10-K: Beyond Air Reports Continued Losses Amidst Commercialization Efforts and Pipeline Advancements; Going Concern Doubts Persist

Beyond Air, Inc. reported a net loss of $48.5 million for the fiscal year ended March 31, 2025, with its independent auditors expressing substantial doubt about the company's ability to continue as a going concern despite increased revenue from its LungFit PH system and ongoing capital raising efforts.

Summary

• Beyond Air, Inc. is a commercial-stage medical device and biopharmaceutical company developing nitric oxide (NO) generators and delivery systems (LungFit platform) from ambient air.
• The company's first device, LungFit PH, received U.S. FDA premarket approval in June 2022 for hypoxic respiratory failure in neonates and European CE mark approval on November 26, 2024, for neonates and periand post-operative pulmonary hypertension in pediatric and adult heart surgery patients.
• LungFit PH commercial launch began in July 2022 in the U.S., with regulatory approvals also secured in Australia, New Zealand, Hong Kong, and Thailand, and new distribution agreements signed for France, Italy, Turkey, India, Saudi Arabia, and Morocco.
• The company reported revenues of $3.7 million for the year ended March 31, 2025, an increase from $1.2 million in the prior year, primarily due to new hospital contracts in the U.S.
• Despite increased revenue, the company incurred a gross loss of $1.7 million for FY2025, compared to $1.3 million in FY2024, driven by supply chain infrastructure costs and depreciation of LungFit devices.
• Net loss for the year ended March 31, 2025, was $48.5 million, a decrease from $64.3 million in the prior year, with an accumulated deficit of $286.3 million since inception.
• Cash used in operating activities for FY2025 was $38.2 million, and the company held $6.9 million in cash, cash equivalents, and marketable securities as of March 31, 2025.
• Beyond Air's independent auditors have included an explanatory paragraph expressing substantial doubt about the company's ability to continue as a going concern.
• The company has two majority-owned affiliates: Beyond Cancer Bermuda Limited (80% ownership) focusing on ultra-high concentration NO (UNO) for solid tumors, currently in Phase 1 clinical trials, and NeuroNOS Limited (88.2% ownership) developing nNOS inhibitors for neurological conditions like autism spectrum disorder (ASD), currently in preclinical stage.
• The LungFit PRO program for viral lung infections (including COVID-19) in hospitalized patients has been paused pending future funding, despite positive pilot clinical trial results showing reduced length of stay and oxygen support duration.
• The LungFit GO program for Nontuberculous mycobacteria (NTM) lung infection completed a pilot clinical trial with positive results, and a pivotal clinical trial is anticipated in calendar year 2026, pending funding.
• The company entered into a new $11.5 million secured loan agreement on November 1, 2024, with certain lenders including its CEO and a director, bearing 15% annual interest and an 8% royalty on net sales from July 2026.
• A previous senior secured term loan with Avenue Capital was extinguished for a one-time payment of $17.85 million on September 30, 2024, resulting in a $2.5 million loss on extinguishment of debt.
• Beyond Air completed a private placement offering in September 2024, raising $20.6 million gross proceeds through the sale of common stock and warrants.
• The company is subject to Nasdaq's minimum bid price requirement and received an extension until August 4, 2025, to regain compliance, with a risk of delisting if compliance is not met.

Sentiment

Score: 3

Explanation: The sentiment is negative due to the explicit 'going concern' doubt from auditors, significant accumulated losses, and continued cash burn. While there are positive developments in product approvals and pipeline progress, and recent capital raises, the fundamental financial instability and ongoing need for funding, coupled with Nasdaq delisting risk, outweigh these positives for immediate outlook.

Positives

• LungFit PH received European CE mark approval on November 26, 2024, expanding its market beyond the U.S. for PPHN and periand post-operative pulmonary hypertension in pediatric and adult heart surgery.
• Regulatory approvals for LungFit PH have been secured in Australia, New Zealand, Hong Kong, and Thailand, with new distribution agreements signed for France, Italy, Turkey, India, Saudi Arabia, and Morocco, anticipating significant revenue contribution in fiscal 2026 and beyond.
• Revenue increased to $3.7 million for the year ended March 31, 2025, from $1.2 million in the prior year, driven by additional hospital contracts in the United States.
• Net loss decreased to $48.5 million for FY2025 from $64.3 million for FY2024, indicating some improvement in financial performance.
• Beyond Cancer's UNO program for solid tumors is progressing, with the first patient treated in a Phase 1 clinical trial and a Phase 1b trial protocol approved by the Israeli Ministry of Health in December 2024 to evaluate UNO with anti-PD-1 combination therapy.
• Preclinical data for UNO therapy in solid tumors showed statistically significant survival benefit in mice treated with UNO plus anti-PD1 versus anti-PD1 alone, and repeat dosing of UNO prolonged survival in combination with anti-PD-1.
• NeuroNOS, a new majority-owned affiliate, raised $2.0 million in a private placement to accelerate preclinical work on nNOS inhibitors for neurological conditions like ASD.
• The LungFit PRO pilot clinical trial for viral lung infections showed a trend of shortening length of stay by a factor of 1.8 and significantly shorter duration of oxygen support (p=0.0339) for inhaled NO treated patients.
• The LungFit GO pilot clinical trial for NTM lung infection demonstrated that high dose NO treatment was well-tolerated in both home and hospital settings, with high treatment compliance (>90%) and improvements in quality-of-life domains.
• One patient in the NTM clinical trial achieved culture conversion with three consecutive negative sputum samples, suggesting potential efficacy.
• The company successfully extinguished its senior secured term loan with Avenue Capital for a one-time payment of $17.85 million, eliminating future debt and interest payments of $12.0 million through June 2026.
• Beyond Air secured $20.6 million in gross proceeds from a private placement offering in September 2024, including participation from directors and officers, strengthening its capital position.

Negatives

• The company's independent registered public accounting firm's report contains an explanatory paragraph expressing substantial doubt about its ability to continue as a going concern due to recurring net losses and negative cash flows from operating activities.
• Beyond Air incurred a net loss of $48.5 million for the year ended March 31, 2025, and has an accumulated deficit of $286.3 million since inception.
• Cash used in operating activities was $38.2 million for the year ended March 31, 2025, indicating continued cash burn.
• The company had only $6.9 million in cash, cash equivalents, and marketable securities as of March 31, 2025, which management believes is insufficient to meet obligations for the next year without additional funding.
• Gross loss increased to $1.7 million for FY2025 from $1.3 million for FY2024, indicating that cost of revenue continues to exceed revenue.
• The LungFit PRO clinical trial in the United States for viral lung infections has been paused pending future funding, delaying potential market entry for this indication.
• The pivotal clinical trial for LungFit GO for NTM lung infection is anticipated to commence in calendar year 2026, pending funding, indicating further delays and capital requirements.
• The company's common stock has not maintained a minimum closing bid price of $1.00 per share, leading to a Nasdaq delisting notice and a risk of delisting if compliance is not regained by August 4, 2025.
• The new loan agreement includes a high annual interest rate of 15% and an 8% royalty interest on net sales from July 2026, which could significantly impact future profitability and cash flow.
• The company relies heavily on third-party manufacturers, with approximately 85% of materials purchased from a single third-party vendor in FY2025, posing supply chain risks.
• The company has limited experience selling and marketing its products as a commercial-stage company and needs to further develop these capabilities, which will be expensive and time-consuming.

Risks

• Substantial doubt about the company's ability to continue as a going concern due to recurring net losses and negative cash flows, potentially limiting access to future financing.
• Need to raise additional capital, which may be costly, difficult to obtain, and could dilute current stockholders' ownership interests.
• Failure to comply with covenants or other terms of the Loan Agreement could result in default, materially and adversely affecting business viability.
• Market opportunities for approved products or product candidates may be smaller than estimated, adversely affecting revenue.
• Intense competition and rapid technological changes in the biotechnology, pharmaceutical, and medical device industries may adversely affect commercialization success.
• Inability to scale sales and marketing capabilities or secure third-party agreements could hinder revenue generation.
• Approved products and future product candidates may fail to achieve necessary market acceptance by physicians, patients, and payors.
• Failure to properly manage anticipated growth could strain management, operational, and financial resources.
• Pricing pressure from competitors and customers may impact the ability to sell products at profitable prices.
• Competitors with greater resources may develop superior products or achieve earlier approvals, rendering Beyond Air's products obsolete or noncompetitive.
• Risk of enforcement action for improper marketing or promotion of products, including off-label uses.
• Healthcare legislative or regulatory reform measures, including government restrictions on pricing and reimbursement, may negatively impact business.
• Cybersecurity risks and failure to maintain confidentiality, integrity, and availability of IT systems could result in harm, costs, fines, or lawsuits.
• Failure to comply with applicable privacy, data, and security regulations could result in substantial penalties and negative publicity.
• No assurance that product candidates will receive certification or regulatory approval, which is necessary for commercialization.
• Potential for additional costs or delays in completing development of product candidates due to unforeseen events in clinical trials.
• FDA may not accept data from clinical trials conducted outside the United States.
• Novel therapeutic processes with NO (Beyond Cancer, NeuroNOS) may be classified as pharmaceutical drugs by the FDA, facing more stringent regulation and increased costs.
• Delays or difficulties in patient enrollment in clinical trials, especially for rare diseases or seasonal viruses like RSV.
• Identification of serious adverse events (SAEs) or undesirable side effects of product candidates could delay or prevent approval or limit commercial profile.
• Reliance on third parties to conduct clinical trials, who may not perform satisfactorily or comply with regulatory requirements.
• Any failure by a third-party supplier or manufacturer to produce or deliver supplies or provide servicing may delay or impair clinical trials or commercialization.
• Inability to enter into or successfully maintain collaborations with third parties for product candidate development and commercialization.
• Third-party manufacturing facilities are subject to significant regulation and may not continue to meet regulatory requirements.
• Reliance on third parties necessitates sharing trade secrets, increasing risk of improper disclosure or appropriation.
• Failure to obtain and maintain sufficiently broad patent protection could impair ability to commercialize technology.
• Involvement in lawsuits to protect or enforce patents or other intellectual property could be expensive, time-consuming, and unsuccessful.
• Claims by third parties asserting misappropriation of intellectual property or ownership of Beyond Air's intellectual property.
• Patent policy and rule changes could increase uncertainties and costs surrounding patent prosecution and enforcement.
• Inability to obtain or maintain necessary intellectual or proprietary rights through acquisitions and in-licenses.
• Dependence on a small number of employees and key consultants, with risk of disruption if they leave.
• Difficulties in managing growth and recruiting additional employees and consultants.
• International operations present challenges and risks related to conflicting laws, regulatory approvals, intellectual property enforcement, and financial risks.
• Geopolitical conditions in Israel may materially and adversely affect business operations, including military service impacts on employees.
• Product liability or similar claims could be expensive, damage reputation, and harm business.
• Natural disasters, geopolitical unrest, war, terrorism, or public health issues could disrupt supply, delivery, or demand.
• Dependence on information technology systems and infrastructure, with risks from cybersecurity breaches and data leakage.
• Failure to maintain compliance with Nasdaq's continued listing standards could result in delisting, adversely affecting liquidity and stock price.
• Volatility in common stock trading price due to various factors, including clinical trial results, regulatory approvals, and competition.
• Anti-takeover provisions in corporate documents and Delaware law may discourage changes in control.
• Employee misconduct or non-compliant activities could lead to regulatory sanctions and reputational harm.
• Failure to comply with healthcare fraud and abuse laws could result in substantial penalties.
• Employee litigation and unfavorable publicity could negatively affect future business.
• Inability to enforce non-compete covenants, allowing competitors to benefit from former employees' expertise.

Future Outlook

Beyond Air expects to incur net losses and have significant cash outflows for at least the next twelve months, with management believing additional funding will be required within one year. The company anticipates significant revenue contribution from international partnerships for LungFit PH in fiscal 2026 and beyond. Beyond Cancer aims to complete its Phase 1b combination study by the end of calendar 2025, and NeuroNOS expects to progress from preclinical to a Phase 1 first-in-human clinical trial by the end of 2026. A pivotal clinical trial for LungFit GO (NTM) is anticipated in calendar year 2026, pending funding. The company is actively pursuing strategies to mitigate going concern risks, including capital conservation and seeking additional financing.

Management Comments

• Management believes that there is a high unmet medical need for patients suffering from certain severe lung infections that the LungFit platform can potentially address.
• Management believes the U.S. sales potential of LungFit PH to be approximately $350 million and worldwide sales potential to be approximately $700 million or greater.
• Management anticipates significant contribution to revenues in fiscal 2026 and beyond from new and future international partnerships for LungFit PH.
• Management believes that current FDA-approved NO vasodilation treatments would have limited success in treating microbial infections given the low concentrations of NO being delivered (<100 ppm).
• Management believes that the entirety of data at 150 ppm 160 ppm NO in both adult and infant patient populations supports further development of LungFit PRO in a pivotal clinical trial for patients hospitalized with VCAP or bronchiolitis.
• Management believes the U.S. market potential for bronchiolitis to be greater than $500 million and worldwide market potential to be greater than $1.2 billion.
• Management believes the U.S. sales potential for NTM to be greater than $1 billion and worldwide sales potential to be greater than $2.5 billion.
• Management believes the NTM study breaks new ground by showing the potential for the company's at-home generator-based system to be used safely and consistently by this patient population in a real-world setting.
• Management is confident that efforts to arrange financing will enable them to meet the company's obligations, despite substantial doubt about continuing as a going concern.
• Management believes the existing facilities are in good operating condition and are suitable for the conduct of its business.

Industry Context

Beyond Air operates in the highly competitive biotechnology, pharmaceutical, and medical device industries, facing established players like Mallinckrodt (INOMAX), Linde Group (NOxBOX), Air Liquide (KINOX), and VERO Biotech (GENOSYL DS) in the NO therapy space for PPHN. The company differentiates itself with its LungFit platform's ability to generate NO from ambient air and deliver higher concentrations (up to 400 ppm) for potential antimicrobial applications, an area where no FDA-approved therapies exist. Its oncology (Beyond Cancer) and neurology (NeuroNOS) programs are exploring novel, gas-based therapies and nNOS inhibitors, respectively, in areas with limited or no FDA-approved treatments, positioning them as potential first-in-class solutions if successful. The industry is characterized by intense competition, rapid technological change, and significant regulatory hurdles, with larger competitors possessing substantially greater financial and marketing resources. The increasing emphasis on cost-containment and HTA in Europe also puts pressure on pricing and reimbursement for new medical products.

Comparison to Industry Standards

• LungFit PH is the first FDA-approved system using patented plasma pulse technology to generate on-demand NO from ambient air, offering competitive advantages over current standard NO delivery systems like Mallinckrodt's INOMAX, which require high-pressure cylinders and cumbersome procedures.
• LungFit PH's ability to generate NO from ambient air eliminates the need for high-pressure cylinders, a logistical and safety advantage over competitors like Mallinckrodt, Linde Group, Air Liquide, and VERO Biotech.
• Beyond Air's LungFit platform can deliver NO at concentrations >100 ppm, which the company believes has the potential to eliminate microbial infections, a capability not present in current FDA-approved NO vasodilation treatments (<100 ppm) from competitors.
• The company's preclinical and pilot clinical trial data for high concentration NO in viral pneumonia and NTM lung infection suggest potential efficacy in areas where current FDA-approved NO treatments are not indicated or effective for antimicrobial purposes.
• In the NTM lung infection space, there are no treatments specifically indicated for Mycobacterium abscessus, and current guideline-based approaches involve multi-drug antibiotic regimens with severe side effects, positioning LungFit GO as a potential novel treatment if approved.
• For autism spectrum disorder (ASD), NeuroNOS is developing nNOS inhibitors in an area where there are currently no FDA-approved therapies, indicating a high unmet medical need and potential for a breakthrough if successful.
• Beyond Cancer's UNO therapy for solid tumors is considered novel medical science, as no such gas-based therapy has been approved for commercialization by the FDA or other regulatory agencies to date, contrasting with traditional oncology treatments.

Management Changes

Corporate Governance

Legal Proceedings

• The company is involved in various legal matters arising in the normal course of business, but does not expect the outcome to have a material effect on its financial position, cash flows, or results of operations.
• The company and Circassia entered into a settlement agreement on May 25, 2021, resolving all claims and mutually terminating their previous agreement, with the company agreeing to pay $10.5 million in three installments (all paid as of March 31, 2025) and a 5% quarterly royalty on LungFit PH net sales in the U.S. until $6.0 million is paid.

Related Party Transactions

• On November 1, 2024, the Company entered into a Loan and Security Agreement for a secured loan of $11.5 million with certain lenders, including its Chief Executive Officer Steven Lisi and director Robert Carey.
• On September 26, 2024, the Company entered into a securities purchase agreement (Securities Purchase Agreement II) with certain institutional and accredited investors, including certain directors and officers of the Company, for gross proceeds of $20.6 million (which included $2.0 million from related parties).
• Members of the Board of Directors and certain executives of the Company are considered related parties to the September 2024 offering.
• Related parties invested $1.1 million in the 2021 Offering for Beyond Cancer, where Beyond Air retained 80% ownership.
• The Loan Agreement with Steven Lisi and Robert Carey was approved by the Company's independent and disinterested directors, following a recommendation from an independent investment bank.

Stakeholder Impact

• **Shareholders**: Face significant dilution risk from ongoing capital raises (equity offerings, warrants) and potential future capital needs. The Nasdaq delisting risk could severely impact liquidity and stock value. The going concern doubt raises fundamental questions about the long-term viability of their investment. The new loan agreement's royalty interest could impact future profitability available to shareholders.
• **Employees**: Subject to staffing level reductions (over 30% across the company) as part of capital conservation strategy. Stock option repricing aims to re-incentivize, but overall financial instability could affect morale and retention. The company's dependence on a small number of key employees and consultants highlights their critical role.
• **Customers (Hospitals/Medical Facilities)**: Benefit from the commercialization of LungFit PH, which offers a novel NO delivery system with competitive advantages. New distribution agreements expand access to the product. However, the company's financial instability could pose long-term concerns regarding product support and supply continuity.
• **Suppliers/Contract Manufacturers**: The company's reliance on a limited number of third-party manufacturers, including a sole source for 85% of materials, creates dependency. Financial instability could impact payment timeliness or future order volumes.
• **Creditors (Lenders)**: The new $11.5 million secured loan provides a high interest rate (15%) and an 8% royalty on net sales, offering a potentially attractive return, but is secured by substantially all of the company's assets, indicating high risk. The extinguishment of the previous Avenue Capital loan demonstrates the company's efforts to manage debt, but also the need for new financing.

Next Steps

• Beyond Air will continue to refine its commercialization efforts for LungFit PH in the U.S. and establish a more complete sales and marketing organization to become a market leader.
• The company plans to partner with third parties to commercialize LungFit PH outside the U.S.
• Beyond Cancer will continue to accelerate ongoing preclinical work, including IND-enabling studies, and complete its Phase 1 clinical trial, with a Phase 1b combination study protocol approved.
• NeuroNOS expects its program to progress from preclinical to a Phase 1 first-in-human clinical trial by the end of 2026.
• Beyond Air anticipates commencing a pivotal clinical trial for LungFit GO (NTM) in calendar year 2026, pending funding and discussions with the FDA.
• The COPD program remains in the preclinical stage and will move forward subject to obtaining additional financing.
• The company is evaluating options for regaining compliance with Nasdaq's minimum bid price rule, including a potential reverse stock split.
• Management will continue to actively pursue strategies to mitigate going concern risks, including capital conservation and securing additional equity and/or debt financing.

Key Dates

Recommendation

Keywords

Nitric Oxide, LungFit PH, PPHN, Medical Device, Biopharmaceutical, Pulmonary Hypertension, Neonates, FDA Approval, CE Mark, Beyond Cancer, Solid Tumors, UNO Therapy, NeuroNOS, ASD, Neurological Conditions, Clinical Trials, Nontuberculous Mycobacteria, NTM, Viral Lung Infections, Bronchiolitis, COPD, Going Concern, Capital Raise, Nasdaq Delisting, SEC Filing, Healthcare, Biotech