Hello, welcome to Virtual Investor Conferences. On behalf of OTC Markets, we are very pleased you have joined us for our quarterly Small Growth Capital Virtual Conference. Our next presentation of the day is from Adagio Medical. Please note, you may submit questions. You can also view a company's availability for a one-on-one meeting by clicking "Book a Meeting." At this point, I am very pleased to welcome Todd Usen, Chief Executive Officer, and Debbie Kaster, CFO and Chief Business Officer of Adagio Medical, which trades on the NASDAQ under the symbol ADGM. Welcome, Todd and Debbie.
Thank you, Greg. I really appreciate it, thank you, OTC, for this opportunity. Good afternoon, everybody. I wanted to spend a little time and share with you a little information on Adagio Medical, I will get started. We are focused on the ventricular tachycardia space, we are blessed to have over 200 combined years of med tech experience with our team from all different walks of life, we are very excited with this organization and this group.
We have proprietary ultra-low temperature cardiac ablation technology in a large underserved ventricular tachycardia market. Thankfully, we are in a technology and a space that is completely reimbursed. We have very strong IP, our pipeline is very strong as well. We expect our first generation to have FDA approval expected by the end of this year. We have a two-year competitive head start in VT.
We received our CE mark in April of 2024, our U.S. pivotal IDE enrollment has been completed, we have treated successfully over 350 patients worldwide. Just to give you a little feel about VT ablation, without making this too anatomical, our main goal is we are trying to restore normal heart rhythm.
Today, when a patient has VT, they are given an ICD, an implantable defibrillator, which when they have a VT storm or the action will be shocked. They also receive anti-arrhythmic drugs. If you see these two animations of the heart, if I go down to the bottom right, the top two circles of this heart are your atria, we see a lot in the electrophysiology space about AFib. That is atrial fibrillation ablation. They use that technology quite a bit. In the bottom here is the ventricles.
Our goal of ablation of the ventricles is to interrupt the abnormal electrical circuit. These are faulty electrical signals that are happening inside the body. The difficult part about VT ablation as compared to AFib ablation is it is a much larger area, it has very thick tissue when you look out in this gray area on the outside of the heart lining.
Today, catheters come inside of the heart for whether it is AFib into the right atrium, the left atrium, then you work your way down into the left ventricle, what you see right here. This catheter is basically in the left ventricle, we are going to ablate. The problem with traditional technologies today is not every technology can ablate all the way out to the outside of the heart here. This is called deep myocardial tissue.
In a nutshell, the Adagio ultra-low temperature ablation is the first and only catheter that can treat all ventricular tachycardias from inside the heart, which allows every physician in the EP community to gain access to the heart. Today, when you use technology, oftentimes you are referring patients out to surgical procedures or electrophysiologists that can perform some function to enter the heart from outside of the heart. We don't have to worry about that.
I mentioned it's a large global market. If I draw your attention to the picture on the right, there's about 1.6 million patients that are eligible for VT annually, and VT is broken up into two big areas. There's structural heart disease, which makes up about 50% of the cases, and within structural heart disease, there's what's called ischemic cardiomyopathy and non-ischemic cardiomyopathy.
Ischemic cardiomyopathy are those scars or substrates that are a little shallower in the heart and easier to get to from inside the heart, as I mentioned in the previous slide. Non-ischemic cardiomyopathy, oftentimes physicians have to make a puncture outside of the heart, outside the body, under the ribs or under the chest bone to treat these non-ischemic or deeper lesions. There's what's called idiopathic VT and premature ventricular contractions.
These are situations where patients, they don't necessarily know the cause of their VT, but these are also large candidates for ventricular tachycardia ablation. Like I said, we're sitting at about 1.6 million patients with only about a 6% penetration of the global addressable market. Let me tell you why that market is only about 6%. Today, the only approved VT ablation catheters are radiofrequency ablation catheters that were designed for atrial ablations.
They're not VT purpose-built catheters. Unfortunately, RF does not go deep enough to treat all scars that you have to do in the ventricles. Again, they can treat shallow scars, and then when you have to go deep, you're forced to come outside the body on the side of the patient's ribs and enter that way. That is called epicardial approach. They're forced to go epicardial approach, and therefore, they're forced to do a lot of referrals.
A lot of traditional electrophysiologists do not do VT ablation because of this high referral pattern. Similarly, when you use RF, radiofrequency ablation, or you use an off-label PFA, pulsed field ablation, you must irrigate. The reason you're irrigating is because of the heat that's displayed in the patient. Unfortunately, heart failure patients are fluid compromised, so irrigation is not their best friend.
Oftentimes, after this procedure, they're in the hospital for one or two extra nights with catheters hooked up for diuretics to remove that fluid. Similarly, when you use a pulsed field ablation off-label right now, it's a high level of current to try to get deep enough to treat these lesions and ventricles. This could lead to vasospasm, which leads to stroke.
Unfortunately, to prevent that from happening, physicians are forced then to use nitrates, in this case, a nitroglycerin, which helps to reduce vasospasm to potentially help reduce that stroke. In a nutshell, without going through the rest of this slide, there's a lot of existing complications that lead to about 11.5% procedural complications right now for VT ablation, and you see some of the compromises that must be made in order to treat patients effectively. That's number one.
Number two, to give you a little feel of why this market today is now primed to make a move. Traditionally, we've heard many times of AFib ablation, as I mentioned before. Historically, 15 years ago, AFib ablation was a second-line treatment to drugs. A patient would go see their physician for atrial fibrillation, and the doctor would give them drugs.
Studies came out in 2010 saying that ablation was now proven to be more effective than drugs alone as first-line treatment. All of a sudden, AFib ablation technologies driven by RF, and then since with RF and PFA, took off, and the market has grown at 10%-13% annually, and now it's north of that with the emergence of PFA into the AFib market. Similarly, if you look at VT ablation, this is a much sicker patient and much more serious.
I just shared many of the complications that are happening today and some of the compromises that must be made with traditional technology. It still has a growth of about 5%-8%, but similar to AF ablation 15 years ago, VT ablation has been second-line therapy to drug therapy, anti-arrhythmic drugs, and ICDs, implantable defibrillators.
Recently, about 18 months ago, two studies were published, the VANISH2 study and the PAUSE-SCD studies, and they provide emerging evidence that VT ablation can be used as first-line therapy. With all of that that I just said on the last couple of slides, the high complication rate, the difficulty of gaining access to patients because you had to go inside and outside the heart.
The fact that it's been second-line therapy and the fact that only so few hospitals were doing this treatment led the market to be stagnant or where it is right now. It is still growing at 5%-8%, but that's why there's only about a 6% penetration market. The market has been waiting for a purpose-built VT catheter, and that's what the vCLAS catheter has brought, the Adagio technology, the ultra-low temperature ablation technology.
This basically is a 15-millimeter-long cryoablation element, as you see on the end of the catheter. These are eight electrodes, and it's bidirectionally flexible. Here's a couple of the keys to this technology. Titratable depth. We're providing large lesions and deep lesions with control. That is extremely important in the VT world.
We're doing everything, whether it's shallow or deep, from an endocardial approach, which is all inside the heart, which allows every electrophysiologist that's been trained to do this to do ablation procedures of any sort in the atria or the ventricles access. Catheter stability. One of the unique things about technology today, and the ventricles are the most mobile area of the heart.
They're constantly moving, and the tissue is constantly moving. The fact that we're frozen and we're basically putting ice on our catheter, we are basically stuck to that tissue when it moves, and that provides stability that you can't get with any other technology. What you see right here in the picture on the right is the same catheter in three different areas. One is the catheter with the traditional electrodes.
Two, once we select freeze, when the physician says freeze, once we get in position, this is an ice bubble that is on the end of the catheter. Right on the end, you can see an ice bubble forms. The top picture is just demonstrating the flexibility. If I move forward to the next slide, I will demonstrate quickly, you can see how the ice bubble forms on the end of a catheter.
Basically, this is a catheter that is in saline. We're going to see the console come in in one second. The physician or the assistant is going to push the freeze control on the catheter, and all of a sudden, you're going to see an ice ball form on the end of this catheter. This ice ball becomes the footprint of the lesion or the ablation that we are going to be treating.
Because it's so cold, this allows large lesions and deep lesions, which are very important. If you look at the picture on the right, traditional treatment today, the only approved technology for VT ablation is radiofrequency ablation catheters that were devised for atrial fibrillation. RF does not go deep. That is known. That is not anything that I am presenting here.
Every physician knows that, therefore, that's why they're forced to go inside the heart for shallow and outside the heart for deep, whereas the ultra-low temperature cardiac ablation can do everything inside the heart because it gets deep deep myocardial non-ischemic or ischemic scars. Let me share with you, as I mentioned, we were lucky enough to receive our CE mark in April of 2024.
We completed a study called Cryocure-VT study, and the Cryocure was a 64-patient study consisting of both ischemic and non-ischemic with an all-inside approach. The results of this allowed us to get our CE mark. 0% major adverse events, which is a big deal for the organization and demonstrating the safety of the device.
Acute effect in this means as soon as the procedure is over, physicians naturally try to reinduce the VT to see if it's reinducible or to see if they have to continue to do more ablation. That goes up in between immediately after the procedure, up to about seven days. We had a 94% freedom from acute effectiveness, which showed freedom from any VT coming back immediately. Freedom from shock, this is the big one.
This is a slide, by the way, that was presented at the Heart Rhythm Society in 2025, and one of the key goals is you're trying to prevent the patient from getting shocked. They have an implantable defibrillator when they have VT, and our goal is to prevent any shock, and a physician's goal is to prevent any shock on patients.
At six-month follow-up, 81% had freedom from shock at six months. In the same cohort, they were averaging about 35% freedom from shock from the prior six months before they entered the study. The major difference of 2/3 of patients were getting shocked once or often within a six-month period, versus this one is three times fewer were getting shocked at six months.
As we move forward, we have taken that CE mark and that clinical trial, we've taken that to North America, and we're proud to say that we've completed our enrollment of 209 patients across 20 sites in North America. The 20 sites that are highlighted here on the map are 20 of the top 25 sites in North America for VT ablation. These are the big sites.
These are people that do this procedure on a regular basis. Again, 209 patients, and we finished that in 11 months. This was on ischemic cardiomyopathy and non-ischemic cardiomyopathy. Again, the only proven technology to do this all-inside-the-heart endocardial approach. We were able to share our acute data at the VT Symposium this past October at the University of Pennsylvania, where they have a major VT conference, and we were at 97.4 acute clinical effectiveness.
We will be sharing our six-month follow-up data at the Heart Rhythm Society meeting this April to share our overall six month and freedom from shock and freedom from recurrence at six months. We're looking forward to that. We've also, as I've mentioned, I believe, we've received from the FDA Breakthrough Device designation. This affords the organization and the company.
This means it's a technology that is capable of doing things or doing things in a different way than other technologies and recognized by the FDA to work with them. Basically, we've completed the enrollment and we're waiting to share the final data. I did want to share the importance of this. While we did our 209 patients, there's a procedure, excuse me, called compassionate use.
In order for a physician to use a technology like ours that's not commercially cleared in the United States yet, they apply for compassionate use case. That means they send a written documentation to the company and to the FDA saying why they need to use this technology. It must be after they've used something else that it's either approved or failed.
In this case, I share five procedures here on this slide, but to tell you that we've completed 17 compassionate use cases, which means that the technology that's approved, which has been some RF, patients have gone through multiple RF ablation treatments. Other technology that they're using in AFib, such as PFA, they might be using PFA off-label here. They've had some failed procedures as well. This is important to know that the market is asking for this technology to treat these patients.
The FDA must approve these hospitals to then go do these procedures. Like I said, we've completed 17 compassionate use, and these are with hospitals that were part of our study, the FULCRUM trial. We've actually turned down another 12 for hospitals that are outside the trial just to share right now, because of the size of our company, the demand for this type of a technology. Good news.
We have our first generation that is CE marked and basically we're going to be releasing the data of our six-month data with our vCLAS. This is a technology that is the best purpose-built VT catheter anywhere on the market to treat VT ablation. We're not going to stop there.
We're now going to compete against ourselves, in a sense, we've come out with our second generation, which we've made a smaller catheter, a more flexible catheter, a significantly faster catheter. Now we do our ablation times in about 75% shorter period of time than we're doing our ablation times traditionally with a smaller catheter and, like I said, more flexible catheter, which allows physicians to use any technology, any sheath, any introductory mechanism or technology that they'd like to make this product that much easier for them.
This data was also presented, our pre-clinical data, at the HRS. The goal of this picture on the right is just to demonstrate we are getting just as significant depth and just as large lesions as we were with our first generation at a much faster pace.
As a company, we have a significant COGS reduction in this product than our first generation. As I move forward and basically to think about where we are, I shared some of the existing issues, complications, or compromises when you do VT ablation today. Again, VT has been second-line therapy.
You must irrigate with today's technologies before our technology is available. You must use a nitroglycerin or a nitrate. You must have the opportunity for an epicardial or outside-the-heart approach. You are not sure of stability because there's nothing that is sticking to the tissue. Because it's heat, we have what's called thermal effects, which causes steam pops, and there's a high risk of what's called hemolysis with other technologies that have this thermal effects. Basically, the ultra-low temperature ablation technology is VT ablation with no compromises.
I'm now going to turn it over to Debbie, our CFO and Chief Business Officer, to take us through the next few slides.
Thanks, Todd. Reimbursement is a large focus with the medical technology industry. We are excited to have established reimbursement under existing codes for VT for cardiac ablation. We have patient codes in both the inpatient and the outpatient setting. What this means is that when our devices are approved, there will be payment in place both in the inpatient and the outpatient setting.
There also recently has been added a code for the ASC, the ambulatory surgical center, which is exciting and really shows that there's been a lot of focus from CMS on cardiac ablation in general. As Todd mentioned earlier, we do have Breakthrough Device designation. One of the things that this does for us is that it gives us an improved likelihood of getting an additional, what's called an add-on payment in the inpatient setting through something called the NTAP, the New Technology Add-on Payment.
What this does if and when we get this, is it adds an additional 65%, up to 65% of the costs to the existing payment. The purpose of an NTAP is for CMS to collect data on a device and to ultimately make sure that that device is paid for appropriately. We're really excited about this possibility. Quickly on financials.
As of our latest disclosure at September 30th, we had a little under $5 million in cash with a little over $20 million in convertible notes outstanding and two tranches of warrants. We did do a financing in October, the bottom box shows our pro forma at September 30th, that we had almost $21 million with the new financing, and then an additional tranche of warrants that were also associated with that financing.
Here's some key highlights for the company. We have a two-year lead with a purpose-built catheter based on when we received our CE mark. We're addressing a significant underserved, only 6% penetrated large VT ablation market. We've shared best-in-class clinical results from our IDE study to get our CE mark, we're focused on similar data to share with our Fulcrum when we'll be releasing that data in a few months.
Breakthrough Device designation from the FDA, which provides that recognition that we believe we're sitting on something very special. I shared we had the enrollment of Fulcrum IDE study has been complete, to support an expected FDA approval at the end of this year. Our next gen device is addressing the new needs and better needs, smaller, faster, deeper with our new technology.
We're sitting in a situation that has established reimbursement with VT ablation. I really want to say thank you. I do see that we have a few questions.
Great. Thank you. First question. Can you lay out the timelines and meaningful company milestones?
Yeah. As we shared, we completed our enrollment of the 209 patients in our trial in only 11 months, and we shared our acute results of 97.4 acute success shortly thereafter in October. We're going to be sharing our pivotal six-month results at the HRS Heart Rhythm Society meeting at the end of April.
We expect to complete our filing of our PMA in quarter two. We expect approval of our gen one product by the end of this year. On gen two, we expect to start enrollment of our IDE supplemental trial in roughly Q2 of this year. We expect approval of our gen two technology in the second half of 2027.
Great. Next question. Can you talk about your commercialization strategy for each product?
Yeah. Basically what we're focused on with our first gen, we've had in those 20 amazing sites that we've had in North America. They're busy sites. We plan a limited market release with generation one with our existing centers, those that have participated in this trial.
Then we will do a broader launch with our second generation to the rest of the United States to begin with, then we'll see what happens after that once that gets approved in the second half of 2027. Just to keep in mind, one of the feelings why we're very confident in our approach, 30% of VT ablations are done in approximately 50, 55 sites in the United States, which means we can prove our product market fit very quickly.
Out of those sites, of those 50 or so sites, I already have 40% of those sites have been part of our study. They know this technology. We're really looking forward to getting good feedback and building out the productive type of sales force that we need.
Great. Next question is, what does the competitive environment look like for VT ablation?
As Todd talked about earlier, currently the only devices that are approved to be used in VT are RF or radiofrequency catheters. These catheters were built for atrial fibrillation, very different anatomy than the ventricle, and some complications that we laid out earlier. That's the reason that only 6% penetration, or we believe that's the reason that the penetration is so low at only 6%.
That's the only thing that is approved currently. There are a few other catheters that we've heard are being developed using pulsed field ablation or pulsed field ablation plus RF. None of those, as far as we have seen, have started what's called an IDE trial or the trials in order to get approval by the FDA.
What this means is that if and when those catheters do start their IDE trials, which is public, we will have about a 2.5 - 3-year lead on those trials because it takes about a year to enroll. They need to do six months follow-up, and then another six months for the FDA to actually approve the device, and that doesn't include all the time required to analyze the data and to get set with the hospitals. We're comfortable that we have a fair lead of 2.5 - 3 years. With that timeline, by the time any competitor would be approved, we would already be on the market with our second generation product. That's the competitive environment.
The other thing to note is that with these other technologies, particularly PFA, from what we know, it's very hard to get really deep in the tissue. We know that we will have an advantage, particularly in the non-ischemic. Also all the shortcomings that Todd talked about earlier where we don't need to use nitroglycerin for potential vasospasm.
Our device sticks to the tissue, which is slippery and moving very fast. We believe very strongly in our advantages to existing technologies.
I'll go to the next question now. Are you building this company to be independent, or do you think it will be acquired?
I think that's a very fair question. I've always been of the belief you don't build a company to sell it, but the companies can be built to be bought. As I mentioned before, with 30% of VT ablations in the U.S. at only 50-55 sites, we can go out and demonstrate in short order a product market fit of this technology.
We're sitting in a really good spot, the EP is a very small community, but major companies. Every company is fighting to be number one right now, and they're putting a lot of focus on AFib ablation. Each knows the next frontier, and the next frontier is their. They've all publicly stated these things, that they're looking at the VT market.
We are sitting with a VT technology that does something that no other technology does and no other technology in anyone's hands currently does. It's a small market. Everyone knows who we are. We'll see what happens, we are ready to go out this and put together the market to go prove our worth on our own, and we'll see what happens in the future.
Great. Can you walk us through your recent financing?
In October we did a financing. It was $19 million upfront, then three tranches of milestone-based warrants. In each of these tranches of warrants, there's a 30-day expiration. Once the milestone is hit, the investor has 30 days to exercise their warrants.
The first tranche is for the release of our pivotal data, which we are planning to share at the HRS conference in April. There will be $10 million in that warrant tranche, exercisable for 30 days after we hit that milestone. The second milestone is at PMA approval of our first generation device, which we expect by the end of 2026. The third tranche of $10 million is at the approval of our second generation device, which we expect in the second half of 2027.
$50 million total potential with the $19 million that we did get upfront.
I think that is all we have time for in terms of our questions. Thank you so much.
Thank you everybody. We really appreciate it.