PAVmed Inc.

Good morning and welcome to the PAVMED first quarter 2025 BISNOT Update Conference Call. At this time, all lines are in listen only mode. Following the presentation, we will conduct a question and answer session. If at any time during this call you require immediate assistance, please press star zero for the operator. Please note this event is being recorded. I would now turn the conference over to Matt Riley, PAVMED Senior Director of Investor

Relations. Please go ahead. Thank you, operator, and good

morning, everyone. Thank you for participating in today's Business Update Call. Joining me today on the call are Dr. Alishan Akhlog, Chairman and Chief Executive Officer of PAVMED, along with Dennis McGrath, Chief Financial Officer of PAVMED. The press release announcing our Business Update and financial results is available on PAVMED's website. Please take a moment to read the disclaimers about forward-looking statements in the press release. The Business Update, press release, and the conference call all include forward-looking statements, and these forward-looking statements are subject to known and unknown risks and uncertainties that may cause actual results to differ materially from statements made. Factors that could cause actual results to differ are described in the disclaimer and in our filings of 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 PAVMED's most recent annual report on Forms 10K, filed with the SEC, and any subsequent updates filed in quarterly reports on Forms 10Q and subsequent Forms 8K. Accepted as required by law, PAVMED 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. Lishan Akhlog, Chairman and CEO of PAVMED.

Lishan? Thank you, Matt, and good morning, everyone. Thank you all for joining our quarterly update call. As always, I'd like to thank our long-term shareholders for ongoing support and commitment. We'll be delving into some of our operational highlights, but just let's start with a few high-level comments. As we've talked about before, following the series of critical steps that we took to stabilize our corporate structure and balance sheet, PAVMED really now is very well positioned to operate as a diversified commercial life science company with multiple independently financed subsidiaries that operate under a shared services model. So let's just overview, for those of you who are not familiar, PAVMED's corporate structure and portfolio. PAVMED is structured to be a parent company that delivers innovative medical technologies and addresses unmet clinical needs. And as our subsidiaries, such as Lucid, succeed, PAVMED will also succeed. Lucid, of course, is our publicly traded diagnostic company. It's our strongest and most advanced asset that's on the cusp of key milestones, including Medicare coverage, making commercial progress along certain new sales channels. I'll talk about it a little bit more. And it's just really focused on securing broad coverage. We have plenty of runaway and are well positioned to accelerate our commercialization once we secure Medicare coverage. Baris is our privately held digital health company that offers a cancer care platform that enhances personalized cancer care. We have financing now secure to restart development of a critical implantable monitor. And we're excited to update you on those developments shortly. TMX is our incubator that has several promising technologies that we're seeking to advance. We're focused right now on Port I.O., which is a plantable enteralysis device. And we're getting traction with some strategic potential strategic partners as we'll discuss further. And then, as I've talked about before, we're always looking for other assets and other opportunities to diversify. We have a history of starting in medical devices and expanding into diagnostics and digital health. And an area that we're actually quite focused on right now is expanding into the biopharma space. We have a really credibility as a partner here based on our track record advancing our subsidiaries and performing clinical trials. And we have a partnership with one of our directors where we've been able to review some very attractive biopharma assets out there that fit within our shared services business structure model that we're looking forward to see if we can consummate in the near future. With regards to Lucid, of course, I encourage you to listen to yesterday's Lucid business update call for greater detail. On each of these areas, I'll try to just focus on some of the main takeaways. Lucid is really now a better position than ever to capitalize on ESIGAR's very large political and market opportunity. We reported revenue of $800,000 this last quarter and a test volume of 3,034, which is sort of at the upper end of our target range of 2,500 to 3,000 tests per quarter. The key development this quarter was that we significantly strengthened our balance sheet with an underwritten public offering of I think $16.1 million. And this really bolstered our balance sheet. Lucid had $40 million in pro forma cash at the end of Q1 and it extends the runway well into 2026 and past some key upcoming milestones. As we discussed yesterday, we have seen continued momentum on some of these new sales channels that we're pursuing, particularly on the concierge medicine side, which is a cash pay channel. And we're also making meaningful progress on executing employer market contrasts, all of this to complement our ongoing efforts at seeking traditional coverage pathways. And we do continue to expect these initiatives, the concierge initiative and the employer market initiative, to have an impact on revenue in the second half of this year. We continue to wait a response from the MaldiX program regarding Medicare coverage for ESIGAR, which we continue to believe is imminent. So let's move on to Varus Health. Having completed financing recently, we've now successfully restarted the development of the key implantable physiologic monitor and we've re-engaged with FDA. We had a recent engagement with them that was so favorable that we did not have to follow up with an in-person meeting. We expect the work to continue through this year, with having re-engaged with our development partners with an FDA filing targeted for the first half of 2026. Our pilot program with OSU is complete and we are really very close to finalizing our long-term commercial and strategic partnership. Really it's imminent. It's been signed off all by the lawyers. It's just really awaiting signatures. The commercial agreement will start once we complete the process of integrating the Varus platform with the electronic health record at OSU and once that launches, which again we expect to be very soon, the commercial agreement is to enroll at least a thousand patients in the first year and 300 Varus implants once it's cleared. So we're very much looking forward to getting rolling on that. The incubator, as I mentioned, we're focused on seeking out direct financing with Board I.O. and engaging with the strategic. That process is actually accelerating. We've had continued to have discussions with now about a dozen strategic who have expressed interest and are active in this space and we look forward to hopefully consummating a strategic partnership that comes with a strategic investment to allow us to relaunch Board I.O. and initiate the clinical trial to get it towards clearance. So with that, I'll pass the call out to Dennis.

Dennis Dixon Thanks, Lee Shonay. Good morning, everyone. Our summary financial results for the first quarter were reported in our press release that has been distributed. On the next three slides, I'll emphasize a few key highlights from the first quarter, but I encourage you to consider those remarks in the context of the full disclosure covered in our quarterly report. One form 10Q is filed with the SEC. Couple reminders as our financials, particularly the income statement with year over year comparisons, will for the next couple quarters illustrate periods before September 10, 2024 with lucid operating results being consolidated into the presented PAVMED results versus the 2025 periods will be without lucid operating results. This is all related to the consolidation and deconsolidation of the PAVMED financials. We do present some supplementary information in footnote four of the 10Q that should help with some of the comparisons. With regard to the balance sheet, you will recall our last two calls in November 2024 in March of this year that the company is engaged in a multi-step process to gain compliance with the NASDAQ Listing Standard for minimum equity, which it did in February, and also position the company for long-term financial stability. The two key components were deconsolidating lucid from PAVMED's consolidated financial statements and restructuring our debt whereby we exchanged about 80% of our outstanding debt for a new Series C Preferred Equity. The slide reflects the balance sheets for both the first quarter and the fourth quarter, both after deconsolidation, which occurred on September 10, 2024. But now the first quarter shows the impact of the debt exchange, which occurred after December 31st, notably the liability reduction of about $25 million coming in part from a significant reduction in the convertible notes, about $23 million, and a $2 million reduction in accrued expenses in exchange for an increase of approximately $25 million in preferred stock. So a couple key things to point out on each of these balance sheets. Cash does not include any lucid cash. The equity method investment balance of almost $47 million at March 31st reflects the $31.3 million lucid shares marked the market, a $21 million gain since year-end representing an 82% increase in the lucid stock price between the periods. This amount was previously eliminated from PAVMED's balance sheet prior to deconsolidation. For a note, there's plenty more information in the 10-Q on both the debt exchange, the Series C Preferred Stock, and the equity method treatment of PAVMED's investment lucid shares. At present, PAVMED continues to be the single largest shareholder of lucid diagnostics with ownership of approximately 29% of the common shares outstanding. Although PAVMED no longer has voting control of lucid, PAVMED, its board, and management still have significant influence over lucid with more than 27% voting interest. Shares outstanding today, including unvested restricted stock awards and pre-funded warrants, are approximately 18.4 million shares. The gap outstanding shares at the end of the quarter of 16.8 million are reflected on the slide as well as on the face of the balance sheet in the 10-Q. Gap shares do not reflect unvested RSA amounts. Additionally, there are about 25,000 Series C preferred shares outstanding, and if they were converted at its conversion price of $1.07 per share, would represent an increase of approximately 23 million common shares. The Z warrants, having a conversion price of $24 and after having been extended for one year beyond their initial five-year term, expired on April 30. Next slide, please. Similar to the past presentation, this P&O slide provides some gap and non-gap -over-year quarterly and annual comparisons. As cautioned earlier in my comments, 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 on September 10 of last year somewhat blurs the historical understanding of the information of PAVMED as a standalone entity, and gap does not allow the presentation for prior periods on the face of the financial statements to be similarly adjusted. Although, as mentioned, there is some supplemental information in the footnotes of the financial statements in the 10-Q. On a pro-form basis and purely for illustrative purposes on this slide only, the various revenue and the lucid management fee income are combined collectively more than $3.5 million per quarter to visually align PAVMED's income sources versus its operating expenses. For SEC reporting purposes, the MSA income is up below the line item. Furthermore, for the first quarter, you see on the slide and in the 10-Q a large GAAP net income of $18.6 million before NCI and preferred dividends. This results in GAAP positive primary EPS of $1.28 per share and a positive diluted EPS of $0.34 per share. PAVMED's ownership of $31.3 million lucid common shares are marked to market quarterly and with an 82% increase in the stock price, a gain of $21 million is recognized in the P&L for the period. I'm happy to answer any detailed questions in the slide in the Q&A, but I think it's more informative to look at the first quarter standalone information presented in this slide and the full first 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 first quarter, you see a non-GAAP loss of $910,000, which has been funded in part by the NIH grant proceeds of $900,000 in the fourth quarter and a PAVMED verus $2.4 million financing during the quarter. Operating expenses for the first quarter were approximately $5.4 million, which includes stock-based compensation expenses of $1 million

and

deal expenses

of $200,000.

With regard to the non-GAAP operating expenses on this slide, you see a graphic illustration of our operating expenses over time as presented in more detail in the press release. Total non-GAAP OPEX is $4.4 million for the first quarter of 25, which is almost the exact same amount incurred in the fourth quarter after accounting for $200,000 in deal expenses in the first quarter. Decrease is equally related to A, the impact of the deconsolidation and B, the fact that the combined OPEX ignoring deconsolidation for PAVMED and LUCIN would have been in line with the previous quarters anyway. With that, operator, let's open it up for questions.

Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press star followed by the number one on your touchtone phone. Your wheel will prompt that your hand has been raised. Should you wish to decline from the polling process, please press star followed by the number two. If you are using a speaker phone, please leave the handset before pressing any keys. One moment please for your first question. Your first

question comes from Jeremy Perlman of Maxim Group. Please go ahead.

Hey Jeremy. Thanks for my question. How are you doing? Great. So maybe now that the pilot program is complete, is there any metrics or information feedback maybe you could share from the physicians and the patients and has that any of that feedback influenced any changes you're going to make to the platform before you fully commercialize it?

Oh great, great question. And the answer is yes, we've had excellent feedback. This is a formal pilot program, so it included pre-specified metrics and performance metrics, patient satisfaction, demonstrating of clinical success and outcomes, logging of sort of anecdotal clinical success stories where the monitoring of the patient led to improved outcomes and all of those pre-specified performance metrics were met. And there's really a lot of enthusiasm. I mean, big academic medical centers can move slowly, they're just big. And the speed with which the desire and the demand for this technology across the cancer center has been really, really encouraging. It hasn't required any, and we don't expect there to be any immediate changes to the platform. The platform works. People are very excited and what's driving some of that enthusiasm is the opportunity to add the implantable monitor in the not too distant future. So everyone's looking forward to that. And frankly, they're looking forward to being the first site to do the first implant. And part of the proposed strategic partnership includes a registry for the implantable, which we're looking forward to. We have learned some lessons on how to implement this. And that's obviously, that was our goal to really focus on big, OSU, the James is the third biggest cancer hospital in the country. And so one of the goals of focusing on them was to learn lessons on how to implement this more broadly. And anyhow, we learned some lessons on sort of how to utilize their call center. They have a very sophisticated process where they have call centers and are able to triage calls and how to adjust alerts, customize alerts based on their individual needs and so forth. So process-wise, sure, we've learned a lot and we're implementing it, but the core cell phone platform was very well received and fulfilled all of the metrics.

Okay, great. And then is there, I don't think there is, just to refine us, did they have an exclusive right to the various platform or are you still in negotiations to cut talks with other large centers?

Oh, no, yeah. I mean, there's some local rights to sort of advance it locally, but not in any way that limits our broader ability to move forward on this. This is a, we expect this to be a commercial agreement that includes a registry for both patients enrolled on the platform as well as when the implantable starts. We did commit to letting them be the first center to do the implantable, but that's going to be natural anyway because they're going to have a big head start. We expect a minimum of 1,000 commercial patients in the first year and they'll be well into that by the time the implantable is FDA clearly ready to go. But no, we're not, the broader vision here is to really, as I said earlier, to use this, it's now become a very strong relationship with one of the top cancer centers in the country to work out a template and work out a model that can be replicated at dozens of other NCI designated cancer centers across the country.

Okay, great. And then just one last question, shifting to the new, you're mentioning your expansion goes into the biopharma segment. There's maybe a little bit more information around the rationale, the strategic rationale, why now? It seems like you have a lot of pokers in the fire. You still have Lucid, you have Varis, Gord.io, so now, and then the financing for this, will it be similar to the incubator style where you look for external financing before you move ahead with procuring a potential asset or will this be financed within TASMEN itself?

Yeah, this is a great question. So look, the way I would like you to think of this is that, you know, we spend a good amount of time just kind of getting our corporate structure right, getting our balance sheet adjusted, all of the moves that we made over the last, now it's coming on six to eight months, have really put us in a position to put kind of Padmé back to its roots with a twist, right? So, Padmé has always been, it was designed really from its inception to be nimble and able to go look for shareholder value kind of wherever it might be. And the reason we're in a position to, you know, have what we think is a, you know, substantial near-term opportunity, you know, for our shareholders with Lucid is because we were willing to pounce on that opportunity when it became available when at the time we were focused on medical devices. And that's similarly true with Verus, right? We added digital health as an area that where we thought there were opportunities. And, you know, this is something that's been a bit on our radar for a while, but it really accelerated when we joined forces and engaged with a long-time biotech investor who is now on our board, on Padmé's board, Dr. Cindy Agarwal. He has just a ton of experience in this space over several decades and is, you know, came to us with sort of a thesis that, you know, Padmé's infrastructure, its manager services structure, its, you know, history of having access to public capital, the history of doing public financing, IPOs and otherwise, and the sort of model of independently financed subsidiaries is one that he felt within the ecosystem of biopharma, biotech could be really interesting and attractive because earlier stage assets were struggling to raise private capital under traditional means, particularly those that have really interesting assets that are sitting outside the US. And, you know, when we thought about it further, it's actually in some ways less of a deviation from, you know, what we had to do to become a diagnostics, to create a diagnostics subsidiary, which required, you know, getting a lab and figuring out how to run effectively and efficiently and, you know, at a high level diagnostic lab and so forth. These assets are, there's just a large pipeline of assets in oncology and in cardiometabolic that are in the early, late preclinical phase or in early, you know, phase one or late in phase one clinical stage that just need to, you know, really just need clinical research. And we have that. We have a clinical research team. They've success at getting studies across the finish line, operating them successfully, and frankly, not much else from our kind of internal resources. So we don't, you know, we believe that we have infrastructure here that we can leverage. We have a track record and there are assets out there that can use this. To your point about financing, as I've said, we said, you know, ever since we've made some adjustments with how PadMed operates that our model is that the individual subsidiaries raise their own capital. And so that's been true with Lucid now going all the way back to the Lucid IPO. It's been true with Verus, including this most recent financing, and that would be the case with within the bi-farmers space. Anyone who's following the life sciences sector broadly knows there's a lot more capital available in bi-tech assets. And it's a bit more of a, you know, kind of streamlined straightforward pathway to value creation if you can find a good asset. So, you know, we're just, we're not there yet, but just wanted to make it clear that that's something we've hinted at before that we're really actively pursuing and hope to dive into in the short term. And no concerns about how it might impact our bandwidth or ability of the company to continue to push forward on these other structures, on these other assets like Lucid and Verus, because the way it's designed is they're, you know, they operate effectively independently, you know, with, you know, with services from the parent company as needed.

Okay, great. Thank you for all that information. I'll rejoin Keith.

Have a nice day.

Yeah, thanks, Jeremy.

Your next question comes

from Edward of Ascension Capital. Please go ahead. Hello, Ed. Yeah,

thanks for answering my questions. Has the volatility in the market affected your ability to raise capital in terms of, you know, do you have wide fluctuations when you're trying to go out to the capital markets to, you know, raise money?

I'll let Ed, Dennis, why don't you go ahead and answer that? The answer is no. We've been fortunate to have good long-term investors who buy into our vision both for the parent company as well as the subsidiaries, but I'll let Dennis provide a little bit more comment.

Yeah, well said. As evidenced by the answer we did in the first quarter, we did a combination with the Admin and Verus equities that is indicative, was indicative of the implicit value of Verus. It was done at a 35 million pre-market, pre-money value, and, you know, we have access to, you know, investors that align with our vision, and we believe that the additional tranches needed for Verus will be available when needed, and given the assets we're looking at and narrowing down on the biopharmacy, we believe that we'll also, you know, have, we will also have access to both private capital and ultimately public capital as well. So we think we're in pretty good shape to execute on both of them, and the money will be available as needed when the time is right to sign those agreements.

Great, well thanks for answering my questions, and I wish you guys good luck. Thanks Ed. Thank you, ladies and gentlemen.

That

concludes our question

and answer session. I will now turn the conference back over to Dr. Vichon Aguilon. Please go ahead.

Great, thank you, operator, and thank you all for joining today and for the great questions. Pat Met is really well positioned, as I just articulated in some additional detail, and we are going to aggressively execute on the strategic vision that I just outlined. You know, Lucid and Verus are now well capitalized through key upcoming milestones. We believe they'll be value creators in the near term, and we're just excited to and ready to pursue the significant opportunities we have to leverage our model and our infrastructure and further diversify into a new sector, and we hope to make some progress on that in the very near future. So with that said, again, I do encourage you to stay connected with our progress through news releases, these calls, sign up for email alerts on our website, and follow us on social media. So thank you so much, and everyone have a great day.

This concludes today's conference. Thank you for attending. You may now disconnect your lines.