Cambridge Heart, Inc. (CAMH)
Interview with:
David Chazanovitz, 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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Cambridge Heart is helping to manage the risk of Sudden Cardiac Death (SCD) with their non-invasive Microvolt T-Wave Alternans Test™ (MTWA)

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Medical Equipment

Cambridge Heart, Inc.

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

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David Chazanovitz
President and
Chief Executive Officer

Interview conducted by:
Lynn Fosse
Senior Editor
May 2003

David Chazanovitz
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. 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 Spacelabs Medical to market its core MTWA technology in the U.S. The Company’s standard stress test system, The CH 2000, is distributed on an exclusive basis in the U.S. by its partner Philips Medical. 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.

CEOCFOinterviews: Mr. Chazanovitz, please give us a brief history of Cambridge Heart.

Mr. Chazanovitz: “I have been with Cambridge Heart for two and one half years. Cambridge Heart is a company that has been around since the early 1990s, going public in 1996 with the assistance of Goldman Sachs and Bear, Stearns & Co. Inc. In the early years through the late 90s, the emphasis of the company was on the research and development of Microvolt T-Wave Alternans Test™ (MTWA) technology. For the last two to three years, the major concentration has been on taking those developments and turning them into a real product in the marketplace. We have moved from an R&D focus to a sales and marketing focus.

Initially Cambridge Heart looked at various technologies for non-invasively diagnosing different types of cardiac disease. Where the company wound up specializing and focusing its time was identifying people that may be of risk of sudden cardiac death.  This was made possible with the use of patented algorithms, advanced digital signal processing and the power of the computer.

Sudden cardiac death is not the same as a heart attack.  Heart attacks are caused by vascular failure. Sudden cardiac death is caused by electrical abnormalities, and till now, testing for at-risk persons has been very difficult.  Often there’s no prior warning.  That’s why automatic external defibrillators are placed in airplanes, airports and federal office buildings – to shock the heart back into normal rhythms and allow the person to survive and be taken to a hospital.  We want to identify those at-risk individuals before they fall over and are in need of a defibrillator.”

CEOCFOinterviews: What attracted you to Cambridge Heart?

Mr. Chazanovitz: “I was finishing up an assignment for a neurosurgery company in France and coming back to the United States, figuring out what would be the next stage in life for me. I have been in medical devices for virtually all of my career. Doing something that has medical importance is very vital to me. I have had the pleasure of developing some interesting products that have very high medical content, that are important to the medical community and to the patients that the medical community serves. Microvolt T-Wave Alternans is clearly one of those products. There are three to four hundred thousand sudden cardiac deaths in the U.S. each year. It is the number one cause of death in individuals 45 years and older, and one in seven will die from it. Most people fall over and die because they hadn’t been identified as being at high-risk. If they knew they were at high-risk they could be protected with an implantable cardioverter defibrillator (ICD). The key is that they need to be easily and non-invasively identified.  That is where Cambridge Heart and MTWA come in. It is the reason why I came here.

CEOCFOinterviews: How does the product work and what does it do?

Mr. Chazanovitz: Conceptually what we do is simple.  We take a look at the electro-cardiogram of the individual while under some moderate exercise. If you have ever experienced a stress test, where electrodes are put on your chest and you are walking on a treadmill to exercise and raise your heartbeat, this is very much what our Microvolt T-Wave Alternans Test™ is like. We are looking for a very specific, very minute, change in the amplitude of the T-Wave portion of the electro-cardiogram on an every-other-beat basis. We find it with the use of our proprietary sensors, which are placed on the body during this exercise test.   The disposable sensors pass information back into the actual product, the Heartwave, a custom computer that analyzes the signal using our patented algorithms. When we find an individual who is Microvolt T-Wave Alternans positive, we know we’ve found a person at risk of a sudden cardiac event. This individual should be protected with an implantable defibrillator. If a patient tests negative, even if they are in potentially high-risk populations with pre-existing coronary disease, we know that this is an individual at very low risk of falling over and dying of a sudden cardiac event”

CEOCFOinterviews: Is there any similar product out there?

Mr. Chazanovitz:  “Not really; the closest thing that I would call competition is the Invasive Electrophysiology  or EP Test. It is a test, which is done in a Cath Lab environment. Electrode catheters are ‘snaked’ up a vein in the leg to the heart, and the electrophysiologist paces the heart using small jolts of low-energy electricity to try and pace the heart into the same ‘bad-beat’ rhythm that would otherwise kill you. If he gets you there, then he can shock you out of it, but you can imagine it is a scary test to undergo for the patient.  Often the general cardiologist will not even refer the patient to the Electrophysiologist for this invasive test. We have equal or better efficacy than the invasive electrophysiology test, and this has been validated by numerous clinical studies. In addition, there are no other non-invasive tests out there that come anywhere close to our ability to define those individuals.”

CEOCFOinterviews: It sounds to me that this should be everywhere. Where are you in that process?

Mr. Chazanovitz: “It would seem to be common sense that it should be used in all cardiology practices on millions of patients. We are at the early stages of market penetration as the technology is new and this requires a great deal of missionary selling right now. Microvolt T-Wave Alternans doesn’t have a neat place in the doctor’s office whereby we are replacing something that they are used to using. It requires a paradigm shift in how cardiologists evaluate their patients, and a paradigm shift in the tools that they use to evaluate their patients. It requires one physician being convinced and helping us convince other physicians, that this test is an important element in their practice. It requires that appropriate reimbursement be in place so that the physicians are adequately reimbursed for what they do. We have excellent reimbursement in place with regards to Medicare reimbursement and our CPT code for the procedure. We are still working at gaining universal reimbursement from all the private carriers. There are always some hurdles whenever you bring a new technology to market. Some of those hurdles we have discovered for the first time and some of the hurdles we already knew were there. We are always trying to figure out the best ways to knock down the brick wall, climb over it or run around it.”

CEOCFOinterviews: What are you doing to make the medical community aware?

Mr. Chazanovitz: “It always has to do with the science of the product.  There is wonderful science and a substantial amount of patients who have undergone study, and we are working to bring this information to the medical community. We are also working with some of the ICD companies on some additional very large studies out in the marketplace to continue to prove the fact that when the Microvolt T-Wave Alternans Test™ is negative, you are at minimal risk and when you are positive you are at substantial risk. This concept will be validated through the MASTER Study which we are starting with Medtronic, Inc. and the ABCD Trial which is underway with St. Jude Medical. You need to build a foundation for the medical community that indeed there is science behind the technology. That is what the studies will do. Then you have to find a way to get the word to them. We use a combination of vehicles; the most important of these is our direct sales force. We have a small direct sales force of fifteen people who are trained in the operation of the system and also the understanding the mechanisms of action and how the test is performed, as well as understanding the reimbursement and business pieces of the technology. Without the business piece of it, no matter how good it is scientifically, it would still be a difficult sale. As mentioned we also work very closely with the various ICD companies that are out there, because identifying the people at risk often leads to the implantation of an ICD.”

CEOCFOinterviews: Currently, how many machines are out on the market?

Mr. Chazanovitz: “We have a few hundred machines out there right now. They are, in some cases, located in world-renowned hospitals. However, the real value of the test is that it is an everyday test useful within a clinical cardiology practice. We have had numerous clinical cardiology practices that have started to use it with increasing frequency to determine the best way to manage their individual patients.”

CEOCFOinterviews: How expensive is it for the doctors, and will eventually most of your revenues come from disposables?

Mr. Chazanovitz: “This is clearly a razor, razor blade sale. We have a piece of capital equipment, which I mentioned, called the Heartwave, which is about the size of a laptop computer. It has a touch screen for the technician to control the conduct of the study. The actual capital equipment is approximately $22,000 and each time a test is performed, we sell a series of our proprietary sensors on a per-patient basis. It costs approximately 85-95 dollars per patient. The actual capital investment is quite modest. The cost per test is also quite modest, especially when you consider that the CPT code for reimbursement of this test is a very attractive $426. The challenge is to get enough equipment in the field, being used frequently enough so that the disposable portion of the business eventually becomes the largest piece of the business.”

CEOCFOinterviews: Wouldn’t it eventually be something that doctors performing annual physicals should have?

Mr. Chazanovitz: “We would love to get to that point, in time, where this is incorporated into the annual physical. All of the clinical testing that we have done has been done in patient populations that have known cardiac disease. They might be post-myocardial infarction / heart attack patients or patients with heart failure or cardio- myopathy. It could be a condition where you get light-headed or dizzy and faint, or it could be from a potential arrhythmia or bad beat rhythm. We have not tested healthy individuals and followed them in a study environment to see the long-term impact of MTWA. The pool of patients associated with known cardiac diseases includes over ten million people, and frankly all of these patients should be tested on an annual or bi-annual basis. Cardiac disease is very progressive in its nature. Doing a test today does not necessarily mean that the patient will have the same risk profile a one or two years from now.”

CEOCFOinterviews: Do you address the general public to make them aware of something they should be asking for, or is that down the line?

Mr. Chazanovitz: “Our efforts now are aimed at gaining penetration into the cardiology community. Once we get a few more steps up the ‘street’ with regards to penetration, the value of going to the public will be increased substantially.”

CEOCFOinterviews: Do you do the manufacturing of the sensors yourself?

Mr. Chazanovitz: “We have an OEM supplier for our sensors.  They take our patented design and manufacture the sensors for us. With regard to the hardware, we contract for large sub-assemblies within the Heartwave product, and then do some final assembly here in our facility in Bedford Massachusetts. Additionally, we do the final testing, inspection, packaging and shipment of the devices as well.”

CEOCFOinterviews: What about the cash and credit position of the company?

Mr. Chazanovitz: “In 2002 we grew our business by 38%, ending the year at 4.3 million dollars in sales. Possibly more important, we grew our U.S. core business approximately 56%, so we are ramping our Alternans sales. At the end of 2002 we had 3.1 million dollars of cash, burning slightly more than a million dollars per quarter in cash. Recently we announced that we closed on approximately $3.1 million through the sale of Series A Preferred Stock to Medtronic and a group of private investors..  We also have the ability to raise op to an additional $3.4 million from the same group of private investors.

CEOCFOinterviews: You mentioned Medicare has accepted your product.

Mr. Chazanovitz: “Medicare has been very progressive in evaluating the Microvolt T-Wave Alternans Test™. We have established a CPT code, which is a unique numerical identifier that is specific to the Microvolt T-Wave Alternans Test™. Medicare carriers across the country reimburse the MTWA Test at an average of $426.  This amount should create an incentive to the cardiologist perform the test and make use of its clinical value.”

CEOCFOinterviews: What are your biggest challenges?

Mr. Chazanovitz: “The biggest challenge is one of penetration. Cardiologists are busy doctors. Those of your readers that read  this interview will remember going to the cardiologist and seeing many people in the waiting room. The biggest challenge that we have as a small company is to gain access time with our end-user customer. Once we get that access time we can do a great job of showing them the importance and ease-of-use of our test. The biggest challenge is getting in front of the customer and that is why we actively partner with the large and well respected ICD companies. We go to the national shows, and try and feed the medical literature with information about our product, in the hopes that physicians will continue to read it, call us up and say ‘why don’t you come in and spend some time with me.”

CEOCFOinterviews: In closing, what would you like to say to shareholders and potential investors?

Mr. Chazanovitz: “Challenging world political conditions have left many potential investors sitting on the sidelines.   Fortunately we have a following of committed investors who have once again invested in our viability.  All of the fundamentals of our business and product acceptance have never been stronger. We have just had a major presentation at the American College of Cardiology Meeting confirming the efficacy of our product. We have wonderful partnerships in the field with major companies. We are about to start a significant study, the MASTER Study, where the largest of the ICD companies, Medtronic, will introduce us to fifty new accounts enabling us to sell our equipment and get our product used both as part of the study, as well as for clinical use within the cardiac practice. Sometimes when you go to the newspaper and see a depressed stock price, the natural tendency is to say, “What’s wrong with this company?” as opposed to “This is a great opportunity, and something that I should be jumping into right now.” Needless to say, we believe that the time is right for Cambridge Heart and that the opportunity is not yet reflected in the share price.”

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 Revenue of U.S. Core Business Up 84% Over Last Year  

Bedford, Mass., July 29, 2003 -- Cambridge Heart, Inc. (OTCBB-CAMH) today reported record revenue of $1,627,236 for the quarter ended June 30, 2003.  This represents an increase of 55% over revenues of $1,050,735 for the same period in 2002.  Net loss attributable to common shareholders for the quarter was $2,566,216, or $0.13 per share, compared to a loss of $1,646,481, or $0.08 per share for the same quarter last year. The reported net loss attributable to common shareholders includes a non-cash financing charge associated with the Company’s recently completed Series A Convertible Preferred stock financing of $1,533,280, or $0.08 per share.  The Company reported a net loss of $1,032,936, which would have resulted in a loss of $0.05 per share before the financing charge.

Posted: 7/30/03

Lancet Study Points to Utility of Microvolt T-Wave Alternans Test in Predicting which MADIT II Type Patients May Not Benefit from a Defibrillator Implant

Growing Body of Evidence Supports Use of Microvolt T-Wave Alternans Test as Risk Stratification Tool for Defibrillator Implantation


Bedford, Mass., July 10, 2003 -- Cambridge Heart, Inc. (OTCBB-CAMH) announced today that the results of a study, assessing the utility of Microvolt T-Wave Alternans™ (MTWA) in predicting risk of sudden death among MADIT II type patients, have been reported in the current issue of The Lancet.  The results indicate that the MTWA Test, using the Cambridge Heart proprietary Analytic Spectral Method during exercise stress, identifies which MADIT II type patients are at low risk for sudden cardiac death and therefore may not benefit from implantation of a defibrillator.

Posted: 7/11/03
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