Movano Q1 2024 Earnings Call Transcript

Quartr
Provided by Quartr
May 15, 2024

There are 5 speakers on the call.

Operator

Greetings, and welcome to the Movana Health Q1 2024 Earnings Call. At this time, all participants are in a listen only mode. A brief question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Jay Kogan.

Operator

Thank you. You may begin.

Speaker 1

Thanks, operator. Good afternoon, everyone, and thank you for joining us today. Milano Health's CEO, John Master Tutaro, will open today's call with prepared remarks about the progress the company has made during the Q1 of 2024 and recent weeks. I will then provide highlights of the company's quarterly operating results and current financial position. Then we'll open up the call for Q and A.

Speaker 1

John and I will be joined by our Chief Marketing Officer, Tyler Bucher our Vice President of Business Development, Michael Sowell and Vice President of Product and Strategy, Stacy Saldi. Movano Health issued a news release this afternoon detailing Q1 2024 financial results. Before we begin, I'd like to remind everyone that the company will make forward looking statements during today's call based on current expectations. Whether in prepared remarks or during the Q and A session, these forward looking statements are subject to inherent risks and uncertainties, and results may be materially different from such statements. These risks and uncertainties are detailed in the Risk Factors section of Movano Health's filings with the Securities and Exchange Commission, specifically in the company's Forms 10Q and 10 ks.

Speaker 1

Except as otherwise required by federal securities laws, Movano Health disclaims any obligation to update or make revisions to such forward looking statements contained herein or elsewhere to reflect changes in expectations with regards to those events, conditions and circumstances. And with that, I'll turn the call over to CEO, John Mastro Sataro.

Speaker 2

Good afternoon, everyone. As you are aware, we've reported our Q4 2023 earnings just over a month ago on April 4, where we were very excited to share the news of our recent $24,000,000 private placement, which included a strategic seed investment from a Tier 1 multibillion dollar medical device company. While we plan to be judicious with our capital spend and methodical in our approach to build out our evring direct to consumer and evmedbusinesstobusinessmarketopportunities, we are committed to establishing a solid foundation for both our B2C and B2B businesses, so we can successfully serve all our customers. As such, our priorities are 3 fold. 1, to prepare to take B2C orders again for the EV ring 2, to secure FDA 510 clearance for its pulse oximeter feature under the EVMed brand and 3, to refine our risk worn prototype with the millimeter wave RF system on a chip in preparation for additional blood pressure and glucose studies.

Speaker 2

As to the first priority, we are laser focused on preparing to take orders again for the EV ring, which requires that we deliver an excellent product experience, ensure a seamless delivery timeline for all orders and provide an improved customer service response to any issue. From a product standpoint, we are diligently working to improve the customer experience across both hardware and software. We are developing more robust hardware with improved chemical, environmental and physical resistance. In software, we are improving our heart rate and motion and sleep algorithms, implementing a more comprehensive AI driven suite of insights and are initiating the process to develop an Android version of the app. On the production side, we are enhancing our automation, tooling and assembly and test processes to increase yield and throughput as we prepare for relaunch.

Speaker 2

We are also in conversations with our key production partner to implement a turnkey solution, which would further increase our efficiencies. We have bolstered our customer service capacity and have implemented an AI powered customer response chatbot on our site as well as onboarded a new Head of Customer Service with over 25 years experience in the D2C space. All these efforts will ensure an enhanced customer experience whether users reach us through D2C or B2B channels. Regarding our second priority, we are working closely with the FDA in anticipation of a 510 clearance on the medical device version of the ring, which we will launch under the brand name EVMed. We announced last week that we successfully submitted exemplary clinical trial results from a Q1 hypoxia trial to the FDA on April 22, 2024, which is a significant milestone for our organization.

Speaker 2

During the trial, each subject were 4 eDMed rings, 2 on fingers and 2 held on fingertips. When evaluating accuracy versus arterial blood gas levels, the 4 EVMed rings achieved a root mean square error of 2.46%, well within the FDA guidance of 3.5%. In addition, our range accuracy exceeded that of the 2 commercially available hospital grade reference Tullbox doses, one of which failed to meet standard for access. We continue to expect FDA decision regarding our 510 in July 2024. In preparation for a positive FDA decision, we remain bullish on the enterprise opportunities that we believe that Clearance will unlock for our organization.

Speaker 2

And as we get closer to securing this distinction, we are already engaged with our strategic partners in the pharmaceutical, medical device and payer channels. These partners have all expressed the immediate challenge they face in obtaining continuous and secure medical grade data and see our solution as an integral part of their future initiatives. We see opportunistic applications in chronic management of cardiovascular, metabolic, obesity and pulmonary patients, which in aggregate we've identified as a $20,000,000,000 per year market opportunity. And finally, we continue to focus on the breakthrough technology of our ultra compact and efficient health monitoring system on a chip, which measures just 4x6.7 millimeters and has yielded breakthrough advances in blood pressure monitoring, enabling accurate, coupless and automated tracking. As you'll recall, we previously announced the results of a blood pressure clinical study in October 2023, where our prototype achieved an overall mean absolute difference or MAD of 5.9 millimeters of mercury below the 7 millimeter mercury MAD required for an FDA recognized standard for wearable, cuffless blood pressure measuring devices.

Speaker 2

We have been making enhancements to this prototype we evaluated in that study and we expect that our next blood pressure study will take place this June and will be the 1st study we've done with an arterial line, which is the precursor to an FDA pivotal study. Unlike a cuff, which provides only one blood pressure value, an arterial line will provide continuous data on a number of patients. In addition, we are also evaluating AI based individual calibration

Speaker 3

methods to

Speaker 2

further enhance future performance of our platform. Ultimately, we expect blood pressure monitoring will be a significant addition to the suite of analytes we currently offer in EV as over half the adults in the U. S. Over age 20 are pre hypertensive or have hypertension. Continuous monitoring of blood pressure holds the promise of dramatically enhancing the management of these conditions.

Speaker 2

With that, I'll now hand the call over to Jay for the financial review.

Speaker 1

Thanks, John. We shipped 5,305 EV Rings in the Q1 of 2024 and reported $850,000 revenue in the period. The company reported an operating loss of $5,800,000 in the Q1 of 2024 versus an operating loss of $7,200,000 in the year ago period. We launched EV Ring during the Black Friday 2023 holiday period and we are reporting revenue for the first time as revenue is tied to the timing of Ring shipments, which commenced in January of this year. You'll recall that given capital constraints, we ceased all paid marketing as of December 1, 2023 and temporarily halted taking orders in February 2024.

Speaker 1

From December of 2023 through March of this year, we prioritized capital preservation and actions to meet production and customer service needs. Not surprisingly, given the limited initial launch, there were some operating inefficiencies and learnings early on. For example, our launch generated a great deal of excitement and consumers were anxious to receive their rings, delays that we experienced with delivery timelines generated a number of cancellations that impacted top and bottom line results of our initial launch. We intend to avoid this issue going forward, as John noted earlier, by ensuring ample inventory prior to taking orders again. We are already making important strides in additional operational improvements across product, manufacturing and customer service that should position us well for both an expanded launch of the EV ring and direct to consumer and eventual launch of EV Med and B2B upon an FDA clearance decision.

Speaker 1

Following our successful private placement in April where the company raised $24,000,000 in gross proceeds, including a strategic seed investment from Tier 1 multi company, we believe we have the resources to judiciously drive our D2C business, launch eDMed, target B2B and accelerate clinical trials related to our proprietary RF technology. Importantly, and as noted before, with these funds now on our balance sheet, we are in conversations with our production partner about a turnkey solution, which should free up both working capital and people resources for Movano Health. A few other financial highlights. Our cash burn in the Q1 2024 was $4,100,000 which was inclusive of costs for the ED ring launch and expenses related to our FDA submission as well as other quarter to quarter timing considerations. Whereas we had $2,100,000 of cash and cash equivalents on our balance sheet at March 31, pro form a for the early April private placement, we had $24,800,000 of cash and cash equivalent at that time.

Speaker 1

Now I'll turn it back over to John for final remarks.

Speaker 2

Thanks, Jay. This past quarter has been a significant one for the company, marked both by valuable lessons from our B2C launch as well as significant progress in our organizational milestones. We are encouraged on all fronts and look forward to a successful B2C reignition, continued positive momentum around our expected 510 clearance and advancing to the next phase of our blood pressure clinical studies. We are confident that this combination of positive developments will act as a catalyst for success through the balance of the year and we look forward to keeping you updated as we continue to make headway. As that concludes our formal remarks, we'd be glad to take your questions.

Operator

Thank you. We will now be conducting a question and answer

Speaker 1

Okay. Operator, it looks like at least while we're waiting for any questions from the phone lines, it looks like we have a few questions on the webcast. So I can go ahead and begin asking those and directing them to the team. The first one, John, I think this should be for you. Could you provide any updates as it relates to the 510 process beyond what you mentioned in the call today?

Speaker 2

Sure, Jay. Yes, thanks for the question. As I mentioned in the call, we recently refiled with the FDA some new clinical results for another hypoxia study where we had 4 rings worn on 4 different locations for each subject and we were really pleased with the results, which exceeded our expectations. The rings not only exceeded far exceeded the FDA benchmarks, but they provided more accurate results than 2 FDA approved hospital grade control devices that were used during the study. And so I think those results bode very well for us.

Speaker 2

We've actually, since putting in the new data, have already had some back and forth communication with our reviewer. And thus far, things are going pretty well. So we're going to continue to work closely with the agency along the path of ideally getting this product cleared from market.

Speaker 1

I think Michael Sowell can answer the next question, which is, can you provide some more detail on your plans for the launch of ED Med with B2B partners?

Speaker 4

Ajay, sure. Yes, that's a good question. So we continue to engage with all of our beta partners in channels ranging from medical device to pharma, who are looking forward to our FDA clearance in the July timeframe. We expect the 5/18 clearance that unlocks a host of initiatives across clinical trials and remote patient monitoring. And we're currently building the back end data systems required for these partnerships so we can hit the ground running.

Speaker 4

Coming off our recent announcement of Cuffles blood pressure clinical study results, we have another new group of large strategic partners wanting to work with us in channels ranging from pharma to medical device.

Speaker 1

Okay. Speaking of blood pressure, this next question, I guess, could be for Michael Lubin or John. Do you want to comment on the progress you've seen with blood pressure?

Speaker 3

Sure, I can take that.

Speaker 1

Michael?

Speaker 3

Yes. So I think, as John mentioned earlier, our next big step, it was 2 big steps actually. 1 is to take our blood pressure reference design and make it more into a product as we get closer to our pivotal study. And as John said, really trying to improve the algorithm and do a Sartir align test in June, which is similar to the test we would be doing for FDA pivotal studies. So really just trying to get everything ready and in a form to really facilitate fast tracking blood pressure.

Speaker 1

Okay. John, do you want to take this next question? I'll throw a couple of the questions together because they all relate to the shipping of the ED rings. Some questions about when we'll start shipping EV rings and then also some questions about features related to EV, including how far are we from an Android app?

Speaker 2

Sure, Jay. Thanks. Yes, I'm seeing this question is coming up quite a bit. So as Jay had mentioned in the prepared remarks, we went through a pretty challenging capital situation at the end of last year and into early this year, which kind of hamstrung us a little bit on what we were able to do. However, launching the ring when we did and getting it out there in the marketplace where we could learn really provided a great opportunity us.

Speaker 2

And so now that we have the new funding, we are focused on optimizing our production processes and delivery times, as well as working on overall ring improvements and of course the enhancements that we've already been making to our customer service. We are currently working with our manufacturing vendors to order all the raw materials that we need to satisfy increased demand that we expect moving forward. And we're going to hold on taking new ring orders until we've ensured that we can establish and maintain an ongoing inventory of about 1 to 2 months by SKU at all times. Once we're confident in all these initiatives that we've set up, then we will announce a new ship start date. But we are under no huge urgency to do this earlier than when we feel really confident in our ability to fulfill orders.

Speaker 2

And so having inventory built up and maintained before we turn on the spigot again is very important to us as an organization.

Speaker 1

Great. And John, I have another one for you. Someone's asking if there's any update on the strategic investor and other potential partnerships?

Speaker 2

Sure. Well, as it relates to the current strategic investor, it's actually been a very really collaborative relationship. That's only a little more than a month old since we did the fundraise. And already I've had multiple meetings with their team. They've actually offered us some support in a couple of areas where they have more experience and expertise than us, which has been very valuable to us moving forward.

Speaker 2

And we've discussed some further opportunities where our ring in its current embodiment could potentially be beneficial to some of the work that they're doing with customers and where they see the market trends going. And lastly, of course, there's the continued interest in what we're doing with our proprietary millimeter wave RF technology and the future that that holds, as I mentioned, as it relates to blood pressure and or glucose, which are the 2 big brand daddies of metrics that we could be monitoring. So a lot of excitement there as well. So yes, since this engagement started, it's been nothing but positive, I think, both on our side as well as theirs. And we've shared with them our strategic plan for the rest of this year and going into next and gotten some feedback from them about what our plans are and our focus and we're in complete alignment.

Speaker 1

Great. And then a couple of quick ones here. Blood pressure, did we see the first device, commercial device being a wristband or a ring? And then for eDMed, will that also be for men?

Speaker 2

Michael, why don't you do the first part of that and I'll do the second part?

Speaker 3

Sure. So I mean, our chip, as John mentioned, is 4x6 millimeters. So it does have the ability to eventually go into a room as well. I think in this first go around, given all of our great data so far that we did

Speaker 1

in our previous clinical studies, we want to

Speaker 3

make sure that we get through the FDA as quick as possible with what we've already been testing for the last year and half. And I think once we take that a little bit further along, then we'll start looking at putting

Speaker 1

it into the ring as well.

Speaker 2

And then as it relates to EB med, I can tell you a couple of things that are very important. When we've run our clinical trials for SpO2, for example, and heart rate, that was done both men and women. We looked at the entire population as well as very importantly, people with different skin tones because they're optical sensors for SpO2. And so really that was not limited to only women, it's for all. And in the discussions that we've had and Michael Soule perhaps can elaborate on this, but the discussions that we've had with potential partners in the healthcare space.

Speaker 2

I mean, some of them are developing female focused solutions. So obviously, that would apply to them, but many others are looking at this for both men and women. And the ring today is worn by some men, albeit a much, much smaller number of men than women, but nothing prohibits the ring from being used by either men or women. And certainly, the men on this call and out in the field are using EB rings today. And as the medical device comes to market, we will certainly use it on both men and women.

Speaker 2

And Michael Sowell, I don't know if you have anything you'd like to add.

Speaker 4

No. John, you covered it well. Just that all of our beta partners, while they see what we're doing in the direct to consumer world and think it's a really great strategy, in the clinical trial areas, in medical device areas, the large strategic that we're dealing with see this as a unisex device. So I

Speaker 2

just want to add that.

Speaker 1

Okay. And then it looks like our last question for the webcast and it doesn't look like we have any on the phone lines. So this will be our last question for this call today. You sold $1,000,000 of rings I'll take this one by the way. You sold $1,000,000 of rings in the 1st 10 days of your launch, but netted 850 dollars after a full quarter.

Speaker 1

Can you elaborate on the difference? Sure. As we mentioned on the call, we had a lot of demand at launch and we were very committed to fulfilling all the orders as quickly as possible. But we did have a series of unexpected delays on the manufacturing side, which caused some frustration for consumers and they grew tired of waiting and subsequently canceled their orders. So while that was disappointing, it was excellent learning for us as an organization.

Speaker 1

We've since modified our processes and our inventory controls so that when we begin taking orders again in the future, we will have plenty of inventory and be able to deliver all sizes and colors within 5 to 7 business days. Okay, operator, that looks like the end of the Q and A. I will turn it back to you.

Operator

Thank you, sir. Do you have any closing remarks you would like to say?

Speaker 1

Yes. Thanks for reminding me just one. We appreciate you all being on the call today. And if you'd like to continue to follow Movado Health for news and events, please stay tuned to our website at ir. Movano.com.

Operator

Ladies and gentlemen, that concludes this conference. Thank you for joining us. You may now disconnect your lines.

Powered by Quartr

Key Takeaways

  • Movano’s three priorities for 2024 are to resume direct-to-consumer EV Ring orders with an improved product and service experience, secure FDA 510(k) clearance for its EVMed pulse oximeter and refine its wearable prototype for blood pressure and glucose monitoring studies.
  • In late April, Movano submitted Q1 hypoxia trial data showing its four EVMed rings achieved a 2.46% RMS error vs arterial blood gas—well under the FDA’s 3.5% benchmark—and expects a clearance decision by July 2024.
  • Movano shipped 5,305 EV Rings in Q1 2024, generating $850,000 in revenue and narrowing its operating loss to $5.8 million (vs $7.2 million a year ago), with pro-forma cash of $24.8 million following a $24 million private placement.
  • The company is upgrading ring hardware and software—including AI-driven insights and an Android app—enhancing manufacturing automation and tooling, and expanding customer support with AI chatbots and a seasoned service lead to ensure a smooth relaunch.
  • Movano’s proprietary 4×6.7 mm RF system-on-chip for cuffless blood pressure monitoring achieved a 5.9 mmHg MAD in prior studies; an arterial line trial is planned for June to pave the way for an FDA pivotal study.
AI Generated. May Contain Errors.
Earnings Conference Call
Movano Q1 2024
00:00 / 00:00