Q1 2023 PAVmed Inc Earnings Call
Speaker 2: Welcome to the TAB-Med Business Update and first quarter 2023 Financial Results Conference call.
Speaker 3: Later, we will conduct a question and answer session. As a reminder, this call is being recorded. I would now like to turn the conference over to your host, Michael Park, Vice President and Vester Relation. Mr. Park, you may begin. Thank you, Betsy, and good morning, everyone. Thank you for participating in today's first quarter, 2023 Business Update Call. The press release announcing this business update in the first quarter of 2023 financials is available on the PABMed website. Please take a moment to read the disclaimer about forward-looking statements and the press release.
Speaker 4: For a list and description of these and other important risks and uncertainties that may affect future operations, see part one, item one, a entitled, risk factors and have as most reason, annual report on form two, 10Q, filed with the SEC and subsequent updates, filed in the quarterly reports on form 10Q and any subsequent form 8K filing. Except as required by law, have met to explain any intentions or obligations to publicly update or revise any forward looking statements to reflect changes and expectations or in events, conditions or circumstances on which those expectations may be based.
Speaker 5: I would now like to turn the call over to Dr. Lee Shodak-Log, Chairman CEO , FF. Thanks, Mike. And good morning, everyone. Thank you for joining us today for today's business update call. Look forward to the conversation. So I'll start with some recent highlights. As those of you who are long-term investors know that earlier this year, we proceeded with a restructuring and strategic refocusing.
Speaker 6: and I've been focusing all of our efforts for this half of the year on our two commercial subsidiaries, Veris Health and Lucid.
Speaker 7: With VARIS Health, we've had some recent highlights, including that our remote patient monitoring platform, VARIS Cancer Care Platform, is now live. We have an expanding commercial footprint with a robust nationwide pipeline.
Speaker 8: Some confirm payments have begun under their software as a service, recurring revenue business model, and we appointed a new president of their Esquiry, Manning to Home Strategy and Span commercial horizons.
Speaker 9: A few introductory slides here for those of you who might be new to the Padmet story. Padmet is a diversified commercial studies medical technology company. We operate all three segments of medical technology and devices, diagnostics, and digital health.
Speaker 10: mentioned our corporate structure such that PadMed has two subsidiaries, the digital health subsidiary, whereas Health which is privately held, and our publicly traded diagnostics company, Lucid Diagnostic.
Speaker 11: So let me start with Varys. Varys Health is a commercial stage digital health company that's focused on enhancing personalized cancer care. There are two elements to our...
Speaker 12: They're two products that we have developed. One is a various cancer care platform and the other is an implantable monitor that's being developed and looking to commercialize.
Speaker 13: Next year, a mission is to utilize modern remote patient monitoring or RPM tools to improve care through early detection of complications, tracking of longitudinal trends and generalized risk management.
Speaker 14: The cancer care platform consists of two parts. There's a patient's smartphone app where patients can report symptoms, quality of life, communicate with providers, and create a, especially a permanent link to their provider team. That's a Mary 2A cloud-based electronic health.
Speaker 15: of the Verus box. It includes telehealth functionalities as well as well as integration with the EHR that allows the cancer care specialist to view everything on one screen as part of the care of the patient. The business model is very attractive both for us for Verus Health as well as for the customers.
Speaker 16: From the customer's point of view, either Cancer Care Center or Cancer Oncology Practice, DRPM billing, again, is well-established. There are well-established CPT codes that collectively provide for approximately $200 per month per patient revenue opportunity to the practice, and that's approximately $100 per month per patient. It also facilitates participation in value-based payment models by CMS and others, providing additional opportunity for enhancing revenue.
Speaker 17: practice revenue and there are opportunities to decrease the administrative workload as well. We believe the total addressable market opportunity based on the number of patients diagnosed with cancer every year undergo treatment for that to be approximately $2 billion.
Speaker 18: So as I mentioned, we are excited to have a new president of our health join us. Gary Manning, Gary has three decades of experience and executive leadership roles, commercializing products and global markets. His experience really spans the experience of those who have many of these.
Speaker 19: Center for Cursor Medical Places and more recently in Rarples, as well as in Digital Health. And carries the task with accelerating the commercialization of a cancer care platform which launched.
Speaker 20: earlier this year as well as advancing the implantable monitor to commercial launch and
Speaker 21: and developing a longer term commercial strategy, which includes expanded horizons such as supporting farm and biomedical research.
Speaker 22: data monetization and other other tools. So we're excited about that, the commercial.
Speaker 23: Well, footprint has expanded. We've added accounts. We have patients on the platform. And as of this month, we're starting to receive.
Speaker 24: that's the description of payments under the model.
Speaker 25: So we're excited for the future with Gary at the next line.
Speaker 26: Our very planable monitor is designed to extend the power of the platform. It's a monitor that's designed to be implemented at the time of a vascular access port placement. As you can see on the image here, the vascular access port, which is a purple device, is designed to snap together with a implantable cardiac and physiologic monitor.
Speaker 27: The monitor has continuous cardiac monitoring, measures activity, has a patient triggered of that monitor, measures temperature, respiratory rate, and has Bluetooth connectivity to the patient's smartphone.
Speaker 28: We recently completed one of several chronic animal studies which showed excellent performance across the key features and the parameters to be measured. We have active discussions with FDA, we've had multiple pre-submission meetings, and are looking to submit early in the first half of the next year.
Speaker 29: The key feature of this is that in terms of how it integrates with the reverse with the remote patient monitoring, system or the overall cancer care platform is that it assures 100% patient compliance with the billing requirements which are that a patient to submit data.
Speaker 30: The logic data for 16 days out of out of a month and this provides a hundred percent compliance with them.
Speaker 31: Next slide. So a few brief slides on Lucid. Again, I would encourage you to review the webinar for me yesterday, which has some further details. Some key highlights here on Instagram testing volume. That's really good. We continue to have good growth and testing volume.
Speaker 32: 50% increased over the fourth quarter and 245% increased annually to total of 1841 tests performed in the first quarter
We've also documented trends with regard to referral sources and operators. The referral source trends are actually stabilized to approximately two-thirds of patients reserved for Easter-guide testing for an early detection of a soft weekend.
are being referred by primary care physicians and about a third are being referred by specialists or broadly broader institutions. There has been a substantial shift in the operators.
You can see here approximately 60% of the
that patients undergoing the research check cell collection procedure are, that procedure is being performed by one of the lucid nurse practitioners either at a physical lucid test center or LPC or what's really a burgeoning aspect of this business which is at the satellite lucid test centers where a lucid nurse practitioner.
has a scheduled day at a commission's office and performs a procedure.
So the shift from the shift to increasing proportion now over half of the total test volume being performed by by Lucid nurse practitioners and physicians officers is a substantial increase in weight.
Still about 40% of patients are under the procedure by physicians, by staff at a physician practice.
this is great
We announced earlier this year our very first Check Your Fruit Tube pre-cancer detection event. These are high-volume testing events which are scheduled and all of them to date have been with firefighters. The first one from the pictures there were at the San Antonio Firefighter Department where approximately 400 patients were underwent...
bus pipeline including nine events that are already scheduled.
So with that, I'll hand this over to Dennis for a date on our financials.
EXPITION
But some financial results for the first quarter reported in our press release. It was published last night. On the next three slides, one of the size H.T. highlights from the quarter. I'd encourage you to consider those remarks in the context of the full disclosure's covered in our quarter of the report on form 10-2 of the S.S.C. Monday afternoon and is available on the PatNet website. So on slide 17,
You'll see the cash of 49.3 million at the end of the quarter. It reflects a 9.5 million sequential increase from the year end balance of 39.7 million.
Then their payables decreased use of cash 1.5 million sequentially.
The convertible note had a net increase of approximately 10.6 million sequentially reflecting the addition of a convertible debt inside lucid diagnostics.
Other moral term liabilities are capitalized leases related to our lab and office spaces.
The shares outstanding, including unvested restricted stock awards as of today. These 104.5 million shares.
The gap outstanding shares of 100.5 million are reflected on the slide as well as on the face of our balance sheet in the T2.
In addition to the Lucid convertible debt in the first quarter, Lucid Board authorized a $20 million preferred offering. We completed the initial closing of the Lucid preferred in the amount of 13.6 million.
Both structures keep Lucid stock out of the market for a long period of time, likely two years in the case of the preferred.
which allows Lucid to complete its work on clinical utility studies and improving reimbursement.
Our consolidated runway is elongated into 2024. When combining these financings with the cash at the beginning of the quarter, results in pro forma cash of 63.3 million on January 1st.
With the ending quarter cash balance of 49.2 million, the pro form of burn rate for the first quarter was 14.1 million, which is in line with the expected burn rate for the year, which we previously indicated would be between 53 and 55 million for the year.
This is particularly achievable since it does not reflect the full effect of the cuts we put in place in the middle of the first quarter.
Nor does it reflect about 1.2 million in one time costs incurred for determining, for terminating loose its relationship with research DX, Severance costs, and the R&D wrap-up costs for Paul's projects.
Furthermore, we have approximately $10 million remaining over $50 million securities purchase agreement with a convertible debt lender that will serve to elongate our runway further.
approximately $10 million or $50 million securities purchase agreement with a convertible debt lender that will serve to elongate our runaway further slide 18
compares this year's first quarter to last year's first quarter on certain key items. Trust you'll review the information about this T&L and my comments in light of the cautionary disclosure at the bottom of the slide about supplemental information, particularly non-gap information.
Revenue for the first quarter reflects lucid, actual cash collections for the quarter. The prior year reflects lucid's fixed monthly fee received from the third party lab that we used before setting up our own lab at the end of last year's first quarter.
The lucid revenue recognition policy, the key determinant is the probability of collection. For the vast majority of lucid's patient out of network claim submission means revenue recognition occurs when the claim is actually collected versus when the patient report these invoices submitted for reimbursement.
As you'll see in R102, this is called variable consideration, the jargon of gaps ASC 606 revenue recognition guidelines, and presently there is insufficient predictive data to recognize revenue and win-in voices.
As you'll see in our 10-2, this is called variable consideration, the jargon of gaps ASC 606 revenue recognition guidelines, and presently there is insufficient predictive data to recognize revenue and win invoices. As per Verus Revenue.
We just started doing our first customer in March. We have not recognized this revenue for March activities as this first customer site, where this first customer site, as they are helping us customize the system, optimize client and company ROI, which will benefit us as we are onboarding additional clients.
We expect that once we are through this initial phase, unlike Lucid's revenue, we expect the recognized revenue on an as invoiced basis subject to normal gap moves. We expect that once we are through this initial phase, we expect the recognized revenue on an as invoiced basis subject to normal gap moves.
Pub comments on Gap and non-Gap, op-ex and net loss.
Our first quarter gap op-X and gap loss is lower sequentially by $3.8 million in $2.5 million for $2.5 million respectively.
A first quarter non-gap op-x.
and non-GAP loss are also lower sequentially by 2.5 million.
and 4.1 man was speak I'm
Our first quarter-nine got lost for share, it's ten cents.
and decrease from 15 cents from the fourth quarter.
Slide 19.
is a graphic illustration of our operating expenses as presented in detail in our press rooms.
First quarter, non-GAP, OPX, decreased significantly by $2.5 million sequentially.
The sequential decrease was led approximately by 2.2 million decrease in R&D and a 1.2 million dollar decrease in sales and marketing. These decreases were offset by an increase in GNA driven approximately 900,000 dollars terminated.
Lucids past relationship with research DX.
which will save us approximately $2.7 million in future expenses.
The cost of revenue primarily consists of lab supplies and fixed lab facility costs.
Consistent with recent SEC filings, it is presented in our 10Q as operating expense.
also consistent with practices of other diagnostic companies.
So with that, let's open it up for questions.
We will now begin the question and answer session.
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The first question comes from Roth Osborne with Kendra Fitzgerald. Please go ahead. Board of Roths, please. Hi, good morning. Congrats on the progress. So maybe I'll focus on Barrett. Can you discuss the types of new accounts you have added during the quarter and how many patients have any of them been onboarded today?
Yeah, we have right now total of three towns and a couple that are close to each other, like one that's close to today. And right now they're sort of medium sized practices, often with multiple locations. So we had the first practices at three different locations.
We do have a process with larger strategic accounts and larger bigger cancer care centers. Those are, as you might expect, longer lead times in terms of securing those accounts, but we're getting traction in those conversations as well. In terms of the number of patients, we're really not quite ready to start reporting on patient numbers, we certainly won't.
in the coming quarters. But we have dozens of patients on board and we've had sort of second ways of patients in our earlier accounts. Generally when we open account, there's a, as you might expect.
they'll well pollinate their practice and identify higher risk patients who they think will benefit. And as Dennis mentioned, you know, this is an important clinical tool, but it's also an important practice tool. So figuring out how to properly integrate it into the RIT system, figuring out the ROI models, figuring out their billing and tracking of time and so forth.
is a collaborative process between our team and theirs and so far it's going really well. Okay, great. And then maybe could you just explain again how the revenue recognition process works? I realize it's a sad small little bit, but maybe just from the time a patient is onboarded until Pad Med should recognize revenue.
Yeah, so on for various, when a patient is on the platform.
We will build the client the appropriate fee on the contract and amount. Roughly we measure that around $80 per patient. And we build that each month that patients on the platform. The client in turn will build the patient's insurance company, which there are existing codes. We don't want to flight the reimbursement.
Do
the patient or the client is English. So it's on an as invoiced basis for virus, unlike Lucid, where we're presently in this reimbursement evolution where we have to recognize revenue on a cash collection basis.
Okay, great. Thank you for taking my questions. Thanks, Russ. The next question comes from Anthony Vanetti with Max and Group. Please go ahead. Anthony, good morning. I'm Anthony. Good morning, Dennis. Good morning, Lee Shon. How are you?
Great, doing great. Excellent. So just following up on Varis, can you talk about what the
Pipeline looks like at this point, any color on that, and then on Lucid, it looks like...
significantly more tests are being performed outside of elucid test centers. Can you comment on that and would that cause you to pause?
setting up new centers and focusing more on just driving patients to...
to wherever the physician can perform the procedure. Thanks. Thanks Anthony. So let's start with Varus. The pipeline is robust, you know, as with any commercial pipeline, some are like, you know, in the midst of contractual and the negotiation, some of their early stages, the typical process we're bringing on a client, you know, a-a-a-a-a.
medium to small practice is one of engagement, demos, of...
contractual negotiations on the subscription fee, and then ultimately of planning and executing on the integration process for getting the platform onto their IT system. So, but there are concrete numbers, but it's in the dozens range in terms of the total number of targets and we expect to start seeing a nice, nice, relating.
a number of those. But as I said, there's a wide range of practice sizes. There are small practices with a couple of oncologists and all the way up to obviously the large, the major, major large cancer centers across the country. We're targeting all of them. And the process for securing those accounts is going to be different and the timelines are going to be different.
Let me move on to the Lucid Test Center question, because that's a really important one. I just, again, I said this before, but I'll repeat it for emphasis that are approached with regard to how we're expanding access for words.
To the test, patient access to the test is a multi-pronged one. It's an all-the-above. The testing events, the high volume testing events are supplementing. And so far we're excited about the opportunity to bring in patients and large chunks through these testing events, but we're continuing full steam and not tacking or shifting it anyway from...
The traditional model of our reps calling on primary care physicians,
He specifically asked about the physical test centers versus the physician practice orientation. That is shifting and to, as I showed in the slide, to an increasing number of the tests that our nurse practitioners are performing, the cell collection procedures are being performed.
at these, what we're referring, a satellite test centers in the physician's offices. And as I've said before, that's a very attractive aspect of this and that it unmovers them from the physical location and increases the geographic span and the efficiency of us being able to perform the test and it also improves our ability to keep the test front and mind with the primary care physicians. We've had really good.
good success with adoption. And so the large focus of our effort is reminding the physicians to think about the test as they're seeing patients. So having the nurse practitioner from Lucid be coming next Thursday is a good idea for that. We will continue to have to maintain the test centers.
In a sense, the economics of the test centers, which we've described before in some detail, are actually somewhat even more efficient right now because the cost associated with the nurse practitioner that calls that physical location their home, their lucid home, is now much greater because they can go beyond the physical location. I would encourage you and others to think about the expansion.
Not as we have in the past in terms of how many test centers, how many cities and so forth. We have kept that fixed for this year consistent with the number of sales reps as part of the plan that we adopted earlier this year. But as you can see, we continue to grow testily because of the number of sales reps that we have in the past.
Some of the creative angles that we've taken with the satellite test centers, as well as the high volume test to commence. Okay, great, thanks. That's very helpful. I'll hop back in the queue.
Thanks Anthony. As a reminder, if you would like to ask a question, please press star then 1 to enter the question queue.
Morning, Ed. Yeah, thank you. Yeah, thank you for taking my question. My question is on, once you get an account signed up for Barris, how quickly can you get them from sending a contract to getting everything up and running? I know it's still pretty early, but one thing is progressing. How quickly do you think it could be? Yeah, it's, as you said, it's early. And so we're progressing and we're learning jointly with the practices. And of course, it depends a bit on the complexity of the practice and the size of the practice. One thing that we've learned in this early experience with for several clients is that we can actually get them up and running where that patients are on the system and generating data.
even as we're working on the integration with their electronic health record, which as you might imagine has some additional complexities to do so. So we are, that time is shortening. I would think over time with more experience that we could have that down from contract to first patient on the system down to a few weeks.
you guys are focusing on first.
Yeah, we're not like in the Lucid case where we did consciously focus on areas in the West. Here we're not. We have our commercial team.
targeting the entire country. It has turned out that several of the first accounts happened to be in the Northeast, in New Jersey and Pennsylvania, but we have acted, we're active in Florida and the southeast as well as in the west. So we're not targeting any particular geography right now. We're looking at any opportunity across the country.
Great, well thanks for answering my question and I wish you guys good luck. Thank you. Yeah, thanks a lot Adam. Great.
This concludes our question and answer session. I would like to end the conference back over to Dr. Ashwald, for any closing remarks.
Thank you, operator. And hey, thank you all for taking the time this morning to have a joining us on this call. I would encourage you for further information to go to our website, follow us on social media. And of course, feel free to contact Mike Parks with any questions his email addresses, m-e-p-at-pabment.com.
Thank you for attending today's presentation. You may now disconnect.
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