Good afternoon, and welcome everyone to the Beyond Air Financial Results Call for the Fiscal Quarter Ended December 31, 2024. At this time, all 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 Corey Davis, LifeSci Advisors. Thank you. You may begin.

Thank you, operator. Good afternoon, everyone, and thank you for joining us. Today, after the market closed, we issued a press release announcing the operational highlights and financial results for Beyond Air's third quarter of fiscal 2025 ended December 31, 2024. A copy of this press release can be found on our website, beyondair.net, under the News and 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 this live broadcast, February 10, 2025. Beyond Air undertakes no obligation to revise or update any statements to reflect events or circumstances after the date of this call. With that, let me turn the call over to Steve Lisi, Chairman and Chief Executive Officer of Beyond Air. Go ahead, Steve.

Thanks, Corey. Good afternoon to everyone joining us. With me here today is Doug Larson, our Chief Financial Officer. Let's start today's call by stating how pleased we are with the sequential quarterly revenue growth we are seeing as our commercial team continues to make significant progress. This has been driven by a steady stream of new hospital signings and going through the onboarding process to begin using our LungFit PH system in their institutions. During the quarter, we saw six new hospital starts and two hospitals renew their contracts, one of them for three years. There's only been about nine months since our upgraded LungFit PH began shipping and seven months since our new Chief Commercial Officer joined us, which has brought new energy to the entire Beyond Air team. We expect this momentum will continue and drive sequential quarterly revenue growth throughout this year. A key factor of our ongoing success is that the Beyond Air team has done a tremendous job of strengthening each stage of the customer engagement process to ensure we are offering the best possible experience for hospital administrators, nurses, physicians, staff, and of course respiratory therapists. Most importantly, our existing customers are providing overwhelmingly positive feedback on the LungFit PH device, which translates to great references for potential new engagements. Building on our robust customer engagement pipeline, we now have several partnerships in place supplementing our direct sales team, including Healthcare Links, a renowned healthcare advisory and contracting firm that works with GPOs and IDNs and TrillaMed to help us engage with and distribute to the military and veterans administration hospitals. Additionally, our marketing efforts have been upgraded significantly, which has provided a meaningful boost to our sales efforts. In addition, our presence and activities at all respiratory conferences are much improved, which you can see if you take a look at all of our social media postings. Turning to the PMA supplement for the LungFit PH label expansion to include cardiac surgery, the interactive discussion with FDA continues. We will continue to provide FDA with the information that they request and provide updates to investors each quarter. As a reminder, no nitric oxide products are currently approved for cardiac surgery in the United States. One last point about the U.S. Market. We expect our PMA supplement for our next generation LungFit PH transport capable system to be ready shortly for submission to FDA. Recall that in November, we demonstrated this next generation system at the AARC Annual Meeting and the feedback was quite strong with the most common question being, 'When can I get this version of LungFit PH in my hospital?' We will provide further details on this system on next quarter's earnings call. Outside the U.S., we announced in December that LungFit PH received the long awaited CE Mark approval. This approval allows us to market LungFit PH in the European Union as well as other countries that recognize this certification. The indications covered under CE Mark certification are the treatment of infants with greater than 34 weeks gestation with hypoxic respiratory failure and the treatment of peri and post-operative pulmonary hypertension in adults and children in conjunction with heart surgery. Receiving CE Mark triggered a $1 million milestone payment from Getz Healthcare, our Asia Pacific distribution partner, which we will receive in March. Along with royalty payments, we will receive based on LungFit PH. Getz is already ahead of schedule securing market authorization in Australia less than two months after receiving CE Mark. To accelerate ex-U.S. sales, we have teamed up with Business Asia consultants to provide LungFit PH to hospitals throughout Europe, South America, the Asia Pacific region, and the Middle East. We've already seen progress with extremely high distributor interest. In fact, we already have two new contracts signed in the Middle East. As a reminder, the fact that LungFit PH generates nitric oxide from room air opens up enormous opportunities in areas around the world where hospitals are unable to obtain nitric oxide supply or do not use nitric oxide due to logistical difficulties associated with cumbersome cylinder-based systems. Overall, we believe that the updated LungFit PH on the U.S. market since the spring of 2024 is poised to start taking significant market share in the U.S. and globally. The inflection point is happening now in the U.S. thanks to the system performance and our new and improved commercial infrastructure. Globally, we expect to see shipments starting in the next few months, which will make an impact on our revenues in the back half of fiscal 2026 and beyond. We will be providing revenue guidance for fiscal 2026 on our fiscal 2025 year-end conference call, which will be held in June. Turning to Beyond Cancer, as peers reported, they received regulatory approval to begin a Phase 1b trial for low volume ultra-high concentration nitric oxide or UNO, in combination with anti-PD-1 therapy in late stage cancer patients who have failed anti-PD-1 therapy, which remains an area of high unmet patient need. Top line data from this Phase 1b study are anticipated around the end of calendar 2025. The UNO dose will be 25,000 parts per million. We call it low volume now because our original human study utilized one liter of gas, while this Phase 1b study will utilize less than 100 milliliters of gas, a reduction of over 90%. As everyone knows, the global anti-PD-1 therapy market is in the tens of billions of dollars. I encourage all of you to visit the Beyond Cancer website for more information, as we believe this year should be transformational for this potentially groundbreaking therapy for those suffering from solid tumors. I am also pleased with the advances that NeuroNOS, our subsidiary focused on therapies for autism spectrum disorders is making. During the December, NeuroNOS announced the appointment of Professor Roger Kornberg to its Scientific Advisory Board. Dr. Kornberg is a renowned leader in the field of eukaryotic gene transcription and was awarded the Nobel Prize in Chemistry in 2006 for his groundbreaking work in molecular reality. NeuroNOS will meet with FDA later this year to get an idea of the path to human studies, which we expect to begin in calendar 2026. The NeuroNOS website offers a more complete understanding of what is to come over the next few years, including first in human data anticipated later in 2026. I hope you all see the great progress made recently and how these leading indicators paint a bright future for LungFit PH and for nitric oxide as a revolutionary therapy across multiple indications. Beyond Air will continue to be diligent on this path to profitability and improve the lives of patients in need of the benefits of nitric oxide. Now, I will turn it over to our CFO, Doug Larson.

Thanks, Steve, and good afternoon, everyone. Our financial results for the third quarter of fiscal 2025, which ended December 31, 2024, are as follows: Revenue for the fiscal third quarter of 2025 was $1.1 million as compared with $0.4 million a year ago. We're showing a $0.2 million loss in gross profit for the fiscal third quarter of 2025 compared to a $0.4 million loss for the same period last year. Cost of revenue in the current fiscal year exceeded revenue primarily due to $0.3 million of one-time costs required to upgrade our existing fleet of devices plus $0.5 million of non-cash headwinds, mainly the depreciation of devices purchased but not yet deployed. Research and development expenses were $3 million as compared to $6.8 million for the 3 months ended December 31, 2023. The decrease of $3.8 million was primarily attributed to a decrease in salaries and stock-based compensation. SG&A expenses for the 3 months ended December 31, 2024, and for December 31, 2023, were $7.7 million and $9.8 million, respectively. The decrease of $2.1 million was primarily attributed to a decrease in salaries and stock-based compensation costs. Other expense was $2.4 million compared to $0.3 million in the previous year. The increase of $2.1 million was mostly non-cash and attributed primarily to the extinguishment of the Avenue loan. Net loss attributed to common stockholders of Beyond Air, Inc. was $13 million or a loss of $0.15 per share basic and diluted. Our net loss for the 3 months ended December 31, 2023, was $16.2 million or a loss of $0.50 per share basic and diluted. Net cash burn in the quarter was $7.6 million, which was more than 30% lower than the prior quarter ended September 30, 2024. This decrease is mostly attributable to cost reductions implemented during the first half of fiscal year 2025, which included us closing 2 offices, a 30% reduction in staff, putting our VCAP study on hold, and adjusting our production forecasts. We anticipate cash burn to continue to trend lower in the March quarter, but not to the same magnitude as we saw in this quarter due to the one-time costs required to complete the submission of our next-generation LungFit PH to FDA. As of December 31, 2024, the company had cash, cash equivalents, and marketable securities of $10.9 million. We believe that our cash, cash equivalents, and marketable securities will be sufficient to allow us to support our current operating plans through the spring of 2026 provided we continue to hit our internal revenue estimates and control costs at Beyond Air. With that, I'll hand the call back to Steve.

Thanks, Doug. We will now take questions.

The first question is from Jason Wittes from Roth Partners.

Hi. Thanks for taking the questions. Looks like nice progression this quarter. In terms of the CE Mark, how should we think about timing in terms of how that might start impacting revenues going forward? Is that an initial immediate hit or is that a delay to get installations in or how do we think about that?

Yes. Thanks, Jason. Yes, it takes a little bit. So I wouldn't think we'd see much in this March quarter that we're in. I would look more towards a small impact in June and then picking up significantly in September and December and much more after that. So, it takes a little bit to get going, but we're going to be shipping in the first half of this calendar year for sure.

Okay, that's good to know. Regarding expenses, it seems that operating expenses, excluding R&D, should decrease further in the next quarter, correct? You mentioned it will come down gradually, although R&D is increasing due to the PMA. Did I understand correctly about how the fourth quarter will look and the overall trend for these expenses?

Yes, exactly. I mean the June quarter will be a much steeper drop than the March will be, because we're getting this second generation LungFit PH submitted.

But the other expenses sound like there's still some additional incremental down on those expenses. I guess that's what I was asking as well.

Yes, correct.

Okay. And then maybe one last question or jump back in queue. In terms of the PMA submission, and this may be not an easy answer, but, a sense of how long you expect that may take to run through the process, is that I understand that it's always hard to get visibility on the FDA?

Especially now. I don't know how many people are going to be quitting the FDA and/or taking retirement or what. I really just don't know. I guess we'll have a better idea once we submit, and as you know, there's usually an FDA acknowledgment that receipt and sends you out some questions and some thoughts and comments on your submission. So I think we need to wait for that to get an idea of where FDA stands and what kind of resources they have to devote to this application. I don't even know if they know what their staff will look like in the next 60 days. So I really don't have an answer for you, Jason. I wish I did, but I just don't know how to handicap it at this moment. I think things are still in flux over there.

Next question is from Marie Thibault from BTIG.

Hi, good afternoon. This is Sam on for Marie. Appreciate everyone taking the questions today. Maybe you could start here on the changes to the commercial organization. It's been about seven months since David joined. You have the new LungFit system and clearly, things are progressing in the right direction. So I'm wondering what's working well? What are some of the changes that you've made internally that are driving some of this sequential strength here?

I think it's more of a cultural shift. I think David, who's our new Chief Commercial Officer, I don't want to call him new anymore. He's no longer new. I think David's driven a new culture here. I think the culture was not good when we launched the product, for various reasons, and that culture needed to be changed. I think David came in and created a new culture here and it's just a more positive attitude, and I think our customer service is always strong. I think it's gotten better. We have even new leadership on our customer service side. Very excited about the gentleman who's running that now. And that makes a lot of difference when you're taking care of your customers, making sure that everything's running smoothly for them. And right now, the machine is performing beautifully, and our customer service team actually has a lot more time on their hands to work with our customers and potential new customers because they're not trying to keep up with the questions and issues that we had with the original version of the system, which was expected when the original version hit. It was absolutely expected. Again, what wasn't expected is how long it would take us to get all those upgrades through FDA. But now that they're through, it's running as we expected. So, I think the most important thing is the culture shift and our ability to have superior customer service than to what one might expect.

Yeah, it makes a lot of sense. And maybe just following up on the transport, PMA submission. I'm wondering how material could that be once you do get approval? How often is that coming up in your conversations with hospitals? Is that something where perhaps the pipeline is already being built now so that once you do get the approval, you have customers basically waiting ready to sign up?

Yeah. I have to be careful how I answer this question for you. But yes, I think it comes up quite a bit about our next generation product. We showed it back in November. People have seen it, people are excited about it, they want it. I do think it's going to make all the difference. It's not just transport capable, but there are other upgrades that have been made, and it's a lot smaller and lighter. So that will help a lot as well. People definitely want it and they're waiting for it, but I'm not going to go so far as to say we have a waiting list. I won't say that.

Okay. Okay. Very good. And maybe I can just squeeze in one final one in terms of annualized contract revenue. I think it was about $3.5 million as of October. Any update on that metric? Or is that something you're still providing?

Looking at Doug right now, was it that high? We probably aren't going to comment on that. I guess the comment will be that I guess the Street is around $4 million for our fiscal year of ’25, and I think that's certainly a good place to be. As for what the run rate will be, I'll leave that to you. You saw we put up this quarter, it's going to grow next quarter or in the March will be higher than the December for sure. So you can kind of guess what that run rate will be.

Next question is from Jason Bednar from Piper Sandler.

Hey, guys. Congrats on the quarter here and the progress. Steve, I'll start with one. I'm not sure you're going to be able to answer it or not, but I'll try. You say you're going to be reintroducing guidance, which is great to hear you got the visibility to do that. When we get to that next quarter, you also sprinkled in like a double-digit sequential growth quarter on quarter going forward for the foreseeable future. And we can all see where the Street is at. I guess just as you try to perhaps prep the Street investors, do you like where the Street is currently sitting for fiscal ‘26? We're all kind of already modeling pretty strong double-digit sequential growth quarter-on-quarter throughout the year. So is it, would you say it's too strong? Would you like things to be conservatively set? Any kind of thoughts or early thoughts there on the setup for the year?

Thanks for bringing a smile to my face, Jason. We're definitely not going to comment. We'll give guidance in June for the fiscal year. And I am not going to give you any hints on what you should do with your numbers. You'll see what we report in June and I'll give you that guidance. So, in general, we as a company internally, we feel really good about what we're doing right now. We feel really good about the progress we've made and the momentum we have. So, I'll leave it at that.

As we kind of get closer and approach that point, do you think you'll be in a position to talk about the contribution you expect from U.S. versus international partnerships, or are you just thinking about, here's our total worldwide revenue guidance and we'll leave it at that?

I think it's going to be total because I think it's too early for us to gauge that ratio. International could move faster than we think. It could take a little longer than we think. We have lots of countries to go through the regulatory process outside of the European Union. And as you know, inside the European Union, even though we have CE Mark, some countries are quicker than others in terms of getting your product to the market. So those are some of the things that are out of our control. So we just don't know how quickly it will happen. And again, even in the U.S., things can be a little chunky in terms of timing of when contracts start. To really nail down that ratio between the two, I think that's going to be tough when we give guidance. Maybe after a year of experience under our belts, we might be able to do a little bit better, but I think that's going to be tough. The total number will allow us to give ourselves some room with our guidance so that if there's movement between those two, up or down in terms of expectations, we'll be perfectly fine to hit our guidance that we're going to give.

As you gain more experience in hospital contracting, are you noticing any seasonality regarding when contracts are up for bid or when hospitals are making decisions, or is there no significant seasonality in the process?

I don't really think there's much seasonality to it. I don't really think there is. Again, it depends on some hospitals being larger than others. So you could get two or three hospitals in one quarter and have one big one, and get seven the next quarter, and those seven might not equal the big one. So it's pretty chunky at this point. What we've seen is hospitals are starting every month of the year. We haven't really seen a major time point. And a lot of them can start some of the contracts when they want, right? They don't have to wait till the end of the contract. There are ways to move out of certain contracts. So if they want to move, they just say, we want to move, and they just go. So it just depends on the type of contract that they have. So I think it's very variable. I think it's when they make up their mind, they want to move, they'll move.

That's all very helpful. One last question to add, and I apologize if I overlooked it. Did you provide any update on the PMA submission for the next-generation device? I don't recall any comments on the status of the cardiac label expansion or indication related to that. Can you share any updates on the FDA questions you are addressing and how that is progressing as you work to secure that label?

Yeah, it's kind of the same thing I said about the PMA for the next-gen system. I mean, we're certainly in contact with them about this, but it's a little bit in flux at the moment. We're just kind of waiting for things to settle down a little bit with the FDA, and we'll keep working with them. But that's all I can say right now. I don't really have much detail to give on this other than that we're working with them and we'll continue to do so and push forward with this. I mean, this is an indication that is obviously approved everywhere in the world, but the United States. So I think for patients’ safety, this is something that should be late. Absolutely. So we'll keep working with the FDA and get them what they need.

Next question is from Justin Walsh from JonesTrading.

Hi, thanks for taking the question. I'm wondering if you can remind us how you view the longer-term relative importance of U.S. versus ex-U.S. geographies for LungFit PH and maybe the expected impact in different geographies of the next generation product as that gets out there.

Yeah. I mean, you look out five years, I think ex-U.S. would be much bigger than the U.S. Right now it's not, but with our product, the fact that we're making it from ambient air changes the game. It's not easy for a lot of these countries to deal with cylinders, or they may just be cost prohibitive or geographically prohibitive. And we solve that problem. I think that one example of that is the naval base in Guam. I think we're the only ones that could support them. It's that simple. So that will occur in our opinion all over the world where it's difficult to get nitric oxide. So that's going to take time. It's not going to happen overnight. It's not going to happen next year. But if you're looking out five years, I think ex-U.S. is going to be a lot bigger than the United States market in terms of money and total volume for sure. So we're very excited about the ex-U.S. opportunity. But again, that will take some time to roll out. I don't see it impacting massively fiscal ‘26 or ‘27 in a meaningful way where it's larger than the U.S. market. It will impact us in a meaningful way as a company, but it won't look bigger than the U.S. market. I think that beyond that, starting in which our fiscal ‘28, which should be mostly calendar '27, you'll start to see that trend moving. I think you'll start to realize, wow, the volume is picking up. Globally, this is going to be a much bigger product than anyone believes.

Next question comes from Yale Jen from Laidlaw & Company.

Good afternoon and thank you for taking the question. Steve, you mentioned you've got six new hospitals and the two renews in the U.S. for this quarter. Is that right?

That's correct.

Last time you mentioned that in the previous quarter, you achieved a 60% increase in terms of the hospital contract. Can you provide any updates on that front? Additionally, for the last quarter's contract, have any actually become paying customers this quarter?

So I don't have the numbers in front of me about the percentage increase like I did last quarter. My apologies, I can get that for you and get it to you offline. But I didn't catch the last part of your question about paying customers. I'm sorry. What was that?

Last quarter, we signed a number of contracts, but some of these may not have been paid or purchased immediately. I'm interested to know if any of these contracts from this quarter have already converted into paying customers.

Yes, you are correct. We can finalize a contract. Typically, when contracts are signed, customers begin within 30 to 45 days, and sometimes even within 15 days. Usually, after signing, they can start within 60 days or less. However, there are instances where a hospital might sign a contract three to six months ahead and request a start date in five months. This does occur. In the March quarter, we had two hospitals that were signed in the summer and began in that quarter, but none that signed in December and delayed starting. All December contracts were both signed and started in that quarter. We did have some customers sign over the summer, initiating their service in the September quarter and starting in March. That is accurate.

So in other words, the turnaround time becomes shortened and do you anticipate this trend continues or this could be lumpy, varying, depending on the contract?

No. The two hospitals that signed six months in advance is unusual. It's not typical based on our experience, as most hospitals sign and begin within 30 to 45 days. This situation was a bit out of the ordinary. I wouldn't say it will never happen again, but it's rare from what we've observed. Other companies in the industry might view it differently. However, when a hospital decides to switch, they usually act quickly and finalize the process. I believe sometimes hospitals want to partner with us but do not realize they are unable to exit their current contracts, so they sign with us and wait. I think that was the case with these two hospitals, and this scenario can occur.

Okay, great. I appreciate the colors on that. Maybe two quick questions. First one, in terms of balance sheet, as you look at it, you are totally out of the long-term debt. Is that correct?

No, no. Remember last quarter, we swapped out the debt. We have $11.5 million but the payments on that don't begin until October of ‘26. So it gives us time before making payments on that. The interest is accruing and going on top of the principal until we start making payments and that's an 8% royalty on net sales that pays that. So we don't have any scheduled payments. It's just at the end of the September quarter of ’26, that is, we will make a payment, it's 30 days later or 45 days later, yes, 30 days later, we make a payment. So we start making those payments based on our ability to pay based on net sales. So that structure is very company-friendly, obviously.

Absolutely. And maybe the last question here is that you have to transfer a new, so next-gen device. Let's just assume, if for any reason that you may have both NICU and the cardiac PMA or supplement PMA approved, would you file for the next-gen for both indications or you still start with the NICU, I mean, and maybe later for the cardiac surgery once you have the supplemental NDA for the regular system approved?

That's a pretty good question. I haven't really thought about that one. I don't think I'll have a definitive answer at this moment. The next generation is a PMA supplement for our currently approved LungFit PH. So I think it would just be automatic. I don't know. My regulatory team will probably want to keep their mouths shut. But since it's a PMA supplement, our second generation is for our first generation, we'll just assume whatever the level is for the first generation.

This concludes the question-and-answer session. I'd like to turn the floor back to management for any closing remarks.

Thanks everybody for joining us. We are definitely looking forward to speaking with you in June and providing guidance for you. Thank you.

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