Lucid Diagnostics Inc.

Good morning and welcome to the Lucid Diagnostics First Quarter 2025 Business Update Conference Call. Please note this event is being recorded. I would now like to turn the conference call over to Mr. Matt Riley, Lucid Diagnostics Senior Director of Investor Relations. Please go ahead.

Thank you, Operator. Good morning, everyone.

Thank

you

for participating in today's Business Update Call. Joining me today on the call are Dr. Lee-Shan Akog, Chairman and Chief Executive Officer of Lucid Diagnostics, along with Dennis McGrath, Chief Financial Officer. The press release announcing our Business Update and financial results is available on Lucid'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 statements made. Factors that could cause actual results to differ are described in the disclaimer and in our filings with the SEC. For a list and a description of these and other important risks and uncertainties that may affect our future operations, be Part 1, Item 1A, entitled Risk Factors in Lucid's most recent annual report on Forms 10K, filed with the SEC, and any subsequent updates filed in courtier reports on Forms 10Q and subsequent Forms 8K. Acceptors 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 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. Leshan

Akog, Chairman and CEO of Lucid. Leshan? Thank you, Matt, and good morning, everyone. Thank you all

for joining our quarterly update call today. As always, I'd like to thank our long-term shareholders for your ongoing support and commitment. Our team here at Lucid remains singularly focused on driving this enterprise towards its substantial commercial potential and to enhance our long-term shareholder value. I really believe we're now better positioned than ever to capitalize on ESAGARD's really huge clinical and market opportunity. We continue to make steady progress since the last update, which was just six weeks ago. Perhaps most importantly, we've secured capital to extend our runway past some reimbursement milestones, and we are continuing to drive our cash pay and contracted programs that we launched earlier this year targeting concierge medicine practices and employers. We continue to have momentum in our engagements with regional commercial insurers on securing ESAGARD coverage. We're waiting to hear back from the MoldeX program on ESAGARD Medicare coverage, which we continue to believe is imminent. Thanks to our recent financings, we have plenty of runway, and we're well positioned to accelerate our commercialization once we secure Medicare coverage. So let's start with some key highlights related to our commercial execution. So we performed 3,034 ESAGARD tests in the first quarter. That's the upper end of our range of 2,500 to 3,000 tests per quarter. And as we mentioned before, we're kind of happy to maintain that volume, that we've been able to maintain that volume, while transitioning our commercial team to these new sales channels to drive revenue such as concierge and employers. Our revenue of $800,000 fell a bit short due to external headwinds and greater concentration of testing for our health care events, and Dennis will provide some more details and color on that a bit later. We

also

launched our Embrace the Future campaign, showcasing ESAGARD groundbreaking collect and protect cell collection technology relative to antiquated sponge on string devices, and we'll provide some more details on that a bit later. We have had a successful partnership with a major health system to launch a comprehensive ESAGARD esophageal pre-cancer testing program, and this will expand access to at-risk patients across the full spectrum of their digestive health teams, their gastroenterology team, primary care, and for the first time, a concierge medicine program that is housed within a major health system. We'll have a more formal announcement coming in the very near term on this. And we have continued momentum executing our concierge medicine program to expand ESAGARD access on a cash-pay basis. We doubled our total number of contracts in the past six weeks, and our team is starting to build the critical procedures and materials, marketing materials, and other patient materials to drive patient volume once contracts are in place. We continue to expect an impact on revenue from this effort in the second half of this year. And we're also making meaningful progress executing employer market contracts, and we have a strong pipeline of opportunities both with employers as well as with fire departments. We doubled the number of employer contracts in the first quarter. And, of course, these two efforts, the cash-pay concierge medicine practice as well as our contract contracting with employers, fire departments, is what really serves to complement our ongoing efforts at traditional reimbursement through coverage and positive medical policy from private payers and all end with Medicare. So now let's discuss some of our recent strategic accomplishments. As I noted earlier, we're extremely happy that we strengthened our balance sheet with an underwritten public offering of common stock that netted approximately $16.1 million in proceeds. This really significantly bolsters our balance sheet with over $40 million in pro forma cash at the end of the first quarter. And this importantly extends our runway well into 2026 and past key milestones. And this really mitigates our risk from the perspective of external factors. And it also provides us the resources to immediately ramp up our commercial effort after we receive Medicare approval. We're also happy to report that the new piece of clinical data that the NCI sponsored study showed that Esegard was effective at detecting the self-sufficiency of pre-cancer and at-risk patients without heartburn and GERD symptoms and that this will ultimately support an expanded indication and market opportunity. This was the initial study that led to the larger ongoing five-year NIH study for which a large NIH grant was secured. And it showed 100% negative predictive values, so no false negatives. And a prevalence in this population of patients without GERD symptoms who are otherwise have risk factors consistent with the American Gastroenterological Association, the prevalence was about 8%, which is really not that much lower than in the heartburn population. So it really demonstrates that this is a targeted population that could emerge in the future. If the NIH study replicates this and in fact the target population expands to patients without symptoms of heartburn, then our already large $60 billion total addressable market could increase by as much as 70%. So before turning the call over to Dennis, I just want to provide a bit more detail on a couple of select topics. Let's like to review a bit more detail on ongoing reimbursement efforts and talk a bit about our Embrace the Future campaign related to EtherCheck and our experience with that at the big DDW conference earlier this month. Let's start with commercial payers. As we announced in March, we secured our first positive policy coverage from Highmark Blue Cross Blue Shield of New York. And that policy will be active just in a couple of weeks later this month. And our expectations with regards to that have played out. So this clearly is helping us in our conversations with other regional plans, including other Blue Cross, regional Blue Cross Blue Shield plans. It serves as a precedent to drive additional policy, positive policy coverage decisions. And that's played out in the field as we continue to engage. And we remain deeply engaged with a robust pipeline of regional plans. As we've clearly expressed in the past, and just to reiterate, that we believe there's plenty of opportunity to hunt in the regional plan territory, but that the larger plans, the nationwide, United, Anthem, and others, Edna and others, will likely wait for us to secure Medicare coverage. Another big area, again, just in the last six weeks that we've noticed is that as we announced in March, the NCCN, National Comprehensive Cancer Care, updated, network updated its clinical practice guidelines to include a, for the first time, a section on esophageal pre-cancer screening that mimics the GI guidelines. And we knew this was highly influential. It's always something that payers pay a lot of attention to. But what we've already learned, just again, in the field, is that this has been very helpful already in our conversations with payers. We've already had multiple meetings where medical directors at regional plans have acknowledged the importance of these NCCN guidelines and have acknowledged that us having it would be helpful. So we really do believe, just even on the early experience from just a few weeks into this, that the NCCN clinical practice guidelines will really be a valuable tool in helping us drive positive commercial insurance policy coverage decisions in the coming months. And on the Medicare, so just to remind people of the history here, we previously, at the end of last year, submitted our complete ESAGARD clinical evidence package in support of a request for consideration of an existing Medicare LCD that seeks to cover ESAGARD and a test of this category based on existing coverage criteria that align with the American College of Gastroenterology guidelines. And we really believe that this package is outstanding, it's complete, and provides unprecedented data, and actually really aligns with the criteria for coverage that are already in the existing LCD. And so we really remain optimistic about the outcome. The next step will be the issuance of a draft LCD proposing Medicare coverage. And we really, again, believe this is imminent. And we're in good shape with plenty of runways to navigate this process before ultimately accelerating commercialization once we secure Medicare coverage, which again we believe is imminent. Moving on to our Embrace the Future campaign, I thought we'd give you a little bit of a highlight of what we're doing in this space. You know, historically our marketing efforts to the physician community is focused on ESAGARD, and that's appropriate because that's the actual test that's delivering the results and giving the positive and negative results that drive patient care. But there's really an opportunity that we've decided to highlight, to really highlight the outstanding performance of not just ESAGARD but our cell collection in over now 30,000 patients to navigate and to really contrast them to these legacy sponge on a string devices, which are decades old and sort of equivalent of a Brillo pad versus our, you know, soft balloon, modern soft balloon device. There have been publications out there for other tests. There have been some presentations, electric tests that seek to enter the space using these sponge on string devices, so we thought that this was the opportunity to highlight to the GI community what the future of esophageal cell collection is. And so we've been put forth, as you can see on this slide here, a variety of marketing materials that demonstrate the pristine safety record, really high patient satisfaction, very high success rates of over 95, 96%. The fact that ESAGARD can be performed in less than three minutes or really down to less than two in our hands and contrast that to the safety profile to the FDA recalls that have occurred with multiple sponge on string devices. And so this has been successful. We have a really positive experience at DDW highlighting this in a pretty assertive, let's just say, ad campaign that highlights this contrast and will continue to do that really to just remind the gastroenterology community in particular of the unique features of ESACHEC that we think ultimately play a critical role in the performance of ESAGARD and the data, the clinical quality data we've been able to generate. So with that, before handing it over to Dennis, I'd like to summarize by saying we really believe we're set up very well from a commercial point of view and based on our financial resources and balance sheets to really advance the ESAGARD through our efforts to gain Medicare and commercial coverage as well as through our new sales channels where we seek to drive revenue. So we really do look forward to continuing to maintain our test volume and grow revenue over the coming quarters.

So with that, let's pass the call on to Dennis. Thanks, LeShawna. Good morning, everyone.

The summary financial results for the first quarter were reported by our press release that has been distributed. On the next three slides, I'll emphasize a few key financial highlights from the first quarter, but I encourage you to consider those remarks in the context of full disclosures covered in our annual report and on Form 10Q. With regard to the balance sheet, AASH at the end of the quarter of March 31st was 25.2 million. Obviously, this does not include the net proceeds from the recent $16 million confidentially market public offering completed on April 11th, which when added to the above would give us the pro forma cash of about $1.4 million as we entered the second quarter. You'll recall that during the fourth quarter, we refinanced our convertible debt, which is a five-year note, interest only at 12% with a dollar conversion price, and it's held by long-term shareholders. The fair value of the convertible notes at 32.8 million at quarter end is really the only other substantive change from the previous reported balances at the end of December. The fair value increase reflects a -to-market quarterly adjustment in parallel with the common stock price increase of 82% from December 31st to March 31st. The quarterly burn rate was 11.3 million, which is slightly higher than the average burn rates with the four preceding quarters of 11.1, part of which is due to a full quarter's interest charge on the convertible debt, mostly paid in cash. The burn in the first quarter included 8.2 million from ongoing operations and 3.1 million from the quarterly management services agreement. Shares outstanding, including unvested RSAs as of last week, are approximately 108 million. The gap outstanding shares as of March 31st of 84.4 million are reflected on the slide as well as on the face of the balance sheet in the 10-Q. Gap shares do not reflect unvested restricted service rewards. At present, PadMed continues to be the single largest shareholder of lucid diagnostics with ownership of approximately 29% of the common shares outstanding. Although PadMed no longer has voting control of lucid, PadMed together with the board and management still have significant influence over lucid with more than 27% of the voting interest. As you're aware, lucid financing last year included the issuance of a series of voting convertible preferred securities whereby the preferred shareholders are significantly incentivized to delay conversion of the preferred shares into common shares until 2026, namely the second anniversary from closing. If all of the preferred shares outfitting were converted to common shares as of today, there would be an additional 49.6 million shares outstanding. With regard to the P&L, this slide compares this year's first quarter to last year's first quarter on certain key items. I trust you'll review the information in my comments in light of the cautionary disclosure at the bottom of the slide about supplemental information, particularly non-GAP information. With over 3,000 tests for the first quarter, we invoiced more than 7.5 million and recognized revenue of approximately 800,000 largely based on the amounts collected during the quarter. Collections were lower sequentially and year over year, mostly related to delayed cash collections from United Healthcare, who generally pays us at the Medicare rate and within a reasonable timeframe, but had a national issue with rolling out its new system Z code for molecular pathology claims that delayed processing claims. They're still working through the backlog with a 60 to 90 day time delay from the initial Z code assignment to final CPT code pairing and claim readiness. Additionally, the quarterly test mix included some larger testing events that involved Kaiser, and we're still working through claim denials with that insurer. With new investors once again joining us for this call, it's worth repeating what we have communicated in past quarters about revenue recognition. He determined how revenue is recognized at this point in our reimbursement journey is the probability of collection. Therefore, due to the fact that we are in the early stages of the reimbursement process, means revenue recognition claims submitted to traditional government or private health insurers will be recognized when the claim is voiced and submitted for reimbursement. You'll see in our 10Q, this is called variable consideration, a jargon of gaps, ASC606 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 or through Concierge Medicine and that are fixed and determinable will be recognized as revenue when our contracted service is delivered. Generally that means when the report is delivered to the referring physician.

Our non

-gap loss for the first quarter of 11.2 million is slightly higher than the trailing four quarter average of 10.8 million. However, if adjusted for the 800,000 financing cost incurred in the quarter, would have been modestly lower than the four quarter average. The non-gap net loss per share of 16 cents is lower sequentially as well as in each of the last four quarters with a trailing four quarter average of 20 cents per share. On a gap EPS basis, the first quarter non-cash charges accounting for approximately 36 cents per share include 13 cents per share related to the Series D preferred dividend issued on March 13. With regard to our operating expenses, this slide is a graphic illustration of our operating expenses after eliminating non-cash expenses for the periods reflected. Non-gap operating expenses were flat sequentially and after normalizing for deal expenses and interest expense for both fourth quarter and first quarter are in line with the last six quarters. Let me close with a few reimbursement highlights for the first quarter. In the first quarter we billed 3,034 tests reflecting just over 7.5 million in pro-forma revenue. During the first quarter we collected 800,000 from traditional reimbursement claims. Of that amount collected, about 20% was for claims submitted in the first quarter. About 60% from claims submitted in the previous quarter and the balance from claims submitted more than six months ago with the longest dated item roughly 21 months ago. Of the claims submitted in the first quarter, about 60% have been adjudicated, 40% are pending. Out of the 60% that have been adjudicated, about 30% resulted in an allowable amount by the insurance company with an average of about 1362 protest. Important to note that the median was right at the Medicare rate, $19.38 and one cent. Of those denied, about 50% are either A, being not medically necessary, B, require prior authorization, or C, require additional medical records. Additionally, about 30% were deemed to be non-covered.

So with that, operator, let's open it up for questions.

Thank you, ladies and gentlemen. We'll now begin the question and answer session. Should you have a question, please press the star followed by the one on your touchtone phone. You'll then hear a prompt that your hand has been raised. Should you wish to time from the polling process, please press the star followed by the two. If you are using a speakerphone, please lift the hands up before pressing the key. One moment please for your first question. And your first question comes from Mark Mazower from BTIG. Please go ahead.

Hey, good morning, guys. Thanks for taking the time. Hey. So, yeah, I just figured I would start with the Q1 volumes. Obviously, you did come in above the high end of that 2,500 to 3,000 threshold that you've talked about to get a large enough number of claims for payers. So that's good. Can you just give us a sense if weather was an impact in the quarter? And then as we think about Q2, would it be reasonable to think that that number might increase or is it still a little too early based on the timing of events?

Yeah, thanks. Thanks, Mark. So you characterize it correctly, as we said before, during this period while we're waiting for broader coverage, our goal is to sort of maintain to protect our cash burn and operating expenses to maintain a volume in this range. That gives us sufficient volume to remain engaged with the regional payers and other payers. And that's held up. The one thing that Dennis hinted at that was different. Directly answering your question is no, we don't believe weather. We have no evidence. Let's just say that weather was a factor. The one thing that Dennis hinted at, which may be worth emphasizing, is that as we've made this transition with our sales team to have a subset of them focus on new sales channels such as concierge medicine and increasing emphasis on contracted and revenue generating targets, that the proportion of the volume that is represented by these larger payers, the number of check your food tube events has increased. And that's just sort of natural, the natural effect of that as those events are much more efficient, they're there allow us to kind of reach these numbers and draw out the number of claims submissions to the traditional plans. One thing that comes of that is they tend to be lumpier, right? So if you have 1000 tests that are being ordered by a whole variety of physicians versus a handful of fire departments where there's a single payer typically for that, it tends to be lumpier. And so that can make the revenue number a little bit lumpier. But overall, no, things are pretty steady. Beyond that, somewhat shift more towards the check for these CYFT events, the health fair events. And I would still recommend that we sort of assume that we'll be in this range until either we get Medicare and are able to drive a volume towards elderly populations or as the commercial coverage as we start to get broadening commercial coverage at which point we'll look to drive volume beyond these levels.

Okay, great. And then I think, Lee, Sean, you indicated that you think the Palmetto GBA decision for Medicare coverage could be imminent. I'm just curious if you could provide any color with respect to whether or not there is active dialogue or is this more of like you had a conversation or meeting months ago and you're just waiting for to hear something. Yeah,

that's a good question. Yeah, no, we haven't gone back and engaged with the Multi-X Group. It wasn't a meeting. We had multiple meetings and multiple engagements heading up to the submission. And our expectations with regard to how long it would take them to process this request for reconsideration is based on the details of those conversations. And as a reminder, the substance of that is that what we submitted was a request to reconsider the previous LCD, which was written as a coverage LCD, but was not covered because there were no tests that had sufficient data at the time that was published two years ago. And so the work that's required for them is very different and substantially less than a typical new LCD or even a typical reconsideration, which seeks to change the coverage criteria or change other meaningful aspects of the LCD. We did not do that. We just said, here's our data. Here's a summary of our data. We provided a detailed summary that, and I'm frankly a red line of the existing LCD that simply incorporates our data and asks that the test be covered based on that. So because of that, because the group had already done all of the hard work that typically takes the periods of time, you know, assessing the space and understanding the underlying clinical and scientific basis for all of this, that's where our estimates as to what how long it would take them to complete that process of reviewing our data and acknowledging that it aligns with the coverage criteria. And that's why we still think it's coming soon.

Okay, great. And then I'll ask one more and then hop back in the queue. It was great to see the NCI sponsored study, which showed the value of ESA guard in patients without symptomatic GERD. I'd be curious to understand what is next. You know, I imagine that additional studies or data would have to be presented in order to longer term potentially gain Medicare coverage. And I think there was an NIH grant that was associated with that. So how are you thinking about investing in additional data? And what are your thoughts about timelines?

Yeah, exactly. So let's make let's make sure we put this you got that right. Let's make sure we put this in the right perspective right right now. Our goal is to target the 30 million plus patients who have who fulfill the more conservative American College of Gastroenterology guidelines, which require that the patient have a long standing heartburn plus three out of six risk factors. There's plenty of room for us to hunt in that space. And our conversations with payers, frankly, including Medicare, are limited to that right. So the Medicare LCD criteria match are identical to that more conservative criteria. However, there's a growing understanding within the GI community that GERD heartburn is not as powerful a risk factor and also very hard to document accurately. And the reason for that is a variety of things, but one of them being that patients are taking PPI medications that are effective at suppressing symptoms. And also the development of these precancerous conditions can can blunt symptoms. So there's an increasing realization of that that was first manifested in the fact that the other big GI society, the American Gastroenterological Association. Removed a requirement for GERD and just made it to be a risk factor. So that's that momentum within the GI community and sort of the understanding of the clinical situation here that in order for us to to really have, you know, maximal effect at preventing cancer that we have to look at these asymptomatic patients. This NCI sponsored study was the first step towards that. And it showed, as I said, two really critical things. One that is a guard works in patients who don't have heartburn. We're not surprised by that. But we had a it showed 100% negative predictive value for us to guard. But perhaps the more important, at least as important data point was that 8% prevalence. You might wonder if you remove heartburn that, okay, well, maybe that's a lower risk population. You know, that maybe they're at three or 4% and the long term opportunity to justify testing in someone in a group of patients that have less pre cancer might be lower. So that 8% number is really right up there in the in the similar range to those who have GERD. So that first box has been checked. You're right. That's not going to be sufficient for for there to be expanded. The universal guidelines for all the guidelines to say that and frankly for the payers to buy into that that's going to require more data. And that's where the NIH study comes in. So the group led by by Case Western, but that include multiple major academic centers received an NIH $8 million NIH grant to replicate the data from this pilot study on a larger basis. So please, the numbers 800 patients over the coming years and that data will be the sort of definitive data that will drive the expansion of the clinical indications and therefore the expansion of the market opportunity. I don't think we'll need any more data beyond that.

Oh, wow. Okay. Thanks very much guys. Yeah,

great. Thanks.

Thank you. And your next question comes from Kyle mix it mix it mechanic origin unity. Please go ahead.

One call. Hey guys. Good morning. Thanks for the questions. I wanted to to talk about volume. That's helpful on ASP though. I know like, you know, just collecting cash and like, and it's not a perfect system right now given the lack of reimbursement. But, you know, you are, I feel like you're working with more conscious medicine, more contracting and the payment rate should be a little more like at least should be elevated. I thought. And now it looks like it's a crime quarter over quarter. The, the effective ASP. So what can you just talk about mix in the quarter? I know you got the events and everything would just mix and then how that flows into pricing and everything. And again, like maybe how we should think about it for the rest of the year.

Yeah, let me let me have Dennis talk about that. But just to start off, just a reminder that the institution, particularly the concierge practice on the expanded targeting of the contract before stuff happened. Pretty recently, right? That this shift in the sales team happened at the beginning of the year. We just started pulling in contracts in the past couple of months. And the, you know, we've expanded the number of contracts where we've demonstrated that we can get concert practices on board, but translating that into patients who are actually getting tested even with those lower bar to recognize revenue in those patients. We're still somewhat early in that process. So I think Dennis can probably comment on sort of that. The contribution to the current revenue numbers in the ASP is this minimal for this quarter for the first quarter.

Thanks. Dennis. Yeah, that is absolutely true. Kyle, I don't want to put too much undue weight on this topic because we were in network. This wouldn't even be a discussion point as it would not even affect our revenue or even our analysis of the business performance. Maybe an uptick in our receivables, but not affecting our our revenue because that's because of the accounting methodology. So the only issue is that we are still working through reimbursement and the central actor here is still the in the storyline is Medicare approval. But with that, let me give you a couple stats. The two that I mentioned, and you can use any AI generated data source, you'll see that the Z code issue is has been a chronic issue with United. But in any case, both United and Kaiser in the last two quarters generated each 1.3 million in billable amounts. And specifically with United, the collection rate for United in the third quarter last year was 30 plus percent, 32 percent, I think it was in the first quarter was only 10 percent. And that Z code issue related to a number of denials and resubmission and working through it. Kaiser, on the other hand, came about and that was about 10 percent of our volume in the first quarter, a little bit less than that in the in the fourth quarter. At 1.3, we have collected zero on and our teams are working through the Kaiser and other IDN like it. We will be important long term. So it's important we start filing claims, we engage with them, we start that process to get into their network. But that resulted in zero of our collections. So there's some of the stats related to the mix. But like I said, I don't want to put a whole lot of weight on this topic simply because it's not an indication of the performance of the business, it's an indication of where we stand with the reimbursement journey.

I think I could just emphasize one other thing, Kyle, if you don't mind. I know your focus was around concierge and employers and that is, again, there was not any meaningful concierge activity in the first quarter. But the IDN question is a really interesting one because they're not traditional just sort of commercial payers, but they have health plans as well. And we have had a handful of them, the notable one obviously being Kaiser and a handful of others and our ability to engage with them as a result of the increased volume of activity within them has been positive. So we've had some positive engagements with the larger IDNs and we look forward to securing contracted coverage with them while we're sort of in the same vein as we're doing with the regional plans.

Okay, perfect. That was great. And can you actually just talk about the Medicare mix and how that's trended recently and how you expect it to go going forward?

Yeah, we should

always... Go

ahead, Dennis, sorry. Yeah, so interesting question. I'm going to expand upon that. So we have about $19 million total in our backlog that our reimbursement teams are working on collecting. About $15 million of that is in the last 12 months. And the Medicare percentage changes every quarter. We focus on this because when we get final approval, you've got the 12 months backlog that you can submit claims. And that varies quarter by quarter. And given that we are now awaiting the approval and our teams have been focused on concierge medicine, the percentage of Medicare is lower. It's probably right now 10, 12 to 15% of our volume. But obviously the goal there is 40%. When you think about the 30 million patients that are symptomatic, that are part of the ACG guidelines of what we're seeking for Medicare, 40% of that 30 million is our targeted audience. Could be even higher than that, but that's generally the way we think about it. And with Medicare approval, we already have plans in place and tactics that are ready to go to start hunting for that particular patient that is in the Medicare group. And our goal will be as quickly as possible to take that 12 to 15% up to 40% of our test volume and our growing test volume.

Perfect. And finally, I guess you're alluding to partnering with the Medare Health System to do a comprehensive ESA Guard testing program. Do you have a lot of those health systems in the pipeline or is this more of like a pilot and you'll try it out and you'll see if others make sense to partner with?

We have a good pipeline of those, but these are long lead time. I think this particular one we've been working on for about a year. We've had positive engagements with the gastroenterologists. And what's a bit interesting, and also by the way, we haven't sort of announced every time we have a major health system, we've been careful to just sort of wait and see how they develop in terms of traction. But what's interesting about this one, as I said, we'll provide a more detailed announcement once we have a sign off to do so from the institution, from the health system, is that they have a very large concierge medicine practice. So this was the first time where we've gone into a health system and said we'd like, you know, not only to implement broad based esophageal pre-cancer testing that includes ESA check and in the ESA Guard and work out exactly who's going to do the cell collection and how we're going to go target patients and how we're going to communicate with the primary care physicians and all of the things that go into building that kind of a program. And this particular health system, and many, they're not unique in this, has a large concierge medicine practice. So the work we've done in learning how to engage with concierge medicine practices over the last couple of months really paid off. And so this is an engagement that covers all of the above and it requires some slight tweaks to how it's done within the concierge group versus the broader group. So it does serve as a template for the future, but we do have a significant pipeline of others that we're working on, but they're longer lead time. So we have to do this as long as well as the other paths to engaging employers for our departments and as well as individual and smaller practices.

Okay, that's interesting. Thanks, Lishan. Thanks, Dennis.

Yeah, thanks,

Kyle. Thank you. And your next question comes from Mike Matson from Needham Company. Please go ahead.

Yeah, thanks. I'm glad to hear that you're feeling positive about the MaldiEx. I guess not to sound negative here, but just, you know, do you have any contingency plans or, you know, I guess what would you do if for some reason you don't get it when you expect it? Well,

I mean, I think the key thing is that we've already sort of started, I wouldn't say contingency plans really, but because we do expect to get it, but we are also, you know, we are building this parallel pipeline of concierge and employer contracted revenue to drive revenue. And Dennis talked last time about our expectations with how that will register in the second half and cut our burn. The most important mitigating factor is that we raise capital to get us through these milestones. And so we're well positioned to handle any delays, but we really are expecting it. The time has come given the amount of work that we expect they needed to do in order to do the analysis and proceed with the draft coverage.

Okay, got it. And then, you know, leads into my next question, just on the concierge program. So I guess, you know, I'm not real familiar with how those things work, but how do the patients that are enrolled in those kind of hear about the guard and decide whether or not that's something they want to hop in for? And is there anything you can do to kind of market the test, you know, or provide information to those people in those plans? Yeah, so

that's exactly what you described is exactly what we're doing. And we're not we're not inventing this from scratch. There are other companies that have done this, most notably Grail, that is and has been engaged with concierge practices for a while and has sort of figured out the secret sauce to go from having a concierge practice that you've won over and you've convinced this is something that they should be offering to their patients on a cash-pay basis, along with other testing that is attractive to this particular kind of approach. And so that's exactly what you described. And that's exactly what I was mentioning earlier, that we are in the process of doing. So we now know that our team can go out and secure contracts. That's clear. Our talk track, the data that we've built up has worked very well in our ability to engage the physicians to say, oh, yeah, this is something I'd like to offer my patients, my concierge patients. And now we are in the process of optimizing and kind of fine tuning our patient facing materials to target this particular patient population and also our processes by which we work hand in hand with the practice to go out and let their patients know that this is available and why it might be valuable and who's at risk and who would be the appropriate patients to do that. So that's a very active process that we're engaged with. And we're making, you know, as you might imagine, we have a pretty robust methodology for doing that from our traditional approach, targeting primary care physicians that include even helping them figure out how to go to their EHRs and identify at-risk patients and contacting them directly and proactively to suggest this. So we have experience doing this. We're just in the process of tailoring those processes and materials to the unique aspects of a concierge medicine practice

patient. Okay, got it. Thank you. Great. Thanks,

Mike. Thank

you. And your next question comes

from Jeremy Perlman from Maxin Group. Please go ahead.

Thank you. How are you? Good. How are you? I'm doing well. So this shift in commercial strategy more towards the cash pay and concierge medicine, is that more short term to just bridge the gap to the potential Medicare coverage or is that market in the cash pay concierge large enough? I mean, I think most of you have seen that it's worthwhile to continue that commercial push even after a potential approval for Medicare. At that point, you would supplement sales reps and target additional whatever insurers. So,

yeah, let's be careful about work here because I don't want to characterize this as a shift really. It's really just supplemental alongside. It's all of the above, right? We're going, we're targeting coverage and payments and revenue everywhere we can. So we're on the on the traditional side. We're engaging with regional plans that we believe we can secure even before Medicare, right? So we have high mark at the high mark coverage policy is helping us engage with others. And we think that will continue to remain fruitful. The larger plans will wait for Medicare. Medicare obviously will wait for Medicare. But then on top of that, supplementing that, we've we've allocated resources towards areas where there are patients that can pay out of pocket. And so that or institutions like entities like employers and fire departments that can pay on a contracted basis. So we guarantee revenue. So that's what we're doing now. We're not shifting. We've shifted some resources, but we're not shifting our strategy. Overall, it remains on all of the above effort while we're pushing on the coverage side. Once we get broad, once we get broad, once we have Medicare coverage, and that leads to broader commercial coverage, look, the vast majority of the opportunity here, the vast majority of those 30 million patients are going to be within traditional plans. And that's where we will. We will put our resources, but I wouldn't underestimate there is a significant about on the employer side about half 50% of the population are in self insured plans through their employer. So there's still a lot of opportunity to to grow there. And the concierge medicine sector is exploding and given the attractiveness of the economics of targeting those, I suspect we'll continue to do so. But once once we have broad coverage, the more traditional pathways are going to be will become dominant.

Understood. And then just one last question from us. You know, there's some legislative efforts underway in some states. I think it's even been in action some states to cover biomarker testing and particularly in cancer patients. Does that have any effect on your business? And are you.

Yeah, we're, we're actively engaged

in that we're helping with that. We are on active and add them at and other groups that that are seeking to push those New Jersey just passed one just across river from us. And and there are examples where that can be helpful, but there's always there's generally a fair amount of hair on those. You know, you start with a with a with a state with state legislation that mandates this but translating that into actually forcing payers to pay for. For your your test takes time. There are larger advocacy groups that are sort of helping to narrow that to make that more straightforward. So we're actively involved in that, but we're not assuming that that's going to be the panacea by any by any stretch. Understood.

All right. Thank you for taking my questions. Thanks. Thanks. Thanks.

Thank you. And your next question comes from Ross Osborne from Kent, which Gerald, please go ahead.

Hey guys, thanks for taking questions. Good morning. So looking at your growing body of clinical utility data would be curious to hear feedback from physicians and what they're excited about recent publication and how you're now feeling about general awareness of each other from the clinical community.

That's a great question. It's not something we talk about enough, probably because, you know, the clinical validity data is sort of the sexier part of your clinical evidence package. But what's what's exciting is that we have the sort of full chain of evidence right now we have evidence public and all of these are published that physicians use the Easter guard test appropriately to triage patients and patients. Who are positive to endoscopy and negative to to not getting any further testing the concordance of that is nearly 100%. We have published data that shows that when patients are. When patients have a positive Easter guard test that 85 85% compliance with them getting the endoscopy, which is really a high number relative to other tests where you triage patients to a more invasive test. And notably, we haven't, we haven't highlighted the whole lot, but it's a double what the compliance rate is with an endoscopy without a cigar. So somebody position just as a likely to get an endoscopy only about 40% of the patients will do that if they have a positive Easter guard test the likelihood of them completing that is double. And then the data that shows that when you. When the patients do get in there and ask it to be the yield from that. The number of positive pre cancers that are detected is two and a half to three fold. So all three of those are really important. They're particularly important for different target population, different positional groups. So the primary referring docs want to know that they're. Test appropriately and then on the at the very end, the gastroenterologists are excited about the fact that their endoscopies are going to have a higher yield or find more positive patients that they will. They will put through surveillance and then and then and then interventional ablation if needed. The awareness. Excuse me, has been has been increasing and good at something that you know the small company always you always have to work hard at to get attention. I think the. This is this was our the ddw meeting is the biggest gastroenterology meeting in the world. It's a massive meeting this year was in Seattle. And we had a very strong presence there this year. We had a very active booth. We had a second area that I showed in the slides where we were able to talk about the advantages of you know how great iso check works. And you know, he could tell just from the general traffic and the general engagement that there is much, much better awareness and understanding of the availability of this testing. So that's what I'm positive. We look forward to very soon having being able to release data that corroborates this and we'll we'll make our efforts. We'll strengthen our efforts in this area, which is where in the final stages of collecting a very large 12,000 patient experience with isogard and iso check testing in the real world for real world experience that provides really outstanding data on on how iso check is performed on as well as on the types of patients that are being tested and how that's playing out in the real world and that that kind of real world evidence is also often very useful, particularly when you have such a large sample size. So that will be coming soon as well. And that'll help with those efforts, but that those

efforts are going well.

Great glad to hear it. Thanks for taking our questions. Thanks for the question.

Thank you. In your last question comes from Ed Wu from capital. Please go ahead.

Yeah, thanks for taking my question. My question is what's your visibility for large testing events for the rest of the year? And is there any seasonality to them?

The pipeline for the large testing events is great. That's that's that's we have a deep pipeline. We're scheduling months in advance. Our goal, of course, I think we said this before our our our goal is to is to transfer to to transition those larger testing events, which still are dominated by fire departments, but we'll be increasingly including self-insured employers to have those be contracted in advance. And so our team, we have now a dedicated team that's working on working with the fire departments on grants and other ways to make sure that when we do these larger events, that we get we get paid without having to go through the traditional claims process. And the visibility is also been great. We have just about every week, there's local media coverage, you know, particularly with the fire departments, we get really strong local media coverage on testing of fire, fire departments and firefighters. And so there's there's increasing visibility. But the key aspect there is really transitioning those high volume events to ones which where we are

now

we have

contractually guaranteed payment in advance. Great. Well, thanks for answering my questions and I wish you guys a good luck. Thank you.

Yeah, thanks.

Thank you. And there are no further questions at this time. I will now like to turn the call back over to Dr. Lee Sean Eklok. Please continue.

Great. So hey, thank you all for your time and attention this morning. Thanks for all the great questions. I hope you got a sense that we are really confident and like we are in a really well positioned to capitalize on this opportunity that we have in front of us with these regards that there's a variety of things that are imminent. We believe Medicare coverage is imminent. We believe we're going to continue to get momentum with the regional commercial insurers and that the larger insurers will follow with Medicare. And when we have really good early signs with the cash paying contracted sales channels, those efforts then began in the first quarter. We believe we'll still we'll actually start reflecting in our revenue numbers over time. And I'm happy that we have a stronger balance sheet to be able to navigate this process over the coming quarters. So with that, again, appreciate your time. We encourage you to keep abreast of our progress via our news releases and these calls as well as on our website and through social media on Twitter and LinkedIn. So

thanks again, everybody. And have a great day.

Ladies and gentlemen, this concludes your conference call for today. We thank you very much for your participation and

as we please do disconnect. Have a great day.