Beyond Air, Inc. — FY2022 Form 10-K
Reporting period: Fiscal year ended March 31, 2022; the filing was signed June 28, 2022. This is an annual report, not a quarterly report. The filing includes subsequent-event information, notably FDA approval of LungFit PH on June 28, 2022.
Business context
Beyond Air develops nitric oxide (NO) generators and delivery systems. LungFit PH received FDA approval for persistent pulmonary hypertension of the newborn (PPHN) after year-end, and the company reported beginning its U.S. commercial launch in June 2022. The company had not yet generated product-sale revenue in FY2022. Other programs include high-concentration inhaled NO for viral pneumonia, bronchiolitis, NTM lung infection and COPD, plus an ultra-high-concentration NO solid-tumor program operated through majority-owned Beyond Cancer.
Financial performance and position
| Metric | FY2022 / March 31, 2022 | FY2021 / March 31, 2021 |
|---|---|---|
| License revenue | $0 | $873,000 |
| Research and development expense | $11.8 million | $12.6 million |
| General and administrative expense | $18.4 million | $10.5 million |
| Operating loss | $40.7 million | $22.2 million |
| Net loss | $44.1 million; $43.2 million attributable to Beyond Air | $22.9 million |
| Basic and diluted loss per share | $1.68 | $1.27 |
| Cash and cash equivalents | $80.2 million | $34.6 million |
| Restricted cash | $10.0 million | $0.6 million |
| Operating cash used | $23.1 million | $19.6 million |
| Investing cash used | $1.5 million | $0.9 million |
| Financing cash provided | $79.5 million | $30.3 million |
| Total liabilities | $21.0 million | $10.1 million |
Product gross margin was not applicable because the company reported no product sales. Liquidity included $7.4 million of restricted cash pledged for an appeal bond and approximately $2.6 million restricted for manufacturer materials. At year-end, current liabilities were $10.7 million and equity was $78.2 million. Debt included a $927,000 current insurance-premium loan and a $200,000 long-term loan; the former $25 million facility was terminated in November 2021.
Changes and notable items
- Net loss increased to $44.1 million from $22.9 million. G&A rose $7.9 million, principally from higher stock compensation, salaries, legal and professional fees, office costs, IT and insurance. R&D declined $0.8 million, partly reflecting lower COVID-study and LungFit PH development costs, offset by increased oncology work.
- FY2022 financing cash flow included $36.5 million of net ATM proceeds, $11.1 million under the Lincoln Park purchase agreement, $6.0 million from warrant exercises and $30.0 million raised by Beyond Cancer, partly offset by $4.8 million related to retiring the loan facility. Beyond Air retained 80% of Beyond Cancer and consolidated it; the outside 20% interest accounted for $882,000 of the reported net loss.
- The company recognized a $10.5 million Circassia settlement liability tied to LungFit PH FDA approval. The settlement calls for $2.5 million following approval, then $3.5 million and $4.5 million on the first and second anniversaries; a U.S. net-sales royalty begins in year three and is capped at $6 million in aggregate.
- A $2.4 million estimated contingent loss was accrued for the Empery warrant litigation. A trial-court judgment awarded approximately $5.8 million; the company appealed and had $7.4 million of cash restricted as bond collateral. Hudson Bay separately claimed approximately $2.6 million; the company said it would defend the claim.
Outlook, commentary and risks
Management estimated that March 31, 2022 cash and cash equivalents would fund operations and capital needs into the fourth quarter of FY2024, assuming its plans. The filing also warns that further capital may be needed and may not be available on acceptable terms. Financing capacity then included $50 million available under a new ATM and approximately $18.1 million under the Lincoln Park agreement; use of these facilities could dilute shareholders. Management expected product revenue to begin in FY2023, but the timing and commercial success remained uncertain.
Management expected EU MDR certification in the second half of calendar 2022 and discussed a potential launch outside the U.S. in 2023, subject to approvals. Clinical programs remained uncertain: the bronchiolitis program was on hold due to the pandemic; the NTM pilot had stopped enrolling, with full results anticipated later in 2022 and a pivotal study contemplated for 2024 if successful; COPD was preclinical, with clinical entry expected in 2023 subject to financing. Beyond Cancer’s solid-tumor program was in Phase 1 enrollment.
Key risks include limited commercialization experience and uncertain market adoption, reimbursement and pricing; continuing losses and financing needs; clinical, regulatory and safety uncertainty, including risks from high-dose NO; reliance on third-party and potentially single-source manufacturers; supply-chain disruption; competition; intellectual-property claims; product liability; and COVID-19-related disruption. The company said prior LungFit PH supply-chain delays had been remedied, but future effects could not be ruled out. It reported effective disclosure controls and management-assessed internal control over financial reporting; the auditor did not provide an ICFR attestation.
Most important facts for investors to verify
- Commercial launch progress, product revenue, hospital adoption, pricing, reimbursement and manufacturing capacity following the June 2022 FDA approval.
- Actual cash burn and runway against management’s estimate through Q4 FY2024, including restricted cash, milestone payments and any additional financing or dilution.
- Payment timing and accounting for the Circassia settlement and NitricGen’s $1.5 million post-approval milestone.
- Developments and potential exposure in the Empery appeal and Hudson Bay litigation.
- Full clinical results and regulatory plans for CAVP, NTM, bronchiolitis and Beyond Cancer, and whether projected timelines and financing assumptions remain achievable.