Beyond Air, Inc.

Greetings and welcome to Beyond Air Incorporated's third quarter 2021 earnings call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Maria Yankovsky, head of IR.

Thank you, operator. Good afternoon, everyone, and thank you for joining us on Beyond Air's conference call. Today, after the close, we issued a press release announcing the financial results for the third quarter of fiscal year 2021, a copy of which can be found on the investor relations page of our website. Before we begin, I would like to remind everyone that we will be making comments and various remarks about future expectations, plans, and prospects which constitute forward-looking statements for the purposes of the safe harbor provisions under the Private Securities Litigation Reform Act of 1995. Beyond Air cautions that these forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those indicated. Beyond Air encourages you to review the company's filings with the Securities and Exchange Commission, including, without limitation, the company's Form 10-K, which identify specific factors that may cause actual results or events to differ materially from those described in the forward-looking statements. Additionally, this conference call is being recorded and will be available for audio rebroadcast on our website, www.beyonddare.net. Furthermore, the content of this conference call contains time-sensitive information that is accurate only as of the date of the live broadcast, February 9th, 2021. Beyond Air undertakes no obligation to revise or update any statements to reflect events or circumstances after the date of this call. I am joined today by Steve Lisi, our chairman and chief executive officer, who will provide business updates. Douglas Beck, our chief financial officer, who will review our financial results for the third quarter of fiscal year 2021. And Duncan Fatkin, our chief commercial officer, who will be available during the Q&A. With that, I would like to now turn the call over to Steve Lisi, our chief executive officer. Steve?

Thanks, Maria, and good afternoon, everyone. I hope you're all staying safe and healthy during the current pandemic, which we all hope will subside this year. We appreciate you taking the time today to listen to our story, which we believe, given our progress, is an even more compelling investment opportunity now than it was in 2019 and 2020. Of course, this progress is attributable to the very strong capabilities of the Beyond Air team and their intense enthusiasm for what we are trying to accomplish for patients, and our investors. I will spend a few minutes to provide a recap of our recent achievements and review our expected milestones ahead of what I believe to be a transformative year for Beyond Air. Doug will conclude our prepared remarks with a review of our financial results, and then we will open up the call for questions. As you all know, we submitted a premarket approval application to FDA for our lung fit pH this past November for the treatment of persistent pulmonary hypertension of the newborn, or PPHN. The currently pending PMA is subject to a 180-day review period. Just in case anyone was curious about our interactions with FDA, let me provide you with this. I will not be commenting on our interactions at this time, other than to say that we are very happy to be working with FDA on this application. In the meantime, we are actively preparing for a commercial launch of LungFit PH in the United States, which we expect will commence approximately four to six weeks after FDA approval. Please take note that we already employ about two-thirds of our launch team, including several respiratory therapists. We continue to guide for controlled phased launch, which requires low upfront costs. We will spend the first six to nine months post-approval in a limited release phase where we will work closely with a select number of hospitals who have staff experience with ENO to perfect our customer service and support functions. Once our commercial plan has proven to be successful during this limited release phase, we will expand our team and reach out to the rest of the market. As a reminder, there are over 800 Level 3 and Level 4 neonatal intensive care units, or NICUs, in the U.S., which most likely all use ENO therapy. We estimate that approximately 20% of hospitals using NO represent roughly 80% of the market, which is the classic model. According to published reports, the use of NO in the hospital setting represents sales of greater than $500 million over the last 12 months in the United States alone. It is important to note that the majority of sales are in cardiovascular-related indications, which are only on label outside of the U.S. We are planning to partner LungFit PH outside of the U.S. with the first agreement expected to be in place by the end of this calendar year, in line with the anticipated receipt of CE mark. Considering the many advantages our novel technology offers compared to the legacy cylinder-based systems that have dominated the NO market for the past 20 years, we expect LungFit PH to be a disruptive force. Our goal is to revolutionize this industry with a truly integrated system. a device that generates NO from ambient air and delivers it to the ventilator circuit. We are not limited by the space requirements of 45 pound cylinders or special storage requirements that are necessary for toxic chemical substances. Instead, our systems rely on easy to dispose nitrogen dioxide or NO2 smart filters that weigh approximately two and a half ounces and last for 12 hours of continuous use. To be clear, Our systems will not deliver NO without a BeyondAir smart filter in place. This prevents NO2 toxicity to patients and staff while protecting our business model. LungFit PH offers hospitals a simple, safe, and convenient alternative to products that are currently on the market. Our system eliminates NO2 purging procedures, and our user interface is designed to be easy to use for providers. Overall, Operational economics and safety are vastly improved for the hospital. Our fixed costs are significantly lower than our competitors because we do not have any expenses associated with NO manufacturing or logistics associated with NO cylinders. I would like to emphasize that for the LungFit system to work, all you need is air. In preparation for launch, we have our global supply chain set up through our subsidiary in Ireland. and have everything on track with our contract manufacturers for our systems and filters. We secured our calibration gas supply more than a year ago and are confident that we will have sufficient inventory available at launch. As a reminder, these NO and NO2 calibration gases are manufactured solely for the purpose of calibrating sensors specific to nitric oxide and nitrogen dioxide. Our LungFit systems are all equipped with appropriate NO, oxygen, and NO2 sensors for monitoring proper delivery of NO and oxygen, and safety levels of NO2. Leading the preparation for the commercial launch of LungFit PH is our chief commercial officer, Duncan Fatkin, who has been with us for more than two years now. Prior to joining BeyondAir, Duncan was the worldwide vice president of the Becton Dickinson diabetes injection franchise, with prior experience at Zimmer Biomet, Smith & Nephew, and Johnson & Johnson. He has over 30 years of experience in hospital-based medical devices, and has worked in Europe, Asia, and for the last 10 years in the US. Duncan choosing to lead our commercial efforts is yet another vote of confidence in our product. As Maria mentioned earlier, Duncan is on the call with us today and will be available to answer questions during the Q&A portion of our call. In addition to a potential FDA decision on our PMA, we also have two ongoing pilot studies that we expect to report interim data from, all within the next six months. Let's start with our acute viral pneumonia study, which includes COVID-19. We began our pilot study in acute viral pneumonia, including patients infected with SARS-CoV-2, with the first site activating last November in Israel. Enrollment is ongoing, and we have had more sites come online each subsequent month post initiation. As to be expected, at this time, the majority of patients enrolled are confirmed COVID cases. But we expect to see an increase in other viral infections as Israel's population continues to receive the COVID-19 vaccine at warp speed. As you may recall, our study is a multicenter, open-label, randomized clinical trial enrolling approximately 90 adult patients with an emphasis on patients infected with SARS-CoV-2. Patients are randomized in a one-to-one ratio to receive inhalations of 150 parts per million NO given intermittently for 40 minutes four times per day for up to seven days. IN ADDITION TO STANDARD SUPPORTIVE TREATMENT, OR STANDARD SUPPORTIVE TREATMENT ALONE. END POINTS RELATED TO SAFETY, OXYGEN SATURATION, FEVER, AND ICU ADMISSION, AMONG OTHERS, ARE BEING ASSESSED. TO DATE, THE LUNG FIT PRO DEVICE IS PERFORMING WELL WITH NO SAFETY ISSUES. WE EXPECT TO RELEASE INTERIM RESULTS IN SPRING 2021 WITH THE TOP LINE FOR THE FULL DATA SET EXPECTED OVER THE SUMMER. MOVING ON TO our ongoing non-tuberculosis mycobacteria, or NTM, pilot study. As you may remember, we began screening patients for our LungFit Go program and NTM in December 2020. We recently dosed the first patient and are continuing to enroll. This is a single-arm, multicenter, 12-week trial in Australia that aims to enroll 20 cystic fibrosis or non-CF bronchiectasis patients with refractory NTM lung infection. Both mycobacterium avium complex or MAC or mycobacterium abscess strains will be included. Patients are titrated up to 250 parts per million NO in the hospital over several days and then sent home to complete the 12-week treatment period. Yes, I said sent home for the remaining 11-plus weeks. We specifically designed our system to be simple to use by non-medical professionals and are confident in our ability to eventually bring NO treatment into the home for patients suffering from chronic severe lung infection. Unfortunately, there are a lot of these patients and we believe will become a key weapon in this ongoing battle. Going back to the trial design during the 1st, 2 weeks patients receive 40 minute administrations 4 times per day, which then moves to 2 administrations per day for the remaining 10 weeks. The studies evaluating safety, quality of life, physical function and bacterial load among others. If this trial is successful, we believe our LungFit Go system will be a game changer for the home setting, helping underserved patients such as those with chronic severe lung infections with various underlying conditions such as cystic fibrosis, bronchiectasis, and, of course, COPD. Consistent with prior guidance, we expect to report interim data from the at-home study around the middle of 2021 with top-line data about six months later. I would like to now turn to our solid tumor program, which is a relatively new indication for us and will not use the long-fit platform due to the ultra-high concentrations of nitric oxide that are necessary to achieve anti-tumor immunity. Though this program is in early development, it has demonstrated exciting preclinical data which we have presented at three different major conferences, the most recent being the AACR Subsection Conference on Tumor Immunology and Immunotherapy this past October. Our hypothesis is that gaseous nitric oxide at extremely high concentrations, greater than 10,000 parts per million and even up to 200,000 parts per million, will cause local cell death when administered directly to a cell or tumor, thus exposing tumor antigens and triggering the host immune system. This exposure may create a memory immune bank that will recognize and attack subsequent primary tumor regrowth as well as distal metastases for the same type of tumor, creating a cancer vaccination. Our goal for this program is to initiate a first in human study by the end of this calendar year. I would like to point out that at this stage our expenditure is less than 10% of our spend through fiscal year 2022 for our solid tumor program. Lung fit remains the overwhelming focus for the company, but the promise is evident and this program demands our commitment. Turning to our bronchiolitis program, it remains on hold due to the ongoing pandemic. Bronchiolitis is the inflammation of the lower respiratory tract in children younger than two years old and is the leading cause of infant hospitalizations globally. The most common cause of bronchiolitis is respiratory syncytial virus, or RSV. But other respiratory viruses, such as rhinovirus, influenza, and parainfluenza, as well as coronaviruses, can also be the cause, though data thus far has showed that SARS-CoV-2 is not likely to trigger bronchiolitis. According to the CDC, RSV season onset has historically ranged from mid-September to mid-November, with season peak from late December to mid-February in the United States. In early 2020, SARS-CoV-2 appeared in the U.S. just as the RSV bronchiolitis season was waning, and we have seen more than a 90% reduction in bronchiolitis so far this season. While information is limited as to why bronchiolitis has essentially disappeared, one could surmise that parents of infants under the age of 12 months are not exposing them the same social environment as they had been prior to COVID. Experts and regulatory bodies remain unsure how SARS-CoV-2 or its mutations could influence the upcoming 2021-22 bronchiolitis season. This situation brings our program to a standstill as the BeyondAIR team is unable to justify committing resources and capital for a study that would have to begin in nine months. BeyondAIR remains committed to reducing the burden for hospitals, bronchiolitis patients, and their families. We have completed three pilot studies to date demonstrating strong safety and efficacy data at 150 parts per million and our pivotal study ready. However, we must make the best R&D investment decision related to bronchiolitis now, and that is to reallocate resources and funds to our other programs. The uncertainty surrounding this program with respect to potential enrollment difficulties will only be resolved, we believe, when we have more visibility on COVID-19 waning and infants getting back to their normal social calendars. With that, I WILL NOW TURN THE CALL OVER TO DOUG FOR THE FULL FINANCIAL REVIEW. DOUG?