HeartBeam, Inc. — FY 2023 Form 10-K
Reporting period: Fiscal year ended December 31, 2023; comparisons are with FY 2022. This is an annual report, not a standalone Q4 filing. Filed March 20, 2024.
Business context
HeartBeam is a pre-revenue medical technology company developing ambulatory cardiac monitoring products using its patented Vector Electrocardiography (VECG) platform. Its planned AIMIGo system combines a portable, credit-card-sized ECG device, patient app, physician portal and cloud software. The company reports that its products have not received FDA marketing clearance.
Financial results and liquidity
| Metric | FY 2023 / Dec. 31, 2023 | FY 2022 / Dec. 31, 2022 |
|---|---|---|
| Revenue | No revenue reported | No revenue reported |
| General and administrative expense | $8.516 million | $7.354 million |
| Research and development expense | $6.798 million | $5.677 million |
| Total operating expenses / operating loss | $15.314 million | $13.031 million |
| Interest income | $675,000 | $69,000 |
| Net loss | $14.639 million | $12.962 million |
| Net loss per share, basic and diluted | $0.72 | $1.59 |
| Cash and cash equivalents | $16.189 million | $3.594 million |
| Total assets / total liabilities | $17.131 million / $1.194 million | $4.039 million / $1.665 million |
Operating cash outflow was $12.093 million in 2023, versus $9.948 million in 2022. Investing cash outflow was $256,000; financing provided $24.994 million, primarily from equity issuance. Cash, cash equivalents and restricted cash totaled $16.239 million at year-end, including $50,000 of restricted cash. The balance sheet reports accounts payable and accrued expenses as its current liabilities; it reports no debt balance. Profit margins are not meaningful because the company had no revenue.
Material changes versus FY 2022
- Operating expenses rose 18% to $15.314 million; G&A increased 16% and R&D increased 20%. Management cited stock-based compensation, higher headcount and professional services supporting FDA clearance.
- Net loss widened by $1.677 million, or 13%. Interest income increased with the larger cash balance and higher interest rates.
- Cash increased by $12.595 million, largely following approximately $24.8 million of net proceeds from equity financing. Common shares outstanding rose from 8.0 million to 26.3 million, creating substantial dilution.
- The company withdrew its FDA application for its hospital-focused AIMI software product during 2023 and said it was focusing on ambulatory cardiac monitoring.
Outlook, risks and notable items
- Going concern: The auditor and management stated that substantial doubt exists about HeartBeam’s ability to continue as a going concern. Management said existing cash was insufficient for the 12 months following issuance of the financial statements; additional financing will be needed, with no assurance it will be available on acceptable terms.
- Regulatory and launch milestones: The first AIMIGo 510(k) application remained under FDA review, with company responses to FDA questions being prepared. At filing, management anticipated clearance by the end of Q2 2024. It planned a second 510(k) submission for synthesized 12-lead ECG software by Q3 2024 and a limited launch by year-end 2024. These are expectations, not approvals or guarantees.
- Clinical study: The VALID-ECG pivotal study enrolled its first patient March 13, 2024. HeartBeam planned to enroll approximately 198 patients and expected enrollment completion in Q2 2024. A 2023 published study reported comparable automated VECG and standard 12-lead ECG performance for detecting coronary occlusion; baseline comparison increased reported AUC from 0.72 to 0.95. These findings do not constitute FDA clearance.
- Capital and dilution: The company disclosed approximately $11 million remaining under its ATM facility at year-end and ongoing financing needs. Future equity issuance could further dilute shareholders. It also reported $5.152 million of warrants outstanding at year-end.
- Execution risks: Key uncertainties include FDA review and clinical outcomes, commercialization and physician adoption, reimbursement, manufacturing scale and supply, competition, and cybersecurity/data availability. The filing also identifies material weaknesses in internal controls over financial reporting; remediation efforts included hiring a Controller in July 2023.
- Other items: No material legal proceedings or off-balance-sheet arrangements were reported. A subsequent-event disclosure estimates approximately $0.7 million for the VALID-ECG clinical trial, including CRO costs.
Important facts for investors to verify
- Current cash runway, actual cash burn and whether additional financing has been secured since the filing.
- FDA status and timing for both 510(k) submissions, plus actual VALID-ECG enrollment, results and costs.
- Whether AIMIGo receives clearance and launches, and whether the proposed indications and functionality match the eventual clearance.
- Share-count changes, remaining ATM capacity, warrant exercises and potential dilution from equity compensation and future financings.
- Progress in remediating the disclosed material weaknesses and the effectiveness of financial reporting controls.