All right, up next, Roger Weiss is back as he sits down with Beyond Air and their CEO for a fireside chat. As a quick reminder, all of our webcasts will be available to watch on demand after the summit. Okay, we'll be right back.
Hello and welcome to the Beyond Air fireside chat. My name is Roger Weiss, and I'm a vice president here at Lytham Partners. Today, I'll be moderating a Q&A discussion with Steve Lisi, CEO and Chairman of the Board at Beyond Air, which trades on the NASDAQ under the symbol XAIR. Let's get started. Steve, welcome to the Lytham Healthcare Summit.
Thanks for having us, Roger. Appreciate it.
Let's start with the questions. Beyond Air is the nitric oxide company. So can you give us a quick overview of what nitric oxide is and what conditions NO is used to treat?
Sure. So nitric oxide is NO, as we call it. So we'll be saying NO a lot on this call. But it's a free radical gas, and it is a medical gas that we use to treat a couple of different indications. But most importantly, it's natural inside of our bodies. So our body uses nitric oxide in many different ways. And one of those ways is as a pulmonary vasodilator. So that means it opens up blood vessels in the lungs. So what we're going to do with nitric oxide, or what's been done with it for the last 25 years, it's approved. It's treated newborn babies who have hypoxic respiratory failure. These are often called blue babies. So these babies are unable to transfer oxygen into the red blood cells when they breathe in the air. So nitric oxide is given to them.
All of these babies are ventilated, and the nitric oxide will vasodilate or open up these blood vessels. And now you will be able to have the red blood cells flowing and the oxygen transferred into those red blood cells. That's on label in the United States and around the world. On label everywhere else in the world, except for the United States, is nitric oxide used for right ventricular dysfunction post-cardiac surgery. So certain cardiac surgeries, you may have a lot of pressure on the right ventricle. Just to recall for people, the right ventricle is pumping blood into the lungs. And as you're having this pressure build up, if you can open up those blood vessels in the lungs, making it easier for the right ventricle to pump, this relieves pressure and leads to an easier recovery and a better recovery for the patients.
Got it. Obviously, there are several NO players on the global market. What makes your solution so special?
Our system makes nitric oxide from room air. We don't need any ingredients. We don't manufacture nitric oxide in a manufacturing facility. The market leaders in the U.S. and around the world, they are cylinder-based players. They have 40+ pound cylinders filled with nitric oxide. To be clear, it's actually over 99% nitrogen in these tanks. It's a very little bit of nitric oxide. Nitrogen is the stabilizer. This is obviously not very sustainable or green for the environment, as we would say. It is a hassle for the hospitals to manage the logistics of these cylinders. There are potential for leaks, potential for these cylinders to fall or hurt people's feet or be heavy for them and give them back problems for the workers in the hospital. With our system, you just carry it in.
It can be wheeled in on a cart or a system, or it can be carried in, and you just turn it on, put a filter in, our filter filters out nitrogen dioxide, which is a byproduct for all players. We filter it out. There is another player out there, in the U.S. and outside the U.S., there are players like this. They use chemicals, and they convert these chemicals, which are toxic, into nitric oxide at the bedside. Again, not good for the environment and certainly hazardous in the hospital space for the hospital workers and potentially the patients. In addition, given that we don't have these chemicals or these cylinders or manufacturing facilities for either one, our offering to hospitals is less costly from a price tag perspective, and of course, it saves them time and space inside the hospital, which translates to money as well.
Wow, so safer, easier to use, and better for a lot of people.
More cost-effective.
Yeah. Given these benefits that your systems provide, can you talk about what has caused the slow uptake in the U.S. market, and how do you plan to take market share in the future?
Yeah, it was a tough launch for our first-generation product. No doubt. We launched at the end of 2022, so just about three years ago. This was a difficult time during the pandemic. Things were moving very quickly. So back in 2019, when we had tested our machine with ventilators, as I mentioned, these patients are ventilated when they're treated with nitric oxide. So we had done our tests against with the current vents at the time. A lot of ventilators were upgraded early in the pandemic. They got quick approvals through FDA. So there were some systems that we were no longer compatible with. So when we first came out, we went to customers. We learned from them what we needed to adjust on our system. Again, it's a first-generation system. This is normal.
Took a while to a few players, a few hospitals, get some feedback from them and upgrade the machine. This is pretty standard in the medical device world, so we followed this path and unfortunately, during this time in 2023, the FDA had their own issues because of the pandemic, so things were very slow, so it took us a good year plus before we could get all the approvals through FDA and then adjust our manufacturing with our contract manufacturer. Again, we are a Class III medical device, a PMA-approved product, so it's a higher burden for us, which makes it safer for medical staff and patients as well. They're assured of the quality of the product, but this does take time, so we really didn't have a competitive product until the middle of 2024 on the market.
Taking that long of a time to really get the competitive product out there certainly was difficult for us to overcome. In addition to that, we do have one drawback. Our system, the first-generation system, cannot be used in inter-hospital transportation. So if we have to go into an ambulance or a helicopter or an airplane, our system won't do that. So in the United States, this is a drawback. And there are many hospitals that have this feature. Even though the volume of nitric oxide used for transportation in this manner is extremely low, it's still a service they need to provide. So this was a detriment to us. We designed the system without this capability on purpose. We never expected to need it for this machine. Our second-generation machine is where we were going to put the transport capabilities.
We knew the first generation was going to have drawbacks, but again, things took a lot longer because of the situation during the pandemic. Our second-generation machine is pending at FDA right now. We anticipate its approval before the end of this year, and this is now a much smaller device, much more user-friendly, and you can use it in ambulances, airplanes, and helicopters, and it's the same device that we use in the transport vehicle that you would use in the ICU, so you don't have to change devices like our competitors do, for example, so again, our competitors are using cylinders, high-pressure cylinders in flight and in the ambulance. This is dangerous. For sure, it's a danger. They've been doing it for many, many years, but it's still a danger and a hazard.
For other competitors who are non-cylinder or not like us, these chemical players, these systems are very different. They don't have built-in backups. You need two systems on a transport device, which again, poses a huge problem. Not to mention you have toxic chemicals that you're transforming into nitric oxide. Again, we are the best solution. It's just it took us a little bit of time given the circumstances. As a company, we did the best we could with what we had. Again, we weren't able to step up to the challenge with the first-generation device. In the United States, we do have good market share. Not good enough, obviously, but there are dozens of hospitals using our device at this moment in time. They love it. With our second-generation device, we anticipate taking the majority of share in the U.S..
Outside the United States, transportation is not as critically important. It's done differently in most other countries, not the same way in the United States. So this is not that much of a burden for us. So outside the United States, which our efforts ex-U.S.. only started in the spring of last year. So it's been about less than nine months. And we've already got 40 countries where we have distribution partners. Some of them will take time because we still need regulatory approval. Others already have regulatory approval. But it does take time to build. We need to sign them up. We need to train them from an engineering standpoint, from a servicing standpoint, from a sales standpoint. This takes time, these people all over the world. And sometimes it's tough to get people to travel to the U.S.. There are certain visa issues.
We have our guys travel around the world, and we're training everybody. So this base around the world is being set. And we anticipate over the next 12 months - 24 months to see significant impact from the overseas market with our first-generation product.
Got it. And I could just follow on with that, Steve. Could you talk a little bit about the size of the international market relative to the domestic market? And how do you think the ramp will be different because of the relative needs of those two different marketplaces, as it were?
Yeah. So it's interesting. We're programmed, I guess, to believe that most healthcare products are more expensive in the United States than outside the United States. It's not always true. And in the situation with nitric oxide, in this situation, it's not true. There are some countries where the price is pretty much at parity with the United States. And there are some where it's lower, but it's not half. So from a pricing perspective, it's pretty close on average around the world to the United States. And we measure pricing on a per-hour view basis. So it's all pretty close within a reasonable margin of each other. But the volume outside the United States of nitric oxide that's necessary, I mean, we're 350 million people in the world, in the United States, give or take. We have 4 million births or so a year in the U.S..
And then the number of cardiac surgeries that are done, etc. You just take those numbers and look at Europe. They're going to have more births than us. They're going to have more cardiac surgeries than us. Japan is going to be they have less people, but their rates per 100,000 people is going to be the same as the United States in terms of these procedures. Other countries, India, for example, China, for example, South America, we may not be at the same rates as those countries, but they all do cardiac surgery. They all have births. They all have these blue babies. So when you're looking at the sheer volume outside the United States, it's massive compared to the US..
We believe that the ex-U.S. market over the next five plus five, six, seven years will be double that in terms of dollar value of the United States. Now, when you look at the ex-U.S. market, sure, Europe, they're going to have the same facilities that we have in the U.S.. Everything's fine. But when you're transporting cylinders around, okay, it's very expensive to transport these cylinders. So that's why the price is just like it is in the U.S. It's very expensive to get the cylinders to where they need to go. And the roads, the infrastructure in a lot of these countries is not like the U.S.. So you can't even bring cylinders to certain areas around the world. So with our product, it takes that away. No problem. We can do that.
So in those remote areas, we'll be treating patients where they don't have nitric oxide now. So it's just an easier product for us to use and a cheaper product for everyone around the world to use. So if it's cost-effective, it's simpler to use, and it's readily available. And I'll give you an example. We have a naval base in the middle of the Pacific Ocean, and none of our competitors were willing to service them. We service them immediately. Why? Because they get our machines, and all we send to them are filters. Filters weigh two and a half ounces. We can ship them anytime we want. And it's very easy to use our machines. So we train them online with video training. That's how simple our system is to use.
So again, for our system, the ease of use, simplicity of the design, the fact that you're making it from room air, it can be used anywhere in the world. And again, remote areas, we can train people remotely. So again, we have a significant advantage outside the United States versus our competitors.
Got it. You touched on it just a little bit in terms of kind of where you thought the global market size would be in five years. I think you said it kind of at least double of the U.S.. How do you think about that? And how do you think about especially using distributors in terms of taking market share?
Yeah. And look, we're a small company. We can't have infrastructure outside the U.S., right? So we need people who sell in these countries, sell multiple products. So we've got a team, our international team. They're an extension of Beyond Air. And they manage it. I mean, the extension of our team, these guys have a couple of products besides the LungFit that they sell. But this is what they do. They've been doing medical device sales for over 30 years around the world. And we were fortunate that they looked at our device and said, "Hey, this is a great product. We can sell it." So they endorsed us by taking this as one of their products. And all of our distribution partners outside the United States who've partnered with us, again, it's only been eight, nine months we've been looking for partners. We've got 40 countries partnered.
It's an endorsement of this product. And things take time to build. But once that base is built, the rapid nature of the sales will build quickly. Not like in the U.S., where it was more difficult. We were doing it during a pandemic. We had drawbacks with our machine. What they have outside the United States is the optimal system that we use in the U.S. now. So they never saw the suboptimal machines. The U.S. did. Outside the U.S., they've never seen it. This is the first machine they've seen. It works beautifully. They love it. So it's a different perspective for them. So we anticipate our distribution partners 100% never work out, right? You'll have a few that we swap out here and there. Nothing ever works perfectly with everybody. But for the majority of them, we think we're working great.
We think that we're going to start to see these revenues pick up here in 2026 and really make a significant impact in 2027 on our top line and bottom line.
Got it. And could you talk a little bit, Steve, about the company's pipeline? In the past, you generated some data in infectious diseases, and you have, I think, two subsidiaries, one for cancer and one for neurological conditions. How does that all fit in?
So it's all nitric oxide mediated, right? So like I said earlier in the beginning, nitric oxide is used in our body in many ways. So one way is as a vasodilator, not just in the lungs, but that's where we deliver it. So in the body, it's a vasodilator throughout our body, right? But it's also used in the immune system. So nitric oxide at a dose of 200 parts per million, okay? So I failed to mention that the current approved dose around the world is 20 parts per million, two-zero. And right now, in the body, it uses 200 parts per million to kill invading pathogens. This is one thing the immune system uses, nitric oxide, among a couple of dozen other things it uses to kill these pathogens. But at that concentration, nitric oxide is effective.
So what we're able to do with our machine is we can generate 250 parts per million of nitric oxide, which is what we did in a study where patients treated themselves in the home for 12 weeks. So they took our machine, put it in their houses, and treated themselves four times a day for the first two weeks. And then after that, for 10 weeks, they did a maintenance dose of twice a day for 40 minutes. No medical people there. There were no serious adverse events. No patients stopped therapy due to any adverse events with our therapy. These patients all had better quality of life. We have our data is published. We had quality of life improved significantly. These patients had a lung infection called nontuberculous mycobacterial lung infection, for short, NTM. Okay?
NTM lung infection is one of the worst lung infections you can get, especially refractory. It's failed antibiotic therapy. These are the patients that we treated. It worked beautifully. Patients were very happy with the machine. The physicians were happy with the machine. It worked very well. This was several years ago. During the pandemic, we did this in the middle of the pandemic in 2021 into 2022, we did this study, a very difficult time, but the machine worked perfectly. That's one thing we're doing on the infectious disease side. Also, nitric oxide will also work against viruses. We did do a COVID study in a hospital in Israel, a couple of hospitals in Israel for that matter. We had very positive results as well.
In addition, we did three studies in babies, three to six months old, most of them, for a condition called bronchiolitis. So bronchiolitis is just another word for the baby got pneumonia. That's it, right? So there are different kinds of viruses, RSV being the most common virus there, but there were coronaviruses, which COVID was a coronavirus. So we did three studies there. So when you add up all the studies we've done, it's over six studies in multiple different types of infection situations. We had over 5,000 doses administered at 150-250 parts per million. Hundreds of patients were treated. So it's very safe, very effective. Unfortunately, during the pandemic, money dried up, funding dried up. So these programs are on a temporary hold. We are moving forward, speaking to FDA about the home study to treat NTM lung infection.
We'll see how that goes. We'll see if we can either get cash for ourselves or partner up with another company to run those studies. That's our infectious disease program. Following on infectious disease, we go to cancer. I mentioned we treat 20 parts per million for pulmonary vasodilation, up to 250. Maybe we could even go to 300 parts per million for infectious disease. Now we're going to 25,000 parts per million for cancer. We've treated 10 humans already at 25,000 parts per million, six of them, and 50,000 parts per million, four of them. We've shown some of the data in the past. We'll be showing the full data set later on in 2026 at a medical conference. I think people will be very impressed with this. We have yet to reach median survival.
So that means that half the patients have not yet died. We started treating patients over three years ago. So some of these patients are alive more than two years after we've treated them. So just to be clear, we treated with nitric oxide, one treatment, one time, and they couldn't take any other drugs for 30 days. So we can monitor what nitric oxide did to their bodies. Then after those 30 days, they could go on other therapies. And they go on whatever they wanted. And now we have a big survival signal in these patients. And these are all refractory patients, full-blown metastatic disease. They had failed multiple therapies. The average number of therapies failed was over 10 by these patients. So these are very, very ill patients with little time to live. And there's been a big reaction from nitric oxide.
So just for 30 seconds, I'll give you the background. Since nitric oxide is natural in our body, and we can go back to our high school chemistry days and periodic table of the elements, either it's nitric oxide or it's not. There's no 99% the same or 99.9% the same. Nitrogen is nitrogen. Oxygen is oxygen. When you combine them in a certain manner, it's nitric oxide no matter what. So if I put nitric oxide into the human body from our machine or from a cylinder or from wherever the nitric oxide is made, the body doesn't know the difference. So the immune response from the body is natural. And the body is now armed against that particular tumor type that we put the nitric oxide into. It has lit up the immune system against that tumor type. So it'll prevent further spread.
In these full-blown metastatic disease patients, the immune system is just too weak for nitric oxide to help enough. So in combination with other drugs, specifically checkpoint inhibitors, which Keytruda is the biggest one in the world, and there are others, when we've seen in animals, we've seen a doubling of the survival rate. So the checkpoint inhibitor alone, if you add nitric oxide, the survival rate doubles. So we'll see how that looks in humans. And hopefully, we'll show some of that data later this year. And hopefully, we'll be able to do a specific study going forward of nitric oxide plus a checkpoint inhibitor to study it directly. So it's a very exciting program for us. And this survival data was a little bit known last year, year and a half ago, but we really just got a full data set a few months ago.
And it's very exciting. So our neurological program, this is preclinical. We're looking at a subset of autism called Phelan-McDermid syndrome. It has orphan drug status at FDA for us. We also have orphan drug status for glioblastoma for that program. And again, it's nitric oxide mediated. The difference here is in the brain, there's overproduction of nitric oxide that causes these problems. So we have a - I know our scientist doesn't like when I say this, but I guess it's a partial inhibitor of nitric oxide production in the brain for the layman. I'm sure the scientist will say it more beautifully than I did. But essentially, we're reducing the amount of nitric oxide being produced in the brain and trying to bring it back into a normal range, whatever that may be. And we've seen preclinically the reversal of autism tendencies.
And with glioblastoma, we've seen significant response in animals with this as well. So it's exciting, but it's nitric oxide mediated. But instead of putting more nitric oxide in the body for this one, we're kind of taking it out. And we'll see, hopefully, that program will be moving forward in the next 12 - 18 months. So we'll see some activity on the neurological side in the near term.
Great. I know we're getting close to running out of time, but before that, I wanted to just touch base on two quick things. The first is, how's the patent portfolio? And followed up by, could you talk a little bit about your capital position?
Sure. So on the patent side, so our LungFit machine, which is approved, we have patents out to 2040 at this point. With our second-generation machine, we expect those patents to be extended to 2044. Possibly, we're working on more patents now that we've submitted to FDA and finished it. We might even have some patents that'll be submitted this year as well. Very important to understand that what we did on the first-generation machine, again, was the first go. And what we've learned and what we've figured out as we were designing and building the second-generation machine, we couldn't have known these things. And we have something that has occurred recently that was completely unexpected. So we'll be patenting that, I think, later this year. So that's good stuff.
Those patents for the LungFit will not just be for the LungFit PH, which is the product that's on the market and the second generation coming for it, but it'll also extend to our LungFit GO machine, which is what we'd be used for the home market. Those patents will go out to 2044 for sure, possibly longer. That's exciting from that front. On the cancer side, we have several patents pending. We have two patents that have been issued as well. We are protected there. Those patents are going to go out. I believe those patents are out past 2040. Again, very long patent life on those as well. For the neurological side, the patents, we have three patents pending at this point in time, I believe.
So those patents should be issued this year, at least two of them. So from a patent standpoint, we feel very comfortable. We've protected our invention very well, and we'll continue to look at ways to protect ourselves. And we do have some method of use for certain diseases on the infection side.
Just to follow up before we run out of time, how's your capital level?
So we put some money on our balance sheet back in November. So that's a good thing. We've got enough cash to get to our approval of our next-generation product. We'll see where our cash position is at that point, if it's enough to launch the product, or we may need a little extra capital to launch it properly. I think it's important to launch the product properly. But we'll see when we get there. We're very confident in approval. Again, this is a product that's already been approved by the FDA, and we've improved upon the approved product. So it's just a matter of time. It's an engineering exercise, and there are some things that have to be done in a certain sequence. And we're doing it.
So once we get there, I think we'll be able to assess how much more capital we might need to launch it properly. But you never know, Roger. We might get some sales to hit here, and we may not need to raise any more money. So we'll see what happens over the next couple of months.
Plus, I would assume, just especially on the international front, where you're using distributors, you're essentially using them as a force multiplier to leverage your balance sheet and grow that way as well.
That's right. Absolutely. Yep.
Well, very good. Steve, thank you so much. And thank you to everybody who's been watching us. If you have any questions or would like to schedule a meeting with Beyond Air, please send me an email at weiss@lythampartners.com. We have additional presentations and fireside chats coming up. So stick around for more. Thank you and have a great day.
Thanks, Roger.