Good morning, and welcome to the Lucid Diagnostics Third Quarter 2024 Business Update Conference Call. At this time, all lines are in a listen-only mode. Following the presentation, we will conduct a question-and-answer session. 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. Please go ahead.

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. 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 1, 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 Form 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. Take it away, Lishan.

Thank you, 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. Our team has always remained singularly focused on driving Lucid enterprise towards its substantial commercial potential and to enhance our long-term shareholder value. This has really been a great quarter for Lucid, especially after key milestones that we announced last week. We’re here. We've been working on this for four years and we're now fully armed with a complete body of outstanding clinical data to go along with a renewed commercial focus. We are really poised now to make our final push towards broad coverage and reimbursement to drive EsoGuard revenue and revenue growth. So let's start with some key highlights related to our commercial execution. In the third quarter, revenue was $1.2 million, about a 20% increase quarter-on-quarter and that’s a record quarterly revenue for us. The third quarter test volume was 2,787. While third quarter volume is in range with recent quarters, following a record second quarter, the fourth quarter is off to a good start with a record test volume in October. Our commercial ramp remains at mid-throttle. We have a critical mass in terms of testing volume to drive our revenue cycle management and medical policy efforts. We’ve expanded our direct contracting initiative with multiple programs that are focused on driving near-term revenue building on the first large Check Your Food Tube event with an upfront contracted payment that we announced earlier. I will dive deeper into this exciting development later in the presentation. We continue to push hard with our efforts with firefighters with Check Your Food Tube events and have now tested over 7,000 firefighters with EsoGuard. Let's highlight a few of our key strategic accomplishments. As we announced last week, the EsoGuard BE-1 clinical validation study was accepted for peer-reviewed publication and that publication completes our evidence package for submission to formally seek Medicare coverage. We also had peer-reviewed publication of the analytical validation study of EsoGuard and we received a notice of allowance for a key patent underlying EsoGuard. Perhaps most importantly, we've held three productive in-person meetings with the CMS Medicare Administrative Contractor or MAC MolDx program, which is focused on our upcoming submission for EsoGuard coverage by CMS. Lucid is a commercial stage cancer prevention solution company. We have two products, EsoCheck and EsoGuard that together provide a comprehensive pre-cancer screening solution and our mission is to prevent esophageal cancer deaths in an established population of at-risk patients. The key technology is the EsoGuard esophageal DNA test and it is the first and only commercially available test capable of serving as a widespread screening tool to prevent esophageal cancer deaths through the early detection of esophageal precancer. This type of non-endoscopic biomarker testing is now recommended in major professional society guidelines, including the two premier gastroenterology societies. EsoGuard's performance as a molecular diagnostic test for detecting pre-cancer and cancer is unprecedented in the history of molecular diagnostic testing for these conditions. You can see on this slide here our performance against comparable early detection tests in the colorectal space. EsoGuard's sensitivity for detecting cancer is extraordinarily high at 96% and really unprecedented sensitivity is shown at 85% for pre-cancerous conditions and a level of sensitivity that's never been accomplished in early pre-cancer at 88% even in those who have the smallest segments of abnormality at 89%. The two most important numbers are that we have a 99% negative predictive value, translating to a 1% false negative rate, and a 32% positive predictive value, meaning EsoGuard successfully serves its purpose as a triage test for directing patients to the invasive test endoscopy. The commercial opportunity for EsoGuard is substantial and massive. We have a well-defined target population. Based on existing society guidelines, approximately 30 million patients at risk are recommended for screening. Medicare pricing has been established at $1,938, setting a precedent for private-payer pricing, which has held up over the years. So the total addressable market is approximately $60 billion, and our gross margin per test remains over 90%. We've shown solid test volume and revenue growth over the past quarters with 30% fewer sellers in the field compared to previously. We've maintained a mid-throttle approach to our commercial activities focusing our efforts on garnering reimbursement and establishing revenue-driving programs through direct contracting. As we reported in two press releases last week, we've had a recent explosion in our clinical evidence base for EsoGuard. Following this, our team has carefully explored new opportunities to expand our commercial strategy while leveraging this complete data set to secure both traditional and Medicare coverage. With this now in hand, we're laser-focused on translating our test volume and growth into contractually guaranteed revenue. We’ve had an explosion of our clinical evidence base. We have now four clinical validity studies published in prestigious journals. The last one has been accepted for publication and will be published soon. Clinical utility is also important for coverage discussions with payers and this data again is very robust as shown here, as well as analytically valid. So overall, we have a complete package to drive our conversations both with Medicare and with commercial payers for coverage. This is our final publication. The publication of EsoGuard BE-1 was really the final piece of the puzzle in our effort to secure traditional commercial and Medicare coverage. With this fourth clinical validation study accepted for peer-review, we believe we are ready to go. We have the full package to submit our data to the MolDX program and formally seek Medicare coverage. We have had three very productive in-person meetings with the MolDX group and its leadership over the past few months and we are poised to submit our data and a request for conversion to a local coverage determination in the very near future. As we announced last week, beyond our journey to secure coverage, we're laser-focused on translating this test volume growth into contractually guaranteed revenue, and commercially focused on three revenue-generating programs: fully contracted CYFT pre-cancer testing events, concierge medicine programs, and employer markets. On the fully contracted CYFT pre-cancer testing events, we will now focus our efforts on securing agreements with self-insured entities, including employers, unions, particularly firefighter unions, and municipal departments to drive contractually guaranteed revenue. This initiative follows our first major successful direct contract event where approximately 200 Fort Worth Fire Department firefighters received EsoGuard testing in partnership with their medical service provider, Front Line Mobile Health. We've designated an established senior member of our team to focus exclusively on building this pipeline of fully contracted CYFT events. We look forward to near-term wins with that. The concierge medicine sector is rapidly growing nationwide and offers patients enhanced access to physicians and personalized care for an annual fee. Patients in these practices routinely seek cutting-edge technologies such as EsoGuard. We've hired a new Senior Director of Strategic Partnerships for Concierge and Executive Medicine, a highly successful individual who comes from GRAIL, where the concierge medicine program has been very successful in introducing new technologies like EsoGuard. She brings extensive relationships in the sector and has demonstrated success at driving revenue through this channel. We have had some activity in the employer markets, but we're ramping up our efforts significantly. Over half of patients in the U.S. are insured under self-funded plans, including through their employers and unions. These plans are typically established through a network of health and wellness program brokers who seek to offer clients value-added services like EsoGuard. We've had good contact and partnerships with these brokers over the past couple of quarters. We've now hired a new Senior Director of Employer Partnerships, also someone who brings extensive experience from GRAIL, where she successfully introduced multi-cancer early detection tests to employers. To close the loop, we are excited and feel like we are at a pivotal moment for Lucid. We’re pushing hard to use the data we’ve completed to advance our CMS coverage efforts with MolDX as well as these direct contracted revenue programs. And so with that, let's pass the call to Dennis.

Thanks, Lishan, and good morning, everyone. The summary financial results for the third 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 quarter, but I encourage you to consider those 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 September 30 was $14.5 million. Last Friday, we gave notice to the convertible debt holder that the company is exercising its right to redeem the remainder of the outstanding note. To finance this payoff, Lucid has entered into convertible note purchase agreements with certain accredited investors that exceed the redemption price. The majority of the new investment is from existing preferred shareholders, which all have a long-term view of the company. We expect to make the payment to the existing convertible debt holder no later than November 22, which is immediately after the expiration of the minimum 10 trading day notice period. During this window, we expect to close on the purchase agreements. The net proceeds to the company, less the payoff amount, are subject to change depending in part on whether the existing debt holder converts any additional amounts of the debt between now and the payoff. However, with the current indications of interest minus the current payoff amount, we expect to increase our cash runway by more than an additional quarter, which brings us much closer to Medicare approval. The terms of the replacement convertible debt are detailed in our related 8-K on the topic, but generally reflect a five-year maturity, interest only at an annual interest rate of 12%, a voluntary conversion price of $1 with no conversions permissible for six months. The company can force conversion to common stock once the stock hits $10 per share for a minimum duration. The note is fully collateralized by the company's assets as well as a few other provisions, including dilution protection, Board representation, participation rights, change of control acceleration, and other customary affirmative and negative covenants. The quarterly burn rate was $10.4 million, which aligns with the average burn rate for the four preceding quarters of $10.6 million. The burn in the third quarter included $7.3 million from ongoing operations and $3.1 million from the quarterly MSA. We disclosed in the 10-Q that our ability to fund operations beyond one year from now is largely dependent upon how revenues ramp over the next four quarters, which is reliant on how the reimbursement landscape improves for both government and private health insurers. Additionally, our direct contracting efforts with self-insured employers and the ramp of concierge medicine can work to exceed that threshold. Included in other current liabilities is the $10.2 million fair value of the senior convertible debt reflecting a sequential quarterly decrease of $1.1 million. During the quarter, the company issued approximately 2.1 million shares. Subsequent to the quarter's end in October, the company issued 3.8 million shares in satisfaction of conversion notices from the debt holder reflecting a principal reduction of approximately $2.5 million. Shares outstanding, including unvested restricted stock awards, as of last week are approximately 59.3 million shares. The GAAP outstanding shares as of September 30 are reflected on the slide as well as on the balance sheet in the 10-Q. At present, PAVmed continues to be the single largest shareholder of Lucid Diagnostics with ownership of approximately 53% of the common shares outstanding. As of September 10, 2024, PAVmed no longer has the controlling voting or financial interest in Lucid, but retains about a 40% voting interest. As you may know, Lucid's financing earlier this year included the issuance of voting convertible preferred securities, incentivizing preferred shareholders to delay conversion of their preferred shares into common shares until 2026. If all preferred shares were converted today, there would be an additional 51.6 million common shares outstanding. Revenue of approximately $1.2 million for the third quarter is about 20% higher sequentially compared to the last two quarters and reflects a 50% increase over the third quarter of last year. This amount reflects actual cash collections for the quarter plus about $185,000 in direct contract billings. Test volume at 2,787 tests for the quarter represents nearly $7 million in submitted claims at our $2,499 ASP. As Lishan noted, we had a record number of tests in October, with a trailing three-month total of approximately 3,500 tests being the largest since the beginning of the company. A key determinant in how revenue is recognized at this stage of our reimbursement journey is the probability of collection. Revenue recognition for claims submitted for traditional government or private insurance will occur when the claim is actually collected. For billable amounts contracted directly with employers, we recognize revenue when our contracted service is provided. Our non-GAAP net loss per share is $0.20, aligning with each of the last four quarters. Our GAAP EPS non-cash charges accounted for approximately $0.05 per share. Total non-GAAP OpEx for Q3 2024 is $11.3 million reflecting a $600,000 increase sequentially, with $300,000 for increased clinical research expenses and $300,000 in G&A expenses. Cost of revenue consists mainly of EsoCheck devices, lab supplies, and fixed lab facility costs consistent with previous quarters. In the third quarter, we billed about 2,800 tests reflecting just under $7 million in pro forma revenue. During the third quarter, we collected $1 million from traditional reimbursement claims. Of that amount collected, about 35% was from current quarter submissions, about 45% from previous quarter submissions, and the balance from claims submitted more than six months ago, with the longest item at nearly 16 months. During this third quarter, we submitted nearly 2,800 claims equating to around $7 million in pro forma revenue. Approximately 46% have been adjudicated, with 54% pending. Out of the 46% adjudicated, about 31% resulted in an allowable amount from the insurance company, averaging about $1,621 per test. Of denied claims, about 34% were deemed not medically necessary or required prior authorization; 23% were deemed non-covered. Lastly, we received updates on subscription agreements anticipated to close shortly, which had been delayed due to travel of a participant. Cash received at the 10-Q cutoff was $21.75 million from subscription agreements. Funds are expected to be wired over the next days, and we aim to settle the existing note payoff by the end of next week. We expect cash to increase by about $13.2 million net of the payoff, which provides us nearly three quarters of runway at the current burn rate. With that, operator, let's open it up for questions.

Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. Our first question comes from the line of Kyle Mikson from Canaccord. Your line is open.

Hi, Kyle.

Hi, guys. Thanks for the question. Good to see the increase in ASP this quarter. But on that note though, the sequential decline in test volume was interesting. Maybe there was something that was inflating the results last quarter that caused it to look like a decline. Can you walk through what happened in the third quarter like the summer month of September that caused that decline because it was pretty material, 11% quarter-over-quarter? I just wanted to start there. Thanks.

So interesting, Kyle, that July was about 700 tests and October was double that amount. So if you look at August, September, and October, it's a record total. In July, we had fewer large events due to the summer period, but we picked up pretty dramatically through August and September. November is off to a very good start as well.

Yes. Really nothing material, Kyle. As we’ve said before, we’ve kept our sales team headcount flat to down. This is where we would expect our numbers to be. Last quarter it was up, this was a bit down, but this month looks great. It's all within the range that we expect as we now start pushing hard on the direct contracting side.

Okay. If October had about 1,400 claims or so, that would be roughly half of what you did in the second quarter of this year. Is it safe to say that the fourth quarter is going to be a record volume quarter for Lucid?

I think you have to temper that due to the fact that the tail end of the quarter starts to hit some holiday periods. Last year we saw some of the large events tail off because of the holidays. You have a baseline of 2,500 to 3,000 tests on a quarter-by-quarter basis, and that can be additive by some of these large events that add unpredictability. The bottom line is adoption is continuing to be validated and expanded by the additional sales channels that Lishan outlined.

And the pipeline is robust. The CYFT pipeline is really looking good. I’d just reiterate this is a stable to moderate increase, which is how we've positioned ourselves to maintain our operating expenses while recognizing broader reimbursement and a greater percentage of test volume being paid through direct contracting.

Yes. The first six to seven weeks of the fourth quarter are very encouraging regarding the results so far.

Great. That sounds promising. On the recent announcement to further penetrate the concierge medicine market with some new hires from GRAIL, that's super interesting. Can you talk about the historical penetration and success you've seen in that market, and why now there could be an inflection for you?

Yes. The concierge medicine side is new for us. Prior to this initiative, we had some success with employer markets and securing amendments to include EsoGuard as a benefit. Our timing relates to the fact that we’ve now built up a strong data package. When calling on concierge medicine, our initial engagement is similar to traditional primary care physicians. We have to show our data and value of the test. Concierges seek technologies for their higher-end patients who pay out of pocket, and we look forward to traction in this area.

Is it fair to say that your past work with employers, health systems, and test centers will help you succeed in the concierge market?

Absolutely. The training is very similar in how we approach physicians. The groundwork we've laid will significantly aid our efforts. The infrastructure we've developed for specimen collection is also critical for both concierge practices and larger networks.

How does pricing in that market work? Is it negotiated rate or volume-based?

You establish a rate with the practice or network, and that's the price the patients pay.

Perfect. That sounds great. Thanks a lot. Appreciate it.

Thanks, Kyle.

Hi, guys. Thank you for taking the questions. Great updates. I appreciate the color on October and November volumes. I wanted to clarify your commentary about the EsoGuard BE-1 study that was accepted for peer-reviewed publication. Is it fair to say that this publication is on track to be published by year-end? And I would assume you'd be submitting this to MolDX immediately after that. Can you give us a sense for that timing?

Yes, it’s been accepted for publication. The PDF of the unformatted version will be available soon, and we’re going through typical formatting protocols. We’re poised to file our data and request for reconsideration of the LCD in the coming days.

Can you provide insight into your funnel in the CYFT pipeline? How many events are you planning in Q4, and what does the runway look like into 2025?

We're scheduling these events about three to four months ahead. Except for the holidays in December, our team is busy during this period. We'll update that as we go forward, but it’s robust. We'll provide updates in our next call.

Regarding the concierge medicine initiative, you have done a good job holding your ASPs and price point with Medicare. Can we look at that Medicare price as a potential proxy when selling into concierge? Or might there be a discount given it's self-pay?

We start with our list price of $2,500. We’re negotiating but expected pricing to remain robust, and our margins strong. This opportunity for guaranteed payment within the sector is attractive. Our prices are likely to hold up.

Thanks for the reminder on the list price. That’s it for me. Thanks, guys.

Hey, thanks, Mark.

Thank you. Hey, Dennis. Hey, Lishan. How are you?

Good morning.

Great.

I wanted to dig into the Medicare coverage submission. What’s the timeline for that, and what’s the expected timeline for a decision? What are your plans to prepare for the eventual coverage decision?

We can’t give hard timelines, but we're deeply engaged with MolDX and confident in our data. This reconsideration is straightforward since the original LCD work is comprehensive. We expect a first-half event next year, and we’re optimistic about this submission.

Regarding concierge, have there been pricing decisions? Will this be different from current coverage pricing?

This is distinct from coverage. We engage with practices, showcase the value of our test, and negotiate a price starting at $2,500. The model is direct pay from patients without the complexities of claims.

Excellent. Thanks for the update. I appreciate it, Lishan.

Thanks, Anthony.

Yes. First, if you receive Medicare coverage, how does your marketing strategy change? I know you're targeting places you're likely to get paid now, but what changes will occur?

About 25% of our volume is from the Medicare population. Securing Medicare coverage allows us to direct resources toward that demographic, which can increase revenue from Medicare. Additionally, it impacts our commercial relationships, facilitating broader coverage discussions.

Regarding the data package for MolDx, is it sufficient for private insurers? To what degree do insurers factor Medicare coverage into their decisions?

We are confident that our data package will suffice for both Medicare and commercial payers. We are already in discussions with commercial payers, but having Medicare coverage significantly aids these conversations.

Thank you for taking my question. I'm curious about the geographic distribution of tests. Has it been uniform across states or are there stronger areas?

There are certainly areas where we have developed traction. Our team has allocated resources strategically, resulting in strong performance in California, Texas, and Florida among others. There are also states that mandate coverage for biomarker tests based on legislation, which we consider as we look at geography.

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

Thanks, Ed.

Thanks, Ed. Appreciate it. Thank you all for your time and attention this morning. It should be clear that this is a pivotal moment for our company with many exciting developments ahead in the coming weeks and months. To keep up with our progress, please sign up for our email alerts on the Lucid Investor Relations website or follow us on Twitter, LinkedIn, and our website. Thank you, everyone. We truly appreciate it and have a great day.

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