Greetings, and welcome to Beyond Air, Inc. Second Quarter 2021 Earnings and Corporate Update Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Maria Yonkoski, Head of Investor Relations for Beyond Air. Thank you. You may begin.

Thank you, operator, and good afternoon, everyone. Welcome to Beyond Air's second quarter of fiscal year 2021 earnings call. Speaking on today's call are Steve Lisi, our Chairman of the Board and Chief Executive Officer; and Douglas Beck, our Chief Financial Officer. This morning, we issued a press release announcing the submission of the PMA for LungFit PH to treat persistent pulmonary hypertension of the newborn or PPHN. In addition, after the close, we issued a press release announcing the financial results for the second quarter of fiscal year 2021. A copy of both releases can be found on the Investor Relations page of our website. Before we begin, I would like to remind everyone that comments and various remarks about future expectations, plans, and prospects constitute forward-looking statements for the purposes of the safe harbor provisions under 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. Beyond Air encourages you to review the Company's filings with the Securities and Exchange Commission, including, without limitation, the Company's Form 10-K, which identifies specific factors that may cause actual results or events to differ materially from those described in the forward-looking statements. As a reminder, this conference call is being recorded. Furthermore, the content of this conference call contains time-sensitive information that is accurate only as of the date of the live broadcast, November 11, 2020. Beyond Air undertakes no obligation to revise or update any statements to reflect events or circumstances after the date of this conference call. With that, I would like now to turn over the call to Steve Lisi, our Chief Executive Officer. Steve?

Thanks, Maria. Good afternoon, everyone, and thank you for joining our call. Before we get started, I wanted to extend a huge thank you and congratulations to every member of the Beyond Air team for the submission of the PMA for LungFit PH to treat persistent pulmonary hypertension of the newborn or PPHN. Despite the difficulties imposed by the ongoing pandemic, our team was able to execute on this critical step, keeping us on track for a U.S. commercial launch in the second calendar quarter of 2021, pending FDA approval. As a reminder, LungFit PH is a lead product from our broader LungFit platform. It is a novel cylinder-free device that is capable of generating nitric oxide, or NO, from ambient air that flows through a reaction chamber where pulses of electrical discharge are created between two electrodes, simulating a lightning strike. The desired concentration of NO is achieved by controlling the voltage and duration of each electrical pulse, giving us the capability to titrate dose on demand or maintain a constant dose for treatment. For PPHN, LungFit PH is designed to deliver a dosage that is consistent with current approved guidelines of 20 parts per million NO, with a range of 0.5 to 80 parts per million. Since nitrogen dioxide or NO2 is a toxic byproduct of NO generation, our proprietary NO2 filters encrypted with RFID chips are required to be securely put in place for the device to generate and safely deliver NO. Our smart filters serve as the razor in our razor-blade model. Overall, the LungFit PH is a much smaller and lighter alternative than the traditional fixed supply cylinder-based systems. It is important to note that our system operates with any standard electrical outlet. We believe that the removal of the cylinder makes it a more cost-effective, convenient, and safe alternative for patients and medical staff. I would like to now pivot slightly and discuss our initial target indication. PPHN is a serious breathing condition that occurs at birth when a newborn's circulatory system is unable to adapt to breathing outside the womb. The newborn's lung vessels or blood vessels are so constricted that oxygen and blood flow are restricted, and manual ventilation is required. Since FDA approval in 1999, NO has been the standard of care for PPHN in the U.S., acting as a pulmonary vasodilator to improve oxygenation and reduce the need for ventilation. We estimate there are over 850 level 3 and level 4 neonatal intensive care units or NICUs that are equipped for NO delivery to treat PPHN today. According to published reports, the use of NO in hospitals had sales of greater than $500 million in 2019 in the United States alone. Additionally, NO has been approved for PPHN in Europe since 2001, with a subsequent label expansion for use in certain cardiovascular surgeries. More recently, NO received regulatory approval in Australia and Japan for pulmonary hypertension in conjunction with heart surgery, further expanding NO use to the worldwide cardiac market. From a commercial perspective in the U.S., cylinder systems have dominated for the past 20 years, dominated by one company, until new players recently entered the market. These new players have the same, if not more disadvantages when compared to our LungFit PH. As I mentioned before, we believe that our novel technology has many advantages over the current standard. First of all, our ability to generate NO from ambient air eliminates the space requirements and NO volume limitations of cylinders. In today's environment, hospitals are left to shoulder the burden, as each cylinder can weigh up to 45 pounds and require special storage. Instead, our system relies on safely disposable smart filters that weigh approximately 2.5 ounces and last for 12 hours of continuous use. To be clear, our systems will not work without a filter in place, confirmed by the RFID technology, preventing both NO2 toxicity and protecting our business model. Additionally, our smart filter design ensures that hospitals are only charged for what they use, which is an advantage over some of our competitors that employ more aggressive pricing strategies. From a manufacturing perspective, our fixed costs are significantly lower than our competitors because we do not have any expenses associated with manufacturing, logistics, and transport of NO cylinders. Finally, our user interface is designed to be easy to use for providers, and we also avoid purging procedures, which both reduce the training burden. Overall, operating economics and safety are vastly improved for the hospital. If approved, after the 180-day FDA review period, the Beyond Air team will be ready for a U.S. commercial launch in the second quarter of 2021. We will discuss our commercial plan in greater detail as we approach this next milestone. Commercial launches outside of the U.S. are dependent on our ongoing partnering discussions and approval timelines in each jurisdiction. Moving on to acute viral pneumonia and COVID-19. We see a significant opportunity to use our novel LungFit platform technology to target acute viral pneumonia, including infections caused by SARS-Cov-2. LungFit PRO is a direct delivery, non-ventilated compatible system for use by an appropriate medical professional. It is designed to deliver NO at a concentration of 150 parts per million for 40 minutes four times per day, which can be easily adjusted for other indications. LungFit PRO was previously referred to as LungFit PRO, named after our bronchiolitis program, has since been renamed because this device is applicable to many indications in the hospital setting. Nitric oxide is well understood to have an inhibitory effect on many viral infections. Beyond Air and the broader scientific community have published data that show nitric oxide's ability to inhibit the replication cycle of coronaviruses, including severe acute respiratory syndrome, otherwise known as SARS-Cov. In vitro. In fact, in October, we presented our new positive in vitro data at the CHEST Annual Meeting 2020 that show anticoronavirus properties against OC43 human coronavirus when administered either prior to or post-infection at 150 to 250 parts per million nitric oxide. We believe this data suggests that the LungFit PRO system may be effective for both prevention and treatment of human coronavirus infection at the 150 PPM dose. I'd like to provide an update on our clinical program in this indication. We have previously announced that we received approval from the FDA to run a study in COVID-19 patients using our LungFit system at 80 parts per million. We've also received approval from Health Canada to run a similar study to the one approved by the FDA. The results from these studies, along with other data, have enabled us to receive approval from the Israeli Ministry of Health to perform a clinical study at 150 parts per million for the treatment of acute viral pneumonia, including COVID-19. The study is a multicenter, open-label, randomized clinical trial targeting approximately 90 adult patients with an emphasis on patients infected with SARS-CoV-2. Enrolled patients will be randomized in a one-to-one ratio to receive inhalations of 150 parts per million nitric oxide, given intermittently 40 minutes four times per day for up to seven days in addition to standard supportive treatment or standard supportive treatment alone. Endpoints related to safety, oxygen saturation, fever, and ICU admission, among others, will be assessed. This is currently the only active trial that our company is performing in the acute viral pneumonia or COVID-19 setting. We expect to begin screening patients shortly. We anticipate results to be available around mid-year 2021 and will continue to provide updates as needed. Sticking with LungFit PRO, I would like to provide a quick update on our bronchiolitis program. We recently presented data at the Chest Annual Meeting from our bronchiolitis pilot study with a respective multicenter double-blind randomized study that included 87 hospitalized infants. Patients treated with 150 parts per million NO in addition to standard supportive therapy had a statistically significant shortening in time to discharge, the primary endpoint of the study, compared to patients who received 85 parts per million NO in addition to standard supportive therapy or standard supportive therapy alone. We found no statistical difference between the lower dose of 85 parts per million NO and control. Importantly, on the key secondary endpoint of hospital length of stay, the 150 parts per million arm was also statistically significant compared to both the 85 PPM and control arms. All treatments had similar safety profiles and were well tolerated with no serious adverse events associated with nitric oxide therapy. We look forward to publishing these data just as the previous two pilot studies have been published. This is our third consecutive successful study in infants hospitalized with viral lung infections and along with the previous two studies, provide the evidence we need to move forward with a definitive study to establish the efficacy and safety of nitric oxide generated and delivered by our LungFit PRO. The pivotal study for bronchiolitis was delayed due to COVID-19. We are planning on starting a pivotal bronchiolitis study in the fourth quarter of 2021, pandemic permitting. Please note that bronchiolitis is seasonal. I will now provide updates for our LungFit GO, which was previously named LungFit HOME. LungFit GO is a non-ventilated compatible system being developed for home use in non-tuberculous mycobacteria lung infections or NTM. The goal is similar to the PRO, with reduced functionality significantly reducing potential user error. For our LungFit GO program, we are aiming to initiate a single-arm multicenter 12-week self-administered at-home pilot study in 20 patients with NTM lung infection. We had delays due to the pandemic, but are expecting to begin screening patients in December of this year. We are focused on rolling refractory NTM patients infected with either mycobacterium avium complex or MAC or mycobacterium abscessus. Patients we titrated are to the 250 parts per million NO in the hospital over several days and then sent home to complete the 12-week treatment period. The first two weeks will see 40-minute administrations four times per day and the remaining 10 weeks will be twice per day. The study will evaluate safety, quality of life, physical function, and bacterial load. The FDA has emphasized the importance of quality of life improvement and physical function as well as improved safety profile as markers of success versus solely eradication of the bacteria. Based on our current expectations, we expect to report interim data from the at-home study towards the middle of 2021 and final results toward the end of 2021. We recently published data from a compassionate use study performed at the National Institute of Health or NIH using our LungFit system. A 24-year-old female cystic fibrosis patient with chronic and progressive pulmonary mycobacterium abscessus disease was treated with 150 parts per million nitric oxide for three weeks and then subsequently treated with 160 parts per million titrated to 240 parts per million NO five months later. Over the course of the follow-up period, after the first course of treatment that included 150 PPM inhaled NO, the patient had improved respiratory symptoms and quality of life and was able to lead a more active life. The second course of therapy was requested by the patient. This course of treatment with 240 parts per million nitric oxide was stopped on the eighth day for reasons unrelated to nitric oxide therapy. These results demonstrate the potential clinical benefits of NO in the treatment of this patient population, and we look forward to initiating the 12-week pilot study next month. As a reminder, our system is very easy to use, thus our enthusiasm for successful outcomes in the at-home study. I will walk you through the four-step process for an administration. Turn on the power switch, insert the smart filter into the system, place the breathing mask on the face, and press the start button. With a successful study, we believe our LungFit GO system opens the door to a very significant underserved market for chronic severe lung infections that can be treated at home. Last, but not least, we come to our solid tumor program. This program has generated exciting pre-clinical data demonstrating nitric oxide’s ability to elicit an anti-tumor systemic immune response when high concentration gaseous NO or gNO is administered directly to solid tumors. Our hypothesis is that gNO at extremely high concentrations greater than 10,000 parts per million and even up to 200,000 parts per million will cause local cell death when injected into solid tumors, thus exposing tumor antigens to the immune system. This exposure may result in a memory immune response that will recognize and attack subsequent primary tumor regrowth as well as distant metastasis for the same type of tumor, creating a type of in-situ cancer vaccination. This program is early in development and will not use our LungFit platform due to the ultra-high concentrations of NO. We have developed a novel delivery device, which we will discuss at a later date. We are extremely excited about this program, especially since the checkpoint inhibitor market alone sold for $23 billion in revenue in 2019 and is still growing. We have presented our pre-clinical data at three different major conferences this year, including the American Association for Cancer Research or AACR Conference in June, the NACLC for lung cancer, as well as the AACR Subsection Conference on Tumor Immunology and Immunotherapy this past October. Given our goal of systemic anti-tumor immunity, we used a tumor challenge model to test this hypothesis in mice. Simply put, we treated tumor-bearing mice with a single treatment of high concentration gNO intra-tumorally with the intent to cause tumor cell death, not complete tumor ablation. After initial treatment, the remaining primary tumor was surgically removed. A challenged tumor with the same cancer cells as the initial primary tumor was introduced on the opposite side of the body. The percentage of tumor take or tumor regrowth was monitored as well as survival. There were control arms for comparison. In our largest study to date, colon tumor-bearing mice received either 20,000 or 50,000 parts per million gNO. There were 11 mice per arm. Treatment was for five minutes during this first single treatment, and then the mice were inoculated with the challenged tumor 21 days later. At day 45 post-challenge tumor inoculation, zero percent of the colon tumor-bearing mice treated with 50,000 parts per million were observed with a challenged tumor versus 100% of naive mice and 27% of 20,000 parts per million mice. So again, zero percent for 50,000 PPM, 27% for the 20,000 PPM arm and 100% over the naive mice at tumor growth. Similarly designed trials in breast tumor-bearing mice and lung tumor-bearing mice with smaller numbers of mice showed similar trends. To date, we have not observed any safety issues with these experimental models; the possibility of treating solid tumors and potentially treating and preventing metastases may be truly groundbreaking. To our knowledge, ours was the first and only program testing the concept of rejecting high concentration NO gas into solid tumors. Solid tumors and their metastases are responsible for approximately 90% of all cancer-related deaths, and we are humbled by the huge unmet need for these patients. With that, I will now turn the call over to Doug for the financial review. Doug?

Thank you so much, Steve. Here's a brief review of our financial results for the second quarter of fiscal '21, which ended September 30, 2020. Revenue for the quarter ended September 30, 2020, was $350,000 as compared to $646,000 for the three months ended September 30, 2019, all of which was from deferred licensing revenue. Research and development expenses for the quarter ended September 30, 2020, were $3.1 million compared to $2.8 million for the three months ended September 30, 2019. General and administrative expenses for the quarter ended September 30, 2020, were $2.2 million compared to $2.1 million for the three months ended September 30, 2019. For the quarter ended September 30, 2020, the Company had a net loss of $5.1 million or $0.30 per share compared to a net loss of $4.1 million or $0.38 per share for the three months ended September 30, 2019. As of September 30, the Company had cash, cash equivalents, and restricted cash of $22.4 million. This cash is sufficient to fund operations well beyond the next 12 months. I'll now hand it back to Steve.

Thanks, Doug. We'll take questions now. Operator?

Thank you. Ladies and gentlemen, we will now move into the question-and-answer session. Our first question comes from Suraj Kalia with Oppenheimer & Company. Please go ahead with your question.

Good afternoon, Steve. Can you hear me all right?

Yes. How are you, Suraj.

Congrats on your PMA filing.

Thank you.

I understand it's been a lengthy process, but it seems we're nearing its conclusion. Steve, I have several questions. Regarding the 850 level 3 NICUs treating PPHN, could you explain the PPHN volume per center annually? How many staff would be needed? Also, have you determined the pricing for the filters? Furthermore, when should we expect the FDA to review your manufacturing as we prepare for the commercial launch?

There are approximately 850 level 3 and 4 NICUs in the U.S. Additionally, there is off-label use in cardiac surgery, meaning we should consider more hospitals using nitric oxide. I can't provide an exact total, but it could be another 300 to 500 hospitals. The market, as reported by Mallinckrodt, exceeds $500 million, allowing us to estimate volume per hospital. Typically, the top 20% of customers account for about 80% of the market, following the classic 80-20 ratio. This gives you an idea of potential revenues based on the number of hospitals. Regarding the FDA's inspection timeline, they typically conduct a standard review of 180 days. We anticipate a pre-approval inspection in about 90 to 120 days from now, but the FDA will schedule this, not us. We have not yet set prices as we monitor market developments. With newly introduced competitors, we’ve noticed some rational price declines in certain hospitals. Our pricing will align more closely with where competition is already present, rather than the previous monopoly pricing. We're observing these price adjustments as expected and are satisfied with the situation. If I missed anything, please feel free to ask again.

Fair enough. I was just trying to squeeze in a number. So Steve, the market you talked about has a lot happening, right? You tend to disrupt the market when you launch. Can you walk us through the current situation? I mean, one of your key players is going through bankruptcy, and another is lowering prices and trying to adopt the cylinder-based approach. How does that factor in? Please share the touch points or stress points you are considering, as these will influence your pricing and may change the market dynamics as you see it.

I can't comment on what Mallinckrodt is doing or their focus in this market. We have insights from our commercial team about the competition, which seems pretty typical for a new entrant. I don't believe it's significantly affecting our strategy. As you mentioned earlier, our initial sales force will be small and focused on a limited number of hospitals to start. Once we gain more experience, we plan to expand. I don't anticipate needing a large sales team—definitely not approaching 100 people. We understand that hospitals need support, particularly in terms of pricing, which we are already addressing. However, we can offer more than just a lower price; we can also provide savings at the hospital level. Our product requires less space, consumes less time, and simplifies tracking usage, which all contribute to direct cost savings for hospitals. It’s a combination of these advantages that makes our system more appealing. For instance, our system is significantly lighter—65 pounds compared to 175 pounds—and can be easily removed from its cart. Eliminating the cylinder is a major benefit. Different hospital personnel appreciate these changes for various reasons, whether it's respiratory therapists, neonatologists, anesthesiologists, or CFOs. Our focus is on ensuring our system's reliability and providing excellent customer service, which is crucial. We recognize that Mallinckrodt has excelled in customer service, and we are committed to matching that standard. Our Chief Commercial Officer, whom many of you met at our Analyst Day earlier this year, is quite capable, so we feel confident moving forward.

Got it. And Steve, final two questions, I'll hop back in queue. First, does it make sense to still pursue COVID studies, given everything going on with vaccines? So that's one thing. And the second thing, on the solid tumor side, Steve, it's a fascinating approach you and I have talked offline about this, and I appreciate you not wanting to hold off on the details of the delivery device for gNO. I guess my question, Steve, is how do you control the residence time for gNO to achieve a certain clinical response? And is there a limit to the physiologic tumor access with such a device mechanism? Any color there would be greatly appreciated?

Sure. I can't really speak for vaccines. I know what you know from the minimal information released recently. So we'll have to see what happens. I think we've all been in this industry a long time, and I don't think any of us have ever seen anything developed in six to nine months at any level of therapy, let alone a vaccine, but we'll see what happens. And hopefully, this is actually real and will help patients and will help everything get back to normal. But I still think there's a need for treatments. And if you notice in our study, we're not just treating COVID-19, we are treating acute viral pneumonia, which is the broader condition. So acute viral pneumonia can be caused by a number of viruses, as you all know, whether it'd be RSV or coronaviruses or in such where SARS-CoV-2 is a coronavirus. So we will be enrolling all-comers in this study. Obviously, we want focus; we want to have a good number of SARS-Cov-2 infected patients in our study, so we can get a good sample in case COVID does last a lot longer and the vaccines are not as effective as they're claiming to be. So if they are effective, and of course, COVID dissipates, acute viral pneumonia doesn't go away. This has been around for a long time. I don't think we're going to get rid of acute viral pneumonia. So, we're looking at a broader indication and if we could help and COVID, obviously, we will. We think what's going to work and whether it's SARS-Cov-2 or SARS-CoV-1 or RSV or adenovirus or you name it. We don't care what virus it is. We think our therapy is going to be successful. And if we can help with the pandemic, that will be fantastic. We're ready to go. We're ready to go as soon as we're asked. We just need to generate some data, I believe, before anybody is going to ask us. But again, if there's no opportunity in COVID, I believe there's still be an opportunity in acute viral pneumonia, which is quite a large market. So this is why we are embarking upon this study. And again, if we were chose just doing COVID, I would understand your question. It will be a very good question for us to decide whether it's a good use of our resources to go after COVID-only, but that's not what we're doing. We're covering the entire spectrum of viral pneumonia. Regarding cancer, it's certainly very exciting. I appreciate your understanding that we won't delve too much into our delivery system right now. It's not fully optimized yet, but we have a clear idea of what it should be. I can't specify where the limits are at this point, as we are still in the process of identifying them. However, I can confirm that we have observed efficacy, and we haven't encountered safety issues or problems related to excessive nitric oxide. So far, we haven't faced any of these challenges, although that doesn't mean we won't in the future. Our current focus is on optimizing the delivery system and the concentration of nitric oxide, as well as the duration of delivery. This optimization is essential before we move ahead with a first-in-man study, which we aim to undertake by the end of next year with our best approach.

Next comes from the line of Matt Kaplan with Ladenburg Thalmann. Please proceed with your question.

And congrats on the PMA filing.

Thanks, Matt.

Yes. Wanted to zero in on your commercial strategy a little bit for the PPHN indication LungFit PH. You mentioned razor blade being your filter. What are your expectations in terms of the device? Will you sell the device, provide it for free, rent the hospital the device, what's your expectation in terms of that part of the program?

Well, Matt, we haven't completely finalized our approach yet. However, I can share some insights. I don't believe most hospitals will prefer a significant upfront payment to acquire a system, so that doesn't seem like a viable option. Whether through leasing or renting for a nominal fee, the primary focus should be on filters, as I believe that's where most of our revenue will originate. This model seems to be the most favorable for hospitals. Once we receive further feedback from them, especially now that we've submitted our application, we expect they will be more open to discussions about the future. Of course, we can't proceed significantly until we obtain approval, and we must adhere to regulations preventing marketing our product before that time. Nevertheless, I anticipate there will be inquiries from potential customers, and we will respond within the established guidelines for pre-marketed products. I genuinely believe the best approach for hospitals is to view the filters as a pay-as-you-go solution. Think of it like razors; we purchase the handle initially, but the ongoing costs come from buying blades. There could be opportunities for volume discounts based on purchasing options, whether that means buying in bulk or ordering at set intervals. Our aim is to price our filters in a way that aligns with the competitive prices available in the market. Hospitals may currently pay different prices based on market competition, and we need to ensure our pricing model allows them to purchase filters as needed, ideally on an annual basis that aligns with others in the industry. The focus remains on the filters, avoiding substantial upfront costs, which would likely deter many hospitals. We also want to ensure that there are no hidden costs or penalties at year-end, focusing instead on being supportive and beneficial to hospitals.

Right. That's helpful. And then you mentioned kind of a stage rollout. How should we think about that stage rollout into hospitals for starting in the second quarter of next year? And can you give us maybe some of your thoughts in terms of the number of devices you hope to have in place by the end of the year? Or number of hospitals you hope to have engaged by kind of end of year next year, something like that?

In the beginning, we're looking at a small number, around a dozen, in the first six months. Our goal is to be targeted and to collaborate with hospitals that are truly interested in making the switch, that want to learn, and that have higher volumes and substantial experience. We need to proceed cautiously as well, Matt. We can't just conduct these studies and then expect to implement them in a thousand hospitals flawlessly. We should take our time because this is a new, life-saving device, and it's crucial that hospitals feel comfortable with it. We need to determine if any adjustments are necessary in our training or other areas, and it's important to identify those early on. By the end of 2021, after about six or seven months on the market, we hope to begin expanding. The pace of that expansion is uncertain. We plan to consider expanding our team towards the end of our calendar year, which will help facilitate a growth to possibly 2,000 or 3,000 hospitals or more. We will have more clarity after the first six months on the market. The best way to gauge our progress is to track how many hospitals we manage to convert. While we have some internal estimates, I won’t disclose ours specifically, but you can likely do some research to understand how long it may take hospitals to switch and what it will entail. We're not aiming for a hundred hospitals initially; we're starting with two, monitoring the outcomes, and then will expand from there.

And in terms of the program for bronchiolitis, you said you're on track to start next year, next fall. What are kind of the rate-limiting steps to getting that bronchiolitis pivotal study off the ground next fall?

We need to submit to the FDA for an IDE so they can approve our pivotal study. Earlier this year, we submitted, but the pandemic interrupted that process. We're hoping to have discussions with the FDA this winter. The situation with the pandemic remains uncertain, and decisions will need to be made early next year to allow us to start by November of next year. It typically takes a good seven to nine months to get sites operational. For COVID-related studies, this process usually takes time. We need to make a decision early next year. It's challenging to predict the FDA's stance, especially concerning studies involving infants in hospitals during the pandemic. The FDA's decision will depend on how the pandemic is progressing. If it appears to be under control and more studies are being conducted, that may help. We need to consider that we are dealing with very young babies in these studies. If the world is more open and these babies are being taken to hospitals, we can proceed. However, we expect this winter will have one of the lowest on record for bronchiolitis hospitalizations due to social distancing, which is fortunate since we wouldn't be able to enroll patients otherwise. If next winter mirrors this one with high social distancing, it would hinder our understanding of the study. The crucial first step is to get FDA approval to run the study. After that, we need to assess in September or October next year whether we are still in a lockdown. If we are, we won’t be able to conduct the study, as we need sufficient hospitalizations to enroll babies. That's where we currently stand. I wish I could provide a clearer answer, but these are just predictions.

To clarify, it seems that you plan to submit the IDE early next year and will decide whether to proceed with the study based on the pandemic situation around late summer or early fall.

Yes, yes. I mean good things and bad things. We get a COVID vaccine. We can run our bronchitis study. We don't get a COVID vaccine, maybe the COVID-19 treatment is a winner. So we win both ways, I guess. I guess we can't lose, I don't know.

And then last question, some very interesting data in the oncology cancer indication with high-dose NO. What are your thoughts in terms of being able to move that into the clinic? What are your were the hurdles you need to overcome to get into the clinic as you hope to late next year?

Yes, we need to optimize our delivery system and regimen. We've had success with various concentrations, ranging from 20,000 to 200,000 parts per million, and have seen efficacy in that range. However, considering that mice are different from humans, we are consulting with experts to determine the safest approach for humans. There are several factors we need to consider, and we must fulfill regulatory requirements to demonstrate safety before proceeding with human trials. We have conducted studies on about 80 to 100 animals, but we need to increase that number significantly. It's critical to approach this systematically and document everything according to regulatory standards. That's why we are planning for about a year to start the study, and I believe the team has a solid plan to meet that timeline.

Our next question comes from the line of Scott Henry with ROTH Capital. Please proceed with your question.

And congratulations on the filing.

Thank you, Scott.

Just a couple of questions. Steve, when it comes to the product launch, are you preparing to launch it yourself? Or are you committed to a young, would you still consider a partnership? Or is it just too late at this?

I would say it's pretty late, but there's a price for everything. I can't guarantee that we won't talk to anyone, but if you don't hear from us by the new year, it will be unlikely to find a partner because there won't be enough time to bring someone in and get the launch done right away. There's always a number that could change the situation, but it’s a significant number at the moment. We are fully committed to launching and currently have about two-thirds of the people we need on board. The remaining hires will be made just before the launch, and the expenses for those individuals are already accounted for in our P&L for this quarter. We are ready.

Okay. Okay. That makes sense. And do you need clarification of the situation with Circassia to launch? Or can those two things go in parallel?

Yes. No, they can. We don't need any clarification there.

Okay. I believe you mentioned enrolling the pilot study for NTM. How many patients do you expect to have in that pilot study, and how long do you anticipate it will take to complete enrollment?

So it's 20 patients. Probably finish enrollment in the second quarter of next year, sometime. It's our best guess. And then it's 12 weeks of treatment and 12 weeks of follow-up. So if we're able to that, I said in the prepared remarks, we'll show the final data set towards the end of next year. So if we're able to get the enrollment done by the end of June, 12-week treatment, 12-week patients were good. And it's an open-label study. So it won't take too much time to put data together and get it out.

Okay. Great. And then on the oncology front, I know you put a target out there, first in man, perhaps end of next year. Any catalyst data points that we should focus on over in the interim, or I guess, we'll find out as we go?

For cancer, it depends, Scott. If we receive data and we haven't missed a deadline for a conference, then we'll present it. That's probably our approach. I'm not sure we will issue any press releases at this point, but if there's a conference where we want to present data and we have new and significant findings, we will share it. It may be challenging to meet the early deadlines for conferences in the first half of next year, but there may be some opportunities in the early part of the second half. However, that will depend on the specifics of each conference and their submission deadlines. I don't anticipate issuing data press releases as we have in the past. For cancer, we have enough proof of concept data, and our focus is on moving it to first in man. We do want to present it to the scientific and medical community when the opportunity arises, but I’m uncertain if that will happen before we initiate first in man due to those deadlines.

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

Congrats on the progress, Steve.

No problem.

In terms of the PMA filing, I just want to confirm or understand. If FDA has a time for making decisions to whether to accept the application or not like the drug, or they can just accept when they receive it and start to eventually review it?

No, the device division, similar to the drug division, has specific timelines and points at which they determine if they will accept a review or not. They operate with a similar structure, but we haven't reached that stage yet.

Is that, again, maybe two months, 60 days? Or it's about the next day for that?

It's around there.

Right. So would you also I guess, report now that the FDA accepted the application? Or I guess you just wait until the full 180 days for the decision?

Yes, I'll let you know if they don't accept it, but this is an extremely rare situation. You have to appreciate the team at Beyond Air; we have a group of engineers who invented the nitric oxide delivery market and are experts in FDA regulations. Our regulatory team has over 40 years of experience with former FDA personnel. I wouldn't want anyone else handling our nitric oxide submissions other than this team. Keep in mind the history of the INOmax System; it developed through multiple companies before becoming part of a larger operation. These are the individuals who created it all, so I'm not particularly concerned about this. I understand it's a technical question, and it's valid to ask, but considering our team's expertise, we don't see this as a real possibility. It's simply a formality for us.

Okay. Great. I mean, I appreciate the confidence, and I think that's very helpful for investors as well. In terms of the ATM study, was individual with the CF also to be included in the study, or those will be excluded assumptions?

In the NTM study. Yes. So in the NTM study, we can take CF or non-CF bronchiolitis patients. It doesn't matter. We're not forcing either one; it will be up to the physicians. We've given them leeway, whether they're CF patients or non-CF patients fine, whether they're NTM obsesses or NTM MAC patients is fine. That's really up to the investigators. We obviously have done all CF patients in the past. So we obviously prefer to get some non-CF patients. And we've done only obsesses this in the past. So we prefer to get some MAC patients as well. But again, we're not restricting that.

Pretty much all-comer in that regard?

Yes.

Maybe two more quick questions. The first one is really rephrasing a question asked a little bit earlier. Which is what do you anticipate the capacity in terms of manufacturing in either the machine or the filter, let's say, in the second half of this year, maybe third quarter, roughly the time of next year and whether the manufacturing capability can catch up to it? Or you would need additional production capacity?

Regarding the filters, our contract manufacturer was initially concerned about insufficient orders from us. However, one commercial line is capable of producing a significant volume of filters. We can likely fulfill three years’ worth of filter requirements in just four or five months. Volume and lead time for filters are not a concern for us. We have a strong partnership, and the facility is exceptional. We're eager to meet demand so that our partner can recognize our value. Concerning the LungFit device, we have a commercial line with Spectronics, which has proven to be excellent. The products they have provided us with have been outstanding and continue to improve as we produce more machines. The main challenge we face is the long lead time and accurately forecasting our needs. Capacity is not an issue; with that single line, we could potentially produce enough systems to satisfy the entire U.S. market in one year, and if we aimed for five to six years' worth, we could manage that as well. However, pursuing such mass production isn't feasible for us at the moment due to financial constraints. Our priority is to effectively manage inventory, as there are many components with varying lead times. We are very satisfied with Spectronics in terms of their support for managing this process. Our main concern is ensuring our supply chain remains robust enough to deliver what we need on time. Setting up a second line would take approximately 90 days, making it easy for us to increase capacity if necessary. For the LungFit PRO devices, which are intended for COVID-19 and bronchiolitis, we also have a commercial line ready. We set it up early anticipating that success with COVID might drive demand for these devices. This line actually has a higher annual capacity than the LungFit PH line, so capacity is not an issue for us at this time.

Okay, great. Maybe the last quick question here, or maybe not so quick, which is that now in the cardiosurgical or treatment side, revenue is presumably greater than from the NICU in the real world, although that's sort of off-label use. Do you have any thoughts on how you would be able to penetrate that market without violating any laws or regulations?

We plan to follow similar strategies as others in the market, like Mallinckrodt and Praxair, without any intention of breaking laws. Physicians in the U.S. have the right to use drugs off-label at their own discretion, and that’s how our approach will be. We are not going to engage in marketing efforts but intend to seek an official label expansion eventually. It seems another company has mentioned their plans to do the same, which I genuinely hope will happen for the benefit of patients and hospital reimbursements. Therefore, I don’t believe we face a competitive disadvantage since currently, no one has the product on label. We aim to act just like others in the industry, and if one company gets on label, I expect the others will follow suit fairly quickly. I don’t see a long-term competitive advantage for anyone in that scenario, but getting on label is undoubtedly important. It would help expand the market and give hospitals greater confidence to utilize the product more freely for patients in need.

Okay. Great. And maybe just tap on that one. Have you noticed whether the at this stage, have decided or not decided to do that study you mentioned?

I only rely on what has been publicly announced. I believe they mentioned they would be submitting something at some point, and you can verify this in their public information. I think they have already submitted something related to juvenile cardiac surgery, specifically for children and adolescents, if I'm not mistaken. However, I'm not sure if the submission has occurred yet; they did talk about it. We'll have to wait and see. I don't know the timing to follow up with them. If one of us gets it first, I believe the other will simply follow suit, which is beneficial for patients and the market's expansion. As I mentioned earlier, I don't see it as a significant win for our company to be the first to obtain it.

That is all the time we have for questions today. I'd like to hand the call back to management for closing remarks.

I'd just like to thank everyone for attending the call. And look forward to talking to you in the near term. Goodbye.

Ladies and gentlemen, this does conclude today's teleconference. Thank you for your participation. You may disconnect your lines at this time, and have a wonderful day.