HeartBeam, Inc. (BEAT) Earnings Call Transcript & Summary

All right, everyone. I want to be respectful of your time and stay on schedule here. We've got a few kind of housekeeping announcements at the front side so that will allow other people to come in as they join. I want to welcome you to today, this presentation from HeartBeam. I'm Lou Basenese, President and Chief Market Strategist at MDB Capital. I'm -- we're excited to be presenting to you this follow-on opportunity with HeartBeam on the heels of their first FDA clearance. We will be recording this. So we will be sharing a recording once we complete the 4 Zooms that we have scheduled, 2 for today and 2 for tomorrow. So if you want to take notes or not take notes, it's up to you. We'll provide that. We also will provide a link to a copy of the registration statement, and we'll be available to answer any questions that you have after this Zoom. We'll do a Q&A period. We just ask that you use the Q&A function embedded in Zoom to submit your questions. You can do that as the presentation is going on as you think of them, we'll be able to see those, and then we'll make sure that we facilitate the answering of those questions as we get to that part of the presentation. So with that being said, I'd love to welcome the executive team from HeartBeam, 3 members here. Rob Eno, the CEO, I'll turn it over to you right now.

Thanks, Lou. Great. Well, we're thrilled to be here today to talk about HeartBeam. First, the standard disclaimers, including that we're talking about forward-looking statements today. So Tim and Richa are joining me on the call. Just a quick overview. I'm Rob, I'm the Chief Executive Officer. I have an MBA from Stanford in about 28 years in medical technology, really focusing on go-to-market strategies and bringing novel technologies to market and just thrilled to be here today. Tim?

Tim Cruickshank, CFO, 15-plus years in med tech public companies and focused on taking clinical stage companies to commercial entities, and just joined the company a little over 3 months ago, and I'm extremely excited about the opportunity ahead of us.

Richa?

Hi, everyone. Richa Gujarati. I head up product at HeartBeam. My background is a combination of medical device technologies such as Abbott and iRhythm and also Apple Health most recently. Been at HeartBeam for about 1.5 years now. And yes, really excited about the future that we have ahead of us.

Great. So here's the overview of HeartBeam. We have fundamentally the first-ever cable-free 12-lead ECG for patients to use. The company was founded by Branislav Vajdic. He was earlier in his career, the co-inventor of flash memory at Intel. But growing up in Europe, his father was a physician. But despite that, one afternoon, his father had a heavy lunch, thought he was having indigestion, and sadly, a couple of hours later, died of a heart attack because he missed up the symptoms. So when Branislav finished his career at Intel, he devoted himself to developing a simple, easy-to-use device that could detect the signs of a heart attack, and that's what turned into HeartBeam with a novel approach that we'll talk more in detail about that captures the heart signals in 3 directions. But really, even more than that, what we now have is the highest resolution ECG collection device. And we'll talk about how when we apply artificial intelligence to that, especially because patients are taking readings over time, we're going to have an unsurpassed database that's going to provide personalized cardiac insights for patients and valuable data for our partners as well. We'll talk about the massive market opportunity we have. We're positioned to disrupt a number of markets that, together are worth more than $100 billion in the U.S. alone. We also have a very clear road map focused in front of us, starting with symptom-driven diagnosis, moving into monitoring and screening, and ultimately with the potential to replace existing 12-lead ECGs. And then finally, we have a clear go-to-market strategy and are significantly de-risked. As Lou mentioned, we just received our initial FDA clearance, which is a major milestone for the company. It's for the HeartBeam system as a whole and really shows that FDA has bought into the concept of our novel approach of capturing the ECG signal. And we'll talk about the cascade of near-term milestones we have as we prepare for commercialization in 2025. This is fundamentally the problem that we're going after. Today's ECG technology is just not adequate. You have 2 very different categories. On the left are the at-home ECGs. You know the Apple Watch, there's the Kardia from a AliveCor and others. These are generally 1-lead ECGs. They're great for basic arrhythmias like atrial fibrillation, but they're not sufficient for more complex arrhythmias or getting into the whole field of heart attack detection or ischemia detection. To do that, you need a 12-lead ECG. The standard 12-lead ECG on the right-hand side, which is really the gold standard used in hospitals, requires the placement of 10 electrodes in specific places on the body. It's really limited to hospital use because it requires the exact electrode placement and physician involvement. So what we think about the market, we think about it in this way. One axis is the number of leads from 1 lead on the left to 12 lead on the right. And then on the vertical axis is design, easy to use versus difficult with cables or external leads. So you generally have 2 clusters. In the top left are the at-home, generally single lead ECGs, which are easy to use, but don't have all the functionality of a 12-lead ECG. And fundamentally, you have to be on the right-hand side of this graph at the 12-lead in order to detect heart attacks. There are a couple of devices for -- that are 12-leads at home. But because they use the traditional approach of all the external electrodes, they're bulky and difficult to use and really haven't had much adoption at all. HeartBeam really breaks this paradigm by having a credit card size cable-free 12-lead ECG that we create in a novel process. This is the IP behind it and really shows the technology that goes into the approach. We're using an approach that collects the heart's electrical signals in 3 directions. So a vertical direction, up and down, a horizontal direction, across and then into the body. And the IP is around the novel way that we've done that, both miniaturizing it and creating this novel resistive network that captures the direction into the body. And then the other key piece of IP that we have is the personalized transformation matrix. So there are existing ways of going back and forth between a 3 directional approach and a 12-lead ECG. The ones that have existed are population-based. So they're good, but not at the level of accuracy that we wanted. So what we do is when the device is prescribed to a patient and the patient is onboarded, they get a single 12-lead ECG either taken from the medical record or taken at the time of onboarding. When we have 1 standard 12-lead ECG plus 1 reading with the HeartBeam system, we can determine the best way to personalize that transformation. We then save that personalized transformation matrix. And going forward, whenever they use the HeartBeam device, they just have to do that reading, and we can synthesize the 12-lead ECG. And with that, I'm going to turn it over to Richa, who's going to do a live demonstration.

Thanks, Rob. So what you'll see on my screen is my phone shared directly where I'll launch the HeartBeam app, and I'll show you how I'm going to take a live reporting through the HeartBeam device using the HeartBeam app on my phone. So I've logged in with my FaceID. The device is connected now, as you can see. And when I press start recording, the user has the option for 2 separate workflows. One is you're experiencing symptoms. You want urgent response and review of your ECG from a physician. And the other one is routine recording when you just want to add to your ECG data set, and are curious about your ECG recording. So let's go with experiencing symptoms. You'll see I've opened up my wings right here. Standard placement, 3 fingers down from your collarbone, sort of left of your chest. And with that, I'm ready to take the recording and I'll go quiet for 30 seconds.

So we ask the users to go quiet just to minimize noise and have them focus on the device. What you'll see is that Richa has the 2 chest electrodes touching the body, those are giving that vertical signal. Then the 2 finger electrodes are giving the horizontal signal. What we're doing now is while it's recording down, she's getting feedback on the quality of the contact between the electrode and the skin. Green means good connection, red means it's maybe not the best. It doesn't have to be fully green for 30 seconds. It's just giving some visual indication in general, if you're getting a lot of red, then maybe you want to move things around. That looks like a good quality recording, and you can see that's all there is to it. We're at the end of the 30 seconds.

Great. And then, yes, just for my physician to review, I can add symptoms, chest pain. You can also add additional context if you want the doctor to review it. And then what's happening right now is we're taking that recording and processing it in 2 separate directions. One is being evaluated by our AI-based arrhythmia detection algorithm for real-time feedback. And the second is it's also being synthesized into a 12-lead ECG so that it can be sent to a cardiologist reader service for quick review and assessment of what your recording looks like. So right now, it takes a little bit longer because we're in the early phases where you have to wake up the GPU. But once we have more users onboarded, it should be less than 5 to 10 seconds. So there it is. You get a quick arrhythmia assessment, normal sinus rhythm, slightly elevated heart rate for me, but all good, 85 beats per minute. And then simultaneously, you'll also see the report directly in the app, so you can share it with your doctor, your caregiver, whoever you may want to send it to. So this is all of 12-lead ECG right on your phone in less than 40 seconds, you can see. So most wearables will only give you lead 1, which is only limited to arrhythmia detection and predominantly only AFib. But lead-12 is what the standard of care is. And you can see this is what most doctors are used to as well for diagnosing heart attacks as well as complex arrhythmias. And that's all of 12-lead ECG in 40 seconds right from your phone. And back to you, Rob.

Thanks so much, Richa. Let me just -- great. That was wonderful, Richa. It really shows how easy it is to use the device, how quick and easy it is to get a reading. Obviously, a lot of technology and a lot of work went into getting it to be that clean and great of a form factor. On the intellectual property, we're focusing mainly on the HeartBeam credit card size device on the left-hand side. But we have 17 issued patents worldwide. And one of the exciting things is how it touches on a range of different form factors and how with such a simple approach, the 3 directional approach, 2 finger electrodes and 2 chest electrodes, how that enables many different form factors. So this extended wear patch, these are the -- it's an existing multibillion-dollar market. These are the patches like the iRhythm Zio patch that you would get prescribed as an electrophysiologist wants to understand about an abnormal heart rhythm and you'd wear this for 14 or 30 days and then they get the results afterwards. Those are 1-lead ECGs generally. Our IP is on adding our technology in. And when a patient would place 2 fingers on the chest, it becomes an on-demand 12-lead ECG. The -- what we call the integrated system is really a way of connecting with a smartwatch so that the Apple Watch or other watch would notify you that something is up and suggest that you take out your 12-lead ECG into a reading. And then on the right-hand side, we have issued IP on an implementation of the technology that takes our electrodes, the chest electrodes and the finger electrodes, and actually embeds them into the watch band of a smart watch. So in that case, if the watch detected something or if you had symptoms, you'd simply take off your watch, put it vertically on your chest, put 2 fingers on, and you're basically carrying your 12-lead watch with you. So we have the IP on all of those different form factors, but focusing on the credit card size to start. Now here's the fundamental problem that exists that we're going after in terms of symptom-driven diagnosis, which is the beginning of our road map. This is when patients have chest pain, just like what happened with Branislav's father and trying to decide what to do. The good news here is that there's been a lot of work within the cardiology community for when a patient shows up at the emergency room door with chest pain, that process has been optimized. The patient will get a 12-lead ECG within 10 minutes of arriving and will be -- have a stent placed to open up the artery within 90 minutes. In many places, it's less than 60 minutes. That's all in guidelines. But what really hasn't been touched over decades is the pre-hospital time, the symptom to door time. This takes an average of 3 to 4 hours as patients are in denial. They're thinking their symptoms are indigestion. They're going to go away. They don't want to go to the emergency room. Really, the bar to take action is very high. And what we believe is a simple, easy-to-use system with them, whenever they had any kind of symptoms, it would reduce the bar to the first action of taking a reading and having that be evaluated by a physician in real time. What do these delays mean? Every 30 minutes of delay increases the mortality rate by 7.5%. And also every 30 minutes increases the risk of heart failure by an even greater amount. Now heart failure, which comes from damage to the heart tissue is directly related to these delays. It's a really terrible complication. It's really expensive to the health care system, $30,000 a year or more. And also patients are in a lot of pain and the life expectancy is actually only about 5 years. So definitely things to avoid. So our vision is by having something with the patient upfront, we can reduce that symptom to door time and affect both the mortality and the complications. So I wanted to touch briefly on the clinical data. There's a significant body of evidence that's existing and is building. I'll go quickly through this. Happy to talk about it more in the Q&A section, but we have 9 papers and presentations, more than 500 patients in these studies. Beyond the basic science, we have a number of studies that have done on arrhythmia indications as well as heart attack. And I'll highlight 4 of them very quickly here. On the top left, the top row is arrhythmia. On the top left, we just presented at the recent American Heart Association meeting, a pilot study where patients who were in arrhythmia clinic, getting a standard 12-lead ECG, they got one of our devices as well simultaneously. We synthesized the 12-lead and compared the results. And what it shows there is whether you look at it quantitatively or qualitatively, we basically matched it very, very well, almost perfectly. On the top right is applying our AI algorithms to this 3 directional approach showed that the algorithm actually had much better performance than a similar algorithm on a 1-lead ECG. That's not surprising. But what was really interesting is the algorithm on our 3 directional approach actually outperformed a panel of electrophysiologists looking at a 12-lead ECG. So it really indicates the power of the combination of our device and the AI algorithm. The bottom row is on heart attack detection. We had a study published about 1.5 years ago in JACC Advances. This was on the ability to detect coronary occlusions, detect blockages. We were equivalent to a 12-lead ECG, but what's fascinating here is that when you add an asymptomatic baseline and compare the 2, the accuracy is much greater than a single reading. So when you compare what happens with our device, where, by definition, we have that baseline from our onboarding to when a patient would show up to the emergency room and they're not a known patient, so they only have a single 12-lead ECG, the HeartBeam system was shown to be about 40% more accurate. And then similarly, on the right-hand side, this is an algorithm that adds the ECG plus symptoms in history. It was equivalent to a physician panel looking at a 12-lead ECG, and when you add in the baseline was even more highly accurate. So now I'm going to turn it over to Richa to talk about our product road map.

Thanks, Rob. So we have really designed a road map to take advantage of our form factor, but also the rich data set we'll collect and split the road map into 3 separate phases, to go from symptom-driven diagnosis that Rob talked about and transitioning to modern and predict so that we can become an important part of everyone's daily life through predictive algorithms that alert users of cardiac risk and ultimately become the standard of care. For our first phase, again, similar to the demo you saw and what Rob already talked about, tiny symptom-driven diagnosis of conditions like heart attack could be life-saving. And this target segment is really anyone at high risk of cardiac events and comes to about 31 million U.S. adult patients. For our second phase, we'll go beyond diagnosis into prediction and management of heart conditions. So imagine predictive algorithms that are just at your home that you can run at any time and can identify cardiac risk factors of things like coronary artery disease well before symptoms appear. This has applications in chronic disease, such as heart failure as well as in early screening. And these solutions could really serve nearly every adult in the United States would represent just under 200 million potential users. We'll discuss the features that are planned as part of this in an upcoming slide. And then for our last phase, physicians frequently ask us, when will HeartBeam become the news -- replace a traditional 12-lead ECG. So the limitations of existing 12-lead ECGs, complex setup, misplacement errors, inaccessibility are really frustrated even expert users such as physicians and nurse practitioners. And our ultimate vision is really to become that new standard to replace the $100 million plus 12-lead ECG procedures performed annually and expand their use beyond hospitals to places like rural health centers, airports and more really sort of driving greater adoption for 12-lead ECG and become sort of redefine the new standard of care. Next, we'll talk about some of those predictive features that we have planned. So as part of our monitor and predict phase, some of these predictive features that we have highlighted here, they have already been proven on 12-lead ECG, but limited to hospital to predict cardiac conditions such as sudden cardiac death, risk of heart failure, need for a heart valve. The added advantage that our HeartBeam system offers that these algorithms can run at any time a user takes an ECG recording, using the HeartBeam device, just like I did a couple of minutes ago, instead of waiting to go to a hospital to get a 12-lead ECG taken once -- which will really be limited to once every year. By frequently running these algorithms will not only improve the accuracy, but will also allow users to have continuous assessment of what their cardiac risk profile looks like so that they can take quick actions and not wait until it's too late or until symptoms actually appear. And with such potentially life-saving capabilities, it's really easy to envision a future where every U.S. adult in the United States would want access to their own HeartBeam system. Separately, this unique data set, so longitudinal 12-lead ECG, paired with predictive algorithm, also holds tremendous value for other stakeholders beyond individual users. So for pharma companies, they can leverage this data set for drug development, optimizing clinical trials. Health insurance companies can use it for better risk stratification. Long term, HeartBeam system can really offer these dual benefits, enhancing patient outcomes but also empowering the broader health care system with the value of data. So next, Rob will talk about some of our near-term milestones and how they set the stage for this long-term vision that we have.

Thanks, Richa. So as you can see, we have a very compelling long-term vision that, when you combine the form factor with AI, it opens up these world of possibilities for the patient and then moving beyond that. But really, we want to focus on what's right in front of us, the recent milestones and then what's coming up in the coming months. So as I mentioned, we just received our foundational FDA 510(k) clearance. This is for the HeartBeam system as a whole, and it really is validation that FDA agrees with our approach and validated our approach of this novel 3 directional approach to collect the signals. We're doing a second application, which we're going to submit imminently on the 12-lead synthesis software. So we have all of the data in the signals, but we want to display the 12 lead, like you saw with Richa's demo because that's a format that physicians are interested in. So we've completed a study called VALID-ECG. It was 198 patients at 5 U.S. centers. And that study that I talked about at the American Heart Association was actually the pilot study for this. So it's the same design simultaneous ECGs and then we convert our ECG into a 12-lead and then both qualitatively and quantitatively, compare the 2. We can't talk about the results because they haven't been presented with, but you saw the results of the pilot study. As this is submitted, we've actually already had 2 what's called pre-submission meetings with FDA to discuss the endpoints and the study design. And now we're submitting the application shortly. And it's difficult, of course, to predict FDA, but we're expecting FDA clearance sometime in the second half of the year. As far as commercialization, now that we have our initial FDA clearance, we're spending the time with our early access program or otherwise called a beta program. And so what we want to do is use this period of time to really optimize everything about our commercial offering. So our reader service, our onboarding, the instructions to the patient and the training, et cetera, and have everything ready to go as well as our internal systems so we can turn on our initial commercial launch upon the 12-lead synthesis clearance. The next line on AI classifications is we're planning to add in, just as you saw in Richa's demo, an automated AI classification of arrhythmia when you take a reading. And this really allows us to do that workflow that Richa described where patients can take as many asymptomatic readings as they want and they get an AI assessment. And then when they have symptoms, it will go to our reader service. So we're going to start a study called RAISE-ECG. And then when that's completed, we'll submit that to FDA to be able to get clearance on those algorithms themselves. And then we're also talking to FDA about a specific indication expansion to be able to cover heart attack detection. The system itself will be 4- and 12-lead ECG, and then we want to expand to include specifically that indication for heart attack detection. And then finally, there's a continuing kind of drumbeat of clinical studies that are going to be coming out at the various cardiology meetings throughout the year this year. I want to talk a little bit more specifically about our go-to-market strategy and our launch. So we're starting with what we're calling direct patient pay. So you see on the top left there, our overall strategy is we've got the first personal cable-free 12-lead ECG. We're going to start with a focused direct sales and marketing operation in the U.S. because we really want to prove the concept, really develop the playbook. We're going to start in select geographic markets and then we'll have the ability to expand. We need to establish a number of things, the premium pricing that we expect as well as the subscription model, and we really want to focus on the customer experience and the retention. We've identified the target patients. These are patients with known cardiac issues, maybe they are at higher risk, they have a family history or they're just concerned about their cardiac health. And obviously, the willingness and ability to pay outside of reimbursement is important. Our initial markets are focused on preventive cardiology practices and concierge practices, but at the same time, going after individuals in the same geographic areas through targeted digital marketing and ultimately get to the point where cardiologists will recommend this to their patients. And just to give a sense of market sizes, we're starting with the concierge market. You see on the bottom left, there are about 1.5 million concierge medicine patients in the U.S. We've talked to a number of concierge physicians. They're extremely excited about our offering and how it fits with their practices. And many of them say that right off the bat, about 1/3 of their patients would make sense, the ones with elevated cardiac risk. So that's 500,000 patients in kind of this tip of the spear market. And at the revenue expectations, that's anywhere from $250 million to $500 million annual revenue. What about the direct patient pay market as a whole? Obviously, as Richa showed, it's very, very huge. But one cut on it is take the patients aged 35 to 74, that's about 160 million. If we said maybe 1/3 have this elevated cardiac risk and are most interested upfront and then only focus on the top 5% of income, that's about 2.6 million people. Interestingly, Oura has sold about 2.5 million Oura rings and AliveCor has sold more than 3 million devices. So it's a similar kind of population there. If we multiply out the expected pricing, that's a revenue of $1.3 billion to $2.6 billion a year because of our recurring revenue model. Now we talked about starting alone by doing a direct sales force because we really have to prove the market and create the playbook. But I wanted to lay out here, we have a number of verticals and an incredible number of potential partners. So without going into company by company, we want to give a general sense of the optionality that we have here. So starting with the concierge market, we're going to -- in addition to going after individual practices, talk to the major concierge change for partnership opportunities there. Then when we move into broader patient pay, there's potential partnerships with the top row there are the traditional medical device companies who we believe would be interested for 2 reasons. One is it's an interesting product to add to their -- the bag of their sales reps, but also it adds to potentially driving downstream treatments, whether that be stents or heart valves or pacemakers as patients discover more things from both our device as well as the predictive algorithms. And then that next row there, Cleerly, HeartFlow and Elucid. Those are the companies that are evolving this exciting space of noninvasive testing based on [ CT ] to determine if patients have coronary artery disease. And what we find is that those patients, if they're -- if the blood flow is really bad, they'll get a stent right away. But many of those patients are told they have coronary artery disease, maybe given a statin, but then nothing else beyond that. So we believe those are perfect candidates for the HeartBeam device, and there's potential synergies with these companies and HeartBeam. The wearable companies, there's 2 potential issues there, as I talked about in the IP slide, the wearable identifying heart issues and prompting patients to use the 12-lead ECG and then also our form factor of a 12-lead on the watch band. So we think those companies should be interested because of we can take these wearables and really tie that into the diagnostics and the algorithms that come out of a 12-lead. The patch itself, those 4 players are the big players in the existing 1-lead patch market. And we believe that the on-demand 12-lead patch has best-in-class performance to drive market share changes as well as increase the size of the market. And then as we move into the hospital and beyond the traditional 12-lead ECG players are also potential partners as they transition their legacy business and expand into new locations. And finally, Richa talked about as we develop our algorithms, there's both drug companies and insurers that would be interested in the data mining, the data that we can get to be able to help with clinical trials, to help with actually targeting for drugs or even for patients in terms of triaging. So with that, I'm going to pass to Tim to talk quickly about the corporate overview.

That's great. Thanks, Rob. As I mentioned, I came over to the company just over 3 months ago and on the other side of a tremendous amount of due diligence and very excited about the opportunity ahead of us and the strong foundation the company has for execution. A couple of quick highlights on this slide. The market cap for the company hovering around $60 million leaves a tremendous amount of opportunity for short-term and long-term appreciation. The company has no debt on the books. And the company has maintained extremely strong financial discipline over the past years. And I'll take you through a snapshot of our financials on the next slide related to that financial discipline. So this -- in Q3 of this past year, the company spent $3.3 million in net operating cash outflows. So everything that Richa and Rob have taken you through, to date, has been built with just 20 -- roughly 20 employees. And so the company has maintained extremely low headcount and accomplished a tremendous amount with a small group of people, leveraging a lot of variable consultants and other variable costs in relation to R&D and some of the development activities. So ability to turn on and off expenditure as needed in order to manage towards milestones. And as we move to the next slide, as we look to fund the next wave of milestones, which Rob walked you through on an earlier slide, for us, we believe the company has found a tremendous partner in MDB Capital and some of the other key people involved in the story. And we're focused on maintaining and adding value-add investors. We believe tremendously in the opportunity in front of us. So it's all about managing dilution and investing appropriately into the story. And these upcoming milestones give us clear focus on what we need to do to accomplish our goals over the coming quarters. So we'll continue to align our cash burn to achieve these key milestones in advance of our full commercialization. A lot of the expenditure and investments we have upcoming are to get commercial ready. So some outbound business development and partnership opportunities, investing into that, a build-out of a small commercial team, as Rob pointed out, some of the initial inventory builds for our system and the demo that Richa walked you through. Overall, it's maintaining our general level of R&D expenditure and G&A and no real need to invest into those areas as we continue to show strong financial discipline in hitting our milestones. Thanks, Rob.

Thanks, Tim. And just to finish off, I wanted to touch on the leadership team, a really outstanding group here. You've met Tim, you've met Richa. Branislav, I described before, the founder and inventor, and he's driving our R&D efforts. Peter Fitzgerald, our Chief Medical Officer, is really legendary within the cardiology field as a practicing physician, an inventor and an investor. Lance Myers, he came to us, he was in charge of all of data science and AI at Google's Verily, and he came to us first as a consultant. And as he got involved, I'm so excited about the potential that he's asked and is now transitioned to be a full-time employee as our Chief AI scientist. And also want to highlight Debbie Castillo, who runs our regulatory group. She's ex-FDA. She was acting Chief of the branch that were in front of FDA. So really provides a wealth of experience and knowledge in our FDA interactions. And then here's our Scientific Advisory Board, really a world-class group of experts in cardiology, both in the interventional cardiology side and the electrophysiology side, and we get incredible input from them on a monthly basis. So just to summarize things here, what you heard today and why we're so excited and we think the company is at such a great point. First, we have, as we described, IP protection on the design that leads to the smallest, easiest to use and the first cable-free 12-lead ECG device. And this provides major advances over the existing technology, both the potential for heart attack detection with the patient and then AI algorithms for early disease detection and personalized insights. We believe we're significantly derisked, having received the first FDA clearance, about to submit our second submission on the 12-lead synthesis, having a significant body of clinical data showing equivalents and, in some cases, superiority to a standard 12-lead ECG, and then continue derisking through the near-term milestones. And then finally, on the opportunity, $1 billion-plus opportunities, as we described on these initial markets, concierge and direct patient pay. But when we take all the large markets, we have the potential to disrupt potentially more than $100 billion in the U.S. We have a high-margin recurring revenue model. And also, as I described, a range of strategic partnership opportunities that can accelerate growth. So I'll turn it back to Lou to discuss the offering.

Thanks, Rob and Richa and Tim. The offering is similar to the last time. We're doing a straight common stock offering at a reasonable discount. Price per share is going to be determined after we get through this week's calls with management. And as I'll share in a moment, we're going to have some KOL calls on Thursday and Friday that we'll be sending invitations out to. It's a fully registered public offering. You should have received the link to the prospectus. If you need it, we will provide that again or it's here at the bottom. The offering amount is going to be $10 million, subject to upsizing on more demand. I do want to make some additional notes here. One, and first and foremost, for people that have been long-term MDB shareholders and investors, this offering does qualify for 12 -- we believe it qualifies for 1202 exclusion for capital gains. Again, we're not tax advisers. You've got to confirm that with your accountant. But that is relevant related to other investments you've made that may have taken profits off the table. They could be reinvested and keep that cost going. As always, existing shareholders, both of MDB and BEAT, will get preference as we look at allocations, and you will need to have an account with MDB Direct or one of our selected dealers that is participating in the offering. Right now, that is [ PulseOn ], and there may be 1 or 2 added after that. So that's an overview of the offering. At this point, I want to open things up to Q&A. So go ahead, if you do have questions, submit them. We have a couple already that are in the Q&A function here in Zoom. I did want to alert you to the fact that we are going to have 4 KOL calls later this week. So I want to give you just a quick highlight of what those are going to be, so you can prepare to make yourself available. As Rob mentioned, the joining of Lance Myers is really a big addition in terms of opening up the optionality for the company in terms of AI applications and the revenue generation there. So we're going to have a call with him as well as with Branislav, the company's founder. That's going to be one of the first calls on Thursday. It's going to be Thursday at 11. Then we're going to bring on Ken Nelson, who is a Board member that has got significant experience in commercializing a lot of deep tech companies, especially in the med tech space, digital health space, and how that happens, how you see disruptive technologies launch into those spaces successfully. And then we're going to speak with Dr. Robert Harrington, who's a dean of the Wheel Cornell Medicine and a HeartBeam Board member as well, talking about the applications beyond just direct to patient, right, in the emergency critical care setting that Rob alluded to earlier and Richa alluded to, where we could get into and overcome some of the friction that happens just with administration of traditional 12-lead ECGs. And then lastly, we're going to talk about cutting the cord with Dr. Jeff Oyler. He's an emergency medicine position at Piedmont Atlanta Hospital, again, talking about the applications for this technology beyond those initial target markets. So again, keep an eye out later today, hopefully, in the next hour or so, you'll see an invite with the same group of RSVP mechanism as you used to sign up for this Zoom to get those all scheduled and on your calendar as well.

So with that, let me go ahead and transition into just Q&A. We've answered a couple of them already through the natural presentation. One is really here a question about the next 510(k) filing. On the heels of the first one, is it the second one going to be an easier lift or an equal lift given that you already have an approval? Is there some additive value from having gone through it before? Or is it really the same?

Yes. I think it's -- I would start with the general statement of obviously, it's FDA and it's impossible for us to predict FDA. But we feel we've got a very good relationship with them, and that's been developing over time. In particular, one of the differences between the first clearance and this clearance is the first clearance included hardware. And so we had to go through and we had a number of questions on cybersecurity, on electrical safety testing, et cetera. This one is the 12-lead synthesis software. We believe it will be primarily focused on the clinical study. So we think that narrows it. The second thing is that we have had the 2 pre-submission meetings with FDA where we talked about the clinical study design. And FDA doesn't say, yes, everything is great, it checks the box, but they will give you guidance about what makes sense, what doesn't. And we took that guidance into effect when we did the pre submissions, and we did the study design. So we feel both of those things are setting us up for positive interactions. Again, we never know we can't predict FDA, but we know we have a good relationship with them going forward.

Yes. Understood. Just for clarity, you mentioned the study, the clinical study, is that completed? I mean, because you talked about the filing being imminent. So is the clinical study aspect already complete?

The clinical study has been completed. It's also been completely analyzed. And all the results are done, the reports are written. So what we're in the final stage of doing is just packaging up the submission to FDA, kind of crossing the Ts and dotting the Is for the final submission. And again, unfortunately, we can't talk about the results because it's part of the submission, and it hasn't been presented in a peer-reviewed setting. It will be presented sometime this year. But I will just point to that study that I mentioned briefly, and we did a press release on and is on our website in -- at the American Heart Association. That was a pilot study with an identical protocol. So I think that gives us a good indication of where we think the study will be going.

Okay. Perfect. Next question surrounds competitive advantages, protecting your moat. Maybe, Richa, because of your experience at Apple, there might be opportunity for you to opine here a little bit, too. Can you talk more about the moat and your ability to overcome attempts by Apple or others to create a competing product similar to yours?

Yes, I'm happy to take it. I mean, the proof is sort of in the pudding. Like if you look at what AliveCor recently came out with, AliveCor came out with a 12-lead ECG. It's predominantly meant for in-hospital usage, but it still has all the challenges that existing 12-lead ECG has. It requires multiple electrodes. You need to put an electrode on your leg and ankle. And I think it speaks to how strong of an IP we have in that space, that there's really no way to synthesize the 12-lead ECG without collecting the data that we do with our existing form factor. The resistive network that Rob talked about, the ability to collect sort of 3 distinctive direction of electrical activity, that's really what allows us to synthesize data into a 12-lead ECG, along with this personalized transformation metrics. And we have IP in all of that. So really no way to work around it.

Yes. No, that's helpful. And just 2 for context for new investors or new people to the community here, when we did the original deal with HeartBeam back in 2023, one of the things that originally attracted us to the company so much is the protection, the IP protection around the technology and how that necessitates essentially, as you put in the presentation, partnering with some of those bigger players. They don't have a path forward with the competing product without going through HeartBeam. Okay. Next question really is, how would the device or could the device be used for patients that are unresponsive, uncooperative or have challenges with using complex hand movements? Maybe they have arthritis. Have you contemplated those kind of extreme use cases?

Richa, do you want to take that one as well?

Yes, sure. So as when we were walking through the demo, we have built in some functionality for users to get real-time feedback in terms of how successful a recording might be is, do they have sufficient content or not? So if you have like micro tremors, arthritis, you can position yourself in a way that allows for more green signal as you were seeing earlier. Another approach that we're taking is, right now, we are targeting sort of a certain demographic for a particular reason to gain some of the -- have some of the early learnings to see what additional improvements we might have to make to hardware in the long run to further expand to user base that are truly not capable of sort of coordinating hand movement that can take a recording with this device.

Okay. That's helpful. Maybe we can use this as a good segue into commercialization and ramp up a couple of questions here. I mean, Rob, I know we were on the road. I saw you have an Oura ring. I have a Whoop Strap. We know that those units have sold. They went viral very quickly, ramp very quickly. What is your commercial readiness to scale on a second FDA approval? What kind of work has been done to prepare for that inevitability potentially of it going a much faster ramp than maybe just a direct to patient via concierge?

Yes, it's a great question. So the work that we're doing now, and we're balancing being ready to move as quickly as possible with what Tim described really keeping the burn down. So we're in the process of hiring our Chief Commercial Officer. We've kept the commercial side very thin. Richa runs the product team but has also been helping with go-to-market. So by having the Chief Commercial Officer in place, that will really accelerate. What we're doing to start the commercialization is we're planning to pick a small number of geographic markets. And within that, we've got a strategy of within a geographic market, we will know all of the concierge and preventive cardiology practices. Between now and the second clearance, we actually have a clearance, we can start marketing to them. So we're basically going to be getting a waiting list and a funnel built up in 2 to 3 key geographic markets to start. And then the plan is within those markets, to supplement. So we'll have a person on the ground doing sales, calling on these practices, and then a second person that would be helping to onboard the patients. But then we can supplement that with targeted direct marketing into those markets to try to get individuals who are not part of those cardiology practices to come to us and then we can connect them with the cardiologist or educate their own cardiologists. The goal and the reason for starting in these geographic markets is, if we can demonstrate that the demand is what we think it is and the uptake of what it is, then that allows us to show that and have the proof of concept to be able to either fund raise more to expand and blow out a national sales force. But also, that's an inflection point where there may be interest from partners who have an existing sales force. And as we prove out the concept and prove out the playbook, they would be interested in partnering at that point. So we have this very focused perspective. And we're also -- the second thing we're doing is using this beta time to optimize everything. We're getting feedback on the device, the recording, the training, the reader service, the workflow so that we have -- because we know we're going after a high-end, very demanding audience, and we want to make sure that we fine-tune everything so we have this positive user experience as possible. So that's where we're using in the coming months to nail.

Okay. A couple of follow-ons there from comments you made on that. First, just what -- you talked about getting the initial FDA approval to go into commercial and get some initial traction. What's your confidence level having been in successful ramp-ups in commercialization, both you and Tim and Richa, that once you get those 2 things, FDA and initial traction that there's going to be significant interest from partnering or outright acquisition as we see a lot from med device space.

Yes. It's -- as we've talked about publicly, we've started talking with a number of partners, and there's a lot of interest. There's a general feeling within the -- I would say, within the device community that where we have something special here, where they believe in the IP, it's exciting. But to your point, what we generally find and what I've found in my career is that they get inundated with so many companies that not having an FDA clearance, they almost don't want to talk to you. So I think that getting through that first FDA clearance is -- puts us in a whole different category of credibility. But I think specifically to your question, from a sales force perspective, if you take a large medical device company, the great thing is that we have something completely novel. We have a prescription 12-lead device with patients that's patient pay. We have a lot of market research on how the patients are really interested in that. But I think these -- my perspective and my experience is that these larger players are looking for us to develop the playbook and to demonstrate a little bit of initial traction. Once we have initial traction, so they can understand this is how I sell it, this is the playbook and patients are actually interested in actually getting adoption, then they'll say, well, we could take this and look at what we could do with it. So I'm not saying we're definitely going to go that route. It's certainly an option for us to continue to blow out and build the sales force, but we have that optionality. And we think by building the playbook and showing initial traction, those are the keys to any partnership discussion.

All right. And then the other one follow-on was you mentioned that you're getting feedback from users. And actually, we were on the road together with some cardiologists in Memphis. I know you've been doing demos with other cardiologists. What have you -- what's some of the feedback, pros and cons, that you've gotten from those direct end users that would be critical to increasing adoption?

Yes. Richa, do you want to start with that? I'm happy to add on to what you have.

Yes. I mean, I think overall, the feedback has sort of surprised us even. We've gone to conferences, given live demos, just ad hoc while running into positions. And the first thing that they comment to us, how good the signal quality is. They're just surprised that you can get a 12-lead ECG so quickly with such high fidelity and such great signal quality. That's the #1 thing that everyone provides feedback on and how simple it is to use. On the flip side, we are running this process to get a lot of feedback on what are the ways to optimize the user experience. As you saw, it is really straightforward, but we're always looking for opportunities to make it even more streamlined and make it such a quick process that no matter where you are, whenever you are experiencing symptoms, you can just take a recording and within 30 seconds, you were done. So we're making additional updates to our patient app in order to further enhance that experience. But yes, I mean, overall, the feedback has even pleasantly surprised us in terms of how positive that has been.

Yes. I remember sitting -- go ahead, Rob.

No, sorry. Well, I was just going to say that the only thing I'd supplement that with, which is great is that we're getting similar feedback on the user side, the patient side as well. I mean it's in sort of the MDB team, but all of us, almost everybody we talk to has something resonates a family member themselves, they'd be interested in this. And then we're starting to do more formal patient market research and really being impressed with how people understand the value of a 12-lead with them, willingness to pay, willingness to adopt. So that's making us very optimistic. We made this decision to be a prescription device because we really want to preserve the value not have it necessarily immediately go to something you can buy from Amazon, and we're seeing that the value and potentially even the pricing is resonating with the target patients, which is very exciting.

Yes. That's helpful. The question here that kind of dovetails into that is, are you going to be putting the device out on a trial basis for patients? I believe you have the equivalent of kind of an early access wait list that's forming. Do you want to share about that for people that might be interested on that? I don't know who wouldn't be interested in a device like this, if it can lower the mortality rate by 7.5% by every 15 minutes of detection, but can you let people know non-investment, how they sign up for that wait list?

Yes. So the waitlist process is pretty straightforward. Go to our website, you'll get a pop-up notification that allows you to put in some information that we need in order to put you on a waitlist. We're using the waitlist to drive our commercialization strategy. As Rob pointed out, we want to do -- invest in some additional marketing efforts in terms of direct patient marketing. The interest, at a geography level, is going to help us decide what geographies to primarily target. The waitlist continues to grow day by day. We're getting numerous -- several e-mail, and we'll share more about what that early access program will really look like in future calls.

And there's a sign up link at the website, right?

There is. Yes. As soon as you go on the website, there's a pop-up, you put in all the details and it puts you on a waitlist.

And I just want to add to that, the strategy, from a company perspective, is to pick a couple of geographies to really show when we have a targeted effort that we can -- what conversion rate we can do. But we are -- as Richa said, we're getting input from around the country, and we're trying to come up with ways with virtual cardiology groups and others that we might be able to fulfill demand on a smaller level even outside of our target markets. So we're trying to look at both things in parallel.

Okay. That's good. A couple of questions here, just that I can answer quickly. What's company debt at this point? I don't believe there's any debt, Tim, right?

That's correct.

I don't want to speak [indiscernible] Tim . No debt there. In terms of the offering, the question was, well, what type of discount. We do a reasonable discount like you looked at last time. We can't guarantee the same will happen, but we priced the deal last time at [ $1.50. ] I think it never traded below [ $1.93 ] after that in the 60, 90 days afterwards. So again, we want to price it effectively, and that's going to be supportive of the market and the company. A question along those lines, Tim. Maybe on that slide, I think it was 19 or 20, where you talked about just categories of use of proceeds. Where does this get you, call it, a $10 million offering? How much runway does that provide? And what are the important value inflections along that way?

Yes. Great. Thank you. It's a really interesting time where we talk a lot about the strategic partnerships and opportunities that are out there and managing dilution and really finding the right shareholders. So we're balancing both of those worlds where we want to maintain optionality, keep our cash burn down as low as possible and run this thing pretty tight to maintain low dilution. Right now, historically, we're spending $3.3 million per quarter. So you put that out when you add existing cash and put that there, that's 3 to 4 quarters of cash, which aligns with those milestones we have in terms of getting FDA clearance, getting across some of the hurdles that we have for some key inflection points and conversations with strategic partners and everything. So it's about balancing both of those priorities in the short term and maintaining that financial discipline as we derisk the business some more with the additional work with the FDA.

Okay. No, that's helpful. And we can follow up with anyone else that wants more specifics on use of proceeds. We can get into that on a subsequent call if you have those questions. Question here is, will there be a need for additional patents? Do you anticipate that? Beside that, I know that you're constantly innovating and working with our IP consulting services firm PatentVest to supplement some of that work. But can you talk about the process of research development and continued IP innovation?

Yes, absolutely. As we said, we believe we've covered the main things incredibly well. And as you said, I think with PatentVest and the diligence that was done, that was great validation. But there's continuing R&D. There's a lot of focus on, as we talked about AI and deep learning. And in particular, how do you take the deep learning AI models and apply them to our unique approach, our 12-lead, and what can you get when you have the longitudinal readings, what new level can you get to there. So there's a whole kind of open space there that we're developing in that is leading to the things that Richa had talked about, that we think might be additional patent opportunities. And then there's all kinds of things in terms of further form factors, further implementations on the device. We have an advanced development team in [ Belgrade ] that's constantly innovating. So I think to answer your direct question, we don't think we need anything else to cover our core area, but we're absolutely continuing to innovate in a series of areas, and we think that's going to lead to additional patent opportunities.

Great. Just a handful of quick questions here towards the end, and then we'll wrap up to be respectful of everyone's time. We have a question here about reimbursement rates from insurance companies. I know there's some existing CPT codes. Have you begun discussions for individual reimbursement for this device? What's your thinking and strategy on that?

Yes. So I'll try to be really quick. Our strategy, we're focusing -- we really have 2 phases. We focused on the Phase I here, which is all the direct patient pay. Our Phase II, which is where we start to get payment by entities beyond patients, that -- our strategy, we really think we don't necessarily need to get our own codes for 2 reasons. One is if we demonstrate the clinical and cost effectiveness benefits of this, we believe there's a number of use cases where hospitals or payers would be willing to pay because it's in their interest. We save costs or do other things. Those are -- we're going to be doing clinical studies to demonstrate that, and that's going to allow us to go after, in a sense, these alternative payment models. The other thing is, we talked about AliveCor has a new 12 lead, not really a direct competitor because it's meant for in-hospital use, but they just have a Category III code. So when you get a new CPT code, it starts by Category III, and with enough evidence becomes Category I. And it's specifically because these codes are never company-specific, they're general, and the code is for an algorithmically generated 12-lead from a reduced lead set, which we think applies very well to us. So we think we can leverage off that code, which, at least, provides some payment when the physician reader service is looking at these and makes the economics make sense as well.

Okay. There are a couple of other questions here that for everyone that's asked them, I'm going to leave those for some of the KOL calls. They get into things about other applications that some of those experts will get to. There's a few here about when you're going to get to cash flow breakeven and positive sales momentum. I won't put you in that situation to answer that. You don't provide guidance on that. I think what's instructive for investors is seeing that, that's contingent upon FDA clearance. So that could be a moving target. And then after that, it could quickly ramp as we've seen with other wearables, and you've provided some detailed level what that pricing and model could look like upon FDA approval. So people can run the numbers based upon that. I do want to end with something though that is tangible. You talked about and sent out a press release that you're going to JPMorgan. You previously had an announcement of a collaboration with Samsung. Any context you can provide us on meetings that you have upcoming at the JPMorgan conference next week? What that kind of interest looks like as you head into that conference?

Tim, do you want to take that?

And maybe add an update on what's going on with Samsung.

Yes, sure. Yes. So we continue to -- we have a pretty full slate, and we're looking at all the different opportunities for meetings there, some good strategic meetings. I think, Rob, in terms of thinking of end-to-end solutions related to our technology and how our device could be partnered with other technologies that could prolong time from an onset of chronic issue to getting to the hospital, there's a number of really interesting partners that are going to be there that we're going to be talking to as well as people related to the FDA and some of the work that we're doing there that we can meet with live.

Yes. Okay. That's helpful. As one of our founders, co-founders said that until you're approved to market, your biggest customer is the FDA. So it's good to hear that you're on top of that and have been focusing. And so with that, we're going to wrap up. It has been about an hour. We have this recording. Obviously, if anyone has any questions, follow-up, you can reach out to any of us here, George, Kevin, Anthony and myself, or just send an e-mail to info@mdb. We'll get to you. We'll get you in touch with management if you have some follow-on questions. Just a couple of reminders. Be on the lookout for an invite to the KOL calls, those will be happening on Thursday and Friday, roughly about the same time as the call as this week. And then as we get through the end of this week, we will and get an idea on pricing, we will be sending out an e-mail to make official indications. So just be thinking of that time line, and we will be in touch. So Rob, Tim, Richa, thank you for your time. I appreciate you answering all the questions, and look to hear from you soon.