Movano Inc. (MOVE) Earnings Call Transcript & Summary

Welcome to Movano Health's investor webinar: B2B, The Next Wearables Boom. In the next 30 minutes, we'll be discussing a few key topics like what is the evolution of the wearables market look like over the last 2 decades? And why are we at a pivotal point today for good medical enterprise applications? Or #2, what are the use cases? We'll talk specifically about 2 of them, remote patient monitoring and pharma/clinical studies. We'll explore how wearable devices can add value to these settings and which types of potential enterprise customers may be motivated to adopt this technology. And finally, we'll look at Movano Health's product, specifically the Evie Ring and how it may be deployed into these settings and how a potential FDA clearance may pave the way for the commercial ramp across these different enterprise markets. So with that, let's jump into the event. I'm here with an esteemed panel of experts who offer a blend of vantage points from across the health care industry like Dr. Rodriguez from the patient care and research point of view; John Mastrototaro, CEO of Movano Health, who has been in medical device development for 4 decades; and Michael Soule, COO of Movano Health, who has decades of experience in business development in the enterprise health care space. I'd like to take a quick moment for each of you to introduce yourselves and your background, how it relates to our topic today, after which we'll jump into our first topic of the discussion. Dr. Rodriguez, let's start with you.

Thanks so much. So I'm a clinical cardiologist and cardiology is a field that really embrace this technology. I also lead our section on preventive cardiology. So a lot of focus on the behavior so we can change to improve cardiovascular health. And then I run a research group that focus on addressing gaps in cardiovascular care prevention through digital health solutions.

Thank you. John?

Yes. Thank you. I've been in the medical device space, as you said for many, many years, and a lot of it was spent in the area of type 1 diabetes, developing wearable devices for people living with that condition, insulin pumps and continuous glucose monitoring devices, which are relevant to what we're talking about here today. So excited to be sharing some of where we're going with our new products.

Thank you. Michael?

Yes. Thanks, Matt. I've been in the wearable health care enterprise fields for over 20-plus years. I was with one of the first wearable companies to come out. I've seen a lot of change across the industry and I'm just excited to be here to talk about this today.

Perfect. Thank you all. So let's jump right in. We're going to be spending a lot of time on B2B medical wearables, but of course, the field has really been pushed forward by consumer wearables. And so John, if you'd like to walk us through how this has evolved this space before we start talking about the future direction.

Sure. Well, it's interesting. Wearables have been around for over 20 years. And they started as step counters, activity monitors and sleep systems. But in the most recent history over the last several years, they started to gravitate more into health care. You now have heart rate monitoring, SpO2, respiration rate, et cetera. And although these systems are still wellness devices, not for medical purposes, they are providing some medical type information. And you can see that this market has grown dramatically. I think, through the course of COVID and other things that have happened in recent history, people are much more attuned to their health than ever before. So this market is upwards of $140 billion per year plus and really exciting growth.

Thank you. Yes, I think we all probably own one or multiple devices, and we obviously see the direction exploding along the lines of the medical applications, at least the promise of it. Michael, would you like to walk through what the enterprise categories look like in those market sizes?

Yes, sure. I mean as you can see from this slide, we've just identified just a few verticals here. But the TAM and the open market for us is unique because with our FDA clearance, it unlocks a number of these verticals that others cannot play in. So you see our corporate wellness continues to grow year-over-year. On the right-hand side, which are FDA-specific verticals, you see condition management like cardiovascular disease, metabolic disease, obesity, pulmonary conditions, all available to us with our FDA clearance or impending FDA clearance. And then, of course, pharma and clinical trials. These are just a snapshot. The $2 billion TAM you see here is just a snapshot of relevant clinical trials where our ring can have immediate effect. If you go to the next slide. We've taken that kind of TAM and boiled it down to 5 focused areas, pharmaceutical and the clinical trial area, RPM, which is exploding since COVID came about and the ability to monitor patients remotely and less costly is growing very, very fast. Payers, of course, we talked about condition management, payers are on the front line of that condition management. And of course, you have medical device companies and self-insured employers.

Great. So a lot of big categories. Dr. Rodriguez, you're in the field, you're working with patients a lot and then Michael even brought up cardiovascular applications. What are you seeing in the field? Where are wearables being adopted? Where are they not? Where should they be? Would love your perspectives.

Great. And I really have to give John a lot of credit for his early work with the continuous glucose monitors. I think that's an example of success really in wearables of a condition that now can be managed much simpler than it was many years ago. And we actually now see a lot of type 2 diabetics using continuous gluco monitors and that changes behavior, they have feedback, they can dose medications more appropriately. So clearly, that's a success, a lot of innovation in that field. However, there's a lot of room to use these tools in my field in cardiology. Again, commonly, we use it to detect arrhythmias and heart rate abnormalities like atrial fibrillation. And again, that's a common reason I may see patients in clinic. Their wearable device notify them over an abnormality and they come to me and say, "Hey, can you verify that?" There's a lot of opportunities around behavior change and disease management. So I'm really excited about the promise for activity monitoring for our patients outside of the health care system because, again, we know that 99% of the time, they're not seeing us in clinic, and we want to know what their vitals are doing, what their heart rate is doing, what their activity is doing when they're not seeing us directly.

Great. Thank you. So maybe we can shift into that first use case. So Michael, as you brought up a number of different use cases across health care, but if we focus on the first one, remote patient monitoring. I think Dr. Rodriguez you just brought up a lot of areas where it would add value to have that real-time connection with patients, have data continuously to the provider. It seems like an obvious concept. It seems like a lot of roads have been meeting here, but probably came with a lot of technical challenges and many have probably tried and clearly haven't gotten there yet. John, would you like to walk through the evolution of Evie Ring, and what it took technically to get the device in the shape that it's in?

Well, ironically, you said shape that it's in and shape is a very important element of the Evie Ring. Look, if you want to be able to track someone continuously over time and monitor their health that way, then you need to have a wearable that they're going to wear all the time. And so what's really important is the aesthetics, the comfort of wearing it, the ease of use in terms of how frequently you need to charge it. All of those are important factors because ideally, you want to have it on the person's finger all the time so that we can track their measures continuously and longitudinally so we can identify when things may get out of whack and when it's important to intervene. So that's number one. Secondly, having the ability to share the data appropriately with the third party who needs it. So to share it with Dr. Rodriguez when she needs that data and do it in a way that's accessible to her is really important and distilling down the wealth of data into the most salient points that are important for her for making her decisions about therapy for an individual are also critical. So all of those factors are important. And then, of course, security, cybersecurity, very important in today's world really important to have the protection of the data and assuring that you have all the appropriate controls in place for that.

And I'll just comment, John, because what you just said, I think one thing that's very important for a solution to be used in the health care system, is that it's integrated with the health system platform, whatever that is. Again, you don't want a physician that's busy to have to open a separate platform to get that data. So you want that data synthesized in a way that's actionable, and again, that can be a click in the EHR system as opposed to open a separate app.

Yes. And that's really why we've had a series of beta tests over the last 1.5 years, a first session and a second session. And we just finished our second session with one of the largest RPM companies in the country. And the reason why they wanted to beta test with us is because there's a real unique need today for medical device -- FDA-approved medical devices within that care continuum. So our ring when we get our FDA approval, will fit an unmet need today. And so they beta tested, a very successful beta test. One of the other reasons within RPM is the ability for us to fit into coding, so reimbursable coding. Today, there are codes like 99452 and 99453, which are reimbursable codes that a provider or a health care system can use. And within that coding, it clearly states that all the components within that RPM solution need to be FDA-approved devices. So that means today, we can't pull a wellness device off the shelf. We all know a few of those. We may even have a few of those. Those, unfortunately, cannot fit within that reimbursable RPM solution. So RPM is growing very, very fast. Since COVID, the ability to monitor people, as John said, remotely and the doctor said, longitudinally, puts us in a unique position with our solution.

Yes. That's a great point, Michael. So it sounds like from the corporates, the FDA clearance is important. Dr. Rodriguez on your side of things as a provider, do you share that same need to know that there's an FDA benchmark that's being cleared?

Yes, absolutely. I think that there are so many products in the market. I think I was sharing with one of my patients, there was actually a toilet seat blood pressure monitors that somebody can use. And I was like, don't get that because again, it hasn't met the bar of FDA clearance, which I think is a very fair bar. The other thing that's technical and important is that you want whatever the product to be calibrated and validated against a gold standard. And that's the first question I ask anybody that brings me a product, what was your gold standard? And I think people don't really think about that when they're offering it directly to consumers and the FDA bar, of course, has that. So yes, I think it's very important, HIPAA compliance. And again, I think what John said can be understated, but you need the patients to wear it if you need the patients to be engaged to have long-term compliance because everybody likes new shiny things. But if they don't stay into the lifestyle, both for the patient and the clinician, they're not going to be used long term.

Yes, that's great. And John, Michael, do we have a cameo for Evie? Or do you guys -- all right. There we go. So...

It's very comfortable, by the way.

All right. So to that -- so you share that as well. Dr. Rodriguez said it's important that folks want to wear it. There's not going to be an interruption in terms of that data feed and it will be easily adoptable. On the gold standard, so John, at this point now, Evie Ring has been through clinical studies. You've studied it extensively. You've measured it against these benchmarks that Dr. Rodriguez is talking about. And I think we have a slide that has a couple of different data panels from prior studies. If you'd like to walk through that clinical journey of ensuring that the data quality matches the standard that Dr. Rodriguez and other providers would require.

Yes. The first 2 metrics we're seeking FDA clearance for a heart rate and SpO2. And the SpO2 trials are really challenging for the volunteers who accept to be in the studies because the FDA wants us to verify 2 things. Number one, with these optical sensors is that because it's an optical-based approach, is the data accurate for people of all skin tones, of all ethnicities, et cetera. We have to make sure it works for all. The second is we have to make sure that it's accurate across a very broad range of oxygen levels, for example. And so in the clinical trials that are done, it goes from 70% oxygen up to the normal 95% to 100%. 70% oxygen is really low. And the volunteers in the study go through a lot of breathing in, get gas mixtures to get them down to 70%. And we, as Dr. Rodriguez said, what's the gold standard? Well, these studies, the hospitals use the gold standard of arterial blood gas measurements. So we're comparing the data from our ring to arterial blood gas. And in the studies, we achieved the level of accuracy that was well within the FDA guidance, but better than the hospital grade pulse oximeters that are there today, which had some accuracy related issues in people of color, which became very evident through the course of COVID when it was found that often those devices would overread the true oxygen level. And we think that it's because they use an approach where they shine the light all the way through a finger, we use a reflected mode with the ring and we see no change in performance across skin tone. So really important outcome. This data has now been published and we're very excited about its utility out with consumers. Anyone using the product, it can work for them very well.

That's really helpful, John. Maybe you can walk us through the analytes that have been studied, that are on that product road map and maybe we can spend a moment talking about the actual clinical use from Dr. Rodriguez' perspective, for instance, blood pressure, other ones that you think would be relevant. I know there's a lot of things Evie can track.

We're -- obviously, heart rate is part of what we've got in now. We are also looking at respiration rate, certain sleep-related metrics that could tell us whether someone has sleep disturbances like sleep apnea is very important for what we're doing. And then, of course, we have our own proprietary technology. This is a radio frequency-based approach where we can monitor blood pressure without a cuff and potentially glucose non-invasively. We recently completed a blood pressure clinical study at the end of last year, where we saw accuracy that was within the FDA guidance for accuracy when compared to a typical hospital cuffed approach for blood pressure. So some really exciting new analytes coming in the future beyond the initial 2.

Yes. Thanks, John. And I think for me, as a cardiologist, all those analytes are extremely relevant and useful. But if I had to pick one unmet need in the market that is really critical, it really is blood pressure monitoring and doing so in a cuffless way that captures longitudinal data because, again, we know that every time a patient comes to clinic, their blood pressure is high. They were like it's not really like that when I leave the office. And there's just a missed opportunity to manage the blood pressure with a combination of lifestyle and medications. And I think that could really make a big change in our population health and that is a solution that we're all looking for. Now of course, there's anything that can be done noninvasively and can provide feedback to our patients is very useful, and we know that changes behavior. Having things like weight again, heart rate when they exercise, heart rate variability, recovery, all those things are extremely useful as we encourage exercise in our patients.

So Dr. Rodriguez, when it comes to actual benefit and clinical benefit that does affect patients and the health care providers are happier. Can you just walk us through what that looks like. So you get a data feed. You understand what's happening with your patient day to day versus every 6 months and then you can modify the treatment course. Can you just walk us through how having that data actually translates to better outcomes?