HeartBeam, Inc. (NASDAQ:BEAT) Q2 2023 Earnings Call Transcript
HeartBeam, Inc. (NASDAQ:BEAT) Q2 2023 Earnings Call Transcript August 13, 2023
Operator: Greetings and welcome to the HeartBeam Second Quarter 2023 Financial Results Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. At this time, I'll turn the call over HeartBeam, Chief Executive Officer, Branislav Vajdic. Please go ahead, sir.
Branislav Vajdic: Thank you, operator and good afternoon, everyone. I'm pleased to welcome you to today's second quarter 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 $26.5 million in funding which will enable us to execute on upcoming product 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 electrocardiogram, or VECG, products, our key future value drivers. Our first step is to obtain a 510-K FDA clearance for the HeartBeam AIMIGo VECG 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 this strategic focus on our AIMIGo system, we withdrew the 510-K application for our AIMI product which is a software applied to 12-Lead ECG in the emergency department. This will allow us to devote all of our resources and energy to products that are being powered for our 12-Lead 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 VECG platform to detect the presence of coronary artery blockages. The study comparing our 3D VECG approach to conventional standard 12-Lead ECG appeared in JACC Advance's, Journal of the American College of Cardiology.
We also strengthened our board with the appointment of 3 respected industry executives, Dr. Michael Jaff, Ken Nelson and Mark Strome, bringing the number of HeartBeam board members to 8. We also are excited to report that, we recently welcomed to our team Debbie Castillo, Ph.D. and 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. Finally, we continued to solidify our intellectual property portfolio in the second quarter, with a new patent issued by the U.S. Patent Office on automated cardiac detection with the HeartBeam AIMIGo system. We believe this patent underscores our leadership effort in the ambulatory VECG space.
As previously reported, on May 3rd of this year, we closed a secondary offering of $25 million, followed by a registered direct offering of $1.5 million, for a total of $26.5 million. We worked with Public Ventures as our placement agent. They are wholly-owned subsidiary of MDB Capital Holdings. MDB and Public Ventures have proven to be tremendous strategic partners for HeartBeam. Public Ventures is a member-driven investor community with a mission of backing visionary public 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 moment with PatentVest, also an MDB entity, is an 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. PatentVest is a unified technology development and patent law firm focused on creating IP leadership for developing state technology companies like HeartBeam and we expect they will support our goal of creating clear leadership in the area of ambulatory VECG 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?
Robert Eno: Thank you, Branislav 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 AIMIGo 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 and beyond to demonstrate the performance of the HeartBeam AIMIGo platform which we believe is the most advanced ambulatory cardiac detection platform available. As Branislav mentioned, the first peer-reviewed study related to our technology was recently published in JACC 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 putting 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. 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 second version of HeartBeam AIMIGo 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 HeartBeam AIMIGo and identifying potential business partners for HeartBeam AIMIGo and other technologies in our portfolio. And finally, as Branislav mentioned, we'll continue to aggressive -- development of our intellectual property through our partnership with PatentVest. Turning to our product timelines and updates, we have two planned FDA 510-K submissions. The first which we call version 1, is for the hardware. In other words, obtaining clearance as a 3-Lead ECG collection device.
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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-K application for version 1. 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 an excellent 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. The result of these 2 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 2024.
With the appointment of Debbie Castillo as Vice President of Regulatory Affairs, we've strengthened our team. Debbie's 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. And finally, in an effort to focus on the HeartBeam AIMIGo product, we withdrew our 510-K application for HeartBeam AIMI. HeartBeam AIMI is focused on emergency room use which is significantly smaller opportunity than the HeartBeam AIMIGo ambulatory ECG market. This decision will allow the company to focus on the product development, clinical, regulatory and market preparation efforts for HeartBeam AIMIGo. I'll now turn the call over to Rick Bronstein, Chief Financial Officer, to discuss operational updates and financials.
Richard Brounstein: 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 second quarter of 2023 were $1.8 million, compared to $1.8 million for the second quarter last year. Although, overall G&A expense is flat, spending is actually down in 2023 compared to 2022. In 2022, we were invested in the commercial team and due to our change in near-term focus in early '23, we are not currently emphasizing commercial activities. The reduced sales and marketing expense was offset by increased non-cash stock-based compensation of about $0.4 million, resulting primarily from the issuance of employee stock options following the May 2023 financings.
Research and development expenses for the second quarter of 2023 were $1.5 million, compared to $1.7 million for the second quarter of 2022. Our focus on R&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 products, working with an outside development organization, LIVMOR and preparing for our first FDA submission. This quarter, our U.S. development team, our employees, hired from LIVMOR and the focus is wholly on HeartBeam AIMIGo. We submitted Version 1f or 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&D this quarter, ended June 30, 2023.
So 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 $0.8 million. In both periods, we also invested in research costs in support of future product pipeline coming from our patented VECG 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 earned $158,000 interest income in the second quarter of 2023 and this only for 2 months as we closed the financing in early May. This compared to $10,000 in the second quarter of 2022. The net loss for the second quarter of 2023 was $3.2 million compared to a net loss of $3.5 million for the second quarter of 2022. We ended the second quarter of 2023 with $21.3 million in cash, cash equivalents and short-term investments, compared to $3.6 million as of December 31.
As mentioned, in May, we closed the common stock financings with net proceeds of approximately $24.3 million. The use of proceeds is planned to last into late 2024, time to when we expect to have received clearance for our commercial product. 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 that we are holding to maturity. The approximate $4 million in short-term investments in June 30, 2023 represents such securities with a 4 to 6-month term. Also of importance in the recent financing is the fact that the 17.7 million shares offered did not include any warrants and our balance sheet, as a result, has a very simple and straightforward capital structure.
Approximately 26 million shares is now outstanding. 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 million authorized shares to the 2022 equity incentive plan, reflecting the overall dilute effect of the S-1 financing. I will now turn it to call back over to Branislav for his closing thoughts.
Branislav Vajdic: Thank you, Rick. We remain incredibly optimistic for the future of HeartBeam. I would like to summarize the recent efforts in the following categories; financial, strategic focus and progress and validation. Following our $26.5 million capital raise, we have a strong cash position, providing runway to late 2024. We have adjusted our strategic focus to enable timely delivery of HeartBeam's breakthrough ambulatory VECG products, the company's key future value driver and we are highly focused on executing on our product development, clinical and regulatory milestones. The key element of this focus is the HeartBeam AIMIGo credit card-sized VECG device. In May, we submitted a 510(k) 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 JACC: Advances. We added three strong members to the Board of Directors, in addition to Debbie Castillo joining our management team and 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 HeartBeam team would like to answer your questions. Operator?
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