Lucid Diagnostics(LUCD) - 2023 Q4 - Annual Report

FORM 10-K Filing Information Registrant Information LUCID DIAGNOSTICS INC. filed its 2023 Form 10-K, is incorporated in Delaware, trades on NASDAQ (LUCD), and is classified as a non-accelerated, smaller reporting, and emerging growth company - Registrant: LUCID DIAGNOSTICS INC.[2] - Fiscal Year End: December 31, 2023[2] Securities Registered | Title of each Class | Trading Symbol(s) | Name of each Exchange on which Registered | | :------------------ | :---------------- | :---------------------------------------- | | Common Stock, $0.001 par value per share | LUCD | The NASDAQ Stock Market LLC | - Filer Status: Non-accelerated filer, Smaller reporting company, Emerging growth company[6] Market Value and Shares Outstanding As of June 30, 2023, non-affiliate voting stock market value was approximately $14.4 million, with 48,244,798 common shares outstanding as of March 21, 2024 - Aggregate market value of voting stock held by non-affiliates (as of June 30, 2023): Approximately $14.4 million (based on 10,331,863 shares at $1.39/share)[6] - Shares of Common Stock issued and outstanding (as of March 21, 2024): 48,244,798 shares[7] Documents Incorporated by Reference Portions of the 2024 annual meeting proxy statement are incorporated by reference into Part III of this Form 10-K, to be filed within 120 days after December 31, 2023 - Portions of the 2024 annual meeting of stockholders' definitive proxy statement are incorporated by reference into Part III of this Form 10-K[9] Forward-Looking Statements Disclaimer and Risk Factors This Form 10-K contains forward-looking statements with significant risks, including limited operating history, revenue generation, regulatory approvals, and financing, and the company disclaims any obligation to update them - Forward-looking statements are not guarantees of future performance and actual results may differ significantly[13] - Key factors that may affect actual results include: limited operating history, ability to generate revenue, regulatory approval, market acceptance, financing, intellectual property, cybersecurity, and risks related to PAVmed[13][16] - The company does not assume any obligation to update forward-looking statements, except as required by applicable law[15] Part I Item 1. Business Lucid Diagnostics is a commercial-stage medical diagnostics company focused on early detection of esophageal precancer and cancer in GERD patients using EsoGuard and EsoCheck, actively commercializing and expanding clinical evidence Background and Overview - Lucid Diagnostics Inc. is a commercial-stage medical diagnostics technology company focused on patients with GERD at risk of esophageal precancer and cancer (EAC)[17] - Flagship product: EsoGuard Esophageal DNA Test, performed on samples collected with EsoCheck Esophageal Cell Collection Device, is positioned as the first and only commercially available diagnostic test for widespread early detection of esophageal precancer[18] - EsoGuard is a bisulfite-converted targeted next-generation sequencing (NGS) DNA assay, quantifying methylation at 31 sites on Vimentin (VIM) and Cyclin A1 (CCNA1) genes[19] EsoGuard Analytical and Clinical Validation Results | Metric | Result | | :---------------------- | :----- | | Analytical Sensitivity | ~97% | | Analytical Specificity | ~95% | | Analytical Accuracy | ~98% | | Inter-assay Precision | 100% | | Intra-assay Precision | 100% | | Clinical Sensitivity (for BE) | 84% (95% CI 76-90%) | | Clinical Specificity (for BE) | 86% (95% CI 81-91%) | | Positive Predictive Value (PPV) | ~42% | | Negative Predictive Value (NPV) | ~98% | - EsoCheck is an FDA 510(k) and CE Mark cleared noninvasive swallowable balloon capsule catheter device for sampling surface esophageal cells in a less than five-minute office procedure, featuring proprietary Collect+Protect™ technology[20] - EsoGuard and EsoCheck are based on patented technology licensed from Case Western Reserve University (CWRU)[21] Market Opportunity - In 2023, approximately 20,000 U.S. GERD patients are projected to be diagnosed with EAC, and 16,000 will die from it, making it the second most lethal cancer in the U.S. with over 80% mortality within five years of diagnosis[22] - The U.S. incidence of EAC has increased 500% over the past four decades[22] - The American Gastroenterology Association (AGA) expanded the target population for esophageal precancer screening in July 2022 to an estimated 30 million U.S. individuals with at least 3 established risk factors for BE[23] - EsoGuard's total addressable U.S. market opportunity approximates $60 billion, based on an effective Medicare payment of $1,938 and 30 million patients[23] - Less than 10% of at-risk patients recommended for screening undergo traditional invasive upper gastrointestinal endoscopy (EGD)[23] - EsoGuard, with EsoCheck, is believed to be the missing element for widespread early detection of esophageal precancer and cancer in at-risk patients[25] Clinical Guidelines for At-Risk Population - The American College of Gastroenterology (ACG) suggests a single screening endoscopy for patients with chronic GERD symptoms and 3+ risk factors (male sex, age >50, White race, tobacco smoking, obesity, family history of BE or EAC)[26] - An April 2022 ACG guideline update endorses nonendoscopic biomarker screening, specifically mentioning EsoCheck and methylated DNA biomarkers like EsoGuard, as an acceptable alternative to endoscopy for BE[27] - In July 2022, the American Gastroenterology Association (AGA) updated its guidance, endorsing non-endoscopic cell collection tools like EsoCheck and expanding the target population to include at-risk patients without GERD symptoms by adding chronic GERD history as a seventh risk factor[28] Commercialization - Commercialization efforts target primary care and GI physicians, aiming to expand the funnel of BE-EAC patients for EGD surveillance and treatment[29] - Testing access is provided through Lucid Test Centers (in AZ, CA, CO, FL, ID, IL, NV, OH, OR, TX, UT), a satellite test center program (in physician offices or via Lucid Mobile Testing Unit), and CheckYourFoodTube Precancer Testing Events (e.g., with fire departments)[30][31][32] - A Direct Contracting Strategic Initiative (DCSI) was launched in March 2023 to engage self-insured employers and unions, resulting in a contract with Ancira Automotive Group in August 2023[33] - An EsoGuard Telemedicine Program, in partnership with UpScript, LLC, accommodates self-referrals from direct-to-consumer marketing[34] Reimbursement and Market Access - In December 2019, EsoGuard secured 'gapfill' determination for PLA code 0114U through the CMS CLFS process[35] - In October 2020, CMS granted EsoGuard a final Medicare payment determination of $1,938.01, effective January 1, 2021[36] - A final Local Coverage Determination (LCD) L39256, 'Molecular Testing for Detection of Upper Gastrointestinal Metaplasia, Dysplasia, and Neoplasia,' became effective in May 2023, outlining criteria for future coverage that MolDX expects tests to meet; EsoGuard is expected to be submitted for Technical Assessment under this LCD later in 2024[38] - The company is actively pursuing commercial insurer payment and coverage, having received out-of-network commercial insurance payments for EsoGuard, which accounts for the vast majority of revenue to date[39] - State laws mandating coverage of comprehensive biomarker testing are being reviewed to expand EsoGuard access[40] Clinical Utility and Clinical Trials - Demonstrating EsoGuard's clinical utility is crucial for Medicare and private payor payment/coverage and physician understanding[41] - Ongoing efforts include expanding the EsoGuard and EsoCheck evidence portfolio with clinical utility, validity, and analytical validity data[42] - Planned publications for H1 2024 include results from the 'Multi-center, Single-arm EsoGuard clinical validation study' (BE-1), real-world experience of EsoCheck, EsoGuard analytical validation studies by LucidDx Labs, and real-world outcomes from EsoGuard-positive patients[42] - The CLinical Utility of EsoGuard study (CLUE) completed enrollment in late 2023, with full results expected mid-2024; interim results from PREVENT and PREVENT-Firefighter (FF) registries are also expected[43] - The 'EsoGuard case-control study' (BE-2) resumed enrollment in 2023 and will continue through 2024[44] Manufacturing - EsoCheck is manufactured by Coastline International and Sage Product Development, with Coastline having a current capacity of up to 25,000 units per year and exponential scaling capacity[45] - EsoGuard Specimen Kits are manufactured by Path-Tec[45] - Warehousing, logistics, fulfillment, and customer support are managed by HealthLink International and Path-Tec[45] License Agreement - Lucid holds an exclusive worldwide right to use EsoGuard and EsoCheck intellectual property from CWRU under the Amended CWRU License Agreement[46] CWRU License Agreement Royalty Payments | Net Sales per Year | Royalty Rate | | :----------------- | :----------- | | < $100 million | 5% | | > $100 million | 8% | CWRU License Agreement Minimum Annual Royalty Payments | Net Sales per Year | Minimum Annual Royalty | | :----------------- | :--------------------- | | N/A (post-first commercial sale) | $50,000 | | > $25 million | $150,000 | | > $50 million | $300,000 | | > $100 million | $600,000 | - One remaining milestone payment of $200,000 is due upon FDA PMA submission of a licensed product[46] - The license agreement terminates upon the expiration of the last-to-expire licensed patent or May 12, 2038, whichever is later[46] Regulatory - EsoCheck received FDA 510(k) clearance in June 2019 for adults, expanded in 2022 for pediatric populations, and received CE Mark certification in May 2021[47][49] - EsoGuard was commercialized as a Laboratory Developed Test (LDT) after analytical validity documentation in December 2019 and received CE Mark self-certification in June 2021[47][49] - EsoGuard received FDA 'Breakthrough Device Designation' in February 2020 as an in-vitro diagnostic (IVD) medical device, expediting development and review[48] - In October 2023, FDA proposed a policy to phase out general enforcement discretion for LDTs, intending to finalize it by April 2024; Lucid plans to implement QS requirements and submit a premarket submission for EsoGuard[50][51] - The longer-term strategy is to secure a specific FDA clearance or approval for EsoGuard with EsoCheck as an IVD device[52] Laboratory Operations - On February 25, 2022, Lucid's wholly-owned subsidiary, LucidDx Labs Inc., acquired assets to operate its own CLIA-certified, CAP-accredited clinical laboratory in Lake Forest, CA[53] - LucidDx Labs launched EsoGuard 2.0 in November 2023, which uses multiplexing for both genes on a single DNA sample, demonstrating improved sensitivity, specificity, and lower costs[54] Competition - The U.S. market for esophageal cancer and precancer testing is large, with over 30 million at-risk individuals[57] - EsoGuard competes with procedure-based detection (e.g., upper endoscopy) and other testing technologies (e.g., multi-cancer early detection products)[57] - EsoCheck competes with other esophageal cell collection devices, such as EndoSign (Cyted) and Cytosponge, which are 'sponge-on-a-string' devices that, unlike EsoCheck, lack anatomically targeted and protected sampling[57] - Future competition may arise from 'liquid biopsy' tests for early cancer detection and other unproven technologies like breath tests and oral tests[57][172][173] EsoCure - The EsoCure Esophageal Ablation Device is a novel technology for treating dysplastic BE without complex capital equipment[59] - Lucid licensed commercialization rights for EsoCure from PAVmed in March 2022, with a 5% royalty on sales up to $100 million and 8% above that threshold[60] - PAVmed completed pre-clinical feasibility and acute/survival animal studies for EsoCure, demonstrating controlled circumferential ablation[61] Our Relationship with PAVmed - Lucid is a majority-owned subsidiary of PAVmed, which holds approximately 70.1% of voting power as of December 31, 2023, and 64.9% as of March 21, 2024[62][63] - Lucid depends on PAVmed for various management, technical, R&D, legal, accounting, and administrative services under a Management Services Agreement (MSA) and a Payroll Benefits and Expense Reimbursement Agreement (PBERA)[62][64] - PAVmed can elect to settle Lucid's obligations under MSA and PBERA by issuing Lucid's stock instead of cash[64] Recent Events - In January 2024, PAVmed elected to receive $4.7 million in fees and reimbursements by issuing 3,331,771 shares of Lucid's common stock[65] - In March 2024, the MSA with PAVmed was amended, increasing the monthly fee from $0.75 million to $0.83 million, effective January 1, 2024; PAVmed may receive payment in cash or common stock, subject to a $0.70 floor price and a maximum of 9,644,135 shares[66] - On March 13, 2024, Lucid completed a Series B Offering and Exchange, selling 12,495 shares of Series B Convertible Preferred Stock for $1,000/share and exchanging all outstanding Series A and A-1 Preferred Stock for 31,790 shares of Series B Preferred Stock; aggregate gross proceeds were $18.16 million[68] - Each Series B Preferred Stock has a stated value of $1,000, a conversion price of $1.2444, a one-time liquidation preference, and a right to receive dividends equal to 20% of common stock convertible shares on the one-year and two-year anniversaries[68] - In October 2023, Lucid sold 5,000 shares of Series A-1 Preferred Stock for $5.0 million, which were later exchanged for Series B Preferred Stock[70] Intellectual Property - Lucid's business relies on proprietary medical device and diagnostic technologies, including EsoCheck and EsoGuard, protected by 20 domestic and foreign patents[71] Earliest Patent Expiration Dates | Technology | Year | | :--------- | :--- | | EsoCheck | May 2034 | | EsoGuard | August 2024 | - Pending patent applications for EsoGuard are positioned to provide protection until at least 2037[71] - The company protects its proprietary rights through patents, trademarks (e.g., Lucid Diagnostics™, LUCID™, EsoCheck®, EsoGuard®, Collect + Protect®), trade secrets, know-how, and confidentiality agreements[73][77][78] Health Insurance Coverage and Reimbursement - Successful commercialization depends on adequate coverage and reimbursement from governmental authorities, private health insurers, and other third-party payors[79] - Third-party payors are implementing initiatives to restrict technology use to those meeting clinical evidentiary requirements and regularly update reimbursement amounts and methodologies[80] Government Regulation Key U.S. Regulation - Medical devices, including IVD products like EsoGuard and traditional devices like EsoCheck, are subject to extensive FDA regulation under the Federal Food, Drug, and Cosmetic Act and/or the Public Health Service Act[82][83] - FDA defines an LDT as an IVD product designed, manufactured, and used within a single laboratory, for which FDA has generally not enforced premarket review requirements[84] - EsoCheck received FDA 510(k) clearance in June 2019 (for adults) and 2022 (expanded to adolescents); EsoGuard was commercialized as an LDT after analytical validity documentation in December 2019[85] - FDA proposed a policy in October 2023 to phase out enforcement discretion for LDTs, intending to finalize by April 2024, requiring LDTs to generally fall under the same enforcement approach as other IVDs[87][88] - EsoGuard received FDA 'Breakthrough Device Designation' in February 2020, which expedites development and review and may lead to an expedited Medicare coverage pathway[90] - Medical devices are classified into Class I, II, or III, with higher classifications requiring greater controls and more extensive approval processes (e.g., PMA for Class III)[92] - Clinical trials for investigational devices must comply with FDA requirements, potentially requiring an Investigational Device Exemption (IDE) application and IRB approval[96] - Post-approval, products are subject to ongoing regulatory requirements including Quality Systems Regulation (QSR), labeling, adverse event reporting, and cGMP for manufacturing[98][99] - The company's CLIA-certified laboratory is subject to U.S. and state laws and regulations, including certification requirements and standards for quality assurance and control[100] Other U.S. Healthcare Regulation - Business practices are restricted by federal and state laws, including anti-kickback, false claims, data privacy and security, and transparency laws (e.g., Physician Payment Sunshine Act)[103][106] - The Federal Anti-Kickback Statute prohibits offering/receiving remuneration to induce purchasing or recommending services reimbursable by federal healthcare programs, with a stricter intent standard under the Affordable Care Act[108][109] - The Federal False Claims Act prohibits knowingly presenting false or fraudulent claims to the federal government or making false statements material to such claims[110] - The Foreign Corrupt Practices Act (FCPA) prohibits payments to foreign officials to obtain or retain business and requires accurate accounting records[113] - The Health Insurance Portability and Accountability Act (HIPAA) establishes comprehensive protection for the privacy and security of health information, applicable to certain company activities and interactions with patients[115] - The federal 'Stark' law prohibits physician self-referrals to entities (like laboratories) with which they have ownership or compensation arrangements for Medicare-reimbursable tests[117] International Regulation - To market products outside the U.S., the company must comply with varying regulatory requirements of other countries and jurisdictions[118] - EsoCheck received CE Mark certification under MDD, and EsoGuard completed CE Mark self-certification under IVDD, allowing marketing in CE Mark European countries[119] - MDD and IVDD have been replaced by stricter MDR and IVDR, respectively, requiring EsoGuard and EsoCheck to undergo recertification, which is difficult to predict in terms of cost, time, and risk[120][121][122] - The UK's departure from the EU (Brexit) necessitates securing UKCA mark certification for EsoGuard and EsoCheck before their CE Mark certifications expire in the UK[123] Other Laws - The company must comply with Occupational Safety and Health Administration (OSHA) requirements for laboratories and hazardous chemicals[126] - Commercialization activities are subject to regulations from the Department of Transportation, U.S. Postal Service, and CDC regarding specimen transportation[127] - Compliance with environmental provisions has had no material effect on the Diagnostics business, with no material capital expenditures for environmental control facilities in 2023 and 2022[128] Employees - As of March 21, 2024, Lucid has 70 full-time employees, including executive officers[129] - The company reimburses PAVmed for certain payroll and benefit-related expenses for its employees, which may be settled in common stock[129] Corporate Information - Lucid Diagnostics Inc. was incorporated in Delaware on May 8, 2018[130] - Corporate offices are located at 360 Madison Avenue, 25th Floor, New York, NY 10017[130] Available Information - Periodic reports and registration statements filed with the SEC (10-K, 10-Q, 8-K) are available free of charge on the company's website (www.luciddx.com)[131](index=131&type=chunk) - Reports filed by executive officers, directors, and 10% stockholders under Section 16 of the Exchange Act are also available on the website[132] Item 1A. Risk Factors Lucid Diagnostics faces significant financial, business, regulatory, intellectual property, and stock ownership risks, including ongoing losses, going concern doubts, dilution, intense competition, and dependence on PAVmed Risks Associated with Our Financial Condition - The company has incurred operating losses since inception, with net losses of $52.7 million in 2023 and $56.2 million in 2022, and expects continued losses[145] - There is substantial doubt about the company's ability to continue as a going concern beyond March 2025, as noted in its financial statements and auditor's report, requiring additional capital funding[148] - Issuance of convertible securities (e.g., Series B Preferred Stock convertible into up to 49,822,240 common shares) and future equity/debt offerings could significantly dilute existing stockholders and potentially cause a change in control[149][150][155] - Servicing indebtedness, including the March 2023 Senior Convertible Note, requires significant cash flow, and restrictive covenants could adversely affect liquidity and operations[158][162] Risks Associated with Our Business - With a limited operating history and no significant revenues to date, there is little basis to evaluate the ability to achieve business objectives[166] - The company faces competition from existing procedure-based technologies, other diagnostic tests (e.g., 'sponge-on-a-string' devices, liquid biopsies), and potential new technologies, some from companies with greater resources[167][169][172][176] - Substantially all revenues are expected from EsoGuard and EsoCheck, making the business highly dependent on their market acceptance, regulatory status, and competition[177] - High dependence on the CWRU license agreement means termination or disputes could prevent commercialization[178] - Products may not achieve market acceptance due to factors like effectiveness, reliability, safety, physician adoption, reimbursement, and marketing efforts[179] - Estimates of total addressable markets may be incorrect, potentially impairing sales growth[181] - Reliance on third-party manufacturers and a single laboratory facility for EsoGuard testing poses risks to capacity, timely production, and operational continuity[184][186][189] - Labor shortages, turnover, and cost increases, as well as disruptions in courier delivery services, could adversely affect operations and customer satisfaction[192][194] Risks Associated with Healthcare Regulation, Billing and Reimbursement, and Product Safety and Effectiveness - Inadequate reimbursement from private or governmental third-party payors, or delays in obtaining coverage decisions, could materially hinder commercialization of EsoGuard and EsoCheck[204][205][209] - The proposed FDA policy to phase out enforcement discretion for LDTs could require EsoGuard to undergo FDA premarket review, a complex and resource-intensive process[212][218] - Failure to maintain CLIA-certification or comply with federal/state laws regulating clinical laboratories could prevent EsoGuard testing and commercialization[214][216] - Jointly marketing EsoGuard with EsoCheck as a combined product without FDA approval as an IVD device could lead to enforcement actions and severe business impact[217] - Clinical trials are expensive, time-consuming, and may not yield results supporting product claims or could reveal adverse side effects, delaying commercialization[226][230] - Ongoing regulatory obligations post-approval, including cGMP compliance and potential recalls, could result in significant expenses and penalties[235][237][267] - Promoting devices for unapproved ('off-label') uses or engaging in other non-compliant activities could lead to recalls, fines, and reputational damage[238][239] - Operation of Lucid Test Centers and telemedicine partnerships are subject to complex federal and state regulations, with non-compliance risking sanctions and fines[244][247][249][251] - Billing complexities in the diagnostic industry, including varying payor requirements and potential for non-coverage, may hinder payment collection for EsoGuard tests[259][260] - Product liability lawsuits, even without merit, could result in substantial liabilities, decreased demand, and reputational harm[269] - Compliance with HIPAA security, privacy, and breach notification regulations increases costs and risks of fines or penalties from data breaches[271][273] Risks Associated with Our Intellectual Property and Technology Infrastructure - Inability to protect or enforce intellectual property rights (patents, trademarks, trade secrets) for EsoGuard and EsoCheck technology could impair competitive position, as patents may expire, be challenged, or circumvented[274][275] - The company may be subject to costly intellectual property infringement claims by third parties, diverting management attention and potentially resulting in liability or requiring product redesigns[280][281] - Failures in information technology (IT) systems, including security breaches, cyberattacks, or data loss, could disrupt operations, research, and commercialization efforts, leading to financial and reputational damage[283][287] Risks Associated with Our Relationship with PAVmed - PAVmed owns a majority of Lucid's voting stock (70.1% as of Dec 31, 2023; 64.9% as of Mar 21, 2024), allowing it to control actions requiring a stockholder vote and potentially creating conflicts of interest[288][289] - If PAVmed's debt is accelerated due to default, it could lose voting control of Lucid, potentially transferring control to its debtholders[292] - Lucid's certificate of incorporation waives certain rights regarding business opportunities presented to PAVmed-affiliated officers/directors, meaning such opportunities may not be presented to Lucid[293][294] - Dependence on PAVmed for management and administrative services under the MSA means that if these services are insufficient or if the MSA terminates, establishing independent systems could be costly and disruptive[295][296] Risks Associated with Ownership of Our Common Stock - Lack of research or unfavorable research from securities/industry analysts could lead to a decline in stock price and trading volume[299][301] - The common stock may be delisted from Nasdaq if listing requirements are not met, limiting investor transactions and potentially subjecting the company to additional trading restrictions[302][303] - The stock price is likely to be volatile, influenced by broad market factors, industry trends, retail investor sentiment, and trading dynamics, potentially leading to substantial losses for stockholders[303][305] - The company does not intend to pay cash dividends on common stock in the foreseeable future, meaning any gain will solely depend on stock appreciation[306] - Operating as a public company incurs significant legal, accounting, and compliance costs, requiring substantial management time[307] - Failure to establish and maintain effective internal control over financial reporting could erode investor confidence and significantly depress the stock price[310][311] - As an 'emerging growth company,' reduced reporting requirements might make common stock less attractive to some investors, potentially affecting trading market and stock price[313] - Provisions in corporate charter documents and Delaware law (e.g., staggered board, no cumulative voting, Section 203) could make an acquisition more difficult and prevent changes in management[315][317][321] Item 1B. Unresolved Staff Comments The company has no unresolved staff comments from the SEC - Not applicable[322] Item 1C. Cybersecurity Lucid Diagnostics' audit committee oversees cybersecurity risks, managed by third-party CyberTeam, which identifies, assesses, and mitigates threats, with no material incidents currently known Governance - The board administers cybersecurity risk oversight through its audit committee, which discusses major risk exposures with management, counsel, and auditors[323] - Techneto, Inc. d/b/a CyberTeam, a third-party vendor with over 25 years of experience, is retained to identify, assess, and manage cybersecurity threats, reporting directly to the president and COO[324] - CyberTeam provides periodic updates on the cybersecurity program and material risks to the board and executive leadership[325] Risk Management and Strategy - Senior management, supported by CyberTeam, monitors cybersecurity events and trends, assessing potential impacts; third-party partners handling confidential information are generally required to notify of cybersecurity incidents[326] - CyberTeam tracks and mitigates cybersecurity risks and incidents, overseeing remediation plans[327] - Cybersecurity risks are integrated into the overall risk management process through regular meetings with executive leadership and, when appropriate, the board and audit committee[328] - Currently, the company is not aware of any cybersecurity threats or incidents that have materially affected or are reasonably likely to materially affect the Company[329] Item 2. Property Lucid Diagnostics leases corporate offices in New York, a 21,019 sq ft CLIA laboratory in California, and approximately 15,048 sq ft across multiple Lucid Test Centers, with current space deemed adequate for operations - Corporate offices are located at 360 Madison Avenue, 25th Floor, New York, NY 10017, leased through PAVmed Inc. until February 1, 2031[330] - The company leases a CLIA laboratory in California (21,019 sq ft) with a term expiring December 31, 2024[331] - Lucid Test Centers are leased in Arizona, California, Colorado, Florida, Idaho, Illinois, Nevada, Ohio, Texas, and Utah, totaling approximately 15,048 sq ft[331] Item 3. Legal Proceedings Lucid Diagnostics may face ordinary course legal actions, but is currently unaware of any pending proceedings likely to have a material business impact - The company may be subject to material legal actions (e.g., intellectual property, contract, privacy, professional liability, employee-related matters) in the ordinary course of business[203][332] - Currently, the company is not aware of any pending legal or other proceedings that are reasonably likely to have a material impact[333] Item 4. Mine Safety Disclosures The company is not subject to Dodd-Frank Section 1503(a) disclosure requirements as it does not own or operate mines - Not applicable[334] Part II Item 5. Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Lucid Diagnostics' common stock (LUCD) trades on Nasdaq, with 48,244,798 shares outstanding as of March 21, 2024; no common stock cash dividends are anticipated, but Series B Preferred Stock dividends are payable in common stock Market for Common Equity - Common stock is traded on the Nasdaq Capital Market under the symbol 'LUCD'[336] Holders - As of March 21, 2024, there were 48,244,798 shares of common stock issued, held by an estimated 256 holders of record[337] Dividends - The company has not paid cash dividends on common stock to date and does not anticipate paying them in the foreseeable future, intending to retain earnings for business growth[338] - Payment of common stock dividends is restricted while the Senior Convertible Note is outstanding and is junior to preferred stock dividends[339] - Holders of Series B Preferred Stock are entitled to dividends payable in common stock (20% of convertible shares) on March 13, 2025, and March 13, 2026[340] Recent Sales of Unregistered Securities and Use of Proceeds - No unregistered securities were sold or repurchased during the fiscal year ended December 31, 2023, except as previously disclosed in 8-K and 10-Q reports and as detailed in the recent financing section[341] Item 6. [Reserved] This item is reserved and contains no information - This item is reserved[342] Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations Lucid Diagnostics, a commercial-stage medical diagnostics company, focuses on EsoGuard and EsoCheck commercialization and regulatory approvals, but faces significant losses and going concern doubts, necessitating further capital raises and managing expenses via PAVmed agreements Overview - Lucid Diagnostics is a commercial-stage medical diagnostics technology company focused on early detection of highly lethal esophageal adenocarcinoma (EAC) in GERD patients[345] - The flagship product, EsoGuard Esophageal DNA Test, performed with EsoCheck Esophageal Cell Collection Device, is designed for widespread early detection of esophageal precancer[346] - EsoGuard is a bisulfite-converted targeted next-generation sequencing (NGS) DNA assay, and EsoCheck is an FDA 510(k) and CE Mark cleared noninvasive swallowable balloon capsule catheter device[347][348] - Both products are based on patented technology licensed from Case Western Reserve University (CWRU) for accurate, non-invasive, patient-friendly early detection of EAC and Barrett's Esophagus (BE)[349] Recent Developments - In January 2024, PAVmed elected to receive $4.7 million in fees and reimbursements by issuing 3,331,771 shares of Lucid's common stock[350] - In March 2024, the MSA with PAVmed was amended, increasing the monthly fee from $0.75 million to $0.83 million, effective January 1, 2024[350] - On March 13, 2024, Lucid completed a Series B Offering and Exchange, selling 12,495 shares of Series B Convertible Preferred Stock for $1,000/share and exchanging all outstanding Series A and A-1 Preferred Stock for 31,790 shares of Series B Preferred Stock; aggregate gross proceeds were $18.16 million[351] - As a result, no Series A or A-1 Preferred Stock remains outstanding[352] - In October 2023, Lucid sold 5,000 shares of Series A-1 Preferred Stock for $5.0 million, which were later exchanged for Series B Preferred Stock[353] Results of Operations - Revenue is recognized upon delivery of patient EsoGuard test results when collection is probable and unconstrained; cost of revenue includes EsoCheck device usage, shipment, royalties, and processing costs[354][355] - Sales and marketing expenses primarily consist of salaries and allocated MSA fees, expected to increase with commercial expansion[358] - General and administrative expenses include professional fees, consulting, patent maintenance, and allocated MSA fees, expected to increase with business growth and public company compliance[359][360] - Research and development expenses include regulatory filings, patent license fees, laboratory supplies, and allocated MSA fees, expected to continue for product development and clinical trials[361][362] Key Financial Results (2023 vs. 2022) | Metric | Year Ended Dec 31, 2023 ($M) | Year Ended Dec 31, 2022 ($M) | Change ($M) | Change (%) | | :------------------------------------- | :--------------------------- | :--------------------------- | :---------- | :--------- | | Revenue | 2.4 | 0.4 | 2.0 | 500.0% | | Cost of revenue | 6.0 | 3.6 | 2.4 | 66.7% | | Sales and marketing expenses | 16.4 | 16.1 | 0.3 | 1.9% | | General and administrative expenses | 19.3 | 24.0 | (4.7) | (19.6%) | | Amortization of acquired intangible assets | 2.0 | 1.6 | 0.4 | 25.0% | | Research and development expenses | 7.3 | 11.3 | (4.0) | (35.4%) | | Operating loss | (48.5) | (56.3) | 7.8 | (13.9%) | | Net loss | (52.7) | (56.2) | 3.5 | (6.2%) | | Change in fair value - Senior Secured Convertible Note | (3.0) | — | (3.0) | N/A | | Loss on issue and offering costs - Senior Secured Convertible Note | (1.2) | — | (1.2) | N/A | - The $2.0 million increase in revenue in 2023 was principally due to the EsoGuard test performed in the company's own CLIA laboratory, following the termination of the EsoGuard Commercialization Agreement with RDx in February 2022[364] - The $2.4 million increase in cost of revenue was primarily due to a $1.6 million increase in EsoCheck and EsoGuard supplies costs and a $0.8 million increase in compensation-related costs[365][368] - The $4.7 million decrease in general and administrative costs was principally due to an $8.3 million decrease in stock-based compensation, partially offset by a $3.3 million increase related to the amended MSA with PAVmed[365][368] - The $4.0 million decrease in research and development costs was principally due to a $5.5 million decrease in development costs, particularly in clinical trial activities and outside professional/consulting fees for EsoCure[366][368] Liquidity and Capital Resources - Current operational activities focus on EsoGuard commercialization across multiple channels (medical practitioners, Lucid Test Centers, mobile units, direct contracting, telemedicine) and expanding clinical evidence for insurance reimbursement[372] - The company incurred a net loss of $52.7 million and used $32.8 million in cash from operations in 2023, ending the year with $18.9 million cash on hand[374] - Negative working capital of $7.3 million as of December 31, 2023, including a $14.0 million Senior Secured Convertible Note classified as a current liability, raises substantial doubt about the company's ability to continue as a going concern beyond March 2025[374][472][473] - Future operations depend on generating substantial revenue from reimbursement, direct employer contracts, and raising additional capital through equity/debt financings or refinancing existing debt[374] - In March 2024, the Series B Offering and Exchange generated $18.16 million in gross proceeds, with all Series A and A-1 Preferred Stock exchanged for Series B Preferred Stock[375][376] - The March 2023 Senior Secured Convertible Note (face value $11.1 million) was issued for $9.925 million net proceeds, with a 7.875% annual interest rate and a $5.00 conversion price, maturing March 21, 2025[378][379][380] - The company is subject to financial covenants for the Senior Convertible Note, including maintaining at least $5.0 million in available cash and specific market capitalization ratios, which it was in compliance with as of December 31, 2023[380] - A committed equity facility with Cantor (up to $50 million) and an 'at-the-market offering' (up to $6.5 million) provide mechanisms for raising primary equity capital[382][383] - Intercompany agreements with PAVmed (MSA and PBERA) govern services and expense reimbursements, with PAVmed electing to receive $4.7 million in January 2024 via common stock issuance[384][386] Critical Accounting Policies and Estimates - Revenue is recognized when performance obligations are satisfied (delivery of test results), reflecting expected consideration, which can be variable or fixed[389][390][391][392] - The company elected the Fair Value Option (FVO) for the March 2023 Senior Secured Convertible Note, measuring it at estimated fair value at issuance and subsequently at each reporting period, with changes recognized in the statement of operations[397][399] - Stock-based compensation expense for awards under Lucid Diagnostics 2018 Equity Plan and PAVmed 2014 Equity Plan is recognized on a straight-line basis over the vesting period, using the Black-Scholes valuation model[402][403][404] Recent Accounting Standards Updates - The company adopted ASU No. 2016-13 (Financial Instruments-Credit Losses) on January 1, 2023, with no impact on consolidated financial statements[407] - The company is evaluating the impact of ASU No. 2023-09 (Income Taxes) and ASU No. 2023-07 (Segment Reporting), effective for fiscal years beginning after December 15, 2024, and December 15, 2023, respectively[408][409] - ASU No. 2023-06 (Disclosure Improvements) modifies disclosure requirements to conform with SEC amendments, with prospective application and early adoption prohibited[410] Off-Balance sheet arrangements - The company does not have any off-balance sheet arrangements[411] Item 7A. Quantitative and Qualitative Disclosure About Market Risk The company has no material market risk exposure requiring quantitative and qualitative disclosure - Not applicable[412] Item 8. Financial Statements and Supplementary Data Consolidated financial statements and the independent registered public accounting firm's report are incorporated by reference - Consolidated financial statements and the report of the independent registered public accounting firm are incorporated by reference[413] Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure There have been no changes in or disagreements with accountants on accounting and financial disclosure - None[414] Item 9A. Controls and Procedures Management concluded that disclosure controls and internal control over financial reporting were effective as of December 31, 2023, with no material changes reported during Q4 2023 Evaluation of Disclosure Controls and Procedures - Management, with the participation of the principal executive officer and principal financial officer, concluded that disclosure controls and procedures were effective as of December 31, 2023[415] Management's Report on Internal Control Over Financial Reporting - Management is responsible for establishing and maintaining an adequate system of internal control over financial reporting[416] - Based on an evaluation using the COSO framework (2013), management concluded that the system of internal control over financial reporting was effective as of December 31, 2023[418] - The Form 10-K does not include an attestation report from the independent registered public accounting firm regarding internal control over financial reporting, as permitted for emerging growth companies[419] Changes to Internal Controls Over Financial Reporting - No change in internal controls over financial reporting occurred during the quarter ended December 31, 2023, that materially affected, or is reasonably likely to materially affect, internal controls[420] Item 9B. Other Information This section reports no adoption or termination of Rule 10b5-1 trading plans by directors or officers during Q4 2023 Rule 10b5-1 Trading Plans - None of the directors or officers adopted or terminated a 'Rule 10b5-1 trading arrangement' or 'non-Rule 10b5-1 trading arrangement' during the fiscal quarter ended December 31, 2023[421] Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections The company has no disclosures regarding foreign jurisdictions that prevent inspections - Not applicable[422] Part III Item 10. Directors, Executive Officers and Corporate Governance Information for this item is incorporated by reference from the 2024 Annual Meeting of Stockholders' definitive proxy statement - Information is incorporated by reference to the Proxy Statement for the 2024 Annual Meeting of Stockholders[424] Item 11. Executive Compensation Information for this item is incorporated by reference from the 2024 Annual Meeting of Stockholders' definitive proxy statement - Information is incorporated by reference to the Proxy Statement for the 2024 Annual Meeting of Stockholders[425] Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters Information for this item is incorporated by reference from the 2024 Annual Meeting of Stockholders' definitive proxy statement - Information is incorporated by reference to the Proxy Statement for the 2024 Annual Meeting of Stockholders[426] Item 13. Certain Relationships and Related Transactions and Director Independence Information for this item is incorporated by reference from the 2024 Annual Meeting of Stockholders' definitive proxy statement - Information is incorporated by reference to the Proxy Statement for the 2024 Annual Meeting of Stockholders[427] Item 14. Principal Accountant Fees and Services Information for this item is incorporated by reference from the 2024 Annual Meeting of Stockholders' definitive proxy statement - Information is incorporated by reference to the Proxy Statement for the 2024 Annual Meeting of Stockholders[428] Part IV Item 15. Exhibits and Financial Statement Schedules This section lists financial statements, schedules, and exhibits filed with the Form 10-K, including the Independent Registered Public Accounting Firm's Report and Consolidated Financial Statements - Includes the Report of Independent Registered Public Accounting Firm, Consolidated Balance Sheets, Statements of Operations, Changes in Stockholders' Equity (Deficit), Cash Flows, and Notes to Consolidated Financial Statements[433][445] - Lists various exhibits, including the Asset Purchase Agreement, Amended and Restated Certificate of Incorporation, Bylaws, Form of Senior Secured Convertible Note, Equity Plans, License Agreements, Management Services Agreements, and certifications[434] Item 16. Form 10-K Summary The company has not provided a summary of its Form 10-K - None[438] Financial Statements Report of Independent Registered Public Accounting Firm Marcum LLP issued an unqualified opinion on Lucid Diagnostics' 2023 and 2022 consolidated financial statements, but included an explanatory paragraph regarding substantial doubt about the company's going concern ability due to recurring losses and funding needs - Marcum LLP issued an unqualified opinion on the consolidated financial statements for 2023 and 2022, stating they present fairly the financial position and results of operations[447] - An explanatory paragraph highlights substantial doubt about the company's ability to continue as a going concern due to recurring losses, negative cash flows from operations, and the need to raise additional capital[448] - The company is not required to have, nor was the auditor engaged to perform, an audit of its internal control over financial reporting[450] Consolidated Balance Sheets Consolidated balance sheets show total assets decreased from $32.5 million in 2022 to $27.3 million in 2023, while total liabilities increased from $9.5 million to $29.6 million, shifting stockholders' equity to a $2.3 million deficit Consolidated Balance Sheet Summary (in thousands) | Account | Dec 31, 2023 | Dec 31, 2022 | | :------------------------------------------ | :----------- | :----------- | | Assets: | | | | Cash | $18,896 | $22,474 | | Total current assets | $22,073 | $24,356 | | Fixed assets, net | $1,334 | $1,592 | | Intangible assets, net | $1,424 | $3,445 | | Total assets | $27,270 | $32,509 | | Liabilities: | | | | Senior Secured Convertible Note - at fair value | $13,950 | — | | Due To: PAVmed Inc. - MSA Fee and operating expenses | $9,339 | $4,960 | | Total current liabilities | $29,382 | $8,425 | | Total liabilities | $29,581 | $9,462 | | Stockholders' Equity (Deficit): | | | | Preferred stock | $18,625 | — | | Accumulated deficit | $(150,741) | $(98,075) | | Total Stockholders' Equity (Deficit) | $(2,311) | $23,047 | - Cash decreased by $3.578 million from $22.474 million in 2022 to $18.896 million in 2023[454] - Total liabilities increased significantly by $20.119 million, primarily due to the recognition of the Senior Secured Convertible Note ($13.950 million) and an increase in Due To: PAVmed Inc. ($4.379 million)[454] - Stockholders' Equity shifted from a positive $23.047 million in 2022 to a deficit of $2.311 million in 2023, driven by the net loss and preferred stock issuances[454] Consolidated Statements of Operations Lucid Diagnostics reported a net loss of $52.7 million in 2023, an improvement from $56.2 million in 2022, with revenue increasing from $0.4 million to $2.4 million, while operating expenses decreased, but new convertible note expenses impacted the overall loss Consolidated Statements of Operations Summary (in thousands) | Account | 2023 | 2022 | | :------------------------------------------ | :----- | :----- | | Revenue | $2,428 | $377 | | Cost of revenue | $5,979 | $3,614 | | Sales and marketing | $16,404 | $16,134 | | General and administrative | $19,254 | $23,974 | | Amortization of acquired intangible assets | $2,021 | $1,649 | | Research and development | $7,252 | $11,257 | | Total operating expenses | $50,910 | $56,628 | | Operating loss | $(48,482) | $(56,251) | | Interest income | $424 | $88 | | Interest expense | $(416) | $(8) | | Change in fair value - Senior Secured Convertible Note | $(2,980) | — | | Loss on issue and offering costs - Senior Secured Convertible Note | $(1,186) | — | | Net loss | $(52,666) | $(56,171) | | Net loss per share - basic and diluted | $(1.26) | $(1.55) | - Revenue increased by $2.051 million (544%) from $0.377 million in 2022 to $2.428 million in 2023[457] - Net loss improved by $3.505 million (6.2%) from $56.171 million in 2022 to $52.666 million in 2023[457] - General and administrative expenses decreased by $4.720 million (19.7%) from $23.974 million in 2022 to $19.254 million in 2023[457] - Research and development expenses decreased by $4.005 million (35.6%) from $11.257 million in 2022 to $7.252 million in 2023[457] - New expenses in 2023 include a $2.980 million change in fair value and $1.186 million loss on issue and offering costs for the Senior Secured Convertible Note[457] Consolidated Statements of Changes in Stockholders' Equity (Deficit) Lucid Diagnostics' total stockholders' equity shifted from a $23.047 million positive balance in 2022 to a $2.311 million deficit in 2023, primarily due to a $52.666 million net loss, partially offset by $18.625 million from preferred stock and $6.822 million in stock-based compensation Consolidated Statements of Changes in Stockholders' Equity (Deficit) Summary (in thousands) | Item | 2023 | 2022 | | :------------------------------------------ | :----- | :----- | | Balance as of December 31, 2021 | $54,739 | $54,739 | | Stock-based compensation - Lucid Diagnostics Inc. 2018 Equity Plan | $5,762 | $13,859 | | Stock-based compensation - PAVmed Inc. 2014 Equity Plan | $1,060 | $1,132 | | Issuance - Series A and Series A-1 Preferred Stock | $18,625 | — | | Net loss | $(52,666) | $(56,171) | | Balance as of December 31, 2023 | $(2,311) | $23,047 | - Total Stockholders' Equity (Deficit) decreased by $25.358 million, from $23.047 million in 2022 to $(2.311) million in 2023[460] - The issuance of Series A and Series A-1 Preferred Stock contributed $18.625 million to equity in 2023[460] - Accumulated deficit increased from $(98.075) million in 2022 to $(150.741) million in 2023 due to the net loss[460] Consolidated Statements of Cash Flows In 2023, Lucid Diagnostics used $32.8 million in operating cash, provided $29.5 million from financing (preferred stock, convertible note), and used $0.2 million in investing, resulting in a net cash decrease of $3.6 million and ending with $18.9 million cash Consolidated Statements of Cash Flows Summary (in thousands) | Cash Flow Activity | 2023 | 2022 | | :------------------------------------------ | :----- | :----- | | Net cash flows used in operating activities | $(32,817) | $(29,685) | | Net cash flows used in investing activities | $(221) | $(4,108) | | Net cash flows provided by financing activities | $29,460 | $2,611 | | Net increase (decrease) in cash | $(3,578) | $(31,182) | | Cash, end of period | $18,896 | $22,474 | - Net cash used in operating activities increased by $3.132 million (10.5%) from $29.685 million in 2022 to $32.817 million in 2023[462] - Net cash provided by financing activities significantly increased by $26.849 million (1028%) from $2.611 million in 2022 to $29.460 million in 2023, driven by preferred stock and convertible note issuances[462] - Cash at the end of the period decreased by $3.578 million, from $22.474 million in 2022 to $18.896 million in 2023[462] Notes to Consolidated Financial Statements These notes detail Lucid Diagnostics' business, fin