Good morning, and welcome to the Lucid Diagnostics first quarter 2024 business update conference call. [Operator Instructions] Please note that this event is being recorded. I would now like to turn the conference over to Matt Riley, Lucid Diagnostics' Director of Investor Relations.

Thank you, operator, and good morning, everyone. Thank you for participating in today's business update call. Joining me today on the call are Dr. Lishan Aklog, Chairman and Chief Executive Officer of Lucid Diagnostics; along with Dennis McGrath, Chief Financial Officer of Lucid Diagnostics. The press release announcing our business update and financial results is available on Lucid's website. Please take a moment to read the disclaimers about forward-looking statements in the press release. The business update, press release and the conference call all include forward-looking statements, and these forward-looking statements are subject to known and unknown risks and uncertainties that may cause actual results to differ materially from statements made. Factors that could cause actual results to differ are described in the disclaimer and in our filings with the Securities and Exchange Commission. For a list and a description of these and other important risks and uncertainties that may affect future operations, see Part I, Item 1A entitled Risk Factors in Lucid's most recent annual report on Form 10-K filed with the SEC and any subsequent updates filed in the quarterly reports on Forms 10-Q and subsequent Forms 8-K. Except as required by law, Lucid disclaims any intentions or obligations to publicly update or revise any forward-looking statements to reflect changes in expectations or in events, conditions or circumstances on which the expectations may be based or that may affect the likelihood that actual results will differ from those contained in the forward-looking statements. I would now like to turn the call over to Dr. Lishan Aklog, Chairman and CEO of Lucid Diagnostics. Lishan, take it away.

Thank you, Matt, and good afternoon, everyone. Thank you for joining our quarterly update call today. I'd also like to thank our long-term shareholders for your ongoing support and commitment. Our team here at Lucid is singularly focused on driving our enterprise towards what we believe is a massive commercial potential and to enhance our long-term shareholder value. Very pleased with the excellent progress the team has made over on multiple fronts during the first quarter and the start of this year and really look forward to very exciting, very near-term milestones for our business. In particular, we're really excited about the fact that we were able to strengthen our balance sheet, closing out our $30 million preferred stock financing to long-term investors that extends our runway well past these near-term milestones and keeps stock out of the market even further into the future. Okay. So let's start off, as usual, with some highlights. First, with regard to our commercial execution. We collected approximately just over $1 million in revenue for this quarter, which is flat quarter-on-quarter and about 124% increase on an annual basis. As we had noted on the last call, our first quarter test volume remained also in -- approximately in the same range, about a 10% increase at 2,420 tests that's also a 31% increase on an annualized basis. We do still see increased productivity from a seller point of view, improving CYFT events are thriving. We had 32 such high-volume health fair events. And we have now implemented a very streamlined centralized telehealth operation as part of it. We're very much focused and engaged on our robust pipeline of direct contracting engagements as we'll talk in detail later that involve benefits brokers, third-party administrators and self-insured entities offering EsoGuard as a covered benefit. Our efforts…

Thanks, Lishan, and good morning, everyone. Summary -- financial results for the first quarter, we reported in our press release that was published earlier today. On the next 3 slides, I'll emphasize a few key financial highlights from the quarter. But I encourage you to consider those remarks in the context of full disclosures covered in our quarterly report on Form 10-Q. Balance sheet, cash at quarter end March 31, was $24.8 million. We added $11.6 million to that amount with the financing completed last week for a pro forma cash of $36.4 million. The average quarterly burn for the trailing 4 quarters is $9.5 million per quarter. The burn in the first quarter included $7 million from ongoing operations and $2.5 million from the quarterly management services agreement with PAVmed. Additionally, the company paid down the intercompany debt to PAVmed with PAVmed accepting 3.3 million shares for a $4.8 million debt reduction as previously disclosed in connection with the dividend distributed by PAVmed to the PAVmed shareholders of Lucid stock plus $2.8 million in cash payments. We disclosed in the 10-Q that our ability to fund operations beyond 1 year from today is largely dependent upon how revenues ramp over the next 4 quarters, which is, of course, dependent on how the reimbursement landscape for both government and private health insurance continues to improve. Additionally, our direct contracting efforts with self-insured employers and/or corporate finance activities, including refinancing the outstanding debt at that time can also work to exceed that threshold. Beyond that, there is nothing substantively remarkable about the remainder of the March 31 balance sheet, shares outstanding, including unvested restricted stock awards as of last week are 52.2 million shares, which includes 1.1 million issued subsequent to quarter end in connection with conversion notices received from the…

[Operator Instructions] Your first question is from the line of Mike Matson from Needham.

I wanted to start with the MolDX pre-submission meeting. So can you maybe just tell us more about what you're expecting to happen there and kind of what the potential outcomes of the meeting would be?

So just to be clear, these are pre-submission meetings. I think the analogy for those who have had experienced or heard about descriptions of FDA pre-submission meetings, it's not quite as structured and formal, but similar. And the purpose of these meetings is to meet with the key personnel, the medical directors at MolDX and to review the full evidence base consisting of clinical validity, clinical utility and analytical validity data and to do so in the context of the elements of the already published and finalized foundational LCD and simply to have a conversation about that also in the context of new information such as guidelines and so forth. So we expect to be well represented with both ourselves, and others who can describe the context of our data in that result. And the goal of that is to be able to inform the actual document, the technical assessment that would be submitted following that meeting to formally seek coverage under the foundational LCD. In addition to personnel from the company in various key roles, we expect to have other key experts so Stan Lapidus, our Vice Chairman, he's an expert in diagnostics, will be contributing as well as one of our medical advisers who was an expert, an author on the guidelines, and we expect to provide some additional support. So that's the nature of the meeting. We would leave with that with a sense of where we stand with their data and will inform the actual formal process, which is to submit the technical assessment and have that clock start following the meeting -- following the submission, excuse me.

Yes, got it. And then -- just in terms of the -- so you've been running at kind of like this 2,500, 2,400 tests per quarter now for a few quarters. And your revenue has been growing a little as you get more -- you're able to collect more payments, I guess. So how long should we expect you to remain in this sort of holding pattern? And at what point would you start to try to grow the tests. At what point would you need to get to in terms of the coverage or the payment rate would -- before you would start to really try to drive more test volume again.

Yes Good question. So I'll talk about a little bit on the test volume side, and have Dennis chime in on the translating test volume into revenue. So we talked about this a bit at the -- on our last call, which is that we've had a fixed level of personnel on the sale side, we obviously have been and remain in a posture where we're trying to maintain -- our OpEx is flat to the best of our ability during a period of time. And as I also mentioned last time, but I'll reiterate, the claims -- the test volume we have has been sufficient to drive claims history and to drive our engagement with private payers. The -- as I -- again, just sort of reiterate a bit from our last call, this level, kind of in the 2,400-plus range, is a level that we think we can maintain with our current team. We did actually have fewer sellers in the field this quarter as we transported some resources and did not fill certain open positions in order to make sure we have sufficient resources under the same overall OpEx in our key market access and direct contracting initiatives. And so there -- certainly, there's is a possibility that even with -- at this current level, we may continue to see some modest growth. We saw about 10% quarter-on-quarter as a result of increasing Check-Your-Food-Tube events, which tend to be more efficient in terms of the side of personnel, sales personnel in the field per test. And obviously, if we start seeing some -- when we start seeing some traction on the direct contracting side, which can drive test volume independent of -- essentially independent of the sales activity. So I'll transfer to Dennis to talk a bit about what -- where our thresholds are and at what point in our revenue -- the revenue and the realization of revenue as -- from test volume, would we consider increasing our OpEx and adding some resources in order to drive test volume as a method of driving -- as a lever to drive revenue.

Mike, I think it's -- those decisions are going to be on a quarter-by-quarter basis as we see realization, meaning cash collections as a percentage of billable claims increases. And as Lishan's pointed out, there are a couple of influences there that we will start to make those investment decisions at the time some of these events start to show themselves maybe even in advance of actually collecting. And they are direct contracting because the price is guaranteed as we see that start to increase, that will give us reason. In fact, we're already putting some additional resources behind that. In addition, I think we've previously mentioned, we have submitted some formal applications for some of the larger regional insurers to move from out-of-network to in-network as those decisions become available, that will influence making those investments. Clearly, that's an indication of what realization will become in the subsequent quarters after those approvals. Obviously, in response to the Medicare upcoming decisions, that will influence timing as well. We're also in the process of trying to fully understand the biomarker legislation and what influence that might have as the -- both the states that are requiring coverage with insurers operating within their states, how that plays itself out. We're staying pretty closely in tune with that in terms of does that make sense for us to put additional resources in those states as they work out those logistics between the state legislation and the actual carriers covering biomarkers. They're all the influences that will have us step on the accelerator to do so. Obviously, with the recent financing, we have the resources to be able to be responsive to those events. So pretty much stay tuned. As I indicated at the outset, it's a quarter-by-quarter basis. And we have and are ready to put these things in place to be responsive to these events.

Your next question is from the line of Anthony Vendetti from Maxim Group.

Some of those questions were around some of mine, but maybe just further talk about the process. You did mention that you're hoping that some of the coverage benefit goes from out-of-network to in-network, that's obviously would be significant. Can you just remind us where we're at in terms of the number of insurers that will reimburse -- maybe the number of -- maybe the large insurers, if we talk about the Cignas, the Aetnas, UnitedHealthcares of the world. Where are they in terms of their reimbursement coverage? And what's the likelihood that they sign up either this year or within the next 12 months as either in-network, out-of-network?

Yes. Let me outline that a bit at a high level. So you asked about the larger payers. So just to be clear, on the out-of-network side, we do get paid. We have -- we get -- we do get paid out-of-network, Dennis went through those numbers. We do get allowed claims and allowed claims at just under the Medicare rate on average. And some of those larger payers are actually doing that at a -- a distribution and some of those are doing that at a higher clip. Our focus with regard to getting near-term changes in medical policies -- positive medical policy for coverage is not focused on the large payers. Our engagement with the large payers is focused more on pilots seeking coverage with evidence development because it's our understanding and expectation that the larger payers are generally will wait for positive coverage by MolDX and the and Medicare in general. However, there's very fertile ground that we're actively pursuing on the regional plans. We mentioned last time that we have -- we're engaged with the Blue Cross and Shield Association, which is a National Association that assists us, and they've been quite remarkable in doing so in our engagements with individual state plans. And those are actually -- we're chipping away at those, and those are -- we're having some success. And as Dennis mentioned, in particular, those that are in states with biomarker legislation, we really believe we can actually make progress and covered under those regional plans in the near term, independent of the MolDX process. And then there, of course, are these direct contracts, which are completely independent of the entire payer process. So one example of that is our -- in the slide that I showed over on the right, there are entities that have a large number of patients under that have -- where they cover their expenses on the -- for covered conditions and one that we'd already given a preview of is the World Trade Center 9/11 Fund. We have active discussions with them, we are optimistic that we'll be able to have a final engagement with that group through one of their centers of excellence, which we're talking to right now. And so that's a pathway to provide patients within -- who were covered by that of which there are about 100,000, access to our test as a covered benefit without -- completely independent of the insurer payer process.

Okay. That's helpful. And maybe just more -- very big picture here. You had a great Investor Day with a couple of gastroenterologists and a thought leader that talked about how the Pap smear changed cervical cancer and obviously, Cologuard, as you see this process continuing to unfold and some of your competitors having a recall, is there a tipping point? Do you think it's a 3- to 5-year process before EsoGuard, EsoCheck becomes a standard and it becomes more well known because that's -- when I was speaking to the guests -- one of the guest enterologists that was at this investor conference. And he was just saying that it's -- it is difficult to get the word out there because not everyone associates esophageal cancer as a major cancer even though we know it's one of the most lethal. How long do you think this process takes before you hit that tipping point? I'm just curious what your view is on that?

I think that's a great question. And let me start with the latter part. So it's not going to be that hard because there is a lot of attention and a lot of increasing attention on esophageal cancer. And you're correct that over the decades, it's been under -- we focused on breast and colon and prostate and some common cancers. But our efforts and our ability to get that message out and for that to resonate without a lot of effort across the physician community, both primary care and specialists is straightforward because we have a straightforward story. We have a well-defined target population. We have a well -- we have a methodology and an understanding of the biology. We know what to do in patients who come back positive. And so the message you heard from the physicians, for example, at the Investor Day is resonating across the country. And that's actually playing itself in local markets across the country in news media, the firefighter events have been very helpful for us. We were in the -- at a great piece at the -- on ABC News in L.A., And we have a variety of those that are happening, and we expect that pipeline to translate into national awareness for this. And it's a process, but it's not a process that I believe will take years because all the pieces are in place. We're not -- we don't have to define the population. We don't have to make all of the elements for us to tell the story, which is a very compelling story. I can tell you, in every interview I've ever done, in a late population, we were an NPR recently. It's been a very straightforward aha-moment conversation where we're -- we're actually -- it's actually…

Your next question is from the line of Mark Massaro from BTIG.

This is actually Vidyun on for Mark. So it's great to hear the date for the presub and you touched on this a little bit, but just remind us what the average time for the technical assessment process is and just when you would expect that final CMS coverage decision?

Well, we can't predict the latter. The turnaround time for a response to the GA is a minimum of 60 to 90 days typically, but that sure can get extended if there are questions along the way. Again, for those who are familiar with the FDA process, it's not dissimilar to that in that once the data submitted -- once the TA submitted, they've had a chance to review that. There may be opportunities to come back with questions or questions about the data and so forth. So it's really impossible to say how long it will take for that process to be completed and result in a final decision. But we think we're going in well-armed with great data. We have literally multiple consultants that we're working with, who are experts on this, who've done advanced tests through the MolDX process and there's quite a bit of optimism amongst the group around that. But in terms of timing, it's a little bit hard to -- I'd say it's --impossible to predict at this point, but we go in with a lot of confidence in the substance and the quality of our data.

Perfect. Understood. And then I just have a follow up on last quarter, I think you had discussed like a $5 million or $6 million revenue bullish in the pipeline. Are you seeing any success in realizing that revenue and just how we should think about maybe any contribution in pacing throughout the year?

Yes. Thanks, Vid, for that. So yes, there is the backlog of pending amounts to be adjudicated and the appeals process is picking up from an intensity standpoint with our revenue cycle manager. It's hard to predict the timing of that. The appeals process is a longer period of time. The statistics that we gave on our prepared remarks, there's 25% or so of them still waiting to be adjudicated. That backlog is still about that same amount. And it's hard to match up that phasing. But we know what the fields look like. We know that -- we're having some success there and it's starting to gain some momentum. So no additional color to offer just yet.

Your next question is from the line of Kyle Mikson from Canaccord.

So just starting with the -- like the EsophaCap Class II FDA recall, wanted to ask a few things about this. Basically, first of all, just kind of rewind back to '21, like around the time of the IPO when you made the acquisition of CapNostics. Like why did you do that? What kind of commercial agreements or manufacturing agreements they're sort of signing now are irrelevant or sort of impacting expenses that aren't really useful. Just kind of update us on that maybe. And then secondarily, if you could just talk about the competitive dynamics here and how maybe certain companies or vendors were using EsophaCap. And now, obviously, that doesn't look great for them and maybe this is advantageous for you.

Thanks, Kyle. So yes, we're happy to rewind back. It's good to get some of the history for those who are not fully -- so we -- in 2021, we had the opportunity. We engaged with the small companies, CapNostics that was making the sponge-on-a-string device. And we acquired it. We had an interest in it as a research tool. There are potentially other applications that we were considering and looking at. And after we acquired it, we had discussions with the 2 institutions that had ongoing research that were being supplied by buy it, and we agreed to supply it for that research. We had really no concern about doing so at the time. And really because we were quite confident at the time that EsoCheck was a superior device for this particular application, we were well aware of the limitations of the sponge-on-a-string. But we have some interest in potentially using it as a research tool and had no problem providing it to these studies because we were quite sure where the results would land based on prior experiences with Cytosponge. That continued until early last year. We were not unable to come up with a business agreement with the 2 institutions around how to continue supplying it. So we stopped supplying the sponges approximately a year ago, in the early part of 2023. And it was only after the publication of the most recent publication that the data, which I highlighted that we became aware of the 2 detachments. And we were aware that Cytosponge, the other sponge-on-a-string which -- again, both of these technologies have been around for years, EsophaCap is essentially identical to technology that was developed in the early 1990s by the same company that we acquired it from. We are aware that Cytosponge…

Kyle, it's important to understand even if a reengineering effort could figure out how the safety issues could be overcome, this study pointed clearly to the contamination because of the lack of the ability to protect the sample. So they have to figure out how to put the sponge back in the wrapper, which is physically impossible to overcome that limitation, that design limitation. So we think unless there is a way to engineer around our patents on EsoCheck, it's going to be really difficult for someone with a nice biomarker to be able to sample in a way that's going to allow the biomarker to perform similar to what our combination of EsoCheck and EsoGuard.

Just to be clear, there's no evidence of that. And we have strong [indiscernible] and pending IP on that. And so we don't really -- yes, there's -- we have no concerns, there's nothing out there that would suggest that there's another technology out there that's not -- again, that was not invented in the 1990s that can do the kind of targeted sampling you need for those very, very specific purpose of collecting cells in a very small portion of the lower esophagus.

Okay. That was a great -- that was really a comprehensive answer. And I'm sure one day if someone's going to make the argument that a blood-based test could be useful here, but we can wait for another day to do that discussion...

I need to touch on that real quick. So yes, well, we won't debate the sort of what -- how the blood-based tests are doing as a whole. Again, I'll leave that for you. You write very informative reports on that on a regular basis. But let's talk about blood-based test for esophageal cancer, right? So to whatever extent there may be ongoing progress or actually good data now or ongoing progress with regard to detecting cancer in the blood, there's been little or no progress in detecting pre-cancers. And as we've stated before, you cannot have an impact on esophageal cancer deaths unless you are picking it up at the pre-cancer stage because unlike colon and other cancers, a stage 1 diagnosis of esophageal cancer, where it still carries about a 50% mortality. And the biology of trying to detect, I'm mean, I showed those slides of sort of how Guardant does. Guardant does okay with cancers. But as you were -- you've highlighted in your reports, the results in -- even in late-stage pre-cancers for -- and even the [indiscernible] data would suggest that, that it's even lower. So the biology of picking up the abnormality that required to pick up early-stage pre-cancer, which you have to do in order to prevent esophageal cancer, there's not any inkling yet to date that you can do that with a blood test. So for our little corner of the world here in esophageal cancer, I feel very confident that liquid biopsy tests are not a threat in any way in -- any time in the foreseeable future. Thanks for letting me highlight that.

Helpful. A final one for me, both of you guys, but maybe Dennis specifically, just thinking about the model. The $1 million in revenue this quarter, flat compared to the last quarter, I guess the volume kind of increased sequentially, pretty nicely, actually. How should we think about the seasonality in this business in other screening businesses there is seasonal kind of early in the year kind of gets better throughout the year. There's flu season, et cetera. So is there anything to consider as we kind of go ahead here in terms of sequential increases in revenue growth?

Yes. I think the only seasonality to consider is the times -- first off, our test is very conveniently administered. And so the times of the year where it's not convenient for patients to get tested, the holiday season in December. Physicians are just not going to schedule this. The large Check-Your-Food-Tube events are probably not going to happen Christmas week. They're probably going to be in around that. It's probably the only time that we see it. People think about seasonality during the summer and the last 2 weeks of August, maybe. But September tends to overcome that -- whatever time period is. So I don't think seasonality, particularly while we're in this kind of mid-throttle range is something for us to consider. It really is -- the volume is directly related to the realization on submitting claims and our reaction to that momentum that we're expecting to pick up in the coming quarters.

[Operator Instructions] Our next question is from the line of Ed Woo from Ascendiant Capital.

Congratulations on the progress in the quarter. I know you're a lot -- all focused on the U.S. business. But have you thought about international opportunities?

So we have -- over time, I think we've talked about it on occasion inquired with -- have had inquiries actually from commercial entities outside looking to potentially partner with us. The current business model around reimbursement in the U.K. and in Europe for screening test is not attractive. And so we haven't made any particular effort. But there are other groups in South America and in Asia that have contacted us that would have to be sort of essentially a license-type agreement, where we have no plans, and we don't think it's consistent with our current strategic approach to put resources in other countries. But there are market opportunities there. We do the case when you get inquiries, and we have one actively that we're discussing with right now. But I don't expect that to be a significant contributor in the near term.

Just a quick question. The esophageal cancer is obviously very deadly. I assume it's similar globally as it is in the U.S. in terms of people getting it and death rates?

Great question. There are 2 types of esophageal cancer. The one we see here in the U.S. and in the West is esophageal adenocarcinoma. There's esophageal squamous cell carcinoma, which used to actually even this country be the dominant factor, more smoke -- more associated with smoking and tobacco and other things as opposed to adenocarcinoma, which is what's related to GERD or heartburn. In Asia, the numbers for squamous cell carcinoma remain higher, although as is true with many things, there's sort of homogenization across the world, because of Western diets and the lifestyle and the diseases that come with that obesity et cetera, that there is a large -- there is plenty of opportunity for esophageal adenocarcinoma worldwide. So that there is -- and hopefully, that gives you a sense of that.

There are no further questions at this time. I would like to hand the call back to Dr. Lishan Aklog for some closing remarks. Please go ahead.

Great. So thanks, everybody, for taking the time. As always, thanks for all the great questions and I really believe we had a great discussion. Hopefully, you can get the sense that we're really excited. We have a lot of -- a bunch of near-term activity and milestones, starting with the DDW meeting this week and followed with a bunch of activity, our engagements with brokers, the MolDX meeting coming up, and more data, which we didn't really talk about, that's forthcoming beyond the data package that we're already putting together. So we look forward to keeping you abreast of our progress via news releases and periodic calls such as this one. And as always, the best way to keep up with our news, updates and events is to sign up for e-mail alerts on the Lucid Investor Relations website, follow us on social media, including Twitter, LinkedIn and on our website, and always feel free to contact Matt with any direct questions. So thank you, everybody, and have a great day.

Ladies and gentlemen, this concludes today's conference call. Thank you very much for your participation. You may now disconnect.