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.