What changed in this filing

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Item 2. Management’s Discussion and Analysis

2022-08-15 compared with 2022-05-16 · 409 added, 303 removed, 115 unchanged (86% of the section changed)

5 unchanged sentences

the context otherwise requires, references herein to “we”, “us”, and “our”, and to the “Company”

or “Lucid Diagnostics” are to Lucid Diagnostics Inc and its subsidiary LucidDx Labs Inc.

(“LucidDx Labs”).

or “Lucid Diagnostics” are to Lucid Diagnostics Inc and its subsidiaries LucidDx Labs Inc.

(“LucidDx Labs”) and

CapNostics, LLC.

FORWARD-LOOKING

Quarterly Report on Form 10-Q (this “Form 10-Q”), including the following discussion and analysis of our (unaudited)

condensed consolidated financial condition and results of operations, contains forward-looking statements that involve substantial risks

and uncertainties.

All statements, other than statements of historical facts, contained in this Form 10-Q, including statements regarding

our future results of operations and financial position, business strategy and plans and objectives of management for future operations,

are forward-looking statements.

The words “may,” “will,” “should,” “expects,” “plans,”

“anticipates,” “could,” “intends,” “target,” “projects,” “contemplates,”

“believes,” “estimates,” “predicts,” “potential” or “continue” or the negative

of these terms or other similar expressions are intended to identify forward-looking statements, although not all forward-looking statements

contain these identifying words.

Forward-looking statements are not guarantees of future performance and the Company’s actual results

may differ significantly from the results discussed in the forward-looking statements.

Factors that might cause such differences include,

but are not limited to, those discussed in Item 1A of Part I of the Form 10-K under the heading “Risk Factors.”

Quarterly Report on Form 10-Q (this “Form 10-Q”), including the following discussion and analysis of our (unaudited) condensed

consolidated financial condition and results of operations, contains forward-looking statements that involve substantial risks and uncertainties.

All statements, other than statements of historical facts, contained in this Form 10-Q, including statements regarding our future results

of operations and financial position, business strategy and plans and objectives of management for future operations, are forward-looking

The words “may,” “will,” “should,” “expects,” “plans,” “anticipates,”

“could,” “intends,” “target,” “projects,” “contemplates,” “believes,”

“estimates,” “predicts,” “potential” or “continue” or the negative of these terms or

other similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these

identifying words.

Forward-looking statements are not guarantees of future performance and the Company’s actual results may differ

significantly from the results discussed in the forward-looking statements.

Factors that might cause such differences include, but are

not limited to, those discussed in Item 1A of Part I of the Form 10-K under the heading “Risk Factors.”

factors that may affect our actual results include:

limited operating history;

financial performance, including our ability to generate revenue;

ability to obtain regulatory approval for the commercialization of our products;

ability of our products to achieve market acceptance;

success in retaining or recruiting, or changes required in, our officers, key employees or

potential ability to obtain additional financing when and if needed;

ability to protect our intellectual property;

ability to complete strategic acquisitions;

ability to manage growth and integrate acquired operations;

potential liquidity and trading of our securities;

and operational risks;

● cybersecurity

related to SARS-CoV-2 /COVID-19 pandemic;

impact of the material weakness identified by our management;

estimates regarding expenses, future revenue, capital requirements and needs for additional

our limited operating history;

our financial performance, including our ability to

generate revenue;

our ability to obtain regulatory approval for the commercialization

of our products;

our ability of our products to achieve market acceptance;

our success in retaining or recruiting, or changes

required in, our officers, key employees or directors;

our potential ability to obtain additional financing

when and if needed;

our ability to protect our intellectual property;

our ability to complete strategic acquisitions;

our ability to manage growth and integrate acquired

the potential liquidity and trading of our securities;

regulatory and operational risks;

cybersecurity risks;

risks related to SARS-CoV-2 /COVID-19 pandemic;

the impact of the material weakness identified by our

our estimates regarding expenses, future revenue, capital

requirements and needs for additional financing.

addition, our forward-looking statements do not reflect the potential impact of any future financings, acquisitions, mergers, dispositions,

8 unchanged sentences

are a commercial-stage, cancer prevention, medical diagnostics technology company focused on the millions of patients with long-standing

gastroesophageal reflux disease (“GERD”) who are at risk of developing esophageal precancer and cancer, specifically

highly lethal esophageal adenocarcinoma (“EAC”), which is expected to lead to approximately 16,000 U.S.

gastroesophageal reflux disease (“GERD”) who are at risk of developing esophageal precancer and cancer, specifically highly

lethal esophageal adenocarcinoma (“EAC”), which is expected to lead to approximately 16,000 U.S.

deaths per year.

believe that our lead products, the EsoGuard Esophageal DNA Test performed on samples collected with the EsoCheck Esophageal Cell Collection

Device, constitute the first and only commercially available diagnostic test capable of serving as a widespread screening tool to prevent

Device, constitutes the first and only commercially available diagnostic test capable of serving as a widespread screening tool to prevent

EAC deaths, through early detection of esophageal precancer in at-risk GERD patients.

is a DNA test performed on surface esophageal cells collected with EsoCheck in a brief noninvasive

office procedure which has been shown to be over 90% sensitive and specific at detecting

Barrett’s Esophagus (“BE”), a precancerous condition of the esophagus and

all conditions along the BE-EAC spectrum, including on samples collected with EsoCheck (Moinova,

Sci Transl Med.

a DNA test performed on surface esophageal cells collected with EsoCheck in a brief noninvasive office procedure which has been shown

to be over 90% sensitive and specific at detecting Barrett’s Esophagus (“BE”), a precancerous condition of the

esophagus and all conditions along the BE-EAC spectrum.

(Moinova, et al.

2018 Jan 17;10(424):

is an FDA 510(k) and CE Mark cleared noninvasive swallowable balloon capsule catheter capable

of sampling surface esophageal cells in a less than five-minute office procedure.

its proprietary Collect+Protect™ technology makes it the only noninvasive esophageal

cell collection device capable of anatomically targeted and protected sampling to prevent

dilution and contamination during device withdrawal.

is a United States Food and Drug Administration FDA 510(k) and CE Mark cleared noninvasive swallowable balloon capsule catheter

capable of sampling surface esophageal cells in a less than five-minute office procedure.

We believe its proprietary

Collect+Protect™ technology makes it the only noninvasive esophageal cell collection device capable of anatomically targeted

and protected sampling to prevent dilution and contamination during device withdrawal.

is commercialized in the U.S.

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third-party commercial clinical laboratory service partner ResearchDx Inc.

(with a d/b/a “Pacific Dx”) (“RDx”),

at their Clinical Laboratory Improvement Amendments (“CLIA”) certified commercial clinical laboratory, located in Irvine,

Beginning in March 2022, the EsoGuard LDT has been performed at our own CLIA-certified commercial clinical laboratory,

located in Lake Forest, CA.

Additionally, RDx also manufactures our EsoGuard Specimen Kits.

(“RDx”), at their Clinical Laboratory

Improvement Amendments (“CLIA”) certified commercial clinical laboratory, located in Irvine, CA.

Beginning in March

2022, the EsoGuard LDT has been performed at our own CLIA-certified commercial clinical laboratory, located in Lake Forest, CA.

also manufactures our EsoGuard Specimen Kits.

EsoCheck is commercialized in the U.S.

a 510(k) cleared esophageal cell collection device currently manufactured for us by our contract manufacturing partner, Sage Product

Development Inc., located in Foxborough, MA.

We are in the process of transferring EsoCheck manufacturing to Coastline International

Inc., a high-volume manufacturer headquartered in San Diego, CA with plants in Mexico.

Both EsoGuard and EsoCheck have completed

the CE Mark certification process.

While EsoGuard and EsoCheck may be marketed separately, they are not presently approved for marketing

together as an in vitro diagnostic device (“IVD”).

EsoGuard, used with EsoCheck as an IVD, was granted FDA Breakthrough

Device designation and is the subject of two large, actively enrolling, international multicenter PMA clinical trials.

as a 510(k) cleared esophageal cell collection

device currently manufactured for us by our contract manufacturing partner, Sage Product Development Inc., located in Foxborough,

We are in the process of transferring EsoCheck manufacturing to Coastline International Inc., a high-volume manufacturer

headquartered in San Diego, CA with plants in Mexico.

Both EsoGuard and EsoCheck have completed the CE Mark certification process.

EsoGuard, us ed with EsoCheck was granted FDA Breakthrough

Device designation and requires the completion of an international multicenter pre-market approval (“PMA”) clinical

trial to be able to submit EsoGuard to the FDA for approval as an in vitro diagnostic device (“IVD”).

Presently, the

Company is focusing its clinical trial efforts and resources towards supporting insurance reimbursement adoption by government and

private insurers.

Consequently, with the Company prioritizing shorter term clinical utility studies to facilitate widespread

insurance adoption, the completion of the BE-1 EsoGuard screening (as described below) study will be delayed indefinitely.

Company expects to complete the EsoGuard BE-2 case control study (as described below) in due course.

EsoGuard PLA code 0114U secured final Medicare payment determination of $1,938.01, effective January 1, 2021.

The CLIA certified laboratory

where the EsoGuard assay is performed has begun to submit claims and receive out-of-network private insurance payments.

We are awaiting

Medicare local coverage determination.

We are awaiting Medicare

local coverage determination.

We are also aggressively pursuing EsoGuard U.S.

private payor payment and coverage as well as

payment in Europe.

are working to expand EsoGuard commercialization across multiple channels by building a direct sales and marketing team targeting

primary care physicians, specialists, institutions and consumers.

To assure sufficient testing capacity and geographic coverage,

as part of this expansion, we are building our own network of Lucid Test Centers, staffed by Lucid-employed clinical personnel, where

patients can undergo the EsoCheck procedure and have the sample sent for EsoGuard testing, starting with three test centers launched

in the Phoenix metropolitan area and have recently expanded our test centers into Utah, Nevada, Colorado, Washington, Oregon and Idaho.

We’ve also established an EsoGuard Telemedicine Program, in partnership with UpScript, LLC, an independent third-party

telemedicine provider, that can accommodate EsoGuard self-referrals from direct-to-consumer marketing.

private payor payment and coverage as well as payment in

are working to expand EsoGuard commercialization across multiple channels by building a direct sales and marketing team targeting primary

care physicians, specialists, institutions and consumers.

To assure sufficient testing capacity and geographic coverage, as part of this

expansion, we are building our own network of Lucid Test Centers, staffed by Lucid-employed clinical personnel, where patients can undergo

the EsoCheck procedure and have the sample sent for EsoGuard testing.

We have also established an EsoGuard Telemedicine Program, in partnership

with UpScript, LLC, an independent third-party telemedicine provider, that can accommodate EsoGuard self-referrals from direct-to-consumer

Overview - continued

In connection

with our efforts to expand our presence in the diagnostic market, we are also developing EsoCure as an Esophageal Ablation Device, with

the intent to allow a clinician to treat dysplastic BE before it can progress to EAC, a highly lethal esophageal cancer, and to do so

without the need for complex and expensive capital equipment.

As described below, we recently entered into a license agreement with our

parent company, PAVmed Inc., pursuant to which we were granted the rights to commercialize EsoCure.

A successful pre-clinical feasibility

animal study of EsoCure has been completed, demonstrating excellent, controlled circumferential ablation of the esophageal mucosal lining.

An acute and survival animal study of EsoCure™ Esophageal Ablation Device has also been completed, demonstrating successful direct

thermal balloon catheter ablation of esophageal lining through the working channel of a standard endoscope.

We plan to conduct additional

development work and animal testing of EsoCure to support a future FDA 510(k) submission.

are a majority owned subsidiary of PAVmed.

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rights for the proprietary technologies underlying EsoCheck and EsoGuard.

Recent Developments

Guideline Update - ACG

April 2022, the American College of Gastroenterology

(“ACG”) updated its clinical guideline to support esophageal precancer (“Barrett’s Esophagus”, “BE”)

screening to prevent highly lethal esophageal cancer (“EAC”) utilizing our EsoGuard® DNA Test on samples collected

with our EsoCheck® Cell Collection Device.

The clinical guideline reiterates the ACG’s long-standing recommendation

for esophageal precancer screening in at-risk patients with gastroesophageal reflux disease (“GERD”), commonly known as chronic

heartburn, acid reflux or simply reflux.

In its Recommendation 5, the ACG suggests a single screening endoscopy in patients with chronic

GERD symptoms and 3 or more additional risk factors for BE, including male sex, age >50 yr, White race, tobacco smoking, obesity,

and family history of BE or EAC in a first-degree relative.

Furthermore, and importantly for the first time, the clinical guideline also

endorses nonendoscopic biomarker screening as an acceptable alternative to costly and invasive endoscopy by stating in its Recommendation

6 that the ACG suggests that a swallowable, nonendoscopic capsule device combined with a biomarker is an acceptable alternative to endoscopy

for screening for BE.

The clinical guideline specifically mentions EsoCheck, along with Lucid’s EsophaCap® device, as such

swallowable, nonendoscopic esophageal cell collection devices, as well as methylated DNA biomarkers such as EsoGuard.

The summary of

evidence for this recommendation cites the seminal NIH-funded multicenter, case-control study published in 2018 in Science Translational

Medicine, which demonstrated that EsoGuard is highly accurate at detecting esophageal precancer and cancer, including on samples collected

with EsoCheck.

Guideline Update - ACG and AGA

In April 2022, the American College

of Gastroenterology (“ACG”) updated its clinical guideline to support esophageal precancer (“Barrett’s Esophagus”-

or “BE”) screening to prevent highly lethal EAC utilizing our EsoGuard® DNA Test on samples collected with our EsoCheck®

Cell Collection Device.

The clinical guideline reiterates the ACG’s long-standing recommendation for esophageal precancer screening

in at-risk patients with GERD, commonly known as chronic heartburn, acid reflux or simply reflux.

In its Recommendation 5, the ACG suggests

a single screening endoscopy in patients with chronic GERD symptoms and 3 or more additional risk factors for BE, including male sex,

age greater than 50 years, White race, tobacco smoking, obesity, and family history of BE or EAC in a first-degree relative.

and importantly for the first time, the clinical guideline also endorses nonendoscopic biomarker screening as an acceptable alternative

to costly and invasive endoscopy by stating in its Recommendation 6 that the ACG suggests that a swallowable, nonendoscopic capsule device

combined with a biomarker is an acceptable alternative to endoscopy for screening for BE.

The clinical guideline specifically mentions

EsoCheck, along with the Company’s EsophaCap® device, as such swallowable, nonendoscopic esophageal cell collection devices,

as well as methylated DNA biomarkers such as EsoGuard.

The summary of evidence for this recommendation cites the seminal NIH-funded multicenter,

case-control study published in 2018 in Science Translational Medicine, which demonstrated that EsoGuard is highly accurate at detecting

esophageal precancer and cancer, including on samples collected with EsoCheck.

In July 2022, the American Gastroenterology

Association (“AGA”) published updated clinical guidance that mirrors the same furnished by the ACG as described above ,

endorsing the use of non-invasive screening tools like our EsoCheck® Cell Collection Device, which is cited in its guideline,

as an acceptable alternative to endoscopy to directly address the need for noninvasive screening tools that are easy to administer,

patient friendly, and cost-effective for the detection of BE.

The clinical practice update by the AGA also significantly expands the target

population for esophageal precancer screening, including for EsoGuard and EsoCheck, by recommending, for the first time, screening in

at-risk patients without symptoms of reflux.

The AGA does so by adding a history of chronic GERD as merely an additional,

seventh, risk factor to the six risk factors for BE and EAC that have traditionally identified at-risk symptomatic patients recommended

for screening.

As a result, chronic symptomatic GERD is no longer a mandatory prerequisite and asymptomatic patients with three of the

other six risk factors (e.g., male sex, age greater than 50 years, White race, tobacco smoking, obesity, and family history of BE) are

now considered appropriate for screening.

Recent Developments - continued

Business - continued

Coverage Determination Update - CMS

In April 2022, a proposed

Local Coverage Determination (“LCD”) DL39256, entitled “Molecular Testing for Detection of Upper Gastrointestinal Metaplasia,

In April 2022, a proposed Local

Coverage Determination (“LCD”) DL39256, entitled “Molecular Testing for Detection of Upper Gastrointestinal Metaplasia,

Dysplasia, and Neoplasia” was published on the Center for Medicare and Medicaid Services (“CMS”) website by MAC Palmetto

The proposed LCD is a further step in Lucid’s efforts to secure Medicare coverage and payment for EsoGuard.

The proposed LCD is a further step in our efforts to secure Medicare coverage and payment for EsoGuard.

proposed LCD, which the CMS website explicitly characterizes as a “work in progress” for “public review,” outlines

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the MAC has had the opportunity to assess and consider the comments and input from the written comment period and the open meeting.

May 2022 LucidDx Labs, Inc.

the MAC Palmetto GBA release of a proposed LCD, Noridian Healthcare Solutions published a proposed LCD entitled Molecular Testing for

Detection of Upper Gastrointestinal Metaplasia, Dysplasia, and Neoplasia DL39262.

The proposed LCD mirrors the MAC Palmetto GBA proposed

We have used the Noridian Healthcare Solutions open meeting held on May 26, 2022, and the written comment period that ended on June

11, 2022 to bring the same essential information that we provided to the MAC Palmetto GBA to maintain consistency in our approach and

advocate appropriately.

BE-1 and BE-2 Clinical Trials

In 2021 Lucid Diagnostics Inc.

began conducting two concurrent clinical

trials, including each of:

the “EsoGuard screening study” (“BE-1”);

and the “EsoGuard case-control study”

(“BE-2”), to expand the clinical evidence for the technologies and to support a United States Food and Drug Administration

(“FDA”) pre-market approval (“PMA”) of the use of EsoGuard and EsoCheck as an in-vitro diagnostic medical device

However, in light of the recently published proposed Local Coverage Determination (“LCD”) DL39256, the

recently updated AGA guidance, and the ACG update to its clinical guideline that supports screening to prevent highly lethal esophageal

cancer (“EAC”) utilizing our EsoGuard® DNA Test on samples collected with our EsoCheck® Cell Collection Device, the

Company has determined to prioritize its clinical trial efforts and resources towards supporting studies that will help secure insurance

reimbursement adoption by government and private insurers.

Consequently, we have decided to delay for the time being the BE-1 trial while

continuing to enroll GERD patients with a previous diagnosis of nondysplastic BE, low-grade dysplasia, high-grade dysplasia, or EAC in

the BE-2 case-control study through Q2 2023.

Recent Developments - continued

Business - continued

In May 2022 LucidDx Labs, Inc.

entered into a participating provider agreement with MediNcrease Health Plans, LLC (“MediNcrease”).

A national directly-contracted, multi-specialty PPO provider network with over 8 million lives covered through its clients and payers,

which include regional and national health plans, insurance companies, third party administrators, self-insured employer groups, municipalities,

unions and other entities involved in the management of medical claims.

Pursuant to the agreement, persons covered by MediNcrease clients

and payers will have in-network access to Lucid’s EsoGuard® DNA test, the first and only commercially available test capable

of serving as a widespread tool to prevent esophageal cancer deaths through the early detection of esophageal precancer in at-risk chronic

heartburn patients.

The agreement provides rates of reimbursement as a percent of charges for services rendered to such covered persons

by LucidDx Labs, including the performance of the EsoGuard test.

A national directly-contracted,

multi-specialty PPO provider network with over 8 million lives covered through its clients and payers, which include regional and national

health plans, insurance companies, third party administrators, self-insured employer groups, municipalities, unions and other entities

involved in the management of medical claims.

Pursuant to the agreement, persons covered by MediNcrease clients and payers will have in-network

access to our EsoGuard® DNA test.

The agreement provides rates of reimbursement as a percent of charges for services rendered to such

covered persons by LucidDx Labs, including the performance of the EsoGuard® DNA test.

June and July 2022, LucidDx Labs Inc.

continued to expand its in-network base by entering into participating provider agreements

with Galaxy Health Network, Three Rivers Provider Network, and Prime Health Services (collectively, “the PPOs”), as well

as Alivio Health.

The PPOs cover millions of lives through the provider networks they have compiled for their clients, including

third-party administrators, insurance companies, self-insured companies, corporations, and government entities to access, while

Alivio provides its clients access to its specialized diagnostic laboratory network.

Pursuant to the agreement, persons covered by

the PPOs will have in-network access to our EsoGuard® DNA test.

The agreements provides rates of reimbursement as a percentage

of charges for services rendered to such covered persons by LucidDx Labs, including the performance of the EsoGuard test.

Company-Owned

Commercial Clinical Laboratory

our wholly-owned subsidiary, LucidDx Labs Inc., we entered into an asset purchase agreement (“APA”) dated February 25,

2022, with ResearchDx, Inc.

(“RDx”), an unrelated third-party - “APA-RDx”.

Under the APA-RDx, LucidDx Labs

acquired certain assets from RDx which were combined with LucidDx Labs purchased and leased property and equipment to establish

a Company-owned CLIA certified, CAP accredited commercial clinical laboratory capable of performing the EsoGuard® Esophageal DNA

assay, inclusive of DNA extraction, next generation sequencing (“NGS”) and specimen storage.

Prior to consummation of

the APA-RDx, RDx provided such laboratory services to us at its owned CLIA-certified, CAP-accredited clinical laboratory.

Recent Developments - continued

Business - continued

Lab Acquisition

February 2022, Lucid Diagnostics, Inc.

through its wholly owned subsidiary LucidDx Labs, Inc.

entered into an asset purchase agreement

(“APA”) with ResearchDx, Inc.

(“RDx”) Under the APA, LucidDx Labs acquired certain licenses and other related

assets necessary to operate a CLIA-certified, CAP-accredited clinical laboratory.

The acquired assets, together with certain additional

assets necessary to commence laboratory operations that were separately purchased by LucidDx Labs, will be used by Lucid to perform the

EsoGuard® Esophageal DNA assay.

Intercompany License

April 2022, we entered into an intercompany license between PAVmed and Lucid such that Lucid has been granted the rights to commercialize

EsoCure for treating dysplastic Barrett’s Esophagus, including a royalty arrangement whereby Lucid will pay PAVmed will be obligated

to fund ongoing development costs and cumulative patent expenses.

EsoCure will become part of an integrated suite of Lucid products addressing

EsoCure is in development as an “Esophageal Ablation Device” with the intent to allow a clinician to treat dysplastic

BE before it can progress to EAC, a highly lethal esophageal cancer, and to do so without the need for complex and expensive capital

We have successfully completed a pre-clinical feasibility animal study of EsoCure demonstrating excellent, controlled circumferential

ablation of the esophageal mucosal lining.

We plan to conduct additional development work and animal testing of EsoCure to support a

planned FDA 510(k) submission in the second half of 2022.

Intercompany Assignment

April 2022, following the approval from both the PAVmed and Lucid board of directors, the respective companies entered into an agreement

to transfer the CapNostics, LLC assets from PAVmed to Lucid as well as transferring the consulting agreement with the previous principal

owner of CapNostics, LLC.

The transfer price is $2.1 million for the assets.

On October 5, 2021, PAVmed Subsidiary Corporation, a wholly-owned

subsidiary of PAVmed Inc., acquired all of the outstanding common stock of CapNostics, LLC (“CapNostics”) for a total (gross)

purchase consideration of approximately $2.1 million of cash, paid at the closing of the transaction.

March 2022, Lucid Diagnostics, Inc.

entered into a committed equity facility with an affiliate of Cantor Fitzgerald (“Cantor”).

Under the terms of the facility, Cantor has committed to purchase up to $50 million of Lucid Diagnostics Inc.

common stock from time

to time at the request of Lucid Diagnostics Inc.

While there are distinct differences, the facility is structured similarly to a traditional

at-the-market equity facility, insofar as it allows Lucid Diagnostics Inc.

to raise primary capital on a periodic basis at prices based

on the existing market price.

of SARS-CoV-2 - COVID-19 Pandemic

in December 2019, there was an outbreak of a novel strain of a coronavirus occurred, with such coronavirus designated by the United Nations

World Health Organization (“WHO”) as the “Severe Acute Respiratory Syndrome Coronavirus 2” - or “SARS-CoV-2”.

The SARS-CoV-2 spread on a global basis to other countries, including the United States.

On March 11, 2020, the WHO declared a pandemic

resulting from SARS-CoV-2, with such pandemic commonly referred to by its resulting illness of coronavirus disease 2019, or “COVID-19”.

The COVID-19 pandemic is ongoing, and we continue to monitor the ongoing impact of the COVID-19 pandemic on the United States national

economy, the global economy, and our business.

COVID-19 pandemic may have an adverse impact on our operations, supply chains, and distribution systems and /or those of our contractors,

and increase our expenses, including as a result of impacts associated with preventive and precautionary measures being taken, restrictions

on travel, quarantine polices, and social distancing.

Such adverse impact may include, for example, the inability of our employees and

/or those of our contractors to perform their work or curtail their services provided to us.

expect the significance of the COVID-19 pandemic, including the extent of its effect on our consolidated financial condition and consolidated

operational results and cash flows, to be dictated by the success of United States and global efforts to mitigate the spread of and /or

to contain the SARS-CoV-2 and the impact of such efforts.

addition, the spread of the SARS-CoV-2 has disrupted the United States’ healthcare and healthcare regulatory systems which could

divert healthcare resources away from, or materially delay United States Food and Drug Administration (“FDA”) approval with

respect to our products.

our clinical trials have been and may be further affected by the COVID-19 pandemic, as site initiation and patient enrollment may be

delayed, for example, due to prioritization of hospital resources toward the virus and /or illness response, as well as travel restrictions

imposed by governments, and the inability to access clinical test sites for initiation and monitoring.

COVID-19 pandemic may have an adverse impact on the economies and financial markets of many countries, including the USA, resulting in

an economic downturn that could adversely affect demand for our products and services and /or our product candidates.

we are continuing to monitor and assess the effects of the COVID-19 pandemic on our business, the ultimate impact of the COVID-19 pandemic

(or a similar health epidemic) is highly uncertain and subject to change, and therefore, its impact on our consolidated financial condition,

consolidated results of operations, and /or consolidated cash flows, the adverse impact could be material.

Payor Billing and Revenue Cycle Management

As part of the transition to

our own Company-owned commercial clinical laboratory, we also contracted with a revenue cycle management (“RCM”) service provider

to submit third-party reimbursement claims on our behalf.

The RCM service provider will have complete oversight of payer claims, appeals

processes, patient billing, online payment collection, and claims tracking.

With the appropriate licenses and certifications for billing

and credentialing secured, and our recently having put in place the necessary back office systems, claims for approximately 1,000 tests

performed since the establishment of our own lab are now being processed, including 850 tests in the three months ended June 30, 2022

(although not having yet secured reimbursed rates from Medicare and Medicaid, the Company does not know the amount per claim it will receive

from payors).

Refer to Note 3 of our Condensed Consolidated Financial Statements for more information on Revenue from Contracts

with Customers.

Presently, recognized revenue for GAAP purposes is subject to actual amounts collected during the period.

Accordingly, since the RCM began submitting claims processed from our own lab subsequent to June 30, 2022, there were no collections during

the three months ended June 30, 2022.

EsoCure License Agreement with PAVmed Inc.

EsoCure has been in development

as an esophageal ablation device by PAVmed.

In April 2022, following the approval from both ours and the PAVmed Inc.

boards of directors,

we and PAVmed Inc.

entered into an intercompany license agreement (“EsoCure License Agreement”), pursuant to which we were

granted the rights to commercialize EsoCure.

The EsoCure License Agreement, includes a royalty arrangement whereby we will pay PAVmed

a 5% royalty on all EsoCure sales up to $100 million per calendar year, and an 8.0% royalty on annual sales in excess of $100 million

per calendar year.

We are obligated to reimburse PAVmed Inc.

for any ongoing development costs and cumulative patent expenses associated

with the licensed technology.

On October 5, 2021, PAVmed Subsidiary Corp, a wholly-owned

subsidiary of PAVmed Inc., acquired 100% of the outstanding membership interest of CapNostics, LLC (“CapNostics”), an unrelated

third-party, for total (gross) purchase consideration of approximately $2.1 million in cash, paid at the closing of the transaction.

Subsequently,

Lucid Diagnostics Inc.

and PAVmed Subsidiary Corp entered into an agreement, effective April 1, 2022, pursuant to which PAVmed Subsidiary

Corp assigned to Lucid Diagnostics Inc.

100% of the membership interest in CapNostics, LLC, inclusive of an acquired defensive technology

intangible asset, and a $2.1 million payment obligation Due To:

Additionally, Lucid Diagnostics Inc.

was also assigned on a prospective basis effective April 1, 2022, the consulting

agreement with the previous principal owner of CapNostics, LLC.

of Operations

was recognized with respect to the EsoGuard Commercialization Agreement, dated August 1, 2021, between the Company’s majority-owned

subsidiary, Lucid Diagnostics Inc., and ResearchDX Inc.

(“RDx”), a CLIA certified commercial laboratory service provider.

On February 25, 2022, the EsoGuard Commercialization Agreement was terminated upon the execution of an Asset Purchase

Agreement between LucidDx Labs Inc., a wholly-owned subsidiary of Lucid Diagnostics Inc.

Revenue was recognized with respect to the EsoGuard

Commercialization Agreement, dated August 1, 2021, between the Company and ResearchDx Inc.

(“RDx”), a CLIA certified commercial

laboratory service provider.

On February 25, 2022, the EsoGuard Commercialization Agreement was terminated upon the execution of an Asset

Purchase Agreement between the Company’s wholly-owned subsidiary LucidDx Labs Inc.

cost of revenue recognized with respect to the revenue recognized under the EsoGuard Commercialization Agreement is inclusive of:

28 unchanged sentences

for the development of our technologies and conducting clinical trials, including:

costs charged to us by various external contract research organizations we contract with

to conduct preclinical studies and engineering studies;

associated with regulatory filings;

license fees;

of laboratory supplies and acquiring, developing, and manufacturing preclinical prototypes;

design engineering studies;

associated with conducting clinical trials for our EsoGuard diagnostic assay;

Fee allocated to research and development, as such MSA Fee are discussed below.

costs charged to us by various external contract research organizations we contract with to conduct preclinical studies and engineering

costs associated with regulatory filings;

patent license fees;

cost of laboratory supplies and acquiring, developing,

and manufacturing preclinical prototypes;

product design engineering studies;

fees associated with conducting clinical trials for

our EsoGuard diagnostic assay;

MSA Fee allocated to research and development, as such

MSA Fee are discussed below.

plan to incur research and development expenses for the foreseeable future as we continue the development of our existing products as

2 unchanged sentences

improvements or extending the utility of the lead products in our pipeline, including EsoCheck and EsoGuard.

Presentation of Dollar Amounts

All dollar amounts in this Management’s

Discussion and Analysis of Financial Condition and Results of Operations are presented in thousands of dollars, if not otherwise indicated

as being presented as dollars in millions, except for the number of shares and per share amounts.

Months ended March 31, 2022 as

compared to three months ended March 31, 2021

the three months ended March 31, 2022, revenue was $0.2 million as compared to no revenue in the corresponding period in the prior

The $0.2 million increase principally relates to our EsoGuard Commercialization Agreement, dated August 1, 2021, which resulted

in revenue recognition of $0.1 million per month beginning August 2021 - through the February 25, 2022 termination date of such agreement.

the three months ended March 31, 2022, cost of revenue was approximately $0.4 million, compared to no cost of revenue in the corresponding

period in the prior year.

The $0.4 million increase principally relates to costs associated with the EsoGuard Commercialization Agreement

of Dollar Amounts

dollar amounts in this Management’s Discussion and Analysis of Financial Condition and Results of Operations are presented in thousands

of dollars, if not otherwise indicated as being presented as dollars in millions, except for the number of shares and per share amounts.

of Operations - continued

months ended June 30, 2022 as compared to three months ended June 30, 2021

Company did not recognize revenue nor cost of revenue during the three months ended June 30, 2022 and June 30, 2021.

and marketing expenses

the three months ended March 31, 2022, sales and marketing costs were approximately $3.3 million, compared to $0.7 million

for the corresponding period in the prior year.

the three months ended June 30, 2022, sales and marketing costs were approximately $3.9 million, compared to $1.0 million for the corresponding

period in the prior year.

The net increase of $2.9 million was principally related to:

approximately

$2.2 million increase in compensation related costs, including stock-based compensation

of approximately $0.4 million in stock based compensation with respect to restricted stock awards (“RSA”) grants under the Lucid Diagnostics Inc.

2018 Long-Term

Incentive Equity Plan (“Lucid Diagnostics Inc.

2018 Equity Plan”) to Lucid Diagnostics and PAVmed

employees and non-employees, and an increase in stock options granted corresponding with

the increase in the number of employees principally related to an increase in headcount;

● approximately

$0.5 million increase in outside professional services related to EsoCheck, EsoGuard

and consulting and professional services fees.

$2.5 million increase in compensation related costs, including stock-based compensation of approximately $0.4 million in stock based

compensation with respect to restricted stock awards (“RSA”) grants under the Lucid Diagnostics Inc.

2018 Equity Plan to Lucid Diagnostics and PAVmed employees and non-employees,

and an increase in stock options granted corresponding with the increase in the number of employees principally related to an increase

in headcount;

approximately

$0.1 million decrease in the MSA fee allocation from PAVmed related to the

growth and expansion of Lucid’s business and the services incurred through PAVmed.

$0.5 million increase in outside professional services related to EsoCheck, EsoGuard and consulting and professional services fees;

approximately $0.1 million

decrease in the MSA fee allocation from PAVmed related to the growth and expansion of our business and the services incurred

through PAVmed.

and administrative expenses

the three months ended March 31, 2022, general and administrative costs were approximately $5.7 million, compared to $1.2

million for the corresponding period in the prior year.

the three months ended June 30, 2022, general and administrative costs were approximately $7.3 million, compared to $3.1 million for

the corresponding period in the prior year.

The net increase of $4.2 million was principally related to:

approximately

$1.6 million increase in compensation related costs, including stock-based compensation

of approximately $1.4 million in stock based compensation with respect to

RSA grants under the Lucid Diagnostics Inc.

2018 Long-Term Incentive Equity Plan (“Lucid

Diagnostics Inc.

2018 Equity Plan”) to Lucid Diagnostics and PAVmed employees

and non-employees, and an increase in stock options granted corresponding with the increase

$0.5 million increase in compensation related costs, including stock-based compensation of approximately $0.2 million with respect to restricted stock awards (“RSA”) grants under the Lucid Diagnostics Inc.

2018 Equity Plan to

Lucid Diagnostics and PAVmed employees and non-employees, and an increase in stock options granted corresponding with the increase

in the number of employees principally related to an increase in headcount;

approximately

$2.5 million in consulting services related to patents, regulatory compliance, legal

processes for contract review, transition of public relations and investor relations

firms, and public company expenses;

● approximately

$0.4 million increase in the MSA fees, after allocation, from PAVmed related to the

growth and expansion of our business and the services incurred through PAVmed.

Three Months ended March 31, 2022 as compared to three months ended

March 31, 2021 - continued

$2.1 million increase in consulting services related to patents, regulatory compliance, legal processes for contract review,

transition of public relations and investor relations firms, and public company expenses;

approximately $0.6 million of amortization expense related to our intangible

approximately $0.3 million

increase in the MSA fees, after allocation, from PAVmed related to the growth and expansion of our business and the services incurred

through PAVmed;

approximately $0.7 million

increase in general business expenses.

and development expenses

the three months ended March 31, 2022, research and development costs were approximately $2.9 million, compared to $1.8

million for the corresponding period in the prior year.

the three months ended June 30, 2022, research and development costs were approximately $3.4 million, compared to $1.9 million for the

corresponding period in the prior year.

The net increase of $1.5 million was principally related to:

approximately

$0.8 million increase in development costs, particularly in clinical trial activities

and outside professional and consulting fees with respect to EsoCheck, EsoCure and EsoGuard;

$1.4 million increase in development costs, particularly in clinical trial activities and outside professional and consulting fees

with respect to EsoCheck, EsoCure and EsoGuard;

approximately $0.1 million

increase in the MSA fee allocation from PAVmed related to the growth and expansion of our business and the services incurred

through PAVmed.

our accompanying unaudited condensed consolidated financial statements for each of:

Note 4 , Related Party Transactions, for a

discussion of the consulting fee expense and stock based compensation expense recognized with respect to the Physician Inventors consulting

agreements and stock options and restricted stock awards;

and the MSA between Lucid Diagnostics and PAVmed;

and Note 11 , Stock-Based

Compensation , for information regarding each of the Lucid Diagnostics 2018 Equity Plan and the PAVmed Inc.

2014 Equity Plan.

of Operations - continued

months ended June 30, 2022 as compared to six months ended June 30, 2021

In the six months ended June

30, 2022, revenue was $0.2 million as compared to no revenue in the corresponding period in the prior year.

The $0.2 million increase

relates to our EsoGuard Commercialization Agreement, dated August 1, 2021, which resulted in revenue recognition of $0.1 million per month

commencing August 2021 and ending February 2022 upon the February 25, 2022 termination date of such agreement.

the six months ended June 30, 2022, cost of revenue was approximately $0.4 million, compared to no cost of revenue in the corresponding

period in the prior year.

The $0.4 million increase principally relates to costs associated with the EsoGuard Commercialization Agreement

and marketing expenses

the six months ended June 30, 2022, sales and marketing costs were approximately $7.2 million, compared to $1.7 million for the corresponding

period in the prior year.

The net increase of $5.5 million was principally related to:

approximately

$0.1 million increase in compensation related costs and related to expanded clinical

and engineering staff;

$4.8 million increase in compensation related costs, including stock-based compensation of approximately $0.8 million in stock based

compensation with respect to restricted stock awards (“RSA”) grants under the Lucid Diagnostics Inc.

2018 Equity Plan to Lucid Diagnostics and PAVmed employees and non-employees,

and an increase in stock options granted corresponding with the increase in the number of employees principally related to an increase

in headcount;

approximately $0.9 million

increase in outside professional services related to EsoCheck, EsoGuard and consulting and professional services fees;

approximately $0.2 million

decrease in the MSA fee allocation from PAVmed related to the growth and expansion of our business and the services incurred

through PAVmed.

and administrative expenses

the six months ended June 30, 2022, general and administrative costs were approximately $13.2 million, compared to $4.3 million for the

corresponding period in the prior year.

The net increase of $8.9 million was principally related to:

approximately

$0.2 million increase in the MSA fee allocation from PAVmed related to the growth

and expansion of Lucid’s business and the services incurred through PAVmed.

$2.0 million increase in compensation related costs, including stock-based compensation of approximately $1.6 million in stock based

compensation with respect to restricted stock awards (“RSA”) grants under the Lucid Diagnostics Inc.

2018 Equity Plan to Lucid Diagnostics and PAVmed employees and non-employees,

and an increase in stock options granted corresponding with the increase in the number of employees principally related to an increase

in headcount;

approximately $4.1 million

increase in consulting services related to patents, regulatory compliance, legal processes for contract review, transition of public

relations and investor relations firms, and public company expenses;

approximately $0.6 million of amortization expense related to our intangible

approximately $0.7 million

increase in the MSA fees, after allocation, from PAVmed related to the growth and expansion of our business and the services incurred

through PAVmed;

approximately $1.5 million

increase general business expenses.

Results of Operations - continued

Six months ended June 30, 2022 as compared to six months ended June

30, 2021 - continued

and development expenses

the six months ended June 30, 2022, research and development costs were approximately $6.3 million, compared to $3.6 million for the

corresponding period in the prior year.

The net increase of $2.7 million was principally related to:

approximately

$2.2 million increase in development costs, particularly in clinical trial activities and outside professional and consulting fees

with respect to EsoCheck, EsoCure and EsoGuard;

approximately $0.2 million

increase in compensation related costs and related to expanded clinical and engineering staff;

approximately $0.3 million

increase in the MSA fee allocation from PAVmed related to the growth and expansion of Lucid’s business and the services incurred

through PAVmed.

our accompanying unaudited condensed consolidated financial statements for each of:

Note 5 , Related Party Transactions,

for a discussion of the consulting fee expense and stock based compensation expense recognized with respect to the Physician

Inventors consulting agreements and stock options and restricted stock awards;

Note 4 , Related Party Transactions, for a

discussion of the consulting fee expense and stock based compensation expense recognized with respect to the Physician Inventors consulting

agreements and stock options and restricted stock awards;

and the MSA between Lucid Diagnostics and PAVmed;

and Note 11 , Stock-Based Compensation , for information regarding each of the Lucid Diagnostics 2018 Equity Plan

and the PAVmed Inc.

and Note 11 , Stock-Based

Compensation , for information regarding each of the Lucid Diagnostics 2018 Equity Plan and the PAVmed Inc.

2014 Equity Plan.

and Capital Resources

have financed our operations principally through advances from PAVmed and through the issuance of common stock in our initial public

offering (“IPO”).

We are subject to all of the risks and uncertainties typically faced by medical device and diagnostic companies

that devote substantially all of their efforts to the commercialization of their initial product and services and ongoing R&D activities

and clinical trials.

We expect to continue to experience recurring losses from operations, and will continue to fund our operations with

debt and/or equity financing transactions.

Notwithstanding, however, with the cash on-hand as of March 31, 2022, we expect to be able

to fund our future operations for one year from the date of the issue of our unaudited condensed consolidated financial statements, as

included herein in this Quarterly Report on Form 10-Q for the period ended March 31, 2022.

our inception in May 2018 through our IPO in October 2021, our operations were been funded by PAVmed providing

working capital cash advances and the payment by PAVmed of certain operating expenses on-our-behalf.

Additionally, our daily operations

have been and continue to be principally managed by personnel employed by PAVmed, for which we incur a MSA Fee expense according

to the provisions of the MSA discussed above.

of March 31, 2022, we had a Due To:

payment obligation liability of an aggregate of approximately $1.8 million payable

to reimburse for employee related costs and certain operating expenses paid by PAVmed Inc.

on our behalf.

See our accompanying

unaudited condensed consolidated financial statements Note 6, Due To PAVmed Inc.

Diagnostics Inc.

Committed Equity Facility

current operational activities are principally focused on the commercialization of EsoGuard.

We are presently focused on expanding commercialization

across multiple sales channels, including:

the communication and education of medical practitioners and clinicians of the EsoGuard LDT;

and establishing “Lucid Diagnostics Test Centers” for the collection of cell samples using EsoCheck.

Additionally, we are

developing expanded clinical evidence to support recommendation of our products in professional society guidelines and insurance reimbursement

adoption by government and private insurers.

Further, the Company is also pursuing development of other products and services, including

EsoCure™, an esophageal ablation device.

ability of the Company to generate revenue depends upon the Company’s ability to successfully advance the commercialization of

EsoGuard, while also completing the clinical studies, its product and service development, and the necessary regulatory approval thereof.

There are no assurances, however, the Company will be able to obtain an adequate level of financial resources required for the long-term

commercialization and development of its products and services.

to our initial public offering (“IPO”) of our common stock in October 2021, our operations were funded by PAVmed Inc., inclusive

of providing working capital cash advances and the payment of certain operating expenses on-our-behalf.

Additionally, certain operations

of Lucid Diagnostics Inc.

continue to be managed by personnel of PAVmed Inc., for which we incur expense according to the provisions

of a Management Services Agreement between us and PAVmed Inc.

are subject to all of the risks and uncertainties typically faced by medical device and diagnostic companies that devote substantially

all of their efforts to the commercialization of their initial product and services and ongoing research and development activities and

conducting clinical trials.

We expect to continue to experience recurring losses from operations and will continue to fund our operations

with debt and equity financing transactions.

Notwithstanding, however, with the cash on-hand as of the date hereof and committed equity

sources of financing, the Company expects to be able to fund its operations and meet its financial obligations as they become due for

the one year period from the date of the issue of the Company’s unaudited condensed consolidated financial statements, as included

herein in this Quarterly Report on Form 10-Q for the period ended June 30, 2022.

Equity Facility - March 28, 2022

March 28, 2022, we entered into a committed equity facility with an affiliate of Cantor Fitzgerald (“Cantor”).

terms of the facility, Cantor has committed to purchase up to $50 million in our shares of our common stock from time to time at our

While there are distinct differences, the facility is structured similarly to a traditional at-the-market equity facility, insofar

as it allows the Company to raise primary equity capital on a periodic basis at prices based on the existing market price.

the initial satisfaction of the conditions to Cantor’s obligation to purchase shares under the facility, including that a registration

statement registering the resale by Cantor of the Shares under the Securities Act is declared effective by the SEC and a final prospectus

relating thereto is filed with the SEC, we will have the right, but not the obligation, from time to time at our sole discretion until

the first day of the month next following the expiration of the 36-month period after the effective date of the registration statement,

to direct Cantor to purchase shares in accordance with the terms of the facility, by delivering written notice to Cantor prior to the

commencement of trading on any trading day, subject to certain maximum amounts.

The purchase price of the shares will be 96% of the volume

weighted average price of the shares of common stock during the trading date on which we have timely delivered written notice to Cantor

directing it to purchase shares under the facility.

will not sell, and Cantor will not purchase, any shares pursuant to the facility, if the aggregate number of shares of common stock issued

pursuant to the facility would exceed 7,482,763 shares of common stock, unless we obtain approval of our stockholders for the sale of

shares in excess of such amount.

In addition, we will not sell, and Cantor will not purchase, any shares pursuant to the facility, which,

when aggregated with all other shares of common stock then beneficially owned by Cantor and its affiliates, would result in the beneficial

ownership by Cantor and its affiliates of more than 4.99% of our outstanding voting power or shares of common stock.

connection with the execution of the agreement for the facility, we agreed to pay Cantor $1.0 million as consideration for its irrevocable

commitment to purchase the shares upon the terms and subject to the satisfaction of the conditions set forth in such agreement.

pursuant to the agreement, e agreed to reimburse Cantor for certain of its expenses.

We also entered into a registration rights agreement

We have the right to terminate the agreement at any time after initial satisfaction of the conditions to Cantor’s

obligation to purchase shares under the facility, at no cost or penalty, upon three trading days’ prior written notice.

terms of the committed equity facility, Cantor has committed to purchase up to $50 million of our common stock from time to time at our

While there are distinct differences, the committed equity facility is structured similarly to a traditional at-the-market equity

facility, insofar as it allows us to raise primary equity capital on a periodic basis at prices based on the existing market price.

of June 30, 2022, there were no shares of common stock issued under the committed equity facility.

Subsequent to June 30, 2022, as of

August 10, 2022, under the committed equity facility, a total of 308,152 shares of common stock of the Company were issued for proceeds

of approximately $927.

our inception in May 2018 through our IPO in October 2021, our operations were funded by PAVmed providing working capital cash advances

and the payment by PAVmed of certain operating expenses on-our-behalf.

Additionally, our daily operations have been and continue to be

principally managed by personnel employed by PAVmed, for which we incur a MSA Fee expense according to the provisions of the MSA discussed

of June 30, 2022, we had a Due To:

payment obligation liability of an aggregate of approximately $2.4 million payable for

the transfer of CapNostics LLC, and for reimbursement of employee related costs and certain operating expenses paid by PAVmed Inc.

See our accompanying unaudited condensed consolidated financial statements Note 5, Due To PAVmed Inc.

Accounting Policies and Significant Judgments and Estimates

discussion and analysis of our (unaudited) financial condition and consolidated results of operations is based on our unaudited condensed

consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles in the United

States of America (“U.S.

The preparation of these unaudited condensed consolidated financial statements requires

us to make estimates and assumptions affecting the reported amounts of assets, liabilities, and equity, along with the disclosure of

contingent assets and liabilities at the date of the unaudited condensed consolidated financial statements and the reported amounts of

expenses during the corresponding periods.

discussion and analysis of our (unaudited) financial condition and consolidated results of operations is based on our unaudited

condensed consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles in

the United States of America (“U.S.

The preparation of these unaudited condensed consolidated financial

statements requires us to make estimates and assumptions affecting the reported amounts of assets, liabilities, and equity, along

with the disclosure of contingent assets and liabilities at the date of the unaudited condensed consolidated financial statements

and the reported amounts of expenses during the corresponding periods.

In accordance with U.S.

GAAP, we base our estimates on historical experience and on various

other assumptions we believe are reasonable under the circumstances.

Actual results may differ from these estimates under different assumptions

or conditions.

Please see Note 2, Summary of Significant Accounting Policies and Recent Accounting Standards Updates , of our unaudited

condensed consolidated financial statements included herein in this Form 10-Q, for a summary of significant accounting policies.

GAAP, we base our estimates on

historical experience and on various other assumptions we believe are reasonable under the circumstances.

Actual results may differ

from these estimates under different assumptions or conditions.

Our critical accounting policies are as disclosed in the

Company’s annual report on Form 10-K for the year ended December 31, 2021 as filed with the SEC on April 6, 2022, except as

otherwise noted in Note 2, Summary of Significant Accounting Policies and Recent Accounting Standards Updates , of our

unaudited condensed consolidated financial statements included herein in this Form 10-Q.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis