HeartBeam, Inc. Price & Performance (BEAT)

A press release detailing these results crossed the wire this afternoon and is available in the Investor Relations section of our company's website, heartbeam.com. [indiscernible] are 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 12/31/2024. At this time, I will turn the call over to Harpien's Chief Executive Officer, Mr. Rob Ino. 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 I want to start by reminding everyone of Heartbeam's overall vision and our foundation for success. Heartbeams is developing the first ever personal cable Our unique IP protected approach captures the heart's electrical top to bottom and into the body. We believe bringing this twelve week capability directly into the hands of patients is to how cardiac conditions are currently managed. We also believe this has the potential to be the highest resolution ambulatory ECG monitor and that adding artificial intelligence to these high resolution can result in unsurpassed algorithms providing personal personalized cardiac insights. This unique technology represents an enormous market opportunity There are applications for patients with a wide range of cardiac that represent more than $100,000,000,000 in The U. S. Our long term roadmap starts with Eustin's in symptom driven diagnosis, followed by applications in monitoring and And Heartbeam has a clear go to market strategy and is significantly derisked having received its initial FDA clearance in December.

We'll provide an update both on our near term milestones and our commercial plan which we've identified and validated our initial target market.

We've achieved a number of important milestones since our last call. First, in December, we received our foundational FDA clearance for the Heartbeam system. This clearance is for the system as a whole with the output being our novel three directional ECG leads This is significant for the company as it demonstrates acceptance of this novel approach. In January, we submitted a second five ten ks up application. This one for the software that synthesizes its 12 lead ECG from the heartbeams signals. The HeartBeam system plus this software when cleared will be the basis for a pilot commercial introduction. The key element in our five ten application on the 12 lead synthesis software is a pivotal study called Valid ECG which enrolled one hundred and ninety eight patients from five U. S. Sites. These patients underwent simultaneous recordings of a standard 12 lead ECG and the Heartbeam device. These clinical results were accepted for presentation at the Heart Rhythm Society Annual Meeting 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 VALIDI ECG.

This 80 patient pilot study demonstrated similar performance detection. The second was a feasibility study highlighting a novel algorithm used in conjunction with the Heartbeam ECG technology to detect acute coronary conditions such as heart attacks.

Next, after receiving our initial FDA clearance, we commenced our early access program. The focus of this program is on refining the end to end workflow, ensuring operational readiness, validating messaging and establishing an early adopter sales funnel. Of note, we're extremely encouraged by the inbound interest with hundreds of physicians and potential patients joining the waiting list. Finally, we successfully completed a public offering of $11,500,000 Tim will discuss this in more detail, but this is part of our plan of aligning Recently, Heartbeam was awarded the Diamond Pinnacle Healthcare Award in Medical Device Innovation. This award recognizes companies making significant contributions to improving patient care, advancing medical technology and improving overall health outcomes. This is the third award Heartbeam has received in the past year and we're pleased that our groundbreaking technology is being recognized. In our last call, we showed this slide which lays out the key near term milestones for the end of twenty twenty four and for 2025. I'm pleased to say that we've made significant progress since then. This slide shows the recent progress we've made toward these milestones. First, as mentioned earlier, in December, we received FDA clearance for the Heartbeam system. This is a foundational clearance and it's a major milestone for us.

Next, we submitted our application for the twelve week synthesis software to the FDA in January and that submission is currently under review by FDA. It's challenging to predict the timing of FDA reviews, but we currently anticipate receiving clearance before the end of the year. Also, we started our early access program, which I'll discuss in more detail in the next slide. On the clinical evidence line at the bottom of the slide, we had two major presentations at the meeting in November, and the valid ECG pivotal study, which is the basis for the 12 lead synthesis five ten 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 AI algorithm for arrhythmia classification. We're in the process of enacting a plan to eliminate the need for RayZ 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 INTERACT 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 twenty twenty five. 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 weed synthesis software. The goals of the early access program include refining the clinical work flows, 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 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 section that we can reach through concierge and preventive cardiology practices, but at the same time supplement this by targeting individuals in select geographic areas through digital marketing. We've conducted extensive market research with patients and concierge practice and validated that there is a strong market need for the Heartbeam technology in this market So that's phase one. Phase two of our go to market strategy is to develop evidence to sell to individual pay payer plans and integrated healthcare systems. Believe that there are numerous use cases that could result in payment for the Heartbeam system by entities other than the patient. These include monitoring hospital at home patients, post 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 12 lead ECG acquisition and interpretation. And we're evaluating our ability to leverage these codes.

So let's go a bit deeper on the direct patient pay mark. Which will be the focus of our pilot commercialization. Our overall strategy is to establish Heartbeam as the first personal cable free synthesized twelve week ECG. We're going to start with a focused 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. 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 one point five million concierge medicine patients in The U. S. We've talked to a number of concierge physicians and their extremely excited about our offering and how it will fit into their practices. Many of these physicians say that right off the bat, Heartbeam could make sense for their patients with elevated cardiac risk.

This is about one third of their patients or five hundred thousand patients. This would be the tip of the market and would translate into an opportunity The direct patient pay market as a whole is massive. One cut is to take the patients in The U. S. Ages 35 to 74. If we then estimate that one third of this group have elevated cardiac risk and then initially focus only on the top five percent of income, that's about two point six million people. If we multiply by our expected pricing, that's a revenue opportunity of $1,300,000,000 to $2,600,000,000 a year. I'll now turn it over to Tim to walk through the financials. 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 derisk the business and Harp E and Harp E 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 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 to say thank you to all of our investors, our partners and our supporters As Rob mentioned, in February, we completed an $11,500,000 public offering with MVB Capital. We completed the deal via common stock equity without warrants and the fundraising once again showed the strong support we have from that are committed to groundbreaking technologies like heartbeams. 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. So 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 $14,500,000 for 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 to critical investments made in R and 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 twenty twenty four. G and A expenses remain largely flat held to less than a 4% increase year over year. So as you can see, 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, [indiscernible] approximately just 20 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 $14,500,000 spend in 2024 is a good baseline for 2025. G and A costs will remain stable R and 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 we have an ability to reassign existing 2024 R and 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 I mentioned will be necessary in 2025 for commercial activities, but we'll be minimizing the spend in the first half of twenty twenty five as we continue to gather market data and derisk the business from a clinical and regulatory perspective. And as we achieve our milestones in 2025, we'll then strategically plan the timing of further commercial readiness spent.

And looking at our cash flow, we aligned our recent capital infusion to our expected burn and the timeline of an number of upcoming milestones. At 12/31/2024, we had cash cash equivalents of $2,400,000 dollars combined with $11,500,000 from the public offering with MTV Capital less capital raising costs that equates to a pro form a cash balance at the end of the year. Of $12,600,000 So for us, 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 The level of funding we brought in provides us the runway to execute on near term milestones. As we continue to derisk 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 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. [indiscernible] We look forward to updating you along the way as we execute on these milestones.

So with that back over to you, Rob.

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 foundational FDA clearance, which was a major achievement for the company. In addition, we submitted our FDA five ten application for the 12 lead synthesis software. Also, the results of our pivotal study on the 12 lead synthesis software were accepted for presentation at HRS in late April. Finally, we completed an $11,500,000 public offering with strong support for 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 12 lead ECG. This platform technology provides the potential for future expansion within the ambulatory ECG space. Major efforts of development include heart attack 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 and 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 U. S. Geographic markets. 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 and A. Operator? Thank you. Thank you. We will now go to webcast questions.

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

Yes, 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 12 lead synthesis software. And we just think it's in 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. 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, what are your expectations for cash burn in 2025 and timing of next raise?

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. But that's where I tried to lay out some of the baseline expenditures. So we spent $14,500,000 operating cash outflows in 2024. This is a good general baseline for 2025. You look at our G and A as a public company, that's going to remain stable level to where it is no expected increases there. We've got R and D milestones, a number of clinical regulatory milestones [indiscernible] resources around to align with our milestones wherever possible. So we believe our R and D spend last year is also 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 really 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 speed things up. So 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, we're going to 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. [indiscernible] based on all this, 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 at the appropriate time.

Our next webcast question asks, can you discuss what the pathway or roadmap is to get to heart attack in tech? Detection. Sure.

I'll take that one. Yes, 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 JAK ADVANCES paper that used the device compared to a 12 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 why we did this system as a whole with a three lead output first. And then going to the 12 lead synthesis. And both of those have an indication for arrhythmia. 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 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.

I can't give any more details as we're still working that out for the the roadmap 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.

The next webcast question asked, is there any competition in the same space? 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 12 lead devices with the patient but they use the traditional 10 electrode approach And in our opinion, those are bulky and more difficult to use for the patient. So while there's applications certainly we think that a small handheld credit card size cable free device 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 say 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. Are you concerned about the political changes having an effect on getting timely FDA approval?

Yes, I'll take that one. 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 12 lead synthesis submission. And it's obviously fluid. We're continuing to monitor it, but we we really haven't seen an impact on our submission and we appear to be on track with our review team. So 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 we think we're on track until we learn anything otherwise.

Next question asked. Does your initial go to market plan include wearables?

Yes. I guess 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 a the benefit of combining our 12 lead out [indiscernible] are continuous monitors. So, I hope that answers the question and I apologize if I didn't quite to the intent of it.

Next question asks, are you planning to initiate or with a partner?

Yes, 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 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. Next question asked.

When is the expected clearance time from FDA for the second clearance? [indiscernible] always challenging and even in today's environment, particularly so, in predicting the timing of FDA reviews and clearances. 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. I'll just 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 VALIDe CG study. And then, 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 April. And our last question asks, can you give us more details on the early access program?

Sure. So I described in the main part that the objective is really we're trying to evaluate our offering on a number of levels prepare for commercialization. So we're going to focus on things like 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. We're going to take this opportunity to evaluate our marketing mess 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.

That concludes our webcast question and answer.

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

Thank you, operator. I'd like to thank each of you for joining the earnings call today. 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 and [indiscernible] who would be more than happy to assist.

Thank you.

Thank you. This concludes today's conference call.

We thank you all for attending today's presentation.

You may now disconnect your lines and have a wonderful evening.