Beyond Air, Inc. — Form 10-Q summary
Reporting period: Three and six months ended September 30, 2021; filed November 12, 2021. Dollar amounts below are in millions unless stated otherwise. Beyond Air is a clinical-stage medical-device and biopharmaceutical company developing nitric-oxide delivery systems. It reported no product revenue.
Financial performance and liquidity
| Metric | Three months ended Sept. 30, 2021 | Three months ended Sept. 30, 2020 | Six months ended Sept. 30, 2021 | Six months ended Sept. 30, 2020 |
|---|---|---|---|---|
| Revenue | $0 | $0.350 | $0 | $0.579 |
| Research and development expense | $2.807 | $3.147 | $5.548 | $7.479 |
| General and administrative expense | $3.395 | $2.169 | $7.245 | $4.663 |
| Operating loss | $(6.201) | $(4.967) | $(12.793) | $(11.563) |
| Net loss | $(8.692) | $(5.132) | $(15.435) | $(11.874) |
| Basic and diluted loss per share | $(0.36) | $(0.30) | $(0.67) | $(0.71) |
- Operating cash used in the first half was $8.898 million, versus $8.806 million a year earlier. Investing used $0.692 million; financing provided $23.068 million, primarily from equity issuance. Cash, cash equivalents and restricted cash increased to $48.746 million, including $47.699 million of cash and cash equivalents.
- At September 30, current assets were $50.295 million and current liabilities $6.912 million. Total liabilities were $13.134 million and stockholders’ equity $40.921 million. Long-term debt was $4.539 million net of discount and issuance costs; a separate short-term loan payable was $0.140 million.
- Management estimated available liquidity would fund operating requirements for at least one year from filing. It also warned that additional financing may be needed and may not be available on acceptable terms.
Changes and material developments
- First-half net loss widened by $3.561 million year over year, despite lower R&D expense, as G&A rose and the company recorded a litigation-related contingent loss. Second-quarter net loss increased by $3.560 million year over year.
- R&D fell year over year, attributed mainly to lower COVID-19 and bronchiolitis spending, lower stock-based compensation, and favorable timing of NTM costs. G&A increased, reflecting commercial-readiness staffing, professional fees, infrastructure and legal costs.
- The company raised $23.521 million net from equity issuance during the six months through the ATM and Lincoln Park arrangements. At September 30, approximately $14.5 million remained available under the ATM and $28.2 million under the Lincoln Park purchase agreement. Common shares outstanding rose to 25.210 million from 21.828 million at March 31.
- In October, the court ruled for Empery in a warrant dispute, awarding approximately $5.8 million plus prejudgment interest. The company recorded a $2.330 million estimated contingent loss at September 30, plans to appeal, and said approximately $7.4 million of cash would be needed as collateral for a supersedeas bond pending appeal. The ultimate loss could exceed the estimate.
- After quarter-end, the company amended and terminated its loan facility on November 10, 2021. It also announced a Beyond Cancer transaction and financing: commitments were approximately $23.9 million; the subsidiary offering was expected to close in December, with Beyond Air retaining at least 80% ownership and receiving a single-digit royalty on future revenues.
Business outlook, commentary and risks
- LungFit PH / PPHN: The PMA had been submitted to the FDA in November 2020. Management anticipated an FDA decision toward the end of calendar 2021, CE marking in the first half of 2022, and a U.S. launch in the fourth quarter of 2021 if approved. These were expectations, not confirmed outcomes.
- LungFit PRO / acute viral pneumonia: The open-label randomized pilot trial, including COVID-19 patients, remained active. Interim data from 19 patients indicated treatment was well tolerated and showed encouraging efficacy signals; the small interim sample does not establish efficacy.
- Bronchiolitis: The program was on hold amid the pandemic. Previously reported pilot-study analyses were described as supporting further development, but the pivotal study had been delayed.
- NTM: The ongoing Australian study was enrolling patients. Interim results reported in October indicated eight participants tolerated titration to 250 ppm; complete safety and efficacy results were anticipated in 2022, with a pivotal study contemplated for the first half of 2023 if results were successful.
- Beyond Cancer: Its ultra-high-concentration nitric-oxide program remained preclinical. The company anticipated beginning a first-in-human study in the first quarter of 2022, subject to development progress and regulatory requirements.
- Key risks include clinical and regulatory uncertainty, lack of product revenue, ongoing operating losses and financing needs, commercial acceptance, reliance on third-party suppliers, and potential COVID-19 disruption. The company reported prior LungFit supply-chain delays that it said had been remedied, while cautioning that renewed disruption remained possible.
- The Circassia settlement calls for $10.5 million in installments and, beginning in year three after approval, a 5% royalty on U.S. LungFit PH net sales capped at $6 million. The filing states no liability had been recognized at September 30 because the product remained under FDA review.
Important facts for investors to verify
- Current FDA review status and timing for LungFit PH, and whether any approval or commercial launch occurred.
- Empery appeal progress, the amount ultimately payable, collateral requirements and any further warrant dilution.
- Actual cash burn and runway, use of remaining ATM and Lincoln Park capacity, and financing needs beyond management’s stated one-year estimate.
- Complete results and enrollment progress for the NTM and viral-pneumonia trials, including whether interim findings are borne out in larger studies.
- Whether the Beyond Cancer offering closed as planned, the final proceeds and ownership structure, and the subsidiary’s funding and development milestones.