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Item 1. Business

2025-02-25 compared with 2024-02-27 · 141 added, 145 removed, 405 unchanged (41% of the section changed)

We are a commercial-stage medical technology company that provides a minimally invasive treatment for patients with severe emphysema, a form of chronic obstructive pulmonary disease (“COPD”).

Our solution, which is comprised of the Zephyr Endobronchial Valve (“Zephyr Valve”), the Chartis Pulmonary Assessment System (“Chartis System”) and the StratX Lung Analysis Platform (“StratX Platform”), is designed to treat severe emphysema patients who, despite medical management, are still profoundly symptomatic and either do not want or are ineligible for surgical approaches.

Our solution, which is comprised of the Zephyr Endobronchial Valve (“Zephyr Valve”), the Chartis Pulmonary Assessment System (“Chartis System”) and the LungTraX Platform (which is called the StratX Platform in international markets), is designed to treat severe emphysema patients who, despite medical management, are still profoundly symptomatic and either do not want or are ineligible for surgical approaches.

Patients with severe emphysema generally experience a worse quality of life than patients with lung cancer, and we believe there is both an urgent clinical need and a strong market opportunity for a solution that is safe, effective and minimally invasive.

In June 2018, we received pre-market approval (“PMA”) by the U.S.

In 2018, we received pre-market approval (“PMA”) from the U.S.

Food and Drug Administration (“FDA”).

The Zephyr Valve is now commercially available in more than 25 countries, with over 100,000 valves used to treat more than 25,000 patients.

The Zephyr Valve is now commercially available in numerous countries globally.

We have established reimbursement in major markets in North America, Europe and Asia Pacific and the Zephyr Valve has been included in treatment guidelines for COPD worldwide.

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Additionally, independent studies have demonstrated that Zephyr Valves deliver increases in the BODE Index (a multi-dimensional health status scoring system for patients with COPD) that have been associated with long-term survival benefits.

We also manufacture the AeriSeal System, which is a synthetic polymer foam designed to occlude, or close, collateral air channels in a target lung lobe and convert the target lung lobe to having little to no collateral ventilation (CV-).

The AeriSeal System has received a “Breakthrough Device” designation by the FDA and a Certificate of Conformity (“CE Mark”) in Europe.

The AeriSeal System is not approved by the FDA or approved for commercial sale in the United States.

We are currently conducting a global clinical trial called CONVERT II to support a PMA application for the AeriSeal System.

We market and sell our products in the United States through a direct sales organization.

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We are expanding our commercial operations in the United States while continuing to foster our international growth.

In international markets, we employ both direct and distributor-based sales models, with over 96% of our revenue generated in markets where we sell directly for the year ended December 31, 2023.

In international

markets, we employ both direct and distributor-based sales models.

For the year ended December 31, 2024, we generated 96% of our revenue from markets where we sell directly.

We generated revenue of $83.8 million, with a gross margin of 74.0% and a net loss of $56.4 million, for the year ended December 31, 2024 compared to revenue of $68.7 million, with a gross margin of 73.9% and a net loss of $60.8 million, for the year ended December 31, 2023.

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We also generate a smaller amount of our revenue from our Chartis System, which is comprised of sales of the balloon catheters, usage fees and sales of the Chartis console.

The StratX Platform, while used to identify patients eligible for treatment with Zephyr Valves, does not independently generate any revenue for us.

The LungTraX Platform, while used to identify patients eligible for treatment with Zephyr Valves, has not independently generated any revenue for us.

Our Market Opportunity

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COPD refers to a group of lung diseases characterized by obstruction of airflow that interferes with normal breathing.

According to the World Health Organization, COPD is the third leading cause of death worldwide, causing 3.23 million deaths in 2019.

Emphysema, a form of COPD, which accounts for approximately 25% of all COPD patients, is a debilitating and life-threatening disease that progressively destroys lung tissue, resulting in a diminishing ability to breathe and engage in the most basic daily activities such as climbing a flight of stairs, walking, or showering, leading to a high mortality rate.

According to the World Health Organization, COPD is the fourth leading cause of death worldwide, causing 3.5 million deaths in 2021, approximately 5% of all global deaths.

Emphysema, a form of COPD, is a debilitating and life-threatening disease that progressively destroys lung tissue, resulting in a diminishing ability to breathe and engage in the most basic daily activities such as climbing a flight of stairs, walking, or showering, leading to a high mortality rate.

We estimate that there are approximately 8.5 million severe COPD patients in developed markets globally as of 2019, and we estimate approximately 3.2 million have severe emphysema.

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LVRS is an invasive surgery that involves cutting away diseased tissue to create space for the remaining lung to inflate more fully.

LVRS was studied extensively in the National Emphysema Treatment Trial (“NETT”), which showed that while a broad group of patients gained quality of life and exercise capacity from the surgery, it also involved substantial risks of complications, prolonged hospital stays and even death.

LVRS was studied extensively in the National Emphysema Treatment Trial (“NETT”), which

showed that while a broad group of patients gained quality of life and exercise capacity from the surgery, it also involved substantial risks of complications, prolonged hospital stays and even death.

As a result of the NETT study, use of LVRS was restricted by the Centers for Medicare & Medicaid Services (“CMS”) to a subgroup of patients and can only be offered at a limited number of highly specialized medical centers.

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This procedure is highly time and resource intensive due to the complexity of the surgery.

Even with a successful

procedure and consistent use of anti-rejection medications, lung transplantation patients have a five-year survival rate on average.

Even with a successful procedure and consistent use of anti-rejection medications, lung transplantation patients have a five-year survival rate on average.

In addition to recently approved endobronchial valves, there are other approaches to a minimally invasive alternatives to LVRS, including the use of airway bypass, coils and vapor.

However, to date, only endobronchial valves have demonstrated safety and effectiveness in FDA-approved investigational device exemption (“IDE”) studies in the United States.

Our solution, which is comprised of the Zephyr Valve, Chartis System and StratX Platform, is designed to treat severe emphysema patients who, despite medical management, are still profoundly symptomatic and either do not want or are ineligible for surgical approaches.

Our solution, which is comprised of the Zephyr Valve, Chartis System and LungTraX Platform, is designed to treat severe emphysema patients who, despite medical management, are still profoundly symptomatic and either do not want or are ineligible for surgical approaches.

We believe our solution provides the following important benefits:

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• High procedural success driven by innovative and effective patient assessment tools;

• Minimally invasive procedure typically lasting less than an hour.

• Minimally invasive procedure typically lasting approximately one hour.

In addition, we believe our solution provides several benefits to other key stakeholders:

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Patients who are evaluated require a comprehensive workup that may unveil other health conditions such as heart disease or cancer, which also may require treatment.

• For physicians, the Zephyr Valve enables treatment for a patient population with few alternatives, and the combination of using the StratX Platform and Chartis System are designed to enable a simple, predictable and efficient patient selection process.

• For physicians, the Zephyr Valve enables treatment for a patient population with few alternatives, and the combination of using the LungTraX Platform and Chartis System are designed to enable a simple, predictable and efficient patient selection process.

• For payors, treatment with the Zephyr Valve has been demonstrated to result in fewer complications and quicker recovery than invasive surgical alternatives and may reduce hospital stays for COPD and incidence of respiratory failure.

We believe the combination of using the StratX Platform and Chartis System enables selection and treatment of patients most likely to benefit from our solution.

We believe the combination of using the LungTraX Platform and Chartis System enables selection and treatment of patients most likely to benefit from our solution.

Treatment with Zephyr Valves

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Patients with advanced COPD routinely undergo a thorough diagnostic workup, which typically includes a high-resolution CT scan of their lungs to determine if they have severe emphysema and hyperinflation.

If the patient meets medical eligibility criteria for Zephyr Valves, their CT scan data will be uploaded to our secure cloud-based CT analysis service, the StratX Platform.

If the patient meets medical eligibility criteria for Zephyr Valves, their CT scan data will be uploaded to our secure cloud-based CT analysis service, the LungTraX Platform.

The treating physician receives an easy-to-read report that we designed for our solution (“StratX Lung Report”) and based on the report, CT scan and other clinical data, decides if the patient is a good candidate for treatment with Zephyr Valves and which lobes may be the best target for treatment.

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The following graphic illustrates the typical treatment steps associated with our solution.

StratX Platform

The StratX Platform is a cloud-based quantitative CT analysis service that provides physicians with an easy-to-read report that we designed for our solution that includes information on emphysema destruction, fissure completeness and lobar volume to help identify target lobes for treatment with Zephyr Valves.

After the physician captures a CT scan of the patient’s chest according to the StratX parameters, the CT scan is de-identified of patient information, and the hospital staff uploads the CT scan to a third-party cloud service provider where it is analyzed using validated algorithms within the StratX Platform.

The StratX Platform is designed to enable physicians to screen treatment

candidates non-invasively, prioritize between multiple potential treatment targets, if applicable, enhance case planning, and educate themselves and their patients using the simple-to-read StratX Lung Report.

In order to make the StratX Platform available to physicians, we contract with a third-party cloud service provider.

This third-party cloud service enables physicians to upload CT scan data while removing protected health information (“PHI”) of patients from that data, in case the physicians have, inadvertently, not removed the PHI themselves.

LungTraX Platform

The LungTraX Platform is a cloud-based quantitative CT (“QCT”) analysis service that provides physicians with multiple products – LungTraX Connect, to improve workup efficiency, LungTraX Detect, to enable patient identification and an easy-to-read StratX Lung report that we designed for our solution that includes information on emphysema destruction, fissure completeness and lobar volume to help identify target lobes for treatment with Zephyr Valves.

LungTraX Connect Software enables a streamlined, efficient, and collaborative workup process including CD-less uploading of CT images, a collaborative patient management tool, and a patient case list, which includes protected health information (“PHI”).

LungTraX Detect allows for seamless picture archiving and communication system (“PACS”) integration and a rule-based screening of patients with emphysema using CT scans within the hospital PACS.

The system continues to support the legacy process of manually uploading CT

After the CT scan is uploaded to a third-party cloud service provider, it is analyzed using validated algorithms.

The LungTraX Platform is designed to enable physicians to screen treatment candidates non-invasively, prioritize between multiple potential treatment targets, if applicable, enhance case planning, and educate themselves and their patients using the simple-to-read StratX Lung Report.

In order to make the LungTraX Platform available to physicians, we contract with a third-party cloud service provider.

We also contract with additional third-party service providers to analyze the CT scan data using their proprietary software and provide quantitative results via the StratX Lung Report.

The StratX Lung Report is then made available to physicians in the third-party cloud service.

The StratX Lung Report is then made available to physicians in the LungTraX Platform.

The software of each of these third-party service providers has received either 510(k) approval or successfully underwent a conformity assessment procedure with a Notified Body and was subsequently CE Marked in accordance with applicable legislation governing medical devices.

We provide exclusive access to physicians to their StratX accounts and cases and monitor this CT scan upload and analysis process to ensure quality control.

We provide exclusive access to physicians to their LungTraX accounts and cases and monitor this CT scan upload and analysis process to ensure quality control.

Chartis Pulmonary Assessment System

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Other methods, such as using fissure analysis as a proxy measurement of collateral ventilation allows detection of an incomplete boundary between the lobes but does not measure how much air is flowing across this gap.

Without assessment by the Chartis System, physicians may treat a lobe that has collateral ventilation, which will likely not respond to valve treatment, or unnecessarily rule out a patient who could have potentially benefitted from valve treatment.

Clinical Trials and Results

The safety, effectiveness and clinical benefits of the Zephyr Valve in patients selected using the Chartis System have been evaluated in multiple randomized controlled clinical trials that have collectively evaluated approximately 450 patients in Austria, Belgium, Brazil, France, Germany, the Netherlands, Sweden, the United Kingdom (“UK”) and the United States.

The results of our LIBERATE study, which served as the basis for the FDA approval of our PMA application, were published in the American Journal of Respiratory and Critical Care Medicine in 2018 and met all its primary and secondary effectiveness endpoints.

In addition, over 100 scientific articles have been published on the clinical benefits of Zephyr Valves, including multiple meta-analyses, review articles, cost-effectiveness analyses and risk-benefit analyses.

We have followed patients enrolled in the LIBERATE study for up to five years for safety and effectiveness (FEV 1 ) assessments.

We have also established a patient registry to collect additional data on the safety and effectiveness (FEV 1 ) of the Zephyr Valve in the United States.

We have established a similar registry in France and Japan.

The safety, effectiveness and clinical benefits of the Zephyr Valve in patients selected using the Chartis System have been evaluated in multiple randomized controlled clinical trials that have collectively evaluated over 650 patients in Austria, Belgium, Brazil, France, Germany, the Netherlands, Sweden, the United Kingdom (“UK”) and the United States.

The LIBERATE study which served as the basis for the FDA approval of our PMA application, met all its primary and secondary effectiveness endpoints, and the results were published in the American Journal of Respiratory and Critical Care Medicine in 2018.

In addition, over 150 scientific articles have been published on the clinical use of Zephyr Valves, including multiple meta-analyses, review articles, cost-effectiveness analyses and risk-benefit analyses.

We followed patients enrolled in the LIBERATE study for up to five years for safety and effectiveness (FEV 1 ) assessments and the findings demonstrating long-term durability (out to at least 5 years) were presented at the 2024 European Respiratory Society Congress in Vienna.

We have also established three separate patient registries to collect additional real-world data on the safety and effectiveness (FEV 1 ) of the Zephyr Valve in the United States, France and Japan.

Results from the French registry demonstrating clinically meaningful benefits of the Zephyr valves with an acceptable safety profile were also presented at the 2024 European Respiratory Society Congress in Vienna.

As seen in the table below, the results from multiple randomized clinical trials have consistently shown statistically significant and clinically meaningful benefits of Zephyr Valves across multiple measures of effectiveness.

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The complications of treatment with Zephyr Valves can include but are not limited to pneumothorax, worsening of COPD symptoms, hemoptysis, pneumonia, dyspnea and, in rare cases, death.

The most common side effect of Zephyr Valve placement is a pneumothorax, which is the collapse of a lung due to an air leak inside the lung and is believed to be a direct result of rapid shifts in air volume in the chest as the target lobe deflates and the neighboring lobe expands.

In clinical trials, pneumothoraces occurred in 18-34% of patients treated with the Zephyr Valve, and in the LIBERATE Study, 17% of the pneumothorax events required no intervention and resolved on their own.

Patients who have had their pneumothoraces successfully treated had comparable outcomes to those who did not experience a pneumothorax, other than that their hospital stays were extended by approximately a week compared to the three nights for patients without pneumothoraces.

Further, our current products are contraindicated, and therefore should not be used, in certain patients, including patients (i) for whom bronchoscopic procedures are contraindicated, (ii) with evidence of active pulmonary infection, (iii) with known allergies to Nitinol (nickel-titanium) or its constituent metals (nickel or titanium) or silicone, (iv) who have not quit smoking or (v) with large bullae encompassing greater than 30% of either lung.

The most common side effect of Zephyr Valve placement is a pneumothorax, which is the collapse of a lung due to an air leak in the lung and is believed to be a direct result of rapid shifts in the lobar volumes in the chest as the target lobe deflates and the neighboring lobe expands.

In clinical trials, in the incidence rate of pneumothorax in patients treated with the Zephyr

Valve is between 18% and 34%.

In the LIBERATE Study, 17% of the pneumothorax events required no intervention and resolved on their own.

While patients with a pneumothorax had a longer hospital stay of approximately a week versus the 3-night stay for patients who did not have a pneumothorax, following the successful resolution of the pneumothorax they had comparable outcomes to those who did not experience a pneumothorax.

Recent publications have reported improved survival in patients with severe hyperinflation undergoing bronchoscopic lung volume reduction (BLVR) with valves compared to a matched population not undergoing BLVR.

Based on the strength of the clinical evidence, the Zephyr valves are included as a standard-of-care treatment option in global guidelines (Global Initiative for Chronic Obstructive Lung Disease;

GOLD) with Evidence Level “A”.

Our current products are contraindicated, and therefore should not be used, in certain patients, including patients (i) for whom bronchoscopic procedures are contraindicated, (ii) with evidence of active pulmonary infection, (iii) with known allergies to Nitinol (nickel-titanium) or its constituent metals (nickel or titanium) or silicone, (iv) who have not quit smoking or (v) with large bullae encompassing greater than 30% of either lung.

Our Commercial Strategy

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Zephyr Valves are typically implanted by an interventional pulmonologist at a hospital, and patients are often evaluated in a multi-disciplinary team approach that includes other lung physicians, radiologists, respiratory therapy specialists and/or surgeons.

Our sales personnel work closely with these stakeholders to ensure quality outcomes.

Our sales personnel educate these stakeholders to ensure quality outcomes.

We offer an in-depth training program developed in conjunction with leading global thought leaders and the largest pulmonary society in the United States.

Our sales personnel work with hospitals to leverage their existing resources to efficiently establish and market Zephyr Valves as a service line.

Our sales personnel educate hospitals to leverage their existing resources to efficiently establish and market Zephyr Valves as a service line.

Our sales territory managers also call on community physicians, nurses, respiratory therapists and pulmonary rehabilitation centers to raise awareness of Zephyr Valves as a treatment option.

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Our patient access team is responsible for all aspects of our reimbursement processes and initiatives.

In the United States, our solution is reimbursed based on established Category I CPT and ICD-10 PCS codes and associated APC and MS-DRG payment groupings.

In the United

States, our solution is generally reimbursed based on established Category I CPT and ICD-10 PCS codes and associated APC and MS-DRG payment groupings.

In the United States, we sell our products to hospitals.

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“Coding” refers to distinct numeric and alphanumeric billing codes that are used by healthcare providers to report the provision of medical services procedures and the use of supplies for specific patients to payors.

CPT codes are published by the American Medical

Association and are used to report medical services and procedures performed by or under the direction of physicians.

CPT codes are published by the American Medical Association and are used to report medical services and procedures performed by or under the direction of physicians.

Medicare generally pays physicians for services based on submission of a claim using one or more specific CPT codes.

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The national average payment for this procedure is sufficient to cover costs of the procedure.

If a patient receives the Zephyr Valve, there is no separate reimbursement for the Chartis System procedure;

If a patient receives Zephyr Valves, there is no separate reimbursement for the Chartis System procedure;

rather, the provider receives payment for the endobronchial valve procedures as described above.

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A majority of our patients are Medicare-eligible beneficiaries.

Without a national coverage determination (“NCD”) or a local coverage determination (“LCD”), Medicare claims are processed by Medicare Administrative Contractors (“MACs”), which assess coverage under Medicare’s reasonable and necessary standard.

We estimate that roughly 80% of the potential Zephyr Valve patient population are Medicare/Medicaid beneficiaries with approximately 55% having managed Medicare/Medicaid and the remaining 45% having traditional fee-for-service Medicare/Medicaid.

Approximately 20% of the potential Zephyr Valve patient population is under third-party commercial payor policies.

Without a national coverage determination (“NCD”) or a local coverage determination (“LCD”), Medicare claims are processed by Medicare Administrative Contractors

(“MACs”), which assess coverage under Medicare’s reasonable and necessary standard.

We estimate that roughly 75% of the potential Zephyr Valve patient population are Medicare beneficiaries, 5% Medicaid and 20% of the potential Zephyr Valve patient population is under third-party commercial payor policies or other government programs.

Commercial payors such as Aetna, Humana, and many of the largest Blue Cross Blue Shield plans including Anthem, Health Care Service Corporation, BCBS Michigan, and Highmark have all issued positive coverage policies for the Zephyr Valve, and United Healthcare no longer considers the procedure unproven or experimental.

We continue to engage with commercial payors to establish positive national coverage policies by highlighting our compelling and robust clinical data, unique patient selection tools, favorable safety profile to more invasive options, increased patient demand and support from global treatment recommendations for the management of COPD and emphysema.

Prior Authorization Approval Process

A second key element of our reimbursement strategy includes leveraging our patient reimbursement support team and knowledge of the published data to assist patients and physicians in obtaining appropriate prior authorization approvals in advance of treatment for payors that require it.

A key element of our reimbursement strategy includes leveraging our patient reimbursement support team and knowledge of the published clinical data and global treatment recommendations for the management of COPD and emphysema to assist patients and physicians in obtaining appropriate prior authorization approvals in advance of treatment for payors that require it.

We believe our patient reimbursement support team is highly effective in working with patients and physicians to obtain appropriate prior authorizations for the Zephyr Valve treatment even when a non-coverage policy exists.

We expect that continued patient demand coupled with successful appeals of any initially denied prior authorization requests will lead to more positive coverage policies.

Reimbursement Outside of the United States

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Reimbursement is obtained from a variety of sources, including national health care systems or private health insurance plans, or combinations thereof.

We have established market access in countries across Europe and Asia Pacific, including Australia, Austria, Belgium, France, Germany, Japan, the Netherlands, United Kingdom, Scotland, Switzerland and South Korea, and other countries.

The procedure is now included as a treatment option in national and international COPD management and treatment guidelines across Europe and Asia Pacific.

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We also work with external vendors in the design and testing of new technologies.

Our pipeline of products that we are currently considering includes innovations in image analysis to support advanced patient selection and optimize patient outcomes, catheter technologies to improve Chartis assessment, valve deliverability and reduce procedure time and the use of AeriSeal for addressing the needs of severe emphysema patients who are not eligible for Zephyr Valves due to collateral ventilation.

AeriSeal is a polymerizing sealant that can be delivered via a bronchoscope to a targeted region of the lung to reduce volume in the treated area.

We believe that AeriSeal would enable the treatment of patients with collateral ventilation, which would complement the screening of patients for Zephyr Valves.

We have successfully undertaken the conformity assessment procedure in the EU with a Notified Body and CE marked AeriSeal on the basis of the MDD (as defined below), which we continue to place on the market in accordance with the transitional provisions of the MDR (as defined below), and have Therapeutic Goods Administration approval in Australia for the medical device and have completed initial feasibility research.

We have funded an independent feasibility study using AeriSeal and sponsored another study to expand the number of patients that can be treated with Zephyr Valves.

In December 2020, AeriSeal received designation as a Breakthrough Device by the FDA.

We have received a staged IDE approval to commence a clinical trial with AeriSeal.

If successfully developed and approved, AeriSeal could further expand the addressable market of our solution.

Our pipeline of products that we are currently considering includes innovations in image analysis to support advanced patient selection and optimize patient outcomes, catheter technologies to improve Chartis System assessment, valve deliverability and reduce procedure time and the use of the AeriSeal System for addressing the needs of severe emphysema patients who are not eligible for Zephyr Valves due to collateral ventilation.

The AeriSeal System is a synthetic polymer foam designed to occlude, or close, collateral air channels in a target lung lobe and convert the target lung lobe to having little to no collateral ventilation (CV-).

We believe that the AeriSeal System would enable the treatment of patients with collateral ventilation, which would complement the screening of patients for Zephyr Valves.

We have successfully undertaken the conformity assessment procedure in the EU with a Notified Body and CE marked AeriSeal System on the basis of the MDD (as defined below), which we continue to place on the market in accordance with the transitional provisions of the MDR (as defined below), and have Therapeutic Goods Administration approval in Australia for the medical device and have completed initial feasibility research.

In December 2020, the AeriSeal System received designation as a Breakthrough Device by the FDA.

We received an IDE approval to commence a clinical trial with the AeriSeal System.

We shared the clinical data from the full 101-patient cohort in the AeriSeal CONVERT Trial at the 2024 European Respiratory Society Congress in Vienna.

The CONVERT Trial data demonstrates that the AeriSeal System is safe and effective in occluding small airways and/or collateral air channels, allowing patients with collateral ventilation to undergo, and benefit from, treatment with Zephyr Valves with 77.6% of patients converted from CV+ to CV-.

If successfully developed and approved, the AeriSeal System could further expand the addressable market of our solution.

Our industry is highly competitive and subject to rapid change from the introduction of new products and technologies and other activities of industry participants.

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These treatments include medical management, other minimally invasive treatments, LVRS and lung transplantations.

The major competitive products include the Spiration Valve System (Olympus Corporation) and the InterVapor System (Broncus Medical, Inc.;

The primary competitive products include the Spiration Valve System (Olympus Corporation) and the InterVapor System (Broncus Medical, Inc.;

not approved for use in the United States).

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however, the Spiration Valve System is contraindicated for patients with homogeneous emphysema.

We believe our solution competes favorably with the Spiration Valve System for several reasons,

including the strength of our published clinical data, differentiated patient selection tools and our comprehensive technical and reimbursement support.

We believe our solution competes favorably with the Spiration Valve System for several reasons, including the strength of our published clinical data, differentiated patient selection tools and our comprehensive technical and reimbursement support.

InterVapor System offers a non-surgical and non-implant therapy developed for lung disease including emphysema and lung cancer where vapor ablation is simply the application of heated pure water to tissue.

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Our most material foreign patents issued and patent applications pending are in the European Union (“EU”), France, Germany, Japan and the United Kingdom.

Our patents cover aspects of our current Zephyr Valve, loading system, airway sizing, EDC, Chartis System, AeriSeal, StratX, and future product concepts.

Our patents cover aspects of our current Zephyr Valve, loading system, airway sizing, EDC, Chartis System, AeriSeal System, LungTraX Platform, and future product concepts.

The term of individual patents depends on the legal term for patents in the countries in which they are granted.

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We also rely upon trademarks to build and maintain the integrity of our brand.

As of December 31, 2023, we had nine registered trademarks, some of which apply to multiple countries, and several pending trademark applications in various countries.

As of December 31, 2024, we had 10 registered trademarks, some of which apply to multiple countries, and several pending trademark applications in various countries.

We also rely, in part, upon unpatented trade secrets, know-how and continuing technological innovation, and licensing arrangements, to develop and maintain our competitive position.

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When we acquired Emphasys in 2009, we became the successor-in-interest to Emphasys’ rights under the Spiration Cross-License.

Under the agreement, each company non-exclusively licensed the other party to make, have made (solely for such other party), sell, offer for sale, import and export specific products under their respective patent portfolio at that time that covers such products or a method of use thereof.

Under the agreement, each company non-exclusively licensed the other party to make, have made (solely for such

other party), sell, offer for sale, import and export specific products under their respective patent portfolio at that time that covers such products or a method of use thereof.

The license granted to us by Spiration is limited to devices where the outer perimeter of the device seals with the airway wall and the device allows fluid flow only through one or more openings in the device radially inward of such outer perimeter.

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Manufacturing and Supply

We manufacture all our products — valves, delivery catheters, balloon catheters and the Chartis System console — at our headquarters located at 700 Chesapeake Drive, Redwood City, California 94063 where we lease approximately 25,000 square feet of space.

We manufacture all our products — valves, delivery catheters, balloon catheters and the Chartis System console — at our headquarters located in Redwood City, California where we lease approximately 50,000 square feet of space.

Our lease terminates on July 31, 2035.

We lease additional facilities in Redwood City, California of approximately 8,000 square feet and 17,000 square feet of space under lease agreements that terminate contemporaneously on September 30, 2024.

We rely on a combination of in-house processing and third-party suppliers for raw materials and components.

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Several components used in our devices rely on single source suppliers and we routinely prioritize, evaluate and qualify backup sources.

The manufacture of AeriSeal, which is still in development, is completely outsourced to a contract manufacturer.

The StratX Platform’s QCT service is currently outsourced as well.

We host the customer-facing web portal for the StratX Platform’s QCT service while using a third-party cloud service provider to direct CT scan uploads from customers to qualified radiological image analysis providers.

The manufacture of the AeriSeal System, which is still in development, is completely outsourced to a contract manufacturer.

The LungTraX Platform’s QCT service is currently outsourced as well.

We host the customer-facing web portal for the LungTraX Platform while using a third-party cloud service provider to direct CT scan uploads from customers to third-party providers.

We perform the final assembly, inspection, testing, packaging and product release testing for the Zephyr Valve, the EDC and Chartis System at our headquarters in Redwood City.

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We also ship from our Redwood City facilities to distributors in Asia Pacific and other international markets.

The FDA monitors compliance with the QSR through periodic inspections of our facilities, which may include inspection of our suppliers’ facilities as well.

The FDA monitors compliance with the Quality Management Systems Regulations (“QMSR”) through periodic inspections of our facilities, which may include inspection of our suppliers’ facilities as well.

Our European Union Notified Body and Great Britain approved body, British Standards Institute (“BSI”), monitors compliance with the European Union Medical Devices Directive (Council Directive 93/42/EEC) (“MDD”), the Medical Device Regulation (Regulation (EU) 2017/745) (“MDR”), and the UK Medical Devices Regulations 2002 requirements through both annual scheduled audits and periodic unannounced audits of our manufacturing facilities as well as our contract third-party suppliers’ facilities.

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Our products and operations are subject to extensive and ongoing regulation by the FDA under the Federal Food, Drug, and Cosmetic Act of 1938 and its implementing regulations (“FDCA”), as well as other federal and state regulatory bodies in the United States.

The laws and regulations govern, among other things, product design and development, pre-clinical and clinical testing, manufacturing, packaging, labeling, storage, record keeping and

reporting, clearance or approval, marketing, distribution, promotion, import and export and post-marketing surveillance.

The laws and regulations govern, among other things, product design and development, pre-clinical and clinical testing, manufacturing, packaging, labeling, storage, record keeping and reporting, clearance or approval, marketing, distribution, promotion, import and export and post-marketing surveillance.

Unless an exemption applies, each new or significantly modified medical device we seek to commercially distribute in the United States will require either a premarket notification to the FDA requesting permission for commercial distribution under Section 510(k) of the FDCA, also referred to as a 510(k) clearance, or approval from the FDA of a PMA application.

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Under the FDCA, medical devices are classified into one of three classes—Class I, Class II or Class III—depending on the degree of risk associated with each medical device and the extent of control needed to provide reasonable assurances with respect to safety and effectiveness.

Class I includes devices with the lowest risk to the patient and are those for which safety and effectiveness can be reasonably assured by adherence to a set of FDA regulations, referred to as the General Controls for Medical Devices (“General Controls”), which require compliance with the applicable portions of the QSR, facility registration and product listing, reporting of adverse events and malfunctions, and as appropriate, truthful and non-misleading labeling and promotional materials.

Some Class I devices, also called Class I reserved devices, also require premarket clearance by the FDA through the 510(k) premarket notification process described below.

Most Class I products are exempt from the premarket notification requirements.

Class II devices are those that are subject to the General Controls, and special controls as deemed necessary by the FDA to ensure the safety and effectiveness of the device (“Special Controls”).

These Special Controls can include performance standards, patient registries, FDA guidance documents and post-market surveillance.

Most Class II devices are subject to premarket review and clearance by the FDA.

Premarket review and clearance by the FDA for Class II devices is accomplished through the 510(k) premarket notification process.

Class I includes devices with the lowest risk to the patient and are those for which safety and effectiveness can be reasonably assured by adherence to General Controls.

Class II devices are additionally subject to special controls and most are subject to premarket review and clearance by the FDA through the 510(k) process.

Class III devices include devices deemed by the FDA to pose the greatest risk such as life-supporting or life-sustaining devices, or implantable devices, in addition to those deemed novel and not substantially equivalent following the 510(k) process.

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The IDE application must be approved in advance by the FDA for a specified number of subjects.

Generally, clinical trials for a significant risk device may begin once the IDE application is approved by the FDA and the study protocol and informed consent are approved by appropriate IRBs at the clinical trial sites.

There can be no assurance that

submission of an IDE application will result in the ability to commence clinical trials, and although the FDA’s approval of an IDE application allows clinical testing to go forward for a specified number of subjects, it does not bind the FDA to accept the results of the trial as sufficient to prove the product’s safety and effectiveness, even if the trial meets its intended success criteria.

Generally, clinical trials for a

significant risk device may begin once the IDE application is approved by the FDA and the study protocol and informed consent are approved by appropriate IRBs at the clinical trial sites.

There can be no assurance that submission of an IDE application will result in the ability to commence clinical trials, and although the FDA’s approval of an IDE application allows clinical testing to go forward for a specified number of subjects, it does not bind the FDA to accept the results of the trial as sufficient to prove the product’s safety and effectiveness, even if the trial meets its intended success criteria.

All clinical trials must be conducted in accordance with the FDA’s IDE regulations that govern investigational device labeling, prohibition of promotion, recordkeeping, and reporting and monitoring responsibilities of study sponsors and study investigators.

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European Union

Our portfolio of products is regulated in the European Union as a medical device per the European Union Medical Devices Directive (Council Directive 93/42/EEC) (“MDD”) and the Medical Device Regulation (Regulation (EU) 2017/745) (“MDR”).

Our portfolio of products is regulated in the European Union as a medical device per the European Union MDD and the MDR.

On May 26, 2021, the MDR entered into application, repealing and replacing both the MDD, and Directive 90/385/EEC concerning active implantable medical devices, or AIMD.

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Depending on the relevant conformity assessment procedure, the Notified Body audits and examines the technical documentation and the quality system for the manufacture, design and final inspection of the medical devices.

Notified Body issues a CE Certificate of Conformity following successful completion of a conformity assessment procedure conducted in relation to the medical device and its manufacturer and their conformity with the GSPRs.

The Notified Body issues a CE Certificate of Conformity following successful completion of a conformity assessment

procedure conducted in relation to the medical device and its manufacturer and their conformity with the GSPRs.

This Certificate and the related conformity assessment process entitles the manufacturer to affix the CE mark to its medical devices after having prepared and signed a related EC Declaration of Conformity.

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Manufacturers of medical devices may only benefit from the above extended transitional provisions deadlines if the following conditions are fulfilled:

(i) the devices continue to comply with the requirements of the MDD or AIMD, (ii) there are no significant changes in the design and intended purpose, (iii) the devices do not present an unacceptable risk to the health or safety of patients, users or other persons, or to other aspects of the protection of public health, (iv) the manufacturer implements a quality management system by May 26, 2024 which complies with the requirements of the Medical Devices Regulation, (v) by May 26, 2024 an application is lodged with a Notified Body for conduct of the conformity assessment of the devices covered by the CE Certificate of Conformity, or the devices intended to substitute for such devices, in accordance with the MDR and a related written agreement is signed with the Notified Body by September 26, 2024, and (vi) from May 26, 2021, compliance with the MDR relating to post-market surveillance, market surveillance, vigilance, registration of economic operators and of devices is ensured in place of the corresponding requirements in the MDD or AIMD.

In addition, CE Certificates of Conformity issued by Notified Bodies in accordance with the MDD or the AIMD from May 25, 2017, which were valid on May 26, 2021 and have not been withdraw since but which expired before March 20, 2023, will only continue to be valid in accordance with the extended transitional deadlines above if either (i) the manufacturer signed a written agreement with a Notified Body for the conformity assessment of the device covered by the expired CE Certificate of Conformity, or the device intended to substitute that device, in accordance with the Medical Device Regulation before the date of expiry of the CE Certificate of Conformity, or (ii) a competent authority of an EU Member State has granted a derogation from the application conformity assessment procedure in accordance with Article 59(1) or Article 97(1) of the Medical Device Regulation.

The MDR sets out the regulatory framework for medical devices in the European Union.

The Competent Authorities of each EU Member State oversee the implementation of the MDR within their jurisdiction.

Devices are classified in accordance with their perceived risks in a manner similar to the United States risk classification system.

Before a medical device can be marketed in the EU it must undergo a conformity assessment procedure after which the manufacturer may affix the CE mark on the devices.

The class of a product determines the conformity assessment

required before the CE mark can be placed on a product.

Our devices are Class IIa and Class IIb on the basis of the MDD and require the involvement of a Notified Body.

Once the Notified Body has issued a Certificate of Conformity, the manufacturer has drawn up the Declaration of Conformity and affixed the CE mark the device can be sold throughout the European Union.

We remain subject to ongoing MDR requirements including among others market surveillance after affixing the CE mark to our devices.

We are currently placing our medical devices on the market in accordance with the MDR, as well as the stringent requirements of the transitional provisions of the MDR and the requirements of the MDD, as applicable to our products, and the guidance of the European Commission’s Medical Devices Coordination Group.

For those devices we are placing on the market in accordance with the transitional provisions of the MDR, we intend to complete conformity assessment procedures in accordance with the MDR prior to the expiration of our existing CE Certificate(s) of Conformity issued by our Notified Body BSI on the basis of the MDD, and the expiration of the transitional provisions of the MDR.

Following the result of a referendum in 2016, the United Kingdom left the European Union on January 31, 2020, commonly referred to as Brexit.

Pursuant to the formal withdrawal arrangements agreed between the United Kingdom and the European Union, the United Kingdom, or the UK, was subject to a transition period until December 31, 2020, or the Transition Period, during which European Union rules continued to apply.

The United Kingdom and the European Union have signed a EU-UK Trade and Cooperation Agreement, or TCA, which became provisionally applicable on January 1, 2021 and entered into force on May 1, 2021.

This agreement provides details on how some aspects of the United Kingdom and European Union’s relationship will operate going forwards however there are still many uncertainties.

The TCA primarily focuses on ensuring free trade between the European Union and the UK in relation to goods.

Among the changes that will now occur are that Great Britain (England, Scotland and Wales) will be treated as a “third country,” a country that is not a member of the European Union and whose citizens do not enjoy the European Union right to free movement.

Northern Ireland will continue to follow many aspects of the European Union regulatory rules, particularly in relation to trade in goods, and including the MDR.

In light of the fact that the CE Marking process is set out in EU law, which no longer applies in the United Kingdom, the United Kingdom has devised a new route to market culminating in a UKCA Mark to replace the CE Mark.

(i) the devices continue to comply with the requirements of the MDD or AIMD, (ii) there are no significant changes in the design and intended purpose, (iii) the devices do not present an unacceptable risk to the health or safety of patients, users or other persons, or to other aspects of the protection of public health, (iv) the manufacturer implements a quality management system by May 26, 2024 which complies with the requirements of the MDR, (v) by May 26, 2024 an application is lodged with a Notified Body for conduct of the conformity assessment of the devices covered by the CE Certificate of Conformity, or the devices intended to substitute for such devices, in accordance with the MDR and a related written agreement is signed with the Notified Body by September 26, 2024, and (vi) from May 26, 2021, compliance with the MDR relating to post-market surveillance, market surveillance, vigilance, registration of economic operators and of devices is ensured in place of the corresponding requirements in the MDD or AIMD.

In addition, CE Certificates of Conformity issued by Notified Bodies in accordance with the MDD or the AIMD from May 25, 2017, which were valid on May 26, 2021 and have not been withdraw since but which expired before March 20, 2023, will only continue to be valid in accordance with the extended transitional deadlines above if either (i) the manufacturer signed a written agreement with a Notified Body for the conformity assessment of the device covered by the expired CE Certificate of Conformity, or the device intended to substitute that device, in accordance with the MDR before the date of expiry of the CE Certificate of Conformity, or (ii) a competent authority of an EU Member State has granted a derogation from the application conformity assessment procedure in accordance with Article 59(1) or Article 97(1) of the MDR.

Our devices are Class IIa and Class IIb medical devices on the basis of the MDD and require the involvement of a Notified Body.

The AeriSeal System is expected to be classified as Class III on the basis of the MDR.

We are currently placing our medical devices on the market in accordance with the MDR, as well as the stringent requirements of the transitional provisions of the MDR, which, among other conditions, requires continuous compliance with the requirements of the MDD, as applicable to our products, and the guidance of the European Commission’s Medical Devices Coordination Group.

For those devices we are placing on the market in accordance

with the transitional provisions of the MDR (the Zephyr System, the AeriSeal System and the Chartis Console (for which we have received a CE certificate under the MDR and are transitioning to the MDR)), we intend to complete conformity assessment procedures in accordance with the MDR prior to the expiration of our existing CE Certificate(s) of Conformity issued by our Notified Body BSI on the basis of the MDD, in accordance with the transitional provisions of the MDR.

The UK left the EU in January of 2020 and the transitional period ended on December 31, 2020.

In light of the fact that the CE Marking process is set out in EU law, which no longer applies in the UK (apart from in certain limited circumstances in Northern Ireland), the UK has implemented a new route to market, to replace the CE Mark, culminating in a UKCA Mark.

Northern Ireland will, however, continue to be covered by the regulations governing CE Marks.

The UK Government has established transitional provision to recognize the acceptance of CE marked medical devices on the Great Britain market.

Accordingly, Class III and Class IIb implantable medical devices which have been CE marked in accordance with the MDD or AIMD and for which a CE Certificate of Conformity has been delivered by a Notified Body in accordance with the MDD or AIMD, can be placed on the Great Britain market until the sooner of the expiry of the related CE Certificate of Conformity or June 30, 2028.

However, in light of the extended transitional provisions of the Medical Device Regulation, related CE Certificates of Conformity will expire, at the latest, on December 31, 2027.

Other Class IIb, Class IIa and Class I devices with a measuring function which have been CE marked in accordance with the MDD or AIMD and for which a CE Certificate of Conformity has been delivered by a Notified Body in accordance with the MDD or AIMD, can be placed on the Great Britain market until the sooner of the expiry of the related CE Certificate of Conformity or June 30, 2028.

Class I medical devices, for which the conformity assessment procedure in accordance with the MDD or the AIMD did not require the involvement of a Notified Body but will require the involvement of a Notified Body in accordance with the Medical Device Regulation and for which an EU Declaration of Conformity was issued in accordance with the MDD or the AIMD prior to May 26, 2021, can continue to be placed on the Great Britain market until June 30, 2028.

Medical devices which have been CE marked in accordance with the Medical Device Regulation may be placed on the Great Britain market until June 30, 2030.

The UK government plans on introducing new legislation governing medical devices with an aim for core aspects of the future regime for medical devices to apply from July 1, 2025.

New legislation is also anticipated in 2024 to bring into force strengthened post-market surveillance requirements ahead of the wider future regulatory regime.

These post-market surveillance requirements are expected to apply from mid-2024.

The UK Medicines and Healthcare products Regulatory Agency (‘‘MHRA’’) has established transitional provisions to recognize the acceptance of certain CE marked medical devices on the market in Great Britain until June 30, 2028 or June 30, 2030, depending on the type of device and its classification, at the latest.

Accordingly, medical devices which, for example, meet all requirements of the EU MDD and have a valid CE Certificate of Conformity and EU Declaration of conformity issued under the MDD prior to May 26, 2021, may be placed on the market until the sooner of expiry of the CE Certificate of Conformity or June 30, 2028.

Medical devices which meet all requirements of the EU MDR may be placed on the market until June 30, 2030.

Manufacturers of medical devices located outside the UK, including manufacturers of CE marked medical devices, need to appoint a UK Responsible Person before the devices may be placed on the UK market.

The UK government plans on introducing new legislation governing medical devices which they have indicated is to be delivered though secondary legislation.

The first piece of legislation was laid in 2024 and updates post-market surveillance requirements.

Additional instruments are currently scheduled to follow in 2025 and 2026 to introduce new pre-market requirements including international reliance, and further enhancements to the regulations.

Our devices were regulated under MDD prior to Brexit and are subject to the UK Medical Devices Regulations 2002.

Pulmonx has registered all products in accordance with the regulation, we received a related certificate of conformity from our Great Britain Approved Body BSI.

EC concerning misleading and comparative advertising, and Directive 2005/29/EC on unfair commercial practices, as well as other national legislation of individual EU Member States governing the advertising and promotion of medical devices.

Pulmonx has registered all products in accordance with the UK Medical Devices Regulations 2002 , we received a UK Declaration of Conformity from our Great Britain Approved Body BSI and we place our products on the Great British market under a UKCA Mark.

In addition, the advertising and promotion of medical devices in the EU is subject to the national laws of the individual EU Member States that implemented the MDD, the AIMD and that apply the MDR, Directive 2006/114/EC concerning misleading and comparative advertising, and Directive 2005/29/EC on unfair commercial practices, as well as other national legislation of individual EU Member States governing the advertising and promotion of medical devices.

EU Member States’ national legislation may also restrict or impose limitations on our ability to advertise our products directly to the general public.

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Business Associates have a corresponding obligation to maintain appropriate Business Associate Agreements under HIPAA.

In addition, companies that would not otherwise be subject to HIPAA may become contractually obligated to follow HIPAA requirements through agreements with Covered Entities and Business Associates, and some of our customers may require us to agree to these provisions.

In certain circumstances, we may be considered a Business Associate and be responsible for implementing reasonable administrative, physical and technical safeguards as required by HIPAA, including, among other things, maintaining Business Associate Agreements with our customers and our subcontractors that have access to protected health information on our behalf.

In addition, companies that would not otherwise be subject to HIPAA may become

contractually obligated to follow HIPAA requirements through agreements with Covered Entities and Business Associates, and some of our customers may require us to agree to these provisions.

Privacy and Information Security Laws

In the ordinary course of our business, we may process personal data, including health data collected through the clinical trial process, our research collaborations, and directly from individuals or their healthcare providers under our patient reimbursement support programs.

In the ordinary course of our business, we process personal data, including health data collected through the clinical trial process, our research collaborations, our LungTraX Platform, and directly from individuals or their healthcare providers under our patient reimbursement support programs.

Accordingly, we are, or may become, subject to numerous data privacy and security obligations, including federal, state, local, and foreign laws, regulations, guidance, and industry standards and contractual obligations related to data privacy, security, and protection.

Such obligations may include, without limitation, the California Consumer Privacy Act of 2018 (“CCPA”), the European Union’s General Data Protection Regulation 2016/679 (“EU GDPR”), and the EU GDPR as it forms part of United Kingdom (“UK”) law (the “UK GDPR”) (collectively, the “GDPR”).

In addition, states within the United States have enacted data privacy laws including Virginia, Colorado, Utah, and Connecticut.

Such obligations may include, without limitation, the California Consumer Privacy Act of 2018 (“CCPA”), the European Union’s General Data Protection Regulation 2016/679 (“EU GDPR”), and the EU GDPR as it forms part of UK law (the “UK GDPR”) (collectively, the “GDPR”).

In addition, states within the United States and other jurisdictions where we do business have enacted or are considering enacting similar data privacy laws.

The CCPA and GDPR are examples of the increasingly stringent and evolving regulatory frameworks related to personal data processing and that increase our compliance obligations and exposure for any non-compliance.

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The processing of personal health data of patients in the EU and the UK is subject to further stringent requirements.

For example, such processing requires both a lawful basis under Article 6 GDPR and at least one separate condition

for processing under Article 9 GDPR.

For example, such processing requires both a lawful basis under Article 6 GDPR and at least one separate condition for processing under Article 9 GDPR.

In addition, such processing must meet high standards under the GDPR regarding transparency and communication towards patients, identifying an appropriate legal basis for processing the personal data, purpose limitation and implementing appropriate technical and security measures safeguards for the transfer of personal data outside of the EU and the UK to countries like the USA, limiting personal data processing only to what is necessary, and increasing rights for data subjects.

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Our business is subject to compliance with these laws.

If our operations are found to be in violation of any of the federal, state and foreign laws described below or any other current or future fraud and abuse or other healthcare laws and regulations that apply to us, we may be subject to significant penalties, including significant criminal, civil, and administrative penalties, damages, fines, imprisonment for individuals, additional oversight and reporting obligations, exclusion from participation in government programs, such as Medicare and Medicaid, imprisonment, contractual damages, reputation harm and disgorgement and we could be required to curtail or cease our operations.

Medicaid, imprisonment, contractual damages, reputation harm and disgorgement and we could be required to curtail or cease our operations.

Anti-Kickback Statutes

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In these cases, the manufacturer faces liability for “causing” a false claim.

In addition, the federal government has prosecuted companies under the FCA in connection with off-label promotion of products.

In addition, the federal government has prosecuted companies under the FCA in connection with off-label promotion of

Our activities, including those relating to the reporting of discount and rebate information and other information affecting federal, state and third-party reimbursement of our products (such as our patient reimbursement support programs) and the sale and marketing of our products, may be subject to scrutiny under these laws.

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The Foreign Corrupt Practices Act (“FCPA”) prohibits any United States individual or business from paying, offering or authorizing payment or offering of anything of value, directly or indirectly, to any foreign official, political party or candidate for the purpose of influencing any act or decision of the foreign entity in order to assist the individual or business in obtaining or retaining business.

The FCPA also obligates companies whose securities are listed in the United States to comply with accounting provisions requiring us to maintain books and records that

accurately and fairly reflect all transactions of the corporation, including international subsidiaries, if any, and to devise and maintain an adequate system of internal accounting controls for international operations.

The FCPA also obligates companies whose securities are listed in the United States to comply with accounting provisions requiring us to maintain books and records that accurately and fairly reflect all transactions of the corporation, including international subsidiaries, if any, and to devise and maintain an adequate system of internal accounting controls for international operations.

International Laws

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Bribery of foreign public officials also falls within the scope of the Bribery Act.

An individual found in violation of the Bribery Act, faces imprisonment of up to ten years.

An individual found in violation of the Bribery Act, faces

imprisonment of up to ten years.

In addition, the individual can be subject to an unlimited fine, as can commercial organizations for failure to prevent bribery.

United States Centers for Medicare and Medicaid Services (“CMS”)

Medicare is a federal program administered by CMS through MACs.

Medicare is a federal program administered by CMS through Medicare Administrative Contractors (“MACs”).

Available to individuals age 65 or over, and certain other individuals, the Medicare program provides, among other things, healthcare benefits that cover, within prescribed limits, the major costs of most medically necessary care for such individuals, subject to certain deductibles and copayments.

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The implementation of the Affordable Care Act in the United States, for example, has changed healthcare financing and delivery by both governmental and private insurers substantially, and affected medical device manufacturers significantly.

There have been executive, judicial and congressional challenges, and a number of health reform measures by the Biden administration that have impacted certain aspects of the Affordable Care Act.

For example, on August 16, 2022, President Biden signed the Inflation Reduction Act of 2022 (“IRA”) into law, which among other things, extends enhanced subsidies for individuals purchasing health insurance coverage in Affordable Care Act marketplaces through plan year 2025.

There have been executive, judicial and congressional challenges, and a number of health reform measures that have impacted certain aspects of the Affordable Care Act.

For example, on August 16, 2022, the Inflation Reduction Act of 2022 (“IRA”) was signed into law, which among other things, extends enhanced subsidies for individuals purchasing health insurance coverage in Affordable Care Act marketplaces through plan year 2025.

The IRA also eliminates the “donut hole” under the Medicare Part D program beginning in 2025 by significantly lowering the beneficiary maximum out-of-pocket cost and through a newly established manufacturer discount program.

It is possible that the Affordable Care Act will be subject to judicial or congressional challenges in the future, including congressional legislation to modify or replace the Affordable Care Act or elements of the Affordable Care Act.

It is unclear how such challenges and the healthcare reform measures of the Biden administration will impact the Affordable Care Act and our business.

It is unclear how such challenges and such healthcare reform measures will impact the Affordable Care Act and our business.

In addition, other legislative changes have been proposed and adopted since the Affordable Care Act was enacted.

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In December 2021 the HTA Regulation was adopted and entered into force on January 11, 2022.

It will apply from 2025.

It began to apply on January 12, 2025.

Human Capital Management

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As of December 31, 2024, we had a total of 291 full time employees, with 226 employees in the U.S., 54 in Europe, and 11 in Asia Pacific.

None of our employees are represented by a labor union or are a party to a collective

bargaining agreement.

None of our employees are represented by a labor union or are a party to a collective bargaining agreement.

We believe that we have good relations with our employees.

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Code of Business Conduct and Business Ethics

Pulmonx is dedicated to conducting its business consistent with the highest standard of business ethics.

Each employee receives and agrees to follow the Pulmonx Code of Business Conduct and Ethics.

We are dedicated to conducting our business consistent with the highest standard of business ethics.

Each employee receives and agrees to follow the Company’s Code of Business Conduct and Ethics.

Employees are encouraged to discuss any related concerns with management or report concerns anonymously through an Ethics Hotline.

Culture of Diversity, Equity, and Inclusion

At Pulmonx, we value diverse perspectives and experiences.

Culture of Inclusion

At Pulmonx, we are committed to creating and nurturing an inclusive workplace, where everyone feels respected, valued, and included – not only because it’s the right thing to do, but also because we strongly believe that it’s vital to our success and crucial to fully support the communities we serve.

We value a variety of perspectives and experiences.

We continue to create an inclusive culture where differences drive innovation.

Compensation Philosophy

To ensure we are able to attract, retain and develop high performing teams, we engage external compensation advisors to guide our efforts in developing cash and equity rewards programs that are competitive with our peer companies.

Total rewards

Talent and Compensation Philosophy

We are committed to attracting the best talent available, while providing our employees with challenging work in a fast-paced environment.

To ensure we can attract, retain and develop high performing teams, we offer competitive, market-based salaries and an annual cash bonus program.

Additionally, to further align the interests of our

employees with those of our shareholders, employees in most of the countries where we operate have the opportunity to have an ownership interest in our company.

We have an equity-based incentive plan that provides for the grant of stock options and awards to eligible employees.

Additionally, we offer an employee stock purchase plan that enables eligible employees to purchase our common stock at a discount through payroll contributions.

We engage external compensation advisors to guide our efforts in developing cash and equity rewards programs that are competitive with our peer companies.

We offer competitive health and welfare programs to support our employees and their families’ physical, mental, and financial well-being.

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• Employee assistance program

Additionally, in an effort to further align the interests of our employees with our shareholders, employees in most countries in which we operate have the opportunity to have an ownership interest in our company.

We have an equity-based incentive plan that provides for the grant of stock options and awards to eligible employees.

Additionally, we implemented an Employee Stock Purchase Plan that enables eligible employees to purchase our common stock at a discount through payroll contributions.

Health and Safety

Employee Health and Safety

The health and safety of our employees is a key focus at our Company.

The Company is committed to protecting its employees everywhere it operates.

The Company identifies potential workplace risks in order to develop measures to mitigate possible hazards.

We are committed to protecting our employees everywhere we operate and we comply with applicable health and safety laws and regulations.

We strictly prohibit any violent or threatening behavior on our premises or during any work-related activities.

Available Information

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business