BioSig: An Emerging Medical Device Developer Making Strides In Catheter-Based Electrophysiology

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Today I am discussing an emerging medical device developer called BioSig Technologies (BSGM). This company operates within the medical device subindustry, has roughly an $21 million market cap and is listed on the OTC. One of the reasons why this company is an interesting investment opportunity is that it is targeting a large indication in catheter-based electrophysiology (EP). Specifically, BioSig is attempting to complement existing recording systems situated in an electrophysiology lab with its PURE EP system. According to BioSig CEO Gregory Cash, the technology "provides a multitude of essential information in real-time; information that is not obtainable with any other equipment presently in the EP lab." This represents a multi-billion dollar opportunity for BioSig.

There are very few companies that offer real exposure to the EP market. According to my research, BioSig is one such company that is immersed in the development of medical devices targeting this indication. Thus, should the company advance a product to market (which is expected as early as 2016), investors could be provided an opportunity for growth that is not possible in some of the more prominent medical device companies. It is important to note, however, that investing in such a company comes with the inherent risks of shareholder dilution, clinical failure, and intense market competition. Thus, it is at the discretion of you, the reader, to approach BioSig given the significant risks that accompany any investment in the equity.

Given the lack of coverage of BioSig, I felt compelled to further investigate the company's various developments. I reached out for an interview with Gregory Cash, President, CEO, and Director of BioSig. Please read CEO Cash's bio on the company website, available here. Following is my interview with Mr. Cash.

Could you summarize BSGM’s pipeline?

BSGM’s PURE EP™ System is a next-generation multichannel surface electrocardiogram and intracardiac electrophysiology (EP) recording platform. It is designed to allow for precise, uninterrupted, real-time evaluations of electrocardiograms and electrograms during electrophysiology procedures ranging from simple diagnostic tests to catheter ablation for the most complex cases of arrhythmias.

PURE EP is being developed to assist electrophysiologists in making crucial clinical decisions in real-time by acquiring and displaying high-fidelity cardiac signal recordings and providing guidance in identifying ablation targets. Based on needs in the field, we expect to continue innovating improved and novel technologies.

 How is BSGM positioned for future revenue growth?

BSGM expects to begin generating revenue in the second half of 2016 with its first generation of the PURE EP System. Additional software upgrades/features would allow for additional revenue growth.

In addition, BSGM’s management is constantly evaluating different avenues to add a disposable component – a key growth factor.

How do you perceive your competitors in the indications BSGM is targeting?

The technology in the PURE EP System is positioned to complement, rather than compete with, the existing recording systems situated in an electrophysiology lab. BSGM believes that PURE EP provides a multitude of essential information in real-time; information that is not obtainable with any other equipment presently in the EP lab.    

Looking at the catheter-based electrophysiology (EP) market, what is BSGM’s market opportunity and what challenges (if any) do you foresee going forward?

Arrhythmias affect a large and growing portion of the global elderly population. The ineffectiveness of pharmacological therapies has transformed the market for ablation treatments - an opportunistic environment for EP device manufacturers. Atrial Fibrillation,   the most common arrhythmia, currently affects more than 3 million people in the US alone, which is expected to double by 2025.  Total annual healthcare costs relating to AF are already $26 billion.

Although cardiac ablation is rapidly becoming the first line of therapy for many arrhythmias, the procedures are long and recurrence rates remain high – approx. 48% within the first 8 months and 30% thereafter even in the most experienced centers.

Analysts forecast the global market for EP devices will grow at a 12% compound annual growth rate, from $2.5 billion in 2012 to $5.5 billion by 2019 - making it one of the fastest growing medical device segments. Just in the US, the number of Atrial Fibrillation (AF) and Ventricular Tachycardia (VT) arrhythmia ablations is forecast to grow about 15% from 2012 to 2017.

Being a new player in the lab, fitting into the budgeting requirements for the EP lab itself may represent a significant challenge. PURE EP is to be competitively priced and positioned as an essential add-on for existing EP recording systems to increase labs’ throughput, reduce costs and improve overall success with the procedures.

Could you please elaborate on the various goals of BSGM, as well as any possible exit strategies that management has contemplated?

Our overall goal is to establish our proprietary technology as a new platform that will have advantages over the electrophysiology recording systems currently available on the market: higher quality cardiac signal acquisition for accurate and efficient electrophysiology studies; reliable cardiac recordings to better determine precise ablation targets, strategy and end point of procedures; and a portable device that can be fully integrated into existing electrophysiology lab environments.

PURE EP System is designed to contribute to an increased number of procedures performed in each electrophysiology lab and improved patient outcomes. BSGM’s main goal is to provide superior cardiac signal quality combined with the ability to guide clinical decision making during ablation; to make the PURE EP System an essential addition to all existing and new EP Labs.  

There are routine exits via acquisition in the EP space. There is a strong likelihood of a big player to acquire a company like BSGM developing an innovative product for the electrophysiology lab.
 
In what ways (if any) is BSGM’s Pure EP System validated? Accordingly, how do you value this system?

The PURE EP System has been developed with the input of leading cardiac electrophysiologists from around the country. Initial concept discussions were held with Drs. Andrea Natale and Luigi Di Biase at Texas Cardiac Arrhythmia Institute (TCAI); and, proof of concept, as well as prototype testing, was carried out at the EP and Animal labs at UCLA Cardiac Arrhythmia Center with Dr. Kalyanam Shivkumar and his team. Valuable guidance has been provided by Dr. Mauricio Arruda from UH Case Medical Center in Cleveland, OH. Clinical input has also been provided by Dr. Vivek Reddy from Mount Sinai Hospital in New York, Dr. David Haines from William Beaumont Hospital in Michigan, and Dr. Hiroshi Nakagawa from the Heart Rhythm Institute at the University of Oklahoma.

We are planning animal studies with Drs. Asirvatham and Venkatachalam at Mayo Clinic in Rochester, MN, and animal studies with Dr. Shivkumar at UCLA in Los Angeles, CA.  The clinical plan for human studies is under development. 

In initial studies, PURE EP demonstrated clear advantage over existing recording systems in retaining acquired cardiac signal fidelity.

Has the EP market seen anything like BSGM’s Pure System platform? What differentiates this technology in respect to efficacy, safety, and suitability?

The PURE EP System is the first of its kind in the EP device market with proprietary technology to combat noise and provide confidence indexes to guide ablation strategies. It preserves the patient's cardiac signal morphology by minimizing non-biologic signals such as noise, artifacts, and baseline wander through proprietary digital signal processing.  Existing systems, many of which employ core technology nearly twenty years old, are unable to eliminate electrical interference without compromising signal quality.

The system employs Confidence Indexes aimed at improving procedural efficiency by eliminating the need for multiple maneuvers and retrospective data validation. PURE EP could substantially increase EP labs’ throughput by shortening ablation procedures.  At the same time, by assisting electrophysiologists in guiding ablation strategies, it has potential to significantly improve outcomes and reduce the need for repeated ablation procedures.

There is an increasing demand in higher quality signal recordings as clinical evidence has shown that ablation procedures only based on an anatomical approach have limited success. There is an unacceptable high rate of repeated complex arrhythmia ablations, driving the need for improved procedural strategies.

To improve on ablation strategies using traditional anatomical markers, modern cardiac ablation procedures are incorporating intracardiac signal analysis to help identify ablation targets. PURE EP's unique signal acquisition, processing and analysis tools are positioned to provide crucial clinical information to guide, shorten and simplify procedures in real-time. This should lead to significant cost and time savings, and, ultimately, reduce the need for repeated procedures

How early can investors expect a regulatory decision on the platform technology? Do you forsee the market changing in the meantime in a way that would place BSGM at a disadvantage?

BioSig intends to seek FDA 510(k) approval for the PURE EP System. The Company has already achieved proof of concept validation through UCLA EP & Animal Labs, and is collaborating with several of the nation's most prestigious cardiac arrhythmia centers including Texas Cardiac Arrhythmia Institute, UCLA Cardiac Arrhythmia Center, and Mayo Clinic.

BioSig hired Libra Medical (Minneapolis), an expert regulatory consulting firm, led by Dr. Sew-Wah Tay.  Dr. Tay has successfully obtained twenty 510(k) approvals in her career and has never failed.  She commenced a rigorous regulatory process in October 2014 working closely with our internal team, and the Company expects to receive FDA approval in Q1 2016.

The market for diagnosis and treatment of arrhythmias in the electrophysiology lab will continue to grow as the population ages – BSGM does not foresee any changing of the market to be disadvantageous to the company.

From a technical standpoint, there is little trade volume on BSGM stock. What initiatives are planned and/or underway to increase awareness of the company’s developments?

BSGM recently hired PCG Advisory Group, a leading investor relations firm in New York.  BioSig management will be presenting the Company to investors in both the U.S. and Europe at selective brokerage and industry conferences, like the Roth Growth Conference in California on March 9, or Health Care Innovations in Dublin, Ireland on April 13.

It is important to add that BioSig’s founder and Executive Chairman was an institutional money manager in New York for 14 years.  He has an extensive knowledge of the capital markets landscape in med tech.  His relationships with leading med tech mutual fund and hedge fund managers date back to 1991.

The Company will be uplisting its stock to Nasdaq in the 2H 2015, allowing a larger audience to consider the stock as an investment choice.  Once on Nasdaq, BioSig management will better be able to leverage its extensive relationship base in developing a market for its shares.

Could you elaborate on the versatility of the technology platform? Are there any plans to augment the platform to target additional indications?

Based on the technology needs of the EP device field, BSGM plans to continue innovating improved and novel platforms. 

What is BSGM’s current cash position and cash burn? Given these figures, do you foresee any need to return to the capital market in the near term?

BioSig just filed its 10-K Annual Report with the SEC on February 20, 2015.  The Company has enough cash on hand to fund operations through Q2 2016.  The Company does not anticipate coming to market in the near term.

Does BSGM have any notable partnerships, collaborations and/or various other business relationships that investors should be made aware of?

Not only has BSGM assembled a top notch Scientific Advisory Board, as discussed in the previous question regarding technology validation, the Company has gathered a distinguished team of seasoned executives on its Board of Directors from many leading companies in the EP space including Biosense Webster, Johnson & Johnson, Boston Scientific, and Medtronic.

The last Company that our founder had a significant role in was able to establish a strategic relationship with a Fortune 500 Company.  In fact, every Company our founder has had a significant role in has been able to obtain a meaningful strategic relationship with a Fortune 500 company.  

What is the next near-term catalyst that investors can broadly expect?

BSGM is working on many fronts.  The categories that may produce near term catalysts would include:

• clinical data

• investments from strategic or noteworthy investors

• hiring of key personnel

• appointment of Fortune 500-quality Board member

• participation in leading med tech investor gatherings

Thank you for your time.