Q2 2021 Beyond Air Inc Earnings Call
Greetings and welcome to beyond their Inc. second quarter, 2021 earnings and corporate update call.
At this time all participants are in listen only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference. This press star zero on your telephone keypad.
That's right.
Under this conference is being recorded it is now my pleasure to introduce your host Maria Jankowski head of Investor Relations for beyond there. Thank you you may begin.
Thank you operator, and good afternoon, everyone welcome to beyond Air second quarter of fiscal year 2021 earnings call speaking on today's call are Steve.
Hi, Andy our chairman of the Board <unk>, Chief Executive Officer, Douglas back our Chief Financial Officer. This afternoon. We issued this morning, we issued a press release announcing the submission of the Pmeight for one cookie H to treat persistent pulmonary hypertension of the Newport or P. page and in addition, after the close we issued a press release announcing the financial results for the second.
Third quarter of fiscal year 2021, okay.
Copy of both releases can be found on the Investor Relations page of our website before we begin I would like to remind everyone that comments in 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.
Of 1995, the on air cautions that these forward looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those indicated the on air encourages you to review the Companys filings with the Securities and Exchange Commission, including without limitation, the company's form 10-K, which I tend to find specific factors that may cause actual results.
Or events to differ materially from those described in the forward looking statements. As a reminder, this conference call is being recorded. Furthermore, the content of this conference call contains time sensitive information that is accurate only as of the date of the life broadcast November 11, 2020 beyond Air undertakes no obligation to revise or update any statements to grip.
What's events or circumstances. After the date of this conference call with that I would like now to turn over the call to Steve Lisi, Our Chief Executive Officer, Steve.
Thanks Maria.
Good afternoon, everyone and thank you for joining our call.
Before we get started.
Wanted to extend a huge thank you and congratulations to every member.
Over the beyond air team.
Submission of the PMAG for lung could ph treat persist in pulmonary hypertension of newborn or PHN.
Despite the difficulties imposed by the ongoing pandemic our team was able to execute on this critical step keeping us on track for us commercial launch in the second calendar quarter.
Of 2021 pending FDA approval.
As a reminder, lung fit ph is a lead product.
From our broader lung fit platform.
It is a novel cylinder free device that is capable of generating nitric oxide ore ano.
From ambient air that flows through a reaction.
Action Chamber, where pulses of electrical discharge created between two electrodes.
Simulating a lightning strike.
The desired concentration of Anno is achieved by controlling the voltage in duration of each electrical pulse, giving us the capability to titrate dose on demand for.
For maintaining a constant dose for treatment.
For PHN lung fit ph is designed to deliver a dosage that is consistent with current approved guidelines of 20 parts per million and though with a range of <unk> 0.5 to 80 parts per million.
Since nitrogen dioxide or ano too is a toxic byproduct of an old generation our.
Our proprietary and no two filters encrypted with RFMD chips are required to be securely put in place for the device to generate and safely deliver and though.
Our smart filters serve as the razor and razor Razorblade model.
Overall, the lung fit ph is a much smaller and.
There are alternative to traditional fixed supply cylinder based systems it.
It is important to note that our system operates with any standard electrical outlet we.
We believe that the removal of a cylinder makes it a more cost effective convenient and safe alternative for patients and medical staff.
I would like to now pivot slightly and discuss our initial target indication.
Piacenza serious breathing condition that occurs at birth, when a newborn circulatory system is unable to adapt to breeding outside the womb.
The newborns long vessels, our blood vessels are so constricted that oxygen and blood flow, our restricted and manual ventilation as required.
Since FDA approval in 1999 Eno has been the standard of care for PHH in the us acting as a pulmonary visa valletta to improve oxygenation and reduced the need for ventilation.
We estimate there are over a little over 850 level three level for neonatal intensive care units or an excuse.
That are equipped for delivery to treat PHN today.
According to published reports that you see in the hospital setting had sales of greater than $500 million in 2019 in the United States alone.
Additionally, and it has been approved for PHN in Europe since 2001 with a subsequent label expansion for use in certain.
The vascular surgery more recently and have received regulatory approval in Australia, and Japan for pulmonary hypertension in conjunction with heart surgery further expanding and I'll use the word cardiac market.
From a commercial perspective in the us cylinder systems have dominated for the past 20 years.
She is dominated by one company.
Until new players recently entered the market.
These new players have the same if not more disadvantages when compared to our long for ph.
As I mentioned before we believe that our novel technology has many advantages over the current standard.
First of all our ability to generate unknown from ambient air eliminates the space requirements.
And any volume limitations.
As of cylinders into.
In today's environment, the hospitals are left to shoulder the burden.
As each cylinder can weigh up to 45 pounds and require special storage.
That our system relies on safely disposable smart filters that way approximately two and a half ounces last for 12 hours of continuous use.
To be clear.
There are systems will not work without a filter in place confirmed by the RFP technology, preventing both anoro to toxicity, while protecting our business model.
Additionally, our smart filter design ensures that hospitals are only charge for what they use which.
Which is an advantage over some of our competitors that implore more aggressive pricing strategies.
From an end.
Refactoring perspective, our fixed costs are significantly lower than our competitors because we do not have any expenses associated with manufacturing logistics and transport of Ano cylinders.
Finally, our user interface is designed to be easy to use for providers and we also avoid purging procedures with which both reduced training Burton.
Overall operating economics and safety are vastly improved for the hospital.
If approved after 180 day after day review period, the beyond Air team will be ready for us commercial launch in the second quarter of 2021.
We will discuss our commercial plan in greater detail as we approach. This next milestone.
Sure launches outside of the U.S. are dependent on our ongoing partnering discussions and approval timelines in each jurisdiction.
Moving onto acute viral pneumonia and COVID-19.
We see significant opportunity to use our long novel lung fit platform technology to target acute viral pneumonia, including infections caused by Sars koby too.
One fit.
Commercial is a direct delivery non ventilator compatible system for use by an appropriate medical professional.
It is designed to deliver an hour at a concentration of 150 parts per million.
For 40 minutes four times per day, which can be easily adjusted for other indications.
One fit pro was previously referred to as long as it broke named after our bronchitis.
Program has since been renamed because this device applicable to many indications in the hospital setting.
Nitric oxide is well understood to have an inventory effect, many viral infections beyond there and the broader scientific community have published data that show nitric oxide ability to inhibit the replication cycle of corn versus.
As putting severe acute respiratory syndrome, otherwise known as Sars Coty.
In vitro in fact in October.
We presented our new positive in vitro data at the chest annual meeting 2020 that show and tech on various properties against OFC 43, who mckeown of ours when administered either prior to.
I will post infection at 150 to 250 parts per million nitric oxide.
We believe these data suggest that the long fit pro system may be effective for both prevention and treatment of human Cornerbacks infection at 150 ppm dose.
I'd like to provide an update on our clinical program in the syndication we have previously announced.
And received approval from the FDA to on a steady income in 19 patients using our lung fit system at 80 parts per million.
We've also received approval from health, Canada to run similar or similar study to one approved by the FDA.
The results from these studies along with other data has enabled us to receive approval from the Israeli Ministry of health.
To perform a clinical study at 150 parts.
Certainly for the treatment of acute apparel pneumonia, including COVID-19.
The study is a multicenter open label randomized clinical trial targeting approximately 90 adult patients with an emphasis on patients infected with Torrance coffee too.
The enrolled patients will be randomized in a one to one ratio to receive innovations of 150 parts.
So the nitric oxide given intermittently 40 minutes four times per day for up to seven days. In addition to standard supportive treatment or stand to support a treatment alone.
And points related to safety auction saturation fever, and IC admission among others will be assessed.
This is currently the only active trial that our company.
Ms performing the acute viral pneumonia over 19 setting.
We expect to begin screening patients shortly.
We anticipate results will be available around midyear 2021, and we'll continue to provide updates as needed.
Sticking with limited pro I would like to provide a quick update on our bronchitis program we've.
We recently presented data.
Data at the chest annual meeting from a bracket lettuce pilot study, which was a prospective multicenter double blind randomized study that.
That included 87 hospitalized infants patients treated with 150 plus million Ano. In addition to standard supportive therapy had a statistically significant shortening and time to fit to discharge the primary endpoint of the study.
Funny.
Than patients who received 85. Fortunately in addition to stand in support of therapy or standard supportive therapy alone.
We found no statistical difference between the lower dose of 85 course maintenance and control import.
Importantly on a key secondary endpoint of hospital length of stay.
The 150 plus million dollars of arm was also statistics in.
Steady compared to what the key five ppm and control arms.
All treatments had similar safety profiles and were well tolerated with no serious adverse events associated with nitric oxide therapy.
We look forward to publishing these data just as the previous two pilot studies have been published.
This is our third consecutive successful study in infants hospital.
If we get a viral infections and along with the previous two studies provide the evidence we need to move forward with a definitive study to establish the efficacy and safety of nitric oxide generated and delivered by our along for pro.
The pivotal study for bulky, let us was delayed due to COVID-19.
We are planning on starting a pivotal bronchitis study in the fourth quarter of 2021 pandemic permitting.
Please note that bunker lettuce is seasonal.
I will now provide updates for our lung fit go which was previously named lump at home on fit go as a nonbank clinical paddle system being developed for home use and non tuberculosis mycobacterial lung infections.
Or NTM.
The goal is similar to the pro with reduced.
Significantly reducing potential user.
For our Olympic Gold program, we are aiming to initiate a single arm multicenter 12 week self administered at home pilot study in 20 patients with NTM lung infections.
We've had delays due to the pandemic, but are expecting to begin screening patients in December of this year.
We are focused on enrolling refractory NTM patients infected with either MCE bacterium avium complex or Mac or Michael bacterium assess.
Patients, we titrated up to 250 parts per million and out in the hospital over several days and then sent home to complete the 12 week treatment period.
First two weeks, we'll see.
40 minute administrations four times per day, and the remaining 10 weeks will be twice per day.
The study will evaluate safety quality of life physical function and bacterial load.
The FDA has emphasized the importance of quality of life improvement in physical function as well as improved safety profile as markers of success versus solely eradication of the bacteria based.
Current expectations, we expect to report interim data from the at home study towards the Middle of 2021 and final results towards the end of 2021.
We recently published data from a compassionate use study performed at the National Institute of health or NIH, using our lung fit system.
The 24 year old female cystic fibrosis patients with chronic.
And progressive pulmonary mycobacteria, obsessive disease, which treated with 160 parts per million nitric oxide for three weeks and then subsequently treated with 160 ports remain titrated to 240 quarterly and annual five months later over.
Over the course of the follow up period. After the first course of treatment that included 160 ppm inhaled.
Good luck.
The patient had improved respiratory symptoms and quality of life and was able to lead a more active life.
The second course of therapy was requested by the patient is.
This course of treatment at 240 parts per million nitric oxide stop in the day for reasons unrelated to nitric oxide therapy.
These results demonstrate the potential clinical benefits of annual in the treatment.
This patient population and we look forward to initiating the 12 week pilot study next month.
As a reminder, our system is very easy to use and thus our enthusiasm for successful outcome and the at home study.
Ill walk you through four step process for administration.
Turn on the power switch insert the smart filter into the system.
Places the breathing mask on the face and press the star but.
With the successful study we believe our long fit go system opens the door to a very significant underserved market for chronic severe lung infections that can be treated in the home.
Last but not least we come to our solid tumor program.
This program has generated exciting preclinical data demonstrating nitric oxide its ability to elicit an anti tumor systemic immune response when high concentration cash as an hour or Gino is administered directly to solid tumors.
Our hypothesis is that Gino and extremely high concentrations greater than 10000 parts per million and even up.
Two 200000 parts per million will cause local cell death, when injected into solid tumors, thus exposing tumor antigens to the immune system.
This exposure May result in a memory immune response that will recognize and attack subsequent primary tumor re growth as well as distant metastasis.
For the same type.
Ups of tumor, creating a type of in situ cancer vaccination.
This program as early in development and will not use our lung fit platform due to the ultra high concentrations of Anna.
We have developed a novel delivery device, which we discussed at a later date.
We are extremely excited by this program, especially since the checkpoint inhibitor market alone.
So over $23 billion in revenue in 2019, and it's still growing.
We have presented our preclinical data at three different major conferences this year, including the American Association for cancer Research or HCR conference in June CNL, any CLC for lung cancer as well as the HCR subsection conference on tumor immunology.
Allergy immunotherapy this past October.
Given our goal of systemic anti tumor immunity, we used the tumor challenge model to test this hypothesis in mice.
Simply put we treated tumor bearing mice with a single treatment of high concentration Gino intra tumoral within.
With the intent to cost tumor cell death, not complete tumor.
Ablation after.
After initial treatment the remaining primary tumor with surgically removed.
A challenge to me with the same cancer cells as the initial primary tumor was introduced on the opposite side of the body.
The percentage of tumor Taco tumor reorder was monitored as well as survival.
The one that were control arms for comparison in our law.
Adjusted to date common tumor bearing mice received other 20000 to 50000 plus million Gino there are 11 miles per arm.
Treatments for five minutes during this.
For a single treatment.
And then the mice were not related with a challenge tumor 21 days later.
At day 45 post challenge tumor.
Inoculation.
Zero percent of the cone tumor bearing mice treated with 50000 parts million were observed with a challenge tumor versus 100% of naive mice and 27% of 20000 parts per million.
Mice.
So again zero percent for 50000.
Ppm arm, 27% for the 20000 ppm arm and 100% of the naive mice.
At tumor group tumor growth.
Simply design trials in breast tumor bearing mice and lung tumor bearing mice with smaller numbers of mice showed similar trends to date, we have not observed any safety issues with these experimental models.
The possibility.
Of treating solid tumors and potentially treating and preventing metastasis, maybe truly groundbreaking to our knowledge I was the first and only program testing the concept projecting high concentration and our gas into solid tumors solid tumors and metastasis are responsible for approximately 90% of all cancer related deaths and we are humbled by the huge unmet need for these patients.
Yes.
With that I will now turn the call over to Doug for the financial review Doug.
Thank you so much Steve Here's a brief review of our financial results for the second quarter of fiscal 21, which ended September Thirtyth 2020.
Revenue for the quarter ended September Thirtyth 2020 was 305.
2000, as compared to 646000 for the three months ended.
September Thirtyth 2019, all of which was from deferred licensing revenue.
Research and development expenses for the quarter ended September Thirtyth 2020 were $3.1 million compared to two two.
$2.8 million for the three months ended September Thirtyth 2019.
General and administrative expenses for the quarter ended September Thirtyth, 2020 were 2.2 million compared to $2.1 million for the three months ended September Thirtyth 2019.
For the quarter end.
Ended September Thirtyth 2020, the company had a net loss of $5.1 million or 30 cents per share compared to a net loss of 4.1 million or 38 cents per share for the three months ended September Thirtyth 2019.
As of September Thirtyth, the company had cash cash equivalents and restricted.
Cash of 22.4 million this.
This cash is sufficient to fund operations well beyond the next 12 months I'll now hand, it back to Steve.
Thanks, Doug.
Well take questions now operator.
Thank you, ladies and gentlemen at this time, we'll be conducting.
And a question and answer session, if you'd like to ask a question you May press star one on your telephone keypad confirmation total indicate your line is in the question queue.
You May press star kill people like to remove your question from the Q4 participants using speaker equipment. It may be necessary to pick up your handset before pressing the star key.
Our first.
Our son comes from the line of Shiraz Kalia with Oppenheimer and company. Please proceed with your question.
Good afternoon, Steve can you hear me all right yes.
Yes, our use rush congrats on your PMA filing thank.
Thank you. So I know, it's been a long journey, but hopefully we are coming to the end to fit so Steve a bunch.
Two questions.
The 850 level three nicas treating PBF Chen for the audience can you just walk us through that.
<unk> Chen volume per center per year.
How many feet on the ground would you need.
And have you decided on the pricing of filters.
And also what old at what point would the ft need to review coming to review your manufacturing as we plan for commercial launch.
Okay. So.
Devin 850, these level, three and four and accusing us roughly.
There is.
Use off label and cardiac surgery. So I think you have to add some more hospitals to those who use nitric oxide. So.
I will now have a total number but it's probably another three four or 500 hospitals, you can add to that number.
The market is reported by Mallinckrodt, mostly is well over 500 million. So you.
You can kind of just back into.
And into kind of volume per hospital, but this is pretty standard.
Top 20% of customers were roughly 80% of the market that classic car.
You know 80 20 ratio. So I think you kind of get an idea of what kind of revenues are generated by certain number of hospitals. If that was so thats your question figure.
I think you asked.
About one ft is going to be inspecting us. This is standard review 180 days.
We would expect to have data to do.
A pre approval inspection at some point.
My guess is probably somewhere around 90 to 120 days or so from now it's pretty standard so I really.
Can't speak for the FDA scheduled they'll let us know, we don't let them know, but thats, usually kind of the window that same.
And we haven't decided on price yet because we were seeing how the market is unfolding.
You know theres been competitors enter the market so in certain hospitals, where there's been some competition we've seen some.
Some rational price decline.
I think that we'll be looking at pricing our pricing structure would be.
More in line with where you've seen some competition already not really at the original pricing that Mallinckrodt has had on the market as monopoly.
So we got to see how things kind of play out but again these price declines have been very rational.
Well within the ranges, we expected to see when we compare competition entered so.
For us it's as expected. So we're we're pretty happy about it I don't know if I missed anything in this rush right to that Okay fair enough I was just trying to squeeze into a number so.
Steve the market you talked about this a lot going on right and you guys.
Stan to disrupt the market when you will launch welcome.
Welcome through what's going on currently and by that I mean, one field one of the key players is going through bankruptcy. The other player is lowering prices and trying to go into the Solyndra based approach.
Uh huh.
How does that factor in and just kind of tell us here with the touch point or the stress points. You are looking at this is going to dictate your pricing and this is what could change the market given that dynamics currently as you view it.
Yes, so you know.
It really can't can't speak for whats happening with with with Mallinckrodt.
I have no idea what their focus is our attention is on this market. We only know we hear in the marketplace from our our initial commercial team. So.
Yes.
Again pretty classic competition nothing out of the ordinary from what we would expect from a new player coming into the market.
I don't think its really impacting.
How were going to approach. These things again I think you already mentioned you asked how many square commercial Salesforce will look like our initial launch will be with a small force targeting small number of hospitals to kind of get our feet wet and then as we get more comfortable will branch out, but we don't really see the total number of sales force or commercial organization being.
It is.
Still be in double digits. We don't we don't think we need to be well below 100 people I don't think we have to even get close to that peak. So again I I you know.
The pressure points I guess for for dealing with these accounts for hospitals is we need to give them what they need they need no relief from from the price which is already.
Turning to an extent, but I think we can give them more not just in the price that we offer but also in the savings at the hospital level.
We take up less space, we take up less time less hassle, it's much easier to to track the usage of over of a filter where the countdown then how much is less than a cylinder.
These these these are these.
Hi benefits that we provide to the hospital that that save them direct costs, rather than just saving them cost by charging them less so I think it's a combination of all of these things to help the hospital.
Understand how much better our system is for them I mean again I mentioned on the call and you can see on our website.
These are just as much smaller.
You know, it's it's 65 pounds on a card versus 175 pounds, we can be taken off a card for ease.
Again, there are no cylinders I mean this is a huge huge thing when a cylinder is taken out of the equation is just so many factors that the different people in the hospital will tell you in our T. will give you a different.
She is and why they're happy than the Neonatologist are the anesthesiologist, the cardiac surgeon where the CFO.
That all have different reasons, why they're happy to get rid of the cylinder.
Our challenge as a company is to make sure that our system is reliable, which obviously, we believe that it is and that we as a as an organization reliable in customer service.
We couldn't I think that.
I think mark has done an excellent job of customer service.
And we need to match that I think it's very important that that we match that and I think that.
Many of you view tended our analyst day earlier. This year you met our chief commercial officer and he sees quite impressive so we're not too concerned.
Got.
Vernon, It's Steve final two questions I'll hop back in queue first does it make sense to still pursue covert studies given everything going on vaccines. So thats one thing and the second thing on the on the solid tumor sites, Steve. It's a fascinating approach you enough talk offline about this and I appreciate.
You not wanting or wanting to hold off on the details of the delivery device for general I guess my question. Steve is how do you control. The rest is it's time for Gino to achieve a certain clinical response and is there a limit to the physiologic axa tumor access, but such a device mechanism any any.
They would be greatly appreciated. Thank you have additional questions and congrats again, thanks, Suresh I'll start with a with Covidien team.
I can't really speak for vaccines I.
I know what you know from from the minimal inferred.
Information released recently, so we'll have to see what happens you know I think we.
Hello, but in this century, a long time and I don't think any of us really seen anything develop and in six to nine months.
Yeah, and any level of therapy, so let alone a vaccine, but we'll see what happens and hopefully this this.
This is actual real and it will help patients will help and get back to normal but.
I still think there is a need for treatments and if.
We've all this in our study were not just treating COVID-19, we are treating acute viral pneumonia, which is which is the broader condition.
So acute viral known can be caused by a number of viruses as you all know whether it be RSV or work.
Core viruses or.
Worker and such were sourced.
Charles Colby too is a cornerstone of our so.
We enrolling bulk.
All commerce in the study obviously, we want to focus we want to have a good number of Sars koby to infected patients in our study. So we can get a good sample in case, a covert does last a lot longer.
No vaccines are not as effective as soon as they are claiming to be so if they are effective and of course covert dissipates acute viral pneumonia doesn't go away. This this has been around for a long time I don't think we're going to get rid of acute viral pneumonia. So we're looking at the broader indication and if we can help and covered obviously, we will we think what's going to work and.
Whether its starts koby two were sharp score you won or or RSV or identifiers or you name. It we don't care. What Verizon is we think our therapy is going to be successful.
And if we can help with the pandemic that would be fantastic. We're ready to go we are ready to go as soon as were asked which is to generate some data I believe before he was going to ask us, but again, if there's an opportunity in covered.
And that I believe this will be an opportunity in Q4 and the winter was quite a large market. So this is why we are embarking upon this study and again, we were just doing Covidien I would understand your question there will be a very good question for us to decide whether it's a good use of our resources to go after covered only but that's not what we're doing we're covering.
Tax.
Spectrum of viral pneumonia.
So.
With respect to cancer.
It's obviously certain we're certainly very exciting and I'm glad you understand we're not going to talk too much about our delivery system at this moment in time.
Certainly not optimized yet, but we have a good idea of exactly what it will be.
Yes, and look I can't even answer your question as to where the limits are I.
I think we're still.
Going through that to learn those limits, but I can tell you that.
We have efficacy.
And we haven't seen.
You know, we haven't bumped up against these limits, where we're putting so much Patrick.
That in this province, we haven't seen any safety you haven't seen migration, we havent seen issues with too much gas or too much an hour or two or what have you. We haven't seen any of that at this point in time, not saying, we were not bump into a well run into it but we are trying to figure out where those limits are we've just gotten efficacy before we've hit those limits. So we're not we're not.
I'm not too concerned.
Learned about that at this moment in time, we are more concerned about optimizing the delivery system and optimizing the concentration of nitric oxide and the amount of time, we're delivering it I think that that needs to be optimized at this moment in time.
Before we progressed to a first in man study so thats our goal right now is to optimize the delivery so that we.
I can go into a first in man study towards the end of next year with our best shot on goal so to speak.
Next question please.
Our next question comes from the line of Matt Kaplan with Ladenburg Thalmann. Please proceed with your question.
Thank you.
Thanks for taking question and congrats.
Congrats on the PMA filing.
Thanks, Matt.
I wanted to zero in on your commercial strategy, a little bit for the PPH and.
Limitation looked at ph.
You mentioned.
It's a blade leading your filter what are your expectations in terms of the device will you sell the device provided free rent rent outsold the device, what's what's your expectation in terms of that part of the.
The program.
Well Matt.
Rich.
I don't think we have 100% settled in on exactly what we're going to do but I think give us some parameters I'm not sure.
The vast majority of hospitals are going to want to have a big upfront payment to bias system.
I don't think that's a good way to go.
Where there will be leased hit or rented or so to speak for.
An amount of money a nominal amount of money or what have you I I think that the main focus really needs to be on filters I think thats where.
The but the bulk of revenues will come from I think it's the best model for the hospitals again, we'll we'll get more information from them now that Weve submitted I think though there'll be one.
Wanted to talk more with us about how.
How things are going to look obviously, we can't do.
That much until we get approval we have to be.
Be aware that we can't be marketing a product prior to approval, but I do think that it's it certainly will.
Well have some inbound calls from people asking those questions and well to our board.
That's to answer them.
Within all the rules that are out there for what we can do as a pre pre marketed.
Product, but I I think again, the best thing for the hospitals is for them to look at the the filters and see them as a pay as you go type of of of instrument. So again truly think of the razor razorblade, we got.
Racism.
We paid for it we got it doesn't cost much half. So most of the time as readers covenant package razorblades kind of that just throw it in there for an extra 50 cents or something to keep it and you go buy as many places you want you about four pack. The pack 12 pack whatever you want and every time you buy more it's a little bit of a discount. So you can think that they will be volume discounts.
And there are many.
And ways to do that going discount whether its buying a box of 10, 20 or 30 or whether its ordering you know a fixed amount for a month for a quarter or a year or what have you. There are many different ways of doing it but I think you should think about focusing on how do we as a company price our filters. So that we are helping the hospital.
You can have their cost to them in.
In line with the reduced price we've seen.
With the competitors that have come into the market, where they've competed so some hospitals may still be paying original mallinckrodt prices and some may be paying more of the newer prices, where there's been competition. So you look at those lower prices would have been competition I think we have to design.
Assist.
For for hospitals, where they are paying for our filters when they need them and that price is coming in on an annual basis roughly in line with the others. That's what we're trying to do but it's really the filter that is most important we don't want to have been big upfront payments I think that that's not as a non starter for most of them.
And we also want to have something that's not going to hurt them, where this hidden cost.
Costs or this penalties at the end of the year things like that we want to be very careful and helpful to the hospital.
Great. That's helpful. And then you mentioned kind of a staged rollout how should we think about that stage rollout into hospital or the.
Starting in the second quarter of next year.
And then can you give us maybe some some of your thoughts in terms of the number of devices you hope to have in place by the end of the year or or number hospitals, you hope to have engaged by kind of end of year next year something like that.
Yes, I mean in the beginning I think it's a small number.
Doesn't give or take.
In the first six months.
I think thats kind of where we want to be.
We want to be targeted we want to work through with hospitals that really want to switch that really want to learn and understand that have higher volume lot of experience and we need to learn to Matt you know.
You don't just do these all these studies and then go.
Go out there to 1000 hospitals and say, it's going to be perfect. So we need to go a little bit slow it's a new device. It's lifesaving, we need to make sure that the hospitals comfortable and then if there's any little tweaks that need to be made and how we train or anything like that we figured out early and then hopefully by the end of 21, which would be about six.
Six seven months or so on the market, we hope to start expanding how quickly we expand I I just don't know that that's that's that's the big question.
So.
We certainly be looking to expand our team towards the end of next year calendar year that is and we'll see if that doesnt or so hospitals goes to two or three dozen war or.
But you know we'll know more you know you know after the first six months on the market I think the best thing to do is kind of.
Kind of track us and how we how quickly or how many hospitals were able to convert I mean, that's probably the best metrics and.
You know your guess I mean, we have good guesses internally I'm sure.
I can't tell you exactly what I guess is our but I'm sure. You can you can do some research with the hospitals and figure out how long, it's going to need to switch and what we need to do but again, we're not going out to 100 going out to.
It doesn't give or take and see how it goes and then will branch out from there.
Great and in.
In terms of.
More of them.
The the program for.
Bronchick bronchitis, you said you're on track to start.
You know next next year next fall.
What are kind of the rate limiting steps to getting that that bronte lettuce pickles.
We'll study off the ground next fall.
Right, we need to submit to the FDA for an I.D. So they can approve our pivotal study I mean, we if you recall the beginning of this year, we did submit and then the pandemic hit so kind of put that to the side obviously.
Hopefully you know when we talk to ft over the winter.
You know again, depending it doesn't seem to be going away.
And decisions have to be made you know early part of next year to be able to start in November of next year. As you know it's you need a good you know 789 months to get all the sites up and running and everything I mean for for corporate studies are running crazy.
Normally it takes time to get these sites up and running so we really need to press the go button.
Early part of next year.
And it's it's a difficult decision I don't know if FDA is going to say well, we're going to prove a study with infants in the hospital with a pandemic going on your on your mind I don't know if that's going to be the decision and its.
Really going to be up to an FDA about how things are progressing with the pandemic and if it seems like it's more under control and more studies are being done again, we're talking about.
Three four month old babies going into the hospital for these studies now obviously, if the world's open and these babies are going to hospital anyway, we can do the study but we.
We do anticipate that this winter is going to be one of the lowest on record for bronchitis hospitalizations because of the social distancing. So we're glad we're not running at this winter because we never enrolled patients. So if this is going to be the situation next winter like we're coming into this winter, where there's a lot of social distancing, we wouldn't be able to understand anyway. So it doesn't really matter, but I don't know anybody has a crystal.
Ball can tell me that we're going to.
Be wide open next winter or we're going to be like this next winter so.
The first step is to get after you to agree that you know we we can run the study and then the second step is to make an educated guess in you know I don't know September October of next year to see if we're still in a lockdown.
We.
Are we can't from the study so we need.
We need to have hospitalizations to be able to get.
No.
Babies in the trial. So again, that's that's kind of where we stand I wish I had a better answer for you on that but.
You know this focus is on Theres number to consider it so just to be clear it sounds like Youre file we plan.
We are the IBT sometime early next year.
And make the go no go decision in terms of actually running the study depending on where the pandemic instead of pandemic sometime in the early fall.
Late summer.
Yeah, Yeah, I mean, you know good things about things, we get we get it we get a our corporate vaccine we can run on bronchitis study.
We don't get a covert vaccine maybe the COVID-19 treatment is a winner. So you know I, we win both ways I guess.
I guess, we can't lose Ana.
Okay, and then last question some very interesting data in the oncology cancer indications with high.
Hi, does gadgets and no.
What what what are your thoughts in terms of.
Being able to move that into the clinic what are your what are the hurdles to overcome to get into the clinic as you hoped to late next year.
Yes, I mean look we.
As I said earlier, we need to.
Optimize.
This this delivery system.
And our our regimen and needs to be optimize I mean, we have.
Had success at as you've seen all of our data we've seen success at a.
20000 plus million all we have to 200000 parts per million. So we we've seen.
50, we've seen different concentrations and for different.
Durations of of of administration. So we're kind of worked out what's what's the best and.
Mice are obviously different than humans and the situation. So we're talking to a lot of experts to try to figure out.
What's the best way to go with respect to.
The best safety environment units.
So there's a couple of different factors that where we're working on with our consultants.
Because obviously, we can go 20000 up to 200, we can we know we have efficacy in that range. It's a very wide range, but there are a lot of other factors that have to be taken into consideration. So we need to do that work.
And.
And satisfy the regulators so that we've we've proven that we believe it's safe to go into into humans.
So again I don't know what else to say so that we're optimizing this and we also need to do it in more more animals I mean, we've done I don't know.
About 80 to 100 animals total I think we need to get.
That number up by a couple of multiples.
So.
Again, it's not it's not hard to do Matt It just.
Just just just takes time to do properly cancers rush through this this has to be done.
Systematically done properly documented properly we have to do everything you know as per the regulatory agencies require so that's.
It's why we're giving ourselves about a year to get to to to start before we start the study.
And I think the team has a good plan and now I will hit that timeline.
Sounds great. Thanks, Thank you.
Sure.
Our next question comes from the line of Scott Henry with Roth Capital. Please proceed with your question.
Thank you good afternoon, and congratulations on the filing.
Thank you Scott.
Just a couple of questions.
[music].
Steve when it comes to the the product launch are you preparing to launch it yourself or are you committed to launch it yourself I mean, what would you still consider a partnership.
Or is it just too late at this.
I mean, Scott I'd say, it's pretty late but there is a price for everything so I can't say that.
No I'm, telling you 100% there is no way, we talk to anybody, but I would say yes.
We don't if you don't hear anything from US you know.
Bye.
By the new year than I think it's impossible to get a partner because there's not enough time to bring somebody in and get this launched right away I mean again.
There's always a number but.
I mean, it's a big number right now so we're fully committed to launching et cetera, we've got.
We probably have I don't know.
[music].
Two thirds of the of the people on board right now that we'd need to launch with.
We'll have obviously the rest would be high right before the launch but.
You know what we're carrying these people right now and those expenses are already in in our piano <unk> for this quarter. So we're.
We're ready.
Okay, great that makes sense and indeed clarification.
One of the situation with a circus, yet to launch or or can those two things going on in parallel.
Dan I think more barrels or we don't get any clarification there.
Okay and then.
I believe you talked about enrolling the pilot study for and.
Yeah, Hi, I didn't get how many patients do you expect to have in that pilot study and how long would you expect it to take a couple to complete enrollment.
So its 20 patients.
Probably finish enrollment in the second quarter of next year.
Sometime.
Yes.
And then it's 12 weeks of treatment and 12 weeks of follow up so if we're able to that I said in prepared remarks, we've showed final dataset towards the end of next year. So if were able to get the enrolment done you know by the end of June.
12, which treatment 12 weeks observation were good and it's an open label study so.
It wont.
Got too much time to put them together and now and get it out.
Okay, Great and then on the oncology front I know you put a target out there first first in man, perhaps end of next year.
Any catalysts data points that we should focus on over in the interim.
All right.
People will find out as we go for the cancer, saying, yes, okay. So it depends Scott if we get data.
And we're in and becomes into our hands and we haven't missed a deadline for a conference then we'll show it.
That's probably what we do I'm not so sure we press released.
These anything at this point that might change, but I think if we have an a conference that we'd like to show data out and we have a new and meaningful data will show it so.
I think it's going to be a real tough given how quick how early deadlines are for conferences to see anything in the first half of next year, but maybe maybe in the early part of.
Second half there might be some conferences that we can get some data.
But again that will just depend on the conferencing.
You know what their dates are for submission to be able to show your data there, but I don't think we're going to be.
Press releasing.
Data as we have in the past for cancer I think we've kind of an update out.
Set up equip a concept and we're just focused on getting the first in man.
But again, we do one show to the scientific and medical community. So if there is an opportunity we'll do it.
I don't know if it would make it before we start first demand just based on those deadlines.
Okay, Great that you do it for me. Thank you for taking the question alright. Thanks Scott.
Our next question comes from the line of Yale Jen with Laidlaw and company. Please proceed with your question.
Oh, thanks for taking the questions and again congrats on the progress Oh.
Thanks, Yeah, no problem in terms of the PM in the filing just wanted to Uh huh.
Oh confirm or understand if the FDA.
BA has a oh hi.
Making decisions to whether to accept the occasional and not like the truck or they can't just accept the older people when they receive it and start to eventually review it.
No that was just the.
A device division I, just like the drug division has timelines and time points, where they say whether you know they've accepted for review or not they do have the same same kind of structure. So we're not at that point yet.
Is that again, maybe tool to month 60 day or you asked about their next day for them.
It's around there.
But certainly not a well.
Well June also.
I get a report on now that.
Stepped up location or just you just wait until the.
180 days ended before the decision.
Yeah.
I'll tell you if they if they don't excessive but I mean this is.
Very very rare.
Occurrence and we.
You know you got to understand the team that we have at beyond Air We we we've.
We've got a team of engineers I mean these.
These guys invented the nitric oxide delivery market [laughter]. They wrote the rules that FDIC need these the best guys in that business.
You know our regulatory team I mean, they've been doing this for 40 years, except the people and this this.
I wouldn't want anybody else to file something and nitric oxide doesn't this team okay. What company you're talking about I mean, you.
Remember what.
Remember what what the IMAX.
Just amazing they came from another company went through like five companies before it became part of Mallinckrodt I mean, these guys who built it built everything so.
I'm not really worried about this I mean that that's just a I know, it's a technicality and it's a good question to ask but when you look in the team. We have here that this is not something that really.
Kirstein says as possibility.
I mean.
Yeah, Okay. It's just not something we are thinking about because just a formality.
Okay, Great I mean, I appreciate the confidence and I think.
That's very helpful.
This as well.
So the ATM or the.
He was in the field.
With the CF also could be included 30 or they will be excluded.
I'm sorry gross.
What patients in the end in the NTM study yeah. So in the NTM study, we can take CF or non CF bronchiectasis patients. It doesn't matter, we're not we're not forcing either one it will be.
Up to.
The physicians, we've given them a leeway whether they are CF patients or non CF patients is fine or whether they're NTM obsess or NTM Mac patience is fine.
That's really up to the.
To the investigators we.
We obviously have done all CF patients in the past. So we we obviously prefer to get some non CF patients.
And we've done only obsess this in the past we prefer to get some back patients as well.
But again it's.
We're not restricting.
The so the sites pretty much all comers.
Yes.
Okay, maybe two more quick questions. The first one.
It's really the phrasing and question a little bit earlier, which is what do you anticipate that capacity in terms of manufacturing, but it either.
The machine or the filter, let's say in the second half of the year, maybe third quarter roughly this time next year.
Year.
And the weather made.
Manufacturing capacity capability can catch up to it or you will need.
Additional.
Our production capacity.
Capacity.
So with respect to the filters our contract manufacturer was worried we wouldn't order enough filters for them.
So one commercial line can make an enormous amount of focus. So we're good there I, we could probably make three years' worth of a filter needs in about four.
Four or five months I mean, it's just not volume on filters is not a problem lead time on filters is not a problem.
Which is not.
Let's turn it.
We have a great partner facility is outstanding and.
Again, you know, we're we're looking forward to making them happy so we can get it to a volume where they can appreciate us with respect to the lung fit device book.
We have a commercial line sport Tronics now there were spark before they spend a cost per tronics.
They have the lineup and in that facility.
Excellent I mean, what we have given us so far has been fantastic. It's only getting better every time, we make more machines, it gets better and better.
The lead time on this is long.
And that's probably the biggest challenges is lead time and estimating what we're going to need when we need it couple.
Capacity is not the issue.
We can with that one line, we could probably make.
Enough systems to cover the entire United States in one year. If you said in a year makes.
Maybe as many as you can I can make enough to cover the entire.
Are you at the next five six years no problem. So that's.
That's really not the issue no one wants to do that would have the money. It's a waste of everyone's time [laughter]. So we.
We have to try to figure out how to work with them. So that we are able to manage that inventory properly. That's really the biggest challenge is not about capacity.
It's more about.
Managing the inventory properly because there's a lot of components many different lead times something so.
We're actually very very happy with spar tronics on the commercial side with their ability to help us manage that process. So we're not really worried about not being able to make enough really more worried about making sure our supply chain is.
In turn great shape, so that when we need things, we can get them in a timely manner thats. The biggest challenge for us again, putting up a second line.
It's I don't know 90 days give or take we did put up another line.
So it's.
It's not really hard for us to increase capacity and when you go to the lung fit pros, which would be.
They were cute viral pneumonia corporate nineteena bronchitis.
[music].
We already have a commercial on it for those as well for.
For that that line is what amongst the pro line. So.
No that was up early obviously, we put it up early just in case, there was success with Covance and the devices where needed so.
We're ready to go there.
Before that actually has more annual capacity then the lung for ph line.
So we can make more per year that mccann for ph. So capacity is not an issue for us at the moment at all.
Okay, Great maybe the last quick question, maybe that might look like.
Is that a note in the cardio that.
Cardio surgical or Jim in sight.
Revenue, presumably is baker greater than front the nickel in the real world, Although that is still so sort of.
Off label use.
If any is there any thoughts how would you.
He able to penetrating that market and.
With all violating any low so other things.
We're not going to do anything different than what others are doing out there like I mean again there is no. There is no intent to break any laws is no nothing we're just going to market just like mowing.
Alright, and praxair to do going after PHN.
And you know physicians in United States have every right to use drugs or products off label at their discretion. So it'll be at their discretion. It won't be us doing any kind of marketing we will at some point.
Requests to Sta to expand the label.
And crucially. So you know I believe one of the companies in the market has already said recently that they are going to be requesting that as well. So I hope they do I hope it becomes on label for the good of patients and reimbursement for hospitals to everybody will be happy So again I don't see that's competitive.
Disadvantaged no one has it on label so there's no competitive disadvantage here, we're just going to do.
What others do and what the chips fall, where they where they will getting an on label obviously be a big is a big help but I think if one company gets on label it won't be too long for the others to get around label as well Hi I.
I don't believe that it would really be.
Well that had an advantage for anybody for any significant length of time, but I do think it's important to get on label.
I do think on label would help expand the market it would give hospitals a little bit more comfort that they can use in a bit more freely in these patients who need it.
Okay, Great and maybe just tag on that one have you note is that.
Metal crop at this stage.
I decided or not decided to do that study you mentioned.
So I I only go by what they've announced publicly and in and I think they did announce publicly that they would if I.
I recall and you can check their their public information.
That they said they'd be submitting at some point they may already have I don't know for Uh Huh I believe it was juvenile cardiac surgery, if I'm not mistaken whats the wording, but I think it was in our children adolescence.
I'm not mistaken, but I don't know if they have submitted yet or not I I don't know, but they did talk about them submitting it so we'll see.
I don't know what.
No what the timing is right.
Ask them, but again, if they get it or we get a first I think the other one was just piggyback off the other one so.
It's good for its good for patients and good for them.
Expansion of the market.
Again, like I said I don't think it's.
It's a huge win for the company to get a first.
Okay, great and thanks, a lot and again congrats on the great news.
Thanks, very much you.
That is all the time, we have for questions today I'd like to hand, the call back to management for closing remarks.
Hi, I just like to thank everyone for.
Retaining the call and look forward to talking you in near term.
Right.
Ladies and gentlemen. This does conclude this does conclude today's teleconference. Thank you for your participation you may disconnect. Your lines at this time and have a wonderful day.