Lucid Diagnostics Inc.

Good morning and welcome to the Lucid Diagnostics second quarter 2025 business update conference call. At this time, all lines are in listen-only mode. Following the presentation, we will conduct a question and answer session. If at any time during this call you require immediate assistance, please press star zero for the operator. Please note that this event is being recorded. I would now like to turn the conference over to Matt Riley, Lucid Diagnostics Senior Director of Investor Relations. Please go ahead.

Thank you, operator, and good morning, everyone. Thank you for participating in today's business update call. Joining me today on the call are Dr. Elisha Nakhlog, Chairman and CEO 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 the 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 future operations, see Part 1, Item 1A, entitled Risk Factors and Lucid's most recent annual report on Forms 10-K, filed with the SEC, and any subsequent updates filed in quarter reports on Forms 10-Q and subsequent Forms 8-K. Except as required by law, LUCID disclaims any intentions or obligations to publicly update or revise any forward-looking statements to reflect changes in expectations or in events, conditions, or circumstances on which 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. Elishon Ackog, Chairman and CEO of LUCID. Go ahead, Elishon.

Thanks, Matt, and good morning, everyone. Thank you 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 really remains singularly focused on driving this enterprise towards its substantial commercial potential and enhance our long-term shareholder value. Since our last update, the biggest development and near-term milestone is the upcoming LCD CAC meeting, which will be the main focus of today's call. We're really excited about this. We see this meeting as a very strong indicator of progress towards a positive Medicare coverage policy outcome. And we really believe that we're in the final stages of this process. We're excited that we've kind of reached this moment in time with very clear and now concrete steps ahead of us to navigate and to succeed. Thanks to our financings earlier this year, we have plenty of runway, and we're well-positioned to successfully navigate these final steps. We'll talk about this a little bit more later, but we've already begun to take proactive steps to ensure that once Medicare coverage is secured, we will be able to accelerate e-cigarettes commercialization and ultimately capitalize on this very large market opportunity that we face. Let's start with some key highlights related to our commercial execution. e-cigarette test volume for the second quarter was 2,756 tests. This is within our target range of 2,500 to 3,000 tests per quarter. And we're really happy that the team continues to be successful at maintaining this level of volume, this target volume, while focusing on contractually guaranteed revenue opportunities and now with a new focus on Medicare patients. Revenue was $1.2 million. That's a 40% increase in revenue from the first quarter and matches our previous quarterly high. We're very excited to partner with HOAG, a large health system, a world-class health system in Orange County, California, and we've launched a comprehensive e-cigar esophageal pre-cancer testing program in partnership with them. What's really exciting about this program is that it's system-wide across the healthcare delivery network, so it includes partnerships between gastroenterologists, including the lead, Dr. Kenneth Chang, who's a very passionate advocate for their mission to eradicate esophageal cancer in their region. It includes primary care. There are 200 primary care physicians that we'll be engaging with, as well as their concierge medicine part of the health system. Really believe this is a model for additional leading health systems, both in that region as well as elsewhere, basically related to building comprehensive programs around using Eastern Guard esophageal pre-cancer testing. We continue to drive our cash pay and contracted programs that we launched earlier this year. These target concierge medicine practices, the self-insured entities, which include fire departments, municipalities, and employers. Very steady progress on this front. We have a robust pipeline that is continuing to fill. We are getting traction on both We're learning, our team is learning how to engage these concierge medicine practices, how to establish contracts, and then how to drive patients within the practice to e-cigar testing. And that's generating good traction so far. Same on the contracting side, particularly with contracting with fire departments and municipalities. And we look forward to seeing some yield from these efforts in the coming quarters. Of course, this effort is designed to complement our traditional reimbursement pathways with commercial payers as well as Medicare. Now, let's discuss our recent strategic accomplishments. As I mentioned, we have a Moldex Contractor Advisory Committee, or CAC meeting, that's scheduled for September 4th. That notice went out a few weeks ago. And I'm really excited about this and look forward to providing you with a lot greater context a little bit later on this call. We were excited to see that the Highmark Blue Cross Blue Shield positive coverage policy for ESA Guard that we had announced earlier actually became effective. This is our first positive commercial coverage policy. It covers upstate New York. And it serves as a precedent first for commercial payers. We've been able to cite this in our ongoing engagements with other commercial payers, including other regional Blue Cross Blue Shield plans and our engagement with the broader Blue Cross Blue Shield Association. So we've seen significant value in having this one under our belt. And actually even potentially for Medicare, we've highlighted the fact that we're starting to secure commercial coverage in our conversations with the leadership of the multi-exit programs. It also validates the strength of our clinical evidence base. including the clinical utility of this test and the overall health care economic arguments that we're making with other commercial payers. It's not just a theoretical policy. We are already seeing patients in this region that have Highmark that we're billing under this policy, and we remain deeply engaged on this front. Dennis will talk about it a little bit further. Of course, we strengthened our balance sheet with an underwritten public offering in the past quarter. that netted $16.1 million in proceeds. This significantly bolsters our balance sheet. We have $30 million in pro forma cash at the end of the second quarter. The key goal for this financing was to extend our runway well into 2026 and past the now concrete milestones that we are facing, particularly as it relates to Medicare and mitigate risk from external factors. It also provides us with sufficient resources to ramp up our commercial efforts after we secure Medicare approval. Another important development, strategic development over this past quarter was ultimately the publication in the American Journal of Gastroenterology of the pilot study that was performed studying the Isagard in a target population of patients without significant GERD symptoms. This publication, if you recall from our previous call, led to a larger ongoing five-year study sponsored and funded by an $8 million grant by the National Institutes of Health. And it had two key findings. One, that EtherGard performed extremely well with no degradation of performance in patients without significant GERD symptoms. It had a 100% negative predictive value. And the prevalence in this population without symptoms of GERD remained high at 8.4%, approximately the same as in the traditional GERD. target population with standard criteria. So we really see this as a future opportunity, not in the near term, but in the medium to long term, that if the NIH study can replicate this result, we really do view that the large total addressable market of about $60 billion can increase by a substantial amount beyond that if we include, ultimately, patients without GERD symptoms, or at least without giving GERD symptoms, are included in guidelines and in coverage policies. So I really want to focus the rest of my comments on the upcoming September 4th CAC meeting and its critical role in our efforts to secure a positive Medicare coverage policy outcome for ESAGARD. As I said, we're really excited about this. We view this as a very positive development and I want to really give some, go in a bit of depth on what this means for our pathway. In order for us to do so, this process of securing local coverage determinations through the MOL-DX process, through the MOL-DX program is not straightforward, and I thought it would be helpful to go through in some detail the history of how we got to this point, understand what we expect from this meeting, the motivation for this meeting based on our conversations with leadership at MOL-DX, and then what we expect to happen after this September 4th meeting. So let's go ahead and get started. engagement with the MoldeX program was in 2020. The MoldeX program is run by one of the Medicare administrative contractors, Palmetto GBA, and they work with several other of the Medicare administrative contractors, other MACs that are MoldeX participants in essentially outsourcing the review of molecular diagnostics for payment and coverage to the MoldeX program. That includes Neridian, which is the MAC that our laboratory falls under in Orange County, California. That first engagement led to several meetings and submission for payment and coverage. We secured our payment rate very soon thereafter in early 2021 at $1,938. And we submitted our request for a coverage policy based on the availability of non-endoscopic biomarker tests. At that time, we didn't have significant data. We had no clinical utility data. We had just the original science translational medicine paper. And we went to work to collect more data. But fortunately, our efforts to trigger the LCD process were successful. There was somewhat of a lull from COVID, but ultimately, the process of actually putting forth a proposed draft and ultimately final LCD started going into effect. In late 2021, there was an actual first CAC meeting, analogous to the CAC meeting that's coming up in September. And that meeting went well. It was an early effort by Moldeix to get expert opinion, to get a sense as to whether they felt, whether the experts, the clinical experts, they were gastroenterologists primarily in that group and a pathologist, as to whether The evidence broadly for non-endoscopic biomarker testing supported identifying these patients with esophageal precancer. And that meeting was positive. And it led, we believe, directly to a decision to actually publish a draft LCD in the spring of 2022. That draft LCD wasn't perfect. It had issues with regard to the way the coverage criteria were outlined. It was listed as a non-coverage LCD because there was no data. We didn't have any data and there were no other tests that fell into this category. But we saw that as a very important development that indicated motivation for the group to actually get in the game and start establishing the groundwork for coverage of these kinds of tests by Medicare. There was sort of the obligatory processes that go with a draft LCD. There was a comment period and a public meeting, and written and public comments were submitted on how to fix the LCD, and that was successful. About a year later, a final LCD was published. Again, it remained non-covered, but the body of it was really written as a coverage LCD. It said, we will cover tests like this, And it fixed the criteria. The criteria matched the standard criteria that the American College of Gastroenterology has published. And we were off to the races at that point. We had a clear roadmap ahead of us as to how to secure coverage based on the data that we collected. By mid last year, by the summer of last year, a year ago, we had essentially completed much of the clinical research that we needed to provide in order for us to secure our coverage under this coverage determination. That data consists of three types of data, clinical validity, which is the actual intrinsic performance of the test, clinical utility, which is the published evidence that the test can be used appropriately to manage patients, and then analytical validity, which is about how it actually operates in the laboratory that's less important. So we requested and had a very successful pre-submission meeting in person with the MOL-DX leadership and went through our data and presented what we had. And that began a several-month period of very close engagement and discussions with the leadership at MoldyX about the process by which we should put our data together, how to collect it, how to actually go ahead and submit for the process, which is called a reconsideration of the LCD that had been previously published. That engagement was very positive. It was very collaborative. and it culminated at the end of the year in November of us submitting and then ultimately them accepting a formal request for consideration that included all of our data. That was in December of last year. Then there was a bit of a waiting game, which we were all waiting for, and we waited through the first half of the year for the MOL-DX team to review our submission, to review the updates to the data. The request was very straightforward. It was just simply that we now have data. We believe we have sufficient clinical validity, clinical utility, and analytical validity data, and that we are ready to be granted coverage for this. We know in retrospect now that there were some delays related to the change in administration and cuts at CMS that delayed the overall activity level at the program. But a few weeks ago, we reengaged with MALDX leadership in person, had discussions just prior to the publication of this meeting notice, and we're excited when the meeting notice was published as an indication that we were well on our way to the final stages of this process. Let me talk a little bit about the meeting itself. The MOLDI-X process has very sort of concrete portions of which are set by statutory requirement processes by which local coverage determinations can be provided. These coverage determinations can incorporate two buckets of information. One is published peer-reviewed data, as well as expert opinion from these public meetings, expert opinion that is by key opinion leaders in the space. So that's the purpose of this meeting. The purpose of this meeting is to provide clinical context to the clinical evidence, which we firmly believe is complete, to show how the utility of our type of test of non-endoscopic biomarker testing enhances the care of patients. And it's important to note that we've been asked this question a bit, that this is not an FDA panel. This is an advisory committee. There's no thumbs-up, thumbs-down decision at the end of it. It's informative. It's intended. It's a two-hour meeting intended that will have questions in advance that's intended to engage the experts and provide clinical context to the evidence that's already presented, that we already presented. in our package. And so we have very high expectations for this meeting. We think it will be positive. We are highly confident, not just in our clinical evidence, but in the clinical utility of this test. We've performed 40,000 tests so far today in all sorts of settings, whether, as we mentioned with Hoag, in building broad programs within health systems, in individual practices, whether they be primary care or gastroenterology. And so we're very confident that that message will come out by the experts, which we think will be a diverse group of both gastroenterologists and primary care physicians, as well as a mix of academic experts and patients and folks in practice. So what happens after the meeting? The meeting is, again, designed to, on the record, have the experts opine on the utility of our test and the clinical validity. From that point on, the results of that meeting will be incorporated into what we believe is the work that's already been performed to date. And the next step in the process will be, as was the case in the initial proposed LCD, there'll be a publication of a draft LCD. Again, we have every reason to think, based on our discussions, that we are in the late stages of this, and we are certainly hopeful that a draft LCD will be forthcoming in the early period after the completion of the CAC meeting. Then after that, sorry, the draft LCD itself is really, from our point of view, is the milestone itself. A draft LCD means that the group, that the multi-ex group on behalf of the other contractors is committed, has made a determination that this test should be covered. And then there's the mandatory process that we went through the last time. There will be a comment period, a public meeting to get public comments, and then a final LCD will be published after incorporating those comments. We have no reason to expect that there will be any pushback with regard to the comment period. We and others in the industry are supportive, obviously, of this moving forward. So that's what we expect. Again, just to summarize, we are really looking forward to this. It's a few weeks away. Everyone's really excited about it. And based on ongoing conversations with folks within Multi-X and elsewhere and our consultants, we have really strong expectations for a very positive outcome. So as we really now do believe that Medicare coverage is coming, and as a testament to To that, we are already positioning resources within our company to focus on increasing our Medicare population. We've already taken some proactive steps to ensure once coverage is secured that we'll be able to accelerate our commercialization and capitalize on this market opportunity. Of course, in parallel, we, as I said earlier, we are continuing to drive our market access efforts that are targeting commercial payers. We've had some very encouraging engagements even in the last couple of weeks. with regional and larger plans. And we're looking forward to starting to secure some additional positive coverage policies even before the final Medicare process is complete and we have final coverage there. And we're also looking forward to starting to see our concierge and contracting pipeline, which, as I said, is robust, start to yield tangible results in the coming quarters. And so with that, let's pass the call on to Dennis.