BioTelemetry Q4 2023 Earnings Call Transcript

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March 20, 2024

There are 7 speakers on the call.

Operator

Greetings, and welcome to the HeartBEAM Fourth Quarter and Full Year 2023 Financial Results Conference Call. At this time, all participants are in a listen only mode. A question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. Before we begin the formal presentation, I would like to remind everyone that statements made on the call and webcast may include predictions, estimates or other information that might be considered forward looking.

Operator

While these forward looking statements represent our current judgment on what the future holds, they are subject to risks and uncertainties that could cause actual results to differ materially. You are cautioned not to place undue reliance on these forward looking statements, which reflect our opinions only as of the date of this presentation. Please keep in mind that we are not obligating ourselves to revise or publicly release the results of any revision to these forward looking statements in light of new information or future events. Throughout today's discussion, we will attempt to present some important factors relating to our business that may affect our predictions. You should also review our most recent Form 10 ks and Form 10 Q for a more complete discussion of these factors and other risks, particularly under the heading Risk Factors.

Operator

A press release detailing these results crossed the wire this afternoon and is available in the Investor Relations section of our company's website, heartbeam.com. Your host today, Branislav Vyjuk, Chief Executive Officer and Founder, Rob Eno, President Deborah Castillo, Vice President, Regulatory Affairs and Rick Brownstein, Consulting Chief Financial Officer, will present results of operations for the Q4 and full year ended December 31, 2023. At this time, I will turn the call over to HeartBEAM Chief Executive Officer, Brantislav Vaidic.

Speaker 1

Thank you, operator. I'd like to start by giving a brief overview of hard beam and our technology. It is really important to understand how our ECG technology is different and lastly, more powerful than the most common personal ECG technology that are out there in the marketplace today. A 12 lead ECG is one of the most commonly performed diagnostic tests in this and it is actually a standard in hospitals and clinics. There are many ECG technologies that can be used by patients and consumers at home.

Speaker 1

You can see a couple of examples on this slide. They are not well lead ECGs, instead they are 1 lead, 3 lead or 6 lead. This is adequate for detecting many arrhythmias, but it is not sufficient for detecting a heart attack or complex arrhythmias. In contrast, the Heartbeat AnyGo is an easy to use pet calcite system that synthesizes a 12 lead ECG. It is handheld device with no external electrodes or virus and it is easy for the patient to apply.

Speaker 1

The key aim of the Heartbeat technology is to quickly and accurately help clinicians identify the full range of cardiac conditions, including a heart attack and outside of a medical facility. Our proprietary 3 d VECG technology offers higher resolution monitoring by capturing heart activity in 3 projections, X, Y and Z, which can provide for many cardiac conditions a more complete view of the heart than a standard fairly ECG. The Aimigo device coupled with a smartphone app and cloud based diagnostic software enables a remote evaluation of cardiac symptoms by physicians, and we believe it could reduce the critical time to intervention for heart attack patients. The average patient waits 3 to 4 hours before seeking care. Shortening that time from symptoms to the door or medical institution would reduce complications and save many lives.

Speaker 1

In addition, more than 80% of patients with chest pain who go to the emergency room are not having a heart attack. An effective triage tool in the hands of the patient would reduce the number of unnecessary emergency room visits and reduce cost to the healthcare system. So why do we think that an easy to use 12 lead ECG with patients is transformational? Well, first, having the ability for patients to take frequent family readings over time and in a variety of realized situations potentially has huge diagnostic value. Whenever patient is feeling symptoms, they can get a 12 lead reading that will be reviewed by a physician.

Speaker 1

Secondly, trending a12 lead ECG, both symptomatic and asymptomatic over time will allow physicians to gain insight to help guide cardiac care. Frequency of ECGs to create this trending is simply not feasible today. And finally, as we will discuss in more detail, combining deep learning algorithms with a large number of longitudinally created VECGs has the potential to create an unparalleled predictive and diagnostic algorithm. We have the opportunity to address not only atrial fibrillation markets, but also coronary artery disease market, which is about 6x larger. In the United States, there are approximately 3,000,000 AP patients representing a $2,000,000,000 market.

Speaker 1

There are approximately $20,000,000 total coronary artery disease patients, which is a $12,000,000,000 market. So the overall opportunity in the U. S. Only is about $14,000,000,000 I'd like to now turn the call over to Rob Eno, our President.

Speaker 2

Thanks, Branislav. We wanted to give an update on our progress related to Aimigo. Our initial clearance for the Amy Go system will be a major milestone for the company and it's important for many reasons. To start, we expect this to be the 1st patient held 3 d VECG device to be cleared by the FDA. Also, this clearance will be the basis for further FDA submissions for HeartBEAM, so it's the cornerstone of our efforts.

Speaker 2

The 3 d VECG approach is an excellent platform for AI algorithms. We have a major AI effort underway. We're encouraged about the progress and the initial results we presented at scientific meetings in Q2. In the longer run, we believe that applying AI algorithms on top of the rich VECG data, especially with longitudinal datasets from patients taking readings monthly, weekly or even more frequently could result in unsurpassed predictive and diagnostic capabilities. In addition, there is significant clinical research over several decades that demonstrates the diagnostic value of a VCG approach.

Speaker 2

By capturing the heart vectors in 3 dimensions, there's even more diagnostic information available than in the standard 12 lead. And our landmark study summarized here that was published in JAK Advances in August of last year showed that the AIMI Go VECG technology had similar diagnostic ability as a 12 lead ECG in detecting coronary inclusions and adding a baseline reading for comparison, which is a crucial part of our system resulted in significantly better accuracy than a single 12 lead ECG. And with that, I'd like to introduce Debbie Castillo to give an update on our regulatory efforts. Debbie is Heartbeams' Vice President of Regulatory. She holds a PhD in Biomedical Engineering from Johns Hopkins University and has extensive experience in regulatory affairs in industry and also at the U.

Speaker 2

S. Food and Drug Administration, where she held various roles, including Senior Lead Reviewer, Lead Scientific Reviewer and Acting Chief of the Cardiac Devices branch.

Speaker 3

Thank you, Rob. As a reminder, we have a 510 ks application under review with the FDA for our Amigo 3 d VECG system. This application includes our 3d VECG credit card sized device that records cardiac activity from the x, y, z projections and displays the signals for clinician review. The system also includes a patient application, a physician portal, and wireless communication among the elements. As Rob mentioned, this is the cornerstone submission for Hartein and will be the basis of future regulatory efforts.

Speaker 3

We submitted this 510 application in the Q2 of 2023. The review remains active with FDA as we have successfully passed the acceptance of the filing and have completed the initial substantive review phase with questions and requests received from FDA. As we continue to navigate the progress towards clearance, we have taken advantage of all available regulatory tools and opportunities to work interactively with FDA, gaining valuable official communication and feedback on our proposed response approach, including our testing protocols. We have conducted the agreed upon testing to address FDA's open questions and are in the process of preparing our official responses. Once these are submitted, the FDA will complete the review of our 510.

Speaker 3

We currently are anticipating clearance by end of quarter 2 of 2024. I also want to touch on our second FDA submission. Following, of course, the clearance of Aimigo3D VACG system, we will be working to obtain a second 510 clearance. The second 510 will be focused on the ability to offer the physician a pair of baseline and symptomatic 12 lead ECGs, both of which are synthesized from the 3 dB ECG signals, the XYZ, recorded by the HeartBEAM Amigo device. This approach leverages recently issued patents system for synthesizing 12 lead ECG waveforms.

Speaker 3

The 2nd 510 application is planned to be submitted to FDA by quarter 3 of 2024. A key part of this submission will be a pivotal study named our VALID ECG study, which will demonstrate the similarities between the synthesized 12 lead output from Aimigo and a simultaneously recorded standard 12 lead ECG. To date, we have held 2 pre submission meetings with FDA on this 12 lead synthesis submission. These meetings have been focused primarily on the performance or proposed pivotal clinical study. Rob will now discuss the details of the pivotal study.

Speaker 2

Thanks, Debbie. Based on feedback from FDA and our clinical experts, we've designed our clinical study, the VALID ECG study. As we announced last week, we've enrolled the 1st patients in this study, which is designed to validate the Aimigo 12 lead ECG synthesis software by comparing its results with those of a standard hospital based FDA cleared 12 lead ECG using both quantitative and qualitative assessment methodologies. We plan to enroll approximately 198 patients presenting to an outpatient cardiology clinic or arrhythmia center with symptoms suggestive of cardiac arrhythmia or for routine checkup of previously diagnosed arrhythmia. The study is expected to include up to 5 sites in the U.

Speaker 2

S. The primary objective is to demonstrate the similarities of ECG waveforms between Aimigo's synthesized 12 lead ECG and a standard 12 lead ECG recorded simultaneously in each subject by assessing intervals and amplitudes. In preparation for this pivotal study, we completed an 80 patient pilot study, which mirrors the pivotal study. Based on these pilot results, we initiated the VALID ECG study. We anticipate completion of enrollment in the VALID ECG study in Q2, 2024 and submission of the second 510 application by Q3, 2024.

Speaker 2

We continue to anticipate that our limited launch of Amy Go will occur by the end of 2024. Now I'd like to turn it back to Branislav for an update on our AI efforts.

Speaker 1

Thanks, Rob. As we discussed last quarter, we have an active artificial intelligence program underway. Our AI team includes 5 TFDs. The leadership has deep AI expertise experience, including positions at Apple, Microsoft and Google. We have acquired approximately 1,000,000 12 day DCGs from various sources, a key element in our fast paced development efforts.

Speaker 1

We have developed initial deep learning algorithms focused on the ability to detect various cardiac arrhythmias. Hardeep has had data of this deep learning algorithms accepted for presentation. In Boston in May. We believe that when combined with our credit card site, Amigo 3D VECG technology, Heartbeat's AI will provide additional value to patients and physicians in a number of ways, including providing automated classification of cardiac conditions, including carbamazepineus the potential to further enhance the user experience and simplify the onboarding process And finally, in the longer run, we believe that applying deep learning algorithms on top of the bridge VCG data that we obtained from our AAMI Go device, especially with the longitudinal data set from patients taking repeated recordings could result in an unparalleled predictive and diagnostic capability. Turning to IP, we have recently received 2 additional U.

Speaker 1

S. Patents enhancing our already strong IP portfolio. As you have heard, our current focus is on the credit side, Ami system AmiGo system with the ability to create a 3 d VcG signal in a small, easy to use, easy to carry form factor. This will be followed by a second clearance on the ability to synthesize a 12 lead ECG from these signals. In addition, there are additional four factors covered by our IP.

Speaker 1

First, in an on demand 12 week extended patch, we have an opportunity to take the usual 1 lead signal that's obtained from the package much further and actually operates well lead. This would operate similarly to current extended wear cardiac monitors such as extended holders or model cardiac telemetry known as MCOT as well. But using the AIMI GO technology, a patient would simply place 2 fingers on the top of the device, which will enable a 12 lead reading, something that is really not possible today with any kind of patch that's in the marketplace. Secondly, our integrated system combines Aimigo with a continuous monitor. We have multiple patents granted to our Read More watch, which is the furthest FDA clearance prescription wearable for continuous cardiac retin monitoring.

Speaker 1

And finally, our IP allows a 12 week watch that is actually a combination of functionality of our wearable ECG that provides continuous monitoring with an on demand 12 lead ECG. Our patents cover a 12 lead ECG watch so that when the watch detects abnormalities, the patient can remove the watch and simply place it on the chest, activating a 12 eDCG. We plan to pursue all options in the development of these products, including the possibility of collaborating with leaders in the ECG and wearable fields. I'd like now to turn the call over to our consultant's CFO, Rick Braunschtein.

Speaker 4

Thank you, Brenna Fowle. Turning now to our financials, I will give a brief review of our financial results. A full breakdown is available in our regulatory filings and the press release that just crossed the wire after the close of market today. General and administrative expenses for the Q4 of 2023 2022 were both $2,100,000 For the year ended December 31, 2023, G and A expense increased $1,200,000 to $8,500,000 compared to $7,300,000 in the same period of 2022. The increase is primarily related to non cash stock based compensation expense amounting to $1,600,000 dollars that was associated with additional awards granted since December 31, 2022, resulting primarily from the issuance of employee stock options following the May 2023 financings.

Speaker 4

Our cash spending is actually down in fiscal 2023 compared to fiscal 2022. Of note, in 2022, we had invested in the commercial team and due to our change in our near term focus in early 2023, we are not currently emphasizing commercial activities as we proceed through the FDA clearance process for Harpine Aimigo. Research and development expenses for the Q4 of 2023 were $2,000,000 compared to $1,600,000 for the Q4 of 2022. For the year ended December 31, 2023, research and development expenses, which increased $1,100,000 to $6,800,000 compared to $5,700,000 in the prior year are also due to the increase in non cash stock based compensation expense as well as the increase in headcount and professional services supporting the FDA clearance process, primarily offset by completion of initial development in 2022 of the platform for Aimigo. Our cash and cash equivalents are conservatively invested in treasuries with a duration of up to 3 months.

Speaker 4

With 2023 interest rates in the short term markets around 5%, we earned $675,000 in interest income in fiscal 2023 compared to $66,000 in fiscal 2022. As a result of our increased cash balance following the $26,500,000 financings in May of 2023, coupled with these higher interest rates. Net loss for the full year of 2023 was $14,600,000 compared to a net loss of $13,000,000 for the full year 2022. We ended 2023 ahead of plan with $16,200,000 in cash and cash equivalents as of December 31, 2023 compared to $3,600,000 as of December 31, 2022. As mentioned, in May we closed common stock financings with gross proceeds of 26,500,000 dollars This cash is anticipated to last into early 2025, while we anticipate to begin the limited launch of Aimigo by the end of 2024.

Speaker 4

Net cash used in operating activities in the Q4 of 2023 was approximately 2,900,000 dollars We remain confident that we have sufficient funds to deliver on our milestones and get prepared to move into commercialization phase of our P and E 2023 financings were common stock only financings. They did not include any warrants in our balance sheet as a result as a very simple and straightforward capital structure with approximately 26,000,000 shares now outstanding. I'm now going to turn the call back over to Bradislav for his closing thoughts.

Speaker 1

Thanks, Rick. So in conclusion, this is an exciting time for Heartbeat and 20 44 is a pivotal year in our company's evolution. I want to reiterate that our FDA clearance of the Amigo system will be foundational for the company. When cleared, it will be the 1st patient health 3 d VECG device to be cleared by the FDA. It will also serve as a robust and IP protected foundation for many future developments.

Speaker 1

As Debbie noted, we have made significant progress on the AIMI Go clearance, having successfully passed the acceptance of the filings and have completed the initial review phase. We have taken advantage of all available regulatory tools and opportunities to work interactively and intensely with the FDA and we are finalizing our testing and our formal responses to questions raised by the FDA. Once these responses are submitted, the FDA will complete their review. We currently anticipate clearance by the end of Q2 of this year. This initial clearance is foundational for a number of reasons.

Speaker 1

First, it will be the basis of our second submission on the algorithm that will generate 12 lead synthesized ECG. And as we discussed, we will have a completed 80 patient pilot study and what we have completed is we have actually engaged in the pivotal study that's in progress as we speak. 2nd, we are developing deep learning artificial intelligence algorithms using our 3 dB CGA signals for inputs. We are very much encouraged by the progress and early results, and we look forward to presenting the initial clinical data on AI at scientific meetings in Q2 of this year. Finally, we will build upon the initial Aimigo clearance as a foundation.

Speaker 1

With both the family synthesis algorithms and AI efforts, we will continue to advance our robust product pipeline that includes AI enabled advances to expand indications as well as patient friendly for factors such as the on demand 12 lead patch and the 12 lead hard beam watch. We ended 20.43 ahead of plan with CAD 16,200,000 in cash and cash equivalents as of December of last year. We anticipate that our strong cash position provides runway to early 2025. We remain confident that we have sufficient funds to deliver on our limited launch of AIMIGO as it is currently anticipated to occur by the end of this year. I look forward to providing our shareholders with further updates in the near term.

Speaker 1

I thank you all for attending. And now, Hargit team would like to answer your questions.

Operator

Operator? Thank you. At this time, we will be conducting a question and answer session. Our first question comes from the line of Ben Haynor with Alliance Global Partners. Please proceed with your question.

Speaker 5

Good afternoon guys. Thanks for taking my questions. First off for me, Debbie, I was just curious on the official responses that you're formulating with your FDA head on, I guess, how would you characterize the questions that you've gotten? Are they fairly straightforward? Any sort of showstoppers?

Speaker 5

Any surprises on that front? Yes.

Speaker 1

Yes, Yes,

Speaker 3

certainly. So, first, this seems to be received a number of questions so much of this from many participants. So what I can share is that the current status and process of our 510 submission is within expectation. Definitely from my perspective and experience from being on both sides of the fence, this is a typical process for 510 reviews where FDA provides their open questions that must be answered prior to their final assessment and submission. So for me, this is pretty standard process and sort of questions from the agency.

Speaker 3

So in doing that to address this as best we can, as we've mentioned, we're using the regulatory tools available to industry where we have leveraged all opportunities to engage with the agency in order to align with our responses and approach to these open questions. This will help us ensure that our responses will meet FDA expectations and of course then allow FDA to make their final assessment of our submission.

Speaker 5

Okay. That's helpful. And then on the on future FDA submissions for the AI applications, do you have any sort of timeline on when we might start to expect those submissions going in or is that kind of open ended at this point?

Speaker 1

Yes. As you know, we have engaged in the full speed AI development, technology development for AI not so long. We have made incredible progress over the last 6 months. And we are, at this point, assessing really what the schedule will be. So we are at this point not ready to share anything, but we are intensely in the phase of estimating the effort to get that 510 submitted eventually cleared.

Speaker 5

Okay, got it. And then lastly for me on commercialization, kind of once you get that second Aimigo clearance, is that kind of the time to wrap up or ramp up, excuse me, the commercialization folks and begin adding to the team again? Or would that be kind of later on after you make potentially some of these AI submissions?

Speaker 1

Karl?

Speaker 2

Yes, I'll take that. Yes, no, we as we said, we're planning on doing a limited launch by the end of 2024. So we're currently pretty deep in work with our current team of defining the go to market strategy and our plans. And as we get closer with the first clearance, have the opportunity to get some beta testing and experience with the device, we plan to be ramping up the commercial team in conjunction with that limited launch towards the end of the year.

Speaker 5

Okay, got it. Very helpful. Congrats on all the progress guys and I'll jump back in queue.

Speaker 1

Thank you. Thank you, Beth.

Operator

And there are currently no questions for the telephone Q and A session. Therefore, I'll now hand the call over to Brook Hamilton for any questions on the webcast.

Speaker 6

Thank you, operator. First question asks, could you describe the VALID ECG study in more detail, specifically as it relates to patient follow-up or endpoints?

Speaker 2

Sure. So first to reiterate the goal of this study is to demonstrate that our synthesized 12 lead ECG is similar clinically comparable to a standard hospital based 12 lead ECG. And we're doing that by taking simultaneous recordings of both the 12 lead and the Aimee Go device. They're literally simultaneous while the patient has the electrodes from a standard 12 lead, we also place the Aimee Go device on. As far as endpoints, we've worked closely with FDA to define the endpoints.

Speaker 2

The primary endpoint is looking at a series of ECG measures that are called intervals and amplitudes. We've also defined what the performance criteria is. In other words, how similar these measurements need to be between the synthesized 12 lead and the standard 12 lead. There's also a secondary endpoint, which physicians will categorize all the arrhythmias they see in the 12 leads in a blinded manner and we'll analyze the similarities and differences between the 2. As far as follow-up, there's no patient follow-up in this study.

Speaker 2

So we're only analyzing the simultaneous recorded ECGs during a single visit. And just I think what I'd add on to that is we mentioned we're rolling 198 patients at up to 5 sites. They're leading U. S. Research centers, but also high volume.

Speaker 2

And because they're high volume and these are arrhythmia clinics where there's lots of patients coming in every day, we expect to be able to see a range of arrhythmias, which helps us in the study and also expect to enroll patients quickly and that's why we anticipated enrollment being complete in Q2 of this year.

Speaker 6

Excellent. Thank you. Next question, it seems like you're developing AI tools internally, but so many of them are already developed by academia. Why not license?

Speaker 1

Yes. We are keenly following everything that's been published and there is a lot of it in the literature these days and that's relevant. However, and luckily for us, our signals are 3 d ECG signals, they're very much data rich source or input, if you want, to the AI. And so for us, it's key that we develop our AI tools and methods based on this data rich set of X, Y and Z signals. So that's a key differentiation.

Speaker 1

And of course, these signals come from a device, any go device that's always with the patient. So all in all, that's the key why we are following what's happening in the field, but our unique situation is that we have even a more data rich set of signals and that's why we like to take full advantage of that those set of signals that come out of Amigo device. Secondly, based on the fact that this technology will be with the patient 20 fourseven and very many ECGs will be taken by the patients and users over time. This longitudinal data that's normally not available in the hospital ECG environment is an extremely important source of differential signals that AI, we believe, can comprehend and shed additional light on the cardiac condition of that patient. And lastly, we have 30 second recordings, right, and all these tools that you see published and results given are for 10 seconds recording.

Speaker 1

So having 30 seconds recordings, we will make a positive impact on the accuracy as well. So all in all, in summary, we are following, but our unique situation is that we have a set of signals, a set of features that go beyond what everybody else has. So that's the main reason why we are developing the internally, which on the other hand, we plan actually to engage some of these academic institutions in the future for some of the predictive algorithms perhaps. And so I wouldn't be not surprised if we actually engage one of them because they have many, many more signals. And secondly, in some of the areas of prediction, they might be well ahead of everybody else.

Speaker 6

Thank you. The next question is where will the Amigo device be manufactured?

Speaker 4

Yes. This is Rick. I'll take care of that. And let's say, do you want to do that?

Speaker 1

No, go ahead.

Speaker 4

All right, sure. So thank you. So the we've been working in Silicon Valley with Triple Ring, who's been helping us with the development of the hardware and they link in with the group called Evolv Manufacturing. All of those are discussed in the 10 ks. And EVOLVE will do the initial manufacturing, the quality systems interlink.

Speaker 4

We are looking forward to an easy transition. Ultimately, when we get into higher volumes, we'll likely be moving off-site. But in the initial, we will we can probably make 10,000 a month or so. So I think it will get us going for some period of time.

Speaker 6

Great. Thank you. Our next question, are you able to deal with cybersecurity aspects as I hear that the FDA and the SEC are very much focused on that?

Speaker 1

Debbie, please.

Speaker 3

Sure. I can take that. So certainly cybersecurity is clearly an important area for FDA, but also for Heartbeat as we strive to keep our systems secure. To that end, our internal teams in conjunction with working with cybersecurity experts in the field, we feel confident that we are able to meet all regulatory expectations both from the FDA and the FCC side. I also point out that we've included our cybersecurity policy in which is disclosed in the 10 ks for additional information.

Speaker 6

Great. Thank you. Next question. Medical studies are usually very expensive. Did you fully account for the cost of your valid ECG study within your final financial projections?

Speaker 6

Can you speak to the cost of the study?

Speaker 4

It actually is not so expensive as people might believe. There is no intervention required. There's no follow-up required. So it is much less expensive. We've actually signed contracts with a clinical research organization, and the first of our expected 5 sites.

Speaker 4

In the footnotes in the financials, if you go to the very end of the subsequent events, we quantified it. And you can see that the commitment to the CRO is about $500,000 and the cost of the enrolling the approximate 200 patients, 198 we're predicting, is going to be about 200,000. So the full cost of the study is going to be about 700,000.

Speaker 6

Thank you. There are no more questions at this time. So I'd like to now turn the call back over to Doctor. Vazic for his closing remarks.

Speaker 1

Yes. Thank you, operator. I would like to thank each of you for joining our earnings conference today and look forward to continuing to update you on our ongoing progress and growth. If you were unable to answer any of your questions, please reach out to our IR firm, MZ Group, who will be more than happy to assist. Again, thank you very much for your participation today.

Operator

And this concludes today's conference and you may disconnect your lines at this time. Thank you for your participation.

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