HeartBeam, Inc. (NASDAQ:BEAT) Q2 2024 Earnings Call Transcript

HeartBeam, Inc. (NASDAQ:BEAT) Q2 2024 Earnings Call Transcript August 14, 2024

HeartBeam, Inc. beats earnings expectations. Reported EPS is $-0.00019, expectations were $-0.16.

Operator: Greetings, and welcome to the HeartBeam Second 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 the 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 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 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 facts 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 website, heartbeam.com. Your host today Branislav Vajdic, Chief Executive Officer and Founder; Rob Eno, President; and Ravi Malhotra, Senior Director and Corporate Controller, will present results of operations for the second quarter ended June 30, 2024.

At this time, I will turn the call over to HeartBeam Chief Executive Officer, Branislav Vajdic. Please go ahead.

Branislav Vajdic: Thank you, operator. I’d like to start by reminding you of the vision for HeartBeam’s unique technology. HeartBeam is developing AIMIGo, a credit card sized, cable-free cardiac monitoring device that will be capable of producing a 12-Lead ECG by leveraging the company’s core vector technology, which captures 360-degree signals of the heart’s electrical activity. AIMIGo has the potential to create new applications for patients and physicians, specifically heart attack detection upon symptom onset, identification of complex arrhythmias that existing variables cannot detect and the opportunity to monitor chronic conditions such as heart failure and to be used prevention and screening through the use of AI. In addition, HeartBeam’s has broad IP protection on its core technology on novel form factors.

These include implementing our vector technology on extended wear cardiac monitor or a mobile cardiac telemetry device, bringing on-demand 12-lead ECG technology to establish market with reimbursement and novel watch form factor that will combine a continuous monitor and a 12-lead on-demand wrist worn device. As we have mentioned previously, 12-lead ECG is one of the most commonly performed diagnostic tests and is the standard of care in hospitals and clinics. There are many ECG technologies that can be used by patients or consumers at home. You can see a couple of them on this slide. They are not 12-lead ECGs. Instead, there are 1-lead, 3-lead or 6-lead devices. This is adequate, perhaps for detecting many arrhythmias, but is not sufficient to detect heart attack or complex arrhythmias.

Q&A Session

In contrast, HeartBeam AIMIGo is an easy-to-use cable-free credit card size system that synthesizes the 12-lead ECG. The key aim of the HeartBeam technology is to quickly and accurately help clinicians identify the full range of cardiac conditions, including the heart attack outside of a medical institution. Today, patients experiencing heart attacks delay seeking care on an average of 3 to 4 hours, which can lead to death and to serious and costly complications such as heart failure. Next, we would like to share a video that demonstrates how easy it will be for patients to use AIMIGo in the real world. Please note that those of you who are dialed into this call by phone will not hear the audio. So you will be experiencing approximately 50 seconds of silence.

[Video] And now I will turn the call over to HeartBeam President, Rob Eno.

Rob Eno: Thank you, Branislav. HeartBeam technology has the potential to transform a large number of markets. Initially, we’ll focus on the detection of arrhythmias with AIMIGo, where its 12-lead capabilities and advanced AI could outperform existing ambulatory cardiac ECGs. Expansion into heart attack detection where 12-lead is needed, accesses the 20 million patients with coronary artery disease and is a $12 billion opportunity. Incorporating our proprietary technology into the patch market, access is a market with established reimbursement that’s estimated to grow to $4.8 billion in 2030. Over time, HeartBeam’s technology plus AI can move into monitoring for the management of chronic conditions such as heart failure and chronic kidney disease where 12-lead ECG, coupled with deep learning algorithms could provide valuable insights.

And ultimately, a simple, easy-to-use 12-lead device with predictive algorithms could be a prevention and screening tool for an even larger set of patients. More than 120 million Americans have some form of heart disease. We’re incredibly excited about the long-term potential of the technology. And in addition, we’re making steady progress on our near-term milestones. Our initial clearance for the AIMIGo system will be a major milestone for the company and is important for several reasons. To start, we anticipate this will be the first patient held device leveraging vector technology 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 vector approaches an excellent platform for AI algorithms.

In the longer run, we believe that applying AI algorithms on top of the rich 360-degree signals could result in unsurpassed predictive and diagnostic capabilities. Our 510(k) submission for the AIMIGo system is an active review by the agency. We’re in the substantial review phase of answering questions posed by the FDA on this submission. We have successfully resolved the vast majority of the questions the FDA has asked. Since our last update, the FDA requested additional information, which we’re in the process of providing. The company is working with the FDA to address the small number of remaining questions. We continue to be engaged in productive discussions with the agency, and we believe that we’re progressing toward clearance. The company continues to plan for a limited launch of AIMIGo by the end of 2024, which will provide us with valuable feedback on the user experience and functionality of the system in a real-world setting.

We continue to make significant progress on other fronts. We’re preparing materials for our second FDA 510(k) submission on the algorithms that convert the 360-degree signals captured by the AIMIGo system into a synthesized 12-lead ECG. On June 20, we completed enrollment in VALID-ECG, the 198 patient trial comparing simultaneously placed AIMIGo and 12-lead ECGs. We completed enrollment in just 3 months, which is extremely fast for a study of this size. The data are currently being analyzed. VALID-ECG will be the basis of the 12-lead synthesis submission, and we anticipate filing this submission soon after we receive clearance for the AIMIGo system. Prior to enrolling VALID-ECG, we conducted an 80-patient pilot study utilizing the same protocol.

That study has been accepted for presentation at the American Heart Association meeting in November. We’ve also made great progress on our AI program. In Q2, there were scientific presentations at two top electrophysiology conferences that demonstrate the ability of HeartBeam’s AI to detect atrial flutter, an important arrhythmia that’s difficult to identify with a single read ECG. These studies demonstrated that HeartBeam’s AI algorithm applied to vector cardiography or VCG, greatly outperformed AI on a single lead ECG. Also, HeartBeam’s AI algorithm applied to VCG outperformed both an expert panel of electrophysiologists reviewing single lead ECGs and impressively an expert panel reviewing 12-lead ECGs with a statistically significant improvement in the detection of atrial flutter cases.

The development of the AI algorithms has progressed. We’re getting close to freezing our multiple AI models powering HeartBeam AI that once cleared by the FDA will provide a comprehensive set of diagnostic suggestions. This powerful AI-based tool, combined with the 12-lead ECG provided to the cardiologist will make, we believe, an offering beyond anything that’s available in patient obtained ECGs, both in terms of diagnosis covered and diagnostic accuracy. We’ve gained significant experience with AIMIGo and believe that technology is derisked. We’ve conducted multiple clinical studies enrolling more than 500 patients. These include the VALID-ECG study described previously, as well as the 80-patient pilot study. We’ve previously discussed the study published last year in JAK Advances, demonstrating equivalent to 12-lead ECG in detecting coronary occlusions and also showing a significant improvement in accuracy when comparing the HeartBeam approach with a baseline reporting to a single 12-lead ECG, which is often the case in an emergency room.

We’ve completed another study on the performance of our ECG technology together with symptoms and patient history compared to the standard of care. These results also will be presented at the American Heart Association meeting in November, along with the results of the 12 lead synthesis pilot study mentioned area. So a total of 2 presentations at this strategic scientific conference later this year. Beyond the clinical protocols, we have usability experience in a real-world setting with over 7,500 recordings for more than 250 patients, providing us with strong confidence in the systems functionality. I’d now like to hand the call over to our Corporate Controller, Ravi Malhotra to present selected financials.

Ravi Malhotra: Thank you, Rob. I’ll 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 close today. General and administrative expenses for the second quarter of 2024 were $2.2 million compared to $1.8 million for the second quarter of 2023. The increase in G&A expense is primarily related to noncash stock-based companion expense associated with additional awards, which the company granted since June 30, 2023, and also higher consulting costs, primarily offset by lower legal costs in the current period. Research and development expenses for the second quarter of 2024 were $2.8 million compared to $1.5 million for the second quarter of 2023.

The increase in R&D expense is primarily related to an increase in headcount, increase of clinical and AI-related costs and increase in consulting spend, which is offset by a decrease in product development consulting cost spending, primarily driven by completion of milestone projects in the prior period. Net loss for the second quarter of 2024 was $5 million compared to a net loss of $3.2 million for the second quarter of 2023. We ended the quarter with approximately $9.2 million in cash and cash equivalents as we close to carefully manage spending. I will now turn the call back to Branislav for closing thoughts.

Branislav Vajdic: In conclusion, we remain extremely excited about the potential at HeartBeam and progress. AIMIGo will be smallest, easiest to use and first cable-free 12-lead ECG device enabled by HeartBeam’s unique IP-protected vector technology. It has the potential to disrupt numerous large markets and clinical applications, starting with the ability to detect complex arrhythmias, expanding to heart attack detection and then to monitor it for complex diseases such as heart failure. Ultimately, we believe that the combination of the small form factor, powerful 360-degree ECG technology and advanced AI algorithms will have significant applications in prediction and screening of cardiac conditions. We continue to make progress towards key regulatory and clinical milestones.

Our initial 510(k) application for the AIMIGo system is under active FDA review with productive discussions underway. The company is working with the FDA to address the small number of remaining questions. We believe that we are progressing toward clearance. We anticipate a limited launch by the end of the year, focused on the AIMIGo system, which will provide the company with valuable feedback on the user experience and functionality of the system in a real-world setting. We are preparing materials for our second FDA submission that will be a 510(k) submission on the algorithms that convert the vector signal captured by our AIMIGo system into a synthesized VALID-ECG. We have completed enrollment in the VALID-ECG study and anticipate submitting the 510(k) application soon after the clearance of AIMIGo system.

We presented positive new data on our deep learning algorithm HeartBeam AI, demonstrating excellent performance in detecting atrial flutter, even outperforming a panel of three electrophysiologists reviewing 12-lead ECG. We are working to freeze the algorithms in preparation for a clinical study to demonstrate the performance of our AI algorithms. We ended the quarter with approximately $9.2 million in cash and cash equivalents, enabling the company to execute on upcoming clinical and regulatory 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. Operator?

Operator: We will now begin the question-and-answer session. [Operator Instructions] Currently, I do not see any questions on the phone.

Unidentified Company Representative: Our first webcast question. Can you just provide some more detail on the timing of the FDA clearance?

Branislav Vajdic: Yes. Let me comment on that. We are under active review with the FDA, and we really can’t give any more details than what we said in the call and in our earnings materials. To reiterate, we have successfully resolved the vast majority of the questions the FDA has asked. And last quarter, FDA requested additional information, which we are now in the process of providing. We are engaged in productive discussions with the FDA and believe that we are progressing towards clearance. We still anticipate a limited launch before end of the year. Again, this will provide us with valuable feedback on the user experience as well as functionality of the system in the real-world setting, extremely valuable to us.

Unidentified Company Representative: Thank you. Let’s see. Our next question. You showed market sizes for HeartBeam’s technology. Can you explain just where you’re going with those?

Branislav Vajdic: Rob?

Rob Eno: Sure. Yes, thanks. That was a new framework. So I can elaborate. The main point there really is to show that HeartBeam’s technology, which, again, is a credit card-sized cable-free device that produces a 12-lead ECG can have a wide range of applications. So it’s a progression. We’re starting with what we call symptom-driven diagnosis, which is arrhythmia, then moving on to ischemia and heart attack detection. We also have the ability to incorporate the technology into an extended wear patch monitor that can provide for on-demand 12-week capabilities. And with both that form factor and with AIMIGo itself, we think that could move us into monitoring for patients with chronic conditions like heart failure and chronic kidney disease.

And then ultimately, beyond that, we think that patients taking frequent 12-lead ECGs over time, especially when combined with AI algorithms can enable prevention and screening for a very large number of patients. So it really shows the progression with sample segments from symptom-driven diagnosis through monitoring into prevention and screening.

Unidentified Company Representative: Thanks. Our next question. You mentioned that the VALID-ECG study has completed enrollment. What are the results of the study?

Branislav Vajdic: Yes, Rob, please shed some light on that.

Rob Eno: Sure. So first, as a reminder, VALID-ECG was a study with simultaneously collected ECGs. So the patient had both a standard 12-les ECG and AIMIGo at the same time. And the goal was to demonstrate the similarity between the standard 12-lead signals and our synthesized 12-lead signals. And we’ve had 2 pre-submission meetings with FDA that are largely focused on the endpoints of the study. So we’ve — where we are right now is we’ve completed enrollment back in June, as I mentioned, but the data is currently being analyzed. So the results are not available. We do anticipate completing that analysis soon as that will be the basis for the second FDA submission that we plan to submit shortly. I would note that we did complete this 80-patient pilot study with the same protocol.

We can’t say the results of that because it’s been accepted for a presentation in November at the American Heart Association. But based on the results of those studies, that study, we did proceed with VALID-ECG.

Unidentified Company Representative: Great. Thank you. The next question, if the 12-L ECG is being evaluated by a physician, why do you need AI?

Branislav Vajdic: Yes. Let me answer that question. Our vision is that with HeartBeam AI, the user will get an automated arrhythmia classification, and that’s going to happen immediately after every use. However, of course, it is important that a physician review patient clinical picture, the complete clinical picture, which includes ECG. We actually anticipate like having two workflows here. If the user is experiencing symptoms, the ECG will be automatically sent to the user’s physician or to a physician breathing [ph] service for evaluation. On the other hand, if the user is not experiencing symptoms but is taking a routine recording to add to their database or ECGs, the ECG will not automatically go to a physician for interpretation. This is asymptomatic recording, but the user will have the option to do so. In either case, symptomatic or not symptomatic, AI will play a key role in informing the patient and helping physicians diagnose the patient.

Unidentified Company Representative: Great. Thanks. Next question. Will the initial AIMIGo product to be able to detect heart attacks from the get-go? Or will there need to be further R&D before that claim can be made?

Branislav Vajdic: We have actually done a lot of research, and we’ve done two studies related to heart attach detection. So in terms of the development, there is still some work to do. But fundamentally, we believe that we have a technology that’s going to provide leading insight into the patients with chest pain. So all in all, at this point, we are focusing on arrhythmia detection, especially complex arrhythmias that other technologies cannot detect. And our plan is, as soon as that is productized, as soon as that is in the marketplace that we will apply all our resources to enable the product to detect heart attack.

Unidentified Company Representative: Thanks. Next question, is it possible to speak to pursuing FDA approval for atrial flutter versus atrial fibrillation?

Rob Eno: Yes. You want me to take that one, Branislav?

Branislav Vajdic: Yes, go ahead.

Rob Eno: Yes, it’s just similar to what Branislav said before, we’re taking a stepwise approach with FDA. And so the initial indications are for arrhythmia and it’s for a range of arrhythmias. So those do cover atrial flutter and atrial fibrillation, and we’ll have clinical data on that. So yes, pursuing those are within the scope of the initial clearance.

Unidentified Company Representative: Great. That is the final question there. I’ll turn now the call back over to Dr. Vajdic for his closing remarks.

Branislav Vajdic: Thank you, operator. I would like to thank each of you for joining our earnings conference 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 today, please reach out to our IR firm, MZ Group, who would be more than happy to assist. Thank you, again.

Operator: The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.