Beyond Air, Inc. — Form 10-Q Summary
Reporting period: Fiscal third quarter and nine months ended December 31, 2020. Beyond Air is a clinical-stage medical device and biopharmaceutical company developing nitric oxide delivery systems; it had not generated product sales.
Financial performance and liquidity
| Metric | Three months ended Dec. 31, 2020 | Year-over-year change | Nine months ended Dec. 31, 2020 | Year-over-year change |
|---|---|---|---|---|
| License revenue | $148,794 | Down from $314,379 | $727,562 | Down from $1,587,450 |
| Research and development | $3.29 million | Up from $2.58 million | $10.77 million | Up from $7.75 million |
| General and administrative | $2.47 million | Essentially unchanged | $7.13 million | Up from $6.72 million |
| Operating loss | $5.62 million | Wider than $4.74 million | $17.18 million | Wider than $12.89 million |
| Net loss | $5.77 million | Wider than $4.40 million | $17.64 million | Wider than $14.67 million |
| Basic and diluted loss per share | $0.33 | Compared with $0.43 | $1.03 | Compared with $1.46 |
Gross margin is not meaningful because revenue consists of license revenue and the company reports no product sales. The lower loss per share reflects a larger weighted-average share count; absolute net loss increased.
- Cash flow: Nine-month operating cash use was $14.07 million, versus $10.39 million in the prior-year period. Investing cash use was $0.87 million; financing provided $12.13 million. Cash, cash equivalents and restricted cash declined by $2.81 million.
- Balance sheet at Dec. 31, 2020: Cash and cash equivalents were $22.02 million, restricted cash $0.64 million, and total current assets $23.08 million. Current liabilities were $2.89 million; total liabilities were $7.61 million.
- Debt: The facility loan had $5.0 million face value and a $4.44 million carrying value. It bears 10% stated interest (13.3% effective rate); repayment begins in 2023 and remaining amounts mature by March 2025. The separate insurance-premium loan was repaid.
- Capital and dilution: The company raised $12.46 million net from stock issuance and exercises during the nine months. At Dec. 31, approximately $44.3 million remained available under its $50 million ATM and $34.8 million under its $40 million Lincoln Park purchase agreement. Shares outstanding increased from 16.06 million at March 31 to 18.38 million at Dec. 31.
Material changes and management outlook
- R&D spending increased, primarily reflecting the acute viral pneumonia/COVID-19 and NTM trials, LungFit PH regulatory work and higher employee costs. G&A was broadly flat for the quarter and modestly higher for the nine-month period.
- License revenue declined as the remaining Circassia-related deferred revenue was recognized over time. Beyond Air terminated the Circassia agreement in December 2019; the filing notes possible claims related to that termination.
- The company submitted a PMA application to the FDA for LungFit PH for PPHN on November 10, 2020. Management anticipated an FDA response by mid-May 2021 under the standard review timetable, while noting possible pandemic-related delays. If approved, it anticipated launches in the U.S. and Israel in 2021 and further global launches thereafter.
- A randomized pilot study of high-dose nitric oxide for acute viral pneumonia, including COVID-19, was underway; interim data were expected in spring 2021. An NTM clinical trial began in Australia in December 2020; interim data were anticipated mid-2021 and full top-line results about six months later. The bronchiolitis pivotal study was delayed and the program placed on hold due to COVID-19. The COPD program remained preclinical, subject to additional financing; solid-tumor work was also preclinical.
- Management said available cash was expected to fund operations for at least one year from the filing date, but stated that substantial additional financing would be needed beyond that period. In January 2021, the company reported approximately $9.7 million of net proceeds from ATM and Lincoln Park sales and warrant exercises.
- COVID-19 had caused supply-chain delays tied to overlap with ventilator suppliers; the company said the identified issue had been remedied, but further disruption remained possible. The company relies on two vendors for commercial system and filter manufacturing.
Risks, contingencies and unusual items
- The company had accumulated losses of $75.23 million and continued to use substantial operating cash. Additional financing may be unavailable or dilutive; access to certain loan tranches depends on FDA approval.
- An Empery warrant lawsuit remained pending, with trial scheduled for April 19, 2021. If Empery prevailed, the filing describes potential increases in warrant shares and a reduction in exercise price from $3.66 to $1.57; an unfavorable outcome could result in a material loss.
- Other commitments include a non-cancellable supplier purchase order of approximately $1.05 million and a planned corporate-office lease with approximately $2.04 million of payments. Certain license agreements include future milestone payments, including up to $87 million under the Pulmonox agreement and $1.8 million remaining under the NitricGen agreement, subject to milestones.
- Product candidates require regulatory approval, and clinical, manufacturing, market-acceptance, intellectual-property and key-personnel risks remain. The filing provides no formal financial guidance.
Important facts for investors to verify
- FDA review progress and timing for the LungFit PH PMA, and whether a 2021 launch remains achievable.
- Clinical-trial enrollment, safety and efficacy results for acute viral pneumonia and NTM, plus timing for restarting the bronchiolitis program.
- Cash burn, post-quarter financing proceeds, remaining ATM/Lincoln Park capacity and the potential dilution from future equity issuance and outstanding warrants.
- Resolution and potential financial impact of the Empery litigation and claims related to the terminated Circassia agreement.
- Manufacturing readiness, supplier concentration, and the costs and timing of future milestones, leases and regulatory development.