. . . . . . . . Thank you for watching! Thank you for watching. . . . . Good morning and welcome to the PAVMED second quarter 2026 business update conference call. At this time all lines are in listen only mode. Following the presentation we will conduct a question and answer session. If at any time during this call you require immediate assistance, please press star zero for the operator. Please note, this event is being recorded. I would now like to turn the conference over to Matt Riley, PABMED's Vice President 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 Chief Executive Officer of PABMED, along with Dennis McGrath, Chief Financial Officer. The press release announcing our business update and financial results is available on FASMED's website. Please take a moment to read the disclaimers about Florida Green Statements in the press release. The business update, press release, and conference call all include Florida Green Statements, and these Florida Green Statements are subject to known and unknown risks and uncertainties that may cause actual results to differ materially from statements made. Factors that could cause actual results to differ are described in the disclaimer and in our filings with the SEC. For a list and a description of these and other important risks and uncertainties that may affect future operations, see Part 1, Item 1A, entitled Risk Factors in PAVMED's most recent annual report on Forms 10-K filed with the FCC and any subsequent updates filed in quarter reports on Forms 10-Q and subsequent Forms 8-K. Except as required by law, PAVMED disclaims any intentions or obligations to publicly update or revise any forward-looking statements. to reflect changes in expectations or in events, conditions, or circumstances on which these expectations may be based or that may affect the likelihood that actual results will differ from those contained in the four different statements. I would now like to turn the call over to Dr. Lishan Aklog.

Thank you, Matt, and good morning, everyone. Thank you for joining our quarterly update call. So we're seeing tangible progress across each of our core businesses. Lucid continues to advance key reimbursement and commercialization initiatives. Barris is building commercial momentum while advancing its implantable towards FDA submission, and our relaunched medical device portfolio is moving Port IO and Octerus forward under Joe Virgilio's leadership. We believe this progress across our portfolio positions admit to create meaningful long-term shareholder value. So let me walk through the key developments, beginning with Lucid. Lucid continues to advance its reimbursement and commercial initiatives. as LUSIB's largest shareholder, PadMed, remains well-positioned to benefit from LUSIB's continued progress and future value creation. I encourage you to listen to yesterday's LUSIB Business Update call for greater detail on these developments. Of course, Medicare coverage remains LUSIB's most important near-term milestone, and we're confident that we will ultimately secure positive draft coverage. Commercial coverage expanded recently with a new positive VisaGuard coverage policy from the Laboratory Benefit Manager. and LBM Concert. Multiple health plans of Concert have already adopted the policy. VA commercialization is progressing well and we expect success as the new federal budget cycle progresses. Continued progress across health systems and health economics is further strengthening the foundation for future growth. So let's now move on to VAERS. The commercial phase of our Ohio State University strategic engagement is accelerating with patient onboarding steadily increasing since We also secured a large purchase order to support ongoing commercial patient onboarding for the rest of the year. The clinical rollout is continuing across additional departments. Approximately two-thirds of the planned departments have now been onboarded. Additional departments continue to move through the implementation process. Our current efforts are focused on reducing workflow friction and driving adoption within participating departments. Our implantable physiologic monitor development is also progressing well. We're targeting an early 2027 FDA 510 The design enhancements have now increased the project battery life beyond the two-year target, and design freeze remains targeted for this month with full verification and validation testing to follow. The long lead time biocompatibility testing has already been initiated in line with our FDA pre-submission guidance. Our new contract manufacturer has successfully completed this trial build with devices performing well in preliminary verification testing, and we completed our first phase of animal testing. This was also successful. So now let's move on to our medical device portfolio, starting with Port IO. As a reminder, Port IO is an implantable intraosseous port that's designed to provide long-term vascular access through the bone marrow cavity, particularly for patients with difficult or compromised fetus access. The positive First in Human results were published in the Journal of Vascular Access, supporting continued advancement of our regulatory strategy. Briefly, the First in Human study evaluated Port IO in 10 patients across multiple clinical sites, and it's demonstrated 100% device patency with 90% of patients completing the full intended implant duration. No device-related adverse events were reported. Peer review publication now provides us with an important foundation as we advance Port IO towards its next development and regulatory milestones. Primary focus right now is on the FDA pre-submission process and we expect to submit a meeting request in the fourth quarter. The history has been that the regulatory pathway Based on our prior engagement with FDA, it's been our expectation that Port IL would be subject to the de novo pathway. However, engagements with outside regulatory consultants suggest that the publication of our first in human studies may give us a shot at proceeding to a straight 510 . This would create a much shorter timeline and lower cap requirements to get to commercialization. And now let's finish up with Arcturus. And as a reminder, Arcturus is developing a multimodal endoscopic imaging platform licensed from Duke University that's designed to identify esophageal dysplasia during upper endoscopy and help guide more accurate biopsy and treatment. The multimodal imaging probe development work is ongoing at Duke. There's continued refinement of the probe, processing speeds have improved substantially, and these improvements are intended to support real-time imaging and analysis during the procedure. These technical advances set the stage for our upcoming clinical validation work at UNC, which we're preparing for. IRB approval is expected in October, and our initial FDA pre-submission draft is completed, and the regulatory work is now focused on preparing for that submission. With that, I'll hand the call over to Dennis for an update on our financials.

Thanks, Lishan, and good morning, everyone. Our 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. With regard to the balance sheet, you will recall from our last investor update that in February, we completed a $30 million Series D preferred stock offering. And currently, the company issued a $15 million senior secured note to an existing investor. The company used the proceeds from these financings, consisting of $22.3 million cash payment and a $15 million senior secured note with a February 2029 maturity date to redeem all the outstanding shares of its Series C convertible preferred stock and fully retire its previously existing convertible debt. The $15 million replacement note nominally has a conversion price of $450 per share. It was done this way to protect the investor's tax status, but in every substantive sense, this is a long-term three-year Turn note with interest-only quarterly payments and a balloon payment at maturity in February 2029. Upon shareholder approval obtained on March 27th, the Series D preferred shares were mandatorily converted into Padman common stock. As a result, the Series D preferred stock has been eliminated. In connection with this financing, the company also issued $30 million in warrants now convertible into common stock, which are callable by the company upon publication of a positive ESA guard LCD. So a couple key things to point out on the balance sheet. Cash at June 30th is $3.8 million, which obviously is not inclusive of the expected $30 million to be received upon the warrants being exercised post-LCD publication, nor does it reflect the $2.5 million from the virus warrants issued last year that are callable upon the virus implantable device being cleared by the FDA. The equity method investment balance of 33 million reflects the 31.3 million Lucid shares mark to market indicative of a closing price of $1.07 on June 30th down from $1.09 at year end and $1.15 at March 31st. At present, PadMed continues to be the single largest common shareholder of Lucid Diagnostics with ownership of approximately 15% of the common shares outstanding. Although PadMed no longer has voting control, PadMed together with its board and management still have significant influence over Lucid with approximately 25% voting interest. Shares outstanding today, including unvested RSA, are approximately 7.3 million shares. The GAAP quarter-end outstanding shares of 6.3 million are reflected on the slide as well as the face of the balance sheet in the 10-Q. GAAP shares do not reflect unvested RSA amounts. Similar to past presentations, This P&L slide provides some GAAP and non-GAAP year-over-year quarterly comparisons. On a pro forma basis and purely for illustrative purposes on this slide only, the VERUS revenue and the Lucid management fee are combined, collectively more than $3 million per quarter, to visually align Padman's income sources versus its operating expenses. For SEC reporting purposes, the MSA, the Management Service Agreement, that income is recorded below the line. Furthermore, for the second quarter, you'll see on the slide a gap net loss of 6.6 million, both before the NCI and preferred dividends, versus the prior year loss of 12.3 million. The driving force of this difference is the change in the fair value of the Lucid shares and the convertible debt, both non-cash amounts, reflecting a charge of approximately 3.1 million in the current quarter, Compared to $10.8 million in the prior year quarter. Other than the fair value changes, the most significant change between the reflected periods is the increased R&D expenses, largely for the virus implantable device. R&D on a non-GAAP increased by approximately $650,000 sequentially and $1.3 million year over year. The GAAP net loss attributable to PadMed as reflected in 10Q is $5.5 million for the second quarter, $0.87 per share. On a non-GAAP basis, the loss is $1.7 million, or $0.27 per share. Next slide, please. With regard to the non-GAAP operating expenses on this slide, you'll see a graphic illustration of our operating expenses over time as presented in more detail in our press release. Second quarter non-GAAP OpEx of $6.1 million is above the previous quarter by about $200,000. and above the average of the last four quarters by about 400,000, all of which reflects incremental virus R&D expenditures. OpEx increases moving forward are likely to be tied mostly to the R&D efforts to get virus implantable device submitted and cleared by the FDA. With that, operator, let's open it up for questions.

Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press star followed by the one on your touch-shown phone. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press star followed by the two. If you are using a speakerphone, please lift the handset before pressing any keys. One moment, please, for your first question. Your first question comes from Ed Wu with Ascendian Capital. Your line is now open.

Yeah, congratulations on all the progress. You mentioned that you're going to have a FDA meeting with Port IO in the fourth quarter. Do you anticipate, you know, news shortly thereafter? And what do you think of the regulatory pathway may be in 2027?

Yeah, so we'll be ready to submit for a request for a pre-submission meeting, so the actual meeting may end up leaking into the beginning of 2027. But I will take the opportunity to kind of flesh out a little bit what I said in my prepared comments about the regulatory pathway. Those of you who have been with us before and saw the progress we've made on Port IO prior to us pausing that project, our previous engagement with FDA prior to our publication of the First in Human, data was firmly in the de novo pathway, which is longer and takes more capital. As we've been preparing with the relaunch of the portfolio and the relaunch of Port.io, as we've been preparing to update our regulatory strategy and in consultation with some outside consultants as well as our very strong internal team, it appears that the that we may, there's no certainty yet, but that we may be able to pursue a 510 pathway with existing short-term intraosseous devices as a predicate. This would, again, based on the fact that we, in the interim, had a successful first human study, this would be, and this is how we're going to pursue our re-engagement with the FDA. If that's successful, then as I mentioned in my comments, that would be a big win as the, we'll still need a clinical trial, but the cost and the time associated with that would be significantly less.

That sounds good. Another, the last question I would have is on Port IO and also the probe with Duke. Does those include global rights, or are they only rights in the U.S.?

Yeah, the Port IO is an internal IP, so it's not a license, so that PadMed owns the full rights to that. And the license with Duke University for the Octerus technology includes worldwide rights as well.

Great. Well, thanks for answering my questions, and I wish you good luck. Thank you. Thanks, Ed.

Ladies and gentlemen, as a reminder, should you have a question, please press star one. Your next question comes from Jeremy Pearlman with Maxim Group. Your line is now open.

Good morning, Jeremy. Hi, Jeremy. Good morning.

How are you doing? First question on the VAERS platform. I know it seems like commercialization is going well. Are there any metrics maybe you could provide? How many patients have been onboarded? How quickly is the number growing? And then maybe what milestones investors to look forward to as they gauge the commercial traction of that platform.

Yeah, we're not providing hard numbers on that, but I can give you a pretty good qualitative sense. So things did not... So the agreement with the strategic partnership with OSU, the James, involves a commitment for them to enroll 1,000 patients in a registry. These are all commercial patients, but enrolled within a registry over a year. And the gun went off when... when EHR integration was completed in the spring. So obviously at the beginning, we started with a limited number of departments, two and then three departments that had participated in the previous pilot. And now we're accelerating with now two-thirds of the departments. The James is a very large cancer hospital with two-thirds of the departments now onboarding and enrolling. So the target of getting to 1,000 patients within the first year is still both us and folks at OSU. I believe that's attainable, and we expect to reach that. And the enrollment has really accelerated over the last couple of months, so we're on a good path to get to that target.

Okay, great. And then maybe just skipping to Ziaf Tarris. You mentioned you're preparing for a clinical validation. Just what specifically will the clinical validation study demonstrate? I mean, how should we think about the timeline from that study to a potential FDA submission?

Yeah, so let me just provide a little bit more color on that. So at the time of our license, the work that had been done There had been clinical work on a prototype probe that had demonstrated the fundamental findings and value of the technology in terms of its ability to detect, to measure the nuclear size within esophageal and mucosal cells and using that, correlating that nuclear size to the presence or absence of the more advanced precancerous esophageal dysplasia. So that work had been completed. So the basic core principles around using this combination of advanced OCT to do those measurements and really outstanding ability to discriminate that have been well established. So after the license, the focus has been on modifying the probe, making it smaller and more user friendly and more applicable to the broad range of patient sizes. That's the active work that's going on now and that will require validation study but also just sort of the ease of use in terms of the ergonomics for the clinician. From that point on, there will still be additional product development work. There's product development work on the console as well as advancing and transitioning the work out of the laboratory into a commercial setting. So there's a reasonable amount of time. So the validation work is really a step in the process of getting to design freeze of the definitive probe on the probe side of things. We are considering doing some parallel work on the console, depending on sort of our access to capital. We may do some of that in parallel, but this overall project is still several years away.

Okay, understood. And then just last question. Is there a, you know, you mentioned that if you get a 510k pathway for the port IO, it might that speed up the potential approval. And do you have a commercialization plan in place for that? Are you working on that, or it's still a little early?

Yeah, we outlined a pretty clear plan. The part of commercialization is actually fairly straightforward. The target physician specialties are pretty straightforward. There are folks who do, who currently implant vascular access devices. They tend to be vascular surgeons and interventional radiologists primarily. We have some internal work on pricing, on coding, and the opportunities, depending on sort of where PadMed is, and again, sort of our access to resources at the time, we have a lot of flexibility with regard to an early commercial launch that includes building a small sales team and partnering with distributors. Distributors are very active in the vascular access space, so there's a lot of options for us when it comes time to do the initial commercial launch.

Okay, great. Thank you for all the information. I'll hop back in the queue. Have a nice day. Thanks, Jim.

I don't know for the questions at this time. I will now turn the call over to Dr. Lishan Aklog for closing remarks.

So, great. Thanks, operator, and thank you all for taking the time and for your attention this morning. Obviously, I appreciate the questions and the opportunity to discuss our business and our technology with the covering analysts. Hopefully, you found that informative as well. So, to summarize, we believe we're, you know, remain in a strong position to advance PABMED's strategic plan and its mission. You know, our two independently financed commercial subsidiaries, Lucid and Veris, are progressing well, and each are approaching key milestones. and importantly, we're starting to see traction and we're quite excited on our relaunched medical device portfolio, including progress on Port.io and Octerus. So we remain firmly committed to PABmed's diversified model, this model offering multiple opportunities, multiple shots on goal to enhance shareholder value and we look forward to continued progress on all those fronts. So with that, as always, we encourage you to continue to keep abreast of our progress. Please follow our news releases, these update calls, and continue to follow us on our website and through social media. As always, also feel free to reach out with any specific questions. So with that, I hope everybody has a great day, and thank you so much for your participation.

Ladies and gentlemen, this concludes the conference call for today. We thank you for participating and ask that you please disconnect your lines.