Q2 2023 PAVmed Inc Earnings Call

Participants

Dennis M. McGrath; President, CFO & Corporate Secretary; PAVmed Inc.

Lishan Aklog; Chairman & CEO; PAVmed Inc.

Michael Parks; VP of IR; PAVmed Inc.

Anthony V. Vendetti; Executive MD of Research & Senior Healthcare Analyst; Maxim Group LLC, Research Division

Edward Moon Woo; Director of Research and Senior Research Analyst of Internet & Digital Media; Ascendiant Capital Markets LLC, Research Division

Frank James Takkinen; Senior Research Analyst; Lake Street Capital Markets, LLC, Research Division

Ross Everett Osborn; Research Analyst; Cantor Fitzgerald & Co., Research Division

Presentation

Operator

Good day, and welcome to the PAVmed Second Quarter 2023 Business Update Conference Call. (Operator Instructions) Please note, today's event is being recorded.
I would now like to turn the conference over to Michael Parks, Vice President of Investor Relations. Please go ahead, sir.

Michael Parks

Thank you, Rocco. Good morning, everyone, and thank you for participating in today's second quarter 2023 business update call. The press release announcing our business update for the company and financial results for the 3 and 6 months ended June 30, 2023, is available on the PAVmed website.
Please take a moment to read the disclaimer about forward-looking statements. The business update press release and this conference call include forward-looking statements, and these forward-looking statements are subject to known and unknown risks and uncertainties that may cause actual results to differ materially from statements made.
Factors that could cause actual results to differ are described in the disclaimer and in our filings with the U.S. Securities and Exchange Commission for a list and description of these and other important risk factors or risks and uncertainties that may affect future operations, see Part I Item 1A entitled Risk Factors and PAVmed's most recent annual report on Form 10-Q filed with the SEC and subsequent updates filed in quarterly reports on Form 10-Q and any subsequent Form 8-K filings.
As required by law, PAVmed disclaims any intentions or obligations to publicly update or revise any forward-looking statements to reflect changes in expectations or in events, conditions or circumstances on which the expectations may be based or that may affect the likelihood that actual results will differ from those contained in the forward-looking statements.
I would now like to turn the call over to Dr. Lishan Aklog, PAVmed Chairman and CEO. Dr. Aklog?

Lishan Aklog

Thank you, Mike, and good morning, everyone. Great to have you here. Thank you for taking the time to join us to spend some time catching you up on the business side of things for Veris and Lucid. As you know, we did do a gold Lucid call yesterday and that call is on our website. So I'll limit my -- the topics of Lucid and focus more on Veris. But let's start with some recent highlights.
On the Veris side, the Veris Cancer Care platform is impacting care at early adopter practices. I'll give an example of how having that impact. We have a next-generation version of the platform that's under development and will launch in the early fourth quarter.
We are restructuring and expanding our commercial team under the leadership of our new President, Gary Manning, with a goal of accelerating patient enrollment and revenue from subscriptions in the second half. We've added 2 new strategic initiatives since his arrival. One is that we are building a module for the platform that corpuses our biopharma and will serve as a companion digital platform to novel cancer therapeutics more on that later. We're also upgrading the platform to serve as a software as a medical device with planned FDA submission in 2024, which will allow us to expand its functionality into clinical -- for more clinical decision support.
The implantable monitor portion of our project is progressing well, that's heading towards FDA submission and commercial launches in 2024. Again, more details in the webinar from yesterday, but some highlights from the Lucid side of things. Quarterly test volume growth grew 20% quarter-on-quarter. We upgraded our revenue cycle management. Infrastructure provider, as you highlighted yesterday, that's already had an immediate impact on both claims and payments and revenue in the first 6 weeks since we made that transition and really feel like we're at an inflection point with regard to translating test volume growth into revenue.
We have 2 prospective clinical utility studies that reached our personal milestone and will be submitted for publication soon. We highlighted unprecedented results from the NCI-funded EsoGuard study that was released recently and highlighted that we executed our first direct employer contract, which offers EsoGuard employee benefit.
Let me just step back and have a couple of slides. There's an introduction to those of you who are not familiar with the PAVmed story. PAVmed is a diversified commercial stage medical technology company. We operate in all 3 sectors, devices, diagnostics and digital health. Our corporate structure is that we have 2 majority-owned subsidiaries as of the beginning of this year represent the entirety of the focus of our business. Veris Health, privately held, digital health company with a cancer care platform and a smart vascular report. And of course, Lucid diagnostics that publicly listed Nasdaq company, which is what the detection of esophageal pre-cancer.
So again, let's start with Veris. So Veris is a commercial stage digital health company. So we're focused on enhancing personalized cancer care. There are 2 components, one of which is actively commercialized and one which we expect to commercialize in next year. The Cancer Care platform consists of a patient -- smartphone module as well as a clinician portal that's managed to a Veris box of branded devices to transmit physiologic data from the patients to their physicians. The mission is to utilize modern remote patient monitoring tools to improve care through the early detection of complications and establishing longitudinal trends and risk management.
The business model is a Software-as-a-Service recurring revenue model. We have established RPM code. So this is not a significant reimbursement hurdle for us. There are also additional revenue opportunities for enhanced technical support, clinical support and when the implant of the device becomes available. We seek to leverage certain value-based models, particularly ones that are focused on oncology, like the enhancing oncology model, EOM. So on the commercial execution side, we had several early adopters. These are generally small to medium practices that are on the platform and putting patients on the platform.
Our focus in the last quarter has been with customer integration support, streamlining, making more efficient the processes for the -- for practices to integrate this within their operations, within their electronic health record and billings and all of that is going quite well. We have received positive feedback and have used some of that feedback to incorporate features into our next-generation platform, which is actively under development right now and will launch by the early part of the fourth quarter.
We are restructuring and expanding our commercial team. Gary Manning, again has taken the lead on that. And we look to do so in the second half of this year to drive commercial expansion and the revenue from subscriptions. But the best way as I did yesterday was Lucid to describe how the system works and that it's real and that patient -- that it's having an impact on Cancer Care. I thought I'd highlight one particular example that shows that remote patient monitoring can prevent adverse outcomes and save lives.
So there's a patient, Dave, who is a 71-year-old male, unfortunately, was diagnosed with bile duct cancer. He is undergoing aggressive systemic treatment, Veris client and oncology practice in Southeast Pennsylvania. He was selected to be enrolled on the Veris platform given that he had a high risk complications. So he received, as you can see on the right there, the Veris box with the Bluetooth connected monitoring devices and the platform was loaded on a smartphone.
So really, we see the Veris platform as a sentinel, as a morning system that allows the patient to highlight abnormalities, either through their symptom reporting or through physiologic changes that are detected on the devices. So the patient's self-reported that his belly duct you can see how he would do that on the right there, on one of the screens that has a quite sophisticated symptom reporting that has you rated time period just like a physician or a nurse would ask you. The next day the nurse noted on the platform. You can see the example there, this is from the actual patients, she noticed that he reported that symptom that's the bottom a little red circle there that shows that he reported symptoms of belly pain, and he rated it a 2, as moderately severe.
She also noted that the heart rate and the oxygen saturation were changing in a way that was concerning to her. You can see the green lines for the heart rate going up and the green lines for the oxygen saturation going down. So given those triggers as you contact with the patient through the telemedicine portal that's spoken to our system. She accepts the patient, tell that it wasn't an imminent emergency, but that this was potentially heading in a serious direction and educated the patient on the next steps, including what the thresholds would be in terms of symptom progression that would necessitate him heading to the emergency room.
Based on that assessment and that education, the patient symptoms did rapidly progress later in the day, and he was admitted to the hospital via the emergency room. He was diagnosed with an acute bowel obstruction, but fortunately, it was early enough in the process that it could be treated with a nonsurgical stent and he get a short stay in the hospital and he is discharged.
So really, this is a classic example of how the platform enhances care. The early warning and intervention of a potential -- an actual complication in these high-risk cancer patients work flawlessly and it prevented very likely progression to perforation, high-risk emergency surgery and potentially death. And it also prevented any delay in cancer -- cancer therapy required surgery, then all treatment would have been halted until he had healed for the surgeon.
We also have very solid documentation that this is a good example of how it drives value based on the EPRG code of hospital expenditures, estimated that the hospital, the system, the payers save between $10,000 and $24,000 by getting the early notification of this complication. Also, the infusion therapy for the treatment is the major source of income for the practices, and there was no loss of that practice income for the physicians. And also these value-based programs that I mentioned like EOM, they depend on preventing complications, preventing hospitalization, and shortening stays of hospitalizations do occur. So clearly, that had an impact on that and would have been a valuable contributor to the EOM calculations.
As I mentioned, we have 2 new initiatives that are coincident with Gary Manning starting as the President, and we're really excited about both. The first one is what we're currently calling a biopharma companion digital platform. And the idea here is to expand the Veris platform to include a module that focuses on biopharma therapeutics. So we'll target biopharma companies that are developing novel cancer therapeutics and provide them with a long-term patient monitoring solution. And this patient monitoring solution will be tightly linked to the therapeutics. So it will start in the early clinical stage during the early clinical trial where the patients will be monitored during these therapies, which again can have significant complications. And that will continue all the way through regulatory approval and full commercialization.
There will be analogy here is something that is quite common and has become common over the last decade and a half, which are companion diagnostics. So we're a therapeutic drug or biologic, it linked to a diagnostic test, both during the development as well as during regulatory clearance and they become incidentally going for the long-term. So the opportunity here includes providing support for clinical trials and post-marketing surveillance, enhancing safety by reducing adverse events. So it's useful for the companies to be able to complete their trials with monitoring to prevent complications just like the complication that we saw in the previous example of the patients.
That will lead to expedite it regulatory filings, lower regulatory hurdles, more likely clearance with expectations that FDA would clear these devices -- clear these therapeutics contingent on the patient being monitored as they were during the trial. That has -- it also has the opportunity of accelerating speed to market and commercial expansion, and we see these as long-term commercial partnerships with the biopharma companies. And an entirely different and new source of revenue and an entirely different business model.
Next slide. The other important strategic initiatives that we're getting started on this quarter is our transition from -- of the Veris platform to a software as a medical device. So the FDA categorizes software used in health care in 2 primary ways. Right now, the Veris platform is considered a medical device data system. So all it does is displays medical data for the clinicians to see it. Again, we saw with the example where the nurse saw the heart rate in the oxygen saturation, but we did not -- and we alert, we provided a sense that it was high based on color coating and based on a threshold that the clinicians provide, but there's no built-in decision-making or analysis that goes into that, and that allows us to operate it under this lower regulatory hurdle. For something could be a software as a medical device and it's intended use is actually for diagnosing and treating patients, and it provides additional clinical -- active clinical supporter decision-making.
So we've decided that we're going to launch a program to upgrade Veris platform from an MDDS to an FDA-cleared software as a medical device. And what -- what will happen after establishing that foundation is it will provide us with unlimited potential to grow the platform into a full bore clinical decision support. So instead of simply displaying medical data, for clinicians, which, of course, is valuable, and we've seen that already. We'll be able to provide more sophisticated threshold alarms, alerts, heuristic algorithms to provide effective triage, so the patients at the top of the list will be ones that have been calculated to be at greatest risk for having complications based on various algorithms and a whole blue ocean area called digital biomarkers where AI and machine learning models are used for patient risk programming. So those are all exciting horizons that we're looking forward to growing into. And in order to do that, we have to make that transition for -- going to be a software as a medical device.
So the key steps, initial steps are we are incorporating key features in this next-generation product that will allow us to do so, and we'll be initiating once the next-generation is launched, we'll be initiating validation testing to support FDA 510(k) submission as a software as a medical device next year. So a really exciting initiative that we're moving forward on.
Final update on the implantable monitor. If you recall, this is to extend the power of the platform and ensure 100% compliance with a remote patient monitoring billing requirements. Just as a reminder, with the remote patient monitoring codes in order for the physician and the practice to go for it, the patient has to actively measure various parameters, weight, blood pressure, oxygen saturation, et cetera, at least 16 days a month. With the implantable device that will guarantee that it does not depend on the patient compliance on 100% -- compliance with that RPM billing threshold. So this consists of an implant, an implantable monitor. You can see on the bottom right there as a stand-alone monitor and it has the (inaudible), which allows an existing off-the-shelf chemo port, that's the purple -- purple item there to kind of snap in and allows them to be implanted at the same time to concur with the initiation of chemotherapy.
And we'll have a variety of features that will measure continuous cardiac monitoring activity. It will have an event monitor where the patient is having some symptoms that could be correlated to the physiologic parameters, temperature, respiratory rate and has a full Bluetooth connectivity to their smartphone. We've had multiple successful FDA pre-submission meetings that seek feedback on various design features that have occurred over the last couple of quarters. That's all going very well as is the actual development work with our 2 manufacturing and R&D engineering partners, and we're looking to target FDA submission and commercial launch next year.
So that's it with Veris. Just 2 real quick slides to highlight some of the key points that -- and accomplishments that we wanted to -- as we spend more time diving into more detail yesterday. Again, we show very nice steady double-digit quarter-on-quarter growth and ease of our testing volume and 2,200 tests performed in the last quarter. And a significant portion of them continuing to be the high-volume testing events at firefighter departments and elsewhere.
Also, I just wanted to highlight the results of the better net study. This is a study that was -- the results were recently released. It's a consortium of academic medical centers, leading academic medical centers in the area of esophageal disease, funded by the National Cancer Institute. The results have been posted on a preprint server. It is available on PAVmed and has been submitted for review to the American Journal of Gastroenterology. The results demonstrated that EsoGuard when compared to both the gold standard of endoscopy, detected 100% of the cancers, 180% of pre-cancers and 85% overall. With an estimated negative predictive value of 99%, which is the threshold that you need in order to be an effective test to make sure that you're not missing any positive patients.
I highlight these results relative to results of other early cancer detection targets, not really suggested as a head-to-head comparison directly. But to really highlight what the standards are for these other successful or imminent tests that are getting a lot of attention and what those targets -- what the target performance is for us relative to what they are -- they have been for these other successful tests. And so as you can see, at 100% cancer detection, we are well in the range and above, frankly, where colon guard is in the newer reported results. The colorectal blood test from (inaudible) substantially lower than that, but still deemed to be sufficient for it to achieve FDA clearance as well as payment for Medicare, although the important highlight of that is that, that 82% number is heavily dominated by later-stage cancers and the rate per stage 1 cancer is quite poor at 55%.
I'll note that all of the cancers and the better net study that EsoGuard picked up were all Stage I cancers. The most striking difference is EsoGuard's ability really, and this is where we described this as unprecedented, its ability to detect pre-cancer. So Cologuard does just under 50%, the blood test have essentially no meaningful ability to deduct pre-cancer while EsoGuard is doing so at the greater than 80% range. Now for colorectal cancer that can be reasonable in that Stage I cancer is curable. But for esophageal cancer, we don't have an option. We actually have to pick up pre-cancer because the mortality rate for stage 1 cancer in esophagus is very, very high.
So I'll leave it at that and hand over to (inaudible).

Dennis M. McGrath

Thank you, Lishan. Summary financial results for the second quarter and first half of the year reported in our press release that was published last night. On the next 3 slides, I'll emphasize a few key highlights from the quarter, but I encourage you to consider those remarks in the context, the full disclosures covering our quarterly report on Form 10-Q that was filed with the SEC on Monday afternoon and is available on the PAVmed website.
Slide 17 is our balance sheet comparison. It demonstrates cash of $37.2 million, which reflects a sequential burn rate of $12.1 million. This represents a $2 million improvement over the first quarter and a $5 million quarterly improvement over the fourth quarter of last year. These improvements are related to the cost control initiatives we put in place at the beginning of the year. Obviously, that cash balance does not reflect the remaining $10 million draw available to us under the securities purchase agreement that was signed in March of 2022 or other resources available to us at both the PAVmed and Lucid entity levels.
On a pro forma basis, including the remainder of the securities purchase agreement and assuming the net burn rate is sustained at this level, our runway is about a year. Furthermore, as cash collections continue to accelerate, and as we'll talk about in a second. This can further throttle the burn rate for the upcoming quarters. Vendor payables are flat sequentially. Other current liabilities show an increase of $1.6 million. The largest increase here is our annual renewals of our insurances, and they get paid over the next year.
The convertible note, a net sequential decrease of approximately $1.3 million is largely related to debt repayments via conversions to common stock during the quarter and other long-term liabilities are from capitalized leases related to our lab and other office spaces. Shares outstanding, including unvested restricted stock towards as of today, is 111.4 million shares. The [GAAP] outstanding shares of 108.5 million are reflected on the slide as well as on the face of the balance sheet in the 10-Q.
So on the next slide, Slide 18 compares this year's second quarter to last year's second quarter and similarly for the 6-month totals on certain key items. Trust you will review the information on my comments later the cautionary disclosure in the bottom of the slide about supplemental information particularly non-GAAP information. The SEC make sure I might say that. Revenue for the second quarter largely reflects Lucid actual cash collections for the quarter, for insurers reimbursable claims plus invoiced EsoGuard test from the Veterans Administration plus initial billings with adverse cancer care platform.
As detailed in our Lucid quarterly call yesterday, we highlighted the discussion that began on our first quarter call in May regarding the major change in upgrade we made to Lucid's revenue cycle management company. We determined the best way to manage that transition was to stop submitting claims for reimbursement at the beginning of May to allow for Quadax, the RCM, to come on board, they did in mid-June and more effectively handled processing and reporting of the claims we had in hand.
So far, in just a short period of time since the beginning of third quarter, July 1st -- collections from the third-party reimbursement claims have tripled what was collected in the entire first -- entire previous quarter. The second quarter Veris revenue reflects the initial payments -- patients equivalent to about 90 patient months, put on the platform for each of the first 2 onboard cancer care centers during the initial customer acceptance, processes that included validation, customization, integration with the respect of the HR systems, generally heavily controlled and very intense pressure testing of the platform as it relates to clinicians relying upon the Veris platform information, the speed of connecting patients and clinicians, feasibility to effectively communicate with an update to the clients' electronic health records and other patient care-related systems.
Obviously, the platform is performing as intended as it is already generating patient case reports that demonstrate life-saving capabilities through remote patient monitoring, as Lishan detailed in his prepared remarks. So with regard to the prior year revenue, as we look at the next slide. You'll recall that there was a fixed monthly fee received from a third-party lab that we used before setting up our own lab. And that agreement terminated in February of '22.
Lucid's revenue recognition. A key determinant is the probability of collection. And therefore, due to the fact that we are in the early stages of our reimbursement process means revenue recognition occurs when the claim is actually collected versus when the patient report is invoiced and submitted for reimbursement. You'll see in our 10-Q, this is called variable consideration in the context of GAAP ASC 606 revenue recognition guidelines.
As for the Veris revenue, we expect to continue to recognize revenue on an as-incurred and as-invoiced basis subject to normal GAAP rules. Couple of comments on GAAP and non-GAAP OpEx as well as net loss. The presentation shows year-over-year comparisons, but I'm going to highlight some sequential changes, which are more indicative of where we're heading for the balance of the year. Our second quarter GAAP OpEx and GAAP loss is lower sequentially by more than $4 million each, reflecting a 20% decrease sequentially for each measure.
Our second quarter non-GAAP OpEx is lower sequentially by $2.3 million and $4.8 million from the fourth quarter, 15% and 27% reduction sequentially. This reflects the impact of the cost controls we initiated at the beginning of the year. Our second quarter non-GAAP loss per share is $0.09, a decrease of about $0.01 from the first quarter and an improvement from a loss of around $0.15 in the fourth quarter.
Slide 19 is the graphic illustration of our operating expenses as they are presented in detail in our press release. The second quarter sequential decrease was led by approximately a $1.5 million decrease in G&A and a $1 million decrease in R&D. Sales and marketing expense was relatively flat and the relatively small cost of revenue increase is largely attributable to an increase in the test volume for the quarter.
Cost of revenue primarily consists of Lucid lab supplies and fixed lab costs with a much smaller amount attributable to the delivery cost for the Veris Health Cancer Care Platform. So I'm going to give you a few more stats that we shared yesterday on our call, related to the improvements that we're realizing on the revenue cycle management company. Just since they took over in -- on May 1, and onboard its claims beginning in the middle of June. From May 1 to August 14, including all of the backlog that existed until they came on board, they submitted claims of over 2,000, 2,100 claims. Of those claims just under half have been adjudicated by the insurance companies already, 943 claims. That resulted in an allowed amount essentially an affirmation of the payment obligation of 349 of them, 37% of them, but telling in that is the allowed amount came in at $1,890, essentially validating our payment ready to establish by Medicare.
So we're seeing speed of submitting claims, we're seeing speed of adjudication, we're seeing speed in terms of the allowable claims and the allowable claims at a significantly higher rate than what we've even reported in our previous quarters. Whether that 37% success rate continues or continues to improve, Quadax, the new RCM manager is demonstrating significant efficacy as well as data reporting that's actionable, including those that are adjudicated and initially denied putting them into their appeals process, which they are just revving up now.
They have about 200 appeals of this group in their process, which the #1 reason for denial is medically not necessary. And we know the 2 society guidelines establish the risk factors, and these patients only get a test if they meet those risk factors. So we believe that appeals process will be helpful in 2 dimensions. One, collecting more money; and two, becoming such an annoyance to the Chief Medical Officer that will raise to their level of attention, and therefore, similar to other contracts we entered move towards in-network as part of our twofold clinical utility data plus claims history driving improvement in the reimbursement process.
So with that, operator, let's open it up for questions.

Question and Answer Session

Operator

(Operator Instructions) Today's first question comes from Frank Takkinen with Lake Street Capital Markets.

Frank James Takkinen

Lishan, Dennis, congrats on progress. I'll start with one on the biopharma cancer care platform given that spend a fair amount of time talking about today. I don't think I heard you guys talk about a time line on that, but maybe walk through when we could see that develop, when we could see what needs to occur from a regulatory process, if anything at all? And when we could see that maybe launch live?

Lishan Aklog

Yes. Thanks for giving the opportunity to highlight that. So I think if you recall, Frank, this was an area that we had sort of on our horizon as a strategic goal for some time in the future. And with Gary coming on board has given us the opportunity to deeper dive and we realize that we have the opportunity to do 2 things that were different than before. One is to move the time line much, much quicker than I had expected. And two, to extend the value of the proposition not just for clinical trial support, but extending it as a full companion technology to the diagnostics. So we are just scoping out. So the reason why it's going to start -- well, just to backtrack a second, the reason why the time lines are going to be -- are significantly shorter than we had originally planned, is that it's clear that we could add it just simply as a module on top of our existing platform.
So it doesn't require a bottoms-up to entirely new structure. Once that became clear in consultation with our really outstanding software development partner Loka. That process has started. We're scoping out the project to figure out what -- how much -- what the design structure will be, but since it will be a module within it, we don't expect the time lines to be significant. We're not giving sort of real guidance in terms of when we expect that we don't have full visibility yet. But we're talking on the order of months or quarters, not years.

Frank James Takkinen

Perfect. That's helpful. And then maybe just to stay on that topic, could you talk about what a business model could look like there once you start to sign partnerships with biopharma companies?

Lishan Aklog

Yes. I mean this is entirely different, right? So here, the value to the pharma company is real, right? So I mentioned all of the potential things. If you take, for example, one of the more expensive immunotherapies, CAR-T therapy, for example, is $1 million per patient treatment and there are significant complications cytokine storm and other things that come along with that.
So having the value to the biopharma company and having an established platform that can not only monitor the patient during the clinical trial and establish the safety and improve the safety profile of such a drug but also do so after clearance in the market is significant. And so we expect that the business model there will be to capture as a service arrangement with the pharma company for the services provided during the development of the -- during the clinical trial, during the development and clinical research phase. And then some additional structure around how the platform will be utilized in conjunction with the drug on more of a subscription basis. but all very much tightly tied with the partner pharmaceutical company, so that our platform and the drug are really intimately linked for the foreseeable future.

Dennis M. McGrath

Frank, opening on this topic is if you have a $1 billion a year drug, every month that you allow them to get into the market, that opportunity cost that they lose is about $80 million a month. So if we can save them a month or 3, it is a significant opportunity for them to couple this as a companion to get that on the market sooner to be able to monitor safety of its performance.

Lishan Aklog

And there's a lot of room there, as you might have actually -- if you've got $1 million of therapy, the amount of -- there's a lot of room there to establish value and pricing of the value associated with having a companion platform that can improve the results.

Frank James Takkinen

Got it. That's helpful. And then maybe for my last one, I'll switch over to the Lucid business. With the clinical utility studies being submitted for peer review by the end of the month, I believe that checks the last primary box that CMS presented to you related to guidelines, utility and validity. So with that, I assume that you can push forward that CMS establishment -- finalization of that establishment pretty quickly and then maybe just extend that thought into private payers, too, and when we start to see those come out based on the futility data.

Lishan Aklog

Yes, I'm going to kind of reverse your question. On the private side, it's very straightforward because it's each individual payer and our ability to have sort of less structured conversations with regard to the efficiency, the data, the results of the data when additional data that they might need, et cetera, I can literally start for one from the time that they posted on the preprint server even prior to peer review. With -- and so that's great. with the proportion of our patients being over 80% commercial pay, we see really immediate opportunities to have an impact on coverage from the results of those 500 patients.
Things obviously are more kind of rigid on the CMS side, where -- what would likely be the case is we would take that data and try to engage with [dentists] to understand if it meets the -- if we believe it needs to be thresholds for that were outlined in the local coverage determination. We have a strong sense that it will because as you recall, the one meeting we did have prior to the draft LCD being published was, in fact, focused on clinical utility and the plan, certainly, as we had it was consistent with what they articulated their expectations to be.
So I don't expect that as soon as this is published, that we'll sort of put out the technical assessment and submitted and sort of roll the dice in that regard. My sense is that we'll try to have some engagement with them and get the level of costs before doing that.

Operator

And our next question today comes from Ed Woo with Ascendiant Capital.

Edward Moon Woo

Yes. Congratulations on the progress. My question is on the Veris sales force. You said you guys are restructuring and expanding it. Is there a target size for the sales force? And in terms of geography, are you guys having a nationwide reach or is there a focus on a certain region of the country?

Lishan Aklog

Yes. Great questions. We're -- so we are not focusing on individual regions. We have initially focused on smaller practices where the hurdles in terms of infrastructure, IT infrastructure integration and so forth are lower, although we are having active discussions with several large academic cancer medical centers. We're going to start small and build as we go. So the current plan is for 2 sellers. We're actively interviewing for those for the second half of this year. And then we will increase that as we go -- as we get traction along the way, so 2 sellers plus Gary for this quarter, and then we will look to expand for the next year.

Edward Moon Woo

Great. And then as you guys start to focus on this biopharma program, will it require a different tech of sales force? Or can you use your existing salespeople to try to go into that market?

Lishan Aklog

Yes. Another great question. My sense is that it will be somewhat different but very similar to, let's say, like on the Lucid side, the difference between sort of the, in the trenches sales folks to call on, on primary care practices and specialists and so forth. And then those that focus more on strategic accounts. So this would be more along those lines. So -- and frankly, at the beginning, much of that will happen at the most senior level with Gary being the primary person to interface with the biopharma companies around this opportunity.

Operator

And our next question today comes from Ross Osborn at Cantor Fitzgerald.

Ross Everett Osborn

So regarding commercialization of Veris, has New Jersey Cancer Care expanded the use outside of the initial group of patients. And as a follow-up, given this was launched in February, can you provide an average use signed per month in order for us to better understand the revenue potential?

Lishan Aklog

Okay. Let's break that down. So the -- they are adding patients to their platform, as they sort of hinted in the patient example, even though that wasn't from their group. The general approach has been to identify a cohort of the highest risk patients to bring on the system first.
And then as I've sort of said, we're focusing -- we've been focused the last couple of quarters on making sure that -- making sure that we -- all of the technical aspects to make sure that when the patients get their device that they are transmitting data appropriately, that they're doing so in a way that will give high levels of compliance, that the physicians are able to track their time on the system to make sure that they can appropriately bill under the various costs.
So it's really critical that all of that is sort of humming along and running on all cylinders. And we've been really focusing our resources on that at the sites that we currently have. And that's working well. As I said, there have been some feedback that we're incorporating into the next-generation device, but that's working well.
With regard to compliance, our compliance is -- even though we sort of pointed out that the implantable platform will be a boost and compliance. We're getting nearly 100% compliance. Patients who are reporting the minimum of 16 days a month of parameters in order for the practice to drill. The hurdles with the practice billing were more around sort of documentation and making sure that we have a streamlined way for them to document their time. And that's starting to get properly fleshed out. I think that covered the various components to your question, if I haven't, please let me know.

Ross Everett Osborn

No, that's perfect. And then just a quick second question. I had the next-generation launch. Can you talk about how you're marketing that offering made to larger practices or institutions?

Lishan Aklog

How we're marketing the implantable device?

Ross Everett Osborn

Yes.

Lishan Aklog

Or the Gen 2 version of the software platform. So I just want to make sure I'm talking about the right product.

Ross Everett Osborn

Well, both would be great, if you can.

Lishan Aklog

Okay. Sure. Yes. So the next-generation software platform is really just incremental improvements that reflect the feedback that we've received from practices. So that will just be sort of smooth upgrade of a new generation device. We're not marketing that, frankly, any differently.
The implantable device won't be available for next year. We don't have a hard date provide to you yet. There's still some feedback back and forth with FDA as well as some timing-related elements with our contract manufacturing vendors. But once we do launch that, we haven't really articulated our full -- externally our full marketing plan. There are still some variables that we have to kind of decide with regard to are we going to charge for the device, how much are we going to charge or we make charge a premium relative to existing ports and so forth.
And that's all still to be determined because it will depend a lot on the valuable real-world information that will garner from the software platform. in terms of the mechanics of that, how well is that -- how well are we doing in capturing the full revenue opportunity from the remote patient monitoring and so forth. That data will be essential for us to find a sweet spot as to where -- how we position the implantable device to enhance the commercialization of the software platform and the work in synergy with that. So we're holding off on finalizing that until we get more commercial experience out of the platform and the timing of that will catch as well.

Operator

And our next question comes from Anthony Vendetti with Maxim Group.

Anthony V. Vendetti

So yes, just to follow up. I know we've spoken about the biopharma opportunity, and it sounds certainly very promising. Is the 510(k) so let's say, the development takes a couple of months or a couple of quarters, and you finished that by end of this year, beginning of next year. would this be a new 510(k) obviously, probably the predicate device would be your device with the Software-as-a-Service to add on? Or would this just be an amendment to include Software-as-a-Service?

Lishan Aklog

Yes. Great. Let's kind of break that down and make sure we're talking about the equity. So first of all, the biopharma platform does not require us to transition to a software (inaudible). The biopharma platform would simply be an extension of the current MDS and DBS functionality, which is just reporting of data, but doing so in a way that structure to facilitate clinical trials. And so that's software work that's gearing up to get started. And we don't have a time line as to when that will be completed, but it's not -- it doesn't have an additional regulatory hurdle, and we think it can be gotten quite an expedition place that we'll have at least a first-generation product that we can show to pharma companies in the not-too-distant future.
So that's just to make sure that, that's different than what I articulated as our second strategic initiative, which is to upgrade the current MDS FDA designated version of the platform into one that is officially a software as a medical device.
So we don't -- the predicate is not our system because our system is not a (inaudible). System is operating right now, as an [MDS]. But there are numerous other predicates that we've already identified that will serve well, and this will be a new 510(k) for the software as a medical device and the steps required to do so are all the usual validation that's required for software as a device. Does that make sense?

Anthony V. Vendetti

Yes, sure. No, that makes sense. And do you think, based on the comments -- did you say you would probably be looking to submit that in the beginning of '24?

Lishan Aklog

Yes. I think sometime by the mid-portion in '24, we don't have full visibility yet -- we don't have the scope yet of the validation testing. So this is a new initiative. We'll need to have some pre-subs with FDA to make sure that we have the validation plan and the products and so forth, well in line. So I would just say in a little bit year next year as a target. That's subject to our interactions with FDA.

Anthony V. Vendetti

Okay. And obviously, you pointed to some examples of Part D being one, but what the potential uses of this would be in terms of monitoring the patients and then also making it as a companion diagnostic with other therapies, whether they're current ones or new ones being developed -- when you put that all together, have you come up with an approximate TAM? What do you think the total addressable market could be?

Lishan Aklog

Yes. Let me just add to the qualitative question first. So there really should be no limitation with regard to the scope of cancer therapeutics that would be applicable here, right, because essentially, every therapy that you're -- that you're offering, whether it's immunotherapy, chemotherapy, oral IV futures, they're all associated with meaningful complication rates that theoretically could be mitigated by more intense monitoring.
So we don't really see any limitation with regard to that. With regard to what your -- the distinction you made between new and existing drugs, I think our focus at the beginning will be with new drugs because the link to the software platform will be much stronger if that length was established during the development and during the clinical development phase and part of clearance, right, then they're pretty much stuck -- joined to the hip and there's no separating them. There is certainly an opportunity as well for -- to take existing drugs and potentially combine them. That happens, as you know, on the diagnostics side, where generic drugs get paired with the companion diagnostic and suddenly become a proprietary drug that can garner a premium.
We haven't really explored that in detail, but there's certainly -- that would be part of the opportunity. And in terms of a numerical TAM, look, it's obviously very, very large because the -- even if you take a small low single-digit percentage that can be attributable of the cost or price of a drug that can be attributable to the value of linking it with a digital health platform to improve safety. That's a very large number so we'll just leave it there.

Anthony V. Vendetti

Yes. No, I agree with that. Just -- so maybe just lastly, remote monitoring, it's not a new idea. Your device may very well be. But in terms of what you see currently in terms of competition, what would be the -- do you believe the closest competitor to the Veris platform?

Lishan Aklog

Yes. I won't sort of call out individual companies, but there are companies out there that are doing generic remote patient monitoring. There's really no sort of hurdle or barrier to entry for that. There are some that are digital platforms that are focused on cancer. There's one that combined the 2 in a way -- in a limited way. But none of them are doing so and is tightly linked to fashion as we are.
And once we launch the implantable device, which has intellectual property associated with it, that will be a meaningful barrier to entry. So most of what we see out there is somewhat generic, somewhat focused on patient engagement as opposed to having a clinician platform that is highly -- that is designed to be highly sort of efficient and integrated with clinical practice.
Our platform is designed by radiation oncologists, taking the lead on that and feedback that we've gotten from the practices that we've called on has been very, very positive with regard to how it can -- how it integrates within the practice of an oncologist. But once we have the implantable, that will be a meaningful area for others. And obviously, the value added from that will be significant.

Operator

Thank you. And ladies and gentlemen, this concludes our question-and-answer session. I'd like to turn the conference back over to management for any closing remarks.

Lishan Aklog

Great. So I'd like to thank all of you for your attention and for spending the time with us this morning and for all the excellent questions and discussion. I'd encourage you to keep in touch with us like contacting Michael Parks at mep@pavmed.com with any questions or comments and following us on social media and our website on the way. So thank you very much, and I look forward to a good day. Bye.

Operator

Thank you, sir. This concludes today's conference call. We thank you all for attending today's presentation. You may now disconnect your lines, and have a wonderful day.