Greetings, welcome to the HeartBeam Second Quarter 2023 financial results conference call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. This time, I will turn the call over to HeartBeam Chief Executive Officer, Branislav Vajdic. Please go ahead, sir.
Thank you, operator, good afternoon, everyone. I'm pleased to welcome you to today's second quarter 2023 financial results conference call. On today's call, we will be relating some very important updates about our business and our products. Recently, we completed $26.5 million in funding, which will enable us to execute on upcoming product development, clinical, and regulatory milestones and extends our cash runway into late 2024. With this funding, we took the opportunity to adjust our strategic focus to enable timely delivery of our ambulatory vector electrocardiogram, or VECG products, our key future value drivers. Our first step is to obtain a 510(k) FDA clearance for the HeartBeam AIMIGo VECG device.
This application was submitted to the FDA in May. We will be following this with a second FDA application on the system's ability to synthesize a 12-lead ECG. Given the strategic focus on our AIMIGo system, we withdrew the 510(k) application for our AIMI product, which is a software applied to 12-lead ECG in the emergency department. This will allow us to devote all of our resources and energy to products that are being powered for our 12-lead ECG into the hands of patients and outside of a medical facility. We just announced the publication of our first peer-reviewed paper, a foundational study demonstrating the ability of our VECG platform to detect the presence of coronary artery blockages. The study comparing our 3D VECG approach to conventional standard 12-lead ECG appeared in JACC: Advances, a journal of the American College of Cardiology.
We also strengthened our board with the appointment of 3 respected industry executives, Dr. Michael Jaff, Ken Nelson, and Mark Strome, bringing the number of HeartBeam board members to 8. We also are excited to report that we recently welcomed our to our team, Deborah Castillo, PhD, as Vice President of Regulatory Affairs. Debbie is an experienced biomedical engineer and brings more than 12 years experience in regulatory affairs and quality assurance for medical devices and diagnostics, both with the FDA and the private sector. Finally, we continued to solidify our intellectual property portfolio in the second quarter with a new patent issued by U.S. Patent Office on automated cardiac detection with the HeartBeam AIMIGo system. We believe this patent underscores our leadership effort in the ambulatory VECG space.
As previously reported, on May 3rd of this year, we closed a secondary offering of $25 million, followed by a registered direct offering of $1.5 million, for a total of $26.5 million. We worked with Public Ventures as our placement agent. They are a wholly owned subsidiary of MDB Capital Holdings. MDB and Public Ventures have proven to be tremendous strategic partners for HeartBeam. Public Ventures is a member-driven investor community with the mission of backing visionary public companies that have potential to become market leaders in their technology category. We continue to work with them as we execute on our strategic plan. In fact, our involvement with PatentVest, also an MDB entity, is ongoing example of how we plan to continue to use their services.
We believe that we are the leader in the mobile VECG space, and as we build on our global intellectual property portfolio, our work with PatentVest is a tangible example of our commitment. PatentVest is a unified technology development and patent law firm focused on creating IP leadership for developing safe technology companies like HeartBeam, and we expect they will support our goal of creating clear leadership in the area of ambulatory VECG cardiac detection. I would like now to turn the call over to our President, Robert Eno, to further discuss our strategic focus and provide product updates. Rob?
Thank you, Branislav. Thanks to everyone joining us today. We mentioned this last quarter. I wanted to reiterate the key points. We've refined our strategic focus and are concentrating on our AIMIGo platform, bringing the performance of a 12-lead ECG into patients' hands. We see this platform, which will enable physicians to remotely monitor patients and immediately interpret any concerning cardiac events, as an important value creation path. In addition, we'll be undertaking clinical studies in 2023 and beyond to demonstrate the performance of the HeartBeam AIMIGo platform, which we believe is the most advanced ambulatory cardiac detection platform available. As Branislav mentioned, the first peer-reviewed study related to our technology was recently published in JACC: Advances. This publication highlighted the capabilities of the technology to detect the presence of a coronary occlusion, the cause of heart attacks, with the same accuracy as a standard 12-lead ECG.
It also demonstrated the advantages of including a baseline recording for comparison in the analysis. This is something that is integral to the HeartBeam technology, but today, when 12-lead ECGs are analyzed, it's not common that a baseline ECG is used for comparison. The significance of this study is in demonstrating the potential to provide patients with an easy-to-use system to record a diagnostic-quality ECG signal outside of a medical institution, which could improve heart attack detection, speed up access to care, and save lives. We'll be conducting additional studies focused on our 12-lead synthesis and on the performance of the system as a whole, and we believe these studies will be key to driving clinical and patient adoption. Our commercial launch activities will be for the second version of HeartBeam AIMIGo after we obtain FDA clearance for the algorithms that synthesize the 12-lead ECG.
I'll describe this in more detail in just a minute. This year, we're undertaking aggressive pre-commercial efforts, defining the initial market segments for HeartBeam AIMIGo, and identifying potential business partners for HeartBeam AIMIGo and other technologies in our portfolio. Finally, as Branislav mentioned, we'll continue to aggress the progressive development of our intellectual property through our partnership with PatentVest. Turning to our product timelines and updates, we have 2 planned FDA 510(k) submissions. The first, which we call version one, is for the hardware. In other words, obtaining clearance as a 3-lead ECG collection device. Next, version two builds upon version one and includes the algorithms that take the 3-lead VECG signals and synthesize a 12-lead ECG for physician review. In May, we submitted our 510(k) application for version one. We've also started the process for version two.
In June, we submitted a request for a pre-submission meeting to FDA. The pre-sub process is an excellent means to get feedback on key elements of the submission. That pre-sub meeting has been scheduled. It has been scheduled, and we look forward to working closely with FDA on both of these applications. The result of these two submissions, once cleared by FDA, will be a device carried by patients that can synthesize a 12-lead ECG for physician review. We'll focus then on a limited market release, which we estimate in the second half of 2024. With the appointment of Deborah Castillo as Vice President of Regulatory Affairs, we've strengthened our team. Debbie is an experienced biomedical engineer with extensive knowledge of the FDA.
In addition to her private sector experience, Debbie held various roles at FDA, including acting branch chief, senior lead reviewer, and lead scientific reviewer. Finally, in an effort to focus on the HeartBeam AIMIGo product, we withdrew our 510(k) application for HeartBeam AIMI. HeartBeam AIMI is focused on emergency room use, which is a significantly smaller opportunity than the HeartBeam AIMIGo ambulatory ECG market. This decision will allow the company to focus on the product development, clinical, regulatory, and market preparation efforts for HeartBeam AIMIGo. I'll now turn the call over to Richard Brounstein, Chief Financial Officer, to discuss operational updates and financials.
Thank you, Rob. Turning to our financials, I'll now give a brief review of our financial results. A full breakdown is available in our regulatory filings. We just filed the 10-Q and in the press release that crossed the wire after the close of business today. General administrative expenses for the second quarter of 2023 were $1.8 million, compared to $1.8 million for the second quarter last year. Although overall G&A expense is flat, spending is actually down in 2023 compared to 2022. In 2022, we were invested in the commercial team, and due to our change in near-term focus in early 2023, we are not currently emphasizing commercial activities.
The reduced sales and marketing expense was offset by increased non-cash stock-based compensation of about $0.4 million, resulting primarily from the issuance of employee stock options following the May 2023 financings. Research and development expenses for the second quarter of 2023 were $1.5 million, compared to $1.7 million for the second quarter of 2022. Our focus on R&D differed in 2022 compared to this quarter. While both consisted largely of product development and regulatory costs, in 2022, our focus was on the development of our platform for our products, working with an outside development organization, Livermore, and preparing for our first FDA submission. This quarter, our U.S. development team are employees hired from Livermore, and the focus is wholly on HeartBeam AIMIGo.
We submitted version 1 for FDA clearance in May. At the same time, we continue to use our professional services agreement with Triple Ring. Triple Ring represents over 20% of our investment in R&D this quarter, ended June 30, 2023. We are investing in a device cost reduction program. As of June 30, 2023, we have a remaining commitment with them for this project of $0.8 million. In both periods, we also invested in research costs in support of future product pipeline coming from our patented zECG platform technology, which is the basis for our patent portfolio of 10 issued patents.
With the current interest, interest rates in short-term markets around 5%, we earned $158,000 in interest income in the second quarter of 2023, and this only for two months, as we, you know, closed the financing in early May. This compared to $10,000 in the second quarter of 2022. The net loss for the second quarter of 2023 was $3.2 million, compared to a net loss of $3.5 million for the second quarter of 2022. We ended the second quarter of 2023 with $21.3 million in cash, cash equivalents, and short-term investments, compared to $3.6 million as of December 31st. As mentioned, in May, we closed the common stock financings with net proceeds of approximately $24.3 million.
The use of proceeds is planned to last into late 2024, timed to when we expect to have received clearance for our commercial product. We are confident we remain on track. With regard to our short-term investments, we take a risk-averse approach, only investing in short-term government-backed money market funds that we are holding to maturity. The approximate $4 million in short-term investments at June 30th, 2023, represent such securities with a 4-6 month term. Also of importance in the recent financing is the fact that the 17.7 million shares offered did not include any warrants, and our balance sheet, as a result, has a very simple and straightforward capital structure. Approximately 26 million shares are now outstanding. Finally, I'd like to share the results of our recent annual meeting of shareholders.
At the event, all proposals passed, which included adding 4 million authorized shares to the 2022 Equity Incentive Plan, reflecting the overall dilutive effect of the S-1 financing. I will now turn it the call back over to Branislav for his closing thoughts.
Thank you, Rick. We remain incredibly optimistic for the future of HeartBeam. I would like to summarize the recent efforts in the following categories: financial, strategic focus and progress, and validation. Following our $26.5 million capital raise, we have a strong cash position, providing runway to late 2024. We have adjusted our strategic focus to enable timely delivery of HeartBeam's breakthrough ambulatory ECG products, the company's key future value driver, and we are highly focused on executing on our product development, clinical, and regulatory milestones. The key element of this focus is the HeartBeam AIMIGo credit card-sized VECG device. In May, we submitted a 510(k) FDA application on version 1 of our system, and in June, we have submitted a Pre-Sub request for version 2 of the system.
We are excited about the addition of Deborah Castillo, our new Vice President of Regulatory, as we work with the FDA on these submissions. Finally, we had several recent milestones that add to the validation of the technology and the company. Our, our foundational clinical study was recently published in JACC: Advances. We added three strong members to the board of directors, in addition to Deborah Castillo, joining our management team. We had an additional patent granted on our automated cardiac detection with HeartBeam AIMIGo system. I look forward to providing our shareholders with further updates in the near term. I thank you all for attending today, and now the HeartBeam team would like to answer your questions. Operator?
Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate that your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for questions. Our first question comes from Benjamin Haynor with Alliance Global Partners. Please proceed with your question.
Hey, good evening, gentlemen. Thanks for taking the questions, and congrats on the progress. First off, for me, just, you know, I know it's early days, but, wondering if you've gotten any reaction to the JACC publication, and then maybe you could talk about, you know, obviously the, the performance was solid. You know, any surprises, positive or negative, you know, with regard to the device, and/or, you know, kind of the human reading that came out in the study?
Yes, Ben, thank you for your question. Yes, we, we, we were actually very fortunate that our publication caused an editorial as well. You know, this is a sign of a well-received publication, a publication that's very impactful. Indeed, you know, all our associated medical team members, as well as some of our potential business partners, have noticed this as a very significant event for our future acceptance. The study shows that we have a technology that puts the power of a 12-lead ECG, the standard of care, in patients' pockets. It's always with the patient, and that is a huge value for those high-risk patients. All in all, this is our first publication, extremely well received, and it's only the first one.
We have a few follow-on publications in the works. We will continue on that treadmill of publications showing the efficacy of our technology.
Can you discuss any? Well, first, I, I guess maybe, any surprises there, and then on the publications that you have in the works, you know, can you share anything about, you know, how they might be similar or different to the current study, or the just published study?
The future studies will take a bit different angle at our technology, and I cannot really, you know, discuss it in many details. I can tell you that, you know, that every one of these studies will be like a brick in the wall, so to speak. We, at this point, we have a number of patents and a number of publications that we are working on. Again, that cadence coming out of HeartBeam will continue both on the publication front and the IP front.
Branislav, maybe I'll just add briefly, if you don't mind. Completely agree with all that. The question of surprises, I don't think there's any surprises, but I think one thing which comes out in the paper, which maybe is less obvious, is the importance of a baseline. In both the VECG and the 12-lead, the results were a lot better when the baseline was used to compare with the reading. What's interesting about that is that's an integral part of our process. We have a baseline when the patient enrolls, and we compare that by definition. When you think about how 12-leads are analyzed today, they're often analyzed in isolation without a baseline.
The top line of the paper is that the VECG performed equal to a 12-lead in both comparison or one at a time. We're always going to have that baseline, and sometimes the 12-leads are analyzed in a vacuum. I think that's a kind of subtle but important point in the study.
Yeah, good point. Thank you, Rob.
Excellent. Then I guess maybe a couple, mainly for Rick. on, on the G&A, it sounded like there was maybe $400,000 that was kind of non-recurring, in the quarter. Is that a fair assessment, or what should we kinda think about going forward on the, on the G&A line?
Okay. I, I would say recurring, but non-cash, right? You know, indeed, as we've, you know, now up to 26, 27 million shares, you'll see, I think, a growing non-cash stock expense. The, if you go back to 2022, yes, there was $400,000, I would say, of non-recurring SG&A expense that we won't see again for probably, you know, until we start getting commercialization, you know, late, you know, 2024 or so.
Okay, there wasn't any. I, I may have misheard it. I thought that you said $400,000 related to stock-based comp related to the-
Yeah, but that was-
financing.
No, as a, a result of this financing, we granted more stock options to people who, you know, now had a much slower share in the company.
Okay. Okay, there wasn't any kind of one-time-ish G&A expenses associated with the deal?
No, not in the quarter.
Okay.
No. I mean, anything-
Got it.
... anything that was associated with the financing is all just, you know, ran through stockholders' equity. It didn't go to the, the P&L.
Okay, got it. Then on the cost reduction program, which we're doing, how, how's that progressing? You know, any more color there that you can provide? That's it for me. Thanks for taking the questions, gentlemen.
Hey, Branislav, do you want to handle that one, or?
Well, go ahead, Rick.
Yeah. Okay. Ben, the... I mean, it's probably gonna be most of the year. We're, we're doing, you know, we're doing things to take a, basically a prototype-level device that, that is, you know, costs over $1,000 and reduce it to something that, when we start to get in volumes, will be, you know, $200, right? There's various pieces that are going on. It, it's ongoing.
... you know, we're looking at the PCB board. We're looking at, you know, some molds that we'll buy and some other things. It's a, it's a dedicated approach now that we look forward to commercialization to be able to produce a, the, the, if you would, the credit card at a reasonable price.
Okay, great. Thanks for the color, and thanks for taking the questions.
Thank you, Ben.
As a reminder, if you would like to ask a question, please press star one on your telephone keypad. At this time, we will now take questions from our webcast.
The first question asks, "You mentioned that you have withdrawn AIMI. Can you tell me more about that decision?
Let me handle that question. Our strategic focus is on ambulatory devices, you know. AIMI application by Valuable has a very different market and distribution strategy. As we have seen the opportunity with our AIMIGo ambulatory ECG device, and as we make progress and get closer, closer to its market availability, it is important for us to totally focus and take advantage of that huge opportunity. This market is much larger market, probably 20x or more than that of the emergency room market. The great need and the key opportunity is to bring the 12-lead VECG to the patients outside of the healthcare institution.
Actually, the algorithm that we developed for AIMI, which basically takes the 12-lead ECG and converts it to the VECG and runs analysis on the VECG, is planned to be included in the future generations of AIMIGo as well. In that sense, we expect to see this technology appear in AIMIGo down the, the line.
Our second and final webcast question is: "You are providing only high-level details on the timings of the future FDA submissions and clearances rather than a detailed timeline. You say you're expecting a limited market release in the second half of 2024. Can you provide more context?
Yeah. Rob, would you please go ahead?
Sure. Yeah, the one thing that's clear about regulatory filings and the whole regulatory process is the timing's uncertain, and to a large extent, it's outside of our control when dealing with regulatory agencies. We're gonna continue to update on our progress toward our milestones, things that we've, we've achieved, as we did today, talking both about the version one and version two products. Rather than give estimates on, on the timing of some of these upcoming intermediate steps, we decided to focus on the key milestone, which is this limited market release of AIMIGo, which happens after the clearance of version two in the second half of 2024. We'll continue to do that going forward, focus on that ultimate date of market release, but also keep providing updates on, on the progress and the milestones that we've achieved.
I would now like to turn the floor back over to Dr. Vajdic for his closing comments.
Thank you, operator. I would like to thank each of you for joining our earnings conference call today and look forward to continuing to update you on our ongoing progress and growth. If we were unable to answer any of your questions, please reach out to IR firm, MZ Group, who would be more than happy to assist. Thank you again.
This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.