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spk01: Ladies and gentlemen, greetings and welcome to the PAVMED Inc. Third Quarter 2022 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Adrian Miller, Vice President of Investor Relations. Please go ahead.
spk03: Thank you, Operator. Good afternoon, everyone. This is Adrian Miller, Vice President of Investor Relations at Padmet. Thank you for participating in today's business update call. Joining me today on the call are Dr. Lishan Aklab, Chairman and Chief Executive Officer of Padmet, along with Dennis McGrath, President and Chief Financial Officer of Padmet, The press release announcing our business updates and financial results is available on PADMED's website. Please take a moment to read the disclaimer about 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 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 description of these and other important risks and uncertainties that may affect future operations, see Part 1, Item 1A, entitled Risk Factors in Padman's Most Recent Annual Report on Form 10-Q, filed with the SEC, and subsequent updates filed in quarterly reports on Form 10-Q and any subsequent Form 8-K filings. Except as required by law, PADMET 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 those expectations may be based or that may affect the likelihood that actual results will differ from those contained in the forward-looking statements. With that said, I would like to turn the call over to Leisha Aklog, Dr. Aklog.
spk07: Thanks, Adrian, and thank you all. Good afternoon for joining us on this Padmas quarterly update call. I'd like to first start by thanking our long-term shareholders for their ongoing commitment and support. You'll note that this quarter we're using a new format with a webcast in response to feedback, including from one of our long-term investors
spk08: in Boston.
spk07: We're really happy that we've done this. So far, the feedback from the Lucid webcast yesterday has been uniformly positive. I'll remind you, speaking of Lucid, that we'll present a pare-down update on Lucid today and encourage those of you who want to seek more details to review the webcast of yesterday's dedicated Lucid update column. That'll be available for a week on the investor relations page on Lucid's website. So during this past quarter and in the recent weeks, our team has continued its relentless focus on executing on our long-term strategy and our vision to build a high-growth, diversified medical technology company. The Lucid, Veris, and technology teams are all delivering results which are steadily advancing us towards that goal and are doing so, I'm proud to say, on schedule and under budget as we continue to keep a close eye on cash preservation to protect our long-term position. So, let me start with a few quarterly updates, starting with Lucid. As we reported yesterday, eCigar testing volume increased 20% sequentially quarter to quarter and 436% annually to 1,088 tests in the third quarter. We now have 13 Lucid test centers operating in 11 states and we plan to open three more during the fourth quarter. The laboratory is operating independently, and we've demonstrated enhanced quality and efficiency metrics on yesterday's call. And as we noted, we've started to receive payments recognizing revenue on e-Cigar claims that we started submitting in August. We're excited that the Veris Cancer Care platform has progressed well, and it is now proceeding towards initial launch later this year. All of the key pre-commercial development projects, products, excuse me, Varus Mercury, Carpex Ultrasound, and eSecure are all progressing well, ultimately towards design freeze, development testing, and regulatory submission. And as I mentioned, from our overall balance sheet point of view, we've been able to continue to be active and execute our growth strategy while preserving cash, and we're well ahead of budget. Just a couple of introductory slides on PadMed. PadMed is a diversified commercial stage medical technology company. We started in the medical device space, but we've diversified over the years to include both the diagnostic sector and the digital health sectors. Corporate structure currently consists of two by majority owned subsidiaries, Lucid Diagnostics, a publicly held subsidiary, in the medical diagnostics space, and Varis Health, our digital health company, which remains privately held. PadMed's model has evolved into a shared services model, where PadMed provides comprehensive shared services to its subsidiaries and other internal business units. As you can see on the slide, everything from administration, HR, finance, product development, IT, regulatory, manufacturing, clinical research, and others, provided at the PadMed level on behalf of the subsidiaries and business units. And that provides us with a variety of key benefits for the company, and we believe for our long-term shareholders in terms of economies of scale. So it facilitates diversification, has an impact on our cost of capital, and also our growth potential. PadMed's current portfolio can be divided into the commercial products, pre-commercial products that are on a clear path towards commercialization. and then projects which remain in the R&D realm. On the commercial side, we have two Lucid products. These are very nice to check. We continue to do commercial cases with the first-generation CARPEX device. On the pre-commercial side, we have the CARPEX ultrasound product. We have the two VAERS products, both the software platform, the cancer care platform, as well as several iterations of our VAERS smart port. And then E-Secure, which is our esophageal ablation device, which is complementary to our E-SoGuard and E-Secure products. We also continue to work on R&D projects on NextFlow and Bored.io, and I'll touch on this a little bit later. Just a few summary slides, again, on Lucid, which are, again, pared down from our update yesterday. As we mentioned, our growth of the testing volume for E-SoGuard testing has continued to steadily increase, 28 percent from the last quarter. This growth has been driven by a combination of things, increased personnel in the field, which I'll show you, as well as improved sales training and data-driven processes. And I've said repeatedly that we view this as a mid-throttle strategy. We're not full throttle yet. We want to generate sufficient test volume to demonstrate our ability to grow testing volume and to demonstrate physician adoption, as well as to generate claims history, which is important for testing. for a long-term contracting in that we're contracting with payers. I described this in a bit more detail yesterday, but briefly, the volume has shifted to include about 22% of patients that have been tested were performed at satellite lucid test centers where our own nurse practitioners co-located at a physician practice, and we're excited about the expansion of opportunity that comes with that new model. As I mentioned, we continue to steadily, according to plan, expand our sales team. You can see here we were up to 37 professionals on the team. And as we've described over the last couple of quarters, our plan is to continue that growth and plateau at a level of approximately 58 sales professionals. That time period has been pushed into the first quarter at the end of this year, and we expect to reach that number by mid-first quarter. The plan from that point on is to use that fixed team, but we believe we'll be able to continue to drive test volume growth through an increased experience. Our median rep right now has only been in the field for a month or two, and we believe it takes a few four months to be fully effective. Similar story with our lucid test centers. Our goal is we have 11 states covered right now with 13 centers. We look to expand that with an additional three by the end of the year, and that will get us to 16. And again, our plan is to plateau there and not plan on opening additional test centers and allow the current drivers of growth to support that work with our expanded sales infrastructure. Just a couple of comments about the laboratory. Those of you know, we've taken over the operations of the laboratory starting in February, and we've seen some dramatic improvements in many parameters, operational parameters and quality parameters. I showed some in more detail yesterday. Perhaps the most relevant one from the point of view of patients and physicians is that we have the turnaround times now down to a record low of just under a week. And as I also described in more detail yesterday, the process by which we are able to submit claims has improved. We started that process in August. We have about 2,000-plus claims that we've held since the laboratory transferred to us in February, and we're in the process of submitting those claims, and we actually have started to receive, even though that process started in August, claims paid in the past quarter. Just a couple comments about Medicare. If you look at the payer mix there, you can see that Our pair mix is heavily weighted towards private payers, about 11% are Medicare. With regard to the LCD, as you may recall, back in the spring, we had a fairly intense amount of activity with the publication of a draft local coverage determination, an LCD, and a flurry of activity around the public comment period. Now that public comment period is over, We simply wait until MoldyX, the entity that's affiliated with the Medicare Administrative Contractor, to get around to reviewing the responses and responding to them. I will just want to make one thing clear. There may have been some confusion from the call earlier. There have been reports that MoldyX was not engaging with us, and that's just not the case. We actually have had calls with MoldyX. We got a call to discuss our clinical utility plan, but with regard to the James Moore- LCD process and that is not a interactive process. You just simply wait until they complete their review and then we will have the opportunity to respond after they publish an updated an updated LCD James Moore- On the private player side we continue to have conversations with private payers, but ultimately for us to James Moore- Have meaningful conversations. We need two things to happen. We need increased claims history, which will get just getting started starting to do And also, clinical utility, which we are starting to collect. But as I mentioned, so far we have had out-of-network payments that are getting paid at the full 50 to 60% out-of-network benefit at the date that respects the target list price that we submit. And those payments are coming in at about $1,200 to $1,400, which is gratifying. And as I discussed yesterday on the manufacturing side, we're really happy to transfer to manufacturing a research check for high-volume manufacturing. We're extracting immediate benefits with regard to decreased manufacturing costs as well as capacity and scalable, long-term scalable capacity. Let's move on to Caveris Health. Caveris Health is a digital health company that's developing a cancer care platform that combines patient engagement with smartphone and connected devices. along with an enhanced cancer care platform that the clinical care team can use to collect, to view data on patients who have cancer who are in their care and respond accordingly and to do so in a way that's integrated with the electronic health record. The long-term plan is to incorporate smart device physiologic monitoring with an implantable port that has biosensors that will allow for physiologic monitoring. The plan that we've described in previous calls is to first launch what we refer to as Varus Solar, which is the cloud-connected platform, software platform, in conjunction with Varus box of connected Bluetooth-enabled devices. Varus Mercury is our first effort to deliver an implantable smart port. This is a modular device that has an implantable physiologic monitoring device with a traditional vascular access port. And then the final stage will be to have a fully integrated smart and plan with physiologic monitor. So as I mentioned, and I'll talk a little bit more detail now, we are on the verge of launching the Varus platform by the end of this year on schedule as we had previously described. So you can see on the left there, this is what we're launching, our software platform, which has been completed and is completed testing and is now ready for launch, along with Bluetooth-connected healthcare measuring devices. You can see activity monitors, scales, O2SAT monitor, blood pressure class, and a digital thermometer. And those are all Bluetooth-connected through a hub that the company provides and allows that data, along with patient symptom reporting, to be transmitted through the cloud to the physician's platform. On the commercialization side, we worked extensively with Deloitte Consulting to establish the market dynamics and to hone our commercial strategy. We're quite excited about this model. It's a subscription-based model with recurring revenue. The practice will pay Veris a fixed subscription fee per seat, and they'll be able to bill with remote patient monitoring or RPM codes, which I've shown here, which actually are established. They're not under threat of any decision that This is not a COVID era process. These are codes that have existed. And so really, from a reimbursement point of view, that's established. There's nothing for us to wait for. There's also, our platform will also facilitate telemedicine billing, which the physicians will have the opportunity to bill as well. Overall, this gives them an opportunity to have a significant net contribution margin, again, based on this existing reimbursement. An additional area that we've learned in our initial engagements now with potential clients is the new enhancing oncology model, which is a CMS program that I won't go into a lot of detail on, but basically uses incentives with regard to certain aspects of quality of care that would be enhanced with this kind of remote monitoring to provide financial incentives for practices that can actually be significant, that can add significantly to the practice revenues. We're targeting the full range of oncology care, oncology practices, large cancer centers, integrated health networks, a bit of an early emphasis on rural practices for obvious reasons that we believe that remote patient monitoring will be beneficial. And we have our commercial team that's already been utilizing demos to interface with such practices and with potential clients. Another aspect of this, as you might imagine, is getting started with customer integration. So when we launch a site, there's a whole slew of things that have to be done to make sure that the practices, software, their EHR and so forth can be fully integrated with our system. We hired a really talented and experienced person to lead this effort. He led customer engagement at Epic, a large electronic health records company, and has been doing a great job so far with us with establishing that infrastructure for customer integration. Our initial interactions with potential clients has been that there's a very, very strong focus right now on tools that can enable remote patient monitoring and everything that we've, all the feedback we've received so far has been And we look forward to getting our first contracted customer by the end of this year and officially launching this product. I'll end now with an overview of the other products within our portfolio. As I mentioned, we still continue to perform CARP-X procedures, utilizing the key opinion leaders at a low level to continue to provide us with procedural and product improvements. But as I've described previously, all of our efforts for a longer term expanded commercial launch are focused on the CARPEX ultrasound device. That product is making good progress through its design and product development phases. We're starting to do cadaver work and getting and starting to get images that demonstrate that we're able to using this device to actually see the anatomic structures in the carpal tunnel. and position them in a way so that the cutting can be done under direct ultrasonic vision. So that's progressing well. The second area of focus on the precommercial products is that Veris SmartPort, the middle one, which we refer internally as Veris Mercury, which is the combination of the implantable cardiac monitor with an existing traditional chemo port. That's also progressing well. We've had multiple interactions with FDA to understand and make clear what our pre-clinical testing will need to be for an FDA submission. We've engaged with several high caliber outside contract manufacturing partners for the various electronics and enclosures and so forth. And again, and also animal work. And so again, that's moving forward on track and looking forward to getting quickly to design freeze and moving towards the work that's required for regulatory submission. Very much a similar story with ESA Cure. If you recall, ESA Cure is a device that is looking to compete with the Medtronic device for ablating dysplastic baric esophagus. So obviously it has synergies with the ESA Guard and ESA Check product. It uses direct thermal energy instead of radio frequency. And we are also making good progress with both the catheters, the console, all the electronics, all the mechanical aspects of it. We've had multiple animal studies which have shown really promising results and including the indirect head-to-head comparisons with the metronic ferric spikes. So again, on target, on schedule to advance through a design freeze and ultimately towards regulatory submission. A few comments about our R&D projects. Those of you who've been involved with Padma for a long time know that next one, just a brief recollection of that history. I hoped and planned to have Nexlo actually complete the pre-submission testing and go for regulatory submission in the first half of this year. We were getting really good regulation of flow, which was the whole point of this technology. But we encountered some technical challenges during the repeatability during the last stages of testing. And that required us to kind of go back to the drawing board and relegate Nexlo back to being an R&D part. We're still very committed to the concept. We think it is a good market opportunity here, and there's a lot of activity right now in the R&D side. But right now, it's still unknown what the solution will be and when we'll be able to bring this back onto a pre-commercial path. Port IO is our implantable intraosseous vascular access device. Again, that remains an R&D project. We have a first-generation device that continues to undergo first in human. testing in Columbia. That's going well. The device works. We've had no complications associated with it, and we're continuing to expand the number of patients. Our long-term plans with this depend a bit on a revised regulatory strategy. Our new VP of regulatory quality has engaged with us on a process to develop a more streamlined plan than we had previously thought we were relegated to And depending on how that goes, we may move this up into the pre-commercial realm after we've completed the first human study. So with that, I'll end, and I'll hand the reins over to Dennis to give us our financial update.
spk02: Thanks, Leishon, and good evening, everyone. You see in front of you the balance sheet. So our summary financial results for the third quarter reported our press release that was published earlier today. On the next three slides, I'll emphasize a few key highlights from the quarter, but I encourage you to consider those remarks in the context of the full disclosures covered on our quarterly report on Form 10-Q that was filed with the SEC yesterday afternoon and is available on our website. So, as you can see here, cash, the sequential decrease was $8.4 million. Vendor payables had a $3 million sequential decrease when considering accounts payable and other recurring accrued expenses. Convertible note, a net increase of $6 million driven by $10.2 million net proceeds from the issuance of an additional convertible note. It was offset by $5 million of principal converted to equity related to the April 2022 note. As mentioned yesterday, the committed equity facility from Lucid Stock issuance proceeds for the quarter were $1.8 million, most of which we had already reported to you as part of our update in August. Shares outstanding for PABMED, including unvested restricted stock awards, as of today is 93.2 million shares. And as also mentioned yesterday, Lucid is now S3 eligible and is previewed with everyone previously, and similar to what we have previously done at PABMED, they'll The Lucid Board considers it good governance to have a shelf registration with an embedded ATM on file with the SEC, and Lucid will plan to do so in due course. Slide 18 here compares this year's third quarter to last year's third quarter on certain key items. I trust you'll review the information and my comments in light of the cautionary disclosure at the bottom of the slide about supplemental information, particularly the non-GAAP information. Revenue for the quarter reflects 39 ESA Guard tests at an average payment rate of $1,945 per test. The rate is slightly higher than the 1938 Medicare rate, as we received one payment closer to our ASP of $2,499, and the Medicare rate skewed things slightly higher. The prior year reflects the fixed monthly fee received from the third-party lab that Lucid used before setting up our own lab earlier this year. Revenue recognition. A key determinant is the probability of collection. We've mentioned this multiple times in the past. For the vast majority of Lucid patient out-of-network claim submissions means revenue recognition occurs when the claim is actually collected versus when the patient report is invoiced and submitted for reimbursement. As you'll see in our 10Q, this is called variable consideration in the jargon of GAAP's ASC 606 revenue recognition, which we all have to live by those guidelines. And presently, there is insufficient predictive data to recognize revenue when invoiced. Our GAAP loss is slightly higher, about 2% higher, and our non-GAAP loss is slightly lower, about 5% lower for the third quarter. due to the effect of higher non-cash charges in the current quarter related to convertible debt. Most comparisons are sequential comparisons. Our non-GAAP loss per share is 15 cents for the third quarter compared to a loss of 17 cents per share in the previous quarter. So slide 19 here is a graphic illustration of our operating expenses as presented in detail in our press release. The total GAAP and non-GAAP OpEx was relatively flat sequentially. The cost of revenue primarily consists of ESO check devices, lab supplies, and fixed lab monthly or facility costs, and is now being presented in our 10-Q as operating expense consistent with the practices of other diagnostic companies. Sales and marketing was slightly lower, about 5% sequentially. also decreased about 9% sequentially and some of that reflects an allocation of about 800,000 of lab costs in the prior quarter as no revenue was recognized in that quarter and therefore the typical cost of revenue type expenses are reclassified to G&A in that previous quarter. And then lastly, R&D decreased 8% sequentially. So with that, operator, let's open it up for questions.
spk01: Thank you. Ladies and gentlemen, at this time, we will be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Ladies and gentlemen, we will wait for a moment while we poll for questions. Our first question comes from the line of Frank Takanan from Lake Street. Please go ahead.
spk06: Good evening. Hi, guys. This is Charlie Montagnon for Frank. Just a couple quick questions for me. First on the lucid front, I heard your comments about the plateauing centers. I assume that does not mean indefinitely. Can you maybe just talk what you're looking to see before re-accelerating openings and maybe any feel for timing around that?
spk07: Sure. Let me just start by emphasizing one thing just to keep hammering this point, that the lucid test centers support the growth. They're not drivers of growth, right? They don't generate actual activity. They're there available for um tests that are that are ordered by physicians through our sales and marketing process to actually perform tests and that and also i just want to emphasize one thing real quick charlie before answering as well which is that we have now expanded our use of the satellite lucid test centers where our nurse practitioners can be more mobile and work within those centers so the the plateauing of the lucid test centers mirrors but this is part of the same strategy of plateauing our sales force altogether. And this is something we described in a bit more detail, I believe it was on the last quarterly call, that as part of our efforts to be cautious with regard to cash preservation, we set a target for both of those that we thought would give us critical mass with regard to the sales team and then with sufficient support with lucid test centers to support the sales team where we could continue at a fixed level to drive growth through, increased effectiveness of the sales force as they get more time in the field and so forth. All of that is really driven by this mid-throttle strategy, right? We want to have enough activity so we can demonstrate ongoing sales growth to get the word out, to continue our momentum with physicians and physician adoption. We need to continue that growth as well to generate claims history, which is one of the critical steps in engaging private payers for in-network contracts, but to do so cautiously at a mid-throttle level because we still have, we still are not at the point where we have predictable reimbursement. So the answer, I think, to the last part of your question is, is this some permanent thing? No, it isn't. It's really just a, you know, we're pausing at a level that we think we can, that we feel confident that will allow us to continue to drive test volume growth while keeping our costs in check and that, you know, Pivoting from that will be a function of what we see with regard to both the trajectory of outer network payments and the percentage of the Lucid tests that are paid out of network. Again, as we've emphasized, we've been quite happy with the payments that we're getting. We just don't know. We just don't have enough of a sample size yet to know what percentage of the test will generate that volume. And then, of course, As we collect clinical utility data and we engage with private payers, we'll start seeing some in-network payments as well. So it's really a holding pattern that we believe will continue to still drive test volume growth, but a holding pattern with regard to the infrastructure until we get more predictable reimbursement numbers. We just think that's the appropriate sort of prudent thing to do from a cash preservation point of view.
spk06: Great. Okay. Thank you. And thanks for kind of clearing that up for us. My other question, just looking at the balance sheet, it looks good. Last quarter, you called out modulating spend across your asset portfolio outside of Lucid with a focus on the most near-term and largest opportunities. Have your capital allocations changed at all since then, or should we continue to think the order of prioritization is various in CARPEX?
spk07: Oh, it's exactly what we described, and we stuck to that plan, and you can see we are seeing some savings already on the R&D side. So it is entirely at this point from the non-lucid. Let's just put it in the two for now. We obviously have the commercial products with Lucid. Very soon we'll have the commercial software product with Veris, the Veris solar software platform. So that will be out in the commercial realm. When it comes to the investment of resources, capital allocation, as you say, into the product portfolio, the focus is heavily and remains the same on those three products. So the three products being the ultrasound version of Carpex, the first version of an implantable Varus device, that Varus Mercury product, and the e-secure esophageal ablation product. So those, that is where we are focusing our resources and capital allocation. But we're not shutting, you know, we continue to, by some effort, on the two research projects which I described, but those are relatively modest investments. It's pure R&D work at this time. And then as we talked about last time, we have rationalized and put on the back burner a number of lower priority, lower yield, we believe, higher-risk projects that we've been working on, and those remain on the shelf for now.
spk06: Okay, great. Thank you very much. And if I can, just one last quick question. You spoke to a commercial agreement with MetaIncrease in May. Can you give us an update around that contract and call out whether or not you have received reimbursement under that contract, and if so, kind of at what level?
spk07: Just to remind you that even though we had, that was the first example, but since then we've reported on multiple, I believe we have seven, correct me if I'm wrong, seven or eight similar secondary PPO contracts. We have not broken down that data and we're not reporting on those individual, on sort of individual plans at this point. That would be sort of too granular at this level with the sample size. I think we'll just suffice it to say that, you know, you saw we had 39 payments in this quarter. Those are a mix of a variety of private payers. And Dennis gave you the data on the average payment, which was just a bit over $1,900, and also that the out-of-network payments that are coming in are $1,200 to $1,400. So, you know, as we get a higher more volume and we have a sample size that's large enough, you know, we will certainly be in a position to kind of break down, you know, where those payments are coming to, whether they're from the secondary PPOs, from out-of-network with traditional payers, eventually with Medicare and so forth. But I think it's a bit premature to break. Dennis, would you like to add anything to that?
spk02: No, I agree. It's too early to kind of give any kind of directional information that's reliable to be able to create some kind of forecast based upon the information that we've gotten so far. It's just too early in the submission process and the collection process.
spk07: I mean, the bottom line, Charlie, is that the $39,000 payments to the tests that we submitted in August and got paid before September were private pay. So, and that was a mix of different payers. We'll look forward to increasing that and perhaps at some point breaking that down further.
spk06: Okay, great. Thank you very much and thanks for answering my questions.
spk08: I'll hop back in. Thanks, Carolyn. Thank you.
spk01: Thank you. Our next question comes from the line of Ed Wu from Ascendant Capital Markets, LLC. Please go ahead.
spk05: Hello, Ed. Thanks for taking my question, and congratulations on the progress. I know you are very focused with your capital allocation right now, but what are you seeing out there in terms of the M&A space and opportunities for adding new products into your portfolio? Have you seen valuations come down significantly to a point where you're seeing interesting opportunities out there or are valuations still all over the place?
spk07: The answer is yes. And I always appreciate you asking that call because there's not a lot that I can talk about sort of directly, but there are a lot of opportunities out there. And as has historically been the case, we get to see a lot of opportunities within the space and we get to evaluate them. And you're right. I mean, the markets are, there are companies that are tight for cash and for a variety of other reasons. are looking to partner or to be acquired and so forth. So there's a lot of activity there. Nothing to report yet. We'll obviously let you guys know if and when we cross the threshold with any of the opportunities that we're looking at. But just let me just reiterate one other point I made last time, which is that, you know, our cash preservation stance is important. It's important that we maintain our runway and protect our long-term interests. But I've also said repeatedly that we're not we're not going to sort of violate our core DNA of this company, which is to pounce on attractive opportunities as we see, just like we did with Lucid and with Veris. The profile of what that would look like is obviously a bit different now than it would have been two, three years ago. And we are looking at opportunities with a very close eye on the opportunity for them to either be synergistic with our current portfolio in some way and to not be a capital drain and to be creative in some capacity in the near future. So those are the criteria we look at. We have opportunities when we have looked at, we continue to look at, and we'll let you know when and if we cross each other's shoulders.
spk05: Great. Well, thank you and good luck.
spk08: Thank you.
spk01: Thank you. Our next question comes from the line of Anthony Vedenti from Maxim Group, LLC. Please go ahead.
spk04: Good evening. Hi, good evening, Dennis. Hi, Lishan. How are you? Great. I wanted to just dig a little deeper into the commercial launch for Veris by the end of the year. Can you talk a little bit about that particular business model and what the pipeline of – potential customers looks like at this point?
spk07: Yeah, let me start with the latter. So the pipeline of potential customers are really the full spectrum of oncology practices. We were really fortunate. We have a good relationship with Deloitte, and we did an extensive market dynamic and market analysis with them. So we have a really good understanding of where patients get their care for their cancer, and it can vary anywhere from relatively small private practices to larger practices, even mega practices, as well as cancer programs that are affiliated with moderate-sized community hospitals all the way up to the big academic medical centers. So really, all of them are targets for us. As I mentioned, there is an obvious opportunity with rural practices in terms of the advantage. Their patients tend to be more dispersed, and the advantages of remote patient monitoring are particularly or potentially greatest with that group. And, you know, the business model is, well, I'll just sort of dive into that a little bit deeper. We engage with the practice. When we engage with them, we have demos now that show how the software platform can feed, can be fed with patient symptom reporting as well as data from these Bluetooth-connected devices. and provide them with data to not just enhance their care, but also to provide them with the opportunity to record activity that can be subjected to, that can be reimbursed as remote patient monitoring or RPM. RPM is sort of a hot topic right now. And, you know, setting up a system that allows physicians to bill for under RPM codes. Again, these are established codes. They're not transient codes like some of the telemedicine codes. that came from COVID requires really good software platform, and our feedback so far has been quite positive. We found that the practices are very focused on RPM codes and the opportunity to practice revenues through RPM, and that our platform does, in fact, do that. One of the things that you have to do in order to go for RPM codes on a monthly basis is they have to show that the patient submitted data of some kind from a device, an FDA authorized device, at least 16 days of the year. So that requires a really good platform that's engaged with the patient, that encourages them to measure the various parameters that you're trying to measure. Just forward thinking, once we have an implantable device, that'll obviously be fixed because that's not going to depend on patient engagement and patient compliance. Then, you know, as I mentioned, there's the other part, the value added here comes from being able to integrate within their IT system. So the process of integrating with their health tech, with their electronic health record and other aspects of IT infrastructure requires some talent and skill on our part. And we're really happy that we recruited someone who was able to help us with that type of engagement as well. So that's a little bit of a repetition of what I said, but perhaps there were more details that you wanted to dive into there.
spk04: Yeah, no, that's great. That's great. Just a quick follow-up before, just a quick question on CARPEX. So the, you know, there's debate about how much coverage CMS, which expanded coverage of telemedicine during COVID, will currently allow to continue. In terms of remote patient monitoring, are there particular CPT codes right now It's actually on slide 15.
spk07: There are codes for the one-time onboarding for the monthly fees. So I list them all on slide 15. And those are not, again, just to emphasize for the third time, those are not temporary codes that have been in place. The telemedicine codes were brought in under COVID and are subject to ongoing sort of statutory updates. But these RPM codes are not. So they are there and their codes are well established. The payment rates are well established. The criteria under which you can bill are well established with regard to the 16 days a month. So all of that infrastructure and reimbursement is established.
spk04: Okay, great. That's helpful. And then before switching to Carpex, 37 sales professionals go into 58. Is that 100% for Lucid? Yes, that's for Lucid.
spk07: We haven't reported on the commercial team for Veris yet. Veris is just, obviously, we're just gearing up with that. We have sales leadership in place. We're starting to recruit individual sales reps. So right now, the sales leadership, they're the ones who are actually out and looking and scouring for early adopters to the Veris technology. And we'll report on the Veris sales team over time. And on Carpex, we do have... three individuals, the same individuals that we've had throughout this limited procedural and product improvement-focused launch, and they remain the same.
spk04: Okay. Any feedback from KOLs on CARPEX at this point?
spk07: So the CARPEX activity right now remains that procedural and product development and product improvement work. So we have our core group of KOLs. We look to expand them here and there, but as I mentioned before, we're not investing in an expanding the team or expanding the activity beyond the limited number of KOLs we have. We're using this exclusively as a procedure in the product development exercise, and we're going to await CARPEX ultrasound before gearing up for a full commercial launch.
spk04: Okay, great. I'll hop in the queue. Thank you very much. Appreciate it.
spk07: Just one follow-up. I know you're off. Thank you. Can I just add one quick follow-up to Anthony's last question, which is that, as you might imagine, the surgeons on our KOL list who we do training with, we do cadaver work with, and they do a limited number of cases, we've obviously also shown them the CARPEX ultrasound device and the prototypes for that and where we're heading with that and the feedback on that, on the ability. These are folks who've done the procedure with the Gen 1 device and the feedback of the opportunity to have ultrasound imaging as you're working within the carpal tunnel has been quite positive. And we're utilizing those folks with CARP-X experience to help us with that development process.
spk08: Thank you, operator. Sorry about the interruption.
spk01: Thank you. Ladies and gentlemen, we have reached the end of the question and answer session. I would now like to turn the conference to Dr. Alishan Akhlaq, Chairman and CEO, for closing comments.
spk07: So I'd like to, again, thank you all for joining us today. Really great questions from all the folks who came on and a really good discussion. Look forward to always being fully transparent with our communications and keeping you abreast of our progress. Keep an eye out for our press releases and obviously these quarterly calls. We appreciate any feedback. As I mentioned, the webcast version of this was a result of direct feedback from individual investors who asked us Kim gave us advice on how to improve our communications, and we're always open to that and look forward to more feedback, positive or negative. Please keep up to date. Sign up for our email alerts and keep up to date with our social media feeds. And as always, Adrian is available for direct contact at akm.padmed.com.
spk08: So, again, thanks, everyone, and have a great evening.
spk01: Thank you. The conference of PavMed, Inc. has now concluded. Thank you for your participation. You may now disconnect your lines.
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