Q2 2025 Lucid Diagnostics Inc Earnings Call

Speaker #3: Good morning and welcome to the Lucid Diagnostics second quarter 2025 business update conference call. At this time, all lines are in listen-only mode.

Dr. Lishan Aklog: Good morning and welcome to the Lucid Diagnostics second quarter 2025 business update conference call. At this time, all lines are in listen-only mode. Following the presentation, we will conduct a question and answer session. If at any time during this call you require immediate assistance, please press star zero for the operator. Please note that this event is being recorded. I would now like to turn the conference over to Matt Riley, Lucid Diagnostics' Senior Director of Investor Relations. Please go ahead.

Speaker #3: Following the presentation, we will conduct a question and answer session. If at any time during this call you require immediate assistance, please press *0 for the operator.

Speaker #3: Please note that this event is being recorded. I would now like to turn the conference over to Matt Riley. Lucid Diagnostics' senior director of investor relations.

Speaker #3: Please go ahead.

Speaker #4: Thank you, operator, and good morning, everyone. Thank you for participating in today's business update call. Joining me today on the call are Dr. Lishan Aklog, chairman and CEO of Lucid Diagnostics, along with Dennis McGrath, chief financial officer.

Matt Riley: Thank you, Operator, and good morning, everyone. Thank you for participating in today's business update call. Joining me today on the call are Dr. Lishan Aklog, Chairman and CEO of Lucid Diagnostics Inc., along with Dennis McGrath, Chief Financial Officer. The press release announcing our business update and financial results is available on Lucid's website. Please take a moment to read the disclaimers about forward-looking statements in the press release. The business update, press release, and the conference call all include forward-looking statements. These forward-looking statements are subject to known and unknown risks and uncertainties that may cause actual results to differ materially from the statements made. Factors that could cause actual results to differ are described in the disclaimer and in our filings with the SEC.

Speaker #4: The press release announcing our business update and financial results is available on Lucid's website. Please take a moment to read the disclaimers about forthcoming statements in the press release.

Speaker #4: The business update press release and the conference call all include forthcoming statements, and these forthcoming statements are subject to known and unknown risks and uncertainties that may cause actual results to differ materially from the statements made.

Speaker #4: Factors that could cause actual results to differ are described in the disclaimer and in our findings of the SEC. For a list and a description of these and other important risks and uncertainties that may affect future operations, see part one, item 1A.

Matt Riley: For a list and a description of these and other important risks and uncertainties that may affect future operations, see Part 1, Item 1A, entitled "Risk Factors in Lucid's Most Recent Annual Report on Forms 10-K Filed with the SEC," and any subsequent updates filed in quarterly reports on Forms 10-Q and subsequent Forms 8-K. Except as required by law, Lucid Diagnostics Inc. disclaims any intentions or obligations to publicly update or revise any forward-looking statements to reflect changes in expectations or in events, conditions, or circumstances on which the expectations may be based or that may affect the likelihood that actual results will differ from those contained in the forward-looking statements. I would now like to turn the call over to Dr. Lishan Aklog, Chairman and CEO of Lucid Diagnostics Inc. Go ahead, Lishan.

Speaker #4: Entitled to risk factors in Lucid's most recent annual report on Forms 10-K, filed with the SEC, and any subsequent updates filed in quarterly reports on Forms 10-Q and subsequent Forms 8-K.

Speaker #4: Except as required by law, Lucid disclaims any intentions or obligations to publicly update or revise any forthcoming 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 forthcoming statements.

Speaker #4: I would now like to turn the call over to Dr. Lishan Aklog, Chairman and CEO of Lucid. Go ahead, Lishan.

Speaker #5: Thanks, Matt, and good morning, everyone. Thank you for joining our quarterly update call today. As always, I'd like to thank our long-term shareholders for your ongoing support and commitment.

Dr. Lishan Aklog: Thanks, Matt, and good morning, everyone. Thank you for joining our quarterly update call today. As always, I would like to thank our long-term shareholders for your ongoing support and commitment. Our team really remains singularly focused on driving this enterprise towards its substantial commercial potential and enhancing our long-term shareholder value. Since our last update, the biggest development and near-term milestone is the upcoming LCD CAC meeting, which will be the main focus of today's call. We are really excited about this. We see this meeting as a very strong indicator of progress towards a positive Medicare coverage policy outcome. We really believe that we are in the final stages of this process. We are excited that we have reached this moment in time with very clear and now concrete steps ahead of us to navigate and to succeed.

Speaker #5: Our team remains singularly focused on driving this enterprise towards its substantial commercial potential and enhancing our long-term shareholder value. Since our last update, the biggest development and near-term milestone is the upcoming LCD CAC meeting.

Speaker #5: Which will be the main focus of today's call. We're really excited about this. We see this meeting as a very strong indicator of progress towards a positive Medicare coverage policy outcome.

Speaker #5: And we really believe that we're in the final stages of this process. We're excited that we've kind of reached this moment in time with very clear and now concrete steps ahead of us to navigate into succeed.

Speaker #5: Thanks to our financings. Earlier this year, we had plenty of runway, and we're well-positioned to successfully navigate these final steps. We'll talk about this a little bit more later, but we've already begun to take proactive steps to ensure that once Medicare coverage is secured, we will be able to accelerate e-cigar commercialization and ultimately capitalize on this very large market opportunity that we face.

Dr. Lishan Aklog: Thanks to our financing earlier this year, we have plenty of runway and we are well positioned to successfully navigate these final steps. We will talk about this a little bit more later, but we have already begun to take proactive steps to ensure that once Medicare coverage is secured, we will be able to accelerate EsoGuard commercialization and ultimately capitalize on this very large market opportunity that we face. Let us start with some key highlights related to our commercial execution. EsoGuard test volume for the second quarter was 2,756 tests. This is within our target range of 2,500 to 3,000 tests per quarter. We are really happy that the team continues to be successful at maintaining this level of volume, this target volume, while focusing on contractually guaranteed revenue opportunities and now with a new focus on Medicare patients.

Speaker #5: Let's start with some key highlights related to our commercial execution. E-cigar test volume for the second quarter was 2,700 tests. This is within our target range of 2,500 to 3,000 tests per quarter.

Speaker #5: And we're really happy that the team continues to be successful at maintaining this level of volume this target volume while focusing on contractually guaranteed revenue opportunities and now with a new focus on Medicare patients.

Speaker #5: Revenue was $1.2 million; that's a 40% increase in revenue from the first quarter, and matches our previous quarterly high. We're very excited to partner with Hoag, a large health system world-class health system in Orange County, California, and we've launched a comprehensive e-cigar and esophageal precancer testing program in partnership with them.

Dr. Lishan Aklog: Revenue was $1.2 million. That is a 40% increase in revenue from the first quarter and matches our previous quarterly high. We are very excited to partner with Hoag Healthcare Network, a large health system, a world-class health system in Orange County, California, and we have launched a comprehensive EsoGuard esophageal precancer testing program in partnership with them. What is really exciting about this program is that it is system-wide across the healthcare delivery network. It includes partnerships between gastroenterologists, including the lead, Dr. Kenneth Chang, who is a very passionate advocate for their mission to eradicate esophageal cancer in their region. It includes primary care. There are 200 primary care physicians that we will be engaging with, as well as a concierge medicine part of the health system.

Speaker #5: What's really exciting about this program is that it's system-wide across the healthcare delivery network. It includes partnerships between gastroenterologists, including the lead, Dr. Kenneth Chang, who's a very passionate advocate for their mission to eradicate esophageal cancer.

Speaker #5: In their region, it includes primary care. There are 200 primary care physicians that will be engaging with as well as their concierge medicine part of the health system.

Speaker #5: Really believe this is a model for additional leading health systems, both in that region as well as elsewhere, about basically related to building comprehensive programs around using e-cigar esophageal precancer testing.

Dr. Lishan Aklog: We really believe this is a model for additional leading health systems, both in that region as well as elsewhere, basically related to building comprehensive programs around using EsoGuard esophageal precancer testing. We continue to drive our cash-pay contracted programs that we launched earlier this year. These target concierge medicine practices of self-insured entities, which include fire departments, municipalities, and employers. Very steady progress on this front. We have a robust pipeline that is continuing to fill. We are getting traction on both fronts. We are learning, our team is learning how to engage these concierge medicine practices, how to establish contracts, and then how to drive patients within the practice to EsoGuard testing. That is generating good traction so far. The same on the contracting side, particularly with contracting with fire departments and municipalities. We look forward to seeing some yield from these efforts in the coming quarters.

Speaker #5: We continue to drive cash pay and contracted programs that we launched earlier this year. These target concierge medicine practices, self-insured entities, which include fire departments, municipalities, and employers.

Speaker #5: Very steady progress on this front. We have a robust pipeline that is continuing to fill. We are getting traction on both fronts. We're learning and our team is learning how to engage these concierge medicine practices, how to establish contracts, and then how to drive patients within the practice to e-cigar testing.

Speaker #5: And that's generating good traction so far. Same on the contracting side, particularly with contracting with fire departments and municipalities. And we look forward to seeing some yield from these efforts in the coming quarters.

Speaker #5: Of course, this effort is designed to complement our traditional reimbursement pathways with commercial payers as well as Medicare. And now let's discuss our recent strategic accomplishments.

Dr. Lishan Aklog: Of course, this effort is designed to complement our traditional reimbursement pathways with commercial payers as well as Medicare. Let us discuss our recent strategic accomplishments. As I mentioned, we have a MolDX Contractor Advisory Committee or CAC meeting that is scheduled for September 4th. That notice went out a few weeks ago. I am really excited about this and look forward to providing you with a lot of greater context a little bit later on this call. We were excited to see that the Highmark Blue Cross Blue Shield positive coverage policy for EsoGuard that we had announced earlier actually became effective. This is our first positive commercial coverage policy. It covers upstate New York.

Speaker #5: As I mentioned, we have a MOLDEX contract advisory committee or CAC meeting that's scheduled for September 4th at notice went out a few weeks ago.

Speaker #5: And I'm really excited about this and look forward to providing you with a lot greater context a little bit later on this call. We were excited to see that the high-marked Blue Cross Blue Shield positive coverage policy for e-cigar that we had announced earlier actually became effective.

Speaker #5: This is our first positive commercial coverage policy. It covers upstate New York and it serves as a precedent first for commercial payers. We've been able to cite this in our ongoing engagements with other commercial payers, including other regional Blue Cross Blue Shield plans and our engagement with the broader Blue Cross Blue Shield Association.

Dr. Lishan Aklog: It serves as a precedent, first for commercial payers. We have been able to cite this in our ongoing engagements with other commercial payers, including other regional Blue Cross Blue Shield plans and our engagement with the broader Blue Cross Blue Shield Association. We have seen significant value in having this one under our belt. Even potentially for Medicare. We have highlighted the fact that we are starting to secure commercial coverage in our conversations with the leadership of the MolDX programs. It also validates the strength of our clinical evidence base, including the clinical utility of this test and the overall healthcare economic arguments that we are making with other commercial payers. It is not just a theoretical policy. We are already seeing patients in this region that have Highmark that we are billing under this policy, and we remain deeply engaged on this front.

Speaker #5: So we've seen significant value in having this one under our belt. And actually, even potentially for Medicare. We've highlighted the fact that we're starting to secure commercial coverage in our conversations with the leadership of the MOLDEX programs.

Speaker #5: It also validates the strength of our clinical evidence base, including the clinical utility of this test and the overall healthcare economic arguments that we're making with other commercial payers.

Speaker #5: It's not just a theoretical policy. We are already seeing patients in this region and that have high mark that we're building under this policy and that we remain deeply engaged on this front.

Speaker #5: Identical talk about a little bit further. Of course, we strengthen our balance sheet with an underwritten public offering in the past quarter that netted $16.1 million in proceeds.

Dr. Lishan Aklog: Dennis McGrath will talk about it a little bit further. Of course, we strengthened our balance sheet with an underwritten public offering in the past quarter that netted $16.1 million in proceeds. This significantly bolsters our balance sheet. We have $30 million in pro forma cash at the end of the second quarter. The key goal for this financing was to extend our runway well into 2026 and past the now concrete milestones that we are facing, particularly as it relates to Medicare and to mitigate risk from external factors. It also provides us with sufficient resources to ramp up our commercial efforts after we secure Medicare approval. Another important development, strategic development over this past quarter, was ultimately the publication in the American Journal of Gastroenterology of the pilot study that was performed studying the EsoGuard in a target population of patients without significant GERD symptoms.

Speaker #5: This significantly bolsters our balance sheet. We have $30 million in pro forma cash at the end of the second quarter. The key goal for this financing was to extend our runway well into 2026 and past the now concrete milestones that we are facing, particularly as it relates to Medicare, and to mitigate risk from external factors.

Speaker #5: It also provides us with sufficient resources to ramp up our commercial efforts after we secure Medicare approval. Another important development, strategic involvement over this past quarter was the ultimately the publication in the American Journal of Gastroenterology of the pilot study that was performed studying the e-cigar in a target population of patients without significant GERD symptoms.

Speaker #5: This publication if you recall from our previous call led to a larger ongoing five-year study sponsored and funded by an $8 million grant by the National Institutes of Health.

Dr. Lishan Aklog: This publication, if you recall from our previous call, led to a larger ongoing five-year study sponsored and funded by an $8 million grant by the National Institutes of Health. It had two key findings. One, that EsoGuard performed extremely well with no degradation in performance in patients without significant GERD symptoms. It had a 100% negative predictive value. The prevalence in this population without symptoms of GERD remained high at 8.4%, approximately the same as in the traditional target population with standard criteria.

Speaker #5: And it had two key findings. One, that e-cigar performed extremely well with no degradation in performance in patients without significant GERD symptoms. It had a 100% negative predictive value.

Speaker #5: And the prevalence in this population without symptoms of GERD remained high at 8.4% approximately the same as in the traditional target population with standard criteria.

Speaker #5: So we really see this as a future opportunity, not in the near term, but in the medium to long term. If the NIH study can replicate this result, we really do view that the large total addressable market of about $60 billion could increase by a substantial amount beyond that if we include ultimately patients without GERD symptoms or at least without significant GERD symptoms are included in guidelines and in coverage policies.

Dr. Lishan Aklog: We really see this as a future opportunity, not in the near term, but in the medium to long term, that if the NIH study can replicate this result, we really do view that the large total addressable market of about $60 billion could increase by a substantial amount beyond that if we include ultimately patients without GERD symptoms or at least without significant GERD symptoms are included in guidelines and in coverage policies. I really want to focus the rest of my comments on the upcoming September 4th CAC meeting and its critical role in our efforts to secure a positive Medicare coverage policy outcome for EsoGuard. As I said, we are really excited about this. We view this as a very positive development and want to really go in a bit of depth on what this means for our pathway.

Speaker #5: So I really want to focus the rest of my comments on the upcoming September 4th CAC meeting and its critical role in our efforts to secure a positive Medicare coverage policy outcome for e-cigar.

Speaker #5: As I said, we're really excited about this. We view this as a very positive development and I want to really give some go in a bit of depth on what this means for our pathway.

Speaker #5: In order for us to do so, this process of securing local coverage determinations through the MOLDEX program is not straightforward. I thought it would be helpful to go through in some detail the history of how we got to this point, understand what we expect from this meeting, and the motivation for this meeting based on our conversations with leadership at MOLDEX. Additionally, we will discuss what we expect to happen after the September 4th meeting.

Dr. Lishan Aklog: In order for us to do so, this process of securing Local Coverage Determinations through the MolDX program is not straightforward. I thought it would be helpful to go through in some detail the history of how we got to this point, understand what we expect from this meeting, the motivation for this meeting based on our conversations with leadership at MolDX, and then what we expect to happen after this September 4th meeting. Let us go ahead and get started. Our first engagement with the MolDX program was in 2020. The MolDX program is run by one of the Medicare administrative contractors, Palmetto GBA, and they work with several other of the Medicare administrative contractors, other MACs that are MolDX participants in essentially outsourcing the review of molecular diagnostics for payment and coverage to the MolDX program.

Speaker #5: So let's go ahead and get started. Our first engagement with the MOLDEX program was in 2020. The MOLDEX program is run by one of the Medicare administrative contractors, Paul Metter GBA.

Speaker #5: And they work with several other of the Medicare administrative contractors, other MACs, that are MOLDEX participants in essentially outsourcing the review of molecular diagnostics for payment and coverage to the MOLDEX program.

Speaker #5: That includes Meridian, which is the MAC that our laboratory falls under in Orange County, California. That first engagement led to several meetings, a submission for payment, and coverage.

Dr. Lishan Aklog: That includes Meridian, which is the MAC that our laboratory falls under in Orange County, California. That first engagement led to several meetings and submissions for payment and coverage. We secured our payment rate very soon thereafter in early 2021 at $1,938. We submitted our request for a coverage policy based on the availability of non-endoscopic biomarker tests. At that time, we did not have significant data. We had no clinical utility data. We had just the original Science Translational Medicine paper. We went to work to collect more data. Fortunately, our efforts to trigger the LCD process were successful. There was somewhat of a lull from COVID, but ultimately, the process of actually putting forth a proposed draft and ultimately a final LCD started going into effect. In late 2021, there was an actual first CAC meeting, analogous to the CAC meeting that is coming up in September.

Speaker #5: We secured our payment rate very soon thereafter in early 2021 at $19.38. We submitted our request for a coverage policy based on the availability of non-endoscopic biomarker tests.

Speaker #5: At that time, we didn't have significant data. We had no clinical utility data. We had just the original science translational medicine paper. And we went to work to collect more data.

Speaker #5: But fortunately, our efforts to trigger the LCD process were successful. There was somewhat of a lull from COVID, but ultimately the process of actually putting forth a proposed draft and ultimately final LCD started going into effect.

Speaker #5: In late 2021, there was an actual first CAC meeting, analogous to the CAC meeting that's coming up in September. And that meeting went well.

Dr. Lishan Aklog: That meeting went well. It was an early effort by MolDX to get expert opinion, to get a sense as to whether the experts, the clinical experts, they were gastroenterologists primarily in that group and a pathologist, as to whether the evidence broadly for non-endoscopic biomarker testing supported identifying these patients with esophageal precancer. That meeting was positive. It led, we believe, directly to a decision to actually publish a draft LCD in the spring of 2022. That draft LCD was not perfect. It had issues with regard to the way the coverage criteria were outlined. It was listed as a non-coverage LCD because there was no data. We didn't have any data, and there were no other tests that fell into this category.

Speaker #5: It was an early effort by MOLDEX to get expert opinion to get a sense as to whether they felt whether the experts, the clinical experts, they were gastroenterologists primarily in that group and ophthalmologists, as to whether the evidence for broadly for non-endoscopic biomarker testing supported identifying these patients with esophageal precancer.

Speaker #5: And that meeting was positive, and it led, we believe, directly to a decision to actually publish a draft LCD in the spring of 2022.

Speaker #5: That draft LCD had wasn't perfect. It had issues with regard to the way the coverage criteria were outlined. It was listed as a non-coverage LCD because there was no data.

Speaker #5: We didn't have any data, and there were no other tests that fell into this category. But we saw that as a very important development that indicated motivation for the group to actually get in the game and start establishing the groundwork for coverage of these kinds of tests by Medicare.

Dr. Lishan Aklog: We saw that as a very important development that indicated motivation for the group to actually get in the game and start establishing the groundwork for coverage of these kinds of tests by Medicare. There were the obligatory processes that go with the draft LCD. There was a comment period and a public meeting, and written and public comments were submitted on how to fix the LCD. That was successful. About a year later, a final LCD was published. Again, it remained non-covered, but the body of it was really written as a coverage LCD. It said, "We will cover tests like this." It fixed the criteria. The criteria matched the standard criteria that the American College of Gastroenterology has published. We were off to the races at that point.

Speaker #5: There were sort of the obligatory processes that go with the draft LCD. There was a comment period, a public meeting, and written public comments were submitted on how to fix the LCD.

Speaker #5: And that was successful. About a year later, a final LCD was published. Again, it remained non-covered, but the body of it was really written as a coverage LCD.

Speaker #5: It said, "We will cover tests like this and it fits the criteria. The criteria match the standard criteria for that the American Gastro American College of Gastroenterology has published." And we were off to the races at that point.

Speaker #5: We had a clear roadmap ahead of us as to how to secure coverage based on the data that we collected. By mid-last year, by the summer of last year, a year ago, we had essentially completed much of the clinical research that we needed to provide in order for us to secure our coverage under this coverage determination.

Dr. Lishan Aklog: We had a clear roadmap ahead of us as to how to secure coverage based on the data that we collected. By mid-last year, by the summer of last year, a year ago, we had essentially completed much of the clinical research that we needed to provide in order for us to secure coverage under this coverage determination. That data consists of three types of data: clinical validity, which is the actual intrinsic performance of the test; clinical utility, which is the published evidence that the test can be used appropriately to manage patients; and analytical validity, which is about how it actually operates in the laboratory. That's less important. We requested and had a very successful pre-submission meeting in person with the MolDX leadership and went through our data and presented what we had.

Speaker #5: That data consists of three types of data: clinical validity, which is the actual intrinsic performance of the test; clinical utility, which is the evidence published evidence that the test can be used appropriately to manage patients; and then analytical validity, which is about how it actually operates in the laboratory that's less important.

Speaker #5: So we requested and had a very successful pre-submission meeting with in-person with the MOLDEX leadership and went through our data and presented what we had.

Speaker #5: And that began several months period a very close engagement and discussions with the leadership at MOLDEX about the process by which we should put our data together, how to collect it, how to actually go ahead and submit for what for the process, which is called a reconsideration of the LCD that had been previously published.

Dr. Lishan Aklog: That began a several-month period of very close engagement and discussions with the leadership at MolDX about the process by which we should put our data together, how to collect it, how to actually go ahead and submit for the process, which is called a reconsideration of the LCD that had been previously published. That engagement was very positive. It was very collaborative. It culminated at the end of the year in November of us submitting and then ultimately them accepting a formal request for consideration that included all of our data. That was in December of last year. That was a bit of a waiting game, which we were all waiting for. We waited through the first half of the year for the MolDX team to review our submission, to review the updates to the data. The request was very straightforward.

Speaker #5: That engagement was very positive. It was very collaborative. And it culminated at the end of the year in November of us submitting and then ultimately them accepting a formal request for consideration that included all of our data.

Speaker #5: That was in December of last year. The note's a bit of a waiting game, which we were all waiting for. And we waited through the first half of the year to for the MOLDEX team to review our submission, to review the updates to the data the request was very straightforward.

Speaker #5: It was just simply that we now have data. We believe we have sufficient clinical validity, clinical utility, and analytical validity data and that we are ready to be granted coverage for this.

Dr. Lishan Aklog: It was just simply that we now have data. We believe we have sufficient clinical validity, clinical utility, and analytical validity data, and that we are ready to be granted coverage for this. We know in retrospect now that there were some delays related to the change in administration and cuts at CMS that delayed the overall activity level at the program. A few weeks ago, we re-engaged with MolDX leadership in person, had discussions just prior to the publication of this meeting notice. We were excited when the meeting notice was published as an indication that we were well on our way to the final stages of this process. Let me talk a little bit about the meeting itself. The MolDX process has very concrete portions of which are by statutory requirement processes by which Local Coverage Determinations can be provided.

Speaker #5: We know in retrospect now that there were some delays related to the change in administration and cuts at CMS that delayed the overall activity level at the program.

Speaker #5: But a few weeks ago, we re-engaged with MOLDEX leadership in person, had discussions just prior to the publication of the meeting notice, and we're excited when the meeting notice was published.

Speaker #5: As an indication that we were well on our way to the final stages of this process. Let me talk a little bit about the meeting itself.

Speaker #5: The MOLDEX process has very sort of concrete portions of which are step-by-statutory requirement processes by which local coverage determinations can be provided. These coverage determinations can incorporate two buckets of information.

Dr. Lishan Aklog: These coverage determinations can incorporate two buckets of information. One is published peer-reviewed data, as well as expert opinions from these public meetings, expert opinion that is by key opinion leaders in the space. That is the purpose of this meeting. The purpose of this meeting is to provide clinical context to the clinical evidence, which we firmly believe is complete to show how the utility of our type of test, of non-endoscopic biomarker testing, enhances the care of patients. It is important to note that we have been asked this question a bit, that this is not an FDA panel.

Speaker #5: One is published peer-reviewed data as well as expert opinion from these public meetings, expert opinion that is by key opinion leaders in the space.

Speaker #5: So that's the purpose of this meeting. The purpose of this meeting is to provide clinical context to the clinical evidence, which we firmly believe is complete to show how the utility of our type of test, of non-endoscopic biomarker testing, enhances the care of patients.

Speaker #5: And it's important to note that we've been asked this question a bit, that this is not an FDA panel. This is an advisory committee.

Dr. Lishan Aklog: This is an advisory committee. There is no thumbs up, thumbs down decision at the end of it. It is informative. It is intended. It is a two-hour meeting that will have questions in advance that is intended to engage the experts and provide clinical context to the evidence that is already presented, that we already presented in our package. We have very high expectations for this meeting. We think it will be positive. We are highly confident, not just in our clinical evidence, but in the clinical utility of this test. We have performed 40,000 tests so far today in all sorts of settings, whether, as we mentioned with Hoag Healthcare Network, in building broad programs within health systems, in individual practices, whether they be primary care or gastroenterology.

Speaker #5: There's no thumbs up, thumbs down decision at the end of it. It's informative. It's intended for two-hour meeting intended that will have questions in advance that's intended to engage the experts and provide clinical context to the evidence that's already presented that we already presented in our package.

Speaker #5: And so we have very high expectations for this meeting. We think it'll be positive. We are highly confident not just in our clinical evidence, but in the clinical utility of this test.

Speaker #5: We've formed 40,000 tests so far today in all sorts of settings, whether as we mentioned with Hoag, in building broad programs within health systems, in individual practices, whether they be primary care or gastroenterology.

Speaker #5: And so we're very confident that that message will come out by the experts, which we think will be a diverse group of both the gastroenterologists and primary care physicians as well as a mix of academic experts and patients and folks in practice.

Dr. Lishan Aklog: We are very confident that that message will come out by the experts, which we think will be a diverse group of both gastroenterologists and primary care physicians, as well as a mix of academic experts and patients and folks in practice. What happens after the meeting? The meeting is, again, designed to, on the record, have the experts opine on the utility of our test and the clinical validity. From that point on, the results of that meeting will be incorporated into what we believe is the work that has already been performed to date. The next step in the process will be, as was the case in the initial proposed LCD, there will be a publication of a draft LCD.

Speaker #5: So what happens after the meeting? The meeting is again designed to, on the record, have the experts opine on the utility of our test and the clinical validity.

Speaker #5: From that point on, the results of that meeting will be incorporated into what we believe is the work that's already been performed to date.

Speaker #5: And the next step in the process will be as was the case in the initial proposed LCD, there'll be a publication of a draft LCD.

Speaker #5: Again, we have every reason to think based on our discussions that this is that we are in the late stages of this and we are certainly hopeful that a draft LCD will be forthcoming in the early period after the completion of the CAC.

Dr. Lishan Aklog: Again, we have every reason to think, based on our discussions, that we are in the late stages of this, and we are certainly hopeful that a draft LCD will be forthcoming in the early period after the completion of the CAC meeting. After that, the draft LCD itself is really, from our point of view, the milestone itself. A draft LCD means that the MolDX group, on behalf of the other contractors, is committed, has made a determination that this test should be covered. Then there is the mandatory process that we went through the last time. There will be a comment period, a public meeting to get public comments. A final LCD will be published after incorporating those comments. We have no reason to expect that there will be any pushback with regard to the comment period.

Speaker #5: Then after that, sorry, the draft LCD itself is really from our point of view, is the milestone itself. A draft LCD means that the group that the MOLDEX group on behalf of the other contractors is committed has made a determination that this test should be covered.

Speaker #5: And then there's a mandatory process that we went through the last time. There'll be a comment period, a public meeting to get public comments.

Speaker #5: And then a final LCD will be published after incorporating those comments. We have no reason to expect that there'll be any pushback with regard to the comment period.

Speaker #5: We and others in the industry are supportive obviously of this moving forward. So that's what we expect. Again, I just to summarize, we are really looking forward to this.

Dr. Lishan Aklog: We and others in the industry are supportive, obviously, of this moving forward. That is what we expect. Again, just to summarize, we are really looking forward to this. It is a few weeks away. Everyone is really excited about it. Based on ongoing conversations with folks within MolDX and elsewhere in our consultants, we have really strong expectations for a very positive outcome. As we really now do believe that Medicare coverage is coming, and as a testament to that, we are already positioning resources within our company to focus on increasing our Medicare population. We have already taken some proactive steps to ensure, once coverage is secured, that we will be able to accelerate our commercialization and capitalize on this market opportunity.

Speaker #5: A few weeks away. It was really excited about it. And based on ongoing conversations with folks within MOLDEX and elsewhere in our consultants, we have really a strong expectation for a very positive outcome.

Speaker #5: So as I as we really now do believe that Medicare coverage is coming, and as a testament to that, we are already positioning resources within our company to focus on increasing our Medicare population.

Speaker #5: We've already taken some proactive steps to ensure once coverage is secured, that we'll be able to accelerate our commercialization and capitalize on this market opportunity.

Speaker #5: Of course, in parallel, we as I said earlier, we are continuing to drive our market access efforts that are targeting commercial payers. We've had some very, very encouraging engagements even in the last couple of weeks with the regional and larger plans.

Dr. Lishan Aklog: Of course, in parallel, as I said earlier, we are continuing to drive our market access efforts that are targeting commercial payers. We have had some very, very encouraging engagements even in the last couple of weeks with regional and larger plans. We are looking forward to starting to secure some additional positive coverage policies even before the final Medicare process is complete and we have final coverage there. We are also looking forward to starting to see our concierge and contracting pipeline, which, as I said, is robust, start to yield tangible results in the coming quarters. With that, let us pass the call on to Dennis.

Speaker #5: And we're looking forward to starting to secure some additional positive coverage policies even before the final Medicare process is complete. And we have final coverage there.

Speaker #5: And we're also looking forward to starting to see our concierge and contracting pipeline, which as I said is robust, start to yield tangible results in the coming quarters.

Speaker #5: And so with that, let's pass the call on to Dennis.

Speaker #6: Thanks, Lishan, and good morning, everyone. The summary financial results for the second quarter were reported in our press release that has been distributed. On the next three slides, I'll emphasize a few key financial highlights from the second quarter, which I encourage you to consider these remarks in the context of the full disclosures covered in our quarterly report on Form 10Q.

Dennis McGrath: Thanks, Lishan. Good morning, everyone. The summary financial results for the second quarter were reported in our press release that has been distributed. On the next three slides, I will emphasize a few key financial highlights from the second quarter. I encourage you to consider these remarks in the context of the full disclosures covered in our quarterly report on Form 10-Q. With regard to the balance sheet, cash at quarter end June 30th was $31.1 million. During the quarter, we completed a public offering with net proceeds of $16 million. The quarterly burn rate was $10.3 million, which is slightly better than the average burn rate for the four preceding quarters of $10.5 million. The burn in the second quarter included $7.2 million from ongoing operations and $3.1 million from the quarterly MSA with PAVmed Inc.

Speaker #6: With regard to the balance sheet, cash at quarter-end June 30th was 31.1 million. During the quarter, we completed a CMPO with net proceeds of 16 million.

Speaker #6: The quarterly burn rate was 10.3 million, which is slightly better than the average burn rate for the four preceding quarters of 10.5. The burn in the second quarter included 7.2 million from ongoing operations, and 3.1 million from the quarterly MSA with PADME.

Speaker #6: You will recall at the end of last year, we refinanced our convertible debt into a 22 million dollar five-year note interest-only at 12% with a dollar conversion price which is held by long-term shareholders.

Dennis McGrath: You will recall at the end of last year, we refinanced our convertible debt into a $22 million five-year note, interest only at 12% with a dollar conversion price, which is held by long-term shareholders. The fair value of the convertible notes in the amount of $25.3 million at quarter end is really the only other substantive change from the previous reported balances at the end of the first quarter. The fair value decrease of $7.5 million reflects a mark-to-market quarterly adjustment in parallel with the common stock price changes between the periods. The fair value decrease also drives a corresponding income pickup of $6.8 million reflected in other income in the P&L. The shares outstanding, including unvested RSAs as of last week, are approximately 108.5 million.

Speaker #6: The fair value of the convertible notes and the amount of 25.3 million at quarter-end is really the only other substantive change from the previous reported balances at the end of the first quarter.

Speaker #6: The fair value decreased to 7.5 million. Reflects a marked-to-mark quarterly adjustment in parallel with the common stock price changes between the periods. The fair value decrease also drives the corresponding income pickup of 6.8 million, reflected in other income in the P&L.

Speaker #6: The shares outstanding, including uninvested RSAs, as of last week are approximately 108.5 million. The gap outstanding shares as of June 30th of 101.8 million are reflected in the slide as well as on the face of the balance sheet in 10Q.

Dennis McGrath: The GAAP outstanding shares as of June 30th of 101.8 million are reflected in the slide as well as on the face of the balance sheet with 10-Q. GAAP shares do not reflect unvested RSA amounts. At present, PAVmed Inc. continues to be the single largest shareholder of Lucid Diagnostics Inc. with ownership of approximately 29% of the common shares outstanding. Although PAVmed Inc. no longer has voting control of Lucid Diagnostics Inc., PAVmed Inc., together with the board and management, still has significant influence over Lucid Diagnostics Inc. with more than 27% voting interest. Lucid Diagnostics Inc. has convertible preferred securities whereby the preferred shareholders are significantly incentivized to delay conversion of the preferred shares in the common shares until 2026, namely the second anniversary from the closing.

Speaker #6: Gap shares do not reflect uninvested RSA amounts. The present PADME continues to be the single largest shareholder of Lucid Diagnostics, with ownership of approximately 29% of the common shares outstanding.

Speaker #6: Although PADME no longer has voting control of Lucid, PADME, together with the board and management, still has significant influence over Lucid with more than 27%.

Speaker #6: Voting interest. Lucid has convertible preferred securities whereby the preferred shareholders are significantly incentivized to delay conversion of the preferred shares in the common shares until 2026.

Speaker #6: Namely, the second anniversary from the closing. If all of the preferred shares outstanding were converted to common shares as of today, there would be an additional 49.6 million common shares outstanding.

Dennis McGrath: If all of the preferred shares outstanding were converted to common shares as of today, there would be an additional 49.6 million common shares outstanding. With regards to the P&L, this slide compares this year's second quarter to last year's second quarter and year-over-year on certain key items. I trust you will review the information in my comments in light of the questionnaire disclosed at the bottom of the slide about supplemental information, particularly non-GAAP information. With over 2,700 tests for the second quarter, we invoiced nearly $7 million and recognized a revenue of approximately $1.2 million, reflecting a 40% sequential revenue increase and a 19% year-over-year increase. With new investors once again joining us for this call, it is worth repeating that we have communicated in the past quarters about revenue recognition.

Speaker #6: With regard to the P&L, this slide compares this year's second quarter to last year's second quarter in year-over-year on certain key items. I trust you'll 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.

Speaker #6: With over 2,700 tests for the second quarter, we invoiced nearly 7 million dollars. And recognize revenue of approximately 1.2 million reflecting a 40% sequential revenue increase and a 19% year-over-year increase.

Speaker #6: With new investors once again joining us for this call, it's worth repeating that we've communicated in the past quarters about revenue recognition. A key determinant in how revenue is recognized at this point in our reimbursement journey is the probability of collection.

Dennis McGrath: Key to determining how revenue is recognized at this point in our reimbursement journey is the probability of collection. Therefore, due to the fact that we are in the early stages of the reimbursement process, it means revenue recognition for the majority of claims submitted to traditional government or private health insurance will be recognized when the claim is actually collected, versus when the patient report is delivered, invoiced, and submitted for reimbursement. As you will see in our 10-Q, this is called variable consideration in the jargon of GAAP's ASC 606 revenue recognition guidelines. Presently, there is insufficient predictive data to reflect revenue from all of our quarterly test volume at the point the test is delivered to the referring physician. For billable amounts contracted directly with employers or through concierge medicine, and they are fixed and determinable, will be recognized as revenue when our contracted service is delivered.

Speaker #6: And therefore, due to the fact that we're in the early stages of the reimbursement process, revenue recognition for the majority of claims submitted to traditional government or private health insurers will be recognized when the claim is actually collected.

Speaker #6: Versus when the patient report is delivered, invoiced, and submitted for reimbursement. As you'll see in our 10-Q, this is called variable consideration in the jargon of GAAP, ASC 606 revenue recognition guidelines.

Speaker #6: And presently, there's insufficient predictive data to reflect revenue from all of our quarterly test volume at the point the test is delivered to the referring physician.

Speaker #6: For billable amounts contracted directly with employers or through concierge medicine, and that are fixed and determinable, revenue will be recognized when our contracted service is delivered.

Speaker #6: Generally, that means when the report is delivered to the referring physician. It's important to note that appending Medicare approval decisions impacts 40% to 50% of our addressable patient population.

Dennis McGrath: Generally, that means when the report is delivered to the referring physician. It is important to note that a pending Medicare approval decision impacts 40% to 50% of our addressable patient population. Therefore, we will have a significant impact on our future revenue recognition analysis. Furthermore, for tests performed on Medicare patients with dates of service within 12 months of a final positive Medicare policy, we will also get paid within a reasonable timeframe after the final policy is issued. Our non-GAAP loss for the second quarter of $9.9 million is better sequentially by $1.2 million and better than the trailing fourth quarter average of $10.5 million. The non-GAAP net loss per share of $0.10 is better sequentially, as well as better than each of the last four quarters with a trailing four-quarter average loss of $0.16 per share.

Speaker #6: And therefore, we'll have a significant impact on our future revenue recognition analysis. Furthermore, for tests performed on Medicare patients with dates of service within 12 months of a final positive Medicare policy, we'll also get paid within a reasonable timeframe after the final policy is issued.

Speaker #6: Our non-GAAP loss for the second quarter of $9.9 million is better sequentially by $1.2 million and is better than the trailing four-quarter average of $10.5 million.

Speaker #6: The non-GAAP net loss per share of 10 cents is better sequentially as well as better than each of the last four quarters with a trailing four-quarter average loss of 16 cents per share.

Speaker #6: On a GAAP EPS basis, the second quarter non-cash charges accounted for an income pickup of approximately $0.02 per share, including $0.07 income per share from the change in the fair value of the debt and offsetting P&L charges of $0.05 per share related to the Series D1 preferred dividend issued on May 6th, as well as other non-cash charges disclosed in the press release.

Dennis McGrath: On a GAAP EPS basis, the second quarter non-cash charges accounted for an income pickup of approximately $0.02 per share, including $0.07 income per share from the change in the fair value of the debt and offsetting P&L charges of $0.05 per share related to the Series B1 preferred dividend issued on May 6th, as well as other non-cash charges disclosed in the press release. With regard to our operating expenses, this slide is a graphic illustration of our operating expenses after eliminating non-cash expenses for the periods reflected. Non-GAAP operating expenses of $11.1 million are modestly lower than the average of $11.6 million for the last four quarters. Let me close with a few reimbursement highlights for the second quarter, as we have done in past calls. In the second quarter, we billed for 2,756 tests, reflecting about $6.9 million in pro forma revenue.

Speaker #6: With regard to our operating expenses, this slide is a graphic illustration of our operating expenses after eliminating non-cash expenses for the periods reflected. Non-GAAP operating expenses of 11.1 million are modestly lower than the average of 11.6 million for the last four quarters.

Speaker #6: Let me close with a few reimbursement highlights for the second quarter, as we've done in past calls. In the second quarter, we billed for 2,756 tests, reflecting about $6.9 million in pro forma revenue.

Speaker #6: During the second quarter, we recognized revenue of about 17% of that amount or 1.2 million. Of that amount, about 41% was from claims submitted in prior quarters with the longest dated item from about 24 months ago.

Dennis McGrath: During the second quarter, we recognized revenue of about 17% of that amount, or $1.2 million. Of that amount, about 41% was from claims submitted in prior quarters, with the longest dated item from about 24 months ago. Of the claims submitted in the second quarter, about 65% have been adjudicated. 35% are pending. Out of the 65% that have been adjudicated, about 30% resulted in an allowable amount by the insurance company with an average of about $1,786 per test, which obviously is bumping up against the Medicare rate, all of it out of network. Although it is denied, about 40% fit into one of three buckets: deemed not medically necessary or require prior authorization or required additional medical records. Additionally, about 49% were deemed to be non-covered. With that, Operator, let us open it up for questions.

Speaker #6: Of the claims submitted in the second quarter, about 65% have been adjudicated. 35% are pending. Out of the 65 that have been adjudicated, about 30% resulted in an allowable amount by the insurance company with an average of about 1,786 dollars per test which obviously is bumping up against the Medicare rate all of it out of network.

Speaker #6: Of those denied, about 40% fit into one of three buckets. Deemed not medically necessary or require a prior authorization, or required additional medical records.

Speaker #6: Additionally, about 49% were deemed to be non-covered. With that operator, let's open it up for questions.

Speaker #2: Yes, sir. Thank you. Ladies and gentlemen, we will now begin the question and answer session. And if you wish to ask a question, please press star and one on your telephone keypad and wait for your name to be announced.

Operator: Yes, sir. Thank you. Ladies and gentlemen, we will now begin the question and answer session. If you wish to ask a question, please press star and one on your telephone keypad and wait for your name to be announced. We now have our first question. This comes from Mark Massaro from BTIG. Your line is now open. Please go ahead.

Speaker #2: And we now have our first question. This comes from Mark Massaro from BTIG, your line is now open. Please go ahead.

Speaker #7: Hi, Mark. Hey, guys. Congrats on the quarter and for taking the questions. I guess the first one is for Lishan. I thought it was interesting that the Medicare contractors are meeting together and so I was just curious you know I think it's your MAC is in California.

Dr. Lishan Aklog: Hi, Mark. Hey, guys. Congrats on the quarter and for taking the questions. I guess the first one is for Lishan Aklog. I thought it was interesting that the Medicare contractors are meeting together. I was just curious, you know, I think your MAC is in California. That is Meridian. It appears to be almost like a coordinated group effort. I was just curious if there is anything that you could perhaps opine on about the fact that these contractors are coming together. Related to that, you guys are in a series of medical guidelines. I was trying to think back on a time where a test was not granted Medicare coverage being included in multiple guidelines across the board. Do you think I am interpreting this reasonably well? Can you share your perspective on perhaps why these Medicare contractors are all coming together? Great. Thanks, Mark. Great questions.

Speaker #7: That's Meridian. And then you know it's sort of this appears to be almost like a coordinated group effort. I was just curious if there's anything that you could perhaps opine on about the fact that these contractors are coming together and then related to that, you know, you guys are in a series of medical guidelines and so I was trying to think back on a time where a test was not granted Medicare coverage being included in multiple guidelines across the board.

Speaker #7: Do you think I'm interpreting this reasonably well and just can you share your perspective on perhaps why these Medicare contractors are all coming together?

Speaker #8: Great. Yeah, thanks, Mark. Great questions. So you're right. This is the official term as this is a multi-jurisdictional CAC meeting. And so that means, as you said, that all four MOLDEX participating MACs including Paul Metter, which is where MOLDEX is, as well as Meridian, which is the MAC that our laboratory is under, are co-hosting this event.

Dr. Lishan Aklog: You are right. This is the official term, this is a multi-jurisdictional CAC meeting. That means, as you said, all four MolDX participating MACs, including Palmetto, which is where MolDX is, as well as Meridian, which is the MAC that our laboratory is under, are co-hosting this event. I think that is a really positive sign. I think it is an indication that they are coming together at the late stages of this process. Although the MolDX program is run by Palmetto, ultimately, for the program to work for the other MolDX participating MACs, ultimately, they have to provide their own version of the draft Local Coverage Determination. It only works if they are all identical. If you look back at the LCD that was previously published, they were verbatim identical between the three MACs that were participating at the time.

Speaker #8: And so, yeah, I think that's a really positive sign. I think it's an indication that they're coming together, and so that's the late stages of this process.

Speaker #8: You know, although the MOLDEX program is run by Paul Metter, ultimately for the program to work, for the other MOLDEX participating MACs, you know, ultimately they have to provide their own version of the local coverage determination.

Speaker #8: And it only works if they're all identical. If you look back at the LCD that was previously published, there were verbatim identical entries between the three MACs that were participating at the time.

Speaker #8: And so having them all come together is really, I would view that very positively as a sense that they are coming together at the late stages and looking to hear the expert opinions to sort of have on the public record. As I mentioned, these meetings are an opportunity for officially being on the public record for the experts to opine on the clinical utility.

Dr. Lishan Aklog: Having them all come together is really, I would view that very positively as a sense that they are coming together at the late stages and looking to hear the expert opinions to have on the public record. As I mentioned, these meetings are an ability for, officially on the public record, for the experts to opine on the clinical utility. You are right. As it relates to the fact that this test not only has outstanding clinical validity data on its performance, the clinical utility, both the published data and just the intrinsic implicit clinical utility based on the guidelines is clear. We have guidelines from the two major GI societies that clearly indicate non-endoscopic biomarker testing, such as EsoGuard, as an acceptable alternative to endoscopy with an equivalent level of evidence.

Speaker #8: You're right. As it relates to the fact that this test not only has outstanding clinical validity data on its performance the clinical utility, both the published data and just the intrinsic implicit clinical utility based on the guidelines, is clear.

Speaker #8: We have guidelines from the two major GI societies that clearly indicate not-endoscopic biomarker testing such as e-cigar as an acceptable alternative to endoscopy with an equivalent level of evidence.

Speaker #8: And recently, the NCCN, which is very powerful in payer circles and market access circles, for the first time published a section on screening for esophageal precancer that mimics that really those guidelines.

Dr. Lishan Aklog: Recently, the NCCN, which is very powerful in payer circles and market access circles, for the first time published a section on screening for esophageal precancer that really mimics those guidelines. We think, really, at the end of the day, that is a very pretty fundamental vote of confidence by the expert community on the clinical utility of this test. We expect that at least one of the experts will, in fact, be one of the co-authors of the guidelines, and that person will be able to reiterate that in a public setting. That is the foundation at the end of the day. At the end of the day, the physician experts, the KOLs, have published their opinion with regard to the clinical utility, and we expect that to be reflected during the meeting. Okay. That is really helpful.

Speaker #8: So, we think really at the end of the day, that's a very pretty fundamental vote of confidence by the expert community on the clinical utility of this test.

Speaker #8: We expect that at least one of the experts will, in fact, be one of the co-authors of the guidelines and that person will be able to reiterate that in a public setting.

Speaker #8: So that is the foundation at the end of the day. At the end of the day, the physician experts the KOLs have published their opinion with regard to the clinical utility and we expect that to be reflected during the meeting.

Speaker #7: Okay. That's really helpful. And then I think I heard you guys talk about how you're taking steps now early steps to begin to target the Medicare population it might be helpful just to get a refresher on what percentage of your business today is Medicare you know of that 2756 volumes, how much of that was Medicare or of the revenue?

Dr. Lishan Aklog: I think I heard you guys talk about how you are taking steps now, early steps to begin to target the Medicare population. It might be helpful just to get a refresher on what percentage of your business today is Medicare, of that 2,756 volumes, how much of that was Medicare or of the revenue. What steps are you taking? Of course, I could guess, but I would just be curious if you could expand on how you are sort of repositioning perhaps some of your salespeople, or are you looking to make some headcount additions? Yes. Great question. Let us start with the portion of, let us start with the target population. As you know, there are 30 million patients at a minimum who are recommended for screening under existing guidelines. The estimates are 40% to 50% of those are Medicare population patients.

Speaker #7: And what steps are you taking? You know, of course, I could guess but I would just be curious if you could expand on how you're sort of repositioning perhaps some of your salespeople or are you looking to make some headcount additions?

Speaker #8: Yep. Great question. So let's start with the portion of let's start with the chart. . Let's start with the target population. So as you know, there are 30 million patients at a minimum who are recommended for screening under existing guidelines.

Speaker #8: The estimates are 40% to 50% of those are Medicare patients. Now, our experience to date hasn't reflected that, and that's because we've made really no particular effort to target Medicare patients.

Dr. Lishan Aklog: Our experience to date has not reflected that, and that is because we have made really no particular effort to target Medicare patients. In fact, a lot of our activity, as you know, one of the most efficient ways for us to drive volume has been through these healthcare type events, these check your to-do events, which have been focused on firefighters. That has been a nice way for us to keep our sales team lean and to keep our OpEx down while still maintaining sufficient volume to drive engagement with commercial payers. As you know, that is sort of the baseline of how we have been trying to operate here. As you might imagine, the fire departments tend to be employed, not non-retirees. Sometimes we test retirees, but for the most part, those are working people, and they are not a Medicare population.

Speaker #8: In fact, a lot of our activity, as you know, one of the most efficient ways for us to drive volume has been through these health fair type events, these "Check Your Tutu" events, which have been focused on firefighters.

Speaker #8: And that's been a nice way for us to keep our sales team lean and to keep our OPEX down while still maintaining sufficient volume to drive engagement with commercial payers.

Speaker #8: As you know, that's sort of the baseline of how we've been trying to operate here. And again, I'd imagine the fire departments tend to employ non-retirees.

Speaker #8: So sometimes we testify retirees, but for the most part, those are working people and they're not a Medicare population. So the portion of our testing that has been Medicare over the years has vacillated a bit.

Dr. Lishan Aklog: The portion of our testing that has been Medicare over the years has vacillated a bit. I do not believe it has ever been much higher than 20%. Right now, it is running in the kind of 10% to 15% range, again, specifically because we have made no effort to target them, and the areas we have targeted tend to be a bit on the younger side. We do think, and this is one of the reasons why we are getting geared up here, once we have Medicare coverage, that we do have the ability to get that 10% to 15% number up substantially higher, just from our own sales execution and will not have anything to do with how quickly we can turn over commercial coverage policies or things that are really dependent on third parties. Ultimately, that will be within our control once we have Medicare coverage.

Speaker #8: I don't believe it's ever been much higher than 20%. Right now, it's running in the kind of 10 to 15 percent range. Again, specifically because we made no effort to target them and the areas we have targeted tend to be younger a bit on the younger side.

Speaker #8: So we do think, and this is one of the reasons why we're getting geared up here, once we have Medicare coverage, then we do have the ability to get that 10 to 15 percent number up substantially higher.

Speaker #8: You know, just from our own sales execution and won't have anything to do with how quickly we can turn over commercial coverage policies or things that are really dependent on third parties.

Speaker #8: Ultimately, that'll be within our control once we have Medicare coverage. So we there's no reason we can't go out and find these patients. And you asked about the steps that we're taking.

Dr. Lishan Aklog: There is no reason we cannot go out and find these patients. You ask about the steps that we are taking. There are other companies, and I think others even in your coverage universe who have done this. It is a combination of what you just said, which is positioning resources. We already have a pretty strong presence in the states that have higher concentrations of Medicare patients: Florida, Texas, Arizona, and even Southern California. Yes, there is some element of reallocating resources. We do not have any plans to increase our headcount and increase our OpEx or burn until we actually secure Medicare coverage. At that point, we will do so judiciously as we see growth and revenue coming in from that. There are other ways.

Speaker #8: You know, there are other companies and I think others even in your coverage universe who've done this. And it's a combination of what you just said, which is positioning resources.

Speaker #8: We already have pretty strong presence in the states where that have higher concentrations of Medicare patients, Florida, Texas, Arizona, and even Southern California. And so yes, there's some element of reallocating resources.

Speaker #8: We don't have any plans to increase our headcount and increase our OPEX or burn until we actually secure Medicare coverage. And at that point, we'll do so judiciously as we see growth and revenue coming in from that.

Speaker #8: There are other ways. So, there's lots of opportunities for digital targeting. We've started some of that right now already, where we can work with data partners to identify, through heat maps, areas that have high concentrations of Medicare populations and physicians that have a combination, for example, of a large Medicare practice, as well as those combining that with, let's say, people who have physicians who have a high rate of ordering proton pump inhibitors, which would suggest that they have a growth population.

Dr. Lishan Aklog: There are lots of opportunities for digital targeting. We have started some of that right now already, where we can work with data partners to identify, through heat maps, areas that have high concentrations of Medicare populations, physicians that have a combination, for example, of a large Medicare practice, as well as those combining that, the intersection of that with, let us say, people who have physicians who have a high rate of ordering proton pump inhibitors, which would suggest that they have a GERD population. This is 2025. There is lots of data out there that we can utilize to help our team better target positions where we will encounter more Medicare patients. Okay. Great. One last one for me. I will hop back in the queue after. I think, I was getting some investor questions about perhaps some more expectations around timing after the CAC meeting.

Speaker #8: So this is 2025. There's lots of data out there that we can utilize to help our team better target physicians where we'll encounter more Medicare patients.

Speaker #7: Okay, great. And then maybe one last one for me. I'll hop back in the queue after. I think you know I was getting some investor questions about perhaps some more expectations around timing.

Speaker #7: After the CAC meeting, I know you talked about how there's a comment period. And then you expect a draft LCD. After the CAC meeting, I'm just curious.

Dr. Lishan Aklog: I know you talked about how there is a comment period, and then you expect a draft LCD after the CAC meeting. I am just curious, is that perhaps roughly the fall or so where we could get the draft? As far as it relates to the final, is that perhaps, either late 2025, early 2026, or how are you guys thinking about that? One thing just to correct, I am not sure if you misspoke. The comment period is after the draft, right? The sequence is the CAC meeting is completed. They go back and hopefully finalize things into the form of a draft. The draft gets published, and then there is a 45-day window for a comment period and a public meeting, a comment meeting, just like we did last time, a public comment, a public meeting for comment.

Speaker #7: I mean, is that perhaps roughly the fall or so where we could get the draft and then as far as it relates to the final, is that perhaps you know either late 25, early 26, or how are you guys thinking about that?

Speaker #8: Yeah. So one thing just to correct: I'm not sure if you misspoke. The comment period is after the draft, right? So the sequence is the CAC meeting is completed.

Speaker #8: They go back and hopefully finalize things into the form of a draft. The draft gets published and then there's a 45-day window for a comment period and a public meeting, a comment meeting, just like we did last time up on the comment.

Speaker #8: A public meeting for comment. Then they're expected at that point to incorporate those comments. Again, we just have no reason to think there'll be any comments beyond what the CAC meeting will say and what we've already said.

Dr. Lishan Aklog: Then they are expected at that point to incorporate those comments. Again, we just have no reason, thankfully, any comments beyond what the CAC meeting will say and what we have already said. Then some period of time to get to the final. Now, again, just to reiterate, if there is a draft, they want to cover this. We view the steps and the time between a draft and a final as really just a bit of a bureaucratic formality. In terms of timing, I mean, look, it is hard to know, out of our hands after this meeting is completed. Everything is pointing to the fact, both based on our conversations with the leadership as well as, other folks who have a lot of experience in this space, everything is pointing to the fact that the bulk of the work is done.

Speaker #8: And then some period of time to get to the final. Now, you know again, just to reiterate, if there's a draft, they want to cover this.

Speaker #8: And so we view the steps and the time between a draft and a final is really just a bit of a bureaucratic formality. Now, in terms of timing, I mean, look, you know it's hard to know.

Speaker #8: You know that's out of our hands after this meeting is completed. But everything is pointing to the fact both based on our conversations with the leadership as well as you know other folks who have a lot of experience in this space.

Speaker #8: Everything is pointing to the fact that the bulk of the work is done. And that this the fact that they're convening as you said from the very beginning, multiple MACs together, convening the experts to opine, would suggest that you know we're really quite late in the process.

Dr. Lishan Aklog: This, the fact that they are convening, as you said, from the very beginning, multiple MACs together, convening the experts to opine would suggest that, we are really quite late in the process. We are certainly hopeful that the time between the CAC meeting and the publication of the draft is relatively short. How long that will be, I have no, really would rather not sort of speculate at this point, but we think it will be relatively quick. Thanks, guys. I appreciate it. Great. Thanks, Mark.

Speaker #8: And we're certainly hopeful that the time between the CAC meeting and a publication of the draft is relatively short. Along that will be, I have no you know really would rather not speculate at this point, but we think it'll be relatively quick.

Speaker #7: Okay. Thanks, guys. Appreciate it.

Speaker #8: All right. Thanks, Mark.

Speaker #2: Thank you. And the next question comes from Anthony Vendetti from Maxim Group, your line is now open. Please go ahead.

Operator: Thank you. The next question comes from Anthony Vendetti from Maxim Group. Your line's now open. Please go ahead.

Speaker #7: Thanks. Good morning, guys. How are you?

Dennis McGrath: Thanks. Good morning, guys. How are you? Great. I think I am just on a. Hey, Dennis McGrath. Hey, Lishan Aklog. Just as a follow-up to that. Without knowing exactly how long the comment, you know, how long they are going to make a decision after the 45-day comment period, if, as we assume right now, that the decision is positive, and like you said, there is no reason to assume it would not be based on everything that is to date been published and the comment period and so forth. Assuming that happens, it looks like it is bumping up against 1126, and it is not likely, it sounds like, that a decision would be made, and a rate decision or a decision to move forward would be as of 1126. Could that happen right after that?

Speaker #8: Great. So I think I just have a hey, Dennis. Hey, Lishan. Just as a follow-up to that, so without knowing exactly how long the comment you know how long they're going to make a decision after the 45-day comment period, if as we assume right now that the decision is positive and like you said, there's no reason to assume it wouldn't be, based on everything that's to date been published and the comment period and so forth, but assuming that happens, it looks like it's bumping up against you know 1/1/26 and it's not likely it sounds like that it would be a decision would be made and a rate decision or a decision to move forward would be as of 1/1/26.

Speaker #8: Could that happen right after that? You know what's the likelihood that this gets once it's decided implemented across the board? Yeah. So let me just clarify a few things.

Dennis McGrath: What is the likelihood that this gets, once it is decided, implemented across the board?

Dr. Lishan Aklog: Yeah. Let me just clarify a few things. One, again, to be 100% clear, the comment period happens after the draft, right? That 45-day.

Speaker #8: One, just to be again, to be 100% clear, the comment period happens after the draft, right? So that 45-day window. So there's nothing you know the CAC meet will happen and the next thing we will hear is a published draft.

Dr. Lishan Aklog: So there's nothing, the crack meet will happen, and the next thing we will hear is a published draft. The unknown really is how long that will take. We believe there's some urgency to get these done. There is a sort of a cadence to the overall productivity of the MolDX group with regard to getting LCDs and TAs out and so forth. As the year wraps up, I think there will be some urgency to get it done. The time between the draft, getting through the comment period, and completing the comment period and getting that to a final, I think I've said this before, I think there's probably at least three months, if you include the comment period, to go from a draft ultimately to a final. As long as we get the draft reasonably soon, we will feel quite good about our prospects.

Speaker #8: And so the unknown really is how long that'll take. We believe there's some urgency to get these done. I mean, there is a sort of a cadence to the overall productivity of the MOLDEX group with regard to getting LCDs and TAs out and so forth.

Speaker #8: And as the year wraps up, I think there'll be some urgency to get it done. The time between the draft, getting through the comment period, and completing the comment period and getting that to a final, I think I've said this before.

Speaker #8: I think there's you know probably at least you know three months if you include the comment period to go from a draft ultimately to a final.

Speaker #8: But you know as long as we get the draft reasonably soon, we'll feel quite good about our prospects and yeah, let's just say hope.

Dr. Lishan Aklog: Let's just say we certainly hope that we will get a draft before the end of the year.

Operator: before the end of the year.

Dr. Lishan Aklog: Okay.

Operator: When you were talking about the initial draft, before the end of the year, 45-day comment period, then the final draft. So we are into somewhere in the beginning of 2026, correct?

Dr. Lishan Aklog: Yeah, but I just want to remind you something. The reason why we are focused on the draft as the actual milestone, and you know that we will feel confident that this process has come to a successful outcome, is that if you remember, I do not recall if Dennis McGrath mentioned this or not, we have a backlog of a year that we can build upon the issuance of the final LCD from that date backwards. Look, we would love the draft to convert to a final as quickly as possible. All of the things that we need to do to extend the activities, the initiatives that we have started and accelerate them, there will be time to do that. Once we know the draft is done, we will start working on that.

Dr. Lishan Aklog: We will be able to submit those claims going back a year once we get a final. That is kind of why our focus is really on the time between the crack meeting and the draft. We certainly hope that things will move quickly after that. There will be plenty of work to do upon completion of the draft to get things geared up. That activity will ultimately, we will get paid for those ultimately.

Operator: Right. Okay. You will have the year's worth of claims you can submit, which is helpful too. I mean, if we were looking at like, and maybe it is tough to pin down because we do not know exactly how long it is going to take to do the draft and how long before the final draft is done. Is it possible that it is somewhere around April 1, 2026, where you think, okay, boom, everything is ready to go? Or could it drag on into the second half of 2026 as a possibility?

Dr. Lishan Aklog: We would certainly be disappointed if that, if it dragged on beyond that. I do not expect it.

It's somewhere around, you know, uh, 4126. Where do you think? Okay, boom, everything's ready to go. Or could it drag on into the second half of 2026 as a possibility?

Operator: You don't expect that. Okay. Okay. In terms of your commercial pipeline, maybe talk if you could just give us a little more color on that because you're talking about commercial payers?

Oh, it certainly would be disappointed if that if if it dragged on me off that. I I don't I don't expect it though.

You don't expect that. Okay, okay. And then, and in terms of your commercial pipeline, um,

Dr. Lishan Aklog: Commercial payers, yeah.

Operator: Now, yeah. Yeah.

Dr. Lishan Aklog: So, out of Medicare into the commercial.

Operator: Yeah, I think, but my perspective on that has evolved a little bit. Once we have gotten Highmark, let us just backtrack a second. We did not really have a final package to engage with the commercial payers until the beginning of this year. All of our activities, we have had engagements with them. We have talked about them. They know our test. We have submitted tests to them. We have engaged, as Dennis McGrath has mentioned before, with their Chief Medical Officers because they are reviewing our claims, out of network and so forth. But the actual meaningful policy, please give us positive medical policy discussions have really begun earlier this year once we have a, based on our full data package.

Operator: With the commercial payers, you actually have to do healthcare economic data that is not required by Medicare, but that is generally part of the part of that process. That culminated in our first, fairly quick turnaround for our first commercial plan in Highmark Blue Cross Blue Shield, with that policy becoming effective in May. As I have said, getting the first one through the door has had a very significant effect in our ongoing conversation. We have a pretty significant pipeline. Just about every week, literally every week, myself and the Chief Medical Officer and our Chief Operating Officer are on phone calls with medical directors of plans and to push them towards securing policy decisions. Those do not happen overnight. Sometimes they happen in discrete cycles through the year. But those conversations have started really been going well because now we have data and we can engage.

Maybe talk, if you could, just give us a little more color on that because you, you talking about commercial players commercial players. Yeah, no, yeah. Yeah. No. Yeah, I think but, you know, my perspective on that is evolved a little bit, you know, once we've gotten high Mark, um, let's just backtrack a second. So we didn't really have a final package to to engage with the commercial payers until the beginning of this year. So this, you know, all of our activities, you know, we we've had engagements with them. We've talked about them, they know our test, we submitted tests to them. We we've engaged, as Dennis has mentioned before with their chief medical officers, uh, because uh, they're reviewing, um, our, our claims, you know, out of network and so forth, but the actual sort of meaningful policy, please give us positive, medical policy discussions. Have really have begun uh earlier this year, once we have a, you know, based on our full data package and you know, with the commercial payers, you actually have to do Health Care economic data that's not required by Medicare. But that's

Operator: It is helpful that myself and, we have two physicians on our side on the call talking to physicians on the other side. The conversations have been very positive. We still think that to get broad coverage, and particularly to secure the larger plans, particularly the ones that operate under these laboratory benefit manager constructs, where they outsource some of the technical analysis to these third parties. I think those will need to secure that those will probably need to wait for Medicare. But I really do expect we are going to start filling the pipeline beyond Highmark Blue Cross Blue Shield with some of these regional plans and even some other national plans that are not on, you know, sort of the typical top five, but do have broader coverage beyond regions. Those calls are going well.

Overnight. Sometimes they happen in in discrete Cycles through the year, but those conversations have got have start really been going well because now we have data and we can engage, you know, it's helpful that myself and you know, we have 2 Physicians on our side. On the call, talking to Physicians on the other side and the conversations are have been very positive. And so, you know, we still think that to get broad coverage, particularly to secure the larger plans, particularly the ones that operate under the these laboratory benefits manager constructs, uh, where they, they absorb some of the technical analysis to these third parties, and I think those will need to, to secure the the those will probably need, um, to wait for Medicare. Uh, but I, you know, I really do expect what we're going to start. Um, um, um, um,

Operator: It is not surprising that they are going well because the data is pretty overwhelming. I mean, you just get really strong data. As Matt Riley mentioned, the guidelines are there. People are really, you know, the notion that this test operates very effectively as a triage test, you know, the first thing that people hear is that you are taking 75% to 80% of people who are recommended for testing and saying they do not need an invasive test. That is the kind of clinical utility endpoints that really resonate with payers. So it is all positive. It takes time to lock these things down. Highmark Blue Cross Blue Shield has broken ground for us, and we expect to continue to have success in that regard.

So on the um pipeline that would be on High Mark with with these Regional plans. And even some other National plans that are not that are not on, you know, sort of a, the typical top 5, but do that do have broader coverage Beyond regions. Uh, those, those, those calls are going well, and it's not surprising that they're going well because the data is pretty pretty, uh, uh, pretty overwhelming and we just got really strong, uh, data as Mark mentioned, the guidelines are there. Um, people are really, you know, the notion that this test operates very effectively as a triage test. You know that you know, the first thing that people hear is that you're taking 80 to, you know, 75 to 80% of people who are recommended for testing and saying they don't need an invasive test. And uh, that's the kind of

Dr. Lishan Aklog: No, that is really helpful, Lishan. That is kind of how I was trying to tie together. Highmark Blue Cross Blue Shield in May of this year and the commercial pipeline is building. The coming Medicare determination here, it sounds like, should accelerate, and some may be waiting for that determination. The combination of Highmark Blue Cross Blue Shield coming on and now this determination, which is on the near-term horizon, that should increase probably the conversion of that pipeline into actual contracts, right?

Those are the kind of clinical utility, um, endpoints that that really resonate with payers. So, uh, it's all positive it takes time uh to to lock these things down. Uh, hi Marcos um, Broken Ground for us and we expect to to to continue to have success in that regard.

Yeah. No, that that that's, that's, that's really helpful USA. And that's kind kind of how I was trying to tie together is. Yeah, you know, High Mark in May of this year. And, and, and the commercial pipeline's building and the the

Rachel Smith: Yeah, I think that's right.

Dr. Lishan Aklog: Anthony, go ahead.

Operator: Yeah, Anthony, another example.

Dr. Lishan Aklog: Yeah.

Operator: Go ahead.

Dr. Lishan Aklog: Sorry, Anthony.

Operator: Yeah, Anthony, another example of Medicare triggering some of the reimbursement. The biomarker legislation, which is still working its way through, 23 or 24 states now have adopted. As you read through some of those policies, many of them require, or one of the evidence to get covered under it is an LCD with Medicare. That will also have some benefit for us once Medicare is on board.

You know the the you know coming Medicare termination here. It sounds like should accelerate and some may be waiting for that determination. Um so the combination of High Mark coming on and and and and now you know this this termination which is on the near-term horizon that should that should increase probably the conversion of that pipeline into actual actual um contracts, right? Yeah. I think that's right. Yeah go ahead. Sorry. Anthony

yeah, Anthony another example of, of Medicare triggering some of the reimbursement, you know, the biomarker legislation which is still working its way through, you know, 23 or 4 States now have adopted it and as you read through some of those policies, many of them uh require or 1 of the the uh the evidence to

Covered under it is an LCD with Medicare. So, that will also have some benefit for us once Medicare is on board.

Dr. Lishan Aklog: But the point I was making at the beginning is that my sense previously that really most of them will wait for Medicare has evolved, really based on our discussions over the last few months, now that we have a full package. The package is pretty powerful. I do think there will be a subset, a meaningful subset of payers that, especially the regional plans and especially the Blue Cross plans, that won't wait for Medicare.

Operator: That won't. Okay.

Dr. Lishan Aklog: Yeah, there will be some that do. But I, you know, the notion that kind of everybody is going to hold off and say, well, that sounds great, but call me when you have Medicare, that just doesn't seem to be, you know, my thinking is really well done on it. That doesn't seem to be a universal hurdle. The hurdle previously was the data package. Now we have a data package that we can sink our teeth into in these conversations. All of those with regard to the data, all those conversations have been really, really positive.

Operator: Okay, excellent. That was great color. I appreciate it. I will hop back in the queue. Thank you.

Okay? But the point I was making at the beginning is that my sense previously? Uh, that really most of them were away for Medicare has has evolved really based on our discussions over the last few months, uh, where now that we have a full package, you know, our the package is pretty powerful and I do think they'll be a subset, a meaningful subsets of payers that the regional plans and especially the Blue Cross plans that will, um, that won't wait for Medicare. Um, yeah, there'll be some that do but I, you know, the, the notion that kind of everybody's going to hold off and say, well, that sounds great. But call me when you have Medicare, that just doesn't seem to be um, that, you know, my thinking is really well on that, that doesn't seem to be a, a, a universal hurdle. Um, the hurdle previously was the was the data package and now we have a data package that we can sink our teeth into when, you know, in these conversations and all of those with regard to the data. All those conversations have been really, really positive.

Dr. Lishan Aklog: Thanks, Dan.

Okay. Excellent. That was that was a great caller. I appreciate it. I'll hop back from the queue. Thank you.

Matt Riley: Thank you. The next question comes from Mike Matson from Nida & Co. Please go ahead. Your line is now open.

Thank you.

Thank you. And the next question comes from

Operator: Thanks. I appreciate the questions. I am curious what sort of feedback you received from MolDX on the decision to hold the CAC because earlier this year, it did not sound like that was something that you guys were expecting. I guess why are they choosing to do this versus just taking the evidence, the data you already have, and just going ahead with an LCD?

Mike Matson from NIDAM and Co. Please go ahead. Your line is now open.

Dr. Lishan Aklog: Yeah, I think we have had, as I said, we've had very good relationship, very good engagement, very open conversations with the MolDX leadership. As you know, once we submitted it, there was a lot of activity prior to the submission of the request for reconsideration just to make sure that that was all buttoned up and consistent with their expectations. During the first half of the year, while they were working on it, we didn't really get in their way. We let them do their work. After the publication of the notice, we've had quite a bit of ongoing engagement with them. It's really, honestly, I feel like it's an opportunity to kind of check all the boxes to make sure that when everybody convenes together, every piece of information that can be brought forth to this decision is officially available.

Questions. Um so you know just curious what sort of feedback you've received from mold DX um the decision to hold the cat because, you know, earlier this year it didn't sound like that was something that that you guys were expecting. Um so I guess why are they choosing to do this um, versus just taking the the evidence that you, you know, the data you already have and just going ahead with an LCD

Dr. Lishan Aklog: One of the things that I didn't realize really until this notice came out was how important the CAC meeting is to supplement clinical evidence with key expert opinions beyond just the guidelines. Just having them, having physicians, including private practice physicians, talk about how they incorporate into practice and how the intrinsic utility of EsoGuard is allowing them to do what they otherwise previously were not doing, which is screening these patients who are well identified and under guidelines were recommended for testing. There's a bit of a narrative and a clinical context that is not immediately, it's not necessarily immediately available in the published literature. They understand the clinical evidence. They can read the papers. It's more providing clinical context from specialists who actually are engaged in this day-to-day.

We have had as I said, we've had very good relationship where I get engagement. Um, very open conversations with the with the multics leadership, but as, as you know, once we submitted the there was a lot of activity prior to the submission of the request for reconsideration, just to make sure that that was all buttoned up and consistent with their expectations. And during the first half of the Year while while they were working on it. We didn't really, um, get in their way. We, we let them do their work, um, but after the, after the publication of the notice, there's we've had quite a bit of ongoing engagement with them and it's really, you know, honestly, I feel like it's, um, you know, checking all the, it's an opportunity to kind of check all the boxes to make sure that when everybody convenes together that every piece of information that can be um, brought forth, uh, to this decision. To, to this decision is officially available and 1 of the things that I didn't I didn't realize really until until this notice came out was how important the CAC meeting

Is to supplement, clinical evidence with, um, uh, with uh, uh, key experts opinions Beyond just the guidelines and just having them having Physicians, including primary Private Practice Physicians, talk about how they incorporate into practice. And how the intrinsic utility of Issa guard is, is is allowing them to, um, see what they otherwise, previously were not doing which is screening these patients, who were well, identified and under

Dr. Lishan Aklog: Having that supplemental information is really just an important part of locking down the argument so that they can receive a consensus among the four MACs so that all of them can sign on to the coverage determination.

Operator: Okay, got it. I just want to clarify, I think I know the answer to this, but in case any investors are wondering, there's no discussion or potential change resulting from this CAC meeting around the amount of that $1,938 payment amount. That's a separate thing, correct?

Guidelines were recommended or recommended for testing. So there's a bit of a narrative and a clinical context, if not, that is not, um, immediately. Um, it's not sort of necessarily immediately available in the public in the published literature. They understand that clinical evidence, they can read the papers. It's more providing clinical context, from from Specialists, who actually are, are engaged in this day-to-day and um, so having that supplemental information is really, um, um, you know, just an important important part of locking down the arguments so that they can receive a consensus among the formats so that all of them can sign on to, um, to a coverage determination.

Okay. Got it. Um, and then.

Dr. Lishan Aklog: Right. So there's no, this is about coverage. The payment side goes through the CLFS process, so that's locked in.

Operator: Okay. Given that this is likely going to take six-plus months longer than you had thought to get the draft Local Coverage Determination, are you going to do anything to reduce your cash burn rate? Would you consider throttling back the test volume some in the meantime? I imagine you have got a backlog. You could still collect some revenue from the tests you have already done.

Just want to clarify, I think. I know they answered this, but in case any investors are wondering, the there's no discussion or potential change resulting from this CAC meeting around the amount of that 1938 payment amount. I mean, that's the separate, um, thing, correct. Right. Yeah. So there's no, this is about coverage. Uh, the uh, the payment side goes through the clfs process, so that's locked in.

Dr. Lishan Aklog: Yeah, I think I'm sure Dennis has some thought about this. The answer to that is no. We do not want to slow down just as we are entering a phase where we expect to start seeing some commercial contracts and policies come into play, as well as Medicare. If anything, we want to be, just look, I would love to be in a position where we are not going to do this, where we can pre-start battling up some of our resources in anticipation of expanded commercialization. We are not going to do that. We are looking to maintain our burn and perhaps have a decline a little bit brought by contributions from contracting and concierge medicine. This is coming. We do not want to be, we want to be in a position where we are operating on all cylinders as these coverage policies start to come in.

Okay. And then just given that this is likely going to take 6 Plus months longer than you had thought to get the LCD. Um, you know, are you gonna do anything to reduce your cash burn rate? Would you consider, you know, throttling back the the test volume sum in the meantime. And I mean, I imagine you've got a backlog. You could still collect some Revenue, uh, from the, you know, test you've already done.

Dr. Lishan Aklog: I do not know, Dennis, if you have any other thoughts on that.

Operator: Yeah, a couple. Beginning the current quarter, the third quarter, $31 million in cash, an average burn around $10 million. Theoretically, that is nine months of runway without considering any reduction of the burn from any of the cash-pay activities, which we think will be more meaningful in the second half of the year. It makes sense to continue along this trajectory. We also have optionality on the capital market side. We are no longer baby shelf limited. We have an ATM that we have barely used. With these meaningful events coming up, it makes sense, particularly knowing that anything that we engage on the Medicare side in terms of test volume will ultimately get paid during that 12-month look-back. It just seems to make sense to continue on in this path.

Yeah, I think I'm sure, Dennis has some thought about this and the answer to that is no. I mean, we don't want to, we don't want to slow down as just as we're entering a phase where, um, you know, where we expect to start seeing some commercial contracts, and, and, and, and policies coming to play as well as, um, as well as Medicare, if anything we want to be, just look, I'd love to be in the position. We're not going to do this where we can. We can free pre pre. Um, uh, you know, start dialing up some of our resources and anticipation of expanded commercialization. We're not going to do that, we're looking to maintain our burn and, and perhaps have a, have a decline, a little bit brought by contributions from Contracting and countries medicine, uh, but um, you know, this is coming and so, you know, we don't want to be, we want to be in a position where we're, we're operating on All 4 of those, um, as the uh as these coverage policies start to come in. I don't know if that's if you have any other thoughts on that.

Operator: We expect that the realization gap between what we have filled and what we have collected to continue to shrink. We also have a backlog of submitted claims that is around $15 million that our teams are continuing to pursue collection. In my comments in terms of analyzing the revenue for the current quarter, the oldest dated item that was part of the revenue base was from 24 months ago. Hopefully, that time lag will shrink as we continue to move forward. Working that backlog will also help us as well.

You know it just uh seems to make sense uh to continue on in this path. Um and we expect that the realization Gap uh between what we build and what we've collected uh continue to

Uh, you know, shrink, uh, we also have a backlog of submitted claims that's around, 15 million dollars that our teams are continuing to pursue collection, dealing in. Uh my comments in terms of analyzing the revenue for the current quarter, the the oldest data item that was part of the revenue base was from 24 months ago. So um, you know, hopefully that, uh, that time lag will shrink as we continue to move forward but working that backlog will also help us as well.

Dr. Lishan Aklog: Okay, got it. That makes sense. Thanks.

Thanks.

Matt Riley: Thank you. Thank you. The next question comes from Ross Osborne from Kantar Fitzgerald. Your line is now open. Please go ahead.

Thank you.

Dr. Lishan Aklog: Good morning, Ross.

Thank you. And the next question comes from Ross, Osborne from kanther Fitzgerald. Your line is now open. Please go ahead.

Operator: Good morning, everyone, and congrats on the progress. Starting off on the Hoag Healthcare Network partnership, would you provide some more color on the organization in terms of the amount of patients on board, what those patients look like, and how you will fit into the workflow, allowing patients to get access to your EsoGuard products?

Dr. Lishan Aklog: Yeah, thanks for giving me the opportunity to talk about that a little bit further because it is really an exciting model. It is an exciting template. It is great when you have, when you are working with a group that has such a passionate leader in Dr. Kenneth Chang. He literally has billboards up and down the highways of Orange County saying how he is going to eliminate esophageal cancer in Orange County. So it has been great. This is a true multidisciplinary program across the whole health system. It is being led by Dr. Chang and his GI colleagues. The plan is to extend throughout the system, including, as I mentioned, there are 200 primary care physicians in addition to the gastroenterologists. They have a fairly robust concierge medicine practice as well. The logistics of that are what you might imagine.

Good morning everyone. And, uh, congrats on the progress. Uh, so starting off on the hog partnership. Would you provide some more color on the organization in terms of the amount of patience on board? What those patients look like and how you will finish the work flow allowing patients to get access to your ESO products,

Dr. Lishan Aklog: We are working through with them on who will do the cell collection. We are going to help with that. We will help with the training, and we will help with some of the actual cell collection portions, the outreach, the patient acquisition efforts in terms of determining where to find these patients at risk, working within their EHR systems to identify patients at risk, and educating the primary care physicians on the risk factors on the guidelines to drive patients within this practice. It is a large system. There are a lot of patients, a lot of primary care physicians, but a very comprehensive, systematic program that will go out and find these patients and pull them through in a very systematic way. It is really a template for how we are talking. We are already talking to other locals, with the news.

Yeah, yeah, thanks for giving the opportunity to talk about that a little bit further because it's really an exciting model and it's exciting template and it's great when you have when you're working with, um, a group that has such a passionate leader and Dr. Ken Chang. Um, he literally has Billboards up and down the highways, the Warren County saying how he's going to eliminate esophageal cancer and and um, in in Orange County. So, it's been great. Um, this is a true multi-disciplinary programme across the whole Health System. Uh, it's being quite led by Dr. Changin and his GI colleagues. But the plan is to, um, uh, to, to extend throughout the system, including, as I mentioned, there are 200 primary care, physicians, in addition to the gastroenterologists and they have a fairly robust concierge medicine, uh, practice as well. So the logistics of that of what you might imagine, you know, we are working through with them on, who will do the self collection, we're going to help with that. We'll help with the training, and we'll help with

Some with some of the, uh, actual self collection portions the, uh, Outreach the patient acquisition efforts in terms of determining, um, where to find these patients that risk working within their EHR systems to identify, uh, patients at risk, including, um, educating the primary care physicians on the risk factors on the guidelines to drive patients within within, um, within this practice. So it's a large system. There are a lot of patience, a lot of primary care, physicians, uh, but, but a, a rare

Dr. Lishan Aklog: Hoag Healthcare Network is quite good at telling their story publicly, and that news has gotten out in the region. We have gotten inquiries from other large systems within the region about their interest in replicating what Hoag Healthcare Network is doing. We even have some activity all the way across on the East Coast that centers here in the Northeast that are looking to replicate this model. Obviously, they will all be tailored to their own individual health system structures, but the model is the same.

A comprehensive systematic program that will go out and find these patients and uh, and pull them through in a in a very systematic way. So, um, it's really a template for how we are talking. We're already talking to other other, um, local, uh, you know, with the, with the news. Um, hope is quite good at telling their story publicly and that news is about out in the region. And we've gotten inquiries from other large systems within the region about their interest in in replicating, um, what hog is doing. And, um, we even have some, uh, activity all the way across from the East Coast that um, centers here in the in the Northeast that are looking to to replicate this. Um, this model and obviously they they'll all be tailored to their own individual um um Health System structures but the the bottle is the same

Operator: Okay, great. Dennis, what does the business model look like here for you guys, and how should we think about contribution margin?

Okay, great and uh Dennis what is the business model like here for you guys? And how should we think about margin contribution?

Dr. Lishan Aklog: So, with roughly a $2,000 test using the Medicare rate as kind of the benchmark, the next patient in the door drives a 90% contribution margin. The cost of the collection device is in the $55 range. The cost of consumption of lab supplies, the process, the report, you are talking less than $125. So, under $200 to process the next patient in the door, you are talking about pretty high margins. The fixed cost to run the lab, it is pretty consistent quarter to quarter. It is about $1.2 million per quarter. So, as we continue to grow volume that we get paid for at or around the Medicare rate, that 90% contribution margin will continue to drive the actual GAAP and non-GAAP margins that are reflected on our P&L as you absorb those fixed costs. Volume-dependent, the pathway to profitability is pretty straightforward.

Yeah, so um you know it uh roughly a thousand dollar test. Using the Medicare rate is kind of The Benchmark. Um you know the next patient in the door drives a 90% contribution margin the cost of the collection device, uh, is in the 55 range, the cost of uh consumption of lab supplies, the process, the report you're talking, um, you know, less than 125 dollars. So, under $200, the process, the next patient is a door. You're talking about pretty high margins. The fixed cost to run the

Dr. Lishan Aklog: We have, for the last several quarters, our OpEx has been pretty flat. We do not see a significant increase in the overall OpEx to drive that process. We think G&A and R&D will be pretty steady as we move forward. Obviously, we will make some investments in the sales and marketing area. But even if you were to go full bore with full reimbursement, you are talking about the cost of acquisition for a patient, even with a very active kind of outreach program, probably less than $400 per patient. You can still drive 70% margins. Obviously, we will not spend that money until we have great assurance that we are going to get paid for it. But that is the overall what the pathway to profitability looks like in self-sustaining.

Overall Opex to drive that process, we think, uh, GNA and R&D, will be pretty steady as we move forward. Obviously, we'll make some investments in the sales and marketing area, but even if you were to go full bore with full reimbursement, uh, you're talking about, uh, the cost of acquisition for, for a patient, even with a very active kind of outreach program, probably less than 400 dollars per patient, you can still drive 70% margins. Obviously we won't spend that money until we have great assures that we're going to get paid for it but that's the overall. What the pathway to profitability looks like in self-sustaining?

Operator: Great. Thanks for taking our questions.

Dr. Lishan Aklog: Thanks, Ross.

Great, thanks for taking our questions.

Matt Riley: Thank you. The next question comes from Ed Wu from Ascendant Capital. Your line is now open. Please go ahead.

Dr. Lishan Aklog: Ed, good morning.

Thank you. And the next question comes from Ed Wu from ascendant. Capital, your line is now open. Please go ahead.

Dennis McGrath: Yeah, congratulations on the progress. My question is on the capacity of tests. Assuming you do get approval for Medicare, what is the current capacity of tests you could do per quarter, and will you need to significantly invest to ramp it up?

Dr. Lishan Aklog: Great. Thanks. Great question. You are a little bit breaking up there, but the question is around capacity. Operator, can there be an issue with you?

And good morning. Yeah, congratulations on the progress. My question is on capacity of tests, assuming you do get approval for Medicare. Uh, what is uh the current capacity of tests you could do for a quarter and will you need to significantly invest to wrap it up? Uh, great thanks. Great question. You're a little bit break breaking up there, but the questions around capacity.

Dennis McGrath: Yeah.

Dr. Lishan Aklog: Okay, great. We have touched on this before, but it is worth reiterating that the laboratory has plenty of excess capacity, fivefold capacity, even within the physical location with very minimal additional personnel that would be required to increase that capacity. That same is true on the manufacturing side. The bulk of the manufacturing right now is happening at our high-volume manufacturer, Coastline in Tijuana. That can be scaled in an unlimited way. It is just adding manufacturing lines along the way. Also, with regard to the cell collection kits, the vials, we have transferred that to a high-volume manufacturer. All three of those, none of those will be in any way a limiting factor and won't require a significant capital investment to get us to be able to handle upcoming increases in volume.

operator can issue with the

Dr. Lishan Aklog: As Dennis McGrath mentioned, it will really come down to how we, in some sort of an incremental fashion, dial up the sales and marketing team in parallel with volume growth and revenue growth.

Um, so um, yeah, so we've we've touched on on this before, but it's worth reiterating that the laboratory has plenty of excess capacity, uh, you know, 5-fold capacity even um within the physical location with very minimal additional, uh, Personnel, that would be required, um, to, uh, increase that capacity. So that same is true. On the manufacturing side, the bulk of the manufacturing right now is happening, um, on our high volume manufacturer Coastline, um, in Tijuana and uh, that that can be scaled, uh, in an unlimited way. I mean, it's just adding just adding manufacturing lines along the way. So, our, uh, and also with regard to the, um, the the cell collection kits, the, um, the vials, um, that that we've transferred that to a high volume manufacturer. So, all 3 of those, none of those will be in any way, um, a limiting factor and won't require a, um, significant capital investment to get us to be able to handle, uh, upcoming increases in volume and as um,

As Dennis mentioned, it will really come down to how we, um, you know, and some sort of an incremental fashion, how we dial up the, the sales and marketing team, um, in parallel with uh, volume growth and revenue growth.

Dennis McGrath: Great. Thanks for answering my questions, Dennis McGrath. Good luck. Thank you.

Great. Thanks for answering my questions and good luck. Thank you.

Thank you.

Dr. Lishan Aklog: Thanks, Dan.

Matt Riley: Thank you. No further questions came through at this time. I will now turn the call back over to Dr. Lishan Aklog for closing remarks. Please go ahead, sir.

Dr. Lishan Aklog: Great. Thanks, Operator. Hey, and thank you all for taking the time and for your attention this morning. Thanks for all the great questions. I really hope you leave today with a better understanding of the LCD process, the role of the CAC meeting, expectations from the meeting, and to the best of our ability, our expectations with regard to events after the CAC meeting. I appreciate your patience. There's a lot to talk about there. We spent quite a bit of time on it, but hopefully, it was worth getting into the details. Again, really, this is a key milestone. We really are confident that we are going to get Medicare coverage. It's a matter of when. This CAC meeting is an indicator that we're in the late stages. We encourage you to keep in touch, to listen in on the call.

Thank you. No further questions have come through at this time. I'll now turn the call back over to Dr. Lishan Aklog for closing remarks. Please go ahead, sir.

Great. Thanks operator. Hey, and thank you all for taking the time and for your attention this morning. Thanks for all the great questions. I really hope you leave today with a better understanding of the LCD process, the role of attack meeting expectations from the meeting. And yeah, to the best of our ability, our expectations with regard to events after the attack meeting and appreciate your patience. We, there was a lot, a lot to, uh, uh, to talk about there. And we spent quite a bit of time on it, but hopefully, that was, it was worth getting into the, uh, into the details. And again, really, this is a key Milestone. We really are confident, um, that we're going, we, we are going to get Medicare coverage matter of, if not a matter of if. But when and, um, this tech meeting is sort of, um, an an indicator that we're in the late stages.

Dr. Lishan Aklog: Feel free to reach out to Matt Riley if you'd like to, if you don't have the information for the CAC meeting, you'd like to listen to that. Remember, it's a public meeting. We expect that it'll be useful. The clinical experts will provide very strong support for the clinical utility of the test. They'll talk about the experience of days and tens of thousands of patients based on their own experience. Also, obviously, as we discussed during the questions, emphasizing that the guidelines recommend this and that there is a need for this that's been universally accepted within the community. With that, I really appreciate it. We appreciate your time again. We encourage you to keep abreast with our progress, the news releases, our calls like this, as well as our website and through social media. Thanks again, and everybody have a great day.

So um we encourage you to uh keep in touch to uh listen in on the call. Uh feel free to reach out to Matt. If you'd like to uh, if you don't have the information for the tag meeting, if you'd like to listen to that. Remember, it's a public meeting. Uh, we expect, um, that it'll be useful at 6:00 experts will provide, you know, very strong support for the clinical utility of the tests. They'll talk about, you know, the experience of date and tens of thousands.

The patients based on their own experience. And then also as um, as we discussed during the questions, emphasizing that the guidelines recommend this and that there is a need for this. That's been, you know, universally accepted within the

Community.

So with that, I really appreciate it. We appreciate your time again. Uh we encourage you to keep a breast with our progress the news releases um our calls like this as well as our website and through social media. Uh so thanks again and everybody have a great day.

Matt Riley: Thank you. This concludes our conference call for today. Thank you all for participating. You may now disconnect.

Thank you. This concludes our conference call for today. Thank you all for participating. You may now. Disconnect