PAVmed Inc (PAVM) 2025 Q2 法說會逐字稿

Good morning, and welcome to the PAVmed second quarter of 2025 business update conference call. (Operator Instructions) Please note this event is being recorded. I would now like to the conference call over to Mr. Matt Riley, PAVmed Senior Director of Investor Relations. Please go ahead.

Thank you, operator, and good morning, everyone. Thank you for participating in today's business update call. Joining me today on the call are Dr. Lishan, Aklog, Chairman and CEO of PAVmed; along with Dennis McGrath, CFO. PAVmed. The press release announcing our business update and financial results is available on PAVmed's website. Please take a moment to read the disclaimers about forward-looking statements in the press release.

The business update, press release, and the conference call all include forward-looking statements and these forward-looking statements are subject to known and unknown risks and uncertainties that may cause actual results to differ materially from statements made. Factors that could cause actual results to differ are described in the disclaimer and in our filings with the SEC.

For our list and a description of these and other important risks and uncertainties that may affect future operations, speed Part 1, item 1A entitled Risk Factors and PAVmed and most recent annual report on Forms 10-K filed with the SEC and any subsequent updates filed in the quarter reports on Forms 10-Q and subsequent Form 8-K.

Except as required by law, PAVmed disclaims any intentions or obligations to publicly update or revise any forwarding-looking statements to reflect changes in expectations or in events, conditions, or circumstances on which the expectations may be based or that may affect the likelihood that actual results will differ from those contained in the forward-looking statement. I would like to turn the call over to Dr. Lishan Aklog, Chairman and CEO of PAVmed.

Lishan?

Thank you, Matt, and good morning, everyone. Thank you for joining our quarterly update call. As always, I'd like to thank our long-term shareholders for your ongoing support and commitment. We'll be diving into our operational highlights in a bit, but before doing that, just a reminder that we've taken some critical steps over the past year to stabilize PAVmed's corporate structure and balance sheet. There's some still work to be done on that front, but despite that, we believe we're now we remain well positioned to operate as a diversified commercialized sciences company with multiple independently financed subsidiaries that operate under our shared services model.

Let me just give a brief overview of PAVmed's portfolio. So PAVmed is a vehicle to deliver innovative medical technologies. We've mentioned we operate under shared services model. And as our subsidiaries succeed, PAVmed will also succeed.

The Lucid is our publicly traded diagnostics company since obviously our strongest, most advanced asset and it's on the cusp of key reimbursement milestones, including Medicare, which we'll talk about in more detail later.

And Lucid has been able to raise its own capital and has sufficient runway to accelerate commercialization once we secure Medicare coverage. Veris Health is our digital health company that has a cancer care platform that enhances personalized care. Dennis will go over some of the updates of it.

Veris has also been able to secure some financing and that has given us the ability to restart development of the device. The implantable physiologic monitor, which works in construction with the cancer care platform.

PMX Incubator, which houses some internal projects like PortIO, we've been working to try to raise capital for these internal projects that really remains an ongoing challenge. However, we also in parallel continue to be solicited regarding other very promising assets, which we continue to aggressively pursue.

So we do remain active in this front -- and front are trying to find trying to balance incorporating new assets with the availability of capital. And on the biopharma side, we talked a bit last call about us exploring opportunities within the biopharma space. And in our last call, we thought we were close with regard to one asset that fits well within our shared services model and could leverage our clinical research team, which is one of the reasons why we did -- we have decided in construction with one of our Board members to explore in this space.

Fortunately, that asset fell through, but the pipeline actually remains robust and we continue to explore interesting assets in this in this vertical. So let's just do a brief update on Lucid. Obviously, I encourage you to listen to yesterday's Lucid business update call for greater detail on each of these areas. But the main takeaway is that Lucid is now better positioned than ever to capitalize on the large market opportunity that these occurred (inaudible).

And there are some real concrete near-term milestones that we believe will drive Lucid's success and therefore will positively impact PAVmed. Just to highlight some numbers EsoGuard test volume was 27,156 tests which was within the target range of 2,500 to 3,000 tests per quarter and revenue was up about 40% from Q1 at a record level at $1.2 million for the quarter.

As I went through -- and a lot of detail on our call yesterday, the big event is the upcoming event for Lucid is this MolDX contractor advisory meeting, the CAC meeting, which is a critical step in the -- also be processed for Medicare coverage. We believe we're in the final stages of that and indicates the strong evidence of progress towards positive Medicare coverage policy.

Lucid could also announced a partnership with HOGUE, a world class health system in Southern California, to launch a comprehensive integrated EsoGuard esophageal precancer testing program across these higher hospital healthcare delivery network, including gastroenterologists, primary care physicians, and concierge medicine. And we're very excited about this model -- and we're excited about this engagement, which really provides a model for additional health systems, which we are now engaging with, to try to replicate the HOGUE model.

Dennis, we'll talk about in more detail. We've also strengthened our -- Lucid also strengthened its balance sheet with an underwritten public offering and has sufficient capital to get through these upcoming milestones. And consistent with the PAVmed model, Lucid continues to succeed at raising its own capital.

Finally, on the commercial side, Lucid secured its first private commercial coverage policy from high mark Blue Cross Blue Shield. And that became effective in late in late May. And as I noted on the call, this has been a very positive experience for us. It establishes a precedent both with regard to our commercial insurance engagements and with with Medicare as well.

And it really points to the value of our clinical evidence, clinical validity utility, as well as the economic argument supporting EsoGuard. So we remain deeply engaged with our commercial payers and are already seeing traction within the high-mark coverage area.

Let's move on to Veris Health. Some recent highlights include that Veris completed a second financing of $2.5 million direct equity financing that supplemented in earlier $2.4 million financing and are very attractive [pre-money] valuation of $35 million. We're very excited about that. It really shows investor confidence in Veris's commercial potential and the progress we've made to date. And most importantly it provides sufficient capital to fund. There, the development of the implantable physiologic monitor, which has been on pause. And to get that through FDA clearance and subsequent commercial launch so it can service purpose as a value added in conjunction with the with the platform. That development has restarted and as soon as we completed that financing. And we have a clear path with FDA. We had our final meeting with FDA after many, many meetings we've had with them.

That feedback was favorable. We were actually able to bypass it in person meeting and we look forward to completing the development work and filing for FDA in 2026. Our long-term strategic partnership with Ohio State University, the James Cancer Center, really progressed nicely during this quarter. We completed our commercial -- our partnership agreement with them and are heading towards commercial launch.

Right now the electronic health record integration step is in process. It's going a little slower than we expected, but should be wrapping up. And it will allow us to do a broad launch across the across the Cancer Center to onboard patients across a variety of conditions, specific groups with the target of enrolling over 1,000 patients within the first year.

We've also begun on a variety of components of a longer term strategic plan that we will we look to start implementing upon completion of the submission and clearance of the implantable. This includes a commercial strategy that builds on the model that we've established with with the James Cancer Center at Ohio State and continue to target new accounts.

It also includes the commercial model for the implantable and we're working through pricing and our commercial strategy on the implantable. And so far that that looks very attractive from a pricing point of view. And then we look towards commercial expansion after the implantable is clear beyond that.

We're also hard at work at developing internal program to put us in a position where we can expand beyond simple remote patient monitoring to Embrace AI, artificial intelligence-based clinical decision support tools that are targeted toward cancer care, and we really believe we have a good opportunity to do that and are putting in the resources and the effort to develop a strategic plan that we would seek to launch upon completion of the implantable.

Our focus right now as I mentioned is to is to complete the OSU engagement and to get the implantable across the finish line. And that's the that's the primary focus of our team. But there's a lot of strategic work going on behind the scenes to make sure when that's completed, that will will be in a position to really, really create some significant value over the long term. So with that, I'll pass the call on to Dennis.

Thanks, Lishan, and good morning everyone. A summary financial results for the second quarter were reported in our press release that has been distributed. On the next three slides, I'll emphasize a few key highlights from the second quarter, but I encourage you to consider those remarks in the context of the full disclosures covered in our quarterly report on Form 10-Q as filed with the SEC.

Couple of reminders as our financials, particularly income statement with year-over-year comparisons will for the next couple quarters illustrate periods before September 10, 2024 with Lucid operating results being consolidated into the presented PAVmed results first this year, the 2025 periods without lose its operating results being consolidated into PAVmed financials.

We do present some supplementary information in the footnotes of finance students, particularly footnote for of the 10-Q that helps with some of the comparisons. With regard to the balance sheet. You will recall from our last three investor update calls in November, March, and May, but the company was engaged in the multi step process to regain compliance with Aztec listing standards for the minimum equity level, which it did in February and also position the company for longer term financial stability.

The two key components were deconsolidated Lucid from PAVmed's consolidated financial statements and restructuring our debt whereby we exchanged about 80% of our outstanding debt for new Theory C preferred equity. The slide reflects the balance sheets for the second quarter and the first quarter, both after deconsolidation. Again, that occurred on September 10, 2024. But now the March balance sheet also reflects the impact of the debt exchange, which occurred after December 31, notably the liability reduction of about 25 main coming in large part from a significant reduction in the convertible notes in exchange for an increase of approximately 25,000,000 in preferred stock and the balance sheet inclusion for the first time of the equity value of PAVmed's 31.3 million shares of Lucid stock.

The June 30 balance sheet reflects the impact during the second quarter of the Lucid stock price changes on the value of the Lucid shares mark-to-market as well as any conversions of the preferred securities to common stock.

So a couple of key things to point out on each of these balance sheets cash does not include any Lucid cash. However, it does include the two various related financings, mainly the $2.4 million in the first quarter and the $2.5 million in the second quarter to support the development of the FDA and FDA submission of viruses and plannable device.

The equity method investment balance of $36 million at June 30 reflects again the $31.3 million Lucid shares marked to market representing a $10 million gain since year end from a 40% rise in the Lucid stock price between the period. This amount was previously eliminated from PAVmed's balance sheet prior to deconsolidation.

Though there's plenty more information in the 10-Q and both debt exchange of Series C preferred stock and the equity method treatment of PAVmed investment and Lucid shares. At present, PAVmed continues to be the single largest shareholder of Lucid Diagnostics, with ownership of approximately 29% of the common shares outstanding.

Although PAVmed no longer has voting control of Lucid PAVmed, its Board and management still has significant influence over Lucid, with more than 27% voting interest.

Shares outstanding today, including unvested RSA's, are approximately 21.9 million shares. The GAAP quarter ending outstanding shares of 20.1 million are reflected on the slide as well as the face of the balance sheet and 10-Q. GAAP shares do not reflect unvested RSA amounts.

Additionally, we issued 25,000 Series C preferred shares as part of the debt restructure at the beginning of the year. To date, approximately 1,850 Series C have been converted to approximately 4.7 million common shares.

If the balance of the Series C were converted at the contractual a $7 conversion price, an additional 21.7 million shares would be issued. The [Z] warrants, after having been extended for one year beyond their initial five-year term, expired on April 30.

Next slide please. Similar to past presentations, this P&L slide provides some GAAP and non GAAP year over year and quarterly and annual comparisons. As cautions earlier in my comments there are some significant differences in how the information is compiled between the comparative periods given the changes in PAVmed's financial controls Lucid.

Importantly the GAAP construct for deconsolidation Ludid on September 10 of last year, somewhat blurs the historical understanding of the information for PAVmed as a standalone entity and GAAP does not allow the presentation for the prior periods on the face of the financial statements to be similarly adjusted.

Although as mentioned, there is some supplementary. Information in the footnotes. On a pro-forma basis and purely for illustrative purposes of this slide only, the various revenue and the Lucid management fee are combined collectively more than 3,000,000 per quarter. Positionary line passive income sources versus operating expenses.

For SEC reporting purposes, the MSA income is below the line item. Furthermore, for the second quarter, you see on the slide and in the 10-Q, a large gap net loss of $12.3 million before NCI, the non controlling interest and preferred dividends opposed to the six month total reflecting $6.3 million of income. This results from that mark-to-market of the 31.3 million Lucid shares for the periods resulting in a second quarter non-cash expense of $10.6 million in the line item titled Change in Fair Value of Equity Investment and an income pickup of $21 million in the first quarter.

Happy to answer any detailed questions on the slide in the Q&A, but I think it's more informative to look at the second quarter standalone information presented in this slide and the full second quarter information presented in our press release that shows a company baseline bias of operating a cash flow breakeven and incurring incremental PAVmed expenses for development activities that are offset by the dedicated funding.

In the second quarter, you see a non-GAAP loss of $845,000, which has been funded in part by the NIH grant proceeds of the $900,000 in the fourth quarter and a PAVmed Veris $2.4 million financing in the first quarter and a Veris direct subsidiary financing of 2.5 million in the second quarter.

Non-GAAP operating expenses for the first quarter and second quarter were nearly identical at $4.5 million change of $53,000 between the two quarters. Next slide please?

With regard to non GAAP operating expenses, on this slide, you see a graphic illustration of operating expenses over time as presented in more detail on our press release. The non GAAP OpEx since the lucid deconsolidation has been nearly flat for the last nine months. OpEx increase is moving forward, are likely tied directly to the R&D efforts to get diverse implantable device submitted and cleared by the FDA for which the recent Veris-related financings are supporting. With that, operator, let's open it up for questions.

(Operator Instructions) Anthony Vendetti, Maxim Group.

Thank you. Good morning. So a couple things on the rollout with OSU, I know it has to be integration with EHRs and used to follow the healthcare information technology industry very closely and having those integrations with different systems within a hospital sometimes takes longer than expected. Where is that specific process was integrating Veris' remote monitoring in with that EHR? And is that what's taking a little bit longer or have you overcome that and then? And then the AI component, just a little more clarity on on that clinical decision support piece of it. It sounds like that's early stage, but could be very interesting going forward to add to the Veris platform.

Yeah, both great questions, Anthony, and thanks for the opportunity to flesh those our a little bit. So the EHR integration is -- has been a bit of the gating item for us to kind of transition to a full commercial expansion across the network.

It's not, I don't think it's -- yes, it is challenging, it takes, it takes some work. It's not quite as onerous as I think the models that you were talking about where you're really in effect altering their EHR. There are third-party vendors that -- one of which we're using that have an established turnkey way to take an external platform and have it communicate with various hooks and links within the HR system. So it's not really built into the EHR, it's just getting these third-party applications that can interrogate and deliver information bidirectionally to the EHR in a streamlined way.

So the amount of work is modest or moderate. It's mostly that's just the challenge of overcoming bureaucratic hurdles within academic Medical Center. But we're making progress, we expect it to to get wrapped up soon, and then we'll be able to launch. We're actually considering seeing about -- the the goal was to kind of get it up and running before launching at all. But we may actually proceed with the early rollout as the EHR integration processes is proceeding. But those coming, but just take a little longer than we had hoped for.

On the on the strategic side, you're right. What you know, when we foundeded this company, the platform itself, the software platform itself, and even the implementation, and the platform is utilization of data from an implantable monitor, we're really firmly rooted in the remote patient monitoring or RPM paradigm where the patients -- physiologic information, whether through the external devices that they currently have or through the implantable, are relayed effectively just directly into the platform for the clinical team to see and for them to make clinical decisions.

(inaudible) there are some elements of highlighting and color coding things to give folks a sense of prioritization of the different alerts. But it's really just that. RPM is literally the more patient monitoring. It does include some patient, the patients own reported symptoms, and incorporates that in a nice interface that is very user friendly and allows the clinical team to review the information and utilize it in their decision making.

But obviously, I don't think it to (inaudible) to anyone that over the years since we launched Veris that there's been an explosion of power expertise and activity in the healthcare space with regard to AI tools. And so we've initiated a really a formal process within this to map out how that can we can incorporate more AI into the process of the way to enhance the care these patients even further.

And our target really is not just you know the -- just you know throwing out an incredibly wide [bed] around operational efficiency or other elements. There are plenty of other companies that are doing that doesn't -- that's not our warehouse.

Our warehouse we're here is really in the clinical care of cancer patients who are being exposed to treatments that can lead to complication. And it's more narrowly focused on clinical decision support tools. And that can go anywhere from smart alerts, so you're not just simply saying, hey, this you know the temperature is rising, the patients getting a fever or there's some reports of certain symptoms that might trigger just an alert based on the value of the data.

But make them alert smarter so they can provide some level of clinical risk or information -- additive information through AI that would be useful to the clinicians. And then it goes all the way to to more advanced tools that are actually propping up quite extensively in other areas and other specialties. Here, within cancer, it would be told that could predict, that could utilize data, and could could train off of data.

One of the expectations with regard to this partnership at OSU, which is, the third largest cancer center and the country is to be able to work with them on using their vast data resources to trade models that can provide clinical decision support.

So (inaudible) the concrete example of that would be their pay one of them -- one of the dreaded complications of patients undergoing chemotherapy, for example, is neutropenic sepsis, solid white blood count gets low for the chemo and they have a risk of developing infection.

So algorithms that are trained on on data in cancer patients undergoing chemotherapy that utilize the data that our system provides to provide a more comprehensive risk profile where a patient -- where the risk of sepsis can be predicted well in advance of the typical (inaudible) clinical picture and uh interventions could be made in order to prevent those complications from going further.

So it's tools like that rather now we focused on cancer care in these patients who are the opportunity to get sick and to provide a layer of of clinical decision support on top of just the reporting of the (inaudible) your monitor. So we are working internally mapping it out identifying potential products and tools and we'll be working with ASU on mapping out ways to use their data. Essentially other other data sources to start to train models.

So that's something they were pretty excited about. And we'll be a real value added to the platform just to maybe -- just in closing the platform. Now is is really great. It's a excellent tool, even though we are doing EHR integration frankly and when we've deployed our platform, the output the clinicians typically. Use our platform as they're kind of the front end for the way they care for their patients. And that will be supplemented by the physiologic data from the monitor. And then the next step in that would be to supplement the value proposition further by adding AI-based clinical decision support tools. So for that answers your question, [Anth].

Yeah. No, that's great. And then and then just on the on the funding component is very still funded at this point through FDA submission and expected clearance. And then any any additional color around that, that timeline in '26 would would be helpful.

Yeah, the answer is yes. I'll let Dennis map out the details of that. There's -- including the opportunity and choose additional cash through a warrant that's that's linked to one of the site financings.

Yeah, that's correct. With the funding, it certainly through clearance and the warrant exercise, which also has a cool feature within 60 days of an FDA clearance is expected to support the commercial launch afterwards.

Okay, excellent. Thanks so much. I'll hop back in the queue.

Great. Thanks, Anthony.

Edward Woo, Ascendiant Capital.

Yeah. Congratulations on all the progress. My question is on the biopharma opportunity. Is there a specific area that you have been looking at that you may continue to focus on for the next opportunity that you're evaluating?

Sure. So you know, as we said last time, we live more detail we've been -- so there's a little bit of noise there that have been [unsure], Mike.

Thanks. As you mentioned last time we've been, we've been sourcing assets at a quite a decent clip now actually for over a year, we've made some progress on some. And I would say the majority. Have been in cancer space is just a lot of activity, both on small molecules and on biologic, and immunotherapies in a variety of areas, cancer, and it's and it is it is attractive because the much more so than Medtech and diagnostics, the pathways through FDA, the FDA process and clearance and reimbursement is much more, much more streamlined.

Recently, we've been viewing assets outside that space. The one asset that we were hopeful that we might get across the finish line. Last time was in cardiac immunology and then the cardiac -- like in the cardiac failure space and I should be more surprised to anyone that the biopharma initiatives around obesity are exploding.

So we're getting to do some assets just at the very early stages in that space. So it's an interesting process. Again, there's a lot of assets out there. There's you know, we have a lot to offer as a public company parent with access to larger term capital that's attractive. But you know the devils are the details, it's it's really a question of how much of fund capital these. You know the holders of these assets are looking for and so forth. So we may we remain optimistic over the long term and we'll keep looking you know working our way through that pipeline.

Great. Thanks for answering my questions, and I wish you guys good luck. Thank you.

Thanks, Ed. Have a good day.

Thank you. There are no further questions at this time. I would now like to tune in the conference call over to Dr. Lishan Aklog for the closing remarks.

Great. Thank you, operator, and thank you all for joining today, and thanks Anthony, and Ed for great questions. So really just want to close on some of my opening comments that at the end of the day, PAVmed's success within given the model we have and given that we stabilized things from a corporate point of view, ultimately is going to depend on the success of its subsidiaries.

And they're -- it's really their commercial success and their ability to finance their operations ultimately through profitability. And both Lucid and Veris are on on solid footing on both fronts. There was some really important strategic milestones, obviously especially at Lucid with the potential to drive significant value at the PAVmed level over the coming months.

And we do, as I've said, again and just response to the last question, we continue to aggressively pursue opportunities with with very strong commercial potential. And we're always looking to expand the portfolio of subsidiaries to find the next release of the next Veris to ultimately drive PAVmed's value.

I am bullish about one such near-term opportunity with academic medical centers and particularly intriguing because it's around innovative technologies that would leverage both Lucid and PAVmed's expertise in [self-dual] disease. So we're looking forward to see if we can get that opportunity locked down.

So with that said, again, just do encourage you to to remain connected with us and our progress through our press releases. These calls, please sign up for e-mail alerts if you haven't done so. Routing on our website and follow us on social media.

So thank you very much, and everybody, have a great day. Thank you.

Ladies and gentlemen, this concludes your conference call for today. We you thank you very much for your participation, you may now disconnect.