Q4 2020 PAVmed Inc Earnings Call
[music].
Greeting.
And welcome to <unk> and business update conference call. At this time all participants are in a listen only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during todays conference. Please press star zero on your telephone keypad.
As a reminder, this conference is being recorded.
And I would now like to turn this conference over to your host Mr. Mike Labelle of director of Investor Relations for parts of my Please go ahead Sir.
Thanks, operator, good morning, everyone and this is Mike Havrilla director of Investor Relations.
And for participating on todays business update call.
Joining me today on the call on.
I don't think the Rihanna, Chairman and Chief Executive Officer.
Dennis Mcgrath, President and Chief Financial Officer, and we're pretty proud of guest speaker, joining us today and.
And we'd repeaters strategic adviser for lucid diagnostics.
The press release announcing the business obviously the results available on time as groups and.
And you take a moment to read the disclaimer about forward looking statements and the press release.
The business update press release and this teleconference. Burke include forward looking statements. These forward looking statements are subject to known and unknown risks and uncertainties may cause actual results to differ materially from the statements made.
Dr.
And could cause actual results to differ are described in the disclaimer and on our filings with the U S Securities and Exchange Commission.
For the list and description of these and other important risks and uncertainties that may affect future operations.
Part one item one of entitled Risk factors and patent administration of annual report on form 10-K.
Dr to talk with the Securities and Exchange Commission and.
And any subsequent updates filed and quarterly reports on form 10-Q.
Except as required by law and met disclaims any intention or obligation to publicly update or revise any forward looking statements to reflect changes and expectations.
Well and events conditions or circumstances.
And as expectations, maybe based on.
And it may affect the likelihood the actual results to differ from those contained in the forward looking statements.
With that said I would like to turn the call over to we show on Aqua Doctor Alcoa.
Thank you Mike.
Good morning, everyone and thank you all for taking the time to join us for todays quarterly business.
On today's call for all of our long haul fellow pad and the travelers. Thank you as always for your unwavering support patience and commitment to our company and the commission.
And the many of you are just getting to know Padma and welcome I.
And I hope by the end of this call you will understand what all the pluses about why we're so excited about where we've come and the promising journey ahead.
First of all I.
I guess for the last minute change of timing for the early hour for those of you and the Western time zone.
And I plan to spend a large portion of this update on our major subsidiary lucid diagnostics and the commercialization of the seafood Guard product list. The primary strategic advisor standard with Peter has played a very important role in helping the kraft to strategic initiatives.
Apologies I think today, so I thought it would be appropriate for him to join this call to provide his insight and perspective on the Easter and Easter Guard.
We changed the time of this call to accommodate this travel schedule and much more of that spend later.
Those of you who follow US closely will agree that we are very different company than we were not just a year or two ago, but even compared to a few months ago.
We are and at the time of our last call, we are bigger and financially stronger and brimming with the confidence and determination of opportunity for us today and to a major player and the medical technology and diagnostic and just.
Our plan is to go big and go bolt on making two announcements today regarding the lucid and Isa guard better consistent with that bullish sentiment.
The first day.
And I'll spend of that lucid is launching a major new commercial initiatives internally the program.
The program seeks to supercharge, the cigar commercialization by simultaneously targeting multiple sales and marketing channel and build lucid the own network of Ito check of operators to assure sufficient testing capacity and geographic coverage to of carbonate.
The.
Second related announcement is that we intend to spinoff lucid into a separate public company.
And through an IPO on a business combination with the health care and spec assuming favorable market conditions continue to hold.
The lucid the board believes is important long contemplated staff as necessary for Lisa to fulfill its extraordinary long term potential.
And the unlock its present value at the separate public company lucid will have access to growth capital and other resources necessary to execute on this major commercial initiative and other value enhancing activities of <unk>.
Of course, we believe that elusive spinoff that accomplishes. These goals would also be on the best interest of <unk> and its shareholders have met.
And the main leaks largest shareholder following the spinoff transactions.
Lisa is in active discussions to engage a prominent investment bank to help at launch and manage the process. The more on the more detailed on those two announcements later in my remarks, I'm going to flip the script today compared to our prior calls and Dennis will now provide a financial update following.
And we'll read at the <unk>.
And help will provide a more comprehensive view of lucid and <unk> commercialization and then I'll close of the more abbreviated and update the unusual on anchor products and we will then proceed the Q&A.
And then the amount of material to cover we likely will run a bit longer than usual, so I apologize for that and Dennis.
Dennis.
Thanks Felicia.
Following and everyone ill be brief of our summary financial results for the quarter and year ended December 31, 2020, we reported on our press release and was published earlier this morning, and our annual report on form 10-K as expected the file with the SEC later this week and at that time, we will also be available at SEC Gov and on our website so regarding test.
Perform and the revenue recognition as you already know from our update call last November and none of the couple of hundred tests performed and the fourth quarter would result, and recognize revenue due to Medicare insurance, not becoming effective until January one.
But the very same reason all of the 2020 commercial tests, we just recently built.
And good morning of the recognized as revenue when collected.
As far as outlook for 2021.
It's our expectation that throughout 2021, GAAP revenue will be realized overall and actual collections received the tests submitted for reimbursement.
With that we can result in and of different timing of revenue is recognized.
Most of the time that the patient testing is conducted and submitted for third party reimbursement.
In short order you will hear from Lisa on about procedural and momentum sales team expansion and major commercial initiatives. Consequently, when we provide our first quarter update in May we would like and we will begin providing some early revenue centric.
Centric metrics.
Presently there are three banking analysts of the should coverage on the company and we expect our outreach will soon the yield additional research coverage.
The number of tests required to achieve the 2021 revenue estimates provided by the analysts are achievable the quantity and collections.
Our highly dependent upon the evolving reimbursement landscape.
As you are likely aware from our last corporate update the.
Local coverage decision of LCD, where CMS related reimbursement and still not been published Michelle we'll have more to say on this and his remarks.
So with regard to the financial results for.
Research and development costs and the year of 2020 research and development costs were approximately $11 million as compared to $6 6 million.
Corresponding period and the prior year with the approximate $4 4 million increase principally related to about.
Of the year increase and clinical trial costs and outside professional and engineering services with respect to carpets next low port I O diesel guard and a glucose monitoring product.
And another 400000 increase and compensation related costs related to expand the clinical and engineering staff.
Four of them and administrative expenses were $12 4 million for 2020, compared with $7 7 million in 2019.
The $4 7 million increase principally is related to approximately $2 3 million increase and compensation related costs, principally related to sales staffing levels and.
And other costs.
Generally to our commercial launch of Easter Guard and claw backs and.
Another $2 million increase was and consulting services related to the patents regulatory compliance legal processes for contract review and public company expenses and above.
400000, and general business expenses.
<unk> reported a loss.
Loss attributable to common stockholders of $34 5 million or a loss of <unk> 73.
Per common share versus the loss of $16 7 million and <unk> 55 per share in 2019.
Our press release provides substantially more detail related to the noncash charges.
Is occurring and the current and prior periods also the press release provides a table entitled non-GAAP measures.
Highlights these amounts along with interest expense and other non cash charges, namely depreciation and stock based compensation and financing related costs to enable better understanding of the company's performance.
You'll notice from the table and after adjusting the GAAP loss by approximately $15 million at least type of non cash or financing related charges. The company reported and non-GAAP adjusted loss for the year ended 2020 of $19 7 million or.
And we're 43 per.
The common share.
The pad that had cash.
And $10 3 million as of the end of December.
And during the fourth quarter as you know the company received additional net proceeds of approximately $16 million from the issuance of common stock.
Furthermore, subsequent to year end.
The approximately $12 5 billion and net cash proceeds from and additional issuance of our common stock.
And so of course, we're pleased that our stock prices increased approximately 85% since debt financing so with that I'll turn it back Felicia which of them.
Alright, Thank you Dennis.
Let me start with a brief overview of our of our corporate structure for those of you who are new department, we operate four divisions Gi health minimally invasive.
So of interventions infusion therapy and emerging innovations, we have three products and the early stages of commercialization Easter guard of visa check and check on the health and <unk> and minimally invasive interventions.
Our Gi Health Division of house within the <unk> subsidiary Lucid diagnostics, which was formed in 2018 to license groundbreaking.
Technology from case Western Reserve University of it have made is operated and funded leased hit since its inception and on approximately 82% of leases outstanding common stock.
Lucid the mission is to prevent the softgel cancer deaths through the early detection and surveillance and treatment of its precursors and such.
A few general comments.
And breaking out the role of early detection of prevent cancer deaths.
Early detection has been very successful and preventing cancer death, most notably for breast and cervical and colon cancer the.
The successes.
Share three key elements, one and well defined population of risk for developing the cancer to a widely utilized screening tool to.
The detect precursors of early stages of of the cancer and the at risk population and three and the interventional and capable of helping progression from precursors or early stages of cancer.
An estimated one of the four adults suffer from weekly heartburn caused by reflects of stomach fluid into the lower esophagus, they spend nearly 15 billion.
Billion per year on modern heartburn and medications, such as private looks like Nexium and perhaps it on.
Unfortunately, very few if any of these patients and very few of their physicians are aware of that their chronic heartburn and could lead to esophageal cancer.
And here's how that can happen the reflects of stomach fluid causes benign changes and the lower sales as compared with <unk>.
And altogether, which can transform into precancerous changes called dysplasia, which in turn can progress the highly lethal esophageal cancer.
But of critical importance. This progression can be halted and cancer prevented if dysplasia is detected and treated with the curative non surgical esophageal ablation procedures.
Softgel.
Cancer kills nearly 20000 Americans per year nearly twice as many of the drunk driving.
Four of five patients die within five years of diagnosis, making it our second most lethal cancer and.
And in Stark contrast to all other cancers. It's incidence has increased by a shocking 500% over recent decades and while it's separated currently budged.
Published guidelines from the American College of Gastroenterology, and other professional societies recommend the chronic heartburn patients with three or more known risk factors undergo screening to the tech precursors of esophageal cancer. These risk factors include the age over 50 male gender like obesity smoking and family history.
And as.
<unk> of that at least $13 million and be approximately $50 million chronic heartburn patients have three or more risk factors and therefore should be screen <unk>.
Despite these recommendations fewer than one and 10 of these patients undergo screening using invasive upper endoscopy the cause.
Consequently, the tragic every day across the country of chronic heartburn and patients receive.
Of a likely death sentence and the form of the new esophageal cancer guidance.
Diagnosis nearly all of these cancers could have been prevented had screened and performed as recommended and thats not.
The hyperbole.
How do we fixes and how do we prevent esophageal cancer deaths. The answer is early detection of its precursors.
And two of the <unk>.
Elements for successful early detection program for esophageal cancer are already in place, we have a well defined risk population, namely chronic heartburn patients for the phase III risk factors, and we have and intervention, which helped the progression of the cancer, mainly esophageal ablation of.
The widespread screening tool for precursors of esophageal cancer had long been.
And then the missing third elements and.
And so now.
Lucid the Isa guard is the molecular diagnostic test, which is commercially available of the laboratory developed tests.
The artist performed on a sample of lower sulfur deal cells collected using lucid FDA cleared Easter check device and a five minute noninvasive office procedure.
<unk> is the first and only commercially available widespread screening tool for detection of esophageal cancer precursors.
These groundbreaking products have received accolades from the National Cancer Institute, which funded the early development and a 2020 of Edison.
Award for gains for game changing innovation.
Yes.
And you sort of granted Easter guard and each of our Czech breakthrough device designation.
Among the benefits of this highly coveted designation will be automatic CMS coverage upon FDA approval through the soon to be implemented Medicare coverage of and innovative technology on <unk> final rule.
A few words on reimbursement before we discuss commercialization.
The FDA last year CMS granted each of.
The <unk> CPT code and attractive CMS payment determination of 90 to $138, which became effective January one.
The with payments secured the ECL guard and market opportunity map is really quite simple and 90 to $100 payment and 13 million patients already recommended.
And for screening translates into on approximately 25 billion dollar addressable market opportunity.
Near 2% to 3% penetration on to this massive market would position of elusive among the largest medical device excuse me and medical diagnostic companies and the world by revenue.
Still waiting CMS coverage determination of as Dennis.
Commended last May we submitted our final coverage dossier to <unk> and <unk>.
The diagnostic group of net of Medicare administrative contractor Palmetto GBA and we believe the dock day presented a very strong case for coverage based on the established well defined population already recommended for screening by professional society guidelines.
As mentioned the precedent and we had expected coverage determination to be finalized by late fall and we understand that the pandemic and the change of administration has resulted in a significant backlog and backlog of reviews, which may not clear until the spring are.
Our reimbursement consultants, who recently served as the medical director of the <unk> together with the subject matter.
A matter of experts that.
Based on the association of abdomen are helping us navigate this process. We are hopeful that these efforts might shake the tree the bed and accelerate the process.
And on the private payer side, we have engaged to lead and consulting firms to help of secure payment and coverage that process, including preliminary interviews with insurance plan medical directors and is well underway.
Let's now dive into the heart of the matter of disregard commercialization.
We are currently on the middle of a significant expansion of lucid sales the sales team.
On our last call.
Since our last call we have grown our fulltime sales team from four to seven regional business managers, who now oversees 50.
Independent.
Sales representatives.
We have and eater check devices and Easter guards specimen kits on the shelf and of trained clinicians at approximately 150 accounts and our sales team is actively engaged with hundreds.
More.
We are also actively recruiting of team of clinical specialists and well trained clinicians and support existing accounts.
And while freeing up other sales personnel to focus on opening new accounts.
Let's now review some of the volume trends for each of our testing. Although a few tests were performed before and during the early months of the pandemic for practical purposes. Each of our commercial activity began last October when the harshest COVID-19 restrictions were lifted.
Counts and non emergency care began to slowly reemerge.
Testing volume grew steadily during the fall until the winter Covid surge field hospitals, and the test and pay slowed once again.
The pace remained depressed in January when many hospitals limited outside of engagements, while their workforce was being back.
With nearly all health care workers now vaccinated.
And moving forward, we anticipate unfettered access to the facilities for sales calls and training and procedural support.
Testing volume has rebounded nicely this month, and we anticipate of returning to accelerating growth in the coming weeks and months.
One of the most frequent questions were asked and it's one test volume will translate into the rest of into recognized revenue the answer.
And then.
And hopefully soon.
As Dennis explained at this early stage without historical collection trends revenue can only be recognized upon receipt of cash.
Last year, we made the tactical decision to minimize denials by not submitting claims until after CMS payment became effective on January one.
We have now begun to submit these past and recent claim.
Not yet and it's important to note that the claims cycle can be prolonged during the early commercialization of any new tests, especially and full coverage has been secured.
The future of each of our commercialization as our new Phoenix program of major New commercial initiative, we are announcing today.
The program seeks the supercharged Easter guard commercialization by.
Claims between targeting multiple sales and marketing channels and build lucid the own network of ether, Chuck operators to ensure sufficient testing capacity and geographic coverage to accommodate demand.
Let's start with some basics the three clinical roles that need to be filled one of the patient undergoes the ethos of our testing of physician or nurse practitioner.
And the evaluation of patient.
The first is there a history of chronic heartburn and associated risk factors and orders the east regard tests indicated.
The elusive trained commission off and a nurse or physician assistant than performance of five minute office space, the eastern check procedure and sense of the sample for each of our testing.
And finally <unk>.
The positive Gastroenterologist performs the confirmatory endoscopy monitors the patients with regular surveillance endoscopies and performs the softgel ablation, if dysplasia and protected.
Our sales efforts to date of targeted Gastroenterologists, who take on all three roles within their practice, the gastroenterologist or a member of their team evaluates the patient.
And as pumps that you subtract procedure and performance of the Endoscopies.
To date, the gastro neurologist have responded very positively to east regard because it helps them expand our funnel of new esophageal disease patients. Most of these patients will become long term patients for the practice and will need periodic follow up and procedures.
We encourage the gastroenterologists to start.
Start with the low hanging fruit high risk chronic heartburn of patients already on their practice such as those undergoing colonoscopy with our help and overtime. They can drive referrals by educating their referring physicians on the disease and east regard the new Noninvasive office based test to detect it.
Plant had been the proceed and a serial fashion directly targeting.
<unk> primary care physicians and patients only after establishing broad gastroenterologists adoption.
So why have we now decided to put aside this organic growth strategy and instead go big and cobalt.
The launch of more aggressive and more expansive near term commercialization plan to simultaneously drive multiple sales.
And any channels, while continuing to aggressively drive adoption of I guess turnaround just the.
The short answer is credit.
Last month, we launched the consumer campaign, introducing our animated keeps the guard mascot.
The good Friday.
<unk> is a friendly level of shop by Pete on gastroesophageal and expenses life and flooring fellow.
All of the Mark Heartburn suffers to quote unquote check your food.
We've always known that he used the guard like Cologuard would be of consumer facing products like people understand heartburn and they understand the cancer.
Over the over the past year of talented marketing team has been quietly building of consumer facing presence on social media and sort of engagements with patient advocacy.
The chronic groups the goal had been to educate consumers on the link between chronic heartburn and cancer and to create and used to guard the visibility and awareness at the foundations for future direct to consumer marketing.
<unk> is now of the cornerstone of that effort.
While we did not expect that perhaps should have is how quickly this effort of a dry cough referrals patients.
The second is directly to inquire about Easter guard testing.
The self referrals of us the currently modest presented a real near term challenge, even our rosiest projections for Gastroenterologist adoption would not guarantee sufficient geographic coverage of testing locations to accommodate escalating self referrals we.
We need expanded cover.
Content was sure that anyone who responds to our educational outreach and the access to Easter Greg testing of clinically appropriate.
We have concluded that the most effective and efficient solution is to build our own network of would be the Czech operators, our analysis confirms the economic and regulatory and viability of this approach.
Here's how it would work once it's fully up and running.
Coverage will retain and train and network of full time nurses each of whom can perform up to several dozen Easter check procedures per day each.
And also will be deployed to one of three types of venues and examine the leased from a part of your positioning second one third of sufficient volume, we will consider setting up our own freestanding Easter guard.
Lucid and <unk> centres, and locales, where the economics can support the.
Finally, we will seek joint ventures, with well known National Laboratory testing companies as well as national pharmacy companies with many clinics to establish if the check testing capacity at their facilities using our staff we're training them.
In addition to ease the Czech operators the program will require of physicians.
Of our test to evaluate self referring patients and order is regarded as clinically indicated this will be done via telemedicine and office visits.
By the physician, who does full time industrial fulltime or within the broader practice. The physician will bill for these visits of course of this all will not happen overnight and we believe but we do believe that we need to start the building.
The process now and our plan is to start with the pilot program. This spring and one major metropolitan area. We are located one of our new clinical specialists, one or two days a week and the lease exam room at the local physician's office. We will then launch of local direct to consumer marketing campaign, using digital radio billboards and of cost effective TV advertising.
<unk> and patients who respond will be evaluated by our partner position, while the order Heath regard testing of clinically indicated.
Our nurse.
And then perform the Easter check procedure of incentive for Ethernet testing.
Of the test comes back positive the physician on will refer the patient to a partner Gastroenterologists for confirmatory endoscopy and long term follow up.
Once we have established geographic coverage and the locale will proceed with another separate sales and marketing channel directly targeting primary care physicians, we will use the hybrid sales model staffed with personnel with experience, calling on primary care physicians such as pharmaceutical reps.
We also seek joint ventures, where the pharmaceutical company to market to primary care physicians.
And as exact sciences did with Pfizer with great success.
So speaking of the exact sciences I would like to now introduce expand Latinos.
And as a medical diagnostics pioneer and prominent industry of adviser whose companies the created billions of dollars of value for their investors I was introduced the standby the claim cancer geneticist and lucid.
<unk> partner doctors standing Marquis.
And that standard founded and led two of the apparently only three successful cancer detection and startup companies and history of.
Although he spoke of can meet that would complete the millet and humility. My first thought was the classic Muhammad Ali quote it and brag and if it is true.
My next thought was.
And the convinced this legendary figure to help us make lucid diagnostics and ex such company apparently I made my case and standard has been and invaluable resource as lucid the strategic adviser for the past seven months.
And first company Sci-tech.
Revolutionized early detection and sort of of several cancer preventing council outlets that's true it's been prep.
And I had passed which key event.
The logic acquired Sci-tech for over $6 billion.
And went on to found and lead exact sciences, who is Cologuard test revolutionized early detection and colon cancer and <unk>.
Exactly the arguably the most successful startup company and the history of the diagnostics industry and has reached the market cap of $25 billion under.
Haven't canarese leadership since 2009.
My team and I are students of the exact story and its value inflection milestones along before scanning joined us the similarities and the core technologies are obvious even to the casual observer.
The garden Cologuard are both molecular diagnostic screening alternatives to endoscopy targeting large population.
And their covers that risk for gastrointestinal cancer and.
And with similar similarly massive market opportunity.
In fact, we're the stories diverge the.
Major differences favor Easter Guard Easter.
And with regard faces certain lower hurdles compared to what the Cologuard free.
For example, compared to the Cologuard East the guard faces and minimal competition from endoscopy.
It's positively aligned with the interest of Gastroenterologists and require a smaller and less expensive clinical trial.
So let me now pass the mic over to Stan to offer his perspective on our efforts.
Good morning, all thanks, Felicia on its good to be here I look forward to sharing my perspectives on lucid and on Easter Guard.
And before I start with regard to financial disclosure lucid pays made a modest monthly retainer for my time.
<unk> equity and lucid I did purchase a small number of pad net shares in the open market some time ago.
At least on leisure I noted my major professional question because then the save lives through early pre cancer detection.
And although my companies have been commercially successful and most proud of the lives that have been saved by sites of care Bye Bye exact.
<unk> and lucid the roots of tumor on the same quest.
This team is quite impressive the real pros by the deep understanding of the opportunity the history and.
Tax functions lucid is a great story. It took me about a millisecond to understand the implications of what lucid is doing its potential could be big.
And important actually historically important is the reason I of link linked elbows with.
And with lucid.
On the channel I believe this is the best time, and my 30, something years and the industry to be doing what lucid is doing psychic with the fixed thats exact with the success and I believe the next company that can catch biological changes before they become malignant is looser.
Exact underwent the explosive growth because the could keep.
She is from getting colorectal cancer pain with cyclic and cervical cancer.
And these two cancers cancers of the cervix and colon.
The goal of cancer prevention with achieved cancer prevention on the other hand for example, and breast cancer has not been achieved only early detection has been achieved.
Hey, this is not a small accomplishment, but ask any woman, who was undergone surgery radiation and chemo.
She would be better off having never had a malignant tumor and the first place.
Cancer prevention and the prostate has not been achieved again early detection has but ask any man.
She began a prostatectomy if he'd had been better off.
Having had a malignant tumor and the first place and contrast cancer prevention has been achieved and the surface and the colon the attack.
And bit morbidity and the attendant expense incurred and treating precancerous lesions is much lower and treating.
Early cancer, the optimum cancer detection strategy is preventing cancer.
Lucid is not doing the same and the esophagus cancer prevention sort of Precancer detection.
<unk> I'll, let exact and now and part of lucid because I believe cancer prevention.
The way the have greatest.
<unk> impact.
Let me comment on the decision to spin off lucid is the Standalone public company, which leave Shawn is announcing for the first time today.
Been advocating for the strategy since I joined Blue said as the strategic advisor of last summer.
I've long believed that listen listen to the under valued.
Asset within <unk> and with Prosper as a Standalone company.
The shine and I have regularly conferred about the appropriate time and conditions for a successful lucid spinoff.
I believe the time is now.
And as now for early cancer detection companies can make their move there has never been and equity.
And market more receptive to the message that has never been an SBA more favorably inclined to consider early detection.
It's the exact opposite of what I dealt with the psychic when the FDA and organized medicine, we're borderline hostile true.
Anything that had to do with early cancer.
The detection this would be on the.
Late 19 eighties.
I am of true believer and the Isa Guard technology, Sandy Markowitz, who is whose lab established lab developed visa guard has been a friend and colleague for over two decades and fact, we collaborated extensively during the early exact days with.
And with Sandy and his colleagues.
Of developed addresses the critical need and that may be as plainly spoken as I can and soft the GL cancer as the death sentence and over 80% of people and whom it is diagnosed.
Get it and you die and the question is when.
It hardly matters, which of your doctors do the outcome is for God.
The leagues, the prognosis is grim and <unk>.
Part because unlike most cancers, finding even earlier stage esophageal cancer.
Not reduce our cap mortality by very much finding pre cancer and the esophagus. However, it can save the life of the patient pre cancer esophageal dysplasia is entirely.
And the treatable curable.
Curable it is not just delaying the inevitable.
If you ablate the dysplastic <unk> esophagus your tour of the patient.
Because of the effectiveness of early intervention no one should die from esophageal cancer.
But unfortunately people do die because.
<unk> Guy Endoscopy has failed as an early detection tool and a population level.
The Isa <unk> value proposition is very compelling the market is large and it has no established competitors, we're looking for pre cancer and the south of goes while everyone else is looking for early cancer and blood.
The exact does not a competitor Grail is not a competitor free zone is not a competitor and garden is not a competitor.
The liquid biopsy companies.
And factor all surprisingly similar.
They're common apparently multibillion dollar of messages, we're looking for early cancer and.
So our results so far for early stage cancers are discouraging, but they may become encouraging and the future and here I refer you to the.
The S. One that Grail had published before.
Acquisition by Illumina.
And none of these companies can and almost certainly never will detect pre <unk>.
Blood or the blood based approach and clinically meaningful levels.
And contrast, MISO guard does detect precancer and is based on the same premise I built my companies on preventing the progression from Precancer the cancer detect the pre cancer you prevent the cancer you save.
<unk>. This is the exact formula and the cyclic formula and now is the research formula.
Lucid and long term success depends on messaging and clinical data the key message to the public which the team is starting to get out of.
The relationship between Gastro esophageal reflux.
<unk> and esophageal cancer.
10 year exposure to gastro esophageal reflux to gird increases your esophageal cancer risk enormously.
Simple message and the public needs to hearing.
For the medical community and especially for the experts who produce guidelines what matters most.
And it's published clinical data I've learned over the decades that what moves the needle over the long term are well published well conducted studies.
And Sean and the lucid team understand this and are off to a great start Sandy markowitz and his colleagues published outstanding data and their seminal study of these technologies.
The cheese and one of medicine's most prestigious journals.
Lucid is clearly committed to building on that data and is actively enrolling patients and two international multicenter trials that are powered to demonstrate that Aesop guard detects non desplat, the non dysplastic barratts and the screening population.
This.
And this pivotal study will support a pre market approval submission to the FDA planned for.
The 2022 for registration both the VISO guard and he's so check as an in vitro diagnostic.
The publications of the studies will be important.
The late hybrids of long term value.
Exact went from about where it is today and $2012 13 to a multibillion dollar company and 2014 upon completion of its pivotal study and.
FDA IBD registration the.
The next step, which lucid is already planning.
And drawn under the Fda's breakthrough device program will be to extend the screening study until it has sufficient statistical power to demonstrate that ESAU guard the tax esophageal displays yet.
That would be the final piece of the puzzle and I believe at that point, the company might well be a very attractive acquisition.
Planning for one of the large diagnostics companies. Finally, we know that large sales and marketing programs and high quality clinical studies require ongoing access to growth capital.
This is the reason I strongly support the plan to spin off lucid and two of Standalone company with access to public.
Target.
A few months ago, I thought lucid might consider waiting to go public until and other milestones such as obtaining ODT local coverage a publication or completion of the pivotal study I no longer believe that the story is already very strong given the data they have.
The logic of what they are doing the strength of the IP portfolio and the favorite competitive environment. These are all factors that support the spin off I believe the spinoff will be successful and I believe that lucid will thrive as the public company.
And I'll stop here and the hand things back to you the shot.
Mark Thanks.
Thanks, so much fan and I'm, so happy that our listeners had the opportunity to get a brief glimpse of the precise analytic thinking and highly actionable advice and the <unk> benefit over.
Over the past several months I will now close with some rapid fire updates across our divisions and products and maybe you don't have time for me to provide the usual background and context for those of you and we're just learning about.
And that's I would encourage you to refer to our website and our SEC filings for additional information and contact us with any questions.
The first close on some items of lucid and G on health on the clinical trial front, the Stan mentioned, our east the Gartner the one and two studies in support of future PMA submission and FDA IBD registration and continue enrolling.
Although the pace of predictably slowed during the winter of Covid surge and European site initiation remains delayed due to travel restrictions.
The 40 of our 60 sites are active and we have enrolled approximately 70 patients across the two studies today.
Although we expect the enrollment to return.
The full pace next month, the accumulative cash.
The related delays have pushed our target completion date into early 2022.
<unk> taken advantage of the Covid related shutdown to introduce the new <unk>.
Proved preservative buffer and a more user friendly and precise Easter chunk of accessories.
We've also strengthened our operator training program during the cycle.
On the European front, we successfully.
We completed the all of the necessary audits by the European notified bodies and expect to receive visa check CE Mark approval and complete each of the guard self certification and Europe next quarter with the limited commercial launch in select countries.
Later this year.
We continue to make excellent progress on our E secure esophageal ablation device.
Based on input from our medical advisers, we've added some features and.
And plants several accessories to the product pushing our animal testing forward a few months and the target of FDA submission of data into early 2022.
We also continue to pursue opportunities to apply east of check the the very common allergy mediated condition send the pelican.
But we.
And we are waiting the print out of the results from the University of Pennsylvania pilot study and continue to explore licensing opportunities in this space.
The next step carp ex and our minimally invasive intervention division.
As we announced last week, the first U S. Carpal tunnel syndrome patients recently underwent successful carp ex minimally invasive carp.
So on a release and Mark contrast, the typical recovery time and swallowing conventional surgery. The patient returned to work of the truck driver within one of the future.
We continue with the steady and deliberate commercialization plan with a small team of world class and surgeons focused on optimizing the procedural steps and safety.
This group of service.
The <unk> trainers and proctors and when we launch of broader more aggressive commercialization effort later in the year.
<unk> also successfully completed all of the necessary audits.
By the European notified bodies and expect to receive Capex CE Mark approval, the next quarter as well.
We're evaluating potential of the European distributors and did not happen.
And specific timetable yet for European commercial launch.
Next briefly our infusion therapy division the Port I O study and Columbia, South America is almost ready to commence our team was able to recently complete and person site initiation visits at for Colombia, and medical centers after travel restrictions were lifted.
We are waiting for final on the approval and unexpected.
And basket and enrollment next quarter. We also continue our discussions with FDA on and.
On a proposed U S. IV study and are considering a more aggressive regulatory strategy to go straight to an eight week implant duration indication instead of the current proposal for a seven day indication of the bridge the longer durations.
Our net flow intravenous and future system continues.
The sex.
The successfully advanced through design control development and testing with the FDA submission targeted for the third quarter, our M&A discussions to license. The next flow technology for disposable infusion pumps continues and the deep diligence process with bench top testing being completed.
And by the large strategic partner that we're engaged with and.
We continue to advance the technology.
Acknowledging all of this M&A process continues and we hope to reach a final agreement and the next quarter.
Finally, our emerging innovation division, but it remains very active our partnership with canon on the disappear resorbable pediatrics pediatric ear tubes is going very well and we expect to be and are positioned to initiate animal testing, both Ken and produce produce the your chips next quarter.
Part of the solar and addition to advancing the noninvasive glucose monitoring technology, we licensed and 2019, we have been developing and advancing our own proprietary technology and this space.
Which is not subject to the license agreement.
Although the R&D work on the licensed the technology produced data and human volunteers and of diabetic rat model consistent.
With the milestone of accuracy of parameters, we ultimately determined that it would be and patent the best interest for us to focus our future efforts solely on our proprietary technology to.
Terminate the license agreement and seek and mutually agreeable unwinding of the religious which is currently being negotiated.
Our emerging innovations team continues to work on several other exciting.
And with today's technologies, including Ecmo cardiopulmonary support and ventilation.
We also continue to evaluate exciting commercially promising innovations, which of regulatory regularly presented to us by academic medical centers political innovators and early stage startup companies. So thank you all for your attention and with that operator, we can now open the call to questions.
Early on at this time, we'll be conducting a question and answer session and you would like to ask the question. Please press star one on the telephone keypad Hey come on.
Formations on will indicate your line is and the question queue. You May Press Star two chairman of your questions on the queue.
It just happens using speaker equipment and maybe market.
The the pickup your handset before pressing the star keen on.
Oh and poll for questions.
The first question comes from the line of Frank Keenan of Lake Street Capital Markets. You May proceed with your question.
Great. Good morning, Thanks, and good morning, good morning, if I could taking my questions.
And Sir congrats on the Big News Thats, Great I think it makes perfect sense of.
The looser business as a pure play <unk> company. So I'll start with just one question for Stan and I realize this was talked about and a couple of different forms throughout the call, but just wanted to revisit it and maybe go a little bit deeper, but and maybe talk.
And complain about the similarities and differences you see with the commercialization of Ito Guard vs Cologuard, and maybe speak a little bit to the importance of the IBD.
Excuse me.
Yeah.
Yes.
Maybe the biggest difference is the growth.
Growth of that colonoscopy had assumed and screening when we started exact colonoscopy was not recommended for primary screening.
And it became.
Our standard of care based on the publication of something called the National Polyps study and 1996 and.
And had achieved something like 40% market share and.
And to be clear colonoscopy is highly effective it's also a daunting procedure for those of US who've had it and the problem persistent problems day 60 per cent noncompliance, 40% compliance.
Organized gastroenterology did not really welcome the exact test because of the cornerstone of the million.
Some of your Gi income colonoscopy needs to be clear so sort of cologuard was taking of direct swipe at the the core income of a large part of the GI community, that's probably the biggest difference the.
The.
The the presence of competition, Kevin Conroy did an outstanding job.
Meaning concurrent reimbursement with the FDA approval for Cologuard, I think leash on and team have done if possible.
And even better job with securing reimbursement pre FDA here, we're well on the way the company is well on its way too to the FDA reimbursement. So those of the two principle points.
Okay, that's great.
And when we're thinking about the next 12 to 24 months what are some of the key milestones we should be watching for both on the transaction front of confer.
Confirming that we're on the trajectory to have lucid as the Standalone company as well as <unk>.
And confirming it as on the trajectory to be as successful as Cologuard. So just looking for a milestone template over the next period of time.
Shlomo amount of of just sort of go through sequentially. So we're.
And we're moving forward.
And as I said, we intend to proceed.
With the spin off and so we are.
And discussions with the bankers to start that process again, assuming the market and market conditions.
And so thats ready to go.
In terms of Heath regard as I mentioned this is a fairly big difference in terms of how we're pursuing how we plan to pursue Easter guard commercialization of and it's really one of the reasons why we are of proceed.
Receding with the spinoff, which does that.
Instead of sort of this organic strategy of going door to door <unk> and again, that's going fine and.
And would continue to expect will continue and accelerate we really felt good.
Given the way the.
Consumers are responding to our outreach that we.
To have multiple sales channels going so.
So the.
And so the spring as I mentioned.
And the initiating a pilot program and.
A specific metropolitan area, where we will start building our own network of nurses to perform Easter check and house them and low.
Alvin venues. So that we have we can assure and not depend on the on the.
Vagaries of the geographic distribution of the Gastroenterologists.
Sure that we have someplace to send patients for testing.
If the.
If and when they are and they are primary care physicians and acquire so thats a really big initiative.
The for Us and I will start this spring and based on the results of the pilot study.
And on those details and plan to spread that out over the next 12 to 18 months, so that will consume a lot of our effort and at this time.
And I think that's really the the key to escalate.
Escalating really sort of escalate and easier on commercialization of and ultimately recognized.
And I think revenue on an accelerated faster because.
Those multiple channel is really giving us an opportunity for them.
And for Us significantly.
And accelerated pace for that for those activities.
The clinical trials are extremely important I think of them as scan.
And I mentioned.
The completion of the.
Of the pivotal study the submission for.
Ivy day registration through of PMA and receiving of that will be critical milestones. They work for exact and they will be for us. So we are.
It's been a bit frustrating because of clinical research and always gets the backseat.
Ex the back seat when during Covid related delays, it's always the first thing they shut down but now that now that health care workers of vaccinated, we feel.
So very confident that we'll have unfettered access both of them commercial activities as well as the clinical research trials. So we should be at full pace next month and.
And complete.
Complete enrollment and the.
Our early part of 2020 to submit the PMA and hopefully secure IBD registration.
The securing of the registration has also become much more important now that the <unk>.
<unk> has been finalized by FDA.
Our ability to secure.
Your CMS coverage upon FDA approval.
Now.
Enhanced because of the because of that final rule has been.
Implemented since our last call.
So those are really the big.
That's what we're focused on and we're focused on obviously the spin off this expanded commercialization strategy of.
Using our on building our own network and.
And the preceding directly to the direct to consumer marketing as well as direct the primary care sales and marketing and then getting the clinical data and <unk>.
The size.
Building on that and completing this pivotal study of those remain the dominant things we folk.
Of course on over the next 18 months.
Perfect and then just last one for Dennis you guys have done a really good job of getting the balance sheet and a lot better place with the recent capital raises maybe Dennis if you could level set us where you guys are standing now from a cash and debt level post the January offering.
Yes sure thing.
And we're just under $30 million on a pro forma basis at using December 30 versus the benchmark and we're presently principal face value principle of the debt.
Is just around 12, and a half million dollars.
Great.
Alright, Thanks for taking my questions and congrats again on the spin off.
Thanks, a lot of great. Thanks, Frank.
Our next question comes from the line of Anthony Vendetti with Maxim Group You May proceed with your question.
Anthony.
Hey, good morning, Anthony.
Just to get started.
With the the pilot program and one major Metropolitan area that you have planned for the second quarter.
Can you talk a little bit about I don't know.
So if you wanted to disclose the metropolitan area, but.
How that's going to roll out.
What's the.
Whats the timeframe and what kind of results are you looking.
Four.
Is it a certain number of of patient that you wanted to have treated just a little more detail on that.
Sure. So let's say one of the top top 10 Metropolitan area I think the spin.
I think about the two.
One.
And the the.
The way it will rollout is that we.
We will quickly and move towards.
On establishing sort of the.
Each of check per one Easter check operators and that venue and won't but by then we will of hired or clinical specialists, and we will either use of them already low or.
Or are we kind of nurse or two and that.
The primary two to be located.
And a venue with a.
The partner physicians trained and available to do self referral or primary care referral.
Easter car and procedures as they come in for.
And so that's really the kind of logistical operational side of things at.
And at that point, we will turn on the switch and begin the direct to consumer marketing.
The size of this and Thats actually already.
Most of that.
On the marketing materials and the you know the.
The animation and all of the all of the patient focused materials actually already in place and Theyre and theyre functioning and the and social media of World will obviously be expanding those and so.
Once we have the infrastructure.
The structure to be able to send a local patient too.
<unk> Gard testing.
Inquire then we will turn on the switch and begin the the.
The direct to consumer marketing campaign, and that and that's and that of Metropolitan area.
And.
And I'm, not obviously I'm out of the position.
And just sort of give you sort of a metric as to how many patients we would expect from that from that and some bad locations.
And the goal here is to too.
To sort of hone the mechanics of it but I can tell she chose from very little.
The modest activity on just social media without even sort of formal.
Formal paid advertising.
And again people consumers and let people understand chronic heartburn and understand the disease.
And they understand the sort of the Friday message and so I would not be surprised if we get a lot of a lot of.
And inflow of of request for testing.
<unk>.
Well.
And hopefully have the infrastructure and the capacity to handle it.
And we turn that switch on.
Okay, Great and you mentioned that did you.
It will remain the largest shareholder in.
And any spin off spinoff of combination.
Do you have.
A timeframe.
And for this is the C is.
Is this.
The next three to six months of 'twenty 2021.
And then and then.
Is that so let me just answer that real quick we're starting now.
And we're not we're not waiting and we're starting because we don't the markets can be finished the obviously on and we don't want the.
The market opportunity because of the window close on us so we're starting that process.
Okay and that includes the Lucent subsidiary includes everything under under the East regarding use of check so cure nothing else goes into that is that correct well, let me, let's say of let me just make one clarification there so.
And.
The DSO guard and eastern Europe, and Eastern Guard in the search ex the licensed technologies from case Western are licensed by and this is listed as the license or for those products.
So cure is actually built on a pad and that technology pattern and that IP of catalyst, but we are we have.
And our plan and if so.
Lucid.
Sell and market is secure through and a range of between <unk> and <unk> to be determined some type of a licensing agreement with the transfer price and so forth, but because of the infrastructure will clearly be of part of the.
The sales and marketing infrastructure will be.
At least and that's.
One of the Gastroenterologists are that's where the secure will be marketed.
Okay. That's helpful and just just to pivot over to carp ex obviously, congratulations on getting that first the first successful patient.
And treated.
Just.
And in terms of as you rollout the commercial launch.
And any color on on how that's starting to rollout the resources behind that a little more about that.
So.
And it's going fine, but I've asked me emphasize some of the beginning of that were.
We're taking a deliberate approach here because of as I mentioned before this is.
The interventional procedure, it's not just the Easter check which of the very simple office based procedure and so the most important thing and these early launches of interventional and surgical devices to make sure you have committed operators to work through sort of the procedural steps and the efficiencies associated.
Associated with that before doing the broader launch and Thats what were doing and we continue to do so we have about a half of dozen.
Surgeons that are and the pipeline are being are being trained and cadavers and are beginning to schedule the test and so that process will.
We'll continue.
During the first half of this year.
Well it will probably expand.
Spanned the 210 or 12 during that period of time.
And then at the end of that once we have a sufficient number of surgeons, who can serve as proctors and trainers and general ambassadors and beyond the podium at the at the meetings then we'll turn the switch and do a broader.
And.
Commercial.
Launched at that point in time.
So modest activity from a case the point of view pace number of point of view through the through this.
Early stage of commercialization, but then we expect obviously once we once and lay the groundwork for that the dental.
The accelerated during the second half.
Okay, and then last question.
And just curious the COVID-19.
On on things like Carpe ex is that is that slowing that down and not really kind of had been yes, sorry to interrupt sorry.
And had been so getting case the schedule is getting the actual getting training and cadaver labs and software and it's been a slog.
Ill.
The the.
Things that you have to do to get those things scheduled but the nice.
Said broadly now both on the commercial front for the Isa Guard and we sort of track activities as well of <unk> and on the clinical research, we kind of see those kinds of part of that because of vaccinations. So it was a little frustrating and January when we would try to schedule visits we would get turned away because.
They were focused I'd say just come back when we when we have rigs already vaccinate and now that that's pretty much wrapped up at the end.
Most health care institutions.
We really think we will have unfettered access moving forward for all of the commercial and clinical research activities, including carpet.
Excellent all right I'll hop back into.
Thanks, So much appreciate it thanks, guys and I appreciate it.
Our next question comes from the line of Ed Woo with <unk>.
Fabian capital you May proceed with your question.
Matt and good morning.
Yes My question Mike.
My question is do you have of targeted.
Ownership interest of lucid that you plan to have going forward and.
We consider just spinning it out completely.
I'm not sure about the I'm not sure I understand your second question, but the first one is relative.
Great.
Ill speak to the.
Maximum valuation will be kind of receive four of the lucid asset and and.
And based on that we expect.
We.
And we have met to be far and the way of the largest shareholder and such a transaction and we believe we will be able to garner really good valuations given the given the current market.
So I'm not sure if youre, saying will be will we sell.
So do we do anticipate selling lucid and havent.
<unk> share and lucid.
Spec and part of your question on the answers now.
Okay, Great and then the other question is there any anticipated change with the management of lucid with this transaction.
No.
And for immediately know the.
The lucid operates extremely efficiency efficiently right now.
The second and.
<unk> has proven that in terms of its track record of getting getting to where we are over the next over the past two and a half years. So through the through the spin off will continue to manage the least it through a management services agreement with the <unk>.
<unk>.
But no there is going to be a lot of activity and there's going to be a lot.
With the resources that are kind of be required within lucid is a spin off company. So we certainly intend to expand the management team within boosted.
And.
And as we complete that spinoff, but Fortunately, we don't we can we can do that and the deliberate fashion and identify the highest quality senior management people.
Lot of too.
To bring into lucid after after the spinoff.
Great well. Thank you for answering my questions and good luck alright, thanks, a lot and I'd really appreciate it.
Ladies and gentlemen, we have reached the end of today's question and answer the question I would like to turn this call back over to the Doctor for closing remarks.
So thank you all for joining us. This morning again, we've run we've taken up the full hour, but I. Appreciate you taking the time and hope you found this to be.
Insightful and and useful and.
Turning about where patent and looser the arm and we're obviously very excited about.
And where things are going based on today's announcements and I'd also obviously like the first and for joining us before.
His insightful remarks, we look forward as always to keeping you abreast with our progress.
And our press releases these periodic conference calls.
And the other modalities and the best way to keep up with our with our news is and.
States and events is to sign up for E mail or E mail alerts on our IR.
The portion of our website and were.
And also active on Twitter, and Linkedin, and Youtube, where we regularly post useful information for for investors.
So and I also encourage you to contact Mike directly with any questions at <unk> at <unk> Dot com. So everybody have a great day. Thanks, so much.
This concludes today's conference or on a disconnect your lines at this time. Thank you.
And your participation and Joe and the rest of the day.
Thank you Robert.
[music].
And.
[music].
Sure.
[music].
And then.
And.
And.
And.
And.
And.
Okay.
And.
[music].
Yes.
[music].
Yes.