Q4 2022 Beyond Air Inc Earnings Call
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And lungfig PH approval conference call. At this time, participants R in a listen-only mode. A question-and-answer sashion will follow the formal presentation, and now I would like to turn the call over to Corey Davis from lifefsside Advisors. Please go ahead, sir. You may begin.
Speaker 1: Thank you, operator. Good after noon everyone, and thank you for joining us today. After market closse, we issued a press release announcing FDA approval for lung 10 PH and a press release announcing the company's fiscal fourth quarter and the year-end 2022 operational highlights and the financial results.
Copies of these press releases can be found on the Investor Relations page of beyond air's website.
Before we begin, I'd like to remind everyone that we will be making comments and various remarks about future expectations, plans and prospects which constitute forward-looking statements for purposes of the safe harbor provisions under the Private Securities Litigation Reform Act in 1995. beyond their cautions that these forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those indicated, we encourage everyone to review the company's filings with the Securities and Exchange Commission including, without limitation, the company's most recent Form 10-K , Form 10 -q, which identify specific factors that may cause actual results or events to differ materially from those described in the forward-looking statements.
Speaker 2: Additionally, this conference call is being recorded and will be available for audio rebroadcast on our website, W beyond air net.
Furthermore, the content of this conference call contains time-sensitive information that is accurate only as of the date of the live broadcast: je 28 twent thousand and 22 beyond there undertakes no obligation or advised update any statements to reflect events or circumstances after the date of this call.
Joining me on today's call, or Steve Lee, Chairman and Chief Executive Officer, dun confatkin, Chief Commercial Officer, and Douglas Larson, Chief Financial Officer, beyond there. With that, I'll turn the call over to Steve leey. Steve, go ahead.
Thanks correy, and good afternoon to everyone joining us today.
Given the timing of PMA approval coinciding with our fiscal year earnings, calli would like to begin with some slides focusing on month at PH.
After which I'll provide an update on our pipeline and Doug will go through the financials.
I am very happy to finally state that LungFit PH has received FDA approval for the treatment of term and near-term neonneeds with hypoxic respiratory failure, commonly referred to as persistent pulmonary hypertensial of the newborn, or PPHN.
I hope the old saying is true that the first time is the toughest, because this was a herculeine task over the last two and a half years.
Speaker 3: What are? An amazing group of engineers, regulatory and quality people, respiratory therapists and everyone who made this happen at Beyond Air.
Lungfit PH is the first and only FDA approved nitric oxide generatorthat can safely deliver unlimited on-demand nitric oxide generated from ambient air to ventilated patients.
Speaker 3: Our product eliminates the complexities associated with cylinder-based systems. We believe lunfit PHL transform nitic oxide therapy, and this is only the beginning for us as a company, as we have developed a portfolio of devices around our platform technology that we believe are capable of treating numerous indications.
Our panded ionizer technology is using all of lumpit familily devices that you see here. Our engineering team is the team that brought the world the first annual delivery system over 20 years ago and has been innovating ever since.
Beyond there is the only company dedicated to harnessing the poweralle ometric oxide, and this approval is evidence of our leadership.
This is an overview above our Ionis where the matter happens.
longung it PH has two irionaes, with the second acting as it built in back up to the first.
Since the system uses AMI air a source for generating an, on as long you have a standand electric outlet supply is unlimited.
Amy ER, red- drawn into the ionizer and passes between two electrodes which are sparking rapidly with the equivalent output of about 60 wats.
The oxygen and mexrogen molecules are disrupted by the sparks and Reform as meitroicasid.
Since nno converts to toxic nitrogen dioxide or no two in the presence of oxygen, the newly Form N and o two pass through our pented nno two smart filter just after exiting inas.
At this point we have pure no to be delivered to ventilative circuit. This process performed on demand, regardless of the dose or flow dictated pri endb.
Now let's review the anal market in the United States.
Here you share a lumpbig device on a card for the convenience of the medical staff.
Prior to 2020, the animax CRA system from mallorot maintain monopoly in the hospital settings for nno for 20 years they were the only option.
In just the past couple of years, this has changed slightly.
As a long PH will be just a fourth entrance into this market.
Entrance into this market. There are two cya bas systems.
Which commanded by 95% share of the us market.
While prices come down on competition. The increased users of an associated with the pandemic has been a partial offset.
Thus the addressable market for beyond there in the United States is well an excess supppoint: million dollars.
Speaker 3: It is important to point out that for over 22 years in United States, the use of 20 parts permillion in health, meticrooxide and P 10 has been the standard of care for term and near-term units which are defined as greater than 34 weeks gestation with hypos, respatory failure associated with clinical reicalcardiographic evidence of polgramhalf tension.
In conjunction with ventilatory support and other approppriate ES.
Magic oxide and sub 80 parts permanent acts as a is eviuilator to improve oxidation and reduce the need after corporal membrane oxyidation. Lum fif, PH will not change our was Li to patients, but it provides a much, much better nostrum.
I want to say a few words about our lead inventors.
As wereat legacy when speaking with Fred Montgomery of Vice President medical systems and duning bed of Vice President engineering. Hold us, I will never be the end yet. These two gentlemen are the reason why no generation is a reality.
Speaker 3: They were also indispensable in the development of the anadents, the first manfactxide delivery system ever approved, and the subsequent adamax DS and adamx dssi, the market-leading system.
Fred and duunket, along with several key members of the Beyond Air team, have been at the forefront of anotherapy for the last 30 years and because they are here and able to attract as a talented team the atic oxide knowledge, experience at Beyond Air is the best in the world.
Amazingly we're able to find two men named duny's work beyond there and they both originally held from the UK. dun, in fact, in our Chief Commercial Officer, has over Ty years of experience in medical device industry. The household names like Johnson and Johnson sliid, the Nephew Zimmer viam and beckon dens.
He has led teams in Asia, Europe and the us. His understanding of the industry's exceptional, his leadership beyond there, has been essential to our success.
As expected, dungna has brought together a fantastic team.
Thanks Steve, and good morning to our investors.
I'm extremely excited that we have finally achieved this groundbreaking approval and that I will have the privilege of leading the commercial team tasked with fulfill-in the enormous potential for lunforit PH.
We are fortunate to have gathered a highly experienced team to support this launch, including our field-based leadership shown here.
Rebecca vandoran, Head of sales, joined our organization last year and has a proven track record of build-in and lead-in sales organizations.
Specifically in the martic oxide industry.
Rebecca has gathered an outstanding group of regional managers, all with Nitro oxide experience, to lead our efforts during the initial phase of our lung-fit PH launch and our customer outreach, which begins today.
Jeff greble joined beyond there at the end of last year and is responsible for our clinical services team in the us. Jeff is a registered respiratory therapist with a distinguished record in the nitric oxide industry and is well known to key opinion leaders and customers in the us.
Jeff has gathered a group of respiratory therapists to lead our clinical training and education program. As we introduced long 58 to the market.
In addition, we are also fortunate to have strong leaders to support this field-based activity, all of whom have many years of experience in the logitric oxoide industry.
Speaker 4: We are very pleased with the team we have gathered and confident this will help us quickly access key decision makers.
As we now look at lun fiftyp-eight as a commercial product.
We believe more than ever that the benefits of the lungcitph design have the power to transform the way nitric oxide is delivered to patients in the us.
As Steve mentioned, longung F PH is the first and only FDA proof system that generates nitric oxide using ruma and there are some very clear potential competitive advantages over antiquated cylinder-based systems.
Nitric oxide delivery with longung fitph will be fast, precise and simple. In fact, nitric oxide can be delivered within one minute of the system be empowered on, allowed for the team in the niu to spend more time on other patient care priorities.
We expect the most, if not all nitric oxoide users will be happy to move away from using large, wholly pressurized cylinders.
This is the foundation of many of the benefits of our system and, as such, we will use the tagline. All you need is airto reinforce the unique position that we will hold in the nitric oxide market.
In a critical care environment. Any improvements in efficiency and eliminated steps are highly valuable.
Not only do we have a simple pre-use setup with LungFit Page.
We eliminate the need for pressure testing manual. pergin under potential for o two exposure due to leaks.
We think our safety profile is going to be very attractive as customers consider making a change.
Finally having nitric oxide available on demand is a game changer.
Since all you need is air. There is an unlimited raw material for the generation of nitric oxide, regardless of the dose being given or the flow rates being used.
Eliminating cylinders dramatically reduces the hassle and complexity in manager. Nitric oxide in a hospital.
I mentioned some of the key differences between longfif PH and the current market leading seilling, the system and the benefits that provides.
As Steve mentioned, longungfif PH was designed by the same inventors who developed the first nitric oxide deilllivery system, launched in the us.
With this experience when the longungfit PH system was designed. We recognise the importance of keeping features that are working well and are familiar to use us.
As you can see in these images. This is particularly the case when you look at the front of both delivery systems.
For example, gas monitoring is organized in similar manner on the user's face, and the connection ports will be straightforward for most users.
The most obvious difference are that our system does not require water trap.
So there is no need to worry about emping or cleaning this component after therapy is complete.
And since we do not use gas cylinders, we have a location for our smart no two filter.
This familiarity is expected to support a smooth transition for hospitals when Stafford trained and begin using blunfth phage.
three of the device is where there are obvious differences between the devices.
For a cylinder basase system. There are a number of connections and, of course, the £245 pressurized gas cylinders.
Long fif pod simply has a non-halfoff gotten and the power connection, since the device itself pulls in rumour to generate nitric oide.
Removing all of these connections should save time and hassle and also has the potential to reduce user error.
We understand the importance of provide a highly responsive service for our customers in this critical care environment.
Which is why we have developed the lungflex twenty-four-seven partnership and support program.
There are three key components of this programbut together make up what we believe will become the gold standard for the nitric oxide industry.
Firstly, we have designed the lungflex business model to be flexible and transparent, providing an all-inclusive contract that includes the necessary number of lung P systems, backup systems and accessories for the period of their contracts.
This will allow for hospitals to budget for their nitric oxide system with certainty.
Secondly, we have recruited a very experienced clinical specialist team that will not only provide initial training, on-site clinical expertise and support.
They will also be available on demand.
All of our clinical specialist team are registered with spiric therapists and have specific experience in the nitric Ox IDE industry.
Finally the longg side service and support line will provide 24: seven access to all customers to technical, clinical and commercial support.
Our team will handle everything from routine orders and billing inquiries to emergency deliveries, using our rapid replacement program.
This takes me to the most important part, which is our go-to-market strategy.
First of all, I am pleased to report that our team is ready for commercial launch.
Consistent with our priimor guidance, the initial phase of our commercial program represents a limited release of LungFit PH, with both personnel and supplies secured.
Our team will work closely with our initial customers to ensure that we have optimized our logistics, customer service and product performance in the first six to nine months.
This short, limited launch period will allow us to work out any Kings and ensure that we are prepared to scale up to meet the needs of a much broader range of customers in the planneds second phase of our commercialization strategy.
During Phase one we will target a few dozen hospitals currently us in nitric oxide.
For context, around 20% of all U's hospitals use nitric oxide, which includes the 850 or so level three and four nickers.
Once we get past Phase 1, we will then enter Phase 2, where we will expand our commercial team and target the next 25% to 50% of U's hospitals that use nitric oxide.
We will also anticipate launching internationally through a partner during this Phase.
We expect the second Phase to take approximately two years, as we expand our commercial team to full-scale.
At this point, our commercial team will allow us to target hospitals that have been limiting their use of nitric oxide due to access, efficiency or value for money, which we consider Phase three of our strategy.
As we enterfacee 3, we expect to have our second generation longung fifpa system available, which will help to consolidate our existing business and grow our market share further.
At this point we hope to have truly transformedon the nitric oxide market.
With that as an overview of our long-term strategy, let me take a step back to the initial phase of our launch, which is rolling out as we speak.
In the immediate future we will begin targeting a select number of hospitals that have level three or level four nickeers and staff experience with inhaled nitric oxide.
To optimize the launch for both our Phase I customers and for beyond there. We are being careful to ensure that our team members are conveniently located near the target hospitals and these hospitals meets other criteria that maximize the chances of success.
These initial hospitals will not necessarily require an abundance of devices upfront.
However they will have a sufficient volume of hours per month to provide a rigorous test for longung fif pheight and the beyond their team.
Also we are acutely aware that hospitals are currently in annual or multi-hayear contracts for logitric oxide.
Speaker 4: Because of the restrictions these agreements could put on their ability to transition. We will be targeting hospitals with less than 12 months left on their existing contracts.
Due to the many advantages of the LungFit PAA system. We have no plans to compete on price. In fact, sinceuryremoving cylinders leads to the many potential workflow logistical benefits I've mentioned, there is a strong healthcare economic argument that even a higher price will still lead to reduction in the overall cost of delivery. Nitric oxide for hospitalsi will close our my review of our launch by saying that our team is prepared and has been waiting for this approval.
Our clinical and commercial teams are in place, our marketing plan is finalized and our lun-fx service and partnership program is ready.
In support of this commercial launch. Today we are Premier in the longungfit PH com microsite. That includes everything we believe hospital administrators and healthcare professionals may need to know about LungFit PH.
The microsite will feature a wealth of resources such as how the lung-fit PH system works, the key messages and benefits, as well as more about our lungflex partnership and support program.
Customers can sign up for updates on this site, and we are ready to provide live demonstrations of our device, as well as run virtual demonstrations of webinars, to make sure we reach as many hospitals as possible.
This is the virtual destination for any nitric oxide users who want to experience the innovation and simplicity of the LungFit phh system.
Of course, FDA approval is just the start of our commercialization journey.
Speaker 4: As we launch in the us. We will finalise our C submission and anticipate our se Mark being granted in the second half of 2020. -two.
In the same time frame, we are planning to submit our supplemental PMA for an expandended cardiac label.
In Q1 2023. We anticipate Phase two of our launch beginning and we will be expanding our commercial team to support this.
I CAn't express enough just how amazing it feels to be able to say that lung fifh is FDA approved.
Our goal is clear: to harness the power of nitric oxide to allow physicians and patients to benefit from this breakthrough technology.
As we learn more about the challenges and opportunities for the P? N population.
We're even more excited to provide the innovation and simplicity of longry PH, the all-in-one nitric oxide generator, monitoring and delivery system, to the us market and eventually in the world, So we can start to turn our goal into reality.
With that, I'll hand the call back to Steve.
Thanks dunken. Before we discuss our pipeline, I just want to emphasize what this slide States.
Speaker 5: Everyone up beyond there and those that use nitric oxide a regular basis know that this is the start of the nno revolution and it will significantly improve medical practice.
Congratulations that beyond our team for this amazing achievement.
Now on to our pipeline discussion.
Where I will begin with our twelve-week mulicenser open-label lung fitgo nt-m, lung infection- pooud study.
Speaker 3: As you may recall, in December 2020 we began screening for refractory NTM patients for this pilot trial in Australia.
And we released positive interim safety data on the first eight refractory MPM patients enrolled in 2021.
Speaker 3: atthis was followed up in May 2022, when we presented updated interim data at the American thask Society international conferenceat the time of the data caught off, on April fourth twent thousand and 22, we reported that a total of 15 refractory NTM patients had been titrated up to the maximum dose of twoour and 50 parts per million ntric oxide in the hospital and then sent home to self-administer therapy.
There were no dose reductions, no treatment related discontinuations.
Speaker 3: And generally high compliance. Following a total of 2003, 23 self-administered inhalations at home using the LungFit go device.
Methemoglobin and nitrogen dioxide concentrations. The two key safety markers remain within acceptable ranges in all subjects during annual treatment, below the safety thresholds of 10% and five parts per milling respectively.
Most importantly, in addition to the strong safety and tolerability data.
Patients reported quality of life benefits from receiving the at-home ano treatment in the majority of quality of life endpoints, with the most improved benefits being NTM symptoms and digestive symptoms.
The totality of these data will be used to evaluate efficacy measures, including quality of life, physical function and studut bacteria, as compared to baseline measurements, and we expect to report complete results later in calendar year. Thousand and twenty-two.
The success of this trial signifies that lunfit go has the potential to be a game changer for this patient population and, if approved, open up the enormous potential of the home market for our system.
Speaker 3: We have always had an interest in investing in other indications with our LungFit go system and have announced ourintion of beginning a pilot study to treat severe exacerbations due to lung infections in coy patients in 2020. -three and.
We previously have shown in vitro and in vivo data demonstrating the killing potential of Enno in various microbes with greater success than refractory NTM bacterial strains.
Hence our enthusiasm for treating a broad spectrum ofmicrobes in long-affected patients with various underlying conditions in the home setting.
Moving on to our viral lung infection program, which uses the lunfit pro system at 150 parts per million eno to treat community acquired viral lumonia in adults and bronchitis children under two years of age, in April 2020 -two, we presented data from our adult cohort of hospitalized patients from the ongoing pilot study at 30 second European Congress of clinical microbiology and infectious disease.
At the time of the cutoff period for these data, we analyze a total of 35 subjects on an intent to treat basis, 16 in the nno treatment arm and 19 in the control arm.
All But one of which will COVID-19 patients.
The data showed that 150 parts of main and o continue tobe well tolerated, with no treatment-related adverse events.
Speaker 3: The fxa in the small study showed statistical significance for duration of oxygen support and time to achieve oxygen saturation of at least 93% in Rumea.
Speaker 3: Length of possiblesp stay was shortened by a factor of one point eight in favor of Enno, but did not reach festical significance.
Intend to propose a trial designed to fdain the near term with the goal ofstart a? U's stud in the fourth quarter of calendar 2000 and twent-threethis April . We also presented a positive safety data from a longitudinal data collection study that evaluated the long-term safety profile of high concentration in halld metric oxide in bronchilatis at the pediatric academic societyties meeting.
Speaker 3: Out of the 190 infants have participated in our prior three broacletattice pilot studies studducted from 2012 to 2021. hundred and one infants participated in the long-term follow-up study, with 39 in the control arm and 62 receiving either 85 parts per million, hundred fifty's ill or sixty's from lay meicrooide.
Study points of the long-term safety study included the percentage of subjects rehospitalized for bronchulatis-related reasons, such as the leasing episodes ammonia asthma, among others.
The endpoin of the long term cfep study included the percentage of subjects rehospitalizede for bronchchaootics related reasons, such as the leeasing episodes ammonia asma, among others, and the percentage of subjects rehospitalized for any reason.
Results showed that rehospitalization to a bronchotis-related reasons trended favorably for the inhaled ano group.
Speaker 3: And the long-term subject rehospitalization rate for any reason was similar between inhalld no and control groups.
We believe this study demonstrates an intimateent and high concentration metric oxide has a favorable long-term safety profile which warrants further investigation into its therapeutic benefitable: adult and infant hospitalized viral ammonia patientsfinally, I would like to provide updates on our private filiate beyond cancer, which presented two abstracts at the American Association for cancer research annual meeting in April of this year.
These new invivo data showed that trteral injection of ultra-high concentrations of Enno at 20.05 million parts per million led to increased recruitment of lymhocytes and T-cells B-cells, macrificages and dendiccytes to the treated primary tumor.
Additionally, increased tea cells and B cells were detected in the spleing and blood. 21 days Coast ano treatment and decreed myot derived suppresssure cells were deteed in the spleing.
These data aren't indicative of an anti-tumor immune response that underlies the rejection of secondary tumors and gaseous nitric oxide treated mice.
These data continue to build upon our growing body of evidence supporting ultra-high metric oxide therapy.
Additionally, with respect to our Phase I clinical trial, I am very pleased to say that the screening for patients is underway. Another great job by our team.
I will now turn the call over to Doug Larson, the Chief Financial Officer of beyondairt, to provide a review of our financials.
Steve.
Speaker 6: Our financial results for the fiscal year which ended on March thirty-first 2022 are's follows.
Speaker 6: Revenue for the fiscal year ended March thirty-first 2022 was zero, as compared to zero- $9 thousand for thefiscal year ended March thirfirst 2021, all of which was licensing revenue. Research and development expenses for the fiscal year ended March thirty-first 2022 were $11.8 million, compared to $12.6 million for the fiscal year ended March thirty-first 2021.
Speaker 6: General and administrative expenses for the fiscal year ended March thirty-first 2022 increased to $18.4 million from $10.5 million for the fiscal year ended March thirty-first 2021, mainly due to the structural investments required to prepare the company for commercial launch in the U? S.
Other operating expenses for the fiscal year ended March thirty-first 2022 were $10.5 million, entirely related to the contingent liability for the carcastsia settlement from May of 2021.
Other income and expense for the fiscal year ended March thirty-first 2022 was a loss of $3.4 million, compared to zero $7 thousand for the fiscal year ended March thirty-first 2020 month.
If you recall, in the third fiscal quarter of 2022, the company recorded a estimated liability for contingent lawss related to a lawsuit for $2.4 million.
For the fiscal year ended March thirty-first 2022, the company had a net loss of $44.1 million, of which $43.2 million, or $1 68 cents per share, was attributable to the shareholders of beyond air INC.
Speaker 6: Compared to a net loss of 22.9 million, or $1 27 cents share for the fiscal year ended March 30. first 20 20: one
As of March thirty-first 2022, the company had cash and cash equivalents of $80.2 million.
Speaker 6: We believe this cash is sufficient to fund operations well beyond the next 12 months, including through the initial commercial launch phase of LungFit PH in the us.
suficient to fund operations well beyond the next 12 months, including through the initial commercial launch phase of LungFit PH in the us. And with that I'll hand the call back to ste.
Thanks Doug, our operator. We are now ready for QA.
At this time it ll be conducting a question and answer squestion. If you would like to use your question, you may proress Star one on your telephone Keypad, a confirmation to indicate your line is in the question que you may proress Star two to remove your your question from the queue for participants using speaker equipment and may be necessary for you to pick up your hands up before bring the starkeys one moment all we pull for question questions. Our first question comes line of Matt kaplplan with lanenberg fallm and you may proceive with your question.
I Steve. Congratulations on approval. Terrific news today. Thank, I guess.
Guess I wanted to get into kind of the three -phase launch and maybe you can give us a little bit more detail with respect to the market size in each of those phases that you re potentially addressing, as as you Phase out the launch.
Okay So.
Obviously the third Phase will be the entire market. That's easy and.
You have to look at it more we. We look at it more in terms of the hospitals themselves, not necessarily the revenues, and you know we're looking for hospitals in this first Phase, that that that are, you know, our high users, let's say, above a certain number of hours per year, So that they have a lot of experience with their teams, So we can learn from them as as we train them, So we can be better as we go out to the boardder market, So that that first Phase is going to be what we would consider, you know, fairly high volume hospitals. So let's say, you know hospitspital and Phase one is going to be worth multipl hospital and Phase three and you know Phase two you have hospalsthat are more close, phasethree or Phase one it just.
The experience that we need So that we fully test our logistical process, we get the experience of the actual clinical use of the device and then we're going to expand as soon as we're confident that everything's working as plned. So we really don't see any constraint because, as we mentioned, contracts coming off all the time and we don't think we're going to be limited.
By the number of hospitals that we're going to be target, and so I hope that answers the question. No, that that's great. Thanks for the add of detail and I guess, looking at this, a kind of proof of concept that you can get this new technology approved. Just thinking about the, the pipeline a little bit Steve maybe can help us understand kind of the next steps for a lung fit go. You've got the and pilot N TM study ongoing. What do you see? Is that the net steps in N TM and development there.
Yes thanks, Matt. You know we we have to wrap up the study. Our our, our last patient, last follow up is going to be, you know August , some point. And then, you know, as you know, we'll have to get all the data in-house, analyze it, so forth, and we will go to FDA. Since we're a medical device, we use a pre submeeting instead of a P? D. this will be a pre submission meeting and we will sit down with F? da- probably happened in the first half of next year- takes time to put the data together submit, and then they have time to schedule a meeting with us and in that meeting' we'll discuss with them what the next steps are and, you know, hopefully those steps are going to be pretty straightforward and clear. You know, you never know. There might be some things we need to clear up for F D a before we go into.
Speaker 7: one study and what what, what we should look for there as you get that underway.
Well we're open for business. We saw that in our press release So we're open for screening of patients and we would anticipate announcing the first patient dosed very shortly So.
Speaker 3: You know we're looking for safety. You know this is the first in in in humanone study. So we're looking for safety in a small number of patients and you know Matt, if we can, you know we'll be looking at biomarkers, of course, and if we see any, any movement in these biomarkers on the immune system in a positive direction, that would just be kind of gravy on top of the safety data that we we intend to gather. So again, safety is the main point of this Phase one study and we will be looking for efficacy from a bomarker perspective and if we can see that that would, we would really be something special.
okand grat's again on the UN approval. Great news and thanks Max taking questions.
Thanks our next question comes from the line of siragej calalia with opppenheimer, where you may receive with their question.
Good afternoon, Steve. Can you havem me all right?
Yes yes, thanks rus, perfect he. Congratulations to you and your team on the long overdue approval. So Steve, three questions from my side. The first one is a multipart question for the initial launch of PPP Chen, the eight to 10 sites that you ll have been referencing for some time.
Give us some guide posts in terms of how the conversations are going. How do you expect PH to be rolled outin terms of cases over the remainder of the year. What are the bogeies you'all looking out for for a broader launch beyond this case and more specifically maybe if you could just also think 850 nickus that you'll at reference earlier. How does utilization look like in your three phases. How should we think about that sorry I mul that barard question but hopefully you got you got the just aefit. I'll just talk about the boies and'll let Don can go through the rest. So.
youknowthe boies for us. You know, in broad terms, you know we're looking to make sure that our training methods are honed and perfect, that we have a very experienced team. But again, this is a generator. It's a brand new device and we need to make sure that we're training everyone in the best manner. So we're going to look for ways to optimize our training methods. I think we've done a hell of a job on optimizing it prior to launch, but you know we don't want to be cavalier about this. Second, we want to make sure that our supply chain, our three pl- everybody', S you know- doing well and everything is running smoothly.
You know there are metrics that we use to to look at this. But it's very important that when we go from you know a dozen hospitals to you know 300, we have to make sure that you know supply chain is ready for that there on three P is ready for that. In addition you, our team, our back office team, our operations team, is ready for it as well. So, and these are the things that we're looking forward- to kind of check the box, to move to that next level. We don't have any concerns about this. So I want to give the impression that we have any concerns about our ability to do this. I think it's the prudent thing everybody on a team thinks the prudent way to go is to is to have a measured launch in the first six to nine months to make sure that we've got.
Speaker 3: Any kind of bugs ironed out, if there are anyif ads just to add a little bit of color. I mentioned and we focused on the experience of the leadership team because we think is really important. These, Rebecca and jeff- have incredible teams that they've brought together and a significant amount of experience of dealing with a lot of hospitals that we'll be speaking to and we're very confident in their interest and enthusiasm for the product that they have been contacting us routinely over the last several months and, even beyond that, their planning to visit with us at the conferences that we are.
Speaker 4: Lining up for the rest of this year and we have a virtual demonstration room set up as well as obviously now we can physically go and talk to people directly So that they're looking forward to seeing another alternative on the market, eliminating cylinders as far as they can, and in terms of utilization. This group of incredible experience professionals, particular on the clinical side, will help them through their evaluation of the system and then hopefully we'll get into contract very soon. So the utilization is going to be initially controlled by us because we want to deal with everything that Steve just mentioned.
And then once we are confident in everything that's working both clinically and logistically. Then we start to release the album and we'll expand and we'll see utilization rapidly increase at that point.
Got ITI'll askking both my questions. Steph, I'll hop back in Q Duncan, and I missed your comments about the CE Mark status and timeline. And Steve, maybe if you could just expand on howyou's are now thinking about the moat around real time on demand no, noncylinder-based no. Now that you have the first PMA and more indications, just kind of walk us through how you're thinking about the regulatory and intellectual moat around your technology gentleman. Congrats again and thank you for taking my questions.
Thank you. Thank you, I think, se Mark, we're pretty clear at' the second half event.
Speaker 5: So there's not much more to say there our resources were focused on FDA approval. So we didn't have the resources to keep the cmark process on the track that we had originally hoped to but.
I think we're pretty happy with FDA approval So it's a small sacrifice on the timing. On seammark.
As for our moat, as you call itwe're always very confident in our patent portfolio around our generatorwe're growing even more confident with some things that have happened in the last few months.
And you know, with a PMA approval- as you know seriraj, pmma approval is is you know something that happens about you know 25, 30 times a year in the U's. So it's not not a frequent occurrence and it is certainly a barrier to entry to others who try to come down this route. So others will have to follow us with a PMA just as we did. So're we? '.re? We're obviously more confident now that we have approval that it's going to be that much harder for anyone to come with a generator. But again, I think the most important.
Barrier to entry to others is our patents portfolio. We do believe it be very difficult for anyone to get around our patents with respect to our generator, especially in the high concentration area.
Think anybody's going to be able to come in at 150 plus parts per million with a generator given our portfolio that's our opinion. I'm sure others will have a different one but let's see what happens in unfolds over the next 10 years. With respect to the PPH N you know we don't know if anybody else who's coming we've heard lots of humors butso far. We're the only game in town. So.
First mover advantage is very important in this in a medical device, So we're quite happy with it. We think there are barareas up and we'll have to wait and see what unfolds.
We're very, very confident.
Thank you.
Our next question comes from the line of Greg, a Fraser with truest Securities. You may perceive. Other question.
A great good afternoon folks, and thanks to taking into questions and congrat on the approval.
Can you remind us how much of the current nitric oxide market is cardiac surgery and what's the pathway to expand the label into that area?
Gas So it's: it's about 70, 30 split, 70% being cardiac. It's a rough estimate. So again, there's no real data on that Greg, it's just you know, kind of.
Best guess. So the pathway to get cardiac on label is just going to FDA and talking to them about that pathway and then making a submission. We we believe that we'll be able to make an official submission or PMA supplement for that indication prior to the end of this this calendar year. That's our goal.
Got it? And then, when you move into the Phase two of the launch, by how much do you plan to expand the commercial team?
While I let Duncan handle that question.
Yes Thank So. quoating Greg, the good news about the nitgeic oxide business is firstly, there's a pretty well established use in nitic oide. That's very experienced hospital, So it actually doesn't need a large commercial organization. So even a peak. We don't expect to be more than around 60 staff, but in the second Phase we expect to be at least half of that fully established team. So will will be somewhere between the sort of 30 in the thir, Ty's I would expect, and continuing to grow, dependent on how the launches going at that time, and then we'll peak.
Somewhere in that 60 zone, depending on the level of nitric oxide usage, because there are actually a significant number of hospitals that have backed off on the use of nitric oxide, either because they don't like the current business model or they have limited access to the technology, and we think we can help in both of those areas. So that's what we're seeing going forward.
Got it. That's very helpful for Europe . Have you had preliminary discussions with potential partners or do you have to wait for the CE Mark before engaging with folks?
No we've. We've spoken to people, I think.
It's appropriate to have cmark before we push.
Appropriate to have CA Mark before we push.
On moving forward to definitive terms. But it's, I wouldn't say we haven't talked to anybody, that's for sure.
Got it. Thanks for taking the questions and conreats again.
Got it. Thanks for taking the questions and reats again. Thanks, Greg.
Our next question comction from the line of Yale Gen with laid law, and company may proceed with their question.
Good afternoon. Thanks for taking questions again. Had my congrats on the approval, or maybe it's a rich of little bit. Look backward to see that. What were the majors? Sort the hurdle during the last few months before you get approval with something specific or anything you can talk about.
Yes I don't think I can really reveal that what the issue was. Just keep that between us and the FDA. Think itis the best thing to do, but was clearly resolved and we're very happy. And no, we're happy that FDA was working with us.
Okay great, that's helpful, or maybe two more question here. The first, one is that on the slide you showed that the bckker markets about 480 at the about one hundred and eighty million versus was 504 hands, presumably due to some price erosions.
What's the general thoughts you guys have in terms of going forward? Is this price erosion start to stop or change or maybe even reverse?
ya I think, I think the price.
As we sit here today is probably fairly stable. I don't see much decline on the price going forward. I don't know if I would predict a.
Rise back up in price I wouldn't say that but I do think that you know in 2022. For this full year you might see a little more softening that four 80 number may come down a little bit five 10% more recall that you know there was an increase in nitric oxide usage and during the pandemic So I think that.
Speaker 3: 2022 20 and 21, while there was price declines in those two years, I think the volume due to the pandemic offset that quite a bit. So I wouldn't. Us as a company, as a team, we don't think that the volumes we saw at the peak in the pandemic are going to be maintained, but we-alsodont- think you're going to Lo 100% of that volume you saw during the pandemic. We think that this seems to be a place for meric oxide in these patients who were hospitalized for COVID-19 or COVID-19 like conditions. So we don't know exactly where it will settle. You'll see in our corporate presentation.
That the new one that should be up this evening, that we're calling this greater thanfour hundred mionll ket. In the past we had said aterthan 380, but again, I think the increased usage due to COVID-19 as well as the price did not decline as much as we anticipated a few years ago. So we think it's going to be a four mionll ket. Don't knowif it's going to St 80. it should be be the four mionmillion plus range.
Okay that's a very appreciated and two quick ones. one is in terms of the cadiac lying extension. Was there additional? What time about? Of a material you you need to prepare for getting that in next year? Would that be any kind of study or simply just like the 1? You just got approval for the nickel.
I hope it's not as hard as getting the approval for the nq. We haven't said exactly what we are going to submit to the FDA, So I'm going to hold that.
That information back Ye, if you don't mind. We don't want to let anybody know what our, what our exact plans are.
Okay maybe the last one is a housekeeping one in terms of this quarter there's quite a big jump in a number of lines oporating sorry, in terms of rnds GNA. As we are modeing for the next year, next fiscal year, was there any sort of a directionationalal guidance you you could provide?
sdas is probably going to go up. I mean, we we're launching the product, So I would anticipate the increases there, whereas R and D I don't really see increase there. To D be flattish, maybe maybe it's probably flattish as best we can think. Take look, you know.
Our disees are seasonal and we won't be starting studies until the back half of 23. So the rest of this fiscal year, which ends in March of of 23, there's really not much going on on the R? N D side, only because of the seasonality of the conditions that we we are attempting to treat. There'll be some spend, obviously in preparation to get things going, this spend to finish up our N? Tm study. But again, you know there'll be a bump in the in the fiscal 24 time frame. You'll see a bump towards the back half of fiscal 24 in our D spend. That's when you should start to ramp up with our studies commencing. So I hope that helps.
So absolutely GU's appreciate that or that.
The details and again congracts on the long-weighted outcome.
I own the long waight to do com. Thanks, you appreciate it.
Ladies and gentlemen, we have reached you of today's question-answer session. I would like to turn this call back over to MR Steve lisy for closing comments.
Thank you, thanks everyone for joining us today again, a great day for beyond there and our investors. We'll be speaking to you soon, Thank you.
Speaker 8: This concludes today's conference. You may disconnect your lines at the time. Thank you for your participation and enjoy the rest of your day.
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