Beyond Air (XAIR) is a biopharmaceutical company developing the LungFit platform system, a generator and delivery system that produces nitric oxide from ambient air. This medical device can generate up to 400 ppm of nitric oxide for continuous or intermittent delivery to a patient’s lung. As a result, this technology can eliminate cylinders from the hospital, can be used anywhere in the hospital setting, and may allow for self-administration at home. XAIR seeks to apply the LungFit system to treat infants with persistent pulmonary hypertension (PPHN). Furthermore, XAIR’s pipeline includes using nitric oxide to treat bronchiolitis, COVID-19, and solid tumors.
The immediate potential catalyst for XAIR is treating persistent pulmonary hypertension of the newborn (PPHN). The LungFit delivery system can provide the dosage of nitric oxide that’s in line with current guidelines (20 ppm with a range of 0.5-80 ppm). The company estimates that US sales potential would be greater than $300 million and worldwide sales could be greater than $600 million. The LungFit PH Ventilator compatible system is pending pre-market approval (PMA) by the FDA, with a deadline of May 10, 2021. XAIR also plans to present two abstracts at the American Thoracic Society International Conference from May 14-19. These abstracts will provide updates to their 3 trials evaluating the safety and efficacy of nitric oxide to treat bronchiolitis, as well as inhaled nitric oxide to treat COVID-19. This analysis will consider nitric oxide as a treatment option for PPHN and COVID-19 as well as the LungFit PH Ventilator system and the LungFit Pro system.
Persistent pulmonary hypertension of the newborn (PPHN), also known as persistent fetal circulation syndrome, is a serious breathing problem in newborns. During pregnancy, a baby gets oxygen through the placenta, and the baby’s blood skips over its lungs, so the blood vessels going to the baby’s lungs (pulmonary vessels) are closed. When the baby is born, normally pulmonary vessels should open up to allow for blood to flow through the lungs, but with PPHN, these blood vessels don’t open up fully. As a result, the brain and body don’t get enough oxygen, and there is too much pressure in the blood vessels to the lungs.
The cause of PPHN is unknown, but certain factors increase the risk of developing the disease, including meconium aspiration, infection, respiratory distress syndrome (RDS), a lack of oxygen before or during birth, and diaphragmatic hernia. If lung vessels fail to be open enough, back-pressure is created and the heart uses fetal circulation pathways, allowing low-oxygen blood to mix with the blood pumped to the rest of the baby’s body,
Symptoms of PPHN include breathing problems with rapid or slow breathing, blue color of the skin, cool hands and feet, and low blood pressure. The goal of treatment for PPHN is to increase oxygen in the baby’s body systems in order to avoid long-term health problems. Treatment includes supplemental oxygen through a mask, and endotracheal (ET) tube to deliver oxygen into the windpipe, a mechanical breathing machine, and nitric oxide to expand the blood vessels in the baby’s lungs.
While high concentrations of nitric oxide can be quickly oxidized into toxic nitrite or nitrate, low concentrations can diffuse into the smooth muscle cells and activate the heme of guanylate cyclase, which raises the concentration level of intracellular cGMP, which induces vasodilation through a variety of mechanisms. A randomized study published by Nature found that in 27 of 40 control patients failed assigned therapy and developed severe PPHN, while 6 out of 40 infants with inhaled nitric oxide failed therapy. Treatment with inhaled nitric oxide improves arterial oxygen, reduces the amount of ventilatory support needed, and prevents progression to severe PPHN.
Inhaled NO (iNO) improves oxygen and reduces the need for therapy in patients with diverse causes of PPHN, with several studies pointing to an effective dosage ranging from 5 to 20 ppm. However, one third of infants with PPHN fail to respond to iNO, and higher NO concentration has potential risks, including methemoglobinemia and prolonged bleeding time. It’s important to note that no iNO-associated serious adverse effects have been identified during follow-up and iNO does not reduce the mortality, length of hospitalization, or risk of neurodevelopmental impairment associated with PPHN. Nitric oxide is one of many supplemental treatments for PPHN, but it is not a direct cure.
It’s important to note that inhaled nitric oxide has been approved by the FDA for treatment of PPHN, and the current process is for pre-market approval, or PMA.
XAIR Economic Standing
With 854 Level 3 and 4 NICU’s in the US and using a report from Mallinckrodt Pharmaceuticals, XAIR estimates that the market size for nitric oxide in the US is $500 million. According to their most recent 10-Q form, XAIR’s US sales potential would be $300 million for PPHN in the United States alone, and $600 million globally. The company states that the compound annual growth rate (CAGR) for the market is 8%. XAIR has $22.7 million in cash and can sustain the company for the next 12 months.
The 10-Q form also states that XAIR entered into a facility agreement on March 17, 2020 with lenders loaning up to $25 million. These loans would be in 5 tranches of $5 million, with the latter 2 tranches only accessible after FDA approval. The interest rate for this loan is 13.3% per year, and it should begin being payed back in 2023, with any remaining amounts fully paid by 2025.
The major selling point of this technology is its ease in comparison to using cylinders. The current cylinder system weighs about 175 pounds and requires storage for bulky cylinders, but LungFit PH can provide a viable alternative, weighing only 78 pounds with no cylinders. The economic model does require existing NICUs to switch from their current iNO system to LungFit, which can slow down sales due to tight budgets with COVID-19. However, LungFit uses a razor-blade system through the filters, which need to be replaced every 12 hours. These filters also reinforce the safety of LungFit by avoiding nitrate toxicity and will not function without a new filter.
Furthermore, in their most recent investor presentation, XAIR expects the LungFit PH will be launched in the second quarter of 2021. XAIR states that it has commercial scale manufacturing in place, the calibration gas supply is secured, and multiple respiratory therapists (RTs) on staff for training. The company has also strong patents protecting its technology, with 20 issued patents expiring through 2033, and 10 pending patents could push this to 2040.
XAIR has had insider buying, with the Director Robert Carey purchasing shares across 2020 and 2021, now possessing 131,418 shares of the company. The most recent purchase was on March 5th with 17,000 shares bought at $5.70. Institutional investors include BlackRock with 687,171 shares, Vanguard with 612,512 shares, and Kingdon Capital with 511,036 shares.
Finally, it’s important to analyze the management team’s experience. XAIR’s CEO and Chariman is Steve Lisi, who was previously the Senior Vice President at Avadel Pharmaceuticals. His involvement allowed the company to restructure, raising $121 million and transforming the company from a $100 million enterprise to $1 billion in 3 years. The President, COO, and co-founder of XAIR is Amir Avinel, who has worked in biotechnology for over 20 years. He co-founded Rosetta Green, which was eventually acquired by Monsanto, and he was the President and CEO of Rosetta Genomics, a NASDAQ company. The directors of XAIR are also experienced and knowledgeable about the biotechnology sector.Nitric Oxide and COVID-19:
There’s been mounting evidence for nitric oxide as a possible treatment for COVID-19. In 2003, nitric oxide was used for the SARS-CoV-1 infection, as viral replication was inhibited due to cytotoxic reactions with intermediates such as peroxynitrite. Currently, the FDA has allowed iNO as one of many potential treatments through the emergency expanded access program. A meta-analysis of nitric oxide as a treatment for coronaviruses ranging from 1993-2020 pointed to better clinical outcomes and alleviating the rapidly rising strain on health care capacity.
Another study published in October 2020 found that, to date, “nitric oxide is the only substance shown so far to have a direct effect on SARS-CoV-2.” Inhaled nitric oxide would be used to relieve symptoms which can shorten hospital stays and reduce mortality. However, both the NIH and Surviving Sepsis Campaign oppose the usage of nitric oxide. According to Dr. Wilson, a professor of medicine at the University of Boston, the recommendations are based on indirect evidence from patients with acute respiratory distress syndrome. However, hypoxemic respiratory failure in COVID-19 may differ, and we should be cautious.
XAIR is currently conducting two studies to analyze inhaled nitric oxide in treating COVID-19. In-vitro studies have suggested the mechanisms of nitric oxide inhibiting SARS by fusing between the S protein and its cognate receptor, ACE2, reducing viral RNA production in the early steps of viral replication. The first study analyzes the safety of intermittent NO delivered through inhalation, with the primary endpoint being the time to deterioration of respiratory symptoms. The study has 20 participants in a randomized, parallel assignment clinical trial to determine device feasibility and has been completed. The second study is a multi-center, open label, randomized clinical trial to consider the efficacy of 150 ppm NO for viral pneumonia. The study enrolled 90 participants with the primary outcome measure of serious adverse events and secondary outcome measurements of time to fever resolution, ICU admission, and oxygen support. The estimated study completion date is September 7, 2021.
While high concentrations of NO can be concerning due to toxicity, XAIR uses intermittent dosing for safe delivery. Their most recent investor presentation asserts that over 2,500 treatments were administered in 140 patients across 9 clinical settings with 0 reported Severe Adverse Events (SAEs). High NO concentration, up to 250 ppm, has shown safety in humans through intermittent dosing.
My analysis for this company was limited, as I have not looked into using nitric oxide in order to treat bronchiolitis. However, I believe XAIR can receive a PMA by the FDA, though I’d be open to hearing a bear thesis on this point. Low-dosage nitric oxide is already the established treatment for PPHN, and XAIR’s technology makes it easier and more compact for hospitals. The switch from heavy cylinders to light filters can make this viable within the market, and the razor and blade model with these filters can provide a source of recurring revenue. Finally, 0 reported SAEs across 2,500 treatments with high NO concentration makes me confident in the technology’s safety. Although NO was used previously to treat SARS, I’m unsure what to expect with the interim data with COVID-19.
This article was written by u/QuickTrades29.