Good day, and welcome to the PAVmed Third Quarter 2023 Business Update Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After today's remarks, there will be an opportunity to ask questions. [Operator Instructions] Please also note that today's event is being recorded. I would now like to turn the conference over to Michael Parks, Vice President of Investor Relations. Please go ahead, Michael.

Thank you, Operator. Good morning, everyone, and thank you for participating in today's third quarter 2023 business update call. The press release announcing our business update for the company and financial results for the three and nine months ended September 30, 2023 is available on the PAVmed website. Please take a moment to read the disclaimer about forward-looking statements. The business update press release and this conference call both include forward-looking statements. And these forward-looking statements are subject to known and unknown risks and uncertainties that may cause actual results to differ materially from statements made. Factors that could cause actual results to differ are described in the disclaimer and in our filings with the U.S. Securities and Exchange Commission. For a list and description of these and other important risk factors or risk factors and uncertainties that may affect future operations, see Part 1, Item 1A entitled Risk Factors, and PAVmed's most recent annual report on Form 10-Q filed with the SEC and subsequent updates filed in quarterly reports on Form 10-Q and any subsequent Form 8-K filings. Except as required by law, PAVmed disclaims any intentions or obligations to publicly update or revise any forward-looking statements to reflect changes in expectations or in events, conditions, or circumstances on which the expectations may be based, or that may affect the likelihood that actual results will differ from those contained in the forward-looking statements. I would now like to turn the call over to Dr. Lishan Aklog, PAVmed Chairman and CEO. Dr. Aklog?

Thanks, Mike, and thanks everyone for joining us this morning. We look forward to providing you with this update on PAVmed's business and finances. First, a quick reminder that we held a separate business update call for PAVmed subsidiary Lucid Diagnostics yesterday. Today I will limit my comments on Lucid's business to key highlights. I would encourage you to view the recording of yesterday's call, which is available on the Lucid website, for further details from Lucid's business update. First some quick background. PAVmed is a commercial-stage medical technology company with two subsidiaries, which are marketing commercial products, privately held Veris Health and NASDAQ-listed Lucid Diagnostics. As the parent company, PAVmed provides a shared services infrastructure, including management services to each subsidiary. The model drives substantial economies of scale and an infrastructure which facilitates licensing or acquisition of high-value assets, such as Lucid and Veris. We implemented a strategic restructuring in early 2023 to focus substantially all of our resources and efforts on our two commercial enterprises, Lucid and Veris. And this update will reflect that strategy. That said, I'll briefly note that we have one active internal R&D project in partnership with Novosound to develop a next-generation intravascular ultrasound device. That progress is progressing very well, having completed two or three milestones. I will also note, as I have in recent calls, we remain very active on the business development side since current market conditions offer a plethora of high-value assets which may provide real opportunities to enhance PAVmed shareholder values. Let me start with some highlights for Veris and Lucid before proceeding to a deeper dive on Veris update. Veris Health is undergoing a commercial restructuring and expansion that is currently underway under the leadership of our President, Gary Manning, who started several months ago. We have active…

Thank you, Lishan. Good morning, everyone. Our summary financial results for the third quarter were reported in our press release that was published last night. On the next three slides, I'll emphasize a few key highlights from the quarter. I encourage you to consider those remarks in the context of the full disclosures covered in our quarterly report on Form 10-Q that was filed with the SEC -- previously filed with the SEC and is available on our PAVmed website. Slide 16. Our balance sheet demonstrates cash of $26.4 million, and it reflects a sequential burn rate of $10.7 million. We have successfully cut our burn rate in each of the first three quarters of this year, reflecting quarterly burn rate reduction of more than $6 million since the fourth quarter of last year for an average reduction of $2 million in each successive quarter. These improvements are related to the cost control initiatives we put in place at the beginning of the year with continued improvement in each successive quarter. Obviously, the cash balance does not reflect the $5 million in additional Lucid funding shortly after the end of the quarter, nor the remaining $10 million draw available to us under the Securities Purchase Agreement signed in March of 2022, nor other resources that are available to us at the PAVmed and Lucid entity levels. On a pro-forma basis, including the remainder of the securities purchase agreement, and assuming the net burden rate is sustained at this level, our runway is about a year. Furthermore, as cash collections continue to accelerate, as we will talk about in a second, This can further throttle the burn rate for the upcoming quarters. Vendor payables. They can vary by quarter based upon the timing of receipt of vendor invoices. Although accounts payable…

We will now begin the question-and-answer session. [Operator Instructions] And our first question today will come from Frank Takkinen with Lake Street. Please go ahead.

Good morning, Frank.

Hi, Frank.

Frank, your line is open. Please check if you're muted.

Good morning. Can you guys hear me now?

Yeah, yes, we can.

I apologize. Maybe just to start on the commercial side on Veris, you mentioned a couple comments. Obviously, there's new leadership there, a couple new market development managers. Maybe dive a little deeper into what we should expect for commercial investments related to Veris over the next couple of years or quarters?

Sure. Yes, I think the last couple of quarters have been really focused on the model and the template and the processes and logistics around getting a practice up and running. There are some significant logistics involved with the processes of getting patients on the platform, getting them their boxes, getting them their devices, making sure they're connected, as well as getting the practice on the clinician portal, getting that integrated with the EHR and so forth. So, a lot of those kinks have now been worked out, and we've had, as I mentioned, good feedback from the two practices were really -- heavily engaged in this and helping us with working out all those kinks. And ultimately, what we wanted to do before pushing harder to expand the number of counts is to make sure that not only does do things does the integration aspects to this operate smoothly. But we can confirm that the practice is actually able to build that, we're facilitating that process through the platform by providing the time stamp – time calculation measures and so forth that allow them to build under these various codes and that they're actually getting paid. And so, we've really made a ton of progress on that. As Dennis mentioned, the practices are telling us that we are now -- that they are now cash flow positive and they're getting paid. And so we have two opportunities here. One is to drive patient enrollment and patients on the platform at our -- at existing sites and put in measures to try to achieve high percentages of the cancer patients in the practice being on our platform. And there's a lot of opportunity to simply drive that within each account. And then, of course, as I mentioned, we just hired…

Yes, that's good color. And my second question was going to be on the pharma side of the Veris platforms. So maybe I'll continue with that thought process.

Yeah, sure.

Maybe talk about when we could see some first partnerships across the goal line? And then I know I heard your comment about focusing mostly on the post-FTA approval phase. Maybe talk to why you think that's the most logical area of development to focus on? And if there is still opportunity to work into some of the clinical trials as well on the maybe Phase 2 or Phase 3 timeframes.

Right. So, thanks for the opportunity to kind of flesh that out a little bit. So there's been an evolution in our strategy and our thinking about this as we've engaged a bit deeper. You know, as you sort of hinted at, our initial focus was on pre-submission and being engaged during the development process during clinical trials in the Phase 2 and Phase 3 sides of this so that it actually becomes part of the package FDA submission. And we still think that there's a big opportunity there. The logistics are more complicated. We have to sort of interface with CROs and have our platform work within the CRO platforms where the data is being collected. But we think it's a big opportunity, but the lifetime of those are going to be greater, right? Before we actually see potential commercial value in that, we have to follow the drug through its development phase through FDA submission until ultimate FDA approval. So that opportunity is still there and the work we'll be doing in the early phases of this will, in the module, will be very similar to what it would be for there. But what we've noticed as we dug further into this is that, there really is an immediate opportunity on the post-market surveillance side. So these are drugs that have already been approved, so we're not waiting for that process. They're in the market, and one of the -- several of the contingencies of their approval is that they have -- that they undergo this market surveillance and they have actual -- they have very well defined care pathways that patients have to go through to be -- to qualify for receiving these new drugs. And the process of collecting that data is critical for the drug…

Okay. That's good color. I'll stop there. Thanks for taking the question and congrats on all the progress.

Thanks, Frank.

[Operator Instructions] Our next question here will come from Ed Woo with Ascendiant Capital. Please go ahead.

Yes, congratulations on all the progress. You mentioned that for Veris, a big opportunity in the pharma is post-FDA approval. How big of that opportunity is versus drugs that are in clinical trials?

I think it's a large, if not, larger opportunity, but most importantly, it's a more immediate opportunity as opposed to sort of the longer timelines for commercial traction in the pre-submission phase. So as anybody who's paying attention knows, there's been a boon, really almost a revolution that's going on right now in oncology therapeutics. There are drugs that are leveraging breakthroughs in science and immunotherapy and other scientific breakthroughs to deliver drugs at sort of a record pace. So there are numerous oncology drugs that are working their way, that have been approved, that are working their way into real world practice and are where the motivation to move up to first and second line is extremely high. So I would say that the opportunity at least is great, if not greater. But most importantly, the opportunity -- the timelines of the opportunity for near-term engagement and commercial value is substantially greater in the post-market phase.

For some of those who are not as familiar, it's typically for drugs that are -- therapeutics that are approved. Is there -- like how intensive is the monitoring post-FDA approval?

Very intensive. So these approvals are in a sense conditional, right? So they are -- they found them to be [indiscernible] effective in their -- typically PMA trials and, and they're -- sorry, their Phase 3 trials, but they're coming out for real world use with a very stringent requirements for surveillance where data has to be collected to demonstrate in real-world use that the safety profiles that were demonstrated in the Phase 3 studies are replicated in the real world. So there's a significant amount of data being collected. There are significant periods of market surveillance. And the way that the drugs are being delivered are under very strictly defined care pathways. So all of that lends itself to a digital health companion platform. So if you have your approved, your drug approved, and the agreement with FDA is that you offer it, let's say, as fourth-line therapy, and you have an actual protocol, so the pathway that patients are supposed to undergo, what kind of testing they're supposed to undergo, what their dosing is supposed to be, how their complications are being monitored and reported. All of that is explicitly described in a care pathway that comes with the approval. And so, all of that is very amenable and works well within a digital health platform that we would seek to capture. And then, again, just to reiterate, the real commercial opportunity for the companies is that, if they come out of the gates as a third or fourth line drug, the market is much smaller. And the goal is to use this post-market surveillance phase to demonstrate that the drug should move up the chain of therapy to first or second line drugs, which expands the market dramatically. So really, we think it's a great opportunity, and it's one that we think will benefit for modern digital health tools such as our platform.

Great. Well, thanks for answering my questions and I wish you guys good luck. Thank you.

Thanks, Ed. I appreciate it.

And our next question will come from Anthony Vendetti with Maxim Group. Please go ahead.

Good morning, Anthony.

Good morning, Dennis. Good morning, Lishan.

Anthony, how are you? Good. How are you? So, just to follow up on the major academic cancer centers, obviously that sale cycle is probably fairly lengthy. Would it be accurate to say it's probably somewhere in the six to 12 month range? Could it be longer?

Yes, I think -- I'm sorry. Go ahead.

Yes, and then I know you said a number of centers that you're speaking with. How many total centers are there that you're having conversations with? And sort of -- would you qualify those as part of a qualified pipeline you have, or some of them early stage in various forms, maybe just a little more color on that.

Yeah, I'll try to give you some, at least qualitative -- a more deeper qualitative sense of that. So, yes, active discussions, several, I would say, and these are amongst the largest cancer care centers in the country. You're right, lead times can be long, but lead times are going to generally be long for the first one, right? So there's an advantage of being the first one, but there's also more work to get somebody to buy in to being the first one. So I think you referred to it as a qualified pipeline. Yes, I would definitely describe it as that. There are ones in there that are -- where we've made enormous progress, working up through the C-suite, getting people to sign off on, and we think we're making excellent progress to actually consummating, and there are others that are more in -- more early stages of the discussion. I worked in academic medicine for two decades, and I know they're competitive, and we certainly feel like once one has signed on and can brag about their cancer-specific platform that their patients benefit from, there will be some potential competitive juices flowing for others. So yes, I think this is not -- I think there are some potential near-term wins here, and we are filling a pipeline of others along the way, and we'll continue to expand the conversations we have.

Okay. And then just switching to the device, I think you provided a lot of color on the opportunity to integrate the Veris platform in clinical trials as well as in the actual post-marketing of these new drugs that are in various stages of coming to market. Maybe just talk about the device itself, the software, there's always -- we hear obviously always about security breaches and there's a lot of unsecured firms out there trying to prevent that. Maybe talk about the development of the software, the monitoring. How comfortable do you feel about the security of that and the HIPAA compliance at this stage, or is that part of the process you're working on at this point.

I mean, I'm glad you brought that up. Let me just maybe do a little bit deeper dive of the actual sort of what the device is and how it works and how we've been talking to the FDA about it. So this is effectively the equivalent of the predicate we're using -- predicates we're using are implantable cardiac monitors that are primarily designed for cardiac monitoring. And so, the whole landscape, the whole FDA process, and as well as we'll get to in a second, the standards with regard to cybersecurity are well established for those devices. They've been around for years, and we're just following in that path. So what our device, how our device differs is that it includes, in addition to the baseline cardiac monitoring, other parameters that we've -- that I enumerated earlier, and it has a form function that allows it to be implanted in conjunction with a vascular access part. It has that divot that you saw that you can snap -- that you can snap those together. So, yes, the development process, we've got multiple world-class partners that are working with us on this that have extensive experience in developing similar devices, whether it be the circuitry, the battery, optimizing software within the device, having the Bluetooth connectivity so that how the data that's collected is transmitted by bluetooth to the patient's phone and ultimately all of that is being handled by, in partnership with firms that have extensive experience in this. And as I said, it's going extremely well. The FDA has very high standards with regard to how this data gets collected, how it gets transmitted. So many of those standards are built into the FDA process. As I said, we've had numerous interactions with FDA. We're down to our last couple of pre-submission meetings on a couple of the final features that will get us towards the -- path towards putting together a 510k package and submitting it. The issues that you raise are important and front and center in these kinds of devices these days around cybersecurity and privacy and so forth. All of those are just -- all of those considerations are just deeply built into the design process from day one. So we're not breaking new ground here. We're just taking established best practices and compliance. We have a very robust compliance infrastructure both internally as well as we have dedicated cybersecurity -- a dedicated cybersecurity consultant that frankly works across all of our companies on all of our cybersecurity matters, but obviously is intimately involved in this process as well. So we're very aware of those considerations and all that work is being done with a very robust theme and with really careful attention to the requirements as well as best practice.

Excellent. That's a great color. And then maybe switching just briefly to Lucid, I know you did the call yesterday. You have a new revenue cycle management firm that seems to be producing the results that you're looking for. I guess on the call, Dennis you mentioned that based on the trends and where you're at, fourth quarter could be on track for $1 million or a little bit north of $1 million. It was that accurate? I didn't know if I heard that correctly, but maybe just summarize that a little bit for me. Thanks.

Yes, that's correct. For the first six weeks of the quarter, the average weekly collections are about 33% higher than the average for the entire prior quarter. So just doing the simple math, you're correct. It's trending to over $1 million in collections for the fourth quarter.

Okay, excellent. Thanks very much. I appreciate it. I'll hop back into the queue.

Thanks, Anthony.

Ladies and gentlemen, this concludes our question-and-answer session. I would like to now turn the conference back over to management for any closing remarks.

All right, great. Hey, thank you everyone for your time. Thank you for the excellent questions. Really excited about this past quarter for PAVmed and its subsidiaries, particularly the strong quarter that Lucid Added. We look forward to continuing on that progress. As always, feel free to -- we'll continue to update you through quarterly calls and press releases, but in the interim, feel free to contact us with any questions. You can contact Mike Park at mep@pavmed.com. So thank you for your time and attention, and have a great day.

This concludes today's conference call. We thank you all for attending today's presentation. You may now disconnect your lines, and have a wonderful day.