Financial Performance - The company incurred net losses of 15.1millionand23.7 million for the years ended December 31, 2024 and 2023, respectively, with an accumulated deficit of 294.3millionasofDecember31,2024[179].−Thecompanymayrequiresubstantialadditionalcapitaltofinanceoperations,whichmaynotbeavailableonacceptableterms[181].−Thecompanymayrequiresubstantialadditionalcapitaltofinanceplannedoperations,whichmaynotbeavailableonacceptableterms[259].−Medicarerevenueaccountedfor25250,000, which poses a risk to liquidity if financial institutions face adverse developments[254]. - As of December 31, 2024, the company had 15.0millioninprincipaloutstandingunderatermloan,withanadditional3.5 million in interest payable in-kind[257]. - The company is required to maintain a minimum liquidity of at least 2.0millionandachievecertainminimumannualrevenueamountsunderitsloanagreement[257].ProductDevelopmentandMarketStrategy−Thecompanyexpectsitsfinancialresultstodependprimarilyonsalesofitstestingproducts,particularlytheAVISECTDtestingproduct,whichhasbeenasignificantrevenuesourcesinceitslaunchin2012[190].−ThecompanyisplanningtolaunchAVISECTDincorporatingnewT−CellBiomarkersandRASub−ProfileBiomarkersinJanuary2025[190].−Marketacceptanceofthecompany′stestingproductsiscrucialforcommercialsuccess,influencedbyfactorssuchasperceivedaccuracy,competitiveadvantages,andreimbursementavailability[196][200].−Thecompanymusteducatehealthcareprovidersandpatientstogeneratedemandfortestingproducts,witheffortsincludingscientificpresentationsandone−on−oneeducation[198].−Thecompanymayneedtoexpanditsspecializedsalesforcetoeffectivelymarketandselltestingproductsasitgrows[215].RegulatoryandComplianceRisks−ThecompanyissubjecttoCLIAregulations,whichrequirespecificstandardsforclinicallaboratories,andmustmaintainaccreditationtoperformhighcomplexitytesting[269].−FailuretocomplywithCLIArequirementscouldleadtosignificantpenalties,includingrevocationofaccreditation,whichwouldseverelyimpactthecompany′sabilitytooperateandgeneraterevenue[271].−Theregulatoryenvironmentiscomplexandsubjecttochange,withnumerousfederalandstatelawsaffectingoperations,includingFDAregulationsandHIPAAcompliance[275].−Thecompanyhasfacedlitigationandgovernmentalinvestigations,incurringcostssuchasa0.7 million settlement in October 2023 related to a qui tam action[281]. - Compliance with export control and anti-corruption laws is critical, as violations could result in severe penalties and reputational harm[283]. - The potential for regulatory changes poses ongoing risks to the company's operations and financial performance[274]. - The FDA's final rule to regulate laboratory-developed tests (LDTs) will phase out enforcement discretion over four years, with high-risk tests requiring premarket approval by the 3.5-year mark[286]. - Noncompliance with FDA requirements could lead to severe enforcement actions, including civil penalties and operational restrictions[290]. - Compliance failures with data protection laws, such as HIPAA and the GDPR, could result in significant penalties and damage to reputation[293][300]. Operational Challenges - The company has faced challenges with third-party payors, including non-coverage policies for AVISE Lupus, which could materially affect revenue[186]. - The company relies on sole suppliers for some reagents and materials, which poses a risk to its ability to meet demand for testing products[178]. - The billing process for testing products is complex and resource-intensive, with risks of errors and delays in claims processing that could adversely affect revenue[207][212]. - The company faces risks related to information technology systems, including potential disruptions that could affect operations and financial condition[243]. - Business disruptions from natural or manmade disasters could significantly harm the company's revenue and financial condition[192]. - The company’s sole fulfillment center is vulnerable to disruptions from disasters, which could hinder the supply of testing products and harm customer relationships[204]. - The company may need to scale operations and enhance quality assurance to meet increased demand for testing products, which could strain resources and affect service quality[205][206]. Competition and Market Dynamics - Competition includes traditional testing methods and commercial laboratories, which may have greater resources and brand recognition[217][220]. - The annual total addressable market estimates for testing products may be inaccurate, which could impair sales growth if actual market conditions differ from projections[201]. - The company faces risks in developing new testing products, which may take several years and involve significant investment[222][226]. Intellectual Property and Innovation - The company holds an exclusive license to two issued U.S. patents and five issued U.S. patents relevant to its AVISE testing products, but faces challenges in maintaining intellectual property protection[305][307]. - The company relies on trade secret protection and confidentiality agreements to safeguard proprietary know-how, but faces risks of unintentional disclosure[308]. - Changes in U.S. patent law could diminish the value of patents, impacting the company's ability to protect its AVISE testing products[310]. - The company may struggle to protect intellectual property rights globally due to high costs and varying patent laws in different jurisdictions[313]. - The company faces risks of third-party claims alleging intellectual property infringement, which could delay development efforts and result in loss of patent rights[323]. Management and Governance - The company has identified material weaknesses in internal controls that have been remediated, but future weaknesses may still occur, potentially impacting financial reporting accuracy and investor confidence[194]. - The loss of senior management or key personnel could hinder the company's ability to execute its business strategy effectively[234]. - The stock price of the company may be volatile, influenced by various factors including financial performance, market conditions, and strategic announcements[330]. - The company may face securities class action litigation following periods of market volatility, which could divert management's attention and resources[331]. - The company has never paid dividends and does not anticipate doing so in the foreseeable future, relying on capital appreciation for returns[340].
