Good afternoon and welcome everyone to the Beyond Air Financial Results Call for the Fourth Quarter and Full Fiscal Year 2021 Financial Results ended March 31st, 2021. At this time, participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. And now, I would like to turn the call over to Maria Yonkoski, Head of Investor Relations at Beyond Air. Please go ahead.

Thank you, operator. Good afternoon everyone and thank you for joining us. Today, after the close, we issued a press release announcing the fourth quarter 2021 operational highlights along with a summary of our year-end financial results. A copy of this press release can be found on the Investor Relations page of our website and will be on file with the 10-K filed today. Before we begin, I would 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 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. We encourage everyone 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. 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 10th, 2021. 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, our Chairman and Chief Executive Officer; Douglas Beck, our Chief Financial Officer, and Duncan Fatkin, our Chief Commercial Officer, who will be available only during the Q&A. With that, I will turn the call over to Steve Lisi, our CEO. Steve?

Thanks Maria. Good afternoon to everyone and thank you for joining us on today's call. The last 12 months have been very productive for Beyond Air, during which we laid the foundation for success over the next few years by achieving several key milestones, including the submission of our first-ever PMA to the FDA for a LungFit device. The significant expansion of our commercial organization involved hiring several nitric oxide industry veterans to keep leadership positions, including heads of sales and marketing. We made important progress in each of our clinical programs, which I'll provide further details on in a few minutes. We ended the current fiscal year executing on our vision of harnessing the power of nitric oxide in order to transform the lives of patients. Most important, when approved, LungFit PH will be the first in our portfolio of devices able to generate nitric oxide from ambient air to reach the market, further validating our technology. As we look to the approval of our pending PMA application for LungFit PH, we envision a future of tankless inhaled nitric oxide delivery in NICUs across the U.S. and eventually the world. LungFit PH is designed to offer hospitals a simple, safe, cost-effective, and convenient alternative to products that are currently on the market. We are excited for the opportunity to introduce LungFit PH to the over 800 level three and level four NICUs in the U.S. over the next few years, starting with a phased commercial launch that is scheduled to begin after PMA approval. Recall, our strategy is to spend the first six to nine months in a limited release phase, targeting a group of select hospitals using a small number of systems at launch. This will not require significant spend and is easily attainable with the amount of cash we have on hand today. As our commercial plan comes together, we aim to partner with the hospital staff to embrace the efficiency, flexibility, and innovation around which our system has been built. Our user interface is designed to be an easy transition from existing user interfaces for NO delivery. We're also able to avoid purging procedures, which along with the simplicity of our user interface will significantly reduce the training burden and time spent on system operation for clinical staff. LungFit PH allows for the removal of the burdensome inventory, storage, and disposal requirements that are necessary for cylinder-based solutions offered by competitors. Additionally, our system minimizes the likelihood of physical injury for healthcare workers, while also reducing the risk of nitrogen dioxide or NO2 exposure for all. NO2 is a toxic byproduct of NO combining with oxygen that can irritate the airways of the human respiratory system and may have fatal consequences, which is the main reason behind the special storage requirements imposed by our competitors. In contrast, our system relies on easy-to-store and dispose of smart filters that can last for 12 hours of continuous use. NO2 levels are monitored constantly and maintained well below the safety threshold, while NO is being generated and delivered by our system. Not only does the Beyond Air smart filter protect patients and medical staff from NO2 toxicity in all devices in the LungFit family via a uniquely encrypted RFID chip that renders the system unusable for NO generation in its absence, but the Smart Filter also acts as the razor blade business model. In terms of the current status of the FDA review process, as you all know, we submitted our PMA application to the FDA for our LungFit PH system this past November, which would normally have been subject to a 180-day review period. I want to reiterate what I have been consistently communicating and note that due to the ongoing pandemic, the review process has been prolonged. We continue to expect approval towards the end of the third quarter of calendar 2021, with a subsequent commercial launch in the fourth quarter. I'm unable to comment further on the PMA review at this time, other than to say that we are happy to report a collaborative effort with the FDA. We have made many strides on the commercial front over the last year, cementing our strategy and logistics plan. In 2020, we set up our global supply chain through a subsidiary in Ireland and worked with our state-of-the-art contract manufacturers to have everything on track for our systems and filters. We secured our calibration gas supplier well over a year ago and are confident we will have sufficient inventory available at launch. As I said earlier, we will spend the first six to nine months in a limited release phase, where we will work closely with a select number of hospitals that have staff experienced with inhaled nitric oxide in order to perfect our customer service and support functions. This phase will not require significant inventory build since we are launching with a small number of systems. I'm pleased to report that we have a strong balance sheet heading into this event. For reference, we had $34.9 million in cash as of April 30th, 2021, which is sufficient to get us through the next 12 months and beyond, inclusive of the initial launch phase. Our actual cash burn for the March quarter was $5 million, and we anticipate that the burn for the current June quarter will be even less than that. Only once our go-to-market approach has been proven and stress-tested, will we begin our ramp phase, which will include expanding our team and reaching out to the rest of the market. Leading the preparation for the commercial launch of LungFit PH is our Chief Commercial Officer, Duncan Fatkin, who has been with us for two and a half years now. He has over 30 years of experience in hospital-based medical devices and has worked in both Europe and Asia and spent the last 11 years in the United States. Over the past several months, Duncan has been expanding his team and recruiting nitric oxide industry veterans to key leadership positions within our organization. In May, we announced the appointments of Rebecca Van Doren as Head of Sales and Kori-Ann Taylor as Head of Marketing. Both of these talented women have worked with that carrier and subsequently pharmaceuticals to drive sales and marketing initiatives for the current NO market leader. They have extensive knowledge of the competitive landscape and have had front row seats to both the successes and challenges faced by our competitors. These two appointments, along with a number of others, are part of our strategy to build a strong commercial team, which is crucial to the success of LungFit PH and an essential part of growing the entire LungFit franchise. As Maria mentioned earlier, Duncan is on the call with us today and will be able to answer questions during the Q&A portion of our call. Outside of the U.S., I am pleased to report that we remain on track to obtain CE Mark for LungFit PH in Europe around the end of this calendar year. As I've said in the past, we have every intention of partnering this program ex-U.S. In fact, we recently appointed Peter Senior into the newly created position of Director of Business Development to spearhead this effort. Peter joined our team after spending 26 years at Linde where he most recently served as the Director of Healthcare Partnerships and External Relations. Peter was responsible for expanding Linde's healthcare portfolio after the merger with Praxair, which made Linde the largest gas company in the world. He's intimately familiar with the nitric oxide market, the technology available, and is hitting the ground running as we look to secure an ex-U.S. partner in 2022 for LungFit PH. Our ability to recruit unparalleled talent speaks volumes for not only the capabilities of LungFit PH but also to the LungFit franchise and Beyond Air as a whole. As an organization, we are ready to bring the incredible benefits of inhaled nitric oxide therapy to patients. Additionally, in May of this year, we reached a settlement agreement with former LungFit PH commercial licensee, Circassia. We retain full global rights to the asset in exchange for returning $10.5 million in upfront and milestone payments received by the company in early 2019. We have secured an advantageous payment structure for the $10.5 million that we are returning to Circassia. Beyond Air will begin making payments only after receiving FDA approval for LungFit PH, with the first payment being only $2.5 million, the second $3.5 million one year after the first, and the last payment one year after that. Additionally, beginning in the third year post-FDA approval, Circassia will receive a quarterly royalty payment equal to 5% of LungFit PH net sales in the U.S. It is important to note that this royalty will terminate once the aggregate payment reaches $6 million. This structure allows us to make payments over time only after we have a revenue-generating asset and will have no impact on our ability to adequately fund the launch of LungFit PH as well as invest in our pipeline development. Our fiscal responsibility is in no way at the expense of our programs. Expenses associated with submitting the PMA were significant and have now subsided. Our spend for our LungFit Pro programs is winding down as we await the 2020 to 2023 pneumonia season, when spend will certainly grow. Our LungFit Go study spend is more than adequate as we received the grant from the Cystic Fibrosis Foundation. In fact, we have made progress on our two ongoing post-studies this year, starting with our viral lung infection program, which we recently reported on acute pneumonia interim data along with the further analysis of our bronchitis studies. We began our pilot studying acute pneumonia, including patients affected with SARS-CoV-2 last November in Israel. As you may recall, our study is a multicenter open-label randomized clinical trial. Patients are randomized in a one-to-one ratio to receive inhaled nitric oxide at 150 parts per million administered intermittently for 40 minutes four times per day for up to seven days in addition to standard supportive treatment, versus standard supportive treatment alone, and points related to safety, oxygen saturation, fever, and ICU admission, among others are being assessed. We reported interim data at the American Thoracic Society International Conference or ATS 2021, which was held virtually from May 14th through May 19th. At the time of the cutoff for these data, we analyzed a total of 19 patients on an intent-to-treat basis, not in the no-treatment arm and the control. I'm very happy to report that 150 parts per million NO treatment administered by LungFit Pro was safe and well-tolerated with no treatment-related or possibly related adverse events or severe adverse events. NO2 levels stayed below four ppm for all treated patients at all time points below the study safety threshold of five parts per million. Similarly, methemoglobin levels were below 4% at all times, well below the study safety threshold of 10%. Methemoglobin levels followed a particular pattern rising during NO administration and returning back to normal baseline levels shortly after administration was done. The intermittent dosing regimen allowed for high concentration NO to be administered without negative side effects, specifically addressing concerns of many patients. Safety data alone would have been a success for the study since the primary purpose is to evaluate the safety of high concentration NO. However, despite the small number of subjects included in this study analysis, we also observed encouraging efficacy signals for clinically meaningful endpoints. Only 22% of subjects in the NO-treating group required additional support beyond their hospitalization compared to 40% of control. With respect to duration of care, the NO-treating patients averaged two days less than control. Additionally, we saw a 26-hour reduction in mean duration of hospital stay between the no-treatment group and control when adjusting for extreme outliers. To be clear, these two outliers both in the control group were discharged from the hospital within three and six hours of enrollment, respectively, and therefore, were not included. Additional detailed study results will be submitted for presentation at upcoming scientific meetings. Today, the trial sites remain open and enrollment is ongoing. However, it is important for us to realistically consider the rate of enrollment going forward. With COVID cases receding, we anticipate recruiting patients with other viral lung infections more representative of the broader viral lung infection pivotal study we are planning. Note that viral infection rates are extremely low during the summer months. Though this is a small pilot study, these efficacy and safety results in the adult population echo the results of the three pilot trials we have conducted in bronchiolitis. Bronchiolitis is the term used for viral lung infection in infants that are hospitalized, rather than the term acute viral pneumonia that is used for everyone above two years of age. Just last month, we presented further analysis about three previously reported pilot studies at ATS 2021. A total of 198 infants with a mean age of about four months participated across the free programs with 84 of them receiving high concentration NO at a dose of 450 or 460 parts per million. Analysis across studies demonstrated that a short course of treatment with intermittent high concentration NO was effective in shortening hospital length of stay by almost one day and accelerating the time to discharge from the hospital. Additionally, inhaled nitric oxide was effective in accelerating the time to stable oxygen saturation without supplemental oxygen. Importantly, in trial three, which was completed in the 2019-2020 winter, we studied NO at a dose of 85 parts per million, which showed no difference compared to control for all efficacy endpoints, while the 150 parts per million NO group showed statistical significance when compared to control on all efficacy endpoints. In addition, when comparing 150 parts per million to 85 parts per million, the 150 parts per million arm was statistically significant on time to fit to discharge and hospital length of stay, with respect to the accuracy endpoints of time to stable oxygen saturation without needing supplemental oxygen. The 250 parts per million arm narrowly missed significance in this small pilot study across three arms. This leads us to view 150 parts per million nitric oxide as the minimum effective therapeutic dose to be used in further studies. NO treatment was generally safe and well-tolerated across three pilot trials with the adverse event rates similar among treatment groups. We believe that taking together the entirety of the data and 150 to 160 parts per million NO in both hospitalized adult and infant viral pneumonia patient populations is reproducible and demonstrates the safety of NO. Our next steps would be to move to a pivotal study for LungFit Pro in patients hospitalized with viral pneumonia. We plan on submitting the entire data package to the FDA as it is supportive of either an adult or pediatric trial. Due to the seasonality of most respiratory viruses, we anticipate starting this study in the fourth quarter of calendar 2022. Moving on to our ongoing non-tuberculous mycobacteria or NTM pilot study. There's currently a significant unmet medical need for treatment of chronic NTM lung infection. NTM is a disease area focus for the FDA. Refractory NTM infection in the lungs has a high mortality rate. In fact, 50% of patients will die in less than five years from the initial diagnosis of the disease. Additionally, as this is a progressive condition, quality of life is substantially reduced prior to death. We began screening patients for LungFit Go programming NTM in December 2020. This is a single-arm multicenter 12-week trial in Australia that aims to enroll 20 cystic fibrosis or non-CF bronchiectasis patients with refractory NTM lung infection, either Mycobacterium Avium Complex or MAC for Mycobacterium assessing. Patients are titrated up from 150 parts per million to 250 parts per million NO in the hospital over several days, and then sent home to complete the 12-week treatment period. We specifically designed our system to be simple to use by non-medical professionals and are confident in our ability to eventually bring LungFit Go into the home to treat patients suffering from chronic severe lung infections. Coming back to the trial design, during the first two weeks, patients received 40-minute NO administrations four times per day, followed by two administrations per day for the remaining 10 weeks. The study evaluates safety, quality of life, physical function, and bacterial load among others. At this point, we are pleased with the performance of LungFit Go in this study and would like to note that the rate of enrollment, though slow at first, has picked up in the last few months. We are on track to deliver topline results in the first half of 2022. If this trial is successful, we believe our LungFit Go system will be a game-changer for the home setting, potentially helping underserved patients with chronic severe lung infections with various underlying conditions, such as cystic fibrosis, bronchitis, and of course, COPD. NO treatment should be thought of as pan-microbial, and the broad spectrum activity of NO may allow for treatment of a variety of indications in markets. Specific to the mechanism for eliminating bacteria, NO causes bacterial DNA damage, bacterial enzyme inhibition, and induction of lipid peroxidation. Additionally, NO penetrates cellular membranes, which may result in the improved delivery of concomitant antibiotics and activation of the immune system. A prior guidance has reported interim data or in the middle of 2021, however, we believe that we will be fortunate enough to have the opportunity to show these data at a conference in the fall of 2021. We believe this is preferable to a simple press release. I would like to now turn to our solid tumor program, which will not use the LungFit platform due to the ultra-high concentrations of nitric oxide that are necessary to achieve anti-tumor effects. This program is early in development, but it's rapidly approaching submission to regulatory authorities and to human studies. As a reminder, we have presented data in mice at several conferences in 2020. The key take-home message is that NO as a monotherapy provided immunity to the host after a single administration of five minutes. In our studies, tumor-bearing mice were treated intratumorally with a single five-minute, 50,000 parts per million nitric oxide administration. Two weeks later, a challenge tumor of the same cell type was implanted contralateral in the treated mice, as well as untreated controls. 100% of the treated mice resisted secondary tumor growth for the 45-day observation period, while tumor growth was observed in all of the control animals within 10 days after tumor inoculation. These and other data, all available on our website, suggest that tumor immunity may be conferred by NO treatment. With that, I will now turn the call over to Doug for the full financial review. Doug?

Thank you, Steve. Here's a brief review of our financial results for fiscal 2021, which ended on March 31st, 2021. Revenue for the fiscal year ended March 31st, 2021 was $873,000 as compared to $1.4 million for the fiscal year ended March 31st, 2020, all of which was from deferred licensing revenue. Research and development expenses for the fiscal year ended March 31st, 2021 were $12.6 million compared to $10.6 million for the fiscal year ended March 31st, 2020. General and administrative expenses for the fiscal year ended March 31st, 2021 were $10.5 million compared to $8.9 million for the fiscal year ended March 31st, 2020. For the fiscal year ended March 31st, 2021, the company had a net loss of $22.9 million or $1.27 per share compared to a net loss of $20.5 million or $1.78 per share for the fiscal year ended March 31st, 2020. As of March 31st, 2021, the company had cash, cash equivalents, and restricted cash of $35.3 million. I would like to reiterate our cash balance as of April 30th, 2021, which was $34.9 million given that we recently provided this information in a press release. As Steve said earlier, we believe this cash is sufficient to fund operations well beyond the next 12 months, including the initial U.S. commercial launch phase of LungFit PH. I'll now hand back this call to Steve.

Thanks Doug. Operator, let's go straight to the Q&A.

Thank you. We will now begin the question-and-answer session. Our first question is from Suraj Kalia with Oppenheimer. Please go ahead.

Good afternoon, everyone. Steve can you hear me all right?

Yes, yes, I can. Thanks, Raj.

Perfect. So, the obvious question I know you specifically said you don't want to talk much about the FDA discussions. If you could characterize the timeline for PPHN from late summer to end of Q3, I presume that is driven by your conservatism, rather than the FDA specifically requesting any more testing or incremental data?

No, surprise, summer ends and the end of September. So, it's almost the same thing. That's how I view it, the moon was the first day of fall is like September 21st, or 22nd, I believe. So it's just a different way of wording it, basically the same thing. I wasn't really trying to change any timing.

Steve, regarding the PPHN launch, could you elaborate on the number of sites you plan to target, the teams involved, and the expected return on investment? For the initial sites you're aiming for, please walk us through how many sites you are considering and your strategy for eventually reaching a wider audience.

Yes, I'll briefly address ROI and then hand it over to Duncan. The return on investment for these initial sites will be modest, as we've communicated that we expect it in the first six to nine months after launch. As you mentioned, we don’t anticipate significant numbers from this as there will only be a limited number of hospitals involved. Thus, the main benefit of this investment is the knowledge we acquire during this early phase, which will enable us to expand further once it's complete. Now, I'll turn it over to Duncan to address the rest.

Thanks, Steve. During this initial phase, we will collaborate with around a dozen hospitals over a period of six to nine months. As Steve mentioned, we do not expect a substantial investment. We have recently appointed two exceptional leaders in sales and marketing who have strong experience in the nitric oxide market. We are aware of the hospitals that are interested in partnering with us, and it should be a relatively simple task to engage them for evaluations. Throughout this timeframe, we will concentrate on improving our supply chain, gaining insights into any logistical specifics with certain hospitals, and learning, as Steve said, to ensure that we have the best product available when we expand after this initial phase.

Got it. And finally, Steve, in terms of CE Mark, maybe you can walk us through the timing of filing and when do you all expect discussions with potential partners? Because the statements seem to be pretty definitive that you will sign a partnership in FY 2022? Maybe you can just walk us through how you see the cadence, the regulatory filing discussions with potential partners, any colors that would be greatly appreciated. Thank you for taking my question.

Sure, thanks, Raj. Europe operates differently than the U.S. We collaborate with a notified body like others, making the process more fluid. Unlike the FDA, there isn't a strict date when we submit and receive acceptance for review; it's an ongoing process. Based on our current situation, we anticipate this will occur around the end of this calendar year. We believe it's in our best interest to wait to partner until after we receive our CE Mark, as this positions us better to negotiate favorable terms for partnerships. Additionally, in the U.S., you can market quickly after approval, while in Europe, there are multiple steps to follow on a country-by-country basis post-approval, which prolongs product launches. We have some leeway, and we don’t see waiting to finalize terms until after the CE Mark as a significant delay to our launch timeline.

Thank you. Our next question is from Matt Kaplan with Ladenburg Thalmann. Please proceed.

Hi, Steve, and thank you for addressing the questions. Congratulations on the progress. My first question is a follow-up on Raj's inquiry regarding your thoughts on the expansion phase after the first six to nine months. How should we consider that phase of the launch once all your systems are established during the initial months, and what are the next steps?

Sure. I'll let Duncan take that.

Yes. Thanks, Matt. So, after that first period, we should have all the information we need to optimize the supply chain etc. So, it's really a question of just building the sales organization. With the leadership that we brought in, Rebecca Van Doren has 10 years' experience building a sales organization in the nitric oxide industry and Kori-Ann Taylor has been working in the healthcare marketing space for a long time, including working on nitric oxide. Both of them understand what's required. We're very clear about how we would ramp up and it's not going to take much for us to expand our sales organization. In terms of targeting, there's already a very good awareness in the respiratory community of nitric oxide. So, we don't spend much trouble finding the right locations to expand and depending on when contracts fall, we estimate they’re typically between one and three years. Of the 850 hospitals with NICU units, we still think there's plenty of hospitals that will be ready to do evaluations and then start to contract. So, for us the investment is not significant; the expansion of the sales team. Bear in mind that the market leader never had more than really 50 to 60 salespeople on the road for their $500 million worth of business. So, we don't think it's going to be a big challenge for us to have the right team in place to expand. So, at that point, it's really about execution.

And is there a metric you put on for kind of revenues for hospitals? Is that a way to think about it? Or is there another way?

Matt, I wouldn't view it that way. The hospitals differ in size and demand for nitric oxide. It's difficult for me to specify which hospitals we will approach first since it largely depends on the contracts that these hospitals currently have. They might have up to three years remaining on their contracts before we can target them, which could include significant or larger hospitals when we launch. You can apply the classic 80/20 rule, where 80% of the revenue comes from 20% of the customers. However, it's not feasible for us to target the top 20% from day one. It's more a matter of timing regarding which hospitals we can focus on and when, and that's not necessarily a disadvantage for us. As Duncan mentioned, this phased approach allows us to plan our geographic strategy and the hospitals we will target over the first two years after approval. Therefore, having this staggered approach over the coming years actually benefits us in terms of our hospital targeting opportunities.

Great. Shifting gears a bit, you mentioned LungFit Go and the ongoing NTM at-home study. Could you share your thoughts on the interim results expected this fall and how we should consider the number of patients that might be involved with those results?

We are planning to enroll 20 patients in the study, but it’s difficult to provide an exact number because we are uncertain about when we will be able to present the data at a conference. While it’s challenging to pinpoint exact figures, we believe that the number of patients involved will be sufficient to make a meaningful impact when the results are shared.

Thank you. Lastly, can you provide some insights on the EU opportunity for PPHN and the LungFit PH?

Yes, so as far as the EU is concerned, the big five are the obvious markets that we would be expecting to target. Of those, the U.K. and Germany are probably the most advanced. In terms of the market opportunities, it's clearly significantly less than the U.S. because prices are depressed compared to the U.S. But we think there's an opportunity because there are a lot of restrictions on the use of nitric oxide in Europe as it's matured, and that's how they've driven the price and the usage down. We think that our system is going to be more simple and flexible to use and will potentially be used in a broader set of circumstances. So, it’s definitely a significantly smaller opportunity, but still a lot of growth potential in the markets that we’re targeting initially.

Okay, thank you. That's helpful. Thanks for taking the question.

Thanks, Matt.

Thank you. Our next question is from Greg Fraser with Truist Securities. Please proceed.

Good afternoon, folks, and thanks for taking the question. Nitric oxide is a large cost item for many hospitals and commanding utilization is clearly important to hospitals and controlling costs. Do you see any material goods to the NO market pushing the use of alternatives to save money like Sildenafil that might contribute to volume erosion over time?

Not at all. I think Sildenafil and the other PDE4 inhibitors are not going to be able to replace nitric oxide in this context. Perhaps in the pulmonary arterial hypertension space, they may have some benefits and may be able to impact that market. But I think with respect to PPHN and outside the U.S., obviously on label cardiac surgery patients, I don't see the Sildenafil type products having an impact here.

Got it. Okay. And then just following up on the LungFit Go study for NTM lung infections, will the interim results include safety and efficacy data? And how would you set the bar on what you need to see in the study efficacy-wise to consider it a success?

So, in this interim look, we'll see safety, obviously tolerability. I think it's important to see the dose that we're titrating, from 150 to 250 parts per million, we'd like to see 250 in as many patients as possible, with patients tolerating it for the full 12 weeks of the treatment. From an efficacy standpoint and the early data, I think we'll be able to get a decent look at quality of life, possibly physical function data, which are two critical endpoints. I think that bacterial load is going to take longer; I don't think we're going to see much, if any, on the interim look. As this type of data takes time, we send it out to a lab, a central lab, and work is done there. And that's something that will take a bit longer. And remember that we do follow these patients for 12 weeks after the 12-week treatment period for an additional observation. So, I think that safety, tolerability, as well as quality of life, and physical function are what you should be looking for. As for what do we need to see to be excited about that improvement, quality of life improvement, and improvement in physical function. This is an open-label study, single arm, and we are gathering baseline numbers. These patients will act as their own controls. So, you'll be able to see the effect on these patients, whatever however many it is, if that interim look shows improvement. If we see a decline in physical function or quality of life, that's bad, but we expect to see improvement, and that will be a big positive for these patients.

Got it, that's very helpful. And then just on the planned pivotal study for patients hospitalized with viral lung infections, it sounds like you're going to make a decision on whether to target ADP or bronchiolitis, is that correct? And if that is right, how you decide which way to go?

Yes, we will choose one or the other going into the winter season, doing a pivotal study for both of those at the same time is just not possible. So, we will pick one and that decision will be made towards the end of this year, when we've gathered all the data that we're still gathering, and we've made an evaluation with the experts internally and beyond there, as well as those experts that are working with us from outside the company. And we'll figure it out at that point in time. Right now, we don't have the answer.

Got it. Okay. Thanks for taking the question.

Thanks, Greg.

Thank you. Our next question is from Scott Henry with ROTH Capital. Please proceed.

Thank you and good afternoon. I've been jumping around, so I apologize if any of these questions have been asked. Starting on the clinical side, see the Australian study for the at-home pilot study, did you say how many patients were going to be in that trial?

Yes, but the target is 20 patients total.

Okay. And it sounds like we should be pretty comfortable that COVID is not going to have any significant delays there based on your statements, is that fair?

Yes, I think the delays related to COVID have already occurred. I can't say for sure that it won't have an impact over the next several months, I don't know. Australia is handling it differently than we have in other places. So, they are pretty tight over there. So, I just don't know. Let's hope there's no more impact from COVID anywhere, especially on our trial. But we certainly faced challenges over the first half of this year or the first six months of this year. I think they're subsiding and like I said in my prepared remarks that enrollment is certainly picking up recently. We're very happy to see that.

Great. Fair enough. And then the pilot study in Israel, when should we expect data from that trial?

So, the data that we showed at ATS is the data that was available at the time. I think that the next time we show data from this trial will probably be in the first half of next year. Right now, the team is focused on gathering this information. Again, we still have the sites open in case more patients are rolling in on a slow basis in the summer months. But our goal is to do our best to analyze all the data and put it together for the FDA, so that we can approach them around the end of this year, and have a discussion about a pivotal study beginning in the fourth quarter of 2022. So, that's our goal. Our goal is not to try to get more data out by the end of this year. Our goal is to prepare for the FDA and provide them with the required information by the end of this year. Perhaps in the first half of 2022, we would show more data from this study.

Okay, great. Thank you. And then cleaning up the Circassia deal, obviously, a nice positive for the company. Is there any accounting noise we should expect from that, any one-time charges or any changes? Just factor into the model?

No, I think it's pretty much laid out as is; this is going to be payment due once we get approval, and then the other payments would obviously be due as well. So, right now, there's no accounting changes until we see approval. Once that happens, you'll see the payments made as they were laid out in the press release a month or so ago.

Perfect. For my final question, you've provided a lot of details already. How should we view the first year of the PPN or PPHN launch? Specifically, how long after the launch can we expect to start generating revenues? Additionally, how should we approach revenue expectations for that first year?

Yes, I believe that according to GAAP accounting, we will be accumulating revenues to align them with the expenses in the same period. Therefore, we may recognize revenues fairly quickly, while cash may come in a few months later. If we launch in the fourth quarter of this calendar year or the third quarter of our fiscal year, which is our plan, you can expect to see revenues in the following quarter. However, I want to remind everyone that we are not anticipating large revenues; rather, we expect a low level of revenues for that quarter. Did that answer your question, Scott?

Yes. I mean that's helpful. But I guess what I'm just trying to think about from a ramp, it sounds like we should think about those first 12 months as sort of a pilot process with kind of an inflection point perhaps later in the cycle. I just want to make sure I'm thinking about that in the right way.

I believe you are considering this correctly. We're anticipating a six to nine-month focus for the launch. This won't begin immediately after approval; it will likely be around two months later, approximately 16 weeks. This timeline would bring us close to the first 12 months post-approval, and I think it's reasonable to set modest expectations for topline revenues during this phase. As Duncan mentioned, once we receive confirmation that the process is all streamlined, we will quickly move to expand. Therefore, I expect significant growth in revenues during the second 12 months compared to the first.

Okay, great. Thank you for taking the questions.

Sure. Thanks, Scott.

Thank you. Our next question is from Yale Jen with Laidlaw & Co. Please proceed.

Good afternoon and thanks for taking the questions. I just started with some housekeeping questions that the last quarter, the R&D expense has been substantially lower than the prior quarters and how should we think about that for the fiscal 2022, specifically in R&D quarter-over-quarter?

Thank you, Yale. We have invested significantly in R&D, which we view in two aspects: R&D for clinical studies and R&D for engineering. Our engineering R&D expenditures decreased notably after we submitted the PMA, leading to reduced variable spending in that area. On the clinical trials front, expenses related to NTM have been minimal, but those costs are expected to rise. The study in Israel incurred many expenses upfront during the December quarter. Consequently, that figure has decreased slightly and is not likely to increase substantially. As I mentioned earlier, we anticipate that overall cash spending will be lower in the June quarter compared to the March quarter, primarily due to reduced trial expenses as we are currently in a lull. Once we obtain approval, our spending will increase on the commercial side, and we expect R&D expenses to rise again in the latter half of 2022 as we prepare for a pivotal study, either in bronchiolitis or viral pneumonia. Additionally, expenses for our cancer program should pick up as we progress through our Phase 1 study. The Phase 1a/1b component will become somewhat costlier, particularly later in the year. While we are concluding the NTM study and planning for its pivotal phase, it's likely that those expenses will not begin until the first half of 2023. Until then, spending will remain relatively low.

Okay, great. That's very helpful. Regarding CF foundation funding, will that be recorded as part of the license revenue, or is it accounted for separately?

It's an offset of expenses, that's how we report it.

In terms of beginning your marketing efforts for the fourth quarter of this year, should we expect to see marketing and sales expenses listed separately on the P&L, or will they be included within the SG&A?

Yes, I don't know yet, Yale. Some companies break out their sales, marketing, and general and administrative expenses separately. I’m not sure if we will do that in the next couple of quarters; it's possible we might consider it in the next year or two. I don't expect it to happen in the near term, but we'll see what we can do.

Could you provide more insights on the nitroxide sales, particularly since a significant share comes from cardiovascular labs and includes off-label use? Are you considering expanding into that area after the initial test or soft launch in the future?

Yes, Yale, it’s Duncan here. Thanks for the question. So, as far as the cardiovascular label, it's something we plan to submit for as soon as possible post-approval. Obviously, right now, the indications for PPHN and that's how we will promote the product. We said we'll respond to all the hospitals that want to use it in any other fashion. Because nitric oxide has been used for over 20 years, the plans are very well established. We don’t expect it to be particularly different for us. But obviously, we'll do it in exactly the right manner. That's how we're going to move forward.

Are you suggesting that you will have a formal permission of approval?

We'll be submitting for a label expansion.

Okay, great. That's great and congrats on the other processes.

Thanks, Yale.

There are no more questions at this time and I would like to turn the call back to management for closing remarks.

Thanks operator. Thanks everyone for joining today. We'll be around if there's any more questions.

This ends today's conference. You may disconnect your lines at this time. Thank you very much for your participation. Have a great day.