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As of December 31, 2020, we had an accumulated deficit of $398.2 million.
−Removed: To date, we have funded our operations primarily with proceeds from sales of preferred stock and borrowings under loan agreements, proceeds from the sale of common stock in our IPO, and revenue from clinical trials and commercial sales of our OCS products.
+Added: To date, we have funded our operations primarily with proceeds from sales of equity, borrowings under loan agreements and revenue from clinical trials and commercial sales of our OCS products.
Our losses have resulted principally from costs incurred in connection with our research and development, clinical trials, manufacturing and commercialization activities.
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and select non-U.S.
−Removed: Further, following the closing of our IPO, we have incurred and expect to continue to incur additional costs associated with operating as a public company.
+Added: Further, following the closing of our IPO in May 2019, we have incurred and expect to continue to incur additional costs associated with operating as a public company.
As a result, we will need substantial additional funding for expenses related to our operating activities, including selling, general and administrative expenses and research, development and clinical trials expenses.
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.
−Removed: Until such time, if ever, as we can generate substantial net revenue sufficient to achieve profitability, we expect to finance our operations through a combination of equity offerings, debt financings and strategic alliances.
+Added: Although we fund a portion of our operations from net revenue from sales of our OCS products for use in clinical trials and from commercial sales, 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 may be unable to raise additional funds or enter into such other agreements or arrangements, when needed, on favorable terms or at all.
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As we continue to pursue and increase commercial sales of our OCS products, we expect our costs and expenses to increase in the future, particularly as we expand our sales and clinical adoption team, scale our manufacturing operation, continue research, development and clinical trial efforts, and seek regulatory clearance for new products and product enhancements, including new indications, both in the United States and in select non-U.S.
−Removed: Further, following the closing of our IPO, we have incurred and expect to continue to incur additional costs associated with operating as a public company.
The timing and amount of our operating and capital expenditures will depend on many factors, including:
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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.
−Removed: If we are not able to obtain financing on terms favorable to us, we may need to cease or reduce development or commercialization activities, sell some or all of our assets or merge with another entity, which could result in a loss of all or part of your investment.
+Added: If we are not able to obtain financing on terms favorable to us, we may need to cease or reduce development or commercialization activities, sell or license to third parties some or all of our assets or merge with another entity, any of which could result in a loss of all or part of your investment.
In addition, 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.
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liquidating our company;
−Removed: modifying our
−Removed: organizational documents;
+Added: modifying our organizational documents;
entering into sale-leaseback arrangements and engaging in certain other business transactions.
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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.
−Removed: Our financial results may fluctuate from quarter to quarter due to a number of factors, including the timing of our clinical trials, 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.
+Added: Our financial results may fluctuate from quarter to quarter due to a number of factors, including the timing of patient enrollment in and regulatory approvals for our clinical trials, 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.
We expect that revenue from sales will 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.
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Financial Conduct Authority announced that it intends to stop persuading or compelling banks to submit London Interbank Offered Rate, or LIBOR, rates after 2021.
−Removed: As a result, LIBOR may be discontinued by 2021.
−Removed: While there is no consensus on what rate or rates may become accepted alternatives to LIBOR, the Alternative Reference Rates Committee, a steering committee comprised of U.S.
+Added: The Financial Conduct Authority and the ICE Benchmark Administration recently announced that LIBOR may continue for legacy contracts until June 2023.
+Added: While there is no certainty as to what rate or rates may become accepted alternatives to LIBOR, the Alternative Reference Rates Committee, a steering committee comprised of U.S.
financial market participants, selected and the Federal Reserve Bank of New York started in May 2018 to publish the Secured Overnight Finance Rate, or SOFR, as an alternative to LIBOR.
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treasury repo market.
−Removed: At this time, it is impossible to predict whether the SOFR or another reference rate will become an accepted alternative to LIBOR.
−Removed: The manner and impact of this transition may materially adversely affect the trading market for LIBOR-based securities, which may result in an increase in borrowing costs under our Credit Agreement.
+Added: The manner and impact of the transition to SOFR or another alternative rate may materially adversely affect the trading market for LIBOR-based securities, which may result in an increase in borrowing costs under our Credit Agreement.
Any replacement for LIBOR may result in an effective increase in the applicable interest rate on our current or future debt obligations, including our Credit Agreement.
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If we are unable to successfully commercialize the OCS, our business may fail.
−Removed: We have invested all of our efforts and financial resources in the development of the OCS.
−Removed: While the OCS Lung received PMA from the FDA for the preservation of donor lungs currently utilized and currently unutilized for double lung transplantation, and our OCS products have received the CE Mark and several other international regulatory approvals for lung, heart and liver for sales outside the United States, we might not be able to commercialize successfully the OCS for the approved indications or obtain approvals for additional indications or in additional jurisdictions on our planned timing or at all.
+Added: 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.
+Added: While the OCS Lung has received PMA from the FDA for the preservation of donor lungs currently utilized and currently unutilized for double lung transplantation, and our OCS products have received the CE Mark and several other international regulatory approvals for lung, heart and liver for sales outside the United States, we might not be able to commercialize successfully the OCS for the 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 solely on sales of OCS Perfusion Sets and OCS Solutions, which we refer to collectively as disposable sets, and OCS Consoles.
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.
−Removed: In order to achieve market acceptance for the OCS, we expect that we will need to demonstrate to surgeons, transplant center program directors and private payors that the OCS potentially results in some or all of the following:
+Added: 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:
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.
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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.
−Removed: Surgeons, transplant centers and private payors often are slow to adopt new products, technologies and treatment practices that require additional upfront costs and training.
+Added: 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.
We expect that the cost of the OCS will significantly exceed 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.
−Removed: Based on these and other factors, transplant center program directors and private payors may decide that the benefits of the OCS do not outweigh its costs.
+Added: 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.
In addition, adoption of the OCS may be constrained by the capacity of individual transplant centers to perform transplants due to factors such as the number of its surgeons trained on the use of the OCS.
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The clinical trial process required to obtain regulatory approvals is lengthy and expensive, with uncertain outcomes.
−Removed: We have obtained PMA approval for the OCS Lung for the preservation of donor lungs currently utilized and currently unutilized for double lung transplants in the United States.
In order to obtain PMA approval for a device, the sponsor must conduct clinical trials, often well-controlled clinical studies, designed to assess the safety and effectiveness of the product.
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Trials often require enrollment of large numbers of subjects, who may be difficult to identify, recruit and maintain as participants in the clinical trial.
−Removed: For example, the clinical trials supporting the PMA application for the OCS Lung for currently utilized lungs involved 349 randomized and transplanted patients.
−Removed: As a condition of our PMA approval for the OCS Lung for currently utilized lungs, we are required to conduct two post-market studies.
+Added: We have obtained PMA approval for the OCS Lung for the preservation of donor lungs currently utilized and currently unutilized for transplants in the United States.
+Added: As a condition of this PMA approval, we are required to conduct two post-market studies.
Adverse outcomes in post-approval studies can result in withdrawal of approval of a PMA or restrictions on the approval.
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our current or future products may have undesirable side effects or other unexpected characteristics.
−Removed: Patient enrollment in clinical trials and completion of patient follow-up depend on many factors, including the size of the patient population, the nature of the trial protocol, the proximity of patients to clinical sites, the eligibility criteria for the clinical trial, patient compliance, competing clinical trials and clinicians’ and patients’ perceptions as to the potential advantages of the product being studied in relation to other available products or services.
+Added: Patient enrollment in clinical trials and completion of patient follow-up depend on many factors, including the size of the patient population, the nature of the trial protocol, the proximity of patients to clinical sites, the eligibility criteria for the clinical trial, patient compliance, competing clinical trials clinicians’ and patients’ perceptions as to the potential advantages of the product being studied in relation to other available products or services, and the ongoing COVID-19 pandemic.
For example, patients may be discouraged from enrolling in our clinical trials if the trial protocol requires them to undergo extensive post-treatment procedures or follow-up to assess the safety and effectiveness of a product, or they may be persuaded to participate in contemporaneous clinical trials of a competitor’s product.
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Clinical trials must be conducted in accordance with the regulations of the FDA and other applicable regulatory authorities’ legal requirements and regulations and are subject to oversight by these governmental agencies and IRBs at the medical institutions where the clinical trials are conducted.
−Removed: In addition, clinical trials must be conducted with supplies of our devices produced under certain requirements of the Quality System Regulation, or QSR, and other regulations.
+Added: In addition, clinical trials must be conducted with supplies of our devices produced under certain requirements of the QSR, and other regulations.
Furthermore, we rely on clinical trial sites to ensure the proper and timely conduct of our clinical trials and while we have agreements governing their committed activities, we have limited influence over their actual performance.
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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.
−Removed: While we responded in full to these FDA’s requests.
−Removed: In the future, the FDA could ask us to conduct additional clinical trials or submit additional evidence to support PMA applications if the FDA does not believe the data we have already submitted is sufficient.
+Added: The FDA ultimately approved the PMA for the OCS Lung.
+Added: While we believe we responded in full to the FDA’s requests with respect to the PMA application for the OCS Heart, including by submitting short and longer-term data from the OCS Heart EXPAND Trial and OCS Heart EXPAND Continued Access Protocol, the FDA could ask us to conduct additional clinical trials or submit additional evidence to support the OCS Heart PMA application, or other PMA applications in the future, if the FDA does not believe the data we have already submitted is sufficient.
Our failure to adequately demonstrate the safety and effectiveness of the OCS or any product we may develop in the future would prevent receipt of regulatory clearance or approval and, ultimately, the commercialization of that product or indication for use.
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Any of these occurrences could materially and adversely affect our business, financial condition, operating results, cash flows and prospects.
−Removed: We must continue to educate surgeons, transplant centers and private payors and demonstrate the merits of the OCS compared with cold storage or new competing technologies.
−Removed: Surgeons, transplant centers and private payors may require additional clinical data prior to adopting or maintaining coverage of the OCS.
+Added: We must continue to educate surgeons, transplant centers and private and public payors and demonstrate the merits of the OCS compared with cold storage or new competing technologies.
+Added: Surgeons, transplant centers and private and public payors may require additional clinical data prior to adopting or maintaining coverage of the OCS.
Directors of transplant programs are key decision-makers in the adoption of novel medical devices used in organ transplantation.
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Our success depends, in large part, on effectively marketing and educating program directors and other surgeons about the benefits of the OCS.
−Removed: Acceptance of the OCS also depends on educating program directors, other surgeons and private payors as to the distinctive characteristics, perceived medical and economic benefits, safety, ease of use and cost-effectiveness of the OCS.
−Removed: If program directors, other surgeons and private 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.
−Removed: Currently, national healthcare systems do not reimburse transplant centers for the use of the OCS and reimbursement in international markets may require us to undertake additional clinical studies.
−Removed: In addition, the long-term effects of our OCS beyond one to two years following transplantation are not yet known.
−Removed: Certain surgeons, transplant centers and private payors may prefer to see longer-term safety and efficacy data than we have produced.
+Added: 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.
+Added: 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.
+Added: Currently, universal national healthcare systems do not reimburse transplant centers for the use of the OCS and reimbursement in international markets may require us to undertake additional clinical studies.
+Added: In addition, the long-term effects of our OCS beyond one to three years following transplantation are not yet known.
+Added: Certain surgeons, transplant centers and private and public payors may prefer to see longer-term safety and efficacy data than we have produced.
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.
−Removed: 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.
+Added: 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, and expanding access to the OCS, including through the potential development of a turnkey perfusion service for transplant centers.
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.
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develop an effective sales and marketing effort.
−Removed: In addition, issues pertaining to the core technology of the OCS could negatively affect adoption of the OCS across the OCS platform.
+Added: We also are developing a turnkey perfusion service that would facilitate organ retrieval and transportation to transplant centers, which we believe would expand access and use of the OCS.
+Added: We may not be successful in the development of such a service, which will depend on recruiting and retaining qualified surgeons and coordinating with regional organ procurement organizations.
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.
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We generate a significant amount of our net revenue from a limited number of customers.
−Removed: For the fiscal year ended December 28, 2019, no individual customer accounted for greater than 10% of our net revenue.
−Removed: For the fiscal year ended December 29, 2018, Harefield Hospital and Massachusetts General Hospital each accounted for 10% of our net revenue.
+Added: For the fiscal year ended December 31, 2020, Massachusetts General Hospital accounted for 14% of our net revenue and Duke University accounted for 10% 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.
−Removed: 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
−Removed: any of our largest customers.
+Added: 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.
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.
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We rely on single-source suppliers and, in a few cases, sole-source suppliers for many of the components used in the OCS.
−Removed: A single-source supplier is a supplier from which we make all purchases of a particular component used in the OCS even though other suppliers of the component exist.
−Removed: A sole-source supplier is a supplier from which we make all purchases of a particular component used in the OCS, and the supplier is the only source of that particular component in the market.
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.
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Our inability to obtain sufficient quantities of components for the OCS also could adversely affect clinical development of the OCS.
−Removed: If we are not able to identify alternate sources of supply for the components, we might have to modify our product to use substitute components, which could cause delays in shipments, increase design and manufacturing costs and increase prices for our products.
+Added: If we are not able to identify alternate sources of supply for the components, we might have to modify our product to use substitute components, which could lead to additional regulatory obligations that could impact our marketing ability, cause delays in shipments, increase design and manufacturing costs and increase prices for our products.
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.
−Removed: We have limited experience in manufacturing the OCS on a commercial scale and may encounter problems at our manufacturing facility or otherwise.
−Removed: We have limited experience in manufacturing the OCS on a commercial scale.
+Added: 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.
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New therapies for COPD, which includes emphysema and chronic bronchitis, could limit the demand for lung transplants.
−Removed: For heart transplants, these alternative products, procedures and therapies include ventricular assist devices, cardiac rhythm management products, total artificial hearts, drug therapies for the heart and surgical procedures.
+Added: Alternative products, procedures and therapies including ventricular assist devices, cardiac rhythm management products, total artificial hearts, and drug therapies for the heart and surgical procedures could limit demand for heart transplants.
Improved treatments for chronic diseases or conditions affecting the liver as well as efforts to develop artificial livers could limit the need for liver transplants.
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Addressing allegations of misconduct detracts focus from business operations and is expensive.
−Removed: In 2018, for example, we resolved a claim based on allegations by a former employee relating to our Chief Executive Officer.
−Removed: Our board of directors, assisted by outside counsel, concluded that our Chief Executive Officer had exhibited poor personal judgment but had not violated state or federal employment discrimination laws (or engaged in any other illegal conduct).
−Removed: Allegations may be made against us and our executives in the future, and we may incur costs defending or settling such claims.
We have adopted policies to promote compliance with laws and regulations as well as to foster a respectful workplace for all employees.
−Removed: These policies, which include a code of business conduct and ethics, an insider trading policy, a Regulation FD policy, a sexual harassment policy, a regulated fraternization policy, and a whistleblower policy, are a component of our effort to minimize employee misconduct
−Removed: as well as activities that frequently result in allegations of misconduct, but our employees may fail to abide by these policies.
+Added: These policies, which include a code of business conduct and ethics, an insider trading policy, a Regulation FD policy, a sexual harassment policy, a regulated fraternization policy, and a whistleblower policy, are a component of our effort to minimize employee misconduct as well as activities that frequently result in allegations of misconduct, but our employees may fail to abide by these policies.
In addition to damaging our reputation, actual or alleged misconduct could affect the confidence of our shareholders, regulators and other parties and could have a material adverse effect on our business, financial condition and operating results.
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security breaches and data corruption.
−Removed: Federal, state and international laws and regulations, such as the GDPR, which took effect in May 2018, can expose us to enforcement actions and investigations by regulatory authorities, and potentially result in regulatory penalties and significant legal liability, if our information technology security efforts fail.
+Added: Federal, state and international laws and regulations, such as the General Data Protection Regulation (EU) 2016/679 (GDPR), can expose us to enforcement actions and investigations by regulatory authorities, and potentially result in regulatory penalties and significant legal liability, if our information technology security efforts fail.
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.
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During the fiscal years ended December 31, 2020 and December 28, 2019, 25% and 31%, respectively, of our net revenue was generated from customers located outside of the United States.
−Removed: Even if we are successful in commercializing the OCS in the United States, we anticipate that international sales will represent a substantial portion of our total sales.
+Added: Even if we are successful in commercializing the OCS in the United States, we anticipate that international sales will represent a meaningful portion of our total sales.
In addition, some of our employees and suppliers are located outside of the United States.
Accordingly, our results of operations could be harmed by a variety of factors, including:
−Removed: changes in a country’s or region’s political or economic conditions, including any potential impact resulting from the U.K.’s decision to exit the European Union, commonly referred to as “Brexit”;
+Added: changes in a country’s or region’s political or economic conditions, including any potential impact resulting from the U.K.’s exit from the European Union;
longer payment cycles of foreign customers and difficulty of collecting receivables in foreign jurisdictions;
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We rely on shipping providers to deliver products to our customers globally.
−Removed: 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.
+Added: 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.
Such disruptions or delays could materially and adversely affect our business, financial condition, operating results, cash flows and prospects.
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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.
−Removed: Public health epidemics or outbreaks could adversely impact our business.
−Removed: In December 2019, a novel strain of coronavirus (COVID-19) emerged in Wuhan, Hubei Province, China and caused significant disruptions to its economy.
−Removed: While initially the outbreak was largely concentrated in China, it has now spread to several other countries, including the United States, and infections have been reported globally.
−Removed: The extent to which the coronavirus impacts our operations will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the duration of the outbreak, new information which may emerge concerning the severity of the coronavirus and the actions to contain the coronavirus or treat its impact, among others.
−Removed: In particular, the continued spread of the coronavirus globally could adversely impact our operations, including among others, our manufacturing and supply chain, sales and marketing, clinical trial operations and the timing of regulatory actions, including review of the OCS Heart PMA currently under review by the FDA.
−Removed: In addition, healthcare providers have, and may need to further, reallocate resources to address the coronavirus outbreak, which may delay the provision of other medical care such as organ transplantation.
−Removed: Any of the foregoing could have an adverse impact our business and financial condition.
+Added: The outbreak of the novel strain of coronavirus (COVID-19) impacts our business, financial condition, operating results, cash flows and prospects .
+Added: 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.
+Added: Impacts to our business as a result of COVID-19 include the temporary disruption of transplant procedures at many of the organ transplant centers who purchase OCS products;
+Added: disruptions to our manufacturing operations and supply chain caused by facility closures, reductions in operating hours, staggered shifts and other social distancing efforts;
+Added: labor shortages;
+Added: decreased productivity and unavailability of materials or components;
+Added: restrictions on or delays of our clinical trials and studies;
+Added: delays of reviews and approvals by the FDA and other health authorities;
+Added: limitations on our employees’ and customers’ ability to travel;
+Added: and delays in product installations, trainings or shipments to and from affected countries and within the United States.
+Added: Since April 2020, we have taken several steps to protect the health and safety of our employees, to establish a process to support the continuous supply of our OCS products at transplant centers globally and to maintain financial flexibility.
+Added: These actions include reducing near-term expenses, such as reducing non-essential discretionary expenses.
+Added: We also deferred a portion of executive and employee compensation from April 2020 through August 31, 2020.
+Added: Additionally, to protect the health of our employees and their families, and our communities, and in accordance with direction from state and local government authorities, we have restricted access to our facilities to personnel and third parties who must perform critical activities that must be completed on-site, limited the number of such personnel that can be present at our facilities at any one time, and requested that most of our personnel work remotely.
+Added: Also, our sales and clinical adoption team has been restricted from visiting many transplant centers in person.
+Added: In addition, we temporarily reduced the manufacturing and distribution of our OCS products at our facility in Andover, Massachusetts.
+Added: Starting in May 2020, we resumed manufacturing and distribution operations to pre-COVID levels.
+Added: In the event that governmental authorities were to further modify current 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.
+Added: We also may be faced with 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.
+Added: 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 and implement limitations on access to hospitals and other medical institutions due to concerns about the potential spread of COVID-19 in such settings.
+Added: 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 clinical trial activities.
+Added: These measures and challenges may continue for the duration of the COVID-19 pandemic, which is highly uncertain, and may significantly reduce our revenue and cash flows while the pandemic continues.
+Added: We have observed recovery in the frequency of transplant procedures, but not yet at the same activity level as prior to the disruption of business and economic activities resulting from COVID-19.
+Added: In addition, while the number of transplant procedures performed has declined during the COVID-19 pandemic, organ transplantations are non-elective, life-saving procedures and we believe that the need for these procedures will persist.
+Added: However, as interventions to contain the spread of the virus are lifted or reduced, new COVID-19 outbreaks may result in new or heightened restrictions, which could again cause disruptions to our customers’ operations and adversely impact organ transplant procedures.
+Added: OCS product sales have been negatively impacted by the COVID-19 pandemic since the first quarter of 2020 and we anticipate OCS product sales will continue to be impacted in 2021;
+Added: however, the length and extent of the pandemic, its consequences, and containment efforts will determine the future impact on our operations and financial condition.
+Added: An adverse impact on the volume and availability of transplant procedures impacts our clinical trials and enrollment in our post-approval studies, and the COVID-19 pandemic has impacted operations at the FDA and other health authorities, resulting in delays of reviews and approvals, including with respect to our OCS Heart PMA application, and may affect other potential PMA applications.
+Added: 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.
+Added: While we maintain an inventory of finished products and raw materials used in our OCS products, a prolonged pandemic could lead to shortages in the raw materials necessary to manufacture our products.
+Added: The extent to which COVID-19 impacts our operations and those of our third-party partners will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the duration of the pandemic, additional or modified government actions , new information which may emerge concerning the severity and incidence of COVID-19, actions to contain the virus or treat its impact, periodic spikes in infection rates, new strains of the virus that cause outbreaks of COVID-19, and the broad availability of effective vaccines .
+Added: In particular, the speed of the continued spread of COVID-19 globally, and the magnitude of interventions to contain the spread of the virus, such as government-imposed quarantines, including shelter-in-place mandates, sweeping restrictions on travel, mandatory shutdowns for non-essential businesses, requirements regarding social distancing, and other public safety measures, will determine the impact of the pandemic on our business, financial condition, operating results, cash flows and prospects.
+Added: If we experience a prolonged disruption in our manufacturing, supply chains, clinical trial or commercial operations, or if demand for our products is significantly reduced as a result of the COVID-19 pandemic, we would expect to experience a material adverse impact on our business, financial condition, results of operations and prospects.
+Added: Additionally, the extent and duration of the impact of the COVID-19 pandemic on our stock price and on those of other companies in our industry is highly uncertain and may make us look less attractive to investors and, as a result, there may be a less active trading market for our common stock, our stock price may be more volatile, and our ability to raise capital could be impaired, which could in the future negatively affect our liquidity and financial position.
Risks Related to Our Intellectual Property
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However, we may not be able to obtain any required license on commercially reasonable terms or at all.
−Removed: we were able to obtain a license, it could be non-exclusive, thereby giving our competitors and other third parties access to the same technologies licensed to us, and it could require us to make substantial licensing and royalty payments.
+Added: Even if we were able to obtain a license, it could be non-exclusive, thereby giving our competitors and other third parties access to the same technologies licensed to us, and it could require us to make substantial licensing and royalty payments.
We also could be forced, including by court order, to cease developing, manufacturing, and commercializing the infringing technology or products.
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With respect to the unexpired, issued U.S.
−Removed: patent licensed from the VA, we have been granted an interim patent term extension until September 23, 2020 and have filed an application for patent term extension that, if granted, would extend the term of that patent until 2022.
+Added: patent licensed from the VA, we have been granted an interim patent term extension until September 23, 2021 and we have requested an extension until May 2022.
+Added: However, the length of the patent term extension is currently being determined by the United States Patent and Trademark Office (USPTO) based on input from the FDA.
+Added: On February 8, 2021, the FDA provided to the USPTO and determined the regulatory review period for the OCS Lung System.
+Added: Under the FDA’s analysis, the patent term extension would be until November 6, 2021.
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 2026 and 2037, assuming all required fees are paid.
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Even if issued, our patents may be challenged, narrowed, held unenforceable, invalidated or circumvented, or others could challenge the inventorship, ownership or enforceability of our patents and patent applications, any of which could limit our ability to stop competitors from marketing similar products or limit the term of patent protection we may have for our products, or cause us to lose our right to manufacture, market and sell the OCS products or components of the OCS products.
+Added: Additionally, the Leahy-Smith America Invents Act, or the Leahy-Smith Act, includes a number of significant changes to U.S.
+Added: These include provisions that affect the way patent applications are prosecuted, redefine prior art, and provide more efficient and cost-effective avenues for competitors to challenge the validity of patents.
+Added: In addition, the Leahy-Smith Act has transformed the U.S.
+Added: patent system into a first-to-file system.
+Added: The first-to-file provisions became effective on March 16, 2013.
+Added: It is not clear what, if any, impact the Leahy-Smith Act will have on the operation of our business.
+Added: For example, the Leahy-Smith Act provides that an administrative tribunal known as the Patent Trial and Appeals Board, or PTAB, provides a venue for challenging the validity of patents at a cost that is much lower than district court litigation and on timelines that are much faster.
Proceedings challenging our patents could result in either loss of the patent or denial of the patent application or loss or reduction in the scope of one or more of the claims of the patent or patent application.
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If we do not have adequate patent protection or other exclusivity for our products, our business, financial condition or results of operations could be materially adversely affected.
−Removed: Recent changes in U.S.
−Removed: patent laws may limit our ability to obtain, defend and/or enforce our patents.
−Removed: Recent patent reform legislation could increase the uncertainties and costs surrounding the prosecution of our patent applications and the enforcement or defense of our issued patents.
−Removed: The Leahy-Smith America Invents Act, or the Leahy-Smith Act, includes a number of significant changes to U.S.
−Removed: These include provisions that affect the way patent applications are prosecuted, redefine prior art, and provide more efficient and cost-effective avenues for competitors to challenge the validity of patents.
−Removed: In addition, the Leahy-Smith Act has transformed the U.S.
−Removed: patent system into a first-to-file system.
−Removed: The first-to-file provisions, however, only became effective on March 16, 2013.
−Removed: Accordingly, it is not clear what, if any, impact the Leahy-Smith Act will have on the operation of our business.
−Removed: However, the Leahy-Smith Act and its implementation could increase the uncertainties and costs surrounding the enforcement and defense of our issued patents.
−Removed: For example, the Leahy-Smith Act provides that an administrative tribunal known as the Patent Trial and Appeals Board, or PTAB, provides a venue for challenging the validity of patents at a cost that is much lower than district court litigation and on timelines that are much faster.
−Removed: Although it is not clear what, if any, long-term impact the PTAB proceedings will have on the operation of our business, the initial results of patent challenge proceedings before the PTAB since its inception in 2013 have resulted in the invalidation of many U.S.
−Removed: patent claims.
−Removed: The availability of the PTAB as a lower-cost, faster and potentially more potent tribunal for challenging patents could increase the likelihood that our own patents will be challenged, thereby increasing the uncertainties and costs of maintaining and enforcing them.
We may be unable to enforce our intellectual property rights throughout the world.
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Risks Related to Government Regulation
−Removed: If we fail to adequately respond to FDA follow-up inquiries or to obtain or maintain necessary FDA approval for each use of the OCS, or if such approval is delayed, or if we fail to maintain the CE Mark in the European Union, we will not be able to commercially sell and market the OCS.
+Added: If we fail to adequately respond to the FDA follow-up inquiries or to obtain or maintain necessary FDA approval for each use of the OCS, or if such approval is delayed, 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.
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We have obtained PMA approval for the OCS Lung for both the preservation of donor lungs currently utilized for transplantation and donor lungs that are currently unutilized for transplantation, but the OCS has not yet attained PMA approval for preservation of heart and liver donor organs.
−Removed: In the European Union, we have the right to affix a CE Mark for the sale of the OCS Lung, OCS Heart and OCS Liver for lung, heart and liver transplants, respectively.
−Removed: Our notified body, BSI is based in the Netherlands and issues the certificates that allow CE marking of the OCS products.
In the United States, before we can market the OCS products for each organ, we must first receive PMA approval from the FDA.
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The process of obtaining PMA approval requires significant clinical trial data.
−Removed: It generally takes one year, or even longer, from the time the PMA application is submitted to the FDA until an approval is obtained.
−Removed: Despite the time, effort and cost involved in this process, the FDA might not approve the OCS products for use in preservation of donor lungs currently unutilized for transplantation or of donor hearts, livers, or other organs.
+Added: It generally takes one year, or even longer, from the time the PMA application is submitted to the FDA until an FDA action date.
+Added: Despite the time, effort and cost involved in this process, the FDA might not approve the OCS products for use in preservation or transplantation or of donor hearts, livers, or other organs.
Furthermore, unforeseen requirements or delays in obtaining clearances or approvals from the FDA for any future products could result in unexpected and significant costs for us and consume management’s time and other resources.
−Removed: The FDA could ask us to supplement our submissions, collect additional non-clinical data, conduct additional clinical trials or engage in other costly and time-consuming actions, or it could simply deny our PMA application or, if we were to seek any 510(k) clearance for a product, issue a not substantially equivalent determination for a 510(k) device.
−Removed: For example, in 2015, we voluntarily withdrew our original PMA application for the OCS Heart prior to approval in an effort to expand our data to include OCS Heart EXPAND Trial results as well as to supplement our OCS Heart PROCEED II Trial results with long-term follow-up data that was not collected as part of the original trial protocol.
+Added: The COVID-19 pandemic may result in delayed review and approval timelines.
+Added: The pandemic has and may continue to cause disruptions in global regulatory agencies’ daily operations.
+Added: 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.
+Added: The duration and severity of the COVID-19 pandemic is unpredictable and difficult to assess.
+Added: Moreover, the FDA could ask us to supplement our submissions, collect additional non-clinical data, conduct additional clinical trials or engage in other costly and time-consuming actions, or it could simply deny our PMA application or, if we were to seek any 510(k) clearance for a product, issue a not substantially equivalent determination for a 510(k) device.
+Added: For example, in 2015, we voluntarily withdrew our original PMA application for the OCS Heart in an effort to expand our data to include OCS Heart EXPAND Trial results as well as to supplement our OCS Heart PROCEED II Trial results with long-term follow-up data that was not collected as part of the original trial protocol.
In addition, even if we obtain PMA approval, the approval could be withdrawn or other restrictions imposed if post- market data demonstrate safety issues or inadequate performance.
−Removed: For 510(k) cleared devices, FDA can use its enforcement authorities to require removal of a device from the market in case of safety issues.
−Removed: We are currently investigating the safety and effectiveness of the OCS in multiple investigational device exemption, or IDE, investigations.
−Removed: Specifically, we recently completed enrollment in a pivotal trial under IDEs that investigate the safety and effectiveness of the OCS Liver for the preservation of donor livers that are currently utilized and currently unutilized for transplantation.
−Removed: Further, we received IDE approval for the Continued Access Protocol for this trial.
−Removed: We also received IDE approval for a study of OCS Liver for certain donor livers that are donated after circulatory death that have extended warm ischemia time or older donor age.
−Removed: In addition, we completed an IDE pivotal trial of the OCS Heart for donor hearts that are currently unutilized for transplantation and received IDE approval for the Continued Access Protocol for this trial.
−Removed: We also received IDE approval for a study of OCS Heart for donor hearts that are donated after circulatory death.
−Removed: We intend to use data from the pivotal clinical trials we are conducting or have finished conducting under IDEs to support our applications for PMA approvals for the OCS Heart and OCS Liver.
+Added: 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.
+Added: We are currently investigating the safety and effectiveness of the OCS in multiple IDE investigations.
+Added: Specifically, we completed enrollment in the OCS Liver PROTECT Trial under an IDE and received IDE approval for and are enrolling patients in the OCS Liver PROTECT CAP Trial .
+Added: We also received IDE approval for a study of the use of the OCS Liver for certain donor livers that are donated after circulatory death that have extended warm ischemia time or older donor age.
+Added: In addition, we completed the OCS Heart EXPAND Trial under an IDE and received IDE approval for the OCS Heart EXPAND CAP Trial.
+Added: We also completed enrollment in the OCS Heart DCD trial for donor hearts that are donated after circulatory death under an IDE and received IDE approval for the OCS Heart DCD CAP Trial.
As is typical to the PMA review process, during the course of its initial PMA review and in most cases within 90 calendar days of the company’s PMA filing date, the FDA communicates issues that it has identified and views as deficiencies through a substantive interaction, which in most cases is a letter.
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an approval, an approvable letter, a not approvable letter, or, in rare instances, a denial.
−Removed: We have received a “major deficiency letter” for each PMA application that we have submitted to the FDA and we believe our responses have been thorough and comprehensive.
−Removed: Regarding the OCS Heart PMA currently under review, we expect that in the second quarter of 2020 the FDA will convene an advisory committee of experts from outside the FDA to review and evaluate our OCS Heart PMA application and provide recommendations to the FDA as to the safety, effectiveness, risk and benefit of the device.
+Added: We have received a “major deficiency letter” for each PMA application that we have submitted to the FDA, and we believe our responses have been thorough and comprehensive, including most recently with respect to the OCS Liver.
+Added: The FDA will convene an advisory committee of experts from outside the FDA to review and evaluate our OCS Heart PMA currently under review and to provide recommendations to the FDA as to the safety, effectiveness, risk and benefit of the device.
It is not uncommon for the FDA to seek advice from an outside expert panel when considering an application for a novel technology.
−Removed: The FDA ultimately decides whether to approve or disapprove the PMA application and may or may not follow the advisory committee’s recommendation.
−Removed: We anticipate FDA action with respect to this PMA application over the next six months.
−Removed: It is possible that the FDA decides that the data from our clinical trials does not support PMA approval or any of the claims we wish to make, or the FDA could require us to gather significant additional clinical data or conduct additional non-clinical testing.
+Added: The FDA ultimately decides whether to approve or disapprove the PMA application and may or may not follow the advisory committee’s recommendation, even if favorable.
+Added: Notwithstanding a favorable recommendation, the FDA could determine that the data from our clinical trials does not support PMA approval or the claims we wish to make, or the FDA could require us to gather significant additional clinical data or conduct additional non-clinical testing.
+Added: The FDA had scheduled the advisory committee meeting regarding our OCS Heart PMA application for the second quarter of 2020.
+Added: However, due to the COVID-19 pandemic, the FDA postponed the advisory committee meeting to October 2020, and in September 2020, the FDA further postponed the advisory committee meeting to allow the FDA to review additional, already collected, short and longer-term data from the OCS Heart EXPAND Trial and OCS Heart EXPAND CAP Trial.
+Added: The FDA advisory committee panel is expected to be held on April 6, 2021.
The approval process involving the OCS for each organ is subject to many of the same risks and uncertainties.
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Even if the FDA grants PMA approval for the OCS Heart and OCS Liver for preservation of donor hearts and livers for transplantation, respectively, the claims approved by the FDA may be significantly narrower than those we are seeking.
+Added: If we fail to maintain the CE Mark in the European Union, Northern Ireland and the UKCA mark (as applicable) in Great Britain, we will not be able to commercially sell and market the OCS in the EU.
+Added: In the European Union, we have the right to affix a CE Mark for the sale of the OCS Lung, OCS Heart and OCS Liver for lung, heart and liver transplants, respectively.
+Added: 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.
−Removed: In order to be able to continue to use the CE Mark in the same manner after May 2020, we will have to meet the conditions set out in the transitional provisions in the Medical Devices Regulation (Regulation 2017/745), or the Medical Devices Regulation.
+Added: In order to be able to continue to use the CE Mark in the same manner after May 2021, we will have to meet the conditions set out in the transitional provisions in the Medical Devices Regulation (Regulation 2017/745) (MDR), and the in vitro Diagnostic Medical Device Regulations (2017/746) (IVDR).
+Added: In Great Britain (England, Wales and Scotland), the devices will be required to conform to the UK MDR 2002 in order to be registered with the Medicines and Healthcare Products Regulatory Agency (MHRA).
+Added: Unlike Great Britain, the Medical Device Regulations (2017/745) and the in vitro Diagnostic Medical Device Regulations (2017/746) will apply in Northern Ireland from 26 May 2021, and 26 May 2022 respectively, in line with the EU’s implementation timeline.
+Added: The MHRA will remain the competent Authority for medical devices in Northern Ireland.
Before expiry of these certificates, we will need to apply for their re-certification under the new Medical Devices Regulation.
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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.
−Removed: 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.
−Removed: Additionally, we will need to appoint a U.K.
−Removed: responsible person and to register with the Medicines and Healthcare Products Regulatory Agency in the U.K.
−Removed: within eight months following Brexit.
+Added: 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.
+Added: Additionally, we have appointed a U.K.
+Added: responsible person and will register with the Medicines and Healthcare Products Regulatory Agency in the U.K.
Failure to do so may mean that we will be unable to lawfully sell our products in the U.K.
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Hospitals or surgeons in countries or regions where separate additional reimbursement or funding for the OCS is not available may determine that the benefits of the OCS do not or will not outweigh the cost of the OCS.
−Removed: 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), which imposes certain standards on procurement, preservation and transport of organs intended for transplantation.
+Added: 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.
+Added: 1501) (the Regulations) in the United Kingdom which imposes certain standards on procurement, preservation and transport of organs intended for transplantation.
Even where reimbursement or funding is available, in some foreign countries, particularly in the European Union, the pricing of medical devices is subject to governmental control.
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For our currently marketed OCS Lung, as part of the conditions of approval, we must complete three PMA post-approval studies:
−Removed: the OCS Lung INSPIRE Continuation Post-Approval Study, or 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 Post-Approval Study, or 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 Post-Approval Study 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.
+Added: 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.
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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.
−Removed: We have voluntarily recalled certain 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.
−Removed: For example, in July 2018, we implemented a correction to the OCS Heart and Liver Consoles to address a loss of connection between the OCS Console and Perfusion Sets that was caused by incomplete cleaning, and issued a Product Information Bulletin to all customers and filed corrective action reports with European and Australian authorities.
−Removed: In March 2018, we identified a defect in one of the parts of the OCS Liver organ chamber.
−Removed: As a result, we temporarily suspended enrollment in the OCS Liver PROTECT Trial and recalled all potentially affected units from customer sites.
−Removed: Additionally, in March 2018, after identifying out-of-specification plastic components used in the manufacturing of the OCS Lung Console, we recalled the affected units from customer sites and replaced them with known, good product.
−Removed: All affected customers were notified of the issue, and regulatory bodies in Italy, Lithuania and Netherlands were notified.
−Removed: In September 2017, we recalled the OCS Heart units from customer sites in the United States and U.K.
−Removed: that were not displaying the programmed settings for certain parameters and replaced them with properly labeled products.
−Removed: We also notified the FDA as well as regulatory bodies in the U.K.
−Removed: and Netherlands.
−Removed: In addition, in January 2017, a heart was rejected for transplantation in the U.K.
−Removed: due to exposure to elevated temperatures beyond the set point due to incorrect reading of the temperature sensor offsets.
−Removed: We notified all OCS Heart users of the issue, and provided steps to help avoid a similar event.
−Removed: We also notified the FDA as well as regulatory bodies in the U.K., Netherlands, Germany, Italy, Denmark, Lithuania and Australia.
+Added: 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.
+Added: For example, most recently, in July 2018, we implemented a correction to the OCS Heart and Liver Consoles to address a loss of connection between the OCS Console and Perfusion Sets that was caused by incomplete cleaning, and in March 2018, after identifying out-of-specification plastic components used in the manufacturing of the OCS Lung Console, we recalled the affected units from customer sites and replaced them with known, good product, and we made required notifications to the FDA and foreign regulatory agencies.
Internationally, the approaches to product defects will vary.
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Foreign regulatory authorities may not clear or approve our product for the same uses cleared or approved by the FDA.
−Removed: 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.
+Added: Although we have been able to affix the CE Mark to the OCS Lung, OCS Heart and OCS
+Added: 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 20 02 (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.
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Foreign regulatory agencies periodically inspect manufacturing facilities both in the United States and abroad.
−Removed: Our most recent inspection by our EU Notified Body was in February 2020, which resulted in minor observations.
−Removed: While we have implemented corrective and preventive actions to address these observations, these previous observations may not be closed out.
+Added: Our most recent inspection by our EU Notified Body was in January 2021, which resulted in one minor observation.
+Added: While we are implementing corrective and preventive action to address the observation, this previous observation may not be closed out.
Additionally, we may fail to pass future inspections of our facility by applicable regulatory authorities or entities both in the United States and in other countries.
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Furthermore, the use of the OCS for indications other than those approved by the FDA or approved by any foreign regulatory body may not effectively treat such conditions, which could harm our reputation in the marketplace among surgeons and patients.
−Removed: If the FDA or any foreign regulatory body determines that our promotional materials or training constitute promotion of an off-label use, or that the materials or training are false or misleading, it could request that we modify our training or promotional materials or subject us to regulatory or enforcement actions, including the issuance or imposition of an untitled letter, which is used for violators that do not necessitate a warning letter, injunction, seizure, civil fine or criminal penalties.
+Added: If the FDA or any foreign regulatory body determines that our promotional materials or training constitute promotion of an off-label use, or that the materials or training are false or misleading, it could request that we modify our training or promotional materials or subject us to regulatory or enforcement actions, including the issuance or imposition of an untitled letter, which is used for violations that do not necessitate a warning letter, injunction, seizure, civil fine or criminal penalties.
It is also possible that other federal, state or foreign enforcement authorities might take action under other regulatory authority, such as false claims 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.
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The European Parliament passed the MDR, which repeals and replaces the European Union Medical Devices Directive and the Active Implantable Medical Devices Directive, which will become effective in May 202 1.
+Added: The EU MDR and EU IVDR will fully apply in the EU Member States from May 26, 2021 and May 26, 2022 .
Unlike directives, which must be implemented into the national laws of the European Economic Area, or EEA, member states, regulations would be directly applicable, (i.e., without the need for adoption of EEA member state laws implementing them) in all EEA member states and are intended to eliminate current differences in the regulation of medical devices among EEA member states.
+Added: T he provisions contained within the EU MDR and EU IVDR will not be transposed into law in Great Britain and will not be implemented in Great Britain.
+Added: Medical Devices in Great Britain are governed under the UK Medical Dev ice Regulations 2002.
+Added: Under the terms of the Northern Ireland Protocol, the rules for placing medical devices on the Northern Ireland market differ from those applicable to Great Britain (England, Wales and Scotland).
+Added: T he EU MDR and EU IVDR will apply in Northern Ireland from May 26, 2021 and May 26, 2022 , respectively .
The MDR, among other things, is intended to establish a uniform, transparent, predictable and sustainable regulatory framework across the EEA for medical devices and ensure a high level of safety and health while supporting innovation.
−Removed: Once applicable, the new regulations will, among other things:
+Added: The regulations, among other things:
strengthen the rules on placing devices on the market and reinforce surveillance once they are available;
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In addition, there are significant concerns associated with whether EU Notified Bodies will be able to re-certify all devices in their care in time.
−Removed: If we do not manage to re-certify our products under this new regulation or cannot rely on the transitional provisions, we may have to take our products off the EU market until this is the case.
+Added: If we do not manage to re-certify our products under this regulation or cannot rely on the transitional provisions, we may have to take our products off the EU market until this is the case.
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.
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Treasury and other federal agencies and authorities have a broad range of civil and criminal penalties they may seek to impose against corporations and individuals for violations of economic sanctions laws, export control laws, the FCPA and other federal statutes and regulations, including those established by the Office of Foreign Assets Control, or OFAC.
−Removed: In addition, the Bribery Act prohibits both domestic and international bribery, as well as bribery across both private and public sectors, where business or personnel engaged by it have a connection with the U.K.
−Removed: An organization with that connection and that “fails to prevent bribery” by anyone associated with the organization can be found guilty under the Bribery Act unless the organization can establish the defense of having implemented “adequate procedures” to prevent bribery.
+Added: In addition, the Bribery Act prohibits both domestic and international bribery, as well as bribery across both private and public sectors.
+Added: 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 U.K.
+Added: 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 .
+Added: 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.
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In addition to fines and penalties that may be imposed for failure to comply with state law, some states also provide for private rights of action to individuals for misuse of personal information.
+Added: Our ongoing efforts to comply with evolving laws and regulations may be costly and require ongoing modifications to our policies, procedures and systems.
+Added: Failure to comply with laws regarding data protection would expose us to risk of enforcement actions and penalties under such laws.
+Added: Even if we are not determined to have violated applicable data laws, government investigations into these issues can be expensive and lengthy and generate adverse publicity, which could harm our business, financial condition, results of operations or prospects.
The European Union also has laws and regulations dealing with the collection, use and processing of personal data concerning individuals who are located in the European Union, which are often more restrictive than those in the United States.
−Removed: We are subject to the requirements of the GDPR because we are processing personal data in the European Union.
−Removed: or offering goods to, or monitoring the behavior of, individuals who are located in the European Union.
−Removed: The GDPR implements more stringent administrative requirements for controllers and processors of personal data, including, for example, shortened timelines for data breach notifications, limitations on retention of information, increased requirements pertaining to health data and pseudonymised (i.e., key-coded) data, additional obligations when we contract with service providers, and more robust rights for individuals over their personal data.
−Removed: The GDPR provides that EU member states may make their own further laws and regulations limiting the processing of genetic, biometric or health data, which could limit our ability to use and share personal data or to cause our costs could increase, and harm our business and financial condition.
−Removed: If we do not comply with our obligations under the GDPR, we could be exposed to substantial fines and litigation.
+Added: We are subject to the requirements of the GDPR because we are processing personal data in the European Union or offering goods to, or monitoring the behavior of, individuals who are located in the European Union.
+Added: The GDPR implements more stringent administrative requirements for controllers and processors of personal data, including, for example, shortened timelines for data breach notifications, limitations on retention of information, increased requirements pertaining to health data and pseudonymized (i.e., key-coded) data, additional obligations when we contract with service providers, and more robust rights for individuals over their personal data.
+Added: The GDPR provides that EU member states may make their own further laws and regulations, including laws and regulations limiting the processing of genetic, biometric or health data, which could limit our ability to use and share personal data or cause our costs to increase, and harm our business and financial condition.
+Added: If we do not comply with our obligations under the GDPR, we could be exposed to enforcement activity from EU regulators, including substantial fines and litigation.
In addition, EU law restricts transfers of personal data to the United States unless certain requirements are met.
−Removed: These rules are under flux.
−Removed: For example, following a decision of the Court of Justice of the European Union in October 2015, transferring personal data to U.S.
−Removed: companies that had certified as members of the U.S.
−Removed: Safe Harbor Scheme was declared invalid.
−Removed: In July 2016, the European Commission adopted the U.S.-EU Privacy Shield Framework which replaces the Safe Harbor Scheme.
−Removed: However, this Framework is under review and there is currently litigation challenging it and other mechanisms for transferring personal data from the EU (e.g., through standard contractual clauses).
−Removed: It is uncertain whether the Privacy Shield Framework and/or the standard contractual clauses will be similarly invalidated by the European courts.
−Removed: We rely on a mixture of mechanisms to transfer personal data from our EU business to the United States, and could be impacted by changes in law as a result of a future review of these transfer mechanisms by European regulators under the GDPR, as well as current challenges to these mechanisms in the European courts.
+Added: The legislative and regulatory landscape for privacy and data protection continues to evolve, and there has been an increasing focus on privacy and data protection issues with the potential to affect our business.
+Added: For example, in July 2020, the Court of Justice of the European Union invalidated the U.S.-EU Privacy Shield Framework, which has led to increased scrutiny of data transfers from the EEA to the United States generally and may increase our costs of compliance with data privacy legislation.
+Added: We rely on a mixture of mechanisms to transfer personal data from our EU business to the United States.
+Added: We are also subject to the laws of each EU member state implementing any EU directive applicable to our processing activities, including Directing 2002/58/EC.
+Added: We are subject to the requirements of the UK Data Protection Law as amended and superseded from time to time.
+Added: UK Data Protection Law means:
+Added: (i) the GDPR as it forms part of UK law by virtue of section 3 of the European Union (Withdrawal) Act 2018;
+Added: (ii) the Data Protection Act 2018;
+Added: (iii) the Privacy and Electronic Communications (EC Directive) Regulations 2003 as they continue to have effect by virtue of section 2 of the European Union (Withdrawal) Act 2018;
+Added: and (iv) any other laws in the field of data protection in force in the UK from time to time applicable (in whole or in part) to us.
Any actual or perceived failure by us or the third parties with whom we work to comply with data privacy or security laws, policies, legal obligations or industry standards, or any security incident that results in the unauthorized release or transfer of information concerning individuals, may result in governmental enforcement actions and investigations, including by European data protection authorities and U.S.
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The taxes imposed by the Affordable Care Act may result in decreased profits to us, lower reimbursement by payors to hospitals and transplant centers, and/or reduced medical procedure volumes, all of which may have a material adverse effect on our business, financial condition and results of operations.
−Removed: The Trump Administration and the U.S.
−Removed: Congress may take further action regarding the Affordable Care Act, including, but not limited to, repeal or replacement.
−Removed: Most recently, the TCJA was enacted which, among other things, removes penalties for not complying with the individual mandate to carry health insurance.
−Removed: Additionally, all or a portion of the Affordable Care Act and related subsequent legislation may be modified, repealed or otherwise invalidated through judicial challenge, which could result in lower numbers of insured individuals, reduced coverage for insured individuals and adversely affect our business.
+Added: Under the former Trump Administration, there were ongoing efforts to repeal, modify, or invalidate provisions of the Affordable Care Act.
+Added: For example, federal legislation repealed penalties for not complying with the individual mandate to carry health insurance.
+Added: Additionally, the Affordable Care Act has been subject to judicial challenge.
+Added: The case Texas v.
+Added: Azar, which challenges the constitutionality of the Affordable Care Act was argued before the Supreme Court in November 2020.
+Added: Pending resolution of the litigation, all of the Affordable Care Act but the individual mandate to buy health insurance remains in effect.
+Added: The repeal of all or a portion of the Affordable Care Act could result in lower numbers of insured individuals, reduced coverage for insured individuals and adversely affect our business.
In addition, other legislative changes have been proposed and adopted since the Affordable Care Act was enacted.
−Removed: The Budget Control Act of 2011, for example, reduced Medicare payments to providers by 2% per fiscal year, and will remain in effect through 2027 unless additional Congressional action is taken.
+Added: The Budget Control Act of 2011, as amended, for example, reduced Medicare payments to providers by 2% per fiscal year, and will remain in effect through 2030 (except for the period from May 1, 2020 to March 31, 2021), when no reduction occurred) unless additional Congressional action is taken.
The American Taxpayer Relief Act of 2012 also reduced Medicare payments to several providers, including hospitals, and increased the statute of limitations period for the government to recover overpayments to providers from three to five years.
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It is unclear what effect new quality and payment programs, such as MACRA, may have on our business, financial condition, results of operations or cash flows.
−Removed: We expect additional state and federal healthcare policies and reform measures to be adopted in the future, including following the 2020 presidential election, any of which could limit reimbursement for healthcare products and services or otherwise result in reduced demand for the OCS or additional pricing pressure and have a material adverse effect on our industry generally and on our customers.
+Added: We expect additional state and federal healthcare policies and reform measures to be adopted in the future, including following in the wake of the transition from the Trump administration to the Biden administration, any of which could limit reimbursement for healthcare products and services or otherwise result in reduced demand for the OCS or additional pricing pressure and have a material adverse effect on our industry generally and on our customers.
Any changes of, or uncertainty with respect to, future reimbursement to hospitals and transplant centers could affect demand for the OCS, which in turn could have a material adverse effect on our business, financial condition and results of operations.
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Furthermore, an accident could damage or force us to shut down our operations.
−Removed: Risks Related to Our Common Stock
+Added: Risks Related to Our Common Stock and General Risks
The market price of our common stock has been and may continue to be volatile and could subject us to securities class action litigation.
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regulatory or legal developments in the United States and other countries, including changes in the healthcare payment systems;
−Removed: results of applications for regulatory approvals or clearances for the OCS or competing products;
+Added: 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;
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Alternatively, if the Business Litigation Session of the Superior Court of Suffolk County, Massachusetts or a court outside of Massachusetts were to find this exclusive forum provision inapplicable to, or unenforceable in respect of, one or more of the specified types of actions or proceedings described above, we may incur additional costs associated with resolving such matters in other venues or jurisdictions, which could materially and adversely affect our business, financial condition, operating results, cash flows and prospects.
−Removed: Our management team has limited experience managing a public company.
−Removed: Most members of our management team have limited experience managing a publicly-traded company, interacting with public company investors and complying with the increasingly complex laws pertaining to public companies.
−Removed: Our management team may not successfully or efficiently manage our ongoing transition to being a public company subject to significant regulatory oversight and reporting obligations under the federal securities laws and the scrutiny of securities analysts and investors.
−Removed: These new obligations and constituents require significant attention from our management team and could divert their attention away from the day-to-day management of our business, which could materially and adversely affect our business, financial condition, operating results, cash flows and prospects.
−Removed: Our directors, executive officers and affiliates have significant voting power and may take actions that may not be in the best interests of our other shareholders.
−Removed: As of December 28, 2019, our directors, executive officers and affiliates collectively controlled approximately 20.8% of our outstanding common stock.
−Removed: As a result, these shareholders, if they act together, are able to control the management and affairs of our company and most matters requiring shareholder approval, including the election of directors and approval of significant corporate transactions.
−Removed: The interests of these shareholders may not be the same as or may even conflict with your interests.
−Removed: For example, these shareholders could attempt to delay or prevent a change in control of the Company, even if such change in control would benefit our other shareholders.
−Removed: As a result, this concentration of ownership may not be in the best interests of our other shareholders.
If we fail to maintain effective internal control over financial reporting and effective disclosure controls and procedures, we may not be able to accurately report our financial results in a timely manner or prevent fraud, which may adversely affect investor confidence in our company.
−Removed: For the fiscal year ended December 28, 2019, we are not required to make a formal assessment of the effectiveness of our internal control over financial reporting.
−Removed: However, we are required to comply with the SEC’s rules implementing Section 302 of the Sarbanes-Oxley Act, which require management to certify financial and other information in our quarterly and annual reports.
−Removed: Although we are required to disclose changes made in our internal controls and procedures on a quarterly basis, we are not required to make our first annual assessment of our internal controls over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act until our annual report on Form 10-K for the year ending December 31, 2020 is filed with the SEC.
−Removed: As an emerging growth company, our independent registered public accounting firm will not be required to formally attest to the effectiveness of our internal control over financial reporting pursuant to Section 404 until the later of the year following our first annual report required to be filed with the SEC or the date we are no longer an emerging growth company.
+Added: Although we are required to annually assess our internal controls over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act and disclose changes that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting on a quarterly basis, as an emerging growth company, our independent registered public accounting firm will not be required to formally attest to the effectiveness of our internal control over financial reporting pursuant to Section 404 until the date we are no longer an emerging growth company.
At such time, our independent registered public accounting firm may issue a report that is adverse in the event it is not satisfied with the level at which our controls are documented, designed or operated.
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We are an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act, and may remain an emerging growth company until the last day of our fiscal year following the fifth anniversary of our IPO, subject to specified conditions.
−Removed: We would cease to be an emerging growth company prior to such date if we have more than $1.07 billion in annual revenue, we have more than $700 million in market value of our stock held by non-affiliates (and we have been a public company for at least 12 months and have filed one annual report on Form 10-K) or we issue more than $1 billion of non-convertible debt securities over a three-year period.
+Added: We would cease to be an emerging growth company prior to such date if we have more than $1.07 billion in annual revenue, we have more than $700 million in market value of our stock held by non-affiliates or we issue more than $1 billion of non-convertible debt securities over a three-year period.
For so long as we remain an emerging growth company, we are permitted, and intend, to rely on exemptions from certain disclosure requirements that are applicable to other public companies that are not emerging growth companies.
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We are also a “smaller reporting company,” as defined under Regulation S-K.
−Removed: We would cease to be a smaller reporting company if we have (i) more than $250 million in market value of our shares held by non-affiliates as of the last business day of our second fiscal quarter or (ii) more than $100 million of annual revenues in our most recent fiscal year completed before the last business day of our second fiscal quarter and a market value of our shares held by non-affiliates more than $700 million as of the last business day of our second fiscal quarter.
+Added: We may continue to be a smaller reporting company if either (i) the market value of our stock held by non-affiliates is less than $250 million or (ii) our annual revenue is less than $100 million during the most recently completed fiscal year and the market value of our stock held by non-affiliates is less than $700 million as of the last business day of our second fiscal quarter.
If we are a smaller reporting company at the time we cease to be an emerging growth company, we may continue to rely on exemptions from certain disclosure requirements that are available to smaller reporting companies.
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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.