HeartBeam, Inc. — Q1 2024 Form 10-Q
Reporting period: Three months ended March 31, 2024; financial statements are unaudited. HeartBeam is a development-stage cardiac technology company developing ambulatory ECG products using its proprietary Vector Electrocardiography platform. Its products are not yet FDA-cleared, and the company reported no revenue.
Financial results and liquidity
| Metric | Q1 2024 | Q1 2023 |
|---|---|---|
| Revenue | None reported | None reported |
| General and administrative expense | $2.356 million | $2.475 million |
| Research and development expense | $2.428 million | $1.681 million |
| Total operating expenses | $4.784 million | $4.156 million |
| Operating loss | $4.784 million | $4.156 million |
| Interest income | $178,000 | $20,000 |
| Net loss | $4.606 million | $4.136 million |
| Net loss per share, basic and diluted | $0.17 | $0.50 |
| Cash used in operating activities | $3.463 million | $3.114 million |
- Cash and cash equivalents were $12.638 million at March 31, 2024, down from $16.189 million at December 31, 2023. Including $50,000 of restricted cash, quarter-end cash was $12.688 million.
- Total assets were $13.635 million and total liabilities were $1.097 million at quarter-end. The reported liabilities were accounts payable and accrued expenses; the filing does not report borrowings.
- Cash used in investing was $88,000, primarily for equipment; there was no financing cash flow in Q1 2024. Stock-based compensation was $1.207 million.
- The company reported no material commercial revenue expected in 2024 and stated existing cash is insufficient to fund operations for the 12 months following issuance of the statements. Management said this raises substantial doubt about the company’s ability to continue as a going concern.
Changes versus prior period
- Operating expenses increased 15% to $4.784 million, and net loss increased 11% to $4.606 million year over year.
- R&D expense rose 44%, primarily due to higher stock-based compensation, headcount and clinical-trial costs, partly offset by completion of initial AIMIGo platform development costs.
- G&A expense declined 5%; lower commercial-team, investor-relations and marketing costs were partly offset by higher stock-based compensation.
- Operating cash use increased from $3.114 million to $3.463 million. Q1 2023 included $510,000 of financing proceeds, versus none in Q1 2024.
Outlook, developments and risks
- HeartBeam reported that its initial AIMIGo device 510(k) submission was in substantive FDA review and anticipated clearance by the end of Q2 2024. The company cautioned that clearance is uncertain.
- The VALID-ECG study for its 12-lead ECG synthesis software began enrolling in March 2024. Management reported enrollment above 50%, expected completion in Q2 2024, and planned a second 510(k) submission in Q3 2024. It anticipated a limited AIMIGo launch by year-end 2024.
- The company entered a May 2, 2024 at-the-market sales agreement allowing up to approximately $17 million of common stock sales, with a 3% sales commission. No shares had been issued under it at the time of the filing. The prior AGP sales agreement was terminated.
- Commitments included approximately $300,000 remaining under a development-services agreement and approximately $700,000 remaining for the clinical trial. The trial’s total estimated cost, including CRO services, was approximately $800,000.
- Management cited the need for additional capital through equity or debt financing or strategic relationships, with no assurance financing will be available on acceptable terms. The company has incurred recurring losses and negative operating cash flows since inception.
- Management concluded disclosure controls and procedures were not effective at March 31, 2024, citing material weaknesses involving documentation, approval and review processes, staffing and formal risk assessment. Remediation efforts were ongoing.
- Other developments included two U.S. patents granted in 2024 and presentation of preliminary AI-related results. These developments do not establish regulatory clearance or commercial adoption.
Most important facts for investors to verify
- Whether FDA clearance was obtained, and the actual timing and requirements for both 510(k) submissions.
- Updated cash runway, operating cash burn, and whether the company raised capital under the $17 million ATM or obtained other financing.
- VALID-ECG enrollment, study completion, results and any changes to the planned launch timeline.
- Actual clinical-trial and development costs relative to remaining commitments and estimates.
- Progress in remediating internal-control weaknesses and whether management later concludes controls are effective.
- Potential dilution from future equity issuance and outstanding options, warrants and other equity awards.