Cambridge Heart Inc. (CAMH-OTCBB)
November 3, 2005 Interview with: David Chazanovitz, Chairman, President and CEO
Business News, Financial News, Stocks, Money & Investment Ideas, CEO Interview
and Information on their
proprietary Microvolt T-Wave Alternans Test™ (MTWA) technology, Heartwave System
products for the non-invasive diagnosis of cardiac disease, identification of those at risk of Sudden Cardiac Death (SCD).

wpe66.jpg (4911 bytes)

wpe68.jpg (6140 bytes)


Cover Story

CEOCFO Current Issue

Cover Story Archives

Private Equity Review

CEOCFO Interview Index

Future Features

Analyst Interviews

Corporate Financials

Contact & Ordering

This is a printer friendly page!

Cambridge Heart’s, cost effective, non-invasive Microvolt T-Wave Alternans test helps save lives by adding efficacy and efficiency to the selection of patients in need of an implantable defibrillator

wpe5B.jpg (5878 bytes)

Healthcare
Medical Equipment and Supplies
(CAMH-OTCBB)

Cambridge Heart Inc.

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


wpe5D.jpg (6559 bytes)

David Chazanovitz
Chairman, President and CEO

Interview conducted by:
Lynn Fosse, Senior Editor
CEOCFOinterviews.com
November 3, 2005

BIO:
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 first diagnostic tool 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. Conversely, those patients who test negative for Microvolt T-Wave Alternans have been demonstrated to be at very low risk and may not benefit from invasive implantable defibrillator therapy. 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 a hybrid model of direct sales representatives and independent manufacturers representatives to market its core MTWA technology in the U.S. The Company’s standard stress test system, the CH2000 is marketed by DelMar Reynolds. 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 to the international medical community throughout much of the world.

CEOCFO: Mr. Chazanovitz, 10 million people are at risk for Sudden Cardiac Death (SCD) this year and thousands will actually die; how does Cambridge Heart help prevent that?
Mr. Chazanovitz: “Sudden Cardiac Death (SCD) is a big problem; there are over 400 thousand people that will die in the coming year from SCD. Back in the 1990’s Cambridge Heart developed a technology at MIT (Massachusetts Institute of Technology), which looked for very subtle, anomalous changes in a portion of an individual’s electrocardiogram called the T-Wave. The change would be seen in the shape or of the size of the T-Wave on an every other beat basis. When seen, that individual would be deemed to have Microvolt T-Wave Alternans. In extensive studies over the last ten or more years, we’ve shown that people that exhibit Microvolt T-Wave Alternans are at very elevated risk for sudden cardiac death. The flip side of that equation is also true, namely that if we do not see the Microvolt T-Wave Alternans, even if the individual is in the high risk category for Sudden Cardiac Death, then it is very unlikely that they will suffer such an event. Therefore, the results are very important both on the plus side as well as the minus side for prognostic value.”

CEOCFO: Tell us about the product that you have developed to test for this.
Mr. Chazanovitz: “The true product or the Company’s Crown Jewels’, is an algorithm, which is a computer based analysis of the electrocardiogram under modest exercise. Our physical product is called the Heartwave II, which is a new platform that we released into the marketplace within the last 3 or 4 months. It is used to analyze the electrocardiographic signal and present the physician with a report that interprets the test for him. It is important that the physician be able to interpret the report on his own as well, but the computer interpretation is every bit as good as if my chief technology officer was reading it himself.”

CEOCFO: What are the new features of the Heartwave II?
Mr. Chazanovitz: “The Heartwave II is a new and updated platform that offers enhanced abilities to the clinician, while the actual algorithms for monitoring and reading Microvolt T-Wave Alternans remains untouched. Further, it is very important that the algorithm does remain untouched, as the algorithm has been clinically validated for its predictive value in thousands of patients. The efficacy of the product has developed over time in terms of proving the clinical results, so if you change the algorithm, you will actually have a new product that is unproven. Therefore, in the Heartwave II, we’ve put more user features in it to help guide the technicians through the test, but the actual analysis algorithm remains the same. The other piece, which has remained the same, is our disposable sensor or electrode. The sensors are put on the patient’s chest to acquire the signal for us to analyze.”

CEOCFO: Are there continuing tests being done concerning the efficacy?
Mr. Chazanovitz: “Absolutely, we have been doing numerous studies now for many years, because you can never develop too much proof. It is always interesting to hear a physician say, ‘well this is interesting, but another study would be even more interesting’. Therefore, we are somewhat used to that the continuous desire for more and more clinical information. Three studies have completed the enrollment of patients within the last 2 to 12 months called, ABCD, MASTER and REFINE. Collectively these studies have looked at an additional 1,500 plus patients. Typically, in our field, when you do an exam or a study on a patient, you need to wait at least one year to get follow-up information to be able to demonstrate the predictive value of the test. Throughout 2006 and into 2007, the new studies that we have already completed, we will present their results at medical meetings and publications in various peer reviewed journals. Therefore, in addition to the thousands of patients that we have already reported on, we will continue to have more clinical data to present I anticipate that within the next few months we expect to see a publication on a 550 patient study on the use of Microvolt T-Wave Alternans in heart failure patients. Much of that information has been presented at medical meetings, but I anticipate that the written presentation in a peer review journal should occur within the next few months. We know the results of that study and they are quite astounding. They suggest that heart failure patients who test negative with T-Wave Alternans are at very low risk of SCD and therefore may not benefit from ICD therapy.”

CEOCFO: Are there many units in operation today?
Mr. Chazanovitz: “Yes, there are well in excess of 500 units out in the market in the United States. The task now is a combination of making sure that those units are used on a routine basis, as well as to continue to put more units out there. The biggest obstacle that we have toward getting the Heartwaves used in a routine manner is to make certain that the physicians can get paid for each and every test that they do. This means that it is necessary to gain appropriate reimbursement, or coverage, from all of the various health insurance companies.”

CEOCFO: Where are you in the process of getting the insurance onboard with your product?
Mr. Chazanovitz: “It is difficult to quantify, but we say that we are probably 60 to 70% along the continuum. Medicare, which is the Federal insurance carrier that covers individuals 65 years and older, covers Microvolt T-Wave Alternans through local carrier decisions. This means that each local state Medicare carrier can decide if they want to pay for Microvolt T-Wave Alternans testing and for which indications. For the most part Medicare pays for the T-Wave Alternans tests across the country, with an average payment to the physician for testing in his office of about $321.00. This rate goes higher in high cost of living areas like New York, Boston and San Francisco. Many private insurance carriers also pay for the test, but there are also a number of the large private carriers that don’t. Those that do not pay include carriers like WellPoint, Inc. (NYSE: WLP), which is the largest of the Blue Cross Blue Shield’s units, AETNA Inc., and United HealthCare Services, Inc. However, we are very actively approaching those carriers to say, ‘it’s time that you should start paying for this test’.

We’ve been very fortunate in receiving assistance from the American College of Cardiology supporting the need for payment of the T-Wave Alternans test. Their Advocacy office has sent letters about T-Wave Alternans to the various insurance carriers advising them of the usefulness of TWA in predicting arrhythmic events and also predicting freedom from arrhythmic events. They have made a very important statement, which suggests that the insurance companies (who do not pay) are discouraging the use of our non-invasive technology, which may actually result in potential harm to large numbers of patients. This is due to the slowing of the adoption of our non-invasive technology and the overzealous implantation of implantable defibrillators as a primary prevention strategy for Sudden Cardiac Death. The American College of Cardiology recognizes the value of our test and we have many clinical studies to use in demonstrating clinical efficacy to the insurance companies. The challenge becomes that each insurance company becomes its own project for us.

We go to the insurance companies and meet with them to convince them that of the benefits their membership receives by having MTWA available. Unfortunately, there is no one magic formula to get all of the insurance companies to universally pay. Because of the importance we do put a significant amount of time and effort into this project. One item that I believe will help us significantly deal with Medicare. I mentioned that Medicare pays for the Microvolt T-Wave Alternans test on a local basis; we’ve gone to Medicare on a national basis and suggested that they should issue a payment or coverage policy Microvolt T-Wave Alternans, to make broad coverage uniform across the entire country. A broad national coverage determination by Medicare should carry some weight with the other private carriers in our effort to gain reimbursement for the test.”

CEOCFO: What is the current financial position at Cambridge Heart as it is always expensive getting new products out?
Mr. Chazanovitz: “Yes it is, and we have been at this for awhile. Although we have spent a lot of money, we are cash conscious, as all small companies should be. Our cash is actually in a very respectable position at this point-in-time. As of midyear we had about $6 million of cash in the bank. This leaves us with over two years worth of cash in the bank. We’ve taken steps to reduce our cash burn as well and I’m sure that some of those steps will enable us to increase the run rate as we work very hard to get our technology defused into the marketplace.”

CEOCFO: There have been some new studies on ICDs; how does that fit in with Cambridge Heart?
Mr. Chazanovitz: “Good question! Many of your readers may know that in the last two years there have been a few very big studies on implantable defibrillators, one called SCD-HeFT and the other MADIT II. By and large, those studies have shown that ICDs are, as we know, life saving products. While the advantage of the ICD over drug therapy in those studies was shown to be statistically significant, the benefit was fairly modest in its magnitude. The largest of these studies is called SCD-HeFT (Sudden Cardiac Death in Heart Failure). It compared the use of implantable defibrillators and standard drug therapy in heart failure patients. If you had the ICD, your chance of dieing was about 5 to 6% on an annual basis. If you were treated with drug therapy, then that number grew to a little over 7%. Therefore, the difference was not overly dramatic between ICD therapy and drug therapy, even though it was a statistically significant event. From a common sense and lay standpoint this means that you would have to place many implantable defibrillators to gain a small incremental value.

Implantable defibrillators are very expensive devices and have an enormous impact on the national healthcare budget. We can help this budgetary crisis by making the identification of patients a more efficient process. In similar groups of patients we’ve shown that the risk of needing the defibrillator in a patient that tests Microvolt T-Wave Alternans negative is really quite small, approximately 1 to 2% on an annual basis. With a 1-2% risk of dieing if you have had a negative MTWA test, this is approximately a 3x lower death rate then the ICD patients mentioned above. While defibrillators are great products they have their own set of issues. In the last year there have been over 100,000 ICD recalled by the major manufacturers. The implant procedure has its own morbidity as problems can arise such as infections resulting from the procedure and the wires that go from the defibrillator to the heart are subject to breakage. Also, defibrillators are known to fire inappropriately and that is not a pleasant experience for the patient. So while they are great products, we can help risk stratify the population, to make the use of implantable defibrillators a lot more cost effective and a lot more beneficial.”

CEOCFO: How do you address that particular feature, with a community that needs to understand that and act on it?
Mr. Chazanovitz: “The typical cardiac patient is seen by his cardiologist, who is typically not the same doctor that implants the defibrillator (electrophysiologist). Most cardiologists today are still hesitant to refer all of the, ‘appropriate’ patients, to the electrophysiologist; partially because of the issues that I have expressed with implantable defibrillators. Our presentation of Microvolt T-Wave Alternans and the Heartwave to the cardiologist serves dual purposes. If the patients tests negative then the MTWA test serves to reinforce the cardiologists to treat the patient conservatively with drug. If the patient does not test negative then we become the enabler to help the cardiologist make the decision that those people need to be referred on to the electrophysiologist for ICD implantation. Whether the test is positive or negative, the information is valuable to the cardiologist in determining the best care for his patient.”

CEOCFO: So it’s really a win, win.
Mr. Chazanovitz: “We look at it that way all of the time and that is exactly what we like to share with our clinicians.”

CEOCFO: How do you get the cardiologist to pay more attention than they have so far?
Mr. Chazanovitz: “We point out to the cardiologist that while he is taking care of his patients, he can also take care of his family by using our Heartwave II test. Meaning that, no matter how good a therapy or diagnostic product is, if the physician can’t make an appropriate profit it on it; it is unlikely to become routinely used. Therefore, we work diligently to make sure that the physician can get paid for the utilization of our Microvolt T-Wave Alternans test. As such working on the reimbursement issue is paramount. The other key element is to continue to supply additional clinical efficacy information to the physician. So it is a combination of clinical proof and economic value to the physician.”

CEOCFO: In closing, please address potential investors - what should they know that they don’t see when they look at the company and why is this a good time for their interest?
Mr. Chazanovitz: “As you know, the stock is quite depressed at this point-in-time; it is approximately 30 cents right now. It is substantially easier to be able to take a 30-cent stock and double it, than it is a $50.00 stock and double it. Now that is not to say that a 30 cent stock doesn’t come with its own inherent risk, obviously it does and the people that read your publication certainly understand the inherent risks associated with micro-cap stocks. It is also important to realize that in almost every case, it is frustrating to watch an emerging medical company, because invariably success takes longer than you think it will. So for the people to give up on it too soon, typically they loose money. For the people that have patience we hope to be able to reward those individuals that have stayed with us and maybe ridden us down, so that hopefully they can ride us back up.”


disclaimers

Any reproduction or further distribution of this article without the express written consent of CEOCFOinterviews.com is prohibited.


“We’ve been very fortunate in receiving assistance from the American College of Cardiology supporting the need for payment of the T-Wave Alternans test. Their Advocacy office has sent letters about T-Wave Alternans to the various insurance carriers advising them of the usefulness of TWA in predicting arrhythmic events and also predicting freedom from arrhythmic events. They have made a very important statement, which suggests that the insurance companies (who do not pay) are discouraging the use of our non-invasive technology, which may actually result in potential harm to large numbers of patients. This is due to the slowing of the adoption of our non-invasive technology and the overzealous implantation of implantable defibrillators as a primary prevention strategy for Sudden Cardiac Death. The American College of Cardiology recognizes the value of our test and we have many clinical studies to use in demonstrating clinical efficacy to the insurance companies. The challenge becomes that each insurance company becomes its own project for us.” - David Chazanovitz

Newsflash!

To view Releases highlight & left click on the company name!

 

ceocfointerviews.com does not purchase or make
recommendation on stocks based on the interviews published.

.