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spk05: 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.
spk03: 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?
spk02: 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.
spk04: Doug? Thank you, Steve. Here is a brief review of our financial results for fiscal 21, which ended on March 31st. Revenue for the fiscal year ended March 31st, 2021 was $873,000 as compared to $1.4 million for the fiscal year ended March 31st, 2020, all of which was from deferred licensing revenue. Research and development expenses for the fiscal year ended March 31st, 2021 were $12.6 million compared to $10.6 million for the fiscal year ended March 31st, 2020. General and administrative expenses for the fiscal year ended March 31st, 2021 were 10.5 million compared to 8.9 million for the fiscal year ended March 31st, 2020. For the fiscal year ended March 31st, 2021, the company had a net loss of 22.9 million or $1.27 per share. compared to a net loss of $20.5 million, or $1.78 per share, for the fiscal year ended March 31, 2020. As of March 31, 2021, the company had cash, cash equivalents, and restricted cash of $35.3 million. I would like to reiterate our cash balance as of April 30, 2021, which was $34.9 million, given that we recently provided this information in a press release. As Steve said earlier, we believe this cash is sufficient to fund operations well beyond the next 12 months, including the initial U.S. commercial launch phase of 150H. I'll now hand back this call to Steve.
spk02: Thanks, Ted. Operator, let's go straight to the Q&A.
spk05: Thank you. At this time, we will be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad, and a confirmation tone will indicate that your line is in the queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for questions. Our first question is from Suraj Kalia with Oppenheimer. Please proceed.
spk07: Good afternoon, everyone. Steve, can you hear me all right?
spk02: Yes, yes, I can. Thanks, Raj. Perfect.
spk07: So, Steve, the obvious question, I know you specifically said you don't want to talk much about the FDA discussions. Maybe you could characterize the timeline shift for PPHN from late summer to end of Q3. I presume that is driven by your conservatism rather than FDA specifically requesting any more testing or incremental data?
spk02: No. You know, summer ends in the end of September, so it's almost the same thing. You know, that's how I view it. I mean, what's the first day of fall? It's like September 21st or 2nd, I believe. So it's just a different way of wording it. It's basically the same thing. I wasn't really trying to change any timing.
spk07: Steve, when you talk about the PPHN launch, maybe you can talk about the number of sites you all are expecting to target, feet on the ground, ROI calculations. For the first few sites you all are looking to target, maybe you all can just walk us through X number of sites, this is how you all are looking for, and then expand to a more broader population.
spk02: Yeah, so I'll quickly comment on ROI and then I'll pass it over to Duncan. You know, return on investment for these 1st, 2 sites is going to be small. I think we told people this 1st. You know, 6 to 9 months after we launch is. Again, targeted as you're saying, and we don't expect to see big numbers from that. I mean, it'll be a very small number of. Hospitals, so the return on that investment is really the knowledge that we gain from this early phase so that we can branch out further once this phase is done. So, to answer the rest, I'll turn it over to Duncan.
spk01: Thanks, Steve. So, this 1st phase, we're going to be working with about a dozen hospitals over that 6 to 9 month period. We don't, as Steve said, we don't anticipate a significant investment. We just announced the appointment of two outstanding leaders on the sales and the marketing side, and they have a really good experience in the nitric oxide market. We know the sites that are interested in working with us, and it's a fairly straightforward exercise to bring them on to run an evaluation. And during that period, we're going to be focusing on refining our supply chain understanding any logistical nuances with specific hospitals, and learning, as Steve said, so that we can make sure that we have the optimal product when we expand after that phase one period.
spk07: Got it. And finally, Steve, in terms of CE, Mark, maybe you can walk us through the timing of filing and when do you all expect discussions with potential partners Because the statements seem to be pretty definitive that you all will sign a partnership in FY22. Maybe you can just walk us through how you see the cadence, the regulatory filing, discussions with potential partners. Any colors there would be greatly appreciated. Thank you for taking my question.
spk02: Sure. Thanks, Suraj. So Europe is a little different than the U.S. You know, we work through a notified body. Um, like everyone else, so it's a more of a fluid process. There's really no hard date we submitted and it was accepted for review. Like, FDA does it's it's more of a. An ongoing process, and based upon that process, and where we are right now, we think that will happen around the end of this year. This calendar year from our perspective, it's, it's best for us to to wait. to partner until after we've received our CE mark. We think that puts us in the best position to optimize the terms that we partner on. So that's where we are. And you know, Suraj, that in the U.S., you can go to market relatively quickly after approval, where in Europe, there are several steps after approval on a country-by-country basis that you need to take, than in the U.S., so we do have some time. I don't think we're losing much by waiting to optimize our terms until after CMARC. I don't think we're going to be delaying the launch by much, if at all.
spk05: Thank you. Our next question is from Matt Kaplan with Leidenberg Thalmann. Please proceed.
spk10: Hi, Steve, and thanks for taking the questions. Congrats on the progress. Just wanted to follow on Suraj's question in terms of can you talk a little bit about thoughts on the expansion phase following the first six to nine months and how we should think about that phase of the launch after you get all of your systems and everything in place in the first few months of the launch and then what happens next?
spk02: Okay, sure. I'll let Duncan take that.
spk01: Yeah, thanks, Matt. So after that first period, we should have all the information we need to optimize the supply chain, et cetera. So it's really a question of just building the sales organization and with the leadership that we've brought in. Rebecca Van Doren has 10 years experience building a sales organization, nitric oxide industry. And Corianne Taylor has been working in the healthcare marketing space for a long time, including working on nitric oxide. So both of them understand what's required. We're very clear about how we would ramp up, and it's not going to take much for us to expand our sales organization. In terms of targeting, there's already a really very good awareness in the respiratory community of nitric oxide, so we don't anticipate much trouble finding the right locations to expand. And depending on when contracts fall, we estimate that typically between one and three years of the 850 hospitals with a NICU unit, we still think there's plenty of hospitals that will be ready to do evaluations and then start to contract. So for us, the investment is not significant, the expansion of the sales team. Bear in mind that the market leader never had more than really 50 to 60 salespeople out on the road for their $500 million worth of business. So we don't think it's going to be a big challenge for us to have the right team in place to expand. So it's really about execution at that point.
spk10: And is there a metric you put on it for kind of Revenues per hospital is that a way to think about it or or is there another way.
spk02: Matt, I wouldn't look at it that way. These are. Hospitals vary in size and in demand of nitric oxide. So. You know, I would look at it more. It's hard for me to tell you which hospitals we're going to get 1st. A lot of it is based upon the contracts that these hospitals are currently under. So, they could be up 2 or 3 years left in their contract and we might get a shot at them. They could be the big ones or. Big ones coming up when we launch so, but it's, you know, you can use the classic, you know, 8020 rule, you know, 80% of the revs are going to be generated by 20% of the customers. I just, you know, it's just not it's not that we can target those top 20% day. It's like, it's, it's more of a timing issue of. Which hospitals we can target and when and that's not a bad thing for us. Um. as Duncan has mentioned, this kind of a phased approach gives us the opportunity to kind of map things out over the first two years post-approval of where we're going to go geographically and which hospitals we'll be targeting. So it actually works very well in our favor to have it kind of staggered over the next few years in terms of the opportunity to target hospitals.
spk10: Great, great. Just shifting gears a little bit in terms of you mentioned Lung Fit Go, the ongoing NTM at-home study. The interim results that are expected this fall, how should we think about those in terms of number of patients that we should see potentially this fall with the results?
spk02: You know, this is a study where looking at all 20 patients, so I wouldn't look for 20 patients in that in that look. And, you know, the exact numbers tough to get to, because we're not exactly sure of the cut off for when we'll be able to. Put the data into any, you know, any presentation that we'd be accepted for at a conference. So, it's tough number to nail down, Matt, but it'll be enough patients that it'll be. In our opinion, it'll be meaningful. to people when they see it. Okay.
spk10: Thanks. And then lastly, the EU opportunity for PPH and the long-fit pH. Can you give us some color on that?
spk01: Yeah. So, as far as the EU is concerned, the two I mean, the big five are the obvious markets that we would be expecting to target. And of those, UK and Germany are probably the most advanced. In terms of the market opportunities, it's clearly significantly less than the U.S. because prices is depressed compared to the U.S. But we think there's an opportunity because there are a lot of restrictions on the use of nitric oxide in Europe as it's matured, and that's how they've driven the price and the usage down. And we think that our system is going to be more simple and flexible to use and will be potentially used in a broader set of circumstances. So it's definitely a significantly smaller opportunity, but still a lot of opportunity for growth in the other markets that we were targeting initially. Okay.
spk10: Thank you. That's helpful. Thanks. Thanks for taking the question.
spk05: Thank you. Our next question is from Greg Fraser with Trues Securities. Please proceed.
spk09: Good afternoon, folks, and thanks for taking the questions. Nitric oxide is a large cost item for many hospitals, and managing utilization is clearly important to hospitals' control costs. Do you see any material risk to the NO market in hospitals questioning the use of alternatives to save money like sildenafil that might contribute to volume erosion over time?
spk02: Not at all. I think sildenafil and the other PDE4s are not going to be able to replace nitric oxide in this context. Perhaps in the pulmonary arterial hypertension space, they may have some benefits and may be able to impact that market. But I think With respect to and outside the U. S. obviously on label is cardiac surgery patients. I don't see the type products having an impact here.
spk09: Got it. Okay. And then just following up on the long, quick go study for sections. Well, the interim results include safety and efficacy data. And how would you set the bar on what you need to see in the study efficacy-wise to consider it a success?
spk02: So most in this interim look, we'll see safety, obviously, safety, tolerability. I think it's important to see the dose that we go to. Remember, we're titrating from 150 to 250 parts per million. I'd like to see 250 in as many patients as possible with, again, patients tolerating it for the full 12 weeks of the treatment. From an efficacy standpoint, on the early data, I think we should get a decent look at quality of life, possibly physical function data, which are two critical endpoints. I think that bacterial load is going to take longer. I don't think we're going to see much, if any, on the interim look as, you know, this is these type of data takes time. You know, we send it out to a lab, a central lab, and work is done there. And that's something that will take a bit longer. And remember that we do follow these patients for 12 weeks after the 12-week treatment period. So it'll be 12 weeks of observation where we're still gathering data, especially on bacterial loads. So I think that safety, tolerability, as well as quality of life and physical functions is what you should be looking for. And As for what do we need to see to be excited or happy about that? Improvement. Improvement in quality of life, improvement in physical function. You know, this is an open-label study, single arm, and we are getting baseline numbers. So these patients will act as their own controls. So you'll be able to see the effect on these patients, whatever, however many it is at that interim look. We expect to see improvement. If we see a decline in physical function and quality of life, that's bad. But we expect to see improvement, and that would be a big positive for these patients.
spk09: Got it, that's very helpful. And then just on the plan of study for patients hospitalized with viral lung infections, it sounds like you're going to make a decision on whether to target AVP or bronchiolitis. Is that correct? And if that is correct, how will you decide which way to go?
spk02: Yeah, we will choose one or the other. Going into a winter season, doing a pivotal study for both of those at the same time is just not possible. So we will pick one, and that decision will be made towards the end of this year when we've gathered all of the data that we're still gathering, and we've made an evaluation with with the experts internally at Beyond Air, as well as those experts that are working with us from outside the company. And we'll figure it out at that point in time. Right now, we don't have the answer. Got it. Okay.
spk09: Thanks for taking the question.
spk05: Thanks, Greg. Thank you. Our next question is from Scott Henry with Roth Capital. Please proceed.
spk08: Thank you, and good afternoon. I've been jumping around, so I apologize if any of these questions have been asked. Starting on the clinical side, Steve, the Australian study for the at-home pilot study, did you say how many patients were going to be in that trial?
spk02: Yeah, the target is 20 patients total.
spk08: Okay, and it sounds like we should be pretty comfortable that COVID's not going to have any significant delays there. Based on your statement, is that fair?
spk02: Yeah, I think the delays related to COVID have already occurred. I can't say for sure that it won't have any impact over the next several months. I don't know. Australia is handling it differently than we have in other places, so they're pretty tight over there. So I just don't know. Let's hope there's no more impact from COVID anywhere, especially on our trial. But We certainly faced challenges over the first half of this year or the first six months of this year. And I think they're subsiding. And like I said in my prepared remarks, that enrollment is certainly picking up recently, and we're very happy to see that.
spk08: Great. Fair enough. And then the pilot study in Israel, when should we expect data from that trial?
spk02: So, you know, the data that we showed at ATS is the data that we've, you know, that was available at the time. I think that the next time we show data from this trial will probably be in the first half of next year. Right now the team is focused on gathering this information. Again, we still have the sites open in case more patients are rolling in on a slow basis in the summer months. But our goal is to do our best to analyze all the data and put it together for FDA so that we can approach them around the end of this year and have a discussion about a pivotal study beginning in the fourth quarter of 22. So that's our goal. Our goal is not to try to get more data out by the end of this year. Our goal is to prepare for FDA and gather them by the end of this year. And perhaps in the first half of 22, we would show more data from this study.
spk08: Okay. Great. Thank you. And then cleaning up the Circassia deal, obviously a nice positive for the company. Is there any accounting noise we should expect from that, any one-time charges or any changes, just to factor into the model?
spk02: No. I think it's pretty much laid out as is. This is going to be – payment due once we get approval. And then the other payments would obviously be due as well. So right now, there's no accounting changes until we see approval. And once that happens, you'll see the payments made as they were laid out in the press release a month or so ago. Okay.
spk08: Perfect. And then just final question. I know you've given us a lot of bits and pieces around it already, but how should we think about the first year of that ppn or of of the the pphn launch in terms of you know how long from when you launch to when you start uh accruing revenues and how should we just think about revenues in that first year i mean just as far as expectations yeah i think um you know based on on gap accounting you're going to be accruing you're trying to match the revenues with the period that you
spk02: You know, in your expenses in the same period, so we may recognize revenues. Fairly quickly with cash coming in a few months after, you know, so. It should be, you know, if we launch in this in this 4th quarter. Of this county, or the 3rd quarter of our fiscal year, which is what we're planning on doing. I would say you would see revenues in the following quarter. So. you would see revs in our fiscal fourth quarter. Again, I would caution everyone that we're not looking at large revenues. We're looking at, you know, a low level of revenues for that quarter. So I think that, did that answer your whole question, Scott?
spk08: Yeah, yeah. I mean, that's helpful. But I guess what I'm just trying to think about from a ramp, It sounds like we should think about those first 12 months as sort of a pilot process with kind of an inflection point perhaps later in the cycle. I just want to make sure I'm thinking about that in the right way.
spk02: I think you are thinking about that in the right way, that we're calling in a six- to nine-month period of a focused launch, and that won't start the day we get approval. It's going to be probably about, I don't know, close to two months before we start to really get out there, six to eight weeks, call it. And that would take us to close to the first 12 months after approval. And I think that, yeah, there should be very modest expectations for top line revenues for that during this period. And, again, Duncan said once we get that confirmation that everything is, all the wrinkles are smoothed out in the process, we'll be moving very quickly to expand. So I would see it. a quite large expansion off of that first 12 months and the second 12 months in terms of revenues that we'll be bringing in.
spk08: Okay, great. Thank you for taking the questions.
spk02: Sure. Thanks, Scott.
spk05: Thank you. Our next question is from Yale Jen with Laidlaw & Company. Please proceed.
spk06: Good afternoon, and thanks for taking the questions. I just started with some housekeeping questions that the last quarter, the R&D expense seems substantially lowered in the prior quarters. And how should we think about that for the fiscal 2022, specifically in the R&D quarter over quarter?
spk02: Thanks, Yael. Yeah, so, you know, we spent a lot of money on the R&D side and, you know, we think of R&D in two ways, R&D for our clinical studies as well as R&D for engineering. And the R&D engineering numbers went down significantly since we had submitted the PMA and the spend subsided on that variable spend for engineering. Even on the clinical trial side, we didn't have a lot of expenses on the NTM side and You know, that's obviously picked up, but again, it'll be offset by the CF grant. And the study in Israel, a lot of those expenses occurred. Upfront in the December quarter, so, yeah, that number went down a bit and I don't anticipate it going up much in my prepared remarks. I said that. Overall actual cast expenditure will be lower in the June quarter than it was in the March quarter and that's. Going to come from R and D, because again, we're not. spending on trials now. We're kind of in a little bit of a low here. And that spend obviously will pick up, again, not on the R&D side, but it'll pick up on the commercial side once we get approval. So I think the R&D spend will begin to pick up in the back half of calendar 22. At that time, we'll be prepping for a pivotal study in either bronchiolitis or viral pneumonia, as well as the expenses will probably be picking up as well on our cancer program. We should be quite a ways through our phase one study. And as you can surmise, there'll be a little bit of, you know, kind of phase 1A, 1B, where B1B will be a little more expensive, and that will be later in the year. Um, and as we wrap up the study and plan for a pivotal there. I don't know if those expenses kick in in 22, but it's probably more in the in the 1st, half of calendar 23 when you start to see those expenses pick up. So that kind of back half of 22 into the 1st, half of 23 is when R and D expenses will start to rent back up until then. It's going to remain fairly low.
spk06: Okay, great. That's been very helpful. Maybe just along the same thing. First of all, in terms of CF foundation funding, would that be recorded as part of the license revenue for this year? Or that's separate?
spk02: It's an offset of expenses. That's how we record it. Okay.
spk06: And in terms of your starting, presumably starting sort of marketing effort, will end up in the fourth quarter of this year, should we anticipate from P&L perspective a separate line of marketing and sales expenditure, or that will be blended into the SG&A altogether?
spk02: Yeah, well, I don't know yet, Yael. I mean, you know, I know some companies will break out their sales and marketing and their G&A separately. You know, I don't know if we're going to do that, you know, in the next couple of quarters. We might do it maybe in the next year or two. I don't see it happening in the near term, but we'll see what we can do.
spk06: Okay. Maybe just one more marketing question here, which is that for the nitroxide sales, the revenue sales, predominant portions come from the cardiovascular labs. And I understand that the off-label is called off-label use. And what your thoughts as this woman also sort of expand into that space? Would that be something after the initial sort of test, soft launch? Or that's something you will contemplate at some time in the future?
spk01: Yeah, it's Duncan here. Thanks for the question. So as far as the cardiovascular label, it's something we plan to submit for as soon as possible post-approval. Obviously, right now, the indication is for PPHN, and that's how we'll promote the product. We said we'll respond to all the hospitals that want to use it in any other fashion. And because the nitric oxide has been used for over 20 years, the patterns are very well established. So we don't expect it to be particularly different for us, but obviously we'll do it in exactly the right manner. So that's how we're going to move forward.
spk06: Are you referring that you will have a formal submission of approval or simply is that what you're uh suggesting we'll be submitting for um cardio it's a label expansion yeah it's a label expansion okay great thanks uh appreciate it and uh congrats on the other progress thank you
spk05: As a reminder, if there are any other questions, you may press star 1 on your cell phone keypad, and any confirmations to indicate your line is in the queue. There are no more questions at this time, and I would like to send a call back to management for closing remarks.
spk02: Thanks, Dr. Greta. Thanks, everyone, for joining today. We'll be around if there's any more questions.
spk05: This ends today's conference. You may disconnect your lines at this time. Thank you very much for your participation and have a great day.
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