Beyond Air, Inc. — Form 10-Q Summary
Reporting period: Third quarter of fiscal 2023, three and nine months ended December 31, 2022. Financial statements are unaudited. Amounts below are in U.S. dollars.
Business context
Beyond Air develops nitric oxide (NO) generation and delivery systems. Its LungFit PH device received FDA approval for persistent pulmonary hypertension of the newborn (PPHN) in June 2022, and U.S. marketing began in July 2022. The company reported no revenue through the quarter. Its majority-owned affiliate, Beyond Cancer, is developing ultra-high-concentration NO treatments for solid tumors; the first patient in its Phase 1 study was treated in August 2022.
Key financial metrics
| Metric | Three months ended Dec. 31, 2022 | Nine months ended Dec. 31, 2022 | Comparable 2021 period |
|---|---|---|---|
| Revenue | $0 | $0 | $0 |
| Cost of revenue | $0.068 million | $0.247 million | $0 |
| Research and development | $5.0 million | $12.7 million | $2.5 million / $8.1 million |
| General and administrative | $8.9 million | $25.1 million | $4.9 million / $12.2 million |
| Operating loss | $14.0 million | $38.1 million | $7.5 million / $20.3 million |
| Net loss | $13.8 million | $38.3 million | $8.0 million / $23.4 million |
| Net loss attributable to Beyond Air | $12.7 million | $35.6 million | $7.7 million / $23.2 million |
| Loss per share, basic and diluted | $0.43 | $1.19 | $0.29 / $0.95 |
| Cash used in operations | Not separately stated | $24.6 million | $15.2 million |
Gross margin is not meaningful because the company had no revenue. Cost of revenue primarily reflected preparations for future U.S. deliveries, including warehouse locations.
At December 31, 2022, cash and cash equivalents were $25.5 million, marketable securities were $27.6 million, and restricted cash was $10.1 million. Total assets were $74.0 million, total liabilities $18.5 million, and total equity $55.4 million. Debt consisted of a $0.2 million loan payable; lease liabilities were reported separately. The company reported $55.7 million of cash, cash equivalents, marketable securities and certain restricted cash in its liquidity discussion, including $33.3 million attributable to Beyond Air and $22.4 million to Beyond Cancer.
Changes versus comparable periods
- Quarterly revenue remained zero, while cost of revenue began to be recorded in 2022.
- Quarterly operating loss increased to $14.0 million from $7.5 million; nine-month operating loss increased to $38.1 million from $20.3 million.
- Higher R&D reflected expanded Beyond Cancer/UNO work and preclinical programs. Higher G&A reflected the Beyond Cancer entity, commercial staffing and increased stock-based compensation.
- Nine-month operating cash use rose to $24.6 million from $15.2 million. Investing cash use was $29.4 million, largely reflecting purchases of marketable securities; financing used $0.7 million versus $73.8 million provided in the prior-year period, when equity and Beyond Cancer financing generated substantial proceeds.
- Cash, cash equivalents and restricted cash declined to $35.6 million from $90.2 million at March 31, 2022; the company also held $27.6 million in marketable securities at December 31, 2022.
Outlook, commentary and risks
- Management expected to begin generating revenue in fiscal 2023 following LungFit PH approval, but disclosed no revenue through December 31, 2022. It anticipated EU CE marking in the first half of fiscal 2024 and said it would continue global commercialization efforts.
- Management estimated available liquidity would fund operating requirements for at least one year from the financial-statement filing date, taking account of cash designated for Beyond Cancer. It also cautioned that operations beyond the fourth calendar quarter of 2023 would depend substantially on successful LungFit PH commercialization, international partners and additional financing. Financing may not be available on acceptable terms or at all.
- Beyond Air anticipated initiating a pivotal VCAP study in calendar 2023 following FDA discussions, and a pivotal NTM study in the second half of fiscal 2025 following FDA discussions. Beyond Cancer expected top-line data from its Phase 1 human study in calendar 2023. These are forward-looking expectations, not reported outcomes.
- Material risks include commercialization and market acceptance, regulatory approvals and clinical trial results, future financing needs, dependence on third-party suppliers, and possible supply-chain disruption. Two vendors supplied approximately 78% of materials purchased in the first nine months of fiscal 2023.
- Litigation remains significant: a $7.4 million cash collateralized supersedeas bond supports the Empery appeal, where the company estimated potential loss of $0–$7.4 million and accrued approximately $2.6 million. In the Hudson Bay matter, the company estimated potential loss of $0–$2.6 million and recorded a $0.2 million contingent-loss estimate; a court had granted partial summary judgment on certain findings, and the company intended to appeal.
- The Circassia settlement requires $10.5 million in installments, with $3.5 million due on the first anniversary of FDA approval and $4.5 million on the second anniversary; additional U.S. sales royalties may apply beginning in year three. The company paid the first $2.5 million installment. A further $1.5 million NitricGen milestone payment was paid in January 2023.
- Management concluded disclosure controls and procedures were effective as of December 31, 2022. The filing reported no material changes in internal control over financial reporting and no material changes to previously disclosed risk factors.
Important facts for investors to verify
- Commercial launch progress, customer adoption and timing of first product revenue.
- Cash burn and usable liquidity, including the amount restricted or allocated to Beyond Cancer, and the timing of any additional financing.
- Clinical and regulatory milestones, including FDA discussions, pivotal-study timing and Beyond Cancer Phase 1 results.
- Outcomes and potential cash exposure from the Empery and Hudson Bay litigation, plus upcoming settlement and licensing payments.
- Stock-based compensation and potential dilution: nine-month stock-based compensation was $15.2 million, and additional shares remained available under ATM and stock-purchase facilities.