Lucid Diagnostics Inc.

identify in the screening population as defined by the guidelines are short segment. So if you can't detect, and they account for about half of the cancers. So if you can't detect short segment B.E., with a high level of sensitivity, then you're not going to have the ability to have an impact on cancer deaths because that's where most of this disease is, and we're hitting that at a really high rate, an 89% rate, and a negative predictive value, so a really low false negative rate, NPV of 98%. They documented something that we continue to see, which is the average procedure time of of two and a half minutes. That's an average. We're seeing times less than that. Some of us in the office were tested last month, and it took 30 seconds for the test to be completed. So really outstanding, and particularly in comparison to potential alternatives, it's a critical part, we believe, of having a highly efficient screening test. We have a study that has shown no adverse consequences, adverse events from the testing, consistent with other studies that we've shown to date. I'd also like to spend a minute or two reviewing the results of a paper that was published last month on a technology from an academic institution on a test that's been called Oncogarn Esophagus. The group used a sponge on a string device called Esophacap to sample cells from the lower esophagus and apply a new molecular test with methylation markers on it. I'll note that the Esophacap device is a device that we acquired and supplied for a portion of the study, although we no longer supply that. Some highlights to note, particularly in contrast, are that the tests showed poor sensitivity for short-segment BE, which, as I mentioned last time, is really the most critical number in having an effective screening test for esophageal precancer, 63%. There were also some troubling complications. About 20% had mild abrasions of the esophagus. About 2% had serious abrasions with bleeding. And there were two catastrophic device failures in the form of detachments. So I thought it was worth summarizing a head-to-head comparison of our results. These are pooled results, although they're pretty consistent across the various studies of ESA-GARD and ESA-CHECK with the results that were reported in this publication on the Oncogard test in combination with a sponge and a string test. So, again, let me emphasize the importance of short-segment BE as critical because these are the patients that account for about half of the cancers, 63%. sensitivity in that category, it just is not going to be sufficient to serve as a commercial test. And again, that data is from this publication that was published last year. Also note that that level That 60%, approximately 60% sensitivity in this critical category is about the same as the sensitivity that was published in the paper that used the Medtronic Cytosponge, another sponge on a string, an old technology sponge on a string that led Medtronic to withdraw that technology from the market. A variety of ways, a variety of areas to contrast. If you look at the device effectiveness, as I noted, ESO check gives you anatomic targeting and of the area, just a very small area where this abnormality occurs, sponge on string devices do not. EsoGuard, EsoCheck provides protected sampling, so there's no deletion and no contamination from cells elsewhere, only in the area where the targeted area, sponge on string devices do not. Lots of issues with regard to procedural efficiencies. The paper showed that the SOS device required a topical anesthesia, essentially numbing medicine applied to the mouth. ESO check does not require that. The SOS devices have to sit in the stomach and dissolve for eight minutes, again, as reported in the study. There is no dwell time. The ESO check does not require that. They had two devices that failed to deploy. They didn't dissolve. They pulled them out, and they were still not fully deployed. We don't have that issue at all with E-SubCheck. If you take the eight minutes and the time to swallow them back, the time to actually complete the procedure is about 15 minutes. As I mentioned, we're doing them in one to two minutes or less, as little as 30 seconds. That's really important if you're doing these large events like one of these Check Your Food Tube events. We've tested 100 patients in a day at a firehouse. You can't do that if it takes 15 minutes or more per patient, and the only reason we could do that is because of these low procedure times. The technical failure rate or sort of being able to complete the test without patients being able to swallow and get a sample are numbers in data that was presented at a big GI conference on 1,500 patients was 98%, which is a 2% technical failure, much higher in this bunch on string devices. But the key area here, and one that I think is going to be ultimately the message here, is on device safety. There were two detachments that are serious, if not catastrophic. The sponge detached from the string. In one case, it had to be retrieved endoscopically. In another, it passed through the intestine, but with putting the patient at risk of a serious obstruction and serious health risk. a soffit cap device that was used in the study after notifying the FDA about this, and it was something that was mandatory. So that's going to be a significant issue that we just don't have to address. We've never had any device failures from research taken now over 10,000 tests. And the abrasions and the serious abrasions are not surprising, but a significant contrast here. The sponge-on-string devices are literally like a sponge, like a Brillo pad that scrapes the esophagus. So it's not surprising that you would see patients who have these abrasions, including 2% that have a serious abrasion. EsoCheck is a balloon that has a soft sort of cushioned surface to it with soft ridges on it, and we just simply don't see these issues with EsoCheck. So with that, I'm going to pass the baton on to Dennis to talk about our financial results.

Thanks, Lee, Sean, and good morning, everyone. Summary financial results for the first quarter were reported in our press release that was published earlier today. On the next three slides, I'll emphasize a few key financial 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 10Q. Balance sheet. cash at quarter end March 31st was $24.8 million. We added $11.6 million to that amount with financing completed last week for pro forma cash of $36.4 million. The average quarterly burn for the trailing four quarters is $9.5 million per quarter. The burn in the first quarter included $7 million from ongoing operations and $2.5 million from the quarterly management services agreement with PadMed. Additionally, the company paid down the intercompany debt to PavMed, with PavMed accepting 3.3 million shares for a $4.8 million debt reduction, as previously disclosed in connection with the dividend distributed by PavMed to the PavMed shareholders of Lucid Stock, plus $2.8 million in cash payments. We disclosed in the 10-Q that our ability to fund operations beyond one year from today is largely dependent upon how Revenues ramp over the next four quarters, which is, of course, dependent on how the reimbursement landscape for both government and private health insurance continues to improve. Additionally, our direct contracting efforts with self-insured employers and or corporate finance activities, including refinancing the outstanding debt at that time, can also work to exceed that threshold. Beyond that, there is nothing substantively remarkable about the remainder of the March 31st balance sheet. Shares outstanding, including unvested restricted stock awards as of last week, are 52.2 million shares, which includes 1.1 million issued subsequent to quarter end in connection with conversion notices received from the convertible debt holder. The gap shares outstanding as of March 31st of 46.7 million are reflected on the slide as well as on the face of the balance sheet in the 10Q. Gap shares do not reflect unvested restricted stock awards. On slide 20, it compares this year's first quarter to last year's first quarter in certain key items. I trust you'll review the information in my comments in light of the cautionary disclosure in the bottom of the slide about supplemental information, particularly non-gap information. I'm required to say that. As previewed in our fourth quarter earnings call, Revenue of just over $1 million for the first quarter is sequentially about even with the fourth quarter and reflects more than a two-fold increase over the prior year first quarter. The amount reflects actual cash collections for the quarter plus a small amount of invoiced ESA guard tests delivered to the VA plus about $25,000 for direct contracting. Test volume at 2,420 tests for the quarter represent just over $6 million in submitted claims at our $2,499 ASP. Revenue recognition, and I know this gets repeated each quarter, but it's important. A key determinant is the probability of collection. And therefore, due to the fact that we are in early stages of our reimbursement process means revenue recognition for claims submitted to traditional government or private health insurers will be recognized when the claim is actually collected versus when the patient report is invoiced and submitted for reimbursement. As you'll see and disclose in our 10-Q, this is called variable consideration and the jargon of GAP's ASC 606 revenue recognition guidelines. And presently, there is insufficient predictive data to reflect revenue when the test report is delivered to the referring physician. For billable amounts contracted directly with employers, and that are fixed and determinable, they will be recognized as revenue when the contracted service is delivered. That generally means when the report is delivered to the referring physician. Our non-GAAP loss for the first quarter of $9.4 million reflects about a $500,000 sequential improvement compared to the fourth quarter loss and about a $400,000 improvement year over year from the prior year first quarter. Slide 21. is a graphic illustration of our operating expenses for the periods reflected. Total non-GAAP OpEx is $10.4 million for the first quarter of 24. It reflects about a $500,000 decrease sequentially, and it's fairly flat year over year. Cost of revenue primarily consists of ESO check devices, lab supplies, and fixed lab facility costs, and it is in line with the last couple quarters where the test volumes ranged between 2,200 and 2,600 tests. The non-GAAP net loss per share has been relatively flat for each of the last five quarters, plus or minus a penny between each of those five quarters. On a GAAP EPS basis, non-cash charges accounted for approximately 19 cents per share in the first quarter, of which 17 cents was directly related to the non-cash deemed dividend connected to the March financing of $18.2 million. A couple of reimbursement highlights. Focus on the last two quarters, the first quarter this year and the last quarter of last year. Collectively, there were just under 4,000 claims, 3,975 claims representing just under $10 million in pro forma revenue that were submitted for reimbursement. About 75% have been adjudicated. 25% are pending. Out of the 75% that have been adjudicated, about 46%, almost half, resulted in an allowable amount by the insurance company with a mean average of about $1,700 per test. And as you collect these things over a longer period of time, with a longer aging time horizon with appeals, approximately $1,800 per test, which is in line with previous quarters we reported the same statistics. Of those denied, about 53% of the denials are deemed not medically necessary or require prior authorization, and about 28% were deemed to be non-covered. So with that, operator, let's open it up for questions.

Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press star followed by the number one on your touchtone phone. you will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press star followed by the number two. If you are using a speakerphone, please lift the handset before pressing any keys. One moment while we prepare the Q&A roster for you. The first question is from the line of Mike Mattson from Needham. Please go ahead. Good morning, Mike. Good morning, Mike.

Good morning. I wanted to start with the small DX pre-submission meeting. So can you maybe just tell us more about what you're expecting to happen there and kind of what the potential outcomes of the meeting would be? So just to be clear, these are pre-submission meetings.

I think the analogy for those who have had experience or heard about descriptions of FDA pre-submission meetings is not quite as structured and formal, but similar. And The purpose of these meetings is to meet with the key personnel, the medical directors at MultiX, and to review the full evidence base consisting of clinical validity, clinical utility, and analytic validity data, and to do so in the context of the elements of the already published and finalized foundational LCD, and simply to have a conversation about that, also in the context of new information such as guidelines and so forth. We expect to be well represented with both ourselves and others who can describe the context of our data and that result. And the goal of that is to be able to inform the actual document, the technical assessment that would be submitted following that meeting to formally seek coverage under the foundational LCD. In addition to personnel from from the company in various key roles. We expect to have other key experts, so Stan Lapidus, our vice chairman, is an expert in diagnostics, will be contributing, as well as one of our medical advisors who is an expert and an author on the guidelines that we expect to provide some additional support. So that's the nature of the meeting. We would leave with that with a sense of of where we stand with our data, and it'll inform the actual formal process, which is to submit the technical assessment and have that clock start following the meeting. Okay, thanks. Following the submission, excuse me.

Yeah, got it. And then just in terms of the – so you've been running kind of like this 2,500, 2,400 tests per quarter now for a few quarters, and Your revenue's been growing a little as you get more, you're able to collect more payments, I guess. So, you know, how long should we expect you to remain in this sort of holding pattern? And, you know, at what point would you start to try to grow the test? You know, what point would you need to get to in terms of the coverage or the payment rate would, you know, before you would start to really try to drive more test volume again?

Yeah, great question. So I'll talk about a little bit on the test volume side. I'll have Dennis chime in on the translating test volume into revenue. So we talked about this a bit on our last call, which is that we've had a fixed level of personnel on the sales side. We obviously have been and remain in a posture where we're trying to maintain our op-exes flat to the best of our ability during a period of time. And as I also mentioned last time, but I'll reiterate, The claims, the test volume we have has been sufficient to drive claims history and to drive our engagement with private payers. The, as I, again, just sort of reiterate a bit from our last call, this level, kind of in the 2400 plus range, is a level that we think we can maintain with our current team. We did actually have fewer sellers in the field this quarter as we transferred some resources and did not fill certain open positions in order to make sure we have sufficient resources under the same overall in our key market access and direct contracting initiatives. Certainly, there is a possibility that even at this current level, we may continue to see some modest growth. We saw about 10% quarter-on-quarter as a result of increasing check your food tip events, which tend to be more efficient in terms of the amount of sales personnel in the field per test. Obviously, when we start seeing some traction on the direct contracting side, which can drive test volume essentially independent of the sales activity. So I'll transfer to Dennis to talk a bit about where our thresholds are and at what point in the realization of revenue from test volume would we consider increasing our OPEX and adding some resources in order to drive test volume and as a method of driving, as a lever to drive revenue.

Mike, I think those decisions are going to be on a quarter-by-quarter basis as we see realization, meaning cash collections as a percentage of billable claims, increases. And as Leishon's pointed out, there are a couple influences there that we will start to make those investment decisions at the time some of these events happen. start to show themselves maybe even in advance of actually collecting. And they are direct contracting because the price is guaranteed. As we see that start to increase, that will give us reason. In fact, we're already putting some additional resources behind that. In addition, I think we've previously mentioned we have submitted some formal applications for some of the larger regional insurers to move from out-of-network to in-network. As those decisions become available, that will influence making those investments. Clearly, that's an indication of what realization will become in the subsequent quarters after those approvals. Obviously, in response to the Medicare upcoming decisions, that will influence timing as well. We're also in the process of trying to fully understand the biomarker legislation and what influence that might have as both the states that are requiring coverage with insurers operating within their states, how that plays itself out. We're staying pretty closely in tune with that in terms of does that make sense for us to put additional resources in those states as they work out those logistics between the state legislation and the actual carriers covering biomarkers. They're all the influences that will have us step on the accelerator to do so. Obviously, with the recent financing, we have the resources to be able to be responsive to those events. So pretty much stay tuned. As I indicated at the outset, it's a quarter-by-quarter basis. And we have and are ready to put these things in place, be responsive to these events.

Okay, got it. Thank you. Thanks, Mike.

Your next question is from the line of Anthony Vendetti from Maxim Group. Please go ahead.

Anthony, good morning.

Hi, Anthony.

Good morning, Luchan. Good morning, Dennis. Yeah, some of those questions were around some of mine, but maybe just further talk about the process. You did mention that you're hoping that some of the coverage benefit goes from out-of-network to in-network, that obviously would be significant. Can you just remind us where we're at in terms of the number of insurers that will reimburse, excuse me, maybe the number of, maybe the large insurers, if we talk about the Cigna's, the Aetna's, UnitedHealthcare's of the world, Where are they in terms of their reimbursement coverage? And, you know, what's the likelihood that they, you know, sign up either this year or within the next 12 months as either in a network, out of network?

Yeah, let me outline that a bit at a high level. So you asked about the larger payer. So just to be clear, on the out-of-network side, we do get paid. We do get paid out-of-network. Dennis went through those numbers. We do get allowed claims and allowed claims at just under the Medicare rate on average. And some of those larger payers are actually doing that as a distribution, and some of those are doing that at a higher clip. Our focus with regard to getting near-term changes in positive medical policy for coverage is not focused on the large payers. Our engagement with the large payers is focused more as on pilots, seeking coverage with evidence development because it's our understanding and expectation that the larger payers generally will wait for positive coverage by Multi-X and Medicare in general. However, there's very fertile ground that we're actively pursuing on the regional plans. We mentioned last time that we're engaged with the Blue Cross and Shield Association, which is a national association that assists that assist us, and they've been quite remarkable in doing so, in our engagements with individual state plans. And those are actually, we're chipping away at those, and those are, we're having some success. And as Dennis mentioned, in particular, those that are in states with biomarker legislation, we really believe we can actually make progress and cover it under those regional plans in the near term, independent of the MOLDx process. And then there, of course, are these direct contracts, which are completely independent of the entire payer process. So one example of that is our, in the slide that I showed over on the right, there are entities that have a large number of patients under, that have, where they cover their expenses for covered conditions. And one that we'd already given a preview of is the World Trade Center 9-11 Fund. We have active discussions with them, we are optimistic that we'll be able to have a final engagement with that group through one of their centers of excellence, which we're talking to right now. And so that's a pathway to provide patients within, who are covered by that, of which there are about 100,000, access to our test as a covered benefit, completely independent of the insurer or payer process.

Okay, that's helpful. And maybe just more very big picture here. You had a great investor day with a couple of gastroenterologists and a thought leader that, you know, talked about, you know, how, how the pap smear changed cervical cancer and, and, and obviously a cold guard as you, as you see this process continuing to unfold and, some of your competitors having a recall. Is there a tipping point? Do you think it's a three- to five-year process before ESO Guard ESO Check becomes a standard and it becomes more well-known? Because that's, you know, when I was speaking to one of the guest renterologists that was at this investor conference, and he was just saying that it is difficult to get the word out there because not everyone associates esophageal cancer as a major cancer, even though we know it's one of the most lethal. How long do you think this process takes before you hit that tipping point? I'm just curious what your view is on that.

I think that's a great question. And let me start with the latter part. So it's not going to be that hard because there is a lot of attention and a lot of increasing attention on esophageal cancer, and you're correct that over the decades it's been under, you know, we focus on breast and colon and prostate and some common cancers. But our efforts and our ability to get that message out and for that to resonate without a lot of effort across the physician community, both primary carers and specialists, is straightforward because we have a straightforward story. We have a well-defined target population. We have a methodology and an understanding of the biology. We know what to do. in patients who come back positive. And so the message you heard from the physicians, for example, at the Investor Day is resonating across the country. And that's actually playing itself in local markets across the country in news media. The firefighter events have been very helpful for us. We were in the and a great piece on ABC News in L.A., and we have a variety of those that are happening, and we expect that pipeline to translate into national awareness for this. It's a process, but it's not a process that I believe will take years because all the pieces are in place. We don't have to define the population. We don't have to make all of the elements for us to tell the story, which is a very compelling story. I can tell you in every interview I've ever done, in a lay population. We were on NPR recently. It's been a very straightforward aha moment conversation. It's actually quite amazing to me how frequently, I think it happens once a week or so, where we're talking to folks and they just sort of objectively about the business and we hear about a family member or a friend or a colleague who suffered from esophageal cancer. And the physician community and the GI community, that's actually also quite straightforward because it's already in their guidelines. We didn't write their guidelines. They did. And so the need to identify pre-cancer and to do so as a methodology to prevent cancer, that's well established. We don't have the hurdle to overcome to suggest that detecting pre-cancer in this condition is something that's controversial. It's not. It's been in guidelines in the last three guidelines. And unlike Cologuard, for example, which was operating in an environment where there was already about 50 to 70% of patients were getting colonoscopy, it's very few, less than 5%, especially no patients in our target population are getting endoscopies. So we're completely allied with the gastroenterologists in our ability to talk to them about going out and expanding their funnel and identifying patients that they're not seeing and increasing the number of endoscopies and the yields of their endoscopies. And so we have great relations with the leadership in the GI community, all of the KOLs. We're really excited. We have a big presence coming up at the major, the biggest GI meeting, in the country every year, which is the DDW meeting, which starts this weekend. Our medical advisory board is meeting there, and it consists of who's who in the GI community of esophageal disease. And we're going to be meeting for a couple hours on Friday and talking about all of the key issues that I already highlighted earlier, such as the importance of short segment the importance of having a cell collection device that has excellent device safety and the features of ESOCHEC. And so that story is we're already getting that out. When will actually the expansion of the activity will be a result of the triggers that we mentioned with regard to coverage and so forth. But the story is getting out there, and it's not going to take that long once we're on full throttle to have that spread out. It just hasn't been a hard-core story to tell, Anthony.

Great. No, that's excellent call, Alicia. Thanks so much.

I'll hop back in the queue. Appreciate it. Thanks, Anthony.

Your next question is from the line of Mark Massaro from BTIG. Your line is now open. Mark, good morning. Hi, Mark.

Hey, guys. This is actually Vivian on for Mark. Thanks for taking the question. So it's great to hear the date for the pre-sub. You touched on this a little bit, but just remind us what the average time for the technical assessment process is and just when you would expect that final CMS coverage decision.

Well, we can't predict the latter. The turnaround time for a response to the TA is a minimum of 60 to 90 days typically, but that period can get extended if there are questions along the way. Again, for those who are familiar with the FDA process, it's not dissimilar to that in that once the data is submitted, once the TA is submitted and they've had a chance to review that, there may be opportunities to come back with questions or questions about the data and so forth. So it's really impossible to say how long it'll take for that process to be completed and result in a final decision. We think we're going in well-armed with great data. We have literally multiple consultants that we're working with who are experts in this, who've done advanced tests through the multi-X process, and there's quite a bit of optimism amongst the group around that. But in terms of timing, it's a little bit hard to – it's only possible to predict at this point, but we go in with a lot of confidence in the substance and the quality of our data.

Perfect. Understood. And then I just wanted to follow up on last quarter. I think you had discussed like a $5 or $6 million revenue bullish within the pipeline. Are you seeing any success in realizing that revenue and just how we should think about maybe any contribution and pacing throughout the year?

Yeah. Thanks, Viv, for that. So, yes, there is the backlog of pending revenue. amounts to be adjudicated, and the appeals process is picking up from an intensity standpoint with our revenue cycle manager. It's hard to predict the timing of that. The appeals process is a longer period of time. The statistics that we gave on our prepared remarks, there's 25% or so of them still waiting to be adjudicated. Yeah, that backlog is still about that same amount. And it's hard to match up that phasing. But we know what the appeals look like. We know that we're having some success there, and it's starting to gain some momentum. So no additional color to offer just yet.

Great. Thanks for taking the questions.

Thanks, everyone.

Your next question is from the line of Kyle Mixon from Canaccord. Your line is now open. Good morning.

How are you? Hey, guys. Hey, guys. Thanks for the questions. Hope you're doing well. So just starting with the ASAPA CAV Class 2 FDA recall, I wanted to ask a few things about this. Basically, first of all, just kind of rewind back to 21, like around the time of the IPO when you made the acquisition of Capnostics. Like why did you do that? What kind of – you know, commercial agreements or manufacturing agreements are sort of fine that now are irrelevant or sort of impacting expenses that aren't really useful. I mean, just kind of update us on that maybe. And then secondarily, if you could just talk about the competitive dynamics here and how maybe, you know, certain companies or vendors were using the Sovac app and now obviously that doesn't look great for them and maybe this is advantageous for you. Thanks.

Thanks, Kyle. So, yeah, Phil, I'm happy to rewind back. It's good to get some of the history for those who are not fully. So we, in 2021, we had the opportunity. We engaged with the small company, Kepnostics, that was making the spongeless string device, and we acquired it. We had an interest in it as a research tool. There are potentially other applications that we were considering looking at. And after we acquired it, we had discussions with the two institutions that had ongoing research that were being supplied by it, and we agreed to supply it for that research. We had really no concern about doing so at the time. And really because we were quite confident at the time that ESA check was a superior device for this particular institution, for this particular application. We were well aware of the limitations of the sponge and the string, but we had some interest in potentially using it as a research tool and had no problem providing it to these studies because we were quite sure where the results would land based on prior experiences with Cytosponge. That continued until early last year. We were not unable to come up with a a business agreement with the two institutions around how to continue supplying it. So we stopped supplying the sponges approximately a year ago in the early part of 2023. And it was only after the publication of the most recent publication that the data which I highlighted that we became aware of the two detachments And we were aware that Cytosponge, the other sponge on the string, which, again, both of these technologies have been around for years. Esophacap is essentially identical to technology that was developed in the early 1990s by the same company that we acquired it from. We were aware that Cytosponge had numerous detachments as well, but Esophacap hadn't. And Cytosponge is, as we mentioned in the press release, is under a global recall right now. specifically for those detachments. And if you read the Medtronic language that we highlighted in the press release, it was specifically for potential serious risks associated with these detachments. So when we saw the report of the two detachments in the manuscript that was published, we were a bit alarmed because they were not reported, had not been reported to the And so we inquired with FDA and concluded that we had to initiate a recall of that. You know, how this played out is where we thought it would play out, which is that, you know, the technology, the molecular tests are one thing, but at the end of the day, the cell collection device matters. And all of the head-to-head features that I showed in the table there are critical to get the level of performance, particularly the sensitivity of the short segment, and the features of ESA check, particularly the collect and protect features of ESA check that allow for targeted sampling is critical for that. So we weren't really that surprised with the results of the study and using this bunch where we supplied a portion of it. In that category in particular, it's really no different than the Medtronic data. The data on Cytosponge and TFF3 that was published by Nick Shaheen in the U.S. a few years ago that led to Medtronic withdrawing that. With regard to the competitive landscape, I'll leave that for you guys. In terms of the overall business, we have enormous confidence in both the cell collection and the molecular diagnostic test. The published data is what it is. And I think the most recent data really highlights the fact that if you're going to have a test that can be efficacious in detecting precancerous to prevent cancer, you have to pick up the short segment precancerous if you're going to have any kind of an impact because they account for about half the cancers. At the end of the day, I'll leave it up to you guys to sort of look at the data and so forth, but from our point of view, we are proceeding with profound confidence in our technology.

Hey, Kyle, it's important to understand, even if a reengineering effort could figure out how the safety issues could be overcome, this study pointed clearly to the contamination because of the lack of the ability to protect the sample. they'd have to figure out how to put the sponge back in the wrapper, which is physically impossible to overcome that limitation, that design limitation. So we think unless there is a way to engineer around our patents on ESO check, it's going to be really difficult for someone with a nice biomarker to be able to sample in a way that's going to allow the biomarker to perform well. similar to what our combination of ESA check and ESA guard.

Just to be clear, there's no evidence of that, and we have strong issues in pending IP on that, and so we don't really – we have no concerns because there's nothing out there that would suggest that there's another technology out there that's not – again, that was not invented in the 1990s that can do the kind of targeted sampling you need for this very, very – specific purpose of collecting cells in a very small proportion of the lower softness.

Okay, that was a great, you know, that was a really comprehensive answer, and I'm sure one day if someone's going to, you know, make the argument that a blood-based test could be useful here, but we can wait for another day to do that discussion.

I need to touch on that real quick. So, yeah, well, we won't debate the sort of how the blood-based tests are doing as a whole. Again, I'll leave that for you. You write very informative reports on that on a regular basis. But let's talk about blood-based tests for esophageal cancer, right? So to whatever extent there may be ongoing progress or, you know, good data now or ongoing progress with regard to detecting cancer in the blood, there's been – little or no progress in detecting precancers. And as we've stated before, you cannot have an impact on esophageal cancer deaths unless you are picking it up at the precancer stage, because unlike colon and other cancers, a stage one diagnosis of esophageal cancer still carries about a 50% mortality. And the biology of trying to detect, I mean, I showed those slides of sort of how GARDEN does, GARDEN does okay with cancers. But as you've highlighted in your reports, the results even in late-stage pre-cancers and even the free-none data would suggest that it's even lower. So the biology of picking up the abnormalities that are required to pick up early-stage pre-cancer, which you have to do in order to prevent esophageal cancer, there's not any inkling yet today that you can do that with a blood test. So for our little corner of the world here in esophageal cancer, I feel very confident that liquid biopsy tests are not a threat in any way in any time in the foreseeable future. Thanks for letting me highlight that, Kyle.

All right. And we have a final one for both you guys, but maybe Dennis specifically was thinking about the model. The $1 million in revenue this quarter flat compared to the last quarter, I guess the volume kind of increased sequentially pretty nicely, actually. How should we think about the seasonality in this business? In other screening businesses, there is seasonality kind of early in the year. It kind of gets better throughout the year. There's flu season, et cetera. So is there anything to consider as we kind of go ahead here in terms of what sequential increases in revenue growth?

I think the only seasonality to consider is the times. First off, our test is very conveniently administered. And so the times of the year where it's not convenient for patients to get tested, the holiday season in December, physicians are just not going to schedule this. The large check your food tube events are probably not going to happen Christmas week. They're probably going to be in around that. It's probably the only time that we see it. People think about seasonality during the summer and the last two weeks of August, maybe. September tends to overcome that whatever time period is. So I don't think seasonality, particularly while we're in this kind of mid-throttle range, is something for us to consider. It really is the volume is directly related to the realization on submitting claims and our reaction to that momentum that we're expecting to pick up in the coming quarters.

Great.

Perfect. Thanks, Dennis. Thanks, guys. Appreciate the time. Thanks, Kyle.

Ladies and gentlemen, just a reminder, if you have a question, please press star, then the number one on your telephone keypad. Our next question is from the line of Ed Wu from Ascendant Capital. Please go ahead.

Congratulations on the progress in the quarter. I know you're all focused on the U.S. business, but have you thought about international opportunities?

We have, over time, I think we've talked about it on occasion, inquired. I've had inquiries, actually, from commercial entities outside looking to potentially partner with us. The current business model around reimbursement in Europe for screening tests is not attractive, and so we haven't made any particular effort. But there are other groups in South America and in Asia that have contacted us. It would have to be sort of essentially a license type agreement where we have no plans and we don't think it's consistent with our current strategic approach to put resources in other countries. There are market opportunities there. We do occasionally get inquiries, and we have one actively that we're discussing with right now, but I don't expect that to be a significant contributor in the near term.

Just a quick question. Esophageal cancer is obviously very deadly. I assume it's similar globally as it is in the U.S. in terms of people getting it and death rates.

Great question. There are two types of esophageal cancer. The one we see here in the U.S. and in the West is esophageal adenocarcinoma. There's esophageal squamous cell carcinoma, which used to actually, even in this country, be the dominant factor, more associated with smoking and tobacco and other things, as opposed to adenocarcinoma, which is what's related to GERD or heartburn. In Asia, the numbers for squamous cell carcinoma remain higher. Although, as is true with many things, there's sort of a homogenization across the world because of Western diets and the lifestyle and the diseases that come with that, obesity, et cetera, that there is a large, there is plenty of opportunity for esophageal adenocarcinoma worldwide. So that there is, hopefully that gives you a sense,

Yes, it does. Thank you very much, and I wish you guys good luck.

Thank you. Thanks, Dave.

There are no further questions at this time. I would like to hand the call back to Dr. Lishan Akhlaq for some closing remarks. Please go ahead.

Great. So, hey, thanks, everybody, for taking the time. As always, thanks for all the great questions. I really believe in a great discussion. Hopefully, you can get the sense that we're really excited. We have a bunch of near-term um activity and milestones you know starting with the ddlb meeting this week uh and followed with a bunch of activity or our engagements with brokers um the multi-x meeting coming up more data which we didn't really talk about that's that's forthcoming beyond the data package that we're already putting together um so we look forward to keeping abreast of our progress via news releases and periodic calls such as this one and as always the best way to keep up with our news Updates and events is to sign up for email alerts on the Lucid Investor Relations website. Follow us on social media, including Twitter, LinkedIn on our website. And always feel free to contact Matt with any direct questions. So thank you, everybody, and have a great day.

Ladies and gentlemen, this concludes today's conference call. Thank you very much for your participation. You may now disconnect.