BioTelemetry Q2 2023 Earnings Call Transcript

There are 6 speakers on the call.

Operator

Greetings and welcome to the HeartBEAM Second Quarter 2023 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. At this time, I will turn the call over to Heartbeam's Chief Executive Officer, Branislav Sajdek.

Operator

Please go ahead, sir.

Speaker 1

Thank you, operator, and good afternoon, everyone. I'm pleased to welcome you to today's Q2 2023 Financial Results Conference Call. On today's call, we will be relating some very important updates about our business and our products. Recently, we completed $26,500,000 in funding, which will enable us to execute on upcoming development, clinical and regulatory milestones and extends our cash runway into late 2024. With this funding, we took the opportunity to adjust our strategic focus to enable timely delivery of our ambulatory vector Cardiogram or VECG products, our key future value drivers.

Speaker 1

Our first step is to obtain an 510 FDA clearance For the Heartbeatim AIMI Go VCG device. This application was submitted to the FDA in May And we will be following this with a second FDA application on the system's ability to synthesize a 12 lead ECG. Given the strategic focus on our AimiGo system, we withdrew the 510 Application for our AMI product, which is a software applied to Trevali DCG in the emergency department. This will allow us to devote all of our resources and energy to products that are being powered For our TwavLead ECG into the hands of patients and outside of a medical facility. We just announced the publication of our first peer reviewed paper, a foundational study demonstrating the ability of our VCG platform to detect the presence of coronary artery blockages.

Speaker 1

The study comparing our 3 d VCG approach to conventional standard travel ECG appeared in JAK Advances, General of the American College of Cardiology. We also strengthened our Board With the appointment of 3 respected industry executives, Doctor. Michael Jaffe, Ken Nelson and Mark Strom, Bringing the number of Heartbeat Board members to 8. We also are excited to report We recently welcomed our to our team, Debbie Castillo, PhD's Vice President of Regulatory Affairs. Debbie is an experienced biomedical engineer and brings more than 12 years experience in regulatory affairs And quality assurance for medical devices and diagnostics, both with the FDA and the private sector.

Speaker 1

Finally, we continued to solidify our intellectual property portfolio in the second quarter With a new patent issued by U. S. Patent Office on automated cardiac detection with the Heartbeatam Amigo system. We believe this patent underscores our leadership effort in the ambulatory BECG space. As previously reported, on May 3 this year, We closed a secondary offering of $25,000,000 followed by a registered direct offering of $1,500,000 For a total of $26,500,000 we worked with Public Ventures as our placement agent.

Speaker 1

They are wholly owned subsidiary of MDB Capital Holding. MDB and Public Ventures have proven To be tremendous strategic partners for Heartbeat. Publish Ventures is a member driven investor community With the mission of backing Vision Republic companies that have potential to become market leaders in their technology category. We continue to work with them as we execute on our strategic plan and in fact our moments with PatentFast also an MDB entity is ongoing example of how we plan to continue to use their services. We believe that we are the leader in the mobile VECG space and as we build on our global intellectual property portfolio, Our work with PatentVest is a tangible example of our commitment.

Speaker 1

PatentVest is a Unified Technology Development is a patent law firm focused on creating IP leadership for development and state technology companies like Heartbeam And we expect they will support our goal of creating clear leadership in the area of ambulatory BCG cardiac detection. I would like now to turn the call over to our President, Rob Eno, to further discuss our strategic focus And provide product updates. Rob?

Speaker 2

Thank you, Brandislav, and thanks to everyone joining us today. We mentioned this last quarter, but I wanted to reiterate the key points. We've refined our strategic focus and are concentrating on our AIMI Go platform, Bringing the performance of a 12 lead ECG into patients' hands. We see this platform, which will enable physicians to remotely monitor patients And immediately interpret any concerning cardiac events as an important value creation path. In addition, we'll be undertaking clinical studies In 2023 beyond to demonstrate the performance of the HeartBeam AIMI Go platform, which we believe is the most advanced Ambulatory cardiac detection platform available.

Speaker 2

As Bratislav mentioned, the first peer reviewed study related to our technology We published in JAK Advances. This publication highlighted the capabilities of the technology to detect the presence of a coronary occlusion, the cause of heart attacks With the same accuracy as a standard 12 lead ECG. It also demonstrated the advantages of including a baseline recording for comparison in the analysis. This is something that is integral to the HeartBEAM technology. But today when 12 lead ECGs are analyzed, it's not common that a baseline ECG is used for comparison.

Speaker 2

The significance of this study is in demonstrating the potential to provide patients with an easy to use system to record a diagnostic quality ECG signal outside of a medical institution, which could improve heart attack detection, speed up access to care and save lives. We'll be conducting additional studies focused on our 12 lead synthesis and on the performance of the system as a whole, and we believe these studies will be key to driving clinical And patient adoption. Our commercial launch activities will be for the 2nd version of HeartbeatAmy Go after we obtain FDA clearance For the algorithms that synthesize a 12 lead ECG, I'll describe this in more detail in just a minute. And this year, we're undertaking aggressive pre commercial efforts, Defining the initial market segments for HeartbeatmeAmy Go and identifying potential business partners for Heartbeatme Amy Go and other technologies in our portfolio. And finally, as Brenoslav mentioned, we'll continue to aggressive development of our intellectual property through our partnership with PatentVest.

Speaker 2

Turning to our product timelines and updates, we have 2 planned FDA 510 submissions. The first, which we call version 1 is for the hardware. In other words, obtaining clearance as a 3 lead ECG collection device. Next, version 2 builds upon version 1 and includes the algorithms that take the 3 lead VECG signals And synthesize a 12 lead ECG for physician review. In May, we submitted our 510 application for version 1.

Speaker 2

We've also started the process for version 2. In June, we submitted a request for a pre submission meeting to FDA. The pre sub process is next what means to get feedback on key elements of the submission. That pre sub meeting has been scheduled. It has been scheduled and we look forward to working closely with FDA on both of these applications.

Speaker 2

The result of these two submissions Once cleared by FDA will be a device carried by patients that can synthesize a 12 lead ECG for physician review. We'll focus then on a limited market release, which we estimate in the second half of twenty twenty four. With the appointment of Debbie Castillo as Vice President of Regulatory Affairs, we've strengthened our team. Debbie is an experienced biomedical engineer with extensive knowledge of the FDA. In addition to her private sector experience, Debbie held various roles at FDA, including acting branch chief, senior lead reviewer and lead scientific reviewer.

Speaker 2

And finally, in an effort to focus on the HeartbeatAmy Go product, we withdrew our 510 application for HeartbeatAmy. Heartbeam AIMI is focused on emergency room use, which is significantly smaller opportunity than the Heartbeam AIMI GO ambulatory ECG market. This decision will allow the company to focus on the product development, clinical, regulatory and market preparation efforts for Heartbeam Amy Go. I'll now turn the call over to Rick Braunstein, Chief Financial Officer, to discuss operational updates and financials.

Speaker 3

Thank you, Rob. Turning to our financials, I'll now give a brief review of our financial results. So a full breakdown is available in our regulatory filings we just filed the 10 Q and in the press release that crossed the wire after the close of business today. General and administrative expenses for the Q2 of 2023 were $1,800,000 compared to $1,800,000 for the Q2 last year. Overall G and A expense is flat, spending is actually down in 2023 compared to 2022.

Speaker 3

In 2022, we were invested in the commercial team and due to our change in near term focus in early 2023, We are not currently emphasizing commercial activities. The reduced sales and marketing expense was offset by increased non cash Stock based compensation of about $400,000 resulting primarily from the issuance of employee stock options following the May 2023 financings. Research and development expenses for the Q2 of 2023 were $1,500,000 compared to $1,700,000 for the Q2 of 2022. Our focus on R and D differed in 2022 compared to this quarter. While both consisted largely of product development and regulatory costs, in 2022, our focus was on the development of our platform for our This quarter, our U.

Speaker 3

S. Development team are employees hired from LivMor and the focus is wholly on HeartbeatenAmy Go. We submitted Version 1 for FDA clearance in May. And at the same time, we continue to use our professional services agreement with Triple Ring. Triple Ring represents over 20% of our investment in R and D this quarter ended June 30, 2023.

Speaker 3

We are investing in a device cost reduction program. As of June 30, 2023, we have a remaining commitment with them For this project of $800,000 in both periods, we also invested in research costs in support of future product pipeline Coming from our patented ZECG platform technology, which is the basis for our patent portfolio of 10 issued patents. With the current interest rates in short term markets around 5%, we earn $158,000 in interest income in the quarter of 2023 and this only for 2 months as we close the financing in early May. This compared to $10,000 in the Q2 of 2022. The net loss for the Q2 of 2023 was $3,200,000 compared to a net loss of $3,500,000 for the Q2 of 2022.

Speaker 3

We ended the Q2 of 2023 with $21,300,000 in cash, cash equivalents and short term investments compared to $3,600,000 as of December 31. As mentioned in May, we closed the common stock financings with net proceeds of approximately 24,300,000 The use of proceeds is planned to last into late 2024, time to when we expect to have received clearance for our commercial product, so we are confident we remain on track. With regard to our short term investments, we take a risk adverse approach, only investing in short term government backed money market funds We are holding to maturity. The approximate $4,000,000 in short term investments at June 30, 2023 We represent such securities with a 4 to 6 month term. Also of importance in the recent financing is the fact that the 17,700,000 shares offered did not include any warrants and our balance sheet as a result has a very simple and straightforward capital structure, Approximately 26,000,000 shares now outstanding.

Speaker 3

Finally, I'd like to share the results of our recent Annual Meeting of Shareholders. At the event all proposals passed, which included adding 4,000,000 authorized shares to the 2022 Equity Incentive Plan, Reflecting the overall dilute effect of the S-one financing. I will now turn the call back over to Branislaw for his closing thoughts.

Speaker 1

Thank you, Rick. We remain incredibly optimistic for the future of Heartbeat. I would like to summarize the recent efforts in the following categories: financial, strategic focus and progress and validation. Following our $26,500,000 capital raise, we have a strong cash position providing runway to late 2024. We have adjusted our strategic focus to enable timely delivery of Heartbeams breakthrough ambulatory BCG products, the company's key future value driver, And we are highly focused on executing on our product development, clinical and regulatory milestones.

Speaker 1

The key element of this focus is the Heartbeat Amy Goh, credit card size VECG device. In May, we submitted a 510 FDA application On version 1 of our system and in June, we have submitted a pre sub request for version 2 of the system. We are excited about the addition of Debbie Castillo, our new Vice President of Regulatory as we work with the FDA on these submissions. Finally, we have several recent milestones that add to the validation Of the technology and the company, our foundational clinical study was recently published in JAK Advances. We added 3 strong members to the Board of Directors in addition to Debbie Castillo joining our management team.

Speaker 1

We had an additional patent granted on our automated cardiac detection with Heartbeam Aimigo system. I look forward to providing our shareholders with further updates in the near term. I thank you all for attending today. And now the Hal Beam team would like to answer your questions. Operator?

Operator

Thank you. We will now be conducting a question and answer session. Our first question comes from Ben Haynor with Alliance Global Partners. Please proceed with your question.

Speaker 4

Good evening. Hey, gentlemen. Thanks for taking the questions and congrats on the progress.

Speaker 3

First off, for me,

Speaker 4

just I know it's early days, but wondering if you've gotten any reaction to the JAK publication. And then Maybe you could talk about, obviously, the performance was solid. Any surprises, positive or negative With regard to the device and or kind of the human reading that came out in the study?

Speaker 1

Yes, Ben. Thank you for your question. Yes, We were actually very fortunate that our publication Caused an editorial as well. This is a sign of a well received publication Publication, that's very impactful. And indeed, all our associated medical team members As well as some of our potential business partners have noticed this as a very significant event For our future acceptance, the study shows that we have a technology That puts the power of a 12 lead ECG, the standard of care in patients' pockets.

Speaker 1

It's always with the patient and that is a huge value for those high risk patients. So all in all, this is our first publication, Extremely well received and it's only the first one. We have a few Of the follow on publications in the works and we will continue on that treadmill of publications showing the efficacy of our technology.

Speaker 4

And can you discuss well, first off, I guess maybe, any surprises there and then any On the publications that you have in the works, can you share anything about how they might be similar or different to the current study And this is published study.

Speaker 1

Yes. The future studies will take a bit different angle at our technology. And I cannot really discuss it in many details, but I can tell you that every one of these Studies will be like a breaking the wall, so to speak. And at this point, we have a number of patents And the number of publications that we are working on and again that cadence Coming out of Heartbeat, we'll continue both on the publication front and the IP front.

Speaker 2

Brinavesslav, maybe I'll just add briefly, if you don't mind. Completely agree with all of that. I don't think and the question of Surprises? I don't think there's any surprises, but I think one thing which comes out in the paper, which maybe is less obvious Is the importance of a baseline. So in both the VECG and the 12 lead, the results were a lot better When the baseline was used to compare with the reading.

Speaker 2

And what's interesting about that is that's an integral part of our Process, we have a baseline when the patient enrolls and we compare that by definition. And when you think about how 12 leads are analyzed today, They're often analyzed in isolation without a baseline. So the top line of the paper is that the VECG performed equal to a 12 lead In both comparison or one at a time, we're always going to have that baseline and sometimes the 12 leads are analyzed in a vacuum. So I think that's a Kind of subtle, but important point in the study.

Speaker 1

Yes. Thank you, Rob.

Speaker 4

Excellent. And then I guess maybe a couple mainly for Rick. On the G and A, it sounded like there was maybe $400,000 that was Kind of non recurring in the quarter, is that a fair assessment or what should we kind of think about going forward on the G and A line?

Speaker 3

Okay. I would say reoccurring but non cash, Right. And indeed, as we've now up to 26000000, 27000000 shares, you'll see, I think, a growing Non cash stock expense, but the if you have if you go back to 2022, Yes. There was $400,000 I would say of non recurring SG and A expense that we won't see again for probably Until we start getting commercialization late 2024 or so.

Speaker 4

Okay. So there wasn't any I may have misheard it. I thought that you said $400,000 related to Stock based comp related to the financing?

Speaker 3

No. As a result of this financing, we granted more Talk options to people who now had a much slower share in the company.

Speaker 4

Okay. So and there wasn't any kind of one Hi, Nish. G and A expenses associated with the deal?

Speaker 3

No, not in the quarter. I mean anything that was associated with the financing is all just ran through stockholders' equity, didn't go to the P and L.

Speaker 4

Okay. Got it. And then on the cost reduction program with Triple Ring, how is that progressing? Any more color there that you can That's it for me. Thanks for taking the questions, gentlemen.

Speaker 3

Okay. Branislav, do you want to handle that one or?

Speaker 1

Go ahead, Blake.

Speaker 3

Yes. Okay. So Ben, the I mean, it's probably going to be most of the year. We're doing things to take a basically a prototype level device that is Costs over $1,000 and reduce it something that when we start to get in volumes will be a couple So there's various pieces that are going on. It's ongoing.

Speaker 3

We're looking at the PCB board. We're looking at Some molds that we'll buy and some other things, but it's a dedicated approach now that we look forward to commercialization To be able to produce say, if you would, the credit card at a reasonable price.

Speaker 4

Okay, Great.

Speaker 3

Thanks for the color

Speaker 4

and thanks for taking the questions.

Speaker 1

Thank you, Ben. Let me handle that question. Our strategic focus is on Ambulatory devices. Any application, while valuable had a very different market and distribution strategy. As we have seen the opportunity with our Aimigo ambulatory BCG device And as we make progress and get closer to its market availability, it is important for us to totally focus And take advantage of that huge opportunity.

Speaker 1

This market is much larger market, probably 20x or more than that of the emergency room market. The great need and the key opportunity is to bring the 12 lead VECG To the patients outside of the healthcare institution. Actually, the algorithm that we Developed for AMI, which basically takes the 12 LDCG and converts it to the VECG Andron's analysis on the VECG is planned to be included In the future generations of Amigo as well. So in that sense, we expect to see this technology

Speaker 5

Our second and final webcast question is, You are providing only high level details on the timings of the future FDA submissions and clearances rather than a detailed timeline. You say you're expecting a limited market release in the second half of twenty twenty four. Can you provide more context?

Speaker 1

Yes. Rob, would you please go ahead?

Speaker 2

Sure. Yes. The one thing that's Clear about regulatory filings and the whole regulatory process is the timing is uncertain and to a large extent it's outside of our control when dealing with regulatory agencies. So we're going to continue to update on our progress toward our milestones, things that we've achieved as we did today talking both about The version 1 and version 2 products. But rather than give estimates on the timing of some of these upcoming intermediate steps, We decided to focus on the key milestone, which is this limited market release of Aimigo, which happens after the clearance of Version 2 In the second half of twenty twenty four and we'll continue to do that going forward is focus on that ultimate date of market release, But also keep providing updates on the progress and the milestones that we've achieved.

Operator

I would now like to turn the floor back over to Doctor. Dvajdek for his closing comments.

Speaker 1

Thank you, operator. I would like to thank each of you for joining our earnings conference call today And look forward to continuing to update you on our ongoing progress and growth. If you were unable to answer any of your questions, please reach out to IR firm, MZ Group, who would be more than happy to assist. Thank you again.

Operator

This concludes today's conference. You may disconnect your lines at this time. Thank you for your

Earnings Conference Call
BioTelemetry Q2 2023
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