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What changed in bioAffinity Technologies, Inc.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of bioAffinity Technologies, Inc.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+938 added−223 removedSource: 10-K (2024-04-01) vs 10-K (2023-03-31)

Top changes in bioAffinity Technologies, Inc.'s 2023 10-K

938 paragraphs added · 223 removed · 100 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeComparison of CyPath ® Lung to Current Standards of Care Diagnostic Test or Procedure Intended Patient Sensitivity Specificity Procedural Risk CyPath ® Lung ‌16 High risk 82% 88% None CyPath ® Lung High risk – nodules less than 20 mm 92% 87% None Low Dose CT screening 17 High risk 93.80% 73.40% Radiation exposure FDG PET imaging ‌18 Suspicious lung nodules 88% 75% Radiation exposure Bronchoscopy ‌19 Suspicious lung nodules – central lesions 88% 47% Invasive, risk of collapsed/bleeding lung infection Fine Needle Biopsy 20 Suspicious lung nodules 90.4% 75.4% Invasive, risk of collapsed/bleeding lung infection Core Needle Biopsy 21 Suspicious lung nodules 89.1% 88.6% Invasive, risk of collapsed/bleeding lung infection 16 Rebel, VI, et al.
Biggest changeComparison of CyPath ® Lung to Current Standards of Care Diagnostic Test or Procedure Intended Patient Sensitivity Specificity Procedural Risk Source CyPath ® Lung ‌ High risk 82% 88% None “Detection of Early-Stage Lung Cancer in Sputum using Automated Flow Cytometry and Machine Learning,” published in Respiratory Research on January 21, 2023 CyPath ® Lung High risk – nodules less than 20 mm 92% 87% None “Detection of Early-Stage Lung Cancer in Sputum using Automated Flow Cytometry and Machine Learning,” published in Respiratory Research on January 21, 2023 Low-dose CT screening High risk 93.8% 73.4% Radiation exposure “Results of initial low dose computed tomographic screening for lung cancer,” published in the New England Journal of Medicine on May 23, 2013 FDG PET imaging Suspicious lung nodules 89% 75% Radiation exposure “Accuracy of FDG-PET to diagnose lung cancer in areas with infectious lung disease: a meta-analysis,” published in JAMA in September 2014 Bronchoscopy Suspicious lung nodules – central lesions 88% 47% Invasive; risk of collapsed/bleeding lung; infection “A bronchial genomic classifier for the diagnostic evaluation of lung cancer,” published in the New England Journal of Medicine on July 16, 2015 Fine needle biopsy Suspicious lung nodules 90.4% 75.4% Invasive; risk of collapsed/bleeding lung; infection “Fine-needle aspiration biopsy versus core-needle biopsy in diagnosing lung cancer: a systemic review,” published in Current Oncology in February 2012 Core needle biopsy 21 Suspicious lung nodules 89.1% 88.6% Invasive; risk of collapsed/bleeding lung; infection “Global patterns and trends in lung cancer incidence: a population-based study,” published in the Journal of Thoracic Oncology on February 16, 2021 10 Our business model is to immediately address the need for a quick-to-market, noninvasive, cost-effective lung cancer diagnostic that will save lives and reduce medical costs.
The test data, including fluorescent intensity over cell size, was analyzed. The Patriquin trial was conducted over 24 months and resulted in 81% test accuracy, 77.9% sensitivity, and 65.7% specificity in the ability to correctly differentiate between samples from lung cancer patients and those at high risk who were cancer-free.
The test data, including fluorescent intensity over cell size, was analyzed. The trial was conducted over 24 months and resulted in 81% test accuracy, 77.9% sensitivity, and 65.7% specificity in the ability to correctly differentiate between samples from lung cancer patients and those at high risk who were cancer-free.
However, the timing, strategies, and stages of our Business Plan may evolve in light of new circumstances that cannot be predicted with certainty at this time. Our Business Plan envisions four phases of expanding market entry into the U.S., the EU, and worldwide that are timed to maximize Company resources and minimize market risk.
However, the timing, strategies, and stages of our business plan may evolve in light of new circumstances that cannot be predicted with certainty at this time. Our business plan envisions four phases of expanding market entry into the U.S., the EU, and worldwide that are timed to maximize our resources and minimize market risk.
For each trial participant, researchers manually scanned 12 microscope slides labeled with TCPP for the presence of red fluorescing cells (“RFCs”) displaying a spectral signature that indicated uptake of TCPP in the cell. In addition to measuring the spectral signature, the fluorescent intensity and cell size of RFCs were measured.
For each trial participant, researchers manually scanned 12 microscope slides labeled with TCPP for the presence of red fluorescent cells (“RFCs”) displaying a spectral signature that indicated uptake of TCPP in the cell. In addition to measuring the spectral signature, the fluorescent intensity and cell size of RFCs were measured.
Phase 4 of our Business Plan accelerates the market presence of CyPath ® Lung in countries in Asia, Eastern Europe, and Australia after obtaining FDA marketing authorization in 2026.
Phase 4 of our business plan accelerates the market presence of CyPath ® Lung in countries in Asia, Eastern Europe, and Australia after obtaining FDA marketing authorization.
Sample processing is straightforward, and laboratory technicians can be easily trained. Reagents used by the test are widely available. Data acquisition and analysis is fully automated, allowing for efficient test results. Third, CyPath ® Lung has shown high specificity and sensitivity that is similar to far more invasive and more expensive procedures currently used to detect lung cancer.
Sample processing is straightforward, and laboratory technicians can be easily trained. Reagents used by the test are widely available. Data acquisition and analysis is fully automated, allowing for non-biased, efficient test results. Third, CyPath ® Lung has shown high specificity and sensitivity that is similar to far more invasive and more expensive procedures currently used to detect lung cancer.
Flow cytometry and patient data used in analysis to produce the results included (1) the proportion of cells with a high ratio of high TCPP fluorescence intensity over cell size; (2) the proportion of cells with an intermediate ratio of fluorescence intensity caused by the viability dye (FVS510) over cell size; (3) the proportion of cells that were CD206 negative but positive for one or more of the following markers: CD66b (granulocytes), CD3 (T cells), and CD19 (B cells); and (4) patient age. 4 T.
Flow cytometry and patient data used in the analysis produced results that included (1) the proportion of cells with a high ratio of high TCPP fluorescence intensity over cell size; (2) the proportion of cells with an intermediate ratio of fluorescence intensity caused by the viability dye (FVS510) over cell size; (3) the proportion of cells that were CD206 negative but positive for one or more of the following markers: CD66b (granulocytes), CD3 (T cells), and CD19 (B cells); and (4) patient age.
CyPath ® Lung Business Development Plan We believe in the viability of the Company’s Business Plan based on the circumstances surrounding our business that are known to us as of the date of this report.
CyPath ® Lung Business Development Plan We believe in the viability of our business plan based on the circumstances surrounding our business that are known to us as of the date of this Annual Report.
The test can be put into routine lab use without requiring expert evaluation of samples or being subject to operator bias. Our approach allows the entire sputum sample to be rapidly analyzed.
CyPath ® Lung can be put into routine lab use without requiring expert evaluation of samples or being subject to operator bias. Our approach allows the entire sputum sample to be rapidly analyzed.
The Company will provide support and collateral materials, including posters, presentations, videos, and peer-reviewed papers, to our KOLs who will present data and their experience with CyPath ® Lung at key meetings.
We will provide support and collateral materials, including posters, presentations, videos, and peer-reviewed papers, to our KOLs who will present data and their experience with CyPath ® Lung at key meetings.
The numerical analysis developed by AI captures complex interactions between lung cancer, the microenvironment, and areas of field cancerization that would be difficult if not impossible for individuals to predict or detect reliably by eye.
The numerical analysis developed with machine learning captures complex interactions between lung cancer, the microenvironment, and areas of field cancerization that would be difficult if not impossible for individuals to predict or detect reliably by eye.
Second, bioAffinity’s proprietary technology is straightforward. bioAffinity’s CyPath ® Lung platform technology is not a molecular test and does not collect genetic material that requires immediate processing. CyPath ® Lung uses well-established flow cytometry techniques to investigate cells contained in the sputum for characteristics that indicate whether cancer is present.
Second, our proprietary technology is straightforward. Our CyPath ® Lung platform technology is not a molecular test and does not collect genetic material that requires immediate processing. CyPath ® Lung uses well-established flow cytometry techniques to investigate cells contained in the sputum for characteristics that indicate the likelihood of lung cancer.
At each phase of commercialization, bioAffinity Technologies will develop messaging and marketing programs, including key convention attendance, digital marketing, social media presence, and advertising, to create an “inbound” lead generation mechanism that delivers our message to our target audience. In addition, bioAffinity will collaborate with key opinion leaders (“KOLs”) to expand our third-party reference and speaking pool of experts.
At each phase of commercialization, we plan to develop messaging and marketing programs, including key convention attendance, digital marketing, social media presence, and advertising, to create an “inbound” lead generation mechanism that delivers our message to our target audience. In addition, we plan to collaborate with key opinion leaders (“KOLs”) to expand our pool of third-party experts and speakers.
Business development is led by our Vice President of Operations, Xavier Reveles, who has 25 years of experience as a clinical geneticist skilled in the creation and management of CLIA clinical laboratories, coding, and CPT reimbursement valuations. Mr.
Business development is led by our Chief Operating Officer, Xavier Reveles, who has 25 years of experience as a clinical geneticist skilled in the creation and management of CLIA clinical laboratories, coding, and CPT reimbursement valuations. Mr.
When CyPath ® Lung sample analysis determines a patient is unlikely or very unlikely to have lung cancer, the result can serve to support a physician’s decision to monitor this patient by following a recommended LDCT screening routine. Figure 1. Patient- and Physician-Friendly CyPath ® Lung Process.
When CyPath ® Lung sample analysis determines a patient is unlikely or very unlikely to have lung cancer, the result can serve to support a physician’s decision to monitor this patient by following a recommended LDCT screening routine.
With regard to our diagnostic test CyPath ® Lung and other diagnostic candidates, we have one issued U.S. patent and nine foreign counterpart patents in Canada, China, France, Germany, Hong Kong, Italy, Spain, Sweden, and the United Kingdom.
With regard to our diagnostic patent portfolio, we have one issued U.S. patent and nine foreign counterpart patents in Canada, China, France, Germany, Hong Kong, Italy, Spain, Sweden, and the United Kingdom.
Research and Development Activities The Company is continuing its research and development activities pertaining to diagnostics that include multiple studies we believe will support FDA final approval of CyPath ® Lung, which we will seek after the pivotal trial is complete.
Research and Development Activities We are continuing our research and development activities pertaining to diagnostics that include multiple studies we believe will support FDA final approval of CyPath ® Lung, which we will seek after completing the pivotal trial.
The CyPath ® Lung test enables physicians to more confidently distinguish between patients who will likely benefit from timely intervention and more invasive follow-up procedures from patients who are likely without lung disease and should continue annual screening.
The CyPath ® Lung test enables physicians to more confidently identify patients who will likely benefit from timely intervention and more invasive follow-up procedures and those who are likely without lung cancer and should continue routine screening.
In addition, the Company has multiple domestic and foreign patent applications to protect the use of flow cytometry and its AI-developed automated analysis platform in the detection of lung cancer and other lung diseases using sputum as a sample. We developed an algorithm using AI to distinguish samples from high-risk patients who had lung cancer from those who are cancer-free.
In addition, we have multiple domestic and foreign patent applications to protect the use of flow cytometry and our AI-developed automated analysis platform in the detection of lung cancer and other lung diseases using sputum as a sample. 8 We developed an algorithm as part of a test validation trial that used machine learning to distinguish samples from high-risk patients who had lung cancer from those who are cancer-free.
Patient enrollment is scheduled to begin in 2023 at up to 20 collection sites. Assuming the study is successful, we intend to submit a de novo classification request to the FDA within six months of study completion. The Patient- and Physician-Friendly CyPath ® Lung Process CyPath® Lung is designed to be noninvasive and patient friendly.
Patient enrollment is scheduled to begin in 2024 at up to 20 collection sites. Assuming the study is successful, we intend to submit a de novo classification request to the FDA within six months of study completion.
Sensitivity is the percentage of persons with the disease – in this case lung cancer – who are correctly identified by the test. Specificity is the percentage of persons without lung cancer who are correctly identified by the test.
Eight out of 10 (80%) of Stage I tumors were correctly identified. Sensitivity is the percentage of persons with the disease – in this case, lung cancer – who are correctly identified by the test. Specificity is the percentage of persons without lung cancer who are correctly identified by the test.
After providing a sputum sample, participants were released from the study after a physician either confirmed the individual was cancer-free by examination of CT imaging or confirmed the presence of lung cancer by biopsy.
In this 19-month test validation trial participants provided a sputum sample and were released from the study after a physician either confirmed the individual was cancer-free by examination of CT imaging or confirmed the presence of lung cancer by biopsy.
These findings are the result of our AI approach to automated analysis. To our knowledge, CyPath ® Lung is the first cancer diagnostic that combines automated flow cytometric analysis to predict the presence of lung cancer from sputum samples.
To our knowledge, CyPath ® Lung is the first cancer diagnostic that combines flow cytometry and automated analysis to predict the presence of lung cancer from sputum samples.
From the 67 companies we evaluated, we found only seven tests, including CyPath ® Lung, that represent a balanced test for early lung cancer detection and that have advanced to the point that there is sufficient data for evaluation.
We completed a competitive analysis in 2022 of 67 companies that published research sufficient to provide a scientific basis for evaluation. We found only seven tests, including CyPath ® Lung, that represent a balanced test for early lung cancer detection and have advanced to the point that there is sufficient data for evaluation.
Intellectual Property Portfolio As of March 31, 2023, the Company and its subsidiary OncoSelect have a patent estate that includes 14 issued U.S. and foreign counterpart patents, including two U.S. patents and twelve foreign counterpart patents in Australia, Canada, China, France, Germany, Hong Kong, Italy, Mexico, Spain, Sweden, and the United Kingdom.
As of April 1, 2024, we and our OncoSelect ® subsidiary have a patent estate that includes 16 issued U.S. and foreign counterpart patents including two U.S. patents and 14 foreign counterpart patents in Australia, Canada, China, France, Germany, Hong Kong, India, Italy, Mexico, Spain, Sweden, and the United Kingdom.
The cancer group included all lung cancer types, but mostly squamous cell carcinoma and adenocarcinoma lung cancer (in near equal numbers), showing that CyPath ® Lung detects all types of lung cancer.
The cancer group included all lung cancer types, but mostly squamous cell carcinoma and adenocarcinoma lung cancer (in near equal numbers), showing that CyPath ® Lung detects all types of lung cancer. The detection of small lung nodules in people who have early-stage cancer can increase lung cancer survival.
Our Employees The Company places significant emphasis on the recruitment, development, and retention of its employees who include award-winning scientists dedicated to advancing scientific discovery from bench to bedside. Of the Company’s 14 employees, all of whom are employed full-time by the Company, one holds an MD and seven hold PhDs in biology or medicinal chemistry.
We place significant emphasis on the recruitment, development, and retention of our employees who include award-winning scientists dedicated to advancing scientific discovery from bench to bedside. Of our nine employees engaged in research and development, all of whom are employed full-time, one holds an M.D. and six hold Ph.Ds in biology or medicinal chemistry.
The therapeutic intellectual property is made up of four families directed at our therapeutic product candidates, including two families directed at siRNA product candidates, one family directed at soluble CD320 used in the treatment of cancer, and one family directed at porphyrin conjugates for treating cancer.
The therapeutic intellectual property is made up of two families, including one family directed at our siRNA product candidates for the treatment of cancer, and another family directed at our porphyrin conjugates for treating cancer. One therapeutic patent application has been granted in China that expires in 2037.
Item 1. Business. Business Overview bioAffinity Technologies, Inc. (the “Company,” “we,” or “our”) develops noninvasive, early-stage diagnostics to detect and researches targeted therapies to detect and treat lung cancer and other diseases of the lung at the cellular level. Our Company also is conducting early-stage research focused on advancing therapeutic discoveries that could result in broad-spectrum cancer treatments.
Item 1. Business Business Overview bioAffinity Technologies, Inc. (the “Company,” “bioAffinity,” “we,” or “our”) develops noninvasive diagnostics to detect early-stage lung cancer and other diseases of the lung. We are advancing research into our therapeutic discoveries which could result in broad-spectrum cancer treatments in the future.
With regard to our diagnostic patent applications, one family is directed at diagnosing lung health using flow cytometry, and the other family is directed at proprietary compensation beads used to calibrate the flow cytometry instrument and used in CyPath ® Lung data acquisition.
With regard to our diagnostic patent applications, there are two families of which one is directed at diagnosing lung health using flow cytometry and the other is directed at proprietary compensation beads used in analysis by flow cytometry.
Fourth, CyPath ® Lung is cost effective. Existing CPT cost codes that have a reimbursable track record have been identified for use with CyPath. Fifth and as important as any of our test’s benefits, CyPath ® Lung is patient friendly, providing at-home sample collection that is noninvasive and offers particular benefit during a public healthcare crisis like the coronavirus pandemic.
Fourth, CyPath ® Lung is cost effective, with a Medicare reimbursement code billable to both government and private insurance carriers. Fifth and as important as any of our test’s benefits, CyPath ® Lung is patient friendly, providing at-home sample collection that is noninvasive and offers particular benefit during a public healthcare crisis like the coronavirus pandemic.
A blinded clinical trial 8 (Patriquin, et. al, 2015) of an earlier version of CyPath ® Lung used a microscope to directly identify cells labeled with TCPP in one-third or less of the sputum sample.
This study reported on an earlier version of CyPath ® Lung that used a fluorescent microscope to directly identify cells labeled with TCPP in one-third or less of the sputum sample.
In developing the test as an LDT, Precision Pathology developed and integrated software into the test protocol, which generated high-throughput and user-friendly, standardized analysis of flow cytometric sample data. Our test can analyze an average sputum sample containing about 20 million cells in less than 20 minutes. A physician’s report is generated within minutes after data acquisition.
Our test can analyze an average sputum sample containing about 16 million cells in approximately 30 minutes using integrated software for high-throughput, user-friendly standardized analysis of flow cytometric sample data. A physician’s report is generated within minutes after data acquisition. The report stratifies the patient into one of two risk groups.
CyPath ® Lung has the potential to increase overall diagnostic accuracy of lung cancer, which could lead to increased survival, fewer unnecessary invasive procedures, reduced patient anxiety, and lower medical costs. Through our wholly owned subsidiary, OncoSelect ® Therapeutics, LLC, our research has led to discoveries and advancement of novel cancer therapeutics that specifically and selectively target cancer cells.
CyPath ® Lung has the potential to increase overall diagnostic accuracy of lung cancer, which could lead to increased survival, fewer unnecessary invasive procedures, reduced patient anxiety, and lower medical costs.
Following its entry into the U.S. market, the Company expects to pursue CE marking of CyPath ® Lung for sale in the European Union and is pursuing collaboration with a strategic partner to develop the test for the China market. bioAffinity conducted market research with pulmonologists, oncologists, cardiothoracic surgeons, radiologists, and internists engaged in the diagnosis and treatment of lung cancer to help assess these stakeholders’ reactions to the new diagnostic, CyPath ® Lung.
We expect to pursue CE marking of CyPath ® Lung for sale in the European Union. We conducted market research in the U.S. with pulmonologists, oncologists, cardiothoracic surgeons, radiologists, and internists engaged in the diagnosis and treatment of lung cancer to help assess their reactions to our diagnostic tool.
A laboratory technician skilled in general laboratory techniques can accomplish sample processing, labeling, and data collection. Physicians receive test results within three days after the laboratory receives the patient’s sputum sample. CyPath ® Lung testing helps identify patients who should undergo more aggressive follow-up procedures to confirm a suspected lung cancer.
The proprietary automated analysis software was developed and is wholly owned and patent protected by bioAffinity Technologies. Physicians receive test results within three days after the laboratory receives the patient’s sputum sample. CyPath ® Lung testing helps identify patients who should undergo more aggressive follow-up procedures to confirm a suspected lung cancer.
CyPath ® Lung uses flow cytometry and automated data analysis developed by artificial intelligence (AI) that allows for an entire sample of sputum to be examined for cost-effective, large-scale screening or diagnosis.
CyPath ® Lung uses automated data analysis developed by AI that allows an entire sample of sputum averaging 16 million cells to be examined in approximately 30 minutes, allowing for cost-effective, large-scale commercialization.
With regard to therapeutic research, the Company continues its experiments focused on establishing proof-of-concept for our discovery that the silencing or knockdown of two genes that each encode a cell surface receptor results in cancer death without much harm to healthy cells with the intent of advancing toward animal studies.
With regard to therapeutic research, we continue our experiments focused on establishing proof-of-concept for our discovery that the silencing or knockdown of two genes that each encode a cell surface receptor result in cancer death without perceived harm to healthy cells. 12 Other Diagnostic Applications for the CyPath ® Platform We expect to expand our platform technology to detect and monitor other lung diseases.
Pending applications directed at diagnosing lung health include one pending U.S. non-provisional patent application and eight foreign counterpart patent applications in Australia, Canada, China, European Patent Office, Hong Kong, Japan, Mexico, and Singapore filed in 2019, one Patent Cooperation Treaty (PCT) International Application directed to the composition of compensation beads and one PCT International Application directed to diagnosing lung health using flow cytometry were filed in 2022. 13 With regard to our therapeutic product candidates, we have one issued U.S. patent, two pending U.S. patent applications, three issued foreign patents, ten foreign applications pending in Canada, China, European Patent Office, Hong Kong, India, and Japan and one pending PCT International Application,.
With regard to our therapeutic product candidates, we have one issued U.S. patent, five issued foreign patents in Australia, China, Hong Kong, India and Mexico, two pending U.S. applications, and 10 foreign applications pending in Canada, China, European Patent Office, Hong Kong, India, and Japan and one pending International Patent Application filed in 2022.
One U.S. patent and nine counterpart foreign patents directed at diagnostic applications expire in 2030. Therapeutic patents registered in Australia, China Mexico and the U.S. expire in 2037.
We and OncoSelect ® own all patents and trademarks in our intellectual property portfolio. One U.S. patent and nine counterpart foreign patents directed at diagnostic applications expire in 2030. One U.S. patent and five counterpart foreign patents directed at therapeutic applications expire in 2037.
We will also work with lung cancer advocacy groups throughout all phases to support the message that routine screening can diagnose cancer at an early stage and save lives. 12 The Competition for CyPath ® Lung In 2022, we evaluated 67 companies advancing tests for the early detection of lung cancer that provided at least a scientific foundation for their tests.
We will also work with lung cancer advocacy groups throughout all phases to support the message that routine screening can save lives by diagnosing cancer at an early stage.
Research and optimization of our platform technologies are conducted in our laboratories at The University of Texas at San Antonio. Our first diagnostic test, CyPath ® Lung, addresses the need for noninvasive detection of early-stage lung cancer. Lung cancer is the leading cause of cancer-related deaths.
Our first diagnostic test, CyPath ® Lung, addresses the need for noninvasive detection of early-stage lung cancer. Lung cancer is the leading cause of cancer-related deaths worldwide. Physicians order CyPath ® Lung to assist in their assessment of patients who are at high risk for lung cancer.
The Company has designed its pivotal trial with guidance from its clinical research organization (“CRO”), Courante Oncology, and has prepared a pre-submission that will be submitted to the FDA for review and feedback.
We have designed our pivotal trial with guidance from our Clinical Research Organization (“CRO”), Courante Oncology, and we are preparing a pre-submission that will be submitted to the FDA for review and feedback. We anticipate a three-year diagnostic trial including an 18-month patient enrollment of approximately 1,800 patients.
Reveles is board certified by the American Society of Clinical Pathology as a clinical specialist in cytogenetics who has successfully launched multiple diagnostics and commercial laboratories. The innovative and collaborative culture at bioAffinity is in part responsible for the high degree of retention and professional advancement.
Reveles is board certified by the American Society of Clinical Pathology as a clinical specialist in cytogenetics who has successfully launched multiple diagnostics and commercial laboratories. We have recently attracted experienced salespeople with a proven record in the pulmonary field.
The flow cytometer is a well-established instrument used in many commercial laboratories that records properties of labeled and unlabeled single cells. Sputum is an excellent sample for analysis because it is in direct contact with any malignancy in the lungs and can thus provide a snapshot of the tumor itself, its microenvironment, and its area of field cancerization.
Flow cytometry collects data pertaining to properties of single cells labeled with antibodies and dyes specific to cell types and characteristics. Sputum is an excellent sample for analysis because it is in direct contact with any malignancy in the lungs and can provide information about its area of field cancerization and the lung microenvironment.
In February 2023, the Company announced that the marketing and advertising firms of Havas Health & You and Trinity Life Sciences had been engaged to build the CyPath ® Lung brand and position it for success in the cancer diagnostics sector.
In January 2024, we began using the new marketing materials with both physicians and patients. The branding concepts were developed by the marketing and advertising firms of Havas Health & You, Trinity Life Sciences, and K2MD to build the CyPath ® Lung brand and position it for success in the cancer diagnostics sector.
(See Figure 1 below.) From the privacy of the patient’s home, the patient collects a sample of his or her sputum over three days using a hand-held assist device that comes in the collection kit called an acapella ® Choice Blue made by Smiths Medical, which acts to break up mucus in the patient’s lung and facilitates the patient’s ability to cough up sputum from the lung into a collection cup that is also supplied with the kit.
A patient collects his or her sample using a hand-held, noninvasive assist device, ICU Medical’s Acapella ® Choice Blue, that acts to break up mucus in the lungs and help a person cough up sputum from the lung into a collection cup.
Preventive Services Task Force recommended doubling the number of Americans at high risk for lung cancer who are recommended for annual screening from 9 million to an estimated 18 million. China has an estimated 300 million smokers. 46 The European Union is estimated to have 34 million people at high risk for lung cancer.
The U.S. Preventive Services Task Force recommended new guidelines for screening in March 2021, nearly doubling the number of Americans at high risk for lung cancer who are recommended for annual screening to 14 million people, according to the ALA.
We develop proprietary noninvasive diagnostic tests and cancer therapeutics using technology that preferentially targets cancer cells and cell populations indicative of a diseased state. The Company was formed as a Delaware corporation on March 26, 2014. On June 15, 2016, we formed OncoSelect ® Therapeutics, LLC, a Delaware limited liability company and wholly owned subsidiary of the Company.
We develop proprietary noninvasive diagnostic tests using flow cytometry and automated analysis developed by artificial intelligence (“AI”). Our diagnostic tests analyze cell populations, including cancer and cancer-related cells, that are indicative of a specific diseased state. We were formed as a Delaware corporation on March 26, 2014.
Their clinical data, therefore, is suspect as it applies to the population of patients who actually will use the test. The two remaining balanced tests are not on the market. We believe there are many reasons why CyPath ® Lung is a superior test when compared to its competitors.
We believe there are many reasons why CyPath ® Lung is a superior test when compared to its competitors.
Classification of cancer was made by subjective visual assessment of the presence and intensity of red fluorescing cells on slides. In this blinded study, one patient initially enrolled as a healthy subject was correctly diagnosed with cancer by the test. Length of study not reported.
The length of the study and specific follow-up was not reported, but researchers did report that one patient entering the study as a healthy subject was correctly diagnosed with cancer by the test.
The Cancer Diagnostics Market and CyPath ® Lung The global cancer diagnostic market is projected to grow from an estimated $172.3 billion in 2022 to $293.5 billion in 2030, with a compound annual growth rate (“CAGR”) of 6.8%. 14 The market worldwide for lung cancer diagnostic tests was estimated at $2.6 billion in 2022 and is projected to reach $4.7 billion by 2030, with a CAGR of 7.8% over 2022-2030. 15 bioAffinity Technologies has the potential to play a significant role in the cancer diagnostic market because our platform is noninvasive, easy to use, cost-effective, and has a potential to lead to better patient outcomes.
A January 2023 report, also by Research and Markets , stated that the market worldwide for lung cancer diagnostic tests was estimated at $2.6 billion in 2022 and is projected to reach $4.7 billion by 2030, with a CAGR of 7.8% over 2022-2030.
CyPath ® Lung Research and Clinical Studies The high affinity of TCPP for cancer and cancer-related cells and its fluorescent nature makes it an excellent bio-label for cancer. The CyPath ® Lung technology is based on this concept and scientific work originating at Los Alamos National Laboratory in collaboration with St. Mary’s Hospital in Colorado.
The CyPath ® Lung technology is based on scientific work originating at Los Alamos National Laboratory in collaboration with St. Mary’s Hospital in Colorado. In the Los Alamos research study, sputum samples from lung cancer patients were differentiated from non-cancer samples with 100% accuracy. This early research was conducted with sputum from 12 uranium miners.
Detection of Early-Stage Lung Cancer in Sputum using Automated Flow Cytometry and Machine Learning 12 Test validation clinical trial using bioAffinity’s automated flow cytometry CyPath ® Lung test (cancer N=28 / high risk N=122) resulted in overall 82% sensitivity and 88% specificity for the test; CyPath ® Lung sensitivity is 92% and specificity is 87% for patients with lung nodules smaller than 20 mm.
As reported in an article titled “Detection of Early-Stage Lung Cancer in Sputum using Automated Flow Cytometry and Machine Learning,” published in Respiratory Research on January 21, 2023, we conducted a 150-patient test validation trial of people at high risk for lung cancer including patients with the disease (N=28) and those who were cancer-free (N=122) that resulted in CyPath ® Lung’s overall 88% specificity, meaning the ability to correctly identify a person without cancer, and 82% sensitivity, meaning the ability to correctly identify cancer in a person with the disease.
Results of Precision Pathology’s certification were comparable to those from the test validation trial and demonstrated that CyPath ® Lung remains robust to differences in sample handling, processing, and the type of flow cytometer. bioAffinity Technologies intends to voluntarily seek FDA clearance of the CyPath ® Lung as a Class II IVD medical device for the detection of lung cancer.
Toward that end, we intend to voluntarily seek FDA clearance of the CyPath ® Lung as a Class II IVD medical device for the detection of lung cancer.
Phase 1 of our Business Plan begins with a controlled market launch of the Company’s LDT CyPath ® Lung in Texas followed by expansion into the Southwest market area. Limited marketing was undertaken prior to the IPO that provided funds necessary to begin our controlled market launch.
Phase 1 of our business plan has already begun with a limited market launch of our LDT CyPath ® Lung in Texas.
The diagnostic process uses sputum that is obtained noninvasively in the privacy of a patient’s home. Physicians order the test for their patients after lung cancer screening reveals a lung nodule considered to be indeterminate because of the nodule size and lack of suspicious characteristics. Lung nodules are considered indeterminate if their size is between 6-20 mm in diameter.
These findings are the result of our machine learning approach to automated analysis. CyPath ® Lung uses sputum that is obtained noninvasively by patients in the privacy of their home. Physicians most often order the test for patients after CT imaging reveals one or more pulmonary nodules that are suspected to be lung cancer.
Our scientists also have begun preliminary studies toward the development of CyPath ® Lung for detection of Chronic Obstructive Pulmonary Disease (COPD) and the assay’s use with bronchoalveolar lavage fluid (BAL).
With support from the DOD, we are also conducting research advancing the development of CyPath ® Lung for detection of COPD and a test for use with bronchoalveolar lavage fluid (BAL) as a companion test to bronchoscopy.
Clinical Validation, Certification, and Classification of CyPath ® Lung A 19-month test validation clinical trial of CyPath ® Lung 6 collected sputum noninvasively from people at high risk for lung cancer, including patients with the disease (N=28) and those cancer-free (N=122). Patients collected their sputum sample over three days at home before bringing their sample to the clinical collection site.
We conducted a 150-patient test validation trial of people at high risk for lung cancer including patients with the disease (N=28) and those who were cancer-free (N=122) that resulted in CyPath ® Lung’s overall 88% specificity, meaning the ability to correctly identify a person without cancer, and 82% sensitivity, meaning the ability to correctly identify cancer in a person with the disease.
Physicians see the value of a noninvasive diagnostic technology with the ability to confirm or rule out cancer and reduce the number of costly invasive procedures that result from LDCT’s low positive predictive rate.
Physicians responded favorably to a noninvasive diagnostic technology that gives them more confidence in their decision to proceed with more aggressive follow-up procedures if the test comes back positive. If test results are negative, physicians can rule out lung cancer, thus reducing the number of costly invasive procedures that result from the LDCT false-positive rate.
While studies have shown that expert cytological analysis of sputum can detect cancerous and pre-malignant cells, 4 the process of looking at microscopy slides is an extremely laborious approach and demands years of expertise.
While studies have shown that expert cytological analysis of sputum can detect cancerous and pre-malignant cells, the level of scrutiny required for the analysis is not feasible in the laboratory routine, according to an October 22, 2009, article, “Premalignant and malignant cells in sputum from lung cancer patients,” published in Cancer Cytopathology .
Of those employees hired prior to 2022, most have been with the Company for more than five years of its nine-year history. Outside partnerships and collaborations that advance business and scientific research are encouraged, allowing the Company to multiply workforce efforts without expending significant capital.
Outside partnerships and collaborations that advance business and scientific research are encouraged, allowing us to multiply workforce efforts without expending significant capital. Implications of Being an Emerging Growth Company and a Smaller Reporting Company We qualify as an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act.
Following completion of the test validation trial, CyPath ® Lung was evaluated independently by Precision Pathology, which developed the test for sale as an LDT in accordance with CAP/CLIA standards. An LDT is a type of in vitro diagnostic (“IVD”) test that is developed, validated, and performed within a single laboratory.
Results of the trial were published January 21, 2023, in the peer-reviewed journal Respiratory Research. Village Oaks developed CyPath ® Lung for sale as an LDT in accordance with the standards of the CAP and the regulations and guidance of the CLIA program, which is administered by CMS.
As used in CyPath ® Lung, the proportion of cells with high TCPP fluorescence intensity in a patient’s sputum sample is a significant predictor of lung cancer. bioAffinity holds multiple patents protecting its use of TCPP for the diagnosis, monitoring, and treatment of cancer.
We hold multiple patents protecting our use of TCPP for the diagnosis, monitoring, and treatment of cancer.
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Physicians are able to order CyPath ® Lung to assist in their assessment of patients who are at high risk for lung cancer.
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On June 15, 2016, we formed OncoSelect ® Therapeutics, LLC (“OncoSelect ® ”) , a Delaware limited liability company and our wholly owned subsidiary which is a preclinical-stage biopharmaceutical discovery company with a focus on therapeutics that deliver cytotoxic (cell-killing) effects on a broad selection of human cancers from diverse tissues while having little or no effect on normal cells.
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We are focused on expanding our broad-spectrum platform technologies to continue developing tests that detect and therapies that target various types of cancer and potentially other diseases.
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On August 14, 2023, we formed Precision Pathology Laboratory Services, LLC (“PPLS”), a Texas limited liability company and our wholly owned subsidiary. Research and optimization of our platform technologies for in vitro diagnostics and technologies are conducted in laboratories at The University of Texas at San Antonio and PPLS in San Antonio, Texas.
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Information regarding the general development of bioAffinity’s business can be found in the “Business” section of our final IPO prospectus filed with the SEC pursuant to Rule 424(b)(4) under the Securities Act of 1933, as amended (the “Securities Act”) on September 2, 2022 (the “Final Prospectus”) (see https://www.sec.gov/Archives/edgar/data/1712762/000149315222024949/form424b4.htm ).
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CyPath ® Lung uses flow cytometry technology to detect and analyze cell populations in a person’s sputum, or phlegm, to find characteristics indicative of lung cancer, including cancer and/or cancer-related cells that have shed from a lung tumor. The flow cytometer is a well-established instrument used in many commercial laboratories.
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Our First Diagnostic Test – CyPath ® Lung Overview of the CyPath ® Lung Methodology Lung cancer is the leading cause of cancer-related death worldwide, claiming nearly 1.8 million lives annually. 1 Individuals at high risk for lung cancer are recommended for annual screening by low-dose computed tomography (“LDCT”).
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For the subset of patients in this trial who had lung nodules 20 millimeters (“mm”) or smaller, this trial resulted in 92% sensitivity, 87% specificity, 99% negative predictive value, and 88% accuracy. In this subset of 132 individuals with small nodules, 119 patients were cancer-free and 13 had confirmed lung cancer.
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Apart from LDCT, there is currently no reliable noninvasive method that can detect lung cancer at an early stage. Our first diagnostic test, CyPath ® Lung, is designed to be a cost-effective, 2 noninvasive, early-stage lung cancer diagnostic.
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The detection of small lung nodules in people who have early-stage cancer can increase lung cancer survival. Through OncoSelect ® , our research has led to discoveries of novel potential cancer therapeutics that specifically and selectively target cancer cells that have been grown in petri dishes.
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Using CyPath ® Lung in conjunction with LDCT is predicted to improve the positive predictive value (the proportion of true positive results) by a factor of five. 2 Improving the positive predictive value of LDCT with the use of CyPath ® Lung can result in fewer patients unnecessarily subjected to invasive diagnostic procedures, earlier detection of lung cancer, and a reduction in healthcare costs. 3 1 The Cancer Atlas, Third Edition, American Cancer Society (ACS), World Health Organization (WHO) and The Union for International Cancer Control (UICC); https://canceratlas.cancer.org/the-burden/lung-cancer/. 2 Analysis of the Potential Diagnostic, Patient and Economic Impact of CyPath® Lung When Used After LDCT Screening to Detect Lung Cancer, bioAffinity Technologies Internal Analysis, 2022; attached as Appendix I of the Company’s Final Prospectus filed with the SEC on September 2, 2022, pursuant to Rule 424(b)(4) under the Securities Act (see https://www.sec.gov/Archives/edgar/data/1712762/000149315222024949/form424b4.htm ). 3 Ibid. 5 CyPath ® Lung uses flow cytometry technology to detect and analyze cell populations in a person’s sputum, or phlegm, to find characteristics indicative of lung cancer, including cancer and/or cancer-related cells that have shed from a lung tumor.
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In September 2023, through our wholly owned subsidiary PPLS, we acquired the assets of Village Oaks Pathology Services, P.A.,(“Village Oaks”) a Texas professional association d/b/a Precision Pathology Services, including a clinical anatomic and clinical pathology laboratory and related services business in San Antonio, Texas.
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In particular, CyPath ® Lung uses a synthetic porphyrin called meso-tetra (4-carboxyphenyl) porphine (“TCPP”), which is a naturally highly fluorescent porphyrin that has an unusually high affinity for cancer and cancer-associated cells. 5 The uptake and retention of TCPP in cancerous tissue and its fluorescent properties make TCPP an excellent bio-label for cancer.
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The laboratory is accredited by the College of American Pathologists (“CAP”) and certified under the Clinical Laboratory Improvement Amendments of 1988 (“CLIA”).
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Precision Pathology Services (“Precision Pathology”) developed CyPath ® Lung for sale as a Laboratory Developed Test (an “LDT”) in accordance with the standards of the College of American Pathologists (“CAP”) and the regulations and guidance of the Clinical Laboratory Improvement Amendments of 1988 (“CLIA”) program, which is administered by the Centers for Medicare and Medicaid Services (“CMS”).
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Recent Developments Registered Direct Offering On March 6, 2024, we raised $2.5 million in gross proceeds from the sale to four institutional investors of (1) 1,600,000 shares of our common stock (the “Shares”), par value $0.007 per share (“Common Stock”) in a registered direct offering, and (2) warrants to purchase an aggregate of 1,600,000 shares of Common Stock (the “Common Warrants”) with an exercise price of $1.64 in a concurrent private placement.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Item 1A. Risk Factors. As a smaller reporting company, we are not required to provide disclosure pursuant to this Item 1A.
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Item 1A. Risk Factors. Risks Related to Our Financial Position Our business plan relies upon our ability to obtain additional sources of capital and financing. If the amount of capital we are able to raise from financing activities, together with our revenues from operations, is not sufficient to satisfy our capital needs, we may be required to cease operations.
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However, in addition to other information set forth in this Annual Report, you should carefully consider the “Risk Factors” discussed in our Final Prospectus filed with the SEC on September 2, 2022, pursuant to Rule 424(b)(4) under the Securities Act (see https://www.sec.gov/Archives/edgar/data/1712762/000149315222024949/form424b4.htm ) and elsewhere in this Annual Report for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in this Annual Report.
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Prior to 2022, we had not generated any revenue. During the years ended December 31, 2023, and December 31, 2022, we generated revenue of approximately $2.5 million and $5,000, respectively.
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Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial might materially adversely affect our actual business, financial condition, and operating results.
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During the year ended December 31, 2023, we generated $2.2 million from laboratory patient services (of which approximately $37,000 related to our first diagnostic test, CyPath ® Lung), and approximately $273,000 from histology laboratory test, approximately $19,000 from medical director fees, and in connection with CyPath ® Lung tests purchased by the DOD in the approximate amount of $19,000 for an observational study.
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To become and remain profitable, we must succeed in generating additional laboratory revenue in excess of our operating expenses and developing and commercializing our diagnostic tests and therapeutic products that we expect will generate significant income in the planned timeframe.
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This will require us to be successful in a range of challenging activities, including completing preclinical testing and clinical trials of our diagnostic and therapeutic technologies, obtaining regulatory approval for our diagnostic and therapeutic technologies, manufacturing, marketing, and selling any diagnostic tests and therapeutic products for which we may obtain regulatory approval, and establishing and managing our collaborations at various phases of each diagnostic test and therapeutic product candidate’s development.
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We are in the preliminary phases of these activities. We may never succeed in these activities and, even if we do, may never generate sufficient income to achieve profitability.
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To become profitable, we must develop our diagnostic tests and therapeutic products, which will depend in large part on our ability to: ● Develop, enhance, and protect our diagnostic tests and therapeutic products; ● Raise sufficient funding to support our diagnostic tests and therapeutic product development program(s); ● Complete pre-clinical testing; ● Work with our partners to expand commercialization of our first diagnostic test, CyPath ® Lung, as an LDT under the CAP/CLIA guidelines and regulations administered by CMS and CAP; ● Obtain de novo classification from FDA for our CyPath ® Lung as a Class II in vitro diagnostic 21 ● Work with our partners to develop and commercialize our first diagnostic test, CyPath ® Lung, as a CE-marked test in accordance with the IVDR of the EU; ● Synthesize, test, and attract licensing partners for drug conjugates, siRNAs, and other therapeutics (and methods for their use) developed by us; ● Develop and conduct human clinical studies to support the regulatory approval and marketing of our diagnostic test(s) and therapeutic product(s); ● Develop and manufacture the test(s) and product(s) to FDA standards, appropriate EU standards, and appropriate standards required for the commercialization of our tests and products in countries in which we seek to sell our diagnostic test(s) and therapeutic product(s); ● Obtain the necessary regulatory approvals to market our diagnostic test(s) and therapeutic product(s); ● Secure the necessary personnel and infrastructure to support the development, commercialization, and marketing of our diagnostic test(s) and therapeutic product(s); and ● Develop strategic relationships to support development, manufacturing, and marketing of our diagnostic test(s) and therapeutic product(s).
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Even if we do achieve profitability, we may not be able to sustain or increase profitability on a quarterly or annual basis.
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Our failure to become and remain profitable would depress the value of our Company and could impair our ability to raise capital, expand our business, maintain the research and development efforts, diversify our diagnostic tests and therapeutic product offerings, or even continue our operations.
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A decline in the value of our Company could also cause you to lose all or part of your investment. We must raise additional capital to fund our operations in order to continue as a going concern. As of December 31, 2023, we had an accumulated deficit of $44.6 million and $2.8 million cash on hand.
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For the year 2023, cash used in operations was $6.0 million and net loss was $7.9 million.
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Despite raising an additional $2.5 million in gross proceeds in March 2024 through the offering of our securities, we may need to raise further capital through the sale of additional equity or debt securities or other debt instruments, strategic relationships or grants, or other arrangements to support our future operations.
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Our business plan includes expansion for our commercialization efforts which will require additional funding. If we are unable to improve our liquidity position, we may not be able to continue as a going concern. Our ability to continue as a going concern is dependent upon our ability to generate revenue and raise capital from financing transactions.
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Without funding from the proceeds of a capital raise or strategic relationship or grant, management anticipates that our cash resources are sufficient to continue operations through September 2024. Our future is dependent upon the ability to obtain financing and upon future profitable operations from the development of new business opportunities.
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There can be no assurance that we will be successful in accomplishing these objectives.
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Without such additional capital, we may be required to curtail or cease operations and be required to realize our assets and discharge our liabilities other than in the normal course of business which could cause investors to suffer the loss of all or a substantial portion of their investment.
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WithumSmith+Brown, PC, our independent registered public accounting firm for the fiscal year ended December 31, 2023, has included an explanatory paragraph in its opinion that accompanies our audited consolidated financial statements as of and for the year ended December 31, 2023, indicating that our current liquidity position raises substantial doubt about our ability to continue as a going concern.
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We have a limited operating history, which makes it difficult to evaluate our current business and future prospects. We are a company with limited operating history, and our operations are subject to all of the risks inherent in establishing a new business enterprise.
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The likelihood of our success must be considered in light of the problems, expenses, difficulties, complications, and delays frequently encountered in connection with the formation of a new business, the development of new technologies or those subject to clinical testing, and the competitive and regulatory environment in which we will operate.
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To date, we have generated revenue from a limited market launch of CyPath ® Lung in Texas. There can be no assurance that we will be able to successfully expand our commercialization efforts or that we will obtain the necessary regulatory approvals that will allow us to expand our marketing efforts.
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We may not be able to maintain certification of CyPath ® Lung as an LDT in accordance with CAP/CLIA guidance and regulations, or obtain approval of our diagnostic tests in development by the CMS, the FDA, European Medicines Agency, or Chinese National Medical Products Administration.
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Even if we do so and are also able to commercialize our diagnostic tests, we may never generate revenue sufficient to become profitable. Our failure to generate revenue and profit would likely cause our securities to decrease in value or become worthless.
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In addition, while we anticipate generating continued revenue from PPLS, our CAP-accredited, CLIA-certified clinical pathology laboratory, we do not expect to immediately derive profit from revenue from PPLS’ services.
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Once we begin to generate such profit, there is no guarantee that it will be sufficient to realize the expected financial benefits of the acquisition and that revenue generated will cover necessary operating expenses. In addition, since we have limited experience operating a clinical laboratory, we may not accurately estimate the expenses we will incur.
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Ownership of a CAP/CLIA laboratory and related services business may not have the clinical value and commercial potential which we envision. Any substantive failure of PPLSlaboratory to meet our expectations could have a material negative effect on our results of operations.
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There can be no assurance that the anticipated benefits of PPLS will materialize or that if they materialize will result in increased stockholder value or revenue stream to the combined company. 22 We will require additional financing to implement our business plan, which may not be available on favorable terms or at all, and we may have to accept financing terms that would place restrictions on us.
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We believe that we must raise additional funds to be able to continue our business operations. We may not be able to obtain equity or debt financing on acceptable terms or at all to implement our growth strategy.
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As a result, adequate capital may not be available to finance our current development plan, take advantage of business opportunities, or respond to competitive pressures. If we are unable to raise additional funds, we may be forced to curtail or even abandon our business plan and focus on fewer commercial opportunities that may result in more limited growth than forecast.
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Until such time, if ever, as we can generate substantial income from sale of our diagnostic test(s) and therapeutic product candidates, we expect to finance our cash needs through a combination of equity offerings, debt financings, and license and collaboration agreements.
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To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interest of existing stockholders will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of the holders of our Common Stock (the “Common Stockholders”).
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In addition, the terms of any future financing may impose restrictions on our right to declare dividends or on the manner in which we conduct our business.
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Debt financing and preferred equity financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures, declaring dividends, or making acquisitions or significant asset sales.
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If we raise additional funds through collaborations, strategic alliances or marketing, or distribution or licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, and research programs, or grant licenses on terms that may not be favorable to us and/or that may reduce the value of our Common Stock.
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Risks Related to the Acquisition The combined company may not experience the anticipated strategic benefits of the PPLS acquisition. While we anticipate benefits from the acquisition of PPLS, we may not be able to realize the expected benefits. Despite due diligence we could assume previously unidentified or contingent liabilities.
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Ownership of a CAP/CLIA laboratory and related services business may not have the clinical value and commercial potential which we envision. Any substantive failure of the acquisition to meet our expectations could have a material negative effect on our results of operations.
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There can be no assurance that the anticipated benefits of the acquisition will materialize or that if they materialize will result in increased stockholder value or revenue stream to the combined company. We may not be able to enforce claims with respect to the representations, warranties, and indemnities that Village Oaks has provided to us under the Asset Purchase Agreement.
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In connection with the acquisition, Village Oaks has given certain representations, warranties, and indemnities. There can be no assurance we will be able to enforce any claims against Village Oaks’ breaches of such representations, warranties, or indemnities.
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Village Oaks’ liability with respect to breaches of such representations, warranties, and indemnities under the Asset Purchase Agreement may be limited or the amount and coverage of any insurance obtained with respect to representations and warranties may be limited. Even if we ultimately succeed in recovering any amounts, we may temporarily be required to bear these losses ourselves.
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We are unable to precisely estimate when we will begin to generate significant profit from revenue, if ever, from PPLS’ services, nor to estimate the amount of profit or revenue that will be generated or the expenses that will be incurred. We do not expect to immediately derive profit from revenue from PPLS’ services.
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Since its acquisition in September 2023, we have generated $2.5 million in revenue from PPLS. Once we begin to generate such profit, there is no guarantee that it will be sufficient to realize the expected financial benefits of the acquisition.
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In addition, since we have limited experience operating a clinical laboratory, we may not accurately estimate the expenses we will incur. Operating a clinical laboratory is a new business for us, and the members of our management team have limited experience operating a CAP-accredited, CLIA-certified laboratory, which may limit the ability of investors to make an informed investment decision.
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We have never operated a clinical laboratory. To date, only our Chief Operating Officer, Xavier Reveles, has operated a CAP-accredited, CLIA-certified clinical laboratory and therefore it may be difficult for investors to analyze our ability to successfully operate a clinical laboratory.
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Our management team may not successfully or efficiently manage our transition to operating a CAP-accredited and CLIA-certified laboratory subject to significant regulatory oversight and reporting obligations. However, to ease the transition, Roby Joyce, M.D., the Medical Director and Laboratory Director of Village Oaks prior to the acquisition, continues to serve as the Medical Director and Laboratory Director of PPLS.
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These new obligations and constituents will require significant attention from our senior management and could divert their attention away from the day-to-day management of our business, which could adversely affect our business, financial condition, and operating results.
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Risks Related to our Diagnostic Product Until we secure FDA clearance for our CyPath ® Lung as a Class II in vitro diagnostic, we may encounter physicians who will not order an LDT.
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In order to market our CyPath ® Lung as an IVD medical device, we must receive de novo classification from the FDA as a Class II in vitro diagnostic.
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We intend to launch a pivotal trial later this year in an effort to attain such classification; however, there can be no assurance that the trial will have favorable results or that it will generate the results necessary to obtain such classification.
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Until such time as we receive de novo classification, which we may never receive, our marketing efforts are limited to the marketing and sale of CyPath ® Lung as an LDT.
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Without clearance of CyPath ® Lung by the FDA, some physicians may not order the test. 23 If we experience delays or difficulties in the enrollment of patients in clinical trials, our receipt of necessary regulatory approvals could be delayed or prevented.
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We may not be able to initiate or continue clinical trials if we are unable to locate and enroll a sufficient number of eligible patients to participate in these trials as required by the FDA or similar regulatory authorities outside the U.S., such as the European Medicines Agency.
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Patient enrollment is affected by many other factors, including: ● the severity of the disease under investigation; ● the patient eligibility criteria for the study in question; ● the efforts to facilitate timely enrollment in clinical trials; ● our payments for conducting clinical trials; ● the patient referral practices of physicians; ● the ability to monitor patients adequately during the trial period; and ● the proximity and availability of clinical trial sites for prospective patients.
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We are unable to forecast with precision our ability to enroll patients. Our inability to enroll a sufficient number of patients for our clinical trials would result in significant delays and could require us to abandon one or more clinical trials altogether.
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Enrollment delays in our clinical trials may result in increased development costs, which would cause the value of our Company to decline and limit our ability to obtain additional financing. Clinical trials are expensive, time consuming, and may not be successful. Clinical trials are expensive, time consuming, and may not be successful.
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They involve the evaluation of diagnostic tests and testing of potential therapeutic agents and effective treatments in humans to determine the safety and efficacy of the diagnostic tests and therapeutic products necessary for an approved diagnostic and therapeutic technology. Many tests and products in human clinical trials fail to demonstrate the desired safety and efficacy characteristics.
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Even if our tests and products progress successfully through initial or subsequent human testing, they may fail in later phases of development. We may engage others to conduct our clinical trials, including clinical research organizations and government-sponsored agencies. These trials may not start or be completed as we forecast or may not achieve desired results.
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We may experience numerous unforeseen events during or as a result of clinical trials that could delay or prevent our ability to receive marketing authorization or commercialize our diagnostic and therapeutic technologies, including: ● regulators or institutional review boards may not authorize us or our investigators to commence a clinical trial or conduct a clinical trial at a prospective trial site; ● we may experience delays in reaching, or fail to reach, agreement on acceptable clinical trial contracts or clinical trial protocols with prospective trial sites; ● clinical trials may produce negative or inconclusive results, and we may decide, or regulators may require us, to conduct additional clinical trials or abandon product and test development programs; ● the number of patients required for clinical trials may be larger than we anticipate, enrollment in these clinical trials may be slower than we anticipate, or participants may drop out of these clinical trials at a higher rate than we anticipate; ● our third-party contractors may fail to comply with regulatory requirements or meet their contractual obligations to us in a timely manner, or at all; ● we may have to suspend or terminate clinical trials for various reasons, including a finding that the participants are being exposed to unacceptable health risks; ● regulators or institutional review boards may require that we or our investigators suspend or terminate clinical research for various reasons, including noncompliance with regulatory requirements or a finding that the participants are being exposed to unacceptable health risks; ● the cost of clinical trials may be greater than we anticipate; or ● regulators may revise the requirements for approving our diagnostic or therapeutic technologies, or such requirements may not be as we anticipate.
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If we are required to conduct additional clinical trials or other testing beyond those that we currently contemplate, if we are unable to successfully complete clinical trials or other testing, if the results of these trials or tests are not positive or are only modestly positive, or if there are safety concerns, we may: ● be delayed in obtaining marketing approval; ● not obtain marketing approval at all, which would seriously impair our viability; 24 ● obtain marketing approval in some countries and not in others; ● obtain approval for indications or patient populations that are not as broad as we intend or desire; ● obtain approval with labeling that includes significant use or distribution restrictions or safety warnings; ● be subject to additional post-marketing testing requirements; or ● have the diagnostic test or therapeutic product removed from the market after obtaining marketing approval.
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Our product and test development costs will increase if we experience delays in clinical testing or marketing approvals. We do not know whether any of our preclinical studies or clinical trials will begin as planned, will need to be restructured, or will be completed on schedule or at all.
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Significant preclinical or clinical trial delays also could shorten any periods during which we may have the exclusive right to commercialize our diagnostic technology or allow our competitors to bring diagnostic tests and therapeutic products to market before we do, potentially impairing our ability to successfully commercialize our diagnostic and therapeutic technologies and harming our business and results of operations.
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Risks Related to Our Diagnostic Tests If our tests do not perform as expected, our operating results, reputation and business will suffer. Our success depends on the market’s confidence that PPLS can provide reliable, high-quality clinical testing services.
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There is no guarantee that the accuracy and reproducibility that our CAP/CLIA clinical pathology laboratory has demonstrated to date will continue as its test volume increases. We believe that PPLS’ customers are likely to be particularly sensitive to test limitations and errors, including inaccurate test results.
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As a result, if PPLS does not perform its diagnostic services as expected, our operating results, reputation and business will suffer. We may be subject to legal claims arising from such limitations, errors, or inaccuracies. We may experience difficulties that delay or prevent our development, introduction, or marketing of enhanced or new tests.
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Our success may also depend on our ability to effectively introduce enhanced or new tests. The development of enhanced or new tests is complex, costly, and uncertain. Furthermore, enhancing or developing new tests requires us to anticipate patients’, clinicians’, and payors’ needs and emerging technology trends accurately.
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We may experience research and development, regulatory, marketing, and other difficulties that could delay or prevent our introduction of enhanced or new tests. The research and development process in diagnostics generally takes a significant amount of time from the research and design stage to commercialization.
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This process is conducted in various stages, and each stage presents the risk that we will not achieve our goals. We may have to abandon a test in which we have invested substantial resources.
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In order to successfully commercialize tests that we may develop in the future, we may need to conduct lengthy, expensive clinical trials and develop dedicated sales and marketing operations or enter into collaborative agreements to achieve market awareness and demand.
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Any delay in the research and development, approval, production, marketing, or distribution of enhanced or new tests could adversely affect our competitive position, branding, and results of operations.
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We cannot be certain that: ● any tests that we may enhance or develop will prove to be effective in clinical trials; ● we will be able to obtain, in a timely manner or at all, regulatory approvals, if needed; ● any tests that we may enhance or develop will be ordered and used by healthcare providers; ● any tests that we may enhance or develop can be provided at acceptable cost and with appropriate quality; or ● any of our tests can be successfully marketed.
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These factors and other factors beyond our control could delay the launch of enhanced or new tests. If clinical testing of a particular diagnostic test or therapeutic product candidate does not yield successful results, we will be unable to commercialize that test or product candidate.
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We must demonstrate the product safety and efficacy of our candidates for diagnostic tests and therapeutic products in humans through extensive clinical testing. Our research and development programs are at an early stage of development.
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We may experience numerous unforeseen events during, or as a result of, the testing process that could delay or prevent commercialization of any test or product, including the following: ● the results of pre-clinical studies may be inconclusive, or they may not be indicative of results that will be obtained in human clinical trials; ● safety and efficacy results attained in early human clinical trials may not be indicative of results that are obtained in later clinical trials; ● after reviewing test results, we may abandon projects that we might previously have believed to be promising; ● we or our regulators may suspend or terminate clinical trials because the participating subjects or patients are being exposed to unacceptable health risks; and ● our test or product candidates may not have the desired effects or may include undesirable side effects or other characteristics that preclude regulatory approval or limit their commercial use if approved. 25 Even if our diagnostic tests or therapeutic products receive marketing approval, they may fail to achieve the degree of market acceptance by physicians, patients, third-party payors, and others in the medical community necessary for commercial success.
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Even if our products receive marketing approval, if needed, they may nonetheless fail to gain sufficient market acceptance by physicians, patients, third-party payors, and others in the medical community. If we do not generate significant product revenues, we may not become profitable.
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The degree of market acceptance of our products and tests, if approved for commercial sale, will depend on a number of factors, including: ● their efficacy, safety, and other potential advantages compared to alternative tests or products; ● our ability to offer them for sale at competitive prices; ● their convenience and ease of administration compared to alternative diagnostics or treatments; ● the willingness of the target patient population to try new diagnostic tests and of physicians to order these tests; ● the willingness of the target patient population to try new therapies and of physicians to prescribe these therapies; ● the strength of marketing and distribution support; ● the availability of governmental agencies and third-party medical insurance and adequate reimbursement for our diagnostic tests or therapeutic products; ● any restrictions on the use of our diagnostic tests or therapeutic products together with other diagnostic methods or therapeutic treatments; ● any restrictions on the use of our diagnostic tests or therapeutic products together with other medications; ● inability of certain types of patients to produce adequate samples for analysis in the use of our diagnostic tests; ● inability of certain types of patients to use our diagnostic tests or take our therapeutic products; and ● the prevalence and severity of side effects from our therapeutic products.
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If we are unable to address and overcome these and similar concerns, our business and results of operations could be substantially harmed.
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If we are unable to establish effective sales, marketing, and distribution capabilities or enter into agreements with third parties with such capabilities, we may not be successful in commercializing our diagnostic tests or therapeutic products if and when they are approved.
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We do not have a sales or marketing infrastructure and have limited experience in the sale, marketing, or distribution of our diagnostic tests and therapeutic products.
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To achieve commercial success for any diagnostic test or therapeutic product for which we obtain marketing approval, we will need to successfully establish and maintain relationships directly and with third parties to perform sales and marketing functions.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeSince 2016, UTSA has granted each of our annual requests for a license extension. 14 We rent additional corporate office space from Venture Point (formerly known as WorkHub Elite Business Center) pursuant to a membership agreement that is renewable on a monthly basis. Currently, we rent several office suites for a monthly fee of approximately $ 5, 000 per month.
Biggest changeThe license agreement has a one-year term that we can extend by requesting a term extension from UTSA. Since 2016, UTSA has granted each of our annual requests for a license extension. We rent additional corporate office space located at Venture Point (formerly WorkHub Elite Business Center) pursuant to a membership agreement that is renewable in September 2024.
We do not own any real property. Management believes that the combination of our rented and licensed office and laboratory spaces are adequate to meet our current needs and expected level of operations.
We are in negotiations to extend the lease for 6 years at a rate similar to the current rent. Management believes that the combination of our rented and licensed office and laboratory spaces are adequate to meet our current needs and expected level of operations.
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The license agreement has a one-year term that we can extend by requesting a term extension from UTSA.
Added
Currently, we rent several office suites for a monthly fee of approximately $7,000 per month. We do not own any real property. PPLS leases a premises in San Antonio, Texas, used in connection with operation of the CAP-accredited, CLIA-certified clinical pathology laboratory. The rent is currently $10,143.83 per month, and the term of the lease expires in October 2024.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeResults of actual and potential litigation are inherently uncertain, and there can be no assurances that favorable outcomes will be obtained. Item 4. Mine Safety Disclosures. Not applicable. PART II
Biggest changeResults of actual and potential litigation are inherently uncertain, and there can be no assurances that favorable outcomes will be obtained.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changePlan category Number of securities to be issued upon exercise of outstanding options, warrants and rights Weighted-average exercise price of outstanding options, warrants and rights Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (a) (b) (c) Equity compensation plans approved by security holders 5,456,344 $ 5.88 237,160 Equity compensation plans not approved by security holders — — — Total 5,456,344 $ 5.88 237,160 Item 6. [Reserved.]
Biggest changePlan category Number of securities to be issued upon exercise of outstanding options, warrants, and rights Weighted-average exercise price of outstanding options, warrants, and rights Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (1) (a) (b) (c) Equity compensation plans approved by security holders 676,553 $ 3.98 683,175 Equity compensation plans not approved by security holders Total 676,553 $ 3.98 683,175 (1) The number of shares of Common Stock that may be issued pursuant to awards under the 2014 Equity Incentive Plan shall not exceed in the aggregate the greater of (i) 8,000,000 shares of Common Stock, or (ii) that number of shares equal to 20% of the total issued and outstanding shares of Common Stock.
Our common stock, par value $0.007 per share (the “Common Stock”) trades under the symbol “BIAF.” Our tradeable warrants, each to purchase one share of Common Stock (collectively, the “Tradeable Warrants”), trade under the symbol “BIAFW.” Our Common Stock and Tradeable Warrants trade on The Nasdaq Capital Market.
Market Information Our Common Stock, par value $0.007 per share (the “Common Stock”) trades under the symbol “BIAF.” Our tradeable warrants, each to purchase one share of Common Stock (collectively, the “Tradeable Warrants”), trade under the symbol “BIAFW.” Our Common Stock and Tradeable Warrants trade on The Nasdaq Capital Market.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Market Information.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
As of March 20, 2023 , there were approximately 68 holders of record of shares of our Common Stock. This number does not reflect the beneficial holders of our common stock who hold shares in street name through brokerage accounts or other nominees. Dividends. We have never declared or paid any cash dividends on our capital stock.
Holders of Record As of March 20, 2024, there were approximately 79 holders of record of shares of our Common Stock. This number does not reflect the beneficial holders of our common stock who hold shares in street name through brokerage accounts or other nominees. Dividends We have never declared or paid any cash dividends on our capital stock.
Any future determination regarding the declaration and payment of dividends, if any, will be at the discretion of our board of directors and will depend on then-existing conditions, including our financial condition, results of operations, contractual restrictions, capital requirements, business prospects, and other factors our board of directors may deem relevant. Securities Authorized for Issuance Under Equity Compensation Plans.
Any future determination regarding the declaration and payment of dividends, if any, will be at the discretion of our Board of Directors and will depend on then-existing conditions, including our financial condition, results of operations, contractual restrictions, capital requirements, business prospects, and other factors our Board of Directors may deem relevant.
Removed
Use of Proceeds from Initial Public Offering On September 6, 2022, we completed our IPO of 1,282,600 Units at an Offering Price of $6.125 per Unit.
Added
Unregistered Sales of Equity Securities We did not sell any equity securities during the quarter ended December 31, 2023, in transactions that were not registered under the Securities Act other than as previously disclosed in our filings with the SEC and as described below.
Removed
Each Unit consisted of one share of Common Stock, one Tradeable Warrant exercisable for the purchase of one share of Common Stock at an exercise price of $7.35 per share, and one Non-tradeable Warrant exercisable for the purchase of one share of Common Stock at an exercise price of $7.656 per share.
Added
We believe that each transaction was exempt from the registration requirements of the Securities Act by virtue of Section 4(a)(2) thereof.
Removed
The total number of shares of Common Stock sold in the IPO does not include the Over-Allotment Option that we granted to the Underwriters to purchase additional shares of Common Stock, Tradeable Warrants, and/or Non-tradeable Warrants.
Added
On October 1, 2023, we issued an aggregate of 94,936 restricted shares of our Common Stock to our seven directors, which shares of restricted stock will vest ratably over three months of continued service and which represents a restricted stock award to each director valued at $18,750 granted by us to each of our directors each quarter during the calendar year as part of our director compensation policy.
Removed
The Underwriters exercised a portion of their Over-Allotment Option and purchased 110,167 Tradeable Warrants at a purchase price of $0.01 per warrant, and 110,167 Non-tradeable warrants at a purchase price of $0.01 per warrant.
Added
On October 1, 2023, we issued 3,164 shares of our Common Stock to a consultant pursuant to the terms of a consulting agreement in consideration of services provided. In November 2023 to an investor relations firm of 50,000 shares of common stock for services provided.
Removed
The shares of Common Stock and Tradeable Warrants underlying the Units offered in our IPO and the Over-Allotment Option were registered for sale pursuant to our Registration Statement on Form S-1, as amended (File No. 333-264463), filed with and declared effective by the SEC on August 29, 2022.
Added
The investor relations firm was a sophisticated investor, received shares that had a restricted legend and had adequate access, though their relationships with the Company, to information about the Company.
Removed
The aggregate offering price for the registered shares of Common Stock and Tradeable Warrants was approximately $7.9 million. We received net proceeds of approximately $6.0 million from the IPO, after deducting underwriting discounts and commissions of approximately $0.7 million and offering expenses of approximately $1.2 million. The representative of the Underwriters was WallachBeth Capital, LLC.
Added
Securities Authorized for Issuance Under Equity Compensation Plans The following table presents information as of December 31, 2023, with respect to shares of our Common Stock that may be issued under our 2014 Equity Incentive Plan.
Removed
No payments for the foregoing expenses were made by us to any of our officers, directors, or persons owning ten percent (10%) or more of our Common Stock, or to the associates of any of the foregoing, or to their affiliates, other than payments in the ordinary course of business to our officers for salaries, bonuses, and expense reimbursements. 15 There has been no material change in the planned use of proceeds as described in our Final Prospectus filed with the SEC on September 2, 2022 (see https://www.sec.gov/Archives/edgar/data/1712762/000149315222024949/form424b4.htm ).
Removed
The expected use of net proceeds from the IPO represents our intentions based upon our present plans and business conditions. We cannot predict with certainty all of the particular uses for the proceeds of the IPO or the amounts that we will actually spend on the uses set forth above.
Removed
Accordingly, our management will have broad discretion in the application of the net proceeds we received from the IPO, and investors will be relying on the judgment of our management regarding the application of our net proceeds.
Removed
While we expect to use the net proceeds for the purposes described above, the timing and amount of our actual expenditures will be based on many factors, including cash flows from operations, the anticipated growth of our business, and the availability and terms of alternative financing sources to fund our growth. Holders of Record.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

28 edited+39 added−57 removed14 unchanged
Biggest changeSelling, General and Administrative Our selling, general and administrative expenses consist primarily of expenditures related to compensation, legal, accounting, tax and other professional services, and general operating costs. Selling, general and administrative expenses totaled approximately $2.7 million and $1.1 million during 2022 and 2021, respectively.
Biggest changeThe increase of approximately $111,000, or 76%, for 2023 compared to 2022 was primarily attributable to an increase in compensation costs and benefits as we added clinic development personnel. Selling, General and Administrative Our selling, general and administrative expenses consist primarily of expenditures related to employee compensation, legal, accounting and tax, other professional services, and general operating expenses.
Net Cash Provided by Financing Activities During the year ended December 31, 2022, net cash provided by financing activities was $14.3 million primarily due to net proceeds of approximately $6.0 million from issuance of Common Stock in our IPO, as well as proceeds of approximately $7.8 million from the exercise of warrants and options.
During the year ended December 31, 2022, net cash provided by financing activities was $14.3 million primarily due to net proceeds of approximately $6.0 million from issuance of Common Stock in our IPO, as well as proceeds of approximately $7.8 million from the exercise of warrants and options.
Going Concern Our evaluation of our ability to continue as a going concern requires us to evaluate our future sources and uses of cash sufficient to fund our currently expected operations in conducting research and development activities one year from the date our financial statements are issued.
Going Concern Our evaluation of our ability to continue as a going concern requires us to evaluate our future sources and uses of cash sufficient to fund our currently expected operations in conducting research and development activities one year from the date our consolidated financial statements are issued.
CyPath ® Lung has the potential to increase overall diagnostic accuracy of lung cancer, which could lead to increased survival, fewer unnecessary invasive procedures, reduced patient anxiety, and lower medical costs. Through our wholly owned subsidiary, OncoSelect ® Therapeutics, LLC, our research has led to discoveries and advancement of novel cancer therapeutics that specifically and selectively target cancer cells.
CyPath ® Lung has the potential to increase overall diagnostic accuracy of lung cancer, which could lead to increased survival, fewer unnecessary invasive procedures, reduced patient anxiety, and lower medical costs. Through our wholly owned subsidiary, OncoSelect ® Therapeutics, LLC, our research has led to discoveries and advancement of novel cancer therapeutic approaches that specifically and selectively target cancer cells.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations. This section presents management’s perspective on our financial condition and results of operations. The following discussion and analysis (the “MD&A”) is intended to highlight and supplement data and information presented elsewhere in this Annual Report on Form 10-K.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations. This section presents management’s perspective on our financial condition and results of operations. The following discussion and analysis (the “MD&A”) is intended to highlight and supplement data and information presented elsewhere in this Annual Report.
Results of Operations Year Ended December 31, 2022, Compared to the Year Ended December 31, 2021 Our results of operations have varied significantly from year to year and quarter to quarter and may vary significantly in the future.
Results of Operations Year Ended December 31, 2023, Compared to the Year Ended December 31, 2022 Our results of operations have varied significantly from year to year and quarter to quarter and may vary significantly in the future.
Critical Accounting Policies and Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles (GAAP) in the United States requires management to make significant judgments and estimates that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.
Critical Accounting Estimates The preparation of financial statements in conformity with GAAP in the United States requires management to make significant judgments and estimates that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.
Liquidity and Capital Resources To date, we have funded our operations primarily through our IPO, exercise of warrants and options, and the sale of our equity and debt securities, resulting in gross proceeds of approximately $34.3 million.
Liquidity and Capital Resources To date, we have funded our operations primarily through our IPO, exercise of warrants, and the sale of our equity and debt securities, resulting in gross proceeds of approximately $36.8 million.
We expect to continue to incur significant operating losses for the foreseeable future as we continue the development of our diagnostic tests and therapeutic products and advance our diagnostic tests through clinical trials. We intend to license our therapeutic products for clinical development should animal and pre-clinical studies prove successful.
We expect to continue to incur significant operating losses for the foreseeable future as we continue the development of our diagnostic tests and advance our diagnostic tests through clinical trials; however, we do expect revenue to increase due to the acquisition. We intend to license our therapeutic products for clinical development should animal and pre-clinical studies prove successful.
The CyPath ® Lung test enables physicians to more confidently distinguish between patients who will likely benefit from timely intervention and more invasive follow-up procedures from patients who are likely without lung cancer and should continue annual screening.
The CyPath ® Lung test enables physicians to more confidently identify patients who will likely benefit from timely intervention and more invasive follow-up procedures and those who are likely without lung cancer and should continue routine screening.
Factors that could cause such differences are discussed in the “Cautionary Note Regarding Forward-Looking Statements” section of this Quarterly Report and in the “Risk Factors” in our Annual Report on Form10-K. 16 Our MD&A is organized as follows: ● Company Overview – Discussion of our Business Plan and strategy to provide context for the remainder of the MD&A. ● Results of Operations – Analysis of our financial results comparing the year ended December 31, 2022, to the year ended December 31, 2021. ● Liquidity and Capital Resources – Analysis of changes in our cash flows, and discussion of our financial condition and potential sources of liquidity. ● Critical Accounting Policies and Use of Estimates – Accounting policies that we believe are important to understanding the assumptions and judgments incorporated in our reported financial results and forecasts.
Factors that could cause such differences are discussed in the “Cautionary Note Regarding Forward-Looking Statements” section of this Annual Report and in the “Risk Factors” in this Annual Report. 48 Our MD&A is organized as follows: ● Company Overview – Discussion of our business plan and strategy to provide context for the remainder of the MD&A. ● Results of Operations – Analysis of our financial results comparing the year ended December 31, 2023, to the year ended December 31, 2022. ● Liquidity and Capital Resources – Analysis of changes in our cash flows and discussion of our financial condition and potential sources of liquidity. ● Critical Accounting Estimates – Accounting estimates are those estimates made in accordance with generally accepted accounting principles (“GAAP”) that we believe are important to understanding the assumptions and judgments incorporated in our reported financial results and forecasts.
We have incurred losses since our inception in 2014 as a result of significant expenditures for operations and research and development and, prior to April 2022, the lack of any approved diagnostic tests or therapeutic products to generate revenue. We have an accumulated deficit of approximately $36.7 million as of December 31, 2022.
We have incurred losses since our inception in 2014 as a result of significant expenditures for operations and research and development and, prior to April 2022, the lack of any approved diagnostic test or therapeutic products to generate revenue.
Our first diagnostic test, CyPath ® Lung, addresses the need for noninvasive detection of early-stage lung cancer. Lung cancer is the leading cause of cancer-related deaths. Physicians are able to order CyPath ® Lung to assist in their assessment of patients who are at high risk for lung cancer.
Lung cancer is the leading cause of cancer-related deaths worldwide. Physicians order CyPath ® Lung to assist in their assessment of patients who are at high risk for lung cancer.
Company Overview Business bioAffinity Technologies, Inc. (the “Company,” “we,” or “our”) develops noninvasive, early-stage diagnostics to detect and researches targeted therapies to detect and treat lung cancer and other diseases of the lung at the cellular level. Our Company also is conducting early-stage research focused on advancing therapeutic discoveries that could result in broad-spectrum cancer treatments.
Company Overview Business bioAffinity Technologies, Inc. (the “Company,” “bioAffinity,” “we,” or “our”) develops noninvasive diagnostics to detect early-stage lung cancer and other diseases of the lung. We are advancing research into our therapeutic discoveries which could result in broad-spectrum cancer treatments in the future.
Net loss for the year ended December 31, 2022, was approximately $8.2 million, compared to a net loss of approximately $6.3 million for the year ended December 31, 2021, resulting from the operational activities described below.
Net loss for the year ended December 31, 2023, was approximately $7.9 million, compared to a net loss of approximately $8.2 million for the year ended December 31, 2022, resulting from the operational activities described below. Revenue Post-acquisition, additional revenue streams have been consolidated starting September 19, 2023.
Cash Flows The following information reflects cash flows for the years presented: Year Ended December 31, 2022 2021 (amounts in thousands) Cash and cash equivalents at beginning of year $ 1,361 $ 83 Net cash used in operating activities (4,071 ) (2,049 ) Net cash used in investing activities (220 ) — Net cash provided by financing activities 14,344 3,327 Cash and cash equivalents at end of year $ 11,414 $ 1,361 Net Cash Used in Operating Activities Net cash used in operating activities was approximately $4.1 million and $2.0 million for the years ended December 31, 2022 and 2021, respectively.
Cash Flows The following information reflects cash flows for the years presented: Year Ended December 31, 2023 2022 Cash and cash equivalents at beginning of year $ 11,413,749 $ 1,360,638 Net cash used in operating activities (6,037,806 ) (4,070,845 ) Net cash used in investing activities (2,209,399 ) (219,987 ) Net cash provided (used) by financing activities (344,984 ) 14,343,953 Cash and cash equivalents at end of year $ 2,821,570 $ 11,413,759 Net Cash Used in Operating Activities Net cash used in operating activities was approximately $6.0 million and $4.1 million for the years ended December 31, 2023, and 2022, respectively.
(Loss) gain on change in fair value of convertible notes The loss on the change in fair value of convertible notes totaled approximately $1.9 million during 2022 compared to a gain of $0.7 million during 2021, respectively.
The favorable improvement is based on convertible notes being converted to common stock in the prior year. 51 (Loss) gain on change in fair value of convertible notes The loss on the change in fair value of convertible notes was $0 during 2023 compared to a loss of $1.9 million during 2022, respectively.
The increase in operating expenses is the result of the following factors. Research and Development Our research and development expenses consist primarily of expenditures for lab operations, preclinical studies, compensation, and consulting costs. Research and development expenses totaled $1.1 million and $1.0 million during 2022 and 2021, respectively.
The increase of approximately $1.7 million for 2023 compared to 2022 was primarily attributable to the laboratory operations of the newly acquired PPLS. Research and Development Our research and development expenses consist primarily of expenditures for lab operations, preclinical studies, compensation, and consulting costs. Research and development expenses totaled $1.5 million and $1.4 million during 2023 and 2022, respectively.
The increase of approximately $2.1 million in cash used by operations during the year ended December 31, 2022, compared to 2021, was primarily attributable to an increase of $1.8 million in our loss from operations as compared to the prior year as described above.
The increase of approximately $1.9 million in cash used by operations during the year ended December 31, 2023, compared to 2022, was primarily attributable to prior year recognizing approximately $1.9 million in fair value adjustments on convertible notes payable.
The change in the fair value of convertible notes resulted primarily from changes in the calculation of the fair value of our stock, the reduction in the expected term, and other assumptions during the reported periods. Refer to our notes to audited financial statements for further discussion on our convertible notes.
The prior year recognized the change in the fair value of convertible notes converted to stock, the reduction in the expected term, and other assumptions during the reported periods.
As a result, since our inception in 2014, we have funded our operations principally through private sales of our equity or debt securities. From October 2021 through August 2022, the Company raised $2.7 million through the sale of Bridge Notes.
As a result, since our inception in 2014, we have funded our operations principally through private sales of our equity or debt securities. Prior to the acquisition, Precision Pathology Services had licensed and developed CyPath ® Lung as an LDT for sale to physicians.
These increases were partially offset by adjustments for the amortization of debt discount related to the issuance of Bridge Notes and non-cash charges related to stock-based compensation. 22 Net Cash Used in Investing Activities The Company used approximately $0.2 million in investing activities in 2022, compared to no cash used for the year ended December 31, 2021.
Net Cash Used in Investing Activities The Company used approximately $2.2 million in investing activities in 2023, compared to $0.2 million used for the year ended December 31, 2022. The increase in cash used in investing activities in 2023, compared to 2022, is attributable to the acquisition of PPLS.
The increase of approximately $135,000, or 13%, for 2022 compared to 2021 was primarily attributable to an increase in compensation costs and benefits as we added research personnel, partially offset by a decrease in the prior year due to several employees who were furloughed for several months and later returned to their positions with the Company.
The increase of approximately $89,000, or 6%, for 2023 compared to 2022 was primarily attributable to an increase in compensation costs and benefits as we added research personnel. Clinical Development Clinical development expenses totaled approximately $257,000 and $146,000 during 2023 and 2022, respectively.
In the second quarter of 2022, we started to recognize revenue from sales of the CyPath ® Lung test by our licensee, Precision Pathology. We have never been profitable, and as of December 31, 2022, we had working capital of $10.8 million and an accumulated deficit of approximately $36.7 million.
We have never been profitable, and as of December 31, 2023, we had total working capital of $1.7 million and an accumulated deficit of approximately $44.6 million.
Interest income (expense) We had net interest expense of approximately $2.5 million and $1.0 million for the years ended December 31, 2022 and 2021, respectively. The increase was due to additional convertible notes outstanding during the same period in the prior year.
Interest income (expense) We had net interest income (expense) of approximately $85,000 and ($2.5) million for the years ended December 31, 2023 and 2022, respectively. The current year amount related to approximately $120,000 interest earned from money market account partially offset by interest paid in financing lease for laboratory equipment.
We develop proprietary noninvasive diagnostic tests and cancer therapeutics using technology that preferentially targets cancer cells and cell populations indicative of a diseased state. Research and optimization of our platform technologies are conducted in our laboratories at The University of Texas at San Antonio.
We develop proprietary noninvasive diagnostic tests using flow cytometry and automated analysis developed by artificial intelligence (AI). One of our diagnostic tests analyzes cell populations, including cancer and cancer-related cells, that are indicative of a specific diseased state.
Notwithstanding that initial and interim data appear promising, the outcomes of our future clinical trials are uncertain, and future clinical trials may ultimately be unsuccessful. Financial To date, we have devoted a substantial portion of our efforts and financial resources to the development of our first diagnostic test, CyPath ® Lung.
We are also obligated to hold a stockholders’ meeting 90 days after the closing date and every three months thereafter seeking approval of the exercise of the Common Warrants. Financial To date, we have devoted a substantial portion of our efforts and financial resources to the development of our diagnostic test, CyPath ® Lung.
During the year ended December 31, 2021, net cash provided by financing activities was $3.3 million consisting of $3.3 million from the issuance of convertible notes, as well as receiving a second draw on our PPP Loan of $212,000 in March 2021, partially offset by the payment of approximately $180,000 in debt issuance costs.
Net Cash Provided by Financing Activities During the year ended December 31, 2023, net cash used by financing activities was $345,000 as compared to net cash proceeds of $14.3 million during 2022.
Removed
We are focused on expanding our broad-spectrum platform technologies to continue developing tests that detect and therapies that target various types of cancer and potentially other diseases. Recent Developments ● In the third quarter of 2022, the Company completed our initial public offering (IPO), with net proceeds of $6.0 million after deducting underwriting discounts, commissions and offering expenses.
Added
Research and optimization of our platform technologies are conducted in laboratories at our wholly owned subsidiary, Precision Pathology Laboratory Services, LLC (“PPLS”) and The University of Texas at San Antonio. Commercial laboratory services are performed at PPLS. Our diagnostic test, CyPath ® Lung, addresses the need for noninvasive detection of early-stage lung cancer.
Removed
In connection with our IPO, the Company converted almost $11 million in debt and related accrued interest into shares of Common Stock. ● In the third quarter of 2022, the Company raised additional proceeds of $7.8 million from the sale of warrants and the exercise of options. ● In the second quarter of 2022, we recognized royalty revenue on sales of our CyPath ® Lung test to physicians by Precision Pathology Services (“Precision Pathology”), a CAP-accredited, CLIA-certified clinical pathology laboratory and our licensee in San Antonio, Texas. 17 ● We have determined we will need to enroll an estimated 1,800 participants in our pivotal clinical trial that is designed to confirm the sensitivity and specificity of CyPath ® Lung in detecting lung cancer in persons at high risk for the disease, including patients who display indeterminate lung nodules between 6mm and 30 mm in size which often present a challenge in diagnosis. ● In the third quarter of 2022, the Company was awarded therapeutic patents in The People’s Republic of China, Mexico, and Australia directed at compounds comprised of porphyrins conjugated to chemotherapeutic agents that can provide selective treatment for cancer. ● In the third quarter of 2022, Precision was inspected by the College of American Pathologists (CAP) including inspection of the CyPath ® Lung test in accordance with CAP/CLIA regulatory standards and regulations.
Added
Through our wholly owned subsidiary PPLS, we acquired the assets of Village Oaks Pathology Services, P.A., a Texas professional association d/b/a Precision Pathology Services, including the CAP-accredited and CLIA-certified commercial laboratory it owned, and we now own and operate the clinical anatomic and clinical pathology laboratory.
Removed
The inspection resulted in continued accreditation for the laboratory and the CyPath ® Lung test as a Laboratory Developed Test (LDT). ● In the first quarter of 2023, the Company announced publication of “Detection of early-stage lung cancer in sputum using automated flow cytometry and machine learning” detailing results of the Company’s validation clinical trial for its non-invasive diagnostic CyPath® Lung in Respiratory Research, which showed CyPath ® Lung had 92% sensitivity and 87% specificity in high-risk patients who had nodules smaller than 20 millimeters or no nodules in the lung, with an area under the ROC curve of 94%.
Added
Recent Developments On March 6, 2024, we received aggregate gross proceeds of $2.5 million from the sale to four institutional investors (the “Purchasers”) of (1) 1,600,000 shares of our Common Stock in a registered direct offering, and (2) Common Warrants to purchase an aggregate of 1,600,000 shares of Common Stock (the “Common Warrants”) with an exercise price of $1.64 in a concurrent private placement (the “Transactions”).
Removed
Overall, the test resulted in specificity of 88% and sensitivity of 82%. More than half of those in the cancer cohort had early Stage I or II lung cancer.
Added
The Common Stock was offered pursuant to a shelf registration statement on Form S-3 (File No. 333-275608), which was declared effective on November 27, 2023, (as amended from time to time, the “Registration Statement”).
Removed
CyPath® Lung detected multiple forms of cancer including adenocarcinoma, squamous cell carcinoma, and small cell lung cancer. ● In the first quarter of 2023, the Company announced publication in the peer-reviewed journal JoVE of “Porphyrin-modified beads for use as compensation controls in flow cytometry” that describes the beads engineered by the Company for use with its CyPath® Lung test. ● In the first quarter of 2023, the Company announced that the U.S.
Added
The Common Warrants and the shares of Common Stock issuable upon exercise of the Common Warrants (the “Common Warrant Shares”) were issued in a concurrent private placement and have not been registered.
Removed
Patent and Trademark Office (USPTO) issued a Notice of Allowance for a therapeutic patent application directed at compounds comprised of porphyrins conjugated to chemotherapeutic agents that can provide selective treatment for cancer.
Added
The Common Warrants will be exercisable commencing on the effective date of stockholder approval for the issuance of the shares of Common Stock issuable upon exercise of the Common Warrants (the “Stockholder Approval Date”) and will expire on the fifth anniversary of the Stockholder Approval Date.
Removed
Development of Our Diagnostic Tests Our first diagnostic test, CyPath ® Lung, is a noninvasive test to detect early-stage lung cancer in people at high risk for the disease.
Added
Pursuant to the terms of the Purchase Agreement, until 60 days following the closing of the Transactions, we have agreed not to issue (or enter into any agreement to issue) any shares of Common Stock or Common Stock equivalents, subject to certain exceptions.
Removed
Our current five-year Business Plan for the commercial development of CyPath ® Lung contemplates the following major initiatives: ● Initial market launch of CyPath ® Lung as an LDT in Texas, expanding sales to the Southwest U.S. to be followed by an expanding sale of the test to U.S. physicians; ● Launch CyPath ® Lung as a CE-marked in vitro diagnostic (IVD) test in the EU; ● Initiate and complete a pivotal clinical trial proving the efficacy of CyPath ® Lung; ● Submit to the U.S.
Added
We have further agreed not to enter into an agreement involving a variable rate transaction until 12 months following the closing of the Transactions, provided however that the prohibition on “at-the-market offerings” and the issuance of common stock pursuant to an equity line of credit shall expire on the six-month anniversary of the closing date of this offering.
Removed
Food and Drug Administration (FDA) for clearance for the Company to directly sell CyPath ® Lung as an FDA-cleared test to U.S. physicians for detection of early-stage lung cancer in people at high risk for the disease; and ● Expand the EU market and sale of CyPath ® Lung in Asia, Eastern Europe, and Australia.
Added
In addition, our Chief Executive Officer and each of our directors have entered into lock-up agreements with the Company pursuant to which each of them has agreed not to, for a period of 60 days from the closing of the Transactions, offer, sell, transfer or otherwise dispose of our securities, subject to certain exceptions.
Removed
In July 2022, all but six of the Bridge Notes with an aggregate principal amount of $325,000 were further amended to have a maturity date of October 31, 2022.
Added
In addition, from the date of the Purchase Agreement until the date that is nine (9) months after the date of the Purchase Agreement, upon any issuance by the Company or any of its subsidiaries of Common Stock, common stock equivalents for cash consideration, Indebtedness (as defined in the Purchase Agreement) or a combination of units thereof for capital raising purposes other than an at-the-market offering (a “Subsequent Financing”), the Purchasers shall have the right to participate in the Subsequent Financing in an amount up to the percentage of such Purchaser’s participation in the Transactions on the same terms, conditions and price provided for in the Subsequent Financing. 49 WallachBeth Capital LLC acted as the placement agent for the offering and received a cash fee of 9.0% of the aggregate gross proceeds paid to us for the securities sold in the transactions and reimbursement of certain out-of-pocket expenses.
Removed
As consideration for the maturity date extension, each noteholder received a warrant to purchase that number of shares of Common Stock equal to the quotient obtained by dividing the principal amount of such holder’s note by 10.5 at an exercise price equal to $5.25 per share of Common Stock, representing 50% warrant coverage on the principal amount of the note.
Added
As additional compensation we issued to WallachBeth Capital LLC a warrant (the “Placement Agent Warrant”) to purchase an aggregate of 32,000 shares of Common Stock, such number of shares equal to two percent (2.0%) of the number of shares of Common Stock issued in the registered direct offering, at an exercise price per share equal to $1.64, which is equal to the exercise price of the Common Warrants.
Removed
In connection with the sale of our convertible Bridge Notes, our Placement Agent was paid commissions of nine percent (9.0%) and was issued the Placement Agent’s Warrant to purchase 54,464 shares of Common Stock.
Added
The Placement Agent Warrant is exercisable via “cashless exercise” in certain circumstances.
Removed
The Placement Agent’s Warrants have substantially the same terms as the warrants issued to our noteholders and an exercise price of $7.35 per share. 18 In September 2022, we completed our IPO, with net proceeds of $6.0 million after underwriting discounts, commissions, and offering expenses, and received proceeds of approximately $7.8 million from the exercise of warrants and options.
Added
We also agreed to file a registration statement to register the resale of the Common Warrant Shares and the shares of Common Stock issuable upon exercise of the Placement Agent Warrant (the “Placement Agent Warrant Shares”) within 30 days of the date of the Purchase Agreement and to use commercially reasonable efforts to keep such registration statement effective at all times until no Purchaser owns any Warrants or Warrant Shares and until the Placement Agent does not own the Placement Agent Warrant or any Placement Agent Warrant Shares.
Removed
As of December 31, 2022, we had cash and cash equivalents of $11.5 million. We believe that our available cash will be sufficient to fund our planned operations for at least 12 months following the issuance date of this Annual Report.
Added
The license agreement provided that revenues from the sale would be split evenly between the Company and Village Oaks. In the second quarter of 2022, prior to the acquisition, we started to recognize revenue as part of a limited beta market testing program of the CyPath ® Lung test.
Removed
Revenue Our revenue is generated exclusively from royalties for our first diagnostic test, CyPath ® Lung, from sales by Precision Pathology, a CAP-accredited, CLIA-certified clinical pathology laboratory and our licensee.
Added
PPLS generates three sources of revenue: (1) patient service fees, (2) histology service fees, and (3) medical director fees.
Removed
Although Precision Pathology placed CyPath ® Lung on its list of tests offered to physicians in second quarter 2022, there was limited marketing of the product until our IPO in September provided funds to assemble a marketing team of experts focused on demonstrating the clinical value of CyPath ® Lung in the marketplace.
Added
Pre-acquisition, bioAffinity Technologies’ revenue was generated in three ways for pre-acquisition: (1) royalties from the Company’s diagnostic test, CyPath ® Lung, (2) clinical flow cytometry services provided to Village Oaks related to the Company’s CyPath ® Lung test, and (3) CyPath ® Lung tests purchased by the U.S.
Removed
The limited test market launch in the San Antonio area is designed to evaluate our marketing program and help us ensure each step in the care pathway is efficient and effective, from the initial order by physicians to patient sputum collection and processing, to generating and delivering the patient report.
Added
Department of Defense (“DOD”) for an observational study, “Detection of Abnormal Respiratory Cell Populations in Lung Cancer Screening Patients Using the CyPath ® Lung Assay (NCT05870592),” and research and development on using bronchoalveolar lavage fluid as a biological sample to assess cardiopulmonary function and exercise performance in military personnel post-COVID-19 infection.
Removed
This limited test market approach allows us to refine future positioning and develop strategic insight for our CyPath ® Lung test before expanding to a larger market. We had revenue of approximately $5,000 during the year ended December 31, 2022, from the sale of CyPath ® Lung as an LDT, compared to no revenue in 2021.
Added
The royalty income from CyPath ® Lung and clinical flow cytometry services income, beginning September 19, 2023, are related party income, and therefore, eliminated from consolidated net revenues. See net revenue summarized in the table below.
Removed
We expect our revenue to continue to grow for CyPath ® Lung as we add physicians prescribing our diagnostic test and expand our outreach to other geographic areas.
Added
For year ended December 31, 2023 2022 Patient service fees 1 $ 2,199,558 $ — Histology service fees 272,660 — Medical director fees 19,324 — Department of Defense observational studies 19,442 — Other revenues 2 21,515 4,803 Total net revenue $ 2,532,499 $ 4,803 1 Patient services fees includes direct billing for CyPath® Lung diagnostic test. 2 Other revenues include pre-acquisition CyPath® Lung royalty income and laboratory services. 50 Operating Expenses Year Ended Change in 2023 December 31, Versus 2022 2023 2022 $ % Operating expenses: Direct costs and expenses $ 1,740,884 $ 467 $ 1,740,417 372,680 % Research and development 1,467,936 1,378,624 89,312 6 % Clinical development 256,661 ‌145,546 111,115 76 % Selling, general and administrative 6,790,654 2,481,042 4,314,612 174 % Depreciation and amortization 249,592 ‌10,185 239,410 2,351 % Total operating expenses $ 10,505,727 $ 4,015,861 $ 6,494,866 162 % Operating expenses totaled $10.5 million and $4.0 million during 2023 and 2022, respectively.
Removed
Our revenues are affected by the test volume of our products, patient adherence rates, payer mix, the levels of reimbursement, and payment patterns of payers and patients. 19 Cost of Sales Cost of sales is comprised primarily of costs related to inventory production and usage and shipment of collection kits to patients and healthcare providers.
Added
The increase in operating expenses is the result of the following factors. Direct costs and expenses Our direct costs and expenses are primarily direct labor for pathology services, laboratory supplies and reagents, laboratory equipment and allocated shared facilities. Direct costs and expenses totaled $1.7 million and $467 during 2023 and 2022, respectively.
Removed
The increase in cost of sales for the year ended December 31, 2022, is primarily due to the launch of sales in the second quarter of 2022, compared to no sales in the prior year.
Added
Selling, general and administrative expenses totaled approximately $6.8 million and $2.5 million during 2023 and 2022, respectively.
Removed
Operating Expenses Year Ended Change in 2022 December 31, Versus 2021 2022 2021 $ % (amounts in thousands) (amounts in thousands) Operating expenses: Research and development $ 1,143 $ 1,008 $ 135 13 % Clinical development ‌146 ‌130 ‌16 12 % Selling, general and administrative ‌2,727 ‌‌1,069 1,658 155 % Total operating expense $ 4,016 $ 2,207 $ 1,809 82 % Operating expenses totaled $4.0 million and $2.2 million during 2022 and 2021, respectively.
Added
The increase of approximately $4.3 million, or 174%, for 2023 compared to 2022, was primarily attributable to general and administration costs acquired from PPLS ($820,000), accounting, legal, and professional fee costs associated with the acquisition of PPLS ($811,000), the accounting, legal, and professional fee costs associated with the SEC filing of a registration statement on Form S-1 ($197,000), increase in stock-based compensation ($486,000), increase in employee compensation ($838,000) as we added sales and administrative personnel, increase in branding and marketing collateral ($391,000), increase in directors and officers (“D&O”) insurance ($290,000), increase in public company-related expenses ($294,000) as well as an increase related to board compensation ($147,000), and other operational expenses.
Removed
Additionally, costs related to lab supplies and reagents increased as employees returned to facilities after restrictions eased for COVID-19. These increases were partially offset by a decrease in stock compensation expense related to stock option and restricted share grants to employees and consultants in 2022 compared to 2021.
Added
Additionally, compensation increased due to additional personnel and support services to support the launch of sales of our diagnostic test, CyPath ® Lung.
Removed
Clinical Development Clinical development expenses totaled approximately $146,000 and $130,000 during 2022 and 2021, respectively.
Added
Other Income (Expense) Year Ended Change in 2023 December 31, Versus 2022 2023 2022 $ % Interest income (expense), net $ 85,006 $ (2,485,932 ) $ 2,570,938 62 % Other income (expense), net (27,796 ) — (27,796 ) 0 % Gain on extinguishment of debt — 212,258 (212,258 ) -100 % Loss on change in fair value of convertible notes — (1,866,992 ) 1,866,922 100 % Total other income (expense) $ 57,210 $ (4,140,596 ) $ 4,197,806 7,237 % Other income (expense) totaled approximately $57,210 and ($4.1) million for 2023 and 2022, respectively.
Removed
The increase of approximately $16,000, or 12%, for 2022, compared to 2021 was primarily attributable to an increase in professional fees, including consulting fees, and increases in clinical study activities related to site costs compared to 2021 as operations were still being affected by the global pandemic.
Added
The Company has evaluated whether there are conditions and events that raise substantial doubt about the Company’s ability to continue as a going concern for at least one year after the date the consolidated financial statements are issued.
Removed
The increase of $1.7 million, or 155%, for 2022 compared to 2021 was primarily attributable to increases related to consulting, legal, and professional fees incurred in 2022 compared to 2021 as we prepared for our IPO and comply with the reporting requirements of a public company.
Added
During 2023 and 2022, we had net losses of $7.9 million and $8.2 million, respectively, and we expect to incur substantial additional losses in future periods. We have an accumulated deficit of approximately $44.6 million as of December 31, 2023.

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