UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-K
(Mark
One)
For
the fiscal year ended December 31, 2025.
OR
For
transition period from ____ to ____.
Commission
file number 001-41463
bioAffinity
Technologies, Inc.
(Exact
name of registrant as specified in its charter)
(Address of principal executive offices) (Zip Code)
(210)698-5334
(Registrant’s
telephone number, including area code)
Securities
registered pursuant to Section 12(b) of the Act:
Title of each class Trading Symbol(s) Name of each exchange on which registered
Common stock, par value $0.007 per share BIAF The Nasdaq Stock Market LLC
Tradeable Warrants to purchase Common Stock BIAFW The Nasdaq Stock Market LLC
Securities
registered pursuant to section 12(g) of the Act: None.
Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes
☐ No ☒
Indicate
by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
Yes
☐ No ☒
Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes
☒ No ☐
Indicate
by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule
405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant
was required to submit such files).
Yes
☒ No ☐
Indicate
by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting
company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,”
“smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☐ Accelerated filer ☐
Non-accelerated filer ☒ Smaller reporting company ☒
Emerging growth company ☒
If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate
by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness
of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered
public accounting firm that prepared or issued its audit report. ☐
If
securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant
included in the filing reflect the correction of an error to previously issued financial statements. ☐
Indicate
by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation
received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒
As
of June 30, 2025, the last business day of the registrant’s most recently completed second fiscal quarter, the aggregate market
value of the voting and non-voting common equity held by non-affiliates of the registrant, based on the closing price of a share of the
registrant’s common stock on that date, as reported by the Nasdaq Capital Market on such date was approximately $22.6 million.
Shares of the registrant’s common stock held by each executive officer, director and holder of 5% or more of the outstanding common
stock have been excluded in that such persons may be deemed to be affiliates. This calculation does not reflect a determination that
certain persons are affiliates of the registrant for any other purpose.
The
number of shares outstanding of the issuer’s common stock, $0.007 par value (the “Common Stock”), is 4,498,675 as
of March 13, 2026.
DOCUMENTS
INCORPORATED BY REFERENCE
Portions
of the registrant’s definitive proxy statement relating to the 2026 annual meeting of stockholders are incorporated by reference
into Part III of this Annual Report on Form 10-K where indicated. Such definitive proxy statement will be filed with the Securities and
Exchange Commission within 120 days after the end of the registrant’s fiscal year ended December 31, 2025 (the “Proxy Statement”).
TABLE
OF CONTENTS
Page
Cautionary Note Regarding Forward-Looking Statements 3
PART I
Item 1. Business 7
Item 1A. Risk Factors 25
Item 1B. Unresolved Staff Comments 52
Item 1C. Cybersecurity 53
Item 2. Properties 54
Item 3. Legal Proceedings 54
Item 4. Mine Safety Disclosures 54
PART II
Item 6. [Reserved] 55
Item 7A. Quantitative and Qualitative Disclosures About Market Risk 62
Item 8. Financial Statements and Supplementary Data 62
Item 9A. Controls and Procedures 63
Item 9B. Other Information 63
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections 63
PART III
Item 10. Directors, Executive Officers and Corporate Governance 64
Item 11. Executive Compensation 64
Item 14. Principal Accountant Fees and Services 64
PART IV
Item 15. Exhibit and Financial Statement Schedules 65
Signatures 71
Throughout
this Annual Report on Form 10-K (the “Annual Report”), the terms “bioAffinity,” “bioAffinity Technologies,”
“we,” “us,” “our” or “Company” refer to bioAffinity Technologies, Inc., a Delaware corporation,
and its wholly owned subsidiaries, OncoSelect® Therapeutics, LLC, a Delaware limited liability company, and Precision
Pathology Laboratory Services, LLC, a Texas limited liability company.
CAUTIONARY
NOTE REGARDING FORWARD-LOOKING STATEMENTS
This
Annual Report contains forward-looking statements within the meaning of the federal securities laws. Forward-looking statements are predictive
in nature, depend on or refer to future events or conditions, and are sometimes identified by words such as “may,” “could,”
“plan,” “project,” “predict,” “pursue,” “believe,” “expect,”
“estimate,” “anticipate,” “intend,” “target,” “seek,” “potentially,”
“will likely result,” “outlook,” “budget, “objective,” “trend,” or similar expressions
of a forward-looking nature and the negative versions of such expressions. The forward-looking information contained in this report is
generally located under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations”
but may be found in other locations as well. The forward-looking statements in this report generally relate to the plans and objectives
for future operations of bioAffinity Technologies, Inc. and are based on our management’s reasonable estimates of future results
or trends. Although we believe these forward-looking statements are reasonable, all forward-looking statements are subject to various
risks and uncertainties, and our projections and expectations may be incorrect. The factors that may affect our expectations regarding
our operations include, among others, the following:
● our projected financial position and estimated cash burn rate;
● our estimates regarding expenses, future revenues, and capital requirements;
● the success, cost, and timing of our clinical trials;
● our dependence on third parties in the conduct of our clinical trials;
● the results of market research conducted by us or others;
● our reliance on third parties;
● our anticipated uses of net proceeds from our financings;
● the increased expenses associated with being a public company; and
● other factors discussed elsewhere in this Annual Report.
Many
of the foregoing risks and uncertainties, as well as risks and uncertainties that are currently unknown to us, are or may be exacerbated
by factors such as the ongoing conflict between Ukraine and Russia, escalating tensions between China and Taiwan, conflict in the Middle
East, increasing economic uncertainty and inflationary pressures, and any consequent worsening of the global business and economic environment.
New factors emerge from time to time, and it is not possible for us to predict all such factors. Should one or more of the risks or uncertainties
described in this Annual Report or any other filing with the Securities and Exchange Commission (the “SEC”) occur or should
the assumptions underlying the forward-looking statements we make herein and therein prove incorrect, our actual results and plans could
differ materially from those expressed in any forward-looking statements. We undertake no obligation to update publicly any forward-looking
statements, whether as a result of new information, future events, or otherwise, except as required by law.
You
should read this Annual Report and the documents that we reference within it with the understanding that our actual future results, performance,
and events and circumstances may be materially different from what we expect.
Website
and Social Media Disclosure
We
use our websites (www.bioaffinitytech.com, ir.bioaffinitytech.com, www.cypathlung.com and www.precisionpath.us) to share Company information.
Information contained on or that can be accessed through our websites is not, however, incorporated by reference in this Annual Report.
Investors should not consider any such information to be part of this Annual Report.
Forward-Looking
Statements
This
Annual Report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities
Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), that involve substantial
risks and uncertainties. The forward-looking statements are contained principally in Part I, Item 1. “Business,” Part I,
Item 1A. “Risk Factors,” and Part II, Item 7. “Management’s Discussion and Analysis of Financial Condition and
Results of Operations,” but are also contained elsewhere in this Annual Report. In some cases, you can identify forward-looking
statements by terminology such as “may,” “should,” “potential,” “continue,” “expects,”
“anticipates,” “intends,” “plans,” “believes,” “estimates,” and similar expressions.
These statements are based on our current beliefs, expectations, and assumptions and are subject to a number of risks and uncertainties,
many of which are difficult to predict and generally beyond our control, that could cause actual results to differ materially from those
expressed, projected, or implied in or by the forward-looking statements.
You
should refer to Item 1A. “Risk Factors” section of this Annual Report for a discussion of important factors that may cause
our actual results to differ materially from those expressed or implied by our forward-looking statements. As a result of these factors,
we cannot assure you that the forward-looking statements in this Annual Report will prove to be accurate. Furthermore, if our forward-looking
statements prove to be inaccurate, the inaccuracy may be material. In light of the significant uncertainties in these forward-looking
statements, you should not regard these statements as a representation or warranty by us or any other person that we will achieve our
objectives and plans in any specified time frame, or at all. We do not undertake any obligation to update any forward-looking statements.
Unless the context requires otherwise, references to “we,” “us,” “our,” and “bioAffinity,”
refer to bioAffinity Technologies, Inc. and its subsidiaries.
Summary
of Risk Factors
Risks
Related to Our Financial Position
Risks
Related to Development and Commercialization of Our Diagnostic Tests
● Clinical trials are expensive, time-consuming, and may not be successful.
Risks
Related to the Operation of Our Commercial Laboratory Accredited by the College of American Pathologists (“CAP”) and the
U.S. Centers for Medicare and Medicaid (“CMS”) in Accordance with the Clinical Laboratory Improvements Amendments of 1988
(“CLIA”).
Risks
Related to Intellectual Property Rights
● Our competitive position depends on protection of our IP.
● We may become involved in lawsuits to protect or enforce our IP.
● Issued patents could be found invalid or unenforceable.
● If we do not obtain patent term extension, our business may be harmed.
● We enjoy only limited geographical protection with respect to certain patents.
Risks
Related to Government Regulations
Risks
Related to Ownership of Our Common Stock and Warrants
● An investment in our Company may involve tax implications.
PART
I
Item
1. Business
Business
Overview
We
develop noninvasive diagnostic laboratory tests to detect early-stage lung cancer and other diseases of the lung using flow cytometry
and automated analysis informed by machine learning, a form of artificial intelligence (AI). Our first commercial diagnostic test,
CyPath® Lung, identifies and analyzes cell populations using flow cytometry, including cancer and cancer-related cells,
that indicate a malignancy in the lung.
CyPath®
Lung addresses the need for noninvasive detection of early-stage lung cancer with the proven ability to detect the leading cancer
killer at its curative Stage 1A. Lung cancer is the leading cause of cancer-related deaths worldwide. Physicians order
CyPath® Lung to assist in their assessment of patients who are at high risk for lung cancer. The
CyPath® Lung test enables physicians to more confidently identify patients who will likely benefit from timely
intervention and more invasive follow-up procedures or those patients who are likely without lung cancer and should continue
screening in accordance with guidelines. For patients with small pulmonary nodules less than 20 millimeters (mm),
CyPath® Lung has shown 92% sensitivity and 87% specificity with 88% accuracy in a clinical trial, offering the
potential to increase the overall diagnostic accuracy of lung cancer testing, which could lead to increased survival, fewer
unnecessary invasive procedures, reduced patient anxiety, and lower medical costs.
CyPath®
Lung is performed and offered by our wholly owned subsidiary PPLS, a clinical anatomic and pathology laboratory which we acquired by
purchasing the assets of Village Oaks Pathology Services, P.A., a Texas professional association. PPLS is a CAP-accredited and CLIA-certified
commercial laboratory that has been in operation for more than 18 years.
In
addition to CyPath® Lung, we are advancing development of our flow cytometry+AI platform for companion diagnostic
tests targeted at asthma and chronic obstructive pulmonary disease (“COPD”). Diagnostics under development are designed
to quantify the extent and type of inflammation in the lung associated with disease and further detect specific receptors in sputum
that may determine the effectiveness of new and emerging therapies for asthma and COPD that have proved to effectively treat
specific types of inflammation. Therapeutics for these lung diseases that are on the market or in development can help some but not
all patients, and often it is unknown before use whether a drug will be effective. Our tests in development are designed to help
determine the most effective use of new and emerging therapies for asthma and COPD and lessen the need for a trial-and-error
approach to proscribing treatment.
Through
our wholly owned subsidiary, OncoSelect® Therapeutics, LLC, we have conducted research that has led to discoveries and
advancement of novel cancer therapeutic approaches that specifically and selectively target cancer cells. We continue to advance research
and development for use of this technology for topical treatment of squamous cell skin cancer. We expect to present our findings at conferences
and publish our research in peer-reviewed journals in the near future. We intend to seek strategic partners to develop our therapeutic
discoveries which could result in broad-spectrum cancer treatments in the future.
Research
and optimization of our platform technologies are conducted in laboratories at our wholly owned subsidiary PPLS and leased
laboratory space at The University of Texas at San Antonio (UTSA). UTSA provided notice in January 2026 that our lease would not be
renewed, and as a result we will relocate our research operations from UTSA to privately owned laboratory space.
Current
Year Financial Highlights
Key
financial results for the year ended December 31, 2025, include:
Recent
Developments
The
Start of Our Longitudinal Clinical Study
In March 2026, we enrolled our first patient in our clinical trial entitled “Detection of Early-Stage Lung Cancer in Sputum using Flow
Cytometry and an Automated Analysis Pipeline” (NCT07168993). The John P. Murtha Cancer Center Research Program (MCCRP), a research program
within the Department of Surgery at the Uniformed Services University of the Health Sciences in Bethesda, Maryland, is providing support
and funding associated with the trial at three collection sites – Brooke Army Medical Center in San Antonio, Texas, Walter Reed
Medical Center in Bethesda, Maryland, and the South Texas Audie L. Murphy Memorial Veterans Medical Center.
The approved trial protocol calls for enrollment
of up to 2,063 patients at 17 VA, military, academic and private medical centers who are at high risk for lung cancer with one or
more indeterminate pulmonary nodules between 6 mm to less than 30 mm. Patients enrolled in the trial will be followed until the
patient receives either a diagnosis of cancer or noncancer, with patients followed up to two years. The clinical trial will evaluate
the clinical performance of the test as a sensitive and specific noninvasive diagnostic to identify the presence of lung cancer in
high-risk individuals who have indeterminate pulmonary nodules as determined by CT imaging. To differentiate the investigational use
of our CyPath® Lung test that is offered for commercial sale and use, we use the name “FlowPathtm
Lung” in protocol documents and on collection kits provided to sites.
Continuation
of Research Studies with the Military
Following
the sale of tests to Brooke Army Medical Center (“BAMC”) beginning in the fourth quarter of 2023 and through 2024 as
part of an observational study, we began a collaboration with BAMC in the fourth quarter 2025 to collect and validate the clinical
utility of using CyPath® Lung to analyze sputum samples obtained by tracheal and bronchial suctioning for early
detection of lung cancer. Bronchoscopy is used commonly in the United States, with approximately 500,000 procedures performed
annually. The CyPath® Lung study with BAMC will explore an approach that could expand the utility of
bronchoscopy-collected samples for earlier, noninvasive lung cancer detection.
In
the first quarter of 2026, we began a research collaboration with BAMC to advance the development of companion diagnostic tests
targeted at asthma and COPD. The initial research study is designed to quantify the extent and type of inflammation in the lung
associated with disease and further determine the ability of our diagnostic platform to detect specific receptors in sputum that
determine the effectiveness of new and emerging therapies for asthma and COPD that have been proved to effectively treat specific
types of inflammation.
Positive Research Findings Advance Company’s
Pipeline Tests for Asthma
In March 2026, the Company presented positive research
findings for its platform technology’s ability to identify antibody drug receptors in sputum, including receptors for dupilumab,
a leading therapy for asthma and chronic obstructive pulmonary disease (“COPD”), and benralizumab, another asthma therapy.
The research, presented at the American Academy of Allergy, Asthma and Immunology’s annual conference, advances the Company’s
pipeline tests aimed at guiding personalized treatment decisions and improving disease monitoring for asthma and COPD sufferers.
Appointment of Nationally Recognized Lung Cancer
Authorities to its Medical and Scientific Advisory Board
In February 2026, we announced the appointment of
David Ost, MD, MPH, Chief of Pulmonary, Critical Care and Sleep Medicine at the University of Texas MD Anderson Cancer Center, Daniel
Sterman, MD, Chief of the Division of Pulmonary, Critical Care and Sleep Medicine at New York University Langone Medical Center, and J.
Scott Ferguson, MD, Director of Interventional Pulmonology at the University of Wisconsin School of Medicine and Public Health, to our
Medical and Science Advisory Board that includes recognized leaders in the field of lung cancer.
New Patient Case Studies Add to Real-World Evidence
of CyPath® Lung Reducing Diagnostic Burden
In February 2026, we announced two additional patient
case studies where a CyPath® Lung result of “Unlikely Malignancy” relieved patient anxiety and supported the
physician’s decision to continue repeat imaging rather than subjecting patients to invasive, risky and costly biopsies. The case
studies add to a growing number of reported cases where CyPath® Lung has made a decisive positive impact on patient care.
PPLS Continues to Meet Highest Standards for
Laboratory Operations
In January 2026, we announced that PPLS maintained
its accreditation across all laboratory service lines from the College of American Pathologists (CAP), considered the gold standard for
excellence. CAP accreditation signifies that a laboratory meets high standards of quality, accuracy and patient safety through comprehensive
peer-based inspections conducted every two years.
Public
and Private Offerings
In
October 2025, we entered into definitive agreements for the purchase and sale of 720,000 shares of common stock, par value $0.007 per
share, at a purchase price of $2.50 per share in a registered direct offering priced at-the-market under Nasdaq rules. The gross proceeds
from the offering were approximately $1.8 million before deducting placement agent fees and other offering expenses payable by us.
On
September 29, 2025, we consummated a best efforts public offering of an aggregate of (i) 1,047,694 shares of Common Stock and (ii) pre-funded
warrants to purchase up to 874,067 shares of Common Stock in lieu of shares of Common Stock. Each share was sold at a public offering
price of $2.50. Each pre-funded warrant was sold at a public offering price of $2.493. The total gross proceeds for the transaction were
approximately $4.8 million.
On
August 13, 2025, we entered into a securities purchase agreement with certain institutional and accredited investors, pursuant to which
the Company agreed to issue and sell in a private placement (i) 990 shares of our newly designated Series B Convertible Preferred Stock,
with a par value $0.001 per share and stated value of $1,000 per share, for gross proceeds to us of $990,000, which were initially convertible
into 143,476 shares of our Common Stock at an initial conversion price of $6.90 per share and (ii) warrants to purchase up to 223,824
shares of our Common Stock at an exercise price of $10.56 per share of Common Stock.
On
May 7, 2025, we completed a public offering of securities for gross proceeds of $3.25 million, before deducting agent fees and other
estimated expenses payable by us. The offering consisted of 338,541 shares of our Common Stock, of which 79,044 were pre-funded warrants,
together with warrants to purchase up to 507,812 shares of Common Stock, at a combined offering price for each share of Common Stock
(or pre-funded warrant) and accompanying warrant of $9.60 per share. The warrants have an exercise price of $10.56 per share and have
certain provisions that allow for additional shares to be issued in the event of a reverse split of Common Stock. Additionally, the
warrants include an anti-dilution adjustment which is subject to stockholder approval.
On
February 26, 2025, pursuant to the terms of a warrant inducement agreement (the “February Inducement Agreement”), we entered
into with certain holders of existing warrants dated February 25, 2025, such holders exercised for cash (i) warrants to purchase an aggregate
of up to 43,402 shares of Common Stock issued on August 5, 2024 (the “August Warrants”), at the reduced exercise price
of $17.40 per share, and (ii) warrants to purchase an aggregate of up to 37,878 shares of Common Stock issued on October 21, 2024 (the
“October Warrants”), at the reduced exercise price of $17.40 per share. We received aggregate gross proceeds of approximately
$1.4 million, before deducting advisory fees and other expenses payable by it. In consideration of the immediate exercise of the October
Warrants and August Warrants by the holders thereof in accordance with the February Inducement Agreement, we issued unregistered common
warrants to purchase an aggregate of up to 97,538 shares of Common Stock (120% of the number of shares of Common Stock issuable upon
exercise of the October Warrants and August Warrants) to such holders.
See
“Management’s Discussion and Analysis of Financial Condition and Results of Operations” for a more detailed discussion
of the foregoing transactions.
Our
First Diagnostic Test – CyPath® Lung
Lung
cancer remains the most commonly diagnosed cancer and the leading cause of cancer-related deaths worldwide, claiming more than 1.8 million
lives with almost 2.5 million new cases reported in 2022, according to a 2024 article in CA: A Cancer Journal for Clinicians.
Lung cancer is the leading cause of cancer deaths in the European Union with an estimated 17 to 34 million people at high risk, according
to Cancer Epidemiology. China reported 1,060,600 cases of lung cancer in 2022. The American Lung Association (“ALA”)
estimated that screening for individuals at high risk for lung cancer has the potential to improve lung cancer survival rates by finding
disease at an earlier stage when it is more likely to be curable. An estimated 19.3 million Americans should have annual screening
for lung cancer, according to American Cancer Society recommendations. A study published in the New England Journal of Medicine
titled “Survival of patients with stage I lung cancer detected on CT screening” dated October 26, 2006, reported that the
survival rate of individuals with Stage I lung cancer who underwent surgical resection within one month after diagnosis had a 10-year
survival rate of 92%, as compared to the current overall five-year survival rate in the U.S. of 29.7% as reported by the ALA in its 2025
“State of Lung Cancer” report . Unfortunately, most lung cancer is detected in late stages. The results of a large national
clinical trial that was reported in the New England Journal of Medicine in an article dated August 4, 2011, titled “Reduced
Lung-Cancer Mortality with Low-Dose Computed Tomographic Screening” showed that screening for lung cancer using low-dose computed
tomography (“LDCT”) resulted in a reduction of the mortality rate by up to 20% as compared to screening by X-ray if LDCT
screening is used by patients at high risk for lung cancer on an annual basis. If half of the individuals at high risk were screened,
more than 12,000 lung cancer deaths could be prevented, according to the ALA. However, the New England Journal of Medicine article
also reported that LDCT was shown to have a low positive predictive value of less than 4%. This means that for every 100 people who receive
a positive result from LDCT screening and are suspected of having lung cancer, only four actually have the disease. A reliable, noninvasive,
and cost-effective diagnostic test can increase diagnosis of early-stage lung cancer while lowering the number of unnecessary and invasive
procedures for patients with a false positive result from LDCT screening. (A false positive test result indicates that the patient has
lung cancer when he or she does not have the disease.)
CyPath® Lung
is a test for early-stage lung cancer proven to detect curative Stage 1A lung cancer that is designed to meet the need for greater
diagnostic certainty. Based on our internal analysis, its use in conjunction with LDCT is predicted to improve the positive
predictive value (the probability that patients with a positive LDCT scan truly have the disease) by a factor of five. Our analysis
concludes that improving the positive predictive value of LDCT with the use of CyPath® Lung has the potential to
subject fewer patients to the stresses of misdiagnosis or unnecessary diagnostic procedures, such as biopsies, while also reducing
healthcare costs. Physicians receive a CyPath® Lung test result within three days of the sample arriving at the
laboratory that identifies patients who should undergo more aggressive follow-up procedures to confirm a suspected lung cancer or
guide and support a physician’s decision to monitor the patient using LDCT or CT imaging.
The
results of a clinical trial using CyPath® Lung, “Detection of Early-Stage Lung Cancer in Sputum using Automated
Flow Cytometry and Machine Learning,” published in Respiratory Research on January 21, 2023, reported overall 88% specificity,
meaning the ability to correctly identify a person without cancer, and 82% sensitivity, meaning the ability to correctly identify cancer
in a person with the disease. For the subset of patients in this trial who had lung nodules 20 millimeters or smaller or no nodules detected
by imaging, this trial resulted in 92% sensitivity, 87% specificity, 99% negative predictive value, and 88% accuracy. This 150-patient
test validation trial analyzed sputum from people at high risk for lung cancer including patients with the disease (N=28) and those who
were cancer-free (N=122). In the subset of 132 individuals with small nodules, 119 patients were cancer-free and 13 had confirmed lung
cancer. Eight out of 10 (80%) of Stage I tumors were correctly identified. Sensitivity is the percentage of persons with the disease
– in this case, lung cancer – who are correctly identified by the test. Specificity is the percentage of persons without
lung cancer who are correctly identified by the test. The cancer group included all lung cancer types, but mostly squamous cell carcinoma
and adenocarcinoma lung cancer (in near equal numbers), showing that CyPath® Lung detects all types of lung cancer. Furthermore,
clinical trial results reported an Area Under the Curve (AUC) value of 0.89 for CyPath® Lung. AUC value indicates the
ability of a test to distinguish between positive and negative cases. An AUC value of 0.7 to 0.8 is considered acceptable; 0.8 to 0.9
is excellent; more than 0.9 is outstanding. In study participants with lung nodules less than 20 mm, the test performed with an AUC value
of 0.94.
A
study authored by two pulmonologists and published in 2024 in the peer-reviewed Journal of Health Economics and Outcomes Research
reported that adding CyPath® Lung to the standard of care for Medicare patients with a positive lung cancer screening
could have saved an average of $2,773 per patient for total cost savings of $379 million in 2022, while the screening could have saved
an average of $6,460 per patient for privately insured patients with a positive lung cancer screening for total cost savings of $891
million. The peer-reviewed study, “Economic Evaluation of a Novel Lung Cancer Diagnostic in a Population of Patients with a Positive
Low-Dose Computed Tomography Result,” attributes the savings to a reduction in follow-up diagnostic assessments, expensive follow-up
procedures, and procedure-related complications. Michael J. Morris, M.D., BAMC pulmonology and critical care physician and Assistant
Dean of Research at San Antonio Uniformed Services Health Education Consortium (“SAUSHEC”), and Sheila A. Habib, M.D., Director
of the Pulmonary Lung Nodule Clinic and the Lung Cancer Screening Program at the South Texas Veterans Health Care Systems’ Audie
L. Murphy Memorial Veterans Hospital and Assistant Professor at the University of Texas Health Science Center at San Antonio, were first
and second authors on the study. Economists John E. Schneider, Ph.D., and Maggie L. Do Valle, Master of Public Health, of Avalon Health
Economics also were authors on the study.
CyPath®
Lung uses flow cytometry technology to detect and analyze cell populations in a person’s sputum, or phlegm, to find characteristics
indicative of lung cancer, including cancer and/or cancer-related cells that have shed from a lung tumor. A patented algorithm developed
using machine learning, a form of AI, automatically analyzes a patient’s flow cytometry data to generate a physician’s report
within minutes after data acquisition that stratifies patients into one of two risk groups. A “Likely” result means cancer
has been detected. An “Unlikely” result means cancer has not been detected. The physician’s report also provides a
numerical probability score between 0.1 to 1.0, with 0.1 to less than 0.5 being a negative result and more than 0.5 to 1.0 considered
positive for lung cancer. The proprietary automated analysis software was developed and is wholly owned and patent protected by bioAffinity
Technologies.
The
flow cytometer is a well-established instrument used in many commercial laboratories. Flow cytometry collects data pertaining to properties
of single cells labeled with antibodies and dyes specific to cell types and characteristics. Sputum is an excellent sample for analysis
because it is in direct contact with any malignancy in the lungs and can provide information about its area of field cancerization and
the lung microenvironment.
In
particular, CyPath® Lung uses a synthetic porphyrin called meso-tetra (4-carboxyphenyl) porphyrin (“TCPP”).
Porphyrins are biological pigments that, when exposed to ultraviolet light at certain wavelengths, can result in the cell fluorescing
a red or purplish color that can be detected under a microscope or by flow cytometry, according to an article titled “Laboratory
Diagnosis of Porphyria,” published in Diagnostics (Basel) on July 26, 2021. Porphyrins can be man-made, like TCPP, or they
can be naturally occurring, like heme that is responsible for the red color in red blood cells. Cancer cells are known to take up certain
porphyrins in higher amounts than non-cancer cells, and the high affinity for cancer cells displayed by TCPP makes it an excellent bio-label
for cancer, according to an article published in Progress in Clinical and Biological Research in 1984 titled “A comparative
study of 28 porphyrins and their abilities to localize in mammary mouse carcinoma: uroporphyrin I superior to hematoporphyrin derivative.”
CyPath®
Lung evaluates sputum for the presence of cancer without the opportunity to introduced operator bias. Our approach allows the entire
sputum sample to be rapidly analyzed. The numerical analysis developed with machine learning captures complex interactions between lung
cancer, the microenvironment, and areas of field cancerization that would be impossible for individuals to predict or detect reliably
by eye. For example, during test development, we discovered that viability staining density suggests a link with apoptosis, or cell death,
that is linked to many cancers, including lung cancer. Our model also suggests that specific markers of immune cell populations are informative
as to the presence of cancer in the lung. These findings are the result of our machine learning approach to automated analysis.
CyPath®
Lung uses sputum that is obtained noninvasively by patients in the privacy of their home. Physicians most often order the test
for patients after CT imaging reveals one or more pulmonary nodules that have a higher risk but are not certain to be lung cancer. A
patient collects his or her sample using a hand-held, noninvasive assist device, ICU Medical’s Acapella® Choice
Blue, that acts to break up mucus in the lungs and help a person cough up sputum from the lung into a collection cup. The Acapella®
Choice Blue has been 510(k)-cleared by the Food and Drug Administration (“FDA”) as a positive expiratory pressure device
to help mobilize lung secretions in people with certain lung conditions
The
sputum sample is shipped overnight by the patient to PPLS and processed into a single-cell suspension, then labeled with antibodies that
distinguish different cell types and the synthetic porphyrin TCPP that identifies cancer cells and/or cancer-associated cells. Our test
can collect sample data and analyze a sputum sample to produce a physician’s report in less than 20 minutes using integrated software
for high-throughput, user-friendly standardized analysis.
The
CyPath® Lung technology is based on scientific work originating at Los Alamos National Laboratory in collaboration with
St. Mary’s Hospital in Colorado. In the Los Alamos research study, sputum samples from lung cancer patients were differentiated
from non-cancer samples with 100% accuracy. This early research was conducted with sputum from 12 uranium miners. Microscope slides of
sputum samples were labeled with the synthetic fluorescent porphyrin TCPP. The Los Alamos research study of 12 uranium miners included
eight men with cancer and four healthy individuals. Researchers were blinded to the sample origin and looked for the presence of highly
fluorescent cells indicating uptake of TCPP as an indicator of lung cancer. The length of the study and specific follow-up was not reported,
but researchers did report that one patient in the study who had been incorrectly considered to be a healthy subject was correctly diagnosed
with cancer by the test. Later, a blinded clinical trial was conducted and results published in September 2015 in an article titled “Early
Detection of Lung Cancer with Meso-Tetra (4-Carboxyphenyl) Porphyrin-Labeled Sputum” in the Journal of Thoracic Oncology.
This study reported on an earlier version of CyPath® Lung that used a fluorescent microscope to directly identify cells
labeled with TCPP in one-third or less of the sputum sample. For each trial participant, researchers manually scanned 12 microscope slides
labeled with TCPP for the presence of red fluorescent cells (“RFCs”) displaying a spectral signature that indicated uptake
of TCPP in the cell. In addition to measuring the spectral signature, the fluorescent intensity and cell size of RFCs were measured.
The test data, including fluorescent intensity over cell size, was analyzed. The trial was conducted over 24 months and resulted in 81%
test accuracy, 77.9% sensitivity, and 65.7% specificity in the ability to correctly differentiate between samples from lung cancer patients
and those at high risk who were cancer-free. The earlier trial required participants to provide a sputum sample and CT imaging of the
lungs. Those in the cancer cohort underwent a biopsy to confirm lung cancer. High-risk patients displaying indeterminate nodules were
followed for 18 months to confirm they were cancer-free. The study concluded that optimizing the test to provide for analysis of the
entire sputum sample would improve results.
On
January 1, 2024, the Medicare reimbursement code 0406U specific for CyPath® Lung became effective. The Current Procedural
Terminology (“CPT”) Proprietary Laboratory Analysis (“PLA”) code specifically for use with CyPath®
Lung, is 0406U with the descriptor “Oncology (lung), flow cytometry, sputum, 5 markers (meso-tetra [\4- carboxyphenyl porphyrin
TCPP, CD206, onveniCD66b, CD3, CD19), algorithm reported as likelihood of lung cancer.”
We
have an agreement with Cardinal Health for logistical services assisting in the delivery of collection kits and
return of patient samples to PPLS. Laboratory reagents, supplies, and equipment are commercially available through multiple vendors. Sample
processing, labeling, and data collection can be accomplished by a laboratory technician skilled in general laboratory techniques. Data
analysis leading to a physician’s report is done by using automated analysis software fully integrated into the test.
To
our knowledge, CyPath® Lung is the first cancer diagnostic that combines flow cytometry and automated analysis to predict
the presence of lung cancer from sputum samples.
The
Cancer Diagnostics Market and CyPath® Lung
The
global lung cancer diagnostic market is projected to grow from an estimated $15.1 billion in 2023 to $34.8 billion by the end of 2034,
with a compound annual growth rate (“CAGR”) of 7.9%, according to a market research report issued by Transparency Market
Research in October 2024. Our Company has the potential to play a significant role in the global cancer diagnostic market because we
hold a strong and expanding IP portfolio for CyPath® Lung, a noninvasive, cost-effective, and high performing test that
has the potential to better patient outcomes.
In
particular, we believe the market for CyPath® Lung is poised for significant growth. The test is most often ordered
by physicians who need better clarity when patients present with small pulmonary nodules that are considered indeterminate, leaving
both physician and patient without a clear diagnostic path forward. In Gould et al. (2015), researchers reported that imaging
increasingly finds indeterminate pulmonary nodules with difficult choices: “watchful waiting” with serial CT scans or
invasive procedures. According to the National Lung Screening Trial Research Team (2011), lung cancer screening using low
dose CT can detect lung cancer at an early stage, but it has low specificity. Only about four out of 100 patients with a
suspicious finding will have lung cancer.In addition, Gould et al. observed that indeterminate pulmonary nodules are
increasingly found incidentally when imaging for other reasons.
Projected Number of Indeterminate Pulmonary
Nodules in the U.S.
As
shown below, the total number of indeterminate pulmonary nodules detected by lung cancer screening and incidentally is projected to increase
by 62% from 2.9 million in 2025 to 4.7 million in 2030, representing an estimated market of greater than $4.7 billion for
CyPath® Lung. The forecast is based on a percentage of 2024 reported cases of suspicious pulmonary nodules and assumes
a 10% compound annual growth for the 2024-2030 period based on 1) an increase in lung cancer screening from 18.1% in 2023 to close to
50% by 2030 due to growing adoption and awareness with improved access, and 2) improved ability to detect indeterminate nodules through
greater adherence to guideline recommendations and use of AI.
In
addition, CyPath® Lung’s ability to be used for surveillance of cancer survivors after they have completed treatment
represents an estimated market of $870 million over the next ten years. The total number of people living with lung cancer is projected
to increase by 28% from 680,450 survivors in 2025 to 871,580 in 2035.
Comparison
of CyPath® Lung to Current Standards of Care
As
seen in the above table, CyPath® Lung performs favorably compared to current Standards of Care, including more invasive
and riskier diagnostic procedures. Our business model is to address the need for a noninvasive, cost-effective, high-performing lung
cancer diagnostic that meets the need for more diagnostic certainty leading to quicker diagnosis at earlier stage for longer survival
and reduced medical costs.
CyPath®
Lung Business Development Plan
We
believe in the viability of our business plan based on the circumstances surrounding our business that are known to us as of the date
of this Annual Report. However, the timing, strategies, and stages of our business plan may evolve in light of new circumstances that
cannot be predicted with certainty at this time. Our business plan envisions three phases of strategic expansion in the U.S. and the
European Union (“EU”) and Asia that are timed to maximize our resources and minimize market risk.
In
January 2025, we reported successful results from the Company’s CyPath® Lung pilot marketing program using Texas
for our beta launch with sales growth quarter-over-quarter and more than 600 tests delivered in 2024. Our test marketing approach allowed
us to refine future positioning and develop strategic insight for our CyPath® Lung test before expanding to a larger market.
In 2025, we more than doubled the number of tests sold and tripled our revenues. We expanded our sales team in the second half of 2025
to enter the Mid-Atlantic market.
In
2026, we will enter Phase 2 of our business plan with expansion into broader strategic markets aimed at providing national coverage,
including increasing our sales force and strategic partners in the Mid-Atlantic and entering the South Atlantic, Southeast, Northeast,
Midwest, West and federal markets. Phase 2 includes launching our longitudinal clinical trial that will provide additional validation
and further evidence of CyPath® Lung’s ability to detect early-stage lung cancer.
In
Phase 3 of our business plan, we expect to have achieved a national sales footprint upon which we can build and secure strategic partners
in the EU and Asia who can support entry into those markets. We also foresee establishing CyPath® Lung as a Standard of
Care for the federal and VA healthcare systems which can propel CyPath® Lung for adoption as a Standard of Care for the
entire U.S. healthcare system.
We
will continue to execute on strategic marketing and promotional collaborations that can accelerate growth, including collaboration with strategic partners that provide greater market access, marketing resources, and opportunities
to leverage existing relationships with physicians and their patients.
We
have developed messaging and marketing programs that will continue to grow both in size and scope as we penetrate the U.S. market, including
executing strategies that take advantage of practicing physicians who find significant benefits from using CyPath® Lung.
To date, we have published more than a dozen patient case studies. Peer-to-peer communication has been a driver for sales which is supported
by attending major conferences and presentations by key opinion leaders (“KOLs”) of case studies, digital marketing, social
media presence, and advertising to create an “inbound” lead generation mechanism that delivers our message to our target
audience.
The
Competition for CyPath® Lung
CyPath®
Lung has not been tested directly against its competitors’ products, but a comparison of the published performance numbers
provides evidence that CyPath® Lung is among the highest performing tests on the market. Furthermore, CyPath® Lung is
noninvasive – not even requiring a needle stick – and cost effective. Processing and analysis procedures are easy to perform.
Our competitive analysis reviewed published research that was sufficient to provide a scientific basis for evaluation.
Low
dose computer tomography (LDCT) is recommended as a screening test with eligibility driven by age and smoking history, but its low positive
predictive value (PPV) can lead to unnecessary invasive procedures on benign nodules. CyPath® Lung is recommended for
adults at high risk of lung cancer, particularly those with small or indeterminate pulmonary nodules discovered by LDCT, to assist doctors
in deciding whether to recommend invasive procedures such as biopsy or continue monitoring by LDCT. CyPath® Lung and competing
tests that assist in making such decisions may be categorized as (1) rule-out tests (2) rule-in tests, and (3) balanced tests. Rule-out
tests are designed to have high sensitivity and negative predictive value (NPV) to determine that the patient is unlikely to
have lung cancer and exclude the patient from unnecessary follow-up procedures. However, these tests also have lower specificity and
produce a greater number of false positives results. Rule-in tests by contrast have high specificity but lower sensitivity, providing
higher positive predictive value (PPV) so that a positive result predicts the patient does have lung cancer. The positive result may
lead to more aggressive follow-up procedures but with higher false-negative rates that can result in more invasive procedures on benign
nodules. Balanced tests are designed to achieve high sensitivity and specificity to both exclude patients without cancer
from unnecessary follow-up diagnostic procedures and accurately detect patients with early-stage cancer who can proceed to more aggressive
procedures to confirm diagnosis.
CyPath®
Lung is a balanced test, having demonstrated a sensitivity of 92% and a specificity of 87% and a NPV of 99% for patients with nodules under 20 mm in a
population with lung cancer prevalence of 18% (Lemieux 2023, Morris 2024). The high sensitivity and specificity of CyPath® Lung
make it a balanced test. In our analysis we will classify competitors as balanced tests, rule-out tests and rule-in tests.
We
believe there are many reasons why CyPath® Lung is a superior test when compared to its competitors. First, lung sputum
is an excellent medium for early lung cancer detection because (1) sputum is in close contact with the tumor and pre-cancerous areas
that shed cancer and pre-cancerous cells directly into the sputum, (2) can be obtained noninvasively, and (3) can be transported easily.
Moreover, sputum contains immune cell populations associated with the presence of a tumor. Second, our proprietary technology is straightforward.
CyPath® Lung uses well-established flow cytometry techniques to investigate cells contained in the sputum for characteristics
that indicate the likelihood of lung cancer, unlike molecular tests which can use labile genetic materials. Sample processing is well
established, and laboratory technicians can be easily trained. Reagents used by the test are widely available. Data acquisition and analysis
is fully automated, allowing for non-biased, efficient test results. Third, CyPath® Lung has demonstrated high specificity
and sensitivity that is similar to far more invasive and more expensive procedures currently used to detect lung cancer. Fourth, CyPath®
Lung is cost effective, with a Medicare reimbursement code billable to both government and private insurance carriers. A 2024 study authored
by Michael Morris, M.D., and Sheila Habib, M.D., reported on CyPath® Lung’s economic impact when used as companion
test to the current standard of care predicting savings of more than $2,700 per Medicare patient and more than $6,400 per patient with
private payer insurance who have pulmonary nodules sized less than 30 mm. Fifth and as important as any of our test’s benefits,
CyPath® Lung is patient friendly, providing at-home, noninvasive sample collection.
The
recent economic journal article evaluating the significant healthcare cost benefits of using CyPath® Lung as a standard