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THE CLASS II DIRECTOR ELECTION PROPOSAL

              The Company's Amended and Restated Bylaws (the "Bylaws") provide that the authorized number of directors of the Company shall not be less than three nor more than 11. Eight directors are currently serving on the Board. The Board is authorized to increase or decrease the total number of directors within the limitations prescribed by the Company's Bylaws. The Company's Bylaws and Amended and Restated Certificate of Incorporation (the "Certificate of Incorporation") divides the Board into three classes with staggered three-year terms. Pursuant to the Certificate of Incorporation and Bylaws, no one class of directors has more than one director more than any other class of directors.

              At the Annual Meeting, the stockholders will be asked to elect three directors to serve for three-year terms expiring at the annual meeting of stockholders in 2023. The Class II director nominees, whose terms of office will expire at the Annual Meeting, are Katherine Rielly-Gauvin, Dr. Seth Rudnick and Raman Singh. If each director is elected, the total number of authorized directors comprising the Company's Board will remain at eight directors with no vacancies, effective immediately following the Annual Meeting.

              The Board has nominated, upon the recommendation of our Nominating and Corporate Governance Committee, Ms. Rielly-Gauvin, Dr. Rudnick and Mr. Singh. Proxies solicited by the Board will, unless otherwise directed, be voted to elect the three nominees named below. Each nominee has indicated a willingness to serve for the term to which they are nominated, if elected. In case any nominee is not a candidate at the Annual Meeting, the proxies named in the enclosed form of proxy intend to vote in favor of the remaining nominee and to vote for a substitute nominee in their discretion in such class, as they shall determine. Set forth below is certain information about the nominees for election as directors, including each nominee's age, principal occupation and business experience for at least the past five years and the names of other publicly held companies on whose boards the director serves or has served in the past five years. There are no family relationships among any of our directors, nominees for director and executive officers.

NOMINEES FOR A THREE YEAR TERM EXPIRING AT THE 2023 ANNUAL MEETING

              The following information contains information about the nominees as of April 28, 2020, including the nominee's age, business experience, public company director positions held currently or at any time during the last five years, involvement in certain legal proceedings, if applicable, and the experiences,

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qualifications, attributes or skills that caused the Nominating and Corporate Governance Committee and our Board to determine that the nominee should serve as one of our directors.

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Vote Required

              Assuming the presence of a quorum at the Annual Meeting, the election of a Class II director requires the affirmative vote of a plurality of the shares of common stock present in person, by remote communication, or represented by proxy and entitled to vote. Thus, the three nominees with the greatest number of votes will be elected.

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Board Recommendation

              After careful consideration, the Board determined that election of each of the nominees for director named above is advisable and in the best interests of Liquidia and its stockholders. On the basis of the foregoing, the Board has approved and declared advisable the election of each of the nominees for director named above and recommends that you vote "FOR" the election of each of the nominees for director named above.

CLASS III DIRECTORS CONTINUING IN OFFICE UNTIL THE 2021 ANNUAL MEETING

              The following contains certain information about those directors whose terms do not expire until the 2021 annual meeting and who are not standing for reelection, including their business experience, public company director positions held currently or at any time during the last five years, involvement in certain legal proceedings, if applicable, and the experiences, qualifications, attributes or skills that caused our Board to determine that the directors should serve as one of our directors. The age of each director as of April 28, 2020 is set forth below.

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CLASS I DIRECTORS CONTINUING IN OFFICE UNTIL THE 2022 ANNUAL MEETING

              The following contains certain information about those directors whose terms do not expire until the 2022 annual meeting and who are not standing for reelection, including their business experience, public company director positions held currently or at any time during the last five years, involvement in certain legal proceedings, if applicable, and the experiences, qualifications, attributes or skills that caused

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our Board to determine that the directors should serve as one of our directors. The age of each director as of April 28, 2020 is set forth below.

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THE CHARTER AMENDMENT PROPOSAL

Overview

              Our Board has approved the amendment to our Certificate of Incorporation, subject to stockholder approval, to increase the number of authorized shares of common stock from 40,000,000 shares to 60,000,000 shares (the "Share Increase"), and recommends unanimously that our stockholders approve the Share Increase. The proposed amendment is reflected in the Charter Amendment attached to this proxy statement as Appendix A. For avoidance of doubt, this Proposal 2 will only amend Article IV. A of the Company's Amended and Restated Certificate of Incorporation to increase the number of authorized shares of common stock by 20,000,000. You are encouraged to read the Charter Amendment in its entirety.

              The additional 20,000,000 shares of common stock will be part of the existing class of common stock, and, if and when issued, would have the same rights and privileges as the shares of common stock presently issued and outstanding. The Company's Amended and Restated Certificate of Incorporation has not been previously amended to increase the number of authorized shares of common stock since the Company went public in July 2018.

Purpose

              Our Board believes that the authorized number of shares of common stock should be increased as a matter of good corporate governance to provide sufficient shares for such corporate purposes as may reasonably be determined by the Board to be necessary and in the best interest of the Company and its stockholders. These purposes may include, but are not limited to:

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expanding our business through the acquisition of other businesses, products or assets;



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establishing partnerships, collaborations and/or other strategic relationships with other companies;



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raising capital through the future sale of our common stock when necessary or appropriate; and



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attracting and retaining valuable employees by providing shares available for equity incentives.

              Our Board believes that these additional shares would provide us with needed flexibility to issue shares in the future without potential expense or delay incident to obtaining stockholder approval for a particular issuance. Currently, we do not have any specific plans, arrangements, undertakings or agreements for the proposed increase of authorized shares in connection with any of the foregoing prospective activities. Once authorized, the additional shares of common stock may be issued with approval of our Board but without further approval from our stockholders, unless applicable law, rule or regulation requires stockholder approval for such issuance. Stockholder approval of the Share Increase is required under Delaware law.

Proposed Changes to the Amended and Restated Certificate of Incorporation

              The proposed Share Increase will increase the number of shares of common stock authorized for issuance from 40,000,000 shares to 60,000,000 shares. The Company is currently authorized to issue 50,000,000 shares of capital stock, of which 40,000,000 shares are designated as common stock and 10,000,000 shares are designated as preferred stock, $0.001 par value per share ("preferred stock") (none of which are currently issued and outstanding). The Share Increase will not change any substantive terms of the Company's common stock or preferred stock or any powers or rights of their respective holders. The

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Company's common stock will continue to be listed and traded on the Nasdaq Capital Market under the symbol "LQDA."

              If Proposal 2 is approved, we intend to amend the Amended and Restated Certificate of Incorporation in connection with implementing the proposal. A copy of the Charter Amendment is attached to this proxy statement as Appendix A.

Certain Risks Associated with the Charter Amendment

              There can be no assurance that the market price per share of our common stock after the Share Increase will remain constant in proportion to the increase in the number of shares of our common stock outstanding before the Share Increase.

              The market price of our common stock will also be based on our performance and other factors, some of which are unrelated to the number of shares outstanding. These factors include the status of the market for our common stock, our reported results of operations in future periods, and general economic, market and industry conditions.

Principal Effects on Outstanding Common Stock

              Holders of common stock are entitled to one vote per share on all matters submitted to a vote of stockholders. Upon a liquidation, dissolution or windup of the Company, holders of common stock would be entitled to share ratably in any assets for distribution to stockholders after payment of all of the Company's obligations, subject to the rights to receive preferential distributions of the holders of any preferred stock then outstanding.

              The additional shares of common stock would have rights identical to our common stock currently outstanding. Approval of the Charter Amendment and any issuance of common stock would not affect the rights of the holders of our common stock currently outstanding, except to the extent that future issuances of common stock would reduce each existing stockholder's proportionate ownership. If the proposed Share Increase is approved and the Board decides to issue such shares of common stock, such issuance of common stock would increase the outstanding number of shares of common stock, thereby causing dilution in earnings per share and voting interests of the outstanding common stock. As of the Record Date, 28,371,746 shares of our common stock were issued and outstanding and 3,269,916 shares of our common stock were subject to outstanding stock options, warrants or other convertible securities, or are reserved for issuance under the 2018 Plan or our employee stock purchase plan, thereby leaving 8,358,338 shares of common stock unassigned and authorized for potential issuance of the current 40,000,000 shares of common stock authorized. If the Share Increase is approved, there will be 28,358,338 shares of common stock unassigned and authorized for potential issuance. If approved, the Share Increase will not change the number of shares of preferred stock authorized for issuance.

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              The following table sets forth the potential dilutive effect on the beneficial ownership of the existing stockholders of the Company if all of the shares of common stock authorized were issued by the Company:

⁽¹⁾        For purposes of clarification, the percentage represented by the existing stockholders excludes any and all options, warrants and other convertible securities held by the existing stockholders.

⁽²⁾        Ownership is based upon the number of outstanding shares of common stock as of the Record Date, and assumes the issuance of all authorized but unissued shares of common stock before the proposed amendment.

⁽³⁾        Ownership is based upon the number of outstanding shares of common stock as of the Record Date, and assumes the issuance of all authorized but unissued shares of common stock after the proposed amendment.

              Additionally, the issuance of additional shares of common stock could have the effect of making it more difficult for a third party to acquire, or discouraging a third party from attempting to acquire, control of the Company. While the issuance of additional shares of common stock may be deemed to have potential anti-takeover effects, including by delaying or preventing a change in control of the Company through subsequent issuances of these shares and the other reasons set forth above, which among other things, could include issuances in one or more transactions that would make a change in control of the Company more difficult, and therefore, less likely, this proposal to increase the authorized common stock is not prompted by any specific effort of which we are aware to accumulate shares of our common stock or obtain control of the Company. A takeover may be beneficial to independent stockholders because, among other reasons, a potential suitor may offer such stockholders a premium for their shares of common stock as compared to the then-existing market price. Although the issuance of additional shares of common stock could, under certain circumstances, have an anti-takeover effect, this proposal to adopt the Charter Amendment is not in response to any attempt to accumulate common stock or obtain control of the Company that we are aware of, nor is it part of a plan by management to recommend a series of similar amendments to the Board or stockholders.

Interests of Certain Persons in the Proposal

              Our directors, executive officers and principal stockholders have no substantial interests, directly or indirectly, in the matters set forth in this Proposal 2, except to the extent of their ownership in shares of our common stock and securities convertible or exercisable for common stock.

Vote Required

              Assuming the presence of a quorum at the Annual Meeting, approval of Proposal 2 requires the affirmative vote of a majority of the Company's outstanding stock entitled to vote thereon, meaning that the votes cast by the stockholders "FOR" the approval of the Charter Amendment must represent a majority of the shares of common stock outstanding as of the Record Date.

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Board Recommendation

              After careful consideration, the Board determined that approval of the Charter Amendment is advisable and in the best interests of the Company and its stockholders. On the basis of the foregoing, the Board has approved and declared advisable the approval of the Charter Amendment and recommends that you vote "FOR" the approval of the Charter Amendment.

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THE STOCK OPTION EXCHANGE PROGRAM PROPOSAL

              We are asking our stockholders to approve the stock option exchange program described below (the "Option Exchange"). In brief, under the Option Exchange, our current employees (including our executive officers) will be given the opportunity to exchange certain stock options owned by them for a lesser number of new stock options based on a three-for-two exchange ratio as determined by our Compensation Committee. On the recommendation of the Compensation Committee, our Board approved the Option Exchange, subject to stockholder approval, on April 13, 2020.

              The stock options eligible to participate in the exchange are referred to below as the "Eligible Options"; those Eligible Options which are actually surrendered for exchange in the Option Exchange are referred to below as the "Tendered Options"; and the new stock options granted in exchange for the Tendered Options are referred to below as the "Replacement Options."

              Our Board believes that the Option Exchange is in the best interest of stockholders and the Company, as the Replacement Options granted under the program will provide added incentive to motivate and retain talented employees. In addition, the Replacement Options will provide us with the opportunity to reduce the "overhang" of our outstanding stock options and allow us to make better use of the compensation costs that we have already incurred from our outstanding stock option awards.

Background

              Long-term equity incentive compensation has been a critical part of our total compensation program for executives and other key employees. These long-term equity incentives make up a meaningful part of the target total compensation of our employees, including our executive officers. Through equity-based grants of stock options ("options") and restricted stock units, our goal is and has been to create an alignment among management and our stockholders focused on the creation of value for our stockholders. A key part of these grants is the use of vesting, which requires continued service in order to enjoy the full economic benefit of the awards. Option grants serve as a powerful tool in the retention of executives and other key employees based on stock price appreciation. However, when the stock price remains flat or declines, the power of options to motivate and retain the holders of these awards can be lost or greatly diminished, in particular when the exercise price is materially higher than the trading price of the underlying common stock. In this circumstance, options are sometimes referred to as being "underwater," and we use this term below.

              Liquidia currently has a substantial number of deeply underwater options due to a sustained drop in its stock price in the past twelve months. We also have a pressing need to retain and motivate our key talent. For this reason, our Board is asking that our stockholders approve the Option Exchange described below. Under this program, all employees who hold Eligible Options will have the opportunity to surrender their Eligible Options and receive a number of Replacement Options based on a three-for-two exchange ratio established by our Compensation Committee using a Black-Scholes option pricing model intended to ensure that Tendered Options having a similar range of values (based on exercise price and remaining life) are treated in the same manner. The number of Replacement Options issued in exchange for the Tendered Options will be a smaller number of Tendered Options, thus reducing equity award overhang. The Eligible Options will consist of those with strike prices that are at least $9.00 and have been held for at least one year by our employees on the date of commencement of the window during which Eligible Options may be surrendered, which we refer to below as the "exchange period." The Replacement Options will have an exercise price equal to the share price on the date of grant, will have a 10-year term from the date of grant, and will vest over a three-year period, with one-third of the Replacement Options vesting on the six-month anniversary of the date of the grant and the remaining Replacement Options vesting monthly thereafter, becoming fully-vested on the three-year anniversary of the date of grant.

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Summary of Currently Outstanding Options

              As of April 15, 2020, there were 2,558,259 outstanding option shares held by our employees, directors and other service providers, of which 1,487,169 option shares, or approximately 58.1%, were "underwater" on that date, meaning the exercise price of the option exceeded $6.49, which was the closing price of our common stock as reported on the Nasdaq Capital Market on such date.

              The following table sets forth the number of Eligible Options held by our named executive officers (as defined below), our other executive officers as a group and our other employees as a group, meaning that each such option has an exercise price equal to or greater than $9.00 and will have been held for at least one year at the time of commencement of the Option Exchange.

Rationale for Option Exchange

              Our Compensation Committee has determined that an Option Exchange whereby participants can elect to exchange significantly underwater stock options for a smaller number of Replacement Options is attractive for the following reasons:

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The Option Exchange offers a reasonable, balanced and meaningful incentive for participants.  Under the Option Exchange, participants will surrender Eligible Options, including options that are fully vested when surrendered, for a smaller number of Replacement Options on a three-for-two exchange basis that are subject to vesting based on continued service. Replacement Options will vest over a three-year period, with one-third of the Replacement Options vesting on the six-month anniversary of the date of the grant and the remaining Replacement Options vesting monthly thereafter, becoming fully-vested on the three-year anniversary of the date of grant. We believe that the smaller number of Replacement Options granted, together with the new vesting requirement, represents a reasonable and balanced approach to the issues presented by the underwater options and creates the potential for a significant positive impact on retention, motivation and performance. As with the currently outstanding options, the Replacement Options will provide value to eligible participants only if our share price increases over time, thereby aligning eligible participant and stockholder interests.



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The Option Exchange will help to restore retention and motivation incentives.  We rely on highly skilled employees to move our business forward. Competition for employees is intense. We continue to believe that equity incentive awards are an important component of our compensation program and our ability to retain and motivate our key contributors. We also believe that substantially underwater options do not have sufficient positive impact on, and in some cases negatively impact, retention and motivation, and that for our stock options to serve their intended purpose, they need to be exercisable at prices at least near the current trading

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prices of our common stock. The failure to address the underwater option issue in the near to medium term will make it more difficult for us to retain our key contributors. If we cannot retain these individuals, our business, results of operations and future stock price would likely be adversely affected. We believe that the Replacement Options will be significantly more effective in retaining and incentivizing eligible participants than the existing underwater options.

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The Option Exchange will more closely align compensation costs with the retention and motivation value of the equity awards.  Our underwater options have exercise prices that were equal to the fair market value of our common stock at the time of grant. Under applicable accounting rules, we are required to continue to recognize compensation expense related to these options while they remain outstanding, even if they are never exercised. We believe that it is an inefficient use of corporate resources to recognize compensation expense on awards that are not valued by our employees. Replacing underwater options that result in compensation accounting expense but have little or no retention or incentive value with Replacement Options that will provide both enhanced retention and incentive value is a more efficient and effective compensation strategy.



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The Option Exchange will reduce our equity award overhang.  Not only do the underwater options have little or no retention value, they must nevertheless be treated as outstanding (i.e., they count as "overhang" on our common stock) until they are exercised, expire or otherwise terminate. The Option Exchange is expected to significantly reduce our equity award overhang at expected levels of participation because significantly fewer shares will be subject to the Replacement Options.



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The reduced number of shares subject to the Replacement Options will conserve our equity pool.  Under the terms of the Liquidia Technologies, Inc. 2018 Long-Term Incentive Plan (the "2018 Plan"), any shares subject to Eligible Options granted under the 2018 Plan that are surrendered in the Option Exchange (less the number of Replacement Options granted) will automatically be reserved for future issuance. This return of shares will constitute an efficient use of the shares available for future issuance.



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The Option Exchange will likely decrease pressure for cash awards.  If we are unable to conduct the Option Exchange, we may find it necessary to provide long-term compensation to our senior management and key employees through other means, including through cash awards that would be in addition to our annual cash bonus program. We do not believe that use of cash for long-term incentives would create the same sustained alignment among our management and key employees as long-term equity incentives, and our strong commercial preference is to use our available cash for other business purposes.

Structure of the Option Exchange

              The following is a summary of the terms recommended by our Compensation Committee and adopted by our Board. Our Compensation Committee reserves the right to modify the terms of the Option Exchange, or to postpone or cancel the Option Exchange, whether before or after the exchange period has commenced. See "Potential Modification to Terms of Option Exchange." The definitive terms of the Option Exchange will be set forth in an "Offer to Exchange" and related materials prepared under the federal securities laws, which are expected to be distributed to holders of Eligible Options as soon as practicable after our stockholders approve the Option Exchange.

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              Eligible Participants.    All of our employees holding Eligible Options, including our executive officers, are eligible to participate in the Option Exchange. Our directors, consultants and former employees are not eligible to participate in the Option Exchange.

              Eligible Stock Options.    The Option Exchange will be offered only with respect to stock options with an exercise price that is equal to or greater than $9.00 and have been held by our employees at the commencement of the exchange period for at least one year.

              Establishment of Exchange Ratios.    The number of Replacement Options to be received by an option holder who participates in the Option Exchange is expected to be three-for-two, meaning that two Replacement Options will be received for every three Tendered Options.

              Date of Grant of the Replacement Options.    The Replacement Options will be granted on the closing date of the exchange period.

              Exercise Price of the Replacement Options.    The exercise price of the Replacement Options will be set using the closing trading price of our common stock on the date of grant.

              Establishment of a New Vesting Period.    Regardless of the vested or unvested status of the Tendered Options, the Replacement Options will be subject to a new vesting period and will vest over a three-year period, with one-third of the Replacement Options vesting on the six-month anniversary of the date of the grant and the remaining Replacement Options vesting monthly thereafter, becoming fully-vested on the three-year anniversary of the date of grant. This vesting period supports the long-term nature of stock as an incentive vehicle and also motivates additional years of retention as compared to the Eligible Options, many of which are already vested.

              Establishment of a New Term of Ten Years.    The Replacement Options will also have a 10-year term from the date of grant.

              Completion of the Option Exchange Following Stockholder Approval.    We expect that the exchange period will begin in the third quarter of 2020 after approval by stockholders at the Annual Meeting. Whether and when to commence the exchange period, and the closing date of the exchange period, will be determined by our Compensation Committee.

Impact of Option Exchange

              We currently estimate that the Option Exchange will cover approximately 1.3 million outstanding Eligible Options. If this number of Eligible Options is exchanged in full, then we currently estimate that approximately 875,000 Replacement Options will be granted to our employees (including our executive officers) and directors, thus reducing our equity award overhang by approximately 1.5%. All Tendered Options will be cancelled on the closing date of the exchange period and, in accordance with the terms of our 2018 Plan, the shares underlying the Tendered Options granted under the 2018 Plan will be available for issuance in connection with future plan awards.

              The Replacement Options will be granted with an exercise price equal to the market value of our common stock on the grant date, and will be subject to the new vesting date and expiration date described above. We believe that this approach will best align our employees with our other stockholders for retention and motivation purposes and to incentivize long-term stock price growth.

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Option Exchange Process

Overview of the Option Exchange Process

              Upon commencement of the exchange period, employees (including our executive officers) holding Eligible Options will receive written materials in the form of an "Offer to Exchange" setting forth the precise terms of the Option Exchange. At or before the commencement of the exchange period, we will file the Offer to Exchange with the SEC as part of a tender offer statement on Schedule TO.

              Eligible employees who desire to exchange some or all of their Eligible Options under the Option Exchange must voluntarily elect to participate. All employees who hold Eligible Options and are employed on the commencement date of the exchange period, as well as remain employed on the Replacement Option grant date, may participate in the Option Exchange. Eligible employees will be given a period of at least 20 business days to elect to surrender Eligible Options in exchange for a lesser number of Replacement Options. Upon completion of the Option Exchange, the Tendered Options will be cancelled and the Replacement Options will be granted. The 2018 Plan will govern any terms or conditions of Replacement Options not specifically addressed within this Proposal 3, including treatment on a termination of employment or a change in control of the Company.

Election to Participate

              Eligible employees will receive the Offer to Exchange and will be able to voluntarily elect to participate in the Option Exchange. If you are both a stockholder and an employee holding Eligible Options, please note that voting to approve the Option Exchange does not constitute an election to participate in the Option Exchange. The Offer to Exchange described above will be provided if and when the Option Exchange is initiated; you can elect to participate with respect to your Eligible Options only after that time.

Eligible Options to Be Cancelled via the Option Exchange

              As of April 15, 2020, there were 2,558,259 total stock options outstanding under the 2018 Plan and prior equity incentive plans, of which 1,312,040 are Eligible Options, as they are held by current employees, contain an exercise price that is equal to or greater than $9.00 and have been held for at least one year at the time of commencement of the Option Exchange.

Stock Option Exchange Ratio

              The anticipated three-for-two exchange ratio governing the conversion of the Tendered Options into Replacement Options has been recommended by the Compensation Committee and approved by the Board for each Eligible Option, based on the value of the Eligible Options (calculated using a Black-Scholes option pricing model). The calculation of value using the Black-Scholes option pricing model takes into account variables such as the volatility of our stock, the exercise price of the stock option and the expected term of a stock option. Setting the exchange ratio in this manner is intended to ensure that a neutral exchange ratio will be applied to all Eligible Options, as determined on a Black-Scholes basis. This is designed for the purpose of fairness and consistency of treatment among all Eligible Options.

Accounting Impact

              We follow the provisions of ASC Topic 718 — Stock Compensation, which requires that employee equity awards be accounted for under the fair value method.

              The Option Exchange will use a Black-Scholes option pricing model to estimate the fair value of the Eligible Options. The use of a Black-Scholes option pricing model is not intended to reduce the share-

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based compensation expense of the Option Exchange. Rather, the use of a Black-Scholes option pricing model is intended to provide that all Tendered Options will be subject to a neutral exchange ratio on an aggregate value-to-value basis compared to the Eligible Options.

              Any unrecognized compensation expense from the Tendered Options will continue to be recognized over the original service period of the Tendered Options. Incremental compensation cost, if any, associated with the Replacement Options under the Option Exchange will be recognized over the service period of the Replacement Options. However, compensation cost will not be recognized as to any options that are forfeited due to employees not meeting the applicable service requirements.

U.S. Tax Consequences

              The exchange of Tendered Options for Replacement Options pursuant to the Option Exchange should be treated as the cancellation of the Tendered Options and the grant of Replacement Options having an exercise price equal to the fair market value of our common stock on the grant date. The Company and participating employees should not recognize any income for U.S. federal income tax purposes upon either the cancellation of the Tendered Options or the grant of the Replacement Options. To the extent Tendered Options were granted as "incentive stock options" within the meaning of Section 422 of the Internal Revenue Code (the "Code"), the Replacement Options granted in replacement of such Eligible Options are intended to keep their incentive stock option status to the fullest extent permitted by and subject to the requirements under Section 422 of the Code and applicable regulations. All other Replacement Options will be non-qualified stock options for U.S. federal income tax purposes. Tax effects may vary in other countries; a more detailed summary of tax considerations will be provided to all participants in the Option Exchange documents.

Potential Modification to Terms of Option Exchange

              The terms of the Option Exchange will be described in an Offer to Exchange that will be filed with the SEC. Although we do not anticipate that the SEC will require us to materially modify the Option Exchange's terms and conditions, it is possible that we will need to alter the terms of the Option Exchange to comply with comments from the SEC. Changes in the terms of the Option Exchange may also be required for tax purposes. It is possible that we may need to make modifications to the terms offered to eligible employees in countries outside the United States to comply with local legal requirements, or for tax or accounting reasons. Our Compensation Committee will retain the discretion to make any such necessary or desirable changes to the terms of the Option Exchange for purposes of complying with comments from the SEC or optimizing the U.S. or foreign tax consequences.

              We may also find it necessary or appropriate to change the terms of the Option Exchange to take into account our administrative needs, legal requirements, accounting rules, other policy decisions that our Compensation Committee determines make it appropriate to change the Option Exchange, and for other or similar reasons. Without limiting the generality of this discretion, our Compensation Committee will retain the discretion to make any necessary or desirable changes to the terms of the Option Exchange at any time, and the Compensation Committee may change the exchange ratio (whether before or during the exchange period) if it determines that doing so will better advance the interests of the Company in the Option Exchange. However, in no event will the Compensation Committee have the discretion to include non-employee directors in the Option Exchange. The final terms of the Option Exchange will be set forth in the formal documents that comprise the Offer to Exchange. In addition, our Compensation Committee reserves the right to postpone or cancel the Option Exchange, whether before or after the exchange period has commenced.

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Conclusion

              We strongly believe that our equity program and emphasis on key employee stock ownership have been integral to our success. We believe that our equity program has enhanced our ability to attract, motivate, and retain the employee talent critical to attaining long-term improved company performance and stockholder returns. Therefore, we consider approval of the Option Exchange to be important to our future success, as it will enable the Company to strengthen the motivational and retention value of our stock option awards to our key employees.

Vote Required

              Assuming the presence of a quorum at the Annual Meeting, the Option Exchange Proposal requires the affirmative vote of the holders of a majority of the shares of common stock present in person, by remote communication, or represented by proxy at the Annual Meeting and entitled to vote thereon, in order for such proposal to be approved. This means that the number of votes cast "FOR" must exceed the combined number of votes "AGAINST" and abstentions (which will each have the same effect as an "AGAINST" vote).

Board Recommendation

              After careful consideration, the Board determined that approval of the Option Exchange is advisable and in the best interests of the Company and its stockholders. On the basis of the foregoing, the Board has approved and declared advisable the approval of the Option Exchange and recommends that you vote "FOR" the approval of the Option Exchange.

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THE AUDITOR RATIFICATION PROPOSAL

              Our Audit Committee has appointed PricewaterhouseCoopers LLP as the Company's independent registered public accounting firm for the year ending December 31, 2020. In connection with this appointment, PricewaterhouseCoopers LLP will examine and report to stockholders on the financial statements of the Company for 2020.

              Although stockholder ratification of the appointment of our independent registered public accounting firm is not required by our Bylaws or otherwise, the Board has put this proposal before the stockholders because it believes that seeking stockholders' ratification of the Audit Committee's appointment of our independent registered public accounting firm is good corporate practice. This vote is only advisory, however, because the Audit Committee has the sole authority to retain and dismiss our independent registered public accounting firm. If the appointment of PricewaterhouseCoopers LLP is not ratified, the Audit Committee will evaluate the basis for the stockholders' vote when determining whether to continue the firm's engagement. Even if the appointment is ratified, the Audit Committee in its sole discretion may direct the appointment of a different independent registered public accounting firm at any time if it determines that such a change would be in the best interests of the Company and its stockholders.

              Representatives of PricewaterhouseCoopers LLP are expected to be virtually present at the Annual Meeting and are expected to be available to respond to appropriate questions from stockholders. They also will have the opportunity to make a statement if they desire to do so.

Vote Required

              Assuming the presence of a quorum at the Annual Meeting, the Auditor Ratification Proposal requires the affirmative vote of the holders of a majority of the shares of common stock present in person, by remote communication, or represented by proxy at the Annual Meeting and entitled to vote thereon, in order for such proposal to be approved. This means that the number of votes cast "FOR" must exceed the combined number of votes "AGAINST" and abstentions (which will each have the same effect as an "AGAINST" vote).

Board Recommendation

              After careful consideration, the Board determined that ratification of the Audit Committee's appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for 2020 is advisable and in the best interests of the Company and its stockholders. On the basis of the foregoing, the Board has approved and declared advisable the ratification of the Audit Committee's appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for 2020 and recommends that you vote "FOR" the ratification of the Audit Committee's appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for 2020.

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⁽¹⁾        Audit fees consist of fees billed for the audit of our annual financial statements, the review of our interim financial statements and related services that are normally provided in connection with public offerings, including the registration statement for our initial public offering in the third quarter of 2018, our follow-on public offering in the first quarter of 2019, our "at-the-market" sales agreement entered into in August 2019 and our private offering of common stock in December 2019.

⁽²⁾        Audit-related fees consist of fees billed for assurance and related services that are reasonably related to the performance of the audit or review of the Company's financial statements and are not reported under "Audit Fees." For 2018, fees for the review of our initial assessment of ASC 606, Revenue from Contracts with Customers, comprise substantially all of such fees.

⁽³⁾        Tax fees consist of fees billed for services including, but not limited to, assistance with tax compliance, tax advice and tax planning. There were no such fees in 2018 or 2019.

⁽⁴⁾        This category includes fees billed for the use of a research tool and automated disclosure checklist.

              The Audit Committee has considered whether the provision of these services by PricewaterhouseCoopers LLP is compatible with maintaining the independence of PricewaterhouseCoopers LLP. Further, pursuant to the Audit Committee's pre-approval policies and procedures described below, all of the services provided by PricewaterhouseCoopers LLP in 2018 and 2019 were approved in advance in accordance with the Audit Committee's pre-approval policies and procedures described below. The Audit Committee did not rely on the waiver of pre-approval procedures permitted with respect to de minimis non-audit services under the applicable rules of the SEC for its approval of any of the services provided by PricewaterhouseCoopers LLP in 2018 and 2019.

Pre-Approval of Audit and Permissible Non-Audit Services

              Our Audit Committee requires pre-approval of all audit and non-audit services in one of two methods. Under the first method, the engagement to render the services would be entered into pursuant to pre-approval policies and procedures established by the Audit Committee, provided (i) the policies and procedures are detailed as to the services to be performed, (ii) the Audit Committee is informed of each service, and (iii) such policies and procedures do not include delegation of the Audit Committee's responsibilities under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), to the Company's management. Under the second method, the engagement to render the services would be presented to and pre-approved by the Audit Committee (subject to the de minimis exceptions for non-audit services described in Section 10A(i)(1)(B) of the Exchange Act that are approved by the Audit Committee prior to the completion of the audit). The Audit Committee has the authority to delegate to one or more members of the Audit Committee the authority to grant pre-approvals of audit and permissible non-audit

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services by the independent registered public accounting firm, provided that all pre-approvals by such Audit Committee members must be presented to the full Audit Committee at its next scheduled meeting. The Audit Committee considers, among other things, whether the provision of such audit or non-audit services is consistent with applicable regulations regarding maintaining auditor independence, whether the provision of such services would impair the independent register public accounting firm's independence and whether the independent registered public accounting firm are best positioned to provide the most effective and efficient service.