Movano Inc. — Form 10-Q summary
Reporting period: Three and six months ended June 30, 2023. The supplied filing is for Movano Inc. (doing business as Movano Health), not Corvex, Inc. The financial statements are unaudited.
Business context
Movano is a development-stage healthcare technology company developing wearable health-monitoring products. Its first proposed commercial product, the Evie Ring, is designed for women and combines health and wellness tracking. The company had not launched a product or recorded revenue by June 30, 2023. It is also developing sensor technology intended to support non-invasive glucose and cuffless blood-pressure monitoring.
Financial results and liquidity
| Metric (USD millions, except per-share data) | Q2 2023 | Q2 2022 | Six months 2023 | Six months 2022 |
|---|---|---|---|---|
| Revenue | None | None | None | None |
| Research and development expense | 4.2 | 4.1 | 8.1 | 8.7 |
| Sales, general and administrative expense | 3.2 | 2.7 | 6.5 | 5.1 |
| Total operating expenses | 7.4 | 6.8 | 14.6 | 13.8 |
| Operating loss | (7.4) | (6.8) | (14.6) | (13.8) |
| Net loss | (7.3) | (6.9) | (14.4) | (13.8) |
| Basic and diluted loss per share | $(0.17) | $(0.21) | $(0.36) | $(0.42) |
As a pre-revenue company, it reported no revenue-based margin. Cash used in operating activities was $14.0 million in the first half of 2023, versus $12.2 million in the first half of 2022. Financing activities provided $17.7 million, mainly from equity offerings and ATM sales; cash increased by $3.7 million to $14.5 million.
At June 30, 2023, total assets were $17.6 million, current assets $16.1 million, and total liabilities $4.7 million, including $4.6 million of current liabilities. Stockholders’ equity was $12.8 million; accumulated deficit was $109.5 million. No borrowings are identified in the reported balance-sheet liabilities. Operating lease liabilities totaled $327,000, and the company had $0.4 million of non-cancelable commitments, generally due within one to twelve months.
Changes versus comparable periods
- Q2 operating expenses rose 8% year over year; net loss widened by $0.4 million. For the first half, operating expenses rose 6% and net loss widened by $0.6 million.
- First-half R&D expense fell 7%, primarily from lower headcount and professional fees, partly offset by higher laboratory costs. SG&A rose 28%, which management attributed primarily to company growth and activity.
- Cash and cash equivalents rose from $10.8 million at December 31, 2022 to $14.5 million at June 30, 2023, supported by public offerings and ATM proceeds. Operating cash use increased from the prior-year first half.
- Shares outstanding increased from 33.7 million at year-end 2022 to 50.6 million at June 30, 2023, reflecting equity issuance. The company also reported 4.6 million outstanding warrants and 7.8 million outstanding options at quarter-end.
Outlook, risks, and notable items
- Going concern and funding: Management says cash is expected to support development and initial commercial launch of the Evie Ring, but not to fund operations for the 12 months after the financial statements were issued. The filing states that substantial doubt exists about the company’s ability to continue as a going concern within that period. Additional financing is expected to be necessary; it may be unavailable or require dilution, debt covenants, or concessions in collaborations.
- Regulatory/product development: In July 2023, after quarter-end, Movano submitted its first FDA 510(k) application for the Evie Ring pulse oximeter. The FDA completed its initial completeness review and the application was under full review at the time described. Approval, product launch, and commercialization remain uncertain.
- Operating costs and execution: The company expects significant expenses and increasing operating losses for at least the next several years as it advances product development, regulatory submissions, manufacturing, distribution, and marketing plans.
- Controls: Disclosure controls and procedures were not effective as of June 30, 2023 because of a previously identified material weakness involving financial close and reporting controls, including account reviews and information-technology general controls. Remediation efforts may not prevent future weaknesses.
- Other risks: The filing highlights reliance on third parties, regulatory approvals, competition, intellectual-property protection, and the ability to develop and commercialize products. Management reported no litigation believed to have a material adverse effect and no off-balance-sheet arrangements.
Important facts for investors to verify
- Whether additional financing is secured, and the resulting dilution, terms, and operating runway.
- FDA review progress and timing, and whether the Evie Ring can be launched and commercialized as planned.
- Actual cash burn and spending relative to the company’s stated expectation that existing cash can support initial launch but not the following 12 months of operations.
- Progress in remediating the material weakness and whether disclosure controls become effective.
- Potential dilution from outstanding options, warrants, and the remaining approximately $44.7 million capacity under the ATM program.