Greetings, welcome to the PAVmed and Lucid Diagnostics Strategic Business Update. At this time, all participants are on a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Michael Parks, Vice President of Investor Relations. Thank you. You may begin.
Thank you, Doug. Good afternoon, everyone. Thank you for participating in today's joint business update call. The press release announcing our strategic business update is available on both PAVmed and Lucid websites. Please take a moment to read the disclaimer about forward-looking statements in the press release. The strategic business update, press release, and the conference call both include forward-looking statements, these forward-looking statements are subject to known and unknown risks and uncertainties that may cause actual results to differ materially from 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 description of these and other important risks and uncertainties that may affect future operations, see Part one, Item 1A, entitled Risk Factors in both PAVmed and Lucid's most recent annual report on Form 10-Q, filed with the SEC and subsequent updates filed in quarterly reports on Form 10-Q and any subsequent Form 8-K filing. Except as required by law, PAVmed and 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 those expectations may be based, or that may affect the likelihood that actual results will differ from those contained in the forward-looking statement. I would now like to turn the call over to Dr. Lishan Aklog, Chairman and CEO of PAVmed and Lucid Diagnostics. Dr. Aklog.
Thank you, Michael, and thank you all for joining us this afternoon on the call. In addition on the call with me today is Dennis McGrath, our Chief Financial Officer. As I have described during previous calls over the past few quarters, both PAVmed and Lucid have engaged in a broad systematic initiative to protect long-term shareholder interests by maximizing our cash runway during what remain challenging market conditions. These efforts have included continuously assessing our operations and portfolio to maintain a cash preservation posture while continuing to execute on our long-term strategy. As stated in today's press release, we have decided to further extend this initiative by aggressively streamlining our operations to focus substantially all our resources and near-term efforts on accelerating the commercialization of Lucid and Veris' products. EsoGuard, EsoCheck, and the Veris Cancer Care Platform.
These commercial products with their large market opportunities are clearly our most valuable assets. We strongly believe that focusing on them provides our shareholders the greatest near and long-term value creation opportunities. Towards this end, we have implemented a targeted workforce reduction of approximately 20% across PAVmed and its subsidiaries. We've also implemented cost-cutting measures which seek to lower our cash burn by at least 25%. These include streamlining our product development and clinical research activities to those that are directly linked to our near-term commercialization efforts. We believe that our leaner, more commercially focused posture puts us in the best position to advance our long-term strategic goals and maximize near and long-term shareholder value. Let's start with our first commercial priority, Lucid Diagnostics.
At first, it's just a few highlights to remind you where we are and why we believe Lucid and EsoGuard remains our most important, our most valuable asset with the greatest near and long-term opportunities. EsoGuard remains the first and only commercially available diagnostic test recommended by clinical practice guidelines to prevent esophageal cancer deaths through early pre-cancer detection. The target population, based on guidelines recommendations, is at least 30 million patients. The estimated addressable market is $60 billion based on an effective Medicare payment of $1,938. Our per test gross margins at that payment rate are very attractive. Physician practice and institutional engagement remains robust without significant clinical hurdles to EsoGuard adoption. The volume of EsoGuard tests performed at our dedicated and now independent CLIA-certified laboratory has grown steadily in recent quarters.
The company began submitting claims to commercial insurers in the late 3rd quarter of 2022 and is starting to generate claim histories that are necessary to drive in-network commercial contract discussions. Finally, our out-of-network payments that we've received to date and in existing in-network contracts have respected Medicare, the Medicare rate as the floor. All of the initiatives that I'm describing today are designed to build on this rock-solid commercial foundation and guide us through private and public payer reimbursement towards cash flow positive sustainability. I'll go through these one at a time. Lucid plans to continue with full force to drive EsoGuard testing volume with an increased focus on closing larger strategic accounts and newer market development initiatives, including targeting self-insured employers, IDNs, and related entities.
We've determined that we can continue to drive test volume growth consistent with our internal projections with the sales team at its current level of approximately 40 sales personnel. We've chosen not to expand the team to the previous Q1 target of 58. We've achieved our current levels through some targeted layoffs and closing of our prior vacancies. The hiring freeze has already allowed our sales leadership to shift attention from what is often a very time-consuming recruiting and hiring process towards just driving productivity of the current team and to focus more time on strategic and market development initiatives, as I just mentioned. Test volume growth requires support from our clinical team of nurse practitioners who perform the EsoCheck procedure at Lucid Test Centers.
We are maintaining this team and the number of test centers at its current level of 13 centers in 11 states. This actually worked out quite well since, as I mentioned our last quarterly call, we have initiated what is now a burgeoning satellite Lucid Test Center program. This program allows us to have Lucid personnel perform the EsoCheck procedure at the prescribing physician's offices, as opposed to one of our physical locations. This in turn provides much greater geographic flexibility, efficiencies in engaging with the practice. Our plan is to accelerate these efforts and adjust our allocation of personnel and test centers as appropriate to drive test volume. The laboratory, Lucid Dx Labs, remains at the core of Lucid's business.
We currently have sufficient personnel and equipment to maintain testing capacity for the foreseeable future. We'll continue to invest as needed to drive ongoing quality improvement, operational and cost efficiencies. On the clinical research front, we are extending prior efforts to prioritize clinical utility studies to support in-network payer coverage and have streamlined our clinical research team and partnerships accordingly. We expect these efforts to bear significant fruit in the next two quarters. We expect our retrospective study, clinical utility study to be completed this quarter and to have meaningful prospective clinical utility data by mid-year. We're still committing to completing the DE2 case control clinical utility study, but plan today to delay completion to the second half of the year, and we will use this opportunity to identify high volume, high enrolling sites along the way.
We plan to do the same with EsoCare, our esophageal ablation product, pause further development at least until the second half of the year before reassessing. Let's now move on to our other commercial priority, Veris Health. A few highlights to remind you why we remain so bullish on this commercial opportunity. We commercially launched the Veris Cancer Care Platform last month. The cloud and smartphone-based digital care platform interfaces with a package of Bluetooth-connected health monitor devices to provide symptom reporting, telehealth functions, ultimately advanced data analytics. The company is currently developing an implantable physiologic monitor designed to be implanted alongside a chemotherapy port, this monitor will interface with the Veris Cancer Care Platform. The platform is designed to improve personalized cancer care through remote patient monitoring or RPM. A few highlights on the value.
Veris' recurring revenue business model is based on software as a service that allows oncology practices to leverage these well-established existing RPM codes. The practice subscribes to the platform for a number of patient seats and pays a recurring subscription fee. The model provides attractive margins to both the oncology practice and to Veris. The implantable monitor will further enhance the clinical and commercial value of the platform by providing continuous RPM data, which is not dependent on patient compliance. The addressable marketing opportunity here is substantial, with several million U.S. patients undergoing cancer treatment each year and a large number requiring implantation of a port. It is obvious from our early commercial efforts that practices are already laser-focused on remote patient monitoring as an opportunity to enhance care, but also to enhance their practice economics.
They're actually looking for RPM solutions, and the feedback on our solution as an RPM tool has been very positive. A critical aspect of Veris' value proposition is that the commercial success is not predicated on securing any third-party reimbursement, only on sales and product development execution. As with Lucid, the initiatives we're announcing today are designed to deliver on this substantial value opportunity which Veris offers through intense focus on near-term commercial priorities. We will continue to drive commercial adoption of the Veris Cancer Care platform utilizing our existing personnel. Traction with early adopters with a product like this requires personalized attention to customer integration support, and we will expand the commercial team only when commercial traction has been more established. We decided it was appropriate to delay development and regulatory submission of the implantable physiologic monitor to the second half of 2023.
This gives us the unique opportunity. The early commercial experience with the software platform will inform final design considerations of the implantable monitor and the commercial strategy for its launch. Since the Veris workforce is focused on near-term commercialization, we have eliminated certain technology positions focused on future data analytics while retaining technology personnel who are directly involved in customer integration and technical support. A few comments on what we are doing at the PAVmed level to support this initiative, which shifts focus on commercial activities to its two subsidiaries, Lucid and Veris. PAVmed will continue to provide research and product development support for Lucid and Veris commercialization. It will continue to work on next generation EsoGuard and EsoCheck products.
Most of the resource-intensive work on the Veris implantable monitor will be pushed to the second half. The PAVmed team will continue to make some progress on the testing and regulatory plans for this product. Last quarter, PAVmed entered into a joint early-stage research and development project with Novosound to explore applying its groundbreaking ultrasound technology to next-generation intravascular ultrasound imaging. Since nearly all of the near-term work on this project will be performed by Novosound and does not require any meaningful resource utilization, we've elected to continue with this promising partnership.
With regard to the remainder of the portfolio, we are indefinitely pausing or halting all other product development activities, including CarpX, PortIO, and X1. This is obviously a difficult decision given very long-term prospects, but we simply cannot justify diverting precious resources away from near-term commercial value opportunities. On the business development front, we'll continue to explore opportunities to present it to us, that are presented to us on a limited basis, but obviously with a much higher bar for engagement, focusing only on high value near-term accretive opportunities that are synergistic with our existing commercial activities. Finally, our entire team, from senior leadership on down remains highly motivated to pursue additional cost-cutting measures beyond what we already achieved while protecting our commercial enterprise.
Despite asking everyone to do more with less, we have made the difficult decision to not pay annual cash bonuses. Employee retention remains a high priority, and we will implement all other necessary measures accordingly. In summary, I, as we enter this new year, I enter with great confidence that the measures we're taking today to make PAVmed and the subsidiaries leaner and more commercially focused and with a firm cash preservation posture, that these efforts will pay dividends in the near and the long term. Many of these decisions were difficult, but ultimately necessary to strengthen the companies and ensure that they continue on a successful path to achieving their long-term vision despite short-term challenges.
You know, we remain in a strong position because we have an incredibly talented and dedicated team that always goes above and beyond, every day to support the mission, and they've particularly done so over the past several. With that, operator, let's now open it up for questions.
Thank you. Ladies and gentlemen, at this time, we will be conducting a question-and-answer session. If you'd like to ask a question, you may press star one on your telephone keypad. Confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key. Our first question comes from the line of Kyle Mikson with Canaccord. Please proceed with your question.
Hey, guys. Thanks for taking the questions. Hey, thanks for doing this call. I guess first, I just was wondering if there was any change in your expectation for use of card collections this year that or in the near term, I guess, that kind of prompted these changes in the reduction that you announced today.
Oh, no. Actually, I think as I mentioned, our internal projections for test volume growth remain the same and robust. You know, when we went to our sales team and asked them, you know, what we needed to do within this, within these, you know, the posture that we're taking to make sure that we maintain, you know, our projections for test volume growth, they actually felt quite comfortable with pausing the growth of the sales team at the current level of 40. We have increasing, you know, tenure amongst our sales team. The folks we had anticipated hiring over this first quarter would not really have been productive and, you know, four months plus into their tenure.
They actually welcomed, believe it or not, the opportunity to focus on the productivity of the current clinical team. They spend a ton of time, they have spent a ton of time on recruiting and hiring and freeing up that time from sales leadership to be more directly involved in the field, as well as to focus on some of these more strategic initiatives, larger accounts, employers and other such entities, was actually welcomed and we think will allow us to maintain our trajectories.
Okay. Okay, that was great, Lishan Aklog. Just in terms of, like, you know, reimbursement and kind of collecting, you know, cash on the use of our claims, how is that progressing relative to, like, what you were expecting?
Yeah, it's actually progressing. I'll let Dennis chime in a little bit, but it's consistent with where we were expecting it to head. Just again, as a reminder, we started submitting claims in the middle of the third quarter. Those, you know, we had 2,000 back claims, so those are starting to work their way through the system. We continue to get paid out-of-network at a price that respects the full price at a $1,200-$1,400 average payment, which reflects the 50%-60% out-of-network coverage.
We are starting to get generate claim histories that have led to engagements with payers whereby we agree on a payment rate as sort of an interim to in-network contract discussions. Those have been gratifying over the last, you know, over the recent past. It's making progress. I would say it's still early since we're only a few months into actual claims submission. What our goals around securing to be to engaging through claim history as well as protecting sort of Medicare as a floor, all of the pricing aspects of this have been, have been gratifying. We look forward to continuing that progress. Dennis, would you like to add anything to that?
Sure thing. Kyle, yes, none of the actions that we've undertaken here were driven by any different view of reimbursement or our expected cash collections based upon claims already submitted or expected to be submitted. As Lishan indicated, none of it was driven by a change in our expectation in terms of the number of tests, which we expect to continue to increase quarter-on-quarter, largely driven by a change in the capital markets that could not be a backup plan. If there is any gap, then it was just prudent to take these actions. We only have a sample of two weeks in the last quarter. The first two weeks are an indication that our expectations should be met, if not exceeded.
Again, it's only a small sample, so there's not a whole lot of predictive value in that sample size.
Yeah. You know what? Actually, maybe if I can just jump in again because I realize that the point of your question I might have missed it. It's actually true to the contrary, Kyle, that the FD initiatives are in fact driven by, you know, by our focus on, you know, applying the resources we have to drive test volume, to drive reimbursement, to get through those hurdles in the upcoming quarters. It's exactly the opposite, just to be clear.
Perfect. Thanks so much, guys. Just, I guess one more. What's new with the draft LCD for Noridian? I think it's only been, like, a year or so. I think April was when that was released. Is anything new there? What are you expecting with respect to timing on that?
Yeah, as we said before, I, you know, the timeline is correct. It's the final, the final submission was actually in June of last year, so we're about six, seven months in. We have no visibility as to when we will hear back from them. It's a bit of a waiting game, similar to what we went through prior to the publication of the LCD. All of the materials are in, we are confident in the arguments we made to transform the LCD into an operational LCD and moving forward. I will use this opportunity to emphasize that our, the distribution amongst payers for the cases we're doing has remained at sort of 90/10 private versus Medicare.
Although the LCD will be important in, you know, engaging larger payers and many of the larger payers do, you know, leverage the at least the draft LCD, it has not been an issue with regard to our engagements so far with smaller plans and in adjudicating claims along the way. We remain full steam ahead on the private side while we wait for the coverage on the Medicare side.
Got it. Okay. Really helpful. Thanks, guys.
Thanks, Kyle.
Thanks, Kyle.
Our next question comes from the line of Ross Osborn with Cantor Fitzgerald. Please proceed with your question.
Good evening, Ross.
Hi, guys. Good evening. Thanks for taking our questions. Starting off, can you provide more detail on what roles you're cutting to lower total workforce by 20%, also the timing of these cuts?
Yeah, the cuts have we've already taken them, so that 20% reduction is already in place. I'll let Dennis dive into further details, but it is in a mix of product development teams, so projects that are no longer active. We've reduced some of our clinical research teams since we're gonna be focusing on clinical utility, and we're gonna be delaying the kind of completion of the BE-2 clinical validity study. We did have some layoffs on the commercial, the Lucid commercial team to get us to this number, but it was really a combination of those layoffs as well as sort of closing that vacancy to get us to that 40 number.
Approximately 28 personnel representing about 20% of the combined workforce of the PAVmed and Lucid. Dennis, feel free to add any details if you'd like.
Yeah, no, I think that's the extent of what we've disclosed. It was generally across the board, across all of those disciplines. The general rule was we did not touch any of the areas that had immediate commercial, short-term, near-term value. It's completely tied to those initiatives that had a longer horizon, and we could afford to push them off indefinitely or halt certain programs. That resulted in where the cuts came from.
Okay. Got it. Turning to the Lucid testing centers, do you plan to launch any new centers in 2023, or are you gonna stick with the 13 centers and the 11 you mentioned?
No. I think that's a good opportunity for me to emphasize something that I had mentioned earlier, which is that, you know, the focus on the number of test centers as opposed to the number of clinical personnel and sort of utilization has really evolved over the last couple of quarters. You know, we were kind of in the, okay, let's keep adding centers, you know, through the quarter and so forth. Right now, what we found with this satellite test center model, where we have much more mobility, where our NPs can move to places that are far removed from a physical location and be able to provide testing even at screening events and so forth, has really changed the game for us. I'm not saying that we won't open any new test centers.
I think the way I would encourage you and others to look at this is start with the sales personnel and how much test volume the sales personnel can drive, and we believe they can continue to drive that volume based on their engagement with physicians and institutions, and that we have sufficient clinical support to provide the EsoCheck procedure to support the test volume that's generated. We believe that we currently have that with the physical sites that we have as well as the NPs that we have. You know, we may need to adjust that as test volume grows during the year, but right now we actually have sufficient clinical support.
That's how I would sort of encourage you to think more about the test centers as opposed to kind of the physical locations, which we'll, you know, continue to add. They still serve an important purpose, but the satellite model has really opened up the game substantially with regard to our ability to provide testing and procedural support. Does that make sense?
Yes, that makes sense. Maybe going off of that with regards to those satellite testing centers, you know, are these being done in the 11 states you're currently in, or is your geographic base more diversified?
They're being done in other state, in other locations too. We even had NPs drive, commute fly, you know, to areas where we don't have, where we don't have physical centers. So that's one of the beauties of it, is it really does expand it geographically. We, you know, there are further ways we can extend that. If we have a busy site in an area where we don't have a physical center or we don't have a nurse practitioner, you know, in close proximity, we can actually. You know, we're looking into having per diem nurses-
A predominance of practitioners who are working part-time to simply just support that would work part-time under us, but would simply be there to support a particularly busy site that wants to get up and running prior to that. Again, just keep emphasizing it's really, really exciting, and it's opened up, you know, really, a number of risks in terms of our ability to expand, support, and expand our activities.
Okay, great. Thanks for taking the questions.
Yeah, thanks Ross.
Our next question comes from the line of Frank Takkinen with Lake Street Capital Markets. Please proceed with your question.
Hey, Frank. How are you?
Good. Hey, thanks for taking the questions. I was hoping to start with one on Veris. It sounds like some good progress is being made there. Can you maybe just lay out how you're thinking about potential contribution from that business in 2023?
Dennis, you wanna take that?
Yeah, go ahead, Dennis.
We started, as you well know, with launching our first commercial site with VerisBox in a cancer care center, and we'll continue to do so. We have a number of opportunities in the pipeline. Keep in mind that the fees that we will earn will be over time, similar and probably aligned to how the institution or the physicians get reimbursed over time as they continue to monitor these patients during their chemo care and shortly afterwards. There won't be the a bolus of revenue as we sign each one. It will occur over time. It's a recurring revenue model.
It will diminish some of the burn inside Veris, but given the development plan that Lishan outlined, we don't think that there is a significant burn beyond where we have been. In the following year as we get past the submission for Mercury, some of that development cost will come down. I know I didn't give you a complete answer. It's walking between the raindrops simply because we haven't publicly disclosed all of those details of what's coming from the initial contract and what we have in the pipeline already.
Yeah. Just to add to that, Ross, the investment in the platform and the, you know, the pipeline of materials, you know, the monitoring devices, all of that's in place, right? By pushing out some of the product development costs on the implantable monitor, the commercial launch right now is really entirely focused on just getting our team out there. You know, we have, as Dennis mentioned, a very robust sales pipeline of practices we're calling on. We're doing demos, we're engaging with them, as I mentioned. Just to highlight something I mentioned, which is that it's been very gratifying the way when we've engaged that.
You know, we did not expect necessarily that the practices would be sort of attuned to the opportunities of remote patient monitoring. We thought we'd have to make that a sort of a second talking point. The conversations with general Zoom kind of do that because people after COVID are very much focused on remote patient monitoring and the both clinical care and economic aspects of that. The coming quarters, it's a straight, you know, sales execution, calling on sites and delivering the product that we already have. There's not a substantial burn associated with that, just the ongoing cost of the sales and sales execution. We're not building a big team to do that. We're gonna start with our current team, and once we start getting traction, we'll build accordingly.
Got it. Okay, that's helpful. Maybe on the statement around indefinitely halting business development around CarpX, PortIO, and NextFlo. Do you intend to seek any monetization avenue with any of these assets, or do you think they sit on the back burner until capital markets allow?
It's a little bit early to say. I mean, we obviously have the IP. Sorry to interrupt you. It's a little bit early to say. I mean, obviously this is not just IP. We have, you know, substantial progress we've made on the product development side with all of those. You know, whether there would be monetization opportunities for those or not is something we'll explore. Yeah, I don't have a good answer for you there with regard to that. We do think they're very, they're extremely valuable. We've been making progress on the ultrasound imaging side of CarpX. You know, PortIO clinical trial have been coming along, we're looking to expand that to longer durations and so forth.
Yeah, it's a bit bittersweet, but we'll, you know, we'll do everything we can, obviously, to take the investment we've made into those and make and try our best to create some value from them, potentially through those, the kinds you referenced in your description.
Okay, perfect. Then maybe just one clarifying question to make sure I understand. You guys state, reduce quarterly cash burn by at least 25%. Is this as it applies to the PAVmed entity as a whole, or are you looking at just the Lucid entity? Just trying to make sure I understand.
I'll let Dennis kind of dive into that. Yes. Yeah.
It's actually both, and it's scaled down. You know, it's not additive. If, you know, in the third quarter, the consolidated burn was around $15 million and the Lucid piece of that was $10 million, it's pretty much pro rata. Does that make sense?
Got it. Yep. Crystal clear. Perfect. Thanks for taking my questions.
Yeah, thanks, Frank.
Our next question comes from the line of Anthony Vendetti with Maxim Group. Please proceed with your question.
Hello, Anthony.
Hey, Anthony.
Hey, Dennis. Hey, Lishan. How are you?
Good.
Great. just on Veris. since that's still one of the focuses.
Any reason to delay the development and regulatory submission of the physiologic monitor at this point? Or is that just you're trying to pace it with what you expect to be the commercial adoption or demand early on?
Yeah, I think that sort of captures it. Let me sort of flush it out a little bit and see if it makes sense. Look, I mean, I think it's to be blunt, our, you know, it was part of sort of our efforts to try to cut a burn, right? The product development expenses, as you get sort of late towards FDA submission can be meaningful. You have third party contractors and so forth. We try to find kind of the right balance between, you know, unlike with the other products where we just felt we had no choice but to pause or halt them, you know, we tried to find the right balance with Veracyte.
I think we landed at a spot that gives us actually some potential commercial advantages, I, as I hinted at in my prior comments, right? by pushing some of the regulatory submission work and kind of the final stages of product development work into the second half, we are delaying the eventual, you know, the commercial launch by a modest amount. There are actually some advantages to that which I mentioned, which is that we're just getting in the field. You know, this product was designed, you know, to, you know, based on our engagement with physicians, obviously our chief medical officers and oncologists and so forth.
You know, as we started looking through this, we thought there would actually be some advantage in understanding the dynamics with regard to the commercial launch of the software platform and with the connected devices, understand how that plays out and make adjustments. It made probably not a lot to the actual design of the device, but all, but as much on the sort of the commercial strategy upon launching. I think there's actually time, this is time that will be, you know, put to good use. I did say we're not, you know, we're not stopping altogether. There's a fair amount of regulatory activities, a variety of engagements with FDA pre-submissions and so forth that are not heavy and resource intensive that will continue.
There's some, you know, there's some testing work that will continue over the next 6 months, but the bulk of the, you know, the design towards the manufacturing work, we'll try to push that to hit our cash burn targets for the next couple quarters.
Sure, sure. Just one question on CarpX, 'cause that was, you know, if we go way back to the beginning, that was at, you know, before Lucid, you know, leapfrogged it and Embarus, CarpX was sort of the lead program at the time. You know, it had some hiccups along the way. You know, the ultrasound imaging I thought maybe was the last piece to really get it over the hump for commercial viability. Has there anything other than having to focus on or just, you know, the desire to focus on Lucid and Embarus, is there anything else about the CarpX commercial opportunity that has changed in the last three to six months?
Is just, hey, that's still a good opportunity, it's just we have to focus on the two leading opportunities?
Yeah, you got it. Nothing has changed. I mean, look, we have a, we have a, you know, as you said, this is dear to my heart. It's sort of where we've been working on this for a while. We've had ups and downs with FDA and, some of the commercial aspects of it, we've slogged through. It was quite difficult to make this decision. It had nothing to do with the progress we've been making. We actually are gonna complete the, some of the work, just the near term work over the next month or so to get the ultrasound imaging, part of it advanced.
No, it was entirely based on, you know, even with the ultrasound version of the device to get that through ongoing development, design freeze, regulatory testing towards, you know, verification, validation testing, regulatory submission and clearance. You know, what was the timeline with a fair amount of near term spend that was very difficult. It was very difficult to justify putting the resources. Look, in my fantasy world could be end up in a situation where we could assessate that or have somebody else pick up the ball on that would be great, 'cause I think there was, again, like I said, there was nothing that, you know, that led us to sour on it.
We just are in a position where we couldn't justify those resources for something that a commercial opportunity that is so far down the road.
understood, Lishan. Thank you very much. Thanks, Dennis.
Yeah, thanks, Anthony.
Thank you.
Our next question comes from the line of Edward Wu with Ascendiant Capital Markets. Please proceed with your question.
Ed, hi.
Yeah, hi. Yeah, my question is on the EsoGuard BE-2 study. You mentioned that you're gonna delay completion. Is it easy to do that, or do you have to spend more money or time in order to kind of stretch out the study? Are you stopping it or are you kind of just going at a much slower pace?
Yeah, very insightful question, Ed. Because you're right. Sometimes actually wanting to stopping studies late in their course can actually chew up as much resources as just hitting the close. We've fine-tuned that quite carefully. We're not stopping it. We are very much looking forward to getting the results of that study. It'll be an important follow-up to the Science Translational Medicine, the foundation of clinical validity for this. We're fully committed to it. What we've decided to do is to kind of use an opportunity to kind of work with our principal investigator to look at the sites that we have.
You know, there's as always, a large spectrum, wide spectrum of enrollment, patients, those that are heavy enrollers and light enrollers, and look at those that have, you know, the sites that we can focus on and potentially bring in new sites that are to replace low enrollment sites or sites where the technical success hasn't been where we wanted it to be. Basically, you know, spend the next six months kind of working to optimize that.
Again, at the end of the day, I think like many of the things I've talked about today, I think there's a silver lining in that, which is that we'll end up with better sites, higher enrollment sites, and frankly, we might be in a position where we may end up being able to pull the timeline in for completion of enrollment. We're definitely committed to getting it done. We just found an opportunity to kind of stretch timelines out a bit to dial back the needed cash burn and to improve the spectrum of sites to want to go better, get better engaged with higher enrollers. It was a good opportunity to take advantage of that. Great.
Thanks for answering my questions, and I wish you guys good luck. Thank you.
Thanks, Ed.
Our next question comes from the line of Mark Massaro with BTIG. Please proceed, Mark.
Hey, Lishan . Hey, Dennis. Thank you for taking my questions. Well, congrats on focusing the business on the two highest priority initiatives. I guess maybe a question for Dennis. I think I did hear this, you know, PAVmed Corporate had, I think, $57 million of cash at the end of Q3. Lucid had $27 million. Did I hear you correctly that cash utilization was around $10 million in Q4 for Lucid, so now your pro forma coming into 2023 for Lucid is somewhere around $17 million?
Let me just give you another piece of the puzzle that to add to your math. The two boards, both PAVmed and Lucid.
Dennis, can I ask you to do one thing, one favor real quick. Can you just make sure we clarify that the consolidated amount included the Lucid amount? I wasn't sure if that was clear from Mark's question before you move on.
Yeah. The consolidated at 9:30 was $56.5 million, and the Lucid portion of that was just under $27 million, $26.5 million.
Okay.
Does that clarify?
Yeah, just I guess my question is what. Can you provide an estimate for the cash burn from Lucid in Q4? Where does Lucid standalone sit at the end of Q4?
We did not provide any details at that granular level, but I'll give you some of the piece parts because there is piece that has been publicly disclosed that can add to your equation to give you your answer, right? That's related to the intercompany debt between the two. The both boards have agreed that the intercompany debt, particularly the management services agreement, piece and some other reimbursable components like payroll. At September 30th, there was a $6.6 million intercompany balance, and that was not paid in cash. That was paid in stock under the agreement. It's at PAVmed's election to have that paid either in cash or stock, and the companies agreed that that would be paid in stock. It reduces the, the burn rate at the Lucid level.
What I said earlier was the third quarter, the approximate burn rates were around $15 and $10 between the two, $15 consolidated, $10 at the Lucid level, and that's been minimized by the intercompany reimbursements being paid in stock versus cash. PAVmed's ownership has gone up in Lucid because of that endeavor, and it's caused to have a lower burn rate inside Lucid for the fourth quarter. They're the publicly disclosed pieces. We haven't provided any more color at this point, so I can't go very much beyond that, Mark.
That's very helpful. I think you characterized the Lucid level cash burn on a quarterly basis, I believe somewhere around $5 million-$6 million at Q3. Can you clarify that? Then, you know, recognizing that there's a 20% workforce reduction, I don't know, should we think of around a $4 million-$5 million burn or so per quarter at the Lucid level?
I think that would be rounding down too much, right? Because in the third quarter, I'd indicated the Lucid burn was around $10 million. You take your 25% off that, you're in the $8 million range. It's supplemented somewhat because of the intercompany on the management services, the management service piece ranges about $1.6 million per quarter.
Gotcha. All right. That's super helpful. You guys, you guys did provide some helpful commentary. Maybe this was just at a high level, but that you have been growing your volume steadily in recent quarters. This is for EsoGuard and EsoCheck. You know, I know you haven't provided full Q4 results, but you know, I imagine that your expectation is to continue to grow EsoGuard volumes on a sequential basis. You know, maybe can you provide a little bit of commentary about how Q4 went relative to Q3 and whether or not you think, you know, I'm on the right track that even with, you know, a dedicated number of approximately 37 reps or 40 reps, you can continue to achieve potentially sequential growth in volumes?
Let me just start with the latter. Yes. We believe, firmly believe that our team, even this, you know, somewhat below the target that we had set, but with more seasoned personnel on average, will continue to generate test line growth. We like, we're happy with the trajectory so far, and we expect it to continue into the year. Again, just a reminder that, you know, these efforts are, I kind of overuse this term, but sort of a mid-swaddle strategy where we're not putting gold medal to the, you know, pedal to the metal here. We can, you know, we're looking to continue test line growth. We know why that's important.
It's important for generating, you know, out-of-network payments, but it's also important for generating claims history, which, as Dennis mentioned, is something that has been, you know, we're starting to see that the claims history pay off in terms of our ability to engage with folks. We have every expectation. You know, there'll be, you know, differences in growth, but we have every expectation that the team will continue to deliver. Everything in the field is going really well, though. You know, the ability to train folks, the ability for them to really hone their message on how they interface with physicians, and the satellite LVC model has really been a bit of a boom as well. Yeah, we continue to have expectation to continue steady growth going forward.
Okay. As it relates to commercial payer coverage, 'cause obviously that's really important when 90% of your current customer base is non-Medicare or Medicaid. Can you just give us a sense for how the nature of some of those conversations are trending with some of the regional payers? You know, is it reasonable for the analysts to think that you could sign a commercial payer or a large payer coverage determination sometime in 2023?
Oh, I would hope. Yeah, I would hope. I would hope. I would urge you were to say shorter timeline, and I would if I might have anticipated, but I would certainly hope that's, you know, that we have good prospects for doing that by the end of the year because we look to have sufficient clinical utility data to drive those conversations by mid-year.
As I pointed out, I'll emphasize, you know, because as a result of your question, the engagement with the plans that we're engaging with now, you know, which are more of the regional plans where they see a claims history and 40 EsoGuard tests show up on their radar, and you end up having conversations with them around coverage and payment for those, and sometimes you get sort of interim, you know, one-off agreements for per tests or agreements with regard to pricing. You know, that's kind of the way that the system works, right? You work your way towards those kinds of in-network conversations.
Those kind of in the trenches activities, secondary payers, smaller plans, regional plans, you know, where the driving force is more claims history than, you know, broader clinical utility or Medicare LCD publications and things like that. Those are going well. I think the main thing we can say about that is not so much on the volume side, but on the pricing side, that we've been gratified that the payments that we've had, the flavors of...
all flavors of them, whether they be the out-of-network payments paid at a out-of-network benefit, the, or the contracted payments or the non-contracted but sort of agreed upon payments for price agreement payments have all generally respected the Medicare of the floor and, you know, and have generally been based on our list price of $2,500 at some, at some reasonable discount to that. The pricing, you know, data in the field and experience has been good. But you know, again, it's still really early. We submitted 2,000 cases and we're just starting to see those go through the claims process and starting to generate the kinds of claim histories that are necessary to engage with folks. Hopefully that.
Okay.
kind of covers the spectrum of your questions.
Yes. All right. Last one for me. You know, I think that your satellite Lucid Test Center strategy is pretty clever, and it also seems to be a pretty low-cost way of commercializing. I believe your satellite initiative contributed nearly 25% of your patients in Q3. I'm just curious, like do you agree that that's a pretty capital efficient means of commercialization? You know, are there any metrics that you think you may roll out to us in the coming months, just to kinda show your traction from this? Maybe how should we think about you potentially increasing the number of NPs to drive a more potentially capital efficient commercial strategy?
There's a couple of things to point out there. Mostly just a yes, but let me try to dive into it a little bit further, right? Again, I think it's important for you, for everyone to focus on the driver of test volume is the sales team. The NPs are there to provide clinical support where we generate the test volume, the way it'll generate test volume. Yes, I mean we will, as the volume grows, we'll still be in need to expand clinical support so that the patients can get their EsoCheck procedures. That's true. It is very efficient. We have the personnel, they're already in place, and having them move over a broader geography is in fact efficient.
I will point out just, again, a reminder that the physical centers are also pretty efficient because the contribution of the lease of having a physical location is very, very modest compared to everything else. To me, the biggest my main sort of source of excitement for the satellite test center model is really around the expansion of the having more flexible and having the ability to expand the geographic reach to not just of the nurse practitioners, but then therefore of the sales team, you know, within a particular geography, right?
Being able to treat patients who are not within driving distance of a physical location, but to be able to treat them to do the procedure at the physician's office, that kind of geographic flexibility is huge and it'll continue to bear fruit, I believe, in the coming quarters. I do believe, I think you were hinting at this, that the percentage of the test volume that represents the satellite tests will probably go up over time. We have a couple of compliance hurdles in a couple of states that we're overcoming that will hold them back in a couple of states, but overall, I think it'll be a big contributor to our activity.
The final one, which I mentioned, but again I'd like to emphasize, is that it also changes the dynamic with the physician, right? Having knowing that the Lucid nurse is coming next Thursday or, you know, two weeks from now or whatever, you know, for a scheduled Lucid Check testing day in that office does provide the practice with focus to remember, say, "Hey, you know, I've got." You know, when they see patients who qualify, fulfill criteria, knowing that they're gonna be there is a real driver of keeping EsoGuard front and center of their mind and driver of test one.
That's great. Thanks, guys, for all the color.
Yeah, appreciate it. Thanks.
That is all the time we have for questions. I'd like to hand the call back to management for closing remarks.
Thank you, operator, and thank you all for joining us on the call today. Thanks to all the questions. It was really led to a great discussion. We appreciate your continued interest and involvement and investment and support of PAVmed and Lucid Diagnostics. I will continue to update you on our progress throughout the year. I'd like to just highlight as a closing remark that you may have noticed we have a new VP of Investor Relations, Michael Parks, who's just joined us. Feel free to reach out to him at mep@pavmed.com with any questions. Again, thanks again, and have a great evening.
Ladies and gentlemen, this does conclude today's teleconference. Thank you for your participation. You may disconnect your lines at this time, and have a wonderful day.