PAVmed Inc. (PAVM) Q1 2020 Earnings Report, Transcript and Summary

Greetings. 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]I would now turn the conference over to your host, Mike 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 SEC, 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 and 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 its only been six weeks, we've been very active since our last update with many exciting accomplishments and upcoming milestones to report on. As with our last update let me first start with the few words about the ongoing challenges we're all facing as a result of the COVID-19 pandemic. I'll start by hoping thing -- we hope and pray that all of you are holding up as best you can and keeping yourself and your love ones safe. Thankfully all members of the PAVmed family are healthy, safe and able to continue their important work.Our corporate structure and culture continue to serve as well as we confront these challenges so far with minimal short-term and really no anticipated long-term disruptions to our strategic plan.Before providing you with updates on our product portfolio, let's first discuss how each area of our business has or has not been affected by the pandemic and how we are continuing to respond to those that are affected.On the financial and administrative side as Dennis will explain in more detail shortly, we recently completed a convertible note financing with the same investor as our previous convertible note financing.We also received proceeds of approximately $300,000 from the Paycheck Protection Program, the PPP in the form of a forgivable loans. Our balance sheet is strong and will support our full strategic plan for the foreseeable future as we advance through upcoming milestones.We remain confident in our ability to continue to finance these operations until we begin to generate meaningful revenue through commercial sales or non diluted financing through M&A activities. We continue to be laser focused on cash management. We remain at or under our board-approved budget and our full-time head count remains lean at 15.On the product, development and manufacturing side, all of our product development and manufacturing partners fortunately, they number over a dozen, have remained fully operational as essential services and we've experienced no meaningful disruptions in their activities on our behalf.Our supply chain has also remained intact with one exception. There's a pressure sensor on the CarpX circuit board that's on backorder as a result of spike in demand due to the dramatic COVID-19 related ramp-up in ventilator production. This will delay the release of the first commercial lot of CarpX devices in the first U.S. clinical cases but we only -- but by only a few weeks.On the regulatory front, the pandemic has not impacted any of our regulatory activities including ongoing work by our regulatory consultants and engagement with the FDA. In fact, as most of you know the FDA rapidly turned around our CarpX 510(k) application clearing CarpX in less than six weeks after submission.Two areas where we have successfully managed the COVID-19 related disruptions are our commercial and clinical research activities. The commercial side, you all know the healthcare system has faced a massive stream on resources as a result of the pandemic, which overwhelmed hospitals and hotspot areas.Non-emergency care including surgical and diagnostic procedures came to a standstill. Although we can't predict whether or not future outbreaks will lead to renewed disruption, the engine is definitely starting up again. Non emergency procedures are coming back online in most parts of the country and elective procedures are being performed again in many parts of the country.Although there is a lot of pent-up demand for these services, the pace of the reboot will depend on how new safety measures impact procedural efficiency and when patients believe it's safe to return to medical facilities.I will discuss EsoGuard commercial activities in more later -- in more detail later, but I'm proud to say that our commercial team has done an amazing, absolutely amazing job adapting to the constraints of the pandemic.We continue to recruit independent sales reps, train them, have them participate with us in virtual sales calls, opening accounts and shipping product. We expect procedural rolling to start picking up in the couple -- in the coming weeks and months as elective clinical activity ramps up.One of our closest gastroenterology advisors in fact today told me that he has a full schedule of endoscopy, which is a good sign. In the clinical research side, nearly all non-COVID-related clinical research, both academic and corporate sponsored came to a grinding halt nationwide, in fact worldwide two months ago, which has impacted multiple PAVmed and Lucid clinical trials which I will summarize later.Work did continue uninterrupted on IRB approvals, as well as negotiating and executing clinical trial agreements. This engine is also starting to rev up again with centers starting to recruit and enroll patients in our trials over the past week.So, I'll start with some recent accomplishments before diving deeper into the individual lead products, try to limit those to the ones that have occurred since our last update. I mentioned in April, we were thrilled to receive 510(k) marketing clearance from the U.S. FDA for CarpX Minimally Invasive Carpal Tunnel Device.This month, we successfully recruited a CarpX national sales manager who has started this week. We enrolled the first three patients including one today in our international multi-center IVD clinical trials comparing EsoGuard and EsoCheck to endoscopy at 60 sites in the U.S. and Europe.We submitted our final EsoGuard payment dossier to the largest Medicare contractor, Palmetto GBA and its molecular diagnostics program, Mol Dx, an important step in securing payment for EsoGuard. We successfully completed an acute animal study of EsoCure, Esophageal Ablation Device, which I'll describe in detail.Both PAVmed and Lucid received firm dates for the Stage 1 audit of their quality system by our EU notified body, which is a critical step required for us to pursue your opinion in CE Mark clearance for our products.Our subsidiary, Solys Diagnostics completed initial bench-top testing of our NDIR laser based non-invasive blood glucose diagnostic device demonstrating a linear response across a wide range of glucose concentrations.Finally, our extensive intellectual property portfolio has always continues to expand and advance and now includes over 130 issued and pending patents either assigned or licensed to PAVmed and their subsidiaries.So what are some of the key upcoming activities and milestones over the coming months, here are few highlights. We will commercially launch CarpX and recruit a world-class Medical Advisory Board of hand surgeons.We will continue to accelerate our EsoGuard commercial activities through an expanding network of independent sales representatives. As medical facilities open up we'll transfer -- we'll transition from virtual sales and professional education to in-person engagements and ultimately procedures.Now we will submit the EsoGuard coverage dossier which is a sister to the payment dossier to Palmetto GBA and other Medicare contractors and hopefully secure payment and coverage decisions for EsoGuard's CPT code as soon as possible.As elective procedures restart, we will accelerate enrollments in our ESOGUARD-BE-1 and 2 trials and we'll also launch four additional clinical trials involving EsoCheck and PortIO, which have been currently on hold because of COVID-19.We will continue -- we are now very active M&A and partnership discussions involving NextFlo, EsoGuard, EsoCheck and disappear, which we hope to consummate in the coming months.Finally, we hope to achieve the critical accuracy milestone in human and animal testing of Solys blood glucose diagnostic device, which will allow us to proceed down and initiate their commercial development path.I'd like to provide now some more specific updates across our four divisions, which are GI Health, Minimally Invasive Interventions, Infusion Therapy and Emerging Innovations.Starting with the GI Health. Our GI Health division is building a family of complementary products, EsoGuard, EsoCheck and EsoCure, which are designed to diagnose and treat conditions of the esophagus.These include the spectrum of conditions, polluting Barrett's Esophagus, which rise from gastroesophageal reflux disease or GERD, also known as chronic heartburn and reflux and can lead to highly lethal esophageal cancer.The other area we are targeting with these products is Eosinophilic Esophagitis, a very common but underappreciated allergy mediated condition that's similar and related to inflammatory bowel disease which currently requires multiple invasive endoscopy during the course of treatment.Last week marked the two-year anniversary of the founding of our subsidiary Lucid Diagnostics, which license the EsoGuard and EsoCheck technologies from our partners at Case Western Reserve University. I'm really can't say how proud I am of what our team and our partners have been able to accomplish in really a short period of time.EsoGuard and EsoCheck are now commercially available diagnostic tools. We added an EsoCure a groundbreaking complementary technology from our Emerging Innovations division and this is making rapid progress and we hope to commercialize this in 2021.In addition, we're pursuing active research programs and partnership discussions for other products in the space including other biomarker tests and ask you to stay tuned on that front.Just to for those of you who are new to PAVmed and Lucid, EsoGuard and EsoCheck are groundbreaking products. They are designed to facilitate early detection of Barrett's Esophagus. Precancerous changes that are called dysplasia and then highly esophageal -- highly lethal esophageal cancer and to do so using a non-invasive office based test.Although screening is recommended in over 10 million high-risk third patients to detect and treat Barrett's before it progresses the cancer fewer than 10% actually undergo screening using invasive upper endoscopy.The tragic consequence of this is that the vast majority of patients diagnosed with esophageal cancer are just not aware that they have underlying Barrett's and that the progression of cancer could have been prevented through careful monitoring and treatment if the Barrett's had been diagnosed earlier. Over 80% of these patients will ultimately die of their esophageal cancer within five years.The potential life-saving impact of ea EsoGuard and EsoCheck has been acknowledged by the National Cancer Institute which highlighted them as one of the year's significant advances in cancer prevention in 2020 report to Congress and the FDA which granted these products breakthrough device designation early this year.EsoCheck was also a 2020 Edison Award Winner, recognized as among the best new medical device products of the year. Just a brief overview again for those of you are just learning about us on how these devices work.EsoCheck is the FDA-cleared cell collection device, which can perform targeted and protected sampling a cells from the lining of the lower esophagus as part of a five-minute noninvasive office-based procedure.Its serve as an alternative to invasive under upper endoscopy, which is performed under anesthesia in a hospital or dedicated endoscopy center. EsoGuard is a highly accurate DNA test which detect epigenetic changes which occur in patients along the Barrett's to esophageal cancer spectrum.EsoGuard is performed on samples collected with EsoCheck and its commercially available U.S. as a laboratory developed test or LDT. Our commission market assessments have estimated the addressable domestic market opportunities for these products to be several billion dollars based on very modest penetration of U.S. third patient already recommended for BE screen.We are commercializing EsoGuard using a hybrid model with internal sales management, marketing and professional education, working closely with independent sales reps. The commercial team has grown rapidly since EsoGuard formally launched five months ago.Our Chief Commercial Officer, Director of Marketing and Communication and our Eastern and Western sales managers are partnered with a rapidly growing network of highly experienced independent sales reps covering most of the country.These are all senior professionals averaging at least a dozen years in the field, most with leading companies and with long-standing relationships with gastroenterologists in their territory. We are now currently up to 30 independent sales rep under contract and are adding new ones every week.Over the last two week the number of virtual sales calls with their physicians has increased dramatically as COVID-19 restrictions relax in anticipation of restarting elective procedures.They have made contact with several hundred accounts and the response probably from gastroenterology community has been extremely positive. We're now back to accepting a new account application this week and our logistics provider has been shipping product to new sites as well.Next week we'll mark the first virtual training for one of our site in the Midwest. We feel strongly that in the short term this will be a successful way to get accounts up and running and will continue one until we get on -- until we're allowed to do on-site support as regulation lift.We're also recruiting clinical support specialists in anticipation of this reopening. We continue our aggressive marketing campaign and professional, journals and social media, targeting physicians and patients to strengthen EsoGuard and EsoCheck brand recognition generate awareness of the underline condition and support the sales product.In addition, we will start to begin highlighting the clear advantages of our product over the alternative in the coming months. Engagement with these activities has been excellent and growing, and the feedback has been very positive.We also continue to make solid progress on the reimbursement front. EsoGuard received a CPT code last year and successfully advanced through the CMS process allowing us to proceed with payment and coverage discussion following on the so-called gap-filled designation.We have successfully engaged with Palmetto GBA, the largest Medicare contractor and its molecular diagnostic group Mol Dx. These efforts followed two parallel paths; payment and coverage.We have submitted a final payment dossier supporting our fee request and will submit the final coverage dossier in the coming months. We're optimistic that we will receive favorable decisions on both payment and coverage.Two days ago, we reached an exciting milestone in the development of our EsoCure, esophageal ablation device. EsoCure is a disposable, single-use thermal balloon ablation catheter that's designed to advance to the working channel of the standard endoscope and uses our patented pelvis technology to ablate esophageal tissue.Once cleared and commercialized, EsoCure would allow clinicians to treat dysplastic Barrett's or dysplasia before it can progress the cancer. And to do so without the need for complex and expensive capital equipment.The current leader in this large and high-margin market is the Medtronic Barrett's radio frequency device, which requires an expensive piece of capital equipment and disposable ablation tool, multiple disposal ablation tools, most of which are too large to pass through the endoscopes working channel.We first completed bench testing of this working prototype which consistently achieved ablation temperatures over 90 degree centigrade within 10 seconds, a significantly higher and more rapidly than the Medtronic radio frequency device.This week we successfully completed initial animal testing of the prototype. The results were stunning as the device performed exactly as designed. Although final pathologic analysis pending, the device consistently performed clear circumferential ablation without charring over very short time intervals compared to what is required with existing expensive radiofrequency and 19:11 platform.We expect to complete development in FDA 510(k) submission of EsoCure by early 2021 and hope to have it commercialized later that year. On the EsoGuard and EsoCheck clinical trial front, activities are starting to gear up following COVID related slowdown.Our two international multicenter clinical trials; ESOGUARD-BE-1 and 2 are designed to support a future PMA submission for FDA registration of EsoGuard and EsoCheck has in-vitro diagnostic or IVD and includes over 60 sites in the U.S. and Europe.The screening study, BE-1 has enroll three patient including one today with three additional patients scheduled this month. We anticipate that we're reopening a site in accordance with the CDC, state of professional society guidance to be staggered over the several weeks based on a few factors, including the type of practice of private versus larger academic institutions and the acceptance of research patient back on campus.The team is currently building a new enrollment forecast which will drive the over all timeline. We've also executed on multiple contingencies which have played a key role on allowing us to keep our original timeline intact.We anticipate that nearly all of our sites will be enroll -- will be enrolling in the coming months. The large institutions as expected will take more time to reconfigure their infrastructure in order to gear up for research.Two additional EsoCheck clinical trials are on hold, but should also begin enrolling soon. The first study at the Fred Hutchinson Cancer Center in Seattle is looking at the role of EsoCheck and biomarkers designed to detect progression from non-dysplastic to dysplatic Barrett's, but this work could greatly facilitate the surveillance of Barrett's patient, so they can be treated prior to the development of cancer.And we are the previously announced we secure the exclusive option to license these biomarkers if they prove effective in the clinical trial. The University Pennsylvania study, a different study will look at the role of EsoCheck and monitoring treatment patients with eosinophilic esophagitis.Finally, we have two active partnerships discussions involving GI Health product. We have strong interest from established diagnostic company outside the U.S. to perform and market EsoGuard in that region and we'll be revisiting that once COVID-related travel restrictions ease up.We also been offered the opportunity to license highly accurate eosinophilic esophagitis biomarkers from a major academic medical center for commercialization as an LDT, and we look forward to consummating that in the near future.So moving on to our Minimally Invasive Interventions, division which encompasses CarpX last month, less than six weeks after submission we are very excited to announce that we've received FDA 510(k) marketing clearance for our CarpX single-use disposable minimally invasive device designed to treat Carpal tunnel syndrome.Carpal tunnel syndrome is a widely prevalent condition that exacts a very large clinical and economic burden on society. The balloon catheter is inserted under this scar's ligament, tensioning it while pushing the nerve and tendons away. When activated bipolar radiofrequency electrodes precisely cut the ligament from the inside out in a matter of second.So now CarpX, CarpX is now the first and only 510(k) cleared minimally invasive I device to utilize common catheter balloon and wire technique to facilitate Carpal tunnel roles. We believe CarpX will revolutionize the treatment of carpal tunnel syndrome by dramatically reducing recovery time compared to traditional open surgery and estimated billion dollars U.S. market opportunity based on an estimated 600,000 patient currently undergoing invasive carpal tunnel surgery and many more who is suffer in silence.As we previously announced, CarpX performed very well in human -- in the human clinical safety study performed in New Zealand and submitted to the FDA, all the patients who completed follow-up met study prespecified safety and effectiveness endpoints, additional prespecified outcome assessment were similar to or better than expected results from a traditional open surgery.Importantly, procedural time spell after short learning curve indicating that the CarpX procedure can be performed in the same or less time as traditional open surgery. We have recruited a CarpX National Sales Manager, Dan Dargis. We're excited, he's starting this week.Dan has decades of commercial experience in the orthopedic space and strong ties to both pen surgeons and the vast network of independent sales rep calling on these. Dan is helping us recruit a world-class advisory board of hand surgeons who will perform the initial U.S. cases, lead our professional education activities and advisers on iterative procedure and product development and he is also beginning his outreach to his network of independent sales reps.Our commercial launch, as I mentioned, has been delayed a few weeks because of the pressure sensor that's on backorder, but we look forward to that launch in the coming weeks and months.Next, some brief highlights from our infusion therapy division, which includes NextFlo and PortIO. NextFlo is a platform technology to deliver highly accurate infusion. We are pursuing a broad range of application in patient infusions, disposable infusion pumps for home use, prepackaged outpatient drug infusion, military and trauma applications and intravenous nutrition.The application, which is further along is the NextFlo IV or intravenous infusions set, which delivers highly accurate gravity driven infusion independent of the height of the IV mix. We believe it will eliminates the need for complex and expensive electronic infusion pump for most, not all, but most of the estimated 1 million infusion delivered each day in the United States.We're making really excellent progress with the NextFlo IV infusions set, design, control, development and testing and we're targeting FDA 510(k) submission before the end of the year. Our NextFlo also remains the active of a very -- the subject of very active M&A discussions with key strategic in this space particularly in the disposable infusion pump, space for home use as well as prepackaged drug infusion application.On to PortIO. PortIO is our implantable interosseous vascular access device, which allows direct access to the bone marrow to deliver medications fluid and other substances addressing an estimated $750 million market opportunity based on patients with poor veins and those with renal failure, kidney failure whose veins must be carefully preserved for current or future dialysis.We're now seeking -- we are we are seeking, sorry, an initial short-term implant duration indication through the FDA's de novo pathway. Earlier this year we participated in the successful pre-submission meeting with the FDA focus on the clinical protocol for a single center clinical safety study.We have plan to perform this study in New Zealand like we did with CarpX, but because of travel restrictions we're moving into the U.S. and we'll be submitting an IDE or an investigational Device Exemption application to the FDA soon.We still do plan to perform a long-term study in Columbia, South America to replicate the remarkable animal study results which we documented showing six-month patency of the PortIO device completely free of any maintenance or flushes.We have locked down three sites in Columbia and have three principal investigators and hope to begin training and enrolling once the things open up. And once again sort of time forces me to just touch on the exciting projects we're working on in our Emerging Innovations division, but if you highlight.As I mentioned, Solys Diagnostics research and development plan for our noninvasive NDIR laser-based blood glucose monitoring technology is progressing very well. The working prototype has been completed and has been tested in a bench-top model. These fairly recent results show a very nice linear response curve across a wide range of glucose concentrations.We expect to be -- to complete human and animal testing in the coming weeks. If that goes well and we achieve our target accuracy threshold we will be able to proceed on a commercial development plan.On DisappEAR, our resorbable pediatric ear tubes, that are made from AquaCel technology and seek to revolutionize the care of the estimated 1 million children who undergo bilateral ear tube place with each year is also progressing, but the limiting factor that has stalled our activities over the recent past has been securing a commercial partner who has the capacity on a scalable basis to process silk into molded cure tubes. We made good progress and expect to secure such a partnership shortly.Our Emerging Innovations team is also working on several other exciting earlier stage product including product in the ECMO cardiopulmonary support space and ventilator space. The ECMO project has had some important breakthroughs in the last week, so we're very excited about that. And the ventilator R&D project with that was launched this week.So I'll stop there and pass the mic on to Dennis for a review of our financial results.

Thanks Lishan, and good afternoon everyone.I'll be brief in our preliminary results for the quarter ended March 31, 2020. We reported in our press release that was published earlier this afternoon. On quarterly we report on Form 10-Q will be available at sec.gov and on our website early next week.The complicities involved with accounting for the non-cash charges related to our first quarter convertible debt financing, couple with lawyers, auditors, consultants and staff working remotely may the extension unavoidable.We recall that even as late as the end of April we were completing the S-3 registration for that financing which also was the gateway to the additional $4 million convertible debt financing on April 30th.So with regard to the preliminary financial results; research and development expenses for the first quarter of 2020 were $2.6 million, up from $1.5 million for the same period in 2019 and $300,000 higher sequentially.The year-over-year increase reflects incremental hiring; Chief Medical Officer, Chief Operating Officer for Lucid Diagnostics and a regulatory professional for PAVmed, as well as approximately $1 million in a clinical trial cost principally related to the EsoGuard as the set-up cost and first patient enrollment cost for the two IVD clinical trial began [indiscernible].General and administrative expenses were $2.6 million for the first quarter of 2020, compared with $1.7 million for the same period in 2018 and were hired by about $300,000 sequentially.The sequential increases reflect the financing transaction costs in the first quarter related to completing the November 2019 convertible debt financing and a year-over-year increase reflects about $300,000 increase in compensation related costs, purely related to sales staffing levels and other sales related costs and approximately a $0.5 million in consulting services related to patents regulatory compliance, legal processes for contract review and public company expenses. There's also an increase of about 100,000 in general business expenses.PAVmed recorded a net loss attributable to common stockholders, a $14.5 million or a loss of $0.33 per common share. However, as I'll detail for you in a minute, $10 million of this loss is driven by non-cash charges related to our financing and furthermore is fueled by our stock pricing -- our stock price climbing significantly.Our press release provides substantially more detail related to the non-cash charges occurring in the current than prior periods, also the press release provides a table entitled non-GAAP measures child late fees amount along with interest expense and other non-cash charges namely depreciation, stock based compensation, financing related cost and able you to give you a better understanding of the company's financial performance.You will notice it from that table that after adjusting the GAAP loss by approximately $10 million for these type of non-cash for financing related charges the company reported a non-GAAP adjusted loss for the three months ended March 31st of $4.5 million or $0.10 per common share.Particularly, I want to point out that the largest non-cash charge and approximate $8 million expense in this group of non-GAAP expenses is the change in the fair value of the convertible debt, god bless accountants, right? Although this in part reflects the increase in funding for the period, it is principally influenced by the stock price more than doubling between the time we entered into this transaction in November 2015 and the end of the first quarter.Essentially a good thing for shareholders that is a sizable increase in our stock price will cause increased charges to the P&L only while the convertible debt is still outstanding. PAVmed had cash of $8.7 million as of March 31, however subsequent to the quarter end in just a couple weeks ago the company received an additional net proceeds of approximately $3.7 million from the sale of convertible notes at a conversion price of $5 per share. So on our pro forma based had the financing closed the end of March, cash would have been over $12 million.So with that operator we can now open up the call to any questions.

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

Thanks for the overview. That was very helpful and for all the detail. Lishan, I was wondering, if you could just talk a little bit more about the backlog pressure sensor for CarpX. You said it -- you think it's a few weeks that its backlog. Can you give us a little more color about?

Yes. I think from a -- I was just being direct about that. But I think from a practical point of view it's not going to change a whole lot, because the elective procedures are still ramping up slowly. So the delay was the few weeks; two to three weeks. We expect the components, the printed circuit board which has the pressure sensor on it to be around in a couple of weeks and then a couple weeks after that before the commercial law could be released. So really in terms of when we would have expected the carpal tunnel surgeries are elective procedures and will come online over the coming months. It doesn't really delay our commercial launch from a practical point of view, but just thought I'd point that out that that is one aspect of our supply chain that we've had to monitor close.

Okay. You know that's so forth like you said elective procedures have been largely postponed or delayed. So I guess as said, you decide a new sales manager for CarpX. What's the thought process in terms of a commercialization strategy as we start to reopen as a country. Is this is this more like a July/August timeframe, slow ramp up with KOLs and then is it more of a September or so full commercial launch?

Yes. I mean, I probably won't be able to give you some specific dates, but I think that's a reasonable summary. CarpX unlike EsoGuard and EsoCheck is an interventional procedure, right? So you have to be careful in the early launch and make sure that you identify the appropriate early adopters to take through the procedural steps and to be frank to do iterative enhancements of the procedure itself. So that's really Dan's first task is to get that group of KOLs and experienced folks who were committed to being early adopters of this technology and to start doing cases, and I do think sort of a midsummer time point for that is appropriate.The ramp from that is going to be affected by a variety of factors. One is how does this -- how does the ramp up the opening of elective cases actually proceed. We're fairly optimistic because how patient facilities which is where the vast majority of carpal tunnel surgeries are performed are less burdens in terms of their ability to reopen. But it'll depend really on that as well as sort of a steady focused, but safe sort of outreach to increase in concentric circles of physicians. And again it's very important to do that in a very careful way to make sure that the procedure is being performed carefully and that people are being appropriately trained.

Okay. Make sense. And then just in terms of commercialization of EsoCheck, EsoGuard, what's been the COVID-19 impact on that? And then how do you expect that to continue to rollout this year?

Sorry. So the COVID impact has been pretty straightforward which is that no one's getting for the last two months they've been essentially no elective or non-emergent procedures being performed in the GI offices. So whether they're endoscopies or other office based procedures. But what's amazing is, I sort of bragging about this and like the brag about it again is that the team was not in any way -- they were able to overcome that challenge and despite that I've had literally contacts with hundreds of accounts and numerous virtual sales calls. These physicians I think as I mentioned last time are not necessarily on the front lines of COVID. So they have time and they're getting used to using telemedicine and so these virtual calls have been -- have gone remarkably well and and the volume has increased almost exponentially.So as the case -- as the elective procedures start and as I said one of our partners in Ohio did a full day of endoscopy today. So that to me it was a very good sign that things are starting to open up then that activity of opening accounts and getting product shipped will actually start to translate, I think very soon into actual cases being performed in tests and tests being ordered and fit. So again there's still some uncertainty, but there's some pretty good sign in the last week or two that this activity will start to ramp up hopefully fairly quickly.

Okay, great. That's helpful. And then Dennis, if we could put aside the non-cash charges, could you just talk about sort of the burn rate that you see right now. What's your best guess as to what you expect that to be on a per quarter basis for the remainder of this year and then what do you expect your capital requirements to be as you move into -- as you move through this year and next year?

If you dissect the first quarter, there is some clues there in terms of how that projects going forward. It is a $4.4 million non-GAAP which you can make these -- it being a proxy for what the cash burn for the quarter and it gave you the data point that about $1.1 million were clinical trials really that's EsoGuard related. So the baseline burn is just around a $1 million, the clinical files we'll add to that but really now it's depended upon when we can get to that. The plan for the year was about a $1.7 million or so per month. We have $12 million pro forma at March 3,1 so you can kind of lay that in. There's availability in multiple forms of financing for us and that will be dictated by not only the ability finance at the parent level, but the possibility financing inside subsidiary level and also the non diluted financing opportunities that we're pursuing particularly with NextFlo.So the ability to finance that we believe is readily available. Which choices we make of those opportunities will be dependent upon the time when they come about and when we get back to cut full-scale clinical trial work.

Our next question is from Chris Sommers from Hammerstein. Please proceed with your question.

Lishan and Dennis, hope you guys are well. Congrats on all the recent accomplishments and milestones and seems like there is an exciting year or two ahead here.

I think we agree with you.

But actually thought that's happening maybe at a trial or study at U-Penn, so you guys might be in Philadelphia a little bit more. Yes, but my question kind of relates, I guess that the third question that the Maxim analyst just had. As far as the planning for funding these trials and it seems like there's a lot, maybe additional funding that Lucid might require for the Eso product.I mean, it seems like and you probably can't comment too much, but with that much activity, with that much funding potentially can you comment at all about the potential spin-off of Lucid, I mean it certainly seems but like the most you have kind of common or that the best strategic, I mean you guys would know better opportunity to fund that company separately, the investors can be in that separately and it would be a great way to raise cash for that company separately as well and unblock value, tremendous value for the company?

Before Dennis can answer, Chris, let me clarify one thing as it relates to these clinical trials. So as you said there are numerous clinical but the bulk of the expense is really in the two IVD trials that are looking to support PMA submission. Many of the other trials are actually part of partnerships with academic medical centers where we're providing only nominal financial support and we're able to leverage the value of EsoCheck and we're providing EsoCheck as a device and many of those actually have their own intramural academic funding as well. So just to be clear that there's really the bulk of the capital requirements are really on EsoGuard IVD trials. Dennis, do you want to follow.

So, yes, Chris. Obviously there's been a lot of speculations. I get a lot of questions about Lucid and the EsoGuard being the key jewel inside that subsidiary and the approaches do to finance that inside that subsidiary whether is a spin-out or is the private investment in there gets financed at the parent level or there are other ways to finance that that may not require issuing securities to do it. No decision has been made. We are talking to a variety of financial types that fit all of those profiles. And once we have a little bit more visibility on some of those choices then the board's going to make a decision.So I think we're in agreement that there's a lot of excitement about that technology. And there are some proxies of other companies that have done similar things with products that are not competitive with these regard, but serve kind of the same mindset and those prospects are very encouraging and that certainly helps in our flexibility of trying to make the right choice for our shareholder.So no decisions at this point. We'll keep you apprised as those decisions are made and we believe they're all favorable outcomes, so we're just trying to figure out what's the best approach out of all those treasures.

[Operator Instructions] Our next question is from [indiscernible] with Private Investor. Please proceed with your question.

Good afternoon, Lishan and thank you for your work and I feel guilty riding your coattails, you guys are amazing. I'm a long term investor. I heard this blade I was listening to the conference call. Did you guys mentioned the glucose monitor, the laser. Did you say you had a prototype device you're going to test this summer?

Yes. Let me have fill in some of those details. I did touch on it, but again just try to keep it a bit brief. So this is -- so the device that the technology we license from our partners at Airware, the Dr Jacob Longs company. We've licensed that within a field of use to create inpatient hospital based glucose, continuous glucose monitoring without the need for doing blood tests, without finger sticks or without blood drop, just by a clamp on the skin that's similar to one of this oximetry devices, the ones that clip on your finger.So where we are with that is we've been working on this R&D project taking the laser technology that he developed and putting it into a working prototype basically in a box that have the lasers configured consistent with the invention. That that's been completed. And we also have a prototype clip, tissue clamp that basically will be applied to the web of the hand.So that device has been tested on the bench-top using these little tubes, these little covets of glucose at varying concentrations and the key is if you do the concentrations across the range that you would be looking at in the patient do you get a linear response. So when the glucose is higher you get more of a signal, if glucose is higher than that you get more of a signal and it follows a nice linear response. And we have been able to document that just over the last week or two.The next step is and we were hoping to get this done this week but it's been delayed a couple of weeks but not too long. Is to actually take that box that working prototype and test it on human volunteers who basically start off fasting and then take some orange juice and see how their blood sugar goes up and all so in a rat model a diabetic rat model, animal model where we can get much higher glucose levels and confirm that that the non-invasive testing works.They are very precise standards for accuracy that that all glucose monitoring devices are held to. It's about plus or minus 15%. So we're pretty optimistic that we'll get to that and once we cross that threshold then that the gun goes off and we can actually start a formal commercial development process where we manufacture a device that can be used in a hospital typically in an ICU setting and continuously monitor glucose. So that's where things are with that and I think that's we're very excited about.

While, they're huge.

It’s a big opportunity, yes.

I mean, its huge, because I know so many people that hate to dip their finger pricked. My daughter hate needles. I mean, and then you could do this for at-home use. Is that what you look at that for?

That would be the next step. So just to clear, the original -- the initial license is only for the hospital, but that's a big a big market. So in the ICU, particularly in cardiac ICU a 100% of the patients there are on an insulin drip. So they're getting their blood sugar checked literally hourly or every other hour.So there's a huge opportunity in that. But obviously the goal, the next step in this would be to take this technology for use in an inpatient setting and then license it, continue to expand the license so that we can replace home fingerstick devices, that sort of deck of card sized boxes that wouldn't require a finger stick, but it could measure your glucose just by clamping onto the skin.

How much does that work?

I'll leave that up to you. It's a big market.

And our next question is from Mazu Amed, who is a Private Investor. Please proceed with your question.

I'm just going to be a brief. So I just wanted to ask you how much has this been charge for power device of CarpX you have decided?

We have set a price, but what we can tell you is based on our understanding of the reimbursement as well as the cost of goods that we are confident that we'll be able to commercialize at volume, so not necessary in the early stages when volume production is low, but at higher volumes we'll be able to achieve an 80%, 85% gross margin. So that is plenty of margin for us to build a very robust business on that.

And we have reached the end of the question answer and session. And I will now turn the call over to management for closing remarks.

So thank you very much everybody for your attention and for joining us this afternoon and for those great questions, and we always appreciate the enthusiasm and the go-get-them feeling that we get from our investors every day. It really inspires us.So we look forward to keeping you abreast of our progress via ongoing press releases, and periodic conference calls, such as this one. As a reminder, the best way to keep up with our news is an update and events to sign-up for email alerts on our Investor Relations website ir.pavmed.com and we encourage you to follow us on Twitter, LinkedIn, YouTube, we've been very, very active on all those platforms lately, and it’s a great way to keep up with what’s going on.Always feel free to contact Mike directly with any questions at jmh@pavmed.com. Have a great day. Thank you.

This concludes today’s conference. You may disconnect your lines at this time. Thank you for your participation.