Executive Summary / Key Takeaways

• Beyond Air (NASDAQ:XAIR) is poised to disrupt the global nitric oxide (NO) market with its innovative LungFit platform, which generates NO from ambient air, eliminating the logistical and safety burdens of traditional cylinder-based systems.
• The upcoming second-generation LungFit PH system, expected in late calendar year 2026, represents a significant technological leap, designed for air and ground transport, and is anticipated to vastly expand market penetration and accelerate adoption.
• The company is demonstrating early commercial traction, with Q2 FY26 revenue up 128% year-over-year, supported by strategic U.S. group purchasing organization (GPO) agreements and rapid international distribution expansion across 35 countries.
• Despite ongoing net losses and cash burn, recent financing of $12 million in debt and a $20 million equity line provides a critical financial runway into calendar 2027, supporting commercial scale-up and pipeline advancement.
• Beyond Air's diversified pipeline, including Beyond Cancer (ultra-high concentration NO for solid tumors) and NeuroNOS (nNOS inhibitors for neurological conditions), offers long-term growth optionality beyond its core LungFit platform.

The Dawn of Cylinder-Free Nitric Oxide Therapy

Beyond Air, Inc. is a commercial-stage medical device and biopharmaceutical company at the forefront of revolutionizing nitric oxide (NO) delivery. Its core innovation, the LungFit platform, generates therapeutic NO from ambient air, a stark contrast to the cumbersome, cylinder-based systems that have long dominated the market. This foundational technology positions Beyond Air as a potential disruptor in a global NO market estimated to reach $1 billion. The company's overarching strategy is to leverage this technological advantage to capture significant market share, initially in the U.S. and increasingly across international geographies, while simultaneously advancing a diversified pipeline of NO-based therapies for oncology and neurology through its majority-owned affiliates, Beyond Cancer and NeuroNOS.

The market for nitric oxide therapies is substantial, with LungFit PH currently indicated for persistent pulmonary hypertension of the newborn (PPHN), a market with an estimated U.S. sales potential of $350 million and worldwide potential exceeding $700 million. Beyond PPHN, the LungFit platform targets viral lung infections like community-acquired pneumonia (VCAP) and bronchiolitis, representing U.S. market potentials greater than $1.5 billion and $500 million, respectively, with global figures significantly higher. The company also addresses nontuberculous mycobacteria (NTM) lung infections, a market with over $1 billion in U.S. sales potential.

Technological Edge: Redefining NO Delivery

Beyond Air's competitive moat is deeply rooted in its proprietary LungFit technology. The LungFit PH system utilizes patented plasma pulse technology to generate NO on demand from ambient air, delivering it directly to a ventilator circuit. This process uses minimal power, equivalent to a 60-watt lightbulb, to ionize nitrogen and oxygen molecules, forming NO with low levels of nitrogen dioxide (NO2) byproduct, which is then removed by a Smart Filter. This innovative approach offers tangible benefits over conventional systems, including the elimination of high-pressure cylinders, cumbersome purging procedures, and a reduced logistical burden on hospital staff. LungFit PH delivers NO at concentrations consistent with current guidelines, typically 20 ppm, with a range of 0.50 ppm to 80 ppm for ventilated patients.

The company's innovation extends to higher concentration NO applications. The LungFit PRO system is designed to deliver 150 ppm of NO directly to the lungs, a concentration believed to be the minimum therapeutic dose for achieving pulmonary antimicrobial effects against microbial infections, including bacteria, fungi, and viruses. This differentiates it from existing FDA-approved NO vasodilation treatments that typically deliver less than 100 ppm.

A major technological leap is the upcoming second-generation LungFit PH system, LungFit PH II, for which Beyond Air submitted a PMA supplement to the FDA in June 2025. This next-generation device is approximately 60% the size of the original, significantly lighter, and critically, designed for both air and ground transportation. It incorporates an upgraded, more intuitive user interface, a more functional backup system, adjustable alarm volume, and promises significantly less frequent maintenance. A design patent covering LungFit PH II has been granted through 2040, securing its long-term competitive advantage. These advancements are expected to vastly expand the addressable market by enabling penetration into larger hospitals and health systems, as well as remote locations where cylinder-based systems are impractical.

Commercial Momentum and Strategic Expansion

Beyond Air's commercial strategy has gained significant traction since the U.S. launch of LungFit PH in July 2022 and the revamp of its sales team. The company has secured national group purchasing agreements with Premier, Inc. (July 2025) and Vizient, providing access to nearly 3,000 hospitals. This broad access, coupled with a focused commercial strategy and the appointment of Bob Goodman as Interim Chief Commercial Officer, is expected to drive meaningful revenue impact. The company has also introduced a capital purchase sales model in the U.S., complementing the traditional leasing model, offering hospitals greater flexibility and accelerating adoption. Vanderbilt University Medical Center has been designated as the first luminary site, further validating the technology and aiding in broader market engagement.

International expansion is a key growth driver, with LungFit PH receiving European CE Mark approval in November 2024. This approval, which included indications for hypoxic respiratory failure in infants and peri- and post-operative pulmonary hypertension in adults and children, triggered a $1 million milestone payment from Asia Pacific partner Getz Healthcare. Beyond Air has rapidly expanded its global distribution network, now covering 35 countries, with a goal of reaching 60 by calendar year 2026. The company achieved its first international commercial placement of LungFit PH in Q2 FY26, validating the technology's global applicability, particularly in regions where traditional NO supply is logistically challenging.

Financial Performance: Growth Amidst Investment

Beyond Air's financial performance reflects its transition to a commercial-stage company, marked by accelerating revenue growth alongside continued investment in R&D and commercial infrastructure. For the fiscal second quarter ended September 30, 2025 (Q2 FY26), the company reported revenues of $1.8 million, a 128% increase year-over-year from $0.8 million in Q2 FY25. For the six months ended September 30, 2025 (H1 FY26), revenues reached $3.578 million, up 141.6% from $1.481 million in H1 FY25. Fiscal year 2025 revenues increased 220% to $3.7 million, primarily driven by U.S. sales.

The net loss attributable to common stockholders improved to $7.9 million ($1.25 per share) in Q2 FY26 from $13.4 million ($5.67 per share) in Q2 FY25.

Despite strong revenue growth, the company reported a gross loss of $0.3 million in Q2 FY26, an improvement from a $1.1 million loss in the prior year, but still negative due to one-time costs for fleet upgrades and provisions for excess inventory. Operating expenses have seen significant reductions, falling to $7.4 million in Q2 FY26 from $11.7 million in Q2 FY25, representing a 37% year-over-year decrease and over 56% reduction from peak levels. This was largely driven by decreases in R&D expenses (down $2.1 million YoY) as Gen II development costs wind down, and SG&A expenses (down $2.3 million YoY) from reductions in salaries and stock-based compensation.

Net cash burn for Q2 FY26 was $4.7 million, a 66% reduction year-over-year. The company has an accumulated deficit of $302 million and has historically incurred significant cash outflows from operating activities, totaling $9 million for the six months ended September 30, 2025.

As of September 30, 2025, Beyond Air held $10.7 million in cash, cash equivalents, and marketable securities. Recognizing the need for additional capital, Beyond Air secured $12 million in debt financing and an equity line of credit for up to $20 million with Streeterville Capital in November 2025. This financing provides a proforma cash balance of $22.9 million as of September 30, 2025, extending the financial runway into calendar 2027.

Competitive Landscape: Disrupting the Status Quo

Beyond Air operates in a competitive landscape dominated by established players offering cylinder-based nitric oxide systems, such as Mallinckrodt (MNK), which represents the fourth cylinder-based system in the U.S. market. Broader respiratory care companies like Inogen (INGN) (portable oxygen concentrators), ResMed (RMD) (sleep apnea and chronic respiratory devices), and Philips (PHG) (diversified healthcare technology) also present indirect competition through their extensive product portfolios and market reach. United Therapeutics (UTHR), a biopharmaceutical company, competes directly in treatments for pulmonary arterial hypertension.

Beyond Air's core competitive advantage lies in its unique ability to generate NO from ambient air. This technological differentiator provides significant benefits over cylinder-based systems, which require cumbersome logistics, purging procedures, and present safety concerns. This enables Beyond Air to serve remote locations and hospitals where traditional NO supply is logistically challenging or cost-prohibitive, as demonstrated by its ability to support the naval base in Guam. The upcoming LungFit PH II, with its transport capabilities, is expected to further amplify this advantage, opening up the entire NO market to Beyond Air.

While larger competitors benefit from scale, diversified revenue streams, and established market penetration, Beyond Air's strength is its targeted innovation. Its high-concentration NO delivery for microbial infections offers a therapeutic approach not effectively addressed by current low-concentration vasodilation treatments. The company's strategic GPO agreements and international expansion efforts are crucial for overcoming the market dominance of entrenched rivals. Management believes that the second-generation LungFit system will significantly steepen the growth trajectory due to its superior attributes compared to both the current system and existing competition.

Outlook and Strategic Roadmap

Beyond Air has updated its fiscal year 2026 revenue guidance to $8 million to $10 million, acknowledging the inherent variability in hospital purchasing cycles and the temporary disruption associated with the transition of its Chief Commercial Officer. Despite this adjustment, management expects sequential growth to resume, driven by continued U.S. commercial momentum and accelerating international contributions. International revenue is anticipated to build steadily through fiscal 2026, with significant momentum expected in fiscal 2027 as global distributors convert opportunities into active installations. The company aims to reach 60 countries under partnership by calendar year 2026.

The anticipated commercial launch of the second-generation LungFit PH system in late calendar year 2026, pending FDA approval, is a pivotal event not factored into the current fiscal year guidance. This system is expected to be a "game-changer" for the industry, vastly expanding the market and enabling Beyond Air to penetrate larger hospitals and health systems, ultimately aiming for a majority market share in the global NO market.

Beyond its core LungFit platform, Beyond Air is advancing its diversified pipeline. Beyond Cancer, its oncology affiliate, anticipates top-line data from its Phase 1b study (ultra-high concentration NO in combination with anti-PD-1 therapy) around the end of calendar 2025. NeuroNOS, the neurology affiliate, is progressing BA-101 for glioblastoma and BA-102 for Phelan-McDermid syndrome (PMS), both having received Orphan Drug Designation. NeuroNOS expects to submit an IND for a first-in-human study by the end of calendar 2026, with initial human data anticipated later that year. The LungFit GO program for NTM lung infection is also on track for a pre-IDE submission to the FDA by year-end 2025.

Risks and Challenges

Investing in Beyond Air carries inherent risks typical of a commercial-stage medical device and biopharmaceutical company. The company has an accumulated deficit of $302 million and continues to incur net losses and significant cash outflows, raising substantial doubt about its ability to meet obligations without additional funding within one year. While recent financing has extended the runway, continuous capital raises may be necessary.

The commercialization of LungFit PH is subject to the inherent complexity of hospital sales cycles, characterized by extended lead times and institutional decision-making processes, which can lead to quarterly sales variability. The company also faces supply chain risks, relying on a concentrated base of third-party, and in some cases single-source, suppliers for approximately 90% of its materials. Regulatory delays, particularly with FDA approvals for new indications or the next-generation LungFit PH II, could impact launch timelines and market penetration. The transition in commercial leadership may also introduce temporary disruptions to sales momentum.

Conclusion

Beyond Air stands at a critical juncture, poised to transform the nitric oxide therapy landscape with its innovative, cylinder-free LungFit platform. The company's differentiated technology, particularly the highly anticipated second-generation LungFit PH II, represents a significant competitive advantage, promising expanded market access and enhanced operational efficiency for healthcare providers globally. Despite the financial challenges typical of a growth-stage company, Beyond Air's strategic commercial execution, robust international expansion, and recent capital infusion provide a solid foundation for future growth. The diversified pipeline in oncology and neurology further underscores its long-term potential. While risks related to liquidity, regulatory timelines, and commercial execution persist, Beyond Air's technological leadership and strategic roadmap position it as a compelling investment opportunity for those seeking exposure to a disruptive force in medical device innovation.