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spk03: Greetings and welcome to the HeartBeam second quarter 2022 financial results conference call. At this time, all participants will be 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. While these forward-looking statements represent our current judgment on what the future holds, they are subject page 2 of 6 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 provision 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. We 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 p.m. Eastern Time and is available in the investor relations section of our company's website, heartbeam.com. Your hosts today are Bratislav Vybich, Chief Executive Officer and Founder, John Hunt, Chief Business Officer, and Rick Brownstein, Chief Financial Officer, who will present results of operations for the second quarter ended June 30, 2022. At this time, I'll turn the call over to Heartbeam Chief Executive Officer, Bratislav Vybich.
spk01: Thank you, operator, and good afternoon, everyone. I'm pleased to welcome you to today's second quarter 2022 financial results conference call. Our second quarter was highlighted by steady enhancement along our commercialization pathway, including the upcoming submission of our emerging department product, now called in Amy, to the FDA on or about August 15th. We continue to make progress in getting our second product, the telemedicine platform, now called AmyGo, prepared for FDA submission in Q4 of this year. In evaluating the database for the clinical validation of hard Amy product, we discovered a significant number of consecutive patients that fell into the category of an unstable a serial cardiac condition, patients with unstable angina may have subtle electrical changes brought on by ischemia without definitive injury to the cardiac tissue. Based on these findings, we expanded the patient population for the company's software product to include unstable angina as a diagnosis for analysis and provide access to wider patient population for our technology once we have clearance from the FDA. We have recently acquired the source code together with the perpetual royalty-free license for the hard-branded version of the FDA-listed Libmore Hello Plus platform, key components of our products. Moreover, This development will enable us to continue development of this powerful platform internally. We were privileged to welcome Ken Pearson to the role of Chief Technology Officer to lead overall technology strategy and development of the HeartBeam Aiming and HeartBeam Go platforms. Ken has over 25 years experience in the digital healthcare and cardiac device industries. Most recently, he founded a digital health company, Limor, where he served as chief technology officer. We were most honored during this quarter to be selected as the winner of the annual 2020 Cardiovascular Innovation Summit, recognizing our unique approach to heart attack detection. I would now like to turn the call over to John Hunt, our Chief Business Officer, to further discuss our products and commercialization plans.
spk07: John? John, you may be on mute, John.
spk05: Thank you, Bronislav. Turning to our product timelines and updates, we had several key developments and strategic partnership agreements related to our HeartBeam Amy and HeartBeam AmyGo platforms. As Branislav mentioned, the 510K submission of our HeartBeam Amy platform to the FDA is imminent, and we expect to receive FDA clearance for a limited market release by the end of 2022 and full commercial rollout in Q1 of 2023. We partnered with Livemore 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. During the quarter, we acquired the source code for the HeartBeam branded version of the FDA registered Livemore Halo Plus portal, which will help us meet our schedule for FDA submission and allows us to continue developing the solution internally. Recently, we engaged multiple partner health systems, and they provided the needed ECG data to complete our clinical trial that will be part of the FDA submission of our HeartBeam AME software product in the coming days. After this, we have plans for additional pilot studies for our end-to-end prescription-only HeartBeam AME Go system for remote heart attack detection in at-risk patients, as well as other future scientific and commercial collaborations with these health systems. HeartBeam AMI is software as a medical device, and the market clearance of the product is via the 510K regulatory pathway. The HeartBeam AMI algorithm used in an acute emergency department setting slots into existing clinical workflow, leverages existing 12-lead ECG hardware, and provides the attending physician with an instant comparison of the patient's baseline and symptomatic ECG for their consideration in the patient's diagnosis. Quickly determining if a patient needs intervention or can be discharged helps emergency departments manage patient throughput. Revenue will be via subscription model, and for high volume EDs, we estimate this to average about $3 per patient.
spk07: Next slide, please.
spk05: Briefly, the total addressable market for the ED software solution is about $500 million. And for telehealth, we estimate to be at $10 billion. And these estimates are for the U.S. market only. Turning to our HeartBeam Amigo product, we engaged Triple Ring Technologies, a co-development company, to assist in the design and development of our HeartBeam Amigo complete solution 3D vector ECG collection device for remote heart attack monitoring. Triple Ring has a long history of successfully designing a wide variety of innovative medical products and underlying technologies. We're now working closely with its medical device team to rapidly build and test our 3D ECG 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. The HeartBeam Amigo product incorporates the hardware design and development efforts of TripleRing and our software, firmware, and remote patient monitoring platform development efforts. Engaging TripleRing for the hardware development of the HeartBeam Amigo 3D ECG device to plug into our RPM platform allows the company to provide an end-to-end telehealth solution for patients and physicians. An added benefit of the partnership with Triple Ring is that they have an established relationship with an OEM manufacturer who is able to manufacture the HeartBeam 3D ECG device at scale. In addition, the OEM manufacturer is capable of handling logistics and distribution for their customers. And so by engaging experienced development partners like Triple Ring, HeartBeam management is confident we'll meet our project timelines for Q4 2022 FDA submission. Heartbeam is also in active discussions with Triple Ring's manufacturing partner to support market release of the Heartbeam Amigo product in Q2 of 2023. The Amigo product is a 510 regulatory pathway. We've already identified a predicate device to demonstrate substantial equivalence with a simple clinical validation study. Clearance of a Gen 1 device allows us to collect 3D vector cardiogram data and use these data to develop advanced features for our Gen 2 product. HeartBeam AMIGO can use a clear reimbursement pathway with existing CPT codes. And the plan is to have a subscription model where HeartBeam builds the practice on a per patient per month basis. And in our discussions with the commercial team with cardiology practices, They indicate this is a very attractive business model for the practice and provides an enhanced level of care for at-risk patients that they currently are not able to monitor. This slide shows several companies in the cardiac monitoring market. While each product offers some of the capabilities of the HeartBeam Amigo, none of them are indicated for heart attack detection. The 12 lead ECG capability, integration of patient history and symptoms, Presentation of comparative ECGs, both baseline and symptomatic, to the physician differentiated from other products on the market. Note, while AliveCor recently introduced its CardioMobile card shown on this slide, it is only a single lead ECG recording, does not contain the vector information needed for heart attack detection as recorded by the HeartBeam device. As we move towards commercialization, we continue to build a substantial moat of protection that will provide a distinct competitive advantage for our products. To date, we now have a fortified IP portfolio of three issued U.S. patents and six patent applications in advance or near term, near approval. We believe HeartBeam Amy and HeartBeam AmyGo by leveraging our patented 3D vector ECG technology offers substantial capabilities beyond existing offerings, and we continue to engage with potential customers and partners in anticipation of FDA clearance and commercial launch of our products. I'll now turn the call over to Rick Brownstein, Chief Financial Officer, to discuss operational updates and financials. Rick.
spk02: Thank you, John. I would like to first briefly discuss our sample financial model at scale for our HeartBean Amy and our AmyGo solutions, which shows that capturing even a modest percentage of our total addressable market results in a significant reoccurring revenue base. I'd 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 emergency department market. And over time, we expect that it will become the primary source of revenue. Turning now to our financials, I'll give a succinct review of our financial results. A full breakdown is available in our regular filings regulatory filing, sorry, and in the press release that crossed the wire after market closed today. We are comparing results as a private company in 2021 to now a public company working on the commercialization of our first two products. So it's a very different and much more exciting story. Restriction development expenses for the second quarter of 2022 were $1.7 million. compared to 25,000 in the second quarter of 2021. Our focus on R&D consisted largely of product development costs for HeartBeam Amy, which is now essentially done, and also HeartBeam Indigo. This includes both software and hardware, the latter with our professional services agreement with Triple Ring Technologies, which John talked about, to assist in the hardware for Indigo. Additionally, there are clinical costs in support of our FDA submissions for both our products this year, as well as research costs in support of the future product pipeline coming from our patented Vector3D ECG platform technology. General and administrative expenses for the second quarter of 2022 were $1.8 million compared to $312,000 for the second quarter of 2021. reflecting the growth in our team and other costs in support of being a public company. Interest income during the three months ended June 30th, 2022 of 10,000 is related to the cash balances from last November's IPO. In 2021, we had 608,000 of expense tied to the 2015 convertible notes, which were converted and added to common stock. as of December 31st, 2021 at the IPO. Net loss for the second quarter of 2022 was 3.5 million compared to a net loss of 945,000 for the second quarter of 2021. We ended the second quarter of 2022 with 9.3 million in cash and cash equivalents compared to 13.2 million as of December 31st, 2021. We expect that our cash position will provide runway into 2023 and the expected FDA submission in Q4 this year, as well as the clearance of the HeartBeam Amygo next year. I will now turn the call back over to Branislav for some closing thoughts.
spk01: Thank you, Rick. In summary, we are well positioned to create long-term value for our shareholders. During the second quarter, we continue to operate from a position of strength, equipped with strategic partnerships to advance product development, near-term milestones, and cash runway into 2023. Looking ahead, we are accelerating our commercialization path and remain confident in our anticipated upcoming product milestones. By the end of 2022, we expect to receive FDA clearance for our hard beam aiming platform, and we plan to have our hard beam aiming goal solution submitted to the FDA for clearance. We approach these milestones from a position of strength with an experienced team bothered by the re-piring of Ken Pearson, our CTO, and new partnerships to support our goals. I look forward to providing our shareholders with further updates in the near term as we move forward with our commercialization. I thank you all for attending, and now the HeartBeam team would like to answer any questions. Operator.
spk03: If you would like to ask a question, please press star 1 on your telephone keypad now, and you will be placed in the queue in the order received. Please be prepared to ask your question when prompted. Once again, if you have a question, please press star 1 on your phone now. And our first question comes from Bill Sutherland from the Benchmark Company. Please go ahead, Bill.
spk07: Thank you.
spk06: Good afternoon, gentlemen. I wanted to ask a couple of things about the pilot studies you have ongoing. One was in the ED side at Phoebe Putney Health System. I think John was...
spk07: the one to ask that question of.
spk00: Yes.
spk05: Go ahead, John. Yeah, Phoebe Putney was one of the sites that provided some of the ECGs for our retrospective clinical validation study for the 510K. So that data has been, you know, consolidated from the various centers. some used in a training set scenario, others for the validation set, which are obviously blinded to the people doing the testing. And so that's now completed. We've completed that clinical validation study for the HeartBeam AMI product. So that's now just being finalized, ready for the FDA submission.
spk06: Is there additional studies that you have ongoing now that pertain to the GO product?
spk05: We're just in the process now of discussing those with some of our health care systems that we've approached. But, you know, we haven't finalized those yet, but that's in process. And that'll, again, be conducted towards the end of the 510K process for Amy Go.
spk06: Okay. And one question on Live More. I understand how that's providing you a nice ability to, you know, do your development kind of on their nickel. What about the branded version of, you know, when you have the – what's the outlook for the branded version of Halo Plus, you know, the HeartBeam branded version?
spk07: So, John, please go ahead.
spk05: Yeah, so as you know, originally, HeartBeam Engage lived more to do the development effort, given they already had an FDA-registered RPM platform. But that is for their wearable solution. So they were creating a white-label version of that for HeartBeam. And what we've done in the last quarter is we've actually, you know, acquired the non-exclusive perpetual license that's royalty free so on a go-forward basis that's more appealing to us because it gives us control of the platform in its entirety for future development but also relieves us of the royalty payments on a go-forward basis so you know as rick indicated that that helps us on the margin side as well and puts it firmly in our control once the submission goes in. So it puts us in a better position from my perspective from a business standpoint, as well as financially.
spk06: I thought very good cash management in the quarter. Rick, directionally, what's the outlook for R&D and G&A in the back half of the year?
spk02: I mean, I think dollar-wise, Probably pretty constant, right? We've been, you know, we'll be spending, we are spending with triple ring throughout the rest of the year. I mean, we continue to do some research, but not at a high level. So I think spending-wise, if you take a look at the first six months of the year, I'd be surprised if we're very different as we go through the rest of the year.
spk06: And then I guess no real, or really any, sales and marketing until you're commercially ready with the, with the ET product.
spk02: Yeah. Well, I mean, there's some money in there already. I mean, we obviously, you see, we, we started, you know, we've got new company names now for the products. I mean, we are doing some work on, you know, maybe it's a mix of PR and IR, but we are clearly, you know, John has a team that is we're looking at some of that stuff. You know, we've got the salespeople on board that are working with, people that will do the early, you know, trials and ultimately, you know, lead to our first customers. So we're, you know, we are definitely, you know, we have a complete organization, I guess, that's the way to say it.
spk06: Okay. Those are my questions.
spk07: Congrats on all your progress. Thanks.
spk03: And our next question comes from Jason Colbert from Dawson James. Please go ahead, Jason.
spk04: Hi, guys. Thanks a lot. Congratulations. You know, a lot of inflection points coming up. Can you talk with me a little bit about what the clinical risk is associated with the FDA submission and Q3 that's anticipated for the AME platform?
spk01: So let me answer that question and maybe supplement my answer. The product that we present is a first generation of AME Go. is geared towards the remote patient monitoring. And in that sense, you know, we defined a clinical study that will basically compare synthesized 12-lead ECG to a recorded 12-lead ECG because we will be supplying baseline 12-lead ECG synthesized and then diagnostic 12-lead ECG synthesizers to the physician for their review for that patient that's outside of the physical facility. So the nature of that study would be a simple comparison between the recorded and the synthesized 12 lead in terms of their diagnostic content. And so that's the nature of that study. We have not decided exactly that will be performed. We are looking into a number of healthcare systems right now. And we feel that that study And the whole mission is fairly low in terms of the content and the outcome of the study.
spk07: And so, anything else that you'd like to add? Okay, thank you very much. Yeah, sorry, Jason.
spk05: Yeah, I think from my perspective, were you referring to the software solution first, Jason?
spk04: Well, I was just trying to follow the sequence of events as you've laid them out between the platform and the company.
spk05: Okay. So, the AMIE platform, that study is completed. We feel very good about the results from that study, given that the bar for 510 is to demonstrate substantial equivalence to the predicate device, and we believe the results from the study we just completed demonstrate that. The good thing is for AMIEgo, to Bronislav's point, is that the algorithms themselves are identical in AMIE and AMIEgo. So we feel pretty good about that. But in addition, given we've got a hardware device recording the 3D vector cardiogram and then generating the synthesized 12-lead, we want to demonstrate also the robustness of that synthesized 12-lead compared to an actual 12-lead recording. So that's in addition to the work we've already done with Amy. There's a logical regulatory stepping stone, if you like, for us to follow. And we'll build on, obviously, the results we've already gotten from the clinical validation study for Amy comparing ourselves with a predicate 12-lead ECG.
spk04: Right. Where I was really going was, at what point is the data compelling enough to present? And I don't know where you presented it, AHA, TCT, or, you know, other major meetings where you start to get key opinion leaders on board in advance of anticipating the commercial launches that begin late this year and into next year?
spk05: Well, I think we already have some key opinion leaders at some of the healthcare systems we're already at who are big believers in the technology. My experience has been companies typically don't spend a lot of time publishing their 510K substantial equivalence data. You know, they might see more value in doing a post-market study and then perhaps having a number of KOLs participate in that study. Yeah, is that part of the plan? Yeah, absolutely part of my plan. I think it gives us a much broader remit to go and recruit some KOLs and do a prospective study rather than what we've just done, obviously, is a retrospective study, which still is of immense value to us to help us get through that regulatory hurdle. But I think most of our clinical value work will occur in a post-market setting.
spk04: And can you talk a little bit about who's helping you with the actual filings and the interactions with the FDA? Because that seems to be an area where a lot of emerging companies get themselves into trouble. And I'm just wondering what steps you've taken to de-risk that process. Because you do have a great timeline, a little aggressive, but it's great. And I just want to, what gives you so much confidence that you're going to meet that timeline?
spk05: Thank you. I think one is that within the Heartbeam management team, there are several of us that have pretty extensive experience dealing with the FDA. You know, I've run over 40 IDEs for class three products in my career. Alan Baumel, our chief operating officer, has run a number of IDEs also, and Ken Pearson, our new CTO, has obviously been involved in the cardiac rhythm management and digital health industries for years. But we have used a consulting company with considerable experience that was already very familiar with the Live More platform. So we've basically piggybacked on their expertise in helping Live More get their platform through And so we didn't think it was worth reinventing the wheel, even though we're providing lots of input, obviously. So we've engaged.
spk04: No, it's always more to have an outside third party validate what you're doing. You never want to be too convinced that you're drinking your own Kool-Aid, even though your track record is impressive. Perfect. Thank you so much. That finishes my question.
spk05: You're welcome. Thank you.
spk07: And at this time, there are no further phone questions. Do we have any other questions? And Larry, you are unmuted now. At this point, we will take a couple of webcast questions. The first asks, can you provide some color around the product renaming? John, please.
spk05: Yeah, so at the request of our board, we initiated some work with a branding house and a very experienced marketing firm. And we've decided from a company standpoint, we'd prefer to be a branded house rather than a house of brands so for those of you in the marketing world a branded house is someone like BMW or Mercedes-Benz and a house of brands is someone like Procter & Gamble so we elected to be a branded house we went through the normal naming conventions that you do with creative marketing firms and ended up with I think five or six potential names and ended up with Aimee as our software as a medical device platform and then Aimee Go obviously with the product that goes with the patient anywhere and everywhere. So that's the process we went through and actually we presented that to our board at the beginning of this month and they were quite pleased with the outcome.
spk07: We've run that process over the last four or five months. And the next question asks if you can provide an update on triple ring. Yes, let me talk to that question.
spk01: Yes, yes, let me provide the answer on triple ring action. We have been very, very pleased with how this project has been going. We are on budget, we are on schedule, and we have a very intense interaction with the triple ring team, very capable team on all aspects of this project up at submission. You know, we're getting ready our own product for submission to FDA. We feel at this point there is absolutely no reason to believe that it will be delayed. We believe that we are totally on schedule here and extremely pleased.
spk07: And the next question asked if you were on track for FDA submission on the 15th of the month.
spk01: Yes. Let me give you some details about that. We have completed the study. Most of the documentation is, as of today, ready. We are sort of crossing the line. At this point, it's all a matter of administrative tasks now that need to be accomplished. So we are confident that we will be submitting on or about on the 15th of this month. And again, it's all a matter of having the administrative things, you know, basically lined up. And all of them are being in the final stages of the review prior to the submission. So we are very much and very close to the submission line here.
spk07: The next question is, can you provide some color around the appointment of 10 persons?
spk01: Yes, we were extremely pleased to be able to attract Ken Peterson to our company. He brings an incredible amount of experience and capabilities that we need today and we will need going forward. He is the architect of the Libmore platform that we just had a perpetual license for, and in that sense we have the ultimate expert inside our company to provide us with the expertise uh to improve and and change the platform to meet our needs and all um he's he's an outstanding match uh in terms of uh his technical capabilities and and his overall familiarity with the markets and indeed the technologies that are needed. I'm 100% mad and very, very pleased that he has joined us.
spk07: And our last question asks, how are you different from the ECG that is Apple Watch and CardioMobile?
spk01: Let me ask John to talk about that in terms of that competitive landscape.
spk07: John, please. Yeah, thank you, Ramaswamy.
spk05: Okay, so Apple Watch is based on photo plethysmography, so it actually reads pulse waves and from that generates an ECG. It's a single lead ECG. And CardioMobile actually uses finger electrodes on a credit card and calculates cardiac activity, but also on a single lead. Our 3D vector ECG is fundamentally different in that we record in three planes, X, Y, and Z. The heart is a three-dimensional organ that conducts in three-dimensional space, and from our pre-lead recording we can in the vector space generate a synthesized 12 lead which is the standard of care that cardiologists and clinicians use to evaluate cardiac activity so the information content in a 3d vector cardiac arm is fundamentally more informative to the clinician because we output it in a format of a synthesized 12 lead that they're used to reading and it has infinitely more information in that recording than just a single lead can provide. So it's a fundamental difference and neither Cardio Mobile Card or the Apple Watch detect for ischemic events and our device is specifically designed to look for ischemic events because they are by nature very difficult to spot in a single lead recording versus a 12 lead, for example.
spk07: That concludes our webcast questions.
spk03: I would now like to turn the call back over to Mr. Vedek for closing remarks.
spk07: Thank you, operator.
spk01: I would like to thank each 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 you were unable to answer any of your questions today, please reach out to our IR firm, MZ Group, who would be more than happy to assist. Finally, we also look forward to seeing some of you at our upcoming conferences, including the HC Wright Virtual Fourth Annual Global Investment Conference on September the 12th to 14th. and AGP Virtual MedTech Conference on September the 21st, followed by two in-person conferences, the Dawson James Small Cap Conference, October the 12th, and the Think Equity Conference, October the 26th. At this point, I'd like to thank you one more time and wish you a good day. Thank you.
spk03: This now concludes today's conference. Thank you for attending.
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