Q4 2024 HeartBeam Inc Earnings Call
Greetings and welcome to the Heartbeam 4th quarter in full year 2024 financial results conference call. At this time all participants are unable to smoothly move. A question or answer session will follow the formal presentation.
As a reminder, this conference call is being recorded.
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 different materiality. You were 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.
He's also a reviewer of this recent Form 10K and Form 10Q for a more complete discussion of these factors and other risks, particularly under the heading that risk factors.
Speaker Change: Eros today, Robino, Chief Executive Officer, and Tim Cruickshank, Chief Financial Officer, will present results of operations for the fourth quarter and full year ended December 31, 2024.
Speaker Change: At this time, I will turn the call over to Heartbeam Chief Executive Officer, Mr. Rob Eno.
Speaker Change: Thank you, operator. The agenda of topics we'll cover on today's call are listed on this slide.
Speaker Change: We'll provide a brief overview of the company's vision and then quickly get into our operational updates.
Speaker Change: Milestones, go-to-market strategy and financial results before turning it over to Q&A.
Speaker Change: I want to start by reminding everyone of Heartbeam's overall vision and our foundation for success.
Speaker Change: Heartbeam is developing the first ever personal, capable free ECG that can synthesize a 12-lead ECG.
Speaker Change: We believe bringing this 12-week capability directly into the hands of patients is extremely disruptive to how cardiac conditions are currently managed.
can result in unsurpassed algorithms providing personal, personalized cardiac insights.
Speaker Change: This unique technology represents an enormous market opportunity, there are applications for patients with a wide range of cardiac conditions that represent more than a hundred billion dollars in the US.
Speaker Change: Our long-term road map starts with use since in symptom-driven diagnosis, followed by applications in monitoring and screening.
Speaker Change: 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.
Speaker Change: In January , we submitted a second 5-10K application, this one for the software that synthesizes its 12-lead ECG from the Heartbeam signals. The Heartbeam system, plus this software, when cleared, will be the basis for a pilot commercial introduction.
Speaker Change: 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 .
Speaker Change: Also, since our last call, we had the results of two additional clinical studies presented at the American Heart Association meeting in November .
Speaker Change: The first, with the results of a pilot study, with the same protocol as ValidicG, this 80-patient pilot study demonstrated similar performance between Heartbeam's synthesized 12-WedicG and a standard 12-WedicG for arrhythmia detection.
Speaker Change: 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.
Speaker Change: 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.
Speaker Change: Of note, we're extremely encouraged by the inbound interest with hundreds of physicians and potential patients joining the waiting list.
Speaker Change: Finally, we successfully completed a public offering of eleven and a half million dollars. Tim will discuss this in more detail but this is part of our plan of aligning financing to upcoming milestones.
Speaker Change: 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.
Speaker Change: This is the third award Heartbeam is received in the past year, and we're pleased that our groundbreaking technology is being recognized.
Speaker Change: 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.
Speaker Change: This slide shows the recent progress we've made toward these milestones.
Speaker Change: Holmes. 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.
Speaker Change: 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.
Speaker Change: Also, we started our Early Access Program, which I'll discuss in more detail in the next slide.
Speaker Change: 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 5-10-K application was accepted for presentation at the HRS meeting in April .
Speaker Change: On the AI Classifications line, in the last call we laid out plans to start enrollment in our Rays ECG study, Validating Heartbeams AI Algorithm for Rhythmia Classification.
Speaker Change: We're in the process of enacting a plan to eliminate the need for ACG. We anticipate this could reduce the cost and shorten the timeline of the project. We expect to be able to share more detail shortly.
Speaker Change: 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.
Speaker Change: 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.
Speaker Change: 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.
Speaker Change: By laying this groundwork and using this time to optimize these areas, we anticipate being able to maximize the impact of our pilot commercialization.
Speaker Change: This is largely a section that we can reach through concierge and preventive cardiology practices, but at the same time supplements us by targeting individuals in select geographic areas through digital marketing. We've conducted extensive market research with patients and concierge practice.
Speaker Change: 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.
Speaker Change: We believe that there are numerous use cases that can result in payment for the heartbeam system by entities other than the patient.
Speaker Change: These include monitoring hospital at home patients, poststenting 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.
Speaker Change: Similarly, Medicare Advantage plans and Medicare Special Needs plans are SNPs, also cover payment for monitoring high-risk cardiac patients to better manage the overall cost associated with these patients and to reduce the expensive downstream procedures.
Speaker Change: And finally, new CPT codes were recently introduced for a synthesized 12 lead ECG acquisition and interpretation and were evaluating our ability to leverage these codes.
Speaker Change: So, let's go a bit deeper on the Direct Patient Pay Market, which will be the focus of our pilot commercialization.
Speaker Change: Our overall strategy is to establish Heartbeam as the first personal cable-free synthesized 12-lead ECG.
Speaker Change: We're going to start with a focus direct sales and marketing operation in the U.S. 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.
Speaker Change: We want to establish premium pricing as well as a subscription model and we plan to focus on customer experience and retention.
Speaker Change: 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 the cardiac health as well, and the willingness and ability to pay outside of reimbursement is important.
Speaker Change: 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 US. 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.
Speaker Change: One cut is to take to patients in the US 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 dollars a year.
Tim Cruickshank: I'm now turned over to Tim to walk through the financials.
Great, thanks Rob.
Tim Cruickshank: The company remains focused on Financial Discipline, which is centered around aligning our cash resources to the achievement of key milestones.
Tim Cruickshank: We're very optimistic. I'm a timeline represented. I'm painting our second FDA clearance, but we're also going to be prudent while we work through that process achievement of this important milestone will further de-risk the business
Ampita and Heartbeam will become a commercial entity.
Tim Cruickshank: In my first call with the company last quarter, we started to lay out some of the groundwork we're doing to ensure Heartbeam has the resources and structure necessary to execute on our goals. But also how we plan to do this in an effective manner for both the company and for our shareholders.
Tim Cruickshank: So, before I begin my commentary, I just want to we want to say thank you to all of our investors, our partners and our supporters. As Rob mentioned in February , we completed an 11 and a half million dollar public offering with MDB capital. We completed the deal via common stock equity without warrants.
Tim Cruickshank: And the fundraising once again showed the strong support we have from existing partners and shareholders that are committed to groundbreaking technologies like Carpioums.
Tim Cruickshank: And through this public offering, we were able to bring in a number of new investors that also see the power of our technology and our vision.
Tim Cruickshank: So now I'll take you through a few financial highlights from 2024 and what it all means as we look out to 2025.
Tim Cruickshank: DNA expenses remain largely flat, held the less than a 4% increase year over year. So as you can see the company remains focused on financial discipline centered around aligning our cash resources to the achievement of key milestones as we prepare for commercialization.
Tim Cruickshank: As I've indicated previously with approximately just 20 employees at the company, a large portion of our spend is variable in nature and is tied to our key milestones, which gives us the ability to turn on or off a portion of our spend to match timelines and ensure we're focused on the most critical projects.
Tim Cruickshank: All of this is important as you think about our operating cash flow for 2025.
Tim Cruickshank: The 14.25 million spend in 2024 is a good baseline for 2025, DNA cost will remain stable, R&D spend from 2024.
Tim Cruickshank: who will fit largely into two buckets, carry over from 2024, focused on open milestones, or as we complete milestones, a reassignment of those funds or investments to new milestones. So all this means...
Tim Cruickshank: We have an ability to reassign existing 2024 R&D spends, which will create a good baseline for 2025 and achieving the monolstones we have at hand.
Tim Cruickshank: The remaining focus for 2025 is commercial readiness and preparing for the launch. Rob walked you through.
Tim Cruickshank: Initial spend beyond the baseline that I mentioned will be necessary in 2025 for commercial activities but will be minimizing the spend in the first half of 2025 as we continue to gather market data and de-risk the business from a clinical and regulatory perspective.
Tim Cruickshank: As we achieve our milestones in 2025, we'll then strategically plan the timing of further commercial readiness spent.
Tim Cruickshank: In looking at our cashflow, we aligned our recent capital infusion to our expected burn and the timeline of a number of upcoming milestones.
Tim Cruickshank: At December 31, 2024, we had cash equivalence of 2.4 million, combined with 11.5 million from the public offering with MDP capital, less capital raising costs, that equates to a pro forma cash balance at the end of the year of 12.6 million.
Tim Cruickshank: So for us at Heartbeam we believe very strongly in the value of our disruptive technology and we feel we're significantly undervalued at present from a market cap perspective
So that means we're going to manage and minimize dilution.
Tim Cruickshank: The level of funding we brought in provides us the runway to execute on near-term milestones. As we continue to de-risk the business and as we achieve our goals, we believe this will create more inflection points for us to finance the company opportunistically and manage this dilution as we prepare for commercial launch.
Tim Cruickshank: We're confident we've got the partners and pieces in place to strategically capitalize the business and we'll continue to align our cash burn to the achievement of key milestones in advance of commercialization.
Rob Eno: We look forward to updating you along the way as we execute on these milestones, so with that back over to you Rob.
Rob Eno: Thanks so much Tim. In summary, there was tremendous progress since our last call and I'm really proud of what the team has achieved and incredibly optimistic about our future.
Rob Eno: or executing on our near-term milestones. Since the last call, we received our foundational FDA clearance, which was a major achievement for the company. In addition, we submitted our FDA 510K application for the 12 lead synthesis software.
Rob Eno: Also, the results of our pivotal study on the 12 weeks that this is software were accepted for presentation at H.R.S. and late April . Finally, we completed an 11.5 million dollar public offering with strong support from our existing shareholders in a deal that did not contain warrants.
Rob Eno: We continue to build a strong foundation for our future growth. Our IP protected design is the smallest, easiest to use in first-ever cable-free ECG device that synthesizes a 12-lead
Rob Eno: This platform technology provides the potential for future expansion within the ambulatory ECG space. Major efforts of development include heart attack detection with the patient and AI algorithms for early disease detection and personalized cardiac insights.
Rob Eno: Finally, we're focused on our go-to-market strategy in preparing for our initial pilot commercialization.
Rob Eno: Our initial market of direct patient pay is a multi-billion dollar market and the beach head within this concierge and preventive cardiology practices is an opportunity worth hundreds of millions of dollars.
Rob Eno: We've initiated our Early Access Program, which will provide key insights as we prepare for pilot commercialization. We also are building a sales funnel of potential business focused on two key US geographic markets.
Speaker Change: 2024 was a transformative year for Heartbeam and I'm excited about what we expect to achieve in 2025. I appreciate the support of our investors and partners and the hard work and dedication of our employees. We thank all of you for attending and we now would like to open it up to Q&A operator.
Speaker Change: Thank you. If you would like to ask a question, please press star then one on your telephone keypad.
Speaker Change: If you're using a speaker phone, we'll ask you, please figure out your hands up before brushing the keys.
To withdraw your question, please press star them too.
Speaker Change: If you are listening via the webcast, please type your question into the box on your webcast screen.
We'll pause for just a moment to assemble our roster.
Speaker Change: Thank you. We will now go to webcast questions. As a reminder to ask webcast questions, please write them in the box on your webcast screen. Please go ahead.
Speaker Change: Our first webcast question asks, congratulations on receiving your first FDA clearance.
Speaker Change: What went into your decision to not immediately commercialize upon clearance?
Yeah, I'll take that one.
Speaker Change: So, just to recap our initial clearances for the system with the three lead output and the second submission is the 12 lead synthesis software. And we just think it's important that we initially commercialize with the 12 lead software, which is really where we think the differentiation is from a physician and a patient perspective.
Speaker Change: So we're using this time after the initial clearance while waiting for that second clearance to fully prepare for commercialization with the Early Access Program. Hope that helps.
Our second question asked.
Speaker Change: What are your expectations for Cashburn in 2025 and timing of next race?
Speaker Change: Sure, Rob, I'll take that one. I went through it a bit in terms of cash, cashburn earlier, but I'll try to provide some more helpful insights. We obviously don't provide guidance at present, but that's where I try to lay out some of the baseline expenditures. So we spent 14.5 million.
Speaker Change: We've got R&D milestones, a number of clinical regulatory milestones in 2025, but we can be opportunistic with our R&D spend and move resources around to align.
Speaker Change: with our milestones wherever possible. So we believe our R&D spend last year is also a good baseline.
Rob Eno: for achieving the stated milestones on the slide, Rob Wachty-Thirpses.
Rob Eno: So, what's beyond that? You look, okay, we've got investments beyond the baseline related to commercial readiness activities and then any emerging strategic opportunities that are going to come in that could either be a cash inflow or an investment we need to make to to speed things up.
Rob Eno: The key here is, as we look out at our milestones in that big FDA clearance towards the second half in the second half of this year.
Rob Eno: We're going to be pruning over the first half of the year really trying to stick to that baseline expenditure minimize our commercial spend but as we continue to gain line of sight. To the achievement of our milestones we then start to bring in some expenditure related to commercial launch. To the achievement of our milestones we're going to be pruning over the first half of the year really trying to stick to that baseline expenditure.
Rob Eno: So, based on all this, you know, our capital race provides us the runway we need to execute on our near term milestones, get to those inflection points and then on the other side of that we're confident we've got the partners and pieces in place to strategically fund the business at the appropriate time.
Rob Eno: Our next webcast question asks, can you discuss what the pathway or road map is to get to a heart attack detection?
Sure, I'll take that one. Yeah, it's a great question.
Rob Eno: I guess I'd first say that we have presented or there's data on using our device for heart attack detection in 2023. There was the Jack advances. It is.
Paper that used ...
Rob Eno: The device compared to a 12 lead ECG and the detection of coronary occusions in one of those two American Heart Association presentations was an algorithm for acute coronary conditions in being able to assess patients. So we have early data within that. As you know, and as we've talked about, we're doing a stepwise approach with FDA, really getting them comfortable with the technology. That's why we did this system as a whole with the freely and output first and then going to the 12 lead synthesis and then going to the 12 lead synthesis.
and both of those have an indication for arrhythmia.
Rob Eno: and then as we go forward and get more comfortable with FDA and they get more comfortable with us and the capabilities of the device, we're going to expand into heart attack detection. So, what I can lay out is that we plan as I mentioned to speak with FDA soon and start discussing the plan and we're also planning to do a new clinical study.
Rob Eno: specifically on the use of the device and this indication later on this year.
Rob Eno: So I can't give any more details as we're still working that out for the road map and the timing for MI, but will certainly keep you informed and over the next couple of quarters as we have more information will certainly provide more details.
Rob Eno: The next webcast question asked, is there any competition in the same space?
Rob Eno: Yes, so the way that I think about it is, there are, and we've shown this slide previously, that there are generally within ambulatory ECGs. There are mostly consumer devices that are generally one lead, and those are good for basic arrhythmias, but really are less appropriate for this.
Comprehensive Cardiac Assessment
and then there have been a couple of...
Rob Eno: Small, Cable-free ECG that can synthesize the 12 lead. We believe that our IP is very strong around that, around this three-directional approach and synthesizing that to a 12 lead. So there are other ambulatory ECGs. We don't see any as directly competitive, and because of our IP we feel in a good position around that, but we're certainly aware and monitoring the situation.
Our next webcast question asked,
Speaker Change: Are you concerned about the political changes having an effect on getting timely FDA approval?
Thank you.
Yeah, I'll I'll take that one um
You know, it is, it's certainly an uncertain environment but-
specifically, from our perspective.
We've been in contact with-
Speaker Change: Our team that's conducting the review of our 12-week synthesis submission and you know it's obviously fluid we're continue to monitor it but we really haven't seen an impact on our submission and we appear to be on track with our review team.
Speaker Change: So, we obviously can't say that we're 100% certain of the full impact. We do think that we have good confidence in our interactions and that, you know, we think we're on track until we learn anything otherwise.
Next question asked, does your initial go-to-market plan include wearables?
Unknown Executive, Rick Brounstein, Robert Eno
Speaker Change: Next question asked, are you planning to initially commercialize the technology alone or with a partner?
Yeah, another great question. We've talked about, um,
Speaker Change: Previously that we are assessing all options and we're very much open to partnerships and there's so many different opportunities here that we want to take advantage of partnerships. So we certainly are continuing discussions along those points.
Speaker Change: What we are planning to do is do our initial pilot commercialization as I described in these two pilot markets.
with our own team. Small and focused
Speaker Change: Direct Sales and Marketing Organization. In our opinion, there's really two reasons for that. The first is we want to demonstrate that the demand that we see is real. And second, in a sense that we understand and can implement the playbook in order to market and sell a novel technology like this. [inaudible]
Speaker Change: and then with that we'll have options in our hands about expanding that internal effort and or working with partners in various areas.
Speaker Change: That's a question asked. When is the expected clearance from FDA for the second clearance?
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Speaker Change: Yeah, it's always challenging, even in today's environment, particularly so, and predicting the timing of FDA reviews and appearances.
Speaker Change: You know, we're estimating that we'll receive the clearance before the end of the year but right now it's a little early for us to give any more specific guidance with that.
and our last question asks.
Speaker Change: Can you give us more details on the Early Access Program?
Speaker Change: Sure. So I described in the main part that you know the objective is really we're trying to evaluate our offering on a number of levels and prepare for commercialization so we're going to focus on things like
Speaker Change: Patient onboarding, training, and the whole end-to-end clinical workflow. But also we're going to be establishing things like customer service operations and relationships with an outside physician reader service and those associated workflows.
Speaker Change: We're going to take this opportunity to evaluate our marketing message and materials and also build out a funnel of early adopter centers, and then in terms of scope, we're going to work with a number of centers and we anticipate including hundreds of patients in this program. [inaudible]
That concludes our webcast question and answer.
Speaker Change: Thank you. At this time, I'd like to turn the call back over to Mr. Robino for his closing remarks.
Speaker Change: Thank you, operator. I'd like to thank each of you for joining the earnings call today. It's going to be an exciting year ahead for the company as we look to achieve a number of critical milestones in the very near term. We look forward to continue to update on you on our progress and growth on an ongoing basis.
Speaker Change: If we 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. Thank you.
Speaker Change: Thank you. This includes today's conference call. We thank you all for attending today's presentation. You may now to select your lines and have a wonderful evening.