Q2 2025 Beyond Air Inc Earnings Call
Speaker Change: Thank you, operator. Good afternoon, everyone, and thank you for joining us.
Speaker Change: Today we issue the press release announcing the operational highlights and financial results for Beyond Air's second quarter of fiscal year 2025.
Speaker Change: A copy of this press release can be found on our website, www.beyondair.net, under the News and Events section.
Speaker Change: Additionally, this conference call is being recorded and will be available for audio rebroadcast on our website beyondair.net.
Speaker Change: Thanks, Corey, and good afternoon to everyone joining us. With me here today is Doug Larson, our Chief Financial Officer.
Speaker Change: We expect this success will continue to drive accelerated top-line revenue growth over the following quarters as our recent sales and marketing initiatives mature.
Speaker Change: In addition, we announced several partnerships, including with Healthcare Links, a renowned healthcare advisory and contracting firm that works with GPOs and IDNs.
Speaker Change: to help us engage with and distribute to the military and Veterans Administration hospitals.
Speaker Change: We're teaming up with BusinessAsia consultants to provide lung fluid pH to hospitals in Europe, South America, the Asia-Pacific region, and the Gulf Coast region, where many hospitals are unable to obtain nitric oxide supply or use NO due to the difficulties associated with legacy cylinder systems.
Speaker Change: that can't generate NO from ambient air like lung fit pH. We're also implementing additional strategic initiatives over the next few months that are expected to build on our momentum that will further separate us from the competition. So stay tuned.
Speaker Change: To best position ourselves for success, we recently announced three separate financial agreements that are expected to extend our cash runway. First, we completed a private placement equity offering for $20.6 million with a select group of healthcare-focused investment funds and company insiders.
Speaker Change: Second, we reached an agreement with Avenue Capital to extinguish their senior secured term loan for a one-time payment of $17.85 million.
Third.
Speaker Change: We entered into an $11.5 million royalty funding agreement led by certain Beyond Air board members. This debt will carry a 15% interest rate with 12% being payment in kind until the September 2026 quarter. Actual cash payments for all interest in principle will commence after the September 2026 quarter and will be determined based on an 8% royalty rate on sales of LungFitPH.
Speaker Change: Our PMA supplement for the expansion of the LungFit PH label to include cardiac surgery was accepted and is under review by the FDA. As a reminder, a PMA supplement is a submission for when there is a change to an already PMA-approved medical device.
Speaker Change: While there is no firm date for FDA to complete its review, we can say that as of today, we have answered all questions posed by FDA and we await their feedback.
Speaker Change: We will work with FDA to provide the quickest timeline possible, but cannot give a specific date for an FDA decision. As you may recall, there are no nitric oxide products currently approved for cardiac surgery in the United States.
Speaker Change: So, if granted, this would represent the first formal FDA approval among any of the current players in the market.
Speaker Change: D. E. Mark, The regulatory changes in the EU for medical devices have been difficult for everyone. However, we believe that we will receive a final answer before the end of this calendar year.
Speaker Change: I know the frustration from investors on this topic, but from my view, the Beyond Air team's performance was a lesson in patience, perseverance, and being an expert at your craft.
Speaker Change: Before the end of the March 2025 quarter, we will file a PMA supplement to the FDA for our next generation LungFit pH system. We look forward to demonstrating this system next week at the AARC annual meeting in Orlando for those attending our private meetings.
Speaker Change: Turning to Beyond Cancer, they are awaiting regulatory approval in Israel for their UNO program in combination with anti-PD-1 therapy in late-stage cancer patients.
which remains an area of high unmet patient need.
Speaker Change: This lower volume administration may be even safer and allow for tumors to be treated in more areas of the body than just cutaneous and near cutaneous.
Speaker Change: In addition, the interest we are seeing outside the U.S. is quickly gaining traction since our system upgrade, and we anticipate signing new ex-U.S. agreements over the next six to twelve months and to begin shipping systems overseas in the first half of calendar 2025.
Speaker Change: In addition, we have several upcoming regulatory and product development milestones that are expected to drive increased growth. When we take all these factors together, I hope you see why we're so excited about what we are planning over the next year. Now, I will turn it over to our CFO, Doug Larson.
Doug Larson: Thanks, Steve, and good afternoon, everyone. Our financial results for the second quarter of fiscal year 2025, which ended September 30, 2024, are as follows.
Doug Larson: Research and development expenses for the three months ended September 30th, 2024 were $4.6 million as compared to $7.1 million for the three months ended September 30th, 2023.
Doug Larson: The decrease of $2.5 million was primarily attributed to a decrease in spend in salaries, SOC-based compensation, and preclinical studies.
Doug Larson: Net loss attributed to the common stockholders of Beyond Air, Inc. for the three months ended September 30, 2024, was $13.4 million, or a loss of 28 cents per share, basic and diluted.
Doug Larson: Net cash burn in the quarter ended September 30, 2024, excluding one-timers, and the impact of the financing transaction Steve mentioned earlier was $11.5 million.
And with that, I'll hand the call back to Steve.
Steve: Thanks, Doug. We will now take any questions you may have.
Speaker Change: Thank you. We will now be conducting a question and answer session.
Speaker Change: If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove yourself from the queue. For participants using speaker equipment, it may be necessary to pick up the handset before pressing the star keys.
One moment please as we poll for questions.
Speaker Change: Unknown Attendee, Steven Lison, Unknown Attendee, Douglas Larson, Unknown Attendee, Steven Lison,
Speaker Change: We just, you know, again, the Trillamed agreement just got started, so I think there's some work we need to do with them before they go out in full force.
Speaker Change: I mean, look, we've given them everything that they've asked for. It's in there. The ball's in their court, so to speak.
Speaker Change: But, you know, this is a device, not a drug, so there's no hard pedophile. So I just don't know.
Speaker Change: I wish I could be more specific, but we've tried to give guidance in the past on regulatory timing and it just hasn't gone well. So we're just gonna let you guys know what we know, which is that we've given them everything they've asked for. And now we just wait.
Speaker Change: Okay, great. I'll ask one more question. I'll jump back in queue. And that's just on the, you mentioned, I appreciate the commentary on cash burn. I think you said it'll reduce by about a third.
Speaker Change: Most of that is in the SG&A line or how would that be? Well, I assume that's where we see most of that reduction or anywhere else. We might see it
Okay, great. I'll jump back in queue
Thank you. Our next question.
Jason Bidnar with Piper Sandler. Please proceed with your question.
Speaker Change: Yeah, I don't know who's gaining traction in the market. I don't know who said who's, who's, who that might be.
Unknown AttendeeYou know, we
Speaker Change: I don't think the hospitals look at money raises by companies on Wall Street as much as you think, you know, our relationship with hospitals and our customers and potential customers is the same as it was before the money raises it is after.
Speaker Change: Unknown Attendee, Steven Larson, Unknown Attendee, Douglas Larson, Unknown Attendee, Steven Larson,
Speaker Change: Greatly by our new chief commercial officer who came on in July we're seeing a lot of
Unknown Attendee, Steven Larson, Unknown Attendee, Steven Larson, Unknown Attendee,
Speaker Change: We seem to be picking up a lot of momentum with with
Unknown Attendee, Steven Larson, Unknown Attendee,
Speaker Change: No, we can take that offline, Steve, that's all right. But I appreciate the color there. And just to follow up to that one, can you also talk a little bit about contract pricing with the uptick in activity in the most recent quarter, kind of piggybacking off the last question. Has there been any movement up and down here in pricing versus earlier this year? And can you talk about how this pricing is fluctuating across account sizes? Thanks.
Yeah, I think that the.
you know, seems to be pretty stable from our perspective.
Great, appreciate that.
Thanks.
Speaker Change: Thank you. Our next question comes from the line of Marie Dibolt with ETIG. Please proceed with your question.
Marie Dibolt: Hi, I appreciate you taking the questions this evening. I wanted to ask a qualitative question here on
Marie Dibolt: Some of the changes David has made to the commercial organization, you know, what strategies specifically are working well? Where are you finding success?
and where is their sort of.
Speaker Change: So, you know, we mentioned, you know, a partnership with an international distribution firm that will manage, you know, our relationships outside the United States. That's a big win for us, you know, it's not like there's hundreds of them you can choose from and there's very few high quality companies out there like BAC. So that's David bringing that in.
Speaker Change: and David, you know, has been able to generate, excuse me, generate more leads.
Speaker Change: Of course, well understood. Thanks for that, Steve. A question for Doug then. Can you talk to us a little bit about gross margins and how we might expect some of that to be impacted by, say, you know, both higher volumes to come, but also some of these label expansions, the transport ready system, the CE mark and selling abroad, any impact of gross margins to expect over the next few quarters. Thanks so much.
Doug Larson: So that was a 700,000. That's, I wouldn't call it exactly a one-timer because we're not completely finished yet, which is why we're calling for gross margins to turn positive in the March quarter and not necessarily the December quarter. So there's gonna be a little additional cost next quarter and then that it's gonna.
Doug Larson: and it's already kind of a drag on our gross margin. So the good news there is as we expand into the market, we don't have to build as many machines that are already built, we can deploy them and that drives, that's gonna go straight into margin.
Unknown Attendee, Steven Lison, Duncan Fatkin
Doug Larson: As we go internationally, you are going to see a little bit of a drag on the gross margin as opposed to, you know, where we'll be in the US, because the business model there is a little bit different.
Steven Larson: Unknown Attendee, Steven Larson, Unknown Attendee, Steven Larson, Unknown Attendee, Steven Larson,
Very helpful. Thanks for taking the questions.
Thank you.
Our next question comes from the line of Dale Jen.
with Laidlaw & Company. Please proceed with your question.
Speaker Change: Good afternoon and thanks for taking the questions. Steve, when you mentioned that there's a 60% increase, could you give a little bit more color in terms of that, whether that 60% is from last year or how should we just think about the basis for that number?
Speaker Change: Yeah, so the base is just our total customers, you know, as of June 30th versus our total customers at September 30th.
Okay, that's all.
Speaker Change: Okay, great. So basically the quarter over quarter, I guess, that's one way to look at it. Yep. Okay. Okay, great. That's very helpful. And also on the press release, you're talking about annual...
Speaker Change: Unknown Attendee, Steven Larson, Duncan Fatkin, Unknown Attendee, Steven Larson, Unknown Attendee,
Speaker Change: Yeah, I mean, we did 800 this quarter and the run rate would put us more like 875.
Speaker Change: We did say that we have some more starts after October 1st, so the number will be higher than that. How much higher, we don't know, because we don't know all the starts.
Speaker Change: Hospital starts in December Right now so we're still waiting So yeah, I mean we'll be talking about that kind of a run rate thing every quarter so you can see how we progress So we think that every quarter it's going to continue to rise
Okay, great.
Speaker Change: Hopefully helpful, and maybe the last question here is in terms of your international
Speaker Change: Just want to again let the color of you guys move forward, go beyond the U.S. borders. And thanks.
Speaker Change: BAC is more of an intermediary between us and the actual distributor in each country.
Speaker Change: You know we we started to see the demand come in as we showed our upgraded system
back in in spring and
Speaker Change: Yeah, he's only one man. So we needed some help. And that's why we contracted with this group. And they can handle any volume that comes comes our way. We're fortunate to have as much as we we we think. So they're the intermediary. They've got a great track record. And we're looking forward to them getting going over the next 30 to 60 days.
Speaker Change: Yeah, so FDA approval covers some, I think the CE mark and the EU covers more than just FDA approval. And there is a.
Speaker Change: Unknown Attendee, Steven Larson, Unknown Attendee, Douglas Larson, Unknown Attendee, Steven Larson,
Speaker Change: Okay, great. Well, I appreciate it. And again, congrats on all the progress at this moment. Great. Thanks, Jim.
Speaker Change: Thank you. And our next question comes from the line of Matt Kaplan with Vandenberg-Dowman. Please proceed with your
Speaker Change: Hey guys, thanks for taking the question. Can you talk a little bit more about the...
Speaker Change: Could that review, since it's a supplement, be faster than the first first gen?
Speaker Change: Thanks for the question, Matt. Boy, it better be faster than the first one. The first one was torturous, but again that was a difficult time for FDA with the pandemic and lots of changes going on over there, so I think they're in better shape.
Speaker Change: staffing wise than they were back then. So we're looking forward to working with them on this supplement. But yeah, it is a supplement. It's not a new product.
Speaker Change: filing of the quality of it and we'll go from there but
Speaker Change: This is a product that we'll be showcasing next week at the American Academy of Respiratory Care in Orlando. So if anybody wants to make the trip down to Disney, you can come see us and we'll give you a look at this system. It is.
Okay.
Speaker Change: Unknown Attendee, Steven Larson, Unknown Attendee, Steven Larson, Unknown Attendee, Steven Larson,
Speaker Change: Sure, man, I wish I could. I mean, you know, I'd love for it to be
It's probably going to be chunky.
Speaker Change: We may, one quarter, get one or two real big contracts, and the next quarter, still keeping up volume with hospitals growing, but we might not hit a big home run in the next quarter, so you just don't know. I wish I could give you more.
Speaker Change: So you just don't know which ones are going to hit in what quarter. But we're talking to as many hospitals as we can.
Speaker Change: Trying to reach out to as many potential customers as possible and there are
Speaker Change: potential wins across the range of size of hospitals. So we'll just have to see how they come in.
Thanks, Matt, for the question. So,
Going forward, you're going to see...
starting in the first quarter of fiscal 26.
Speaker Change: And let me let me just help out here. I mean, you know, we've said publicly in the past that, you know, we're targeting with our first generation product, you know, sixty.
Speaker Change: Unknown Attendee, Steven Lisi, Duncan Fatkin Unknown Attendee, Steven Lisi, Duncan Fatkin
impact, you know, there is always the cost plus.
Okay, that's great. That's helpful. Thanks, thanks for taking questions.
Great. Thanks, Matt. Appreciate it.
Speaker Change: Thank you. At this time, we are showing no further questions in the queue, and this concludes our question and answer session. I would now like to turn the call back over to Steve Lisi for any closing remarks.
Steve Lisi: Thanks for joining today, everyone. Look forward to speaking to you in a couple of months. Thanks.
Speaker Change: Thank you, and ladies and gentlemen, this concludes today's conference. You may disconnect your lines at this time.
Thank you for your participation.
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