Beyond Air, Inc. (XAIR) Earnings Call Transcript & Summary

Greetings, and welcome to Beyond Air introducing the role of nitric oxide in autism spectrum disorder. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Ed Barger, Head of Investor Relations. Thank you. You may begin.

Thank you, operator. Before we begin, I would like to remind everyone that we will be making comments and various remarks about future expectations, plans and prospects, which constitute forward-looking statements for the purposes of the safe harbor provisions under the Private Securities Litigation Reform Act of 1995. Beyond Air cautions that these forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those indicated. We encourage everyone to review the company's filings with the SEC, including, without limitation, the company's most recent Form 10-K and Form 10-Q, which identify specific factors that may cause actual results or events to differ materially from those described in the forward-looking statements. Additionally, this conference call is being recorded and will be available for audio rebroadcast on our website, www.beyondair.net. Furthermore, the content of this conference call contains time-sensitive information that is accurate only as of the date of the live broadcast, Thursday, June 15, 2023. Beyond Air undertakes no obligation to revise or update any statements to reflect events or circumstances after the date of this call. Joining me today on the call are Steve Lisi, Chairman and Chief Executive Officer; and Dr. Jeff Myers, Chief Medical Officer. We'll begin with the presentation and prepared remarks before moving over to Q&A. And with that, I'll turn the call over to our CEO, Steve?

Thanks, Ed. Thank you, everyone, for joining us as we introduce the role of nitric oxide in autism. We are very excited to share the data generated to date. We believe the path to move into human clinical studies is very clear given where we are today. Our deal with Hebrew University in Israel is for exclusive global commercial rights for several compounds that partially inhibit neuronal nitric oxide synthase or nNOS. Autism may be the first of several indications as we learn more about the critical role nNOS plays in the human body. Specific to autism, the preclinical data provide evidence that nNOS overactivity is a culprit. And we will describe this in more specificity in later slides. I would like to emphasize that Beyond Air is a world leader in NO research, and that brings us to our pipeline. As you can see, we are exploring the benefits of using nitric oxide to improve patients' lives in those suffering from persistent pulmonary hypertension of the newborn, postoperative right ventricular failure after cardiac surgery, bronchiolitis, pneumonia, chronic refractory persistent bacterial lung infections, solid tumors and now autism. We are dedicated to saving and improving lives by harnessing the power of nitric oxide. This is a win-win deal with Hebrew University. As development progresses, Beyond Air will pay milestones for certain clinical, regulatory and commercial achievements. In addition, a low single-digit royalty on net sales will be paid. These economics may extend to other neurological indications as well. Several papers have been published on the topic of the role of nNOS in autism, which has led up to the most recent publication, The NO Answer for Autism Spectrum Disorder, published in Advanced Science last month. The publication has received enormous praise and is truly revolutionary. The world owes this groundbreaking research the dedication of Dr. Haitham Amal. I would like to publicly congratulate Dr. Amal and his team on reaching this point and providing us with the opportunity to potentially change the way we approach treating autism. The entire Beyond Air team and I look forward to continuing to support Dr. Amal as we move towards human studies. The numbers are daunting as 1 in 36 in the U.S. are estimated to be on the autism spectrum. Globally, this number is 1 in 100. The economic burden is expected to be in excess of $450 billion by 2025 in the United States alone. With continued hard work and dedication, we believe this research can provide hope in this frame. Now I'd like to turn the call over to the Chief Medical Officer of Beyond Air, Jeff Myers, to discuss NO and autism in more detail. Jeff?

Thank you, Steve. As you've noted, Beyond Air has experience with nitric oxide across a large number of therapeutic areas and indications. We have extensively explored nitric oxide generated from the eNOS isoform with persistent pulmonary hypertension of the newborn and the iNOS isoform across a number of hypoxic infectious diseases. It's a natural extension for Beyond Air to partner with Dr. Amal in defining nNOS targeted therapies, specifically for autism spectrum disorder. His work within nNOS inhibition and ASD models has demonstrated reversal of molecular, synaptic and behavioral ASD-associated phenotypes, which we will discuss in detail. While perhaps not intuitive for more common clinical applications such as pulmonary hypertension, the well-established understanding of nitric oxide's function as a neurotransmitter makes it unsurprising to discover its involvement in neurologic disorders such as ASD. In fact, nitrosative stress marked by high levels of nitric oxide and nitrogen dioxide has been implicated in other neurologic diseases such as Alzheimer's disease. Dr. Amal's laboratory has demonstrated that nitrosative stress as a result of nNOS overactivity and importantly overproduction in nitric oxide is present in low-functioning ASD patients. I'm now going to review some of the data using the nNOS inhibitor 7-NI in autism spectrum models, 2 different ASD mouse models, Shank3 and Caspr2 were utilized. Both are associated with ASD behaviors and are defined by overproduction of nitric oxide. As you can see from the diagram in the middle panel, there is also an abnormality in dendritic spines. These are protrusions from dendrites, which form the functional contact of neighboring exons to other neurons. The third panel shows down regulation of nitric oxide to more normal levels, normalization of the dendritic spines produced and a reversal of the ASD behaviors. We briefly touched on the concept of nitrosative stress. Nitrotyrosine is one of the reactive nitrogen species and is associated with cell damage and inflammation. The top images show the large increase in nitrosamine (sic) [ nitrotyrosine ] demonstrated by Western blot in both the cortex and corpus striatum of the mouse brains in the middle bar and the return to normal levels in treated mice. The bottom figure show increased nitrosamine (sic) [ nitrotyrosine ] levels represented by the relatively bright immunofluorescence in the middle image and a return to normal wild-type in the third image. We also discussed synaptogenesis in the production of abnormal dendritic spine in ASD mouse models. The top images nicely demonstrate decreased density of dendritic spines in M1 Shank3 mice, the restoration to normal after 7-NI administration. The enlarged bottom figures show the severely impaired production of the synaptogenesis biomarker, synaptophysin, shown as red in the figure. This is restored after 7-NI administration and subsequent normalizing of nitric oxide levels. This slide shows abnormal social behaviors in the ASD mouse models and subsequent improvement with 7-NI administration and normalized nitric oxide production. Number one demonstrates the concept of novelty seeking. Mice with an ASD phenotype will interact less with the novel object as demonstrated by the middle bars and the interaction difference between familiar and novel objects are restored with 7-NI. You can see the same abnormal ASD associated social behaviors in the other 2 graphs. 7-NI restored both the willingness to interact with stranger mice in #2 and the time spent exploring the open arms of [ maze ] in #3, demonstrating improved social behavior and decreased anxiety, respectively. Finally and critically, when we examined normal non-ASD type behaviors such as motor activity in the ASD mouse models, 7-NI did not alter these behaviors. This indicates an absence of off-target effects and no associated impact on normal non-ASD behavior with neuronal NO synthase inhibition. So in summary, in well-established mouse models of autism spectrum disorder, the inhibition of the overactive nNOS and increased nitric oxide production with 7-NI reversed molecular, synaptic and behavioral ASD-associated phenotypes without evidence of off-target effects. Note that the Nlgn3 mutation was tested after the manuscript was submitted, but the data are consistent with the 2 models discussed here. Also note that we are progressing with a compound that has a superior toxicity and delivery profile when compared to 7-NI.

Thanks, Jeff. Just a little reminder of the Beyond Air patent portfolio. We have over 70 patents worldwide, with some expiring as far out as 2040. Our autism patent was filed just over 1 year ago and is one of dozens of pending patent applications at Beyond Air. To wrap things up, I would like to reiterate that we are the nitric oxide company. Our expertise complements Dr. Amal's work, and we will continue to assess the best path forward. But today, we believe that our in-house capabilities can take this program through at least Phase I clinical studies. The incremental cost to us, including payments to Hebrew University, is approximately $4 million over the next 30 months. This includes a first in-human study, which we expect will be complete in 2025. With that, I would like to open the call to your questions. Operator?

Thank you. Ladies and gentlemen, at this time, we'll be conducting a question-and-answer session. [Operator Instructions]. Our first question comes from the line of Marie Thibault with BTIG.

Congrats on this interesting development, certainly very unique. I wanted to hear a little bit about what the competitive landscape would look like for the autism spectrum disorder. Certainly, we know that it's a very common condition. And so I want to think about if this is a successful therapy or show signs of success, what you'd be competing against directly? And you mentioned here at the end, a patent around this application. Can you tell us a little bit more about the intellectual property around it?

Thanks, Marie. I appreciate the question. As for competition, there's really not much going on that -- in autism spectrum disorder where you're treating underlying condition itself and reversing the behavioral deficits caused by the condition. So we're not aware of anybody who is in advanced stages. And obviously, we're not in humans yet. So I think it's a little premature to see what the competitive environment will be in human studies. But at this point, there's really nothing going on with respect to reversing the condition. I think most things that are being used are just treating some of the symptoms and mostly they are anti-schizophrenic drugs and such. So with respect to the IP, I mean, we haven't had a patent issued yet, but we haven't named our backup compound to 7-NI, but 7-NI itself has been around a long time. So I think that what we're using it for and how it's being used and how it will be delivered, I think these are the things that the intellectual property will be focused on. There won't be a composition of matter patent per se since this molecule has been in existence in the past.

Okay. That's really helpful, Steve. If I could ask my follow-up here. You mentioned incremental cost about $4 million. Is that inclusive of any additional R&D hiring you might need to do, given the novel approach here and saw that you signed a debt financing today. Congrats on that. Any more details on sort of top priorities for some of that capital? Very nice to see.

Well, the top priority for that capital is to really support the Phase II of our commercial launch that we've entered -- we jumped into last month. So that's where most of that capital will be deployed. The -- Marie, can you repeat the first part of your question again, I'm sorry?

Yes. Yes. It was the $4 million on incremental cost on this autism. Is that inclusive of any R&D hiring or anything additional? I understand certainly around the licensing some of that is included, but anything additional in terms of OpEx spend.

Yes. I mean that spend is really for costs that are outside of our company. So we already have people who are doing preclinical and clinical work and statistics, pharmacology, et cetera, all of the typical areas that you would be -- you would have in a company of our size that has done extensive preclinical work and clinical work as well. As you know, we've done multiple pilot studies with our programs. So again, going through Phase I is not something where I think we need to add people to our team to do anything with the autism program. So this will be spend outside of what we already have on our team.

Our next question comes from the line of Matt Kaplan with Ladenburg Thalmann.

Congrats on the in-licensing. Can you talk a little bit about how you envision the nNOS inhibitors that you're developing to be utilized in autism as you described it's a spectrum. And which patients will you target initially? Do you think this will have utility?

So it's a little early to say that, Matt. I would think that we're looking more in the -- more moderate-to-severe patients on the spectrum. I think that's probably where the target will be. Not to say that it can -- we're not really sure where it will end up, if it will be more severe or -- in the more moderate area. We're not sure yet. We have to get into humans where we can really pinpoint that mice or people. But we certainly -- if you read the paper that Dr. Amal published and his team, there is some work that he did to indicate that what we've seen in mice should be consistent in humans. But again, where we fall in the spectrum in terms of where the target patient probation would be, I think we need to wait a little bit before we can really pinpoint that.

Okay. Fair enough. And then just along that same thing, how early do you think you would need to treat patients to have an effect in terms of the -- as they progress through there?

Yes, it's a question internally, we talk about -- I mean, if there's a 25-year-old or a 35-year-old or what have you, would we have any effect? Or are we only going to be able to have this reversal effect in younger patients, we're not sure. That's something we have to, again, explore when we get into humans. But there's nothing that tells us in the preclinical work that's been done that we're limited. But again, we're going to figure that out once we get into humans. But at this point, I think the sky is the limit until we learn more in human studies.

Okay. And then in terms of the pathway to the IND, you mentioned that 7-NI, the next compounds, where are you identifying those compounds and pathway to an IND into the clinic?

Yes. I mean that's why we're announcing this now the backup molecule to move forward into humans has been identified, tested, and we feel very comfortable with the profile of this. So -- at this point, I think, as you know, Matt, there's got to be some CMC work done so we can satisfy FDA requirements. We'll do a little bit more work on the delivery, this -- the needle that will be used and the frequency of administration. Our goal is to be once a week. I think we're close to that goal already. But we'll be doing a lot of that work over the next 12 months to make sure that we've got our ducks in a row before we head off to FDA and ask them to move into humans. So there is a little bit more work to do, but I think it's just blocking and tackling at this point, not necessarily a risk of whether we get there or not, just how quickly we can do it.

Okay. And, I guess, last question on these compounds. What other indications do you think they would have potential utility in?

This is a theoretical question and Jeff Myers, our Chief Medical Officer. Jeff, are you on the line Well, we have a little bit of trouble getting Jeff on the line from where he is in the world. So I'll give him a second to see if he jumps on, if not then we'll talk about. There's possibilities Matt. If you look at Dr. Amal's work, he has published other papers on different indications. He's done some work in Alzheimer's, he's done some work in neuroblastoma. So these are things he's working on. I think autism is the most -- the furthest along, so to speak, but we're certainly exploring other areas. I don't know if it will ever work out in those other indications. But I have a lot of confidence in Dr. Amal, he's a relentless worker and super duper smart. And he is very well connected with other experts around the world in this field. So if there's something else that these nNOS inhibitors are going to work, I'm sure he's going to find it. But again, if you look at some of his work, you'll see that he has explored a few other areas. But again, I think autism is the focus at this point. I don't want to get too far ahead of ourselves on other indications. I think autism is the focus right now, but certainly, there's potential for other neurological conditions.

Hi, Steve. Sorry, technical issues there. So this is Jeff Myers. There is a history of nitric oxide in a number of neurologic conditions going all the way back. It's been indicated or implicated in Alzheimer's for a long, long time. So I think there's probably a spectrum of neurologic diseases that might be affected by this. And I think to your point, I think you said it well, Dr. Amal is the guy to figure out if this is replicatable in something besides autism spectrum disorder. And my guess is, it probably is.

Yes. All right. Great.

[Operator Instructions] There are no further questions in the queue. I'd like to hand the call back to management for closing remarks.

Thanks, operator. Thank you, everyone, for joining us today. We much appreciate it and we look forward to giving you more updates on this program as it progresses. Thank you.

Ladies and gentlemen, this does conclude today's teleconference. Thank you for your participation. You may disconnect your lines at this time, and have a wonderful day. Goodbye.