Good afternoon and welcome to the Beyond Air Fiscal Year 2022 Financial Results and LungFit PH Approval Conference Call. [Operator Instructions] And now I would like to turn the call over to Corey Davis from LifeSci Advisors. Please go ahead, sir. You may begin.

Thank you, operator. Good afternoon, everyone and thank you for joining us. Today, after market close, we issued a press release announcing FDA approval for LungFit PH and a press release announcing the company’s fiscal fourth quarter and year end 2022 operational highlights and financial results. Copies of these press releases can be found on the Investor Relations page of Beyond Air’s website. 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 purposes of the Safe Harbor provisions of the Private Securities Litigation 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.beyondair.net. Furthermore, the content of this conference call contains time-sensitive information that is accurate only as of the date of the live broadcast, June 28, 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 Fatkin, Chief Commercial Officer; and Douglas Larson, Chief Financial Officer, Beyond Air. With that, I will turn the call over to Steve Lisi. Steve, go ahead.

Thanks, Corey, and good afternoon to everyone joining us today. Given the timing of PMA approval, coinciding with our fiscal year earnings call, I would like to begin with some slides focusing on LungFit PH, after which I will provide an update on our pipeline and Doug will go through the financials. I am very happy to finally state that LungFit PH has received FDA approval for the treatment of term and near-term neonates with hypoxic respiratory failure commonly referred to as persistent pulmonary hypertension of the newborn or PPHN. I hope the old saying is true that the first time is the toughest, because this was a Herculean task over the last 2.5 years. What an amazing group of engineers, regulatory and quality people, respiratory therapists and everyone who made this happen at Beyond Air. LungFit PH is the first and only FDA-approved nitric oxide generator that can safely deliver unlimited on-demand nitric oxide generated from ambient air to ventilated patients. Our product eliminates the complexities associated with cylinder-based systems. We believe LungFit PH will transform nitric oxide therapy. And this is only the beginning for us as a company, as we have developed a portfolio of devices around our platform technology that we believe are capable of treating numerous indications. Our patented ionizer technology is used in all of LungFit family devices that you see here. Our engineering team is the team that brought the world the first NO Delivery System over 20 years ago and has been innovating ever since. Beyond Air is the only company dedicated to harnessing the power of nitric oxide and this approval is evidence of our leadership. This is an overview of our ionizer where the magic happens. LungFit PH has two ionizers with the second acting as they are built in…

Thanks, Steve, and good morning to our investors. I am extremely excited that we have finally achieved this groundbreaking approval and that I will have the privilege of leading the commercial team tasked with fulfilling the enormous potential for LungFit PH. We are fortunate to have gathered a highly experienced team to support this launch, including our field-based leadership shown here. Rebecca Van Doren, Head of Sales, joined our organization last year and has a proven track record of building and leading sales organizations, specifically in the nitric oxide industry. Rebecca has gathered an outstanding group of regional managers, all with nitric oxide experience to lead our efforts during the initial phase of our LungFit PH launch and our customer outreach, which begins today. Jeff Griebel, joined Beyond Air at the end of last year and is responsible for our clinical services team in the U.S. Jeff is a registered respiratory therapist with a distinguished record in the nitric oxide industry and is well known to key opinion leaders and customers in the U.S. Jeff has gathered a group of respiratory therapists to lead our clinical training and education program as we introduced LungFit PH to the market. In addition, we are also fortunate to have strong leaders to support this field-based activity, all of whom have many years of experience in the nitric oxide industry. We are very pleased with the team we have gathered and confident this will help us quickly access key decision-makers. As we now look at LungFit PH as the commercial product, we believe more than ever that the benefits of the LungFit PH design have the power to transform the way nitric oxide is delivered to patients in the U.S. As Steve mentioned, LungFit PH is the first and only FDA-approved system that generates…

Thanks, Duncan. Before we discuss our pipeline, I just want to emphasize what this slide states. Everyone at Beyond Air and those that use nitric oxide on a regular basis know that this is the start of the NO revolution, and it will significantly improve medical practice. Congratulations to the Beyond Air team for this amazing achievement. Now on to our pipeline discussion, where I will begin with our 12-week multicenter open-label LungFit GO NTM lung infection pilot study. As you may recall, in December of 2020, we began screening for refractory NTM patients for this pilot trial in Australia. And we released positive interim safety data on the first eight refractory NTM patients enrolled in 2021. This was followed up in May 2022 when we presented updated interim data at the American Thoracic Society International Conference. At the time of the data cut off on April 4, 2022, we reported that a total of 15 refractory NTM patients had been titrated up to the maximum dose of 250 parts per million nitric oxide in the hospital and then sent home to self-administered therapy. There were no dose reductions, no treatment-related discontinuations and generally high compliance following a total of 2,323 self-administered inhalations at home using the LungFit GO device. Methemoglobin and nitrogen dioxide concentrations. The two key safety markers remain within acceptable ranges in all subjects during NO treatment below the safety thresholds of 10% and 5 parts per million, respectively. Most importantly, in addition to the strong safety and tolerability data, patients reported quality of life benefits from receiving the at-home NO treatment in the majority of quality of life endpoints with the most improved benefits being NTM symptoms and digestive symptoms. The totality of these data will be used to evaluate efficacy measures, including quality of life,…

Thanks, Steve. Our financial results for the fiscal year, which ended on March 31, 2022, are as follows: Revenue for the fiscal year ended March 31, 2022, was zero as compared to $0.9 million for the fiscal year ended March 31, 2021, all of which was licensing revenue. Research and development expenses for the fiscal year ended March 31, 2022, were $11.8 million compared to $12.6 million for the fiscal year ended March 31, 2021. General and administrative expenses for the fiscal year ended March 31, 2022, increased to $18.4 million from $10.5 million for the fiscal year ended March 31, 2021, mainly due to the structural investments required to prepare the company for a commercial launch in the U.S. Other operating expenses for the fiscal year ended March 31, 2022, were $10.5 million, entirely related to the contingent liability for the Circassia settlement from May of 2021. Other income and expense for the fiscal year ended March 31, 2022, was a loss of $3.4 million compared to $0.7 million for the fiscal year ended March 31, 2021. If you recall, in the third fiscal quarter of 2022, the company recorded an estimated liability for contingent loss related to a lawsuit for $2.4 million. For the fiscal year ended March 31, 2022, the company had a net loss of $44.1 million of which $43.2 million or $1.68 per share was attributable to the shareholders of Beyond Air, Inc. compared to a net loss of $22.9 million or $1.27 a share for the fiscal year ended March 31, 2021. As of March 31, 2022, the company had cash and cash equivalents of $80.2 million. We believe this cash is sufficient to fund operations well beyond the next 12 months, including through the initial commercial launch phase of LungFit PH in the U.S. And with that, I’ll hand the call back to Steve.

Thanks, Doug. Operator, we are now ready for Q&A.

[Operator Instructions] Our first question comes from the line of Matt Kaplan with Ladenburg Thalmann. You may proceed with your question.

Hi, Steve, congratulations on the approval. Terrific news today.

Thanks, Matt.

I guess I wanted to get into kind of the 3-phase launch. And maybe you can give us a little bit more detail with respect to the market size in each of those phases that you’re potentially addressing as you phase out the launch?

Okay. So obviously, the third phase will be the entire market. That’s easy. And you have to look at it more – we look at it more in terms of the hospitals themselves, not necessarily the revenues. And we’re looking for hospitals in this first phase that are high users, let’s say, above a certain number of hours per year so that they have a lot of experience with their team, so we can learn from them as we train them. So we can be better as we go out to the broader market. So that first phase is going to be what we would consider fairly high-volume hospitals. So let’s say, a hospital in Phase 1 is going to be worth multiples of a hospital in Phase 3. And Phase 2, you could have hospitals that are more closer to Phase 3 or closer to Phase 1. It’s just going to depend on how contracts are ending up with respect to how long they are locked in for, so to speak. Remember, there will be hospitals that are coming off contract every quarter for the next 3 years and some of these contracts can last that long. I’ll let Duncan expand upon this if you like to.

Sure. Thanks for the question, Matt. Yes, I think we said in our prepared remarks that the first phase is we’re targeting about 20% of the hospitals. And as Steve said, we’re really focused on the hospitals that have the experience that we need, so that we fully test our logistical process. We get the experience of the actual clinical use of the device. And then we’re going to expand as soon as we’re confident that everything is working as planned. So we really don’t see any constraint because as we mentioned, contracts are coming off all the time, and we don’t think we’re going to be limited by the number of hospitals that we’re going to be targeting. So I hope that answers your question.

No, that’s great. Thanks for all the detail. And I guess looking at this as kind of proof of concept that you can get this new technology approved. Just thinking about the pipeline, a little bit, Steve, maybe you can help us understand kind of the next steps for LungFit GO. You’ve got the pilot NTM study ongoing. What do you see as the net steps in NTM and development there?

Yes. Thanks, Matt. We have to wrap up the study. Our last patient last follow-up is going to be in August at some point. And then as you know, we will have to get all the data in-house analyzed and so forth and we will go to FDA. Since we’re a medical device, we use a pre-sub meeting instead of a pre-IND. This will be a pre-submission meeting, and we will sit down with FDA. It will probably happen in the first half of next year. It takes time to put the data together, submit and then they have time to schedule a meeting with us. And in that meeting, we will discuss with them what the next steps are. And hopefully, those steps are going to be pretty straightforward and clear. You never know, there might be some things we need to clear up for FDA before we go into the next study in the U.S. But I think we’re guiding to begin that study in 2024, and we feel very comfortable with that guidance. If it can be sooner, we will see. But I think that’s when the next study should be beginning is a 2024 start.

Okay. And that will potentially be a pivotal type study that you would be able to file for approval of the device?

Yes, that’s our intention. We need to speak with the FDA first, but our intention is to try to make it a pivotal.

Okay, great. And then just last question Beyond Cancer, can you give us a little bit more detail in terms of the Phase 1 study and what we should look for there as you get that underway?

Well, we’re over for business. You saw that in our press release. So we’re open for screening of patients and we would anticipate announcing the first patient dosed very shortly. So we’re looking for safety. This is the first in-human study. So we’re looking for safety in a small number of patients. And Matt, if we can – we will be looking at biomarkers, of course. And if we see any movement in these biomarkers on the immune system in a positive direction, that would just be kind of gravy on top of the safety data that we intend to gather. So, again, safety is the main point of this Phase 1 study, and we will be looking for efficacy from a biomarker perspective. And if we can see that, that would – it would really be something special.

Congrats again on the approval. Great news. Thanks for taking my questions.

Thanks.

Our next question comes from the line of Suraj Kalia with Oppenheimer. You may proceed with your question.

Good afternoon, Steve. Can you hear me alright?

Yes. Yes. Thanks, Suraj.

Perfect. Hey, congratulations to you and your team on the long overview approval. So, Steve, three questions from my side. The first one is a multipart question. For the initial launch of PPHN, the 8 to 10 sites that you all have been referencing for some time. Give us some guideposts in terms of how the conversations are going? How do you expect PH to be rolled out in terms of cases over the remainder of the year? What are the bogeys you are looking out for a broader launch beyond this case? And more specifically, maybe if you could just also the 850 NICUs that you all had referenced earlier, how does utilization look like in your three phases? How should we think about that? Sorry, a multipart question, but hopefully, you got the gist of it.

I will just talk about the bogeys and I will let Duncan go through the rest. So, the bogeys for us, in broad terms, we are looking to make sure that our training methods are honed and perfect and we have a very experienced team. But again, this is a generator. It’s a brand-new device, and we need to make sure that we are training everyone in the best manner. So, we are going to look for ways to optimize our training methods. I think we have done a hell of a job on optimizing it prior to launch, but we don’t want to be cavalier about this. Second, we want to make sure that our supply chain, our 3PL, everybody is doing well and everything is running smoothly. There are metrics that we use to look at this, but it’s very important that when we go from a dozen hospitals to 300, we have to make sure that supply chain is ready for that and our 3PL is ready for that. In addition, our team, our back office team, our operations team is ready for it as well. So, these are the things that we are looking for to kind of check the box to move to that next level. We don’t have any concerns about this, Suraj. I don’t want to give the impression that we have any concerns about our ability to do this. I think it’s the prudent thing. Everybody on our team thinks the prudent way to go is to have a measured launch in the first six months to nine months to make sure that we have got any kind of bugs ironed out if there are any.

Yes, Suraj, just to add a little bit of color. I mentioned that we focused on the experience of the leadership team because we think it’s really important. These – Rebecca and Jeff have incredible teams that they have brought together and a significant amount of experience of dealing with a lot of hospitals that we will be speaking to. And we are very confident in their interest and enthusiasm for the product that they have been contacting us routinely over the last several months and even beyond that, they are planning to visit with us at the conferences that we are lining up for the rest of this year. And we have a virtual demonstration room set up as well as, obviously, now we can physically go and talk to people directly. So, they are looking forward to seeing another alternative on the market, eliminating cylinders as far as they can. And in terms of utilization, this group of incredible experienced professionals, particularly on the clinical side, will help them through their evaluation of the system and then hopefully, we will get into contracting very soon. So, the utilization is going to be initially controlled by us because we want to deal with everything that Steve just mentioned. And then once we are confident in everything that’s working both clinically and logistically, then we start to release the valve and will expand and we will see utilization rapidly increase at that point.

Got it. I will ask both my questions, Steve, and I will hop back in queue. Duncan, I missed your comments about the CE mark status and timeline? And Steve, maybe if you could just expand on how you are now thinking about the moat around real-time on-demand NO, non-cylinder-based NO now that you have the first PMA in hand, more indications. Just kind of walk us through how you are thinking about the regulatory and intellectual moat around your technology. Gentlemen, congrats again and thank you for taking my questions.

Thank you. I think CE mark, we were pretty clear. It’s a second half event. So, there is not much more to say there. We – our resources were focused on FDA approval. So, we didn’t have the resources to keep the CE mark process on the track that we had originally hoped to. But I think we are pretty happy with FDA approval. So, it’s a small sacrifice on the timing on CE mark. As for our moat, as you call it, we are always very confident in our patent portfolio around our generator. We are growing even more confident with some things that have happened in the last few months. And with a PMA approval, as you know, Suraj, PMA approval is something that happens about 25 times, 30 times a year in the U.S. So, it’s not a frequent occurrence, and it is certainly a barrier to entry to others who try to come down this route. So, others will have to follow us with a PMA just as we did. So, we are obviously more confident now that we have approval that it’s going to be that much harder for anyone to come with the generator. But again, I think the most important barrier to entry to others is our patent portfolio. We do believe it will be very difficult for anyone to get around our patents with respect to our generator, especially in the high concentration area. I don’t think anybody is going to be able to come in at 150-plus parts per million with a generator given our portfolio. That’s our opinion. I am sure others will have a different one, but let’s see what happens as it unfolds over the next 10 years. With respect to the PPHN, we don’t know of anybody else who is coming. We have heard lots of rumors, but so far, we are the only game in town. So, first-mover advantage is very important in the medical device. So, we are quite happy with it. We think there are barriers up, and we will have to wait and see what unfolds. But we are very, very confident.

Thank you.

Our next question comes from the line of Greg Fraser with Truist Securities. You may proceed with your question.

Hi. Good afternoon both. Thank you for taking the question. Congrats on the approval. Can you remind us how much of the current nitric oxide market is cardiac surgery? And what’s the pathway to expand the label into that area?

Yes. So, it’s about 70-30 split, 70% being the cardiac. That’s a rough estimate. So again, there is no real data on that, Greg. It’s just kind of best guess. So, the pathway to get cardiac on label is just going to FDA and talking to them about that pathway and then making a submission. We believe that we will be able to make an official submission or PMA supplement for that indication prior to the end of this calendar year. That’s our goal.

Got it. And then when you move into the Phase 2 of the launch, by how much do you plan to expand the commercial team?

Well, I will let Duncan handle that question.

Yes. Thanks for the question, Greg. The good news about the nitric oxide business is, firstly, there is a pretty well-established use of nitric oxide in some very experienced hospitals. So, it actually doesn’t need a large commercial organization. So, even at peak, we don’t expect to be more than around 60 staff. But in the second phase, we expect to be at least half of that fully established team. So, we will be somewhere between the sort of 30 – in the 30s, I would expect, and continuing to grow depending on how the launch is going at that time. And then we will peak somewhere in that 60 zone depending on the level of nitric oxide usage, because there are actually a significant number of hospitals that have backed off on the use of nitric oxide either because they don’t like the current business model or they have limited access to the technology, and we think we can help in both of those areas. So, that’s what we are seeing going forward.

Got it. That’s very helpful. For Europe, have you had preliminary discussions with potential partners, or do you have to wait for the CE mark before engaging with folks?

No. We have spoken to people. I think it’s appropriate to have CE mark before we push on moving forward to definitive terms. But it’s – I wouldn’t say we haven’t talked to anybody. That’s for sure.

Got it. Thanks for taking the questions and congrats again.

Thanks Greg.

Our next question comes from the line of Yale Jen with Laidlaw & Company. You may proceed with your question.

Good afternoon. Thanks for taking the questions again and my congrats on the approval. Maybe if we just little bit look backward to see that what were the major sort of hurdle during the last few months before you get approval, was something specific or anything you can talk about?

Yes, I don’t think I can really reveal that what the issue was, just keep that between us and the FDA, I think it’s the best thing to do. But it was clearly resolved and we are very happy. And we are happy that FDA was working with us.

Okay. Great. That’s helpful. Maybe two more questions here. The first one is that on the slide, you show that the current market is about 408 – the estimate about $480 million versus it was $500 million before hand, presumably due to some price erosion. What’s the general thought you guys have in terms of going forward? Is this price erosion start to stop or change or maybe even reverse?

Yes. I think the price, as we sit here today, it’s probably fairly stable. I don’t see much decline on the price going forward. I don’t know if I would predict a rise back up in price. I wouldn’t say that. But I do think that in 2022 for this full year, you might see a little more softening that $480 million number may come down, just a little bit, 5%, 10% more. Recall that there was an increase in nitric oxide usage during the pandemic. So, I think that 2020 and 2021, while there was a price decline in those 2 years, I think the volume due to the pandemic offset that quite a bit. So, I wouldn’t – so us as a company, as a team, we don’t think that the volumes we saw at the peak of the pandemic are going to be maintained. But we also don’t think you are going to lose 100% of that volume you saw during the pandemic. We think that there seems to be a place for nitric oxide in these patients who are hospitalized for COVID or COVID-like conditions. So, we don’t know exactly where it will settle. You will see in our corporate presentation that the new one that should be up this evening that we are calling this a greater than $400 million market. In the past, we had said greater than $300 million. But again, I think we increased usage due to COVID as well as the price did not decline as much as we had anticipated a few years ago. So, we think it’s going to be a $400-plus million market. I don’t know if it’s going to stay up at $480 million, but it should be in the $400 million plus range.

Okay. That’s a very – appreciate it. And two quick ones, one is in terms of the cardiac line expansion. Was there additional – what type of material you need to prepare for getting that in next year? Would that be any kind of study or simply just like the one you just got approval for the NICU?

I hope it’s not as hard as getting the approval for the NICU. But, we haven’t said exactly what we are going to submit to the FDA. So, I am going to hold that information back, yes. If you don’t mind, we don’t want to let anybody know what our exact plans are.

Okay. Maybe the last one is a housekeeping one. In terms of this quarter, there is quite a big jump in a number of lines in operating side in terms of R&D, SG&A. As we are modeling for the next year or next fiscal year, was there any sort of directional guidance you could provide?

SG&A is probably going to go up. I mean we are launching the product, so I would anticipate increases there. Whereas R&D, I don’t really see an increase there to be flattish maybe probably flattish as best we can think give or take. Look, our diseases are seasonal, and we won’t be starting studies until the back half of ‘23. So, the rest of this fiscal year, which ends in March of ‘23, there is really not much going on in the R&D side only because of the seasonality of the conditions that we are attempting to treat. There will be some spend, obviously, in preparation to get things going, the spend to finish up our NTM study. But again, there will be a bump in the fiscal ‘24 timeframe. You will see a bump towards the back half of fiscal ‘24 in R&D spend. That’s when it should start to ramp up with our studies commencing. So, I hope that helps.

Absolutely. And again, I appreciate that all the details. And again, congrats on the long-weighted outcome.

Thanks, Yale. Appreciate it.

Ladies and gentlemen, we have reached the end of today’s question-and-answer session. I would like to turn this call back over to Mr. Steve Lisi for closing comments.

Thank you. Thanks everyone for joining us today. Again, a great day for Beyond Air and our investors. We will be speaking to you soon. Thank you.

This concludes today’s conference. You may disconnect your lines at this time. Thank you for your participation and enjoy the rest of your day.