Good afternoon, and welcome, everyone to the Beyond Air Financial Results Call for the Fiscal Quarter Ended March 31, 2024. 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 Garth Russell, LifeSci Advisors. Please go ahead.

Thank you, operator. Good afternoon, everyone, and thank you for joining us. Today after the market closed, we issued a press release announcing the fiscal year 2024 operational highlights and financial results. A copy of this press release can be found on our website, www.beyondair.net, under the News & Events section. 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 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 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 24, 2024. Beyond Air undertakes no obligation to revise or update any statements to reflect events or circumstances after the date of this call. I would also like to mention that considering the corporate update being provided to you today and a relatively short period of time until the company is going to announce its Q1 fiscal year 2025 financial results, management has decided to forego hosting a standalone conference call next month. The company's results will still be thoroughly communicated via press release and 10-Q filing with the SEC. With that, I'll now turn the call over to Steve Lisi, Chairman and Chief Executive Officer of Beyond Air.

Thanks, Garth, and good afternoon to everyone joining us today. Joining me on the call is Doug Larson, Chief Financial Officer, and we're both happy to be here today. I'm excited to report that we closed out our fiscal year 2024 with positive momentum as revenues for the fiscal fourth quarter grew more than 20% sequentially and we reported several positive metrics across our growing lineup of existing customers and sales pipeline, which I will touch on in a moment. First, I would like to offer a short review of the road we've taken to get to this point. The launch of LungFit PH following FDA PMA approval in the fall of calendar year 2022. Immediately after FDA approval in mid-2022, our engineers worked diligently to expand the device's compatibility with additional ventilators already installed in the market and made certain other improvements that address feedback received from real-world use and customer input. In the spring of 2023, we had received all we needed from the FDA to make our system what we believe is the best on the market, with two notable exceptions: compatibility with an important ventilator; and improved nitric oxide sensors, both of which were tied to a pending software approval. Then in the fall of calendar 2023, which is the third quarter of our fiscal 2024, the FDA gave approval for this update. Thus, we are now in the market with a more optimized product. As you all know, with a PMA-approved Class 3 medical device, the implementation of this software change required more than simply uploading files from a thumb drive. We spent several months ensuring perfection, working with our existing customers to ensure the updated system worked perfectly. Once we had that performance indication, we upgraded the devices at all of our existing customer locations and brought on new customers as well. This took a little longer than expected, but we believe that the quality of the system we now have is paramount for medium and long-term success. Overall, we believe LungFit is well positioned for rapid gains as we expect that it meets all existing market needs. Now let's talk about our confidence for the next several quarters and beyond. Over the past few months, since the updated LungFit PH system has been available, we have seen a steady flow of high-quality engagements with potential new customers and extremely positive feedback from existing customers. The level of satisfaction among our existing customers is important as word of mouth referrals and reference checks are sometimes the most effective form of marketing to hospitals. Momentum is building, and we are ready to seize the moment. We are confident that our newly appointed Chief Commercial Officer, David Webster, who begins on July 8th, will build upon this newly cemented foundation and on our success to date. Now I will fill you in on some quick statistics. More than 50 hospitals in the United States have used LungFit PH to treat patients. These hospitals collectively have now treated over 1,100 patients. This translates to over 75,000 hours of therapy with LungFit PH. Clearly, LungFit PH works in multiple settings, while being used with various ventilators, and hospital staff are pleased with LungFit's benefits. Also, it's worth noting that most of these hours were done with LungFit PH prior to the recent updates. So just imagine how much more satisfying it is for hospital staff to work with the upgraded system. Perhaps most telling, continuing on our discussion of engagements from our last earnings call, every hospital that uses LungFit PH that had their contract conclude has renewed with us. The number of multi-year contracts has increased by over 100% since our last conference call, with such requests becoming more frequent. We are proud of our continuing performance and the quality of LungFit PH and to be crystal clear to all of our potential customers, we welcome all head-to-head comparisons with any competitor's NO device under any circumstance. Now, a few things about our new Chief Commercial Officer, David Webster, and why we believe he is absolutely the right person to lead the commercial team. We were fortunate to have had several very capable candidates participate in the extensive vetting process for the job. While all the candidates were extraordinary, David's record of success and demonstration of leadership qualities led us to believe that he will drive the success of LungFit PH. He has extensive experience bringing products to market in the hospital setting and working within small to medium-sized companies. He also has built commercial teams from the stage where we currently are, with customers in 10 states to full-sized well-oiled machines covering the entire United States. I look forward to having David hit the ground running in two weeks. In addition to having a well-qualified Chief Commercial Officer at the helm, we also have a couple of other upcoming events that should further drive growth. Remember, that our PMA supplement for the expansion of the LungFit PH label to include cardiac surgery was accepted and is under review by the FDA. While there is no firm date for the FDA to complete its review and timelines may change, based on our interactions with the agency to date, we expect a decision in the fourth quarter of calendar 2024. Recall that there are no nitric oxide products presently approved for cardiac surgery in the United States. Looking outside of the U.S., CE Mark for LungFit PH remains pending and we continue to work collaboratively with regulators. While we don't presently have clarity on updated timing, we have learned to be patient given the overhaul of the EU medical device regulations that occurred a few years ago and the learning curve of the European notified bodies as everyone navigates the new rules. As we have mentioned previously, in addition to opening up doors in Europe for our system, receiving this CE Mark will trigger a milestone payment from our partner Getz Healthcare, which has signed an agreement with us to commercialize LungFit PH in several countries in the Asia Pacific region, excluding Japan. As I look ahead, while we continue to make significant strides forward, delays in reaching our milestones have left us slightly behind our previous near-term targets. Due to this, we are revising our fiscal year 2025 revenue guidance to greater than $10 million, down from $12 million to $16 million. I will now address our cash burn. Preserving capital is critical for us at this juncture in our evolution in this current market. We began our analysis in January of how we could most effectively preserve capital and give our new Chief Commercial Officer a runway to succeed. Since then, we have reduced our headcount by over 20%, with most of the moves occurring in the June quarter. Most of the associated costs, including severance payments, will be recognized in the June quarter, the first quarter of our fiscal year, resulting in what we expect to be the largest cash burn of fiscal year 2025. Conceivably, the decrease in our bank balance in the June quarter may end up being more than the other three quarters combined. To reiterate what was in the press release earlier today, the impacted R&D projects include the LungFit PRO program, which is on hold, and LungFit GO, where all engineering has been brought in-house, which resulted in a delay until 2026 for the next clinical study start. The LungFit PH transport-ready system is on track for FDA submission on or about December 31, 2024. Beyond Cancer's UNO program is nearing the end of Phase 1a and is targeting initiation of a Phase 1b combination study with anti-PD-1 therapy prior to the end of calendar 2024. NeuroNOS, Beyond Air's subsidiary focused on autism spectrum disorder, is still moving towards a first-in-human study in 2025. Beyond Cancer and NeuroNOS are focused solely on their respective human studies and in alignment with Beyond Air's focus on careful cash management. Now an update on Beyond Cancer. Data were recently announced from its Phase 1a study evaluating ultra-high concentration nitric oxide, or UNO, in subjects with advanced relapse or refractory unresectable primary or metastatic cutaneous and subcutaneous solid tumors. These encouraging first-in-class clinical data show UNO demonstrated evidence of immune system activation by a biomarker response in a heavily pretreated population. These data were presented at the American Society of Clinical Oncology Key Opinion Leader Event held in conjunction with the 2024 annual meeting in Chicago. In addition, Beyond Cancer presented the design of the Phase 1b trial, which will enroll up to 20 subjects with prior exposure to anti-PD-1 antibody that have either progressed, not achieved a response, or have prolonged stable disease on single-agent anti-PD-1 without radiographic evidence of continued tumor reduction. Subjects enrolled in the Phase 1b trial will be treated with the UNO plus anti-PD-1 combination upon completion of the Phase 1a trial and regulatory approval. I encourage all of you to visit the Beyond Cancer website to get better educated on this potential transformational therapy for those suffering from solid tumors. Now we'll turn it over to our CFO, Doug Larson.

Thanks, Steve, and good afternoon, everyone. Our financial results for the fiscal year ended March 31st, 2024, are as follows. Revenue for the 2024 fiscal year was $1.2 million as compared with zero revenue in our previous fiscal year. We are showing a $1.3 million loss in gross margin, which is worth spending a bit of time on. That figure is close to $2 million lower than our expectations from a year ago, and probably your expectations as well. For those of you who listened in for the third quarter call, none of this will be a surprise, but it's worth repeating. There are three main drivers of this margin shortfall. First, we incurred costs related to upgrades of the LungFit devices for the last two quarters of fiscal year 2024 and will continue to incur costs for the next few quarters as we complete the upgrades of all devices. Second, we prebuilt several hundred devices that are currently being upgraded. So we have depreciation of devices that are not currently generating revenue. Depreciation explains almost half of the margin variance. This effect disappears as we place units in hospitals and is not a drag on cash. Third, we're suboptimal in our physical warehousing infrastructure. But as we expand our customer base in each region, this effect will dissipate. Research and development expenses for the fiscal year ended March 31, 2024 were $24.4 million, compared with $16.8 million for the previous fiscal year. The increase of $7.6 million was attributed primarily to an increase in development costs with just over half of that increase for external costs for trials and professional fees. G&A expense for the fiscal year ended March 31, 2024, was $37.3 million, compared with $34.7 million for the previous fiscal year. The biggest moving parts in the net increase of $2.7 million were due to increases in headcount. Other expenses for the year ended March 31, 2024, and March 31, 2023, were losses of $1.3 million and $7.3 million, respectively. The $6 million improvement was mainly due to the $7.1 million year-on-year decrease in non-product-related litigation, an additional $1.1 million of interest income, and $0.7 million pickup from the change in fair value of our warrant liability, partially offset by an increase in interest expense of $2.9 million. For the year ended March 31, 2024, the company recorded a net loss of $64.3 million, of which $60.2 million, or $1.82 per share, was attributable to the shareholders of Beyond Air Inc. compared with a net loss of $59.4 million or $1.86 a share for the fiscal quarter ended March 31, 2023. Net cash burn in the quarter ended March 31, 2024, was $12.8 million. We continue to expand our pool of LungFit devices in addition to making payments on our VCAP study, continue to work on the development of our transport-ready device, human trials in Beyond Cancer, and advances in our autism program. Finally, in March, we entered into a security purchase agreement with Roth Capital and Laidlaw. In that offer, we sold just over 9.6 million shares of common stock with a one-for-one callable warrant at $1.66 per share. The warrant has a $2.25 exercise price and can be called upon us achieving $4.5 million of revenues in the quarter ending March 31, 2025. We received net proceeds of $14.6 million at the end of the quarter from this purchase agreement. As of March 31, 2024, the company had cash, cash equivalents, and marketable securities of $34.5 million. As Steve mentioned in his earlier remarks, we are executing a plan to preserve capital and extend our cash runway. We'll start seeing the impact of that plan in our second fiscal quarter, which starts a week from today. Finally, as Garth mentioned in his opening remarks, given that the timeline between this call and the close of the next quarter are so close, we're not planning on hosting a Q1 conference call next month. And with that, I'll hand the call back over to Steve.

Thanks, Doug. Before we open the call for questions, I would like to address one more item. Two weeks ago on June 7th, we filed suit in New York State Supreme Court against Airgas for breach of contract. There will be information in the 10-K that will be available shortly after this call. As this is pending litigation, I will not be making any further comments on this matter. We will now take any questions you may have.

Thank you. We will now open the floor for questions. Our first question comes from Marie Thibault with BTIG. Please go ahead with your question.

Good evening. I want to start off here with a question about the fiscal fourth quarter we just completed and try to understand why we didn't see more of a sequential lift in revenue between fiscal third and fiscal fourth quarter? And as part of that, I would also love to understand some of the assumptions built into the fiscal 2025 outlook?

Thanks, Marie. As mentioned in the prepared remarks, we made a decision to ensure that our upgrades were tested with our current customers first. We wanted to confirm that everything was functioning properly before we expanded to the broader market and attracted new customers. It’s crucial for us to upgrade our existing customers, which extended the process a bit longer. Therefore, we didn’t onboard as many new customers as we had expected. I believe that’s the primary reason, though it may not be the only one.

Okay, and some of the assumptions in the fiscal 2025 outlook?

Well we're assuming that our pipeline is accurate in terms of potential hospitals over the next nine months and that our success rate, which we can measure fairly decently given the experience we've had in the market, is in a normal range. Not to mention we have someone new who's going to be leading this team starting in two weeks and we have a lot of confidence in our new Chief Commercial Officer and the strategies that he will bring to us. So I think those are some of the assumptions. I mean, it's important that we have a database of targets and we have an expected win rate. I think that with our machine and the shape that it's in, we're going to be just fine.

Okay. Given we're five, six days away from the end of your fiscal first quarter, any chance you can give us some color around how that quarter is doing, especially since we won't get to hear from you publicly next quarter?

Yeah. I mean, it's certainly better than last quarter. Our growth in this quarter will be better than our growth from 4Q over 3Q, that's for sure. Not just a little bit, but the growth rate will be significantly better.

Thank you for the update on cash burn. Can you remind us about the debt financing from a couple of quarters ago, including the remaining tranches? Do you still have access to the full amount? I recall there were some milestones related to that. Is that funding still available to you?

So the milestone, the first milestone funding is not available to us, but there is another pool of money that could be available to us if we choose to have a discussion with our lender.

Okay. And can you tell me how much that is?

So 10 was the second tranche, 12.5 the third tranche.

12.5. So the 10 is not available anymore. The 12.5 is potentially there.

Okay. That's helpful. Thank you.

Thanks, Marie.

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

Thanks for taking the questions. My first question is that, given that you guys are going to be more conservative in terms of the R&D expenses, so how should we think about from a housekeeping perspective, the trend for fiscal 2025, both in R&D as well as in SG&A?

Thanks. I'll take that one. So, in our modeling and in the plan that Steve and I put together, we were looking for kind of north of 15% of our operating cost reduction year-on-year. We've got a plan to attain that. There's more of that in R&D. So we're looking at north of 20% reduction in overall R&D spend year-on-year. In SG&A, somewhere between 5% and 10%. And a little bit lower in SG&A, obviously, because our selling is in there and we didn't want to touch that part and give David a chance to get the market running.

And also that in terms of the revenue for fiscal 2025, should we anticipate a greater portion of the revenue in the second half of this fiscal 2025 versus the first?

Yes, sir. Yes, to conclude, as Steve mentioned, we expect higher growth next quarter compared to last quarter, and anticipate continuing that trend through the third and fourth quarters.

And maybe the last question here is that, for the last reported quarter that you indicated, was there any new accounts or mostly just the renewing of the existing accounts and what do you anticipate at least starting from fiscal 2025? Do you anticipate more new accounts instead of, again, renewing? Or how should I see the mix?

Yes, we have gained a lot of new accounts. This is crucial for increasing our revenues. While there may be some minor growth from existing customers if they use more than expected, that is not significant. It is very rare for a hospital to exceed its estimate by such large margins. Therefore, the real drivers of our growth are new hospitals. We signed new hospitals in our fiscal fourth quarter and have secured even more in this fiscal first quarter than we did last quarter. We expect this trend to continue, and the growth rates will increase quarter-over-quarter. Eventually, these rates may level off as we grow larger in the quarter, making it harder to maintain that momentum. However, the number of hospitals we sign should keep rising over the next several quarters, possibly extending into fiscal 2026.

Okay, great. Thanks a lot. I appreciate the colors on the development.

Great. Thanks, Yale.

And our next question comes from the line of Matt Kaplan with Ladenburg Thalmann. Please proceed with your question.

Hey guys, thanks for taking questions. Steve, maybe if you can help us understand in terms of where you are with respect to the software upgrades across the existing devices?

Yes. So Matt, we have two lines that are contract manufacturers, so we are building new systems on one and we're upgrading old systems on the other. That process will continue for the next couple of quarters. Instead of upgrading all of them on both lines, we want to make sure that we have a line making new ones from scratch as well. So the technicians over there building it don't get rusty because it's a different process when you're upgrading versus building new ones. So we have a line for each, so it will continue for the next couple of quarters.

So kind of mid-fiscal year you'll be completed with the upgrades and then we should think about…

I would say mid-fiscal year, leaning more towards the end of the fiscal year. Our fiscal year is nine months long, so there will be at least two or three quarters where we continue these upgrades and also build new ones. We don't expect any problems meeting demand, and if we did, that would be a fortunate challenge. We can increase production on our new machine line if necessary, but it won't happen immediately. If we anticipate rising demand, we need to decide three, four, or five months in advance to ramp up. You'll have a good sense of demand; it's not like we suddenly have 17 hospitals sign up in two weeks without expecting it. We can forecast three, six, or nine months ahead from our targeted hospitals. Currently, we believe our manufacturing and retrofitting are adequate. If we can place all of our systems, we will certainly exceed the $10 million for this fiscal year. We're aiming for that figure but are producing a bit more than it suggests. If we place all of our machines, we can definitely surpass that number. We are not lacking in supply capacity.

Okay. How should we consider your focus on driving growth? Are you aiming to expand the customer base, increase usage among existing customers, or both?

So I think it's both, but to new customers is going to be the real driver. A hospital knows they're using 10,000 hours a year or 15,000 hours or 3,000 hours or 25,000. They're not going to come back to us and say, 'hey, we're using 50% more than we thought.' There can be some increase there. Maybe they're switching over from a competitor’s product, for example. They’re switching over from that product to use nitric more. But again, it's not going to be some massive move. I think that getting recommendations from existing customers is really where we're starting to build the business. So I think it's the referrals that help us the most. We recall that we do have a partner overseas in Asia and we expect before the end of this calendar year to hopefully get some European partners. So there will be some shipments going out to at least Asia this fiscal year.

And then last question in terms of the PMA supplement which is under review. I guess initially we had thought about calendar year's second half of this year. What's pushing it to the fourth quarter and what do you think that impact will have on your revenue ramp or upon approval of the PMA for the cardiovascular indication?

It's still the second half of the year. I wish it were the third or fourth quarter of the calendar year, but we are in the second half. The FDA takes their time, and I don’t believe this will have an impact. The guidance we provided, including our previous guidance, does not account for any effects from cardiac surgery on the label in fiscal 2025. For fiscal 2026, we do expect to have that in the background. This is the standard process with the FDA; that’s why we mentioned the second half. It would have been ideal if it was September or October, but now it seems it might be more like October or November. There are no guarantees, as you know, and this is based on our latest communications with the FDA. This appears to be the timing, but there could still be more questions. Since this is not a drug review, there is no specific PDUFA date. This is related to medical devices, so it’s never a fixed target; it’s always subject to change. Based on what we understand from the FDA, we expect to receive a decision in the December quarter. However, I will keep you updated if that information changes.

Great. Thanks, Steve.

Thanks, Matt.

Thank you. At this time, we are showing no further questions in the queue, and this concludes our question-and-answer session. I would now like to turn the call back over to Steve Lisi for any closing remarks.

I want to thank everybody for listening in. We're pretty excited about the point that we're at right now. It should have happened a little sooner, but sometimes you've got to wait for the good stuff, right? I look forward to speaking to you all in the future.

This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.