10-Q: Beyond Air Reports Q3 2024 Results, Revenue Growth and Strategic Updates

Beyond Air, Inc. reported its financial results for the third quarter of fiscal year 2024, highlighting revenue growth and strategic advancements in its nitric oxide technology platform.

Summary

• Beyond Air, Inc. reported a net loss of $17.258 million for the three months ended December 31, 2023, and a net loss of $49.739 million for the nine months ended December 31, 2023.
• The company generated revenue of $391,000 for the three months ended December 31, 2023, and $689,000 for the nine months ended December 31, 2023, compared to no revenue in the same periods of the previous year.
• Operating expenses were $16.606 million for the three months ended December 31, 2023, and $49.578 million for the nine months ended December 31, 2023.
• The company's cash, cash equivalents, and marketable securities totaled $31.3 million as of December 31, 2023.
• Beyond Air has various funding options in place to raise additional capital, including a debt line of $22.5 million with Avenue Capital and an ATM sales agreement with $34.3 million of available funds.
• The company is also exploring options to leverage assets such as Beyond Cancer, Autism, LungFit PH ex-US partnerships, LungFit PRO ex-US partnerships and LungFit GO partnerships.
• The company expects to incur net losses and have significant cash outflows for at least the next eighteen months, including making significant investments in research and development.

Sentiment

Score: 4

Explanation: The document highlights some positive developments, such as revenue growth and clinical trial progress, but the significant net losses, reliance on external funding, and various risks and uncertainties create a negative sentiment overall.

Positives

• The company has commenced marketing LungFit PH in the United States for PPHN as a medical device.
• The company has made progress in clinical trials for VCAP, bronchiolitis, and NTM lung infection.
• Beyond Cancer's UNO therapy has shown promising preclinical results in treating solid tumors.
• The company has secured a loan and security agreement with Avenue Capital for up to $40 million.
• The company has an ATM sales agreement with $34.3 million of available funds.
• The company has a diverse pipeline of product candidates and is exploring multiple therapeutic applications of its nitric oxide technology.

Negatives

• The company has incurred significant net losses, with a net loss of $17.258 million for the three months ended December 31, 2023, and $49.739 million for the nine months ended December 31, 2023.
• The company's cost of revenue exceeded revenue, primarily driven by costs of supply chain infrastructure and depreciation of devices.
• The company is dependent on third-party suppliers and, in some cases, single-source suppliers.
• The company is subject to risks common to development and early-stage medical device companies.
• The company's operations could be disrupted by armed conflicts, terrorist activities or political instability involving Israel.
• The company has a financial covenant requiring it to maintain $5.0 million in unrestricted cash.

Risks

• The company's ability to successfully commercialize its LungFit PH system in the U.S. is uncertain.
• The company's ability to obtain CE Certificate of Conformity to CE mark LungFit in the European Union (the EU) is not guaranteed.
• The company expects to incur losses for the next few years.
• The company's ability to predict accurately the demand for its products and to develop strategies to address markets successfully is uncertain.
• The company's products may contain undetected errors or defects or otherwise not perform as anticipated.
• The company's future capital needs and its need to raise additional funds are uncertain.
• The company's ability to build a pipeline of product candidates and develop and commercialize its approved products is not guaranteed.
• The company's ability to enroll patients in clinical trials, timely and successfully complete those trials and receive necessary certifications or regulatory approvals is uncertain.
• The company's ability to maintain its existing or future collaborations or licenses is not guaranteed.
• The company's ability to protect and enforce its intellectual property rights is uncertain.
• The company is subject to federal, state, and foreign regulatory requirements, including the U.S Food and Drug Administration (FDA) regulation of its approved product and product candidates.
• The company's ability to obtain and retain key executives and attract and retain qualified personnel is uncertain.
• The company's ability to successfully manage its growth, including as a commercial-stage company, is uncertain.
• Conditions in Israel may materially and adversely affect the company's business.

Future Outlook

The company expects to incur net losses and have significant cash outflows for at least the next eighteen months, including making significant investments in research and development. The company anticipates completion of the VCAP clinical trial in the second quarter of calendar 2025 and commencing a pivotal clinical trial for NTM in calendar year 2025. The company also expects the nNOS program to progress into a phase 1 first-in-human clinical trial in calendar year 2025.

Management Comments

• Management believes that the efforts to arrange financing will enable them to meet the company's obligations.
• Management is confident that the various funding options in place will enable them to raise additional capital.

Industry Context

The company operates in the medical device and biopharmaceutical industry, focusing on nitric oxide technology. The company's LungFit platform competes with existing nitric oxide delivery systems, and its development programs target unmet medical needs in areas such as PPHN, viral pneumonia, bronchiolitis, NTM lung infection, and solid tumors. The company's nNOS inhibitor program targets the neurological conditions market, specifically autism spectrum disorder.

Comparison to Industry Standards

• Mallinckrodt Pharmaceuticals reported sales of NO were $339.7 million in 2022, with ~90% in the United States, indicating a significant market for nitric oxide therapies.
• The company believes the U.S. sales potential of LungFit PH in PPHN to be approximately $350 million and worldwide sales potential to be approximately $700 million, suggesting a substantial market opportunity.
• The company estimates the U.S. market potential for viral pneumonia to be greater than $1.5 billion and worldwide market potential to be greater than $3 billion, indicating a large addressable market.
• The company estimates the U.S. market potential for bronchiolitis to be greater than $500 million and worldwide market potential to be greater than $1.2 billion, highlighting a significant market opportunity.
• The company estimates the U.S. sales potential for NTM to be greater than $1 billion and worldwide sales potential to be greater than $2.5 billion, indicating a substantial market opportunity.
• The company's focus on high-concentration nitric oxide delivery for microbial infections differentiates it from current FDA-approved NO vasodilation treatments, which use lower concentrations.

Legal Proceedings

• In April 2023, the company paid a total of $7.6 million including damages and interest in satisfaction of judgment in resolution of the Empery Suit.
• The lawsuit with Hudson Bay Master Fund was settled in July 2023 and $3.1 million was paid for defense and indemnity costs.

Stakeholder Impact

• Shareholders are impacted by the company's net losses and the need for additional funding.
• Employees are impacted by the company's growth and development programs.
• Customers are impacted by the company's commercial launch of LungFit PH and the development of new therapies.
• Suppliers are impacted by the company's reliance on third-party vendors.
• Creditors are impacted by the company's debt obligations and financial covenants.

Next Steps

• The company expects to receive CE mark under the Medical Device Regulation (MDR) in the EU during the first half of calendar 2024.
• The company anticipates completion of the VCAP clinical trial in the second quarter of calendar 2025.
• The company anticipates commencing a pivotal clinical trial for NTM in calendar year 2025.
• The company expects the nNOS program to progress into a phase 1 first-in-human clinical trial in calendar year 2025.
• The company expects to present data from the completed phase 1a study and commence phase 1b study for Beyond Cancer in calendar year 2024.

Key Dates

Keywords

Nitric Oxide, LungFit, PPHN, VCAP, Bronchiolitis, NTM, Oncology, Autism, Medical Device, Biopharmaceutical