Cambridge Heart Inc. (CAMH)
2004 Interview with:
David Chazanovitz, Chairman, President and CEO
Business News, Financial News, Stocks, Money & Investment Ideas, CEO Interview
and Information on their
products for the non-invasive diagnosis of cardiac disease, identification of those at risk of Sudden Cardiac Death (SCD)..

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Independent studies on how implantable defibrillators can save lives are giving Cambridge Heart the opportunity to show how their Microvolt T-Wave Alternans Test™ can inform patients of their need for the device

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Medical Equipment and Supplies

Cambridge Heart Inc.

Oak Park Drive
Bedford, MA 01730
Phone: 781-271-1200

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David Chazanovitz
Chairman, President and CEO

Interview conducted by:
Lynn Fosse
Senior Editor
August 2004

David Chazanovitz
Chairman, President and CEO

Mr. Chazanovitz has 30 years experience in sales, marketing and general management of medical products businesses, ranging from early stage device companies to larger more established businesses. Prior to joining Cambridge Heart, he has been active in developing products, marketing and selling to many different medical specialties including electrophysiology, interventional cardiology and radiology, pediatric cardiology, gastroenterology, and general surgery.

Mr. Chazanovitz has worked as a Divisional President for NMT Medical, initially with total responsibility for establishing a start-up effort to develop a new cardiac technology and more recently as President of their Neurosciences Division. Mr. Chazanovitz has also held the position of President for several divisions of C.R. Bard, Inc., including Bard Ventures, Bard Electrophysiology Division and USCI Angiography Division.

Mr. Chazanovitz earned a B.S. degree in Biology from City College of New York and an MBA in Marketing from Long Island University.

Company Profile:
Cambridge Heart, Inc., (CAMH – OTC: BB) located in Bedford, Massachusetts, is engaged in the research, development and commercialization of products for the non-invasive diagnosis of cardiac disease. Using innovative technologies, they are addressing a key problem in cardiac diagnosis, the identification of those at risk of Sudden Cardiac Death (SCD). The Company’s products incorporate their proprietary Microvolt T-Wave Alternans Test™ (MTWA) technology and are the only diagnostic tools cleared by the U.S. Food and Drug Administration to non-invasively predict which individuals may be at risk of ventricular arrhythmias and SCD. All of the Company’s products have obtained the CE mark for sale in the European community and are generally available in most major worldwide markets.

Awareness of Cambridge Heart’s innovative products continues to increase through the publication of clinical data from studies performed in a broad range of patients showing that those patients who test positive for Microvolt T-Wave Alternans are at increased risk for subsequent sudden cardiac events including sudden death. Patients at risk for sudden cardiac death now have several treatment options available to them, including implantable defibrillators and drug therapy. What has been missing is an accurate, noninvasive method to identify those at risk and separate them from those not at risk. Cambridge Heart now has a noninvasive product – the Heartwave – that can detect patients at risk for sudden cardiac death who need lifesaving intervention.

Cambridge Heart's Microvolt T-Wave Alternans Test™ measures subtle fluctuations in the human heartbeat, known as Microvolt T-Wave Alternans, which can be used to identify patients at risk for sudden cardiac arrest, the leading cause of death in the United States. These tiny variations, measured at one millionth of a volt, are detected under elevated heart rates, often during a typical treadmill or bicycle exercise stress test. The measurements are captured by disposable proprietary Micro-V Alternans™ Sensors placed on the patient’s chest and transmitted to the Heartwave System for detailed analysis using proprietary algorithms.

Cambridge Heart uses its direct sales organization and its partner Burdick to market its core MTWA technology in the U.S. The Company’s standard stress test system,. The Company also utilizes partnering programs with several of the major ICD manufacturers to increase its visibility and credibility in the medical community and to help its U.S. sales representatives in accessing many cardiology groups. Internationally, the Company utilizes exclusive distribution partners to promote its products throughout much of the world. Cambridge Heart's technology, which has gained widespread recognition from industry analysts, is marketed to the international medical community through sales and distribution channels in the North America, Europe, Australia and Asia.

CEOCFOinterviews: Mr. Chazanovitz, it has been about a year since we last spoke with you. Will you remind us of the technology,which is so important to Cambridge Heart?

Mr. Chazanovitz: “Cambridge Heart is in the business of identifying individuals that may be at risk of dying suddenly from an electrical problem of their heart. It is a big issue; over 400,000 Americans die suddenly each year of sudden cardiac death or sudden cardiac arrest, as some people may know it. Over 400,000 people as compared to the 500,000 individuals who die each year from all types of cancer.  So you can see that it is a big problem. What we do is evaluate the electrocardiographic waveform of the individual under exercise to elevate the heart rate. At that point, we let our customized computer processor and algorithm evaluate the signal, looking for a minute, every-other beat change in the T- wave portion of the electrocardiogram. People that have this Microvolt T-Wave Alternans or alternating pattern are at high-risk for sudden cardiac death and ventricular arrhythmias or bad beat rhythms. People that test negative are essentially at very low risk for the next one to two years.”

CEOCFOinterviews: Who is using the technology now?

Mr. Chazanovitz: “The technology is mostly aimed at the general cardiologist. The general cardiologist is the individual who takes care of the vast majority of patients with cardiac disease. Cardiac disease meaning that the patient may have some type of heart failure or they may have had a myocardial infarction, a classic heart attack where there coronary arteries narrow or becomes blocked. They may have structural problems with their heart that fundamentally cause electrical arrhythmias to take place. For the most part, these people are being taken care of on an everyday basis by the general cardiologist.”

CEOCFOinterviews: Is the cardiology population warming to the product, and how do you encourage more use and awareness of the product?

Mr. Chazanovitz: “That is a good way of putting it; whether they are warming to it. We are early in our penetration with our Microvolt T-Wave Alternans technology. The platform is called the Heartwave. Each quarter we wind up installing more units. We have a wonderful cadre of cardiologists that are very dedicated to the technology because they see the importance of it. The way we capture their attention is that most cardiologists today, treat their patients as conservatively as possible, this means that they put them on optimal medication, optimal pharmaceutical or drug therapy because they can’t tell which of the people are at highest risk and which of the people are at lowest risk. The Heartwave can give them the peace of mind to treat Alternans negative patients conservatively while referring the rest of the patients onto the electrophysiologist for defibrillator implantation.”

CEOCFOinterviews: Is your procedure approved by Medicare?

Mr. Chazanovitz: “Yes our procedure is approved by Medicare. We have a unique CPT code (Current Procedural Terminology) 93025 for those who follow the details. A CPT code is a unique identifier, which lets Medicare know exactly the procedure which has been performed and is therefore being billed. The average reimbursement across the country by Medicare for a Microvolt T-Wave Alternans Test™ (MTWA) is $338.00.  This reimbursement approaches $500 in major metropolitan areas.”

CEOCFOinterviews: Is that an important fact in getting your equipment into the cardiologist’s office?

Mr. Chazanovitz: “It is very important. You can imagine that no matter how good an individual test is in allowing physicians to take care of their patients he is still running a business. For him to be reimbursed for the procedures that he does is critical. For the most part, Medicare universally reimburses our test. We have a number of regional private payers that reimburse our test; however we are still working on some of the large national payers such as Blue Cross/Blue Shield, Aetna and United Healthcare, to achieve full reimbursement with them as well. We have an active program here to go to the private insurance companies with our clinical information and to generate grassroots support from their customers, the physicians to get them to pay for this very important test.”

CEOCFOinterviews: I understand that Medicare is looking at a few studies about preventively using defibrillators; will you tell us about the studies and the part Cambridge can play?

Mr. Chazanovitz: “Starting a couple of years ago, there have been a few very important and very well-done studies released by two of the major players in the implantable defibrillators field; Guidant Corporation (NYSE: GDT) and Medtronic (NYSE: MDT). One study your readers will recognize as being MADIT-II and the second one is a more recent study called: SCD-HeFT (Sudden Cardiac Death in Heart Failure Trial). Both studies show that defibrillators save lives. In these studies, very broad groups of patients were being treated with implantable defibrillators rather that trying to identify individual subsets of patients that were at the highest risk. The bottom line was that implantable defibrillators are more effective than drugs in preventing sudden cardiac death in various types of cardiac disease patients as studied in the two trials I just mentioned. Where we come into play in these patient populations is that Microvolt T-Wave Alternans has extraordinarily high negative predicted value, approximately 98% plus.

Negative predicted value means that when a Microvolt T-Wave Alternans comes back negative, the patient is at very minimal risk of dying suddenly in the next one to two years. I say one to two years because that is the length of follow-up that we have on our studies. As such, our technology can be used to help identify individuals in these broad populations, who are at the lowest risk of having an event; in fact, even lower than if they were going to have an implantable defibrillator implanted. By infusing Microvolt T-Wave into the equation, Microvolt T-Wave Alternans can make the defibrillators even more effective by making sure they get into the people that really do need them and really are at risk for dying suddenly rather than just large groups of cardiac patients.”

CEOCFOinterviews: That would make it less costly for Medicare!

Mr. Chazanovitz: “Absolutely!  I believe that most of your readers know that an implantable defibrillator is a fairly expensive and sophisticated device. The actual device often sells for approximately $25,000, with another ten to twenty thousand dollars for the procedure to implant the device. If we can eliminate some patients from the group that would get ICDs (Implantable Cardioverter Defibrillator) and eliminate them because they are not at risk; we could save twenty-five to forty thousand dollars per patient. Over many thousands of patients we are talking about saving Medicare billions of dollars. By the way, those billions of dollars are our tax dollars.”

CEOCFOinterviews: How does Cambridge get Medicare to put you in the equation and what part can you play in the process?

Mr. Chazanovitz: “Medicare, otherwise known as CMS (Centers for Medicare & Medicaid Services – US Federal agency), is actually conducting a very transparent and open examination of the information available to them, so that any appropriate individual or work group can very easily put their information in front of CMS. We have put all of our clinical trial information in front of CMS and showed them the bottom line is that Microvolt T-Wave Alternans studies in populations, similar to those they are looking at right now, have a lower mortality and death rate than the mortality rate of patients treated with ICDs in those studies. Microvolt T-Wave Alternans is an inexpensive, relatively quick, non-invasive test, which can help change the equation and protect Medicare’s budget. In fairness to Medicare, they are under pressure from many different groups. It is unclear how this will come out but we can play a very important role in terms of doing the right thing for patients, physicians and taxpayers.”

CEOCFOinterviews: You received the 2004 Frost and Sullivan award for Technology Innovation; will you tell us about that?

Mr. Chazanovitz: “Not too many people really know that. Frost and Sullivan is an internationally recognized marketing research and consulting firm. They just completed a major report on the cardiology diagnostic product market. It was a report that is probably two inches tall. They singled out Cambridge Heart for its technology advancement and that we were able to bring a totally new technology to market and address the market successfully with a meaningful and enabling technology. We are very proud of that award and it is on my bookcase about four feet from where I am speaking to you right now.”

CEOCFOinterviews: What about ongoing studies and research?

Mr. Chazanovitz: “Why we have dozens and dozens of studies already under our belt. We also have additional key studies in process. The largest of these is a study, called the ‘MASTER’ Study. We are conducting this clinical trial with Medtronic, the largest manufacturer of implantable defibrillators in the world. We are also participating in the ABCD Trial, which is underway with St. Jude Medical. The objective of the MASTER study is to show that certain types of cardiac patients that we have talked about previously, who test negative for Microvolt T-Wave Alternans, are a substantially lower risk than those who test positive. . The objective of the ABCD (Alternans Before Cardio Defribulator) study is to show that Microvolt T-Wave Alternans, which is a simple non-invasive study, is at least as effective as the invasive electrophysiology study in determining which people are really at risk. This means that insurance companies should be willing to pay for an implantable defibrillator based upon a positive Microvolt T-Wave Alternans result. In addition to those two major studies, we have studies ongoing in, Canada, Scandinavia, Italy and in many other places throughout the world so that we continue prove the effectiveness of Microvolt T-Wave Alternans in stratifying cardiac populations for the risk of sudden death.”

CEOCFOinterviews: You have some recent patents in-place; does this make your technology yours and only yours?

Mr. Chazanovitz: “It absolutely does! We were recently notified that both the U.S. Patent office as well as the European Patent office, have granted us a new patent on what I call the ‘Family Jewels’, which is really the algorithm and data processing techniques to be able to evaluate Microvolt T-Wave Alternans. It is important for your readers to recognize that literally what we are looking for is a change that could be as small as a million or two-millionths of a volt. It is a challenging environment to be able to understand that minute level of change.”

CEOCFOinterviews: Are the tests difficult to read and who is reading them?

Mr. Chazanovitz: “The easiest way to read the test is to let the computer read it for you. We have enabled the custom computer to give an answer at the end of the test. Once the test is complete, the information is processed, which takes no more than a couple of minutes and gives an answer, which tells the physician whether the patient is positive or negative for Microvolt T-Wave Alternans. If for some reason the physician is uncomfortable in allowing the computer to read the result, or he is uncomfortable that it is a borderline case, we provide a complimentary over-read service for him. Since the report is only two pages in length, we are happy to have him fax it to us and we will look at it and give an over-read by experts.”

CEOCFOinterviews: Will you tell us about your financial condition today?

Mr. Chazanovitz: “We are actually in much better shape than the last time we spoke. Throughout the last few years we have actually had our revenue numbers go up quite nicely and our losses have come down. We raised six-and-a-half million dollars, in an equity raise which was completed in January of 2004. It was a process, which started with money coming in mid-year last year and being completed in January. We have cash in the bank, a direct sales force and we have shown growing revenues on a year-to-year basis. We have increased revenue throughout last year and our losses have gone down. The cash burn has been reduced. What is very important is that our products are profitable so that we can show a steady increase in the gross margin of our products. Now we need to move on to profitability.”

CEOCFOinterviews: In closing, why should potential investors be interested and what should they know that they might not realize when they first look at the company?

Mr. Chazanovitz: “I think the biggest thing that they may not recognize when they look at the company from a surface standpoint, is the real potential that Cambridge Heart has in a financial situation as well as in benefiting people. We are immersed with the medical community, the ICD companies and Medicare regarding the role that Microvolt T-Wave Alternans can play in a large population of people in helping to identify people that are at-risk of sudden death and need to be treated, from those who do not require invasive therapy.  In the process of doing what the technology was created for, we set ourselves up in a situation where we can be testing hundreds of thousands if not millions of people a year. Our test costs Medicare about $338.00. The test costs the physician about eighty dollars in disposable products, namely the Microvolt T-Wave Alternans sensors. If you do the math, you can quickly come to the conclusion that in a short time, we can be a very attractive company financially while doing something that is good for the public health as well. I think that some of your readers may not realize that we have good partnerships with great technology underlying them. The partnerships include companies such as Medtronic (NYSE: MDT) and other ICD companies with which we do various clinical studies. I think that with some of your readers will look at a company that has grown nicely but it is still relatively small and we intend on changing that.”

CEOCFOinterviews: I would envision a time when this procedure would be standard for everyone’s annual check-up.

Mr. Chazanovitz: “I would envision that as well. We are not there yet and we have a number of bridges to cross but that would be the ideal situation.”


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