Beyond Air, Inc. Q2 FY2025 earnings call

• Increased total hospital clients by over 60% during Q2 2024.
• LungFit PH device operating well post-upgrades. New Chief Commercial Officer joined in July, driving strategic initiatives and contract negotiations.
• Announced partnerships with Healthcare Links, TrillaMed, and business Asia consultants.
• Implemented financial agreements to extend cash runway, including a $20.6 million private placement, $17.85 million extinguishment of Avenue Capital loan, and $11.5 million royalty funding agreement.
• PMA supplement for LungFit PH label expansion to cardiac surgery accepted and under FDA review. CE Mark expected by end of 2024. Next-gen LungFit PH system to be showcased at AARC Annual Meeting.
• Beyond Cancer awaiting regulatory approval in Israel. NeuroNOS making early-stage progress on autism therapies.

For the second fiscal quarter of 2025, revenue was $0.8 million compared to $0.2 million in the same period of 2024. Gross margin was a loss of $1.1 million in 2025 vs. a $0.2 million loss in 2024. Cost of revenue exceeded revenue due to $0.7 million in one-time device upgrade costs and $0.8 million in non-cash headwinds. R&D expenses for Q2 2024 were $4.6 million vs. $7.1 million in 2023, a decrease of $2.5 million. SG&A expenses were $7.2 million in 2024 vs. $10.2 million in 2023, a decrease of $3 million. Net loss was $13.4 million in 2024 vs. $16.2 million in 2023.

• Expect gross margins to turn positive in the March 2025 quarter.
• Anticipate accelerated top line revenue growth as sales and marketing initiatives mature.
• Expect to sign new ex-U.S. agreements over next 6-12 months and begin shipping overseas in H1 2025.
• PMA supplement for next-gen LungFit PH system to be filed before March 2025 quarter.

• Regulatory uncertainties with FDA review timelines for PMA and CE Mark.
• Competition in the nitric oxide medical device market.
• Cash burn risks despite financial agreements, though cash runway extended to about 18 months.

Q: How does the 60% increase in hospital clients impact momentum for the rest of the year?

A: Momentum will continue, with number of contracts added per quarter expected to continue, though percentage may not keep up as denominator grows. Current quarter close to last quarter, with seven weeks left.

Q: How do strategic partnerships like with TrillaMed work for VA hospitals?

A: Relationship with TrillaMed just started; no big impact expected in December quarter from VA yet, as work still needed with TrillaMed.

Q: Timing of PMA for cardiac surgery?

A: Ball is in FDA's court; PDUFA date not available, but all requested info has been provided.

Q: Impact of gross margins from label expansions, CE Mark, etc.?

A: One-time cost of device upgrades will disappear in March 2025 quarter. Expansion into markets will drive positive margin as deployed systems generate revenue without additional depreciation. International sales may have slightly lower margins initially but grow over time.

Q: Color on 60% increase in hospital clients?

A: 60% increase is quarter-over-quarter, comparing total customers as of June 30 vs. September 30.

Q: Elaboration on annualized revenue in October?

A: Q2 revenue was $0.8 million, run rate would be ~$875,000, with more starts after October 1, so revenue expected to be higher.

Q: International sales expansion and approvals?

A: BAC acts as intermediary for international distribution. CE Mark will cover most countries outside U.S., but each country has its own regulatory process, taking a couple months to a year in some cases.

Q: Next-gen device PMA supplement timing?

A: Supplement should be smoother than first PMA, but timing not specified; system to be showcased at AARC Annual Meeting next week.

Q: Color on accelerated top line growth?

A: Growth expected to be chunky, with contract sizes varying from less than $100,000 to over $1 million per year; no specific timing on when big contracts will hit quarters.