0001558370-21-014305 | 10-Q | XBRL Viewer

Acquisition of RareGen, LLC (now Liquidia PAH, LLC) - Purchase Price Allocation (Details) - USD ($)	Sep. 30, 2021	Dec. 31, 2020	Nov. 18, 2020
Business Acquisition [Line Items]
Contract acquisition costs	$ 10,439,634	$ 12,792,491
Goodwill	3,903,282	3,903,282
Merger With RareGen LLC
Business Acquisition [Line Items]
Cash			$ 1,000,000
Property and equipment			79,330
Prepaid and other current assets			30,190
Intangible asset			5,620,000
Contract acquisition costs	$ 10,439,634	$ 12,792,491	12,980,000
Indemnification asset, related party			1,065,538
Goodwill			3,903,282
Less other current liabilities			(492,499)
Less refund liability			(2,696,000)
Less litigation finance payable, long-term			(646,510)
Total estimated purchase price			$ 20,843,331

Acquisition of RareGen, LLC (now Liquidia PAH, LLC) - Purchase Price (Details) - Merger With RareGen LLC - USD ($) $ / shares in Units, $ in Millions	Dec. 31, 2020	Nov. 18, 2020
Business Acquisition [Line Items]
Number of common shares to be issued to RareGen's members	5,550,000	6,166,666
Multiplied by the fair value per share of Liquidia Technologies common stock		$ 3.38
Total estimated purchase price		$ 20.8

Revenue From Contracts With Customers (Details) - Sandoz - USD ($)		3 Months Ended	9 Months Ended	12 Months Ended
	Aug. 01, 2018	Sep. 30, 2021	Sep. 30, 2021	Dec. 31, 2020
Promotion Agreement, Payment	$ 20,000,000
Percentage of Revenue from Promotion Agreement		99.00%	99.00%
Contract with Customer, Refund Liability		$ 526,491	$ 526,491
Contract with Customer, Liability, Revenue Recognized				$ 927,136

Business - Going Concern (Details) - USD ($)	3 Months Ended						9 Months Ended
Business - Going Concern (Details) - USD ($)	Sep. 30, 2021	Jun. 30, 2021	Mar. 31, 2021	Sep. 30, 2020	Jun. 30, 2020	Mar. 31, 2020	Sep. 30, 2021	Sep. 30, 2020	Dec. 31, 2020
Business
Net loss	$ 7,280,892	$ 6,551,486	$ 9,183,153	$ 14,968,680	$ 13,916,101	$ 14,791,479	$ 23,015,531	$ 43,676,260
Accumulated deficit	$ 298,017,750						$ 298,017,750		$ 275,002,219

- Definition

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

+ References

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+ Details

Consolidated Balance Sheets - USD ($)	Sep. 30, 2021	Dec. 31, 2020
Current assets:
Cash and cash equivalents	$ 64,053,795	$ 65,316,481
Accounts receivable, net	3,050,384	0
Prepaid expenses and other current assets	375,695	752,447
Total current assets	67,479,874	66,068,928
Property, plant and equipment, net	5,452,269	6,805,570
Operating lease right-of-use assets, net	2,477,786	2,649,328
Indemnification asset, related party	5,713,551	1,387,275
Contract acquisition costs, net	10,439,634	12,792,491
Intangible asset, net	4,520,088	5,534,843
Goodwill	3,903,282	3,903,282
Other assets	312,925	390,043
Total assets	100,299,409	99,531,760
Current liabilities:
Accounts payable	1,609,162	3,734,227
Accrued compensation	2,060,773	3,259,515
Other accrued expenses	2,323,130	1,386,880
Refund liability, net	0	1,768,864
Current portion of operating lease liabilities	745,891	664,670
Current portion of finance lease liabilities	325,436	923,218
Total current liabilities	7,064,392	11,737,374
Litigation finance payable	5,074,507	1,154,360
Long-term operating lease liabilities	4,437,490	5,006,301
Long-term finance lease liabilities	427,363	255,402
Long-term debt	10,331,648	10,292,485
Total liabilities	27,335,400	28,445,922
Commitments and contingencies
Stockholders' equity:
Preferred stock - 10,000,000 shares authorized as of September 30, 2021 and December 31, 2020, 0 shares issued and outstanding as of September 30, 2021 and December 31, 2020	0	0
Common stock - $0.001 par value, 80,000,000 shares authorized as of September 30, 2021 and December 31, 2020, 51,976,804 and 43,336,277 shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively	51,977	43,336
Additional paid-in capital	370,929,782	346,044,721
Accumulated deficit	(298,017,750)	(275,002,219)
Total stockholders' equity	72,964,009	71,085,838
Total liabilities and stockholders' equity	$ 100,299,409	$ 99,531,760

Property, Plant and Equipment

9 Months Ended

Sep. 30, 2021

Property, Plant and Equipment

Property, Plant and Equipment

10. Property, Plant and Equipment

Property, plant and equipment consisted of the following:


	September 30,		December 31,
	2021		2020
Lab and build-to-suit equipment	$	7,544,098	$	7,499,645
Office equipment		28,410		31,205
Furniture and fixtures		257,774		257,774
Computer equipment		463,789		404,558
Leasehold improvements		11,506,332		11,524,738
Construction-in-progress		—		65,820
Total property, plant and equipment		19,800,403		19,783,740
Accumulated depreciation and amortization		(14,348,134)		(12,978,170)
Property, plant and equipment, net	$	5,452,269	$	6,805,570

The Company recorded depreciation and amortization expense of $428,010 and $722,325 for the three months ended September 30, 2021 and 2020, respectively, and $1,372,632 and $2,178,402 for the nine months ended September 30, 2021 and 2020, respectively.

Indemnification Asset with Related Party and Litigation Finance Payable (Details)	Oct. 15, 2021
Indemnification Asset with Related Party and Litigation Finance Payable
Variable Interest Entity, Qualitative or Quantitative Information, Ownership Percentage	9.90%

Property, Plant and Equipment (Details) - USD ($)	3 Months Ended		9 Months Ended
Property, Plant and Equipment (Details) - USD ($)	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Property, Plant and Equipment
Depreciation, Depletion and Amortization, Nonproduction, Total	$ 428,010	$ 722,325	$ 1,372,632	$ 2,178,402

Long-term Debt - Terms (Details)			9 Months Ended
Long-term Debt - Terms (Details)	Mar. 01, 2021 USD ($)	Feb. 26, 2021 USD ($) subsidiary $ / shares shares	Sep. 30, 2021 USD ($) $ / shares shares	Sep. 30, 2020 USD ($)	Mar. 31, 2022 USD ($)	Dec. 31, 2021 USD ($)	Jun. 30, 2021 USD ($)	Mar. 31, 2021 USD ($)	Dec. 31, 2020 $ / shares
Debt Instrument [Line Items]
Number of wholly owned subsidiaries \| subsidiary		2
Proceeds from Issuance of Long-term Debt, Total			$ 10,410,269	$ 0
Long-term Debt, Gross			$ 10,500,000
Common Stock, Par or Stated Value Per Share (in dollars per share) \| $ / shares			$ 0.001						$ 0.001
SVB Warrant
Debt Instrument [Line Items]
Class of Warrant or Right, Number of Securities Called by Warrants or Rights (in shares) \| shares		200,000
Common Stock, Par or Stated Value Per Share (in dollars per share) \| $ / shares		$ 0.001
Warrants and Rights Outstanding, Term (Year)		10 years
SVB Warrant Initial Tranche
Debt Instrument [Line Items]
Class of Warrant or Right, Number of Securities Vested (in shares) \| shares		100,000
Class of Warrant or Right, Exercise Price of Warrants or Rights (in dollars per share) \| $ / shares		$ 3.05	$ 3.05
Class of Warrant or Right, Outstanding (in shares) \| shares			100,000
SVB Warrant Term B Tranche
Debt Instrument [Line Items]
Class of Warrant or Right, Outstanding (in shares) \| shares		50,000
SVB Warrant Term C Tranche
Debt Instrument [Line Items]
Class of Warrant or Right, Outstanding (in shares) \| shares		50,000
Pacific Western Bank Note, A&R LSA
Debt Instrument [Line Items]
Repayments of Debt	$ 9,400,000
Loss on extinguishment of debt			$ 53,150
Loan and Security Agreement with SVB
Debt Instrument [Line Items]
Minimum Cash Balance to be Maintained		$ 30,000,000.0
Minimum Cash Balance to be Maintained Commencing on the Term B Loan Funding Date		$ 35,000,000.0
Debt Instrument, Cumulative Cash Burn			$ 56,100,000				$ 17,000,000.0	$ 10,500,000
Debt Instrument, Cumulative Cash Burn, Conditional Increase, Percent		75.00%
Loan and Security Agreement with SVB \| Forecast
Debt Instrument [Line Items]
Debt Instrument, Cumulative Cash Burn					$ 65,600,000	$ 61,100,000
Silicon Valley Bank Term Loan
Debt Instrument [Line Items]
Maximum Borrowing Capacity		$ 20,500,000
Percentage of the aggregate principal amount of all Term loans made by SVB to be paid (the "Final Payment")		5.00%
Debt Instrument, Prepayment Penalty Fee Percentage		5.00%
Silicon Valley Bank Term Loan \| Minimum
Debt Instrument [Line Items]
Debt Instrument, Interest Rate, Stated Percentage		4.00%
Silicon Valley Bank Term Loan \| Prime Rate
Debt Instrument [Line Items]
Debt Instrument, Basis Spread on Variable Rate		0.75%
Term A Loan
Debt Instrument [Line Items]
Debt Instrument, Face Amount	$ 10,500,000
Term B Loan
Debt Instrument [Line Items]
Borrowing capacity available, conditioned upon the Company meeting certain requirements		$ 5,000,000.0
Term C Loan
Debt Instrument [Line Items]
Borrowing capacity available, conditioned upon the Company meeting certain requirements		$ 5,000,000.0

Leases, Commitments and Contingencies - Future Minimum Lease Payments (Details)	Sep. 30, 2021 USD ($)
Operating Leases
2021 - three months remaining	$ 306,436
2022	1,243,934
2023	1,283,253
2024	1,316,540
2025	1,355,923
Thereafter	1,157,807
Total minimum lease payments	6,663,893
Less: Interest	(1,480,512)
Present value of lease liabilities	5,183,381
Finance Leases
2021 - three months remaining	101,326
2022	342,762
2023	195,350
2024	114,727
2025	64,161
Total minimum lease payments	818,326
Less: Interest	(65,527)
Present value of lease liabilities	752,799
Total
2021 - three months remaining	407,762
2022	1,586,696
2023	1,478,603
2024	1,431,267
2025	1,420,084
Thereafter	1,157,807
Total minimum lease payments	7,482,219
Less: Interest	(1,546,039)
Present value of lease liabilities	$ 5,936,180

Acquisition of RareGen, LLC (now Liquidia PAH, LLC)

9 Months Ended

Sep. 30, 2021

Acquisition of RareGen, LLC (now Liquidia PAH, LLC)

Acquisition of RareGen, LLC (now Liquidia PAH, LLC)

3. Acquisition of RareGen, LLC (now Liquidia PAH, LLC)

On November 18, 2020 (the “Closing Date”), the Company completed the previously announced acquisition contemplated by the Agreement and Plan of Merger, dated as of June 29, 2020, as amended by a Limited Waiver and Modification to the Merger Agreement, dated as of August 3, 2020 (the “Merger Agreement”), by and among Liquidia Technologies, the Company, RareGen, Gemini Merger Sub I, Inc., a Delaware corporation (“Liquidia Merger Sub”), Gemini Merger Sub II, LLC, a Delaware limited liability company (“RareGen Merger Sub”), and PBM RG Holdings, LLC, a Delaware limited liability company (“PBM”). Upon consummation of the Merger Transaction, the separate corporate existences of Liquidia Merger Sub and RareGen Merger Sub ceased and Liquidia Technologies and RareGen (now Liquidia PAH) continue as wholly owned subsidiaries of Liquidia Corporation.

On the Closing Date, an aggregate of 5,550,000 shares of common stock, $0.001 par value per share (“Liquidia Corporation Common Stock”), were issued to RareGen members in exchange for 10,000 RareGen common units, representing all of the issued and outstanding RareGen equity. Additionally, on the Closing Date, an aggregate of 616,666 shares of Liquidia Corporation Common Stock were withheld from RareGen members to secure the indemnification obligations of RareGen members. Additionally, RareGen members received a pro rata portion of the RareGen cash at closing in excess of $1 million. RareGen members are also entitled to receive a pro rata portion of up to an additional 2,708,333 shares of Liquidia Corporation Common Stock in the aggregate in 2022, based on the amount of 2021 net sales of the generic treprostinil product (“Net Sales Earnout Shares”) owned by Sandoz, which RareGen markets pursuant to the Promotion Agreement. The fair value of the purchase consideration or the purchase price was approximately $20.8 million.

Reasons for the Acquisition and Merger

The Company acquired Liquidia PAH to improve financial strength and operational efficiencies including the generation of cash flow through sales of a generic version of Remodulin, which is a parenteral formulation of treprostinil, for the treatment of PAH. Strategically, the Company believes that its commercial presence in the field will enable an efficient launch of LIQ861 upon approval, leveraging existing relationships and further validating its reputation as a company committed to supporting PAH patients.

Merger Consideration

The fair value of the purchase consideration or the purchase price, was approximately $20.8 million. The purchase consideration consisted of the 6,166,666 shares of Liquidia Corporation Common Stock at a per share price of $3.38, which represented the closing price of Liquidia Technologies Common Stock on the Closing Date. 5,550,000 of the shares were issued as of December 31, 2020 and the remaining 616,666 shares were withheld from RareGen members to secure their indemnification obligations pursuant to the Merger Agreement.

Accounting for the Acquisition

The acquisition of Liquidia PAH was accounted for as a business combination and reflects the application of acquisition accounting in accordance with Accounting Standards Codification (ASC) 805, Business Combinations. The acquired Liquidia PAH assets, including identifiable intangible assets and liabilities assumed, have been recorded at their estimated fair values with the excess purchase price assigned to goodwill. A preliminary purchase price allocation has been performed and the recorded amounts for intangible assets, other assets, indemnification asset, goodwill, litigation finance payable, deferred tax liability and other liabilities are subject to change pending finalization of valuation efforts and review of tax matters. The amounts recognized will be finalized as the information necessary to complete the analysis is obtained, but no later than one year after the Closing Date.

Purchase Price Allocation

The preliminary purchase price allocation resulted in the following amounts being allocated to the assets acquired and liabilities assumed as of the Closing Date of November 18, 2020 based on their respective preliminary fair values summarized below:


Cash	$	1,000,000
Property and equipment		79,330
Prepaid and other current assets		30,190
Intangible asset		5,620,000
Contract acquisition costs		12,980,000
Indemnification asset, related party		1,065,538
Goodwill		3,903,282
Less other current liabilities		(492,499)
Less refund liability		(2,696,000)
Less litigation finance payable, long-term		(646,510)
Total estimated purchase price	$	20,843,331

Consolidated Statements of Cash Flows - USD ($)	9 Months Ended
Consolidated Statements of Cash Flows - USD ($)	Sep. 30, 2021	Sep. 30, 2020
Operating activities
Net loss	$ (23,015,531)	$ (43,676,260)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation	2,922,259	2,948,082
Depreciation and amortization	4,740,244	2,178,402
Non-cash lease expense	171,542	125,086
Loss on disposal of property and equipment	29,122
Non-cash interest expense	207,834	47,183
Changes in operating assets and liabilities:
Accounts receivable, net	(3,050,384)	0
Prepaid expenses and other current assets	376,752	(505,080)
Other non-current assets	77,118	0
Accounts payable	(6,451,341)	133,521
Accrued compensation	(1,198,742)	(1,096,207)
Other accrued expenses	971,250	203,833
Refund liability	(1,768,864)	0
Operating lease liabilities	(487,590)	(414,960)
Net cash used in operating activities	(26,476,331)	(40,056,400)
Investing activities
Purchases of property, plant and equipment	(87,240)	(713,121)
Net cash used in investing activities	(87,240)	(713,121)
Financing activities
Principal payments on finance leases	(387,034)	(876,793)
Principal payments on long-term debt	(10,352,940)	(4,235,294)
Proceeds from issuance of long-term debt with warrants, net	10,410,269	0
Receipts from litigation financing	3,920,147	0
Proceeds from sale of common stock, net of underwriting fees and commissions	21,709,949	71,225,398
Payments for offering costs	0	(1,634,467)
Proceeds from issuance of common stock under stock incentive plans	494	45,340
Net cash provided by financing activities	25,300,885	64,524,184
Net (decrease) increase in cash and cash equivalents	(1,262,686)	23,754,663
Cash and cash equivalents, beginning of period	65,316,481	55,796,378
Cash and cash equivalents, end of period	64,053,795	79,551,041
Supplemental disclosure of cash flow information
Cash paid for interest	309,302	601,838
Cash paid for operating lease liabilities	901,271	875,229
Reduction of lease liability and right-of-use asset from lease modification	38,787	0
Non-cash increase in indemnification asset through accounts payable	4,326,276	0
Changes in purchases of property, plant and equipment in accounts payable and accrued expenses	$ 0	$ 400,308

Basis of Presentation, Significant Accounting Policies and Fair Value Measurements (Details) - USD ($)		3 Months Ended		9 Months Ended
	Jul. 01, 2021	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020	Dec. 31, 2020
Cash and cash equivalents		$ 64,053,795		$ 64,053,795		$ 65,316,481
Money market funds included in cash and cash equivalents		63,100,000		63,100,000
Cash						65,300,000
Cash equivalents						0
Accounts Receivable, Allowance for Credit Loss, Current		0		$ 0		$ 0
Number of reporting units				1
Impairment of long-lived assets				$ 0
Impairment of goodwill	$ 0
Revenue from Contract with Customer, Excluding Assessed Tax, Total		$ 3,178,621	$ 0	$ 9,638,338	$ 0
Credit Concentration Risk \| Cash Held on Deposit \| Pacific Western Bank
Concentration Risk, Percentage				100.00%
Credit Concentration Risk \| Accounts Receivable \| Customer One
Concentration Risk, Percentage				99.00%
Customer Concentration Risk \| Revenue from Contract with Customer Benchmark \| Customer One
Concentration Risk, Percentage		99.00%		99.00%

Leases, Commitments and Contingencies - Lease Cost and Other (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Total Lease Cost	$ 249,550	$ 551,495	$ 844,191	$ 1,713,387
Operating leases (Year)	5 years 1 month 6 days		5 years 1 month 6 days
Finance leases (Year)	2 years 7 months 6 days		2 years 7 months 6 days
Operating leases	10.30%		10.30%
Finance leases	6.50%		6.50%
General and Administrative Expense
Operating lease cost	$ 195,118	195,118	$ 585,353	585,353
Amortization of lease assets	41,800	328,946	227,187	1,027,123
Interest Expense
Interest on lease liabilities	$ 12,632	$ 27,431	$ 31,651	$ 100,911

Stockholders' Equity Authorized Capital (Details) - USD ($) $ / shares in Units, $ in Millions				1 Months Ended	9 Months Ended
	Apr. 13, 2021	Jul. 02, 2020	Jun. 29, 2020	Aug. 31, 2019	Sep. 30, 2021	Sep. 30, 2020	Feb. 26, 2021	Dec. 31, 2020
Common Stock and Preferred Stock, Shares Authorized (in shares)					90,000,000
Common Stock and Preferred Stock, Par or Stated Value Per Share (in dollars per share)					$ 0.001
Common Stock, Shares Authorized (in shares)					80,000,000			80,000,000
Preferred Stock, Shares Authorized (in shares)					10,000,000			10,000,000
Class of Warrant or Right, Exercised During Period (in shares)					0	0
SVB Warrant Initial Tranche
Class of Warrant or Right, Outstanding (in shares)					100,000
Class of Warrant or Right, Exercise Price of Warrants or Rights (in dollars per share)					$ 3.05		$ 3.05
SVB Warrant - Term B and Term C Tranches
Class of Warrant or Right, Outstanding (in shares)					100,000
Other Warrants
Class of Warrant or Right, Outstanding (in shares)					106,274			106,274
Class of Warrant or Right, Exercise Price of Warrants or Rights (in dollars per share)					$ 0.02			$ 0.02
Underwritten Public Offering
Stock Issued During Period, Shares, New Issues (in shares)			9,375,000
Shares Issued, Price Per Share (in dollars per share)			$ 8.00
Proceeds from Issuance of Common Stock		$ 70.3
Private Placement
Stock Issued During Period, Shares, New Issues (in shares)	8,626,037
Shares Issued, Price Per Share (in dollars per share)	$ 2.52
Proceeds from Issuance of Common Stock	$ 21.7
ATM Agreement
Stock Issued During Period, Shares, New Issues (in shares)					131,425
Proceeds from Issuance of Common Stock, Net					$ 0.7
ATM Agreement \| Jefferies, LLC
Sale of Stock, Maximum Aggregate Offering Price				$ 40.0
Sale of Stock, Commission Percentage				3.00%

Long-term Debt - Maturities (Details) - USD ($)	Sep. 30, 2021	Dec. 31, 2020
Scheduled annual maturities of long-term debt
2023	$ 5,250,000
2024	5,250,000
Thereafter	0
Total	10,500,000
Less: Unamortized discount, debt issuance costs and accretion	(168,352)
Long-term debt, noncurrent	$ 10,331,648	$ 10,292,485

Contract Acquisition Costs, Intangible Asset, and Goodwill

9 Months Ended

Sep. 30, 2021

Contract Acquisition Costs, Intangible Asset, and Goodwill

Contract Acquisition Costs, Intangible Asset, and Goodwill

4. Contract Acquisition Costs, Intangible Asset, and Goodwill

Contract acquisition costs and the Intangible asset consist of the total value assigned to the Promotion Agreement (see Note 3 for Purchase Price Allocation). The Company is amortizing the value of the contract acquisition costs and intangible asset on a pro-rata basis based on the estimated total revenue or net profits to be recognized over the period from the date of the Merger Transaction through May 2027 (see Note 2 for Revenue Recognition accounting policy). Amortization of contract acquisition costs is recorded as a reduction of revenue and amortization of the intangible asset is recorded as cost of revenue. During the three and nine months ended September 30, 2021, the Company recorded total amortization of $779,873 and $2,350,086 from the contract acquisition costs as a reduction in revenue, respectively. Net contract acquisition costs totaled $10,439,634 and $12,792,491 as of September 30, 2021 and December 31, 2020. During the three and nine months ended September 30, 2021, the Company recorded total amortization of $337,665 and $1,017,526 from the intangible asset as cost of revenue, respectively.

The Company acquired goodwill in the Merger Transaction of $3,903,282 which primarily represents the Liquidia PAH assembled workforce and the residual value of the purchase consideration and assumed liabilities that exceeded the assets acquired (see Note 2 for Goodwill accounting policy). None of the goodwill recognized is expected to be deductible for income tax purposes.

Stockholders' Equity Authorized Capital (Tables)

9 Months Ended

Sep. 30, 2021

Stockholders' Equity Authorized Capital

Schedule of Stockholders' Equity Note, Warrants or Rights [Table Text Block]

As of September 30, 2021 outstanding warrants consisted of the following:


	Number of
	warrants	Exercise Price		Expiration Date
SVB Warrant - Initial Tranche (see Note 13)	100,000	$	3.05	February 26, 2031
SVB Warrant - Term B and Term C Tranches (see Note 13)	100,000	$	n/a	February 26, 2031
Other warrants	106,274	$	0.02	December 31, 2026

As of December 31, 2020 outstanding warrants consisted of the following:


	Number of
	warrants	Exercise Price		Expiration Date
Other warrants	106,274	$	0.02	December 31, 2026

Acquisition of RareGen, LLC (now Liquidia PAH, LLC) (Tables)

9 Months Ended

Sep. 30, 2021

Acquisition of RareGen, LLC (now Liquidia PAH, LLC)

Schedule of Recognized Identified Assets Acquired and Liabilities Assumed [Table Text Block]


Cash	$	1,000,000
Property and equipment		79,330
Prepaid and other current assets		30,190
Intangible asset		5,620,000
Contract acquisition costs		12,980,000
Indemnification asset, related party		1,065,538
Goodwill		3,903,282
Less other current liabilities		(492,499)
Less refund liability		(2,696,000)
Less litigation finance payable, long-term		(646,510)
Total estimated purchase price	$	20,843,331

Business

9 Months Ended

Sep. 30, 2021

Business

Business

1. Business

Liquidia Corporation (“Liquidia” or the “Company”) is a biopharmaceutical company focused on the development, manufacturing, and commercialization of products that address unmet patient needs, with current focus directed towards the treatment of pulmonary hypertension (“PH”). Liquidia Corporation operates through its wholly owned operating subsidiaries, Liquidia Technologies, Inc. (“Liquidia Technologies”) and Liquidia PAH, LLC (“Liquidia PAH”), formerly known as RareGen, LLC (“RareGen”).

The Company generates revenue pursuant to a promotion agreement between Liquidia PAH and Sandoz Inc. (“Sandoz”), dated as of August 1, 2018, as amended (the “Promotion Agreement”), sharing profit derived from the sale of the first-to-file fully substitutable generic treprostinil injection (“Treprostinil Injection”) in the United States. Liquidia PAH has the exclusive rights to conduct commercial activities to encourage the appropriate use of Treprostinil Injection. The Company employs a targeted sales force calling on physicians and hospital pharmacies involved in the treatment of pulmonary arterial hypertension (“PAH”) in the United States, as well as key stakeholders involved in the distribution and reimbursement of Treprostinil Injection. Strategically, the Company believes that its commercial presence in the field will enable an efficient base to expand from for the launch of LIQ861 upon approval, leveraging existing relationships and further validating its reputation as a company committed to supporting PAH patients.

The Company conducts research, development and manufacturing of novel products by applying its 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. The Company’s lead product candidate, for which it holds worldwide commercial rights, is LIQ861 for the treatment of PAH.

LIQ861 is an inhaled dry powder formulation of treprostinil designed to improve the therapeutic profile of treprostinil by enhancing deep lung delivery and achieving higher dose levels than current inhaled therapies. The Company submitted the New Drug Application (“NDA”) for LIQ861 in January 2020. In November 2020, the Company received a Complete Response Letter (“CRL”) issued by the Food and Drug Administration (“FDA”) with respect to the NDA for LIQ861. In May 2021, the Company resubmitted the NDA for LIQ861 in response to the CRL. In June 2021, the FDA accepted the Company’s resubmitted NDA for LIQ861 for review and established a PDUFA goal date of November 7, 2021.

The Company is subject to risks and uncertainties common to companies in the biotechnology industry, including, but not limited to, development by competitors of new technological innovations, dependence on key personnel, protection of proprietary technology, compliance with government regulations, the impact of the COVID-19 coronavirus, and the ability to secure additional capital to fund operations. The Company expects to incur significant expenses and operating losses for the foreseeable future as it seeks regulatory approval and pursues commercialization of any approved product candidates. In addition, if the Company obtains marketing approval for any of its current or future product candidates, it would incur significant commercialization expenses related to product manufacturing, marketing, sales and distribution. These efforts require significant amounts of additional capital, adequate personnel and infrastructure, and extensive compliance-reporting capabilities. Even if the Company's development efforts are successful, it is uncertain when, if ever, the Company will realize significant revenue from product sales. The Company may need to seek additional funding through public or private financings, debt financing or collaboration. If the Company determines it requires but is unable to obtain funding, the Company could be required to delay, reduce, or eliminate research and development programs, product portfolio expansion, or future commercialization efforts, which could adversely affect its business prospects.

In accordance with Accounting Standards Update (“ASU”) 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (Subtopic 205-40), the Company has evaluated whether there are conditions and events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the condensed consolidated financial statements are issued. The Company has financed its growth and operations through a combination of funds generated from revenues, the issuance of convertible preferred stock and common stock, finance leases, bank borrowings, bank borrowings with warrants and the issuance of convertible notes and warrants. Since inception, the Company has incurred recurring losses, including net loss of $23.0 million for the the nine months ended September 30, 2021 and the Company had an accumulated deficit of $298.0 million as of September 30, 2021. The Company expects to continue to generate operating losses for the foreseeable future. As of the issuance date of the September 30, 2021 condensed consolidated financial statements, the Company expects that its cash and cash equivalents will be sufficient to fund its operating expenses and capital expenditure requirements for at least 12 months from the issuance date of these unaudited interim condensed consolidated financial statements. The accompanying unaudited interim condensed consolidated financial statements have been prepared on the basis of continuity of operations, realization of assets, and the satisfaction of liabilities and commitments in the ordinary course of business.

Leases, Commitments and Contingencies (Tables)

9 Months Ended

Sep. 30, 2021

Leases, Commitments and Contingencies

Lease, Cost [Table Text Block]


		Three Months Ended September 30,				Nine Months Ended September 30,
	Classification	2021		2020		2021		2020
Operating lease cost	General and administrative	$	195,118	$	195,118	$	585,353	$	585,353
Finance lease cost:
Amortization of lease assets	General and administrative		41,800		328,946		227,187		1,027,123
Interest on lease liabilities	Interest expense		12,632		27,431		31,651		100,911
Total Lease Cost		$	249,550	$	551,495	$	844,191	$	1,713,387

The weighted average remaining lease term and discount rates as of September 30, 2021 were as follows:


Weighted average remaining lease term (years):
Operating leases	5.1
Finance leases	2.6
Weighted average discount rate:
Operating leases	10.3	%
Finance leases	6.5	%

Lease Liability Maturity [Table Text Block]


	Operating		Finance
Year ending December 31:	Leases		Leases		Total
2021 - three months remaining	$	306,436	$	101,326	$	407,762
2022		1,243,934		342,762		1,586,696
2023		1,283,253		195,350		1,478,603
2024		1,316,540		114,727		1,431,267
2025		1,355,923		64,161		1,420,084
Thereafter		1,157,807		—		1,157,807
Total minimum lease payments		6,663,893		818,326		7,482,219
Less: Interest		(1,480,512)		(65,527)		(1,546,039)
Present value of lease liabilities	$	5,183,381	$	752,799	$	5,936,180

Basis of Presentation, Significant Accounting Policies and Fair Value Measurements - Common Stock Equivalent Shares Excluded From Calculation of Diluted Net Loss Per Share (Details) - shares	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Anti-dilutive Shares Excluded from Calculation of Diluted Net Loss Per Share (in shares)	5,934,805	2,870,907	5,563,819	2,614,959
Share-based Payment Arrangement, Option
Anti-dilutive Shares Excluded from Calculation of Diluted Net Loss Per Share (in shares)	5,451,114	2,747,538	5,101,347	2,516,604
Restricted Stock Units (RSUs)
Anti-dilutive Shares Excluded from Calculation of Diluted Net Loss Per Share (in shares)	283,691	123,369	304,230	98,355
SVB Warrant
Anti-dilutive Shares Excluded from Calculation of Diluted Net Loss Per Share (in shares)	200,000		158,242

Leases, Commitments and Contingencies (Details)	9 Months Ended
Leases, Commitments and Contingencies (Details)	Sep. 30, 2021 USD ($) ft²	Feb. 28, 2021	Jan. 31, 2021	Nov. 18, 2020 shares
Lessee, Finance Lease, Discount Rate		6.50%	7.50%
Maximum Net Sales Threshold As Basis For Payment Of Future Contingent Royalties	$ 1,500,000
Agreement With LGM Pharma, LLC
Purchase Commitment, Remaining Minimum Amount Committed	$ 3,050,000
Minimum
Lessee, Finance Lease, Remaining Lease Term		24 months
Maximum
Lessee, Finance Lease, Remaining Lease Term		48 months
Merger With RareGen LLC \| Maximum
Business Acquisition, Number of Additional Shares Issuable Upon Achievement of Sales Target (in shares) \| shares				2,708,333
Primary Building in Morrisville, North Carolina
Area of Real Estate Property (Square Foot) \| ft²	45,000

Consolidated Balance Sheets (Parentheticals) - $ / shares	Sep. 30, 2021	Dec. 31, 2020
Consolidated Balance Sheets
Preferred stock, shares authorized (in shares)	10,000,000	10,000,000
Preferred stock, shares issued (in shares)	0	0
Preferred stock, shares outstanding (in shares)	0	0
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, shares authorized (in shares)	80,000,000	80,000,000
Common stock, shares issued (in shares)	51,976,804	43,336,277
Common stock, shares outstanding (in shares)	51,976,804	43,336,277

Long-term Debt (Tables)

9 Months Ended

Sep. 30, 2021

Long-term Debt

Schedule of Long-Term Debt


		September 30,		December 31,
	Maturity Date	2021		2020
Pacific Western Bank term loan	October 25, 2022	$	—	$	10,292,485
Silicon Valley Bank term loan	September 1, 2024		10,331,648		—
Less current portion			—		—
Long-term debt		$	10,331,648	$	10,292,485

Schedule of Inputs used to Estimate Fair Value of SVB Warrant


Expected dividend yield		—
Risk-free interest rate		1.43%
Expected volatility		90.8%
Expected life (years)		10.0

Schedule of Annual Maturities of Long-Term Debt


Year ending December 31:
2021 – three months remaining	$	—
2022		—
2023		5,250,000
2024		5,250,000
Thereafter		—
Total		10,500,000
Less: Unamortized discount, debt issuance costs and accretion		(168,352)
Less: Current portion of long-term debt		—
Long-term debt, noncurrent	$	10,331,648

- Definition

Tabular disclosure of long-debt instruments or arrangements, including identification, terms, features, collateral requirements and other information necessary to a fair presentation. These are debt arrangements that originally required repayment more than twelve months after issuance or greater than the normal operating cycle of the entity, if longer.

+ References

Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 210
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.5-02.22)
-URI http://asc.fasb.org/extlink&oid=120391452&loc=d3e13212-122682

Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 835
-SubTopic 30
-Section 45
-Paragraph 1A
-URI http://asc.fasb.org/extlink&oid=119993939&loc=d3e28541-108399

Reference 3: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 6
-URI http://asc.fasb.org/extlink&oid=109259400&loc=d3e21506-112644

Reference 4: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 235
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08.(e),(f))
-URI http://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690

Reference 5: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 835
-SubTopic 30
-Section 45
-Paragraph 2
-URI http://asc.fasb.org/extlink&oid=119993939&loc=d3e28551-108399

Reference 6: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 7
-URI http://asc.fasb.org/extlink&oid=109259400&loc=d3e21521-112644

Reference 7: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 8
-URI http://asc.fasb.org/extlink&oid=109259400&loc=d3e21538-112644

Reference 8: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 942
-SubTopic 470
-Section 50
-Paragraph 3
-URI http://asc.fasb.org/extlink&oid=75038535&loc=d3e64711-112823

Reference 9: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 835
-SubTopic 30
-Section 55
-Paragraph 8
-URI http://asc.fasb.org/extlink&oid=114775985&loc=d3e28878-108400

Reference 10: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 3
-URI http://asc.fasb.org/extlink&oid=109259400&loc=d3e21475-112644

+ Details

Stock-Based Compensation (Tables)

9 Months Ended

Sep. 30, 2021

Stock-Based Compensation.

Share-based Payment Arrangement, Expensed and Capitalized, Amount [Table Text Block]


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
By Expense Category:	2021		2020		2021		2020
Research and development	$	288,116	$	292,386	$	816,966	$	853,704
General and administrative		935,928		788,614		2,105,293		2,094,378
Total stock-based compensation expense	$	1,224,044	$	1,081,000	$	2,922,259	$	2,948,082


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
By Type of Award:	2021		2020		2021		2020
Stock options	$	1,218,694	$	1,044,991	$	2,927,149	$	2,843,409
Restricted stock units		5,350		36,009		(4,890)		104,673
Total stock-based compensation expense	$	1,224,044	$	1,081,000	$	2,922,259	$	2,948,082

Share-based Payment Arrangement, Nonvested Award, Cost [Table Text Block]


	As of September 30, 2021
			Weighted
			Average
			Remaining
			Recognition
	Unamortized		Period
	Expense		(Years)
Stock options	$	9,139,975	3.1
Restricted stock units	$	812,560	1.3

Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions [Table Text Block]


	Nine Months Ended
	September 30,
	2021	2020
Expected dividend yield	—	—
Risk-free interest rate	0.62% - 1.67%	0.40% - 1.60%
Expected volatility	91% - 96%	87% - 90%
Expected life (years)	5.2 - 6.1	6.3

Share-based Payment Arrangement, Option, Activity [Table Text Block]


				Weighted
		Weighted		Average
		Average		Contractual	Aggregate
	Number of	Exercise		Term	Intrinsic
	Shares	Price		(in years)	Value
Outstanding as of December 31, 2020	4,692,071	$	5.51
Granted	2,000,750		2.70
Exercised	(623)		2.33
Cancelled	(1,062,059)		7.11
Outstanding as of September 30, 2021	5,630,139	$	4.21	8.3	$	291,098
Exercisable as of September 30, 2021	1,308,478	$	7.22	5.0	$	49,750
Vested and expected to vest as of September 30, 2021	5,605,939	$	4.20	8.3	$	291,098

Schedule of Nonvested Restricted Stock Units Activity [Table Text Block]


		Weighted
		Average
		Grant-Date
	Number of	Fair Value
	RSUs	(per RSU)
Nonvested as of December 31, 2020	88,131	$	4.68
Granted	334,015		2.97
Vested	(14,209)		3.33
Forfeited	(136,237)		3.99
Nonvested as of September 30, 2021	271,700	$	2.99

Income Taxes (Details) - USD ($)	3 Months Ended	9 Months Ended
Income Taxes (Details) - USD ($)	Sep. 30, 2021	Sep. 30, 2021
Income Taxes
Income Tax Expense (Benefit), Total	$ 0	$ 0

- Definition

Amount of current income tax expense (benefit) and deferred income tax expense (benefit) pertaining to continuing operations.

+ References + Details

Stock-Based Compensation - Nonvested RSU Awards Outstanding (Details) - Restricted Stock Units (RSUs) - $ / shares	1 Months Ended	9 Months Ended
	Mar. 31, 2020	Sep. 30, 2021
Nonvested, number (in shares)		88,131
Nonvested , weighted average grant date fair value (in dollars per share)		$ 4.68
Granted, number (in shares)	138,464	334,015
Granted , weighted average grant date fair value (in dollars per share)		$ 2.97
Vested , number (in shares)		(14,209)
Vested , weighted average grant date fair value (in dollars per share)		$ 3.33
Forfeited, number (in shares)		(136,237)
Forfeited , weighted average grant date fair value (in dollars per share)		$ 3.99
Nonvested , number (in shares)		271,700
Nonvested , weighted average grant date fair value (in dollars per share)		$ 2.99

Stock-Based Compensation - Fair Value Assumptions (Details)	9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020
Expected dividend yield	0.00%
Risk-free interest rate, minimum	0.62%	0.40%
Risk-free interest rate, maximum	1.67%	1.60%
Expected Volatility, minimum	91.00%	87.00%
Expected Volatility, maximum	96.00%	90.00%
Expected life (years) (Year)	6 years 3 months 18 days
Minimum
Expected life (years) (Year)	5 years 2 months 12 days
Maximum
Expected life (years) (Year)	6 years 1 month 6 days

Indemnification Asset with Related Party and Litigation Finance Payable

9 Months Ended

Sep. 30, 2021

Indemnification Asset with Related Party and Litigation Finance Payable

Indemnification Asset with Related Party and Litigation Finance Payable

5. Indemnification Asset with Related Party and Litigation Finance Payable

On June 3, 2020, Liquidia PAH entered into a litigation financing arrangement (the “Financing Agreement”) with Henderson SPV, LLC (“Henderson”). Liquidia PAH, along with Sandoz (collectively the “Plaintiffs”), are pursuing litigation against United Therapeutics Corporation (“United Therapeutics”) and, prior to entering into a binding settlement term sheet with Smiths Medical ASC in November 2020, were pursuing litigation against Smiths Medical. Under the Financing Agreement, Henderson will fund Liquidia PAH’s legal and litigation expenses (referred to as “Deployments”) in exchange for a share of certain litigation or settlement proceeds. Deployments received from Henderson are recorded as a Litigation finance payable.

Litigation proceeds will be split equally between Liquidia PAH and Sandoz. Unless there is an event of default by Henderson, litigation proceeds received by Liquidia PAH must be applied first to repayment of total Deployments received. Litigation proceeds in excess of Deployments received are split between Liquidia PAH and Henderson according to a formula. Unless there is an event of default by PBM, proceeds received by Liquidia PAH are due to PBM as described further below.

On November 17, 2020, Liquidia PAH entered into a Litigation Funding and Indemnification Agreement (“Indemnification Agreement”) with PBM. PBM is considered to be a related party as it is controlled by a major stockholder (which beneficially owns approximately 9.9% of Liquidia Corporation Common Stock as of October 15, 2021) who is also a member of the Company’s Board of Directors.

Under the terms of the Indemnification Agreement, PBM now controls the litigation, with Liquidia PAH’s primarily responsibility being to cooperate to support the litigation proceedings as needed. The Indemnification Agreement provides that Liquidia PAH and its affiliates will not be entitled to any proceeds resulting from, or bear any financial or other liability for, the United Therapeutics and Smiths Medical ASC litigation unless there is an event of default by PBM. Any Liquidia PAH litigation expenses not reimbursed by Henderson under the Financing Agreement will be reimbursed by PBM. Any proceeds received which Henderson is not entitled to under the Financing Agreement will be due to PBM.

The Indemnification Asset is increased as the Company records third party legal and litigation expenses related to the United Therapeutics and Smiths Medical ASC litigation.

As of September 30, 2021 and December 31, 2020, the Indemnification Asset and Litigation Finance Payable were classified as long-term assets and liabilities, respectively as it is considered unlikely that the litigation would conclude prior to September 30, 2022.

Leases, Commitments and Contingencies Commitments

9 Months Ended

Sep. 30, 2021

Leases, Commitments and Contingencies

Leases, Commitments and Contingencies

12. Leases, Commitments and Contingencies

Leases

The Company leases certain laboratory space, office space, and equipment. Leases with an initial term of 12 months or less are not recorded on the balance sheet; the Company recognizes lease expense for these leases on a straight-line basis over the lease term. For lease agreements entered into or reassessed after the adoption of Topic 842, the Company combines lease and non-lease components, if any. Most leases include one or more options to renew. The exercise of lease renewal options is at the Company’s sole discretion. Certain leases also include options to purchase the leased property. Consistent with past practice and current intent, the Company has recognized all such purchase options as part of its right-of-use assets and lease liabilities. The depreciable life of assets and leasehold improvements are limited by the expected lease term unless there is a transfer of title or purchase option reasonably certain of exercise. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants.

The Company conducts its operations from leased facilities of approximately 45,000 square feet in Morrisville, North Carolina with a lease expiration date of October 31, 2026. In addition, the Company leases specialized laboratory equipment under finance leases. The related right-of-use assets are amortized on a straight-line basis over the lesser of the lease term or the estimated useful life of the asset.

The Company does not have access to certain inputs used by its lessors to calculate the rate implicit in its finance leases. As such, the Company utilized its estimated incremental borrowing rate for the discount rate applied to its finance leases. The original incremental borrowing rate used on finance leases was 7.5%. During February 2021, the Company exercised the lease purchase option for certain finance leases that had expired and entered into a lease modification agreement with its existing lessor for certain other finance leases. The modification resulted in an increase in the remaining lease term of between 24 and 48 months as well as a decrease in the monthly payments associated with the respective modified leases. The incremental borrowing rate used on the modified leases was 6.5%. The lease modification had an immaterial impact on the Company’s condensed consolidated financial statements.

The Company’s lease cost is reflected in the accompanying condensed statements of operations and comprehensive loss as follows:


		Three Months Ended September 30,				Nine Months Ended September 30,
	Classification	2021		2020		2021		2020
Operating lease cost	General and administrative	$	195,118	$	195,118	$	585,353	$	585,353
Finance lease cost:
Amortization of lease assets	General and administrative		41,800		328,946		227,187		1,027,123
Interest on lease liabilities	Interest expense		12,632		27,431		31,651		100,911
Total Lease Cost		$	249,550	$	551,495	$	844,191	$	1,713,387

The weighted average remaining lease term and discount rates as of September 30, 2021 were as follows:


Weighted average remaining lease term (years):
Operating leases	5.1
Finance leases	2.6
Weighted average discount rate:
Operating leases	10.3	%
Finance leases	6.5	%

The discount rate for operating leases was estimated based upon market rates of collateralized loan obligations of comparable companies on comparable terms.

The future minimum lease payment as of September 30, 2021 were as follows:


	Operating		Finance
Year ending December 31:	Leases		Leases		Total
2021 - three months remaining	$	306,436	$	101,326	$	407,762
2022		1,243,934		342,762		1,586,696
2023		1,283,253		195,350		1,478,603
2024		1,316,540		114,727		1,431,267
2025		1,355,923		64,161		1,420,084
Thereafter		1,157,807		—		1,157,807
Total minimum lease payments		6,663,893		818,326		7,482,219
Less: Interest		(1,480,512)		(65,527)		(1,546,039)
Present value of lease liabilities	$	5,183,381	$	752,799	$	5,936,180

Commitments

In connection with the Merger Transaction, we agreed to issue additional consideration of up to 2,708,333 additional shares of common stock to the former equity holders of RareGen (now Liquidia PAH) contingent on achievement of certain Liquidia PAH revenue targets during the year ending December 31, 2021. As of September 30, 2021 and December 31, 2020, the fair value of this contingent consideration was deemed to be immaterial.

In March 2012, the Company entered into an agreement, as amended, with Chasm Technologies, Inc. for manufacturing consulting services related to the Company’s manufacturing capabilities during the term of the agreement. The Company agreed to pay future contingent royalties, totaling no more than $1,500,000, on net sales of certain products. As of September 30, 2021, none of the contingent royalties had been earned.

We enter into contracts in the normal course of business with contract service providers to assist in the performance of our research and development and manufacturing activities. Subject to required notice periods and our obligations under binding purchase orders, we can elect to discontinue the work under these agreements at any time. In addition, we have entered into a multi-year agreement with LGM Pharma, LLC (LGM) to produce active pharmaceutical ingredients

for LIQ861. Under our manufacturing 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 $3,050,000 for the term of the agreement. The agreement expires five years from the first marketing authorization approval of LIQ861. This minimum commitment was waived for the year ending December 31, 2021.

We also have employment agreements with certain employees which require the funding of a specific level of payments, if certain events, such as a change in control or termination without cause, occur.

Contingencies

The Company from time-to-time is subject to claims and litigation in the normal course of business, none of which the Company believes represent a risk of material loss or exposure.

Long-term Debt - SVB Warrant Fair Value (Details)	9 Months Ended
Long-term Debt - SVB Warrant Fair Value (Details)	Sep. 30, 2021 USD ($)	Feb. 26, 2021 USD ($)
Term A Loan
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Fair value of term loan	$ 10,239,000
Debt, fees incurred		$ 88,000
SVB Warrant
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Fair value of the warrant included in additional paid-in-capital	$ 261,000
SVB Warrant \| Measurement Input, Risk Free Interest Rate
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Warrants and Rights Outstanding, Measurement Input	0.0143
SVB Warrant \| Measurement Input, Price Volatility
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Warrants and Rights Outstanding, Measurement Input	0.908
SVB Warrant \| Measurement Input, Expected Life
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Warrants and Rights Outstanding, Measurement Input	10.0

Basis of Presentation, Significant Accounting Policies and Fair Value Measurements (Policies)

9 Months Ended

Sep. 30, 2021

Basis of Presentation, Significant Accounting Policies and Fair Value Measurements

Basis of Presentation

The unaudited interim condensed consolidated financial statements as of September 30, 2021 and for the three and nine months ended September 30, 2021 and 2020 have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial reporting. These condensed consolidated financial statements are unaudited and, in the opinion of management, include all adjustments (consisting only of normal recurring adjustments and accruals) necessary for a fair statement of the results for the periods presented in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The year-end condensed consolidated balance sheet data was derived from the Company’s audited consolidated financial statements but does not include all disclosures required by GAAP. Operating results for the three and nine months ended September 30, 2021 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2021. Certain information and footnote disclosures normally included in the annual consolidated financial statements prepared in accordance with GAAP have been omitted in accordance with the SEC’s rules and regulations for interim reporting. The Company’s financial position, results of operations and cash flows are presented in U.S. Dollars.

The accompanying unaudited condensed consolidated financial statements and related notes should be read in conjunction with the Company’s audited consolidated financial statements for the year ended December 31, 2020, which are included in the Company’s 2020 Annual Report on Form 10-K.

There have been no material changes to the Company’s significant accounting policies during the the nine months ended September 30, 2021 compared with the significant accounting policies disclosed in Note 2 of the consolidated financial statements for the years ended December 31, 2020 and 2019, which are included in the Company’s 2020 Annual Report on Form 10-K.

Consolidation

The accompanying condensed consolidated financial statements include the Company’s wholly owned subsidiaries, Liquidia Technologies and Liquidia PAH. All intercompany accounts and transactions have been eliminated.

Use of Estimates

The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and the disclosure of contingent assets and liabilities, at the date of the financial statements, as well as the reported amounts of revenues and expenses during the period. These estimates are based on historical experience and various other assumptions believed reasonable under the circumstances. The Company evaluates its estimates on an ongoing basis and makes changes to the estimates and

related disclosures as experience develops or new information becomes known. Actual results will most likely differ from those estimates.

Cash and Cash Equivalents

The Company considers all highly liquid investments with a maturity of three months or less at the date of purchase to be cash equivalents. Cash and cash equivalents as of September 30, 2021 were $64.1 million and included cash investments in money market funds of $63.1 million. Cash as of December 31, 2020 was $65.3 million and included no cash equivalents.

Accounts Receivable

Accounts receivable are stated at net realizable value including an allowance for doubtful accounts as of each balance sheet date, if applicable. As of September 30, 2021 and December 31, 2020, the Company has not recorded an allowance for doubtful accounts.

Business Combination

In a business combination, the acquisition method of accounting requires that the assets acquired and liabilities assumed be recorded as of the date of the acquisition at their respective fair values with limited exceptions. Assets acquired and liabilities assumed in a business combination that arise from contingencies are generally recognized at fair value. If fair value cannot be determined, the asset or liability is recognized if probable and reasonably estimable; if these criteria are not met, no asset or liability is recognized. Transaction costs and costs to restructure the acquired company are expensed as incurred. The operating results of the acquired business are reflected in the Company’s consolidated financial statements after the date of the acquisition.

Long-Lived Assets

The Company reviews long-lived assets, including definite-life intangible assets, for realizability on an ongoing basis. Changes in depreciation and amortization, generally accelerated depreciation and variable amortization, are determined and recorded when estimates of the remaining useful lives or residual values of long-term assets change. The Company also reviews for impairment when conditions exist that indicate the carrying amount of the assets may not be fully recoverable. In those circumstances, the Company performs undiscounted operating cash flow analyses to determine if an impairment exists. When testing for asset impairment, the Company groups assets and liabilities at the lowest level for which cash flows are separately identifiable. Any impairment loss is calculated as the excess of the asset’s carrying value over its estimated fair value. Fair value is estimated based on the discounted cash flows for the asset group over the remaining useful life or based on the expected cash proceeds for the asset less costs of disposal. Any impairment losses would be recorded in the consolidated statements of operations. To date, no such impairments have occurred.

Goodwill

The Company acquired goodwill on its condensed consolidated balance sheet during the fourth quarter of 2020 from the Merger Transaction. The Company assesses goodwill for impairment at least annually as of July 1 or whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. For example, significant and unanticipated changes or our inability to obtain or maintain regulatory approvals for our product candidates, including the NDA for LIQ861, could trigger testing of our goodwill for impairment at an interim date. The Company has one reporting unit. The Company has the option to first assess qualitative factors to determine whether events or circumstances indicate it is more likely than not that the fair value of a reporting unit is greater than its carrying amount, in which case a quantitative impairment test is not required.

Per ASU 2017-04 the quantitative goodwill impairment test is performed by comparing the fair value of the reporting unit with its carrying amount, including goodwill. If the fair value of the reporting unit exceeds its carrying amount,

goodwill is not impaired. An impairment loss is recognized for any excess of the carrying amount of the reporting unit’s goodwill over the fair value up to the amount of goodwill allocated to the reporting unit. Income tax effects from any tax-deductible goodwill on the carrying amount of the reporting unit are considered when measuring the goodwill impairment loss, if applicable. The Company completed its annual impairment test as of July 1, 2021 and concluded that no impairments have occurred.

Concentration of Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk consist of cash and cash equivalents. The Company is exposed to credit risk, subject to federal deposit insurance, in the event of default by the financial institutions holding its cash and cash equivalents to the extent of amounts recorded on the condensed consolidated balance sheet. 100% of the Company’s cash and cash equivalents are held with Silicon Valley Bank (“SVB”).

For the three and nine months ended September 30, 2021, one customer accounted for 99% of revenue. As of September 30, 2021 one customer accounted for 99% of the Company's accounts receivable.

Revenue Recognition

The Company recognizes revenue in accordance with Accounting Standards Update (ASU) 2014-09, Revenue from Contracts with Customers (Topic 606). The core principle of Topic 606 is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. The following five steps are applied to achieve that core principle:

●

Step 1: Identify the contract with the customer

●

Step 2: Identify the performance obligations in the contract

●

Step 3: Determine the transaction price

●

Step 4: Allocate the transaction price to the performance obligations in the contract

●

Step 5: Recognize revenue when the company satisfies a performance obligation

In order to identify the performance obligations in a contract with a customer, the Company assesses the promised goods or services in the contract and identifies each promised good or service that is distinct.

If a good or service is not distinct, the good or service is combined with other promised goods or services until a bundle of goods or services is identified that is distinct.

The transaction price is the amount of consideration to which an entity expects to be entitled in exchange for transferring promised goods or services to a customer. The consideration promised in a contract with a customer may include fixed amounts, variable amounts, or both.

Variable consideration is included in the transaction price only to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved. The Company evaluates any non-cash consideration, consideration payable to the customer, potential returns and refunds, and whether consideration contains a significant financing element in determining the transaction price.

Revenue is measured based on consideration specified in a contract with a customer. The Company recognizes revenue when it satisfies a performance obligation by transferring control over a service to a customer. The amount of revenue

recognized reflects estimates for refunds and returns, which are presented as a reduction of Accounts receivable where the right of setoff exists.

Stock-Based Compensation

The Company estimates the grant date fair value of its stock-based awards and amortizes this fair value to compensation expense on a straight-line basis over the requisite service period, which is generally the vesting period of the respective award (see Note 7). The grant date fair value of stock options is determined using the Black-Scholes option-pricing model.

Net Loss Per Share

Basic net loss per share is calculated by dividing net loss attributable to common stockholders by the weighted average shares outstanding during the period, without consideration of common stock equivalents.

Diluted net loss per share is calculated by adjusting the weighted average shares outstanding for the dilutive effect of common stock equivalents outstanding for the period, determined using the treasury-stock method. For purposes of the diluted net loss per share calculation, stock options, restricted stock units and the SVB Warrant (see Note 13) are considered to be common stock equivalents but are excluded from the calculation of diluted net loss per share because their effect would be anti-dilutive as the Company is in a net loss position for all periods presented. Due to their anti-dilutive effect, the calculation of diluted net loss per share for the three and nine months ended September 30, 2021 and 2020 does not include the following common stock equivalent shares:


	Three Months Ended		Nine Months Ended
	September 30,		September 30,
	2021	2020	2021	2020
Stock Options	5,451,114	2,747,538	5,101,347	2,516,604
Restricted Stock Units	283,691	123,369	304,230	98,355
SVB Warrant	200,000	—	158,242	—
Total	5,934,805	2,870,907	5,563,819	2,614,959

For the three and nine months ended September 30, 2021 and 2020, certain common stock warrants are included in the calculation of basic and diluted net loss per share since their exercise price is de minimis.

Recent Accounting Pronouncements

In March 2020, the Financial Accounting Standards Board ("FASB") issued guidance that provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by the discontinuation of the London Interbank Offered Rate (“LIBOR”) or by another reference rate expected to be discontinued. The Company adopted this guidance during the first quarter of 2021 and it did not have a material impact on its consolidated financial position, results of operations or cash flows.

In August 2020, the FASB issued ASU 2020-06, Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. This guidance simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts in an entity’s own equity. Key provisions of the guidance include reducing the number of accounting models, simplifying the earnings per share calculations and expanding the disclosures related to convertible instruments. The guidance is effective for fiscal years, and interim periods within these fiscal years, beginning after December 15, 2021. The Company is in the process of evaluating the impact of this guidance on its consolidated financial statements and related disclosures.

In May 2021, the FASB issues ASU 2021-04, Issuer’s Accounting for certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options. This guidance clarifies and reduces diversity in the accounting for modifications or exchanges of freestanding equity-classified written call options (for example warrants) that remain equity classified after modification or exchange. The guidance is effective for fiscal years, and interim periods within

those fiscal years, beginning after December 15, 2021. The Company is in the process of evaluating the impact of this guidance on its consolidated financial statements and related disclosures.

Fair Value of Measurements

The Company’s valuation of financial instruments is based on a three-tiered approach, which requires that fair value measurements be classified and disclosed in one of three tiers. The fair value hierarchy defines a three-level valuation hierarchy for disclosure of fair value measurements as follows:

Level 1 — Quoted prices in active markets for identical assets or liabilities;

Level 2 — Other than quoted prices included in Level 1 inputs that are observable for the asset or liability, either directly or indirectly; and

Level 3 — Unobservable inputs for the asset and liability used to measure fair value, to the extent that observable inputs are not available.

The categorization of a financial instrument within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The following tables present the placement in the fair value hierarchy of financial liabilities measured at fair value as of September 30, 2021 and December 31, 2020:


	Quoted		Significant
	Prices in		Other		Significant
	Active		Observable		Unobservable
	Markets		Inputs		Inputs		Carrying
September 30, 2021	(Level 1)		(Level 2)		(Level 3)		Value
Assets
Money market mutual funds	$	63,053,795	$	—	$	—	$	63,053,795
Liabilities
Silicon Valley Bank term loan	$	—	$	10,274,486	$	—	$	10,331,648

Quoted

Significant

Prices in

Other

Significant

Active

Observable

Unobservable

Markets

Inputs

Carrying

December 31, 2020

(Level 1)

(Level 2)

(Level 3)

Value

Liabilities

Pacific Western Bank term loan

—

9,842,069

—

10,292,485

Money market mutual funds are included in cash and cash equivalents on the Company's condensed consolidated balance sheets. They are valued using quoted market prices and therefore are classified within Level 1 of the fair value hierarchy.

The carrying amounts reflected in the Company's condensed consolidated balance sheets for cash and cash equivalents, prepaid expenses and other current assets, accounts payable and accrued expenses and other liabilities approximate their fair values due to their short-term nature.

The fair value of debt is measured in accordance with ASU 2016-01, Financial Instruments–Overall: Recognition and Measurement of Financial Assets and Financial Liabilities. The fair value is determined based on the exit price notion using credit spreads and an illiquidity premium for each loan. The credit spread is determined by the credit risk rating, loan rate index, and maturity date. The illiquidity premium is based on the loan’s credit risk rating.

Consolidated Statements of Stockholders' Equity - USD ($)	Common Stock	Additional Paid-in Capital	Accumulated Deficit	Total
Balance (in shares) at Dec. 31, 2019	28,231,267
Balance at Dec. 31, 2019	$ 28,231	$ 250,158,766	$ (215,239,450)	$ 34,947,547
Issuance of common stock upon exercise of stock options (in shares)	2,035
Issuance of common stock upon exercise of stock options	$ 2	(2)	0	0
Issuance of common stock upon vesting of restricted stock units (in shares)	702
Issuance of common stock upon vesting of restricted stock units	$ 1	(1)	0	0
Issuance of common stock under employee stock purchase plan (in shares)	3,269
Issuance of common stock under employee stock purchase plan	$ 3	11,488	0	11,491
Sale of common stock, net (in shares)	131,425
Sale of common stock, net	$ 131	725,267	0	725,398
Stock-based compensation	0	878,963	0	878,963
Net loss	$ 0	0	(14,791,479)	(14,791,479)
Balance (in shares) at Mar. 31, 2020	28,368,698
Balance at Mar. 31, 2020	$ 28,368	251,774,481	(230,030,929)	21,771,920
Balance (in shares) at Dec. 31, 2019	28,231,267
Balance at Dec. 31, 2019	$ 28,231	250,158,766	(215,239,450)	34,947,547
Net loss				(43,676,260)
Balance (in shares) at Sep. 30, 2020	37,752,261
Balance at Sep. 30, 2020	$ 37,752	324,159,065	(258,915,710)	65,281,107
Balance (in shares) at Mar. 31, 2020	28,368,698
Balance at Mar. 31, 2020	$ 28,368	251,774,481	(230,030,929)	21,771,920
Issuance of common stock upon exercise of stock options (in shares)	5,184
Issuance of common stock upon exercise of stock options	$ 5	25,646	0	25,651
Issuance of common stock upon vesting of restricted stock units (in shares)	703
Issuance of common stock upon vesting of restricted stock units	$ 1	(1)	0	0
Stock-based compensation	0	988,119	0	988,119
Net loss	$ 0	0	(13,916,101)	(13,916,101)
Balance (in shares) at Jun. 30, 2020	28,374,585
Balance at Jun. 30, 2020	$ 28,374	252,788,245	(243,947,030)	8,869,589
Issuance of common stock upon exercise of stock options (in shares)	153
Issuance of common stock upon exercise of stock options	$ 0	273	0	273
Issuance of common stock upon vesting of restricted stock units (in shares)	702
Issuance of common stock upon vesting of restricted stock units	$ 1	(1)	0	0
Issuance of common stock under employee stock purchase plan (in shares)	1,821
Issuance of common stock under employee stock purchase plan	$ 2	7,923	0	7,925
Sale of common stock, net (in shares)	9,375,000
Sale of common stock, net	$ 9,375	70,281,625	0	70,291,000
Stock-based compensation	0	1,081,000	0	1,081,000
Net loss	$ 0	0	(14,968,680)	(14,968,680)
Balance (in shares) at Sep. 30, 2020	37,752,261
Balance at Sep. 30, 2020	$ 37,752	324,159,065	(258,915,710)	65,281,107
Balance (in shares) at Dec. 31, 2020	43,336,277
Balance at Dec. 31, 2020	$ 43,336	346,044,721	(275,002,219)	71,085,838
Issuance of common stock upon exercise of stock options (in shares)	281
Issuance of common stock upon exercise of stock options	$ 0	494	0	494
Issuance of common stock upon vesting of restricted stock units (in shares)	10,366
Issuance of common stock upon vesting of restricted stock units	$ 11	(11)	0	0
Issuance of warrants	0	261,000	0	261,000
Stock-based compensation	0	745,000	0	745,000
Net loss	$ 0	0	(9,183,153)	(9,183,153)
Balance (in shares) at Mar. 31, 2021	43,346,924
Balance at Mar. 31, 2021	$ 43,347	347,051,204	(284,185,372)	62,909,179
Balance (in shares) at Dec. 31, 2020	43,336,277
Balance at Dec. 31, 2020	$ 43,336	346,044,721	(275,002,219)	$ 71,085,838
Issuance of common stock upon exercise of stock options (in shares)				623
Net loss				$ (23,015,531)
Balance (in shares) at Sep. 30, 2021	51,976,804
Balance at Sep. 30, 2021	$ 51,977	370,929,782	(298,017,750)	72,964,009
Balance (in shares) at Mar. 31, 2021	43,346,924
Balance at Mar. 31, 2021	$ 43,347	347,051,204	(284,185,372)	62,909,179
Issuance of common stock upon vesting of restricted stock units (in shares)	2,088
Issuance of common stock upon vesting of restricted stock units	$ 2	(2)	0	0
Sale of common stock, net (in shares)	8,626,037
Sale of common stock, net	$ 8,626	21,701,323	0	21,709,949
Stock-based compensation	0	953,215	0	953,215
Net loss	$ 0	0	(6,551,486)	(6,551,486)
Balance (in shares) at Jun. 30, 2021	51,975,049
Balance at Jun. 30, 2021	$ 51,975	369,705,740	(290,736,858)	79,020,857
Issuance of common stock upon vesting of restricted stock units (in shares)	1,755
Issuance of common stock upon vesting of restricted stock units	$ 2	(2)	0	0
Stock-based compensation	0	1,224,044	0	1,224,044
Net loss	$ 0	0	(7,280,892)	(7,280,892)
Balance (in shares) at Sep. 30, 2021	51,976,804
Balance at Sep. 30, 2021	$ 51,977	$ 370,929,782	$ (298,017,750)	$ 72,964,009

Property, Plant and Equipment (Tables)

9 Months Ended

Sep. 30, 2021

Property, Plant and Equipment

Property, Plant and Equipment [Table Text Block]


	September 30,		December 31,
	2021		2020
Lab and build-to-suit equipment	$	7,544,098	$	7,499,645
Office equipment		28,410		31,205
Furniture and fixtures		257,774		257,774
Computer equipment		463,789		404,558
Leasehold improvements		11,506,332		11,524,738
Construction-in-progress		—		65,820
Total property, plant and equipment		19,800,403		19,783,740
Accumulated depreciation and amortization		(14,348,134)		(12,978,170)
Property, plant and equipment, net	$	5,452,269	$	6,805,570

Document And Entity Information - shares	9 Months Ended
Document And Entity Information - shares	Sep. 30, 2021	Oct. 28, 2021
Document Information [Line Items]
Entity Central Index Key	0001819576
Entity Registrant Name	LIQUIDIA CORPORATION
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Document Fiscal Period Focus	Q3
Document Fiscal Year Focus	2021
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Sep. 30, 2021
Document Transition Report	false
Entity File Number	001-39724
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	85-1710962
Entity Address, Address Line One	419 Davis Drive, Suite 100
Entity Address, City or Town	Morrisville
Entity Address, State or Province	NC
Entity Address, Postal Zip Code	27560
City Area Code	919
Local Phone Number	328-4400
Title of 12(b) Security	Common stock, $0.001 par value per share
Trading Symbol	LQDA
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	true
Entity Ex Transition Period	true
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		51,977,995

Income Taxes

9 Months Ended

Sep. 30, 2021

Income Taxes

Income Taxes

11. Income Taxes

The Company did not record a federal or state income tax expense or benefit during the three and nine months ended September 30, 2021 as a result of the establishment of a full valuation allowance being required against the Company’s net deferred tax assets.

- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

+ References + Details

Long-Term Debt

9 Months Ended

Sep. 30, 2021

Long-term Debt

Long-term Debt

13. Long-Term Debt

Long-term debt consisted of the following as of September 30, 2021 and December 31, 2020:


		September 30,		December 31,
	Maturity Date	2021		2020
Pacific Western Bank term loan	October 25, 2022	$	—	$	10,292,485
Silicon Valley Bank term loan	September 1, 2024		10,331,648		—
Less current portion			—		—
Long-term debt		$	10,331,648	$	10,292,485

During 2020, the Company, Liquidia Merger Sub and RareGen Merger Sub entered into a Joinder and Second Amendment to Amended and Restated Loan and Security Agreement, dated as of October 26, 2018 (the “A&R LSA”), with Pacific Western Bank (“PWB”). The A&R LSA included interest only payments through December 2019 with principal and interest payments beginning in January 2020 and was scheduled to mature in October 2022.

The Company and its two wholly owned subsidiaries, Liquidia Technologies and Liquidia PAH, entered into a Loan and Security Agreement with SVB on February 26, 2021 (the “Effective Date”) and a First Loan Modification Agreement with SVB on August 26, 2021. The Loan and Security Agreement, as amended by the First Loan Modification Agreement, is referred to as the “Loan Agreement.” The Loan Agreement established a term loan facility in the aggregate principal amount of up to $20.5 million (the “Term Loan Facility”). An initial $10.5 million (the “Term A Loan”) was funded on March 1, 2021 and was used to satisfy the Company’s existing obligations under the A&R LSA, consisting of approximately $9.4 million in outstanding principal and interest, and such obligations are considered fully repaid and terminated as of that date, with the excess proceeds funded to the Company. The Company accounted for the repayment of the A&R LSA in accordance with ASC 405, Extinguishments of Liabilities, which resulted in a loss on extinguishment during the nine months ended September 30, 2021 of approximately $53,150, which is included in interest expense in the consolidated statement of operations and comprehensive loss.

Availability of $5.0 million under a second tranche of the Term Loan Facility (the “Term B Loan”) is conditioned upon Liquidia having received tentative FDA approval for LIQ861 by June 30, 2022, and availability of $5.0 million under a third tranche of the Term Loan Facility (the “Term C Loan” and, collectively with the Term A Loan and Term B Loan, the “Term Loans”) is conditioned upon Liquidia having received final and unconditional FDA approval for LIQ861 by December 31, 2022.

As security for its obligations under the Loan Agreement, Liquidia granted SVB a continuing security interest in substantially all of the assets of Liquidia, other than intellectual property.

The Term Loans made under the Term Loan Facility mature on September 1, 2024 (the “Maturity Date”) and have an interest-only monthly payment period through March 31, 2023 (the “Interest-Only Period”). Following the Interest-Only Period, the Company will begin making monthly payments of principal and interest until the Maturity Date. Interest will accrue on the unpaid principal balance of the outstanding Term Loans at a floating per annum rate equal to the greater of

(i) the Wall Street Journal prime rate plus 0.75% and (ii) four percent (4.0%). Furthermore, on the earliest to occur of (x) the Maturity Date, (y) the date the Term Loans are repaid in full or (z) the date of termination of the Loan Agreement, the Company shall pay to SVB five percent (5.0%) of the aggregate original principal amount of all Term Loans made by SVB (the “Final Payment”).

In the event that Liquidia elects to terminate the Term Loan Facility in its entirety, it may do so at any time by paying the outstanding principal balance, unpaid accrued interest, the Final Payment and a prepayment fee equal to (i) five percent (5.0%) of the outstanding principal balance, if such prepayment is made during the Interest-Only Period or (ii) zero, if such prepayment is made after the Interest-Only Period and before the Maturity Date.

Subject to certain exceptions, the Loan Agreement contains covenants prohibiting the Company from, among other things, and subject to certain limited exceptions: (a) conveying, selling, leasing, transferring or otherwise disposing of its properties or assets; (b) liquidating or dissolving; (c) engaging in any business other than the business currently engaged in or reasonably related thereto by it or any of its subsidiaries; (d) engaging in mergers or acquisitions; (e) incurrence of additional indebtedness; (f) allowing any lien or encumbrance on any of its property; (g) paying any dividends; (h) repurchasing its equity; and (i) making payment on subordinated debt. In addition, the Loan Agreement requires Liquidia to maintain an unrestricted and unencumbered “Minimum Cash Balance” (as defined therein) equal to at least (i) $30.0 million during the period commencing on the Effective Date and including the date immediately prior to the funding date of the Term B Loan (the “Term B Loan Funding Date”) and (ii) during the period commencing on the Term B Loan Funding Date through and including the date immediately prior to the funding date of the Term C Loan (the “Term C Loan Funding Date”), $35.0 million. Moreover, in the event the Minimum Cash Balance is not achieved during any calendar quarter during the term of the Loan Agreement, the Loan Agreement requires Liquidia to maintain cumulative “Cash Burn” (as defined in the Loan Agreement) for the periods ending March 31, 2021, June 30, 2021, September 30, 2021, December 31, 2021 and March 31, 2022 and for each calendar quarter thereafter less than or equal to $10.5 million, $17.0 million, $56.1 million, $61.1 million and $65.6 million, respectively; provided, however, that the above amounts shall be increased by an amount equal to 75% of the aggregate net cash proceeds received by the Company from the sale of the Company’s equity securities on or after June 30, 2021 but on or prior to the last day of such calendar quarter; provided, further, that upon the Term C Loan Funding Date, the Cash Burn covenant shall no longer apply. The Company was in compliance with the loan covenants as of September 30, 2021.

The Loan Agreement also contains customary events of default, including among other things, the Company’s failure to make any principal or interest payments when due, the occurrence of certain bankruptcy or insolvency events or the Company’s breach of the covenants under the Loan Agreement, or other material adverse changes relating to Liquidia. Furthermore, per the Loan Agreement, an event of default shall occur upon any formal court ruling against Liquidia that the SVB determines in its good faith business judgment is reasonably likely to prohibit its ability to obtain final approval from the FDA with respect to its New Drug Application for LIQ861 or impair or delay Liquidia’s ability to commercialize LIQ861 as currently contemplated. Upon the occurrence of an event of default, SVB may, among other things, accelerate Liquidia’s obligations under the Loan Agreement.

In connection with the Loan Agreement, the Company issued to SVB a warrant, dated as of the Effective Date (the “SVB Warrant”) to purchase up to 200,000 shares of the Company’s common stock, $0.001 par value per share (the “Common Stock”), of which (x) 100,000 shares vested on the Effective Date, with an exercise price per share equal to $3.05 (the “Initial Tranche”), and (y) 50,000 shares shall become exercisable on each of the Term B Loan Funding Date and Term C Loan Funding Date (if these events occur), with an exercise price per share equal to the lower of (i) the trailing 10-day average price of the Common Stock on the applicable funding date and (ii) the closing price per share of Common Stock on the trading day prior to applicable funding date (the “Term B and C Tranches”). The SVB Warrant is exercisable for ten (10) years from the date of issuance, and will be exercised automatically on a net issuance basis if not exercised prior to the expiration date and if the then-current fair market value of one share of Common Stock is greater than the exercise price then in effect.

The Company evaluated the features of the Loan Agreement and SVB Warrant in accordance with ASC 480, Distinguishing Liabilities from Equity and ASC 815, Derivatives and Hedging. The Company determined that the Loan Agreement and Warrant did not contain any features that would qualify as a derivative or embedded derivative. In addition, the Company determined that the SVB Warrant should be classified as equity. The value of the SVB Warrant

is included in Additional Paid-in-Capital in the Company’s condensed consolidated balance sheet as of September 30, 2021. The estimated fair value of the SVB Warrant of was calculated using the Black-Scholes Option Pricing Model based on the following inputs:


Expected dividend yield		—
Risk-free interest rate		1.43%
Expected volatility		90.8%
Expected life (years)		10.0

In accordance with ASC 470, Debt, the value of the Warrant and the Term A Loan were allocated using a relative fair value allocation with $261,000 allocated to the Warrant as a debt discount and additional paid-in-capital and $10,239,000 allocated to the Term A Loan. In addition, the Company incurred fees of approximately $88,000, which were recorded as a reduction in the face value of the Term A Loan. The debt discount and debt issuance costs are being amortized to interest expense and the Final Payment is being accreted using the effective interest method over the term of the Term A Loan.

Scheduled annual maturities of long-term debt as of September 30, 2021 are as follows:


Year ending December 31:
2021 – three months remaining	$	—
2022		—
2023		5,250,000
2024		5,250,000
Thereafter		—
Total		10,500,000
Less: Unamortized discount, debt issuance costs and accretion		(168,352)
Less: Current portion of long-term debt		—
Long-term debt, noncurrent	$	10,331,648

Basis of Presentation, Significant Accounting Policies and Fair Value Measurements

9 Months Ended

Sep. 30, 2021

Basis of Presentation, Significant Accounting Policies and Fair Value Measurements

Basis of Presentation, Significant Accounting Policies and Fair Value Measurements

2. Basis of Presentation, Significant Accounting Policies and Fair Value Measurements

Basis of Presentation

Consolidation

Use of Estimates

related disclosures as experience develops or new information becomes known. Actual results will most likely differ from those estimates.

Summary of Significant Accounting Policies

Cash and Cash Equivalents

Accounts Receivable

Business Combination

Long-Lived Assets

Goodwill

Concentration of Credit Risk

For the three and nine months ended September 30, 2021, one customer accounted for 99% of revenue. As of September 30, 2021 one customer accounted for 99% of the Company's accounts receivable.

Revenue Recognition

●

Step 1: Identify the contract with the customer

●

Step 2: Identify the performance obligations in the contract

●

Step 3: Determine the transaction price

●

Step 4: Allocate the transaction price to the performance obligations in the contract

●

Step 5: Recognize revenue when the company satisfies a performance obligation

If a good or service is not distinct, the good or service is combined with other promised goods or services until a bundle of goods or services is identified that is distinct.

recognized reflects estimates for refunds and returns, which are presented as a reduction of Accounts receivable where the right of setoff exists.

Stock-Based Compensation

Net Loss Per Share


	Three Months Ended		Nine Months Ended
	September 30,		September 30,
	2021	2020	2021	2020
Stock Options	5,451,114	2,747,538	5,101,347	2,516,604
Restricted Stock Units	283,691	123,369	304,230	98,355
SVB Warrant	200,000	—	158,242	—
Total	5,934,805	2,870,907	5,563,819	2,614,959

Recent Accounting Pronouncements

those fiscal years, beginning after December 15, 2021. The Company is in the process of evaluating the impact of this guidance on its consolidated financial statements and related disclosures.

Fair Value of Measurements

Level 1 — Quoted prices in active markets for identical assets or liabilities;

Level 2 — Other than quoted prices included in Level 1 inputs that are observable for the asset or liability, either directly or indirectly; and

Level 3 — Unobservable inputs for the asset and liability used to measure fair value, to the extent that observable inputs are not available.


	Quoted		Significant
	Prices in		Other		Significant
	Active		Observable		Unobservable
	Markets		Inputs		Inputs		Carrying
September 30, 2021	(Level 1)		(Level 2)		(Level 3)		Value
Assets
Money market mutual funds	$	63,053,795	$	—	$	—	$	63,053,795
Liabilities
Silicon Valley Bank term loan	$	—	$	10,274,486	$	—	$	10,331,648

Quoted

Significant

Prices in

Other

Significant

Active

Observable

Unobservable

Markets

Inputs

Carrying

December 31, 2020

(Level 1)

(Level 2)

(Level 3)

Value

Liabilities

Pacific Western Bank term loan

—

9,842,069

—

10,292,485

Contract Acquisition Costs, Intangible Asset, and Goodwill (Details) - USD ($)	3 Months Ended	9 Months Ended
	Sep. 30, 2021	Sep. 30, 2021	Dec. 31, 2020	Nov. 18, 2020
Business Acquisition [Line Items]
Contract acquisition costs	$ 10,439,634	$ 10,439,634	$ 12,792,491
Goodwill	3,903,282	3,903,282	3,903,282
Merger With RareGen LLC
Business Acquisition [Line Items]
Business Combination, Amortization Expense	779,873	2,350,086
Contract acquisition costs	10,439,634	10,439,634	$ 12,792,491	$ 12,980,000
Amortization of Intangible Assets, Total	$ 337,665	$ 1,017,526
Goodwill				3,903,282
Goodwill expected to be tax deductible				$ 0

License Agreements

9 Months Ended

Sep. 30, 2021

License Agreements

License Agreements

8. License Agreements

The Company performs research under a license agreement with The University of North Carolina at Chapel Hill (“UNC”) as amended to date (the “UNC License Agreement”). As part of the UNC License Agreement, the Company holds an exclusive license to certain research and development technologies and processes in various stages of patent pursuit, for use in its research and development and commercial activities, with a term until the expiration date of the last to expire patent subject to the UNC License Agreement, subject to industry standard contractual compliance. 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 LIQ861. The Company may grant sublicenses of UNC licensed intellectual property in return for specified payments based on a percentage of any fee, royalty or other consideration received.

Stockholders' Equity Authorized Capital

9 Months Ended

Sep. 30, 2021

Stockholders' Equity Authorized Capital

Stockholders' Equity Authorized Capital

6. Stockholders’ Equity Authorized Capital

As of September 30, 2021, the authorized capital of the Company consists of 90,000,000 shares of capital stock, $0.001 par value per share, of which 80,000,000 shares are designated as common stock and 10,000,000 shares are designated as preferred stock.

Common Stock

Upon any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Company, the holders of the common stock shall be entitled to receive that portion of the remaining funds to be distributed to the stockholders, subject to the liquidation preferences of any outstanding preferred stock, if any. Such funds shall be paid to the holders of common stock on the basis of the number of shares so held by each of them.

Issuance of Common Stock on April 13, 2021 from a Private Placement

On April 12, 2021, the Company entered into a Common Stock Purchase Agreement (the “Purchase Agreement”) with a fund and account managed by Caligan Partners LP and certain other accredited investors for the sale by the Company in a private placement (the “Private Placement”) of an aggregate of 8,626,037 shares of the Company’s Common Stock at a purchase price of $2.52 per share.

The Private Placement closed on April 13, 2021 and the Company received gross proceeds of approximately $21.7 million. The Company intends to use the proceeds from the Private Placement to strengthen its commercial capability for the introduction of LIQ861 and the subcutaneous administration of Treprostinil Injection, for growth initiatives, and for general corporate purposes.

Issuance of Common Stock on July 2, 2020 from an Underwritten Public Offering

On June 29, 2020, the Company entered into an underwriting agreement (the “Underwriting Agreement”) with Jefferies LLC, as representative of the several underwriters named therein (collectively, the “Underwriters”), pursuant to which 9,375,000 shares of the Company’s Common Stock were sold in an underwritten registered public offering at an offering price of $8.00 per Share (the “Offering”).

The Offering closed on July 2, 2020, and the Company received net proceeds of approximately $70.3 million from the sale of the Shares, after deducting the underwriting discounts and commissions and other offering expenses. The

Company intends to use the net proceeds from this Offering for ongoing commercial development of LIQ861 and for general corporate purposes. The Company’s management will retain broad discretion over the allocation of the net proceeds.

Issuance of Common Stock from the ATM Agreement Commencing in August 2019

In August 2019, the Company entered into a sales agreement (the “ATM Agreement”) with Jefferies LLC (“Jefferies”) to issue and sell shares of the Company’s common stock, having an aggregate offering price of up to $40.0 million, from time to time during the term of the ATM Agreement, through an “at-the-market” equity offering program at the Company’s sole discretion, under which Jefferies acted as the Company’s agent and/or principal. The Company paid Jefferies a commission equal to 3.0% of the gross proceeds of any common stock sold through Jefferies under the ATM Agreement. During the nine months ended September 30, 2021, the Company sold 131,425 shares of common stock for net proceeds of $0.7 million after deducting the underwriting discounts and other offering expenses under the ATM Agreement. The ATM Agreement terminated upon the closing of the Merger Transaction.

Warrants

During the nine months ended September 30, 2021 and 2020, no warrants to purchase shares of common stock were exercised.

As of September 30, 2021 outstanding warrants consisted of the following:


	Number of
	warrants	Exercise Price		Expiration Date
SVB Warrant - Initial Tranche (see Note 13)	100,000	$	3.05	February 26, 2031
SVB Warrant - Term B and Term C Tranches (see Note 13)	100,000	$	n/a	February 26, 2031
Other warrants	106,274	$	0.02	December 31, 2026

As of December 31, 2020 outstanding warrants consisted of the following:


	Number of
	warrants	Exercise Price		Expiration Date
Other warrants	106,274	$	0.02	December 31, 2026

Stock-Based Compensation

9 Months Ended

Sep. 30, 2021

Stock-Based Compensation.

Stock-Based Compensation

7. Stock-Based Compensation

The Company’s 2020 Long-Term Incentive Plan (the “2020 Plan”) was approved by stockholders in November 2020. In addition to stock options, the 2020 Plan provides for the granting of stock appreciation rights, stock awards, stock units, and other stock-based awards. The 2020 Plan provides for accelerated vesting under certain change of control transactions. A total of 1,700,000 shares of the Company’s common stock was initially authorized and reserved for issuance under the 2020 Plan. This reserve will automatically increase each subsequent anniversary of January 1 through 2030, by an amount equal to the smaller of (a) 4% of the number of shares of common stock issued and outstanding on the immediately preceding December 31, or (b) an amount determined by the Board of Directors (the “Evergreen Provision”). On January 1, 2021, the number of shares of common stock available for issuance under the 2020 Plan automatically increased by 1,733,432 shares to 2,955,432 shares from 1,222,000 pursuant to the Evergreen Provision. As of September 30, 2021, the Company had 939,709 shares available to issue under the 2020 Plan.

The 2020 Plan replaced the Company’s 2018 Long-Term Incentive Plan (the “2018 Plan”) and as a result the 2018 Plan was discontinued. The 2018 Plan had replaced the 2016 Equity Incentive Plan (the “2016 Plan”) and 2004 Stock Option Plan (the “2004 Plan”) as the Company’s primary long-term incentive program. The 2018, 2016 and 2004 Plans have been discontinued but the outstanding awards under the 2018, 2016 and 2004 Plans will continue to remain in effect in accordance with their terms. Shares that are returned under the 2018, 2016 and 2004 Plans upon cancellation, termination or otherwise of awards outstanding under the 2018, 2016 and 2004 Plans will not be available for grant under the 2020 Plan. As of September 30, 2021, the Company had reserved for issuance 894,072 shares of common

stock under the 2018 Plan, 313,652 shares of common stock under the 2016 Plan and 200,392 shares of common stock under the 2004 Plan, representing the remaining outstanding options granted under the 2018, 2016 and 2004 Plans.

During December 2020, the Company issued a stock option grant to its new chief executive officer (the “CEO”) to purchase up to 2,000,000 shares of the Company’s common stock (the “CEO Option”) at the exercise price on the grant date of $3.00 per share. The CEO Option was issued outside of the 2020 Plan and is subject to the following vesting schedule: 25% of the CEO Option will become vested and exercisable on the first anniversary of December 14, 2020 and the balance will become vested and exercisable in equal monthly installments over the following thirty-six months, subject to the CEO’s continuous employment with the Company. However, the CEO Option is subject to the following accelerated vesting events:

(i)

If the Company receives tentative approval by the FDA of the Company’s New Drug Application for LIQ861 prior to June 30, 2022, and the CEO is actively employed by the Company on such date, then 25% of the then-unvested portion of the CEO Option shall become vested and exercisable as of the date of the FDA’s tentative approval. As of September 30, 2021 this event had not occurred.

(ii)

If the Company achieves commercial availability of the subcutaneous Treprostinil product with cartridge supplies sufficient to support the market for one year by December 31, 2021, and the CEO is actively employed by the Company on such date, then 25% of the then-unvested portion of the CEO Option shall become vested and exercisable as of the date the Company can document by competent proof to the Board of the achievement of such milestone. In addition, the CEO Option will become 100% vested upon certain change of control transactions. As of September 30, 2021 this event was deemed probable to occur and an additional $236,176 charge to stock-based compensation expense was recorded during the quarter ended September 30, 2021 associated with the acceleration.

Stock-Based Compensation Valuation and Expense

The Company accounts for its employee stock-based compensation plans using the fair value method. The fair value method requires the Company to estimate the grant-date fair value of its stock-based awards and amortize this fair value to compensation expense over the requisite service period or vesting term. The fair value of each option grant is estimated using a Black-Scholes option-pricing model.

For restricted stock units (“RSUs”), the grant-date fair value is based upon the market price of the Company’s common stock on the date of the grant. This fair value is then amortized to compensation expense over the requisite service period or vesting term.

The Company recorded the following stock-based compensation expense:


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
By Expense Category:	2021		2020		2021		2020
Research and development	$	288,116	$	292,386	$	816,966	$	853,704
General and administrative		935,928		788,614		2,105,293		2,094,378
Total stock-based compensation expense	$	1,224,044	$	1,081,000	$	2,922,259	$	2,948,082


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
By Type of Award:	2021		2020		2021		2020
Stock options	$	1,218,694	$	1,044,991	$	2,927,149	$	2,843,409
Restricted stock units		5,350		36,009		(4,890)		104,673
Total stock-based compensation expense	$	1,224,044	$	1,081,000	$	2,922,259	$	2,948,082

The following table summarizes the unamortized compensation expense and the remaining years over which such expense would be expected to be recognized, on a weighted average basis, by type of award:


	As of September 30, 2021
			Weighted
			Average
			Remaining
			Recognition
	Unamortized		Period
	Expense		(Years)
Stock options	$	9,139,975	3.1
Restricted stock units	$	812,560	1.3

Stock Options

The following table summarizes the assumptions used for estimating the fair value of stock options granted under the Black-Scholes option-pricing model during:


	Nine Months Ended
	September 30,
	2021	2020
Expected dividend yield	—	—
Risk-free interest rate	0.62% - 1.67%	0.40% - 1.60%
Expected volatility	91% - 96%	87% - 90%
Expected life (years)	5.2 - 6.1	6.3

As a result of using these assumptions in the Black-Scholes option-pricing model, the weighted average fair value for options granted during the nine months ended September 30, 2021 and 2020 was $2.02 and $4.16 per share, respectively.

The following describes each of these assumptions and the Company’s methodology for determining each assumption:

Expected Dividend Yield

The dividend yield percentage is zero because the Company neither currently pays dividends nor intends to do so during the expected option term.

Risk-Free Interest Rate

The risk-free interest rate is based on the U.S. Treasury yield curve approximating the term of the expected life of the award in effect on the date of grant.

Expected Volatility

Expected stock price volatility is based on a weighted average of several peer public companies and the historical volatility of the Company’s common stock during the period for which it has traded since the initial public offering. For purposes of identifying peer companies, the Company considered characteristics such as industry, length of trading history and similar vesting terms.

Expected Life

The expected life represents the period the awards are expected to be outstanding. The Company’s historical share option exercise experience does not provide a reasonable basis upon which to estimate an expected term because of a lack of sufficient data. Therefore, the Company estimates the expected term by using the simplified method.

The following table summarizes the Company’s stock option activity during the nine months ended September 30, 2021:


				Weighted
		Weighted		Average
		Average		Contractual	Aggregate
	Number of	Exercise		Term	Intrinsic
	Shares	Price		(in years)	Value
Outstanding as of December 31, 2020	4,692,071	$	5.51
Granted	2,000,750		2.70
Exercised	(623)		2.33
Cancelled	(1,062,059)		7.11
Outstanding as of September 30, 2021	5,630,139	$	4.21	8.3	$	291,098
Exercisable as of September 30, 2021	1,308,478	$	7.22	5.0	$	49,750
Vested and expected to vest as of September 30, 2021	5,605,939	$	4.20	8.3	$	291,098

The aggregate intrinsic value of stock options in the table above represents the difference between the $2.76 closing price of the Company’s common stock as of September 30, 2021 and the exercise price of outstanding, exercisable, and vested and expected to vest in-the-money stock options.

Restricted Stock Units

Restricted Stock Units (“RSUs”) represent the right to receive shares of common stock of the Company at the end of a specified time period or upon the achievement of a specific milestone. RSUs can only be settled in shares of the Company’s common stock. During the nine months ended September 30, 2021, the Board of Directors approved grants of an aggregate of 334,015 performance-based RSUs to employees. These performance RSUs vest upon the tentative approval by the FDA of the Company’s New Drug Application for LIQ861. The achievement of this performance milestone was not deemed probable as of September 30, 2021. During March 2020, the Board of Directors approved grants of an aggregate of 138,464 non-performance-based RSUs to employees. RSUs represent the right to receive shares of common stock of the Company at the end of a specified time period. The RSUs vest over a four-year period similar to stock options granted to employees.

A summary of nonvested RSU awards outstanding as of September 30, 2021 and changes during the nine months then ended is as follows:


		Weighted
		Average
		Grant-Date
	Number of	Fair Value
	RSUs	(per RSU)
Nonvested as of December 31, 2020	88,131	$	4.68
Granted	334,015		2.97
Vested	(14,209)		3.33
Forfeited	(136,237)		3.99
Nonvested as of September 30, 2021	271,700	$	2.99

Employee Stock Purchase Plan

In November 2020, stockholders approved the Liquidia Corporation 2020 Employee Stock Purchase Plan (the “2020 ESPP”). As of September 30, 2021, a total of 300,000 shares of the Company’s common stock are reserved for issuance under the 2020 ESPP. The initial six-month offering period commenced on September 1, 2021 and will be followed by successive six-month offering periods. The 2020 ESPP allows eligible employees to purchase shares of the Company’s common stock at a discount through payroll deductions, subject to plan limitations. Unless otherwise determined by the administrator, the Company’s common stock will be purchased for the accounts of employees participating in the 2020 ESPP at a price per share that is 85% of the fair market value of the Company’s common stock on the last trading day of the offering period.

Long-term Debt - Summary (Details) - USD ($)	Sep. 30, 2021	Dec. 31, 2020
Debt Instrument [Line Items]
Long-term debt, less current portion	$ 10,331,648	$ 10,292,485
Pacific Western Bank Note, A&R LSA
Debt Instrument [Line Items]
Long-term debt		$ 10,292,485
Silicon Valley Bank Term Loan
Debt Instrument [Line Items]
Long-term debt	$ 10,331,648

Consolidated Statements of Operations and Comprehensive Loss - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Consolidated Statements of Operations and Comprehensive Loss
Revenue	$ 3,178,621	$ 0	$ 9,638,338	$ 0
Costs and expenses:
Cost of revenue	889,511	0	2,296,983	0
Research and development	4,487,098	7,660,979	15,136,201	26,974,320
General and administrative	4,881,669	7,151,788	14,639,752	16,201,249
Total costs and expenses	10,258,278	14,812,767	32,072,936	43,175,569
Loss from operations	(7,079,657)	(14,812,767)	(22,434,598)	(43,175,569)
Other income (expense):
Interest income	3,875	34,633	29,521	155,852
Interest expense	(205,110)	(190,546)	(610,454)	(656,543)
Total other income (expense), net	(201,235)	(155,913)	(580,933)	(500,691)
Net loss	(7,280,892)	(14,968,680)	(23,015,531)	(43,676,260)
Comprehensive loss	$ (7,280,892)	$ (14,968,680)	$ (23,015,531)	$ (43,676,260)
Net loss per common share, basic and diluted	$ (0.14)	$ (0.40)	$ (0.47)	$ (1.38)
Weighted average common shares outstanding, basic and diluted	52,081,497	37,755,472	48,822,303	31,576,992

Acquisition of RareGen, LLC (now Liquidia PAH, LLC) (Details) - USD ($) $ / shares in Units, $ in Millions	Dec. 31, 2020	Nov. 18, 2020	Sep. 30, 2021
Business Acquisition [Line Items]
Common stock, par value (in dollars per share)	$ 0.001		$ 0.001
Merger With RareGen LLC
Business Acquisition [Line Items]
Business Acquisition, Equity Interest Issued or Issuable, Number of Shares (in shares)	5,550,000	6,166,666
Common stock, par value (in dollars per share)		$ 0.001
Number of common units exchanged, representing all of the issued and outstanding RareGen equity		10,000
Cash threshold amount used to determine the pro-rata portion of RareGen cash at closing that RareGen members received		$ 1.0
Business Combination, Consideration Transferred, Total		$ 20.8
Merger With RareGen LLC \| Holdback Shares
Business Acquisition [Line Items]
Business Acquisition, Equity Interest Issued or Issuable, Number of Shares (in shares)		616,666
Merger With RareGen LLC \| Maximum
Business Acquisition [Line Items]
Business Acquisition, Number of Additional Shares Issuable Upon Achievement of Sales Target (in shares)		2,708,333

Basis of Presentation and Summary of Significant Accounting Policies (Tables)

9 Months Ended

Sep. 30, 2021

Basis of Presentation, Significant Accounting Policies and Fair Value Measurements

Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share [Table Text Block]


	Three Months Ended		Nine Months Ended
	September 30,		September 30,
	2021	2020	2021	2020
Stock Options	5,451,114	2,747,538	5,101,347	2,516,604
Restricted Stock Units	283,691	123,369	304,230	98,355
SVB Warrant	200,000	—	158,242	—
Total	5,934,805	2,870,907	5,563,819	2,614,959

Fair Value, Liabilities Measured on Recurring and Nonrecurring Basis [Table Text Block]


	Quoted		Significant
	Prices in		Other		Significant
	Active		Observable		Unobservable
	Markets		Inputs		Inputs		Carrying
September 30, 2021	(Level 1)		(Level 2)		(Level 3)		Value
Assets
Money market mutual funds	$	63,053,795	$	—	$	—	$	63,053,795
Liabilities
Silicon Valley Bank term loan	$	—	$	10,274,486	$	—	$	10,331,648

Quoted

Significant

Prices in

Other

Significant

Active

Observable

Unobservable

Markets

Inputs

Carrying

December 31, 2020

(Level 1)

(Level 2)

(Level 3)

Value

Liabilities

Pacific Western Bank term loan

—

9,842,069

—

10,292,485

Stock-Based Compensation - Stock Option Activity (Details)	9 Months Ended
	Sep. 30, 2021 USD ($) $ / shares shares
Stock-Based Compensation.
Outstanding, number of shares (in shares) \| shares	4,692,071
Outstanding, weighted average exercise price (in dollars per share) \| $ / shares	$ 5.51
Granted, number of shares (in shares) \| shares	2,000,750
Granted, weighted average exercise price (in dollars per share) \| $ / shares	$ 2.70
Exercised, number of shares (in shares) \| shares	(623)
Exercised, weighted average exercise price (in dollars per share) \| $ / shares	$ 2.33
Cancelled, number of shares (in shares) \| shares	(1,062,059)
Cancelled, weighted average exercise price (in dollars per share) \| $ / shares	$ 7.11
Outstanding, number of shares (in shares) \| shares	5,630,139
Outstanding, weighted average exercise price (in dollars per share) \| $ / shares	$ 4.21
Outstanding, weighted average contractual term (Year)	8 years 3 months 18 days
Outstanding, aggregate intrinsic value \| $	$ 291,098
Exercisable, number of shares (in shares) \| shares	1,308,478
Exercisable, weighted average exercise price (in dollars per share) \| $ / shares	$ 7.22
Exercisable, weighted average contractual term (Year)	5 years
Exercisable, aggregate intrinsic value \| $	$ 49,750
Vested and expected to vest, number of shares (in shares) \| shares	5,605,939
Vested and expected to vest, weighted average exercise price (in dollars per share) \| $ / shares	$ 4.20
Vested and expected to vest, weighted average contractual term (Year)	8 years 3 months 18 days
Vested and expected to vest, aggregate intrinsic value \| $	$ 291,098

Stock-Based Compensation (Details) - USD ($)		1 Months Ended			3 Months Ended					9 Months Ended
Stock-Based Compensation (Details) - USD ($)	Jan. 01, 2021	Dec. 31, 2020	Nov. 30, 2020	Mar. 31, 2020	Sep. 30, 2021	Mar. 31, 2021	Sep. 30, 2020	Jun. 30, 2020	Mar. 31, 2020	Sep. 30, 2021	Sep. 30, 2020
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross (in shares)										2,000,750
Share-based Compensation Arrangements by Share-based Payment Award, Options, Grants in Period, Weighted Average Exercise Price (in dollars per share)										$ 2.70
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Weighted Average Grant Date Fair Value (in dollars per share)										$ 2.02	$ 4.16
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Dividend Rate										0.00%
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period (in shares)										623
Restricted Stock Units (RSUs)
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period										4 years
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period (in shares)				138,464						334,015
Common Stock
Share Price (in dollars per share)					$ 2.76					$ 2.76
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period (in shares)						281	153	5,184	2,035
Chief Executive Officer
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross (in shares)		2,000,000
Share-based Compensation Arrangements by Share-based Payment Award, Options, Grants in Period, Weighted Average Exercise Price (in dollars per share)		$ 3.00
Additional compensation expense					$ 236,176
Chief Executive Officer \| Share-based Payment Arrangement, Tranche One
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Rights, Percentage		25.00%
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period		36 months
Chief Executive Officer \| Share-based Payment Arrangement, Tranche Two
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Rights, Percentage		25.00%
Chief Executive Officer \| Share-based Payment Arrangement, Tranche Three
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Rights, Percentage		25.00%
Chief Executive Officer \| Share-based Payment Arrangement, Tranche One, Two, Three, and Four
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Rights, Percentage										100.00%
The 2020 Plan
Common Stock, Capital Shares Reserved for Future Issuance (in shares)			1,700,000
Share-based Compensation Arrangement by Share-based Payment Award, Percent Annual Increase in Capital Shares Reserved for Future Issuance			4.00%
Share-based Compensation Arrangement by Share-based Payment Award, Number of Additional Shares Authorized (in shares)	1,733,432
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized (in shares)	2,955,432	1,222,000
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant (in shares)					939,709					939,709
The 2018 Plan
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant (in shares)					894,072					894,072
The 2016 Plan
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant (in shares)					313,652					313,652
The 2004 Plan
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant (in shares)					200,392					200,392
The ESPP
Common Stock, Capital Shares Reserved for Future Issuance (in shares)					300,000					300,000
Share-based Compensation Arrangement by Share-based Payment Award, Purchase Price of Common Stock, Percent										85.00%

Basis of Presentation, Significant Accounting Policies and Fair Value Measurements - Fair Value of Financial Liabilities (Details) - USD ($)	Sep. 30, 2021	Dec. 31, 2020
Money Market Funds \| Reported Value Measurement
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Money market funds	$ 63,053,795
Money Market Funds \| Fair Value, Inputs, Level 1 \| Estimate of Fair Value Measurement
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Money market funds	63,053,795
Pacific Western Bank Note, A&R LSA \| Reported Value Measurement
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Debt		$ 10,292,485
Pacific Western Bank Note, A&R LSA \| Fair Value, Inputs, Level 2 \| Estimate of Fair Value Measurement
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Debt		$ 9,842,069
Silicon Valley Bank Term Loan \| Reported Value Measurement
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Debt	10,331,648
Silicon Valley Bank Term Loan \| Fair Value, Inputs, Level 2 \| Estimate of Fair Value Measurement
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Debt	$ 10,274,486

Revenue From Contracts With Customers

9 Months Ended

Sep. 30, 2021

Revenue From Contracts With Customers

Revenue From Contracts With Customers

9. Revenue From Contracts With Customers

On August 1, 2018, the Company partnered with Sandoz in the Promotion Agreement to launch the first-to-file generic of Treprostinil Injection for the treatment of patients with PAH. Under the Promotion Agreement, the Company provides certain promotional and nonpromotional activities on an exclusive basis for the product in the United States of America for the treatment of PAH. In addition, the Company paid Sandoz $20 million at the inception of the Promotion Agreement, in consideration for the right to conduct the promotional and nonpromotional activities for the product. In exchange for its services, the Company is entitled to receive a portion of net profits, as defined within the Promotion Agreement, based on specified profit levels associated with the product.

The Company determined that certain activities within the contract are within the scope of ASC 808, Collaborative Arrangements. The commercialization of the product is a joint operating activity where the Company will provide promotional and nonpromotional activities for Sandoz’s product and Sandoz will be responsible for items such as supply of the product, distribution to customers, managing sales, processing returns, and regulatory matters. Both parties will be active participants, each carrying out its assigned responsibilities, and participating in the joint operating activity and will share in the risks and rewards of the commercialization through the profit-sharing arrangement.

In addition, the Company determined that the services provided under the Promotion Agreement fall within the scope of Topic 606. The promotional and nonpromotional activities the Company performs are one of the services the Company expects to provide as part of its ordinary activities, and it is receiving consideration for this service from Sandoz in the form of a share of “Net Profits” (as defined in the Promotion Agreement). The Company has one combined performance obligation under the Promotion Agreement, which is to perform promotional and nonpromotional activities to encourage the appropriate use of the product in accordance with the product labeling and applicable law. As such, and in accordance with ASU 2018-18: Clarifying the Interaction between Topic 808 and Topic 606, the Company will account for the entire Promotion Agreement under Topic 606.

The Company derived approximately 99% of its revenue from the Promotion Agreement during the three and nine months ended September 30, 2021

Refund Liability

In accordance with the Promotion Agreement, Liquidia PAH receives consideration from Sandoz in the form of a share of Net Profits for the promotional activities it performs. The share of Net Profits received is subject to adjustments from Sandoz for items such as distributor chargebacks, rebates, inventory returns, inventory write-offs and other adjustments (the “Net Profits Adjustment”). The Company expects to refund certain amounts to Sandoz through a reduction of the cash received from future Net Profits generated under the Promotion Agreement. As of September 30, 2021, a $526,491 refund liability is offset against accounts receivable from Sandoz related to net service revenues recognized during the nine months ended September 30, 2021. As of December 31, 2020 $927,136 of accounts receivable from Sandoz related to net service revenues was offset against the refund liability.

- Definition

The entire disclosure of revenue from contract with customer to transfer good or service and to transfer nonfinancial asset. Includes, but is not limited to, disaggregation of revenue, credit loss recognized from contract with customer, judgment and change in judgment related to contract with customer, and asset recognized from cost incurred to obtain or fulfill contract with customer. Excludes insurance and lease contracts.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-URI http://asc.fasb.org/topic&trid=49130388

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 10
-URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130551-203045

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 13
-Subparagraph (b)(2)
-URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130556-203045

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 12
-Subparagraph (b)
-URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130554-203045

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 9
-URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130550-203045

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 12
-Subparagraph (e)
-URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130554-203045

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 12
-Subparagraph (a)
-URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130554-203045

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 12
-Subparagraph (d)
-URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130554-203045

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 15
-URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130558-203045

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 12
-Subparagraph (c)
-URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130554-203045

+ Details

Stock-Based Compensation - Unamortized Compensation Expense (Details)	9 Months Ended
	Sep. 30, 2021 USD ($)
Share-based Payment Arrangement, Option
Stock-based awards, unamortized expense	$ 9,139,975
Stock-based awards, weighted average remaining recognition period (Year)	3 years 1 month 6 days
Restricted Stock Units (RSUs)
Stock-based awards, unamortized expense	$ 812,560
Stock-based awards, weighted average remaining recognition period (Year)	1 year 3 months 18 days

Property, Plant and Equipment - Property, Plant and Equipment (Details) - USD ($)	Sep. 30, 2021	Dec. 31, 2020
Total property, plant and equipment	$ 19,800,403	$ 19,783,740
Accumulated depreciation and amortization	(14,348,134)	(12,978,170)
Property, Plant and Equipment, Net, Total	5,452,269	6,805,570
Lab and build-to-suit equipment
Total property, plant and equipment	7,544,098	7,499,645
Office equipment
Total property, plant and equipment	28,410	31,205
Furniture and fixtures
Total property, plant and equipment	257,774	257,774
Computer equipment
Total property, plant and equipment	463,789	404,558
Leasehold improvements
Total property, plant and equipment	11,506,332	11,524,738
Construction-in-progress
Total property, plant and equipment	$ 0	$ 65,820

Stock-Based Compensation - Stock-based Compensation Expense (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Stock-based compensation expense	$ 1,224,044	$ 1,081,000	$ 2,922,259	$ 2,948,082
Share-based Payment Arrangement, Option
Stock-based compensation expense	1,218,694	1,044,991	2,927,149	2,843,409
Restricted Stock Units (RSUs)
Stock-based compensation expense	5,350	36,009	(4,890)	104,673
Research and Development Expense
Stock-based compensation expense	288,116	292,386	816,966	853,704
General and Administrative Expense
Stock-based compensation expense	$ 935,928	$ 788,614	$ 2,105,293	$ 2,094,378