Q4 2023 PAVmed Inc Earnings Call
Operator: Good morning, and welcome to PAVmed's fourth quarter and full year 2023 business update conference call. At this time, all lines are in listen-only mode.
Good morning, and welcome to <unk> fourth quarter, and full year 2023 bread business update conference call.
At this time all lines are in listen only mode.
Operator: 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. This call is being recorded on Wednesday, March 27, 2024. I would now like to turn the conference over to Dennis McGrath, PAVmed President and Chief Financial Officer. Please go ahead, Dennis.
Following the presentation, we will conduct a question and answer session.
At any time during this call you require immediate assistance. Please press star zero for the operator.
This call is being recorded on Wednesday March 27, 2024, I would now like to turn the conference over to Dennis Mcgrath, who I've met President and Chief Financial Officer. Please go ahead Dennis.
Dennis M. McGrath: Thank you, Operator. Good morning, everyone, and thank you for participating in today's third quarter to fourth quarter and 2023 business update call. The press release announcing our business update for the company and financial results for the fourth quarter and the full year ended December 31st, 2023 is available on the PAVMed website. Please take a moment to read the disclaimer about this forward-looking state. The business update, press release, and this conference call both include forward-looking statements, and these forward-looking statements are subject to known and unknown risks and uncertainties that may cause actual results to differ materially from those stated. Factors that could cause actual results to differ are described in the disclaimer and in our filings with the U.S. Securities and Exchange Commission for a list and a description of these and other important risk factors or risks and uncertainties that may affect future operations.
Dennis M. McGrath: Thank you operator, good morning, everyone and thank you for participating in today's third quarter to fourth quarter.
Speaker Change: 2023 business update call.
Speaker Change: A press release announcing our business update for the company and financial results for the fourth quarter and full year.
Speaker Change: Just ended December 31, 2023 is available on the website.
Speaker Change: Please take a moment to read the disclaimer about forward looking statements.
Speaker Change: The business update press release and this conference call. Both include forward looking statements and these forward looking statements are subject to known and unknown risks and uncertainties that may cause actual results to differ materially from statements made.
Speaker Change: Factors that could cause actual results to differ are described in the disclaimer and in our filings with the U S Securities and Exchange Commission for.
Speaker Change: For a list and a description of these and other important risk factors or risks and uncertainties that may affect future operations see part one item one a entitled risk factors in <unk>. Most recent annual report on Form 10-K filed with the SEC.
Dennis M. McGrath: See Part 1, Item 1A entitled Risk Factors in PAVmed's most recent annual report on Form 10-K filed with the SEC and subsequent updates filed in quarterly reports on Form 10-Q and any subsequent Form 8-K files, except as required by law. PAVmed disclaims any intention or obligation to publicly update or revise any forward-looking statements to reflect changes in expectations or in the 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 study. Now, I would like to turn it over to Dr. Lishan Aklog, PAVmed Chairman and CEO. Lishan.
Speaker Change: Subsequent updates filed in quarterly reports on Form 10-Q, and any subsequent form 8-K filings.
Speaker Change: Except as required by law.
Speaker Change: <unk> disclaims any intention or obligation 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.
Speaker Change: <unk>.
Alwyn Burton: I would like to turn it over to Dr. Alicia backlog tablet chairman and CEO Alicia.
Lishan Aklog: Thank you, Dennis, and good afternoon, everyone. Thank you for joining our quarterly update call. Before proceeding, a couple of things. As I did yesterday, I'd like to apologize for my scratchy voice; I'm a little bit under the weather.
Alicia: Thank you Dennis and good afternoon, everyone. Thank you for joining our quarterly update call.
Alicia: Before proceeding to a couple of things I was yesterday I'd like to apologize.
Alicia: For my Scratchy voice, a little bit under the weather I'd also like to thank our long term shareholders for your ongoing support and commitment we've been together through some challenging times and as we will discuss in greater depth. We continue to leave no stone unturned to enhance long term shareholder value.
Lishan Aklog: I'd also like to thank our long-term shareholders for your ongoing support and commitment. We've been together through some challenging times, and as we'll discuss in greater depth, we continue to leave no stone unturned to enhance our long-term shareholders' returns. Lucid clearly remains PAVmed's strongest and most promising asset, and we're very pleased by its commercial progress and its ability to finance its operations despite challenging market conditions. We're looking to replicate the model more broadly and have raised PAVmed's capital, revised PAVmed's overall strategy to drive shareholder value through independently financed subsidiaries, which, like Lucid, can leverage PAVmed's shared resources. Consistent with this approach, we We've launched our PMX incubator in partnership with Hatcher Medical, and we've aggressively sought groundbreaking independently-financeable technologies with large market opportunities. So let's just start with some recent highlights, starting with Lucid Diagnostics. A reminder that yesterday, we had a full presentation regarding Lucid, so I'd encourage everyone to view that webinar or the transcript of that webinar to get further details about Lucid. I'll just give some highlights.
Alicia: Melissa clearly remains strongest and most promising assets and we're very pleased by its commercial progress.
Alicia: And this is the ability to finance its operations despite challenging market conditions, we're looking to replicate the model more broadly and have raised <unk> revised patent adds or overall strategy to drive shareholder value through independently financed subsidiaries, which like lucid can leverage five minutes shared infrastructure.
Alicia: Consistent with this approach we've updated versus commercial strategy. Accordingly, we've launched RPX incubator in partnership with types of medical and we've aggressively sought groundbreaking independently financeable technologies with large market opportunities agnostic of center.
Alicia: So.
Alicia: So to start with some recent highlights starting with lucid diagnostics.
Alicia: Hinder that yesterday, we had a full presentation regarding what you said so I would encourage everyone to do that webinar. The tranches of that webinar to get further details or at least if I will just give some highlights.
Lishan Aklog: Quarterly revenue rose nicely at 33% from the prior quarter, and these health fair high-volume CYFT events continue to gain traction. Our out-of-network reimbursement is improving with stable pricing, and we've expanded our clinical validity and clinical utility data to support in-network coverage, including Medicare. As I mentioned, I'll talk about it further, in more depth, a bit, for VAERS Health, we've shifted our strategy to target large academic and regional cancer centers, and our first such engagement is expected in the very near future. We had a final and successful FDA pre-submission meeting for the implantable monitor, and we feel we have a clear path to FDA clearance pending, as we announced last week. PAV launched its wholly owned incubator, PMX, in partnership with Hatch Medical to complete the development and commercialization of its existing MedTech portfolio technology, starting with Port IM. Next slide So, a bit more about our updated strategy or revised strategy. As I mentioned, given the success of Lucid and Lucid's ability to run itself independently.
Alicia: Robert with quarterly revenue rose nicely at 33% from the prior quarter.
Alicia: In the health care high volume <unk> events continue to gain traction our out of network reimbursement is improving with stable pricing and we expanded our clinical what are the clinical utility data to support and network coverage, including Medicare.
Alicia: As I mentioned I'll talk about it in further in more depth.
Alicia: For various health.
Alicia: Shifted our strategy, that's hard to target large academic and regional cancer centers and our first such engage what is expected in the very near term.
Alicia: We had a final and successful FDA pre submission meeting for the implantable monitor.
Alicia: And we feel we have a clear path to FDA clearance pending independent financing as.
Alicia: As we announced last week.
Alicia: We launched a pilot launch that's wholly owned incubator Pms and partnership with <unk> medical to complete development and commercialization of its existing med Tech portfolio technology, starting with Port Io excellent.
So a bit more about our updated strategy a revised strategy as I mentioned.
Alicia: Given.
Alicia: The successful lucid elusive ability to independently financed itself.
Lishan Aklog: We've decided to move forward to focus on driving shareholder value through our holdings in independently financed subsidiaries managed through our PAVmed shared services structure, following Lucy's successful path of seeking and will seek financing opportunities directly to VAERS and our subsidiaries based on the PAVMed, the PMX incubator technologies as well as future subsidiaries. As I mentioned, Veris is shifting to large academic centers in order to enhance its financiability. The PMX launch has proceeded, and the initial effort will be to independently finance port IOs and subsidiaries. We're also actively seeking new, groundbreaking, independently-financeable technologies that have several... targets that we're working on. These have large market opportunities that we've been agnostic to center, and we're looking to leverage PAVmed's existing efforts.
Alicia: Decided to moving forward to focus on driving shareholder value through our holdings and independently finance subsidiaries managed through our <unk> shared services structure.
Following looser successful path of seeking of and we will seek.
Alicia: Domestic opportunities directly to <unk> and our subsidiaries based on the patent on the Tms incubator technologies as well as future subsidiaries.
Alicia: As I mentioned various is shifting to large academic centers in order to drive.
Alicia: To enhance its I mean its ability.
Alicia: <unk> launch.
Alicia: Preceded the initial effort will be to independently financed part I was a subsidiary.
Alicia: We're also actively seeking new groundbreaking independent conventional technologies around several.
Alicia: Targets that we're working on at least to a large market opportunities that were keeping agnostic center and we're looking to leverage patent its existing infrastructure.
Lishan Aklog: So a summary of the corporate structure is as follows, with PAVmed providing shared services, we have Lucid Diagnostics, we have Veris Health as a digital health platform, we have our MedTech products within our privately held incubator, PMX, and we're looking again to add additional assets consistent with the structure, each of them independently financeable. Just a couple of brief slides on LUCID.
Alicia: So a summary of the corporate structure follows with patented providing shared services we have.
Alicia: Lucid diagnostics, we have various health is a digital health platform, we have a med tech products within our private our.
Alicia: Our private label incubator Pemex, and we're looking again to add additional assets consistent with the structure each of them independently from Mexico.
Alicia: There's a couple of brief slides on lucid again I would recommend reviewing the further details in a webinar.
Lishan Aklog: Again, I would recommend reviewing the further details in our webinar. As I mentioned on the next slide, we've stabilized our test volume, expected to remain in the 23 to 2,500 range pending improvement and reimbursement, as well as driving revenue through our early efforts at direct contracting. And you can see revenue has grown nicely since we took over and updated our revenue cycle management. This is all out of network reimbursement.
Alicia: As I mentioned in the next slide.
Alicia: <unk>.
Alicia: We have stabilized our test volume expected to remain in the 23 to 2500 range pending.
Improvements in reimbursement as well as <unk>.
Alicia: Driving revenue through our early efforts are direct contracting and you can see revenue has grown nicely since we took over and updated in our revenue cycle management. This is all an out of network.
Alicia: Reimbursement.
Alicia: Alright.
Lishan Aklog: Again, just a couple of highlights on LUCID. On the commercial execution side, as I mentioned, we're making great progress with our CYFT health fair testing events and are fully booked through July. We're increasing our activity in strategic accounts and now have over a dozen. These are large academic medical centers and other regional centers.
Couple of highlights on the on lucid the commercial execution side as I mentioned.
Alicia: We're making great progress with our <unk> T hub for testing events are fully booked through July.
Alicia: We're increasing our activity in strategic accounts and now have over a dozen of these are large academic medical centers and other.
Alicia: Regional centers and on the <unk>.
Lishan Aklog: And on the revenue cycle management side, we're getting about approximately 50 percent of our claims are now being allowed by commercial payers, and the payment amount has stabilized out of network at about $1,800. So just shy, a bit shy of the medical.
Alicia: Revenue cycle management side, we're getting about approximately 50% of our claims are now being allowed by commercial payers and the payment amount and stabilized our out of network and about $1800. So just shy a bit shy of the Medicare price.
Lishan Aklog: Some of the key strategic accomplishments. We strengthened Lucid and strengthened its balance sheet by raising $18.1 million in a preferred stock financing. I'll note, again, to put it in the broader context of Lucid's financeability, we've been gratified that Lucid has been able to raise its own capital, and this financing puts that number well over $100 million, including the IP. The clinical data are now well positioned to support broad medical policy coverage for e-cigarettes. They are positioning us to engage with the multi-X group that works on local coverage determinations on behalf of Medicare. We're looking for that re-engagement to happen quite soon upon publication and peer-reviewed publication of one of the CV studies. We've just started in the last month or so to hold meetings with major commercial payers using our data to formally request positive medical policy determinations and look forward to the outcomes. As I mentioned, we're really bullish on this direct contracting program with ESAGuard offered as a covered benefit and have expanded our team pursuing these, and we have a robust pipeline of employers, self-insured entities, working with brokers, and third-party administrators Next slide. So, a bit of an overview of Veris.
Alicia: Some of the key strategic accomplishments, we strengthened our lucid strengthened its balance sheet by.
Alicia: By raising $18 $1 million of.
Alicia: Preferred stock financing I'll note again to put it in the broader context of lucid finance ability we've been.
Alicia: Gratified that at least it has been eight those raise its own capital in this financing puts us.
Alicia: That number well over $100 million, including the IPO.
Alicia: The clinical validity and utility data now are well positioned to support a broad medical policy coverage for East guard their positioning us to engage with the <unk> group then.
Alicia: That works on local coverage determinations on behalf of Medicare, We're looking for that engagement to happen quite soon upon publication of peer reviewed publication of one of the CV.
Alicia: Studies.
Alicia: We've just started in the last month or so to hold meetings with major commercial payers using are using this data to formally request pilot positive medical policy determinations and look forward to the outcomes of assets as I mentioned, we're really bullish on this direct contracting program with Easter Greg offered as a covered benefit and have expanded our team.
Pursuing these and we have a robust pipeline of.
Alicia: Employers self insured entities working with brokers and third party administrators to offer Keith regarding this factory.
Alicia: Right.
Alicia: Okay.
Alicia: So a bit of an overview on various next slide.
Lishan Aklog: Next slide. Veris Health is a commercial-stage digital health company that seeks to enhance personalized cancer care. It has two components.
Alicia: The various health as a commercial stage digital health companies.
Alicia: Seeks to enhance personalized cancer care has two components the various cancer care platform, which has a smartphone app that the patient interact sweat and enters.
Lishan Aklog: The Veris Cancer Care Platform, which has a smartphone app that the patient interacts with and enters patient-reported outcome information, along with a platform that physicians and other caretakers use to track physiologic parameters that are currently collected using Bluetooth-connected external devices. And the long-term plan is to market an implantable monitor that works with this platform that would be inserted at the time of the implantation of a vascular access port for chemotherapy or immunotherapy. And the goal is to utilize modern remote patient monitoring tools to improve care through early detection of complications, longitudinal trends, and risk management. Next slide.
Alicia: Patient reported outcome information along with a.
Alicia: Platform.
Alicia: <unk> and other caretakers use to track physiologic parameters that are collected currently using Bluetooth connected external devices and the long term plan is to market.
Alicia: Implantable monitor that works with this platform that would be inserted at the time at the time of the implantation of a.
Alicia: Vascular access port for chemotherapy or immunotherapy and the goal is to utilize modern.
Alicia: Remote patient monitoring tools to improve care through early textile complications longitudinal trends and risk management.
Alicia: Right.
Lishan Aklog: So a bit about our revised commercial strategy. Again, the goal here is to... take Ferris to the point where it can raise its own independent capital. We've had a strong interest in that regard, and we felt that the commercial strategy that targeted large, prestigious academic and regional cancer centers was the best path to get there. These tend to be centers that have large staffs, a large number of oncologists, and a large number of patients on infusion therapy, thousands and thousands of such patients. These tend to be concentrated in metropolitan areas.
Alicia: So a bit about our revised commercial strategy.
Alicia: Again the goal here is to.
Speaker Change: That's fair us to the point, where it can raise its own.
Speaker Change: So on independent capital we've had.
Speaker Change: Interest in that regard and we felt that the commercial strategy that targeted large prestigious academic and regional cancer centers, what's the best best path to get there and these tend to be centers that have large SaaS large number of oncologist and a large number of patients or infusion therapy, thousands and thousands.
Speaker Change: Such patients these tend to be concentrated in metropolitan areas.
Lishan Aklog: They are typically NCI-designated comprehensive cancer centers, and actually, many of them have venture arms, and in our conversations with them, we've had interest in the centers investing directly into Vera. So among these centers, we have a robust pipeline, we have over a dozen targets with multiple active discussions, and, as I mentioned at the beginning, we have one engagement that is in its very late stages, and we expect it to close in the near term. Our approach with these is very different than with the smaller ones, as we initially approached the smaller oncology practices, and these are more comprehensive engagements. So they start with pilot programs, and they involve long-term commercial partnerships as well as other strategic collaborations, so research and development activities, shared collaborations in this regard that include developing care pathways, digital biomarkers, and other innovations on our platform. Next slide.
Speaker Change: Our.
Speaker Change: NCI designated comprehensive cancer centers, and actually many of them have venture arms and its in our conversations with them. We've we've had interest in either the centers investing directly into <unk>, that's something we're pursuing.
Speaker Change: So among these centers, we have a robust pipeline we have over a dozen targets with multiple active discussions and as as I mentioned at the beginning we have one engagement.
Speaker Change: It's very late stages and we expect.
Speaker Change: It is a consummate in the near term.
Speaker Change: Approach with games is very different than with the smaller.
Speaker Change: Initially approached with smaller.
Speaker Change: Apology practices.
Speaker Change: And these are more comprehensive engagements so they start with pilot programs and they involve long term commercial partnerships as well as other strategic collaborations that research and development.
Speaker Change: Activities share collaborations in this regard that include developing care pathways.
Speaker Change: Digital biomarkers of other innovations on our platform.
Speaker Change: Next slide.
Speaker Change: Yeah.
Lishan Aklog: So the VARIS implantable monitor is an important future part of this endeavor, and we think it will ultimately play a central role in advancing this technology. Among other things, it assures 100% compliance with patient compliance to fulfill the requirements necessary for remote patient monitoring billing. Again, it's designed to be implanted at the time of a vascular access port and provides many of the necessary physiologic parameters, of all the physiologic parameters you can see listed there, continuously without the need for external devices. This device has gone through multiple, we've had multiple engagements with the FDA, we held our final and ultimately successful FDA pre-submission meeting a few weeks ago, and now we believe we have a clear path to FDA clearance and commercial launch, and we will push forward on that once Vera secures independent financing, which we hope to accomplish. Thanks. And the final area that we announced recently is our new incubator, PMX.
Speaker Change: So the various implantable monitor is an important feature of part of this endeavor and we think ultimately will play a central role in advancing this technology.
Speaker Change: Among other things that assure us 100% compliance.
Speaker Change: With patient compliance.
Speaker Change: Fulfill the requirements necessary for remote patient monitoring going again is designed to be implanted at the time of a vascular access port and provides.
Speaker Change: Many of the necessary physiologic parameters, rather than physiologic parameters you can see listed there.
Speaker Change: Our fleet without the need for external hires.
Speaker Change: Hmm.
Speaker Change: This device has gone through multiple we've had multiple engagements with the FDA, we held our final and ultimately successful FDA pre submission meeting a few weeks ago.
Speaker Change: And that we believe we have a clear path to FDA clearance and commercial launch and we will push forward on that once we are securing <unk> independent financing, which we hope to accomplish there.
Speaker Change: Thanks.
Speaker Change: And the final area.
Speaker Change: We announced recently is our new incubator.
Lishan Aklog: Next slide. So we launched PMX, as we announced last week, to complete development and commercialization of products with existing portfolio technologies, which many long-term PAVmed shareholders will remember. The Port IEO implantable intraosseous vascular access device; E-Secure esophageal ablation device, which has been licensed to Lucid for commercialization once completed; and CARPEX minimally invasive device for carpal tunnel syndrome.
Speaker Change: Next slide.
Speaker Change: So we launched <unk> as we announced last week the.
Speaker Change: <unk> development and commercialization of products.
Speaker Change: Listing portfolio technologies, which many of our long term type of pattern that shareholders will remember.
Speaker Change: <unk> implantable interosseous vascular access devices.
Speaker Change: <unk>, John ablation device, which has been licensed out lucid for commercialization once completed the <unk> minimally invasive device for carpet.
Speaker Change: A couple of tunnel syndrome, each of these technologies have advanced quite far.
Speaker Change: Excuse me.
Lishan Aklog: Each of these technologies had advanced quite far. I had to advance quite far as well, with the Carpex device having been cleared and was undergoing second generation product development. These had been put on the back burner at the time of a restructuring about a year ago, and we're very excited to have launched them again in the context of this incubator through a joint venture with Hatch Medical, a very experienced group of medtech veterans who have a long history of advancing medtech technologies as well as brokering partnerships, and Strategic Acquisition. So we're really looking forward to that.
Speaker Change: It's quite far with <unk>.
Speaker Change: <unk> device, having been cleared and was undergoing a second direct second generation product development.
Speaker Change: These had been put on the backburner.
Speaker Change: At the time.
Speaker Change: Our restructuring about a year ago, and we're very excited to have.
Speaker Change: March these again in the context of the incubator.
Speaker Change: Joint venture with <unk> medical very experienced group of Med Tech veterans, who have long history of advancing that tech technologies as well as brokering partnerships.
Speaker Change: And strategic acquisitions, so we're really looking forward to that.
Speaker Change: The structure is that we will seek to independently financed a separate subsidiary of incubator to develop and commercialize each technology and our first target than we were just getting started on.
Lishan Aklog: The structure is that we will seek to independently finance a separate subsidiary, the incubator, to develop and commercialize each technology. And our first target, and we're just getting started on seeking financing for this, is Port IO. It's the first such device, the first implantable intraostate vascular access device. It offers solutions for patients with poor veins or the need to preserve veins for dialysis. It eliminates the need for regular maintenance with flushes and is resistant to occlusion and infections compared to traditional access.
Speaker Change: Seeking financing tore this is part of our year is.
Speaker Change: It's the first such device the first implantable <unk> vascular access device and offer solutions for patients with poor veins or the need to preferred.
Speaker Change: As there are veins for dialysis and eliminates the need for regular maintenance with flushes and is resistant to occlusion of infections compared to traditional access devices.
Speaker Change: Tomato market opportunity and not included in the dialysis population is about $500 million.
Speaker Change: We completed our first in human study in Colombia in 2022 and that studying.
Speaker Change: <unk> patients demonstrated excellent device function operated as designed and there were no complications in any of those patients using this data.
Dennis M. McGrath: The estimated market opportunity, not including the dialysis population, is about $500 million. We completed a first in human study in Columbia in 2022, and nine patients demonstrated excellent device function, operated just as designed, and there were no complications in any of those. Using this data, we've, We hope to add to the extensive engagement we've had already with the FDA, and we believe we now have a clear path to a US IDE or Investigational Device Exemption clinical study that will be necessary to get a de novo regulatory clearance. So, we look forward to getting this financed and moving forward to fulfill its commercial potential and then, in series or in parallel, pursue similar pathways for eSecur And with that, I'll pass things over to Dennis to talk about our finances. Thanks Lishan.
Speaker Change:
Speaker Change: We hope to add to the extensive engagement we've had already with the FDA and we believe we now have a clear path to a U S E E or investigational device exemption clinical study that will be necessary to get I didn't have a regulatory clearance. So looking forward to getting this financed and.
Speaker Change: We've referred to fulfill its commercial potential and then.
Speaker Change: Series or parallel pursue similar pathways for a secure and contacts and with that I'll pass things over to Dennis to talk about an effect on our financial update.
Dennis M. McGrath: Thanks Lee Shaun.
Dennis M. McGrath: Financial results for the fourth quarter and year were reported in our press release that was published last night on the next three slides I'll emphasize a few key highlights from the quarter, but I encourage you to consider those remarks in the context of the full disclosures.
Dennis M. McGrath: And our annual report on Form 10-K was filed with the SEC Monday afternoon.
Dennis M. McGrath: Is available on <unk> website.
Dennis M. McGrath: Balance sheets slide 16 here.
Dennis M. McGrath: Our financial results for the fourth quarter of the year were reported in our press release that was published last night. In the next three slides, I'll emphasize a few key highlights from the quarter, but I encourage you to consider those remarks in the context of the full disclosures covered in our annual report on Form 10-K, which was filed with the SEC on Monday afternoon and is available on the PATMED website.
Dennis M. McGrath: Cash of $19 6 million reflects sequential burn of 11 8 million cutoff.
Dennis M. McGrath: But our quarterly burn rate by 31% since the beginning of the year of 2023.
Dennis M. McGrath: These improvements are related to the cost control initiatives, we put in place at the beginning of the year with continued improvement with each successive quarter.
Dennis M. McGrath: [inaudible] Slide 16 here shows cash of $19.6 million, which reflects sequential burn of $11.8 million, cut our quarterly burn rate by 31% since the beginning of the year 2023. These improvements are related to the cost control initiatives we put in place at the beginning of the year with continued improvement with each successive quarter. Obviously, the cash balance does not reflect the $18.1 million in additional LUCID funding just two weeks ago. We disclosed in the 10-K that our ability to fund operations beyond one year from today is largely dependent upon how revenues ramp over the next five quarters, which is highly dependent on how the reimbursement landscape for both government and private health insurers, as well as successful efforts for direct contracting with self-insured employers, shapes increases in payment realization of submitted claims and The change in other assets is largely related to the normal amortization of certain intangible assets.
Dennis M. McGrath: Do you see the cash balance does not reflect the $18 1 million in additional lucid funding just two weeks ago.
Dennis M. McGrath: We disclosed in the 10-K that our ability to fund operations beyond one year from today is largely dependent upon how revenues ramp over the next five quarters, which is highly dependent on how the reimbursement landscape for both government and private health insurance as well as successful efforts for direct contracting with self insured employers.
Dennis M. McGrath: Dips increases in payment realization of submitted claims and or our corporate finance activities.
Dennis M. McGrath: The change in other assets is largely related to the normal amortization of certain intangibles prepaid insurance as an example, the application of advanced vendor deposits to current period incurred expenses.
Dennis M. McGrath: With regard to the convertible note the balance reflects a $37 $7 million in face value principal plus <unk>.
Dennis M. McGrath: $6 5 million in fair value accounting convention, which is a non cash amount that gets added to that principle amount for accounting purposes. The face value principle is split between pad letting lucid at approximately $27 million and $11 million respectively.
Dennis M. McGrath: Prepaid insurance is an example, and the application of advanced vendor deposits to current period and current. With regard to the convertible note, the balance reflects $37.7 million in face value principal plus $6.5 million in Fair Value Accounting Convention, which is a non-cash amount that gets added to that principal amount for accounting purposes. The face value principal is split between PAVMed and LUCID at approximately $27 million and $11 million, respectively. During the fourth quarter, the face value principal was reduced by about a million dollars with the issuance of approximately 387,000 shares, post-split shares of Common Share. Other long-term liabilities are from capitalized leases related to our lab and office spaces, and shares outstanding, including unvested restricted stock awards of $8.8 million. The gap outstanding shares of $8.6 million are reflected on the slide as well as the face of the balance sheet on the 10-K. Slide 17.
Dennis M. McGrath: During the fourth quarter the face value principal was reduced by about $1 million with the issuance of approximately 387000 shares post split shares.
Dennis M. McGrath: Common shares.
Dennis M. McGrath: Other long term liabilities are from capitalized leases related to our lab and office basis.
Dennis M. McGrath: Shares outstanding, including Unvested restricted stock awards of $8 8 million.
Dennis M. McGrath: GAAP outstanding shares of $8 6 million are reflected on the slide as well as the face of the balance sheet on the 10-K.
Dennis M. McGrath: Slide 17.
Dennis M. McGrath: Slide 17 compares this year's fourth quarter to last year's fourth quarter and similarly for the yearly totals on certain key items.
Dennis M. McGrath: <unk> will review the information in my comments in light of the cautionary disclosure at the bottom of the slide about supplemental information, particularly non-GAAP information.
Dennis M. McGrath: Revenue for the fourth quarter largely reflects lucid actual cash collections for the quarter for insurance Reimbursable claims plus Invoiced easily guard test to the VA and about $26000 to serum auto group.
Dennis M. McGrath: Under the direct contracting is testing Theyre just got underway late in the fourth quarter, plus some invoiced amounts about $9000 for various cancer care platform.
Dennis M. McGrath: Slide 17 compares this year's fourth quarter to last year's fourth quarter and similarly for the yearly totals on certain key items. I trust you'll review the information and my comments, in light of the cautionary disclosure at the bottom of the slide about supplemental information, particularly non-GAP information. Revenue for the fourth quarter largely reflects lucid actual cash collections for the quarter for insurance, reimbursable claims plus invoiced e-cigarette tests to the VA for about $26,000 to Enserum Auto Group under the direct contract.
Dennis M. McGrath: As detailed in our lucid quarterly call yesterday recognized lucid revenue of $1 million and 40000 represented a 33% increase over the third quarter and was in line with what was previously previewed to the market.
Dennis M. McGrath: Test volume at 2200 tests for the quarter represent just over $5 million in submitted claims for the fourth quarter at our standard ASP of $24 99.
Dennis M. McGrath: Lucid recognized revenue.
Dennis M. McGrath: Its recognition policy a key determinant.
Dennis M. McGrath: Is the probability of collection and therefore due to the fact that we are in the early stages of reimbursement process means revenue recognition for claims submitted for traditional government or private health insurers will be recognized when the claim is actually collected first when that patient reported invoiced and submit for reimbursement.
Dennis M. McGrath: Testing there just got underway late in the fourth quarter, plus some invoiced amounts of about $9,000 for various cancer care. As detailed in our LUCID quarterly call yesterday, recognized LUCID revenue of $1,040,000 represented a 33% increase over the third quarter and was in line with what was previously previewed for the market. Test volume at 2200 tests for the quarter represents just over $5 million in submitted claims for the fourth quarter at our standard ASP of $24.99.
Dennis M. McGrath: As Youll see in our 10-K. This is called variable consideration that jargon of gaps ASC 606, the revenue recognition guidelines, we need to live by and presently there is insufficient predictive data to reflect revenue with a test report is actually delivered.
Dennis M. McGrath: Billable amount contracted directly with employers.
Dennis M. McGrath: And that are fixed and determinable.
Dennis M. McGrath: There is a difference in how we will recognize revenue we will recognize that revenue when the contracted services delivered in the contracted service generally means when that report is delivered to the referring physician.
Dennis M. McGrath: Lucid recognized revenue. [inaudible] versus when the patient report is invoiced and submitted for reimbursement. As you'll see in our 10-K, this is called Variable Consideration, the Jargon of Gaps, ASC 606, the Revenue Recognition Guidelines We Need to Live By, and presently, there is insufficient predictive data to reflect revenue when the test report is actually delivered, for billable amounts contracted directly with employers, and that are fixed and
Dennis M. McGrath: Our non-GAAP loss for the year was $42 million with a quarterly average of $10 5 billion and a quarterly high of $10 9 million the fourth quarter non-GAAP loss was 10, 6% very much in line with the average for the year.
Dennis M. McGrath: Slide 18.
Dennis M. McGrath: Slide 18 is a graphic illustration of our operating expenses presented in the detail as presented in detail in our press release.
Dennis M. McGrath: As detailed yesterday in our lucid investor call about 850000 of the Opex increases related to certain onetime fourth quarter event split about evenly between clinical research related to our published studies at that point.
Dennis M. McGrath: There's a difference in how we'll recognize revenue. We will recognize that revenue when the contracted service is delivered, and the contracted service generally means when the report is delivered to the referring physician. Our non-GAP loss for the year was $42 million, with a quarterly average of $10.5 million and a quarterly high of $10.9.
Dennis M. McGrath: <unk> costs and patent expenses the balance relates to the various health, particularly some animal studies to advance our work on the implantable.
Dennis M. McGrath: Also note worthy of repeating some reimbursement status as mentioned on the lucid call yesterday.
Dennis M. McGrath: The fourth quarter non-gap loss was 10.6, very much in line with the average for Slide 18. Slide 18 is a graphic illustration of our operating expenses presented in detail in our press release. As detailed yesterday in our Lucid Investor Call, about $850,000 of the OPEX increases related to certain one-time fourth-quarter events split about evenly between clinical research related to our public-private partnerships, studies at that point, sales costs, and patent expenses, the balance related to various health, particularly some animal studies to advance our work on the implantable. Also, worth repeating, some reimbursement stats, as mentioned on the LUCID call yesterday. Since the new Revenue Cycle Manager, Quadex, took over in mid-June, about 7,800 claims representing almost $20 million in pro forma revenue have been submitted for reimbursement.
Dennis M. McGrath: Since the new revenue cycle managed or Quad X took over in mid June.
Dennis M. McGrath: About 7800 claims representing almost $20 million in pro forma revenues have been submitted for reimbursement.
Dennis M. McGrath: About 82%.
Dennis M. McGrath: Of those 7800 claims have been adjudicated already which means 18% are still pending.
Dennis M. McGrath: Out of the 82% that had been adjudicated about 46%.
Resulted in an allowable amount by the insurance company with an average of $1828 allowable protest.
Dennis M. McGrath: Although it's denied of which 54% were denied about 51% of those that were denied selling.
Dennis M. McGrath: <unk> fell into a couple of different buckets, either required additional information that was about 7% of them.
Dennis M. McGrath: Were deemed not medically necessary that was 26% that's probably the most puzzling piece because the guidelines are well established the patients meet those guidelines for tests that we built.
Dennis M. McGrath: About 82% of those 7,800 claims have already been adjudicated already, which means 18% are still pending. Out of the 82% that have been adjudicated, about 46% resulted in an allowable amount by the insurance company with an average of $1,828 allowable per capita. Of those denied, of which 54% were denied, about 51% of those that were denied, fell into a couple of different buckets.
Dennis M. McGrath: Medically necessary is a denial is one that's right for appeal.
Dennis M. McGrath: Sure.
Bucket, 18% of those denied require a prior authorization.
Dennis M. McGrath: About 29% were deemed not covered.
Speaker Change: So with that operator, let's open it up for questions.
Speaker Change: Thank you ladies and gentlemen allow begin the question and answer session should you have a question. Please press star followed by the one on your Touchtone phone.
Speaker Change: If youre a prompt that Johan has been raised.
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Speaker Change: One moment. Please for your first question.
Dennis M. McGrath: They either required additional information, that was about 7% of them, or were deemed not medically necessary, that was 26%. That's probably the most puzzling piece because the guidelines are well established, the patients meet those guidelines, they're tested, and we bill, uh... medically not necessary as a denial is one that's uh... right for uh... appeal. Or, lastly, 18% of those denied About 29% were deemed not to be.
Speaker Change: Your first question comes from Frank Hakkinen with Lake Street Capital markets. Please go ahead.
Frank James Takkinen: Hi, Thanks.
Good morning Trey.
Frank James Takkinen: Good morning, This is Nelson on for Frank.
I was wondering if you could hey, good morning was wondering if you can provide some additional commentary on the biomarker legislation mentioned in yesterday's call. What are the steps look like to obtain coverage with that and how do you think about that opportunity impacting your business overall.
Operator: So with that, Operator, let's open it up. 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 on your touchtone phone. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press star followed by the letter 'O'. If you are using a speakerphone, please lift the handset before pressing it.
Thanks for the opportunity to elaborate on that a little bit it's actually a really important and exciting area. As we mentioned there are <unk>.
Frank James Takkinen: <unk> state.
Frank James Takkinen: Type of biomarker legislation, but they vary from state to state. So each one has a different flavor of the language is different.
Frank James Takkinen: Generally they seek to mandate coverage within.
Frank James Takkinen: The state by commercial payers for.
Frank James Takkinen: Biomarker tests some of them are specific to cancer some of that and.
Operator: One moment, please, for your first question. The first question comes from Frank Takkinen with Link Street Capital Markets. Please go ahead. Hi Frank.
Frank James Takkinen: So the opportunity there is great, but it does require some work with regard to.
Frank James Takkinen: Looking at each state and one at a time in determining.
Frank James Takkinen: In consultation with.
Lishan Aklog: Good morning, this is Nelson speaking on behalf of Frank. I was wondering if you could provide some additional commentary on the biomarker legislation mentioned in yesterday's call. What do the steps look like to obtain coverage with that, and how do you think about that opportunity impacting your business overall? Yeah, thanks for the opportunity to elaborate on that a little bit. It's actually a really important and exciting area, as we mentioned there. There are 15 states that have some type of biomarker legislation, but they vary from state to state. So each one has a different flavor; the language is different.
The commercial payers there.
Frank James Takkinen: The language and making the case that were covered under that language and so we're still in the early stages of those engagements, but we're starting to get some traction there and we believe that we will.
Frank James Takkinen: And many of them if not ultimately all of US we would hope.
Frank James Takkinen: Finding end up with a determination that.
Frank James Takkinen: Easter Guard is in fact, which we believe it is a biomarker test for cancer.
Frank James Takkinen: Prevention.
Frank James Takkinen: That would be.
Frank James Takkinen: Be subject to mandatory coverage by payers in that state. So there are steps along the way, although the foundational language in these.
Frank James Takkinen: And the statutes are promising.
Lishan Aklog: Generally, they seek to mandate coverage within the state by commercial payers for biomarker tests. Some of them are specific to cancer, and some are not. And so the opportunity there is great, but it does require some work with regard to looking at each state one at a time and determining, in consultation with the commercial payers there, the language and making the case that we're covered under that language. And so we're still in the early stages of those engagements, but we're starting to get some traction there, and we believe that we will, in many of them, if not, ultimately, all, as we would hope, find, end up with a determination that Isagard is, in fact, which we believe it is, a biomarker test for cancer prevention that would be subject to mandatory coverage by payers in that state. So there are steps along the way, although the foundational language in these statutes is promising. I got it.
Speaker Change: Got it.
Speaker Change: And then maybe switching over to various how should we think about the potential revenue contribution from that in 'twenty four 'twenty five I understand there's a lot of moving pieces still but as you shift into those large academic in regional centers, how should we think about that yes.
Speaker Change: Yes.
Speaker Change: I'll, let Dennis maybe chime in a bit but sort of conceptually and strategically we've.
Speaker Change: We are moving away, we still have some existing accounts.
Speaker Change: Then our oncology practices, but the cost of acquisition of these accounts with when we hire we needed a fulsome 12 sort of sales team to do that while engaging with strategic accounts has longer lead times they take more.
Speaker Change: There is more time, because it is as they are and when they reach their call strategic accounts is because theres a strategic dimension to these engagements. So they do have longer lead times, but the commercial opportunity. The revenue opportunity. In particular is is higher so I would I will let Dennis maybe chime in a little bit on sort of how we're not really projecting but.
Lishan Aklog: And then maybe switching over to Veris, how should we think about the potential revenue contribution from that in 24 and 25? I understand there are a lot of moving pieces still, but as you shift into those large academic and regional centers, how should we think about that?
Lishan Aklog: I'll let Dennis maybe chime in a bit, but sort of conceptually and strategically, we're moving away. We still have some existing accounts that are oncology practices, but the cost of acquisition of these accounts was significantly higher. We needed a full sales team to do that, while engaging with strategic accounts has longer lead times. There's more time because, as they're named, the reason they're called strategic accounts is because there's a strategic dimension to these engagements.
Dennis M. McGrath: Larger these are larger accounts think one of the accounts that were.
Dennis M. McGrath: We're in the late stages of discussing has 10000 patients with getting infusion therapy and so the revenue opportunity is substantial and is equivalent to dozens of smaller cancer.
Dennis M. McGrath: Oncology practices.
Dennis M. McGrath: The process for getting to being in a position where we would have.
Lishan Aklog: So, they do have longer lead times, but the commercial opportunity and the revenue opportunity, in particular, is higher. So, I'll let Dennis maybe chime in a little bit on sort of how we're not really yet projecting, but these are larger accounts. I think one of the accounts that we're in the late stages of discussing has 10,000 patients getting infusion therapy. And so, the revenue opportunity is substantial. It's equivalent to dozens of smaller cancer oncology practices.
Dennis M. McGrath: Some meaningful portion of those patients on the platform is not just that.
Dennis M. McGrath: Sure.
Dennis M. McGrath:
Dennis M. McGrath: We would expect to start with a pilot program in one particular area within that cancer Center.
Dennis M. McGrath: For example, a higher risk subgroup by bone marrow transplant, and then work our way to a broader application.
Dennis M. McGrath: So why don't I leave it there and see if Dennis has any further and so I don't think well have a lot of color yet on a revenue trajectory, but this is clearly we believe the path towards.
Lishan Aklog: The process for getting to, being in a position where we would have some meaningful portion of those patients on the platform is not necessarily short. We would expect to start with a pilot program in one particular area within that cancer center, for example, a higher-risk subgroup like bone marrow transplants, and then work our way to a broader application.
Dennis M. McGrath: Sustained value creation within various and finance ability.
Dennis M. McGrath: Yes, maybe just a few other data points so as Lisa indicated these large strategic accounts.
Dennis M. McGrath: A large patient population 10000 was the number that <unk> put there and if you think about the top 10.
Cancer centers in the United States Theyre, all in that kind of framework of large patient pools.
Lishan Aklog: So, why don't I leave it there and see if Dennis has any further insights. I don't think we'll have a lot of color yet on a revenue trajectory, but this is clearly, we believe, the path towards sustained value creation within VAERS and financeability. Yeah, maybe just a few other data points.
Dennis M. McGrath: <unk>.
Dennis M. McGrath: You will recall this is a recurring revenue model for us reimbursement is not an issue its already established the general notion is that we would collect about $80 per patient per month for each patient that is on the platform.
Dennis M. McGrath: So, as Lishan indicated, these large strategic accounts have a large patient population; 10,000 was the number that Lishan put there. And if you think about the top 10 cancer centers in the United States, they're all in that kind of framework of a large patient pool. And you'll recall this is a recurring revenue model for us. Reimbursement is not an issue.
Dennis M. McGrath: Alicia already mentioned, our selling costs will be less because of.
Dennis M. McGrath: Just a single person getting.
Dennis M. McGrath: Much larger opportunity.
Dennis M. McGrath: The transition will initially be pilot program connected devices, ultimately higher penetration and adoption of the patient pool on the platform.
Dennis M. McGrath: It's already established. The general notion is that we would collect about $80 per patient per month for each patient that's on the platform. Lishan already mentioned our selling costs will be less because of just a single person getting a much larger opportunity. The transition will initially be a pilot program, connected devices, ultimately higher penetration and adoption of the patient pool on the platform, and down the road, implantable devices as part of it. These larger institutions tend to have a venture arm, whether or not they participate in one where they influence decision-making, or they have one themselves, adds to the ability to finance this and become an anchor and a tenant, if you will, in a financing for this opportunity. All of the pieces make sense.
Dennis M. McGrath: Down the road implantable devices as part of it.
Dennis M. McGrath: These larger institutions tend to have a venture arm whether or not they.
Dennis M. McGrath: Whether they participate in one that they influence decision, making or they have one themselves adds to the ability to finance this and can.
Dennis M. McGrath: Can become an anchor tenant if you will in a financing for this opportunity all of the piece parts makes sense the smaller.
Dennis M. McGrath: Cancer centers that we have started with have demonstrated.
Dennis M. McGrath: The effectiveness of the platform of the completeness of it.
Dennis M. McGrath: The ability to monitor patients so all of the validation.
<unk> of the technology has now been accomplished with the smaller.
Dennis M. McGrath: The smaller cancer centers that we have started with have demonstrated the effectiveness of the platform, its completeness, and its ability to monitor patients. So all of the validation side of the technology has now been accomplished with the smaller institutions we've been involved with. It's now time to step up to these larger opportunities, which give us a greater opportunity for scaling and scaling with recurring revenue. So I think that's what, over the next two years, you'll see more of.
Dennis M. McGrath: Institutions, we've been involved with it is now time to step up to these larger opportunities, which give us a greater opportunity for scaling and scaling with the recurring revenue.
Dennis M. McGrath: I think thats what.
Dennis M. McGrath: Over the next two years Youll see more of this.
Dennis M. McGrath: And how fast that speed will be in terms of adoption remains to be seen here, but we are pretty optimistic about what could occur over the next several quarters for us.
Speaker Change: Awesome, Thanks, guys and congrats on the progress great. Thanks, Brian.
Dennis M. McGrath: And how fast that speed will be in terms of adoption remains to be seen here, but we are pretty optimistic about what could occur over the next several quarters. Awesome, thanks guys, and congrats on the progress. Great, thanks Frank. Your next question comes from Ross Osborn with Cantor Fitzgerald. Please go ahead. Hi, Ross. Hi, everyone.
Speaker Change: Your next question comes from Ross Osborne with Cantor Fitzgerald. Please go ahead.
Ross Everett Osborn: Hi, good morning, everyone.
Ross Everett Osborn: So I understand the switch to larger centers, but would be curious to hear is the biopharma opportunity. So interesting maybe the post market studies phase.
Yeah, we didnt mention that because that sort of the anchor of what we're pursuing here in the near term is with the large.
Lishan Aklog: So, I understand the switch to larger centers, but would be curious to hear whether the biopharma opportunity is still interesting, maybe in the post-market study space? Yeah, we didn't mention that because that's sort of the anchor of what we're pursuing here in the near term is with the large, you know, our expectation in terms of very near opportunities is with there. But yes, we are still actively involved. There's a separate, related, but separate opportunity to apply this platform technology in partnership with biopharma companies who are launching a large number of new cancer therapies, many of which are expensive and many of which are very intense in their therapy and can lead to complications and therefore can benefit from monitoring. And these conversations are focused around the phase four, or the post-market surveillance aspect of this, where a drug, a new cancer therapy, is launched, but it is cleared, and launched, but only as a, say, third or fourth or even fifth line therapy for patients who have failed other therapies because of the still-to-be-proven balance between safety and effectiveness.
Ross Everett Osborn: Our expectation in terms of very near opportunities aren't there, but yes. We are still actively involved we have discussions with two major biopharma companies just to remind everybody. Thanks for triggering has the opportunity to talk about this.
Ross Everett Osborn: There is a separate related but separate opportunity to apply this platform technology.
Ross Everett Osborn: In partnership with.
Ross Everett Osborn: Biopharma companies who are launching.
Ross Everett Osborn: <unk>.
Ross Everett Osborn: Large number of new.
Ross Everett Osborn: Cancer.
Ross Everett Osborn: [noise] therapies, many of which are expensive and many of which are very intense in their therapy and can lead to complications and therefore can benefit from for monitoring.
Ross Everett Osborn: These conversations are focused around the phase four of the post market surveillance.
Ross Everett Osborn: Back to this where a drug a new cancer therapy is launched but launched is cleared and launched but only as I say third or fourth or even fifth line therapy for patients who failed other therapies because of the.
Ross Everett Osborn: Still to be proven balance between safety and effectiveness and so there is a strong well and a strong interest with these companies to improve.
Lishan Aklog: And so there's a strong will and a strong interest from these companies to improve the outcomes during those phase four post-market surveillance studies and the opportunity for a remote patient monitoring platform to monitor and enhance the safety of these drugs by picking up changes in the patient before they result in complications. And so, yes, those are conversations that remain ongoing. There's a strong interest. There's clearly a synergy.
Ross Everett Osborn: The outcomes during those phase four post market surveillance studies and the opportunity for remote patient monitoring platform to monitor and to enhance the safety of these drugs by picking up.
Ross Everett Osborn: Changes in the patient before they result in complications and so yes. Those are conversations that remain ongoing there's a strong interest is clearly a synergy. They are also a long lead time conversations are not going to happen overnight, but it does it does remain an.
Lishan Aklog: They are also long-lead time conversations. They're not going to happen overnight. But it does remain an important area of strategic focus. However, I would still emphasize the large academic centers as being the linchpin of our near-term strategy. Okay, great. And then, sticking with Veris, would you provide an update on where you stand in the development work on next-gen PortIO offerings? For next-gen, you mean Port IO. I just wanted to make sure I heard you correctly. Yeah, so PortIO is, we used the first generation device in the first human study, and that demonstrated really excellent results with no complications. We have a second generation device that was in its late stages of development that enhanced some of the usability and structure and sort of built-in handle and a few other things. Fundamentally, the actual implantable portion was... bit of additional work to get that through verification and validation testing and ready for use in a clinical study.
Ross Everett Osborn: An important.
Ross Everett Osborn: Area of strategic focus, but I would emphasize.
Ross Everett Osborn: Emphasized the large academic centers as being some of the linchpin of our of our near term strategy.
Speaker Change: Okay, Great and then sticking with various would you provide an update on where you stand and development work on next Gen offerings.
Speaker Change: For next Gen. You mean for the Port I am just wondering if I heard correctly.
Speaker Change: Yeah, So port Io as.
Speaker Change: We use the first generation device.
Speaker Change: In the first in human study and demonstrated.
Speaker Change: U S.
Speaker Change: Excellent results and with no complications we have a second generation device that was in its late stages of development that enhanced some of the usability.
Speaker Change: Our structure has ever built and handle and a few other things fundamentally the actual implantable portion.
Speaker Change: So there is.
Speaker Change: A bit of additional work to get that through.
Speaker Change: Against the validation testing and.
Speaker Change: And ready for use in a clinical and a clinical study. So the we haven't we haven't decided yet as to whether we're going to proceed.
Lishan Aklog: So, we haven't decided yet as to whether we're going to proceed. I would say the most likely path, if we can secure financing for PortIO in the near term, would be to proceed with the IDE, with the first-generation device, and then transition into the second-generation midstream if that becomes ready. We're really anxious to start the IDE study.
Speaker Change: I would say the most likely path if we can.
Speaker Change: Secure financing for our portfolio in the near term would be to proceed.
Speaker Change: With the IV with the first generation device and then transition into the second generation.
Speaker Change: <unk> midstream.
Speaker Change: That becomes ready, where we're all anxious to start the IV study, we've done a lot of time with FDA over the previous years on fine tuning a variety of preclinical work as well as <unk>.
Lishan Aklog: We've spent a lot of time with FDA over the previous years on fine-tuning a variety of preclinical work as well as various aspects of the study design. We think we're in a good position to get an approved IDE based on the first human results, which we were gearing to do when we stopped the development when we paused the development work a year ago. So that's pretty much where we stand. Hopefully, that answers your question. Thanks for taking my questions. All right. Thanks, Ross. Your next question comes from Ed Woo with Ascendia Capital. Please go ahead.
Speaker Change: Various aspects of the study design, we think we're in a good position to get an approved <unk> based on the first results.
Speaker Change: Which we will guarantee when we stopped them.
Speaker Change: They developed when we part of the development.
Speaker Change: A year ago.
Speaker Change: So that's pretty much where we stand hopefully that answers your question.
Speaker Change: Yes, thanks for taking my questions.
Speaker Change: Great. Thanks Ross.
Your next question comes from Ed Woo with <unk> capital. Please go ahead.
Edward Moon Woo: Good morning, and thank you for taking my question. My question is on the recently announced incubator that you guys are developing.
Edward Moon Woo: Thank you for taking my question. My question is about the recently announced incubator that you guys are developing. What is your exact responsibility and any financial commitments for the incubator?
Edward Moon Woo: Hi.
Edward Moon Woo: What is your exact the responsibility of any financial commitments to four the incubator.
Edward Moon Woo: So the incubator as a wholly owned subsidiary of cabinets. So it's 100% owned interest.
Lishan Aklog: So, the incubator is a wholly owned subsidiary of PAVMed, so it's 100% owned, and structurally, we're dropping those assets into the incubator, and we're seeking to, on a product-by-product basis, secure individual financing, just like you would with a freestanding incubator, seeking to secure financing for the development and regulatory clearance and commercialization of each individual product, and that would be in a separate subsidiary where there would be We have a partnership with Hatch Medical that would incentivizes them to sort of help with that process on an individual product-by-product basis. But the incubator itself remains wholly owned by PAVmed.
Edward Moon Woo: Structurally we're dropping those assets into the incubator and we're seeking to.
Edward Moon Woo: On a product by product basis secure individual financing just like you would with a freestanding incubator seeking to secure financing for the development and commercial regulatory clearance and commercialization of each individual product and that would be in a separate subsidiary where there would be additional stakeholders.
Edward Moon Woo: Including anyone who financings that particular, so theres an opportunity to finance individual individual products and we have a partnership with <unk> medical that wood.
Edward Moon Woo: And that incentivize them to sort of help with that process on an individual product by product basis, but the incubator itself remains wholly owned by <unk>.
Edward Moon Woo: <unk> patented.
Edward Moon Woo: Dennis do you want to add any color to that.
Dennis M. McGrath: Yes. So the game plan here is to have a joint venture with hatch, where they will provide capital we will provide talent engineering knowledge and know how about the market and ultimately once a decision is made about.
Dennis M. McGrath: Dennis, do you want to add any comments to that? Yeah, so the game plan here is to have a joint venture with Hatch, where they will provide capital, we will provide talent, engineering knowledge, and know-how about the market, and ultimately, once a decision is made about whether it is fully commercialized or you look to partner with a commercial entity, Hatch has the ability to broker that transaction as well. So, the full-service entity that can provide both financing, development work, you know, the exit and brokerage, combined with the talent that we have internally to bring this to its full realization. Just one point of clarification: it'll be the entities, the PAVmed entity or subsidiary of the incubator, that will be raising the capital.
Dennis M. McGrath: Whether it is fully commercialized or you look too.
Partner with a commercial entity that has the ability to broker that transaction as well so the full service entity that can provide.
Financing development work.
Dennis M. McGrath: The exit in brokerage.
Dennis M. McGrath: Buying with.
Dennis M. McGrath: The talent that we have internally to bring this to its full realization.
Just one point of clarification so the.
Dennis M. McGrath: <unk>.
Dennis M. McGrath: It'll be the entity.
Dennis M. McGrath: The patented entity or a subsidiary of the incubator that will be raising will be raising the capital.
Dennis M. McGrath: Our partnership with Hatch is designed to help in all aspects, whether it's helping introduce potential financial partners, angel networks, and also participate in the development. And ultimately, as Dennis said, an area where they've had great success over the years in brokering, commercial, and strategic transactions. Well, I thank you and wish you guys good luck. Thank you. Thanks, Ed. Your next question comes from Nick Sherwood with Maxim Group. Please go ahead.
Dennis M. McGrath: Our partnership with agile.
Dennis M. McGrath: That is designed to help at all aspects, whether it's something introduced due to potential financial partners Angel networks and also participate in the development and ultimately as Dennis said, an area, where they've had great success over the years in Brooklyn, commercial and strategic transactions.
Speaker Change: Great well thank you.
Speaker Change: I wish you guys. Good luck. Thank you.
Speaker Change: Thanks, Ed.
Speaker Change: Your next question comes from Nick Sherwood with Maxim Group. Please go ahead.
Speaker Change: Nick.
Nick Sherwood: Nick, thanks for taking my question. For the incubator, do you plan on being the majority owners of those products that are spun off of the incubator, or are you open to having minority stakes in CARPEX or any of the others? I mean, our expectation is, you know, we have target financings for each of them. They're not huge.
Nick Sherwood: Thank you for taking my question for the incubator do you plan on being the majority owners of those products that are spun off. So the incubator are you open to having minority stakes in carpets or any of the other products I mean, our expectation is we have target financings.
Nick Sherwood: For each of them. They are not huge they are relatively modest in terms of the amount of capital required to get each of those products through.
Lishan Aklog: They're relatively modest in terms of the amount of capital required to get each of those products through regulatory clearance and commercial launch, and so we would not expect the financing into them to be dilutive so that PAVmed ends up with a minority stake. So our expectation is that each of the products and subsidiaries would still be majority owned because we expect evaluations and the capital needs to kind of reflect that math. And look, over the long term, once these are launched commercially, and there's opportunities to partner with entities that are looking to deploy resources to advance and accelerate a commercialization, we're open to whatever kinds of transactions are in the best interest of our shareholders. And that could include anything up to an acquisition of that technology by a larger strategic. But I would say, Dennis, quickly, if you think otherwise, in the initial transaction, the initial financing to relaunch these products, the amount of capital that we're seeking to raise in each of these is modest enough that I would really expect PAVmed to lose its majority stake in it. I agree.
Nick Sherwood: Through regulatory clearance and commercial launch and so we would not expect the financing into into them too.
Nick Sherwood: Be dilutive so that patent ended up with a minority stake. So our expectation is that they that the each of their products and subsidiaries would still be a.
Nick Sherwood: Our majority owned because we expect evaluations.
Nick Sherwood: And the capital needs to to kind of reflect that math.
Nick Sherwood: Good luck over the long term if there once once these are launched commercially and there is opportunities to partner with entities that are looking to deploy <unk>.
Nick Sherwood: Resources to advance and accelerate the commercialization that we are open to whatever kinds of transactions are in the best interest of our shareholders and that could include anything up to.
Nick Sherwood: And.
Nick Sherwood: <unk>.
Nick Sherwood: That technology by a larger strategic but I would say Dennis correct me, if you think otherwise in the <unk>.
Nick Sherwood: Initial transaction the initial financing.
Nick Sherwood: To relaunch these products.
Speaker Change: The amount of capital that we're seeking to raise in each of these is modest enough that I would expect.
Speaker Change: Really don't anticipate losing.
Losing its majority stake in any of those.
Speaker Change: I agree.
Dennis M. McGrath: And then my final question is, how far along in the progress of securing independent financing for the various systems to, you know, clear the path to FDA submission in the 510k. So we have an interest. We've had discussions with various groups that have expressed interest in that. And what we've decided to do is to look to consummate our first, to demonstrate that we can engage with a major, large academic... Cancer Center and sort of demonstrate and do a proof of concept that there's an opportunity to continue to do that. So our expectation is that once we do sign this first contract, then we will be able to engage with various folks that have expressed an interest and consummate the financing shortly thereafter.
Speaker Change: Awesome. Thanks for the detail and then my final question is what how far along in the progress for securing financing for the various.
Speaker Change: System to clear the path to FDA submission and besides NK clearance so.
Speaker Change: So we have we have inter.
Speaker Change: Interest.
Speaker Change: We've had discussions with various groups that have expressed interest in that and what we have.
Speaker Change: What we've decided to do is to look to consummate our first to demonstrate that we can engage.
Speaker Change: With a measure.
Speaker Change: Large academic.
Speaker Change: Cancer Center, and sort of demonstrate and do a proof of concept.
Speaker Change: Is that fair to say.
Opportunity to tick.
Speaker Change: They need to do that so our expectation is that once we do sign. This first first contract then we will be able to.
Speaker Change: To engage with various folks that have expressed interest and consummated financing shortly thereafter.
Dennis M. McGrath: Can you share with us the size of that target pool of the institutions? Yeah, we have a, yeah, I mean, there are obviously, you know, based on, we've done this in a very systematic way and based on sort of the criteria that I'd outlined on that slide about NCI centers, magnet centers, a minimum of at least 20 oncologists, a minimum number of patients getting systemic infusion therapy, and so There are dozens of such centers across the country.
Can you share with us the size of that target pool of the institutions.
Speaker Change: We have a yes.
Speaker Change: Yes, I mean, there are obviously.
Speaker Change: We've done this in a very systematic way and based on sort of the criteria that I outlined on that slide about NCI centers magnetic magnet centers, a minimum of at least 20 oncologist a minimum number.
Speaker Change: Of.
Speaker Change: Patients are getting systemic infusion therapy, and so forth there are dozens of such centers across the country. We have a couple of dozen that are on our target list at about a dozen that were making active inquiries with I would say, we have five or six where we've actually had active discussions.
Lishan Aklog: We have a couple of dozen that are on our target list and about a dozen that we're making active inquiries with. I would say we have five or six where we've actually had active discussions. One of them, again, is very late stage, and a couple of others are, at least one other is pretty far along, and a couple others are; we're making progress. Hopefully, that gives you some clarity.
Speaker Change: One of them again is very late stage in a couple of others are.
Speaker Change: At least what others pretty far along in a couple of others are more we're making progress with.
Speaker Change: So hopefully that gives you some color.
Speaker Change: Yeah. That's perfect. Thank you for answering my questions and I'll hop back into the queue.
Lishan Aklog: Yeah, that's perfect. Thank you for answering my questions, and I'll hop back. Great, thanks.
Speaker Change: Great. Thanks.
Speaker Change: Ladies and gentlemen, as a reminder, should you have a question. Please press star one.
Speaker Change: There are no further questions at this time. Please proceed.
Speaker Change: Yes.
Speaker Change: Alicia.
Operator: Ladies and gentlemen, as a reminder, should you have a question, please press star 1. If there are no further questions at this time, please proceed. Lishan.
Alicia: Oh, sorry, I was on mute. Thank you all for joining us today and for the great questions and as always we look forward to keeping abreast of our progress.
Alicia: Press releases and conference calls such as this one the best way to keep up with pad mode or at least of news or updates or events I would encourage you to sign up for our E mail alerts on both the <unk> and lucid investor relation website and to follow us on Twitter and Linkedin.
Lishan Aklog: Sorry, I was on mute. Thank you all for joining us today and for the great questions. And as always, we look forward to keeping you abreast of our progress via press releases and conference calls such as this one. The best way to keep up with PAVmed or Lucid news, updates, or events is to sign up for our email alerts on both the PAVmed and Lucid investor relations websites and to follow us on Twitter and LinkedIn, as well.
Speaker Change: As well so thank you very much everybody and have great day.
Speaker Change: Ladies and gentlemen, this concludes your conference call for today, we thank you for participating and ask that you. Please disconnect your lines.
Speaker Change: Yes.
Speaker Change: [music].
Speaker Change: Yeah.
Speaker Change: [music].
Operator: So, thank you very much, everybody, and have a great day. Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines.
Speaker Change: Okay.
Speaker Change: No.
Speaker Change: Right.
Speaker Change: [music].