Q2 2023 Beyond Air Inc Earnings Call
Good afternoon.
And welcome to the beyond Air second quarter 2023 earnings call.
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I'd now like to turn the conference over to Ed Barger. Please go ahead Sir.
Thank you operator, good afternoon, everyone and thank you for joining us today after market close we issued a press release announcing the second quarter of fiscal year 2023 operational highlights and financial results. A copy of this press release can be found on the Investor Relations page of our website.
Before we begin I would like to remind everyone that we are 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 1095.
<unk> cautions that these forward looking statements are subjects to risks and uncertainties that could cause actual results to differ materially from those indicated.
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, and 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.
Additionally, this conference call is being recorded and will be available for audio rebroadcast on our website www dot beyond their dot net.
Furthermore, the content of this conference call contains time sensitive information that is accurate only as of the date of this broadcast November eight 2022.
Beyond Air undertakes no obligation to revise or update any statements to reflect events or circumstances. After the date of this call.
Joining me on today's call are Steve Lisi, Chairman and Chief Executive Officer, Duncan <unk>, Chief Commercial Officer, and Douglas Larson Chief Financial Officer.
With that I will turn the call over to Steve Steve.
Thanks, Ed and good afternoon to everyone joining us I'd like to take a moment to welcome Ed Barger to beyond their team.
And as our new head of Investor Relations.
Very fortunate to have someone with edge experience, which includes some time on wall Street in the last eight years on the Investor relations teams at Teva and Organised.
Turning to our review of the business on today's call I'll begin by providing an update across our portfolio, including beyond cancer.
Before turning it over to our Chief commercial officer Duncan factoring for an update on the <unk> commercial launch.
This will be followed by an overview of our financial results for the quarter by our Chief Financial Officer, Douglas, Washington, and then we will open the call up for questions.
Let me start by stating that we continued to successfully execute our strategy across our pipeline, which is a testament to the quality of our team and our lumpy therapeutic platform of nitric oxide generators targeting pulmonary diseases.
Leading the way as our commercial program for lung fit ph that received FDA approval in late June .
As a reminder, this is our first commercial product and we believe it has the potential to revolutionize the treatment of persistent pulmonary hypertension of the newborn or PPA, Chen and cardiac surgeries around the world.
The sales and marketing teams have been working hard over the past few months implementing the initial phase of the commercial launch I.
I am very pleased with their progress thus far.
Perhaps most important is that the feedback from hospitals remains very positive.
As we look ahead.
The team is on track with the commercial timeline, we have in place and we anticipate being able to progress to phase two of our launch in the second quarter of calendar year 2023.
We also anticipate launching internationally through a partner next year, given our current expectation of receiving CE Mark in Europe by the end of 2022.
We will provide more information on our global strategy as these matters unfold.
Turning now to our development pipeline, which has delivered several data announcements at recent scientific conferences.
We're excited to present favorable safety tolerability and efficacy data from the lung fit go at home study of patients with severe treatment refractory non tuberculosis mycobacteria or <unk> lung disease. During a rapid oral session at the chest annual meeting last month.
These data show that high concentration inhaled nitric oxide was well tolerated following a total of 2492 installations self administered at home with no treatment related discontinuation as reported and an overall high treatment compliance rate above 90%.
Respiratory function and physical function are maintained during treatment and the 12 week follow up period.
Key efficacy endpoints of quality of life and bacterial load reduction showed strong results with improvements seen in the majority of quality of life domains and a statistical reduction in bacterial load four months. After <unk> treatment began where one month after cessation of therapy.
It is important to note that according to the Fda's. Most recent guidance for an MTM pivotal study.
A patient reported outcome or quality of life questionnaire is the required primary endpoint with bacterial load as a secondary endpoint.
In addition to further supporting the development of intimate and high dose.
For the treatment of MTM. This study breaks new ground by successfully showing the ability of our at home <unk> generated based system to be used safely and consistently by this patient population in a real world setting.
We believe there is an enormous home market opportunity for the lung fit go in treating MTM as well as other respiratory conditions if approved.
To expand the landscape for both lung fit pro and go.
We are currently planning to initiate a pilot study in late 2023 that will evaluate the lung fitzco treating severe exacerbations due to lung infections in COPD patients. This of course is pending discussions with FDA.
Moving onto our viral lung infection program.
Which uses the lung fit pro system at 150 parts per million.
Beryl community acquired pneumonia.
Well, what we call recap in adults and bronchiolitis in children under two years of age.
Last month, we presented positive incremental data from the completed lung fit pro pilot study high concentration and <unk> NV cap, including COVID-19 in a poster presentation at infectious disease week 2022.
These data show that <unk> treatment with the lung fit pro was well tolerated overall with no treatment related serious adverse events and improved efficacy on multiple parameters compared to standard supportive treatment.
Our next milestone for this indication will be a discussion with the FDA over the next few months on a U S trial design with the intention of starting such a study in the fourth quarter of calendar year 2023.
As a reminder, under this program we've already conducted a total of four studies with NOL concentrations of 150 parts per million or more in hospitalized subjects suffering from viral respiratory infections.
All of these studies have shown a strong safety profile with consistently positive results on efficacy.
Considering these data we believe high concentration NOI delivery with lung fit pro can be a powerful tool against any type of pneumonia, especially COVID-19, and we remain dedicated to bringing this important therapy to market as soon as possible.
And to conclude our highlights for the pipeline I would like to remind everyone that we have now completed and adult pneumonia study three bronchiolitis studies to MTN studies, along with several other studies to give us an excess of 5000 Edo administrations at 150 parts remains at 250 parts per million to over one.
Wondered 70 patients with an excellent safety profile.
Moving to our private affiliate beyond cancer.
In late August we announced that the first patient was treated in the phase one clinical trial to evaluate the maximum tolerated dose safety and efficacy of our immunotherapy or ultra high concentration nitric oxide for patients with cutaneous solid tumors in the refractory setting.
We are excited to announce that we've already seen evidence of an immune response at the low dose of 25000 parts per million nitric oxide.
While still early this is extremely encouraging.
We anticipate announcing initial data from the study in the first half of 2023.
Beyond cancer will present preclinical in vivo data at the Citi Conference. This Thursday, which will show that the combination of Ono therapy with anti PD, one achieved higher tumor regression rates and prolonged survival in <unk> 'twenty six tumor bearing mice compared with anti PD one alone.
Based on this study we believe there is a strong possibility that high concentration.
Assist the immune system and overcoming anti PD one resistance.
As a result, we believe the combination of high concentration at immune checkpoint inhibitors, such as anti PD, one could be a potential breakthrough therapy with important clinical implications I encourage everyone to review the full dataset on Thursday.
One last point to make on beyond cancer is that we very recently received a notice of allowance from the U S patent office for our first patent and important milestone.
Now it is with great pleasure that I hand, the call over to Duncan factoring the chief commercial officer of beyond Air to speak about the first few months of U S. Commercial launch for the FDA approved lung fit ph Duncan.
Thanks, Steve and good afternoon to our investors.
The past few months have been extremely productive for the beyond that team as we kicked off the initial phase of our commercial launch of <unk>.
During this time, we have been busy implementing and executing against our go to market strategy, which includes a multi phased commercial approach.
The initial phase represents a measured release of <unk> <unk> to a select group of hospitals to have level, three or level, four knickers and staff experienced with inhaled nitric oxide.
I am very pleased to report that our team has already conducted dozens of demonstrations of the <unk> ph system to the staff at these hospitals and trained well over 100 respiratory therapist.
From which the feedback continues to be overwhelmingly positive.
As anticipated the hospitals, we visited so far are highly motivated to eliminate cylinders.
In addition, the most common feedback we got when we demonstrate or run a training session is that the system is simple and easy to use.
Offering the potential to eliminate steps in the previous setup and allow respiratory teams to focus more on patient care, which is especially important as demands on that time have increased dramatically since the onset of COVID-19.
Our goal with the initial limited and highly controlled release is to make sure that everything runs smoothly.
Over the first six to nine months our team is working closely with hospital staff to ensure that beyond that has optimized our logistics customer service and product performance.
We expect these initial hospitals will have a sufficient volume of hours per month to provide a rigorous test for lung <unk> ph and the beyond that too.
We are also attending local and national respiratory conferences to raise awareness of lung <unk> and set ourselves up for success. During this period.
In fact, we're in New Orleans this week for ASC, the Premier conference for respiratory therapists.
Which is the perfect opportunity.
For us to give key decision makers from hospitals throughout the U S. Some hands on experience with our <unk> system.
We encourage all of you to attend from Tomorrow through Friday, if you have the opportunity.
We will use the learnings from the first phase of our launch to ensure that we are ready to significantly broaden our sales effort in the spring of 2023.
During this second phase, we will be expanding our commercial team both field sales and clinical specialists.
Capitalizing on the leads generated during the demonstrations completed throughout our controlled launch period.
This is a very exciting time for our team as we stopped our commercialization journey in the U S.
Also as Steve mentioned earlier, we remain on track to submit a supplemental PMA to FDA for an expanded cardiac viable before the end of 2022.
In addition, we anticipate the CE Mark for <unk> will be granted around the end of 2022.
I am very encouraged with the speed of which we have mobilized our field team.
Access we have been granted in these first few months since approval and the very positive response to our <unk> system.
Look forward to sharing more of our progress early in 2023.
I will now turn the call over to Douglas <unk>, Chief Financial Officer to provide an overview of our financial results for the fiscal quarter ended September 32022.
Thanks, Duncan and good afternoon to our investors.
Our financial results for the second quarter of our fiscal year 2023, which ended on September 32022 are as follows.
On a GAAP basis research and development expenses for fiscal quarter ended September 32022 for $4 5 million compared with $2 8 million.
For the fiscal quarter ended September 32021.
This increase is almost exclusively due to investments in beyond cancer on project.
On a GAAP basis general and administrative expenses for the fiscal quarter ended September 32022 increased to $8 million.
Paired with $3 4 million for the fiscal quarter ended September 32021.
This is mostly attributable to the planned staffing and scaling up of beyond cancer in both the U S and Israel as well as continued investments necessary to support the commercial launch of lung <unk> ph in the U S.
Other income and expense for the fiscal quarter ended September 32022 was a loss of <unk> 2 million compared.
Compared with a loss of $2 $5 million for the fiscal quarter ended September 32021.
If you recall in the prior year, we recorded a $2 4 million contingent liability related to a lawsuit and our second quarter.
For the fiscal quarter ended September 32022, the company had a GAAP net loss of $12 8 million.
Of which $12 million or <unk> 40 per share was attributable to the shareholders of beyond Air Inc.
With a net loss of $8 7 million or <unk> 36 per share for the fiscal quarter ended September 32021.
Net cash used by the company or cash burn, including beyond cancer was $10 $4 million during the quarter ended September 32022.
Which includes a $2 5 million payment to surpass yet in accordance with our settlement agreement.
During the first half of the fiscal year total cash burn has been $17 $9 million.
I would like to point out that you will see a shift of $32 $6 million from cash to marketable securities and the support.
Since we are now a commercial company, we have started looking for ways to optimize our future cash inflows. This is just the first step in that direction.
As of September 32022, the company reported cash and cash equivalents.
Marketable securities and restricted cash of $72 5 million.
We still forecast that our average quarterly cash burn for fiscal 'twenty, two 'twenty three to be within a range of $8 million to $10 million and expect that we will start recording revenue in our fourth fiscal quarter.
As such we believe our current cash and cash equivalents are sufficient to fund operations well beyond the next 12 months, including through the initial commercial launch phase of <unk> ph in the U S.
With that I'll hand, the call back to Steve.
Thanks, Doug.
Operator, let's go to the Q&A.
We will now begin the question and answer session.
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At this time, we will pause momentarily to assemble our roster.
And our first question here will come from Suraj Kalia with Oppenheimer. Please go ahead.
Good afternoon, everyone. Steve can you give me all right.
Yes, Ken Thanks Raj.
Perfect.
Everyone Congrats on the progress.
So steeper Duncan.
In terms of fuel oil rich no plan commercial plan or targeting certain Nicky as I'd love to get maybe you could quantify for us how many initial sites are under evaluation. How is the process flowing through you're obviously seeing something that didn't.
Fiscal Q4, some of these will get converted into revenues, maybe if you can just quantify and put some guideposts around this effort would be great.
Hey, Suraj.
It's Steve here.
So everything is going.
Pretty much as we expected it to go the feedback is very good as Duncan stated in the prepared remarks.
And yes, we are in the process of going through demonstrations and evaluations that lead to commercial contracts and this is a lead time with hospitals that takes.
Several months as you know.
We're not going to put any parameters on numbers of hospitals are quantifying anything that we think is going to happen at this time. So we'll leave that for future calls to discuss those in more detail.
Okay and Steve.
International partnership for lung fifth pitch.
You all are in relatively advanced stages of discussions with some potential partners.
Well, we're definitely talking to partners.
I can discuss.
At what stage are at but we're certainly talking to people and again thats going to be really.
Hinging hinged upon the CE Mark when it comes so hopefully it comes in a timely manner, but again those things are out of our control.
Got it and finally, Steve from my side or maybe even Duncan can jump in I would love to get your perspective on I know Max evolve.
Kevin.
The form factor is changing the mobility part the automated set up.
The one pound cylinder.
I'd love to get your thoughts as melon Croc looks to get.
Submit the 510-KN.
At least all indications or by next year.
They should be on the market evolve and I'd love to get your perspective as.
As you see it today gentlemen, thank you for taking my questions.
Thank you Suraj.
Thanks Raj for the question I'll take that this is Duncan so obviously.
I will focus on lunch 50 eight's.
Reveal specific details about the direction that Viacom guidance, but obviously, we are aware of the plans for next generation design.
Okay.
Implement phase, one strategy, which won't be affected by.
The launch of any other system because.
So many opportunities for us what I will say is that we continue to reinforce.
<unk>.
Unique features.
Three in one design and the fact that we use.
We managed to generate nitric oxide, which has been.
Reinforced probably even more.
Significantly than I would've expected.
They are designed to give it as soon it is whatever the size of those cylinders.
The momentum will continue.
And that should accelerate so we don't see any significant impact from that in certainly in the short to medium term, we will see and make our assessment.
As and when new products into the market.
Thank you.
Our next question here will come from Matt Kaplan with Ladenburg Thalmann. Please go ahead.
Hi, Thanks for taking my questions and congrats on that.
Progress.
I just wanted to zero in on the launch and maybe some of the.
Comments that Duncan made in his prepared remarks, I guess, you mentioned that you trained over 100.
Respiratory therapists, so far can.
Can you give us a sense in terms of the typical number that's correct Erika as you would expect to train at each hospital.
Operating system.
Yes, so I think that.
It depends because each hospital has a different approach to what constitutes an evaluation. So some will have a very small group and there'll be very focused on a particular team some will widen that so.
Steve mentioned, we don't want to share.
Specific information about the number of hospitals.
It's clearly a number of hospitals.
So depend.
Depends on the length of the trial and the number of patients that they want to treat to get the data that they need to progress so.
It varies.
Please.
Presumably as we get more and more experienced those numbers will increase because the whole of the hospital will routinely need to be trained.
Okay, and the feedback from the respiratory therapists and I guess beyond the respiratory therapist, others and hospitals, what has that been like so far.
I think that is.
Great deal of excitement.
This is clearly.
Innovation step for them.
There's an adjustment because they used to dealing with cylinders. So they have to.
Change that protocol as appropriate once most common is it's very easy to train.
The respiratory therapist with funded very simple to use and very quick to set up.
There's no surprises beyond that and the rest of the time, we've used to test logistics and customer service in San Francisco.
Okay great.
And just shifting to the pipeline.
A little bit.
Can you give us some color in terms of.
Yes.
The feedback and reception that you had at the recent chest meeting too.
Data one could go data.
Thank you presented for Garanti and patients.
Yeah.
Sure Matt so at the chest meeting the reception was very good.
There were several people there will be chatting with after the data were presented.
All positive people are excited obviously they want to see.
A large number of patients.
<unk> treated and.
Certainly begs the data out there begging the question of how long do you treat four is 12 weeks enough can you continue the maintenance therapy for a longer period of time.
So it was all positive.
In my opinion, so we'll be discussing with FDA in the first half of next year, what that path forward is.
For MTM I think.
Right now as it stands everything is positive pointing in the right directions.
And as you know.
What FDA wants to see as the primary endpoint is a patient reported outcome, which would be a quality of life questionnaire, which is what we showed strong data on in this in these results.
Well as they certainly want to see impactful and bacterial load and we showed a nice reduction as I mentioned in my prepared remarks, there was a time point, where it was significant.
<unk>.
This is.
This is what we wanted to see to 15 patient study small study and we saw very positive results in good trends. So we will be moving forward.
We're very excited about the key opinion leaders that are interested in helping us.
But again this is a process that will take a little bit of time, we just closed the study in August officially.
That would be last patient last follow up and then of course as you know this accumulating the data closing the database locking and then of course analyzing everything preparing for FDA. So this is a process that will take a little bit of time I wish could go faster but.
It's not really possible so.
Excitement around it and we're going to have a little bit of a lull in terms of preparation for the next study in the U S. But we should get that up and running in 2024.
Okay that sounds great and then last question in terms of.
And once that trial you planned.
Phil.
We acquired pneumonia.
Studying.
Does that did that.
Our pivotal study or what are your thoughts there.
I think it could be yes, I mean, we'll have to.
See what.
What FDA.
Agrees to in terms of.
The overall design of the study and the size of the study so when we have that information, we'll obviously share it.
And we'll make our own determination.
And everyone else as to whether it's.
The large enough study empowered as such to be a pivotal but we believe it will be.
Okay great.
Great. Thanks.
Again, if you have a question you May press Star then one to join the queue.
Our next question here will come from Greg Fraser with Truest. Please go ahead.
Great. Good afternoon folks thanks for taking the question.
I wanted to ask that the cargo cardiac surgery application.
Can talk about kind of the regulatory path and your confidence and success and what the potential hurdles are.
Yeah.
I'll give it a shot Greg so.
The path is.
To go to FDA and explained to them that this is the standard of care.
For these cardiac surgery patients.
They need nitric oxide as you know there is a.
A challenge in the Cath lab for patients who may be in need of nitric and during that challenge test, you'll know if they needed or not.
Let's go along with their surgical procedure.
This is done in hospitals across the U S. Obviously around the world It's approved everywhere in the world.
And always available, except the United States or maybe the major countries I don't know about some of the smaller countries, but let's just say in most countries outside the U S. It's approved.
We'll have to see what FDA requires.
This approval, we do feel.
Good about what the package that we put together.
And I really honestly I Couldnt tell you what the exact hurdles are because that's going to be revealed when we discussed this with FDA shortly.
So until we have that discussion I really don't know exactly what those hurdles are so we're having a discussion with FDA prior to submitting the actual application.
So that discussion will take place obviously between now and the end of the year and we hope for a very quick turnaround.
Post that conversation and we would submit our actual <unk>.
You may supplement.
No.
That's that's kind of where we stand was there another parts of the question I am sorry, if I missed it now.
No no you covered it thank you.
Related to that if you can't take care of label expansion or it takes let's say it takes some time and require some additional work do you expect hospitals to use lumpy piece off label like they do with the cylinder system.
Well I can't speak for the hospitals.
<unk>.
It's obvious to everyone that that nitric oxide is used off label today.
For the.
Competing products that have been out there for longer than we have obviously.
Sure.
It's obvious issue is not just for cardiac surgeries, but also in acute respiratory distress syndrome, which is most related to COVID-19 recently.
Certainly use there I can't speak to whether they'll use the lung fit.
In that capacity, it's not something that we promote or we look for however.
<unk>.
There is no reason why our system.
Can't be used in the same vein that other systems are used in again the major difference is the source of Ano.
Hours being ambient air.
Others being.
Cylinder is filled with N O R.
Yes.
Perhaps another competitor has a cartridge that can create <unk> and <unk>.
Chemical process at that site so.
Again, the Ano Thats delivered to the patient is the same.
From the from the cylinders as it is from our generator.
So I would think that.
You would see use of all the systems in the same manner, but again thats going to be up to the hospitals and the physicians its not for us to decide it's for us to just go out there and present our system what it does.
Train the respiratory therapist in the neonatal intensive care unit.
And what happens beyond that is really not up to us.
Got it okay.
And I just wanted to ask about on the on campus.
You had mentioned seeing.
An immune response.
The low dose were you referring to the first patient.
Silicon the phase one study.
So I didn't say, how many patients it was.
Just said it was in the low dose so.
What these trials there are three by three designs. So you usually do a minimum of three patients at each dosing level.
So I didn't say, whether this was one two or three patients I didn't say.
That at all it certainly was only at the low concentration.
And we.
I'm not saying, if we have or haven't seen that at a higher concentration yet I'm just commenting on the fact that.
Based on what we've seen to date.
The patients or patients that have been treated at that 25000 ports familiar we have seen an immune response.
Got it okay. Thank you very much.
Okay.
With no remaining questions. This will conclude our question and answer session I would like to turn the conference back over to Steve Lisi for any closing remarks.
Great. Thanks, everyone for joining us today.
And I hope to see a few of you down in New Orleans, Tomorrow, and Thursday, and Friday at the AARC meeting, we will be demonstrating the lung <unk> ph.
At this largest conference for respiratory therapists and nitric oxide of the year.
Okay.
The conference has now concluded. Thank you for attending today's presentation. You may now disconnect your lines.