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What changed in Insight Molecular Diagnostics Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Insight Molecular Diagnostics Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+637 added−387 removedSource: 10-K (2025-03-24) vs 10-K (2024-04-16)

Top changes in Insight Molecular Diagnostics Inc.'s 2024 10-K

637 paragraphs added · 387 removed · 220 edited across 4 sections

Item 1. Business

Business — how the company describes what it does

61 edited+42 added−73 removed133 unchanged
Biggest changeThe FDA has structured the phaseout policy to contain five key stages: ● Stage 1: End the general enforcement discretion approach with respect to MDR requirements and correction and removal reporting requirements one year after FDA publishes a final phaseout policy, which FDA intends to issue in the preamble of the final rule. ● Stage 2: End the general enforcement discretion approach with respect to requirements other than MDR, correction and removal reporting, quality system (“QS”), and premarket review requirements two years after FDA publishes a final phaseout policy. ● Stage 3: End the general enforcement discretion approach with respect to QS requirements three years after FDA publishes a final phaseout policy. ● Stage 4: End the general enforcement discretion approach with respect to premarket review requirements for high-risk IVDs three and a half years after FDA publishes a final phaseout policy, but not before October 1, 2027. ● Stage 5: End the general enforcement discretion approach with respect to premarket review requirements for moderate risk and low risk IVDs (that require premarket submissions) four years after FDA publishes a final phaseout policy, but not before April 1, 2028.
Biggest changeCompliance is required by May 6, 2026. • Stage 3: End the general enforcement discretion approach with respect to QS requirements three years after FDA publishes a final phaseout policy. Compliance is required by May 6, 2027. • Stage 4: End the general enforcement discretion approach with respect to premarket review requirements for high-risk IVDs.
Due to these evolving and diverse requirements, we face uncertain product approval timelines, additional time and effort to comply, as well as the potential for reduced sales and/or fines for noncompliance. 15 State Laboratory Licensing In addition to federal certification requirements of laboratories under CLIA, we are required to maintain licensure under Tennessee law for our laboratory in Nashville, Tennessee.
Due to these evolving and diverse requirements, we face uncertain product approval timelines, additional time and effort to comply, as well as the potential for reduced sales and/or fines for noncompliance. State Laboratory Licensing In addition to federal certification requirements of laboratories under CLIA, we are required to maintain licensure under Tennessee law for our laboratory in Nashville, Tennessee.
Due to this patient cost factor, revenues from any new cancer test that we market may experience slow growth until the test is approved for reimbursement by larger payer plans which cover many patients. 7 Medicare For diagnostics tests, Medicare or the Centers for Medicare & Medicaid Services (“CMS”) reimbursement approval is critical.
Due to this patient cost factor, revenues from any new cancer test that we market may experience slow growth until the test is approved for reimbursement by larger payer plans which cover many patients. Medicare For diagnostics tests, Medicare or the Centers for Medicare & Medicaid Services (“CMS”) reimbursement approval is critical.
Adoption or expansion of laws and regulations that limit our ability to bill and obtain reimbursement for the full costs of our services would have a material adverse impact on our business and on market acceptance of our tests. 8 Corporate Information We were incorporated in September 2009 in the state of California.
Adoption or expansion of laws and regulations that limit our ability to bill and obtain reimbursement for the full costs of our services would have a material adverse impact on our business and on market acceptance of our tests. Corporate Information We were incorporated in September 2009 in the state of California.
If FDA were to disagree with our designation of any of these products, we could be forced to obtain the appropriate regulatory clearances or approval prior to commercialization. 16 Regulation of In Vitro Diagnostics In the future, we may elect to develop IVDs, which are regulated by the FDA as medical devices.
If FDA were to disagree with our designation of any of these products, we could be forced to obtain the appropriate regulatory clearances or approval prior to commercialization. Regulation of In Vitro Diagnostics In the future, we may elect to develop IVDs, which are regulated by the FDA as medical devices.
Penalties for violations of HIPAA regulations include civil and criminal penalties. 17 The HIPAA privacy regulations cover the use and disclosure of PHI by covered entities as well as business associates, which are persons or entities that perform certain functions for or on behalf of a covered entity that involve the creation, receipt, maintenance, or transmittal of PHI.
Penalties for violations of HIPAA regulations include civil and criminal penalties. The HIPAA privacy regulations cover the use and disclosure of PHI by covered entities as well as business associates, which are persons or entities that perform certain functions for or on behalf of a covered entity that involve the creation, receipt, maintenance, or transmittal of PHI.
In addition, violation of these laws may result in sanctions imposed against us and/or the professional through licensure proceedings, and we could be subject to civil and criminal penalties that could result in exclusion from state and federal health care programs. Federal and State Fraud and Abuse Laws A variety of federal and state laws prohibit fraud and abuse.
In addition, violation of these laws may result in sanctions imposed against us and/or the professional through licensure proceedings, and we could be subject to civil and criminal penalties that could result in exclusion from state and federal health care programs. 16 Federal and State Fraud and Abuse Laws A variety of federal and state laws prohibit fraud and abuse.
Other countries have enacted similar anti-corruption laws and/or regulations. Other Regulatory Requirements Our laboratory is subject to federal, state and local regulations relating to the handling and disposal of regulated medical waste, hazardous waste and biohazardous waste, including chemical, biological agents and compounds, blood samples and other human tissue.
Other countries have enacted similar anti-corruption laws and/or regulations. 17 Other Regulatory Requirements Our laboratory is subject to federal, state and local regulations relating to the handling and disposal of regulated medical waste, hazardous waste and biohazardous waste, including chemical, biological agents and compounds, blood samples and other human tissue.
The CCPA provides for civil penalties for violations, as well as a private right of action for data breaches that result from a business’ failure to implement and maintain reasonable data security procedures. 18 State laws regarding the privacy and security of personal information are also evolving.
The CCPA provides for civil penalties for violations, as well as a private right of action for data breaches that result from a business’ failure to implement and maintain reasonable data security procedures. State laws regarding the privacy and security of personal information are also evolving.
HIPAA also created new federal crimes, including health care fraud and false statements relating to health care matters. The health care fraud statute prohibits knowingly and willfully executing a scheme to defraud any health care benefit program, including private third-party payers.
HIPAA also created federal crimes, including health care fraud and false statements relating to health care matters. The health care fraud statute prohibits knowingly and willfully executing a scheme to defraud any health care benefit program, including private third-party payers.
Many states have comparable laws that are not limited to Medicare and Medicaid referrals. 19 In November 2020, CMS issued a final rule to modernize and clarify the regulations that interpret self-referral law.
Many states have comparable laws that are not limited to Medicare and Medicaid referrals. In November 2020, CMS issued a final rule to modernize and clarify the regulations that interpret self-referral law.
The public comment period for these most recently proposed updates to the HIPAA Privacy Rule closed on May 6, 2021, and the final, updated HIPAA Privacy Rule is expected to be published in the Federal Register at some point in 2024.
The public comment period for these most recently proposed updates to the HIPAA Privacy Rule closed on May 6, 2021, and the final, updated HIPAA Privacy Rule is expected to be published in the Federal Register at some point in 2025.
Through our acquisition of Insight in January 2020 and Chronix in April 2021, we obtained exclusive rights to additional intellectual property, including trade secrets, registered trademarks, domain names, copyrights, issued and reissued patents and pending applications, and software material, and have, since our acquisition of Insight, filed our own patents to protect DetermaIO.
Through our acquisition of Insight Genetics, Inc. (“Insight”) in January 2020 and Chronix in April 2021, we obtained exclusive rights to additional intellectual property, including trade secrets, registered trademarks, domain names, copyrights, issued and reissued patents and pending applications, and software material, and have, since our acquisition of Insight, filed our own patents to protect DetermaIO.
CMS relies on a network of Medicare Administrative Contractors (“MACs”) to make LCDs approving a test for reimbursement. The MolDx Program was developed by Palmetto GBA (the previous MAC for California) to identify and establish coverage and reimbursement for molecular diagnostics tests.
CMS relies on a network of Medicare Administrative Contractors (“MACs”) to make a local coverage determination (“LCD”) approving a test for reimbursement. The MolDx Program was developed by Palmetto GBA (the previous MAC for California) to identify and establish coverage and reimbursement for molecular diagnostics tests.
Our business could be negatively impacted by any of the following: ● The claims of any patents that are issued may not provide meaningful protection, may not provide a basis for commercially viable diagnostic tests or may not provide us with any competitive advantages; ● Our patents may be challenged by competitors or other third parties and, if the third parties are successful in their challenge, the patents could be invalidated, permitting third parties to use the patented inventions to compete with us; ● Others may have patents that relate to our technology or business that may prevent us from marketing our diagnostic test candidates unless we are able to obtain a license to those patents; ● Patent applications to which we have rights may not result in issued patents and the information disclosed in those applications could be used by our competitors; ● Changes in government regulations or patent laws; and ● We may not be successful in developing additional proprietary technologies that are patentable.
Our business could be negatively impacted by any of the following: • The claims of any patents that are issued may not provide meaningful protection, may not provide a basis for commercially viable diagnostic tests or may not provide us with any competitive advantages; • Our patents may be challenged by competitors or other third parties and, if the third parties are successful in their challenge, the patents could be invalidated, permitting third parties to use the patented inventions to compete with us; • Others may have patents that relate to our technology or business that may prevent us from marketing our diagnostic test candidates unless we are able to obtain a license to those patents; • Patent applications to which we have rights may not result in issued patents and the information disclosed in those applications could be used by our competitors; • Changes in government regulations or patent laws; and • We may not be successful in developing additional proprietary technologies that are patentable. 9 In addition, others may independently develop similar or alternative technologies, duplicate any of our technologies and, if patents are licensed or issued to us, design around the patented technologies licensed to or developed by us.
Additional states - including Delaware, Indiana, Iowa, Montana, New Jersey, Oregon, Tennessee, and Texas – have enacted similar comprehensive state privacy laws that will take effect at various points between 2024 and 2026.
Additional states - including Delaware, Indiana, Iowa, Montana, New Jersey, Oregon, Tennessee, and Texas – have enacted similar comprehensive state privacy laws that have either taken effect or will take effect at various points between 2025 and 2026.
Human Capital As of December 31, 2023, we employed 46 persons, of which 43 were on a full-time basis and three were on a part-time basis.
Human Capital As of December 31, 2024, we employed 49 persons, of which 46 were on a full-time basis and three were on a part-time basis.
Government Regulation CLIA—Clinical Laboratory Improvement Amendments of 1988 and State Regulation We expect that DetermaIO, VitaGraft and DetermaCNI will be regulated under the CLIA as LDTs.
Government Regulation CLIA—Clinical Laboratory Improvement Amendments of 1988 and State Regulation We expect that GraftAssureCore, GraftAssureIQ, GraftAssureDx, DetermaIO and DetermaCNI will continue to be regulated under the CLIA as LDTs.
If similar issues were to arise after commercialization of a test, we could experience a disruption for a period of time in providing the tests to patients and we would lose revenue and potentially market share as a result.
If similar issues were to arise after commercialization of a test, we could experience a disruption in providing the tests to patients and we would lose revenue and potentially market share as a result. See “Part I, Item 1A.
We also operate a CLIA certified laboratory in Nashville, Tennessee, and through the acquisition of Chronix, we also have a research and development facility in Göttingen, Germany, which serves as the center of excellence for our blood-based monitoring program. 9 Materials There is a limited number of manufacturers of molecular testing equipment and related chemical reagents necessary for the provision of our tests.
(“Chronix”), we also have a research and development facility in Göttingen, Germany, which serves as the center of excellence for our blood-based monitoring program. 8 Materials There is a limited number of manufacturers of molecular testing equipment and related chemical reagents necessary for the provision of our tests.
Historically, the FDA had exercised enforcement restraint with respect to most LDTs and had not required laboratories that offer LDTs to comply with FDA requirements for medical devices, such as registration, device listing, quality systems regulations, premarket clearance or premarket approval, and post-market controls.
Historically, the FDA had exercised enforcement restraint with respect to most LDTs and had not required laboratories that offer LDTs to comply with FDA requirements for medical devices, such as registration, device listing, quality systems regulations, premarket clearance or premarket approval, and post-market controls. 11 However, in May 2024, the FDA finalized a rule, ending its enforcement discretion policy for LDTs.
Where there is no coverage policy in place, we will pursue reimbursement on a case-by-case basis. In some cases, if not prohibited by law or regulation, we may bill physicians, hospitals and other laboratories directly for the services that they order.
Furthermore, if a third-party payer denies coverage after final appeal, payment may not be received at all. 7 Where there is no coverage policy in place, we will pursue reimbursement on a case-by-case basis. In some cases, if not prohibited by law or regulation, we may bill physicians, hospitals and other laboratories directly for the services that they order.
In particular, a covered entity must notify any individual whose unsecured PHI is breached according to the specifications set forth in the breach notification rule. A covered entity must also notify the Secretary of the HHS and, under certain circumstances, the media of a breach of unsecured PHI.
In particular, a covered entity must notify any individual whose unsecured PHI is breached according to the specifications set forth in the breach notification rule.
Our efforts in obtaining reimbursement based on individual claims, including pursuing appeals or reconsiderations of claims denials, could take a substantial amount of time, and bills may not be paid for many months, if at all. Furthermore, if a third-party payer denies coverage after final appeal, payment may not be received at all.
Our efforts in obtaining reimbursement based on individual claims, including pursuing appeals or reconsideration of claims denials, could take a substantial amount of time, and bills may not be paid for many months, if at all.
CMS and the Office of Civil Rights issued a final rule in February 2014 to amend both the HIPAA and CLIA regulations. The final rule amended the HIPAA privacy rule to remove the CLIA laboratory exceptions, and as a result, HIPAA-covered laboratories are now required to provide individuals, upon request, with access to their completed test reports.
The final rule amended the HIPAA privacy rule to remove the CLIA laboratory exceptions, and as a result, HIPAA-covered laboratories are now required to provide individuals, upon request, with access to their completed test reports.
There can be no assurance, however, that these measures will prevent the unauthorized disclosure or use of our trade secrets and know-how, or that others may not independently develop similar trade secrets and know-how or obtain access to our trade secrets, know-how, or proprietary technology. 10 General Risks Related to Obtaining and Enforcing Patent Protection Our patents and patent applications are directed to compositions of matter, formulations, methods of use and/or methods of manufacturing.
There can be no assurance, however, that these measures will prevent the unauthorized disclosure or use of our trade secrets and know-how, or that others may not independently develop similar trade secrets and know-how or obtain access to our trade secrets, know-how, or proprietary technology.
Therefore, the FDA is proposing a gradual phaseout to occur in stages over a total period of four years. The FDA anticipates that this phaseout policy should ultimately enable IVDs offered as LDTs that are supported by sound science to remain on the market.
Therefore, the FDA’s final rule gradually phases out enforcement discretion over a period of four years. The FDA anticipates that this phaseout policy should ultimately enable IVDs offered as LDTs that are supported by sound science to remain on the market.
The Occupational Safety and Health Administration has established extensive requirements relating to workplace safety for health care employers, including requirements to develop and implement programs to protect workers from exposure to blood-borne pathogens by preventing or minimizing any exposure through needle stick or similar penetrating injuries. 21 In May 2020, the Office of the National Coordinator for Health Information Technology promulgated final regulations under the authority of the 21st Century Cures Act that impose new conditions to obtain and maintain certification of certified health information technology and prohibit certain covered actors, including operators of laboratories which are considered “health care providers” under the final regulation, from engaging in activities that are likely to interfere with the access, exchange, or use of electronic health information (information blocking).
In May 2020, the Office of the National Coordinator for Health Information Technology promulgated final regulations under the authority of the 21st Century Cures Act that impose new conditions to obtain and maintain certification of certified health information technology and prohibit certain covered actors, including operators of laboratories which are considered “health care providers” under the final regulation, from engaging in activities that are likely to interfere with the access, exchange, or use of electronic health information (information blocking).
The FDA also recognizes that some IVDs may need to come off the market, because, for example, the IVD cannot meet applicable requirements under the FD&C Act and its implementing regulations, or the laboratory chooses not to invest resources to meet those requirements. 13 While the FDA’s general enforcement discretion approach has been focused on LDTs, the FDA is proposing a broader scope for the phaseout policy.
The FDA also recognizes that some IVDs may need to come off the market, because, for example, the IVD cannot meet applicable requirements under the FD&C Act and its implementing regulations, or the laboratory chooses not to invest resources to meet those requirements.
Manufacturers of currently marketed in vitro diagnostics products had until May 2022 to meet the requirements of the EU IVDR, though the EU Council and Parliament signed an amendment that delays certain previously mandated deadlines to allow more time for Notified Body of EU countries to manage the entire portfolio of IVD products on the European market.
Manufacturers of currently marketed in vitro diagnostics products had until May 2022 to meet the requirements of the EU IVDR, though the EU Council and Parliament signed an amendment that delays certain previously mandated deadlines to allow more time for Notified Body of EU countries to manage the entire portfolio of IVD products on the European market. 12 In addition, Russia has enacted more stringent medical product registration and labeling regulations, China has enacted stricter labeling requirements, and we expect other countries, such as Brazil and India, to impose more regulations that impact our product registrations.
Medical devices marketed in the United States are subject to the regulatory controls under CLIA, the FD&C Act, and regulations adopted by the FDA. Some requirements, known as premarket requirements, apply to medical devices before they are marketed, and other requirements, known as post-market requirements, apply to medical devices after they are marketed.
Medical devices marketed in the United States are subject to the regulatory controls under CLIA, the FD&C Act, and regulations adopted by the FDA.
Our financial success will be dependent, in part on our ability to obtain commercially valuable patent claims, to protect our intellectual property rights, and to operate without infringing upon the proprietary rights of others.
We may also use license agreements both to access technologies developed by other companies and universities and to convey certain intellectual property rights to others. Our financial success will be dependent, in part on our ability to obtain commercially valuable patent claims, to protect our intellectual property rights, and to operate without infringing upon the proprietary rights of others.
The Subject Matter Eligibility Updates include new Subject Matter Eligibility Examples for the Life Sciences. These examples provide favorable exemplary subject matter eligibility analysis of hypothetical claims covering diagnostic tests and claims drawn from case law. This update from the USPTO does not change our opinion on our ability to obtain meaningful patent protection.
The Subject Matter Eligibility Updates include new Subject Matter Eligibility Examples for the Life Sciences. These examples provide favorable exemplary subject matter eligibility analysis of hypothetical claims covering diagnostic tests and claims drawn from case law.
There is a risk that any patent applications that we file and any patents that we hold or later obtain could be challenged by third parties and declared invalid or infringing of third-party claims.
This update from the USPTO does not change our opinion on our ability to obtain meaningful patent protection. 10 There is a risk that any patent applications that we file and any patents that we hold or later obtain could be challenged by third parties and declared invalid or infringing of third-party claims.
Insofar as we may be required to obtain premarket clearance or approval to perform or continue performing an LDT, we cannot assure that we will be able to obtain such authorization.
Further, if any of our current or future LDTs are required to obtain premarket clearance or approval to perform or continue performing an LDT, we cannot assure that we will be able to obtain such authorization.
Similar health care and data privacy laws and regulations exist in Europe and other jurisdictions, including reporting requirements detailing interactions with and payments to healthcare providers and requirements regarding the collection, distribution, use, security, and storage of personally identifiable information and other data relating to individuals, including the General Data Protection Regulation (“GDPR”), which went into effect in May 2018.
Failure to comply with applicable state laws that impose privacy, security, or breach notification requirements could result in significant civil or criminal penalties, administrative actions, or private causes of action by individuals, and adversely affect our business, results of operations and reputation. 15 Similar health care and data privacy laws and regulations exist in Europe and other jurisdictions, including reporting requirements detailing interactions with and payments to healthcare providers and requirements regarding the collection, distribution, use, security, and storage of personally identifiable information and other data relating to individuals, including the General Data Protection Regulation (“GDPR”), which went into effect in May 2018.
Some Class I and most Class II devices may be marketed after a 510(k) premarket notification, while a more extensive Premarket Approval (“PMA”) is required to market Class III devices.
Some Class I and most Class II devices may be marketed after a 510(k) premarket notification, while a more extensive Premarket Approval (“PMA”) is required to market Class III devices. If we elect to develop additional IVDs or LDTs, our future screenings diagnostics may require a 510(k) submission or a PMA application to the FDA.
Although full compliance with these provisions ensures against prosecution under the federal Anti-Kickback Statute, the failure of a transaction or arrangement to fit within a specific safe harbor does not necessarily mean that the transaction or arrangement is illegal or that prosecution under the federal Anti-Kickback Statute will be pursued. 20 Federal civil and criminal false claims laws, including the False Claims Act, prohibit any person from knowingly presenting, or causing to be presented, a false claim for payment to the federal government or knowingly making, or causing to be made, a false statement to get a false claim paid.
Although full compliance with these provisions ensures against prosecution under the federal Anti-Kickback Statute, the failure of a transaction or arrangement to fit within a specific safe harbor does not necessarily mean that the transaction or arrangement is illegal or that prosecution under the federal Anti-Kickback Statute will be pursued.
These concrete process steps were used, not merely to observe the presence of the phenomenon that fetal DNA is shorter than maternal DNA, but to exploit that discovery in a method for preparation of a mixture enriched in fetal DNA and thus supported a finding of patent eligible subject matter. 11 While the cases discussed above are instructive, the USPTO has also issued guidelines in light of the Supreme Court decisions indicating that process claims having a natural principle as a limiting step will be evaluated to determine if the claim includes additional steps that practically apply the natural principle such that the claim amounts to significantly more than the natural principle itself.
While the cases discussed above are instructive, the United States Patent and Trademark Office (the “USPTO”) has also issued guidelines in light of the Supreme Court decisions indicating that process claims having a natural principle as a limiting step will be evaluated to determine if the claim includes additional steps that practically apply the natural principle such that the claim amounts to significantly more than the natural principle itself.
We have a laboratory and pharma services lab, certified under the Clinical Laboratory Improvements Amendment (“CLIA”) and accredited by the Collage of American Pathologists (“CAP”), in Nashville, Tennessee, and a research and development lab in Göttingen, Germany.
We also have a laboratory and pharma services lab, certified under the CLIA and accredited by the Collage of American Pathologists (“CAP”), in Nashville, Tennessee, and a research and development lab in Göttingen, Germany. Our innovation centers in Nashville and Germany employ world-renowned research scientists who, we believe, are leaders in their fields.
The particular premarket requirements that must be met to market a medical device in the United States will depend on the classification of the device under FDA regulations. Medical devices are categorized into one of three classes, based on the degree of risk they present.
Some requirements, known as premarket requirements, apply to medical devices before they are marketed, and other requirements, known as post-market requirements, apply to medical devices after they are marketed. 13 The particular premarket requirements that must be met to market a medical device in the United States will depend on the classification of the device under FDA regulations.
In 1988, Congress enacted CLIA, which established quality standards for all laboratories that provide testing services to ensure the accuracy, reliability and timeliness of patient test results regardless of where the test is performed. 12 Under CLIA, a laboratory is defined as any facility that performs laboratory testing on specimens derived from humans for the purpose of providing information for the diagnosis, prevention or treatment of disease, or the impairment of, or assessment of health of human beings.
Under CLIA, a laboratory is defined as any facility that performs laboratory testing on specimens derived from humans for the purpose of providing information for the diagnosis, prevention or treatment of disease, or the impairment of, or assessment of health of human beings.
In 2021, we presented data at four major scientific conferences supporting the association of DetermaIO and response to checkpoint inhibitor therapy and comparing to PD-L1 and TMB. Notably, data presented at both the European Society for Medical Oncology and the San Antonio Breast Cancer Symposium demonstrated the predictive value of the test.
Further, data presented at the Society for Immunotherapy of Cancer, suggested that DetermaIO outperformed both PD-L1 and TMB in predicting response to checkpoint inhibitors in patients with non-small lung cancer. In 2021, we presented data at four major scientific conferences supporting the association of DetermaIO and response to checkpoint inhibitor therapy and comparing to PD-L1 and TMB.
A 510(k) requires demonstration of substantial equivalence to another device that is legally marketed in the United States. Substantial equivalence means that the new device is at least as safe and effective as the predicate.
In a 510(k) submission, the device sponsor must demonstrate that the new device is “substantially equivalent” to a predicate device in terms of intended use, technological characteristics, and performance testing. A 510(k) requires demonstration of substantial equivalence to another device that is legally marketed in the United States.
FDA Regulation of Diagnostic Tests We have designed, developed, and are validating our tests as LDTs, and consequently, believe our tests are governed under the CLIA regulations, as administered by CMS, as well as by applicable state laws.
FDA Regulation of Diagnostic Tests We currently believe we have designed, developed, and are validating our tests as LDTs.
Myriad Genetics may limit our ability to obtain patent protection on diagnostic methods that merely recite a correlation between a naturally occurring event and a diagnostic outcome associated with that event. Our cancer diagnostic tests are based on the presence of certain genetic markers for a variety of cancers. In Mayo Collaborative Services v.
Risk Factors – Risks Related to Intellectual Property.” The United States Supreme Court’s decisions in Mayo Collaborative Services v. Prometheus Laboratories, Inc. and Association for Molecular Pathology v. Myriad Genetics may limit our ability to obtain patent protection on diagnostic methods that merely recite a correlation between a naturally occurring event and a diagnostic outcome associated with that event.
We believe, however, the current standard of care for PD-L1 testing has important limitations. According to published literature, more than half of PD-L1 positive patients do not respond to immune- checkpoint inhibitors, and 1 in 6 patients who will respond are missed (referred to as a “false negative”).
According to published literature, more than half of PD-L1 positive patients do not respond to immune-checkpoint inhibitors, and 1 in 6 patients who will respond are missed (referred to as a “false negative”). Furthermore, data presented at recent oncology medical conferences suggests that TMB is not a reliable predictor of immunotherapy response.
We believe that the experience of our team with diverse technologies through our pharma services activities (acquired through Insight Genetics (“Insight”)) (“Pharma Services”), strong scientific integrity regarding evidence generation and innovation mentality, alongside our flexibility in operations and regulatory strategy, will drive our success, differentiate us from our competition, and are foundational to our future. 4 We plan to expand our role in the rapidly evolving healthcare market by strengthening our positions across our portfolio of capabilities, growing strategic opportunities that drive new business, and differentiating our unique offerings, capabilities, and financial performance.
We also perform other assay development and clinical testing services for pharmaceutical and biotechnology companies through our pharma services operations (“Pharma Services”). 6 We believe that the experience of our team with diverse technologies through our Pharma Services activities, strong scientific integrity regarding evidence generation and innovation mentality, alongside our flexibility in operations and regulatory strategy, will drive our success, differentiate us from our competition, and are foundational to our future.
Additionally, the timing of market introduction of our diagnostic tests or of competitors’ tests may be an important competitive factor. The DetermaIO test competes with multiple biomarkers already in clinical use or in development for predicting response to immunotherapy. The most commonly used clinical tests employed in the immunotherapy response market are PD-L1 expression testing and TMB.
The DetermaIO test competes with multiple biomarkers already in clinical use or in development for predicting response to immunotherapy. The most commonly used clinical tests employed in the immunotherapy response market are Programmed Death-Ligand 1 (“PD-L1”) expression testing and Tumor Mutational Burden (“TMB”). We believe, however, the current standard of care for PD-L1 testing has important limitations.
If the FDA is successful with their rulemaking or other means, and ultimately regulates certain LDTs, our tests may be subject to certain additional regulatory requirements. Complying with the FDA’s requirements can be expensive, time-consuming, and subject us to significant or unanticipated delays.
Complying with the FDA’s requirements can be expensive, time-consuming, and subject us to significant or unanticipated delays.
Patents and Trade Secrets We rely primarily on patents and contractual obligations with employees and third parties to protect our proprietary rights. We have sought, and intend to continue to seek, appropriate patent protection for important and strategic components of our proprietary technologies by filing patent applications in the United States and certain foreign countries.
We have sought, and intend to continue to seek, appropriate patent protection for important and strategic components of our proprietary technologies by filing patent applications in the United States and certain foreign countries. There can be no assurance that any of our patents will guarantee protection or market exclusivity for our diagnostic tests and diagnostic test candidates.
The FDA has also made a preliminary determination that the general enforcement discretion approach should be phased out in a manner that accounts for the level of public health concern and the importance of avoiding undue disruption to the testing market, including undue disruption to the provision of care.
The new rule amends the definition of “in vitro diagnostic products” in FDA regulations to state that IVDs are devices under the FD&C Act “including when the manufacturer of these products is a laboratory.” The FDA determined that the general enforcement discretion approach should be phased out in a manner that accounts for the level of public health concern and the importance of avoiding undue disruption to the testing market, including undue disruption to the provision of care.
The patent positions of pharmaceutical and biotechnology companies, including ours, are generally uncertain and involve complex legal and factual questions.
General Risks Related to Obtaining and Enforcing Patent Protection Our patents and patent applications are directed to compositions of matter, formulations, methods of use and/or methods of manufacturing. The patent positions of pharmaceutical and biotechnology companies, including ours, are generally uncertain and involve complex legal and factual questions.
Moreover, we could incur substantial costs in litigation if we have to defend ourselves in patent lawsuits brought by third parties or if we initiate such lawsuits. The United States Supreme Court’s decisions in Mayo Collaborative Services v. Prometheus Laboratories, Inc. and Association for Molecular Pathology v.
Moreover, we could incur substantial costs in litigation if we have to defend ourselves in patent lawsuits brought by third parties or if we initiate such lawsuits. For additional information regarding the risks related to obtaining and enforcing patent protection, see “Part I, Item 1A.
Under the 21st Century Cures Act, health care providers that violate the information blocking prohibition will be subject to appropriate disincentives, which HHS services has yet to establish through required rulemaking. Developers of certified information technology and health information networks and health information exchanges, however, may be subject to civil monetary penalties of up to $1.0 million per violation.
Developers of certified information technology and health information networks and health information exchanges may be subject to civil monetary penalties of up to $1.0 million per violation.
The assay is analytically and clinically validated in three major solid organ transplant types (kidney, liver and heart) by peer reviewed international publications. We received a positive coverage decision from the Molecular Diagnostics Services (“MolDx”) for VitaGraft Kidney in August of 2023, and it became commercially available for ordering in January 2024 through our CLIA Laboratory in Nashville, Tennessee.
We received a positive coverage decision from MolDx for GraftAssureCore (Kidney) in August of 2023, and it became commercially available for ordering in January 2024 through our Clinical Laboratory Improvements Amendment (“CLIA”) laboratory in Nashville, Tennessee. GraftAssureCore (Kidney) is now broadly available to transplant professionals upon request.
Notwithstanding the FDA’s current position with respect to oversight of our tests, we will engage with FDA for guidance on the data expectations for our tests, where appropriate and pursue FDA pre-market review for our current tests and tests we may offer in the future, if we determine that doing so would be appropriate from a strategic perspective. 14 In addition, Congress has considered a number of legislative proposals in recent years that would amend the regulatory framework for LDTs, including, among other requirements, FDA premarket review of certain LDTs.
In addition, Congress has previously considered, and may consider in the future, legislative proposals that would amend the regulatory framework for LDTs, including, among other requirements, FDA premarket review of certain LDTs.
VitaGraft competes with multiple other tests from competitors that measure donor derived cell-free DNA. While our competitors have an established customer base, we believe that through the use of digital PCR, VitaGraft’s reduced need for batching to achieve attractive sample economics, fast turnaround time and native absolute quantification will be differentiators in the marketplace.
We believe that through the use of digital PCR, our tests have attractive sample economics even at low volumes, offer fast turnaround times and offer native absolute quantification, which are expected to be differentiators in the marketplace. Based on our research of customer needs, we believe that turnaround time matters to practitioners while sample economics are important to local labs.
The proposed phaseout policy would not change the FDA’s longstanding expectation that IVD manufacturing activities occurring outside of a CLIA-certified laboratory comply with applicable device requirements.
Notably, the phaseout policy does not change the FDA’s longstanding expectation that IVDs designed, manufactured, or used outside of a single CLIA-certified laboratory are medical devices and, thus, subject to medical device regulations.
Based on our research of customer needs, we believe that this fast turnaround time is critical to inform timely, critical medical decisions. Facilities We lease a building located at 15 Cushing in Irvine, California that serves as our principal executive and administrative offices.
These results were published in the peer-reviewed journal, Clinical Cancer Research, and validated DetermaIO’s utility in potentially identifying breast cancer patients most likely to benefit from atezolizumab. Facilities We lease a building located at 15 Cushing in Irvine, California that serves as our principal executive and administrative offices.
See Note 14, “Subsequent Events,” to our consolidated financial statements included elsewhere in this Report for additional information. 4. Billing, Coverage, and Reimbursement for our Laboratory Tests We are currently in the process of developing and commercializing DetermaIO, VitaGraft and DetermaCNI.
We are focusing on executing the technology priorities discussed herein, which have evolved to reflect our operations and strategic vision. Billing, Coverage, and Reimbursement for our Laboratory Tests We are currently in the process of developing and commercializing GraftAssureCore, GraftAssureIQ, GraftAssureDx, DetermaIO and DetermaCNI.
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Item 1. Business We are a partner in the healthcare and life science field to researchers and physicians through our development and acquisitions of proprietary molecular technologies in the fields of oncology and transplantation. Through a series of acquisitions, we have built a portfolio of differentiated content with utility in well-established clinical and research markets.
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Item 1. Business. Overview We are a pioneering diagnostics technology company. Our mission is to democratize access to novel molecular diagnostic testing to improve patient outcomes. We do this primarily by developing molecular diagnostic test kits that empower our customers to run their own tests to participate in the patient-care value chain, which is counter-positioned with the central laboratory model.
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With the increased adoption of precision medicine, healthcare providers are relying on advanced testing to identify patients who will benefit from new, targeted treatments and therapies that are more effective and often have fewer side effects than chemotherapy and other traditional treatments.
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Our decentralized approach also puts testing in the hands of researchers to enable more studies, which inspires innovation, which we believe can improve standards of care while also creating demand for more testing. We develop tests that measure both established biomarkers as well as pioneer the adoption of new and more effective biomarkers.
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In addition to identifying these individualized treatment options, researchers and healthcare providers are looking to new technologies to rapidly identify when medical or therapeutic interventions are necessary.
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We believe that combining innovative science with a simple, but disruptive, business model can create enormous value. This model is designed to empower doctors to reduce uncertainty to make better decisions to save lives as well as enable researchers to measure biomarkers to inspire innovation. Our customer institutions are hospitals, transplant centers, and labs.
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We are leveraging our experience in oncology and transplantation to develop and commercialize diagnostic testing at our licensed and accredited laboratory as well as focusing on the development of distributable kitted formats of these technologies so that researchers may study how these tests can be further utilized in other types of cancers.
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The decision to deploy our tests on behalf of patients or research studies supports front line doctors, including surgeons, nephrologists and oncologists, as well as researchers, pathologists, lab directors, medical directors, department heads, lab managers, and chief medical officers. 5 Our operating premise is that democratizing access to testing to foster scientific innovation and better treatments ultimately reduces the cost of care, while expanding access and improving outcomes.
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Commercialization of these products, which are intended to be sold for research purposes in the United States and labeled “For Research Use Only” (“RUO”), is expected to occur through a mix of direct sales, partnering and distribution agreements, and licensing.
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At the heart, we are a science-driven organization that champions scientific integrity and inquiry. We employ world-renowned scientists who generate intellectual property in our strategic target markets. We have built and acquired an intellectual property portfolio that we believe will enable us to gain share in well-established clinical and research markets.
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We may sometimes refer to our technologies as “diagnostic tests.” Our laboratory developed tests (“LDTs”) are intended to help support and inform physician decision-making but are not themselves diagnostic or prescriptive of treatment decisions.
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Our current intellectual property comprises three general areas: 1) organ transplant, 2) oncology therapy selection and 3) oncology therapy monitoring.
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They are critical to our ability to carry out our mission to improve patient outcomes by providing patient specific insights that inform critical provider decisions throughout the patient care journey. We believe that if clinicians are given the right information and educational tools, they will make the right choices with their patients.
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Within these categories, we have developed or are in the process of developing laboratory developed tests (“LDTs”) that can be run at our Nashville, Tennessee lab, kitted research use only (“RUO”) tests, and kitted clinical tests that can be run by local labs. Our primary near-term strategic market is organ transplant.
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To do so, we are focusing on executing the technology priorities discussed below, which have evolved to reflect our operations and strategic vision. 1. Priorities and Resource Allocation Spin-off of DetermaRx As part of our initial strategy on the broader diagnostic continuum, we launched the DetermaRx test via our majority acquisition of Razor Genomics, Inc. (“Razor”) in September 2019.
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Oncocyte’s molecular diagnostic tests are designed to help the industry to better address one of the leading challenges in the transplantation market – which is the body’s potential to reject the donor organ. We do this by detecting early evidence of graft organ damage in the blood through assessing a known biomarker known as donor-derived cell-free DNA.
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During February 2021, we acquired all outstanding shares of Razor’s common stock which made Razor a wholly-owned subsidiary of Oncocyte. In February 2023, we sold approximately 70% of the issued and outstanding equity interests of Razor to buyers who are experienced in the development of early-stage lung cancer diagnostics and the provision of gene-expression-based prognostic tests.
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GraftAssureCore (Kidney), for example, can find donor kidney damage up to 11 months sooner than other protocols. GraftAssureCore is analytically and clinically validated in three major solid organ transplant types (kidney, liver and heart) by peer reviewed international publications.
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As part of the same transaction, we transferred to Razor all of the assets and liabilities related to DetermaRx. We continue to retain approximately 30% of the issued and outstanding equity interests of Razor on a fully-diluted basis.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeFor example, in the United States, proving invalidity requires a showing of clear and convincing evidence to overcome the presumption of validity enjoyed by issued patents.
Biggest changeFor example, in the United States, proving invalidity requires a showing of clear and convincing evidence to overcome the presumption of validity enjoyed by issued patents. 34 We may not have identified all patents, published applications or published literature that affect our business either by blocking our ability to commercialize our products or potential products, by preventing the patentability of one or more aspects of our products or potential products to us or our licensors, or by covering the same or similar technologies that may affect our ability to market our products and potential products.
Such events could cause interruption of our operations, downtime of our information technology or telecommunications systems or those used by our third-party service providers, and have an adverse effect on our business and results of operations.
Such events could cause interruption of our operations, downtime of our information technology or telecommunications systems or those used by our third-party service providers, and could have an adverse effect on our business and results of operations.
Also, even if we do not incur an interruption of or our operations, fines, penalties, or financial liability to third parties from a security breach, we could suffer a loss of confidence in our services, which could adversely affect our business and competitive position.
Also, even if we do not incur an interruption of our operations, or fines, penalties, or financial liability to third parties from a security breach, we could suffer a loss of confidence in our services, which could adversely affect our business and competitive position.
We will need to raise additional capital to pay operating expenses unless we are able to generate sufficient revenues from diagnostic test sales, royalties, and license fees to meet our operating expenses. ● Our ability to raise additional equity or debt capital will depend not only on the successful completion of development of our diagnostic tests and receiving reimbursement approval from Medicare and other third-party payers for those tests, but also will depend on access to capital and conditions in the capital markets.
We will need to raise additional capital to pay operating expenses unless we are able to generate sufficient revenues from diagnostic test sales, royalties, and license fees to meet our operating expenses. 18 • Our ability to raise additional equity or debt capital will depend not only on the successful completion of development of our diagnostic tests and receiving reimbursement approval from Medicare and other third-party payers for those tests, but also will depend on access to capital and conditions in the capital markets.
Delays or denials of the regulatory clearances or approvals may be encountered as a result of changes in regulatory agency policy, regulations, or laws. ● A diagnostic test that is cleared or approved for marketing may be subject to restrictions on use. ● The FDA can withdraw approval of an FDA regulated product if problems arise.
Delays or denials of the regulatory clearances or approvals may be encountered as a result of changes in regulatory agency policy, regulations, or laws; • A diagnostic test that is cleared or approved for marketing may be subject to restrictions on use; and • The FDA can withdraw approval of an FDA regulated product if problems arise.
Even if we ultimately prevail in such claims, the monetary cost of such litigation and the diversion of the attention of our management and scientific personnel could outweigh any benefit we receive as a result of the proceedings. 42 We may not be able to enforce our intellectual property rights throughout the world.
Even if we ultimately prevail in such claims, the monetary cost of such litigation and the diversion of the attention of our management and scientific personnel could outweigh any benefit we receive as a result of the proceedings. We may not be able to enforce our intellectual property rights throughout the world.
Any data privacy or security event could also disrupt our operations and damage our reputation, any of which could adversely affect our business. 31 If a privacy or security event occurs, we may be required to comply with state breach notification laws and become subject to mandatory corrective action.
Any data privacy or security event could also disrupt our operations and damage our reputation, any of which could adversely affect our business. If a privacy or security event occurs, we may be required to comply with state breach notification laws and become subject to mandatory corrective action.
There is no assurance that we will be successful in completing the development of our current diagnostic tests or in developing additional diagnostic tests regardless of the amount of our expenditures. Sales of our diagnostic tests could be adversely impacted by the reluctance of physicians to adopt the use of our tests and by the availability of competing diagnostic tests.
There is no assurance that we will be successful in completing the development of our current diagnostic tests or in developing additional diagnostic tests regardless of the amount of our expenditures. 19 Sales of our diagnostic tests could be adversely impacted by the reluctance of physicians to adopt the use of our tests and by the availability of competing diagnostic tests.
Further, a derivation proceeding may be instituted by the USPTO or an inventor alleging that a patent or application was derived from the work of another inventor. 41 Oppositions to the issuance of patents may be filed under European patent law and the patent laws of certain other countries.
Further, a derivation proceeding may be instituted by the USPTO or an inventor alleging that a patent or application was derived from the work of another inventor. Oppositions to the issuance of patents may be filed under European patent law and the patent laws of certain other countries.
The law also requires us to maintain a state laboratory license to conduct testing in the states in which are laboratories are located. State laws establish standards for day-to-day operation of a clinical laboratory, including the training and skills required of personnel and quality control.
The law also requires us to maintain a state laboratory license to conduct testing in the states in which our laboratories are located. State laws establish standards for day-to-day operation of a clinical laboratory, including the training and skills required of personnel and quality control.
In addition to acquisition costs, operationally we will have to build out infrastructure for installing a new testing platform across multiple laboratory locations as well as support functions to help maintain these instrument systems in new customer labs, and we may also encounter unexpected technology issues in the process. 27 If our laboratory facilities become damaged or inoperable, or we are required to vacate any facility, our ability to provide services and pursue our research and development and commercialization efforts may be jeopardized.
In addition to acquisition costs, operationally we will have to build out infrastructure for installing a new testing platform across multiple laboratory locations as well as support functions to help maintain these instrument systems in new customer labs, and we may also encounter unexpected technology issues in the process. 20 If our laboratory facilities become damaged or inoperable, or we are required to vacate any facility, our ability to provide services and pursue our research and development and commercialization efforts may be jeopardized.
If a collaboration partner fails to conduct its diagnostic test development, manufacturing, commercialization, regulatory compliance, sales and marketing or distribution activities successfully and in a timely manner, or if it terminates or materially modifies its agreements with us, the development and commercialization of one or more diagnostic test candidates could be delayed, curtailed or terminated because we may not have sufficient financial resources or capabilities to continue diagnostic test development, manufacturing, and commercialization on our own.
If a collaboration partner fails to conduct its diagnostic test or instrument-related development, manufacturing, commercialization, regulatory compliance, sales and marketing or distribution activities successfully and in a timely manner, or if it terminates or materially modifies its agreements with us, the development and commercialization of one or more diagnostic test candidates could be delayed, curtailed or terminated because we may not have sufficient financial resources or capabilities to continue diagnostic test development, manufacturing, and commercialization on our own.
If pre-market review and approval is required by the FDA, we may need to incur additional expenses or require additional time to seek it, or we may be unable to satisfy FDA standards, and our tests may not be cleared or approved on a timely basis, if at all, and the labeling claims permitted by the FDA may not be consistent with our currently planned claims or adequate to support adoption of and reimbursement for our tests.
If pre-market review and approval is required by the FDA for any of our tests, we may need to incur additional expenses or require additional time to seek it, or we may be unable to satisfy FDA standards, and our applicable tests may not be cleared or approved on a timely basis, if at all, and the labeling claims permitted by the FDA may not be consistent with our currently planned claims or adequate to support adoption of and reimbursement for our tests.
If issues were to arise with the new equipment or if reagents we are using causing us to acquire different diagnostic testing equipment again, we would need to conduct validation and analytic studies to determine whether our previous test results can be reproduced using the new equipment. As a result, we could experience delays again in developing our diagnostic tests.
If issues were to arise with our equipment or if reagents we are using cause us to acquire different diagnostic testing equipment, we would need to conduct validation and analytic studies to determine whether our previous test results can be reproduced using the new equipment. As a result, we could experience delays again in developing our diagnostic tests.
As such, the effects of inflation may adversely impact our results of operations, financial condition and cash flows. 34 Risks Related to Our Industry Our operations as a clinical laboratory in the United States are subject to oversight by CMS under CLIA, as well as certain state agencies, and our operation of clinical laboratories in any foreign jurisdictions are subject to similar regulatory oversight.
As such, the effects of inflation may adversely impact our results of operations, financial condition and cash flows. 25 Risks Related to Our Industry Our operations as a clinical laboratory in the United States are subject to oversight by CMS under CLIA, as well as certain state agencies, and our operation of clinical laboratories in any foreign jurisdictions are subject to similar regulatory oversight.
Item 1A. Risk Factors Our business is subject to various risks, including those described below. You should consider the following risk factors, together with all of the other information included in this Report, which could materially adversely affect our proposed operations, our business prospects, and financial condition, and the value of an investment in our business.
Item 1A. R isk Factors. Our business is subject to various risks, including those described below. You should consider the following risk factors, together with all of the other information included in this Report, which could materially adversely affect our proposed operations, our business prospects, our financial condition, and the value of an investment in our business.
The future issuance of any such additional common stock or other securities may create downward pressure on the trading price of our common stock. 45 We may also issue preferred stock having rights, preferences, and privileges senior to the rights of our common stock with respect to dividends, rights to share in distributions of our assets if we liquidate our company, or voting rights.
The future issuance of any such additional common stock or other securities may create downward pressure on the trading price of our common stock. 36 We may also issue preferred stock having rights, preferences, and privileges senior to the rights of our common stock with respect to dividends, rights to share in distributions of our assets if we liquidate our company, or voting rights.
For instance, the payment reductions imposed by healthcare reform legislation known as the “Patient Protection and Affordable Care Act,” also known as the ACA (“ACA”), the expansion of the federal and state governments’ role in the U.S. healthcare industry, and the changes to the reimbursement amounts paid by payers for our tests and future tests and products may reduce our profits and have a materially adverse effect on our business, financial condition, results of operations and cash flows.
For instance, the payment reductions imposed by healthcare reform legislation known as the “Patient Protection and Affordable Care Act,” also known as the ACA, the expansion of the federal and state governments’ role in the U.S. healthcare industry, and the changes to the reimbursement amounts paid by payers for our tests and future tests and products may reduce our profits and have a material adverse effect on our business, financial condition, results of operations and cash flows.
HITECH established certain health information security breach notification obligations that require covered entities to notify each individual whose PHI is breached. 39 We may incur significant compliance costs related to HIPAA and HITECH privacy regulations and varying state privacy regulations and varying state privacy and security laws.
HITECH established certain health information security breach notification obligations that require covered entities to notify each individual whose PHI is breached. 30 We may incur significant compliance costs related to HIPAA and HITECH privacy regulations and varying state privacy regulations and varying state privacy and security laws.
We currently have a clinical laboratory facility in Nashville, Tennessee. We also acquired a laboratory in Germany through merger with Chronix.
We currently have a clinical laboratory facility in Nashville, Tennessee. We also acquired a laboratory in Germany through our merger with Chronix.
Clinical trial failures or delays can occur at any stage of the trials, and may be directly or indirectly caused by a variety of factors, including but not limited to: ● Delays in securing clinical investigators or trial sites for our clinical trials; ● Delays in obtaining Institutional Review Board and other regulatory approvals to commence a clinical trial; ● Slower than anticipated rates of patient recruitment and enrollment, or failing to reach the targeted number of patients due to competition for patients from other trials; ● Limited or no availability of coverage, reimbursement and adequate payment from health maintenance organizations and other third-party payers for the use of our diagnostic test candidates in our clinical trials; ● Negative or inconclusive results from clinical trials; ● Approval and introduction of new diagnostic or changes in standards of practice or regulatory guidance that render our clinical trial endpoints or the targeting of our proposed indications obsolete; ● Inability to monitor patients adequately during or after treatment or problems with investigator or patient compliance with the trial protocols; ● Inability to replicate in large controlled studies safety and efficacy data obtained from a limited number of patients in uncontrolled trials; and ● Inability or unwillingness of medical investigators to follow our clinical protocols. 37 The commercial success of our diagnostic tests depends on the availability and sufficiency of third-party payer coverage and reimbursement, which may be limited or unavailable.
Clinical trial failures or delays can occur at any stage of the trials, and may be directly or indirectly caused by a variety of factors, including but not limited to: • Delays in securing clinical investigators or trial sites for our clinical trials; • Delays in obtaining Institutional Review Board and other regulatory approvals to commence a clinical trial; • Slower than anticipated rates of patient recruitment and enrollment, or failing to reach the targeted number of patients due to competition for patients from other trials; • Limited or no availability of coverage, reimbursement and adequate payment from health maintenance organizations and other third-party payers for the use of our diagnostic test candidates in our clinical trials; • Negative or inconclusive results from clinical trials; • Approval and introduction of new diagnostic tests or changes in standards of practice or regulatory guidance that render our clinical trial endpoints or the targeting of our proposed indications obsolete; • Inability to monitor patients adequately during or after treatment or problems with investigator or patient compliance with the trial protocols; • Inability to replicate in large controlled studies safety and efficacy data obtained from a limited number of patients in uncontrolled trials; and • Inability or unwillingness of medical investigators to follow our clinical protocols.
The U.S. Supreme Court has ruled on several patent cases in recent years, either narrowing the scope of patent protection available in certain circumstances or weakening the rights of patent owners in certain situations.
Supreme Court has ruled on several patent cases in recent years, either narrowing the scope of patent protection available in certain circumstances or weakening the rights of patent owners in certain situations.
Further, given the complexities of the reimbursement landscape in which we operate, our payors may be unwilling or unable to increase reimbursement rates to compensate for inflationary impacts.
Further, given the complexities of the reimbursement landscape in which we operate, our payers may be unwilling or unable to increase reimbursement rates to compensate for inflationary impacts.
This means that: ● The IVDs that we may develop cannot be sold until the CMS or the FDA, and corresponding foreign regulatory authorities approve or authorize the laboratory tests or the IVDs for medical use. ● We will have to conduct expensive and time-consuming clinical trials of new diagnostic tests.
This means that: • The IVDs cannot be sold until the CMS or the FDA, and corresponding foreign regulatory authorities approve or authorize the IVDs for medical use; • We will have to conduct expensive and time-consuming clinical trials of new diagnostic tests.
Failure to adequately protect, or disputes relating to, trademarks, could harm our business. We cannot be certain that the legal steps we are taking are sufficient to protect our trademark rights or that, notwithstanding legal protection, others will not infringe or misappropriate our intellectual property rights.
Failure to adequately protect, or disputes relating to, trademarks or patents, could harm our business. We cannot be certain that the legal steps we are taking are sufficient to protect our trademark and patent rights or that, notwithstanding legal protection, others will not infringe or misappropriate our intellectual property rights.
However, there is no assurance that our development plans for VitaGraft, DetermaIO or DetermaCNI will be successful or that we will be generate sufficient revenues from commercialization of our diagnostic tests to finance our operations and earn a profit. The research and development work we are doing is costly, time consuming, and uncertain as to its results.
However, there is no assurance that our development plans for GraftAssureCore , GraftAssureIQ, GraftAssureDx, DetermaIO or DetermaCNI will be successful or that we will generate sufficient revenues from commercialization of our diagnostic tests to finance our operations and earn a profit. The research and development work we are doing is costly, time consuming, and uncertain as to its results.
Our near-term commercial efforts will focus on maximizing the opportunities for VitaGraft and DetermaIO and DetermaCNI. Our reliance on a small group of diagnostic tests as sources of revenue could limit our future revenue, make it more difficult for us to finance our operations, and impair our prospects for profitability and growth.
Our near-term commercial efforts will focus on maximizing the opportunities for GraftAssureCore , GraftAssureIQ, GraftAssureDx, DetermaIO and DetermaCNI. Our reliance on a small group of diagnostic tests as sources of revenue could limit our future revenue, make it more difficult for us to finance our operations, and impair our prospects for profitability and growth.
If similar issues were to arise after commercialization of a diagnostic test, we could experience a disruption for a period of time in providing the diagnostic tests to patients and we would lose revenues and potentially market share as a result.
If similar issues were to arise after commercialization of a diagnostic test, we could experience a disruption in providing the diagnostic tests to patients and we would lose revenues and potentially market share as a result.
There is a risk that we could become dependent upon one or more collaborative arrangements for diagnostic test development or manufacturing or as a source of revenues from the sale of any diagnostic tests that may be developed by us alone or through one of the collaborative arrangements.
There is a risk that we could become dependent upon one or more collaborative arrangements, in addition to the Bio-Rad arrangement, for diagnostic test development or manufacturing or as a source of revenues from the sale of any diagnostic tests that may be developed by us alone or through one of the collaborative arrangements.
The anti-bribery provisions of the FCPA are enforced primarily by the United States Department of Justice. The SEC is involved with enforcement of the books and records provisions of the FCPA. 32 Compliance with these anti-bribery laws is expensive and difficult, particularly in countries in which corruption is a recognized problem.
The anti-bribery provisions of the FCPA are enforced primarily by the United States Department of Justice. The Securities and Exchange Commission (“SEC”) is involved with enforcement of the books and records provisions of the FCPA. Compliance with these anti-bribery laws is expensive and difficult, particularly in countries in which corruption is a recognized problem.
Our business and operations could suffer in the event of system failures. We depend on information technology and telecommunications systems, including a combination of on-site systems, managed data center systems, cloud-based systems, and the Internet, for significant elements of our operations, including processing, transmitting, and storing a wide variety of business-critical information.
We depend on information technology and telecommunications systems, including a combination of on-site systems, managed data center systems, cloud-based systems, and the Internet, for significant elements of our operations, including processing, transmitting, and storing a wide variety of business-critical information.
Such challenges or related developments (for example if the labeling claims the FDA allows us to make are more limited than the claims we currently plan to make) may impact our commercialization efforts as orders or reimbursement may be less than anticipated.
Such challenges or related developments (for example if the labeling claims the FDA allows us to make are more limited than the claims we currently plan to make) may impact our commercialization efforts as orders or reimbursement may be less than anticipated. Any of these regulatory developments may cause our business to suffer.
We may acquire businesses or assets that complement or augment our existing business. If we acquire businesses with promising products or technologies, we may not be able to realize the benefit of acquiring such businesses if we are unable to move one or more products through preclinical and/or clinical development to regulatory approval and commercialization.
If we acquire businesses with promising products or technologies, we may not be able to realize the benefit of acquiring such businesses if we are unable to move one or more products through preclinical and/or clinical development to regulatory approval and commercialization.
If after commercialization under the LDT framework our tests are allowed to remain on the market but there is uncertainty about the regulatory status of our tests, including questions that may be raised if competitors object to our regulatory positioning as an LDT, we may encounter ongoing regulatory and legal challenges and related costs.
If after commercialization under the LDT framework, our tests are allowed to remain on the market but there is uncertainty about the regulatory status of our tests, which is likely, given the current state of industry challenges to FDA’s final rule, including questions that may be raised if competitors object to our regulatory positioning as an LDT, we may encounter ongoing regulatory and legal challenges and related costs.
If there is no coverage, neither the supplier nor any other party, such as a diagnostic laboratory, may receive reimbursement from Medicare for the service. Regional policies are directed by Medicare’s regional MACs. Reimbursement for our diagnostic testing may be negatively impacted by California MAC policies.
If there is no coverage, neither the supplier nor any other party, such as a diagnostic laboratory, may receive reimbursement from Medicare for the service. Regional policies are directed by Medicare’s regional MACs.
Under the Merger Agreement pursuant to which we acquired Insight, as described in Note 3 to the consolidated financial statements included elsewhere in this Report, we have agreed to pay contingent consideration of up to $6.0 million in any combination of cash or shares of our common stock if certain milestones related to DetermaIO are achieved (the “Contingent Consideration”), which consist of (i) a $1.5 million clinical trial completion and data publication milestone, (ii) $3.0 million for an affirmative final LCD from CMS for a specified lung cancer test, and (iii) up to $1.5 million for achieving certain CMS reimbursement milestones.
Under the merger agreement pursuant to which we acquired Insight, as described in Note 3 to the consolidated financial statements included elsewhere in this Report, based on current estimates, we have agreed to pay contingent consideration of up to $4.5 million in any combination of cash or shares of our common stock if certain milestones related to DetermaIO are achieved, which consist of (i) $3.0 million for an affirmative final LCD from CMS for a specified lung cancer test, and (ii) up to $1.5 million for achieving certain CMS reimbursement milestones.
DetermaIO and VitaGraft are currently available only in early access for non-clinical use. We plan to continue development of all three products for clinical and research use.
DetermaIO and GraftAssureCore are currently available only in early access for non-clinical use. We plan to continue development of all five of such products for clinical and research use.
Even if we are able to overcome physician reluctance and compete with products that are currently on the market, our competitors may succeed in developing new safer, more accurate or more cost-effective diagnostic tests that could render our diagnostic tests and technologies obsolete or noncompetitive.
Even if we are able to overcome physician reluctance and compete with products that are currently on the market, our competitors may succeed in developing new safer, more accurate or more cost-effective diagnostic tests that could render our diagnostic tests and technologies obsolete or noncompetitive. There is a risk of product liability claims in our business.
We may enter into various kinds of collaborative research and development, manufacturing, and diagnostic test marketing agreements to develop and commercialize our diagnostic tests.
We have entered into and may in the future enter into various kinds of collaborative research and development, manufacturing, and diagnostic test marketing agreements to develop and commercialize our diagnostic tests.
The sale of such shares could have a depressing effect on the market value of our common stock and the prices at which we can sell our own shares of common stock to raise capital to support our operations. Item 1B. Unresolved Staff Comments Not applicable.
The sale of such shares could have a depressing effect on the market value of our common stock and the prices at which we can sell our own shares of common stock to raise capital to support our operations.
Our laboratories are operating under CLIA and are not currently operating as device manufacturing facilities following FDA’s Quality System Regulation. Because these standards differ, we may face challenges establishing FDA-compliant quality systems or be unable to do so.
Our laboratories are operating under CLIA and are not currently operating as registered device manufacturing facilities or in compliance with FDA’s QSR. Because these standards differ, we may face challenges establishing FDA-compliant quality systems or be unable to do so.
Risks Related to Our Capital Resources We may incur significant cash payment and common stock issuance obligations under our agreements arising from our investments in Insight and Chronix.
We may incur significant cash payment and common stock issuance obligations under our agreements arising from our investments in Insight and Chronix.
We may experience inflationary pressures, primarily in personnel costs and with certain laboratory supplies. We anticipate inflationary impacts on other cost areas in the future.
We may experience inflationary pressures, primarily in personnel costs, with certain laboratory supplies and from inventory costs related to certain raw materials . We anticipate inflationary impacts on other cost areas in the future.
We incurred research and development expenses amounting to approximately $9.3 million and $7.3 million during years ended December 31, 2023 and 2022, respectively. The current focus of our research and development efforts is the development of DetermaIO, VitaGraft and DetermaCNI.
We incurred research and development expenses amounting to approximately $9.8 million and $9.3 million during the years ended December 31, 2024 and 2023, respectively. The current focus of our research and development efforts is the development of GraftAssureCore, GraftAssureIQ, GraftAssureDx, DetermaIO and DetermaCNI.
Our net losses for the years ended December 31, 2023 and 2022 were $ 27.8 million and $72.9 million, respectively, and we had an accumulated deficit of $ 289.9 million as of December 31, 2023. We finance our operations primarily through sales of our common stock.
Our net losses for the years ended December 31, 2024 and 2023 were $60.7 million and $27.8 million, respectively, and we had an accumulated deficit of $350.5 million as of December 31, 2024. We finance our operations primarily through sales of our common stock.
In addition to storing and transmitting sensitive data that is subject to legal protections, these applications and data encompass a wide variety of business-critical information, including research and development information, commercial information, and business and financial information. The secure processing, maintenance, and transmission of this information is critical to our operations and business strategy.
In addition to storing and transmitting sensitive data that is subject to legal protections, these applications and data encompass a wide variety of business-critical information, including research and development information, commercial information, and business and financial information.
Even if we are successful in these proceedings, we may incur substantial costs, and the time and attention of our management and scientific personnel could be diverted in pursuing these proceedings, which could significantly harm our business and operating results.
Even if we are successful in these proceedings, we may incur substantial costs, and the time and attention of our management and scientific personnel could be diverted in pursuing these proceedings, which could significantly harm our business and operating results. We may also not have sufficient resources to bring these actions to a successful conclusion.
We may also not have sufficient resources to bring these actions to a successful conclusion. 43 If we are found to infringe a third party’s intellectual property rights, we may have to pay monetary damages, lose valuable intellectual property rights or personnel, or be forced to cease developing, manufacturing or commercializing the infringing diagnostic test.
If we are found to infringe a third party’s intellectual property rights, we may have to pay monetary damages, lose valuable intellectual property rights or personnel, or be forced to cease developing, manufacturing or commercializing the infringing diagnostic test.
We face a number of risks relative to protecting our information, including loss of access, inappropriate disclosure, inappropriate modification, and the risk of our being unable to adequately monitor and modify our controls over our critical information.
The secure processing, maintenance, and transmission of this information is critical to our operations and business strategy. 22 We face a number of risks relative to protecting our information, including loss of access, inappropriate disclosure, inappropriate modification, and the risk of our being unable to adequately monitor and modify our controls over our critical information.
Since we are a smaller reporting company, we are exempt from the requirement of having our internal controls over financial reporting audited by our independent registered public accountants, which means that material weaknesses or significant deficiencies in our internal controls that might be detected by an audit may not be detected and remedied.
Since we are a smaller reporting company, we are exempt from the requirement of having our internal controls over financial reporting audited by our independent registered public accountants, which means that material weaknesses or significant deficiencies in our internal controls that might be detected by an audit may not be detected and remedied. 23 We are subject to laws and regulations governing corruption, which may require us to develop, maintain, and implement costly compliance programs.
We may in the future be subject to litigation, which could harm our stock price, business, results of operations and financial condition. We may be subject to litigation in the future. In the past, following periods of volatility in the market price of their stock, many companies, including us, have been the subjects of securities class action litigation.
We may be subject to litigation in the future. In the past, following periods of volatility in the market price of their stock, many companies, including us, have been the subjects of securities class action litigation.
The Leahy-Smith Act and its implementation may make it more difficult to obtain patent protection for our inventions and increase the uncertainties and costs surrounding the prosecution of our or our collaboration partners’ patent applications and the enforcement or defense of our or our collaboration partners’ issued patents, all of which could harm our business, results of operations and financial condition.
The Leahy-Smith Act and its implementation may make it more difficult to obtain patent protection for our inventions and increase the uncertainties and costs surrounding the prosecution of our or our collaboration partners’ patent applications and the enforcement or defense of our or our collaboration partners’ issued patents, all of which could harm our business, results of operations and financial condition. 32 Other companies or organizations may challenge our patent rights or may assert patent rights that prevent us from developing and commercializing our diagnostic tests.
It is likely that we will need to issue additional equity or debt securities in order to raise additional capital needed to pay our operating expenses until such time as our revenues are sufficient to finance our operating expenses. ● We plan to continue to incur substantial research and development expenses and we anticipate that we will be incurring significant sales and marketing costs as we develop and commercialize our diagnostic tests.
We have historically been dependent upon outside financing capital to fund our operations and until such time as our revenues are sufficient to finance our operating expenses, we may need to issue additional equity or debt securities to raise the capital needed to pay our operating expenses. • We plan to continue to incur substantial research and development expenses and we anticipate that we will be incurring significant sales and marketing costs as we develop and commercialize our diagnostic tests.
In addition, if any of our competitors are not subject to the FCPA, they may engage in practices that will lead to their receipt of preferential treatment from foreign hospitals and enable them to secure business from foreign hospitals in ways that are unavailable to us.
In addition, if any of our competitors are not subject to the FCPA, they may engage in practices that will lead to their receipt of preferential treatment from foreign hospitals and enable them to secure business from foreign hospitals in ways that are unavailable to us. 24 We may in the future be subject to litigation, which could harm our stock price, business, results of operations and financial condition.
Similarly, if we assert trademark infringement claims, a court may determine that the marks we have asserted are invalid or unenforceable, or that the party against whom we have asserted trademark infringement has superior rights to the marks in question, in which case, we could ultimately be forced to cease use of such trademarks.
Similarly, if we assert trademark infringement claims, a court may determine that the marks we have asserted are invalid or unenforceable, or that the party against whom we have asserted trademark infringement has superior rights to the marks in question, in which case, we could ultimately be forced to cease use of such trademarks. 33 Even if we establish infringement, the court may decide not to grant an injunction against further infringing activity and instead award only monetary damages, which may or may not be an adequate remedy.
Any of these regulatory developments may cause our business to suffer. 36 We will also need to obtain FDA and other regulatory approvals for any IVDs that we may develop, in order to market those IVD tests. If we decide to develop IVDs, we will need to obtain regulatory clearance or approval to market each new IVD test.
We will also need to obtain FDA and other regulatory approvals for any IVDs that we may develop, or for any currently marketed products the FDA determines are IVDs instead of LDTs, in order to market those IVD tests. If we decide to develop IVDs, we will need to obtain regulatory clearance or approval to market each IVD test.
For the foreseeable future we anticipate that any earnings generated in our business will be used to finance the growth of our business and will not be paid out as dividends to our shareholders.
For the foreseeable future we anticipate that any earnings generated in our business will be used to finance the growth of our business and will not be paid out as dividends to our shareholders. Consequently, shareholders’ ability to achieve a return on their investment will depend on appreciation in the price of our common stock.
Ongoing compliance with FDA regulations would increase the cost of conducting our business, and subject us to inspection by and the regulatory requirements of the FDA, for example registration and listing, adherence to good manufacturing practices under the Quality System Regulation, and medical device reporting, and enforcement action in the event we fail to comply with these requirements.
Ongoing compliance with any applicable FDA medical device regulations to which we could become subject in connection with any of our tests that FDA may regulate as traditional IVDs would increase the cost of conducting our business, and subject us to inspection by, and potential enforcement of certain regulatory requirements, of the FDA, for example registration and listing, adherence to good manufacturing practices under the Quality System Regulation ("QSR"), and medical device reporting.
Even if capital is available, it may not be available on terms that we or our shareholders would consider favorable. ● Sales or other issuances of additional equity securities by us could result in the dilution of the interests of our shareholders. 26 Risks Related to Our Business Operations Our revenues in the near term will depend on our ability to commercialize a small number of diagnostic tests.
Even if capital is available, it may not be available on terms that we or our shareholders would consider favorable. • Sales or other issuances of additional equity securities by us could result in the dilution of the interests of our stockholders.
If we fail to create and maintain suitable alliances, we may have to limit the size or scope of, or delay, one or more of our product development or research programs, or we will have to increase our expenditures and will need to obtain additional funding, which may be unavailable or available only on unfavorable terms. 29 If we are able to enter into development and marketing arrangements with diagnostic, pharmaceutical or medical device companies for our diagnostic tests, we may license product development, manufacturing, and marketing rights to the pharmaceutical or medical device company or to a joint venture company formed with the pharmaceutical or medical device company.
If we fail to create and maintain suitable alliances, we may have to limit the size or scope of, or delay, one or more of our product development or research programs, or we will have to increase our expenditures and will need to obtain additional funding, which may be unavailable or available only on unfavorable terms.
A collaborative arrangement upon which we might depend might be terminated by our collaboration partner or they might determine not to actively pursue the development or commercialization of our diagnostic tests. A collaboration partner also may not be precluded from independently pursuing competing diagnostic tests or technologies.
A collaborative arrangement upon which we currently, or might in the future, depend might be terminated by our collaboration partner or they might determine not to actively pursue the development or commercialization of our diagnostic tests, or they may determine to stop supporting technologies, such as instruments or consumables, upon which our diagnostic tests are reliant.
If this occurs, our competitors may be able to take advantage of our investment in development and clinical trials by referencing our clinical and preclinical data and launch their product earlier than might otherwise be the case.
If this occurs, our competitors may be able to take advantage of our investment in development and clinical trials by referencing our clinical and preclinical data and launch their product earlier than might otherwise be the case. 35 Obtaining and maintaining patent protection depends on compliance with various procedures and other requirements, and our patent protection could be reduced or eliminated in case of non-compliance with these requirements.
Other companies or organizations may challenge our patent rights or may assert patent rights that prevent us from developing and commercializing our diagnostic tests. Any patent applications that we file and any patents that we hold or later obtain could be challenged by third parties and declared invalid or infringing of third-party claims.
Any patent applications that we file and any patents that we hold or later obtain could be challenged by third parties and declared invalid or infringing of third-party claims.
If we fail to comply with any foreign jurisdiction’s applicable laboratory regulations and standards it could limit our revenue and harm or business and we could be subject to fines and other sanctions.
If we fail to comply with any foreign jurisdiction’s applicable laboratory regulations and standards it could limit our revenue and harm or business and we could be subject to fines and other sanctions. Our products are subject to the FDA’s final rule ending enforcement discretion for LDTs and regulating such tests as medical devices.
There is a risk that a collaboration partner might fail to perform its obligations under the collaborative arrangements or may be slow in performing its obligations. In addition, a collaboration partner may experience financial difficulties at any time that could prevent it from having available funds to contribute to the collaboration.
In addition, a collaboration partner may experience financial difficulties at any time that could prevent it from having available funds to contribute to the collaboration.
In addition, we could come into conflict with third parties over trademark rights, which could result in disruptive and expensive litigation. Challenges to our trademarks could result in significant costs related to the prosecution or defense of the registrations of our trademarks or rebranding if we need to abandon or modify a trademark.
Challenges to our trademarks or patents could result in significant costs related to the prosecution or defense of the registrations of our trademarks or patents or rebranding if we need to abandon or modify a trademark or patent.
As a result, our revenues from the sale of those diagnostic tests may be substantially less than the amount of revenues and gross profits that we might receive if we were to develop, manufacture, and market the diagnostic tests ourselves.
As a result, our revenues from the sale of those diagnostic tests may be substantially less than the amount of revenues and gross profits that we might receive if we were to develop, manufacture, and market the diagnostic tests ourselves. 21 We are, and in the future, may become, dependent on collaborations to develop and commercialize many of our diagnostic test candidates and to provide the manufacturing, regulatory compliance, sales, marketing and distribution capabilities required for the success of our business.
Patent terms may be inadequate to protect our competitive position on our diagnostic tests for an adequate amount of time. Given the amount of time required for the development, testing and regulatory review of new diagnostic tests, patents protecting such candidates might expire before or shortly after such candidates are commercialized.
Given the amount of time required for the development, testing and regulatory review of new diagnostic tests, patents protecting such candidates might expire before or shortly after such candidates are commercialized. We expect to seek extensions of patent terms in the United States and, if available, in other countries where we are prosecuting patents.
Accordingly, the loss of the services of one or more of the members of that management team could have a material adverse effect on our business. 30 Our cash and cash equivalents could be adversely affected if the financial institutions in which we hold our cash and cash equivalents fail.
Accordingly, the loss of the services of one or more of the members of that management team could have a material adverse effect on our business. Our business and operations could suffer in the event of system failures.
Supreme Court dismissed a judicial challenge to the ACA brought by several states without specifically ruling on the constitutionality of the ACA.
Supreme Court dismissed a judicial challenge to the ACA brought by several states without specifically ruling on the constitutionality of the ACA. We cannot be certain that there will not be further legislative efforts or judicial challenges in the future.
The creation and implementation of international business practices compliance programs is costly and such programs are difficult to enforce, particularly where reliance on third parties is required.
We must comply with a wide range of laws and regulations to prevent corruption, bribery, and other unethical business practices, including the FCPA, anti-bribery and anti-corruption laws in other countries. The creation and implementation of international business practices compliance programs is costly and such programs are difficult to enforce, particularly where reliance on third parties is required.
We may be subject to enforcement action based on the actions or omissions of employees or contractors, including our anticipated sales force.
We may be subject to enforcement action based on the actions or omissions of employees or contractors, including our anticipated sales force. Tariff policies and potential countermeasures could increase our costs and disrupt our global supply chain, which could negatively impact the results of our operations.
Any such litigation can result in substantial costs and diversion of management’s attention and resources and could harm our stock price, business results of operations and financial condition.
Any such litigation can result in substantial costs and diversion of management’s attention and resources and could harm our stock price, business, results of operations and financial condition. As a result of these factors, holders of our common stock might be unable to sell their shares at or above the price they paid for such shares.
Moreover, we may not have sufficient financial or other resources to file and pursue such infringement claims, which typically last for years before they are concluded.
If securities analysts or investors perceive these results to be negative, it could have a material adverse effect on the price of shares of our common stock. Moreover, we may not have sufficient financial or other resources to file and pursue such infringement claims, which typically last for years before they are concluded.
Long payment cycles of Medicare, Medicaid and other third-party payers, or other payment delays, could hurt our cash flows and increase our need for working capital. Medicare and Medicaid have complex billing and documentation requirements that we will have to satisfy in order to receive payment.
Reimbursement for our diagnostic testing may be negatively impacted by California MAC policies and we may not receive complete reimbursement for tests provided to Medicare patients due to such policies. Long payment cycles of Medicare, Medicaid and other third-party payers, or other payment delays, could hurt our cash flows and increase our need for working capital.
Our financial success will depend, in part, on our ability to obtain commercially valuable patent claims, protect our intellectual property rights and operate without infringing upon the proprietary rights of others. 40 We may not be able to obtain patent protection for our diagnostic test if our pending U.S. patent applications are found to be directed to unpatentable subject matter.
We may not be able to obtain patent protection for our diagnostic tests if our pending U.S. patent applications are found to be directed to unpatentable subject matter. The U.S.
The 2024 presidential election may also significantly alter the current regulatory framework and the health care industry, including any further challenges, extensions or expansions of certain ACA provisions.
The new presidential administration may also significantly alter the current regulatory framework and the healthcare industry, including any further challenges of certain ACA provisions. These changes could have an adverse and material impact on our operations.
Separately, the SEC has also announced that it is scrutinizing existing climate-change related disclosures in public filings, increasing the potential for enforcement if the SEC were to allege our existing climate disclosures are misleading or deficient. There is a limited number of manufacturers of molecular diagnostic testing equipment and related chemical reagents necessary for the provision of our diagnostic tests.
There is a limited number of manufacturers of molecular diagnostic testing equipment and related chemical reagents necessary for the provision of our diagnostic tests. There is a limited number of manufacturers of molecular testing equipment and related chemical reagents necessary for the provision of our tests.
Any shares of common stock or other securities we sell to raise cash to meet our cash payment obligations will dilute the interests of our common stockholders. 25 There is substantial doubt about our ability to continue as a going concern and management’s plans to alleviate this condition may be unsuccessful.
Any shares of common stock or other securities we sell to raise cash to meet our cash payment obligations will dilute the interests of our common stockholders. Risks Related to Our Business Operations Our revenues in the near term will depend on our ability to commercialize a small number of diagnostic tests.
If the FDA takes the position that any of our tests are not within the scope of its policy on enforcement discretion for laboratory-developed tests, or otherwise determines that it will seek to actively regulate one or more of our diagnostic tests, responding to such a regulatory position could lead to delays in commercialization, or (if encountered after commercialization) requirements to halt the commercial provision of our tests until FDA marketing authorization is obtained.
Implementing the requirements under the final rule could lead to delays in commercialization, or (if encountered after commercialization) requirements to halt the commercial provision of our tests until FDA marketing authorization is obtained.

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Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeItem 3. Legal Proceedings From time to time, we may be involved in routine litigation incidental to the conduct of our business. We are not presently involved in any material pending litigation or proceedings. See Note 7 to our consolidated financial statements included elsewhere in this Report for additional information regarding commitments and contingencies. Item 4.
Biggest changeItem 3. Leg al Proceedings. From time to time, we may be involved in routine litigation incidental to the conduct of our business. We are not presently involved in any material pending litigation or proceedings. See Note 6 to our consolidated financial statements included elsewhere in this Report for additional information regarding commitments and contingencies. Item 4. Mine Safety Disclosures.
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Mine Safety Disclosures Not applicable. 46 PART II
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Not applicable. 38 PART II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
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Market Information On February 7, 2023, our common stock began trading on The Nasdaq Capital Market under the symbol “OCX.” Previously, as of March 8, 2021, our common stock was trading on The Nasdaq Global Market, and prior to that date, our common stock was traded on The New York Stock Exchange (“NYSE”) American, both previously under the same symbol.
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Dividends We have not declared or paid any cash dividends on our common stock. Any future decision to declare or pay dividends will be at the sole discretion of our Board of Directors. Holders As of March 17, 2025, we had approximately 182 holders of record of our common stock.
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This number does not include shareholders whose shares of our common stock are held in “street name” in accounts with securities broker-dealers or other financial institutions or fiduciaries. Recent Sales of Unregistered Securities None. Repurchases None. Ite m 6. [RESERVED] Not applicable. 39

Item 7. Management's Discussion & Analysis

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

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Biggest changeGeneral and Administrative Expenses A summary of the main drivers of the change in general and administrative expenses is as follows: Years Ended December 31, 2023 2022 $ Change % Change (In thousands, except percentage change values) Personnel-related expenses and board fees $ 3,461 $ 7,155 $ (3,694 ) -52 % Professional fees, legal, and outside services 3,117 4,299 (1,182 ) -27 % Facilities and insurance 2,435 2,696 (261 ) -10 % Share-based compensation 1,249 5,435 (4,186 ) -77 % Severance 441 1,480 (1,039 ) -70 % Other 479 816 (337 ) -41 % Total $ 11,182 $ 21,881 $ (10,699 ) -49 % % of Net Revenue 744 % 2284 % -1540 % Change in Fair Value of Contingent Consideration We will pay contingent consideration if various payment milestones are triggered under the merger agreements through which we acquired Insight and Chronix.
Biggest changeBecause physicians are more likely to prescribe a test for their patients if the cost is covered by Medicare or health insurance, demand for our diagnostic and other tests and our expenditures on sales and marketing are likely to increase if our diagnostic or other tests qualify for reimbursement by Medicare or private health insurance companies. 44 General and Administrative Expenses A summary of the main drivers of the change in general and administrative expenses is as follows: Years Ended December 31, 2024 2023 $ Change % Change (In thousands, except percentage change values) Personnel-related expenses and board fees $ 3,957 $ 3,461 $ 496 14 % Depreciation and amortization 242 249 (7 ) (3 )% Stock-based compensation 769 1,249 (480 ) (38 )% Facilities and insurance 1,626 2,435 (809 ) (33 )% Professional fees, legal, and outside services 3,289 3,117 172 6 % Severance — 441 (441 ) (100 )% Other 321 230 91 40 % Total $ 10,204 $ 11,182 $ (978 ) (9 )% % of Net Revenue 542 % 744 % (202 )% Change in Fair Value of Contingent Consideration We will pay contingent consideration if various payment milestones are triggered under the merger agreements through which we acquired Insight and Chronix.
Cash Provided by Financing Activities During the year ended December 31, 2023, net cash provided by financing activities was $12.2 million, attributable to the $13.4 million of net cash proceeds from the sale of shares of common stock, partially offset by redemption of Series A Redeemable Convertible Preferred Stock of $1.1 million and repayments of financing lease obligations of $117,000.
During the year ended December 31, 2023, net cash provided by financing activities was $12.2 million, attributable to the $13.4 million of net cash proceeds from the sale of shares of common stock, partially offset by redemption of Series A Redeemable Convertible Preferred Stock of $1.1 million and repayments of financing lease obligations of $117,000.
Revenue Recognition and Allowance for Credit Losses Pharma Services revenue Pharma Services are generally performed under individual scope of work (“SOW”) arrangements or license agreements (together with SOW the “Pharma Services Agreements”) with specific deliverables defined by the customer. Pharma Services are performed on a (i) time and materials basis or (ii) per test completed basis.
Revenue Recognition and Allowance for Credit Losses Pharma Services Pharma Services are generally performed under individual scope of work (“SOW”) arrangements or license agreements (together with SOW the “Pharma Services Agreements”) with specific deliverables defined by the customer. Pharma Services are performed on a (i) time and materials basis or (ii) per test completed basis.
We believe that of the significant accounting policies discussed in Note 2 to our consolidated financial statements included elsewhere in this Report, the following accounting policies involve a significant level of estimation uncertainty and require our most difficult, subjective or complex assumptions, judgments and estimates: ● Going Concern Assessment; ● Contingent Consideration Liabilities; ● Intangible Assets; ● Impairment of Long-Lived Assets; ● Revenue Recognition and Allowance for Credit Losses; ● Stock-Based Compensation; and ● Income Taxes. 56 Going Concern Assessment We assess going concern uncertainty in our consolidated financial statements to determine if we have sufficient cash and cash equivalents on hand and working capital, including available loans or lines of credit, if any, to operate for a period of at least one year from the date our consolidated financial statements are issued (the “look-forward period”).
We believe that of the significant accounting policies discussed in Note 2 to our consolidated financial statements included elsewhere in this Report, the following accounting policies involve a significant level of estimation uncertainty and require our most difficult, subjective or complex assumptions, judgments and estimates: • Going Concern Assessment; • Contingent Consideration Liabilities; • Intangible Assets; • Impairment of Long-Lived Assets; • Revenue Recognition and Allowance for Credit Losses; • Stock-Based Compensation; and • Income Taxes. 48 Going Concern Assessment We assess going concern uncertainty in our consolidated financial statements to determine if we have sufficient cash and cash equivalents on hand and working capital, including available loans or lines of credit, if any, to operate for a period of at least one year from the date our consolidated financial statements are issued (the “look-forward period”).
To meet the future cash payment obligations, we may have to utilize cash on hand that would otherwise be available to us for other business and operational purposes, which could cause us to delay or reduce activities in the development and commercialization of our cancer tests.
To meet the future cash payment obligations, we may have to utilize cash on hand that would otherwise be available to us for other business and operational purposes, which could cause us to delay or reduce activities in the development and commercialization of our tests.
Key inputs and assumptions may change as we continue to develop our own company estimates, experience and key inputs including our expected term, and stock price volatility based on the trading history of our stock in the public market.
Key inputs and assumptions may change as we continue to develop our Company estimates, experience and key inputs including our expected term, and stock price volatility based on the trading history of our stock in the public market.
We establish an allowance for credit losses based on the evaluation of the collectability of its Pharma Services accounts receivables after considering a variety of factors, including the length of time receivables are past due, significant events that may impair the customer’s ability to pay, such as a bankruptcy filing or deterioration in the customer’s operating results or financial position, reasonable and supportable forecast that affect the collectability of the reported amount, and historical experience.
We establish an allowance for credit losses based on the evaluation of the collectability of its Pharma Services accounts receivables after considering a variety of factors, including the length of time receivables are past due, significant events that may impair the customer’s ability to pay, such as a bankruptcy filing or deterioration in the customer’s operating results or financial condition, reasonable and supportable forecast that affect the collectability of the reported amount, and historical experience.
As part of this assessment, based on conditions that are known and reasonably knowable to us, we consider various scenarios, forecasts, projections, and estimates, and we make certain key assumptions, including the timing and nature of projected cash expenditures or programs, and our ability to delay or curtail those expenditures or programs, if necessary, among other factors.
As part of this assessment, based on conditions that are known and reasonably knowable to us, we consider various scenarios, forecasts, projections and estimates, including stress tests, and we make certain key assumptions, including the timing and nature of projected cash expenditures or programs, and our ability to delay or curtail those expenditures or programs, if necessary, among other factors.
We may also explore a range of other commercialization options in order to enter overseas markets and to reduce our capital needs and expenditures, and the risks associated the timelines and uncertainty for attaining the Medicare reimbursement approvals that will be essential for the successful commercialization of additional cancer diagnostic tests.
We may also explore a range of other commercialization options in order to enter overseas markets and to reduce our capital needs and expenditures, and the risks associated with the timelines and uncertainty for attaining the Medicare reimbursement approvals that will be essential for the successful commercialization of additional diagnostic tests.
The original IPR&D balances were reassessed based on the updated long range plan, using the multi-period excess earnings method (“MPEEM”) approach, the results of the valuation noted that the carrying value of certain IPR&D intangible assets was greater than the fair market value. Accordingly, we recorded an impairment of approximately $5.0 million as of March 31, 2023.
The original IPR&D balances were reassessed based on the updated long range plan, using the multi-period excess earnings method (“MPEEM”) approach, the results of the valuation noted that the carrying value of certain oncology related IPR&D intangible assets was greater than the fair market value. We recorded an impairment of approximately $5.0 million as of March 31, 2023.
We are continuing to develop DetermaIO, a test with promising data supporting its potential to help identify patients likely to respond to checkpoint inhibitor drugs. This new class of drugs modulate the immune response and show activity in multiple solid tumor types including non-small cell lung cancer (NSCLC), and triple negative breast cancer (TNBC).
For example, we are continuing to develop DetermaIO, a test with promising data supporting its potential to help identify patients likely to respond to checkpoint inhibitor drugs. This new class of drugs modulate the immune response and show activity in multiple solid tumor types including non-small cell lung cancer, and triple negative breast cancer.
During the period between completion or abandonment, the IPR&D assets will not be amortized but will be tested for impairment on an annual basis and between annual tests if we become aware of any events occurring or changes in circumstances that would indicate a reduction in the fair value of the IPR&D projects below their respective carrying amounts. 57 During the first quarter of 2023, due to changes in management and our economic condition, management shifted our business strategy to direct efforts on fewer studies and to transition from tests that are LDTs to research use only sales.
During the period between completion or abandonment, the IPR&D assets will not be amortized but will be tested for impairment on an annual basis and between annual tests if we become aware of any events occurring or changes in circumstances that would indicate a reduction in the fair value of the IPR&D projects below their respective carrying amounts. 49 During the first quarter of 2023, due to changes in management and our economic condition, management shifted our business strategy to direct efforts on fewer studies and to transition from tests that are LDTs to RUO sales.
Sales and marketing expenses will also increase if we successfully develop and begin commercializing DetermaCNI, and VitaGraft, or if we acquire and commercialize other diagnostic tests. Our commercialization efforts and expenses will also depend on the amount of capital that we are able to raise to finance commercialization of our tests.
Sales and marketing expenses will also increase if we successfully develop and begin commercializing GraftAssureCore, GraftAssureIQ, GraftAssureDx and DetermaCNI, or if we acquire and commercialize other diagnostic tests. Our commercialization efforts and expenses will also depend on the amount of capital that we are able to raise to finance commercialization of our tests.
We cannot assure that adequate long-term financing will be available on favorable terms, if at all. See Note 1 and Note 8 to our consolidated financial statements included elsewhere in this Report for additional information about our going concern discussion and equity offerings, respectively.
We cannot assure that adequate long-term financing will be available on favorable terms, if at all. See Note 1 and Note 7 to our consolidated financial statements included elsewhere in this Report for additional information about our liquidity discussion and equity offerings, respectively.
Cash Used in Operations During the year ended December 31, 2023, our total research and development expenses were $9.3 million, our sales and marketing expenses were $2.8 million, and our general and administrative expenses were $11.2 million. We also incurred $1.1 million in total cost of revenues, including $88,000 amortization of intangible expenses.
Cash Used in Operations During the year ended December 31, 2024, our total research and development expenses were $9.8 million, our sales and marketing expenses were $3.9 million, and our general and administrative expenses were $10.2 million. We also incurred $1.1 million in total cost of revenues, including $88,000 for amortization of intangible expenses.
Changes in these subjective assumptions can materially affect the estimated value of equity grants and the stock-based compensation that we record in our consolidated financial statements. During the years ended December 31, 2023 and 2022, we recognized total stock-based compensation of $2.8 million and $10.0 million, respectively.
Changes in these subjective assumptions can materially affect the estimated value of equity grants and the stock-based compensation that we record in our consolidated financial statements. During the years ended December 31, 2024 and 2023, we recognized total stock-based compensation of $1.8 million and $2.8 million, respectively.
Changes in the fair value of the contingent consideration will be based on our reassessment of the key assumptions underlying the determination of this liability as changes in circumstances and conditions occur from the Insight and Chronix acquisition dates to the reporting period being presented, with the subsequent changes in fair value recorded as part of our consolidated loss from operations for that period.
Changes in the fair value of the contingent consideration will be based on our reassessment of the key assumptions underlying the determination of this liability as changes in circumstances and conditions occur from the Insight and Chronix acquisition dates to the reporting periods being presented, with the subsequent changes in fair value recorded as part of our consolidated results from operations for such periods.
We will continue development of DetermaIO and VitaGraft. Our future research and development efforts and expenses will also depend on the amount of capital that we are able to raise to finance those activities and whether we acquire rights to any new diagnostic tests.
We will continue development of GraftAssureCore, GraftAssureIQ, GraftAssureDx, DetermaIO and DetermaCNI. Our future research and development efforts and expenses will also depend on the amount of capital that we are able to raise to finance those activities and whether we acquire rights to any new diagnostic tests.
The main drivers of the increase were personnel-related expenses, depreciation and amortization, and stock-based compensation (see below for additional details). ● Sales and marketing expenses increased by $ 1.7 million, primarily attributable to continued ramp in sales, marketing and advertising activities related to the transplant business, as well as supporting the commercialization efforts within oncology.
The main drivers of the increase were personnel-related expenses and facilities costs, partially offset by depreciation and amortization, stock-based compensation and severance costs (see below for additional details). • Sales and marketing expenses increased by $1.1 million, primarily attributable to continued ramp up in sales, marketing and advertising activities related to the transplant business, as well as supporting the commercialization efforts within oncology.
Management’s Discussion and Analysis of Financial Condition and Results of Operations The following Management’s Discussion and Analysis of Financial Condition and Results of Operations is intended to provide information necessary to understand our audited consolidated financial statements for the years ended December 31, 2023 and 2022, and highlight certain other information which, in the opinion of management, will enhance a reader’s understanding of our financial condition, changes in financial condition and results of operations.
The following Management’s Discussion and Analysis of Financial Condition and Results of Operations is intended to provide information necessary to understand our consolidated financial statements for the years ended December 31, 2024 and 2023 included elsewhere in this Report, and highlight certain other information which, in the opinion of management, will enhance a reader’s understanding of our financial condition, changes in financial condition and results of operations.
Changes in key assumptions can materially affect the estimated fair value of contingent consideration liabilities and, accordingly, the resulting gain or loss that we record in our consolidated financial statements. During the years ended December 31, 2023 and 2022, we recorded gains in fair value of contingent consideration of $5.8 million and $31.0 million, respectively.
Changes in key assumptions can materially affect the estimated fair value of contingent consideration liabilities and, accordingly, the resulting gain or loss that we record in our consolidated financial statements. During the years ended December 31, 2024 and 2023, we recorded gains of $4.3 million and $5.8 million, respectively, related to the fair value of contingent consideration.
Inflation Although historically not significant to our results of operations, financial condition and cash flows, we may experience inflationary pressures, primarily in personnel costs and with certain laboratory supplies.
Inflation Although historically not significant to our results of operations, financial condition and cash flows, we may experience inflationary pressures, primarily in personnel costs, with certain laboratory supplies and from inventory costs related to certain raw materials.
Accordingly, different customers may account for greater or lesser portions of Pharma Services during different accounting periods, and Pharma Services revenues may exhibit a larger variance from accounting period to accounting period than other revenues such as DetermaRx testing revenues.
Accordingly, different customers may account for greater or lesser portions of Pharma Services during different accounting periods, and Pharma Services revenues may exhibit a larger variance from accounting period to accounting period than other revenues such as Laboratory Developed Test Services revenue.
In addition to sales and marketing expenses, we will incur expenses from leasing and improving our offices and laboratory facilities in Nashville, Tennessee. During the third quarter of 2023, we entered into a sublease arrangement for our main office (see “Irvine Office Sublease Agreement” discussion above).
In addition to sales and marketing expenses, we will incur expenses from leasing and improving our offices and laboratory facilities in Nashville, Tennessee. During the third quarter of 2023, we entered into a sublease arrangement for our main office in Irvine, California.
In preparing these financial statements, we make assumptions, judgments and estimates that involve a significant level of estimation uncertainty and have had or are reasonably likely to have a material impact on our financial condition or results of operations.
Critical Accounting Estimates Our consolidated financial statements are prepared in conformity with GAAP. In preparing these financial statements, we make assumptions, judgments and estimates that involve a significant level of estimation uncertainty and have had or are reasonably likely to have a material impact on our financial condition or results of operations.
For additional information, see Note 1 to our consolidated financial statements included elsewhere in this Report.
For additional information, refer to Note 8 to our consolidated financial statements included elsewhere in this Report.
As of December 31, 2023 and 2022, we had an allowance for credit losses of zero and $154,000, respectively, related to Laboratory Developed Test Services. Stock-Based Compensation We recognize compensation expense related to share-based payment awards made to employees, board directors and other non-employees based on estimated fair values.
As of December 31, 2024 and 2023, we had an allowance for credit losses of $16,000 and $5,000, respectively, related to Pharma Services. 50 Stock-Based Compensation We recognize compensation expense related to share-based payment awards made to employees, board directors and other non-employees based on estimated fair values.
There is no assurance that we will be successful in developing new technology or diagnostic tests, or that any technology or diagnostic tests that we may develop will be proven safe and effective in diagnosis of cancer in humans or will be successfully commercialized. Refer to “Item 1 – Business” for additional information.
There is no assurance that we will be successful in developing new technology or diagnostic tests, nor that any technology or diagnostic tests that we may develop will be proven safe and effective in diagnosis of cancer in humans or will be successfully commercialized.
See above change explanation for additional information. Other Income and Expenses Total other income and expenses is primarily comprised of interest income and expense, and net realized and unrealized losses from Lineage and AgeX marketable equity securities, which were both sold in 2023 (see Note 2, “Marketable Equity Securities,” to our consolidated financial statements included elsewhere in this Report).
See above Results of Operations explanation for additional information. Other Income and Expenses Other income and expenses are primarily comprised of interest income and expense, and gains/losses from marketable equity securities, which were sold in 2023 (see Note 2, “Marketable Equity Securities,” to our consolidated financial statements included elsewhere in this Report).
A portion of our costs for leasing and operating our CLIA laboratory in Tennessee, and in Germany with Chronix, will also be included in research and development expenses to the extent allocated to the development of our diagnostic tests.
A portion of our costs for leasing and operating our CLIA laboratory in Tennessee, and in Germany with Chronix, will also be included in research and development expenses to the extent allocated to the development of our diagnostic tests. We intend to pursue a clinical trial in conjunction with our IVD submission in 2025, supporting our transplant products.
See below for additional details. ● Change in fair value of contingent consideration was a gain in both periods presented, and decreased by $ 25.3 million due to changes in the fair value model inputs and revised estimates on if and when future payouts will occur.
See below for additional details. 42 • Change in fair value of contingent consideration was a gain of $4.3 million in 2024 compared to a gain of $5.8 million in 2023. This change was due to changes in the fair value model inputs and revised estimates on if and when future payouts will occur.
Revenues The following table shows our service revenues: Years Ended December 31, 2023 2022 $ Change % Change (In thousands, except percentage change values) Pharma Services $ 1,467 $ 958 $ 509 53 % Laboratory developed test services 36 - 36 100 % Total $ 1,503 $ 958 $ 545 57 % Pharma Services are generally performed on a time and materials basis.
Revenues The following table shows our service revenues: Years Ended December 31, 2024 2023 $ Change % Change (In thousands, except percentage change values) Pharma Services $ 1,859 $ 1,467 $ 392 27 % Laboratory Developed Test Services 22 36 (14 ) (39 )% Total $ 1,881 $ 1,503 $ 378 25 % Pharma Services are generally performed on a time and materials basis.
See below for additional information. ● Cost of revenues - amortization of acquired intangibles decreased by $8,000, and relates to noncash amortization of acquired intangible assets such as our customer relationship intangible assets acquired as part of the Insight merger. ● Research and development expenses increased by $ 2.0 million, as we continue development of DetermaIO, VitaGraft (formerly TheraSure Transplant Monitor), and DetermaCNI (formerly TheraSure - CNI Monitor).
See below for additional information. • Cost of revenues - amortization of acquired intangibles was unchanged, and relates to noncash amortization of acquired intangible assets such as our customer relationship intangible assets acquired as part of the Insight merger. • Research and development expenses increased by $545,000, as we continue development of GraftAssureCore, GraftAsssureIQ, GraftAssureDx, DetermaIO and DetermaCNI.
Liquidity and Capital Resources Our foreseeable material cash requirements as of December 31, 2023, are recognized as liabilities or generally are otherwise described in Note 7, “Commitments and Contingencies,” to our consolidated financial statements included elsewhere in this Report.
As such, the effects of inflation may adversely impact our results of operations, financial condition and cash flows. 45 Liquidity and Capital Resources Our foreseeable material cash requirements as of December 31, 2024, are recognized as liabilities or generally are otherwise described in Note 6, “Commitments and Contingencies,” to our consolidated financial statements included elsewhere in this Report.
Changes in operating assets and liabilities were $1.9 million as an additional use of cash. Cash Used in Investing Activities During the year ended December 31, 2023, net cash used in investing activities was $932,000, mainly attributable to cash sold in discontinued operations, partially offset by proceeds from the sale of marketable equity securities and equipment.
During the year ended December 31, 2023, net cash used in investing activities was $932,000, primarily from cash sold in discontinued operations, partially offset by proceeds from the sale of marketable equity securities and equipment.
Interest expense was incurred under our financing lease obligations (see Note 7), and from our Bank loan in the prior year (see Note 6). 53 Income Taxes We did not record any provision or benefit for income taxes for the years ended December 31, 2023 and 2022, as we had a full valuation allowance for the periods presented (see Note 10 to our consolidated financial statements included elsewhere in this Report).
Income Taxes We did not record any provision or benefit for income taxes for the years ended December 31, 2024 and 2023, as we had a full valuation allowance for the periods presented (see Note 12 to our consolidated financial statements included elsewhere in this Report).
Delays in the development of DetermaIO, or obtaining reimbursement coverage from Medicare for that diagnostic test and for the other diagnostic tests that we may develop or acquire, could prevent us from raising sufficient additional capital to finance the completion of development and commercial launch of those tests.
Delays in our collaborative arrangement for the development and the commercialization of RUO and IVD kitted transplant products, or delays in obtaining regulatory approval to distribute our products for clinical use, or delays in the development of, or in obtaining reimbursement coverage from Medicare for DetermaIO and other future laboratory tests that we may develop or acquire, could prevent us from raising sufficient additional capital to finance the completion of development and commercial launch of those tests.
For additional information, refer to Note 9 to our consolidated financial statements included elsewhere in this Report. 59 Income Taxes We account for income taxes in accordance with ASC 740, Income Taxes , which prescribes the use of the asset and liability method, whereby deferred tax asset or liability account balances are calculated at the balance sheet date using current tax laws and rates in effect.
Income Taxes We account for income taxes in accordance with Accounting Standards Codification 740, Income Taxes , which prescribes the use of the asset and liability method, whereby deferred tax asset or liability account balances are calculated at the balance sheet date using current tax laws and rates in effect.
The gross proceeds from the private placement are expected to be approximately $15.8 million. See Note 14, “Subsequent Events,” to our consolidated financial statements included elsewhere in this Report for additional information. We expect that our general operating expenses will remain flat as we continue to manage our available cash.
See Note 14, “Subsequent Events – Private Placement Transaction” and “Subsequent Events – Registered Direct Offering,” to our consolidated financial statements included elsewhere in this Report for additional information. 46 We expect that our general operating expenses will be commensurate with the market opportunity as we continue to manage our available cash.
Further, given the complexities of the reimbursement landscape in which we operate, our payors may be unwilling or unable to increase reimbursement rates to compensate for inflationary impacts. As such, the effects of inflation may adversely impact our results of operations, financial condition and cash flows.
Further, given the complexities of the reimbursement landscape in which we operate, our payers may be unwilling or unable to increase reimbursement rates to compensate for inflationary impacts.
The offering was intended to be priced ‘at-the market’ for purposes of complying with applicable Nasdaq Listing Rules. The aggregate gross proceeds from the offering were approximately $13.9 million before deducting offering expenses payable by us.
The offering was intended to be priced at-the-market for purposes of complying with applicable Nasdaq Listing Rules. The aggregate gross proceeds from the offering were approximately $13.9 million before deducting offering expenses payable by us. We used approximately $1.1 million of the net proceeds to immediately redeem an aggregate of 1,064 shares of our Series A Redeemable Convertible Preferred Stock.
Our cash used in operating activities during 2022 did not include the following noncash items: $5.2 million in depreciation and amortization expenses, $10.0 million in stock-based compensation; $31.0 million in gain from change in fair value of contingent consideration; $18.7 million loss from goodwill impairment, $25.9 million loss from held for sale asset impairments, and $471,000 in unrealized losses on marketable equity securities.
Our cash used in operating activities during 2024 did not include the following noncash items: $1.6 million in depreciation and amortization expenses, $1.8 million in stock-based compensation, $160,000 in other equity compensation expenses, $4.3 million gain from change in fair value of contingent consideration, $41.9 million loss from intangible asset impairments, and $169,000 impairment loss on held for sale assets.
At December 31, 2023, we had $9.4 million of cash and cash equivalents. We expect to continue to incur operating losses and negative cash flows for the near future.
We expect to continue to incur operating losses and negative cash flows for the near future.
See Note 2, “Assets Held for Sale and Discontinued Operations,” to our consolidated financial statements included elsewhere in this Report for additional information. ● Total other income (expense) increased by $ 896 ,000, from an expense of $615,000 in 2022, to income of $ 281 ,000 in 2023, primarily due to additional interest income in 2023 and the change in realized and unrealized loss on marketable equity securities.
See Note 2, “Assets Held for Sale and Discontinued Operations,” to our consolidated financial statements included elsewhere in this Report for additional information. • Total other income, net increased by $97,000, primarily due to additional interest income and miscellaneous income in 2024 compared to 2023. See below for additional information.
During the years ended December 31, 2023 and 2022, we recognized long-lived assets impairments of $1.8 million and zero, respectively. For additional information, refer to Note 4 to our consolidated financial statements included elsewhere in this Report.
During the years ended December 31, 2024 and 2023, we recognized impairment losses on held for sale assets of $169,000 and $1.3 million, respectively. For additional information, refer to Note 2, “Assets Held for Sale and Discontinued Operations,” to our consolidated financial statements included elsewhere in this Report.
Consolidated net loss for the year ended December 31, 2023 was $27.8 million, of which $2.9 million was from discontinued operations, and our consolidated net cash used in operating activities amounted to $23.3 million.
We also incurred $1.1 million in total cost of revenues, including $88,000 for amortization of intangible expenses. Consolidated net loss for the period was $27.8 million, of which $2.9 million was from discontinued operations, and our consolidated net cash used in operating activities amounted to $23.3 million.
During the fourth quarter of 2023, the IPR&D balances were reassessed using the MPEEM approach and the results of the valuation noted that the fair market values were greater than the carrying values of the IPR&D intangible assets. Accordingly, we did not record any additional adjustment as of December 31, 2023.
During the fourth quarter of 2024, the IPR&D balances were reassessed using the MPEEM approach and the results of the valuations noted that the carrying values of certain oncology related IPR&D intangible assets were greater than the fair market values. We recorded a total impairment of $41.9 million as of December 31, 2024.
During the year ended December 31, 2022, net cash used in investing activities was $4.3 million, due to cash paid for construction in progress and purchase of furniture and equipment.
Net changes in operating assets and liabilities were $4.0 million as an additional use of cash. Cash Used in Investing Activities During the year ended December 31, 2024, net cash used in investing activities was $512,000, primarily from cash paid for construction in progress and purchase of furniture and equipment.
(“Broadwood”), our largest shareholder, relating to their purchase of an aggregate of up to 2,278,121 shares of its common stock at an offering price of $7.08 per share to board members and $6.03 per share to the other investors participating in the offering (see Note 8).
On April 3, 2023, we entered into an agreement with certain members of our Board of Directors, and several institutional and accredited investors, including Broadwood Partners, L.P., our largest shareholder, relating to their purchase of an aggregate of up to 2,278,121 shares of our common stock at an offering price of $7.08 per share to board members and $6.03 per share to the other investors participating in the offering (see Note 7 to our consolidated financial statements included elsewhere in this Report).
We are currently unaware of any tax issues under review. Refer to Note 10 to our consolidated financial statements included elsewhere in this Report.
We are currently unaware of any tax issues under review. For additional information, refer to Note 12, “Income Taxes,” to our consolidated financial statements included elsewhere in this Report. Ite m 7A. Quantitative and Qualitative Disclosures about Market Risk.
See Note 14, “Subsequent Events,” to our consolidated financial statements included elsewhere in this Report for additional information. 49 Results of Operations Summary Results of Operations Years Ended December 31, 2023 2022 $ Change % Change (In thousands, except percentage change values) Net revenue $ 1,503 $ 958 $ 545 57 % Cost of revenues 1,002 880 122 14 % Cost of revenues – amortization of acquired intangibles 88 96 (8 ) -8 % Research and development 9,294 7,301 1,993 27 % Sales and marketing 2,795 1,132 1,663 147 % General and administrative 11,182 21,881 (10,699 ) -49 % Change in fair value of contingent consideration (5,762 ) (31,019 ) 25,257 -81 % Impairment losses 6,757 - 6,757 100 % Goodwill impairment - 18,684 (18,684 ) -100 % Loss on disposal and held for sale assets 1,283 - 1,283 100 % Loss from operations (25,136 ) (17,997 ) (7,139 ) 40 % Total other income (expenses) 281 (615 ) 896 -146 % Loss from continuing operations (24,855 ) (18,612 ) (6,243 ) 34 % Loss from discontinued operations (Note 13) (2,926 ) (54,290 ) 51,364 -95 % Net loss $ (27,781 ) $ (72,902 ) $ 45,121 -62 % Results of Operations – Year Ended December 31, 2023 Compared with the Year Ended December 31, 2022 Revenues increased to $1.5 million for the year ended December 31, 2023, as compared to $958,000 in the prior year, due to increased revenues in Pharma Services.
See Note 14, “Subsequent Events – Private Placement Transaction” and “Subsequent Events – Registered Direct Offering,” to our consolidated financial statements included elsewhere in this Report for additional information. 41 Results of Operations Summary Results of Operations Years Ended December 31, 2024 2023 $ Change % Change (In thousands, except percentage change values) Net revenue $ 1,881 $ 1,503 $ 378 25 % Cost of revenues 1,053 1,002 51 5 % Cost of revenues – amortization of acquired intangibles 88 88 — — Research and development 9,839 9,294 545 6 % Sales and marketing 3,944 2,795 1,149 41 % General and administrative 10,204 11,182 (978 ) (9 )% Change in fair value of contingent consideration (4,275 ) (5,762 ) 1,487 (26 )% Impairment losses 41,900 6,757 35,143 520 % Impairment loss on held for sale assets 169 1,283 (1,114 ) (87 )% Loss from operations (61,041 ) (25,136 ) (35,905 ) 143 % Total other income, net 378 281 97 35 % Loss from continuing operations (60,663 ) (24,855 ) (35,808 ) 144 % Loss from discontinued operations (Note 13) — (2,926 ) 2,926 (100 )% Net loss $ (60,663 ) $ (27,781 ) $ (32,882 ) 118 % Results of Operations – Year Ended December 31, 2024 Compared with the Year Ended December 31, 2023 Total net revenue increased to $1.9 million for the year ended December 31, 2024, as compared to $1.5 million in the comparable prior period from Pharma Services as further discussed below.
The assay is analytically and clinically validated in three major solid organ transplant types (kidney, liver and heart) by peer reviewed international publications. We received a positive coverage decision from MolDx for VitaGraft Kidney in August of 2023, and it became commercially available for ordering in January 2024 through our CLIA Laboratory in Nashville, Tennessee.
We received a positive coverage decision from MolDx for GraftAssureCore (Kidney) in August of 2023, and it became commercially available for ordering in January 2024 through our CLIA laboratory in Nashville, Tennessee. GraftAssureCore (Kidney) is now broadly available to transplant professionals upon request.
Refer to Note 2, “Revenue Recognition – Laboratory Developed Test Services,” to our consolidated financial statements included elsewhere in this Report for additional information. 51 Cost of Revenues Cost of revenues generally consists of cost of materials, direct labor including payroll, payroll taxes, bonus, benefit and stock-based compensation, equipment and infrastructure expenses, clinical sample costs associated with performing Pharma Services, and amortization of acquired intangible assets.
Cost of Revenues Cost of revenues generally consists of cost of materials, direct labor including payroll, payroll taxes, bonus, benefit and stock-based compensation, equipment and infrastructure expenses, clinical sample costs associated with performing Pharma Services, and amortization of acquired intangible assets. Infrastructure expenses include depreciation of laboratory equipment, allocated rent costs and leasehold improvements.
As of December 31, 2023 and 2022, contingent consideration liabilities were $39.9 million and $45.7 million, respectively. For additional information, refer to Note 3 to our consolidated financial statements included elsewhere in this Report. Intangible Assets We consider various factors and risks for potential impairment of IPR&D intangible assets, including the current legal and regulatory environment and the competitive landscape.
As of December 31, 2024 and 2023, total contingent consideration liabilities were $37.9 million and $42.2 million, respectively. For additional information, refer to Note 3 to our consolidated financial statements included elsewhere in this Report.
We may commence clinical trials of DetermaIO if we develop that diagnostic test to the point where we determine that its use as a clinical diagnostic appears to be feasible. 52 Sales and Marketing Expenses A summary of the main drivers of the change in sales and marketing expenses is as follows: Years Ended December 31, 2023 2022 $ Change % Change (In thousands, except percentage change values) Personnel-related expenses $ 1,880 $ 592 $ 1,288 218 % Share-based compensation 241 261 (20 ) -8 % Facilities and insurance 202 43 159 370 % Professional fees, legal, and outside services 163 219 (56 ) -26 % Marketing, advertising and other 309 17 292 1718 % Total $ 2,795 $ 1,132 $ 1,663 147 % % of Net Revenue 186 % 118 % 68 % We expect to continue to incur sales and marketing expenses during the foreseeable future as we complete product development and begin commercialization efforts for DetermaIO as a clinical test.
Sales and Marketing Expenses A summary of the main drivers of the change in sales and marketing expenses is as follows: Years Ended December 31, 2024 2023 $ Change % Change (In thousands, except percentage change values) Personnel-related expenses $ 2,691 $ 1,880 $ 811 43 % Depreciation and amortization 121 2 119 5950 % Stock-based compensation 174 241 (67 ) (28 )% Facilities and insurance 122 202 (80 ) (40 )% Professional fees, legal, and outside services 195 163 32 20 % Marketing and advertising 257 187 70 37 % Other 384 120 264 220 % Total $ 3,944 $ 2,795 $ 1,149 41 % % of Net Revenue 210 % 186 % 24 % We expect to continue to incur sales and marketing expenses during the foreseeable future as we complete product development and begin commercialization efforts for DetermaIO as a clinical test.
During the year ended December 31, 2022, net cash provided in financing activities was $35.8 million, primarily attributable to $32.4 million of net cash proceeds from the sale of shares of common stock, and $4.8 million of net cash proceeds from the sale of redeemable convertible Series A preferred shares, partially offset by repayments of our Bank loan and financing lease obligations of $1.4 million.
Cash Provided by Financing Activities During the year ended December 31, 2024, net cash provided by financing activities was $20.4 million from $26.0 million of net cash proceeds from the April 2024 Offering, the August 2024 Offering and the October 2024 Offering, partially offset by the redemption of our remaining Series A Preferred Stock of $5.4 million and repayments of financing lease obligations of $201,000.
Research and Development Expenses A summary of the main drivers of the change in research and development expenses is as follows: Years Ended December 31, 2023 2022 $ Change % Change (In thousands, except percentage change values) Personnel-related expenses $ 3,586 $ 2,931 $ 655 22 % Depreciation and amortization 1,264 315 949 301 % Share-based compensation 1,238 773 465 60 % Laboratory supplies and expenses 1,676 1,369 307 22 % Facilities and insurance 740 334 406 122 % Professional fees, legal, and outside services 515 1,334 (819 ) -61 % Severance 149 21 128 610 % Other 96 215 (119 ) -55 % Clinical trials 30 9 21 233 % Total $ 9,294 $ 7,301 $ 1,993 27 % % of Net Revenue 618 % 762 % -144 % We expect to continue to incur a significant amount of research and development expenses during the foreseeable future.
Cost of revenues for Pharma Services varies depending on the nature, timing, and scope of customer projects. 43 Research and Development Expenses A summary of the main drivers of the change in research and development expenses is as follows: Years Ended December 31, 2024 2023 $ Change % Change (In thousands, except percentage change values) Personnel-related expenses $ 4,352 $ 3,586 $ 766 21 % Depreciation and amortization 1,043 1,264 (221 ) (17 )% Stock-based compensation 810 1,238 (428 ) (35 )% Laboratory supplies and expenses 1,826 1,676 150 9 % Facilities and insurance 1,337 740 597 81 % Professional fees, legal, and outside services 510 515 (5 ) (1 )% Severance — 149 (149 ) (100 )% Other (41 ) 96 (137 ) (143 )% Clinical trials 2 30 (28 ) (93 )% Total $ 9,839 $ 9,294 $ 545 6 % % of Net Revenue 523 % 618 % (95 )% We expect to continue to incur a significant amount of research and development expenses for the foreseeable future.
See Note 14, “Subsequent Events,” to our consolidated financial statements included elsewhere in this Report for additional information. Securities Purchase Agreement On April 11, 2024, we entered into a private placement securities purchase agreement with certain accredited investors. The gross proceeds from the private placement are expected to be approximately $15.8 million.
As a result, the Company may not make any further sales pursuant to such sales agreement. See Note 14, “Subsequent Events,” to our consolidated financial statements included elsewhere in this Report for additional information. On October 4, 2024, we consummated a private placement of our securities to certain accredited investors (the “October 2024 Offering”).
Cash requirements are generally derived from our operating and investing activities including expenditures for working capital, human capital, business development, investments in intellectual property, and business combinations. Our office lease obligations, net of sublease payments, and contingent consideration obligations are further described in Note 7 and Note 3, respectively. Historically, we have not entered into any off-balance sheet arrangements.
Our office lease obligations (net of sublease payments) and financing lease obligations, and contingent consideration obligations are further described in Note 6 and Note 3, respectively, to our consolidated financial statements included elsewhere in this Report. Historically, we have not entered into any off-balance sheet arrangements.
DetermaIO is presently available for research use through our Pharma Services operations but one of our goals is to complete development of that assay and to make it available for clinical use later in 2024. We also perform other assay development and clinical testing services for pharmaceutical and biotechnology companies through our Pharma Services operations.
We expect that our operating expenses will continue to increase if we successfully complete the development of DetermaIO and commercialize this test. We also perform other assay development and clinical testing services for pharmaceutical and biotechnology companies through our Pharma Services operations.
See below for additional information. ● Impairment losses relate to two 2023 assets impairment charges, including $ 5.0 million to in-process research and development (“IPR&D”) intangible assets (see Note 5 to our consolidated financial statements included elsewhere in this Report) and $1.8 million to leasehold improvements (see Note 4). ● Goodwill impairment of $18.7 million was recorded during the fourth quarter of 2022 after we assessed our current environment and concluded that it was more-likely-than-not that the fair value of the goodwill was less than the carrying value.
See below for additional information. • The current year impairment losses relate to our in-process research and development intangible assets. During the fourth quarter of 2024, it was determined that our DetermaIO and DetermaCNI intangible assets were impaired by $41.9 million (see Note 5 to our consolidated financial statements included elsewhere in this Report for additional information).
See Note 2, “Intangible Assets and Goodwill,” to our consolidated financial statements included elsewhere in this Report for additional information. ● Loss on disposal and held for sale assets of $1.3 million recorded in 2023 relates to various agreements to sell laboratory equipment and is mainly comprised of an impairment charge.
The prior year impairment losses related to two asset impairments, including in-process research and development intangible assets of $5.0 million (see Note 5 to our consolidated financial statements included elsewhere in this Report for additional information) and leasehold improvements of $1.8 million (see Note 4 to our consolidated financial statements included elsewhere in this Report for additional information). • Impairment loss on held for sale assets relates to various agreements to sell laboratory equipment and the subsequent fair value adjustments.
See below for additional information. ● Cost of revenues increased by $ 122 ,000, primarily related to labor and allocated overhead associated with performing our Pharma Services.
Although we had a decrease in the number of contracts performed during the period, we earned revenue from one existing customer in the amount of approximately $1.5 million during the fourth quarter of 2024. See below for additional information. • Cost of revenues increased by $51,000, primarily related to labor and allocated overhead associated with performing our Pharma Services.
At December 31, 2023 and 2022, we had unrecognized tax benefits (see Note 10). Since formation, we have financed our operations primarily through the sale of our common stock, preferred stock and warrants. We have incurred operating losses and negative cash flows since inception and had an accumulated deficit of $ 289.9 million as of December 31, 2023.
As of December 31, 2024 and 2023, we had unrecognized tax benefits totaling $1.1 million and $2.3 million, respectively (see Note 12, “Income Taxes,” to our consolidated financial statements included elsewhere in this Report). Since formation, we have financed our operations primarily through the sale of our common stock, preferred stock and warrants.
The main driver of the increase was personnel-related expenses (see below for additional details). 50 ● General and administrative expenses decreased by $ 10.7 million, primarily due to decreases in stock-based compensation, headcount and personnel-related expenses. Headcount reductions were initiated in the second half of 2022 and continued into the first half of 2023.
The main drivers of the increase were personnel-related expenses, depreciation and amortization, and other expenses, which are primarily comprised of travel and entertainment, partially offset by facilities costs and stock-based compensation (see below for additional details). • General and administrative expenses decreased by $978,000, primarily due to decreases in facilities costs, stock-based compensation and severance costs, partially offset by personnel-related expenses and professional fees.
The loss from continuing operations increase of $ 6.2 million was comprised of the changes in Pharm Services revenue, operating expenses and other income and expenses from continuing operations as follows: ● Pharma Services revenue increased by $509,000 due to an increased number of contracts performed during the period.
The loss from continuing operations expanded by $35.8 million mainly due to impairment charges for certain in-process research and development (discussed below), the change in fair value of contingent consideration, and certain other changes in operating expenses from continuing operations as follows: • Pharma Services revenue increased by $392,000.
Changes in operating assets and liabilities were $4.0 million as an additional use of cash. 55 During the year ended December 31, 2022, our consolidated net loss was $72.9 million, of which $54.3 million was from discontinued operations, and consolidated net cash used in operating activities amounted to $45.6 million.
Net changes in operating assets and liabilities for the period were $1.3 million as an additional use of cash. 47 During the year ended December 31, 2023, our total research and development expenses were $9.3 million, our sales and marketing expenses were $2.8 million, and our general and administrative expenses were $11.2 million.
This Management’s Discussion and Analysis of Financial Condition and Results of Operations contains a number of forward-looking statements, all of which are based on our current expectations and could be affected by the uncertainties and risks described throughout this filing, particularly in “Risk Factors.” The following discussion should be read in conjunction with our consolidated financial statements and the related notes provided under “Item 8 - Financial Statements and Supplementary Data.” Overview We are a precision diagnostics company focused on developing and commercializing proprietary tests in three areas: VitaGraft is a blood-based solid organ transplantation monitoring test, DetermaIO is a gene expression test that assesses the tumor microenvironment to predict response to immunotherapies, and DetermaCNI is a blood-based monitoring tool for monitoring therapeutic efficacy in cancer patients.
This Management’s Discussion and Analysis of Financial Condition and Results of Operations contains a number of forward-looking statements, all of which are based on our current expectations and could be affected by the uncertainties and risks described throughout this filing, particularly under Risk Factors in Part I, Item 1A of this Report.
We used approximately $1.1 million of the net proceeds to immediately redeem an aggregate of 1,064 shares of its Series A Redeemable Convertible Preferred Stock and may thereafter elect to redeem additional shares. 54 On April 11, 2024, we entered into a private placement securities purchase agreement with certain accredited investors.
On April 15, 2024, we consummated a private placement of our securities to certain accredited investors (the “April 2024 Offering”). The resulting net proceeds were approximately $9.9 million, after deducting offering expenses of $538,000 and deducting $5.4 million for the redemption of all remaining shares of our Series A Redeemable Convertible Preferred Stock.
On April 5, 2024, we entered into an agreement to collaborate in the development and the commercialization of research use only and in vitro diagnostics kitted transplant products. See Note 14, “Subsequent Events,” to our consolidated financial statements included elsewhere in this Report for additional information.
We have entered into a global strategic partnership agreement with Bio-Rad to collaborate in the development and the commercialization of RUO and IVD kitted transplant products for clinical use (see Note 10, “Collaborative Arrangements,” to our consolidated financial statements included elsewhere in this Report for additional information). 40 Under strict regulatory rules, our kitted tests may not be used in a clinical treatment setting until they have attained IVD clearance from the FDA in the U.S. and In Vitro Diagnostic Medical Devices Regulation approval in the European Union.
On January 1, 2024, we expanded our Nashville facility by adding one new office lease and renewing and extending our existing leases.
In January 2024, we expanded our Nashville facility by adding one new office lease and renewing and extending our existing leases. During 2024, we added five financing leases for certain laboratory equipment to be used in our operations. See Note 6, “Commitments and Contingencies,” to our consolidated financial statements included elsewhere in this Report for additional leasing information.
Interest income is earned from money market funds we hold for capital preservation.
Interest income is earned from money market funds we hold for capital preservation. Interest expense was incurred mainly from our financing lease obligations (see Note 6 to our consolidated financial statements included elsewhere in this Report) and insurance financing activity.
Removed
As of the fourth quarter of 2021, this test is currently available as part of an early access program with leaders in the immuno-oncology field. A kitted research product format of the underlying technology began proof-of-concept development in the first quarter of 2023.
Added
Item 7. Management’s Disc ussion and Analysis of Financial Condition and Results of Operations.
Removed
During 2021, we added to our diagnostic test pipeline VitaGraft, a blood-based solid organ transplantation monitoring test, and DetermaCNI, a patented, blood-based test from Chronix for immunotherapy monitoring. We successfully completed the technology transfer of VitaGraft to our laboratory in Nashville, Tennessee in the second quarter of 2022.
Added
For additional information, refer to the section above entitled “Cautionary Note Regarding Forward-Looking Statements.” The following discussion should be read in conjunction with our consolidated financial statements and the related notes thereto provided under Part IV, Item 15(a)(1) of this Report. Overview We are a pioneering diagnostics technology company.
Removed
VitaGraft Kidney is now broadly available to transplant professionals upon request. In April 2024, we entered into an agreement to collaborate in the development and the commercialization of research use only and in vitro diagnostics kitted transplant products. See Note 14, “Subsequent Events,” to our consolidated financial statements included elsewhere in this Report for additional information.
Added
Our mission is to democratize access to novel molecular diagnostic testing to improve patient outcomes. We do this primarily by developing molecular diagnostic test kits that empower our customers to run their own tests to participate in the patient-care value chain, which is counter-positioned with the central laboratory model.
Removed
We expect that our operating expenses will continue to increase if we successfully complete the development of DetermaIO and commercialize this test. We have hired a sales and marketing team. We also acquired a laboratory in Germany through our completed merger with Chronix and we will incur additional expenses resulting from our continued investment in Chronix.
Added
Our decentralized approach also puts testing in the hands of researchers to enable more studies, which inspires innovation, which we believe, can improve standards of care while also creating demand for more testing. We develop tests that measure both established biomarkers as well as pioneer the adoption of new and more effective biomarkers.

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