Beyond Air, Inc.

Good afternoon and welcome everyone to the Beyond Air Financial Results Call for the first fiscal quarter of 2022 financial results, ended June 30th, 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 first fiscal quarter 2022 operational highlights and financial results. A copy of this press release 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 purposes of the safe harbor provisions under the Private Securities Litigation Reform Act of 1995. Beyond their 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 companies form 10-K, which identifies 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 contents of this conference call contain time-sensitive information that is accurate only as of the date of the live broadcast, August 10, 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 Steve Lisi, our Chairman and Chief Executive Officer, Duncan Fatkin, our Chief Commercial Officer, and Douglas Beck, our Chief Financial Officer. With that, I will turn the call over to Steve Lisi, our CEO. Steve?

Thanks, Maria. Good afternoon, everyone, and thank you for joining us today. On today's call, we will provide a brief overview of recent business highlights and preview upcoming milestones across our development pipeline. I will start by providing an update on the company's progress before handing the call over to our Chief Commercial Officer, Duncan Facken, to discuss our commercial launch preparations in greater detail. This will be followed by our Chief Financial Officer, Doug Beck, who will provide a review of our financial results, and then we'll open up the call for your questions. Let me start by saying that the entire BeyondAIR team continues to execute on our strategy, and we remain on track with the timelines that we outlined during our public call on June 10th for the fiscal 2021 results. As you all know, we are awaiting FDA approval of our pending PMA application for the LungFit PH system to treat persistent pulmonary hypertension of the newborn, or PPHN. LungFit PH is designed to offer hospitals a simple, safe, cost-effective, and convenient alternative to products that are currently available. We continue to have a collaborative rapport with FDA and anticipate approval at the end of the third quarter of calendar 2021 with a subsequent commercial launch in the fourth quarter. As we prepare for the potential commercial launch of LungFit PH, we are excited by the opportunity to disrupt this market and create a future of tankless inhaled nitric oxide delivery systems in NICUs across the United States and eventually globally. I will let Duncan discuss the specifics of this commercial planning in a moment. Let me turn to the progress we have made in our other ongoing programs and restate timing expectations, starting with our viral lung infection program, which uses the LungFit Pro system at 150 parts per million nitric oxide to treat acute viral pneumonia in adults and bronchiolitis in children under two years of age. In May, we showed interim data from 19 patients from our acute viral pneumonia pilot study in adults, all of which were COVID-19 patients, at the American Thoracic Society International Conference, or ATS, 2021. We reported that 150 parts per million NO administered using LungFit Pro were safe and well tolerated. We also observed positive efficacy trends for clinically meaningful endpoints, including a two-day mean reduction in oxygen support in NO treated patients versus control, a 26-hour reduction in mean duration of hospital stay between the NO treatment group and control, and only 22% of subjects in the NO treated group required oxygen support beyond their hospitalization, compared to 40% of control subjects. This mid-study review was encouraging. especially since the trends echoed the results of the three previous bronchiolitis pilot trials we conducted. Today, trial sites remain open for this study. We plan on submitting additional detailed study results at a future scientific meeting. Once this pilot trial is complete, our plan is to submit the entirety of the data at 150 to 160 parts per million NO in both hospitalized adult and infant viral pneumonia patient populations. as one comprehensive data package to the FDA. We would like to move to a pivotal all-comer trial for LungFit Pro in patients hospitalized with acute viral pneumonia and anticipate starting this study in the fourth quarter of calendar year 2022, the timing of which is due to the seasonality of most respiratory viruses. Moving on to our ongoing nontuberculous mycobacteria, or NTM, pilot study. We began screening patients for our LungFit Go program and NTM in December 2020, and are on track to report interim data at a conference in the fall of 2021, with top-line results coming later in the second quarter of calendar year 2022. We are pleased with the performance of LungFit Go, especially since this is the first device designed for self-treatment by patients in a home setting in this indication. And this is the first study that is using up to 250 parts per million nitric oxide to treat patients with bacterial lung infections. Enrollment is going well and we anticipate completion in fourth quarter of calendar 2021. As a reminder, patients receive four 40-minute treatments per day for two weeks and then two 40-minute treatments for 10 weeks with more than 11 weeks of self-administration at home. There is a 12-week observation period after treatment is completed. If this trial is successful, we believe our LungFit Go system will be a game changer for the home setting. We could potentially target chronic, severe lung infections with various underlying conditions, such as cystic fibrosis, bronchiectasis, and of course, COPD. Turning now to our Solid Tumor Program. Recall, this program exists outside of the LungFit platform due to the ultra-high concentrations of nitric oxide that are necessary to achieve anti-tumor effects. As I stated in June, we are rapidly approaching a submission to regulatory authorities to enter human studies. Our goal is to receive regulatory approval to move it to humans on the end of calendar year 2021, and subsequently begin recruiting patients the first quarter of calendar year 2022. We have presented data at several conferences in 2020, and it is available on our website. I encourage all of you to take the time to review these data, but if you can't, I'll provide you with the key cliff notes. Nitric oxide as a monotherapy can be tumor immunity to the host after a single five-minute local administration of 50,000 parts per million using BeyondAir's proprietary delivery system in 11 of 11 mice. Though we are highly encouraged by the results from the Solid Tumor Program, our LungFit platform remains the focus of BeyondAir. The resources needed to bring a Solid Tumor Program to a first in human study are not impacting our LungFit programs. We will constantly assess this balance to ensure that we are taking the best path forward for investor return while maintaining our focus on patient benefit. I will now turn the call over to our Chief Commercial Officer, Duncan Facken, for the review of our commercial plan. Duncan?

Thanks, Steve, and good afternoon to our investors. I'm pleased to report that we are right on track in our preparations for the LungFit PH launch, and we are, of course, extremely excited to present our solution, if approved, to the many hospitals that have been patiently waiting. As Steve has previously mentioned, we're preparing for a limited release phase for the first six to nine months post-launch. Although nitric oxide has been used as standard of care for PPHN for the past 21 years, our rationale is that our generator is a novel device that will require proper training and support for hospital staff. We recognize the important role the respiratory therapists, or RTs, play in the NO space. These providers are the ones directly responsible for administering inhaled NO therapy to severely ill patients, and they will be the ones using our device. As such, you could think of RTs as the champions or gatekeepers of NO devices being adopted by hospitals. We have carefully designed our LongFit PH's user interface to facilitate an easy transition from any prior device that an RT is familiar with. Our team will work closely with these providers to ensure that we have optimized our logistics, customer service, and product performance in the first limited release phase so that we are confident in our ability to scale up to meet the needs of a much broader range of customers in the planned second phase of our commercialization strategy. Our strategy for the initial phase will be to target a select number of hospitals that have level 3 or level 4 NICUs and staff experienced with inhaled nitric oxide. These initial hospitals will not necessarily require an abundance of devices up front. However, they will have a sufficient volume of hours per month to provide a rigorous test for lung trip pH and the beyond their team. we are acutely aware that hospitals are currently in annual or multi-year contracts for NO. Because of that, we will be targeting hospitals with less than 12 months left on their existing contracts, and we anticipate it taking about four years to have a shot at every hospital that uses NO in the United States. Remember, When under a monopoly, the NO market was north of a $550 million run rate in the U.S., which we believe has since come in to about $350 million. This includes the 850 or so level 3 and 4 NICUs in the United States that use NO for PPHN, and the off-label usage, mostly in cardiac surgeries, that accounts for about 80% of NO use. I want to make it clear our initial patients will be newborns diagnosed with persistent pulmonary hypertension. Due to the many advantages of the LungFit PH system, we do not plan on competing on price. In fact, our system's lack of reliance on heavy cylinders or cumbersome cartridges allows for the removal of the burdensome inventory, storage, and disposal requirements that are necessary for the products offered by our competitors. We are also able to reduce the training burden by avoiding purging procedures and reducing the likelihood of physical injury to healthcare workers, which pose many economic savings for the hospital. We will be charging on an hourly basis similar to the cylinder players via our encrypted 12-hour smart filter that ensures safety protects our business model, and leads to a predictable and steady revenue stream of consumables. The commercial team has been working diligently to prep for our anticipated launch this year. Let me talk more specifically about the main areas of immediate focus. Firstly, I want to highlight that we already have our pre-approval launch team in place and have identified candidates for the extended team who we plan to recruit once approval is obtained. We have numerous RTs on staff and experienced leaders to run our sales, marketing, and ex-U.S. partnership efforts. Secondly, our supply chain preparation is well advanced and going according to plan. In preparation for FDA approval, we'll have all the LungFit pH systems and accessories we need, and our service and support resources are in place. Lastly, we are finalizing our marketing plan. Of course, we are not yet approved, and so there is no promotional activity occurring. However, we have continued to refine our marketing materials, messaging, and business model based on conversations with the many potential customers that have reached out to us for information on LungFit PH. The first major conference following the expected timeline for FDA approval is the AARC, or American Association for Respiratory Care, in Phoenix in early November. And so we are targeting that meeting as the first introduction of lung-fit pH to the world. We'll provide more detail of our plans for both this specific conference and our broader marketing plan as we get closer to that time. In summary, we are really pleased with our progress and will be ready for launch as soon as we receive FDA approval. At BeyondAir, our vision is to harness the power of nitric oxide to unlock access, empower healthcare providers, and transform more lives in more ways. We're excited to bring the groundbreaking LungFit pH nitric oxide generator and delivery system to the U.S. market and the world once approved so we can start to turn that vision into reality. Thank you. And I will now turn the call over to Doug for the full financial review.

Doug? Thanks, Duncan. Here's a brief review of our financial results for the first fiscal quarter of 2022, which ended on June 30th, 2021. Revenue for the first quarter ended June 30th, 2021 with zero as compared to $229,000 for the fiscal quarter ended June 30th, 2020, all of which was licensing revenue. Research and development expenses for the fiscal quarter ended June 30th, 2021 were 2.7 million compared to 4.3 million for the fiscal quarter ended June 30th, 2020. General and administrative expenses for the fiscal quarter ended June 30th, 2021 with 3.9 million compared to 2.5 million for the fiscal quarter ended June 30th, 2020. The company had a net loss for the fiscal quarter ended June 30th, 2021 of 6.7 million or 31 cents per share compared to a net loss of 6.7 million or 41 cents per share for the fiscal quarter ended June 30th, 2020. As of June 30th, 2021, the company had cash, cash equivalents, and restricted cash of $39.6 million. We believe that this cash is sufficient to fund operations well beyond the next 12 months, including the initial U.S. commercial launch phase of LungFit PH. I'll now hand it back to Steve. Thanks, Doug.

Operator, we are ready for Q&A.

And at this time, we'll be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you'd 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. And our first question is from Greg Fraser with Truist. please proceed with your question.

Thanks. Good afternoon, guys. On the FDA review, the timeline is intact. You mentioned a collaborative rapport with the agency. Has anything surprising come up in the review or have you got any questions that were outside of what you and the team expected or has it been pretty straightforward so far?

Hey, Greg, thanks for the question. Appreciate it. It's been pretty straightforward. Remember that our team of engineers are the guys who designed and built and did all the work to get approval of the first ever system called the InoVent and several versions after the InoVent, which is the Inomax DSIR. So they've been doing nitric oxide since the early, mid-90s. So nothing in this space really surprises that team.

Got it. And have the inspection boxes been checked yet, or is that still to come?

I'm sorry, say that again? The inspection boxes?

Like, had the boss even checked on inspections? Had the inspections happened? No, the inspections haven't happened.

Usually, they're right at the end.

Yep, okay. And then, on LungFit Pro... How has your thinking evolved on which path to pursue if it has between AVP and bronchiolitis with COVID cases ramping up and the potential for COVID to remain a problem for some time? To me, there seems clear. But on the other hand, RSV cases are ramping up in a big way, and RSV will probably always be a problem. So I'm just curious where you see at this point the most unmet need and opportunity.

Well, it's a great question because I can go either way. I mean, we want to save the baby, so that's really what you want to do. but it seems like this pandemic is never-ending, and really the people who are suffering there are the adults and the elderly. So I think that we're going to take a look at the full package we have, and obviously we have data from both bronchiolitis and pneumonia, as well as our preclinical data and some other work we're doing. So we'll make a decision in the next few months which way we're going to go, and I think the direction we're going to go, and obviously dictated by our data set, is going to be what we believe we can get agreement with FDA on to move forward into a pivotal study. I think that's the most important thing is to move forward with one of them. If we try to go with one that's not as strong in terms of the data set because maybe it's a bigger market or what have you, then that would be a mistake on our part. So we're going to pick the one that we think has the best chance of getting agreement with FDA on a pivotal trial design and moving forward in fourth quarter of calendar 22. We just don't know yet. We're still gathering all of our... Understood.

Thanks for taking the questions. Thanks, Greg. And our next question is from Suraj Kalia with Oppenheimer. Please proceed with your question.

Good afternoon, everyone. Can you hear me all right?

Yes, we can, Suraj.

So, Steve... If the PMA approval for PBHN is, let's say, by end of this month, the 1st of September, is it fair to say that the labeling discussions have already happened?

Well, I don't think it's the approvals coming at the end of August. I think we've been saying September. So I wouldn't change that viewpoint in any way. I would still look at the end of September as the timings. And I think that, you know, with respect to the label, I mean, you know, there's no ambiguity on the label, in our opinion. I mean, the label is what's out there now. I think all three U.S. players right now have the exact same label. So I don't think there's going to be any difference here one way or the other on the label. I think it's pretty well known. And there's nothing from our side that would change that.

But have you all had labeling discussions with the FDA?

No.

Okay.

I'm not sure it's appropriate at this moment in time to have those discussions anyway.

One other question for Duncan. Duncan, you mentioned 850 NICUs. If I heard you correctly, about a four-year ramp, And please correct me if I'm wrong. So help us understand the cadence of targeting, you know, if the Pareto rule still applies in this case, how you all are thinking about targeting, just sort of, you know, so that we have some goalposts we can look at, you know, as post-approval and then after commercial launch. Thank you for taking my questions.

Yeah, no problem, Siraj. So to be clear, what I mentioned is that the contract, but typically around one to three years. And so within four years, we expect to have gone through or had the opportunity to talk into any hospital in the U.S. about their contract. It wasn't a reflection of a specific time that it will take for us to get to RAMP. As far as the phase is concerned, we've been clear that we're going to focus in the first six to nine months on something around up to a dozen locations or hospitals And we're going to focus on the customer service logistics and service and maintenance questions that you would expect to have to iron out before going into the next phase. The exact timing of that ramp up and the speed with which we increase our organization and revenue, it remains to be seen because we're obviously going to be dealing with all the questions that come back. And we think it's going to be fast, but I can't tell you exactly what those specific metrics are going to be at this time.

Thank you. And just as a quick reminder, if you have any questions, you may press star 1 on your telephone keypad, doing so will have you join the queue. Our next question is from Matt Kaplan with Lattenberg. Please proceed with your question.

Hi. Good afternoon, guys. I guess first, you know, as you're nearing your first approval with LongFit Pro, Can you talk about what your strategy is for potentially expanding the label for the LungFit pH? Sorry, not LungFit Pro, LungFit pH after approval.

We'll give you that nice save there, Matt, all right? LungFit pH.

Pro, go, pH.

I'll let you talk about the label expansion. Thank you.

Sure, thanks. Yeah, so as soon as we get our approval, we are going to file for the expanded indication for cardiac. So this could take, you know, obviously there's a range of times this normally takes, but certainly middle of next year is when we would expect to get that expansion. And it's really a pretty straightforward piece of work from our perspective. So, you know, it doesn't require any additional clinical work, et cetera. So it's just the dossier. And we'll submit that as soon as we get the initial approval.

Great. And maybe, Duncan, for you, can you talk a little bit about the business model for LungFit PH and how to think about kind of the razor and the razor blades and the sales of both?

Yeah, no, I appreciate that. So I don't want to get into too much detail about it because obviously it's a competitive advantage for us to kind of keep that fairly close to our chest. But I will say that we do have the smart filter that I mentioned. It's a 12-hour timestamp, if you like, and that allows us to measure how much people are using our system. And it actually gives us a lot of flexibility to So we're going to focus on the simplicity of our system and the flexibility of the business model. There are a number of different ways we can approach this, and we think people will really appreciate that. We're certainly not expecting to have to compete on price, and we'll focus on the broader value proposition, which is around eliminating the cylinders, optimizing the workflow, and ultimately increasing access to nitric oxide, which is what we're trying to deliver for this hospital.

Okay, very good. Thanks, fair enough. And then, Steve, for the OneFitGo NTM program, can you tell us a little bit about what to expect or look for in the interim data that's coming in the fourth quarter from the ongoing study?

Sure. I think the bacterial load data won't be available. I think that's the one thing that won't be there. in that interim. But, you know, quality of life, physical function, safety, and tolerability, all those data points will be reported on. You know, I think it's important to also note the concentration that the patients are on. You know, we start them at 150 parts per million, and we try to titrate them from 150 to 200 and to 250. And obviously, you know, The more patients on 250, the better. I think that's really what we're looking at from the early days. Remember, just as a reminder, these patients are treating themselves at home with our LungFit Go system for a little more than 11 weeks. The first couple of days would obviously be training and titration phase at the hospital. Okay, that's helpful.

Thank you. And then last question in terms of... your, I guess, kind of under-recognized program, your oncology solid tumor ultra-high concentration NO program. Can you give us a little bit more color in terms of what you're thinking of in terms of the first clinical study that you're on track to launch, I guess, late this year, early next year?

Yeah, I mean, this first phase one study It'll be two steps, phase 1 AB, no different than most other companies here. The first one will be, I don't want to say all comers, but it'll be multiple types of solid tumors. We'll be looking for safety. I think that's an important thing in this first piece of the phase 1 study. So that's really it. Can we deliver this safely in humans as we've done in rodents? They're obviously, Matt, as you know, we'll be looking at several biomarkers to be sure that there are at least the hints of efficacy that we expect to see in that first study with these biomarkers. But again, it would be more the phase 1B study that would have a direct endpoint of efficacy. But we'll get some good biomarker data in that first study for sure. Great, great.

Thanks for taking the questions.

Thanks, Matt. And our next question is from Yale Jen with Laidlaw and Company. Please proceed with your question.

Good afternoon, Steve, and thanks for taking the questions. Just two quick ones. First one is for the lung fits probe study. Do you have any non-COVID patients so far in the study?

Hey, Hale, how are you? So in the current ammonia study, all of the patients to date are SARS-CoV-2 or COVID-19 patients.

And just another follow-up question is that given that you feel comfortable that the approval may come by end of September, just a little bit referring back to the earlier question, is that whether you already have the inspection day set to have that or you just still to be determined?

Yeah, I wish FDA would give us a nice couple of months lead time and when they're coming in to inspect us, but usually their MO is to just kind of call you up and say, hey, we're coming next week or something. So it's usually a very short notice that they're coming. So it's not at least in my experience, my team's experience, it's not something that's set up well in advance. So a direct answer to your question is no, they're not scheduled yet, but I wouldn't expect it to be scheduled at this moment in time. I say, you know, it's going to be a couple more weeks before they make that phone call to us.

Okay, great. Thanks. And again, congrats. You are reaching the one-yard line and probably go beyond that very soon.

Thanks, Jan. And we have reached the end of the question and answer session. I'll now turn the call over to management for any closing remarks.

Thanks, everybody, for taking the time today. We'll talk to you next quarter. Thank you.

This concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation.