CEO releases Letter to Shareholders
Dear Fellow Shareholders,
2010, while a very challenging year for NewCardio, was one of continued progress in developing and realizing the underlying value of our 3D cardiovascular diagnostic platform technology. NewCardio continued to build on our core science, technology and operations strength in 2010 to support the strategic development of our 3D platform technology. This commitment and focus by the entire NewCardio team was, and remains, on achieving, and exceeding the goals of our key initiatives, those being driving QTinno® commercialization and attracting strategic funding to advance the development of CardioBip™ and my3KG™.
We have proven the viability and robustness of the technology in the delivery of our initial product, QTinno, while remaining focused on the continued development of our novel 3D cardiovascular diagnostic platform technology. Simultaneously, we have continued to advance our second and third solutions, CardioBip, which captures and wirelessly transmits a full 12 lead ECG for the remote monitoring of chronic cardiovascular patients, and my3KG, which enables the more timely and accurate assessment of acute coronary syndrome in urgent care settings. Through our scientific and marketing efforts, we have established a high level of awareness of the value proposition in applying our advanced technology to the current issues in utilization of the electrocardiogram (ECG) as one of the primary diagnostic tools for cardiovascular disease. Management remains convinced of our ability to develop solutions that will advance the diagnostic value of the ECG, ultimately saving time, costs and lives.
In 2010, NewCardio transitioned from a development to a commercial stage company, achieving a number of key milestones, to include realizing our initial revenues for QTinno. This demonstrates the commercial opportunity for our initial solution and validates the regulatory and commercial viability of our underlying 3D platform technology. To ensure effective delivery of quality solutions in a timely and profitable manner, we have also transitioned the management from research and development to a commercially driven focus. We formalized our going-to-market priorities and implemented a more disciplined approach to our strategic and operational planning. We have built a scalable, regulatory-compliant infrastructure to effectively deliver our solutions in a cost effective manner. Management is focused on quality management, revenue generation and expense management, and believes this will maximize value creation for our shareholders, customers and employees and will make us a more attractive partner for our current and future investors and strategic partners.
The results of this continued progress and advancement will be the ongoing delivery of solutions that enhance the value of the ECG. These ongoing efforts, as mentioned earlier, are focused in two primary areas: 1) driving QTinno commercialization and, 2) attracting strategic funding to accelerate the development of CardioBip and my3KG.
During the year, our sales and marketing efforts for QTinno aggressively moved forward, involving educational and collaborative initiatives with all of the key industry constituents. We built upon the initial marketing successes and have realized the following successes:
* Signed an additional four Master Services Agreements (MSA) with clinical trial service providers who will use QTinno as their technology platform in delivering fully automated early Phase QT results to their drug sponsor customers. This provides NewCardio with a solid presence in Phase I units globally, ensuring that we will have a growing awareness of the QT study opportunities as this segment of the clinical drug development market strengthens in 2011.
* Realized initial revenues through a combination of ECG licensing fees as well as professional services fees in support of the implementation and validation of QTinno for customers. The ECG licensing fees represent the initial fully automated studies secured by customers, while the professional services fees enable us to accelerate the time to market for customers. At the end of 2010, all of our customers had fully integrated and validated QTinno into current clinical workflows and were proactively marketing their ability to deliver high quality cardiac safety analysis in a more timely and cost effective manner than the current methodologies allow.
* Collaborated with the Cardiac Safety Research Consortium (CSRC) in validating QTinno against their blinded “testing” dataset. The CSRC results showed that fully automated QTinno measurements were highly accurate and demonstrated significantly reduced measurement variability relative to the measurements submitted to the FDA by the pharmaceutical sponsor. These CSRC findings provide independent and authoritative validation of the QTinno value proposition that we believe will resonate deeply with potential QTinno customers. Results were presented jointly by CSRC and NewCardio scientists at the Annual CSRC meeting held at the FDA Headquarters in December of 2010. We know of no other automated cardiac safety solution provider that has accepted the CSRC validation challenge.
* Developed intelligent extraction algorithms, as part of the core QTinno solution, further enhancing QTinno’s ability to deliver higher-quality cardiac safety analysis in a much more timely and cost effective manner that the current ECG core labs. By automating and optimizing the ECG extraction process, we believe that drug sponsors will be able to conduct QT studies with significantly fewer study subjects without sacrificing study power. Continuous improvements such as this will ensure that NewCardio maintains its leadership position in delivering the most advanced cardiac safety solution in the industry.
Management expects market awareness and adoption to accelerate in 2011, and in the first three months we are already seeing a significant increase in the interest on behalf of the drug sponsors in better understanding how QTinno would be incorporated into their early Phase QT study programs. Recently QTinno was selected by one of the top five pharmaceutical companies for the cardiac safety analysis in two early phase studies. In an industry that is known for “me too”/“follow the leader” philosophies, we have positioned QTinno as the clear scientific and technology leader. Our close collaboration with the key industry leaders positions NewCardio well for capturing a growing market share as automation takes hold.
The team continues to work closely with strategic advisors to identify opportunities for securing strategic funding to advance the development of CardioBip and my3KG. We continue discussions to secure this funding and the strategic partnership/network that will leverage the actual funding. While these initiatives always take longer than anticipated, we remain hopeful that the exercise will result in a partnership that strengthens NewCardio in the long term and not just in its ability to deliver on the promise of CardioBip and my3KG. We expect to communicate the results of these efforts in the near future.
Finally, while focused on QTinno and strategic funding as “job1,” NewCardio remains more than a one-solution company. All of us at NewCardio joined the team not simply because of the promise of QTinno, but because of the unique and compelling 3D platform technology, which can support multiple products and solutions in advancing the diagnostic value of the ECG. We have recruited a world class scientific, technical, operational and managerial team to leverage this platform technology. This team truly believes in the potential to add value to each and every one of the 250 million plus ECGs performed annually in the developed world.
The entire NewCardio organization believes CardioBip will become a game changing solution in the evolving telemedicine and mobile health industry as it is the only remote monitoring tool which can effectively capture and transmit a full 12 lead ECG for analysis and review. We have extended our clinical study focused on the diagnosis of atrial fibrillation and continue to receive very encouraging and promising findings. Preliminary results show substantial promise for CardioBip to detect atrial fibrillation recurrence much earlier than standard follow-up.
The Company continues to experience an increase in the number of acceptances of scientific and medical submissions for presentation at leading trade shows. Most recently, we have been accepted to present the results of our latest clinical findings at the annual Heart Rhythm Society meeting (HRS) in May. These achievements are significant in increasing industry awareness of the potential of NewCardio’s science and technology and in CardioBip’s ability to become the emerging leader in the growing wireless remote monitoring market.
my3KG has experienced break through findings as the team continues to develop the underlying algorithms and tests them internally against databases acquired from our research partners. Dr. Ihor Gussak, our Chief Medical Officer, presented the results of NewCardio’s recently completed clinical study showing that this solution had substantially greater accuracy than the standard 12 lead ECG in diagnosing Acute Myocardial Infarction, or AMI, in diabetic patients. With current technology, accurate diagnosis of AMI is notoriously difficult in diabetics, largely because the standard 12 lead ECG is particularly inaccurate in this patient group. This is an important result because diabetes currently affects over 10% of adults in the US, and the incidence of AMI is two to four times greater in diabetics than in the general population, according to the American Diabetes Association and the American Heart Association. More accurate and timely diagnosis facilitated by the my3KG may lead to improved clinical outcomes in diabetics with heart conditions. We believe that these findings represent the tip of the iceberg on the potential of my3KG and more importantly our 3-D software platform technology.
What attracted the team to NewCardio – the potential of the 3D software platform technology – is starting to be realized. The commercialization of QTinno validates the platform and continues with our other solutions. For 2011, our strategic and tactical goals and objectives remain focused and consistent:
* Grow market awareness and adoption of QTinno to achieve steady revenue growth
* Secure strategic funding to accelerate the development, validation and commercial delivery of CardioBip and my3KG.
As funding is achieved and QTinno commercialization expands, we expect to deliver on the potential and translate it into the creation of value for our customers, shareholders and employees, and probably, most importantly, to those people whose lives will be enhanced by our solutions. I would like to thank you for your continued support of our efforts.
Sincerely,
Vincent W. Renz, Jr.
President and CEO
