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What changed in SERA PROGNOSTICS, INC.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of SERA PROGNOSTICS, 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.

+530 added−468 removedSource: 10-K (2024-03-20) vs 10-K (2023-03-22)

Top changes in SERA PROGNOSTICS, INC.'s 2023 10-K

530 paragraphs added · 468 removed · 372 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

185 edited+67 added−31 removed254 unchanged
Biggest changeWe use the following multifaceted approach in our research, development and commercialization efforts: • Significant Unmet Need : We select specific conditions of pregnancy that are clinically meaningful and economically important and with significant unmet needs that lack effective solutions. • Proteomic and Bioinformatics Platform : We utilize our platform to understand the biology underlying selected pregnancy-related conditions in order to discover, verify and broadly validate high-performing predictive biomarker tests. • Demonstration of Health and Economic Impact of Our Test and Treat Strategy : We believe a critical element of our success will be to demonstrate the beneficial health and economic impacts of using the information provided by our biomarker tests. • Reimbursement : We have focused on building reimbursement for early commercialization of our biomarker tests, by seeking to leverage the health and economic benefits conferred by our biomarker approach to gain early reimbursement from integrated systems, large physician practices, and major health insurance payers. • Broader Market Adoption : We will seek to capitalize on early reimbursement decisions to facilitate obtaining widespread commercial coverage of our biomarker tests from other health care payers. 5 Table of Contents Our Pipeline We are developing a robust pipeline of novel blood-based biomarker tests for a number of major pregnancy related conditions beyond preterm birth by leveraging the biological insights provided by our proprietary technology platform.
Biggest changeWe use the following multifaceted approach in our research, development and commercialization efforts: • Significant Unmet Need : We select specific conditions or features of pregnancy that are clinically and personally meaningful and economically important and with significant unmet needs that lack effective solutions. • Proteomic and Bioinformatics Platform : We utilize our platform to understand the biology underlying selected pregnancy-related conditions in order to discover, verify and broadly validate high-performing predictive biomarker tests and predictive analytic products and services. • Immunoassays : We identify antibodies to discovered pregnancy biomarkers and develop immunoassays for use in our CLIA laboratory and eventual use in ex-US territories. • Whole-Blood Collection and Ambient Shipment : We migrate from discoveries made in our serum pregnancy biobank and temperature-controlled specimen shipment to whole-blood collection and ambient shipment. • Demonstration of Health and Economic Impact of Our Test and Treat Strategy : We believe a critical element of our success will be to demonstrate the beneficial health and economic impacts of using the information provided by our biomarker tests. • Societal Guidelines : We believe that broad market adoption of a product benefits from the product being included in clinical societal guidelines and therefore we work closely with organizations such as the Society for Maternal-Fetal Medicine and the American College of Obstetricians and Gynecologists, as we keep them apprised of our accumulating evidence development. 5 Table of Contents • Payment and Reimbursement : We have focused on building third-party reimbursement for early commercialization of our clinical tests, by seeking to leverage the health and economic benefits conferred by our biomarker approach to gain reimbursement from integrated systems, large physician practices, and major health insurance payers.
In the case of our the PreTRM test, an important part of our commercialization strategy involves amassing clinical and economic data to definitively demonstrate that detecting the risk of preterm birth can enable proactive interventions which improve the health of mothers and their babies while at the same time saving substantial health care system costs.
In the case of the PreTRM test, an important part of our commercialization strategy involves amassing clinical and economic data to definitively demonstrate that detecting the risk of preterm birth can enable proactive interventions which improve the health of mothers and their babies while at the same time saving substantial health care system costs.
Longer-term, infants can have neurodevelopment issues, metabolic and cardiovascular complications. Objective for a Biomarker Test for FGR . By identifying molecular events that precede measurable changes in fetal size, we aim to address the placental dysfunction and other growth restriction etiologies that lead to fetal growth restriction and thereby enable earlier proactive interventions. Development Status .
In the longer term, infants can have neurodevelopment issues, metabolic and cardiovascular complications. Objective for a Biomarker Test for FGR . By identifying molecular events that precede measurable changes in fetal size, we aim to address the placental dysfunction and other growth restriction etiologies that lead to fetal growth restriction and thereby enable earlier proactive interventions. Development Status .
Many of the potential competitors that may emerge, either alone or with their collaborators, have significantly greater resources, established presence in the market, expertise in research and development and greater experience in laboratory operations, obtaining regulatory approvals, gaining reimbursement and commercializing approved products than we do.
Many of the potential competitors that may emerge, either alone or with their collaborators, may have significantly greater resources, established presence in the market, expertise in research and development and greater experience in laboratory operations, obtaining regulatory approvals, gaining reimbursement and commercializing approved products than we do.
However, existing laws regulating such matters continue to evolve, including through amendments, new interpretations and guidance, and, around the world, lawmakers continue to propose new laws regulating privacy and data security, and we may not be able to maintain compliance in all jurisdictions where we do business.
However, existing laws regulating such matters continue to evolve, including through amendments, new interpretations and guidance, and, around the world, lawmakers continue to propose new laws regulating privacy and data security. We may not be able to maintain compliance in all jurisdictions where we do business.
Title II of HIPAA, the Administrative Simplification Act, contains provisions that address the privacy of health data, the security of health data, the standardization of identifying numbers used in the health care system and the standardization of certain health care transactions.
Title II of HIPAA, the Administrative Simplification Act, contains provisions that address the privacy and security of health data, the standardization of identifying numbers used in the health care system and the standardization of certain health care transactions.
False Claims Act The FCA imposes civil liability on any person or entity that, among other things, knowingly presents, or causes to be presented, to the federal government, claims for payment that are false or fraudulent; knowingly making, using or causing to be made or used, a false statement of record material to a false or fraudulent claim or obligation to pay or transmit money or property to the federal government or knowingly concealing or knowingly and improperly avoiding or decreasing an obligation to pay money to the federal government.
False Claims Act The FCA imposes civil liability on any person or entity that, among other things, knowingly presents, or causes to be presented, to the federal government, claims for payment that are false or fraudulent; knowingly making, using or causing to be made or used, a false statement or record material to a false or fraudulent claim or obligation to pay or transmit money or property to the federal government or knowingly concealing or knowingly and improperly avoiding or decreasing an obligation to pay money to the federal government.
Anti-Kickback Statute The Anti-Kickback Statute, or AKS, prohibits, among other things, knowingly and willfully offering, paying, soliciting, receiving or providing remuneration, directly or indirectly, in exchange for or to induce either the referral of an individual, or the furnishing, arranging for or recommending of an item or service that is reimbursable, in whole or in part, by a federal health care program.
Anti-Kickback Statute The Anti-Kickback Statute, or AKS, prohibits, among other things, knowingly and willfully offering, paying, soliciting, or receiving remuneration, directly or indirectly, in exchange for or to induce either the referral of an individual, or the furnishing, arranging for or recommending of an item or service that is reimbursable, in whole or in part, by a federal health care program.
The validated threshold of 15%, twice the average population risk of spontaneous preterm birth, was demonstrated to statistically separate patients at higher versus lower risk of preterm delivery based on 14 Table of Contents the PreTRM test results. This is the risk threshold for interventional actions to be taken in the PRIME prospective intervention trial that was initiated in 2020.
The validated threshold of 15%, twice the average population risk of spontaneous preterm birth, was demonstrated to statistically separate patients at higher versus lower risk of preterm delivery based on the PreTRM test results. This is the risk threshold for interventional actions to be taken in the PRIME prospective 15 Table of Contents intervention trial that was initiated in 2020.
Patients in the screened group that were found not to be at higher risk by the PreTRM test and those in the control group received standard obstetrical care. The diagram below illustrates the study design for PREVENT-PTB: 15 Table of Contents Study Design of PREVENT-PTB The PREVENT-PTB results were published on August 16, 2021 in the American Journal of Perinatology.
Patients in the screened group that were found not to be at higher risk by the PreTRM test and those in the control group received standard obstetrical care. The diagram below illustrates the study design for PREVENT-PTB: 16 Table of Contents Study Design of PREVENT-PTB The PREVENT-PTB results were published on August 16, 2021 in the American Journal of Perinatology.
A fundamental component of our platform is our proprietary biobank, consisting of comprehensive, clinically and demographically annotated blood specimens collected from thousands of pregnant U.S. women, representing the broad demographic and geographic diversity inherent in the U.S. population. This differentiated resource enables us to develop and broadly validate our predictors.
A fundamental component of our platform is our proprietary biobank, consisting of comprehensive, clinically and demographically annotated specimens collected from thousands of pregnant U.S. women, representing the broad demographic and geographic diversity inherent in the U.S. population. This differentiated resource enables us to develop and broadly validate our predictors.
Required breach notices must be made as soon as is reasonably practicable, but no later than 60 days following discovery of the breach. Reports must be made to affected individuals and to the Secretary and, in some cases depending on the size of the breach, they must be reported through local and national media.
Required breach notices must be made as soon as is reasonably practicable, but no later than 60 days following discovery of the breach. Reports must be made to affected individuals and to the Secretary and, in some cases depending on the size of the breach and location of affected individuals, they must be reported through local and national media.
We are working to overcome this obstacle through our development of a proprietary technology platform consisting of biobanks, advanced mass spectrometry and other proteomic analytic methods and bioinformatics, which enables superior characterization of the biology of pregnancy and more accurate prediction of pregnancy outcomes.
We are working to overcome this obstacle through our development of a proprietary technology platform consisting of biobanks, advanced mass spectrometry, immunoassays, and other proteomic analytic methods and bioinformatics, which enables superior characterization of the biology of pregnancy and more accurate prediction of pregnancy outcomes.
We have initially applied our platform and capabilities to address the problem of preterm birth, given its profound health and economic impacts worldwide. In the future, we may use this technology to develop products for a number of health conditions other than premature births.
We have initially applied our platform and capabilities to address the problem of preterm birth, given its profound health and economic impacts worldwide. In the future, we may use this technology to develop products for a number of health conditions other than premature birth.
Several future opportunities may be created by comprehensively profiling pregnancy, including, but not limited to: • additional diagnostic predictors; • epidemiologic, efficacy and best practice assessment tools to better understand and address critical patient outcomes and disparities across the United States; 11 Table of Contents • pregnancy educational content development, based on our actual data, for physicians, PAs, nurse practitioners, midwives, regulators, insurers, researchers and health care students; and • pharmaceutical drug development tools.
Several future opportunities may be created by comprehensively profiling pregnancy, including, but not limited to: • additional diagnostic predictors; • epidemiologic, efficacy and best practice assessment tools to better understand and address critical patient outcomes and disparities across the United States; 12 Table of Contents • pregnancy educational content development, based on our actual data, for physicians, PAs, nurse practitioners, midwives, regulators, insurers, researchers and health care students; and • pharmaceutical drug development tools.
Coupled with the experience and expertise of our management and scientific teams, we believe we possess meaningful potential to compete in developing and commercializing important products to improve the health of mothers and babies.
Coupled with the experience and expertise of our management and scientific teams, we believe we possess meaningful potential to compete in developing and commercializing important products to improve the pregnancy experience and the health of mothers and babies.
Penalties for failure to comply with a requirement of HIPAA and HITECH vary significantly depending on the failure and include civil monetary penalties. A single breach incident can violate multiple requirements.
Penalties for failure to comply with a requirement of HIPAA and HITECH vary significantly depending on the nature of the failure and include civil monetary penalties. A single breach incident can violate multiple requirements.
The pending patent applications, if issued, are expected to expire in 2038, without taking into account any possible patent term adjustment or extensions and assuming payment of all appropriate maintenance, renewal, annuity, or other governmental fees. A fourth patent family relates to pairs of biomarkers, compositions, and methods for predicting the probability for preterm birth in a pregnant female.
The pending patent applications, if issued, are expected to expire in 2038, without taking into account any possible patent term adjustment or extensions and assuming payment of all appropriate maintenance, renewal, annuity, or other governmental fees. A fifth patent family relates to pairs of biomarkers, compositions, and methods for predicting the probability for preterm birth in a pregnant female.
The laboratory data are time-stamped and are transferred to an external statistician, who applies the pre-specified algorithms to the laboratory measurements and independently validates the performance of the test by breaking the blind. At this point, a prediction that has been independently and rigorously validated can be used for clinical decision-making in trials and/or commercialization. Preeclampsia Condition.
The laboratory data are time-stamped and are transferred to an external statistician, who applies the pre-specified algorithms to the laboratory measurements and independently validates the performance of the test by breaking the blind. At this point, a prediction that has been independently and rigorously validated can be used for clinical decision-making in trials and/or commercialization.
Underscoring the benefits of the PreTRM test and treat strategy, the clinical and economic utility of the PreTRM test administered mid-pregnancy has been published by respected independent health economists in a leading maternal fetal medicine journal. 13 Table of Contents The strength of the data from our studies of the PreTRM test has enabled us to pursue an innovative and accelerated approach to commercialization.
Underscoring the benefits of the PreTRM test and treat strategy, the clinical and economic utility of the PreTRM test administered mid-pregnancy has been published by respected independent health economists in a leading maternal fetal medicine journal. 14 Table of Contents The strength of the data from our studies of the PreTRM test has enabled us to pursue an innovative and accelerated approach to commercialization.
Given the uncertainties in reliably predicting timing for these phases and additional requirements, we estimate that the timing for our next new commercially available product is a matter of years, not months. We will only advance our programs from one stage to the next if we believe that they qualify for advancement pursuant to the NAM guidelines described above.
Given the uncertainties in reliably predicting timing for these phases and additional requirements, we estimate that the timing for our next new commercially available product is a matter of months or years. We will only advance our programs from one stage to the next if we believe that they qualify for advancement pursuant to the NAM guidelines described above.
Our product candidates are designed to accurately predict and enable better management of a range of serious pregnancy-related conditions. We believe these product candidates, if successfully developed, have the potential to address significant unmet needs by providing more accurate detection of these pregnancy-related conditions and providing patients and physicians with earlier opportunities for interventional treatment.
Our product candidates are designed to accurately predict and enable better management of a range of serious pregnancy-related conditions. We believe these product candidates, if successfully developed, have the potential to address significant unmet needs by providing more accurate detection of these pregnancy-related conditions and providing patients with meaningful information and physicians with earlier opportunities for interventional treatment.
We work to publish models that provide peer reviewed evidence of the value of our strategy, in the form of meeting presentations and articles. • Reimbursement Strategy.
We work to publish models that provide peer reviewed evidence of the value of our strategy, in the form of meeting presentations and articles. • Payment and Reimbursement Strategy.
The two co-primary endpoints were reduction in total neonatal hospital length of stay and improvement in composite neonatal morbidity and mortality in the PreTRM-screened group versus the historical control group, which did not have a PreTRM test. 16 Table of Contents Design of the AVERT PRETERM TRIAL Health and economic outcomes of the screened group were compared with those of the historical control arm.
The two co-primary endpoints were reduction in total neonatal hospital length of stay and improvement in composite neonatal morbidity and mortality in the PreTRM-screened group versus the historical control group, which did not have a PreTRM test. 17 Table of Contents Design of the AVERT PRETERM TRIAL Health and economic outcomes of the screened group were compared with those of the historical control arm.
We have initially applied our platform and capabilities to address the problem of preterm birth, given its profound health and economic 10 Table of Contents impacts worldwide. We intend to explore other areas of significant unmet need in pregnancy, including preeclampsia, gestational diabetes and others. • Proteomic and Bioinformatics Platform.
We have initially applied our platform and capabilities to address the problem of preterm birth, given its profound health and economic impacts worldwide. We intend to explore other areas of significant unmet need in pregnancy, including preeclampsia, gestational diabetes and others. 11 Table of Contents • Proteomic and Bioinformatics Platform.
A woman with a reported “Higher Risk” test result, at or above the 15% threshold (which is equivalent to more than a doubling of average population risk of spontaneous preterm delivery less than 37 weeks’ gestation), will receive multiple interventions, including weekly nurse case management contact, daily vaginal progesterone, daily low dose aspirin and additional vaginal ultrasound cervical length determinations, with cerclage considered for cervical lengths less than 10 millimeters.
A woman with a reported “Higher Risk” test result, at or above the 15% threshold (which is equivalent to more than a doubling of average population risk of spontaneous preterm delivery less than 37 weeks’ gestation), received multiple interventions, including weekly nurse case management contact, daily vaginal progesterone, daily low dose aspirin and additional vaginal ultrasound cervical length determinations, with cerclage considered for cervical lengths less than 10 millimeters.
We also believe that based on our growing body of evidence regarding the clinical and economic benefits of the PreTRM test, our commercial collaboration with Elevance Health, and the anticipated greater payer and physician adoption throughout the United States, the PreTRM test has the potential to create a new standard of care in pregnancies. • Apply our platform capabilities to broaden our pipeline and develop novel and high-performing biomarker tests for pregnancy-related conditions and potentially other health conditions.
We also believe that based on our growing body of evidence regarding the clinical and economic benefits of the PreTRM test, our commercial collaboration with Elevance Health, and the anticipated greater payer and physician adoption throughout the United States, the PreTRM test has the potential to create a new standard of care in pregnancies. • Apply our platform capabilities to broaden our pipeline and develop novel and high-performing products for pregnancy-related conditions and potentially other health conditions.
The authors concluded that care management has substantial potential to improve the environmental, behavioral, social, and psychological factors with patients at risk of preterm birth (Garite and Manuck. Am. J. Obstet. Gynecol. 2022 Sep 19:S0002-9378(22)00746-3).
The authors concluded that care management has substantial potential to 19 Table of Contents improve the environmental, behavioral, social, and psychological factors with patients at risk of preterm birth (Garite and Manuck. Am. J. Obstet. Gynecol. 2022 Sep 19:S0002-9378(22)00746-3).
An analysis of protein pathways and expression at various points during pregnancy reveals the constantly evolving and dynamic changes affecting both the mother and the fetus. Earlier detection of changes in protein expression indicating the emergence of adverse pregnancy outcomes can enable proactive management of those conditions.
An analysis of protein pathways and expression at various points during pregnancy reveals the constantly evolving and dynamic changes affecting both the mother and the baby. Earlier detection of changes in protein expression indicating the emergence of adverse pregnancy outcomes can enable proactive management of those conditions.
Civil Monetary Penalties Law The federal Civil Monetary Penalties Law, or CMP Law, prohibits, among other things, (1) the offering or transfer of remuneration to a Medicare or Medicaid beneficiary if the person knows or should know it is likely to influence the 32 Table of Contents beneficiary’s selection of a particular provider, practitioner, or supplier of services reimbursable by Medicare or a state health care program, unless an exception applies; (2) employing or contracting with an individual or entity that the provider knows or should know is excluded from participation in a federal health care program; (3) billing for services requested by an unlicensed physician or an excluded provider; and (4) billing for medically unnecessary services.
Civil Monetary Penalties Law The federal Civil Monetary Penalties Law, or CMP Law, prohibits, among other things, (1) the offering or transfer of remuneration to a Medicare or Medicaid beneficiary if the person knows or should know that remuneration is likely to influence the beneficiary’s selection of a particular provider, practitioner, or supplier of services reimbursable by Medicare or a state health care program, unless an exception applies; (2) employing or contracting with an individual or entity that the provider knows or should know is excluded from participation in a federal health care program; (3) billing for services requested by an unlicensed physician or an excluded provider; and (4) billing for medically unnecessary services.
The information contained on the websites referenced in this Form 10-K is not incorporated by reference into this filing. Further, our references to website URLs are intended to be inactive textual references only. 37 Table of Contents
The information contained on the websites referenced in this Form 10-K is not incorporated by reference into this filing. Further, our references to website URLs are intended to be inactive textual references only. 39 Table of Contents
Therefore, compliance with an AKS safe harbor may not guarantee protection under EKRA. EKRA thus potentially expands the universe of arrangements that could be subject to enforcement under federal fraud and abuse laws, as well as substantial penalties. EKRA does permit the DOJ to issue regulations clarifying or expanding the statute’s exceptions, but such regulations have not yet been issued.
Therefore, compliance with an AKS safe harbor may not guarantee protection under EKRA. EKRA thus potentially expands the universe of arrangements that could be subject to enforcement under federal fraud and abuse laws, as well as substantial penalties. EKRA permits DOJ to issue regulations clarifying or expanding the statute’s exceptions, but such regulations have not yet been issued.
Importantly, our mass spectrometry process is well-suited not only for discovery and development activities, but also for high volume commercial production through the use of robotics and automation. Mass spectrometry measurements can be performed on very small blood volumes, which is appealing for patient specimen collection and can lower cost of goods in laboratory analyses.
Importantly, our mass spectrometry process is well-suited not only for discovery and development activities, but also for high volume commercial production through the use of robotics and 10 Table of Contents automation. Mass spectrometry measurements can be performed on very small blood volumes, which is appealing for patient specimen collection and can lower cost of goods in laboratory analyses.
Development Status . We have developed the ability to measure the expression of hundreds of proteins by our advanced mass spectrometry proteomic technology. These proteins are members of key biochemical proteomic pregnancy signaling pathways, including pathways that are operative in stillbirth.
We have developed the ability to measure the expression of hundreds of proteins by our advanced mass spectrometry proteomic technology. These proteins are members of key biochemical proteomic pregnancy signaling pathways, including pathways that are operative in stillbirth.
The FDA regulates, among other matters, the research, testing, manufacturing, safety, labeling, storage, recordkeeping, premarket clearance or approval, marketing and promotion and sales and distribution of medical devices, including IVDs, in the U.S. to ensure that such products on the domestic market are safe and effective for their intended uses.
The FDA regulates, 29 Table of Contents among other matters, the research, testing, manufacturing, safety, labeling, storage, recordkeeping, premarket clearance or approval, marketing and promotion and sales and distribution of medical devices, including IVDs, in the U.S. to ensure that such products on the domestic market are safe and effective for their intended uses.
Other Applicable Environmental, Health, And Safety Regulations We are subject to numerous federal, state and local environmental, health and safety, or EHS, laws and regulations relating to, among other matters, safe working conditions, environmental protection, and handling or disposition of products, including those governing the generation, storage, handling, use, transportation, release, and disposal of hazardous or potentially hazardous materials, medical waste, and infectious materials.
Other Applicable Environmental, Health, And Safety Regulations We are subject to numerous federal, state and local environmental, health and safety, or EHS, laws and regulations relating to, among other matters, safe working conditions, environmental protection, and handling or disposition of 37 Table of Contents products, including those governing the generation, storage, handling, use, transportation, release, and disposal of hazardous or potentially hazardous materials, medical waste, and infectious materials.
In parallel with our pursuit of broader insurance coverage, we intend to deploy our sales team to address U.S. sales channels to help drive adoption among physician practices. We envision that our comprehensive approach will enable us to fully characterize one of the most important periods of time in the lives of both women and children.
In parallel with our pursuit of broader insurance coverage, we intend to deploy our sales team to address U.S. sales channels to help drive adoption among physician practices. We envision that our comprehensive approach will enable us to fully characterize one of the most important periods of time in the lives of both women and their babies.
Most studies involving human participants must be reviewed and approved by, and 27 Table of Contents conducted under the auspices of, a duly-constituted institutional review board, or IRB, which is a multi-disciplinary committee responsible for reviewing and evaluating the risks and benefits of a clinical trial for participating subjects and monitoring the trial on an ongoing basis.
Most studies involving human participants must be reviewed and approved by, and conducted under the auspices of, a duly-constituted institutional review board, or IRB, which is a multi-disciplinary committee responsible for reviewing and evaluating the risks and benefits of a clinical trial for participating subjects and monitoring the trial on an ongoing basis.
Certain of our development activities involve use of hazardous materials, and we believe we are in compliance with the applicable environmental laws, regulations, permits, and licenses. However, we cannot ensure that EHS liabilities will 35 Table of Contents not develop in the future. EHS laws and regulations are complex, change frequently and have tended to become more stringent over time.
Certain of our development activities involve use of hazardous materials, and we believe we are in compliance with the applicable environmental laws, regulations, permits, and licenses. However, we cannot ensure that EHS liabilities will not develop in the future. EHS laws and regulations are complex, change frequently and have tended to become more stringent over time.
The great majority of 12 Table of Contents singleton preterm births only become apparent when the woman goes into labor and delivers, at which point proactive management options are no longer possible.
The great majority of 13 Table of Contents singleton preterm births only become apparent when the woman goes into labor and delivers, at which point proactive management options are no longer possible.
Timing of Pipeline Developments In the development of high-performing biomarker signatures, the timing of when to move from the discovery phase to the verification phase to the validation phase, based on the NAM guidelines described above, is entirely dependent on the performance data.
Timing of Pipeline Development s In the development of high-performing biomarker signatures, the timing of when to move from the discovery phase to the verification phase to the validation phase, based on the NAM guidelines described above, is entirely dependent on the performance data.
The first patent family includes a pending U.S. patent application, eight foreign patents granted in Australia, China, France, Germany, Italy, Ireland, Spain, and the United Kingdom, and five pending foreign patent applications in the EPO, China, Australia, Japan, and Canada.
The first patent family includes a pending U.S. patent application, eight foreign patents granted in Australia, China, France, Germany, Italy, Ireland, Spain, Canada, and the United Kingdom, and six pending foreign patent applications in the EPO, China, Australia, Japan, and Canada.
Once a pregnant woman is diagnosed with preeclampsia, a common treatment is to deliver the baby; however, if the delivery occurs before the infant reaches term (preterm preeclampsia), complications of preterm birth can ensue and clinical decisions are challenged by weighing the risk to the mother of continuing the pregnancy versus the risks to the baby associated with early delivery.
Once a pregnant woman is diagnosed with preeclampsia, a common treatment is to deliver the baby; however, if the delivery occurs before the infant reaches term (preterm 21 Table of Contents preeclampsia), complications of preterm birth can ensue and clinical decisions are challenged by weighing the risk to the mother of continuing the pregnancy versus the risks to the baby associated with early delivery.
We believe that as our database 9 Table of Contents and sets of predictions grow, verifying and validating the predictions can lead to more rapid and efficient development required to commercialize such predictions in the future. Advanced Mass Spectrometry Approaches Mass spectrometry is a highly developed analytical technology capable of precise identification, quantification and characterization of proteins.
We believe that as our database and sets of predictions grow, verifying and validating the predictions can lead to more rapid and efficient development required to commercialize such predictions in the future. Advanced Mass Spectrometry Approaches Mass spectrometry is a highly developed analytical technology capable of precise identification, quantification and characterization of proteins.
Additionally, a privacy called law the California Privacy Rights Act, or CPRA, was approved by California voters on November 3, 2020 and went into effect in January 2023 modifying the CCPA significantly, resulting in further uncertainty, additional costs and expenses stemming from efforts to comply, and additional potential for harm and liability for failure to comply.
Additionally, the California Privacy Rights Act, or CPRA, was approved by California voters on November 3, 2020 and went into effect in January 2023 modifying the CCPA significantly, resulting in further uncertainty, additional costs and expenses stemming from efforts to comply, and additional potential for harm and liability for failure to comply.
For further discussion of the risks relating to intellectual property, see the section titled “Risk factors — Risks Related to our Intellectual Property.” Government Regulation Federal and State Regulations Related to Clinical Laboratories Clinical Laboratory Improvement Amendments of 1988 As a clinical laboratory, we are required to be certified under CLIA to conduct our business.
For further discussion of the risks relating to intellectual property, see the section titled “Risk factors — Risks Related to our Intellectual Property.” 27 Table of Contents Government Regulation Federal and State Regulations Related to Clinical Laboratories Clinical Laboratory Improvement Amendments of 1988 As a clinical laboratory, we are required to be certified under CLIA to conduct our business.
We believe that additional capital required to do this work could help to accelerate the progress on our comprehensive pregnancy pipeline. Commercialization The beginning of life and end of life are widely recognized to be costly periods for health care services in the human life cycle.
We believe that additional capital required to do this work could help to accelerate the progress on our comprehensive pregnancy pipeline. 23 Table of Contents Commercialization The beginning of life and end of life are widely recognized to be costly periods for health care services in the human life cycle.
In addition, CLIA specifies certain testing categories requiring periodic proficiency testing, and certified laboratories performing these tests must enroll in an approved proficiency testing program. 26 Table of Contents In addition, as a condition of CLIA certification, our laboratory is subject to survey and inspection every other year, as well as random inspections.
In addition, CLIA specifies certain testing categories requiring periodic proficiency testing, and certified laboratories performing these tests must enroll in an approved proficiency testing program. In addition, as a condition of CLIA certification, our laboratory is subject to survey and inspection every other year, as well as random inspections.
Additionally, a person who knowingly obtains or discloses individually identifiable health information in violation of HIPAA may face a criminal penalties, which increase if the wrongful conduct involves false pretenses or the intent to sell, transfer or use identifiable health information for commercial advantage, personal gain or malicious harm.
Additionally, a person who knowingly obtains or discloses protected health information in violation of HIPAA may face a criminal penalties, which increase if the wrongful conduct involves false pretenses or the intent to sell, transfer or use information for commercial advantage, personal gain or malicious harm.
Additionally, we must identify and comply with all applicable state laws for the protection of personal information with respect to employee information or other personal information that we collect. Other Federal and State Health Care Laws A variety of state and federal laws prohibit fraud and abuse involving private insurers (as well as state and federal health care programs).
Additionally, we must identify and comply with all applicable state laws for the protection of personal information with respect to employee information or other personal information that we collect. 32 Table of Contents Other Federal and State Health Care Laws A variety of state and federal laws prohibit fraud and abuse involving private insurers (as well as state and federal health care programs).
One patent family relates to determining probability for preeclampsia in a pregnant female, and includes one granted patent in Australia and four patent applications pending in the U.S., the EPO, Australia and Canada.
One patent family relates to determining probability for preeclampsia in a pregnant female, and includes two granted patents in Australia and Canada, and four patent applications pending in the U.S., the EPO, Australia and Canada.
Subjects in the “Not Higher Risk” group will receive standard obstetrical care for the duration of pregnancy through hospital discharge. Major perinatal outcomes to be evaluated in each group include length of NICU and total hospital stay, measures of neonatal health, NICU preterm costs and preterm delivery rates.
Subjects in the “Not Higher Risk” group received standard obstetrical care for the duration of pregnancy through hospital discharge. Major perinatal outcomes to be evaluated in each group include length of NICU and total hospital stay, measures of neonatal health, NICU preterm costs and preterm delivery rates.
We believe our proprietary proteomic and bioinformatics technology platform has the potential to enable critical advances in the management of pregnancy and its outcomes. Our platform consists of biobanks, advanced mass spectrometry and other proteomic analytic methods and bioinformatics, which enables superior characterization of the biology of pregnancy and accurate prediction of pregnancy outcomes.
We believe our proprietary proteomic and bioinformatics technology platform has the potential to enable critical advances in the management of pregnancy and its outcomes. Our platform consists of biobanks, advanced mass spectrometry, immunoassays, and other proteomic analytic methods and bioinformatics, which enables superior characterization of the biology of pregnancy and accurate characterization of pregnancy outcomes and features.
The granted patent and pending patent applications, if issued, are expected to expire in 2034, without taking into account any possible patent term adjustment or extensions and assuming payment of all appropriate maintenance, renewal, annuity, or other governmental fees.
The granted patent and pending patent 26 Table of Contents applications, if issued, are expected to expire in 2034, without taking into account any possible patent term adjustment or extensions and assuming payment of all appropriate maintenance, renewal, annuity, or other governmental fees.
We also agreed to develop a sales, marketing, and customer service program, and to provide training and marketing to duly licensed physicians specializing in obstetrics and gynecology or family medicine, or licensed nurse midwives, at the reasonable request of Elevance Health.
We also agreed to develop a sales, marketing, and customer service 24 Table of Contents program, and to provide training and marketing to duly licensed physicians specializing in obstetrics and gynecology or family medicine, or licensed nurse midwives, at the reasonable request of Elevance Health.
The privacy regulations protect medical records and other protected health information by limiting their use and release, giving patients the right to access their medical records 29 Table of Contents and limiting most disclosures of health information to the minimum amount necessary to accomplish an intended purpose.
The privacy regulations protect medical records and other protected health information by limiting their use and release, giving patients the right to access their medical records and limiting most disclosures of health information to the minimum amount necessary to accomplish an intended purpose.
We have already developed a high performing biomarker signature in our PreTRM test for spontaneous preterm birth risk. For a pregnant woman who is not at higher risk of preterm birth by our PreTRM test, she would typically like to know how much time is remaining in her pregnancy until delivery.
Molecular Time-to-Birth Problem and Need . We have already developed a high performing biomarker signature in our PreTRM test for spontaneous preterm birth risk. For a pregnant woman who is not at higher risk of preterm birth by our PreTRM test, she would typically like to know how much time is remaining in her pregnancy until delivery.
We plan to work closely with maternal 22 Table of Contents fetal medicine experts, payers and key opinion leaders to generate clear use-cases, as well as peer-reviewed publications that illustrate our product performance claims and value proposition. We have worked and continue to work with more than 60 investigators world-wide.
We plan to work closely with maternal fetal medicine experts, payers and key opinion leaders to generate clear use-cases, as well as peer-reviewed publications that illustrate our product performance claims and value proposition. We have worked and continue to work with more than 60 investigators world-wide.
Our Proprietary Technology Platform Proprietary Biobanks We have built proprietary biobanks of blood specimens and related data over a number of years, which are key resources required to develop a deeper understanding of the biology of normal and adverse pregnancy outcomes.
Proprietary Biobanks We have built proprietary biobanks of blood specimens and related data over a number of years, which are key resources required to develop a deeper understanding of the biology of normal and adverse pregnancy outcomes.
In addition, we believe that our proprietary technology platform, including our extensive biobanks, advanced mass spectrometry approaches and bioinformatics capabilities, provides us with valuable competitive assets to utilize in discovering and developing other proteomics tests for pregnancy conditions, several of which are already in our pipeline.
In addition, we believe that our proprietary technology platform, including our extensive biobanks, advanced mass spectrometry approaches and bioinformatics capabilities, provides us with valuable competitive assets to utilize in discovering and developing other products and services for pregnancy conditions, several of which are already in our pipeline.
Given that our vision is to comprehensively profile the biology of pregnancy by leveraging our platform technologies to characterize disruption of 21 Table of Contents normal developmental biology in both the mother and the fetus, we believe that there is a significant opportunity to improve earlier detection and the potential to develop targeted interventions to better address this serious problem.
Given that our vision is to comprehensively profile the biology of pregnancy by leveraging our platform technologies to characterize disruption of normal developmental biology in both the mother and the fetus, we believe that there is a significant opportunity to improve earlier detection and the potential to develop targeted interventions to better address this serious problem. Development Status .
The pending patent applications, if issued, are expected to expire in 2037, without taking into account any possible patent term adjustment or extensions and assuming payment of all appropriate maintenance, renewal, annuity, or other governmental fees.
The granted patents and pending patent applications, if issued, are expected to expire in 2036, without taking into account any possible patent term adjustment or extensions and assuming payment of all appropriate maintenance, renewal, annuity, or other governmental fees.
Our Discovery, Development, and Commercialization Approach Our product discovery and development approach is based on rigorous science- and health-based economic analyses as we discover, develop and commercialize biomarker tests designed to transform pregnancy-related care for patients, doctors and payers.
Our Discovery, Development, and Commercialization Approach Our product discovery and development approach is based on rigorous science and health-based economic analyses as we discover, develop and commercialize biomarker tests and predictive analytic products and services designed to transform pregnancy-related care for patients, doctors and payers.
Our platform consists of biobanks, advanced mass 8 Table of Contents spectrometry and other proteomic analytic methods and bioinformatics, which enables superior characterization of the biology of pregnancy and accurate prediction of pregnancy outcomes.
Our platform consists of biobanks, advanced mass spectrometry and other proteomic analytic methods and bioinformatics, which enables superior characterization of the biology of pregnancy and accurate prediction of pregnancy outcomes.
These competitors also compete with us in recruiting and retaining qualified scientific, sales, marketing and management personnel, conducting clinical studies, publishing scientific research and acquiring technologies that may be complementary to, or necessary for, the ongoing robustness of our discovery, development and commercialization efforts.
These competitors are also expected to compete with us in recruiting and retaining qualified scientific, sales, marketing and management personnel, conducting clinical studies, publishing scientific research and acquiring technologies that may be complementary to, or necessary for, the ongoing robustness of our discovery, development and 25 Table of Contents commercialization efforts.
The California Confidentiality of Medical Information Act imposes restrictive requirements regulating the use and disclosure of health information and other personally identifiable information. In addition to fines and penalties imposed upon violators, some of these state laws also afford private rights of action to individuals who believe their personal information has been misused.
The California Confidentiality of Medical Information Act imposes restrictive requirements regulating the use and disclosure of individually identifiable health information. In addition to fines and penalties imposed upon violators, some of these state laws also afford private rights of action to residents who believe their personal information has been misused.
Although the FDA has statutory authority to ensure that medical devices, including IVDs, are safe and effective for their intended uses, the FDA has historically exercised its enforcement discretion and not enforced applicable provisions of the FD&C Act and regulations with respect to LDTs.
Although the FDA has statutory authority to ensure that medical devices, including IVDs, are safe and effective for their intended uses, the FDA historically exercised enforcement discretion and generally did not enforce applicable provisions of the FD&C Act and regulations with respect to LDTs.
We believe that the breadth and depth of our databases, our unique proteomic analytical techniques and our bioinformatics approaches all position us to be the leader in providing important pregnancy information to patients and doctors.
We believe that the breadth and depth of our databases, our unique proteomic analytical techniques, immunoassay capabilities, and our bioinformatics approaches all position us to be the leader in providing important pregnancy information to women and doctors.
Human Capital As of December 31, 2022, we had 89 employees, including 87 full-time employees. Our headquarters are located in Salt Lake City, Utah. None of our employees are subject to a collective bargaining agreement. We consider our relationship with our employees to be good. Talent Acquisition and Retention We recognize that our employees largely contribute to our success.
Human Capital As of December 31, 2023, we had 57 employees, including 55 full-time employees. Our headquarters are located in Salt Lake City, Utah. None of our employees are subject to a collective bargaining agreement. We consider our relationship with our employees to be good. Talent Acquisition and Retention We recognize that our employees largely contribute to our success.
Proposed modifications to the HIPAA Privacy Rule were published in January of 2021 with a public comment period that ended in May of 2021. The content of any final rules and their impact on us is not yet known.
Proposed modifications to the HIPAA Privacy Rule were published in January of 2021 with a public comment period that ended in May of 2021. Final rules have not yet been published by HHS, therefore, the content of any final rules and their impact on us is not yet known.
Similarly, state enforcement agencies may issue opinion letters that describe their interpretation of how the state AKS applies to certain arrangements, and also provide insight into that agency’s enforcement priorities.
Similarly, state enforcement agencies may issue opinion letters or other guidance documents that describe their interpretation of how the state AKS applies to certain arrangements, and also provide insight into that agency’s enforcement priorities.
The granted patents and pending patent applications, if issued, are expected to expire in 2036, without taking into account any possible patent term adjustment or extensions and assuming payment of all appropriate maintenance, renewal, annuity, or other governmental fees. We also own a granted patent and pending patent applications directed to other indications.
The pending patent application, if issued, is expected to expire in 2043, without taking into account any possible patent term adjustment or extensions and assuming payment of all appropriate maintenance, renewal, annuity, or other governmental fees. We also own granted patents and pending patent applications directed to other indications.
The FCA also permits a private individual acting as a “whistleblower” to bring actions on behalf of the federal government alleging violations of the FCA and to share in any monetary recovery.
The FCA also permits a private individual acting as a “whistleblower” (also referred to as a qui tam relator) to bring actions on behalf of the federal government alleging violations of the FCA and to share in any monetary recovery.
Sales of the PreTRM test or other diagnostic testing that we may develop will depend substantially, both domestically and abroad, on the extent to which the costs of our tests will be paid by MCOs or other commercial insurers, or reimbursed by government health care programs, and other third-party payers.
Sales of the PreTRM test or other clinical testing that we may develop will in large part depend, both domestically and abroad, on the extent to which the costs of our tests will be paid by MCOs or other commercial insurers, or reimbursed by government health care programs, and other third-party payers.
Carelon Research/Elevance Health and Economic Study Carelon Research (formerly known as HealthCore, Inc.), a subsidiary of Elevance Health, conducted an insurance claims data analysis on the cost-effectiveness of screening more than 40,000 mothers and babies within Elevance Health’s commercially insured membership.
Carelon Research/Elevance Health and Economic Study Carelon Research, a subsidiary of Elevance Health, conducted an insurance claims data analysis on the cost-effectiveness of screening more than 40,000 mothers and babies within Elevance Health’s commercially insured membership.
Notwithstanding the foregoing advantages, given the potential market opportunity represented by the PreTRM test and other pregnancy-related proteomic tests that we may develop, we expect competition to emerge and intensify in the coming years, with one or more competitive prognostic tests resulting from competitors’ efforts.
Notwithstanding the foregoing advantages, given the potential market opportunity represented by the PreTRM test and other pregnancy-related products and services that we may develop, we expect competition to emerge and intensify in the coming years, with one or more competitive offerings resulting from competitors’ efforts.
Our vision is to deliver pivotal and actionable information to pregnant women, their physicians, and health care payers to significantly improve maternal and neonatal health and to dramatically reduce health care costs.
Our Strategy Our vision is to deliver pivotal and actionable information to pregnant women, their physicians and health care payers to significantly improve the pregnancy experience and maternal and neonatal health, and to dramatically reduce health care costs.
A third patent family relates to determining the estimated due date for a pregnant female, and includes patent applications pending in the U.S., the EPO, Canada and Australia.
A fourth patent family relates to determining the estimated due date for a pregnant female, and includes one granted patent in the U.S. and patent applications pending in the U.S., the EPO, Canada and Australia.
Our proprietary technology platform is designed to provide deep characterization of the biology of pregnancy, which we are using to develop additional accurate predictors of pregnancy outcomes, such as preeclampsia, gestational diabetes, and other conditions.
Our proprietary technology platform is designed to provide deep characterization of the biology of pregnancy, which we are using to develop additional products addressing pregnancy outcomes, such as time-to-birth, preeclampsia, gestational diabetes, and other conditions.
These publications are demonstrative of interest in the field, but they characteristically lack evidence of strict adherence to the NAM guidelines for multi-omics prediction development and have not achieved rigorous validation of predictions of interest.
These publications are demonstrative of interest in the field, but they have so far typically lacked evidence of strict adherence to the NAM guidelines for multi-omics prediction development and have not achieved rigorous validation of predictions of interest.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

136 edited+60 added−40 removed415 unchanged
Biggest changeOur business could be adversely affected by the effects of other future public health threats in regions where we, or third parties on which we rely, have significant business operations. 38 Table of Contents • If we lose the services of our Chairman, President and Chief Executive Officer or other members of our senior management team, we may not be able to execute our business strategy. • Our ability to utilize our net operating loss carryforwards and certain other tax attributes may be limited. • Our estimates of total addressable market opportunity and forecasts of market growth may prove to be inaccurate, and even if the market in which we compete achieves the forecasted growth, our business could fail to grow at a similar rate. • The inflationary environment could materially adversely impact our business and results of operations. • If third-party payers do not adequately reimburse for the PreTRM test or any new tests we may develop, such tests may not be purchased or used, which may adversely affect our revenue and profits. • New reimbursement methodologies applicable to the PreTRM test, and other future tests, including new CPT codes, may decrease reimbursement rates from third-party payers. • Billing disputes with third-party payers, including disagreement regarding the selection and use of CPT codes when submitting claims, may decrease realized revenue and may lead to requests for recoupment of past amounts paid. • When third-party payers deny coverage, we are often unable to collect from the patient or any other source and risk disputes if we attempt to do so. • Our revenues may be adversely impacted if third-party payers withdraw coverage or provide lower levels of reimbursement due to changing policies, billing complexities or other factors. • Status as an out-of-network provider with a large commercial insurer may cause health care providers to avoid recommending our tests. • If the validity of an informed consent from a patient is challenged, we could be precluded from billing for such patient’s testing, be forced to stop performing certain tests, forced to exclude the patient’s data or specimens from clinical trial results or be subject to lawsuits or regulatory enforcement. • Changes in the way the FDA regulates laboratory developed tests or the reagents, other consumables, and testing equipment we use when developing, validating, and performing our tests could result in delay or additional expense in bringing our tests to market or performing such tests for our customers. • If we fail to comply with federal and/or state laboratory licensing requirements, we could lose the ability to perform our tests or experience disruptions to our business. • Any failure to obtain, maintain, and enforce our intellectual property rights could impair our ability to protect our proprietary technology and our brand. • Issued patents covering our tests and technology could be found invalid or unenforceable if challenged. • Our intellectual property may be infringed by a third party. • If we are not able to prevent disclosure of our trade secrets and other proprietary information, the value of our tests and technology could be significantly diminished. • The price of our Class A common stock may be volatile, and you could lose all or part of your investment. • Sales of a substantial number of shares of our Class A common stock by our existing stockholders in the public market could cause our stock price to fall. • Our disclosure controls and procedures may not prevent or detect all errors or acts of fraud.
Biggest changeIf we are unable to compete successfully with respect to our current or future products or services, we may not be able to increase or sustain our revenues or achieve profitability. • If our CLIA-certified laboratory facility becomes inoperable, we will be unable to perform our tests and our business will be harmed. • Interim, top-line and preliminary data from our clinical trials that we announce or publish from time to time may change as additional data become available and are subject to confirmation, audit, and verification procedures that could result in material changes in the final data. • Our business would be materially harmed if our proprietary biobank were to become contaminated, lost or destroyed. • We rely on third parties for specimen collection, including phlebotomy services, and commercial courier delivery services, and if these services are disrupted, our business will be harmed. • We rely on a limited number of suppliers or, in some cases, single suppliers, for some of our laboratory instruments and materials and may not be able to find replacements or immediately transition to alternative suppliers on a cost-effective basis, or at all. • Our ability to utilize our net operating loss carryforwards and certain other tax attributes may be limited. 40 Table of Contents • Our estimates of total addressable market opportunity and forecasts of market growth may prove to be inaccurate, and even if the market in which we compete achieves the forecasted growth, our business could fail to grow at a similar rate. • The inflationary environment could materially adversely impact our business and results of operations. • If third-party payers do not adequately reimburse for the PreTRM test or any new tests we may develop, such tests may not be purchased or used, which may adversely affect our revenue and profits. • New reimbursement methodologies applicable to the PreTRM test, and other future tests, including new CPT codes, may decrease reimbursement rates from third-party payers. • Billing disputes with third-party payers, including disagreement regarding the selection and use of CPT codes when submitting claims, may decrease realized revenue and may lead to requests for recoupment of past amounts paid. • When third-party payers deny coverage, we are often unable to collect from the patient or any other source and risk disputes if we attempt to do so. • Our revenues may be adversely impacted if third-party payers withdraw coverage or provide lower levels of reimbursement due to changing policies, billing complexities or other factors. • Status as an out-of-network provider with a large commercial insurer may cause health care providers to avoid recommending our tests. • If the validity of an informed consent from a patient is challenged, we could be precluded from billing for such patient’s testing, be forced to stop performing certain tests, forced to exclude the patient’s data or specimens from clinical trial results or be subject to lawsuits or regulatory enforcement. • Changes in the way the FDA regulates the reagents, other consumables, and testing equipment we use when developing, validating, and performing our tests could result in delay or additional expense in bringing our tests to market or performing such tests for our customers. • If we fail to comply with federal and/or state laboratory licensing requirements, we could lose the ability to perform our tests or experience disruptions to our business. • Any failure to obtain, maintain, and enforce our intellectual property rights could impair our ability to protect our proprietary technology and our brand. • Issued patents covering our tests and technology could be found invalid or unenforceable, if challenged. • Our intellectual property may be infringed by a third party. • If we are not able to prevent disclosure of our trade secrets and other proprietary information, the value of our tests and technology could be significantly diminished. • The price of our Class A common stock may be volatile, and you could lose all or part of your investment. • Sales of a substantial number of shares of our Class A common stock by our existing stockholders in the public market could cause our stock price to fall. • Our inability to maintain effective disclosure controls and procedures could adversely affect our results of operations, liquidity and financial positions, as well as our stock price and investor confidence in us.
The results of our clinical trials may not support the use of our tests and other product candidates, or may not be replicated in later studies.
The results of our clinical trials and studies may not support the use of our tests and other product candidates, or may not be replicated in later studies.
Despite our compliance policies and procedures, and related training and monitoring, we may experience situations in which employees may have failed to fully adhere to our policies and applicable laws in the past or in which they fail to adhere to applicable policies and/or laws in the future.
Despite our compliance policies and procedures, and related training and monitoring, we may experience situations in which employees may have failed to fully adhere to our policies and/or applicable laws in the past or in which they fail to adhere to applicable policies and/or laws in the future.
If a third-party payer or a regulatory or enforcement agency, or, in some cases, a qui tam relator, believes or alleges that we engaged in improper billing practices—including, but not limited to, not adequately pursuing patient cost share responsibilities, submitting improper CPT codes, multipliers or modifiers on our claims—we may be subject to investigation and/or enforcement actions under federal and/or state law.
If a third-party payer or a regulatory or enforcement agency, or, in some cases, a qui tam relator, believes or alleges that we engaged in improper billing practices—including, but not limited to, not adequately pursuing patient cost share responsibilities or submitting improper CPT codes, multipliers or modifiers on our claims—we may be subject to investigation and/or enforcement actions under federal and/or state law.
We may be considered to be an out-of-network provider with respect to the large commercial insurers from which we may receive reimbursement from in the future. Physician groups and other health care providers may view this negatively and may insist upon only using laboratories that are in-network with their patients’ insurance companies.
We may be considered to be an out-of-network provider with respect to the large commercial insurers from which we may receive reimbursement in the future. Physician groups and other health care providers may view this negatively and may insist upon only using laboratories that are in-network with their patients’ insurance companies.
If there are changes in FDA regulations and legislative authorities such that the agency begins to exercise oversight over LDTs, or if the FDA disagrees that our marketed tests are within the scope of its criteria used for defining LDTs, we may become subject to extensive regulatory requirements and may be required to stop selling our existing test or launching any other tests we may develop and to conduct additional clinical trials or take other actions prior to continuing to market our tests.
If there are changes in FDA regulations or legislative authorities such that the agency begins to exercise oversight over LDTs, or if the FDA disagrees that our marketed tests are within the scope of its criteria used for defining LDTs, we may become subject to extensive regulatory requirements and may be required to stop selling our existing test or launching any other tests we may develop and to conduct additional clinical trials or take other actions prior to continuing to market our tests.
For example, the CCPA creates individual privacy rights for California consumers and increases the privacy and security obligations of entities handling certain personal data. The CCPA provides for civil penalties for violations, as well as a private right of action for data breaches.
For example, the CCPA creates individual privacy rights for California consumers and increases the privacy and security obligations of certain entities handling certain personal data. The CCPA provides for civil penalties for violations, as well as a private right of action for data breaches.
In addition, there are additional federal, state, and non-U.S. laws which govern the privacy and security of health and other personal information, many of which differ from each other in significant ways and may not have the same effect, thus complicating compliance efforts. • The Eliminating Kickbacks in Recovery Act of 2018, or EKRA, which is an all-payer anti-kickback law that criminalizes the offer, payment, solicitation or receipt of any remuneration, directly or indirectly, overtly or covertly, in cash or in kind, in return for referring, to induce referrals of, or in exchange for referring patients to recovery homes, clinical treatment facilities, or laboratories, unless an exception applies.
There are additional federal, state, and non-U.S. laws which govern the privacy and security of health and other personal information, many of which differ from each other in significant ways and may not have the same effect, thus complicating compliance efforts. • The Eliminating Kickbacks in Recovery Act of 2018, or EKRA, which is an all-payer anti-kickback law that criminalizes the offer, payment, solicitation, or receipt of any remuneration, directly or indirectly, overtly or covertly, in cash or in kind, in return for referring, to induce referrals of, or in exchange for referring patients to recovery homes, clinical treatment facilities, or laboratories, unless an exception applies.
In addition to the factors discussed in this “Risk Factors” section and elsewhere in this report, these factors include: • our ability to successfully meet our obligations under our commercial agreement with Elevance Health and obtain broader market adoption of our PreTRM test; • actual or anticipated variations in our and our competitors’ results of operations, as well as how those results compare to analyst and investor expectations; • our failure to successfully commercialize our product candidates; • announcements by us or our competitors of new products, significant acquisitions, other strategic transactions, including strategic and commercial partnerships and relationships, joint ventures, divestitures, collaborations or capital commitments; • changes in reimbursement practices by current or potential payers; • failure of analysts to initiate or maintain coverage of our company, issuance of new securities analysts’ reports or changed recommendations for our Class A common stock; • forward-looking statements related to our financial guidance or projections, our failure to meet or exceed our financial guidance or projections or changes in our financial guidance or projections; • actual or anticipated changes in regulatory oversight of our products; • development of disputes concerning our intellectual property or other proprietary rights; • commencement of, or our involvement in, litigation; • announcement or expectation of additional debt or equity financing efforts; • any major change in our management; • our inability to establish collaborations, if needed; • additions or departures of key scientific or management personnel; • our ability to effectively manage our growth; • overall performance of the equity markets; • sales of our common stock by us, our directors and officers, or our other stockholders in the future; • trading volume of our Class A common stock; • changes in accounting practices; • ineffectiveness of our internal controls; • general political and economic conditions; and • other events or factors, many of which are beyond our control.
In addition to the factors discussed in this “Risk Factors” section and elsewhere in this report, these factors include: • our ability to successfully execute under our commercial agreement with Elevance Health and obtain broader market adoption of our PreTRM test; • actual or anticipated variations in our and our competitors’ results of operations, as well as how those results compare to analyst and investor expectations; • our failure to successfully commercialize our product candidates; • announcements by us or our competitors of new products, significant acquisitions, other strategic transactions, including strategic and commercial partnerships and relationships, joint ventures, divestitures, collaborations or capital commitments; • changes in reimbursement practices by current or potential payers; • failure of analysts to initiate or maintain coverage of our Company, issuance of new securities analysts’ reports or changed recommendations for our Class A common stock; • forward-looking statements related to our financial guidance or projections, our failure to meet or exceed our financial guidance or projections or changes in our financial guidance or projections; • actual or anticipated changes in regulatory oversight of our products; • development of disputes concerning our intellectual property or other proprietary rights; • commencement of, or our involvement in, litigation; • announcement or expectation of additional debt or equity financing efforts; • any major change in our management; • our inability to establish collaborations, if needed; • additions or departures of key scientific or management personnel; • our ability to effectively manage our growth; • overall performance of the equity markets; • sales of our common stock by us, our directors and officers, or our other stockholders in the future; • trading volume of our Class A common stock; • changes in accounting practices; • ineffectiveness of our internal controls; • general political and economic conditions; and • other events or factors, many of which are beyond our control.
Such risks include, but are not limited to: • We have incurred net losses since our inception and we anticipate that we will continue to incur losses for the foreseeable future, which could harm our future business prospects. • Operating our business requires a significant amount of cash, and our ability to generate sufficient cash depends on many factors, some of which are beyond our control and if we cannot raise additional capital when needed, we may have to curtail or cease operations. • Our quarterly and annual results may fluctuate from period to period, which could adversely impact the value of our Class A common stock. • We have derived substantially all of our revenues to date from the PreTRM test, and if our efforts to further increase the use and adoption of the PreTRM test or to develop new products and services in the future do not succeed, our business will be harmed. • In the near future, we expect to rely on sales to a limited number of direct customers for a significant portion of our revenue from the sale of the PreTRM test, making us subject to customer concentration risk. • If we are unable to establish and maintain sales and marketing capabilities, we may not be successful in commercializing the PreTRM test. • Competition in the life science industry, including companies engaged in molecular diagnostics and proteomics, is intense.
Such risks include, but are not limited to: • We have incurred net losses since our inception and we anticipate that we will continue to incur losses for the foreseeable future, which could harm our future business prospects. • Operating our business requires a significant amount of cash, and our ability to generate sufficient cash depends on many factors, some of which are beyond our control and if we cannot raise additional capital when needed, we may have to curtail or cease operations. • Our quarterly and annual results may fluctuate from period to period, which could adversely impact the value of our Class A common stock. • We have derived substantially all of our revenues to date from the PreTRM test, and if our efforts to further increase the use and adoption of the PreTRM test or to develop new products and services in the future do not succeed, our business will be harmed. • In the near future, we expect to rely on sales to a limited number of direct customers for a significant portion of our revenue and cash flows related to the sale of the PreTRM test, making us subject to customer concentration risk. • If we are unable to establish and maintain sales and marketing capabilities, we may not be successful in commercializing the PreTRM test. • Competition in the life science industry, including companies engaged in molecular diagnostics and proteomics, is intense.
Accordingly, our business and financial results in the future could be adversely affected due to a variety of factors, including: • multiple, conflicting and changing laws and regulations such as privacy, security and data use regulations, tax laws, export and import restrictions, economic sanctions and embargoes, employment laws, anti-corruption laws, regulatory requirements, reimbursement or payer regimes and other governmental approvals, permits, and licenses; • failure by us or our distributors to obtain any necessary regulatory clearance, authorization or approval for the use of our products and services in various countries; • additional potentially relevant third-party patent rights; • complexities and difficulties in obtaining intellectual property protection and maintaining, defending, and enforcing our intellectual property outside the United States; • difficulties in staffing and managing foreign operations; • employment risks related to hiring employees outside the United States; • complexities associated with managing multiple payer reimbursement regimes, government payers or patient self-pay systems; • difficulties in negotiating favorable reimbursement negotiations with governmental authorities; • logistics and regulations associated with shipping specimens, including infrastructure conditions and transportation delays; • limits in our ability to penetrate international markets if we are not able to sell our products or conduct services locally; • financial risks, such as longer payment cycles, difficulty collecting accounts receivable, the impact of local and regional financial crises on demand and payment for our products and services and exposure to foreign currency exchange rate fluctuations; • natural disasters, political and economic instability, including wars, terrorism, and political unrest, outbreak of disease, boycotts, curtailment of trade, and other business restrictions; • regulatory and compliance risks that relate to maintaining accurate information and control over sales and distributors’ activities that may fall within the purview of the U.S.
Accordingly, our business and financial results in the future could be adversely affected due to a variety of factors, including: • multiple, conflicting and changing laws and regulations such as data privacy, information security, and data use regulations, tax laws, export and import restrictions, economic sanctions and embargoes, employment laws, anti-corruption laws, regulatory requirements, reimbursement or payer regimes and other governmental approvals, permits, and licenses; • failure by us or our distributors to obtain any necessary regulatory clearance, authorization or approval for the use of our products and services in various countries; • additional potentially relevant third-party patent rights; • complexities and difficulties in obtaining intellectual property protection and maintaining, defending, and enforcing our intellectual property outside the United States; • difficulties in staffing and managing foreign operations; • employment risks related to hiring employees outside the United States; • complexities associated with managing multiple payer reimbursement regimes, government payers or patient self-pay systems; • difficulties in negotiating favorable reimbursement negotiations with governmental authorities; 50 Table of Contents • logistics and regulations associated with shipping specimens, including infrastructure conditions and transportation delays; • limits in our ability to penetrate international markets if we are not able to sell our products or conduct services locally; • financial risks, such as longer payment cycles, difficulty collecting accounts receivable, the impact of local and regional financial crises on demand and payment for our products and services and exposure to foreign currency exchange rate fluctuations; • natural disasters, political and economic instability, including wars, terrorism, and political unrest, outbreak of disease, boycotts, curtailment of trade, and other business restrictions; • regulatory and compliance risks that relate to maintaining accurate information and control over sales and distributors’ activities that may fall within the purview of the U.S.
Such a breach or violation also could result in legal claims or proceedings brought by a private party or a governmental authority, liability under laws and regulations that protect the privacy of personal information, such as HIPAA, HITECH and laws and regulations of various U.S. states, as well as penalties imposed by the Payment Card Industry Security Standards Council for violations of the Payment Card Industry Data Security Standards.
Such a breach or violation also could result in legal claims or proceedings brought by a private party or a governmental authority, liability under laws and regulations that protect the privacy of personal information, such as HIPAA and laws and regulations of various U.S. states, as well as penalties imposed by the Payment Card Industry Security Standards Council for violations of the Payment Card Industry Data Security Standards.
Our amended and restated certificate of incorporation provides that, unless we consent in writing to an alternative forum, the Court of Chancery of the State of Delaware will be the sole and exclusive forum for any state law claims for (i) any derivative action or proceeding brought on our behalf, (ii) any action or proceeding asserting a claim of breach of fiduciary duty owed by any of our current or former directors, officers and employees, to us or our stockholders, (iii) any 74 Table of Contents action or proceeding asserting a claim arising pursuant to any provision of the General Corporation Law of the State of Delaware, our amended and restated certificate of incorporation or our bylaws (in each case, as they may be amended from time to time), (iv) any action or proceeding to interpret, apply, enforce or determine the validity of our amended and restated certificate of incorporation or bylaws, (v) any action or proceeding as to which the Delaware General Corporation Law confers jurisdiction to the Court of Chancery of the State of Delaware, or (vi) any action asserting a claim against us or any of our directors, officers or employees that is governed by the internal affairs doctrine; provided, however, that this exclusive forum provision will not apply to any causes of action arising under the Exchange Act.
Our amended and restated certificate of incorporation provides that, unless we consent in writing to an alternative forum, the Court of Chancery of the State of Delaware will be the sole and exclusive forum for any state law claims for (i) any derivative action or proceeding brought on our behalf, (ii) any action or proceeding asserting a claim of breach of fiduciary duty owed by any of our current or former directors, officers and employees, to us or our stockholders, (iii) any action or proceeding asserting a claim arising pursuant to any provision of the General Corporation Law of the State of Delaware, our amended and restated certificate of incorporation or our bylaws (in each case, as they may be amended from time to time), (iv) any action or proceeding to interpret, apply, enforce or determine the validity of our amended and 77 Table of Contents restated certificate of incorporation or bylaws, (v) any action or proceeding as to which the Delaware General Corporation Law confers jurisdiction to the Court of Chancery of the State of Delaware, or (vi) any action asserting a claim against us or any of our directors, officers or employees that is governed by the internal affairs doctrine; provided, however, that this exclusive forum provision will not apply to any causes of action arising under the Exchange Act.
If a breach affects fewer than 500 individuals, the covered entity must notify HHS within the first 60 days of the following calendar year in which the breach occurred. Penalties for failure to comply with HIPAA and HITECH are substantial and could include corrective action plans, and/or the imposition of civil monetary or criminal penalties.
If a breach affects fewer than 500 individuals, the covered entity must notify HHS within the first 60 days of the following calendar year in which the breach occurred. Penalties for failure to comply with HIPAA are substantial and could include corrective action plans, and/or the imposition of civil monetary or criminal penalties.
Violations of this statute are punishable by imprisonment, fines, or both. • HIPAA, as amended by HITECH and their respective implementing regulations, including the Final Omnibus Rule published in January 2013, which impose requirements on certain covered health care providers, health plans, and health care clearinghouses as well as their respective business associates.
Violations of this statute are punishable by imprisonment, fines, or both. • HIPAA, as amended by HITECH and its respective implementing regulations, including the Final Omnibus Rule published in January 2013, which impose requirements on certain covered health care providers, health plans, and health care clearinghouses as well as their respective business associates.
We intend to establish early reimbursement for the PreTRM test by collaborating with payers to perform rigorous analysis to demonstrate the health and economic benefits of our biomarker tests within their own network using customized inputs based on the plan’s patient population.
We intend to establish reimbursement for the PreTRM test by collaborating with payers to perform rigorous analysis to demonstrate the health and economic benefits of our biomarker tests within their own network using customized inputs based on the plan’s patient population.
Such failures may subject us to administrative, civil, and criminal actions, penalties, damages, fines, individual imprisonment, exclusion from participation in federal health care programs, refunding of payments received by us, and curtailment or cessation of our operations.
Such failures may subject us to administrative, civil, and criminal actions, penalties, damages, fines, individual imprisonment, exclusion from participation in state and/or federal health care programs, refunding of payments received by us, and curtailment or cessation of our operations.
Our business activities are, or may in the future be, subject to comprehensive compliance obligations under state and federal laws and regulations, including: • Federal and state laws governing laboratory testing, including but not limited to the Clinical Laboratory Improvement Amendments of 1988 and state laboratory licensure and related laws. • The federal Anti-Kickback Statute, or AKS, which generally prohibits, among other things knowingly and willfully offering, paying, soliciting, or receiving any remuneration, directly or indirectly, covertly or overtly, in cash or in kind in return for (i) referring an individual to a person for the furnishing or arranging of any item or service, or (ii) purchasing, leasing, ordering, or arranging for or recommending the purchasing, leasing, or ordering of any good, facility, service, or item, for which payment may be made by federal health care programs.
Our business activities are, or may in the future be, subject to comprehensive compliance obligations under state and federal laws and regulations, including: • Federal and state laws governing laboratory testing, including but not limited to the Clinical Laboratory Improvement Amendments of 1988 and state laboratory licensure and related laws. • FDA laws and regulations, including but not limited to requirements for offering LDTs. • The federal Anti-Kickback Statute, or AKS, which generally prohibits, among other things knowingly and willfully offering, paying, soliciting, or receiving any remuneration, directly or indirectly, covertly or overtly, in cash or in kind in return for (i) referring an individual to a person for the furnishing or arranging of any item or service, or (ii) purchasing, leasing, ordering, or arranging for or recommending the purchasing, leasing, or ordering of any good, facility, service, or item, for which payment may be made by federal health care programs.
Our actual liquidity and capital funding requirements will depend on numerous factors, including: • our ability to achieve broad commercial success with the PreTRM test; • the scope and duration of, and expenditures associated with, our discovery efforts and research and development programs, including for our proprietary proteomics and bioinformatics platform; • the costs to fund our commercialization strategies for any product candidates which we launch and to prepare for potential product marketing authorizations, as required; • the costs of any acquisitions of complementary businesses or technologies that we may pursue; • potential licensing or partnering transactions, if any; • our facility expenses, which will vary depending on the time and terms of any facility lease or sublease we may enter into, and other operating expenses; • the scope and extent of the expansion of our sales and marketing efforts; • the commercial success of our products; • our ability to obtain more extensive coverage and reimbursement for the PreTRM test and other products, if any; and • our ability to collect our accounts receivable. 40 Table of Contents The availability of additional capital, whether from private capital sources, such as banks, or the public capital markets, may fluctuate as our financial condition and market conditions in general change.
Our actual liquidity and capital funding requirements will depend on numerous factors, including: • our ability to achieve broad commercial success with the PreTRM test and other pipeline products and services; • the scope and duration of, and expenditures associated with, our discovery efforts and research and development programs, including for our proprietary proteomics and bioinformatics platform; • the costs to fund our commercialization strategies for any product candidates which we launch and to prepare for potential product marketing authorizations, as required; • the costs of any acquisitions of complementary businesses or technologies that we may pursue; • potential licensing or partnering transactions, if any; • our facility expenses, which will vary depending on the time and terms of any facility lease or sublease we may enter into, and other operating expenses; • the scope and extent of the expansion of our sales and marketing efforts; • the commercial success of our other products and services; • our ability to obtain more extensive coverage and reimbursement for the PreTRM test and other products and services, if any; and • our ability to collect our accounts receivable. 42 Table of Contents The availability of additional capital, whether from private capital sources, such as banks, or the public capital markets, may fluctuate as our financial condition and market conditions in general change.
Such rights also include “march-in” rights, which refer to the right of the U.S. government to require us to grant a license to the technology to a responsible applicant if we fail to achieve practical application of the technology or if action is necessary to alleviate health or safety needs, to meet requirements of federal regulations or to give preference to U.S. industry; 67 Table of Contents • our patent counsel, lawyers or advisors may have given us, or may in the future give us incorrect advice or counsel; • the patent and patent enforcement laws of some foreign jurisdictions may not protect intellectual property rights to the same extent as laws in the United States, and many companies have encountered significant difficulties in protecting and defending such rights in foreign jurisdictions.
Such rights also include “march-in” rights, which refer to the right of the U.S. government to require us to grant a license to the technology to a responsible applicant if we fail to achieve practical application of the technology or if action is necessary to alleviate health or safety needs, to meet requirements of federal regulations or to give preference to U.S. industry; • our patent counsel, lawyers or advisors may have given us, or may in the future give us incorrect advice or counsel; • the patent and patent enforcement laws of some foreign jurisdictions may not protect intellectual property rights to the same extent as laws in the United States, and many companies have encountered significant difficulties in protecting and defending such rights in foreign jurisdictions.
Additionally, if we were required to make a repayment, such repayment could be significant, which could have a material and adverse effect on our business, operating results, and financial condition. 55 Table of Contents Our revenues may be adversely impacted if third-party payers withdraw coverage or provide lower levels of reimbursement due to changing policies, billing complexities or other factors.
Additionally, if we were required to make a repayment, such repayment could be significant, which could have a material and adverse effect on our business, operating results, and financial condition. 57 Table of Contents Our revenues may be adversely impacted if third-party payers withdraw coverage or provide lower levels of reimbursement due to changing policies, billing complexities or other factors.
These factors could involve financial institutions or financial services industry companies with which we have financial or business relationships, but could also include factors involving financial markets or the financial services industry generally. 41 Table of Contents The results of events or concerns that involve one or more of these factors could include a variety of material and adverse impacts on our current and projected business operations and our financial condition and results of operations.
These factors could involve financial institutions or financial services industry companies with which we have financial or business relationships, but could also include factors involving financial markets or the financial services industry generally. 43 Table of Contents The results of events or concerns that involve one or more of these factors could include a variety of material and adverse impacts on our current and projected business operations and our financial condition and results of operations.
These types of decisions could reduce our revenue and harm our financial condition. 56 Table of Contents Changes in government health care policy could increase our costs and negatively impact coverage and reimbursement for our tests by governmental and other third-party payers. The U.S. government is pursuing health care reform and aiming to reduce health care costs.
These types of decisions could reduce our revenue and harm our financial condition. 58 Table of Contents Changes in government health care policy could increase our costs and negatively impact coverage and reimbursement for our tests by governmental and other third-party payers. The U.S. government is pursuing health care reform and aiming to reduce health care costs.
A Joint Select Committee on Deficit Reduction, tasked with recommending a targeted deficit reduction of at least $1.2 trillion 57 Table of Contents for the years 2013 through 2021, was unable to reach required goals, thereby triggering the legislation’s automatic reduction to several state and federal health care programs.
A Joint Select Committee on Deficit Reduction, tasked with recommending a targeted deficit reduction of at least $1.2 trillion 59 Table of Contents for the years 2013 through 2021, was unable to reach required goals, thereby triggering the legislation’s automatic reduction to several state and federal health care programs.
Moreover, eligibility for coverage does not imply that any test will be reimbursed in all cases or at a rate that allows us to make a profit or even cover our costs. Interim payments for new tests, if applicable, may also not be sufficient to cover our costs and may not be made permanent.
Moreover, eligibility for coverage does not mean that any test will be reimbursed in all cases or at a rate that allows us to make a profit or even cover our costs. Interim payments for new tests, if applicable, may also not be sufficient to cover our costs and may not be made permanent.
Any failure or perceived failure by us, or any third parties with which we do business, to comply 62 Table of Contents with our privacy policies, changing expectations, evolving laws, rules and regulations, industry standards, or contractual obligations to which we or such third parties are or may become subject, may result in actions or other claims against us by governmental entities or private actors, the expenditure of substantial costs, time and other resources or the incurrence of significant fines, penalties or other liabilities.
Any failure or perceived failure by us, or any third parties with which we do business, to comply with our privacy policies, changing expectations, evolving laws, rules and regulations, industry standards, or contractual obligations to which we or such third parties are or may become subject, may result in actions or other claims against us by governmental entities or private actors, the expenditure of substantial costs, time and other resources or the incurrence of significant fines, penalties or other liabilities.
If our operations are found to be in violation of any of these laws and regulations, we may be subject to administrative, civil and/or criminal penalties, damages, fines, individual imprisonment, refunding of payments received by us, exclusion from government health care programs, and/or curtailment or cessation of our operations, among other potential penalties, any of which could harm our reputation and adversely affect our business, operating results, and financial condition.
If our operations are found to be in violation of any of these (or other) laws and regulations, we may be subject to administrative, civil and/or criminal penalties, damages, fines, individual imprisonment, refunding of payments received by us, exclusion 51 Table of Contents from government health care programs, and/or curtailment or cessation of our operations, among other potential penalties, any of which could harm our reputation and adversely affect our business, operating results, and financial condition.
Although we work to comply with applicable laws, regulations and standards, our contractual obligations, and other legal obligations, these requirements are evolving and may be modified, interpreted, and applied in an inconsistent manner from one jurisdiction to another, and may conflict with one another or other legal obligations with which we must comply.
Although we strive to comply with applicable laws, regulations and standards, our contractual obligations, and other legal obligations, these requirements are evolving and may be modified, interpreted, and applied in an inconsistent manner from one jurisdiction to another, and may conflict with one another or other legal obligations with which we must comply.
Violations of this statute are punishable by imprisonment, fines, or both. • The federal statute prohibiting false statements relating to health care matters, which criminalizes knowingly and willfully falsifying, concealing or covering up by any trick or device a material fact or making any materially false, fictitious, or fraudulent statements or representations in connection with the delivery of, or payment for, health care benefits, items or services relating to health care matters.
Violations of this statute are punishable by imprisonment, fines, or both. • The federal statute prohibiting false statements relating to health care matters, which criminalizes knowingly and willfully falsifying, concealing or covering up by any trick or device a material fact or making any materially 67 Table of Contents false, fictitious, or fraudulent statements or representations in connection with the delivery of, or payment for, health care benefits, items or services relating to health care matters.
Changes in the way the FDA regulates laboratory developed tests or the reagents, other consumables, and testing equipment we use when developing, validating, and performing our tests could result in delay or additional expense in bringing our tests to market or performing such tests for our customers.
Changes in the way the FDA regulates the reagents, other consumables, and testing equipment we use when developing, validating, and performing our tests could result in delay or additional expense in bringing our tests to market or performing such tests for our customers.
In addition, in a patent infringement proceeding, a court may decide that a patent of ours is invalid or unenforceable, in whole or in part, construe the patent’s claims narrowly and/or refuse to stop the other party from using the technology at issue on the grounds that our patents do not cover the technology in question, any of which may adversely affect our business.
In addition, in a patent infringement proceeding, a court may decide that a patent of ours is invalid or unenforceable, in whole or in part, construe the patent’s claims narrowly and/or refuse to stop the other party from using the technology at issue on the grounds that our patents do not cover the technology in question, 71 Table of Contents any of which may adversely affect our business.
Failure to maintain CAP accreditation could likewise have a material adverse effect on the sales of our tests and the results of our operations. 59 Table of Contents Our laboratory is located in Salt Lake City, Utah.
Failure to maintain CAP accreditation could likewise have a material adverse effect on the sales of our tests and the results of our operations. 61 Table of Contents Our laboratory is located in Salt Lake City, Utah.
Should we not be able to perform these studies, or should their results not provide clinically meaningful data and value for clinicians, or if our results are unfavorable, adoption of our tests could be impaired. 46 Table of Contents The administration of clinical and economic utility studies is expensive and demands significant attention from certain members of our management team.
Should we not be able to perform these studies, or should their results not provide clinically meaningful data and value for clinicians, or if our results are unfavorable, adoption of our tests could be impaired. The administration of clinical and economic utility studies is expensive and demands significant attention from certain members of our management team.
If a third-party payer successfully challenges that payment for prior testing was in breach of contract or otherwise contrary to policy or law, they may recoup payment, which amounts could be significant and would impact our operating results and financial 54 Table of Contents condition, and it may decrease reimbursement going forward.
If a third-party payer successfully challenges that payment for prior testing was in breach of contract or otherwise contrary to policy or law, they may recoup payment, which amounts could be significant and would impact our operating results and financial condition, and it may decrease reimbursement going forward.
We may also become subject to legal claims arising from such limitations, errors or inaccuracies. 45 Table of Contents The PreTRM test uses, and our future tests will use, a number of complex and sophisticated proteomic and bioinformatics processes and advanced mass spectrometry techniques, which are highly sensitive to external factors.
We may also become subject to legal claims arising from such limitations, errors or inaccuracies. The PreTRM test uses, and our future tests will use, a number of complex and sophisticated proteomic and bioinformatics processes and advanced mass spectrometry techniques, which are highly sensitive to external factors.
In addition, any manufacturing or design defects in our products could lead to product recalls, either voluntary or as required by government authorities, which could result in the removal of a product from the market. A product liability or professional liability claim could result in substantial damages and be costly and time-consuming for us to defend.
In addition, any manufacturing or design 48 Table of Contents defects in our products could lead to product recalls, either voluntary or as required by government authorities, which could result in the removal of a product from the market. A product liability or professional liability claim could result in substantial damages and be costly and time-consuming for us to defend.
We cannot predict what impact these decisions may have on our ability to obtain or enforce patents relating to diagnostic methods in the future. We believe that no consistent policy regarding the scope of valid patent claims in these fields has emerged to date in the United States.
We cannot predict what 69 Table of Contents impact these decisions may have on our ability to obtain or enforce patents relating to diagnostic methods in the future. We believe that no consistent policy regarding the scope of valid patent claims in these fields has emerged to date in the United States.
Changes in economic conditions, supply chain constraints, logistics challenges, labor shortages, global conflicts, and steps taken by governments and central banks, particularly in response to public health threats as well as other stimulus and spending programs, have 52 Table of Contents led to higher inflation, which is likely, in turn, to lead to an increase in costs and may cause changes in fiscal and monetary policy, including increased interest rates.
Changes in economic conditions, supply chain constraints, logistics challenges, labor shortages, global conflicts, and steps taken by governments and central banks, particularly in response to public health threats as well as other stimulus and spending programs, have led to higher inflation, which is likely, in turn, to lead to an increase in costs and may cause changes in fiscal and monetary policy, including increased interest rates.
Many of the companies against which we are competing or may compete against in the future have significantly greater financial resources and expertise in research and development, manufacturing, and commercialization. Mergers and acquisitions in our industry may result in even more resources being concentrated among a smaller number of our competitors.
Many of the companies against which we are competing or may compete against in the future have significantly greater financial resources and expertise in research and 47 Table of Contents development, manufacturing, and commercialization. Mergers and acquisitions in our industry may result in even more resources being concentrated among a smaller number of our competitors.
In addition, we may be subject to liability for errors in, a misunderstanding of, or inappropriate reliance upon, the information we provide, or for failure to provide such information, in connection with our marketing and promotional activities or as part of the results generated by the PreTRM test and other future tests.
In addition, we may be subject to liability for errors in, a misunderstanding of, or inappropriate reliance upon, the information we provide, or for failure to provide such information, in connection with our marketing and promotional activities or as part of the results generated by the PreTRM test and other future products or services.
Our failure to maintain a continued and cost-effective supply of high-quality components could materially and adversely harm our business, operating results, and financial condition. 49 Table of Contents If we are unable to successfully scale our operations, or attract and retain highly skilled employees, our business could suffer.
Our failure to maintain a continued and cost-effective supply of high-quality components could materially and adversely harm our business, operating results, and financial condition. If we are unable to successfully scale our operations, or attract and retain highly skilled employees, our business could suffer.
This type of litigation, if instituted, could result in substantial costs and a diversion of management’s attention and resources. We do not intend to pay dividends on our Class A common stock, so any returns will be limited to the value of our Class A common stock.
This type of litigation, if instituted, could result in substantial costs and a diversion of management’s attention and resources. 74 Table of Contents We do not intend to pay dividends on our Class A common stock, so any returns will be limited to the value of our Class A common stock.
If we are unable to obtain, maintain, and enforce 66 Table of Contents intellectual property protection covering our current and future tests or technology, others may be able to make, use or sell tests or technology that are substantially the same as ours without incurring the sizeable development costs that we have incurred, which would adversely affect our ability to compete in the market.
If we are unable to obtain, maintain, and enforce intellectual property protection covering our current and future tests or technology, others may be able to make, use or sell tests or technology that are substantially the same as ours without incurring the sizeable development costs that we have incurred, which would adversely affect our ability to compete in the market.
The FCA also prohibits the knowing retention of overpayments (sometimes referred to as “reverse false claims”) and permits private individuals acting as “whistleblowers” to bring actions on behalf of the federal government alleging violations of the FCA and to share in any monetary recovery.
The FCA also prohibits the knowing retention of overpayments (sometimes referred to as “reverse false claims”) and permits private individuals acting as “whistleblowers” (also referred to as qui tam relators) to bring actions on behalf of the federal government alleging violations of the FCA and to share in any monetary recovery.
It is possible that we will not generate sufficient revenue from the sale of our products to cover our costs, including research and development expenses related to furthering our product pipeline, and achieve or sustain profitability. A significant element of our business strategy is to increase and maintain our in-network coverage with third-party payers.
It is possible that we will not generate sufficient revenue from the sales of any of our products and services to cover our costs, including research and development expenses related to furthering our product pipeline, and achieve or sustain profitability. A significant element of our business strategy is to increase and maintain our in-network coverage with third-party payers.
In addition, any such action, particularly to the extent we were found to be guilty of violations or otherwise liable for damages, would damage our reputation and adversely affect our business, financial condition, and results of operations.
In addition, any such action, particularly to the extent we were found to be 65 Table of Contents guilty of violations or otherwise liable for damages, would damage our reputation and adversely affect our business, financial condition, and results of operations.
Substantially all of our shares of Class A common stock and Class B common stock are eligible for public sale, if they are registered under the Securities Act, or if they qualify for an exemption from registration under the Securities Act, including under Rules 144 or 701.
Substantially all of our shares of Class A common stock and Class B common stock are eligible for public sale, if they are registered under the Securities Act of 1933, as amended, or the Securities Act, or if they qualify for an exemption from registration under the Securities Act, including under Rules 144 or 701.
CMS has the authority to impose a wide range of sanctions, including revocation of the CLIA certification, directed plans of correction, onsite monitoring, civil monetary penalties, civil injunctive suits, a bar on the ownership or operation of a CLIA-certified laboratory by any owners or operators of the deficient laboratory, and many others, depending on the nature of the CLIA violation.
In the event of any CLIA-related violations, CMS has the authority to impose a wide range of sanctions, including revocation of the CLIA certification, directed plans of correction, onsite monitoring, civil monetary penalties, civil injunctive suits, a bar on the ownership or operation of a CLIA-certified laboratory by any owners or operators of the deficient laboratory, and many others, depending on the nature of the CLIA violation.
Although members of our management team have considerable industry experience, successfully commercializing the PreTRM test will require adapting our sales, marketing, distribution, and customer service and support capabilities to current and ever-changing market conditions.
Although members of our management team have considerable industry experience, successfully commercializing the PreTRM test will require adapting our sales, marketing, distribution, and customer service and support capabilities to current and ever-changing 46 Table of Contents market conditions.
If we encounter such difficulties or we are otherwise precluded from effectively protecting our intellectual property rights in foreign jurisdictions, our business prospects could be substantially harmed, and we may not pursue or obtain patent protection in all major markets; and • we may not develop additional tests or technology that are patentable.
If we encounter such difficulties or we are otherwise precluded from effectively protecting our intellectual property rights in foreign jurisdictions, our business prospects could be substantially harmed, and we may not pursue or obtain patent protection in all major markets; and 70 Table of Contents • we may not develop additional tests or technology that are patentable.
However, third-party payers, such as commercial insurers and government health care programs, may decide not to reimburse for the PreTRM test, may not reimburse for uses of the PreTRM test for the pregnant patient population, or may set the amounts of such reimbursements at prices that do not allow us to cover our expenses.
However, third-party payers, such as commercial insurers and government health care programs, may decide not to reimburse for the PreTRM test or other tests we may develop, may not reimburse for uses of the PreTRM test or our other tests for the pregnant patient population, or may set the amounts of such reimbursements at prices that do not allow us to cover our expenses.
For example, health care providers may be reluctant to order our tests or other products due to the possibility that a patient may incur substantial costs if coverage or reimbursement is unavailable or insufficient.
For example, health care providers may be reluctant to order our tests or other products due to the possibility that a patient may incur substantial costs if third-party payer coverage or reimbursement is unavailable or insufficient.
Performing additional, new clinical studies and trials in order to obtain product approval from the FDA, if any were to become necessary, would take a significant amount of time and would substantially 60 Table of Contents delay our ability to commercialize the PreTRM test, all of which would adversely impact our business.
Performing additional, new clinical studies and trials in order to obtain product approval from the FDA, if any were to become necessary, would take a significant amount of time and would substantially delay our ability to commercialize the PreTRM test, any or all of which would adversely impact our business.
If Congress were to pass the VALID Act or any other legislation applicable to the FDA’s regulation of LDTs, or if the FDA were to promulgate new regulations for such products through notice-and-comment rulemaking, we will likely be subject to increased regulatory burdens such as registration and listing requirements, adverse event reporting requirements, and quality control requirements.
If Congress were to pass the VALID Act or any other legislation applicable to the FDA’s regulation of LDTs, or if the FDA were to successfully promulgate new regulations for such products through the ongoing notice-and-comment rulemaking or a future rulemaking proceeding, we will likely be subject to increased regulatory burdens such as registration and listing requirements, adverse event reporting requirements, and quality control requirements.
We also make assumptions, estimations, calculations, and conclusions as part of our analyses of data, and we may not have received or have had the opportunity to fully and carefully evaluate all data.
We also make assumptions, estimations, 49 Table of Contents calculations, and conclusions as part of our analyses of data, and we may not have received or have had the opportunity to fully and carefully evaluate all data.
State enforcement agencies may assert that a claim including items or services resulting from a violation of the state physician self-referral law constitutes a false or fraudulent claim for purposes of any state false claims statute. • The federal False Claims Act, which imposes civil liability on any person or entity that, among other things, knowingly presents, or causes to be presented, to the federal government, claims for payment that are false or fraudulent; and/or knowingly makes, uses, or causes to be made or used, a false statement of record material to a false or fraudulent claim or obligation to pay or transmit money or property to the federal government.
Federal and state enforcement agencies may assert that a claim including items or services resulting from a violation of the Stark Law or state law equivalent constitutes a false or fraudulent claim for purposes of the federal FCA or any state false claims statute. • The federal False Claims Act imposes civil liability on any person or entity that, among other things, knowingly presents, or causes to be presented, to the federal government, claims for payment that are false or fraudulent; and/or knowingly makes, uses, or causes to be made or used, a false statement or record material to a false or fraudulent claim or obligation to pay or transmit money or property to the federal government.
EGCs are permitted to implement many of 75 Table of Contents these requirements over a longer period, which may be up to five years from the pricing of our IPO.
EGCs are permitted to implement many of these requirements over a longer period, which may be up to five years from the pricing of our IPO.
We have a significant amount of net operating loss, or NOL, carryforwards that can be used to offset potential future taxable income and related income taxes. As of December 31, 2022, we had federal NOL carryforwards of approximately $187.9 million, of which, $70.3 million, if not utilized, begin to expire in 2028.
We have a significant amount of net operating loss, or NOL, carryforwards that can be used to offset potential future taxable income and related income taxes. As of December 31, 2023, we had federal NOL carryforwards of approximately $211.6 million, of which, $70.3 million, if not utilized, begin to expire in 2028.
In addition, there has been a recent trend of increased U.S. federal and state regulation of payments made to physicians, which are governed by laws and regulations including the Stark Law, the federal Anti-Kickback Statute, the Physician Payments Sunshine Act, the Eliminating Kickbacks in Recovery Act of 2018, and the federal False Claims Act, as well as state equivalents of such laws. 58 Table of Contents While we have implemented and strive to continuously develop and improve compliance policies and procedures intended to address compliance with applicable federal and state laws and regulations, including applicable fraud and abuse laws and regulations such as those described in this risk factor, the evolving commercial compliance environment and the need to build and maintain robust and scalable systems to comply with regulations in multiple jurisdictions with different compliance and reporting requirements increases the possibility that we could inadvertently violate one or more of these requirements.
In addition, there has been a longstanding trend of heightened U.S. federal and state scrutiny of payments made to physicians and other referral sources, which are governed by various state and federal laws and regulations including the Stark Law, the federal Anti-Kickback Statute, the Physician Payments Sunshine Act, the Eliminating Kickbacks in Recovery Act of 2018, and the federal False Claims Act, as well as state equivalents of such laws. 60 Table of Contents While we have implemented and strive to continuously develop and improve compliance policies and procedures intended to address compliance with applicable federal and state laws and regulations, including applicable fraud and abuse laws and regulations such as those described in this risk factor, the evolving compliance environment and the need to build and maintain robust and scalable systems to comply with regulations in multiple jurisdictions with different compliance and reporting requirements increases the possibility that we could inadvertently violate one or more of these requirements.
To date, we have financed our operations primarily through private placements of our equity and debt securities, bank loans and the sale and issuance of Class A common stock in our initial public offering (“IPO”). Our net loss for the years ended December 31, 2022 and 2021 was $44.2 million and $35.0 million, respectively.
To date, we have financed our operations primarily through private placements of our equity and debt securities, bank loans and the sale and issuance of Class A common stock in our initial public offering (“IPO”), which was completed in July 2021. Our net loss for the years ended December 31, 2023 and 2022 was $36.2 million and $44.2 million, respectively.
We may remain an 72 Table of Contents EGC until the earliest to occur of: (1) the last day of the fiscal year in which we have at least $1.235 billion in annual revenue; (2) the last day of the fiscal year in which we are deemed to be a “large accelerated filer,” as defined in Rule 12b-2 under the Exchange Act, which would occur if the market value of our common stock held by non-affiliates exceeded $700.0 million as of the last business day of the second fiscal quarter of such year; (3) the date on which we have issued more than $1.0 billion in non-convertible debt securities during the prior three-year period; and (4) December 31, 2026.
We may remain an EGC until the earliest to occur of: (1) the last day of the fiscal year in which we have at least $1.235 billion in annual revenue; (2) the last day of the fiscal year in which we are deemed to be a “large accelerated filer,” as defined in Rule 12b-2 under the Exchange Act, which would occur if the market value of our common stock held by non-affiliates exceeded $700.0 million as of the last business day of the second fiscal quarter of such year; (3) the date on which we have issued more than $1.0 billion in non-convertible debt securities during the prior three-year period; and (4) December 31, 2026. 75 Table of Contents We are also a smaller reporting company, meaning that the market value of our Class A common stock held by non-affiliates is less than $700.0 million and our annual revenue is less than $100.0 million during the most recently completed fiscal year.
Any natural or other disasters, such as re-emergence of COVID-19 pandemic, acts of war or terrorism, shipping embargoes, labor unrest or political instability or similar events at our third-party suppliers’ facilities that cause a loss of manufacturing capacity or a reduction in the quality of the items manufactured would heighten the risks that we face.
Any natural or other disasters, pandemics, acts of war or terrorism, shipping embargoes, labor unrest or political instability or similar events at our third-party suppliers’ facilities that cause a loss of manufacturing capacity or a reduction in the quality of the items manufactured would heighten the risks that we face.
Complying with these laws could cause us to incur substantial costs or require us to change our business practices and compliance procedures in a manner adverse to our business, operating results, and financial condition. 63 Table of Contents Any failure or perceived failure by us or any third-party collaborators, service providers, contractors or consultants to comply with privacy, confidentiality, data security or similar obligations, or any data security incidents or other security breaches that result in the accidental, unlawful or unauthorized access to, use of, release of, or transfer of sensitive information, including personally identifiable information, or PHI, may result in negative publicity, harm to our reputation, governmental investigations, enforcement actions, regulatory fines, litigation or public statements against us, could cause third parties to lose trust in us or could result in claims by third parties, including class action lawsuits, any of which could have a material adverse effect on our reputation, business, financial condition or results of operations.
Any failure or perceived failure by us or any third-party collaborators, service providers, contractors or consultants to comply with privacy, confidentiality, data security or similar obligations, or any data security incidents or other security breaches that result in the accidental, unlawful or unauthorized access to, use of, release of, or transfer of sensitive information, including personally identifiable information, or PHI, may result in negative publicity, harm to our reputation, governmental investigations, enforcement actions, regulatory fines, litigation or public statements against us, could cause third parties to lose trust in us or could result in claims by third parties, including class action lawsuits, any of which could have a material adverse effect on our reputation, business, financial condition or results of operations.
If our CLIA-certified laboratory facility becomes inoperable, we will be unable to perform our tests and our business will be harmed. We currently operate a CLIA-certified laboratory facility in Salt Lake City, Utah, which processes the PreTRM test that represents the source of substantially all of our revenues.
If our CLIA-certified laboratory facility becomes inoperable, we will be unable to perform our tests and our business will be harmed. We currently operate a CLIA-certified laboratory facility in Salt Lake City, Utah, which processes the PreTRM test and likely any other future test, if approved, that is or will be the source of substantially all of our revenues.
Although we have not historically submitted claims to Medicare or other state and federal health care programs, the rates paid by these programs have been the subject of controversy in the industry, including a lawsuit by the American Clinical Laboratory Association, and it is unclear whether and to what extent the new rates may change.
The rates paid by Medicare and other state and federal health care programs have been the subject of controversy in the industry, including a lawsuit by the American Clinical Laboratory Association, and it is unclear whether and to what extent the new rates may change.
The federal government may elect or decline to intervene in such matters, but if the government declines intervention, the whistleblower may still proceed with the litigation on the government’s behalf. • The federal Civil Monetary Penalties Law, or CMP Law, which, unless an exception applies, prohibits, among other things, (1) the offering or transfer of remuneration to a beneficiary of Medicare or a state health care program, if the person knows or should know it is likely to influence the beneficiary’s selection of a particular provider, practitioner, or supplier of services reimbursable by Medicare or a state health care program; (2) employing or contracting with an individual or entity that the provider knows or should know is excluded from 64 Table of Contents participation in a federal health care program; (3) billing for services requested by an unlicensed physician or an excluded provider; and (4) billing for medically unnecessary services. • The federal health care fraud statute, which imposes criminal liability for knowingly and willfully executing or attempting to execute a scheme to defraud any health care benefit program (which includes commercial insurers).
The federal government may elect or decline to intervene in such matters, but if the government declines intervention, the whistleblower may still proceed with the litigation on the government’s behalf. • The federal Civil Monetary Penalties Law, or CMP Law, which, unless an exception applies, prohibits, among other things, (1) the offering or transfer of remuneration to a beneficiary of Medicare or a state health care program, if the person knows or should know it is likely to influence the beneficiary’s selection of a particular provider, practitioner, or supplier of services reimbursable by Medicare or a state health care program; (2) employing or contracting with an individual or entity that the provider knows or should know is excluded from participation in a federal health care program; (3) billing for services requested by an unlicensed physician or an excluded provider; and (4) billing for medically unnecessary services.
We cannot predict the full extent of potential delays or impacts on our business, our clinical trials, health care systems or the global economy as a whole. We cannot ensure that our employees will fully adhere to compliance policies and procedures.
The future impact of a public health threat is highly uncertain and subject to change. We cannot predict the full extent of potential delays or impacts on our business, our clinical trials, health care systems or the global economy as a whole. We cannot ensure that our employees will fully adhere to compliance policies and procedures.
Congress or the USPTO may change the standards of patentability, scope and validity of patents within the life sciences technology and any such changes, or any similar adverse changes in the patent laws of other jurisdictions, could have a negative impact on our business, financial condition, prospects, and results of operations.
Congress or the USPTO may change the standards of patentability, scope and validity of patents within the life sciences technology and any such changes, or any similar adverse changes in the patent laws of other jurisdictions, could have a negative impact on our business, financial condition, prospects, and results of operations. 72 Table of Contents We may be subject to claims challenging the inventorship of our patents and other intellectual property.
Our ability to increase sales of the PreTRM test and establish greater levels of adoption and reimbursement for the PreTRM test is uncertain for many reasons, including, among others: • we may be unable to demonstrate to clinics, clinicians, physicians, payers, and patients that the PreTRM test is superior to alternatives with respect to value, convenience, accuracy, scope of coverage, and other factors; 42 Table of Contents • third-party payers may set the amounts of reimbursement at prices that reduce our profit margins or do not allow us to cover our expenses; • we may not be able to maintain and grow effective sales and marketing capabilities; • our sales and marketing efforts may fail to effectively reach customers or communicate the benefits of the PreTRM test; • superior alternatives to the PreTRM test may be developed and commercialized and we may not be able to compete against these alternatives; • we may face competitive pressures; • we may experience supply constraints, including due to the failure of our key suppliers to provide required sequencing instruments and reagents; • we may encounter difficulties with transportation logistics and regulations associated with shipping blood specimens, including infrastructure conditions and transportation delays; • U.S. or foreign regulatory or legislative bodies may adopt new regulations or policies or take other actions that impose significant restrictions on our ability to market our products; • we may be unable to compete successfully with respect to our current or future products or services, as a result of which we may not be able to increase or sustain our revenues or achieve profitability; and • we may not be able to protect our intellectual property position.
Our ability to increase sales of the PreTRM test and establish greater levels of adoption and reimbursement for the PreTRM test is uncertain for many reasons, including, among others: • we may be unable to demonstrate to clinics, clinicians, physicians, payers, and patients that the PreTRM test is superior to alternatives with respect to value, convenience, accuracy, scope of coverage, and other factors; • third-party payers may set the amounts of reimbursement at prices that reduce our profit margins or do not allow us to cover our expenses; • we may not be able to maintain and grow effective sales and marketing capabilities; • our sales and marketing efforts may fail to effectively reach customers or communicate the benefits of the PreTRM test; • superior alternatives to the PreTRM test may be developed and commercialized and we may not be able to compete against these alternatives; • we may face competitive pressures; • we may experience supply constraints, including due to the failure of our key suppliers to provide laboratory supplies, instruments, and reagents; • we may encounter difficulties with transportation logistics, regulations and quality associated with shipping blood specimens, including infrastructure conditions, transportation delays and temperature stress; • we may encounter laboratory process difficulties that impact the quality and timeliness of reporting of test results; • U.S. or foreign regulatory or legislative bodies may adopt new regulations or policies or take other actions that impose significant restrictions on, or other challenges to, our ability to sell or market our products; • news media organizations, medical societies, or industry groups may issue publications, guidance, or analyses that negatively impact patients’ and/or health care providers’ perception or utilization of the PreTRM test (or certain types of prenatal testing and related health care services, generally) and thereby negatively impact our ability to sell or market the PreTRM test; • we may be unable to compete successfully with respect to our current or future products or services, as a result of which we may not be able to increase or sustain our revenues or achieve profitability; and • we may not be able to protect our intellectual property position.
We cannot predict if, when or where a third party may infringe our intellectual property rights. To counter infringement, we may be required to file infringement lawsuits, which can be expensive and time consuming.
Our intellectual property may be infringed by a third party. Third parties may infringe one or more of our patents, trademarks or other intellectual property rights. We cannot predict if, when or where a third party may infringe our intellectual property rights. To counter infringement, we may be required to file infringement lawsuits, which can be expensive and time consuming.
In addition, the stock market in general, and the market for diagnostics companies in particular, has experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of 71 Table of Contents the companies, including as a result of the COVID-19 pandemic and inflationary pressures.
In addition, the stock market in general, and the market for diagnostics companies in particular, has experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of the companies, including as a result of inflationary pressures, supply chain disruptions and geopolitical instability.
Other factors in achieving commercial market acceptance include: • our ability to market and increase awareness of the capabilities of the PreTRM test; • the ability of the PreTRM test to demonstrate comparable performance in intended use applications broadly in the hands of customers; • our customers’ willingness to adopt new products and workflows; • the PreTRM test’s ease of use and whether it reliably provides advantages over other alternative technologies; • the rate of adoption of the PreTRM test by patients, physicians, payers and the medical community at large; • the prices we charge for the PreTRM test; • our ability to develop new products and solutions for customers; • whether competitors develop and commercialize products that perform similar functions as the PreTRM test; and • the impact of our investments in product innovation and commercial growth. 43 Table of Contents We cannot assure that we will be successful in addressing each of these criteria or other criteria that might affect the market acceptance of any products we commercialize, particularly the PreTRM test.
Other factors in achieving commercial market acceptance include: • our ability to market and increase awareness of the capabilities of the PreTRM test; • the ability of the PreTRM test to demonstrate comparable performance in intended use applications broadly in the hands of customers; • our customers’ willingness to adopt new products and workflows; • the PreTRM test’s ease of use and whether it reliably provides advantages over other alternative technologies; • the rate of adoption of the PreTRM test by patients, physicians, payers and the medical community at large; • medical society guidelines supporting the use of the PreTRM test and clinical interventions based on it; • the prices we charge for the PreTRM test; • our ability to develop new products and solutions for customers; • whether competitors develop and commercialize products that perform similar functions as the PreTRM test; and • the impact of our investments in product innovation and commercial growth.
The FDA may undertake rulemaking to regulate Laboratory Developed Tests or Congress may reform the current legal requirements applicable to LDTs, in which case we may become subject to extensive regulatory requirements and may be required to conduct additional clinical trials prior to continuing to sell our existing tests or launching any other tests we may develop, which may increase the cost of conducting, or otherwise harm, our business.
In either case we may become subject to extensive regulatory requirements and may be required to conduct additional clinical trials prior to continuing to sell our existing tests or launching any other tests we may develop, which may increase the cost of conducting, or otherwise harm, our business.
We currently receive and expect to continue to receive substantially all of our revenues from the sales of the PreTRM test for the foreseeable future.
We currently receive and expect to continue to receive substantially all of our revenues from the sales of the PreTRM test in the near term.
Our business could be adversely affected by the effects of other future public health threats in regions where we, or third parties on which we rely, have significant business operations.
Public health threats, such as COVID-19, could materially affect our operations, as well as the business or operations of third parties with whom we conduct business. Our business could be adversely affected by the effects of other future public health threats in regions where we, or third parties on which we rely, have significant business operations.
Approximately $117.6 million of these federal NOLs can be carried forward indefinitely.
Approximately $141.3 million of these federal NOLs can be carried forward indefinitely.
Any liability from failure to comply with the requirements of these laws could adversely affect our financial condition. All U.S. states have implemented data breach notification laws that overlap and often conflict with HIPAA and apply simultaneously. We must comply with all of these laws simultaneously in the event of a data breach which is a complicated and expensive proposition.
All U.S. states have implemented data breach notification laws that overlap and often conflict with HIPAA and apply simultaneously. We must comply with all of these laws simultaneously in the event of a data breach which is a complicated and expensive proposition.
In the years following the initial outbreak, numerous state and local jurisdictions, including the jurisdictions where our headquarters and laboratory are located, imposed quarantines, shelter-in-place orders, executive orders, and similar government orders for their residents to control the spread of COVID-19.
In the years following the initial outbreak, numerous state 53 Table of Contents and local jurisdictions, including the jurisdictions where our headquarters and laboratory are located, imposed quarantines, shelter-in-place orders, executive orders, and similar government orders for their residents to control the spread of COVID-19. A new serious public health threat could result in similar restrictions being imposed.
If our market share for the PreTRM test fails to grow or grows more slowly than expected, our business, operating results, and financial condition would be adversely affected. Our success depends on broad scientific and market acceptance of the PreTRM test, which we may fail to achieve.
If our market share for the PreTRM test fails to grow or grows more slowly than expected, or if our efforts to develop new products and services in the future do not succeed, our business, operating results, and financial condition would be adversely affected. 45 Table of Contents Our success depends on broad scientific and market acceptance of the PreTRM test and our other pipeline products and services, which we may fail to achieve.
Any failure or perceived failure by us to comply with federal or state laws or regulations, our internal policies and procedures or our contracts governing our use and disclosures of 61 Table of Contents personal information could result in negative publicity, government investigations and enforcement actions, claims by third parties, and damage to our reputation, any of which could have a material adverse effect on our operations, financial performance, and business.
Any failure or perceived failure by us to comply with federal or state laws or regulations, our internal policies and procedures, or our contracts governing our use and disclosures of personal information could result in negative publicity, government investigations and enforcement actions, claims by third parties, and damage to our reputation, any of which could have a material adverse effect on our operations, financial performance, and business. 64 Table of Contents As our operations and business grow, we may become subject to or affected by new or additional privacy and security laws and regulations and face increased scrutiny or attention from regulatory authorities.

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Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeWe may, from time to time, be involved in various legal proceedings arising from the normal course of business activities, and an unfavorable resolution of any of these matters could materially affect our future results of operations, cash flows, or financial position. Item 4. Mine Safety Disclosures None. 76 Table of Contents PART II
Biggest changeWe may, from time to time, be involved in various legal proceedings arising from the normal course of business activities, and an unfavorable resolution of any of these matters could materially affect our future results of operations, cash flows, or financial position. Item 4. Mine Safety Disclosures None. 81 Table of Contents PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeOur Class B common stock is not listed on any stock exchange nor traded on any public market. Holders of Record As of March 17, 2023, we had 168 stockholders of record of our Class A common stock.
Biggest changeOur Class B common stock is not listed on any stock exchange nor traded on any public market. Holders of Record As of March 15, 2024, we had 120 stockholders of record of our Class A common stock.
Stockholders of record are defined as those stockholders whose shares are registered in their names in our stock records and do not include beneficial owners of common stock whose shares are held in the names of brokers, dealers or clearing agencies. As of March 17, 2023, we had two stockholders of record of our Class B common stock.
Stockholders of record are defined as those stockholders whose shares are registered in their names in our stock records and do not include beneficial owners of common stock whose shares are held in the names of brokers, dealers or clearing agencies. As of March 15, 2024, we had two stockholders of record of our Class B common stock.
Removed
Issuer Purchases of Equity Securities None. Use of Proceeds from the Initial Public Offering On July 19, 2021, we completed our IPO, which resulted in the sale of 4,687,500 shares of our Class A common stock, at a price to the public of $16.00 per share.
Added
Issuer Purchases of Equity Securities None. Item 6. [ Reserved ]
Removed
The offer and sale of the shares in our IPO was made pursuant to the Registration Statement on Form S-1 (File No. 333-257038) which was declared effective by the SEC. Shares of our Class A common stock began trading on The Nasdaq Global Market on July 15, 2021. The offering closed on July 19, 2021.
Removed
The underwriters of our IPO were Citigroup Global Markets Inc., Cowen and Company, LLC and William Blair & Company, L.L.C. We paid to the underwriters of our initial public offering an underwriting discount totaling approximately $5.3 million. In addition, we incurred expenses of approximately $3.1 million.
Removed
We received net proceeds, after deducting underwriting discounts and offering expenses, of approximately $66.6 million. No offering expenses were paid directly or indirectly to any of our directors or officers (or their associates) or person owning 10% or more of any class of our equity securities or to any other affiliates.
Removed
There has been no material change in the planned use of proceeds from our IPO from those that were described in our final prospectus dated as of July 14, 2021 and filed with the SEC pursuant to Rule 424(b) under the Securities Act on July 16, 2021. Issuer Purchases of Equity Securities None.
Removed
Item 6. [ Reserved ] 77 Table of Contents

Item 7. Management's Discussion & Analysis

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

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Biggest changeIf COVID-19 re-emerges as a serious public health threat, or if another serious pathogen appears, then we may experience additional disruptions that could severely impact our business, preclinical studies, and clinical trials, including potential delays. 79 Table of Contents Factors Affecting Our Performance We believe there are several important factors that have impacted, and that we expect will continue to impact, our operating performance and results of operations, including: • our ability to furt her increase the use and adoption of the PreTRM test; • our ability to develop and successfully commercialize new products and services in the future; • the continued development of the market for proteomics and bioinformatics; • our ability to secure payer and health system contracts that result in significant revenues or to access additional funds; • raising substantial additional capital to continue operations and execute on our business plan, until such time as we can generate significant revenue from the sales of our products, if ever; • obtaining and maintaining intellectual property protection for our technology and products; and • other factors described in the “Risk Factors” section and elsewhere in this report.
Biggest changeFactors Affecting Our Performance We believe there are several important factors that have impacted, and that we expect will continue to impact, our operating performance and results of operations, including: • our ability to furt her increase the use and adoption of the PreTRM test; • our ability to develop and successfully commercialize new products and services in the future; • the continued development of the market for proteomics and bioinformatics; • our ability to secure payer and health system contracts that result in significant revenues or to access additional funds; • raising substantial additional capital to continue operations and execute on our business plan, until such time as we can generate significant revenue from the sales of our products, if ever; • obtaining and maintaining intellectual property protection for our technology and products; and • other factors described in the “Risk Factors” section and elsewhere in this report. 84 Table of Contents Key Components of Our Results of Operations Revenues Substantially all of our revenue in the near term is expected to come from sales of the PreTRM test.
We will continue to use judgment in evaluating the expected volatility, expected terms, and interest rates utilized for out stock-based compensation expense calculations on a prospective basis. Emerging Growth Company and Smaller Reporting Company Status We are an emerging growth company, or EGC, as defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act.
We will continue to use judgment in evaluating the expected volatility, expected terms, and interest rates utilized for our stock-based compensation expense calculations on a prospective basis. Emerging Growth Company and Smaller Reporting Company Status We are an emerging growth company, or EGC, as defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act.
If we are unable to achieve significant revenues or raise additional funding, when needed, we may not be able to continue the development or commercialization of our diagnostic products and could be required to delay, scale back, or abandon some or all of our development programs and other operations.
If we are unable to achieve significant revenues or raise additional funding, when needed, we may not be able to continue the development or commercialization of our products and services and could be required to delay, scale back, or abandon some or all of our development programs and other operations.
Our future funding requirements will depend on many factors, including the following: • the timing, receipt, and amount of sales from the PreTRM test; • the cost and timing of establishing sales, marketing, and other commercialization capabilities in the United States and abroad; • our ability to develop and commercialize other products; • the terms and timing of any collaborative, licensing, and other arrangements that we may establish; • the cost, timing, and outcomes of regulatory approvals; • the scope, rate of progress, results, and cost of our clinical studies, and other related activities; • the cost of preparing, filing, prosecuting, defending, and enforcing any patent claims and other intellectual property rights; • the extent to which we acquire or invest in businesses, products or technologies, although we currently have no commitments or agreements relating to any of these types of transactions; • partnerships and other strategic options for our product and other product candidates; and • other factors described in the “Risk Factors” section and elsewhere in this report.
Our future funding requirements will depend on many factors, including the following: • the timing, receipt, and amount of sales from the PreTRM test and other pipeline products and services, if approved; 88 Table of Contents • the cost and timing of establishing sales, marketing, and other commercialization capabilities in the United States and abroad; • our ability to develop and commercialize other products and services; • the terms and timing of any collaborative, licensing, and other arrangements that we may establish; • the cost, timing, and outcomes of regulatory approvals; • the scope, rate of progress, results, and cost of our clinical, scientific, and real-world studies, and other related activities; • the cost of preparing, filing, prosecuting, defending, and enforcing any patent claims and other intellectual property rights; • the extent to which we acquire or invest in businesses, products or technologies, although we currently have no commitments or agreements relating to any of these types of transactions; • partnerships and other strategic options for our PreTRM test and other product candidates; and • other factors described in the “Risk Factors” section and elsewhere in this report.
As of December 31, 2022, we had future minimum lease payments of $3.1 million, with $1.1 million payable within 12 months. Consulting Agreement We have a consulting agreement with Blue Ox Healthcare Partners, LLC, or Blue Ox, to advise us on development of strategies with the goal to obtain widespread insurance coverage for the PreTRM test.
As of December 31, 2023, we had future minimum lease payments of $2.0 million, with $1.1 million payable within 12 months. Consulting Agreement We have a consulting agreement with Blue Ox Healthcare Partners, LLC, or Blue Ox, to advise us on development of strategies with the goal to obtain widespread insurance coverage for the PreTRM test.
Our stock-based compensation costs are based upon the grant date fair value of options estimated using the Black-Scholes option pricing model. Input assumptions used in calculating the fair value of stock-based awards represent management’s estimates and involve inherent uncertainties and the application of management’s judgment.
Our stock-based compensation expenses are based upon the grant date fair value of options estimated using the Black-Scholes option pricing model. Input assumptions used in calculating the fair value of stock-based awards represent management’s estimates and involve inherent uncertainties and 89 Table of Contents the application of management’s judgment.
We believe that our existing cash and cash equivalents will enable us to fund our operating expenses and capital expenditure requirements for at least the next 12 months. 84 Table of Contents Contractual Obligations and Commitments Our material cash requirements include the following contractual and other obligations. Leases We have lease arrangements for certain equipment and facilities.
We evaluated that our existing cash and cash equivalents will enable us to fund our operating expenses and capital expenditure requirements for at least the next 12 months. Contractual Obligations and Commitments Our material cash requirements include the following contractual and other obligations. Leases We have lease arrangements for certain equipment and facilities.
Since our inception, we have devoted the majority of our efforts and resources to performing research and development, acquiring product rights, raising capital, establishing facilities, conducting clinical trials, and establishing commercial operations to market the PreTRM test. During this fiscal year, we have incurred annual net losses.
Since our inception, we have devoted the majority of our efforts and resources to performing research and development, acquiring product rights, raising capital, establishing facilities, conducting clinical trials, and establishing commercial operations to develop and commercialize the PreTRM test. During this period, we have incurred annual net losses.
Net cash used in investing activities for the year ended December 31, 2021 was primarily due to $82.1 million in purchases of marketable securities and $1.3 million in purchases of property and equipment, partially offset by proceeds from maturities and sales of marketable securities of $0.8 million.
Net cash used in investing activities for the year ended December 31, 2022 was primarily due to $54.4 million in proceeds from maturities and sales of marketable securities, partially offset by $48.1 million in purchases of marketable securities and $0.8 million in purchases of property and equipment.
Our vision is to deliver pivotal and actionable information to pregnant women, their physicians, and health care payers to significantly improve maternal and neonatal health and to dramatically reduce health care costs.
Our vision is to deliver pivotal and actionable information to pregnant women, their physicians, and health care payers to significantly enhance a mother’s pregnancy journey, improve maternal and neonatal health, and dramatically reduce health care costs.
Future Funding Requirements We expect to incur significant additional operating losses and negative cash flows for the foreseeable future. We expect our losses in the future to arise principally as a result of our commercialization activities for the PreTRM test, and to support additional clinical studies and anticipated research and development activities.
We expect to incur significant additional operating losses and negative cash flows for the foreseeable future, principally as a result of our commercialization activities for the PreTRM test, and to support additional clinical studies, publications, and anticipated research and development of our other pipeline products and services.
These expenses include: • clinical studies; • laboratory processes; • research and bioinformatic activities; • biobanking and publication efforts; • personnel-related expenses, including salaries, payroll taxes, employee benefits, and stock-based compensation charges for employees engaged in these research and development activities; • direct clinical study expenses incurred under agreements with clinical study sites or contract research organizations; • consultants engaged in our research and development efforts; • laboratory materials and supplies; • facilities costs; and • depreciation, amortization, and other direct and allocated expenses, including rent, insurance, and other operating costs, incurred as a result of our research and development activities. 80 Table of Contents We expense all research and development costs, both internal and external, in the period in which they are incurred.
These expenses include: • clinical and real-world studies; • laboratory processes; • research and bioinformatic activities; • biobanking and publication efforts; • personnel-related expenses, including salaries, payroll taxes, employee benefits, and stock-based compensation charges for employees engaged in these research and development activities; • direct study expenses incurred under agreements with study sites or contract research organizations; • consultants engaged in our research and development efforts; • laboratory materials and supplies; • facilities costs; and • depreciation, amortization, and other direct and allocated expenses, including insurance and other operating costs, incurred as a result of our research and development activities.
The $1.3 million increase in research and bioinformatics expenses was primarily due to an increase of $0.8 million in personnel costs driven by increased average headcount, a $0.3 million increase in specimen acquisition costs related to product development, and a $0.3 million increase in stock-based compensation expense.
The $0.1 million increase in research and bioinformatics expenses was primarily due to an increase of $0.3 million in personnel costs driven by increased average headcount, partially offset by a $0.2 million decrease in specimen acquisition costs related to product development.
We have financed our operations primarily through proceeds from the sale and issuance of convertible preferred stock and convertible notes, bank loans, and the sale and issuance of Class A common stock in our IPO, which was completed in July 2021. See Note 10—Capital Structure for additional details about the IPO.
We have financed our operations primarily through proceeds from the sale and issuance of convertible preferred stock and convertible notes, bank loans, and the sale and issuance of Class A common stock in our IPO, which was completed in July 2021.
The $0.1 million decrease in laboratory operations costs was primarily due to a $0.4 million decrease in lab supplies, and a $0.1 million decrease in consulting costs, partially offset by a $0.4 million increase in personnel costs driven by increased average headcount.
The $0.1 million decrease in laboratory operations costs was primarily due to a $0.4 million decrease in personnel costs driven by decreased average headcount and a $0.3 million decrease in lab supplies, partially offset by a $0.5 million increase related to lab equipment and associated depreciation.
We have largely funded our operations with proceeds from the sale and issuance of convertible preferred stock, debt financings, bank loans, and the sale and issuance of Class A common stock in our IPO, which was completed in July 2021. See Note 10—Capital Structure for additional details about the IPO. We have incurred significant operating losses since inception.
We have largely funded our operations with proceeds from the sale and issuance of convertible preferred stock, debt financings, bank loans, and the sale and issuance of Class A common stock in our initial public offering, or IPO, which was completed in July 2021. We have incurred significant operating losses since inception.
Other Income, Net Other income, net consists of interest earned on our cash, cash equivalents, and marketable securities, and other gains and losses.
Interest Expense Interest expense represents interest incurred on our finance leases. Other Income, Net Other income, net consists of interest income and other investment income earned on our cash, cash equivalents, and marketable securities, and other gains and losses.
Our commercialization strategy includes conducting clinical trials to demonstrate the health and economic benefits of early and accurate detection of preterm birth risk coupled with well-recognized interventions in higher risk patients. Elevance Health, Inc.
Our commercialization strategy includes streamlining patient access to the test by improving specimen acquisition and transport and conducting clinical trials to demonstrate the health and economic benefits of early and accurate detection of preterm birth risk coupled with well-recognized interventions in higher risk patients.
Financing Activities Net cash provided by financing activities for the year ended December 31, 2022 was due to $0.3 million in proceeds from options exercised, partially offset by $0.3 million of finance lease principal payments.
Financing Activities Net cash provided by financing activities for the year ended December 31, 2023 was due to $1.2 million in proceeds from employee equity transactions, partially offset by $0.5 million of finance lease principal payments.
As a result, our financial statements may not be comparable to companies that comply with the new or revised accounting pronouncements as of public company effective dates and we are not required to provide auditor attestation regarding requirements of Section 404(b) of Sarbanes-Oxley. 85 Table of Contents We will remain an EGC until the earliest to occur of: (1) the last day of the fiscal year in which we have at least $1.235 billion in annual revenue; (2) the last day of the fiscal year in which we are deemed to be a “large accelerated filer,” as defined in Rule 12b-2 under the Exchange Act, which would occur if the market value of our common stock held by non-affiliates exceeded $700.0 million as of the last business day of the second fiscal quarter of such year; (3) the date on which we have issued more than $1.0 billion in non-convertible debt securities during the prior three-year period; and (4) December 31, 2026.
We will remain an EGC until the earliest to occur of: (1) the last day of the fiscal year in which we have at least $1.235 billion in annual revenue; (2) the last day of the fiscal year in which we are deemed to be a “large accelerated filer,” as defined in Rule 12b-2 under the Exchange Act, which would occur if the market value of our common stock held by non-affiliates exceeded $700.0 million as of the last business day of the second fiscal quarter of such year; (3) the date on which we have issued more than $1.0 billion in non-convertible debt securities during the prior three-year period; and (4) December 31, 2026.
If we are unable to secure payer contracts that result in significant revenues or access additional funds, we may be required to delay, scale back or abandon some, or all, of our development programs and other operations.
However, if we are unable to secure payer contracts and generate significant market adoption by providers resulting in significant revenues, or if we fail to develop and successfully market our additional tests that generate additional revenues, we may be required to delay, scale back or abandon some, or all, of our development programs and other operations.
Cash Flows The following table summarizes our cash flows for the periods indicated: Year Ended December 31, 2022 2021 (in thousands) Net cash (used in) provided by: Operating activities $ (34,610) $ (31,636) Investing activities 5,551 (82,559) Financing activities 5 159,594 Net (decrease) increase in cash and cash equivalents $ (29,054) $ 45,399 Operating Activities The net cash used in operating activities during the year ended December 31, 2022 was primarily due to a net loss of $44.2 million, partially offset by non-cash charges of $6.0 million and an increase in operating assets and liabilities of $3.6 million.
As of December 31, 2023, we had aggregate cash, cash equivalents, and available-for-sale securities of $79.9 million, and an accumulated deficit of $246.9 million. 87 Table of Contents Cash Flows The following table summarizes our cash flows for the periods indicated: Year Ended December 31, 2023 2022 (in thousands) Net cash (used in) provided by: Operating activities $ (27,188) $ (34,610) Investing activities 438 5,551 Financing activities 752 5 Net decrease in cash and cash equivalents $ (25,998) $ (29,054) Operating Activities The net cash used in operating activities during the year ended December 31, 2023 was primarily due to a net loss of $36.2 million, partially offset by non-cash charges of $5.5 million and an increase in operating assets and liabilities of $3.5 million.
The net cash used in operating activities during the year ended December 31, 2021 was primarily due to a net loss of $35.0 million, partially offset by non-cash charges of $3.4 million. 83 Table of Contents Investing Activities Net cash provided by investing activities for the year ended December 31, 2022 was primarily due to $54.4 million in proceeds from maturities and sales of marketable securities, partially offset by $48.1 million in purchases of marketable securities and $0.8 million in purchases of property and equipment.
Investing Activities Net cash provided by investing activities for the year ended December 31, 2023 was primarily due to $54.4 million in proceeds from maturities and sales of marketable securities, partially offset by $54.1 million in purchases of marketable securities.
Selling and Marketing Expenses The $4.4 million increase was due primarily to increases of $2.2 million in personnel-related costs driven by increased average headcount, $1.0 million of marketing programs and materials development, $0.7 million of travel costs driven by 82 Table of Contents increased average headcount and relaxed COVID-19 restrictions, $0.7 million of IT systems to support sales efforts, and $0.5 million of severance costs related to efforts to streamline our sales team, partially offset by a $0.8 million decrease in consulting and outside services.
Selling and Marketing Expenses The $6.4 million decrease was due primarily to decreases of $4.3 million in personnel-related costs driven by decreased average headcount, $0.8 million of travel costs driven by decreased average headcount, $0.7 million of marketing programs and materials development, $0.5 million of consulting and outside services, and $0.4 million of IT systems supporting sales efforts.
In 2021, other income, net also included periodic fair value adjustments on certain liabilities. 81 Table of Contents Results of Operations The results of operations presented below should be reviewed in conjunction with the financial statements and related notes included elsewhere in this report.
Results of Operations The results of operations presented below should be reviewed in conjunction with the financial statements and related notes included elsewhere in this report.
Critical Accounting Policies, Significant Judgments and Use of Estimates Our management’s discussion and analysis of financial condition and results of operations is based on our financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles.
As of December 31, 2023, we had future minimum payments under this agreement of $0.7 million, which is payable within 12 months. Critical Accounting Policies and Estimates Our management’s discussion and analysis of financial condition and results of operations is based on our financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles.
Comparison of the Years Ended December 31, 2022 and 2021 The following table summarizes our results of operations for the years ended December 31, 2022 and 2021: Year Ended December 31, 2022 2021 $ Change (in thousands) Revenue $ 268 $ 82 $ 186 Operating expenses: Cost of revenue 193 37 156 Research and development 14,244 11,019 3,225 Selling and marketing 14,699 10,328 4,371 General and administrative 16,784 14,093 2,691 Total operating expenses 45,920 35,477 10,443 Loss from operations (45,652) (35,395) (10,257) Interest expense (61) (746) 685 Other income, net 1,527 1,132 395 Net loss $ (44,186) $ (35,009) $ (9,177) Research and Development Expenses The following table summarizes our research and development expenses for the years ended December 31, 2022 and 2021: Year Ended December 31, 2022 2021 $ Change (in thousands) Research and development expenses: Clinical studies $ 5,818 $ 3,779 $ 2,039 Research and bioinformatics 4,312 3,031 1,281 Laboratory operations 4,114 4,209 (95) Total research and development expenses $ 14,244 $ 11,019 $ 3,225 The $3.2 million increase was due to a $2.0 million increase in clinical study costs, and a $1.3 million increase in research and bioinformatics expenses, partially offset by a $0.1 million decrease in laboratory operations costs.
Comparison of the Years Ended December 31, 2023 and 2022 The following table summarizes our results of operations for the years ended December 31, 2023 and 2022: Year Ended December 31, 2023 2022 $ Change (in thousands) Revenue $ 306 $ 268 $ 38 Operating expenses: Cost of revenue 210 193 17 Research and development 15,225 14,244 981 Selling and marketing 8,349 14,699 (6,350) General and administrative 16,343 16,784 (441) Total operating expenses 40,127 45,920 (5,793) Loss from operations (39,821) (45,652) 5,831 Interest expense (55) (61) 6 Other income, net 3,634 1,527 2,107 Net loss $ (36,242) $ (44,186) $ 7,944 86 Table of Contents Research and Development Expenses The following table summarizes our research and development expenses for the years ended December 31, 2023 and 2022: Year Ended December 31, 2023 2022 $ Change (in thousands) Research and development expenses: Clinical studies $ 6,784 $ 5,818 $ 966 Research and bioinformatics 4,412 4,312 100 Laboratory operations 4,029 4,114 (85) Total research and development expenses $ 15,225 $ 14,244 $ 981 The $1.0 million increase was due to a $1.0 million increase in clinical study costs, and a $0.1 million increase in research and bioinformatics expenses, partially offset by a $0.1 million decrease in laboratory operations costs.
The $2.0 million increase in clinical study costs was primarily due to a $0.9 million increase resulting from the increased enrollment and site setup activity in the PRIME study, a $0.8 million increase in personnel costs driven by increased average headcount, and a $0.4 million increase in stock-based compensation expense.
The $1.0 million increase in clinical study costs was primarily due to a $1.3 million increase resulting from the increased activity in the PRIME study and a $0.1 million increase in consulting costs, partially offset by a $0.5 million decrease in personnel costs driven by decreased average headcount.
Of these, it is estimated that as many as 25% are affected by various complications, including: preterm birth, preeclampsia, fetal growth restriction, stillbirth, hypertension of pregnancy, gestational diabetes, and others.
There are approximately 140 million births globally each year, and approximately 3.7 million births annually in the United States. Of these, it is estimated that as many as 30% are affected by various complications ( i.e. , a high-risk pregnancy), including: preterm birth, preeclampsia, fetal growth restriction, stillbirth, hypertension of pregnancy, gestational diabetes, and others.
Other Income, net The $0.4 million increase in other income was primarily due to a $1.1 million increase related to investment income on our marketable securities and a $0.3 million increase in interest income related to our marketable securities, partially offset by a one-time $1.1 million gain on extinguishment of the Paycheck Protection Program (“PPP”) loan that occurred in the prior year.
Other Income, net The $2.1 million increase in other income was due to a $1.2 million increase related primarily to investment income on our marketable securities and a $0.9 million increase in interest income related primarily to our marketable securities.
In the United States, there are approximately 3.7 million births annually, and 10.5% of those pregnancies result in preterm births with profound short- and long-term health consequences to the mother and baby. These health consequences are estimated to lead to associated costs of approximately $25 billion annually in the United States.
In many cases these complications have profound short- and long-term health consequences for the mother and baby. These health consequences of preterm birth alone are estimated to be approximately $25 billion annually in the United States.
Our ability to access capital when needed is not assured and, if not achieved on a timely basis, will materially harm our business, financial condition, and results of operations. Impact of COVID-19 The COVID-19 pandemic continues to evolve. While it appears its most severe effects have subsided, COVID-19 could re-emerge or new public health threats could appear.
Our ability to access capital when needed is not assured and, if not achieved on a timely basis, will materially harm our business, financial condition, and results of operations.
We believe that our method of combining the disciplines of proteomics and bioinformatics with rigorous clinical testing and economic analysis enables us to provide physicians and patients with actionable data and information designed to result in better maternal and neonatal health at lower cost.
We believe that our method of combining the disciplines of proteomics and bioinformatics with rigorous clinical testing, data, and economic analysis enables us to 82 Table of Contents provide physicians, patients, and consumers with personally insightful, clinically meaningful, and economically impactful information designed to improve the pregnancy experience and outcomes for mothers and babies.
We expect costs of revenue will generally move in line with the sales of the PreTRM test. Research and Development Expenses Research and development expenses consist of costs incurred for our research activities and development of our product candidates.
Research and Development Expenses Research and development expenses consist of costs incurred for our research activities and development of our product candidates.
By incorporating our proprietary technology platform into our rigorous data-driven development process, we have created a differentiated approach for effectively addressing major conditions of pregnancy. We envision that our comprehensive approach will enable us to fully characterize one of the most important periods in the lives of women and children, and will help to improve their well-being.
We envision that our comprehensive approach will enable us to fully characterize one of the most important periods in the lives of women and their babies, and will help to improve their well-being. We are actively discovering and developing several additional biomarker tests to predict other specific major conditions of pregnancy, such as a pregnancy risk prediction panel test.
General and Administrative Expenses The $2.7 million increase was due primarily to increases of $1.3 million of personnel expenses driven by increased average headcount, $1.4 million of stock-based compensation expense, $0.8 million of director and officer insurance costs which increased as a result of our becoming a public company, and $0.3 million of consulting fees, partially offset by a $0.6 million decrease in recruiting fees, and a $0.3 million decrease related to capitalized employee costs for an internal software project.
General and Administrative Expenses The $0.4 million decrease was due primarily to decreases of $0.8 million of director and officer insurance costs and $0.8 million of personnel expenses driven by decreased average headcount, partially offset by increases of $0.8 million related to one-time personnel costs and $0.3 million of legal expenses.
Accordingly, we encourage investors, the media, and others interested in us to review the information that we share on the Investors section of our website, investors.seraprognostics.com. Overview We are a women’s health company utilizing our proprietary proteomics and bioinformatics platform to discover, develop, and commercialize clinically meaningful and economically impactful biomarker tests, with an initial focus on improving pregnancy outcomes.
Accordingly, we encourage investors, the media, and others interested in us to review the information that we share on the Investors section of our website, investors.seraprognostics.com.
General and Administrative Expenses General and administrative expenses consist primarily of salaries, payroll taxes, employee benefits, and stock-based compensation charges for personnel in executive, finance, information technology, human resources, and other administrative functions. Other significant costs include facilities, corporate and intellectual property legal fees, accounting, insurance, consulting, and other professional fees.
We expect selling and marketing expenses to increase in the medium to long-term as we expand our commercial efforts as opportunity dictates and increase our product portfolio. General and Administrative Expenses General and administrative expenses consist primarily of salaries, payroll taxes, employee benefits, and stock-based compensation charges for personnel in executive, finance, information technology, human resources, and other administrative functions.
We expect that our research and development expenses will increase in 2023 compared to 2022. Research and development costs may increase in the medium to long-term as we support current and additional clinical studies, publications, and other product development activities.
Research and development costs may increase in the medium to long-term as we support current and additional clinical studies, publications, and other product development activities. 85 Table of Contents Selling and Marketing Expenses Selling and marketing expenses consist primarily of salaries, payroll taxes, employee benefits, and stock-based compensation charges for sales, marketing, and payer access personnel.
We expect general and administrative expenses will remain relatively consistent in 2023 compared to 2022, which will maintain the appropriate level of support for our current level of operations. We expect general and administrative expenses to increase in the medium to long-term as needed to support future operations and anticipated revenue growth.
Other significant costs include facilities, corporate and intellectual property legal fees, accounting, insurance, consulting, and other professional fees. We expect general and administrative expenses in 2024 could remain consistent or decrease slightly compared to 2023, but such expenses could increase in the medium to long-term as needed to support future operations and anticipated revenue growth.
Key Components of Our Results of Operations Revenues We expect to derive substantially all of our revenue in the near term from sales of the PreTRM test. We generally expect revenue to increase as sales volume continues to increase and as we continue to engage with payers and health systems to close payment contracts.
We expect to derive future revenues from PreTRM and other pipeline tests. As we continue to engage with payers and health systems using our latest evidence, we aim to close additional contracts which would eventually result in additional revenues when health care providers order the PreTRM test.
We expect selling and marketing expenses to decrease in 2023 compared to 2022 as we took steps in 2022 to streamline our sales team and focus our commercial strategy in response to market dynamics.
Other significant costs include travel, consulting, public relations, facilities, and legal costs related to commercial efforts. We expect selling and marketing expenses will decrease in 2024 compared to 2023 as we recently took steps to further streamline our near-term commercial strategy to refocus on institutional sales as we generate additional clinical data.
Net cash provided by financing activities for the year ended December 31, 2021 was primarily due to net proceeds of $100.1 million from the sale of Series E convertible preferred stock, including $1.1 million allocated to common stock warrants issued in connection with the sale of Series E convertible preferred stock, net proceeds of $66.6 million from our IPO, and $0.6 million in proceeds from options exercised, partially offset by $3.1 million and $4.5 million of loan and note repayments, respectively.
Net cash provided by financing activities for the year ended December 31, 2022 was due to $0.3 million in proceeds from options exercised, partially offset by $0.3 million of finance lease principal payments. Future Funding Requirements We expect to incur significant additional operating losses and negative cash flows for the foreseeable future.
Removed
Our goal is to develop and commercialize tests that inform important decisions during all pregnancies. We also believe that the work we perform in pregnancy can ultimately be leveraged more broadly to address other areas in medicine and health care.
Added
Overview We are a women’s health company utilizing our proprietary proteomics and bioinformatics platform, and significant data resources, to improve maternal and neonatal health by discovering, developing, and commercializing blood-based biomarker tests and predictive analytic products and services.
Removed
(formerly known as Anthem, Inc.), or Elevance Health, whose health plans cover more than 10% of U.S. pregnancies annually, agreed to make our PreTRM test available to eligible pregnant members as part of a multi-year contract. Elevance Health is one of the nation’s largest health insurers with greater than 47 million members nationwide.
Added
This underscores that existing methods to predict adverse pregnancy outcomes are insufficient for timely and effective proactive management for the vast majority of high-risk pregnancies.
Removed
Through this collaboration, a significant number of physicians and patients in the U.S. gain access to early and accurate predictions of preterm birth to enable more informed decision-making during pregnancy. Sera believes that its commercial collaboration with Elevance Health further validates the clinical and economic value of its PreTRM test.
Added
We believe that positive patient outcomes are the result of appropriate care, and the primary differentiator of patient care should be based on a determination of risk informed by a number of factors including our novel diagnostic tests.
Removed
We are actively discovering and developing several additional biomarker tests to predict other major conditions of pregnancy, such as preeclampsia, and gestational diabetes, among others, that have the potential to offer significant health benefits to women and their babies. There are approximately 140 million births globally each year.
Added
Clinical trials conducted to date include the Prediction and Prevention of Preterm Birth, or the PREVENT-PTB Study, Serum Assessment of Preterm Birth Outcomes Compared to Historical Controls study, or the AVERT PRETERM TRIAL, and the P rematurity R isk Assessment Combined With Clinical I nterventions for Improving Neonatal outco ME s study, or the PRIME study.
Removed
Traditional methods to detect prematurity risk in time for proactive management have been limited and fail to identify the vast majority of women who will deliver prematurely. 78 Table of Contents Our blood-based biomarkers were demonstrated to be predictive of very early preterm birth of any cause, length of neonatal hospital stay, and neonatal morbidity and mortality in the Multicenter Assessment of a Spontaneous Preterm Birth Risk Predictor (TREETOP) study, a large prospective U.S. study.
Added
Manuscript results of these studies demonstrate consistency in the reported beneficial impact of the PreTRM test and treat strategy. Specifically, this includes evidence of a prolongation of gestation, shortened hospital or NICU length of stay, and improvements in measures of neonatal morbidity/mortality.
Removed
Additional new data published in May 2022 showed improved PreTRM Test predictive performance for women whose due dates are more reliably determined by ultrasound. We believe our actionable blood-based biomarker test for prematurity risk can enable patients, physicians, and payers to more proactively manage and mitigate the complications and associated costs of prematurity.
Added
A model that is emerging is that by identifying and intervening on at-risk pregnancies, not identifiable by other approaches, babies destined for premature delivery remain in utero longer. This prolongation of gestation in the preterm period leads to more mature babies that require shorter hospital/NICU stays due to improved neonatal health.
Removed
Given that pregnancy is the launch point for the future health of babies and a key determinant in the future health of mothers and babies, we believe this area is ripe for innovation and better tools to improve patient outcomes. Our operations are located in Salt Lake City, Utah, including a CLIA-certified laboratory.
Added
The PRIME study, for which enrollment was stopped due to efficacy at the interim analysis and is being prepared for publication, includes the same Primary and Secondary outcomes as the AVERT PRETERM TRIAL and affords the continued assessment of this model.
Removed
Our net losses were $44.2 million and $35.0 million for the years ended December 31, 2022 and 2021, respectively. We expect to incur significant additional operating losses and negative cash flows for the foreseeable future, principally as a result of our commercialization activities for the PreTRM test, and to support additional clinical studies, publications, and anticipated research and development activities.
Added
We believe market adoption by both health care providers and payers should be aided by the recent publication of our PREVENT-PTB study sub-analysis, positive data from our AVERT PRETERM TRIAL, our PRIME study, and other real-world evidence studies.
Removed
We have signed an agreement with Elevance Health, pursuant to which Elevance Health agreed to purchase our PreTRM test, and we continue to negotiate contracts with private and governmental payers and health systems that could eventually result in revenues.
Added
We believe the data that will be published over the coming years, together with our current body of evidence, will further demonstrate the clinical and economic utility of our test.
Removed
The future impact of the COVID-19 pandemic or a similar health disruption is highly uncertain and subject to change. We cannot predict the full extent of potential delays or impacts on our business, our clinical trials, health care systems or the global economy as a whole.
Added
In December 2023, we announced that the Data Safety Monitoring Board, or DSMB, overseeing our PRIME study recommended stopping enrollment due to efficacy, reporting that either co-primary endpoints, neonatal hospital length of stay and composite neonatal morbidity and mortality, met the stopping criteria for statistical significance at the pre-planned interim analysis.
Removed
To date, the primary impacts to our business have been the early cessation of enrollment in our Serum Assessment of Preterm Birth Outcomes Compared to Historical Controls study, or the AVERT PRETERM TRIAL study, in March 2020, the delayed commencement of enrollment in our PRIME study until November 2020 and slower than expected enrollment thereafter, and limited access to ordering clinicians during our early commercialization of our PreTRM test.
Added
We adopted the DSMB’s recommendation and stopped PRIME study enrollment to focus on analyzing and reporting the available data. A manuscript reporting study results, including top-line and exploratory analyses, is being prepared for submission and peer review.
Removed
We have enrolled sufficient numbers of PRIME study patients to enable the interim analysis to occur in 2023, and expect to report the results of that analysis if and when we are able to do so.
Added
By incorporating our proprietary technology platform into our rigorous data-driven development process, we have created a differentiated approach for effectively addressing major milestones, conditions, and features of pregnancy. We believe our large and growing pregnancy dataset (clinical, demographic, proteomic) is a substantial asset for understanding pregnancy complications, health inequities, and the personal pregnancy journey.
Removed
These additional contracts may enable an upfront negotiated payment rate which could eventually result in additional revenues when health care providers order the PreTRM test.
Added
We believe these tests have the potential to offer significant health benefits to women and their babies.
Removed
Selling and Marketing Expenses Selling and marketing expenses consist primarily of salaries, payroll taxes, employee benefits, and stock-based compensation charges for sales, marketing, and payer access personnel. Other significant costs include travel, consulting, public relations, and legal costs related to commercial efforts.
Added
Among other products, we are developing a test designed to provide a more accurate estimate of the delivery date for expectant mothers for the purposes of planning maternity leave, required support, travel arrangements, and related considerations. 83 Table of Contents Our operations are headquartered in Salt Lake City, Utah, including a CLIA-certified laboratory.
Removed
We expect selling and marketing expenses to increase in the medium-term as we hire personnel to implement our refocused sales strategy, and then in the long-term as we expand our dedicated sales team to more completely cover U.S. sales channels over time as we enter into contracts with payers and health systems.
Added
Our net losses were $36.2 million and $44.2 million for the years ended December 31, 2023 and 2022, respectively.
Removed
Interest Expense Interest expense in 2022 represents interest incurred on our finance leases. Interest expense in 2021 represents interest incurred on our finance leases, loans payable and convertible promissory note, amortization of a discount feature on a convertible promissory note, and periodic fair value adjustments on certain liabilities. As of December 31, 2022, we had no outstanding debt.
Added
We have taken steps to significantly reduce our annual operating expenses across all aspects of our business and we believe our cash runway is sufficient to enable us to operate into 2027 based on our existing operating plans.
Removed
Interest Expense Interest expense for the year ended December 31, 2021 included $0.4 million related to fair value adjustments on certain liabilities that were extinguished in that period and $0.3 million related to debt that was fully repaid during that period. Interest expense for the year ended December 31, 2022 is related to our finance leases.
Added
We will continue to evaluate the allocation of our resources as we focus our efforts to accelerate the market adoption of our PreTRM test and the development and launch of additional pipeline products and services.
Removed
As of December 31, 2022, we had cash, cash equivalents, and available-for-sale securities of approximately $104.0 million, and an accumulated deficit of $210.7 million.
Added
Our evidence portfolio continues to grow with the publication of a PREVENT-PTB study sub-analysis of the potential benefit of care coordination and low-dose aspirin paired with PreTRM test results. We have finalized the AVERT PRETERM TRIAL primary analysis for peer review, the details of which can be found on the medrxiv pre-print server.
Removed
As of December 31, 2022, we had future minimum payments under this agreement of $0.7 million, with $0.6 million payable within 12 months.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

5 edited+1 added−0 removed2 unchanged
Biggest changeWe may incur such expenses in the future at which point exchange rate fluctuations might adversely affect our expenses, results of operations, financial position and cash flows. To date, exchange rate fluctuations have not had a material effect on our results of operations.
Biggest changeForeign Currency We do not regularly incur expenses with vendors outside the United States or that are denominated in currencies other than the U.S. dollar. We may incur such expenses in the future at which point exchange rate fluctuations might adversely affect our expenses, results of operations, financial position and cash flows.
In addition, increased inflation has had, and may continue to have, an effect on interest rates and may adversely affect our borrowing rate and our ability to obtain any potential additional funding. 86 Table of Contents
In addition, increased inflation has had, and may continue to have, an effect on interest rates and may adversely affect our borrowing rate and our ability to obtain any potential additional funding. 91 Table of Contents
Changes in U.S. interest rates affect the interest earned on our cash and cash equivalents and marketable securities, and the market value of those securities. A hypothetical 100 basis point increase in interest rates would have resulted in a decrease of $0.5 million in the market value of our available-for-sale debt securities as of December 31, 2022.
Changes in U.S. interest rates affect the interest earned on our cash and cash equivalents and marketable securities, and the market value of those securities. A hypothetical 100 basis point increase in interest rates would have resulted in a decrease of $0.6 million in the market value of our available-for-sale debt securities as of December 31, 2023.
Effects of Inflation We do not believe inflation has had a material effect on our results of operations during the periods presented. However, the current inflationary environment could affect us by increasing our costs of labor, laboratory supplies, and clinical trials and could adversely affect our business, results of operations, financial position and cash flows.
However, the current inflationary environment could affect us by increasing our costs of labor, laboratory supplies, and clinical trials and could adversely affect our business, results of operations, financial position and cash flows.
Any realized gains or losses resulting from such interest rate changes would only occur if we sold the investments prior to maturity. Foreign Currency We do not regularly incur expenses with vendors outside the United States or that are denominated in currencies other than the U.S. dollar.
Any realized gains or losses resulting from such interest rate changes would only occur if we sold the investments prior to maturity. We do not 90 Table of Contents intend to sell investments while they are in an unrealized loss position and do not believe we will be required to sell the investments before recovery, which may be maturity.
Added
To date, exchange rate fluctuations have not had a material effect on our results of operations. Effects of Inflation We do not believe inflation has had a material effect on our results of operations during the periods presented.

Other SERA 10-K year-over-year comparisons