Good morning and welcome to PAVmed's Second Quarter 2024 Business Update Conference Call. At this time, all lines are in a listen-only mode. Following the presentation, we will conduct a question-and-answer session. [Operator Instructions]. Please note this event is being recorded. I would now like to turn the conference over to Matt Riley, PAVmed Director of Investor Relations. Please go ahead.

Thank you, Operator, and good morning, everyone. Thank you for participating in today's business update call. Joining me today on the call are Dr. Lishan Aklog, Chairman and Chief Executive Officer of PAVmed, along with Dennis McGrath, Chief Financial Officer of PAVmed. The press release announcing our business update and financial results is available on PAVmed's website. Please take a moment to read the disclaimers about forward-looking statements in the press release. The business update, press release, and the conference call all 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 the statements made. Factors that could cause actual results to differ are described in the disclaimer and in our filings of the Securities and Exchange Commission. For a list and a description of these and other important risks and uncertainties that operations, be Part 1, Item 1A, entitled Risk Factors in PAVmed's most recent annual report on Forms 10-K filed with the SEC, and any subsequent updates filed in the quarterly reports on Forms 10-Q and subsequent Forms 8-K. Acceptance required by law of PAVmed disclaims any intentions or obligations to publicly update or revise any forward-looking statements to reflect changes in expectations or in events, or circumstances on which 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, Chairman and CEO of PAVmed. Take it away, Lishan.

Thank you, Matt, and good morning, everyone. Thank you for joining our quarterly update call. Before proceeding, I'd like to thank our long-term shareholders for your ongoing support and commitment. As we discussed in recent calls, our updated strategy for PAVmed has been to strengthen its finances and long-term stability by seeking to have each of its subsidiaries be independently financeable and well-positioned to leverage PAVmed's shared infrastructure. I'm pleased at the progress we've made on this front. Lucid remains PAVmed's strongest asset, and has been able to independently finance its operations, and as we discussed in yesterday's Lucid earnings call, is making solid progress over multiple fronts towards fulfilling its large commercial potential. PAVmed's two other subsidiaries are also headed in a positive direction consistent with this strategy. As we'll discuss later, Veris Health is close to securing an independent financing round and the PMX Incubator is deep in the process of securing financing for PortIO. Both of these add attractive valuations. Let's start with some highlights from the second quarter and recent weeks. Again, starting with Lucid Diagnostics, just briefly, second quarter, EsoGuard revenue was flat, but test volume increased approximately 31% quarter-on-quarter and 44% year-on-year, and it was a record quarter for us. An important highlight is that we had a productive meeting with the CMS Medicare Contractor MolDX program and look forward to being able to follow up on that meeting with the submission of our data. We held our first large #CheckYourFoodTube event with upfront contracted payments, an important milestone with regard to us being able to translate test volume growth and #CheckYourFoodTube events with revenue and revenue growth. In Veris Health, our focus has been on our pilot program with the Ohio State James Cancer Center and we, as we'll discuss later, are first…

Thanks, Lishan. Good morning, everyone. Our summary financial results for the second quarter report in our press release was published last night. On the next three slides, I'll emphasize a few key highlights from the quarter, but I encourage you to consider those remarks in the context of the full disclosures covered in our quarterly report on Form 10-Q. With regard to the balance sheet, ASH at quarter end June 30th was $25.5 million. During the quarter, we added $11.6 million to that amount with elusive financing previously announced. The average quarterly burn rate for the trailing four quarters is $11.6 million per quarter. We disclosed in the 10-Q that our ability to fund operations beyond one year from today is largely dependent on how revenues ramp over the next four quarters, which is dependent on how the reimbursement landscape for both government and private health insurers continues to improve for EsoGuard. Additionally, our direct contracting efforts with self-insured employers and our corporate finance activities, including refinancing any outstanding debt at the time, can also work to exceed that threshold. Furthermore, as we advance the initiatives, both with PMX Incubator and Veris Health, particularly in connection with the High State University Cancer Care Center, any direct financing into either of these subsidiaries will further satisfy that threshold. The change in other assets is largely related to the three-year lease renewal for Lucid's Lab in California, which is accompanied by a similar increase in other current and long-term liabilities. The sequential decrease in the fair value of the convertible notes is largely related to principal reductions in the Lucid convertible note through conversion notices and issuances of Lucid shares and satisfaction of that note. As mentioned on our Lucid call yesterday during the quarter, Lucid issued 2.1 million shares and satisfaction…

Thank you. And ladies and gentlemen, we will now begin the question-and-answer session. [Operator Instructions]. And your first question comes from the line of Ross Osborn with Cantor Fitzgerald. Please go ahead.

Good morning, Ross.

Good morning, Lishan and Dennis. This is Matthew Park on for Ross today. Thanks for taking the question.

Hey, Matthew.

I was just hoping you could provide more color in terms of the scale of the pilot launch, and I guess your timeline to full launch and when we should start to see revenue coming from the fold?

Yes. So the pilot's going on pace. We've -- since -- we're about a third of the way through. It's designed to follow to have 100 patients enrolled on the platform. And it's going well. The purpose of the pilot was -- so this is a large medical center. They're the third largest cancer center in the country. And it's really about making sure that we're aligned with logistics with regard to how they handle calls and incoming notifications and all of that is really going really well. So we expect the pilot to wrap up in several months and then we'll look to get based on the success of that transition to not just a full commercial engagement, but we're really looking forward to finding ways to engage strategically with the institution on a variety of fronts consistent with what we described in the memorandum of understanding and then of course, using this as a prototype to engage with other large academic cancer centers along the way.

Got it. That's helpful. And then, I guess following up on that, would you walk us through your pipeline of additional contracts and any conversations you guys are having right now with large centers?

Yes. We do have a pipeline of about a dozen or so large centers and have active conversations with several of them. We expect those to move forward and accelerate really upon completion of this pilot. Veris has been -- we've been careful with our expenditures and our operating expenses to focus on this particular account as a driver to be able to cure financing, to drive -- to restart the develop for the implantable monitor and so forth. And as I've mentioned that strategy is working and we're close to securing some additional financing. I believe once we do and once we complete this pilot, we'll be able to start securing additional accounts.

Got it. That's helpful. And then, I guess just one more on my end. Turning to the implantable monitor, pending additional financing, have you guys provided longer-term guidance on when you expect to submit the monitor for approval? And I guess the steps that you guys need to take to get there? Thanks.

Yes, the timeline for submission, the pathway to clearance and it has all been pretty well worked out. We've had -- as I've said before, we've had multiple meetings with FDA. We've done a variety of preclinical studies at their request. And so, we feel like we're in pretty good shape, have a pretty predictable path. And if we are able to secure that financing soon and to be able to relaunch the development of the product, that'll take some time. It takes some time to bring vendors back online and to get back to where we left off. But we're looking at some time in mid-next year, 2025, as a reasonable target for FDA submission. And once we're submitted, we believe the clearance path is pretty straightforward.

Great. Thanks for taking the questions.

Great. Thanks a lot. Appreciate it.

Thank you. [Operator Instructions] Your next question comes from the line of Anthony Vendetti with Maxim Group. Please go ahead.

Thank you.

Good morning, Anthony.

Good morning, Lishan. Good morning, Dennis. I think you may have answered the question, but I just want to clarify. So, when you were talking about the financing, you were talking for Veris, not for the incubator, correct?

Well, for both. We mentioned that for both, but the Veris one is furthest along. And again, just to maybe use this as an opportunity to reiterate, PAVmed, we've model, right? We have a shared services model, we have subsidiaries, and we're seeking to raise capital into each of the subsidiaries. Obviously, Lucid has done that well over the past couple of years. And we're looking for the first time, really, to raise capital directly into Veris. And the incubator that we launched a couple quarters ago is designed also to raise capital not just into the incubator itself, but into individual corporate entities that hold individual assets such as PortIO.

Okay, great. And at this point, though, it's not a spin-off into an IPO like Lucid, correct?

No, no, we don't think that the markets are really amenable to that right now. This is just simply where do we raise the capital to advance these technologies? And our conclusion earlier this year was that to take advantage of PAVmed's shared services model and the infrastructure that we've created, and to advance other assets beyond Lucid, that each of those assets would have to raise its own capital privately, but not in the public markets really, or not the place right now for these early stage assets.

Agreed. Yes, no, that makes sense. So based on your best estimate, you expect Veris -- you expect to have funding for Veris in place before the end of the year and then submit to the FDA by mid-'25. Is that correct?

Yes, that sounds about right. I think, as I said, I think the financing of that effort is going well. We're hopeful to close on an additional tranche that will allow us to get things off the ground actually pretty soon. So those broad estimates with regard to timeline are reasonable.

Okay, great. Thank you very much. I'll hop back in the queue.

Thanks. Appreciate it.

And your next question comes from the line of Ed Woo with Ascendiant Capitalized. Please go ahead.

Yes, thank you very much. I had a very general question about valuations. Have you seen valuations change significantly in terms of when you're going out trying to raise funding for the incubator as well as for Veris?

Yes, I mean, I think obviously it depends on the individual asset. Veris is further along, although PortIO has actually been advanced quite far and was just waiting the launch of the clinical study and IDE study. So we've been -- again, these are not closed yet, so I don't want to speak prematurely, but they're both strong assets and we've been pleasantly surprised at the interest and valuations that we believe we can close these transactions at.

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

Yes, thanks Ed.

And I'm showing no further questions at this time. I would like to turn this back to Dr. Lishan Aklog for closing remarks.

Great. Thank you very much, operator, and I'd like to thank our colleagues for their excellent questions. Again, we're really excited about this important transition point for PAVmed and for subsidiaries, Veris and the incubator in particular, and we look forward to keeping you abreast of our progress via news releases or peer articles such as this one and encourage you to keep up with our news updates and events by signing up for email alerts on our PAVmed Investor Relations website and to follow us on social media on Twitter and LinkedIn. So thank you everybody and have a great day.

Thank you, presenters. And ladies and gentlemen this concludes today's conference call. Thank you all for participating. You may now disconnect.