EIQ significantly derisked with FDA approval of AS diagnosis. Reimbursement codes next step and announcement of CEO should build momentum.

Highlights:

510(k) clearance secured from FDA allows for EIQ’s AI-enabled solution, EchoSolv AS to be marketed and sold in the USA

EIQ is in advanced discussions with a range of US healthcare providers around the potential uptake of EchoSolv AS – pipeline is well established with multiple groups

Ongoing liaison with device manufacturers and pharmaceutical companies advancing to broaden commercialisation pipeline

Work alongside US consultancy to obtain reimbursement codes for use of EchoSolv AS under insurance to scale up following FDA clearance

Company is well funded to advance multiple, near-term commercialisation opportunities

Advanced discussion with potential US based CEO with extensive healthcare, commercialisation and reimbursement experience.

“Following clearance, the Company is now aggressively focused on commercialisation."

Hot copper email sent out sharing a next investors article about EIQ. ("The Company has been engaged by EIQ to share our commentary on the progress of our Investment in EIQ over time").

Headline is that FDA approval could be any day now. The article does give a detailed run down on the company and outlines the risks. Their view is that it will take at least 12 months to ramp up sales. It does note that they have an investment in the company and include their investment memo.

Highlights of their thesis

"The data shows that the AI algorithm works.

Imminent share price catalyst in potential aortic stenosis FDA approval.

Multi-billion dollar market target for “heart failure” diagnostics assistant.

Second catalyst for FDA approval on heart failure could be within 12 months.

Exclusive commercial access to the world's biggest heart data repository

Clear pathways to commercialisation in the USA - the biggest healthcare market in the world.

SaaS revenue model, potential to rapidly grow revenue and/or secure large licensing deals.

Cost savings, 3 seconds until results, removing bias"

Could provide some momentum to the SP.

Disc: held in SM and RL

Investor presentation webinar gives some possible revenue and answers some of the questions regarding progress.

Anticipated reimbursement for Aortic Stenosis is US$68 of which EIQ gets 25% at ~90+% margin. US $8.5M ARR @10% market share (conservative 5M number of Echocardiograms only Medicare, total could be closer to 35M). In contrast the same market share for Heart Failure is $264 @25% or $42M as the penalties for hospitals are much higher if the patient returns to hospital following missed diagnosis or insufficient treatment.

Reimbursement allows EIQ to clip the ticket rather than charging the medical centre.

$4M cash burn in last 12 months. Stated that HF approval not needed to be a successful company. AS treatment in UK only @10% so large market expansion potential for device/ drug treatment.

HF FDA approval expected in the next 12 months. Reimbursement should follow shortly after.

Licensing discussions ongoing with device manufacturers, pharmaceutical firms and hardware producers. Expected to peak post approval and reimbursement.

Accepted that initial push on missed diagnoses had not been well received and so now focusing more on improved workflow and practitioner assist. Although the algorithm is black box they are trying to show how the numerical data generated leads to the decision to provide greater transparency.

Claiming competitors AI solutions were about improving the image rather than aiding the decision but pretty vague.

Suggesting that once a partner top US hospital is using the product, liability concern issues will drive wider adoption.

Following the study results announcement EIQ went into a trading halt for a CR. Despite earlier statements about options providing sufficient funding I had taken a small $1K position in RL assuming that a raise was coming and hoping to take part. However $7.1M was raised only from institutional investors @15c. "Several new institutional investors introduced to the register."

$4.65M for commercialisation, $1M for product development, $0.45M for FDA and trial costs and $1M for working capital.

47.4M new shares issued a dilution of 9% @5.4% to 5day VWAP so at least not heavily discounted. SP currently @16.7 so in the money.

EIQ announces positive study results for Heat Failure AI solution. FDA decision for Aortic Stenosis due soon and now pursuing approval for heart failure.

Highlights:

• Echo IQ recently completed two clinical studies to evaluate the performance of its Heart Failure AI system in detecting new onset heart failure:

o EIQ’s AI-alone detects 86% of heart failure cases (vs 46% detection observed in current standard clinical practice)

o Combination of AI and clinical evaluation increases diagnosis accuracy to 97% in high-risk individuals

• Heart failure is the leading cause of re-hospitalisation in the US, accounts for 17%(1) of all US healthcare expenditure and is a US$60bn market annually.

• Results were presented by invitation at Late Breaking Science sessions at the European Society of Cardiology (ESC) Congress 2024, the world’s largest and most renowned cardiology congress.

• Positive results form the basis for FDA application for EIQ’s AI solution as a diagnostic aid for the detection of heart failure.

• Groundbreaking results highlight EIQ’s potential ability to positively impact heart failure health economics – Reimbursement strategy being progressed.

• Significant commercial interest established and expected to scale in light of significance of results.

“The current status quo is not acceptable, since many patients with heart failure do not receive a clear diagnosis, and similarly other individuals at risk of heart failure may not be identified. The results of these studies demonstrate our ability to positively change the diagnostic landscape and to improve on current practices, with the goal of enhancing our patients lives.”

Proposed regulatory pathway and commercial opportunities: Following the presentation of these results at ESC Congress 2024, the Company remains well placed to advance its regulatory strategy with an application for US FDA clearance for its heart failure solution. Work is now underway toward a pre-submission meeting with the regulator, which will provide additional insight into its clearance pathway. Concurrently, Echo IQ has been engaging with a number of leading global pharmaceutical companies and device manufacturers, with both on-market and planned therapies for heart failure and associated conditions. These results are expected to advance these discussions ahead of potential commercial uplift with counterparties.

SP had dropped significantly and I have topped up in SM @ 10c. This announcement gives a bit clearer timeline to FDA approval leading to a 25% jump. Good to see CEO buying on market.

EIQ announces that it has completed its US Reader Study. The results from the Reader Study are now undergoing final statistical analysis and are expected to form part of the Company’s FDA 510(k) application, which will be submitted in April 2024. The FDA currently publicises its timeframe for decision response as being 90 days from lodgement of final application. Echo IQ Chief Executive Officer Kimber Rothwell said: “Completion of our US Reader Study is a key step towards securing final FDA clearance for our cardiology decision-support technology and is an important milestone in Echo IQ’s commercial development.” The Company also advises that its Chief Executive Officer, Kimber Rothwell has purchased 500,000 Echo IQ (ASX:EIQ) shares on-market.

EIQ announcing progress towards "whole of heart solution". This is where their product becomes compelling as it covers most/ all of the conditions a cardiologist is concerned about. The access to the largest echo-cardiogram database should give them the ability to have greater accuracy if their algorithm can utilise it. New SaaS contracts pending

Six new cardiac decision-support solutions to be introduced between November 2023 & January 2024.

Product expansion will significantly increase EchoSolv’s addressable market.

EchoSolv platform advances towards delivering a “total heart solution” for 8 cardiovascular diseases and diagnostic indicators.

1. Diastolic Dysfunction

2. Heart Failure

3. Hypertension

4. Left Atrial Volume

5. Left Ventricular Mass

6. Mitral Stenosis

Based principally on current industry diagnostic guidelines, these new modules fall outside the scope of FDA regulation which allows us to fast-track their introduction to the market.

Separately, new revenue-generating Software as a Solution (SaaS) contracts for EchoSolvTM’s current modules are pending.

“We are also pleased to confirm that our commercial pipeline for EchoSolv’s current SaaS offering continues to build very favourably and we anticipate adding new revenue-generating contracts with hospitals and cardiologists in the near-term. There are a number of avenues to build the revenue base beyond SaaS deployments and a number of exciting opportunities continue to advance in this regard too.”

Held in SM and RL

No revenue for this quarter and a cash burn of $1.7M. Next quarter has $500K options already exercised (remainder CY24, 145M outstanding ranging from 4c to 30c) and $650K R+D rebate. Should see some small revenue start next quarter but with $3.3M cash a raise is looking probable. Significant revenue likely following FDA approval early CY24. IP protection noted in quarterly report as a priority.

Pathway to FDA on-track, with reader study underway and final clearance anticipated Q4CY2023 /Q1CY2024

Echo IQ and EchoSolv(TM) will also be featured by Hydrix Medical at the Cardiac Society of Australia and New Zealand Conferenced in Auckland, New Zealand in August 2023. Echo IQ's Chief Medical Advisor will also be speaking at this important regional conference.

Increased operating expenses, reflecting an emphasis on sales and marketing activities, are starting to yield positive commercial impact, as reflected by the new partnerships and contracts announced . The Echo IQ Board of Directors was enhanced with the appointment of Simon Tolhurst, an experienced lawyer with expertise in competition law and mergers and acquisitions.

Commissioned broker report with a valuation of $0.59 gives a good detailed overview of the company and investment thesis.

Based on our modelling of revenues and expenses, we see EIQ achieving breakeven at the EBITDA line in FY25.

Financing EIQ’s first product EchoSolv™ was launched in December 2022. Growing the business in the near term is dependent on cash from revenue which is currently generated solely by EchoSolv™. As such, and until the product is generating sufficient income, the company will be reliant on access to external funding. 

Intellectual property EIQ is using a broad single patent approach across all conditions related to structural heart disease to protect its intellectual property. Its Australian provisional patent application (2022901868) is called ‘Systems and Methods for AI-assisted Echocardiography’. Intellectual property risk, notwithstanding the granting of the patent, could be offset by gaining a first-mover advantage, which – given the multifaceted commercialisation activity to date and lack of direct competition in imaging – seems within reach.

Next heart condition for Echosolv. This starts to build the advantage that EIQ can have if it can continue to leverage the big data lead and keep developing new applications to make their product the must have solution.

Echo IQ introduces new EchoSolv module for Mitral Regurgitation

Mitral Regurgitation is the most common type of heart valve abnormality, and is subject to high rates of under-diagnosis

AI-backed decision support solution designed to increase identification of the progression of chronic Mitral Regurgitation

New solution development complete, with availability from August 2023

Sales pipeline for EchoSolvTM continues to grow with new deployments pending 

"We can now pursue sales of the AI-backed software that supports improved detection of two forms of heart disease, thus increasing its commercial appeal to cardiologists, hospitals and healthcare facilities. Prior to the launch of the software in August, we expect to report a number of new sales of EchoSolvTM given the strong growth in our sales pipeline recently.” 

Held

First Australian contract in Queensland @70k/year. Sounds like it will also be a test bed for other forms of structural heart disease. Good to see revenue starting and will be interesting to see the next set of results to get some idea of margin.

Highlights:

• EchoSolv to be deployed in Gold Coast Private Hospital representing the maiden sale of EIQ’s AI-backed SaaS technology into a large hospital

• Sales pipeline is building strongly in the US and Australia

The agreement is for an initial term of 12 months which commences upon receipt by the Company of historical measurement data from GCPH for initial review. The agreement includes standard commercial terms for a contract of this nature and is expected to generate revenues to Echo IQ of approximately $70,000 annually. The agreement also provides GCPH with early-access to new AI-backed solutions from Echo IQ designed to address additional forms of structural heart disease.

Gold Coast Private Hospital is a leading Queensland hospital and part of HealthscopeLtd’s network of 42 hospitals across Australia.

Here in rl and sm

EchoSolv to be made available to 700 US cardiovascular facilities through Studycast integration agreement. No details as to how this affects margins (as it clips the ticket on sales) but a good way to make access to EchoSolv easy and raise the profile by being showcased at American Society of Echocardiology Conference.

Highlights:

Integration Partner agreement with Core Sound Imaging

Core Sound Imaging supplies comprehensive imaging workflow platform, Studycast to medical facilities in 49 US states and territories and 7 countries. Agreement will see EchoSolvTM integration made available to 700 cardiovascular facilities

EchoSolvTM to be integrated into Studycast imaging and reporting platform

Rapid uptake to be supported by strong presence at ASE Conference, June 2023 Sydney

Under the terms of the one-year agreement, EchoSolv will be integrated into the Studycast system. Echo IQ will remain responsible for the direct sale of EchoSolv to prospective users, however access to EchoSolv will be simple and fast with this new turnkey integration interface.

User benefits of this agreement include:

1. Every user of Studycast will have access to the integration, enabling them to leverage the diagnostic support power of EchoSolv;

2. Users will be able to embed EchoSolv assessments into current reporting; and

3. Technical integration for mutual customers of EchoSolv and Studycast is no longer necessary with access via built-in integration.

The agreement gives Echo IQ several important benefits as commercial roll-out of EchoSolv accelerates. Studycast customers will be able to gain access to EchoSolv almost instantly. They can do so with zero additional technical integration required, and they can see EchoSolv assessments directly embedded into their existing diagnostic workflow.

Pursuant to the agreement, the Company will pay Core Sound Imaging an integration licensing fee. New and existing users will be able to access EchoSolv via the Studycast platform by entering into a direct sale with the Company. 

Comments

Core Sound Imaging COO and founding partner, Laurie Smith, said: “We expect our Studycast clients to benefit immediately from the AI-backed decision support capability of EchoSolv. Having the flexibility to use this novel technology without the complexities of manual set-up will make the adoption of AI in cardiovascular care easier and simpler than many may have imagined. We are delighted to be showcasing EchoSolv later this month at ASE 2023 (the American Society of Echocardiology Conference) and expect our customers to embrace this important solution as part of the Studycast Integration Program.”

Echo IQ Executive Chair, Andrew Grover, added: “Studycast has significant market penetration in US cardiovascular hospitals and this established presence and trust delivers and outstanding commercial opportunity to Echo IQ given Core Sound Imaging’s acceptance of our technology. The value of this two-year agreement should not be underestimated by our shareholders and it is further validation of EchoSolv. Commercial take up of EchoSolv is gathering pace in the US and Australia and we anticipate more revenue-generating deployments to be reported shortly.”

Investor presentation following announcement of US mid West distribution agreement (12 month 10 states). First small revenues May 23, exercise of options and R&D tax rebate by EOFY to give $5M cash balance. Advanced discussions with hardware manufacturers, valve manufacturers, healthcare providers and PACS / reporting providers mentioned. Monthly subscription/ project fee as revenue model but no detail.

Company will commence commercial deployment of EchoSolv this month in a private cardiology practice in Queensland, Australia. It will initially be used in audit- mode by the practice to review echocardiographic measurements obtained over a 12-month period. EchoSolvTM will then be integrated into the practice’s reporting systems, under a one- year paid SaaS agreement, for use in real-time analysis. This should enable patient assessments to be enhanced with the proven capability of Echo IQ’s software and shows the versatility of its potential use cases. The contract will initially generate revenue of approximately $60,000 per annum.

A couple of slides demonstrating healthcare cost savings due to decreased hospital admission time ( 1 day vs 11 days) and more higher margin procedures ( 40% higher revenue).

510k FDA clearance expected Q4 23

EIQ organising its approach in to the US by partnering with American College of Cardiology. Appointing a distributor for ANZ and S ingapore. Still no detail on pricing model but some info on the rolling commission in the ANZS distributor Hydrix ASX announcement.

• Echo IQ enters US partnership with MedAxiom, an American College of Cardiology company

MedAxiom is linked to over 475 cardiovascular organisations in the United States encompassing 6,500 cardiovascular leaders, over 13,200 clinicians and around 2,700 administrators.

• Echo IQ appoints Hydrix Medical Pty. Ltd, a subsidiary of Hydrix Limited (ASX:HYD), as sales partner for Australia, New Zealand, Singapore

Under the terms of this three-year re-seller agreement, Hydrix Medical will promote, market and sell EchoSolv to the cardiology healthcare sector. More than 1 million echocardiograms and 10,000 Aortic Valve replacements are carried out annually in Australia, New Zealand, and Singapore

Echo IQ will pay Hydrix a sales commission on each qualified customer contract facilitated by Hydrix, and entered into by Echo IQ directly with the customer. A portion of the commission is payable to Hydrix upfront after Echo IQ completes the initial customer implementation, and thereafter on each contract anniversary date for the remainder of the contract period, based on the recurring fees payable by the customer to Echo IQ.

• US commercial team strengthened with recruitment of an experienced and well networked East Coast Business Development Manager

• Australian commercial team increased with recruitment of Queensland Business Development Manager

The Company retains the ability to sell directly in Queensland to ensure Echo IQ continues to benefit from direct industry engagement and to incorporate market insights into its product roadmap.

”Advanced commercial discussions are ongoing with several healthcare providers across Australia and the US which gives me great confidence in progress of the commercialisation of EchoSolvTM. Echo IQ looks to be exceptionally well-placed for the year ahead.”

Media from Ch9 and The Australian following the trial results.

https://www.theaustralian.com.au/science/artificial-intelligence-gives-new-hope-for-sufferers-of-severe-heart-problem/news-story/82e5d3be198c466eea85fc675fca709d

https://www.9news.com.au/national/how-ai-is-helping-with-life-threatening-heart-diagnoses/c5f84633-bb29-48c3-b57c-308aa4f3fc51

Further good results from second clinical trial with some comments in the announcement that suggests a marketing approach. Incorrect/inaccurate diagnosis leading to malpractice suits and an increase in recipients for device manufacturers. Trial was funded by one such company. Now to get the adoption and revenue going.

Echo IQ’s EchoSolv AI technology identified 72% more patients with severe aortic stenosis than human diagnosis alone

• Trial revealed that women were 66% less likely to have been accurately diagnosed than men using human-only assessment: EchoSolvTM resolves this discrimination

• Study was funded by Edwards Lifesciences (NYSE:EW)(Edwards Lifesciences Corp. engages in patient-focused medical innovations for heart disease and critical care monitoring. Its products are categorized into four main areas: Transcatheter Aortic Valve Replacement, Transcatheter Mitral and Tricuspid Therapies, Surgical Structural Heart, and Critical Care)

• Clinical trials now completed at St. Vincent’s Hospitals and Beth Israel Deaconess Medical Center (USA) with more than 40,000 echocardiograms reviewed

• Trial results support rapid commercial deployment of EchoSolvTM in multiple sites and markets

In the United States, diagnostic errors affect an estimated 12 million adults each year. Furthermore, we know that 1 in 3 medical malpractice cases resulting in death or permanent disability are due to inaccurate or delayed diagnosis. EchoSolvTM has clearly demonstrated how valuable it can be in clinical practice and we are pleased to see a number of facilities in Australia and the US evaluating our technology.

Device manufacturers, such as replacement valve manufacturers, could potentially see an increase in suitable recipients for their proven therapies.

We look forward to sharing more news in the weeks ahead as Echo IQ starts to capitalise on these exciting results.”

Trading halt is requested pending an announcement by the Company in relation to the Australian Clinical Study Results. SP has made a recovery in recent days so investors are assuming it will be positive.

Podcast from last year gives a good overview of the company and where it is headed. 2 main take aways for me are the processing of existing Echocardiograms does not require FDA approval so some revenue to come this year as mentioned in the 4C today and in discussion with heart valve manufacturers who obviously have an interest in identifying more patients to treat. FDA approval projected Q3 23 will allow the identification of patients outside current guidelines which is where their product has an edge.

”The Company completed a capital raising of $3.5m during the quarter. This, coupled with careful management of the Company cost-base resulted in Echo IQ finishing the quarter in a strong financial position, and able to deliver against its strategic priorities, with $3.536m cash on hand. In the next 6 months, the Company expects its financial position to be positively impacted by the commencement of commercial revenues from EchoSolvTM as well as Research and Development grants and the exercising of up to $3 million in $0.08 options expiring at the end of June 2023.”

”Echo IQ is moving ever-closer to the commercial introduction of its solution for retrospective and real-time identification of guideline-defined severe aortic stenosis and steady progress being made towards FDA certification of its ai-backed phenotype solution, expected Q3 2023.”

Disc: have taken a position in SM and a small position in RL.

Ultromics are in the same field received $33M in series B funding in 2021. Spun out of the University of Oxford and built-in partnership with the U.K.'s National Health Service (NHS). They already have partnerships with Mayo Clinic, Janssen, Microsoft Azure and the American society of echocardiography. FDA and CE Mark. Need to read more of the research to see where Echo IQ is going to have enough advantage to catch up in US / Euro market.

Ultromics receives FDA Clearance for its Breakthrough Device EchoGo® Heart Failure: An AI-based platform that enables precision detection of heart failure with preserved ejection fraction.