Video Transcription
Steve Atkinson 00:02
Steve: So hi folks, I'm Steve Atkinson. I'm the CEO of ChestPal. We're a digital health deep tech company involved in the respiratory space. And as you can see from this slide, our mission really is to transform respiratory care. Our founder, we have a female founder, Helena Binetskaya, whose daughter had numerous respiratory problems when she was a child. Helena found that she was taking her to see the GP, the primary care physician, who then referred her to another physician, who then referred her to another physician. She went to the ED and then got referred, eventually to an expert pulmonologist. And Helena, being an engineer—she's a software validation engineer—figured that this is probably solvable through tech. Her purpose for this was to allow everybody to have the same access to the expertise of a pulmonologist, even at the primary care level. Hence, she then set about developing what we have today. As I said, at ChestPal, we're pretty much a deep tech company. We have an AI neural network in the cloud with a patented system method for the detection of lung sounds. We have an app which is just a thin client between the cloud and the device. We have a small device which is like a puck, which goes onto the chest and gives a reading in five seconds. A result in five seconds. It's instantaneous technology, and the business model is SaaS. While we have a small charge for the device, the device is very low cost. Most of our revenue over time comes through the SaaS model. By the way, the SaaS is per registered user, not per device. So for example, in a clinic, there might be, say, 30 doctors. All 30 may take out a subscription to use the device, but there may only be, say, 10 devices in that clinic because they're not all working at the same time.
So what does it do? It detects lung sounds, and in the US, our indication is for healthcare professional use to detect crackles and wheezes as an aid to the diagnosis of respiratory conditions. I'll get on to the next slide, and I'll explain why crackles and why wheezes. We have peer-reviewed published clinical evidence in two articles in the European Respiratory Journal, which is a very high-ranking journal in the field. The device provides audible and visual results, and those can be shared over any common application—WhatsApp, Messenger, anything—and it's all HIPAA compliant. We also store the results so you can review them if you want to. It's so easy to use that even non-experts can use the device. You could have a nurse in a nursing home who has no training on the use of a stethoscope, place the device on a patient who's struggling to breathe a little bit, and see if there's pneumonia present in those vulnerable groups, the elderly and the young. Those are particularly our target audience.
So the problem is, why do you use a stethoscope for lungs, and what are the problems? Crackles are indicative of fluid on the lungs, and that fluid is either a response to an immune response to an infection. If it's in one place, then that's pneumonia; if it's all across the lower lobes of the lungs—sorry about that with my microphone—then it's indicative of congestive heart failure. Sometimes you get mixed results with COPD wheezes, which are caused by narrowing of the airways, and that causes wheezing, which is asthma. Deep wheezes are indicative of COPD, so that's what we call rhonchi. Those are what they're trying to hear. But subjectivity is the problem, and the ability to hear it is very difficult. If you look at the results, that's weak performance. An average clinician, according to the clinical data, is missing four out of every 10 diagnoses with their stethoscope. A pediatrician is missing almost four—three and a half—but the pulmonologist is almost 80%. You can see the difference in why Helena got the results with a pulmonologist. So we solved that problem with our clinical results and validation studies. Our finished POGO is 87.2 on average across all lung sounds, and some of them are much higher. We have like a 95% accuracy across all upper classes and so forth. We provide high sound quality and a visual spectrogram.
As I said, non-expert users can use it. The size of the market? Well, respiratory is the largest cause of presentation to the ED. No surprise, because doctors are sending them to the ED because they can't hear the lung sounds properly. 60% of clinicians have told us that they send their patients to the ED when they can't hear the lung sounds properly. This creates a big market of unnecessary presentations, which the insurers are paying for in the US. That alone, as you can see, is a $5.6 billion unnecessary cost. For COPD and asthma, the poor management of COPD and asthma results in $8.7 billion of avoidable hospitalizations. 85% of clinicians say they believe that a stethoscope for lung sounds will have a significant impact on the reduction of ED visits, and there is also a growing number of clinicians using these sorts of devices.
What does that mean for us? Well, we just narrow it down to say just 1 million of these users, and that's about 10% of the market. That's a $750 million business in a five-year period, and a lot of that is SaaS. So it's repeat business. I'm not going to go through all our target audience, but you can imagine anyone who uses a stethoscope for listening to lung sounds is a target. We've got a really good team. I don't know if everyone said it, but we have an experienced team. There's Helena there, but Susanne Judd was the head of respiratory. She launched JSK and the respiratory biologic globally for them. Paige Hargrove has a background with Intuitive Surgical and Stereotaxis, and then she's done some startups. We have a small office in Atlanta as well. Our KOL is Alexander Machidarkis, who is the editor of Cochrane Airways. I'm sure you are all familiar with the editor of Cochrane; it's the number one clinical review group.
So last slide, in terms of where we've done that, we're going through all the stuff on the left because we've sort of done this. I will say on this, this is Q4; we're expecting to come to this final seed round. There's about $750,000 in that seed round left. In fact, I think I've just raised about $130,000 in the last two weeks, so it's coming down all the time. That takes us through to next year, and then we expect to launch our Series A. That Series A funds the launch of our heart diagnosis product. After that, we have ChestPal for the COPD and asthma users to manage their condition. So that's the home use, and we have to do a 510(k) for that as well and for chronic management. Then we get into the reimbursed market in 2026, with positive cash flow for the company projected. We're not burning a lot of cash. Our Series A raise is expected to be in the region of $5 to $10 million, depending on how much we can prove our data.
In the meantime, we've got 15 US accounts we're talking to right now, some very big ones who want to kind of try to buy the product, you know what I mean? Sort of trial to buy. If we can convert a couple of those accounts, we can see how many doctors use it, how many nurses, physician assistants, and so forth, generate the data, use that data for our Series A valuation. The higher the valuation, the more capital we raise to really scale the company and get to that profitability much quicker. But that's really it. In 2027, our SaaS revenue exceeds our little device revenue, so we become predominantly a SaaS company. We project very conservatively about $30 to $35 million out of 30% EBITDA at that point in time. Then we get that decision because good things happen to great companies, right? If we can build a great company, good things will happen, and we'll have a choice. We either scale further, get more money, do another raise, or we'll exit. But that's what we're aiming for at that time, and that is it. Any questions? There are our contact details on there. Love to have anyone invest, particularly in this little $750,000 seed round now, but anything, you know, any Series A investors as well. Thank you very much.
