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spk04: Greetings and welcome to the HeartBeam fourth quarter and full year 2021 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. I would now like to hand the call over to Larry Holub, Director at MZ Group. Larry?
spk06: Good afternoon and welcome to HeartBeam's Financial Results Call. Today's conference call 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. While these forward-looking statements represent our 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-K and Form 10-Q for a more complete discussion of these factors and other risks, particularly under the heading Risk Factors. A press release detailing these results crossed the wires this afternoon at 4.01 Eastern Time and is available in the Investor Relations section of our company's website, heartbeam.com. Your hosts today, Branislav Botic, Chief Executive Officer and Founder, John Hunt, Chief Business Officer, and Rick Bronstein, Chief Financial Officer, will present results of operations for the fourth quarter and full year ended December 31st, 2021. At this time, I would like to turn the call over to HeartBeam Chief Executive Officer, Branislav Vanec.
spk00: Thank you, Larry, and good afternoon, everyone. I'm pleased to welcome you to today's fourth quarter and full year 2021. financial result conference call. Our fourth quarter was highlighted by HeartBeam's most significant event to date, our successful IPO on NASDAQ Exchange that resulted in net proceeds of $14.9 million and set the company on course for several additional milestones during the fourth quarter and into the 2022. With the rapid pace of our product timeline, we have positioned the company for rollout success with a number of key hires to broaden our depth and reach. At the executive level, Alan Baumel was appointed as chief operating officer. His deep experience with cardiac devices and extensive industry knowledge will be instrumental in managing the preparations to accelerate and scale our commercialization path as well ready our products for the FDA submissions. We have also begun establishing our scientific advisory board with the appointment on world-renowned Harvard cardiologist Dr. Mike Gibson as chairman to drive our success and use of our technology. And we have further rounded out our capabilities with additional staff in sales, IT and cybersecurity, Q&A, documentation control, support, and electronics QMS, technical support, customer support, and accounting. We have also signed an agreement with Libmore Inc. and Triple Ring Technologies that will help bring our technologies to commercialization, and finally, we have partners with Phoebe Putney Health Systems for our first pilot study of our emergency department or ED heart attack or MI software detection technology. Our commercial team has identified key target accounts for both the HeartBeam ED and telehealth products and have engaged in a number of productive discussions on partnering with these key institutions. The target accounts include large academic institutions, regional healthcare systems in the Southeast and Mid-Atlantic, and regional community systems in the Western U.S. Some of these include Piedmont Health, WellSTAR, Emory, A&T Wake Forest, WellSpan Health, UCLA, Harborview, and Century. There has been a very positive response to our technology and several systems are willing to conduct pilot evaluations of our ED software solution as soon as we receive FDA clearance. The goal for the commercial team is indeed to transition the participating centers to a revenue account at the conclusion of these pilot studies. We look forward to ongoing conversations with these healthcare leaders moving forward. For those of you joining us for the first time or whom I have not had the opportunity to meet, I'd like to take a moment to introduce Heartbeam's products and our opportunity. Remote heart attack detection is a huge, well-known, and previously unsolved problem with a massive worldwide market. We have developed a system used by patients at home to help their physicians assess whether chest pain that they're experiencing is the result of a heart attack or MI. Our telemedicine solution can be used by patients at home to help their physician assess whether chest pain is the result of a heart attack. Based on very strong feedback actually received from the emergency department physicians, we developed a software tool for highly accurate detection of heart attacks in the ED emergency department setting. Our ED MI software product enables emergency departments to rapidly detect the heart attacks in patients. Both of these products share a common technology based on our 3D cardiac signal collection and processing. By developing our proprietary 3D vector signal-based technology, we have addressed a huge unmet need and enormous market opportunity. Most of you are familiar with the market for atrial fibrillation or AFib detection and key players. That market size is defined, actually, by the prevalence of AFib patients in the U.S., of which there are approximately 3 million. It is estimated to be a $2 billion market. The AFib detection space has many players, and some of them AliveCore and Apple Watch, to name just two of them. The market for heart attack detection outside of a medical facility is much larger. It is determined by about 18 million people in the United States that are at high risk for a heart attack. This is, in our estimate, a $10 billion opportunity in the U.S. alone. Of particular interest to us, and we believe the early adopters will be individuals that already survived a heart attack. There are about eight million people in the United States that fall into this category. They are at very high risk for another heart attack, and indeed, we believe that these individuals and their cardiologists will be leading the adoption of our telehealth technology. The telehealth is a very rapidly emerging solution that has dramatically increased with the onset of COVID-19 and is being driven by government policies to promote its use along with the rise of chronic conditions and an aging population in the United States. Indeed, we are seeing on many levels that patient care is moving to the patient and outside of the four walls of a medical institution. and we strongly believe that this trend will only accelerate. Again, bringing our telehealth product to cardiac patients and their physicians will present a major advancement for cardiac patients. Cardiovascular illness is the number one cause of death in the United States, and it presents a huge telehealth market opportunity. I would like now to turn the call over to John Hunt, our Chief Business Officer, to give you further details on product development and customer updates. John.
spk05: Thank you, Branislav. Turning to our product timelines and updates, we had several key developments and strategic partnership agreements related to our EDMI software product and telehealth solution this quarter. Recently, we partnered with Phoebe Putney Health System, signing a BAA, and clinical trial agreement to conduct a pilot study designed to evaluate our EDMI software product. Phoebe Putney Health System, headquartered in Albany, Georgia, is a not-for-profit network of more than 4,500 physicians, nurses, and professional staff who will be partnering with their emergency department, which serves over 100,000 patients annually, for our first pilot study in a clinical setting for our EDMI software product. After this initial study, we have plans for additional pilot studies for our end-to-end prescription-only telehealth system for remote heart attack detection in at-risk patients, as well as other future scientific and commercial collaboration with Phoebe Putney. We also partnered with Livemore, a digital health solutions company, to develop a HeartBeam-branded version of Livemore's Halo Plus FDA-cleared turnkey solution for remote patient monitoring to connect physicians and patients. We're collaborating closely with the Live More team to ready our software on schedule for submission to the FDA in the second quarter. And we continue to expect a limited market release by the end of the year and launch in 2022. Turning to our telehealth product, we recently engaged with Triple Ring Technologies, a co-development company, to assist in the design and development of our telehealth complete solution 3D vector electrocardiogram collection device for remote heart attack MI monitoring. Triple Ring has a long history of designing a wide variety of innovative medical devices and underlying technologies. And we are now working closely with its medical device team to rapidly build and test our 3D vector ECG collection device. This joint partnership is a five-phase expedited device development project scheduled to be completed in the fourth quarter of 2022 in time for our 510K submission to the FDA. Alan Baumel, HeartBeam's COO, is managing the relationship with both TripleRing and LiveMore. and the telehealth product incorporates the hardware design and development efforts of TripleRing and the software, firmware, and RPM platform development efforts of Livemore. Engaging TripleRing for the hardware development for the 3D vector ECG collection device to plug into Livemore's FDA registered remote patient monitoring platform allows HeartBeam to provide an end-to-end telehealth solution for patients and physicians. By engaging experienced development partners like TripleRing and LiveMore, and based on our strong working relationship with both partners, HeartBeam management is confident we will meet our project timelines for a Q4 2022 FDA submission. An added benefit of the partnership with TripleRing is that they have an established relationship with an OEM manufacturer able to manufacture the HeartBeam 3D vector ECG collection device at scale. In addition, the OEM manufacturer is capable of handling logistics and distribution for their customers. Heartbeam is in active discussions with Triple Ring's manufacturing partner to manufacture at scale to support market release of the telehealth product in Q2 of 2023. This slide shows several companies in the cardiac monitoring market. While each product offers some of the capabilities of the Heartbeam telehealth product, the 12 lead ECG capability, integration of patient history and symptoms, presentation of comparative ECGs, incorporating a patient's baseline and symptomatic ECG to the physician, differentiate it from other products on the market. As we move towards commercialization, we have continued to build substantial moat of protection that will provide a distinct competitive advantage for our products. To date, we now have a fortified intellectual property portfolio of three issued U.S. patents and six patent applications in advance of near-term commercialization initiatives. We believe our products offer substantial capabilities beyond existing offerings, and we continue to engage with potential customers and partners in anticipation of FDA clearance and commercial launch for our products. I will now turn the call over to Rick Brownstein, Chief Financial Officer, to discuss operational updates and financials. Rick?
spk08: Thank you, John. I'd like to briefly discuss our sample financial model at scale for our ED and telehealth solutions, which shows that capturing even a modest percentage of our total addressable market results in a significant recurring revenue base. I would like to highlight that our solutions also generate high gross margins under either base case assumptions, with gross margins above 80%. And finally, as the company scales, operating margins can be in excess of 30%, even as we increase investment in R&D. Telehealth is a much larger market opportunity compared to the size of the ED market, and over time, we expect that it will be the primary source of revenue. Turning now to our financials, I will now give a succinct review of our financial results. A full breakdown is available in our regulatory filings and in the press release that crossed the wire after the market closed today. Research and development expenses for the fourth quarter of 2021 were $96,000 compared to $86,000 in the fourth quarter of 2020. For the year ended December 31st, 2021, research and development expenses increased to $255,000 from $133,000 the prior year. Our focus on R&D consisted largely of consultants associated with the development of our telehealth system and in 2021, the initial development work on the software-only ED product. General and administrative expenses for the fourth quarter of 2021 were $1.2 million compared to $214,000 for the fourth quarter of 2020. For the year ended December 31st, 2021, G&A expense increased to $2 million compared to $655,000 in the same period of 2020 as we've prepared for and transitioned to becoming a public company. Interest expense is all non-cash expense. And for the year ended December 31st, 2021, it increased $1.9 million or 673% to $2.1 million compared to 0.3 million in the same period of 2020. That was primarily due to the one-time accretion of the 2015 notes 30% discount, which was approximately 1.9 million. The notes all converted to common stock at the IPO. That loss for the fourth quarter of 2021 was 2.1 million. compared to a net loss of $335,000 for the fourth quarter of 2020, and $4.4 million for the full year of 2021, compared to $1.1 million in the year-ago period. With the successful completion of our IPO in November, we ended 2021 with over $13.2 million in cash and cash equivalents, compared to $795,000 as of September 30th, 2021, and 24,000 as of December 31, 2020. We expect our cash position to provide sufficient runway into 2023. With the planned 2022 release of our ED product, we continue to believe that we will have sufficient cash to meet our development, regulatory, and commercialization milestones without the need to raise additional capital funds, at least through the achievement of FDA clearance of our telehealth product in 2023. I will now turn the call back over to Branislav for his closing thoughts.
spk00: Thank you, Rick. In summary, we are well positioned to create long-term value for our shareholders. Throughout 2021, we made significant advancements for our products, and we begin 2022 with increased momentum, resources, and enthusiasm. For the first time outside of a medical setting, We expect that physicians will be able to determine with a patient-friendly device if chest pains are due to a heart attack, something that no other technology facing consumers is able to offer today. Looking ahead, we are, with our transition to our public company, and the addition of new capital to accelerate our commercialization path, we remain confident in our anticipated upcoming product milestones. By the end of 2022, we expect to have our ED software tools submitted and cleared by the FDA and in full commercial rollout, and our telehealth solution submitted to the FDA for the clearance. We approach these milestones from a position of strength with an experienced team and a new partnership to support our goals. I look forward to providing our shareholders with further updates in the near term as we move toward commercialization. I thank you all for attending, and now I would like to hand the call over back to the operator to begin our questions and answer session. Operator, please.
spk04: Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate that your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.
spk02: One moment, please, while we poll for questions. Thank you. Our first question is from Bill Sutherland with The Benchmark Company.
spk04: Please proceed with your question.
spk07: Thank you, and hello, everybody. Great progress here on your year-end report. Braslov, the timeline for the Phoebe Putney pilot is approximately what, and what is kind of the scope of that study probably going to be?
spk00: Yes, thank you. Thank you, Bill, for the question. We are planning to complete that study within four to six weeks from now. The study is in progress in terms of, it is a retrospective study, so we really don't have a contact with the patients, and it is in the process of selection in terms of files that we will use that match to our inclusion criteria. So all in all, within six to, let's call it four to six weeks, we will have results of this study. And again, we plan to continue that collaboration with that organization in terms of going forward with our further product development and further medical studies.
spk07: And are there any other studies that you're planning that you consider important as far as proving out the use case here?
spk00: Yes, we have actually engaged with a number of other organizations as well because we'd like to spread our studies, you know, throughout the interested parties in terms of publishing these studies and actually achieving these results that will be a very powerful, you know, tool in our sales process as well. And so we will do a total of three studies, at least that's the plan at this point, to prove our ED tool in the environment of various ED organizations. So all in all, the plan right now calls for a total of three studies, and we believe it will result in three publications as well with various organizations.
spk07: Okay, great. And then it sounds, as I read through the partnering deals as well as the development deal with Triple Ring, I guess you have got everything in place now to engineer and get to market the products?
spk00: Yes. The focus of the Triple Ring contract and collaboration is, actually the hardware piece. At the top level, Livemore is our choice of platform and our software collaboration is with Livemore. And when it comes to hardware, TripleRink is our choice. And I would like to emphasize that that job that they have in front of them is not really to redesign the product. It is to make it ready for FDA submission, which could entail some improvements at a small scale to the device. But we've tested this system with thousands of transmissions, et cetera. So it is largely a matter of making it ready for the FDA submission.
spk07: Got it. And then lastly, I was thinking about your small team in Serbia and whether there's been any – interruption in their progress or just their ability to communicate with you guys, or is it all pretty much unrelated to all the conflict going on nearby?
spk00: Yes. As it stands right now, we really don't feel any impact. We were, as everybody else, we were hit with COVID, and many of them actually had COVID, and luckily, Everybody is fine. But between the turmoil in that part of the world and the COVID, we basically had no interruptions.
spk07: Great. Okay. Well, congrats again. Thanks. Thanks, Francois.
spk00: Thank you.
spk04: Thank you. Our next question comes from Sarah Constantine with Summer Moon Capital. Please proceed with your question.
spk01: Good afternoon. Thanks for taking my question. Obviously, very excited for your product because I'm actually a current user of AliveCore, which is why I'm invested in your company because I think there's a differentiated image you guys have that will make a big difference in people's health. So first wanted to start out with the positive aspect. But I did want to ask a question, you know, while I understand Y'all don't control the stock price. You know, we know the stock price has been doing fairly poorly. And I want to ask, how is the company planning to address kind of the lack of the volume in the stock? That seems like to be lack of shareholder engagement. You know, the volume has been pretty anemic. So it feels like, you know, the message isn't necessarily getting out about the exciting stuff you guys are doing.
spk00: Yeah, thank you for your question, Sarah. I'll make an initial comment, and I will ask Rick Brownstein to continue with answering the question. At the top level, we expect to submit in Q2 for clearance of our ED product, and we expect that to be cleared in perhaps 90 days or so. And indeed, that's a big milestone. that will basically show to the investment community that we are serious about meeting our milestones and that we are entering a commercialization phase, which is significant for us. And secondly, our IR efforts with MZ and another organization are in place, and indeed we pay attention to conferences, we pay attention to to announcing all our significant events, et cetera, and we'll continue to do that. So, Rick, perhaps maybe you can supplement.
spk08: Yeah, I mean, let me just focus a little bit. It's a good question, Sarah, on what we're really doing with MZ and Hybrid, who is the other IR firm, and we're doing some stuff in LinkedIn, is we're working real hard to get in front of people. Obviously, with the price of the stock, it's a little bit of a challenge to to get institutions to want to be able to invest in us at this stage. But we are on track with the things we said we would do in the S-1, and we want to get the word out. And it feels like we are. There's a number of people that are watching us. And I think, at least our hope is, our plan is that when some of the more significant announcements come out, Probably the next big one is really that FDA submission. You'll see an announcement when we get ready. So the other piece of the getting people to help us is what we talked about with Triple Ring and getting a manufacturing partner. So everyone just needs to understand that the risks of the revenues not happening as we expect them to happen should be pretty low. And I think as some big announcements, FDA submission, probably the first big one will hopefully, you know, get, you know, at least the goal is people will be aware and they're following us. And when they see something significant, you know, would they, we will at least not be a big secret. Right. And that's our, that's our goal. And we're working hard to make sure we get the word out to as many people as we can. As Brian mentioned, you know, we're going to investor conferences, you know, we're keeping as much press as we can out there. and just keeping everybody informed.
spk04: Thank you. As a reminder, if you would like to ask a question, please press star 1 on your telephone keypad. The confirmation tone will indicate your line is in the question queue.
spk03: Thank you.
spk04: There are no further dialing questions at this time. I'd like to turn the floor back over to Larry Holub to field any questions from the webcast.
spk06: Thank you. Our first question from the webcast is, do you have any plans to enter the market for AFib protection?
spk00: We have a deep pipeline of products, and our technology is, indeed, a through platform technology. And our plans go well beyond heart attack detection and based on the strength of our technology. So our goal here is to provide a solution for all cardiac patients that need to be diagnosed and cared for outside of a medical facility. So in that sense, AFib and other conditions, cardiac conditions, are very much on our list of conditions that we will tackle and AFib probably sooner rather than later because again we have a 3D view electrical view of the heart and that's very much more powerful than anything else that's out there and we believe that we have an exceptional opportunity to provide an accuracy that will be really quite impressive for detecting other conditions, including AFib. We don't have any timeline right now to share with the audience here today on that, but indeed a comprehensive cardiac solution that includes AFib and other conditions is very much on our horizon.
spk06: Our next question is in regards to heart-based 3D technology. The question is, what is the advantage of that?
spk00: Yes, to answer that question, I will try to simplify the answer. In terms of having a 3D look at an organ that is three-dimensional, like heart is, it is obvious that having a complete three-dimensional look at that electrical signal that's moving through the heart is superior to a one-dimensional look at cardiac signals. So there is much more information to be obtained out of that 3D, if you want, treatment of the heart signals. That could be contrasted to the single EDCG technologies like AliveCore, Cardia, and Apple Watch, just two of them. These are single EDCG technologies that are not indicated for anything but a couple of arrhythmias. And our technology, once cleared, will be able to help the patients. they diagnose the heart attack. So, thanks to that 3D nature of our signal collection and processing, we are able to offer a detection of heart attacks outside of the medical facility. And actually, one of our studies has shown that our technology went beyond the standard of KR12 lead ECG in its ability to detect a heart attack. So not only that we believe that we have achieved the accuracy of 12-lead ECG, for some conditions we have shown in our studies to be superior to the standard of care 12-lead ECG.
spk06: Our next question is, you say Live More provides an FDA-approved platform, and the question is, how does that help you?
spk00: Well, I'd like John to comment on that. He's been very intimately involved with bringing LIMOR on board.
spk05: Yeah, thanks, Larry. Thanks, Bronislav. So the reason it helps us is it de-risks our 510 submission. 510K is the lowest bar for a company with a medical device to get to market. You have to demonstrate substantial equivalence to a predicate device, but the fact that Livemore already has an FDA cleared platform allows us to leverage that. It's already been through the review process, so the fact we're basically using our version of the Livemore platform in the submission is good. And it's something they've seen, FDA has seen before. And when we go to the commercial side, this is a platform that's already been tested in the market from our perspective. And, you know, Livermore has an existing VA contract, which is a very robust process to go through. So from our perspective, it de-risks the regulatory submission. And then on the flip side, once we get clearance, it helps us in the commercial rollout as well because it's already a tried and tested platform.
spk06: Our next question, AliveCorps recently announced a credit card size ECG device. What is the difference between HeartBeam's credit card size ECG device and their device?
spk00: Actually, being the same size in terms of exactly the credit card size, it seems to be like the only similarity between these two devices. And ours is a device that is capable of recording 3D signals of the heart, X, Y, and Z. And the LiveCore device is a single device. dimension device, so to speak. In that sense, while from the outside they may look similar, their application to the body is different because ours is pressed against the chest with the two fingers on top. In terms of their diagnostic value, they're very different. The key message is ours is a 3D signal collection device and a live course credit card size device is a single dimension collection device so the ECG signal that is single lead.
spk03: The next question asks how expensive are your clinical trials?
spk00: Actually our clinical trials in the short run are all retrospective because we are able to use the existing emergency department records of the patient that came in with chest pain and actually perform our study and show a diagnostic accuracy of our technology on these records. That means that these studies are fairly simple to administrate and are not very expensive. And that's for our DED product. I would say they're very inexpensive. They're measured in tens of thousands of dollars per study. And for our telehealth product, we will engage in a prospective study that will be basically engaging a few hundred patients. And we'll be comparing our 12-lead ECG to a standard of care 12-lead ECG. And that study will be... probably, you know, several times more in terms of cost. But all our studies, you know, are very much lower in price and price tag than anything that you have seen in pharma or, for that matter, for many medical devices, you know. So that is that we don't expect in the short term before the market introduction, our studies will be a significant load on our
spk03: on our balance sheet. And with that, we are finished with the webcast questions. Operator?
spk04: Thank you. I would now like to turn the call back over to Dr. Vajdic for any closing comments.
spk00: Thank you, operator. I would like to thank each and every one of you for joining our earnings conference call today, and I look forward to continuing to update you on our ongoing progress and growth. If we were unable to answer any of your questions or the new questions come up, please reach out to our IFRM MZ group. We will be more than happy to assist. And again, thank you so much.
spk04: This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.
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