Greetings and welcome to the Movano Second Quarter 2023 Earnings Call. At this time, all participants are in listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Jay Cogan, Chief Financial Officer. Sir, please go ahead.

Thank you, operator, good afternoon, everyone, and thank you for joining us today. Our CEO, John Mastrototaro, will open today's call with prepared remarks about the progress we've made during the second quarter of 2023 and in recent weeks. Our Chief Marketing Officer, Tyler Bucher, will join us to give an update on the upcoming launch of the EV ring. Afterward, I'll cover the highlights of our quarterly operating results and provide a perspective on our financial position. Finally, Movano Health, Founder and Chief Technology Officer, Michael Leabman; and Stacy Salvi, our Vice President of Strategy, will join John Tyler and me for the Q&A. Movano Health issued a news release earlier this afternoon detailing our second quarter financial results. This news release and today's presentation are available on our website at movanohealth.com. Before we begin, I'd like to remind everyone that we'll make forward-looking statements during today's call based on our 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 our filings with the Securities and Exchange Commission, specifically in the company's Forms 10-Q and 10-K. 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. So with that, I'd like to turn the call over to our CEO, John Mastrototaro.

Welcome, everyone. Thank you for joining us for Movano Health's second quarter earnings call. As you know, preparing for the commercial release of a product as innovative and complex as the EV ring requires a focused road map and dedication to delivering a high-quality health solution. At our last earnings call, we announced the planned launch date of September. Over the past few months, we have demonstrated significant progress with the development of our production rain as well as group fulfilling the requirements of our FDA submission, which I'll speak to in more detail in a minute. We recently validated a new high-performance sensor with increased sensitivity that has materially improved the efficacy of the EV rain. With the new sensor, testing shows we're getting better, more accurate data across a wider group of people, particularly those with smaller fingers or lower perfusion. As a company pursuing medical device clearance, prioritizing data quality from the start is essential. We believe this new sensor could be critical to EV's long-term success. However, it naturally requires more time to test. To that end, we have made a business decision to move out our launch date by an estimated two months. That said, we are still planning to launch ahead of Black Friday, and this extra time will significantly benefit us in several ways. It enables us to expand upon the capabilities of the EV ring to launch, complete a critical round of testing with the new sensor and better position the ring for significant media and influencer exposure ahead of the holiday season. EV is not just the number wearable. It's a medical-grade smart ring that means FDA guidelines and is designed specifically for women. It's our belief that EV has the potential to be a game-changing solution that ushers in a…

Thanks, John. Momentum for the EV Ram continues to build at a steady pace, and we've been amping up our communications across social content and e-mail over the last two months. Since CES, we've had over 600,000 visitors to ebring.com with more than 100,000 people signed up to receive updates about our release. Our engagement on social and e-mail has been well beyond our internal expectations, and we've continuously seen positive responses to quotes that highlight our unique benefits and product features. Next up will be the launch of our paid brand campaign, which brings UD-Life in a whole new way and really showcases the game-changing solutions for women that we're bringing to market. In addition to our paid and social efforts, we will shortly begin to see EV samples with influencers, celebrities and the media. The revised release date offers us the opportunity to place wings into the hands of individuals with enough time to complete thorough device evaluation and draft comprehensive reviews, which are critical to cultivating consumer trust and influencing buying decisions. The level of interest we have from press and consumers positions us well as a potential must-have gift for the holiday season as well as the choice for the New Year when people often turn their attention to new healthy habits. We'll also be showcasing EV at CES in January, where we will be exhibiting on the floor and sharing a sneak peak of new features we plan to release following launch. We're building a brand-new commercial website to support our DTC plans that will allow users to purchase the ring directly from us and receive a free sizer kit to help find their perfect fit. The entire site is set up to provide an educational immersive and frictionless customer experience from consideration to the…

Thank you, Tyler. To support all the activities we've just laid out, our operations team has been building the foundation of our supply chain and order fulfillment capabilities. With a well-prepared supply chain and FDA-compliant contract manufacturing sites, the team is prepping to handle increased demand and ensure a seamless production process. We're also finalizing manufacturing process and equipment automation, hard tooling and packaging as well as software integrations for order fulfillment and logistics. In addition to our commercial launch, we continue to move forward with testing our proprietary single-chip radio frequency solution, which is the backbone of our cuff-less blood pressure and noninvasive glucose initiatives. In May, we completed a three week IRB-approved clinical study on 51 volunteers in the Movano Health clinical lab to evaluate the efficacy of our single-chip prototype in estimating blood pressure. As you may recall, this was the very first time we've used our single-chip solution in a clinical study. We analyzed the data and saw good signals. We learned a lot from this initial study and have made modifications to improve the prototype and measurement algorithms and plan to execute a follow-up blood pressure study on an additional 50 people in the coming weeks. We've also been conducting testing to evaluate glucose data. As a result, we're optimizing antennas and the circuit board layout to improve signal sensitivity. Once complete, we'll leverage the modified platform in an upcoming glucose clinical trial. After almost two years of extensive research and development, we're looking forward to bringing the EV ring to market. The timing for such a product couldn't be better with increased interest in medical-grade technologies for home use and a strong focus on women's health and empowerment. We believe we've designed an exceptional product and are excited to deliver it to our customers who are highly engaged and looking for a solution that aids them in their health journey. With that, I'll turn it back to Jay to go over the financials.

Thanks, John. We detailed the financial results in today's second quarter earnings release, which you can find on our website, but I'll share a few key line items. Movano Health reported an operating loss of $7.4 million in the second quarter of 2023, and that compares to an operating loss of $6.8 million in the year ago period. The increase was primarily related to the accelerated commercialization initiatives described earlier in the call. Our cash burn in the period was $7.9 million, a bit higher than the run rate for the prior six quarters, given certain prelaunch and FDA submission costs and other timing considerations. With regards to capital, we raised $9.2 million in gross proceeds or $8.1 million net through an underwritten public offering of shares of Movano Health common stock in the period. At the end of the second quarter of 2023, we had $14.5 million of cash and cash equivalents and total assets of $17.6 million. As that concludes our formal remarks, we'd be glad to take your questions. Operator, we're ready to begin the Q&A section of the call.

Thank you. [Operator Instructions]

And I think also, operator, I remind the participants that we can ask questions in the webcast link as well.

You may ask -- also ask questions on the webcast link.

Right, and looks like we've got several there. Just for those that are on with cash, just as a reminder, you can click on the question mark icon and hit the send button after you've typed your question, and we'll do our best to address them all. So let me start with the webcast questions. I'll just ask them and a few of us on the call here, we'll be happy to answer them. John, maybe the first one will be for you, just in terms of can you talk more about why you've delayed the launch date?

Sure, Jay. Well, first off, I want to say that as a medical device company, the quality and accuracy of the data that we're providing is essential. And we had an opportunity to enhance our product by incorporating this new component that we spoke of into the range. This new component is more accurate and addresses perfusion issues that could be within our target market. Essentially, what the new component does is it has the ability to collect more of the signal that is being reflected from the finger. So with a female-focused product and with the size of the rain going down to size five, where you may have much smaller fingers, lower perfusion, less blood -- smaller blood vessels and therefore, have less signal using this larger footprint component allows us to collect more of the data from the finger. And we've already started testing this. We have seen that it is able to get more of the signal than what we were able to do before. And so it increases our ability to provide more accurate data because we have a better signal that we're collecting. We're still using the same LEDs that are -- that we had before in terms of their wavelengths of light and whatnot, but this sensor allows us to basically elect more of the data that's emanating from the finger. So having this delay to put this part into the brain is something that we think is going to really pay off for us. And obviously, the delay gives us some more time to get in front of the media, influencers and others to really run it through the paces before we get to launch. At the end of the day, we want to be able to deliver a product that we can be really proud of and stand behind, and we believe that pushing back the launch date by a couple of months gives us time to assure just that. The other thing that I'll lastly mention is that by pushing it out for a couple of months, we can also make sure that we're set up with production and manufacturing and being able to build up a bit more inventory initially so that we can meet the demand that comes into the market.

Okay. John, I think this next question is for you as well. What gives you confidence in your ability to meet the new launch date?

It's a great question. Several things, first off, you should know that -- and in order to submit to the FDA for the ring, we had to have produced the fully baked product. We had to have all of the testing done, environmental testing, biocompatibility testing, electrical testing, even cloud platforms, cybersecurity testing all done as part of the development process and so all of that has already been in place. All of the testing is complete all of that documentation is in with the agency. So that's one important note is that we really are at a point where we've done a lot of the heavy lifting for this product. The other thing that you should know is that we've been continuing to push forward with marketing, production readiness, as we mentioned on the call, customer service, et cetera. And so we feel pretty confident because we have been testing this new component. We've seen how it performs. We already -- we know that we're getting more signal collected from it. And so we feel really good about the fact that this isn't going to somehow not work at the end of the day because we've tested it so thoroughly. And basically, the majority of the system is the same as what it was before. And I'll stop there.

Okay. Tyler, I think this next question is for you, any concern about your ability to capitalize on holiday traffic with the launch ahead of Black Friday?

Also a great question, and so no, I mean, while the team is focused on ensuring that we maximize holiday timing in order to drive our sales, we really believe that our overall launch extends far beyond just the fourth quarter. And I think it's important to state that the macro awareness around women and their health that we're seeing in the media and in business and in pop culture, there's a really clear signal that the time is now for a product like EV Ring. So our long care is really just the first step in a much bigger plan to serve our growing community of consumers for the long term, but feeling very confident that the momentum that we've generated so far will translate into purchase both during the holiday season and beyond.

Yes. Okay. I'll take the next question regarding cash burn. Why did your cash burn increase in the quarter? The later launch affected and what will the burn rate be after launch. So our cash burn has averaged about $6.5 million per quarter for the last several quarters. We've been gearing up for launch. Not too surprisingly, as you approach a launch date, there's some additional resources that you need to invest behind. For us, it includes raw materials, tooling, some FDA and product testing and also some marketing dollars that we've begun to put to work. We continue to be focused on being good stewards of our capital. You can count on us to continue to have that focus on a go-forward basis. We view a launch prior to Black Friday is relatively immaterial to our cash burn as any push out 8, 10 weeks or so of gross profits, we think will be offset by lower marketing spend and other launch-related costs going into the events. So it's kind of a wash. Obviously, it's something that we would rather be launching in September, but we are of the view that is relatively immaterial on an overall cash burn basis. There's also one more question that relates to cash, which I'll address here as well, which is where you have enough cash to operate and execute your plan without going out to the capital markets and all that. I just basically say that as a reminder, we've raised $102 million since inception in 2018. We had $14.5 million on the balance sheet as of June 30. Our investors have been incredibly supportive over the years, including a couple of offerings that we did year-to-date in 2023, both in the first quarter and the second quarter. And then also, we've raised about $5 million in net proceeds on the ATM over the past year as well. We've highlighted in our financial filings that we will need to raise additional capital over time. But we've also been seeing increased interest as we hit key milestones, for example, our FDA submission as well as getting closer and closer to the launch of our Evera. Okay.

Next question, John, this is for you. Can you give us some more insight to the FDA process? What are the next milestones? When do you expect to hear back from FDA?

Yes. Happy, Jay, thank you for the question. And I see there's a couple of there's very closely related to this, so I'll handle it all once I hope. Let me get -- first, let me explain the process with the FDA for a 510(k). Step one is actually making the filing. And the first thing that would happen after that is that the FDA acknowledged that they've received the filing. The next step is when they assess the entire package for completeness, they verified that all the sections that are required in a filing are there and that we have provided everything that they expect to see in that part of the filing. We've gone through that process as well. That's at least a 15-day review of the entire filing that we put in. And when we recently announced that we had done the 510(k), it was -- we waited until after that step where that milestone was beyond us. And so now the 510(k) is in the formal review. And the agency typically comes back with detailed questions after doing the detailed review at 60 days post filing date. And the filing date is the date when they -- when they gave the 15-day review and said, yes, you're past that, it's 15 days prior to that date. So basically, we are in the middle of the detailed review from the agency or probably the first part of the review with the agency, and at 60 days, we'll get some feedback. Once we get the feedback with questions and typically in all the 510(k)s that I've been affiliated with and filed, there's often some number of questions. There's a back and forth where we generate answers to the questions and they -- we go back with them and…

Okay. And we've got one more from the webcast here. And Michael or gentlemen, I think this would be best answered by you. What were the results of your latest blood pressure study with your single-chip technology? And what are you doing to make further progress? Go ahead, Michael.

Sure. Yes, so the big change in our last study is we're finally using our single chip, which is much smaller, has a lot less heat impacts is more efficient, and there's no exposed wires all self-contained in a single chip. And we're able to get much cleaner data on that platform. That test was done like a little over a month or so ago. From that, we've done a couple of things that we think will really kind of take us to the next level in terms of optimizing our antenna. As we mentioned before, it's the millimeter wave system. So there's definitely a lot of innovation on our antenna side that we keep making and find more and more things as we go along. So we're making some changes there. And there's a couple of other things we're doing from an algorithm standpoint, and we hope that the next study, which John mentioned earlier will start in a couple of weeks, will give us the data that we need to really fine tune average and hopefully get to the holy grail of working on for the last couple of years. I think that also applies, as we mentioned, John mentioned earlier, to glucose. So they kind of go hand in hand as we make fixes to our blood pressure system. A lot of those is also applied to glucose. And again, most of the -- I'd say most of the innovation in the last couple of months has been really trying to fine tune our antennas, which again are quite complicated dis-frequency to perfect. And I think now we're finally getting to the bottom of a lot of the performance improvements we'd like to get to.

Okay. Operator, I think that does it for the Q&A from the webcast and I think also, as I'm looking at the phone lines as well. So I'll turn it back to you.

Thank you. We do have one question on the phone line from the line of Marie Thibault with B. Riley. Please proceed with your question.

Can you hear me?

Yes. We can.

Okay. Just a little aside, I -- some Facebook today, I saw an ad for a watch that does glucose monitoring, that's not invasive. Is that something that's -- and I haven't had a chance to check it out. Is that something that's FDA cleared? Or is it just like the blood pressure on the other ones?

I will answer this question real quick. Thanks for providing it. I'm not -- since I don't know the name specifically of the one you're referring to. I can't exactly answer, but there was one recently that I did see talking about trying to make glucose measurements noninvasively. And they've talked about setting up for an FDA filing on that. So it's not something that is commercially available or that's been through the rigor of an FDA review process at this point. Doing glucose noninvasively is obviously really challenging as we all know. We like the platform that we have in development for that. We've certainly seen some nice signals on the bench as well as in prior clinical studies. And as Michael mentioned, we're making some enhancements to our design so that we get even stronger signals for glucose and are excited about more clinical work coming up a little bit later in the year. Michael, do you have anything you'd like to add?

No, I mean I think one of the things that we know is kind of related to the glucose or blood pressure. And now that we're using optical signals for things like blood auction or ring is that our millimeter wave signal really has a lot less sensitivity to light movement and some like other things than optical, and it's had a lot higher fidelity, which we need for measuring the different features we use for blood pressure. So I think we're -- the fact that we're in both domains on a range for different things and blood pressure with our chip. I think we feel even more strongly that our millimeters wide strip is really the right architecture and the right design for going after things like blood pressure and glucose.

Great. A little follow-up on that, I remember when the -- I can't remember what it's called, but anyway, the other fitness device that came out Fitbit or whatever. Some of the insurance -- life insurance companies were offering them as part of the deal. Have you looked at insurance companies and trying to do partnerships with them as well. Thank you by the way.

Sure. So I'll start with this, and Jay, maybe if you'd like to comment as well in a moment. Yes, in our beta valuations, we've already completed in our beta 1 study, a partnership with an integrated health care network. And in the next one, we are working with another entity that payer like. And the bottom line is the product being a medical device really lowers the bar for us to get in and partner with them. It also provides us an opportunity to potentially seek reimbursement in the future, which would be really nice, especially for high-risk populations who could benefit from this technology that we have. And so for those reasons, anything in the health care space really is a big opportunity for us, especially because of the fact that we're a medical device. The wellness devices on the market are specifically labeled against being used for medical purposes. Now that doesn't mean you can't use them in a certain capacity and certainly use them to monitor activity and sleep and those types of things. But we feel like having the FDA clearance, which we're seeking for heart rate, SPO2, and then for future measures beyond that, I mean, our goal in the next three to five years is to maybe have five to 10 different measures or diagnoses that are all cleared within the one product, we're really looking to provide a comprehensive health solution, which would be very appealing, we believe, to the insurance companies, as you mentioned.

Yes. I would just basically just add on a broader basis, our investors obviously know a lot about us and has been with us through the years. Still on a relative basis, we're fairly under the radar company and with the launch of EV, obviously, will be coming much more onto the limelight. I think there's a few things that are very much underappreciated about us. One is, you've seen just growing interest in other form factors besides bands or watches, rings, and I think that's strategic. Second, I'd say that being a medical device company is definitely a differentiator. We continue to see significant interest from health care and other enterprises. And what we're doing as we highlighted, for example, we'll be working with a large insurer for RBI as well as a major remote patient monitoring company and also a global athletic apparel retailer, as we talked about on today's call, we've talked about that in the past as well. And we've said that there are other health care and consumer entities that we've been talking to about possible partnerships, collaborations, et cetera. And as we move through the FDA process, we think that could provide meaningful opportunities over time, and then third, obviously, the RF technology that Michael and John were highlighting with respect to the -- being the engine behind our glucose and blood pressure initiatives. And so from our standpoint, we feel like we have a lot of opportunities to create value over time and looking forward to continuing that journey. Operator, I think that pretty much concludes the Q&A for us today. We'd like to thank everybody for your time. As a reminder, you can stay connected and up-to-date on Movano Health news and events by checking out our investor website at ir.movano.com. Thank you.

Thank you. This concludes today's conference. You may now disconnect your lines at this time. Thank you for your participation.