MedAvail Holdings, Inc.

Matthew Abenante - Porter LeVay & Rose Joseph Mannello - CEO Joseph DiPietro - Financial Controller

Brian Marckx - Zacks Investment Research

Thank you, operator. And thanks to all of you are joining us today.

Welcome to the MYOS RENS Technology second quarter results conference call. Joining us on the call today is Joseph Manello, Chief Executive Officer; and Joseph DiPietro, Financial Controller.

I would like to remind our listeners that any statements on this call that are not historical facts are forward-looking statements. Actual results may differ materially from those projected or implied in any forward-looking statements.

Such statements involve risks and uncertainties, including but not limited to those relating to product and customer demand, market acceptance of our products, the ability to create new products through research and development, the successful results of strategic initiatives, the successful launch for our products, including Qurr products, the success of our research and development, the results of the clinical evaluation of Fortetropin and its effects, the ability to enter into new partnership opportunities and the success of our existing partnerships, the ability to generate the forecasted revenue stream and cash flows from sales of our products, the ability to continue increasing our revenue and gross profit margins, the ability to achieve a sustainable, profitable business, the effect of economic conditions, the ability to protect our intellectual property rights, competition from other providers and products, continued listing of our securities on the NASDAQ Stock Market, risks in product development, our ability to raise capital to fund continuing operations, and other factors discussed from time-to-time in the company’s Securities and Exchange Commission filings. Company takes no obligation to update or revise any forward-looking statement for events or circumstances after the date on which such statement is made except as required by law.

Our statements have not been evaluated by the Food and Drug Administration. Our products are not intended to diagnose, treat or cure or prevent any disease.

With that, I’d like to turn over the call to our first speaker Mr. Joseph DiPietro to go over the financial results.

Good morning, Joe.

Good morning, everyone. Thank you for joining us.

I’m going to go over our second quarter 2018 financial highlights. Our gross profit margin was 30% for the second quarter of 2018, compared to 25% in the prior year.

Net revenues increased 49% to 88 for the second quarter of 2018, compared to 59 for the second quarter of 2017. The increase in net revenues was primarily due to increased sales from our products including -- that we launched in the second quarter 2018 including Yolked and MYOS Canine Muscle Formula.

Gross profit increased to 26 compared to 15 for the second quarter of last year. Operating expenses decreased 6%, compared to second quarter of 2017 and our net loss decreased 7%, compared to the second quarter of 2017.

Our liquidity as of June 30, 2018, the company had no debt and had 1.9 million in working capital. On April 27, 2018, the company raised approximately $1 million from the sale of 806,452 shares of our stock at $1.24 per share for the private placement with a group of accredited investors, including MYOS’ CEO Joseph Mannello and another member of the company's Board of Directors.

I'd now like to turn the call over to our Chief Executive Officer, Joseph Mannello.

Thank you, Joe. Good morning, everyone.

And thank you for being on the call. Our results for the second quarter of 2018 are in line with our expectations.

Even though, I'm still not happy with how these results are coming in. It's -- what we really are optimistic about is our clinical trials and where we're at with them as far and the two new products that we launched, that we've been working on now for a while.

In April of 2018, we launched our new sports nutrition product line, Yolked, that has received the prestigious Certified for Sport certification from NSF International. It's an all-natural nutrition product based on Fortetropin that is marketed specifically to competitive athletes.

I want everyone to know that the NSF Certified for Sport certificate just opens the doors to the athletic world, whether it's professional athletes, or college athletes, or even crossfit. People will know with that certification that this is not a drug, it will pass all the tests that any college or protein can come up with.

I mean, they literally have around 200 tests they go through. So that has been real, real helpful for us as we go out marketing this product.

And as part of our marketing agreement with IMG, we introduced Yolked at Princeton University and six additional D1 schools. Athletes in these athletic programs are taking Yolked in conjunction with their summer training routines in all different areas, football, basketball, hockey, lacrosse; we have numerous different athletic groups taking it.

And we had some good feedback, it's early on. Most of the program started in July.

And we are working with them probably on a four month program to see how their athletes do. And we anticipate our marketing partnership with IMG is going to lead to more introductions to universities, particularly as the full semesters approaching, we are targeting another four universities to speak to over the next 30 to 60 days.

In June of 2000 -- and let me just give you some feedback on Yolked. The name, the brand that we have trademarked is just -- we're just getting incredible feedback on the name itself when we bring it to schools, the reaction is, what an incredible name.

Yolked in the 18 to 35 year old age group or even the 15 to 35 has a significant meaning of being muscular. And so, it really, really resonates.

And the fact that we were able to trade market is pretty powerful. So I don't want to just say hey, we got this thing.

It is a pretty powerful name that really describes the product. And we were lucky to get it.

In June of 2018, we launched a Fortetropin-based pet product called MYOS Canine Muscle Formula, which is also trademarked. We launched our new website myospet.com, and we began targeting veterinary hospitals, veterinary practices as well as consumers.

Two veterinarian hospitals have already performed some informal observational studies with older dogs that experienced frailty and observed that the dogs who consumed Fortetropin appeared more mobile after taking our pet product, which is incredibly positive results. We believe the feedback we received from these hospitals, as well as pet owners and together with the potential results from our KSU study, Kansas State University, will enable us to really grow this pet business product line.

We don’t see anything in the pet supplement world, anything -- we don’t see anything out there like this. Recently we’ve made some key additions to our sales team by hiring a brand manager, a marketing specialist, and two salespeople.

We spent a lot of time trying to identify people that we thought would really understand our products, be excited about our product and get what we’re trying to do here. And we believe we have found those people.

Growing our sales people -- our sales team is crucial to our near-term and long-term strategy to expand our customer base across the fitness, sports nutrition, and pet vertical. We have strategically deployed capital into strengthening the scale and scope of our sales efforts and believe that this combined with our partnership with IMG, will drive top-line growth going forward.

At the heart of MYOS is our commitment towards uncovering the science behind Fortetropin. As you know, when I came here, I said, we’re going to get back to building this company through science.

We have made investments in R&D through academic collaborations aimed at enhancing our products and broadening the product portfolio and we currently have the following four research studies underway. And I want to give you really some color of where we’re at.

Our KSU study which focuses on the impact of Fortetropin on reducing muscle atrophy in dogs after what is called tibial-plateau-leveling osteotomy surgery better known as TPLO, I actually can’t believe I was able to say that. This surgery is very similar to ACL surgery in humans.

The recruitment is done. By early call, they will be calculating, putting together all the results and we expect to be able to talk about those results in the fourth quarter of this year.

We’re very excited, because that study not only helps us in the pet market, potentially, but there are parts of it with regard to inflammation, muscle atrophy, rehab and recovery that will also help us as we promote this product in the rehab and recovery market for humans and muscle atrophy for humans. So, this will lead to help us there and potentially lead us if the results are favorable to doing a study on humans who have gone through surgery be it hip surgery or knee surgery.

Our UC Berkeley study, which is the effect of Fortetropin on increasing the fractional rate of skeletal muscle protein synthesis in men and women between 60 and 75 years of age, where we're at in that studying, where these studies take much longer than I would like. We committed in January and they're finaling now, enrolling people and we expect complete enrollment in the fourth quarter and by the second quarter of 2019 we will have all our data.

Again, the commercial aspect or the commercial benefit to this is that older sarcopenic market, as we age we all have muscle atrophy, defined scientifically as sarcopenia and we've seen tremendous anecdotal results but this will do two things. One, it will help us prove that this really does work with 60 to 75 year olds.

And two, it will lead us potentially to do a larger study on a group -- in that age group that are lifting or doing movement and to see how that study, I mean how Fortetropin will help individuals there. So, I'm excited and the second quarter of 2019 as we know is not that far off.

Our Rutgers University study is a program focused on discovering compounds and products for improving muscle health and performance. They have initiated assay optimization and will shortly begin screening.

We anticipate announcing developments on this research as they become available I expect some time next year, mid next year. Again the universities don’t move as fast as business people would like, so we do expect it some time mid to later on next year.

Our study of Weill Cornell focuses on the efficacy of Fortetropin in preventing weight and muscle loss associated with cancer in a mouse model of lung cancer. They have initiated tumor inductions in mice and expect to begin dosing them in about two months.

After two months of dosing, the team will begin histological evaluations. And we anticipate that this study will be completed and the results announced around the end of the first quarter or beginning of the second quarter of 2019.

We are committed to continuing our focus on various clinical trials in support of enhancing our commercial strategy as well as enhancing our intellectual property assets, to develop product improvements and new products. And we anticipate launching other clinical studies over the next six months to a year.

Just know when before we try -- before we make to decision on clinical trials or clinical studies, we look at what the commercial application is going to be. This isn’t a research company, it’s a research and development company and that development part is important.

We try and develop products that can help with muscle atrophy and anything else we find with the benefits of Fortetropin. As I approach the end of my first year as permanent CEO, I believe that we are in a much better position than a year ago.

We've managed to control expenses. We have no debt on the balance sheet, and have successfully raised capital through our ATM program and a private placement of which I as well as one of our other Board members participated.

We launched four clinical studies with more to come. We have two new and I think very powerful product lines, and partnered with IMG, a leading global sports marketing agency to help market our products.

We have -- still have room to improve our positioning, which I am committed towards accomplishing in the long-term. I remain optimistic in our ability to grow this business as Fortetropin is a remarkable, disruptive ingredient, one that has demonstrated tremendous clinical and anecdotal evidence and versatility.

I agreed to forego an annual salary in lieu of stock options, and -- while purchasing MYOS stock on the open market and making direct investments in the company because I truly believe that this is an undervalued stock and a very undervalued company. We have a strong balance sheet.

We maintain conservative cash management. We have really improved scientific profile and we are now developing brands that I think can stand on their own, all which I believe will yield long-term success.

Thank you for joining us today and I’m happy to answer any questions you have, either now or if people want to call me after this call is over, I’ll be glad to answer anything you have. Thank you.

And again, thanks for being an investor of MYOS.

In terms of the Yolked product and the universities that you have that today and maybe this question is a little too early to ask but. And if so, that’s certainly understandable.

But are you seeing any reorders from those universities where you’ve placed it?

Brian, good morning. Thanks for the question.

We’re not there yet. Under this program, they’re going to be using our product -- probably you’re talking around October to November, so they’re going to be using it, July or August that will be the beginning for all the schools.

And then we want them to use the product for four months. So -- and we’ll see, is it possible that’d be great if we start seeing orders in the fall but we expect this to play -- we're trying to be cautious and conservative, we expect this to play out until the October type area.

That's when the product we have given them will be used up. And this product -- this is not something you can use and within -- I'll give you the story about this product.

The study we did, it was used for three months. It has to be consistently used, it takes around seven days to get your bloodstream and people usually see results one to three month timeframe.

We wanted to -- because of those universities we wanted to supply them with four months of product. So, it's a long winded long answers saying we haven't seen that preorder and we don't expect it till the fourth quarter.

Yes. Appreciate the details, it's helpful.

And then in terms of the new -- the additional universities that you hope to bring on here in the near future, do you have an internal goal in terms of number of universities that you hope to bring on over a certain timeframe say through the end of the year?

We'd like to bring on another four. We have three other universities away from IMG -- we have one other university away from IMG that we're working with.

We -- three other universities that have requested product. So, I mean the IMG -- I will tell you IMG is a great company.

The meetings we get with universities are just tremendous. We sit down with these sports and nutrition individuals, the trainers, the people who are going to make a decision on the product.

It's just -- I go to all these meetings, it’s such a warm lead you can say. So, I hope to have a minimal of another four -- three to four universities by the end of the year, taking a part.

So roughly one a month maybe is kind of a goal maybe a little less than that, is that kind of fair to say?

That's probably a good goal.

Okay.

I don't want anyone to be -- this is a long process. Again, I come from Wall Street and you want to do a trade the next day, building a brand right.

I mean there's a method to this [madness], I mean there really is but it takes time. We're trying to do this the right way.

We spent months getting NSF approval not because -- all the testing to building the brand, it probably from start to finish took six to seven months to get there. And I'm not used to that, I get frustrated with that, but I've learnt to be more patient.

I know investors are not -- and I'm the second largest investor in this company but I've had to learn to understand that this is a long-term play.

Yes. Okay.

And then in terms of the -- on to MYOS pet -- in terms of the observational studies that were done at a few of the veterinary sites, are the details of that study is something that you expect to release in some format? And I guess in particular, is that something that you think is appropriate to provide the details on the MYOS pet website?

No.

Okay.

And the reason -- it’s not credible, it’s anecdotal and without -- it was set up like a pure -- that’s why we’ve done the Kansas study, that’s why we’re working on potential other studies. There is a quote on our MYOS pet website from the vet who did the observational study and she -- just -- she has given us a testimonial about what she has seen, you can see it on there.

But I don’t -- it’s just not credible if there weren’t the right structure, the right protocol put in place. And that’s why we’re doing the science.

Very much understood. And just one more on MYOS pet.

I am a dog owner and one of the concerns I have, when I change or add to her diet is potential for allergies. Is that something that you intend to look at in terms of a future study, is the hypoallergenic nature or how it may affect allergies, the MYOS pet product?

We don’t have an intention to do that. What we know is the only reaction we had over the years that we really had not -- because we tell people that you have an egg allergy not to take the product.

We don’t have anyone really returning the product or saying they’ve had worse reaction to it. If you would -- if you think your pet, your dog would have an adverse reaction to eggs, I think -- and obviously, unless you have a tremendous dog who speaks you won’t know that other than how they react to the product.

We have not yet had anyone tell us who used the pet product that their dog had an adverse reaction. I have two dogs and knowing what they eat, whether it’s their food or out of our garbage that I think our product is probably tame compared to the rest of their diet.

But the only way really to know is to give them the product. What’s interesting, we are really focused on dogs that are older who have experienced muscle atrophy, because that’s where a lot of the anecdotal evidence is.

And 50% of all dogs in the United States -- of around 68 million dogs are over the age of seven, meaning potential for this product is just enormous. And most dogs like we said -- and I can’t tell you for your dog, the only way to really know is to try it.

Sure. Thank you.

I just want to let everyone know that if you don’t want to ask a question on this call, please reach out to myself or Matt from Porter LeVay, glad to answer any question we can. And whether it's on the science -- and if I can't answer it, as you can see how I garble some of the scientific terms, I'll get you in touch with our scientists, and they can speak to it.

I want to be as transparent as possible. I'm very excited about the direction.

It’s taking us some time to get there. But I really do believe we're on our way to long-term success.

Again, thank you. Enjoy the rest of the summer.

And we'll talk in another three months. Take care now.