Operator: Good morning, and welcome to PAVmed’s Fourth 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. [Operator Instructions]. Please note this event is being recorded. I would now like to turn the conference over to Matt Riley, PAVmed’s Senior Director of Investor Relations. Please go ahead.

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 Chief Executive Officer of PAVmed, along with Dennis McGrath, Chief Financial Officer of PAVmed. The press release announcing our business update and financial results is available on PAVmed’s website. Please take a moment to read the disclosures 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 the statements made.

Factors that could cause actual results to differ are described in the disclaimer and in our filings with the SEC. For a list and a description of these and other important risks and uncertainties that may affect future operations, see Part I, Item IA entitled Risk Factors in PAVmed’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, PAVmed disclaims any intentions or obligations to publicly update or revise any forward-looking statements to reflect changes 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 PAVmed. Take it away, Lishan.

Lishan Aklog: Thank you, Matt, and good morning, everyone. Thank you for joining our quarterly update call. I’d like to thank our long-term shareholders for your ongoing support and commitment. Before we delve into our recent operational highlights, I just want to reiterate some of the critical steps that we’ve taken to stabilize PAVmed’s corporate structure and balance sheet. Those changes are now complete and PAVmed is now in a strong position to fulfill our mission. As you know PAVmed, as the parent company, has subsidiaries, including Lucid Diagnostics and Veris Health and last year’s spinout incubator PMX. As our subsidiaries succeed, particularly Lucid, it’s important to understand that we expect PAVmed will follow suit and succeed as well.

Beginning of this year, we successfully completed what was a carefully designed strategic transformation to solidify PAVmed as a sustainable vehicle. As you recall, last year, we completed the deconsolidation of Lucid Diagnostics and restructured our convertible debt. This accomplished two things. One is preserve PAVmed’s ownership in Lucid without having to absorb Lucid’s operating losses on its balance sheet and it allowed us to satisfy the NASDAQ minimum equity listing requirement. PAVmed is now well positioned to operate as designed as a diversified commercial life sciences company with multiple independently financed subsidiaries operating under a shared services model. So now on to highlights from the fourth quarter and recent weeks. Let me start with Lucid Diagnostics.

However, I do encourage you to listen to the Lucid business update call that — from yesterday, for greater detail on these programs. But here are some of the main takeaways. Lucid generated $1.2 million in revenue and test volume of just over 4,000 tests, which represented a 45% growth quarter-on-quarter. In the fourth quarter, EsoGuard revenue was approximately $1.2 million, and we booked record test volume of 4,042 tests, about 45% quarter-on-quarter growth above our targeted 2,500 to 3,000 tests per quarter that are necessary for us to achieve critical mass with our revenue cycle management and medical policy efforts while protecting our cash burn. Highmark Blue Cross Blue Shield in New York established our first positive commercial insurance coverage policy for EsoGuard, so exciting development there.

Another exciting development was the update to the National Comprehensive Cancer Network clinical practice guideline, which now includes esophageal precancer screening, consistent with the ACG gastroenterology guidelines. As an important step, the NCCN is widely regarded as a key indicator of standard of excellence and we think this will help us drive positive commercial insurance coverage decisions in the coming quarters. Our concierge medicine cash pay program is off to a great start. We’ve executed over 20 concierge medicine contracts in just a few weeks since we started this program. We also strengthened our balance sheet with long-term debt refinancing and a registered direct common stock offering, extending our cash runway past the key upcoming reimbursement milestones.

We’re also waiting for a response to our submission to the MolDX Group for reconsideration of EsoGuard for Medicare coverage under the existing local coverage determination that was submitted in November, and we expect some action on that and remain optimistic for action within the first half of this year. Also, a lot of great progress with Veris Health. We were excited to complete a private placement financing with gross proceeds of $2.4 million at a $35 million pre-money valuation. These were credit investors who purchased PAVmed’s securities at the market as well as shares of Veris common stock. This financing supplements recently secured $1.8 million nondilutive two-year NIH grant. The financing allows us to advance our strategy. We’re focusing on the completion of the regulatory process for the implantable physiologic monitor and a regulatory clearance regulatory submission by the end of this year or into the first quarter of next year.

We believe that this Veris pre-money valuation really reflects strong investor confidence in Veris’ long-term commercial potential and we expect that once cleared, the employment monitor will significantly enhance the commercial potential. We also continue to have a strong engagement with our partners at The Ohio State University, the James Cancer Center. We extended our pilot program with them to the end of April to give us time to close our long-term commercial and strategic partnership, which we believe is imminent. On the incubator side, we’re continuing to seek direct financing to fund the PortIO and is in contact with angel investors as well as with several strategics and those conversations remain active. With that, I’ll pass the call on to Dennis.

Dennis McGrath: Thanks, Lishan, and good morning, everyone. Our summary financial results for the fourth quarter and the year were reported in our press release that has been distributed. On the next three slides, I’ll emphasize a few key highlights from the fourth quarter, but I encourage you to consider those remarks in the context of the full disclosures covenant in our annual report on Form 10-K as filed with the SEC. With regard to the balance sheet, you will recall from our last call in November, the company was engaged in a multistep process to regain compliance with NASDAQ’s listing standard for minimum equity and also position the company for long-term financial stability. Among the strategic endeavors that Lishan spoke about, there are three immediate tactical financial targets, we were intent on accomplishing.

Namely, one, deconsolidating Lucid from PAVmed’s consolidated financial statements. Two, restructuring our debt. And three, focusing on financing Veris and PortIO. This slide reflects the balance sheet for the third quarter and fourth quarter after deconsolidation, which occurred on September 10. But prior to the effect of the debt exchange, which became effective on January 17, 2025, right after the shareholders approved the exchange, and two, prior to NASDAQ’s notice of listing compliance on February 14 and three, prior to the PAVmed Veris financing that occurred on February 21. So a couple of key things to point out on each of these balance sheets. Cash does not include any Lucid cash. Two, the equity method investment balances reflect the $31.3 million lucid shares mark-to-market on each balance sheet date, which at December 31, the date of the balance sheet was $0.82 per share.

This amount was previously eliminated from PAVmed’s balance sheet prior to deconsolidation. The stock price between September 30 and December 31 and was relatively flat. Hence, the balance did not change much between the beginning and ending dates of the fourth quarter. However, the Lucid stock price is way up since year-end, and so the impact of a rising stock price can have a dramatic impact on PAVmed’s first quarter results. A way to think about that impact of this line item and how it affects the building financial stability of PAVmed is as follows. For every $0.032 of Lucid price change from a base of $0.82, the balance sheet amount will change by $1 million in total. As an example, just in the last couple of weeks, this amount has increased to just under $50 million.

Note, there is plenty more information in the 10-K on this topic, particularly Note 4 to the financial statements. The senior secured note balances are before the debt exchange that occurred after year-end on January 17. A general way to think about how the balance sheet amount changes as a result of the January debt exchange is to decrease the debt by $25 million and increase preferred equity by $25 million. PAVmed continues to be the single largest shareholder of the common stock. However, the controlling voting interest dropped from more than 50% to about 32% as a result of these intentional actions by management and Board, clearing the pathway to deconsolidate Lucid from PAVmed. Some additional tactical steps that have been taken by management and the Board.

One, the incurrence of future R&D expenses to advance the next development stages of the Veris cancer care platform and PorIO technology will be largely dependent upon obtaining funding for those entities to cover the incremental development costs. Hence, any increased burn rate from those endeavors will be offset from the incremental financing. As a good start in that direction, we previously announced being awarded an NIH grant of $1.8 million for Veris, payable over two years, for which we collected 50% of the award in December, which covered Veris expenses in the fourth quarter. The additional funding efforts have been — were paused pending the outcome of the NASDAQ hearings panel. With the NASDAQ approval in hand on February 14, the PAVmed’s Veris financing was then later completed on February 21.

The Veris component of the financing was negotiated at $35 million pre-money value. PortIO Corp has ongoing discussions with both financial and strategic investors for a direct investment in the PortIO Corp at a pre-money valuation of $42 million to cover the final development costs. Shares outstanding today include unvested RSAs at approximately 17.5 million shares outstanding. The GAAP year-end outstanding shares of 11.2 million are reflected on the slide as well as on the face of the balance sheet in the 10-K. GAAP shares do not reflect unvested RSA amounts. Next slide, please. Similar to past presentations, this P&L slide provides some GAAP and non-GAAP year-over-year quarterly and annual comparisons. However, there are some significant differences in how the information is compiled between the comparative periods given the changes in PAVmed’s financial control of Lucid.

Importantly, the GAAP construct for deconsolidating Lucid on September 10 somewhat blurs the historical understanding of the information for PAVmed as a standalone entity and GAAP does not allow the presentation for prior periods to be similarly adjusted. The GAAP annual results as presented reflect inclusion or consolidation of Lucid’s results through September 10 and then differently after that date, mainly without Lucid’s results. Furthermore, you will see a large net income of $28.4 million on the GAAP P&L before non-controlling interest. And the 10-K shows a GAAP positive primary EPS of $3.30 per share and a positive diluted EPS of $0.50 per share. This is all the result of eliminating Lucid from PAVmed’s balance sheet and extracting the impact of Lucid’s cumulative historical losses.

The net adjustments to the balance sheet create a $72 million gain that then flows through the P&L to obtain the net equity impact of all the deconsolidation adjustments. Happy to answer any detailed questions on the slide in the Q&A. But I think it’s more informative to look at the fourth quarter standalone information presented in the slide and the full fourth quarter information presented in our press release that shows a company baseline bias of operating at cash flow breakeven and incurring incremental PAVmed expenses for development activities that are offset by dedicated funding. So in the fourth quarter, you see a non-GAAP loss of $688,000, which has been offset by the NIH grant proceeds of $900,000. Where that three months ended December 31, 2024, PAVmed revenues reflect approximately 125 patients on the Veris Cancer Care platform largely in connection with the expanded pilot program with OSU.

EsoGuard related revenues are no longer consolidated with PAVmed results with a deconsolidation that became effective in September. PAVmed’s management service income from Lucid diagnostics of $3.2 million for the quarter is reflected in other income. Operating expenses were approximately $5.2 million, which includes stock-based compensation expenses of $700,000. GAAP net income attributable to common stockholders was approximately $1.3 million or approximately $0.12 per common share on a diluted basis for the quarter. Next slide, please. With regard to the non-GAAP operating expenses on this slide, you’ll see a graphic illustration of our operating expenses over time as presented in more detail in our press release. Total non-GAAP OpEx is $4.2 million for the fourth quarter of ’24.

The decrease is equally related to the impact of deconsolidation and the fact that the combined OpEx ignoring deconsolidation of PAVmed and Lucid would have been in line with the previous quarters. With that, operator, let’s open it up for questions.

Operator: [Operator Instructions] Your first question comes from the line of Jeremy Pearlman with Maxim Group. Please go ahead.

Lishan Aklog: Jeremy, good morning.

Jeremy Pearlman: Good morning. Thank you for taking my question. Just quickly on the Veris Healthcare cancer platform with the Ohio State pilot program. So it seems like it was extended through April. It seems like the finalizing of contract is imminent. I mean, what is — based on your conversations you’re having with them, what does that contract do you think will look like? How is it going to play out?

Lishan Aklog: It’s really exciting because it’s not only a commercial engagement and our first major commercial engagement. It will be our first major commercial engagement with the third largest cancer center in the country. It’s also a strategic partnership, and that’s been part of the nature of our engagement with Ohio State with the James Cancer Center going back to the very beginning and the contemplation of the memorandum of understanding, the design and the launch of the pilot program, the sort of joint assessment of the successes of the pilot program with regard to the various key performance indicators, KPIs as well as clinical success, fine-tuning to how the platform works within the construct of their workflow. And so, all of that’s been great.

So, the reason we extended the pilot was, frankly, because as we were working through the details of what the agreement would look like, the — there was just demand from the clinical sites to continue on patients. And so we just agreed to continue it while we are ironing out the final details. there will be a commitment from Ohio State to enroll a substantial portion of patients over the first year. These will be commercial patients, but also patients enrolled in a registry. So, we’ll be able to use that data, collect that data for ongoing improvements, but also for a pathway towards data analytics and development of clinical decision support tools using AI. They have also committed to being the first site for — once the agreement is consummated for them to be the first site for the initial implantation of the implantable device once it’s FDA cleared and to do a separate registry for that to help us document its role on and its use.

So it’s really a comprehensive commercial as well as strategic partnerships. What it does during this interval of time were — where the primary focus for Veris is going to be on advancing the implantable and launching the agreement with Ohio State, what it will do for us as we culminate that process, and we end up crossing the threshold with FDA clearance is it will really be a poster child, a standard bearer for our ability to engage with other large cancer centers. And the James is very committed to helping us do that and for them to be at the forefront of using a dedicated cancer care platform to enhance the care of their patients.

Jeremy Pearlman: Understood. Thank you. And then just one follow-up question. You mentioned the implantable device. Now that you have funding for that, do you have any more clarity how that timeline would look until you hopefully get potential FDA approval for that?

Lishan Aklog: Yeah, sure. So we’re getting the manufacturing partners with us back online and getting all the — as you may recall, we are pretty far along with that process. And so that’s just — that’s all getting rebooted. Right now, it looks like that process will be completed and will be ready for submission in the very end of this year or the early part of 2026. The — I just want to maybe use this opportunity to note that we’ve had numerous engagements, pre-submission meetings with the FDA. We have a very clear idea. They have a very clear idea of what we intend to do, and we have a very clear idea of what they’re going to ask us to do. It’s been a very successful engagement and that it looks like we’ll be able to avoid having to do any kind of sort of meaningful human clinical trial of the implantable where it’s actually implanted and we’re in the final stages of kind of just checking one last box with them around the way to validate a skin study where the device is just put on the skin and used to monitor patients for short periods of time to demonstrate that — to demonstrate its efficacy without having to do a full-blown clinical study.

So really intense engagement with FDA that’s really borne fruit with regard to what we’ll have to do to get this thing cleared.

Jeremy Pearlman: Okay, great. Thank you for that information, and I’ll hop back in the queue.

Lishan Aklog: Great. Thanks, Jeremy.

Operator: Your next question comes from the line of Ross Osborn with Cantor Fitzgerald. Please go ahead.

Lishan Aklog: Hey, Ross.

Matthew Park: Hey, guys. This is Matthew Park on for Ross today. Thanks for taking — I guess just one for me. Can you give us some color on the discussions you’re having with other institutions on Veris to initiate pilot launches and any learnings you can take from what you’re doing at OSU when going into other centers?

Lishan Aklog: Yeah. So we had a pretty comprehensive process screening the sort of hundreds of cancer centers in this country, screening for targets that are — that have NCI designation, that have — that are large, have significant number of patients getting advanced therapies. And I would say — of that group, we’ve had meaningful conversations with about a dozen or so and more advanced conversations with enhanceables and four or five of those. We’re not pushing real hard on advancing new pilots because we want to take the sort of limited resources right now and make sure that we’re advancing the — that we’re applying those the implantable. We really believe from the pilot engagement with OSU, that although we’ve had really great success with the software platform in conjunction with the Veris box of connected devices that the real differentiator here over the medium and long term is with the implantable.

So we continue to have dialogues with a handful of other major centers. There’s been positive feedback with regard to our experience to date with Ohio State and the opportunity to enhance care. So those relationships are being kept warm. It’s certainly possible we’ll add a pilot or two during this period where we’re focused primarily on the OSU engagement and the advancement of the implantable, but we don’t expect to make a major push to expand the number of sites until after the implantable is clear. And we believe that that’s the best utilization of our resources. And frankly, by then, we’ll have a meaningful amount of data from the more formal post-pilot commercial engagement with OSU that we’ll be able to leverage. There are also a variety of other things that we’re going to be working on over — during this period of time.

We’re looking to work with OSU on helping us develop the clinical support offering, so we can offer sites the ability for Veris personnel to provide some clinical support to triage alerts and so forth to help them make maximally utilize the platform itself. So that’s something that’s in progress as well as developing tools beyond the baseline remote patient monitoring functionality that already exists. So, AI-based tools for clinical decision support. So all of those are really things that will enhance the product, both the implantable as well as the software element, which will put us in a strong position to expand beyond a handful of centers once the implantable is cleared.

Matthew Park: Got it. Super helpful. Makes sense. And then I guess one more for me on PortIO. So, pending any incremental financing, can you just walk us through what the path to FDA approval would look like here? And any additional studies you need to go through? Thanks.

Lishan Aklog: Sure, sure. We don’t — I just have to talk too much, but just maybe as on PortIO, so just a reminder of what PortIO actually is. PortIO is the first implantable long-term vascular access device that uses the bone marrow as a site. That’s the intraosseous or IO portion of the name PortIO. And it’s usually going to provide really an opportunity to provide long term vascular access for patients who have poor veins, for patients who need their veins for future dialysis and a variety of other very large market opportunities that total about $2 billion. So to get more directly to your question, the pathway is quite straightforward. PAVmed has already invested a substantial amount in getting the getting the device through the first — the Gen 1 device through verification and validation testing.

And if you recall, we completed a successful first in-human study in Colombia, South America, that went perfectly. Excellent results of online patients. It worked exactly as intended and that’s the basis for our discussions with FDA on what a IDE would look like. The regulatory path here is a de novo, but a fairly straightforward de novo, as de novo because this is a new category of device. There’s never ever been a device that can use the intraosseous for long-term use. The plan upon securing the financing either through investors or through what are fairly active discussions right now with the strategics in the space would be to launch the IDE study. We estimate the number of patients in that study on the low end of the sort of 50 to 80 patient range.

And so that we believe we could enroll somewhere in the 18-month period, perhaps less, perhaps a bit longer depending on the sites that we secure. So that will get us through FDA — completing that study will allow us to submit and secure clearance with FDA. Certainly, our goal would be within two years of the launch of the clinical study, hopefully or possibly less than that. In parallel, we’ve made significant progress on the Gen 2 device that has the same basic core element. It had some improvements with regard to the silicon septum and some of the ergonomics of the delivery device. We will also use a portion of the capital raised to advance the Gen 2 device in parallel and frankly, just swap it out in the middle of the study using the appropriate mechanisms that FDA allows for that, so that the commercial launch would be with the Gen 2 device.

Matthew Park: Got it, that makes sense. Thanks for taking the questions, guys.

Lishan Aklog: Yeah, great, thanks a lot, appreciate it.

Operator: And your next question comes from the line of Ed Woo with Ascendiant Capital. Please go ahead.

Ed Woo: Hey, congratulations on all the progress. My question is on Veris. As you’re possibly talking to other cancer centers, have you run into any competing products or competition out there? Thank you.

Lishan Aklog: Yeah. Great question, Ed. So the competitive landscape here is very attractive in a variety of ways. So let’s just start at the highest level. Yeah, there is a fair number of companies that offer rather generic remote patient monitoring software tools that just allow you to track patients in a very generic way. So it gives me an opportunity to remind you and others that what’s great about the software platform – Veris’ software platform is it’s designed from the bottom up by oncologists to be very specific to patients undergoing systemic therapy, chemotherapy immunotherapy for cancer. What does that actually mean in practice? It means that the patient — the part that interfaces with patients and ask them about their symptoms and so forth is very highly tuned to what cancer patients are undergoing.

So that’s one differentiating factor compared to just traditional remote patient monitoring RPM technologies that are used sort of across the board across patients with chronic disease, acute disease and so forth. So there’s really nothing out there that is competitive with regard to targeting cancer patients. Perhaps even more important over the long term or not even that much of a long term because we’re not that far from having the implantable is the implantable. That’s a proprietary technology, patent protected, that will be a barrier to entry for others trying to get in this space. So we believe certainly, right now, we have the only dedicated product that’s really of interest. I’ll note that I’m not just saying that, we participated in a — Veris participated in a medical center wide RFP, request for proposals with OSU and we were able to secure approval for the Veris platform to be the dedicated platform for their cancer center.

There really wasn’t any meaningful competition in that exercise. But, once we have the implantable, that really is the moat, that’s the significant value added and it’s a barrier to entry for others trying to get into the space.

Ed Woo: Great. Well, thanks for answering my questions. I wish you guys good luck. Thank you.

Lishan Aklog: Yeah. Thanks a lot, Ed.

Operator: I’m showing no further questions at this time. I would like to turn it back to Dr. Lishan Aklog for closing remarks.

Lishan Aklog: Great. Thank you, operator, and thank you all for joining us today. Hopefully, it’s clear from our comments here that with the various challenges over the past year now really squarely behind us and PAvmed on on a very strong footing. Our team is really looking forward to a very strong remainder of 2025. Lucid is making really strong progress on multiple fronts. We believe we’re on the cusp of the major inflection milestones that will drive shareholder value. And the work we’ve done over the last six months on the PAVmed restructure will really allow PAVmed to directly benefit from the Lucid value creation side. And as you’ve heard, including during the Q&A period here, Veris is also in a much stronger position.

We’ve demonstrated that it’s financeable. It’s been able to raise sufficient capital to implant — to advance its key asset, which is the implantable monitor and we’re on the verge of launching our first strategic and commercial engagement with a major academic center, which really bodes well for the long-term commercial success. This stability, we haven’t really talked about it much today, we’ve touched on it before, also allows PAVmed to continue to pursue other assets in the broader life sciences sector to drive value, and that’s an active process that we’re continuing. So with that said, I do encourage you to stay connected with our progress, our news releases, these calls as well as signing up for our e-mail alerts from our website, and you can also follow us on Twitter and LinkedIn. So thank you, everybody, and have a great day.

Operator: Thank you. And ladies and gentlemen, this concludes today’s conference call. Thank you all for joining. You may now disconnect.

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