Executive Summary / Key Takeaways

• Transformative Technology Driving Growth: Beyond Air ($XAIR) is leveraging its proprietary LungFit platform, which generates nitric oxide (NO) from ambient air, to disrupt the traditional cylinder-based NO market. This unique, cylinder-free technology offers significant logistical and operational advantages, positioning LungFit PH for substantial market share gains in the U.S. and globally.
• Accelerating Commercial Momentum: Following critical software upgrades and the appointment of a new Chief Commercial Officer, the company is experiencing accelerating revenue growth, with fiscal year 2025 revenues up 220% and fiscal year 2026 guidance projecting $12 million to $16 million. This growth is fueled by increasing hospital adoptions and strong customer renewals.
• Strategic Pipeline Expansion: Beyond Air is actively expanding its market reach through a next-generation transport-ready system (LungFit PH2) and pursuing label expansions (cardiac surgery), alongside advancing high-potential subsidiary programs in oncology (Beyond Cancer) and neurological disorders (NeuroNOS), diversifying its long-term revenue streams.
• Disciplined Financial Management: Despite historical losses and a "going concern" note, management has implemented aggressive cost reduction measures, significantly lowering cash burn. Recent financing agreements have extended the cash runway, providing critical capital to execute commercial and development plans into calendar year 2026.
• Competitive Differentiation: Beyond Air's core technological advantage in ambient-air NO generation provides a strong competitive moat against established cylinder-based rivals, enabling access to underserved global markets and driving superior operational efficiency for hospitals.

The Dawn of a New Era in Nitric Oxide Therapy

Beyond Air, Inc. ($XAIR) stands at the precipice of a transformative period, poised to redefine the landscape of nitric oxide (NO) therapy. At its core, the company is a commercial-stage medical device and biopharmaceutical innovator, distinguished by its proprietary LungFit platform. This technology generates NO directly from ambient air, a stark departure from the cumbersome, cylinder-based systems that have long dominated the market. This fundamental technological differentiation is not merely an incremental improvement; it represents a strategic pivot designed to unlock new efficiencies, expand market access, and ultimately, improve patient care globally.

The company's journey began in 2015 as AIT Therapeutics, strategically acquiring intellectual property that would form the bedrock of its NO generation capabilities. Key milestones included securing rights to the eNOGenerator, which became central to the LungFit system. This foundational technology allows LungFit to generate NO up to 400 parts per million (ppm) for delivery, with the LungFit PH system specifically designed for 0.5 ppm to 80 ppm for ventilated patients. The tangible benefits are profound: it eliminates the need for high-pressure cylinders, removes complex purging procedures, and significantly reduces the logistical and safety burdens on hospital staff. This translates to a more streamlined, efficient, and potentially safer NO delivery system, offering a compelling value proposition in a market ripe for innovation.

The broader nitric oxide market, particularly for persistent pulmonary hypertension of the newborn (PPHN), is substantial, with the U.S. sales potential for LungFit PH estimated at $350 million and worldwide potential at $700 million or greater. Beyond this, the company is targeting vast markets in viral pneumonia (U.S. potential >$1.5 billion, global >$3 billion), bronchiolitis (U.S. potential >$500 million, global >$1.2 billion), and nontuberculous mycobacteria (NTM) lung infection (U.S. potential >$1 billion, global >$2.5 billion). These figures underscore the immense opportunity for a disruptive technology like LungFit, especially in regions where traditional cylinder supply is geographically or cost-prohibitive.

Competitive Landscape and Technological Moat

The medical device and biopharmaceutical industries are intensely competitive, with numerous players vying for market share in respiratory care. Beyond Air's primary direct competitors in NO therapy include established giants like Mallinckrodt (INOMAX), Linde Group (LIN) (NOxBOX), Air Liquide (AI) (KINOX), and VERO Biotech LLC (GENOSYL DS), all of whom rely on cylinder-based NO delivery. Indirect competitors span broader respiratory device manufacturers such as ResMed (RMD), Inogen (INGN), and Philips (PHG), as well as pharmaceutical companies developing alternative therapies for lung conditions.

Beyond Air's core competitive advantage, its patented plasma pulse technology that generates NO from ambient air, creates a significant moat. This technology offers superior operational efficiency by eliminating the logistical complexities and safety concerns associated with high-pressure cylinders. While precise, directly comparable market share figures for all niche competitors are not publicly detailed, Beyond Air's cylinder-free approach provides a distinct edge, particularly in global markets where cylinder supply chains are underdeveloped or costly. Management emphasizes that this technology is a "game changer," enabling access to "every hospital in the world that wants to use nitric oxide." This contrasts sharply with competitors like Mallinckrodt, whose new offerings remain "another cylinder-based system."

Financially, Beyond Air's current TTM gross profit margin of -44.91% and operating profit margin of -1202.13% significantly trail established competitors like ResMed (gross profit margin ~57%, operating profit margin ~28%) and Philips (gross profit margin ~43%, operating profit margin ~3%). This disparity reflects Beyond Air's early commercial stage, high R&D investment, and the initial costs associated with scaling its unique supply chain and upgrading its fleet of devices. However, the company's technology is designed for long-term cost efficiency, with management targeting 60%-65% gross margins for LungFit PH as it scales. This potential for substantial margin improvement, driven by its differentiated technology, is a critical factor for future profitability and competitive strength.

Operational Momentum and Financial Trajectory

Beyond Air's operational journey has been marked by strategic improvements and a clear path to commercial acceleration. Following FDA PMA approval for LungFit PH in June 2022, the company focused on enhancing device compatibility and software. A critical software update approval in fall 2023 (fiscal Q3 2024) allowed for the optimization of the system, leading to a period of upgrading existing customer devices and a more aggressive pursuit of new accounts. This deliberate approach, though causing some near-term revenue delays, was deemed "paramount for medium and long-term success" by management, ensuring product quality and customer satisfaction.

The impact of these efforts is now evident in the financial results. For the fiscal year ended March 31, 2025, Beyond Air reported revenues of $3.7 million, a substantial 220% increase from $1.2 million in the prior fiscal year. This growth was entirely driven by U.S. sales, with a significant portion coming from new hospital contracts secured in the latter half of the year. The company's commercial team successfully increased its total number of hospital clients by over 60% in the quarter ended September 30, 2024, and has seen over 1,100 patients treated across more than 50 U.S. hospitals, accumulating over 75,000 hours of therapy. Crucially, every hospital whose contract concluded has renewed, with multi-year contracts increasing by over 100%, signaling strong customer satisfaction and product utility.

Management has provided concrete guidance for the upcoming periods, reflecting increasing confidence. For the quarter ending June 30, 2025 (fiscal Q1 2026), Beyond Air expects to report revenue of at least $1.7 million, representing over 45% sequential quarterly growth and over 145% year-over-year growth. Looking further ahead, the company projects revenue of $12 million to $16 million for the full fiscal year ending March 31, 2026. This guidance, which notably does not yet factor in the next-generation LungFit PH2 system, is underpinned by the accelerating pace of new hospital signings and increasing volume per existing hospital. The introduction of a "Razer Razer Blade model" (system purchase plus consumables) is also gaining traction, offering flexible contracting options.

Strategic Initiatives and Pipeline Diversification

Beyond Air's growth strategy extends beyond the current LungFit PH system, encompassing significant product development and international expansion. The company submitted a PMA supplement for its next-generation LungFit PH2 system to the FDA in June 2025. This system is designed to be smaller, lighter, and transport-ready, with enhanced user features and reduced maintenance. Management believes LungFit PH2 will "vastly expand" the market, enabling NO delivery in challenging environments and significantly impacting market share and total annual volume. This innovation reinforces Beyond Air's technological leadership and addresses a critical unmet need for mobile NO therapy.

In parallel, Beyond Air is pursuing a PMA supplement to expand the LungFit PH label to include cardiac surgery, an indication for which no NO products are currently approved in the U.S. This represents a substantial market opportunity. Internationally, the company achieved a major milestone with European CE Mark approval for LungFit PH in November 2024, opening doors to the EU and other recognizing countries. This approval triggered a $1 million milestone payment from Getz Healthcare, its Asia Pacific distribution partner, which has already secured market authorization in Australia. New distribution agreements have been signed across numerous countries, including India, Italy, France, Turkey, and Ukraine, with initial international shipments already underway. These international efforts are expected to contribute meaningfully to revenues starting in the back half of fiscal 2026.

Beyond the LungFit platform, Beyond Air has strategically diversified its pipeline through majority-owned subsidiaries. Beyond Cancer (80% owned) is developing ultra-high concentration nitric oxide (UNO) for solid tumors, a program distinct from LungFit. It has advanced to a Phase 1b combination study with anti-PD-1 therapy in Israel, targeting top-line data by the end of calendar 2025. Preclinical data show UNO's ability to elicit an immune response and upregulate key biomarkers, suggesting potential in a multi-billion dollar anti-PD-1 market. NeuroNOS (88.2% owned) focuses on nNOS inhibitors for neurological conditions, particularly autism spectrum disorder (ASD). Its lead therapy, BA-102, recently received FDA Orphan Drug Designation for Phelan-McDermid syndrome, providing significant development incentives. NeuroNOS plans to initiate first-in-human studies in late calendar 2026, supported by recent $2 million equity financing and a Scientific Advisory Board featuring Nobel laureates.

Financial Health and Risk Considerations

Beyond Air's financial health reflects its stage of development as a commercializing innovator. The company has incurred recurring net losses, with a net loss of $46.6 million for the fiscal year ended March 31, 2025. Its independent auditors have included a "going concern" explanatory paragraph, highlighting the need for additional funding. However, management has proactively addressed these challenges with a stringent capital conservation strategy. This included a significant reduction in operating expenses by 58% over the past six quarters, from over $17 million to just above $7 million, achieved through headcount reductions, office closures, and pausing the LungFit PRO study. Net cash burn for fiscal year 2025 was $44.1 million, a 28% reduction from the previous year, with further reductions anticipated in fiscal Q1 and Q2 2026.

To bolster liquidity, the company secured new financing agreements in late 2024, including a $20.6 million private placement and an $11.5 million secured royalty funding agreement. The latter, led by company insiders, features a favorable structure with interest largely paid in kind until June 2026, and subsequent payments tied to an 8% royalty on net sales, providing flexibility. These measures, combined with anticipated revenue growth, are expected to provide sufficient cash runway "well into calendar 2026 and potentially to profitability."

Key risks remain, including the inherent unpredictability of regulatory timelines, particularly with the FDA's current "upheaval" and the ongoing learning curve for EU MDR. Delays in approvals for LungFit PH2 or cardiac surgery label expansion could impact revenue ramp. The company's reliance on a single third-party manufacturer for 87% of its materials in fiscal 2025 also presents a supply chain risk. While management has shown adeptness in cost control and securing financing, the ability to consistently meet ambitious revenue targets and manage the complexities of global expansion will be critical.

Conclusion

Beyond Air is charting a compelling course in the medical device and biopharmaceutical sectors, driven by its innovative, cylinder-free nitric oxide generation technology. The company's strategic focus on product optimization, aggressive commercial expansion in the U.S., and a robust international rollout, coupled with disciplined financial management, positions it for significant growth. Its technological leadership provides a distinct competitive advantage, enabling access to underserved markets and promising long-term margin expansion. While challenges such as regulatory timelines and the need for continued capital remain, the accelerating revenue trajectory, strong customer adoption, and diversified pipeline underscore a promising investment thesis. Beyond Air's ability to execute on its ambitious guidance and leverage its unique technology to capture market share will be paramount in its journey toward sustained profitability and establishing itself as a leader in global NO therapy.