What changed in this filing

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Item 1A. Risk Factors

2021-02-18 compared with 2020-03-02 · 117 added, 422 removed, 670 unchanged (45% of the section changed)

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RISKS RELATED TO OUR BUSINESS

We have a history of operating losses and may not become profitable in the near future.

We are not profitable and have incurred losses since our inception.

We may not generate substantial revenue from the sale of proprietary pharmaceutical products or certain of our diagnostic products for some time and we have generated only limited revenue from our pharmaceutical operations in the U.

S., Chile, Mexico, Israel, Spain, and Ireland, and from sale of the 4Kscore test.

We may not successfully leverage the national marketing, sales and distribution resources of BioReference to enhance sales of, and reimbursement for, our 4Kscore test and our other diagnostic products under development, which would adversely impact our ability to generate substantial revenue from the sale of these products for some time.

Rayaldee is our only pharmaceutical product that has been approved for marketing, other than those products sold by our Chilean, Mexican, Israeli, Spanish, and Irish subsidiaries.

We continue to incur substantial research and development and general and administrative expenses related to our operations and, to date, we have devoted most of our financial resources to research and development, including our pre-clinical development activities and clinical trials.

We may incur losses from our operations for the foreseeable future and these losses could increase as we continue our research activities and conduct development of, and seek regulatory approvals and clearances for, our product candidates, and prepare for and begin to commercialize any approved or cleared products, particularly if we are unable to generate profits and cash flow from BioReference and our other commercial businesses.

If we are unable to generate profits and cash flow from BioReference and our other commercial businesses, our product candidates fail in clinical trials or do not gain regulatory approval or clearance, or if our approved products and product candidates do not achieve market acceptance, we may never become profitable.

In particular, if we are unable to successfully commercialize Rayaldee , we may never generate substantial revenues from Rayaldee or achieve profitability.

Our business has been, and may continue to be, affected by the coronavirus disease 2019 (COVID-19) outbreak.

The outbreak of the coronavirus disease 2019 (COVID-19) has evolved into a global pandemic, significantly affecting the U.S.

and most countries around the world.

The extent to which this coronavirus impacts our business and operating results will depend on future developments that are highly uncertain and cannot be accurately predicted, including new information that may emerge concerning the virus, including variants of the virus, and the actions to contain the spread of or to detect, prevent, or treat COVID-19, among others.

As a result of the demand for COVID-19 testing, the Company’s overall testing volume has increased significantly, which has positively impacted its operations.

Simultaneously, however, demand for tests that comprise the Company’s core testing business has declined.

Should the demand for COVID-19 PCR testing decline, whether from the introduction of new technologies, vaccines or therapies or a reduction in infection rates, our business, including our sales and operations, could be materially adversely affected.

Because the demand and duration of the need for COVID-19 testing are uncertain, the Company could experience significant volatility in its results of operations if the demand for testing declines and such demand is not offset by an increase in demand for the services provided by the Company’s core testing business.

We may also experience supply chain disruptions, including shortages, delays and price increases in testing equipment and supplies as a result of global disruptions in healthcare markets, which could materially adversely impact our business.

It is also possible that the Company will experience an adverse impact on cash collections as a result of the COVID-19 pandemic.

Governments have implemented travel restrictions and quarantine policies which may have a material adverse economic effect on our business.

Such restrictions may present challenges in connection with our laboratory business, our ability to

successfully commercialize Rayaldee , our ability to manufacture pharmaceutical products in Ireland, Mexico, Spain, Chile and Israel, and our ability to continue clinical development of our product candidates.

Further, if the spread of the coronavirus pandemic continues and our operations are adversely impacted, our ability to meet performance obligations under contracts may be impacted.

COVID-19 could also disrupt our operations due to absenteeism by infected or ill members of management or other employees, or absenteeism by members of management and other employees who elect not to come to work due to the illness affecting others in our office or laboratory facilities, or due to quarantines.

The regulatory framework governing laboratories, diagnostic and pharmaceutical companies may be affected as governmental authorities divert resources to respond to the COVID-19 outbreak, which may have an unanticipated and unforeseen impact on our operations.

It is possible that the timing of regulatory submissions and approvals for our products, including hGH-CTP, will be adversely impacted or delayed.

With respect to our ongoing and planned clinical trials, restrictions and efforts to avoid further spread of COVID-19 may present challenges to the conduct of these trials consistent with normally applicable approaches and good clinical practice standards, and although regulators including the FDA have offered guidance applicable during the COVID-19 pandemic allowing for flexibility of standards in certain areas and alternate methods of meeting trial oversight obligations (for example, via remote monitoring), the potential impact of these challenges cannot be fully predicted at this time.

We have had a history of operating losses and may not be able to sustain profitability in the near future.

BioReference’s COVID-19 testing volume has positively impacted our profitability, but we had, until recently, incurred losses since our inception.

We may not continue to generate substantial revenue from COVID-19 testing as vaccine use is adopted and infection rates decline, unless such decline is offset by significant revenue generation from our other income streams.

We have historically generated only limited revenue from operations and we may not generate substantial revenue from the sale of proprietary pharmaceutical products or certain of our diagnostic products for some time, if at all.

Rayaldee is our only proprietary pharmaceutical product that has been approved for marketing by us to date.

We continue to incur substantial research and development and general and administrative expenses related to our operations including our pre-clinical development activities and clinical trials.

We may incur losses from our operations in the future and these losses could increase as we continue our research activities and conduct development of, and seek regulatory approvals and clearances for, our product candidates, particularly if we are unable to generate or sustain profits and cash flow from sales of Rayaldee or our operations at BioReference.

If we are unable to generate or sustain profits and cash flow from our operations, our product candidates fail in clinical trials or do not gain regulatory approval or clearance, or if our approved products and product candidates do not achieve market acceptance, we may no longer be profitable.

In particular, if we are unable to successfully commercialize Rayaldee , we may never generate substantial revenues from Rayaldee .

In addition, if we are required by the U.S.

Food and Drug Administration (“FDA”), to perform studies in addition to those we currently anticipate, our expenses will increase beyond current expectations and the timing of any potential product approval may be delayed.

Even if we achieve profitability in the future, we may not be able to sustain profitability in subsequent periods.

We will continue to require additional funding, which may not be available to us on acceptable terms, or at all.

As of December 31, 2019 , we have cash and cash equivalents of $85.5 million .

We have not generated sustained positive cash flows sufficient to offset our operating and research and development expenses and our primary source of cash has been from the public and private placement of stock, the issuance of the 2033 Senior Notes, 2023 Convertible Notes and the 2025 Notes (each as defined below) and credit facilities available to us.

On November 8, 2018, we entered into stock purchase agreements with certain investors pursuant to which we agreed to sell to such investors in private placements (the “Private Placements”) an aggregate of approximately 26.5 million shares of our Common Stock at a purchase price of $3.49 per share, which was the closing bid price of our Common Stock on the Nasdaq Global Select Market on such date, for an aggregate purchase price of $92.5 million.

On February 7, 2019, we issued $200 million aggregate principal amount of its 4.50% Convertible Senior Notes due 2025 (the “2025Notes”) in a registered public offering under the Securities Act.

On October 29, 2019, we issued 50 million shares of Common Stock at a price of $1.50 per share in an underwritten public offering, resulting

in net proceeds to the Company of approximately $70 million, after deducting underwriting commissions and offering expenses.

The underwriters also received an option for a period of 30 days to purchase up to an additional 7.5 million of the shares of Common Stock issued and sold in the offering.

In November 2019, the underwriters exercised the option for an additional 4.2 million shares of Common Stock, resulting in net proceeds to the Company of approximately $6 million.

We believe that the cash and cash equivalents on hand or available to us from operations or through our lines of credit, are sufficient to meet our anticipated cash requirements for operations and debt service beyond the next 12 months.

We have based this estimate on assumptions that may prove to be wrong or subject to change, and we may be required to use our available capital resources sooner than we currently expect or curtail aspects of our operations in order to preserve our capital.

Because of the numerous risks and uncertainties associated with the development and commercialization of our products and product candidates, the success of our relationships with Pfizer, VFMCRP and JT and the success of our integration of BioReference and other acquisitions, the actual amounts of increased capital outlays and operating expenditures associated with our current and anticipated clinical trials and our expanded commercial operations may differ significantly from our estimates.

Our future capital requirements will depend on a number of factors, including the successful commercialization of Rayaldee , our continued relationships with Pfizer, VFMCRP, and JT, cash flow generated by BioReference and costs associated with the integration of acquisitions, the continued progress of our research and development of product candidates, the timing and outcome of clinical trials and regulatory approvals, the costs involved in preparing, filing, prosecuting, maintaining, defending, and enforcing patent claims and other intellectual property rights, the status of competitive products, the availability of financing, and our success in developing markets for our products and product candidates.

Until we can generate a sufficient amount of product and service revenue to finance our cash requirements for research, development and operations, we will need to finance future cash needs primarily through public or private equity offerings, debt financings, or strategic collaborations.

We may require additional funding, which may not be available to us on acceptable terms, or at all.

As of December 31, 2020, we had cash and cash equivalents of $72.2 million.

Prior to 2020, we had not generated sustained positive cash flows sufficient to offset our operating and research and development expenses and our primary sources of cash has been from the public and private placement of stock, the issuance of convertible notes and credit facilities available to us.

While we have generated significant cash from operations as a result of testing related to the COVID-19 pandemic, we are unable to predict how long the demand will continue for our COVID-19 related testing, whether pricing and reimbursement policies for testing will sustain, or whether further restrictions will be placed on elective procedures or if stay at home orders will be reinstated and accordingly, the sustainability of the cash flow is uncertain.

If we are unable to generate a sufficient amount of product and service revenue to finance our cash requirements for research, development and operations, we will need to finance future cash needs primarily through public or private equity offerings, debt financings, or strategic collaborations.

Our ability to obtain additional capital may depend on prevailing economic conditions and financial, business and other factors beyond our control, as well as our ability to comply with credit facilities and other loan requirements.

Our line of credit with CB and other agreements that govern our indebtedness may contain restrictive and financial covenants that impose restrictions on us and certain of our subsidiaries, including covenants that require us to maintain specified financial ratios.

Our line of credit with JPMorgan Chase Bank, N.A.

(“CB”) contains and other agreements that govern our indebtedness may contain restrictive and financial covenants that impose restrictions on us and certain of our subsidiaries, including covenants that require us to maintain specified financial ratios.

We have obtained waivers and/or amended our credit facility with CB from time to time in the past to avoid a default under certain covenants, and our ability to comply with these financial covenants may be adversely affected in the future.

Failure to comply with specified financial covenants and other requirements could result in an event of default under our line of credit with CB and/or other lenders, which, if not cured or waived, could accelerate our repayment obligations and which would have a material adverse effect on our financial condition.

Failure to comply with specified financial covenants and other requirements could result in an event of default under our line of credit with CB and/or other lenders, which, if not cured or waived, could restrict us from utilizing the facility or accelerate any repayment obligations we may have under the facility and which could have a material adverse effect on our financial condition.

Disruptions in the U.S.

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Continued instability in these market conditions may limit our ability to replace, in a timely manner, maturing liabilities and access the capital necessary to fund and grow our business.

Additionally, our continuing operating losses and the lawsuits involving us and our Chief Executive Officer (“CEO”) and Chairman of our Board of Directors (“Chairman”) by the SEC and other parties increased the difficulty in obtaining additional capital.

There can be no assurance that additional capital will be available to us on acceptable terms, or at all, which could adversely impact our business, results of operations, liquidity, capital resources and financial condition.

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regulatory authorities.

Positive results from pre-clinical studies and early clinical trial experience, including the results from our global phase 3 trial evaluating hGH-CTP (somatrogon),should not be relied upon as evidence that later-stage or large-scale clinical trials will succeed.

Positive results from pre-clinical studies and early clinical trial experience should not be relied upon as evidence that later-stage or large-scale clinical trials will succeed.

Likewise, there can be no assurance that the results of studies conducted by collaborators or other third parties will be viewed favorably or are indicative of our own future study results.

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regulatory authorities.

Safety concerns with drug products over the years have resulted in the withdrawal of drug products, revisions to drug labeling that further limit use of the drug products, and establishment of risk management programs that may, for instance, restrict distribution of drug products.

Attention to drug safety issues may result in a more cautious approach by the FDA to clinical trials.

Data from clinical trials may receive greater scrutiny with respect to safety, which may make the FDA or other regulatory authorities more likely to terminate clinical trials before completion, or require longer or additional clinical trials that may result in substantial additional expense and a delay or failure in obtaining approval or approval for a more limited indication than originally sought.

The failure to successfully commercialize Rayaldee would have a material adverse effect on our business.

In June 2016, the FDA approved the Company’s New Drug Application for Rayaldee (calcifediol) extended release capsules for the treatment of secondary hyperparathyroidism (“SHPT”) in adults with stage 3 or 4 chronic kidney disease (“CKD”) and serum total 25-hydroxyvitamin D levels less than 30 ng/mL.

The commercial launch for Rayaldee began in November 2016.

Rayaldee is our only pharmaceutical product approved for marketing in the U.S.

and our ability to generate revenue from product sales and achieve profitability is substantially dependent on our ability to effectively commercialize Rayaldee.

Our failure to successfully commercialize Rayaldee would have a material adverse effect on our business, financial condition, cash flows and results of operations.

Additionally, the market perception and reputation of Rayaldee and its safety and efficacy are important to our business and the continued acceptance of our product candidates and products.

Any negative publicity about Rayaldee , such as the discovery of safety issues, adverse events, or even public rumors about such events, could have a material adverse effect on our business.

Levels of market acceptance for Rayaldee could be impacted by several factors, some of which are not within our control, including but not limited to the:

safety, efficacy, convenience and cost-effectiveness of our product compared to products of our competitors;

scope of approved uses and marketing approvals;

availability of patent or regulatory exclusivity;

timing of market approvals and market entries;

ongoing regulatory obligations following approval;

any restrictions or “black box” warnings required on the product labeling:

availability of alternative products from our competitors;

acceptance of the price of our product;

effectiveness of our sales force and promotional efforts;

the level of reimbursement of our product;

acceptance of our product on government and private formularies;

ability to market our product effectively at the retail level or in the appropriate setting of care;

the reputation of our product.

If Rayaldee fails to gain, or loses, market acceptance, our revenues would be adversely impacted and we may be required to take material impairment charges, all of which could have a material adverse effect on our business, financial condition, cash flows and results of operations.

We rely on licensing agreements with Vifor Fresenius Medical Renal Care Pharma Ltd (“VFMCRP”) and Japan Tobacco (“JT”) for the international development and marketing of Rayaldee.

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The license to VFMCRP potentially covers all therapeutic and prophylactic uses of the product in human patients, provided that initially the license is for the use of the product for the treatment or prevention of secondary hyperparathyroidism related to patients with stage 3 or 4 chronic kidney disease and vitamin D insufficiency/deficiency.

We received a non-refundable and non-creditable upfront payment of $50 million and a $2.0 million payment triggered by the approval of Rayaldee in Canada for the treatment of SHPT in adults with stage 3 or 4 CKD and vitamin D insufficiency.

EirGen is also eligible to receive up to an additional $35 million in regulatory milestones and $195 million in launch and sales-based milestones.

In addition, we are eligible to receive tiered, double digit royalty payments or a minimum royalty, whichever is greater, upon commencement of sales of the product.

Effective May 5, 2020, we entered into the VFMCRP Amendment, pursuant to which the parties agreed to exclude Mexico, South Korea, the Middle East and all of the countries of Africa from the VFMCRP Territory.

In addition, the parties agreed to certain amendments to the milestone structure and to reduce minimum royalties payable.

As revised, the Company is eligible to receive up to $17 million in regulatory milestones and $210 million in milestone payments tied to launch, pricing and sales of Rayaldee , and tiered, double-digit royalties.

The success of the Development and License Agreement with VFMCRP is dependent in part on, among other things, the skills, experience and efforts of VFMCRP’s employees responsible for the project, VFMCRP’s commitment to the arrangement, and the financial condition of VFMCRP, all of which are beyond our control.

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The license grant to JT covers the therapeutic and preventative use of the product for (i) SHPT in non-dialysis and dialysis patients with CKD, (ii) rickets, and (iii) osteomalacia, as well as such additional indications as may be added to the scope of the license subject to the terms of the JT Agreement.

Under the terms of the JT Agreement, we received an initial upfront payment of $6 million and received another $6 million upon the initiation of our phase 2 study for Rayaldee in dialysis patients in the U.S.

We are also eligible to receive up to an additional aggregate amount of $31 million upon the achievement of certain regulatory and development milestones by JT for Rayaldee in Japan, and $75 million upon the achievement of certain sales based milestones by JT.

Under the terms of the JT Agreement, we are eligible to receive up to $31 million upon the achievement of certain regulatory and development milestones by JT for Rayaldee in Japan, and $75 million upon the achievement of certain sales based milestones by JT.

We will also receive tiered, double digit royalty payments at rates ranging from low double digits to mid-teens on net sales within Japan.

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If JT, for any reason, including but not limited to early termination of the JT Agreement, fails to devote sufficient resources to successfully develop and market Rayaldee in Japan, our ability to earn milestone payments or receive royalty payments would be adversely affected, which could have a material adverse effect on our financial condition and prospects.

We currently have an eighty-nine person specialized sales and marketing team for Rayaldee in the U.S.

If we are unable to develop or maintain a strong sales, marketing and distribution capability on our own or through collaborations with

marketing partners, we will not be successful in commercializing Rayaldee or our other pharmaceutical products or product candidates in the U.S.

Other than our 89-person specialized sales and marketing team dedicated to Rayaldee , we currently have no pharmaceutical marketing, sales or distribution capabilities in the U.S.

Any failure or inability to maintain adequate sales, marketing and distribution capabilities would adversely impact the commercialization of Rayaldee or our other pharmaceutical products or candidates.

If we are not successful in commercializing our existing and future pharmaceutical products and product candidates, either on our own or through collaborations with one or more third parties, our product revenue will suffer and we may incur significant additional losses.

Our exclusive worldwide agreement with Pfizer Inc.

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In December 2014, we entered into a development and commercialization agreement with Pfizer relating to our long-acting hGH- CTP for the treatment of GHD in adults and children (the “Pfizer Agreement”).

Under the Pfizer Agreement, we received non-refundable and non-creditable upfront payments of $295 million and are eligible to receive up to an additional $275 million upon the achievement of certain regulatory milestones.

In addition, we are eligible to receive initial royalty payments associated with the commercialization of hGH-CTP for Adult GHD.

Upon the launch of hGH-CTP for Pediatric GHD, the royalties will transition to a regional, tiered gross profit sharing for both hGH-CTP and Pfizer’s Genotropin® (somatropin).

Under the Pfizer Agreement, we are eligible to receive up to $275 million upon the achievement of certain regulatory milestones.

Upon the launch of hGH-CTP for Pediatric GHD, we are eligible to receive a regional, tiered gross profit share based upon sales of both hGH-CTP and Pfizer’s Genotropin® (somatropin).

We are responsible for the development program and are obligated to pay for the development up to an agreed cap, which has been exceeded.

If we are unable to reach an agreement with Pfizer regarding cost sharing for the overruns as well as other obligations, including development obligations, it could have a material adverse impact on the expected benefits to us from the Pfizer Transaction and our overall financial condition.

In May 2020, we entered into an Amended and Restated Development and Commercialization License Agreement (the “Restated Agreement”) with Pfizer, effective January 1, 2020, pursuant to which the parties agreed, among other things, to share all costs for Manufacturing Activities, as defined in the Restated Agreement, for developing a licensed product for the three indications included in the Agreement.

In the event that the parties are able to obtain regulatory approvals to market a product covered by the Pfizer Agreement, we will be substantially dependent on Pfizer for the successful commercialization of such product.

The success of the collaboration arrangement with Pfizer is dependent in part on, among other things, the skills, experience and efforts of Pfizer’s employees responsible for the project, Pfizer’s commitment to the arrangement, and the financial condition of Pfizer, all of which are beyond our control.

The Pfizer Agreement is terminable for any reason by Pfizer upon ninety days written notice to OPKO.

In the event that Pfizer, for any reason, including but not limited to early termination of the Pfizer Agreement, fails to devote sufficient resources to successfully develop and commercialize any product resulting from the collaboration arrangement, our ability to earn milestone payments or receive royalty or profit sharing payments would be adversely affected, which would have a material adverse effect on our financial condition and prospects and the trading prices of our securities.

In the event that Pfizer terminates the Agreement or fails to devote sufficient resources to successfully develop and commercialize any product resulting from the collaboration arrangement, our ability to earn milestone payments or receive royalty or profit sharing payments would be adversely affected, which would have a material adverse effect on our financial condition and prospects and the trading prices of our securities.

Our business is substantially dependent on our ability to achieve regulatory approval for the marketing of hGH-CTP (somatrogon) in pediatric and adult patients and the commercial success of this product.

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There can be no assurance that the FDA will consider the sensitivity analysis or consider the product for approval for adults with GHD.

There can be no assurance that a BLA will be submitted for the pediatric or adult indications or that we will obtain marketing approval for either indication.

In January 2021, we and Pfizer announced that the FDA had accepted for filing the BLA submission for the pediatric indication which was submitted in October 2020.

There can be no assurance that a BLA will be submitted for the adult indication or that we will obtain marketing approval for either the pediatric or adult indication.

Before they can be marketed, our products in development must be approved by the FDA or similar foreign governmental agencies.

The process for obtaining FDA marketing approval is both time-consuming and costly, with no certainty of a successful outcome.

If we are unable to achieve regulatory approval for hGH-CTP to treat

pediatric patients or adults with GHD, our business will be significantly adversely impacted, which could have a materially adverse effect on our business, financial condition and results of operations.

If we are unable to achieve regulatory approval for hGH-CTP to treat pediatric patients or adults with GHD, our business will be significantly adversely impacted, which could have a materially adverse effect on our business, financial condition and results of operations.

Protein therapeutics have the potential to cause an immune or antibody response in patients.

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Antibodies that neutralize the activity of a therapeutic protein are known as neutralizing antibodies.

As previously reported, low titers of anti-hGH-CTP antibodies were noted over a four year period in 17 subjects, or approximately 35% of the subjects, in our phase 2 open label extension study in children with GHD.

Three of the 17 subjects had transient antibodies.

All subjects with antibodies were negative for neutralizing antibodies and demonstrated similar annualized height velocity (cm/year) to subjects with no detectable antibodies.

As previously reported, low titers of anti-hGH-CTP non-neutralizing antibodies were noted over a four year period in 17 subjects, or approximately 35% of the subjects, in our phase 2 open label extension study in children with GHD.

The low titer non-neutralizing antibodies did not affect growth parameters or IGF-1 levels in the patients.

Immunogenicity testing and analysis for our phase 3 study is ongoing, and we expect that the full results of the study will be submitted for presentation at a future scientific meeting.

The FDA reviews information on immune responses observed during clinical studies and the implications on safety and loss of efficacy.

In the event our phase 3 or ongoing phase 2 open label extension studies reveal a high prevalence of side effects or antibodies, or patients develop neutralizing antibodies, the FDA or foreign regulatory authorities could request additional studies or analysis of hGH-CTP, which could delay or prevent the submission of a BLA, or the regulatory authorities could decline to approve hGH-CTP for the indications we seek.

The FDA reviews information on immune responses observed during clinical studies and the implications on safety and efficacy and could request additional studies or analysus of hGH-CTP or could decline to approve hGH-CTP for the indications we seek.

Any of these occurrences could have a material adverse impact on our business, results of operation and financial condition.

Our business is substantially dependent on our ability to develop, launch and generate revenue from our diagnostic products.

Our business is dependent on our ability to successfully commercialize the 4Kscore test and other diagnostic products, including the Claros 1.

Our business is dependent on our ability to develop, launch and generate revenue from our diagnostic products.

Our business is dependent on our ability to successfully commercialize the 4Kscore test and other diagnostic products .

We are committing significant resources to the development and commercialization of these products, and there is no guarantee that we will be able to successfully commercialize these tests.

We have limited experience in developing, manufacturing, selling, marketing and distributing diagnostic tests.

We have limited experience in developing, manufacturing, selling, marketing and distributing innovative diagnostic tests.

If we are not able to successfully develop, market or sell diagnostic tests we develop for any reason, including the failure to obtain any required regulatory approvals, or obtain favorable reimbursement, we will not generate any meaningful revenue from the sale of such tests.

Even if we are able to develop effective diagnostic tests for sale in the marketplace, a number of factors could impact our ability to sell such tests or generate any significant revenue from the sale of such tests, including without limitation:

our ability to establish and maintain adequate infrastructure to support the commercial launch and sale of our diagnostic tests, including establishing adequate laboratory space, information technology infrastructure, sample collection and tracking systems, electronic ordering and reporting systems and other infrastructure and hiring adequate laboratory and other personnel;

the success of the validation studies for our diagnostic tests under development and our ability to publish study results in peer-reviewed journals;

the availability of alternative and competing tests or products and technological innovations or other advances in medicine that cause our technologies to be less competitive;

the accuracy rates of such tests, including rates of false-negatives and/or false-positives;

concerns regarding the safety or effectiveness or clinical utility of our diagnostic tests;

changes in the regulatory environment affecting health care and health care providers, including changes in laws regulating laboratory testing and/or device manufacturers;

the extent and success of our sales and marketing efforts and ability to drive adoption of our diagnostic tests;

coverage and reimbursement levels by government payors and private insurers;

pricing pressures and changes in third-party payor reimbursement policies;

intellectual property rights held by others or others infringing our intellectual property rights.

Our business is substantially dependent on our ability to generate profits and cash flow from our laboratory operations.

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Our failure to successfully compete on any of these factors could result in the loss of clients and a reduction in our revenues and profits.

To offset efforts by payors to reduce the cost and utilization of clinical laboratory services, we will need to obtain and retain new

clients and business partners and grow the laboratory operations.

A reduction in tests ordered, specimens submitted by existing clients, or payment rates, without offsetting growth in our client base, would impact our ability to successfully grow our business and could have a material adverse impact on our ability to generate profits and cash flow from the laboratory operations.

To offset efforts by payors to reduce the cost and utilization of clinical laboratory services, we will need to obtain and retain new clients and business partners and grow the laboratory operations.

In response to the global pandemic, BioReference has been conducting a substantial amount of COVID-19 testing that has positively impacted our revenues.

Simultaneously, however, the volume of its core testing business has decreased as a result of COVID-19.

A significant reduction in COVID-19 tests ordered,

specimens submitted by existing clients, or payment rates, without offsetting growth in our core business testing or client base, would impact our ability to successfully maintain the growth our business has experienced and could have a material adverse impact on our ability to generate profits and cash flow from the laboratory operations in the future.

Discontinuation or recalls of existing testing products, failure to develop, or acquire, licenses for new or improved testing technologies or our clients using new technologies to perform their own tests could adversely affect our business.

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If our competitors develop and market products or services that are more effective, safer or less expensive than our current and future products or services, our revenues, profitability and commercial opportunities will be negatively impacted.

The pharmaceutical, diagnostic, and laboratory testing industries are highly competitive and require an ongoing, extensive search for technological innovation.

The industries are characterized by rapidly advancing technologies, intense competition and a strong emphasis on proprietary products.

They also require, among other things, the ability to effectively discover, develop, test and obtain regulatory approvals for products, as well as the ability to effectively commercialize, market and promote approved products.

Numerous companies, including major pharmaceutical companies, specialty pharmaceutical companies and specialized biotechnology companies, are engaged in the development, manufacture and marketing of pharmaceutical products competitive with those that we intend to commercialize ourselves and through our partners.

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This enables them, among other things, to make greater research and development investments and efficiently utilize their research and development costs, as well as their marketing and promotion costs, over a broader revenue base.

This also provides our competitors with a competitive advantage in connection with the highly competitive product acquisition and product in-licensing process, which may include auctions in which the highest bidder wins.

This also provides our competitors with a competitive advantage in connection with the highly competitive product acquisition and product in-licensing process.

Our competitors may also have more experience and expertise in obtaining marketing approvals from the FDA and other regulatory authorities.

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In addition to product development, testing, approval, and promotion, other competitive factors in the pharmaceutical and diagnostics industry include industry consolidation, product quality and price, product technology, reputation, customer service, and access to technical information.

In our clinical laboratory operations, we compete with three types of providers in a highly fragmented and competitive industry:

hospital laboratories, physician-office laboratories and other independent clinical laboratories.

competitors in the New York metropolitan area are two of the largest national laboratories, Quest Diagnostics and Laboratory Corporation of America.

We are much smaller than these national laboratories.

The clinical laboratory business is intensely competitive both in terms of price and service.

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Any failure or significant delay in commencing or completing clinical trials for our product candidates could materially harm our results of operations and financial condition, as well as the commercial prospects for our product candidates.

Our approved products or product candidates may have undesirable side effects and cause our products to be taken off the market.

If we or others identify undesirable side effects caused by our products:

regulatory authorities may require the addition of labeling statements, specific warnings, a contraindication, or field alerts to physicians and pharmacies;

regulatory authorities may withdraw their approval of the product and require us to take our approved product off the market;

we may be required to change the way the product is administered, conduct additional clinical trials, or change the labeling of the product;

we may have limitations on how we promote our products;

sales of products may decrease significantly;

we may be subject to litigation or product liability claims;

our reputation may suffer.

Any of these events could prevent us from achieving or maintaining market acceptance of the affected product or could substantially increase our commercialization costs and expenses, which in turn could delay or prevent us from generating significant revenues from its sale.

Our inability to meet regulatory quality standards applicable to our manufacturing and quality processes and to address quality control issues in a timely manner could delay the production and sale of our products or result in recalls of products.

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As a medical device manufacturer, we are required to register with the FDA and are subject to periodic inspection by the FDA for compliance with its Quality System Regulation (“QSR”) requirements, which require manufacturers of medical devices to adhere to certain regulations, including testing, quality control and documentation procedures.

Compliance with

applicable regulatory requirements is subject to continual review and is monitored rigorously through periodic inspections by the FDA.

Compliance with applicable regulatory requirements is subject to continual review and is monitored rigorously through periodic inspections by the FDA.

In addition, most international jurisdictions have adopted regulatory approval and periodic renewal requirements for medical devices, and we must comply with these requirements in order to market our products in these jurisdictions.

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The coverage and reimbursement status of newly approved or cleared drugs, diagnostic and laboratory tests is uncertain, and failure of our pharmaceutical products, diagnostic tests or laboratory tests to be adequately covered by insurance and eligible for adequate reimbursement could limit our ability to market any future product candidates we may develop and decrease our ability to generate revenue from any of our existing and future product candidates that may be approved or cleared.

the Medicare and Medicaid programs, managed care organizations, and other third-party payors, as well as our ability to obtain in network status with such payors.

The commercial success of our existing and future products in both domestic and international markets will depend in part on the availability of coverage and adequate reimbursement from third-party payors, including government payors, such as the Medicare and Medicaid programs, managed care organizations, and other third-party payors, as well as our ability to obtain in network status with such payors.

The government and other third-party payors are increasingly attempting to contain health care costs by limiting both insurance coverage and the level of reimbursement for new drugs and diagnostic tests and restricting in network status of laboratory providers.

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These payors may also conclude that the overall cost of the procedure using one of our devices exceeds the overall cost of the competing procedure using another type of device, and third-party payors may not approve our products for insurance coverage and adequate reimbursement or approve our laboratory for in network status.

The failure to obtain coverage and adequate or any reimbursement for our products, or health care cost containment initiatives that limit or restrict reimbursement for our products, may reduce any future product revenue.

The failure to obtain adequate coverage or any reimbursement for our products, or health care cost containment initiatives that limit or restrict reimbursement for our products, may reduce any future product revenue.

Even though a drug (not administered by a physician) may be approved by the FDA, this does not mean that a Prescription Drug Plan (“PDP”), a private insurer operating under Medicare Part D, will list that drug on its formulary or will set a reimbursement level.

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Our failure to comply with applicable Medicare, Medicaid and other governmental payor rules could result in our inability to participate in a governmental payor program, our returning funds already paid to us, civil monetary penalties, criminal penalties and/or limitations on the operational function of our laboratory.

For example, on October 11, 2019, GeneDx Inc., a subsidiary that provides specialized laboratory testing rare and ultra-rare genetic diseases (“GeneDx”), received a letter from the Centers for Medicare and Medicaid Services (“CMS”), notifying GeneDx of CMS’ determination to suspend Medicare payments to GeneDx, which suspension became effective on September 27, 2019 (the “CMS Letter”).

The CMS Letter specifically stated that the suspension may last for up to 180 days from the effective date and may be extended under certain circumstances.

CMS advised that it suspended payments due to possible overpayments to GeneDx in connection with reimbursement claims for genetic testing services based on a diagnosis of family history of cancer, which testing CMS alleges is not covered by Medicare under the applicable provisions of the Social Security Act on the basis that such testing is not reasonable and necessary for the diagnosis or treatment of illness or injury.

On or around February 3, 2020, we were notified that CMS was lifting the payment suspension.

CMS noted, however, that the decision to lift the payment suspension should not be construed as a positive determination regarding our Medicare billing.

CMS also notified us of results of a payment audit concluding that the Company had been overpaid by Medicare for genetic testing services based on a diagnosis of a family history of cancer.

The Company is currently evaluating the audit findings.

There can be no assurance that CMS and other governmental payor programs will not seek to recoup payments from us, suspend reimbursement or seek overpayment damages from GeneDx.

If we were unable to receive reimbursement under governmental payor program, a substantial portion of our consolidated revenues would be lost, which would adversely affect our results of operations and financial condition.

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If the federal or state governments fail to make payments under these programs on a timely basis, our business could suffer, and our financial position, results of operations or cash flows may be materially affected.

If the 4Kscore test is not covered and eligible for reimbursement from government and third party payors, we may not be able to generate significant revenue for the product.

On May 18, 2018, Novitas, the MAC for a jurisdiction that includes the State of New Jersey, where our 4Kscore test samples are processed, issued a draft non-coverage determination that proposed no coverage for our 4Kscore test.

We submitted comments to the draft policy during the public comment period, but in January 2019, Novitas issued a notice of future non-coverage determination for the 4Kscore test to be effective March 20, 2019.

In June 2019, Novitas then issued a new proposed local coverage determination (“LCD”) for the 4Kscore test, with defined coverage criteria.

Under the proposed LCD, which became effective December 30, 2019,Medicare reimburses the test for patients who meet the defined criteria.

If we are unable to obtain adequate Medicare reimbursement for the 4Kscore test in the future, we could experience a loss of revenues that could have a material adverse effect on our cash flows, results of operations, net income, and financial condition.

As we evolve from a company primarily involved in development to a company also involved in commercialization of our pharmaceutical and diagnostic products as well as our laboratory testing services, we may encounter difficulties in managing our growth and expanding our operations successfully.

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and expand our facilities, all of which may impose a strain on our administrative and operational infrastructure.

Furthermore, we may acquire additional businesses, products or product candidates that complement or augment our existing business.

Integrating any newly acquired business or product could be expensive and time-consuming.

We may not be able to integrate any acquired business or product successfully or operate any acquired business profitably.

Our future financial performance will depend, in part, on our ability to manage any future growth effectively and our ability to integrate any acquired businesses.

We may not be able to accomplish these tasks, and our failure to accomplish any of them could prevent us from successfully growing our company, which would have a material adverse effect on our business, results of operations and financial condition.

Our success is dependent to a significant degree upon the involvement, efforts and reputation of our Chairman and Chief Executive Officer, Phillip Frost, M.D.

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Our CEO has also provided financing to us, both in terms of a credit agreement and equity investments.

If we lost his services or if his reputation was damaged for whatever reason, including, but not limited to, as a result of the allegations underlying various SEC and shareholder lawsuits against us and Dr.

If we lost his services or if his reputation was damaged for whatever reason, including, but not limited to, as a result of the allegations underlying various past SEC and shareholder lawsuits against us and Dr.

Frost, our relationships with acquisition and investment targets, joint ventures, customers and investors, as well as our ability to obtain additional funding on acceptable terms, or at all, may suffer and could cause a material adverse impact on our operations, financial condition and the value of our Common Stock.

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Our success depends on our continued ability to attract, retain, and motivate highly qualified management and pre-clinical and clinical personnel.

The loss of the services or support of any of our senior management, particularly Dr.

Phillip Frost, our Chairman and CEO, could delay or prevent the development and commercialization of our products and product candidates.

The loss of the services or support of any of our senior management could delay or prevent the development and commercialization of our products and product candidates.

If the FDA or other applicable regulatory authorities approve generic products that compete with any of our products or product candidates, the sale of our products or product candidates may be adversely affected.

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Accordingly, competition from generic equivalents to our products or product candidates would materially adversely impact our revenues, profitability and cash flows and substantially limit our ability to obtain a return on the investments that we have made in our products and product candidates.

In 2017, Congress reauthorized the Generic Drug User Fee Act (GDUFA).

The generic drug user fee program, established in 2012, is designed to speed the approval of new generic drugs.

In addition, over the past few months, the FDA has used its regulatory authority to enact other programs to streamline the path to market for generic drugs.

In addition, a regulatory pathway for biosimilars was established in 2012 including a new user fee program to promote the development of these products that show no clinically meaningful differences from innovator biologics.

Though they have their own statutory market pathway, like generic drugs, biosimilars can receive FDA approval by providing less clinical data than the innovator product.

Biosimilars are expected to be less expensive competitors to innovator biologics reducing prices overall.

We anticipate several new biosimilars reaching the market over the next year.

If we fail to acquire and develop other products or product candidates at all or on commercially reasonable terms, we may be unable to diversify or grow our business.

We intend to continue to rely on acquisitions and in-licensing as a source of our products and product candidates for development and commercialization.

The success of this strategy depends upon our ability to identify, select, and acquire pharmaceutical and diagnostic products, drug delivery technologies, and medical device product candidates.

Proposing, negotiating, and implementing an economically viable product acquisition or license is a lengthy and complex process.

We compete for partnering arrangements and license agreements with pharmaceutical, biotechnology and medical device companies, and academic research institutions.

Our competitors may have stronger relationships with third parties with whom we are interested in collaborating and/or may have more established histories of developing and commercializing products.

Most of our competitors also have substantially greater financial and other resources than us.

As a result, our competitors may have a competitive advantage in entering into partnering arrangements with such third parties, as such partnering arrangements are often decided in an auction process in which the highest bidder wins.

In addition, even if we find promising products and product candidates, and generate interest in a partnering or strategic arrangement to acquire such products or product candidates, we may not be able to acquire rights to additional product candidates or approved products on terms that we find acceptable, or at all.

We expect that any product candidate to which we acquire rights will require additional development efforts prior to commercial sale, including extensive clinical testing and approval or clearance by the FDA and other non-U.S.

regulatory authorities.

All product candidates are subject to the risks of failure inherent in pharmaceutical, diagnostic test or medical device product development, including the possibility that the product candidate will not be shown to be sufficiently safe and effective for approval by regulatory authorities.

Even if the product candidates are approved or cleared for marketing, we cannot be sure that they would be capable of economically feasible production or commercial success.

If we fail to acquire or develop other product candidates that are capable of economically feasible production and commercial success, our business, results of operations and financial condition and cash flows may be materially adversely affected.

We rely on third parties to manufacture and supply our pharmaceutical and diagnostic products and product candidates.

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Any of our contract manufacturers will be subject to ongoing periodic unannounced inspection by the FDA and other non-U.S.

regulatory authorities to ensure strict compliance with QSR regulations for devices or cGMPs for drugs, and other applicable government regulations and corresponding standards relating to matters such as testing, quality control, and documentation procedures.

regulatory authorities to ensure strict

compliance with QSR regulations for devices or cGMPs for drugs, and other applicable government regulations and corresponding standards relating to matters such as testing, quality control, and documentation procedures.

If our contract manufacturers fail to achieve and maintain high manufacturing standards in compliance with QSR or cGMPs, we may experience manufacturing errors resulting in patient injury or death, product recalls or withdrawals, delays or interruptions of production or failures in product testing or delivery, delay or prevention of filing or approval of marketing applications for our products, cost overruns, or other problems that could seriously harm our business.

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Contract research organizations may also assist us in the collection and analysis of data.

These investigators and contract research organizations will not be our employees, and we will not be able to control, other than by contract, the amount of resources, including time, that they devote to products that we develop.

These investigators and contract research organizations are independent contractors and we will not be able to control, other than by contract, the amount of resources, including time, that they devote to products that we develop.

If independent investigators fail to devote sufficient resources to the development of product candidates or clinical trials, or if their performance is substandard, it will delay the marketing approval or clearance and commercialization of any products that we develop.

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Each third-party payor generally develops payment amounts and coverage policies for their beneficiaries or members that ties to the CPT code established for the laboratory test and the ICD-10 code selected by the ordering or performing physician.

Therefore, coverage and reimbursement may differ by payor even if the same billing code is reported for claims filing purposes.

Therefore, coverage and reimbursement may differ by payor even if the same

billing code is reported for claims filing purposes.

For laboratory tests without a specific billing code, payors often review claims on a claim-by-claim basis and there are increased uncertainties as to coverage and eligibility for reimbursement.

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Our revenues may be subject to retroactive adjustment as a result of these factors among others, including without limitation, differing interpretations of billing and coding guidance and changes by government agencies and payors in interpretations, requirements, and “conditions of participation” in various programs.

The adoption of a new billing system in 2016 has posed several challenges relating to, among other things, training of personnel, communication of new rules and procedures, changes in corporate culture, migration of data, and the potential instability of the new system.

As an integral part of our billing compliance program, we assess our billing and coding practices in the ordinary course of business, respond to payor audits on a routine basis, and investigate reported failures or suspected failures to comply with federal and state healthcare reimbursement requirements, as well as overpayment claims which may

arise from time to time without fault on our part.

We have in the ordinary course of business been the subject of recoupments by payors and have from time to time identified and reimbursed payors for overpayments.

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If such attacks are successful, they could disrupt our operations and result in unauthorized persons gaining access to confidential or proprietary information.

A breach or security incident affecting these third parties could harm our business, results of operations and reputation and subject us to liability.

On June 3, 2019, the Company reported that Retrieval-Masters Creditors Bureau, Inc.

d/b/a American Medical Collection Agency (“AMCA”), informed BioReference about unauthorized activity on AMCA’s web payment page which occurred between August 1, 2018, and March 30, 2019.

AMCA is an external collection agency that has been used in the past by BioReference and other healthcare companies.

AMCA advised that AMCA’s affected system includes information provided by BioReference that may have included patient name, date of birth, address, phone, date of service, provider, and balance information.

In addition, the affected AMCA system also included credit card information, bank account information (but no passwords or security questions) and email addresses that were provided by the consumer to AMCA.

AMCA has advised BioReference that no Social Security Numbers were compromised, and BioReference provided no laboratory results or diagnostic information to AMCA.

AMCA has also informed us that information pertaining to other laboratories’ customers was also affected.

BioReference has not sent any collection requests to AMCA since October 2018, and it will not send any new collection requests to AMCA.

In addition, BioReference has requested that AMCA cease continuing to work on any pending collection requests involving BioReference patients.

A breach or security incident affecting these third parties could harm our business, results of operations and reputation, and subject us to liability, governmental investigation, significant damage to our reputation or otherwise adversely affect our business.

Although the Company has security measures implemented, cyber-attacks and threats against us and our third-party providers continue to evolve and are often not recognized until such attacks are launched against a potential target.

A successful cybersecurity attack or other data security incident could result in the misappropriation and/or loss of confidential or personal information, create system interruptions, or deploy malicious software that attacks our systems.

It is possible that a cybersecurity attack might not be noticed for some period of time.

There can be no assurance that the Company or its third-party providers can anticipate all future attacks, viruses or intrusions, implement adequate preventative measures, nor remediate any security vulnerabilities.

Such breaches could expose our or our third-party providers’ IT systems to attack, which could result in disruption of our business, and compromise our customers’ confidential information, result in litigation and potential liability for the Company, governmental investigation, significant damage to our reputation or otherwise adversely affect our business.

In addition, the unauthorized dissemination of sensitive personal information or proprietary or confidential information could expose us or other third-parties to regulatory fines or penalties, litigation and potential liability, or otherwise harm our business.

The unauthorized dissemination of sensitive personal information or proprietary or confidential information due to a breach of these IT systems could expose us or other third-parties to regulatory fines or penalties, litigation and potential liability, or otherwise harm our business.

Any mitigation or remediation efforts that we undertake may require expenditures of significant resources and the diversion of the attention of management.

We have taken, and continue to take, precautionary measures to reduce the risk of, and detect and respond to, future cyber threats, and prevent or minimize vulnerabilities in our IT systems.

In addition, we have taken, and continue to take, precautionary measures to reduce the risk of, and detect and respond to, future cyber threats, and prevent or minimize vulnerabilities in our IT systems.

We have also taken, and will continue to take, measures to assess the cybersecurity protections implemented by our third-party providers.

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We also face efforts by non-governmental third-party payors, including healthcare plans, to reduce utilization and reimbursement for clinical testing services.

The healthcare industry has experienced a trend of consolidation among healthcare insurance plans, resulting in fewer but larger insurance plans with significant bargaining power to negotiate fee arrangements with healthcare providers, including

clinical testing providers.

These healthcare plans and independent physician associations, may demand that clinical testing providers accept discounted fee structures or assume all or a portion of the financial risk associated with providing testing services to their members through capped payment arrangements.

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These efforts, including future changes in third-party payor rules, practices and policies, or failing to become a contracted provider or ceasing to be a contracted provider to a healthcare plan, may have a material adverse effect on our business.

The success of our business may be dependent on the actions of our collaborative partners.

We have entered into and expect in the future to enter into collaborative arrangements with established multi-national pharmaceutical, diagnostic, and medical device companies, which will finance or otherwise assist in the development, manufacture and marketing of products incorporating our technology.

We anticipate deriving some revenues from research and development fees, license fees, milestone payments, and royalties from collaborative partners.

Our prospects, therefore, may depend to some extent upon our ability to attract and retain collaborative partners and to develop technologies and products that meet the requirements of prospective collaborative partners.

In addition, our collaborative partners may have the right to abandon research projects, guide strategy regarding prosecution of relevant patent applications and terminate applicable agreements, including funding obligations, prior to or upon the expiration of the agreed-upon research terms.

There can be no assurance that we will be successful in establishing collaborative arrangements on acceptable terms or at all, that collaborative partners will not terminate funding before completion of projects, that our collaborative arrangements will result in successful product commercialization, or that we will derive any revenues from such arrangements.

To the extent that we are unable to develop and maintain collaborative arrangements, we would need substantial additional capital to undertake research, development, and commercialization activities on our own.

If we are unable to obtain and enforce patent protection for our products, our business could be materially harmed.

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Any patents we have obtained, or obtain in the future, may be challenged, invalidated, unenforceable, or circumvented.

Moreover, the USPTO may commence interference proceedings involving our patents or patent applications.

In addition, court decisions may introduce uncertainty in the enforceability or scope of patents owned by biotechnology, pharmaceutical, and medical device companies.

Any challenge to, finding of unenforceability or invalidation or circumvention of, our patents or patent applications would be costly, would require significant time and attention of our management, and could have a material adverse effect on our business, results of operations and financial condition.

Our pending patent applications may not result in issued patents.

The patent position of pharmaceutical, biotechnology, diagnostic, and medical device companies, including ours, is generally uncertain and involves complex legal and factual considerations.

The standards that the USPTO and its foreign counterparts use to grant patents are not always applied

predictably or uniformly and can change.

There is also no uniform, worldwide policy regarding the subject matter and scope of claims granted or allowable in pharmaceutical, biotechnology, diagnostic, or medical device patents.

Accordingly, we do not know the degree of future protection for our proprietary rights or the breadth of claims that will be allowed in any patents issued to us or to others.

The legal systems of certain countries do not favor the aggressive enforcement of patents, and the laws of foreign countries may not protect our rights to the same extent as the laws of the U.S.

Therefore, the enforceability or scope of our owned or licensed patents in the U.S.

or in foreign countries cannot be predicted with certainty, and, as a result, any patents that we own or license may not provide sufficient protection against competitors.

We may not be able to obtain or maintain patent protection for our pending patent applications, those we may file in the future, or those we may license from third parties.

We cannot assure you that any patents that have issued, that may issue, or that may be licensed to us will be enforceable or valid, or will not expire prior to the commercialization of our products and product candidates, thus allowing others to more effectively compete with us.

Therefore, any patents that we own or license may not adequately protect our products and product candidates or our future products, which could have a material adverse effect on our business, results of operations, and financial condition.

We cannot be assured that our filings for patent term extensions or supplementary protection certificates to potentially extend a patent term of a patent covering an approved drug or biological product will be granted in any particular jurisdiction in which the Company or its licensee obtains approval for a drug or biological product.

If we are unable to protect the confidentiality of our proprietary information and know-how, the value of our technology and products could be adversely affected.

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If such owners do not properly maintain or enforce the patents underlying such licenses, our competitive position and business prospects will be harmed.

We have obtained licenses from, among others, INEOS Healthcare, the President and Fellows of Harvard College, The Scripps Research Institute and Arctic Partners, that are necessary or useful for our business.

In addition, we intend to enter into additional licenses of third-party intellectual property in the future.

We have obtained and may in the future obtain licenses from third party owners that are necessary or useful for our business.

We cannot guarantee that no third parties will step forward and assert inventorship or ownership in our in-licensed patents.

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Even if patents issue in respect of these patent applications, we or our licensors may fail to maintain these patents or may determine not to pursue litigation against other companies that are infringing these patents.

Without protection for the intellectual property we

have licensed, other companies might be able to offer substantially identical products for sale, which could adversely affect our competitive business position and harm our business, results of operations and financial condition.

Without protection for the intellectual property we have licensed, other companies might be able to offer substantially identical products for sale, which could adversely affect our competitive business position and harm our business, results of operations and financial condition.

Our commercial success depends significantly on our ability to operate without infringing the patents and other proprietary rights of third parties.

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Intellectual property litigation, regardless of outcome, is expensive and time-consuming, could divert management’s attention from our business and have a material negative effect on our business, operating results or financial condition.

contains the allegedly infringing intellectual property or enter into royalty or license agreements that may not be available on acceptable or commercially practical terms, if at all.

If there is a successful claim of infringement against us, we may be required to pay substantial damages (including treble damages if we were to be found to have willfully infringed a third party’s patent) to the party claiming infringement, develop non-infringing technology, stop selling our tests or using technology that contains the allegedly infringing intellectual property or enter into royalty or license agreements that may not be available on acceptable or commercially practical terms, if at all.

Our failure to develop non-infringing technologies or license the proprietary rights on a timely basis could harm our business.

It is possible that a third party or patent office might take the position that one or more patents or patent applications constitute prior art in the field of genomic-based diagnostics.

It is possible that in the patent laws related to the field of genomic-based products and diagnostics and patents covering such products changes to permit the patenting of genes and/or gene based products and/or related diagnostic methods.

In such a case, we might be required to pay royalties, damages and costs to firms who own the rights to these patents, or we might be restricted from using any of the inventions claimed in those patents.

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A product liability claim could have a serious adverse effect on our business, financial condition and results of operations.

We are the subject of pending civil litigation which could require us to pay substantial damages or could otherwise have a material adverse effect on us.

On September 7, 2018, the SEC filed a lawsuit in the Southern District of New York (the “Complaint”), against a number of individuals and entities (each a “Defendant” and, collectively, the “Defendants”) including us and our CEO and Chairman, Dr.

Phillip Frost.

The SEC alleged that we (i) aided and abetted a purported “pump and dump” scheme in connection with one company perpetrated by a number of the Defendants, and (ii) failed to file required Schedules 13D or 13G with the SEC.

The Complaint also alleged that Dr.

Frost (i) participated in the alleged market manipulation in connection with two companies, (ii) failed to file required Schedule 13Ds with the SEC, and (iii) sold unregistered securities without an applicable exemption.

Following the SEC’s announcement of the Complaint, a number of class action and derivative suits were filed against us and our directors and officers concerning the allegations in the Complaint and related matters.

In December 2018, we and Dr.

Frost entered into settlements with the SEC, which, upon approval by the court in January 2019, resolved the claims against us and Dr.

Frost raised in the Complaint.

Pursuant to the settlement between us and the SEC, and without admitting or denying any of the allegations of the Complaint, we agreed to an injunction from violations of Section 13(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), a strict liability claim, and to pay a $100,000 penalty, which has been paid.

We also agreed to:

(i) establish a Management Investment Committee (“MIC”) that will make recommendations to an Independent Investment Committee (“IIC”) of our Board of Directors in connection with existing and future strategic minority investments;

and (ii) retain an Independent Compliance Consultant (“ICC”) to (a) advise us on whether filings pursuant to Section 13(d) of the Exchange Act for previous strategic investments made at the suggestion of or in tandem with Dr.

Frost should have been amended or made to reflect group membership with Dr.

Frost and his related entities;

(b) review our existing policies and procedures relating to compliance with Section 13(d) of the Exchange Act;

and (c) review the independence of the MIC and IIC of our Board of Directors solely for purposes of the handling of strategic minority investments.

The ICC was required to report its findings (including recommendations as to filings, amendments, improvements to policies and procedures, and improvement to the composition of the MIC and the IIC to our Board of Directors) to the SEC within 15 days of completion of its work, and we were required to implement the ICC’s recommendations, and to certify our compliance with these undertakings in writing, all of which has been completed.

Under the terms of the settlement between the SEC and Dr.

Frost, and without admitting or denying any of the allegations in the Complaint, Dr.

Frost agreed to injunctions from violations of Sections 5(a) and (c) and 17(a)(2) of the Securities Act, claims which may be satisfied by strict liability and negligence, respectively, and Section 13(d) of the Exchange Act, also a strict liability claim;

to pay approximately $5.5 million in penalty, disgorgement and pre-judgment interest, which has been paid;

and to be prohibited, with certain exceptions, from trading in penny stocks.

The settlements include no restriction on Dr.

Frost’s ability to continue to serve as our CEO and Chairman.

Although the SEC matter against us and Dr.

Frost is resolved, there can be no assurance that additional charges from other governmental authorities will not be brought against one or more parties named in the Complaint.

We also continue to face a number of class actions and derivative suits concerning the allegations in the SEC Complaint.

We cannot predict with certainty the outcome or effect of the class actions or derivative suits, which could require us to pay substantial damages or could otherwise have a material adverse effect on us.

Our primary and side A directors and officers’ liability insurance carrier denied coverage for the class action and derivative suits filed against us and our directors and officers concerning the allegations in the Complaint.

We believe that this denial was in error, and we appealed this coverage determination.

If we are unsuccessful in this appeal or are not able to reach an agreement with the various insurers on coverage, or if other third-party insurers deny, cancel, or refuse coverage, which we are not able to successfully appeal, or are otherwise unable to provide us with adequate insurance coverage for all or any of the aforementioned lawsuits, then our overall risk exposure and operational expenses could increase and the management of our business operations could be disrupted, which could cause a material adverse impact on our business, operations and financial condition.

Further, an unusually large liability claim or a string of claims, like these lawsuits, could potentially exceed our available insurance coverage if any.

In addition, the availability of, and our ability to collect on, insurance coverage can be subject to factors beyond our control.

As our current insurance policies expire, increased premiums for renewed or new coverage, if such coverage can be secured at all, may increase our insurance expense and/or require us to increase our self-insured retention or deductibles.

If the number of claims or the dollar amounts of any such claims rise in any policy year, we could suffer additional costs associated with accessing excess coverage policies.

Also, an increase in the loss amounts attributable to such claims could expose us to uninsured damages if we are unable or elect not to insure against certain claims because of increased premiums or other reasons.

These lawsuits or the resolution of such lawsuits may affect the availability or cost of some of our insurance coverage, which could materially adversely impact our business, results of operations and cash flows and potentially expose us to increased risks that would be uninsured.

Adverse results in material litigation matters or governmental inquiries could have a material adverse effect upon our business and financial condition.

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The health care industry is subject to substantial federal and state government regulation and audit.

Additionally, we are subject to pending legal proceedings with respect to alleged violations of securities laws.

See “ We are the subject of pending civil litigation which could require us to pay substantial damages or could otherwise have a material adverse effect on us” above.

Additionally, as previously disclosed and further explained in Legal Proceedings, we are subject to pending legal proceedings with respect to alleged violations of securities laws, specifically, the class action lawsuits for which we await a final order approving the settlement terms.

From time to time, we may receive inquiries, document requests, Civil Investigative Demands (“CIDs”) or subpoenas from the Department of Justice, the Office of Inspector General and Office for Civil Rights (“OCR”) of the Department of Health and Human Services, the Centers for Medicare and Medicaid Services, various payors and fiscal intermediaries, and other state and federal regulators regarding investigations, audits and reviews.

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The Company generally has cooperated, and intends to continue to cooperate, with appropriate regulatory authorities as and when investigations, audits and inquiries arise.

Legal actions and government investigations could result in substantial monetary damages, negatively impact our ability to obtain additional funding on acceptable terms, or at all, and damage to our reputation with customers, business partners and other third parties, all of which could have a material adverse effect upon our results of operations and financial position.

Such legal actions and government investigations could result in substantial monetary damages, negatively impact our ability to obtain additional funding on acceptable terms, or at all, and damage to our reputation with customers, business partners and other third parties, all of which could have a material adverse effect upon our results of operations and financial position.

Further, the legal actions and government investigations could damage our reputation with investors and adversely affect the trading prices of our securities.

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until we receive approval of a Biologics License Application (BLA), an approval of a NDA, a clearance letter under the premarket notification process, or 510(k) process, or an approval of a PMA from the FDA.

To date, we have only submitted one NDA which was approved in June 2016.

To date, we have only submitted one NDA which was approved in June 2016, and one BLA which was approved for filing in January 2021.

We have received FDA approval of the PMA for our Sangia Total PSA Test using the Claros Analyzer, a novel diagnostic instrument system to provide rapid, high performance blood test results in the point-of-care setting, in January 2019 but we have not received marketing approval or clearance for any of our other diagnostic product candidates, Obtaining approval of a NDA or PMA can be a lengthy, expensive, and uncertain process.

With respect to medical devices, while the FDA reviews and clears a premarket notification in as little as three months, there is no guarantee that our products will qualify for this more expeditious regulatory process, which is reserved for Class I and II devices, nor is there any assurance that even if a device is reviewed under the 510(k) process that the FDA will review it expeditiously or determine that the device is substantially equivalent to a lawfully marketed non-PMA device.

With respect to medical devices, while the FDA reviews and clears a premarket

notification in as little as three months, there is no guarantee that our products will qualify for this more expeditious regulatory process, which is reserved for Class I and II devices, nor is there any assurance that even if a device is reviewed under the 510(k) process that the FDA will review it expeditiously or determine that the device is substantially equivalent to a lawfully marketed non-PMA device.

If the FDA fails to make this finding, then we cannot market the device.

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▪ civil and criminal penalties;

▪ injunctions;

▪ suspension or withdrawal of regulatory approvals or clearances;

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Beyond these risks, there is also a possibility that our licensees or collaborators could decide to discontinue a study at any time for commercial, scientific or other reasons.

Regulation by governmental authorities in the U.S.

and other countries may be a significant factor in how we develop, test, produce and market our diagnostic test products.

Diagnostic tests like ours may not fall squarely within the regulatory approval process for pharmaceutical or device products as described above, and the regulatory pathway is not as clear.

It is possible that the diagnostic products developed by us or our collaborators will be regulated as medical devices by the FDA and comparable agencies of other countries and require either PMA or 510(k) clearance from the FDA prior to marketing.

Some companies that have successfully commercialized diagnostic tests for various conditions and disease states have not sought clearance or approval for such tests through the traditional 510(k) or PMA processes, and have instead utilized a process involving LDTs through a CLIA- certified laboratory.

CLIA is a federal law that regulates clinical laboratories that perform testing on specimens derived from humans for the purpose of providing information for diagnostic, preventative or treatment purpose.

In such instances, the CLIA lab is solely responsible for the development, validation and commercialization of the assay.

Such LDT testing is currently under the purview of CMS and state agencies that provide oversight of the safe and effective use of LDTs.

However, the FDA has consistently asserted that it has the regulatory authority to regulate LDTs despite historically exercising enforcement discretion.

In furtherance of that position, the FDA issued two draft guidance documents in October 2014:

(1) Framework for Regulatory Oversight of Laboratory Developed Tests (the “Framework Guidance”);

and (2) FDA Notification and Medical Device Reporting for Laboratory Developed Tests (the “Notification Guidance”).

The Framework Guidance outlines the FDA’s plan to adopt over time a risk-based approach to regulating LDTs whereby different classifications of LDTs would be subject to different levels of FDA oversight and enforcement, including, for example, prohibitions on adulteration and misbranding, establishment registration and device listing, premarket notification, banned devices, records and reports, good manufacturing practices, adverse event reporting, premarket review of safety, effectiveness, and clinical validity, and quality system requirements.

The Notification Guidance is intended to explain how clinical laboratories should notify the FDA of the LDTs they develop and how to satisfy Medical Device Reporting requirements.

On January 13, 2017, the FDA published a synthesis of feedback on the Framework Guidance and Notification Guidance titled, Discussion Paper on Laboratory Developed Tests (the “Discussion Paper”).

The Discussion Paper provided notice that the FDA would not issue a final guidance on the oversight of LDTs to allow for further public discussion on appropriate oversight approach, and to give congressional authorizing committees the opportunity to develop a legislative solution.

The outcome and ultimate impact of such proposals on the business is difficult to predict at this time.

However, the FDA’s authority to regulate LDTs continues to be challenged and the regulatory situation is fluid.

The timeline and process for finalizing the draft guidance documents is unknown.

We will continue to monitor changes to all domestic and international LDT regulatory policy so as to ensure compliance with the current regulatory scheme.

The terms of approvals and ongoing regulation of our products may limit how we manufacture and market our products and product candidates, which could materially impair our ability to generate anticipated revenues.

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Marketing, labeling, packaging, adverse event reporting, storage, advertising, and promotion for our approved products will be subject to extensive regulatory requirements.

We train our marketing and sales force against promoting our products for uses outside of the cleared or approved indications for use, known as “off-label uses.” If the FDA determines that our promotional materials or training constitute promotion of unsupported claims or an off-label use, it could request that we modify our training or promotional materials or subject us to regulatory or enforcement actions, including the issuance of an untitled letter, a warning letter, injunction, seizure, civil fine or criminal penalties.

unsupported claims or an off-label use, it could request that we modify our training or promotional materials or subject us to regulatory or enforcement actions, including the issuance of an untitled letter, a warning letter, injunction, seizure, civil fine or criminal penalties.

It is also possible that other federal, state or foreign enforcement authorities might take action if they consider our business activities to constitute promotion of an off-label use, which could result in significant penalties, including, but not limited to, criminal, civil and/or administrative penalties, damages, fines, disgorgement, exclusion from participation in government healthcare programs, and the curtailment of our operations.

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If we fail to comply with existing or future applicable laws and regulations, we could suffer civil or criminal penalties, including the loss of our licenses to operate our laboratories and our ability to participate in federal and state healthcare programs.

Different interpretations and enforcement policies of existing statutes and regulations applicable to our business could subject our current practices to allegations of impropriety or illegality, or could require us to make significant changes to our operations.

our operations.

Under the FCA, whistleblower or qui tam provisions allow a private individual to bring actions on behalf of the federal government alleging that the defendant has submitted a false claim to the federal government, and to share in any monetary recovery.

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The costs associated with complying with federal and state regulations could be significant and the failure to comply with any such legal requirements could have a material adverse effect on our financial condition, results of operations, and liquidity.

Tax reform may significantly affect us and our stockholders.

On December 22, 2017, President Trump signed into law the Tax Cuts and Jobs Act (the “Tax Act”) that significantly reforms the Internal Revenue Code of 1986, as amended (the “Code”).

The Tax Act, among other things, includes changes to U.S.

federal tax rates, including reduction of the corporate tax rate from a top marginal rate of 35% to a flat rate of 21%, limitations of the tax deduction for interest expense to 30% of adjusted earnings (except for certain small businesses), limitations of the deduction for net operating losses to 80% of current year taxable income and elimination of net operating loss carrybacks, one time taxation of offshore earnings at reduced rates regardless of whether they are repatriated, elimination of U.S.

tax on foreign earnings (subject to certain important exceptions), immediate deductions for certain new investments instead of deductions for depreciation expense over time, modifying or repealing many business deductions and credits and putting into effect the migration from a “worldwide” system of taxation to a territorial system.

Failure to maintain the security of patient-related information or compliance with security requirements could damage our reputation with customers, cause us to incur substantial additional costs and become subject to litigation.

Pursuant to HIPAA, and certain similar state laws, we must comply with comprehensive privacy and security standards with respect to the use and disclosure of protected health information.

If we do not comply with existing or new laws and regulations related to protecting privacy and security of personal or health information, it could be subject to monetary fines, civil penalties, or criminal sanctions.

Under the HITECH amendments to HIPAA, HIPAA was expanded to require certain data breach notification, to extend certain HIPAA privacy and security standards directly to business associates, to heighten penalties for noncompliance, and enhance enforcement efforts.

We may also be required to comply with the data privacy and security laws of other countries in which it operates or from which it receives data transfers.

The European Union enacted the General Data Protection Regulation (GDPR) to replace the current data protection directive, Directive 95/46/EC, which took effect May 25, 2018, and which has a broader application and enhanced penalties for noncompliance.

Pursuant to HIPAA, including the HITECH amendments thereunder, and certain similar state laws, we must comply with comprehensive privacy and security standards with respect to the use and disclosure of protected health information.

If we do not comply with existing or new laws and regulations related to protecting privacy and security of personal or health information, we could be subject to monetary fines, civil penalties, or criminal sanctions.

We may also be required to comply with the data privacy and security laws of other countries in which we operate or from which we receives data transfers, including the General Data Protection Regulation (GDPR), which affects our European operations and possibly our laboratory and clinical development operations.

The GDPR, which is wide-ranging in scope, governs the collection and use of personal data in the European Union and imposes operational requirements for companies that receive or process personal data of residents of the European Union that are different than those currently in place in the European Union.

The GDPR will apply to our European operations and possibly to our laboratory and clinical development operations.

We have implemented policies and procedures required to comply with the new EU regulations and will continue to evaluate compliance.

In March 2014, CareEvolve, BioReference’s wholly-owned connectivity subsidiary, became aware that there had been a HIPAA breach with regard to one of its servers managed at an internet service provider site called XAND, where the server was inadvertently configured so that it was accessible to the Internet for a brief period.

Upon becoming aware of the matter, CareEvolve immediately took the server offline and removed all indexed files that could be located on the internet.

In the meantime, an Internet data collection “robot” operated by Google, Inc.

had briefly acquired data from a server and made it available to Internet searches.

To the best of our knowledge, there were no known disclosures of this Patient Health Information (“PHI”) to unauthorized parties.

BioReference self-reported this incident to the appropriate government agency, the Office of Civil Rights (“OCR”).

OCR notified BioReference that it has initiated an investigation of the breach report, and we are awaiting further discussion, investigation and action by OCR.

Since March 2014, BioReference has taken meaningful steps to further improve its HIPAA and cybersecurity platform, including engaging independent and specialized IT consultants to conduct HIPAA and cybersecurity assessments, reviewing data security and internal safeguards, and continuously

implementing enhanced security measures to minimize the risk of similar occurrences in the future.

We have had other data and security breaches in the ordinary course and such breaches may continue to happen from time to time despite our best efforts to prevent such breaches and safeguard private information.

We have implemented policies and procedures required to comply with the new EU regulations but may be subject for penalties if we are found to be non-compliant.

We have had data and security breaches in the ordinary course and such breaches may continue to happen from time to time despite our best efforts to prevent such breaches and safeguard private information.

Some of these other data and security breaches have been reported to OCR and we have received requests for information from OCR in connection with certain of these matters, or we are awaiting discussion, investigation or action by OCR.

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The Federal Occupational Safety and Health Administration has established extensive requirements relating to workplace safety for health care employers, including clinical laboratories, whose workers may be exposed to blood-borne pathogens such as HIV and the hepatitis B virus.

These requirements, among other things, require work practice controls, protective clothing and equipment, training, medical follow-up, vaccinations and other measures designed to minimize exposure to, and transmission of, blood-borne pathogens.

These requirements are designed to minimize exposure to, and transmission of, blood-borne pathogens.

In addition, the Needlestick Safety and Prevention Act requires, among other things, that we include in our safety programs the evaluation and use of engineering controls such as safety needles if found to be effective at reducing the risk of needlestick injuries in the workplace.

Waste management is subject to federal and state regulations governing the transportation and disposal of medical waste including bodily fluids.

Federal regulations require licensure of interstate transporters of medical waste.

In New Jersey, we are subject to the Comprehensive Medical Waste Management Act (“CMWMA”), which requires us to register as a generator of special medical waste.

All of our medical waste is disposed of by a licensed interstate hauler.

The hauler provides a manifest of the disposition of the waste products as well as a certificate of incineration, which is retained by us.

These records are audited by the State of New Jersey on a yearly basis.

We are also subject to the Federal Hazardous Materials Transportation Law, 49 U.S.C.

5101 et seq., and the Hazardous Materials Regulations (“HMR”), 49 CFR parts 171-180.

5101 et seq., and the Hazardous Materials Regulations (“HMR”), 49 CFR

parts 171-180.

The federal government has classified hazardous medical waste as hazardous materials for the purpose of regulation.

These regulations preempt state regulation, which must be “substantively the same,” meaning that “the non-federal requirement must conform “in every significant respect to the federal requirement.

Editorial and other similar de minimis changes are permitted,” 49 CFR 107.202(d).

Failure to comply with such federal, state and local laws and regulations could subject us to denial of the right to conduct business, fines, criminal penalties and/or other enforcement actions, any of which could have a material adverse effect on our business.

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The diagnosis codes must be obtained from the ordering physician for clinical laboratory testing and from the interpreting pathologist for anatomic pathology services.

Our failure or the failure of third party payors or physicians to comply with these requirements could have an adverse impact on reimbursement, days sales and cash collections.

Our failure or the failure of third party payors or physicians to comply with these requirements could have an adverse impact on reimbursement, delay sales and cash collections.

Also, the failure of our IT systems to keep pace with technological advances may significantly reduce our revenues or increase our expenses.

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If enacted, this would require us to attempt to collect this amount from patients, although in many cases the costs of collection would exceed the amount actually received.

In April 2015, changes to the physician fee schedule were enacted under the Medicare Access and CHIP Reauthorization Act of 2015 (“MACRA”).

Our reimbursement for our pathology services is paid primarily under the physician fee schedule of Medicare and Medicaid.

Historically, the physician fee schedule was governed by a complex formula, referred to as the Sustainable Growth Rate, or SGR.

However, in April 2015, MACRA was passed, which permanently replaces the SGR formula with a value-based payment system.

The passage of MACRA also repealed the 21.1% reduction of the physician fee schedule that was scheduled for April 1, 2015.

Under MACRA, the physician fee schedule conversion factor increases of 0.5% from July 1, 2015 to December 31, 2015, and 0.5% in each of years 2016-2019, followed by 0.0% updates for 2020-2025.

Subsequent years will vary based on participation in alternative payment models.

Beginning in 2019, rates were adjusted under the new Merit-based Incentive Payment System.

The Center for Medicare and Medicaid Services (“CMS”) pays laboratories on the basis of a fee schedule that is reviewed and re-calculated on an annual basis.

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Our revenue and business may be adversely affected if the reimbursement rates associated with such codes are reduced.

Even when reimbursement rates are not reduced, policy changes add to our costs by

increasing the complexity and volume of administrative requirements.

Even when reimbursement rates are not reduced, policy changes add to our costs by increasing the complexity and volume of administrative requirements.

Medicaid reimbursement, which varies by state, is also subject to administrative and billing requirements and budget pressures.

Recently, state budget pressures have caused states to consider several policy changes that may impact our financial condition and results of operations, such as delaying payments, reducing reimbursement, restricting coverage eligibility and service coverage, and imposing taxes on our services.

CMS has changed or discussed making changes to certain types of reimbursement which could affect our rate of reimbursement.

Certain cases are comprised of both a technical component (“TC”) and a professional component (“PC”).

In certain specified areas of testing, primarily in the area of anatomic pathology, CMS has determined that some providers have over-utilized these testing procedures and CMS has introduced changes in reimbursement policies to discourage over-utilization.

We are always subject to review by CMS and cannot be certain that CMS won’t interpret our practices differently than we do.

In recent years, state budget pressures have caused states to consider several policy changes that may impact our financial condition and results of operations, such as delaying payments, reducing reimbursement, restricting coverage eligibility and service coverage, and imposing taxes on our services.

Third party payors are increasingly challenging established prices, and new products that are more expensive than existing treatments may have difficulty finding ready acceptance unless there is a clear therapeutic benefit.

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Under PAMA, Medicare payment for clinical diagnostic laboratory tests is established by calculating a weighted mean of private payor rates.

Effective January 1, 2018, clinical laboratory fee schedule rates will be based on weighted median private payor rates as required by PAMA.

Effective January 1, 2018, clinical laboratory fee schedule rates are based on weighted median private payor rates as required by PAMA.

Even though the permitted annual decrease are capped through 2023, the cap does not apply to new tests or new advanced diagnostic tests.

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Most significantly, on March 23, 2010, President Obama signed into law both the Affordable Care Act and the reconciliation law known as Health Care and Education Affordability Reconciliation Act (the “Reconciliation Act”) and, combined we refer to both Acts as the “2010 Health Care Reform Legislation.” The constitutionality of the 2010 Health Care Reform Legislation was confirmed on June 28, 2012 by the Supreme Court of the U.

However, as discussed in further detail below, the current Presidential administration has attempted to repeal and replace the 2010 Health Care Reform Legislation.

The 2010 Health Care Reform Legislation included significant fraud and abuse measures, including (i) required disclosures under the Open Payments Program (which implements the requirements of the Physician Payments Sunshine Act), which in conjunction with its implementing regulations, requires certain manufacturers of certain drugs, biologics, and devices that are reimbursed by Medicare and Medicaid to report annually certain payments or “transfers of value” provided to physicians and teaching hospitals and to report annually ownership and investment interests held by physicians and their immediate family members during the preceding calendar year, (ii) lower thresholds for violations, and (iii) increasing potential penalties for such violations.

Federal funding available for combating health care fraud and abuse generally has increased.

Many of the laws and regulations applicable to our business, particularly those relating to billing and reimbursement of tests and those relating to relationships with physicians, hospitals and patients, contain language that has not been interpreted by courts.

We must rely on our interpretation of these laws and regulations based on the advice of our counsel and regulatory or law enforcement authorities may not agree with our interpretation of these laws and regulations and may seek to enforce legal remedies or penalties against us for violations.

From time to time we may need to change our operations, particularly pricing or billing practices, in response to changing interpretations of these laws and regulations or regulatory or judicial determinations with respect to these laws and regulations.

These occurrences, regardless of their outcome, could damage our reputation and harm important business relationships that we have with healthcare providers, payors and others.

Furthermore, if a regulatory or judicial authority finds that we have not complied with applicable laws and regulations, we could be required to refund amounts that were billed and collected in violation of such laws and regulations.

In addition, we may voluntarily refund amounts that were alleged to have been billed and collected in violation of applicable laws and regulations.

In either case, we could suffer civil and criminal damages, fines and penalties, exclusion from participation in governmental healthcare

programs and the loss of licenses, certificates and authorizations necessary to operate our business, as well as incur liabilities from third-party claims, all of which could harm our operating results and financial condition.

Moreover, regardless of the outcome, if we or physicians or other third parties with whom we do business are investigated by a regulatory or law enforcement authority we could incur substantial costs, including legal fees, and our management may be required to divert a substantial amount of time to an investigation.

Prior to the 2016 U.S.

elections (including the current Presidential administration), regulations under the 2010 Health Care Reform Legislation were expected to continue being drafted, released and finalized throughout the next several years.

In 2017, the President and members of Congress sought to repeal and replace the 2010 Health Care Reform Legislation.

It is uncertain whether such repeal and replacement legislative efforts will be successful or enacted into law, and if enacted, what the impact might be on our business.

It is also uncertain whether regulatory changes to the implementation of the 2010 Health Care Reform Legislation will restrict patient access to affordable insurance or other third-party payor sources and impact their access to novel, biosimilar and complex generic products.

The full effects of any repeal and replacement of the 2010 Health Care Reform Legislation, or regulatory changes to its implementation, cannot be known until a new law is enacted or existing law is implemented through regulations or guidance issued by the CMS and other federal and state health care agencies.

Because of the continued uncertainty about the implementation of the 2010 Health Care Reform Legislation, including the potential for further legal challenges or repeal of that legislation, we cannot quantify or predict with any certainty the likely impact of the 2010 Health Care Reform Legislation or its repeal on our business model, prospects, financial condition or results of operations.

We also anticipate that Congress, state legislatures, and third-party payors may continue to review and assess alternative healthcare delivery and payment systems and may in the future propose and adopt legislation or policy changes or implementations effecting additional fundamental changes in the healthcare delivery system.

However, there are legal challenges to 2010 Health Care Reform Legislation pending before the Supreme Court and we cannot ascertain the outcome of those challenges and how any such challenge might affect the Company.

It is uncertain whether any efforts to amend the Affordable Care Act will be successful or enacted into law, and if enacted, what the impact might be on our business.

It is also uncertain how the current administration intends to alter 2010 Health Care Reform Legislation, if at all including whether regulatory changes to the implementation of the 2010 Health Care Reform Legislation will restrict patient access to affordable insurance or other third-party payor sources and impact their access to novel, biosimilar and complex generic products.

In addition, litigation may prevent some or all of the legislation from taking effect.

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To enhance compliance with applicable health care laws, and mitigate potential liability in the event of noncompliance, regulatory authorities, such as the U.

Health and Human Services Department Office of Inspector General (the “OIG”), have recommended the adoption and implementation of a comprehensive health care compliance program that generally contains the elements of an effective compliance and ethics program described in Section 8B2.1 of the U.

Sentencing Commission Guidelines Manual, and for many years the OIG has made available a model compliance program targeted to the clinical laboratory industry.

In addition, certain states, such as New York, require that health care providers, such as clinical laboratories, that engage in substantial business under the state Medicaid program have a compliance program that generally adheres to the standards set forth in the Model Compliance Program.

In addition, certain states, such as New York, require that certain health care providers have a compliance program that generally adheres to the standards set forth in a model compliance program.

Also, under the 2010 Health Care Reform Legislation, the U.S.

Department of Health and Human Services, or HHS, requires suppliers, such as us, to adopt, as a condition of Medicare participation, compliance programs that meet a core set of requirements.

Department of Health and Human Services, or HHS,

requires suppliers, such as us, to adopt, as a condition of Medicare participation, compliance programs that meet a core set of requirements.

While we have adopted U.S.

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In some countries, particularly countries of the European Union, each of which has developed its own rules and regulations, pricing is subject to governmental control.

In these countries, pricing negotiations

with governmental authorities can take considerable time after the receipt of marketing approval for a drug or medical device candidate.

In these countries, pricing negotiations with governmental authorities can take considerable time after the receipt of marketing approval for a drug or medical device candidate.

To obtain reimbursement or pricing approval in some countries, we may be required to conduct a clinical trial that compares the cost-effectiveness of our product and product candidates to other available products.

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To the extent that transactions of these subsidiaries are settled in their local currencies, a devaluation of those currencies versus the U.S.

dollar could reduce the contribution from these subsidiaries to our consolidated results of operations as reported in U.S.

dollar could reduce the contribution from these

subsidiaries to our consolidated results of operations as reported in U.S.

For financial reporting purposes, such depreciation will negatively affect our reported results of operations since earnings denominated in foreign currencies would be converted to U.S.

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We also could be affected by the legal, regulatory and economic impacts of Britain’s exit from the European Union, the impact of which is not known at this time.

The occurrence and impact of these factors is difficult to predict, but one or more of them could have a material adverse effect on our financial position, results of operations and/or cash flows.

The occurrence and impact of these

factors is difficult to predict, but one or more of them could have a material adverse effect on our financial position, results of operations and/or cash flows.

RISKS RELATED TO ACQUISITIONS AND INVESTMENTS

Acquisitions, investments and strategic alliances that we have made or may make in the future may use significant resources, result in disruptions to our business or distractions of our management, may not proceed as planned, and could expose us to unforeseen liabilities.

We may continue to expand our business through the acquisition of, investments in and strategic alliances with companies, technologies, products and services.

Acquisitions, investments and strategic alliances involve a number of special problems and risks, including, but not limited to:

difficulty integrating acquired technologies, products, services, operations, and personnel with the existing businesses;

diversion of management’s attention in connection with both negotiating the acquisitions and integrating the businesses;

strain on managerial and operational resources as management tries to oversee larger operations and investments;

difficulty implementing and maintaining effective internal control over financial reporting at businesses that we acquire or invest in, particularly if they are not located near our existing operations;

exposure to unforeseen liabilities of acquired companies or companies in which we invest;

potential costly and time-consuming litigation, including stockholder lawsuits;

potential issuance of securities to equity holders of the company being acquired with rights that are superior to the rights of holders of our Common Stock, or which may have a dilutive effect on our stockholders;

the need to incur additional debt or use cash;

the requirement to record potentially significant additional future operating costs for the amortization of

intangible assets;

non-cash charges or impairments due to a decline in the value of our investments.

As a result of these or other problems and risks, businesses we acquire or invest in may not produce the revenues, earnings, or business synergies that we anticipated, and acquired products, services, or technologies might not perform as we expected.

As a result, we may incur higher costs and realize lower revenues than we had anticipated.

We may not be able to successfully address these problems and we cannot assure you that the acquisitions or investments will be successfully identified and completed or that, if completed, the acquired businesses, investments, products, services, or technologies will generate sufficient revenue to offset the associated costs or other negative effects on our business.

Any of these risks can be greater if an acquisition or investment is large relative to our size.

Failure to manage effectively our growth through acquisitions could adversely affect our growth prospects, business, results of operations, financial condition and cash flows.

We may fail to realize the anticipated benefits of the mergers with BioReference, Transition Therapeutics, and other acquisitions.

The success of the mergers will depend on, among other things, our ability to combine our business with that of BioReference and Transition in a manner that facilitates growth opportunities and realizes synergies and cost savings.

We believe that the mergers will provide an opportunity for revenue growth.

However, we must successfully combine our business with that of BioReference and Transition in a manner that permits these benefits to be realized.

In addition, we must achieve the anticipated growth and cost savings without adversely affecting current revenues and investments in future growth.

If we are not able to successfully achieve these objectives, the anticipated benefits of the mergers may not be realized fully, or at all, or may take longer to realize than expected.

The failure to integrate successfully the business and operations of BioReference in the expected time frame may adversely affect our future results.

Historically, we and BioReference have operated as independent companies.

There can be no assurances that our and BioReference’s businesses can be integrated successfully.

It is possible that the integration process could result in the loss of our or BioReference’s key employees, the loss of customers, the disruption of either company’s or both companies’ ongoing businesses or in unexpected integration issues, higher than expected integration costs and an overall post-completion integration process that takes longer than originally anticipated.

Specifically, the following issues, among others, must be addressed in integrating our operations with BioReference’s operations in order to realize the anticipated benefits of the merger so we perform as expected:

combining the companies’ operations and corporate functions, as well as obtaining anticipated synergies;

combining our business with BioReference’s business and meeting the capital requirements of the combined company, in a manner that permits us to achieve the cost savings or revenue synergies anticipated to result from the merger, the failure of which would result in the anticipated benefits of the merger not being realized in the time frame currently anticipated or at all;

integrating the companies’ technologies;

integrating and unifying the offerings and services available to customers;

identifying and eliminating redundant and underperforming functions and assets;

harmonizing and/or addressing differences in the companies’ operating practices, employee development and compensation programs, internal controls and other policies, procedures and processes;

maintaining existing agreements with customers, distributors, providers and vendors and avoiding delays in entering into new agreements with prospective customers, distributors, providers and vendors;

addressing possible differences in business backgrounds, corporate cultures and management philosophies;

consolidating the companies’ administrative and information technology infrastructure;

coordinating distribution and marketing efforts;

managing the movement of certain positions to different locations;

coordinating geographically dispersed organizations;

effecting actions that may be required in connection with obtaining regulatory approvals.

In addition, at times the attention of our management and resources may be focused on the integration of the businesses of the two companies and diverted from day-to-day business operations, which may disrupt our ongoing business.

Funding may not be available for us to continue to make acquisitions, investments and strategic alliances in order to grow our business.

We have made and anticipate that we may continue to make acquisitions, investments and strategic alliances with complementary businesses, technologies, products and services to expand our business.

Our growth plans rely, in part, on the successful completion of future acquisitions.

At any particular time, we may need to raise substantial additional capital or to issue additional equity to finance such acquisitions, investments, and strategic alliances.

There is no assurance that we will be able to secure additional funding on acceptable terms, or at all, or obtain the stockholder approvals necessary to issue additional equity to finance such acquisitions, investments, and strategic alliances.

If we are unsuccessful in obtaining the financing, our business would be adversely impacted.

We have a large amount of goodwill and other intangible assets on our balance sheet that are subject to periodic impairment evaluations.

As a result of the annual impairment test for the year ended December 31, 2019, we wrote down goodwill and intangible assets and we may have similar charges in the future, which would have a material adverse impact on our financial condition and results of operations.

We have a large amount of goodwill and other intangible assets and we are required to perform an annual, or in certain situations a more frequent, assessment for possible impairment for accounting purposes.

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Examples of qualitative factors include our share price, our financial performance compared to budgets, long-term financial plans, macroeconomic, industry and market conditions as well as the substantial excess of fair value over the carrying value of net assets from the annual impairment test previously performed.

The estimated fair value of a reporting unit is highly sensitive to changes in projections and assumptions;

therefore, in some instances, changes in these assumptions could potentially lead to impairment.

We perform sensitivity analyses around our assumptions in order to assess the reasonableness of the assumptions and the results of our testing.

Ultimately, future potential changes in these assumptions may impact the estimated fair value of a reporting unit and cause the fair value of the reporting unit to be below its carrying value.

Intangible assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable, although in-process research and development (“IPR&D”) is required to be tested at least annually until the project is completed or abandoned.

Upon obtaining regulatory approval, the IPR&D asset is then accounted for as a finite-lived intangible asset and amortized on a straight-line basis over its estimated useful life.

If the project is abandoned, the IPR&D asset is charged to expense.

IPR&D is tested for impairment by assessing qualitative factors or performing a quantitative analysis in determining whether it is more likely than not that its fair value exceeds the carrying amount.

If the carrying amount of the IPR&D exceeds its fair value, an impairment loss will be recognized in an amount equal to that excess.

For the year ended December 31, 2019, we recorded asset impairment charges of $92.4 million , which were related to an impairment charge of $44.8 million to write our IPR&D assets for OPK88003 (oxyntomodulin) and CURNA’s platform technology for oligonucleotide therapeutics down to their estimated fair values, a goodwill impairment charge of $26.2 million to write the carrying amount of the OPKO Diagnostics, CURNA and Transition Therapeutics reporting units down to their estimated fair values, and an impairment charge of $20.7 million to write our intangible asset for the Claros Analyzer down to its estimated fair values.

For the year ended December 31, 2018, we recorded asset impairment charges of $21.8 million, which were related to an impairment charge of $10.1 million to write our IPR&D assets for Alpharen and OPK88004 down to their estimated fair value and a goodwill impairment charge of $11.7 million to write the carrying amount of the FineTech reporting unit down to its estimated fair value.

We also took a charge of $2.9 million to write down our investment in InCellDX, Inc.

to its fair value as of December 31, 2018.

Impairment analysis and measurement is a process that requires significant judgment.

Our stock price and any estimated control premium are significant qualitative factors affecting the assessment of fair value for purposes of performing our impairment assessment.

Our stock price and public market capitalization has experienced volatility in the past and our public market capitalization is below the net book carrying value of our equity.

A further sustained decline in our stock price and market capitalization below our expectations can be a positive indicator of impairment.

It is possible that a material change could occur in the future that would require that we record an impairment charge, which could be material.

There can be no assurance that future reviews of our goodwill and other intangible assets will not result in additional impairment charges.

Sales of Rayaldee and our operations at EirGen, are currently underperforming expectations and if we do not achieve our planned operating results, we may be required to incur a non-cash impairment charge.

There can be no assurance that future reviews of our goodwill and other intangible assets will not result in impairment charges.

Any impairment charges in the future will adversely affect our results of operations.

A significant write down of goodwill and/or other intangible assets would have a material adverse effect on our reported results of operations and net worth and the trading price of our securities.

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As of January 31, 2021, our directors, executive officers, principal stockholders and affiliated entities beneficially owned, in the aggregate, approximately 41.3% of our outstanding voting securities.

Phillip Frost, M.D., our Chairman and CEO, is deemed to beneficially own, in the aggregate, approximately 33.8% of our Common Stock as of January 31, 2020.

Phillip Frost, M.D., our Chairman and CEO, is

deemed to beneficially own, in the aggregate, approximately 34.2% of our Common Stock as of January 31, 2021.

As a result, Dr.

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In addition, material weaknesses in the design and operation of the internal control over financial reporting of companies that we acquire could have a material adverse effect on our business and operating results.

Our acquisition of BioReference and Transition Therapeutics and possible future acquisitions may increase this risk by expanding the scope and nature of operations over which we must develop and maintain internal control over financial reporting.

If we cannot provide reliable financial reports or prevent fraud, our results of operation could be harmed.

10 unchanged sentences

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 1A. Risk Factors