Q3 2023 Beyond Air Inc Earnings Call
[music].
Good afternoon, and welcome everyone to the beyond Air financial results call for the third fiscal quarter ended December 31st 'twenty 'twenty. Two at this time participants are in a listen only mode a question and answer session.
We will follow the formal presentation and.
And now I would like to turn the conference over to Edward larger head of Investor Relations at beyond Air. Please go ahead.
Thank you operator, good afternoon, everyone and thank you for joining us today after market close we issued a press release announcing the third quarter of fiscal year 2023 operational highlights and financial results.
A copy of this press release can be found on our website under the news and events section 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 the purposes of the safe Harbor provisions under the private Securities litigation.
And reform Act of 1995.
Beyond Air cautions that these forward looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those indicated.
We encourage everyone to review the company's filings with the Securities and Exchange Commission, including without limitation. The company's 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 the live broadcast February 19 2023.
Beyond Air undertakes no obligation to revise or update any statements to reflect events or circumstances. After the date of this call.
Joining me today on the call are Steve Lisi, Chairman and Chief Executive Officer, Duncan Bakken, Chief Commercial Officer, and Douglas Larson, Chief Financial Officer, and with that I'll turn the call over to Steve Lisi Steve.
Thanks, Ed and good afternoon to everyone joining us.
Today, I'll be providing an update across our portfolio, including beyond cancer.
I'll be followed by an overview of our financial results for the quarter by our Chief Financial Officer, Doug, Washington, and then as usual, we will open the call up for questions before.
Before discussing our pipeline our financials I would like to turn it over to our Chief commercial officer Duncan fracking for an update on the lung fifth ph commercial launch Dunkin'.
Thanks, Steve and good afternoon to our investors.
During the last quarter, we have continued to make tremendous progress with the initial phase of our commercial launch of lung <unk> ph.
As a reminder, our go to market strategy is a multi phased commercial approach.
The initial phase represents a measured release of lungfish pis to a select group of hospitals.
That have level, three or level four knickers and.
And staff experienced with inhaled nitric oxide.
I am very pleased to report that our team has completed evaluations of lung fifth th.
That's a variety of different hospitals in line with our strategy to gain feedback on our logistics customer service and of course, the clinical performance of the device.
The feedback has been in line with our expectations and we have moved into the contracting phase with a number of hospitals as a result of their experience and awareness of our technology.
In addition, our team has demonstrated the lung <unk> ph system in person at over 150 hospitals and state and national conferences in our target regions.
Tremendous achievement given continued restrictions in hospitals as a result of the triple threat of Covid RSV and flu during the winter period, so far.
As anticipated.
Richie therapists in neonatology is so highly motivated to eliminate cylinders and were impressed with how simple and easy the lung <unk> ph system is to use.
Hospital administrators are reacting very positively to the flexible and transparent business models presented and we believe in some cases, they will revisit some of the restrictions placed on the use of nitric oxide due to cost and logistical challenges.
We've been able to test our logistics infrastructure as well as our clinical and sales operation support through our 24 seven lung flex service.
Based on the feedback received in the first seven months since launch we are planning to move into an accelerated phase of promotion in the spring.
We will use the experience from this first phase of our launch to refine our business model geographical focus and clinical training to make sure that we optimize the next phase of our launch.
As I previously mentioned during the second phase, we will be expanding our commercial team both field sales and clinical specialists and building a network of reference hospitals and key opinion leaders.
We are very excited about the progress made over the last quarter and look forward to building a coalition of hospitals supporting this amazing new technology and accelerating awareness of a new way of delivering nitric oxide across the U S. M belongs.
With that I'll turn the call back to Steve for the pipeline review Steve.
Thanks Duncan.
I will start with lung fifth th, where you faced regulatory delays our quest for CE, Mark is going well, but we must postpone or anticipated approval until the first half of our fiscal year 'twenty 'twenty four.
In the U S. We have faced similar issues or delays beyond our control and thus we have not yet submitted our PMA supplement for cardiac label expansion, but expect to do so before the end of the first half of this calendar year.
We remain confident in achieving both of these goals.
With respect to our recap program.
We continue to work closely with FDA to agree upon the protocol for our study, which we intend to start in the fourth quarter of calendar year 2023.
We began this discussion over the summer and we believe that FDA should allow this study to be conducted given our efficacy and safety profile.
In an adult pneumonia study three.
Three bronchiolitis studies two N T M studies, along with several other studies.
These studies have resulted in excess of 5000 Endo administrations at 150 parts domain to 250 parts per million nitric oxide and over 170 patients.
Not to mention the squeaky clean safety data in animals that we have mentioned many times in the past.
As a reminder, this proposed study is extremely similar in design to what we reported from our Israeli viral pneumonia study.
We expect to treat patients hospitalized with pneumonia, who tests virus positive for any virus, including any and all variants of Sars Covid two.
We've seen no SAE is related to 150 parts per million, the Orange 60, plus million and only three Bronco latest studies and one adult pneumonia study.
Plus we filed the infants long term somehow more than five years, and so I know long term effects from the acute N O treatment.
Our studies and long term data reflect our continuing ability to manage concerns have met hemoglobin EMEA and nitrogen dioxide exposure associated with high concentration N O treatment work.
Confident that we will be able to build on these results.
When we get 250 parts remain N O, which was delivered in our study multiple times per day at home by patients with no medical professional present for more than 11 weeks.
You can see these data as they were presented at the 2022 chest annual meeting by visiting our website.
Just a reminder, no met hemoglobin them, yet and no nitrogen dioxide issues were reported.
We believe that these data support moving forward with a pivotal study for MTM patients and we will move as fast as possible.
At this time, we do not see the study beginning until the second half of our fiscal year 2025, we look forward to working with FDA to meet or shorten this timeline.
Our pilot study in patients with underlying COPD will not be conducted this coming winter.
We'll look to begin this study in the fourth quarter of calendar 2024.
Lung for ph and recap our our immediate priorities, we will continue to work with FDA and addressing the varied applications have been up.
Moving onto beyond cancer <unk>.
Progress over the last 15 months since the money race has been a very strong faith.
Phase one human clinical studies ongoing with our current belief that we'll be releasing top line data later this calendar year.
Our first publication is out with another expected later this year our preclinical team is quite active with data expected at several medical conferences. This year and we've already shown a doubling of survival in animals. When we added our Uno therapy anti PD, one therapy compared to anti PD one alone.
The team has also been expanded with the recent hiring of Gavin Choy is C O O and the additions of Dr. Fred Dervish and Dr. Mark Peter them. Both World. We're now an oncologist at Stanford to our beyond cancer S. A b.
In addition, the first patent for our technology was issued.
Please visit beyond cancer Dot com for detail on all of these accomplishments and stay tuned for more later this year.
I'll now turn the call over to Doug, Washington, Our Chief Financial Officer to provide an overview of our financial results for the fiscal quarter ended December 31, 2020 to Doug.
Thanks, Steve and good afternoon, everyone.
Our financial results for the third quarter of fiscal year 2023, which ended on December 31, 2022 are as follows.
On a GAAP basis research and development expenses for the fiscal quarter ended December 31, 2022 for $5 million compared with $2 $5 million for the fiscal quarter ended December 31, 2021.
This increase was driven mainly by compensation costs from scaling up operations and beyond cancer as well as from increased investments in preclinical work being done across the group in our targeted therapeutic areas.
General and administrative expenses for the fiscal quarter ended December 31, 2022 increased to $8 $9 million compared with $4 $9 million for the fiscal quarter ended December 31 2021.
$3 million of the increase was due to the planned structural investments and beyond cancer with the remaining million dollars attributed attributable to continued investments in people and systems necessary to support the commercial launch of lung <unk> ph in the U S.
Other income and expense for the fiscal quarter ended December 31, 2022 was a zero point $2 million gain compared with a zero point $5 million loss for the fiscal quarter ended December 31 2021.
The two main drivers in this year over year improvement, where the gains we made from our investments in marketable securities as well as favorable foreign exchange movements.
For the fiscal quarter ended December 31, 2022, the company had a GAAP net loss of $13 $8 million up.
Of which $12 $7 million or <unk> 43 per share was attributable to the shareholders of beyond Air Inc. Compared with a net loss of $7 $7 million or 29 cents per share for the fiscal quarter ended December 31 2021.
Net cash used by the company, including beyond cancer was $9 $3 million for the quarter ended December 31 2022.
Through the first nine months of this fiscal year net cash burn has been $27 million.
As of December 31, 2022, the company reported cash and cash equivalents marketable securities and restricted cash of $63 $2 million.
We still forecast that our average quarterly cash burn for fiscal 2023 to be within a range of $8 million to $10 million per quarter.
And with that I'll hand, the call back to Steve.
Thanks, Doug hope everyone as pleased as I am with the execution and progress that beyond air.
Operator, let's go to Q&A.
We will now begin the question and answer session to ask a question you May Press Star then one on your Touchtone phone.
Youre using a speakerphone please pick up your handset before pressing the keys if at any time. Your question has been addressed and you would like to withdraw. Your question. Please press Star then two at this time, we will pause momentarily to assemble our roster.
Oh all right.
Question comes from.
Matt Kaplan with Lindenberg Thalmann. Please go ahead.
Good afternoon, and thanks for taking the question just.
Just wanted to follow up on how the lung.
Among fit ph launch initial early launches going phase one I guess is there anything that you learned about I guess the competitive market place in the hospital.
Which is new or unexpected which could.
Potentially help to expedite the launch or would potentially slow it down in terms of market patient placement penetration.
Thanks, Matt.
I'll turn this over to Duncan to answer this question, but the one thing I'll say before that is man the hospitals move very slowly I think COVID-19. It's just.
Now made things a little bit more difficult to get things through and in the hospital space lots of.
New new new things in terms of getting your teams and into the hospital to get work done but.
Just for my Bird's eye view, but I'll, let Don can comment on this further.
Thanks for the question, Matt No, we're really pleased with the way it's gone.
Essentially there's no change to the plan, we're executing as per the previous.
Conversations are first six to nine months up to a dozen hospitals and that's what we've been doing and we've had really excellent feedback during that period and as we've said before we've been focusing on the logistics the service and from a clinical point of view things have gone as absolutely well as we could expect we're very pleased with the feedback that we've been getting.
We've trained hundreds of respiratory therapists in a number of different hospitals and now are in the contracting process and.
As I mentioned in my remarks.
Very impressed with the access we've got considering the triple threat.
We're all familiar with and now we go through the contract process with these various hospitals and they're the ones that we're now moving forward with in the early.
Phase of that broader expansion and each hospital is different there are different stages and have different processes and some of those have become.
More onerous some of them haven't changed so it.
It depends from hospital to hospital. So nothing that we've learned that has surprised us and we're pleased with the progress.
Great and then and then specifically how should we think about that the phase two as you are moving into this accelerated change then in the spring.
Yes, I think that we said that the first six to nine months would be that sort of phase one so we're coming to the end of that so in the next fiscal year is when we start to ramp up.
And as I said it depends on the mix of hospitals that we ended up with from a contractual point of view we caught.
No for sure exactly when they're all going to hit them.
Partly for reasons that Steve commented on and partly just the luck of the draw in terms of where they are in that contracting process. So unfortunately, we cant control that to a significant extent as we get more scale, we'll obviously have more confidence in that.
Great great. Thanks, Sir yes.
Our next question comes from Greg Fraser with Truth Securities. Please go ahead.
Right.
Good afternoon folks thanks for taking the question.
For the hospitals that have done.
And decided to not move forward with contract discussions have there been any common reasons why.
Yeah.
So.
I mean, the initial I think they all comes down to contract and if they're in a phase where we've done an evaluation and.
They are looking at for example, dual source in some cases, they can do that in some cases it takes a little bit longer. So that's part of the reason is around contracting and the other might be to do with the scale of the hospital in terms of it might be part of a group and that group might have in some cases, we've done work with.
The hospital that was acquired by a group and that slows things down so typically its around the timing of the contracting process. That's the most common but we have been selective with.
They'll work in with most of those hospitals.
And Greg just just to follow up on that.
This is.
I guess youre getting at the question of you know is there something consistently wrong that is seen with our system that people arent signing up with us and I think that's way off base.
Base in terms of what what's actually going on you know the process moves slowly you can look back at all the conference call transcripts that we've had in the past two years and I've said that this is a six to nine month process to get the ball moving in and we've just completed six months at the end of December .
Including July and August launching in the summer in this industry. You know is usually a no now so those.
Those were those are rough months, obviously so.
We knew it was going to take a long time to get the ball Rolling and this is not you know just fill the channel with some some pills and get going you know this is a process. It takes time and education and so forth.
Training and with the hospitals, so we haven't seen anything about our system.
That concerns us or concerns any of the hospitals that have seen our system and played around with it.
They're little tweaks here and there of course you know these are things that are normal in the beginning of a launch we'll probably tweak in our system for the next 10 years, just like our competitors have I mean, if you look at the you know the IMAX D. S. A R. Gogo look when it was first approved in.
What it looked like denim it looks like now and Theres still.
Coming out with new versions of their system.
So there's always room for improvement.
But we've seen nothing with our system that <unk>.
Stops hospitals.
From using our system that that has nothing to do with where we are at this moment in time in fact, you know where where we're pretty much right, where we thought we'd be at this moment in time, what I'd like it to go faster of course, everybody wants things to go faster, but the reality is six to nine months is what we estimated and it's going to take that time to really take the full nine months for us to get the ball rolling in place that we'd like to be.
So I think that's what you're getting at with your question.
But if it wasn't please follow up.
Yeah.
Went up.
That's very helpful answer. Thank you on the contracting discussions that I believe your objective is to supply.
Similar to what the hospital.
Our hospital.
To get to that or some of them are discount any color there would be helpful.
Yeah look again it varies once you've seen one hospital you've seen one hospital is kind of the same.
We've looked at various business models as we've evolved and learned we've.
Adjusted to what different hospitals are looking for and it very much depends on the circumstances the clinical setting.
In some cases, we expect the the winning formula is going to be in line with the current expectation in some cases.
We might be actually at a premium it just very much depends on the benefits of eliminating cylinders in that hospital and the value of the logistical.
Hassle that we remove it and so again.
Giving you a blanket answer because it is so varied but we havent.
We certainly haven't had any general difficulty in that area.
But we're going to continue to be very flexible and responsive to their needs.
Got it that's very helpful. And then can you just comment a bit more about the EMR process and what contributes to that later timing fashion versus your prior expectation.
You know they change things in the EU, a few years ago, the new M. D. R. I guess they call it.
And that resulted in a significant decline in the number of notified bodies in Europe .
Plus a lot of the.
The.
Any of these remaining notified bodies was being used up by companies with products that were already on the market.
A lot of these.
Lot of these things these products, where we're subject to the new rules and could have been pulled off the market.
So there wasn't a lot of capacity we were in we had a timeline with our notified body. We communicated guidance to you based on that timeline communicated to us.
They just couldnt get it done they're overworked overwhelmed.
And these things happen and we're working with them. They are doing a good job. We don't see any reason why we won't be getting CE, mark, but we still have to work through the process with them and things are just taking longer than expected and.
We we went through these things with them and got timelines.
Thought we all can hit them all send them together thought they could hit these timelines just didn't happen.
There seems to be delays, you know with regulatory stuff.
In the U S and Europe .
I think the regulatory agencies are recovering from what happened during COVID-19 and what happened in Europe anyway from the change in regulations, but are.
You know.
Some companies are getting lucky than others, given the timelines.
But it's really been nothing of concern for us in terms of.
Were insufficient to get approval that that's not the issue. The issue is just working through it.
And trying to meet the timeline so it's unfortunate.
But.
It is what it is.
And we'll just get it in a couple of months. That's that's all we can do.
Okay, I'll ask one more and I'll hop back in the queue on the cardiac filing I think you had a meeting with the FDA did anything come up in that meeting that was unexpected and potentially be a hurdle.
Beautiful thanks, so much.
Yeah, our meeting on the cardiac label expansion was pushed back by a by FDA. So it was scheduling conflicts so that meeting has not yet occurred.
Which is why we haven't submitted the PMA supplement.
So I really can't comment I'm sorry.
Okay.
Okay. Thank you.
The next question comes from Yale Jen with Laidlaw <unk> Company. Please go ahead.
Good afternoon, and thanks for taking the questions and congrats on the other progress.
Oh in terms of Oh lung 50 accumulation that are in the state.
And the fourth.
Or could you give us a little bit color, oh that pace might be and how that might be and then I have a follow up.
Yeah.
Yeah. So yeah. Thanks, the the pace at which we expand the commercial team is going to be dictated by what we see coming in the next six to 12 months in terms of expected contracts. So.
Duncan is going to be you know.
Building up that team.
Starting very soon and we're gonna be focusing on our clinical team buildup.
Yeah.
Those are the guys who educate train.
The hospital employees and that's really.
The hurdle in the beginning as you get rolling.
Since it is relatively new for these these are hospitals.
And then we'll go.
Focus more on the actual sales reps once we've gotten our clinical people.
Up to the number that we need so.
This will be ongoing the.
The expansion of the team will be ongoing probably for the next 18 to 24 months, we don't just snap our fingers are bringing everybody in right. So they will come in in waves.
No.
That's that's the phase two of our of our launch like I said the fleet get going in the next few months and last probably 18 to 24 months of US building that team I hope that answered the question of if it didn't please let me know.
That's very helpful. I appreciate that maybe one more question.
The FDA meeting.
Pearl on V C. A P O N E.
Colors, all the that meeting you can.
And I'll talk about.
Yeah, I mean, we don't like to talk about what was said between us and the FDA are communications, a private with them, but again, Brian what I will say is that we were certainly enthusiastic about getting this study started up.
In the fourth quarter of this calendar year.
So we're looking forward to it that's for sure.
Okay, Great and maybe just a tuck in one more.
We noticed that long.
So the trials both N D M E N as well and see.
C O P. D has been pushed out quite a bit compared to your earlier guidance, including your reason.
Slide deck looked at Nee Strategical reason, you will take them all and thanks.
So COPD is not strategic.
Strategic.
That's just again.
D. A timelines have been pushed out and we need time to set that study up properly because even though you don't see it as a seasonal study it really is because we're looking for exacerbations in these patients.
And seeing those exacerbations result in hospitalization, so that's going to be a lot.
There'll be a much more volume in the winter months than in the summer months. So.
We don't want to do this outside of a winter season, and there's no way, we can get it done in the upcoming winter based on that.
The timelines that have.
Being given to us by FDA, so that that's just.
The reality of.
Where we are today.
With respect to MTN.
Yeah, I think we said we were shooting for a late 'twenty four calendar I think we just meet our guidance for the.
Back half of our fiscal year.
So it's kind of semantics, not really a delay, but we'll try to get this done as quickly as possible I think that maybe we're being a little conservative because you know FCA as kind of AUM.
We're loaded with things a little bit and we don't want to.
We'd like to give ourselves a little bit of a cushion in case theres, some push out there as well but.
Things run smoothly, maybe we can pull that back in a little bit Yale but.
Well, we'll have to see how that goes this is more of a this is not just a.
Protocol discussion with FDA, but it's also a discussion of our final home system, that's being built we need to.
Obviously get the device.
Approved by them as well as the study, whereas you know for pneumonia. It's just about the study not about the device.
Okay, Great very helpful. Appreciate it and congrats on the progress thanks.
Thanks Yale.
Our next question comes from Suraj, Kalia with Oppenheimer and company. Please go ahead.
Good afternoon, everyone. So two questions Duncan one for you and one for Steve Let me start out with you Duncan.
So Duncan Youll have been consistent in terms of the phased launch of P. Etch.
I was wondering if I could push you a little bit in terms of quantifying.
The sites that have gone through evaluations and are now in the contracting phase.
Specifically when you see a site has finished evaluation.
What does a typical Q.
That may or may not already be contracted with Alan Croda way what have they done from an evaluation perspective to push it to the next stage.
Hey, Suraj, we're not going to comment on those numbers, but Duncan and comment on the other question.
Yeah. So from an evaluation point of view again it varies from hospital to hospital dependant on the protocol and the quality assurance process. They have.
In place in some cases in fact, they do what they call a bench test.
So the.
That requires them to go through a protocol without actually.
Connecting it to a patient.
Typically evaluation, where they do have clinical experience they will.
Go through that process in a matter of somewhere between a week and three to four weeks and it's usually the lined up with a period before that contract is due and again some hospitals begin that contracting process six to nine months in some cases 12 months ahead.
Just on the protocol and the various stakeholders in a value access committee or something of that nature that they need to go through so.
Unfortunately, there's no one size fits all again, but from our perspective, it's a pretty straightforward process because our system is so.
Fast and simple.
They just have to use our system instead of the system that are currently using that as part of that protocol.
I've answered your question.
Fair enough Duncan Steve.
Steve.
One question for you and I know you guys. At this stage are somewhat averse to giving specifics on numbers.
But picking up on the commentary in terms of some of the things getting delayed.
Processes, taking longer maybe if I could just position. It this way Steve fiscal fourth quarter numbers that are about 3 million revs physicals.
Fiscal 'twenty four.
Looking at it correctly, it's almost 40 million. So maybe you can.
Help thread the needle here in terms of what you are seeing in terms of the phase launch and how would you guide US based based on you know what the consensus numbers that are out there gentlemen, thank you for taking my questions. Thanks, Suraj and let's be clear those numbers are from you and the other analysts that's consensus we've given no.
Guidance whatsoever. So that's just your interpretation.
And we're not going to be giving guidance at this point I think I've been very clear about that.
We're going to wait and see how things play out and get more gather more information before doing that and that will probably happen when we announce our fiscal year.
Which obviously is ends March 31, so you can look forward to us discussing in more detail what kind of guidance we'd be giving.
At that time, I think it's still a little bit too early to discuss those things.
At this time, we're showing no further questions in the in the Q and this concludes our question and answer session I would now like to turn the conference over to Steve Lisi for any closing remarks.
Thanks to thank everyone for joining us today, where we appreciate the interest look forward to speaking to you very shortly in a couple of upcoming industry conferences. Thanks very much.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.