Good day, and welcome to the iACCESS Alpha Virtual Best Ideas Summer Investment Conference 2025. The next presenting company is HeartBeam. If you'd like to ask a question during the webcast, you may do so at any point during the presentation by clicking the Ask Question button on the left side of your screen. Type your question into the box and hit Send to submit. I'd now like to turn the floor over to today's host, Rob Eno, CEO at HeartBeam. Rob, the floor is yours.
Thank you. I'm excited to be speaking with you today about HeartBeam. Next slide is our disclosures. We will be making forward-looking statements today. My name is Rob Eno. I'm the CEO of HeartBeam, and joining me is Tim Cruickshank, who's our CFO. HeartBeam has developed the first-ever cable-free ECG that's capable of creating or synthesizing a 12-lead ECG. This is a major advancement in cardiac care. It brings technology that's been standard in the healthcare setting out to patients for them to use anytime and anywhere. We have strong IP with 20 issued patents covering all aspects of our technology, and we're fundamentally de-risked, most importantly having received our foundational FDA clearance in December. We're poised to launch into our initial market segment, which is concierge medicine.
There are 1.5 million people with concierge medicine in the U.S., and we estimate a SAM of $500 million of recurring revenue in this initial segment alone. We have extremely strong interest from high-net-worth individuals and concierge physicians, and we plan to launch by the end of 2025. We're working closely with FDA on a series of clearances for the device. Our first indication will be for arrhythmias or irregular heartbeats, but we plan to expand into heart attack detection. This is where 12-lead ECG shines and where we expect our system to be truly differentiated. It's a massive opportunity with 20 million people in the U.S. having had a prior heart attack or at the highest risk for one. Physicians will assess ECGs from our system in the context of the patient's own baseline, which has the potential to exceed the current standard of care.
We're starting with a patient-pay model, but we have multiple avenues for reimbursement by the healthcare system. Finally, it's a real open-ended opportunity. Beyond our core device for concierge and then heart attack detection, we have a robust AI program, and that'll allow us to create significant personalized insights using our unique longitudinal data as patients take ECGs over time. We also have a separate form factor which will allow us to have a best-in-class product in the multi-billion-dollar extended wear patch market by offering the first on-demand 12-lead patch. On the next slide, here's the problem that we're solving. There's a real gap. There are numerous single-lead ECGs like the Apple Watch and the Kardia device from AliveCor, and those are good for basic arrhythmias. The gold standard used in hospitals is a 12-lead ECG.
This uses 10 sticky electrodes placed on specific points in the body, and they give a more complete view of the heart's electrical activity, but it's not practical for home use or patient staff application. The slides might have been a little slow. Those on the left-hand side are the one leads, and the standard 12-lead was on the right-hand side. This next slide coming up is one way to visualize it. It's a two-by-two matrix. You can see the number of leads on the horizontal axis from one lead to 12 leads, and you really need to be on the right-hand side of this chart to provide heart attack detection. The vertical axis represents ease of use.
You have two clusters: an easy-to-use one-lead ECG at the top left, and then a few companies have attempted to have at-home 12-lead ECGs using the traditional approach at the bottom right, but those are more difficult for a patient to apply as they incorporate this standard 10 electrodes. What HeartBeam is doing is creating a new paradigm by using a unique approach. The patient holds the device to the chest, and it collects signals in three dimensions, which then in turn is synthesized to a 12-lead ECG. How does it work? It's actually based on decades-old technology called vector cardiography. You can see the output there on the left from the traditional VCG. It measures the heart's electrical activity in three axes: up and down, left to right, and then into the body.
Once you have these three axes, you then can create or synthesize a 12-lead ECG. This vector approach was an alternative to 12-lead ECG decades ago, but it fell out of favor. Our founder, who's actually the co-inventor of flash memory when he was at Intel, set out to produce a device that patients could use anytime if they felt like they were having a heart attack. After a number of cardiologists told him that was impossible, one finally suggested looking at this vector approach. In the middle, the team miniaturized this vector approach to a credit card-sized device with two electrodes for the vertical axis, two for the horizontal axis, and then a proprietary resistive network into the body. That's the core of our IP. We also personalize the creation of a 12-lead.
We take a single 12-lead ECG from the patient at onboarding, and by pairing that with a reading from our device, we create what we call a personalized transformation matrix for each patient. We then save that, and as the patient takes subsequent readings with our device, we use that matrix to create the 12-lead ECG. Next, we'll show a video of the system in action showing how easy it is to take a recording. It may just take a minute for this to load. What you could see there was how easy the system is to use. We have the device and an accompanying smartphone application that are connected via Bluetooth. We have a standard position three fingers down from the collarbone. The person puts it on their chest, puts two fingers on the device, hits start recording. Thirty seconds later, they have the reading.
With that background, we have a large amount of clinical evidence on the system. We have more than 1,000 patients enrolled in clinical studies, 11 papers and presentations, and these are on both the basic technology, but also comparing the output of the system to a standard 12-lead ECG, both for arrhythmias and heart attack detection. Moving on, with that underpinning of IP and clinical data, the company is significantly de-risked, and we're approaching commercialization. I wanted to describe that. We received our foundational FDA clearance in December. That clearance covers everything you saw: the device, the patient application, a physician portal, signal quality algorithms, communications, and all of that's on the native three-lead output of the system. In January, we submitted our second 510(k) application to FDA. That's the one that takes the algorithm.
It's an algorithm that takes the native three leads, and it creates or synthesizes a 12-lead ECG. The basis of this submission is a study we did with 198 patients at five U.S. centers. These patients were in arrhythmia clinics and all received a standard 12-lead ECG plus simultaneously the HeartBeam ECG. We compared the results of the two ECGs, both qualitatively and quantitatively, and the results were excellent, meeting our performance goals. By the way, these were presented at the Heart Rhythm Society meeting in April. We're engaged in productive discussions with FDA, and we anticipate clearance by the end of the year. In parallel, we're preparing for commercialization. We're currently beta testing the system. It's providing really great information on commercialization, things like onboarding patients, our internal systems, etc.
We also recently announced an agreement with AccurKardia that'll provide an automated arrhythmia assessment as part of our product. Next, here's the go-to-market strategy that we're executing. The goal is to establish HeartBeam as the first-ever personal, cable-free synthesized 12-lead ECG, as you see there on the left. We'll focus on creating a direct focus, direct sales force and marketing force in the U.S. We're going to pilot in two U.S. regions, and then we'll expand. The goal is to establish premium pricing and our subscription model, and we'll be focused on customer experience and retention. At the top right there, the target patient population is clear. It's those with a known cardiac issue, higher risk, or family history, and then those that are concerned with their cardiac health. Also, users will need to have a willingness and ability to pay without reimbursement.
We're initially accessing these patients through concierge and preventive cardiology practices. As I said, we estimate 1.5 million patients in concierge medicine. Assuming just one-third are interested from a cardiac health perspective, that's a serviceable market of up to $500 million in recurring revenue. The market research we have from both net-worth individuals and concierge physicians is extremely strong. We have the ability to go beyond concierge practices. If we just look at, say, the top 5% of income, the same one-third being interested in the device for the cardiac health, that yields an opportunity of up to $2.6 billion in recurring revenue. We do expect it to be a high-volume recurring revenue business. We have some of the highlights here. The ongoing revenue is tied to access on an ongoing basis to a cardiology reader service.
We expect over time margins to be in excess of 70%. We also believe we have a path to get to break even from this initial kind of tip-of-the-sphere market segment. It would take us only on the order of 10% penetration in the first five geographic regions to get to break even. We have an excellent opportunity right in front of us with the strategy I laid out, but we also have a number of exciting opportunities beyond this initial segment. I want to highlight the next one, which is heart attack detection. Heart disease is the leading cause of death in 20 million people in the U.S. that either had a heart attack or are at the highest risk for one. When a patient experiences a heart attack, timely treatment is crucial. They say time is muscle.
For every 30 minutes of delay, there's an increase in one-year mortality of 7.5%. It also increases the rate of complications such as heart failure by almost 9%. Heart failure is extremely expensive for the healthcare system, and it's a serious and difficult condition for patients. On the bottom there, you can see on the right-hand side, tremendous progress has been made over the past few decades in reducing what's called the door-to-balloon time, the time from a patient arriving at the emergency room till the blockage is open with a balloon and a stent. If you show up to the emergency room in the first 10 minutes, you'll get a 12-lead ECG. If it's positive, the cath lab is activated, and the patient will be treated within 90 minutes. That's in guidelines, and it's been optimized.
Unfortunately, what's in red there is there's been no improvement over years in what's called the symptom-to-door time, the time from onset of symptoms to when the patient reaches the hospital. This time is variable, and it's actually longer than the hospital time. The reality is many patients are in denial. They have concerns with going to the emergency room, and this is really the major unsolved problem for heart attack treatment. One way to think about the HeartBeam system is that it can reduce the barrier for the patient to take the first action. They don't need to go all the way into the emergency room. They take out the card, and they get a quick reading. The vision is the patient takes the reading. It would be assessed by an AI algorithm, and then the cardiologist immediately reviews it and gets back to the patient.
On the right-hand side, you'll see as it builds here that we've done proof-of-concept studies. These show that the accuracy of a 12-lead standard ECG and our system are similar. What's interesting is the accuracy of either of them, as you see on the far right, increases significantly when the ECG is compared to the patient's own baseline, as it's the change in signal and the presence of symptoms that's really crucial. What the chart really shows is that our system, by design, always has a baseline, and that can significantly outperform a 12-lead taken in the emergency room, kind of comparing those two middle boxes there. If the patient in the emergency room is not a known patient, there's no reference ECG. That's where we potentially could actually exceed the current standard of care.
Next slide, we have two initiatives related to heart attack detection. The first is an expansion of our indication. Our current system and the application we have in front of FDA are both for arrhythmias. The future clearance will be for the exact same system, but with an added indication for heart attack detection. We've initiated discussions with FDA on this. We have proof-of-concept data, part of which I showed you, and we anticipate starting two pilot studies this year. It's difficult to predict the exact timing of a clearance like this, but it could be in 2027. In parallel, we have a strong AI program, and we've been developing, or we will be developing, an AI assessment algorithm for heart attacks.
An automated algorithm would run immediately after the patient takes a recording, and if it's positive, it would flag our cardiology reader service, which would further accelerate the process. Now, another major opportunity for HeartBeam is an on-demand 12-lead patch. We have issued patents on this concept. The extended wear patch segment, so passive monitors like the iRhythm Zio, as well as MCOTs, that's a multi-billion dollar revenue market with existing reimbursement. We can incorporate our technology into this form factor. Those devices have two chest electrodes. We'd add two finger electrodes and an internal resistive network. The patch would function just like existing patches, but when a patient places two fingers on the top of the device, for example, when they're having symptoms, it would record 30 seconds of a 12-lead ECG.
Market research on the right-hand side shows that it's been extremely positive, physicians saying they would switch many of their patients to an on-demand 12-lead patch if it were available, and also it would result in them prescribing patches more frequently. So overall, HeartBeam is starting with patient pay, as we described, targeting the concierge and preventive cardiology segment. This is where we'll initially launch upon our next FDA clearance, and we're really excited about that opportunity. Longer term, in parallel, we have a number of opportunities for the technology to be paid for by the healthcare system, either by payers or providers. For payers, we can leverage existing category three CPT codes that exist for algorithmically generated ECGs from reduced lead set.
We also have the ability to develop specific use cases to appeal to value-based care, such as Medicare Advantage and the so-called special needs plans or SNPs. There are a number of use cases where the technology can increase revenue or reduce costs for hospital systems, including hospital at home, the so-called frequent flyers with chest pain in emergency rooms, and also to reduce post-procedure readmissions. Finally, these new form factors hold potential for reimbursement. We discussed the 12-lead on-demand patch where there is existing reimbursement. There is also potential to pair our card device with a drug. There are companies today developing injectable thrombin inhibitors designed to be injected after a heart attack and after a positive 12-lead ECG. The drug attacks the clot and basically buys time for the patient before the blockage can be opened with the stent.
The use of the HeartBeam System with this drug could facilitate usage of an early treatment at home for the patient. In all, we have a number of opportunities to supplement patient pay with payment by the healthcare system. With that, I'll turn it over to Tim to provide some general company and financial information.
Great. Thanks, Rob. I'll give a quick corporate overview for everyone. We believe HeartBeam's got a really strong foundation for execution. The company went public in 2021, pre-commercial, a market cap currently sitting between $50 million and $60 million. Our last reported cash balance, $8.2 million at March 31, and we have no debt on the books. Key to what we're doing is strong financial discipline in place as we work our way towards commercialization, and we look to maximize our dollars and our runway to lead up to some key milestones.
Our baseline cost structure is less than $4 million per quarter, and the company's gotten where it is today, built everything that Rob walked you through with just 20 employees. That means a high percentage of our spend is variable and project-based, which gives us the ability to manage our cash flow as needed in order to hit milestones. We'll be making some key investments as we prepare for commercialization, but we're also being prudent in the timing of that, the timing of bringing those on as we continue to de-risk the opportunity and get closer and closer to our clearance date. With amazing technology, a high-margin recurring revenue business model, and this modest cost base, we believe we're putting the company in a great position for commercialization as well as strategic partnerships.
We think we're highly undervalued at present and believe we're poised for a breakout as we continue to consistently deliver on these milestones Rob's walked you through. Over the financials, last year's financials are provided here. I won't go through them in detail, I think, in detail. The important piece, we completed an $11.5 million common stock public offering in February. The offering was led by our largest shareholder, MDB Capital. This offering, it provided us the funding we needed to continue to achieve these key upcoming milestones, and we believe strongly in the value of what we're creating and the value of our technology and what it's going to provide to patients and clinicians. From a capital structure standpoint, we've got great partners in place to continue to strategically finance the company.
MDB Capital, as I mentioned, they led the last two financings, and they continue to be very supportive of the company. We do have an ATM facility open through them, which just helps to provide optionality for the company if necessary. We are at a key inflection point here as we near commercialization. We are bringing awareness to the story, getting key stakeholders and other partners interested that are interested in finding ways to join this exciting journey. Rob, back to you.
Thanks so much, Tim. I will just give a quick summary, then I would love to open it up to any questions that anybody has. In short, it is a really exciting time for us at HeartBeam. The company is significantly de-risked with strong IP and clinical data, and we have already received our foundational FDA clearance.
We anticipate our pilot commercial launch will start upon our second clearance, the clearance for the 12-lead synthesis algorithm later this year. Our initial segment, the concierge medicine market, is a $500 million annual revenue serviceable market, recurring revenue, and we have high levels of interest from physicians and from target patients. Beyond this, heart attack detection opens up a massive opportunity, and the HeartBeam device and system is uniquely positioned to address this market. We have multiple opportunities for payment by the healthcare system, both by payers and providers, as I described. Really, it's a true open-ended opportunity with the addition of AI algorithms trained on our unique longitudinal data, as well as the 12-lead on-demand patch. Thank you very much for your attention, and I look forward to questions.
Great. Thanks, Rob. We have one here. Talk a little more about the different channels you're targeting. Have you announced as well any partners on the sales side? I would think the different channels we're targeting, if you want to speak some more about the concierge market or the direct patient pay.
Absolutely. Yeah. I'll answer both of those, both the channels and the partners. We're seeing our first channel as we call it concierge medicine, but it also includes practices like preventive cardiology, longevity clinics, and really that provides us a great way to reach practices where these patients that meet our target patient profile are congregated. We're planning to also start in, as I mentioned, two geographic regions.
Really, what we want to do in the early days is to prove that demand we're seeing in market research and in our discussions is real, and then also to prove that we have basically the playbook to sell. Those are the initial channels. We believe we can expand still within direct patient pay, ultimately beyond concierge. Part of what we'll do is take advantage of referrals from our existing patients, but really the simplest way without having to do a lot of direct-to-consumer advertising is through these concierge practices. As far as partners, it's definitely something that we're looking at and we're aware of, and we're going to definitely be interested in partnering with folks that could help us to expand our reach. We're definitely going to start with our own small targeted direct sales and marketing organization to really prove out the playbook.
Then as we start to expand, we'll look at all options, including expanding our sales force and finding like-minded partners that we can expand. The other thing I'd add is, in addition to one-by-one going after concierge practices, there's a number of concierge chains that we're talking to, and the ability to get into a concierge chain is another way to rapidly expand. That's great. Maybe in terms of the partnership side of the question, it's worth talking about beyond the direct patient pay, some of the opportunities with maybe the patch and other form factors. Sure. The patch is an interesting one. As I mentioned, and as many of you know, it's a multi-billion dollar existing market, and it has existing reimbursement.
As we develop that, one potential way we would go with that is to talk with, and we've already started talking with, existing patch players, and we believe there would be interest in the patch manufacturers in having this best-in-class product, and then that would be a natural one for us to leverage the existing infrastructure and channels and relationships of those partners.
Great. Thank you. Next question. A lot is going on in the remote monitoring space. What does the competitive landscape look like? Anything you want to touch on there? Yeah. There's definitely a lot that's going on. I think what I can comment on best is how we see our own positioning.
We see for portable patient-carried ECGs, that kind of two-by-two matrix I showed where there's a lot of wearables that are either PPG or they're single-lead ECGs, and those are great for basic arrhythmias. Then you have that other cluster of 12-lead ECGs, which is what you would need for more complex arrhythmias and heart attack detection. Because they use the traditional approach, those are very difficult for the patient to use, we believe, and to apply. We believe we're creating this new segment where, by using the unique approach, it can be a simple, easy-to-use, easy-to-carry credit card-sized device that has the full functionality. There's definitely a lot going on, and one of the things that we're going to be exploring from a product perspective is, obviously, our device is not a wearable.
It's an intermittent device, but there's a lot of really exciting things that we're working on with partnering with and kind of getting the data combined with wearable data, and then adding in the 12-lead on top of that becomes, we think, a very compelling offering.
Great.
And Tim, there's one on the diagnostic agreement. I'm happy to talk about that one too.
The clinical data?
Yeah. I'll just, yeah, the question here was, it was a very detailed question, but we did a study in April where we showed 93.4% overall diagnostic agreement between our 12-lead ECG and a standard 12-lead ECG. And the question is, what's going on with this 6.6% difference? And the issue there is, actually, if you were to have two physicians look at the same 12-lead ECG and diagnose, it's a bit of an art.
The studies have shown that two physicians looking at the same 12-lead ECG are going to have agreement somewhere between 80%, 85%, and 95%. There is always going to be variations based on kind of borderline cases and how it is interpreted. The overall 93.4% agreement is, we believe, very, very close, and that certainly meets our performance goals. The other thing we did in that testing is we looked at the actual ECG signal. We looked at the amplitudes of the signal and the intervals, the spacing between things, and overall, those were extremely close. If you know the ECG paper, it has large boxes and small boxes, and we were within about a fifth of the small box, so very, very close. We feel that those were really exciting results that support the similarity to a standard 12-lead.
Great response. Thank you.
There's one I can take here. How are you allocating your cash across R&D, regulatory, and initial commercial activities?
Right now, as I mentioned, we've got a small headcount. About 40% of our cost base goes to headcount, so more than half variable in nature, if you will, in terms of more project-based. Another 15% of that is public company expenditure, so just over half between headcount and G&A. We've got about a quarter of our spend right now going to product development, so really the things that you saw with the HeartBeam System and software development of getting the product to where it is today. That remaining 20% is roughly what we've got allocated for sales and marketing early days. We mentioned we're being prudent in terms of how we allocate and roll out that expenditure as we continue to manage our cash runway, de-risk the business.
Obviously, that sales and marketing expenditure will ramp up as we begin to commercialize and prove the demand is real, as Rob said, but we're taking it in a stepwise approach in terms of two initial markets, proving the demand, proving the metrics that we need to start to invest into the other areas, and then we'll, from there, rapidly expand into additional areas. Taking the stepwise approach allows us to really prove out the cost structure, make sure we're investing into the right territories, and it helps manage our cash runway early days.
Another question.
Tim, we have only about one minute left. Yeah. Yeah. Do you want to take this last question? I'll ask you, what do you think the business looks like in two years? Mix of business margins and what revenue do you need to get to break even just in our last minute? Yeah.
Great. Obviously, we do not give guidance from a revenue perspective, but we have got some, the modeling we do shows 70%+ margins as we model this out. Once you get beyond the first couple of months of a contract with a customer, we start to see 70%+ margins. This is pre-reimbursement. The opportunity and the big thing a couple of years out, if we can leverage reimbursement as we get down this path from the reader service to the technical codes, there are opportunities for 80%-90%+ margins on this technology. Early days, we are modeling 70%, and we will be opportunistic as we see that.
If you think about a cost basis of roughly $20 million to cover our initial territories and really start to make some good headway into our commercialization, you can get to break even just north of $20 million once you factor in cost of goods sold. We think we've got a line of sight to achieving that.
Great. Thanks to everybody for your time and those great questions.