What changed in this filing

/stocks — the workspaceLOADING

Item 1A. Risk Factors

2023-02-27 compared with 2022-03-01 · 299 added, 311 removed, 643 unchanged (49% of the section changed)

6 unchanged sentences

Additional risks and uncertainties not presently known to us or that we currently believe to be immaterial may also adversely affect our business.

See “Forward-Looking Statements” in this Annual Report on Form 10-K.

See “Forward-Looking Statements”

in this Annual Report on Form 10-K.

Risks Related to Our Financial Position and Need for Additional Capital

1 unchanged sentence

Since our inception, we have incurred significant operating losses.

Our ability to generate net revenue sufficient to achieve profitability will depend on successful commercialization of our OCS products.

We generated net revenue of $30.3 million and $25.6 million for the years ended December 31, 2021 and 2020, respectively, and incurred net losses of $44.2 million and $28.7 million for these same years.

Our ability to generate revenue sufficient to achieve profitability will depend on successful commercialization of our OCS products.

We generated revenue of $93.5 million, $30.3 million and $25.6 million for the years ended December 31, 2022, 2021 and 2020, respectively, and incurred net losses of $36.2 million, $44.2 million and $28.7 million for these same years.

As of December 31, 2022, we had an accumulated deficit of $478.7 million.

3 unchanged sentences

and select non-U.S.

markets, including growing our commercial team, which will pursue increasing commercial sales of our OCS products;

markets, including expanding our National OCS Program, growing our commercial team, which will pursue increasing commercial sales of our OCS products;

scaling our manufacturing operations;

3 unchanged sentences

The timing and amount of our operating and capital expenditures will depend on many factors, including:

the amount of net revenue generated by sales of our OCS Consoles, OCS Perfusion Sets and OCS Solutions and other products that may be approved in the United States and select non-U.S.

the amount of net product revenue generated by sales of our OCS Consoles, OCS Perfusion Sets and OCS Solutions and other products that may be approved in the United States and select non-U.S.

markets, revenue generated by our services, and expansion of the NOP;

the costs and expenses of expanding our U.S.

2 unchanged sentences

the ability of our customers to obtain adequate reimbursement from third-party payors for procedures performed using the OCS products;

the costs incurred in our efforts to develop our National OCS Program ;

the costs incurred in our efforts to expand our National OCS Program;

the costs and timing of research and development of the next generation of OCS products;

the degree of success we experience in commercializing our OCS products for additional indications;

the costs, timing and outcomes of any future clinical studies and regulatory reviews, including to seek and obtain approvals for new indications for our OCS products;

the costs, timing and outcomes of any future clinical studies and regulatory reviews, including to seek and obtain approvals for the next generation of OCS products or for new indications for our OCS products;

the emergence of competing or complementary technologies;

3 unchanged sentences

Because of the numerous risks and uncertainties associated with product development and commercialization, we are unable to accurately predict the timing or amount of increased expenses or when, or if, we will be able to achieve or maintain profitability.

We may need to raise additional funding, which might not be available on favorable terms or at all.

Raising additional capital may cause dilution to our shareholders.

Although we fund a portion of our operations from net revenue from sales of our OCS products, we expect that we will need to finance our operations through a combination of equity offerings, debt financings and strategic alliances until such time, if ever, that we can generate substantial net revenue sufficient to achieve profitability.

We also may elect to raise additional funds sooner because we believe market conditions are attractive or as a risk mitigation measure.

Additional capital might not be available when we need it, and our actual cash requirements might be greater than anticipated.

If we require additional capital at a time when investment in our industry or in the marketplace in general is limited, we might not be able to raise funding on favorable terms, if at all.

If we are not able to obtain financing on terms favorable to us, we may need to significantly delay, scale back or discontinue our development or commercialization activities, sell or license to third parties some or all of our assets or merge with another entity or may be forced to reduce or terminate our operations any of which could result in a loss of all or part of your investment.

If we raise additional funds through the issuance of equity or convertible securities, the issuance of these securities could dilute your percentage ownership in our company.

Furthermore, newly issued securities may have rights, preferences or privileges senior to those of common shareholders.

If we raise additional funds through additional debt financing, we may need to dedicate a substantial additional portion of any operating cash flows to the payment of principal and interest on such indebtedness.

The terms of any debt financing also could impose significant restrictions on our operations.

Our existing and any future indebtedness could adversely affect our ability to operate our business.

As of December 31, 2021, our outstanding principal balance of long-term debt under our credit agreement with OrbiMed Royalty Opportunities II, LP, or OrbiMed, was $35.0 million, which we refer to as the Credit Agreement.

As of December 31, 2022, our outstanding principal balance of long-term debt under our credit agreement with Canadian Imperial Bank of Commerce, or CIBC, was $60.0 million, which we refer to as the CIBC Credit Agreement.

We could incur additional indebtedness in the future.

Our payment obligations under the Credit Agreement reduce cash available to fund working capital, capital expenditures, research and development and general corporate needs.

In addition, indebtedness under the Credit Agreement bears interest at a variable rate, making us vulnerable to increases in market interest rates.

Our payment obligations under the CIBC Credit Agreement reduce cash available to fund working capital, capital expenditures, research and development and general corporate needs.

In addition, indebtedness under the CIBC Credit Agreement bears interest at a variable rate, making us vulnerable to increases in market interest rates.

If market rates increase substantially, we will have to pay additional interest on this indebtedness, which would further reduce cash available for our other business needs.

We may not have sufficient funds, and may be unable to arrange for additional financing, to pay the amounts due under or refinance our indebtedness under the Credit Agreement, which matures in June 2023.

Our obligations under the Credit Agreement are secured by substantially all of our assets and the assets of our wholly-owned subsidiaries.

We may not have sufficient funds, and may be unable to arrange for additional financing, to pay the amounts due under or refinance our indebtedness under the CIBC Credit Agreement, which matures in July 2027.

Our obligations under the CIBC Credit Agreement are secured by substantially all of our assets and the assets of our wholly-owned material subsidiaries.

The security interest granted over our assets could limit our ability to obtain additional debt financing.

In addition, the Credit Agreement contains negative covenants restricting our activities, including limitations on dispositions, mergers or acquisitions;

encumbering our intellectual property;

incurring indebtedness or liens;

paying dividends or redeeming stock or making other distributions;

making certain investments;

liquidating our company;

modifying our organizational documents;

entering into sale-leaseback arrangements and engaging in certain other business transactions.

In addition, we are required to maintain a minimum liquidity amount of $3.0 million.

Failure to comply with the covenants in the Credit Agreement, including the minimum liquidity, could result in the acceleration of our obligations under the Credit Agreement, which are also subject to acceleration upon the occurrence of specified events of default, including payment default, change in control, bankruptcy, insolvency, certain defaults under other material debt, certain events with respect to regulatory approvals and a material adverse change in our business, operations or other financial condition.

If an event of default (other than certain events of bankruptcy or insolvency) occurs and is continuing, OrbiMed may declare all or any portion of the outstanding principal amount of the borrowings plus accrued and unpaid interest to be due and payable.

In addition, the CIBC Credit Agreement contains covenants requiring certain financial performance metrics that restrict our activities, including (x) a requirement to maintain a minimum liquidity amount of the greater of either (i) the consolidated adjusted EBITDA loss (or gain) for the trailing four month period (only if EBITDA is negative) and (ii) $10.0 million, and (y) a requirement to maintain total net revenue of at least 75% of the level set forth in the total revenue plan presented to CIBC.

Failure to comply with the covenants in the CIBC Credit Agreement, including the financial covenants, could result in the acceleration of our obligations under the CIBC Credit Agreement, which are also subject to acceleration upon the occurrence of specified events of default, including payment default, change in control, bankruptcy, insolvency, certain defaults under other material debt, certain events with respect to regulatory approvals and a material adverse change in our business, operations or other financial condition.

If an event of default (other than certain events of bankruptcy or insolvency) occurs and is continuing, CIBC may declare all or any portion of the outstanding principal amount of the borrowings plus accrued and unpaid interest to be due and payable.

Upon the occurrence of certain events of bankruptcy or insolvency, all of the outstanding principal amount of the borrowings plus accrued and unpaid interest will automatically become due and payable.

1 unchanged sentence

Our outstanding indebtedness and any future indebtedness, combined with our other financial obligations, could increase our vulnerability to adverse changes in general economic, industry and market conditions, limit our flexibility in planning for, or reacting to, changes in our business and the industry and impose a competitive disadvantage compared to our competitors that have less debt or better debt servicing options.

Management’s Discussion and Analysis-Long-term Debt” in this Annual Report on Form 10-K.

See “Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Long-term Debt”

in this Annual Report on Form 10-K.

Our financial results may fluctuate from quarter to quarter, which makes our results difficult to predict and may cause our results to fall short of expectations.

Our financial results may fluctuate from quarter to quarter due to a number of factors, including the availability of donor organs for transplantation, which is unpredictable and could impact the volume of transplant procedures performed at transplant centers using the OCS, and foreign currency exchange rates.

Our revenue from sales may fluctuate significantly from quarter to quarter, and our future quarterly and annual expenses as a percentage of our revenue may be significantly different from those we have recorded in the past.

3 unchanged sentences

Our ability to use our net operating losses and research and development credit carryforwards to offset future taxable income may be subject to limitations.

As of December 31, 2021, we had U.S.

federal and state net operating loss, or NOL, carryforwards of $368.1 million and $304.0, respectively, which may be available to offset future taxable income.

federal NOL carryforwards began to expire in 2022 and our state NOL carryforwards begin to expire in 2030.

The Company’s federal net operating losses include $156.4 million, which can be carried forward indefinitely.

As of December 31, 2022, we had federal net operating loss, or NOL, carryforwards of $378.5 million, which may be available to offset future taxable income, of which $209.5 million of the total net operating loss carryforwards expire at various dates beginning in 2023, while the remaining $169.0 million do not expire but are limited in their usage to an annual deduction equal to 80% of annual taxable income.

As of December 31, 2022, we had state net operating loss carryforwards of $321.2 million, which may be available to offset future taxable income and expire at various dates beginning in 2030.

As of December 31, 2022, we also had U.S.

2 unchanged sentences

A material portion of these NOL and tax credit carryforwards could expire unused and be unavailable to offset future income tax liabilities.

In addition, in general, under Sections 382 and 383 of the Internal Revenue Code of 1986, as amended, or the Code, a corporation that undergoes an “ownership change,” generally defined as a greater than 50% change by value in its equity ownership over a three-year period, is subject to limitations on its ability to utilize its pre-change NOLs, its research and development credit carryforwards and its disallowed interest expense carryovers to offset future taxable income.

In addition, in general, under Sections 382 and 383 of the Internal Revenue Code of 1986, as amended, or the Code, a corporation that undergoes an “ownership change,”

generally defined as a greater than 50% change by value in its equity ownership over a three-year period, is subject to limitations on its ability to utilize its pre-change NOLs, its research and development credit carryforwards and its disallowed interest expense carryovers to offset future taxable income.

Our existing NOLs and research and development credit carryforwards may be subject to limitations arising from previous ownership changes.

11 unchanged sentences

This may cause a reduction in the potential economic benefit of our NOLs and other available deferred tax assets.

The transition away from LIBOR may adversely affect our cost to obtain financing.

On July 27, 2017, the UK Financial Conduct Authority announced that it intends to stop persuading or compelling banks to submit London Interbank Offered Rate, or LIBOR, rates after 2021.

The Financial Conduct Authority and the ICE Benchmark Administration recently announced that LIBOR may continue for legacy contracts until June 2023.

The Alternative Reference Rates Committee, a steering committee comprised of U.S.

financial market participants, selected and the Federal Reserve Bank of New York has recommended the Secured Overnight Finance Rate, or SOFR, as an alternative to LIBOR.

SOFR is a broad measure of the cost of borrowing cash in the overnight U.S.

treasury repo market.

Rates linked to SOFR or associated changes related to the adoption of SOFR may not be as favorable to us as LIBOR and may result in an effective increase in the applicable interest rate on our current or future debt obligations, including our Credit Agreement.

Risks Related to Product Development and Commercialization

We depend heavily on the success of the OCS and achieving market acceptance.

We may need to raise additional funding, which might not be available on favorable terms or at all.

Raising additional capital may cause dilution to our shareholders.

Although we fund a portion of our operations from revenue from sales of our OCS products and services, we expect that we will need to finance our operations through a combination of equity offerings, debt financings and strategic alliances until such time, if ever, that we can generate substantial revenue sufficient to achieve profitability.

We also may elect to raise additional funds sooner because we believe market conditions are attractive or as a risk mitigation measure.

Additional capital might not be available when we need it, and our actual cash requirements might be greater than anticipated.

If we require additional capital at a time when investment in our industry or in the marketplace in general is limited, we might not be able to raise funding on favorable terms, if at all.

If we raise additional funds through the issuance of equity or convertible securities, the issuance of these securities could dilute your percentage ownership in our company.

Furthermore, newly issued securities may have rights, preferences or privileges senior to those of common shareholders.

The terms of any debt financing also could impose significant restrictions on our operations.

Risks Related to Product Commercialization and Development

Our long-term growth depends on our ability to expand access to the OCS through our National OCS Program.

We have developed a National OCS Program, an innovative turnkey solution to provide outsourced organ retrieval and OCS organ management, to provide transplant programs with a more efficient process to procure donor organs with the OCS.

We believe the National OCS Program will continue to expand access and use of the OCS.

However, we may not be successful in the continued development of our National OCS Program, which will depend on recruiting and retaining qualified surgeons and establishing and maintaining effective coordination with transplant centers and regional Organ Procurement Organizations

to locate donor organs and recipients.

We may not be able to recruit and retain surgeons and other qualified personnel, including due to demand for their capabilities and competitive compensation offered by other employers.

In order to recruit and retain such highly qualified employees, we also may need to increase the level, or change the form or composition, of the compensation that we pay to them, which would increase our expenses.

In addition to our own surgical and clinical personnel, we utilize a network with a limited number of partners for organ retrieval, organ preservation and transportation services offered through our National OCS Program.

If any of these relationships are interrupted or terminated, or if one or more partners are unable or unwilling to fulfill their obligations for any reason, National OCS Program services to our customers may be interrupted.

We also may not be able to identify or negotiate with additional partners on terms that are commercially reasonable to us.

The interruption or failure to retain or replace partners for our National OCS Program would negatively impact our operations and financial results.

Furthermore, the expenses incurred by us for sales of OCS products to customers who participate in our National OCS Program are typically higher than expenses for sales of OCS products to our other customers and as we seek to increase sales of our OCS products through our National OCS Program our gross margin may decline.

Additional expenses incurred by our National OCS Program include the cost of transportation and increases in the cost of fuel and other transportation costs would impact our expenses related to operating the National OCS Program, which could adversely affect our business, financial condition, operating results, cash flows and prospects.

We will need to increase our manufacturing and sterilization capacity in the future and may encounter problems at our manufacturing facility or otherwise.

In order to manufacture the OCS in quantities sufficient to meet our anticipated commercial opportunity, we will need to continue to increase our manufacturing capabilities, including operationalizing our expanded clean room at our Andover facility, and retain third parties to sterilize our products.

We may encounter technical challenges to increasing the scale at which we manufacture the OCS, including with respect to material procurement and quality control and assurance.

An increase in production could make it more difficult for us to comply with quality system regulations or other applicable requirements that are currently enforced by the FDA and other regulatory authorities, or that may be introduced in the future, in both the United States and in other countries.

Commercial scale production of the OCS on a continuing basis also will require us to continue to hire and retain additional management and technical personnel who have the necessary manufacturing experience and skills.

We might not successfully identify, hire or retain qualified personnel on a timely basis or at all.

To maintain quality of our OCS, we may not be able to scale production of our OCS products at a rate that meets customer demand for our products.

Our inability to increase the scale of our manufacturing of the OCS could impair our ability to generate revenue and adversely affect market acceptance of our product.

In addition, all of our manufacturing operations are conducted at a single facility in Andover, Massachusetts.

Any interruption in operations at this location, or delays in operationalizing our expanded clean room facility, could result in our inability to satisfy product demand.

Despite our efforts to safeguard this facility, including acquiring insurance on commercially reasonable terms, adopting environmental health and safety protocols and utilizing off-site storage of computer data, a number of factors could damage or destroy our manufacturing equipment or our inventory of component supplies or finished goods, cause substantial delays in our operations, result in the loss of key information, and cause us to incur additional expenses, including:

operating restrictions, partial suspension or total shutdown of production imposed by regulatory authorities;

equipment malfunctions or failures;

technology malfunctions;

work stoppages;

damage to or destruction of the facility due to natural disasters or other events;

regional or local power shortages.

Our insurance may not cover our losses in any particular case, or insurance may not be available on commercially reasonable terms to cover certain of these catastrophic events.

In addition, regardless of the level of insurance coverage, damage

to our facilities or any disruption that impedes our ability to manufacture the OCS in a timely manner could materially and adversely affect our business, financial condition, operating results, cash flows and prospects.

We rely on third-party vendors to sterilize our disposable sets prior to sale.

If vendors are unable to sterilize our products, whether due to capacity, availability of materials for sterilization, regulatory or other constraints, including federal and state regulations on the use of ethylene oxide used in the sterilization process, we will not be able to sell products until we can retain an alternative vendor to sterilize the products.

We may be unable to transition to alternative methods of sterilization in a timely or cost-effective manner or at all, which could harm our business and results of operations.

Our results of operations could be materially harmed if we are unable to accurately forecast customer demand for our products and manage our inventory.

We seek to maintain sufficient levels of inventory, including our OCS Perfusion Sets, in order to protect ourselves from supply interruptions and to support the demand from customers, but keep limited components, sub-assemblies, materials and finished products on hand.

To ensure adequate inventory supply and manage our operations with our suppliers, we forecast anticipated materials requirements and demand for our products in order to predict inventory needs and then place orders with our suppliers based on these predictions.

Our ability to accurately forecast demand for our products could be negatively affected by many factors, including the rate of transplantations, product recalls, failure to accurately manage our commercial strategy, product introductions by competitors, an increase or decrease in customer demand for our products, our failure to accurately forecast customer acceptance of new products, changes to hospital capacity, staffing, procedure and protocol changes, unanticipated changes in general market conditions or regulatory matters and weakening of economic conditions or consumer confidence in future economic conditions.

We also maintain inventory reserves at regional locations for distribution through our National OCS Program.

If we are not able to maintain sufficient inventory at these locations, or if we are not able to accurately predict the regional demand for our OCS products, we will incur additional costs to transport inventory to our regional locations, including rebalancing inventory amongst regional locations, and we may not be able to grow our commercial sales as anticipated.

Inventory levels in excess of customer demand may result in a portion of our inventory becoming obsolete or expiring, as well as inventory write-downs or write-offs.

Conversely, if we underestimate customer demand for our products or our own requirements for components, subassemblies and materials, our manufacturing partners and suppliers may not be able to deliver components, sub-assemblies and materials to meet our requirements and our manufacturing may be affected by the impact of COVID-19, general impacts of inflation and labor shortages on our suppliers, which could result in inadequate inventory levels or interruptions, delays or cancellations of deliveries to our customers, any of which would damage our reputation, customer relationships and business.

In addition, several components, sub-assemblies and materials incorporated into our products require lengthy order lead times, and additional supplies or materials may not be available when required on terms that are acceptable to us or our manufacturing partners, or at all, and our manufacturing partners and suppliers may not be able to allocate sufficient capacity in order to meet our increased requirements, any of which could have an adverse effect on our ability to meet customer demand for our products and our results of operations.

We aim to maintain strategic reserves of our OCS Perfusion Sets, but if we are not able to manufacture and assemble OCS Perfusion Sets at a rate that will allow us to maintain these reserves, then we will be required to rely on alternative strategies to deliver OCS Perfusion Sets in a timely manner, which may impact our expenses and results of operations.

We depend heavily on the success of the OCS and it achieving market acceptance.

If we are unable to successfully commercialize the OCS, our business may fail.

We have invested all of our efforts and financial resources in the development of the OCS, educating surgeons, transplant centers, Organ Procurement Organizations and private and public payors of the benefits of the OCS and providing services related to the OCS.

Although we have received PMAs from the FDA for preservation of donor lungs for the transplantation of DBD and DCD donor organs, for the preservation of donor hearts for the transplantation of DBD donor organs and for the preservation of donor livers from DBD and certain DCD donor organs, we might not successfully commercialize the OCS for these approved indications or obtain approvals for additional indications or in additional jurisdictions on our planned timing or at all.

Our ability to generate product revenue and become profitable depends primarily on sales of OCS Perfusion Sets and OCS Solutions, which we refer to collectively as disposable sets, and OCS Consoles.

Although we have received PMAs from the FDA for each of our three OCS products, we might not successfully commercialize the OCS for these approved indications or obtain approvals for additional indications or in additional jurisdictions on our planned timing or at all.

Our ability to generate product revenue and become profitable depends primarily on sales of OCS Perfusion Sets and OCS Solutions, which we refer to collectively as disposable sets.

Our assumptions regarding demographic trends, donor organ availability and the use of transplantation as a treatment for end-stage organ failure may prove to be incorrect.

In order to achieve market acceptance for the OCS, we expect that we will need to demonstrate to surgeons, transplant center program directors, Organ Procurement Organizations and private and public payors that the OCS potentially results in some or all of the following:

We expect that we will need to continue to demonstrate to surgeons, transplant center program directors, Organ Procurement Organizations and private and public payors that the OCS potentially results in some or all of the following:

improvements in post-transplant clinical outcomes, increases in the utilization of donor organs, expansion of the pool of potential donors and reduction in the total cost of care as compared to available alternatives.

In addition, the medical community might not consider data collected from our patient registry meaningful or compelling, or the data collected from our patient registry or any clinical or commercial experience could indicate that the OCS is unsafe, which would substantially undermine our commercialization efforts.

Surgeons, transplant centers and private and public payors often are slow to adopt new products, technologies and treatment practices that require additional upfront costs and training.

The cost of the OCS significantly exceeds the cost of cold storage preservation.

In addition, surgeons may not be willing to undergo training to use the OCS, may decide the OCS is too complex to adopt without appropriate training and may choose not to use the OCS.

In addition, our international customers and some U.S.

customers use a direct acquisition model pursuant to which transplant centers train their own teams for retrieval and organ management using the OCS rather than utilizing our National OCS Program.

Surgeons may not be willing to undergo training to use the OCS, may decide the OCS is too complex to adopt without appropriate training and may choose not to use the OCS, which may limit the adoption of the OCS under the direct acquisition model.

Based on these and other factors, transplant center program directors, Organ Procurement Organizations and private and public payors may decide that the benefits of the OCS do not outweigh its costs.

4 unchanged sentences

An important part of our commercialization efforts is to educate transplant center program directors and other surgeons on the relative merits of the OCS.

Our success depends, in large part, on effectively marketing and educating program directors and other surgeons about the benefits of the OCS.

Acceptance of the OCS also depends on educating program directors, other surgeons and private and public payors as to the distinctive characteristics, perceived medical and economic benefits, safety, ease of use and cost-effectiveness of the OCS.

If program directors, other surgeons and private and public payors do not find our body of published clinical evidence and data compelling or wish to wait for additional studies, they may choose not to use or provide coverage and reimbursement for our products.

Our success depends, in large part, on effectively marketing and educating program directors and other surgeons about the benefits of the OCS and our National OCS Program.

Currently, most universal national healthcare systems outside of the United States do not reimburse transplant centers for the use of the OCS and reimbursement in international markets may require us to undertake additional clinical studies.

2 unchanged sentences

We cannot provide assurance that any data that we or others may generate in the future will be consistent with that observed in our existing clinical studies.

Our long-term growth depends on our ability to expand access to the OCS through our National OCS Program.

We are developing a National OCS Program, a turnkey solution to provide outsourced organ retrieval and OCS organ management, to provide transplant programs with a more efficient process to procure donor organs with the OCS.

We believe the National OCS Program will expand access and use of the OCS.

However, we may not be successful in the continued

development of our National OCS Program, which will depend on recruiting and retaining qualified surgeons and coordinating with transplant centers and regional O rgan P rocurement O rganizations .

We may not be able to recruit and retain surgeons and other qualified personnel, including due to demand for their capabilities and competitive compensation offered by other employers.

In addition to our own surgical and clinical personnel, we utilize a network with a limited number of partners for a portion of our organ retrieval, organ preservation and transportation services offered through our National OCS Program.

If our partners are unable to fulfill their obligations under their contracts, it could harm our operations.

If any of these relationships are interrupted or terminated, or if one or more partners are unable or unwilling to fulfill their obligations for whatever reasons, National OCS program services to our customers may be interrupted, and business and financial results may be negatively impacted.

Further, we may not be able to identify or negotiate with additional partners on terms that are commercially reasonable to us.

In addition, as the National OCS Program expands access to the OCS, transplant surgeons may increasingly rely on information provided to them by our clinical specialists and surgeons.

We are responsible for the accuracy of information about the OCS that is provided to transplant surgeons who participate in the National OCS Program.

In addition, as the National OCS Program expands access to the OCS, transplant surgeons may increasingly rely on clinical data regarding the organ provided to them by our clinical specialists and surgeons.

We are responsible for the clinical data regarding the organ that is provided to transplant surgeons who participate in the National OCS Program.

Our long-term growth depends on our ability to improve the OCS platform, including by expanding into new indications and developing the next generation of our products.

Our business plan contemplates that we will continue to improve the OCS platform, including by expanding into additional organs and developing the next generation of our products.

Developing such new or modified products is expensive and time-consuming and diverts management’s attention away from current operations.

The success of any new product offering or product enhancements to our OCS platform will depend on several factors, including our ability to:

9 unchanged sentences

If we are not successful in expanding our indications and developing the next generation of our products, our ability to increase our revenue may be impaired, which could materially and adversely affect our business, financial condition, operating results, cash flows and prospects.

We have limited experience in directly marketing and selling our products, and if we are unable to successfully expand our sales infrastructure and adequately address our customers’ needs, it could negatively impact sales and market acceptance of our products and we may never generate sufficient revenue to achieve or sustain profitability.

We have limited experience in directly marketing and selling our products, and if we are unable to successfully expand our sales infrastructure and adequately address our customers’

needs, it could negatively impact sales and market acceptance of our products and we may never generate sufficient revenue to achieve or sustain profitability.

We have limited experience in directly marketing and selling our products in the United States.

1 unchanged sentence

If we fail to adequately promote and market our products, our sales may not grow or could significantly decrease.

We believe it is necessary to utilize a sales force that incorporates a specialized group consisting of sales representatives and clinical specialists who have experience with products to support our customers’ needs.

Competition for sales representatives and marketing employees is intense and we may be unable to attract and retain sufficient personnel to

maintain an effective sales and marketing force.

If we are unable to adequately address our customers’ needs, it could negatively impact sales and market acceptance of our products, and we may not generate sufficient revenue to achieve or sustain profitability.

Competition for sales representatives and marketing employees is intense and we may be unable to attract and retain sufficient personnel to maintain an effective sales and marketing force.

If we are unable to adequately address our customers’

needs, it could negatively impact sales and market acceptance of our products, and we may not generate sufficient revenue to achieve or sustain profitability.

Our future success will depend largely on our ability to continue to hire, train, retain and motivate skilled surgeons, sales representatives and clinical specialists, and ensuring our sales program offerings satisfy the needs of our customers.

1 unchanged sentence

If we fail to train new hires adequately, if we experience high turnover in our sales force in the future, or if our sales program offerings do not satisfy the needs of our customers, new hires may not become as productive as may be necessary to maintain or increase our sales.

We depend on a limited number of customers for a significant portion of our net revenue and the loss of, or a significant shortfall in demand from, these customers could have a material adverse effect on our financial condition and operating results.

We generate a significant amount of our net revenue from a limited number of customers.

For the year ended December 31, 2021, Duke University accounted for 11% of our net revenue.

We expect that sales to relatively few customers will continue to account for a significant percentage of our net revenue in future periods.

However, these customers or any of our other customers may not continue to utilize our products at current levels, pricing, or at all, and our revenue could fluctuate significantly due to changes in economic conditions, the use of other methods for organ preservation, such as cold storage, or the loss of, reduction of business with, or less favorable terms with any of our largest customers.

We depend on a limited number of customers for a significant portion of our revenue and the loss of, or a significant shortfall in demand from, these customers could have a material adverse effect on our financial condition and operating results.

We generate a significant amount of our revenue from a limited number of customers.

For the year ended December 31, 2022, the Mayo Clinic Hospital - Phoenix accounted for 14% of our revenue.

However, this customer or any of our other customers may not continue to utilize our products at current levels, pricing, or at all, and our revenue could fluctuate significantly due to changes in economic conditions, the use of other methods for organ preservation, such as cold storage, or the loss of, reduction of business with, or less favorable terms with any of our largest customers.

Our future success will depend upon the timing and volume of business from our largest customers and the financial and operational success of these customers.

If we were to lose one of our key customers or have a key customer significantly reduce its volume of business with us, our revenue may be materially reduced, which would materially and adversely affect our business, financial condition, operating results, cash flows and prospects.

Revenue from customers who participated in our National OCS Program accounted for approximately 89% of total revenue from customers in the United States for the year ended December 31, 2022.

Our success will depend on our ability to maintain the function and efficiency, while increasing capacity and capability, of our National OCS Program.

If we are unable to deliver OCS products to customers through their participation in the National OCS Program, our revenue may be materially reduced, which would materially and adversely effect our business, financial condition, operating results, cash flows and prospects.

We depend on single-source suppliers and, in a few cases, sole-source suppliers for many of the components used in the OCS.

1 unchanged sentence

For example, each of Fresenius Kabi Austria GmbH and Fresenius Kabi AB, which we refer to collectively as Fresenius, is our single-source supplier of OCS Solutions for the OCS Lung and the OCS Heart, respectively.

While we have manufacturing and supply agreements with certain of our suppliers, for most of our suppliers, we place purchase orders on an as-needed basis.

While we have manufacturing and supply agreements with certain of our suppliers, for most of our suppliers, we place purchase orders on an

as-needed basis.

Our suppliers could discontinue the manufacturing or supply of these components at any time.

14 unchanged sentences

Any such modified product might not be as effective as the predecessor product or might not gain market acceptance.

This could lead to customer

dissatisfaction and damage to our reputation and could materially and adversely affect our business, financial condition, operating results, cash flows and prospects.

Our results of operations could be materially harmed if we are unable to accurately forecast customer demand for our products and manage our inventory.

We seek to maintain sufficient levels of inventory in order to protect ourselves from supply interruptions, but keep limited components, sub-assemblies, materials and finished products on hand.

Inventory levels in excess of customer demand may result in a portion of our inventory becoming obsolete or expiring, as well as inventory write-downs or write-offs.

Conversely, if we underestimate customer demand for our products or our own requirements for components, subassemblies and materials, our manufacturing partners and suppliers may not be able to deliver components, sub-assemblies and materials to meet our requirements and our manufacturing may be affected by the impact of COVID-19 on our suppliers, which could result in inadequate inventory levels or interruptions, delays or cancellations of deliveries to our customers, any of which would damage our reputation, customer relationships and business.

We will need to increase our manufacturing capacity in the future and may encounter problems at our manufacturing facility or otherwise.

In order to manufacture the OCS in quantities sufficient to meet our anticipated commercial opportunity, we will need to increase our manufacturing capabilities.

We may encounter technical challenges to increasing the scale at which we manufacture the OCS, including with respect to material procurement and quality control and assurance.

Commercial scale production of the OCS on a continuing basis also will require us to hire and retain additional management and technical personnel who have the necessary manufacturing experience and skills.

We might not successfully identify, hire or retain qualified personnel on a timely basis or at all.

Our inability to increase the scale of our manufacturing of the OCS could impair our ability to generate revenue and adversely affect market acceptance of our product.

In addition, all of our manufacturing operations are conducted at a single facility in Andover, Massachusetts.

Any interruption in operations at this location could result in our inability to satisfy product demand.

operating restrictions, partial suspension or total shutdown of production imposed by regulatory authorities;

equipment malfunctions or failures;

technology malfunctions;

work stoppages;

damage to or destruction of the facility due to natural disasters or other events;

regional or local power shortages.

Our insurance may not cover our losses in any particular case, or insurance may not be available on commercially reasonable terms to cover certain of these catastrophic events.

In addition, regardless of the level of insurance coverage, damage to our facilities or any disruption that impedes our ability to manufacture the OCS in a timely manner could materially and adversely affect our business, financial condition, operating results, cash flows and prospects.

This could lead to customer dissatisfaction and damage to our reputation and could materially and adversely affect our business, financial condition, operating results, cash flows and prospects.

We depend on third parties to transport donor organs and medical personnel for our National OCS Program, and limited availability of, or increases in the cost of, transportation could limit our ability to expand or operate our National OCS Program.

Our NOP depends on the use of a third-party network of private aircraft to transport medical personnel to retrieve donor organs and deliver donor organs to patients for transplantation.

Reliance on private aircraft is subject to various risks, including those associated with change in fuel prices, work stoppages and weather-related operating hazards.

In particular, private aircraft are occasionally in high demand and/or subject to price fluctuations based on market conditions.

Further, availability is constrained by a limited number of private aircraft available in the United States and a limited number of qualified pilots.

As a result, third party private aircraft providers may not be able to prioritize our use of their services.

If we are unable to obtain flight services for our NOP when needed, we may be unable to utilize our NOP to satisfy demand.

We also may be required to seek alternative and, potentially more costly, flight services.

These flight costs represent a significant part of the cost structure for our NOP, and although the cost of flights is paid by our customers, a substantial increase in the cost of flight services, due to prolonged increases in fuel prices, lack of availability of aircraft or otherwise, may require us to incur additional costs to identify and obtain alternative flights or rebalance our inventory by shipping products to locations for which flight costs are less expensive or from which flights are more readily available, and customers may be unwilling or unable to incur higher costs of flights and therefore forgo use of our services and products for the retrieval of donor organs despite availability.

Further, the capacity of our NOP is limited by the number of aircraft and pilots available for our use and as we continue to expand our NOP, we will be required to obtain access to a greater number of available aircraft and pilots.

We may not be able to achieve or maintain satisfactory pricing and margins for our products.

1 unchanged sentence

Any decline in the amount that payors reimburse our customers for OCS Products could make it difficult for customers to continue using, or to adopt, our products and could create additional pricing pressure for us.

If we are forced to lower the price we charge for our products, our gross margins will decrease, which will adversely affect our ability to invest in and grow our business.

If we are forced to lower the price we charge for our

products, our gross margins will decrease, which will adversely affect our ability to invest in and grow our business.

If we are unable to maintain our prices, or if our costs increase and we are unable to offset such increase with an increase in our prices, our margins could erode.

2 unchanged sentences

The supply of raw materials to our component parts suppliers could be interrupted for a variety of reasons, including availability and pricing.

We have experienced supply chain disruptions related to the COVID-19 pandemic, and continued disruptions to the supply chain could adversely affect our ability to meet commitments to customers.

We may experience supply chain disruptions due to general impacts of inflation and labor shortages and these disruptions to the supply chain could adversely affect our ability to meet commitments to customers.

Significant price increases could adversely affect our results of operations and operating margins.

10 unchanged sentences

Other companies may develop technologies and products that result in improved patient outcomes or are safer, easier to use, less expensive or more readily accepted than the OCS.

Their products or technologies could make the OCS obsolete or noncompetitive.

These products or technologies could make the OCS obsolete or noncompetitive and reduce demand for our OCS products.

Many of these providers of alternative products, procedures and therapies have greater name recognition, significantly greater financial resources and expertise in research and development, manufacturing, preclinical testing, conducting clinical trials, obtaining regulatory approvals and clearances and marketing and selling products than we do.

5 unchanged sentences

Conducting clinical trials is a complex and expensive process, can take many years and outcomes are inherently uncertain.

For the development of the next generation of OCS products, we may incur substantial expense for, and devote significant time to, clinical trials but cannot be certain that the product tested will ever generate revenue sufficient to cover the costs of trials.

For the development of the next generation of OCS products or the development of OCS products for additional organs, we may incur substantial expense for, and devote significant time to, clinical trials but cannot be certain that the product tested will ever generate revenue sufficient to cover the costs of trials.

We may experience significant setbacks in clinical trials, even after earlier clinical trials showed promising results, and failure can occur at any time during the clinical trial process.

7 unchanged sentences

As a condition to our PMA approvals, we are required to conduct post-market studies.

For example, we have post-approval registries ongoing for all three of our organ products, including the OCS Lung Thoracic Organ Perfusion Registry, or TOP Registry, the OCS Heart Perfusion Registry, or OHP, and the OCS Liver Perfusion Registry, or OLP.

Adverse outcomes in post-approval studies can result in withdrawal of approval of a PMA or restrictions on the approval.

We will need to conduct additional clinical studies to support use of the OCS in, and development of OCS products for, new organs, like kidney, and potentially for commercialization of our products in additional foreign jurisdictions.

We will need to conduct additional clinical studies to support use of the OCS in, and development of OCS products for, new organs, and potentially for commercialization of our products in additional foreign jurisdictions.

Clinical trials in organ transplant are difficult to design and implement, take substantial time to conduct and are expensive.

8 unchanged sentences

the number of subjects or patients required for clinical trials may be larger than we anticipate, enrollment in these clinical trials may be insufficient or slower than we anticipate, and the number of clinical trials being conducted at any given time may be high and result in fewer available patients for any given clinical trial, or patients may drop out of these clinical trials at a higher rate than we anticipate;

our third-party contractors, including those manufacturing products, may fail to comply with regulatory requirements or meet their contractual obligations to us in a timely manner or at all;

our third-party contractors, including those manufacturing or sterilizing our products, may fail to comply with regulatory requirements or meet their contractual obligations to us in a timely manner or at all;

we might have to suspend or terminate clinical trials for various reasons, including a finding that the subjects are being exposed to unacceptable health risks;

8 unchanged sentences

For example, our clinical studies may produce negative or inconclusive results, and, in the future, we may decide, or regulators may require us, to conduct clinical and non-clinical testing in addition to those we have planned.

After submission of our PMA applications for OCS Lung and OCS Heart, the FDA requested certain additional clinical analyses, technical information and clarifications as part of the agency’s normal review process.

The FDA ultimately approved both PMAs.

8 unchanged sentences

Our ability to attract and retain a high-quality workforce depends upon our commitment to a diverse and inclusive environment, along with our perceived trustworthiness and ethics.

Issues can arise in any number of circumstances, including employment-related offenses such as workplace harassment and discrimination, regulatory noncompliance, and failure to properly use and protect data and systems, as well as from actions taken by regulators or others in response to such conduct.

Issues can arise in any number of circumstances, including employment-related offenses such as workplace harassment and discrimination, regulatory noncompliance, failure to properly use and protect data and systems, and violations of our employee policies, as well as from actions taken by regulators or others in response to such conduct.

Addressing allegations of misconduct detracts focus from business operations and is expensive.

11 unchanged sentences

security breaches and data corruption.

The failure of either our or our service providers’ information technology could disrupt our entire operation or result in decreased sales, increased overhead costs and product shortages, all of which could materially and adversely affect our business, financial condition, operating results, cash flows and prospects.

The failure of either our or our service providers’

information technology could disrupt our entire operation or result in decreased sales, increased overhead costs and product shortages, all of which could materially and adversely affect our business, financial condition, operating results, cash flows and prospects.

In addition, our software systems include cloud-based applications that are hosted by third-party service providers with security and information technology systems subject to similar risks.

1 unchanged sentence

New and expanding threats to our information systems, including computer viruses, ransomware and phishing attacks and more sophisticated and targeted cyber-related attacks, as well as cybersecurity failures resulting from human error and technological errors, pose a risk to the security of our systems and the systems of our customers, business partners and suppliers, as well the confidentiality, availability and integrity of the data we process.

In addition, there are numerous and evolving risks to cybersecurity, including criminal hackers, hacktivists, state-sponsored intrusions, industrial espionage, employee malfeasance and human or technological error.

In addition, there are

numerous and evolving risks to cybersecurity, including criminal hackers, hacktivists, state-sponsored intrusions, industrial espionage, employee malfeasance and human or technological error.

We also have access to sensitive, confidential or personal data or information that is subject to privacy and security laws, regulations or customer-imposed controls.

12 unchanged sentences

Because we market the OCS in countries in Europe, Asia-Pacific, Central Asia and Canada and plan to market it in other international markets, we are subject to risks associated with doing business internationally.

During the years ended December 31, 2021 and 2020, 28% and 25%, respectively, of our net revenue was generated from customers located outside of the United States.

During the years ended December 31, 2022, 2021 and 2020, 10%, 28% and 25%, respectively, of our revenue was generated from customers located outside of the United States.

We anticipate that international sales will continue to represent a meaningful portion of our total sales.

1 unchanged sentence

Accordingly, our results of operations could be harmed by a variety of factors, including:

changes in a country’s or region’s political or economic conditions, including any potential impact resulting from the UK ’s exit from the European Union;

changes in a country’s or region’s political or economic conditions;

longer payment cycles of foreign customers and difficulty of collecting receivables in foreign jurisdictions;

12 unchanged sentences

We rely on shipping providers to deliver products to our customers globally.

Labor, tariff or World Trade Organization-related disputes, piracy, physical damage to shipping facilities or equipment caused by severe weather or terrorist incidents, congestion at shipping facilities, inadequate equipment to load, dock and offload our products, energy-related tie-ups, the impacts of the COVID-19 pandemic or other factors could disrupt or delay shipping or off-loading of our products domestically and internationally.

Labor, tariff or World Trade Organization-related disputes, piracy, physical damage to shipping facilities or equipment caused by severe weather or terrorist incidents, congestion at shipping facilities, inadequate equipment to load, dock and offload our products, energy-related tie-ups or other factors could disrupt or delay shipping or off-loading of our products domestically and internationally.

Such disruptions or delays could materially and adversely affect our business, financial condition, operating results, cash flows and prospects.

7 unchanged sentences

Hassanein, could impede our achievement of our research, development and commercialization objectives.

In addition, it will be an event of default under our Credit Agreement if Dr.

Hassanein ceases to be our President and Chief Executive Officer and we do not hire a replacement that is reasonably acceptable to OrbiMed within 120 days.

We maintain $1.0 million of “key person” insurance policy on the life of Dr.

We maintain $1.0 million of “key person”

insurance policy on the life of Dr.

Hassanein, but we do not maintain such insurance on any of our other employees.

3 unchanged sentences

The failure to manage our growth effectively could harm our business.

To manage our anticipated future growth effectively, we must enhance our manufacturing capabilities, information technology infrastructure and financial and accounting systems and controls.

Our growth could require significant capital expenditures and may divert financial resources from other projects, such as the development of the OCS for transplants involving additional indications or other organs, such as kidney.

Our National OCS Program, a turnkey solution to provide outsourced organ retrieval and OCS organ management, may also require additional capital expenditures.

To manage our anticipated future growth effectively, we must enhance our manufacturing and sterilization capabilities, information technology infrastructure and financial and accounting systems and controls.

Our growth will require significant capital expenditures and may divert financial resources from other projects, such as the development of the OCS for transplants involving additional indications or other organs.

Our National OCS Program, an innovative turnkey solution to provide outsourced organ retrieval and OCS organ management, will also require additional capital expenditures.

If we are unable to effectively manage our growth, our expenses may increase more than expected, our revenue could grow more slowly than expected and we might not be able to achieve our research and development and commercialization goals, which in turn could materially and adversely affect our business, financial condition, operating results, cash flows and prospects.

If we pursue acquisitions, such acquisitions may expose us to additional risks.

We may review acquisition and strategic investment opportunities to expand our current product offerings, increase the size and geographic scope of our operations or otherwise offer growth and operating efficiency opportunities.

If we pursue acquisitions, joint ventures, and strategic investments, such transactions may expose us to additional risks.

We may review acquisition, joint ventures and strategic investment opportunities to expand our current product offerings, increase the size and geographic scope of our operations or otherwise offer growth and operating efficiency opportunities.

There can be no assurance that we will be able to identify suitable candidates or consummate these transactions on favorable terms.

If required, the financing for these transactions could result in an increase in our indebtedness, dilute the interests of our shareholders or both.

The purchase price for some acquisitions may include additional amounts to be paid in cash in the future, a portion of which may be contingent on the achievement of certain future operating results of the acquired business.

If the performance of any such acquired business exceeds such operating results, then we may incur additional charges and be required to pay additional amounts.

The purchase price for some acquisitions or joint ventures interests may include additional amounts to be paid in cash in the future, a portion of which may be contingent on the achievement of certain future operating results of the acquired business.

If the performance of any such acquired business or joint venture exceeds such operating results, then we may incur additional charges and be required to pay additional amounts.

Our failure to successfully complete the integration of any acquired business or to achieve the long-term plan for such business, as well as any other adverse consequences associated with our acquisition and investment activities, could have an adverse effect on our business.

Any acquisition may also disrupt our ongoing business, divert resources, increase our expenses, and distract our management from our ongoing operations.

The outbreak of the novel strain of coronavirus (COVID-19) impacts our business, financial condition, operating results, cash flows and prospects.

The COVID-19 pandemic, including efforts to contain the spread of the coronavirus, has impacted, and may continue to impact, our business, financial condition, operating results and cash flows, including as a result of the impact of new variants.

Impacts to our business as a result of COVID-19 have included the temporary disruption of transplant procedures at many of the organ transplant centers who purchase OCS products;

customer delays or reductions in customer capital expenditures and operating budgets and the related impact on our product sales;

disruptions to our manufacturing operations and supply chain caused by facility closures, reductions in operating hours, staggered shifts and other social distancing efforts;

The ongoing COVID-19 pandemic impacts our business, financial condition, operating results, cash flows and prospects.

Impacts to our business as a result of COVID-19 that have occurred and may in the future occur include have included decreased overall frequency of transplant procedures;

disruptions to our manufacturing operations and supply chain;

labor shortages;

decreased productivity and unavailability of materials or components;

delays of reviews and approvals by the FDA and other health authorities;

delays in our clinical trial enrollment;

limitations on our employees’ and customers’ ability to travel;

limitations on our employees’

and customers’

ability to travel;

and delays in product installations, trainings or shipments to and from other affected countries and within the United States.

In the event that governmental authorities introduce new restrictions, our employees conducting manufacturing activities may not be able to access our manufacturing facilities, and our core activities may be significantly limited or curtailed, possibly for an extended period of time.

We also may face limitations in employee resources that would otherwise be focused on our commercial, manufacturing or clinical activities, including because of sickness of employees or their families or the desire of employees to avoid contact with large groups of people.

In response to the pandemic, healthcare providers have, and may need to further, reallocate resources, such as physicians, staff, hospital beds and intensive care unit facilities, as they prioritize limited resources and personnel capacity to focus on the treatment of patients with COVID-19.

These actions significantly delay the provision of other medical care such as organ transplantation and reduce the number of transplant procedures that are performed, which negatively impacts our revenue and cash flows.

These measures and challenges may continue for the duration of the COVID-19 pandemic.

The COVID-19 pandemic has also impacted, and may continue to impact, our third party suppliers, including through the effects of facility closures, reductions in operating hours, staggered shifts and other social distancing efforts, labor shortages, decreased productivity and unavailability of materials or components.

While we maintain an inventory of finished products and raw materials used in our OCS products, a further prolonged pandemic could lead to shortages in the raw materials necessary to manufacture our products.

The extent to which COVID-19 impacts operations of our third-party

partners will depend on future developments, which are highly uncertain and cannot be predicted with confidence.

The extent to which COVID-19 impacts operations of our third-party partners will depend on future developments, which are highly uncertain and cannot be predicted with confidence.

If we experience a prolonged disruption in our manufacturing, supply chains, or commercial operations, we would expect to experience a material adverse impact on our business, financial condition, results of operations and prospects.

10 unchanged sentences

As we continue to commercialize our products in their current or updated forms, launch new products and enter new markets, competitors may claim that one or more of our products infringe their intellectual property rights as part of business strategies designed to impede our successful commercialization and entry into new markets.

The large number of patents, the rapid rate of new patent applications and issuances, the complexities of the technology involved, and the uncertainty of litigation may increase the risk of business resources and management’s attention being diverted to patent litigation.

If any third-party patents were asserted against us, even if we believe such claims are without merit, there is no assurance that a court would find in our favor on questions of infringement, validity, enforceability, or priority.

4 unchanged sentences

patent claim, there is no assurance that a court of competent jurisdiction would invalidate the claims of any such U.S.

We may choose or, if we are found to infringe a third party’s patent rights and we are unsuccessful in demonstrating that such patents are invalid or unenforceable, we could be required to obtain a license from such third party to continue developing, manufacturing, and marketing any of our products.

We may choose or, if we are found to infringe a third party’s patent rights and we are unsuccessful in demonstrating that such patents are invalid or unenforceable, we could be required to

obtain a license from such third party to continue developing, manufacturing, and marketing any of our products.

However, we may not be able to obtain any required license on commercially reasonable terms or at all.

1 unchanged sentence

We also could be forced, including by court order, to cease developing, manufacturing, and commercializing the infringing technology or products.

In addition, we could be found liable for significant monetary damages, including treble damages and attorneys’ fees if we are found to have willfully infringed a patent or other intellectual property right.

In addition, we could be found liable for significant monetary damages, including treble damages and attorneys’

fees if we are found to have willfully infringed a patent or other intellectual property right.

There could also be public announcements of the results of hearing, motions, or other interim developments.

3 unchanged sentences

In addition to infringement claims against us, we may become a party to other types of patent litigation and other proceedings, including post-grant proceedings declared by the United States Patent and Trademark Office, or USPTO, and opposition proceedings in the European Patent Office, regarding intellectual property rights with respect to the OCS.

example, we may be subject to a third-party preissuance submission of prior art to the USPTO, or become involved in post-grant review procedures, oppositions, derivations, reexaminations, inter partes review or interference proceedings, in the United States or elsewhere, challenging our patent rights or the patent rights of others.

For example, we may be subject to a third-party preissuance submission of prior art to the USPTO, or become involved in post-grant review procedures, oppositions, derivations, reexaminations, inter partes review or interference proceedings, in the United States or elsewhere, challenging our patent rights or the patent rights of others.

An adverse determination in any such challenges may result in loss of exclusivity or in patent claims being narrowed, invalidated or held unenforceable, in whole or in part, which could limit our ability to stop others from using or commercializing similar or identical technology and products, or limit the duration of the patent protection of our technology and products.

24 unchanged sentences

We own or have an exclusive license under several patents and patent applications in the United States and corresponding patents and patent applications in a number of foreign jurisdictions.

All but one of the issued United States patents under the VA license expired in 2017 and the issued international patents expired in 2018.

However, we have requested patent term extension for one U.S.

patent covered by the VA license agreement, U.S.

We have been granted an interim patent term extension until November 6, 2021.

We have not received final approval of the patent extension beyond the interim patent already requested.

The maximum extensions granted would be through May 2022;

however, the length of the patent term extension will be determined by the United States Patent and Trademark Office, or USPTO, based on input from the FDA.

On February 8, 2021, the FDA provided to the USPTO a determined regulatory review period for the OCS Lung.

Under the FDA’s analysis, the patent term extension of the ’082 patent would be until November 6, 2021.

We have not received communication from the USPTO, but expect that the USPTO’s patent term extension for the ‘082 patent will maintain the November 6, 2021 expiration date.

With respect to the patents and patent applications that we own, any patents that have or may issue from our currently issued or pending patent applications would be expected to expire between 2025 and 2036, assuming all required fees are paid.

29 unchanged sentences

patents we own or license may be eligible for limited patent term restoration under the Drug Price Competition and Patent Term Restoration Act of 1984, referred to as the Hatch-Waxman Act.

For example, we currently have a pending patent term extension request based on the recently approved OCS Lung that, if granted, would increase the term of one of our patents by up to five years, through May 2022.

The Hatch-Waxman Act permits a patent restoration term of up to five years for a patent covering an approved product as compensation for effective patent term lost during product development and the FDA regulatory review process.

27 unchanged sentences

In addition, trade secrets may be independently developed by others in a manner that could prevent legal recourse by us.

We also have agreements with our employees, consultants and third parties that obligate them to assign inventions made in the course of their work for us to us, however

these agreements may not be self-executing, not all employees or consultants may enter into such agreements, or employees or consultants may breach or violate the terms of these agreements, and we may not have adequate remedies for any such breach or violation.

We also have agreements with our employees, consultants and third parties that obligate them to assign inventions made

in the course of their work for us to us, however these agreements may not be self-executing, not all employees or consultants may enter into such agreements, or employees or consultants may breach or violate the terms of these agreements, and we may not have adequate remedies for any such breach or violation.

If any of our intellectual property or confidential or proprietary information, such as our trade secrets, were to be disclosed or misappropriated, or if any such information was independently developed by a competitor, the value of the OCS and our business and competitive position could be harmed.

13 unchanged sentences

Risks Related to Government Regulation

If we fail to maintain necessary FDA approval for the OCS, or obtain necessary FDA approval for future uses of the OCS, we will not be able to commercially sell and market the OCS.

Even after approval for the OCS, we are subject to continuing regulation by regulatory authorities and entities in the United States and other countries, and if we fail to comply with any of these regulations, our business could suffer.

Even after approval of the OCS for a specific indication, we are subject to extensive continuing regulation by the FDA and other regulatory authorities and entities.

We are subject to Medical Device Reporting regulations, which require us to report to the FDA if we become aware of information that reasonably suggests our product may have caused or contributed to a death or serious injury, or has malfunctioned and the device or a similar device we market would likely cause or contribute to a death or serious injury if the malfunction were to recur.

We must report corrections and removals to the FDA where the correction or removal was initiated to reduce a risk to health posed by the device or to remedy a violation of the FDCA caused by the device that may present a risk to health, and maintain records of other corrections or removals.

The FDA closely regulates promotion and advertising and all claims that we make for the OCS.

If the FDA determines that our promotional materials, training or advertising activities constitute promotion of an unapproved use of the OCS, it could request that we cease or modify our training or promotional materials or subject us to regulatory enforcement actions.

The FDA and state authorities have broad enforcement powers.

Our failure to comply with applicable regulatory requirements could result in enforcement actions by the FDA or state agencies, which may include any of the following sanctions:

untitled letters, warning letters, fines, injunctions, consent decrees and civil penalties;

recall, suspension or termination of distribution, administrative detention, injunction or seizure of organ-specific OCS Consoles or disposable sets;

customer notifications or repair, replacement or refunds;

operating restrictions or partial suspension or total shutdown of production;

refusing or delaying our requests for premarket approval of new products or for modifications to existing products, and refusing or delaying our requests for PMAs for new intended uses of the OCS;

withdrawing or suspending PMA approvals that have already been granted, resulting in prohibitions on sales of our products;

FDA refusal to issue certificates to foreign governments needed to export products for sale in other countries;

criminal prosecution.

Any corrective action, whether voluntary or involuntary, as well as potentially defending ourselves in a lawsuit, will require the dedication of our time and capital, distract management from operating our business, and may harm our reputation and financial results.

For our currently marketed OCS Lung, OCS Heart and OCS Liver, as part of the conditions of approval, we must complete PMA post-approval studies.

For example, three post-approval studies must be completed for OCS Lung including, the OCS Lung INSPIRE Continuation PAS, which is a two-arm observational study intended to evaluate long-term outcomes of the OCS Lung INSPIRE Trial patients, the OCS Lung EXPAND Continuation PAS, which is a single arm study intended to evaluate long-term outcomes of the OCS Lung EXPAND Trial patients, and our OCS Lung TOP Registry, which is a prospective, single-arm, multi-center, observational study designed to evaluate short- and long-term safety and effectiveness of the OCS Lung for both donor lungs currently utilized and unutilized for transplantation.

Our TOP Registry entails submission of regular reports to the FDA.

Failure to comply with the conditions of approval can result in material adverse action, including withdrawal of the approval.

We also are required to comply with strict post-marketing obligations that accompany the affixing of the CE Mark to medical devices in the European Union.

These include the obligation to report incidents which meet the criteria for reporting, and to provide periodic safety update reports and trend reports.

Additionally, national competent authorities in the European Union also closely monitor the marketing programs implemented by device companies.

The obligations that companies must fulfill concerning premarketing approval of promotional material vary among member states of the European Union.

A failure to comply with our obligations in marketing and promoting the OCS in the European Union could harm our business and results of operations.

In addition, certain changes and other events with respect to regulatory approvals may cause an event of default under our CIBC Credit Agreement.

See “Item 7.

Management’s Discussion and Analysis - Long-Term Debt,”

in this Annual Report on Form 10-K.

Our products have been and may in the future be subject to product recalls that could harm our reputation and could materially and adversely affect our business, financial condition, operating results, cash flows and prospects.

The OCS must be manufactured in accordance with federal and state regulations, and we or any of our suppliers or third-party manufacturers could be forced to recall our installed systems or suspend or terminate production if we fail to comply with these regulations.

The FDA and similar foreign governmental authorities have the authority to require the recall of commercialized products in the event of material deficiencies or defects in design, manufacture or labeling.

In the case of the FDA, the recall order must be based on an FDA finding that there is a reasonable probability that the device would cause serious adverse health consequences or death.

In addition, foreign governmental bodies have the authority to require the recall of our products in the event of material deficiencies or defects in design or manufacture.

Manufacturers may, under their own initiative, recall a product if any material deficiency in a device is found.

A government-mandated or voluntary recall by us could occur as a result of component failures, security failures, manufacturing errors, design or labeling defects or other deficiencies and issues.

Recalls of any of our products would divert managerial and financial resources and have an adverse effect on our financial condition and results of operations.

The FDA requires that recalls initiated to reduce a risk to health posed by the device or to remedy a violation of the FDCA caused by the device that may present a risk to health be reported to the FDA within 10 working days after the recall is initiated.

Companies are required to maintain records of recalls, even if they are not reportable to the FDA.

We may initiate voluntary recalls involving our products in the future that we determine do not require notification of the FDA.

If the FDA disagrees with our determinations, we could be required to report those actions as

A recall announcement could harm our reputation with customers and negatively affect our sales.

Additionally, any corrective action, whether voluntary or involuntary, as well as defending ourselves in a lawsuit, will require the dedication of our time and capital, distract management from operating our business and may harm our reputation and financial results.

In addition, the FDA could take enforcement action for failing to report the recalls when they were conducted, including warning letters, untitled letters, administrative actions, criminal prosecution, imposition of civil monetary penalties, revocation of our device approval(s), seizure of our products or delay in clearance or approval of future products.

We have voluntarily recalled certain OCS products from clinical sites in the past and may need to take similar actions in the future, which may result in notices to regulatory agencies in other jurisdictions.

As we continue to expand commercialization of our products and sell OCS products to new customers, the impact of any future product recall increases, and any future product recalls would require greater administrative and response efforts than historical product recalls.

Internationally, the approaches to product defects will vary.

A product may be recalled in one country but not in others.

However, within the European Union, competent authorities are required without delay to take corrective action against a device (including withdrawal/recall of a device) and notify other national competent authorities, the European Commission and notified bodies (as applicable) of any devices that present an unacceptable risk to the health or safety of patients, users or other persons, or other aspects of the protection of public health.

Other non-compliance with the MDR may also lead to corrective action being taken and notifications being sent if the non-compliance is not rectified within a given time period (as determined by the competent authority).

Therefore, a recall in one EU member state may lead to recalls in the rest of the European Union.

If we fail to maintain necessary FDA approvals for the OCS, or obtain necessary FDA approval for future uses of the OCS, we will not be able to commercially sell and market the OCS.

The OCS products are medical devices subject to extensive regulation in the United States by the FDA and other federal, state and local authorities.

The FDA regulates the design, development, testing, manufacturing, labeling, selling, promoting, distributing, importing, exporting and shipping of the OCS.

As of September 2021, we have obtained a PMA for each of the OCS Lung, OCS Liver and OCS Heart.

Unforeseen requirements or delays in obtaining clearances or approvals from the FDA for any future indications of the OCS or future products could result in unexpected and significant costs for us and consume management’s time and other resources.

The COVID-19 pandemic may result in delayed review and approval timelines.

The pandemic has and may continue to cause disruptions in global regulatory agencies’ daily operations.

Any delay in regulatory review resulting from such disruptions could materially affect our development and commercialization plans, which could adversely affect our business and results of operations.

The duration and severity of the COVID-19 pandemic is unpredictable and difficult to assess.

We have obtained a PMA for each of the OCS Lung, OCS Liver and OCS Heart for both DBD and DCD indications.

We received 510(k) clearances for the OCS Lung Solution for cold flush, storage and transportation of donor lungs in July 2021, and for the OCS Lung Donor Flush Set in November 2022.

PMA approval could be withdrawn or other restrictions imposed if post- market data demonstrate safety issues or inadequate performance.

For 510(k) cleared devices, the FDA can use its enforcement authorities to require removal of a device from the market in case of safety issues.

The FDA can also require removal of 510(k) cleared devices from the market in case of safety issues.

If we are not able to maintain the necessary regulatory approvals for the OCS, or obtain the necessary regulatory approvals or clearances for future products on a timely basis or at all, our financial condition and results of operations would suffer, possibly materially, and our business might fail.

2 unchanged sentences

Our notified body, BSI, is based in the Netherlands and issues the certificates that allow CE marking of the OCS products.

We have CE Marks for each of the OCS Heart, the OCS Lung, and the OCS Liver, which were renewed in September 2017.

These CE Marks are valid for five years, so they will expire in September 2022.

In order to be able to continue to use the CE Mark in the same manner during the transitional period, we will have to meet the conditions set out in the transitional provisions in the MDR.

Post-Brexit the MDR applies in Northern Ireland in accordance with the Northern Irish Protocol but does not apply in Great Britain (England, Wales and Scotland).

The UK Medical Devices Regulations 2002 provided a transitional period under which the UK will recognize EU CE marks until June 30, 2023.

To be placed on the market in Great Britain after this date, medical devices must have undergone a conformity assessment in accordance with the UK Medical Devices Regulations 2002 and have the UKCA mark affixed.

However, even devices that benefit from the transition period must still comply with the other requirements of the UK Medical Devices Regulations;

Our sales in the EU are dependent on obtaining and maintaining the CE Mark certifications for each of our OCS products.

As required by the MDR, we received recertification of the CE Mark in September 2022 for each of the OCS Heart, OCS Liver Console (and disposables) and OCS Lung systems, which includes the OCS Console, the OCS disposables, and the OCS solution additives.

We have applied for and expect to receive the CE Mark for the OCS Liver combined with our solution additives under the MDR within the next 12 months.

In order to be able to continue to use the CE Mark we will have to meet the conditions set out in the MDR.

Post-Brexit the MDR applies in Northern Ireland in accordance with the Northern Ireland Protocol but does not apply in Great Britain (England, Wales and Scotland).

The UK Medical Devices Regulations 2002 (UK MDR 2002) provided a transitional period under which the UK will recognize EU CE marks until June 30, 2023.

The MHRA has confirmed that this will be extended until June 30, 2024.

To be placed on the market in Great Britain after this date, medical devices must have undergone a conformity assessment in accordance with the UK MDR 2002 and have the UKCA mark affixed.

However, even devices that benefit from the transition period must still comply with the other requirements of the UK MDR 2002;

for example, there are broader registration requirements with the Medicines and Healthcare products Regulatory Agency, or the MHRA, and if the manufacturer is located outside the UK, a UK Responsible Person must be appointed.

To continue to place products on the market in the European Union and United Kingdom after expiry of our existing notified body certificate, we will need to apply for their re-certification under the new MDR.

We might not be able to continue to place the devices on the market in the European Union and/or United Kingdom for any current use of the OCS.

we are not able to obtain re-certification of our products for their current use under the MDR and/or obtain cortication under the UK Medical Devices Regulations when required;

we are not able to do so in time before the certificates expire;

our technical files for our products do not meet the new (and more stringent) requirements under the Medical Devices Regulation;

any variation in the uses for which the CE Mark has been affixed to the OCS requires us to perform further research or to modify the technical documentation required to affix the CE mark, our revenue and operating results could be adversely affected and our reputation could be harmed.

To continue to place products on the market in the European Union and United Kingdom, we will need to meet the conditions set out in the EU MDR or UK MDR 2022, as applicable.

We might not be able to continue to place the devices on the market in the European Union and/or United Kingdom for any current use of the OCS if we are not able to maintain certifications of our products for their current use under the MDR and/or obtain certification under the UK MD0R 2002 when required.

If any variation in the uses for which the CE/UKCA Mark has been affixed to the OCS requires us to perform further research or to modify the technical documentation required to affix the CE/UKCA mark, our revenue and operating results could be adversely affected and our reputation could be harmed.

If we fail to obtain and maintain regulatory approval in foreign jurisdictions, our market opportunities will be limited.

2 unchanged sentences

If we do not obtain or maintain necessary market authorizations to commercialize our products in markets outside the United States, it would negatively affect our overall market penetration.

For example, if, as a result of manufacturing error, the efficacy of our products does not meet the standards claimed in the accompanying instructions for use, regulatory authorities could prevent our products from being placed on the market in the European Union, Northern Ireland and Great Britain.

Additionally, we have appointed a UK responsible person and have registered with the Medicines and Healthcare Products Regulatory Agency in the UK.

If transplant centers and hospitals cannot obtain adequate reimbursement or funding from governments or third-party payors for purchases of the OCS and additional disposable sets and for costs associated with procedures that use the OCS, our prospects for generating revenue and achieving profitability will suffer materially.

Our prospects for generating revenue and achieving profitability depend heavily upon the availability of adequate reimbursement or funding in both the United States and other markets for purchases of the OCS and for organ transplant procedures that use the OCS.

If transplant centers and hospitals cannot obtain adequate reimbursement or funding from governments or third-party payors for purchases of the OCS and additional disposable sets and for costs associated with procedures that use the OCS and the National OCS Program, our prospects for generating revenue and achieving profitability will suffer materially.

In the United States, Medicare generally reimburses the facilities in which transplant procedures are performed based upon prospectively determined amounts.

For hospital inpatient treatment, the Medicare prospective payment generally is determined by the patient’s condition and other patient data and procedures performed during the patient’s hospital stay, using a classification system known as MS-DRGs.

Prospective rates are adjusted for, among other things, regional differences and whether the hospital is a teaching hospital.

Because prospective payments are based on predetermined rates and may be less than a hospital’s actual costs in furnishing care, hospitals have incentives to lower their inpatient operating costs by utilizing products, devices and supplies that will reduce the length of patients’ hospital stays, decrease labor or otherwise lower their costs.

In addition to these MS-DRG-based payments, Medicare reimburses transplant centers for “reasonable and necessary” organ acquisition costs, which are considered “pass-through” costs from the prospective payment system, and are not based on the payments for the applicable MS-DRG.

hospital stays, decrease labor or otherwise lower their costs.

In addition to these MS-DRG-based payments, Medicare reimburses transplant centers for “reasonable and necessary”

organ acquisition costs, which are considered “pass-through”

costs from the prospective payment system, and are not based on the payments for the applicable MS-DRG.

Pass-through organ acquisition costs include services required for the acquisition of an organ, such as tissue typing, organ preservation, transport of organs, donor evaluation and other acquisition costs.

The separate payments for these costs are determined on a reasonable cost basis established through the transplant center’s Medicare cost report.

During OCS clinical trials, even before the OCS had been approved by the FDA, the Medicare program reimbursed transplant centers for their use of the OCS for lung, heart and liver transplantation.

We believe, though cannot be assured, that the costs incurred by transplant centers for the organ-specific OCS Console, OCS Perfusion Sets and OCS Solutions will be classified as organ acquisition costs for which Medicare will provide additional reimbursement.

The separate payments for these costs are determined on a reasonable cost basis established through the transplant center’s Medicare cost report.

The costs incurred by transplant centers for the organ-specific OCS Console, OCS Perfusion Sets and OCS Solutions are classified as organ acquisition costs for which Medicare provides additional reimbursement.

However, Medicare does not reimburse for items determined not to be reasonable and necessary for diagnosis or treatment of an illness or injury.

7 unchanged sentences

In the European Union member states, the costs associated with organ transplant procedures may be paid for by national insurance and in some cases private insurers or by both national insurance and private insurers, depending on the priorities established by individual programs.

These reimbursement arrangements are subject to complex rules and regulations at the national and regional levels that can vary between member states of the European Union and are likely to require that we demonstrate that the OCS is superior to existing preservation methods.

These reimbursement arrangements are subject to complex rules and regulations at the national and regional levels that can vary between member states of the European Union

and may require that we perform additional clinical studies to demonstrate that the OCS is superior to existing preservation methods.

We have no studies currently planned to collect such clinical data, and any studies of this kind likely would be expensive and lengthy and may not ultimately produce results adequate to secure reimbursement.

2 unchanged sentences

Alternatively, we may be required to enter into risk sharing arrangements with payers.

Adoption of our products in the European Union may be hindered if they impede our customer’s compliance with the requirements of Directive 2010/53/EU (formerly Directive 2010/45/EU), and the Quality and Safety of Organs Intended for Transplantation Regulations 2012 (Statutory Instrument (SI) 2012 No.

1501) (the Regulations) in the United Kingdom which imposes certain standards on procurement, preservation and transport of organs intended for transplantation.

1 unchanged sentence

In these countries, reimbursement and pricing negotiations with governmental authorities can take considerable time after the CE marking of a product.

For example, some foreign reimbursement systems provide for limited payments in a given period and, therefore, result in extended payment periods, which could hinder

adoption of the OCS for use in transplantation, limiting sales.

For example, some foreign reimbursement systems provide for limited payments in a given period and, therefore, result in extended payment periods, which could hinder adoption of the OCS for use in transplantation, limiting sales.

If reimbursement of our products is unavailable or limited in scope or amount, or if pricing is set at unsatisfactory levels, it may not be profitable to sell our products in certain foreign countries, which could negatively affect the long-term growth of our business.

14 unchanged sentences

If the FDA disagrees with our determination and requires us to submit a new PMA, PMA supplement or 30-day Notice for modifications to our previously approved products or manufacturing processes, we may be required to cease marketing or to recall the modified product until we obtain approval or submit the 30-day Notice, and we may be subject to significant regulatory fines or penalties.

In addition, the FDA may not approve our products for the indications that are necessary or desirable for successful commercialization or could require clinical trials to support any modification to the device or our modified indications or claims.

In addition, the FDA may not approve our products for any future indications that are desirable for commercialization or could require clinical trials to support any modification to the device or

any modified indications or claims.

Any delay or failure in obtaining required approvals would adversely affect our ability to introduce new or enhanced products in a timely manner, which in turn would harm our future growth.

3 unchanged sentences

For example, we might need to conduct additional clinical trials and provide additional technical information to the appropriate notified body before the CE Mark can be affixed to the changed product.

Additionally, devices that are relying on a notified body certificate under the Medical Devices Directive under the MDR transition period will no longer benefit from the transition period if significant changes are made to the design and/or intended purpose of the device.

If we make such changes we would need to CE Mark the devices under the MDR in order to continue to place them on the market in the European Union and/or United Kingdom.

Even after approval of the OCS for a specific indication, we are subject to extensive continuing regulation by the FDA and other regulatory authorities and entities.

The FDA closely regulates promotion and advertising and all claims that we make for the OCS.

The FDA and state authorities have broad enforcement powers.

Our failure to comply with applicable regulatory requirements could result in enforcement actions by the FDA or state agencies, which may include any of the following sanctions:

untitled letters, warning letters, fines, injunctions, consent decrees and civil penalties;

recall, termination of distribution, administrative detention, injunction or seizure of organ-specific OCS Consoles or disposable sets;

customer notifications or repair, replacement or refunds;

operating restrictions or partial suspension or total shutdown of production;

refusing or delaying our requests for premarket approval of new products or for modifications to existing products, and refusing or delaying our requests for PMAs for new intended uses of the OCS;

withdrawing or suspending PMA approvals that have already been granted, resulting in prohibitions on sales of our products;

FDA refusal to issue certificates to foreign governments needed to export products for sale in other countries;

criminal prosecution.

For our currently marketed OCS Lung, OCS Heart and OCS Liver, as part of the conditions of approval, we must complete PMA post-approval studies.

For example, three post-approval studies must be competed for OCS Lung including, the OCS Lung INSPIRE Continuation PAS, which is a two-arm observational study intended to evaluate long-term outcomes of the OCS Lung INSPIRE Trial patients, the OCS Lung EXPAND Continuation PAS, which is a single arm study intended to evaluate long-term outcomes of the OCS Lung EXPAND Trial patients, and our OCS Lung Thoracic Organ Perfusion PAS Registry, or TOP Registry, which is a prospective, single-arm, multi-center, observational study designed to evaluate short- and long-term safety and effectiveness of the OCS Lung for both donor lungs currently utilized and unutilized for transplantation.

The OCS Lung INSPIRE Continuation PAS, the OCS Lung EXPAND Continuation PAS and the TOP Registry entail submission of regular reports to the FDA.

Failure to comply with the conditions of approval can result in material adverse enforcement action, including withdrawal of the approval.

We also are required to comply with strict post-marketing obligations that accompany the affixing of the CE Mark to medical devices in the European Union.

These include the obligation to report incidents which meet the criteria for reporting, and to provide periodic safety update reports and trend reports.

Additionally, national competent authorities in the European Union also closely monitor the marketing programs implemented by device companies.

The obligations that companies must fulfill concerning premarketing approval of promotional material vary among member states of the European Union.

failure to comply with our obligations in marketing and promoting the OCS in the European Union could harm our business and results of operations.

In addition, certain changes and other events with respect to regulatory approvals may cause an event of default under our Credit Agreement, including the initiation of a regulatory enforcement action or issuance of a warning letter with respect to the Company or any of its products or manufacturing facilities that causes the discontinuance of marketing or withdrawal of any products or causes delay in manufacturing.

Management’s Discussion and Analysis -Long-Term Debt,” in this Annual Report on Form 10-K.

If we fail to comply with the FDA’s QSR, or FDA or EU requirements that pertain to clinical trials or investigations, the FDA or the relevant EU competent authority could take various enforcement actions, including halting our manufacturing operations, and our business would suffer.

In the United States, as a manufacturer of a medical device, we are required to demonstrate and maintain compliance with the FDA’s QSR.

The QSR is a complex regulatory scheme that covers the methods and documentation of the design, testing, control, manufacturing, labeling, quality assurance, packaging, storage and shipping of medical devices.

The FDA enforces the QSR through periodic inspections and unannounced “for cause” inspections.

The FDA enforces the QSR through periodic inspections and unannounced “for cause”

We are subject to periodic FDA inspections to determine compliance with QSR and pursuant to the Bioresearch Monitoring Program, which have in the past and may in the future result in the FDA issuing Form 483s, including during the conduct of clinical trials.

4 unchanged sentences

Our failure to comply with FDA or local requirements that pertain to clinical trials/investigations, including GCP requirements, and the QSR (in the United States), or failure to take satisfactory and prompt corrective action in response to an adverse inspection, could result in enforcement actions, including a warning letter, adverse publicity, a shutdown of or restrictions on our manufacturing operations, delays in approving or clearing our products, refusal to permit the import or export of our product, prohibition on sales of our product, a recall or seizure of our products, fines, injunctions, civil or criminal penalties, or other sanctions, any of which could cause our business and operating results to suffer.

The OCS must be manufactured in accordance with federal and state regulations, and we or any of our suppliers or third-party manufacturers could be forced to recall our installed systems or terminate production if we fail to comply with these regulations.

In the case of the FDA, the recall order must be based on an FDA finding that there is a reasonable probability that the device would cause serious adverse health consequences or death.

In addition, foreign governmental bodies have the authority to require the recall of our products in the event of material deficiencies or defects in design or manufacture.

Manufacturers may, under their own initiative, recall a product if any material deficiency in a device is found.

A government-mandated or voluntary recall by us could occur as a result of component failures, security failures, manufacturing errors, design or labeling defects or other deficiencies and issues.

Recalls of any of our products would divert managerial and financial resources and have an adverse effect on our financial condition and results of operations.

Companies are required to maintain records of recalls, even if they are not reportable to the FDA.

We may initiate voluntary recalls involving our products in the future that we determine do not require notification of the FDA.

If the FDA disagrees with our determinations, we could be required to report those actions as recalls.

A recall announcement could harm our reputation with customers and negatively affect our sales.

In addition, the FDA could take enforcement action for failing to report the recalls when they were conducted, including warning letters, untitled letters, administrative actions, criminal prosecution, imposition of civil monetary penalties, revocation of our device approval, seizure of our products or delay in clearance or approval of future products.

We have voluntarily recalled certain OCS products from customer sites in the past and may need to take similar actions in the future, which may result in notices to regulatory agencies in other jurisdictions .

Internationally, the approaches to product defects will vary.

A product may be recalled in one country but not in others.

Therefore a recall in one EU member state may lead to recalls in the rest of the European Union.

We may not be able to obtain or maintain regulatory qualifications outside the United States, which could harm our business.

4 unchanged sentences

Foreign regulatory authorities may not clear or approve our product for the same uses cleared or approved by the FDA.

Although we have been able to affix the CE Mark to the OCS Lung, OCS Heart and OCS Liver in the European Union, we may not be able to maintain such CE Marking, including as a result of the need to re-certify our products, under the new Medical Devices Regulation and the Medical Devices Regulations 2002 (UK MDR 2002) in Great Britain.

Our notified body in the Netherlands, BSI, could determine either itself or at the request of a competent authority that our OCS products do not meet the regulatory requirements for CE marking, which would result in withdrawal of the certificates that allow the CE marking required to market the OCS products in the European Union.

In addition, we may not be able to affix the CE Mark to new or modified products and we may fail to obtain any additional regulatory qualifications, clearances or approvals or to comply with additional legal obligations required by the individual member states of the European Union or other countries in which we seek to market the OCS.

15 unchanged sentences

Because the OCS represents a novel approach to organ transplantation, a patient or transplant center may choose to name us as a party to a lawsuit relating to the use of the OCS in connection with a planned or completed transplant procedure regardless of whether the OCS caused or contributed to a serious adverse event or death of a patient.

Any claim, whether or not we are ultimately successful, could divert management’s attention from our core business, be expensive to defend and result in sizable damage awards against us.

Currently, we maintain global product liability insurance covering damages of up to $10 million per occurrence for both the human clinical and commercial use of our product.

15 unchanged sentences

Our OCS products have been approved for marketing in the United States, European Union and other jurisdictions for specific indications, and our promotional materials and training methods must comply with regulatory requirements in the countries where they are sold.

We train our commercial team to not promote the OCS for uses outside of the approved indications for use/intended purpose, known as “off-label uses.” We cannot, however, prevent a surgeon from using the OCS off-label, when in the surgeon’s independent professional medical judgment he or she deems it appropriate.

We train our commercial team to not promote the OCS for uses outside of the approved

indications for use/intended purpose, known as “off-label uses.”

We cannot, however, prevent a surgeon from using the OCS off-label, when in the surgeon’s independent professional medical judgment he or she deems it appropriate.

There may be increased risk of injury to patients if surgeons attempt to use the OCS off-label.

2 unchanged sentences

In the EU the MDR expressly prohibits misleading claims in the form of off-label promotion and the MDR grants enforcement powers to national competent authorities.

including, but not limited to, criminal, civil and administrative penalties, damages, fines, disgorgement, exclusion from participation in government healthcare programs and the curtailment of our operations.

It is also possible that other federal, state or foreign enforcement authorities might take action under other regulatory authority, such as false claims laws or consumer protection laws, 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 administrative penalties, damages, fines, disgorgement, exclusion from participation in government healthcare programs and the curtailment of our operations.

In addition, surgeons may misuse the OCS or use improper techniques if they are not adequately trained, potentially leading to unsatisfactory patient outcomes, patient injuries, negative publicity and an increased risk of product liability.

1 unchanged sentence

Similarly, in an effort to decrease costs, surgeons may also reuse the component and accessories of the OCS that are intended for a single use or may purchase reprocessed OCS components from third-party reprocessors in lieu of purchasing new components from us, which could result in product failure and liability.

As described above, product liability claims could divert management’s attention from our core business, be expensive to defend and result in sizeable damage awards against us that may not be covered by insurance.

Legislative or regulatory reforms in the United States or other jurisdictions may make it more difficult and costly for us to obtain regulatory clearances or approvals for our products or to manufacture, market or distribute our products after clearance or approval is obtained.

8 unchanged sentences

or additional record keeping.

In the EU, Regulation (EU) 2017/745, or the MDR, which repealed and replaced the Medical Devices Directive (93/42/EEC) with effect from May, 26 2021.

In the EU, Regulation (EU) 2017/745, or the MDR, repealed and replaced the Medical Devices Directive (93/42/EEC) with effect from May, 26 2021.

Although the MDR now applies so all new devices placed on the market must be CE marked under it, under the transition period granted by the MDR, certificates issued by notified bodies for medical devices under the Medical Devices Directive before May 26, 2021 remain valid until the period indicated on the certificate, subject to all certificates becoming void on May 27, 2024.

Post-Brexit the MDR applies in Northern Ireland in accordance with the Northern Irish Protocol but does not apply in Great Britain (England, Wales and Scotland).

The UK Medical Devices Regulations 2002 provided a transitional period under which the UK will recognize EU CE marks until June 30, 2023.

We recognize that our products will have to be re-certified under the MDR by September 2022 (as they currently benefit from the MDR transition period) and we are actively working with our notified body to meet the MDR requirements.

However, if we do not manage to re-certify our products under this regulation or can no longer rely on the transitional provisions (e.g., if a substantial change is made to the design or intended purpose), we may have to take our products off the EU market until this is the case.

Post-Brexit the MDR applies in Northern Ireland in accordance with the Northern Ireland Protocol but does not apply in Great Britain (England, Wales and Scotland).

The UK Medicines and Healthcare products Regulatory Agency (MHRA) has provided a transitional period under which the UK will recognize EU CE marks until June 30, 2024.

To be placed on the market in Great Britain after this date, medical devices must have undergone a conformity assessment in accordance with UK legislation and have the UKCA mark affixed.

All of our products that were previously certified under the Medical Devices Directive, including OCS Heart, OCS Liver Console (and disposables) and OCS Lung systems, which includes the OCS Console, the OCS disposables, and the OCS solution additives, have now been recertified under the MDR.

We have also applied for and expect to receive the CE Mark for the OCS Liver combined with our solution additives under the MDR within the next 12 months.

We also recognize that our products will need to be certified and have a UKCA mark affixed to be placed on the market in Great Britain from July 1, 2024.

However, in 2021 the MHRA ran a consultation on the future regulation of medical devices in the UK.

This might lead to substantial changes in the regulatory framework/requirements imposed on medical devices.

This could slow our ability to obtain the necessary certification and we may have to take our product off the market in Great Britain until we could obtain a UKCA mark.

However, following the MHRA's response to a consultation on the future regulation of medical devices in the UK the UK Government is expected to publish updated UK medical devices legislation in 2023.

might lead to substantial changes in the regulatory framework/requirements imposed on medical devices.

This could slow our ability to obtain the necessary certification and we may have to take our product off the market in Great Britain until we obtain a UKCA mark.

We are subject to certain federal, state and foreign fraud and abuse laws, health information privacy and security laws and transparency laws, which, if violated, could subject us to substantial penalties.

13 unchanged sentences

These laws can apply to manufacturers who provide information on coverage, coding, and reimbursement of their products to persons who bill private payors.

Private individuals can bring False Claims Act “qui tam” actions, on behalf of the government and such individuals, commonly known as “whistleblowers,” may share in amounts paid by the entity to the government in fines or settlement.

Private individuals can bring False Claims Act “qui tam”

actions, on behalf of the government and such individuals, commonly known as “whistleblowers,”

may share in amounts paid by the entity to the government in fines or settlement.

When an entity is determined to have violated the federal civil False Claims Act, the government may impose substantial civil fines and penalties, and exclude the entity from participation in Medicare, Medicaid and other federal healthcare programs;

the federal Civil Monetary Penalties Law, which prohibits, among other things, offering or transferring remuneration to a federal healthcare beneficiary that a person knows or should know is likely to influence the beneficiary’s decision to order or receive items or services reimbursable by the government from a particular provider or supplier;

HIPAA, which created additional federal criminal statutes that prohibit, among other things, executing a scheme to defraud any healthcare benefit program and making false statements relating to healthcare matters.

Similar to the federal Anti-Kickback Statute, a person or entity does not need to have actual knowledge of the statute or specific intent to violate it to have committed a violation;

the federal Physician Sunshine Act under the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act, collectively referred to as the Affordable Care Act, which require certain applicable manufacturers of drugs, devices, biologics and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program to report annually to CMS information related to payments and other transfers of value to physicians and teaching hospitals.

Applicable manufacturers are required to submit annual reports to CMS.

4 unchanged sentences

The extra-territorial effect of those laws affects our sales and marketing strategy, since in many countries healthcare professionals are officers of the state.

This is particularly important in the context of bribery offences, which in the UK and in the United States include the offence of bribing a foreign public official.

This is particularly important in the context of bribery offences,

which in the UK and in the United States include the offence of bribing a foreign public official.

Failure by our sales staff to comply with those laws may result in criminal and civil penalties and damage our reputation;

analogous state and foreign law equivalents of each of the above federal laws, such as anti-kickback and false claims laws which may apply to items or services reimbursed by any private payor, including commercial insurers or patients;

state laws that require device companies to comply with the industry’s voluntary compliance guidelines and the applicable compliance guidance promulgated by the federal government or otherwise restrict payments that may be made to healthcare providers and other potential referral sources;

state laws that require device manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers or marketing expenditures;

6 unchanged sentences

For example, the member states of the European Union closely monitor perceived unlawful marketing activity by companies, including inducement to prescribe and the encouragement of off-label use of devices.

Responding to investigations can be time-and resource-consuming and can divert management’s attention from the business.

Additionally, as a result of these investigations, healthcare providers and entities may have to agree to additional compliance and reporting requirements as part of a consent decree or corporate integrity agreement.

10 unchanged sentences

The substantive offences of offering or receiving a bribe will be committed by an individual where either the bribery takes place in the U.K, or the person paying or receiving the bribe has a close connection with the UK An organization which is either incorporated in or carries on part of its business in the U.K will be liable under the Bribery Act if a person associated with the organization (being persons performing services for it) pays a bribe anywhere in the world intending to obtain or retain business for the organization.

This is a strict liability offense with the only defenses available being that the organization implemented “adequate procedures” to prevent bribery or it was reasonable for it to not have such procedures in place.

Under these laws and regulations, as well as other anti-corruption laws, anti-money laundering laws, export control laws, customs laws, sanctions laws and other laws governing our operations, various government agencies may require export licenses, may seek to impose modifications to business practices, including cessation of business activities in sanctioned countries or with sanctioned persons or entities and modifications to compliance

programs, which may increase compliance costs, and may subject us to fines, penalties and other sanctions.

This is a strict liability offense with the only defenses available being that the organization implemented “adequate procedures”

to prevent bribery or it was reasonable for it to not have such procedures in place.

may require export licenses, may seek to impose modifications to business practices, including cessation of business activities in sanctioned countries or with sanctioned persons or entities and modifications to compliance programs, which may increase compliance costs, and may subject us to fines, penalties and other sanctions.

A violation of these laws or regulations would negatively affect our business, financial condition and results of operations.

43 unchanged sentences

In the United States, there have been and continue to be a number of legislative initiatives to contain healthcare costs.

For example, the Affordable Care Act, which was enacted in 2010, substantially revised the coverage, delivery and payment of health care services.

For example, the Affordable Care Act:

established a new Patient-Centered Outcomes Research Institute to oversee and identify priorities in comparative clinical effectiveness research in an effort to coordinate and develop such research;

implemented payment system reforms, including a national pilot program on payment bundling to encourage hospitals, physicians and other providers to improve the coordination, quality and efficiency of certain healthcare services through bundled payment models;

expanded health care coverage through Medicaid expansion and the implementation of the so-called “individual mandate” for health insurance coverage.

Since its enactment, there have been and likely will be judicial, administrative, executive, and legislative challenges to certain aspects of the Affordable Care Act.

For example, tax reform legislation was enacted at the end of 2017 that eliminates the tax penalty for individuals who do not maintain sufficient health insurance coverage beginning in 2019 (the so-called “individual mandate”).

More recently, on June 17, 2021, the U.S.

Supreme Court dismissed the latest judicial challenge to the Affordable Care Act brought by several states without specifically ruling on the constitutionality of the Affordable Care Act.

Changes resulting from any successful challenges or other future modifications have a material impact on our business.

Beyond the Affordable Care Act, there have been and will likely continue to be ongoing healthcare reform efforts.

There have been and will likely continue to be ongoing healthcare reform efforts.

These reform efforts have and may continue to focus on coverage and payment for organ procurement and transplant.

2 unchanged sentences

Any changes of, or uncertainty with respect to, coverage or reimbursement of services provided by organ procurement organizations, transplant centers or hospitals could affect demand for the OCS, which in turn could have a material adverse effect on our business, financial condition and results of operations.

In addition, other broader legislative changes have been adopted that could have an adverse effect upon, and could prevent, our products’ commercial success.

The Budget Control Act of 2011, as amended, or the Budget Control Act, includes provisions intended to reduce the federal deficit, including reductions in Medicare payments to providers through

2030 (except May 1, 2020 to March 31, 2022).

In addition, other broader legislative changes have been adopted that could have an adverse effect upon, and could prevent, our products’

commercial success.

The Budget Control Act of 2011, as amended, or the Budget Control Act, includes provisions intended to reduce the federal deficit, including reductions in Medicare payments to providers through 2030 (except May 1, 2020 to March 31, 2022).

Any significant spending reductions affecting Medicare, Medicaid, or other publicly funded or subsidized health programs, or any significant taxes or fees imposed as part of any broader deficit reduction effort or legislative replacement to the Budget Control Act, or otherwise, could have an adverse impact on our anticipated product revenue.

10 unchanged sentences

The market price of our common stock has been and may continue to be volatile and could subject us to securities class action litigation.

Over the last twelve months, the price per share of our common stock has ranged from as low as $17.20 to as high as $49.50.

During the year ended December 31, 2022, the price per share of our common stock has ranged from as low as $10.00 to as high as $64.36.

Some of the factors that may cause the market price of our common stock to fluctuate include:

6 unchanged sentences

results or changes in the status of, or developments relating to, applications for regulatory approvals or clearances for the OCS or competing products;

our announcements or our competitors’ announcements of new products, procedures or therapies;

our announcements or our competitors’

announcements of new products, procedures or therapies;

departure of key personnel;

3 unchanged sentences

changes in general economic, industry and market conditions and trends;

investors’ general perception of us;

investors’

general perception of us;

sales of large blocks of our stock.

1 unchanged sentence

Because of the potential volatility of our stock price, we may become the target of securities litigation in the future.

Securities litigation could result in substantial costs and divert management’s attention and resources from our business.

An active trading market may not be sustained.

You may not be able to sell your shares quickly or at a recently reported market price if trading in our common stock does not remain active.

The lack of an active market may also reduce the fair market value of your shares.

An inactive market may also impair our ability to raise capital to continue to fund operations by selling shares and may impair our ability to acquire other companies or technologies by using our shares as consideration.

Securities litigation could result in substantial costs and divert management’s attention and resources from our business.

If securities or industry analysts issue an adverse or misleading opinion regarding our business or do not publish research or publish unfavorable research about our business, our stock price and trading volume could decline.

1 unchanged sentence

If one or more of these analysts ceases coverage of our company or fails to publish reports on us regularly, we could lose visibility in the financial markets, which in turn could cause our stock price or trading volume to decline.

Moreover, if any of the analysts who cover us issue an adverse or misleading opinion regarding us, our business model or our stock performance, or if our operating results fail to meet the expectations of the investor community, one or more of the analysts who cover our company may change their recommendations regarding our company, and our stock price could decline.

the analysts who cover our company may change their recommendations regarding our company, and our stock price could decline.

We have adopted anti-takeover provisions in our restated articles of organization and amended and restated bylaws and are subject to provisions of Massachusetts law that may frustrate any attempt to remove or replace our current board of directors or to effect a change of control or other business combination involving our company.

7 unchanged sentences

Our restated articles of organization designate the Business Litigation Session of the Superior Court of Suffolk County, Massachusetts (or, if and only if the Business Litigation Session of the Superior Court of Suffolk County, Massachusetts lacks jurisdiction, another state or federal court located within the Commonwealth of Massachusetts) as the sole and exclusive forum for any action under Massachusetts statutory or common law:

brought derivatively on our behalf, asserting a claim of breach of a fiduciary duty owed by any of our directors, officers or other employees to us or our shareholders, asserting a claim arising pursuant to any provision of the Massachusetts Business Corporation Act or asserting a claim governed by the internal affairs doctrine, in all cases subject to the court’s having personal jurisdiction over the indispensable parties named as defendants.

In addition, our restated articles of organization provide that any person or entity purchasing or

otherwise acquiring any interest in shares of our common stock is deemed to have notice of and consented to the foregoing provisions.

In addition, our restated articles of organization provide that any person or entity purchasing or otherwise acquiring any interest in shares of our common stock is deemed to have notice of and consented to the foregoing provisions.

This provision will not apply to actions arising under the Exchange Act, or the Securities Act of 1933, as amended, or the Securities Act.

4 unchanged sentences

This assessment includes disclosure of any material weakness identified by our management in our internal control over financial reporting.

In addition, we are required to comply with the SEC’s rules implementing Section 302 of the Sarbanes-Oxley Act, which requires management to certify financial and other information in our quarterly and annual reports, and we are required to disclose significant changes made in our internal controls and procedures on a quarterly basis.

If we identify a material weakness in our internal control over financial reporting, we may not be able to remediate the material weakness identified in a timely manner or maintain all of the controls necessary to remain in compliance with our reporting obligations.

If we identify any material weaknesses in our internal controls over financial reporting or we are unable to comply with the requirements of Section 404 in a timely manner or assert that our internal controls over financial reporting are effective, or if our independent registered public accounting firm is unable to express an unqualified opinion as to the effectiveness of our internal control over financial reporting in future periods, investors may lose confidence in the accuracy and completeness of our financial reports.

effectiveness of our internal control over financial reporting in future periods, investors may lose confidence in the accuracy and completeness of our financial reports.

As a result, the market price of our common stock could be materially adversely affected.

4 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