Beyond Air, Inc. Q4 FY2025 Earnings Call

Good afternoon, and welcome to the Beyond Air Financial Results Call for the Fiscal Quarter and Year Ended March 31, 2025. I would now like to turn the call over to Corey Davis with 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 operational highlights and financial results for Beyond Air's fourth quarter of fiscal year 2025 ended March 31, 2025. A copy of this press release can be found on our website, beyondair.net, under the News & Events section. Before we begin, I'd like to remind everyone that we will be making comments and various remarks about future expectations, plans and prospects, which constitute forward-looking statements for purposes of the safe harbor provisions 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 SEC, 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, 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 17, 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, I'll turn the call over to Steve Lisi, Chairman and Chief Executive Officer of Beyond Air. Go ahead, Steve.

Thanks, Corey, and good afternoon to everyone. With me here today is Doug Larson, our Chief Financial Officer. We are quite pleased with the progress we've made over the past year. For the fiscal year ended March 31, 2025, we reported a 220% increase in revenue to $3.7 million compared with $1.2 million for the same period last year. All of this growth came from U.S. sales, the majority coming from hospitals signed during the back half of the year. As a result, we have tremendous revenue growth built in to kick off fiscal year 2026, along with several new growth drivers as I will discuss in a moment. With this in mind, we have decided to also announce that we are on track to report revenue of at least $1.7 million for the quarter ending in just 2 weeks on June 30, 2025, which translates to greater than a 45% sequential quarterly growth and greater than 145% year-over-year growth. In addition, we are providing revenue guidance of $12 million to $16 million for the full fiscal year ending March 31, 2026. This level of projected growth moving forward shows how we are overcoming the barriers to entry in the nitric oxide market and are well on our way to making LungFit PH the market leader. The more customers use LungFit PH, the more confidence grows in the product and our ability to provide top-tier service. This is an exciting time for our team and our shareholders. Let me now dig a little deeper into the numbers for the fiscal fourth quarter of 2025 and growth drivers for fiscal 2026. The commercial team's efforts have led to a steady flow of new hospital contracts throughout fiscal year 2025. During the fourth quarter, we saw 3 new hospital starts and 3 hospitals renew their contracts. As I've mentioned recently, we have established a solid customer base across key target regions in the U.S. We are pleased and thankful that many of these customers have made themselves available as references for LungFit PH over recent months, which has proven to be a valuable tool when establishing new accounts. Further to the customer reference approach, we have partnered with Vanderbilt University Medical Center, naming them as the first luminary site for LungFit PH. Through this program, we will work alongside the Vanderbilt team to further optimize LungFit products and explore new opportunities to enhance hospital-based nitric oxide therapy. In addition, Vanderbilt has made themselves available to better showcase the full utility of LungFit PH technology to respiratory therapists, anesthesiologists, nurses, and other relevant clinicians at hospitals considering adopting our cylinder-free nitric oxide delivery system. This collaboration marks a major milestone in our core mission to redefine tankless nitric oxide delivery and drive continued innovation in respiratory care. Now I would like to update you on the status of LungFit PH II, our next-generation system. As announced yesterday, we have submitted a PMA supplement to FDA. LungFit PH II is smaller, lighter and designed for air and ground transportation while still delivering all the revolutionary features of the current FDA-approved system. Additional improvements include a more intuitive user interface, more functional backup system, adjustable alarm volume and significantly less frequent maintenance. All of these improvements were made with extensive input from our customers. We anticipate that the anticipated FDA approval of the second-generation system and subsequent introduction to the U.S. market will have a major impact on our market share, total NO volume and logistics within the hospital. Looking outside the U.S. Over the course of just the past 6 months, we have quickly ramped up our commercial program across Europe, Southeast Asia and the Middle East. These activities have included securing key regulatory approvals, including CE Mark, as well as signing distribution agreements across more than 2 dozen countries covering over 2 billion lives. Today, we announced that the team has recently signed several new international distribution partnerships for the following countries: India, Italy, Latvia, Lithuania, Estonia, Ukraine, Kuwait, Kazakhstan, Israel, and Poland. As a reminder, because the LungFit system generates NO from room air unlike other systems that require NO-filled cylinders, we are opening an enormous new opportunity in geographical areas around the world where hospitals are unable to obtain nitric oxide supply or do not use nitric oxide due to the logistical difficulties associated with cumbersome cylinder-based systems. I am pleased to report that we have already shipped more than a dozen units of LungFit PH to customers outside the U.S. over the course of just the past few weeks. As a result, we plan to see a meaningful contribution from these activities reflected in our financial results starting in the back half of fiscal 2026 and beyond. Turning to Beyond Cancer. As previously reported, they received regulatory approval in Israel to begin a Phase Ib trial for low-volume UNO or ultra-high concentration nitric oxide in combination with anti-PD-1 therapy in late-stage cancer patients who have failed anti-PD-1 therapy. This remains an area of high unmet patient need. Timing for the initiation of this study is under review. On to NeuroNOS, our subsidiary focused on therapies for autism special disorders. We are pleased to announce recently that the U.S. FDA granted Orphan Drug Designation to our lead investigational therapy, BA-102, which is being developed for the treatment of Phelan-McDermid syndrome, a syndrome associated with autism spectrum disorder. As many of you are aware, this designation provides key development incentives, including 7 years of market exclusivity upon approval, tax credits for qualified clinical trials, waiver of FDA application fees and access to FDA protocol assistance. NeuroNOS will meet with FDA later this year to get an idea of the path to human studies, which we expect to begin late in calendar 2026. The excitement around our autism program goes beyond our walls. This is evident by our ability to recruit leaders in the field to our Scientific Advisory Board. Just recently, we announced the appointment of Nobel Prize laureate, Professor Dan Shechtman to the NeuroNOS SAB. We believe bringing in Professor Shechtman to join Professor Roger Kornberg from Stanford University on this Board brings unparalleled scientific expertise to the NeuroNOS team. During the March quarter, NeuroNOS published a peer-reviewed journal article in Translational Psychiatry, which presented breakthrough research by its Chief Scientific Officer, Professor Haitham Amal, which shows compelling evidence of a novel mechanism in the early stages of Alzheimer's disease. These new preclinical data further underscore the consistency and power of NeuroNOS' platform and offers new hope for the development of effective therapies for this devastating condition. Building on the excitement around the data and progress of its programs, NeuroNOS announced at the end of March that it completed a $2 million equity financing from private investors as part of a larger funding round. This investment will accelerate the preclinical development of NeuroNOS' small molecule drug designed as an injectable or oral treatment for children with autism. Turning to the corporate side. We're excited to announce today the appointment of Bob Goodman to our Board of Directors effective June 13, 2025. Bob is a seasoned health care executive and Board Director, who brings decades of commercial leadership experience from across the medical technology, pharmaceutical services and medical device industries. His career has included executive roles at BioTelemetry, Philips Healthcare, Cardiocore, Thermo Fisher, and Pfizer. Our Board and management team look forward to working with Bob as we continue to build positive momentum across the commercial side of our business. Before I conclude my comments today, I want to mention that our LungFit GO program is still moving along. We are dedicated to bringing this therapy to market to improve the lives of patients suffering from lung infections. We plan to meet with FDA prior to year-end to discuss the clinical path forward. We continue to make significant progress in executing against the strategies for each of our businesses. The past year showed just a glimpse of how LungFit PH will transform the global NO landscape for the better and gives us a solid foundation from which to continue to build. Beyond Air team will continue to be diligent on its path to profitability and improving 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 fourth quarter fiscal year 2025, which ended March 31, 2025, are as follows: revenue for the fiscal year ended March 31, 2025, increased 220% to $3.7 million compared with $1.2 million for the fiscal year ended March 31, 2024. We're showing a $1.7 million loss in gross profit for the fiscal year 2025 compared to $1.3 million for fiscal year 2024. Cost of revenue of $5.4 million were recognized in the fiscal year compared to $2.5 million in the fiscal year ended March 31, 2024. Cost of revenue exceeded revenue, primarily driven by the depreciation of LungFit devices and one-time upgrade costs to systems. Research and development expenses were $16.9 million for fiscal year 2025 compared with $24.4 million for fiscal year ended March 31, 2024. The decrease of $7.5 million was primarily attributed to a decrease in salaries, stock-based compensation and, to a lesser extent, from clinical and preclinical study expenses. SG&A expenses for the year ended March 31, 2025 and March 31, 2024, were $26 million and $37.3 million, respectively. The decrease of $11.3 million was attributed primarily to a reduction in salaries and stock-based compensation costs. Other expense was $3.9 million compared to $1.3 million a year ago. The increase in other expense of $2.6 million was mainly due to a non-cash loss recorded upon the retirement of Avenue Capital debt. Net loss attributed to common stockholders of Beyond Air, Inc. was $46.6 million or a loss of $0.69 per share, basic and diluted. Our net loss for the fiscal year ended March 31, 2024, was $60.2 million or a loss of $1.82 per share, basic and diluted. Net cash burn for the year was $44.1 million, which is more than 28% lower than the previous year. We've talked in previous quarters how we've been laser-focused on fixed cost reduction, in R&D and in our supply chain. Now that we're wrapping up spend on development of our next-generation LungFit device, we'll see further reduction in our cash burn in Q1 and again in Q2. I would like to take a moment and expand a bit on our cost reduction efforts. Over the past 6 quarters, we've reduced operating expenses from north of $17 million to just above $7 million in the current quarter. This translates to a 58% reduction. We believe the trough in our operating expenses will either be in the coming June quarter or the September quarter. Please do not interpret that expenses will be moving up significantly in the December quarter. Expenses will move up in proportion to our commercial performance to maintain our excellence in service and take advantage of coming opportunities. As of March 31, 2025, the company had cash, cash equivalents and marketable securities of $6.9 million. Please note this does not include the $1 million payment we received from Getz Healthcare nor the additional $2 million investment into our existing synthetic royalty debt structure, both of which we received after March 31, 2025. We believe our cash, cash equivalents, marketable securities, and existing financing vehicles will be sufficient to allow us to support our current operating plans well into calendar 2026 and potentially to profitability, provided we continue to hit our internal revenue estimates and control costs at Beyond Air. And with that, I'll hand the call back to Steve.

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

Our first question is from Marie Thibault with BTIG.

Congrats on the progress here. Wanted to ask my first question here about LungFit PH II. Great to see that get in. Wanted to understand if that system approval is being assumed in the fiscal year '26 guidance range that you've given us, and how we should think about the selling dynamics ahead of that potential approval. Is that something where hospitals see that coming approval and say, 'Hey, I want to get exposure to LungFit before that comes out?' Is it they wait a little bit as they're waiting for that next-gen system? Help us think about some of those dynamics.

Thanks, Marie. Fiscal '26 guidance does not include the second-generation system at all. And to answer your other question, we don't promote the Gen 2, obviously, until we get approval. So people know it exists, obviously, and they do inquire. But I think it's — the focus is on Gen 1. That's what we're promoting now and that's what we're marketing and pushing. And yes, I mean, obviously, there are some hospitals that are interested in getting exposure to Gen 1 immediately. And then there are others who will choose to wait. So we've seen both at this point.

Okay. Very encouraging. Very helpful, Steve. Wanted to ask also about OUS. You've gotten several shipments out there, it sounds like, of units. What are we understanding about what some of those contracts look like? Is there any difference in how hospitals use this versus how they use it within U.S. hospitals? Any trends or specific countries we should be looking toward or any other catalysts OUS? Just want to get a little closer to that market.

Yes. I think it's a little early for us to see any trends in actual hospitals outside the U.S. Right now, our shipments are initial shipments to distributors, and they're taking those and using them for demonstration to get interest to have hospital placements. And there's much more of a tender process outside the United States than in the U.S., so it takes a little bit longer to get into the hospitals. So I think the back half of this fiscal year, we'll see a big upswing on the international side as we get hospital placements and we'll get some trends at that point. But our initial work in the market outside the U.S. is showing consistency in terms of how they use nitric oxide. Outside the U.S., cardiac surgery is on label so they're definitely using it in that area. But again, it's similar to how it's used in the United States.

Okay. Very helpful update.

Our next question is from Jason Wittes with ROTH Capital.

Congrats on the progress here. On the PMA submission, do you have an expected timeline for when we may see an approval for that for LungFit PH II?

Jason, did you ask me when FDA is going to approve it?

Do you have an estimate? Also, how should we think about a potential launch? You mentioned earlier that it would be a staged launch rather than an immediate rollout. I'm curious about the dynamics we might expect when the FDA approves this device.

Okay. So yes, I'm going to stay away from the exact timing on an FDA approval. I mean, everybody kind of knows what's going on at FDA right now. There's a little bit of an upheaval. So let's just kind of let things settle in. It will take a few months for us to interact with FDA and get a better understanding of their questions on our application. And perhaps I can give some more on timelines or better guidance on timing at that moment in time. But as for the launch for Gen 2, obviously, we're going to prep for that as we work with FDA. There's always a period where you need to build up inventory and you need to scale up your manufacturing. So it will take a couple of months and then we will try to keep up with demand. That will probably be the challenge that we have post approval.

Okay. That's a totally appropriate answer, I get it. And then appreciate the guidance, which looks quite strong. We're at the low end. There's a big range there. I mean, what has to happen to get to the higher end of that range for the $12 million to $16 million that you're kind of hinting or pointing to for 2026?

Yes, it's not a very large range. A $4 million range may seem significant because it's from $12 million to $16 million, rather than 100 to 104. However, securing a few substantial contracts could prompt a shift of a few million dollars. If we receive regulatory approvals internationally from major countries, we could secure larger orders. Therefore, to us, this range isn't particularly wide since various factors could lead to considerable changes based on our pipeline. We are reasonably confident in reaching the low end of that range, and there are several opportunities that could allow us to approach the mid and upper range. If there are any updates, we will inform you. Our next call is in early August, so changes may not be apparent by then. However, by November, we should have a clearer picture of our potential position within the range, or possibly even exceeding it. Currently, there are too many variables to predict, and it is still June, which makes this an exciting time for us.

Got it. That's helpful. Just to clarify, did I understand correctly that there will be further reductions in expenses until September, and then expenses will grow in line with revenues? Is that the right way to model the P&L?

Yes, exactly.

Our next question is from Justin Walsh with JonesTrading.

Now you guys are supplying globally, I was wondering, I guess, the degree to which you're seeing impacts or worried about impacts from some of the emerging geopolitical questions. I mean, we have a moving target with U.S. tariffs, and you mentioned that you're supplying to Ukraine and, of course, you have ties in Israel. So just curious how all that is impacting things or not.

I don't believe it has a significant effect on us. We produce LungFit in the United States, so most of our costs are domestic. While we do get some parts from outside the U.S., the tariffs won't have a major effect since they represent only a small percentage of our costs. We also haven't encountered any tax issues related to our shipping destinations so far. Regarding Israel and Ukraine, Israel is a great market for us. Although it's not a large country, it will influence our international sales. We are pleased to be present there, but it isn't a key market compared to larger countries like France, Turkey, Australia, or India, where we have a stronger presence. We were pleasantly surprised that our distributor in Eastern Europe had Ukraine as part of their focus, so we're excited to support them there, even though we didn't anticipate it. This situation presents additional opportunities for us.

Great. And maybe just a follow-up on that. I'm curious if you're seeing more uptake in some of those geographies or where you think some of the markets might be a little bigger. I mean, obviously, you just mentioned a couple of them. But I'm wondering if you're, I don't know really, I think you'll take off in India or somewhere in particular.

Yes, it varies because each country has different regulatory timelines. In India, we have a partner, but there's a regulatory process to navigate, so we expect minimal impact from there this fiscal year. In other countries like Australia, Thailand, France, Romania, and Turkey, the regulatory processes are already complete or will conclude soon, which should yield more significant impact from those markets. However, it’s still early to predict outcomes as many of these countries have tender processes that take time to get into hospitals. We plan to monitor progress over the next few months. Each country presents unique challenges, making this a new experience for us and for this product. Even our international team, despite their experience, faces novelty with this non-cylinder-based nitric oxide system that produces from ambient air, which hasn't been seen outside the U.S. before. While some distributors are enthusiastic and quickly signed up, others are more hesitant and skeptical about the machine's capabilities. We are in the early stages, and I'm optimistic that we'll have clearer insights by the next call or soon after regarding which countries are likely to progress rapidly. For now, we’re assessing the landscape and are excited to have so many partners and opportunities in various countries at this time.

Our next question is from Yale Jen with Laidlaw & Company.

Congratulations on the guidance and performance. I have a question regarding your suggestion of more than $1.7 million for the upcoming quarter and $12 million to $16 million for fiscal '26. Can you share your confidence in these forecasts or projections? I also have a follow-up.

Thanks, Yale. We are quite confident in our projections, and we wouldn't have shared them if we weren't. With the June quarter ending in two weeks, we are confident it will reach $1.7 million. While there could be some developments in these two weeks that may enhance that figure, our confidence in this number remains high. Looking at the fiscal year, we feel similarly confident, especially with several promising opportunities on the international front. In the U.S., we are noticing positive movement in some areas that may occur sooner than we initially expected. For instance, we are very adaptable with our customers regarding how they wish to structure their contracts, and our system allows for that flexibility. Earlier this year, we began offering a razor-razorblade model, which involves the purchase of our system along with ongoing purchases of consumables, primarily filters. We've received favorable feedback on this model over the past month or two, and it may entice some hospitals to opt for it instead of the traditional nitric oxide pricing model, which involves billing based on hours of use. Our new purchase model could see traction this fiscal year, which is exciting and gives us added confidence in our numbers, especially since we were not observing this interest six to nine months ago.

Okay, great. That's very helpful and comforting. In the press release, you mentioned having about 45 hospitals in the United States that are either installed or currently using the LungFit systems. As we approach the end of this year, do you anticipate an estimate or projection of how many hospitals you might have, as well as an increase in volume per hospital?

I definitely see the volume increasing per hospital, which we have observed over the past 1.5 years. Many of our hospitals are exceeding their initial estimates for the year, which is positive. We provide a discounted hourly rate for any overages, so pricing certainty is essential for our customers. I believe this trend may continue, and I hope hospitals can collaborate with us to better predict their annual usage, leading to clearer spending. I won't speculate on the total number of hospitals we will have by the end of the fiscal year. While this number is important, each hospital varies significantly; some have small volumes while others are much larger. Consequently, one hospital could hold the same value as ten others. While I consider 45 to be a strong figure, I anticipate we will exceed that by the fiscal year's end. However, I won't predict an exact number at this time. Thank you.

Okay, great. And maybe just squeezing 1 more question. Actually it's a follow-up to the earlier 1 that for the PMA application. I know this is difficult to predict the time in possible approval. But just let's assume or maybe if in the normal circumstances, would this process maybe take about 12 months to 16 months or shorter? Just curious what would be the sort of reference point we can at least think about.

Yes. So there are statistics that FDA puts out about PMAs, and this is a PMA supplement. So FDA puts statistics out about how long these things take so you can see them online. I'd just caution you to take these averages because not every PMA is created equal. We are just a supplement. We basically make nitric oxide the same way with our second-generation system as our first-generation system. A lot of the things that we do are equivalent. It's obviously smaller. It obviously has some enhanced features, and it obviously is built to be used for transport in ambulances and helicopters and airplanes. So there are some differences, but from how it operates, it's really not that much different. So could we be quicker than the average that FDA puts out? Probably. But again, if you look at FDA's guidelines, it's 180 days for a PMA supplement and they normally do not hit that 180 days. And it's not that they can't hit their timelines. A lot of times, they have questions and that clock will stop while you're having discussions with FDA. So that's something that companies don't control. FDA does, and we're going to work with them to get this done as quickly as possible. But I just don't know what that timeline will be at this point. We'll have a better handle once we start discussions with FDA in the next couple of months.

Great. That's a lot of great colors on the story. And again, congrats.

Our next question is from Jason Bednar with Piper Sandler.

This is Joe Downing on for Jason. Congrats on the PMA submission. Just wondering if there's any difference you can call out in the sales process with the 2.0 device versus the 1.0 device. And then just off of that, can you just remind us how much this LungFit 2.0 expands the market?

So Joe, thanks for the questions. I mean, we're not trying to sell this Gen 2 or market the Gen 2 right now, so we're not going to comment on how the process is different because we don't have a process yet. We have to wait for approval on that. But as for how it opens the market, I mean, it vastly expands this market. It opens it up for us as a company to every hospital in the world that wants to use nitric oxide. We can get it anywhere. Our Gen 1 is already in remote locations treating patients, so the Gen 2, it will be even easier to do that. So this is something that will change the way people use nitric oxide in the hospital. I think that it will increase volumes overall and again reach hospitals that don't use nitric right now. So this is, for us, I think and for the industry, it's a game changer. It really is.

Great. And then just 1 last 1 on the competitive landscape. Your largest peer put out a new offering a number of months ago. Just wondering if you're seeing anything worth calling out with contract negotiations with hospitals as a result of that launch.

Which one are you talking about?

Mallinckrodt.

Yes, we haven't seen a change. I mean, the contracts are usually 1, 3 and 5 years in this market. We haven't really seen any change in that. So at least my team and I haven't really seen much change. Yes, they're out there with their new offering and they're marketing it for sure. And I think the last time they spoke, they gave an idea of how many hospitals they were in or something or that they were in hospitals. So you can take a look at what their transcript said. So yes, it's another competitor. It's another cylinder-based system out there.

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

Just like to thank everybody for joining us today, and we'll talk to you in August. Thank you.

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