PAVmed Inc. (PAVM) Q1 2021 Earnings Report, Transcript and Summary

Greetings, and welcome to the PAVmed Inc. Business Update 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 Mike Havrilla, Director of Investor Relations for PAVmed. Please, go ahead.

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. Press release announcing our business updates and financial results is available on PAVmed's website. 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, may cause actual results to differ materially from the statements made. Factors that could cause actual results to differ are described in the disclaimer and in our filings with the Securities and Exchange Commission. For further list and description of these and other important risks and uncertainties 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 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 said, I would like to turn the call over to Lishan Aklog. Dr. Aklog?

Thank you, Mike. Good afternoon. Thank you for joining today's update call. For those of you new to PAVmed, welcome, and for those of you who are already part of the family, thanks for your support and commitment to our long-term vision to improve patients' lives while creating substantial shareholder value. I'm delighted to report that we have experienced strong momentum during the first quarter and in recent weeks, as we seek to execute our bigger and bolder strategic plan and strengthen our foundation for long-term success. We continue to focus our efforts in several key areas, driving EsoGuard commercialization, strengthening our management and Board, solidifying our balance sheet while extending our cash runway, taken Lucid public and as always, exploring new partnership opportunities on groundbreaking innovations. Let me start with our successful efforts to reinforce the foundation of our company. As Dennis will describe, maybe, in a bit more detail later, we have substantially strengthened our financial position over the recent months. We raised approximately $75 million of gross proceeds and straight common stock offerings between Christmas and Valentine's Day, including approximately $58 million during the first quarter. A heavily oversubscribed underwritten public offering led by Cantor Fitzgerald generated approximately $45 million of those gross proceeds. We were very pleased that this offering was anchored by leading long-term fundamental institutional funds, including Fidelity, Vanguard and Blackstone. We consider their participation to be a strong validation of our long-term strategic plan. We've received and continue to receive meaningful additional cash from the exercise of our Series B warrants. As previously announced, we decided to use approximately $15 million of the proceeds of the February financing to fully retire our convertible debt held by European funds. The debt was view upon demand and paying it off in cash avoided further dilution, as our stock price had exceeded the debt conversion. The financings warrant exercise and convertible debt requirement have combined to substantially strengthen our balance sheet. We started the quarter with approximately $17 million in cash and $15 million in debt. We ended the quarter with approximately $49 million in cash and no debt except for a small forgivable PPP loans. PAVmed's cash runway now extends into 2023 at our current burn rate not taking into account the prospect of Lucid going public and raising its own capital. Another important area of focus has been to strengthen our management team and Board. I will discuss the expansion of our commercial team a bit later. On the Board side, I was very excited to welcome two prominent executives to the PAVmed and Lucid Boards over the past few weeks. Debbie White, who joined the PAVmed Board is a prominent UK-based global industry executive who has led commercial entities with billions of revenue and tens of thousands of employees including in health care. Debbie has already provided an invaluable guidance on long-term strategy and will play an important role in advising on commercialization and serving this PAVmed's Audit Chair. Dr. Jacque Sokolov who joined the Lucid Board is a nationally recognized healthcare executive with expertise across all aspects of the healthcare industry, the established and shared Board compliance and quality committees for major healthcare companies, including Hospira. Dr. Sokolov already established special committee for Lucid and serves as its inaugural Chair. His efforts will be of critical importance as we expand our commercial activities to include our own Lucid test centers, direct-to-consumer marketing and telemedicine all of which require meticulous attention to regulatory compliance. Now let's now dive into the details of our business starting with our major -- majority-owned subsidiary Lucid Diagnostics. So Lucid is a commercial stage medical diagnostics technology company focused on the relationship between chronic heartburn, which is ubiquitous and esophageal cancer, which is highly lethal. Esophageal cancer is effectively death sentence at the time of diagnosis in nearly all patients. Meanwhile, approximately 50 million Americans have its predisposing condition in the form of severe chronic heartburn. Risk factors for the development of esophageal pre-cancer and cancer in these chronic heartburn patients are well-established. The highest risk subgroup are the 13 million men over 50 with one other risk factor, namely, white race, obesity smoking and family history. Unfortunately less than 10% of the at-risk chronic heartburn patients are screened despite professional society guidelines. The direct result of this lack of screening is a tragedy of over 16,000 esophageal cancer deaths for years. Our products EsoGuard and EsoCheck seek to prevent esophageal cancer test through the early detection of esophageal pre-cancer and cancer and chronic heartburn patients. Lucid was created to license these technologies from Case Western Reserve University. In a year to three years and for less than $20 million on invested capital, we have advanced these technologies from research projects in an academic laboratory to commercial products with effective CMS payment and FDA breakthrough device designation. A little more detail EsoGuard is a more -- is a molecular diagnostic test which is commercially available as a laboratory developed test performed at our CLIA certified laboratory partner, which is located in Irvine California. EsoGuard has performed on samples of esophageal cells collected non-invasively using our FDA-cleared EsoCheck device. The sampling procedure can be performed by a nurse in an office in less than five minutes without any anesthesia or sedation. EsoGuard is the first and only commercially available diagnostic test capable of serving as a widespread screening tool to prevent esophageal cancer desk through early detection of pre-cancer and cancer and chronic heartburn patients. With CMS payments secured the over 13 million patients already recommended for screening translates into an approximately $25 billion annual addressable market opportunity for EsoGuard. A mere 2% to 3% penetration into this massive market would position Lucid among the largest pure medical diagnostic companies in the world by revenue. Lucid is also fortunate to work with several world-class advisors including diagnostics Pioneer Stan Latinas who cofounded and let Exact Sciences along a similar journey in colon cancer steaming; Alberto Gutierrez, who led the FDA office for in vitro diagnostics; and Dr. Nick an internationally renowned esophageal specialist and the lead author of the relevant gastroenterology society. During our last quarterly call, I announced that we intend to take Lucid public as a stand-alone medical diagnostics company, assuming markets and conditions remain favorable. The goal is to fulfill Lucid's extraordinary long-term potential and unlock its present value. We seek to have Lucid raise its own capital to drive its own growth strategy. This growth strategy is focused on expanding EsoGuard commercialization, as well as the clinical evidence base to support inclusion and future clinical guidelines. Of course, we firmly believe that taking Lucid public under the right terms would also be in the best interest of PAVmed and its shareholders. PAVmed will retain a controlling majority interest in Lucid. We engaged Cantor Fitzgerald to assist us in this effort and have pursued both the IPO and SPAC test. In parallel, Cantor ran a process which had us engage in discussions with numerous BAC targeting Life Sciences companies. Lucid's Board ultimately determined that the best interest of the shareholders would be served by Lucid going public through an IPO and not as SPAC. Several factors contributed to this decision including greater dilution from SPAC and uncertainty arising from the recent SEC SaaS statement on SPAC one accounting. Let me now update you on where we stand with EsoGuard’s commercialization. We're very encouraged that the pandemic-related restrictions to our commercial activities appear to be a thing in the past. With nearly all health care workers now vaccinated, moving forward we anticipate unfettered access to facilities for sales calls training and procedural support even if local and regional outbreaks occur in the future. EsoGuard testing has accelerated as these pandemic-related healthcare facility limitations of ease. Lucid processed 78 EsoGuard tests in the first quarter and 96 so far in the first half of the second quarter. We have EsoCheck devices and EsoGuard specimen kits on the shelf and have trained clinicians at approximately 180 accounts. Lucid is significantly -- has also significantly expanded its full-time commercial team to help drive EsoGuard commercialization, including as previously announced four industry veterans in the senior leadership roles. We're very fortunate to have these highly experienced leaders with deep sector experience on the Lucid team. For example, our new Director of Sales has spent over a decade in the gastroenterology space both at Medtronic and previously at Barrett's Medical. He oversees what is now growing full-time Lucid team of regional sales managers and independent sales representatives who currently call on gastroenterologists. He will lead the upcoming expansion of Lucid sales team to include two groups of full-time territory managers, one calling on GI specialists and the other on Primary Care physicians. We've also hired two clinical specialists and are actively recruiting more. These specialists will train clinicians and support existing accounts, while freeing up other sales personnel to focus on opening new accounts. Our new Vice President of market access and reimbursement has over 25 years of experience as a leader in the complex area of market access and reimbursement for diagnostic tests. He has a proven track record of success seeking insurance reimbursement and driving revenue. He served as Senior Director of Reimbursement and Managed Care at Exact Sciences had an important period during which he secured coating, payment and coverage for its Cologuard early cancer detection test. Our new sales training manager and strategic accounts manager, both held from CDX Diagnostics. CDX markets are widely utilized upper GI endoscopic tool to enhance the diagnosis of esophageal precancer. As such, they both have very deep connections with the community of gastroenterologists who specialize in esophageal disease. Let's spend a few words -- a few minutes on reimbursement. As we've noted previously last year, CMS granted EsoGuard, an attractive CMS payment determination of $1,938. This CMS payment became effective January 1. We began to submit EsoGuard claims later in the fourth -- in the first quarter and are pleased to -- are pleased that we have started to receive out-of-network private insurance payments. Although this is encouraging, it's important to remember that the claims cycle can be prolonged during the early commercialization of any new test, especially until contractual coverage has been secure. We are still awaiting CMS local coverage determination. As many of you know, last May, we submitted our final coverage determination to Multix, the Molecular Diagnostic Group of the Medicare Administrative Contractor, Palmetto GBA. We understand from our consultants and context of our trade association AdvaMed that the pandemic and change of administrations has resulted in a significant backlog of local coverage reviews which persist, but we do hope to hear from them soon. Meanwhile, we are pushing full steam ahead on the private payer side. Our new VP of Market Access and Reimbursement is working with two consulting firms to assemble the data package, to support securing contracts with private payers for EsoGuard payments and coverage. Our first advisory Board meeting with medical directors of the major insurers will be held this Friday in Orlando. During our last quarterly call, I announced a major new initiative for Lucid, which I believe represents the long-term future of EsoGuard's commercialization. This program, which we have internally done project Phoenix, seeks to supercharge EsoGuard commercialization by simultaneously targeting multiple sales and marketing cans. So what do I mean by that? Our sales efforts to date have targeted gastroenterologists. We are seeing good traction here because EsoGuard helps the gastroenterologists expand their funnel of new esophageal diseases patients. Most of these patients will become long-term patients for the practice and we'll lead periodic follow-up and procedures. We will continue to aggressively market EsoGuard to the gastroenterologists as I have already noted, we are expanding our teams at Lucid. This new initiative does not in any way represent a shift away from the gastroenterologists. They remain our anchor specialty. It is clear however from the experience of exact and others in the early cancer detection space that fulfilling EsoGuard potential requires that we expand our sales and marketing efforts to include primary care physicians and ultimately consumers as well. The reason is that the vast majority of chronic heartburn patients never see a gastroenterologist. As importantly, most primary care physicians and consumers still need to be educated on the relationship between chronic heartburn and esophageal cancer, as well as on the availability of a new noninvasive office space alternative to endoscopy to detect esophageal precancer. To accommodate referrals from primary care physicians and consumers, we need expanded EsoGuard testing coverage to assure that any physician or consumer, who responds to our educational marketing outreach has access to east of our testing is clinically appropriate. That requires us to create our own Lucid test centers to which patients can be referred for EsoGuard testing. We have made significant progress in honing the details of this program and operationalizing it over the past couple of months. There are fundamentally two phases to this program. Phase 1 is the creation of the Lucid test centers and Phase 2 is the establishment of a telemedicine program that can accommodate self referrals from direct-to-consumer marketing. Preparatory work on the Phase 1 pilot program has been completed. We've hired the clinical personnel and leased the medical office space to launch three Lucid test centers in the Phoenix, Arizona metropolitan area. We expect the centers to be ready to accept physicians referral for EsoGuard testing in the coming weeks. The only step remaining is to finalize the necessary regulatory and compliance infrastructure. This infrastructure is being overseen by the Board's new compliance and quality committee, which as I mentioned our new Board member Dr. Sokolov has established in leads. In addition to Lucid management and directors, this committee includes outside general counsel; outside specialized health care compliance council; our adviser Alberto Gutierrez who as I mentioned led the in-vitro diagnostics branch with FDA; and he’s former colleague DC based attorney Jeffrey Gibbs who previously served as FDA Associate General Counsel for Enforcement. This high-power team is making sure that we pay meticulous attention to compliance and regulatory matter that this program requires. Phase 2 of the pilot program in Phoenix will commence later this summer. We are finalizing contractual arrangements with a telemedicine company with extensive experience in handling these types of programs for pharmaceutical and diagnostic companies. The telemedicine company will receive and process self-referrals from patients who respond to our direct-to-consumer marketing efforts. More specifically the telemedicine physician will perform a detailed intake medical assessment and refer the patients who induce the test center if each of our testing is clinically indicated. The result of the test will be sent back to the prescribing telemedicine team who will then refer those with positive EsoGuard results to the appropriate gastroenterologists for further evaluation. The long-term economics of both the Lucid test centers and the telemedicine program are very attractive. We estimate that one of our nurse practitioners can perform up to 20 EsoCheck procedures per day. The fixed and marginal cost of personnel office space and supplies are small relative to the potential revenue stream for each test center. The marginal cost of direct-to-consumer marketing and the telemedicine program are also very reasonable given the projected gross margins for the EsoGuard tests. A few comments now on European clearance, our ongoing clinical studies and manufacturing. Earlier this year, Lucid passed its final stage two audit of the quality management system, mid-quality management system by our EU-based notified body. The notified body recently notified us that their review of the EsoCheck technical trial was complete and the final summary report had been submitted. We, therefore, expect to receive EsoCheck CE Mark approval under the current EU MDD regulatory regime before the EU transitions to its new MDR regulatory regime on May 26th. EsoGuard is classified as a general in vitro diagnostic under the EU's IVDD regulatory regime for in vitro diagnostics, and therefore, only require self-certification, which will be completed quite soon. We are -- in terms of our clinical studies we're actively enrolling U.S. patients in two international multicenter clinical studies ESOGUARD BE-1, a screening study; and ESOGUARD BE-2, a case control study to support a PMA application for IVD registration of EsoGuard on samples collected using this initiatives. These studies were the subject of an FDA presubmission meeting during, which we received positive feedback on the protocol and the proposed indications for use. We expect European sites to begin enrolling patients this summer. We expect the study to complete enrollment and submit the PMA application in 2022. As I mentioned, EsoGuard and EsoCheck received FDA breakthrough device designation which entitles us to close the FDA communications and other benefits. We have contacted FDA to begin discussions pursuant to this breakthrough device designation. We will seek the agency's input on an extension of ESOGUARDBE1 screening study that's sufficiently powered for an expanded indication to detect dysplastic Barrett's Esophagus to support inclusion in future clinical guidelines. These FDA meetings are currently backlogged due to COVID, but we expect them to open up in plenty of time for us to finalize the protocols for extending enrollment in the expanded study in 2022 and beyond. On the manufacturing side, we're working to transfer EsoCheck manufacturing to coastline international, a high-volume manufacturer that's based in San Diego with production facilities in Mexico. And we expect to complete this process by the end of 2021. This will increase EsoCheck manufacturing capacity to up to one million units per year. Finally, before moving on to our other products, I'd like to spend a few minutes on the competitive landscape for EsoGuard and EsoCheck. These topics come up frequently in our discussions with investors and are worthy of some analysis. I stated that, EsoGuard performed on esophageal samples collected with EsoCheck is the first and only commercially available diagnostic, capable of serving as a widespread cleaning tool, to prevent esophageal cancer deaths through the early detection of pre-cancer and cancer in chronic heartburn patients. This statement really has two parts, as it relates separately to other biomarkers and to other cell collection devices. There are no commercially available biomarker tests other than EsoGuard that test esophageal cells, for pre-cancer and cancer, much less one with sufficient accuracy to serve as a widespread screening to and chronic heartburn patients. There have been a few abstracts and publications with preliminary data on biomarkers that purport Lucid. One of these are, biomarkers being developed -- our set of biomarkers being developed by Mayo Clinic which has a relationship with Exact Sciences. We are aware of these data as our physician consultants including, Dr. Shahin in the Case Western Faculty are all part of the same NCI funded Consortium on Esophageal disease as the Mayo investigators. We do not see these biomarkers as being -- as becoming direct competition to EsoGuard anytime in the foreseeable future. We believe the data presented today falls short in terms of power and accuracy, compared to the EsoGuard data that was published well over three years ago, in science translational medicine. That data demonstrated greater than 90% sensitivity, specificity and a well-designed 408 patient case-control study with proper training and validation sets. The ultimate barrier to entry, I believe, however, is EsoCheck. All other biomarkers including the Mayo markers have some variation of a Brillo pad sponge on a string device to sample these esophageal cells. These include the Cytosponge device which Medtronic no longer markets in the United States and is cloned insofar cap device which the Mayo investigators use. These devices sample cells indiscriminately from the stomach to the mouth. They lack the key differentiating feature of EsoCheck, which is its patent-protected ability to perform anatomically targeted sampling of the distal esophagus, while protecting the sample from dilution and contamination during retrieval. Picking up early pre-cancer changes is the Proverbial Needle in a Haystack. The molecular changes can occur in as few as 1% of the sample DNA molecules. Any biomarker performed on a sample swamped by cells outside of the disease region will struggle to replicate EsoGuard's performance on EsoCheck samples. Finally, we frequently get asked about the potential threat of liquid biopsy test, which can detect minute amounts of tumor DNA in blood. These questions obviously arise from the intense attention and capital flowing into liquid biopsy companies looking to detect cancer in the blood. This is a complex topic but let me briefly state that EsoGuard does not face any serious threat from liquid biopsy tests in my opinion. The fundamental reason is that the prognosis of early-stage esophageal cancer is very poor with over 40% mortality rates in Stage 1 and Stage 2 cancers. This means that the only way to prevent esophageal cancer death is to detect early pre-cancer such as Barrett's Esophagus. These pre-cancer cells have no cancerous mutations and don't invade blood vessels. So even in the unlikely event that their DNA ended up in the bloodstream so would essentially be indistinguishable from normal DNA. The only way to detect these early changes is to collect actual esophageal cells. So I'll now close with some brief updates across our other products. As with our last call, we don't have time for me to provide much background or context for those of you who are just winning PAVmed, I would encourage you to refer to our website and SEC filings for additional information and contact us with any questions. Let's start with CarpX, our minimally invasive device to treat carpal tunnel syndrome. I'm excited to welcome our new full-time CarpX national sales manager, Calvin Roberts who starts with us today. Calvin brings over a decade of experience in orthopedic sales. This includes an extended at ‎Trice Medical. At ‎Trice, he played an important role in the successful launch and commercialization of a minimally invasive carpal tunnel release device, which it acquired a couple of years ago. Calvin brings a fat lower [indiscernible] contacts in the hand surgery space including surgeons and distributions. Calvin has been tasked with reorganizing the corporate advisory panel to accelerate procedural volume which has filed since the first case several months ago. We remain committed to a steady and deliberate initial commercialization plan focused on optimizing the procedural steps and safety, and look to broaden our commercialization efforts later this year. Our EU-based notified body also recently notified us that their review of the CarpX technical file has been completed. We await the final summary report submission confirmation, but as with EsoCheck we expect to receive CarpX CE Mark approval under the current MDD regulatory regime before the transition to the new MDR regime on May 26. Next slide, NextFlo. I'm very excited by the progress we have made with our NextFlo Infusion set, IV infusion set. Once commercialized it will seek to radically transform the efficiency and cost effectiveness of the million infusions administered each day in the United States. Our work to-date clearly demonstrates that the NextFlo IV set works and is able to provide constant flow with accuracy approaching electronic and future pumps. We believe it has actually replaced these pumps in over 80% of infusions. We are in the midst of design freeze verification testing and expect to begin final verification validation testing soon. We are targeting FDA 510(k) submission by the end of the year with clearance in the first half of 2022. We continue to engage in discussions and to support technologic diligence with a large strategic partner to license the NextFlo technology specifically for disposable infusion pumps. As those discussions continue, however, we continue to advance the technology for this application and we'll be well positioned to self-commercialize for this application [indiscernible]. Our PortIO implantable, intraosseous vascular access device is currently awaiting regulatory steps in the US and abroad. The PortIO is study in Colombia South America is ready to commence. We have initiated four medical centers which are ready to begin enrolling patients once IRB approval is secured. The IRB process however was slowed by a severe COVID outbreak in South America, but we expect to get final approval and enrollment this summer. PortIO is facing similar delays in the US, so we're awaiting the FDA reopening of non-COVID pre-submission processes and meetings to discuss the protocol for our US IVD study based on an 8-week implant duration. We hope to get that meeting scheduled soon once they open up. In the meantime, we're performing long-term animal studies to strengthen our preclinical data set in anticipation of the pre-submission meeting and these studies are going well. Next a few highlights from products in our emerging innovations portfolio, work on our esophageal ablation device is progressing well. We recently completed a successful animal study with Dr. David Poppers of NYU. This was the first study, which included animals who were survived after the adjacent procedure. Histopathology is pending, but we demonstrated successful direct thermal balloon catheter ablation of esophageal lining through the working channel of a standard endoscope using our proprietary Caldus technology. We believe we're on schedule for FDA submission and clearance of secured in 2022. We continue to work closely with our research, development and manufacturing partner Canon USA in advancing our DisappEAR resorbable pediatric ear tubes. We're still expecting to initiate animal testing this quarter and targeting FDA 510(k) submission in late 2021. And next as previewed during our last call, our subsidiary Solys Diagnostics recently terminated a third-party license agreement to develop non-invasive glucose monitor technology. This was partly based on the fact that we had developed and advanced our own proprietary technology in this space, which we believe is superior. Work on our own technology is going well and we expect the prototype to be ready for testing in human volunteers and a diabetic animal model later this year. Finally, I'd like to close with a few comments on our long-term vision for PAVmed assuming Lucid does become a stand-alone public company. Again this topic comes up frequently in my discussions with investors and the direct question I frequently get is as follows: since Lucid represents such a significant portion of PAVmed's activity and value, what is PAVmed post Lucid? In the immediate term, this is actually a pretty straightforward question. We have made it clear that we will only proceed to take Lucid public, if PAVmed retains a controlling majority equity interest. As such PAVmed will continue to report consolidated financials and we'll recognize Lucid revenue and revenue growth. Lucid will have access to itself capital to drive its growth strategy, but PAVmed will continue to play an important role and benefit directly from Lucid successes. But there's a deeper question about our vision for PAVmed over the medium and long-term. So let me be clear about one thing. The future PAVmed is not to be a holding company for Lucid. To the contrary, one of the fruits of our success at building and rapidly building value in Lucid over the past three years has been that PAVmed has built a powerful infrastructure to serve as an innovation and value engine across medical device, diagnostics and potentially even more broadly. This infrastructure consists of a greatly expanded PAVmed team with broad expertise and experience across all disciplines, which is tightly integrated with the network of best-in-class process experts and consultants. The infrastructure both deep expertise and technical skill set in design and development, regulatory device manufacturing, commercialization, market access, clinical trials and CLIA laboratory molecular diagnostics. So our vision for PAVmed is quite simple is succeed this engine and generate value in the form of future consists. This can be from groundbreaking technologies already in our portfolio such as CarpX and our suite of infusion products, it can also be from technologies we license or acquire as we did with Lucid. Our success with Lucid in creating value not just for our shareholders, but for our partners of Case Western has greatly increased the number of innovators and academic centers we are soliciting us to consider partnering with them on very exciting technologies. We assess each of these opportunities very carefully, but we won't hesitate to pounce on the most promising as we did with Lucid just three years ago. With that I'll pass it on to Dennis to provide an update on our financials.

Thanks, Lishan, and good afternoon, everyone. Let me brief our summary financial results for the first quarter ended March 31, we reported in our press release that was published earlier this afternoon and our quarterly report on Form 10-Q was concurrently filed with the SEC and is available at sec.gov and also on our website. As you already know from our update call in February and previously in November, test performed in any given quarter will not result in recognized GAAP revenue until the cash is actually collected. As previously mentioned on several occasions, this will be true during the transition period of negotiating third-party private payer reimbursement contracts and related coverage policies. There was no recognized revenue in the quarter. As only recently were the first payments received by our Medicare and private payer billing agency. With regard to the balance of 2021 consequently, so our expectation that throughout 2021 GAAP revenue will be realized only on actual collections received for test submitted for reimbursement. This obviously can result in timing of revenues recognized versus the time they are submitted by third-party reimbursement. As promised on our last corporate update call, EsoGuard tests performed and submitted for payment are now provided in the press release. Obviously, we're in the very early innings. We continue to evolve our reporting metrics as our various sales and marketing efforts further influence adoption, particularly with Project Phoenix upcoming kick off. Presently, there are now four banking analysts who have issued coverage on the company and others that are also doing their due diligence. The 2021 revenue estimates provided by the analysts are achievable. But quantity and collections are highly dependent upon the evolving reimbursement landscape. As you are likely aware from our last corporate update, the local coverage decision or LCD for CMS related reimbursement has still not been published. With regard to the financial results for the quarter, research and development costs, the first quarter research and development costs were approximately $3.3 million as compared to $2.6 million for the corresponding period of prior year, with the approximate $700,000 increase principally related to increase in clinical trial costs, outside professional engineering services with respect to CarpX, Nextflo, PortIO, EsoGuard and our glucose monitoring project. G&A. And G&A not including sales and marketing expenses which are now presented separately were $3.4 million for the first quarter compared to $2.2 million for the same quarter in 2020. The approximate $1.2 million increase is principally related to approximately $800,000 increase in compensation related costs, principally related to staffing levels and also related stock-based compensation costs. In addition, about $300,000 in consulting services related to patents, regulatory compliance and legal processes for contract review and public company expenses and another $100,000 in general business expenses. Sales and marketing expenses were approximately $1.4 million for the first quarter compared to $400,000 for the corresponding prior year period with an $800,000 increase principally related to increased headcount sales and marketing personnel and $200,000 increase principally related to consulting and professional services with respect to increased commercial activities. PAVmed reported a net loss attributable to common stockholders of $9.5 million or a loss of $0.13 per common share versus a loss of $14.5 million and $0.33 per common share for the same period in 2020. A press release provides substantially more detail related to the noncash charges occurring in the current and prior periods. Also the press release provides a table entitled non-GAAP measures which highlight these amounts along with interest expense and other non-cash charges namely depreciation, stock-based compensation, and financing-related costs to enable better understanding of the company's financial performance. You will notice from the table that after adjusting the GAAP loss by approximately $3.6 million for non-cash or financing-related charges, the company reported a non-GAAP adjusted loss for the first quarter of $5.95 million or $0.08 per common share. PAVmed had cash as Lishan mentioned of $48.6 million as of March 31st after paying off our convertible debt in March in the amount of $14.5 million. During the first quarter, the company received additional net proceeds of approximately $53.7 million from the issuance of common stock and $1.4 million from the exercise of Z warrants. So, with that, operator, let's open it up for questions.

Thank you. We will now be conducting a question-and-answer session. [Operator Instructions] The first question is from Kyle Mikson from Cantor Fitzgerald. Please go ahead.

Hi, good afternoon.

Hi Kyle, how are you?

Doing strong. How are you guys doing? Thank you. So, I just wanted to confirm on the Lucid tests processed during the quarter. So 78 EsoGuard tests versus is that the number of tests that were performed and then submitted for reimbursement or just simply performed? And then also I know Dennis you talked about this a little bit but just I was wondering if you could provide a bit more detail on your expectation for the rate of claims denials for the rest of the year or even the pacing of the cash collections as well because just -- I know it's a little bit uncertain, but I was wondering how we should be thinking about that? Thanks.

Yes. 78 -- yes. So, the test in the first quarter are submitted for reimbursement and they have not been fully collected yet. And the rate of denials is still uncertain in terms of what that would be. On the CMS side, we shouldn't expect sizable denials. And interestingly enough, so far on the private payer side, we have been receiving payments -- there have been some denials which will get appealed. And then on the private payer side the reimbursement rate is at the non-network levels, which you would expect because there's not coverage policies on the private side yet. So, in terms of giving you any guidance in terms of denials, it's too uncertain to provide that at this time. I will tell you that I think it's known among our investor base that our targeted audience of patients is approximately 60% Medicare patients or CMS-related and we have the payment determination for that. 40% being private pay and so the denials will likely be heavier on the private payer side until coverage policies are in place. They are encouraged by the fact that we are getting some payments on the private payer side. Again, too early to tell what the denial rate would be, but is likely part of the evolving reporting metrics that as we have more experience to be able to project further. That will be forthcoming.

If I could just reemphasize one point, which is that the -- that neither the tests that were performed in the first quarter of those in second quarter, the vast majority of those we haven't gotten any response yet with regard to the submitted plan. So, we're just getting the early signal as to how things are going to break with regard it. And we'll obviously have some more color on that over the coming months.

All right, makes sense. Thanks for that. And sticking with Lucid and EsoGuard, I wanted to -- I wondering if you can kindly quantify the commercial team. I was just wondering if you can provide any numbers around -- and I did hear a few of these like two clinical specialists, I think I heard but any numbers around sales reps or sales managers?

Yes. So, let's go through that. Let's just go through that systematically. So we have some -- we have Chief Commercial Officer, Director of National Sales, other support folks at that level including market access and sales managers and so forth. Below the Director of Sales, the new Director of Sales, we have seven Regional Business Managers that cover the entire US territory. And each of them -- sorry, collectively they currently supervise independent sales reps approximately 50 independent sales reps. But one of the things that we've mentioned and one of the parts of our growth strategy is to expand to start including territory managers under those seven. And we have not begun the -- John just started a couple of weeks ago, but one of the things the past was doing is to start building the territory managers under the regional managers, as I mentioned in my comments in two different flavors. One group that call on GIs, and one group that call on primary care physicians. That process is just getting started. On the clinical special side, our goal is to hire seven to start and we've hired two so far out of that seven. To be clear that does not include the staffing of our test center. So, this is strictly the sales and marketing team. The Lucid test centers are going to be a separate.

Okay. That was helpful. I guess I'll ask one more, and I'll let others hop in. On Europe, I guess could you just walk through the kind of the commercial and the distribution strategy in Europe assuming you receive CE Mark approval for EsoCheck and you're cleared for the EsoGuard assay as well? And then, similarly what kind of issues would arise I guess, or headwinds would be presented? If you don't get the CE Mark approval by May 26 by the time that the new regime begins?

Yes. Let me answer that. I mean we're really pretty confident. I mean there's -- everything is being sort of down to the wire, because there's a lot of applications that these notified bodies are trying to get. So we're pretty confident we'll do so. But it's not the end of -- I mean if it doesn't happen, it's not the end of the world in terms of the delay transforming our application to an MDR application is not going to -- will take some time, but it's not going to have any sort of long-term impact. So again, pretty optimistic, but it's -- it doesn't make it through the 26 then we'll just be held will dust it off and then we submit it as MDR. So I think as you know, Kyle, in Europe getting CE Mark is one thing but getting commercial traction is very different -- a very different play than it is here in the US. And generally speaking and this is what we would do. We want to try to do is to target countries where you have expectations of having good traction with key opinion leaders and early adopters that you believe can drive this. And so, what our plans would be to focus on the two countries where we're focusing our clinical study. So as I mentioned, we're about to start European enrollment in our clinical studies in the summer. And as part of that, we've had strong engagement with centers in the Netherlands and in Spain. Both of those countries have very prominent -- particularly, the Netherlands, they're very prominent physicians in the esophageal space and in the very Barrett's Esophagus space. So our efforts would be to get to -- once we get CE mark clearance, to focus our initial commercialization efforts on those two countries. The other prospect would be in the UK, where there's a very strong interest in this, because of other technologies that have been developed in the UK and we also have some connections in the UK through our new Board member, Debbie White. So just to reiterate, Europe, it's pretty much shorter over comeback. You do a country at a time and get your commercial infrastructure setup. I don't know if it's clear, but I'll emphasize this that, the assay will still be performed in the US. So the samples will still get sent by Express Mail to the US and we'll continue to perform the assays there.

Okay. That was perfect. Interesting. So I will leave it there, but thanks guys for taking the questions and congrats on getting these for the EsoGuard. Thanks.

Yes. Great. Thanks Kyle. Take care.

The next question is from Frank Takkinen from Lake Street Capital Markets. Please go ahead.

Hi, Frank. Good afternoon.

Hi, Frank.

Good afternoon, guys. Thanks for taking my questions. Just a couple for you. I wanted to start with the approximately 180 US accounts. I was hoping you guys could walk us through the process of account being interested to trained and shelving product, to actually performing procedures? And then, with some of your earlier accounts that you onboarded right at the beginning, could you just talk to how their utilization has trended since onboarding and launching their product?

Yes. So the process is pretty typical. There's engagement by the sales team. There's sort of an educational step, there may be a dinner or other opportunities to educate them on the technology or bring in other users to bear on the process. That doesn't typically take too long. Once we've been able to make the case to the astrologist that they should be interested in, the most that they have patients, immediately within their practice that can benefit from this, particularly their colonoscopy patients. And that we would work with them to deliver referrals from their primary care network. The rest of the steps are pretty straightforward. You get getting product and the sales are straightforward that -- quite frankly, just set EsoCheck devices as well as the EsoGuard certificates to their location. And training is actually quite straightforward as well. We come to their facility. All of our sales regional managers are capable of trading accounts. And they simply perform the procedure in an office setting and teach them the various steps of how to do the -- either the physician themselves or if they're going to be delegated to a nurse, to that individual. So I'd be hard-pressed to put a time line on it. I mean, I think, as you know, in any aspects of medical devices or diagnostics businesses, you can turn an account in two days or sometimes it takes more and a longer education process to get them on board. I would say just one point that, the private practices can move more quickly. As you might imagine, got some of the longer lead times, but ultimately the greater yields in terms of case volume are at the academic medical centers. So our busiest account -- I believe that our business account to date is NYU. It took quite a while to get through the complexities and the -- of the logistics of the academic -- of a large academic medical center. But then once you get started, you actually can really do a lot of cases. I'm not sure I have a good answer for you in terms of the metrics that you can hang your head on with regard to accounts. We just don't have enough data with regard to accounts -- take at accounts and sort of the reproducibility of that. We have some accounts that we contacted early on during the pandemic that there's express an interest that have product on the shelf that we're going back to now that there's more access. We have other accounts that have moved more quickly that are more recent. It really has varied. And I just don't -- I don't think I can provide you with sort of in the way of numeric guidance on that. I don’t know Dennis, if you have anything else to add to that.

No, I think the predictable pattern still yet to be seen. I think you know Frank that through the early part of the first quarter was rather choppy as clinics were focusing on vaccinations and that has picked up, but the pattern is still too early that it will be part of future metrics.

I want to add one other thing which is important which is that it's also hard to separate the trends from the expanding team. And I'll give you one concrete example of that. So, once you have an account open, as again as I'm sure you know from other new device markets, maintaining accounts and getting accounts to do procedures often requires a lot of face time and a lot of touches. And doing so -- that's one of the reasons why we're expanding our clinical specialist to provide sort of procedural support so that the sales reps and the business managers can focus on new accounts. So, we haven't really had that until recently, but we've been able to put folks and the procedures for established accounts to provide support and free up some of our steps. So, I think some of that will start to declare itself over the coming months.

Got it, that's helpful. Next for me on the reimbursement side I was hoping you could -- and I understand it's very early days and the reimbursement conversations you have had to-date. But I was hoping you could help us understand the expected out-of-network reimbursement level you could see in relation to the 1932 set by CMS? And then a little longer term, how you expect the commercial insurers to establish a reimbursement level over time?

Yes, I think the latter is very hard to predict. I mean as you said we're just starting -- we have -- we're really excited. We have our first Board meeting on Friday in Orlando. We have Medical Directors from many of the major payers that are going to be present for our presentation. We think we have a very powerful data set to present to them. But I think it's too early to say. I mean you certainly hope that barriers will come in at or near Medicare rate. We have a strong motivation with -- I don't know how familiar you or others might be with the PAMA regulations, but we have a very strong motivation to not undercut our Medicare pricing with private payer contracts because that could have follow-on effects for Medicare. So, we're very attuned to that. The sample size is small, but so far we've been building the private pay patients at the approximately $2,000 price. And it's very small, but the ones we've received have been in the ballpark of about where you'd expect a 50% out-of-network payment to be. But I wouldn't really interpret you wouldn't interact that much at all because I -- it's very early. And I'm not sure that that's really predictive of where we'll end up in the more subsitive discussions from a contractual and network point of view.

Great. Okay. Last one for me. Given you guys have elected to go the IPO route, can you just give us a refresh time line when we could see this filed, as well as when you could see it become a standalone company?

Dennis, you handle that.

Yes sure. Frank we're working through the process. It includes separate audit financial statements which the auditors are working through and we expect that to be done shortly. It requires an S1 update and we'll be filing that once the audit is completed. Bankers have been retained. The banker has been retained and once we -- I guess the gating factor is going to be once we file with the SEC how quickly they can turn around comments. And we had filed a confidential one before and the comments were light. We'll update that with the updated financing. So we can't predict the timing. It really will be SEC related once we hand the document over to them.

It's just simply we're moving. We are moving full to the gating items are the one.

Perfect. All right. Thanks for taking all my questions here.

Thanks Frank.

Next question is from Anthony Vendetti of Maxim Group. Please go ahead.

Anthony good afternoon.

Good afternoon, Dennis. Hi, Lishan, how are you doing. So I just to shift gears a little bit to talk a little bit about CarpX. So I was just wondering if you can give us an update on how that rollout is going?

Yes. So as you know we did our first case and we were using external non full-time manager as well as distributors. And we had developed a panel of surgeons which we were hoping could get us through this sort of initial commercialization phase and sort of working out the procedural development and safety issues and so forth with the device before full commercialization. And then to be frank that just hasn't panned out some of the surgeons that we've have we put on that panel, just do not have the clinical volume that we need in order to start to get that experience. So we decided to kind of reorganize the whole effort frankly and I and -- went out and spent some time recruiting. A full-time national sales manager with specific one of the things we realized is they needed someone with specific experience working full-time that had done this before in the carpal tunnel in the carpal tunnel space. And we've gotten that -- we have that person now. Calvin is, as I mentioned was at the center of the launch and successful commercialization of the segue device by price medical which we acquired a couple of years ago. So Calvin starts today and he's here to go and we have his wallet of enhanced surgeons and distributors. And we look to sort of get back on track with regard to getting the advisory panel cases Doug and still looking towards a full commercialization way.

Is -- what full commercialization when we…

So later in the year. Yes, we're still hoping to get there across the same time line, but just with this initial commercialization under our belts with this new reorganization.

Okay. So still by the end of the year okay? Okay. That's -- I guess any update just on -- DisappEAR really quick and then?

Yes, it is going well. I mean again I spent 6:30 -- as get 30 minutes to get through everything. Sometimes I don't have time to talk about the others. But we've had -- we do all the really great working relationship with Canon. We have that sort of full force of their team and their expertise and their resources behind us now. We continue to receive samples from them for benchtop testing, we're close to being able to do animal testing on the actual samples that are manufactured by Canon and that should put us in a good position to submit for FDA 510(k) by the end of the year. So it's going really well. We're really happy with how that relationship has lost.

Okay. Excellent. Thanks for the update. I’ll turn it back over.

All right. Thanks.

The next question is from Ed Woo from Ascendiant Capital. Please go ahead.

Yes. Also congratulations on the quarter. Lishan, thank you very much for giving us your vision of PAVmed post-Lucid. And you mentioned that you're seeing a lot of different partners coming out with products in that for you to possibly work with. Do you have a set target in mind of how many products you can have at one given time?

No. I don't think I can -- and I would say that definitively. I mean we look at each one at the time. And look at the opportunity. And I think the lesson here is it's not a theoretical one the lesson in the template where this is lucid. At the time Lucid was presented to us we were not contemplating necessarily adding sort of a full-blown subsidiary. We were not looking in the diagnostic space frankly, but the opportunity was presented to us. We became quite clear to us that it had a big opportunity and we passed on it. And so we look at a lot of things. We'll only act on a limited number because you have the limited capacity and capital and we're not looking to outstrip either of those in the short or medium-term. So we -- but the good news is that we're seeing a lot. And people understand and they've read about Lucid. They know how things have played out in terms of the value created for Case Western. It's very diverse. It covers a lot of interesting areas that we're not directly involved in right now that have that have great market opportunities. So I wouldn't come up with a hard number to be frank. But we certainly will do it responsibly based on our resources on our capital.

Great. And just a follow-up to that question. I know you said that potentially it may be in areas that you're not involved with now. What is some of the big key criteria you're looking for when you're evaluating opportunities?

So it really was to kind of -- to come up with the checklist because if you could ask me that in December of 2017 I gave you a checklist of the kind of device companies we were looking at but I would have had to eat my words three months later and said well we're going to do diagnostics because we have a diagnostic opportunity. But I think -- so I'm not trying to evade your question, but I'll say that it's the check boxes are pretty similar to what we've always looked at which is do we have -- does it have an opportunity to have an impact clinically? Does it address some significant unmet need and have a significant clinical impact? Is it generally an area where you can count on, sort of decent margins -- decent gross margins and not sort of have to work within a commoditized space? The market -- is the broader market opportunity large enough to justify the investment? And, I guess, I would say that on top of that there are just areas in the industry and the life sciences industry right now that are sort of and certainly we'll look at -- we'll pay attention to that. I think diagnostics got capturing -- we acquired Lucid business, but more over the last couple of years and perhaps others may disagree with that. But there's clearly areas within the life sciences that are getting some attention in terms of capital and attention on the street. So those would be criteria. And then, I guess, finally I would say, we would -- we look to products that synergize certainly we look -- put towards the top of the list products that synergize our innovation. That synergize with our existing technologies, whether it be within Lucid or within with CarpX or infusion technologies that would certainly be a criteria that would have an impact on what we would look for or ones that have -- where we could add and we could inaugurate certain innovations under an umbrella. And that obviously would be useful as well. I think that's probably as much as I can say, in terms of guiding principles about, how we look at these technologies.

Great. Well thank you. That is very helpful.

Thank you.

Yeah. Thanks a lot.

Thanks, Ed.

Sure.

The next question is from Frank Ibarra from Morgan Stanley. Please go ahead.

Yeah. I am sorry. Frank Ibarra from …

Go ahead. Hi Frank.

Hi How are you?

Great.

Thank you so much for taking my call. Just to be correct here, it's Frank Ibarra from IbarMax, LLC. I was formerly with Moran Stanley for 40 years, but have retired.

Okay.

A couple of questions, it doesn't seem that if any of the current PAVmed shareholders are going to receive any kind of stock in Lucid prior to the IPO, is that correct?

We have not stated that one way or the other. So we'll -- yeah.

Okay. Well thank you very much for answering that question. Secondly is, if that were to be the case, would it be possible, because we do going to have preemptive rights, would it be possible to allocate any kind of portion to current shareholders of PAVmed?

I don't think, we're ready to make any specific comments about that, except that, at the time that we're faced with that decision, we'll make the decisions that we think are in the best interest of PAVmed in the shareholders. So I can't provide you any more specifics on that.

But again…

Frank there are sentiment comes up a lot.

Well thank you very much and congratulations on a very good quarter and actually for the beginning.

Thank you very much Frank.

Thank you, Frank.

This concludes the question-and-answer session. I would like to turn the floor back over to Dr. Lishan Aklog for closing comments.

So thank you all for joining us this afternoon and really for a bunch of great questions and great discussion. As always, it's a pleasure. So we look forward to keeping you abreast of our progress in the future. We press releases and conference calls such as this one. And I'd remind you the best way to keep up with our news in between our calls updates and events is to sign-up for our e-mail alerts, on our Investor Relations website or to follow-up on social media Twitter, LinkedIn, or YouTube. I also encourage you to contact Mike directly with any questions at JMH@PAVmed.com. Have a great day. Thank you very much.

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