Beyond Air, Inc. (XAIR) Q1 2022 Results - Earnings Call
Beyond Air, Inc. (XAIR) Q1 2022 Earnings Conference Call August 10, 2021 4:30 PM ET
Company Participants
Maria Yonkoski - Head of Investor Relations
Steve Lisi - Chairman & Chief Executive Officer
Douglas Beck - Chief Financial Officer
Duncan Fatkin - Chief Commercial Officer
Conference Call Participants
Greg Fraser - Truist Securities
Suraj Kalia - Oppenheimer
Matt Kaplan - Ladenburg
Yale Jen - Laidlaw & Co.
Operator
Good afternoon and welcome, everyone, to the Beyond Air Financial Results Call for the First Fiscal Quarter of 2022 Financial Results, ended June 30, 2021. At this time, participants are in 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 Yonkoski, Head of Investor Relations at Beyond Air. Please, go ahead.
Maria Yonkoski
Thank you, Operator. Good afternoon, everyone and thank you for joining us. Today after market closed, 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 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 statements. Additionally, this conference call is being recorded and will be available for audio rebroadcast on our website, www.beyondair.net. Furthermore, the contents of this conference call contains 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?
Steve Lisi
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 Fatkin 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 Beyond Air team continues to execute on our strategy and we remain on track with the time lines that we outlined during our public call on June 10 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 report with FDA and anticipate approval at the end of the third quarter of calendar 2021 with the subsequent commercial launch in the fourth quarter.
As we prepare for potential commercial launch of LungFit PH, we are excited by the opportunity to disrupt this market and create a future of tank-less inhaled nitric oxide delivery systems in the 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 and 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 was safe and well-tolerated.
We also observed positive efficacy transfer [ph] clinically meaningful endpoints, including a two-day mean reduction in oxygen support in NO-treated patients versus controlled, a 26-hour reduction in mean duration of hospital stay between the NO treatment group and controlled, and only 22% of subjects in the NO treated group required oxygen support beyond their hospitalization compared to 40% control subjects. This midstream [ph] review was encouraging, especially since the trends echo the results of the three previous bronchiolitis pilot trials we conducted.
Today, trial sets remain open for the study and 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 150-160 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-common [ph] 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 non-tuberculous mycobacteria or NTM pilot study. We began screening patients for our LungFit Pro program in 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 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 440-minute treatments per day for two weeks and then 240-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 where 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 during the ultra high concentrations of nitric oxide that are necessary to achieve anti-tumor effects. As I stated in June, we are rapidly approaching submission to regulatory authorities to enter human studies. Our goal is to receive regulatory approval to move into humans on the end of calendar year 2021 and subsequently begin recruiting patients in 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 convey [ph] tumor-immunity to the host after a single five-minute local administration of 50,000 parts per million using Beyond Air'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 Beyond Air. The resources needed to bring up 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 benefits.
With that, I will now turn the call over to our Chief Commercial Officer Duncan Fatkin for the review of our commercial plan. Duncan?
Duncan Fatkin
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 a 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 LungFit 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 balance [ph] per month to provide a rigorous test for LungFit PH and the Beyond Air team. Also, we're 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 anticipated taken 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 $550 million run rate in the U.S., which we believe has since come into about $350 million. This includes the 850 or so Leven 3 and 4 NICUs in the United States that use NO for PPHN, and the off-label usage mostly in cardiac surgeries, but 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 systems 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 to the hospital. We'll 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, but we plan to recruit once approval is obtained. We have numerous RTs on staff and experienced leaders to run our sales, marketing and X U.S. [ph] partnership efforts. Secondly, our supply chain preparation is well-advanced and going according to plan. In preparation for FDA approval, we will 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 LungFit PH to the world. We will 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're really pleased with our progress and we'll be ready for launch as soon as we receive FDA approval. At Beyond Air, 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?
Duncan Fatkin
Thanks, Duncan. Here's a brief review of our financial results for the First Fiscal Quarter of 2022, which ended on June 30, 2021. Revenue for the first quarter ended June 30, 2021 was $0 as compared to $229,000 for the fiscal quarter ended June 30, 2020, all of which was licensing revenue. Research and development expenses for the fiscal quarter ended June 30, 2021 were $2.7 million compared to $4.3 million for the fiscal quarter ended June 30. 2020. General and administrative expenses for the fiscal quarter ended June 30, 2021, were $3.9 million compared to $2.5 million for the fiscal quarter ended June 30, 2020.
The company had a net loss for the fiscal quarter ended June 30, 2021 of $6.7 million or $0.31 per share, compared to a net worth of $6.7 million or $0.41 per share for the fiscal quarter ended June 30, 2020. As of June 30, 2021, the company had cash, cash equivalents and restricted cash at $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.
Steve Lisi
Thanks, Doug. Operator, we are ready for Q&A.
Question-and-Answer Session
Operator
And at this time, we will be conducting a question-and-answer session. [Operator Instructions] Our first question is from Greg Fraser with Truist. Please proceed with your question.
Greg Fraser
Thanks. Good afternoon, guys. On the FDA reviews, the timeline is intact. You mentioned the collaborative report with the agency. Has anything surprising come up in the review or if you get any questions that were outside of what you and the team expected? O has it been pretty straightforward so far?
Steve Lisi
Hey, Greg, thanks for the question. Appreciate it. It's been pretty straightforward. Remember that our team of engineers were 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 was the INOmax DSIR. So, they've been doing nitric oxide since the early mid-90s. So, nothing in this space really surprises that team.
Greg Fraser
Got it and have the inspection boxes been checked yet? Or is that still to come?
Steve Lisi
I'm sorry, say that again? The inspection boxes?
Greg Fraser
Have the boxes been checked on inspections -- have the inspections happened?
Steve Lisi
No, the inspections haven't happened. Usually they're right at the end.
Greg Fraser
Yes, okay. And then on LungFit Pro, how was you're thinking involved on which path to pursue, if it has between AVP [ph] 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. I'm curious where you see at this point the most unmet need in opportunity?
Steve Lisi
Well, it's a great question because I can go either way. I mean, we want to save the babies, so that's really what you want to do. But it seems like this pandemic is never ending and it's 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 the 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 the fourth quarter of calendar 2022. We just don't know yet. We're still gathering over.
Greg Fraser
Understood. Thanks for taking the questions.
Steve Lisi
Thanks, Greg.
Operator
And our next question is from Suraj Kalia with Oppenheimer. Please proceed with your question.
Suraj Kalia
Good afternoon, everyone. Can you hear me all right?
Steve Lisi
Yes, we can, Suraj.
Suraj Kalia
So, Steve, if the PMA approvals for PPHN is, let's say, by the end of this month, so the first of September, is it fair to say that the labeling discussions have already happened?
Duncan Fatkin
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 that viewpoint in any way. I would still look at the end of September as the timing. And I think that with respect to the label, there's no ambiguity on the label in our opinion. The label is what's out there now. I think all three U.S. players right now has 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.
Suraj Kalia
But have you all had labeling discussions with the FDA?
Duncan Fatkin
No.
Suraj Kalia
Okay.
Duncan Fatkin
Not sure it's appropriate at this moment in time to have those discussions anyway.
Suraj Kalia
One of the questions for Duncan. Duncan, you mentioned 850 NICUs, and 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 if the Pareto [ph] rule still applies in this case, how you all are thinking about targeting so that we have some goal posts we can look at as post-approval and after commercial launch. Thank you for taking my questions.
Douglas Beck
Yes, no problem, Suraj. So, to be clear, what I mentioned is that the contracts are typically around one to three years. And so, within four years, we expect to have gone through or had the opportunity talking to 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 around. 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 that ironed out before going into the next phase. The exact timing of that ramp up and the speed with which we increase 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.
Suraj Kalia
Thank you.
Operator
[Operator Instructions] Our next question is from Matt Kaplan with Ladenburg. Please proceed with your question.
Matt Kaplan
Hi. Good afternoon, guys. I guess first as you're nearing your first approval with LungFit PH, can you talk about what your strategy is for potential re-expanding the label for the LungFit PH after approval?
Steve Lisi
We will give you that nice save there, Matt. All right? LungFit PH.
Matt Kaplan
Yes. So, PH.
Steve Lisi
I'll let Doug talk the labor expansion.
Matt Kaplan
Thank you.
Douglas Beck
Sure, Matt. Yes, so as soon as we get our approval, we are going to file for the expanded indication for cardiac.
Matt Kaplan
Okay.
Douglas Beck
So, this could take -- 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, 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.
Matt Kaplan
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?
Duncan Fatkin
Yes, 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 time stamp, 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. 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.
Matt Kaplan
Okay, very good. Thanks. Fair enough. And then, Steve, for the ones that LungFit Go 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?
Steve Lisi
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 quality of life, physical function, safety and tolerability, all those data points will be reported on. I think it's important to also note the concentration that the patients are on. We start them in 150 parts per million and we try to titrate them from 150 to 200, then to 250. Then obviously, 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. First couple of days would obviously be training and titration phase at the hospital.
Matt Kaplan
Okay, that's helpful. Thank you. And then last question in terms of 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 or early next year?
Steve Lisi
Yes. This first Phase 1 will be two steps. Phase 1A/B [ph] are no different than most other companies here. The first one will be -- I don't want to say all comers [ph], but it will be multiple types of solid tumors we'll be looking for safety. I think that's 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? There are 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 those in that first study with these biomarkers. But again, it would be more of the Phase 1B study that would have a direct endpoint of efficacy. We'll get some good biomarker data in that first study for sure.
Matt Kaplan
Great. Thanks for taking the questions.
Steve Lisi
Thanks, Matt.
Operator
And our next question is from Yale Jen with Laidlaw & Company. Please proceed with your questions.
Yale Jen
Good afternoon, Steve, and thanks for taking the questions. So, just the two quick ones. The first one is for the LungFit Pro study. Do you have any non-COVID patients so far in this study?
Steve Lisi
Hey, Yale, how are you?
Yale Jen
Good.
Steve Lisi
Hey, how are you? So, in the current MO [ph] study, all of the patients to-date our SARS-CoV-2 or COVID-19 patients.
Yale Jen
Okay. And maybe just another follow-up question. Given that you feel comfortable that the approval may come end of this September -- because I'd be referring back to earlier question, that whether you already have the inspection date set to have that? Or just still to be determined?
Steve Lisi
Yale, 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'll come in next week' or something. So, it's usually a very short notice that they're coming. So, at least in my experience, in my team's experience, that's something that's set up well in advance. Direct-to-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 that it's going to be a couple more weeks before they make that phone call to us.
Yale Jen
Okay, great. Thanks and again, congrats for reaching the one-yard line and probably go beyond that very soon.
Steve Lisi
Thanks, Yale.
Operator
And we have reached the end of the question-and-answer session. I'll now turn the call over to the Management for any closing remarks.
Steve Lisi
Thanks, everybody, for taking the time today. We'll talk to you next quarter. Thank you.
Operator
This concludes today's conference and you may disconnect your lines at this time. Thank you for your participation.
