XAIR US Equity☆

Item 1A. Risk Factors 32

Item 1B. Unresolved Staff Comments 72

Item 2. Properties 72

Item 3. Legal Proceedings 72

Item 4. Mine Safety Disclosures 72

Item 6. Selected Financial Data 73

Item 7A. Quantitative and Qualitative Disclosures About Market Risk 81

Item 8. Financial Statements and Supplementary Data 81

Item 9A. Controls and Procedures 82

Item 9B. Other Information 82

Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspection 82

PART III 83

Item 10. Directors, Executive Officers and Corporate Governance 83

Item 11. Executive Compensation 90

Item 14. Principal Accounting Fees and Services 98

Item 15. Exhibits and Financial Statement Schedules 99

References

in this Annual Report on Form 10-K (this “Annual Report”) to the “Company,” “Beyond Air,” “we,”

“our,” or “us” mean Beyond Air, Inc. and its subsidiaries except where the context otherwise requires.

FORWARD-LOOKING

STATEMENTS AND MARKET DATA

This

Annual Report contains forward-looking statements. We intend such forward-looking statements to be covered by the safe harbor provisions

for forward-looking statements contained in Section 27A of the Securities Act of 1933 (the “Securities Act”) and Section

21E of the Securities Exchange Act of 1934 (the “Exchange Act”). All statements other than statements of historical facts

contained in this Annual Report, including statements regarding our future results of operations and financial position, business strategy,

approved product and product candidates, certifications or approvals, timing of our clinical development activities, research and development

costs, our commercialization plans and the expected timing thereof, timing and likelihood of success, and the plans and objectives of

management for future operations and future results of anticipated products are forward-looking statements. These statements involve

known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to

be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements.

In

some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,”

“expect,” “plan,” “anticipate,” “expect,” “could,” “intend,”

“target,” “project,” “contemplate,” “believe,” “estimate,” “predict,”

“potential,” or “continue” or the negative of these terms or other similar conditional expressions. The forward-looking

statements in this Annual Report are only predictions. We have based these forward-looking statements largely on our current expectations

and projections about future events and financial trends that we believe may affect our business, financial condition and results of

operations. These forward-looking statements speak only as of the date of this Annual Report and are subject to a number of important

factors that could cause actual results to differ materially from those in the forward-looking statements, including the factors described

under the sections in this Annual Report titled “Risk Factors” and “Management’s Discussion and Analysis of Financial

Condition and Results of Operations” as well as the following:

-

our ability to successfully commercialize our LungFit® PH system in the U.S.;

-

our ability to achieve a CE mark for LungFit® in the European Union (the “EU”);

-

our expectation to incur losses for the next few years;

-

our ability to predict accurately the demand for our products, and products under development and to develop strategies to address markets

successfully;

-

the possibility that products may contain undetected errors or defects or otherwise not perform as anticipated;

-

the anticipated development of markets we sell our products into and the success of our products in these markets;

-

our future capital needs and our need to raise additional funds;

-

our ability to build a pipeline of product candidates and develop and commercialize our approved products;

-

our ability to enroll patients in clinical trials, timely and successfully complete those trials and receive necessary certifications

or regulatory approvals;

-

our ability to maintain our existing or future collaborations or licenses;

-

our ability to protect and enforce our intellectual property rights;

-

federal, state, and foreign regulatory requirements, including the FDA regulation of our approved product and product candidates;

-

our ability to obtain and retain key executives and attract and retain qualified personnel;

-

our ability to successfully manage our growth, including as a commercial-stage company; and

-

our ability to address business disruption and related risks resulting from the COVID-19 pandemic and the responses to curb the spear

of COVID-19, which could have a material adverse effect on our business plan.

Moreover,

we operate in an evolving environment. New risk factors and uncertainties may emerge from time to time, and it is not possible for management

to predict all risk factors and uncertainties.

You

should read this Annual Report and the documents that we reference in this Annual Report completely and with the understanding that our

actual future results may be materially different from what we expect. We qualify all of our forward-looking statements by these cautionary

statements. Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained

herein, whether as a result of any new information, future events, changed circumstances or otherwise.

Beyond

Air, Inc. the Beyond Air logo, and other trademarks or service marks of Beyond Air, Inc. appearing in this Annual Report are the property

of Beyond Air, Inc. This Annual Report also includes trademarks, tradenames and service marks that are the property of other organizations.

Solely for convenience, trademarks and tradenames referred to in this Annual Report may appear without the ® and TM

symbols, but those references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable

law, our rights, or that the applicable owner will not assert its rights, to these trademarks and tradenames.

MARKET,

INDUSTRY AND OTHER DATA

This

Annual Report contains estimates, projections, market research and other information concerning our industry, our business, markets for

LungFit® PH and our product candidates and the size of those markets, the prevalence of certain medical conditions, LungFit®

PH market access, prescription data and other physician, patient and payor data. Unless otherwise expressly stated, we obtain this

information from reports, research surveys, studies and similar data prepared by market research firms and other third parties, industry,

medical and general publications, government data and similar sources as well as from our own internal estimates and research and from

publications, research, surveys and studies conducted by third parties on our behalf. Information that is based on estimates, projections,

market research or similar methodologies is inherently subject to uncertainties and actual events or circumstances may differ materially

from events and circumstances that are reflected in this information. As a result, you are cautioned not to give undue weight to such

information.

SUMMARY

OF PRINCIPAL RISK FACTORS

This

summary briefly lists the principal risks and uncertainties facing our business, which are only a select portion of those risks. A more

complete discussion of those risks and uncertainties is set forth in Part I, Item 1A of this Annual Report, entitled Risk Factors. Additional

risks not presently known to us or that we currently deem immaterial may also affect us. If any of these risks occur, our business, financial

condition or results of operations could be materially and adversely affected.

Our

business is subject to the following principal risks and uncertainties:

Risks

Related to our Financial Position and Capital Requirements

● We will need additional funding.

Risks

Related to Commercialization of our Approved Product or Product Candidates

Risks

Related to the Discovery and Development of Our Product Candidates

Risks

Related to our Reliance on Third-Parties

Risks

Related to our Intellectual Property

Risks

Related to our Business Operations

Risks

Related to the Ownership of our Common Stock

Risks

Related to Employee Matters

● Our employees may engage in misconduct.

General

Risk Factors

PART

I

ITEM

1. BUSINESS

Business

Overview

We

are a commercial-stage medical device and biopharmaceutical company developing a platform of nitric oxide (“NO”) generators

and delivery systems (the “LungFit® platform”) capable of generating NO from ambient air. Our first device,

LungFit® PH received PMA approval from the FDA in June 2022. The NO generated by the LungFit®

PH System is indicated to improve oxygenation and reduce the need for extracorporeal membrane oxygenation in term and near-term (>34

weeks gestation) neonates with hypoxic respiratory failure associated with clinical or echocardiographic evidence of pulmonary hypertension

in conjunction with ventilatory support and other appropriate agents. This condition is commonly referred to as persistent pulmonary

hypertension of the newborn or “PPHN”. The LungFit® platform can generate NO up to 400 parts per million

(“ppm”) for delivery to a patient’s lungs directly or via a ventilator. LungFit® can deliver NO either

continuously or for a fixed amount of time at various flow rates and has the ability to either titrate dose on demand or maintain a constant

dose. LungFit® can be used to treat patients on ventilators that require NO, as well as patients with chronic or acute

severe lung infections via delivery through a breathing mask or similar apparatus. Furthermore, we believe that there is a high unmet

medical need for patients suffering from certain severe lung infections that the LungFit® platform can potentially address.

Our current areas of focus with LungFit® are PPHN, community-acquired viral pneumonia (“CAVP”) including COVID-19,

bronchiolitis (“BRO”), nontuberculous mycobacteria (“NTM”) lung infection and those with various severe lung

infections with underlying chronic obstructive pulmonary disease (“COPD”). The Company’s current product candidates

will be subject to premarket reviews and approvals by the FDA, certification through the conduct of a conformity assessment by a notified

body in the EU for the product to be CE marked, as well as comparable foreign regulatory authorities. The Company’s system will

be marketed as a medical device in the U.S.

An additional program of Beyond

Air targets solid tumors, through our majority-owned affiliate Beyond Cancer, Ltd. (“Beyond Cancer”). The LungFit®

platform is not utilized for the solid tumor indication due to need for ultra-high concentrations of gaseous nitric oxide (“UNO”).

A proprietary delivery system has been developed that can safely deliver UNO in excess of 10,000 ppm directly to a solid tumor. This

program has advanced to phase 1 as enrollment is underway in the first human study.

Our

approved product and active pipeline of product candidates is shown in the table below:

(2) Label expected to include cardiac surgery and PPHN

Our

programs represent large market opportunities:

All

figures are Company estimates for peak year sales: Global sales potential includes US sales potential

LungFit®

PH is the first FDA approved system using our patented ionizer technology to generate on-demand nitric oxide from ambient air and,

regardless of dose or flow, deliver it to a ventilator circuit. The device uses a medical air compressor to drive room air through a

plasma chamber in the center of the unit where pulses of electrical discharge are created between two electrodes. The system uses the

power equivalent to a 60-watt lightbulb to ionize the nitrogen and oxygen molecules, which then combine as NO with low levels of nitrogen

dioxide (“NO2”) created as a byproduct. The products are then passed through a Smart Filter, which removes the toxic NO2

from the internal circuit. With respect to PPHN, the novel LungFit® PH is designed to deliver a dosage of NO to the lungs

that is consistent with current guidelines for delivery of 20 ppm NO with a range of 0.5 ppm – 80 ppm (low concentration NO) for

ventilated patients.

We

believe the ability of LungFit® PH to generate NO from ambient air provides us with many competitive advantages over the

current standard of NO delivery systems in the U.S., the E.U., Japan and other markets. For example, LungFit® PH does

not require the use of a high-pressure cylinder, does not require cumbersome purging procedures and places less burden on hospital staff

in carrying out safety procedures.

Our

novel LungFit® platform can also deliver a high concentration (>150 ppm) of NO directly to the lungs, which

we believe has the potential to eliminate microbial infections including bacteria, fungi and viruses, among others. We believe that current

FDA-approved NO vasodilation treatments would have limited success in treating microbial infections given the low concentrations of NO

being delivered (<100 ppm). Given that NO is produced naturally by the body as an innate immunity mechanism, at a concentration of

200 ppm, supplemental high dose NO should aid in the body’s fight against infection. Based on our preclinical and clinical studies,

we believe that 150 ppm is the minimum therapeutic dose to achieve the desired pulmonary antimicrobial effect of NO. To date, neither

the FDA nor comparable foreign regulatory agencies in other countries or regions have approved any NO formulation and/or delivery system

for >80 ppm NO.

LungFit®

PH for the treatment of Persistent Pulmonary Hypertension of the Newborn (PPHN)

In

June 2022 the FDA approved LungFit® PH to treat PPHN. LungFit® PH is the inaugural device from the LungFit®

platform of NO generators that use patented ionizer technology and is the first FDA-approved product for Beyond Air.

We

also expect to receive the CE Mark under the Medical Device Regulation (“MDR”) in the E.U. in the second half of calendar

year 2022. According to the most recent year-end report from Mallinckrodt Pharmaceuticals, sales of NO were $448.5 million in 2021 (down

from $574.1 million in 2020) for the United States, Canada, Japan, Mexico and Australia, with ~90% in the United States. Outside

of the U.S. there are multiple market participants which translates to considerably lower sales than in the U.S. We believe the U.S.

sales potential of LungFit® PH in PPHN to be greater than $400 million and worldwide sales potential to be greater

than $700 million. We initiated the first phase of our commercial launch in June 2022 in the U.S. and will continue to work

toward a potential launch in the EU and globally in 2022 and beyond.

LungFit®

PRO for the treatment of viral lung infections in hospitalized patients

Community-Acquired

Viral Pneumonia (including COVID-19)

Viral

pneumonia in adults is most commonly caused by rhinovirus, respiratory syncytial virus (“RSV”) and influenza virus. However,

newly emerging viruses (including SARS-CoV-1, SARS-CoV-2, avian influenza A, and H1N1 viruses) have been identified as pathogens contributing

to the overall burden of adult viral pneumonia. COVID-19 is an infectious disease caused by SARS-CoV-2, that has resulted in a global

pandemic, causing over 6.6 million hospitalizations and over 5 million deaths worldwide as of November 2021. Excluding the pandemic,

there are approximately 350,000 annual viral pneumonia hospitalizations in the US, and up to 16 million annual viral pneumonia hospitalizations

globally. For the broader annual viral pneumonia hospitalizations, we believe U.S. market potential to be greater than $1.5 billion and

worldwide market potential to be greater than $3 billion.

We

initiated a pilot study in late 2020 using our novel LungFit® PRO system at 150 ppm to treat patients with CAVP. The trial is a multi-center,

open-label, randomized clinical trial in Israel, including patients infected with COVID-19. Patients are randomized in a 1:1 ratio to

receive either inhalations of 150 ppm NO given intermittently for 40 minutes four times per day for up to seven days in addition to standard

supportive treatment (“NO+SST”) or standard supportive treatment alone (“SST”). Endpoints related to safety (primary

endpoint), oxygen saturation and ICU admission, among others, were assessed.

We

reported interim data from this trial at the American Thoracic Society or ATS International Conference 2021, which was held virtually

from May 14, 2021 through May 19, 2021. At the time of the data cut off, the intent-to-treat (“ITT”) analysis population

included 19 COVID-19 patients (9 NO + SST vs 10 SST). The data readout showed that 150 ppm NO treatment administered via LungFit®

PRO was safe and well tolerated and demonstrated encouraging efficacy signals. From a safety perspective, there were no treatment-related,

or possibly related, adverse events or severe adverse events. NO2 levels were below 4 ppm at all timepoints (trial safety

threshold is 5 ppm) and methemoglobin (“MetHb”) levels were below 4% at all times (trial safety threshold is 10%). With respect

to the requirement of oxygen support beyond hospital stay, 22.2% of subjects in the NO + SST group compared with 40% of control subjects

had this requirement. There was an observable trend of shortening the duration of hospital stay and duration on oxygen support for treated

patients. The pilot study in adult viral pneumonia, including COVID-19, remained active with trial sites open for enrollment after these

data were presented.

We

presented additional detailed study results at the 32nd European Congress of Clinical Microbiology & Infectious Diseases

(ECCMID 2022), which took place from April 23, 2022 through April 26, 2022 as a hybrid event both onsite in Lisbon, Portugal and online.

At the time of the data cut off, the trial enrolled a total of 40 subject hospitalized for CAVP (SARS-CoV-2, n=39; other viruses n=1).

The ITT population included 35 subjects with 16 in the inhaled NO group and 19 in the control group. Safety data from the study showed

that inhaled NO treatment was well tolerated overall with no treatment related adverse events as assessed by the investigators. NO2

levels were below 4.4 ppm at all timepoints (trial safety threshold is 5 ppm) and MetHb levels were below 6.8% at all times (trial

safety threshold is 10%). There were two SAEs reported in the group receiving inhaled NO along with SST, which were determined to be

related to underlying conditions and unrelated to study drug/device. From an efficacy perspective, results showed a trend of shortening

length of stay (“LOS”) in favor of the inhaled NO treatment group by a factor 1.8 in favor of inhaled NO treatment. Duration

of oxygen support, measured in-hospital and at home, was significantly shorter (p=0.0339) for inhaled NO treated subjects. In addition,

of subjects with unstable oxygen saturation during hospitalization, 66.7% of the inhaled NO treatment group reached stable saturation

of ≥93% during hospital stay as compared to 26.7% in the SST group.

Bronchiolitis

(BRO)

Bronchiolitis

is the leading cause of hospital admission in children less than 1 year of age. The incidence is estimated to be 150 million new cases

a year worldwide, with 2-3% (over 3 million) of them severe enough to require hospitalization. Worldwide, 95%3 of all cases

occur in developing countries. In the U.S., there are approximately 120,000 annual bronchiolitis hospitalizations and approximately 3.2

million annual child hospitalizations globally. Currently, there is no approved treatment for bronchiolitis. The treatment for acute

viral lung infections that cause bronchiolitis in infants is largely supportive care and is based primarily on prolonged hospitalization

during which the infant receives a constant flow of oxygen to treat hypoxemia, a reduced concentration of oxygen in the blood. In addition,

systemic steroids and inhalation with bronchodilators are sometimes utilized until recovery, but we believe that these treatments do

not successfully reduce hospital length of stay. We believe the U.S. market potential for bronchiolitis to be greater than $500 million

and worldwide market potential to be greater than $1.2 billion.

Our

BRO program is currently on hold due to the COVID-19 pandemic. The pivotal study for bronchiolitis was originally set to be performed

in the winter of 2020/21 but was delayed due to the pandemic. We have completed three successful pilot studies for bronchiolitis. A further

analysis of the three previously reported pilot studies was presented at the ATS International Conference 2021, which was held virtually

from May 14, 2021 through May 19, 2021. Analysis across the studies (n=198 infants, mean age 3.9 months) showed that 150 ppm –

160 ppm NO administered intermittently was generally safe and well tolerated with adverse event rates similar among treatment groups

with no reported treatment-related serious adverse events. The short course of treatments with intermittent high concentration inhaled

NO was effective in shortening hospital length of stay and accelerating time to fit for discharge – a composite endpoint of clinical

signs and symptoms to indicate readiness to be evaluated for hospital discharge. This treatment was also effective in accelerating time

to stable oxygen saturation – measured as SpO2 ≥ 92% in room air. Additionally, NO at a dose of 85 ppm NO showed no difference

compared to control for all efficacy endpoints, while 150 ppm NO showed statistical significance when compared to control.

Additionally,

long-term safety data for high concentration inhaled NO in bronchiolitis was presented at the Pediatric Academic Societies Meeting 2022

(PAS 22), which was held in Denver, Colorado from April 21, 2022 through April 25, 2022. A total of 101 infants from the three prior

pilot studies for bronchiolitis (n=198) participated in the long-term follow-up study. Study endpoints for the long-term safety study

included percentage of subjects re-hospitalized for bronchiolitis related reasons, such reasons included wheezing episodes, pneumonia,

asthma, etc., and the percentage of subjects re-hospitalized for any reason. Data from the study showed the re-hospitalization rate per

100 Patient Exposure Years (PEY) due to bronchiolitis related reasons trended favorably for the inhaled NO group. In addition, the long-term

subject re-hospitalization rate for any reason was similar between inhaled NO and control groups. As such, the study concluded that the

treatment of hospitalized infants with acute bronchiolitis by intermittent high dose inhaled NO show a favorable long-term safety profile.

We

believe that the entirety of data at 150 ppm - 160 ppm NO in both adult and infant patient populations supports further development of

LungFit® PRO in a pivotal study for patients hospitalized with CAVP or bronchiolitis.

LungFit®

GO for the treatment of Nontuberculous mycobacteria (NTM)

NTM

lung infection is a rare and serious pulmonary disease associated with increased morbidity and mortality. Patients with NTM lung

disease may experience a multitude of symptoms such as fever, weight loss, cough, lack of appetite, night sweats, blood in the

sputum and fatigue. Patients with NTM lung disease, specifically Mycobacterium abscessus (M. abscessus) representing

20% - 25% of all NTM and other forms of NTM that are refractory to antibiotic therapy, frequently require lengthy and

repeated hospital stays to manage their condition. There are no treatments specifically indicated for the treatment of M.

abscessus lung disease in North America, Europe or Japan.

There

are approximately 50,000 to 90,000 people with NTM infections in the U.S. In Asia, the number of patients suffering from NTM surpasses

what is seen in the U.S. There is one inhaled antibiotic approved for the treatment of refractory Mycobacterium avium complex

(“MAC”). Current guideline-based approaches to treat NTM lung disease involve multi-drug regimens of antibiotics that may

cause severe, long lasting side effects, and treatment can be as long as 18 months or more. Median survival for NTM MAC patients is approximately

13 years while median survival for patients with other variations of NTM is typically 4.6 years. The prevalence of human disease attributable

to NTM has increased over the past two decades. In a study conducted between 2007 and 2016, researchers found that the prevalence of

NTM in the U.S. is increasing at approximately 7.5% per year. M. abscessus treatment costs are estimated to be more than double

that of MAC. In total, a 2015 publication by co-authors from several U.S. government departments stated that annual cases in 2014 cost

the U.S. healthcare system approximately $1.7 billion. For this indication, we believe U.S. sales potential to be greater than $1 billion

and worldwide sales potential to be greater than $2.5 billion.

In

December 2020 we began a 12-week, multi-center, open-label clinical trial in Australia intended to enroll approximately 20 adult patients

with chronic refractory NTM lung disease. We received a grant of up to $2.17 million from the Cystic Fibrosis Foundation (“CFF”)

to fund this study and advance the clinical development of inhaled NO to treat NTM pulmonary disease. The trial is enrolling both cystic

fibrosis (“CF”) and non-CF patients infected with MAC, M. abscessus or any strain of NTM. The study consists

of a run-in period followed by two treatment phases. The run-in period provides a baseline for the efficacy endpoints. The first treatment

phase takes place over a two-week period and begins in the hospital setting where patients will be titrated from 150 ppm NO up to 250

ppm NO over several days. During this phase patients receive NO for 40 minutes, four times per day while MetHb levels are monitored.

Patients are also trained to use LungFit® GO and subsequently discharged to complete the remaining portion of the two-week

treatment period at their home at the highest tolerated NO concentration. For the second treatment phase, a 10-week maintenance phase,

the administration is twice daily. The study is evaluating safety, quality of life, physical function, and bacterial load among other

parameters.

We

reported positive interim results in October 2021. At the time of data cutoff on September 6, 2021, eight subjects were successfully

titrated up to 250 ppm NO in the hospital setting, and none required dose reductions during the subsequent at-home portion of the study.

The mean age of subjects was 56.6 years (range: 22 – 73 years) with the majority female (87.5%), a distribution consistent with

real-world NTM disease, and occurring at a higher rate in older adult women than men. 250 ppm NO was well-tolerated in all subjects with

no study discontinuations or treatment-related serious adverse events observed. Methemoglobin and NO2 concentrations remained

within acceptable ranges in all subjects during NO treatment, and below the safety thresholds of 10% and 5 ppm, respectively.

We

reported additional positive interim results at the American Thoracic Society International Conference 2022 (ATS 2022), which was held

in San Francisco from May 13, 2022 through May 18, 2022. At the time of data cutoff on April 4, 2022, a total of 15 subjects were enrolled

in the pilot study. The mean age of subjects was 62.1 years (range: 22–82 years) with the majority female (80%), a distribution

consistent with real-world NTM disease. The data show that high concentration inhaled NO was well tolerated following a total of 2,323

inhalations self-administered at home with no treatment related discontinuations reported and overall high treatment compliance. All

15 subjects were successfully titrated to 250 ppm NO in the hospital setting, and none have required dose reductions during the subsequent

at-home portion of the study. Methemoglobin and NO2 concentrations remained within acceptable ranges in all subjects during

NO treatment, below the safety thresholds of 10% and 5 ppm, respectively. Patients are followed up for 12 weeks after the 12-week treatment

period is completed and the last patient visit at the end of week 24 is expected to occur in August 2022. The totality of the data will

be used to evaluate efficacy measures, including quality of life, physical function, and sputum bacteria as compared to baseline measurements.

The study is no longer enrolling patients, and we anticipate reporting the complete efficacy and safety results later in calendar year

2022. If the trial is successful, we would anticipate commencing a pivotal study in calendar year 2024.

Our

program in COPD is in the preclinical stage and, subject to obtaining additional financing, is expected to enter clinical trials in calendar

year 2023.

Ultra-High

Concentration NO in solid tumors through majority-owned affiliate Beyond Cancer, Ltd.

In

the fourth calendar quarter of 2021, Beyond Cancer, our newly formed, majority-owned affiliate, raised $30 million in a private placement

of common shares. The investors purchased a 20% equity ownership in Beyond Cancer, while Beyond Air maintained 80%. The funding is expected

to be used to accelerate ongoing preclinical work including the completion of IND-enabling studies, completion of a Phase 1 study, expansion

of preclinical programs for combination studies, hiring of additional Beyond Cancer team members, and optimization of the delivery system,

as well as for general corporate purposes.

Beyond

Cancer will benefit from Beyond Air’s NO expertise, IP portfolio, preclinical oncology team, and regulatory progress, and will

pay Beyond Air a single digit royalty on all future revenues. Beyond Cancer will be led by a seasoned leadership team with experience

in emerging healthcare companies and clinical oncology.

Selena

Chaisson, MD, joined Beyond Cancer as Chief Executive Officer. Previously, Dr. Chaisson was the Director of Healthcare Investments at

Bailard, where she spent 16 years focusing on highly specialized, emerging healthcare opportunities with more than one-third of her portfolio

dedicated to investing in oncology companies. Prior to Bailard, Dr. Chaisson held senior executive roles at RCM Capital Management and

Tiger Management. RCM Capital Management was acquired and then merged with Allianz Global Investors U.S. in 2013. Dr. Chaisson received

a BS in microbiology in 1987 from Louisiana State University in Baton Rouge, LA, where she graduated summa cum laude. She earned her

MBA and MD from Stanford University in 1992 and 1993, respectively.

The

Beyond Cancer Board of Directors consists of six members:

● Selena Chaisson, MD, Director, and Chief Executive Officer of Beyond Cancer

● Amir Avniel, Executive Director, and COO and Co-Founder of Beyond Air

● Robert Carey, Director, and Board Member of Beyond Air

● David Dvorak, Director

● Gregory Berk, M.D., Director

UNO

has shown anticancer properties in preclinical trials by eliciting an immune response from the host. We have released this preclinical

data at several medical/scientific conferences showing the promise of delivering NO at concentrations of 20,000 ppm – 200,000 ppm

directly to tumors. Results showed that local tumor ablation with NO conveyed anti-tumor immunity to the host. We recently presented

new in vivo and in vitro preclinical data at the American Association for Cancer Research (“AACR”) Annual Meeting

2022. The in vivo study assessed the mode of action following a single 5-minute gaseous NO (“gNO”) treatment provided

data showing an effect on the primary tumor 14 days post treatment. These data showed that intratumoral injections of concentrations of

gNO at 20,000 and 50,000 ppm led to increased recruitment of T cells, B cells, macrophages and dendrocytes to the primary tumor. An elevated

number of T cells and B cells were also detected in the spleen and blood 21 days following gNO treatment. In addition, at the same timepoint,

a marked reduction in the number of myeloid derived suppressor cells was seen in the spleen. Results from the in vitro study showed

that exposure of six different cancer cell lines – including human ovarian and pancreatic and mouse lung, melanoma, colon, and

breast– to ultra-high concentrations of gNO ranging from 10,000 ppm to 100,000 ppm for up to 10 minutes resulted in a dose-dependent

cytotoxic response. The higher concentration doses of gNO lead to near instant cell death, while the lower concentration doses required

a longer exposure period to elicit cell death. Cell viability was assessed using two assays: XTT and clonogenic assay. After one minute

of exposure to 25,000 ppm gNO, less than 10% viability was observed in all cell lines.

COVID-19

The

development of our product candidates and the commercialization of our approved product could be further disrupted and adversely affected

by a resurgence of the COVID-19 pandemic. We experienced significant delays in the supply chain for the LungFit® system

due to the redundancy in parts and suppliers for ventilator manufacturing which has since been remedied. We continuously assess the impact

that COVID-19 may have on our business plans and our ability to conduct the preclinical studies and clinical trials as well as on our

reliance on third-party manufacturing and our supply chain. However, there can be no assurance that we will be able to avoid part or

all of any impact from COVID-19 or its consequences if a resurgence occurs.

Background

and NO Mechanism of Action

NO

is recognized as a vital molecule involved in many physiological and pathological processes. NO is naturally produced by the body’s

immune system to provide a first line of defense against invading pathogens. It is a powerful molecule with a short half-life of a few

seconds in the blood, enabling it to be cleared rapidly from the body. NO has been shown to play a critical role in the function of several

body systems. For example, as vasodilator of smooth muscles, NO enhances blood flow and circulation. In addition, NO is involved in regulation

of a wound healing and immune responses to infection. The pharmacology, toxicity and other data for NO in humans is generally well known,

and its use has been approved by the FDA as a vasodilator. The precise effect of inhaled NO is dependent on concentration, oxidation

state and type of pathogen.

NO

has multiple immunoregulatory and antimicrobial functions that are likely to be of relevance to inhaled NO therapy. In vitro studies

suggest that NO possesses anti-microbial activity against common bacteria, gram positive and gram negative, as well as mycobacteria,

fungi, yeast, parasites and helminths. It has the potential to eliminate multi-drug resistant strains of the above. Anti-viral activity

covers respiratory viruses such as influenza, corona viruses, RSV and others. In healthy humans, NO has been shown to stimulate mucociliary

clearance, and low levels of nasal NO correlate with impaired mucociliary function in the human upper airway. Unlike other inhaled

drugs, NO is also a smooth muscle relaxant and avoids the concomitant bronchial constriction often associated with inhaled antibiotics

and mucolytics. A potential benefit of these multiple mechanisms may be that in addition to treating lung infections in CF patients,

this suggests that NO may be useful in directly treating the mucus caused by CF, which is the principal manifestation of the disease.

Nitric

Oxide and Infection

NO

possesses broad-spectrum anti-microbial activity acting against bacteria, fungi and viruses. NO is produced at high output as part of

the innate immune response. NO and its by-products (for example, reactive nitrogen species, or RNS) are responsible for the process of

killing microorganisms within white blood cells called macrophages and in organs such as the lungs and other mucolytic tissues.

More

than a decade ago, several research groups showed that NO and RNS possess anti-viral activity and affect several viruses including coxsackievirus,

RSV, influenza, severe acute respiratory syndrome, or SARS, coronavirus, rhinovirus, herpes simplex virus, Epstein-Barr virus, or EBV,

and others. NO has also been shown to be useful in preventing bacterial growth on surfaces.

Continuous

exposure to 150 ppm NO and above, especially in the lungs, may have side effects and cause damage to host cells. Intermittent exposure

to NO in cycles retains NO anti-microbial activity both in vitro and in animal model of infection. Exposure of bacteria to concomitant

30-minute treatments with 160 ppm NO resulted in a significant reduction in bacterial load. A similar dose has been shown to reduce viruses

(common influenza) by 30-100% in a canine kidney infection model. In vivo, in a pneumonia model in rats, inhaled 160 ppm NO, for 30 minutes,

every 4 hours, resulted in significant reduction in bacteria counts in the lungs, without affecting the body’s defense mechanisms,

and without any other adverse effect. In addition, we believe a daily dose of 160 ppm of NO can treat bovine respiratory disease (“BRD”)

in cattle.

Importantly,

several studies report synergy between NO and antibiotic drugs. Adjunctive treatment combining NO together with inhaled tobramycin antibiotics

or other anti-microbial agents has been shown to greatly enhance the efficacy of the antibiotics in dispersing P. aeruginosa biofilms

and to increase their ability to elicit anti-microbial activity. These studies suggest that adjuvant treatment combining NO with antibiotics

might have a beneficial role by reducing bacterial infectivity, and therefore reduce the dependency on antibiotics.

Beyond

Air Technology

We

have developed the Beyond Air nitric oxide generator and delivery system which we call LungFit®, a novel and precise delivery

system that uses NO generated from ambient air with a novel NO generator, the ionizer. Our system provides continuous monitoring and

control of the gaseous content administered during intermittent and continuous NO inhalation treatments, as well as a precise and reliable

monitoring system that is able to monitor patient status and alert medical staff to any adverse effects.

The

LungFit® system is innovatively designed to provide patients with a gaseous dose of NO (ranging from 0.5 ppm up to 400

ppm) combined with ambient air. The gaseous blend is supplied to the patient via a ventilator, face mask, or similar apparatus. LungFit®

is designed to minimize the time that NO is mixed with oxygen and air. The system is also designed to continuously monitor inhaled

NO concentration, NO2 concentration and oxygen. A dedicated screen allows for monitoring of the gas mixture. Further, our

approved product and product candidates resemble other inhalation systems, making them user friendly, with operation and maintenance

that we believe will be immediately familiar to medical staff. Our LungFit® system has been manufactured at commercial

scale with a contract manufacturer.

When

programmed for lung infections, the LungFit®, is designed to specifically deliver a NO dosage of 150 ppm and higher. We

believe that the LungFit® has a number of advantages over other NO formulation delivery systems. For example, it is:

● designed to be used by the patient, thus convenient and portable; and

We

believe that our solution has the potential for a number of additional benefits and opportunities, as follows:

NitricGen

License

On

January 31, 2018, we entered into a definitive agreement to acquire a global, exclusive, perpetual, transferable license to the eNOGenerator

and associated critical assets including intellectual property, know-how, trade secrets and confidential information (the “License”)

from NitricGen Inc. (“NitricGen”). The eNOGenerator is a novel and precise delivery system that uses NO generated from ambient

air with a novel NO generator.

The

Beyond Air LungFit® system, which incorporates the eNOGenerator, has been designated as a medical device by the FDA. The

eNOGenerator can generate NO on demand for delivery to the lungs at concentrations ranging from 0.5 to 400 ppm. With the License, we

expect that we will be able to target all conditions requiring NO at any concentration, regardless of the need for intermittent or continuous

dosing.

Under

the terms of the License, we agreed to pay NitricGen an aggregate of $2 million in up-front, clinical, and regulatory milestone payments,

with the majority pertaining to regulatory milestones, as well as royalties on net sales of the delivery system containing the eNOGenerator

at a percentage in the low-single digits. As partial consideration for the License, we issued to NitricGen warrants to purchase 100,000

shares of our common stock at an exercise price of $6.90 per share. To date, $200 thousand has been paid for milestones that were earned.

The next milestone of $1.5 million became due to NitricGen upon approval by the FDA and is now payable within the next six months of

the triggering event.

Cystic

Fibrosis Foundation Agreement

On

February 10, 2021 we received a grant for up to $2.17 million from the CFF to advance the clinical development of high concentration

NO for the treatment of nontuberculous mycobacteria pulmonary disease, which disproportionally affects CF patients. Under the terms of

the agreement, the funding will be allocated to the ongoing LungFit® GO NTM pilot study. The Company met the second milestone

and received a reimbursement of $425 thousand in the fiscal year ended March 31, 2022. The reimbursement was recorded as an offset to

research and development expenses for the year ended March 31, 2022.

Strategies

Our

objective is to build a leading medical device and biopharmaceutical company that develops and commercializes patented and proprietary

products for the treatment of respiratory infections and diseases, with an initial focus on the treatment of PPHN, AVP, BRO, NTM and

severe infections in COPD patients, among others. Additionally, we are exploring the effects of NO on solid tumors. If our clinical trials

for our product candidates are successful, we expect to seek certification or marketing approval from the FDA and other worldwide authorities

and notified regulatory bodies.

Our

Clinical Results to Date

We

have conducted several clinical trials to assess our ≥ 150 ppm NO inhalation-treatment in various indications. These trials include:

Date Study Indication Primary Results

2011 Pilot Safety (n=10) All comers Safety No SAEs

Cystic

Fibrosis and NTM Clinical Development

In

2011, a prospective, open label, controlled, single-center pilot safety study was conducted on ten healthy adults between 20 and 62 years

of age. The data were published in the Journal of Cystic Fibrosis in 2012. Subjects received 160 ppm NO for 30 minutes, five times a

day, for five consecutive days via direct inhalation to the lungs using a prototype delivery system. The primary objective of the study

was to determine the effect of inhaled 160 ppm NO on pulmonary function tests and characterize the relationship between high-concentration

NO administration and MetHb – a form of hemoglobin that is a biproduct of NO and hemoglobin that cannot bind oxygen – and

establish a MetHb safety threshold level to assess adverse events associated with the treatment. Secondary objectives of the study were

to assess the changes in cytokine levels. Multiple safety markers were continuously monitored including: NO levels, NO2 (a

biproduct of NO and O2 that can be toxic at high concentrations), FiO2, as well as MetHb and oxygen saturation

(“SaO2”). Vital signs, lung function, blood chemistry (including nitrite/nitrates), hematology, prothrombin time,

inflammatory cytokine/chemokines levels and endothelial activation (angiopoietin ratio) were also closely monitored. All individuals

tolerated the NO formulation treatment courses well. No significant adverse events occurred. The maximum amount of air one can forcefully

exhale in one second, known as forced expiratory volume in one second (“FEV1”) and other lung function parameters, serum

nitrites/nitrates, prothrombin, pro-inflammatory cytokine and chemokine levels did not differ between baseline and day five, while MetHb

increased during the study period by an average of 0.9%, as expected. These data suggest that inhalation of 160 ppm NO for 30 minutes,

five times a day, for five consecutive days is well tolerated in healthy individuals.

In

2014, we completed a pilot open label, multi-center study in nine CF patients (≥10 years old). Patients received intermittent (30

minutes, three times a day) inhalation of 160 ppm NO formulation, five days a week, over a two-week period. The study was performed in

two centers, Soroka Medical Center and Schneider Children’s Medical Center of Israel. The primary endpoints of the study were to

determine the MetHb percentage, adverse events associated with inhaled NO and the percentage of subjects who prematurely discontinued

the study due to adverse events (“AEs”) and/or severe adverse events (“SAEs”), or for any other reason. AEs were

reported by five (55.5%) subjects. There were no SAEs related to NO therapy, no treatment-related withdrawals due to AEs, and no deaths.

AEs considered by the investigator as possibly or probably related to treatment were reported for two (22.2%) subjects. There were no

AEs of MetHb elevation >5% or NO 2 elevation >5 ppm (study safety threshold of MetHb and NO2, respectively).

In total, seven cases of hemoptysis were reported in two subjects and all events were mild in severity. There was no cumulative effect

of MetHb exposure during the study. The maximum MetHb level reported was 4.6%. Several secondary efficacy analyses were conducted in

this study, and though the study was not powered for efficacy, results show various positive effects of the treatment regime. Bacterial

and fungal sputum load analysis results were highly variable, though marked reductions of MSSA, Achromabacter, P. aeruginosa,

and Aspergillus were seen in several subjects. These results suggest non-specific targeting of bacteria and fungi that commonly manifest

in CF patients. In subjects with systemic inflammation (CRP >5 mg/mL) at baseline, CRP levels decreased over the treatment period,

showing the effect of NO in the reduction of systemic inflammation. There were no statistically significant or clinically relevant changes

in FEV1 over time, and lung function indices also remained relatively constant throughout the study duration.

In

2016, Rambam healthcare campus in Israel conducted a compassionate use treatment for two patients with CF who suffer from M, abscessus

lung infections. The data were published in the Pediatric Infectious Disease Journal in 2017. The NO treatment regime, as well as

the device for this treatment, was supplied by BA Ltd. our wholly owned subsidiary. Patients received intermittent 30-minute treatments

of 160 ppm NO, with two different regimes including hospitalization (5 times a day) and ambulatory treatment (2-3 inhalations a day).

Treatment was well tolerated with no evidence of any serious side effects. We observed significant improvement in sputum production (up

to 5-10 time more sputum), and subjective improvement in the well-being of both patients. Significant reduction in systemic inflammation

was observed in the first patient, as observed by reduction of CRP (C-reactive protein, a systemic inflammation marker that rises in

response to inflammation) levels during treatment. In addition, the first patient had a 2 log (100-fold) reduction in M. abscessus

during treatment (an effect that was lost after the treatment regime changed to ambulatory). The second patient showed a significant

increase in the 6-minute walk (“6MW”) test and the sputum culture became negative, which is consistent with eradication of

M. abscessus. Further information is needed, but we believe these results suggest that the treatment of M. abscessus with

high-concentration inhaled NO is effective.

In

2017, we treated one patient with CF who suffered from NTM infections (specifically, M. abscessus) under compassionate use in

the United Sates at the National Heart, Lung and Blood Institute with our generator based NO delivery system. The patient saw improvements

in 6MW, FEV1, most Quality of Life measures and had no SAEs. The bacteria was not eradicated. The patient requested to be treated again

and this treatment was commenced in February 2018. A total of 38 treatments were administered over 8 days, 29 of them at a concentration

of 240 ppm, with no SAEs believed to be related to NO reported.

Additionally

in 2017, we completed a single-arm, open-label Pilot trial in nine patients with M. abcessus lung disease, who were refractory

to standard-of-care. The patients were treated with inhaled NO at a concentration of 160 ppm for 30 minutes, in addition to treatment

with standard-of-care. Our inhaled NO treatment was administered intermittently five times per day over a 14-day period, followed by

a seven-day period with three treatments per day. The primary endpoint of safety, as measured by NO-related SAEs, over the 21-day treatment

period was met with no SAEs reported. Secondary endpoints of a 6MW test FEV1, Quality of Life and M. abscessus load in sputum

all trended positively. 6MW showed an increase of >40 meters at the end of treatment at day 21 versus baseline and an increase of

>25 meters on day 81 (60 days after the cessation of therapy). The mean percentage change in FEV1 at day 21 and day 51 (30 days after

the cessation of treatment) was > 3.5% with FEV1 returning to baseline at day 81 (60 days after the cessation of therapy). At day

81 (60 days after the cessation of therapy) bacterial load was 65% lower than baseline. 1 of 9 patients saw culture conversion. This

study was published in the Journal of Cystic Fibrosis in 2019.

In

2018, an additional CF patient infected with M. abscessus was treated over a 4-week period with 76 of 84 treatments at 250 ppm

NO in Israel at Soroka Medical Center. The patient saw improvements in 6MW, FEV1 and most Quality of Life measures. The bacteria was

not eradicated. Importantly, there were no SAE’s reported and all treatments were completed without incident.

CAVP

and BRO Clinical Development

In

2014, we completed a double blind, randomized Pilot study for infants with bronchiolitis (n=43) for which the data were published in

the Pediatric Pulmonology Journal in 2017. The study was performed at Soroka University Medical Center in Israel. Forty-three infants

between the ages of two to 12 months diagnosed with bronchiolitis were randomly assigned to either the treatment group or the control

group. The treatment group comprised 21 subjects who received intermittent (30 minutes, five times a day) inhalation of 160 ppm NO formulation,

in addition to supportive O2 treatment for up to five days. The control group, 22 subjects, received ongoing inhalation of

the supportive O2 treatment. Primary endpoints included determination of the MetHb levels, adverse events associated with

the inhaled NO formulation and proportion of subjects who prematurely discontinued the study. Baseline clinical score, indicating disease

severity at screening, was similar between treatment groups (~8). Results were encouraging, with similar overall incidence of AEs between

the treatment groups. Out of 43 patients, 39 (~90%) completed the study per protocol (“PP”), with similar percentages (90%)

for both the control and the treatment groups, individually. Only one subject from the treatment group discontinued treatment due to

an adverse event, namely – repeated MetHb levels above 5%. Adverse events were reported by 23 (53.5%) subjects overall, with ten

(47.6%) subjects in the NO group reporting a total of 22 AEs, and 13 (59.1%) subjects in the control group reporting a total of 22 AEs.

Serious adverse events were reported by four (19.0%) subjects in the NO group and four (18.2%) in the standard treatment group. There

were no treatment-related SAEs in the NO treatment group.

In

the NO group, six (28.6%) subjects had any MetHb measurement >5% during the study treatment period, and three of these subjects had

more than one MetHb >5%. The maximum MetHb level was 5.6% in one subject in the NO group. There was no cumulative effect of MetHb

exposure during the study. The MetHb levels in this study were defined to <5% as a safety measure, though previous findings have shown

that higher levels (6.4%) are non-toxic in children. Secondary and exploratory analyses were performed, and results show positive impact

of the treatment regime. In a subgroup of subjects that stayed at the hospital at least 24 hours (Length of Stay (“LOS”)

>24 hours), a statistically significant treatment benefit of NO versus standard treatment was demonstrated. Mean results for subjects

with LOS > 24 hours show that LOS was shortened by approximately 34% in the NO group compared to the standard treatment group, with

a one-day difference between the groups (PP, N=24). Time to normal oxygenation ((SaO2 of 92%) was shortened by approximately 44% (27.75

hours) in the NO group compared to the standard treatment group (PP, N=24). An 80% improvement in time to clinical score (indicating

improvement in disease severity) and time to normal oxygenation (92%) was observed in favor of the NO group (PP, N=24).

In

2018 we completed a second pilot study in bronchiolitis in 6 centers in Israel. The data were published in Nature in 2020. The prospective,

randomized, double-blind, controlled pilot study enrolled 67 patients, aged 0-12 months, who were hospitalized due to bronchiolitis.

The patients received either standard of care (“SOC”) (typically oxygen and hydration) or SOC plus inhaled NO at a concentration

of 160 ppm for 30 minutes 5 times per day for up to 5 days. The primary endpoint of hospital LOS was met with a 26.7-hour reduction in

hospital length of stay demonstrated (p=0.04). Secondary endpoints of time required to achieve a clinical score of 5 or less on the modified

Tal score and time required to achieve oxygen saturation (SaO2) of 92% or greater showed improvement versus the standard-of-care.

There were no issues with NO2 or MetHb and no SAEs were recorded.

In

2020 we completed a third pilot study in bronchiolitis in 8 centers in Israel and presented the data at CHEST Annual Meeting 2020. The

prospective, randomized, double-blind, controlled pilot study enrolled 89 patients (ITT n=87), aged 0-12 months, who were hospitalized

due to bronchiolitis. The patients were randomized 1:1:1 to receive either SOC (typically oxygen and hydration) or SOC plus inhaled NO

at 85 ppm or SOC plus inhaled NO at 150 ppm for 40 minutes 4 times per day for up to 5 days. There were no SAEs related to NO therapy.

Efficacy results are shown in the table below.

150 ppm vs. 85 ppm Hazard Ratio (p-value) 150 ppm vs. SST Hazard Ratio (p-value)

We