bioAffinity Technologies(BIAF) - 2024 Q4 - Annual Report

Financial Performance - Consolidated revenue increased approximately 270% to $9.4 million compared to $2.5 million for the year ended December 31, 2023, primarily due to the acquisition of PPLS in September 2023[45] - The company generated revenue of approximately $9.4 million and $2.5 million for the years ended December 31, 2024, and December 31, 2023, respectively[155] - The company generated $2.5 million in revenue from PPLS in 2023 and $9.4 million in 2024, but does not expect to derive immediate profit from these services[169] - For the year 2024, cash used in operations was $7.1 million, and the net loss was $9.0 million[161] - As of December 31, 2024, the company had an accumulated deficit of $53.6 million and only $1.1 million in cash on hand[161] - The company anticipates needing to raise additional capital to support operations and may require further financing through equity or debt securities[166] Product Development and Clinical Trials - A pivotal clinical trial for CyPath Lung is expected to open in the second quarter of 2025, with 3,200 patients participating across multiple collection sites[40] - CyPath Lung achieved an overall 88% specificity and 82% sensitivity in a 150-patient validation trial, correctly detecting 80% of Stage I lung cancers[39] - The test demonstrated 92% sensitivity and 87% specificity for patients with lung nodules 20 millimeters or smaller, with a 99% negative predictive value[39] - The company plans to develop and commercialize its first diagnostic test, CyPath Lung, and aims to secure necessary regulatory approvals[164] - The company is in the preliminary phases of developing diagnostic tests and therapeutic products, which are critical for achieving profitability[156] - The company is conducting research to develop precision diagnostics for asthma and COPD, with patient studies expected to begin in 2026[84] - A pivotal clinical trial for the FDA-cleared FlowPath Lung test is expected to enroll approximately 3,400 patients over 18 months, with the first site opening in Q2 2025[70] Regulatory and Compliance - Medicare reimbursement code 0406U for CyPath Lung became effective on January 1, 2024, following regulatory approvals in 2023[61] - The FDA's final rule on Laboratory Developed Tests (LDTs) will require compliance with premarket review and quality system requirements for LDTs marketed after May 6, 2024[100] - The company has completed its certification as an LDT in accordance with CAP and CLIA regulations in 2023[100] - The FDA may order the temporary or permanent discontinuation of a clinical trial if it believes the trial is not compliant with regulations or poses unacceptable risks[120] - The company must maintain compliance with current good manufacturing practices (cGMP) post-approval to avoid product recalls or regulatory issues[142] - The company may face fines or withdrawal of regulatory approvals if it fails to comply with foreign regulatory requirements[146] Market Potential and Competitive Landscape - The global lung cancer diagnostic market is projected to grow from $15.1 billion in 2023 to $34.8 billion by 2034, with a CAGR of 7.9%[63] - The diagnostics market for COPD was valued at $5.6 billion in 2023 and is projected to reach $8.2 billion by 2029, indicating significant growth potential for the company's future products[84] - The company faces significant competition from larger diagnostic and pharmaceutical companies, which may have greater financial resources and established market presence[196] - The ability to achieve market acceptance for diagnostic tests and therapeutic products is contingent upon factors such as efficacy, safety, pricing, and physician willingness to adopt new tests[191] - The market for diagnostic tests and products is rapidly changing, with technological advancements potentially rendering the company's offerings noncompetitive[218] Financial Risks and Challenges - The company has limited operating history and faces significant risks in establishing its business and expanding its commercialization efforts[162] - The company’s future profitability is uncertain, and failure to generate sufficient revenue could lead to a decline in stockholder value[162] - The company may struggle to obtain adequate reimbursement from third-party payors, which could limit market acceptance and revenue generation[212] - The company relies on third parties for manufacturing and clinical trial management, which may reduce control over timelines and quality[204] - The evolving landscape of privacy regulations poses risks to the company's operations and could result in reputational harm if compliance is not maintained[210] Innovation and Intellectual Property - CyPath Lung is the first cancer diagnostic combining flow cytometry and automated analysis for lung cancer detection from sputum samples[62] - The company achieved a reduction of CD320 and LRP2 protein levels of up to 90% using siRNAs, which inhibited cell growth or killed cancer cells by up to 80%[87] - As of December 31, 2024, the company and its OncoSelect® subsidiary hold a patent estate that includes 17 issued U.S. and foreign counterpart patents, with expiration dates ranging from 2030 to 2039[92] - The diagnostic patent portfolio includes one issued U.S. patent and nine foreign counterpart patents, with applications directed at diagnosing lung health and proprietary compensation beads for flow cytometry[93] - The company plans to rely on regulatory protections such as orphan drug exclusivities and data exclusivities to maintain market position[98] Operational and Management Aspects - The company employs 57 employees, with 21 at bioAffinity and 36 at PPLS, emphasizing recruitment and retention of skilled professionals[147] - The Chief Science Officer has extensive experience in FDA approval processes, having previously worked at Genzyme Corporation and Ilex Products[148] - The loss of key executives could impede the company's ability to achieve its research and commercialization objectives[200] - The company has limited experience in sales and marketing of diagnostic tests, which may hinder its ability to commercialize products effectively[189] Economic and Environmental Factors - Increased inflation rates may result in higher operating costs, impacting demand and pricing for the company's drug candidates[229] - The global macroeconomic environment is affected by geopolitical instability, which could lead to uncertainty in local economies and financial markets[231] - Changes in U.S. trade policies, including tariffs, could adversely impact the company's business and financial condition[227]