PAVmed Inc.

Good morning and welcome to PABMED's fourth quarter 2024 business update conference call. At this time, all lines are in the 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 this event is being recorded. I would now like to turn the conference over to Matt Riley, PABMED's senior director of business. Best 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. Lee-Sean Acklug, chairman and chief executive officer of PABMED, along with Dennis McGrath, chief financial officer of PABMED. The press release announcing our business update and financial results is available on PABMED's website. Please take a moment to read the disclosure 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 PABMED's most recent annual report on Forms 10K, filed by the SEC, and any subsequent updates filed in quarterly reports on Forms 10Q and subsequent Forms 8K. Except as required by law, PABMED 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. Leshaan Acklog, Chairman

and CEO of PABMED. Take it away, Leshaan.

Thank

you, Matt, and good morning, everyone.

Thank you for joining our quarterly update call. I'd like to thank our long-term shareholders for your ongoing support and commitment. Before we delve into our recent operational highlights, just want to reiterate some of the critical steps that we've taken to stabilize PABMED's corporate structure and balance sheet. Those changes are now complete, and PABMED is now in a strong position to fulfill our mission. As you know, PABMED is a parent company and has subsidiaries, including Lucid Diagnostics and Avarice Health, and last year spun out an incubator, PMX. As our subsidiaries succeed, particularly Lucid, it's important to understand that we expect PABMED will follow suit and succeed as well. Beginning of this year, we successfully completed what was a carefully designed strategic transformation to solidify PABMED as a sustainable vehicle. As you recall, last year we completed the deconsolidation of Lucid Diagnostics and restructured our convertible debt. This accomplished two things. One, it preserved PABMED's ownership in Lucid without having to absorb Lucid's operating losses on its balance sheet, and it allowed us to satisfy the NASDAQ minimum equity listing requirement. PABMED is now well positioned to operate as designed as a diversified commercial life sciences company with multiple independently financed subsidiaries operating under a shared services model. So now on to highlights from the fourth quarter and recent weeks. Let me start with Lucid Diagnostics. However, I do encourage you to listen to the Lucid Business Update call from yesterday, which for greater detail on these programs. But here are some of the main takeaways. Lucid generated $1.2 million in revenue and a test volume of just over 4,000 tests, which represented a 45% growth quarter on quarter. In the fourth quarter, ESAGARD revenue was approximately $1.2 million, and we booked record test volume of 4,042 tests, about a 45% quarter on quarter growth. Above are targeted 2,500 to 3,000 tests per quarter that are necessary for us to achieve critical mass with our revenue cycle management and medical policy efforts while protecting our cash burn. Highmark Blue Cross Blue Shield in New York established their first positive commercial insurance coverage policy for ESAGARD, so exciting development there. Another exciting development was the update to the National Comprehensive Cancer Network Clinical Practice Guideline, which now includes esophageal pre-cancer screening consistent with the ACG gastroenterology guidelines. As an important step, the NCCN is widely regarded as a key indicator of standards of excellence, and we think this will help us drive positive commercial insurance coverage decisions in the coming quarters. Our Concierge Medicine Cash-Fay program is off to a great start. We've executed over 20 Concierge Medicine contracts in just a few weeks since we started this program. We also strengthened our balance sheet with long-term debt refinancing and registered direct common stock offering, extending our cash runway past the key upcoming reimbursement milestones. We're also awaiting for a response to our submission to the Maldives Group for reconsideration of ESAGARD for Medicare coverage under the existing local coverage determination that was submitted in November, and we expect some action on that and remain optimistic for action within the first half of this year. Also, lots of great progress with Varus Health. We're excited to complete a private placement financing with gross proceeds of $2.4 million at a $35 million pre-money valuation. These were accredited investors who purchased Padme Securities at the market, as well as shares of Varus common stock. This financing supplement recently secured $1.8 million non-dilutive two-year NIH grant. This financing allows us to advance our strategy. We're focusing on the completion of the regulatory process for the implantable physiologic monitor and a regulatory clearance, regulatory submission by the end of this year or into the first quarter of next year. We believe that this Varus pre-money valuation really reflects strong investor confidence in Varus' long-term commercial potential, and we expect that once cleared, the implantable monitor will significantly enhance the commercial potential. We also continue to have a strong engagement with our partners at The Ohio State University, the James Cancer Center. We extended our pilot program with them to the end of April to give us time to close on a long-term commercial strategic partnership which we believe is imminent. On the incubator side, we're continuing to seek direct financing to fund the Port and IO and to have contact with angel investors as well as with several strategic. Those conversations remain active.

With that, I'll pass the call on to Dennis.

Dennis Jones. Thanks, Lee John and good morning, everyone. Our summary financial results for the fourth quarter of the year were reported in our press release that has been distributed. On the next three slides, we'll emphasize a few key highlights from the fourth quarter, but I encourage you to consider those remarks in the context of the full disclosures covered in our annual report on foreign 10K as filed with the SEC. With regards to the balance sheet, you will recall from our last call in November, the company was engaged in a multi-step process to regain compliance with the NASDAQ listing standard for minimum equity and also position the company for long-term financial stability. Among the strategic endeavors that Lee John spoke about, there were three immediate tactical financial targets we were intent on accomplishing. Namely, one, deconsolidating Lucid from PAVMED's consolidated financial statements. Two, restructuring our debt. And three, focusing on financing Verus and Port IO. This slide reflects the balance sheets for the third quarter and fourth quarter after deconsolidation, which occurred on September 10th. But prior to the effect of the debt exchange, which became effective on January 17th, 2025, right after the shareholders approved the exchange. And two, prior to NASDAQ notice of listing compliance on February 14th. And three, prior to the PAVMED Verus financing that occurred on February 21st. So a couple key things to point out on each of these balance sheets. Cash does not include any Lucid cash. Two, the equity method investment balances reflect the 31.3 million Lucid shares marked to market on each balance sheet date, which at December 31st, the date of the balance sheet was 82 cents per share. This amount was previously eliminated from the PAVMED's balance sheet prior to deconsolidation. The stock price between September 30th and December 31st was relatively flat. Hence, the balance did not change much between the beginning and ending dates of the fourth quarter. However, the Lucid stock price is way up since year end. And so the impact of a rising stock price can have a dramatic impact on PAVMED's first quarter results. Way to think about that impact of this line item and how it affects the building financial stability of PAVMED is as follows. For every 3.2 cents of Lucid price change from a base of 82 cents, the balance sheet amount will change by $1 million in total. As an example, just in the last couple weeks, this amount has increased to just under $50 million. Note, there is plenty more information in 10K on this topic, particularly Note 4 to the financial statements.

The

senior secured note balances are before the debt exchange that occurred after year end on January 17th. A general way to think about how the balance sheet amount changes as a result of the January debt exchange is to decrease the debt by $25 million and increase preferred equity by $25 million. PAVMED continues to be the single largest shareholder of the common stock. However, the controlling voting interest dropped from more than 50% to about 32% as a result of these intentional actions by management and the board clearing the pathway to deconsolidate Lucid from PAVMED. Some additional tactical steps have been taken by management and the board. One, the incurrence of future R&D expenses to advance the next development stages of various cancer care platform and PortIO technology will be largely dependent upon obtaining funding for those entities to cover the incremental development costs. Hence, any increased burn rate from those endeavors will be offset from the incremental financing. As a good start in that direction, we previously announced being awarded an NIH grant of $1.8 million for various, it's payable over two years, for which we collected 50% of the award in December, which covered various expenses in the fourth quarter. The additional funding efforts have been, were paused pending the outcome of the NADDAC hearings panel. With the NADDAC approval on hand on February 14th, the PAVMED various financing was then later completed on February 21st. The various component of the financing was negotiated a $35 million pre-money value. PortIO Corp has ongoing discussions with both financial and strategic investors for direct investment into PortIO Corp at a pre-money valuation of $42 million to cover the final development costs. Shares outstanding today include unvested RSAs at approximately 17.5 million shares outstanding. The gap year-end outstanding shares of 11.2 million are reflected on the slide as well as on the face of the balance sheet in the 10K. Gap shares do not reflect unvested RSA amounts. Next slide, please. Similar to past presentations, this P&L slide provides some gap and non-gap -over-year quarterly and annual comparisons. However, there are some significant differences in how the information is compiled between the comparative periods given the changes in PAVMED's financial control of lucid. Importantly, the gap construct for deconsolidating lucid on September 10th somewhat blurs the historical understanding of the information for PAVMED as a stand-alone entity, and gap does not allow the presentation for prior periods to be similarly adjusted. The gap annual results as presented reflect inclusion or consolidation of lucid's results through September 10th, and then differently after that date, mainly without lucid's results. Furthermore, you will see a large net income of $28.4 million on the gap P&L before non-controlling interest, and the 10K shows a gap positive primary EPS of $3.30 per share and a positive diluted EPS of $0.50 per share. This is all the result of eliminating lucid from PAVMED's balance sheet and extracting the impact of lucid's cumulative historical losses. The net adjustments to the balance sheet create a $72 million gain that then flows through the P&L to obtain the net equity impact of all the deconsolidation adjustments. I'm happy to answer any detailed questions on the slide in the Q&A, but I think it's more informative to look at the fourth quarter stand-alone information presented in this slide and the full fourth quarter information presented in our press release that shows a company baseline bias of operating at cash flow break even and incurring incremental PAVMED expenses for development activities that are offset by dedicated funding. So in the fourth quarter, you see a non-gap loss of $688,000, which has been offset by the NIH grant proceeds of $900,000. Where the three months ended December 31, 2024, PAVMED revenues reflect approximately 125 patients on the various cancer care platforms largely in connection with the expanded pilot program with OSU. ESU Guard-related revenues are no longer consolidated with PAVMED results with the deconsolidation that became effective in September. PAVMED's management service income from lucid diagnostics of $3.2 million for the quarter is reflected in other income. Operating expenses were approximately $5.2 million, which includes stock-based compensation expenses of $700,000. Gap net income attributable to common stockholders was approximately $1.3 million, or approximately $0.12 per common share on a diluted basis for the quarter. Next slide, please. With regard to the non-gap operating expenses, on this slide, you'll see a graphic illustration of operating expenses over time as presented in more detail in our press release. Total non-gap OPEX is $4.2 million for the fourth quarter of 2024. The decrease is equally related to the impact of deconsolidation and the fact that the combined OPEX ignoring deconsolidation with PAVMED and lucid would have been in line with the previous quarters. With that, operator, let's

open it up for questions.

Thank you. And ladies and gentlemen, we will now begin the question and answer session. To ask a question, you may press the store, followed by the number one on your telephone keypad. If you're using a speakerphone, please pick up your handset before pressing any keys. To withdraw your question, you may press the store, followed by the number two. One moment please for your first question. And once again, if you would like to ask a question, simply press the store, followed by the number one on your telephone keypad. Your first question comes from the line of Jeremy Firmlin with Maxim Group. Please go ahead.

Jeremy, good morning. Good morning. Good morning. Thank you for taking my question. Just so quickly on the healthcare cancer platform with the Ohio State, that pilot program, so it seems like it was extended through April. It seems like the finalizing of contract is imminent. What is, based on your conversations you're having with them, what does that contract look like? How's it going to play out? It's

really exciting because it's not only a commercial engagement and our first major commercial engagement. It'll be our first major commercial engagement with the third largest cancer center in the country. It's also a strategic partnership and that's been part of the nature of our engagement with Ohio State with the James Cancer Center going back to the very beginning and the contemplation of the memorandum of understanding, the design and the launch of the pilot program, the sort of joint assessment of the successes of the pilot program with regard to the various key performance indicators, KPIs, as well as clinical success, fine tuning of how the platform works within the construct of their workflow. All of that's been great. The reason we extended the pilot was frankly because as we were working through the details of what the agreement would look like, there was just demand from the clinical sites to continue on patients. We just agreed to have a commitment from Ohio State to enroll a substantial portion of patients over the first year. These will be commercial patients but also patients enrolled in a registry. So we'll be able to use that data, collect that data for ongoing improvements but also for a pathway towards data analytics and development of clinical decision support tools using AI. They've also committed to being the first site for once the agreement is consummated for them to be the first site for the initial implantation of the implantable device once it's FDA cleared and to do a separate registry for that to help us document its role and its use. That's really a comprehensive commercial as well as strategic partnerships. What it does during this interval of time where the primary focus for VARIS is going to be on advancing the implantable and launching the agreement with Ohio State, what it will do for us as we culminate that process and we end up crossing the threshold with FDA clearance is it will really be a poster child, a standard bearer for our ability to engage with other large cancer centers. James is very committed to helping us do that and for them to be at the forefront of using a dedicated cancer care platform to enhance the care of their patients.

Thank you. Then just one follow-up question. You mentioned the implantable device. Now that you have funding for that, do you have any more clarity how that timeline would look until you hopefully get potential FDA approval for that?

Yeah, sure. We're getting the manufacturing partners with us back online and getting all the data out. As you may recall, we are pretty far along with that process. That's all getting rebooted. Right now it looks like that process will be completed and we'll be ready for submission in the very end of this year or the early part of 2026. I just want to maybe use this opportunity to note that we've had numerous engagements, pre-submission meetings with the FDA. We have a very clear idea. They have a very clear idea of what we intend to do and we are going to ask us to do. It's been a very successful engagement and that it looks like we'll be able to avoid having to do any kind of meaningful human clinical trial of the implantable where it's actually implanted. We're in the final stages of just checking one last box with them around the way to validate a skin study where the device is just put on the skin and used to treat patients for short periods of time to demonstrate that that to demonstrate its efficacy without having to do a full-blown clinical study. So really intense engagement with FDA that's really born fruit with regard to what we'll have to do to get this thing clear.

Okay, great. Thank you for that information and I'll hop back in the queue. Great,

thanks,

Sharon.

And your next question comes from the line of Ross Asperin with Cantor Beach Drill. Please go ahead.

Hi Ross, how are you?

Hey guys, this is Matthew Farcon for Ross Today. Thanks for taking my questions. Okay, I'm in. I guess this one from me, can you give us some color on discussions you're having with other institutions on the various to initiate pilot launches and any learnings you can take from what you're doing at OSU when going into other centers?

Yeah,

so we have a pretty comprehensive process of screening, you know, the sort of hundreds of cancer centers in this country screening for targets that are, that have NCI designation, that have, that are large, have significant number of patients getting advanced therapies. And I would say of that group, we've had meaningful conversations with about a dozen or so and more advanced conversations with hand samples and four or five of those. We're not pushing real hard on advancing new pilots because we want to take the sort of limited resources right now and make sure that we're advancing the, that we're applying those to the implantable. We really believe from the pilot engagement with OSU that, although we've had really great success with the software platform in conjunction with the various box of connected devices that, you know, the real differentiator here over the medium and long term is with, is with the implantable. So we continue to have dialogues with a handful of other major centers. There's been positive feedback with regard to our experience to date with Ohio State and the opportunity to enhance, to enhance care. So those relationships are being kept warm. It's certainly possible we'll add a pilot or two during this period where we're focused primarily on the OSU engagement and the advancement of the implantable. But we don't expect to make a major push to expand the number of sites until after the implantable is clear. We believe that that's the, that's the best utilization of our resources. And frankly, by then we'll have a meaningful amount of data from the more formal, the post-pilot commercial engagement with OSU that we'll be able to leverage. There are also a variety of other things that we're going to be working on it over during this period of time. We're looking to work with OSU on helping us develop a clinical support offering. So we can offer sites the ability for various personnel to provide some clinical support, to triage alerts and so forth to help them make, you know, so maximally utilize the platform itself. So that's something that's in progress as well as developing tools beyond the baseline remote patient monitoring functionality that already exists. So AI and AI and so forth. We're also looking to provide base tools for clinical decision support. So all of those are really things that will enhance the product, both the implantable as well as the software element, which will put us in a strong position to expand beyond a handful of centers once the implantable is clear.

Got it. Super helpful. Makes sense. And then I guess one more for me on port IO. So pending any incremental financing, can you just walk us through what the path to FDA approval would look like here and any additional studies you need to go through?

Thanks. Sure, sure. We don't get to talk too much, but just maybe on port IO, so just a reminder of what port IO actually is. Port IO is the first, excuse me, the first implantable long-term vascular access device that uses the bone marrow as a site. That's the intraosseous or IO portion of the name port IO. And it's usually, it provides a really an opportunity to provide long-term vascular access for patients who have poor veins, for patients who need their veins for future dialysis and a variety of other very large market opportunities that total about $2 billion. So to get more directly to your question, the pathway is quite straightforward. PadMED has already invested a substantial amount in getting the device through the first, the gen one device through verification and validation testing. And if you recall, we completed a successful first in human study in Columbia, South America. That went perfectly. Excellent results in all nine patients and worked exactly as intended. And that's the basis for discussions with FDA on what a IDE would look like. The regulatory path here is a de novo, but a fairly straightforward de novo. It's a de novo because this is a new category of device. There's never ever been a device that can use the intraosseous route for long-term use. The plan upon securing the financing, either through investors or through what are fairly active discussions right now with strategics in the space, would be to launch the IDE study. We estimate the number of patients in that study on the low end of the sort of a 50 to 80 patient range. And so that we believe we could enroll somewhere in the 18 month period, perhaps less, perhaps a bit longer, depending on on the sites that we secure. So that will get us through FDA. Completing that study will allow us to submit and secure clearance with FDA. Certainly our goal would be within two years of the launch of the clinical study, hopefully or possibly less than that. In parallel, we've made significant progress on a gen two device that has the same basic core element. It has some improvements with regard to the silicon septum and some of the ergonomics of the delivery device. We will also use a portion of the capital raised to advance the gen two device in parallel and, frankly, just swap it out in the middle of the study using the appropriate mechanisms that FDA allows for that so that the commercial launch

would be with the gen two device. Got it. That makes sense. Thanks for taking the questions, guys. Yeah, great. Thanks a lot. Appreciate it.

And your next question comes from the line of Ed Wu with the Sandian Capital. Please go ahead.

Congratulations on all the progress. My question is on various as you're possibly talking to other cancer centers. Have you run into any competing products or competition out there?

Yeah, great question. So the competitive landscape here is very attractive in a variety of ways. So let's just start at the highest level. Yeah, there is a fair number of companies that offer rather generic remote patient monitoring software tools that just allow you to track patients in a very generic way. So it gives me an opportunity to remind you and others that what's great about the software platform, various software platform is it's designed from the bottom up by oncologists to be very specific to patients undergoing systemic therapy, chemotherapy, immunotherapy for cancer. What does that actually mean in practice? It means that the patient, the part that interfaces with patients and asks them about their symptoms and so forth is very highly tuned to what cancer patients are undergoing. So that's one differentiating factor compared to just traditional remote patient monitoring RPM technologies that are used sort of across the board, across patients with chronic disease, acute disease, and so forth. So there's really nothing out there that is competitive with regard to targeting cancer patients. Perhaps even more important over the long term or not even that much of a long term because we're not that far from having the implantable is the implantable. That's a proprietary technology, patent protected that will be a barrier to entry for others trying to get in this space. So we believe certainly right now we have the only dedicated product that's really of interest. I'll note that I'm not just saying that we participated in a, Varus participated in a medical center wide RFP or request for proposals with OSU and we were able to secure an approval for the Varus platform to be the dedicated platform for their cancer center. There really wasn't any meaningful competition in that exercise. But once we have the implantable that really is the most, that's the significant value added and it's a barrier to entry

for others trying to get into the space. Great.

Well, thanks for answering my questions. I wish you guys good luck. Thank

you. Yeah, thanks a lot.

And I'm showing no further questions at this time. I would like to turn it back to Dr. Lee Shanok log for closing remarks.

Great. Thank you, operator. And thank you all for joining us today. Hopefully it's clear from our comments here that, you know, with the various challenges over the past year now really squarely behind us and padmint on a very strong footing, our team is really looking forward to a very strong remainder of 2025. You know, Lucid is making really strong progress on multiple fronts. We believe we're on the cusp of some major inflection milestones that will drive shareholder value and the work we've done over the last six months on the padmint restructure will really allow padmint to directly benefit from the Lucid value creation side. And as you've heard, including during the Q&A period here, Varus is also in a much stronger position. We've demonstrated that it's been able to raise sufficient capital to implant, to advance its key asset, which is the implantable monitor. And we're on the verge of launching our first strategic and commercial engagement with a major academic center, which really bodes well for the long-term commercial success. This stability, we haven't really talked about it much today. We've touched on it before also allows padmint to continue to pursue other assets in the broader life sciences sector to drive value. And that's an active process that we're continuing. So with that said, I do encourage you to stay connected with our progress or our news releases, these calls, as well as signing up for our email alerts from our website. And you can also follow us on Twitter and LinkedIn. So thank you everybody and have a great day.

Thank you. And ladies and gentlemen, this concludes today's conference call. Thank you all for joining. You may now disconnect.