Jason Kolbert

Jason Kolbert questioned Beyond Air about the cost of goods sold (COGS) performance in the recent quarter, the projected sustainable COGS over the next few years, and the sensitivity of the sales cycle and revenues to increases in SG&A, such as hiring additional salespeople.

Answer

CFO Dan Moorhead stated that gross profit increased to $300,000 for Q3 FY26. He projected long-term COGS for Gen 1 in the 50-60% range and Gen 2 targeting 65-70% at scale. CEO Steve Lisi added that Gen 1 might be closer to 50% and Gen 2's target is 70%, but actual figures will depend on market pricing. The question regarding SG&A's impact on sales was interrupted.

Jason Kolbert asked about COGS performance in the quarter and what a sustainable COGS might look like over the next couple of years.

Answer

Dan Moorhead, CFO, projected long-term COGS at scale to be in the 60% range, potentially moving towards 70% with the Gen 2 product. Steve Lisi, CEO, clarified that the target for Gen 2 is 70%, possibly 65%, while Gen 1 aims for close to 60%, but more realistically in the 50s, depending on market pricing.

Jason Kolbert asked about the strategy for transitioning the sales force to address the commercial opportunity for Symvess in hemodialysis, leveraging current trauma market awareness. He also expressed fascination with earlier-stage programs like the bioengineered esophagus, trachea, and urinary conduit, inquiring about their progress and awareness of prior data from companies like Harvard Apparatus.

Answer

President and CEO Laura Niklason explained that the current small sales force for trauma will strategically add representatives, noting that vascular surgeons for trauma also perform dialysis access operations. She anticipates an additional sales force for dialysis access around early 2027 approval, targeting the same surgeons but different outpatient facilities. Regarding earlier-stage programs, Dr. Niklason stated that Humacyte holds intellectual property but does not have active preclinical programs currently, prioritizing them as revenues and cash improve. She acknowledged awareness of prior challenges with esophagus and airway replacements, attributing some failures to improper design criteria.

Jason Kolbert inquired about the strategy for transitioning the sales force to support the hemodialysis commercial opportunity and the progress of earlier-stage programs like engineered esophagus, trachea, and urinary conduits.

Answer

CEO Laura Niklason explained that the current small sales force targets vascular surgeons who perform both trauma and dialysis access. She outlined plans to strategically add more sales representatives and, upon potential BLA approval for dialysis access in early 2027, to bring on an additional 10-20 reps to target the same surgeons in different outpatient settings. Regarding earlier-stage programs, Dr. Niklason stated that while Humacyte holds intellectual property for these indications, active preclinical programs are currently on hold, with prioritization dependent on increased revenues and improved cash position. She acknowledged awareness of past failures in these areas and aims for improved design criteria in future development.

Jason Kolbert from D. Borel Capital asked for high-level expense guidance on R&D and G&A trends as the company nears commercialization, and also inquired about the acquisition pipeline and five-year vision for the Hope Therapeutics clinic network.

Answer

CFO Michael Labrums addressed expenses by pointing to the 47% year-over-year reduction in loss from operations as the best proxy, stating future G&A increases would align with revenue. CEO Jonathan Javitt added that the vision for Hope Therapeutics is to create a national network of integrated care clinics focused on neuroplasticity, similar to DaVita, starting with acquisitions and then building new clinics.

Jason Kolbert inquired about the rationale for removing the preservative from ketamine, the acquisition strategy for new clinics, and the details surrounding the potential $300 million non-binding term sheet for a ketamine deal.

Answer

CEO Jonathan Javitt explained that the preservative, benzethonium chloride, was only necessary for outdated multi-use vials and is potentially toxic for repeated use, whereas NRx's single-use vial does not require it and has proven stable. Regarding clinic acquisitions, he stated the focus is on high-quality, comprehensive care centers, particularly in Florida, and outlined a financing stack involving commercial banks, owner equity, and other investors. On the potential deal, Javitt confirmed commercial interest but emphasized that a deal is not yet finalized.

Jason Kolbert of H.C. Wainwright & Co. asked about the interplay between the ongoing CardiAMP Heart Failure II trial and the simultaneous FDA submission for approval, and also questioned the potential impact of new U.S. tariff and pricing policies.

Answer

Peter Altman, President and CEO, clarified that running the CardiAMP HF II trial while seeking approval is a strategy to continuously build evidence, especially since the first trial missed its primary endpoint. He detailed improvements in the HF II trial design, including the use of the Morph DNA platform and a different composite endpoint metric. Regarding policy, he stated there is no current impact from 'most favored nation' pricing, and the company's value-based pricing strategy provides a buffer against future tariff issues.

An associate on behalf of Jason Kolbert of D Boral Capital asked for clarification on the steps required to achieve a data readout for the recurrent glioblastoma (GBM) trial within the year and inquired about the trial's powering assumptions.

Answer

President and CEO Marc Hedrick stated that the ReSPECT-GBM trial is in late-stage Phase II and needs to enroll just 11 more patients to complete, which he believes is achievable within the next year, supported by five enrolling sites. Regarding powering, Hedrick explained the comparator is the standard of care, with a median overall survival of about 8 months based on real-world control arms. He mentioned that a registrational trial would likely require 100-150 patients, but discussions with the FDA are ongoing about using a real-world control design.

Jason Kolbert from D. Boral Capital pressed for guidance on system placements and the revenue inflection point, citing investor concern over stock performance. He also asked how recently raised capital would be deployed, the company's cash runway, and plans for future use of the ATM facility.

Answer

CEO Erez Meltzer and CFO Ran Daniel addressed the questions by confirming the ~$37 million in net proceeds from the ATM facility will be used to accelerate commercialization. They declined to give specific guidance on an inflection point or cash runway but pointed to catalysts like EU penetration and the ARC-X clearance as drivers of future growth. Meltzer also stated they are conservative regarding further use of the ATM, considering the impact on existing shareholders.

Jason Kolbert of Dawson James Securities inquired about the market dynamics for the Nu.Q Vet test in Japan, including the veterinary clinic penetration rate, and questioned if the revenue forecast of $6 million for the next year might be too conservative given the current ramp.

Answer

President and Group CEO Cameron Reynolds highlighted the strong performance of their partner Fuji in Japan, which has achieved a 10% penetration rate among its veterinarians. CFO Terig Hughes acknowledged the strong growth but cautioned that revenue can be "lumpy," making guidance difficult. Reynolds added that the most significant future growth driver will be licensing deals in the human health space, where there is substantial interest from major diagnostic companies.

Asked about the commercial value of the inventory on the balance sheet, the scientific process for creating more potent, next-generation antibodies like VYD2311, and the potential for the company's technology platform beyond COVID-19.

Answer

The commercial value of the inventory is well in excess of hundreds of millions of dollars, though the book value is lower due to pre-EUA expensing. Next-generation antibodies are developed using a proprietary technology platform that screens vast combinatorial libraries against contemporary virus variants to enhance potency, a process of 'directed molecular honing'. This platform is believed to have utility for other dynamic targets beyond COVID.

Jason Kolbert of D. Boral Capital questioned the commercial value of the inventory on the balance sheet, noting it was carried at a value substantially lower than its market potential. He also asked for insight into the scientific process for engineering a more potent, next-generation antibody like VYD2311.

Answer

Chairman Marc Elia confirmed the inventory's revenue potential is well in excess of hundreds of millions of dollars, with CFO William Duke clarifying that the low carrying value is due to significant costs being expensed prior to the EUA. Regarding R&D, Marc Elia described a process of 'directed molecular honing' using combinatorial libraries to enhance antibody potency. Chief Scientific Officer Dr. Robert Allen added that this is a continuous process, ensuring their platform can address dynamic viral targets.

Jason Kolbert asked about the planned COVID-19 trial for Piclidenoson, inquiring about the expected therapeutic effect, trial design specifics like dosing, and its mechanism of action compared to steroids. He also questioned the trial's locations, costs, the timeline for the Phase III liver cancer trial, and the status of business development discussions for a potential partnership.

Answer

CEO Pnina Fishman explained that the COVID-19 trial will use a 2mg dose of Piclidenoson, which has a strong safety profile and has been shown to counter cytokine release syndrome. The trial will initially enroll patients in the U.S. and Israel, with potential expansion to Europe. Regarding the liver cancer trial, she stated the Phase III protocol is complete. For business development, she noted that Namodenoson is already out-licensed in China and Korea, and discussions with other potential partners are ongoing, with news expected shortly.

Jason Kolbert of Dawson James inquired about the path forward for the NASH trial following its proof-of-concept data, the impact of COVID-19 on the rheumatoid arthritis trial timeline, the development sequence for Piclidenoson in COVID-19, and the level of business development interest for Namodenoson.

Answer

CEO Pnina Fishman stated that for the NASH program, the company is consulting with key opinion leaders to design the next study. Regarding the RA trial, she acknowledged a delay of a few months but noted they might proceed directly to the next Phase III if data is positive. For Piclidenoson in COVID-19, development is pending FDA guidance on their pre-IND submission. Dr. Fishman also confirmed that the company is actively seeking partners for Namodenoson and is participating in upcoming partnering meetings.

Jason Kolbert of Maxim Group inquired about the future trajectory of gross margins and SG&A expenses, particularly how the product mix would influence them. He also asked about the strategy for sales force expansion versus consolidation, the potential for opportunistic product acquisitions, and sought clarification on the company's guidance, including the $26 million annualized revenue target for breakeven and the growth drivers behind the U.S. dermatology business.

Answer

CFO Robert Miller explained that overall gross margins are expected to rise to the low-70% range by breakeven as the low-margin (6%) Invekra business is phased out and replaced by high-margin (80%+) U.S. dermatology sales. He projected quarterly cash operating expenses would normalize to a $4.3 million to $4.6 million range. Miller stated that the current sales force of 30-34 reps is sufficient to reach profitability and that the company is actively seeking product acquisitions. CEO James Schutz added that Sonoma is becoming an attractive partner for international firms. Miller clarified the $26 million revenue figure is the estimated run rate to achieve breakeven, not a growth ceiling, and noted that telephonic sales represent a more cost-effective growth lever than adding more field reps at this time.

Jason Kolbert of Maxim Group inquired about the regulatory pathway for the spinal cord injury (SCI) study following the Phase II data, the strategy for partnering the AMD program, and the expense guidance split for 2016-2017. He also asked for details on the cells' mechanism of action, the rationale for implanting months after injury, and the potential for expansion into other indications like Multiple Sclerosis (MS).

Answer

Dr. Stephen Huhn, VP of Clinical Research and CMO, stated that the company anticipates FDA interactions to define a pivotal study and detailed the multifaceted mechanism of action, including remyelination, which could support exploring indications like MS. President and CEO Ian Massey confirmed active partnering discussions for the AMD program. CFO Gregory Schiffman clarified that the 2016-2017 spending split would primarily see a reduction in the R&D line after trial enrollment completes in 2016.

Jason Kolbert of Maxim Group LLC asked for a detailed comparison of the company's therapeutic approaches for dry AMD and spinal cord injury against those of its competitors, specifically questioning the differentiation in strategy and trial design, such as the timing of cell implantation in spinal cord injuries.

Answer

Chief Medical Officer Dr. Stephen Huhn explained that their dry AMD strategy focuses on neuroprotection to arrest disease progression, unlike competitors' cell replacement strategies. For spinal cord injury, he stated that implanting cells in the late subacute or early chronic stage is supported by preclinical data showing stronger effects and is pragmatic for clinical trials by reducing variability from spontaneous recovery. CEO Martin M. McGlynn initiated the response.