Beyond Air Inc (XAIR) 2020 Q3 法說會逐字稿

Good morning, and welcome, everyone, to the Beyond Air financial results call for the fiscal third quarter ending December 31, 2019. Today's conference is being recorded. At this time, I'd like to turn the call over to Monique Kosse of LifeSci Advisors. Please go ahead.

Thank you, operator, and good morning, everyone. Thank you for participating in today's financial earnings conference call for the company's fiscal third quarter ended December 31, 2019. Leading the call today will be Steve Lisi, Chairman of the Board and Chief Executive Officer of Beyond Air. Joining him today will be Douglas Beck, Chief Financial Officer; and Amir Avniel, President and Chief Operating Officer.

Earlier this morning, Beyond Air issued a press release announcing its financial results for the fiscal third quarter 2020. A copy of the release can be found on the Investor Relations page of the company's website.

Before we begin, I would like to remind everyone that comments and various remarks about future expectations, plans and prospects 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. Beyond Air encourages you to review the company's filings with the Securities and Exchange Commission, including without limitation to the company's Form 10-Q, which identifies specific factors that may cause actual results or events to differ materially from those described in the forward-looking statements.

As a reminder, this conference call is being recorded and will be available for audio rebroadcast on Beyond Air's 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, February 7, 2020. Beyond Air undertakes no obligation to revise or update any statements to reflect events or circumstances after the date of this call.

With that, I would like to now turn the call over to Steve Lisi, Chairman of the Board and Chief Executive Officer of Beyond Air. Steve?

Thanks, Monique, and good morning, everyone. Thank you for joining us today. We are pleased to be here with another update on our progress. 2020 is going to be an exciting year. I will keep my comments brief as we are only 4 weeks away from our analyst meeting, which we will hold in New York City on March 5 at 2:00 p.m., where we'll give more detailed updates on all of our programs.

Let me begin with our LungFit PH program, where we are preparing for our U.S. Premarket Approval or PMA submission for persistent pulmonary hypertension of the newborn or PPHN. On our last earnings call 3 months ago, I noted how we were allocating resources to get our IDE submitted for our pivotal bronchiolitis study and that we would need to push out our PMA filing, given that we are unable to run both programs in parallel.

I am very pleased to report that next week, we will be moving our resources to focus on the LungFit PH PMA submission. At this time, our best estimate is that the PMA submission will occur in approximately 10 to 12 weeks from today. Thus, we remain confident in our ability to commercially launch our LungFit PH system in calendar fourth quarter 2020.

With respect to our launch plans. We announced in December our decision to terminate our commercialization agreement with Circassia Pharmaceuticals for material breach. Termination of our partnership with Circassia does not change our plans for a late 2020 launch, and we are currently exploring all options for commercial launch. We are fully prepared to launch the product on our own in the U.S. However, discussions with potential commercial partners are ongoing for the U.S. market as well as for the ex-U. S. markets. Many times, I have highlighted the operational, safety and cost advantages of our system over cylinder-based systems, which we think will help us take a significant share of the several hundred million dollar U.S. market.

Our Chief Commercial Officer, Duncan Fatkin has been with us for 13 months now and has the experience to successfully launch the LungFit PH system. Me and the Beyond Air team are looking forward to discussing our plans and displaying the LungFit PH system at our Analyst Day on March 5.

In our second program, LungFit BRO for bronchiolitis, we have enrolled over 85% of the patients in a final pilot study in Israel and expect to complete enrollment before the end of this month. We expect to announce data from this pilot study in May. Our clinical team has done an excellent job of executing on the trial. As I mentioned earlier, we are on track to initiate our pivotal trial in 2020, '21 winter season in the United States. The pivotal study should be completed in the second quarter of '21 with data reported around midyear.

As a reminder, bronchiolitis is a leading cause of hospitalization for infants worldwide with over 130,000 hospitalizations annually in the U.S. alone. There are no drugs approved for the treatment of bronchiolitis, and the standard of care is currently oxygen and hydration. More on our plans to launch this product will be discussed at our Analyst Day on March 5.

I would like to point out that about 35% of bronchiolitis is caused by viruses other than RSV. Some of these other viruses are deemed coronavirus. We are all monitoring the global situation with the coronavirus strain from China. While the company has never attempted to treat the specific coronavirus that is causing the current global alarm. We currently have confidence that our LungFit BRO system is effective in treating certain types of coronavirus based on data already generated. We look forward to the opportunity to test our system on the difficult-to-treat coronavirus strains. And hopefully, we will get a chance to test it on the coronavirus from China. We view it as our responsibility to help if we can.

In our LungFit NTM program or better dubbed our at-home program, we are planning to initiate a multi-centered, 12-week, self-administered, at-home pilot study in patients with NTM lung infection by mid-calendar year 2020.

Patients may be diagnosed with either a Mycobacterium abscessus complex or also called an abscessus or Mycobacterium avium complex known as MAC. Patients will be titrated up to 250 parts per million of nitric oxide. Based on the clinical and preclinical data generated to date, we are confident that this pilot at-home study will succeed. We are encouraged by the simplicity of our LungFit NTM system where the patients self-administer in the home setting.

For the patient, it is a simple 5-step process: plug the system into any standard electric outlet, turn on the power switch and insert smart filter into the system, place the breathing mask on the face and press the start button. It's a very straightforward system. The pilot study is designed to enroll 20 patients infected with NTM who have either attracted MAC or [MXF]. The 12-week study will evaluate safety, quality of life, physical function and bacteria removal. The FDA has emphasized recently the importance of quality of life improvement in physical function as well as improved safety profile as markers of success versus solely eradication of the bacteria.

Data from patients treated to date with NO gives us confidence that we can safely treat patients for 12 weeks at 250-plus per million, improve patients' lives on multiple parameters and improve concurrently to eradication.

Based on our current expectations, we expect to report interim data from the at-home study around the end of calendar 2020. If successful in our LungFit at-home NTM study, we believe it opens the door for a very significant market for chronic, severe lung infections treated in the home. And with proper resources, we could potentially explore our program in COPD patients with severe exacerbations brought on by any pathogen. This is a very large underserved market.

I would like to point out that our preclinical toxicology testing of our LungFit system is complete, and the results are stellar. I am pleased to report that both our 12-week rat and dog studies have been completed, and the histopathology is complete as well. There are 0 observations. In other words, there were no differences, macro or microscopic, between treatment with 250 parts per million nitric oxide with the 12 weeks in control. The protocol used in these 2 studies mimicked the protocol that will be used in [clinics] in our upcoming at-home NTM study. These results complement the 30-day rat study that was completed previously at 400 parts per million, where there were no differences versus control.

Before I turn it over to Doug to review the financials, it's important to note that we recently completed a public offering and private placement of our common stock, raising $11.5 million in gross proceeds. This will support our activities, developments and anticipated milestones at least through fiscal year 2021. We are very excited about the outlook for the next 18 months, and are eager to share our vision with you at our Analyst Day on March 5, 2020 at 2:00 p.m. in New York. We will display our commercial-ready systems and have several members of the Beyond Air team in attendance for you to speak with. We will also have KOLs presenting their perspective on acute pulmonary hypertension, bronchiolitis and NTM and why LungFit is needed. These are truly exciting times for everyone involved, and we look forward to an in-depth discussion with you next month.

With that, I will turn the call over to Doug for the financial review. Doug?

Thank you, Steve. Here's a brief review of our third quarter results ended December 31, 2019. Revenue for the 3 months ended December 31, 2019, were $314,000. This revenue came from the milestone payments from our partnership with Circassia. There were no revenues from the same period of 2018.

Research and development expenses for the 3 months ended December 31, 2019, were $2.6 million compared to $0.6 million expense in the same 3-month period of 2018. General and administrative expenses for the 3 months ended December 31, 2019, were $2.5 million compared to $1.8 million for the same 3-month period 2018. For the 3 months ended December 31, 2019, the company had a net loss to common shareholders of $4.6 million or $0.43 per share compared to a net loss to common shareholders of $2.4 million or $0.28 per share in the same 3-month period of 2018.

As of December 31, 2019, the company had cash, cash equivalent, restricted cash and marketable securities of $15.5 million. This cash is sufficient to fund operations beyond the next 12 months.

I'll now hand it back to Steve.

Thanks, Doug. Before we go to questions, I would like to acknowledge the excellent job and tremendous effort by the Beyond Air team. On most fronts, we have met or exceeded our goals, and we expect to continue this trend and launch our LungFit PH system later this year, have our LungFit BRO pivotal study completed during 2020, '21 winter season and complete our at-home LungFit NTM study in the first half of 2021. Thanks to our many supporters who've helped us get this far. We will never stop pushing to improve patients' lives with LungFit and reward our investors, for the patience and belief in us.

Now we would like to open up the call to your questions. Operator?

(Operator Instructions) Our first question comes from Suraj Kalia with Oppenheimer.

Steve, can you hear me all right?

Yes.

Okay. So on BRO, Steve, walk us through what data should we expect in a few weeks from the pilot study? And also for the pivotal study, the second quarter '21 time line highlighted, can you walk us back through the data from the pilot? And then how that parlays into pivotal number of patients? Any color there for the pivotal BRO would be great.

Sure. So the study that we'll be reading out in a couple of months, this is a 90-patient study in Israel, and it's blinded, so we don't know anything yet. But we'll be showing efficacy safety data in a small number of patients. Again, this is helping us to potentially reduce the size of the pivotal study, and to give us some confidence on a few things, a few tweaks that we should have trialed this on and, also, for the (inaudible) use. So I'll give you one example. One example is the mask. We wanted to optimize the mask which we used in the study, which are infants. We wanted to make sure we have something that will work on the 1-month old and the 12-month old (inaudible). So we tested a lot of the masks in the study and we put it in, and it's actually going very well. So we're very happy with that. That's one example of doing it in the study, which has been better than the pivotal study. And there are a few data points that we'll be looking at that maybe boost the size of our pivotal study. So right now, the pivotal study, you asked about the size, I'd say the pivotal study is going to be somewhere between 250, 300. And maybe if we -- we might be able to reduce it down [50 to 200]. So we may be able to say that a couple of dozen patients [in total] in the pivotal study, which is -- which would be, actually might even justify the cost that we spent (inaudible). So I don't know if there's any further detail you wanted on bronchiolitis. I can walk you back on the time line that should be '21 because of absence in this data.

Right. No, that's good enough. And if there isn't a roll in, right, for the 90 patients on the pilot that potentially could be brought over into the pivotal, correct, the pivotal would be completely separate, 250 or 300 patients. And there wouldn't be data mixing it. Okay.

No, not at all. It's absolutely [stable].

So second question, Steve, you mentioned coronavirus. And forgive me, I don't have your exact words from your prepared remarks, but what has been done so far vis-à-vis coronavirus? Your comments caught my attention there?

So look, in bronchiolitis, there's coronavirus in these infants. About 65% of bronchiolitis is caused by RSV. The other viruses, the coronavirus being one of them. So we really didn't do a lot of genotyping here. We didn't -- in our studies, we didn't say, hey, we really want to know exactly what subtype there are in each infant, but we do have some data, but some of the hospitals are doing that on their own. They will know what type of virus was in the infant. Some do, some don't. So we scoured back through the data in the trial, 2 trials that are completed, obviously, the trial we're doing now, again, obviously, in the middle of the trial, we're saying, "Hey, who is doing this?" And if you're not, can you for the rest of the babies? So we don't know if we're going to have any coronavirus in this study. But the other 2 we did, and we've looked at it. And it's obviously, from 2 different studies, it's a very low number of patients, but there's definitely promise there. I can say that. It certainly peaked our interest to look at it. And it gave us confidence to kind of move forward and look at more options. So we will be doing some in vitro work in the very near future. It will not be with the coronavirus from China. Obviously, I'm sure most of you know, it's very hard to get a hands on it, #1. And #2, you need proper type of lab to do it in. It's very difficult to have that. We don't have that. So I don't know what will happen going forward, Suraj. We have the data, we'll have some more data. Again, there are different strains of coronavirus, and we'll do our best to get as much as we can. And we'll see. Obviously, everyone knows that many governments around the world are looking for help. We will present what we have. And if they want our help, we're more than happy to do it. But at this time, we're still probably a couple of weeks away from knowing if anybody wants -- wants our help specifically.

Got it. And finally, Steve, PPHN it's delayed by -- the submission is delayed by approximately a quarter, if you have -- are to launch, let's say, Q4, calendar Q4 '20, then can you just walk us through what all needs to be done between -- obviously, you submit, as we understand it, max is a 6-month or at least statutory is 6-month review period. How are you thinking through it to give your confidence in the 4Q launch time frame?

Sure. So just to recall, we definitely stated that our submission was going to be towards the -- hopefully towards the end of March, given that we're working on our IDE submission for bronchiolitis. So I wouldn't say we start by an entire quarter, that would be the end of June. We're very disappointed in that. So I don't think that's the case. So we think that 180 days gets us to a point in the fourth quarter where we will have time to launch. And just to reiterate, I've done a few times, the people have asked that the launch is not a big giant launch to over 1,000 hospitals on day 1. This is more of a slow launch with a small number of hospitals. So getting it launched quickly is not really an issue. If we were going out to 1,000 hospitals we could do the launch immediately. So that's not the plan, it never was the plan. So launching in the fourth quarter of this year shouldn't be a problem. We got approval in October and November, it wouldn't be an issue at all. Obviously, if it happened in December might not happen, no (inaudible). So right now, we feel comfortable that we'll be able to launch (inaudible) this year. So again, we've got no reason to believe at this point that, that wouldn't happen.

Our next question comes from Matt Kaplan with Ladenburg Thalmann.

Congrats on the progress during the quarter. You mentioned in your prepared remarks here, discussion is ongoing with potential partners for the PPHN program U.S., ex U.S. I guess, question is, is there anything really that -- any recourse that Circassia has at this point that could prevent you from signing a new partner in the U.S.?

It's a great question, Matt. I don't know if I have the answer. We took action. In our action, we feel very comfortable with what we did. We think it was the right thing to do. And therefore, in our opinion, they don't have much recourse to stop us from progressing forward. I can't speak for potential partners in what they -- what their opinion is about it, about the situation. So I really don't know how to answer the question exactly. Our opinion is there's nothing stopping us from operating our business and moving forward in any way that we choose to, but others may have a different theme.

Got it. And then ex U.S., that should be technical, right?

That's outside of China technically. Technically, the deal with them was for U.S. and China. So I don't want to -- I just want to make that clear. But outside of those 2 territories, there was no rights to them. So yes, that would be correct.

And then just a follow-up on the BRO program pilot study specifically. In terms of helping us to that kind of, let's call it, expectation in terms of what you're looking for in the endpoint there with respect to efficacy, can you help us understand what to look for when you report out the data?

So it's the same thing that -- and again, this study is small. So it's not powered for statistical significance, I just want to make that clear. 90 patients is not enough power to show statistical significance, we don't expect to see it. We just expect to see, obviously, separation, but it won't be statistically significant, it's just not big enough, and that was done on purpose. So I don't want to get expectations up for a P value of 0.05, that's not the goal of this study. But we are looking at the influence of the same as the studies before. We're looking at oxygen saturation. We're looking at the modified Tal score, which is positive improvements for 4 endpoints in that composite, 2 objective and 2 subjective, and we'll also be looking at hospital length of stay. Those are the main ones. And again, in the previous study, the primary endpoint was the half -- the actual physician's decision to discharge the patient from the hospital. In this study, we're going to be looking at that.

We're also going to be looking at the composite influence of the Tal score and oxygen saturation. So it's the same as before. So let me see if I can explain this simply. A physician in the last study could not make a decision to discharge, unless the Tal score was met and oxygen saturation endpoint was met. Both of those endpoints, secondary endpoints, in the previous study need to be met before the physician was even allowed to consider a decision for discharge. Okay. So in this study, we're going to be looking at each endpoint individually. We'll be looking at the composite of those 2 endpoints combined and looking at the discharge. In the previous study, we didn't do that interim step. We didn't look at the combination of Tal score and oxygen saturation before the physician made a decision. It wasn't looked at. In this study, we'll be looking at that as an endpoint as well. So it's the same 3 endpoints we're looking at, but there's an interim step endpoint that we added to the study to look at. So in other words, oxygen saturation is an endpoint, Tal score is an endpoint. Then the combination of those 2 occurring will be a third endpoint and then discharge will be the fourth endpoint. So you'll see that we're looking at -- that we'll report on 4 endpoints in this study, rather the last one, where we reported on 3. I don't know if I'm making sense to everybody, but I can explain it on March 5 a lot better. The slides will look great.

That's really helpful. That's really helpful. And then in terms of what you're thinking for the pivotal study as a primary endpoint?

Well, that's what we're going to find out. I mean I think that, that interim step that I mentioned just now. I think that we may be looking at that as a primary endpoint rather than the actual discharge from the hospital. That's going to be -- we'll see what happens here and there could be a discussion with FDA. I think, either way, it doesn't matter to us. We'll win on either one. So it's just a matter of what we see in this study as to whether the FDA is going to sign. So for us, it doesn't matter. But FDA wanted to -- they wanted to -- they wanted us to answer some questions before they signed off and that's what we're doing.

Great, great. And then last question. In terms of your PPHN PMA file. Previously, you had said that there were some software engineering, things that you need to complete. What do you view as kind of the late limiting step now in terms of completing that PMA file?

Paperwork, let's call it. Organizing all of the test reports, putting them into a prepped form for PMA. We haven't completed all the testing. So I don't want to say the testing's done, it's not. But I think that doing the test, completing the test, that's not a problem. Just putting everything together the right way and making sure it's a high-quality PMA filing. This is just kind of blocking and tackling with our partners, our vendors and making sure that we can get everything coordinated. That's the stage that we're at. You'll see the system on March 5. This will be a representation of a commercial system. This will be one of the devices that we've built for the -- on the commercial line for evaluation by the FDA. So this will be what would go into the hospital. So you'll see it. It's ready for prime time. We just need to take the system, obviously multiple systems, off this line and do all the requisite testing that FDA requires. Now all the requisite testing FDA requires, we just completed all that testing with our bronchiolitis system for our IDD. Testing is very similar. Obviously, there will be a few differences, but it's very similar. There's just a lot more with the ventilated compatible system than the bronchiolitis system, in terms of data generated paperwork and so forth, plus the PMA versus an IDD. So it's work that we just did, it's just going to be on a little bit bigger scale with the ventilated compatible system. So it's just a matter of getting it together and getting the resources from our partners and making it happen. The software that we mentioned many, many months ago, you'll see on the 5th that, there's no problems, everything is working beautifully. We showed it down in November at AARC. That was not the commercial-ready LungFit PH system, but it was a fully functioning working LungFit PH system on a ventilator. So that system is great. Now we have the one coming off the commercial line. So it's ready to go. So again, it's just a matter of us -- our ability to coordinate everything with our partners and make it happen.

Our next question comes from Scott Henry with Roth Capital.

Steve, with regards to the PTHN launch, which would happen in Q4, calendar year. How late can you wait before making that partner, non-partner decision? Meaning, at what point do you have to kind of prepare for the launch one way or the other?

Yes, I think that once we submit -- I think that, that first 30 to 60 days after we submit, we're going to be putting on the commercial side, we'll be putting in a lot of effort on our side to put things in place. So if someone's going to do something, it would be shortly after that PMA submission. I think if we get past 30 or 60 days, we would have to just say we're not going to partner. So I think that's kind of the timing. I wouldn't -- at that time, I'll let you know, "Hey, there's someone close and we may not go alone still", but at this moment in time, you asked the question. I think that 30 or 60 days after we submit, if we don't have somebody that -- if we don't have a structure of a deal that's conducive to us, it's something that we believe is worthwhile taking, we would go alone.

Okay. And with regards to Europe, I believe you were planning on filing in the first half of 2020, is that still the case?

No, we removed that guidance a while ago, 9 months ago, I think. Because the -- 6 months ago, we removed that guidance, it's been a while. So the new rules in Europe come out April 1. And it's just been -- we're the small company here. We don't really know everything that's going on. We have some consultants in people that we know. And they're just as confused as we are and they're kind of just waiting for these new regulations to come out of Europe. So once they come out, we will evaluate them and see what we can do. So it could be a back half of this year filing, could be another 2 years. Just don't know until we get the final regs from them, and we get our people, who are experts over there to sift through it and try to figure out how our product fits in. So I really just don't have a definitive answer for you on timing on that, because we are -- we're at the mercy of what these new regulations are going to say.

Okay, fair enough. And with regards to the at-home trial to start in the middle of this year. Are there any gating factors for that trial to begin? Or is it more up to your time line?

Well, there's always gating factors. So there's IRB approval. That's a gating factor. We are going to make our submissions on the time lines that we've been told, we need to make them for the IRB review. So if the IRB is reviewing the time line they're supposed to, that's good. So I can't control that. But given the time lines that we've been told, we're going to meet those time lines to submit the IRBs, and they will review and we'll be ready to go. With respect to manufacturing, we just manufacture our bronchiolitis systems, they'll be the same systems used in the home NTM study for now. This is a pilot study. So we don't have a commercial-ready NTM home system yet. We don't need it. The study will tell us a lot on how to make that final design. So those systems need to be built, which again, I don't think is a problem. We've got time lines for both our filters and systems, but in fairness, they're both contracted out. So if they miss the time lines, that's a problem. But right now, the time lines are on track, shouldn't be any issues. And this study is going to take place outside the United States, study is going to take place in Australia. So hopefully, our shipping guys don't have any customs problems. But I mean, that's really it, Scott. These are normal things in the trial, normal things that you go through. And right now, we've got schedules for everything. Everything's in place. And nothing should stop us within that time line other than something out of the ordinary, something out of left field that we can't control. But we're on track for that study. I'm very excited to get it started.

Great. And then just for clarity on the bronchiolitis program. Is the IDE? Is that going in next week? Or has that already been submitted?

The bronchiolitis IDE?

Yes.

I'll let you know. It's supposed to go in today. So if it happens today, it happens today. If it happens Monday, it'll happen Monday. But the team has all the information and it's just a matter of getting it into the format and shipping it off to the FDA. So I can't -- I don't have the confirmation that it was done today or will be done today or, if not today, it'll be Monday. But our team, obviously, is moving on after today to the P&A. So that's where we are. Everything was done for it. Just I'm not privy to how you need to submit these things to the FDA but there's some format and if we can get it done today, we will, if not, it'll be Monday.

Great. And just a final question, more on the accounting side. Given what's happened with Circassia. Going forward, do we pull out those milestones? Do they not get counted anymore? Or just any accounting changes that we should think about in our model, given what's happened?

From the Circassia deal? I mean there's nothing. That's it -- they don't exist anymore, not in the model.

So the amortization which happened in this quarter won't continue?

I'm not sure, Doug, if there's still going to be more because we recognize that, I think it was just a couple of hundred thousand [quid] or so. There might be a little bit less next quarter. Doug, do you know, if there's a little bit left on the amortization?

There's about 650 or so left. Most likely we'll be taking in the revenue based on what is performed on this obligation in the future.

So over the next 2 quarters, Scott, that'll be in there. We don't know exactly how it will be -- it'll break down between the 2 quarters, but it's basically amortized from the deal signing to the PMA solution on the amortization schedule.

It's really based on the cost-to-cost method of what we expended.

Our next question comes from I-Eh Jen with Laidlaw & Company.

Steve. The first question is about -- for the potential partner versus the sales and marketing. Given the program, theoretically, a little more due risk. Do you anticipate or do you want a deal that's better than the Circassia deal to be the goal or the requirement to sign the deal? Or you have other considerations as well?

I think there are other considerations in the mix specifically the global deals, for example, that would be -- we wouldn't be able to compare it to what the terms were prior. If it's a US only deal, yes. You would think it would be at least those sort of (inaudible), but there are some other considerations that we are seeing there.

Okay, great. Two more quick ones. First one is that the -- can we anticipate in the Phase II meetings in the third quarter of this year for bronchiolitis, given that you will start a trial in the fourth quarter of this year. The pivotal study in the fourth quarter of this year?

Yes. I don't know who does the FDA again. Obviously, after we get the results. And I'll pause with my team really to see but at this point, I don't think we need to sit down with the FDA again. I think we've already sat down with them and I think we are pretty much -- the inspectors, that's what they have told us and guided us to. What they asked of us was very reasonable. And we're going to hit everything, they're asking for in the pivotal trial design. Again, I think that the results that we're coming out with now is more going to help us power the study properly. It's really [going to be very good] so I don't think there's very much change from the FDA as we see it.

Okay. Maybe then last question, that in the press release, just one thing you mentioned there is the calibration gas deal with MESA Specialty Gas. So do you want to elaborate a little bit more or just giving the significance of that particular deal?

Yes. So yes it's a good question. Right now, the only calibration gas that's available in the U.S. comes from (inaudible) for the specific purpose of calibrating systems for use in humans. Obviously, there's plenty of calibration investments (inaudible) in the U.S. from different vendors. But in our opinion, none of them [lies] to the level of being allowed to sell their gas to hospitals to calibrate the (inaudible) systems, for use (inaudible), anybody can do it except those two. So if we were to come to market without a source of (inaudible). That would be a problem. I can't imagine why (inaudible) wanted to sell it to us (inaudible). So it's very important to secure supply. And that's what we did. We said it's fantastic what they did. We're very happy to have to have them supporting and they're going to be ready to go with that. In addition to that this gas is not only going to be for our pulmonary hypertension system, it's going to be for all of our systems. So if we sell the bronchiolitis system, the (inaudible) system, the at-home system for any, any lung infection. Those systems will be calibrated as well. So now we have the supply for calibration gas for all of our systems and globally too [it makes sense]. Currently it ships product to, I think, [80] more countries around the world. So if you have those distribution systems and channels to get the gas wherever we need it, so. So as we move forward, we have ultimate confidence that we keep supply calibration gas to any hospitals or any partners that have home system, so that we can make sure that the calibration can be buffered, we don't have to rely on others who are most likely our competitors and probably [wouldn't give it us]. So it's very important to have this locked up. We did it early to make sure.

Okay, great. Thanks and congrats and have a pretty eventful year to come.

(Operator Instructions) Our next question comes from Dave Sherman with LifeSci Capital.

This is Rahul on for Dave. Just two quick ones for me. If you guys were going to take on U.S. commercialization in PPHN yourself. There are certain hospitals you would target early on? And how could that potentially change if you were to find a new commercial partner?

I'm not so sure that the initial target hospitals are going to change much, whether it's also important beyond -- there are several factors at play and I just don't think it matters if it's done by us or a partner. It'll be the same hospital that would be targeted. And I'm not even sure where the initial control [comes from].

Okay. Great. And then in terms of the study design for the at-home trial and NTM. Can you remind us of your plans for monitoring the patients in the study? How frequently will you be checking in and what kind of freedom will you have to engage with them and kind of help them optimize treatment?

We're not going to be helping them in the home. That's the whole point. They should be able to do this on their own. So there will be visits, obviously, I've just mentioned calibrations there. So we have to calibrate the systems, just do the normal, calibrate it once a month. So if they're going to be treated for 12 weeks at home. Obviously, there's going to be at least two visits for calibration. So we'll be able to visit them and calibrate systems and also do a check. But these patients -- if there's any issues and learning issues then they're going to be -- these are going to be patients who have underlying serious illness, some type of bronchiectasis, most likely the CF or non-CF.

So they're going to be in communication with their physicians, so if there's anything from a medical perspective, they'll be in a position to see their physician whether it be at the hospital or elsewhere. But with respect to the system itself, we are certainly going to be at least in the home twice during that time period. And probably, there will be a couple of more checks on the patient and on the systems to ensure -- as you can imagine, using the filters, we probably don't want to give them 12 weeks with the filters at one time. We'll probably stop off a couple of times, dropping those filters on a regular basis, rather than just giving them the entire amount at once. You don't need them, 2 days after they go home destroying 12 weeks' worth of filters by accident. So there'll be ample times -- ample opportunities for us to interact with patients, helping the patients, answering questions and the patient will be trained on the system before they go home obviously. So they won't be able to go home with the system unless they pass the training that we will be giving them before they take the system home. So we're very confident with the trial design because there's a lot of parameters built in for safety and just we can't wait to get it going.

Got it. That was very helpful. Yes. I mean, I think that's it from us, we're just excited to see everything that happens over the next 12 months.

Our next question is from James Molloy with Alliance Global Partners.

I had a quick question on potential marketing -- additional marketing partner for the U.S. launch? I mean, what -- can you speak to the interest level that you're seeing and sort of what the ideal new partner or a new deal for a new partner would look like from XAIR's perspective?

Yes. I mean, there's interest. And again, you have to understand that this is a niche market. It's not like there's 50 or 100 companies that want this, it's not a GP market. It's not a general hospital based product either. It's a very specialized product within the hospital. So the universe of potential partners is a lot smaller than your average product that we do have interest. And I don't know what ideal is. We have to see. There's a lot of factors here, who the partner is? What their abilities are? What the kind of -- if you can battle with the royalties and the front payments and how they match up on custom made or not custom made [in the first place]. I think that's an interesting question that's out there. So there's a lot of different things here that could lead to an optimal deal for us depending on different factors that we're looking at, but just -- everybody has asked this question. So you have to keep in mind on the second indication of bronchiolitis, and that's a hospital based product, that will be in the hospital 100% of the time. It's pediatric focused, which are going to be babies. They are going to be infants, the (inaudible) trials are optimum year of age. So it's a little different than newborns, but still it is pediatric focused in hospital. So this would be a lot of overlap with sales force. So as you can imagine, if we do have a partner who might be interested in looking at a (inaudible) perspective, that would be to give us a leg up in the bronchiolitis match. That's going to be about 2 years behind at this stage. So that's a major factor for us in terms of having discussions at the forums. We've been talking to them about the kind of structure they'd like to have. So when you look at the bigger picture of our company, you have to keep the bronchiolitis match in mind. This isn't just a one-off thing where you say, "Hey, (inaudible), it means nothing for the rest of our company." It's just not true. From a commercial perspective, if you look at our at-home product. Yes, there's really not much. There's not much overlap between the hospital and the at-home systems in terms of initial need. So we will have that in our minds as we think about this deal but we do have to take a look at a lot of the details. Hope that helps.

And then just a follow-up on that. What do you anticipate? I know that there's going to be a tough question to answer on a call because your competitor's probably on this call, but coming in with a fairly disruptive technology should -- that we see. What do you see as potential responses from sort of the installed base in this niche and sort of the plans that you guys have to respond to their reactions?

Yes, I don't know what they're going to do. So we have a whole bunch of scenario analyses that we've gone over internally. So hopefully, we've thought of every possible thing that they can do, and we're prepared for -- to respond to it. But you have to ask them what they think of us when they're (inaudible) market. I really don't know which triggers they will pull. I don't expect but whatever it is we'll [be ready for it].

Absolutely. Well, last question then, just to touch on, briefly, the coronavirus thing, and I know that you're simply not playing it up as a big part of the story, more of it sounds like if you can be of some help, you will. But it's certainly a topical story, obviously. And what kind of timing would you anticipate were there to be some actual developments along those lines from you guys?

Yes, I think that the governments around the world that are looking for help. They want something fairly quickly. I don't think -- I think they're looking for people, the companies that could help within the next 30, 60, 90 days, is my guess. I think if we get into the summertime and they have no solution, then there's probably no solution. So I think it's going to happen fairly quickly. We're in February. I'd be surprised if we got past May or June, where they didn't have things ready to go. So if it's going to happen, it'll happen quickly. Again, we're going to throw our hat in the ring. And if we can be of service, we'll do it. And if they think our product can help and our treatment can help, we're going to do what we can. And I think that our manufacturing partners will do the same thing. They would do the best that they could in terms of churning out product as quickly as they could to help with this situation. So yes, I'm not playing it up, Jim, because this is not part of our plan. This is just something that's happening in the world. And if we can help, we will. And it's not the time to talk about how much money a company can make. This is not the time to talk about it. The time to talk about that is on our other products. Right now it's just, if we could be of service, we will and I have no idea what kind of compensation we'd get for that. I really -- we haven't even thought about that. If there's something, great. I mean it's not something that we are -- we're planning on or even thinking about. We're just trying to get as much data as we can together, as quickly as we can to show them, "Hey, we're an option for you, if you need us."

We have reached the end of the question-and-answer session. At this time, I'd like to turn the call back over to management for closing comments.

Thanks, everyone, for spending time with us. And it's a long call. Thank you very much for all the questions, and I look forward to seeing everyone on March 5.

This concludes today's conference. You may disconnect your lines at this time, and we thank you for your participation.