaled prostacyclins and also patient identification.

Scott Moomaw
Scott Moomaw
Chief Commercial Officer at Liquidia

We still feel like even the academic PH-ILD centers can do a better job of diagnosing the patients. And then finally is the community, which was, as I mentioned, one of the main reasons we did the expansion. And this enables us to get further out into the community deeper where we know many of these 60,000 patients are. They just need to be identified, and usually referred, but if they will diagnose them and treat them in that venue, then that's great as well. I think the answer is nice, which is that we have opportunities on both fronts. From the payer perspective, I think we feel good where we are. I think we've reached a stasis. We have, I would say, very good availability across the board.

Scott Moomaw
Scott Moomaw
Chief Commercial Officer at Liquidia

I would say we are generally at parity across the board, and therefore it just comes down to product choice. As you can see from our numbers, and the revenue growth, we feel like folks are taking advantage of that product choice and choosing YUTREPIA. Thanks, Julian.

Operator

Thank you. Our next question comes from Ben Burnett with Wells Fargo. Your line is open.

Analyst at Wells Fargo

Hi. Hello. This is Tianxi calling in for Ben. Congratulations on the quarter. I have a question regarding the new patient adds. Based on our back-of-the-envelope maths, your new patient add during this period is still showing about middle single digit acceleration versus last period. Just thinking about for the remainder of the year, how should that growth trend for the rest of the year, and where do you see it lands over the long term? Thank you.

Roger Jeffs
Roger Jeffs
CEO at Liquidia

Yeah, I appreciate the question. Maybe first, Rusty, if you could answer Julian's question around the '327 update, and then Mike, if you'll talk about patient numbers going forward.

Rusty Schundler
Rusty Schundler
General Counsel at Liquidia

Sure. Happy to. Thanks for the question, Julian. As for the two questions you asked me, first is the range of outcomes. No change there. It's the same things we've been talking about for over a year now. Obviously, in the upside scenario where we win on all claims, we continue forward as is, unimpeded. If the ruling goes against us, it's the full range of outcomes we've been talking about in the past. Could be a royalty, could be some form of injunctive relief. Again, no change on that front. We don't know. We don't have any visibility into what the judge's workload is, where he is in his process.

Rusty Schundler
Rusty Schundler
General Counsel at Liquidia

I think looking at past data as to how long it typically has taken Judge Andrews to get to decisions following a bench trial, I'd say our expectation is we could see a decision any day now. But again, it's hard for us to provide much more color than that just because we don't have visibility into this process. Thanks.

Roger Jeffs
Roger Jeffs
CEO at Liquidia

Yeah. I would add that nothing has changed in our confidence based on the probability of success and the arguments that we made in court. Mike, if you want to talk about how we look at patient adds going forward and the implications that may have for down the road.

Michael Kaseta
Michael Kaseta
COO and CFO at Liquidia

Yeah. Thanks, Roger, and thanks for the question. What we've seen since launch is really a linear trajectory of referrals and new patient starts really since the beginning of the launch last June. We're very confident in what we're doing. As Scott had spoken earlier, increasing the size of our sales force, looking to increase our patient support services. We feel very confident that we can stay on the same trajectory that we're on right now. Roger has said in the prepared statements that we believe we'll be more than $1 billion in sales in 2027, and we say that with confidence and believe that we will stay on this same trajectory and see significant increases as we move forward.

Roger Jeffs
Roger Jeffs
CEO at Liquidia

Great. Thanks, Mike. Next question, operator.

Operator

Thank you. Our next question comes from Ryan Deschner with Raymond James. Your line is open.

Ryan Deschner
Ryan Deschner
Analyst at Raymond James

Hi. Thanks for the question and congrats on the impressive results this quarter. Two for me. Where are you seeing the biggest areas of script growth in terms of specific patient subpopulations in both PAH and PH-ILD at this point? Also in one of your PHA posters this year, you cite the diverse responsibilities of pharmacists, the diverse responsibilities that they have in supporting PH patients, including assistance with transitioning patients across different prostacyclins. How have those findings changed your commercial strategy with respect to pharmacist interactions? Thanks.

Roger Jeffs
Roger Jeffs
CEO at Liquidia

Yeah. Great. Scott, I think both of those are directed in your field.

Scott Moomaw
Scott Moomaw
Chief Commercial Officer at Liquidia

Yeah. In terms of the growth, I think there's kind of a short and long-term aspect to this. The short-term is we still have loads of opportunity in the centers, where these patients are coming in today and tomorrow. I think the flywheel of YUTREPIA is turning only more strongly as time goes along and more prescribers get a chance to try it. We have many examples of when one prescriber who's tried it and really found it to be satisfying, or better, has talked to another prescriber and said, "Look, it's not the same. You really need to try this." As that flywheel turns more in the short term, those physicians who are using prostacyclins and treating PH, whether that's PAH or PH-ILD, there's a lot of opportunity there.

Scott Moomaw
Scott Moomaw
Chief Commercial Officer at Liquidia

Of course, those patients, as I said, are coming in right now, and so therefore the prescriber has the opportunity to make that decision today or tomorrow. Longer term is what I referenced earlier, which is the patients out in the community, and that tide will raise as the education around that takes place and as we get deeper out. It is rising right now. A lot of the PH-ILD academic centers are being overwhelmed by the number of patients that are coming in from the community because there's more awareness around this. It's starting, it's happening right now, but it's going to continue to happen. On the pharmacist question, Ryan, I wasn't quite sure I understood it. We have a very expansive care model. We work with the specialty pharmacies who are high touch with the patients and in touch with the patients all the time.

Scott Moomaw
Scott Moomaw
Chief Commercial Officer at Liquidia

One of the things we found is early on, I think they were almost, despite our trying to convince them, I think they were almost sort of stuck in the old paradigm of tolerability and dosing. As those folks have experienced the new paradigm, where the dosing and the tolerability are better leading to, as Roger mentioned, the efficacy. I think the lights have gone on there a little bit as well, and so they've become believers as well. Feel free to elaborate, Ryan, on the question if I didn't get it.

Rajeev Saggar
Rajeev Saggar
Chief Medical Officer at Liquidia

It's Scott, Rajeev. Maybe I can just add in something, Ryan, on that particular poster. First of all, what we've recognized in the market is that the care team that provides care to patients with Group 1 PH and PH-ILD is multifactorial, from the physician to the nurse practitioner, and to the pharmacist and the PH coordinators. I think one of the key things that we're doing on the ground is heavy education about the benefits of YUTREPIA, the ease of prescribability, and the titratability of the drug respective to both conditions. The pharmacists are, I think, critical in many of the larger programs. They help coordinate the care of the patient, they manage the side effect profile, and they also support how to titrate those patients.

Rajeev Saggar
Rajeev Saggar
Chief Medical Officer at Liquidia

It's a key target for us, and I think the results have spoken is what you see here today at the earnings call. Thanks.

Roger Jeffs
Roger Jeffs
CEO at Liquidia

I think maybe I'll just add to both of the comments. Again, I think we're taking a fulsome approach to the centers, not just the physicians, the pharmacists, but also the nurse practitioners who are critical to the therapeutic success in this category. I think one thing on the numbers, we're starting to see a shift. If you just look, and we said a little bit about this in the prepared remarks. The inhaled category is now on a run rate of $600 million. The total prostacyclin pathway is about $1.2 billion in the quarter in total. You're getting into a $5 billion market and half of that is in the inhaled segment, which is growing. The inhaled's starting to infringe on the oral and parenteral category. If you look at the oral categories between UPTRAVI and Orenitram, that's about $500 million.

Roger Jeffs
Roger Jeffs
CEO at Liquidia

If you look at Remodulin, it is about $100 million. And those are shrinking or flat. The only growth that you are seeing is in the inhaled category, and the only reason for that growth is YUTREPIA launched. What we are starting to do is broadly take share, not only from the competitive inhaled brand, but also from oral and parenteral as people figure out that, again, this paradigm of tolerability is key and the linchpin to success for these patients.

Roger Jeffs
Roger Jeffs
CEO at Liquidia

This is where the field is moving. A very attractive opportunity in PAH and PH-ILD, as Scott said, which is virtual white space still. So lots of upside, and I think just in the current indications that are approved, there is opportunity to grow beyond the $5 billion that is here today. So a very attractive market, especially when you have a very attractive molecule like YUTREPIA. Next question, please.

Operator

Thank you. Our next question comes from Serge Belanger with Needham. Your line is open.

Serge Belanger
Serge Belanger
Analyst at Needham

Hi, good morning. Thanks for taking my question. I guess just one probably for Rajeev. What is the current thinking for the development and regulatory path to potentially expand YUTREPIA usage to PPF and IPF?

Rajeev Saggar
Rajeev Saggar
Chief Medical Officer at Liquidia

Yes. Sure, Serge. Thanks for the question. Obviously, just to remember, the safety profile of YUTREPIA has been studied in patients with pulmonary hypertension associated with a broad range of underlying interstitial lung disease, inclusive of IPF, autoimmune disease, and most likely progressive pulmonary fibrosis as well, given the definition of that condition. I think there is a lot of confidence in the safety profile of YUTREPIA in these patients. I think as you see in the slides, we are going to be advancing a study in the first half of 2027 evaluating the safety, efficacy, and dose titratability of YUTREPIA. I think this is really critical to really highlight the fact that every study that has been done to date with inhaled treprostinil continues to highlight that dose absolutely matters.

Rajeev Saggar
Rajeev Saggar
Chief Medical Officer at Liquidia

If you extrapolate what we saw in the INCREASE study as well as in the TTAIN study, there is at least a minimally acceptable dose, and anything above that still needs to be studied. This is where we believe we can shine. So evaluating how high of a dose that we should use to treat those patients is going to be critical in that assessment. Also, we do acknowledge that the antifibrotic world with oral therapies has advanced with the new therapy in the mix. We do want to see how YUTREPIA will respond on top of some of these therapies so that we can adequately power future studies as well and modify inclusion/exclusion criteria.

Rajeev Saggar
Rajeev Saggar
Chief Medical Officer at Liquidia

So we're taking it, I think, in a very sophisticated approach. We have a lot of support through KOLs throughout the U.S. and the rest of the world to help guide us to the best trial design.

Roger Jeffs
Roger Jeffs
CEO at Liquidia

Great. Operator, next question.

Operator

Thank you. Our next question comes from Jason Gerberry with Bank of America. Your line is open.

Jason Gerberry
Jason Gerberry
Analyst at Bank of America

Hey, guys. Congrats on the quarter. Got a few. Thinking about the growth here, is it fair to say that most of the growth is coming from category expansion and limited more on the switch from inhaled competitor agents? As we think about the expanded pool of patients, do you have any anecdotes, any commentary to what extent patients with comorbid IPF are seeking treatment with inhaled options and that might be expanding the pie? Lastly, just a question around thinking about drug adherence. You have 5,000 patients treated roughly since the launch. If we think about 10% free drug, about maybe 10% drop off, it gets you into that sort of patient number that could support the sales number for the quarter.

Jason Gerberry
Jason Gerberry
Analyst at Bank of America

Are those the right ways to maybe think about patient adherence for some of those early patients who started drug at the early point of the launch? Thanks.

Roger Jeffs
Roger Jeffs
CEO at Liquidia

Yeah. Maybe I'll pick on the adherence and then maybe Scott and Mike, you guys can talk about the growth and the pool of patients. I will say, though, Jason, that I don't think IPF is yet sort of expanding the market. I think what we're seeing is on-label expansion. Nothing there from an IPF standpoint, although certainly in the future, I think there'll be more interest in seeing what the value of YUTREPIA could be in that indication by physicians. In terms of drug adherence, really aren't talking about it much. Obviously, we've said it over and over again that the tolerability to our therapy is best in class. I think because of that the adherence to the drug will be best in class. We would expect it would be underneath sort of the typical discontinuation rate of competitive inhaled agents for sure.

Roger Jeffs
Roger Jeffs
CEO at Liquidia

We need more time to think about it. What we do know is that the AEs, they manifest at first exposure. If somebody's going to be intolerant to the drug, it's usually somewhat in the first one to three months that they become intolerant and will move off of the therapy if it's because of intolerance. Again, let's remind ourselves, this is a life-threatening disease. These patients are severely ill, and with ILD, they have comorbid disease. Patients do die and clip off at a pace just due to other comorbidities. We're still looking at that, and I don't think you can do the kind of parallel match that you're trying to assign here in terms of what you were doing. Again, as we get more and more information, we'll get a little bit more granular about that as we move forward.

Roger Jeffs
Roger Jeffs
CEO at Liquidia

Nothing's concerning in terms of our DC rate. Again, because of our PRINT-enabled formulation, we're not getting discontinuation because of AEs at the rate that the competitive agents are. Again, all good news there. I think one way that we can grow the revenues is to stack on patients QoQ, and that's what you're seeing. That's why it looks to be quite linear. Then maybe Scott, if you want to talk about the growth specifically that Jason was asking about.

Scott Moomaw
Scott Moomaw
Chief Commercial Officer at Liquidia

Yeah. Hi, Jason. I'll handle the switch part of that question first, and then I'll come back to the kind of market expansion, although obviously they're related. I think we absolutely are still seeing switches. We're seeing switches from other inhaled therapies for the reasons we've been outlining since before launch. We are seeing switches from the oral prostacyclins as well, I think, generally because of the rough tolerability of those drugs and the inability to titrate to effect. But also with the decreased promotion in that sector coming from Johnson & Johnson backing away as well. I think that's kind of propelling that. In terms of market expansion, I think if you walk through the math that Roger walked through earlier, I think you have to say that we are expanding the market just globally from a revenue standpoint.

Scott Moomaw
Scott Moomaw
Chief Commercial Officer at Liquidia

However, when I'm in the market, when I'm talking to folks, I think the dynamic is, yes, there are some switches when patients, for the reasons I mentioned earlier. But more often than not, what happens is, it's a prescriber who used to use one of the other inhaleds first or oral prostacyclin first, and they've come around to the fact that this is a better therapy to use first, and so now they are putting us ahead of those therapies, and that's how we are gaining share. So the good news is both are happening, and as sort of a student of the market, having been in it 16 years, I'm fascinated to watch it happen. But I think the answer is both are happening.

Scott Moomaw
Scott Moomaw
Chief Commercial Officer at Liquidia

You can't argue with the math that the market is expanding, and I'm seeing it every day in terms of us gaining share within the market.

Rajeev Saggar
Rajeev Saggar
Chief Medical Officer at Liquidia

Maybe I can just step in, just last comment. I think it's important, Jason, to recognize that the hemodynamic definition has just changed, and it's been slightly under two years since the hemodynamic profile of the definition of pulmonary hypertension has been modified. That education, I think, is starting to become a lot more universal across both the centers and the community itself. I think we can learn a lot from that by a study designed by another company called FINDER, which essentially was looking at what is actually the prevalence of pulmonary hypertension in the setting of ILD, just highlighting the market growth potential here. These proactively performed right heart catheterization, suggesting that actually the diagnosis of pulmonary hypertension was on the order of over 70%, of which pre-capillary pulmonary hypertension, using the new definition, was around 55%.

Rajeev Saggar
Rajeev Saggar
Chief Medical Officer at Liquidia

I think that just highlights that the demand and the amount of pulmonary hypertension, especially in Group 3, is actually acutely being understood by the market. Because of the safety profile of YUTREPIA and the ability to titrate higher and tighter doses and modify this condition, I think is being well-received in the marketplace, and we continue to focus on that exclusive growth.

Roger Jeffs
Roger Jeffs
CEO at Liquidia

Great.

Jason Gerberry
Jason Gerberry
Analyst at Bank of America

Thank you.

Roger Jeffs
Roger Jeffs
CEO at Liquidia

Thanks for that addition, Rajeev. Operator, next question.

Operator

Thank you. Our next question comes from Gaurav Maini with LifeSci Capital. Your line is open.

Gaurav Maini
Gaurav Maini
Analyst at LifeSci Capital

Hey, good morning, congrats, and another great quarter, guys. Just a quick one from me here. As we think about YUTREPIA growth moving forward, can you just give us a refresher on sort of the patient setting plan as we think about targets? Do you see the community setting as still relatively under-penetrated, and is this going to be a key area of growth moving forward? Put another way, could we potentially see acceleration in patient adds as community penetration increases, especially with the recent sales force expansion? Thanks.

Roger Jeffs
Roger Jeffs
CEO at Liquidia

Yeah. Scott, if you wouldn't mind talking about that.

Scott Moomaw
Scott Moomaw
Chief Commercial Officer at Liquidia

Yeah. There is absolutely a lot of room for growth in the community. We know those patients are out there. Rajeev talks about the prevalence of PH-ILD being whatever it is, 30%-60% in ILD patients. Clearly in all of those patients that are out there's an opportunity to better identify, diagnose, and refer or treat those patients. It's a little bit of a, I don't want to say a slow burn because it's going to happen this year and next year. But there's definitely some work there to penetrate, which we're doing with the expansion. In terms of patient numbers, I don't think we're ready to say that the pace is going to increase as a result of that.

Scott Moomaw
Scott Moomaw
Chief Commercial Officer at Liquidia

But clearly there is a lot of room in that 60,000 patients that a lot of those are out there in the community and just haven't been identified yet.

Roger Jeffs
Roger Jeffs
CEO at Liquidia

Great. Thank you, Scott. Operator, next question.

Operator

Thank you. I'm showing no further questions at this time. I would now like to turn it back to Dr. Roger Jeffs for closing remarks.

Roger Jeffs
Roger Jeffs
CEO at Liquidia

Great. Thank you everyone for joining the call. We're very excited about the results and clinical update that we could provide today, and look forward to updating you again in the near future. Bye-bye.

Operator

This concludes today's conference call. Thank you for participating. You may now disconnect.

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