Beyond Air XAIR Q3 2026 Earnings Call Transcript

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Date

Friday, February 13, 2026 at 8 a.m. ET

Call participants

• Chief Executive Officer — Steven Adam Lisi
• Chief Financial Officer — Dan Moorhead
• Chief Commercial Officer — Bob Goodman

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Takeaways

• Revenue -- $2.2 million, a 105% increase year over year and a 21% increase sequentially from the prior quarter.
• Gross profit -- $0.3 million versus a gross loss of $0.2 million a year ago and a gross loss of $0.3 million in the prior quarter.
• Operating expenses -- $6.9 million, down 36% year over year and more than 60% from the previous peak of $17 million.
• SG&A expenses -- $4.5 million, a 42% decrease compared to $7.7 million in the comparable period last year, mostly from reduced employee-related costs.
• Research and development expenses -- $2.4 million, down from $3 million a year earlier, primarily due to lower costs associated with the Gen-2 device after FDA submission and headcount reductions.
• Net loss -- $7.3 million, or $0.85 per share (reflecting a reverse stock split), compared with $13 million, or $2.96 per share, last year.
• Cash and equivalents -- $17.8 million as of December 31, 2025, before $4.5 million in equity financing completed after quarter end.
• Cash burn -- $4.3 million for the quarter, more than 40% lower than the year-ago period.
• Installed base -- Over 45 hospitals across the U.S. and internationally have adopted the first-generation LungFit PH system, with customer retention exceeding 90% and more than half under multiyear contracts.
• Neuronos divestiture -- Binding letter of intent to sell 85% ownership in Neuronos to XTL Biopharmaceutical in exchange for a 19.9% XTL equity stake, $1 million in cash, and up to $31.5 million in milestone payments.
• VA system penetration -- First commercial LungFit PH sale to a VA Medical Center completed, gaining access to the largest U.S. healthcare network through the ECAT system.
• Market access partnerships -- National group purchasing organization agreements with Premier and Vizient provide access to nearly 3,000 U.S. hospitals.
• International expansion -- Distribution agreements now cover 40 countries, with new partners in Canada, Germany, Brazil, Austria, the Netherlands, and Sri Lanka.
• Gen-2 system FDA timeline -- Management expects regulatory decision before the end of calendar 2026, with ongoing contract manufacturing and site inspection as main gating factors.
• Service interval advancement -- Gen-2 LungFit PH projected to require service every 3,000+ hours versus every 1,000 hours for Gen-1, potentially reducing service costs and equipment downtime.
• Cost structure and margins -- Management targets COGS near 60% for Gen-1 and up to 70% for Gen-2, influenced by scaling and price realization; Gen-1 gross margins expected in the 50% range near term.
• Financing resources -- $5 million financing closed in January 2026 and access to $32 million via promissory note and equity line with Streeterville Capital to support commercialization and Gen-2 readiness.
• Cash runway guidance -- CFO stated, "we believe this capital provides us with a cash runway into calendar year 2027 and potentially to profitability, provided we continue to hit our current revenue estimates and continue to control costs."
• Clinical progress -- Beyond Cancer abstract accepted at 2026 AACR Annual Meeting; median survival from NO intratumoral dose-escalation trial not yet reached as of October 1, 2025; Phase 1b anti–PD-1 combination study remains in planning.

Summary

Beyond Air (NASDAQ:XAIR) delivered triple-digit revenue growth and sequential improvement in gross profit, citing significant traction for its LungFit PH platform. Operating expense reductions and postquarter financing extend the company's cash runway to at least calendar year 2027. The company emphasized substantial commercial access gains, including first entry into the VA healthcare system and expanded GPO and international distribution coverage. Management stated confidence in the Gen-2 system approval timeline and highlighted a major planned divestiture of its Neuronos subsidiary to XTL Biopharmaceutical on terms involving milestone payments and an equity stake.

• Management said FDA communication for the Gen-2 LungFit PH system has been "fairly constant" and described the approval process as on track, with contract manufacturer inspection named as the critical timing factor.
• Customer retention exceeding 90% and repeat international accessory orders were cited as indicators of sticky adoption and recurring demand for LungFit PH.
• Bob Goodman said, "It provides access to the largest healthcare network in the United States," referring to the initial VA Medical Center sale.
• The company reported its workforce has undergone reductions to support cost savings, with R&D expenses decreasing after Gen-2 PMA submission.
• Financing flexibility was reinforced by the combined effect of the $5 million raise and up to $32 million line of credit, specifically earmarked for continued commercial execution.
• Gross margin for Gen-2 could reach 70% depending on market pricing and scale, but management acknowledged near-term margins may remain lower for Gen-1.
• Future clinical development of Beyond Cancer and additional studies may depend on the company’s comfort with its path to profitability, suggesting resource allocation is focused on commercial priorities.

Industry glossary

• ECAT system: A U.S. Department of Veterans Affairs electronic contract vehicle and catalog used to purchase medical devices and supplies, enabling streamlined procurement within VA hospitals.
• PMA: Premarket Approval application; the FDA process for evaluating and approving high-risk medical devices before they can be marketed in the United States.
• GPO: Group Purchasing Organization; an entity that helps healthcare providers realize savings by aggregating purchasing volume and negotiating agreements with vendors.

Full Conference Call Transcript

Steven Adam Lisi, Chief Executive Officer of Beyond Air, Inc. Steve, go ahead. Thanks, Corey. And good morning to everyone. With me here today is Dan Moorhead, our new Chief Financial Officer. It has been a pleasure working with Dan over the past several months. He brings a proven track record as a proactive CFO with demonstrated

Steven Adam Lisi: success supporting commercial organizations through periods of rapid growth. I also look forward to his active engagement with the investment community as he becomes fully integrated into the role. Also joining us today is Bob Goodman, our Chief Commercial Officer. Bob assumed the role in October after previously joining Beyond Air, Inc. as a board member back in June. Let me start my prepared remarks by saying just how pleased I am to speak with you today and provide an update on what has been a productive and meaningful period for our company.

We have achieved several significant milestones, strengthened our balance sheet to support continued commercial execution, and made the strategic decision to sell our Neuronos subsidiary in exchange for equity in the acquiring company, up to $32.5 million in upfront, development, and commercial milestone payments. We believe these recent events have strengthened our ability to execute our commercial strategy and create long-term value for our shareholders. Let me walk you through these updates in greater detail. Starting with our core business, revenue in the fiscal quarter increased 105% year-over-year to $2,200,000. This represents continued progress as we scale adoption and expand awareness of LungFit PH in clinical settings.

We now support more than 45 hospitals across the United States and internationally that have adopted our first-generation LungFit PH system. Customer feedback has been encouraging, with retention exceeding 90% and more than half of customers under multiyear agreements. We believe this installed base positions us well to support continued revenue growth from our first-generation system while preparing for the anticipated FDA decision for our second-generation system. Our commercial team continues to refine its targeting strategy, prioritizing hospitals most likely to adopt LungFit PH today and expand usage following approval of the second-generation system, which we expect to receive before the end of calendar 2026, subject to regulatory review and clearance.

We are making steady progress building relationships with clinicians, administrators, and healthcare systems. Our current objective is to continue expanding Gen-1 system utilization through calendar 2026 in the U.S. and internationally, while preparing for the potential launch of our second-generation system once approved. As previously discussed, the Gen-2 system is designed to offer reduced size and weight, simplified operation, extended service intervals, improved backup system functionality, and, very importantly, compatibility with both air and ground transport. We believe these enhancements will expand the addressable market relative to Gen-1 and support broader adoption over time.

At this point, I am going to pass the call over to Bob Goodman, who has made excellent progress since taking the reins as Chief Commercial Officer about four months ago. Bob?

Operator: Thanks, Steve.

Bob Goodman: And let me begin by saying I share Steve's enthusiasm about the opportunities for Beyond Air, Inc. I as well believe that LungFit PH is the best-in-class nitric oxide solution globally. Feedback from U.S. customers and international partners on system performance and customer support have been extremely positive, providing a solid foundation for continuous growth. We have national group purchasing organization agreements with Premier and Vizient, which together provide access to nearly 3,000 hospitals across the United States. As awareness of LungFit PH increases, we expect additional opportunities at the GPO and integrated delivery network level in 2026. As previously announced, we have been working with Trillimed to support our engagements with the federal healthcare systems.

I am pleased to announce that together with this valued partner, we completed the first sale of LungFit PH to a VA Medical Center. This initial commercial sale to the VA hospital system establishes an important foothold, opening potential pathways for future orders and broader adoption across the system. It provides access to the largest healthcare network in the United States. Internationally, we continue to see strong engagement from our distribution partners. Over the past several months, we have expanded our global LungFit PH distribution network with new agreements in Canada, Germany, Brazil, Austria, the Netherlands, and Sri Lanka, bringing total international coverage to 40 countries.

As we broaden our global footprint, we are laying the groundwork for long-term growth and positioning Beyond Air, Inc. to serve a significantly larger addressable market. It is important to note that we are live in a few hospitals with LungFit PH and have already begun to see repeat orders for accessories from several countries. Taken together, these commercial, operational, and strategic developments give me confidence in the trajectory of the business. What also gives me confidence are the people at Beyond Air, Inc. The dedication of this team is second to none; I have been in this business for decades.

This includes all the aspects of the team from clinical support, to marketing, to customer service, to engineering, to finance, to regulatory, to quality, etc. Our people are fully engaged and dedicated to the vision of improving the lives of patients and medical staff with LungFit PH. I also want to emphasize the advantages, as Steve mentioned earlier, of our second system. From my time spent with customers and potential customers in the United States, I believe that the Gen-2 system addresses everything on the wish list from clinicians and hospitals. I am extremely confident I, along with the team here, will execute on our vision of becoming the global nitric oxide leader.

Now I will turn things back over to Steve.

Steven Adam Lisi: Thanks, Bob. Turning to Beyond Cancer, we recently announced that our abstract was selected for the 2026 AACR Annual Meeting, which is taking place in April in San Diego, California. As previously announced, the study enrolled 10 subjects at doses of 2,500–50,000 parts per million of nitric oxide gas delivered over five minutes intratumorally. These patients all had metastatic disease and were heavily pretreated. All subjects had a life expectancy of less than 12 months. We have already reported that the safety profile observed to date is acceptable. The data presented at AACR will include updated overall survival data, for which median survival has not yet been reached as of 10/01/2025.

We remain dedicated to pursuing the Phase 1b combination study with anti–PD-1 therapy, and we will communicate more details as we progress. With respect to Neuronos, our neurology-focused subsidiary, on 01/13/2026, XTL Biopharmaceutical announced a binding letter of intent to acquire Neuronos in exchange for Beyond Air, Inc.’s approximately 85% ownership interest. Consideration includes a 19.9% stake in XTL, $1,000,000 in cash, and milestone-based contingent payments totaling up to $31,500,000. Following closing, Neuronos is expected to serve as XTL’s flagship platform for autism and neuro-oncology development. We believe this agreement provides the potential to create meaningful value for our shareholders by enabling Neuronos’ pipeline to advance with dedicated focus and funding through XTL Bio.

We will not provide additional commentary beyond public disclosures while the transaction remains pending.

To conclude, the $5,000,000 financing completed in January 2026, together with the previously announced promissory note and equity line of credit for up to $32,000,000 with Streeterville Capital that we announced in November 2025, provide resources to support commercial execution and readiness for the second-generation LungFit PH system. We remain focused on disciplined execution and delivering advanced nitric oxide solutions to clinicians and patients around the world. Now I will turn it over to our CFO, Dan Moran.

Dan Moorhead: Thanks, Steve. And good morning, everyone. I am excited to join my first call since being appointed CFO about seven weeks ago. I still have a lot to learn, but I am incredibly impressed by what the team has achieved, not just over the past year, but even within the past few months. The progress has been extraordinary, and I see a bright future ahead as the team continues to execute on our growth strategy. Our financial results for the 2026Q3 which ended 12/31/2025, are as follows. Revenue for the fiscal quarter ended December 31, 2025 increased 105% to $2,200,000 compared with $1,100,000 for the fiscal quarter ended 12/31/2024.

On a sequential basis, this represents a 21% increase compared with last quarter. Gross profit increased to $300,000 for fiscal third quarter 2026, compared to a gross loss of $200,000 for the same period last year and a gross loss of $300,000 in the prior quarter. Turning to operating expenses, we continue to see reductions across SG&A, R&D, and in our supply chain, as a result of cost reduction initiatives taken in the past twelve months as well as the decrease in R&D costs related to our Gen-2 device, which are mostly behind us since the PMA was filed with the FDA. Total operating expenses for the 2026Q3 were reduced to approximately $6,900,000, which is down from $10,700,000 for the same period last year.

This translates to a 36% reduction year-over-year and a greater than 60% reduction from the high of $17,000,000 at its peak. Research and development expenses were $2,400,000 for 2026Q3, as compared to $3,000,000 for the same period last year. As I mentioned earlier, the year-over-year decrease was primarily driven by lower development costs associated with our Gen-2 device, with the remaining reduction attributable to a decrease in headcount and related costs. SG&A expenses for the quarters ended December 31, 2025 and 12/31/2024 were $4,500,000 and $7,700,000, respectively, a decrease of 42% year-over-year. Almost all of the decrease of $3,300,000 was from a reduction in employee-related costs. Other expense was $1,000,000 compared to $2,400,000 for the same period a year ago.

The decrease in expense of $1,500,000 was primarily attributed to the prior period loss associated with the extinguishment of debt of $1,900,000. Net loss attributed to common stockholders of Beyond Air, Inc. was $7,300,000, for a loss of $0.85 per share basic and diluted, compared with $13,000,000, or a loss of $2.96 per share basic and diluted. Please note that the per-share results for both periods were calculated to reflect the company's 1-for-20 reverse stock split, which became effective on 07/14/2025. Net cash burn for the quarter was $4,300,000, which is a reduction of over 40% versus a year ago. We believe our overall cash burn will continue to reduce as revenue grows and will only get better until we get approval and start building in preparation for the launch of Gen-2. As of 12/31/2025, we reported cash, cash equivalents, restricted cash, and marketable securities of $17,800,000. Subsequent to the end of the third quarter, we completed a $4,500,000 equity financing net of issuance costs, and we believe this capital provides us with a cash runway into calendar year 2027 and potentially to profitability, provided we continue to hit our current revenue estimates and continue to control costs. With that, I will hand the call back to Steve.

Steven Adam Lisi: Thanks, Dan. Operator, we will take questions now.

Unidentified Speaker: Thank you.

Operator: Let me press 2 if you would like to withdraw your question from the queue. It may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for our first question. First question comes from the line of Mike King with Rodman and Renshaw.

Please proceed with your questions.

Unidentified Analyst: Thanks for taking the question. Good morning, guys. I have a couple of questions, if you do not mind. I just wonder if you could talk a little bit more about the sales process. I mean, I think it is a great breakthrough that you, you know, you have got sales into the VA system, or VA hospital, I should say, but it brings up the topic of the VA system, as you mentioned. How do you penetrate systems rather than a single hospital at a time?

What needs to happen in terms of the sales process or the RFPs or things like that can, you know, see us knocking off, you know, more than one healthcare facility at a time.

Steven Adam Lisi: Yeah. I think that is a question. Yeah. Go ahead, Bob. You take this one.

Bob Goodman: So sure. And then you can definitely provide any color you like, Steve. You—yeah. So, Mike, yeah, with the VA system, we are on, as you know, and our product is being offered through the ECAT system. So that catalog actually makes it an easier approach for our customers to get to us directly. It is outside of an RFP process, but we are still able to actually compete with other RFPs that come up. You know, there are a couple of different ways the VA contracts with vendors. But, so, yeah, we have access that way. It is great.

Analyst: Okay. And, in your formal comments, you mentioned words to the effect that you are identifying facilities most likely to acquire, you know, the system. How do you—how do you, or can you say how you identify them and, you know, maybe help us understand how you are targeting those facilities?

Bob Goodman: Yeah. So we have done a really good job standing up our commercial organization both in the U.S. and internationally. And right now, what we are doing is we are focusing—and not to say an overhaul, but more of an exactness—with our people and our process and our technology.

So, you know, different prospecting tools with good intelligence and good CRM rigor to follow up with the customers and taking the process of real good demand generation where we are getting top-of-the-funnel looks at our customers and having really good pipeline discipline so we could get in front of the right customers, and then have our people, the people part of it, in the right places at the right time with the right coverage so we have that right reach and frequency getting in front of these customers and just getting in front of more and more. So we have that touch.

So, yeah, we have been really refining that, and the customers are really responding well to our ability to get in front of them.

Unidentified Speaker: That is great. Has there been any appreciable change in the length of the sales cycle?

Bob Goodman: Yeah. I mean, that pretty much might still remain the same. At the real front end, you know, if you get kind of real lucky based off of the timing of a contract that might be expiring, and that customer is really, really organized, and you can knock out a real quick demo and evaluation, you could do that in that four- or five-month time frame, but it is really in that right around six to nine months, and it could be longer.

But what we are doing is a good job identifying the customers and, again, reaching out to them and finding out where they are at with their contract and making sure that they see the value of our product. And with that, you know, we are hoping that might, you know, restrict things just a bit. But we are really organized in our clinical teams out there in the field with our sales teams to make sure that we are in front of them as early as possible.

Unidentified Analyst: Okay. And I apologize, one more quick one. How do you segment—or can you segment—the next-gen system so that, you know, this is typical of a lot of businesses where, you know, a next-generation chip, let us say, is coming out or something, and, you know, the sales cycle kind of, you know, concertina effect where, you know, the purchaser may hold off until the next-gen system is available. Is that a concern, or are you, you know, segmenting a different market with the new system? Thank you.

Bob Goodman: Yes. So we are focusing right now, as you would expect, on our first-generation product, and it has been really well received, the Version 24 of Gen-1. So—and we are focusing on the non-transport systems. Okay? And we are being really well received there, as there are natural conversations within the market for the transportation systems. That is a later-on Gen-2 conversation, and we are really kind of breaking away from those conversations, but being aware that these are systems that are going to want to be working with us in the future.

Analyst: Okay. Alright. Thanks for indulging me, guys.

Steven Adam Lisi: You got it. Thanks, Mike.

Operator: The next question is from the line of Marie Yoko Thibault with BTIG. Please proceed with your question.

Unidentified Speaker: Good morning. Thanks for taking the questions, and welcome, Bob and Dan. Wanted to quickly just check in on anything—any communications—you have been having with the FDA on the Gen-2 process to speak to your confidence in the timeline. I think you said by end of calendar year. And then, what will be needed to do post-clearance in terms of building inventory? Kind of a timeline we might think about before you can go into a formal launch and ramp?

Steven Adam Lisi: Okay. Thanks, Marie. Well, I will comment on the FDA side. So we have been having fairly constant communication with FDA, and, you know, we are very happy with the interaction. You know, we do not really see any major hurdles. Everything the FDA has asked for, we will provide them. Should not be a problem. And I am sure there will be the process with FDA, and we will continue to answer the questions as we go forward. We still are waiting on the work to be completed with our contract manufacturer so we can be inspected. And that is essentially, in our minds, what the gating factor will be from a timing perspective.

So we feel highly confident in the timelines that we provided.

Given the state of affairs today. I do not know if I can—alright. If that is the answer you need, if there are other things you want to—

Unidentified Speaker: Yeah. Yeah. That is great to hear. Thank you for that, Steve. And then I guess I will ask a quick here on the international side. I know you have got some great partnerships and some efforts going on there. So any wins or any catalyst to think about on the international side? And thanks for taking the question.

Steven Adam Lisi: Sure. Bob, you want to take the international question?

Bob Goodman: Yeah. Sure. So we have had some recent wins, which is great. I think, as you know from the past calls, it was all about setting up and getting our distributors armed with our demo devices so they get in front of the systems. But then there is the whole part of the process with whether it is Europe or Middle East or Australia, where it is mostly tenders, compared to the U.K. or Portugal, where there is, you know, a national framework, or, you know, you get that hunting license, Germany and APAC where you can go direct. So with all those different regions—yeah. No. We have had wins.

And on top of having wins, we are now actually seeing reorder filters. So, you know, the product is being deployed into hospitals now, which is great, and we are starting to, again, get that stickiness. So it is fantastic.

Unidentified Speaker: Alright. Thank you so much. Yeah. Thanks, Marie.

Operator: Our next question is from the line of Justin Howard Walsh with JonesTrading. Please proceed with your question.

Unidentified Speaker: Hi. Thanks for taking the question. Wondering if you can provide any color on what attracted XTL Biopharmaceuticals to be interested in the Neuronos opportunity.

And then how, I guess, collaboration or working with them will look going forward, given that you still have a stake in that company?

Steven Adam Lisi: Thanks for the question. So yes, Justin, look, XTL was, you know, a company looking for an asset. And there were multiple choices for them. I think what excited them about this opportunity is the science. I mean, there have been two papers, landmark papers, published about the work done by Dr. Amal, who is a scientist, you know, the innovator behind this approach to treating autism as well as glioblastoma. Just want people to recognize that the functions of nitric oxide in the brain are numerous. So I think that is what attracted them to this. There is a clear path to human studies. I think a lot of the work that has been done by the Neuronos team has given that clarity to anybody who is taking a look under the hood.

So I think it is just a matter of providing the FDA what they require, which is pretty straightforward. It is just a matter of getting that work done. So with XTL coming up with funding, they will be able to bring this into humans. So I think the attractiveness was great science, clear path to human trials. And, as everyone on this call probably knows, translating efficacy from rodents to humans is something that is difficult to predict, but we will find out. And I think that is what attracted them. We are going to get there and do that study and figure out if the efficacy translates.

And if it does, you know, we are looking at a potential treatment for autism and glioblastoma at this point. So it is very exciting. Just a little bit early for Beyond Air, Inc. to, you know, to maintain and fund. So this is why the transaction was done, and we are very happy that a lot of this—the new entity—transaction for Beyond Air, Inc. is us getting a 20% stake in. And we have confidence on the safety side for sure. That is the confidence we have that this is going to be in human trials. And the efficacy side, we will see what happens.

Unidentified Speaker: Got it. Thanks.

Operator: The next question is from the line of Jason Hart Wittes with David Berman Capital. Please proceed with your questions.

Unidentified Speaker: Good morning, guys. Can we talk a little bit about COGS? And how COGS performed in the quarter? And over the next couple of years, what do you think is the sustainable COGS?

Steven Adam Lisi: Dan, you want to take that one?

Unidentified Speaker: Sure. You know, we tend to see Gen-1—you know, again, we think we are in the—and Steve can help me on this. I am still pretty new on it. But, you know, we expect COGS long term, as we get to scale, you know, in the 60% range and moving up towards 70% with the Gen-2 product. But in the near term, again, with revenue levels growing but growing at a more moderate pace until we hit the Gen-2 launch, again, I think you are going to see it pretty close to what you saw in Q3 and continue to grow from there.

But long term, I think that gives you a little profile, and I am guessing you guys have possibly talked about that in the past as well.

Unidentified Speaker: And just to follow up.

Steven Adam Lisi: Just follow up on what Dan said, if you do not mind. You know? So, yeah, I think Dan is right in what he says, but I would—

Unidentified Speaker: you know,

Steven Adam Lisi: there are a couple of factors—and, like Dan said, he is barely two months in—there are a couple of factors that we are still trying to figure out with respect to the margin, and that will be from a pricing side of the market. So I think, you know, that goal of 70% with the Gen-2 is a great goal. That is a target. You know, if it is 65% to 65%, you know, that is not the end of the world for us. But I think that is our target, and I think we would like to hit it. And, you know, target with Gen-1 would be to get close to 60%.

But, again, I think Gen-1 is more of a 50s-type thing. But, again, it is going to depend on how the price shakes out in the market at the end of the day. And that remains to be seen. Okay. So you had a follow—you had a—please. Right? Yeah. Very helpful. Can you talk also about SG&A and how sensitive the sales cycle would be to increasing SG&A, hiring additional salespeople,

Operator: how does that impact kind of revenues? What I am trying to do is get a handle on

Bob Goodman: you know, more capital deployed in SG&A. Does that translate into more revenues?

Unidentified Speaker: Well,

Steven Adam Lisi: Jason, I mean, you know, you guys—

Unidentified Speaker: Thank you.

Operator: The next question is from the line of I-Eh Jen with Laidlaw. Please proceed with your question.

Unidentified Speaker: Good morning, and thanks for taking the questions. Just in the press release, you mentioned—you mentioned that

Yale Jen: the Gen-2, they have the potential of extending the service intervals. Could you elaborate a little bit more on that specific aspect?

Unidentified Speaker: Hello? Can you hear me? Hello?

Operator: Hi. Your line is live for a question. Please go ahead.

Yale Jen: Yes, I am.

Unidentified Speaker: Thank you.

Yale Jen: Hello? Can you hear me?

Operator: Please standby, ladies and gentlemen. We are experiencing technical difficulties. Our conference will resume momentarily.

Unidentified Speaker: Thank you. Please remain on the line. Our

Operator: Please remain on line, ladies and gentlemen, while our call will resume momentarily.

Unidentified Speaker: Thank you.

Operator: Steve, you are now reconnected. Please continue. Caller, please go ahead with your question.

Yale Jen: Sure. Thanks. Hey, Steve. Thanks for taking the questions. I believe in the press release, you mentioned that the second gen will have the potential of extending the—make longer—service intervals. Could you elaborate a little bit more specifically on this particular aspect? And then I have a follow-up. Yeah. Thanks.

Steven Adam Lisi: Yeah. Thanks, Yale. Appreciate that question. So the current system is first-generation system. Every 1,000 hours, we need to bring it in for service. So that can be, you know, that can—it could be a slight disruption for the hospital if they are using a couple thousand hours a year per machine. So we might be in there every six months, rotating machines. So it is a smooth process, but it is an expensive process for us. Right? So we just come in, drop them a new machine, and pick that one up and bring it in for service. It is not very frequent, but, you know, it is something we would like to improve upon.

So with the second-generation machine, we think that service interval will be pushed out to at least 3,000 hours before we need—and potentially longer. So testing is still going on. We have not reached that juncture yet where the reliability testing that we are doing has stopped. So it is still ongoing. So we are past the 3,000-hour mark at this point, which means, you know, it is at least three times longer before we have to go in. So if we were going in at a hospital—let us say we are going in every 10 months—now we are going in every 30 months on average before we have to swap out the machine.

So that is—certainly better for the hospital from that standpoint. Although I do not think the swap outs are really a problem for them because our team does a great job, and it runs so smooth. But from a gross margin perspective, I think that is the impact that you heard about earlier on a question when Dan and I were responding to the gross margins between Gen-1 and Gen-2.

Yale Jen: Okay. Great. And maybe just a touch on that—to this one a little bit, which is that would this be needed—you mentioned you are still testing for maybe even longer interval for the service needed—would that be required before you, you know, submit or complete for the general review, or that is something that could be the general review without having this particular aspect?

Steven Adam Lisi: No. This is—so there is a reliability hurdle with FDA. We have already passed that hurdle. So anything that we get is just more of a guide for us for service with our customers. That is really what it is. So it is not a gating factor for FDA approval.

Yale Jen: Okay. Great. Maybe just one more question. So on the oncology side, since you guys already have a little bit more cash

Operator: in hand,

Yale Jen: should we think about the Phase 2/Phase 1b study potentially to start later this calendar year?

Operator: And thanks.

Unidentified Speaker: Well, I—

Steven Adam Lisi: I do not know when it will start, Yale. We are certainly speaking with people and looking at that. So I do not want to commit to a timeline at this point. You know, while we do have a nice balance sheet at this moment in time, I think we need to focus the balance sheet on the commercial operations at this point.

Unidentified Speaker: So it would—

Steven Adam Lisi: probably not be something that Beyond Air, Inc. would commit to fully fund, a study like that. Maybe once we are more comfortable with our path to profitability, that could be a different conversation that we have internally.

Yale Jen: Okay, great. That is very helpful. And congrats on the good quarter in terms of the top line.

Operator: At this time, we are showing no further questions in the queue. And this concludes our question-and-answer session. I would now like to turn the call back over to Steven Adam Lisi for any closing remarks.

Steven Adam Lisi: No. I would just like to thank everybody for dialing in today. Bye-bye.

Operator: Thanks, everyone, for their time today. You may now disconnect your lines at this time and have a wonderful day.

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