Beyond Air, Inc. — Form 10-K Summary
Reporting period: Fiscal year ended March 31, 2023; filed June 22, 2023. The request refers to 2022 Q4, but this filing reports the full fiscal year, not standalone quarterly results. Unless otherwise noted, amounts are U.S. dollars.
Business context
Beyond Air is a commercial-stage medical-device and biopharmaceutical company developing nitric-oxide generation and delivery systems. Its first product, LungFit PH, received FDA premarket approval in June 2022 for persistent pulmonary hypertension of the newborn (PPHN); U.S. marketing began in July 2022. The company reported no revenue for the year. Other respiratory indications remain investigational. Its 80%-owned Beyond Cancer affiliate is conducting a Phase 1 study of ultra-high-concentration nitric oxide for solid tumors. A separate nNOS-inhibitor program for autism is preclinical.
Financial results and liquidity
| Metric | FY ended March 31, 2023 | FY ended March 31, 2022 |
|---|---|---|
| Revenue | $0 | $0 |
| Cost of revenue / gross loss | $0.6 million / $0.6 million loss | $0 / $0 |
| Research and development | $16.8 million | $11.8 million |
| General and administrative | $34.7 million | $18.4 million |
| Operating loss | $52.1 million | $40.7 million |
| Net loss | $59.4 million; $55.8 million attributable to Beyond Air | $44.1 million; $43.2 million attributable to Beyond Air |
| Loss per share, basic and diluted | $1.86 | $1.68 |
| Cash used in operating activities | $33.0 million | $23.1 million |
Margins are not meaningful with no reported revenue. The company’s accumulated deficit was $179.5 million at March 31, 2023. Cash and cash equivalents were $29.2 million, marketable securities $16.7 million, and restricted cash $10.1 million. Management cited $45.9 million in cash, cash equivalents and marketable securities as available liquidity, excluding restricted cash.
At year-end, the balance sheet showed $0.8 million of current loan payable and $0.1 million of long-term debt, alongside lease liabilities of $2.7 million. Accrued expenses were $16.6 million, including litigation and settlement amounts. The company had $46.3 million of availability under its $50 million ATM equity program at March 31, 2023.
Changes versus prior year
- Net loss attributable to Beyond Air rose by $12.6 million, and operating cash use increased by $9.9 million.
- R&D expense increased $5.0 million, primarily from cancer and autism programs and PPHN approval preparation, partly offset by lower NTM and bronchiolitis spending.
- G&A expense increased $16.3 million, reflecting higher stock-based compensation, payroll, office costs and expansion of staffing.
- FY2023 included $0.6 million of launch-related cost of revenue but no product revenue. FY2022 included $10.5 million of Circassia approval-contingent expense, which did not recur in FY2023.
- Stock-based compensation increased to $19.6 million from $7.8 million. Marketable securities were $16.7 million at year-end, versus none reported in the prior year.
Outlook, risks and unusual items
- Management expected to begin generating LungFit PH revenue in fiscal Q1 2024 and said year-end liquidity, $5.6 million raised through the ATM in FY2024’s first quarter, and subsequent debt proceeds were expected to fund operations for at least one year from the financial-statement filing date. The company also warned that continued operations beyond Q1 FY2025 depend substantially on commercial uptake, financing and partnerships.
- In June 2023, after year-end, Beyond Air entered a senior secured loan agreement for up to $40 million and received $17.5 million gross, or $15.7 million net. Up to $10 million more is conditional on revenue performance; a further $12.5 million is discretionary and requires lender agreement. The loans carry interest at the greater of prime plus 3.75% or 12%, are secured by substantially all company assets, and require at least $5 million of unrestricted cash. Principal repayments are scheduled to begin January 2025, subject to potential deferral conditions.
- The Empery judgment was affirmed in March 2023. The company paid $7.6 million in April 2023, including release of the $7.4 million supersedeas bond. A separate Hudson Bay warrant-related lawsuit remained unresolved; $2.7 million was accrued at year-end.
- The Circassia settlement requires $3.5 million in July 2023 and $4.5 million in July 2024; the agreement also provides for a 5% royalty on U.S. LungFit PH net sales beginning in year three after approval, capped at $6 million in aggregate royalty payments.
- Key risks include ongoing losses and likely need for additional capital; uncertain LungFit PH adoption, reimbursement and sales ramp; product and regulatory risks; and dependence on third-party manufacturing. Two vendors supplied approximately 80% of materials in FY2023, representing 67% and 13%. Competitors include established nitric-oxide suppliers and delivery systems.
- Management reported effective disclosure controls and internal control over financial reporting. The auditor issued an unqualified opinion, while identifying going-concern assessment as a critical audit matter because of uncertainty in forecast cash flows and financing assumptions.
Important facts for investors to verify
- Actual LungFit PH revenue, hospital adoption, repeat use, pricing and reimbursement after the reported launch.
- Cash runway after the April 2023 judgment payment and June 2023 debt funding, including the status of ATM issuance and remaining loan-tranche conditions.
- Progress toward EU certification and the timing, design and regulatory requirements for planned clinical studies.
- Clinical evidence behind investigational uses: the filing describes small pilot studies and notes that larger trials and regulatory approvals are still required.
- Resolution and cash impact of the Hudson Bay litigation, scheduled Circassia payments and any other material contingencies.
- Whether the company can diversify suppliers and scale manufacturing without disrupting commercial supply or clinical programs.