Top Deal: A Cardiologist In Your Pocket

Summary

The Heartbeam team has been selected as a “Top Deal” by KingsCrowd. This distinction is reserved for deals selected into the top 10% of our due diligence funnel. If you have questions regarding our deal diligence and selection methodology, please reach out to hello@kingscrowd.com. 

Problem

Every year, 610,000 people die of heart disease in the United States. Of all the accounted deaths, heart disease claims 1 in 4 of them. Heart disease is the leading cause of death for both men and women. Each year, 735,000 Americans have a heart attack where 525,000 of them have their first heart attack and 210,000 of them have already had at least one. 

Heart Disease costs the United States $200B each year, which includes the cost of healthcare services, medications, and lost productivity. By 2030, annual direct medical costs associated with cardiovascular diseases are projected to rise to more than $818B, while lost productivity costs could exceed $275B. 

Despite the misconception, cardiovascular disease is largely preventable. Most Americans can improve their heart health by making lifestyle changes or managing medical conditions. A large issue associated with people who are suffering from a heart attack is that they do not call 911 when the first warning signs appear. 

The American Heart Association suggests that proper exercise, a well rounded diet, low stress situations, and knowing the signs and symptoms of a heart attack are all adequate in avoiding cardiovascular disease as best as possible.

When all of these things are not enough in preventing cardiovascular disease in Americans as the upward trends show, a handheld patient administered device that can interpret the condition of a person’s heart is needed. Heartbeam provides an answer.

Solution

HeartBeam offers their device, iCardiologist, as a solution to monitor and alert patient’s doctors to their real time heart status. The iCardiologist is equivalent to a 12 lead ECG, which doctors use in hospitals to monitor heart function. The device is a credit card sized cloud based diagnostic expert system that can send information directly to patient’s doctors about their condition. 

Harvard Medical School has conducted studies using the HeartBeam technology which have shown that the iCardiologist is equal or better than world class cardiologists in diagnosing a heart attack. The technology is personalized to each patient equipped with diagnostic thresholds and heart attack ECG markers. The technology can further help the real life cardiologist save time by pinpointing the location of the problem on the 3D model of the heart.

This product combines biopharma, medtech and cardiovascular disease markets that are focused on proprietary big data precision medicine. The iCardiologist collects data across all users, which then can be used in studies when analyzing heart disease in the years to come. 

By bringing interpretable information to patients, HeartBeam eliminates the stress, anxiety, and fear associated with the diagnosis of cardiovascular disease. 

For provider systems like emergency medical systems and emergency departments, there is long term monitoring and high risk patient alerts. This feature keeps unnecessary patients out of hospital beds while simultaneously making room for the urgent ones.

This invention saves payors by treating heart attacks sooner and significantly reducing expenditures for unnecessary chest pain ER visits which are currently estimated at $16B. 

The iCardiologist is the equivalent of putting a licensed cardiologist with years of experience in the pocket of heart disease patients. The iCardiologist performed well in 4 proof of principle studies done by Harvard Medical School faculty members. 

iCardiologist has the ability to analyze heart rhythm, detect a heart attack or arrhythmia, and advise patients to call 911 or not. In the 1,200 recordings done of healthy individuals, there were no false positive events. The iCardiologist performance in detecting atrial fibrillation was better than the current AFib mHealth market leader.

Go-To-Market

HeartBeam defines their Phase I by an over the counter (OTC) version of iCardiologist hardware and software. During Phase I, iCardiologist will be offered initially to all individuals without a prescription as a subscription service (SaaS model). 

A challenge initially associated with Phase I is finding the client base to support the subscription (SaaS model). It should be anticipated that HeartBeam will use funds during this phase to not only fund the hardware and software but also for advertising.

HeartBeam’s Phase II will begin after the Food and Drug Administration’s (FDA) validation of the early available data. This enhanced release will enable HeartBeam’s advanced user and patient features along with physician access to the advanced analytics of patients. 

These Phase II enhancements will be available only on a prescription basis. Prescribing service providers will utilize current CPT codes and a patient co-pay by the high risk patients. The risk of this phase is the dreaded wait for FDA approval which is time consuming and requires constant attention.

Phase III will begin with a marketing campaign and sales focus on larger employers (>500 employees). The goal of Phase III is to encourage these companies to distribute HeartBeam’s solution as a benefit to each employee. In turn, these companies, which are generally self-insured, will benefit from both cost savings and improved medical outcomes for their employees. 

A challenge that goes along with this phase is the initial action to find these companies who would be willing to buy the HeartBeam technology for their 500+ employees. Hopefully with testaments from patients and doctors, HeartBeam can sell the product to large companies with ease. 

After the HeartBeam technology has been on the market for some time, the data available from millions of different individual’s ECGs, coupled with other patient data, will  be of immense research value to biotech and pharma firms worldwide. 

This will offer huge predictive and preventive value. The only risk and challenge with this idea is the compliance with the Health Insurance Portability and Accountability Act (HIPAA). However, HeartBeam assures investors that they will be preparing and packaging HIPAA compliant datasets from day 1 of launch.

Team

Branislav Vajdic is Heartbeam’s CEO with 22 years at Intel’s Technology Development. He was the co-inventor of Flash memory. He was also the prior CEO of NewCardio, a public medical device company. 

Wim Elfrink is HeartBeam’s Chairman and the lead seed investor. He was the former EVP of Industry Solutions and Chief Globalization Officer at Cisco. He was also the President and Founder of WPE Ventures Digitized Solutions.

Rick Brounstein is HeartBeam’s CFO with 25 years of CFO-level experience including Big 4 CPA experience (Arthur Andersen & Co.), IPO experience and as a sitting CFO within the technology and life science markets.

Dorin Panescu is HeartBeam’s CTO who has prior experience with Boston Scientific and St. Jude Medical. He was the VP at four medical device companies. He is one of the world’s most prolific medical device inventors with over 200 patents. 

James O’Rourke is HeartBeam’s COO and a Silicon Valley Veteran with 16 years at Fujitsu. He spent 6 years at Intel, 12 years at McAfee as a VP running TechOps/Supply Chain and MFE Enterprise BU’s Security Server Support Services Business.

Why We Like it

1. Large Addressable Market: With cardiovascular disease as the leading cause of death in the United States, the market is large and expected to grow. Currently valued at $129.2B in 2015, the cardiovascular disease market is expected to steadily increase to $146.4B in 2022. 

2. Data Differentiation: As the user base of the product grows so too will the data sets, which will help to refine the product and produce even more preventative features in the future.

As the product improves and becomes the best identifier of cardiovascular events, Heartbeam will become a necessary and accepted mechanism by the healthcare industry. This will make it harder for future competitors to win.

3. Market Positioning: While AliveCor, Apple, and iRhythm Technologies are more established in this field in terms of funding and client base, HeartBeam offers a completely different product than these three competitor  companies. 

HeartBeam will likely not have as large a user base but it is also more focused on patients with more serious concerns and potential cardiovascular issues. We see this being utilized by a patient with an acute need to monitor potential heart attacks. 

With a premium price point and a strong claim to recognizing heart attacks this will likely be looked at as a medical grade tool rather than a nice-to-have Apple watch feature. This will allow Heartbeam to thrive despite high budget competition with a lower grade product. These competitors can also serve as future acquirers looking to get further into the healthcare market. 

The Rating: Top Deal

Heartbeam is a Top Deal. With a large addressable market, an innovative technology and signs of real meaningful results, we think this management team is poised to be very productive. 

Essentially, this is a first to market product that can help prevent unnecessary ER visits, while increasing the number of timely/necessary visits from patients with real medical issues. This increases the productivity of hospitals while also driving better outcomes. 

This feature alone could save insurance payors hundreds of millions of dollars in medical staff lost productivity and poor outcomes. While not a mass market product quite in the same way as an Apple Watch heart monitoring tool, we think this fits nicely into the medical grade product level and can still market and sell to patients with an acute need for heart monitoring. 

We could see either a company like Apple acquiring the company for its technology, or a large insurance/healthcare provider acquiring this to drive towards reduced cost and better managed patients. Either way, the team is in a large market that is in need of more preventative tools, and this fits the bill. 

At the current phase of the business with a 30% discount convertible note on the Series A, this is an intriguing investment opportunity.