Greetings, and welcome to the PAVmed Inc. Business Update Conference Call. At this time, all participants are in a listen only mode. A brief question and answer session will follow the formal presentation. As a reminder, this conference is being recorded.
It is now my pleasure to introduce your host, Mike Havrilla, Director of Investor Relations for PAVmed. Please go ahead.
Thanks, operator. Good afternoon, everyone. This is Mike Cavarello, PAVmed's Director of Investor Relations. Thanks for participating in today's business update call. Joining me today on the call are Doctor.
Lishan Aklog, Chairman and Chief Executive Officer And Dennis McGrath, President and Chief Financial Officer. Press release announcing our business updates and financial results is available on PAVmed's website. Please take a moment to read the disclaimer about forward looking statements in the press release. The business update press release and this conference call Both include forward looking statements, and these forward looking statements are subject to known and unknown risks and uncertainties that may cause actual results 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 further list and description of these and other important risks and uncertainties may affect future operations, See Part 1, Item 1A entitled Risk Factors in PAVmed's most recent annual report on Form 10 ks Except as required by law, PAVmed disclaims any intention or obligation to publicly update or revise any forward looking statement To reflect changes in expectations or in events, conditions or circumstances on which those expectations may be based Word that may affect the likelihood that actual results will differ from those contained in the forward looking statements.
With that said, I would like I'll turn the call over to Rishan Aklog. Doctor. Aklog?
Thank you, Mike. Good afternoon. Thank you for joining today's update call. For those of you new to PAVmed, welcome. And for those of you who are already part of the family, thanks for your support and commitment to our long term vision To improve patient lives while creating substantial shareholder value.
I'm delighted to report that we have experienced strong momentum during the Q1 and in recent weeks As we seek to execute our bigger and bolder strategic plan and strengthen our foundation for long term success. We continue to focus our efforts in several key areas, Driving EsoGuard commercialization, strengthening our management and Board, solidifying our balance sheet while extending our cash runway, taking Lucid public And as always, exploring new partnership opportunities on groundbreaking innovations. Let me start with our successful efforts to reinforce the foundation of our company. As Dennis will describe maybe in a bit more detail later, we have substantially strengthened our financial position over the recent months. We raised approximately $75,000,000 of gross proceeds and straight common stock offerings between Christmas and Valentine's Day, including approximately $58,000,000 during the Q1.
A heavily oversubscribed underwritten public offering led by Cantor Fitzgerald Generated approximately $45,000,000 of those gross proceeds. We were very pleased that this offering was anchored by leading long term fundamental institutional funds, including Fidelity, Vanguard and Blackstone. We consider their participation to be a strong validation of our long term strategic plan. We've received and continue to receive meaningful additional cash from the exercise of our Series Z1s. As previously announced, we decided to use approximately $15,000,000 of the proceeds of the February financing to fully retire our convertible debt held by Ericsson Funds.
The debt was due upon demand and paying it off in cash avoided further dilution as our stock price had exceeded the debt conversion price. The financings warrant exercise and convertible debt requirement have combined to substantially strengthen our balance sheet. We started the quarter with approximately $17,000,000 in cash and $15,000,000 in debt. We ended the quarter with approximately $49,000,000 in cash and no debt except for a small forgivable PPP loan. PAVmed's cash run rate now extends into 2023 at our current burn rate, not taking into account the prospect of Lucid going public and raising its own capital.
Another important area of focus has been to strengthen our management team and Board. I will discuss the expansion of our commercial team a bit later. On the Board side, I was very excited to welcome 2 prominent executives to the PAVmed and Lucid Boards over the past few weeks. Debbie White, who joined the PAVmed Board, is a prominent UK based global industry executive who has led commercial entities with billions in revenue and tens of 1,000,000 of employees, including in healthcare. Debbie has already provided me invaluable guidance on long term strategy and will play an important role in advising on commercialization and serving as PAVmed's Audit Chair.
Doctor. Jack Sokoloff, who joined the Alicia Board as a nationally recognized healthcare executive With expertise across all aspects of the healthcare industry, he established and shared Board compliance and quality committees for major healthcare companies, including Hospira. Doctor. Sokolov has already established Specialty Committee for Lucid and serves as its inaugural chair. His efforts will be of critical importance as we expand our commercial activities to include our own Lucid test centers, direct to consumer marketing and telemedicine, all of which require meticulous attention to regulatory compliance.
Now let's now dive into the details of our business, starting with our major majority owned subsidiary, Lucid Diagnostics. So Lucid is a commercial stage medical diagnostics technology company focused on the relationship between chronic heartburn, which is ubiquitous And esophageal cancer, which is highly lethal. Esophageal cancer is effectively a death sentence at the time of diagnosis in nearly all patients. Meanwhile, approximately 50,000,000 Americans have its predisposing condition in the form of severe chronic heartburn. Risk factors for the development of esophageal precancer and cancer in these chronic heartburn patients are well established.
The highest risk subgroup Are the 13,000,000 men over 50 with one other risk factor, namely white race, obesity, smoking and family history? Unfortunately, less than 10% of the at risk chronic heartburn patients are screened despite professional society guidelines. The direct result of this lack of screening is a tragedy of over 16,000 esophageal cancer deaths per year. Our products EsoGuard and EsoCheck seek to prevent esophageal cancer deaths through the early detection of esophageal precancer And cancer and chronic heartburn patients. Lucid was created to license these technologies from Case Western Reserve University.
In a mere 3 years and for less than $20,000,000 in invested capital, we have advanced these technologies from research projects in an academic laboratory to commercial Products with effective CMS payment and FDA breakthrough device designation. A little more detail, EsoGuard is a more is a molecular diagnostic test, is commercially available as a laboratory developed test performed at our CLIA certified laboratory partner, which is located in Irvine, California. EsoGuard is performed on samples of esophageal cells collected non invasively using our FDA cleared EsoCheck device. The sampling procedure can be performed by a nurse in an office in less than 5 minutes without any anesthesia or sedation. EsoGuard is the 1st and only commercially available diagnostic test capable of serving as a widespread screening tool to prevent esophageal cancer deaths through early detection of precancer and cancer in chronic heartburn patients.
With CMS payments secured, the over 13,000,000 patients already recommended for Screening translates into an approximately $25,000,000,000 annual addressable market opportunity for EsoGuard. A mere 2% to 3% penetration into this massive market would position Lucid among the largest pure medical diagnostic companies in the world by revenue. Listen is also fortunate to work with several world class advisors, including diagnostics pioneer Stan Lapides, who co founded and led Exact Sciences Along a similar journey in colon cancer screening, Alberto Gutierrez, who led the FDA office for in vitro diagnostics and Doctor. Nick Shaheen, an internationally renowned esophageal specialist and the lead author of the relevant gastroenterology society guidelines. During our last quarterly call, I announced that we intend to take Lucid public as a standalone medical diagnostics company, assuming market conditions remain favorable.
The goal is to fulfill Lucid's extraordinary long term potential and unlock its present value. We seek to have Lucid raise its own capital to drive its own growth strategy. This growth strategy is focused on expanding EsoGuard commercialization as well as the clinical evidence base to support inclusion and future clinical guidelines. Of course, we firmly believe that taking Lucid public under the right terms would also be in the best interest of PAVmed and its shareholders. PAVmed will We retain a controlling majority interest in Lucid.
We engaged Cantor Fitzgerald to assist us in this effort and have pursued both the IPO and SPAC tasks in parallel. Tanner ran a process which had us engage in discussions with numerous facts targeting life sciences companies. Lucid's Board ultimately determined that the best The first of the shareholders would be served by Lucid going public through an IPO and not a SPAC. Several factors contributed to this decision, including Greater dilution from SPACs and uncertainty arising from the recent SEC staff statement on SPAC warrant accounting. Let me now update you on where we stand with EsoGuard commercialization.
We're very encouraged that the pandemic related restrictions to our commercial activities Appear to be a thing of the past. With nearly all healthcare workers now vaccinated, moving forward, we anticipate unfettered access to facilities for sales calls, training and procedural support even if local and regional outbreaks occur in the future. E Ciguard testing has accelerated as these pandemic related healthcare facility limitation Lucid processed 78 EsoGuard tests in the 1st quarter and 96 so far in the first half of the second quarter. We have EsoCheck devices and EsoGuard specimen kits on the shelf and have trained clinicians at approximately 180 Lucid has significantly has also significantly expanded its full time commercial team to help drive EsoGuard commercialization, including as previously announced, 4 industry veterans in the senior leadership roles. We're very fortunate to have these highly experienced leaders with deep sector experience on the Lucid team.
For example, our new Director of Sales has spent over a decade in the gastroenterology space, both at Medtronic and previously at Barrick Medical. He oversees what is now a growing full time Lucid team of regional sales managers and independent sales representatives who currently call on gastroenterologists. He will lead the upcoming expansion of Lucid's sales team to include 2 groups of full time territory managers, 1 calling on GI specialists and the other on primary care physicians. We've also hired 2 clinical specialists and are actively recruiting more. These specialists will train clinicians and support existing accounts, while freeing up other sales personnel to focus on opening new accounts.
Our new Vice President of Market Access and Reimbursement has over 25 years of experience As a leader in the complex area of market access and reimbursement for diagnostic tests, he has a proven track record of success seeking insurance reimbursement and driving revenue. He served as Senior Director of Reimbursement and Managed Care at Exact Sciences at an important period during which he secured coding, Payment and coverage for its Cologuard early cancer detection test. Our new sales training manager and strategic accounts manager Both hail from CDx Diagnostics. CDx markets a widely utilized upper GI endoscopic tool to enhance the diagnosis of esophageal precancer. As such, they both have very deep connections with the community of gastroenterologists who specialize in esophageal disease.
Let's spend a few words a few minutes on reimbursement. As we've noted previously, last year, CMS granted EsoGuard an attractive CMS Payment determination of $1938 This CMS payment became effective January 1. We began to submit Easter Grind claims later in the Q1 and are pleased that we have started to receive Out of network private insurance payments. Although this is encouraging, it's important to remember that the claim cycle can be prolonged During the early commercialization of any new test, especially until contractual coverage has been secured. We are still awaiting CMS local coverage determination.
As many of you know, last May, we submitted our final coverage determination to Moltex, the molecular diagnostic group of the Medicare administrative contractor At Meadow GBA, we understand from our consultants and contacts on our trade association, AviMed, that the pandemic and change of administrations has resulted And a significant backlog of local coverage reviews, which persist, but we do hope to hear from them soon. Meanwhile, we are pushing full steam ahead on the private payer side. Our new VP of Market Access and Reimbursement is working with 2 consulting firms to assemble the data package to support securing contracts with private payers for Ether Guard payment and coverage. Our first advisory board meeting with medical directors of the During our last quarterly call, I announced a major new initiative for Lucid, which I believe represents The long term future of EsoGuard commercialization. This program, which we have internally dubbed Project Phoenix, seeks to supercharge EsoGuard commercialization By simultaneously targeting multiple sales and marketing channels.
So what do I mean by that? Our sales efforts to date have targeted gastroenterologists. We are seeing good traction here because EsoGuard helps to gastroenterologists expand their funnel of new esophageal disease patients. Most of these patients will become long term patients for the practice and will need periodic follow-up and procedures. We will continue to aggressively market EsoGuard to the And neurologists, as I have already noted, we are expanding our team to use it.
This new initiative does not in any way represent a shift away from gastroenterologists. They remain our anchor specialty. It is clear, however, from the experience of Exact and others in the early cancer detection space That fulfilling EsoGuard's potential requires that we expand our sales and marketing efforts to include primary care physicians and ultimately consumers as well. The reason is that the vast majority of chronic heartburn patients never see a gastroenterologist. As importantly, Most primary care physicians and consumers still need to be educated on the relationship between chronic heartburn and esophageal cancer, as well as on the availability of a new non invasive office based alternative to endoscopy to detect esophageal precancer.
To accommodate referrals from primary care physicians and We need expanded EsoGuard testing coverage to assure that any physician or consumer who responds to our educational and marketing outreach as access to E Cigarette testing is clinically appropriate. That requires us to create our own Lucid test centers to which patients can be referred We have made significant progress in honing the details of this program and operationalizing it over the past couple of months. There are fundamentally 2 phases to this program. Phase 1 is the creation of the Lucid test centers and Phase 2 is the establishment of a telemedicine program that can accommodate Preparatory work on the Phase 1 pilot program has been completed. We've hired the clinical personnel and leased the medical office space to launch 3 Lucid test centers in the Phoenix, Arizona Metropolitan area.
We expect the centers to be ready to accept physicians' referral for EsoGuard testing in the coming weeks. The only step remaining is to finalize the necessary regulatory and compliance infrastructure. This infrastructure is being overseen by the Board's new Compliance and Quality Committee, which as I mentioned, our new Board member, Doctor. Sokolov has established and leased. In addition to Lucid Management and Directors, this committee includes outside general counsel, Outside Specialized Healthcare Compliance Counsel, our advisor, Alberto Gutierrez, who as I mentioned, led the in vitro diagnostics branch with FDA And his former colleague, DC based attorney, Jeff Gibbs, who previously served as FDA Associate General Counsel for Enforcement.
This high power team is making sure that we pay meticulous attention to compliance and regulatory matters that this program requires. Case 2 of the pilot program in Phoenix will commence later this summer. We are finalizing contractual arrangements with a telemedicine company with The telemedicine company will receive and process self referrals from patients who respond to our direct to consumer marketing efforts. More specifically, The telemedicine physician will perform a detailed intake medical assessment and refer the patient to a Lucid test center if EsoGuard testing is clinically indicated. The result of the test will be sent back to the prescribing telemedicine team, who will then refer those with positive EsoGuard results to the appropriate gastroenterologist for further evaluation.
Long term economics of both the Lucid test centers and the telemedicine program Very attractive. We estimate that one of our nurse practitioners can perform up to 20 EsoCheck procedures per day. The fixed and marginal cost of personnel, office space and supplies are small relative to the potential revenue stream for each test center. Marginal costs of direct to consumer marketing and the telemedicine program are also very reasonable given the projected gross margins for the ustagartens. A few comments now on European clearance, our ongoing clinical studies and manufacturing.
Earlier this year, Luz had passed its Final Stage 2 audit of the quality management system, this quality management system by our EU based notified body. The notified body recently notified us that their review of the EsoCheck technical file was complete and the final summary report had been submitted. We therefore expect to receive EsoCheck CE Mark approval under the current EU MDD regulatory regime Before the EU transitions to its new MDR regulatory regime on May 26, EsoGuard is classified as a General in vitro diagnostic under the EU's IVDD regulatory regime for in vitro diagnostics and therefore only requires self certification, which will be completed quite soon. We are in terms of our clinical studies, we're actively enrolling U. S.
Patients in 2 international multicenter Clinical studies EsoGuard BE-1, a screening study and EsoGuard BE-two, a case control study to support a PMA application for IVD Registration of EsoGuard on samples collected using EsoCheck. These studies were the subject of an FDA pre submission meeting during which We received positive feedback on the protocol and the proposed indications for use. We expect European sites to begin enrolling patients this summer. We expect the study to complete enrollment and submit the PMA application in 2022. As I mentioned, EsoGuard and EsoCheck received FDA breakthrough device designation, which entitles us to close FDA communications and other benefits.
We have contacted FDA to begin discussions pursuant to this breakthrough device designation. We will seek the agency's input on an The patient of EsoGuard DE1 screening study that's sufficiently powered for an expanded indication to detect the spastic Barrett's Esophagus to support inclusion in future clinical guidelines. These FDA meetings are currently backlogged due to COVID, but we expect them to open up in plenty of time for us to finalize the protocols for extending enrollment in the expanded study in 2022 and beyond. On the manufacturing side, we're working to transfer EsoCheck Manufacturing to Coastline International, a high volume manufacturer that's based in San Diego with production facilities in Mexico and expect to complete this process by the end of 2021. This will increase EsoCheck manufacturing capacity to up to 1,000,000 units per year.
Finally, before moving on to our other products, I'd like to spend a few minutes on the competitive landscape for EsoGuard and EsoCheck. These topics come up frequently in our discussions with I stated that EsoGuard performed on esophageal samples collected with EsoCheck is the 1st and only commercially available diagnostic Capable of serving as a widespread screening tool to prevent esophageal cancer death through the early detection of pre cancer And cancer and chronic heartworm patients. This statement really has 2 parts as it relates separately to other biomarkers and to other cell collection devices. There are no commercially available biomarker tests other than EsoGuard that test esophageal cells for pre cancer and cancer, much less than one with sufficient accuracy to serve as a widespread screening for lymph chronic heartburn patients. There have been a few abstracts and publications with Preliminary data on biomarkers that purports to do so.
One of these are biomarkers being developed or set of biomarkers being developed by Mayo Clinic, which has a relationship with Exact Sciences. We are aware of these data as our physician consultants, including Doctor. Shaheen and the Case Western faculty, We're all part of the same NCI funded consortium on esophageal disease as the Mayo investigators. We do not see these biomarkers as being becoming direct competition to EsoGuard anytime in the foreseeable future. We believe the data presented today falls short in terms of power and accuracy Compared to the EsoGuard data that was published well over 3 years ago in Science Translational Medicine.
That data Demonstrated greater than 90% sensitivity and specificity in a well designed 408 patient case control study with proper training and validation sets. The ultimate barrier to entry, I believe, however, is EsoCheck. All other biomarkers, including the biomarkers, have some variation of a Brillo pad sponge on a string device to sample the esophageal cells. These include the CytoSponge device, which Medtronic no longer markets in the United States And it's cloned the EsophaCAT device, which the Mayo investigators use. These devices sample cells indiscriminately from the stomach to the mouth.
They lack the key differentiating feature of EsoCheck, which is its patent protected ability to perform anatomically targeted Sampling of the distal esophagus, while protecting the samples from dilution and contamination during retrieval. Picking up early pre cancer changes is the Molecular changes can occur in as few as 1% of the sample DNA molecule. Any biomarker performed on a sample swamped outside of the disease region will struggle to replicate EsoGuard's performance on EsoCheck samples. Finally, we frequently get asked about the potential threat of liquid biopsy tests, which can detect minute amounts of tumor DNA in blood. These questions obviously arise from the intense attention and capital flowing into liquid biopsy companies looking to detect cancer in the blood.
This is a complex topic, but let me briefly state that EsoGuard does not face any serious threat from liquid biopsy tests in my opinion. The fundamental reason is that the prognosis of early stage esophageal cancer is very poor with over 40% mortality rates in Stage 1 and Stage 2 cancers. This means that the only way to prevent esophageal cancer death is to detect early precancers such as Barrett's Esophagus. These precancer cells have no cancerous mutation and don't invade blood vessels. So even in the unlikely event that their DNA ended up in the bloodstream, It would essentially be indistinguishable from normal DNA.
The only way to detect these early changes is to collect actual esophageal cells. So I'll now close with some brief updates across our other products. As with our last call, we don't have time for me to provide Much background or context for those of you who are just learning about PADMEADS, I would encourage you to refer to our website and SEC filings for additional information and contact Let's start with CarpX, our minimally invasive device to treat carpal tunnel syndrome. I'm excited to welcome our new full time CarpX National Sales Manager, Calvin Roberts, who starts The best of today. Halver brings over a decade of experience in orthopedic sales.
This includes an extended stint at Trieste Medical. Tri C played an important role in the successful launch and commercialization of a minimally invasive carpal tunnel release device, which it acquired a couple of years ago. Calvin brings a fast forward exit contacts in the hand surgery space, including surgeons and distributors. Calvin has been tasked We're reorganized in the Carpus Advisory Panel to accelerate procedural volume, which has stalled since the first case several months ago. We remain committed to a steady and deliberate initial commercialization plan, focused on optimizing the procedural steps and safety and look to broaden our commercialization efforts later this year.
Our EU based notified body also recently notified us that The review of the CarpX technical file has been completed. We await the final summary report submission confirmation, but as with EsoCheck, we expect to receive CarpX Approval under the current MDD regulatory regime before the transition to the new MDR regime on May 26. Next up, NexFlo. I'm very excited by the progress we have made with our NexFlo infusion set ID infusion Once commercialized, it will seek to radically transform the efficiency and cost effectiveness of the 1,000,000 infusions administered each day in the United States. Our work today clearly demonstrates that the NextFlo ID set works and is able to provide constant flow with accuracy approaching electronic infusion pumps.
We believe it has potential to replace these pumps in over 80% of infusions. We are in the midst of design freeze verification testing and expect to begin final verification and validation testing soon. We are targeting FDA 510 submission by the end of the year with clearance in the first half of twenty twenty We continue to engage in discussions and to support technological diligence with a large strategic partner to license the NetFlow technology specifically for disposable infusion As those discussions continue, however, we continue to advance the technology for this application and we'll be well positioned to self commercialize for this application. Our PortIO implantable intraosseous vascular access device is currently awaiting regulatory steps in the U. S.
And abroad. The PortIO study in Columbia, South America is ready to commence. We have initiated 4 medical centers, which are ready to begin enrolling patients once IRB approval is secured. The IRB process, however, was slowed by a severe COVID outbreak in South America, but we expect to get final approval in enrollment this summer. PortIO is facing similar delays in the U.
S. And we're awaiting the FDA reopening of non COVID pre submission processes and meetings To discuss the protocol for our U. S. ID study based on an 8 week implant duration, we hope to get that meeting scheduled soon once they open up. In In the meantime, we're performing long term animal studies to strengthen our preclinical data set in anticipation of the pre submission meeting as these studies are going well.
Next, a few highlights from products in our emerging innovations portfolio. Work on our EsoCare Self Agile ablation device is progressing well. We recently completed a successful animal study with Doctor. David Hoppers of NYU. This was the first study, which included animals who were survived after the adhesion procedure.
Histopathology is pending, but we demonstrated successful direct thermal balloon catheter ablation of the esophageal lining Through the working channel of a standard endoscope using our proprietary Caldus technology, we believe we're on schedule for FDA submission and clearance I'll be secure in 2022. We continue to work closely with our research, development and manufacturing partner Canon USA In advancing our DisappEAR resolvable pediatric ear tubes, we're still expecting to initiate animal testing this quarter and targeting FDA 510 submission in late 2021. Next, as previewed during our last call, our subsidiary Solus Diagnostics recently terminated A third party license agreement to develop non invasive glucose monitoring technology. This is partly based on the fact that we had developed and advanced our own proprietary technology in this space, which we believe is superior. Work on our own technology is going well and we expect the prototype to be ready for testing in human volunteers and a diabetic animal model later this year.
Finally, I'd like to close with a few comments on our long term vision for PAVmed, assuming Lucid does become a standalone public company. Again, this topic comes up frequently in my discussions with investors and the direct question I frequently get is as follows. Since Lucid represents such a significant portion Of PAVmed's activity and value, what is PAVmed post listen? In the immediate term, this is actually a pretty straightforward question. We have made it clear that we will only proceed to take Lucid public if PAVmed retains the controlling majority equity interest.
As such, PAVmed will continue to report consolidated financials and will recognize Lucid revenue and revenue growth. Lucid will have access to its own capital to drive its growth strategy, but Padme will continue to play an important role and benefit directly from Lucid's successes. But there is a deeper question about our vision for PAVmed over the medium and long term. So let me be clear about one thing. The future of PAVmed is not to be a holding company for Lucid.
To the contrary, one of the fruits of our success at building and rapidly building value in Lucid over the past 3 years Has been that PAVmed has built a powerful infrastructure to serve as an innovation and value engine across medical device diagnostics and potentially even more broadly. This infrastructure consists of a greatly expanded PAVmed team with broad expertise and experience across all disciplines, which is tightly integrated with a network of best in class process experts and consultants. The infrastructure boasts deep expertise And technical skill set in design and development, regulatory, device manufacturing, commercialization, market access, Clinical trials and CLIA laboratory molecular diagnostics. So our vision for PAVmed is quite simple. It's to feed this engine and generate value in the form of future leases.
This can be from groundbreaking technologies already in our portfolio, such as CarpX and our suite of infusion products. It can also be from technologies we license or acquire as we did with Luce. Our success with Lucid in creating value, not just for our shareholders, but for our partners at Case Western Has greatly increased the number of innovators and academic centers who are soliciting us to consider partnering with them on various guiding technologies. We assess each of these opportunities very carefully, but we won't hesitate to pounce on the most promising as we did with Lucid just 3 years ago. With that, I'll pass it on to Dennis to provide an update on our financials.
Thanks, Lisa, and good afternoon, everyone. We briefed our Summary, financial results for the Q1 ended March 31 were reported in our press release that was published earlier this afternoon And our quarterly report on Form 10 Q was concurrently filed with the SEC and is available at sec.gov And also on our website. As you already know from our update call in February and previously in November, tests performed at any given quarter will not Recognize GAAP revenue until the cash is actually collected. As previously mentioned on several occasions, this will be true during the transition period of negotiating 3rd Party private payer reimbursement contracts and related coverage policies. There was no recognized revenue in the quarter As only recently were the first payments received by our Medicare and private payer billing agency.
With regard to the balance of 2021, consequently, It's our expectation that throughout 2021 GAAP revenue will be realized only on actual collections received for tests submitted for reimbursement. This obviously can result in timing of revenues recognized versus the time they are submitted by 3rd party reimbursement. As promised on our last corporate update call, EsoGuard tests performed and submitted for payment are now provided in the press release. Obviously, we're in very early innings. We continue to evolve our reporting metrics as our various sales and marketing efforts further influence adoption, particularly with Project Phoenix upcoming kickoff.
Presently, there are now 4 banking analysts who have issued coverage on the company and others that are also doing their due diligence. The 2021 revenue estimates provided by the analysts are achievable, The quantity and collections are highly dependent upon the evolving reimbursement landscape. As you are likely aware From our last corporate update, the local coverage decision or LCD for CMS related reimbursement has still not been published. With regard to the financial results for the quarter, research and development costs. The first quarter research and development costs were Only $3,300,000 as compared to $2,600,000 for the corresponding period in the prior year, with the approximate $700,000 increase Principally related to the increase in clinical trial costs outside professional engineering services with respect to CarpX, NextFlo, PortIO, EsoGuard and our glucose monitoring project.
G and A and G and A not including sales and marketing Expenses, which are now presented separately, were $3,400,000 for the Q1 compared to $2,200,000 for the same quarter in 2020. The Approximately $1,200,000 increase is principally related to approximately $800,000 increase in compensation related costs, principally related to staffing levels and also related stock based compensation costs. In addition, About $300,000 in consulting services related to patents, regulatory compliance and legal processes for contract review and public company expenses and another $100,000 in general business expenses. Sales and marketing expenses were approximately $1,400,000 for the Q1 Compared to $400,000 for the corresponding prior year period, with an $800,000 increase Principally related to increased headcount sales and marketing personnel and 200,000 increased principally related to consulting and professional services With respect to increased commercial activities, PAVmed reported a net loss attributable to common stockholders of $9,500,000 or a loss of $0.13 per common share versus a loss of $14,500,000 $0.33 In the current and prior periods. Also, the press release provides a table entitled non GAAP measures, which Highlights these amounts along with interest expense and other non cash charges, namely depreciation, stock based compensation and financing related costs to enable better understanding of the company's financial performance.
You will notice from the table that after adjusting the GAAP loss by approximately 3,600,000 For non cash or financing related charges, the company reported a non GAAP adjusted loss for the Q1 A $5,950,000 or $0.08 per common share. PAB Medex cash, As Lishan mentioned, a $48,600,000 as of March 31, after paying off our convertible debt in March in the amount of 14,500,000 During the Q1, the company received additional net proceeds of approximately $53,700,000 from the issuance of common stock and $1,400,000 So with that, operator, let's open it up for questions.
Thank you. We will now be conducting a question and answer The first question is from Kyle Nixon from Cantor Fitzgerald. Please go ahead.
Kyle, good afternoon.
Hi, Kyle. How are you? Good. This is Sean. How are
you guys doing? Thank you. So just wanted to confirm on the Lucid tests Processed during the quarter, so 78 EsoGuard tests. First, is that the number of tests that were performed and then submitted for reimbursement or just simply performed? And then also, I know, Dennis, you talked about this a little bit, but just I was wondering if you could provide a bit more detail on your expectation for the rate of claim denials The rest of the year or even the piecing of the cash collections as well, because just I know it's a little bit uncertain, but was wondering how
we should be thinking about that? Thanks. Yes. So the tests
in the Q1 are submitted for reimbursement And they have not been fully collected yet. And the rate of denials is still uncertain In terms of what that would be, on the CMS side, we shouldn't expect sizable denials. And interestingly enough, so far on the private payer side, we have been receiving payments. There have been some denials, which will get appealed. And then on the private payer side, the reimbursement rate is at the non network levels, which you would expect Because there's not coverage policies on the private side yet.
So in terms of giving Any guidance in terms of the dials, it's too uncertain to provide that at this time. I will tell you that, I think it's It's known among our investor base that our targeted audience of patients is Approximately 60% Medicare patients are CMS related and we have the payment determination for that, 40% being private pay and so the denials will likely be heavier on the private payer side until coverage policies are in place. We are encouraged by the fact that we are getting some payments on the private payer side. Again, too early to tell what the denial rate would be, But it's likely part of the evolving recording metrics that as we have more experience to be able To project further, that will be forthcoming.
If I could just reemphasize one point, which is that the that neither the So the tests that were performed in the Q1 of those and Q2, the vast majority of those, we haven't gotten Any response yet with regard to a submitted claim. So we're just getting the early signal as to how things are going to break with regard to that. And we'll obviously have More color on that over the coming months.
Makes sense. Thanks for that. And sticking with Lucid and EsoGuard, Wondering if you can help me quantify the commercial team. I was just wondering if you can provide any numbers around I did hear a few of these like 2 clinical specialists, I think I heard, but any numbers around sales reps or sales managers too?
Yes. So let's go through that and let's just go through that systematically. So we have Sean, we have a Chief Commercial Officer, Director of National Sales, Other support for folks at that level, including market access and sales management and so forth, below the director of sales, The new Director of Sales, we have 7 regional business managers that cover the entire U. S. Territory.
And each of them sorry, collectively, they Currently supervised independent sales reps, approximately 50 independent sales reps. But one of the things that we've mentioned and one of the Part of our growth strategy is to expand, to start including territory managers under those 7. We have not begun the John just started a couple of weeks ago, but one of the things he's tasked with doing is to start building the territory managers Under the regional managers, as I mentioned in my comments in 2 different flavors, one group that call on GIs and one group that call On primary care physicians. So that process is just getting started. On the clinical special side, our goal is to hire 7 to start and we've hired 2 so far out of those 7.
To be clear, that does not include the staffing of our test centers. So this is strictly the sales and marketing team. The Elusive test centers are going to be staffed Definitely. Okay. That was helpful.
I guess
I'll ask one more and I'll let others hop in. Anna, on Europe,
I guess, can you just walk through the kind of
the commercial and the distribution strategy in Europe, assuming you received CE Mark approval for IsoCheck and you're cleared for the EvoGuard assay as well. And then similarly, What kind of issues would arise, I guess, or headwinds would be presented if you don't get the CE Mark approval by May 26, By the time that the new regime begins.
Yes. Let me answer that. I mean, we're really pretty confident. I mean, there's a lot everything is being sort of Down to the wire because there's a log of applications that these notified bodies are trying to get. So we're pretty confident we'll But it's not the end of the world.
I mean, if it doesn't happen, it's not the end of the world in terms of the delay. Transforming our application to an MDR application It's not going to it will take some time, but it's not going to have any sort of long term impact. So again, pretty optimistic, but If it doesn't make it through the 26th, then we'll just adjust it off and then resubmit it as NBR. The so I think as you know, Kyle, in Europe, getting CE Mark is one thing, but getting commercial traction is very different, a very different play than it is here in the U. S.
And generally speaking, and this is what we would do, what we try to do is to target those countries where you have expectations of having good traction with key opinion leaders and early adopters that you believe can drive this. And so what our plans would be To focus on the 2 countries where we're focusing our clinical study. So as I mentioned, we're about to start European enrollment in our clinical studies In the summer and as part of that, we've had strong engagement with sensors in the Netherlands and in Spain. Both of those countries Have very prominent, particularly the Netherlands, they have very prominent physicians in the esophageal space and in the various esophagus space. So, our efforts would be to get to once we get CE Mark clearance to focus our initial commercialization efforts on those two countries.
The other prospect would be in the UK where there's a very strong interest in this because of other technologies that have been Developed in the UK and we also have some connections in the UK through our new board member, Debbie White. So just to reiterate, Europe, it's pretty much order to come back. Country at a time and get your commercial infrastructure set up. I don't know if it's clear, but I'll emphasize this that the assay will still be performed In the U. S.
So the samples will still get sent via express mail to the U. S. And we'll continue to perform the assays there.
Okay. That was perfect. It's interesting. So yes, I will leave it there. But thanks guys for taking the questions and congrats on Again, these first, they took our claims.
Yes, great. Thanks, Tom. Take care.
The next question is from Frank Takedaian from Lake Street Capital Markets. Please go ahead.
Frank, good afternoon.
Hi, Frank.
Good afternoon, guys. Thanks for taking my questions. Just a couple for you. Wanted to start with the approximately 180 U. S.
Accounts. I was hoping you guys could walk us through the process of account being interested to trained and shelving product to actually performing procedures.
And then with some of
your earlier accounts that you onboarded right at the beginning, could you just talk to how their utilization has trended Since onboarding and launching their product?
Yes. So the process is pretty typical. There's engagement By the sales team, there's a sort of an educational step, there may be a dinner or other opportunities to educate them on the technology Or bring in other users to bear on the process. That doesn't typically take too long. Once we've been able to make the case to the gastroenterologists that they should be interested in this, that they have patients immediately within their practice that You can benefit from this, particularly their colonoscopy patients and that we would work with them to deliver referrals From their primary care network, the rest of the steps are pretty straightforward.
It's getting product on the shelf is straightforward that Yes, quite quickly, just ship EsoCheck devices as well as the EsoGuard specimen kits to their location And training is actually quite straightforward as well. We come to their facility, all of our sales regional managers Are capable of trading accounts and they simply perform the procedure in an office setting and teach them the various steps of how to do the Either the physician themselves or if they're going to be delegated to a nurse to that individual. So, I'd be hard To put a timeline on it, I mean, I think as you know in any aspect of medical device or diagnostics businesses, you can turn an account in 2 days or sometimes It takes a willing and a longer educational process to get them on board. I would say just one point that the private Practices can move more quickly as you might imagine that some of the longer lead times, but ultimately the greater yields in terms of Case volume are at the academic medical center. So our biggest account, I believe, still our biggest account today is NYU.
That took quite a while to get through The complexities and the logistics of the academic of the large academic medical center, but then once you get started, you actually can really do a lot of cases. I'm not sure I have a good answer for you in terms of metrics that you can hang your head on with regard to accounts. We just don't have enough data with regard to accounts, table lines of accounts and sort of the reproducibility of that. We have some accounts that we contacted early on during the pandemic that has expressed an interest that have products on We're going back to now that there's more access. We have other accounts that have moved more quickly that are more recent.
It really varies and I just don't think I can provide you with sort of budgets in the way of numeric guidance on that. I don't know, Jim, if you have anything else to add to that.
No, I think the predictable pattern is still yet to be seen. I think you know, Frank, that through the early part of Q1 was rather choppy as Clinics were focusing on vaccinations and that has picked up, but the pattern is still too early. That will be Part of future metrics.
I'll just add one other thing, which is important, which is that it's also hard to separate That's trends from the expanding heat. And I'll give you one concrete example of that. So once you have an account open, As again, as I'm sure you know from other device markets, maintaining accounts and getting accounts to do procedures often requires a lot of face time and a lot of touches. In doing so, that's one of the reasons why we're expanding our clinical specialist team to provide sort of procedural support So that the sales reps and the business managers can focus on new accounts. And so we haven't really had that until recently, but we've been able To put folks in the procedures for established accounts to provide support And free up some of our staffs.
I think some of that will start to declare itself over the coming months.
Got it. That's helpful. Next from me, on the reimbursement side, I was hoping you could and I understand it's very early days in the reimbursement conversations you have had to date, but I was hoping you could help us understand the expected out of network reimbursement level you could see in relation The 1932 set by CMS and then a little longer term, how you expect the commercial insurers to establish a reimbursement level Yes.
I think the latter is very hard to predict. I mean, as you said, we're just starting. We have we're really excited. We have our first TAB board meeting On Friday in Orlando, we have medical directors from many of the major payers That are going to be present for our presentation. We think we have a very powerful data set to present to them.
But I think it's too early to say. I mean, you certainly hope that the payers will come in at or near the Medicare rate. We have a strong motivation with I don't know how familiar you or others might be with the PAMA regulations, but we have a very strong motivation Do not undercut our Medicare pricing with private payer contracts because that could have follow on effects for Medicare. So we're very attuned to that. The sample size is small, but so far, we've been billing the private pay patients At the approximately $2,000 price and it's very small, but the ones we've received have been in the ballpark of about Where you would expect the 50% out of network payment to be.
But I wouldn't really interpret you wouldn't interpret that much at all because it's just it's very early I'm not sure that that's really predictive of where we'll end up in the more substantive discussions from a contractual and network point of view.
Great. Okay. Last one from me. Given you guys have elected
to go the IPO route, can
you just give us a refresh timeline when we See this filed as well
as you can see it become a standalone company. Dennis, follow-up to you, Oliver.
Yes, sure. Frank, we're working through the process. It includes separate audit and financial statements, which the auditors are working through, and we expect that to be done shortly. It requires an S-one update, and we'll be filing that once the audit is completed. Bankers have been retained.
The banker has been retained. And once we I guess the gating factor Once we file with the SEC, how quickly they can turn around comments. And we had filed a confidential one before and The comments were light. We'll update that with the updated financing. So we can't predict the timing.
It really will be SEC related once So we hand the document over to them.
Just to be clear, we're moving we are moving full speed ahead of the gating items are the ones that kind of switch. Perfect. All right. Thanks for taking all my questions guys. Yes.
Thanks, Craig.
Next question is from Anthony Vendetti of Maxim Group. Please go ahead.
Hey, Anthony. Good afternoon.
Hi, Anthony. How are you? Good afternoon. Hi, Lishan. How are you doing?
So I just want to shift gears a little bit to talk a little bit about CarpX. So I was just wondering if you can give us an update on how that rollout is going. Yes. So as you know, we did our first case and we were using And we had developed a panel of surgeons, which we were hoping could get us through this sort of initial commercialization phase and sort of Working out of procedural development and safety issues and so forth with the device before full commercialization. And that to be frank, that just hasn't panned out.
Some of the surgeons We put on that panel, just to not have the clinical volume that we needed in order to start to get that experience. So we decided To kind of reorganize the whole effort, frankly, and I went out and spent some time recruiting a full time national sales manager with specific, One of the things we realized is we needed someone with specific experience working full time that had done this before in the carpal tunnel In the carpal tunnel space and we've gotten that we have that person now. Calvin, as I mentioned, was at the center of the launch and successful commercialization of the Segway device by Price Medical, which they acquired a couple of years ago. So, Calvis starts today and he's wearing a go and we have his rolodex of hand surgeons and distributors And we look to sort of get back on track with regard to getting the advisory panel cases done and still looking towards a full commercialization line contributor. Full commercialization when, Michel?
Later in the year. Yes, we're still hoping to get there Across the same timeline, but just with this initial commercialization under our belts with this new reorganization. Okay. So full by the end of the year. Okay.
Okay. That's I guess, any update just on DisappEAR Really quick and then Yes, this has been going well. I mean, again, I spent 6:30 hours to get through 30 minutes to get through everything. Sometimes I don't have time to talk about the others. But We've had we've built a really great working relationship with Canon.
We have that sort of full force of their team and their expertise and the resources behind us now. We continue to receive samples from them for bench top testing. We're close to being able to do Animal testing on the actual samples that are manufactured by Canon and that should put us in a good position to submit for FDA 510 by the end of the year. So it's going really well. We're really happy with how that relationship has blossomed.
Okay, excellent. Thanks for the update. I'll turn it back over. All right. Thanks, Justin.
The next question is from Ed Woo from Ascendiant Capital. Please go ahead.
Yes. Also congratulations on the quarter. Yifan, thank you very much for giving us your vision of PAVmed post Lucid. And you mentioned that you're seeing a lot of Different partners coming out with products and that for you to possibly work with. Do you have a set target in mind of how many Products you can't have at one given time?
No, I don't think I can I would say that definitively, I mean, we look at each one at a time and look at the opportunity? And I think the lesson Yes. It's not a theoretical one. The lesson on the template for this is Lucid. At the time Lucid was presented to us, we were not contemplating Necessarily adding sort of a full blown subsidiary.
We were not looking in the diagnostic space frankly, but the opportunity was Presented to us, we may it became quite clear to us that it had a big opportunity and we pounced on it. And so we look at a lot of things. We'll only act on a limited number because We have limited capacity and capital and we're not looking to outstrip either of those in the short or medium term. So we but the good news is that we're seeing a lot and people understand and they've read about Lucid. They know how things Have played out in terms of the value created for Case Western.
It's very diverse. It covers a lot of interesting areas That we're not directly involved in right now that have, clear market opportunities. So I wouldn't Come up with a hard number to be frank, but we certainly would we'll do it responsibly based on our resources and our capital. Great. And just a follow-up to that question.
I know you said that potentially it may be in areas that you're not involved with now. What is the some of the big key criteria you're looking for when you're evaluating opportunities? I really love to come up with a checklist because if you had asked me that in December of 2017 and I gave you a checklist of the kind of device companies we were looking at, But I would have had to eat my words 3 months later and said, well, we're going to do diagnostics because we have a diagnostic opportunity. But I think, so I'm not trying to evade your question, but I'll say that it's the checkboxes are pretty similar to what we've always looked at, which is, Do we have does it have an opportunity to have an impact clinically? Does it address some significant unmet need and have a significant clinical impact?
Is it generally an area where you can count on sort of decent margins, decent gross margins and not Sort of have to work within a commoditized space. There's really the market opportunity is a broader market opportunity large enough to justify the investment. And I guess I would say that on top of that, there are just areas in the industry, in the life sciences industry right now that are sort of hot and we'll Certainly, we'll look at we'll pay attention to that. I think diagnostics has actually Quietly, we said it has been more over the last couple of years and perhaps others might disagree with that. But there's clearly areas within the life sciences that are getting some Attention in terms of capital and the pressure on The Street.
So those would be criteria. And then I guess finally, I would say we would look to Products that synergize certainly, we look towards the top of the list products that synergize our innovation that synergize with our existing technologies, Whether it be within Lucid or within with CarpX or Infusion Technologies, that would certainly be a criteria that would Would have an impact on what we would look for or ones that have where we could add we could inaugurate certain innovations under an umbrella. That obviously would be useful as well. I think that's probably as much as I can say In terms of guiding principles about how we look at these technologies. Great.
Well, thank you. That was very helpful. Thank you. Yes. Thanks a lot.
Thanks, Ed.
The next question is from Frank Ibarra from Morgan Stanley. Please go ahead.
Yes, I'm sorry, Frank Ibera from Hi,
Frank.
How are you? Thank you so much for taking the call. Just to be sure correct here, it's Frank Ibera From Ivermect, LLC. I was formerly with Morgan Stanley for 40 years, but I retired. A couple of Questions.
It doesn't seem that if any
of the
current PAVmed shareholders are going to receive any kind of stock in Lucid Prior to the IPO, is that correct?
We have not stated that one way or the other. So we'll Okay.
Well, thank you very much for answering that question. Secondly is, if that were to be the case, would it be possible because we do not have preemptive rights, would it be possible to allocate Any kind of portion to current shareholders of PAVmed?
I don't think we're ready to make any specific comments about that except that at the time That we're faced with that decision, we'll make the decisions that we think are in the best interest of PAVmed and the shareholders. So I can't provide you any more
I appreciate it. I appreciate it.
The sentiment comes up a lot. Sure.
Well, thank you very much. Congratulations on a very good quarter, and I truly believe it's just
Thank you very much, Frank. Thank you, Frank.
Super.
This concludes the question I would like to turn the floor back over to Doctor. Lishan Aklog for closing comments.
So thank you all for joining us this afternoon and really for a bunch of great questions and great discussion as always. It's a pleasure. We look forward to keeping you abreast of our progress in the future via press releases and conference calls such as this one. And I'd remind you the best way to keep up with our news in between our calls, with updates and events is to sign up for our email alerts I also encourage you to contact Mike directly with any questions at jmh@azmed.com. Have a great day.
Thank you very much.
This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.