Good morning, and welcome to the Lucid Diagnostics first quarter 2024 business update conference call. Please note that this event is being recorded. I would now like to turn the conference over to Matt Riley, Lucid Diagnostics' Director of Investor Relations.

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 Chief Executive Officer of Lucid Diagnostics; along with Dennis McGrath, Chief Financial Officer of Lucid Diagnostics. 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, and these forward-looking statements are subject to known and unknown risks and uncertainties that may cause actual results to differ materially from statements made. Factors that could cause actual results to differ are described in the disclaimer and in our filings with the Securities and Exchange Commission. For a list and a description of these and other important risks and uncertainties that may affect future operations, see Part I, Item 1A entitled Risk Factors in Lucid's most recent annual report on Form 10-K filed with the SEC and any subsequent updates filed in the quarterly reports on Forms 10-Q and subsequent Forms 8-K. Except as required by law, Lucid 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. Lishan, take it away.

Thank you, Matt, and good afternoon, everyone. I appreciate you joining our quarterly update call today. I also want to extend my gratitude to our long-term shareholders for your continued support and commitment. Our team at Lucid is dedicated to advancing our company towards significant commercial potential while enhancing long-term shareholder value. I am very pleased with the progress the team has achieved on multiple fronts during the first quarter and the beginning of this year, and I'm looking forward to exciting milestones ahead for our business. Notably, we strengthened our balance sheet by closing a $30 million preferred stock financing with long-term investors, extending our runway beyond these upcoming milestones and reducing stock availability in the market for the foreseeable future. Let's start with some highlights. In terms of commercial execution, we generated just over $1 million in revenue this quarter, which is flat compared to the previous quarter and represents a 124% increase year-over-year. As we mentioned in the last call, our first quarter test volume stayed roughly the same with about a 10% increase, totaling 2,420 tests, marking a 31% rise annually. We are also seeing increased productivity from our sellers, and our CYFT events are thriving, with 32 high-volume health fair events conducted. We've implemented a streamlined centralized telehealth operation as part of this initiative. Our focus on a robust pipeline of direct contracting engagements continues, involving benefits brokers, third-party administrators, and self-insured entities offering EsoGuard as a covered benefit. Over the past 6 to 9 months, our revenue cycle management improvements are yielding positive results. We remain engaged in various initiatives to further enhance this process, including prior authorization, appeals, and physician advocacy, while maintaining stable out-of-network allowed amounts averaging approximately $1,800. Key achievements for this quarter include strengthening our balance sheet through a $29.8 million Series B preferred stock offering. A significant accomplishment was the peer-reviewed publication of positive data from a landmark National Cancer Institute-sponsored clinical validation study of EsoGuard for early pre-cancer detection, which demonstrated unprecedented results. This study bolsters EsoGuard's clinical data as we pursue both commercial and Medicare payer coverage. We've secured a date, July 17, for our MolDX pre-submission meeting, which allows us to review data with the MolDX group seeking coverage of EsoGuard under Medicare's Local Coverage Determination. We're actively implementing an aggressive market access strategy aimed at securing medical policy coverage with regional plans and navigating biomarker legislation at the state level. I'll provide more details on this later, as well as on pilots with national plans. For those new to our story, Lucid Diagnostics is a commercial-stage cancer prevention and medical diagnostics company focused on early pre-cancer detection to prevent esophageal cancer deaths in at-risk patients. Our two technologies include the EsoGuard Esophageal DNA Test and the EsoCheck Cell collection device. The EsoGuard Test is the first and only commercially available test capable of widespread screening to prevent esophageal cancer death through early detection. The performance of this test is unprecedented among molecular diagnostic tests. When comparing EsoGuard's performance to other screenings like Cologuard, which has been highly successful for years, we see comparable or superior sensitivity for detecting esophageal cancer. What's remarkable is our test's ability to accurately detect early pre-cancers, achieving around a 90% sensitivity rate, which is exceptional compared to the 40% to 50% sensitivity of Cologuard for late-stage pre-cancers. The blood tests currently available do not match this capability. This impressive early detection not only addresses late-stage pre-cancers but also significantly increases the chance to impact patients before they progress to cancer. With over 30 million patients at risk recommended for pre-cancer testing, the total addressable market for Lucid is approximately $50 billion, presenting substantial revenue potential even at low penetration levels. Our gross margin at current volumes is about 90%, which supports our business growth. Our multifaceted commercial strategy aims to provide patient access to this test in various settings, including our own physical test centers in roughly 13 cities and partnerships with physician practices. During this quarter, test volume remained consistent at 2,420 tests. Our sales team has been halted since early 2023, although we are seeing some productivity increases. We plan to re-expand our sales team to boost test volumes when revenue realizations justify this. Dennis will discuss the revenue trajectories tied to test volumes and opportunities in greater detail. On the commercial execution front, our Check Your Food Tube events are flourishing, with 32 events held this quarter. We've streamlined our telehealth operations, allowing firefighters to register for testing through telehealth visits before their events. Our connection with the firefighting community remains strong, highlighted by our participation in the FDIC International conference, the leading firefighter event in the country, where we conducted on-site EsoGuard testing and engaged with fire chiefs from across the nation. Our direct contracting initiative is a critical focus, with a pipeline of engagements involving benefit brokers, third-party administrators, and self-insured entities. This strategy allows us to offer EsoGuard as a covered benefit, which leads to guaranteed revenues through contracts. We are targeting benefit brokers, third-party administrators, and large patient groups like the 9/11 funds and others for direct contracting opportunities. Various engagement models include ongoing contracts, per-patient fees, lifetime benefits per member through benefit plans, and fixed-price testing days. We look forward to ramping up these efforts in the second half of the year, supplementing our traditional pathways. So an update on our overall experience with claims, payment, and coverage. Revenue cycle management remains critical. We continue to have ongoing improvements in our process in partnership with our RCM provider. These improvements include starting a prior-authorization program, which accounts for about a quarter of the denials, and we're hoping to eliminate those through prior authorization. Our appeals process is getting much more sophisticated and targeted, and our percentage of appeals that we win is steadily improving. We're recruiting, and this is actually gratifying. We're recruiting local physicians to advocate on our behalf with regard to local payers, which is something that can have a significant impact. Dennis will talk about the numbers in a little more detail, but we continue to have about half of our adjudicated claims allowed by the payers. This is all out of network, and the payment is remaining stable at just under the Medicare rate. Some big developments on the medical policy and coverage side, particularly with MolDX upon publication of the National Cancer Institute-sponsored study and the outstanding results from that. We pulled the trigger and asked for and secured a meeting with the MolDX group that's scheduled for July 17. This is a pre-submission meeting where we get an opportunity to discuss the body of clinical evidence. These are categorized as clinical validity data, clinical utility data, and analytical validity data, and review that data with them, get their feedback, and proceed thereafter to submit what's called a technical assessment or TA that seeks coverage under the existing foundational Local Coverage Determination, or LCD, that MolDX and other Medicare contractors published last year for tests in this category of esophageal testing. On the private side, we are actively executing on this strategy. We're focused on securing medical policy, positive medical policy coverage with regional plans, and have engagements with a number of them. A high area of focus for us is biomarker legislation states, which I'll talk about a little later, as well as pilots with the national plans where we seek coverage with evidence development. We are able to demonstrate the clinical utility of our study to that particular payer, as well as the potential economic benefits to that payer in a study while getting covered and paid over that time. So those are the things that we continue to actively pursue. The biomarker initiatives are expected to have a significant impact. Various states have enacted biomarker legislation that requires local payers to cover these tests, including ours. We are engaging with local entities to ensure we are included in this legislation and to seek coverage under the biomarker laws for individual payers. This provides us with a valuable opportunity. Recently, we released a brief overview regarding a landmark study conducted by a national investigator-sponsored group called the BETRNet consortium, which is funded by the NCI. They published an important paper in the American Journal of Gastroenterology detailing the performance of EsoGuard on samples collected with EsoCheck compared to upper endoscopy. The study's results in detecting esophageal pre-cancer and cancer are both impressive and unprecedented. The sensitivity for cancer detection reached 100%, successfully identifying all cancer cases. The overall sensitivity and specificity were both 85%, which is crucial for demonstrating the value of this test, particularly the short segment BE sensitivity. This measures the ability to detect a small area of disease less than 3 centimeters long, which is the most challenging to identify and constitutes about 70% of the cases we aim to detect in the screening population. A high sensitivity rate in detecting short segment BE is essential for impacting cancer mortality, and we achieved an 89% detection rate with a negative predictive value of 98%, indicating a very low false negative rate. The average procedure time was about 2.5 minutes, although some tests were completed in as little as 30 seconds. This efficiency stands out, especially in comparison to potential alternatives, making it a critical aspect of our highly efficient screening test. We have not recorded any adverse events from the testing, which is consistent with other studies we have conducted. I'd also like to spend a minute or two reviewing the results of a paper that was published last month on the technology from an academic institution on a test called Oncoguard Esophagus. The group used a sponge-on-a-string device called EsophaCap to sample cells from the lower esophagus and apply a new molecular test with methylation markers on it. I'll note that the EsophaCap device is one that we acquired and supplied for a portion of the study, although we no longer supply that. Some highlights to note, particularly in contrast, are that the test showed poor sensitivity for short segment BE, which is, as I mentioned last time, really the most critical number in having an effective screening test for esophageal pre-cancer, at 63%. There were also some troubling complications, about 20% had mild abrasions of the esophagus, about 2% had serious abrasions with bleeding, and there were 2 catastrophic device failures in the form of detachments. I thought it was worth summarizing a head-to-head comparison of our results. These are pulled results, although they're pretty consistent across the various studies as EsoGuard and EsoCheck with the results reported in this publication on the OncoGuard test in combination with a sponge-on-the-string test. Again, let me emphasize the importance of short segment BE as critical because these are the patients that account for about half the cancers, a 63% sensitivity in that category. It just is not going to be sufficient to serve as a commercial test. That data is from this publication that was published last year. Also note that the level that 60% sensitivity in this critical category is about the same as the sensitivity published in the paper that used the Medtronic Cytosponge, another sponge-on-a-string old technology that led Medtronic to withdraw that technology from the market. There are various ways to compare the devices. EsoCheck provides precise anatomic targeting of a very small area where the abnormality occurs, whereas sponge-on-string devices do not. EsoGuard offers protected sampling, ensuring there's no dilution or contamination from other cells, unlike sponge-on-string devices. There are many issues regarding procedural efficiencies. The study indicated that the SOS device requires topical anesthesia, a numbing medication used in the mouth, while EsoCheck does not need that. The SOS devices must remain in the stomach to dissolve for 8 minutes; however, EsoCheck eliminates any dwell time. There were two SOS devices that failed to deploy and did not dissolve, necessitating their removal, while EsoCheck does not have these problems. If you factor in the 8 minutes of wait time and the swallowing process, the total procedure time for SOS devices is around 15 minutes, whereas our procedure lasts from 1 to 2 minutes or even as short as 30 seconds. This efficiency is crucial during large-scale events, such as our Check-Your-Food-Tube initiative. We have tested 100 patients in a single day at a firehouse, which would be impossible if each patient took 15 minutes or longer. The only reason we can manage this is because of the quick procedure times. The technical failure rate, or the ability to complete the test without patient swallowing issues, was presented at a major GI conference with data from 1,500 patients showing a 98% completion rate, translating to a 2% technical failure rate, which is significantly higher for sponge-on-a-string devices. An important point to highlight is device safety. There were two serious detachments of sponge devices, one needing endoscopic retrieval and another passing into the intestine, posing a severe risk of obstruction and health complications for the patient. This prompted us to initiate a recall of the EsophaCap device used in the study and notify the FDA, a mandatory step. Consequently, this represents a major concern that we do not face with EsoCheck, which has had no device failures across over 10,000 tests. The abrasions associated with sponge-on-string devices are predictable yet significant; they can scrape the esophagus, explaining why 2% of patients experience serious abrasions. In contrast, EsoCheck features a balloon design with a soft cushioned surface and ridges, which prevents these issues.

Thanks, Lishan, and good morning, everyone. In summary of our financial results for the first quarter, we reported in our press release published earlier today. On the next three slides, I will highlight a few key financial points from the quarter, but I encourage you to view these comments in the context of the full disclosures found in our quarterly report on Form 10-Q. Our cash balance at the end of the quarter on March 31 was $24.8 million. We added $11.6 million to that amount with the financing completed last week, bringing our pro forma cash to $36.4 million. The average quarterly burn over the last four quarters is $9.5 million per quarter. In the first quarter, the burn included $7 million from ongoing operations and $2.5 million from our quarterly management services agreement with PAVmed. Additionally, we reduced intercompany debt to PAVmed, which accepted 3.3 million shares for a $4.8 million debt reduction, as previously disclosed related to the dividend distributed by PAVmed to Lucid stock shareholders, plus $2.8 million in cash payments. We noted in the 10-Q that our ability to fund operations beyond one year from now significantly depends on how revenues grow over the next four quarters, which is linked to improvements in the reimbursement landscape for both government and private health insurance. Furthermore, our direct contracting initiatives with self-insured employers and potential corporate finance activities, including refinancing outstanding debt, may also help us exceed that threshold. Beyond that, there are no significant updates regarding the remainder of the March 31 balance sheet; shares outstanding, including unvested restricted stock awards as of last week, total 52.2 million shares, which includes 1.1 million issued after the quarter ended related to conversion notices received from the convertible debt holder. The GAAP shares outstanding as of March 31 are 46.7 million, which are shown on the slide and on the balance sheet in the 10-Q. GAAP shares do not account for unvested restricted stock awards. On Slide 20, we compare this year's first quarter to last year's first quarter regarding key items. I encourage you to review my comments alongside the cautionary disclosure at the bottom of the slide about supplemental information, particularly non-GAAP information. As mentioned in our fourth quarter earnings call, revenue exceeded $1 million for the first quarter, remaining roughly the same as the fourth quarter, which is more than a twofold increase compared to the first quarter of the prior year. This amount reflects actual cash collections for the quarter, a small quantity of invoiced EsoGuard tests delivered to the VA, and around $25,000 from direct contracting. We processed 2,420 tests this quarter, amounting to just over $6 million in claims submitted at our $2,499 ASP. It's important to note that revenue recognition depends on the likelihood of collection. Since we are early in our reimbursement process, claims submitted to traditional government or private insurers will be recognized as revenue when collected, not when invoiced. As detailed in our 10-Q, this is referred to as variable consideration according to GAAP's ASC 606 revenue recognition guidelines. Currently, we lack sufficient predictive data to recognize revenue at the time of test report delivery to the referring physician. For billable amounts contracted directly with employers that are fixed and determinable, they will be recognized as revenue when the contracted service is delivered, typically when the report is sent to the referring physician. Our non-GAAP loss for the first quarter stands at $9.4 million, showing a sequential improvement of about $500,000 compared to the fourth quarter loss and about a $400,000 improvement compared to the first quarter of the previous year. Slide 21 provides a graphic representation of our operating expenses for the specified periods. Total non-GAAP operating expenses for the first quarter of 2024 were $10.4 million, which is approximately a $500,000 decrease from the previous quarter and remains relatively stable compared to the same period last year. The cost of revenue mainly comprises EsoCheck devices, lab supplies, and fixed lab facility expenses, aligning with recent quarters where test volumes ranged between 2,200 and 2,600 tests. The non-GAAP net loss per share has been fairly consistent over the past five quarters, fluctuating by about $0.01. On a GAAP EPS basis, noncash charges represented roughly $0.19 per share in the first quarter, with $0.17 attributed to the noncash deemed dividend linked to the $18.2 million financing in March. In the past two quarters, notably the first quarter of this year and the last quarter of the previous year, we submitted nearly 4,000 claims—3,975 claims in total—amounting to just under $10 million in pro forma revenue for reimbursement. About 75% of these claims have been adjudicated, while 25% are still pending. Among the adjudicated claims, approximately 46%, or nearly half, received an allowable amount from the insurance company, averaging about $1,700 per test. Over a longer collection period, with added aging time for appeals, the average rises to about $1,800 per test, consistent with data from previous quarters. Of the claims that were denied, about 53% were considered not medically necessary or required prior authorization, and around 28% were classified as non-covered.

Your first question is from Mike Matson at Needham.

I wanted to start with the MolDX pre-submission meeting. So can you maybe just tell us more about what you're expecting to happen there and kind of what the potential outcomes of the meeting would be?

So just to clarify, these are pre-submission meetings. For those familiar with FDA pre-submission meetings, this process is somewhat less structured and formal, but it's similar. The aim of these meetings is to engage with key personnel, particularly the medical directors at MolDX, and to examine the comprehensive evidence base, which includes clinical validity, clinical utility, and analytical validity data, all within the framework of the finalized foundational LCD. We anticipate a strong representation of both our team and others who can articulate the context of our data and findings. The objective is to provide insights that will inform the technical assessment document that we will submit after the meeting to formally request coverage under the foundational LCD. In addition to our company personnel in critical roles, we expect to involve key experts such as Stan Lapidus, our Vice Chairman and a diagnostics expert, along with one of our medical advisers who contributed to the guidelines. We aim to give additional support during this process. This meeting will help us understand our standing with their data and guide the formal process of submitting the technical assessment and starting the subsequent timeline following the submission.

Yes, I understand. You've been conducting about 2,500 to 2,400 tests per quarter for several quarters now, and your revenue has been increasing slightly as you're collecting more payments. How long do you anticipate being in this holding pattern? At what point will you consider growing the number of tests? What coverage or payment rate would you need to reach before you start to push for higher test volumes again?

Yes, that's a great question. I will address the test volume aspect and Dennis will provide insight on converting test volume into revenue. We discussed this in our previous call, noting that we have maintained a consistent number of sales personnel. Our goal is to keep our operating expenses as stable as possible during this time. The test volume we have continues to generate a solid claims history and engage with private payers. As mentioned previously, we believe we can sustain the current volume, which is around 2,400 or more, with our team. This quarter, we actually had fewer sales representatives in the field as we reallocated some resources and chose not to fill certain open positions to maintain our overall operating expenses for key market access and direct contracting efforts. There is a chance that we might see some modest growth at this level. We experienced about a 10% increase from the previous quarter due to a rise in Check-Your-Food-Tube events, which are more efficient regarding the sales personnel needed per test. If we gain traction in direct contracting, that could lead to increased test volume regardless of sales efforts. Now, I’ll hand it over to Dennis to discuss our thresholds and when we might consider increasing our operating expenses and adding resources to enhance test volume as a way to drive revenue.

Mike, I think those decisions are going to be on a quarter-by-quarter basis as we see realization, meaning cash collections as a percentage of billable claims increase. As Lishan's pointed out, there are a couple of influences there that we will start to make those investment decisions when some of these events start to show themselves, maybe even in advance of actually collecting. They are direct contracting because the price is guaranteed as we see that start to increase, that will give us reason. In fact, we're already putting some additional resources behind that. In addition, I think we've previously mentioned that we have submitted some formal applications for some of the larger regional insurers to move from out-of-network to in-network as those decisions become available, that will influence making those investments. Clearly, that's an indication of what realization will become in the subsequent quarters after those approvals. Obviously, in response to the Medicare upcoming decisions, that will influence timing as well. We're also in the process of trying to fully understand the biomarker legislation and what influence that might have as the states requiring coverage with insurers operating within their states, how that plays itself out. We're staying pretty close to that in terms of whether it makes sense for us to put additional resources in those states as they work out logistics between the state legislation and the actual carriers covering biomarkers. They're all the influences that will have us step on the accelerator to do so. Obviously, with the recent financing, we have the resources to be able to be responsive to those events. So pretty much stay tuned. As I indicated at the outset, it's on a quarter-by-quarter basis. We are and are ready to put these things in place to be responsive to these events.

Your next question is from the line of Anthony Vendetti from Maxim Group.

Some of those questions were about my concerns, but I’d like to discuss the process further. You mentioned that you're hoping to shift some of the coverage benefit from out-of-network to in-network, which is clearly important. Can you remind us of the current status regarding the number of insurers that will reimburse? Specifically, what about the larger insurers like Cigna, Aetna, and UnitedHealthcare? What is their reimbursement coverage situation? Also, what are the chances that they will sign up as either in-network or out-of-network within this year or the next 12 months?

Yes. Let me clarify that at a high level. You inquired about the larger payers. It's important to note that on the out-of-network side, we do receive payments. We receive allowed claims at just under the Medicare rate on average, and some of the larger payers are actually paying at a higher rate. Our focus on achieving near-term changes in medical policies is not aimed at the large payers. Instead, our interactions with them are centered on pilots seeking coverage with evidence development, as we believe that larger payers tend to wait for positive coverage by MolDX and Medicare. However, we are actively pursuing opportunities with regional plans. We previously mentioned our engagement with the Blue Cross and Shield Association, which has been very helpful in our discussions with individual state plans. We are making progress there. Specifically, in states with biomarker legislation, we are optimistic about establishing coverage under those regional plans in the near term, independent of the MolDX process. We also have direct contracts that are entirely separate from the payer process. For instance, we are currently discussing partnerships with entities that cover a large number of patients for specific conditions, including the World Trade Center 9/11 Fund. We are hopeful for a successful collaboration with them through one of their centers of excellence, which would allow patients covered by that fund, numbering around 100,000, to access our test as a covered benefit, entirely independent of the insurer payer process.

Okay. That's helpful. Very big picture here, you had a great Investor Day with some gastroenterologists and a thought leader discussing how the Pap smear transformed cervical cancer detection. With Cologuard's ongoing progress and some competitors facing recalls, is there a tipping point? Do you believe it will take 3 to 5 years for EsoGuard and EsoCheck to become standard and gain greater recognition? I spoke with one of the gastroenterologists at the investor conference, and he mentioned that spreading awareness is challenging because not everyone considers esophageal cancer a major concern, despite it being one of the deadliest cancers. How long do you think it will take to reach that tipping point? I would love to hear your thoughts on this.

That's a great question. Let me address the latter part first. It's not going to be very difficult because there is a lot of attention, and growing interest, in esophageal cancer. You're right that over the years, we've focused more on breast, colon, prostate, and some other common cancers. However, our ability to communicate this message effectively to the physician community, both primary care and specialists, is straightforward because we have a compelling story. We have a clearly defined target population, a methodology, and a solid understanding of the biology involved. We know how to proceed with patients who test positive. The message shared by physicians during the Investor Day is resonating nationwide and is being reinforced in local markets and news media; the events with firefighters have been particularly beneficial for us. We featured prominently in a segment on ABC News in Los Angeles, and we have a lineup of similar stories. We anticipate that this momentum will lead to national awareness, and we believe this won't take years because we have all the necessary elements in place. We are not in the process of defining the population. We can effectively communicate our compelling story without needing to finalize every detail. In every interview I conduct weekly, I hear about someone—a family member, friend, or colleague—who has suffered from esophageal cancer. The physician community, especially within gastroenterology, is receptive to this because it is already included in their guidelines. We did not create those guidelines; they did. The necessity to identify pre-cancer and utilize this methodology for cancer prevention is well recognized, and there is no debate about the importance of detecting pre-cancer in this context. It's been included in the last three sets of guidelines. Unlike Cologuard, which faced an environment where a significant percentage of patients were receiving colonoscopies, less than 5% of our target population is currently undergoing endoscopies. We align completely with gastroenterologists, and our discussions with them focus on expanding their patient identification efforts to increase both the number and effectiveness of endoscopies. We have strong relationships with leaders in the gastroenterology community and key opinion leaders. We're excited about our major presence at the largest GI meeting in the country, the DDW meeting, starting this weekend. Our Medical Advisory Board will convene there, consisting of key figures in the GI community focused on esophageal disease. We will spend a few hours discussing crucial topics, including the significance of short segment Barrett's esophagus and the importance of a safe cell collection device with excellent features like EsoCheck. Our story is gaining traction, and the timing of our activity expansion will depend on various triggers related to coverage and more. However, the narrative is spreading quickly, and once we hit full throttle, I don't think it will take long for it to become nationwide. It's been easy to share this story.

Your next question is from the line of Mark Massaro from BTIG.

This is actually Vidyun on for Mark. So it's great to hear the date for the presub, and you touched on this a little bit, but just remind us what the average time for the technical assessment process is and just when you would expect that final CMS coverage decision?

We cannot predict that aspect. The turnaround time for a response to the guidance is typically a minimum of 60 to 90 days, but it can extend if there are questions during the process. For those familiar with the FDA procedure, it's similar in that once the technical assessment is submitted and reviewed, there may be chances to ask questions about the data. It's really hard to determine how long it will take to complete that process and reach a final decision. However, we believe we are well-prepared with excellent data. We are collaborating with several consultants who are experts in this area and have conducted advanced tests through the MolDX process, and there is considerable optimism within the group regarding this.

Perfect. Understood. Then I just have a follow-up on last quarter. I think you had discussed like a $5 million or $6 million revenue bullish in the pipeline. Are you seeing any success in realizing that revenue and just how we should think about maybe any contribution in pacing throughout the year?

Yes, there is a backlog of pending amounts that need to be resolved, and the appeals process is increasing in intensity with our revenue cycle manager. It's difficult to predict how long this will take, as the appeals process typically requires more time. Our prepared remarks indicated that approximately 25% are still awaiting adjudication, which corresponds with the backlog. It’s challenging to align that timing. We understand the current situation, and while we are experiencing some success, it is beginning to build momentum. We don't have any further details to share at this time.

Your next question is from Kyle Mikson from Canaccord.

So just starting with the EsophaCap Class II FDA recall. I wanted to ask a few things about this. Basically, first of all, just kind of rewind back to '21, like around the time of the IPO when you made the acquisition of CapNostics. Why did you do that? What commercial agreements or manufacturing agreements are they signing now that are irrelevant or impacting expenses that aren't really useful? Just kind of update us on that maybe. And then secondarily, if you could just talk about the competitive dynamics here and how maybe certain companies or vendors were using EsophaCap. Now, obviously, that doesn't look great for them, and maybe this is advantageous for you.

Thank you, Kyle. We're glad to revisit this topic. In 2021, we had the chance to engage with a small company, CapNostics, which developed the sponge-on-a-string device. We acquired them mainly as a research tool, considering potential additional applications. After the acquisition, we collaborated with the two institutions that were utilizing the device for ongoing research, agreeing to supply it for that purpose. At the time, we felt confident that EsoCheck was the better device for this application. However, after we halted the supply of the sponges in early 2023, we became aware of detachments following the publication of recent data. The report of two detachments alarmed us since they had not been previously reported. We reached out to the FDA and determined that a recall was necessary. We believed that while molecular tests are useful, the effectiveness of the cell collection device is crucial, and the head-to-head features I highlighted are critical for optimal performance, especially the sensitivity of the short segment and the functions of EsoCheck. We were not surprised by the study results and are confident that we have not encountered any device failures with EsoCheck in over 10,000 tests.

Kyle, it's important to understand even if a reengineering effort could figure out how to overcome the safety issues, this study pointed clearly to contamination because of the lack of the ability to protect the sample. So they have to figure out how to put the sponge back in the wrapper, which is physically impossible to overcome that limitation, that design limitation. We think unless there's a way to engineer around our patents on EsoCheck, it's going to be really difficult for someone with a nice biomarker to be able to sample in a way that allows the biomarker to perform similar to what our combination of EsoCheck and EsoGuard does.

Just to be clear, there's no evidence of that. We have strong patents and pending IP on that. We don't have concerns that there's another technology out there that can do the targeted sampling you need to collect cells in a very small portion of the lower esophagus.

Okay. That was a great and really comprehensive answer. I'm sure one day someone will argue that a blood-based test could be useful here, but we can save that discussion for another day.

I need to touch on that real quick. So yes, well, we won't debate the effectiveness of blood-based tests as a whole. To whatever extent there may be ongoing progress or good data or ongoing work in detecting cancer in the blood, there's been little or no progress in detecting pre-cancers. You cannot have an impact on esophageal cancer deaths unless you find it at the pre-cancer stage. A stage 1 diagnosis of esophageal cancer carries about a 50% mortality rate. There's not any indication yet that you can detect early-stage pre-cancer with a blood test. I feel very confident that liquid biopsy tests are not a threat in any way in the foreseeable future.

I'm considering our revenue model. We generated $1 million this quarter, which is consistent with the previous quarter, but we saw a nice increase in volume sequentially. How should we view the seasonality in this business? In other screening industries, there's a pattern where early in the year tends to improve as the year progresses, including factors like flu seasons. Are there aspects we should take into account regarding sequential revenue growth moving forward? Yes. The only seasonality to keep in mind is related to the convenience of testing for patients. During the holiday season in December, for instance, physicians are unlikely to schedule tests, and major events like Check-Your-Food-Tube are probably not going to take place during the week of Christmas. Those events will occur around that time instead. This represents the main seasonal impact we observe. There are also thoughts about summer and the last two weeks of August. However, September usually compensates for those periods. Overall, I don't believe seasonality is a significant factor for us right now, especially as we are in a mid-throttle range. The focus is more on how we realize our claims and our response to the increasing momentum we anticipate in the upcoming quarters.

Congratulations on the progress in the quarter. I know you're focused on the U.S. business, but have you considered international opportunities?

We have had inquiries from commercial entities outside looking to potentially partner with us. The current business model around reimbursement in the U.K. and Europe for screening tests is not attractive, so we haven't made any particular effort. But there are other groups in South America and Asia that have contacted us that would have to be sort of essentially a license-type agreement, where we have no plans to put resources in other countries. There are market opportunities there. We do get inquiries, and we have one actively that we're discussing with right now. But I don't expect that to be a significant contributor in the near term.

Just a quick question. Esophageal cancer is obviously very deadly. I assume it's similar globally as it is in the U.S. in terms of people getting it and death rates?

Great question. There are 2 types of esophageal cancer. The one we see here in the U.S. and in the West is esophageal adenocarcinoma. There's esophageal squamous cell carcinoma, which used to actually dominate in this country, more associated with smoking and tobacco and other things as opposed to adenocarcinoma, which is related to GERD or heartburn. In Asia, the numbers for squamous cell carcinoma remain higher; however, as in many things, there's a homogenization across the world, because of Western diets, the lifestyle. Both the diseases that come with that obesity et cetera does mean there is a large opportunity for esophageal adenocarcinoma worldwide. That gives you a sense of that.

There are no further questions at this time. I would like to hand the call back to Dr. Lishan Aklog for some closing remarks. Please go ahead.

Great. So thanks, everybody, for taking the time. Thanks for all the great questions. I believe we had a great discussion. Hopefully, you can get the sense that we're really excited. We have a lot of near-term activities and milestones, starting with the DDW meeting this week, followed with a bunch of activity, our engagements with brokers, the MolDX meeting coming up, and more data, which we didn't really talk about, that's forthcoming beyond the data package that we're already putting together. We look forward to keeping you abreast of our progress via news releases and periodic calls such as this one. As always, the best way to keep up with our news, updates, and events is to sign up for e-mail alerts on the Lucid Investor Relations website, follow us on social media, including Twitter, LinkedIn, and our website, and always feel free to contact Matt with any direct questions. Thank you, everybody, and have a great day.

Ladies and gentlemen, this concludes today's conference call. Thank you very much for your participation. You may now disconnect.