Greetings and welcome to the PAVmed Inc. 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. I would now like to turn the conference over to Mike Havrilla, Director of Investor Relations for PAVmed. Thank you. Please begin.

Good afternoon everyone. This is Mike Havrilla, PAVmed's Director of Investor Relations. Thank you all for participating in today's business update conference call. Joining me today on the call are Dr. Lishan Aklog, Chairman and CEO, Dennis McGrath, President and Chief Financial Officer. Before we begin, I would like to caution that comments made during the 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 cost 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. 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 SEC, 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 for any 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. As you know, we have just submitted our press release which should be distributed shortly by our partner and this will be forthcoming. 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. Those of you who have been keeping up with our press releases know that we have been extraordinary active in the months since our last update many exciting accomplishments and even more milestones to look forward during the upcoming months. Let me start first with a few words about the enormous challenges we are all facing as a result of the COVID-19 pandemic which, in just a few months, has exacted a tremendous human and economic toll on our industry, on our nation and on our world. I hope and pray that all of you are weathering this level and storm as best you can and are keeping yourself and your loved ones safe. I am deeply moved that many of you have taken the time to reach out to us to express your support and continued confidence in us as well as to express your concerns for our safety and health. Thankfully, all members of the PAVmed family, including our employees and critical partners are healthy, safe and able to continue their important work. We are very fortunate that our corporate structure and culture are well suited to address these challenges with minimal short-term and no anticipated long-term disruptions to our future plans. For example, our employees and partners are already dispersed over many states across the nation and are already proficient at productively utilizing modern remote collaboration tools which they have been doing since our inception. In addition, our team has always embraced a special forces type culture with all members able to operate autonomously when necessary and spontaneously collaborate to address short term challenges as they arise while still…

Thanks Lishan and good afternoon everyone. I will brief as our financial results for the quarter and year ended December 31, 2019 were reported in our press release that was published just prior to the beginning of this call. Our Annual Report on Form 10-K will be available at sec.gov and our website early next week. The complexities involved with accounting for the non-cash charges related to our fourth quarter convertible debt financing coupled with lawyers, auditors, consultants and staff working remotely made the extension unavoidable. You will recall that even as late as just last week, we completed the second half of November 2019 financing, which Lishan spoke to which also impacted the related registration statement that was filed in December and amended on March 30. The elongated registration process was impacted in part by the SEC's availability challenges as they were working at home as well. Nonetheless, the financial results I will be providing today are consistent with the preliminary results reported on March 30, as available to you and reported on Form 12b-25 extension filed at that time. So with regard to the financial results, research and development expenses for the fourth quarter of 2019 were $2.3 million, up from about $1.4 million for the same period in 2018 and about $700,000 higher sequentially. The year-over-year increase reflects incremental hiring, Chief Medical Officer, Chief Operating Officer and engineer at PAVmed as well as the clinical trial related expenses, many of which Lishan just went through for CarpX and particularly EsoGuard as the early set up cost for the IVD clinical trial began in earnest in the fourth quarter. General and administrative expenses were $2.3 million for the fourth quarter 2019, compared with $1.9 million for the same period in 2018 and were higher by about $600,000 sequentially.…

[Operator Instructions]. Our first question comes from the line of Anthony Vendetti of the Maxim Group. Please proceed with your question.

Good afternoon Anthony.

Hi Anthony.

Good afternoon Dennis. Good afternoon. Lishan. Thanks so much for doing the call and also for going over the COVID-19 impact across all facets of your business. It seems like most of, well, all of your business has continued to operate and you have been operating and they have had experience operating remotely. So that side of the business seems fine. It's the commercial side that is going to delay some of the trials and so forth. But that's to be expected. I was wondering if you could just talk a little bit more about CarpX. Obviously, this is a resubmission. So you have had a lot of conversation, many conversations with the FDA over this time period. If it wasn't for the COVID-19 situation, do you believe they would have needed the full 90 days? And with the current situation, is it hard to gauge whether you think they will take the full 90 days to review? Or based on your conversations with them, where are they at in terms of the review process?

Sure. That's a great questions. And obviously, we have to be careful about predicting anything. But I can provide some insights that you alluded to. One of them is that we have been involved with the FDA on this product. This is a resubmission, as you know. And what I didn't mention is that we have the same lead examiner who was very supportive of our application at the beginning. So we were fortunate to have that. That's not guaranteed, as you may know. So yes, so the people who worked with us on developing the preclinical testing and documenting the lack of thermal spread and the thermal safety, the preclinical setting in animals and cadavers, the same people who worked with us to develop the protocol for the clinical study are now reviewing this. As I mentioned, we don't really have any sense that they are being affected by the pandemic. They have acknowledged receipt. They have quickly proceeded with the acceptance of custom [indiscernible]. As I mentioned, we have had some informal communication that indicates that they are deep into the weeds of the application. So we have had no indication that there is a slow down and we have always been hopeful that now because it's the same group, that because this is a resubmission that there would be an opportunity for things to move quickly. But there is no way we can really predict that. I mean, the counter argument to that is that we are submitting a clinical trial, even though it's small and there is 20 patients, there would be substantial amount of data and information that they have to go through. So I wouldn't want to presume that that things will move more quickly than normal. But I can say that I don't we are slowed down by COVID. We are very fortunate that we have the same group reviewing it and we have had some informal communications that indicates that they are well into their -- that they are deep into the review the application.

That's very helpful Lishan. And if you could just give a little bit more color on EsoGuard in terms of feedback from KOLs during your initial commercial launch here? How is that going?

Yes. Sure. It's been asked, this is going to sound cheerleader-ish a little bit but it's been absolutely remarkable. I mean, the feedback has been excellent. We have really followed people on the ground. Our Eastern sales managers is a long time veteran of the GI space and the people who are, the independent reps who are already on the phone and on e-mail contacted the doctors are having these conversations. And these conversations are going very well. We have them well-trained with objection handling to handle all the various paths that these conversations can take about how it relates to their existing endoscopy business and so forth. And the feedback we are getting and I receive a lot of these, is that people ultimately got it. They understand that there is an opportunity here to enlarge the funnel and to bring more patients that are not in this group of sort of 90% of the patients who should be getting screened who are not getting screened is a way to expand the funnel and to ultimately both benefit patients and benefits their practices. So some of the larger practices already have a subset of their physicians who run esophageal clinic, they run motility and GH clinic. And any concern we had about sort of where this would fit in within their practices is really not material. The feedback has been, yes, let's get started and let's get rolling and get these patients in into these clinics. So I really can honestly say that the feedback has been extremely positive and once they are actually able to do procedures, we expect the uptake to be pretty quick and substantial.

Good. And so just obviously a commercial launch is going to be stalled by COVID-19. Do you think there will be some pent up demand as you are having these conversations?

Yes. Definitely, yes. It started right. But yes, exactly, that's one point I was trying to get across which is that, there is still a lot of activity and because of the existing relationships of these reps, they are able to pick up the phone and talk to their long-time physician colleagues about this technology and begin that process. So all of that activity has really been somewhat affected but has been proceeding pretty aggressively. The only thing we can't do are actually procedures, right. And so I think the way you described it, is exactly right, that there will be pent up demand and that will make up somewhat for lost time because of the activities that are currently ongoing.

Okay. Great. That's great color. I will hop back in the queue. Thanks so much. I appreciate it.

Yes. Thanks Anthony.

[Operator Instructions]. Our next question comes from Hafiz Ahmad [ph]. Please proceed with your question.

Hi. Good afternoon guys. How are you guys doing?

Great. How are you?

Doing very well. Just one quick follow-up on Lucid and since you guys have all the stuff lined up. Would there be any chance, you don't have to go into the details if there is something that's confidential, obviously, but any chance that you guys are thinking off running Lucid as a separate entity? Has there been any plans or anything? We just want to, obviously, many of the guys that I am working with, they would like to know and are really interested, if there's anything you can say that, that is obviously safe and secure to say?

Dennis?

That's a great question and is one that is a frequent inquiry made of us. And so, I am not going to answer your question very specifically because it is a strategic plan that the Board will mull over continuously. I am going to give more a broad answer. Our plans this year include a bunch of activities that Lishan thoroughly went through that will modulate our burn rate from where it is now and where the clinical trials once they ramp up and there are many access points for us to finance that business. We can finance as we have at the parent level. We can finance with debt. We have been creative with that which we would evolve to a level of sophistication that the early days of PAVmed's maturity had different types of financing structures. One, as you suggest, is a financing inside the subsidiary in whatever form that takes, private or public financing, it's a tool, proceeds from any M&A transaction on one of our assets and revenues for the second half. So your question, although I can't specifically answer because no firm decision has been made about that, the ability to finance inside a subsidiary and treat that as its own separate entity. Right now, we look at this as a single segment with four divisions. But what you are suggesting is something that could be available to us in the future and as it continues to evolve, we will be opportunistic and take action in the best interest of shareholders.

Got it, Dennis. Thank you so much. I did get my answer. I really appreciate all you guys. I am going to hang back and let someone else get in. Thank you so much again for everything. Thank you.

Thank you.

You are welcome.

Our next question comes from the line of Robert [indiscernible]. Please proceed with your question.

Robert, good afternoon.

Hello.

Thank you. Thanks for taking my question. It's in regards to, I believe there is a provision in the latest round of convertible note that speaks about a requirement of a sale of an asset by the end of June to provide a source of non-dilutive financing. Is that something that we expect to still come to fruition? Is that of a provision that could be renegotiated if an acceptable terms for sale of an asset, but don't present themselves? Just could you provide as much context as you can around that?

Yes. Sure thing. Let me expand your comment just a bit to add context. When we completed or engaged in the November financing, you will recall there were two pieces of that puzzle, the Series A financing notes that we got received $7 million and the Series B that was an additional $7 million of debt, $6.3 million of net proceeds available option to us that had a prerequisite condition to be achieved. One of them is what you just outlined that a non-dilutive financing at a certain level would occur before a certain date and that condition was waived, as indicated, by the financing last week. Investors are delighted with the progress of the company, the continued involvement of our value that he waived that condition. Now that's not an indication that we have lost sight of that. As Lishan indicated in his remarks, we are actively engaged in M&A related activities including on NextFlo with multiple parties. So although we are not prepared to speak specifically to that at this point, rest assured there are ongoing discussions related to that. So hopefully that answers your question.

It does. That was helpful. And in terms of Nextflo, as we are talking with multiple parties and I would imagine engaging their interest. In the background, are we also progressing toward FDA clearance for that device where presumably the value of that would go up substantially?

Yes. Sorry, I wasn't clear on that. I did to mention that in my comments. So the answer is, yes. The best way to understand that is to think of Nextflo as a platform technology, as I mentioned with multiple applications. So the application we had always focused on and the one that was the center of most of our commentary was this infusion set to replace electronic infusion pumps. And that product is in fact as you asked advancing through our design control development process and we are looking to have submission to the FDA before the end of the year. So that is moving along and we are definitely keeping the parties that we are talking to informed about. What's interesting is that they have come back to us and expressed interest in these other applications beyond the infusion set we have been using for. And because of their inquiry around this that we have started to pursue these other applications for disposal infusion pumps, particularly that and the pre-filled drug infusions. And that's actually enhanced our ability to have these conversations. So the way this ultimately could evolve would be that we enter into agreements that start with one particular application with milestones or timeline that extend for other applications and even in theory have multiple transactions with different parties we are licensing or they are acquiring the technology for certain applications. Does that make sense? But yes, the simple answer is, we absolutely are moving the product along, both because we would like to eventually commercialized them, but also as you said because it does in fact enhance the product.

Thank you.

[Operator Instructions]. Our next questions come from the line of John Levin of Levin Capital. Please proceed with your question.

Hi John.

Hi Lishan, Dennis. Congratulations on all you are doing. It's really terrific. The presentation was wonderful. I ask regarding EsoCheck. I am outside, it's hard to hear me. So forgive me.

I can hear you fine.

Why am I not able to tell -- what?

We can hear you fine, John.

Okay. Why are you able to sell of it yet? I understand COVID is an impediment. So is there some technical reason? You may have said it and I missed it. What is the impediment to getting actual sale?

Yes, The impediment is simply that there are no procedures being performed. So for us to effectively sell EsoGuard and EsoCheck, the physician has to perform a procedure, get a sample, send a sample to our laboratory for performance and then for billing, right. So because there are no non-emergency procedures being performed, there is no sort of stocking inventory right now. It's just that we have to wait for procedures to come up with. So we are building up demand. There's no doubt about that. And once thing open up, we will able to sell them.

Yes. Perfect. I understand. I would have assumed for the most vulnerable or the most favorite patients, they would have said, Oh, sneak into our office and we will get one done to you. But I guess --

Yes, There really is none of that right now. I mean, we have actually had some creative conversations about them, informing them with equipment as cars passed by and so forth. But for practical purposes, it has to wait for them to come back. But they will come back sooner than you might think because you can't wait forever.

Yes. I was just trying to make sure there was no regulatory or procedural or some kind of impediment --

No. Not at all. We were off to the races and then things came to a halt, yes.

Well, let me follow that up, if I may, with when you are off to the races.

Sure.

What percentage of the patients -- when you are at the races, how many horses ran and what was the result with the horses that ran?

Yes. We were just getting started. So we only had a handful of patients at two sites before things shut down. And those cases went fine. Those physicians and their staff were trained. They were able to perform the procedure. The samples were sent. So everything was successful in that regard. But it was only a handful before the elective procedures started to end. But as I mentioned, we are in contact with well over 100, maybe close to 200 accounts right now as we speak. So those conversations, they are priming and gearing up to go once things open up.

Right. Good. Thank you.

Thanks John.

We have reached the end of the question-and-answer session. I will now turn the call back to management for any closing remarks.

Thank you all for joining this afternoon and for your questions. We look forward to keeping you apprised of our progress via our news releases and periodic conference calls such as this one. We encourage you to continue to stay in contact which many of you have with Mike directly with any questions at jmh@pavmed.com. Thank you for joining us today. You have a great day. Stay safe.

That concludes today's conference. You may disconnect your lines at this time. Thank you for your participation and have a great evening.