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spk03: Good day and welcome to the PadMed, Inc. first quarter business update call. Today's conference is being recorded. And now at this time, I'd like to turn the conference over to Adrian Miller. Please go ahead, sir.
spk07: Thanks, operator. Good afternoon, everyone. This is Adrian Miller, Vice President of Best Relations at PadMed. Thank you for participating in today's business update call. Joining me today on the call is Dr. Alishan Akhlog, Chairman and Chief Executive Officer of PadMed, along with Dennis McGrath, President and Chief Financial Officer of PadMed, The press release announcing our business update and financial results will be posted shortly on PatMed's website. Please take a moment to read the disclaimer about the forward-looking statements in the press release. The business update press release and this conference call both include forward-looking statements, and these forward-looking statements are subject to known and unknown risks and uncertainties that may cause actual results to differ materially from 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 descriptions of these and other important risks and uncertainties that may affect future operations, see Part 1, Item 1A, entitled Risk Factors in PABMID's Most Recent Annual Report on Form 10-K, filed with the Securities and Exchange Commission, and any subsequent updates filed in quarterly reports on Form 10-Q and subsequent Form 8-K filings. except as required by law, PABMID disclaims any intentional obligation to publicly update or revise any forward-looking statements to reflect changes in expectations or in events, conditions, or circumstances on which these expectations may be based or that may affect the likelihood that actual results may differ from those contained in the forward-looking statements. With that, I'd like to turn the call over to Leishan Aglog, Dr. Aglog.
spk09: Hey, thank you, Adrian. Good afternoon, everyone, and thank you for joining our quarterly update call. I'm happy to report that PadMed and its subsidiaries are making solid progress as we continue driving our long-term and mission to create a leading diversified medical technology company. Before proceeding, I would like to thank our long-term shareholders for your ongoing support and commitment. Our combined team has grown to over 100 employees and is singularly focused on growing the PadMed enterprise while enhancing long-term shareholder value. Our balance sheet remains strong, providing us with the resources to execute this strategy. Given the current market volatility, we're particularly focused on deploying our capital as efficiently and effectively as possible to accomplish our strategic goals while preserving and extending our cash runway. I'd like to start by providing an overview of our business, and we'll then pass the baton over to Dennis, who will provide our financial update before opening it up to questions. First, some background on PadMed. PadMed is a diversified commercial-stage medical technology company operating in the medical device, diagnostics, and digital health sectors. Our mission is to utilize state-of-the-art technologies in the service of patients by providing innovative and disruptive products and solutions, which significantly improve or save lives while enhancing healthcare quality, efficiency, and cost-effectiveness. Our vision is to build a growing and profitable diversified medical technology leader across all the three major sectors. The PadMed enterprise today consists of two majority-owned subsidiaries, Lucid Diagnostics and Veris Health, two business units, Carpex and Nexlo, and an R&D pipeline of products at various stages of development. Lucid is a NASDAQ-listed commercial stage cancer prevention medical diagnostics company, which markets ESOGARD and ESOCHEC, the first and only commercial tools for widespread early detection of esophageal precancer to prevent esophageal cancer death. PadMed owns approximately 76% of Lucid's outstanding shares. Veris Health is a privately held digital health company developing the first intelligent implantable vascular access port with biologic sensors and wireless communications to improve personalized cancer care through remote patient monitoring. PadMed owns approximately 81% of Veris' outstanding shares. PadMed operates as a central engine, which provides a broad range of shared services to its subsidiaries and business units, as well as to its R&D team. These include general administration, finance, product design and development, regulatory affairs, quality management, clinical research, manufacturing, and medical affairs. This centralized share services model allows each of the subsidiaries and business units to be laser focused on the development, commercialization, and clinical evidence for its product or products. The model provides numerous benefits to facilitate value creation across the enterprise, including economies of scale, risk mitigation through diversification, a lower cost of capital, and much greater growth potential. Operators, could you mute the other participants real quick? Thank you. During the past couple of years, especially in 2021, we have undergone a major transition focusing on expanding our internal human systems and physical infrastructure, laying the foundation for commercial success, as well as optimizing and rationalizing our portfolio. We believe this transition is essentially complete. The expanded infrastructure is mostly in place, and we are now entirely focused on commercial expansion and execution, reimbursement, and revenue growth in the coming quarters and years. Now proceed with an update of our subsidiaries, business units, and R&D pipeline, starting with Lucid, which remains PatMED's dominant business. My discussion of Lucid will be a distillation of my remarks during yesterday's Lucid call, with the focus on the updated ACG guidelines, ESA guard commercialization, laboratory operations, and reimbursement, I would encourage you to read the transcript or listen to the recording of the Lucid call for additional details. And feel free to contact Adrian to help with this. So as we previously announced, the American College of Gastroenterology recently updated its clinical guideline on the diagnosis and management of esophageal precancer, the first such update since 2016. For the first time, the guideline endorses non-endoscopic biomarker screening as an acceptable alternative to costly and invasive endoscopy. ESAGARD and ESA-CHECK, which are described in the guideline, are currently the only such non-endoscopic biomarker screening tests. This is an exciting development for Lucid, and I can't overemphasize its importance in supporting our efforts to eradicate esophageal cancer. Our ESAGARD commercialization efforts are going well. We continue to see excellent traction with robust growth in ESAGARD testing volume. We processed 533 commercial e-cigar tests in the first quarter of 2022. That represents a 76% sequential increase from the fourth quarter of 2021 and a nearly 500% increase annually from the first quarter of 2021. Testing volume growth was strong in both sales channels. Primary care physician referrals to our lucid test centers as well as tests performed at gastroenterology for gut surgeon specialty practices and institutions. We are investing in sufficient sales infrastructure to demonstrate clinical utility and generate claims to support our reimbursement efforts. Once reimbursement is more fully established, we will transition to full-throttle efforts to drive testing volume and revenue growth. Our sales team continues to grow and now consists of a national VP of sales, three area directors, six market development managers, and 17 sales reps, as well as several sales operations staff. We are hitting our hiring targets and seek to have new reps operating effectively within about four months of hiring. Our expanding network of lucid test centers support our primary care channel by providing a facility where patients referred for e-cigar testing by primary care physicians can undergo the e-cigar cell collection procedure. The test centers have very modest fixed costs and attractive margins, operating almost entirely as marginal variable cost businesses. The Lucid Test Center program completed its first stage during the first quarter of 2022 and now covers seven Western U.S. cities. We recently launched stage two of our Lucid Test Center program. We plan to open test centers in nine additional states this year. Last month, we hired a director of clinical services with extensive operating experience at the health facilities to oversee this expansion. We also do continue the pilot of our e-cigar telemedicine program, which we launched in December. Although patients in any Lucid test center city can access the telemedicine program, we're only actively pursuing a direct-to-consumer advertising program on a limited pilot basis in Phoenix, consistent with the near-term strategy that I previously described. The first quarter and recent months have been full of important developments in our laboratory operations, which are critical to the future success of the company. At the end of February, Lucid DX Labs, a wholly-owned subsidiary of Lucid Diagnostics, acquired the assets necessary to operate our own CLIA-certified and CAP-accredited clinical laboratory in Orange County, California. Last month, we hired a new VP of laboratory operations with nearly two decades of clinical laboratory leadership experience, and we plan to accelerate the transition from the current management services agreement to the lab being fully staffed by Lucid employees. In parallel with the acquisition, we upgraded to a new revenue cycle management provider, and for the first time, a Lucid entity will be billing directly for e-cigar testing. Claims submissions have been on hold since we took over the laboratory, awaiting license transfers and getting the new billing partner online. So the transition from fixed monthly payments from our former laboratory partner to direct billing will result in a temporary pause in out-of-network receipts and recognized revenues, as Dennis will describe in more detail. Now a brief update on where we stand with reimbursement. On the private payer side, we executed our first commercial payer agreement LucidDx Labs entered into a participating provider agreement with MedIncrease Health Plans, a national directly contracted multi-specialty PPO provider network with over 8 million lives covered through its clients and payers. The effective payment for e-cigar under this contract, which is based on a list price of approximately $2,500, is consistent with our goal of protecting the effective Medicare payment of just over $1,900. Thank you. In parallel, we continue to collect clinical utility data demonstrating that e-Cigar positively impacts medical decision-making, which is necessary for us to secure direct in-network coverage from regional and national health plans. We have also seen progress on the Medicare reimbursement front. Last month, Medicare contractor Palmetto GBA's MOL-DX program published a proposed foundational local coverage determination, or LCD, for tests designed to detect upper gastrointestinal precancer and cancer. We've been patiently awaiting this important next step in the process since we received our final Medicare payment determination back in January of 2021. The proposed LCD outlines criteria that Moldex expects upper GI, precancer, and cancer molecular diagnostic tests to meet. It is important to emphasize that the provisional LCD was published prior to the publication of the updated ACG guidelines. and as such does not take into consideration the recommendation supporting non-endoscopic biomarker testing, such as e-cigar, as an acceptable alternative to endoscopy for esophageal pre-cancer screening. The publication of the proposed LCD triggers a written comment period that extends until this Saturday. We, along with multiple other stakeholders, will be submitting comments suggesting important modifications to the proposed LCD. Moldy X also held a substantive open meeting Yes, two days ago, during which we, along with stakeholders and other interested parties, had the opportunity to address the proposed LCD. In addition, we recently learned that Naridian Healthcare Solutions, the Medicare contractor which covers LucidDx Labs and participates in the Multi-X program, has scheduled its own open meeting on May 26th and a written comment period that extends through June 11th. We look forward to the opportunity to address the proposed LCD directly with Naridian as well. A final LCD will not be issued until the Medicare contractors have had the opportunity to assess and consider these comments. Let's now move on to Padman's other majority-owned subsidiary, Veris Health. Veris was launched a year ago as our first foray into the dynamic and rapidly growing digital health sector. The medical technology sector is in the midst of a digital health revolution, which includes smart and connected devices and an intense focus on data analytics, including artificial intelligence and machine Veris is developing a remote cancer care platform that integrates an intelligent and plannable vascular access device with physiologic sensing, software with symptom reporting and telehealth functions, and advanced data analytics. The Veris technology is designed to allow oncologists to detect early signs of common cancer-related complications, provide longitudinal trends of physiologic and clinical data, offer data-driven risk management tools for precision oncology, and incorporate additional prospects for substantial value creation through data monetization, and biotherapeutic clinical trial support. The technology contains biologic sensors capable of generating continuous data on key physiologic parameters that are known to predict adverse outcomes of cancer patients undergoing treatment. Wireless communication to the patient's smartphone and its cloud-based digital healthcare platform will efficiently and effectively deliver actionable real-time data to patients and physicians. The Veris business model is based on software as a subscription service that leverages existing reimbursement codes for remote patient monitoring. Veris is advancing its mission on three fronts, software, device, and data, with the help of a world-class technology and medical advisory board. We are also working very closely with Microsoft as a member of its global partner program. Our team is actually traveling to Microsoft headquarters next week, and we look forward to further strengthening what has been a very productive relationship. The VAERS team is growing in anticipation to our first commercial launch, in anticipation of, excuse me, our first commercial launch late this year. We've hired a VAERS chief commercial officer with extensive experience in the oncology sector. We're also building out our data and analytics team with four new hires as we seek to establish strong in-house expertise, including in artificial intelligence and machine learning. I should note that consistent with our shared services model, the data and analytics expertise will be available across the PAPET enterprise including exciting research using genomic data analysis in future generations of eSoGuard. On the software development front, we're making excellent progress on the three interconnected software platforms, namely a patient smartphone app designed to communicate with the intelligent implantable monitoring device, a cloud-based software platform to which the patient app uploads its data and provides the oncology team with the clinical data to facilitate patient care, and a smartphone app for the team to engage with the cloud-based platform remotely. As I previously noted, we have split this work into three parallel projects designed to give us the best opportunity to effectively navigate the regulatory landscape. What we're referring to as Veris Solar combines the software platform with existing wearable and connected medical devices. This will allow us to launch the first commercial product and get valuable initial real-world experience with the software platform and engage with early adopters. We're on schedule to launch Veris Solis later this year. Veris Mercury adds our own implantable monitoring smart device. The device will include all of the first-generation biosensing features contemplated, but will be as a separate device that will be implanted alongside a traditional port. By separating the device from the port, we expect to be able to leverage existing implantable monitors as the predicate and proceed down the FDA's 510k path. Very happy with the progress on the design and development to date on Varus Mercury. We have a second animal lab scheduled in the coming weeks to test the latest prototypes, and we're targeting submission and launch in 2023. Finally, Varus Venus will offer the fully integrated intelligent vascular access port, utilizing many of the same components of Varus Mercury. We will seek to advance this product through the FDA's de novo pathway. New regulations for the integrated device will be less onerous and could allow a classic year-first strategy for the fully integrated intelligent vascular access port. The design and development work on varus venous is also progressing well. Because the device doesn't need to mimic the full ECG recording features of the varus mercury predicates, the device will be able to achieve multi-year battery life with a much smaller form factor, and we're really very excited about how this project is shaping up. Let's move on to CARPEX. CARPEX is our FDA 510K cleared minimally invasive device to treat carpal tunnel syndrome. Carpex continues with its limited commercial release, utilizing early adopter key opinion leaders. There really are no major updates from our call six weeks ago. As I explained then, we had clinical cases on hold while we implemented product improvements that were derived from the experience of U.S. surgeons to date. The first set of product improvements, including addressing an electrode coating manufacturing issue, have been completed, and we now have commercial product just recently back on the shelf. As previously noted, subsequent product improvements are also slated to be completed later this year, at which point we should be in a position to expand commercialization more broadly. And as I introduced during the last call, the development of our next generation CARPEX device that incorporates integrated ultrasound imaging is progressing well with target FDA submission in 2023. So on to NEXFLOW. NEXFLOW is a platform infusion technology. The first product incorporating it is our Next Flow intravenous set, which seeks to revolutionize care by eliminating the need for complex, expensive, and error-prone electronic infusion pumps for most of the 1 million infusions performed in this country each day. As I noted in our last call, we had reinitiated pre-DV testing prior to FDA submission after addressing a manufacturing issue through a small redesign. Pre-DV testing since that call demonstrated good flow regulation, But the repeatability data fell short of our targets. The team is in the midst of a comprehensive root cause analysis on repeatability and exploring several redesign options to improve repeatability. Once this work is complete, we'll have a better understanding of how it'll impact timelines for FDA submission and commercialization. And just a few comments on other key products in our R&D pipeline. Not a lot new to report since the last update six weeks ago. Port IO is our implantable intraosseous vascular access device. We believe that Port IO, which does not require flushing, is the first maintenance-free long-term vascular access device. Port IO is in the midst of its first in-human clinical study in Columbia, South America, with four successful implants at one site. Three additional sites have been approved and will be trained and begin enrolling patients next month. We are also working with our partners in Europe to pursue a European study to support EU CE mark clearance and provide additional human data for U.S. approval. Our E-Secure device is designed to endoscopically treat esophageal precancer, and it's also progressing well. Based on head-to-head chronic animal studies completed to date and the histology thereof, we believe E-Secure compares favorably to Medtronic's market-leading Barix device. Current work is focused on optimizing the dose response and redesigning development Finally, we continue to have active discussions on business development opportunities, especially in the smart device space, and we'll provide updates as the opportunities flesh out. With that, I'll hand the reins over on to Dennis to provide an update on our financials before proceeding with a more comprehensive – before proceeding to questions.
spk01: Excuse me. Dennis? Thanks, Lijan, and good afternoon, everyone. Our preliminary and summary financial results for the three months ended March 31, 2022 were reported in our press release, that was recently published. And we plan to file our quarterly report for PABMED on Form 10-Q at the SEC on Monday, May 16th. And at that time, it will be available at sec.gov and on the PABMED website. Tests performed and revenue recognition. As we outlined during Lou's attorney's call, as a rule, ESAGAR tests performed are recognized as GAAP revenue when cash is actually collected by the company. As also previously mentioned, this will more than likely be true during the transition period of negotiating third-party private payer reimbursement contracts and related coverage policies. As I reported to you in previous quarters, for compliance purposes during this reimbursement transition period, we negotiated a short-term month-to-month fixed payment arrangement with the contract laboratory that was processing the ESA Guard assay and was performing the insurance company billing and collections function. This commercial agreement became effective on August 1st, 2021, and terminated concurrently with the opening of our own lab on February 25th. We recognized 189,000 of revenue as part of the ESA Guard commercial agreement with ResearchDx for the partial period from January 1st through the end of the agreement on February 25th. March represented a transition period that included hiring a new revenue cycle management provider. Though we had a record number of e-cigar tests performed in the month of March, we did not bill for any of these tests during the month. Therefore, the recognized quarterly revenue of approximately $200,000, reflecting the pro rata amount of the previous commercial revenue agreement with ResearchDx, or otherwise $100,000 for the month of January, $89,000 representing 25 of 28 days in February. As a reminder, now that we're operating our own lab, Following the February 2022 asset purchase agreement, we'll be able to directly bill payers. As Leishon described, direct billing will occur in the second quarter once our new revenue cycle provider comes online in the coming days. Future revenues will be recognized based upon actual collections until such time as the coverage policies are in place with CMS and payment contracts with private payers. This obviously can result in the timing of revenues recognized versus the timing they are submitted for third-party reimbursement until these future conditions are all met. The gap in claim submission from this transition will impact near-term gap revenue recognized until the system catches up with the claims for the tests performed during the transition. These will all be filed for payment, but the timing of collections could be elongated because of those issues. This is our expectation that we will begin to recognize gap revenue related to our Lucid Labs in the second quarter, as mentioned, and will be adjusted based upon actual collections received. The number of the ESA Guard tests performed and submitted for payment are provided in the press release and was discussed earlier by Lishan. Obviously, we're in the early stages of our commercial launch, particularly with our test centers. We'll continue to evolve our reporting metrics as various sales and marketing efforts further influence adoption. particularly with the ramp-up of our Lucid test centers and our e-cigar telemedicine program in cooperation with Upscript. Presently, there are now four banking analysts who have issued coverage on PadMed and others doing their diligence. The quantity of e-cigar tests payable at the CMS rate required to meet the 2022 revenue estimates provided by the analysts are achievable. The quantity and collections are highly dependent upon the evolving reimbursement landscape. So the consolidated three months results. Just provide some summary comments on PABMED and then follow with similar comments on Lucid Diagnostics as a standalone. PABMED remains Lucid's controlling shareholder, holding approximately 73% of the voting interest of Lucid. Lucid's operating results will continue to be consolidated into PABMED's financial results. The statement of operations will reflect a line item to show the non-controlling interest of profits or losses to non-PavMed shareholders of its majority-owned subsidiaries. As well, there will be a corresponding offset in the equity section of the balance sheet for amounts attributable to minority interest equity. This methodology is unchanged as a result of the IPO will continue to be applicable as long as PavMed remains the controlling shareholder. With regard to revenue. ABMED recognized approximately $200,000 of revenues related to the ESO guard for the first quarter ended March 31st. Despite the negative gross profit for the last quarter, which reflects the initial test center startup-related costs, at modest volumes, incremental gross margins can be around 90%, and contribution margins north of 60%. Two comments on operating expenses. During yesterday's Lucid earnings call, we discussed the three components that make up Lucid's operating expenses, namely sales and marketing, general and administrative, and research and development. Since Lucid's operating expenses represent more than 60% of PadMed's consolidated operating expense for the first quarter, we'll summarize the consolidated operating expense. With a three-month end at March 31st, PadMed's consolidating operating expenses were $19.3 million, compared to $8.1 million during the same period in 2021, with 83% of the net increase attributable to compensation related to headcount increases, stock-based compensation, consulting services, and development costs, particularly in the clinical activities and outside professional services. There is a table in the PavMed press release published earlier and the Lucid press release published yesterday that adjust each of these three components of operating expenses for the embedded non-cash stock-based compensation expense. Without including this stock-based compensation, operating expenses for PABMED were 11.7 million, inclusive of 8.2 million of Lucid's OpEx. PABMED's loss per share. PABMED reported the first quarter net loss attributable to common stockholders of 16.9 million, or a loss of 20 cents per common share, versus a loss of $9.4 million or 13 cents in the first quarter of the previous year in 2021. The press release provides a table entitled Non-Gap, which highlights these amounts along with non-cash charges, namely depreciation, stock-based compensation, and acquisition-related costs to enable better understanding of the company's financial performance. You will notice from the table that after adjusting the Q1 loss by approximately $5.2 million for non-cash charges, The company reported the non-GAAP adjustment loss for the first quarter of 22 of $11.7 million, or $0.14 per common share. PadMed had consolidated cash of $64.7 million as of March 31st, which compares to $77.3 million as of December 31st. The cash balance does not include approximately $24.5 million of net proceeds from the convertible debt financing program, announced in early April. Hence, on a pro forma basis, had the financing occurred prior to March 31st, cash would have been nearly $90 million. Thank you for your attention. And with that, operator, we can now open the call up to any questions.
spk03: Thank you. If you would like to ask a question, please signal by pressing star 1 on your telephone keypad. If you're using a speakerphone, please make sure that your mute function is turned off to allow your signal to reach our equipment. Again, that is star 1 if you would like to ask a question. Let me take our first question from Ross Osborne with Cancer Fitzgerald.
spk05: Please go ahead.
spk04: Hey, everyone.
spk02: Maybe starting off with a next-gen CARPEX offering with integrated ultrasound. You know, what do you think ultrasound will do to the adoption rate of CARPEX? You know, is that TAM expanding, meaning more patients will be able to benefit from it, or does it simply enhance the attractiveness of the device?
spk09: Yeah, I think I would say more of the latter. I think from what we've seen in the working prototypes to date, it's really sort of pretty spectacular in that while you're – if you recall the way CARPEX works, it has a balloon – that creates a space and pushes the critical structures away, such as the ligaments and nerves, and tensions the ligament and positions the electrode on the ligaments to cut them from the inside out. And with integrated intraluminal ultrasound, you can see all that really beautifully. So it's really to facilitate the procedural simplicity to give the physicians confidence about where the anatomic structures are, and we think it'll be a big step forward in terms of enhancing the procedure.
spk02: Okay, great. And then on Port IO, I think last time we spoke, maybe three patients had been implanted. It sounds like maybe a fourth has at this point. It could be right there, but any feedback from the fourth patients?
spk09: Yeah, so far so good. It's going well. We're looking forward, as I said, to increasing enrollment. The plan was to have multiple sites, and the IRB approval for the other three sites has now been completed, and next month we'll train those three sites and get them starting to enroll as well.
spk02: Got it. And then maybe last one, just on operating expenses, but can you talk about it specific to PAVMED, you know, what you saw during the quarter and kind of how we should think about that for the rest of the year?
spk04: That'd be great. Thank you.
spk05: Yeah, sure thing.
spk01: So the first quarter, when you look at the stock-based compensation expense, that probably is a consistency through the balance of the year. And the level of expenses that you see is probably a pretty good baseline for the year. We'll be increasing some headcounts, particularly at the Lucid level that will increase that. As Lishan pointed out on the direct to patient advertising for Lucid, that would probably be a very limited expansion and really will be paralleling what happens on the reimbursement front. The GNA is probably fairly stable between now and then, the end of the year. And the R&D expense, which is influenced by our clinical trials, probably is a good baseline as the year unfolds. We are making some changes to our clinical trials, focusing on clinical utility because of the short-term wins with reimbursement. and stretching out our PMA expenses over a longer horizon. So you won't see quite the spike that was initially anticipated maybe six, seven months ago when we were thinking about the year related to it.
spk02: Got it.
spk04: Thanks for taking my questions and congrats on progress.
spk05: Thanks, Ross.
spk03: Thank you. We'll take our next question from Anthony Venditti with the Maxim Group.
spk06: Good afternoon, Anthony. Hi, this is actually Jeremy on the line for Anthony.
spk03: Hey, Jeremy.
spk06: So just two quick questions on the Lucid test centers. I know you have nine, the second stage of nine centers planned to open up at the end of this year. It's already, you know, they have seven months left. Is that or any of those centers opened or, you know, and what can you give us, like what's the timeframe for when you choose a center? How long does it take to get that up and running?
spk09: Great. Yeah. So this is maybe a good opportunity to kind of put a reminder in that the test center is When we talk about test center expansion, we're really talking about sales rep expansion primarily, right? The test centers are there really to support the sales reps. And as I've mentioned on previous calls, the rate limiting factor is usually hiring reps, not actually finding a location and hiring a nurse practitioner. That being said, what's different about this stage is that we're doing it all at once. In the first stage, we did it in three tranches, Phoenix and then two than three centers at two different moments. We're branching out simultaneously across all nine states. We've identified the actual place within the actual metropolitan area, and we have started the process of hiring reps and identifying locales. So we are the ramp in terms of sales reps that we have. We had said last call that we anticipate tripling by the end of the year at a fairly linear pace. We have a bit more reps this year, and it would be more like double between now and the end of the year. So that should give you a reasonable trajectory. Again, we're looking at all of them at the same time. There's one other difference, which I did mention on the Lucid call yesterday, which is that in some of the cities that we're targeting in this stage, we actually already have a presence with market development managers and reps. or already calling on gastroenterologists. So those will move more quickly. For example, we have a very effective rep in Orange County in Southern California, and one of the locations we intend to open a test center is actually within the physical building of the Lucid DX labs. And that also applies in other locales in Ohio and elsewhere where we already have a fairly strong presence. So that'll accelerate some of those timelines.
spk06: Okay, great. Thanks for that. And then just one last question also regarding the test centers. I know you had record testing done in this quarter. Is there an internal goal? Do you have like per test center, you know, was that spread out evenly over the test centers that are currently operational? And, you know, what's something that you, if there's a test center, is there a certain, you know, level where if it's not, if a test center is not hitting that, you sort of, you know, pull it offline? Yeah.
spk09: So let me, let me, let me again, use this as an opportunity to, you know, I think trying to make it, clear that the perception that the test centers are sort of like, you know, stores, you know, or retail outlets or facilities that are driving the business, I think is something that we need to sort of work on getting people to understand a little bit better, right? The test center is really just a collection center that allows the sales reps to be able to call on primary care physicians and drive patients there. So there really isn't when we, as we start getting more traction and the team expands and we are able to provide more additional metrics and metrics are going to be traditional metrics along, you know, performance of the sales team, not really test center focused. Right. Um, I don't know if that's hopefully that, that, that makes sense. So the answer to your question is that we do, um, you know, we, we do track and we do, um, assess, um, how our entire sales team is doing and, uh, they're held it's quite rigorous and data driven. and we look for improvements, and we look to make sure that people are being productive in the regions that we're targeting. We don't expect to sort of move away from particular geographies. If we're not getting our numbers in that geography, then we'll look to ways to improve sales engagement in that territory. So, again, hopefully that makes sense, a bit of the nuance between understanding that the test centers are really passive vehicles where the procedure is performed and the real action is really happening at the, you know, in the physician offices with sales reps calling on physicians and trying to drive referrals.
spk05: I understand. Okay, thank you. I'll hop back in the queue. Yeah, thanks a lot.
spk03: And once again, that's star one. If you'd like to ask a question, we'll hear next from Ed Wu with City and Capital.
spk08: Yeah, congratulations on the quarter. You know, with a very strong balance sheet and obviously a lot of volatility in the capital markets out there, are you seeing more opportunities of companies with, you know, products that might be interesting or technology that are interesting for you guys? And have valuations come down significantly in the past couple months?
spk09: We are, you know, we do have an active business development process. One of the things I didn't get a chance to mention is that we've hired a very accomplished company. Vice President on Business Strategy and Development, who will help sort of focus our activities on the PD side of things, as well as broader strategy. And I wouldn't say that necessarily we're at the point on any of these where we certainly would expect, given the volatility, that valuations would be attractive. But none of them are at the stage where we're really able to assess that yet. But that's a fair expectation. We are very excited about opportunities that we're starting to see in areas that are synergistic with our current work, particularly in sort of smart device technologies that are potentially synergistic with our efforts on the digital health side. So stay tuned. We really are excited about some of the opportunities that that are in front of us.
spk08: Great. Thanks for answering my question there. I wish you guys good luck.
spk05: Thank you. Thanks, Ed. Thanks, Ed.
spk03: Thank you. And that does conclude today's question and answer session. I would like to turn the conference back over to Dr. Ackbar for any additional or closing remarks.
spk09: All right. Thanks, operator. And hey, thank you all for joining us today and for, as always, great questions. We look forward to keeping abreast of our progress through news releases and periodic calls such as this one. As always, a reminder, the best way to keep up with Padmet News updates and events is to sign up for our email alerts on our website, the Investor Relations website, and to follow us on social media on Twitter, LinkedIn, YouTube, and directly on our website. You can also feel free to contact our VP of Investor Relations, Adrian Miller, at akm.padmed.com. So, again, thank you all again, and have a great rest of your day.
spk03: Again, that does conclude today's conference. We thank you all for your participation. You may now disconnect.
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