Lucid Diagnostics Inc.

Greetings. Welcome to the Lucid Diagnostics Business Update Conference Call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. And please note that this conference is being recorded. I will now turn the conference over to Adrian Miller, Vice President of Investor Relations. Thank you, sir. You may begin.

Thanks, Barbara. Good afternoon, everyone. This is Adrian Miller, Vice President of Investor Relations at Lucid Diagnostics. Thank you for participating in today's business update call. Joining me today on the call are Dr. LaShawn Acklog, Chairman and CEO of Lucid Diagnostics, along with Dennis McGrath, Chief Financial Officer of Lucid Diagnostics. The press release announcing our business update and financial results is available on Lucid'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 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 Securities and Exchange Commission. For a list and description of these and other important risks and uncertainties, that may affect future operations, see Part 1, Item 1A, Entitled Risk Factors, and Lucid's most recent annual report on Form 10-K filed the SEC, and the subsequent update files quarterly reports of Form 10-Q and any subsequent Form 8-K filings. Except as required by law, Lucid 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 those expectations may be based or that may affect the likelihood that actual results will differ from those contained in the forward-looking statements. So with that, I'd like to turn the call over to LaShawn Acklog, Dr. Acklog.

Thank you, Adrian, and good afternoon, everyone. I'm happy to report that Lucid Diagnostics is making excellent progress on all fronts and that we're laying a solid foundation for driving our long-term growth strategy. We continue to drive e-cigar commercialization, expand our sales infrastructure, execute the second stage of our Lucid test center rollout, transition to our own fully staffed laboratory, and update our clinical trial strategy to best serve our growth strategy. Our balance sheet remains strong, providing us with the resources to execute this growth strategy. Before proceeding, I'd like to thank our long-term shareholders for your ongoing support and commitment. We are singularly focused on growing Lucid while enhancing long-term shareholder value. I'll start by providing an overview of our business and then we'll pass the baton over to Dennis who will provide a financial update before opening it up to questions. Let me first provide some background on our company and its mission. Lucid Diagnostics is a commercial stage cancer prevention diagnostics company focused on the millions of chronic heartburn patients who are at risk of developing highly lethal esophageal cancer. Unlike other common cancers, mortality rates are high even in their earlier stages. So preventing deaths requires us to detect esophageal precancer, which occurs in approximately five to 15% of at-risk chronic heartburn patients. Esophageal precancer can be monitored in its early phase and cured with an endoscopic ablation procedure in its late phase. Ablation reliably halts progression to esophageal cancer. Although esophageal precancer screening is already recommended in millions of chronic heartburn patients, fewer than 10% undergo traditional invasive endoscopic screening. The profound tragedy of nearly every esophageal cancer diagnosis is that likely death could have been prevented if the patient had been screened. The missing element for a viable early detection program to prevent these thousands of tragic deaths has been the lack of a widespread screening tool. We believe our ESAGARD NGS methylated DNA test performed on samples collected in a brief, non-invasive, OFFICE PROCEDURE USING OUR ESA CHECK COLLECTION DEVICE IS THE FIRST AND ONLY COMMERCIALLY AVAILABLE DIAGNOSTIC TEST CAPABLE OF SERVING AS SUCH A WIDESPREAD SCREENING TOOL. WE BELIEVE ESAGUARD HAS THE POTENTIAL TO BECOME THE STANDARD OF CARE TO DETECT ESOPHAGEAL PRE-CANCER IN AT-RISK CHRONIC HEARTBURN PATIENTS WITH A TOTAL ADDRESSABLE MARKET GREATER THAN $25 BILLION. AS WE PREVIOUSLY ANNOUNCED, THE AMERICAN COLLEGE OF GASTRO NEUROLOGY RECENTLY UPDATED ITS CLINICAL GUIDELINE ON THE DIAGNOSIS AND MANAGEMENT OF ESOPHAGEAL PRE-CANCER the first such update since 2016. The guideline reiterates the longstanding recommendation that chronic heartburn patients should undergo esophageal pre-cancer screening if they have at least three of six defined risk factors, which include male sex, age over 50, obesity, smoking, and a family history. I would like to highlight two key updates that greatly enhance the commercial potential of elusive products contained in this guideline. The guideline no longer hedges on recommending screening for women. This more than doubles the target population for IsoGard testing to an estimated 30 million Americans. Second, and most importantly, for the first time, the guideline endorses non-endoscopic biomarker screening as an acceptable alternative to costly and invasive endoscopy. IsoGard and IsoCheck, which are described in the guideline, are currently the only such non-endoscopic biomarker screening tests. This is an exciting development for Lucid, and I can't overemphasize its importance in supporting our efforts to eradicate esophageal cancer. We look forward for other professional society guidelines to follow suit. Let's now review how eCigar commercialization has been going. We continue to see excellent traction with robust growth in eCigar testing volume. We processed 533 commercial eCigar tests in the first quarter of 2022. That represents a 76% sequential increase from the fourth quarter of 2021 and a nearly 500% increase annually from the first quarter of 2021. Testing volume growth was strong in both sales channels, primary care physician referrals to our Lucid test centers, as well as tests performed by gastroenterology and foregut surgeon specialty practices and institutions. Now that our sales process and sales training is well-honed and increasingly predictable, our near-term growth strategy is clearly defined. We are investing in sales infrastructure, training, and supporting resources sufficient to drive steady testing volume growth to demonstrate clinical utility and generate claims history to support our reimbursement efforts. Once reimbursement is more fully established, we will transition to full throttle efforts to drive testing volume and revenue growth. Our sales team consists of market development managers who focus on establishing e-cigarette testing at gastroenterology, foregut surgeons, large primary care and multi-specialty practices, as well as large academic medical centers and integrated health networks. Our sales reps are focused on engaging with primary care physicians, including those within the referral networks of our gastroenterology and foregut surgeon practices. The team, led by our national VP of sales, now consists of three area directors covering the east, central, and west, respectively, six market development managers, 17 sales reps, and several sales operations staff. We are hitting our hiring targets and are actually a bit ahead of schedule to hit our end-of-year goals. Our sales training process is continuing to be developed and is well-honed and quite intense. Our goal is to have new reps operating effectively within about four months of hire. Some of our growth strategy remains our expanding network of Lucid test centers. The test centers operate in leased medical office suites, each staffed by a Lucid-employed HESA-checked trained nurse practitioner or medical assistant, The centers support our primary care physician sales channel by providing a facility where a patient referred for e-cigar testing can undergo the e-cigar cell collection procedure. The reps work to educate the primary care physicians on the relationship between chronic heartburn and esophageal cancer and on e-cigar's availability as a new non-invasive alternative to screen at-risk patients. The physician then just orders a test, which is performed at one of our test Single nurse practitioner can reasonably perform 20 ESA check procedures in a normal workday. Each test center covers its personal and medical office lease costs with only a couple of reimbursed tests per week. The Lucid Test Center program completed its first stage during the first quarter of 2022, having advanced from a pilot program in Phoenix launched in the third quarter of 2021. The program has developed into a regional program covering seven metropolitan areas in Western states. We recently launched stage two of our Lucid Test Center program. We plan to open test centers in nine additional states this year, and last month we hired a director of clinical services with extensive experience operating dialysis facilities for Fresenius and DaVita to oversee this expansion. We continue to pilot our e-cigar telemedicine program, which we launched in December. Patients who learn about e-cigar testing can request an online visit with a telemedicine physician who can send the patient, if appropriate, to a Lucid test center for Eastern Guard testing. Although patients in any Lucid test center city can access the telemedicine program, we continue to only actively pursue direct-to-consumer advertising on a limited pilot basis in Phoenix, consistent with the near-term strategy I previously described. We're just over four months into the program and will soon have sufficient numbers to assess the efficacy of various modes of direct-to-consumer engagement. I'd like to now discuss our laboratory operations. The first quarter and recent months have been full of important developments in our laboratory operations, which are critical to the future success of the company. At the end of February, Lucid DX Labs, a wholly owned subsidiary of Lucid Diagnostics, acquired the assets necessary to operate its own, our own, CLIA-certified, CAP-accredited clinical laboratory. The laboratory operates in a freestanding 20,000 square foot building in Orange County, California, and last month we hired a new VP of laboratory operations with nearly two decades of clinical laboratory experience including at LabCorp, Abbott, and Rosetta Genomics. Under his and our chief scientific officer's leadership, we plan to accelerate the transition from the current management services agreement to the lab being fully staffed by Lucid employees. In parallel with the acquisition, we upgraded our revenue cycle management provider to CenterGene Solutions. CenterGene will be up and running this month and will begin billing and processing claims on behalf of Lucid DX Labs. This will be the first time a Lucid entity will be billing directly for e-cigarette testing. Claims held since the lab transition in February will be submitted once Senergy is active later this month. The transition from fixed monthly payments from our former laboratory partner to direct billing will result in a temporary pause of out-of-network receipts and recognized revenue, as Dennis will describe in more detail. Now a brief update on where we stand with reimbursement. On the private payer side, we were pleased to announce earlier this week that we executed our first commercial payer agreement. Lucid DX Labs entered into a participating provider agreement with MedIncrease Health Plans, LLC, a national directly contracted multi-specialty PPO provider network with over 8 million lives covered through its clients and payers. Persons covered by MedIncrease clients and payers will have in-network access to e-cigarette testing. The agreement provides rates of reimbursement as a percent of charges for services rendered, including performance of the ESAGARD test. We are pleased that the effective payment for ESAGARD under this agreement, which is based on a list price of approximately $2,500, is consistent with our goal of protecting the effective Medicare payment of just over $1,900. We will continue to work tirelessly to secure many more such participating provider agreements, covering millions and more lives in the coming quarters. In parallel, we continue to collect critical clinical utility data demonstrating that ESAGARD positively impacts patient care. Such data will be necessary for us to secure direct in-network coverage for major regional and national health plans. We've also seen progress on the Medicare reimbursement front. Last month, Medicare contractor Palmetto GBA's MOLD-DX program published a proposed Local Coverage Determination, or LCD, for tests designed to detect upper gastrointestinal pre-cancer and cancer. Consistent with its practice over the past couple of years, the proposed LCD is a foundational LCD. That means it provides criteria for a category of testing, not a specific test. Proposed LCDs are by definition works in progress for public review. We have been patiently awaiting this important next step in the process since we completed CMS's clinical laboratory fee schedule, or CLFS process, culminating in the important first step, namely final Medicare payment determination, which became effective on January 1st, 2021. The proposed LCD outlines criteria that MOL-DX expects upper gastrointestinal, precancer, and cancer molecular diagnostic tests to meet. These criteria include active GERD with at least two risk factors, as well as evidence of analytic validity, clinical validity, and clinical utility. Although it found that no currently existing test has fulfilled these criteria, It indicated that it will monitor the evidence and will provide coverage based on the pertinent literature and society recommendations. It's important to emphasize that the provisional LCD was published prior to the publication of the updated ACG guideline and as such does not take into consideration the recommendation supporting non-endoscopic biomarker testing such as e-cigar as an acceptable alternative to endoscopy for esophageal pre-cancer screening. The publication of the proposed LCD triggered a written comment period that extends until this Saturday. We, along with multiple other stakeholders, will be submitting comments suggesting important modifications to the proposed LCD. Moldex also held a substantive open meeting yesterday during which we, along with other stakeholders and interested parties, had the opportunity to address the proposed LCD. We previewed our suggested modifications to the proposed LCD. Subsequently, Dr. David Poppers of NYU, who has performed hundreds of e-cigar tests, discussed the clinical utility of e-cigar testing in his practice. And finally, Mindy Mordecai, founder of the Esophageal Cancer Action Network and a widow of an esophageal cancer victim, offered a moving and passionate statement on how critical non-endoscopic biomarker testing is to prevent esophageal cancer deaths. In addition, we recently learned that Noridian Healthcare Solutions, The Medicare contractor, which covers LucidDx Labs in California and participates in the Multi-X program, has scheduled its own open meeting on May 26th and a written comment period that extends through June 11th. We look forward to the opportunity to address the proposed LCD directly with Naridian as well. A final LCD will not be issued until the Medicare administrative contractors have had the opportunity to assess and consider the comments written and comments during the public meeting. Let's now wrap up with our clinical studies. As I've said on many occasions, expanding the clinical evidence for e-cigarette testing is a pillar of our growth strategy and was a key impetus for us raising capital in the fall. Over the past couple of months, our management team along with our board have been reviewing our clinical trial strategy to make sure that the substantial capital we are investing in clinical trials is being deployed in an optimal fashion consistent with our short and long-term strategic goals and situation on the ground. There are numerous factors we're considering in addition to optimal capital utilization. These include our current understanding from the trenches on what drives clinical adoption, the rapidly evolving reimbursement landscape I just described, promising research data on a next-generation version of the ESAGARD assay, and the opportunity to conform the clinical trial processes to current clinical practice. We expect this updated clinical strategy to be finalized in the coming months. One key aspect of our updated strategy is already underway. We are doubling down on our efforts to generate clinical utility data to support commercial and Medicare reimbursement. Clinical utility trials are designed to demonstrate that e-Cigar impacts medical decision making. We have multiple such studies which we expect to launch in the coming weeks, including a retrospective review of Dr. Popper's NYU experience focused on the impact of e-Cigar on medical decision making. Additionally, multiple prospective clinical utility studies, including a Lucid-sponsored registry at existing commercial sites, a prospective Lucid-sponsored clinical utility study named CLUE, C-L-U-E, and prospective clinical utility studies that are institutionally sponsored at Northwell Health and at St. Joseph's Health, New Jersey. With that, I'll pass the baton on to Dennis to provide an update on our financials before opening up for questions.