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GRAIL, Inc.

GRAIL, Inc.GRAL決算レポート

Nasdaq · biotechnology industry

GRAIL, Inc. is an American biotechnology company based in Menlo Park, California founded in 2015 seeking to develop an early cancer screening test for people who do not have symptoms. As a startup it was a subsidiary of Illumina, which bought it outright in 2021.

What changed in GRAIL, Inc.'s 10-K — 2024 vs 2025

Top changes in GRAIL, Inc.'s 2025 10-K

1136 paragraphs added · 910 removed · 579 edited across 10 sections

Item 1. Business

Business — how the company describes what it does

236 edited+199 added−59 removed262 unchanged
Together with our partners at leading community and academic medical centers in the United States and United Kingdom, we expect to continue to report ongoing and long-term follow-up clinical data from our studies over many years. • Our highly-differentiated methylation platform, which enables product opportunities across the cancer care continuum.
Together with our partners at leading community and academic medical centers in the United States and the United Kingdom, we expect to continue to report ongoing and long-term follow-up clinical data from our studies over many years. • Our highly-differentiated methylation platform, which enables product opportunities across the cancer care continuum.
Our goal is to address cancer screening globally, beginning in large markets with established health systems, such as the United States and United Kingdom, and extending to other markets over time through both direct market entry and distributors.
Our goal is to address cancer screening globally, beginning in large markets with established health systems, such as the United States and the United Kingdom, and extending to other markets over time through both direct market entry and distributors.
Our ability to collect, manage, and integrate high-quality genomic and clinical data is central to our business, and our automated laboratory workflows and processes enable high volumes of tests and samples to be processed automatically with high efficiency and speed and low failure rates.
Our ability to collect, manage, and integrate high-quality genomic and clinical data is central to our business, and our automated laboratory workflows and processes enable high volumes of tests and samples to be processed automatically with high efficiency, speed and low failure rates.
For example, data published in JCO Precision Oncology in 2024 demonstrated that prostate cancers that were detected by Galleri were more aggressive and clinically significant as compared to indolent and slow growing cancers.
For example, data published in JCO Precision Oncology in 2024 demonstrated that prostate cancers that were detected by Galleri were more aggressive and clinically significant as compared to indolent and slow growing prostate cancers.
We are led by a multidisciplinary team with extensive experience across biotechnology, life sciences, public health, genomics, computer science, data science, biostatistics, clinical development, medical affairs, government and regulatory affairs, quality assurance, and laboratory and commercial operations.
We are led by a multidisciplinary team with extensive experience across biotechnology, life sciences, public health, genomics, computer science, data science, biostatistics, clinical development, medical affairs, government and regulatory affairs, quality assurance, and laboratory and commercial operations.
Under CLIA, a survey is generally conducted every two years by CMS, a CMS agent (typically a state agency), or, if the laboratory holds a CLIA Certificate of Accreditation, a CMS-approved accreditation organization (for example, CAP). The routine biennial survey includes review of the laboratory’s analytical validation of any LDTs performed by the laboratory.
Under CLIA, a survey is generally conducted every two years by CMS, a CMS agent (typically a state agency), or, if the laboratory holds a CLIA Certificate of Accreditation, a CMS-approved accreditation organization (for example, CAP). The routine biennial survey includes a review of the laboratory’s analytical validation of any LDTs performed by the laboratory.
The Stark Law contains several exceptions, including an exception for compensation paid to a physician for personal services rendered by the physician provided that several conditions are met, including that the payment is set at fair market value for the services furnished and the terms of the arrangement be set out in writing and signed by the parties.
The Stark Law contains several exceptions, including an exception for compensation paid to a physician for personal services rendered by the physician provided that several conditions are met, including that the payment is set at fair market value for the services furnished and the terms of the arrangement are set out in writing and signed by the parties.
Life insurers are committed to helping customers live longer, healthier, better lives and understand that preventative care and early detection are key to that mission. Galleri is offered by these providers as a preventative health benefit and is not used for underwriting, risk assessment or risk pooling. Payors .
Life insurers are committed to helping customers live longer, healthier, better lives and understand that preventative care and early detection are key to that mission. Galleri is offered by these providers as a preventative health benefit and is not used for underwriting, risk assessment or risk pooling.
The results of this early analysis represented limited information from only one year of results out of the three-year trial period, and final results from the full three-year period may differ from the early analysis for a variety of reasons. In May 2024, the NHS determined not to initiate the pilot on the basis of those available data.
The results of this early analysis represented limited information from only one year of results out of the three-year trial period, and final results from the full three-year period may differ from the early analysis for a variety of reasons. In May 2024, the NHS determined not to initiate the pilot on the basis of the available data.
We extrapolated the CCGA-based modeled PPV to a representative population due to the limitations of measuring PPV in a case controlled study with enrichment of cancer cases in the sample set, whereas the PATHFINDER study was performed in an intended use population and PPV was measured directly.
We extrapolated the CCGA-based modeled PPV to a representative population due to the limitations of measuring PPV in a case controlled study with enrichment of cancer cases in the sample set, whereas the PATHFINDER 2 study was performed in an intended use population and PPV was measured directly.
We found that interrogating methylation patterns yielded significantly better results for cancer detection (based on sensitivity, cancer signal origin prediction accuracy, and clinical limit of detection (a measure of the how much signal must exist in order to be detected)) than was observed by interrogating mutations (changes in a DNA sequence), chromosomal alterations (changes to the structure or number of chromosomes, which are strands of genetic material), fragment lengths (differences in length of DNA fragments), and other genomic features, either alone or in combination.
We found that interrogating methylation patterns yielded significantly better results for cancer detection (based on sensitivity, CSO prediction accuracy, and clinical limit of detection (a measure of the how much signal must exist in order to be detected)) than was observed by interrogating mutations (changes in a DNA sequence), chromosomal alterations (changes to the structure or number of chromosomes, which are strands of genetic material), fragment lengths (differences in length of DNA fragments), and other genomic features, either alone or in combination.
Even if any of our current or future owned or licensed patent applications are granted as issued patents, those patents may be challenged, circumvented or invalidated by third parties. We recently faced an opposition from anonymous challengers against one of our in-licensed European patents. The patent does not relate to aspects of Galleri or our precision oncology portfolio.
Even if any of our current or future owned or licensed patent applications are granted as issued patents, those patents may be challenged, circumvented or invalidated by third parties. We previously faced an opposition from anonymous challengers against one of our in-licensed European patents. The patent does not relate to aspects of Galleri or our precision oncology portfolio.
Based on our extensive, published and peer reviewed discovery work, we believe that a targeted methylation approach, which entails interrogating specific methylation sites within a genome to assess methylation patterns and which is an integral part of the technology used in our Galleri test, is the best approach for detecting a cancer signal and identifying a cancer signal origin.
Based on our extensive, published and peer reviewed discovery work, we believe that a targeted methylation approach, which entails interrogating specific methylation sites within a genome to assess methylation patterns and which is an integral part of the technology used in our Galleri test, is the best approach for detecting a cancer signal and identifying a CSO.
Federal Trade Commission and the European Commission. These proceedings spanned more than three years and resulted in several orders, including hold-separate arrangements imposed by the European Commission. Following the European Commission’s decision on October 12, 2023 ordering Illumina to divest GRAIL, Illumina completed the divestiture via a Spin-Off on June 24, 2024 (the “Distribution Date”).
These proceedings spanned more than three years and resulted in several orders, including hold-separate arrangements imposed by the European Commission. Following the European Commission’s decision on October 12, 2023 ordering Illumina to divest GRAIL, Illumina completed the divestiture via a Spin-Off on June 24, 2024 (the “Distribution Date”).
With the roll-out of our new version of Galleri, our facility is able to process test volumes in excess of our current forecasts without requiring significant additional investment in capital expenditures. In addition, we engineered custom technology infrastructure and cloud-based tools to enable scalable data collection and analysis capabilities.
With the roll-out of our new version of Galleri in late 2024, our facility is able to process test volumes in excess of our current forecasts without requiring significant additional investment in capital expenditures. In addition, we engineered custom technology infrastructure and cloud-based tools to enable scalable data collection and analysis capabilities.
Coverage and Reimbursement We are pursuing payment for our products through a diverse and broad range of channels, including sales to self-insured employers, integrated health systems, healthcare providers, life insurance companies, and patients, as well as, where available, through coverage and reimbursement by government healthcare programs and commercial third-party payors.
Coverage and Reimbursement We are pursuing payment for our products through a diverse and broad range of channels, including sales to integrated health systems, self-insured employers, digital health platforms, healthcare providers, life insurance companies, and patients, as well as, where available, through coverage and reimbursement by government healthcare programs and commercial third-party payors.
Based on this model, we estimate that by adding Galleri to the five standard of care single-cancer screening tests (breast, cervical, colorectal, lung cancer, and prostate), there is potential to 10 Table of Contents detect many more cancers at an earlier stage, which could translate into the potential to avert approximately 100,000 deaths per year in the United States as measured by five-year survival, or 39% of the five-year deaths expected if not for early detection by Galleri.
Based on this model, we estimate that by adding Galleri to the five standard of care single-cancer screening tests (breast, cervical, colorectal, lung cancer, and prostate), there is potential to detect many more cancers at an earlier stage, which could translate into the potential to avert approximately 100,000 deaths per year in the United States as measured by five-year survival, or 39% of the five-year deaths expected if not for early detection by Galleri.
The Sunshine Act requires certain manufacturers of drugs, devices, biologics and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program, with specific exceptions, to report annually to CMS certain data on payments and other transfers of 30 Table of Contents value made to U.S.-licensed physicians (as defined by statute), teaching hospitals, and certain non-physician practitioners, including physician assistants, nurse practitioners, clinical nurse specialists, certified nurse anesthetists, anesthesiologist assistants and certified nurse-midwives.
The Sunshine Act requires certain manufacturers of drugs, devices, biologics and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program, with specific exceptions, to report annually to CMS certain data on payments and other transfers of value made to U.S.-licensed physicians (as defined by statute), teaching hospitals, and certain non-physician practitioners, including physician assistants, nurse practitioners, clinical nurse specialists, certified nurse anesthetists, anesthesiologist assistants and certified nurse-midwives.
A low false positive rate can help to limit unnecessary workups on patients who do not have cancer. While Galleri is designed to complement the current standard of care screening tests, Galleri’s high PPV of approximately 43% is significantly higher than the PPV of all of the standard of care single-cancer screening tests.
A low false positive rate can help to limit unnecessary workups on patients who do not have cancer. While Galleri is designed to complement the current standard of care screening tests, Galleri’s high PPV is significantly higher than the PPV of all of the standard of care single-cancer screening tests.
Based on this model, we estimated that by adding Galleri to the five standard of care single-cancer screening tests (breast, cervical, colorectal, lung cancer, and prostate), there is potential to detect many more cancers at an earlier stage, which could translate into the potential to avert approximately 100,000 deaths per year in the United States as measured by five-year survival.
Based on this model, we estimated that by adding 1 Table of Contents Galleri to the five standard of care single-cancer screening tests (breast, cervical, colorectal, lung cancer, and prostate), there is potential to detect many more cancers at an earlier stage, which could translate into the potential to avert approximately 100,000 deaths per year in the United States as measured by five-year survival.
We believe these patents cover, and that these patent applications upon grant will cover, various aspects of Galleri, our precision oncology portfolio and future products or improvements to existing products that we may develop. Of particular importance within our sizeable patent portfolio are patents that relate to various aspects of Galleri and our precision oncology portfolio.
We believe these patents cover, and that these patent applications upon grant will cover, various aspects of Galleri, our precision oncology portfolio and future products or improvements to existing products that we may develop. Of particular importance within our sizable patent portfolio are patents that relate to various aspects of Galleri and our precision oncology portfolio.
Laboratory Developed Tests Under the FDA’s regulatory framework, in vitro diagnostic devices (“IVDs”), such as Galleri, are a type of medical device, including tests that can be used in the diagnosis or detection of diseases, such as cancer, or other conditions.
Laboratory Developed Tests Under the FDA’s regulatory framework, in vitro diagnostic devices (“IVDs”), such as Galleri, are a type of medical device, including tests, which can be used in the diagnosis or detection of diseases, such as cancer, or other conditions.
In 22 Table of Contents addition, the Federal Food, Drug and Cosmetic Act (“FDC Act”) defines a medical device to include any instrument, apparatus, implement, machine, contrivance, implant, in vitro reagent, or other similar or related article, including a component part or accessory intended for use in the diagnosis of disease or other conditions, or in the cure, mitigation, treatment, or prevention of disease in man or other animals.
In addition, the Federal Food, Drug and Cosmetic Act (“FDC Act”) defines a medical device to include any instrument, apparatus, implement, machine, contrivance, implant, in vitro reagent, or other similar or related article, including a component part or accessory intended for use in the diagnosis of disease or other conditions, or in the cure, mitigation, treatment, or prevention of disease in man or other animals.
We also believe our work with the NHS and the data generated from our NHS-Galleri Trial, if compelling, could help facilitate adoption in other single-payor systems around the world and support evidence of clinical utility worldwide.
We also believe our work with the NHS and the data generated from our NHS-Galleri Trial could help facilitate adoption in other single-payor systems around the world and support evidence of clinical utility worldwide.
As part of the FDA’s review of a PMA, the FDA will typically inspect the manufacturer’s facilities for compliance with QSR requirements, which impose requirements related to design controls, manufacturing controls, documentation, and other quality assurance procedures.
As part of the FDA’s review of a PMA, the FDA will typically inspect the manufacturer’s facilities for compliance with QMSR requirements, which impose requirements related to design controls, manufacturing controls, documentation, and other quality assurance procedures.
In addition, upon the execution of such amendment, we may elect to purchase instruments, supplies, and services from Illumina either pursuant to Illumina’s “Open Offer” universal pricing terms applicable to all of its for-profit oncology customers in the United States since March 2021, as updated, or the pricing terms we had prior to Illumina’s acquisition of us.
In addition, upon the execution of such amendment, we were permitted to elect to purchase instruments, supplies, and services from Illumina either pursuant to Illumina’s “Open Offer” universal pricing terms applicable to all of its for-profit oncology customers in the United States since March 2021, as updated, or the pricing terms we had prior to Illumina’s acquisition of us.
Investigation or challenge under the federal Anti-Kickback Statute and analogous state laws of any relationship we may form with physicians, healthcare providers or other potential customers or business partners could lead to sanctions that could have a negative effect on our business. In addition, other healthcare fraud and abuse laws could have an effect on our business.
Investigation or challenge under the federal Anti-Kickback Statute and analogous state laws of any relationship we may form with physicians, healthcare providers or other potential customers or business partners could lead to sanctions that could have a negative effect on our business. 45 Table of Contents In addition, other healthcare fraud and abuse laws could have an effect on our business.
License Agreements with the Chinese University of Hong Kong We have entered into five license agreements with the Chinese University of Hong Kong, each on substantially similar terms and with two dated April 7, 2016 and three dated May 29, 2017.
License Agreements with the Chinese University of Hong Kong We have entered into five lic ense agreements with the Chinese University of Hong Kong, each on substantially similar terms and with two dated April 7, 2016 and three dated May 29, 2017.
In addition, we believe this market development strategy will drive adoption of our products and further awareness of the benefits of MCED testing generally. • Leveraging our existing infrastructure to enable and scale our growing business.
We believe this market development strategy will drive adoption of our products and further awareness of the benefits of MCED testing generally. • Leveraging our existing infrastructure to enable and scale our growing business.
In our pursuit to improve cancer 7 Table of Contents care and solve one of healthcare’s most important challenges, we recognize the importance of a workforce with different experiences, and we will continue to foster an agile and inclusive environment that is a destination for world-class talent with expertise from a variety of backgrounds.
In our pursuit to improve cancer care and solve one of healthcare’s most important challenges, we recognize the importance of a workforce with different experiences, and we will continue to foster an agile and inclusive environment that is a destination for world-class talent with expertise from a variety of backgrounds.
Reimbursement Landscape for Screening Tests United States 14 Table of Contents Traditional fee-for-service Medicare generally does not cover screening tests, which are considered preventive services, that are performed in the absence of signs or symptoms of illness or injury, unless there is a statutory provision that explicitly authorizes coverage of the test.
Reimbursement Landscape for Screening Tests United States Traditional fee-for-service Medicare generally does not cover screening tests, which are considered preventive services, that are performed in the absence of signs or symptoms of illness or injury, unless there is a statutory provision that explicitly authorizes coverage of the test.
We also engage with contractors, vendors, and consultants. None of our employees are represented by a labor union or covered by a collective bargaining agreement. We consider our relationship with our employees to be good.
None of our employees are represented by a labor union or covered by a collective bargaining agreement. We consider our relationship with our employees to be good. Additionally, we engage with contractors, vendors, and consultants.
Through commercial and clinical use of Galleri, we’ve collected a number of positive patient testimonials from patients where Galleri detected a cancer signal, including from patients who have self-identified in media stories. Investment to Enhance Versions of Tests 11 Table of Contents We seek to continually enhance the performance and features of Galleri.
Through commercial and clinical use of Galleri, we have collected a number of positive patient testimonials from patients where Galleri detected a cancer signal, including from patients who have self-identified in media stories. 14 Table of Contents Investment to Enhance Versions of Tests We seek to continually enhance the performance and features of Galleri.
After comprehensive analysis of whole-genome methylation patterns in connection with our CCGA study, we discovered highly informative and low-noise methylation sites for cancer signal and cancer signal origin detection.
After comprehensive analysis of whole-genome methylation patterns in connection with our CCGA study, we discovered highly informative and low-noise methylation sites for cancer signal and CSO detection.
We also seek 17 Table of Contents trademark protection where appropriate to protect the names that identify us as the source of our products and services. We own certain patents, patent applications, and other intellectual property, and also exclusively license certain patents, patent applications, and other intellectual property from third parties, including the Chinese University of Hong Kong.
We also seek trademark protection where appropriate to protect the names that identify us as the source of our products and services. We own certain patents, patent applications, and other intellectual property, and also exclusively license certain patents, patent applications, and other intellectual property from third parties, including the Chinese University of Hong Kong.
Even if favorable coverage and reimbursement status is attained for our tests, less favorable coverage policies and reimbursement rates may be implemented in the future. Healthcare Reform In the United States and certain foreign jurisdictions, there have been a number of legislative and regulatory changes to the healthcare system.
Even if favorable coverage and reimbursement status is attained for our tests, less favorable coverage policies and reimbursement rates may be implemented in the future. 51 Table of Contents Healthcare Reform In the United States and certain foreign jurisdictions, there have been a number of legislative and regulatory changes to the healthcare system.
If the device presents a non-significant risk to the patient, a sponsor may begin 26 Table of Contents the clinical trial after obtaining approval for the trial by one or more IRBs without separate approval from the FDA, but must still follow abbreviated IDE requirements, such as monitoring the investigation, ensuring that the investigators obtain informed consent, and labeling and record-keeping requirements.
If the device presents a non-significant risk to the patient, a sponsor may begin the clinical trial after obtaining approval for the trial by one or more IRBs without separate approval from the FDA, but must still follow abbreviated IDE requirements, such as monitoring the investigation, ensuring that the investigators obtain informed consent, and labeling and record-keeping requirements.
For additional information, see “Business—Our Clinical Studies.” Galleri screening test results can help guide next steps for a diagnosis of cancer by healthcare providers in required follow-up diagnostic testing. We launched Galleri in the United States in mid-2021. As of December 31, 2024, we have sold more than 290,000 commercial tests.
For additional information, see “Business—Our Clinical Studies.” Galleri screening test results can help guide next steps for a diagnosis of cancer by healthcare providers in required follow-up diagnostic testing. We launched Galleri in the United States in mid-2021. As of December 31, 2025, we have sold more than 475,000 commercial tests.
As a result, a low limit of detection is important to facilitate performance of retrospective research studies. Additional Products in Development Our rigorous discovery efforts have already enabled us to build unique technologies and develop a powerful platform for early detection.
As a result, a low limit of detection is important to facilitate performance of retrospective research studies. 15 Table of Contents Additional Products in Development Our rigorous discovery efforts have already enabled us to build unique technologies and develop a powerful platform for early detection.
The data are sent to CMS for public disclosure on the Open Payments. Additional International Regulation and Product Approval We may have to obtain or submit approvals, markings, notifications, certifications or satisfy other premarket requirements from regulatory authorities in non-U.S. jurisdictions prior to marketing our products in those countries and territories.
The data are sent to CMS for public disclosure on the Open Payments. 46 Table of Contents Additional International Regulation and Product Approval We may have to obtain or submit approvals, markings, notifications, certifications or satisfy other premarket requirements from regulatory authorities in non-U.S. jurisdictions prior to marketing our products in those countries and territories.
Our high-capacity laboratory is accredited by the College of American Pathologists (“CAP”) and certified by the Clinical Laboratory Improvement Amendments of 1988 (“CLIA”) and the New York State Department of Health, which represent one of the most rigorous levels of validation required for laboratory developed tests.
Our high-capacity laboratory is accredited by the College of American Pathologists (“CAP”) and certified by the Clinical Laboratory Improvement Amendments of 1988 (“CLIA”) and the New York State Department of Health (“NYSDoH”), which represents one of the most rigorous levels of validation required for laboratory developed tests.
The FDA has statutory authority to assure that medical devices are safe and effective for their intended uses, but the FDA has historically exercised its enforcement discretion and not enforced certain applicable provisions of the FDC Act and regulations with respect to LDTs.
The FDA has statutory authority to assure that medical devices are safe and effective for their intended uses, but the FDA had historically exercised enforcement discretion and not enforced certain potentially applicable provisions of the FDC Act and regulations with respect to LDTs.
In our head-to-head analyses we compared multiple different classifiers that were trained to detect a cancer signal and predict the cancer signal origin, and which were independently validated.
In our head-to-head analyses we compared multiple different classifiers that were trained to detect a cancer signal and predict the CSO, and which were independently validated.
The Medicare Improvements for Patients and Providers Act of 2008 authorizes the Centers for Medicare and Medicaid Services (“CMS”) to cover additional preventive services that are not expressly covered by the statute if the service is (a) reasonable and necessary for the prevention or early detection of an illness or disability, (b) recommended with a grade of A or B by the USPSTF, an independent, volunteer panel of experts in the field of prevention, evidence-based medicine and primary care, and (c) appropriate for Medicare beneficiaries under Part A or Part B.
The Medicare Improvements for Patients and Providers Act of 2008 also authorizes CMS to cover additional preventive services that are not expressly covered by the statute if the service is (a) reasonable and necessary for the prevention or early detection of an illness or disability, (b) recommended with a grade of A or B by the USPSTF, an independent, volunteer panel of experts in the field of prevention, evidence-based medicine and primary care, and (c) appropriate for Medicare beneficiaries under Part A or Part B.
Sanctions for a violation of the Stark Law include the following: • denial of payment for the services provided in violation of the prohibition; 28 Table of Contents • refunds of amounts collected by an entity in violation of the Stark Law; • monetary penalties; and • exclusion from federal healthcare programs, including Medicare and Medicaid.
Sanctions for a violation of the Stark Law include the following: • denial of payment for the services provided in violation of the prohibition; • refunds of amounts collected by an entity in violation of the Stark Law; • monetary penalties; and • exclusion from federal healthcare programs, including Medicare and Medicaid.
We will continue to invest in clinical evidence generation and work with regulatory bodies and payors in our target markets to expand coverage for early cancer screening and to increase access. • Defining, leading, and expanding adoption of MCED.
We will continue to invest in clinical evidence generation and work with regulatory bodies and payors in our target markets to expand coverage for early cancer screening and to increase access. 8 Table of Contents • Defining, leading, and expanding adoption of MCED.
We cannot provide any assurance that any of our current or future owned or licensed patent applications will result in the issuance of patents in any jurisdiction, or that any of 19 Table of Contents our current or future owned or licensed issued patents will effectively protect any of our products or technology or prevent others from commercializing competitive products or technology.
We cannot provide any assurance that any of our current or future owned or licensed patent applications will result in the issuance of patents in any jurisdiction, or that any of our current or future owned or licensed issued patents will effectively protect any of our products or technology or prevent others from commercializing competitive products or technology.
Law enforcement authorities and the courts have also demonstrated a willingness to look behind the formalities of a transaction to determine the underlying purpose of any remuneration exchanged between healthcare providers and actual or 29 Table of Contents potential referral sources.
Law enforcement authorities and the courts have also demonstrated a willingness to look behind the formalities of a transaction to determine the underlying purpose of any remuneration exchanged between healthcare providers and actual or potential referral sources.
We have shared evidence supporting our MCED testing at renowned medical conferences, such as the American Association of Cancer Research (“AACR”), American Society of Clinical Oncology (“ASCO”), European Society of Medical Oncology (“ESMO”), and American Academy of Family Physicians (“AAFP”).
We have shared evidence supporting our MCED testing at renowned medical conferences, such as the American Association of Cancer Research (“AACR”), American Society of Clinical Oncology (“ASCO”), ESMO, and American Academy of Family Physicians (“AAFP”).
General Coverage and Reimbursement Considerations 34 Table of Contents Across jurisdictions, a decision to provide coverage for a product from a government payor, such as Medicare, or other third-party payor does not imply that an adequate reimbursement rate will be approved. Further, coverage and reimbursement for products, and services that utilize such products, can differ significantly from payor to payor.
General Coverage and Reimbursement Considerations Across jurisdictions, a decision to provide coverage for a product from a government payor, such as Medicare, or other third-party payor does not imply that an adequate reimbursement rate will be approved. Further, coverage and reimbursement for products, and services that utilize such products, can differ significantly from payor to payor.
Further, Galleri’s cancer signal origin prediction capability enables physicians to limit the use of full body imaging following cancer signal detected results, which can be expensive, not readily accessible to broad patient populations, exposes patients to radiation, and can lead to false alarms and unnecessary ancillary workups.
Further, Galleri’s CSO prediction capability enables physicians to limit the use of full body imaging following cancer signal detected results, which can be expensive, not readily accessible to broad patient populations, expose patients to radiation, and can lead to false alarms and unnecessary ancillary workups.
In the United States, numerous federal and state laws and regulations, including data breach notification laws, health information privacy and security laws and consumer protection laws and regulations govern the collection, use, disclosure, and protection of health-related and other personal information. In addition, certain foreign laws govern the privacy and security of personal data, including health-related data.
In the United States, numerous federal and state laws and regulations, including data breach notification laws, health information privacy and security laws and consumer protection laws and regulations govern the collection, use, disclosure, and protection of health-related and other personal information.
In the commercial setting, healthcare providers have self-reported to us that Galleri’s cancer signal of origin capability enables them to efficiently direct the pathway following a positive test. The test is available through a wide range of in-person and telemedicine care settings in the United States.
In the commercial setting, healthcare providers have self-reported to us that Galleri’s CSO capability enables them to efficiently direct the pathway following a positive test. The test is available through a wide range of in-person and telemedicine care settings in the United States.
We will continue to improve our technologies and launch innovative products across the cancer care continuum. • Sustaining a patient-first corporate culture that attracts top talent. We have built a multi-disciplinary organization of leading scientists, engineers, and clinicians with a variety of backgrounds, all driven to improve outcomes for cancer patients.
We will continue to improve our technologies and launch innovative products across the cancer care continuum. 9 Table of Contents • Sustaining a patient-first corporate culture that attracts top talent. We have built a multi-disciplinary organization of leading scientists, engineers, clinicians and other professionals with a variety of backgrounds, all driven to improve outcomes for cancer patients.
These payors include Medicare Advantage plans, which generally must cover all of the services that traditional Medicare covers, but they have the discretion to offer their enrollees additional or supplemental benefits. This also includes early-adopting commercial payors. First Responders .
These payors include Medicare Advantage plans, which generally must cover all of the services that traditional Medicare covers, but they have the discretion to offer their enrollees additional or supplemental benefits. This also includes early-adopting commercial payors. International Strategy .
We can also terminate the agreements for the Chinese University of Hong Kong’s uncured material breach. Trade Secrets We also rely on trade secret protection for our confidential and proprietary information.
We can also terminate the agreements for the Chinese University of Hong Kong’s uncured material breach. 36 Table of Contents Trade Secrets We also rely on trade secret protection for our confidential and proprietary information.
Even under its current enforcement discretion policy, the FDA has issued warning letters to and safety communications about in vitro diagnostic device manufacturers for commercializing laboratory tests that were purported to be LDTs but that the FDA alleged failed to meet the definition of an LDT or otherwise were not subject to the FDA’s enforcement discretion policy. 24 Table of Contents The FDA has for a number of years stated its intention to modify its enforcement discretion policy with respect to LDTs and impose applicable medical device requirements to LDTs more broadly.
Even under that enforcement discretion policy, the FDA has issued warning letters to and safety communications about in vitro diagnostic device manufacturers for commercializing laboratory tests that were purported to be LDTs but that the FDA alleged failed to meet the definition of an LDT or otherwise were not subject to the FDA’s prior enforcement discretion policy. 40 Table of Contents The FDA had, for a number of years, stated its intention to modify this historical enforcement discretion policy with respect to LDTs and impose applicable medical device requirements to LDTs more broadly.
In addition, our patents, trade secrets, and know-how provide broad intellectual property coverage for our products, including chemistry, bioinformatics, and machine learning algorithms used in 5 Table of Contents Galleri and our product development pipeline. Our exclusively licensed patents will begin to expire in 2027.
In addition, our patents, trade secrets, and know-how provide broad intellectual property coverage for our products, including chemistry, bioinformatics, and machine learning algorithms used in Galleri and our product development pipeline. Our exclusively licensed patents will begin to expire in 2027.
The QSR also requires, among other things, maintenance of a device master file, device history file, and complaint files. Manufacturers are subject to periodic scheduled or unscheduled inspections by the FDA. A failure to maintain compliance with the QSR requirements could result in the shut-down of, or restrictions on, manufacturing operations and the recall or seizure of products.
The QMSR also requires, among other things, maintenance of a medical device file and complaint files. Manufacturers are subject to periodic scheduled or unscheduled inspections by the FDA. A failure to maintain compliance with the QMSR requirements could result in the shut-down of, or restrictions on, manufacturing operations and the recall or seizure of products.
Our industry leadership in MCED testing has been recognized with multiple national high profile accolades. • Our established commercial leadership is driving the development of a significant market.
Our industry leadership in MCED testing has been recognized with multiple national high profile accolades. 5 Table of Contents • Our established commercial leadership is driving the development of a significant market.
Galleri expands upon the current standard of care guidelines to screen individuals with a single test for many types of cancer, most of which have no recommended screenings.
Galleri expands upon the current standard of care guidelines to screen individuals with a single test for many types of cancer, over 70% of which have no recommended screenings.
We intend to explore the launch of Galleri in select other international geographies, including through distributors. 15 Table of Contents Operations Significant Investments for Scale We have made significant investments for scale in our CAP-accredited and CLIA-certified laboratory facility in Durham, North Carolina and demonstrated execution with more than 600,000 clinical and commercial individual samples processed through December 31, 2024.
We intend to explore the launch of Galleri in select other international geographies, including through distributors. 31 Table of Contents Operations Significant Investments for Scale We have made significant investments for scale in our CAP-accredited and CLIA-certified laboratory facility in Durham, North Carolina and demonstrated execution with more than 800,000 clinical and commercial individual samples processed from launch through December 31, 2025.
Item 1. Business Our Company Our mission is to detect cancer early, when it can be cured. We are an innovative commercial-stage healthcare company focused on saving lives and shifting the paradigm in early cancer detection. We believe screening individuals for many types of cancer with a single test represents a significant opportunity to reduce the global burden of cancer.
Item 1. Business Our Company Our mission is to detect cancer early, when it can be cured. We are an innovative commercial-stage healthcare company focused on shifting the paradigm in early cancer detection at population scale. We believe screening individuals for many types of cancer with a single test represents a significant opportunity to reduce the global burden of cancer.
Importantly, for every test we process, we provide a clinically actionable test report, as depicted in the graphic below, that is delivered through our secure web portal to the ordering healthcare providers to show whether or not a cancer signal is detected, and if so, to predict where in the body the cancer signal is located.
Importantly, for every test we process, we provide a clinically actionable test report, that is delivered through our secure web portal to the ordering healthcare providers and patient to show whether or not a cancer signal is detected, and if so, to predict where in the body the cancer signal is located.
We have presented data and published results from our clinical studies in leading forums, including multiple major medical conferences, such as AACR, ASCO, and ESMO, and leading journals, such as The Lancet , Nature , Nature Medicine , Cancer Cell , and The Lancet Oncology .
We have presented data and published results from many of these clinical studies in leading forums, including multiple major medical conferences, such as AACR, ASCO, and ESMO, and leading journals, such as The Lancet, Nature, Nature Medicine, Cancer Cell, and The Lancet Oncology.
A number of these companies, including Guardant Health, Inc., Exact Sciences Corporation, Natera, Inc. and Clearnote Health in the United States and, Insighta, Mirxes and Seekin, Inc. outside of the United States, have announced intentions to develop or launch multi-cancer early detection products.
A number of these companies, including Natera, Inc. and Clearnote Health in the United States and, Insighta, Mirxes and Seekin, Inc. outside of the United States, have announced intentions to develop or launch multi-cancer early detection products.
Our owned or co-owned patents will begin to expire in 2037. • Our highly experienced and multidisciplinary team. Since our founding, we have built an entrepreneurial culture driven to improve outcomes for cancer patients.
Our owned or co-owned patents will begin to expire in 2037. 7 Table of Contents • Our highly experienced and multidisciplinary team. Since our founding, we have built an entrepreneurial culture driven to improve outcomes for cancer patients.
Class I includes devices with the lowest risk to the patient and are those for which safety and effectiveness can be assured by adherence to the FDA’s General Controls for medical devices, which include compliance with the applicable portions of the QSR facility registration and product listing, reporting of adverse medical events, and truthful and non-misleading labeling, advertising, and promotional materials.
Class I includes devices with the lowest risk to the patient and are those for which safety and effectiveness can be assured by adherence to the FDA’s General Controls for medical devices, which include compliance with the applicable portions of the Quality Management System Regulation (“QMSR”) facility registration and product listing, reporting of adverse medical events, and truthful and non-misleading labeling, advertising, and promotional materials.
However, certain IVDs in compliance with either the EU IVDD or IVDR can continue to be placed on the Great Britain market until the sooner of certificate expiration or June 30, 2030.
However, certain IVDs in compliance with (a) the EU IVDD can continue to be placed on the Great Britain market until the sooner of certificate expiration or June 30, 2030; and (b) the EU IVDR can continue to be placed on the Great Britain market until June 30, 2030.
If the test is an advanced diagnostic laboratory test (“ADLT”), the test will be paid based on an actual list charge for an initial period of three quarters before being shifted to the weighted median private payor rate reported by the laboratory performing the ADLT.
If the test is an advanced diagnostic laboratory test (“ADLT”), the test is paid based on an actual list charge for an initial period of three quarters before 50 Table of Contents being shifted to the weighted median private payor rate reported by the laboratory performing the ADLT.
We strongly believe our corporate culture is the operating system that powers the company and helps to achieve our mission. Our values include; 21 Table of Contents • Embrace Change —We operate in a dynamic environment.
We strongly believe our corporate culture is the operating system that powers the company and helps to achieve our mission. Our values include; • Embrace Change —We operate in a dynamic environment.
As of December 31, 2024, we have published more than 70 manuscripts, including in high profile journals like The Lancet, Nature, Nature Medicine, Cancer Cell, and The Lancet Oncology. We have also presented our data in more than 30 podium and 200 poster presentations at renowned medical conferences, including AACR, ASCO, ESMO, and AAFP.
As of December 31, 2025, we have published more than 90 manuscripts, including in high profile journals like The Lancet, Nature, Nature Medicine, Cancer Cell, and The Lancet Oncology. We have also presented our data in more than 30 podium and 250 poster presentations at renowned medical conferences, including AACR, ASCO, ESMO, and AAFP.
If we do not timely file non-provisional patent applications, we may lose our priority date with respect to our provisional patent applications and any patent protection on the inventions disclosed in our provisional patent applications.
If we do not timely file non-provisional patent applications, we may lose our priority date with respect to our provisional patent applications and any patent protection on the inventions disclosed in our provisional patent 35 Table of Contents applications.
Improving Cancer Care The Burden of Cancer and the Benefits of Earlier Detection Cancer is the second leading cause of death in both the United States and worldwide, with more than 19 million new cases and 10 million deaths globally in 2020. This burden is expected to grow as the global population ages.
Improving Cancer Care The Burden of Cancer and the Benefits of Earlier Detection Cancer is a leading cause of death in both the United States and worldwide, with more than 20 million new cases and 10 million deaths globally in 2022. This burden is expected to grow as the global population ages.
We have an established footprint in the United States and United Kingdom, with operations in Durham, North Carolina, Washington, D.C., and London, United Kingdom. In total we have approximately 46,000 square feet of CAP-accredited, CLIA-certified laboratory space with sufficient capacity to support multiple years of growth at our Durham facility.
We have an established footprint in the United States and the United Kingdom, with our headquarters in Menlo Park, California and operations in Durham, North Carolina, Washington, D.C., and London, United Kingdom. In total we have approximately 46,000 s quare feet of CAP-accredited, CLIA-certified laboratory space with sufficient capacity to support multiple years of growth at our Durham facility.
The new legislation is expected to be implemented in 2026 and aims to enable greater international collaboration and practices, with more patient-centered, proportionate requirements for medical devices which are responsive to technological advances.
A draft of the new legislation is expected to be published in 2026 and aims to enable greater international collaboration and practices, with more patient-centered, proportionate requirements for medical devices which are responsive to technological advances.
In its discretion, the USPSTF generally waits for FDA authorization before it considers undertaking review of novel technology. Galleri could be considered a screening test under Medicare and, accordingly, is unlikely to be covered by Medicare without pursuing the CMS NCD-related measures described above.
In its discretion, the USPSTF generally waits for FDA authorization before it considers undertaking review of novel technology. Galleri could be considered a screening test under Medicare and, accordingly, is unlikely to be covered by Medicare without pursuing the CMS NCD-related measures described above for MCED tests or for other screening under additional preventative services.
The revised reimbursement methodology described above generally results in relatively lower reimbursement amounts under Medicare for clinical laboratory services than has been historically reimbursed. Any reductions to reimbursement rates resulting from the new methodology are limited to 0% in 2023 and 15% per test per year in each of 2024 through 2026.
The revised reimbursement methodology described above generally results in relatively lower reimbursement amounts under Medicare for clinical laboratory services than has been historically reimbursed. Any reductions to reimbursement rates resulting from the new methodology are limited to 0% through January 30, 2026 and 15% per test per year from January 31, of 2026 through 2028.
We also have exclusive licenses to approximately 630 issued or granted patents and more than 190 pending patent applications globally, including 55 issued U.S. patents and 575 patents granted across Albania, Austria, Australia, Belgium, Bulgaria, Brazil, Canada, Switzerland, China, Cyprus, Czech Republic, Germany, Denmark, Eurasia, Europe, Estonia, Spain, Finland, France, the United Kingdom, Greece, Hong Kong, Croatia, Hungary, Indonesia, Ireland, Israel, India, Iceland, Italy, Japan, Republic of Korea, Lithuania, Luxembourg, Latvia, Monaco, North Macedonia, Macao, Malta, Mexico, Malaysia, Netherlands, Norway, New Zealand, Philippines, Poland, Portugal, Romania, Serbia, Sweden, Singapore, Slovenia, Slovakia, San Marino, Türkiye, Taiwan, and South Africa, and more than 35 pending U.S. non-provisional and provisional patent applications.
We also own or co-own more than 325 pending patent applications globally, including more than 132 pending U.S. non-provisional and provisional patent applications. 34 Table of Contents We also have exclusive licenses to approximately 408 issued or granted patents, including 55 issued U.S. patents and 353 patents granted across Australia, Brazil, Canada, China, Eurasia, Europe (including national patents and Unitary Patents covering Albania, Austria, Belgium, Bulgaria, Cyprus, Czech Republic, Germany, Denmark, Estonia, Spain, Finland, France, the United Kingdom, Greece, Croatia, Hungary, Ireland, Iceland, Italy, Lithuania, Luxembourg, Latvia, Monaco, North Macedonia, Malta, Netherlands, Norway, Poland, Portugal, Romania, Serbia, Switzerland, Sweden, Slovenia, Slovakia, San Marino, and Türkiye), Hong Kong, Indonesia, Israel, India, Japan, Republic of Korea, Macao, Mexico, Malaysia, New Zealand, Philippines, Singapore, Taiwan, and South Africa; and more than 79 pending patent applications globally, including more than 35 pending U.S. non-provisional and provisional patent applications.
State laws may require that laboratory personnel meet certain qualifications and obtain licenses, specify certain quality 23 Table of Contents control procedures and facility requirements, or prescribe record maintenance requirements.
State laws may require that laboratory personnel meet certain qualifications and obtain licenses, specify certain quality control procedures and facility requirements, or prescribe record maintenance requirements.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Item 1A. Risk Factors You should carefully consider the following risks and other information in this Annual Report on Form 10-K in evaluating GRAIL and GRAIL common stock. Any of the following risks and uncertainties could materially adversely affect our business, financial condition, and results of operations.
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Item 1A. “Risk Factors” for more information. 135 Table of Contents Components of Results of Operations Screening Revenue We currently derive screening revenue through the sale of Galleri primarily within the United States and primarily through primary care physicians, health systems, employers, digital health platforms, payors, and life insurance providers. Galleri is not currently broadly reimbursed.
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The following risks have generally been separated into five groups: risks relating to our business and industry, risks relating to regulation and legal compliance, risks relating to intellectual property, risks relating to the Spin-Off, and risks relating to our common stock.
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Galleri test pricing is generally based on our list price, with discounts in certain channels, or, for certain customers, such as larger, higher-volume customers or international distributors, negotiated contractual rates. For certain customers, we also offer rebates. We expect the number or magnitude of these rates, discounts and rebates to reduce our ASP over time.
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References to “we,” “our,” “us,” and words of similar import in this section refer to GRAIL and, unless otherwise specified, its consolidated subsidiaries. Risks Relating to Our Business and Industry We operate in a rapidly evolving field and have a limited operating history, which makes it difficult to evaluate our current business and predict our future performance.
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We identify each sale of our test to our customer as a single performance obligation; therefore, revenue is recognized at the point of time when the test result report is delivered.
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We operate in a rapidly evolving field and, having commenced operations in January 2016, have a limited operating history. We completed our first sale of our multi-cancer early detection test, Galleri, in mid-2021 and our other products and products in development have an even more limited history, with most still not in commercial distribution.
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For self-pay patients, we have concluded that an implied contract exists, however the transaction price for the implied contract represents variable consideration as there are situations in which we do not expect to collect the full invoiced amounts from self-pay patients due to price concessions.
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We have funded our operations to date primarily with the proceeds from the sale of equity securities and capital contributions from Illumina and, to a lesser extent, revenue derived from sales of Galleri and biopharmaceutical business revenue.
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We utilize the expected value approach to estimate the transaction price and apply a constraint for such variable consideration, on a portfolio basis. We monitor the estimated amounts to be collected at each reporting period based on actual cash collections in order to assess whether a revision to the estimate is required.
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Our short operating history as a company, evolving business strategies, rapid growth and significant events such as our separation from Illumina and the Restructuring Plan may make it difficult to evaluate our current business or our future success and the risks and challenges we may encounter, and may increase the risk that we will not continue to grow at or near historical rates.
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Development Services Revenue We also derive revenue through our development services, which consist of research services we provide to biopharmaceutical and clinical customers including support of ongoing clinical studies, pilot testing, research, and therapy development.
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We evaluate the terms and conditions included within our development services contracts with biopharmaceutical customers to ensure appropriate revenue recognition, including whether services are considered distinct performance obligations that should be accounted for separately versus together. Revenue from pilot and research services performed is recognized as performance obligations are achieved.
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We recognize revenue from development service agreements related to regulatory filings to support clinical study and companion diagnostic device development and regulatory submissions for the developed product(s) using an input method based on costs incurred to measure its progress toward the completion and satisfaction of the performance obligations.
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Cost of Screening Revenue (Exclusive of Amortization of Intangible Assets) and Cost of Development Services Revenue Cost of revenue represents expenses that are incurred to produce and sell our products and services.
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For screening revenue, these costs consist of materials, labor including salaries and wages, bonus, benefits and stock-based compensation, blood collection kits and shipping, phlebotomy, royalties, electronic medical records, equipment depreciation, and allocations of overhead expenses such as facilities and information technology costs.
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For development services, these costs consist of materials and patient sample acquisition, labor including salaries and wages, bonus, benefits and stock-based compensation, royalties, equipment depreciation, and allocations of overhead expenses such as facilities and information technology costs.
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As demand for our products increases, we expect to further leverage the scale efficiencies of our infrastructure and platform technology, which we believe will positively impact margins over time. These margin improvements from scale efficiencies will at least be partially offset when we commence recognition of royalties owing under the terms of the Illumina Supply Agreement on December 24, 2026.
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Cost of Revenue—Amortization of Intangible Assets As a result of the application of pushdown accounting, intangible assets recognized in our standalone financial statements relate to our own technology, and consist of developed technologies and in-process research and development that were measured at fair value upon the Acquisition.
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Our developed technology includes intangible assets related to Galleri, designed as a cancer screening test for asymptomatic individuals over 50 years of age, as well as our DAC product that is being designed to accelerate diagnostic resolution for patients for whom there is a clinical suspicion of cancer.
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As part of our Restructuring Plan, we have reduced investment in the development of products beyond Galleri, including DAC.
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The cost of identifiable intangible assets with finite lives, such as developed technology assets, are amortized on a straight-line basis over the assets’ respective estimated useful lives of 18 years. 136 Table of Contents Research and Development Research and development expenses include costs incurred to develop our technology (prior to establishing technological feasibility), collect clinical samples, and conduct clinical studies to develop and support our products.
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These costs consist of personnel costs, including salaries, benefits, and stock-based compensation expense associated with our research and development personnel, costs associated with setting up and conducting clinical studies at domestic and international sites, laboratory supplies, consulting costs, depreciation, and allocated overhead including facilities and information technology expenses, which we do not allocate by product.
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We expense both internal and external research and development costs in the periods in which they are incurred. Nonrefundable advance payments for goods and services that will be used or rendered in future research and development activities are deferred and recognized as expenses in the period in which the related goods are delivered or services are performed.
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We expect our research and development expenses to decrease over the next three years as, in conjunction with our portfolio review, we determined to decrease investment in product programs beyond Galleri. Additionally, some of our large clinical studies and development of our automated platform have substantially concluded.
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Sales and Marketing Sales and marketing expenses consist primarily of personnel costs, including salaries, benefits and stock- based compensation expense, consulting costs, allocated overhead including facilities and information technology expenses, and travel associated with our commercial organization. Also included are costs associated with advertising programs that consist of brand and product awareness activities and trade events and conferences.
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Sales and marketing expense also includes amortization of the trade name intangible asset that was recognized upon the Acquisition, which has been recorded in our financial statements as a result of the application of pushdown accounting.
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The cost of identifiable intangible assets with finite lives, such as trade names, are amortized on a straight-line basis over the assets’ respective estimated useful lives of 9 years.
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We expect our sales and marketing expenses to increase following the release of positive study results as we invest in initiatives to drive awareness and demand generation of Galleri and to continue to decrease as a percentage of revenue over the next three years and long term.
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General and Administrative G&A expenses consist of personnel expenses, including salaries, benefits and stock-based compensation expenses, for executive, finance and accounting, legal, human resources, business development, corporate communications, portfolio management, medical affairs, and management information systems personnel. Also included are professional fees, legal costs, including patent and trademark-related expenses and educational activities.
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The related party amount in the prior year periods represents allocated stock administration expenses from Illumina.
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We have incurred and will incur additional expenses as a result of operating as a public company, including expenses related to compliance with the rules and regulations of the SEC, director and officer insurance premiums, investor relations activities, and other expenses related to administrative and professional services.
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We expect our G&A expenses to increase as we continue to invest in corporate infrastructure to support public company operations and the commercialization of Galleri and to continue to decrease as a percentage of revenue over the next three years and long term.
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Goodwill and Intangible Assets Impairments Upon the Acquisition, excess consideration over the aggregate fair value of tangible and intangible assets, net of liabilities assumed, was recognized by Illumina as goodwill. As a result of the application of pushdown accounting, the separately issued financial statements of GRAIL reflected the goodwill recorded by Illumina upon the Acquisition.
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We evaluate goodwill and intangible assets for impairment annually or more frequently if an event occurs or circumstances change in the interim that would more likely than not reduce the fair value of the asset below its carrying amount.
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Refer to Note 2 — Summary Of Significant Accounting Policies —Goodwill and Intangible Assets in Item 8 in this Annual Report on Form 10K for more information . 137 Table of Contents Interest Income Interest income consists primarily of interest income earned on our cash, cash equivalents, and short-term marketable securities.
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Other Income (Expense), Net Other income (expense), net primarily consists of foreign currency gains and losses as a result of our intercompany agreements.
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Benefit from Income Taxes Income taxes are accounted for under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the future tax consequences of events that have been included in the consolidated financial statements.
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Deferred tax assets are recognized for deductible temporary differences and tax credit carryforwards, and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases.
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Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portions or all of the deferred tax assets will not be realized.
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Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. 138 Table of Contents Results of Operations Comparisons of 2025 to 2024 The following table summarizes our results of operations for 2025 and 2024: Year Ended Change (in thousands) December 31, 2025 December 31, 2024 $ % Revenue: Screening revenue $ 138,601 $ 108,627 $ 29,974 28 % Development services revenue 8,571 16,968 (8,397) (49 %) Total revenue 147,172 125,595 21,577 17 % Costs and operating expenses: Cost of screening revenue (exclusive of amortization of intangible assets) 73,251 63,284 9,967 16 % Cost of development services revenue 2,605 6,444 (3,839) (60 %) Cost of revenue — amortization of intangible assets 133,889 133,889 — — % Research and development 195,794 322,380 (126,586) (39 %) Sales and marketing 116,693 153,958 (37,265) (24 %) General and administrative 159,103 213,862 (54,759) (26 %) Goodwill and intangible assets impairment 28,000 1,420,936 (1,392,936) (98 %) Total costs and operating expenses 709,335 2,314,753 (1,605,418) (69 %) Loss from operations (562,163) (2,189,158) 1,626,995 74 % Other income: Interest income 28,652 26,733 1,919 7 % Other income (expense), net (993) 64 (1,057) (1652 %) Total other income, net 27,659 26,797 862 3 % Loss before income taxes (534,504) (2,162,361) 1,627,857 75 % Benefit from income taxes 126,153 135,356 (9,203) (7 %) Net loss $ (408,351) $ (2,027,005) $ 1,618,654 80 % Cost of screening revenue (exclusive of amortization of intangible assets) as a percentage of screening revenue 53 % 58 % (5) % Revenue Year Ended Change (in thousands) December 31, 2025 December 31, 2024 $ % Screening revenue $ 138,601 $ 108,627 $ 29,974 28 % Development services revenue 8,571 16,968 (8,397) (49 %) Total revenue $ 147,172 $ 125,595 $ 21,577 17 % Screening Revenue The increase in screening revenue of $30.0 million or 28% was primarily driven by a 36% increase in Galleri sales volume, partially offset by a 6% decrease in ASP.
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Galleri sales volume increased in 2025 as a result of the continued ramp in our commercial activity following the release of positive study results, implementation of new pricing strategies, enhanced ordering pathways via new integrations, expansion of our partnerships with digital health platforms, and increased enrollment in our REACH/Galleri-Medicare clinical study. 139 Table of Contents Development Services Revenue The decrease in development services revenue of $8.4 million or 49% was primarily driven by a $7.0 million decrease in revenue from pilots with biopharmaceutical partners and a $1.4 million decrease in revenue from research services and other services revenue.
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Cost of Screening Revenue (Exclusive of Amortization of Intangible Assets) Year Ended Change (in thousands) December 31, 2025 December 31, 2024 $ % Cost of screening revenue (exclusive of amortization of intangible assets) $ 73,251 $ 63,284 $ 9,967 16 % The increase in cost of screening revenue (exclusive of amortization of intangible assets) of $10.0 million or 16% was primarily driven by a 36% increase in Galleri sales volume, partially offset by a reduction in variable costs of Galleri testing performed on our automated platform.
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Cost of screening revenue (exclusive of amortization of intangible assets) as a percent of revenue decreased in 2025 mainly due to the reduction in variable costs of Galleri testing performed on our automated platform, partially offset by a 6% decrease in ASP and higher sample reprocessing costs.
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Cost of Development Services Revenue Year Ended Change (in thousands) December 31, 2025 December 31, 2024 $ % Cost of development services revenue $ 2,605 $ 6,444 $ (3,839) (60 %) The decrease in cost of development services revenue of $3.8 million or 60% was primarily due to a decrease in pilots with biopharmaceutical partners and a decrease in the number of research samples processed.
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Research and Development Research and development expenses for 2025 and 2024 were as follows: Year Ended Change (in thousands) December 31, 2025 December 31, 2024 $ % Compensation expenses $ 102,580 $ 162,914 $ (60,334) (37 %) Laboratory supplies and research collaborations 12,802 41,341 (28,539) (69 %) Clinical studies 28,012 43,890 (15,878) (36 %) Allocated Expenses 24,206 35,436 (11,230) (32 %) Depreciation expenses 10,347 12,237 (1,890) (15 %) Other expenses 17,847 26,562 (8,715) (33 %) Total research and development $ 195,794 $ 322,380 $ (126,586) (39 %) The decrease in the research and development expenses of $126.6 million or 39% was primarily attributable to: A decrease in compensation expenses of $60.3 million primarily due to a $37.4 million decrease in salaries and wages, a $14.7 million decrease in stock-based compensation expense and a $7.7 million decrease in severance and benefits, primarily due to the workforce reductions related to the Restructuring Plan implemented in 2024. 140 Table of Contents A decrease in laboratory supplies and research collaborations of $28.5 million primarily driven by the substantial completion of the development and validation of our automated platform, the completion of enrollment in the PATHFINDER 2 study and the completion of final study visits in the NHS-Galleri Trial in 2024.
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A decrease in clinical studies of $15.9 million primarily due to a $20.3 million decrease in PATHFINDER 2 study and NHS-Galleri trial expenses, partially offset by a $6.2 million increase due to increased enrollment in the REACH/Galleri-Medicare study.
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A decrease in allocated expenses of $11.2 million primarily related to ongoing cost reduction efforts, which resulted in lower software, IT, and facilities expenses being allocated to the research and development function, as well as reduced headcount.
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A decrease in other expenses of $8.7 million primarily due to a $3.9 million decrease in contractors and temporary labor, a $1.8 million decrease in professional services, and a $1.8 million decrease in cloud computing expenses due to cost optimization efforts.
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Sales and Marketing Year Ended Change (in thousands) December 31, 2025 December 31, 2024 $ % Sales and marketing $ 116,693 $ 153,958 $ (37,265) (24 %) The decrease in sales and marketing expenses of $37.3 million or 24% was primarily attributable to a decrease in compensation expenses of $26.1 million, primarily due to a $17.4 million decrease in salaries and wages, a $4.8 million decrease in severance and benefits, and a $4.4 million decrease in stock-based compensation expense, primarily due to workforce reductions related to the Restructuring Plan implemented in 2024.
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P rofessional services and marketing expenses decreased by $9.6 million due to cost optimization efforts. Other expenses decreased by $1.6 million mainly driven by decreases in the use of contractors and temporary labor as well as reductions in allocated expenses due to cost optimization efforts.
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General and Administrative Year Ended Change (in thousands) December 31, 2025 December 31, 2024 $ % General and administrative $ 159,103 $ 213,862 $ (54,759) (26 %) The decrease in general and administrative expenses of $54.8 million or 26% was primarily attributable to decreases in legal and professional services expenses and compensation related expenses.
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Legal and professional services expenses decreased $28.6 million primarily due to no longer incurring legal and professional service fees related to compliance with the European Commission hold separate order and transaction costs related to our Spin-Off, completed on June 24, 2024.
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Compensation expenses decreased by $21.6 million primarily due to a $9.0 million decrease in stock-based compensation expense , an $8.4 million decrease in salaries and wages, and a $5.9 million decrease in severance and benefits primarily due to the reduction in workforce related to the Restructuring Plan implemented in 2024, partially offset by a $1.6 million increase in variable compensation.
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Costs associated with the use of contractors and temporary labor decreased by $7.3 million due to cost optimization efforts.
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Other general and administrative costs increased by $2.7 million primarily due to higher allocated expenses due to changes in headcount. 141 Table of Contents Goodwill and Intangible Assets Impairment Year Ended Change (in thousands) December 31, 2025 December 31, 2024 $ % Goodwill and intangible assets impairment $ 28,000 $ 1,420,936 $ (1,392,936) (98 %) Goodwill and intangible impairment decreased $1.4 billion or 98% due to a goodwill impairment charge of $888.9 million and an IPR&D impairment charge of $532.0 million recognized during 2024, partially offset by an IPR&D impairment charge of $28.0 million recognized in 2025.
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Interest Income Year Ended Change (in thousands) December 31, 2025 December 31, 2024 $ % Interest income $ 28,652 $ 26,733 $ 1,919 7 % The increase in interest income of $1.9 million or 7% was primarily driven by an increase in interest earned on our money market funds and short-term marketable securities primarily due to an increase in the average balance on hand.
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Other Expense, net Year Ended Change (in thousands) December 31, 2025 December 31, 2024 $ % Other income (expense), net $ (993) $ 64 $ (1,057) (1652 %) The decrease in other income (expense), net of $1.1 million was primarily a result of the fluctuation of foreign currency exchange rates.
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Benefit from Income Taxes Year Ended Change (in thousands) December 31, 2025 December 31, 2024 $ % Benefit from income taxes $ 126,153 $ 135,356 $ (9,203) (7 %) The decrease in benefit from income taxes of $9.2 million or 7% was primarily due to an increase in effective tax rate for the year ended December 31, 2025 when compared to the effective tax rate for the year ended December 31, 2024.
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Non-GAAP Financial Measures In addition to our results provided throughout this Annual Report on Form 10-K that are determined in accordance with GAAP, this Annual Report on Form 10-K also includes the following non-GAAP financial measures for 2025, 2024, and 2023 , which information should be read in conjunction with our audited Consolidated Financial Statements and the related notes and accompanying notes included elsewhere in this Annual Report on Form 10-K: 142 Table of Contents Adjusted Gross Profit Adjusted Gross Profit is a key performance measure that our management uses to assess our operational performance, as it represents the results of revenues and direct costs, which are key components of our operations.
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We believe that this non-GAAP financial measure is useful to investors and other interested parties in analyzing our financial performance because it reflects the gross profitability of our operations, and excludes the costs associated with our sales and marketing, product development, general and administrative activities, depreciation and amortization, and the impact of our financing methods and income taxes.
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We calculate Adjusted Gross Profit as gross loss (as defined below) adjusted to exclude amortization of intangible assets and stock-based compensation allocated to cost of revenue.
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Adjusted Gross Profit should be viewed as a measure of operating performance that is a supplement to, and not a substitute for, operating income or loss from operations, net earnings or loss and other GAAP measures of income (loss) or profitability.
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The following table presents a reconciliation of gross loss, the most directly comparable financial measure calculated in accordance with GAAP, to Adjusted Gross Profit.
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Year Ended (in thousands) December 31, 2025 December 31, 2024 December 31, 2023 Gross loss (1) $ (62,573) $ (78,022) $ (95,611) Amortization of intangible assets 133,889 133,889 133,889 Stock-based compensation 2,262 1,954 1,970 Adjusted Gross Profit $ 73,578 $ 57,821 $ 40,248 (1) Gross loss is calculated as total revenue less cost of revenue (exclusive of amortization of intangible assets), cost of development services revenue, and cost of revenue — amortization of intangible assets.
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Adjusted EBITDA Adjusted EBITDA is a key performance measure that our management uses to assess our financial performance and is also used for internal planning and forecasting purposes. We believe that this non-GAAP financial measure is useful to investors and other interested parties in analyzing our financial performance because it provides a comparable overview of our operations across historical periods.
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In addition, we believe that providing Adjusted EBITDA, together with a reconciliation of net loss to Adjusted EBITDA, helps investors make comparisons between our company and other companies that may have different capital structures, different tax rates, different operational and ownership histories, and/or different forms of employee compensation.
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Adjusted EBITDA is used by our management team as an additional measure of our performance for purposes of business decision-making, including managing expenditures. Period-to-period comparisons of Adjusted EBITDA help our management identify additional trends in our financial results that may not be shown solely by period-to-period comparisons of net income (loss) or income (loss) from operations.
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Our management recognizes that Adjusted EBITDA has inherent limitations because of the excluded items, and may not be directly comparable to similarly titled metrics used by other companies.
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We calculate Adjusted EBITDA as net loss adjusted to exclude amortization of intangible assets, stock-based compensation, depreciation, goodwill and intangible assets impairment, restructuring, interest income, benefit from income tax expense, and legal and professional services costs related to the Acquisition and corresponding antitrust litigation, including compliance with the hold separate arrangements imposed by the European Commission, and our divestment from Illumina.
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We believe that the items subject to these further adjustments are not indicative of our ongoing operations due to their nature, especially considering the impact of certain items as a result of the Acquisition. 143 Table of Contents Adjusted EBITDA should be viewed as a measure of operating performance that is a supplement to, and not a substitute for, operating income or loss from operations, net earnings or loss and other U.S.
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GAAP measures of income (loss). Additionally, it is not intended to be a measure of free cash flow for management’s discretionary use, as it does not consider certain cash requirements such as interest and tax payments. Further, our definition of Adjusted EBITDA may differ from similarly titled measures used by other companies and therefore may not be comparable among companies.
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The following table presents a reconciliation of net loss, the most directly comparable financial measure calculated in accordance with U.S. GAAP, to Adjusted EBITDA on a consolidated basis.
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Year Ended (in thousands) December 31, 2025 December 31, 2024 December 31, 2023 Net loss $ (408,351) $ (2,027,005) $ (1,465,685) Adjusted to exclude the following: Amortization of intangible assets (1) 138,334 138,333 138,333 Stock-based compensation (2) 58,283 86,084 97,235 Depreciation 18,010 19,723 20,364 Goodwill and intangible assets impairment (3) 28,000 1,420,936 718,466 Restructuring (4) (34) 18,313 — Interest income (28,652) (26,733) (7,954) Benefit from income tax expense (126,153) (135,356) (41,951) Illumina/GRAIL merger & divestiture legal and professional services costs (5) — 22,158 17,320 Adjusted EBITDA $ (320,563) $ (483,547) $ (523,872) (1) Represents amortization of intangible assets, including developed technology and trade names.
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(2) Represents all stock-based compensation recognized on our standalone financial statements for the periods presented. (3) Reflects impairment of goodwill and intangible assets recognized as a result of the Acquisition. (4) Represents employee severance, benefits, payroll taxes, and other costs associated with the Restructuring Plan.
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(5) Represents legal and professional services costs associated with the Acquisition and corresponding antitrust litigation, including compliance with the hold separate arrangements imposed by the European Commission, and legal and professional services costs associated with the divestiture.
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Pursuant to the fourth amendment to the Illumina Supply Agreement, our perpetual royalty payment obligation to Illumina is suspended until December 24, 2026 or any earlier change of control, at which time royalty payments to Illumina will resume without retroactive effect.
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In future periods, when we are obliged to make royalty payments under the Illumina Supply Agreement, our gross loss, adjusted gross profit, net loss and Adjusted EBITDA will be impacted. 144 Table of Contents Liquidity and Capital Resources Sources of Liquidity From inception through the closing date of Illumina’s acquisition of GRAIL, we had funded our operations primarily through the sale and issuance of redeemable convertible preferred stock and receipt of continuation payments from Illumina.
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Post- Acquisition until completion of the Spin-Off, we received funding on a quarterly basis directly from Illumina. While we generate revenue from screening and development services, these revenues have not been sufficient to fund all operations. On June 21, 2024, in connection with the Spin-Off, we received a cash contribution of $932.3 million from Illumina.
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In October 2025, we completed the PIPE and received aggregate net proceeds of $311.3 million, after deducting issuance costs of $13.7 million. During 2025, we issued 1,169,218 shares of our common stock under the ATM program at the prevailing market prices for aggregate net proceeds of $107.5 million, after deducting issuance costs of $3.2 million.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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The Audit Committee is charged with reviewing our cybersecurity and other information technology risks, controls, and procedures, including our plan to mitigate cybersecurity risks and respond to data or cybersecurity incidents. The Audit Committee is also charged with reviewing with management cybersecurity issues that could affect the adequacy of our internal controls.
The Audit Committee is charged with reviewing our cybersecurity and other information technology risks, controls, and procedures, including our processes to mitigate cybersecurity risks and respond to data or cybersecurity incidents. The Audit Committee is also charged with reviewing cybersecurity issues with management that could affect the adequacy of our internal controls.
The CSO also provides regular briefings to our executive leadership team, including the CEO and CFO, and our Audit Committee on cybersecurity matters, such as threats, events, and the state of the program, and at least annually as part of our ERM process.
The VP, Security also provides regular briefings to our executive leadership team, including the CEO and CFO, and our Audit Committee on cybersecurity matters, such as threats, events, and the state of the program, and at least annually as part of our ERM process.
Identifying, assessing and managing cybersecurity risks Our cybersecurity team and the owners of information technology systems across the business, led by our Chief Security Officer (“CSO”), monitor current events and trends related to cybersecurity in an effort to anticipate potential risks and threats on current systems and operations.
Identifying, assessing and managing cybersecurity risks Our cybersecurity team and the owners of information technology systems across the business, led by our Chief Security Officer (“CSO”) and Vice President, Security (“VP, Security”), monitor current events and trends related to cybersecurity in an effort to anticipate potential risks and threats on current systems and operations.
At least annually, the Audit Committee meets directly with the CSO and the executive leadership team and receives a report on our cybersecurity program, posture, risks and other matters. At least annually, we conduct an organization-wide ERM process to evaluate key risks in different areas of the business.
The Audit Committee meets periodically, and at least annually,with the CSO and/or VP, Security and the executive leadership team and receives a report on our cybersecurity program, posture, risks and other matters. At least annually, we conduct an organization-wide ERM process to evaluate key risks in different areas of the business including cybersecurity.
Cybersecurity is a key piece of our overall ERM program.The Audit Committee oversees the activities of, and meets regularly with, our Chief Compliance Officer, and receives direct reports from the Chief Compliance Officer regarding the ERM structure and activities of our compliance program, including updates on training, policies, auditing and monitoring, investigations and any corrective and preventive actions.
The Audit Committee oversees the activities of, and meets regularly with, our Chief Compliance Officer, and receives direct reports from the Chief Compliance Officer regarding the ERM structure and activities of our compliance program, including updates on training, policies, auditing and monitoring, investigations and any corrective and preventive actions.
Item 1C. Cybersecurity Risk Management and Strategy Given the importance of cybersecurity to our business, we maintain a cybersecurity program to help support the effectiveness of our systems and our preparedness for cybersecurity risks.
Item 1C. Cybersecurity Risk Management and Strategy Given the importance of cybersecurity to our business, we maintain a cybersecurity program to help support the effectiveness of our systems, and our preparedness for cybersecurity risks, and our protection of the confidentiality, integrity, and availability of our critical systems and information.
Among those risks, cybersecurity risks are identified, and scores representing the potential likelihood and severity of each risk are determined. The executive leadership team and Audit Committee receive a direct report of the ERM program findings, including these cybersecurity risks.
During that process, cybersecurity risks are identified, and scores representing the potential likelihood and severity of each risk are determined. The executive leadership team and Audit Committee receive a direct report of the ERM program findings, including these cybersecurity risks and incidents it considers to be significant or potentially significant.
In the event of a cybersecurity incident, we have policies and processes for detecting threats and managing incident response. We also periodically conduct cross-functional exercises and activities to help detect, assess and respond to cybersecurity incidents, and have relationships with external providers to assist with incident response efforts, as needed.
In the event of a cybersecurity incident, we have an incident response framework that includes defined escalation procedures, cross-functional coordination protocols, regulatory notification assessment procedures, and post-incident review processes. We also periodically conduct cross-functional exercises and activities to help detect, assess and respond to cybersecurity incidents, and have relationships with external providers to assist with incident response efforts, as needed.
The CSO, cybersecurity team, and members of the Privacy and Security Steering Committee combined have decades of experience in managing relevant information technology and cybersecurity matters.
The Privacy and Security Steering Committee is composed of the VP, Security, Chief Privacy Officer, Chief Compliance Officer, and other representatives from our cybersecurity, IT, legal, and privacy teams. The VP. Security, cybersecurity team, and members of the Privacy and Security Steering Committee combined have decades of experience in managing relevant information technology and cybersecurity matters.
We also maintain a Privacy and Security Steering Committee that regularly meets to review and discuss cybersecurity issues and review our cybersecurity-related metrics. The Privacy and Security Steering Committee is comprised of the CSO and other representatives from our cybersecurity, IT, legal, and privacy teams.
The CSO is responsible for implementing and overseeing the controls and processes employed to identify, assess and manage the Company’s risks from cybersecurity threats. We also maintain a Privacy and Security Steering Committee that regularly meets to review and discuss cybersecurity issues and review our cybersecurity-related metrics.
Third-party assessors, consultants, counsel or other parties also participate in Audit Committee discussions as needed. 102 Table of Contents More broadly, the Audit Committee reviews our policies and practices with respect to risk assessment and risk management, including results from our overall Enterprise Risk Management (“ERM”), and discusses with management our major financial risk exposures and the steps that have been taken to monitor and control such exposures.
More broadly, the Audit Committee reviews our policies and practices with respect to risk assessment and risk management, including results from our overall ERM review, and discusses with management our major risk exposures and the steps that have been taken to monitor and control such exposures. Cybersecurity is a key piece of our overall ERM program.
We also are working towards enhancing our cybersecurity risk management practices and various other security controls following the Spin-Off, and have at times conducted internal audits and engaged external assessors to help review our cybersecurity program and identify opportunities for maturing our program. For additional information, see “Item 1A—Risk Factors”.
We conduct internal audits and engage external assessors to help review our cybersecurity program and identify opportunities for maturing our program. For additional information, see “Item 1A. Risk Factors”.
We use various means, including our Enterprise Risk Management (“ERM”) process, in an effort to assess and manage cybersecurity risks that may be associated with our systems, operations, and third-party service providers.
We also require cybersecurity trainings when onboarding new employees and contractors, as well as annual cybersecurity awareness training for our employees and contractors. 123 Table of Contents We use our Enterprise Risk Management (“ERM”) process to assess and manage cybersecurity risks that may be associated with our systems, operations, and third-party service providers.
As part of the ERM program, our Chief Compliance Officer gathers information about cybersecurity risk, and that information is included in the Chief Compliance Officer’s report to the Audit Committee. The CSO is responsible for implementing and overseeing the controls and processes employed to identify, assess and manage the Company’s risks from cybersecurity threats.
As part of the ERM program, our Chief Compliance Officer gathers information about cybersecurity risk, and that information is included in the Chief Compliance Officer’s report to the Audit Committee. Our cybersecurity team and information technology system owners across the business are led by our CSO and VP, Security.
We have implemented or are in the process of implementing various processes to identify, review and track risks to our systems and operations, including through the use of third-party solutions. We also seek to conduct due diligence in connection with the onboarding of new third-party vendors, and reviews are conducted on our critical third-party vendors.
We have implemented and continue to develop various processes to identify, review and track risks to our systems and operations, including through the use of third-party solutions and penetration testing of our systems.
As of December 31, 2024, we are not aware of any risks from cybersecurity threats, or from previous cybersecurity incidents, that have materially affected or are reasonably likely to materially affect the Company. While we maintain a cybersecurity program, the techniques used to infiltrate information technology systems continue to evolve.
As of December 31, 2025, we have not identified any risks from cybersecurity threats, including as a result of any previous cybersecurity incidents, that have materially affected us, including our operations, business strategy, results of operations, or financial condition.
Removed
Our program is informed by industry frameworks, such as the NIST Cybersecurity Framework, and comprises various components, including policies, procedures and protocols; threat monitoring and alerting; auditing and assessments; and other security controls and tools. We also require cybersecurity trainings when onboarding new employees and contractors, as well as annual cybersecurity awareness training for our employees and contractors.
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Our cybersecurity risk management program is part of our overall risk management program and shares similar governance processes and reporting channels that apply across the risk management program to financial, legal, compliance, and other operational risk areas. Our program is informed by industry frameworks, such as the National Institute of Standards and Technology (“NIST”) Cybersecurity Framework 2.0 (“NIST CSF 2.0”).
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Following these assessments, we utilize the findings to improve and mature our cybersecurity practices and to promote continuous improvement. In addition, we have implemented a cybersecurity awareness program to train our employees and contractors on key cyber threats, which includes phishing exercises.
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This does not imply that we meet any particular technical standards, specifications, or requirements, only that we use frameworks such as NIST CSF 2.0 as a guide to help us identify, assess, and manage cybersecurity risks relevant to our business.
Removed
Accordingly, we may not be able to timely detect threats or anticipate and implement adequate security measures. For additional information, see “Item 1A—Risk Factors”. Governance Our Board of Directors administers its cybersecurity risk oversight function through its Audit Committee.
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We have policies and procedures for performing cybersecurity risk assessments of our third-party service providers that may have access to our systems, data, facilities, or that otherwise perform services on our behalf and for conducting due diligence in connection with the onboarding of new third-party vendors.
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Our security program also includes a yearly audit of our controls towards cybersecurity certifications, including ISO 27001, SOC 2 Type 2, PCI DSS, UK Cyber Essentials, and others. 103 Table of Contents
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As a core component of our enterprise risk management strategy, we maintain a rigorous cybersecurity program that is periodically evaluated through internal assessments and independent third-party audits. We perform comprehensive maturity assessments against the NIST CSF2.0 and the NIST Privacy Framework.
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These strategic reviews complement our sustained compliance posture, which includes recurring annual audits for ISO/IEC 27001, SOC 2 Type 2, PCI DSS, UK Cyber Essentials and HIPAA. We leverage these assessments to identify functional gaps and benchmark our cybersecurity program against applicable regulatory requirements.
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The resulting findings are integrated into a formal Remediation Roadmap designed to mature our security posture and drive continuous improvement. By integrating findings from both internal evaluations and independent external audits, we foster a culture of continuous improvement and operational resilience. Recognizing that the human element is a critical line of defense, we maintain a robust cybersecurity awareness program.
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This initiative equips our employees and contractors to recognize and mitigate evolving threats through continuous education and regular phishing simulation exercises designed to reinforce vigilant behavior. Our process also includes initial due diligence, ongoing monitoring, and periodic reassessments of our third-party service providers.
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We assess materiality based on quantitative and qualitative factors, including potential impact to our operations, financial condition, intellectual property, regulatory compliance obligations, and reputation. While we maintain a cybersecurity program, the techniques used to infiltrate information technology systems continue to evolve.
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Accordingly, we face risks from cybersecurity threats that, if realized, are reasonably likely to materially affect us, including our operations, business strategy, results of operations, or financial condition. For additional information, see Item 1A.
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“Risk Factors –Our information technology systems, or those used by our third-party collaborators or other contractors or consultants, may fail or suffer cybersecurity incidents or cyberattacks”. 124 Table of Contents Cybersecurity Governance Our Board of Directors administers its cybersecurity risk oversight function through its Audit Committee.
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Third-party assessors, consultants, counsel or other parties also participate in Audit Committee discussions as needed.
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Our CSO has over five years of tenure with the Company and more than 29 years of experience in technology, including 15 years in cybersecurity. He previously served as Chief Technology Officer at NextBio and as Vice President of Software Engineering, Enterprise Informatics at Illumina, Inc.
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He is supported by a cybersecurity organization comprising experts in strategy, governance, risk management, compliance, engineering, security operations, and incident response, including our VP, Security who has over two decades of specialized experience in cybersecurity and privacy.
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Our management team takes steps to stay informed about and monitor efforts to prevent, detect, mitigate, and remediate cybersecurity risks and incidents through various means, which may include briefings from IT personnel; threat intelligence and other information obtained from governmental, public or private sources, including external consultants engaged by us; and alerts and reports produced by security tools deployed in our IT environment. 125 Table of Contents

Item 2. Properties

Properties — owned and leased real estate

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Item 2. Properties Our principal office and laboratory is approximately 74,300 square feet and located at 1525 O’Brien Drive, Menlo Park, California. We amended the related lease in June 2017 to add approximately 57,400 square feet at 11605 Adams Drive, Menlo Park, California.
Item 2. Properties Our principal office and research laboratory is approximately 74,300 square feet and located at 1525 O’Brien Drive, Menlo Park, California. We also lease office space of approximately 57,400 square feet at 1605 Adams Drive, Menlo Park, California. These leases expire on September 30, 2026.
We hold a CLIA Certificate of Accreditation Registration from the CMS and an accreditation from CAP for our laboratory in Durham, North Carolina, and a Clinical Laboratory Certificate of Deemed Status from the State of California Department of Public Health. We believe that our facilities are sufficient to meet our current and anticipated near-term needs.
We hold a CLIA Certificate of Accreditation Registration from the CMS,an accreditation from CAP, and certifications from the State of California Department of Public Health and New York State Department of Health, among others, for our North Carolina laboratory.
Our lease expires in 2033 and we have three separate options to extend the lease, each for an additional five years.
We have approximately 46,000 s quare feet of CAP-accredited, CLIA-certified laboratory space with sufficient capacity to support multiple years of growth. This lease expires in 2033 and we have three separate options to extend the lease, each for an additional five years.
Our lease expires in 2026 and we have an option to extend the lease for an additional five years. In June 2020, we entered into an agreement to lease approximately 200,000 square feet of a building in Durham, North Carolina.
The Company plans to relocate its headquarters to Sunnyvale, California upon expiration of these leases. In June 2020, we entered into an agreement to lease approximately 200,000 square feet of a building in Durham, North Carolina which is primarily a commercial laboratory capable of meeting demand of up to one million tests per year.
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In September 2025, we entered into an agreement to lease an aggregate of approximately 75,556 square feet for our new corporate headquarters located at 250 S. Matilda Avenue, Suite 100 in Sunnyvale, California. This lease is expected to commence on or about October 1, 2026 and expire on or about September 30, 2037.
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We have the option to expand into additional space and renew the lease for an additional five-year term under specified conditions. We believe that our facilities are sufficient to meet our current and anticipated near-term needs. For financial information regarding leases, refer to Note 9 — Leases in Item 8 in this Annual Report on Form 10-K . Item 3.
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Legal Proceedings For information regarding Legal Proceedings, refer to Note 11 — Legal And Regulatory Proceedings in Item 8 in this Annual Report on Form 10-K.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Item 3. Legal Proceedings For information with respect to Legal Proceedings, see Note 10 — Legal And Regulatory Proceedings to our consolidated financial statements included in this Annual Report on Form 10-K, concerning certain legal proceedings in which we are involved, is hereby incorporated by reference.
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Item 3. Legal Proceedings 126 Item 4. Mine Safety Disclosures 126 PART II 126 Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 126 Item 6. [Reserved] 127 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 128 Item 7A.
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The resolution of any such legal proceeding is subject to inherent uncertainty and could have a material adverse effect on our financial condition, cash flows or results of operations.
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Quantitative and Qualitative Disclosures About Market Risk 150 Item 8. Financial Statements and Supplementary Data 151

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Item 4. Mine Safety Disclosures Not applicable. PART II Item 5 Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market information for common stock GRAIL’s common stock is listed under the ticker symbol “GRAL” on the Nasdaq Stock Exchange since June 24, 2024.
Item 4. Mine Safety Disclosures Not applicable. PART II Item 5 Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market information for common stock GRAIL’s common stock is traded under the symbol “GRAL” and is listed on the Nasdaq Stock Exchange since June 24, 2024.
Any future determination to pay dividends on our common stock will be made at the discretion of our Board and will depend upon, among other factors, our financial condition, results from operations, current and anticipated cash needs, plans for expansion, and other factors that our Board may deem relevant. Unregistered sales of equity securities 104 Table of Contents None.
Any future determination to pay dividends on our common stock will be made at the discretion of our Board and will depend upon, among other factors, our financial condition, results from operations, current and anticipated cash needs, plans for expansion, and other factors that our Board may deem relevant.
Dividend policy We have never declared or paid any dividends on our common stock. We do not anticipate paying any cash dividends in the foreseeable future. We currently anticipate that we will retain all available funds for use in the operation and expansion of our business.
We do not anticipate paying any cash dividends in the foreseeable future. We currently anticipate that we will retain all available funds for use in the operation and expansion of our business.
Holders of record As of February 27, 2025, there were 463 holders of record of our common stock. Because many of our shares of common stock are held by brokers and other institutions on behalf of stockholders, we are unable to estimate the total number of stockholders represented by these record holders.
Because many of our shares of common stock are held by brokers and other institutions on behalf of stockholders, we are unable to estimate the total number of stockholders represented by these record holders. 126 Table of Contents Dividend policy We have never declared or paid any dividends on our common stock.
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Holders of record As of March 6, 2026, there were 440 holders of record of our common stock.
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Unregistered sales of equity securities Disclosure about unregistered sales of equity securities during the quarter ended December 31, 2025 was previously reported in a Current Report on Form 8-K filed on October 20, 2025. Issuer purchases of equity securities None.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 104 Item 6. [Reserved] 105 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 106 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 127 Item 8. Financial Statements and Supplementary Data F- 1
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Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers. On March 10, 2026, the Board of Directors appointed Joshua Ofman, M.D., MSHS, age 61, to serve as Chief Executive Officer of the Company, effective June 1, 2026 (the “Transition Effective Date”). The Board also appointed Dr.
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Ofman to serve as a Class III director, effective on March 12, 2026, immediately following the filing of this Annual Report on Form 10-K and a Registration Statement on Form S-8 relating to the registration of certain shares under our Employee Stock Purchase Plan and Incentive Award Plan, to hold office until the 2027 annual meeting of stockholders.
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We intend to nominate Dr. Ofman for reelection to the Board at the 2027 annual meeting of stockholders. Dr.
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Ofman has served as the Company's President since June 2021 and previously served as the Company's Chief Medical Officer from November 2021 until June 2022, as the Company's Chief Medical Officer 197 and Head of External Affairs from June 2020 until August 2021, and as Chief of Corporate Strategy and External Affairs from June 2019 until January 2020. Dr.
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Ofman has previously served on the Board of Directors of two privately held biotechnology companies. Previously, Dr. Ofman spent more than 15 years at Amgen, where he last served in the role of Senior Vice President, Global Value, Access and Policy. Prior to that, Dr.
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Ofman was a faculty member in the Department of Medicine and Health Services Research at University of California, Los Angeles ("UCLA") School of Medicine, Cedars-Sinai Medical Center, as well as Senior Vice President of Zynx Health, Inc. Dr.
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Ofman holds a B.A. in history and philosophy of science from the University of California, Berkeley, an M.D. from the University of California, Irvine, School of Medicine, and an MSHS from the UCLA School of Public Health. There are no arrangements or understandings between Dr. Ofman and any other persons pursuant to which Dr.
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Ofman was appointed as Chief Executive Officer. Dr. Ofman has no direct or indirect material interest in any transaction required to be disclosed pursuant to Item 404(a) of Regulation S-K, and there are no family relationships between Dr. Ofman and any director or executive officer of the Company. The material terms of any compensatory arrangements entered into with Dr.
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Ofman in connection with his appointment as Chief Executive Officer will be disclosed once determined in a subsequent periodic or current report, as required. On March 12, 2026, Robert Ragusa announced his retirement as Chief Executive Officer of the Company and as a Class III director, in each case, effective on the Transition Effective Date (June 1, 2026).
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In connection with Mr. Ragusa's retirement, the Company and Mr. Ragusa entered into a Transition Agreement, dated as of March 10, 2026 (the "Transition Agreement"). A copy of the Transition Agreement is filed as Exhibit 10.15 to this Annual Report on Form 10-K and is incorporated herein by reference. Pursuant to the Transition Agreement, Mr.
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Ragusa will continue to serve as our Chief Executive Officer until the Transition Effective Date and, following the Transition Effective Date, will serve as a senior executive advisor until March 12, 2027 (such period the “Transition Period”). During the Transition Period, Mr.
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Ragusa will assist and cooperate with the Company with respect to the transition of the position of Chief Executive Officer to Dr. Ofman. Pursuant to the Transition Agreement, Mr. Ragusa will continue to receive the same compensation and benefits as currently in effect until the Transition Date. During the Transition Period, we will pay or provide to Mr.
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Ragusa: (i) an annualized base salary of $300,000, (ii) continued participation in health and welfare benefits or comparable subsidized healthcare continuation coverage, (iii) a pro-rated bonus under the Company’s Variable Compensation Plan for portion of calendar year 2026 preceding the Transition Date, subject to Mr.
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Ragusa’s continued employment through the end of the Transition Period, execution of a release of claims, and continued compliance with restrictive covenants, and (iv) continued vesting of outstanding and unvested equity awards (without eligibility for accelerated vesting, except as described below). If the Company terminates Mr.
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Ragusa’s employment without Cause (as defined in the Transition Agreement) prior to March 12, 2027, subject to his execution of a release of claims and continued compliance with restrictive covenants, Mr.
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Ragusa will be entitled to receive: (i) continued payment of his base salary through March 12, 2027, (ii) subsidized healthcare continuation coverage through March 2027, (iii) his pro-rated bonus (if earned), and (iv) accelerated vesting solely as to the portion of his outstanding and unvested equity awards that would have vested had his employment continued through March 12, 2027.
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The Transition Agreement includes a general release of claims in favor of the Company and provides that Mr. Ragusa will continue to comply with certain restrictive covenants, including confidentiality, non-disparagement, non-competition, and non-solicitation provisions contained therein.
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The foregoing description of the Transition Agreement is qualified in its entirety by reference to a copy of the Transition Agreement which is hereby incorporated herein by reference. 198 (b) Insider Trading Arrangements and Policies.
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During the three months ended December 31, 2025, the following of our directors or officers (as defined in Rule 16a-1(f) under the Securities Exchange Act of 1934, as amended) adopted, modified or terminated a “Rule 10b5-1 trading arrangement” or a “non-Rule 10b5-1 trading arrangement”, as each term is defined in Item 408(a) of Regulation S-K.
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None of our other directors or officers adopted, modified or terminated a “Rule 10b5-1 trading arrangement” or a “non-Rule 10b5-1 trading arrangement” during this period, other than as set forth below. On December 2, 2025, Dr.
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Joshua Ofman, President of the Company, modified a Rule 10b5-1 trading arrangement intended to satisfy the affirmative defense of Rule 10b5-1(c) (as modified, the “2026 Ofman Trading Arrangement”).
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The 2026 Ofman Trading Arrangement modifies the 2025 Ofman Trading Arrangement, as defined in our Quarterly Report on Form 10-Q for the three months ended March 31, 2025, and provides for the sale of up to 86,452 shares of common stock, subject to price limitations, until February 20, 2027. On December 11, 2025, Mr.
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Aaron Freidin, Chief Financial Officer of the Company, modified a Rule 10b5-1 trading arrangement intended to satisfy the affirmative defense of Rule 10b5-1(c) (as modified, the “2026 Freidin Trading Arrangement”).
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The 2026 Freidin Trading Arrangement modifies the 2025 Freidin Trading Arrangement, as defined in our Quarterly Report on Form 10-Q for the three months ended March 31, 2025, and provides for the sale of up to 21,000 shares of common stock, subject to price limitations, until March 19, 2027. 199 Item 9C.
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Disclosure Regarding Foreign Jurisdictions that Prevent Inspections Not applicable . 200 PART III

Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

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Our actual results could differ materially from the results contemplated by these forward-looking statements due to a number of factors, including those discussed in the section entitled “Risk Factors” in Part I, Item 1A of this Form 10-K and the section titled “Cautionary Statement Concerning Forward-Looking Statements” of this Annual Report on Form 10-K.
Our actual results could differ materially from the results contemplated by these forward-looking statements due to a number of factors, including those discussed in the section entitled “Risk Factors” in Part I, Item 1A of this Annual Report on Form 10-K and the section titled “Cautionary Statement Concerning Forward-Looking Statements” of this Annual Report on Form 10-K.
The additional costs we expect to incur as a separate public company are summarized as follows: • Accounting and audit related costs, professional services, and new systems and software to support the accounting, financial reporting, and audits as a standalone public company; • Professional service costs, for additional support to enhance our capabilities in areas such as investor relations, accounting, financial reporting, treasury, risk management, and equity administration, among others; and 108 Table of Contents • Corporate governance costs, including but not limited to board of directors compensation and expenses, insurance, legal and other professional services fees, annual report and proxy statement costs, SEC filing fees, transfer agent fees, and stock exchange listing fees.
The additional costs we expect to incur as a separate public company are summarized as follows: • Accounting and audit related costs, professional services, and new systems and software to support the accounting, financial reporting, and audits as a standalone public company; • Professional service costs, for additional support to enhance our capabilities in areas such as investor relations, accounting, financial reporting, treasury, risk management, and equity administration, among others; and • Corporate governance costs, including but not limited to board of directors compensation and expenses, insurance, legal and other professional services fees, annual report and proxy statement costs, SEC filing fees, transfer agent fees, and stock exchange listing fees.
Illumina’s acquisition of GRAIL on August 18, 2021 (“the Acquisition”) represented a change of control with respect to GRAIL. Given GRAIL, Inc. merged with SDG Ops, Inc., which then merged with SDG Ops LLC, authoritative guidance (ASC 805-50-30) required pushdown accounting to be applied for the Second Merger amongst entities under common control.
Illumina’s acquisition of GRAIL on August 18, 2021 represented a change of control with respect to GRAIL. Given GRAIL, Inc. merged with SDG Ops, Inc., which then merged with SDG Ops LLC, authoritative guidance (ASC 805-50-30) required pushdown accounting to be applied for the Second Merger amongst entities under common control.
Substantially all of our net losses resulted from the application of pushdown accounting, including goodwill and intangible assets impairment, amortization of intangible assets, as well as our research and development programs, general and administrative (“G&A”) costs associated with our operations and sales and marketing costs associated with commercializing our products.
Substantially all of our net losses resulted from the application of pushdown accounting, including goodwill and intangible assets impairments, amortization of intangible assets, as well as our research and development programs, general and administrative (“G&A”) costs associated with our operations, and sales and marketing costs associated with commercializing our products.
Item 6. [Reserved] 105 Table of Contents Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations You should read the following discussion of our results of operations and financial condition together with our accompanying consolidated financial statements and the notes thereto included under Item 8. “Financial Statements”.
Item 6. [Reserved] 127 Table of Contents Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations You should read the following discussion of our results of operations and financial condition together with our accompanying consolidated financial statements and the notes thereto included under Item 8. “Financial Statements”.
These consolidated financial statements reflect GRAIL’s consolidated historical financial position, results of operations and cash flows as historically managed, in accordance with GAAP.
These consolidated financial statements reflect our consolidated historical financial position, results of operations and cash flows as historically managed, in accordance with GAAP.
A key factor to our future success is and will be our ability to increase demand for, and sales of, Galleri from new and existing customers. Our commercial strategy is focused on innovative value-oriented partnerships and targets health systems, employers, payors, and life insurance providers.
A key factor to our future success is and will be our ability to increase demand for, and sales of, Galleri from new and existing customers. Our commercial strategy is focused on innovative value-oriented partnerships and targets primary care physicians, health systems, employers, digital health platforms, payors, and life insurance providers.
The Consolidated Financial Statements may not be indicative of GRAIL’s future performance and do not necessarily reflect what the financial position, results of operations and cash flows would have been, and may not include all expenses that would have been incurred, had GRAIL been operated as an independent, publicly traded company during the periods presented.
The consolidated financial statements may not be indicative of our future performance and do not necessarily reflect what the financial position, results of operations and cash flows would have been, and may not include all expenses that would have been incurred, had GRAIL been operated as an independent, publicly traded company during the periods presented prior to the Spin-Off.
As of December 31, 2024, we have entered into commercial partnerships, including with leading healthcare systems, employers, payors, and life insurance providers, and have established a network of over 13,000 prescribers across the United States in a pre-reimbursement setting. We believe this commercial network represents a significant opportunity to drive further demand for Galleri.
As of December 31, 2025, we have entered into commercial partnerships, including with leading healthcare systems, digital health platforms, employers, payors, and life insurance providers, and have established a network of over 17,000 prescribers across the United States in a pre-reimbursement setting. We believe this commercial network represents a significant opportunity to drive further demand for Galleri.
Overview Our Business We are an innovative commercial-stage healthcare company focused on saving lives and shifting the paradigm in early cancer detection. We believe screening individuals for many types of cancer with a single test represents a significant opportunity to reduce the global burden of cancer.
Overview Our Business We are an innovative commercial-stage healthcare company focused on shifting the paradigm in early cancer detection at population scale. We believe screening individuals for many types of cancer with a single test represents a significant opportunity to reduce the global burden of cancer.
The mix of customers from which we generate revenue from period to period has an impact on our revenue and gross margin. Galleri test pricing is generally based on our list price or, for certain customers, such as larger, higher-volume customers, negotiated contractual rates. For certain customers, we also offer rebates or discounts from time to time.
The mix of customers from which we generate revenue from period to period has an impact on our revenue and gross margin. Galleri tes t pricing is generally based on our list price, with discounts in certain channels, or, for certain customers, such as larger, higher-volume customers or international distributors, negotiated contractual rates. For certain customers, we also offer rebates.
In addition, we have entered into a supply and commercialization agreement with Illumina.
In addition, we have entered into a supply and commercialization agreement with Illumina (the “Illumina Supply Agreement”).
In addition, from 2021 to 2024, we spent $143.8 million on legal and professional service fees related to the antitrust litigation and compliance with the hold separate order and transaction costs related to Illumina’s acquisition of GRAIL and the Spin-Off.
See “Non-GAAP Financial Measures — Adjusted EBITDA” for further details. In addition, from 2021 to 2024, we spent $143.8 million on legal and professional service fees related to the antitrust litigation and compliance with the hold separate order and transaction costs related to Illumina’s acquisition of GRAIL and the Spin-Off.
Restructuring Plan On August 9, 2024, following a portfolio review, our Board of Directors (the “Board”) approved a restructuring plan (“Restructuring Plan”) designed to reprioritize our resources to focus on our core MCED business and reduce overall spend as we progress towards completion of registrational studies and premarket approval application (“PMA”) submission to the U.S.
Restructuring Plan On August 9, 2024, following a portfolio review, our Board of Directors (the “Board”) approved a restructuring plan (“Restructuring Plan”) designed to reprioritize our resources to focus on our core MCED business and reduce overall spend as we progressed towards completion of registrational studies and PMA submission to the FDA for Galleri.
Prior to broader coverage and reimbursement in the United States, we will continue our work with clinics and health systems to accelerate utilization, and with self-insured employers and health insurers to offer and cover Galleri.
Our performance will be impacted by the extent to which we can secure reimbursement and coverage for Galleri. Prior to broader coverage and reimbursement in the United States, we will continue our work with clinics and health systems to accelerate utilization, and with self-insured employers and health insurers to offer and cover Galleri.
Galleri is currently available as a laboratory developed test (“LDT”) in the United States and we have established private reimbursement from a number of self-insured employers and health plans, but do not currently have broader coverage and reimbursement by government healthcare programs, such as Medicare.
Galleri is currently available as a laboratory developed test (“LDT”) in the United States and we have established coverage and reimbursement from a number of self-insured employers and health plans, including coverage from TRICARE, but we do not currently have broader coverage and reimbursement by Medicare or large commercial insurers.
We expect to incur additional costs as a separate public company. These additional costs are primarily related to certain supporting functions that may differ from and be higher than the costs historically incurred or allocated to us.
These additional costs are primarily related to certain supporting functions that may differ from and be higher than the costs historically incurred or allocated to us.
Under the terms of the agreement, regardless of whether our products incorporate any Illumina technology, we have agreed to pay to Illumina a high single-digit royalty, subject to certain reductions, in perpetuity on net sales generated by our products or revenues otherwise generated or received by us, subject to certain exceptions, in the field of oncology.
Under the terms of the Illumina Supply Agreement, regardless of whether our products incorporate any Illumina technology, we will be obligated to pay Illumina a 9% royalty, subject to certain reductions and floors, in perpetuity on net sales generated by our products or revenues otherwise generated or received by us, subject to certain exceptions, in the field of oncology.
We have established and maintained a leading voice in conversations regarding the early detection of multiple cancer types in the peer-reviewed literature. We have published data from these studies in high-profile journals and have presented such data at renowned medical conferences.
These studies include: NHS-Galleri, PATHFINDER, PATHFINDER 2, CCGA, REACH/Galleri-Medicare, REFLECTION, STRIVE, SUMMIT, and SYMPLIFY. We have established and maintained a leading voice in conversations regarding the early detection of multiple cancer types in the peer-reviewed literature. We have published data from these studies in high-profile journals and have presented such data at renowned medical conferences.
While Galleri has not been approved or cleared by the FDA, FDA approval is currently not required to market our test in the United States. We plan to pursue FDA approval to help support broad access for Galleri in the United States. We plan to complete a PMA submission with the FDA in the first half of 2026.
While Galleri has not been approved or cleared by the FDA, FDA approval is currently not required to market our test in the United States. We are pursuing FDA approval to help support broad access for Galleri in the United States and we submitted a PMA for Galleri to the FDA in January 2026.
Adjusted EBITDA was $(483.5) million for fiscal year 2024, $(523.9) million for fiscal year 2023 , and $(500.1) million for fiscal year 2022 . Adjusted EBITDA is a non-GAAP financial measure.
Adjusted EBITDA was $(320.6) million, $(483.5) million and $(523.9) million for 2025, 2024 and 2023 . Adjusted EBITDA is a non-GAAP financial measure.
In connection with the Spin-Off, we incurred $22.2 million of legal and professional fees in the year ended December 31, 2024 related to the 2021 acquisition of GRAIL by Illumina, and corresponding antitrust litigation, including compliance and divestiture of GRAIL from Illumina through the Spin-Off. See “Non-GAAP Financial Measures — Adjusted EBITDA” for further details.
In connection with the Spin-Off, we incurred $22.2 million of legal and professional fees in the year ended December 31, 2024 related to the 2021 acquisition of GRAIL by Illumina, and corresponding antitrust litigation, including compliance with the hold separate arrangements imposed by the European Commission, and divestiture of GRAIL from Illumina through the Spin-Off.
We expect to continue selectively engaging with international opportunities over time. • Continued development of the market for MCED testing . Multi-cancer early detection is a relatively novel technology and the market for MCED tests is evolving. We continue to drive MCED as a solution to one of healthcare’s most important challenges.
Multi-cancer early detection is a novel technology and the market for MCED tests is evolving. We continue to drive MCED as a solution to one of healthcare’s most important challenges.
We make significant efforts to educate these key stakeholders regarding the benefits of MCED and the clinical and economic value of our products, which we believe will continue to drive awareness of MCED and expand the commercial opportunity for our products. • Demand for our products and customer mix .
We make significant efforts to educate these key stakeholders regarding the benefits of MCED and the clinical and economic value of our products, which we believe will continue to drive awareness of MCED and expand the commercial opportunity for our products. Additionally, new MCED products from new market entrants launched commercially in the second half of 2025.
The Restructuring Plan included a reduction in our existing headcount and planned 2024 hires of approximately 30%, inclusive of 350 then full-time employees, or approximately 25% of the workforce in place as of June 30, 2024.
The decision was based on cost-reduction initiatives intended to reduce our ongoing operating expenses and maximize shareholder value. The Restructuring Plan included a reduction in our existing headcount and planned 2024 hires of approximately 30%, inclusive of 350 then full-time employees, or approximately 25% of the workforce in place as of June 30, 2024.
We expect our research and development expenses to decrease over the next three years as, in conjunction with our portfolio review, we determined to decrease investment in product programs beyond Galleri. Additionally, some of our large clinical studies and development of our automated platform are expected to substantially conclude in this period .
We expect our research and development expenses to decrease over the next three years as, in conjunction with our portfolio review, we determined to decrease investment in product programs beyond Galleri.
We also expect to increase demand from new customers through our efforts to further develop the market for MCED testing. • Investment in clinical studies and innovation to support our strategy and growth . A significant aspect of our business is our investment in research and development and the ongoing evidence generation supporting the clinical performance and utility of Galleri.
We also expect to increase demand from new customers through our efforts to further develop the market for MCED testing. 134 Table of Contents • Investment in clinical studies and innovation to support our strategy and growth .
The Restructuring Plan was substantially completed in the fourth quarter of 2024, and we incurred approximately $18.3 million of total charges for the year ended December 31, 2024, consisting primarily of employee severance, benefits, payroll taxes, and other associated costs. We expect the headcount reductions to enable future cost savings of approximately $120 million on an annual basis.
The Restructuring Plan was substantially completed in the fourth quarter of 2024, and we incurred $18.3 million of total charges through the fourth quarter of 2024, consisting primarily of employee severance, benefits, payroll taxes, and other associated costs.
On June 21, 2024, in connection with the Spin-Off, we received a cash contribution of $932.3 million from Illumina.
Refer to Note 1 — Organization And Description Of Business in Item 8 in this Annual Report on Form 10K. On June 21, 2024, in connection with the Spin-Off, we received a cash contribution of $932.3 million from Illumina.
We have sold more than 290,000 commercial tests which have detected some of the most aggressive cancers in early stages including, among others, endometrial, esophageal, gastric, head and neck, liver, pancreatic, and rectal cancers. 106 Table of Contents Since our inception, we have incurred net losses each year.
We have sold approximately 475,000 commercial Galleri tests through December 31, 2025, including more than 185,000 in 2025, which have detected some of the most aggressive cancers in early stages including, among others, endometrial, esophageal, gastrointestinal, head and neck, liver, pancreatic, and rectal cancers.
If we obtain FDA approval, we expect to pursue inclusion of Galleri in the USPSTF’s guideline recommendation, although such inclusion is not certain even with FDA approval. We believe such inclusion would further increase adoption and market acceptance of our tests.
If we obtain FDA approval, we expect to pursue coverage through this new law and, subsequently, inclusion of Galleri in the USPSTF’s guideline recommendation, although such inclusion may take years and is not certain even with FDA approval.
A detailed discussion comparing our results of operations for the years ended December 31, 2023 and January 2, 2022 can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our final Information Statement filed with our Registration Statement on Form 10, as amended, as filed with the SEC.
A detailed discussion comparing our results of operations for 2024 and 2023 can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our Annual Report on Form 10-K, for the year ended December 31, 2024.
We have expanded our research internationally into the United Kingdom through our partnership with NHS England in the NHS-Galleri Trial, and we expect to launch Galleri in the United Kingdom subject to the results of our NHS-Galleri Trial. We continue to evaluate international expansion 109 Table of Contents opportunities and we have begun expansion in select additional geographies through distributors.
We have expanded our research internationally into the United Kingdom through our partnership with NHS England in the NHS-Galleri Trial, and we expect to launch Galleri in the United Kingdom, following any positive NHS evaluation of the final results from the NHS-Galleri Trial.
Key Factors Affecting Performance We believe there are several important factors that have impacted and that we expect will impact our operating performance and results of operations, including: • FDA and other regulatory approval and reimbursement . Our performance will be impacted by the extent to which we can secure reimbursement and coverage for Galleri.
Certain factors could impact the nature and amount of these separate public company costs, including the finalization of our staffing and infrastructure needs. 132 Table of Contents Key Factors Affecting Performance We believe there are several important factors that have impacted and that we expect will impact our operating performance and results of operations, including: • FDA and other regulatory approval and reimbursement .
Our Durham, North Carolina facility is able to process a substantial number of tests 110 Table of Contents annually and is CAP-accredited and CLIA-certified. In addition, we engineered custom technology infrastructure and cloud-based tools to enable scalable data collection and analysis capabilities.
We have made significant investments to build a scalable infrastructure capable of meeting significant demand of up to one million tests per year while satisfying applicable certification and licensing requirements and accreditation standards. Our Durham, North Carolina facility is CAP-accredited and CLIA-certified. In addition, we engineered custom technology infrastructure and cloud-based tools to enable scalable data collection and analysis capabilities.
We estimate that the Restructuring Plan extends our anticipated cash runway from the second half of 2026 into 2028. Basis of Presentation The accompanying consolidated financial statements have been prepared on a standalone basis using the consolidated financial statements and accounting records of Illumina prior to the Spin-Off, and the accounting records of GRAIL, Inc. subsequent to the Spin-Off.
For the year ended December 31, 2025, we incurred an immaterial amount of restructuring charges. 131 Table of Contents Basis of Presentation The accompanying consolidated financial statements have been prepared on a standalone basis using the consolidated financial statements and accounting records of Illumina prior to the Spin-Off, and the accounting records of GRAIL, Inc. subsequent to the Spin-Off.
Food and Drug Administration (“FDA”) for Galleri. As a result, we have taken actions to streamline our commercial sales forces and focus their field-based activities on the current customers expected to be more productive and high priority opportunities. We maintained sales force coverage for the majority of our current Galleri volume and active prescribers.
As a result, we streamlined our commercial sales forces to focus on productive customers and high priority opportunities, while maintaining sales force coverage for the majority of our current Galleri volume and active prescribers. We also streamlined the investment in enterprise business, including our employer and life insurance businesses.
We believe our work with the NHS and data generated from our NHS-Galleri Trial, if favorable, could help facilitate adoption in other single-payor systems around the world and support evidence of clinical utility worldwide. • International expansion . A component of our long-term growth strategy is to expand our commercial reach internationally.
We believe the decision will include considerations such as NHS budget, political priorities, cost-effectiveness and implementation constraints in addition to an evaluation of the final results. We also believe our work with the NHS and the data generated from our NHS-Galleri Trial could help facilitate adoption in other single-payor systems around the world and support evidence of clinical utility worldwide.
We plan to continue to invest in our biopharmaceutical partnerships and work with our partners to leverage our proprietary methylation technology in precision oncology applications. 107 Table of Contents The decision was based on cost-reduction initiatives intended to reduce our ongoing operating expenses and maximize shareholder value.
In addition, we made reductions in general and administrative expenses to reflect the focus on the MCED opportunity. We plan to continue to invest in our biopharmaceutical partnerships and work with our partners to leverage our proprietary methylation technology in precision oncology applications.
Revenue generated from customers with negotiated contractual rates, or with rebates or discounts, is generally lower margin as compared to revenue generated based on list pricing. In addition, we have entered into a number of biopharmaceutical research partnerships for our research-use-only (“RUO”) offering under our precision oncology portfolio.
Revenue generated from customers with negotiated contractual rates, or with rebates or discounts, is generally lower margin as compared to revenue generated based on list pricing. We expect the number or magnitude of these rates, discounts and rebates to reduce our average selling price (“ASP”) over time.
In these studies, Galleri demonstrated an ability to detect a shared cancer signal across more than 50 types of cancer, accurately predict the specific organ or tissue type where the cancer signal originated, and yield high positive predictive values and low false positive rates, all from a simple blood draw.
Our multi-cancer early detection test (“Galleri”) can screen for many types of cancer, accurately predicting the specific organ or tissue type where the cancer signal originated (the “Cancer Signal of Origin”, or “CSO”), with high positive predictive values (“PPV”) and low false positive rates, all from a simple blood draw.
We also substantially decreased investment and planned investment in research and development activities related to our product programs beyond Galleri, including our diagnostic aid for cancer and minimal residual disease programs. In addition, we made reductions in general and administrative expenses to reflect the focus on the MCED opportunity.
These changes involved simplifying management layers and commercial roles without sales responsibilities, along with reductions in medical affairs teams involved with U.S. Galleri provider engagement. We also substantially decreased investment and planned investment in research and development activities related to our product programs beyond Galleri, including our diagnostic aid for cancer (“DAC”) and minimal residual disease programs.
In particular, we have invested heavily in clinical studies and designed and executed what we believe is the largest clinical program in genomic medicine to date. These studies include: CCGA, NHS-Galleri, PATHFINDER, PATHFINDER 2, REACH/Galleri-Medicare, REFLECTION, STRIVE, SUMMIT, and SYMPLIFY.
A significant aspect of our business is our investment in research and development and the ongoing evidence generation supporting the clinical performance and utility of Galleri. In particular, we have invested heavily in clinical studies and designed and executed what we believe is the largest clinical program in genomic medicine to date.
Large customers, such as healthcare systems, employers, and biopharmaceutical partners, generally begin using our products by initiating pilots involving a limited number of tests. We believe that our ability to convert these initial pilots into long-term customer relationships has the potential to drive substantial long-term revenue.
In addition, we have entered into a number of biopharmaceutical research partnerships for our research-use-only (“RUO”) offering under our precision oncology portfolio. Large customers, such as healthcare systems, employers, and biopharmaceutical partners, generally begin using our products by initiating pilots involving a limited number of tests.
Per the terms of the Separation and Distribution Agreement with Illumina, the royalty arrangement is suspended until the earlier of December 24, 2026 or any earlier GRAIL Change of Control (as defined in that agreement), at which time the high-single digit royalty will become payable.
Pursuant to the fourth amendment to the Illumina Supply Agreement, the perpetual royalty payment obligation to Illumina is suspended until December 24, 2026 or any earlier change of control of GRAIL, at which time royalty payments to Illumina will resume, without retroactive effect.
Over time, to the extent Galleri becomes more accessible in the United States, we may opt to reduce pricing in order to access a broader population base and accelerate adoption. In the United Kingdom, we are working with NHS England to complete our NHS-Galleri Trial.
Over time, we have and may continue to opt to provide rebates or discounts to certain customers, or reduce pricing in order to access a broader population base and accelerate adoption.
In the future, it is possible that we may invest significant amounts in infrastructure to support new products or existing products in new markets. While each of these areas presents significant opportunities for us, they also pose significant risks and challenges that we must address. See “Risk Factors” for more information.
These seasonal trends have caused, and will likely continue to cause, fluctuations in our quarterly results, including fluctuations in sequential revenue growth rates. While each of these areas presents significant opportunities for us, they also pose significant risks and challenges that we must address. See
We continue to interact with the FDA regarding the data we must provide the FDA to support our PMA submission for the proposed intended use. We believe that FDA approval, if obtained, could unlock large commercial payors in the United States and we are supporting proposed legislation in the United States to enable coverage of FDA-approved MCED tests by Medicare.
We believe that FDA approval, if obtained, could unlock coverage from large commercial payors in the United States.
The timing of this submission is subject to various risks and other factors, including the completion of clinical studies and our ongoing discussions with the FDA. Obtaining PMA approval can take several years from the time an application is submitted, if at all.
Obtaining PMA approval can take several months or years from the time an application is submitted, if at all. Moreover, the regulatory requirements surrounding the pathway to PMA for laboratory tests has in the recent past, and may in the future, be subject to change.
Removed
Our Galleri test is a commercially available screening test for early detection of multiple types of cancer, which we termed multi-cancer early detection (“MCED”).
Added
Our fiscal year end is December 31. References to 2025 , 2024, and 2023 refer to the fiscal years ended December 31, 2025 , December 31, 2024, and December 31, 2023 . This section of this report generally discusses 2025 and 2024 items and year-to-year comparisons between 2025 and 2024.
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We believe Galleri is clinically validated based on the results of its clinical studies completed to date, including the results of its foundational case-control Circulating Cell-free Genome Atlas (“CCGA”) study and interventional PATHFINDER study which together enrolled more than 21,000 participants.
Added
Galleri has detected some of the most aggressive cancers in early stages including, among others, endometrial, esophageal, gastrointestinal, head and neck, liver, pancreatic, and rectal cancers.
Removed
Galleri results can help guide next steps for diagnosis of cancer by healthcare providers in required follow-up diagnostic testing. We launched Galleri in the United States in mid-2021.
Added
We have conducted what we believe is the largest clinical program in genomic medicine to date with data from over 385,000 participants that we believe demonstrate the clinical validation and clinical utility of Galleri in its intended use population.
Removed
Our net losses were $2.0 billion for fiscal year 2024 ( which includes $1.4 billion of goodwill and intangible assets impairment), $1.5 billion for fiscal year 2023 (which includes $718.5 million of goodwill and intangible assets impairment), and $5.4 billion for fiscal year 2022 (which includes $4.7 billion in goodwill impairment), (see “Basis of Presentation” below for a description of applicable fiscal periods).
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We have deep operational experience with over 800,000 tests processed 128 Table of Contents across this clinical program and from our commercial experience, including through partnerships with leading healthcare systems, employers, digital health platforms, payors, and life insurance providers.
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We expect to continue to incur operating losses over at least the next several years as we continue to invest in research and development and commercialization of existing products. Separation from Illumina On June 24, 2024, Illumina completed the Spin-Off, as described above. See Note 1 — Organization And Description Of Business for details.
Added
Recently we announced results from two of our large clinical trials, PATHFINDER 2 and NHS-Galleri Trial, and included certain results from those studies in our pre-market approval application (“PMA”) to the Food and Drug Administration (“FDA”), the last module of which we submitted in January 2026.
Removed
In connection with the Spin-Off, certain equity and liability classified awards were converted in accordance with the employee matters agreement, as further described in Note 7 — Stock-Based Compensation . As a result of the separation, our member’s equity balance was reclassified to additional paid-in capital.
Added
Performance and safety data focused on the first approximately 25,000 participants of our approximately 35,000 parti cipant PATHFINDER 2 study were presented at the European Society for Medical Oncology (“ESMO”) in October 2025 (the “PATHFINDER 2 Initial Results”) and demonstrated that adding Galleri to recommended (breast, cervical, colorectal and lung) screenings led to a cancer detection rate more than seven-fold increase in the number of cancers found within a year, and an approximately three-fold increase when prostate screening was included.
Removed
As part of this approach, we also streamlined our current and planned investment in our enterprise business, which included our employer and life insurance businesses. Reductions in the commercial organization included management layers and commercial roles without sales responsibilities. In addition to reductions in the commercial organization, we made reductions in medical affairs teams involved with U.S. Galleri provider engagement.
Added
Results from the full approximately 35,000 participants in the PATHFINDER 2 study were generally consistent with the results presented at ESMO.
Removed
While GRAIL was a subsidiary of Illumina, GRAIL’s fiscal year was the 52 or 53 weeks ending the Sunday closest to December 31, with quarters of 13 or 14 weeks ending the Sunday closest to March 31, June 30, September 30, and December 31.
Added
We also announced topline results from our three year, randomized control NHS-Galleri Trial which demonstrated a substantial reduction in stage 4 cancer diagnoses, increased stage 1 and 2 detection of deadly cancers, and four-fold higher cancer detection rate when compared to recommended screenings alone, although the primary endpoint of statistically significant combined stage 3 and 4 reduction was not observed.
Removed
References to “fiscal year 2023 ” refer to the period from January 2, 2023 to December 31, 2023, and “fiscal year 2024 ” refer to the period from January 1, 2024 to December 31, 2024 . Upon the closing of the Spin-Off, GRAIL adopted a fiscal year end of December 31.
Added
However, there was a favorable trend toward fewer combined stage 3 and 4 cancers in a pre-specified group of 12 deadly cancers in the intervention arm after the prevalent screening round.
Removed
Certain factors could impact the nature and amount of these separate public company costs, including the finalization of our staffing and infrastructure needs .
Added
The PATHFINDER 2 Initial Results and the performance and safety metrics from the first year (prevalent screening round) of our NHS-Galleri Trial (“NHS-Galleri Prevalent Screening Round Results”) were included in our PMA submission, along with results of a bridging study.
Removed
Moreover, the FDA requirements that will govern MCED tests, as well as the breadth and nature of data we must provide the FDA to support the proposed intended use, may be subject to change, and as such it is difficult to predict what information we will need to submit to obtain approval of a PMA from the FDA for a proposed intended use.
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We designed Galleri to detect cancer early, when it is more amenable to curative treatment, and we launched Galleri in the United States in mid-2021.
Removed
The NHS will evaluate the final results from the NHS-Galleri Trial, which are expected to be available in 2026, before determining whether to implement the Galleri test in the NHS. We believe the decision will include considerations such as NHS budget, political priorities, cost-effectiveness and implementation constraints in addition to an evaluation of the final results.
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Galleri works by detecting DNA fragments shed into the bloodstream by tumor cells and analyzing specific methylation patterns that can be used to both identify a general cancer signal and localize that signal to a specific organ or tissue type.
Removed
We expect our research and development expenses to decrease over the next three years as, in conjunction with our portfolio review, we determined to decrease investment in product programs beyond Galleri. Additionally, some of our large clinical trials are moving into follow-up phase and the development of our automated platform is expected to substantially conclude in 2025.
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As an early pioneer of MCED testing, we have established strong relationships within the cancer and primary care community, including through partnerships with academic and community medical centers, key opinion leaders, and governmental policy and advocacy partners.
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We will continue to prioritize key objectives for Galleri, including completion of our registrational studies and our premarket approval application. • Leverage our operational infrastructure . We have made significant investments to build a scalable infrastructure capable of meeting significant demand while satisfying applicable certification requirements.
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We have shared evidence supporting our MCED testing at renowned medical conferences, such as the American Association of Cancer Research (“AACR”), American Society of Clinical Oncology (“ASCO”), ESMO, and American Academy of Family Physicians (“AAFP”).
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Components of Results of Operations Screening Revenue We currently derive screening revenue through the sale of Galleri primarily within the United States and primarily through primary care physicians, health systems, employers, payors, and life insurance providers. Galleri is not currently broadly reimbursed.
Added
We have also published results from our studies in leading scientific and medical journals, including The Lancet, Nature, Nature Medicine, Cancer Cell, and The Lancet Oncology. Since our inception, we have incurred net losses each year. Our net losses were $408.4 million, $2.0 billion and $1.5 billion for 2025, 2024 and 2023 .
Removed
The test price is based on the negotiated contractual rate with our contracted customers, otherwise our standard list price applies. We identify each sale of our test to our customer as a single performance obligation; therefore, revenue is recognized at the point of time when the test result report is delivered.

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Item 7. Management's Discussion & Analysis

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

266 edited+128 added−78 removed559 unchanged
Our product development and clinical study activities are expensive, and we expect to continue to spend substantial amounts as we expand our commercialization efforts with respect to Galleri, including pursuing broader coverage and reimbursement, continue to enhance our core technology platform, broaden the applications of our technology platform, and develop new products in the future.
Our product development, commercialization and clinical study activities are expensive, and we expect to continue to spend substantial amounts as we expand our commercialization efforts with respect to Galleri, including pursuing broader coverage and reimbursement, continue to enhance our core technology platform, broaden the applications of our technology platform, and develop new products in the future.
These risks may be more pronounced for certain applications in our precision oncology portfolio, such as companion diagnostic development, as our products would be directly involved with the choice to use certain treatments in a particular case.
These risks may be more pronounced for certain applications in our precision oncology portfolio, such as companion diagnostic development, as our products would be directly involved with the choice to use certain treatments in a particular case.
The Federal Trade Commission (“FTC”) also has authority to initiate enforcement actions against entities that mislead customers about HIPAA compliance, make deceptive statements about privacy and data sharing in privacy policies, fail to limit third-party use of personal health information, fail to implement policies to protect personal health information or engage in other unfair practices that harm customers or that may violate Section 5 of the Federal Trade Commission Act (“FTC Act”).
The Federal Trade Commission (“FTC”) also has authority to initiate enforcement actions against entities that mislead customers about HIPAA compliance, make deceptive statements about privacy and data sharing in privacy policies, fail to limit third-party use of health information, fail to implement policies to protect personal health information or engage in other unfair practices that harm customers or that may violate Section 5 of the Federal Trade Commission Act (“FTC Act”).
The FDA, other regulators or notified bodies can delay, limit, or deny clearance, approval, or certification of a product for many reasons, including but not limited to the following: • disagreement with the design, implementation, or results of, or interpretation of the data from, our clinical studies; • determination that our product has not been shown to be safe and effective or substantially equivalent to a predicate device, or has other characteristics that preclude us from obtaining marketing authorization or certification, or prevent or limit its commercial use (for example, a narrowed indication for use claim); • the population studied in the clinical program may not be sufficiently broad, generalizable, or representative of the intended target population of our product to assure effectiveness and safety in the population for which we seek approval, clearance, or certification; • disagreement with our interpretation of data from clinical studies or may fail to accept data from clinical studies (or clinical sites), including if we fail to establish the integrity of our data; • determination that our clinical studies otherwise fail to comply with applicable regulations, including good clinical practice requirements; • serious or unexpected adverse effects or other performance issues are identified with our existing or future products; 69 Table of Contents • determination that our manufacturing or quality system fails to comply with applicable regulations or otherwise fails to meet the standards necessary to support approval or certification; and • the approval (or certification) policies or regulations of the FDA or comparable foreign regulatory authorities may significantly change in a manner rendering our clinical data insufficient for approval or certification.
The FDA, other regulators or notified bodies can delay, limit, or deny clearance, approval, or certification of a product for many reasons, including but not limited to the following: • disagreement with the design, implementation, or results of, or interpretation of the data from, our clinical studies; • determination that our product has not been shown to be safe and effective or substantially equivalent to a predicate device, or has other characteristics that preclude us from obtaining marketing authorization or certification, or prevent or limit its commercial use (for example, a narrowed indication for use claim); • the population studied in the clinical program may not be sufficiently broad, generalizable, or representative of the intended target population of our product to assure effectiveness and safety in the population for which we seek approval, clearance, or certification; • disagreement with our interpretation of data from clinical studies or may fail to accept data from clinical studies (or clinical sites), including if we fail to establish the integrity of our data; 89 Table of Contents • determination that our clinical studies otherwise fail to comply with applicable regulations, including good clinical practice requirements; • serious or unexpected adverse effects or other performance issues are identified with our existing or future products; • determination that our manufacturing or quality system fails to comply with applicable regulations or otherwise fails to meet the standards necessary to support approval or certification; and • the approval (or certification) policies or regulations of the FDA or comparable foreign regulatory authorities may significantly change in a manner rendering our clinical data insufficient for approval or certification.
For example, the California Consumer Privacy Act as amended by the California Privacy Rights Act (“CPRA” and, collectively, the “CCPA”) requires covered businesses that process the personal information of California residents to, among other things: (i) provide certain disclosures to California residents regarding the business’s collection, use, and disclosure of their personal information; (ii) receive and respond to requests from California residents to access, delete, and correct their personal information, or to opt out of certain disclosures of their personal information; and (iii) enter into specific contractual provisions with service providers that process California resident personal information on the business’s behalf.
For example, the California Consumer Privacy Act, as amended by the California Privacy Rights Act (collectively, the “CCPA”) requires covered businesses that process the personal information of California residents to, among other things: (i) provide certain disclosures to California residents regarding the business’s collection, use, and disclosure of their personal information; (ii) receive and respond to requests from California residents to access, delete, and correct their personal information, or to opt out of certain disclosures of their personal information; and (iii) enter into specific contractual provisions with service providers that process California resident personal information on the business’s behalf.
HIPAA establishes, among other things, a set of national privacy and security standards relating to the privacy, security, transmission, and breach reporting of individually identifiable health information, by health plans, healthcare clearinghouses and certain healthcare providers, referred to as covered entities, the business associates with whom such covered entities contract for services that involve creating, receiving, maintaining, or transmitting protected health information, and the subcontractors of such business associates.
HIPAA establishes, among other things, a set of national privacy and security standards relating to the privacy, security, transmission, and breach reporting of individually identifiable health information, by health plans, healthcare clearinghouses and certain healthcare providers, referred to as covered entities, the business associates with whom such covered entities contract for services that involve creating, receiving, maintaining, or transmitting protected health information (“PHI”), and the subcontractors of such business associates.
The Medicare Improvements for Patients and Providers Act of 2008 authorizes the CMS to cover additional preventive services that are not expressly covered by the statute if the service is (a) reasonable and necessary for the prevention or early detection of an illness or disability, (b) recommended with a grade of A or B by the USPSTF, and (c) appropriate for Medicare beneficiaries under Part A or Part B.
Additionally, the Medicare Improvements for Patients and Providers Act of 2008 authorizes the CMS to cover additional preventive services that are not expressly covered by the statute if the service is (a) reasonable and necessary for the prevention or early detection of an illness or disability, (b) recommended with a grade of A or B by the USPSTF, and (c) appropriate for Medicare beneficiaries under Part A or Part B.
While we have heavily invested in our scalability, including by expanding our Durham facility laboratory capacity, further buildout of our Durham facility may be needed, as well as further new infrastructure, data processing capabilities, customer service, billing and systems processes, and expanding our internal quality assurance program and information technology to support testing on a larger scale.
While we have heavily invested in our scalability, including by expanding our Durham facility laboratory capacity, further buildout of our Durham facility may be needed, as well as further new infrastructure, data processing capabilities, customer service, billing and systems processes, and expanding our internal quality assurance program and cybersecurity and information technology to support testing on a larger scale.
These and other unknown risks which make it difficult for us to assess the potential success of our international expansion and the costs associated therewith. For additional information, see “—Risks Relating to Regulation and Legal Compliance.”. Our information technology systems, or those used by our third-party collaborators or other contractors or consultants, may fail or suffer cybersecurity incidents or cyberattacks.
These and other unknown risks make it difficult for us to assess the potential success of our international expansion and the costs associated therewith. For additional information, see “—Risks Relating to Regulation and Legal Compliance.” Our information technology systems, or those used by our third-party collaborators or other contractors or consultants, may fail or suffer cybersecurity incidents or cyberattacks.
Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for more information about the Restructuring Plan. If we fail to address the risks and difficulties that we face, including those described elsewhere in this “Risk Factors” section, our business, financial condition, results of operations, and growth prospects could be materially adversely affected.
Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for more information about the Restructuring Plan. If we fail to address the risks and difficulties that we face, including those described elsewhere in this Item 1A. “Risk Factors” section, our business, financial condition, results of operations, and growth prospects could be materially adversely affected.
This is particularly true for transport of our samples, which generally must be delivered to our facilities for processing within seven days of blood draw. We also depend on third-party telemedicine providers for certain referrals and follow up services with patients. Third-party phlebotomists also provide patient-facing services in collecting samples and shipping samples to our facilities for processing.
This is particularly true for the transport of our samples, which generally must be delivered to our facilities for processing within seven days of blood draw. We also depend on third-party telemedicine providers for certain referrals and follow up services with patients. Third-party phlebotomists also provide patient-facing services in collecting samples and shipping samples to our facilities for processing.
After clearance, approval, or certification, discovery of problems with our product, suppliers, vendors, or 76 Table of Contents contract manufacturers, or manufacturing processes (including software validation), and/or failure to comply with regulatory requirements, may result in actions such as: • restrictions on operations of our laboratories; • restrictions on manufacturing processes; • restrictions on marketing of a product; • Untitled or Warning letters; • withdrawal or recall of the product from the market or seizure of the product; • refusal to approve applications or supplements to approved applications that we may submit; • fines, restitution or disgorgement of profits or revenue; • suspension, limitation or withdrawal of regulatory approvals, clearances, or certifications; • exclusion from participation in U.S. federal or state healthcare programs, such as Medicare and Medicaid; • safety communications; • refusal to permit the import or export of our product; • injunctions; or • imposition of civil or criminal penalties.
After clearance, approval, or certification, discovery of problems with our product, suppliers, vendors, or contract manufacturers, or manufacturing processes (including software validation), and/or failure to comply with regulatory requirements, may result in actions such as: • restrictions on operations of our laboratories; • restrictions on manufacturing processes; • restrictions on marketing of a product; • Untitled or Warning letters; • withdrawal or recall of the product from the market or seizure of the product; • refusal to approve applications or supplements to approved applications that we may submit; • fines, restitution or disgorgement of profits or revenue; • suspension, limitation or withdrawal of regulatory approvals, clearances, or certifications; • exclusion from participation in U.S. federal or state healthcare programs, such as Medicare and Medicaid; 97 Table of Contents • safety communications; • refusal to permit the import or export of our product; • injunctions; or • imposition of civil or criminal penalties.
In addition, as Galleri and our research-use-only offering are currently available to customers and others, any studies, including those conducted by third parties, that use our current or future products, or that examine elements of our methylation platform, may produce results that are inconsistent to evaluate independently or comparatively from our own studies.
In addition, as Galleri and our research-use-only offering are currently available to customers and others, any analyses or studies, including those conducted by third parties, that use our current or future products, or that examine elements of our methylation platform, may produce results that are inconsistent to evaluate independently or comparatively from our own studies.
Our operations and business are materially dependent on various third parties, including information technology, sample collection, processing, transfer facilities, and other patient-facing service providers, any of which could experience disruption, failure, or interruption. We depend on third parties for information technology, telecommunication systems, the collection, processing, transport, and storage of sample, and other patient-facing services.
Our operations and business are materially dependent on various third parties, including information technology, sample collection, processing, transfer facilities, and other patient-facing service providers, any of which could experience disruption, failure, or interruption. We depend on third parties for information technology, telecommunication systems, the collection, processing, transport, and storage of samples, and other patient-facing services.
We rely, and expect to continue to rely, on collaborative partners to help us develop our products and enhance our research and development efforts. For example, we have collaborated with pharmaceutical companies, research institutions, and academic centers. Additionally, our RUO offering has formed the basis of biopharmaceutical partnerships with several leading oncology companies.
We rely, and expect to continue to rely, on collaborative partners to help us develop our products and enhance our research and development efforts. For example, we have collaborated with research institutions, and academic centers. Additionally, our RUO offering has formed the basis of biopharmaceutical partnerships with several leading oncology companies.
The GDPR imposes a comprehensive data privacy compliance regime including: maintaining a record of data processing; providing detailed disclosures about how personal information is collected and processed (in a concise, intelligible and easily accessible form); demonstrating that appropriate legal bases are in place to justify data processing activities; complying with rights 73 Table of Contents for data subjects in regard to their personal information (including data access, erasure (the right to be “forgotten”) and portability); ensuring appropriate safeguards are in place where personal information is transferred out of the EEA and the UK; and complying with the principal of accountability and the obligation to demonstrate compliance through policies, procedures, training and audit.
The GDPR imposes a comprehensive data privacy compliance regime including: maintaining a record of data processing; providing detailed disclosures 93 Table of Contents about how personal information is collected and processed (in a concise, intelligible and easily accessible form); demonstrating that appropriate legal bases are in place to justify data processing activities; complying with rights for data subjects in regard to their personal information (including data access, erasure (the right to be “forgotten”) and portability); ensuring appropriate safeguards are in place where personal information is transferred out of the EEA and the UK; and complying with the principal of accountability and the obligation to demonstrate compliance through policies, procedures, training and audit.
Any acquisition or strategic partnership may entail numerous risks, including: • increased operating expenses and cash requirements; 63 Table of Contents • the assumption of indebtedness or contingent liabilities; • the issuance of our equity securities that would result in dilution to our stockholders; • assimilation of operations, intellectual property, and products of an acquired company; • difficulties associated with integrating new personnel; • retention of key employees, the loss of key personnel, and uncertainties in our ability to maintain key business relationships; • the diversion of our management’s attention from our existing product programs and initiatives in pursuing such an acquisition or strategic partnership; • risks and uncertainties associated with the other party to such a transaction, including the prospects of that party and their existing or future products and regulatory approvals or certifications, and the validity and enforceability of their intellectual property; • inability to consummate acquisitions on which we spend a significant amount of time and resources; • possible write-offs or impairment charges relating to acquired businesses; and • our inability to generate revenue from acquired intellectual property, technology, or tests sufficient to meet our objectives or offset the associated transaction costs.
Any acquisition or strategic partnership may entail numerous risks, including: • increased operating expenses and cash requirements; • the assumption of indebtedness or contingent liabilities; • the issuance of our equity securities that would result in dilution to our stockholders; • assimilation of operations, intellectual property, and products of an acquired company; • difficulties associated with integrating new personnel; • retention of key employees, the loss of key personnel, and uncertainties in our ability to maintain key business relationships; • the diversion of our management’s attention from our existing product programs and initiatives in pursuing such an acquisition or strategic partnership; • risks and uncertainties associated with the other party to such a transaction, including the prospects of that party and their existing or future products and regulatory approvals or certifications, and the validity and enforceability of their intellectual property; • inability to consummate acquisitions on which we spend a significant amount of time and resources; • possible write-offs or impairment charges relating to acquired businesses; and • our inability to generate revenue from acquired intellectual property, technology, or tests sufficient to meet our objectives or offset the associated transaction costs.
Any such violations could include prohibitions on our ability to offer our products in one or more countries and could materially damage our reputation, our brand, our international expansion efforts, our ability to attract and retain employees, and our business, prospects, operating results, and financial condition. 85 Table of Contents The biopharmaceutical and medical device industries are subject to extensive regulatory obligations and policies that may be subject to significant and abrupt change, including due to judicial challenges, election cycles, and resulting regulatory updates and changes in policy priorities.
Any such violations could include prohibitions on our ability to offer our products in one or more countries and could materially damage our reputation, our brand, our international expansion efforts, our ability to attract and retain employees, and our business, prospects, operating results, and financial condition. 106 Table of Contents The biopharmaceutical and medical device industries are subject to extensive regulatory obligations and policies that may be subject to significant and abrupt change, including due to judicial challenges, election cycles, and resulting regulatory updates and changes in policy priorities.
Moreover, if disputes over intellectual property that we have licensed or otherwise obtained rights to prevent or impair our ability to maintain our current arrangements on commercially acceptable terms, or at all, we may be unable to successfully commercialize the affected product or technology, which could have a material adverse effect on our business, financial condition, results of operations, and growth prospects. 88 Table of Contents Our use of open-source software could subject our proprietary technology to unwanted open-source license conditions that could negatively impact our business.
Moreover, if disputes over intellectual property that we have licensed or otherwise obtained rights to prevent or impair our ability to maintain our current arrangements on commercially acceptable terms, or at all, we may be unable to successfully commercialize the affected product or technology, which could have a material adverse effect on our business, financial condition, results of operations, and growth prospects. 109 Table of Contents Our use of open-source software could subject our proprietary technology to unwanted open-source license conditions that could negatively impact our business.
Any of these actions could significantly and negatively affect supply of our products. If any of these events occurs, our reputation could be harmed, we could be exposed to product liability claims and we could lose customers and experience reduced sales and increased costs.
Any of these actions could significantly and negatively affect the supply of our products. If any of these events occurs, our reputation could be harmed, we could be exposed to product liability claims and we could lose customers and experience reduced sales and increased costs.
If we obtain PMA approvals from the FDA, we may make modifications or add additional features in the future that we believe do not require approval of a PMA application or supplement or other regulatory submission.
If we obtain PMA approvals from the FDA, we may make modifications or add additional features in the future that we believe do not require approval of a PMA or supplement or other regulatory submission.
Since we are subject to the supervision of relevant data protection authorities under both the UK GDPR and the EU GDPR, we could be fined under each of those regimes independently in respect of the same non-compliance.
Since we are subject to the supervision of relevant data protection authorities under both the UK GDPR and the EU GDPR, we could be fined under those regimes independently and in respect of the same non-compliance.
In such an event, potential competitors might be able to enter the market with similar or identical tests or technology, which could have a material adverse effect on our market position. 87 Table of Contents If we fail to comply with our obligations in the agreements under which we license intellectual property rights from third parties or otherwise experience disruptions to our business relationships with our licensors, we could lose license rights that are important to our business.
In such an event, potential competitors might be able to enter the market with similar or identical tests or technology, which could have a material adverse effect on our market position. 108 Table of Contents If we fail to comply with our obligations in the agreements under which we license intellectual property rights from third parties or otherwise experience disruptions to our business relationships with our licensors, we could lose license rights that are important to our business.
Our ability to generate future revenue growth from product sales depends heavily on our success in: • continuing clinical development, validation, and demonstration of the clinical utility of our products and future products and continuing to improve product performance and expand product features over time; • seeking, obtaining, and maintaining marketing authorizations or certifications that may be necessary or desired for any versions of Galleri and any future products that we develop; • launching and commercializing our products by maintaining and expanding our sales force, marketing, medical affairs, and distribution infrastructure, and collaborating with commercialization partners; • investing in and enhancing our proprietary methylation platform, and enhancing later versions of our existing and future products and offerings; • obtaining market acceptance by consumers, including self-insured employers, health systems, healthcare providers, life insurance companies, patients, and third-party payors; • establishing and maintaining supply and manufacturing relationships with third parties that can timely and consistently provide adequate, in both amount and quality, products and services to support clinical development and the market demand for Galleri, our precision oncology portfolio, and, if launched, future versions of Galleri or other future products; • achieving adequate coverage and reimbursement from government healthcare programs, health insurance organizations, and other third-party payors for products that we launch; • achieving sufficient efficiencies and cost management strategies in our laboratory, supply chain, and elsewhere to maintain an appropriate cost of goods sold to offer our products at an acceptable price in a pre-reimbursement environment; • addressing any technological and market developments; • negotiating favorable terms in any collaboration, licensing, or other arrangements into which we may enter and maintaining such existing or future arrangements; • maintaining, protecting, and expanding our portfolio of intellectual property rights, including patents, trade secrets, know-how, and trademarks; • the potential cost of and delays in product development as a result of any regulatory oversight applicable to our existing and future products and offerings; 47 Table of Contents • defending against third-party interference, invalidation, or infringement claims, if any; and • attracting, hiring, and retaining qualified personnel.
Our ability to generate future revenue growth from product sales depends heavily on our success in: • continuing clinical development, validation, and demonstration of the clinical utility of our products and future products and continuing to improve product performance and expand product features over time; • seeking, obtaining, and maintaining marketing authorizations or certifications that may be necessary or desired for any versions of Galleri and any future products that we develop; • launching and commercializing our products by maintaining and expanding our sales force, marketing, medical affairs, and distribution infrastructure, and collaborating with commercialization partners; • investing in and enhancing our proprietary methylation platform, and enhancing later versions of our existing and future products and offerings; • obtaining market acceptance by consumers, including self-insured employers, health systems, healthcare providers, life insurance companies, patients, and third-party payors; • establishing and maintaining supply and manufacturing relationships with third parties that can timely and consistently provide adequate, in both amount and quality, products and services to support clinical development and the market demand for Galleri, our precision oncology portfolio, and, if launched, future versions of Galleri or other future products; • achieving adequate coverage and reimbursement from government healthcare programs, health insurance organizations, and other third-party payors for products that we launch; • achieving sufficient efficiencies and cost management strategies in our laboratory, supply chain, and elsewhere to maintain an appropriate cost of goods sold to offer our products at an acceptable price in a pre-reimbursement environment; • addressing any technological and market developments; • negotiating favorable terms in any collaboration, licensing, or other arrangements into which we may enter and maintaining such existing or future arrangements; • maintaining, protecting, and expanding our portfolio of intellectual property rights, including patents, trade secrets, know-how, and trademarks; • the potential cost of and delays in product development as a result of any regulatory oversight applicable to our existing and future products and offerings; • defending against third-party interference, invalidation, or infringement claims, if any; and • attracting, hiring, and retaining qualified personnel. 65 Table of Contents We anticipate incurring significant costs to continue commercializing our products.
Our ability to perform successfully will depend largely on our ability to: • successfully expand commercialization efforts for our products; • demonstrate compelling advantages in the performance and convenience of our products, including on a cost efficient basis; • achieve market acceptance of our products by healthcare providers and patients, including through our reputation; • achieve adequate coverage and reimbursement by third-party payors for our products; • differentiate our product from future tests and products of and third parties; • attract qualified scientific, data science, clinical development, product development, and commercial personnel; • obtain, maintain, defend, and enforce patent and other proprietary protection as necessary for our products; • obtain and maintain any necessary or desirable marketing authorizations or certifications from regulators in the United States and other jurisdictions, and notified bodies; • integrate product ordering and results delivery into practices’ electronic health or medical records systems; • successfully collaborate with institutions in the discovery, development, and commercialization of our products; and • successfully expand our operations and implement a successful sales and marketing strategy to support commercialization.
Our ability to perform successfully will depend largely on our ability to: • demonstrate compelling advantages in the performance and convenience of our products, including on a cost efficient basis; • achieve market acceptance of our products by healthcare providers and patients, including through our reputation; • achieve adequate coverage and reimbursement by third-party payors for our products; • differentiate our product from future tests and products of third parties; • attract qualified scientific, data science, clinical development, product development, and commercial personnel; 75 Table of Contents • obtain, maintain, defend, and enforce patent and other proprietary protection as necessary for our products; • obtain and maintain any necessary or desirable marketing authorizations or certifications from regulators in the United States and other jurisdictions, and notified bodies; • integrate product ordering and results delivery into practices’ electronic health or medical records systems; • successfully collaborate with institutions in the discovery, development, and commercialization of our products; and • successfully expand our operations and implement a successful sales and marketing strategy to support commercialization.
For the FDA to approve or clear a medical device marketing application, the methods used in, and the facilities used for, the manufacture of our products must comply with the FDA’s QSR, which is a complex regulatory scheme that covers the procedures and documentation of the design, testing, production, process controls, quality assurance, labeling, packaging, handling, storage, distribution, installation, servicing and shipping of medical devices.
For the FDA to approve or clear a medical device marketing application, the methods used in, and the facilities used for, the manufacture of our products must comply with the FDA’s QMSR, which is a complex regulatory scheme that covers the procedures and documentation of the design, testing, production, process controls, quality assurance, labeling, packaging, handling, storage, distribution, installation, servicing and shipping of medical devices.
Factors that may inhibit our efforts to commercialize any of our products include: • our inability to recruit and retain adequate numbers of effective sales, marketing, reimbursement, customer service, medical affairs, and other support personnel; • the inability of sales personnel to generate an adequate number of customers, including healthcare systems and healthcare providers, to use our products; • the inability to price our products at a sufficient price point to ensure an adequate and attractive level of gross margin and profitability; • our inability to effectively market to, collaborate with, and secure coverage and reimbursement from third-party payors; 57 Table of Contents • our failure to comply with applicable regulatory requirements governing the sale, marketing, reimbursement, and commercialization of our products; and • unforeseen costs and expenses associated with maintaining a commercialization organization.
Factors that may inhibit our efforts to commercialize any of our products include: • our inability to recruit and retain adequate numbers of effective sales, marketing, reimbursement, customer service, medical affairs, and other support personnel; • the inability of sales personnel to generate an adequate number of customers, including healthcare systems and healthcare providers, to use our products; • the inability to price our products at a sufficient price point to ensure an adequate and attractive level of gross margin and profitability; • our inability to effectively market to, collaborate with, and secure coverage and reimbursement from third-party payors; • our failure to comply with applicable regulatory requirements governing the sale, marketing, reimbursement, and commercialization of our products; and • unforeseen costs and expenses associated with maintaining a commercialization organization.
In this regard, we will need to continue to dedicate internal resources, potentially engage outside consultants, adopt a detailed work plan to assess and document the adequacy of internal control over financial reporting, continue steps to improve control processes as appropriate, validate through testing that controls are functioning as documented, and implement a continuous reporting and improvement process for internal control over financial reporting.
In this regard, we have and will need to continue to dedicate internal resources, engage outside consultants, adopt a detailed work plan to assess and document the adequacy of internal control over financial reporting, continue steps to improve control processes as appropriate, validate through testing that controls are functioning as documented, and implement a continuous reporting and improvement process for internal control over financial reporting.
Accordingly, we cannot guarantee that our relationships with providers, sales representatives, or customers will not be subject to scrutiny or will withstand regulatory challenge under EKRA; • the federal physician self-referral prohibition, commonly known as the Stark Law, which, in the absence of an applicable exception, prohibits a physician from making a referral for certain designated health services covered by the Medicare or Medicaid program, including clinical laboratory services, if the physician or an immediate family member of the physician has a financial relationship with the entity providing the designated health services.
Accordingly, we cannot guarantee that our relationships with providers, sales representatives, or customers will not be subject to scrutiny or will withstand regulatory challenge under EKRA; • the federal physician self-referral prohibition, commonly known as the Stark Law, which, in the absence of an applicable exception, prohibits a physician from making a referral for certain designated health services covered by the Medicare or Medicaid program, including clinical laboratory services, if the physician or an immediate family member of the physician has a financial relationship with the entity 103 Table of Contents providing the designated health services.
Additionally, in March 2020, the FDA held a public workshop to discuss the clinical, scientific, and regulatory challenges associated with circulating tumor DNA cancer screening tests, and we expect the FDA to continue to gather input from a variety of industry, academic, and clinical stakeholders to inform its thinking on how to assess these types of tests, including potentially convening an Advisory Committee meeting 70 Table of Contents during review of a PMA for Galleri (or another company’s PMA for a multi-cancer early detection test, should it precede ours).
Additionally, in March 2020, the FDA held a public workshop to discuss the clinical, scientific, and regulatory challenges associated with circulating tumor DNA cancer screening tests, and we expect the FDA to continue to gather input from a variety of industry, academic, and clinical stakeholders to inform its thinking on how to assess these types of tests, including potentially convening an Advisory Committee meeting during review of a PMA for Galleri (or another company’s PMA for a multi-cancer early detection test, should it precede ours).
The market price of our common stock may fluctuate widely, depending on many factors, some of which may be beyond our control, including: • the commercial success of Galleri; • the timing of launch of any future products; • the timing and results of clinical studies for our products and the failure or discontinuation of any of our product development and research programs; • the success of future third-party tests, services, or technologies and the results of clinical studies, or regulatory approvals (or certifications) of tests of third parties; • developments or disputes concerning patent applications, issued patents, or other proprietary rights; • whether our financial results, forecasts, and development timelines meet the expectations of securities analysts or investors, and changes in estimates or recommendations by securities analysts, if any, that cover our stock; • announcement or expectation of additional financing efforts; • sales of our common stock by us, our insiders, Illumina, or other stockholders; • regulatory or legal developments in the United States, including under the new presidential administration, changes in the structure of healthcare payment systems, such as changes that would affect coverage and reimbursement by third-party payors, and other countries • general economic, industry, and market conditions; and • the other factors described in this “Risk Factors” section.
The market price of our common stock may fluctuate widely, depending on many factors, some of which may be beyond our control, including: • the commercial success of Galleri; • the timing of launch of any future products; • the timing and results of clinical studies for our products and the failure or discontinuation of any of our product development and research programs; • the success of future third-party tests, services, or technologies and the results of clinical studies, or regulatory approvals (or certifications) of tests of third parties; • developments or disputes concerning patent applications, issued patents, or other proprietary rights; • whether our financial results, forecasts, and development timelines meet the expectations of securities analysts or investors, and changes in estimates or recommendations by securities analysts, if any, that cover our stock; • announcement or expectation of additional financing efforts; • sales of our common stock by us, our insiders, Illumina, or other stockholders; • regulatory or legal developments in the United States, including under the new presidential administration, changes in the structure of healthcare payment systems, such as changes that would affect coverage and reimbursement by third-party payors, and other countries • general economic, industry, and market conditions; and • the other factors described in this Item 1A.
There are many patents claiming nucleic acids and diagnostic methods based on natural correlations that issued before the court decisions summarized above and, although some of these patents may be invalid 89 Table of Contents under the standards set forth in these decisions, these patents are presumed valid and enforceable until they are successfully challenged.
There are many patents claiming nucleic acids and diagnostic methods based on natural correlations that issued before the court decisions summarized above and, although some of these patents may be invalid 110 Table of Contents under the standards set forth in these decisions, these patents are presumed valid and enforceable until they are successfully challenged.
Uncertainties resulting from the initiation and continuation of patent litigation or other proceedings could have a material adverse effect on our ability to perform in the marketplace. 93 Table of Contents Intellectual property litigation may lead to unfavorable publicity that harms our reputation and causes the market price of our common stock to decline.
Uncertainties resulting from the initiation and continuation of patent litigation or other proceedings could have a material adverse effect on our ability to perform in the marketplace. 114 Table of Contents Intellectual property litigation may lead to unfavorable publicity that harms our reputation and causes the market price of our common stock to decline.
We have encountered delays and may encounter future delays in, or unexpected data from, our clinical studies, and may therefore be unable to complete our clinical studies on the timelines we expect, if at all, which could materially and adversely impact our ability to launch our products and seek regulatory clearance or approval, or coverage and reimbursement.
We have encountered delays and may encounter future delays in, or unexpected, uncertain or negative data from, our clinical studies, and may therefore be unable to complete our clinical studies on the timelines we expect, if at all, which could materially and adversely impact our ability to launch our products and seek regulatory clearance or approval, or coverage and reimbursement.
Furthermore, to obtain FDA clearance or approval, we are required to verify that our suppliers maintain facilities, procedures and operations that comply with our quality standards and applicable regulatory requirements. The FDA enforces the QSR through periodic announced or unannounced inspections of medical device manufacturing facilities, which may include the facilities of subcontractors.
Furthermore, to obtain FDA clearance or approval, we are required to verify that our suppliers maintain facilities, procedures and operations that comply with our quality standards and applicable regulatory requirements. The FDA enforces the QMSR through periodic announced or unannounced inspections of medical device manufacturing facilities, which may include the facilities of subcontractors.
For products for which we obtain FDA clearance or approval or that are otherwise subject to affirmative FDA oversight, we will be subject to the FDA’s medical device reporting regulations and similar foreign regulations, which require us to report to the FDA when we receive or become aware of information that reasonably suggests that one or more of our products may have caused or contributed to a death or serious injury or malfunctioned in a way that, if the malfunction were to recur, it could cause or contribute to a death or serious injury.
For products for which we obtain FDA clearance or approval or that are otherwise subject to affirmative FDA oversight, we will be subject to the FDA’s medical device reporting regulations and similar foreign regulations, 98 Table of Contents which require us to report to the FDA when we receive or become aware of information that reasonably suggests that one or more of our products may have caused or contributed to a death or serious injury or malfunctioned in a way that, if the malfunction were to recur, it could cause or contribute to a death or serious injury.
These expansions may prove more difficult than we expect and could cause disruptions in our operations or additional expense. Information technology and telecommunications systems are vulnerable to damage from a variety of sources, including telecommunications or network failures, malicious human acts, and natural disasters.
These expansions may prove more difficult than we expect and could cause disruptions in our operations or additional expenses. Information technology and telecommunications systems are vulnerable to damage from a variety of sources, including telecommunications or network failures, malicious human acts, and natural disasters.
If we or our third-party collaborators, consultants, contractors, suppliers, or service providers were to suffer a cybersecurity incident or attack, for example, that resulted in the unauthorized access to or use or disclosure of personal or health 61 Table of Contents information, we may have to notify physicians, patients, partners, collaborators, government authorities, and the media, and may be subject to investigations, civil penalties, administrative and enforcement actions, and litigation, any of which could harm our business and reputation.
If we or our third-party collaborators, consultants, contractors, suppliers, or service providers were to suffer a cybersecurity incident or attack, for example, that resulted in the unauthorized access to or use or disclosure of personal or health information, we may have to notify physicians, patients, partners, collaborators, government authorities, and the media, and may be subject to investigations, civil penalties, administrative and enforcement actions, and litigation, any of which could harm our business and reputation.
Although we have focused our business on Galleri-related activities and our work with biopharmaceutical companies as part of the Restructuring Plan resulting in a lower number of employees as of December 31, 2024, we may nevertheless need to continue to grow our operations to achieve our goals.
Although we have focused our business on Galleri-related activities and our work with biopharmaceutical companies as part of the Restructuring Plan resulting in a lower number of employees as of December 31, 2025, we may nevertheless need to continue to grow our operations to achieve our goals.
These and other efforts that we may be required to undertake could delay the submission of our PMA or delay or prevent approval, lead to a more limited intended use statement or approved labeling, and/or lead to significant post-approval limitations or restrictions, if approval is obtained at all.
These and other efforts that we may be required to undertake could delay the review of our PMA or delay or prevent approval, lead to a more limited intended use statement or approved labeling, and/or lead to significant post-approval limitations or restrictions, if approval is obtained at all.
If adequate capital is not available to us on a timely basis, we may be required to significantly delay, scale back, or discontinue the commercialization of our products or research and development programs, or be unable to continue or expand our operations or otherwise capitalize on our business opportunities, as desired, which could materially affect our business, financial condition, results of operations, and growth prospects and cause the price of our common stock to decline.
If adequate capital is not available to us on a timely basis, we may be required to significantly delay, scale back, or discontinue the commercialization of our products or research and development programs, or be unable to continue or expand our operations or otherwise capitalize on our business opportunities, as desired, 68 Table of Contents which could materially affect our business, financial condition, results of operations, and growth prospects and cause the price of our common stock to decline.
If, after FDA authorization or certification, the FDA or any foreign regulatory body determines that our promotional materials or training constitute promotion of an off-label use, it could request that we modify our training or promotional materials or subject us to regulatory or enforcement actions, including the issuance or imposition of an untitled letter, which is used for violators that do not necessitate a warning letter, injunction, 79 Table of Contents seizure, civil fine or criminal penalties.
If, after FDA authorization or certification, the FDA or any foreign regulatory body determines that our promotional materials or training constitute promotion of an off-label use, it could request that we modify our training or promotional materials or subject us to regulatory or enforcement actions, including the issuance or imposition of an untitled letter, which is used for violators that do not necessitate a warning letter, injunction, seizure, civil fine or criminal penalties.
If we are unable to recruit sufficient participants for our clinical studies, including our Real-world Evidence to Advance Multi-Cancer Early Detection Health Equity (“REACH” or “Galleri-Medicare”) study, or if we are unable to maintain sufficient participation of enrolled participants to maintain statistical power for our endpoints, our product development, commercialization activities, and our ability to seek regulatory clearance or approval for our products could be delayed, require modification, or be prevented.
If we are unable to recruit sufficient participants for our clinical studies, including our Real-world Evidence to Advance Multi-Cancer Early Detection Health Equity (“REACH” or “Galleri-Medicare”) study, or if we are unable to maintain sufficient participation of enrolled participants to maintain 57 Table of Contents statistical power for our endpoints, our product development, commercialization activities, and our ability to seek regulatory clearance or approval for our products could be delayed, require modification, or be prevented.
While we maintain cybersecurity insurance, our insurance policies may not be adequate to compensate us for the potential losses arising from such disruptions, failure, or cybersecurity incident. In addition, such insurance may not be available to us in the future on economically reasonable terms, or at all.
While we maintain cybersecurity insurance, our insurance policies may not be adequate to compensate us for the potential losses arising from such disruptions, failure, or cybersecurity incidents. In addition, such insurance may not be available to us in the future on economically reasonable terms, or at all.
We receive, store, process and use personal information as part of our business and as our operations and business grow, we may become subject to or affected by new or additional data protection laws and regulations and face increased scrutiny or attention from regulatory authorities.
We receive, store, process and disclose personal information as part of our business and as our operations and business grow, we may become subject to or affected by new or additional data protection laws and regulations and face increased scrutiny or attention from regulatory authorities.
We may be required to conduct additional studies or expand the enrollment of completed or ongoing studies to support our PMA, as study design and enrollment continue to be discussed with the FDA. The FDA may require us to perform new analyses of our clinical data.
We may be required to conduct additional studies or expand the enrollment of completed or ongoing studies to support approval of a PMA, as study design and enrollment continue to be discussed with the FDA. The FDA may require us to perform new analyses of our clinical data.
Our use and disclosure of personal information, including individually identifiable health information, and biologic samples and related data are subject to federal, state and foreign privacy and security regulations. Data privacy rules are evolving and new legislation concerning privacy and data use may limit our ability to use such data and specimens.
Our use and disclosure of personal information, including individually identifiable health information, and biological samples and related data are subject to federal, state and foreign privacy and security regulations. Data privacy rules are evolving and new legislation concerning privacy and data use may limit our ability to use such data and specimens.
We have obtained New York State Department of Health clinical laboratory permits for our Durham facility for our initial commercial version of Galleri and conditional approval for our new version of Galleri, which authorize us to accept and generate for diagnosis or treatment purposes patient-specific results on specimens originating from New York at the applicable facility, as well as having obtained New York State Department of Health approval (or, with respect to the new version of Galleri, conditional approval) to offer Galleri to residents of the State of New York.
We have obtained NYSDoH clinical laboratory permits for our Durham facility for our initial commercial version of Galleri and approval for our new version of Galleri, which authorize us to accept and generate for diagnosis or treatment purposes patient-specific results on specimens originating from New York at the applicable facility, as well as having obtained NYSDoH approval (or, with respect to the new version of Galleri, conditional approval) to offer Galleri to residents of the State of New York.
Third parties have raised, and in the future may raise, claims 90 Table of Contents challenging the validity or enforceability of our owned or in-licensed patents before administrative bodies in the United States or abroad, even outside the context of litigation.
Third parties have raised, and in the future may raise, claims 111 Table of Contents challenging the validity or enforceability of our owned or in-licensed patents before administrative bodies in the United States or abroad, even outside the context of litigation.
We also must sufficiently substantiate any claims that we make for any products, including claims comparing those products to other companies’ products, and must abide by the FDA’s strict requirements regarding the content of promotion and advertising. Our multi-cancer detection tests are a new approach to cancer screening, which present a number of novel and complex issues for FDA review.
We also must sufficiently substantiate any claims that we make for any products, including claims comparing those products to other companies’ products, and must abide by the FDA’s strict requirements regarding the content of promotion and advertising. 90 Table of Contents Our multi-cancer detection tests are a new approach to cancer screening, which present a number of novel and complex issues for FDA review.
In addition, a decree was adopted by the Russian government in March 2022, allowing Russian companies and individuals to exploit inventions owned by 91 Table of Contents patentees from the United States without consent or compensation.
In addition, a decree was adopted by the Russian government in March 2022, allowing Russian companies and individuals to exploit inventions owned by 112 Table of Contents patentees from the United States without consent or compensation.
In addition, establishing collaborations is difficult, time-consuming and may require our significant financial investment. Potential collaborators may elect not to work with us based on their assessment of our financial, regulatory, or intellectual property position. Even if we establish new collaborations, they may not result in the successful development or commercialization of our products or technology.
In addition, establishing collaborations is difficult, time-consuming and may require our significant financial investment. Potential collaborators may elect not to work with us based on their assessment of our 76 Table of Contents financial, regulatory, or intellectual property position. Even if we establish new collaborations, they may not result in the successful development or commercialization of our products or technology.
The new methodology implements Section 216 of the Protecting Access to Medicare Act of 2014 44 Table of Contents (“PAMA”) and requires laboratories that meet certain requirements related to volume and type of Medicare revenues to report to CMS their private payor payment rates for each test they perform, the volume of tests paid at each rate, and the HCPCS code associated with the test.
The new methodology implements Section 216 of the Protecting Access to Medicare Act of 2014 (“PAMA”) and requires laboratories that meet certain requirements related to volume and type of Medicare revenues to report to CMS their private payor payment rates for each test they perform, the volume of tests paid at each rate, and the HCPCS code associated with the test.
Certain of these restrictions 95 Table of Contents will apply for the two-year period after the Spin-Off unless Illumina obtains an opinion from counsel or a ruling from the IRS generally to the effect that a restricted action will not cause the Spin-Off or certain related transactions to fail to qualify for its intended tax treatment, or Illumina gives its consent for us to take a restricted action.
Certain of these restrictions will apply for the two-year period after the Spin-Off unless Illumina obtains an opinion from counsel or a ruling from the IRS generally to the effect that a restricted action will not cause the Spin-Off or certain related transactions to fail to qualify for its intended tax treatment, or Illumina gives its consent for us to take a restricted action.
Finally, the facilities of any of our third-party collaborators, consultants, contractors, vendors, suppliers, and service providers could be subject to earthquakes, power shortages, telecommunications failures, water shortages, floods, tornadoes, hurricanes, fires, extreme weather conditions, medical epidemics, pandemics, and 53 Table of Contents other natural or man-made disasters or business interruptions.
Finally, the facilities of any of our third-party collaborators, consultants, contractors, vendors, suppliers, and service providers could be subject to earthquakes, power shortages, telecommunications failures, water shortages, floods, tornadoes, hurricanes, fires, extreme weather conditions, medical epidemics, pandemics, and other natural or man-made disasters or business interruptions.
The EU AI Act and its future interpretation and application may affect our use of AI technologies and our ability to provide, improve or commercialize our services, require additional compliance measures and changes to our operations and processes, result in increased compliance costs and potential increases in civil claims against us, and could adversely affect our business, operations and financial condition.
The EU AI Act and its future interpretation and application may affect our use of AI technologies and our ability to provide, improve or 73 Table of Contents commercialize our services, require additional compliance measures and changes to our operations and processes, result in increased compliance costs and potential increases in civil claims against us, and could adversely affect our business, operations and financial condition.
Because the product cannot detect all cancer signals, and may not detect signals for all cancer types, a negative test does not rule out the presence of cancer. Additionally, an individual undergoing unnecessary diagnostic tests on the basis of a false positive result or an erroneous cancer signal origin result could expose us to reputational risks and potential liability.
Because the product cannot detect all cancer signals, and may not detect signals for all cancer types, a negative test does not rule out the presence of cancer. Additionally, an individual undergoing unnecessary diagnostic tests on the basis of a false positive result or an erroneous CSO result could expose us to reputational risks and potential liability.
Further, our insurance may not cover all claims made against us and defending a suit, regardless of its merit, could be costly, divert management attention, and harm our reputation. If we are sued for product or professional liability, we could face substantial liabilities that exceed our resources and insurance coverage.
Further, our insurance may not cover all claims made against us and defending a suit, regardless of its merit, could be costly, divert management attention, and harm our reputation. 82 Table of Contents If we are sued for product or professional liability, we could face substantial liabilities that exceed our resources and insurance coverage.
As and to the extent test volumes grow, we may need to ramp up laboratory capacity, including increasing the processing of Galleri in our Durham, North Carolina facility by increased operations.
As and to the extent test volumes grow, we may need to ramp up laboratory capacity, including expanding the processing of Galleri in our Durham, North Carolina facility by increased operations.
Such laws and regulations will be subject to interpretation by various courts and other governmental authorities, thus creating potentially complex compliance issues for us and our future customers and strategic partners.
Such laws and regulations are and will continue to be subject to interpretation by various courts and other governmental authorities, thus creating potentially complex compliance issues for us and our future customers and strategic partners.
We expect to continue to incur significant expenses and operating losses as we: • attract, hire, and retain qualified personnel; • seek regulatory approvals, clearances, or certifications, or coverage and reimbursement, that may be necessary or desired for our products and future products; • conduct our ongoing clinical studies and initiate and conduct additional clinical studies to support the development and commercialization of our products and potential future products; • continue our research and development activities; • maintain and potentially expand our laboratory capacity and enhance operating capabilities for greater commercial scale; • maintain sales, marketing, and distribution infrastructure for purchases of our products; • acquire or in-license additional intellectual property and technologies; • make milestone, royalty, or other payments due under any license or collaboration agreements; • obtain, maintain, protect, and enforce our intellectual property portfolio, including intellectual property obtained through license agreements; • maintain and potentially expand our facilities and infrastructure to support our continued research and development, operations and any planned commercialization efforts in the future; • defend against any litigation, including but not limited to any patent disputes, employment matters, product liability claims or other lawsuits related to our products, our marketing, advertising, or labeling, or our clinical research; • support international commercial expansion of our products; • continue to engage the medical community and others to drive awareness and adoption of multi-cancer early detection (“MCED”) testing; and • meet the requirements and demands of being a public company.
We expect to continue to incur significant expenses and operating losses as we: • attract, hire, and retain qualified personnel; • seek regulatory approvals, clearances, or certifications, or coverage and reimbursement, that may be necessary or desired for our products and future products; • conduct our ongoing clinical studies and initiate and conduct additional clinical studies to support the development and commercialization of our products and potential future products; 54 Table of Contents • continue our research and development activities; • maintain and potentially expand our laboratory capacity and enhance operating capabilities for greater commercial scale; • maintain sales, marketing, and distribution infrastructure for purchases of our products; • acquire or in-license additional intellectual property and technologies; • make milestone, royalty, or other payments due under any license or collaboration agreements; • obtain, maintain, protect, and enforce our intellectual property portfolio, including intellectual property obtained through license agreements; • maintain and potentially expand our facilities and infrastructure to support our continued research and development, operations and any planned commercialization efforts in the future; • defend against any litigation, including but not limited to any patent disputes, employment matters, product liability claims or other lawsuits related to our products, our marketing, advertising, or labeling, or our clinical research; • support international commercial expansion of our products; • continue to engage the medical community and others to drive awareness and adoption of MCED testing; and • meet the requirements and demands of being a public company.
We expect to seek additional capital, and may pursue fundraising paths that could include public and private equity offerings, debt financings, strategic partnerships, and alliances and licensing arrangements. We, and 97 Table of Contents indirectly, our stockholders, will bear the cost of issuing and servicing securities issued in any such transactions.
We expect to seek additional capital, and may pursue fundraising paths that could include public and private equity offerings, debt financings, strategic partnerships, and alliances and licensing arrangements. We, and indirectly, our stockholders, will bear the cost of issuing and servicing securities issued in any such transactions.
These partnerships leverage our RUO offering to test applications of biomarkers with the goal of optimizing the use of therapeutic interventions. Partnerships may also include development of customized applications to support clinical studies and companion 56 Table of Contents diagnostic development and commercialization. Our reliance on certain of these third parties reduces our control over our product development activities.
These partnerships leverage our RUO offering to test applications of biomarkers with the goal of optimizing the use of therapeutic interventions. Partnerships may also include development of customized applications to support clinical studies and companion diagnostic development and commercialization. Our reliance on certain of these third parties reduces our control over our product development activities.
We may also experience cybersecurity incidents that may remain undetected for an extended period. Even if identified, we may be unable to adequately investigate or remediate cybersecurity incidents due to attackers increasingly using tools and techniques that are designed to circumvent controls, to avoid detection, and to remove or obfuscate forensic evidence.
We may also experience cybersecurity incidents that may remain undetected for an extended period. Even if identified, we may be unable to adequately investigate or remediate cybersecurity incidents due to attackers increasingly using tools and techniques – including artificial intelligence – that are designed to circumvent controls, to avoid detection, and to remove or obfuscate forensic evidence.
The occurrence of any of these events could have a material adverse effect on our business, financial condition, results of operations, and growth prospects. 62 Table of Contents Our quarterly results of operations may fluctuate significantly or may fall below the expectations of investors or securities analysts, each of which may cause our stock price to fluctuate or decline.
The occurrence of any of these events could have a material adverse effect on our business, financial condition, results of operations, and growth prospects. Our quarterly results of operations may fluctuate significantly or may fall below the expectations of investors or securities analysts, each of which may cause our stock price to fluctuate or decline.
Additionally, in recent years, stock markets in general, and the market for healthcare companies in particular (including companies in the biotechnology, diagnostics, and related sectors), have experienced significant price and volume fluctuations that have often been unrelated or disproportionate to changes in the operating performance of the companies whose stock is experiencing those price and volume fluctuations.
“Risk Factors” section. Additionally, in recent years, stock markets in general, and the market for healthcare companies in particular (including companies in the biotechnology, diagnostics, and related sectors), have experienced significant price and volume fluctuations that have often been unrelated or disproportionate to changes in the operating performance of the companies whose stock is experiencing those price and volume fluctuations.
To the extent our collaborators experience any of delays, halts, unexpected data or other issues in the trials they collaborate on with us, we may be similarly delayed or halted in 42 Table of Contents validating or generating revenue from our precision oncology offering, and we could experience reputational or other harms.
To the extent our collaborators experience any of delays, halts, unexpected data or other issues in the trials they collaborate on with us, we may be similarly delayed or halted in validating or generating revenue from our precision oncology offering, and we could experience reputational or other harms.
In the ordinary course of our business, we collect, store, and transmit large amounts of confidential information, including intellectual property, proprietary business information, personal, financial, and health information of patients and personal and financial information of our employees and contractors.
In the ordinary course of our business, we collect, store, and transmit large amounts of confidential information, including intellectual property, proprietary business information, personal, financial, and health information of patients and personal and financial information of our employees and contractors (“Confidential Information”).
It is possible that the FDA, among other things, may disagree with our interpretation of data we have relied on to support our LDT launches for our intended uses.
It is possible that the FDA, among other things, could disagree with our interpretation of data we have relied on to support our LDT launches for our intended uses.
There can be no assurance that we will be able to obtain such marketing authorization or that any labeling claims will be consistent with the claims we have made or intend to make for such products when launched as LDTs, or that such claims will be adequate to support continued adoption of and reimbursement for our products.
There can be no assurance that we will be able to obtain any required marketing authorization for our tests or that any labeling claims will be consistent with the claims we have made or intend to make for such products when launched as LDTs, or that such claims would be adequate to support continued adoption of and reimbursement for our products.
There can be no assurance that our existing or future products for which we may seek clearance, approval, or certification will be approved, cleared, or certified by the FDA, a comparable foreign regulatory authority or a notified body on a timely basis, if at all.
Notwithstanding any FDA feedback, there can be no assurance that our existing or future products for which we may seek clearance, approval, or certification will be approved, cleared, or certified by the FDA, a comparable foreign regulatory authority or a notified body on a timely basis, if at all.
The FTC has instituted enforcement actions against certain healthcare testing companies for making false or misleading advertising claims and for failing to adequately substantiate claims made in advertising. These enforcement actions may result in warning letters, consent decrees, and the payment of civil penalties and/or restitution by the companies involved.
The FTC has instituted enforcement actions against certain healthcare testing companies for making false or misleading advertising claims and for failing to adequately substantiate claims made in advertising. These enforcement actions may result in warning 100 Table of Contents letters, consent decrees, and the payment of civil penalties and/or restitution by the companies involved.
Although patents are presumed valid and enforceable upon issuance, a patent may be challenged as to its inventorship, scope, validity, or enforceability, and certain of our owned or exclusively in-licensed patents have 86 Table of Contents been, and others in the future may be, challenged in the courts or patent offices in the United States or abroad.
Although patents are presumed valid and enforceable upon issuance, a patent may be challenged as to its inventorship, scope, validity, or enforceability, and certain of our owned or exclusively in-licensed patents have been, and others in the future may be, challenged in the courts or patent offices in the United States or abroad.
For example, in China, claims regarding 92 Table of Contents infringement or misappropriation of trade secrets are more difficult to prove, and consequently plaintiffs are rarely successful in bringing these claims.
For example, in China, claims regarding 113 Table of Contents infringement or misappropriation of trade secrets are more difficult to prove, and consequently plaintiffs are rarely successful in bringing these claims.
See “—We could be subject to securities class action litigation.” If securities analysts publish negative evaluations of our stock, the price of our stock could decline. The trading market for our common stock relies in part on the research and reports that industry or securities analysts publish about us or our business.
See “—We could be subject to securities class action litigation.” 118 Table of Contents If securities analysts publish negative evaluations of our stock, the price of our stock could decline. The trading market for our common stock relies in part on the research and reports that industry or securities analysts publish about us or our business.
The aforementioned EU rules are generally applicable in the EEA (which consists of the 27 EU member states plus Iceland, Norway and 68 Table of Contents Liechtenstein, and also generally applicable in Türkiye). Non-compliance with the above requirements would also prevent us from selling our products in these three countries.
The aforementioned EU rules are generally applicable in the EEA (which consists of the 27 EU member states plus Iceland, Norway and Liechtenstein, and also generally applicable in Türkiye). Non-compliance with the above requirements would also prevent us from selling our products in these three countries.
As a result of such challenges, our pending or future patent applications may not result in issued patents, or the scope of existing or future patents may not provide us with sufficient rights to exclude others from commercializing products similar or identical to ours, or our issued patents may be held invalid or unenforceable.
As a result of such challenges, our pending or future patent applications may not result in 107 Table of Contents issued patents, or the scope of existing or future patents may not provide us with sufficient rights to exclude others from commercializing products similar or identical to ours, or our issued patents may be held invalid or unenforceable.
Traditional fee-for-service Medicare 43 Table of Contents generally does not cover screening tests, which are considered preventive services, that are performed in the absence of signs or symptoms of illness or injury, unless there is a statutory provision that explicitly authorizes coverage of the test.
Traditional fee-for-service Medicare generally does not cover screening tests, which are considered preventive services, that are performed in the absence of signs or symptoms of illness or injury, unless there is a statutory provision that explicitly authorizes coverage of the test.
If we fail to obtain any required state licensure, or lose CLIA certification, CAP accreditation, or licensure, we would not be able to operate our clinical laboratory and offer our products in full or in particular states, which would adversely impact our business and results of operations.
If we fail to obtain any required state licensure, or lose CLIA certification, CAP accreditation, or licensure, we would not be able to operate our clinical laboratory and offer our products in full or in particular states, which would adversely impact our business and results of 95 Table of Contents operations.
Our failure to successfully develop new and/ or improved products (including new versions of existing products) on a timely basis could have a material adverse effect on our results of operations and business. The clinical study process is lengthy and expensive with uncertain outcomes.
Our failure to successfully develop new and/or improved products (including new versions of existing products) on a timely basis could have a material adverse effect on our results of operations and business. 56 Table of Contents The clinical study process is lengthy and expensive with uncertain outcomes.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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We do not currently engage in any hedging activity to reduce our potential exposure to currency fluctuations, although we may choose to do so in the future. A hypothetical 10% change in foreign exchange rates during any of the periods presented would not have had a material impact on our Consolidated Financial Statements. 127 Table of Contents
We do not currently engage in any hedging activity to reduce our potential exposure to currency fluctuations, although we may choose to do so in the future. A hypothetical 10% change in foreign exchange rates during any of the periods presented would not have had a material impact on our Consolidated Financial Statements. 150 Table of Contents
The primary objective of our investment activities is to preserve capital to fund our operations. We do not enter into investments for trading or speculative purposes. Our investments are subject to interest rate risk and could fall in value if market interest rates increase.
We do not enter into investments for trading or speculative purposes. Our investments are subject to interest rate risk and could fall in value if market interest rates increase.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk Interest Rate Sensitivity We are exposed to market risk related to changes in interest rates related primarily to our cash, cash equivalents and marketable securities. We had cash and cash equivalents of $214.2 million as of December 31, 2024, which consisted primarily of bank deposits, money market funds, and marketable securities.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk Interest Rate Sensitivity We are exposed to market risk related to changes in interest rates related primarily to our cash, cash equivalents and marketable securities.
Our marketable securities are held in U.S. government treasury bills. As of December 31, 2024 , we had short-term marketable securities of $549.2 million. Our primary exposure to market risk is interest income sensitivity, which is affected by changes in the general level of the interest rates in the United States.
Our marketable securities are held in U.S. government treasury bills. Our primary exposure to market risk is interest income sensitivity, which is affected by changes in the general level of the interest rates in the United States. The primary objective of our investment activities is to preserve capital to fund our operations.
Added
We had cash and cash equivalents of $249.7 million as of December 31, 2025, which consisted primarily of bank deposits, money market funds and U.S. government treasury bills with an original maturity of three months or less. As of December 31, 2025 , we had short-term marketable securities of $654.7 million.