4 unchanged sentences
Our goal is to enable rheumatologists to improve care for patients through the differential diagnosis, prognosis and monitoring of complex autoimmune and autoimmune-related diseases, including SLE and rheumatoid arthritis, or RA.
−Removed: Our strategy includes leveraging our portfolio of testing products to market therapeutics through our sales channel, targeting the approximately 5,000 rheumatologists across the United States.
−Removed: Our business model of integrating testing products and therapeutics positions us to offer targeted solutions to rheumatologists and, ultimately, better serve patients.
We currently market 10 testing products under our AVISE ® brand that allow for the differential diagnosis, prognosis and monitoring of complex autoimmune and autoimmune-related diseases.
4 unchanged sentences
We are leveraging our portfolio of testing products to establish partnerships with leading pharmaceutical companies, academic research centers and patient advocacy organizations.
−Removed: In December 2018, we entered into a co-promotion agreement, or the Janssen Agreement, with Janssen Biotech, Inc., or Janssen, to exclusively promote SIMPONI ® (golimumab) in order to advance our integrated testing and therapeutics strategy, and we began direct promotion of SIMPONI ® in January 2019.
−Removed: We also have agreements with other leading pharmaceutical companies and clinical research organizations, including GlaxoSmithKline LLC, or GSK, Covance Inc.
−Removed: and Parexel that leverage our testing products and/or the data generated from such tests.
+Added: We also have agreements with other leading pharmaceutical companies and clinical research organizations, including GlaxoSmithKline LLC, or GSK, Labcorp Drug Development and Parexel that leverage our testing products and/or the data generated from such tests.
We provide GSK, a leader in lupus therapeutics, our test result data to provide market insight into and help increase awareness of the benefits of an early and accurate diagnosis of SLE and lupus nephritis, and monitoring disease activity.
−Removed: We partner with academic research centers and patient advocacy organizations, such as Brigham and Women's Hospital, Hospital for Special Surgery, and Duke University as well as the Lupus Foundation of America, to help improve the quality of life for people affected by autoimmune diseases through programs of research, education, support and advocacy.
+Added: We partner with academic research centers and patient advocacy organizations, such as Brigham and Women's Hospital, Hospital for Special Surgery, Duke University and Emory University as well as the Lupus Foundation of America, to help improve the quality of life for people affected by autoimmune diseases through programs of research, education, support and advocacy.
We plan to pursue additional partnerships that are synergistic with our evolving portfolio of testing products.
6 unchanged sentences
Depending on disease severity, AVISE ® SLE Monitor may be utilized by patients multiple times a year throughout their lives.
−Removed: We market our AVISE ® testing products using our specialized salesforce.
+Added: Our RA-focused testing products include AVISE ® MTX and AVISE ® Anti-CarP.
+Added: AVISE ® MTX is a drug monitoring test designed to aid in the optimization of methotrexate therapy, the standard of care and first-line therapy for patients with RA.
+Added: AVISE ® MTX is based on our proprietary methotrexate polyglutamate, or MTXPG, technology that measures blood levels of MTXPGs, the active metabolite of methotrexate linked to disease control in RA patients.
+Added: Measuring MTXPGs allows rheumatologists to identify patients presenting with inadequate exposure to methotrexate enabling them to optimize dosing and achieve therapeutic levels commensurate with adequate disease control.
+Added: AVISE ® MTX is compatible with AVISE ® Touch, our low-volume test sample collection method that allows for a micro-volume blood sample to be collected anywhere from a simple fingerstick.
+Added: AVISE ® Anti-CarP, which measures anti-carbamylated protein antibody, or anti-CarP, was developed by the Leiden University Medical Center, and we introduced it as a biomarker-driven RA prognostic test through a distribution agreement with Werfen USA, LLC with the goal of identifying patients prone to more severe disease.
+Added: We market our AVISE ® testing products using our specialized sales force.
Since the launch of AVISE ® CTD in 2012 and through December 31, 2021, we have delivered over 615,000 of these tests.
−Removed: For the year ended December 31, 2020, 100,450 AVISE ® CTD tests were delivered, representing an approximate 5% decline over the same period in 2019.
−Removed: The number of ordering healthcare providers reached a record of 2,500 for the year ended December 31, 2020, representing approximately 5% growth over the same period in 2019.
−Removed: In the fourth quarter of 2020, the number of ordering healthcare providers reached 1,690 compared to 1,707 in the same period in 2019, and we reached a record 635 adopting healthcare providers (defined as those who previously prescribed at least 11 diagnostic tests in the corresponding period) compared to 572 in the same period in 2019.
+Added: For the year ended December 31, 2021, 128,246 AVISE ® CTD tests were delivered, representing an approximate 28% increase over the same period in 2020.
+Added: In the fourth quarter of 2021, the number of ordering healthcare providers reached a record 2,126 compared to 1,690 in the same period in 2020, and we reached a record 739 adopting healthcare providers (defined as those who previously prescribed at least 11 diagnostic tests in the corresponding period) compared to 635 in the same period in 2020.
A high percentage of adopting healthcare providers continue to order tests in subsequent quarters, including a retention rate of approximately 99% among adopting healthcare providers from the third quarter of 2021 that order at least one diagnostic test in the fourth quarter of 2021.
2 unchanged sentences
We believe we also have the ability to further leverage our database to optimize patient selection in clinical trials for companies developing therapeutics for autoimmune and autoimmune-related diseases.
−Removed: We plan to collaborate with our existing and future pharmaceutical and biotechnology partners to help maximize the full value of our in-house database.
−Removed: We believe our integrated testing and therapeutics strategy differentiates us from other diagnostic and pharmaceutical companies, and results in a unique opportunity to promote and sell targeted therapies in patient focused sales calls with rheumatologists, including those with whom we have a longstanding relationship and who have a history using our portfolio of testing products.
−Removed: We intend to leverage our integrated testing and therapeutics strategy to establish additional partnerships.
−Removed: We are led by an experienced management team with unique capabilities to execute on our strategy of integrating the promotion of testing products and therapeutics.
+Added: collaborate with our existing and future pharmaceutical and biotechnology partners to help maximize the full value of our in-house database.
+Added: We also believe we can leverage our portfolio of testing products to market therapeutics through our sales channel, targeting the approximately 5,000 rheumatologists across the United States, by integrating testing products and therapeutics to offer targeted solutions to rheumatologists and ultimately, better serve patients.
+Added: We will continue to rely on our existing testing products to drive revenue growth and intend to leverage our integrated testing and therapeutics strategy to establish partnerships with a focus on the development and commercialization of therapeutics that are synergistic with our testing products.
+Added: We are led by an experienced management team with unique capabilities to execute on our strategy.
Our senior management has an average of over 20 years of experience in the healthcare industry with a focus on integrating diagnostics and therapeutics.
−Removed: We develop and commercialize next-generation testing products and promote synergistic therapeutics to ultimately improve the continuum of care for patients suffering from debilitating and chronic autoimmune diseases.
+Added: We develop and commercialize next-generation testing products to ultimately improve the continuum of care for patients suffering from debilitating and chronic autoimmune diseases.
The key tenets of our business strategy include:
5 unchanged sentences
Our portfolio of testing products enables the differential diagnosis, prognosis and monitoring of complex autoimmune and autoimmune-related diseases.
−Removed: We have demonstrated a strong track record of commercial growth from our testing products, leveraging our specialized salesforce and expansive network of relationships with rheumatologists across the United States.
−Removed: We believe we are uniquely positioned to continue expanding our commercial presence within the autoimmune disease market and plan to continue to invest in our salesforce in order to achieve the optimal reach and frequency with rheumatologists.
−Removed: This will support our strategy of integrating the promotion of testing products and therapeutics.
+Added: We have demonstrated a strong track record of commercial growth from our testing products, leveraging our specialized sales force and expansive network of relationships with rheumatologists across the United States.
+Added: We believe we are uniquely positioned to continue expanding our commercial presence within the autoimmune disease market and plan to continue to invest in our sales force in order to achieve the optimal reach and frequency with rheumatologists.
In addition, we will continue to expand our efforts in the targeted promotion and education of rheumatologists and payors as to the clinical and cost benefits of our testing products.
We believe these efforts will position us to capture additional market share for our portfolio of testing products.
−Removed: ▪ Integrate the promotion of testing products and therapeutics for autoimmune and autoimmune-related diseases and establish additional partnerships.
−Removed: Our integrated testing and therapeutics strategy leverages our sales and marketing efforts, targeting rheumatologists for the commercialization of our testing products to promote therapeutics.
−Removed: In January 2019, we began our exclusive promotion of SIMPONI ® in the United States.
−Removed: In addition, we believe our agreements with leading pharmaceutical companies and clinical research organizations validate our unique value proposition to partners seeking a competitive edge for developing and commercializing therapeutics for autoimmune and autoimmune-related diseases.
−Removed: We intend to leverage our integrated testing and therapeutics strategy to establish additional partnerships with a focus on the development and commercialization of therapeutics that are synergistic with our testing products.
+Added: ▪ Integrate the promotion of testing products and therapeutics for autoimmune and autoimmune-related diseases and establish partnerships.
+Added: We are seeking to leverage our sales and marketing efforts targeting rheumatologists for the commercialization of our testing products to promote therapeutics.
+Added: We intend to establish partnerships with a focus on the development and commercialization of therapeutics that are synergistic with our testing products to execute on this integrated testing and therapeutics strategy.
▪ Maintain meaningful margin.
−Removed: We realized an increase to our gross margins beginning in the first quarter of 2020 following the expiration of a 10% annual royalty on our CB-CAPs technology.
We believe we are well positioned to maintain meaningful margin through a continued focus on increasing operating leverage through the implementation of certain internal initiatives, such as conducting additional validation and reimbursement oriented clinical studies to facilitate payor coverage of our testing products, capitalizing on our growing reagent purchasing to negotiate improved volume-based pricing and automation in our clinical laboratory to reduce material and labor costs.
−Removed: However, our efforts to maintain a meaningful margin may be partially offset by our ability to generate meaningful co-promotion revenue in 2021.
Autoimmune and Connective Tissue Diseases
5 unchanged sentences
CTDs are a sub-category of autoimmune diseases involving inflammation of the joints, tissues and internal organs.
−Removed: Persons with CTDs often present to their rheumatologist with complaints of joint pain, fatigue, unexplained fever,
−Removed: inflammation, rash, stiffness and muscle aches.
+Added: Persons with CTDs often present to their rheumatologist with complaints of joint pain, fatigue, unexplained fever, inflammation, rash, stiffness and muscle aches.
These symptoms overlap among numerous CTDs, including SLE, one of the most severe CTDs and historically difficult to rule out, as well as other autoimmune-related diseases and other disorders that mimic these diseases, such as fibromyalgia.
38 unchanged sentences
In March 2011, the first new biologic targeting treatment of SLE in over 50 years, GSK’s Benlysta ® , was approved by the U.S.
−Removed: Food and Drug Administration, or the FDA, and in December 2020, the FDA approved this biologic drug
−Removed: for the treatment of lupus nephritis.
+Added: Food and Drug Administration, or the FDA, and in December 2020, the FDA approved this biologic drug for the treatment of lupus nephritis.
It is the only approved biologic for the treatment of active, antibody-positive SLE who are receiving standard therapy, and in December 2020, the FDA approved this biologic for the treatment of adult patients with active lupus nephritis who are receiving standard therapy.
3 unchanged sentences
RA is a chronic, systemic autoimmune disease in which the immune system attacks the joints and can also affect other organ systems.
−Removed: The annual incidence and prevalence of RA in the United States is estimated to be 75,000 and 1.75 million, respectively.
+Added: The annual incidence and prevalence of RA in the United States is estimated to be 120,000 and two million, respectively.
Patients suffering from RA develop joint damage that is associated with painful inflammation which often progresses to irreversible damage of cartilage and bone leading to significant disability and a reduction in quality of life and the ability to work.
13 unchanged sentences
Our product portfolio integrates our proprietary CB-CAPs technology, which is a stable and reliable method for differentially diagnosing SLE.
−Removed: We are focused on leveraging our portfolio of testing products to co-promote therapeutics with existing partners and future partners through our sales channel targeting the approximately 5,000 rheumatologists across the United States.
+Added: We are focused on leveraging our sales channel targeting the approximately 5,000 rheumatologists across the United States.
Our Proprietary Technologies
23 unchanged sentences
The SLE portion of the test employs our proprietary CB-CAPs technology and specifically measures activation of the complement system by quantifying the level of two CB-CAPs biomarkers in the patient’s blood, B-cell C4d, or BC4d, and erythrocyte bound C4d, or EC4d, which are higher in patients with SLE compared to patients with other CTDs.
−Removed: In addition, the comprehensive nature of AVISE ® CTD enables testing for a series of biomarkers (23 as of December 31, 2020) in one convenient blood draw to further aid in the differential diagnosis of a wide variety of CTDs and other diseases which can be challenging to diagnose as a result of overlapping symptoms.
+Added: In addition, the comprehensive nature of AVISE ® CTD enables testing for a series of biomarkers in one convenient blood draw to further aid in the differential diagnosis of a wide variety of CTDs and other diseases which can be challenging to diagnose as a result of overlapping symptoms.
These diseases include SLE, RA, Sjögren’s syndrome, APS, other autoimmune-related diseases such as autoimmune thyroid, and other disorders that mimic these diseases, such as fibromyalgia.
−Removed: Our test’s ability to allow rheumatologists to effectively rule out SLE and differentially diagnose other CTDs such as RA adds clarity to the rheumatologist’s assessment, thereby making the evaluation process more efficient and accurate.
+Added: Our test’s ability to allow rheumatologists to effectively rule out SLE and differentially diagnose other CTDs such as RA adds clarity to the rheumatologist’s assessment, thereby making the larger diagnostic process more efficient and accurate.
The clinical performance of our proprietary biomarkers and the convenience of a single blood draw make AVISE ® CTD an attractive choice among rheumatologists.
3 unchanged sentences
Rheumatologists choose to order the comprehensive AVISE ® CTD test or the more focused AVISE ® Lupus test based on medical necessity, which is determined by each patient’s symptoms and medical history.
−Removed: AVISE ® APS consists of a specialized panel of eight autoantibody tests.
+Added: AVISE ® APS consists of a specialized panel of autoantibody tests.
This test aids in both the diagnosis and management of APS, a hyper-coagulation state leading to thrombosis, pregnancy complications, and even death.
6 unchanged sentences
AVISE ® SLE Prognostic
−Removed: AVISE ® SLE Prognostic is a ten-biomarker panel of autoantibodies that have established predictive value for assessing the potential for complications affecting the kidney, brain and cardiovascular system, including lupus nephritis, lupus psychosis, strokes and heart attacks related to lupus.
+Added: AVISE ® SLE Prognostic is a panel of autoantibodies that have established predictive value for assessing the potential for complications affecting the kidney, brain and cardiovascular system, including lupus nephritis, lupus psychosis, strokes and heart attacks related to lupus.
Rheumatologists rely on insights from the AVISE ® SLE Prognostic test to help tailor their treatment approach.
AVISE ® Anti-CarP
−Removed: AVISE ® Anti-CarP, which measures anti-carbamylated protein antibody, or anti-CarP, was developed by the Leiden University Medical Center, and we introduced it as a biomarker-driven RA prognostic test through a distribution agreement with Inova Diagnostics, Inc.
+Added: AVISE ® Anti-CarP, which measures anti-carbamylated protein antibody, or anti-CarP, was developed by the Leiden University Medical Center, and we introduced it as a biomarker-driven RA prognostic test through a distribution agreement with Werfen USA, LLC.
with the goal of identifying patients prone to more severe disease.
8 unchanged sentences
AVISE ® SLE Monitor
−Removed: AVISE ® SLE Monitor is a six-biomarker blood test that employs our proprietary CB-CAPs technology and is intended to assess the condition of a patient that has been diagnosed with SLE.
+Added: AVISE ® SLE Monitor is a blood test that employs our proprietary CB-CAPs technology and is intended to assess the condition of a patient that has been diagnosed with SLE.
It offers a unique combination of biomarkers that measure for EC4d, which has shown greater accuracy in tracking disease activity than C3 and C4, and PC4d, which is associated with thrombosis risk in SLE.
7 unchanged sentences
We believe AVISE ® SLE Monitor will play an increasingly important role in the management of SLE patients and further solidify the role and relationship of AVISE ® testing products for these patients.
−Removed: In the first quarter of 2021, physicians will have the option to obtain complete blood counts with differential (CBC+diff) and serum creatinine and C-reactive protein measurements for their patients along with their AVISE ® SLE Monitor test order.
AVISE ® MTX is a patented and validated blood test that precisely measures blood levels of MTXPG, the active metabolite of methotrexate linked to disease control in RA patients.
4 unchanged sentences
AVISE ® MTX provides crucial information as to whether a patient has achieved MTXPG blood levels consistent with an appropriate response to methotrexate, also known as the therapeutic level, or if the MTXPG blood levels are too low to produce adequate effects.
−Removed: The rheumatologists can then make informed therapeutic decisions to optimize methotrexate therapy and give patients their best chance at achieving an optimal response.
+Added: AVISE ® MTX can allow rheumatologists to make a more informed therapeutic decisions in their efforts to optimize methotrexate therapy and give patients their best chance at achieving an optimal response.
AVISE ® MTX is compatible with AVISE ® Touch, our low-volume test sample collection method that allows for a micro-volume blood sample to be collected anywhere from a simple fingerstick.
11 unchanged sentences
AVISE ® CTD Report
−Removed: In December 2018, we entered into the Janssen Agreement to exclusively promote SIMPONI ® in the United States for the treatment of adult patients with moderate to severe RA and for other indicated rheumatic diseases, and we began direct promotion of SIMPONI ® to rheumatologists with our specialized salesforce in January 2019.
−Removed: We believe our salesforce allows us to reach the approximately 5,000 rheumatologists in the United States.
−Removed: Additionally, we believe that educating providers regarding SIMPONI ® has and will continue to facilitate greater acceptance of SIMPONI ® .
−Removed: Our AVISE ® MTX test can identify methotrexate patients with inadequate methotrexate exposure who are potential candidates for SIMPONI ® therapy.
−Removed: Our AVISE ® Anti-CarP test can identify RA patients with more severe disease requiring more aggressive therapy, such as anti-TNF biologics like SIMPONI ® .
−Removed: We believe our strategy of integrating the promotion of testing products and therapeutics, combined with our specialized salesforce, uniquely position us to expand SIMPONI ® ’s U.S.
−Removed: market share.
−Removed: We recognized co-promotional revenue of approximately $5.1 million and $1.5 million during the years ended December 31, 2020 and 2019, respectively.
−Removed: For more information regarding the Janssen Agreement, including predetermined baselines and minimum promotion fee levels for 2021, see “—Agreements with Pharmaceutical Companies.”
−Removed: In recent years, advancements in the understanding of the autoimmune and autoimmune-related disease process have led to a significant number of novel biologic drugs and drug development initiatives, especially in RA and SLE, and we intend to leverage our integrated testing and therapeutics strategy to establish additional partnerships with a focus on the development and commercialization of therapeutics that are synergistic with our testing products.
Our Pipeline and Growth Opportunities
−Removed: In December 2019, we formed a Scientific Advisory Board consisting of national experts in the clinical management of rheumatic autoimmune diseases including RA and lupus to help guide the organization’s leadership team on the design and execution of research projects as well as weigh-in on known and anticipated advances in technologies affecting clinical management of autoimmune diseases.
+Added: We have a Scientific Advisory Board consisting of national experts in the clinical management of rheumatic autoimmune diseases, including RA and lupus, to help guide the organization’s leadership team on the design and
+Added: execution of research projects, as well as weigh-in on known and anticipated advances in technologies affecting clinical management of autoimmune diseases.
We believe there is significant potential to capitalize on our proprietary CB-CAPs and MTXPG technologies by integrating those technologies with commercially validated biomarkers to develop testing products with superior clinical utility.
2 unchanged sentences
For example, we are focused on leveraging our proprietary CB-CAPs technology by developing a thrombosis risk score with PC4d in prognosing cardiovascular events in SLE.
−Removed: In addition, we are developing a panel of assays that we believe may have high diagnostic and/or prognostic value in patients with fibromyalgia, RA, Sjögren’s and myositis, and we continue to evaluate the use of AVISE ® Touch and microfluidics for our broader portfolio of testing products to increase convenience and cost-effectiveness.
+Added: In addition, we are developing assays that we believe may have high diagnostic, prognostic, monitoring and/or therapeutic response value in patients with fibromyalgia, RA and additional autoimmune indications, and we continue to evaluate the use of AVISE ® Touch and microfluidics for our broader portfolio of testing products to increase convenience and cost-effectiveness.
+Added: AVISE ® RADR Platform
+Added: RA is estimated to affect approximately two million patients in the United States and can be difficult to manage due to the variability in treatment response from patient to patient.
+Added: Therapeutic agent selection for RA patients remains a significant unmet need.
+Added: RA patients often try multiple therapies empirically before they find one that lowers their disease activity.
+Added: The placement of an RA patient on an ineffective therapy risks progression and worsening of the disease, further damage to the joints, and significant wasted spend on expensive therapeutic agents.
+Added: There are currently no reliable assays for predicting positive patient response prior to the selection of commonly prescribed biological therapeutic agents.
+Added: In collaboration with Queen Mary University of London, we are aiming to develop a family of patented assays pertaining to RNA expression patterns used in the prediction of patient response to commonly prescribed csDMARD (AVISE ® RADR 1) and biological therapeutics (AVISE ® RADR 2) for RA.
+Added: The assays utilize minimally invasive synovial tissue biopsies as input, which are then assessed for RNA expression data.
+Added: These data are then run through proprietary machine learning algorithms that provide actionable insights on predicted csDMARD and biological therapeutic response for RA patients based on an individual patient's RNA expression patterns.
Sales and Marketing
−Removed: Our specialized salesforce is focused on targeting the approximately 5,000 rheumatologists across the United States.
+Added: Our specialized sales force is focused on targeting the approximately 5,000 rheumatologists across the United States.
Our sales representatives generally have extensive experience in healthcare sales with backgrounds in rheumatology, biologics, specialty therapeutics and/or testing.
In addition, our sales representatives complete a comprehensive disease-level sales training program and are required to participate in regular, ongoing training activities and certifications.
−Removed: Our sales model involves integrating the promotion of testing products and therapeutics in a unique approach that will enable our sales representatives to gain greater access and time with rheumatologists.
−Removed: The test information available to our sales representatives creates a different dynamic as compared to a traditional drug sales representative’s product detail.
−Removed: It enables a timely, extended, patient-focused discussion that naturally transitions to a therapeutic discussion during the same sales call.
Our goal is for our sales representative to be viewed as a collaborative consultant versus a traditional drug sales representative.
−Removed: We intend to capitalize on our established reputation, market presence and expertise to sell additional products and services into the autoimmune and autoimmune-related disease market.
−Removed: We believe that a collaborative relationship with rheumatologists helps build a lasting sales channel through which additional products and services can be introduced.
As of December 31, 2021, our overall sales team consisted of approximately 79 members.
−Removed: We have a salesforce of 53 representatives, who are managed by a team of seven regional sales directors.
−Removed: Our salesforce is organized into seven regions which include, Pacific, Southwest, Midwest, Great Lakes, Southeast, Atlantic and Northeast.
−Removed: As of December 31, 2020, our salesforce was covering a total of 56 territories within the seven regions.
−Removed: We expanded the reach and frequency of our salesforce by adding seven new territories in 2021 for a total of 63 territories, as well as the creation of an inside salesforce to further our reach with rheumatologists in white space, complementing our
−Removed: decentralized salesforce and covering vacant territories.
−Removed: In addition, we expect to increase our salesforce in 2021, which is expected to significantly increase the number of sales calls made per year, helping us to cultivate a strong collaborative relationship with rheumatologists through increased interactions.
−Removed: To further support our promotional efforts, we have a centralized, dedicated client services department with a high level of technical training that augments our specialized salesforce and marketing activities and enhances sales efficiency and customer satisfaction by providing personalized customer support.
−Removed: We believe our salesforce allows us to reach the approximately 5,000 rheumatologists in the United States.
+Added: We have a sales force of 61 representatives, who are managed by a team of seven regional sales directors.
+Added: Our sales force is organized into seven regions which include, Pacific, Southwest, Midwest, Great Lakes, Southeast, Atlantic and Northeast.
+Added: As of December 31, 2021, our sales force was covering a total of 63 territories within the seven regions.
+Added: Our inside sales force helps further our reach with rheumatologists in white space, complementing our decentralized sales force and covering vacant territories.
+Added: In addition, we intend to continue to evaluate our sales force's reach and frequency of interactions with rheumatologists, including as we launch our pipeline products.
+Added: To further support our promotional efforts, we have a centralized, dedicated client services department with a high level of technical training that augments our specialized sales force and marketing activities and enhances sales efficiency and customer satisfaction by providing personalized customer support.
Right Doctor, Right Message, Right Frequency
−Removed: We believe our sales model of integrating the promotion of testing products and therapeutics will be complemented by our focused “high-touch” selling approach that emphasizes execution in three core areas:
+Added: Our focused “high-touch” selling approach emphasizes execution in three core areas:
targeting, messaging and call frequency .
12 unchanged sentences
When we contract to serve as a participating provider, reimbursements are made pursuant to a percentage of our charges or a negotiated fee schedule amount.
−Removed: Where we are not reimbursed in full, we may elect to appeal the insurer’s underpayment or denial of payment or seek payment from the patient.
−Removed: We continue to focus on expanding coverage among existing contracted providers and achieving coverage with commercial payors, laboratory benefit managers and evidence review organizations.
+Added: Where we are not reimbursed in full, or receive a claim denial, for in-network and out-of-network claims, we may elect to appeal the insurer’s underpayment or denial of payment or seek payment from the patient.
+Added: We continue to focus on expanding coverage among existing contracted providers and achieving coverage with additional commercial payors, laboratory benefit managers and evidence review organizations.
We employ a multi-pronged strategy designed to achieve broad coverage and reimbursement for our AVISE ® testing products:
3 unchanged sentences
When studies with such evidence are published in peer-reviewed journals, the authors of clinical guidelines may assess the level of evidence and determine whether modifying existing guidelines to include new technology is warranted.
−Removed: For example, we previously conducted peer-reviewed, published clinical studies for AVISE ® Lupus which helped us secure favorable coverage from various commercial plans.
−Removed: We have conducted, and continue to conduct, clinical validation and clinical utility studies for AVISE ® Lupus, which we believe will provide a basis for the ACR White Paper and/or UpToDate to consider inclusion of AVISE ® Lupus in their respective guidelines.
+Added: For example, we previously conducted peer-reviewed, published clinical studies for AVISE ® Lupus which helped us secure favorable coverage from various commercial third-party payors.
In the future, we also intend to conduct similar studies in order to develop similar supporting literature with respect to our other testing products.
1 unchanged sentence
We employ a team of in-house claims processing and reimbursement specialists who work with patients and payors to obtain maximum reimbursement.
−Removed: In parallel, a managed care team collaborates with our reimbursement specialists to ensure our payor outreach strategy reacts and anticipates the changing needs of our customer base.
+Added: In parallel, a managed care team collaborates with our reimbursement specialists to ensure our payor outreach strategy reacts to and anticipates the changing needs of our customer base.
Our customer service team is an integral part of our reimbursement strategy, working with patients and rheumatologists to navigate the claims process.
8 unchanged sentences
The objective of this study was to evaluate the frequency of AVISE ® Lupus and CB-CAPs as a marker of complement activation in patients with pSLE and the usefulness of the AVISE ® Lupus test as a predictor of the evolution of pSLE into classified SLE by the ACR criteria.
−Removed: Of the 92 pSLE patients, more pSLE were positive for CB-CAPs (28%) or AVISE ® Lupus (40%) than for low complement (9%) at the enrollment visit (p=0.0001, for each) and an AVISE ® Lupus index score >0.08 prospectively associated with the development from pSLE to SLE by ACR classification criteria within 18 months (hazard ratio = 3.11, p<0.01).
+Added: Of the 92 pSLE patients, more pSLE were positive for CB-CAPs (28%) or AVISE ® Lupus (40%) than for low complement (9%) at the enrollment visit (p=0.0001, for
+Added: each) and an AVISE ® Lupus index score >0.08 prospectively associated with the development from pSLE to SLE by ACR classification criteria within 18 months (hazard ratio = 3.11, p<0.01).
Clinical Utility
8 unchanged sentences
Finally, in the group of patients randomized to the AVISE ® Lupus group, a positive test result associated with an increase in patient-reported outcomes measuring health-related quality of life using five-level EQ-5D, or EQ5D-5L index score, from enrollment to visit 2 (p=0.028), and greater improvements were detectable when compared to the group of patients positive for AVISE ® Lupus and randomized to the SDLT arm (p=0.049).
+Added: In July 2021, a real-world retrospective analysis of patients tested with the AVISE ® Lupus test was published in the journal Lupus Science & Medicine, titled "A multianalyte assay panel with cell-bound complement activation products demonstrates clinical utility in systemic lupus erythematosus clinical utility study summary".
+Added: A cohort of 161 AVISE ® Lupus tested patients from 12 rheumatology centers across the U.S.
+Added: provided clinical outcome data on diagnosis and treatment decisions following AVISE ® Lupus testing.
+Added: The study findings revealed a 7 to 15-fold increased risk of Lupus diagnosis in AVISE ® Lupus Positive and anti-dsDNA negative patients relative to patients negative for both tests.
+Added: In addition, AVISE ® Lupus positive and anti-dsDNA negative patients were at 3 to 4-fold increased odds relative to patients testing negative for both tests of starting a new hydroxychloroquine (cornerstone therapy for Lupus) prescription following AVISE ® Lupus testing.
+Added: Collectively, the study results affirm earlier study findings demonstrating the superior clinical utility and actionability of AVISE ® Lupus vs.
+Added: standard diagnostic testing for the differential diagnosis of Lupus.
Healthcare Economics
3 unchanged sentences
The above referenced studies are included in the AVISE ® Lupus Dossier.
−Removed: In March 2020, we announced coverage and in-network contract with three California Medical Groups followed by coverage and an in-network agreement
−Removed: with TRICARE East Humana Military and Highmark BCBS coverage policy.
+Added: In March 2020, we announced coverage and in-network contract with three California Medical Groups followed by coverage and an in-network agreement with TRICARE East Humana Military and Highmark BCBS coverage policy.
+Added: In February 2021, we entered into a coverage and in-network contract with TRICARE West followed by coverage and an in-network agreement with Inland Empire Health Plan.
We anticipate continued coverage determinations and in-network contracting announcements in 2022 and beyond.
1 unchanged sentence
Laboratory Operations
−Removed: We perform all of our AVISE ® tests in our approximately 8,000 square foot clinical laboratory, which is certified by the Clinical Laboratory Improvement Amendments of 1988, or CLIA, and accredited by the College of American Pathologists, or CAP, and located in Vista, California.
−Removed: Our laboratory is certified for the performance of high-complexity testing by the Centers for Medicare and Medicaid Services, or CMS, in accordance with CLIA.
−Removed: We are approved to offer our products in all 50 states.
+Added: We perform all of our AVISE ® tests in our approximately 10,000 square foot clinical laboratory located in Vista, California.
+Added: Our laboratory is certified to perform high-complexity testing under the Clinical Laboratory Improvement Amendments of 1988, or CLIA, and is accredited by the College of American Pathologists, or CAP.
+Added: Our laboratory also holds a license issued by the California Department of Public Health, and it is licensed by all states requiring out-of-state licensure.
Our clinical laboratory reports all AVISE ® testing product results within five business days.
−Removed: In the fourth quarter of 2020, we completed the build-out of approximately 2,000 additional square feet to our clinical laboratory.
−Removed: We believe that our existing laboratory facilities are adequate to meet our business needs for at least the next 12 months and that additional laboratory space will be available on commercially reasonable terms, if required.
+Added: In the second half of 2021, we began the conversion of approximately 8,000 square feet of warehouse space into additional clinical laboratory space and approximately 6,000 square feet of warehouse space into additional research and development facility space, and expect to complete such conversions by the first quarter of 2022 and mid 2022, respectively.
+Added: The expansion of our clinical laboratory and research and development facility are expected to allow us to enhance our testing capacity and improve efficiencies as well as allow us to develop molecular and multiomic capabilities and advance our product pipeline.
+Added: We believe that our existing laboratory facility is adequate to meet our business needs for at least the next 12 months and that additional laboratory space will be available on commercially reasonable terms, if required.
Quality Assurance
9 unchanged sentences
(acquired by Laboratory Corporation of America in June 2020).
−Removed: Other potential competitors include companies that might develop diagnostic or disease or drug monitoring products, such as Myriad Genetics, Inc., Progentec Diagnostics Inc., Scipher Medicine Corporation, Genalyte Inc., Oncimmune plc, DxTerity Diagnostics Inc.
−Removed: and Immunovia AB.
+Added: Other potential competitors include companies that might develop diagnostic or disease or drug monitoring products, such as Progentec Diagnostics Inc., Scipher Medicine Corporation, Genalyte Inc., Oncimmune plc, DxTerity Diagnostics Inc., Immunovia AB and EpicGenetics, Inc.
In the future, we may also face competition from companies developing new products or technologies.
−Removed: Direct competition for the promotion of SIMPONI ® includes all other companies with anti-TNF biologics and the marketing companies supporting their distribution and promotion.
−Removed: These products include HUMIRA ® from Abbvie Inc., ENBREL ® from Amgen Inc., CIMZIA ® from UCB, INFLECTRA ® from Pfizer Inc., or Pfizer, (biosimilar REMICADE ® ) and RENFLEXIS ® from Merck & Co.
−Removed: (biosimilar REMICADE ® ).
−Removed: Additionally, we are restricted from promoting any other biologic or Janus kinase inhibitor, or JAK inhibitor, used for treatment of indications covered by the Janssen Agreement without Janssen's consent.
−Removed: Additional competitors include companies with other biologic drugs indicated for RA that have significant sales or sales potential.
−Removed: Specifically, these include ORENCIA ® from Bristol-Myers Squibb Company, ACTEMRA ® from Roche Holding AG, or Roche, RITUXAN ® from Roche, XELJANZ ® from Pfizer, KEVZARA ® from Sanofi S.A., RINVOQ TM from Abbvie Inc.
−Removed: and OLUMIANT ® from Eli Lilly and Company.
−Removed: There are also several late-stage RA drug and biosimilar development programs and several additional RA products that have minimal sales to date or that are indicated for other rheumatic indications competitive to SIMPONI ® such as psoriatic arthritis and ankylosing spondylitis.
We believe the principal competitive factors in our target market include:
1 unchanged sentence
confidence in diagnostic results;
−Removed: safety and efficacy with respect to promoted therapeutics;
sales and marketing capabilities;
7 unchanged sentences
Agreements with Pharmaceutical Companies
−Removed: Janssen Agreement
−Removed: In December 2018, we and Janssen entered into the Janssen agreement to co-promote SIMPONI ® in the United States.
−Removed: We are responsible for the costs associated with our salesforce over the course of such co-promotion.
−Removed: Janssen is responsible for all other aspects of the commercialization of SIMPONI ® under the Janssen agreement.
−Removed: In exchange for our sales and co-promotional services, we are entitled to a quarterly tiered promotion fee ranging from $750 to $1,250 per prescription based on the incremental increase in total prescribed units of SIMPONI ® for that quarter over a predetermined baseline for the quarters ended March 31, 2019 to December 31, 2020.
−Removed: The predetermined average baseline for quarters ended March 31, 2019 to March 31, 2020 was approximately 29,000 prescribed units per quarter, subject to adjustment under certain circumstances.
−Removed: In June 2020, due in part to COVID-19, we amended the Janssen Agreement, pursuant to which the predetermined average baseline for total prescribed units of SIMPONI ® for each remaining quarter in 2020, starting with the quarter ending June 30, 2020, was adjusted from approximately 29,000 to approximately 26,000 prescribed units per quarter, and subject to adjustment under certain circumstances.
−Removed: For each of the third and fourth quarters of 2020, we received a minimum promotion fee of $0.3 million and the fee was capped at 5% above the adjusted predetermined baseline.
−Removed: In December 2020, we further amended the Janssen Agreement, pursuant to which the predetermined average baseline for total prescribed units of SIMPONI ® for the quarters ending December 31, 2020, March 31, 2021 and June 30, 2021 was adjusted to approximately 28,750 prescribed units per quarter, subject to further adjustment under certain circumstances.
−Removed: For the first and second quarter of 2021, we will be entitled to an amended quarterly tiered promotion fee ranging from $500 to $1,000 per prescription based on the incremental increase in total prescribed units of SIMPONI ® for that quarter over the predetermined baseline.
−Removed: We refer to the Janssen Agreement, as amended in June 2020 and December 2020, as the Amended Janssen Agreement.
−Removed: Pursuant to the Amended Janssen Agreement, for each of the first and second quarters of 2021, we will receive a minimum promotion fee of $0.3 million and the fee will be capped at 10% above the adjusted predetermined baseline.
−Removed: We continued to receive a minimum promotion fee of $0.3 million and the fee was capped at 5% above the adjusted predetermined baseline for the quarter ended December 31, 2020.
−Removed: The quarterly tiered promotion fee for the remaining term of the Amended Janssen Agreement beginning with the quarter ended September 30, 2021 will revert to the terms set forth in the Janssen Agreement prior to the amendment, with no minimum promotion fee and no cap on predetermined baseline units.
−Removed: The Janssen Agreement expires on December 31, 2021, unless extended by us for an additional 12 months upon 180 days written notice prior to the end of the current term.
−Removed: If we elect to extend the term, the predetermined baseline for 2022 will be subject to future agreement by us and Janssen.
−Removed: Janssen can terminate the agreement at any time for any reason upon 30 days’ notice to us, and we can terminate the agreement for any reason at the end of any calendar quarter upon 30 days’ notice to Janssen.
−Removed: Either party may terminate the agreement in the event of the other party’s default of any of its material obligations under the agreement if such default remains uncured for a specified period of time following receipt of written notice of such default.
Collaboration Agreement with GSK
1 unchanged sentence
The agreement was amended in November 2018 to, among other things, include data from our AVISE ® Prognostic and AVISE ® HCQ testing products and extend the term of the agreement through December 31, 2019.
−Removed: The agreement was further amended in November 2019 and November 2020 to, among other things, extend the term of the agreement through December 31, 2020 and December 31, 2021, respectively.
+Added: The agreement was further amended in November 2019, November 2020, December 2021 and February
+Added: 2022 to, among other things, extend the term of the agreement through December 31, 2020, December 31, 2021, January 31, 2022 and December 31, 2022, respectively.
Under the agreement, we are required to deliver weekly de-identified data files to GSK covering all data obtained from the performance of certain AVISE ® testing products, subject to applicable requirements under the Federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, internal policy requirements and other applicable laws.
−Removed: During the term of the agreement, the data we provide to GSK may not be provided, directly or through a third party, to any other pharmaceutical company that is marketing or developing a product for the
−Removed: treatment of SLE.
+Added: During the term of the agreement and amendments through December 31, 2021, the data we provided to GSK could not be provided, directly or through a third party, to any other pharmaceutical company that was marketing or developing a product for the treatment of SLE, however, the February 2022 amendment eliminated that limitation.
GSK made a single upfront payment in exchange for the right to receive the applicable data files.
25 unchanged sentences
7,588,905 and 8,126,654 has issued in Japan (JP 4550051).
−Removed: We also own one issued patent (US 10,132,813), two pending U.S.
−Removed: nonprovisional patent applications, a pending PCT application, and a pending U.S.
−Removed: provisional application that relate to our AVISE ® Lupus products.
−Removed: Foreign patents corresponding to US 10,132,813 have issued in Europe (EP 2,673,644) and Japan (JP 5,990,542) and Hong Kong (HK112316).
+Added: We also own one issued patent (US 10,132,813), three pending U.S.
+Added: nonprovisional patent applications, three pending foreign applications and a pending PCT application that relate to our AVISE ® Lupus products.
+Added: Foreign patents corresponding to our issued U.S.
+Added: patent and pending U.S.
+Added: nonprovisional patent applications have issued in Europe (EP 2,673,644 and EP2972365), China (CN105229470), Japan (JP 5,990,542 and JP6453299) and Hong Kong (HK1192316).
In order to manage our foreign filing costs and focus on the U.S.
6 unchanged sentences
MTX Exposure Assessment Products and Services
−Removed: We are the exclusive licensee of four patents that relate to our AVISE ® MTX product and methods for monitoring methotrexate therapy using red blood cell MTXPG exposure assessments.
−Removed: These patents and patent applications are owned by Prometheus and are exclusively licensed to us for all uses except for use in gastrointestinal diseases.
+Added: We own four patents that relate to our AVISE ® MTX product and methods for monitoring methotrexate therapy using red blood cell MTXPG exposure assessments.
These patents include U.S.
7,582,282 and 7,695,908, which are expected to expire between 2023 and 2027.
−Removed: We also are the exclusive licensee of two issued US patents (US 9,261,509 and US 9,822,391) that relate to our AVISE ® MTX product.
Proprietary Rights and Processes
26 unchanged sentences
UPitt may terminate the agreement if we fail to meet such milestones.
−Removed: In addition, if we fail to meet a milestone relating to development of the UPitt Patent Rights in the monitoring of organ transplantation and organ rejection field, UPitt may remove that field from our licensed rights.
+Added: In addition, if we fail to meet a milestone relating to development of
+Added: the UPitt Patent Rights in the monitoring of organ transplantation and organ rejection field, UPitt may remove that field from our licensed rights.
We are currently in compliance with these milestone requirements.
29 unchanged sentences
Absent early termination, the agreement will continue until the expiration date of the longest-lived patent right included in the UPitt Patent Rights.
−Removed: License Agreement with Prometheus Laboratories, Inc.
−Removed: In connection with the Cypress Purchase, we acquired a license agreement, dated September 2007, between Prometheus Laboratories, Inc., or Prometheus, and Proprius Pharmaceuticals, Inc., or Proprius, a company which had been previously acquired by Cypress.
−Removed: Pursuant to this agreement, we obtained an exclusive, worldwide license to Prometheus’s patent rights in certain inventions, or the Prometheus Patent Rights, related to the diagnosis, prognosis and monitoring of diseases, including certain patents related to our AVISE ® testing products and services.
−Removed: This agreement was subsequently amended in October 2013.
−Removed: Under the agreement, we are permitted to research, develop, manufacture and commercialize products utilizing the Prometheus Patent Rights and to sublicense such rights;
−Removed: provided, however, that any such sublicenses may only be granted with Prometheus’s consent.
−Removed: We are not permitted to develop or commercialize products utilizing the Prometheus Patent Rights for use in diagnosing or treating any gastrointestinal diseases or to promote any such products to gastroenterologists.
−Removed: Pursuant to the agreement, we are obligated to use reasonable commercial efforts to undertake certain development activities with respect to products utilizing the Prometheus Patent Rights, including the completion of certain clinical studies.
−Removed: In addition, in the event that we do not timely complete these studies or approved substitute studies, we will become obligated to pay to Prometheus a one-time payment of $50,000.
−Removed: We are required to make a milestone payment of $2.0 million upon the achievement of certain net sales.
−Removed: In addition, we are required to pay Prometheus tiered royalties in the mid-single-digit range on sales of any products utilizing the Prometheus Patent Rights by us, our affiliates or our sublicensees.
−Removed: Our royalty obligations continue on a licensed-product-by-licensed-product and country-by-country basis until the expiration, lapse or invalidation of the last valid claim in a licensed patent covering the applicable licensed product in such country.
−Removed: In the event we sublicense any of the Prometheus Patent Rights, we are obligated to pay to Prometheus a fee based on a percentage of sublicense fees received by us, which percentage is in the mid-twenties.
−Removed: In addition, we
−Removed: are also required to pay to Prometheus a percentage of the royalty payments we receive from our sublicensees, which may not be less than a certain low single-digit percentage of net sales of products or services sold by our sublicensees that utilize the sublicensed Prometheus Patent Rights, nor more than a certain mid-single digit percentage of such net sales.
−Removed: We may unilaterally terminate the agreement for any reason upon 60-days’ written notice to Prometheus.
−Removed: Either party may terminate the agreement in the event of the other party’s material breach of the agreement if such breach remains uncured for a certain period of time following receipt of written notice of such breach or in the event of the other party’s insolvency.
−Removed: Absent early termination, the agreement will continue until the expiration date of the longest-lived patent right included in the Prometheus Patent Rights.
Asset Purchase Agreement with Cypress (Royalty Pharma) and Proprius
3 unchanged sentences
In consideration for the acquisition, we made certain initial cash payments to Cypress and we are currently making payments to Royalty Pharma, as a successor-in-interest to Cypress, pursuant to the August 2012 amendment, which payments are subject to acceleration in certain circumstances.
−Removed: Under our agreements with Royalty Pharma, we are required to pay Royalty Pharma a low double-digit royalty on the world wide net sales of CB-CAPs products and a low double-digit royalty on the net sales of certain new products in each case, for a period of eight years, which eight year period expired in January 2020.
+Added: Under our agreements with Royalty Pharma, we are required to pay Royalty Pharma a low double-digit royalty on the world
+Added: wide net sales of CB-CAPs products and a low double-digit royalty on the net sales of certain new products in each case, for a period of eight years, which eight year period expired in January 2020.
In addition, we are required to make certain one-time contingent milestone payments for two third-party commercial programs, for the launch of a CB-CAPs monitoring assay, and for the achievement of an annual, worldwide net sales level for CB-CAPs products.
10 unchanged sentences
Under the agreement, we are permitted to develop, manufacture and commercialize products utilizing the Dervieux Patent Rights in the human healthcare market, and to sublicense such rights.
−Removed: In considerations for the rights granted to us under the agreement, we are required to make milestone payments, up to an aggregate of $600,000, upon achievement of certain sales milestones.
+Added: In consideration for the rights granted to us under the agreement, we are required to make milestone payments, up to an aggregate of $600,000, upon achievement of certain sales milestones.
In addition, we are required to pay Dr.
2 unchanged sentences
Dervieux a percentage in the mid-twenties of sublicense fees and royalties received by us.
−Removed: The agreement requires that we diligently develop and commercialize products that are covered by the Dervieux Patent Rights, and we have agreed to use commercially reasonable efforts to bring technology covered by the Dervieux Patent Rights to market as soon as practicable.
−Removed: We may unilaterally terminate the agreement upon 12 months’ written notice to Dr.
−Removed: Either party may terminate this agreement in the event of the other party’s nonperformance of any of its obligations under the agreement if such nonperformance remains uncured for a specified period of time following receipt of written notice of such nonperformance or in the event of the other party’s insolvency.
−Removed: Absent early termination, the agreement will continue until the expiration date of the longest-lived patent right included in the Dervieux Patent Rights.
+Added: To date, none of the circumstances under the agreement that would require us to make a payment to Dr.
+Added: Dervieux or De Novo Diagnostics, Inc.
+Added: have occurred and, accordingly, we have made no such payment.
+Added: We have provided a termination notice to Dr.
+Added: Dervieux and De Novo Diagnostics, Inc.
+Added: in accordance with the agreement and intend to terminate the agreement on June 9, 2022.
+Added: Exclusive License Agreement and Master Research Collaboration Agreement with Allegheny Health Network Research Institute
+Added: In May 2021, we entered into an exclusive license agreement with Allegheny Health Network Research Institute, or AHN, under which we obtained an exclusive, worldwide license to AHN's patent rights in certain inventions, or the AHN Patent Rights, related to diagnostics for autoimmune rheumatic diseases.
+Added: Under the agreement, we are permitted to make, use and sell products and services utilizing the AHN Patent Rights and to sublicense such rights;
+Added: provided, however, that any such sublicenses may only be granted with AHN's consent.
+Added: AHN retained the right to practice under the AHN Patent Rights and to use such rights for teaching, research, education, public service, clinical and other research-related purposes.
+Added: In addition, the agreement is subject to the rights of the United States government with respect to the AHN Patent Rights, including under a funding agreement between AHN and the United States Government and under the Bayh-Dole Act (35 U.S.C.
+Added: §200, et seq.
+Added: Pursuant to the Bayh-Dole Act, the United States Government may acquire a nonexclusive, nontransferable, paid up license to practice or have practiced for or on behalf of the U.S.
+Added: government the inventions described in the AHN Patent Rights throughout the world.
+Added: In consideration for the rights granted to us under the agreement, we paid an initial license fee to AHN to cover past patent expenses and agreed to pay future direct patent costs related to AHN Patent Rights.
+Added: We are also required to pay AHN a low single-digit royalty on net sales of products utilizing the AHN Patent Rights through the first quarter of 2024 sold by us or our affiliates, subject to adjustment in certain circumstances.
+Added: Beginning in the second quarter of 2024, we are required to pay AHN an increased low single-digit royalty or a flat annual minimum royalty amount, which royalty obligations continue for each licensed product on a country-by-country basis until the expiration of the last licensed patent covering the applicable licensed product in such country, pending approvals and commercialization, or the earlier termination of the agreement (excluding payment obligations accruing prior to such termination).
+Added: In the event we sublicense any of the AHN Patent Rights, we are obligated to pay AHN a mid double-digit percentage of any sublicense income, whether in the form of royalties or sub-license fees.
+Added: The agreement requires that we diligently develop and commercialize products that are covered by the AHN Patent Rights.
+Added: If, no earlier than May 2023, we elect not to pursue intellectual property rights or expand commercialization to certain territories within a commercially reasonable period, AHN may pursue other licenses and terminate our exclusive license with respect to such territories upon 30 days prior written notice.
+Added: We may terminate the agreement upon 60 day written notice to AHN provided we pay a specified termination fee.
+Added: AHN may terminate the agreement in the event of our nonperformance of any of our material obligations under the agreement if such nonperformance remains uncured for a certain period of time following our receipt of written notice of such nonperformance or in the event of insolvency.
+Added: Absent early termination, the agreement will continue until expiration date of the longest-lived patent right included in the AHN Patent Rights.
+Added: In addition, we entered into a master research collaboration agreement with AHN, focused on the development of novel patented biomarkers for diagnosis, prognosis and monitoring of autoimmune diseases, including SLE.
+Added: The agreement has a three-year initial term, expiring May 2024, with renewals thereafter for successive one-year terms upon mutual agreement with AHN.
+Added: Each party may terminate the agreement upon 60 days' notice to the other party.
+Added: We are required to pay AHN a collaboration fee of $0.4 million for each year of the agreement and AHN is required to make an in-kind contribution equivalent of $0.3 million for the initial term and each subsequent one-year term, if any.
+Added: Exclusive License Agreement and Collaboration Agreement with Queen Mary University of London
+Added: In November 2021, we entered into an exclusive license agreement with Queen Mary University of London, or QMUL, under which we obtained an exclusive license to QMUL's patent-pending inventions, or the QMUL Patent Rights, related to diagnosis and/or development of diagnostic or companion diagnostics for rheumatoid arthritis.
+Added: Under the agreement, we are permitted to make, use and sell products and services utilizing the QMUL Patent Rights and to sublicense such rights;
+Added: provided, however, that any such sublicenses may only be granted with QMUL's consent.
+Added: QMUL retained the right to practice under the QMUL Patent Rights and to use such rights for teaching, research, education, public service, clinical and other research-related purposes.
+Added: In consideration for the rights granted to us under the agreement, we paid an initial license fee to QMUL and payment of past patent expenses and ongoing patent expenses.
+Added: We are required to make a $0.1 million milestone payment upon the first commercial sale of products utilizing the QMUL Patent Rights.
+Added: In addition, after the first 18 months of commercial sales under the terms of the exclusive license agreement, we are required to pay royalties in the low to high single-digits on net sales of testing products using the assigned patents, pending approvals and commercialization.
+Added: In the event we sublicense any of the QMUL Patent Rights, we are obligated to pay QMUL a double-digit percentage of sublicensing income, whether in the form of royalties or sub-license fees.
+Added: The agreement requires that we diligently develop and commercialize products that are covered by the QMUL Patent Rights.
+Added: QMUL may terminate the agreement if we fail to develop the QMUL Patent Rights in the field of diagnosis and/or development of diagnostic or companion diagnostics for rheumatoid arthritis, QMUL may convert our license to non-exclusive.
+Added: We may terminate the agreement upon 6 month written notice to QMUL.
+Added: QMUL may terminate the agreement in the event of our nonperformance of any of our material obligations under the agreement if such nonperformance remains uncured for a certain period of time following our receipt of written notice of such nonperformance or in the event of insolvency.
+Added: Absent early termination, the agreement will continue for a period of 20 years after the first commercial sale of any licensed product utilizing the QMUL Patent Rights.
+Added: In addition, we entered into a collaboration agreement with QMUL for a three-year term, expiring November 2024.
+Added: The collaboration will focus on development and optimization of patent-pending precision medicine approaches, based on RNA expression signatures, to personalize therapeutic agent selection for RA patients.
+Added: We or QMUL may terminate the master research collaboration agreement upon 30-day written notice.
Clinical Laboratory Improvement Amendments of 1988
−Removed: As a clinical reference laboratory, we are required to hold certain federal, state and local licenses, certifications and permits to conduct our business.
+Added: As a clinical laboratory, we are required to hold certain federal, state and local licenses, certifications and permits to conduct our business.
Under CLIA, we are required to hold a certificate applicable to the type of laboratory tests we perform and to comply with standards applicable to our operations, including test processes, personnel, facilities administration, equipment maintenance, recordkeeping, quality systems and proficiency testing.
−Removed: We must maintain CLIA compliance and certification to be eligible to bill for diagnostic services provided to Medicare beneficiaries.
−Removed: We have current certification under CLIA to perform testing at our Vista facility.
+Added: We must maintain CLIA certification to be eligible to bill for diagnostic services provided to Medicare beneficiaries.
+Added: Many commercial third-party payors also require CLIA certification as a condition of payment.
+Added: Our Vista facility holds a current CLIA certificate.
To renew our CLIA certificate, we are subject to survey and inspection every two years to assess compliance with program standards.
+Added: We elect to participate in the accreditation program of CAP.
+Added: CMS has deemed CAP standards to be equally or more stringent than CLIA regulations and has approved CAP as a recognized accrediting organization.
+Added: Inspection by CAP is performed in lieu of inspection by CMS for CAP-accredited laboratories.
+Added: Because we are accredited by the CAP Laboratory Accreditation Program, we are deemed to also comply with CLIA.
The regulatory and compliance standards applicable to the testing we perform may change over time, and any such changes could have a material effect on our business.
−Removed: Penalties for non-compliance with CLIA requirements include suspension, limitation or revocation of the laboratory’s CLIA certificate, as well as directed plan of correction, state on-site monitoring, civil money penalties, civil injunctive suit or criminal penalties.
+Added: Penalties for non-compliance with CLIA or CAP requirements include suspension, limitation or revocation of the laboratory’s CLIA or CAP certificate, as well as a directed plan of correction, state on-site monitoring, civil money penalties, civil injunctive suit or criminal penalties, as applicable.
State Laboratory Licensing
−Removed: In addition to federal certification requirements of laboratories under CLIA, licensure is required and maintained for our Vista clinical reference laboratory under California law.
−Removed: Such laws establish standards for the day-to-day operation of a clinical reference laboratory, including the training and skills required of personnel and quality control.
−Removed: In addition, California laws mandate proficiency testing, which involves testing of specimens that have been specifically prepared for the laboratory.
−Removed: Because we receive specimens from New York, our clinical reference laboratory is required to be licensed by New York, under New York laws and regulations, which establish standards for:
−Removed: ▪ day-to-day operation of a clinical laboratory, including training and skill levels required of laboratory personnel;
+Added: Our Vista facility also holds a state license issued by the California Department of Public Health, or DPH.
+Added: California law and regulations establish standards for the day-to-day operation of a clinical laboratory, including the training and skills required of laboratory personnel and quality control.
+Added: In addition, California laws and regulations also mandate proficiency testing, which involves testing of specimens that have been specifically prepared for the laboratory for quality control purposes.
+Added: Because we receive specimens from New York, our Vista facility also is required to be licensed by the New York State Department of Health, or NYDOH, New York laws and regulations establish standards in a variety of operational areas, including:
+Added: ▪ day-to-day operation of the laboratory, including training and skill levels required of laboratory personnel;
▪ physical requirements of a facility;
▪ validation and quality control.
−Removed: New York law also mandates proficiency testing for laboratories licensed under New York state law, regardless of whether such laboratories are located in New York.
−Removed: If a laboratory is out of compliance with New York statutory or regulatory standards, the New York Department of Health, or NYDOH, may suspend, limit, revoke or annul the laboratory’s New York license, censure the holder of the license or assess civil money penalties.
+Added: New York law also mandates proficiency testing for laboratories licensed under New York state law, regardless of whether such laboratories are located in or outside of New York.
+Added: If a laboratory is out of compliance with New York's statutory or regulatory standards, the NYDOH, may suspend, limit, revoke or annul the laboratory’s New York license, censure the holder of the license or assess civil money penalties.
Statutory or regulatory noncompliance may result in a laboratory’s operator being found guilty of a misdemeanor under New York law.
−Removed: NYDOH also must approve the LDT before the test is offered in New York.
+Added: New York's law and regulations are more stringent than CLIA in certain respects.
+Added: For example, NYDOH must approve an LDT before it is offered in New York.
We have received written approval from NYDOH to offer our products in New York.
In addition to New York and California, other states, including Maryland, Pennsylvania and Rhode Island, require licensing of out-of-state laboratories under certain circumstances.
−Removed: Federal Oversight of Laboratory Developed Tests
+Added: Federal Oversight of Laboratory Developed Tests and Certain Devices
The laws and regulations governing the marketing of diagnostic products are evolving, extremely complex, and in many instances, there are no significant regulatory or judicial interpretations of these laws and regulations.
−Removed: Clinical laboratory tests like AVISE ® CTD, AVISE ® SLE Prognostic and AVISE ® MTX are regulated under CLIA, as administered by CMS, as well as by applicable state laws.
−Removed: In addition, the Federal Food, Drug and Cosmetic Act, or
−Removed: FDCA, defines a medical device to include any instrument, apparatus, implement, machine, contrivance, implant, in vitro reagent, or other similar or related article, including a component part, or accessory, intended for use in the diagnosis of disease or other conditions, or in the cure, mitigation, treatment, or prevention of disease, in man or other animals.
−Removed: Our in vitro testing products are considered by the FDA to be subject to regulation as medical devices.
−Removed: Among other things, pursuant to the FDCA and its implementing regulations, the FDA regulates the research, testing, manufacturing, safety, labeling, storage, recordkeeping, pre-market clearance or approval, marketing and promotion, and sales and distribution of medical devices in the United States to ensure that medical products distributed domestically are safe and effective for their intended uses.
+Added: We perform our tests like AVISE ® CTD, AVISE ® SLE Prognostic and AVISE ® MTX assays in our Vista, California clinical laboratory, and they are primarily regulated under CLIA, as administered by CMS, as well as by applicable state laws, as described above.
+Added: The FDA regulates diagnostic tests that meet the definition of a medical device, except under specific, narrow circumstances.
+Added: The Federal Food, Drug and Cosmetic Act, or FDCA, defines a medical device as "an instrument, apparatus, implement, machine, contrivance, implant, in vitro reagent, or other similar or related article, including a component part, or accessory, which is, among other things:
+Added: intended for use in the diagnosis of disease or other conditions, or in the cure, mitigation, treatment, or prevention of disease, in man or other animals and which does not achieve its primary intended purposes through chemical action within or on the body of man or other animals and which is not dependent upon being metabolized for the achievement of any of its primary intended purposes." By this definition, in vitro reagents and diagnostic tests are considered medical devices.
+Added: Specifically, the FDA defines an in vitro diagnostic test, or IVD, as "reagents, instruments, and systems
+Added: intended for use in the diagnosis of disease or other conditions, including a determination of the state of health, in order to cure, mitigate, treat, or prevent disease or its sequelae." Therefore, the FDA generally considers our testing products to be IVDs subject to the agency's regulatory requirements.
+Added: Among other things, pursuant to the FDCA and its implementing regulations, the FDA regulates the research, testing, manufacturing, safety, labeling, storage, recordkeeping, pre-market clearance or approval, marketing and promotion, and sales and distribution of medical devices, including IVDs, in the United States to ensure that medical products distributed domestically are safe and effective for their intended uses.
In addition, the FDA regulates the export of medical devices manufactured in the United States to international markets.
−Removed: Although the FDA has statutory authority to assure that medical devices are safe and effective for their intended uses, the FDA has generally exercised its enforcement discretion and not enforced applicable regulations with respect to in vitro diagnostics that are designed, manufactured, and used within a single laboratory for use only in that laboratory, which are referred to as laboratory developed tests, or LDTs.
−Removed: We believe that the AVISE ® CTD and AVISE ® MTX are LDTs, as are our near-term pipeline candidate tests.
−Removed: As a result, we believe many of our diagnostic services are currently subject to the FDA’s enforcement discretion and are not subject to the FDA’s oversight.
−Removed: However, reagents, instruments, software or components provided by third parties and used to perform LDTs may be subject to regulation.
−Removed: Legislative and administrative proposals proposing to amend the FDA’s oversight of LDTs have been introduced in recent years and we expect that new legislative and administrative proposals will continue to be introduced from time to time.
−Removed: It is possible that legislation could be enacted into law or regulations or guidance could be issued by the FDA which may result in new or increased regulatory requirements for us to continue to offer our LDTs or to develop and introduce new tests as LDTs.
−Removed: For example, in recent years, FDA has stated its intention to modify its enforcement discretion policy with respect to LDTs.
−Removed: For example, on July 31, 2014, the FDA notified Congress of its intent to modify, in a risk-based manner, its policy of enforcement discretion with respect to LDTs.
−Removed: On October 3, 2014, the FDA issued two draft guidance documents entitled “Framework for Regulatory Oversight of Laboratory Developed Tests (LDTs),” or the Framework Guidance, and “FDA Notification and Medical Device Reporting for Laboratory Developed Tests (LDTs),” or the Reporting Guidance.
−Removed: The Framework Guidance stated that FDA intends to modify its policy of enforcement discretion with respect to LDTs in a risk-based manner consistent with the classification of medical devices generally in Classes I through III.
−Removed: The Reporting Guidance would have further enabled FDA to collect information regarding the LDTs currently being offered for clinical use through a notification process, as well as to enforce its regulations for reporting safety issues and collecting information on any known or suspected adverse events related to the use of an LDT.
−Removed: On November 18, 2016, the FDA announced that it would not finalize either guidance document to allow for further public discussion on an appropriate oversight approach to LDTs and to give Congressional authorizing committees the opportunity to develop a legislative solution, and the FDA issued a discussion paper on possible approaches to LDT regulation in January 2017.
−Removed: Moreover, in August 2020, the U.S.
−Removed: Department of Health and Human Services announced that FDA will not require premarket review of LDTs absent notice-and-comment rulemaking, as opposed to through guidance documents and other informal issuances.
−Removed: The FDA could ultimately modify its current approach to LDTs in a way that would subject LDTs to additional regulatory requirements.
−Removed: Moreover, legislative measures have could likewise result in a change to the approach to FDA's regulation over LDTs, including a requirement for premarket review of LDTs, among other things.
−Removed: Medical Device Regulatory Framework
−Removed: Although we currently market our proprietary testing products as LDTs, which are currently subject to enforcement discretion, we could be subject to more onerous FDA compliance obligations in the future.
−Removed: Specifically, if the FDA begins to actively regulate LDTs, then, unless an exemption applies, each new or significantly modified medical device we seek to commercially distribute in the U.S.
−Removed: will require either a premarket notification to the FDA requesting permission for commercial distribution under Section 510(k) of the FDCA, also referred to as a 510(k) clearance, or approval from the FDA of a premarket approval, or PMA, application.
−Removed: Both the 510(k) clearance and PMA processes can be resource intensive, expensive, and lengthy, and require payment of significant user fees.
−Removed: Device Classification
−Removed: Under the FDCA, medical devices are classified into one of three classes-Class I, Class II or Class III depending on the degree of risk associated with each medical device and the extent of control needed to provide reasonable assurances with respect to safety and effectiveness.
−Removed: Class I includes devices with the lowest risk to the patient and are those for which safety and effectiveness can be reasonably assured by adherence to a set of FDA regulations, referred to as the General Controls for Medical Devices, which require compliance with the applicable portions of the FDA’s quality system regulation, or QSR, facility registration and product listing, reporting of adverse events and malfunctions, and appropriate, truthful and non-misleading labeling and promotional materials.
−Removed: Some Class I devices also require premarket clearance by the FDA through the 510(k) premarket notification process described below.
−Removed: Most Class I products are exempt from the premarket notification requirements.
−Removed: Class II devices are those that are subject to the General Controls, and special controls as deemed necessary by the FDA to ensure the safety and effectiveness of the device.
−Removed: These special controls can include performance standards, patient registries, FDA guidance documents and post-market surveillance.
−Removed: Most Class II devices are subject to premarket review and clearance by the FDA.
−Removed: Premarket review and clearance by the FDA for Class II devices is accomplished through the 510(k) premarket notification process.
−Removed: Class III devices include devices deemed by the FDA to pose the greatest risk such as life-supporting or life-sustaining devices, or implantable devices, in addition to those deemed novel and not substantially equivalent following the 510(k) process.
−Removed: The safety and effectiveness of Class III devices cannot be reasonably assured solely by the General Controls and Special Controls described above.
−Removed: Therefore, these devices are subject to the PMA application process, which is generally more costly and time-consuming than the 510(k) process.
−Removed: Through the PMA application process, the applicant must submit data and information demonstrating reasonable assurance of the safety and effectiveness of the device for its intended use to the FDA’s satisfaction.
−Removed: Accordingly, a PMA typically includes, but is not limited to, extensive technical information regarding device design and development, pre-clinical and clinical trial data, manufacturing information, labeling and financial disclosure information for the clinical investigators in device studies.
−Removed: The PMA application must provide valid scientific evidence that demonstrates to the FDA’s satisfaction a reasonable assurance of the safety and effectiveness of the device for its intended use.
−Removed: The 510(k) Clearance Process
−Removed: Under the 510(k) clearance process, the manufacturer must submit to the FDA a premarket notification, demonstrating that the device is “substantially equivalent” to a legally marketed predicate device.
−Removed: A predicate device is a legally marketed device that is not subject to a PMA, i.e., a device that was legally marketed prior to May 28, 1976 (pre-amendments device) and for which a PMA is not required, a device that has been reclassified from Class III to Class II or I, or a device that was previously found substantially equivalent through the 510(k) process.
−Removed: To be “substantially equivalent,” the proposed device must have the same intended use as the predicate device, and either have the same technological characteristics as the predicate device or have different technological characteristics and not raise different questions of safety or effectiveness than the predicate device.
−Removed: Clinical data is sometimes required to support substantial equivalence.
−Removed: After a 510(k) premarket notification is submitted, the FDA determines whether to accept it for substantive review.
−Removed: If it lacks necessary information for substantive review, the FDA will refuse to accept the 510(k) notification.
−Removed: If it is accepted for filing, the FDA begins a substantive review.
−Removed: By statute, the FDA is required to complete its review of a 510(k) notification within 90 days of receiving the 510(k) notification.
−Removed: As a practical matter, clearance often takes longer, and clearance is never assured.
−Removed: Although many 510(k) premarket notifications are cleared without clinical data, the FDA may require further information, including clinical data, to make a determination regarding substantial equivalence, which may significantly prolong the review process.
−Removed: If the FDA agrees that the device is substantially equivalent, it will grant clearance to commercially market the device.
−Removed: If the FDA determines that the device is not “substantially equivalent” to a predicate device, or if the device is automatically classified into Class III, the device sponsor must then fulfill the much more rigorous premarketing requirements of the PMA approval process, or seek reclassification of the device through the de novo process.
−Removed: The de novo classification process is an alternate pathway to classify medical devices that are automatically classified into Class III but which are low to moderate risk.
−Removed: A manufacturer can submit a petition for direct de novo review if the manufacturer is unable to identify an appropriate predicate device and the new device or new use of the device presents a moderate or low risk.
−Removed: De novo classification may also be available after receipt of a “not substantially equivalent” letter following submission of a 510(k) to FDA.
−Removed: After a device receives 510(k) clearance, any modification that could significantly affect its safety or effectiveness, or that would constitute a new or major change in its intended use, will require a new 510(k) clearance or, depending on the modification, could require a PMA application.
−Removed: The FDA requires each manufacturer to determine whether the proposed change requires a new submission in the first instance, but the FDA can review any such decision and disagree with a manufacturer’s determination.
−Removed: Many minor modifications are accomplished by a letter-to-file in which the manufacture documents the change in an internal letter-to-file.
−Removed: The letter-to-file is in lieu of submitting a new 510(k) to obtain clearance for such change.
−Removed: The FDA can always review these letters to file in an inspection.
−Removed: FDA disagrees with a manufacturer’s determination regarding whether a new premarket submission is required for the modification of an existing 510(k)-cleared device, the FDA can require the manufacturer to cease marketing and/or recall the modified device until 510(k) clearance or approval of a PMA application is obtained.
−Removed: In addition, in these circumstances, the FDA can impose significant regulatory fines or penalties for failure to submit the requisite application(s).
−Removed: Over the last several years, the FDA has proposed reforms to its 510(k) clearance process, and such proposals could include increased requirements for clinical data and a longer review period, or could make it more difficult for manufacturers to utilize the 510(k) clearance process for their products.
−Removed: For example, in November 2018, FDA officials announced steps that the FDA intended to take to modernize the premarket notification pathway under Section 510(k) of the FDCA.
−Removed: Among other things, the FDA announced that it planned to develop proposals to drive manufacturers utilizing the 510(k) pathway toward the use of newer predicates.
−Removed: These proposals included plans to potentially sunset certain older devices that were used as predicates under the 510(k) clearance pathway, and to potentially publish a list of devices that have been cleared on the basis of demonstrated substantial equivalence to predicate devices that are more than 10 years old.
−Removed: These proposals have not yet been finalized or adopted, although the FDA may work with Congress to implement such proposals through legislation.
−Removed: More recently, in September 2019, the FDA published revised final guidance describing an optional “safety and performance based” premarket review pathway for manufacturers of “certain, well-understood device types” to demonstrate substantial equivalence under the 510(k) clearance pathway by showing that such device meets objective safety and performance criteria established by the FDA, thereby obviating the need for manufacturers to compare the safety and performance of their medical devices to specific predicate devices in the clearance process.
−Removed: The FDA maintains a list device types appropriate for the “safety and performance based” pathway and continues to develop product-specific guidance documents that identify the performance criteria for each such device type, as well as the recommended testing methods for such device types.
−Removed: The PMA Approval Process
−Removed: Following receipt of a PMA application, the FDA conducts an administrative review to determine whether the application is sufficiently complete to permit a substantive review.
−Removed: If it is not, the agency will refuse to file the PMA.
−Removed: If it is, the FDA will accept the application for filing and begin the review.
−Removed: The FDA has 180 days to review a filed PMA application, although the review of an application more often occurs over a significantly longer period of time.
−Removed: During this review period, the FDA may request additional information or clarification of information already provided, and the FDA may issue a major deficiency letter to the applicant, requesting the applicant’s response to deficiencies communicated by the FDA.
−Removed: Before approving or denying a PMA, an FDA advisory committee may review the PMA at a public meeting and provide the FDA with the committee’s recommendation on whether the FDA should approve the submission, approve it with specific conditions, or not approve it.
−Removed: The FDA is not bound by the recommendations of an advisory committee, but it considers such recommendations carefully when making decisions.
−Removed: Prior to approval of a PMA, the FDA may conduct inspections of the clinical trial data and clinical trial sites, as well as inspections of the manufacturing facility and processes to ensure compliance with the QSR.
−Removed: PMA devices are also subject to the payment of user fees, and an annual establishment registration fee.
−Removed: If the FDA evaluation of a PMA is favorable, the FDA will issue either an approval letter, or an approvable letter, the latter of which usually contains a number of conditions that must be met in order to secure final approval of the PMA.
−Removed: When and if those conditions have been fulfilled to the satisfaction of the FDA, the agency will issue a PMA approval letter authorizing commercial marketing of the device, subject to the conditions of approval and the limitations established in the approval letter.
−Removed: If the FDA’s evaluation of a PMA application or manufacturing facilities is not favorable, the FDA will deny approval of the PMA or issue a not approvable letter.
−Removed: The FDA also may determine that additional tests or clinical trials are necessary, in which case the PMA approval may be delayed for several months or years while the trials are conducted and data is submitted in an amendment to the PMA, or the PMA is withdrawn and resubmitted when the data are available.
−Removed: The PMA process can be expensive, uncertain and lengthy and a number of devices for which the FDA approval has been sought by other companies have never been approved by the FDA for marketing.
−Removed: New PMA applications or PMA supplements are required for modification to the manufacturing process, equipment or facility, quality control procedures, sterilization, packaging, expiration date, labeling, device specifications, ingredients, materials or design of a device that has been approved through the PMA process.
−Removed: PMA supplements often require submission of the same type of information as an initial PMA application, except that the supplement is limited to information needed to support any changes from the device covered by the approved PMA application and
−Removed: may or may not require as extensive technical or clinical data or the convening of an advisory panel, depending on the nature of the proposed change.
−Removed: In approving a PMA application, as a condition of approval, the FDA may also require some form of post-approval study or post-market surveillance, whereby the applicant conducts a follow-up study or follows certain patient groups for a number of years and makes periodic reports to the FDA on the clinical status of those patients when necessary to protect the public health or to provide additional or longer term safety and effectiveness data for the device.
−Removed: The FDA may also approve a PMA application with other post-approval conditions intended to ensure the safety and effectiveness of the device, such as, among other things, restrictions on labeling, promotion, sale, distribution and use.
−Removed: New PMA applications or PMA supplements may also be required for modifications to any approved diagnostic tests, including modifications to our manufacturing processes, device labeling and device design, based on the findings of post-approval studies.
−Removed: Clinical Trials
−Removed: Clinical trials are almost always required to support a PMA and are sometimes required to support a 510(k) submission.
−Removed: All clinical investigations of devices to determine safety and effectiveness must be conducted in accordance with the FDA’s investigational device exemption, or IDE, regulations which govern investigational device labeling, prohibit promotion of the investigational device, and specify an array of recordkeeping, reporting and monitoring responsibilities of study sponsors and study investigators.
−Removed: If the device presents a “significant risk,” to human health, as defined by the FDA, the FDA requires the device sponsor to submit an IDE application to the FDA, which must become effective prior to commencing human clinical trials.
−Removed: A significant risk device is one that presents a potential for serious risk to the health, safety or welfare of a patient and either is implanted, used in supporting or sustaining human life, substantially important in diagnosing, curing, mitigating or treating disease or otherwise preventing impairment of human health, or otherwise presents a potential for serious risk to a subject.
−Removed: An IDE application must be supported by appropriate data, such as animal and laboratory test results, showing that it is safe to test the device in humans and that the testing protocol is scientifically sound.
−Removed: The IDE will automatically become effective 30 days after receipt by the FDA unless the FDA notifies the company that the investigation may not begin.
−Removed: If the FDA determines that there are deficiencies or other concerns with an IDE for which it requires modification, the FDA may permit a clinical trial to proceed under a conditional approval.
−Removed: In addition, the study must be approved by, and conducted under the oversight of, an Institutional Review Board, or IRB, for each clinical site.
−Removed: The IRB is responsible for the initial and continuing review of the IDE, and may pose additional requirements for the conduct of the study.
−Removed: If an IDE application is approved by the FDA and one or more IRBs, human clinical trials may begin at a specific number of investigational sites with a specific number of patients, as approved by the FDA.
−Removed: If the device presents a non-significant risk to the patient, a sponsor may begin the clinical trial after obtaining approval for the trial by one or more IRBs without separate approval from the FDA, but must still follow abbreviated IDE requirements, such as monitoring the investigation, ensuring that the investigators obtain informed consent, and labeling and record-keeping requirements.
−Removed: Acceptance of an IDE application for review does not guarantee that the FDA will allow the IDE to become effective and, if it does become effective, the FDA may or may not determine that the data derived from the trials support the safety and effectiveness of the device or warrant the continuation of clinical trials.
−Removed: An IDE supplement must be submitted to, and approved by, the FDA before a sponsor or investigator may make a change to the investigational plan that may affect its scientific soundness, study plan or the rights, safety or welfare of human subjects.
−Removed: During a study, the sponsor is required to comply with the applicable FDA requirements, including, for example, trial monitoring, selecting clinical investigators and providing them with the investigational plan, ensuring IRB review, adverse event reporting, record keeping and prohibitions on the promotion of investigational devices or on making safety or effectiveness claims for them.
−Removed: The clinical investigators in the clinical study are also subject to FDA’s regulations and must obtain patient informed consent, rigorously follow the investigational plan and study protocol, control the disposition of the investigational device, and comply with all reporting and recordkeeping requirements.
−Removed: Additionally, after a trial begins, the sponsor, the FDA or the IRB could suspend or terminate a clinical trial at any time for various reasons, including a belief that the risks to study subjects outweigh the anticipated benefits.
−Removed: Post-market Regulation
−Removed: After a device is cleared or approved for marketing, numerous and pervasive regulatory requirements continue to apply.
+Added: The FDCA classifies medical devices into one of three categories based on the risks associated with the device and the level of control necessary to provide reasonable assurance of safety and effectiveness.
+Added: Devices deemed by the FDA to pose the greatest risk, such as life-sustaining, life-supporting or implantable devices or devices deemed not substantially equivalent to a previously 510(k) cleared device, are categorized as Class III.
+Added: These devices typically require submission and approval of a premarket approval application, or PMA.
+Added: Devices deemed to pose lower risk are categorized as either Class I or II, which requires the manufacturer to submit to the FDA a 510(k) premarket notification submission requesting clearance of the device for commercial distribution in the United States.
+Added: Some low-risk devices are exempted from this requirement.
+Added: When a 510(k) premarket notification submission is required, the manufacturer must submit to the FDA a premarket notification submission demonstrating that the device is "substantially equivalent" to:
+Added: (i) a device that was legally marketed prior to May 28, 1976, for which PMA approval is not required, (ii) a legally marketed device that has been reclassified from Class III to Class II or Class I, or (iii) another legally marketed, similar device that has been cleared through the 510(k) clearance process.
+Added: After the FDA permits a device to enter commercial distribution, numerous regulatory requirements apply.
These include:
−Removed: • establishment registration and device listing with the FDA;
−Removed: • QSR requirements, which require manufacturers, including third-party manufacturers, to follow stringent design, testing, control, documentation and other quality assurance procedures during all aspects of the design and manufacturing process;
−Removed: • labeling regulations and FDA prohibitions against the promotion of investigational products, or the promotion of ‘‘off-label’’ uses of cleared or approved products;
−Removed: • requirements related to promotional activities;
−Removed: • clearance or approval of product modifications to 510(k)-cleared devices that could significantly affect safety or effectiveness or that would constitute a major change in intended use of one of our cleared devices, or approval of certain modifications to PMA-approved devices;
−Removed: • medical device reporting regulations, which require that a manufacturer report to the FDA if a device it markets may have caused or contributed to a death or serious injury, or has malfunctioned and the device or a similar device that it markets would be likely to cause or contribute to a death or serious injury, if the malfunction were to recur;
−Removed: • correction, removal and recall reporting regulations, which require that manufacturers report to the FDA field corrections and product recalls or removals if undertaken to reduce a risk to health posed by the device or to remedy a violation of the FDCA that may present a risk to health;
−Removed: • the FDA’s recall authority, whereby the agency can order device manufacturers to recall from the market a product that is in violation of governing laws and regulations;
−Removed: • post-market surveillance activities and regulations, which apply when deemed by the FDA to be necessary to protect the public health or to provide additional safety and effectiveness data for the device.
−Removed: Device manufacturing processes are required to comply with the applicable portions of the QSR, which cover the methods and the facilities and controls for the design, manufacture, testing, production, processes, controls, quality assurance, labeling, packaging, distribution, installation and servicing of finished devices intended for human use.
−Removed: The QSR also requires, among other things, maintenance of a device master file, device history file, and complaint files.
−Removed: As a manufacturer, will be subject to periodic scheduled or unscheduled inspections by the FDA.
−Removed: Failure to maintain compliance with the QSR requirements could result in the shut-down of, or restrictions on, manufacturing operations and the recall or seizure of products.
−Removed: The discovery of previously unknown problems with any marketed medical device products, including unanticipated adverse events or adverse events of increasing severity or frequency, whether resulting from the use of the device within the scope of its clearance or off-label by a physician in the practice of medicine, could result in restrictions on a medical device, including the removal of the product from the market or voluntary or mandatory device recalls.
−Removed: The FDA has broad regulatory compliance and enforcement powers.
−Removed: If the FDA determines that a manufacturer has failed to comply with applicable regulatory requirements, it can take a variety of compliance or enforcement actions, which may result in any of the following sanctions:
−Removed: • warning letters, untitled letters, fines, injunctions, consent decrees and civil penalties;
−Removed: • recalls, withdrawals, or administrative detention or seizure of our products;
−Removed: • operating restrictions or partial suspension or total shutdown of production;
−Removed: • refusing or delaying requests for 510(k) marketing clearance or PMA approvals of new products or modified products;
−Removed: • withdrawing 510(k) clearances or PMA approvals that have already been granted;
−Removed: • refusal to grant export approvals;
−Removed: • criminal prosecution.
+Added: the Quality System Regulation, which requires manufacturers to follow elaborate design, testing, control, documentation and other quality assurance procedures during the manufacturing process;
+Added: labeling regulations;
+Added: the FDA’s general prohibition against promoting products for unapproved or "off-label" uses;
+Added: and the Medical Device Reporting regulation, which requires that manufacturers report to the FDA if their device may have caused or contributed to a death or serious injury or malfunctioned in a way that would likely cause or contribute to a death or serious injury if it were to recur.
+Added: The FDA has broad post-market and regulatory and enforcement powers.
+Added: Failure to comply with the applicable U.S.
+Added: medical device regulatory requirements could result in, among other things, warning letters, fines, injunctions, consent decrees, civil penalties, repairs, replacements, refunds, recalls or seizures of products, total or partial suspension of production, the FDA’s refusal to grant future premarket clearances or approvals, withdrawals or suspensions of current product applications, and criminal prosecution.
+Added: Although the FDA has statutory authority to assure that medical devices, including IVDs, are safe and effective for their intended uses, the FDA has generally exercised its enforcement discretion and not enforced applicable regulations with respect to IVDs that are designed, manufactured, and used within a single high-complexity CLIA-certified laboratory for use only in that laboratory.
+Added: Such tests are referred to as laboratory developed tests, or LDTs.
+Added: We believe that all of our AVISE ® test products are LDTs, as are our near-term pipeline candidate tests.
+Added: As a result, we believe our diagnostic services are currently subject to the FDA’s enforcement discretion and are not subject to the FDA’s oversight.
+Added: However, reagents, instruments, software or components provided by third parties and used to perform LDTs may be subject to regulation.
+Added: Even though we commercialize our tests as LDTs, our tests may in the future become subject to more onerous regulation by the FDA.
+Added: For example, in 2017, the FDA published a Discussion Paper on Laboratory Developed Tests to further public discussion about an appropriate LDT oversight approach and to give congressional committees the opportunity to develop a legislative solution to the competing interests of ensuring the public health and promoting innovation in the clinical testing industry.
+Added: However, in August 2020, the United States Department of Health and Human Services, or HHS, published a policy announcement that FDA must go through the formal notice-and-comment rulemaking process before requiring premarket review of LDTs rather than making such changes through guidance documents, compliance manuals, or other informal policy statements.
+Added: HHS’s policy statement did not affect proposed legislation for the regulation of LDTs, which is discussed below.
+Added: In November 2021, the Biden Administration withdrew that HHS policy announcement and ostensibly restored FDA’s regulatory oversight of LDTs.
+Added: In December 2018, members of Congress released a discussion draft of a possible bill to regulate in vitro clinical tests including LDTs, and provided opportunities for additional stakeholders to also provide input on the proposed reform legislation.
+Added: On March 5, 2020, U.S.
+Added: Representatives Diana DeGette (D-CO) and Dr.
+Added: Larry Bucshon (R-IN) formally introduced the long-awaited legislation, called the Verifying Accurate, Leading-edge IVCT Development, or VALID Act.
+Added: An identical version of the bill was introduced concurrently in the Senate, demonstrating both bicameral and bipartisan support for the effort to overhaul how the FDA reviews and approves diagnostic tests going forward.
+Added: The VALID Act would codify into law the term "in vitro clinical test", or IVCT, to create a new medical product
+Added: category separate from medical devices that includes products currently regulated as IVDs as well as LDTs.
+Added: The VALID Act would also create a new system for labs and hospitals to use to submit their tests electronically to the FDA for approval, which is aimed at reducing the amount of time it takes for the agency to approve such tests, and establish a new program to expedite the development of diagnostic tests that can be used to address a current unmet need for patients.
+Added: A substantively unchanged version of the VALID Act was re-introduced in both houses of Congress on June 24, 2021.
+Added: It is unclear whether the VALID Act would be passed by Congress in its current form or signed into law by the President.
+Added: Until the FDA finalizes its position on regulation of LDTs through formal notice-and-comment rulemaking, or the VALID Act or other federal legislation is passed reforming the government’s regulation of LDTs, or alternatively, if the FDA disagrees with our assessment that our tests fall within the definition of an LDT, we could be subject to enforcement of regulatory requirements such as registration and listing requirements, medical device reporting requirements and quality control requirements.
+Added: Any new legislation or formal FDA regulations affecting LDTs may result in increased regulatory burdens on our ability to continue marketing our tests and to develop and introduce new tests in the future.
+Added: Additionally, if and when the FDA begins to actively enforce its premarket submission regulations with respect to LDTs generally or our tests in particular, whether as a result of new legislative authority or following formal notice-and-comment rulemaking, we may be required to obtain premarket clearance for our tests under Section 510(k) of the FDCA or approval of a PMA.
+Added: The process for submitting a 510(k) premarket notification and receiving FDA clearance usually takes from three to 12 months, but it can take significantly longer and clearance is never guaranteed.
+Added: The process for submitting and obtaining FDA approval of a PMA generally takes from one to three years or even longer and approval is not guaranteed.
+Added: PMA approval typically requires extensive clinical data and can be significantly longer, more expensive and more uncertain than the 510(k) clearance process.
+Added: If premarket review is required for some or all of our tests, the FDA could require that we stop selling our products pending clearance or approval and conduct clinical testing prior to making submissions to FDA to obtain premarket clearance or approval.
+Added: The FDA could also require that we label our tests as investigational or limit the labeling claims we are permitted to make.
+Added: We also distribute the AVISE ® Touch blood specimen collection kit for collection and transport of blood samples from a healthcare provider to our laboratory.
+Added: The kit includes a blood specimen collection device that was designed and is manufactured for us by a third-party manufacturer, as well as a biohazard bag and a prepaid envelope for shipping the sample and instructions for use.
+Added: The FDA regulates a kit that contain multiple copackaged but independent medical devices as a "convenience kit," which is considered a separate medical device from the individual kit components.
+Added: Many types of convenience kits do not require marketing authorization because the FDA exercises enforcement discretion for such requirements, but they must meet FDA’s general controls for medical devices, including that they be manufactured in compliance with applicable quality system regulations for medical devices and adhere to device labeling requirements, among other regulatory controls.
+Added: Regulation of Clinical Trials
+Added: We have also conducted and may in the future conduct studies for our AVISE ® tests and our other tests in development that involve clinical investigators at sites in the U.S.
+Added: We may need to conduct additional studies for the AVISE ® tests, as well as other tests we may offer in the future, to drive test adoption in the marketplace and reimbursement.
+Added: Should we not be able to perform these studies, or should their results not provide clinically meaningful data and value for clinicians, adoption of our tests could be impaired and we may not be able to obtain reimbursement for them.
+Added: The conduct of clinical trials is also subject to extensive federal and institutional regulations intended to assure that the data and reported results are credible and accurate and that the rights, safety, and welfare of study participants are protected.
+Added: Most studies involving human participants must be reviewed and approved by, and conducted under the auspices of, a duly-constituted institutional review board, or IRB, which is a multi-disciplinary committee responsible for reviewing and evaluating the risks and benefits of a clinical trial for participating subjects and monitoring the trial on an ongoing basis.
+Added: Companies sponsoring the clinical trials and investigators also must comply with, as applicable, regulations, guidelines and IRB requirements for obtaining informed consent from the study subjects, following the protocol and investigational plan, adequately monitoring the clinical trial, and timely reporting of adverse events.
+Added: The sponsoring company or the IRB may suspend or terminate a clinical trial at any time on various grounds, including a finding that the subjects are being exposed to an unacceptable health risk.
+Added: In addition, studies involving human participants often require significant time and cash resources to complete and are subject to a high degree of risk, including risks of experiencing delays, failing to complete the trial or obtaining unexpected or negative results.
Federal and State Physician Self-Referral Prohibitions
−Removed: We are subject to the federal physician self-referral prohibitions, commonly known as the Stark Law, and to similar state law restrictions, such as California’s Physician Ownership and Referral Act, or PORA, and other comparable state laws.
−Removed: Together these restrictions generally prohibit us from billing a patient or any governmental or private payor for certain designated health services, including clinical laboratory services, when the physician ordering the service, or any member of such physician’s immediate family, has a financial interest, such as an ownership or investment interest in or compensation arrangement with us, unless the arrangement meets an exception to the prohibition.
+Added: We are subject to the federal physician self-referral prohibitions, commonly known as the Stark Law, and to similar state law restrictions, such as California’s Physician Ownership and Referral Act of 1933, or PORA, and other comparable state laws.
+Added: The Stark Law generally prohibits us from billing a patient or any governmental or private payor for certain designated health services, including clinical laboratory services, when the physician ordering the service, or any member of such physician’s immediate family, has a financial interest, such as an ownership or investment interest in or compensation arrangement with us, unless the arrangement meets an exception to the prohibition.
Sanctions for a Stark Law violation include the following:
▪ denial of payment for the services provided in violation of the prohibition;
−Removed: ▪ refunds of amounts collected by an entity in violation of the Stark Law;
+Added: ▪ refunds of amounts collected in violation of the Stark Law;
▪ significant civil penalties for each bill or claim for a service arising out of the prohibited referral, and additional penalties for each arrangement or scheme that the parties know (or should know) has the principal purpose of circumventing the Stark Law's prohibition;
−Removed: ▪ the imposition of up to three times the amounts for each item or service wrongfully claimed;
+Added: ▪ the imposition of penalties of up to three times the amounts assessed for each item or service wrongfully claimed;
▪ possible exclusion from federal healthcare programs, including Medicare and Medicaid.
−Removed: These prohibitions apply regardless of any intent by the parties to induce or reward referrals or the reasons for the financial relationship and the referral.
−Removed: In addition, knowing violations of the Stark Law may also serve as the basis for liability under the Federal False Claims Act, which can result in additional civil and criminal penalties.
−Removed: Further, a violation of PORA is a misdemeanor and could result in civil penalties and criminal fines.
−Removed: Other states also have self-referral restrictions with which we have to comply, some of which differ from those imposed by the Stark Law or California law.
+Added: The Stark Law applies regardless of any intent by the parties to induce or reward referrals or the reasons for the financial relationship and the referral.
+Added: In addition, violations of the Stark Law may also serve as the basis for liability under the Federal False Claims Act, which can result in additional civil penalties.
+Added: Similarly, PORA makes it unlawful for a physician or certain other healing arts licensees to refer a person for certain healthcare services, including clinical laboratory services, if the licensee has a financial interest with the person or entity that receives the referral, unless an exemption is met.
+Added: Unlike the Stark Law, PORA applies regardless of the source of payment.
+Added: PORA also prohibits the submission of claims for services provided pursuant to a prohibited referral, and violation of this prohibition constitutes a public offense and is punishable upon conviction by a fine not exceeding fifteen thousand dollars ($15,000) for each violation and appropriate disciplinary action.
+Added: Other states also have self-referral restrictions with which we have to comply, some of which differ from those imposed by the Stark Law or PORA.
Federal and State Anti-Kickback Laws
−Removed: The Federal Anti-kickback Statute makes it a felony for a person or entity, including a clinical laboratory, to knowingly and willfully offer, pay, solicit or receive any remuneration, directly or indirectly, overtly or covertly, in cash or in kind, in order to induce business that is reimbursable under any federal health care program.
−Removed: A violation of the Anti-kickback Statute may result in imprisonment for up to ten years and significant fines for each violation and additional administrative civil money penalties, plus up to three times the amount of the remuneration paid.
−Removed: Convictions under the Anti-kickback Statute result in mandatory exclusion from federal health care programs for a minimum of five years.
−Removed: In addition, The U.S.
−Removed: Department of Health and Human Services, or HHS, has the authority to impose civil assessments and fines and to exclude health care providers and others engaged in prohibited activities from Medicare, Medicaid and other federal health care programs.
−Removed: In addition, the government may assert that a claim that includes items or services resulting from a violation of the Anti-kickback Statute constitutes a false or fraudulent claim under the Federal False Claims Act, which is discussed in greater detail below.
−Removed: Additionally, a person or entity does not need to have actual knowledge of the statute or specific intent to violate it in order to have committed a violation.
−Removed: Although the Anti-kickback Statute applies only to items and services reimbursable under any federal health care program, a number of states, including California, have passed statutes substantially similar to the Anti-kickback Statute that apply to all third-party payors, including commercial insurers, and in some states, to patients without insurance.
−Removed: The California Attorney General and courts have interpreted the California anti-kickback and fee-splitting laws in substantially the same way as HHS and the courts have interpreted the Anti-kickback Statute.
−Removed: Penalties of such state laws include imprisonment and significant monetary fines.
−Removed: Federal and state law enforcement authorities scrutinize arrangements between health care providers and potential referral sources to ensure that the arrangements are not designed as a mechanism to induce patient care referrals or induce the purchase or prescribing of particular products or services.
−Removed: Generally, courts have taken a broad interpretation of the scope of the Anti-kickback Statute, holding that the statute may be violated if merely one purpose of a payment arrangement is to induce referrals or purchases.
+Added: The Federal Anti-Kickback Statute makes it a felony for a person or entity, including a clinical laboratory, to knowingly and willfully offer, pay, solicit or receive any remuneration, directly or indirectly, overtly or covertly, in cash or in kind, in order to induce or in return for the referral of an individual for the furnishing of, or the recommending or arranging for the furnishing of, purchasing, leasing, ordering or arranging for or recommending purchasing, leasing or ordering of any item or service that is reimbursable in whole or in part, under any federal healthcare program.
+Added: A person or entity does not need to have actual knowledge of the statute or specific intent to violate it in order to have committed a violation.
+Added: Courts have broadly interpreted of the scope of the Anti-kickback Statute and generally have held that the statute may be violated if merely one purpose of a payment arrangement is to induce referrals.
In addition to statutory exceptions to the Anti-kickback Statute, regulations provide for a number of safe harbors.
−Removed: If an arrangement meets the provisions of a safe harbor, it is deemed not to violate the Anti-kickback Statute.
+Added: If an arrangement meets the provisions of a safe harbor or exception, it is deemed not to violate the Anti-Kickback Statute, and the parties are immune from prosecution.
An arrangement must fully comply with each element of an applicable safe harbor in order to qualify for protection.
−Removed: Failure to meet the requirements of the safe harbor, however, does not render an arrangement illegal.
+Added: Failure to meet the requirements of an exception or the safe harbor does not render an arrangement illegal.
Rather, the government may evaluate such arrangements on a case-by-case basis, taking into account all facts and circumstances.
−Removed: There are no regulatory safe harbors under California laws.
+Added: A violation of the Anti-Kickback Statute may result in imprisonment for up to ten years and significant fines for each violation and additional administrative civil money penalties, plus up to three times the amount of the remuneration paid.
+Added: Convictions under the Anti-Kickback Statute result in mandatory exclusion from federal healthcare programs for a minimum of five years.
+Added: In addition, a violation of the Anti-kickback Statute can serve as the basis of liability under the federal False Claims Act, which is discussed in greater detail below.
+Added: Although the Anti-kickback Statute applies only to items and services reimbursable under any federal healthcare program, a number of states, including California, have passed statutes substantially similar to the Anti-Kickback Statute that apply to all third-party payors, including commercial insurers, and, in some states, to patients without insurance.
+Added: The California Attorney General and courts have interpreted the California anti-kickback and fee-splitting
+Added: laws in substantially the same way as HHS and the courts have interpreted the Anti-Kickback Statute.
+Added: Penalties under such state laws include imprisonment and significant monetary fines.
+Added: In addition, in October 2018, the Eliminating Kickbacks in Recovery Act of 2018, or EKRA, was enacted as part of the Substance Use-Disorder Prevention that Promotes Opioid Recovery and Treatment for Patients and Communities Act.
+Added: EKRA is an all-payor anti-kickback law that makes it a criminal offense to pay any remuneration to induce referrals to, or in exchange for, patients using the services of a recovery home, a substance use clinical treatment facility, or laboratory.
+Added: However, unlike the Anti-Kickback Statute, EKRA is not limited to services covered by federal or state healthcare programs but applies more broadly to services covered by “healthcare benefit programs,” including private third-party payors.
+Added: Although EKRA apparently was intended to reach patient brokering and similar arrangements to induce patronage of substance use recovery and treatment, the language in EKRA is broadly written.
+Added: Further, certain of EKRA’s exceptions are inconsistent with the Anti-Kickback Statute and regulations.
+Added: EKRA permits the U.S.
+Added: Department of Justice to issue regulations clarifying EKRA’s exceptions or adding additional exceptions, but such regulations have not yet been issued.
Other Federal and State Health Care Laws
−Removed: In addition to the requirements discussed above, several other health care fraud and abuse laws could have an effect on our business.
−Removed: For example, provisions of the Social Security Act permit Medicare and Medicaid to exclude an entity that charges the federal health care programs substantially in excess of its usual charges for its services.
+Added: In addition to the requirements discussed above, several other healthcare fraud and abuse laws could have an effect on our business.
+Added: For example, federal law permits the Office of Inspector General for the Department of Health and Human Services to exclude an individual or entity from Medicare or Medicaid for charging Medicare or state healthcare programs, such as Medicaid, substantially in excess of its usual charges for its items or services absent a finding of good cause.
The terms “usual charge” and “substantially in excess” are subject to varying interpretations.
−Removed: The Federal False Claims Act prohibits, among other things, a person from knowingly presenting, or causing to be presented, a false or fraudulent claim for payment or approval and from, making, using, or causing to be made or used, a false record or statement material to a false or fraudulent claim in order to secure payment or retaining an overpayment by the federal government.
−Removed: In addition to actions initiated by the government itself, the statute authorizes actions to be brought on behalf of the federal government by a private party having knowledge of the alleged fraud.
−Removed: Because the complaint is initially filed under seal, the action may be pending for some time before the defendant is even aware of the action.
−Removed: If the government intervenes and is ultimately successful in obtaining redress in the matter or if the plaintiff succeeds in obtaining redress without the government’s involvement, then the plaintiff
−Removed: will receive a percentage of the recovery.
−Removed: Finally, the Social Security Act includes its own provisions that prohibit the filing of false claims or submitting false statements in order to obtain payment.
−Removed: Violation of these provisions may result in fines, imprisonment or both, and possible exclusion from Medicare or Medicaid programs.
−Removed: Several states, including California, have enacted comparable false claims laws which may be broader in scope and may apply regardless of payor.
−Removed: The civil monetary penalties statute imposes penalties against any person or entity that, among other things, is determined to have presented or caused to be presented a claim to a federal health program that the person knows or should know is for an item or service that was not provided as claimed or is false or fraudulent.
+Added: The federal False Claims Act prohibits, among other things, a person from knowingly presenting, or causing to be presented, a false or fraudulent claim for payment to the federal government.
+Added: In addition to actions initiated by the government itself, the statute authorizes actions to be brought on behalf of the federal government by a private party having knowledge of the alleged fraud pursuant to its qui tam provisions.
+Added: Because the complaint in a qui tam action is initially filed under seal, the action may be pending for some time before the defendant is even aware of the action.
+Added: If the government intervenes and is ultimately successful in obtaining redress in the matter or if the relator succeeds in obtaining redress without the government’s involvement, then the relator will receive a percentage of the recovery.
+Added: In addition, providers and suppliers must report and return any overpayments received from the Medicare and Medicaid programs within 60 days of identification, and failure to identify and return such overpayments exposes the provider or supplier to False Claims Act liability.
+Added: Violation of the False Claims Act may result payment of up to three times the actual damages sustained by the government, plus significant per-claim civil penalties.
+Added: Several states, including California, have enacted comparable false claims laws that may be broader in scope and may apply regardless of payor.
+Added: The federal civil monetary penalties law, or the CMP Law, prohibits, among other things, (1) the offering or transfer of remuneration (including a waiver of copayments and deductible amounts) to a Medicare or state healthcare program beneficiary if the person knows or should know it is likely to influence the beneficiary’s selection of a particular provider, practitioner, or supplier of services reimbursable by Medicare or a state healthcare program, unless an exception applies;
+Added: (2) employing or contracting with an individual or entity that the provider knows or should know is excluded from participation in a federal healthcare program;
+Added: (3) billing for services requested by an unlicensed physician or an excluded provider;
+Added: (4) billing for medically unnecessary services;
+Added: and (5) presenting or causing to be presented a claim to a federal health program that the person knows or should know is for an item or service that was not provided as claimed or is false or fraudulent.
+Added: The penalties for violating the CMP Law include exclusion, substantial fines, and payment of up to three times the amount billed, depending on the nature of the offense.
A person who offers or provides to a Medicare or Medicaid beneficiary any remuneration, including waivers of co-payments and deductible amounts (or any part thereof), that the person knows or should know is likely to influence the beneficiary’s selection of a particular provider, practitioner or supplier of Medicare or Medicaid payable items or services may be liable for significant civil monetary penalties for each wrongful act and up to three times the amount improperly claimed.
−Removed: Moreover, in certain cases, providers who routinely waive copayments and deductibles for Medicare and Medicaid beneficiaries can also be held liable under the Anti-Kickback Statute and False Claims Act.
+Added: Moreover, in certain cases, providers who routinely waive copayments, or coinsurance for Medicare, and deductibles for Medicare and Medicaid beneficiaries can also be held liable under the Anti-Kickback Statute and False Claims Act.
One of the statutory exceptions to the prohibition is non-routine, unadvertised waivers of copayments or deductible amounts based on individualized determinations of financial need or exhaustion of reasonable collection efforts.
1 unchanged sentence
Although this prohibition applies only to federal healthcare program beneficiaries, applicable state laws related to, among other things, unlawful schemes to defraud, excessive fees for services, tortious interference with patient contracts and statutory or common law fraud, may also be implicated for similar practices offered to patients covered by commercial payors.
−Removed: HIPAA created new federal criminal statutes that prohibit, among other actions, knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program, including private third-party payors, and knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false, fictitious or fraudulent statement in connection with the delivery of or payment for healthcare benefits, items or services.
−Removed: Like the Anti-kickback Statute, a person or entity does not need to have actual knowledge of the statute or specific intent to violate it in order to have committed a violation.
−Removed: The Patient Protection and Affordable Care Act of 2010, as amended by the Health Care and Education Reconciliation Act of 2010, collectively the Affordable Care Act, or ACA, among other things, also imposed annual reporting requirements on manufacturers of certain devices, drugs and biologics for certain payments and transfers of value by them and in some cases their distributors to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors), certain other health care providers beginning in 2022, and teaching hospitals, as well as ownership and investment interests held by physicians (as defined under the statute) and their immediate family members.
+Added: Federal criminal statutes prohibit, among other actions, knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program, including those administered by private third-party payors, and knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false, fictitious or fraudulent statement in connection with the delivery of or payment for healthcare benefits, items or services.
+Added: Like the Anti-Kickback Statute, this federal criminal statute requires a showing of intent, but a person or entity does not need to have actual knowledge of the statute or specific intent to violate it in order to have committed a violation.
+Added: The Physician Payments Sunshine Act imposes annual reporting requirements on manufacturers of certain devices, drugs and biologics for certain payments and transfers of value by them and in some cases their distributors to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors), certain other healthcare providers (such as nurse practitioners), and teaching hospitals, as well as ownership and investment interests held by physicians (as defined under the statute) and their immediate family members.
Any failure to comply with these reporting requirements could result in significant fines and penalties.
1 unchanged sentence
We cannot assure you, however, that the government will agree with our determination, and a determination that we have violated these laws and regulations, or a public announcement that we are being investigated for possible violations, could adversely affect our business, prospects, results of operations or financial condition.
−Removed: If our operations are found to be in violation of any of the fraud and abuse laws described above or any other laws that apply to us, we may be subject to penalties, including potentially significant criminal and civil and/or administrative penalties, damages, fines, disgorgement, imprisonment, exclusion from participation in government healthcare programs, contractual damages, reputational harm, administrative burdens, diminished profits and future earnings, and the curtailment or restructuring of our operations, any of which could adversely affect our ability to operate our business and our results of operations.
+Added: We are also subject to applicable state restrictions on laboratory billing.
+Added: These laws vary from state to state but generally are intended to prevent a provider who ordered but did not perform the service from billing for that service at a markup.
+Added: For example, California has an anti-markup statute with which we must comply, which prohibits a provider from charging for any laboratory test that it did not perform unless the provider (a) notifies the patient, client or customer of the name, address, and charges of the laboratory performing the test, and (b) charges no more than what the provider was charged by the clinical laboratory that performed the test except for any other service actually rendered to the patient by the provider (for example, specimen collection, processing and handling).
+Added: This provision applies, with certain limited exceptions, to licensed persons such as physicians and clinical laboratories regulated under California’s Business and Professions Code.
+Added: A violation of this provision can lead to imprisonment and/or a fine of up to $10,000.
+Added: Other states have similar anti-markup and other client billing restrictions with which we must comply.
+Added: Many states also have "direct-bill" laws, which require the party that performed the service to bill for the service, with certain exceptions.
+Added: If our operations are found to be in violation of any of the fraud and abuse laws described above or any other healthcare regulatory laws that apply to us, we may be subject to penalties, including potentially significant criminal and civil and/or administrative penalties, damages, fines, disgorgement, imprisonment, exclusion from participation in government healthcare programs, contractual damages, reputational harm, administrative burdens, diminished profits and future earnings, and the curtailment or restructuring of our operations, any of which could adversely affect our ability to operate our business and our results of operations.
International Regulations
−Removed: Many countries in which we may offer any of our testing products in the future have anti-kickback regulations prohibiting providers from offering, paying, soliciting or receiving remuneration, directly or indirectly, in order to induce business that is reimbursable under any national health care program.
−Removed: In situations involving physicians employed by state-funded institutions or national health care agencies, violation of the local anti-kickback law may also constitute a violation of the U.S.
+Added: Many countries in which we may offer any of our testing products in the future have anti-kickback regulations prohibiting providers from offering, paying, soliciting or receiving remuneration, directly or indirectly, in order to induce business that is reimbursable under any national healthcare program.
+Added: In situations involving physicians employed by state-funded institutions or national healthcare agencies, violation of the local anti-kickback law may also constitute a violation of the U.S.
Foreign Corrupt Practices Act, or FCPA, and/or other applicable anti-corruption laws.
2 unchanged sentences
business entity from offering or providing, directly or through a third party, including any potential distributors we may rely on in certain markets, anything of value to a foreign official with corrupt intent to influence an award or continuation of business or to gain an unfair advantage, whether or not such conduct violates local laws.
−Removed: In addition, it is illegal for a company that
−Removed: reports to the SEC to have false or inaccurate books or records or to fail to maintain a system of internal accounting controls.
+Added: In addition, it is illegal for a company that reports to the SEC to have false or inaccurate books or records or to fail to maintain a system of internal accounting controls.
We will also be required to maintain accurate information and control over sales and distributors’ activities that may fall within the purview of the FCPA, including its books and records provisions and its anti-bribery provisions.
10 unchanged sentences
Data Privacy and Security Laws
−Removed: Under HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act, or HITECH Act, HHS has issued regulations to protect the privacy and security of protected health information, or PHI, used or disclosed by certain entities including health care providers, such as us.
−Removed: HIPAA also regulates standardization of data content, codes and formats used in certain health care transactions and standardization of identifiers for health plans and providers.
−Removed: Penalties for violations of HIPAA and HITECH laws and regulations include civil and criminal penalties.
−Removed: The HIPAA privacy regulations cover the use and disclosure of PHI by covered entities as well as business associates, which are defined to include subcontractors that create, receive, maintain, or transmit PHI on behalf of a business associate.
−Removed: They also set forth certain rights that an individual has with respect to his or her PHI maintained by a covered entity, including the right to access or amend certain records containing PHI, or to request restrictions on the use or disclosure of PHI.
−Removed: The HIPAA security regulations establish requirements for safeguarding the confidentiality, integrity, and availability of PHI that is electronically transmitted or electronically stored.
+Added: The Health Insurance Portability and Accountability Act of 1996, or HIPAA, established comprehensive federal standards for the privacy and security of health information.
+Added: In 2009, Congress enacted Subtitle D of the Health Information Technology for Economic and Clinical Health Act.
+Added: or HITECH provisions of the American Recovery and Reinvestment Act of 2009.
+Added: HITECH amended HIPAA and, among other things, expanded and strengthened HIPAA, created new targets for enforcement, imposed new penalties for noncompliance and established new breach notification requirements.
+Added: HIPAA applies to health plans, healthcare clearing houses, and healthcare providers that conduct certain healthcare transactions electronically, which we refer to collectively as Covered Entities, as well as individuals or entities that perform services for them involving the use, or disclosure of, individually identifiable health information or "protected health information" under HIPAA.
+Added: Such service providers are called "Business Associates." Under HIPAA, as amended by the HITECH Act, HHS has issued regulations to protect the privacy and security of protected health information, or PHI, used or disclosed by Covered Entities and Business Associates.
+Added: HIPAA also regulates and standardizes the codes, formats and identifiers used in certain healthcare transactions and standardization of identifiers for health plans and providers, for example insurance billing.
+Added: Any non-compliance with HIPAA and HITECH and related penalties, could adversely impact our business.
+Added: The HIPAA security standards require the adoption of administrative, physical, and technical safeguards and the adoption of written security policies and procedures to maintain the security of protected health information.
+Added: The HIPAA privacy regulations address the privacy of PHI by limiting the use and release of such information.
+Added: They also set forth certain rights that an individual has with respect to his or her PHI maintained by a covered entity, including the right to access or amend certain records containing PHI, request an accounting of disclosures of PHI or to request restrictions on the use or disclosure of PHI.
+Added: Proposed modifications to the privacy regulations were published in January of 2021 with a public comment period that ended in May of 2021.
+Added: The content of any final rules and their potential impact on us is unknown.
The HIPAA breach notification regulations impose certain reporting requirements on covered entities and their business associates in the event of a breach of PHI.
−Removed: The HIPAA privacy and security regulations establish a uniform federal “floor” and do not preempt state laws that are more stringent or provide individuals with greater rights with respect to the privacy or security of, and access to, their records containing PHI or insofar as such state laws apply to personal information that is broader in scope than PHI.
−Removed: HIPAA authorizes state attorneys general to file suit on behalf of their residents for violations.
−Removed: Courts are able to award damages, costs and attorneys’ fees related to violations of HIPAA in such cases.
−Removed: While HIPAA does not create a private right of action allowing individuals to file suit against us in civil court for violations of HIPAA, its standards have been used as the basis for duty of care cases in state civil suits such as those for negligence or recklessness in the misuse or breach of PHI.
−Removed: In addition, HIPAA mandates that the Secretary of HHS conduct periodic compliance audits of HIPAA covered entities, such as us, and their business associates for compliance with the HIPAA privacy and security standards.
−Removed: It also tasks HHS with establishing a methodology whereby harmed individuals who were the victims of breaches of unsecured PHI may receive a percentage of the civil monetary penalty paid by the violator.
−Removed: Even when HIPAA does not apply, according to the FTC, failing to take appropriate steps to keep consumers’ personal information secure constitutes unfair acts or practices in or affecting commerce in violation of Section 5(a) of the Federal Trade Commission Act.
+Added: Covered entities must report breaches of PHI that has not been encrypted or otherwise secured in accordance with guidance from the Secretary of HHS, or the Secretary.
+Added: Breaches must be reported as soon as reasonably practicable, but no later than sixty days following discovery of the breach.
+Added: Reports must be made to affected individuals, the HHS Secretary, and depending on the size of the breach, the local and national media.
+Added: Covered Entities like us are also subject the HHS HIPAA audit program and may be investigated in connection with a privacy or data security complaint.
+Added: Significant civil and criminal fines and other penalties may be imposed for violating HIPAA directly, and in connection with acts or omissions of any agents, including a downstream business associates, as determined according to the federal common law of agency.
+Added: Civil penalties are adjusted for inflation on an annual basis and can exceed one million dollars per year for failure to comply with a HIPAA requirement.
+Added: A single breach incident can violate multiple requirements.
+Added: Additionally, a person who knowingly obtains or discloses PHI in violation of HIPAA may face a criminal penalties (including fines and imprisonment), which increase if the wrongful conduct involves false pretenses or the intent to sell, transfer or use PHI for commercial advantage, personal gain or malicious harm.
+Added: Covered entities are also subject to enforcement by state attorneys general who were given authority to enforce HIPAA.
+Added: Additionally, while HIPAA does not create a private right of action allowing individuals to file suit against us in civil court for violations of HIPAA, its standards have been used as the basis for duty of care cases in state civil suits such as those for negligence or recklessness in the misuse or breach of PHI.
+Added: Further, to the extent that we submit electronic healthcare claims and payment transactions that do not comply with the transaction standards established under HIPAA and HITECH, payments to us may be delayed or denied.
+Added: Even when HIPAA does not apply, according to the FTC, failing to take appropriate steps to keep consumers’ personal information secure constitutes unfair acts or practices in or affecting commerce in violation of Section 5(a)
+Added: of the Federal Trade Commission Act.
The FTC expects a company’s data security measures to be reasonable and appropriate in light of the sensitivity and volume of consumer information it holds, the size and complexity of its business, and the cost of available tools to improve security and reduce vulnerabilities.
Individually identifiable health information is considered sensitive data that merits stronger safeguards.
−Removed: In addition, certain state laws govern the privacy and security of health-related and other personal information in certain circumstances, some of which are more stringent than HIPAA and many of which differ from each other in significant ways and may not have the same effect, thus complicating compliance efforts.
−Removed: Failure to comply with these laws, where applicable, can result in the imposition of significant civil and/or criminal penalties and private
−Removed: The State of California, for example, recently adopted the California Consumer Privacy Act of 2018, or the CCPA, which went into effect January 1, 2020.
+Added: The FTC and states' Attorneys General have also brought enforcement actions and prosecuted some data breach cases as unfair and/or deceptive acts or practices under the FTC Act and comparable state laws.
+Added: The HIPAA privacy and security regulations establish a uniform federal "floor" and do not preempt state laws that are more stringent or provide individuals with greater rights with respect to the privacy or security of, and access to, their records containing PHI or insofar as such state laws apply to personal information that is broader in scope than PHI.
+Added: Certain state laws govern the privacy and security of health-related and other personal information in certain circumstances, some of which are more stringent than HIPAA and many of which differ from each other in significant ways and may not have the same effect, thus complicating compliance efforts.
+Added: Failure to comply with these laws, where applicable, can result in the imposition of significant civil and/or criminal penalties and private litigation.
+Added: The State of California, for example, has implemented comprehensive laws and regulations.
+Added: The California Confidentiality of Medical Information Act, or CMIA, imposes restrictive requirements regulating the use and disclosure of health information and other personally identifiable information.
+Added: California has also recently adopted the California Consumer Privacy Act of 2018, or the CCPA, which went into effect January 1, 2020.
The CCPA, among other things, creates new data privacy obligations for covered companies and provides new privacy rights to California residents, including the right to opt out of certain disclosures of their information.
1 unchanged sentence
The CCPA provides for civil penalties for violations, as well as a private right of action for data breaches that is expected to increase data breach litigation.
−Removed: Although the law includes limited exceptions, including for PHI maintained by a covered entity or business associate, it may regulate or impact our processing of personal information depending on the context.
+Added: Although the law includes limited exceptions, including for PHI maintained by a covered entity or business associate under HIPAA and medical information maintained by healthcare providers under the CMIA, it may regulate or impact our processing of personal information depending on the context.
Further, the California Privacy Rights Act, or CPRA, recently passed in California.
2 unchanged sentences
The majority of the provisions will go into effect on January 1, 2023, and additional compliance investment and potential business process changes may be required.
+Added: Numerous other federal and state laws, including consumer protection laws and regulations, govern the collection, dissemination, use, access to, confidentiality and security of patient health information.
+Added: In addition, Congress and some states are considering new laws and regulations that further protect the privacy and security of medical records or medical information.
+Added: With the recent increase in publicity regarding data breaches resulting in improper dissemination of consumer information, all 50 states have passed laws regulating the actions that a business must take if it experiences a data breach, as defined by state law, including prompt disclosure within a specified amount of time to affected individuals.
+Added: In addition to data breach notification laws, some states have enacted statutes and rules requiring businesses to reasonably protect certain types of personal information they hold or to otherwise comply with certain specified data security requirements for personal information.
+Added: Congress has also been considering similar federal legislation relating to data privacy and data protection.
+Added: Many states, such as Massachusetts, have also implemented genetic testing and privacy laws imposing specific patient consent requirements and requirements for protecting test results.
+Added: The interplay of federal and state laws regulating genetic information may be subject to varying interpretations by courts and government agencies, creating complex compliance issues for us and potentially exposing us to additional expense, adverse publicity, and liability.
+Added: Further, as regulatory focus on genetic privacy issues continues to increase and laws and regulations concerning the protection of personal information expand and become more complex, these potential risks to our business could intensify.
+Added: Information Blocking Rules
+Added: The National Coordinator for Health Information Technology, or ONC, coordinates the ongoing development of standards to enable interoperable health information technology infrastructure nationwide in the healthcare sector.
+Added: In May 2020, ONC released the final Information Blocking Rule to implement the interoperability and patient access provisions of the 21st Century Cures Act.
+Added: We will need to continually review our practices for conduct that could be considered as likely to interfere with access, exchange or use of electronic health information, as those practices are prohibited by the Information Blocking Rule, unless one of the exceptions outlined in the Information Blocking Rule applies.
+Added: Among other things, the Information Blocking Rule requires us to provide patients with on-demand access to laboratory test results.
+Added: These requirements can be inconsistent with our obligations as a laboratory under
+Added: state law and/or medical or ethical standards.
+Added: It is currently unclear how the ONC will approach delays in providing patient access in these situations.
+Added: Health care providers including laboratories will be subject to civil monetary penalties for violations of the Information Blocking Rule once the penalty regulations are finalized;
+Added: the proposed rule allows for up to $1 million in penalties per violation.
GDPR and Foreign Laws
18 unchanged sentences
Under Medicare, payment for our laboratory tests are generally made under the Clinical Laboratory Fee Schedule, or CLFS, with payment amounts assigned to specific procedure billing codes.
−Removed: In April 2014, Congress passed the Protecting Access to Medicare Act, or PAMA, which included substantial changes to the way in which clinical laboratory services will be paid under Medicare.
−Removed: Under PAMA, laboratories that receive the majority of their Medicare revenue from payments made under the CLFS or the Physician Fee Schedule are required to report to
−Removed: CMS, beginning in 2017 and every three years thereafter (or annually for “advanced diagnostic laboratory tests”), private payor payment rates and volumes for their tests.
+Added: In April 2014, Congress passed the Protecting Access to Medicare Act, or PAMA, which substantially changed the way in which Medicare sets the payment amounts for clinical laboratory services.
+Added: Under PAMA, laboratories that receive the majority of their Medicare revenue from payments made under the CLFS or the Physician Fee Schedule are required to report to CMS, beginning in 2017 and every three years thereafter (or annually for "advanced diagnostic laboratory tests"), private payor payment rates and volumes for their tests.
Laboratories that fail to report the required payment information may be subject to substantial civil monetary penalties.
2 unchanged sentences
For tests furnished on or after January 1, 2018, Medicare payments for clinical diagnostic laboratory tests are based upon these reported private payor rates.
−Removed: For clinical diagnostic laboratory tests that are assigned a new or substantially revised CPT code, initial payment rates will be assigned by the gap-fill methodology, as under prior law.
−Removed: Initial payment rates for new advanced diagnostic laboratory tests will be based on the actual list charge for the laboratory test.
−Removed: Any reductions to payment rates resulting from the new methodology are limited to 10% per test per year in each of the years 2018 through 2020 and to 15% per test per year in each of the years 2021 through 2023.
−Removed: At the beginning of 2020, PAMA’s impact on Medicare reimbursement for AVISE ® CTD was a reduction of 7.3% compared to levels experienced in 2019.
−Removed: Effective March 2020, as a result of our change in the composition of our AVISE ® CTD test, PAMA's impact on Medicare reimbursement for AVISE ® CTD was a reduction of 5.3% compared to levels experienced in 2019.
−Removed: We do not expect PAMA to impact Medicare reimbursement for AVISE ® CTD in 2021 compared to levels experienced in 2020.
+Added: For clinical diagnostic laboratory tests, or CDLTs, that are assigned a new or substantially revised CPT code, CMS will set the initial payment rates using the gap-fill
+Added: methodology, as under prior law.
+Added: Initial payment rates for new advanced diagnostic laboratory tests, or ADLTs, will be based on the actual list charge.
+Added: Any reductions to payment rates resulting from the new methodology are limited to up to 10% per test per year in each of the years 2018 through 2020 and up to 15% per test per year in each of the years 2021 through 2023.
+Added: PAMA did not impact Medicare reimbursement for AVISE ® CTD in 2021 compared to levels experienced in 2020.
+Added: Additionally, PAMA and changes to the Physician Fee Schedule will not have a significant impact to Medicare reimbursement for AVISE ® CTD in 2022 compared to levels experienced in 2021.
The Coronavirus Aid, Relief, and Economic Security Act, or the CARES Act, signed into law on March 27, 2020 provides clinical laboratories a one-year reprieve from reporting requirements under the Protecting Access to Medicare Act, as well as a one-year delay of rate cuts scheduled to take place next year.
1 unchanged sentence
Instead, it is required between January 1, 2023 and March 31, 2023.
−Removed: Additionally, the next round of rate cuts was pushed from 2021 to 2022, with tests receiving cuts of up to 15% a year from 2022 through 2024.
−Removed: PAMA also authorizes the adoption of new, temporary billing codes and unique test identifiers for FDA-cleared or approved tests, as well as advanced diagnostic laboratory tests.
+Added: Additionally, the next round of rate cuts was delayed until 2022 to 2023, with tests receiving cuts of up to 15% a year from 2023 through 2025.
+Added: On December 20, 2019, the Further Consolidated Appropriations Act, which included the Laboratory Access for Beneficiaries Act, or LAB Act, took effect.
+Added: The LAB Act delayed by one year the reporting of payment data under PAMA for CDLTs that are not ADLTs until the first quarter of 2021.
+Added: The Coronavirus Aid, Relief, and Economic Security Act, or the CARES Act, which was signed into law on March 27, 2020, delayed the reporting period by an additional year, until the first quarter of 2022.
+Added: Then, on December 10, 2021, Congress passed the Protecting Medicare and American Farmers from Sequester Cuts Act, which included a provision that further delayed the next PAMA reporting period for CDLTs that are not ADLTs to January 1, 2023 through March 31, 2023.
+Added: New CLFS rates for CDLTs will be established based on that data beginning in 2024, subject to phase-in limits.
+Added: As a result, Medicare payment rates determined by data reported in 2017 will continue through December 31, 2023.
+Added: In addition, under PAMA, as amended, the payment reduction cap will be 15% per test per year in each of the years 2023 through 2025.
+Added: PAMA also authorized the adoption of new, temporary billing codes and unique test identifiers for FDA-cleared or approved tests, as well as ADLTs.
The AMA’s CPT Editorial Panel has approved a proposal to create a new section of billing codes to facilitate implementation of this section of PAMA.
−Removed: These proprietary laboratory analyses codes, or PLA codes, may be requested by a clinical laboratory or manufacturer to specifically identify their test.
−Removed: If approved, the codes are issued by the AMA on a quarterly basis.
+Added: These proprietary laboratory analyses codes, or PLA codes, may be requested by a clinical laboratory or manufacturer to specifically identify a particular test.
+Added: The AMA publishes approved codes on a quarterly basis.
While our testing products are not presently identified by any PLA codes, we may seek a specific PLA code or codes to describe some of our testing products in the future.
3 unchanged sentences
Changes in laws and regulations could negatively impact our ability to bill our clients or increase our costs.
−Removed: CMS also establishes new procedures and continuously evaluates and implements changes to the reimbursement process for billing government programs.
+Added: CMS also establishes new procedures and continuously evaluates and implements changes to the reimbursement process for billing government healthcare programs.
Missing or incorrect information on test requisitions adds complexity to and slows the billing process, creates backlogs of unbilled tests, and generally increases the aging of accounts receivable and bad debt expense.
8 unchanged sentences
Healthcare Reform
−Removed: In March 2010, the ACA was enacted in the U.S.
−Removed: The ACA made a number of substantial changes to the way healthcare is financed by governmental and private insurers.
−Removed: The ACA, among other things, included provisions governing enrollment in federal and state healthcare programs, reimbursement matters and fraud and abuse, which we expect will impact our industry and our operations in ways that we cannot currently predict.
−Removed: Additionally, on December 14, 2018, a U.S.
−Removed: District Court Judge in the Northern District of Texas, or Texas District Court Judge, ruled that the entire ACA is invalid based primarily on the fact that the Tax Cuts and Jobs Act of 2017 repealed the tax-based shared responsibility payment imposed by the ACA, on certain individuals who fail to maintain qualifying
−Removed: health coverage for all or part of a year, which is commonly referred to as the “individual mandate”.
−Removed: On December 18, 2019, the U.S.
−Removed: Court of Appeals for the 5th Circuit upheld the district court’s decision that the individual mandate was unconstitutional but remanded the case back to the District Court to determine whether the remaining provisions of the ACA are invalid as well.
−Removed: Supreme Court is currently reviewing the case, although it is unclear how the Supreme Court will rule.
−Removed: It is also unclear how other efforts, if any, to challenge, repeal or replace the ACA will impact the ACA.
+Added: In March 2010, the ACA was enacted in the United States.
+Added: The ACA made a number of substantial changes to the way healthcare is financed both by governmental and private payors.
+Added: Although the ACA included a medical device tax, the tax never went into effect and was fully repealed by Congress with enactment of the 2019 federal spending package signed into law by President Trump on December 20, 2019.
+Added: Since the ACA’s enactment, there have been judicial and Congressional challenges to certain aspects of the ACA, and as a result, certain sections of the ACA have not been fully implemented or were effectively repealed.
+Added: following several years of litigation in the federal courts, in June 2021, the United States Supreme Court, or the Supreme Court, upheld the ACA when it dismissed a legal challenge to the Act’s constitutionality.
+Added: Further legislative and regulatory changes under the ACA remain possible, although the new Democrat-led presidential administration has been taking steps to strengthen the ACA and the 117th Congress is not expected to have the same interest in repealing the law, in part due to the healthcare economic impacts of the ongoing COVID-19 pandemic on many subsets of the U.S.
+Added: Future changes or additions to the ACA, the Medicare and Medicaid programs, such as changes allowing the federal government to directly negotiate drug prices, and changes stemming from other healthcare reform measures, especially with regard to healthcare access, financing or other legislation in individual states, could have a material adverse effect on the healthcare industry in the U.S.
+Added: The uncertainty around the future of the ACA, and in particular the impact to reimbursement levels and the number of insured individuals, may lead to delay in the purchasing decisions of our customers.
Other legislative changes have been proposed and adopted since the ACA was enacted.
−Removed: These changes include aggregate reductions to Medicare payments to providers of 2% per fiscal year pursuant to the Budget Control Act of 2011, which went into effect on April 1, 2013, and due to subsequent legislative amendments to the statute, will remain in effect through 2030, with the exception of a temporary suspension from May 1, 2020 through March 31, 2021, unless additional Congressional action is taken.
−Removed: The American Taxpayer Relief Act of 2012, among other things, further reduced Medicare payments to several providers, including hospitals and cancer treatment centers, and increased the statute of limitations period for the government to recover overpayments to providers from three to five years.
−Removed: Additional state and federal health care reform measures may also be adopted in the future, any of which could have a material adverse effect on the clinical laboratory industry.
+Added: These changes include aggregate reductions to Medicare payments to providers of 2% per fiscal year pursuant to the Budget Control Act of 2011, which went into effect on April 1, 2013, and due to subsequent legislative amendments to the statute, will remain in effect through 2030, unless additional Congressional action is taken.
+Added: The Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act") which was signed into law on March 27, 2020, designed to provide financial support and resources to individuals and businesses affected by the COVID-19 pandemic, suspended the 2% Medicare sequester from May 1, 2020 through December 31, 2020, and extended the sequester by one year, through 2030, in order to offset the added expense of the 2020 cancellation.
+Added: Congress subsequently extended the sequester suspension period to June 30, 2022, with a 1% sequester in effect from April 1, 2022 to June 30, 2022.
+Added: In addition, the American Taxpayer Relief Act of 2012, among other things, further reduced Medicare payments to certain providers and increased the statute of limitations period for the government to recover overpayments to providers from three to five years.
+Added: Additional state and federal healthcare reform measures may also be adopted in the future, any of which could have a material adverse effect on the clinical laboratory industry.
+Added: Environmental and Other Regulatory Requirements
+Added: Our laboratory is subject on an ongoing basis to federal, state and local laws and regulations governing the use, storage, handling and disposal of regulated medical waste, hazardous waste and biohazardous waste, including chemicals, biological agents and compounds and blood and other tissue specimens.
+Added: Typically, we use licensed or otherwise qualified outside vendors to dispose of this waste.
+Added: However, many of these laws and regulations provide for strict liability, holding a party potentially liable without regard to fault or negligence.
+Added: As a result, we could be held liable for damages and fines if our, or others', business operations or other actions result in contamination of the environment or personal injury due to exposure to hazardous materials.
+Added: Our costs for complying with these laws and regulations cannot be estimated or predicted and depends on a number of factors, including the amount and nature of waste we produce (which depends in part on the number of tests we perform) and the terms we negotiate with our waste disposal vendors.
+Added: In 2021, we disposed of all hazardous and/or medical waste that we produced across our entire business through environmentally sound methods.
+Added: Our operations are also subject to extensive requirements established by the U.S.
+Added: Occupational Safety and Health Administration relating to workplace safety for healthcare employees, including requirements to develop and implement programs to protect workers from exposure to blood-borne pathogens by preventing or minimizing any exposure through needle stick or similar penetrating injuries.
Human Capital
14 unchanged sentences
We plan to continue to refine our efforts related to optimizing our use of human capital as we grow, including improvements in the way we hire, develop, motivate and retain employees.
+Added: To address the safety and health of our workforce due to the COVID-19 pandemic, we created a committee consisting of six members of our management team and implemented the following, among other steps:
+Added: • Established new safety protocols and procedures;
+Added: • Maintained regular communication regarding the impacts of the pandemic on our employees and operations;
+Added: • Developed and distributed a playbook to guide the safe return to offices, communities, and work sites;
+Added: • Provided paid time-off for those directly impacted by COVID-19, and instructed those who were infected to stay home;
+Added: • Increased sanitation protocols across the entire campus;
+Added: • Established physical distancing procedures, modified workspaces;
+Added: and provided personal protective equipment and cleaning supplies for employees who needed to be onsite;
+Added: • Created and refined protocols to address actual and suspected COVID-19 cases and potential exposures of our employees, customers, and trade partners.
+Added: We conduct periodic anonymous employee surveys aimed at measuring the overall satisfaction of our team and address issues brought to our attention, such as adherence to social distancing standards and vaccination acceptance.
+Added: The results consistently show that our employees believe in our mandate and consider their work valuable and meaningful.
+Added: Diversity and Inclusion
+Added: Our organization recognizes the importance of diversity and inclusion in recruiting, developing and retaining the best available talent.
+Added: We are committed to further understand and build upon our diversity and inclusion strengths and are in the process of identifying opportunities and developing initiatives.
+Added: As of December 31, 2021, our employees were 59.5% female and 40.5% male.
+Added: Our overall employee population as of December 31, 2021 was 57.6% White, 20.7% Hispanic or Latino, 13.2% Asian, 3.5% Native Hawaiian or other Pacific Islander, 3.0% Black or African-American and 2.0% two or more races (not Hispanic or Latino) and other.
+Added: In executive positions, which we define as Senior Vice President and above, our employee population as of December 31, 2021 was 85.7% White and 14.3% Asian.
+Added: Females represented 28.5% of employees in executive positions.
+Added: In addition, three of our nine Board of Directors are female and two directors are Hispanic or Latino as of December 31, 2021.
+Added: We are continuing to further assess and understand additional measures of diversity.
+Added: Environmental, Social and Governance Matters
+Added: In 2020, we undertook a review of our environmental, social and governance, or ESG, matters.
+Added: In 2021, we released our initial Sustainability Report.
+Added: In 2022, we created an Environmental, Social and Governance Committee, or the ESG Committee, with the purpose, duties and responsibility to reviewing and recommending our ESG programs, policies and practices relating to ESG issues.
+Added: The ESG Committee meets formally at least quarterly and plans to make recommendations to our President and Chief Executive Officer to be presented to the Audit Committee of our Board of Directors.
+Added: For more information regarding our ESG initiatives, please refer to www.exagen.com/investors.
We rely on sole suppliers for the critical supply of reagents, equipment and other materials that we use to perform the tests that comprise our AVISE ® testing products.
16 unchanged sentences
Our filings with the SEC are available free of charge on the SEC’s website at www.sec.gov and on the "Investors" section of our website as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC.
−Removed: You may also read and copy, at SEC prescribed rates, any document we file with the SEC at the SEC’s Public Reference Room located at 100 F Street, N.E., Washington D.C.
−Removed: You can call the SEC at 1-800-SEC-0330 to obtain information on the operation of the Public Reference Room.
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.