Greetings and welcome to the PAVmed Incorporated Business Update Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Mike Havrilla, Director of Investor Relations for PAVmed. Thank you, Mr. Havrilla. You may begin.

Thanks operator. Good afternoon, everyone. This is Mike Havrilla, PAVmed's Director of Investor Relations. Thanks for participating in today's business update call. Joining me today on the call are Dr. Lishan Aklog, Chairman and Chief Executive Officer; and Dennis McGrath, President and Chief Financial Officer. Before we begin, I'd like to caution that comments made during this conference call by management will contain forward-looking statements, regarding the operations and future results of PAVmed. I encourage you to review the company's filings with the Securities and Exchange Commission, which identify specific factors that may cause actual results or events to differ materially from those described in the forward-looking statements. Factors that may affect the company's results, include, but are not limited to the uncertainties inherent in research and development, including the costs and time required to advance products to regulatory submission; whether and when products are cleared by regulatory authorities; market acceptance of products once cleared and commercialized; the company's ability to raise additional capital; and the competitive environment. PAVmed has not yet received clearance from the FDA or other regulatory bodies to market many of its products. PAVmed has been monitoring the COVID-19 pandemic and its impact on our business. PAVmed expect the significance of the COVID-10 pandemic, including the extent of its effect on financial and operational results to be dictated by among things, success of effort to contain it and the impact of actions taken in response. New risks and uncertainties may arise from time-to-time are difficult to predict. All these factors are difficult or impossible to predict accurately. Many of them are beyond the company's control. For a further list and description of these and other important risks and uncertainties that may affect future operations see Part I, Item IA, entitled Risk Factors in PAVmed's most recent annual report on Form 10-K filed with the Securities and Exchange Commission and any subsequent updates filed in quarterly reports on Form 10-Q. Except as required by law, PAVmed disclaims any intention or obligation to publicly update or revise any forward-looking statement to reflect changes in expectations or in events conditions or circumstances on which those expectations may be based or that may affect the likelihood that actual results will differ from those contained in the forward-looking statements. With that said, I would like turn the call over to Lishan Aklog. Dr. Aklog?

Thank you, Mike. Good afternoon, everyone, and thank you for joining us on this quarterly call to update you on our business and discuss our recent financial results. Although I always look forward to coming before you each quarter to provide a detailed overview of our business activities, this time is somewhat special because as I noted in today's press release, the second quarter and subsequent weeks have really been unprecedented for this company in terms of major accomplishment. Any emerging commercial space company’s CEO would be proud to highlight any one of a preliminary CMS payment determination or an FDA clearance and a commercial launch, or a consummation of corporate partnership agreements and a quarterly update. I am in the enviable position of being able to highlight all three along with solid steady progress and multiple other friends as we advance, PAVmed and its majority owned subsidiary listed diagnostics as commercial stage company. I'm also blessed to work with an expanding team of the most talented professionals, along with the best and most accomplished consultants, advisors, and corporate partners in the industry. Armed with a strengthen in the balance sheet from two recent finances, to financings, the extended PAVmed and Lucid family is poised to deliver on important upcoming milestones in the coming month. I'll begin with a shorter summary of COVID-19 pandemic related challenges then the last two calls as to be frank, we have fully and successfully incorporated COVID-19 mitigation strategies in all aspects of our business. Although the pandemic continues to exact a heavy human toll in the United States, with concerns for a second wave in the fall synergizing with flu season, the healthcare system and the life sciences industry, which serves it, which we're a part, are beginning to come out of a several…

Thanks, Lishan, and good afternoon, everyone. I'll be brief as our financial results for the quarter ended June 30 were reported in our press releases published earlier this afternoon. And our quarterly report on Form 10-Q is available at sec.gov, as well as on our website. So, with regard to the financial results for the quarter, research and development expenses for the second quarter were 2.1 million, up from about 1.4 million for the same period in 2019, but about $500,000 lower sequentially. The year-over-year increase largely reflect the incremental clinical trial costs for Lucid Diagnostics and product development costs for Solys Diagnostics, as well as some increased personnel costs. As you might expect, the sequential decrease is primarily related to the delayed clinical trial costs due to the pandemic closure of GI Clinics for most of last several months. General and administrative expenses were 2.9 million for the second quarter, compared with 1.9 million for the same period 2018 and we're higher by about $250,000 sequentially. The year-over-year increase reflects approximately $500,000 increase in sales, staffing levels, and other sales related costs. Together with an increase of approximately 400,000 in consulting services related patents regulatory compliance, financing costs, and public company expenses. There’s also an increase of approximately 100,000 in general business expenses. The sequential increase reflects compensation related costs, primarily – approximately 130,000 in non-cash stock based compensation costs. PAVmed reported a net loss attributable to common stockholders of 5.6 million or a loss of $0.12 per common share. Our press release provides substantially more detail related to the non-cash charges occurring in the current and prior periods. Also, the press release provides a table entitled non-GAAP measures, which highlights these amounts along with interest expense and other non-cash charges, mainly depreciation, stock-based compensation, and financing related costs to enable better understanding of our company's financial performance. You'll notice from the table that after adjusting the gap loss by approximately 1.4 million for these type of non-cash or financing related charges, the company reported a non-GAAP adjusted loss for the three months ended June 30, a 4.2 million or $0.09 per common share. PAVmed had cash of 7.1 million as of June 30, but as you know, subsequent to the quarter end, just about two weeks ago, the company received an additional net proceeds of approximately 7 million from the sale of convertible notes at a conversion price of $5 per share. On a pro forma basis, had the financing closed at the end of June, cash would have been over [$14 billion]. So with that operator, we can now open it up the call to any questions.

Thank you. [Operator Instructions] Our first question comes from Anthony Vendetti with Maxim Group. Please proceed with your question.

Good afternoon, Anthony.

Good afternoon, Dennis. Good afternoon, Lishan.

Hi Anthony.

Just a little more color on COVID-19 and any delays you're seeing whether it's on commercialization side with CarpX and EsoGuard/EsoCheck or on the regulatory timeline? You know, are you seeing any delays with the FDA? And then I'll have a follow up on scheduling trends for non-emergency procedures.

Sure. So, let's start with the latter. We've had no issues with regulatory issues. We've – as you know, CarpX was [indiscernible] approximate 45 days for submission. We've been able to get our pre-submission meeting scheduled and I know others have suggested that that we haven’t experienced any delays on the regulatory front. You know, on the commercial front, I kind of expand on what I was mentioning, which is that, you know, we always, even though you know, COVID is still with us and there's still concerns about it spiking in the fall, you know, we always knew that you could, that you could only delay non-emergent procedures for so long. I mean, non-emergent procedures still need to be done. People still need to be screened for cancer. They still need to go under – undergo other procedures, which may not be deemed as an absolute emergency. And so what we have found, after pretty much a three-month hibernation, if you go sort of March, April, three to four months, March, April, May, and then much of June is that the system is waking up and that despite the fact that they're still okay, but there is still plenty of COVID. You know, even in geographies where, you know, that are that are subject to new hotspots down the south and southwest that clinical entities, hospitals, practices and otherwise are figuring out how to get back on track with necessary elective procedures. Again, I don't like the word elective, because it means – it almost implies that you can do without them and that's just not the case. And so, we have found both on the clinical trial enrollment, as well as with our engagement of clinicians on the commercial side that things are actually – are just starting to pick up in the last four to six weeks, and you know, how long they will take to get back to full steam that's obviously hard to predict, but you know, we're in the early stages with both of these and so, you know, as I mentioned from the statistics, I outlined, I mean, we're actively involved in hundreds of discussions with hundreds of accounts where, you know, we have dozens and we expect that to grow accounts with product on the shelf. And we really expect commercial procedures to start picking up any day now. Now, that things are opening up and as I noted are, as a preview of that, our clinical trial enrollment is picked up [indiscernible]. So, you know, there's still uncertainty with COVID, but, but you can't withhold these procedures forever and we expect that we will start seeing up ramp in both commercial cases and clinical trial alone.

Okay, great. And then just in terms of the initial payment determination, I know we [still need, you know] before the end of the year will have a decision on what it is, and you know, somewhere between probably 2000 and 2600 as you're saying is probably where it's going to be, and that goes into effect 1/1/2021, are you – do you think that range that's out there is favorable and can you expand upon why GI’s would or why that procedure would be done by a gastroenterologist instead of doing an endoscopy? And then if they would then – if they did this procedure, which doesn't require anesthesia would they then follow up with an endoscopy depending on what they find?

Okay, so there's a lot there. Let me break it down. Let me first take this as an opportunity to expand a little bit on the process on reimbursement because it can be a little bit complicated and difficult to follow. So, we received preliminary payment determination by CMS, capital preliminary payments termination, we have every reason to believe that that will be the final number. Typically, the transition between preliminary and final is really meant as an opportunity for those who appeal. So, we fully expect that those will be the final numbers – the final determination, and we expect to hear about that in the fall. The fact that we're not appealing should indicate that we do find them to be quite favorable. And as I hinted in my previous comments, if you do the math, we really believe that we can, you know, with a blended payment of $2,000, that we have a really good opportunity to capture this market opportunity with a nice contribution margin. So, that will become active on January 1 for CMS patients. The process was – once you have CMS and it really allows you to begin the process with private payors and that will continue over the coming months as well. It's important to emphasize that payment is not necessarily covered and our coverage determination we expect to hear before the end of the year, as well and we believe we submitted a compelling case on coverage given the existing professional society guidelines that are published in that what we are basing our coverage request on. So that's really where we stand on reimbursement and coverage, and we look forward to submitting bill after the first of the year using this [indiscernible]. The next question you asked is an important –…

Correct. I’ll do an ablation or follow-up endoscopy. They're only doing ablations when there's dysplasia, so I do, as a result, if they'd find dysplasia, they'll do an ablation. If there's no dysplasia, they'll follow them with an endoscopy every three years. And then if they do develop dysplasia, they'll get an inflation, which, as he said, he secure looking to position itself to that aspect of the spectrum of disease.

And just – I know you talked about it on the prepared remarks. But EsoCure, what's your best guess as to the timeline for that in terms of going through FDA and eventual approval, maybe best case…?

Yes. I think, we're really bullish on EsoCure. The animal study was just blew it out of the water. It just – there are GI consultants who work with us. We're really blown away by how cleanly the ablation happened. So, we still have development work in terms of titrating and finding the dose. We know we can ablate deeply. We just have to get the timing right. So, we can ablate just the superficial layer, and those ablation times are going to be significantly shorter than the existing technologies by Medtronic and others. So, our goal is to have that work – the development work and then the subsequent device qualification work in preparation for a FDA submission. And I think best-case scenario would be Q1 of next year, but I would certainly think on our current trajectory, we would be submitted within the first-half of next year. Our current regulatory assessment is that, this is a 510(k), so we would hope to have something on the market by the end of next year.

Okay. And then just an update Lishan on the commercial progress with CarpX, like you said, there's only so long you can put up non-emergency procedures. Do you see that pipeline starting to build as we move into the end of the year? Or is it just going to be not too many cases until really a point one?

I think the important thing to emphasize, Anthony, was CarpX. And maybe it's worth contrasting is the EsoGuard and EsoCheck. EsoCheck is a fairly straightforward procedure, performed by a nurse that can be – it can be someone can be trained quite quickly. The CarpX, it’s a surgical – it's a procedure that's done by a surgeon. And it's extremely important with devices that are launched as part of a procedure to be very careful that people are well trained and that you don't get ahead of yourself in terms of bringing on more surgeons than you can train properly and end up having adverse outcomes. So, a major emphasis on the early launch of CarpX is to build this network of initial adopters, early adopters, and key opinion leaders. And to do so in a study in our way. So, I don't mean to imply that is that we are definitely going to start now that we solve this – the supply chain problem. We're ready to go and ready to start doing a bunch of cases. And we will do, but we'll – we're going to do that in a controlled fashion so that we can make sure that the case is going well. And that the we have sufficient processors and trainers to continue to train an expanding group of surgeons to do the procedure. So that doesn't give you any sort of quantification. But I just think it's qualitatively important to make the distinction from EsoGuard, where we're looking – anybody wants to do it, we're giving them the opportunity to do it on day one.

Sure. Okay. Understood. And then lastly, obviously, you have a pretty full product portfolio and there's a lot going on. Should we expect R&D to start to pick back up to go here in the third and fourth quarter to be closer to 1Q levels?

Yes, I’ll let Dennis comment on that. I think the answer will be no, as it relates to actual product development work. Certainly, as a clinical research activities, we’ll end up being a significant part of that overall R&D budget as enrollment in the EsoGuard trials, starts to pick up. Dennis, do you have anything else to add?

No, that's true. The balance will shift to the clinical trial work for EsoGuard IBD. Yes. And so the decrease, as I mentioned, in the second quarter was largely the clinics were closed and those costs were in pause mode. And I'll pick back up in the second-half of the year.

Okay.

Our bench-top in animal research and R&D work is, we're really pretty efficient with that and we're quite cost-effective at getting those projects through [indiscernible].

Okay, perfect. Thanks. I’ll hop back in the queue. I appreciate it.

Yes. Thanks, Anthony. Great questions.

Thank you. [Operator Instructions] Our next question comes from [Robert Wellman] a Private Investor. Please proceed with your question.

Good afternoon, Robert.

Hi, Robert.

Hi, Dr. Aklog thanks for taking my question. It's with respect to NextFlo M&A as we approach the timeframe that you expect to submit to the FDA for clearance, is it a good assumption that the interested parties that would participate in an M&A with us may want to see their investment de-risk by actually getting cleared before consummating an M&A deal or is that not necessarily the case?

Yeah, thanks Robert it’s a great question and I appreciate the opportunity to maybe elaborate a little bit more on the NextFlo [indiscernible] as there are some nuances there that I think are relevant. So, the answer to your question is, no. So, our conversations really are on the M&A and licensing side incorporate expectations with regard to milestones for FDA submission incurred. So, let me perhaps it will be helpful to articulate a little bit more clearly than I did in my prepared remarks on the distinction between what we are pursuing from a licensing M&A, licensing opportunity and what we're pursuing directly with an FDA submission on our behalf. So, they're really – it’s important although there are multiple applications to NextFlow let’s focus on a few of them. The first was the original conceived application, which was for intravenous infusions in in-patient setting in hospital, and the fusion set that allows the nurses to administer medication without the need for electronic infusion pump, that application we think has huge market potential and we are prepared to maximize the value of that by proceeding with an FDA submission this week getting – sorry this year, getting FDA clearance and having the opportunity to market it and even demonstrate market adopting of that by ourselves. Look, if the opportunity comes to – enter into a worthy deal for that particular application part of that, we're open to it. That's our strategy with the entire next month portfolio. Our conversations that we're having currently, with these potential strategic partners are focused on disposable infusion pumps, disposal infusion pumps are pumps that patients go home with typically after surgery that administer usually pain medication or local anesthetic and surgical ones. And those devices are highly inaccurate and they have a more…

Okay. And is the regulatory timeframe for those two applications the same or defer – is it different?

So what we've chosen to do is to proceed on our own terms for the infusion application because we're pursuing that independent unless we get an offer unless someone makes us an offer we can’t refuse on that. We are advancing the development of the technology, but we have not initiated the steps required for regulatory submission for the disposal of the infusion pump application pending what transpired with these M&A discussions, but really the simple answer to your question is, they really are and generally in the same timeframe.

Great, thanks.

Thank you, Robert.

Thank you. There are no further questions at this time. I like to turn the floor back over to management for any closing remarks you may have.

Well, thank you, everybody for your attention. As always, we appreciate the great questions, and we look forward to keeping you abreast of our progress via news releases and [periodicals] such as this one. As always, I just like to remind you that the best way to keep up with PAVmed news updates and events is to sign up for our email alerts on our Investor Relations website, and you can follow us on Twitter, LinkedIn, and YouTube, as well as our main PAVmed website, as well as our Lucid website as well. Feel free to contact Mike directly with any questions at JMH@PAVmed.com. Have a great day. Thank you very much.

Ladies and gentlemen, this concludes today's web conference. You may now disconnect your lines at this time. Thank you for your participation and have a great day.