Hi, welcome to the Canaccord Genuity Global Growth Conference. I'm Kyle Mixon. I cover lifestyle and tools and diagnostics for Canaccord. Pleased to welcome you to a Fireside Chat with Lucid Diagnostics. Lucid is a developer and commercializer of a novel diagnostic for pre-cancer to esophageal cancer called Barrett's Esophagus. The test is called EsoGuard, and the collection device is called EsoCheck. We'll hear more about that today. With us from the company, we have Lishan Aklog, CEO. Thanks, Lishan, for joining us today. Thanks. Great to be here. So, you just had your Q2 results yesterday morning. Maybe just walk through how the quarter progressed with EsoGuard and so forth. Yeah. I think a couple highlights from the quarter. One, we did report record test volume. We did 3,174, I believe, tests for the quarter. So nice 30% quarter-on-quarter growth there. But really, the real highlight has been the trend over the last couple of quarters, which is just a you know, really nice stream of clinical evidence that's right at the point now where we really feel like we have a full body of evidence that we're fully armed to proceed to sort of the last stage of our journey here, which is to secure widespread coverage for this test. And yeah, the 30% sequential growth in volume is really impressive, very good. And obviously, year-over-year growth, very good as well. I think it was like maybe 50%- Yeah Or more. But the revenue per test, if you just kind of... You know, you had $1 million in revenue this quarter. Yeah. You had $1 million in revenue last quarter as well, and honestly, Q4 of last year, maybe about $1 million as well- Yeah Too, sort of. So, you know, the denominator is growing, which is nice, but then the top line is- Yeah is not. So look, what happened with the revenue again? You don't have reimbursement necessarily, but- Yeah When does that change? So just a couple of background points on that. So as you mentioned, we're still. still. Right now, we bill as out-of-network coverage. We submit claims and receive payment on that. I think as Dennis touched on, on yesterday's call, our CFO, we are still in a phase where there's a significant lag from the time you submit claims, the time you perform the test, till the time you actually get paid. So this last quarter's revenue is really a reflection of tests going back a couple of quarters and even into last year. So we think we'll start seeing some improvements in there. But really, at the end of the day, again, as he emphasized yesterday, for us to translate the revenue opportunity that comes from this, from the, you know, from this testing, you know, it's about $6 million for the last quarter, we'll have to continue to see traction on the coverage side, continuing to proceed with the out-of-network situation. We'll make some incremental progress as our RCM processes improve. One of the other highlights from this quarter is, that I didn't mention, is that we had our first direct contracted healthcare event, and so that's direct revenue, that's, that's contractually obligated, that's separate from the standard path of submitting claims, and that'll start contributing to revenue as well. But ultimately, to fulfill the full commercial potential here and to be able to justify deploying resources and expanding our team and driving ongoing test volume growth will require broad coverage. Okay. Yeah, I guess and in terms of, like, commercializing, the test, like you've been through some, like, test center, test strategy, and now you sort of are thinking about it like I mean, more like a direct sales force, but you have this interesting, Check Your Food Tube event, I guess, you know, dynamic or tailwind that you're- Mm-hmm - benefiting from. So talk about, like, how much volume has been processed from these Check Your Food Tube events. Yeah. Maybe describe what it is actually. Sure. But how important has that been, and, like, how does that gradually kind of- Yeah - How do you wean off that dependence, sort of, you know, on that? Yeah. So, you know, our strategy from the beginning has been to take a multipronged approach and to get patients access to this test, you know, by whatever it means necessary. And, you know, one of the unique things about this test is that there's a cell collection element to it that requires someone who's trained on the cell collection procedure to perform the test. And, different referring physicians have different dynamics with regard to whether they're they want to absorb that into their practice, how exactly to work that in. And so by having a somewhat diversified strategy with regard to that, it allows us to target primary care physicians, specialists, health systems, in various, in various ways. So... But, you know, these #CheckYourFoodTube events are something that kinda came up organically, that was really the intersection of a couple of factors. One is that we discovered about a year and a half ago that there was a strong interest among fire departments in particular with just general cancer awareness, because firefighters have an elevated risk of cancers in general and a very elevated risk of esophageal cancer. And so there's a strong interest, a strong commitment within fire departments to test, to test their members to address this risk. So it was really a confluence of us having an opportunity to leverage that commitment to cancer prevention within this group. And the advantage during this phase of our commercial progression is that these events tend to be pretty efficient. You know, the productivity from our sales team in generating volume related to these events is significantly higher than the door-to-door working, you know, with primary care physicians, or actually, the health system side as well, which has a longer lead time. So they've been great, and as far as we're concerned, if we're testing patients and we're getting results that allow us to prevent cancer or get people in the proper surveillance regimen, we'll, we'll take it either way. So it has represented a pretty significant part of this... The reason why this quarter was a record quarter was related to the number of these events we did. We did about 50 of them, 50 of them this year. And that goes to the issue of direct contracting. So, you know, previously we would schedule these events, the firefighter, we'd work with the leadership, and we'd do these events sometimes, you know, 50, sometimes 200, sometimes 400 over a period, a couple of days, and we'd submit claims. This year, this last a couple weeks ago, for the first time, we did a large event, 200 firefighters in Fort Worth Fire Department, where we had a contract in advance, where we were paid in advance. We made a contractual arrangement, so those patients that were performed, those tests that were performed, were paid in advance. And, you know, but we don't, I wouldn't maybe characterize it as a, you know, sort of weaning from one to the other at the end of the day. I mean, we think there is opportunity to get patients access to this test and to generate meaningful revenue through multiple modalities. So we see this as just a multi-pronged approach, where we're working on medical policy, on coverage, on the commercial side, on the Medicare side, and we have a direct contracting initiative. And we have, for the first time, demonstrated that we can hold these events and generate meaningful revenue per event by entering into contractual arrangements in advance. Okay, so you can always keep this, like, event strategy going on while you build out the direct side? Absolutely. They're, they're not mutually exclusive. Yeah. And then, this was the only time, this past quarter, that you could, like, like, contract, like, and get your re- like, you know, recognize- We've had a few smaller ones, but this was the first large one. Yeah. Typically, like, you have to process the claim, then you submit it to the Yeah ... payer, basically, and then it's all in arrears, or like, you kind of- Yeah, it's no different than kind of the traditional testing. If you go to a physician's office, a physician orders a bunch of tests, we submit it for, you know, for payment through the insurance plan. So, this is obviously much more efficient, more timely. It gives us the ability to actually recognize revenue at an earlier stage in the process, and it's contractually guaranteed. Who is the payer for a, like, a firefighter, like, department? So in this particular case, there could be various flavors or the department can pay for it directly. In this case, it's actually really intriguing. We worked with a group called Front Line Health, which is a services company that provides medical services, targeting fire departments all over, across the country, and they provide, in addition to medical care, they provide a lot of screening, ultrasounds, and other health screening. They literally have a physical location at the fire, at this particular fire department. So we worked with them, and the contractual arrangement was with Front Line on behalf of the fire, on behalf of the fire department. So it was processed through their contractual service with the fire department, and so we look forward to working with them in other centers. But it depends on the specifics of the individual department. Okay. And then the test center strategy, too, how that... It used to be, like, you had your own Lucid test centers, and then you moved to the satellite model, which I feel like it's still probably existing today. What's the update on that whole- Yeah. So, just to flesh that out a little bit. So we started this launch. We had a need to be able to provide the cell collection for physicians who couldn't really incorporate it into their office, and we were motivated to do so, to make sure that there were high quality, personnel, trained personnel who were doing it. And so, as you mentioned, we started with some physical locations in about 13 states, and, one of the... And those were working well. One of the things that we learned, however, is that there was an opportunity to deploy our clinical team, who were trained to do the cell collection, in physician offices. So the standard, the standard, so the template for this is that our sales team goes in, talks to physician practice. They are fired up, motivated to bring this into their practice. They have some estimate about how many patients they might be able to refer over some cadence, a week, month, 6 weeks. And then we have our nurse practitioner or nurse show up, and they'll book 10, 15, 20, even up to 30 patients in a day, and they'll get their cell collection right there in the physician office. So it's really been great. It's much more efficient. It provides much greater geographic reach. It's, you know, our... The patient compliance is going to be higher because they're just coming to their physician's office. And and it works, it works really well. And so now that actually represents a, you know, significant majority of the non-CYFT, the non-healthcare event testing that we're doing, we're doing through that model. Got it. Okay, that's helpful. And then the sales force today stands at how many reps? Yeah, we have about 29 direct sellers. If you include sales management, training, and so forth, it's in the mid-30s, and we've kept that flat. It's actually down from the Q4 of 2022. Because you know, we're in this mode where we're being, you know, very careful about our operating expenses and keeping that flat during this period as we're trying to lock down coverage. Even, like, three years ago, I think it was, like, 20-ish or something. Yeah, it was higher than in the Q4 of 2022. I think we were in the mid-30s. Cool. So, you know, we've had some attrition. We haven't filled certain roles, and productivity has gone up, obviously, quite a bit for the same headcount. Okay. From this past quarterly update, again, like yesterday- Yeah You, I think the big... And, you had press releases throughout the quarter, but the big update, when you think about the full, you know, the last few months in general, as a whole, would be that, you know, the additional clinical evidence. Now, you have a clinical utility study, a clinical validity study. The validity one is what matters more for payers, probably. That one's in the queue for, like, publication. The utility? Sorry. The validity, I thought was- Okay. Well, yeah, go ahead. Is it not? We'll close that out. So, well, I mean, they both matter, right? Okay. For payers. So not to interrupt, but we have actually four clinical validity studies right now, and four clinical utility studies. The clinical validity studies are relevant for both physicians and payers. I mean, you have to show that your test works, that you have good performance in your test, and that's what that shows. Clinical utility is less relevant to physicians, but is something that the payers insist on because they want to know that not only does the test work, but does it get utilized in an appropriate way, and are we justified for paying for it? So, the most recent clinical utility study was the one we announced recently, which is the NVET study on endoscopy yield. So NVET is important. I was just, yeah- Yeah. Just saying how, like, the, EsoGuard BE1, which is the validity study, that's- Yeah -going to be important for, like, many groups. Sure. That's in the queue for peer-reviewed publication. Correct. I guess NVET is it? NVET's clinical utility. It's also kind of on the, in the queue. In peer review, yeah. So- It's been submitted for publication. So- Those are the two that are still pending. When those are published, what's your, you know, portfolio of clinical evidence look like at that point? Yeah. So the clinical... Let's Let's maybe talk a bit about clinical utility, 'cause it's not as commonly understood. So we have four clinical utility studies. The three prior to NVET, NVET was the most recent one, were physician management. So you show that you have your test, a physician gets the result of a test, and they do the appropriate thing. If it's positive, they send the patient for a confirmatory endoscopy, so we had 100% concordance there. If it's negative, they send the patient for... They don't send a patient for a confirmatory endoscopy, and we had 99% concordance there. So that's-- those-- the first three studies were in that category, which is sort of the first-line category of clinical utility. The NVET study was sort of one step further, which is that, the patients who do end up getting a, an endoscopy, what's the yield of the endoscopy? What is it? So what... So EsoGuard is a non-invasive triage tool, right? The goal here is to do a non-invasive test to enrich the population of patients that are undergoing the invasive test, the endoscopy, right? And so you can, assess that, and the data was really good, that we had about 2.4-fold increase in the yield of positive endoscopies, which meant that, those who are undergoing the invasive test have a higher yield of positive, and those who are gonna be negative are not undergoing endoscopy. It's... And it, there's a resource element to that. You're not utilizing the more expensive, the more invasive test in patients who are, more likely to be negative. So that's the clinical utility side. Okay. And then- On the validity side, the key with the BE1 study is in conjunction. So there are two types of clinical validity studies. There's case-control studies, where you take patients in different groups, and you assess the performance of the test in each of those, and those tend to be enriched with patients who have more advanced disease. But it's also important to demonstrate that your test works in the real world, in the screening population. So you take a group of patients who were recommended for screening, who are known to be at risk. In our target population, the risk of having esophageal pre-cancer or cancer is about 10%. So you start with that, and you identify the performance of your test in that population. You're mostly gonna see the earlier stage pre-cancers in those. You'll occasionally see a later stage. So we have now two intended use population studies. One is the BE1 study, which, as you mentioned, is in preprint. The other one is the VA study, Cleveland VA study, which is published in the American Journal of Gastroenterology. So between the two of those, they had almost identical results. They showed the same high level of sensitivity and nearly 99% negative predictive value, demonstrating that our false negative rates are real low, and that data matches the case-control data. So really, what we have here is a nice body of evidence with multiple clinical validation studies that show very similar performance in both types of studies, high sensitivity, high negative predictive value, and good, really solid, positive predictive value. How did the prospective data compare to the case-control data again? They were very similar. Yeah, the performance is very similar, and it's similar also across the spectrum of disease. So- How was the level... How about, like, the, the stage of cancer, like, if it's earlier? Yeah. Yeah, so it's actually similar across that. So the great news is that we don't miss cancers. So if you take those three studies, the sensitivity for cancer is 100%. Even the VA study, which is an intended use population study, which you wouldn't expect to find any cancers, they had two cancers, and we were able to detect both of those. So that's at the cancer stage. If you take pre-cancer, the overall sensitivity in the pre-cancer range is in the mid-80s across all the studies, and the negative predictive value is about 99%. That's unprecedented. If you think about a molecular test detecting a pre-cancer at that level, you know, high 90s negative predictive value, it's never happened before. If you think of, in the colon space, for example, Cologuard stool DNA testing has about a 45%-50% sensitivity for advanced adenomas, not even sort of across the board for pre-cancer. And you keep going. You say, "Okay, well, what about early pre-cancers?" Same thing, sensitivity's in the eighties, negative predictive value's in the high nineties. What about short segment, early, where there's only about a centimeter or 2 of abnormality, which we're detecting, you know, deep down in the esophagus? Same thing, we showed 91% sensitivity for the shortest segment of disease. So it's really... The underlying biology here, the underlying molecular biology here, is really unprecedented in terms of its ability to detect this early stage of disease, and I think, as you know, for this particular cancer, you have no choice. You have to detect the earlier pre-cancers in order to be able to put people on the appropriate regimen and prevent cancer. Yeah, the BE2 study, is that necessary for next steps reimbursement, which I want to talk about, but- No, that's just another case-control study. So that's enrolling, but we're not, that's not a gating item for our next steps with reimbursement. Is that prospective or case-control? Because I thought- That's a case-control, yeah. All right. Yeah, so BE1 is prospective and screening, and BE2 is case control. Multi, multicenter- Multicenter, including Europe- Okay ... Yeah, including Europe and the US. Next steps now, you had your pre-submission meeting with MolDX, like July seventeenth. Correct. That was like a reintroduction, you were saying- Yeah To MolDX, I guess. Now the next steps is, like, package all your data up. I guess maybe wait for publication, but you'll probably just package it up, submit it as a dossier. What... I mean, what, what's the timing look like? Yeah. Will you wait a few years? So we've kind of drawn a line in the sand, and we said we're going to wait for the unpublished data at these meetings, but for the dossier, for validity and utility data, they only will consider published data. So we are going to wait for the publication of the BE1 study that's under current review right now, and that should happen shortly. And at that point, we'll collect the data, put it together, and submit it. You know, the meeting was very productive. It was, it ran over a lot of detailed discussion of our data, and we really feel confident that we have that the evidence space is really solid and will move through. You never know. There's a review process that'll happen. Predicting timing is always fraught. So I don't have, you know, any specific sort of numbers to give you, but I feel confident we're going to get this test covered, and that we have the data to do so. Yeah, just the DLCD has been kind of out there for a while, and also- It's been for a year. Yeah. The payment rate, too, has been, like, I don't know, four-ish years or so? I mean- Yeah, payment rate was official January... three years. Yeah, January of 2021. All right. So, I guess, the data and this, like dossier submission. So you have utility, Clinical Utility, Clinical Validity, clinical, Analytical Validity, I guess. Yeah, that always sort of ends up not getting as much attention, but it's the classic three, right? CV, CU, and AV. AV doesn't typically get the same amount of attention, and that's because AV is sort of the basics of what you need to have a CLIA lab, right? To have a lab that- Mm That's certified under CLIA. So we have that data as well. That data actually has been posted on preprint, but that's the one group of data that you can submit, basically internal data on, that's consistent with what you're using to be certified under CLIA. How about the, like, kind of economic, health, health economic? Yeah, that's not part of the submission process, but we have healthcare economic data that demonstrates that EsoGuard is cost effective, and you know, in this target population of patients who are recommended for endoscopy and certainly less expensive than endoscopy. Yeah. So your payment rate is, like, $19, is it? $1,938.01 Penny. Don't forget the penny. Yeah. Yeah. Oh, well- Yeah. Oh, well- I thought it was $0.02, but it's $0.01. $0.01, yeah. Yeah, so did you ever go to ADLT? Like, did you- We haven't. That one. That's on our radar. You know, we know it's out there. We know that's something we're considering. But honestly, at this price point, we really need coverage. I mean, at this price point, we have a 90% margin on next test in the door. You know, our cost of goods to perform the test and also make the cell collection devices under $200. So certainly, you know, at some future point, ADLT might be of interest, but right now we're focused on coverage. Okay, but I mean, I know it's a process to get that status, probably costs money and everything, and it takes time, but I mean, it's first of its kind. Mm-hmm. It's like a really novel test. Absolutely. Yes. Um, sure. Oh, no, no, we think we would qualify under it, and it's something that we're- Yeah That we're considering. The list price is probably, you know, it's $3,000 something. Yeah. Our list price is currently $2,500, but there's, you know, there is room, there is upside room on pricing for in the future, and that's something to consider. Got it. Okay. What, what else is, like, I mean, if you're not going to get payment really soon, what, what else is, like, the catalyst for Lucid kind of this year- Yeah Going forward? Yeah, I think, I think direct contracting is something that, that's really intriguing. You know, the notion that you can go to self-insured entities in particular, that, you know, for example, unions and employers that have benefit packages, which will often include additional health-related things, you know, smoking cessation, nutrition, gym memberships, things like that. And, increasingly, these benefit managers are looking at, tests like cancer screening tests in order to, supplement the benefit package and make it more attractive for, for these entities. And, GRAIL, in particular, has done that well and is, and has been successful at incorporating their molecular test, molecular cancer detection test as a, as a covered benefit. And, what's intriguing about that is it's a parallel path. It's a parallel path that has, where you have the ability to get, contractual payment, by offering this as a benefit. So we have a very active program. It's only been in force for about nine months. We have three full-time employees who are working on sourcing employer contracts, and it's, we think it's actually going to have a, you know, a meaningful impact in parallel, in terms of test volume and revenue growth, converting test volume growth into revenue growth. Got it. And what is the position... What is the patient response? Where does that stand today? Like, and how often do patients, like, come back for more testing, maybe like a year or two? Yeah. So there's maybe I'll split those into kind of two different things. The patient response has been great, and we have, if this test gets ordered, the patients will get their EsoCheck. The compliance rate for people who are referred for this test is high. We don't have many, very few patients who resist getting the test, and we also have good patient satisfaction data. So once they do get the test, we're collecting that. That's another manuscript that's actually pending, where we'll demonstrate in 6,000 patients what the patient preference is and technical success rates, and so forth. So that is, patients are enthusiastic about this actually, because, you know, it's not a hard story to tell. Hey, people understand heartburn, certainly. They understand cancer and the link between them. It's remarkable how many people have some connection to someone who's had esophageal cancer, and so the opportunity to have a test like this and to be able to potentially prevent that, and if you're in a target population, is high. But the collection though is kind of looks uncomfortable? Like, it's like a- So it's, yeah, the cell collection has, is basically uses a device called EsoCheck, that has a capsule that's attached to a silicone string, sort of piece of spaghetti. And yeah, the patient swallows that, and it's about a two-minute test. The average in our, in one of their most recent studies was about two minutes. I had mine, it took 30 seconds. And, well, it's mostly people feel like: "Wait, can I actually swallow that? Um, how am I going to swallow that?" It's more the psychology of it, and the folks who are trained in administering this are excellent. So we have, we have, we presented abstract data. The data in the larger manuscript shows a 98% technical success rate, so only about one in 50 patients in whom we attempt to do the cell collection are unable to complete it. And that includes about... And those people are generally people who have trouble swallowing pills in general. Of the remainder, about one in 10 have they sort of gag a little bit and require-