With FDA approval close, Echo IQ's AI platform is set to disrupt US heart disease market

Echo IQ is awaiting FDA approval for its AI-powered EchoSolv platform
EchoSolv utilises machine learning algorithms to detect aortic stenosis
Stockhead reached out to Echo IQ’s COO, Deon Strydom

When looking at a healthcare stock to buy, one of the signposts potential investors often look for is how close the company’s products are to a US FDA approval.

Companies with at least one product in the final stages of approval are obviously safer investments than those just beginning the investigative phases of development.

Receiving an FDA approval can also have a significant impact on a biotech’s stock price for several reasons – the most important one being the revenue generating opportunities it could bring.

At the end of the day, the FDA is the ultimate gatekeeper for the US pharmaceutical market, which is by far the world’s largest.

One ASX company that’s close to receiving such approval is Echo IQ (ASX:EIQ), a $65m-market capped stock focusing on artificial intelligence (AI) and data science to improve detection of structural heart disease.

On Tuesday, EchoIQ announced the lodgement of a formal FDA 501(k) application for its AI-powered EchoSolv platform to diagnose aortic stenosis.

“The FDA will have 90 days to give us a response, but what’s important to know is that we’ve had what’s called a Pre Sub Meeting with them. So there shouldn’t be surprises from their perspective,” said EchoIQ’s COO, Deon Strydom.

According to FDA guidelines, applicants under the 510(k) expedited process can anticipate a decision regarding clearance 90 days from the date of submission.

Assuming no requests for additional information are issued by the FDA, Echo IQ could receive clearance to market by as early as August.

How does EchoSolv work?

Echo IQ’s EchoSolv is a novel machine learning algorithm software developed by the company using its access to cardiac data covering millions of echocardiographic data points.

The decision support platform was built to provide physicians with a reliable tool to perform an accurate detection of aortic stenosis (AS), a condition that occurs in approximately 3% of the population aged over 65.

AS happens when there’s an abnormal narrowing of the aortic valve, which slows down the flow of blood from the left ventricle to the rest of the body through the aorta.

This conditions forces the heart to put in extra effort to pump blood effectively. If left untreated, patients have a 50% chance of dying within 2 to 3 years.

The EchoSolv technology detects the condition by checking echo measurements (a measure of the heart’s pumping chambers) of the patient, which can be completed in just 3 seconds.

Strydom explained that this rapid diagnosis is possible because Echo IQ’s algorithm leverages data from the National Echo Database of Australia (NEDA), which is the largest database of echocardiograms in the world.

“We have an exclusive agreement with NEDA to commercialise their data. This allowed us to train our algorithms on millions and millions of patient records and echoes, to help us diagnose structural heart disease within seconds,” he said.

The current standard practice to detect AS is to use the echocardiogram device, which is practically a transducer that sends ultrasound waves through the chest toward the heart.

“But this device often misdiagnoses the condition, and the reason is because the condition is just so complex,” Strydom told Stockhead.

“The physicians have to try and get the exact right angles in order get these images of the heart, and it’s a moving object so there’s a lot of interdependencies from operating errors there.”

EchoSolv helps to eliminate those operating errors by sending the echocardiogram data back to its algorithm, which are then analysed to give the correct diagnosis output.

“So EchoSolv is essentially a decision support tool that tells a doctor if a patient is at risk of the condition,” said Strydom.

“We’re not saying that we’re better than humans. This is a difficult and complex condition to diagnose, so humans will always be involved. We don’t supersede them.

“But what we’re able to do is augment what the physicians are doing, giving them more information so they can make a more informed decision.”

Big plans ahead

Now that the Echo IQ’s product development around aortic stenosis is largely complete, the company is turning its attention to another condition, heart failure.

According to the Causes of Death report, which is released once a year, heart failure accounts for more than 18,500 (one in every 10) deaths annually here in Australia.

“And in the US, heart failure is the single largest reason for hospitalisations, with 17% of the US healthcare outspend being spent on heart failure,” said Strydom.

What’s more, the CMS (Centers for Medicare and Medicaid Services) – the organisation that provides health coverage to more than 100 million Americans – penalises hospitals for patient readmissions.

“So if I go to the hospital in the US today, and I get readmitted within 30 days, the hospital has to pay a significant penalty to the CMS,” Strydom says.

For heart failure, that rate of readmission is currently as high as 25%.

“So these hospitals want keep patients out of hospital, because there’s a big financial incentive for them to do so,” said Strydom, adding that a platform like EchoSolv could help them solve that problem.

The company is currently working on a new platform to tackle the health failure segment, and according to Strydom, the software should be all completed and wrapped up within 12 to 16 months if everything goes according to plan.

“This is absolutely going to significantly increase our addressable market,” he said.

So what now?

Strydom believes an FDA approval or feedback over the next 90 days could trigger a revaluation of EIQ’s stock price.

“We know what happens to the stock prices of all those other companies once they’ve got an FDA clearance,” he said.

An FDA approval will also significantly de-risk the business for shareholders, he adds.

“You can see this in medical device companies like ImpediMed, 4DX, and Compumedics. And obviously, we all know the success story with Pro Medicus. The FDA approvals for them were seen as de-risking of their businesses.”

Echo IQ’s management also has skin in the game, with current CEO Andrew Grover being the largest shareholder of the company.

“We’ve now started reimbursement discussions for aortic stenosis in the US, and our FDA filing will open a much much bigger market for us.

“So the opportunity really is now,” said Strydom.

Echo IQ share price today:

A few other heart related stocks on the ASX

Anteris Tech (ASX:AVR)

Anteris provides solutions to the challenges facing heart surgeons.

Anteris’ DurAVR THV system is also used to treat severe aortic stenosis. It’s also said to create a wider valve opening and better blood flow, and also requires fewer stitches.

The company has recently raised $23 million to prepare for the DurAVR transcatheter heart valve’s FDA pivotal study, a key step to gain regulatory clearance for the US market.

Imricor Medical Systems (ASX:IMR)

Imricor is said to have the world’s first and only commercially available MRI (magnetic resonance imaging)-compatible cardiac ablation catheter.

Catheter ablation is a procedure used to remove or terminate a faulty electrical pathway from sections of the heart.

The company recently announced that Dubrava University Hospital in Croatia has submitted its first order of Imricor catheters and other consumable devices.

USCOM (ASX:UCM)

The Ultrasonic Cardiac Output Monitor (USCOM) is a non-invasive, quantitative method for measuring and monitoring cardiovascular haemodynamic parameters in patients.

Uscom markets the USCOM 1A advanced hemodynamic monitor, the BP+ and BP+ Reporter, and SpiroSonic digital ultrasonic spirometer series and the proprietary SpiroReporter software.

Uscom has abundant IP protection across the globe.

EBR Systems (ASX:EBR)

EBR Systems, established in 2003 in Silicon Valley, has pioneered the WiSE Cardiac Resynchronization Therapy (CRT) system tech – literally the size of a cooked rice grain – which employs proprietary wireless methods to provide pacing stimulation directly inside the heart’s left ventricle.

WiSE holds the distinction of being the world’s first pacing system within the heart for heart failure.

The company was described by early investor and well-known venture capitalist Mark Carnegie as having potential to “be as big as Cochlear” when it made its IPO in 2021.

Read more about EBR Systems here: How big-hearted EBR Systems is pacing a multi-billion dollar cardiac market

At Stockhead we tell it like it is. While EBR Systems is a Stockhead advertiser, it did not sponsor this article.