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Operator
Greetings and welcome to the HeartBeam First Quarter 2024 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 this call and webcasts may include predictions, estimates, or other information that might be considered might 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 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 the 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 and is available in the in the investor relations section of our company's website, heartbeam.com. Your host today, Bronislav Vytautas, Chief Executive Officer and Founder, Rob Eno, President, and Rick Bronstein, Consulting Chief Financial Officer, will present results of operations for the first quarter ended March 31, 2024. At this time, I will turn the call over to Heartbeam Chief Executive Officer, Bronislav Vytautas.
Bronislav Vytautas
Please go ahead.
Bratislav
Thank you, operator. I'd like to start by giving a brief overview of Harbin and our technology. It is important to understand how our VECG technology is different and vastly more powerful than the most common personal ECG technologies that are on the market today. K12 lead ECG is one of the most commonly performed diagnostic tests in the standard is hospitals and clinics. There are many ECG technologies that can be used by patients or consumers at home. You can see a couple of examples on this slide on the right-hand side. They're not valid ECG technologies. Instead, they are one-lead, three-lead, or six-lead ECGs. This is adequate for detecting many arrhythmias, but is not sufficient to detect a heart attack or complex arrhythmias. In contrast, a HeartBeam Amigo is an easy-to-use credit card-sized system that synthesizes the 12-ADC gene. The key aim of HeartBeam technology is to quickly and accurately help clinicians identify the full range of cardiac conditions, including a heart attack, outside of a medical institution. The Amigo device, coupled with a smartphone app and cloud-based diagnostic software, facilitates remote evaluation of cardiac symptoms by physicians, and we believe it could reduce the critical time to intervention for heart attack patients. Shortening that time from symptoms to the door of a medical facility would reduce complications and save many lives. An effective triage tool in the hands of patients could also reduce the number of unnecessary emergency room visits and reduce costs to the health care. So why do we think that an easy to use 12 lead ECG with patients is transformational? First, having the ability for patients to take frequent 12 lead ECG readings over time and in a variety of real life settings potentially has huge diagnostic value. Whenever a patient is feeling symptoms, they can get the 12 lead reading that will be reviewed by a physician. Secondly, trending or 12 EDCGs, both symptomatic and asymptomatic over time, will allow the physicians to gain insight to help guide cardiac care. Frequent 12 EDCGs create a trending and insightful way of tracking a cardiac condition. Finally, combining deep learning algorithms with a large number of studentally collected VECGs has the potential to create an unsurpassed predictive and diagnostic algorithm. We have the opportunity to address not only the arterial fibrillation market, but also the coronary artery disease market, which is six times larger. In the United States, there are approximately 3 million AP patients representing a $2 billion market. There are approximately 20 million coronary artery disease patients, which is a $12 billion market. So the overall opportunity in the U.S. only is about $14 billion. I'd like to now turn the call over to our President, Robby.
Robby
Thanks, Bratislav. We next wanted to give an update on our progress related to Amigo. Our initial clearance for the Amigo system will be a major milestone for the company, and it's important for several reasons. To start, we expect this to be the first patient-held 3D 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. The 3D VECG approach is an excellent platform for AI algorithms. In the longer run, we believe that applying AI algorithms on top of the rich VECG data could result in unsurpassed predictive and diagnostic capabilities. Our landmark study published in Jack Advances in August of last year showed that the Amigo VECG technology had similar diagnostic ability as a 12-lead ECG in detecting coronary occlusions. 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. We have a 510K application under review with the FDA for our Amygo 3D VECG system. This is the cornerstone submission for HeartBeam and will be the basis of future regulatory efforts. The system includes the Amygo device, a patient application, a physician portal, and wireless communications among the elements. We submitted our 510 application in the second quarter 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 from FDA. We have conducted the agreed upon testing to address FDA's open questions and are in the process of finalizing our official responses. Once these are submitted, the FDA will complete their review. Our timeline remains on track, and we anticipate clearance by the end of Q2 2024, followed by a limited launch of Amigo by the end of 2024. Following the clearance of the Amigo 3D VECG system, We will be working to obtain a second FDA clearance focused on the ability to offer to the physician a pair of baseline and symptomatic 12-lead ECGs, both of which are synthesized from the 3D VECG signals. This second 510K application is planned to be submitted to FDA by Q3 2024. A key part of this submission will be a pivotal study, our valid ECG study. As we announced in March, we've enrolled the first patients in this pivotal study, which is designed to validate the Amygo 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. The primary objective is to demonstrate the similarities of ECG waveforms between Amygo'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. And based on these pilot results, we plan to enroll a total of approximately 198 adult patients. Currently, we have enrolled more than 50% of the patients. We anticipate completion of enrollment of the valid ECG study in Q2 2024 and submission of the second 510K application by Q3 2024. As we've discussed on previous conference calls, we have an active AI program underway. We have acquired approximately 1 million 12-lead ECGs from various sources, a key element in our fast-paced AI development efforts. We have developed initial deep learning algorithms focused on the ability to detect various cardiac arrhythmias. Heartbeam has had data on its deep learning algorithm accepted for presentation at two prestigious electrophysiology conferences. We believe that when combined with our credit card size Amigo 3D VECG technology, Heartbeam's AI will provide additional value to patients and physicians in a number of ways, including automated classification of cardiac conditions, the potential to further enhance the user experience and simplify the onboarding process, and in the longer run, could result in unsurpassed predictive and diagnostic capabilities. The first scientific presentation on the company's deep learning algorithm, HeartBeam AI, was at the European Heart Rhythm Association Conference in April. Results were presented by Dr. Vivek Reddy, Director of Cardiac Arrhythmia Services at the Mount Sinai Hospital. The study showed that Heartbeam AI combined with VCG delivers equivalent performance to a 12-lead ECG and greatly improves detection of atrial flutter over a single-lead ECG. This presents an opportunity for a VCG-based algorithm that offers arrhythmia detection capabilities beyond what is available today and to fill gaps in healthcare inequality when obtaining a 12-lead ECG is challenging. Additional data on our deep learning algorithm will be presented at the Heart Rhythm Society Conference to be held in Boston next week. I'd like to now turn the call over to our consulting CFO, Rick Brownstein.
Rick Brownstein
Thank you, Rob. I will now give a brief review of our financial results. A full breakdown is available in our regulatory filings and the press release that crossed the wire after market closed today. General administrative expenses for the first quarter of 2024 were 2.4 million, compared to 2.5 million for the first quarter of 2023. Research and development expenses for the first quarter of 2024 were 2.4 million, compared to 1.7 million for the first quarter of 2023. The net loss for the first quarter of 2024 was 4.6 million, compared to a net loss of $4.1 million for the first quarter of 2023. Our cash and cash equivalents total $12.6 million as of March 31st, compared to $16.2 million as of December 31st, 2023. Pet cash used in operations was $3.5 million for the three months ended March 31st, 2024. We remain confident that we have sufficient funds to deliver on our milestones and get prepared to move into the commercialization phase of HeartBeam Indigo. I will now turn the call back over to Bratislav for his closing thoughts.
Bratislav
Thanks, Rick. So in conclusion, this is an exciting time for HeartBeam, and 2024 is a pivotal year in our company 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 first patient health 3D ECG device to be cleared by the FDA. It will be also serving as a robust and IP-protected foundation for many future developments. We have made significant progress on the Amigo clearance. having successfully passed the acceptance of the filing and have completed the initial substantive review phase. We have taken advantage of all available regulatory tools and opportunities to work interactively with the FDA, and we are finalizing our testing and our formal responses to the questions raised by the FDA. Once these responses are submitted in the near future, the FDA will complete their review. We continue to anticipate clearance by the end of Q2 of this year. This initial clearance is foundational for a number of reasons. First, it will be the basis of our second submission on the algorithm that generates the 12 leads synthesized waveform. Currently, we have enrolled more than 50% of the patients in the valid ECG study. We will submit the results of this pivotal study to the FDA as a key element of this 12-lead synthesis submission. Second, we are developing deep learning algorithms using the 3D BCG signals for inputs. We presented at the European Heart Retail Association Conference, making the first scientific presentation on heartbeam AI, and look forward to the second presentation at the Heartbeam Society meeting in Boston next week. Finally, we will build upon the initial Amigo clearance as a foundation with both the 12-week synthesis algorithms, and AI efforts, we will continue to advance our robust product pipeline from AI-intense advances to expanding indications to patient-friendly form factor, such as the on-demand 12-lead patch and our 12-lead watch. We believe that our VECG technology has the potential to be the most advanced ambulatory cardiac monitoring solution and is applicable in a number of core factors. In anticipation of the FDA clearance, we are refining our go-to-market strategy and are encouraged by our early discussions with industry partners and their interest in our technology. We ended the quarter of this year with $12.6 million in cash and cash equivalents. So that is $12.6 million in cash and cash equivalents. We remain confident that we have sufficient funds to deliver on our timelines. I look forward to providing our shareholders with further updates in the near future. I thank you all for attending, and now the Harvey team would like to answer your questions. Operator.
Operator
We will now begin the question and answer session. To ask a question, you may press star then 1 on your touch-tone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then 2.
Breneslav
As a reminder, if you have a question, please press star 1.
Operator
The first question comes from Leo Tarpeo from Joseph Gunner. Please go ahead.
Leo Tarpeo
Good afternoon, gentlemen. A quick question. I see here on your slide you say you're refining the go-to-market strategy. Could you remind us what exactly was your strategy? If I recall, you were trying to target the private practice specialists who would have the ability to buy your product and roll it out to their practice and patient base. And so I was wondering if there's been a change in that, and which industry leaders and players are you speaking with? Thanks.
Bratislav
Thanks, Leo. Rob?
Robby
Sure. Yeah, as far as the go-to-market strategy, yeah, the refinement, you know, obviously as we get closer to the FDA clearance, we're working on that. Yeah, as we described before, the effort that we're undertaking is going after the patient pay segment. So these are where patients are aggregated together in ability and willingness to pay directly for the product. We also are looking at a number of other use cases within value-based care and taking advantage of other market segments that are out there. So it's something that we're going to continue to you on and get more information as we get closer. But that's what Breneslau's meant by looking at the various different market segments. We're uncovering a number of things we think where there's a potential fit for the product and we're continuing to explore those. But I also want to mention the first effort that we're going to do after the clearance is what we're calling a beta testing phase. So this is really about getting real world experience with the product, understanding the optimal experience for patients and physicians, really testing the end-to-end system, really optimizing everything. So that, as well as continue to do some clinical work on additional clinical studies beyond the valid ECG. So immediately upon the clearance, you'll see us going into that phase while we're fine tuning and finalizing the ultimate launch strategy around around the the limit of the launch, as we've described at the end of the year. And then to touch on the other element, you know, we're Breneslav mentioned, you know, we're encouraged by early discussions we're having with partners. We're looking at going direct, building our own Salesforce, as well as partnerships with industry partners in a number of different areas. We think that Amygo's technology, the VECG technology, is really the most powerful, has the potential of being the most powerful ambulatory ECG technology and is applicable in a number of form factors. So we're looking at potential industry partners really in a number of different ways. So a little early to talk about obviously any details there, but wanted just to underscore that working directly on building our go-to-market strategy and talking to potential partners about a fit in general across form factors.
Breneslav
As a reminder, if you have a question, please press star 1. There are no further questions on the phone.
Bronislav Vytautas
I would like to turn it over to Brooks Hamilton.
spk03
First question from the webcast. Can you provide more detail on just the timing of the FDA clearance?
Bratislav
Well, there is not much to add to what we already discussed here today. Overall, we are pleased with the tenor of our discussions with the agency and the progress. As we mentioned, we are finalizing the materials related to the questions they have asked, and we have made progress that will enable very, you know, timely answers to their questions. In that light, we expect
Breneslav
the clearance to be within the Q2 of this year. Thank you.
spk03
Next webcast question. You mentioned that the valid ECG study is enrolling. What is the latest on that status?
Bratislav
Rob, please go ahead.
Robby
Sure. So as we mentioned, we're enrolling up to a total of 198 patients. And we're at five sites. All of the five sites are now up and running and enrolling patients. We're really pleased with that. The sites are Piedmont Heart Institute, Atlanta Heart Specialists, Allegheny Health Network, Mount Sinai, and then Long Island Jewish Hospital, part of the Northwell system. So all five of those are up and running and enrolling patients. And we're really pleased with how enrollment is going. We're on track relative to our goals and more than 50% are enrolled. And we continue to expect that we'll finish enrollment in Q2. And then just to reiterate, you know, this is an important element of the second submission because we're designing the study to compare the ECG waveforms between our synthesized 12-lead and the standard 12-lead recorded simultaneously. So progressing very well with all sites up and running and more than half of the enrollment completed and expect to finish enrollment this quarter.
spk03
Next question from the webcast. In your AI update, you're focusing on atrial flutter. Can you explain the significance of that?
Bratislav
Atrial flutter is an important arrhythmia, and one that existing variables and, in general, patients facing ECG technologies struggle with. If undetected and untreated, it can lead to strokes. Our clinical data shows that the combination of VECG, our VECG technology and our HeartBeam AI technology, can do an excellent job in actually identifying arterial flutter in differentiating from arterial fibrillation and the normal sinus rhythm. Beyond this, it is an example of a complex arrhythmia that VECG and Synthesized 12-lead can identify. We look forward to further clinical data, of course, on these conditions, but what we have seen so far is extremely encouraging. and you know looking at the big picture i'd like to point out one more time perhaps uh this is an existing uh um and uh i would say demonstrated value of combining the power of vcg with power of ai uh that combined with the availability of a 12 lead ecg make for an offering that will make a difference first and foremost for the patients but also for the physicians who will now be equipped with family synthesized ECGs and a powerful diagnostic suggestion tool that stands from the ECG application to the AI algorithms.
spk03
All right, looks like that's it for the webcast questions. I'll now turn the call back over to Dr. Vajdic for his closing remarks.
Bratislav
So, at this point, you know, we'd like to conclude this conference. We very much appreciate your attendance and look forward to continued dialogue with our investors. And if we have not covered all questions today, please do not hesitate to contact our IR firm, MZ Group, for further interactions. Thank you again and have a good day.
Operator
The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.
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