Beyond Air, Inc. — Form 10-Q Summary
Reporting period: Quarter and six months ended September 30, 2020, the company’s fiscal second quarter. The company 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 September 30, 2020 | Six months ended September 30, 2020 |
|---|---|---|
| License revenue | $349,607; down from $645,602 | $578,768; down from $1,273,071 |
| Research and development | $3.15 million; up from $2.85 million | $7.48 million; up from $5.17 million |
| General and administrative | $2.17 million; up from $2.06 million | $4.66 million; up from $4.25 million |
| Operating loss | $4.97 million, versus $4.27 million | $11.56 million, versus $8.15 million |
| Net loss | $5.13 million, versus $4.10 million | $11.87 million, versus $10.28 million |
| Basic and diluted loss per share | $0.30, versus $0.38 | $0.71, versus $1.03 |
| Operating cash used | $8.81 million for the six months, compared with $5.63 million |
Quarterly and six-month losses widened year over year, while loss per share narrowed, reflecting a larger weighted-average share count. Revenue was license revenue tied to the terminated Circassia agreement, not product sales. The company reported no product revenue. Operating margins are not meaningful given the company’s pre-commercial stage.
At September 30, 2020, cash and cash equivalents were $21.72 million and restricted cash was $636,444, totaling $22.35 million. Current assets were $22.79 million and current liabilities $3.63 million. Total liabilities were $8.34 million, including a $5.0 million face-value facility loan (reported net at $4.41 million) and an $84,280 short-term loan payable. Management estimated available cash would fund operations for at least one year from the filing date, but said further financing would be needed to fund longer-term plans.
Material changes and financing
- Six-month R&D expense rose $2.31 million, with increased spending on LungFit development, COVID-19 studies, preclinical work, compensation and stock-based compensation. G&A increased $416,000.
- Six-month operating cash use increased by $3.17 million year over year. Investing cash use was $731,138, mainly for equipment; financing provided $6.43 million, primarily from equity issuance and warrant exercises.
- During the six months, the company raised $6.68 million net through equity issuances and exercises, and repaid $251,078 of loans. Common shares outstanding rose from 16.06 million at March 31 to 17.15 million at September 30.
- As of September 30, approximately $47.4 million remained available under the $50 million at-the-market program and $37.2 million under the $40 million Lincoln Park purchase agreement, subject to their terms. The $25 million loan facility had an initial $5 million tranche drawn; subsequent tranches are conditional, with the last three available only after FDA approval of LungFit PH.
Outlook, risks and unusual items
- The company filed a PMA application for LungFit PH with the FDA on November 10, 2020, after quarter-end. It anticipated an FDA response around May 2021 and, if approved, a 2021 launch in the U.S. and Israel. Approval and launch timing are uncertain.
- Management described development programs in COVID-19/acute viral pneumonia, bronchiolitis, NTM lung infection and solid tumors. COVID-19-related supply-chain delays had affected LungFit components; the bronchiolitis pivotal study and NTM study timelines were also delayed. Plans and market-size estimates are forward-looking and not assured.
- The company depends on regulatory approvals, additional financing and third-party suppliers, including two vendors for key LungFit components. It warned that financing may not be available on acceptable terms or at all, and that COVID-19 could further disrupt trials, manufacturing and supply.
- A New York lawsuit over adjustments to certain 2017 warrants remained unresolved. The company said an adverse outcome could result in a material loss; a motion for summary judgment was largely denied, and the company sought reargument.
- A new 10.5-year Garden City office lease was expected to commence in January 2021, with approximately $2.04 million in lease payments; the related lease liabilities and right-of-use assets were to be recorded upon commencement.
- The Circassia license had been terminated in December 2019. Remaining deferred license revenue was recognized over time; the agreement’s termination and potential related claims remain relevant uncertainties.
Investor facts to verify
- Confirm FDA review progress and any subsequent regulatory, clinical or launch developments for LungFit PH.
- Track cash burn, financing activity, share dilution and the terms and availability of remaining equity and debt facilities.
- Assess whether COVID-19, supplier concentration or manufacturing delays affect study schedules and product readiness.
- Monitor the Empery warrant litigation and any claims connected with the terminated Circassia agreement.
- Reconcile apparent filing-text inconsistencies: Note 10 reports six-month 2020 license revenue of $579,768, while the statements report $578,768; MD&A gives differing March 31 deferred-revenue amounts, while the balance sheet reports $873,190.