HeartBeam, Inc. (NASDAQ:BEAT) Q4 2024 Earnings Call Transcript

HeartBeam, Inc. (NASDAQ:BEAT) Q4 2024 Earnings Call Transcript March 13, 2025

HeartBeam, Inc. beats earnings expectations. Reported EPS is $-0.18, expectations were $-0.19.

Operator: Greetings, and welcome to the HeartBeam, Inc. 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 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 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. It is available in the Investor Relations section of our company’s website, heartbeam.com. Your host today, Rob Eno, 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.

At this time, I will turn the call over to HeartBeam, Inc. Chief Executive Officer, Mr. Rob Eno.

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, Inc.’s overall vision and our foundation for success. HeartBeam, Inc. is developing the first-ever personal cable-free ECG that can synthesize a twelve-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 twelve-lead 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 model 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 US. Our long-term roadmap starts with use in symptom-driven diagnosis followed by applications in monitoring and screening. HeartBeam, Inc. 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.

Q&A Session

We’ve achieved a number of important milestones since our last call. First, in December, we received our foundational clearance for the HeartBeam, Inc. 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 510(k) application, this one for the software that synthesizes a twelve-lead ECG from the HeartBeam, Inc. signals. The HeartBeam, Inc. system plus this software, when cleared, will be the basis for a pilot commercial introduction. The key element in our 510(k) application on the twelve-lead synthesis software is a pivotal study called VALID ECG which enrolled 198 patients from five US sites.

These patients underwent simultaneous recordings of a standard twelve-lead ECG and the HeartBeam, Inc. 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 VALID ECG. This 80-patient pilot study demonstrated similar performance between HeartBeam, Inc.’s synthesized twelve-lead ECG and a standard twelve-lead ECG for arrhythmia detection. The second was a feasibility study highlighting a novel algorithm used in conjunction with the HeartBeam, Inc. 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, Inc. was awarded the Diamond Pinnacle Health Care 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, Inc. 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, Inc. system. This is a foundational clearance, and it’s a major milestone for us. Next, we submitted our application for the twelve-lead 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 meeting in November and the VALID ECG pivotal study, which is the basis for the twelve-lead synthesis 510(k) application, was accepted for presentation at the HRS meeting in April. On the AI classifications line, in the last call, we laid out plans to start enrollment in our RAISE ECG study validating HeartBeam, Inc.’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 interaction 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 twelve-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 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, Inc. 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 health care systems. We believe that there are numerous use cases that could result in payment for the HeartBeam, Inc.

system by entities other than the patient. These include monitoring home patients, post-stenting 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 costs associated with these patients and to reduce expensive downstream procedures. And finally, new CPT codes were recently introduced for a synthesized twelve-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, Inc. as the first personal cable-free synthesized twelve-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 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. Many of these physicians say that right off the bat, HeartBeam, Inc. 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 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 it by our expected pricing, that’s a revenue opportunity of $1.3 to $2.6 billion a year. I’ll now turn it over to Tim to walk through the financials.

Tim Cruickshank: Great. Thanks, Rob. The company remains focused on financial discipline, which is centered around aligning our cash resources to the achievement of key milestones. We’re very optimistic on the timeline represented on obtaining 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 and HeartBeam, Inc. will become a commercial entity. In my first call with the company last quarter, we started to lay out some of the groundwork we’re doing to ensure HeartBeam, Inc. 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.

Before I begin my commentary, I just want to say thank you to all of our investors, our partners, and our supporters. As Rob mentioned, in February, we completed an $11.5 million public offering with MPB Capital. We completed the deal via common stock equity without warrants. And the fundraising once again showed the strong support we have from existing partners and shareholders that are committed to groundbreaking technologies like HeartBeam, Inc. 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. Our recent FDA clearance and this financing bring us closer to fulfilling our vision of providing unprecedented cardiac insights to individuals and physicians.

So once again, thank you. And now I’ll take you through a few financial highlights from 2024, and what it all means as we look out to 2025. Net cash used in operating activities was $14.5 million FY 2024, equates to a 20% increase year over year. And in line with expectations. The year-over-year increase in spend was primarily attributed to critical investments made in R&D as the clinical data required to complete the VALID ECG pivotal study. And internal and external resources focused on achieving our foundational FDA clearance at the end of 2024. G&A expenses remain largely flat held to 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.

As I’ve indicated previously, with approximately just twenty employees at the company, a large portion of our spend is variable in nature. 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. All of this is important as you think about our operating cash flow for 2025. The $14.5 million spend in 2024 is a good baseline for 2025. G&A costs will remain stable. R&D spend from 2024 will fit largely into two buckets, carryover 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 I have an ability to reassign existing 2024 R&D spend which will create a good baseline for 2025.

And achieving the milestones we have at hand. The remaining focus for 2025 is commercial readiness and preparing for the launch Rob walked you through. Initial spend beyond the baseline that I mentioned will be necessary in 2025 for commercial activities, but we’ll 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. As we achieve our milestones in 2025, we’ll then strategically plan the timing of further commercial readiness spend. Looking at our cash flow, we aligned our recent capital infusion to our expected burn and the timeline of a number of upcoming milestones. At December 31, 2024, we had cash and cash equivalents of $2.4 million combined with $11.5 million from the public offering with MVP Capital.

Less capital raising costs, that equates to a pro forma cash balance at the end of the year of $12.6 million. So for us, at HeartBeam, Inc., 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. That means we’re gonna manage and minimize dilution. 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 dilution as we prepare for commercial launch. We’re confident we’ve got the partners and thesis 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.

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. We’re 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 510(k) application for the twelve-lead synthesis software. Also, the results of our pivotal study of the twelve-lead synthesis software were accepted for presentation at HRS in late April. Finally, we completed an $11.5 million public offering with strong support from our existing shareholders in a deal that did not contain warrants. We continue to build a strong foundation for our future growth.

Our IP-protected design is the smallest, easiest to use, and first-ever cable-free ECG device that synthesizes a twelve-lead ECG. 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. Finally, we’re focused on our go-to-market strategy in preparing for our initial pilot commercial. Our initial market of direct patient pay is a multibillion-dollar market, and the beachhead within this concierge preventive cardiology practices is an opportunity worth hundreds of millions of dollars. 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. 2024 was a transformative year for HeartBeam, Inc., 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?

Operator: Thank you. 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. And once again, if you have an audio question, please press star then one at this time. 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.

Rob Eno: Our first webcast question asks, congratulations on receiving your first FDA clearance. What went into your decision to not immediately commercialize upon clearance?

Tim Cruickshank: Yeah. I’ll take that one. So just to recap, our initial clearance is for the system with the three-lead output and the second submission is the twelve-lead synthesis software. And we just think it’s important that we initially commercialize with the twelve-lead software, which is really where we think the differentiation is from a physician and a patient perspective. 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.

Rob Eno: Our second question asked, what are your expectations for cash burn in 2025 and timing of next raise?

Tim Cruickshank: Sure, Rob. I’ll take that one. I went through it a bit in terms of cash burn earlier, but I’ll try to provide some more helpful insights. We obviously don’t provide guidance at present. That’s where I tried to lay out some of the baseline expenditures. So we spent $14.5 million operating cash outflows in 2024. This is a good general baseline for 2025. You look at our G&A as a public company, that’s gonna remain stable level to where it is. No expected increases there. We’ve got R&D milestones, you know, a number of clinical regulatory milestones in 2025. But we can be opportunistic with our R&D spend and move resources to our milestones wherever possible. So we believe our R&D spend last year is also a good baseline for achieving the stated milestones on the slide Rob walked you through.

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 gonna come in. That could either be a cash inflow or investment we need to make to speed things up. So the key here is as we look out at our milestones and that big FDA clearance, towards the second half in the second half of this year, we’re gonna be prudent 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. So based on all this, you know, our capital raise 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 capitalize 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 heart attack detection?

Tim Cruickshank: Sure. I’ll take that one. Yeah. It’s a great question. 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 JACC Advances paper that used the device compared to a twelve-lead ECG in the detection of coronary occlusions. And 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 a three-lead output first and then going to the twelve-lead synthesis.

And both of those have an indication for arrhythmia. And then as we go forward and get more comfortable with and they get more comfortable with us and the capabilities of the device, we’re gonna 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 then we’re also planning to do a new clinical study specifically on the use of the device in this indication later on this year. 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 we’ll certainly keep you informed. And over the next couple of quarters as we have more information, we’ll certainly provide more details.

Tim Cruickshank: The next webcast question asked, is there any competition in the same space?

Rob Eno: Yeah. 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 twelve-lead devices with the patient, but they use the traditional ten-electrode approach. And in our opinion, those are bulky and more difficult to use for the patient. So while there’s application certainly we think that a small handheld credit card size cable-free device, you know, makes more sense from a patient perspective. So we don’t know of any direct competitors within our space of this small cable-free ECG that can synthesize the twelve-lead.

We believe that our IP is very strong around that, around this three-directional approach and synthesizing that to a twelve-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.

Tim Cruickshank: Our next webcast question asked, are you concerned about the political changes having an effect on getting timely FDA approval?

Rob Eno: Yeah. I’ll take that one. You know, it is it’s certainly an uncertain environment, but specifically from our perspective, we’ve been in contact with our team that’s conducting the review of our twelve-lead synthesis submission. And you know, it’s obviously fluid. We’re continuing 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. So we obviously can’t say that we’re a hundred percent 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.

Tim Cruickshank: Next question asked, does your initial go-to-market plan include wearables?

Rob Eno: Yeah. I guess I’m I apologize that I’m not sure exactly the intent of this question. So whoever asked that, feel free to follow-up with us if I don’t answer this in the right way. Our device is not a wearable. We have some IP in terms of making it work as a wearable. But we do think that there’s a potential for an ecosystem where patients who have wearables could have their data feed into our system, and there’s the benefit of combining our twelve-lead output and the one-lead wearable information. Obviously, many of those are continuous monitors. So I hope that answers the question, and I apologize if I didn’t quite get to the intent of it.

Tim Cruickshank: Next question asked, are you planning to initially commercialize this technology alone or with a partner?

Rob Eno: Yeah. Another great question. We’ve talked about 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. What we are planning to do is do our initial pilot commercialization as I described in these two pilot markets with our own team a small and focused direct sales and marketing organization. And 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. And then with that, we’ll have options in our hands about expanding that internal effort and or working with partners in various areas.

Tim Cruickshank: Next question asked, when is the expected clearance time from FDA for the second clearance?

Rob Eno: Yeah. It’s you know, always challenging and, you know, even in today’s environment you know, particularly so in predicting the timing of FDA reviews and clearances. 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. You know, just to add that we have excellent relationships with FDA. We feel good about our submission. We held two pre-submission meetings with FDA to specifically talk about the design of the VALID ECG study. And then we as we’ve mentioned, we’re encouraged by the results of the VALID ECG study. Which will be the main focus of the application, and also those results will be presented publicly at the end of April.

Tim Cruickshank: And our last question asks, can you give us more details on the early access program?

Rob Eno: 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 gonna focus on things like patient onboarding, training, and the whole end-to-end clinical workflow. But also we’re gonna be establishing things like customer service operations and relationships with an outside physician reader service and those associated workflows. We’re gonna 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, you know, we’re gonna work with a number of centers and we anticipate including, you know, hundreds of patients in this program. That concludes our webcast question and answer.

Operator: Thank you. At this time, I’d like to turn the call back over to Mr. Rob Eno for his closing remarks.

Rob Eno: 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 continuing to update you on our progress and growth on an ongoing basis. 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.