What changed in this filing

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Item 1. Business

2023-03-14 compared with 2022-04-06 · 584 added, 785 removed, 380 unchanged (78% of the section changed)

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its subsidiaries.

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

The technologies were highlighted

in the NCI’s Annual Plan and Budget Proposal for FY2020 to Congress as one of the year’s significant advances in cancer prevention.

We believe EsoGuard could have as great an impact in preventing EAC deaths as widespread Pap test screening has had in preventing cervical

cancer deaths.

was formed in May 2018 as a subsidiary of our parent company, PAVmed Inc.

PAVM) (“PAVmed”), to license the

technologies underlying EsoGuard and EsoCheck from Case Western Reserve University (“CWRU”).

For a description of the license

agreement with CWRU, as amended to date (the “License Agreement”), please refer to “ Business—License

Agreement .” Since our inception we have been managed pursuant to a management services agreement with PAVmed and have financed

our operations through working capital advances from PAVmed.

For a description of the PAVmed management services agreement and financing

of our operations, please refer to “ Certain Transactions—Related Party Transactions .”

October 14, 2021, Lucid completed an initial public offering (“IPO”) of its common stock under an effective registration

statement on Form S-1 (SEC File No.

333-259721), wherein a total of 5.0 million IPO shares of common stock of Lucid Diagnostics Inc.

were issued, with such total IPO shares inclusive of 571,428 shares issued to PAVmed , at an IPO offering price of $14.00 per share,

resulting gross proceeds of $70.0 million, before underwriting fees of $4.9 million, and approximately $0.7 million of offering costs

incurred by Lucid.

just over three years since our inception, we have advanced the technologies underlying EsoGuard and EsoCheck from the academic research

laboratory to commercial products within scalable business model.

EsoGuard is commercialized in the U.S.

as a Laboratory Developed Test

(“LDT”) and was granted final Medicare payment determination of $1,938.01, effective January 1, 2021.

commercialized in the U.S.

as a 510(k)-cleared esophageal cell collection device.

EsoGuard, used with EsoCheck, was granted U.S.

and Drug Administration (“FDA”) Breakthrough Device designation and is the subject of two large, actively enrolling,

international multicenter PMA clinical trials.

proceeds of the IPO offering and transitioning to a public company was aimed at driving a growth strategy focused on expanding commercialization

across multiple channels, including expanding the number of our own testing centers, and expanding the clinical evidence of our products’

efficacy to support our ongoing regulatory, reimbursement and commercial efforts, as well as recommendation of our products in clinical

practice guidelines.

EsoCheck device received 510(k) marketing clearance from the FDA, in June 2019 and European CE Mark Certification in May 2021 as an esophageal

cell collection device.

EsoGuard has been established as a Laboratory Developed Test (“LDT”), completed European CE Mark

Certification in June 2021, and was launched commercially in December 2019 after Clinical Laboratory Improvement Amendment (“CLIA”)

certification and College of American Pathologists (“CAP”) accreditation of the test at Lucid Diagnostics commercial

diagnostic laboratory partner ResearchDx Inc.

(“RDx”), headquartered in Irvine, California.

In August 2021, Lucid Diagnostics

launched a strategic partnership with direct-to-consumer telemedicine company UpScriptHealth to support our commercialization efforts.

Also in August 2021, we tested our first patients referred by primary care physicians (“PCPs”) in three Lucid Test Centers

opened in the Phoenix metropolitan area.

Subsequently,

on February 25, 2022, our new, wholly owned subsidiary, LucidDx Labs Inc.

(“LucidDx Labs”), acquired from RDx,

certain licenses and other related assets necessary for LucidDx Labs to operate its own new CLIA-certified, CAP-accredited clinical laboratory

located in Lake Forest, CA.

Since March 2022, we have conducted EsoGuard testing at our owned laboratory.

and EsoCheck and EsoCure

and EsoCheck are based on patented technology licensed from CWRU.

and have been developed to provide an accurate, non-invasive, patient-friendly

screening test for the early detection of EAC and Barrett’s Esophagus (“BE”), including dysplastic BE and related pre-cursors

to EAC in patients with chronic GERD.

is a bisulfite-converted next-generation sequencing (“NGS”) DNA assay performed on surface esophageal cells collected with

It quantifies methylation at 31 sites on two genes, Vimentin (VIM) and Cyclin A1 (CCNA1).

The assay was evaluated in a 408-patient

multicenter case-control study published in Science Translational Medicine and showed greater than 90% sensitivity and specificity at

detecting esophageal precancer and all conditions along the BE-EAC spectrum, including on samples collected with EsoCheck (Moinova, et

believe that our flagship product, the EsoGuard Esophageal DNA Test, performed on samples collected with the EsoCheck Esophageal Cell

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

tool to prevent esophageal adenocarcinoma (“EAC”) deaths, through early detection of esophageal precancer in at-risk gastroesophageal

reflux disease (“GERD,” also commonly known as chronic heartburn, acid reflux or simply reflux) patients.

is a bisulfite-converted next-generation sequencing (NGS) DNA assay performed on surface esophageal cells collected with EsoCheck.

quantifies methylation at 31 sites on two genes, Vimentin (VIM) and Cyclin A1 (CCNA1).

The assay was evaluated in a 408-patient multicenter

case-control study published in Science Translational Medicine and showed greater than 90% sensitivity and specificity at detecting esophageal

precancer and all conditions along the BE-EAC spectrum, including on samples collected with EsoCheck (Moinova, et al.

Sci Transl Med.

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EsoGuard is commercially available in the U.S.

as a LDT performed at our CLIA-certified

and CAP-certified laboratory partner, RDx, which does business as “PacificDx.” Cell samples, including those collected

with EsoCheck, as discussed below, are sent to RDx, for testing and analyses using our proprietary EsoGuard NGS DNA assay.

is an FDA 510(k) and CE Mark cleared noninvasive swallowable balloon capsule catheter device capable of sampling surface esophageal cells

in a less than five-minute office.

It consists of a vitamin pill-sized rigid plastic capsule tethered to a thin silicone catheter from

which a soft silicone balloon with textured ridges emerges to gently swab surface esophageal cells.

When vacuum suction is applied, the

balloon and sampled cells are pulled into the capsule, protecting them from contamination and dilution by cells outside of the targeted

region during device withdrawal.

We believe this proprietary Collect+Protect™ technology makes EsoCheck the only noninvasive esophageal

cell collection device capable of such anatomically targeted and protected sampling.

December 2019, we secured “gapfill” determination for the EsoGuard PLA code 0114U through the United States Department of

Health and Human Services (“HHS”) Centers for Medicare and Medicaid Services (“CMS”) Clinical Laboratory Fee

Schedule (“CLFS”) process, which has allowed us to engage directly with Medicare contractor Palmetto GBA, LLC and its MolDx

Program on CMS payment and coverage.

In October 2020, CMS granted EsoGuard final Medicare payment determination of $1,938.01, effective

January 1, 2021.

We are still awaiting Medicare local coverage determination from MolDx, which we understand is working to clear a significant

backlog of reviews.

are also aggressively pursuing EsoGuard U.S.

private payor payment and coverage.

We held advisory board meetings with medical directors

of major insurers to obtain feedback and guidance on the type of clinical data that will be helpful in securing payment and coverage.

Although the claim cycle can be prolonged during the early commercialization of a new test, RDx is starting to receive out-of-network

private insurance payments on our behalf.

initial EsoGuard commercialization efforts focused on gastroenterology (“GI”) physicians who have generally embraced

our message that EsoGuard has the potential to expand the funnel of BE-EAC patients who will need long term EGD surveillance and, potentially,

treatment with endoscopic esophageal ablation.

We have previously relied upon a hybrid sales model with full-time sales management and

approximately fifty independent sales representatives.

We significantly expanded our full-time commercial team in 2021 and are actively

recruiting full-time territory managers and sales representatives nationwide.

Our Lucid Vice President of Sales and three Area Sales

Directors (“ASD”) oversee a growing number of Sales Representatives, Market Development Mangers (“MDM”) and Clinical

EsoGuard testing has accelerated as pandemic-related healthcare facility limitations have eased.

EsoGuard commercialization efforts span multiple channels including targeting primary care physicians and consumers in addition to GI

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.

We have expanded our test centers

to include Salt Lake City, Utah, Henderson, Nevada, and Denver, Colorado.

We are currently expanding into Portland, Oregon, Seattle,

Washington, and Boise, Idaho.

have also established an EsoGuard Telemedicine Program, in partnership with UpScript, LLC, an independent third-party telemedicine provider,

that accommodates EsoGuard self-referrals from direct-to-consumer marketing.

active clinical research and development program seeks to expand the clinical evidence of our products’ efficacy to support our

ongoing regulatory, reimbursement and commercial efforts, including an FDA PMA submission for approval of EsoGuard and EsoCheck used

together as an in vitro device (“IVD”), as currently, EsoGuard and EsoCheck are permitted to be marketed separately,

but not in combination.

We are actively enrolling patients in two international multicenter clinical trials to support FDA PMA approval

of EsoGuard, used with EsoCheck, as an IVD indicated to detect NDBE.

ESOGUARD-BE-1 is a screening study which will enroll approximately

500 to 900 male GERD patients over 50 years of age with one other risk factor.

ESOGUARD-BE-2 is a case control study which will enroll

approximately 500 male GERD patients with a previous diagnosis of NDBE, LGD, HGD, or EAC, along with normal controls.

February 2020, we received FDA “Breakthrough Device Designation” for EsoGuard as an in-vitro diagnostic (“IVD”)

medical device.

The FDA Breakthrough Device Program was created to offer patients more timely access to breakthrough technologies

which provide for more effective treatment or diagnosis of life-threatening or irreversibly debilitating human disease or conditions

by expediting their development, assessment and review through enhanced communications and more efficient and flexible clinical study

design, including more favorable pre/post market data collection balance.

The Centers for Medicare and Medicaid Services and the United

States Congress continue to work to provide an expedited coverage pathway for emerging technologies.

have received ISO 13485:2016 certification for Lucid’s quality management system and received CE Mark certification for EsoCheck

in May 2021 which allows it to be marketed in CE Mark European countries, which include the European Economic Area (the EU, Norway, Iceland,

and Lichtenstein), Switzerland, and, until July 1, 2023, the United Kingdom.

In June 2021, we completed the European Directive 98/79/EC

for In-Vitro Diagnostic Medical Devices (“IVDD”) CE Mark certification for EsoGuard after Lucid and its European Union (“EU”)

authorized representative completed the Commission of the European Union (“EC”) declaration of conformity procedure, including

the associated technical documentation, ensuring and declaring EsoGuard meets the essential requirements of the IVDD.

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 equipment.

We have successfully

completed a pre-clinical feasibility animal study of EsoCure demonstrating excellent, controlled circumferential ablation of the esophageal

mucosal lining.

We have also completed an acute and survival animal study of EsoCure™ Esophageal Ablation Device, 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.

March 2022, both the PAVmed and Lucid board of directors approved entering into an intercompany license between PAVmed and Lucid such

that Lucid will be granted the rights to commercialize EsoCure for the treating dysplastic Barrett’s Esophagus.

Under the intercompany

license, Lucid will pay PAVmed a 5% royalty on all EsoCure sales up to $100 million per calendar year, and 8% above that threshold.

Lucid will be obligated to fund ongoing development costs and cumulative patent expenses.

EsoCure will become part of an integrated

suite of Lucid products addressing BE-EAC.

Furthermore, should PAVmed acquire businesses or commercial products or develop technologies

that may be partially or wholly synergistic with Lucid’s lead products and therefore provide the opportunity to create value, Lucid

may also seek to negotiate an arms-length commercial license from PAVmed to market the relevant commercial products that may originate

from PAVmed’s development or acquisition initiatives.

To that end, In March 2022, both the PAVmed and Lucid board of directors

have approved entering into an intercompany purchase and sale of 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, the same purchase price paid by PAVmed’s subsidiary.

– Opportunity, Solution, and Strategy

a pathologic condition in which stomach fluid, including acid, inappropriately refluxes into the lower esophagus, is ubiquitous and can

lead to highly lethal EAC.

Our opportunity is to prevent EAC deaths through the early detection of esophageal precancer and cancer in

millions of at-risk GERD patients.

as a Laboratory Developed Test (LDT) performed at our

CLIA-certified laboratory.

Cell samples, including those collected with EsoCheck, as discussed below, are sent to our laboratory, for

testing and analyses using our proprietary EsoGuard NGS DNA assay.

is an FDA 510(k) and CE Mark cleared noninvasive swallowable balloon capsule catheter device capable of sampling surface esophageal

cells in a less than five-minute office procedure.

It consists of a vitamin pill-sized rigid plastic capsule tethered to a thin silicone

catheter from which a soft silicone balloon with textured ridges emerges to gently swab surface esophageal cells.

suction is applied, the balloon and sampled cells are pulled into the capsule, protecting them from contamination and dilution by

cells outside of the targeted region during device withdrawal.

We believe this proprietary Collect+Protect™ technology makes

EsoCheck the only noninvasive esophageal cell collection device capable of such anatomically targeted and protected

and EsoCheck are based on patented technology licensed by Lucid from Case Western Reserve University (“CWRU”).

EsoCheck have been developed to provide an accurate, non-invasive, patient-friendly screening test for the early detection of adenocarcinoma

of the esophagus (“EAC”) and Barrett’s Esophagus (“BE”), including dysplastic BE and related pre-cursors

to EAC in patients with chronic gastroesophageal reflux (“GERD”).

2023, approximately 20,000 U.S.

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diagnosis, and, unlike other common cancers, mortality rates are high even in its earlier stages.

to 50 million, or one in four, U.S.

adults have weekly GERD symptoms.

Although symptoms can be ameliorated with medications, including

proton pump inhibitors (PPIs) such as Nexium® and Prilosec®, medications do not prevent progression to esophageal precancer or

is an esophageal precancer and complication of GERD characterized by pathologic transformation of surface esophageal cells.

BE is a late esophageal precancer characterized by further premalignant pathologic transformation called dysplasia.

All EAC is believed

to arise from BE as the culmination of pathologic changes along the BE-EAC precancer-cancer spectrum—from nondysplastic BE (“NDBE”),

to low-grade dysplastic BE (“LGD”), high-grade dysplastic BE (“HGD”) and finally EAC.

BE can be cured with endoscopic esophageal ablation which reliably halts progression to EAC.

subgroup of long-standing or severe GERD patients at-risk for BE and progression to EAC is well defined in clinical practice guidelines,

including the American College of Gastroenterology (“ACG”) BE Guidelines.

Risk factors include age over 50 years,

male gender, White race, obesity, smoking history and a family history of BE-EAC.

The ACG BE Guidelines recommend screening for patients

with a five-year history of, or severe, GERD and three or more risk factors.

The highest risk symptomatic GERD cohort recommended for

screening consists of the estimated 13 million U.S.

men over 50 with one additional risk factor.

An estimated 60% of at-risk GERD patients

are Medicare beneficiaries.

discussed below under the heading “Clinical Guidelines for At-Risk Population”, the American Gastroenterology Association

(“AGA”) recently significantly expanded the target population for esophageal precancer screening, recommending screening

in at-risk patients without symptoms of GERD.

Based on this revision, we believe the cohort recommended for screening consists of an

estimated 30 million U.S.

individuals with at least 3 established risk factors for BE.

Accordingly, we believe EsoGuard’s total

addressable U.S.

market opportunity exceeds $60 billion based on an effective Medicare payment of $1,938 and the estimated 30 million

patients recommended for screening by clinical practice guidelines.

(In December 2019, we secured “gapfill” determination

for EsoGuard’s PLA code 0114U through the CMS CLFS process.

This allowed us to engage directly with Medicare contractor Palmetto

GBA and its MolDx Program on CMS payment and coverage.

In October 2020, CMS granted EsoGuard final Medicare payment determination of

$1,938.01, effective January 1, 2021.)

Unfortunately,

for a variety of reasons, less than 10% of at-risk GERD patients who are recommended for screening undergo traditional invasive upper

gastrointestinal endoscopy (“EGD”).

We believe that the profound tragedy of an EAC diagnosis is that likely death

could have been prevented if the at-risk GERD patient had been screened and then undergone surveillance and curative endoscopic esophageal

ablation of dysplastic BE.

for a variety of reasons, less than 10% of at-risk patients who are recommended for screening undergo traditional invasive upper gastrointestinal

endoscopy (EGD).

We believe that the profound tragedy of an EAC diagnosis is that likely death could have been prevented if the at-risk

patient had been screened and then undergone surveillance and curative endoscopic esophageal ablation of dysplastic BE.

mortality rates are high even in early stage EAC, preventing EAC deaths requires detection and intervention at the precancer stage.

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believe EsoGuard, used with EsoCheck, constitutes that missing element—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 and cancer in

at-risk GERD patients.

Status of EsoGuard and EsoCheck

capable of serving as a widespread screening tool to prevent EAC deaths through early detection of esophageal precancer and cancer in patients with 3 or more risk factors.

Guidelines for At-Risk Population

subgroup of long-standing or severe GERD patients at-risk for BE and progression to EAC is well defined in clinical practice guidelines,

including the American College of Gastroenterology (ACG) BE Guidelines.

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.

ACG clinical guideline entitled “ Diagnosis and Management of Barrett’s Esophagus:

An Updated ACG Guideline ,”

the first such update since 2016, was published online last year in the American Journal of Gastroenterology.

The clinical guideline

reiterates the ACG’s long-standing recommendation for esophageal precancer screening in at-risk patients with GERD.

For the first

time, however, the clinical guideline also endorses nonendoscopic biomarker screening as an acceptable alternative to costly and invasive

endoscopy stating that “a swallowable nonendoscopic capsule device combined with a biomarker is an acceptable alternative to endoscopy

for BE.” The clinical guideline specifically mentions EsoCheck, along with our 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

includes a reference to 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.

July 2022, the American Gastroenterology Association (“AGA”) published in their “Clinical Practice Update on New Technology

and Innovation for Surveillance and Screening in Barrett’s Esophagus” updated clinical guidance that mirrors the same furnished

by the ACG as described above, endorsing the use of non-endoscopic cell collection tools to screen for BE like our EsoCheck Cell Collection

Device, which is cited in the update, 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 GERD.

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.

Commercialization

EsoGuard commercialization efforts span multiple channels including targeting primary care physicians and GI physicians, who have generally

embraced our message that EsoGuard has the potential to expand the funnel of BE-EAC patients who will need long term EGD surveillance

and, potentially, treatment with endoscopic esophageal ablation.

assure sufficient testing capacity and geographic coverage, we have built 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 at our CLIA-certified

Our current test center network currently includes locations in metropolitan areas in Arizona, California, Colorado, Florida,

Idaho, Illinois, Nevada, Ohio, Oregon, Texas and Utah.

addition to our base test center network, we have established a satellite test center program, whereby we are expanding our footprint

by making our personnel available to perform cell collection services in physician offices.

Further, we have sought to expand our outreach

by successfully conducting multiple “#CheckYourFoodTube Precancer Testing Event” for organizations such as the San Antonio Fire Department, where

samples are collected from the organization’s employees for testing with EsoGuard at our CLIA-certified laboratory.

have also established an EsoGuard Telemedicine Program, in partnership with UpScript, LLC, an independent third-party telemedicine provider,

that accommodates EsoGuard self-referrals from direct-to-consumer marketing.

Reimbursement

and Market Access

noted above, in December 2019, we secured “gapfill” determination for EsoGuard’s PLA code 0114U through the CMS CLFS

This allowed us to engage directly with Medicare contractor Palmetto GBA and its MolDx Program on CMS payment and coverage.

In October 2020, CMS granted EsoGuard final Medicare payment determination of $1,938.01, effective January 1, 2021.

A proposed Local Coverage Determination

(“LCD”) DL39256, entitled “ Molecular Testing for Detection of Upper Gastrointestinal Metaplasia, Dysplasia, and Neoplasia ”

was published recently on the Center for Medicare and Medicaid Services (“CMS”) website by MAC Palmetto GBA.

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

The proposed LCD, which the CMS website explicitly

characterizes as a “work in progress” for “public review,” outlines criteria that MolDX expects upper gastrointestinal

precancer and cancer molecular diagnostic tests to meet.

These criteria include active GERD with at least two risk factors, as well as

evidence of analytic validity, clinical validity, and clinical utility.

Although the proposed LCD indicated that it found that no currently

existing test has fulfilled all these criteria, it indicated that it will “monitor the evidence and will provide coverage based

on the pertinent literature and society recommendations.” Notably, the proposed LCD pre-dated, and therefore does not include consideration

of, the most recent AGA clinical practice update endorsing swallowable, nonendoscopic capsule devices combined with a biomarker, such

as EsoCheck and EsoGuard,, an an alternative to endoscopy.

The publication of the proposed LCD triggered a written comment period, and

MolDX also held an open meeting on May 10, 2022, during which stakeholders and other interested parties had the opportunity to address

the proposed LCD.

We presented at the public meeting and made a written submission during the comment period as well.

A final LCD will

not be issued until the MAC has had the opportunity to assess and consider all stakeholder comments.

While we await a CMS coverage determination

from MolDX, we are aggressively pursuing EsoGuard commercial insurer payment and coverage.

Although the claim adjudication cycle can be

prolonged during the early commercialization of a new test, we have received out-of-network commercial insurance payments for the EsoGuard

test, and has entered into agreements with insurers that provide access to, in the aggregate, over 70 million patients.

Utility and Clinical Trials

Demonstrating

EsoGuard’s clinical utility, which requires providing evidence that the test has a meaningful impact on clinical practice, is very

important for a variety of purposes, including, importantly, for Medicare and private payor payment and coverage.

It has been established

that one of the most important factors to private payors in deciding whether to grant payment and coverage will be demonstration that

the EsoGuard test, when ordered by physicians, provides information that can be used to

identify or exclude patients who would benefit from additional management and/or treatment.

Clinical utility studies are also important

for general EsoGuard commercialization by facilitating physician understanding of test indications and potential benefit to the patients.

are currently seeking to accelerate our collection of clinical utility data through a range of trials that can be efficiently executed.

These efforts include a planned investigator-initiated, retrospective analysis of prospectively collected data on the approximately 400

San Antonio fire fighters who underwent testing as part of a community-sponsored cancer awareness event (in

respect of which we expect to publish results in the first half of 2023) ;

an ongoing investigator-initiated, retrospective, single-center,

study with 500 patients (in respect of which we expect to publish results mid-2023), a virtual-patient randomized controlled trial with

intended recruitment of 100-200 physician participants (in respect of which we expect to publish

results this year) ;

a Lucid-sponsored multi-center, prospective, observational study with 500 patients;

and a Lucid-sponsored

registry at existing Lucid Test Centers, whereby all patients undergoing EsoCheck testing will be given the opportunity to provide informed

consent and contribute data about their risk factors, EsoGuard results, and subsequent diagnostic and/or therapeutic journey.

Both Lucid-sponsored

observational/registry studies expect to have preliminary results and/or interim analysis before the end of 2023.

previously disclosed, consequently, we have decided to delay for the time being the two previously commenced clinical trials, the “EsoGuard

screening study” (“BE-1”) and the “EsoGuard case-control study” (“BE-2”), as we are devoting

our clinical resources to the studies cited above, which we expect will more efficiently generate the clinical data we are currently

prioritizing to drive EsoGuard commercialization.

Manufacturing

is currently manufactured for us by our partners Coastline International, a high-volume device manufacturer, and Sage Product Development.

Through mid-2023, we expect to further transition from Sage to Coastline as the manufacturing process is further optimized.

line capacity can produce up to 25,000 units per year.

With Coastline’s improvement and expansion, there is capacity to scale exponentially.

Our EsoGuard Specimen Kits are currently manufactured for us by our partner Path-Tec.

The warehousing, logistics, fulfillment and customer

support of our products is managed for us by our partners HealthLink International (a leading third-party logistics company) and Path-Tec.

the terms of our license agreement with CWRU, we acquired an exclusive worldwide right to use the intellectual property rights to the

EsoGuard and EsoCheck technology for the detection of changes in the esophagus and on sample preservation.

we are required to pay CWRU

royalties on net sales of licensed products as follows:

5% of net sales of less than $100 million per year;

and 8% of net sales greater

than $100 million per year.

We are also required to pay CWRU minimum annual royalty payments as follows:

$50,000 per year, beginning

January 1 following the first anniversary of a commercial sale of a licensed product;

$150,000 per year, if net sales of a licensed product

exceed $25 million in a year;

$300,000 per year, if net sales of a licensed product exceed $50 million in a year;

and $600,000 per year,

if net sales of a licensed product exceed $100 million in a year.

Minimum yearly royalty amounts are subject to increase based on the

percentage change in the CPI-W Consumer Price Index and are credited against the royalties otherwise due.

The license agreement was subject

to four regulatory and commercialization milestones, of which one remains unachieved and unpaid.

The remaining milestone is the FDA PMA

submission of a licensed product, upon the achievement of which we will pay CWRU a milestone payment of $200,000.

The license agreement

terminates upon the expiration of the last-to-expire licensed patent, or on May 12, 2038, in countries where no such patents exist, or

upon expiration of any exclusive marketing rights for a licensed product that have been granted by FDA or other U.S.

government agency,

whichever comes later.

The EsoCheck patents, which are currently the last to expire, begin to expire in May 2035.

June 2019, we received FDA 510(k) clearance to market EsoCheck in the U.S.

as a device indicated for use in the collection and retrieval

of surface cells of the esophagus in adults.

In December 2019, Research Dx Inc.

(“RDx”), our CLIA-certified commercial

clinical laboratory services partner, completed documentation of EsoGuard analytical validity allowing us to commercialize

it as an LDT.

In March 2022, we transferred testing to our own laboratory, upon our acquisition of certain assets from RDx

as described elsewhere in this report.

In May 2021, we received CE Mark certification for EsoCheck, and in June 2021, we completed

CE Mark self-certification for EsoGuard, indicating both may be marketed in CE Mark European countries.

status as a commercially available LDT is dependent on the FDA exercising enforcement discretion for LDTs.

Notwithstanding the fact that

FDA has exercised such discretion despite indicating through non-binding communications and documents it might consider no longer doing

so, and the fact that HHS recently forbade FDA from requiring premarket review of LDTs absent a formal rulemaking process, pending legislation

seeking to revamp the regulatory framework of diagnostic tests keeps the regulatory landscape for LDTs such as EsoGuard uncertain.

mitigate that risk long-term, and to allow the marketing of EsoGuard and EsoCheck together, we have decided to pursue FDA PMA

approval for EsoGuard, as an IVD device.

In October 2019, we participated in an FDA pre-submission meeting and received feedback

on a proposed initial indication for use and the design of our two international multi-center clinical studies to support a PMA application

for FDA approval of EsoGuard on samples collected with EsoCheck.

We expect to complete enrollment by the end of 2022 and submit our PMA

by early 2023.

Manufacturing

is currently manufactured for us by our partner Sage Product Development Inc.

on a line that can produce over ten thousand units per

In July 2021 we entered into an agreement to transfer the EsoCheck manufacturing line to high-volume manufacturer Coastline International

The initial term of the agreement expires on September 1, 2023, subject to automatic renewal for successive two-year terms unless

either party notifies the other of intent to terminate the agreement no less than 90 days prior to the initial termination date or the

expiration of any successive term.

The agreement, as amended, provides per unit pricing for up to 250,000 units per year, a non-recurring

charge to cover the costs associated with the transfer process, and a detailed timeline that allows for the flexibility to move production

to Coastline later in 2022 as test volumes increase.

The manufacturing line is being designed to allow capacity to be scaled to over

one million units per year.

Our EsoGuard Specimen Kits are manufactured for us by our partner RDx and can be transferred to a

higher volume manufacturer whenever demand dictates.

The warehousing, logistics, fulfillment and customer support of our products is

managed for us by our partner HealthLink International, a leading third-party logistics company.

Reimbursement

December 2019, we secured “gapfill” determination for EsoGuard’s PLA code 0114U through the CMS CLFS process.

allowed us to engage directly with Medicare contractor Palmetto GBA and its MolDx Program on CMS payment and coverage.

In October 2020,

CMS granted EsoGuard final Medicare payment determination of $1,938.01, effective January 1, 2021.

We are still awaiting Medicare local

coverage determination from MolDx, which we understand is working to clear a significant backlog of reviews.

are also aggressively pursuing EsoGuard U.S.

private payor payment and coverage.

We held advisory board meetings with medical directors

of major insurers to obtain feedback and guidance on the type of clinical data that will be helpful in securing payment and coverage.

Although the claim cycle can be prolonged during the early commercialization of a new test, RDx has received out-of-network private

insurance payments for submitted EsoGuard tests.

Commercialization

initial EsoGuard commercialization efforts on gastroenterology (“GI”) physicians who have generally embraced our message

that EsoGuard has the potential to expand the funnel of BE-EAC patients who will need long-term EGD surveillance and, potentially, treatment

with endoscopic esophageal ablation.

At the outset of our commercialization, we utilized a hybrid sales model with full-time sales management

but have since transitioned and significantly expanded our full-time commercial team in 2021 and are actively recruiting full-time territory

market develop managers and sales representatives nationwide.

EsoGuard testing has begun accelerating as pandemic-related healthcare

facility limitations have eased.

are now expanding EsoGuard commercialization to target primary care physicians.

The vast majority of at-risk GERD patients are cared

for by PCPs and never see a gastroenterologist.

To assure sufficient testing capacity and geographic coverage during this expansion,

we are building our own network of Lucid Test Centers, where Lucid-employed clinical personnel will perform the EsoCheck procedure for

EsoGuard testing.

We have hired personnel and leased medical office space and have launched three pilot Lucid Test Centers in the Phoenix

metropolitan area and added centers in Utah, Colorado, and Nevada.

We are presently focused on adding Centers in Oregon, Washington,

Additionally, we have established an EsoGuard Telemedicine Program, in partnership with an independent third-party telemedicine

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

In July 2021, we entered into an agreement

with UpScript, LLC (“UpScript”) to develop and operate a web-based platform to allow individuals access to licensed physicians

and healthcare professionals in order to engage in a telemedicine consult.

UpScript will develop, operate, and maintain a Lucid website

for individuals to request a Laboratory Test and access physicians and other healthcare professionals that are each qualified by law

for professional services they are providing.

The Lucid website will have the ability to transmit the requests from individuals and return

a test order, if authorized.

UpScript will transmit any such test order to the CLIA-certified laboratory directed by Lucid in order arrange

for the performance of the specimen collection with the EsoCheck and performance of the laboratory test (EsoGuard).

Research & Development

active clinical research and development program seeks to expand the clinical evidence of our products’ efficacy to support our

ongoing regulatory, reimbursement and commercial efforts.

We are actively enrolling patients in two international multicenter clinical

trials to support FDA PMA approval of EsoGuard, used with EsoCheck, as an IVD device indicated to detect NDBE.

ESOGUARD-BE-1 is

a screening study which will enroll approximately 500 to 900 male GERD patients over 50 years of age with one other risk factor.

ESOGUARD-BE-2

is a case control study which will enroll approximately 500 male GERD patients with a previous diagnosis of NDBE, LGD, HGD, or EAC, along

with normal controls.

Approximately one-half of the U.S.

sites and one European site are actively enrolling.

We expect to complete enrollment

in both trials by the end of 2022 or the early part of 2023 and submit our PMA to FDA by mid-2023.

Growth Strategy

believe EsoGuard’s total addressable U.S.

market opportunity exceeds $25 billion based on an effective Medicare payment of $1,938

and the over 13 million U.S.

male at-risk GERD patients recommended for screening by clinical practice guidelines.

We believe that EsoGuard,

used with EsoCheck, as the first and only commercially available test capable of serving as a widespread BE-EAC screening tool, has the

potential to become the standard of care to detect esophageal precancer in at-risk GERD patients.

EsoGuard Commercialization Across Multiple Channels

first pillar of our overall growth strategy is to expand EsoGuard commercialization across multiple channels, targeting primary care

physicians (PCPs) and consumers in addition to GI physicians.

We continue to accelerate the expansion of our sales and marketing team

targeting these multiple channels.

have the opportunity to educate PCPs that GERD can lead to EAC, and that, for the first time, they can refer their at-risk GERD patients

for testing using a non-endoscopic alternative to EGD.

We believe our Lucid Test Centers will play a critical role in significantly growing

EsoGuard testing from PCP referrals.

After advancing the pilot program in Phoenix, we are steadily expanding our Lucid Test Centers to

other metropolitan areas, first in Western U.S.

states and then nationwide.

believe that direct-to-consumer (DTC) education and marketing will help drive our long-term growth.

We believe that educating consumers

on the link between GERD and BE-EAC, and the availability of a simple noninvasive test to detect esophageal precancer, will encourage

those at risk to consider EsoGuard testing.

We have launched an EsoGuard Telemedicine Program with DTC marketing in Phoenix and will

expand it to other metropolitan areas once we demonstrate an acceptable return on investment.

Our Clinical Evidence to Support Commercialization, Reimbursement and Regulatory Efforts

second pillar of our growth strategy is to aggressively expand the clinical evidence for our products to support our commercialization,

reimbursement and regulatory efforts, as well as to secure recommendations in clinical practice guidelines, an important value creation

We are currently undertaking multiple ongoing and future clinical trials to build this evidence.

seek to accelerate completion of our ongoing ESOGUARD-BE-1 and ESOGUARD-BE-2 clinical trials to support FDA PMA approval of EsoGuard,

used with EsoCheck, as an IVD device.

We will then work with FDA, pursuant to our Breakthrough Device designation, to extend the ESOGUARD-BE-1

to enroll sufficient patients to support an expanded indication to detect dysplastic BE, a substantial but potentially highly rewarding

Finally, we are planning several EsoGuard/EsoCheck clinical utility studies, including a large registry and a study using

electronic medical record screening to assess an EsoGuard-driven strategy to find BE-EAC disease in at-risk GERD patients.

Our Manufacturing and Laboratory Testing Capacity

are in the process of scaling our operational capacity, enhance efficiency and improve operating margins as demand for our products grows.

We will complete transfer of EsoCheck manufacturing to a high-volume partner in 2022, which will provide sufficient long-term manufacturing

capacity and substantially lower per-unit cost of goods.

We anticipate doing the same for EsoGuard Specimen Kit manufacturing as demand

We previously relied on the CLIA-certified commercial clinical laboratory at RDx to meet EsoGuard testing

However, we believed it was in our long-term interest to secure our own CLIA-certified laboratory, to increase

capacity further, streamline billing and claims management, and decrease per-test cost of goods.

In that regard, on February 25,

2022, our new, wholly owned subsidiary, LucidDx Labs, acquired from RDx certain licenses and other related assets necessary

for LucidDx Labs to operate its own new CLIA-certified, CAP-accredited clinical laboratory located in Lake Forest, CA.

2022, we have conducted EsoGuard testing at our owned laboratory.

Our Product Portfolio

seek to expand our product portfolio with at least two highly synergistic technologies under development—BE-EAC progression markers

and PAVmed’s EsoCure device—that would create a fully integrated suite of products to address the diagnosis, monitoring and

treatment of BE-EAC.

We have the opportunity to license and develop biomarkers with the potential to discriminate between NDBE and dysplastic

BE on samples collected with EsoCheck, which we believe would revolutionize NDBE surveillance.

When dysplastic BE is identified, endoscopic

esophageal ablation is indicated to cure the BE and halt progression to EAC.

EsoCure has certain key features which give it the potential,

once cleared and clinically available, to unseat the dominant RF ablation technology.

We intend to pursue these and any other technologies

which synergize with our lead products, improve our competitive position or otherwise provide the opportunity to create value.

Subsequently,

in March of 2022, both the PAVmed and Lucid boards approved entering into an intercompany license agreement for Lucid to formally license

of surface cells of the esophagus in adults followed by FDA 510(k) clearance in 2022, expanding the use of EsoCheck in adults and pediatric

populations in the U.S.

In December 2019, our CLIA-certified then-laboratory partner, completed documentation of EsoGuard analytical

validity allowing us to commercialize it as a Laboratory Developed Test (LDT).

February 2020, we received FDA “Breakthrough Device Designation” for EsoGuard as an in-vitro diagnostic (“IVD”)

medical device.

The FDA Breakthrough Device Program was created to offer patients more timely access to breakthrough technologies which

provide for more effective treatment or diagnosis of life-threatening or irreversibly debilitating human disease or conditions by expediting

their development, assessment and review through enhanced communications and more efficient and flexible clinical study design, including

more favorable pre/post market data collection balance.

The Centers for Medicare and Medicaid Services and the United States Congress

continue to work to provide an expedited coverage pathway for emerging technologies.

May 2021, we received CE Mark certification for EsoCheck (under the Medical Devices Directive 93/42/EEC), and in June 2021, we completed

CE Mark self-certification for EsoGuard (under the European In-Vitro Diagnostic Devices Directive (IVDD 98/79/EC)), indicating both may

be marketed in CE Mark European countries.

longer-term strategy is to secure a specific indication, based on published guidelines, for BE screening in certain at-risk populations

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or approved by the FDA as an IVD device.

In September 2019, we entered into an agreement with a clinical research organization to assist

us with two ongoing clinical trials for EsoGuard as an IVD device, which are actively enrolling patients and consist of a screening study

(ESOGUARD-BE-1) and a case control study (ESOGUARD-BE-2).

screening study is enrolling GERD patients without a prior diagnosis of BE or EAC who satisfy ACG BE screening guidelines.

The case control

study is enrolling patients with a previous diagnosis of non-dysplastic BE, dysplastic BE (both low and high-grade) or EAC.

In both studies,

EsoGuard is comparing to the gold standard of endoscopy with biopsies.

In February 2020, EsoGuard has received Breakthrough Device designation

from the FDA for its EsoGuard Esophageal DNA Test on esophageal samples collected using its EsoCheck Cell Collection Device in a prevalent

well-defined group of patients at elevated risk for esophageal dysplasia due to chronic GERD.

Breakthrough Device

Food and Drug Administration “Breakthrough Device” designation relates to the FDA’s Breakthrough Device Program

that was created to offer patients more timely access to breakthrough technologies which provide for more effective treatment or diagnosis

of life-threatening or irreversibly debilitating human disease or conditions by expediting their development, assessment and review through

enhanced communications and more efficient and flexible clinical study design, including more favorable pre- and post-market data collection.

Breakthrough Devices receive priority FDA review, and the Centers for Medicare and Medicaid Services and the United States Congress continue

to work to provide an expedited coverage pathway for emerging technologies.

to our Breakthrough Device discussions with FDA, we intend to extend enrollment in the ESOGUARD-BE-1 screening study until it is sufficiently

powered to support expansion to the above proposed indication for use to include detection of dysplastic BE.

FDA indicated that although

they would have preferred to a study powered for HGD, they understood that the study size would be impracticable and that they would

be open to including LGD.

It also indicated that it would consider study designs with some enrichment and, potentially, interim analysis

and approval to mitigate sample size.

We will be working with FDA to finalize an extension of our current screening study to support

such an expanded dysplastic BE indication once FDA resumes Breakthrough Device meetings for IVD devices, which are currently on

hold as the branch works to clear a Covid-19 pandemic related backlog.

This study will be a substantial, capital-intensive, but potentially

highly rewarding undertaking.

Although the study size is yet to be determined and will depend on negotiations with FDA, it will be in

the thousands.

Clinical Utility Studies

Demonstrating

EsoGuard clinical utility requires providing evidence that it has a meaningful impact on the clinical care of patients undergoing the

It does not require demonstrating the performance of the assay, i.e.

, the negative and positive predictive values.

Our PMA trials are designed and powered to do so.

Clinical utility studies need to demonstrate that patients with a positive EsoGuard

test undergoes confirmatory EGD which leads to a specific intervention, e.g.

, implementation of an NDBE surveillance program or

ablation of dysplastic BE.

Ideally, the near-term EGD rate of EsoGuard negative patients should be low.

In other words, EsoGuard testing

should be able to triage patient to EGD vs.

no EGD, with EGD positive patients receiving an intervention, which would not have happened

if the patient had not been triaged by EsoGuard.

Demonstrating

EsoGuard’s clinical utility is very important for a variety of purposes, including, importantly, for private payor payment and

Our recent advisor board meeting with medical directors of private insurers confirmed this.

They strongly indicated that one

of the most important factors in their future decision to grant payment and coverage will be demonstrating that physicians order the

test and, when they do, that clinical utility can be demonstrated.

utility studies are also important for general EsoGuard commercialization to physician who want to know that it can “find disease”.

A recent U.K.

study from Dr.

Fitzgerald’s team is a good example.

They published a large study of GERD patients in a primary care

setting who underwent screening with Cytosponge/TFF-3 and showed that they were able to identify patients with BE and the occasional

This was not a performance study with routine EGD so the authors could not say how many BE-EAC patients were missed, which was likely

non-trivial given the published data on suboptimal Cytosponge/TFF-3 performance.

However, the study was useful in convincing U.K.

to initiate mobile testing centers around the country.

shortly will launch an EsoGuard Registry study as our primary study to demonstrate clinical utility.

Every patient undergoing EsoCheck

testing will be asked to provide informed consent for us to collect limited post-procedural data from the patient’s physician on

care received after EsoGuard testing, most importantly whether they underwent EGD and, if so, what the results showed.

are also in discussions with a large academic medical center to initiate a clinical utility study in which investigators would use the

network-wide electronic medical record to systematically identify at-risk GERD patients, offer them EsoGuard testing and compare them

to historical controls also identified from the database.

The study would seek to demonstrate that an EsoGuard-guided strategy identifies

more BE-EAC patient than historical practice.

we are helping investigators at a VA medical center launch a Department of Defense supported study to compare the positive predictive

value of EsoGuard followed by EGD compared to EGD alone and the relative costs of each strategy.

The study would seek to demonstrate

that EsoGuard increases the positive rate of EGD, an important measure of the clinical utility of a noninvasive diagnostic test.

Esophagitis Using EsoCheck

are exploring additional EsoCheck applications beyond our core focus of BE-EAC.

The application with the greatest potential may be the

monitoring of patients with Eosinophilic Esophagitis (“EoE”).

EoE is a rapidly emerging allergy-mediated inflammatory

condition of the esophagus similar to, and often associated with, inflammatory bowel disease (“IBD”).

Although underappreciated

by the medical community and frequently confused with GERD, EoE has a prevalence comparable to IBD and exacts a significant burden on

It can lead to swallowing difficulties, esophageal scarring, food impaction and pain.

Current treatment includes oral steroids

and an elimination diet.

Several anti-inflammatory biologics are being evaluated to treat EoE.

Since inflammation can persist despite

resolution of symptoms, treatment courses can be very difficult and costly for patients, requiring multiple and frequent invasive endoscopies

with biopsies.

To date, efforts to replace endoscopy with a noninvasive diagnostic device have proven unsuccessful.

March 2020, we entered into a clinical trial research agreement with the University of Pennsylvania to perform a pilot study to assess

whether EsoCheck can detect the eosinophils characteristic of active EoE and potentially serve as a less-invasive, more efficient, and

cost-effective alternative to endoscopic biopsies in the management of EoE patients.

The study, entitled “Pilot Study of EsoCheck

Compared to Bio psies and Brush Cytology During Endoscopy for Evaluation of Eosinophilic Esophagitis ”, was led by Gary W.

Falk, M.D., an internationally renowned expert on esophageal disease with specific experience and expertise in the management of EoE.

The study, which has been completed, was a prospective cross-sectional pilot feasibility study of ten patients with suspected or established

EoE scheduled for a clinically indicated upper endoscopy.

The patients underwent esophageal sampling using EsoCheck, with the sample

sent for traditional cytologic analysis, followed by EGD, including brushings and biopsies.

The study results have yet to be published

but preliminary reports indicate that EsoCheck is able to detect a meaningful number of eosinophils in patients with active disease.

We have already initiated discussions with Dr.

Falk to lead a larger multicenter follow-up study powered to document EsoCheck’s

sensitivity and specificity in detecting active EoE, compared to EGD with brushings and biopsy.

and EsoCheck Intellectual Property

Diagnostics business will depend on proprietary medical device and diagnostic technologies, including the EsoCheck and EsoGuard technology

licensed by us.

We intend to vigorously protect our proprietary technologies’ intellectual property rights in patents, trademarks

and copyrights, as available through registration in the United States and internationally.

Patent protection and other proprietary rights

are thus essential to our Diagnostics business.

The EsoCheck and EsoGuard technology is protected by patents in the United States and

internationally, and our policy is to continue to aggressively file patent applications, both independently and in collaboration with

CWRU, as appropriate, to protect this technology and other proprietary technologies of ours relating to our Diagnostics business, including

inventions and improvements to inventions.

Under the CWRU License Agreement, CWRU has agreed to apply for patent coverage, at our expense,

in any country requested by us, to the extent such protection is reasonably attainable.

We seek patent protection, as appropriate, on:

product itself including all embodiments with future commercial potential;

methods of using the product;

methods of manufacturing the product.

addition to filing and prosecuting patent applications in the United States, we intend to file counterpart patent applications in Canada,

the European Union and other countries worldwide.

Foreign filings can be cumbersome and expensive, and we will pursue such filings when

we believe they are warranted as we try to balance our international commercialization plans with our desire to protect the global value

of the technology.

term of individual patents depends upon the legal term of the patents in the countries in which they are obtained.

In most countries

in which we file, the patent term is 20 years from the earliest date of filing a non-provisional patent application.

In the United States,

a patent’s term may be shortened if a patent is terminally disclaimed over another patent or as a result of delays in patent prosecution

by the patentee, and a patent’s term may be lengthened by patent term adjustment, which compensates a patentee for administrative

delays by the USPTO in granting a patent.

intend to continuously reassess and fine-tune our intellectual property strategy in order to fortify the position of our Diagnostics

business in the United States and internationally.

Prior to acquiring or licensing a technology from a third party, we will evaluate

the existing proprietary rights, our ability to adequately obtain and protect these rights and the likelihood or possibility of infringement

upon competing rights of others.

will also rely upon trade secrets, know-how, continuing technological innovation, and may rely upon licensing opportunities in the future,

to develop and maintain our competitive position in our Diagnostics business.

We intend to protect our proprietary rights through a variety

of methods, including confidentiality agreements and/or proprietary information agreements with suppliers, employees, consultants, independent

contractors and other entities who may have access to proprietary information.

We will generally require employees to assign patents

and other intellectual property to us as a condition of employment with us.

All our consulting agreements will pre-emptively assign to

us all new and improved intellectual property that arise during the term of the agreement.

and EsoCheck Competition

February 25, 2022, our new, wholly owned subsidiary, LucidDx Labs Inc.

(“LucidDx Labs”), acquired from RDx, certain licenses

and other related assets necessary for LucidDx Labs to operate its own new CLIA-certified, CAP-accredited clinical laboratory located

in Lake Forest, CA.

Since March 2022, we have conducted EsoGuard testing at our own laboratory with, until recently, the assistance of

RDx, which had continued to provide certain testing and related services for the laboratory in accordance with the terms of a management

services agreement (“MSA-RDx”), dated and effective February 25, 2022.

Recently, however, the Company accelerated the development

of internal resources necessary to operate the laboratory entirely on its own.

Accordingly, our subsidiary LucidDx Labs and RDx agreed

terminate the MSA-RDx effective as of February 10, 2023, such that LucidDx Labs now operates the laboratory itself, which the Company

believes will improve the efficiency of the performance of the EsoGuard assay.

market for esophageal cancer (i.e., EAC) and pre-cancer (i.e., BE, with or without dysplasia) screening is large, consisting of

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test faces competition from procedure-based detection technologies such as upper endoscopy, and other screening technologies such as

pill-based imaging solutions like PillCam Eso, cleared by the FDA in November 2004, and transnasal esophagoscopy, a flexible tube with

a miniature camera that is inserted into the nose and advanced through the esophagus into the upper portion of the stomach.

device faces competition from other manufactures with devices designed to collect cell samples from targeted regions of the esophagus.

For example, Cytosponge is a small mesh sponge within a soluble gelatin capsule that dissolves in the stomach and then is pulled thru

the targeted region brushing the lining of the esophagus and then later retrieved, although, unlike EsoCheck, it is unprotected from

contamination.

Interpace Diagnostics (Nasdaq:

IDXG), NeoGenomics (Nasdaq:

NEO) and Cernostics (private) are developing progression type

test for known patients with BE aimed at assessing or predicting the likely development of EAC.

Our competitors may also be developing

additional methods of detecting esophageal cancer and pre-cancer that have not yet been announced.

the market for our Diagnostics products is highly competitive and is characterized by extensive research and clinical efforts and rapid

technological change.

In order to compete effectively, EsoGuard and EsoCheck will have to achieve market acceptance, receive adequate

insurance coverage and reimbursement, be cost effective and be simultaneously safe and effective.

We believe that the principal competitive

factors in our markets are:

multi-cancer early detection products.

Our EsoCheck device faces competition from other manufactures with devices designed to collect

cell samples from targeted regions of the esophagus.

For example, Cytosponge is a small mesh sponge within a soluble gelatin capsule

that dissolves in the stomach and then is pulled thru the targeted region brushing the lining of the esophagus and then later retrieved,

although, unlike EsoCheck, it is unprotected from contamination.

Our competitors may also be developing additional methods of detecting

esophageal cancer and pre-cancer that have not yet been announced.

the market for our products is highly competitive and is characterized by extensive research and clinical efforts and rapid technological

In order to compete effectively, EsoGuard and EsoCheck will have to achieve market acceptance, receive adequate insurance coverage

and reimbursement, be cost effective and be simultaneously safe and effective.

We believe that the principal competitive factors in our

accuracy and the quality of outcomes for medical conditions;

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to respond to such technical advances.

Notwithstanding

that the market for BE and EAC screening is highly competitive, we believe that EsoCheck, currently cleared by the FDA pursuant to a

510(k), and EsoGuard, the first and only DNA-based non-invasive BE screening LDT test on the market today, compare favorably to other

available products and services.

When used in combination after achieving FDA approval as an IVD medical device through the PMA process,

the use of EsoGuard, on samples collected using EsoCheck, may offer an accurate, lower cost, non-invasive approach, that does not require

endoscopy, to screen for BE and EAC.

The test may be performed in five minutes, without sedation, in an outpatient ambulatory setting

such as a primary care or family practice physician’s office or a freestanding diagnostic facility.

May 12, 2018, we entered into the License Agreement with CWRU, which was amended on November 19, 2019, February 12, 2021 and August 23,

Under the terms of the License Agreement, we acquired an exclusive worldwide right to use the intellectual property rights to the

EsoGuard and EsoCheck technology for the detection of changes in the esophagus.

CWRU retains the right to grant licenses to the EsoGuard

technology outside this field of use.

The November 2019 amendment to the License Agreement also incorporates technology on sample preservation,

jointly developed by us and CWRU, as licensed technology under the agreement, on mutually agreeable terms and conditions.

is entitled to receive royalties based on net sales by us of licensed products utilizing the EsoGuard and EsoCheck technology.

When determining

net sales in circumstances where samples collected using a device based on EsoCheck technology are evaluated in a test other than one

based on EsoGuard technology, the unit sales price of the device will be deemed to be 200% of the direct unit manufacturing cost (or

400%, if the test is for the detection of EAC or its precursors).

We are required to pay CWRU royalties on net sales of licensed products

of net sales of less than $100 million per year;

of net sales greater than $100 million per year.

are also required to pay CWRU minimum annual royalty payments as follows:

per year, beginning January 1 following the first anniversary of a commercial sale of a licensed

per year, if net sales of a licensed product exceed $25 million in a year;

per year, if net sales of a licensed product exceed $50 million in a year;

per year, if net sales of a licensed product exceed $100 million in a year.

yearly royalty amounts are subject to increase based on the percentage change in the CPI-W Consumer Price Index.

The minimum yearly royalty

payment is credited against the royalties otherwise due.

We are also required to pay CWRU a specified portion of any other non-royalty

proceeds received by us pursuant to a sublicense of the EsoGuard and EsoCheck technology.

License Agreement was subject to four regulatory and commercialization milestones, of which one remains unachieved and unpaid.

The remaining

milestone is the FDA PMA submission of a licensed product, upon the achievement of which we will pay CWRU a milestone payment of $200,000.

the License Agreement, we are responsible for the costs incurred by CWRU in preparing, filing and prosecuting any patents related to

the EsoGuard and EsoCheck technology (subject to a provision for cost sharing in the event CWRU grants other non-overlapping licenses

to the technology).

CWRU agreed to apply for patent coverage, at our expense, in any country requested by us, to the extent such protection

is reasonably attainable.

CWRU also may apply for patent, copyright or trademark rights to the EsoGuard and EsoCheck technology in other

countries, at its option, and we will have no rights under any the patents in such countries unless we reimburse CWRU for its expenses.

In the event of any actual or threatened infringement of any patent in the field of use covered by the License Agreement, we will have

the first right to commence an action against the infringer.

We also will have the right to defend against any claims that the EsoGuard

and EsoCheck technology infringes on the intellectual property rights of a third party.

License Agreement provides for us to indemnify CWRU and certain related parties for any claims relating to product liability or similar

claims involving acts or omissions by us in connection with the EsoGuard technology and the development, use or sale of products based

on such technology, or relating to our gross negligence or willful misconduct, or relating to our breach of the License Agreement, unless,

in any case, such claim results from the gross negligence or willful misconduct of CWRU.

License Agreement terminates upon the expiration of the last-to-expire licensed patent, or on May 12, 2038, in countries where no such

patents exist, or upon expiration of any exclusive marketing rights for a licensed product that have been granted by FDA or other U.S.

government agency, whichever comes later.

The EsoGuard patents begin to expire in August 2024.

However, we are pursuing applications

of the clinical utility to extend the patent protection with more recently filed families of cases that have a twenty-year term and,

if issued, will expire in the mid to late 2030s.

The EsoCheck patents, which are currently the last to expire, begin to expire in May

addition, in the event that we defaults in the payment of any amount when due under the License Agreement, and such amount is not paid

within 30 days of notice of nonpayment, CWRU may terminate the exclusivity of the license or terminate the CWRU License Agreement in

In addition, either party may terminate the CWRU License Agreement upon the other party’s default in the performance of its

obligations under the License Agreement, subject to certain grace periods.

Upon expiration of the CWRU License Agreement in the ordinary

course, we expect to continue selling products using the EsoGuard and EsoCheck technology, as CWRU’s proprietary intellectual property

rights in the technology also will have expired.

will also compete in the marketplace to recruit and retain qualified scientific, management and sales personnel, as well as in acquiring

technologies and licenses complementary to our products or advantageous to our business.

We are aware of several companies that compete

or are developing technologies in our current and future products areas.

In order to compete effectively, our products will have to achieve

market acceptance, receive adequate insurance coverage and reimbursement, be cost effective and be simultaneously safe and effective.

connection with our efforts to expand our presence in the EAC diagnostic market, we are also developing the EsoCure 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.

We have successfully completed a pre-clinical feasibility

animal study of EsoCure 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.

When resources permit, we plan to conduct additional

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

March 2022, both the PAVmed and Lucid board of directors approved entering into an intercompany license between PAVmed and Lucid such

that Lucid will be granted the rights to commercialize EsoCure for the treating dysplastic Barrett’s Esophagus.

Under the intercompany

license, Lucid will pay PAVmed a 5% royalty on all EsoCure sales up to $100 million per calendar year, and 8% above that threshold.

Relationship with PAVmed Inc.

We are a majority-owned subsidiary

of PAVmed, and PAVmed has a controlling financial interest.

We continue to depend on PAVmed to provide us various management, technical,

research and development, legal, accounting, and administrative services.

approximately 75.8% as of December 31, 2021 and 74.6% as of March 29, 2022 of the combined voting power of our outstanding common

stock (with such percentage inclusive of shares of our common stock underlying granted but unvested restricted stock awards).

long as PAVmed continues to control more than 50% of our common stock, PAVmed will be able to direct the election of all the members

are a majority-owned subsidiary of PAVmed, and PAVmed has a controlling financial interest.

We continue to depend on PAVmed to provide

us various management, technical, research and development, legal, accounting, and administrative services.

owns approximately 73% as of December 31, 2022 and 72% as of March 9, 2023 of the combined voting power of our outstanding

common stock (with such percentage inclusive of shares of our common stock underlying granted but unvested restricted stock awards).

For as long as PAVmed continues to control more than 50% of our common stock, PAVmed will be able to direct the election of all the members

of our board of directors.

Similarly, PAVmed will have the power to determine matters submitted to a vote of our stockholders

without the consent of our other stockholders, to prevent a change in control of us, and to take other actions that might be

favorable to PAVmed, without prior notice to other stockholders.

PAVmed’s controlling interest may discourage a change of

control that other holders of our common stock may favor.

are party to a management services agreement with PAVmed (the “MSA”).

Under the agreement, PAVmed provides management, technical

and administrative services to us, including without limitation services related to research and development, regulatory clearance, manufacture,

and commercialization of our products, as well as services related to corporate financial, accounting and legal matters.

this agreement are intended to be consistent with the terms that we could have negotiated with unaffiliated third parties;

however, they

may actually be more or less favorable.

The MSA does not have a termination date, but may be terminated by the Lucid Diagnostics’

board of directors at any time.

Equity Financing

to December 31, 2021, in March 2022, we 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 in shares of our common stock from

time to time at our request.

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.

Acquisition from RDx

to December 31, 2021, in 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, including without limitation DNA extraction, next generation sequencing (“NGS”)

and specimen storage, in its own laboratory located in Lake Forest, CA (the “Laboratory”).

Prior to consummation of the Transactions,

RDx provided such testing and related services for the EsoGuard assay at its own separate CLIA-certified, CAP-accredited laboratory.

Lucid’s EsoGuard assay is a bisulfite-converted NGS DNA methylation assay performed on surface esophageal cells, which is commercially

available in the U.S.

as a Laboratory Developed Test and has been shown to be accurate at detecting esophageal precancer and all conditions

along the Barrett’s Esophagus-Esophageal Adenocarcinoma spectrum.

Under the APA, LucidDx Labs will pay RDx an aggregate purchase

price of up to $6.2 million for the acquired assets.

Concurrent with the APA, LucidDx Labs and RDx also entered into a management

services agreement (“MSA”).

The MSA has a term of three years whereby LucidDx Labs will pay up to $1.8 million in

quarterly installments.

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 total (gross) purchase consideration of approximately $2.1 million of cash, paid at

the closing of the transaction.

In March 2022, both the PAVmed and Lucid board of directors approved entering into a purchase and sale

of 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.

has been in development as an Esophageal Ablation Device by PAVmed, 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.

In March 2022, both the PAVmed and Lucid board of directors have approved entering into an intercompany license between PAVmed and Lucid

such that Lucid will be granted the rights to commercialize EsoCure for the treating dysplastic Barrett’s Esophagus, including

a royalty arrangement whereby Lucid will pay PAVmed a 5% royalty on all EsoCure sales up to $100 million per calendar year, and 8% above

that threshold.

Lucid will obligated to fund ongoing development costs and cumulative patent expenses.

EsoCure will become part of an

integrated suite of Lucid products addressing BE-EAC.

authorities in the United States, at the federal, state and local level, and in other countries extensively regulate, among other things,

the research, development, testing, manufacture, quality control, approval, labeling, packaging, storage, recordkeeping, promotion, advertising,

distribution, post-approval monitoring and reporting, marketing and export and import of products such as those we are developing.

following is a summary of the government regulations applicable to our business.

and Similar Regulation

Similarly, PAVmed will have the power to determine matters submitted to a vote of our stockholders without

the consent of our other stockholders, to prevent a change in control of us, and to take other actions that might be favorable to PAVmed,

without prior notice to other stockholders.

PAVmed’s controlling interest may discourage a change of control that other holders

of our common stock may favor.

are party to a management services agreement with PAVmed (the “MSA”), as well as a payroll benefits and expense reimbursement

agreement (the “PBERA”).

Under the MSA, PAVmed provides management, technical and administrative services to us, including

without limitation services related to research and development, regulatory clearance, manufacture, and commercialization of our products,

as well as services related to corporate financial, accounting and legal matters.

The terms of this agreement are intended to be consistent

with the terms that we could have negotiated with unaffiliated third parties;

however, they may actually be more or less favorable.

the PBERA, as more fully described below, PAVmed has agreed to pay certain payroll and benefit-related expenses in respect of our personnel

on our behalf, and we reimburse PAVmed for the same.

PAVmed may elect that our obligations under each of the MSA and the PBERA are settled

by the issuance of our stock (instead of cash), subject to applicable restrictions under securities laws (and, in the case of the PBERA,

subject also to approval by our board).

The MSA does not have a termination date, but may be terminated by the our board of directors

The PBERA likewise does not have a termination date, but may be terminated by PAVmed or Lucid at any time.

Status of Clinical Trials

We are currently seeking to accelerate

our collection of clinical utility data through a range of trials that can be efficiently executed.

These efforts include a planned investigator-initiated,

retrospective analysis of prospectively collected data on the approximately 400 San Antonio fire fighters who underwent testing as part

of a community-sponsored cancer awareness event (in respect of which we expect to publish results

in the first half of 2023) ;

an ongoing investigator-initiated, retrospective, single-center, study with 500 patients (in respect

of which we expect to publish results mid-2023), a virtual-patient randomized controlled trial with intended recruitment of 100-200 physician

participants (in respect of which we expect to publish results this year) ;

a Lucid-sponsored

multi-center, prospective, observational study with 500 patients;

and a Lucid-sponsored registry at existing Lucid Test Centers, whereby

all patients undergoing EsoCheck testing will be given the opportunity to provide informed consent and contribute data about their risk

factors, EsoGuard results, and subsequent diagnostic and/or therapeutic journey.

Both Lucid-sponsored observational/registry studies expect

to have preliminary results and/or interim analysis before the end of 2023.

As previously disclosed, consequently, we have decided to delay for the time being the two previously commenced clinical

trials, the “EsoGuard screening study” (“BE-1”) and the “EsoGuard case-control study” (“BE-2”),

as we are devoting our clinical resources to the studies cited above, which we expect will more efficiently generate the clinical data

we are currently prioritzing to drive EsoGuard commercialization.

Labs Laboratory Operations Update

February 14, 2023, we and our subsidiary, LucidDx Labs Inc., entered into an agreement (the “MSA Termination Agreement ”)

with RDx, pursuant to which the parties mutually agreed to terminate the MSA-RDx without cause.

The termination was effective as February

Until the termination of the MSA-RDx, RDx had continued to provide certain testing and related services for the Laboratory

in accordance with the terms of the MSA-RDx.

Recently, however, we accelerated the development of internal resources necessary to operate

the Laboratory entirely on its own.

Accordingly, we believe that termination of the MSA-RDx will improve the efficiency of the performance

of the EsoGuard assay.

other things, the MSA Termination Agreement reduces the remaining amounts of the earnout payments and management fees due under the APA-RDx

and the MSA-RDx to $725,000 (from the $3,450,000 that would otherwise have been payable under the APA and MSA if the MSA had remained

in effect through the balance of its stated term), resulting in a net savings to us of $2,725,000.

The payment was satisfied through

the issuance of 553,436 shares of Lucid Diagnostics’ common stock on February 25, 2023.

We were not required to make any cash payments

in connection with the termination.

#CheckYourFoodTube

Precancer Testing Events

January 2023, we successfully completed our first #CheckYourFoodTube Precancer Testing Event, in partnership with Rachelle Hamblin, M.D.,

M.P.H., and the San Antonio Fire Department (SAFD), to detect esophageal precancer in at-risk members of the department.

The SAFD testing

event was held over two weekends in January, which has been designated as Firefighter Cancer Awareness Month by the International Association

of Fire Fighters (IAFF).

A total of 391 members, nearly one-quarter of the department, who were deemed by Dr.

Hamblin to be at-risk for

esophageal precancer, underwent a brief, on-site, noninvasive cell collection procedure, performed by our clinical personnel using EsoCheck.

Firefighters with suspected esophageal precancer based on a positive EsoGuard result were identified, including some less than forty

years of age, and will undergo appropriate monitoring and treatment, as indicated by clinical practice guidelines, to prevent progression

to esophageal cancer.

These events, which we look to expand across the country, are an extension of our expanding satellite Lucid Test

Center (sLTC) program, which brings our precancer testing directly to patients—at their physician’s office and now at large

testing day events.

We demonstrated that our nurse practitioners can each perform up to fifty EsoCheck procedures in a day, and our laboratory

team handled over two hundred incoming samples in a day, while maintaining turnaround times at target.

These successes provide an excellent

foundation for future testing events as we continue to drive EsoGuard commercialization using all the tools at our disposal.

and Benefit Expense Reimbursement Agreement

November 30, 2022, PAVmed and we entered into a payroll and benefit expense reimbursement agreement (the “PBERA”).

Historically,

PAVmed has paid for certain payroll and benefit-related expenses in respect of our personnel on our behalf, and we have reimbursed PAVmed

for the same.

Pursuant to the PBERA, PAVmed will continue to pay such expenses, and we will continue to reimburse PAVmed for the same.

The PBERA now provides that the expenses will be reimbursed on a quarterly basis or at such other frequency as the parties may determine,

in cash or, subject to approval by PAVmed’s and our boards of directors, in shares of our common stock, with such shares valued

at the volume weighted average price of such stock during the final ten trading days preceding the later of the two dates on which such

stock issuance is approved by PAVmed’s and our boards of directors (subject to a floor price of $0.40 per share), or in a combination

of cash and shares.

However, in no event shall we issue any shares of our common stock to PAVmed in satisfaction of all or any portion

of the expenses if the issuance of such shares of our common stock would exceed the maximum number of shares of common stock that we

may issue under the rules or regulations of The Nasdaq Stock Market LLC (“Nasdaq”), unless we obtain the approval of our

stockholders as required by the applicable rules of the Nasdaq for issuances of shares of our common stock in excess of such amount.

Committed Equity Facility and ATM Facility

In March 2022, we entered into a

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

Under the terms of the facility, Cantor committed

to purchase up to $50 million of our common stock from time to time upon our request.

While there are distinct differences, the facility

is structured similarly to a traditional at-the-market equity facility, insofar as it allows us to raise primary capital on a periodic

basis at prices based on the existing market price.

Through December 31, 2022, 680,263 shares of our common stock were issued under this

facility for total proceeds of approximately $1.8 million.

In November 2022, we also entered into an “at-the-market offering”

for up to $6.5 million of our common stock that may be offered and sold under a Controlled Equity Offering Agreement between us and Cantor

Fitzgerald & Co.

In the year ended December 31, 2022, there were no shares sold through the at-the-market equity facility.

to December 31, 2022, through March 9, 2023, we sold 230,068 shares through its at-the-market equity facility for approximately $0.3

Series A Preferred Stock Offering

March 7, 2023, we entered into subscription agreements for the sale of 13,625 shares of Series A preferred stock (the

“ Series A Preferred Stock ”).

Each share of the Series A Preferred Stock has a stated value of $1,000 and a

conversion price of $1.394.

The terms of the Series A Preferred Stock also include a one times preference on liquidation and a right

to receive dividends equal to 20% of the number of shares into which such Series A Preferred Stock is convertible, payable on the

one-year and two-year anniversary of the issuance date.

The Series A Preferred Stock is a non-voting security, other than with

respect to limited matters related to changes in terms of the Series A Preferred Stock.

The aggregate gross proceeds from the sale

of shares in such offering were $13.625 million.

Senior Secured Convertible Note

Effective as of March 13, 2023, we entered into a Securities Purchase

Agreement (“SPA”) with an accredited institutional investor (“Investor”, “Lender”, and /or “Holder”),

pursuant to which we agreed to sell, and the Investor agreed to purchase a Senior Secured Convertible Note with a face value principal

of $11.1 million (the “March 2023 Senior Convertible Note”).

The issuance of the March 2023 Senior Convertible Note is

subject to customary closing conditions.

The March 2023 Senior Secured Convertible Note

would have a 7.875% annual stated interest rate, a contractual conversion price of $5.00 per share of the Company’s common stock

(subject to standard adjustments in the event of any stock split, stock dividend, stock combination, recapitalization or other similar

transaction), and a contractual maturity date of the two-year anniversary of the date of issuance.

The March 2023 Senior Convertible

Note would be convertible into or otherwise paid in shares of the Company’s common stock.

Under the March 2023 Senior

Convertible Note, the Company would be subject to certain customary affirmative and negative covenants regarding the

incurrence of indebtedness, the existence of liens, the repayment of indebtedness and the making of investments, the payment of cash

in respect of dividends, distributions or redemptions, the transfer of assets, the maturity of other indebtedness, and transactions with

affiliates, among other customary matters.

Under the March 2023 Senior Convertible Note, the Company would also be subject to financial covenants requiring that (i) the amount

of our available cash equal or exceed $5.0 million at all times, (ii) the ratio of (a) the outstanding principal amount of the notes

issued under the SPA, accrued and unpaid interest thereon and accrued and unpaid late charges to (b) the Company’s average market

capitalization over the prior ten trading days, not exceed 30%, and (iii) that the Company’s market capitalization shall at no

time be less than an amount to be agreed upon.

business will depend on proprietary medical device and diagnostic technologies, including the EsoCheck and EsoGuard technology

licensed by us.

We intend to vigorously protect our proprietary technologies’ intellectual property rights in patents,

trademarks and copyrights, as available through registration in the United States and internationally.

Patent protection and other

proprietary rights are thus essential to our Diagnostics business.

We currently have applied for, license or own 19 domestic and

foreign patents covering the EsoGuard and EsoCheck products and related technology.

date the patents protecting certain of our owned and licensed technology will first begin to expire is as set forth in the table

below (although currently pending patent applications, both foreign and domestic, are positioned to provide protection beyond such

date in each instance).

The EsoCheck and EsoGuard technology is protected by patents in the United States and

internationally, and our policy is to continue to aggressively file patent applications, both independently and in collaboration

with CWRU, as appropriate, to protect this technology and other of our proprietary technologies relating to our Diagnostics

business, including inventions and improvements to inventions.

Under the CWRU License Agreement, CWRU has agreed to apply for patent

coverage, at our expense, in any country requested by us, to the extent such protection is reasonably attainable.

We seek patent

protection, as appropriate, on:

product itself including all embodiments with future commercial potential;

methods of using the product;

methods of manufacturing the product.

addition to filing and prosecuting patent applications in the United States, we intend to file counterpart patent applications in other

countries worldwide where there is a value in doing so.

Foreign filings can be cumbersome and expensive, and we will pursue such filings

when we believe they are warranted as we try to balance our international commercialization plans with our desire to protect the global

value of the technology.

term of individual patents depends upon the legal term of the patents in the countries in which they are obtained.

In most countries

in which we file, the patent term is 20 years from the earliest date of filing a non-provisional patent application.

In the United States,

a patent’s term may be shortened if a patent is terminally disclaimed over another patent or as a result of delays in patent prosecution

by the patentee, and a patent’s term may be lengthened by patent term adjustment, which compensates a patentee for administrative

delays by the USPTO in granting a patent, or patent term extension, which restores time lost due to regulatory delays.

intend to continuously reassess and fine-tune our intellectual property strategy in order to fortify the position of our business in

the United States and internationally.

Prior to acquiring or licensing a technology from a third party, we will evaluate the existing

proprietary rights, our ability to adequately obtain and protect these rights and the likelihood or possibility of infringement upon

competing rights of others.

We also rely upon trade secrets,

know-how, continuing technological innovation, and may rely upon licensing opportunities, to develop and maintain our competitive position.

We intend to protect our proprietary rights through a variety of methods, including confidentiality agreements and/or proprietary information

agreements with suppliers, employees, consultants, independent contractors and other entities who may have access to proprietary information.

We will generally require employees to assign patents and other intellectual property to us as a condition of employment with us.

of our consulting agreements will pre-emptively assign to us all new and improved intellectual property that arise during the term of

the agreement.

also has (directly or through its subsidiaries) proprietary rights to a range of trademarks, including, among others, Lucid Diagnostics™,

LUCID™, EsoCheck®, EsoGuard®, Collect + Protect®, and EsoCheck Cell Collection Device®.

(Solely as a matter of

convenience, trademarks and trade names referred to herein may or may not be accompanied with the requisite marks of “™”

However, the absence of such marks is not intended to indicate, in any way, Lucid or its subsidiaries will not

assert, to the fullest extent possible under applicable law, their respective rights to such trademarks and trade names.)

Insurance Coverage and Reimbursement

ability to successfully commercialize our products will depend in part on the extent to which governmental authorities, private health

insurers and other third-party payors provide coverage for and establish adequate reimbursement levels for the procedures during which

our products are used.

the United States, third-party payors continue to implement initiatives that restrict the use of certain technologies to those that meet

certain clinical evidentiary requirements.

In addition to uncertainties surrounding coverage policies, there are periodic changes to

reimbursement.

Third-party payors regularly update reimbursement amounts and also from time to time revise the methodologies used to

determine reimbursement amounts.

This includes annual updates to payments to physicians, hospitals and ambulatory surgery centers for

procedures during which our products are used.

An example of payment updates is the Medicare program’s updates to hospital and

physician payments, which are done on an annual basis using a prescribed statutory formula.

In the past, when the application of the

formula resulted in lower payment, Congress has passed interim legislation to prevent the reductions.

product’s reimbursement profile, both in the U.S.

and internationally, is an important component of the product’s commercial

We prefer projects with existing reimbursement codes, the opportunity to seek reimbursement under higher-value surgical

procedure codes or the potential to seek reimbursement under narrow, product-specific codes as opposed to bundled procedure codes.

those products that have high strategic value, but with less defined reimbursement, we have engaged reimbursement experts and support

from industry associations to accelerate the acquisition of satisfactory reimbursement levels.

“ Reimbursement and Market Access ” above for a fuller discussion of the reimbursement status for EsoCheck and EsoGuard.

the purposes of FDA regulation a “medical device” is broadly defined in section 201(h) of the FDCA as “an instrument,

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to affect the structure or any function of the body, and which does not achieve its primary intended purposes through chemical action

and which is not dependent upon being metabolized for the achievement of its primary intended purposes.” Medical devices

subject to FDA regulation include “in-vitro diagnostic medical devices” or IVD devices, defined in the same FDCA section

as “reagents, instruments, and systems intended for use in the diagnosis of disease or other conditions, including a determination

of the state of health, in order to cure, mitigate, treat, or prevent disease or its sequelae, which are intended for use in the collection,

preparation, and examination of specimens taken from the human body”.

and which is not dependent upon being metabolized for the achievement of its primary intended purposes.” Medical devices subject

to FDA regulation include “in-vitro diagnostic medical devices” or IVD devices, defined in the same FDCA section as “reagents,

instruments, and systems intended for use in the diagnosis of disease or other conditions, including a determination of the state of

health, in order to cure, mitigate, treat, or prevent disease or its sequelae, which are intended for use in the collection, preparation,

and examination of specimens taken from the human body”.

marketing of any medical device product we may develop, license, or acquire, including traditional medical devices such as EsoCheck,

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cells of the esophagus in the general population of adults, 22 years of age and older.

December 2019, our CLIA-certified laboratory partner ResearchDx Inc., dba PacificDx, completed

documentation of EsoGuard analytical validity allowing us to commercialize it as an LDT.

In March 2022, we transferred EsoGuard testing to our own CLIA-certified laboratory, upon

our acquisition of certain assets from RDx as described elsewhere in this report.

defines an LDT as “an IVD product that is intended for clinical use and designed, manufactured and used within a single

laboratory.” FDA has long maintained that it has clear regulatory authority over LDTs and has chosen to fully exercise its authority

for certain classes of “single laboratory” IVD products which would satisfy its definition of an LDT, such as direct-to-consumer

tests that do not involve a health care provider.

FDA, however, has generally not enforced these regulatory requirements for most LDTs

not in one of these classes and has generally not required these LDTs to undergo FDA premarket review of analytical validity and clinical

validity, as all other IVD products must.

For over a decade, FDA has expressed its concern about insufficient regulatory oversight

over increasingly high-risk LDTs.

On multiple occasions from 2010 to 2020 it announced its intent to reconsider its long-standing policy

of LDT enforcement discretion with respect to LDTs but never acted on this intent, limiting its actions to hosting a public workshop

to gather feedback from industry stakeholders.

publishing two draft guidance documents describing a proposed risk-based framework to

LDTs, issuing a report citing evidence for the need for additional regulation of LDTs, and issuing a Discussion Paper on LDTs.

issued a final guidance document on the regulation of LDTs and, in 2020, HHS announced that, effective immediately, it was rescinding

all guidance, compliance manuals, website statements, or other informal issuances concerning FDA premarket review of LDTs, and that FDA

may not require premarket review of LDTs absent a formal notice-and-comment rulemaking process.

December 2019, RDx, our then-CLIA-certified laboratory partner completed documentation of

EsoGuard analytical validity allowing us to commercialize it as an LDT.

In March 2022, we

transferred EsoGuard testing to our own CLIA-certified laboratory, upon our acquisition of

certain assets from RDx as described elsewhere in this report.

defines an LDT as “an IVD product that is intended for clinical use and designed, manufactured and used within a single laboratory.”

FDA has long maintained that it has clear regulatory authority over LDTs and has chosen to fully exercise its authority for certain classes

of “single laboratory” IVD products which would satisfy its definition of an LDT, such as direct-to-consumer tests that do

not involve a health care provider.

FDA, however, has generally not enforced these regulatory requirements for most LDTs not in one of

these classes and has generally not required these LDTs to undergo FDA premarket review of analytical validity and clinical validity,

as all other IVD products must.

For over a decade, FDA has expressed its concern about insufficient regulatory oversight over increasingly

high-risk LDTs.

On multiple occasions from 2010 to 2020 it announced its intent to reconsider its long-standing policy of LDT enforcement

discretion with respect to LDTs but never acted on this intent, limiting its actions to hosting a public workshop to gather feedback

from industry stakeholders.

publishing two draft guidance documents describing a proposed risk-based framework to LDTs, issuing a report

citing evidence for the need for additional regulation of LDTs, and issuing a Discussion Paper on LDTs.

FDA never issued a final guidance

document on the regulation of LDTs and, in 2020, HHS announced that, effective immediately, it was rescinding all guidance, compliance

manuals, website statements, or other informal issuances concerning FDA premarket review of LDTs, and that FDA may not require premarket

review of LDTs absent a formal notice-and-comment rulemaking process.

2020 HHS directive notwithstanding, the regulatory status for LDTs such as EsoGuard remains somewhat ambiguous and uncertain.

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EsoGuard, used with EsoCheck, as a combined product.

therefore have decided to pursue FDA PMA approval for EsoGuard, when used on samples collected

with EsoCheck, which will allow us to jointly market them as well as provide protection against

changes to LDT regulation which could threaten our ability to market EsoGuard as an LDT.

In October 2019, we participated in a FDA pre-submission meeting and received feedback on

a proposed initial indication for use and the design of our two international multi-center

clinical studies to support a PMA application for FDA approval of EsoGuard on samples collected

with EsoCheck.

We expect to complete enrollment by the end of 2022 and submit our PMA by

We therefore may, when resources permit, pursue FDA PMA approval for EsoGuard, when

used on samples collected with EsoCheck, which will allow us to jointly market them as well as provide protection against changes to

LDT regulation which could threaten our ability to market EsoGuard as an LDT.

“Breakthrough Device” is highly-coveted special designation under FDA’s Breakthrough Devices Program, established pursuant

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Pursuant to this designation, we will be working with FDA to design an extension to our current screening

study to support an expanded indication to detect dysplastic BE, once FDA resumes Breakthrough Device meetings for IVD products,

which are currently on hold as the branch works to clear a Covid-19 pandemic related backlog.

and after approval or clearance in the United States, our products are subject to extensive regulation by FDA under the Federal Food,

Drug, and Cosmetic Act and/or the Public Health Service Act, as well as by other regulatory bodies.

FDA regulations govern, among other

things, the development, testing, manufacturing, labeling, safety, storage, recordkeeping, market clearance or approval, advertising

and promotion, import and export, marketing and sales, and distribution of medical devices and products.

study to support an expanded indication to detect dysplastic BE, once FDA resumes Breakthrough Device meetings for IVD products, which

are currently on hold as the branch works to clear a Covid-19 pandemic related backlog.

and after approval or clearance in the United States, our products are subject to extensive regulation by the FDA under the Federal

Food, Drug, and Cosmetic Act and/or the Public Health Service Act, as well as by other regulatory bodies.

FDA regulations govern,

among other things, the development, testing, manufacturing, labeling, safety, storage, recordkeeping, market clearance or approval,

advertising and promotion, import and export, marketing and sales, and distribution of medical devices and products.

the United States, medical devices are subject to varying degrees of regulatory control and are classified in one of three classes depending

on the extent of controls FDA determines are necessary to reasonably ensure their safety and efficacy:

general controls, such as labeling and adherence to quality system regulations;

special controls, pre-market notification (often referred to as a 510(k) application), specific controls such as performance standards,

patient registries, post-market surveillance, additional controls such as labeling and adherence to quality system regulations;

special controls and approval of a de novo request or PMA application, likely with clinical data requirements.

on the extent of controls the FDA determines are necessary to reasonably ensure their safety and efficacy:

general controls, such as labeling

and adherence to quality system regulations;

special controls, pre-market notification

(often referred to as a 510(k) application), specific controls such as performance standards, patient registries, post-market surveillance,

additional controls such as labeling and adherence to quality system regulations;

special controls and approval of

a de novo request or PMA application, likely with clinical data requirements.

general, the higher the classification, the greater the time and cost to obtain approval to market.

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CLIA-certified laboratory is subject to U.S.

and state laws and regulations regarding the operation

of clinical laboratories.

CLIA requirements and laws of certain states, including those of California, New York, Maryland, Pennsylvania,

Rhode Island and Florida, impose certification requirements for clinical laboratories, and establish standards for quality assurance

and quality control, among other things.

CLIA provides that a state may adopt different or more stringent regulations than federal law

and permits states to apply for exemption from CLIA if the state’s laboratory laws are equivalent to, or more stringent than, CLIA.

For example, the State of New York’s clinical laboratory regulations, which have received an exemption from CLIA, contain provisions

that are in certain respects more stringent than federal law.

Therefore, as long as New York maintains a licensure program that is CLIA-exempt,

we will need to comply with New York’s clinical laboratory regulations in order to offer our clinical laboratory products and services

CLIA-certified laboratory partner has current certificates to perform clinical laboratory testing.

Clinical laboratories are subject

to inspection by regulators and to sanctions for failing to comply with applicable requirements.

Sanctions available under CLIA and certain

state laws include prohibiting a laboratory from running tests, requiring a laboratory to implement a corrective plan, and imposing civil

monetary penalties.

If our CLIA-certified laboratory fails to meet any applicable requirements of CLIA or state law, that failure

could adversely affect any future CMS consideration of our technologies, prevent their approval entirely, and/or interrupt the commercial

sale of any products and services and otherwise cause us to incur significant expense.

and state laws and regulations regarding the operation of clinical laboratories.

CLIA requirements

and laws of certain states, including those of California, New York, Maryland, Pennsylvania, Rhode Island and Florida, impose certification

requirements for clinical laboratories, and establish standards for quality assurance and quality control, among other things.

CLIA provides

that a state may adopt different or more stringent regulations than federal law and permits states to apply for exemption from CLIA if

the state’s laboratory laws are equivalent to, or more stringent than, CLIA.

For example, the State of New York’s clinical

laboratory regulations, which have received an exemption from CLIA, contain provisions that are in certain respects more stringent than

Therefore, as long as New York maintains a licensure program that is CLIA-exempt, we will need to comply with New York’s

clinical laboratory regulations in order to offer our clinical laboratory products and services in New York.

have current certificates to perform clinical laboratory testing.

Clinical laboratories are subject to inspection by regulators and to

sanctions for failing to comply with applicable requirements.

Sanctions available under CLIA and certain state laws include prohibiting

a laboratory from running tests, requiring a laboratory to implement a corrective plan, and imposing civil monetary penalties.

CLIA-certified laboratory fails to meet any applicable requirements of CLIA or state law, that failure could adversely affect any future

CMS consideration of our technologies, prevent their approval entirely, and/or interrupt the commercial sale of any products and services

and otherwise cause us to incur significant expense.

Healthcare Regulation

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implementation of corporate compliance programs and reporting of payments or transfers of value to healthcare professionals.

Payment Sunshine Act

has been a recent trend of increased federal and state regulation of payments and transfers of value provided to healthcare professionals

On February 8, 2013, the Centers for Medicare & Medicaid Services, or CMS, released its final rule implementing section

6002 of the Affordable Care Act known as the Physician Payment Sunshine Act that imposes new annual reporting requirements on device

manufacturers for payments and other transfers of value provided by them, directly or indirectly, to physicians and teaching hospitals,

as well as ownership and investment interests held by physicians and their family members.

A manufacturer’s failure to submit timely,

accurately and completely the required information for all payments, transfers of value or ownership or investment interests may result

in civil monetary penalties of up to an aggregate of $150,000 per year, and up to an aggregate of $1 million per year

for “knowing failures.” Manufacturers that produces at least one product reimbursed by Medicare, Medicaid, or Children’s

Health Insurance Program and (i) if the product is a drug or biological, and it requires a prescription (or physician’s authorization)

to administer;

or (ii) if the product is a device or medical supply, and it requires premarket approval or premarket notification by

the FDA are required to comply with the Open Payments (commonly referred to as the Sunshine Act) filing requirements under CMS.

do not have any products covered by Medicare, Medicaid, or Children’s Health Insurance Program as none of our products have premarket

approval or clearance notification.

We expect once our products receive regulatory clearance, we will be required to comply with the

Sunshine Act provisions.

states, such as California and Connecticut, also mandate implementation of commercial compliance programs, and other states, such as

Massachusetts and Vermont, impose restrictions on device manufacturer marketing practices and require tracking and reporting of gifts,

compensation and other remuneration to healthcare professionals and entities.

The shifting commercial compliance environment and the

need to build and maintain robust and expandable systems to comply with different compliance or reporting requirements in multiple jurisdictions

increase the possibility a healthcare company may fail to comply fully with one or more of these requirements.

Anti-Kickback Statute

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the patient’s journey through our upcoming EsoGuard Telemedicine Program and our Lucid Test Centers consistent with the provisions

of the Federal Anti-Kickback Statute requires very careful coordination between us and our third-party telemedicine partners,

which each entity operating within numerous standard operating procedures incorporated in our quality management system.

We have established

a costly and substantial regulatory and compliance infrastructure for the Lucid Test Centers and EsoGuard Telemedicine Program, including

retaining multiple legal and regulatory consultants with specific expertise in this space, establishing and a special Quality & Compliance

Committee of our board of directors to provide board-level oversight, and assuring that our contracts with our third-party telemedicine partners comply with the law.

of the Federal Anti-Kickback Statute requires very careful coordination between us and our third-party telemedicine partners, which each

entity operating within numerous standard operating procedures incorporated in our quality management system.

We have established a costly

and substantial regulatory and compliance infrastructure for the Lucid Test Centers and EsoGuard Telemedicine Program, including retaining

multiple legal and regulatory consultants with specific expertise in this space, establishing and a special Quality & Compliance

Committee of our board of directors to provide board-level oversight, and assuring that our contracts with our third-party telemedicine

partners comply with the law.

False Claims Act

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patients who pass through our EsoGuard Telemedicine Program and our Lucid Test Centers, requires very careful coordination between us

and our third-party telemedicine partners broadly operating within numerous standard operating procedures incorporated

in our quality management system.

We have established a costly and substantial regulatory and compliance infrastructure for the Lucid

Test Centers and EsoGuard Telemedicine Program, including retaining multiple legal and regulatory consultants with specific expertise

in this space, establishing and a special Quality & Compliance Committee of our board of directors to provide board-level oversight,

and assuring that our contracts with our third-party telemedicine comply with the law.

and our third-party telemedicine partners broadly operating within numerous standard operating procedures incorporated in our quality

management system.

We have established a costly and substantial regulatory and compliance infrastructure for the Lucid Test Centers and

EsoGuard Telemedicine Program, including retaining multiple legal and regulatory consultants with specific expertise in this space, establishing

and a special Quality & Compliance Committee of our board of directors to provide board-level oversight, and assuring that our contracts

with our third-party telemedicine comply with the law.

government may further prosecute, as a crime, conduct constituting a false claim under the False Claims Act.

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under the False Claims Act, requires proof of intent to submit a false claim.

Payment Sunshine Act

has been a recent trend of increased federal and state regulation of payments and transfers of value provided to healthcare professionals

On February 8, 2013, the Centers for Medicare & Medicaid Services, or “CMS,” released its final rule implementing

section 6002 of the Affordable Care Act known as the Physician Payment Sunshine Act that imposes new annual reporting requirements on

device manufacturers for payments and other transfers of value provided by them, directly or indirectly, to physicians and teaching hospitals,

as well as ownership and investment interests held by physicians and their family members.

A manufacturer’s failure to submit timely,

accurately and completely the required information for all payments, transfers of value or ownership or investment interests may result

in civil monetary penalties of up to an aggregate of $150,000 per year, and up to an aggregate of $1 million per year for

“knowing failures.”

states, such as California and Connecticut, also mandate implementation of commercial compliance programs, and other states, such as

Massachusetts and Vermont, impose restrictions on device manufacturer marketing practices and require tracking and reporting of gifts,

compensation and other remuneration to healthcare professionals and entities.

The shifting commercial compliance environment and the

need to build and maintain robust and expandable systems to comply with different compliance or reporting requirements in multiple jurisdictions

increase the possibility that a healthcare company may fail to comply fully with one or more of these requirements.

Foreign Corrupt Practices Act

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and providers.

Affordable Care Act is an example that has the potential to substantially change healthcare financing and delivery by both governmental

and private insurers, and significantly impact the pharmaceutical and medical device industries.

The Affordable Care Act implemented

payment system reforms including a national pilot program on payment bundling to encourage hospitals, physicians and other providers

to improve the coordination, quality and efficiency of certain healthcare services through bundled payment models.

In addition, other

legislative changes have been proposed and adopted since the PPACA was enacted.

On August 2, 2011, President Obama signed into law the

Budget Control Act of 2011, which, among other things, created the Joint Select Committee on Deficit Reduction to recommend to Congress

proposals in spending reductions.

The Joint Select Committee did not achieve a targeted deficit reduction of at least $1.2 trillion for

the years 2013 through 2021, triggering the legislation’s automatic reduction to several government programs.

This includes reductions

to Medicare payments to providers of 2.0% per fiscal year, which went into effect on April 1, 2013, and will stay in effect through 2024

unless congressional action is taken.

On January 2, 2013, President Obama signed into law the American Taxpayer Relief Act of 2012, which,

among other things, reduced Medicare payments to several providers, including hospitals, imaging centers and cancer treatment centers

and increased the statute of limitations period for the government to recover overpayments to providers from three to five years.

expect that additional state and federal healthcare reform measures will be adopted in the future, any of which could limit the amounts

that federal and state governments will pay for healthcare products and services, which could result in reduced demand for our products

or additional pricing pressure.

and Other Privacy Laws

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31, 2022, 2021 and 2020.

daily operations of Lucid Diagnostics are managed by personnel employed by PAVmed, for which Lucid Diagnostics Inc.

incurs a service

fee (the “MSA Fee”), according to the provisions of the MSA.

Lucid Diagnostics recognized employee related

costs for employees spending all of their time working for Lucid Diagnostics products, services and business activities.

Additionally,

the Company is charged a MSA Fee under the MSA for the percentage of other employees providing services to Lucid Diagnostics Inc.

executive offices are located at One Grand Central Place, Suite 4600, New York, NY 10165, and our telephone number is (212) 949-4319.

make available free of charge through our website (www.luciddx.com) our periodic reports and registration statements filed with

the United States Securities and Exchange Commission (“SEC”), including our Annual Report on Form 10-K, Quarterly Reports

on Form 10-Q, Current Reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Sections 13(a) and 15(d) of

the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

We make these reports available through our

website as soon as reasonably practicable after we electronically file such reports with, or furnish such reports to the SEC.

as of March 9, 2023 we have 74 employees (all of whom are full-time employees), inclusive of our executive officers –our

Chairman of the Board of Directors and Chief Executive Officer (“CEO”), our President and Chief Financial Officer (“CFO”),

our Chief Operating Officer (“COO”), and our General Counsel and Secretary (“General Counsel”).

we are obligated to reimburse PAVmed for certain payroll benefit and expenses related to our employees pursuant to the PBERA, which may be settled in shares of our common stock, at PAVmed’s election.

are covered by a collective bargaining agreement.

We consider our relationship with our employees to be good.

were incorporated in Delaware on May 8, 2018.

Our corporate offices are located at 360 Madison Avenue, 25th Floor, New York, NY 10017,

and our telephone number is (212) 949-4319.

make available free of charge through our website (www.luciddx.com) our periodic reports and registration statements filed with the United

States Securities and Exchange Commission (“SEC”), including our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q,

Current Reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Sections 13(a) and 15(d) of the Securities

Exchange Act of 1934, as amended (the “Exchange Act”).

We make these reports available through our website as soon as reasonably

practicable after we electronically file such reports with, or furnish such reports to the SEC.

also make available, free of charge on our website, the reports filed with the SEC by our named executive officers, directors, and 10%

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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-K

Item 1. Business