Q3 2021 Beyond Air Inc Earnings Call

And.

[music].

Greetings and welcome to beyond Air incorporated third quarter, 'twenty 'twenty, one and earnings call. At this time, all participants are in a listen only mode.

And the answer session will follow the formal presentation, if anyone should require operator assistance. During the conference. Please press star zero on your telephone keypad. As a reminder, this conference is being recorded I would now like to turn the conference over to your host Maria and Koskey head of IR.

Thank you operator, good afternoon, everyone and thank you for joining us and beyond Air Conference call today. After the close we issued a press release announcing the financial results for the third quarter of fiscal year, 'twenty and 'twenty, one a copy of which 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 the purposes of the safe Harbor provisions under the private Securities Litigation Reform Act of 1995.

And air cautions that these forward looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those indicated beyond.

And air encourages you 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 and the forward looking statements.

Additionally, this conference call is being recorded and will be available for audio rebroadcast on our website www dot beyond Derrick Dot net. Furthermore, the content of this conference call contains time sensitive information that is accurate only as of the date of the live broadcast February 9th 'twenty 'twenty one.

Beyond Air undertakes no obligation to revise or update any statements to reflect events or circumstances. After the date of this call I'm joined today by Steve Lisi, Our chairman and Chief Executive Officer, who will provide business updates Douglas Beck, our Chief Financial Officer, who will review our financial results for the third quarter of fiscal year, 'twenty and 'twenty, one and done.

And in fact, and our Chief commercial officer, who will be available during the Q&A, but that I would like to now turn the call over to Steve Lisi, Our Chief Executive Officer, Steve.

Thanks, Maria and good afternoon, everyone.

And I hope, you're all staying safe and healthy during the current pandemic, which we all hope will subside this year.

We appreciate you taking the time today to listen to our story, we believe given our progress is an even more compelling investment opportunity now than it was in 2019 and 2020.

Of course this progress was attributable to the very strong capabilities of the beyond air team and their intention Susie has and for what we are trying to accomplish for patients and.

And our investors.

I will spend a few minutes to provide a recap of our recent achievements and review our expected milestones ahead of what I believe to be a transformative year for beyond there.

Doug will conclude our prepared remarks for the review of our financial results and then we will open up the call for questions.

As you all know we submitted a premarket approval application to FDA for our lungs for ph. This past November for the treatment of persistent pulmonary hypertension of the newborn for PPA share.

The currently pending PMA is subject to a 180 day review period.

Just in case anyone was curious about our interactions with FDA and let me provide you with this I will not be commenting on other interactions at this time other than to say that we are very happy to be working with FDA on this application.

In the meantime, we are actively preparing for a commercial launch of lung for ph and the United States, which we expect will commence approximately four to six weeks after FDA approval.

Please take note that we've already employ about two thirds of our launch team, including several respiratory therapists.

We continue to guide for controlled phased launch, which requires low upfront costs, we will spend the first six to nine months post approval and a limited release phase.

And where we will work closely with a select number of hospitals, who have staff experience with N O to perfect our customer service and support functions.

Once our commercial plan has proven to be successful. During this limited release phase, we will expand our team and reach out to the rest of the market.

As a reminder.

There are over 800 level, three and level for neonatal intensive care units for Nick Hughes in the U S, which most likely for us and on therapy.

Estimate that approximately 20% of hospitals using N O represent roughly 80% of the market.

Which is the classic model.

According to published reports the usage and O and the hospital setting represents sales of greater than $500 million over the last 12 months and the United States alone.

It is important to note that the majority of sales are and cardiovascular related indications, which are only on label outside of the U S.

We are planning to partner lumpy ph outside of the U S. With the first agreement expected to be in place by the end of this calendar year in line with the anticipated receipt of CE Mark.

Considering the many advantages our novel technology offers compared to the legacy cylinder based systems that have dominated the market for the past 20 years, we expect lung for ph to be a disruptive force.

Our goal is to revolutionize this industry with a truly integrated system.

A device that generates and oh from ambient air and delivers it to the ventilator circuit.

We're not limited by their space requirements of 45 pound cylinders, where special storage requirements that are necessary for toxic chemical substances.

Instead, our systems rely on easy to dispose nitrogen oxide or N O two smart filters that way approximately two and a half ounces and last for 12 hours of continuous use.

To be clear our systems will not deliver N O without and beyond air Smart filter in place this prevents and O two toxicity to patients and staff, while protecting our business model.

One for ph offers hospitals, a simple safe and convenient alternative to products that are currently on the market.

Our system eliminates and O two urgent procedures and our user interface is designed to be easy to use for providers.

Overall operational economics and safety are vastly improved for the hospital are.

Our fixed costs are significantly lower than our competitors, because we do not have any expenses associated with and on manufacturing or logistics associated with and all cylinders.

I would like to emphasize that for the lung fits system to work all you need is air.

And preparation for launch we have our global supply chain and set up through our subsidiary in Ireland and have everything on track with our contract manufacturers for our systems and filters.

We secured a calibration gas supply more than a year ago and are confident that we will have sufficient inventory available at launch.

As a reminder, these N O and N O. Two calibration gases are manufactured solely for the purpose of calibrating sensors specific to nitric oxide and nitrogen dioxide.

And our lump it systems are all equipped for the appropriate N O oxygen and N O two sensors for monitoring proper delivery of N O and oxygen and safety levels of N O two.

Leading the preparation for the commercial launch lung for ph is our chief commercial officer Duncan <unk>.

And who has been with us for more than two years now.

Prior to joining beyond their Dunkin' was the worldwide Vice president of the Becton Dickinson diabetes injection franchise with prior experience at Zimmer Biomet Smith, <unk> nephew, and Johnson and Johnson.

He has over 30 years of experience and hospital based medical devices and has worked and Europe Asia and for the last 10 years in the U S.

Dunkin' choosing to lead our commercial efforts as yet another vote of confidence and our product.

And as Maria mentioned earlier Duncan who's on the call with us today and will be available to answer questions. During the Q&A portion of our call.

In addition to a potential FDA decision on our PMA. We also have two ongoing pilot studies that we expect to report interim data from all within the next six months.

Let's start with our acute viral pneumonia study, which includes COVID-19.

We began a pilot study in acute viral pneumonia, including patients infected with Sars Covid two with.

With the first site activating last November and Israel.

Enrollment is ongoing and we have had more sites come online each subsequent month post initiation.

As to be expected at this time the majority of patients enrolled are confirmed Covid cases.

But we expect to see an increase and other viral infections is Israel's population continues to receive the COVID-19 vaccine at warp speed.

As you May recall, our study is a multicenter open label randomized clinical trial enrolling approximately 90 adult patients with an emphasis on patients infected with Sars Covid two.

Patients are randomized and a one to one ratio to receive installations of 150 parts per million and now given intermittently for 40 minutes for times per day for up to seven days and addition to standard supportive treatment.

For standard supportive treatment alone.

And points related to safety oxygen saturation fever, and ICU admission among others are being assessed to date for lung fit pro devices, performing well with no safety issues.

We expect for at least interim results and spring 2021 with the top line for the full dataset expected over the summer.

Moving on to our ongoing non tuberculosis, mycobacteria or <unk> and T. M pilot study.

As you May remember, we began screening patients for our lump it go program and MTM and December 2020.

We recently dosed the first patient and are continuing to enroll this is a single arm multicenter 12 week trial, and Australia that aims to enroll 2000, and cystic fibrosis or non CF bronchiectasis patients with refractory and TM lung infection, both mycobacterium avium complex or Mac or mycobacterium abscesses strengths will be included.

Patients are titrated up to 250 parts per million and AUM and the hospital over several days and then sent home to complete the 12 week treatment period.

Yes, I said sent home for the remaining 11 plus weeks, we specifically designed our system to be simple to use by non medical professionals and are confident and our ability to eventually bring and O treatment into the home for patients suffering from chronic severe lung infections. Unfortunately, there are a lot of these patients and we believe and we will be.

A key weapon and this ongoing battle.

Going back to the trial design during the first two weeks patients receive 40 minute administrations for times per day, which then moves to two administrations per day for the remaining 10 weeks.

Studies evaluating safety and quality of life physical function and bacterial load among others.

If this trial is successful we believe our lung for dose system will be a game changer for the home setting.

Underserved patients such as those with chronic and severe lung infections with various underlying conditions, such as cystic fibrosis bronchiectasis and of course COPD.

Consistent with prior guidance, we expect to report interim data from the at home study around the middle of 'twenty and 'twenty, one with topline data about six months later.

I would like to now turn to our solid tumor program, which is a relatively new indication for us and we will not used alongside platform due to the ultra high concentrations of nitric oxide that are necessary to achieve <unk>.

Anti tumor immunity.

Although this program is and early development.

It has demonstrated exciting preclinical data, which we have presented at three different major conferences and the.

And the most recent being the ACR subsection conference on tumor immunology and immunotherapy. This past October.

And our hypothesis is that gaseous nitric oxide at extremely high concentrations greater than 10000 parts per million and even up to 200000 parts per million will cause local cell death, when administered directly to a solid tumor thus exposing tumor antigens and triggering the host immune system.

This exposure may create a memory immune bank that will recognize and attack subsequent primary tumor regrowth as well as distal metastases for the same type of tumor, creating a cancer vaccination.

Our goal for this program is to initiate a first in human study by the end of this calendar year.

I would like to point out that at this stage, our expenditure is less and 10% of our spend through fiscal year 2022 for our solid tumor program.

One for it remains the overwhelming focus for the company.

But the promise as evidenced in this program demands our commitment.

Turning to our Bronchiolitis program it remains on hold due to the ongoing pandemic.

<unk> is the inflammation of the lower respiratory tract and children younger than two years old and is the leading cause of infant hospitalizations globally.

And most common cause for bronchiolitis is respiratory syncytial virus or RSV.

But other respiratory viruses, such as run of RSV influenza and power influenza as well as Corona viruses can also be the costs low data. Thus far has showed that Sars COVID-19 two is not likely to trigger bronchiolitis.

According to the CDC RSV season onset has historically ranged from mid September and mid November with season peak from late December to mid February and the United States.

And in early 2020, Sars Covid two appeared in the U S. Just as the RSV bronchiolitis season was waning.

And we have seen more than a 90% reduction and bronchiolitis. So for the season, while information and limit as to why bronchiolitis is essentially disappeared one could surmise that parents of infants under the age of 12 months are not exposing them the same social environment as they had been prior to Covid.

Experts and regulatory bodies remain unsure how Sars COVID-19, two or its mutations could influence the upcoming 2000 and 'twenty one 'twenty two bronchiolitis season. This situation brings our program to a standstill as to beyond your team is unable to justify committing resources and capital for a study that would have to begin and nine months.

Beyond there and what remains committed to reducing the burden for hospitals bronchiolitis patients and their families.

We have completed three pilot studies to date, demonstrating strong safety and efficacy data at 150 parts per million and our pivotal study ready.

However, we must make the best R&D investment decision related to Bronco, let us know and that is to reallocate resources and funds to our other programs the.

And the uncertainty surrounding this program with respect to potential enrollment difficulties will only be resolved, we believe and we have more visibility on COVID-19, waning and infants getting back to that and normal social calendars.

With that I will now turn the call over to Doug for the full financial review Doug.

Thank you Steve Here's.

Here's a brief review of our financing.

And third quarter of fiscal 'twenty, one which ended on December 31 2020.

Revenue for the quarter ended December 31, 2020 was 149000 as compared to 314000 for the three months ended December 31, 2019, all of it was deferred licensing revenue.

Research and development expenses for the quarter ended December 31, 2020, with reported 3 million compared to $2 6 million for the three months ended December 31 2019.

General and administrative expenses for the quarter ended December 31, 2020 were $2 5 million compared to $2 5 million for the three months ended December 31 2019 for.

For the quarter ended December 31, 2020, the company had a net loss attributed to common shareholders of $5 8 million or <unk> 33 per share compared to a net loss of $4 9 million or <unk> 43 per share for the three months ended December 31 2019.

As of December 31, and 2020, the company had cash cash equivalents and restricted cash of $22 7 million.

I would like to provide our cash balance as of January 31, 2021, which is $35 million. We have previously mentioned that we had in the money warrants expiring in February 'twenty, one as well as access to equity lines, which provided this increase in cash for January and we believe this cash is sufficient to fund.

Operations well beyond the next 12 months.

I'll now hand, it back to Steve Thanks, Doug and I want to questions operator.

Yes.

At this time, we'll be conducting a question and answer session. If he would like to ask a question. Please press star one on your telephone keypad.

Confirmation tone will indicate that your line is and the question queue. You May press star two if he would like to remove your question from the Q.

For participants using speaker equipment and may be necessary to pick up your handset before pressing the star keys, one moment, please while we poll for questions.

Yes.

Our first question is from Suraj Kalia with Oppenheimer and company. Please proceed with your question.

Good afternoon, everyone. Steve can you hear me all right.

Yes, Suraj I can.

So Steve first of all foremost congrats and all the progress.

No it's been a long haul with COVID-19, but it looks like we are nearing the finish line at least on a PPA BPH and indications so congrats.

And I know, Steve you, specifically made a comment he would not granola and talk about the FDA interactions. So that throws out my first question. So let me move on.

Let me move.

Move on to the second one Steve can you remind us how many filters per case, how does your team.

Analyzed internally on a per case basis, and PPA Chin when you launch and the first 12 or 20 hospital and Nick used debt.

Do you guys believe other key targets.

I'm, sorry, what do you mean filters per case.

No.

Each.

Patient on average weighted requires so many days of usage.

And just the and filters and they will look is it one per case or is it required to be changed on a daily basis forgive me and my memory fails me here.

And there are no problem, so the filters or 12 hours and the last 12 hours, so youre changing it.

At that point in time, so it's two filters per day.

And patients.

Patients will require a different lengths of therapy, but you can figure the averages somewhere around $3 four days per patient right, which you could see shorter than that and longer than that but thats a good average to use.

Got it okay and the thought process is pricing is going to be similar to what the the cylinder based therapies for lets say for days that are publicly reported it is going to be plus or minus the same.

Yes, I mean, I have dunkin back and hear off from our Chief commercial officer, So Suraj I love to introduce them to everyone and let him. After some of these questions. So.

And so if you don't mind I'll, let him address this question for you if it's commercials if thats, Okay sure Hey, Duncan.

Hi, Sara and thanks for letting me ask the question so from a price and point of view, we are expecting that the price is going to decline a little bit we've got EBITDA in the past and.

And we are going to be competitive with the.

<unk> price and Thats out there for the gas cylinders and so yes, we will be pretty consistent with what it's currently used over three or four day period.

And we have the flexibility if we need to to be more competitive, but we hope and we can demonstrate the additional value of non <unk> cylinders and maintain the price somewhat close to that.

Got it Okay fair enough, Steve maybe I missed it and where are the patients recruited and the MTM trial, the lung for go and TM trial.

Yes.

Yeah.

Oh, sorry, I must have missed the number then.

And it didn't give you the number.

Yeah.

How many patients we just just saying that yes, there was price we have begun our.

And our enrollment.

Got it okay.

Steve just on moving on to Covid.

Obviously that has been the prospect of.

Oh, I know and Covid, then even mellon crop towards the end of 2020 and.

<unk> did a trial I believe it was with farmer right.

More specifically, Steve as you know, we all are evolving enough thought processes.

Do you think.

Inhaled nitric oxide could there be a differential to be demonstrated with some other COVID-19 variance that we're seeing over vaccines I guess I'd love to get your updated thoughts given everything we are seeing that vaccines with what's happening with variance.

And there I don't know fits and this and this matrix.

Yes look suraj.

We haven't tested it and nitric oxide against these variance there is so new I don't know of anybody else who's tested against these variance, but what I can say is that we do have.

Data that came out of Sweden back in 2000 for.

Which was against Sars Colby, one and nitric oxide was clearly effective in that study, it's been published and we actually have a copy of or at least a picture of that from page of that publication and our corporate presentation and then the same group put out a publication late last year against Sars Covid two.

<unk> and had very similar results to what happened and starts could be one so.

You can make your own conclusions there, but I would say nitric oxide seems to be a broad spectrum.

Against.

Viruses and specifically the Corona viruses and here we did work on.

OC 43, human coronavirus in vitro and we had success there so.

You can't see for shortly actually test it and these in these and these.

Mutations and these new strains, but from the previous information, we have about nitric oxide against.

Sars and against other Corona viruses.

It would seem to look very promising.

Got it and then Steve just generally speaking and maybe we can take this offline do you ever envision lung for go to have a role and COPD. Thanks for taking my questions everyone.

Thanks Suraj.

So, yes and no.

I'll do the no part first we're not going to be treating the underlying COPD.

Natural oxide.

Treat COPD per se, but most COPD patients, especially those that are progressing to moderate to severe COPD will it be experiencing.

Lung infections that are causing severe exacerbations. So they are more susceptible to these debt and healthy patients or those with with mild COPD and.

And those exacerbations.

Again can be very severe cost hospitalizations and there are data out there showing that if you are hospitalized due to a severe exacerbation with underlying COPD.

Will.

Reduce your life expectancy.

That's where nitric oxide can be beneficial we believe that we can.

Treat these patients who are hospitalized and they can go home with nitric oxide and and hopefully improve.

They are there.

The mortality rates and we can reduce debt mortality rate for those types of patients and perhaps and.

And these patients who are at high risk for these exacerbations, we could be treating them chronically and their home. So that we prevent these exacerbations from ever happening that's really the target for COPD and I think this study and MTM, we're treating patients and their home or their sub administering and their home is the first step towards having long ago and the home.

And treating these COPD patients.

Thank you.

Our next question is from Scott Henry with Roth capital.

Please proceed with any other question.

Thank you and good afternoon, just a couple of questions.

I guess first when it comes to the launch I think you mentioned that two thirds of the launch teams is already in place and how should we think about.

The kind of the promotional budget as well should that be is that also partially in the current expenses, what and when you think about trade shows and and any sort of.

Sampling or anything that you will you'll have to do and in line with the launch.

Thanks, Scott I'll take a little bit of this question and I'll pass it over to Duncan.

Obviously promotional expenses and marketing expenses are very minimal now since we can't promote.

So there are few things that we're covering and our current budget, but.

Obviously, the bulk of that will be once we do launch the product, but I'll, let duncan.

And expand upon this as you can imagine this is not a we're not doing and a DTC advertising that's for sure. So dunkin'.

Thanks for the question Scott So we.

We have accounted and budgeted for some significant activity obviously for loans, but prior to launch we continue to respond to inbound calls we're building on the.

Conferences that we attended pre Covid and we continue to attend those virtually and the cost of doing that is certainly not prohibitive.

That's really not a problem when we get into the launch phase and we are starting and as Steve said with a limited release.

Specific number of hospitals, and we think that the actual trial phase we will only be a matter of weeks that they actually have to trial the system and it's going to be relatively cost effective for us. So we certainly have all of that covered we don't anticipate it to be very difficult at all.

Okay, great. Thank you for that color.

And then Steve and I believe you said, we would start to see first in man for the oncology indications by the end of calendar year 'twenty 'twenty one.

How should I think about you know how long until we see some data there should these be relatively.

Marker shorter marker based trials, just trying to get a sense, if and when we should.

Get readout and that area.

Yes, Scott.

It is tough at this point to really predict when we'd be able to show data from that but I think youre on the right path that this is not going to be.

For a very long term.

First in human study it will be.

And there will be biomarkers, we'll be targeting and there'll be safety and so forth. So it should be relatively short for oncology studies.

No.

It's hard for me to commit to a specific quarter.

And that we will be showing data, but if we can get started by the end of 'twenty. One I think it's fair to say, we could probably have something out there by the end of 'twenty two.

But again, let's let's see how that goes it's almost two years from now so.

Got a couple of things Dan.

To accomplish before I can really nailed down that timing.

Okay, great. Thank you.

And then just final question.

Please with regards to the balance sheet are a real time cash figure was given was did I hear that.

And then it was $3 5 billion.

And.

If I hear that corrected for the difference mostly warrant exercises.

But how we should think about that there is an outstanding line.

Okay.

Alright, Thanks, Scott so.

Yes, It was $35 million was what Doug said and the prepared remarks.

And it was a mix of the warrant exercises as well as the use of <unk>.

Our ATM and equity line of credit. So it was a combination of those three things.

Okay perfect. Thanks for the clarification and thank you for taking the questions. Thanks.

Thanks Scott.

Yes.

Our next question is with Matt Kaplan with.

And with Ladenburg. Please proceed with your question.

Thanks.

Good afternoon guys.

Hey, Matt how are you doing well thanks.

Just wanted to ask.

Asking a couple of questions with respect to the plan and watch it and that's for a while.

Loved the ph you mentioned a phase a phase launch can you describe kind of how what the phases are and how the what the first phase will look like as you kind of and.

Once the product later this year.

Matt I'm going to pass that over to Duncan.

Thank you very much.

The question yet.

And suddenly we got it is best practice for us to take a steady approach, what we call and limited release to that first phase its probably going to be around six to nine months and we expect to go to something like 10 to 12 hospitals and the purpose of that phase is to optimize the supply chain the service model.

And glue and whatever we can particularly anything that we haven't anticipated and.

The goal is to make sure that after that period, when we get to the mine for 12 months sides. We can then broaden it to a much larger group of hospitals, and we will be able to accelerate at a much faster rate with a lot of confidence we don't have any constraints on our supply chain and have made us make that decision. We just think it's prudent and the appropriate way.

To launch a medical device something that I've, certainly had plenty of experience.

And that has gone well and some that haven't gone by and it tells me. This is the right thing to do and then the pace that we expand across the U S. We will obviously depend on how things play out after that first phase as we start to accelerate and we're hoping that we'll be able to go quickly and.

And.

Move as fast as supply chain allows at that time.

Makes sense, okay, great that's very helpful and in terms of.

What are you thinking about in terms of how you charge for the device itself and then let's call it the <unk>.

Laser and then the razor blades.

Is that.

How are you going to monetize and showed us.

Sure. Thank you, yes, I think that we're still working through the specifics of the model, but we have a pretty good idea you can imagine we don't want to reveal.

Exactly the details because we want to maintain that competitive advantage.

I will say that we intend to be flexible we intend to make sure that there is an incentive for people to increase their usage of nitric oxide, which I think is something that hasnt been there and in fact I assume theres been a.

A trend to put in and protocols to kind of restrict usage because of the business model and that's in existence and we're going to just make it easy for us to do easy for them for new business with us.

Alright, alright, thanks, and then.

And for you.

You have some significant initial data readouts coming up and the relative near term can you help us understand what we should be looking for I guess and the from a one fifth CRO acute viral pneumonia interim data that you expect to.

You know present or announced and in the spring.

Yeah, I think obviously most important is safety.

<unk> pro being used and this number of patients.

For the first time and Ah study, it's important and make sure that it's reliable system and safe and simple to use as we've been.

Telling you for the past.

A couple of years here.

In addition.

We will have ex standpoints, there obviously and.

And typically.

And what have we been doing with with for COVID-19 studies, what you've been seeing.

People are looking for.

Patients resolving symptoms how quickly they resolve them quickly and get out of the hospital pay.

Patients not progressing and going to the ICU those kinds of things will all be reported.

And again I mentioned COVID-19 because most of the patients are COVID-19 at this time and for acute viral pneumonia patients as well you would look for the same things choice and it's pretty consistent there. So.

I think it's pretty standard of what Youre seeing from other companies right now.

And then out of the 90 patients and plan to enrollment study how many shipping expense.

And the spring.

Yes.

We will see.

We will have.

A point, where we will have to cut the cut the data in terms of this is it. This is the date and we're going to pilot and then put that release out we're not looking for any specific number per se. It's more of a timing issue from a date and we just have to kind of pick one and at some point and say that's it and whatever we have at that point, we'll put out and the press release so.

We haven't really made that decision at this point and time of what that date will be but.

The season's pretty much over in by the time, we get into May unless Covid just continues to go the way its going but.

Israel seems to be Vaccinating very quickly. So I don't think it's going to last too much longer than that so.

That's why we feel that we'll have something out in the spring clearly.

And on an interim basis, but I don't know the exact number of patients who would be.

Sure.

And after enough to enough too.

Enough to.

Draw some.

Initial conclusions that's for sure.

Okay, and then I guess similarly for the one fit.

<unk> program and and T M.

And from data.

And I guess, a little net net.

This year.

What's your meeting bookings quarter, there and what do you have kind of culture conversion data at that point.

And what efficacy that we have yes, I don't think theyre going to be anything on culture conversion at that point it would be too early.

This is this is a <unk>.

12 week treatment 12 week observation so the coach conversion stuff would be after 24 weeks. So we won't have anything on that but we'll have.

Physical function data and safety and Tolerability data.

No.

I don't know, if we're having and quality of life data at that point and time to be honest with you I'm not sure we can pilot that quickly but.

I think it's important method.

And we see patients going home with the system and that they are using it themselves safely and their home and that the machine is.

And is holding up and without many problems and the patients are and complaining and.

They're taking their doses and they're happy with it and we get good feedback from these patients and net.

Most important thing here and when.

We put the final data set out then and we can talk about culture conversion, but we seem to see how the safety and tolerability of our system and home looks as well as.

Data on and on physical function.

Great.

Thanks, Steve and thanks for that and detail.

Alright, thank you.

As a reminder, if you would like to ask a question. Please press star one on your telephone keypad.

Our next question is with Yale Jen with Laidlaw and co. Please proceed with your question.

Good afternoon, and steep and.

And congrats to finally getting to the finish line for.

And our alone.

And that pitch.

Thank you my not finished yet, but we're close but thank you.

It's 90 596 yards I guess.

Uh huh.

The first question is that.

How do you guys see the market at this point debt.

Being giving the one.

Generic and machine already.

Cylinder or ADP and the market.

Do you see the.

Total market value.

Value being eroded and.

And what do you anticipate should you guys coming in would that be.

Burgers or.

Reduced because of a competitive competition reasons.

So the first thing I'll say is that we've been we've been saying since 2017 that this is a $300 million plus market knowing that the sales and there were at that time, pushing $500 million run rate and now before praxair start to take market share.

It was pushing closer to $600 million run rate.

And we've always said, we think it will settle in around 300 million plus just because praxair was coming it was well known well telegraphed they were coming and we think that it won't go much lower than that in terms of the price is kind of been set by practice entry.

No.

I think we've anticipated this well we projected this market would be the size and I think it's actually occurring.

Anticipated over the last couple of years, and then I'll, let Duncan and talk about what he thinks will happen when we come in.

Yeah, Thanks, Steve I think that.

Steve's comments I think they'll hold with the optimistic view that will start to grow the market again, we do know as I said earlier.

A lot of hospitals are put in protocols to try and restrict the use of nitric oxide and we're hoping that our business model and encourages them to change those protocols and increase use as well as the ease of use of our system and the.

Relative.

The reduction in time for them to use and efficiency, removing all the obstacles around logistics et cetera et cetera. So.

Joel is that more patients are treated with nitric oxide. So that would be the cancer. We're certainly not expect and we will fully market further down we think that we've got enough advantages too and a strong enough story to prevent that from happening, but obviously, it's a competitive world and it will depend from hospitals.

For hospital, but certainly that's our goal.

Okay, Great. That's very helpful and maybe just the one more question at least from the marketing side, which is that the cardiovascular.

Presumably the large portion of my talk side, but also that's off label.

Bob.

And I know you've got cannot promote that.

But was there any strategy elite and top.

10000 feet the vintage point.

And for you guys to thinking entering that market.

Yeah, no. Thanks for that question.

No the usage pattern the already exists so of course, we can't promote.

And that.

Off label use, but we certainly can promote for hospitals, where they make and we intend to do that and.

As we enter the market will definitely be looking to expand our own.

Indication to include cardiovascular disease as well.

We're going to respond to the.

Inquiries of customers and we're going to just make sure that it's easy for them to use our system and.

And we will have clinical specialists and people who can respond to any off label request. So we certainly hope that we can be part of expanding the use formerly and getting some reimbursement.

Okay and maybe the last question here I know you say I'm not going to ask about the interaction between you guys and the F D. A.

General question in terms and so have the AT&T already inspected and.

And he's been to the manufacturer and the other aspect.

That's still something in progress at this moment.

Yes.

Yeah, Thanks, Joe and I will answer this one and so FDA has not yet done formula inspections of the facilities, it's a little bit early and the process for them to do that so you will see that will occur and the last you know.

About 30 days 45 days before the 180 day clock is up so we're not quite there yet so.

And when we get there I'm sure it will happen and when.

We're looking forward to it.

Okay, and maybe just tagged a lot more questions debt.

In terms of the European CE Mark.

Uh huh.

Do you anticipate potentially approval by I guess you and.

And is that.

Is there additional inflammation debt.

You need to.

Fly to the agency over there or the process.

Already.

And I'll go in and what does the channel already left the station.

Yeah, and all the trains and I left the station there I mean.

The data is extremely similar.

There are there are some subtle differences and you need to be aware of them.

And we have a great team that's dealt with Europe before so.

Where we are.

For the beginning of this process with the EU and like you said by the end of the year, we expect to get CE Mark and.

And there's no more work left to be done per se and in terms of generating data for them. It's just a matter of working through the process.

With the EU, which is obviously different and FDA.

Okay, Great. That's all I really appreciate that just one more yet to go.

Thanks for you.

Okay.

Our next question is with Greg Gilbert with choice. Please proceed with your question.

Thank you Steve on the inspection theme can you speak to your confidence and your partners I know you can't talk about how and when and whether they get inspected but can you talk about maybe historical track record and your confidence overall.

And then maybe for Dunkin' and can you speak to.

To what degree customers are locked up with contracts and how those tend to work in terms of when they roll off and.

And as the second part of that is for all you can eat consumption model, becoming more popular among your potential customers or is that still the exception and how theyre doing business with the incumbents.

Okay.

Thanks, Greg.

We'll be hitting the all you can eat buffet Tonight and that's for sure.

And so.

Yes.

Yes.

The.

The manufacturers the contract manufacturers, we are using our partners for both the filter and the lung fit system. Obviously they are two separate contractors. They they are at the top of their game and they RFP.

At the top tier of this industry with the kind of products that product and we're manufacturing with them.

They have.

Very clean record.

And with the FDA.

Do manufacturer and many products globally.

Really we went with these guys because of the reputation many years ago and.

It's certainly worth every penny that we spent with these guys and we get to this point and you just really not much of a concern on our part from there.

It's I don't lose sleep over the fact that theyre going to go and and CR are contracted for lung fit or for our filters and any way shape or form.

So I hope that answers your question on that site and.

Duncan just mix.

And so Greg for the the first part of the question the contract length. They typically between one and three years definitely one of the strategies of the incumbent and try and learn from those contracts for the same time the.

Hospitals and in particular, it's bridging therapy community, which is a very tight knit community.

We are very aware of.

They come in of beyond there and we've definitely talk to a lot of them so that resist and those those changes. So I think it's a mixed bag.

There also.

Clauses and a lot of these contracts that allow hospitals to break for new technology, and we would certainly regard ourselves and differentiate it from that point of view. So I think that when you consider that there are about 850 hospitals in the U S. With <unk> that we can speak to I think there should be plenty that are going to be coming off contract.

And I don't see that.

And if so.

For us to see if that answer your question, Greg before I go and for the second half.

Yes, it does thanks.

Now onto Steves and perfect.

Yes.

All you can eat and we Havent trademark.

And I want.

So again, that's definitely was the trend for the last few years was to try and.

So look down longer term contracts and the tradeoff would be to provide sort of incentives.

So unlimited type contracts for the reality is that they are not really unlimited there on the unlimited for the period of the contract and in some cases.

Less than that.

<unk> is to make sure that our business model.

Isn't.

Restrictive and anyway, and we're also and a very strong position from a point of view of the more people use our cash.

Cost structure and they can handle lot much better than that.

Competitors, but where we're going to try and change the way people think about the use of nitric oxide.

It doesn't really matter to us the kind of contracts is more making sure that they are available.

And to speak with us.

And a reasonable timeframe.

Thanks, guys. Good luck with the review.

Thanks, Greg.

Ladies and gentlemen, we have reached the end of the question and answer session and I would like to turn the call back to management for closing remarks.

Thanks, everyone for joining us today I really appreciate the interest and we'll see at the buffet.

Okay.

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