Q4 2023 Movano Inc Earnings Call
Okay.
Greetings and welcome to the mobile health fourth quarter 2023 earnings call. At this time, all participants are in a listen only mode.
Brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference. Please press star zero on your telephone keypad.
As a reminder, this conference is being recorded.
Now my pleasure to introduce your host David Barnard with L. E K Investor Relations. Thank you David you may begin.
Thanks, Paul Good afternoon, everyone and thank you for joining us today.
Well I know helps CEO, John Masters Totaro will open today's call with prepared remarks about the progress the company made during the fourth quarter of 2023 and in recent weeks.
Today as a guest speaker will be Michael So vice president of business development, who will provide some remarks on the company's b to B activities, followed again by John and then CFO Jay Kogan will provide highlights of the company's quarterly operating results and current financial position.
Then we'll open the call for Q&A, John J, and Michael will be joined by our Chief Marketing Officer, China Booker.
And vice President of product strategy Stacey Salvi.
Well one of health issued a news release this afternoon detailing both fourth quarter and full year 2023 financial results before we begin I would 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&A session. These forward looking statements are subject to inherent risks and uncertainties and actual results may be materially different from such statements. These risks and uncertainties are detailed in the risk factors section of Obama House filings with the Securities and Exchange Commission.
Frankly in the company's forms 10-Q and 10-K.
Except as otherwise required by federal Securities laws vital 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 with that I'll turn the call over to CEO John mastered.
Charles.
Good afternoon, everyone.
Final health is at a critical inflection point and I'm excited to speak with you today about our progress.
First we commercially launched the E V rain last November ahead of Black Friday, garnering strong reviews on the aesthetics technology and form factor.
Answer the E B ring far exceeded our expectations. However, our ability to attain volume production to meet demand was hindered most significantly by capital constraints and to a lesser degree we experienced some operational challenges. So we paused our rank order intake.
I'm pleased to share our team has been diligently addressing the issues and are nearing resolution.
During this time and just six weeks, we have amassed a waitlist of over 8000 potential buyers organically without any paid marketing.
Our initial direct to consumer launch is providing incredibly valuable user feedback as we drive towards.
The word bolt continued to see growth and multiple business to business opportunities.
This afternoon, we closed on a $24 million private placement, including a 3 million dollar strategic seed investment from a tier one multibillion dollar global medical device company.
This is a pivotal moment in our company's journey, we're thrilled to partner with this leader in health care and look forward to potential future collaborations.
As we highlighted in our press release earlier. This week. This strategic Investor is keenly interested in the E B rang and our proprietary millimeter wave radio frequency technology and this event underscores the vast potential of our innovative approach to delivering medical grade data to both consumers and <unk>.
Prices.
We're also fortunate to have had the broad participation in the private placement from a bundle health management team and board of directors totaling more than $3.6 million.
Now with the new financing we are set up to scale commercial production proceed further along the regulatory pathway and pursue multiple market opportunities that should deliver shareholder value.
Our goal is to deliver both the consumer and FDA cleared wearable that combines accessibility personalization and style with the recognized capabilities of a medical device.
Our highest priorities are as follows one we achieved our first FDA clearance for pulse rate and blood oxygen mondegreen, which sets the stage for our brand expansion to E V med.
Two on the heels of this clearance to bring key b to be opportunities to fruition.
And three to accelerate our clinical trials for a couple of blood pressure and noninvasive glucose monitoring establishing the foundation to develop additional commercial products leveraging our proprietary technology.
But vinyl health is using E b to set new standards for the possibilities of what wearable health technology can do.
We plan to serve consumers through both D to C and b to B channels, where regardless of the access point or user is ultimately always a consumer wearing a ring.
As such the EBIT Ringwald. This product is a valuable step on our path to broader commercialization.
We're already learning what consumers like and want and that's critical information will help us achieve higher adoption and engagement from future users.
Based on early feedback we've made several software updates to improve the overall experience, including minimizing use at the Green Leds light and improving the accuracy of our sleep tracking.
In March we launched our insights engine, which is the first step to offering our customers personalized insights, which leveraging AI based framework correlate disparate data types.
We plan to be judicious with our capital position and methodical in our approach to build out our direct to consumer and business to business market opportunities.
In preparation for our B to B launch, we must secure FDA clearance and improve our scale and volume production capabilities. We also plan to execute several initiatives in the next few months.
Developing an Android version of the App building sufficient finished inventory to ensure a quick order fulfillment.
And bolstering our customer service capacity.
Regarding the FDA pathway, we've been strategically focused on pulse rate and blood oxygen saturation monitoring often referred to as S. P O two.
In the first quarter of 'twenty 'twenty four we used our commercial ring and a second hypoxia trial with UCSF in which each subject war for E V ranks to one fingers and two held on fingertips.
When evaluating accuracy versus arterial blood gas levels. The four EV range achieved a root mean square error of 2.46% well within the F D a guidance of 3.5%.
In addition, our rings accuracy also exceeded that of two commercially available hospital grade reference pulse oximeter, one of which failed to meet the FDA standard for accuracy.
Later this month, we plan to present this confirmatory data and address the outstanding FDA comments from my prior submission. We believe taking these steps will put my that'll help on track to receive a decision regarding the five 10-K clearance in July 2024.
We look forward to continuing to work closely with the FDA throughout the review process.
In preparation for a positive FDA decision, we have been planning the launch of EV met the medical device version of the rain.
It is important to note that because the EBIT range and E V. Med will be the same physical rang production costs remain the same.
The primary differences that E V. Med will include labeling for the FDA cleared features as well as some modifications to the App experience.
As mentioned earlier, our <unk> user base and customer feedback support sizable BTB opportunities I'll now hand, the call over to Michael So our VP of business development to discuss our efforts.
Yeah.
Thank you John.
As noted there are numerous b to be opportunities for EV, Matt.
We are actively engaged with potential partners that are performing various beta tests with easy to assess form and function.
Today I will review three of the distinct market segments beyond the medical device partnership that we announced earlier this week.
First the clinical trials market consists of pharmaceutical companies that need to gather data from FDA cleared devices as part of their drug trials for FDA and other regulatory submissions.
We are poised to dominate the $2 billion market annually of FDA cleared wearables with minimal competition.
Currently trials are in person cumbersome and expensive and off a suboptimal as they don't capture the subjects in actual realized situations.
We believe E V med would improve compliance lower cost significantly and enable quicker enrollment better data and improved quality of results.
Presently we are in discussions with five top tier pharma companies.
One of which is beta tested EV.
All of these potential partners are excited about the prospects for an FDA cleared low cost and convenient wearable to take the place of other devices presently used.
Second the payer market consists of insurers that represent more than 130 million patients with chronic diseases, often with comorbidities, who have poor indoor unreliable monitoring options.
E V Med would provide an easy to implement solutions for early detection of dangerous health risks and for the prevention that could greatly reduce costly disease interventions.
Already we have traction with one of the top three U S payers that covers approximately 50 million lives.
It's eating that is used by just 1% and this ensures population.
That equates to more than a half a million rings.
The third market I wanted to highlight is the rapidly growing remote patient monitoring channel or RPM.
This market barely existed for years ago, However, COVID-19 unlocked the reality that health care can reduce the need for in office visits expand access and reduce costs.
We believe the demand will be able to automate more complete and accurate data, resulting in an RPM solution with meaningful advantages over RPM products in the market today.
Wearable technology is in beta testing with a leading U S. RPM company that serves over 450 health care organizations and as the exclusive platform for one of the largest medical device companies in the world.
This is just the tip of the iceberg.
They're large b to b opportunities include applications in condition management for cardiovascular metabolic obesity and pulmonary patients, which in aggregate we've identified as a 20 billion per year market opportunity.
And corporate wellness women identified Tam of 14 billion.
Additionally, we fully anticipate to easy met introduction will drive more consumer awareness, leading to greater D to C.
Adoption.
I'll now turn the call back to John.
John: Thanks, Michael.
Our product development plan extends far beyond E D and E B met with.
We're deeply invested in multi analyte fencing and pursuing additional FDA clearances with further research and respiration rate for temperature and a solution to address sleep disturbances. Some of these metrics may only require a software update while others may require new hardware components or potentially different form factors.
Actors.
Our commitment to innovation and improving health monitoring and intervention has fueled six years of intensive R&D work in millimeter wave radio frequency and AI technology.
Through these efforts, we created our ultra compact and efficient health monitoring system on a chip or Soc C, which message just four by $6 seven millimeters in size.
Use of this chip yield a breakthrough advances and blood pressure monitoring, enabling accurate costless and automated tracking.
We announced the results of a blood pressure clinical study in October 2023, where a prototype achieved an overall mean absolute difference or M. A D. A.
Five nine millimeters of Mercury well below the seven millimeter Mercury M. A D required for an F. D. A recognized standard for wearable Cup list, but pressure monitoring devices the.
The results of this clinical trial, where a clear catalyst for investment by the tier one medical device company.
Looking ahead, we're also evaluating AI based individual calibration methods to further enhance the future performance of our prototype.
Ultimately, we expect blood pressure monitoring will be a significant addition to incorporate into a new product that supplements. The suite of analytes. We currently offer an E D.
In addition, we believe our single chip technology can be can be implemented and products designed to aid in the treatment of patients with multiple chronic conditions, including diabetes, where our platform is being evaluated for noninvasive blood glucose monitoring.
Our studies demonstrated that our millimeter wave RF technology surpasses traditional optical sensors and provide high fidelity data and reliable readings with the ease of continuous data collection.
We look forward to additional clinical testing later this year leveraging the RF chip.
With that I'll now hand, the call over to Jay for the financial review.
Jay: Thanks, John.
Earlier. This afternoon, we closed on a $24 million private placement, including a $3 million equity investment.
Tier one multibillion dollar global medical device company and more than three 6 million $3 $6 million investment by insiders, including members of the Companys management team and board of directors.
Going forward, we believe we now have the resources judiciously drive our DTC business launched E V med targets b to B and accelerate clinical trials and pre commercial work related to our proprietary RF technology important.
Importantly, with these funds now on our balance sheet, our production partners committed to instituting a turnkey process, which would free up both working capital and people resources for Moana health as our manufacturing partner will now purchase and inventory raw materials parts and finished goods. We expect this will be a significant benefit for the company.
Moving to our financial commentary, while the launch of even bring in late 2023 began a lot of health transitioned to a commercial stage company shipments commenced in January 2024, and revenue will be recognized as a result in 2024.
And our first quarter results, we will begin to report revenue, which we expect to be nominal as we pause order intake in mid February.
That said one of the things we've learned since launching if you bring in November is that there is significant demand for the products. The company generated over $1 billion in sales during a very efficient Black Friday holiday watch period, given capital constraints. We ceased all paid marketing as at December 1st we continue to see a steady flow of orders through mid February we pause.
Taking new orders.
From December through March, we prioritized capital preservation and actions to new production and customer service needs looking ahead, with an improved capital position and operational improvements across product manufacturing and customer service, we will be building inventory in preparation for re launching will.
We will also be moving with intention along the regulatory pathway as we work toward receiving our first FDA clearance and securing initial BTB contracts with health care partners.
For the fourth quarter of 2023 him a lot of health reported an operating loss of $6 million and that compared to an operating loss of $8 million and a year ago period.
Our cash burn in the fourth quarter of 2023 was $5 $4 million, which was inclusive of costs for the <unk> launch and expenses related to our FTE submission as well as other timing considerations.
In November we raised $4 $1 million in gross proceeds in an equity financing that partially offset the cash burn.
At December 31, 2023, we had $6 $1 million of cash and cash equivalents on our balance sheet.
And as noted earlier, we closed on a $24 million private placement earlier this afternoon.
And that concludes our formal remarks, we'd be glad to take your questions operator.
Sure.
None: Thank you well now be conducting a question and answer session.
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<unk> may also be submitted online through the webcast.
One moment, please while we poll for questions.
It doesn't look like we have any questions on the phone lines. He had operator, let's start with the webcast and I.
I have a few questions here, which I can.
We begin to ask.
And maybe John if you can start.
With this first question are there any additional updates that you can provide as it relates to our first five 10-K application.
Yes.
First off as I mentioned in the pre book.
Earlier remarks.
Made tremendous progress with the clinical work on the on the E V Rang a the results from our latest trial were exceptional and it was a very interesting to see that one of the hospital devices actually did not meet the F D a accuracy criteria.
My experience in working with the FDA, obviously, the clinical results are critically important and so we feel really good about that.
In addition, we've had numerous discussions with the FDA.
They have been working with us are very collaboratively and where we're pleased with that and we have addressed all of the questions that they have brought to our attention and so we.
We will be.
<unk>, the new new information to the agency.
Later this month and as I mentioned, we do expect to have a decision from the agency in July but I do feel pretty good about where we are based upon the discussions that we've had to this date and the clinical data that we achieved in the latest study.
Okay and there's another question here in the webcast about eating that looking for a little bit more information about what that will be all about how the comparisons ease rank as a wellness product.
Yeah.
None: So the E B bad hardware is essentially the same as far as the E. D. Wellness device that we launched already but there are some differences when you have a medical device FDA reviews, the labeling in detail and obviously for the medical device.
None: Aspects of it there are some differences between the two and then secondly.
Beyond just the labeling the App experience is different we have separated out the wellness metrics from the medical metric of what like a pulse oximeter would provide as part of the app experience in that and that's based upon some discussion that we've had with the agency as well so we feel pretty good.
That naturally we do look forward to talking more about this in the future and certainly as we move forward and have more feedback from the agency.
Maybe you could spend a moment, though and talk a little bit about some of the things that we're thinking about related to.
Pricing and whatnot.
Sure I would say given that eating that will be an FDA cleared device, we would expect it to be sold at a premium.
Relative to the heavy rain.
And on top of that across the <unk> space.
None: We see a variety of opportunities.
To have a recurring revenue stream.
Database revenue for example.
Whereas with the EDI range, let's say.
Thanks Dale.
So we look forward to talking more about that in the future as well.
Okay, Let's go onto the next question.
<unk>.
Either John or Michael maybe you can give.
Given update here the question is related to.
Or is this existing strategic partner, if you can talk a little bit about where things stand with potential partners at this stage.
Sure.
Thank you John Yeah. So.
That's a great question.
Just this month, we've had two large strategic partners one in the RPM channel the other in the payer channel wrapping up their beta tests.
We continue to engage our first set of beta partners from last year.
And channels ranging from medical device to pharma.
And they are all very much looking forward to our FDA clearance coming up in the July timeframe.
And then most recently coming off of our announcement of our Costless blood pressure clinical study results, we have a whole new tranche, a large strategic partners wanting to work with us in channels ranging from farm outs of medical device to everything in between.
John.
No that's fine.
I think we should move on to the next question go ahead Jay.
Great.
This is for Tyler and Stacey.
What has been the customer response, thus far can you tell us how users are engaging with the app about their broader user experience.
Sure Yeah, I can I can kick us off.
So as John already mentioned, we faced a number of operational and customer service challenges at launch, which was obviously frustrating for our customers and very frustrating for us as well as our goal has always been to provide a best in class user experience across the board.
Despite these initial stuff Alex we're still committed to fulfilling this call and we have received a tremendous amount of invaluable feedback in some parts of my early adopters all of which we are implementing in our go forward planning.
Additionally, the media does continue to review its very positively, which is driving organic traffic and awareness for the brand and as John noted we have over 8000 people signed up for updates since we paused the site with no paid marketing at all.
I mean, this coupled with our planned media efforts, our Influencer program in our upcoming our upcoming launch on our new social channel will set us up for success. Once we're ready to start taking orders again in.
In addition to opening the store back up our ongoing focus now that were with us will be to shore up our customer service and delivering response times expand our engagement strategy for our existing members and build out our product offering to include new features and insight and actually with that I will turn that over to Stacy.
Thanks Tyler.
And so from a strategic product perspective, we're really pleased to see our users highly engaged with the app and using the ring and act as expected of course, we're focused on delivering the high quality experience our users dessert with attention paid to improving sleep and the activity feature.
First.
We're also rolling out the insights experience as we speak and excited to develop this important feature what's really personalize it and contextualize the data from the ring him in the coming months.
Great. Thank you Tyler and Stacey.
Seeing that there are still no questions on the phone lines and ask a few more questions here from the webcast Q&A.
And either John or maybe Tyler there's a few questions about when we're going to start shipping brings again, what do we need to see before.
We start taking new orders going forward.
Yeah first off with the new funding, we're focused on optimizing our production processes and delivery times as well as ordering raw materials components and working on the overall rate improvements.
We're currently working with our vendors to order the materials, we need to satisfy increased demand, but we're going to continue to hold on taking new orders until we ensure that we can establish and maintain an ongoing inventory of about a month or two by SKU at all times, we want to be able to move forward to be able to fulfill orders are.
Immediately when they come in Tyler do you have anything you'd like to add.
No I think it's good I think the key is that we're continuing to focus on this call are making sure that it is a best in class customer service experience when people into one of the ring and in the interim we're gonna be focused really heavily on driving engagement with the consumers that we do have some of them are opened up really solid word of mouth.
Okay.
We've got a few here about blood pressure and.
Prototypes for blood pressure and glucose initiatives.
So John maybe for you Keith.
Can you tell us a little bit more about what this.
The blood pressure clinical trial that we've been referring to from last fall what do the results really mean and how long will it be before.
Our blood pressure product could potentially make it to the market.
Yeah first off that what one thing that was really critical about the work on blood pressure was that we demonstrated that the chip that we produced working in concert with Globalfoundries was fully functional and able to provide.
Higher resolution signals that we could use to determine blood pressure values and so that was a real key for us and the fact that we were able to gain in accuracy and the study that was commensurate with what the FDA guidelines a request of a product like this was really important to us and it and it really formed the base.
As for the.
The investment by this year.
Pier, one multibillion dollar medical device company, because blood pressure is such a huge problem. It's probably if you get out one analytes that you can be measuring continuously at home blood.
Blood pressure is is first stopped by a half the people over the age of 20 suffer from a hypertension or a pre hypertensive and so and it's the leading cause of heart disease and stroke and other things. So it's a it's the granddaddy of them all glucose is a bit behind that and of course, we're making.
Progress there as well, but this is critical and then in terms of how long to the market.
We just completed that.
Feasibility trial with a prototype system, we have already made some enhancements and the layout of the components on the board.
Optimizing it for our next round of studies and so throughout the course of this year, we'll be conducting more clinical work will be evaluating the product and more like a consumer type form factor moving forward. We have done all of our initial studies on the risk versus the finger.
And we will continue to do so, but we may do some experimental work looking at our ability to monitor blood pressure on the finger.
And through the course of this time we.
We will continue to develop what the overall consumer oriented form factor would look like as well as continue to not only generate clinical evidence, but look at longitudinal tracking of blood pressure. So we look forward to updating you more over time.
Now that we have the resources that allow us to really.
Put more behind these efforts for blood pressure because it is one of our top initiatives in the company.
And John I don't think you mentioned it and those comments, there, but others are and.
Another question here regarding blood pressure and also regarding glucose monitoring and wondering yes, we would expect the first product to be in a range or possibly a band or some other form factor.
One of the things we have not evaluated for blood pressure anywhere, but the rest at this point, we we basically focus the RF energy at the radial artery of the risks, but the measurements are we get really clean very nice pulse pressure wave forms using that we're gonna have to look at whether or not we could do it on the.
Finger, we know that chip is small enough to fit inside a ring that could be used on the finger, but we have not evaluated that site, but we do know that we want to be able to SaaS awake.
Await the waveform, that's coming from from an arterial source as it relates to glucose it's a little bit more open quite frankly, if you know you're aware of the existing CGM and something I worked on for a lot of my career there.
They were done in the yen or looking at the interstitial fluid and really we're looking at interstitial changes and signals based on the RF signature for glucose so.
We are also looking at whether we could for glucose monitoring use other sites of making the measurement I think there's more flexibility with glucose than there is for blood pressure.
Great and maybe Stacy or Tyler, there's a question about Apple health and win easy.
<unk> is planning on connecting to Apple health in the future.
I can take the fun. Thank you so much for the question.
This is certainly near the top of our list. We know that our users are also likely Apple product users of course, and so as we consider the kind of landscape of opportunity out there and and where we want to focus our attention on this one is on the shortlist I can say that I can't give an exact date, but.
It's something that we're looking at.
Great and I think the last question for today.
Will be one that I can actually answer.
How long will the cash you just raised last.
Well first of all I'd say is look we're incredibly pleased with results of the $24 million capital raise that we closed earlier this afternoon.
As we've mentioned.
You know, we had a $3 million strategic seed investment by.
A tier one multibillion dollar global medical device company.
So saw very strong demand from existing shareholders and new institutional investors.
Clearly a significant participation from insiders.
Including members of the management team and board of directors, the capital's going to able to provide us with the ability to proceed.
Among our major initiatives, including the regulatory pathway to the FDA clearance.
To help us accelerate our blood pressure clinical studies and work around noninvasive glucose monitoring.
We've also been discussing begin to scale commercial production.
Okay with that.
Operator, I think we are ready to.
Today's call. Thank you.
This concludes today's conference you may disconnect your lines at this point. Thank you for your participation.
Okay.
Yeah.
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