What changed in this filing

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Item 1. Business

2024-03-25 compared with 2023-03-14 · 426 added, 500 removed, 464 unchanged (67% of the section changed)

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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.

2018 Jan 17;10(424):

EsoGuard is commercially available in the U.S.

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

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

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

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

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

Analytical validation tests of EsoGuard demonstrated

approximately 97% analytical sensitivity, 95% analytical specificity, approximately 98% analytical accuracy, and 100% inter-assay and

intra-assay precision.

Two independent clinical validation case control studies funded by the National Institute of Health utilized were

performed using upper endoscopy with biopsies as the diagnostic comparator and confirmed EsoGuard accurately identifies BE.

analysis of both studies demonstrated 84% sensitivity (95% confidence interval [CI] 76-90%), for detection of BE, and 86% specificity

(95% CI 81-91%).

Positive predictive value ( PPV) and negative predictive value (NPV) were calculated

using a BE prevalence of 10.6% published in a meta-analysis of U.S patients with GERD.

This resulted in a PPV of approximately

42% and NPV of around 98% .

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.

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.

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”).

EsoCheck have been developed to provide accurate, non-invasive, patient-friendly testing 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.

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.

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

discussed below under the heading “Clinical Guidelines for At-Risk Population”, in July 2022, the American Gastroenterology

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

in at-risk patients without symptoms of GERD.

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addressable U.S.

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

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

patients recommended for screening by clinical practice guidelines.

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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.)

As discussed below under the heading “Reimbursement and Market Access”,

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

Unfortunately,

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patients), a precancer (BE), and an intervention which can halt progression to EAC (endoscopic esophageal ablation).

The only missing

element for such an early detection program is a widespread screening tool that can detect BE prior to EAC.

Until recently,

the only missing element for such an early detection program is a widespread screening tool that can detect BE prior to EAC.

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 patients with 3 or more risk factors.

capable of serving as a widespread testing tool with the goal of preventing EAC deaths through early detection of esophageal precancer

and cancer in patients with 3 or more risk factors.

Guidelines for At-Risk Population

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An Updated ACG Guideline ,”

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

the first such update since 2016, was published online in April 2022 in the American Journal of Gastroenterology.

The clinical guideline

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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.

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

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

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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.

EsoGuard commercialization efforts span multiple channels including targeting primary care 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 undertaken multiple ways for patients have access to our test.

Initially, we built a limited network of our own physical 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 laboratory.

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 own test center locations, we have broadened patient access to our test by establishing a satellite test center program,

whereby we are making our personnel available to perform cell collection services inside physician offices or in certain geographies,

closely nearby physician offices by way of our Lucid Mobile Testing Unit.

in January 2023, we completed our first #CheckYourFoodTube Precancer Testing Event, with the San Antonio Fire Department (the “SAFD”)

during Firefighter Cancer Awareness Month as designated by the International Association of Fire Fighters (IAFF).

A total of 391 members

who were deemed to be at-risk for esophageal precancer, underwent a brief, on-site, noninvasive cell collection procedure, performed

by our clinical personnel using EsoCheck.

Since then, additional testing events have been hosted with the SAFD, and similar events

have been held with fire departments throughout the country.

These events are ongoing and are an extension of Lucid’s satellite

test center program, which brings our precancer testing directly to patients—at their physician’s office and now at testing

March 2023, we launched a Direct Contracting Strategic Initiative (“DCSI”) to engage directly with large Administrative

Services Only (“ASO”) self-insured employers, unions and other entities, seeking to replicate the successes of other

cancer screening diagnostic companies that have deployed similar strategies.

In August 2023, we contracted with the

Ancira Automotive Group as a result of this initiative, providing access to esophageal precancer testing for its employees at all 12

San Antonio locations.

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

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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.

final Local Coverage Determination (“LCD”) L39256, entitled “ Molecular Testing for Detection of Upper

Gastrointestinal Metaplasia, Dysplasia, and Neoplasia ” became effective in May 2023 on the Center for Medicare and

Medicaid Services (“CMS”) website by MAC Palmetto GBA.

(A substantially identical LCD was published by Noridian

Healthcare Solutions, the MAC whose geographic jurisdiction covers our CLIA laboratory in Lake Forest, CA.) The LCD outlines

criteria for future coverage 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 LCD indicated that it found that no currently existing test has fulfilled all these criteria, it

indicated that it will “monitor the evidence and may revise this determination based on the pertinent literature and society

recommendations.” We expect to submit EsoGuard for Technical Assessment under this foundational LCD later this

parallel with preparing to submit EsoGuard for Technical Assessment with 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 and are continuing to receive out-of-network commercial insurance payments for the EsoGuard test, which accounts for the vast

majority of our revenue to date.

Additionally, the legislatures in a number of states have passed laws mandating coverage of comprehensive biomarker

testing over the past several years.

We believe that EsoGuard falls within the definition of a biomarker test and thus we are reviewing

how to leverage legislation in those states to expand access to EsoGuard.

Utility and Clinical Trials

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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.

continue to expand the EsoGuard and EsoCheck evidence portfolio with additional clinical utility, clinical validity, and analytical validity

data from a range of ongoing studies and those that have recently completed or will be completed in the upcoming year.

These efforts

include planned publication of the results from the previously discussed “Multi-center, Single-arm EsoGuard clinical validation

study” (“BE-1”) which will also be presented at Digestive Disease Week (DDW) 2024;

this third clinical validation study

evaluates EsoGuard performance in the intended-use population.

Publication of real-world experience of EsoCheck as a nonendoscopic cell

collection device is also planned (previously presented as a poster at DDW 2023), in addition to results from EsoGuard analytical validation

studies performed by LucidDx Labs, and a summary of real-world outcomes from several hundred patients who tested positive with EsoGuard

and underwent confirmatory endoscopic evaluation.

These four manuscripts will be submitted for peer review in the first half of 2024.

Additionally,

the Lucid-sponsored multi-center, prospective, observational CL inical U tility of E soGuard study ( CLUE ) with

>500 subjects completed enrollment in late 2023, and full results are expected to be published in mid-2024;

results from an additional

data snapshot of the Lucid-sponsored PREVENT and PREVENT - F ire f ighter ( FF ) registries with a combined

enrollment of >1,000 subjects are expected to be published in a similar timeframe.

Combined interim results from the PREVENT and PREVENT-FF

registries focusing on provider decision impact have previously been accepted for peer review publication in Journal of Gastroenterology

& Digestive Systems (ISSN:

Both studies capture information on the diagnostic and/or therapeutic journey of subjects

following EsoGuard testing, and in addition to provider decision impact, will contribute differing levels of clinical outcomes data to

the Lucid evidence portfolio.

results for the Lucid-sponsored virtual-patient study are expected to be ready for analysis in mid-2024.

the “EsoGuard case-control study” (“BE-2”), a Lucid-sponsored clinical validation study, resumed enrollment in

2023 and is expected to continue through 2024.

This data will further supplement what has previously been produced by the two NCI-funded

studies (Moinova, et al.

Sci Transl Med.

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:

is currently manufactured for us by our partners Coastline International (“Coastline”), a high-volume device manufacturer,

and Sage Product Development.

Our current line at Coastline 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

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 (as amended to date, the “Amended CWRU 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 and on sample preservation.

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

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;

and 8% of net sales greater than $100 million per year.

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

$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.

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.

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

government agency, whichever comes later.

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

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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).

validity allowing us to commercialize it as a LDT.

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

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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

October 2023, FDA proposed a policy under which FDA intends to phase out its general enforcement discretion approach for LDTs so that

IVDs manufactured by a laboratory would generally fall under the same enforcement approach as other IVDs.

If finalized, FDA believes

that this phaseout may also foster the manufacturing of innovative IVDs for which FDA has determined there is a reasonable assurance

of safety and effectiveness.

As such, FDA has structured the proposed phaseout policy to contain five key stages:

End the general enforcement discretion approach with respect to Medical Device Regulation (MDR) requirements and correction and

removal reporting requirements 1 year after FDA publishes a final phaseout policy, which FDA intends to issue in the preamble of

the final rule.

End the general enforcement discretion approach with respect to requirements other than MDR, correction and removal reporting,

Quality System (QS), and premarket review requirements 2 years after FDA publishes a final phaseout policy.

End the general enforcement discretion approach with respect to QS requirements 3 years after FDA publishes a final phaseout policy.

End the general enforcement discretion approach with respect to premarket review requirements for high-risk IVDs 3.5 years after

FDA publishes a final phaseout policy, but not before October 1, 2027.

End the general enforcement discretion approach with respect to premarket review requirements for moderate risk and low risk IVDs

(that require premarket submissions) 4 years after FDA publishes a final phaseout policy, but not before April 1, 2028.

is currently anticipated that FDA will finalize the proposed policy by April 2024.

Once the final policy is released, we will implement

the QS requirements in the recommended staged approach and conduct pre-submission meetings with FDA to seek agreement on regulatory pathway

for EsoGuard premarket submission.

As required by the final policy, we will submit the regulatory premarket submission to the FDA as

per the timeframe defined in the final policy.

We are confident that the proposed policy will not have a commercial impact as the Company

already has a robust QS management platform for medical devices and EsoGuard will be able to transition to the platform to fulfill the

QS requirements, if and when required by the FDA.

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

using EsoGuard on samples collected with EsoCheck.

This use of EsoGuard together with EsoCheck as a screening system must be cleared

or approved by the FDA as an IVD device.

This use of EsoGuard together with EsoCheck as a testing system must be cleared or

approved by the FDA as an IVD device.

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

more than 30 million at-risk individuals over the age of 50.

Given the large market for pre-cancer screening, we likely will face numerous

competitors, some of which possess significantly greater financial and other resources and development capabilities than us.

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

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;

by physicians and the medical device market generally;

of use and reliability;

leadership and superiority;

marketing and distribution;

price and qualification for coverage and reimbursement.

of our existing and potential competitors have substantially greater financial, marketing, sales, distribution, manufacturing and technological

We may be unable to compete effectively against our competitors either because their products and services are superior or

more cost efficient, or because of they have access to greater resources than us.

These competitors may have greater name recognition

Many of these competitors have obtained all desirable FDA or other regulatory approvals, and superior patent protection,

for their products.

Certain of our competitors have already commercialized their products, and others may commercialize their products

in advance of our products.

In addition, our competitors may make technical advances that render our products obsolete.

We may be unable

to respond to such technical advances.

(“LucidDx Labs”), acquired from ResearchDX Inc.

(“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 February 10, 2023, 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”).

Our subsidiary LucidDx

Labs and RDx agreed to terminate the MSA RDx effective as of February 10, 2023, such that LucidDx Labs from and after such date has

operated the laboratory itself, which the Company believes has improved the efficiency of the performance of the EsoGuard

November 2023, LucidDx Labs launched EsoGuard 2.0, which uses multiplexing thereby allowing both genes to be interrogated on a single

The next-generation assay underwent rigorous analytical and clinical validation studies, including head-to-head comparisons

of multiplexed triplicate consensus versus singleplex techniques, consistent with CLIA standards.

Clinical validation analysis demonstrated

improved sensitivity and specificity for the detection of esophageal precancer, having demonstrated enhanced assay performance and lower

costs in extensive validation studies.

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

than 30 million at-risk individuals over the age of 50.

Given the large market for pre-cancer testing, we likely will face numerous competitors,

some of which possess significantly greater financial and other resources and development capabilities than us.

Our EsoGuard test faces

competition from procedure-based detection technologies such as upper endoscopy, and other testing technologies such as 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, EndoSign, commercialized by Cyted, and much like Cytosponge and our own EsophaCap

before it, is a small mesh sponge within a soluble gelatin capsule that needs to reside in the stomach for some time until it fully dissolves

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 sample contamination as the brush later passes regions of the upper esophagus and mouth.

Our competitors may also

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

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

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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.

The EsoCure Esophageal Ablation

Device is a novel technology that allows 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 connection with our efforts to

expand our presence in the EAC diagnostic market, in March 2022, PAVmed and Lucid entered into an intercompany license agreement whereby

Lucid was granted the rights to commercialize EsoCure for the treating dysplastic BE.

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.

PAVmed has 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, PAVmed may conduct additional development work and animal testing of EsoCure to support

a future FDA 510(k) submission.

Relationship with PAVmed

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

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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.

PAVmed owns approximately 70.1% as of December 31, 2023 and 64.9% as of

March 21, 2024 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), but excluding the voting power of any convertible securities.

PAVmed controls more than 50% of the combined voting power of our common stock and our convertible securities.

However, PAVmed’s

percentage of the combined voting power may decrease when dividends are paid on our convertible securities and to the extent our convertible

securities are converted into shares of our common stock.

For as long as PAVmed continues to control more than 50% of our voting securities,

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.

Even if PAVmed’s ownership

falls below 50%, PAVmed may retain substantial influence on such matters and may remain our controlling stockholder.

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

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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

the PBERA, 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.

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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 MSA does not have a termination date, but may be terminated by 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:

Agreements with PAVmed

January 2024, in accordance with the MSA and the PBERA, PAVmed elected to receive payment of $4.7 million of fees and reimbursements

accrued under the MSA and the PBERA through the issuance of 3,331,771 shares of the Company’s common stock.

March 2024, the Company entered into an eighth amendment to the MSA with PAVmed, increasing the monthly fee due thereunder from $0.75

million to $0.83 million, effective as of January 1, 2024.

The eighth amendment to the MSA was executed on March 22, 2024.

the MSA, as amended by the eighth amendment, the parties agreed PAVmed may elect to receive payment of the monthly MSA Fee in cash or

in shares of our common stock, with such shares valued at the volume weighted average price (“VWAP”) during the final ten

trading days of the applicable month (subject to a floor price of $0.70 per share).

However, in no event will PAVmed be entitled to receive

under the MSA, as amended, from and after the effective date of the eighth amendment to the MSA, more than 9,644,135 shares of our common

stock (representing 19.99% of our outstanding shares of common stock as of immediately prior to the execution of the eighth amendment).

Stock Offerings

March 13, 2024, we entered into subscription agreements (each, a “Series B Subscription Agreement”) and exchange

agreements (each, an “Exchange Agreement”) with certain accredited investors (collectively, the “Series B

Investors”), which agreements provided for (i) the sale to the Series B Investors of 12,495 shares of our newly designated

Series B Convertible Preferred Stock, par value $0.001 per share (the “Series B Preferred Stock”), at a purchase price

of $1,000 per share, and (ii) the exchange by the Series B Investors of 13,625 shares of our Series A Convertible Preferred Stock,

par value $0.001 per share (the “Series A Preferred Stock”), and 10,670 shares of our Series A-1 Convertible Preferred

Stock, par value $0.001 per share (the “Series A-1 Preferred Stock”), held by them for 31,790 shares of Series B

Preferred Stock (collectively, the “Series B Offering and Exchange”).

Prior to the execution of the Series B

Subscription Agreements and the Exchange Agreements, we entered into subscription agreements with certain of the Series B Investors

providing for the sale to such investors of 5,670 shares of Series A-1 Preferred Stock, at a purchase price of $1,000 per share,

which shares the investors immediately agreed to exchange for shares of Series B Preferred Stock pursuant to the Exchange Agreements

(and are included in the 10,670 shares of Series A-1 Preferred Stock set forth above).

Each share of the Series B Preferred Stock

has a stated value of $1,000 and a conversion price of $1.2444.

The terms of the Series B Preferred Stock also include a one times

preference on liquidation and a right to receive dividends equal to 20% of the number of shares of our common stock into which such

Series B Preferred Stock is convertible, payable on the one-year and two-year anniversary of the issuance date.

Preferred Stock votes with our common stock on an as converted basis (subject to certain beneficial ownership and Nasdaq limitations

described elsewhere in this Form 10-K).

The aggregate gross proceeds of these transactions was $18.16 million (inclusive of $5.67

million of aggregate gross proceeds from the sale of the Series A-1 Preferred Stock that was immediately exchanged for Series B

Preferred Stock in the transactions).

All the shares of Series A Preferred

Stock and Series A-1 Preferred Stock were exchanged for shares of Series B Preferred Stock in the Series B Offering and Exchange and,

as a result, no shares of Series A Preferred Stock or Series A-1 Preferred Stock remain outstanding.

On October 17, 2023, we sold 5,000 shares of Series A-1 Preferred Stock, solely to accredited investors (all of which

were including in the 10,670 shares of Series A-1 Preferred exchanged for Series B Preferred Stock in the Series B Offering and Exchange).

The aggregate gross proceeds to Lucid of this offering were $5.0 million.

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

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 business.

We currently have applied for, license or own 20 domestic and foreign patents covering the EsoGuard and EsoCheck products

and related technology.

Each of the technologies noted below is protected by multiple families, and only the earliest expiration for

the first of the families is listed.

The 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).

For EsoGuard, families are pending that, when granted, will offer additional

protections until at least 2037.

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 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

We seek patent protection, as appropriate, on:

product itself including all embodiments with future commercial potential;

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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.

countries 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.

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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.

delays by the U.S.

Patent and Trademark Office (“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

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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.)

also rely upon trade secrets, know-how, continuing technological innovation, and may rely upon licensing opportunities, to develop and

maintain our competitive position.

We 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 of our consulting agreements assign to us all new and improved intellectual property that arise

during the term of the agreement.

also has 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 “™” or “®”.

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

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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.

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and IVD products such as EsoGuard, is subject to FDA regulation.

June 2019, we received FDA 510(k) clearance for EsoCheck, permitting us to market it in the

as a cell collection device indicated for use in the collection and retrieval of surface

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

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.

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

as a cell collection device indicated

for use in the collection and retrieval of surface cells of the esophagus in the general population of adults, 22 years of age and

In 2022, we received FDA clearance to expand EsoCheck’s indications for use to include adults and adolescents, 12 years

of age and older.

In 2023, we further received FDA clearance to permit us to market EsoCheck as non-sterile.

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.”

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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.

administration could rescind the HHS directive and allow FDA to return to its previous regime of enforcement discretion.

The Verifying

Accurate Leading-edge IVCT Development (VALID) Act of 2020, which seeks to revamp the regulatory framework of diagnostic tests, including

LDTs, is expected to be reintroduced in 2021 and could radically alter the landscape for LDTs.

FDA may also choose to modify its enforcement

discretion of elements of its “single laboratory” definition of LDTs which by strict interpretation would require the LDT

to have been “designed” at the “single laboratory” and not transferred from another research laboratory, as EsoGuard