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Thursday, March 16, 2017

BioSig Secures Cash, Partners With Mayo, And Prepares For PURE EP Approval

Over the past month, BioSig Technologies, Inc. (BSGM) raised roughly $1.5 million in cash through the sale of nearly one million shares of common stock to accredited investors, which included participation from insiders, at $1.50 per share. Participants in the offering also received warrants to purchase one-half a share at $1.50 that if exercised, would raise an additional $750,000. Additional details on the financing can be found in the SEC 8K filing.

The new cash will help BioSig complete the necessary 510(k)-enabling work currently underway on PURE EP before the filing expected in the third quarter 2017. This work position PURE EP for market approval in the fourth quarter 2017, which would be a major milestone for the company. Below is a quick update outlining the company's progress.

Significant Recent Progress

BioSig has been aggressively pursuing development of PURE EP over the past several years with proof-of-concept, validation, and preclinical studies largely funded by management and venture partners. Advisory relationships for both the technology development and validation studies exist with leading medical centers in the U.S, including the Texas Cardiac Arrhythmia Institute in Austin, the Cardiac Arrhythmia Center at UCLA, Mount Sinai Medical Center in New York, Beaumont Medical Center in Detroit, Case Medical Center in Cleveland, the Heart Rhythm Institute in Oklahoma City, and Mayo Clinic in Rochester, Minnesota. 

Initial system concept validation took place at the Cardiac Arrhythmia Center at UCLA with the assistance of Dr. Kalyanam Shivkumar in June 2013. Subsequent preclinical studies have been performed at the Mayo Clinic in Rochester, Minnesota under the direction of Dr. Samuel J. Asirvatham and the Mount Sinai Hospital in New York City under the direction of Dr. Vivek Reddy. The main objective of these studies was to demonstrate the clinical potential of the PURE EP System.  

Much of this data has been presented and published at major medical conferences throughout 2016. For example, in March 2016, at the 13th Annual IDSS meeting, researchers from the Mayo Clinic presented pre-clinical data from three canine studies comparing BioSig's PURE EP System to a traditional FDA cleared recording system, System-A, which was later revealed to be CardioLab by GE Healthcare. Analysis of the two systems was done head-to-head, simultaneously, in real-time, and demonstrate that PURE EP offers enhanced recording and improved signal acquisition and differentiation compared to GE's market leading system. 

In June 2016, Dr. Ammar M. Killu, M.D of Mayo Clinic published a paper in JACC: Clinical Electrophysiology entitled, "Novel Electrophysiology Signal Recording System Enables Specific Visualization of the Purkinje Network and Other High-Frequency Signals." The paper highlights the ability of PURE EP to "Consistently demonstrate superior Purkinje potentials and other high-frequency signal visualization compared with the standard recorder in all sites of the cardiac conduction system."

In September 2016, more data from Mayo Clinic became available at the IEEE Engineering in Medicine and Biology Society (EMBC2016). New data presented at IEEE-EMBC2016 further builds upon the advantage of the high sampling rate (2000 samples/second) coupled with a high-resolution AID converter (24 bits) and an input voltage range of (±250mV) of PURE EP compared to existing EP recording systems. The figure below highlights the key findings presented by Killu et al at IEEE-EMBC in August 2016.

Most recently, BioSig initiated technology development with Minnetronix, a medical technology and innovation company, to implement the final necessary steps for obtaining 510(k) approval from the U.S. FDA for the PURE EP System. The company believes it will be in the position to file the 510(k) market clearance application during the first half of 2017 and gain market approval during the second half of the year. Below is look at the timelines and some of the near-term milestones for BioSig outlined in the March 2017 investor presentation.


Expanding Relationship With Mayo Clinic

On March 17, 2017, BioSig announced it has signed a ten-year strategic agreement with Mayo Clinic and Mayo Clinic Ventures. This new, expanded collaboration with Mayo builds upon the work realized under the Advanced Clinical Research Program that was signed with Mayo Clinic in March 2016. BioSig intends to work closely with Drs. Samuel Asirvatham and K. L. Venkatachalam, leading Mayo electrophysiologists, to develop advanced clinical features and applications for its PURE EP System, as well as to leverage the company’s core competency in physiologic signal processing to develop future technologies.

Mayo is expected to contribute know-how, intellectual property and clinical support to the partnership. The company expects joint patent filings to come out of the relationship. It's an exciting transaction for BioSig to partner with one of the nation's leading centers for cardiology. It's also a huge validation of the platform and opportunity to develop next-generation devices.

A Huge Market Opportunity

PURE EP has several advantages over legacy electrocardiogram systems currently being produced by major medical device players, including Boston Scientific, St. Jude Medical, and GE Healthcare. PURE EP stands for Precise Uninterrupted Real-time evaluation of Electrograms (PURE) EP Systems. BioSig's proprietary system is similar to traditional EP recording systems produced by GE Healthcare or St. Jude Medical, which have two computer screens and allow for independent, real-time review capabilities. However, where PURE EP is superior is in the systems very low noise (1 11V RMS), coupled with a minimum gain and maximum bandwidth (1 KHz). PURE EP delivers unique proprietary topology features, including high input impedance, high common mode rejection ratio (110dB@60Hz), and rejection of noise generated by an RF ablation generator.

This is all rather technical, but what investors need to understand is that as clinical decisions are made in real-time during ablation procedures, PURE EP's ability to display both small and large signals with similar resolution is a significant leap forward in the treatment of arrhythmias, including atrial fibrillation (AF) and ventricular tachycardia (VT).

Importantly, this is a significantly large market opportunity. According to Global Industry Analysis, the electrophysiology device market will grow at a 12.1% 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. Accordingly, the number of catheter ablation procedures done in the U.S. is also expected to see accelerating growth. Health Research International sees the number of catheter ablation procedures on a global basis reaching 160,000 in 2017.


Conclusion

As noted above, PURE EP is designed to deliver improved signals and information over the existing already installed equipment, making the product a nice add-on to the expensive systems in place at EP labs across the world. From a valuation standpoint, BioSig is an estimated 9-12 months away from revenue generation, with peak sales likely five years later based on PURE EP system installs and a $4 billion addressable market. My valuation work pegs the fair value of the shares at roughly $225 million, or around $9 per share as of today. This figure includes the recent $1.5 million financing that helps position the company to meet the aggressive development plans laid out above.

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1 comment:

  1. Great analysis. I can't see much downside here with incredible upside. Do you think they will uplist and raise serious money for commercialization once they have approval?

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