Biodesix (BDSX) risk factors, FY2024 10-K

Risks Related to our Business and Industry

1. 01We have a history of net losses, and we expect to continue to incur losses for the foreseeable future. If we achieve profitability, we may not be able to sustain it
2. 02The commercial success of our current and future diagnostic tests and services and our revenue growth depends upon attaining significant market acceptance among payers, providers, clinics, patients, and biopharmaceutical companies
3. 03limitations or warnings contained in the labeling cleared or approved by the FDA or other regulatory authorities or conformity assessment bodies
4. 04We may encounter difficulties in managing our growth, which could disrupt our operations
5. 05If we fail to retain sales and marketing personnel and, as we grow, fail to increase our sales and marketing capabilities or develop broad awareness of our diagnostic tests in a cost-effective manner, we may not be able to generate revenue growth
6. 06If we cannot maintain our current relationships, or enter into new relationships, with biopharmaceutical companies, our revenue prospects could be reduced
7. 07our biopharmaceutical customers may also fluctuate in the future, which could have a material adverse effect on our financial condition and results of operations. In addition, the termination of these relationships could result in a temporary or permanent loss of revenue
8. 08Our operating results may fluctuate significantly, which makes our future operating results difficult to predict and could cause our operating results to fall below expectations or any guidance we may provide
9. 09general market conditions
10. 10necessarily indicative of results expected for any future period, and quarterly results are not necessarily indicative of the results to be expected for the full year or any other period, and accordingly should not be relied upon as indicative of future performance
11. 11We need to ensure strong product performance and reliability to maintain and grow our business
12. 12We depend upon third-party suppliers, including single source suppliers, making us vulnerable to supply problems and price fluctuations
13. 13We may not be able to sufficiently reduce costs in the performance, manufacturing and production of our diagnostic tests to achieve sustainable gross margins
14. 14Natural or man-made disasters and other similar events may significantly disrupt our business, and negatively impact our business, financial condition and results of operations
15. 15Any failure to offer high-quality support for our diagnostic tests and services may adversely affect our relationships with providers and negatively impact our reputation among patients and providers, which may adversely affect our business, financial condition and results of operations
16. 16The sizes of the markets for our diagnostic tests and services and any future diagnostic tests and services may be smaller than we estimate and may decline
17. 17Our industry is subject to rapid change, which could make our solutions and the diagnostic tests we develop and services we offer, obsolete. If we are unable to continue to innovate and improve our diagnostic tests and services we offer, we could lose customers or market share
18. 18We may face additional costs, loss of revenue, significant liabilities, harm to our brand, decreased use of our products or services and business disruption if there are any security or data privacy breaches or other unauthorized or improper access
19. 19We have significant payer concentration, with a limited number of customers accounting for a substantial portion of our revenues
20. 20Our results of operations will be materially harmed if we are unable to accurately forecast customer demand for, and utilization of, our diagnostic tests and manage our inventory
21. 21If we experience significant disruptions in our information technology systems, our business may be adversely affected
22. 22exhaustion of any available insurance and our capital resources
23. 23We face competition from many sources, including larger companies, and we may be unable to compete successfully
24. 24greater financial and human resources for product development, sales and marketing and patent litigation
25. 25cost-effectively manufacture our diagnostic tests and their component parts as well as drive down the cost of service
26. 26Performance issues, service interruptions or price increases by our shipping carriers and warehousing providers could adversely affect our business and harm our reputation and ability to provide our services on a timely basis
27. 27Cost-containment efforts of our customers, purchasing groups and governmental purchasing organizations could have a material adverse effect on our sales and profitability
28. 28Litigation and other legal proceedings may adversely affect our business
29. 29General economic and financial market conditions may exacerbate our business risks
30. 30We may not realize the benefits or costs of our Co-Development and Collaboration Agreement with AVEO Oncology
31. 31We are exposed to significant future payments and other obligations associated with our acquisition of Oncimmune, U.S.A., and may not realize the advantages we expect from this acquisition
32. 32We are highly dependent on our senior management team and key personnel, and our business could be harmed if we are unable to attract and retain personnel necessary for our success
33. 33Our research and development programs and laboratory operations depend on our ability to attract and retain highly skilled scientists and technicians
34. 34Our corporate culture has contributed to our success, and if we cannot maintain this culture as we grow, we could lose the innovation, creativity and teamwork fostered by our culture and our business may be harmed
35. 35Our ability to utilize our net operating loss carryforwards and research and development credit may be limited
36. 36The terms of the Perceptive Term Loan Facility require us to meet certain operating and financial covenants and place restrictions on our operating and financial flexibility. If we raise additional capital through debt financing, the terms of any new debt could further restrict our ability to operate our business
37. 37to refinance long-term debt. The Perceptive Term Loan Facility provides for an “interest-only” period during the term of the loan with principal due at the maturity date, which will be November 21, 2027
38. 38We will need to raise additional capital to fund our existing operations, develop our platform, commercialize new diagnostic tests or expand our operations
39. 39finance capital expenditures and general and administrative expenses
40. 40the potential cost of and delays in product development as a result of any regulatory oversight applicable to our diagnostic tests
41. 41We may acquire other businesses, which could require significant management attention, disrupt our business, dilute stockholder value and adversely affect our results of operations
42. 42A pandemic, epidemic or outbreak of an infectious disease in the United States or worldwide and its variants could adversely affect our business

Risks Related to our Governmental Regulation

1. 43constraints, discounts, restrictions on certain product access and marketing cost disclosure and transparency measures, which are, in some cases, designed to encourage importation from other countries and bulk purchasing
2. 44Measures to reduce healthcare costs may hurt our business
3. 45Healthcare reform measures could hinder or prevent the commercial success of our diagnostic tests
4. 46the availability of capital
5. 47We must comply with anti-corruption, anti-bribery, anti-money laundering and similar laws
6. 48We must comply with healthcare fraud and abuse laws
7. 49analogous state and foreign laws and regulations, such as state anti-kickback and false claims laws, may apply to sales or marketing arrangements and claims involving healthcare items or services reimbursed by non-governmental third-party payers, including private insurers
8. 50FDA regulation of our industry generally or our tests specifically could be disruptive to our business
9. 51Failure to comply with federal, state and foreign laboratory licensing requirements and the applicable requirements of the FDA or any other regulatory authority, could cause us to lose the ability to perform our tests, experience disruptions to our business, or become subject to administrative or judicial sanctions
10. 52Sanctions for failure to comply with CLIA requirements, including proficiency testing violations, may include suspension, revocation, or limitation of a laboratory’s CLIA certificate, which is necessary to conduct our business, as well as the imposition of significant fines or criminal penalties
11. 53FDA is phasing out its general policy of enforcement discretion and will regulate laboratory developed tests as medical devices
12. 54We believe that our tests, as utilized in our clinical laboratory, are and would be considered LDTs and that as a result, the FDA does not require that we obtain regulatory clearances or approvals for our LDTs or their components pursuant to the FDA’s current policies and guidance
13. 55product import and export
14. 56the potential for approval policies or regulations of the FDA or applicable foreign regulatory bodies to change significantly in a manner rendering our clinical data or regulatory filings insufficient for clearance or approval
15. 57As discussed above, we believe that our current line of diagnostic tests and their components are LDTs, which are subject to state licensing requirements and federal regulation by CMS under CLIA, which may cause us to be subject to additional FDA regulations discussed above
16. 58provide adequate training to potential users of our diagnostic tests
17. 59Modifications to our marketed tests may require new 510(k) clearances, De Novo authorizations, or PMA approvals, or may require us to cease marketing or recall the modified tests until clearances or approvals are obtained
18. 60If we or our suppliers fail to comply with ongoing FDA or other domestic and foreign regulatory authority or conformity assessment body requirements, or if we experience unanticipated problems with our diagnostic tests, they could be subject to restrictions or withdrawal from the market
19. 61Our diagnostic tests and services may in the future be subject to product recalls that could harm our reputation, business and financial results
20. 62Legislative or regulatory reforms may make it more difficult and costly for us to obtain regulatory clearance or approval or certification of any future diagnostic tests and to manufacture, market and distribute our diagnostic tests after clearance or approval is obtained
21. 63If the third parties on which we rely to conduct our clinical trials and to assist us with pre-clinical development do not perform as contractually required or expected, we may not be able to obtain regulatory clearance or approval or certification for or commercialize our diagnostic tests and services
22. 64may be adversely affected. Furthermore, our third-party clinical trial investigators may be delayed in conducting our clinical trials for reasons outside of their control
23. 65HIPAA requires CEs and BAs, such as us, to develop and maintain policies with respect to the protection of, use and disclosure of electronic PHI, including the adoption of administrative, physical and technical safeguards to protect such information, and certain notification requirements in the event of a data breach
24. 66Complying with these various laws and regulations could cause us to incur substantial costs or require us to change our business practices, systems and compliance procedures in a manner adverse to our business
25. 67The EU GDPR also provides that EU Member States may make their own further laws and regulations limiting the processing of personal data, including genetic, biometric or health data, which could limit our ability to use and share such personal data and cause our costs to increase and harm our financial condition
26. 68Our employees, collaborators, independent contractors and consultants may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements
27. 69laws that require the true, complete and accurate reporting of financial information or data
28. 70Clinical development involves a lengthy and expensive process with an uncertain outcome, and results of earlier studies and trials may not be predictive of future trial results
29. 71The results of our clinical trials may not support our product candidate claims or may result in the discovery of adverse side effects
30. 72Our billing, collections and claims processing activities are complex and time-consuming, and any delay in transmitting and collecting claims or failure to comply with applicable billing requirements, could have an adverse effect on our future revenue
31. 73the resources required to manage the billing and claims appeals process
32. 74We and our third-party manufacturers and suppliers must comply with environmental, health and safety laws and regulations, which can be expensive and restrict how we do, or interrupt our, business

Risks Related to our Intellectual Property

1. 75Our success may be impaired if we are unable to obtain, maintain and protect our intellectual property rights
2. 76allow us to gain or maintain a competitive advantage
3. 77If we are unable to protect the confidentiality of our trade secrets, our business and competitive position may be harmed
4. 78Changes in patent law could diminish the value of patents in general, thereby impairing our ability to protect our existing and future diagnostic tests, products and services
5. 79If our trademarks and trade names are not adequately protected, then we may not be able to build name recognition in our markets and our business may be adversely affected
6. 80We may become involved in lawsuits to protect or enforce our patents, the patents of our licensors or other intellectual property rights, which could be expensive, time consuming and unsuccessful
7. 81Third parties may initiate legal proceedings alleging that we are infringing, misappropriating, or otherwise violating their intellectual property rights, the outcome of which would be uncertain and could have a material adverse effect on the success of our business
8. 82We could incur substantial costs and divert the attention of our management and technical personnel in defending against any of these claims. Parties making claims against us may be able to sustain the costs of complex patent litigation more effectively than we can because they have substantially greater resources
9. 83We may be subject to claims challenging the priority or inventorship of our patents and other intellectual property rights
10. 84Obtaining and maintaining our patent protection depends on compliance with various required procedures, document submissions, fee payments and other requirements imposed by governmental patent agencies, and our patent protection could be reduced or eliminated for non-compliance with these requirements
11. 85Issued patents covering our diagnostic tests and any other or future diagnostic tests, products or services could be found invalid or unenforceable if challenged
12. 86We may not be aware of all third-party intellectual property rights potentially relating to our current or future diagnostic tests, products or services
13. 87We rely on licenses from third parties in relation to certain diagnostic tests, products and services and if we lose these licenses then we may be subjected to future litigation
14. 88Any of the foregoing could have a material adverse effect on our competitive position, business, financial conditions, results of operations and prospects
15. 89If we do not prevail in such disputes, we may lose any or all of our rights under such license agreements
16. 90Patent terms may be inadequate to protect our competitive position on our diagnostic tests, products and services for an adequate amount of time
17. 91Third parties may attempt to commercialize competitive diagnostic tests, products or services in foreign countries where we do not have any patents or patent applications and/or where legal recourse may be limited. This may have a significant commercial impact on our foreign business operations
18. 92Intellectual property rights do not necessarily address all potential threats
19. 93We expect that the price of our common stock will fluctuate substantially and you may not be able to sell your shares at or above the price you paid for them
20. 94general market conditions and other factors, including factors unrelated to our operating performance or the operating performance of our competitors
21. 95Securities analysts may not publish favorable research or reports about our business or may publish no information at all, which could cause our stock price or trading volume to decline
22. 96We are an “emerging growth company” and a “smaller reporting company,” and the reduced disclosure requirements applicable to emerging growth companies and smaller reporting companies may make our common stock less attractive to investors
23. 97Section 7(a)(2)(B) of the Securities Act, for complying with new or revised accounting standards. In other words, an “emerging growth company” can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies
24. 98If our estimates or judgments relating to our critical accounting policies are based on assumptions that change or prove to be incorrect, our operating results could fall below the expectations of securities analysts and investors, resulting in a decline in the market price of our common stock
25. 99Our directors, officers and principal stockholders have significant voting power and may take actions that may not be in the best interests of our other stockholders
26. 100Operating as a public company requires us to incur substantial costs and requires substantial management attention
27. 101the possibility that any enhancements to controls and procedures may still not be adequate to assure timely and accurate financial control
28. 102Our disclosure controls and procedures may not prevent or detect all errors or acts of fraud
29. 103Provisions in our corporate charter documents and under Delaware law could make an acquisition of us more difficult and may prevent attempts by our stockholders to replace or remove our current management
30. 104with us for a period of three years after the date of the transaction in which the person acquired in excess of 15% of our outstanding voting stock, unless the merger or combination is approved in a prescribed manner
31. 105Our amended and restated articles of incorporation provide that we will indemnify our directors and officers to the fullest extent permitted by Section 145 of the Delaware General Corporate Law
32. 106We have never paid dividends on our capital stock, and we do not anticipate paying dividends in the foreseeable future
33. 107Risk Management and Strategy
34. 108Current Cybersecurity Risks
35. 109Management and Board Oversight