Lucid Diagnostics Inc. — Q1 2022 Form 10-Q
Reporting period: Three months ended March 31, 2022. Lucid is a commercial-stage diagnostics company and a majority-owned subsidiary of PAVmed Inc. It is developing and commercializing EsoGuard, an esophageal DNA test, and EsoCheck, a cell-collection device, for detecting precancerous esophageal conditions.
Financial performance and position
| Metric | Q1 2022 | Q1 2021 / comparison |
|---|---|---|
| Revenue | $189,000 | None |
| Cost of revenue | $369,000 | None |
| Gross profit (loss) | $(180,000) | None |
| Operating expenses | $11.917 million | $3.653 million |
| Operating loss | $(12.097) million | $(3.653) million |
| Net loss | $(12.270) million | $(3.653) million |
| Basic and diluted loss per share | $(0.35) | $(0.26) |
| Cash used in operations | $5.776 million | $3.315 million |
Revenue was recognized under the former ResearchDx commercialization agreement, principally at a fixed monthly fee; that agreement ended February 25, 2022, when Lucid acquired laboratory assets from ResearchDx. The filing reports negative gross profit, so gross margin was below zero.
Cash was $47.919 million at March 31, 2022, down from $53.656 million at December 31, 2021. Current assets were $52.332 million and current liabilities $14.114 million. Total assets were $62.060 million; total liabilities were $15.569 million. The company reported no preferred shares outstanding. It had $1.770 million payable to PAVmed for employee-related costs and expenses paid on Lucid’s behalf, and $4.887 million of current contingent acquisition consideration. The filing does not report conventional borrowings outstanding at quarter-end.
Changes versus the prior comparable period
- Revenue began to be recognized, while operating expenses rose to $11.917 million from $3.653 million. The net loss widened to $12.270 million from $3.653 million.
- Sales and marketing expense increased to $3.318 million from $689,000; general and administrative expense to $5.718 million from $1.212 million; and research and development expense to $2.881 million from $1.752 million.
- Stock-based compensation was $3.835 million, compared with $805,000. Management attributed much of the expense growth to increased compensation and headcount, stock awards, professional services, commercialization, and clinical-development activities.
- Operating cash use increased, while cash at period-end was substantially higher than the $87,000 reported at March 31, 2021, following the October 2021 IPO.
Outlook, developments, and risks
- Management expects recurring operating losses and continued spending on commercialization, clinical trials, research and development, and public-company operations. It stated that cash on hand and committed capital sources were expected to fund operations for one year from issuance of the financial statements.
- In March, Lucid entered a committed equity facility allowing it to request up to $50 million of stock purchases by a Cantor Fitzgerald affiliate, subject to conditions and limits. The purchase price is 96% of the applicable trading-day volume-weighted average price; Lucid agreed to pay Cantor $1 million for the commitment. Use of the facility could dilute shareholders.
- Lucid acquired assets from ResearchDx to establish its own CLIA-certified, CAP-accredited laboratory. The purchase price is up to $6.2 million: $1.0 million non-contingent and up to $5.2 million contingent on milestones. The contingent consideration was valued at $4.887 million at quarter-end and is subject to remeasurement.
- In April, the American College of Gastroenterology updated guidance to support nonendoscopic capsule-and-biomarker screening as an acceptable alternative to endoscopy for Barrett’s esophagus screening, specifically mentioning EsoCheck and EsoGuard. Medicare coverage was not yet established: a proposed local coverage determination remained under review and was not final.
- The filing cites market acceptance, regulatory approval, reimbursement, financing availability, clinical-trial execution, intellectual-property protection, acquisition integration, COVID-19 effects, and other operational matters as risks. EsoGuard used with EsoCheck as an in-vitro diagnostic was not yet approved for marketing as a combined product; the company was pursuing FDA premarket approval through clinical trials.
- After quarter-end, Lucid obtained rights to commercialize PAVmed’s EsoCure device, with ongoing development costs and royalties, and agreed to acquire CapNostics assets from PAVmed for $2.1 million. These are related-party developments.
Investor verification points
- Confirm the timing and economics of any Cantor facility drawdowns, including dilution and remaining share limits.
- Track Medicare coverage decisions, private-payor reimbursement, and whether the ACG guideline update translates into clinical adoption and revenue.
- Verify progress, cost, and regulatory milestones for the Lucid-owned laboratory and the ResearchDx contingent consideration.
- Assess cash burn, stock-based compensation, related-party fees and balances with PAVmed, and the stated one-year funding outlook.
- Monitor enrollment and outcomes in the EsoGuard clinical trials and the regulatory path for the combined EsoGuard/EsoCheck product and EsoCure.