Movano Inc.

Good afternoon, everyone, and thank you for joining us today. Our CEO, John Master-Tatara, will open today's call with prepared remarks about the progress we've made during Q4 2021. Afterward, I'll cover the highlights of our fourth quarter 2021 operating results and provide perspective on our financial position. Finally, Movano's founder and chief technology officer, Michael Liebman, will join John and me for the Q&A. Before we begin, I would like to remind everyone that we will make forward-looking statements during today's call. Whether in prepared remarks or during the Q&A session, these forward-looking statements are subject to inherent risks and uncertainties. These risks and uncertainties are detailed in the risk factors section of our filings with the Securities and Exchange Commission, specifically in the company's forms 10Q and 10K. Except as otherwise required by federal securities laws, Movano 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. Now, I'd like to turn the call over to our CEO, John Mastratataro.

Thanks, Jay, and welcome, everyone. We appreciate you joining us today for our Q4 earnings call and are excited to provide you a business update. Today's call happens to fall almost exactly on the one-year anniversary of our initial listing on NASDAQ. And when I take a step back to consider the progress we've made as a company over that time, I feel an immense sense of pride in our team. Spencer IPO, we've been diligently laying the groundwork to build a platform of purpose-driven, competitive, and durable healthcare solutions while remaining dedicated to our mission of empowering and inspiring you to live a happier, healthier life. Despite the pandemic and various other external factors in which the business sector worldwide experienced countless interruptions, We feel extremely fortunate to have continued to grow with purpose and passion. We've met each milestone of our technology and clinical roadmaps. We've significantly grown our staff and areas of expertise, and we have developed and are in the process of preparing the business for our first commercial product, which we are now less than a year away from releasing via beta launch. In our previous earnings calls, I've talked about our crawl, walk, run strategy for product commercialization in which we are taking incremental steps to reach our end goal of bringing a class two FDA cleared solution to the market while also developing a pathway to get our technology in the hands of consumers sooner. In December of last year, as part of our virtual participation at CES 2022, we brought this strategy to light by unveiling plans for our initial product, the Movano Ring. The Smart Ring and its accompanying app and cloud platform combine vital health metrics with personalized intelligent feedback and is designed for women of all ages who are traditionally an afterthought when it comes to wearable technology. The Movano Ring will measure heart rate, heart rate variability, sleep, respiration rate, temperature, blood oxygen, steps, calories, and incorporate women-centric features and design. The solution will provide users and their network of caregivers with continuous health data distilled down to simple yet meaningful insights to help women make lifestyle changes and take a more proactive approach to managing their health. The Movano Ring is our foundational product as we work toward gaining FDA clearances. We are currently conducting clinical trials with our proprietary and non-invasive radio frequency enabled technology platform, as well as developing algorithms to add medical data, including non-invasive glucose and cuffless blood pressure monitoring to our core product in the future. In addition, we have planned to execute accuracy studies to gain FDA clearances on our vital signs monitoring capabilities, including heart rate, SpO2, and respiration rate. The ring will be available through a limited beta release in the second half of this year. The decision to release an initial product without blood pressure or glucose was one that we considered carefully, and the board and our senior leadership team ultimately agreed it was the right move for a number of reasons. First, we wanted to launch our brand and define our category in the market. There's a real opportunity for a new kind of health solution that sits at the intersection of med tech and consumer devices, and we believe the Movano ring can provide real value beyond what's on the market today. Second, the strategic decision is poised to accelerate our ability to scale once we add blood pressure or glucose monitoring to the solution. While we are conducting clinical studies and advancing algorithms for our glucose and blood pressure technology, commercializing the initial Movano ring allows us to build the foundation of our platform with the essential data that people with or at risk of chronic conditions need to understand the full picture of their health. We will be able to collect feedback on our platform outside of the lab so we can further optimize our solution and become better prepared for future product releases. And it gives us an opportunity to invest revenue from sales of the Movano Ring into additional product features and growth opportunities. Finally, we anticipated the exposure would improve our ability to attract top talent and be a catalyst for strategic partners to engage with us, and this has certainly proven to be true over the past few months. The response to our year-end announcement of the Movano Ring by the media, consumers, investors, and potential strategic partners has been overwhelmingly positive and far exceeded our expectations. Since launching the press release in conjunction with a new website and branding direction, we have been featured in hundreds of mainstream media outlets, including TechCrunch, Forbes, The Verge, and more. In addition, we were named Best of CES 2022 by The Wall Street Journal, Wired, Business Insider, and others. The volume of media coverage Movano received as a result of the announcement at CES not only launched the company and the Movano ring into the public eye, but it also created a snowball effect of positive momentum across a budding franchise. Since late December, we have received over 50,000 unique visitors to our website, and more than 4,000 people have sent personalized messages to the company via social media or through our website, to demonstrate their support and excitement about the ring. Their stories have been incredibly inspiring to me and the team and keep all of us laser focused on our mission at hand. As a result of our decision to focus our first product on women, we've had the great fortune to get to know several women executives who are recognized leaders across the healthcare and consumer sectors as we continue to search for new team members, as well as a new member of our board of directors. You've seen some of our recent press releases on key go-to-market hires and can anticipate more news in the near term on this front. Finally, the Movano Ring announcement provided a catalyst for our company to engage with potential strategic partners who represent a broad cross-section of the healthcare, consumer, and technology sectors. While we do not have any news to report on the strategic partner front at this juncture, Our conversations have reinforced our belief that the Movano solution has tremendous appeal and can deliver significant value to individuals and potential partners. There are five major elements of the Movano ring and our mission that have resonated broadly in our conversations and stand out versus the competition. First and foremost, we have received extremely positive feedback in our decision to build our initial product for women. Wearable tech has historically favored styles and sizes that tend to be more masculine. While other companies are now thinking and shrinking their products and adding women-focused features as an afterthought to their original device, our focus on women is embedded in the DNA of our solution from the outset. We want to help bring vitality to women who are often sidelined. Second, we've also purposely emphasized the sleek, slim, and sophisticated design. In fact, we've had multiple consumers tell us they want to use the Mabano ring as an engagement or wedding ring. We believe our design concepts have been appealing because the rings look more like jewelry than a traditional wearable. Third, another major differentiator is our intelligent insights. We don't plan to just display data. We are taking it one step further. Our app is being designed to note your body's signals and transform them into insights. It will delve beyond typical graphs, charts, and percentages to provide accessible, actionable information that can help you make small changes that could have a big impact on your short- and long-term health. Fourth, Movano was built upon the principle that good health is a fundamental human right, and we believe managing your health should not be expensive. Our commitment to bring the Movano ring to consumers at an affordable price with a low-cost subscription model has been a point of interest in many of our conversations. We are not interested in building a niche product. We're focused on helping a wide audience live healthier, happier lives. Lastly, we're structuring Movano as a medical device company. This enables us to pursue FDA clearances and designations that will certify the reliability of our data, and we believe this will be particularly attractive to potential strategic partners. We have a quality management system to meet regulatory requirements. Our manufacturing will be done in a facility approved for medical devices. And we have deep expertise in the clinical and medical device worlds that gives us a leg up in developing devices that provide the quality and credibility consumers and enterprises demand. Combined with our focus on building an attractive, easy to use, and affordable solution, We are positioning ourselves at the intersection of the med tech and consumer device industries, which in our view represents the future of healthcare. In support of our plans to obtain FDA clearances, we completed two critical studies in Q4 2021 and the early part of this year. At our last earnings call, we announced the first iteration of our wireless battery powered and Bluetooth enabled wearable prototype was out of development operational, and would soon be put to use in an upcoming blood pressure clinical study. In late December, we completed that study, which was our third and largest blood pressure trial to date with 110 participants at the Movano Clinical Lab. During the study, participants wore Movano's adjustable both finger ring prototype and our wrist worn wearable prototype, along with a hospital grade FDA cleared vital signs monitor as the control. Movano's devices collected pulse pressure waveform data for three minutes, a total of five times, over the course of a 30-minute session with three-minute break between each measurement cycle. Our proprietary integrated circuits in the wrist-worn prototype, which is supported by our radio frequency technology platform, allow us to calculate blood pressure, heart rate, and heart rate variability, while the ring prototype uses sensors to estimate SpO2, heart rate, heart rate variability, and respiration rate. We're actively evaluating three different calibration methods to analyze the accuracy of our blood pressure data and are pleased with the progress. And based upon the analysis we've completed thus far on our SpO2 and heart rate data, we believe the accuracy is commensurate with predicate devices that have received FDA clearance. We also recently announced the completion of our second IRB-approved glucose pilot study, which was conducted on 10 participants with diabetes in conjunction with an independent FDA-compliant clinical lab. During each four-hour session, participants wore Movano's wrist-borne wearable prototype and reference devices. The reference devices included an FDA-cleared finger-stick glucose tester, the subject's existing CGM device, and a vital signs monitoring device. Both these recent studies will allow us to further refine the algorithms we use to calculate glucose and blood pressure values, as well as other vital signs measurements. The results of these studies will also inform our approach in follow on studies in support of future FDA clearances. Now, if you recall during our last earnings report, we shared we had completed the tape out of our single chip solution and we're moving forward with the fabrication process with our partner Global Foundries. This milestone allows us to shrink our proprietary multi-chip architecture into a single integrated circuit, giving us the flexibility to design small form factors that are key to developing competitive commercial products. We recently received our single chips back from Global Foundries on time and as planned and have begun the testing process, which is expected to continue through the spring. To prepare for the commercialization of the Movano Ring, we've grown our company in a very deliberate and meaningful way over the past few months with the addition of key strategic hires on both engineering and non-engineering sides. Most recently, we hired Vice President of Strategy, Stacey Salvi, who is formerly head of strategic partnerships for Google Fitbit, and also vice president of business development, Michael Soule, who has held several senior leadership roles managing global and national sales, strategic direction, and new business development at Ember Labs, Bose Health, Medtronic, Weight Watchers, and other recognizable brands. We also expect to announce our new chief marketing officer in the coming weeks, who we are equally thrilled to have on our team. These seasoned professionals will be working alongside the senior leadership team to further refine our go-to-market strategy. It's been a major vote of confidence to know we can attract such talented individuals given how competitive the labor market is today. While we're making great progress, I want to reiterate that we're not taking the easy path. We've chosen to develop proprietary technology from the ground up rather than use off-the-shelf components, and we're pursuing medical device clearances. Although this route comes with meaningful challenges and barriers to entry, we believe it's necessary in order to establish the level of credibility, quality, and accuracy we're aiming to achieve. We have already seen the payoff of these decisions. It's opening doors with strategic partners and helping us rise above the crowded market of wellness devices. 2022 is going to be an exciting year for us as we prepare for our beta launch, and you can continue to expect to see regular updates as we progress forward. We plan to participate in various industry events to attract investment and strategic opportunities, and have already presented at two investor conferences and held several calls with groups of investors year to date. Considering the pace at which we've been advancing our technology, our aggressive clinical study roadmap the experienced team we're assembling, and our unwavering commitment to ensure that good health is accessible to everyone, I truly believe we have the foundation we need to deliver on our promise to provide vital health data to a massive and underserved population and improve health outcomes while at the same time build a durable enterprise that can create significant value for our shareholders. We're looking forward to a great year ahead. And with that, I'll turn it back to Jay to discuss the quarterly financials.

Thanks, John. We detailed the financial results in today's fourth Q earnings release, which you can find on our website, but I'll share a few key line items. Movano reported an operating loss of $6.3 million in the fourth quarter of 2021 compared to an operating loss of $3.2 million in the year-ago period. For the 12 months ended December 31, 2021, We reported an operating loss of $19.8 million versus $11.1 million in the 12 months ending December 2020. The increase was primarily related to the expansion of our team and R&D initiatives, as well as the inclusion of public company costs related to our March 2021 initial public offering. At the end of the fourth quarter, we had $33.6 million of cash, cash equivalents, and short-term investments, and total assets of $36.3 million. We will not be providing specific financial guidance, but as you've heard in today's quarterly report, as well as through our commentary on previous quarterly calls, we're making great progress across our small but mighty organization. We've accelerated the development of our platform of purpose-driven health solutions and are now poised to bring the Malama Ring to market in a beta release in the back half of 2022. At our third quarter earnings call, we highlighted that our cash burn would increase in the fourth quarter of 2021 and into 2022, and that remains our view at this juncture. That said, capital deployment and operating efficiency is critical to our strategic plan, and when you consider the market opportunity and the progress that we've made to date on our invested capital, we feel very good about our trajectory and the opportunity ahead. As that concludes our formal remarks, we'd be glad to take your questions.

Operator? Thank you. At this time, we will be conducting a question and answer session. If you would like to ask a question over the phone, please press star 1 on your telephone keypad. A confirmation tone will indicate that your line is in the question queue. You may press star or two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. And for those of you who have logged into the webcast, there is an opportunity to ask questions as well. Please use the chat box to ask a question. One moment, please, while we poll for questions.

Operator, looks like there's some in the webcast, so why don't I go ahead and get started. I can ask a few of those and we can see if there's anybody dialing in. Okay. Okay, John, I can take the first question. It's on cash burn rate. There's one on strategic partners for you after that. You mentioned in your prepared remarks that you continue to expect your cash burn to run higher into 2022. Can you talk a little bit, can you talk about that in a little bit more detail? Our cash burn, as we just mentioned, was $5.7 million in the fourth quarter, and we also had $33.6 million in cash equivalents and short-term investments at the end of the year. As I'm sure you can understand, given our development stage, we're not at the point where we're going to be providing specific financial guidance as a general practice, but taking a broad view, the more progress that we're making developing our platform of health solutions, including preparing for the upcoming beta launch of the Movano Ring, the more that we're going to want to invest behind that progress, including expanding our team, accelerating our R&D and clinical studies initiatives, and also preparing to launch the product. We've said it before, but to reiterate one more time, we take capital deployment and operating efficiency very seriously, and we plan to continue to be good stewards of the cash on the company's balance sheet. We've got a small but mighty team, and when you consider the market opportunity and the progress that we've made to date on our invested capital, We feel really good about our trajectory and the opportunity ahead. Okay, so the next question has to do with strategic partners. John, at your last earnings call, you stated that you'd be meeting with potential strategic partners at CES. How'd that go?

Yeah, well, certainly our year-end announcement right before CES of the Movano Ring provided a catalyst for our company to engage with potential strategic partners. There's several elements of the ring and our mission that have resonated broadly in our conversations, primarily the focus on women, the ring form factor, structuring ourselves as a medical device company with medical-grade data and pursuing FDA clearances for many metrics that we'll be monitoring, providing intelligent insights that connect cause and effect, and finally having a solution that's affordable enough for a mass audience all resonated really well. And so, as you can imagine, we've had a lot of interest. At this point, we're not in a position to be specific about the status of conversations that we've had with strategic partners. But as we noted, we're seeing great interest across healthcare industry, consumer, and technology sectors. And in fact, the interest level has definitely surpassed our expectations. And I think it really speaks to the appeal of what we're attempting to do right now and how that solution could be of great value to both consumers and potential partners.

Okay, we've got a few more in the webcast. This is for you as well, John. What is the status of your blood pressure and glucose algorithm development efforts? Are you getting close to filing for an FDA clearance? Yes.

Yeah, great question. Well, you know, we aren't there yet. I'm going to start off by saying that we're not there yet, but we've really made a lot of progress, and I remain very optimistic. And there's a couple of things to keep in mind about the progress that we're making. So the first is related to the shrinking of the technology and the hardware. Every time that we've gone from a larger prototype system to smaller – so we started with something that was the size of a pizza box and went to something that was the size of a large iPhone – and then most recently down to our first wrist-worn prototype. When we got to the wrist-worn prototype in the 110-subject study we conducted at the end of last year for blood pressure, for example, we found that the cleanliness of the data that we get, the ability to process and filter the data, all improves each time. And so we are really now looking forward to implementing the new single-chip solution, which is the ultimate step where everything is in a very small, like four by seven millimeter or so size chip, where we can have the antennas that are directing the energy in a much more direct contact with the body and where we want to go. So the hardware itself, every time we've shrunk it down, we've gotten better data. We've gotten more data and cleaner data. Now, the second part is the work we're doing with both the signal processing and the algorithms. And we've got a really strong team. All the folks that we've got working on this have at least 20, 25, and upwards of 30, 35 years experience in the field. And with every new set of data that we bring in, we get closer to our goal of having something that we can file with the FDA. The other thing I do want to mention real quick is that we are looking at different calibration processes. And there's the approach of doing a unique calibration for each individual. We can certainly employ that, but our ultimate goal is to have a universal calibration so that someone can just take the product, put it on their finger or wrist, and it will automatically provide blood pressure. And for that, we're not quite there. We've made a lot of progress as it relates to solutions that require calibration, but we're marching forward to try to get to something that would require none. And then lastly, I do want to reiterate that, you know, We're trying to get FDA clearance for a number of different metrics beyond glucose and blood pressure. And, you know, to that end, when we ran our 110-subject blood pressure study, we did monitor heart rate and SpO2, and we believe that the accuracy of those measures is already commensurate with what we need to seek FDA clearance. We are really excited about where we're going as a company and I'm looking to the future where we have a number of different analytes that we're monitoring that are all FDA cleared, all part of this really small consumer looking wearable that provides great medical data. So that's essentially where we are at the moment and I'm really happy with the state of the company at this point.

Okay. We've got a couple questions that are along the same vein. One about being a little bit more specific about the beta launch of the ring, including things like pricing and subscription model. And then there was also another subscription model question. So do you want to start on that and I can help you as well? Sure.

Well, just with regards to the beta launch, you know, first I'll tell you that there's no shortage of interested beta testers. As we mentioned in the prepared remarks, We've received thousands of messages from individuals who are very excited and have requested and volunteered to participate in our beta launch. Obviously, we're not yet prepared to go public with details of what we're going to do exactly for the beta launch, but our focus will be to thoroughly test the solution and make sure it's ready for both the direct-to-consumer as well as for B2B activities. And we want to ensure that The device itself, the hardware, the app experience, and all the related support are all ready for prime time. It's certainly a lot of work to do through the course of this year, but it's very exciting for the organization. And so that's a little bit about the beta launch. In terms about the details on the pricing and, you know, subscription model and whatnot, you know, as you heard on the call, And I've seen in the recent press releases, we're rapidly building our go-to-market team. And obviously, they're going to work very closely with senior management on the launch of the ring and future products. And you should expect to hear more about our team in the coming weeks, as well as some more in the future, you know, about how we're thinking about bringing this to market. And I'll turn it over to Jay to maybe make a couple of comments there.

Yeah, I think that we've been pretty clear that we want to make the solution attractive and accessible to a wide audience. We remain very committed to that. We believe good health is a fundamental right. We've also discussed that we're leaning towards a subscription model that would be approachable to consumers and to potential partners, and that would enable the company to reinvest in our solution, allowing us to add more features over time. So we're going to look to an economic model that works for both our customers and our shareholders, and we feel good about where things are going in that regard. And I think our last question for the day, unless there's any questions on the phone lines, is just kind of a big picture question for you, John, after having been CEO for a year. The question is, you've been CEO for a year now. Movano has been a public company for a year as well. What are your biggest takeaways, biggest surprises?

Yeah, great question. You know, I've been in the healthcare space, specifically in med device for over 30 years now, and then with smaller companies and larger companies throughout that time. A lot of my work has been dealing with chronic conditions and most of it in the area of diabetes. And, you know, the solutions we were developing were helping people who had type 1 diabetes who really needed a tool to to help them live with the chronic condition that they had living with day in, day out. And this is somewhat different with what we're trying to do here at Movano. Number one, we're trying to help a broader group of people, a much larger, many, many tens of millions and even hundreds of millions of people who just want to try to live healthier, who may have type 2 diabetes, who may have prediabetes, who may have hypertension or be prehypertensive. And trying to do more on the preventative side versus the treatment side once people are are sick and this is very exciting to me because i think this is where we need to go as a society and a country to really deal with the overwhelming healthcare related costs that we see and the rising rates of type 2 diabetes and and hypertension and so um because of that I tell you, it's very exciting because of how many people it really can apply to with what we're trying to do. And I think we're on the cutting edge of healthcare. I think that healthcare has got to move more consumer-oriented. I think people are getting more aware of their health, and we need to help them understand their health better. And so trying to be more at this intersection between consumer devices and med devices, making them more affordable than traditional medical devices, but then in terms of the consumer side, making them more consumer-friendly and easy to use as compared to traditional medical devices. And we're trying to take the best of both worlds and bring it together and help people, you know, sustain a happier and healthier life. And since we announced our start with a focus on women, I mean, the feedback we have heard has just been so positive and We feel like we've made a lot of smart decisions in that regard, and we're really excited about where this is going to take us. Naturally, in the future, we're going to develop solutions for men as well and develop additional form factors, but we wanted to start with something where we felt that there was a real gap in the marketplace, and based upon all the feedback we've received since we went public with this, that's certainly been the case. So I can tell you from myself where my one-year anniversary is coming up at the end of this month. This has been probably the most exciting year of the 30 that I've spent in the industry. And the team that we have and that we're continuing to assemble, I think is going to be able to accomplish great things. So I'm very excited about it.

Okay. I think that does it for the questions.

Yes. On my end, I'm not seeing anything. So Jay, I'll pass it back over to you for any closing remarks.

Thanks, Operator. Thanks to everybody on the call today for your time. As a reminder, you can stay connected and up-to-date on Movano news and events by checking out our investor website at ir.movano.com. Thanks. Good night.