Beyond Air, Inc.

Good afternoon and welcome everyone to the Beyond Air financial results call for the fourth quarter and full fiscal year 2021 financial results, ended March 31st, 2021. At this time, participants are in a listen-only mode. A question and answer session will follow the formal presentation. And now, I would like to turn the call over to Maria Jankowski, head of investor relations at Beyond Air. Please go ahead.

Thank you, operator. Good afternoon everyone and thank you for joining us today after market close. We issued a press release announcing the 4th quarter 2021 operational highlights along with a summary of our year and year end financial results. A copy of this press release can be found on the investor relations page of our website and will be on file with the 10 K file today. Before we begin, I would like to remind everyone that we will be making comments and various remarks about future expectations, plans, and prospects constitute forward-looking statements for 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. We encourage everyone to review the company's filings with the Securities and Exchange Commission, including, without limitation, the company's Form 10-K, which identifies specific factors that may cause actual results or events to differ materially from those described in the forward-looking statement. Additionally, this conference call is being recorded and will be available for audio or broadcast on our website, www.beyondair.net. Furthermore, the content of this conference call contains time sensitive information that is accurate only as of the date of the live broadcast. June 10th, 2021 beyond air undertakes no obligation to revise or update any statements to reflect events or circumstances after the date of this call joining me on today's call are our chairman and chief executive officer. Douglas Beck, our chief financial officer, and Duncan Fatkin, our chief commercial officer, who will be available only during the Q&A. With that, I will turn the call over to Steve Lisi, our CEO. Steve?

Thanks, Maria. Good afternoon to everyone, and thank you for joining us on today's call. The last 12 months have been very productive for Beyond Air, during which we laid the foundation for success over the next few years by achieving several key milestones – including the submission of our first ever PMA to the FDA for a lung fit device. The significant expansion of our commercial organization by hiring several nitric oxide industry veterans to key leadership positions, including heads of sales and marketing. And we made important progress in each of our clinical programs, which I'll provide further details on in a few minutes. We entered the current fiscal year executing on our vision of harnessing the power of nitric oxide, in order to transform the lives of patients. Most importantly, when approved, LungFit PH will be the first in our portfolio of devices able to generate nitric oxide from ambient air to reach the market, further validating our technology. As we look to the approval of our pending PMA application for LungFit PH, we envision a future of tankless inhaled nitric oxide delivery in NICUs across the US and eventually the world. LungFit PH is designed to offer hospitals a simple, safe, cost-effective, and convenient alternative to products that are currently on the market. We are excited for the opportunity to introduce LungFit PH to the over 800 Level 3 and Level 4 NICUs in the U.S. over the next few years, starting with a phased commercial launch that is scheduled to begin after PMA approval. Our strategy is to spend the first six to nine months in a limited release phase, targeting a group of select hospitals using a small number of systems at launch. This will not require significant spend and is easily attained with the amount of cash we have on hand today. As our commercial plan comes together, we aim to partner with the hospital staff to embrace the efficiency, flexibility, and innovation around which our system has been built. Our user interface is designed to be an easy transition from existing user interfaces for NO delivery. We are also able to avoid purging procedures, which, along with the simplicity of our user interface, will significantly reduce the training burden and time spent on system operation for clinical staff. LungFit PH allows for the removal of the burdensome inventory storage and disposal requirements that are necessary for cylinder-based solutions offered by competitors. Additionally, our system minimizes the likelihood of physical injury for healthcare workers, while also reducing the risk of nitrogen dioxide, or NO2, exposure for all. NO2 is the toxic byproduct of NO combining with oxygen that can irritate the airways of the human respiratory system and may have fatal consequences, which is the main reason behind the special storage requirements imposed by our competitors. In contrast, Our system relies on easy-to-store and dispose-of smart filters that can last for 12 hours of continuous use. NO2 levels are monitored constantly and maintained well below the safety threshold while NO is being generated and delivered by our system. Not only does the BeyondAir smart filter protect patients and medical staff from NO2 toxicity in all devices in the lung fit family via a uniquely encrypted RFID chip, rendering the system unusable for NO generation in its absence. But the smart filter also acts as the razor blade in our razor, razor blade business model. In terms of current status for the FDA review process, as you all know, we submitted our PMA application to the FDA for our LungFit pH system this past November, which would normally have been subject to 180-day review period. I want to reiterate what I have been consistently communicating and note that due to the ongoing pandemic, this review process has been prolonged. We continue to expect approval towards the end of the third quarter of calendar 2021 with a subsequent commercial launch in the fourth quarter. I am unable to comment further on the PMA review at this time, other than to say that we are happy to report a collaborative effort with FDA. We have made many strides on the commercial front over the last year, cementing our strategy and logistics plan. In 2020, we set up our global supply chain through our subsidiary in Ireland and worked with our state-of-the-art contract manufacturers to have everything on track for our systems and filters. We secured our calibration gas supplier well over a year ago and are confident we will have sufficient inventory available at launch. Like I said earlier, we will spend the first six to nine months in a limited release phase where we will work closely with a select number of hospitals who have staff experienced with inhaled nitric oxide in order to perfect our customer service and support functions. This phase will not require significant inventory built since we are launching with a small number of systems. I am pleased to report that we have a strong balance sheet heading into this event. For reference, we had $34.9 million in cash as of April 30th, to get us through the next 12 months and beyond, inclusive of the initial launch phase. Our actual cash burn for the March quarter was $5 million, and we anticipate that the burn for the current June quarter will be even less than that. Only once our go-to-market approach has been proven and stress tested will we begin our ramp phase, which will include expanding our team and reaching out to the rest of the market. Leading the preparation for the commercial launch of LungFit PH is our Chief Commercial Officer, Duncan Fatkin, who has been with us for two and a half years now. He has over 30 years of experience in hospital-based medical devices and has worked in both Europe, Asia, and has spent the last 11 years in the United States. Over the past several months, Duncan has been expanding his team and recruiting nitric oxide industry veterans to key leadership positions within our organization. In May, we announced the appointments of Rebecca Van Doren as head of sales and Corianne Taylor as head of marketing. Both of these talented women have worked with Icaria and subsequently Mountain Craft Pharmaceuticals to drive sales and marketing initiatives for the current NO market leader. They have extensive knowledge of the competitive landscape and have had first row seats to both the successes and challenges faced by our competitors. These two appointments, along with a number of others, are part of our strategy to build a strong commercial team, which is crucial to the success of LungFit PH and an essential part of growing the entire LungFit franchise. As Maria mentioned earlier, Duncan is on the call with us today and will be able to answer questions during the Q&A portion of our call. Outside of the U.S., I am pleased to report that we remain on track to obtain CE Mark for LungFit PH in Europe around the end of this calendar year. As I have said in the past, We have every intention of partnering this program at XUS. In fact, we recently appointed Peter Sr. to the newly created position of Director of Business Development to spearhead this effort. Peter joined our team after spending 26 years at Lynda, where he most recently served as a Director of Healthcare Partnerships and External Relations. Peter was responsible for expanding Lynda's healthcare portfolio after the merger with Praxair, which made Lynda the largest gas company in the world. He's intimately familiar with the nitric oxide market The technology available, and it's hitting the ground running as we look to secure an partner in 2022 for. Our ability to recruit unparalleled talent speaks volumes for not only the capabilities of, but also to the franchise and beyond as a whole. As an organization, we are ready to bring the incredible benefits of inhaled nitric oxide therapy to patients. Additional. In May of this year, we reached a settlement agreement with former LungFit PH commercial licensee, Circassia. We retained full global rights to the asset in exchange for returning $10.5 million in upfront and milestone payments received by the company in early 2019. We have secured an advantageous payment structure for the $10.5 million that we are returning to Circassia. Beyond Air will begin making payments only after receiving FDA approval for LungFit PH. with the first payment being only 2 1⁄2 million, the second at 3 1⁄2 million one year after the first, and the last payment one year after that. Additionally, beginning in the third year post-FDA approval, Saccasio will receive a quarterly royalty payment equal to 5% of Lungford PHNet sales in the US. It is important to note that this royalty will terminate once the aggregate payment reaches $6 million. This structure allows us to make payments over time only after we have a revenue-generating asset and will have no impact on our ability to adequately fund the launch of LungFit PH, as well as invest in our pipeline development. Our fiscal responsibility is in no way at the expense of our programs. Expenses associated with submitting the PMA were significant and have now subsided. Our spend for our LungFit Pro programs is winding down as we await the 2022-23 pneumonia season, when spend will certainly grow. Our Lung Fit Go study spend is more than adequate as we have received a grant from the Cystic Fibrosis Foundation. In fact, we have made progress on our two ongoing pilot studies this year. Let's start with our viral lung infection program, for which we recently reported acute viral pneumonia interim data, along with a further analysis of our bronchiolitis studies. We began our pilot study in acute viral pneumonia, including patients infected with SARS-CoV-2, last November in Israel. As you may recall, our study is a multicenter, open-label, randomized clinical trial. 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 versus standard supportive treatment alone. Endpoints related to safety, oxygen saturation, fever, and ICU admission, among others, are being assessed. We reported interim data at the American Thoracic Society International Conference, or ATS 2021, which was held virtually from May 14th through May 19th. At the time of the cutoff for these data, we analyzed a total of 19 patients on an intent-to-treat basis, nine in the NO treatment arm, and 10 in control. I'm very happy to report that our 150 parts per million NO treatment administered via LungFit Pro was safe and well-tolerated, with no treatment-related or possibly related adverse events or severe adverse events. NO2 levels stayed below 4 ppm for all treated patients at all time points, below the study safety threshold of 5 parts per million. Similarly, methemoglobin levels were below 4% at all times, well below the study safety threshold of 10%. Methemoglobin levels followed a predictable pattern, rising during NO administration and falling back to normal baseline levels shortly after administration was stopped. The intermittent dosing regimen allowed for high-concentration NO to be administered without negative side effects, specifically addressing concerns of many in developing India. Safety data alone would have been a success for the study since its primary purpose is to evaluate the safety of high-concentration NO. However, despite the small number of subjects included in this mid-study analysis, we also observed encouraging efficacy signals for clinically meaningful endpoints. Only 22% of subjects in the NO treated group required oxygen support beyond their hospitalization, compared to 40% of control. With respect to duration of oxygen support, NO treated patients averaged two days less than control. Additionally, we saw a 26-hour reduction in mean duration of hospital stay between the NO treatment group and control when adjusting for extreme outliers. To be clear, these two outliers, both in the control arm, were discharged from the hospital within three and six hours of enrollment, respectively, and therefore were not included. Additional detailed study results will be submitted for presentation at an upcoming scientific meeting. Today, the trial sites remain open and enrollment is ongoing. However, it is important for us to realistically consider the rate of enrollment going forward. With COVID cases receding, we anticipate recruiting patients with other viral lung infections. more representative of the broader viral lung infection pivotal study we are planning. Note that viral infection rates are extremely low during the summer months. Though this is a small pilot study, these efficacy and safety results in the adult population echo the results of the three pilot trials we have conducted in bronchiolitis. Bronchiolitis is the term used for a viral lung infection in infants that are hospitalized. rather than the term acute viral pneumonia that is used for everyone above two years of age. Just last month, we presented further analysis of our three previously reported pilot studies at ATS 2021. A total of 198 infants with a mean age of about four months participated across the three programs with 84 of them receiving high concentration NO at a dose of 150 or 160 parts per million. Analysis across the studies demonstrated that a short course of treatment with intermittent high concentration inhaled NO was effective in shortening hospital length of stay by almost one day and accelerating the time to be fit for discharge from the hospital. Additionally, inhaled nitric oxide was effective in accelerating time to stable oxygen saturation without supplemental oxygen. Importantly, in trial three, which was completed in the 2019-2020 winter, We studied NO at a dose of 85 parts per million, which showed no difference compared to control for all efficacy endpoints, while 150 parts per million NO showed statistical significance when compared to control for all efficacy endpoints. In addition, when comparing 150 parts per million to 85 parts per million, the 150 part per million arm was statistically significant on time to fit to discharge and hospital length of stay. With respect to the efficacy endpoint of time to stable oxygen saturation without the need for supplemental oxygen, the 150 parts per million arm narrowly missed statistical significance in this small pilot study of 87 subjects across three arms. This leads us to view 150 parts per million nitric oxide as the minimum effective therapeutic dose to be used in further studies. NO treatment was generally safe and well-tolerated across the three pilot trials, with the adverse event rates similar among treatment groups. We believe that taken together, the entirety of data at 150 to 160 parts per million NO in both hospitalized, adult, and infant viral pneumonia patient populations is reproducible and demonstrates that NO is safe. Our next steps would be to move to a pivotal all-comer trial for LungFit Pro in patients hospitalized with viral pneumonia. We plan on submitting the entire data package to the FDA as it is supportive of either an adult or pediatric trial. Due to the seasonality of most respiratory viruses, we anticipate starting this study in the fourth quarter of calendar 2022. Moving on to our ongoing non-tuberculose mycobacteria, or NTM, pilot study. There's currently significant unmet medical need for treatment of chronic NTM lung infection, and NTM is a disease area of focus for FDA. Refractory NTM infection in the lungs has a high mortality rate, in fact, 50% of patients will die in less than five years from the initial diagnosis of the abscessus infection. Additionally, as this is a progressive condition, quality of life is substantially reduced prior to death. We began screening patients for our LungFit Go program at NTM in December 2020. This is a single-arm, multi-center, 12-week trial in Australia that aims to enroll 20 cystic fibrosis or non-CF bronchiectasis patients with refractory NTM lung infections. either mycobacterium avium complex or MAC or mycobacterium obsessus. Patients are titrated up from 150 parts per million to 250 parts per million NO in the hospital over several days and then sent home to complete the 12-week treatment period. We specifically designed our system to be simple to use by non-medical professionals that are confident in our ability to eventually bring LungFit Go into the home to treat patients suffering from chronic severe lung infections. Coming back to the trial design, during the first two weeks, patients received 40-minute NO administrations four times per day, followed by two administrations per day for the remaining 10 weeks. The study evaluates safety, quality of life, physical function, and bacterial load, among others. At this point, we are pleased with the performance of LungFit Go in this study and would like to note that the rate of enrollment, though slow at first, has picked up in the last few months, and we are on track to deliver top-line results in the first half of 2022. If this trial is successful, we believe our LungFit Go system will be a game changer for the home setting, potentially helping underserved patients with chronic severe lung infections with various underlying conditions such as cystic fibrosis, bronchitis, and of course, COPD. NO treatment should be thought of as pan-microbial, and the broad spectrum activity of NO may allow for the treatment of a variety of different indications and markets. Specific to the mechanism for eliminating bacteria, NO causes bacterial DNA damage, bacterial enzyme inhibition, and induction of lipid peroxidation. Additionally, NO penetrates biofilm, which may result in the improved delivery of concomitantly delivered antibiotics and activation of the immune system. Our prior guidance has reporting interim data around the middle of 2021. However, we believe that we will be fortunate enough to have the opportunity to show these data at a conference in the fall of 2021. We believe this is preferable to a simple press release. I would like to now turn to our solid tumor program, which will not use the LungFit platform due to the ultra-high concentrations of nitric oxide that are necessary to achieve anti-tumor effects. This program is early in development, but it's rapidly approaching a submission to regulatory authorities to enter human studies. As a reminder, we have presented data in mice at several conferences in 2020. The key take-home message is that NO as a monotherapy conveyed immunity to the host after a single administration of five minutes. In our studies, tumor-bearing mice were treated intratumorally with a single five-minute 50,000 part per million nitric oxide administration. Two weeks later, a challenged tumor of the same cell type was implanted contralaterally in the treated mice as well as untreated controls. 100% of the treated mice resisted secondary tumor growth for the 45-day observation period, while tumor growth was observed in all of the control animals within 10 days after tumor inoculation. These and other data, all available on our website, suggest that tumor immunity may be conferred by annual treatment. With that, I will now turn the call over to Doug for the full financial review.