Lucid Diagnostics Provides Business Update and Fourth Quarter and Full Year 2022 Financial Results

Lucid Diagnostics Inc. (NASDAQ: LUCD) a commercial-stage, cancer prevention medical diagnostics company, and majority-owned subsidiary of PAVmed Inc. (NASDAQ: PAVM, PAVMZ), today provided a business update for the Company and presented financial results for the year ended December 31, 2022.

Business Update Highlights

“We continue to make significant strides in our efforts to expand EsoGuard testing volume and secure in-network commercial payor access for EsoGuard,” said Lishan Aklog, M.D., Lucid’s Chairman and Chief Executive Officer. “Testing volume growth has been particularly strong this quarter and we expect that growth to continue with ongoing expansion of our satellite Lucid Test Center (sLTC) program and high-volume testing events.   We also are making steady progress with commercial payor engagements and expect that effort to accelerate as we continue to generate claims histories with major plans and collect data demonstrating clinical utility of EsoGuard testing.”

“Our in-network agreement to participate in Multiplan’s networks, comprising approximately 60 million consumers, represents a significant milestone in our efforts to broaden patient access to EsoGuard testing. Our recent financings, along with our ongoing cash preservation efforts, have strengthened our balance sheet and extended our cash runway well into 2024, through key value inflection milestones. We will continue to focus on commercial execution and market access expansion to drive long-term shareholder value,” Dr. Aklog added.

Highlights from the 4Q22 and recent weeks include:

• Lucid’s CLIA-certified clinical laboratory performed 1,174 commercial EsoGuard^® Esophageal DNA Tests in the 4Q22, which represents an 8 percent increase sequentially from the 3Q22 and a 288 percent annual increase from the 4Q21. The Company projects approximately 1600 commercial EsoGuard tests in 1Q23, which represents a 36 percent increase sequentially from 4Q22 and a 300 percent annual increase from 1Q22.
  
  
• Satellite Lucid Test Center (sLTC) activity, whereby Lucid clinicians collect samples at physician offices, continues to increase rapidly, representing 31 percent of samples collected in 4Q22, up from 22 percent in 3Q22.
  
  
• Lucid signed an in-network agreement with MultiPlan^®, the largest secondary Preferred Provider Organization (PPO), expanding EsoGuard’s access to Multiplan’s estimated 60 million consumers through its relationship with more than 700 healthcare payors and 1.2 million healthcare providers.
  
  
• Commercial payor engagement is accelerating, with a total of 13 in-network EsoGuard contracts, averaging more than $2000 per test and all in-network PPO contracts priced at or above the Medicare payment rate of $1938. Key drivers of future in-network commercial payor contracting—generating claims history with individual payors and collecting retrospective and prospective clinical utility data—are also progressing well.
  
  
• Lucid launched an aggressive Direct Contracting Strategic Initiative (DCSI) to engage directly with large Administrative Services Only (ASO) self-insured employers, unions and other entities, seeking to replicate the successes of other cancer screening diagnostic companies that have deployed similar strategies.
  
  
• Lucid launched its #CheckYourFoodTube Precancer Detection Event (#CYFT Event) program, bringing EsoGuard testing directly to at-risk patients at high-volume testing day events.  The first #CYFT Event, held in partnership with the San Antonio Fire Department, tested 391 firefighters over two weekends. The Company set new performance records during this inaugural event, reflecting enhanced operating efficiencies, including approximately:
  
  — 100 individuals undergoing esophageal cell collection procedures per day;
  
  — 50 cell collection procedures performed per nurse practitioner per day; and
  
  — 200 EsoGuard tests processed by the laboratory in a single day.
  
  The near-term pipeline for future #CYFT Events is robust.
  
  
• Lucid received Food and Drug Administration (FDA) 510(k) clearance to market its EsoCheck^® Cell Collection Device without sterilization, which will significantly reduce the cost of goods, enhance gross margins, mitigate supply chain issues, and address potential environmental concerns with current sterilization techniques.
  
  
• Lucid secured financing of $24.6 million through separate offerings of preferred stock and debt. Recently, the Company received $13.6 million from the sale of shares of non-voting Series A Convertible Preferred Stock, which may not be converted until September 2023 and not until March 2025 without surrendering the right to an annual dividend. Also, on March 13, 2023 the Company entered into a securities purchase agreement for Series A Convertible Notes with an aggregated principal amount of $11.1 million, which may not be converted until September 2023. Further details of these transactions are available on Form 8-K notices filed with the Securities and Exchange Commission. The proceeds of these offerings will extend the Company’s cash runway well into 2024, through near-term commercial milestones, including expanded market access.
  
  
• Lucid management confirms that the entirety of its cash and cash-equivalent instruments are held at JP Morgan, and that it does not hold any cash at Silicon Valley Bank (SVB) or any other financial institution whose deposits have been reported to be at risk.

Financial Results

• For 4Q22, EsoGuard related revenues were $0.1 million while for the year ended December 31, 2021, revenues were $0.3 million. Fourth-quarter and full-year 2022 operating expenses were approximately $24.6 million and $91.3 million, respectively, which include stock-based compensation expenses of $4.9 million and $19.5 million, respectively. GAAP net loss attributable to shareholders for the fourth quarter and full-year 2022 were approximately $14.9 million and $56.2 million, or $(0.47) and $(1.55) per common share.
  
  
• As shown below and for the purpose of illustrating the effect of stock-based compensation and other non-cash income and expenses on the Company’s financial results, the Company’s non-GAAP adjusted loss for the fourth quarter and year ended December 31, 2022, were approximately $10.6 million and $39.2 million or $(0.33) and $(1.08) per common share.
  
  
• Lucid had cash and cash equivalents of $22.5 million as of December 31, 2022, compared with $53.7 million as of December 31, 2021.  Subsequent to December 31, 2022, the company completed an initial closing for the issuance of preferred securities resulting in net proceeds of approximately $13.6 million and entered into a Securities Purchase Agreement to issues Secured Convertible Debt in the principal amount of $11.1 million.

Lucid Non-GAAP Measures

• To supplement our unaudited financial results presented in accordance with U.S. generally accepted accounting principles (GAAP), management provides certain non-GAAP financial measures of the Company’s financial results. These non-GAAP financial measures include net loss before interest, taxes, depreciation, and amortization (EBITDA), and non-GAAP adjusted loss, which further adjusts EBITDA for stock-based compensation expense and other non-cash income and expenses, if any. The foregoing non-GAAP financial measures of EBITDA and non-GAAP adjusted loss are not recognized terms under U.S. GAAP.
  
  
• Non-GAAP financial measures are presented with the intent of providing greater transparency to the information used by us in our financial performance analysis and operational decision-making. We believe these non-GAAP financial measures provide meaningful information to assist investors, shareholders, and other readers of our unaudited financial statements in making comparisons to our historical financial results and analyzing the underlying performance of our results of operations. These non-GAAP financial measures are not intended to be, and should not be, a substitute for, considered superior to, considered separately from, or as an alternative to, the most directly comparable GAAP financial measures.
  
  
• Non-GAAP financial measures are provided to enhance readers’ overall understanding of our current financial results and to provide further information for comparative purposes. Management believes the non-GAAP financial measures provide useful information to management and investors by isolating certain expenses, gains, and losses that may not be indicative of our core operating results and business outlook. Specifically, the non-GAAP financial measures include non-GAAP adjusted loss, and its presentation is intended to help the reader understand the effect of the loss on the issuance or modification of convertible securities, the periodic change in fair value of convertible securities, the loss on debt extinguishment, and the corresponding accounting for non-cash charges on financial performance. In addition, management believes non-GAAP financial measures enhance the comparability of results against prior periods.
  
  
• A reconciliation to the most directly comparable GAAP measure of all non-GAAP financial measures included in this press release for the three months and nine months ended December 31, 2022, and 2021 are as follows:

 

About EsoGuard and EsoCheck

Millions of patients with GERD are at risk of developing esophageal precancer and a highly lethal form of esophageal cancer (“EAC”). Over 80 percent of EAC patients die within five years of diagnosis, making it the second most lethal cancer in the U.S. The mortality rate is high even in those diagnosed with early stage EAC. The U.S. incidence of EAC has increased 500 percent over the past four decades, while the incidences of other common cancers have declined or remained flat. In nearly all cases, EAC silently progresses until it manifests itself with new symptoms of advanced disease. All EAC is believed to arise from esophageal precancer, which occurs in approximately 5 percent to 15 percent of at-risk GERD patients. Early esophageal precancer can be monitored for progression to late esophageal precancer which can be cured with endoscopic esophageal ablation, reliably halting progression to cancer.

Esophageal precancer screening is already recommended by clinical practice guidelines in millions of GERD patients with multiple risk factors, including age over 50 years, male gender, White race, obesity, smoking history, and a family history of esophageal precancer or cancer. Unfortunately, fewer than 10 percent of those recommended for screening undergo traditional invasive endoscopic screening. The profound tragedy of an EAC diagnosis is that likely death could have been prevented if the at-risk GERD patient had been screened and then undergone surveillance and curative treatment.

The only missing element for a viable esophageal cancer prevention program has been the lack of a widespread screening tool that can detect esophageal precancer. Lucid believes EsoGuard, performed on samples collected with EsoCheck, is the missing element – 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 in at-risk GERD patients. An updated American College of Gastroenterology clinical practice guideline and an American Gastroenterological Association clinical practice update both endorse non-endoscopic biomarker tests as an acceptable alternative to costly and invasive endoscopy for esophageal precancer screening. EsoGuard is the only such test currently available in the United States.

EsoGuard is a bisulfite-converted NGS DNA assay performed on surface esophageal cells collected with EsoCheck, which quantifies methylation at 31 sites on two genes, Vimentin (VIM) and Cyclin A1 (CCNA1). The assay was evaluated in a 408-patient, multicenter, case-control study published in Science Translational Medicine and showed greater than 90 percent sensitivity and specificity at detecting esophageal precancer and cancer.

EsoCheck is an FDA 510(k) and CE Mark cleared noninvasive swallowable balloon capsule catheter device capable of sampling surface esophageal cells in a less than five-minute office procedure. It consists of a vitamin pill-sized rigid plastic capsule tethered to a thin silicone catheter from which a soft silicone balloon with textured ridges emerges to gently swab surface esophageal cells. When vacuum suction is applied, the balloon and sampled cells are pulled into the capsule, protecting them from contamination and dilution by cells outside of the targeted region during device withdrawal. Lucid believes this proprietary Collect+Protect™ technology makes EsoCheck the only noninvasive esophageal cell collection device capable of such anatomically targeted and protected sampling. The sample is sent by overnight express mail to Lucid’s CLIA-certified, CAP-accredited laboratory, LucidDx Labs, for EsoGuard testing.

About Lucid Diagnostics

Lucid Diagnostics Inc. is a commercial-stage, cancer prevention medical diagnostics company, and subsidiary of PAVmed Inc. Lucid is focused on the millions of patients with gastroesophageal reflux disease (GERD), also known as chronic heartburn, who are at risk of developing esophageal precancer and cancer. Lucid’s EsoGuard® Esophageal DNA Test, performed on samples collected in a brief, noninvasive office procedure with its EsoCheck® Esophageal Cell Collection Device, is the first and only commercially available diagnostic test capable of serving as a widespread screening tool to prevent cancer and cancer deaths through early detection of esophageal precancer in at-risk GERD patients.

For more information, please visit luciddx.com and for more information about its parent company PAVmed, please visit pavmed.com.