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spk01: Greetings and welcome to the HeartBeam third quarter 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, and other information that may be considered forward-looking. 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 deter 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 our wires this afternoon, and it's available in the Investor Relations section of our company's website, hardwareinbeing.com. Your hosts today, Bronis Nav, Vadej, Chief Executive Officer and Founder, Rob Eno, President, and Rick Brownstein, Chief Financial Officer, will present results of operations for the third quarter, end of September 30, 2023. At this time, I will turn the call over to Harbin Chief Executive Officer, Paneslav Vadej. Please go ahead, Sam.
spk02: Thank you, Operator, and good afternoon, everyone. I'm pleased to welcome you to today's third quarter 2023 Financial Results Conference call. On today's call, we will be relating some very important updates about our business, our products, including a landmark peer-reviewed study publication and a significant enhanced HeartBeam team. We continue to make steady progress towards upcoming clinical and regulatory milestones. I'd like to give you a brief overview of HeartBeam and our technology for those of you who just joined for the first time, and as a reminder for those of you who are already familiar with us. It's really important to understand how our VECG technology is different from exactly more powerful than most common personal ECG technologies that are in the marketplace today. There are many ECG technologies offered to consumers in patients outside of a medical facility. You can see a couple of examples on this slide. These are not 12-lead ECGs. Instead, they are one-lead, three-lead, or six-lead. This is adequate for detecting many arrhythmias, but is not sufficient to detect a heart attack or complex arrhythmias. while there are complex, I'm sorry, while there are many 12 ECG, I'm so sorry. Basically, what I'd like to say is that a couple of ECG technologies that are out there today that are indicated for at-home use, but we do not believe that these are adequate
spk04: and easy to use for the consumer and patients to adopt it.
spk02: We believe our technology has the potential to solve the problem of heart attack detection outside of a medical institution. The key aim of heartbeat technology is to quickly and accurately help clinicians identify a heart attack. HeartBeam Amigo is a personal, portable, and easy-to-use system that generates a 12-lead ECG. The Amigo device, coupled with a smartphone app and cloud-based diagnostic software system, facilitate remote evaluation of cardiac symptoms by physicians. In addition, By collecting 3D signals of the heart electrical activity, HeartBeam Amigo has the potential to provide unparalleled data for the development of AI algorithms and the creation of a rich data set for AI. We believe that Amigo could reduce the critical time to intervention for heart attack patients. the average patient waits three to four hours before seeking care. Quicker action would reduce complications and save lives. In addition, more than 80% of the patients with chest pain that go to the emergency room are not having a heart attack. An effective triage tool in the hands of the patient could reduce the number of unnecessary emergency room visits and thus reduce costs to the healthcare system. The opportunity for our technology in the United States is six times larger than the atrial fibrillation or AP market, with approximately 3 million AP patients representing a $2 billion market. At the same time, there are approximately 20 million total coronary artery disease patients representing a $12 billion market. These are estimated market numbers for the U.S. only. We have the opportunity to unlock conditions beyond arrhythmia as the Amigo technology will bring the power of standard of care 12-lead ECG to physicians from their patients that are anywhere and at any time. These diagnostic capabilities have the potential to go beyond the standard of care, capable of recording and processing vector cardiography, VECG signals, and using powerful 3D vector-based algorithms to detect heart attacks. We have been working on our core technology, AMI-GO, with a credit card core factor. But our deep product pipeline that is well protected with our AP represents us with an extraordinary opportunity, we believe, to form alliances with key strategic players and multiple industrial players, including wearables and ambulatory monitoring. Our rich pipeline of products includes our on-demand 12 lead extended wear patch. We recently were granted our third U.S. patent on this technology, which will be bringing 12 lead technology to the established extended wear patch segment, which is estimated to reach 4.8 billion by 2030. We also have extensive IP on continuous cardiac monitoring through our acquisition of Limor, which developed the first FDA-cleared prescription variable for continuous cardiac rhythm monitoring. Also in our pipeline is our integrated system, which combines continuous cardiac monitoring with our 12 lead patient-carried ECG the Harvey watch, which combines a 12 VDCG, a continuous cardiac monitor into a single form factor. Lastly, we are applying the latest in deep learning to our cardiac signals. We look forward to updating you soon on these efforts. I would now like to turn the call over to our President, Rob Eno, to provide product and business updates. Rob.
spk07: Thank you, Branislav, and thanks to everyone joining us today. Turning to recent milestones, a landmark study based on our novel VECG technology was published in Jack Advances, a journal of the American College of Cardiology. This peer-reviewed study demonstrated the ability of HeartBeam's VECG technology platform to detect the presence of coronary artery occlusions. This is a very interesting study design that used balloon inflation during a stent procedure, also called a percutaneous coronary intervention, or PCI, to simulate coronary occlusions. HeartBeam's technology and a standard 12-lead ECG were both tested for their ability to detect coronary occlusions. There are three main takeaways from the study. First, on the left, Heartbeam's technology matched the performance of a standard in-hospital 12-lead ECG with similar accuracy. This in itself is important, as Heartbeam's technology is intended to be used by patients outside of a healthcare institution. Second, the study showed that both for heartbeams technology and a standard 12-gauge ECG, when assessing chest pain, performance was much better when the reading was accompanied by a baseline ECG taken before the event. The area under the curve, or AUC, a measure of accuracy, was 0.95 or greater when including both the symptomatic and baseline recordings. The AUC when only the symptomatic was included was much lower, around 0.7. In other words, assessing pairs of ECGs or VECGs, the patient's baseline plus one taken during an event, can increase accuracy by more than 30%. 12 plus 12 is better than just a 12 lead ECG. And this is particularly important because HeartBeam's technology by design always includes the patient's asymptomatic baseline. taken when he or she is onboarded. The final takeaway is that in practice, the heartbeam technology could have a dramatic improvement in accuracy over a 12-lead ECG taken in an emergency room. While the heartbeam technology will always have a patient's asymptomatic VECG and will be able to assess the pairs of readings, when a patient's ECG is assessed in an emergency room, there's often no baseline. So a heartbeam 12 plus 12 reading could be almost 40% more accurate than a single 12-lead ECG recording in the emergency room, with the AUC increasing from 0.68 to 0.95. So in all, this study demonstrates the potential that the Amigo system holds, and we'll be conducting additional studies focused on our 12-lead synthesis and on the performance of the system as a whole. We believe these studies will be key to driving clinical and patient adoptions. During the quarter, we were privileged to add multiple new respected industry executives and physicians to our leadership team, board of directors, and scientific advisory board. We strengthened our board of directors with the appointment of Dr. Michael Arjaf, Chief Medical Officer and Vice President of Clinical Affairs, Technology, and Innovation of the Peripheral Interventions Division at Boston Scientific. Dr. Jaffe is a renowned vascular physician and researcher, bringing a wealth of clinical and industry experience to the board. This follows the recent additions of Ken Nelson and Mark Stroman. We also made three key hires to our senior management team. Richa Gujarati joined HeartBeam as senior vice president of product. Richa has over 13 years of experience collecting market-level insights and translating them into business needs for companies ranging from St. Jude and iRhythm to Apple. Her deep expertise in go-to-market strategies for health-sensing technologies will be instrumental as we ready the Heartbeat Maybe Go system for market release. Debbie Castillo joined Heartbeam as Vice President of Regulatory Affairs. Debbie is an experienced biomedical engineer with extensive knowledge of FDA, EU, and Health Canada regulations. She has industry experience as well in various positions with the FDA. She is responsible for leading our regulatory affairs function and overseeing the company's interactions with regulatory agencies worldwide. And finally, we welcomed Pooja Chatterjee as vice president clinical. She brings over 15 years of extensive clinical leadership experience in the medical device industry, most recently at Abbott, and will oversee our clinical studies and related efforts. We recently added five distinguished physicians to our scientific advisory board. This group brings expertise in interventional cardiology, electrophysiology, clinical research, and new technologies. The new members are Charles L. Brown III, Tony Das, Robert Harrington, Campbell Rogers, and Neeraj Verma. They join our Chief Medical Officer, Peter Fitzgerald, and the previously announced Chair of the Scientific Advisory Board, Michael Gibson. I encourage you to read our press release of the appointments to get a sense of the wealth of experience that they bring. We continue to make steady progress toward our key product milestones. As previously discussed, we will have two 510 submissions to the FDA. The first, which we call version one, is for clearance of the HeartBeam Amigo VECG device. This application, which was submitted to the FDA in May, is for the hardware. Clearance is a three-lead VECG collection device. This submission is progressing well. We've received questions from FDA and have submitted our responses. The second submission, planned for after we receive the clearance for version one, is for the software, including the algorithms that generate a synthesized 12-lead ECG for physician review. On this application, which we call version two, we've held a successful pre-submission meeting with the FDA. This meeting focused on the design of the critical study that will demonstrate the performance of our synthesized 12-lead ECG in relation to a standard 12-lead ECG. We're encouraged by our interactions with FDA, and we continue to expect the product will be ready for limited market release during the second half of 2024. I'll now turn the call over to Rick Brownstein, Chief Financial Officer, to discuss operational updates and financials.
spk08: Thank you, Rob. Turning to our financials, I will now give a brief overview of our financial results. A full breakdown is available in our regulatory filings. and in the press release that crossed the wire after market closed today. General administrative expenses for the third quarter of 2023 were $2.1 million compared to $2 million for the third quarter of 2022. Although overall G&A expense is flat, cash spending is actually down in looking at 2023 compared to 2022. In 2022, we were invested in the commercial team and due to our change in the near-term focus in early 23, we're not currently emphasizing commercial activities. The reduced sales and marketing expense was offset by increased non-cash stock-based compensation of about $0.4 million, resulting primarily from the issuance of employee stock options following the May 2023 financings. Research and development expenses for the third quarter of 2023 were $1.6 million, approximately the same level of expense as compared to the third quarter of 2022. In addition to the current development focus on Harvey and Inigo, in both periods we also invested in research costs in support of the future product pipeline coming from our patented VECG platform technology, which is the basis for our patent portfolio of 11 issued patents. With current interest rates in the short-term markets around 5%, we earned $267,000 in interest income in the third quarter of 2023 compared to $28,000 in the third quarter last year. That loss for the third quarter of 2023 was $3.5 million compared to a net loss of $3.6 million for the third quarter of 2022. We ended the third quarter of 2023 ahead of plan with $19.2 million in cash and cash equivalents compared to $3.6 million as of December 31st last year. As mentioned, in May we closed the common stock financings with gross proceeds of $26.5 million. The cash is planned to last into early 2025 while we expect to receive FDA clearance for Harpy Mamigo version 2, which is our commercial product, in the second half of 2024. We remain confident that we have sufficient funds to deliver on these important milestones and to get prepared to move into the commercialization phase of Heartbeat Mimico. Also of importance in the May 23 financings is the fact that they were common stock only financings. They did not include any warrants and our balance sheet as a result has a very simple and straightforward capital structure with approximately 20 6 million shares outstanding now. Finally, I would also like to share the results of our recent annual meeting of shareholders. At the event, all proposals passed, which included adding 4 million authorized shares to the 2022 Equity Incentive Plan. I'll now turn the call back over to Branislav for closing thoughts.
spk02: Thank you, Rick. Let me just say that we remain incredibly optimistic for the future of Harbin. Now I would like to summarize the recent efforts in the following categories. Continued validation and company momentum.
spk04: Progress toward key milestones and financial soundness.
spk02: First, we had several announcements that demonstrated external validation of the technology and continued momentum of the company. Our landmark clinical study was published in Journal of American College of Cardiology Advances. We made several key additions to our board of directors, our senior management team, and our scientific advisory board. And the US Patent and Trademark Office granted the third patent on 12 lead extended wear patch, our 11th patent overall. Next, as Rob has summarized, we have made steady progress toward our key milestones with productive discussions with FDA on our initial application, our AMIGO hardware. Equally importantly, we had a successful pre-submission meeting with the FDA on our second application, which will be on the algorithm that synthesizes the 12 lead ECG from our Amigo device. Our expectation for a limited launch in the second half of 2024 remains unchanged.
spk04: We have a strong cash position.
spk02: We ended the quarter with significant cash position of 19.2 million, well ahead of the plan. And these 19.2 million in cash includes also cash equivalents and short-term investments, providing the runway, very importantly, to early 2025. I would like to close by reiterating that we have had positive interactions with the FDA in the past quarter, and we remain on track for our key product milestones. I look forward to providing our shareholders with further updates in the near term. I thank you all for attending, and now the HeartBeam team would like to answer your questions.
spk01: operator thank you sir ladies and gentlemen at this time we will be conducting a question and answer session if you would like to ask a question please press star and then one on your telephone keypad a confirmation tone will indicate your line is in the question queue you may press star and then two 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 start keys.
spk04: We will pause a moment while this queue assembles.
spk01: Our first question is from of Alliance Global Marketers. Please go ahead.
spk06: Good afternoon, gentlemen. Thanks for taking the questions. First off for me, you know, congrats on all the progress. Just curious on the interactions with the FDA, the questions on the first submission. I mean, it sounds like it's been a productive dialogue, but, you know, just knowing that you've answered the questions, I presume there aren't any things that look like showstoppers in there. Is that a fair assumption?
spk02: Yes, we definitely had a number of interactions now with the FDA on our first submission that's under consideration, as well as on our V2 future submission, which was subject of our pre-submission meeting with the FDA. Without going into details, we definitely have tackled the issues that FDA basically brought up, but we really don't have anything on our horizon that would be of, you know, serious concern or, as you termed it, showstopper. So, all in all, it's quite a bit of work, no question about that, but there are no points that would, in our judgment, be of negative nature in terms of not being able to achieve our goal.
spk06: Okay, great. That's definitely helpful and sounds positive. And then, you know, just on the pre-sub meeting, any takeaways that you can, you know, potentially share on the study design? I mean, is it you know, bigger than a bread box? I mean, is it something that you can do in animals? Is it in humans? Is it, you know, dozens? Is it hundreds? Is it thousands? What's kind of the, is there any sort of guide rails you can give us on what that might look like?
spk02: Yes, indeed. You know, that was a significant topic in our pre-sub meeting with the FDA. the clinical studies, the nature of the endpoints. And as far as, of course, it's going to be in humans. It's going to be a fairly simple study for what we are proposing now and what FDA appears to be, you know, basically positive on in terms of how the study will be designed and executed. And in terms of, you know, cost, and the number of subjects, it's all in the range that we expected, and it is not high. So, all in all, on the study, everything is looking as we have envisioned so far.
spk06: Okay. So, it sounds like everything's going according to plan, or as you put it earlier, well ahead of plan on the casualization. And then just lastly for me, and then I'll jump back in queue, you know, big deal with the Jack publication. Can you share any reaction that you've gotten from folks on that? I know there was the editorial that came away positive that was published, but just any kind of color that you have from, you know, other folks that saw it and are intrigued by its findings?
spk02: Rob, would you please answer?
spk07: Yeah, sure. Yeah, no, good question. The feedback's been really positive. I think, you know, as I highlighted, I think a lot of the physicians we spoke to were intrigued by the study design, using balloon inflation as a really interesting way to look at this, this problem. And I think the themes really resonated the theme that, you know, this is a good way to show kind of apples to apples that were equivalent to, to a standard 12 lead, even though we're outside the hospital. And then this insight, which I think was new to a lot of people of the importance of the baseline, especially when assessing potential heart attack or potential occlusion is And how much that adds to the accuracy, both for a 12 lead and for ours. So, I think, as I tried to allude to what the feedback we're getting is, it's really interesting when you put those 2 together, because not everybody who goes to the emergency room gets a. has a baseline readily accessible that actually our baseline being accessible, you know, provides a potential advantage. So I think the physicians we talked to were very excited about it and see it as a really great first step to prove the feasibility of the study and looking forward to continue to work with us and provide more data.
spk04: Okay, great. That's helpful. Thanks for taking the questions, guys. Thank you. Thank you very much. Ladies and gentlemen, just a reminder, if you wish to ask a question, you may press star and then 1. We have no further questions on the conference call at the moment, and I would like to take the webcast questions.
spk03: The first webcast question asks, if you have a 12-lead ECG with a patient at home, who will read or interpret the heart attack, the patient, AI, or a cardiologist? If the latter, how will they get the ECG?
spk07: Yeah, I can take this one as well. Please. Yeah, it's a great question, and it's really an important thing. We believe it's crucial for the ECG to be evaluated by a physician. We don't want to be in a position that, you know, Heartbeam's algorithm is saying whether or not you have, especially in the case of a heart attack.
spk04: ...will be set up.
spk07: The idea is the patient will use the Amigo device at home with the device and the app. That gets sent up to the cloud where the signals are processed, checked for quality, and then the 12-lead is synthesized. And then that is sent to the reader service, which then analyzes it. And then the physician in that reader service... will reply to the patient, giving them the interpretation, and can even initiate a telehealth visit or consultation if needed. So we think it's important, especially when we're dealing with things like potential heart attacks, that there's a physician in the loop and are building the workflow to incorporate that.
spk03: Our next question asks, you mentioned the application of deep learning to your systems. Do you have more details on that effort?
spk02: Yes, when it comes to deep learning and, in general, AI, it's always in the headlines in terms of its impact on various areas of our society. And the future impact is really quite relevant when it comes to medical area. So all in all, looking at the impact AI will have on a specific area of ECG, we believe that it's going to be impactful. And that technology combined with our unique advantages that include data-rich data set, and very importantly, longitudinal data set, set collected over time, frequently over time for that patient, will provide, we believe, value that goes beyond what a data set, traditional data set of 12 lead ECGs can offer. So we are keenly interested in AI, and we will be making some announcements in terms of, you know, our plans and efforts in this area.
spk04: and in the near future.
spk03: Our next question asks, do you have enough capital for 2025 commercial launch?
spk08: So that sounds like a good question for the CFO. Yes. Yes. Yes. So a couple points on that. Yes, we have enough money to get through the second FDA clearance, which is the commercial product. and get it ready for launch. That said, you know, we clearly plan to do another round of financing to fully fund the commercialization. So a little bit of both. But, you know, we have probably several months of leeway between when we expect to get ready for commercialization and when we would need another round to really carry on. So we're feeling very comfortable from the cash position today.
spk04: The next question asks, what are your near-term milestones?
spk02: We made a decision to approach our regulatory submissions in two steps. The first one is what we call V1 system, the hardware system, the credit card system. size hardware system that's very important foundational to our ability to synthesize the 12 leads. Synthesized 12 leads is our second submission, the V2 clearance that we'll be seeking for the 12 leads. And indeed, it stands right now, we expect both of these to be cleared in 2024.
spk04: Our next question asks, can you talk about new business development opportunities?
spk05: Sure, I can handle that one.
spk07: Branislav touched on that in his overview of the new technologies. So our focus, obviously, right now is on the Amigo system, getting that through FDA and commercializing that. And as we described, we believe we're making really good progress on that. That is very much our company's focus. At the same time, we have this rich pipeline of products that have strong IP associated with them. So the continuous monitor watch, what we call the integrated system, which is the watch plus the card, and also the monitor. 12-lead ECG heartbeam watch. And we think some of those, given the size of our company, really lend themselves well to strategic partnerships, especially in the area of wearables and ambulatory monitoring. So we're going to be pursuing discussions in the coming months with companies for some of those future areas. And maybe I'll just touch on another question that I had seen seen come through, which is on the go-to-market strategy for the Amigo system. And so we are planning to go forward bringing that product to market ourselves. We're going to be unveiling more about what our go-to-market plans are. We're making good progress in developing those plans. And in the coming months, we'll outline them in a lot more detail.
spk03: Our next question asks, current CMS guidelines for chest pain patients is to go to the emergency department. And therefore, how do you plan on becoming a CMS guideline?
spk05: Yeah, I can take that one as well.
spk07: It's another really interesting question. First of all, the guidelines are if you have chest pain, you should go to the emergency room. The reality is patients often delay three to four hours before going. We think that's really one of the fundamental issues that exist today. The ultimate goal is for this technology to be accepted and go down a path of unique reimbursement as well as getting into the guidelines. And so the short answer is that'll all be done with studies and evidence. It's going to be really important for us to generate evidence and data that show the clinical effectiveness and the cost effectiveness. And so it takes time ultimately, but with evidence showing the benefit when patients use this device, that's the kind of work that would ultimately help to get something like this into the guidelines.
spk03: And our last question asks, where do you see the three lead finding a market? There are several dozen companies in this market, and what is the value of another three lead?
spk07: Yeah, I can take that one as well. Now, these are touching on some really good points. When we talk about our three lead collection device, It is collecting three orthogonal leads, X, Y, and Z. And that's the basis of vector cardiography, VCG. And when you're collecting those specific three axes, that gives you all the data, all the electrical data in the heart. And from that, you can then synthesize the 12 lead. Other three lead devices, other reduced lead set devices are not using three orthogonal leads. So they're projections that aren't getting the full signal. So our difference for the three-lead is that we are three-lead VCG, so we're collecting all the heart signals. But as we've laid out the strategy, it's a stepwise approach. Getting the hardware cleared as a three-lead collection device then allows us to move on to taking those three orthogonal leads and then synthesizing the 12-lead. We believe it's important for physicians who are involved, as we mentioned earlier, to be able to analyze the 12-lead together with the baseline because that's what they're used to seeing. So it's a stepping stone having the three orthogonal leads to get to the 12-lead synthesis, which is our true differentiator.
spk04: Thank you, sir.
spk01: Ladies and gentlemen, we have reached the end of the question and answer session, and I would like to turn the call back to Dr. Baric for some closing remarks.
spk02: Thank you, Operator. I would like to thank each of you for joining our earnings conference call today and look forward to continuing to update you on our ongoing progress and growth. If you were not able to answer any of your questions here today, please reach out to our IR firm, MZ Group, who would be more than happy to assist.
spk04: Good day. Thank you very much. Ladies and gentlemen, that concludes today's conference.
spk01: Thank you for joining, and you may disconnect your lines at this time.
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