Ladies and gentlemen, greetings and welcome to the PAVmed Inc. Third Quarter 2022 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief 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 Adrian Miller, Vice President of Investor Relations. Please go ahead.

Thank you, operator. Good afternoon, everyone. This is Adrian Miller, Vice President of Investor Relations at PAVmed. 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 PAVmed, along with Dennis McGrath, President and Chief Financial Officer of PAVmed. The press release announcing our business updates and financial results is available on PAVmed's Web site. Please take a moment to read the disclaimer about forward-looking statements in the press release. The business update press release and this conference call, both 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 SEC. For a list and description of these and other important risks and uncertainties that may affect future operations, see Part 1, Item 1A entitled Risk Factors in PAVmed's most recent annual report on Form 10-Q filed with the SEC and subsequent updates filed in quarterly reports on Form 10-Q and in subsequent Form 8-K filing. Except as required by law, PAVmed 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 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, I'd like to turn the call over to Lishan Aklog. Dr. Aklog?

Thanks, Adrian and thank you all. Good afternoon for joining us on this PAVmed's quarterly update call. I would like to first start by thanking our long-term shareholders for their ongoing commitment and support. You'll note that this quarter, we're using a new format with a webcast in response to feedback, including one of our long-term investors in Boston. We're really happy that we've done this. So far, the feedback from the recent webcast yesterday has been uniformly positive. I'll remind you, speaking of Lucid that will present a tear down update on Lucid today, and encourage those of you who want to seek more details to review the webcast as yesterday's dedicated listed Update Call and that will be available for a week on the Investor Relations page on Lucid's Web site. So during this past quarter and the recent weeks, our team has continued its relentless focus on executing on our long-term strategy and our vision to build a high growth diversified medical technology company. Lucid, Veris and technology teams are all delivering results which are steadily advancing us towards that goal, and are doing so I'm proud to say it's on schedule and under budget, as we continue to keep a close eye on cash preservation to protect our long-term position. So let me start with a few quarterly updates, starting with Lucid. As we reported yesterday, EsoGuard testing volume increased 20% sequentially quarter-to-quarter, and 436% annually to 1,088 tests in the third quarter. We now have 13 Lucid Test Centers operating in 11 states and we plan to open three more during the fourth quarter. The laboratory is operating independently and we demonstrated enhanced quality and efficiency metrics on yesterday's call. And as we noted, we started to receive payments recognizing revenue on each of our…

Thanks, Lishan, and good evening, everyone. You see in front of you the balance sheet, so our summary financial results for the third quarter reported press release that was published earlier today. On the next three slides, I want to emphasize a few key highlights from the quarter, but I encourage you to consider those remarks in the context of a full disclosures covered on our quarterly report on Form 10-Q that was filed with the SEC yesterday afternoon, and is available on our Web site. So as you can see here, cash, the sequential decrease was $8.4 million. Vendor payables had a $3 million sequential decrease when considering accounts payable and other recurring accrued expenses. Convertible note, a net increase of $6 million driven by $10.2 million net proceeds from the issuance of an additional convertible note. It was offset by $5 million of principal converted to equity related to the April 2022 note. As mentioned yesterday, the committed equity facility from Lucid stock issuance proceeds for the quarter were $1.8 million, most of which we had already reported to you as part of our update in August. Shares outstanding for PAVmed including our invested restricted stock awards as of today is 93.2 million shares. And as also mentioned yesterday, Lucid is now S3 eligible and is previewed with everyone previously and similar to what we have previously done at PAVmed, the Lucid Board considers it good governance to have a shelf [ph] registration with an embedded ATM on file with the SEC and Lucid will plan to do so in due course. Slide 18 here compares this year's third quarter to last year's third quarter on certain key items. Trust you'll review the information and my comments in light of the cautionary disclosure at the bottom of the…

Thank you. [Operator Instructions] Our first question comes from the line of Frank Takkinen from Lake Street. Please go ahead.

Good evening. Hi, guys. This is Charlie Montang on for Frank. Just a couple of quick questions for me. First on the Lucid front. I heard your comments about the plateauing centers, I assume that does not mean indefinitely. Can you maybe just talk, what you're looking to see before reaccelerating openings, and maybe any feel for timing around that.

Sure. Let me just start by emphasizing one thing is to keep hammering this point. That the Lucid Test Centers support the growth, they're not drivers of growth, right. They're not -- they don't generate actual activity. They're available for tests that are ordered by physicians through our sales and marketing process to actually perform tests. And also, just want to emphasize one thing real quick, Charlie, before answering a while, which is that we have now expanded our use of the satellite Lucid Test Centers where our nurse practitioners can be more mobile and work within those [indiscernible]. So the plateauing of the Lucid Test Centers and the [indiscernible] its part of the same strategy of plateauing our sales force altogether. And this is something we described in a bit more detail, believe it on the last quarterly call that as part of our efforts to be cautious with regard to cash preservation, we set a target for both of those that we thought would give us -- would have given us critical mass with regard to the sales team, and then with sufficient support with Lucid Test Centers to support the sales team, where we could continue at a fixed level to drive growth through increased effectiveness of the sales force as they get more time in the field, and so forth. All of that is really driven by this mid -- mid throttle strategy, right. We want to have enough activity, so we can demonstrate ongoing sales growth to get the word out to continue our momentum with physicians and physician adoption. Well, we need to continue that growth as well to generate claims history, which is a critical step, one of its critical steps in engaging private payers, for in network contracts, but to do so…

Great, okay. Thank you. Thanks for clearing that up for us. My other question, just looking at the balance sheet that looks good. Last quarter, you call about modulating spend across your asset portfolio outside of Lucid with a focus on the most near-term and largest opportunities. Have your capital allocations changed at all since then? Or should we continue to think the order of [indiscernible] CarpX.

It's exactly what we were described and we stuck to that plan. And you can see the -- we are seeing some savings already on the R&D side. So it's it is entirely at this point from the non-Lucid. Now let's just split it into two for now. We have obviously have the commercial products with Lucid. Very soon we'll have the commercial software product with various -- the various solar software platform. So that that'll be out in the commercial realm. When it comes to the investment of resources. capital allocation, as you say, into the product portfolio. The focus is heavily and remains the same on those three products. So the three products being the ultrasound version of CarpX, the first version of an implantable Veris device, that Veris Mercury product and the EsoCure esophageal ablation product. So those that is where we are focusing our resources and capital allocation. But we're not shutting, we continue to make some effort on the two research projects which I described. But those are relatively modest investments. It's pure R&D work at this time. And then as we talked about last time, we have rationalized and put on the backs -- on the backburner a number of lower priority, lower yield, we believe, higher risk projects that we've been working on and those remain on the [indiscernible].

Okay, great. Thank you very much. And if I can just one last quick question. You spoke to commercial agreement with [indiscernible] increase in May. Can you give us an update around that contract and call out whether or not you’ve received reimbursement under that contract? And if so, kind of at what level?

Just to remind you that even though we had -- that was the first example. But since then we've reported on multiple, I believe we have seven, correct me if I'm wrong, seven or eight, similar secondary PPO contracts. We have not broken on that data and we're not reporting on those individual on sort of individual plans at this point, that would be sort of too granular at this level with the sample size. I think, well just suffice it to say that, you saw we have 39 payments in this quarter, those are a mix of a variety of private payers. And the -- Dennis gave you the data on the average payment, which was 19, just a bit over $1,900. And also that the other network payments that are coming in are $1,200 to $1,400. So as we get higher more volume, and we have a sample size, that's large enough, we will certainly be in a position to kind of break down where that -- where those payments are coming to, whether they're from secondary BPOs, from other network with traditional payers, eventually with Medicare and so forth. But I think it's a bit premature to break. Dennis, would you like to add anything to that?

No, I agree. It's too early to kind of give any kind of directional information that's reliable to be able to create some kind of forecast based upon the information we've gotten so far. It's just too early in the submission process and the collection process.

I mean, the bottom line, Charlie, is that the 39 payments test that we submitted in August and got paid before September were private pay. So and it was a mix of different payers and we will look forward to increasing that, and perhaps at some point breaking that down.

Okay, great. Thank you very much and thanks for answering my questions. I'll hop back in the queue.

Thanks Charlie.

Thank you.

Thank you. Our next question comes from the line of Ed Woo from Ascending Capital Markets LLC. Please go ahead.

Hello. Yes, thanks for taking my question and congratulations on the progress. I know you are very focused with your capital allocation right now. But what are you seeing out there in terms of the M&A space and opportunities for adding new products into your portfolio? Have you seen valuations come down significantly to the point where you're seeing interesting opportunities out there or valuation still all over the place?

The answer is yes. And I probably appreciate you asking that call because I -- there's not a lot that I can talk about sort of directly, but there's a lot of -- there are a lot of opportunities out there. And as it's historically been the case, we get to see a lot of opportunities within the space and we get to evaluate them. And you're right, I mean, the markets are there are companies that are tight for cash, and for a variety of other reasons are looking to partner or to be acquired and so forth. So there's a lot of activity there. Nothing to report yet. But we will obviously let you guys know when we -- if and when we cross the threshold with any of the opportunities that we're looking at.

But let me just reiterate one other point I made last time, which is that our cash preservation stances is important. It's important that we maintain our runway and protect our long-term interests. But I've also said repeatedly that we're not going to sort of violate our core DNA of this company, which was to pounce on attractive opportunities, as we say, just like we did with Lucid and with Veris. The profile of what that would look like is going to be -- it's obviously a bit different now than it would have been 2, 3 years ago. And we are looking at opportunities with a very close eye on the opportunity for them to either be synergistic with our current portfolio in some way and to not be a capital drain and to be accretive in some capacity in the near future. So those are the criteria we look at. We have opportunities when we have looked at, we continue to look at the world. We'll let you know when we [indiscernible].

Great. Well, thank you and good luck.

Thanks, Ed.

Thank you. Our next question comes from the line of Anthony Vendetti from Maxim Group LLC. Please go ahead.

Anthony, good evening.

Good evening, Dennis. Hi, Lishan. How are you?

Great.

Wanted to just dig a little deeper into the commercial launch for Veris by the end of the year. Can you talk a little bit about that particular business model? And what the pipeline of potential customers looks like at this point?

Yes, well, let me start with the latter. So the pipeline of potential customers are really the full spectrum of oncology practices, [indiscernible] we have -- Q3, we were really fortunate that we have a good relationship with the Lloyds [ph] and we did an extensive market dynamic marketing and market analysis with them. So we have a really good understanding of where patients get their care for their cancer, and it can vary anywhere from relatively small, private practices to larger practices, even mega practices, as well as cancer programs that are affiliated with moderate sized community hospitals all the way up to the big academic medical center. So really all of them are our targets for us. As I mentioned, there is an obvious opportunity with rural practices, in terms of the advantage, their patients tend to be more dispersed. And the advantages of remote patient monitoring are particularly are potentially greatest with that group. The business model is just sort of dive into a little bit deeper. And as we engage with the practice, we -- when we engage with them, we have demos now that show how the software platform can feed -- can be fed with patients symptom reporting, as well as data from these Bluetooth connected devices and provide them with data to not just enhance their care, but also to provide them with the opportunity to record activity that can be subjected to -- that can be reimbursed as remote patient monitoring or RPM. RPM is sort of a hot topic right now. And setting up a system that allows physicians to bill for under RPM codes, again, these are established codes are not transient codes, like some of the telemedicine codes that came from COVID, requires really good software platform and our…

Okay.

So that’s a little bit of attention to what I said, but perhaps there was more, more detail that you wanted to dive into that.

Yes, no, that's great. That's great to know. Just a quick follow-up for just a quick question on CarpX. So the -- there's debate about how much coverage CMS which expanded coverage of telemedicine during COVID will currently allow to continue. In terms of remote patient monitoring, are there particular CPT codes right now that this fall under and …?

Yes, yes, it's actually on Slide 15. There are codes for the one-time onboarding for the per monthly fee. So, I list them all on Slide 15. And those are not again, just to emphasize for the third time, those are not temporary codes that have been in place. Although the telemedicine codes were brought in under COVID and are subject to ongoing sort of statutory updates, but these RPM codes are not. So they are there and our codes are well established, the payment rates are well established. The criteria under which you can build are well established with regard to the 16th day of the month. So all of that infrastructure and reimbursement is kind of established.

Okay, great. That's helpful. And then before switching to CarpX, 37 sales professionals go into 58, that -- is that 100% for Lucid?

Yes, that's for Lucid, yes. We're not -- we haven't reported on the commercial team for Veris yet. Veris is just -- obviously just we're just gearing up with that. We have a leadership in place, we're starting to create individual sales reps, so right now the sales leadership, they're the ones who are actually out and looking at high-end scattering for early adopters to the various technologies and we'll report on the various sales team over time. And on CarpX we have -- we do have three individuals, the same individuals that we've had throughout this limited procedural and product improvement focused on launch and then they remain the same.

Okay. Any feedback from KOLs on CarpX at this point?

So the CarpX activity right now remain that procedural and product development and product improvement work. So we have our core group of KOLs. We would look to expand on here and there, but we -- as I mentioned before, we're not investing in a -- in expanding the team or expanding that -- the activity beyond the limited number of KOLs we have. We're using this exclusively as a procedure in the product development exercise. And we're going to wait CarpX ultrasound before gearing up for a full commercial launch.

Okay, great. I will hop in the queue. Thank you very much. Appreciate it.

Just one follow-up. I know you're [indiscernible]. Can I just add one real quick -- one quick follow-up to Anthony's last question, which is that, as you might imagine, the surgeons in our KOL list, who we do training with, but you could ever work with and they do a limited number of cases, we've obviously also shown them the CarpX ultrasound device and the prototypes for that and where we're heading with that. And the feedback on that on the ability these are folks who've done the procedure with the Gen 1 device and the feedback of the opportunity to have intraluminal ultrasound. So ultrasound imaging as you're working within the carpal tunnel has been quite positive. And then when we were utilizing those folks with CarpX experience to help us with that development process. Thank you, operator. Sorry about the interruption.

Thank you. Ladies and gentlemen, we have reached the end of the question-and-answer session. I would now like to turn the conference to Dr. Lishan Aklog, Chairman and CEO for closing comments.

So I'd like to, again, thank you all for joining us today. And really great questions from all the folks who came on and really good discussion. Look forward to always to being fully transparent with our communications and keeping you abreast of our progress and keep an eye out for our press releases and obviously these quarterly calls. We appreciate any feedback. As I mentioned, the webcast version of this was a result of direct feedback from individual investors who asked us can give us advice on how to improve our communications. And we're always open to that and look forward to more feedback positive or negative. Please keep up to date, sign up for our email alerts and keep up to date with our social media feeds. And as always, Adrian is available for direct contact at akm@pavmed.com. So again, thanks everyone and have a great day.

Thank you. The conference of PAVmed Inc has now concluded. Thank you for your participation. You may now disconnect your lines.