All right, good afternoon. My name's Jason Bednar. I cover med tech here at Piper. Next up for a fireside chat here we have today is Beyond Air. Very happy to have with us Beyond Air's CEO, Steve Lisi. Steve, thanks for joining us today. Thanks for having me. Yeah, of course. So why don't we get right into Q&A? You've had some commercial and clinical wins that I really wanna focus on here in the first part of our discussion today. These wins haven't exactly been rewarded with the stock. I know you're sensitive to that, but you know, it's in part, and you know, a little bit of an expectations game, right? So why don't we step through each of these wins? You know, maybe can you first talk about where you're at with contracting with hospitals? Yeah. So, you know, we've gotten some contracts. Obviously, we've given people some parameters about, you know, contracts that have been won and filters that have been sent out for use, which is how we measure usage. Each filter is 12 hours long of usage. So, this is all good, and what's happening right now is, you know, we got our software approved, software update approved to our system in September, which was important for us to, you know, kind of just improve some of the small little nitpicky shortcomings that our system had, considering, you know, there was a pandemic and things changed a bit. So, but right now, you know, there's been a lot of hospitals that were kind of waiting for this, and so we're kind of being, you know, inundated a little bit with the requests to see the new system and to use it. So that's a good place to be in. And so things are certainly picking up for us at this moment, and, you know, it's exciting times. I mean, our commercial team is running around happy. You know, it's good to be busy. That's good. Yeah, it is, it is good to be busy. What can you say whether you were... Like, were you proactively holding back on some of your activity, waiting for that software approval, and now it's, you know, kind of floodgates are open, you're out there, you know, really beating the street on trying to, you know, secure contracts now that you have that software in place? Yeah, I don't know if we were holding back until we got it, 'cause with, you know, it's hard to know when you're getting it. Sure. But once we were close to getting it in and/or knew we were about to get it, we kind of did pull back a little bit. You know, you don't wanna upset your customers and say, "Hey, take this device that's not upgraded, and by the way, in two months, we'll have the new one, and we'll have to go and swap everything out again." And, you know, it's. Yep ...it's about, you know, being honest with your customers and letting them know, "Hey, you know what? It's okay if we start up three months later, rather than, you know, rather than October 1 or November 1, it's very—it's fine to go to January, or February, or March 1. So we'll have supply for you. You'll get the new system. You don't have to worry about swapping out later." And I think that's paid dividends for us as a company and as a team. We're upfront with the customers, honest with them, letting them know. And, you know, if there's a couple of months push-out on a start date for somebody because we're gonna get them the best system that we have, then so be it. And I think that's what's going on now. So yeah, I think in the September and October time frames, we certainly were letting people know, "Hey, you know, in November, we'll start our new systems rolling out," and they have been rolling out this month, and obviously, every month they'll be more and more and more. So over the next six months, we'll have, I think, almost the whole fleet retrofitted. It might slip into the summer, depends on how things go. But we have two manufacturing lines, so one's fixing the existing fleet and the other one's just manufacturing new ones. So new ones are coming off the line. They started a couple of weeks ago. All right, great. You've had this phased approach to the commercial plan. You had phase one. We're in phase two now. What were the learnings out of phase one that you're now applying as you move forward with the kind of the second phase, the more open, you know, everyone running for the contract phase? Yeah, I mean, look, we learned, you know, where we had to improve, you know, our system and make it compatible with certain ventilators and other things that need compatibility in this market, that we may have been compatible in 2019, and post-pandemic, we weren't compatible anymore. That was part of the software update? Yeah, the software update gave us compatibility with everything that we weren't compatible with before. And right now, our system is on par or superior to everybody else in the market, and that's our opinion. We can always go into detail about that, but you know, with this software update, I think we can do everything that our competitors can do, as well as them, if not better. So that's obviously. Okay ... important for us. Got it. I wanted to ask, I don't know what to what extent you wanna give details on some of the contracting, where you're at right now, but, you know, I have you sitting, at least coming out of the last quarter, maybe right now, 6 or so contracts, you know, in the ballpark there, if I am, and then, you know, each contract running about $250,000. I think it's, you know, at least just trying to do some rough math. Is that, you know, is that in the ballpark? And, you know, is there, at least on the, on the contract value, does... Yeah, I would think that has probably some upward movement over time as you go after some larger hospitals, larger networks. Yeah, I agree with that. You're roughly ballparks, and yeah, the average probably will go higher over the next six months because, you know, we weren't really going for the big, big hospitals- Sure ... early on. Not to say we don't have, you know, a hospital or two that we would consider to be, you know, skewing it into that range, because there are some that are much smaller as well. Yeah. But yeah, I mean, I think that, you know, in the next six months, we'll see some bigger names and bigger-sized contracts coming our way. But again, you'd be surprised, some of the big-name hospitals you've heard of are just mid-sized nitric oxide users. Okay. It's... Yeah ... sometimes name recognition is great, but they may not be the major users. Yeah. I'm learning that. You know- Yeah, inter- ...... I'm certainly learning that. Interesting how that plays out. Yeah. On the macro side, I would think that your business is far less sensitive to the macro. There's other considerations, you know, more so just like the stickiness of the market. But do you feel any macro sensitivity when you're going into hospitals, or are they, you know... I don't wanna mean from a budgetary perspective, can they afford it? But more so, are they distracted with other decisions, other considerations on, on budget decisions that that's been affecting you? ... I mean, I think so. I mean, I don't, the macro environment's not as important. They always want to save money, right? So now there's competition in nitric oxide. So we always said from the beginning, price would come down. I think it's in a range where we expected a certain range for it to be in. I think it's still in that range where it'll come down to. So I think it's more about what you mentioned, the second thing you mentioned, that sometimes there are other things pulling them away, you know, supply chain and other parts of the hospital dealing with other decisions. And sometimes, you know, yeah, we've heard, "Hey, we, you know, we don't want to change. We want to retrain people on the whole system throughout the hospital, so we're just going to wait another year or two or something." Sure, that happens. I mean, that's just part of the business. I don't know if it's worse now than it was five years or better now. I really don't know, but that's always something that you have to deal with. Sometimes they just don't want to deal with something more important, in their opinion. They say, "Ah, we'll go another year with our current supplier. Let's just leave it alone." We do run into that, but- Okay ... I think when they see our system, we can solve that sometimes. So we've run into that, and we're like: Hey, you know what? We'll just stop by with the system, you know, just show it to you. And, you know, half the time they're like, "You know what? Let me make a phone call. I think we need to look at your system right now. Okay. That is happening, again, with our, the one we currently have with the upgraded software. Yep. So just because we're manufacturing in November doesn't mean we couldn't show them a demonstration model, right? Right. Of what it would look like. Okay. Okay, maybe to zoom out, this most recent quarter, you did give fiscal 2025 revenue guidance, $12 million-$16 million. Mm-hmm. I'll admit, a bit unusual to have, you know, halfway through one fiscal year to be giving guidance for the next fiscal year. I guess as you were kind of contemplating how to manage expectations, I guess, what led you to want to give that revenue guidance at least three months early or maybe six months early, compared to what some other companies might how they might approach their guidance? Yeah, I mean, look, it's a tough decision to do it, not because we're worried about hitting the range. That's not the issue. The issue is what you're saying, you know, what's the perception of why we're doing it? And, you know, it's not a market that's easy to track for investors. So we wanted to let them know, one, that we had two good things happen to us, which gives us clarity, which was the software update, and as well as that, we entered the Vizient GPO platform as a new technology product, which is a very good designation, and it's very helpful. Vizient is the largest GPO in the country. So these two things helped us give us clarity in terms of the hospitals that we've been talking to, when their contracts are up, you know, and, you know, it's based on, you know, which ones we think we'll get. You're not going to get everybody. You have to think certain in percentages, and then you also look at our ability to manufacture as well, right? So, you know, that range is there based on all those factors. I mean, you know, if we could supply the whole market tomorrow, maybe I'd have a different number, but, you know, that's just not reality. So- Yeah ... I thought it was important to give people an understanding of how we see the market and how we see our progression, how we think we see things unfolding. Because the questions about: How do we track this? What metrics can you give us? You know, number of hospitals, if the average is 50,000 a hospital, doesn't help you. And if I have a low number of hospitals, but the average is 700,000, does it help you know? Mm-hmm. Again, it's very hard to give these kind of metrics for this market. You can't track it with an IMS database or anything like that. We felt that giving the guidance would help people understand what we're seeing and where we think we'll be, you know, in 15-18 months from now. Okay. I guess we'll have to kind of give people proof over the next two quarters that that's the runway we're on. Okay. Okay, so I mean, clearly, and I don't want to put words in your mouth, but clearly confident, just given where the business is today from a revenue base, you know, going to 12-16, it's a big move, but- Yeah ... you also have, again, all the confidence of getting there. And the next place I wanted to go, and you touched on a little bit there, Steve, was the capacity to support that, and that's not at all an issue. I mean, can you talk about where your capacity is? You know, again, if things all break right, could you support something that was like $18 million or $20 million next year, or is there a ceiling on what you could support? There's definitely a ceiling on what we could support. Okay. I mean, there's limits to how much we can manufacture. Like I said, we have two lines. Yep. We know what we could do if we max them both out, which we're not at the max right now, for both lines. We could obviously turn that on. It's like a 3-6-month process to do that. Okay. Can't just do it overnight, right? It just takes time. But, you know, with where we are, with the capacity we have right now, we can certainly hit that range. So I can dial it up if we see that demand coming. Okay. We can certainly dial it up to go above $16 million, no problem. We could certainly be $20+ million- Okay ... million in that timeframe. If the demand were there, we could probably meet $20 million in supply, no problem. Okay, and supply chain, I know that at one point, that you, like everybody else, in this med tech- Yeah ... was running into issues on accessing certain components. You know, again, thinking about that 12-16, again, 20 would be great, but just thinking about the 12-16- I'm not guiding to 20. I know you're not guiding- You're asking about supply. Yep. Yeah. No, no, no. But thinking about the 12-16 that you did guide to, supply chain, is there at all a risk on the supply chain, or you feel pretty good on where you stand, just given- There's always a risk on the supply chain right now. I mean, you know, we're a heavily electronic device. Yep. So there's always a risk out there. It's still difficult. We still have, you know, a good portion of our products that have more than 16 weeks lead time, and as you go to, you know, 24-week lead time, 36 weeks, even 48-week lead time, we have products that are more than 48 weeks out. If you noticed, last quarter, we doubled our cash in escrow from $2.6 million to $5.2 million. This is essentially for our contract manufacturer. We are buying all of these parts well in advance. So if you ask me, "Steve, can you handle the next nine months?" I'd be like: "Yeah, no problem," because that's what I got sitting. Yep. We have an enormous amount of parts sitting on the shelf at our contract manufacturer to make sure that we don't run into a problem. Because if we start doing this, and we have contracts, and we know people are coming in on the 3 months or 4 months, and we need to have the machines ready, we can't, you know, get ready and get these hospitals ready to sign with us if we can't supply. So we're looking out 6-9 months at all times to make sure we can manufacture the demand that we're anticipating. And that costs money right now because the supply chain is not good. Normally, you know, you're running a product, well, parts of the 16 weeks plus is usually like nothing, 5% of what you're looking at, maybe. Mm-hmm. If that. Most things are, you know, 8-12 weeks, you can get stuff. That's how it was pre-pandemic. Then all of a sudden, you know, the whole world is completely changed, and it's expensive to keep these things. And we can't expect our contract manufacturer to bear the entire burden of that, so that's why we are, we're helping where we can. Yeah. You know, it's a good sign, because we upped this obviously based upon knowing that we were getting the software update. I mean, we knew a few weeks before, just like, you know, the feeling with FDA talking to them and the feeling with Vizient, too. We announced it on October fifteenth, but, you know, you obviously knew several weeks before that you were getting close, and you were getting close. So, you know, it's a rolling forecast with these guys, so- Mm-hmm. You have to talk to them six months in advance before you want to change the manufacturing. So we made the decision in September to say to them: "Look, we're gonna need more stuff. We're gonna need more on the shelf. We're gonna have to do it." And that was a discussion with them, what it's gonna cost to make sure we get this amount of material sitting there waiting for the demand that we anticipate. Okay, last question on this topic. Have those lead times shifted in the last 6-12 months? Have they started to come down at some- No. So yours- No. Yours are still pretty elevated? Yeah. Okay. Yeah, that's why we had to give them more money. And they're not... But they're not getting any worse? Not really. I mean, you know- Generally speaking, they're stable. Generally speaking, yeah, it's been stable the last year or so. I mean, you know, it's an interesting discussion when you sit down with the team and you go over these things. You know, sometimes the number of products that are post 48 got a little higher, but when you go down to, like, post 24, it's about the same. You know, so it's still pretty bad. Yeah. Okay. But you have to maintain that continuity, or you can't have a gap in your ability to do maintenance on existing products or provide new products. Yeah. You can't have that gap. Shifting gears a little bit, but still kind of weaving in the guidance point. You talked about Vizient- Mm-hmm. And how important that, like, securing that Innovative Technology contract was with Vizient. How did that factor into the guidance? How important of an element was that, or was it just, you know, kind of an ancillary factor, and it's just a lot of other things that are built into that $12-$16? Yeah, I think it's a piece of it. Okay. I think it's a piece of it. I think it's a very important piece of it. I don't know. You know, I think the software is more important. Okay. That was probably the biggest key- Yep ... to us, but it's important. I mean, a lot of hospitals, you know, they want you to be on the Vizient platform. I mean, they're the biggest, so it's certainly helpful. And it did factor into the guidance that we gave. Can you say, like, through whatever it's been now, well, like, probably a year plus? Mm-hmm. how many times hospitals have said no or sorry, we can't because you're not on Vizient? Heard that a lot. Okay. Yeah, it's- Okay. You know, and there are other GPOs, they're not the only ones we've heard from. Right. From some of the other ones, too. So, you know, the contracts we have now, you know, there's a few that are on GPO platforms, but they, they worked with us anyway. So they can do it. Hospitals can do it, but a lot of them are unwilling, you know, Okay. Just, how certain hospitals are set up. Okay. All right. Turn to the pipeline, because the pipeline's important here, too. This isn't... You know, we get a lot of focus from folks like myself on the factors that impact the P&L and the revenue, but, you know, the pipeline, there's a lot of value here. So first of all, you have submitted, you know, the PMA for to expand the label to include cardiac surgery. You know, why is that so important? Because it feels like it's not super well appreciated out there. Why is it such an important piece to the story in terms of, like, driving adoption? I mean, pretty simple story. I, I think people just aren't paying attention at all because they think, you know, that the product doesn't work or it's not competitive. That's fine. We'll, we'll show some numbers soon. But look, right now, cardiac surgery being off label, it's the majority of usage for nitric oxide in the United States. Way more than 50% of the usage. And these hospitals, you know, are getting paid for a, a cardiac procedure, and if nitric oxide is needed, they're using that, and it just takes away from their profitability, okay? But it's best practice, standard of care, so they're going to do it. We get on label, all of a sudden, we're the only product that's reimbursed. I mean, w- who are they gonna choose? Which product are they gonna choose? Not to mention, hold on. Yeah. Not to mention that our product works great with the adult and pediatric ventilators that are used on the cardiac surgery patient and the modes that they use. I mean, some vents are specific and some vents can go across all types of patients, but these pressures are different in the adult cardiac setting than they would be in the pediatric setting or for PPHN babies. So our system works across the board, and that's also important to understand, you know, because maybe one of our competitors may not be able to do that as well, work across the board like that. So we do work there, and we have no cylinders, obviously, so you can leave our system just sitting in the cardiac surgical suite. You know? Mm-hmm. If it's post-surgery, they're gonna use it, so we just think ours can sit in the corner. There's no danger. There's no safety to worry about, nothing. You can't just leave cylinders sitting there in the corner without, you know, some kind of safety procedures in place or people who understand how to use it. Ours just sits there. If it's not plugged in... If there's no filter in place, you could have it plugged in with no filter in place. It can't generate. It can't generate. There's zero danger, so ours can just sit there. It's, it's much more convenient, safer, simpler to use, and if they're getting reimbursed for it, I mean- Yeah, no-brainer. It's a no-brainer. It is. And I just wanna be clear, I know you know this, but maybe some other people don't. You get approval, the reimbursement code's gonna take three years just the way life is. Yep. But there are what we call miscellaneous codes or temporary codes, however you wanna phrase it, that can be used in the interim, which obviously wouldn't be as much of a savings as the permanent code would be, but still- It's something. Something's better than nothing. So you and I have talked about this before, and I think you kind of alluded to it, but again, for everyone else in the room, why haven't your competitors gone after that cardiac label? Because you have all the benefits you just talked about- Yeah ... about, you know, securing reimbursement. It would seem like an, you know, an obvious choice then to like, for those other players to go after this label. Why haven't they? Well, I mean, Mallinckrodt, they were a monopoly all these years, so, you know, it doesn't really matter to them. There was no competition anyway, so- Sure ... it was irrelevant at that point. And, I can't speak for why they haven't gone forward with it now. They did speak publicly about it a few years ago, saying they were gonna do it, but again, they've had two bankruptcies in three years, so they may have other things to worry about. Right. The other two competitors, you know, I don't wanna speak for them either, but I think one of them does have trouble in the adult cardiac setting, so why would you go for something where your product doesn't really work? And, you know, the other one, again, is it really worth their time to pursue this? It's not as easy as it sounds, just to say, "Oh, let's just get it on label." It's not that easy. This is not a simple process to do it. There's an art to this, and people have done it in the past. I've been a part of teams that have done this in the past. My statistician has done this many times in the past. It's critically important to have the right people in place, have the right understanding with FDA. It's not that easy, and it does take time. So I don't know why, you know, this other cylinder player hasn't done it. You'd have to ask them. I don't know, but they are the largest gas company in the world, so I don't know- Yeah ... if this is something that is critically important to them. Okay. Moving on to another piece of the pipeline, VCAP, you know, Viral Community-Acquired Pneumonia. Yes. There's a lot of confidence from you on this study and in this category, and it's been informed by a lot of the past- Yeah ... prior work that you've done, which I think, you know, then speaks to the confidence that you have. So maybe help, again, help us all, why you think that... Why is this trial so important for Beyond Air? Why do you think this is an underappreciated piece of the story and the capabilities of nitric oxide? So look, we started this program for pneumonia in babies, called bronchiolitis. Mm-hmm. Essentially pneumonia in infants under the age of two, and our average, our mean age was, like, 3.5 months. So these are all under a year old. We went 3 for 3. Safety, efficacy was there. We also did a long-term safety extension study. Some of these babies were tracked 7 years. No, no danger long term from acute use of nitric oxide. So it's a great database. We were talking to FDA about going to a pivotal study in March of 2020. Perfect timing. So we haven't seen any babies... This winter we're gonna see babies in the hospital for sure, but we didn't see it in the 2020-2021 and 2021-2022 winters. 2023, we kind of saw them coming back, but I think this will be the first year you're gonna see it back to normal. So we've shifted to the adult setting. We did a study, 35 adult patients, 34 COVID. We found one non-COVID pneumonia patient during the pandemic. So, that should be a victory in itself. Yeah. But, you know, the data there were similar to what we saw in the infants. I mean, it's still pneumonia. We're just dealing with patients with a lot of comorbidities. But it was safe. Efficacy trends were in our favor. We actually had statistical significance in one of them, which I'm not gonna jump up and down about. It's too small of a study, but trends are all in the right direction. So we were 4 for 4 in viral community-acquired pneumonia. So I don't see why we're not gonna go 6 for 6, 'cause this is a pilot study. FDA asked us to do another pilot study. It'll be the first time we do it in the U.S. Okay, we have to do what FDA asks us to do. So it's gonna be this season. We're doing the study this season. It may. The safety study may extend into next season. I'm not gonna rush it. I'm not gonna push my team. The efficacy needs to be in one season for FDA. So our pivotal study was gonna be in 2025, 2026, no matter what. Yeah. So whether the pilot study for safety does it finish this season, extends to next season, is not really relevant to us. I just wanna be clear, that we're, we're gonna take our time and make sure we get all the right sites and studies, and right sites and right patients in there. I don't see why the fifth time we do it is gonna be any different than the first four. Yeah. This is why I have confidence. Yeah. This is just a matter of time before we do this study or a pivotal study and get approval. Yeah, it's frustrating for everybody on my team that we shifted from infants to adults because of the pandemic, and we're obviously several years delayed on having this product to market, but there's just nothing we could do. Mm-hmm. Okay. Just so I have the timeline right here, and then I wanna, you know, save one question for your next-gen system. Sure. VCAP study run at this winter, so 2023-2024. It might bleed over to 2024-2025. Yep. But even if it does, regardless of what happens, you're planning 2025-2026 cycle to be your pivotal. Even if I could do the whole pilot study in 2023-2024, I still couldn't run the pivotal until 2025-2026. Okay. No way. So 2025-2026 winter season- Yeah ... is when you're planning the pivotal. Okay. Correct. So we've got 10 seconds, unfortunately, to talk... We'll go over a little bit. To talk about your next-gen system. So just, you know, what's the latest? You know, is everything still on track? What are the... And then just what are the milestones we set in mind? Submit, submit by the end of next year. Okay. And then FDA will take at least six months. I don't know how long it'll take to review, but that's what it is. Okay. It can be used in airplanes, helicopters, ambulances for transport. It's about half the size of the current system with some improved functionality. Okay, so like, best case scenario, mid 2025 launch? That's the best case scenario. Yeah ... 'cause I don't know about the 6-month thing. Right. Exactly. I know. They haven't hit a timeline in the last four years, and they did have a pandemic hurting them, so I understand. That's okay. We'll cross our fingers at the FDA. So Steve, thanks so much for being here. It was great, great chatting with you, and please, everyone here, thank you for joining, and join me in thanking Steve as well for his time today. Thanks a lot.