Greetings and welcome to the Movano Health Q1 2024 Earnings Call. As a reminder, this conference is being recorded.

Thanks, operator. Good afternoon, everyone, and thank you for joining us today. Movano Health's CEO, John Mastrototaro will open today's call with prepared remarks about the progress the company has made during the first quarter of 2024 in 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&A. John and I will be joined by our Chief Marketing Officer, Tyler Bucher, our Vice President of Business Development, Michael Soule; and Vice President of Product and Strategy, Stacy Salvi. Movano Health issued a news release this afternoon detailing first quarter 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&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 Movano Health's 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. And with that, I'll turn the call over to CEO, John Mastrototaro.

Good afternoon, everyone. As you are aware, we 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 million 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 building out our Evie Ring direct-to-consumer and Evie Med business-to-business market opportunities, 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 threefold: one, to prepare to take B2C orders against the Evie Ring; two, to secure FDA 510(k) clearance for its pulse oximeter feature under the Evie Med brand; and three, to refine our risk-worn prototype with the mmWave RF system on a chip in preparation for additional blood pressure and glucose studies. As to the first priority, we are laser-focused on preparing to take orders again for the Evie 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 in motion and sleep algorithms, cementing 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, assembly, and test processes to increase yield and throughput as we prepare for relaunch. 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 of 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 the 510(k) clearance on the medical device version of the Ring, which we will launch under the brand name Evie Med. 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. During the trial, each subject wore 4 Evie Med rings, 2 on fingers and 2 held on fingertips. When evaluating accuracy versus arterial blood gas levels, the 4 Evie Med Rings achieved a root mean square error of 2.46%, well within the FDA guidance of 3.5%. In addition, our range factors exceeded that of the 2 commercially available hospital-grade reference devices. We continue to expect our FDA decision regarding our 510(k) in July 2024. In preparation for a positive FDA decision, we remain optimistic about the enterprise opportunities that we believe a clearance will unlock for our organization. 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 billion 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 4 x 6.7 millimeters and has yielded breakthrough advances in blood pressure monitoring, enabling accurate, cuffless, and automated tracking. As you'll recall, we previously announced the results of a blood pressure clinical study in October 2023, where our product type 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. We have been making enhancements to this prototype to be evaluated in that study, and we expect that our next blood pressure study will take place this June and will be the first 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 efforts to further enhance the 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 Evie 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. With that, I'll now hand the call over to Jay for the financial review.

Thanks, John. We shipped 5,305 Evie Rings in the first quarter of 2024 and reported $852,000 in revenue during the period. The company reported an operating loss of $5.8 million in the first quarter of 2024 versus an operating loss of $7.2 million in the year-ago period. We launched Evie 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 paid marketing as of December 1, 2023, and temporarily halted taking orders in February 2024. 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 products, manufacturing, and customer service that should position us well for both an expanded launch of the Evie Ring and direct-to-consumer and eventual launch of Evie Med in B2B upon an FDA clearance decision. Following our successful private placement in April, where the company raised $24 million in gross proceeds, including a strategic seed investment from a Tier 1 multibillion-dollar medical device company, we believe we have the resources to judiciously drive our D2C business, launch Evie Med, 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 personnel resources for Movano Health. A few other financial highlights. Our cash burn in the first quarter of 2024 was $4.1 million, which was inclusive of costs for the Evie Ring launch and expenses related to our FDA submission as well as other quarter-to-quarter timing considerations. Whereas we had $2.1 million of cash and cash equivalents on our balance sheet at March 31, pro forma for the early April private placement, we had $24.8 million of cash and cash equivalents at that time. Now I'll turn it back over to John for final remarks.

Thanks, Jay. This past quarter has been a significant one for the company, marked both by valuable lessons from our D2C launch as well as significant progress in our organizational milestones. We are encouraged on all fronts and look forward to a successful D2C reignition, continued positive momentum around our expected 510(k) 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.

We are encouraged on all fronts and look forward to a successful D2C reignition, continued positive momentum around our expected 510(k) 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. That concludes our formal remarks, and we would be glad to take your questions.

Okay, it seems we have a few questions from the webcast while we wait for any inquiries from the phone lines. I can start asking those and directing them to the team. The first question is for you, John. Can you provide any updates regarding the 510(k) process beyond what you discussed earlier in the call?

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 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. 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 for market.

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

Jay, sure. Yes, that's a good question. So we continue to engage with all of our Beta partners and channels ranging from medical device to pharma, who are looking forward to our FDA clearance in the July timeframe. We expect the 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. Coming off our recent announcement of cuffless 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.

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

Sure, I could take. Yes. So I think as John mentioned earlier, our next big step, there's 2 big steps actually. One, if we take our blood pressure references on 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 arterial line 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 informed to really facilitate fast tracking blood pressure.

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

Sure, Jay. Thanks. Yes, I've seen 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 for us. 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. And so having inventory built up and maintained before we turn this spigot again is very important to us as an organization.

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

Sure. Well, as it relates to the current strategic investor, it's actually been a very collaborative relationship. That's only a little more than a month old since we did the fund raise. 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 for moving forward. 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. Lastly, of course, there's continued interest in what we're doing with our proprietary millimeter-Wave RF technology and the future that holds, as I mentioned, as it relates to blood pressure and/or glucose, which are the 2 big areas 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.

Great. I have a couple of quick questions. Will the first commercial blood pressure device be a wristband or a ring? Also, will Evie Med be applicable for men?

Sure. So I mean our chip, as John mentioned, is 4 by 6 millimeters. So it does have the ability to eventually go into the Ring as well. I think in this first go-around, given all of our great data so far from our previous clinical studies, we want to make sure that we get through the FDA as quickly as possible with what we've already been testing for the last 1.5 years. I think once we take that a little bit further along, then we'll start looking at putting it into the Ring as well.

And then as it relates to Evie Med, I can tell you a couple of things that are very important. When we run our clinical trials for SpO2, for example, and heart rate, that was done for 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. 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, 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. The ring today is worn by some men, albeit a much smaller number 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 Evie Rings today. And as the medical device comes to market, we will certainly use it on both men and women. And Michael Soule, I don't know if you have anything you'd like to add.

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 I think it's a really great strategy in the clinical trial areas and medical device areas, the folks, the large strategics that we're dealing with see this as a unisex device. So I just want to add that.

Okay. It appears we have reached the final question for the webcast, and there are no further inquiries on the phone lines. You sold $1 million of rings in the first 10 days of your launch, but netted $850,000 after a complete quarter. Can you explain the discrepancy? Sure. As we noted earlier, there was significant demand at launch, and we are fully committed to fulfilling all orders as quickly as we can. However, we faced a series of unexpected manufacturing delays, which frustrated some customers, leading to cancellations of their orders. This was disappointing and served as a valuable lesson for us as a company. We have since adjusted our processes and inventory management so that when we resume taking orders in the future, we will have sufficient inventory and be able to deliver all sizes and colors within 5 to 7 business days.

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

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 Movano Health for news and events, please stay tuned to our website at ir.movano.com.

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