SVRE: Restoring Balance Despite Market Volatility

Despite a slew of safety improvements added to vehicles in the U.S. over the past 20 years – like forward collision warnings, emergency braking, lane departure warnings, blind spot detection, backup cameras, etc., nearly 43,000 people died in traffic accidents in 2022 in the U.S., up 30% from 2013.2 Experts agree that there is not one simple explanation for this apparent contradiction where we are driving safer vehicles and yet, traffic fatalities continue to climb. Some of the increase is simply driven by math, because while the U.S. population has grown by 5.4% over the past decade the number of registered vehicles in the U.S. has grown by over 16.8% during the same period. However, there has also been a notable increase in what the NHTSA calls “dangerous driving behaviors” – speeding, impaired driving, and failure to wear a seatbelt – which are pushing traffic fatalities up in the U.S.

Enter the SaverOne Solution
While protecting everyone on the roads from the dangers of distracted driving is an admirable goal, until legislation completely bars access to technology in our vehicles the reality is that economics will drive adoption of tools to prevent distracted driving. In the case of commercial fleets, think bus companies, trucking and delivery companies, the risk of litigation from a single distracted driver incident is so great, that these companies are looking for alternative solutions to eliminate a driver’s access to distracting phone apps. Again, while this technology largely exists in most phones, it requires the driver to actively opt-in, and in the case of commercial vehicles looking to mitigate liability risk, they want to remove the opt-in requirement and instead have a system that automatically limits a driver’s phone to only essential tools to prevent driver distraction.

SaverOne (NASDAQ:SVRE) has built its first commercial product to address just this need by detecting and locating a driver’s cell phone radiofrequency (RF) signal. The company’s first commercial product - an In-Cabin Driver Distraction Prevention Solution (DDPS) branded as the SaverOne system, can identify if a cell phone is in the vicinity of the driver’s seat and with the SaverOne App installed it will block access to the most distracting apps (social media/texting) while still allowing necessary apps like navigation and the ability to make hands-free phone calls. SaverOne is initially deploying this solution for the commercial market so companies operating commercial vehicles, buses, or vehicles provided to employees can mitigate their liability associated with distracted driving.

The company launched this product in 2019 in Israel with several pilot programs and as of August 2023 about 4,300 systems have been ordered and roughly 3,000 of these systems have been installed. The company released a second generation of the distracted driver protection solution in the fourth quarter of 2022, which will target the larger global auto market and in 2023 the company announced its first international sales. We believe that the company is still identifying the best distribution, installation, and marketing strategies for global markets.

Recent financial results and news:
In the first half of 2023, the company reported a sharp jump in year-over-year revenues to roughly $400k as the number of installed systems grew to 3,000 as of August 29, 2023 (up from 1,750 installed units as of 3/31/23). While this growth rate is impressive it is important to note that SaverOne is still a fairly small company and managing its growth as the company moves from initial pilot installations to full fleet installations will be a challenge. The company’s first-half operating loss of $4.8 million was due in large part to the $3.3 million R&D expenditure. The company has indicated that as it develops its OEM solution and VRU product R&D expenditures will likely remain elevated.

Other Notable Milestone:
- The company announced that Electra Afikim (a large public transportation company in Israel) would install the SaverOne System in its entire bus fleet representing roughly 1,200 vehicles, SaverOne’s largest order to-date.

- The company announced a meaningful expansion of its pilot projects outside of Israel with an additional pilot project on buses in the Gulf region; a second pilot project in the U.S.; and its first pilot in Europe.

- In 2022, the company entered into a memorandum of understanding with IVECO (one of the leading medium/heavy truck manufacturers in the world) to integrate its solution within IVECO trucks. This has the potential to be a game-changing agreement for the company based on IVECO’s size (producing over 150,000 vehicles annually).

IPO/Financing:

A little over a year ago, in June 2022, the company closed on its initial public offering of 2.94 million units (consisting of an ADS and one warrant to purchase an ADS) at a price of $4.13 per unit raising roughly $13 million in gross proceeds. Each ADS represents 5 shares of common stock.

In December 2022, the company completed a private placement of 0.8 million ADSs at $1.854 per ADS raising roughly $1.5 million in gross proceeds.

Closing Notes
SaverOne (NASDAQ:SVRE) is an emerging company addressing the challenging issue of cell phone device use inside a moving vehicle. Distracted driving continues to get worse around the globe despite numerous public awareness campaigns. Corporate fleets and commercial transportation companies need tools to limit distracted driving that operate seamlessly without requiring a driver to opt-in and that is the solution that SaverOne has brought to the market.

The opportunities in front of SaverOne as they expand into fleets, push into international markets, launch an OEM solution for car makers, and build a tool to protect Vulnerable Road Users will have to be weighed by investors against the dilution risk related to any pending financing.

There is no doubt that distracted driving remains a huge problem around the globe, but absent significant legislative action (the EU has recently enacted some distracted driving measures to be rollout over the next few years), the current half-hearted approach to the problem (relying on driver compliance) is likely going to be the default in most markets. As more advanced features are built into new vehicles, it is likely that adoption rates of Driver Distraction Prevention Solutions like those offered by SaverOne with grow.

SaverOne is an early-stage market entrant but if you are watching for next-generation safety solutions in the transportation market then you should have it on your radar.