Heartbeam, Inc.

Greetings and welcome to the HeartBeam Fourth Quarter and Full Year 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 call is being recorded. Before we begin the formal presentation, I would like to remind everyone that statements made on this 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 to risk 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 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 wire this afternoon and is available in the Investor Relations section of our company's website, heartbeam.com. Your host today, Rob Eno, Chief Executive Officer of and Tim Cruikshank, Chief Financial Officer, will present results of operations for the fourth quarter and full year ended December 31st, 2024. At this time, I will turn the call over to HeartBeam Chief Executive Officer, Mr. Rob Eno.

Thank you, Operator.

The agenda of topics we'll cover on today's call are listed on this slide. We'll provide a brief overview of the company's vision and then quickly get into our operational updates, milestones, go-to-market strategy, and financial results before turning it over to Q&A. I want to start by reminding everyone of Heartbeam's overall vision and our foundation for success. Heartbeam is developing the first-ever personal cable-free ECG that can synthesize a 12-lead ECG. Our unique IP-protected approach captures the heart's electrical signals in three directions, side to side, top to bottom, and into the body. We believe bringing this 12-week capability directly into the hands of patients is extremely disruptive to how cardiac conditions are currently managed. We also believe this has the potential to be the highest resolution ambulatory ECG monitor and that adding artificial intelligence to these high resolution signals that are acquired by patients longitudinally over time can result in unsurpassed algorithms providing personalized cardiac insights. This unique technology represents an enormous market opportunity. There are applications for patients with a wide range of cardiac conditions that represent more than $100 billion in the U.S. Our long-term roadmap starts with use in symptom-driven diagnosis, followed by applications in monitoring and screening. And Heartbeam has a clear go-to-market strategy and is significantly de-risked, having received its initial FDA clearance in December. We'll provide an update both on our near-term milestones and our commercial plan in which we've identified and validated our initial target markets. We've achieved a number of important milestones since our last call. First, in December, we received our foundational FDA clearance for the Heartbeam system. This clearance is for the system as a whole with the output being our novel three directional ECG leads. This is significant for the company as it demonstrates acceptance of this novel approach. In January, we submitted a second 510K application. This one for the software that synthesizes a 12 lead ECG from the HeartBeam signals. The HeartBeam system plus this software when cleared will be the basis for a pilot commercial introduction. The key element in our 510K application on the 12-lead synthesis software is a pivotal study called Valid ECG, which enrolled 198 patients from five U.S. sites. These patients underwent simultaneous recordings of a standard 12-lead ECG and the heartbeam device. These clinical results were accepted for presentation at the Heart Rhythm Society annual meeting in late April. Also, since our last call, we had the results of two additional clinical studies presented at the American Heart Association meeting in November. The first was the results of a pilot study with the same protocol as ValidECG. This 80-patient pilot study demonstrated similar performance between heartbeam-synthesized 12-lead ECG and a standard 12-lead ECG for arrhythmia detection. The second was a feasibility study highlighting a novel algorithm used in conjunction with the HeartBeam ECG technology to detect acute coronary conditions such as heart attacks. Next, after receiving our initial FDA clearance, we commenced our early access program. The focus of this program is on refining the end-to-end workflow, ensuring operational readiness, validating messaging, and establishing an early adopter sales funnel. Of note, we're extremely encouraged by the inbound interest with hundreds of physicians and potential patients joining the waiting list. Finally, we successfully completed a public offering of $11.5 million. Tim will discuss this in more detail, but this is part of our plan of aligning financing to upcoming milestones. Recently, HeartBeam was awarded the Diamond Pinnacle Healthcare Award in Medical Device Innovation. This award recognizes companies making significant contributions to improving patient care, advancing medical technology, and improving overall health outcomes. This is the third award HeartBeam has received in the past year, and we're pleased that our groundbreaking technology is being recognized. In our last call, we showed this slide, which lays out the key near-term milestones for the end of 2024 and for 2025. I'm pleased to say that we've made significant progress since then. This slide shows the recent progress we've made toward these milestones. First, as mentioned earlier, in December we received FDA clearance for the HeartBeam system. This is a foundational clearance, and it's a major milestone for us. Next, we submitted our application for the 12-week synthesis software to the FDA in January, and that submission is currently under review by FDA. It's challenging to predict the timing of FDA reviews, but we currently anticipate receiving clearance before the end of the year. Also, we started our early access program, which I'll discuss in more detail in the next slide. On the clinical evidence line at the bottom of the slide, we had two major presentations at the AHA meeting in November, and the valid ECG pivotal study, which is the basis for the 12-lead synthesis 510 application, was accepted for presentation at the HRS meeting in April. On the AI classifications line, And the last call, we laid out plans to start enrollment in our RAISE-ECG study, validating HeartBeam's AI algorithm for arrhythmia classification. We're in the process of enacting a plan to eliminate the need for RAISE-ECG. We anticipate this could reduce the cost and shorten the timeline of the project. We expect to be able to share more details shortly. For MI detection, we'll be initiating interactions with the FDA soon, and we have added to this slide that we anticipate starting enrollment on a clinical study related to this indication later this year. As I mentioned previously, we commenced our early access program in Q1 2025. The intent of this program is to learn in preparation for our pilot commercialization, which we plan to initiate after we receive FDA clearance for the 12-lead synthesis software. The goals of the Early Access Program include refining the clinical workflows, establishing operational readiness, validating our commercial messaging and marketing materials, and creating a strong funnel of early adopter sites. By laying this groundwork and using this time to optimize these areas, we anticipate being able to maximize the impact of our pilot commercialization. I want to talk a little bit more specifically about our go-to-market strategy. We're planning to start with what we're referring to as direct patient pay, specifically patients paying for the system outside of reimbursement. This is largely a section that we can reach through concierge and preventive cardiology practices, but at the same time supplement this by targeting individuals in select geographic areas through digital marketing. We've conducted extensive market research with patients and concierge practice and validated that there's a strong market need for the HeartBeam technology in this market segment. So that's phase one. Phase two of our go-to-market strategy is to develop evidence to sell to individual payer plans and integrated healthcare systems. We believe that there are numerous use cases that could result in payment for the HeartBeam system by entities other than the patient. These include monitoring hospital-at-home patients, post-denting or prior heart attack patients, and so-called frequent flyers in the emergency department, patients who visit repeatedly with chest pain that's not the result of cardiac issues. Similarly, Medicare Advantage plans and Medicare Special Needs plans, or SNPs, also cover payment for monitoring high-risk cardiac patients to better manage the overall cost associated with these patients and to reduce expensive downstream procedures. And finally, new CPT codes were recently introduced for a synthesized 12-lead ECG acquisition and interpretation, and we're evaluating our ability to leverage these codes. So let's go a bit deeper on the direct patient pay market, which will be the focus of our pilot commercialization. Our overall strategy is to establish HeartBeam as the first personal cable-free synthesized 12-lead ECG. We're going to start with a focused direct sales and marketing operation in the US. We really want to prove the concept and develop the playbook. So we'll start in two geographic markets as our pilots and then expand. We want to establish premium pricing as well as a subscription model, and we plan to focus on customer experience and retention. We've identified the target patient population. These are patients with known cardiac issues at higher risk or a family history. They may just be concerned about their cardiac health as well, and the willingness and ability to pay outside of reimbursement is important. Now, to give a sense of market sizes, we're starting with the concierge market. There are currently about 1.5 million concierge medicine patients in the U.S. We've talked to a number of concierge physicians, and they're extremely excited about our offering and how it will fit into their practices. Many of these physicians say that right off the bat, HeartBeam could make sense for their patients with elevated cardiac risk. This is about one-third of their patients, or 500,000 patients. This would be the tip of the market and would translate into an opportunity of $250 to $500 million in annual revenue. The direct patient pay market as a whole is massive. One cut is to take the patients in the U.S. ages 35 to 74. If we then estimate that one-third of this group have elevated cardiac risk and then initially focus only on the top 5% of income, that's about 2.6 million people. If we multiply by our expected pricing, that's a revenue opportunity of $1.3 to $2.6 billion a year.