Q2 2023 HeartBeam Inc Earnings Call
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Yeah.
Greetings and welcome to the Heartbeat second quarter 2023 financial results conference call. At this time, all participants are in a listen only mode.
A question on first answer session will follow the formal presentation. As a reminder, this conference is being recorded at this time I will turn the call over to Heartburn, Chief Executive Officer, Brendan swap Patrick. Please go ahead Sir.
Thank you operator, and good afternoon, everyone I'm pleased to welcome you to today's second quarter 2023 financial results Conference call.
On today's call there'll be relating some very important updates about our business and our products.
Recently, we completed $26 5 million in funding, which.
Which will enable us to execute on upcoming.
I think the development clinical and regulatory milestones and extends our cash runway into late 2024.
With this funding.
We took the opportunity to adjust our strategic focus to enable timely delivery of our ambulatory Baxter Alex to Cod yoga or V. C G product our key.
Two value drivers.
Our first step is to obtain and five 10-K FDA clearance for.
For the Harbin Amy go V C D device.
This application was submitted to the FDA made any.
Have you got any that'd be following this will be the second FDA application.
On the system's ability to synthesize that lead E C G.
Even this strategic focus on our Amy go system, we withdrew the five 10-K.
Implication for our Amy product, which is a softer applied.
Valvoline E C G in the emergency Department.
This will allow us to devote all of our resources and energy to products that are being powered for.
For our two lead E C G.
To the hands of patients and outside of a medical facility.
We just announced the publication of our first peer reviewed paper.
<unk> foundational study demonstrating the ability of our B C. G platform to detect the presence of coronary artery blockages.
The study comparing our three D V C. G approach to conventional standards I believe E C. G appear to inject advances.
All of the American College of Cardiology.
We also strengthened our board.
The appointment of three it affected the executives there Mike Michael Josh.
Ken Nelson and my strong, bringing the number of Harbin board members to eight.
We also are excited to report that the recent Debelle Kevin our.
Two our team Debbie Castile ph D S.
He is vice president of regulatory affairs.
Debbie ease of Nyx, Bds biomedical engineer and brings more than 30 years' experience in regulatory affairs and quality assurance.
Medical devices and diagnostics.
Well, it's with the FDA and the private sector.
Finally, we continued to solidify our intellectual property portfolio in the second quarter with a new patent issued U S patent office.
On all debates at Cod do detection.
Amy go system.
We believe this path it underscores our leadership.
In the ambulatory <unk> space.
As previously reported.
On may 3rd looks this year.
We closed a secondary offering of 25 million.
Followed by at a registered direct offering of $1.5 million or a total of 20 point $26 5 million.
The first public Ventas as our placement agent there a wholly owned subsidiary of MVP Capital Holdings.
M D B and public ventures kept proven to be tremendous strategic partners for a heartbeat.
Public ventures is a member driven investor community with the mission of backing visionary public companies that have potential to become market leaders to get their technology category.
We continue to work with them as we execute on our strategic plan and the facts our ball minutes. It that that's fast also an M. D. B entity is ongoing example of how we plan to continue to use their services.
We believe.
The leader in the mall build a b C G space and as we built on our global intellectual property portfolio, our birth with that the best is a tangible example of our commitment.
That's interesting is that <unk>.
Unified technology development and passed that law firm focused on creating IP Lee there she put development stage companies like hot beam.
And we expect they will support our goal of creating clear leadership in the area of ambulatory BCG cardiac detection.
I would like now to turn the call over to our President Rob <unk>.
To further discuss our strategic focus and provide product updates Rob.
Thank you Brandon and thanks to everyone. Joining us today, we mentioned this last quarter, but I wanted to reiterate the key points, we've refined our strategic focus and are concentrating on our Amy go platform, bringing the performance of the 12 beat ECG into patients' hands, we see this platform, which will enable physicians.
<unk> to remotely monitor patients and immediately interpret any concerning cardiac events as an important value creation path.
In addition, we will be undertaking clinical studies in 2023 and beyond to demonstrate the performance of the Heartbeat. Amy go platform, which we believe is the most advanced ambulatory cardiac detection platform available.
As Brendan mentioned the first peer reviewed study related to our technology was recently published in Jack enhances this publication highlighted the capabilities of the technology to detect the presence of a coronary occlusion the cause of heart attacks with the same accuracy is a standard 12 lead ECG.
It also demonstrated the advantages of cooling a baseline recording for comparison in the analysis. This is something that is integral to the heart beam technology, but today when 12 <unk> our annualized it's not common that a baseline ECG is used for comparison.
The significance of this study is in demonstrating the potential to provide patients with an easy to use system to record of diagnostic quality ECG signal outside of a medical institution, which could improve heart attack detection speed up access to care and save lives will be conducting additional studies focused on our 12 week census.
And on the performance in the system as a whole and we believe these studies will be key to driving clinical and patient adoption.
Our commercial launch activities will be for the second version of heart PMA Mcgough asked can we obtain FDA clearance for the algorithms synthesize a 12 D. C. G. I will describe this in more detail in just a minute.
And this year, we're undertaking aggressive pre commercial efforts to finding the initial market segments for heart, PMA, Macau and identifying potential business partners for Heartburn, Amy go and other technologies in our portfolio.
And finally as Brent as Todd mentioned, we will continue to aggressively there can progressive development of our intellectual property through our partnership with Pat and best.
Turning to our product timelines and updates we have to plan to F. T. A five 10-K submission the first which we call version one is for the hardware in other words obtaining clearance as a three lead ECG collection device next version two builds upon version one and includes the algorithms that take the <unk>.
<unk> signals and synthesize a 12 liter ECG for physician review.
In May we submitted our 500 10-K application for version one we have also started the process for version 10 in June we submitted a request for a pre submission meeting to FTA. The pre sub processes, an excellent means to get feedback on key elements of the submission that pre sub meeting has been scheduled it has been scheduled with me.
Look forward to working closely with FDA on both of these applications.
The result of these two submissions once cleared by FDA will be a device carried by patients that can synthesize it 12, we'd ECG for physician review.
We'll have we'll focus then on a limited market release, which we estimate in the second half of 2024.
With the appointment of Debbie Castile as Vice President of regulatory Affairs, we've strengthened our team debbie's, an experienced biomedical engineer with extensive knowledge of the FDA. In addition to her private sector experienced Debbie held various roles at FDA, including acting branch Chief Senior lead reviewer and Ilene scientific humor.
And finally in an effort to focus on the Heartbeat may make a product we withdrew our five 10-K application for heart team Amy our beam Amy is focused on emergency room, reuse, which is significantly smaller opportunity than the heartbeat, Amy go ambulatory ECG market.
Decision will allow the company to focus on the product development clinical regulatory and market preparation efforts for Heartbeat Amy go.
I'll now turn the call over to Rick Braunstein, Chief Financial officer to discuss operational updates and financials.
Thank you Rob.
Turning to our financials I'll now give a brief review of our financial results.
Breakdown is available in our regulatory filings, we just filed the 10-Q and.
And in the press release that crossed the wire after the close of business today.
General and administrative expenses for the second quarter of 2023 were $1 8 million compared to $1 8 million for the second quarter last year.
Overall, G&A expenses flat spending is actually down in 2023 compared to 2022.
In 2022, we're investing in the commercial team and due to our change in near term focus and early 'twenty. Three we are not currently emphasizing commercial activities.
The reduced sales and marketing expense was offset by increased noncash stock based compensation of about <unk> 4 million, resulting primarily from the issuance of employee stock options. Following the May 2023 financings.
Research and development expenses for the second quarter of 2023 were $1 5 million compared to $1 7 million for the second quarter of 2022.
Our focus on R&D deferred in 2022 compared to this quarter.
Well both consisted largely of our product development and regulatory costs in 2022, our focus was on that element of our platform for our products working with an outside development organization live more.
And preparing for our first FDA submission.
This quarter, our U S development team our employees hired from live more and the focus is wholly on heartburn named Mako.
We submitted version one for FDA clearance in May.
At the same time, we continue to use our professional services agreement with Triple ring.
Triple ring represents over 20% of our investment in R&D. This quarter ended June 32023. So we are investing in the device cost reduction program.
As of June 32023, we have a remaining connect with them and this project a point $8 million.
In both periods. We also invested in research costs in support of future product pipeline coming from our patented <unk> platform technology, which is the basis for our patent portfolios 10 issued patents.
With the current interest interest rates and short term markets around 5%. We earned 158000 in interest income in the second quarter of 2023, and that's only for two months because we can you know closing the financing in early may.
Compared to $10000 in the second quarter of 2022.
Net loss for the second quarter of 2023 was $3 2 million compared to a net loss of $3 5 million for the second quarter of 2022.
We ended the second quarter of 2023 with $21 3 million in cash cash equivalents and short term investments compared to $3 6 million as of December 31st.
As mentioned in May we closed a common stock financing with net proceeds of approximately $24 3 million.
Use of proceeds is planned to last into late 2020 for time to when we expect to have received clearance for a commercial product. We are confident we remain on track.
With regard to our short term investments, we take a risk adverse approach only investing in short term government backed money market funds that we are holding to maturity.
The approximate $4 million in short term investments at June 30 of 2023 represents such securities with a four to six month term.
Also of importance and the recent financing is the fact that the $17 7 million shares offered did not include any warrants.
And our balance sheet as a result has a very simple and straightforward capital structure.
Approximately 26 million shares now withstanding.
Yeah.
Finally, I'd like to share the results of our recent annual meeting of shareholders.
<unk> haul proposals passed which included adding 4 million authorized shares.
The 2022 equity incentive plans.
Reflecting the overall dilutive effect of the S. One financing.
I will now turn it to call back over to Brian <unk> for his closing thoughts.
Thank you Rick.
We remain incredibly optimistic for the future of a heartbeat.
I would like to summarize our recent airports in the following categories.
National strategic focus and progress and validation.
Following our 2006 and a half million dollar capital raise we have a strong cash position provide the run rate to late 2024, we have adjusted our strategic focus to enable timely delivery of heartbeats breakthrough ambulatory V. C. G products the companies keep future value driver and we are.
Highly focused on executing on our product development clinical and regulatory milestones. The key element of this focus is the heartbeat Amy go credit card sized V. C. G device.
In May we submitted a five 10-K M. D application on version one of our system and in June we have submitted a pre sub request well version two of the system.
We are excited about the addition of Debbie Castile.
Our new Vice President of regulatory as we work with the FDA on these submissions.
Finally, we had several recent milestones that add to the validation of the technology and the company.
All our foundational clinical study was published in JAK advances.
We added three strong members to the board of Directors. In addition to that because steel joined our management team as we had an additional patent granted.
Our automated detection VITAS beam Amy go system.
Yeah.
I look forward to providing our shareholders to get further updates in the near term.
Thank you all for attending today.
And now the heartbeat team would like to answer your questions.
Operator.
Okay.
Thank you we will now be conducting a question and answer session.
If you would like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue. You May press star two if he 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.
One moment, please while we poll for questions.
Our first question comes from Ben Hayner with Alliance Global Partners. Please proceed with your question.
Ladies and gentlemen, thanks for taking the questions and congrats on the progress.
First off for me just I know, it's early days, but I'm wondering if you've done any reaction to the Jac publication and then maybe you could talk about obviously the performance of solid.
Any surprises positive or negative.
With regard to the device and or kind of the human reading.
That came out in the study.
Yes, Ben Thank you for your question.
Yes, we do.
Actually very fortunate.
That's our.
Publication.
Ooh caused tours.
Corio as well you know this.
This is a sign of a.
<unk> eight of a validly ceased publication.
A publication, that's very impactful and indeed all of our.
Associated.
Medical team members as well as some of our potential business partners.
<unk> have noticed this is a very significant event.
For our future acceptance.
This study shows.
That we have a technology that puts the power water, what's about Aleve D. C G.
The standard of care.
In patients pockets, it's always be the patient and that is a huge value for those high risk patients. So all in all this is our first publication, it's extremely well received and eat all the the the first one we have a few.
Oh the follow on publications in the works and we will continue on that treadmill of publications showing the efficacy of our technology.
And can you discuss it well first of all I guess maybe.
Any surprises there and then any on the publications that you have in the works.
Can you share anything about how they might be similar or different that the current study.
Published studies.
Yes, the future studies will take a little bit different angle as our technology.
I cannot really discuss it in into many details, but I can tell you that.
Every one of these studies will be like a brick in the wall so to speak and.
At this point.
A number of patents and the number of publications that we are working on.
And.
Again that did that.
That cadence because I've been out of hot.
We will continue both on the publication front and the IP front.
Turning to slide maybe I'll just add briefly if you don't mind.
Lately you agree with all of that I don't think the question of surprises I don't think there's any surprises, but I think one thing which comes out in the paper, which may be less obvious is the importance of a baseline. So in both the V. C. G. In the 12 lead the results were a lot better when the.
Baseline was was used to compare with some reading.
And what's interesting about that is that's an integral part of our process. We have a baseline when the patient enrolls and we compare that by definition and when you think about how 12 leads for annualized today theyre often analyzed in isolation without a baseline so the topline in the paper or is that the V. C. G pro formed equal.
Two of 12 lead in both comparisons are or one at a time, we're always going to have that baseline and sometimes the 12 leads are analyzed in a vacuum swing thats kind of subtle but important point in this study.
Yeah. Thank you Rob.
Excellent and then just maybe a couple mainly for Rex.
On the G&A it sounded like there is maybe 400000 that was kind of nonrecurring.
In the quarter or is that a fair assessment or what should we kind of think about going forward on the on the G&A line.
No.
Okay.
I would say reoccurring, but not in cash.
Alright, and indeed, we've now up to 26 27 million shares.
You'll see I think a growing.
Noncash stock expense.
Uh huh.
If you have if you go back to 2022, yes. There was 400000 I would say of nonrecurring SG&A expense that we won't see again for probably.
Until we start getting commercialization.
Great.
2024 months or so.
Okay. So so there wasn't any.
May have misheard. It I thought you said 400000 related to stock based comp related to that.
Dean.
No as a result of this financing we granted more stock options to people, who now had a much slower share in the company.
Okay.
Was it any.
Hi, Mitch.
G&A expenses associated with the deal.
No not in the club channel.
I mean, any kind of anything that was associated with the financing is all just ran through stockholders' equity you didn't go to the P&L.
Okay got it and then on the cost reduction program, which ranked hows that progressing any more color. There that you can provide and that's it for me. Thanks.
Thanks for taking the questions gentlemen.
Okay.
And Brian do you want to handle that I wonder.
Go ahead.
Yeah.
Yeah, Okay. So.
So Ben the I mean.
It's probably going to be most of the year or we're doing we're doing things to take a basically a prototype level.
Device that is you know costs over $1000 and reducing something that when we start to get in volumes will be.
A couple of hundred dollars right. So there's various pieces that are going on.
It's ongoing.
We're looking at the P C V or looking at some malls are all buying some other things right.
It's a dedicated approach now that we look forward to commercialization to be able to produce.
If you went to credit card at a reasonable price.
Okay, great. Thanks for the color and thanks for taking the questions.
Thank you Beth.
As a reminder, if you would like to ask a question. Please press star one on your telephone keypad.
Okay.
At this time, we will now take questions from our webcast.
Our first question as you mentioned that you have withdrawn Amy can you tell me more about that decision.
Let me handle that question.
Our strategic focus is on ambulatory devices.
Amy application Bye bye.
Valuable had a very different market and distribution strategy.
And as he has seen the opportunity with our Amy go ambulatory D. C G device.
And as we make progress and get closer and closer to its market availability. It is important for us to totally focus.
And take advantage of that huge opportunity.
This market is much larger market probably.
<unk> or more.
Then thats of the emergency room market.
The great needs.
And the key opportunity is to bring the lead.
D C G.
The patients outside of the healthcare institution.
Actually the algorithm the V a.
Developed for.
Amy.
Which basically takes that sadly D C G and cause you to the V C G.
And Russ analysis on the B C G.
Is planned to be included in the future generations. So Amy go as well.
So in that sense, we expect to see this technology appear in Amy go down.
Down the line.
Our second and final webcast question is you're providing only high level details on the timing of the future FDA submissions and clearances, rather than a detailed timeline.
You say, you're expecting a limited market release in the second half of 2024 can you provide more context.
Yeah, Rob would you. Please go ahead Sir.
Yeah. The one thing that's clear about regulatory filings in the whole regulatory process is the timing is uncertain and to a large extent, it's outside of our control when dealing with regulatory agencies. So we're going to continue to update on our progress toward our milestones things that we've achieved as we did Ted.
<unk> talking both about the version one and version two products, but rather than give estimates on the timing of some of these upcoming intermediate steps, we decided to focus on the key milestone which is this limited market release of Amy go which happens after the clearance at version two and the second half of 2024.
And we will continue to do that going forward is focus on that ultimate date of market release, but also keep providing updates on the progress and the milestones that we've achieved.
I would now like to turn the floor back over to Dr. <unk> for closing comments.
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 unable to answer any of your questions. Please reach out.
Two IR firm.
MZ group, who would be more than happy to assist.
Thank you again.
This concludes today's conference you may disconnect your lines at this time. Thank you for your participation.
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