sera-20211231

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

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FORM 10-K

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(Mark One)

For the fiscal year ended December 31, 2021

Commission File Number: 001-40606

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SERA PROGNOSTICS, INC.

(Exact Name of Registrant as Specified in its Charter)

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(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code: (801) 990-0520

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Securities registered pursuant to Section 12(b) of the Act:

Title of each class Trading Symbol(s) Name of each exchange on which registered

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes Nox

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 Nox

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. Yesx No o

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). Yesx No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, 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 o Accelerated filer o

Non-accelerated filer x Smaller reporting company x

Emerging growth company x

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. o

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. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

As of June 30, 2021, the last business day of the registrant's most recently completed second fiscal quarter, there was no established public market for the registrant's common stock. The registrant's Class A Common Stock began trading on the Nasdaq Global Market on July 15, 2021. As of March 25, 2022, the registrant had 29,492,334 and 1,405,259 shares of Class A and B common stock, $0.0001 par value per share, outstanding, respectively.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the registrant's definitive proxy statement relating to its 2022 annual meeting of stockholders (the "Proxy Statement") are incorporated by reference into Part III of this Annual Report on Form 10-K where indicated. The 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, 2021.

TABLE OF CONTENTS

Page

Special Note Regarding Forward-Looking Statements 3

PART I

Item 1. Business 4

Item 1A. Risk Factors 41

Item 1B. Unresolved Staff Comments 79

Item 2. Properties 79

Item 3. Legal Proceedings 79

Item 4. Mine Safety Disclosures 79

PART II

Item 6. [ Reserved ] 80

Item 7A. Quantitative and Qualitative Disclosures About Market Risk 89

Item 8. Financial Statements and Supplementary Data 90

Item 9A. Controls and Procedures 116

Item 9B. Other Information 117

Item 9C. Disclosure Regarding Foreign Jurisdiction that Prevent Inspections. 117

PART III

Item 10. Directors, Executive Officers and Corporate Governance 118

Item 11. Executive Compensation 118

Item 14. Principal Accounting Fees and Services 118

PART IV

Item 15. Exhibits and Financial Statement Schedules 119

“Sera,” “PreTRM,” “The Pregnancy Company” and our logo are our trademarks. All other service marks, trademarks, and trade names appearing in this annual report on Form 10-K are the property of their respective owners. We do not intend our use or display of other companies’ trade names, trademarks, or service marks to imply a relationship with, or endorsement or sponsorship of us by, these other companies. Solely for convenience, trademarks and tradenames referred to in this annual report on Form 10-K may appear without the ® or TM symbols, but such references are not intended to indicate in any way that we will not assert, to the fullest extent under applicable law, our rights, or that the applicable owner will not assert its rights, to these trademarks and tradenames. Unless the context otherwise requires, we use the terms “Sera,” “Company,” “we,” “us” and “our” in this report to refer to Sera Prognostics, Inc.

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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This discussion contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. In some cases, you can identify forward-looking statements by words such as “anticipate,” “believe,” “contemplate,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “seek,” “should,” “target,” “will,” “would,” or the negative of these words or other comparable terminology. These forward-looking statements include, but are not limited to, statements about:

•estimates of our addressable market, market growth, future revenue, key performance indicators, expenses, capital requirements, and our needs for additional financing;

•our expectations regarding the rate and degree of market acceptance of our PreTRM test;

•the impact of our PreTRM test on the field of bioinformatics and proteomics and the size and growth of the addressable bioinformatics and proteomics market;

•our ability to obtain funding for our operations;

•our ability to manage and grow our business and commercialize our PreTRM test;

•our ability to develop and commercialize new products;

•our ability to retain the continued service of our key professionals and to identify, hire, and retain additional qualified professionals;

•the pricing and reimbursement of our products;

•the implementation of our business model, strategic plans for our business, products and technology;

•the scope of protection we are able to establish and maintain for intellectual property rights covering our product candidates and technology;

•developments relating to our competitors and our industry;

•the accuracy of our estimates regarding expenses, capital requirements, and needs for additional financing;

•the impact of COVID-19 on our business; and

•our financial performance.

These forward-looking statements are subject to a number of risks, uncertainties, and assumptions, including those described in the “Risk Factors” section and elsewhere in this report. Moreover, we operate in a very competitive and rapidly changing environment, and new risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties, and assumptions, the forward-looking events and circumstances discussed in this report may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements.

You should not rely upon forward-looking statements as predictions of future events. Although we believe that the expectations reflected in the forward-looking statements are reasonable as of the date of this report, we cannot guarantee that the future results, levels of activity, performance or events and circumstances reflected in the forward-looking statements will be achieved or occur. We undertake no obligation to update publicly any forward-looking statements for any reason after the date of this report to conform these statements to new information, actual results or to changes in our expectations, except as required by law.

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PART I

Item 1. Business

Overview

We are a women’s health company utilizing our proprietary proteomics and bioinformatics platform to discover, develop, and commercialize clinically meaningful and economically impactful biomarker tests, with an initial focus on improving pregnancy outcomes. We believe that our method of combining the disciplines of proteomics and bioinformatics with rigorous clinical testing and economic analysis enables us to provide physicians and patients with actionable data and information designed to result in better maternal and neonatal health at lower cost. Our vision is to deliver pivotal and actionable information to pregnant women, their physicians, and health care payers to significantly improve maternal and neonatal health and to dramatically reduce health care costs. We have built an advanced, proprietary, and scalable proteomics and bioinformatics platform to characterize the biology of pregnancy and to discover and validate key protein biomarkers found in blood that are highly accurate predictors of dynamic changes that occur during pregnancy. By incorporating our proprietary technology platform into our rigorous data-driven development process, we have created a differentiated approach for effectively addressing major conditions of pregnancy. We envision that our comprehensive approach will enable us to fully characterize one of the most important periods in the lives of women and children, and will help to improve their well-being. Our goal is to develop and commercialize tests that inform important decisions during all pregnancies. We also believe that the work we perform in pregnancy can ultimately be leveraged more broadly to address other areas in medicine and health care.

Our first commercial product, the PreTRM test, is the only broadly validated, commercially available blood-based biomarker test to accurately predict the risk of a premature delivery, also known as preterm birth. The PreTRM test is a non-invasive blood test given to a pregnant woman, carrying a single fetus, during week 19 or 20 of gestation that provides an accurate prediction of the expectant mother’s risk of delivering spontaneously before 37 weeks’ gestation. Our commercialization strategy includes conducting clinical trials to demonstrate the health and economic benefits of early and accurate detection of preterm birth risk coupled with well-recognized interventions in higher risk patients. Anthem, Inc., or Anthem, whose health plans cover more than 10% of U.S. pregnancies annually, will make our PreTRM test available to eligible pregnant members as part of a multi-year contract. Anthem is the nation’s second largest health insurer with greater than 43 million members nationwide. Through this collaboration, a significant number of physicians and patients in the U.S. gain access to early and accurate predictions of preterm birth to enable more informed decision-making during pregnancy. Sera believes that its commercial collaboration with Anthem further validates the clinical and economic value of its PreTRM test and significantly de-risks initial commercialization. Sera further expects this provides a pathway for broader market adoption through subsequent coverage decisions by major payers. We are actively discovering and developing several additional biomarker tests to predict other major conditions of pregnancy, such as preeclampsia, and gestational diabetes, among others, that have the potential to offer significant health benefits to women and their babies.

There are approximately 140 million births globally each year. Of these, it is estimated that as many as 25% are affected by various complications, including: preterm birth, preeclampsia, fetal growth restriction, stillbirth, hypertension of pregnancy, gestational diabetes, and others. In the United States, there are approximately 3.6 million births annually, and over 10% of those pregnancies result in preterm births with profound short- and long-term health consequences to the mother and baby. These health consequences are estimated to lead to associated costs of approximately $25 billion annually in the United States. Traditional methods to detect prematurity risk in time for proactive management have been limited and fail to identify the vast majority of women who will deliver prematurely. We believe our actionable blood-based biomarker test for prematurity risk can enable patients, physicians, and payers to more proactively manage and mitigate the complications and associated costs of prematurity. Given that pregnancy is the launch point for the future health of babies and a key determinant in the future health of mothers and babies, we believe this area is ripe for innovation and better tools to improve patient outcomes.

Our Proprietary Technology Platform

The complexities of the biological processes occurring during pregnancy have been a major obstacle in developing effective tests for pregnancy-related conditions. We are working to overcome this obstacle through our development of a proprietary technology platform consisting of biobanks, advanced mass spectrometry and other proteomic analytic methods and bioinformatics, which enables superior characterization of the biology of pregnancy and more accurate prediction of pregnancy outcomes.

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An analysis of protein pathways and expression at various points during pregnancy reveals the constantly evolving and dynamic changes affecting both the mother and the fetus. Earlier detection of changes in protein expression indicating the emergence of adverse pregnancy outcomes can enable proactive management of those conditions. A fundamental component of our platform is our proprietary and continually growing biobank consisting of comprehensive, clinically and demographically annotated blood specimens collected from more than 10,500 pregnant U.S. women, representing broad demographic and geographic diversity inherent in the U.S. population. This differentiated resource enables us to develop and broadly validate our predictors. Further biobank diversity is also provided through our scientific collaborations with leading maternal fetal medicine experts around the globe, enabling us to analyze specimens collected from patients in the United States, Europe, Asia and Africa. In strict adherence to the authoritative National Academy of Medicine, or NAM, guidelines, we apply our innovative mass-spectrometry and other proteomic analytical methods and our protein information network knowledge to probe biobank specimens for meaningful protein expression changes. We then subject the data to detailed bioinformatics analysis and use advanced tools, such as machine learning and artificial intelligence, to find relationships between various proteins and to discover important predictors.

Our Discovery, Development, and Commercialization Approach

Our product discovery and development approach is based on rigorous science- and health-based economic analyses as we discover, develop and commercialize biomarker tests designed to transform pregnancy-related care for patients, doctors and payers. We have initially applied our platform and capabilities to address the problem of preterm birth, given its profound health and economic impacts worldwide. In the future, we may use this technology to develop products for a number of health conditions other than premature births.

We use the following multifaceted approach in our research, development and commercialization efforts:

•Significant Unmet Need: We select specific conditions of pregnancy that are clinically meaningful and economically important and with significant unmet needs that lack effective solutions.

•Proteomic and Bioinformatics Platform: We utilize our platform to understand the biology underlying selected pregnancy-related conditions in order to discover, verify and broadly validate high-performing predictive biomarker tests.

•Demonstrate Health and Economic Impact of Our Test and Treat Strategy: We believe a critical element of our success will be to demonstrate the beneficial health and economic impacts of using the information provided by our biomarker tests.

•Payer-Centric Reimbursement Coverage: We have adopted what we believe is an innovative payer-centric approach for early commercialization of our biomarker tests, by seeking to leverage the health and economic benefits conferred by our biomarker approach to gain early reimbursement coverage from major health insurance payers.

•Broader Market Adoption: We are capitalizing on our innovative payer-centric reimbursement strategy to facilitate obtaining widespread commercial coverage of our biomarker tests from other health care payers.

Our Pipeline

We are developing a robust pipeline of novel blood-based biomarker tests for a number of major pregnancy related conditions beyond preterm birth by leveraging the biological insights provided by our proprietary technology platform. Our product candidates are designed to accurately predict and enable better management of a range of serious pregnancy-related conditions. We believe these product candidates, if successfully developed, have the potential to address significant unmet needs by providing more accurate detection of these pregnancy-related conditions and providing patients and physicians with earlier opportunities for interventional treatment. We retain worldwide development and commercialization rights to all of our product candidates.

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Our biomarker pregnancy pipeline consists of the following:

The PreTRM Test — Our Solution for Preterm Birth

Our first product, the PreTRM test, is the only broadly validated, commercially available blood-based biomarker test to accurately predict the risk of spontaneous preterm birth. Preterm birth, which occurs in approximately 15 million deliveries annually around the world, is defined as any birth before 37 weeks’ gestation and is a leading cause of illness and death in newborns. The 2021 March of Dimes Report Card shows that of the approximately 3.6 million babies born annually in the United States, more than one in 10 is born prematurely. Preterm births result in approximately $25 billion in economic costs in the United States per year, largely as a result of profound short- and long-term health consequences to the mother and baby. Major long-term medical complications associated with preterm birth include learning disabilities, cerebral palsy, chronic respiratory illness, intellectual disability, seizures, vision and hearing loss. These complications can generate significant costs throughout the lives of affected children.

The PreTRM test is a non-invasive blood test given to a pregnant woman during week 19 or 20 of gestation. The PreTRM test provides an accurate prediction of the expectant mother’s individualized risk, expressed as a percentage, of delivering spontaneously before 37 weeks’ gestation, as well as her relative risk compared to the average population risk. The great majority of single fetus, or singleton, preterm births are spontaneous, where the mother goes into labor and delivers without any apparent known pathology.

The protein biomarkers of preterm birth utilized in our PreTRM test have been extensively validated in multiple maternal fetal medicine centers located in the United States, Europe, Asia and Africa. In addition, we continue to build on our existing data to further demonstrate the clinical and economic benefits of intervening based on PreTRM test results. We believe our comprehensive approach to build evidence for our PreTRM test addresses key elements payers require in order to reimburse testing, including:

•analytical validation of the testing platform, or measurement validity;

•clinical validation, or test validity;

•clinical utility of using validated predictions, or positive health benefit; and

•economic utility, or cost effectiveness and health care savings.

Underscoring the benefits of the PreTRM test and treat strategy, the clinical and economic utility of the PreTRM test administered mid-pregnancy has been published by respected independent health economists in a leading maternal fetal medicine journal.

The strength of the data from our studies of the PreTRM test has enabled us to pursue an innovative and accelerated approach to commercialization. We have secured payment for the PreTRM test through a major strategic payer, Anthem,

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representing an important step in achieving initial payer recognition of our rigorous approach to prematurity, which we believe will help the PreTRM test obtain broader insurance coverage adoption. We believe that this collaboration significantly de-risks initial commercialization of the PreTRM test, as it provides payment from a major payer representing more than 10% of U.S. pregnancies annually and provides a pathway for broader market adoption through subsequent coverage decisions by other major payers. The collaboration also enables us to generate more data to demonstrate the value of the PreTRM test and treat approach across diverse patient populations within Anthem’s insurance plans. In November 2020, we were awarded a unique CPT®PLA code by the AMA Editorial Board, specifically for the PreTRM test, which we believe will also help drive payment and coverage decisions for PreTRM testing. Following the implementation of this unique PLA code in April 2021, the code was priced by the Centers for Medicare & Medicaid Services, or CMS, at $750.

Our Team

Our team brings extensive experience and expertise in building and running highly profitable molecular diagnostics companies. We are led by Gregory C. Critchfield, M.D., M.S., our Chairman, President and Chief Executive Officer, who previously served as President of Myriad Genetic Laboratories; Thomas Garite, M.D., our Vice President, Clinical Sciences, a past president of the Society for Maternal Fetal Medicine; Jay Boniface, Ph.D., our Chief Scientific Officer; and Nadia Altomare, our Chief Commercial Officer, all of whom have extensive leadership experience in the pharmaceutical, device and diagnostic companies. Jay Moyes, our Chief Financial Officer, or CFO, served as CFO with Myriad Genetics and has extensive experience in public and private financings, licensing transactions and acquisitions. We are supported by an experienced board of directors and clinical and scientific advisors that are leaders in the fields of maternal fetal medicine, bioinformatics, clinical trials and science based businesses.

Our Strengths

We attribute our success and future growth prospects to the following:

•Our differentiated approach to understanding and addressing major conditions of pregnancy. We take a focused and data-driven approach based on rigorous science to understand the biology of pregnancy and the health and economic impacts of major pregnancy conditions. Our approach involves conducting controlled trials and health economic analyses to demonstrate the beneficial health and economic impacts of using the information provided by our biomarker tests. We also work with leading health economists and organizations to build rigorous models that describe how the application of our tests impacts both health and economic outcomes. Leveraging the demonstrated short- and long-term health and economic benefits of our biomarker approach, we aim to gain early reimbursement coverage from major health insurance payers by working with them to demonstrate the benefits of using our biomarker tests based upon analysis of claims data in their own plans. We intend to capitalize on our innovative payer-centric reimbursement strategy to facilitate obtaining widespread commercial coverage of our biomarker tests from other health care payers.

•Our proprietary and scalable proteomics and bioinformatics platform technology creates clinically meaningful and economically impactful predictions for pregnancy. We believe our proprietary proteomic and bioinformatics technology platform has the potential to enable critical advances in the management of pregnancy and its outcomes. Our platform consists of biobanks, advanced mass spectrometry and other proteomic analytic methods and bioinformatics, which enables superior characterization of the biology of pregnancy and accurate prediction of pregnancy outcomes. We believe this platform has the potential to address significant unmet medical needs in the large, underserved market for the prediction of outcomes associated with pregnancy.

•The PreTRM Test is the only broadly validated, commercially available blood test proven to predict the risk of an individual woman to deliver prematurely. The predictive performance of the PreTRM biomarkers has been extensively validated in diverse populations and geographies and enables earlier proactive care addressing higher preterm birth risk that occurs among the 3.6 million annual singleton pregnancies in the United States. We believe that based on our growing body of evidence regarding the clinical and economic benefits of the PreTRM test and our innovative collaboration with Anthem, as greater payer and physician adoption occurs throughout the United States, the PreTRM test has the potential to become an important standard of care for preterm birth.

•Innovative and strategic partnership with Anthem. We have secured early payment for the PreTRM test through our strategic collaboration with Anthem, which represents an important step in achieving initial payer recognition of our rigorous approach to prematurity and which we believe will help foster broader insurance coverage adoption. We launched this commercialization process in the first half of 2021, and we envision

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substantial penetration of our testing into Anthem’s network over the next few years. We believe this collaboration significantly de-risks initial commercialization of our PreTRM test, as it demonstrates payment from a major payer representing more than 10% of U.S. pregnancies annually and provides a pathway for broader market adoption through subsequent coverage decisions by major payers.

•Broad pipeline covering additional significant conditions of pregnancy. We are also developing a novel pipeline of blood-based biomarker tests for a number of major pregnancy-related conditions beyond preterm birth by leveraging the biological insights provided by our proprietary technology platform. We believe these product candidates, if successfully developed, have the potential to address significant unmet needs by providing more accurate detection of these pregnancy-related conditions and affording patients and physicians earlier opportunities for interventional treatment. We retain worldwide development and commercialization rights to all of our product candidates.

•Deeply experienced team in biotechnology and molecular diagnostics test development and commercialization. Our executive team has decades of experience in building and commercializing molecular diagnostics tests. We have worked to build a first-class scientific organization capable of harnessing and translating our platform technologies into innovative predictive solutions as we strive to deliver pivotal and actionable information to pregnant women, their physicians and payers to improve the health of patients as well as the economics of health care delivery. Our experienced discovery and development team performs rigorous bioinformatics analyses and strictly adheres to the authoritative NAM guidelines on how to reliably develop and validate omics predictions made on complex biological data sets. Adhering to these guidelines, in the case of predicting preterm birth, we have been able to document generalizable biomarker predictive performance across independent cohorts of patients from the United States, Europe, Asia and Africa. Reflective of the scientific rigor of our efforts, our scientists have published best practice recommendations for the analysis of preterm delivery data. We believe this will improve the quality of statistical analysis of research data related to proteomic test development, enabling the broad community of statisticians, researchers, clinicians and regulators to better validate predictions prior to their clinical use.

Our Strategy

Our vision is to deliver pivotal and actionable information to pregnant women, their physicians and health care payers to significantly improve maternal and neonatal health and to dramatically reduce health care costs. Our goal as The Pregnancy Company is to discover, develop and commercialize clinically meaningful and economically impactful biomarker tests designed to improve pregnancy outcomes. We believe it is critical to innovate products that will be viewed as cost-effective by payers in order to receive reimbursement for our tests. We aim to accomplish our vision by implementing the following strategies:

•Accelerate the commercialization of the PreTRM test through our innovative strategic partnership with Anthem. Through our collaboration with Anthem, the second largest health benefits company in the United States with plans covering more than 10% of U.S. pregnancies annually, we intend to accelerate commercialization of the PreTRM test and generate revenue for our test in Anthem’s network. We believe that sizable early penetration of the market will lay a foundation for future expansion of our PreTRM test to other insurance plans. We believe that through this partnership, a significant number of physicians and patients in the U.S. will have access to early and accurate predictions of preterm birth to enable more informed decision-making during pregnancy. We launched this commercialization process in the first half of 2021, and we envision substantial penetration of our testing into Anthem’s network over the next few years.

•Expand coverage of the PreTRM test to additional payers to maximize the commercial opportunity. We believe that the Anthem collaboration significantly de-risks early PreTRM test commercialization by demonstrating the clinical and economic benefits of the PreTRM test and will help incentivize broader market adoption the PreTRM test as we approach other payers. We believe that growing coverage of the PreTRM test will drive physicians to more broadly offer the testing to their patients, thereby significantly expanding the number of U.S. pregnancies benefiting from our technology. We also believe that, based on our growing body of evidence regarding the clinical and economic benefits of the PreTRM test, our innovative collaboration with Anthem and the resulting anticipated greater payer and physician adoption throughout the United States, the PreTRM test has the potential to create a new standard of care in pregnancies.

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•Apply our platform capabilities to broaden our pipeline and develop novel and high-performing biomarker tests for pregnancy-related conditions and potentially other health conditions. Our proprietary technology platform is designed to provide deep characterization of the biology of pregnancy, which we are using to develop additional accurate predictors of pregnancy outcomes, such as preeclampsia, gestational diabetes, and other conditions. We plan to leverage the strength of our technology platform and expertise to discover and develop novel and high-performing protein biomarker tests that will provide women and their physicians more timely and actionable information for pivotal decisions, which will lead to improved maternal and newborn health. In the future, we aspire to expand our product offerings by deeply characterizing the biology of the pregnancy journey. Longer-term, we intend to explore the use of our platform to develop tests for medical conditions outside of pregnancy.

•Continually enhance the value and capabilities of our proprietary technology platform through ongoing expansion and integration of our biobank and our proteomics and bioinformatics databases. We believe that the breadth and depth of our databases, our unique proteomic analytical techniques and our bioinformatics approaches all position us to be the leader in providing important pregnancy information to patients and doctors. The continued expansion of our proprietary biobank, together with our innovative mass spectrometry, proteomic analytical methods and bioinformatics analyses, is designed to enable us to discover and broadly validate meaningful protein expression changes during pregnancy. We intend to further expand our product engine capabilities to enhance the reach and productivity of our approach to developing biomarker tests and services for pregnancy-related conditions.

•Rapidly build a dedicated women’s health commercial infrastructure. Based on our commercial collaboration with Anthem, we are initially building our dedicated specialty OB-GYN commercial sales force to sell and support the PreTRM test in key regions in the United States where Anthem has a significant number of members. Upon further market adoption of the PreTRM test by other payers and the expansion of our pipeline, we expect to expand our dedicated sales force into additional regions in the United States to cover the entire U.S. OB-GYN sales channel.

•Evaluate strategic partnerships to maximize the value of our product offerings. We may strategically enter into collaborations or other partnerships to maximize the commercial potential of the PreTRM test and our product candidates within or outside of the United States. We may explore strategic alliances or collaboration to accelerate the discovery, development, validation and commercialization of our product candidates.

The Biology of Pregnancy

Pregnancy is a highly complex, dynamic process that leads to the formation of a human being. From its beginning, genes, proteins and metabolites are expressed in a coordinated fashion to enable the placenta, the uterus and the mother to support the development of a child during pregnancy. This duration of a term pregnancy is usually between 37 and 42 weeks.

At the inception of pregnancy, the placenta begins its development as a critical organ necessary for a healthy pregnancy for both the baby and the mother. The placenta initially forms and evolves during pregnancy to become a large, highly active metabolic organ conducting numerous vital biological functions through the time of delivery. The placenta is the means of communication between the mother and the fetus. Life-enabling exchanges of oxygen, nutrients and protective antibodies as well as elimination of wastes are effected by the placenta.

Proteins and protein expression are critical molecular elements in driving and carrying out key processes that take place during pregnancy in both the mother and the fetus. Protein expression can, in some cases, become disordered, leading to adverse pregnancy outcomes, such as preterm birth, preeclampsia, gestational diabetes, stillbirth and other conditions. There are approximately 140 million births globally each year. It is estimated that as many as 25% of pregnancies may have complications affecting the mother and/or the baby.

Maternal blood is a window through which maternal, fetal and placental communication can be deciphered. Subtle abnormalities in protein expression in the mother’s blood may provide insights into complications earlier in pregnancy that can be utilized to benefit the mother and the baby. These changes, if appropriately detected and understood, have the potential to predict that the mother and/or baby are trending toward adverse conditions in pregnancy, which can be serious and costly. Timely detection of these subtle changes can enable the application of specific interventions to address the emergence of such complications and thereby improve the health of mothers and babies.

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To date, a deeper understanding of the abnormalities of protein expression has been limited by the lack of understanding of the molecular events of the biology of pregnancy. The development of meaningful predictions in pregnancy requires improved methods to better understand such biology.

Building clinically meaningful and economically impactful predictions for pregnancy requires a significant commitment of resources, the proper selection and application of state-of-the-art laboratory technologies, access to well-annotated biologic specimens and advanced bioinformatics capabilities.

Proprietary Technology Platform

We believe our proprietary proteomic and bioinformatics technology platform has the potential to enable critical advances in the management of pregnancy and its outcomes. Our platform consists of biobanks, advanced mass spectrometry and other proteomic analytic methods and bioinformatics, which enables superior characterization of the biology of pregnancy and accurate prediction of pregnancy outcomes. Our platform, built on differentiated tools and capabilities, provides pregnant mothers and their doctors more clinically meaningful and economically impactful predictions of adverse pregnancy outcomes to enable more timely intervention and improve the well-being of both mother and baby.

Our Proprietary Technology Platform

Proprietary Biobanks

We have built proprietary biobanks of blood specimens and related data over a number of years, which are key resources required to develop a deeper understanding of the biology of normal and adverse pregnancy outcomes. By continuing to aggregate proprietary bioinformatics insights gained from analyses of comprehensively annotated biobank specimens, we are working to develop and commercialize a variety of clinically meaningful and economically impactful biomarker tests for pregnant women and their health care providers.

Our large proprietary U.S. biobank resource was built by collecting blood from more than 10,500 comprehensively annotated blood specimens from patients, which cover a broad range of gestational ages and represent the broad demographic diversity and geographic distribution of pregnant women across the United States. We collected the specimens in two large multi-center trials: our PAPR study, beginning in 2011, and our TREETOP study, beginning in 2016. These two studies prospectively collected specimens, together encompassing weeks 17 through 28 of pregnancy, from women carrying a single baby, and, as “all comers” studies, collected information on a variety of important pregnancy outcomes, including preterm birth, preeclampsia, gestational diabetes and other conditions. These specimens and their

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associated data are carefully analyzed to discover and develop informative biomarker signatures for intended use pregnancy populations. We continuously work to add new specimens to our biobanks in additional studies, generating greater opportunities for ongoing development of clinically meaningful and economically impactful biomarker predictions.

We believe our work on proprietary biobanks has established us as a leader in proteomic approaches to characterize pregnancy. We also conduct our bioinformatics analyses on additional specimens from other institutions in the United States and abroad. We analyze each specimen by conducting proteomic and other measurements in our laboratory, which generates large sets of biomarker data for each specimen. Through the analysis and evaluation of biomarkers with advanced bioinformatics approaches, we discover novel predictions for various adverse pregnancy outcomes. We then are able to apply these predictions to non-overlapping independent specimens from different biobanks available to us to confirm and validate the accuracy and performance of the predictions. We add to our biobanks on an ongoing basis by continuously analyzing larger numbers of specimens from our own sponsored studies as well as those from collaborations with maternal fetal medicine leaders around the world. We have validated proprietary biomarker signatures consisting of proteins and clinical variables in specimens collected from the United States, Europe, Asia and Africa. We believe that as our database and sets of predictions grow, verifying and validating the predictions can lead to more rapid and efficient development required to commercialize such predictions in the future.

Advanced Mass Spectrometry Approaches

Mass spectrometry is a highly developed analytical technology capable of precise identification, quantification and characterization of proteins. We have developed and applied innovative state-of-the-art mass spectrometry techniques to screen and detect in our bio-specimens the dynamic changes in protein expression occurring in normal and abnormal pregnancy development. Our proprietary proteomics workflows enable detailed and efficient measurements of hundreds of proteins simultaneously from complex matrices, such as blood. We also utilize a variety of other screening techniques to explore and understand the pregnancy proteome, including large- and small-scale immunoassay screens, other ligand-binding assays and RNA analyses, among others. To ultimately validate biomarker performance, we translate and confirm, on our mass spectrometry platform, the findings that we have generated with these other analytical measurement technologies. Our rich and extensive database of omics data, combined with highly annotated clinical information, is analyzed by state-of-the-art bioinformatics capabilities.

Through our innovative approaches and advances in proteomics, we have discovered and validated meaningful predictions for adverse pregnancy outcomes. Importantly, our mass spectrometry process is well-suited not only for discovery and development activities, but also for high volume commercial production through the use of robotics and automation. Mass spectrometry measurements can be performed on very small blood volumes, which is appealing for patient specimen collection and can lower cost of goods in laboratory analyses. We believe that our specific applications of mass spectrometry-based proteomics can be scaled to efficiently and cost-effectively accommodate the growth that we anticipate in addressing the large pregnancy testing market.

Advanced Bioinformatics

We have assembled a powerful collection of advanced bioinformatics capabilities as a critical component of our platform. Bioinformatics is an essential field of science in which biology, statistics, advanced computational science and information technology are combined to systematically and comprehensively analyze complex biological information. The advanced bioinformatics tools that we apply at great scale to measurements conducted on our biobank specimens to develop high-performing, important predictive algorithms include, but are not limited to: machine learning, artificial intelligence, causal inference, supervised learning methods, dimensionality reduction methods and advanced statistics. As a result of rigorously applying our core expertise and proprietary approaches in bioinformatics, we have discovered high-performing algorithms that reliably distinguish pregnancies with normal protein expression compared to those showing disordered protein expression. Deep bioinformatics insights into the biology of pregnancy have enabled us to discover, verify and validate important predictions of adverse pregnancy outcomes.

We have built an experienced discovery and development team with the deep expertise in science and mathematics necessary to perform rigorous bioinformatics analyses. We strictly adhere to the authoritative guidelines published by NAM on how to reliably develop and validate omics predictions made on complex biological data sets. These guidelines require disciplined validation of predictions to ensure validity and reliability of such predictions before they can be used clinically or commercially. The NAM guidance calls for pre-specifying how the predictions are to be made and then applying testing in completely independent specimen cohorts, in order to be certain that the predictions are valid. Adhering

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to these guidelines, we have been able to validate that a number of our adverse pregnancy predictors are replicable in independent cohorts of patients residing in United States, Europe, Asia and Africa.

Our Product Discovery, Development and Commercialization Approach

We leverage our proprietary technology platform to develop and commercialize novel, high-performing biomarker tests that are designed to make a significant difference to patients, doctors and payers. In our product development efforts, we take a focused and data-driven approach based on rigorous science and economics. Our multi-faceted approach involves the following elements that we apply in the discovery, development and commercialization of our biomarker tests:

•Significant Unmet Need. We select specific conditions of pregnancy that are clinically meaningful and economically important and with significant unmet needs that lack effective solutions. We have initially applied our platform and capabilities to address the problem of preterm birth, given its profound health and economic impacts worldwide. We intend to explore other areas of significant unmet need in pregnancy, including preeclampsia, gestational diabetes and others.

•Proteomic and Bioinformatics Platform. We utilize our platform to understand the biology underlying such conditions in order to discover, verify and broadly validate high-performing predictive biomarker tests. We pursued a multi-year effort to build an extensive biobank resource that we used to discover, verify and validate our first product, the PreTRM test. More than 10,500 patients were enrolled in two large U.S. multi-center clinical validation studies. Beyond their validation of the PreTRM test, these studies provide a deep view into the care and outcomes of diverse singleton pregnancies across the United States, enabling prediction of various other outcomes. We are continuing to conduct analyses by combining growing biobank data from multiple studies to provide new insights that will be the basis of discovering and developing biomarker predictions for a variety of important conditions of pregnancy.

•Demonstrate Health and Economic Impact of Our Test and Treat Strategy. We believe a critical element of our success will be to demonstrate the beneficial health and economic impacts of using the information provided by our biomarker tests. Our approach involves conducting controlled trials and health economic analyses. In the case of our the PreTRM test, an important part of our commercialization strategy involves amassing clinical and economic data to definitively demonstrate that detecting the risk of preterm birth can enable proactive interventions which improve the health of mothers and their babies while at the same time saving substantial health care system costs. Our rigorous, controlled intervention trials, PREVENT-PTB, AVERT PRETERM TRIAL and PRIME, have been designed to evaluate our test and treat strategy in more than 10,000 patients.

We also work with leading health economists and organizations to build rigorous models that describe how application of the PreTRM test and treat strategy impacts both health and economic outcomes. We work to publish models that provide peer reviewed evidence of the value of our strategy, in the form of meeting presentations and articles.

•Payer-Centric Early Reimbursement Strategy. We have adopted what we believe is an innovative payer-centric approach for early commercialization and reimbursement of our biomarker testing. Leveraging the demonstrated short- and long-term health and economic benefits of our biomarker approach, our plan is to gain early reimbursement coverage from major health insurance payers by working with them to demonstrate the economic benefits of using our biomarker tests based upon analysis of claims data from their own plans. With respect to the PreTRM test, we have a major multi-year contract with Anthem, the second largest U.S. health benefits company, pursuant to which Anthem has agreed to purchase a substantial number of PreTRM tests for pregnant women in their network, and will facilitate commercializing PreTRM testing among its members. We believe that this innovative approach serves as a validation of the commercial value of the PreTRM test and treat strategy, and significantly de-risks our initial commercialization activities by providing a pathway for broader market adoption through subsequent coverage decisions by major payers. In November 2020, we were awarded a unique CPT® PLA code by the AMA Editorial Board, specifically for the PreTRM test, which we believe will also help drive payment and coverage decisions for PreTRM testing. Following the implementation of this unique PLA code in April 2021, the code was priced by CMS at $750.

•Broader Market Adoption. We intend to capitalize on our innovative payer-centric reimbursement strategy to facilitate obtaining widespread commercial coverage of our biomarker tests from other health care payers. We plan to leverage publications of clinical and economic studies that further demonstrate benefits of the PreTRM test and treat strategy as we expand coverage across numerous U.S. payer networks. With respect to the PreTRM test,

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we believe that early coverage decisions by respected third-party payers, such as Anthem, will incentivize other payers to more rapidly cover our test. We also anticipate that payer decisions to cover the test will pave the way for physicians to order testing for their patients. Additionally, we believe that insurance coverage in the United States will help to facilitate coverage of our tests in other countries as we expand internationally in the longer-term. In parallel with our pursuit of broader insurance coverage, we intend to deploy our specialty OB-GYN sales force to help drive adoption among physician practices.

We envision that our comprehensive approach will enable us to fully characterize one of the most important periods of time in the lives of both women and children. We believe that the data and predictions that we develop will ultimately create important information tools and services for a variety of customers, including women, health care workers, insurers, pharmaceutical companies, researchers and related companies. Several future opportunities may be created by comprehensively profiling pregnancy, including, but not limited to:

•additional diagnostic predictors;

•epidemiologic, efficacy and best practice assessment tools to better understand and address critical patient outcomes and disparities across the United States;

•pregnancy educational content development, based on our actual data, for physicians, PAs, nurse practitioners, midwives, regulators, insurers, researchers and health care students; and

•pharmaceutical drug development tools.

We also believe that the work we perform in pregnancy could be leveraged more broadly to address other areas in medicine and health care.

The PreTRM Test

Utilizing our product discovery, development and commercialization approach, we focused our first development and commercialization efforts on preterm birth. Prematurity is the leading cause of illness and death in newborns and accounts for approximately $25 billion in annual expense in the United States. Unfortunately, current detection methods fail to identify the great majority of singleton pregnancies that end in preterm births.

Our first product, the PreTRM test, is the only broadly validated, commercially available blood-based biomarker test for prematurity. The PreTRM test accurately predicts the risk that a pregnant woman carrying a single fetus, known as singleton pregnancy, will have a spontaneous preterm birth. The great majority of singleton preterm births are spontaneous, where the mother goes into labor and delivers without any apparent known pathology. The predictive performance of the PreTRM test biomarkers has been extensively validated in diverse populations and geographies, including in the United States, Europe, Asia and Africa.

The strength of the data from our numerous studies of the PreTRM test has enabled us to pursue an innovative approach to commercialization. We have secured early payment for the PreTRM test through our strategic collaboration with Anthem, which represents an important step in achieving initial payer acceptance of our rigorous approach to preterm birth and which we believe will help foster broader insurance coverage adoption. We believe this collaboration significantly de-risks initial commercialization of the PreTRM test, as Anthem is a major payer with plans that include 400,000 U.S. deliveries, representing more than 10% of U.S. annual births and this will provide a pathway for broader market adoption through subsequent coverage decisions by major payers. The clinical and economic utility of a biomarker test administered mid-pregnancy has been published by leading independent health economists, underscoring the benefits of the PreTRM test and treat strategy.

Preterm Birth

Term pregnancy usually lasts between 37 and 42 weeks. Preterm birth is defined as any pregnancy delivering before 37 weeks’ gestation. Preterm delivery includes two major categories: medically indicated preterm birth, where the doctor intervenes because of concerns for the health of the mother and/or the baby, and spontaneous preterm birth where the mother goes into labor spontaneously with no apparent or known pathology.

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Of the estimated 140 million annual births globally, approximately 15 million births are preterm. In the United States, there are approximately 3.6 million annual births, and the 2021 March of Dimes Report Card shows that the preterm birth rate has increased for the last five years, now exceeding 10% of U.S. births.

Preterm birth remains a leading cause of neonatal morbidity and mortality throughout the world, with approximately 22,000 annual deaths from prematurity occurring in the United States. Across the globe, approximately 15 million preterm babies are born every year, of which about one million die. As a consequence of their preterm birth, many infants require significant medical support in intensive care settings to survive and continue to develop. Preterm birth is also associated with significant long-term disability for many individuals, including learning disabilities, cerebral palsy, chronic respiratory illness, intellectual disability, seizures and impairment of vision and hearing, which can generate significant costs throughout the lives of affected children. The annual U.S. health care costs to manage short- and long-term complications of preterm birth have been estimated to be approximately $25 billion, consisting of direct medical costs incurred during pregnancy, lost productivity due to preterm birth in the perinatal period as well as additional associated longer term medical costs for the mother and child. The estimated average expense per preterm delivery in the United States is approximately $65,000. Earlier preterm births are associated with higher costs due to the greater severity of complications occurring in babies born at earlier gestational ages. Given this, the ability to prolong the gestation period by even one week has the potential for significant savings as shown in the figure below. As a result, the economic benefit of a test that can enable effective interventions to prolong the length of time for a baby to continue developing in utero, even for a short period of time, and to improve neonatal health before delivery is substantial.

Distribution of U.S. Preterm Births and Estimated Average First Year of Life Cost per PTB by Gestational Age at Birth

Unfortunately, traditional methods to predict preterm birth risk fail to identify the great majority of pregnancies that will result in preterm births. Currently, the two most commonly used predictors of preterm birth risk are a woman’s history of prior preterm delivery or a short cervical length measurement found early in pregnancy. It is estimated that only about 1 out of 6 singleton spontaneous preterm births can be detected proactively with these clinical methods. The great majority of singleton preterm births only become apparent when the woman goes into labor and delivers, at which point proactive management options are no longer possible. Therefore, the ability to identify the great majority of women who will, in fact, deliver prematurely, and thus be able to more proactively manage their risk, represents a significant unmet medical need and offers a pivotal opportunity to make a positive difference for the mother and the baby.

Proactive interventions to address higher preterm birth risk may include more frequent contact with the patient, additional clinical visits, more intensive education and monitoring of the patient during pregnancy, prophylactic administration of progesterone or anti-inflammatory medications, heightened awareness of impending delivery and reacting more promptly to changes indicative of preterm birth as the pregnancy progresses.

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The PreTRM Test — Our Solution to Preterm Birth

Our first product, the PreTRM test, is the only broadly validated, commercially available blood-based biomarker test to accurately predict the risk of spontaneous preterm birth. The PreTRM test provides an early and individualized spontaneous risk prediction of preterm birth in asymptomatic singleton pregnancies, expressed as a percentage, of delivering before 37 weeks’ gestation, as well as her relative risk compared to the average population.

The PreTRM test is a serum-based proteomic test that combines the ratio of insulin-like growth factor-binding protein 4, or IBP4, to sex hormone-binding globulin, or SHBG, with a woman’s height and weight to predict the risk of spontaneous preterm birth. The PreTRM test is a non-invasive blood test given to a pregnant woman carrying a single fetus during week 19 or 20 of her pregnancy. The PreTRM test is drawn once in singleton pregnancies where there is no evidence of significant fetal anomalies by non-invasive pre-natal genetic screening, or NIPS, or ultrasound, and the women tested are not taking progesterone. The blood specimen is analyzed in our CLIA-approved clinical laboratory using our high through-put mass spectrometry technology. Once the laboratory analysis is completed, a risk report is generated from our validated algorithm and the results are transmitted to the ordering clinician. The PreTRM test provides an early, accurate and individualized prediction of spontaneous preterm delivery risk based on the underlying biology taking place in her pregnancy. An example of a PreTRM test report is illustrated below.

Illustrative Example of PreTRM Test Report

The protein biomarkers of preterm birth utilized in the PreTRM test have been extensively validated in multiple diverse populations in the United States, Europe, Asia and Africa. The PreTRM test accuracy has been rigorously assessed and validated in our PAPR study involving over 5,501 women in 11 obstetric centers across the United States. Our completed PAPR study validated the biomarker signature which is highly predictive of spontaneous preterm birth risk. The performance of the PreTRM test biomarkers was replicated in a second independent large prospective U.S. study, TREETOP, supporting that the IBP4 to SHBG predictor can be used to accurately risk-stratify patients for implementation of preterm birth preventive strategies and direct patients to appropriate levels of care. The ability to accurately risk-stratify is critical for enabling precision care management. We and our collaborators are also conducting three prospective controlled intervention studies — The Prediction and Prevention of Preterm Birth, or PREVENT-PTB, study, or

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PREVENT-PTB, the Serum Assessment of Preterm Birth Outcomes Compared to Historical Controls, or AVERT PRETERM TRIAL and Prematurity Risk Assessment Combined With Clinical Interventions for Improving Neonatal outcoMEs, or PRIME — to demonstrate the value of identifying higher risk pregnancies coupled with proactive interventions to improve the well-being of mothers and newborns. Further underscoring the benefits of the PreTRM test and treat strategy, the clinical and economic utility of a biomarker test administered mid-pregnancy has been published by leading independent health economists.

The strength of the data from our clinical trials of the PreTRM test has enabled us to pursue an innovative and accelerated approach to commercialization. We have secured payment for the PreTRM test through a major strategic payer, Anthem, representing an important step in achieving initial payer acceptance of our rigorous methods to address preterm birth. We believe this collaboration significantly de-risks initial commercialization of the PreTRM test, as it provides payment from a major payer representing more than 10% of U.S. pregnancies annually and provides a pathway for broader market adoption through subsequent coverage decisions by major payers.

Biomarker Discovery and Clinical Validation of the PreTRM Test

Adherence to National Academy of Medicine Guidelines

We rigorously adhere to authoritative NAM guidelines published in 2012 for developing and validating multi-omics predictions and applying important principles to address adverse conditions that arise in pregnancy. The guidelines specify three phases of work to be performed in non-overlapping sets of specimens:

Discovery Phase. A set of specimens from patients whose outcomes are known are analyzed in the lab to find biomarker differences between individuals with an adverse outcome versus individuals without that particular outcome (e.g., pregnancies that deliver preterm versus term pregnancies). Algorithms are built on high performing predictions that can be tested in the next phase.

Verification Phase. High-performing predictive algorithms selected from discovery work are pre-specified and applied to a completely independent set of non-overlapping specimens, with the laboratory being blinded to the outcomes. The performance of the algorithms is either independently verified, or confirmed, by an external statistician, who ranks the algorithms according to predictive accuracy. Once verified, highest performing algorithms are locked down in the form of optimized tests that can be validated in final validation phases before commercialization.

Validation Phase. In a third, entirely independent set of non-overlapping specimens, the laboratory measurements are performed, and the laboratory is blinded to patient outcomes. The laboratory data are time-stamped and are transferred to an external statistician, who applies the pre-specified algorithm to the laboratory measurements and independently validates the performance of the test by breaking the blind. At this point, a prediction that has been independently and rigorously validated can be used for clinical decision-making in trials and/or commercialization.

PAPR Study

The biomarkers used in the PreTRM test have demonstrated strong clinical performance in accurately predicting women at risk of preterm birth across diverse patient populations in the United States, Europe, Asia and Africa. The initial discovery, verification and validation of our spontaneous preterm birth biomarker risk predictor was performed in the 5,501 patient Proteomic Assessment of Preterm Risk, or PAPR, study.

The PAPR study was initiated in April 2011 and the last observed birth occurred in February 2014. The study was designed to discover, verify and validate biomarkers and clinical variables that accurately predict the risk of spontaneous preterm birth. We measured and evaluated protein expression of thousands of distinct proteins by their expression in maternal serum to assess their effectiveness as predictors of spontaneous preterm birth early in pregnancy before symptoms occur. The PAPR study analyzed blood specimens collected from 5,501 pregnant women performed at 11 maternal fetal medicine sites, across gestation from 17 weeks and zero days to 28 weeks and six days, and consisting of a diverse demographic ethnic and geographic groups of women broadly representative of the U.S. pregnant population. Specimens were collected and processed in a standardized manner for frozen storage and subsequent laboratory analyses. Maternal serum was processed by our proprietary proteomic workflow, using liquid chromatography and mass spectrometry, and proteins were identified and quantified by multiple reaction monitoring mass spectrometry.

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From our analysis of thousands of proteins from these specimens, we discovered and verified a specific combination of two proteins, IBP4 and SHBG, coupled with clinical variables consisting of a woman’s height and weight, which we developed into a proprietary predictive algorithm. That algorithm demonstrated highly accurate prediction of spontaneous preterm birth risk at mid-pregnancy.

We executed a multi-step process, strictly following NAM Guidelines, for discovery, verification and validation of the PreTRM test predictor. These steps involved pre-specification of study plans and analyses, site document verification of clinical data, blinding protocols for three independent specimen sets and the use of outside statisticians for the un-blinding of data and read-outs of the results of both verification and validation. The collected specimens were separated into three independent non-overlapping sets of patients, each set comprised of spontaneous preterm deliveries occurring before 37 weeks’ gestation and term deliveries occurring during or after week 37 of gestation. From the first set of specimens of 86 preterm deliveries and 172 term deliveries used in the discovery phase, we identified biomarkers and algorithms that could predict preterm births on specimens drawn between 17 and 28 weeks. This led to our identification of the best performing predictor, found in specimens drawn during weeks 19 and 20 of pregnancy. In the verification phase of the test development, the second set of completely independent specimens of 50 preterm deliveries and 100 term deliveries was analyzed in a blinded fashion using the predictive algorithm discovered in the first phase and demonstrated consistent predictive performance. In the validation phase, the third completely independent set of specimens of 81 preterm deliveries and 162 term deliveries was analyzed using the same algorithm, which again demonstrated consistent predictive performance. Following the readout of the pre-specified validation of test performance, the consistency across the three phases was examined. More than 500,000 data points were generated across the 217 preterm delivery cases and 434 matching term delivery controls examined across the three phases, in a 1:2 nested case:control design.

We utilized area under the receiver operating characteristic curve value, or AUROC, as a measure of the predictive performance of the PreTRM test. AUROC is an effective way to measure the diagnostic testing separation of measured biomarker scores found preterm cases versus those found in term control deliveries. External statisticians validated that a combination of biomarkers and clinical variables had an AUROC value of 0.75 for a prediction of spontaneous preterm birth before 37 weeks’ gestation versus at or after 37 weeks’ gestation. At a threshold where the sensitivity, or the fraction of preterm deliveries correctly classified as “higher risk”, and specificity, or the fraction of term deliveries correctly classified as “lower risk”, were maximized, the sensitivity was 0.75 and specificity was 0.74. In a Kaplan Meier analysis, performed to examine times to delivery across patients stratified at that same threshold, those at higher risk delivered earlier than those at lower risk, demonstrating highly statistically significant separation between the groups, p = 0.004.

TREETOP Study

Our second large clinical validation study, A MulTicenteR AssEssmEnt of a SponTaneOus Preterm Birth Predictor, or TREETOP, enrolled patients in October 2016 through January 2019, with the last delivery occurring in May 2019. The TREETOP study enrolled 5,011 pregnant women from 18 sites across the United States, with blood drawn in a window of 18 weeks and zero days to 21 weeks and six days. The TREETOP trial was designed to assess and validate:

•accurate risk prediction for all preterm birth, including both spontaneous and medically indicated preterm births,

•possible expansion of a validated blood draw window for PreTRM testing;

•the threshold for risk stratification of the PreTRM test;

•discover biomarkers predictive of time-to-birth remaining in a pregnancy;

•discovery of biomarkers that date the pregnancy, which we refer to as a pregnancy clock; and

•the performance of additional biomarkers for prediction of spontaneous preterm birth and other pregnancy complications.

Given the large body of evidence generated from PAPR and our other collaborative biomarker studies, the TREETOP specimens from the 5,011 enrolled subjects were randomized into two cohorts:

•a first patient cohort of 847 specimens to validate certain pre-specified predictions originating from our earlier PAPR study work, and to verify new potentially enhanced predictions that could be validated later on the specimens of the remaining unanalyzed cohort of patients; and

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•a second cohort of remaining specimens has been held in reserve to validate, in the future, a number of potentially enhanced predictions that may eventually be incorporated into our commercially available testing as we build our pipeline of adverse pregnancy outcome predictions.

Previous work performed on our proprietary PAPR study biobank specimens demonstrated that our validated spontaneous preterm birth biomarkers accurately predicted risk not only for spontaneous preterm delivery, but also for medically indicated preterm delivery in which the majority are preeclamptic preterm deliveries. From our studies and publications in the literature, the biological function of the PreTRM test proteins suggested an ability to predict preeclampsia and other conditions of placental dysfunction. These conditions appear to underlie a number of adverse pregnancy outcomes that could be explored going forward in TREETOP.

In an analysis of the first cohort, the study demonstrated:

•accurate prediction by IBP4 and SHBG biomarkers of early preterm delivery, which refers to deliveries of less than 32 weeks’ gestation due to any cause, with an AUROC of 0.76 (p = 0.023);

•accurate prediction of severe neonatal morbidity and mortality based on a standard published composite index with an AUROC of 0.67 (p = 0.005); and

•accurate prediction of increased neonatal hospital length of stay (p = 0.024).

In the first cohort, we also validated a PreTRM test risk threshold to statistically stratify higher versus lower risk patients based on a pre-specification of the threshold from PAPR data and by applying it to specimens in this cohort. The validated threshold of 15%, twice the average population risk of spontaneous preterm birth, was demonstrated to statistically separate patients at higher versus lower risk of preterm delivery based on the PreTRM test results. This is the risk threshold for interventional actions to be taken in the PRIME prospective intervention trial that was initiated in 2020.

PAPR and TREETOP together encompass a powerful resource of specimens and clinical data from more than 10,500 pregnant women collected over an eight-year period to characterize what takes place biologically in pregnancy. Both PAPR and TREETOP enrolled a large number of women who were not known to be at risk of preterm birth based on other identified clinical factors, and as such, were not already covered by professional society guidelines addressing the need for risk stratification and guidance of treatment. We believe the results from these studies provides a deep view into the outcomes of diverse singleton pregnancies across the United States and prediction of these outcomes.

Our Prospective Intervention Studies — Demonstrating the Benefits of the PreTRM Test and Treat Strategy

Following the validation of predictors for spontaneous preterm birth, we set out to demonstrate the value of identifying higher-risk pregnancies coupled with proactive interventions to improve the well-being of mothers and newborns. We have worked with respected collaborators to conduct three prospective intervention studies in order to demonstrate the clinical utility and economic value of the PreTRM test and treat approach.

PREVENT-PTB Study

The Prediction and Prevention of Preterm Birth, or PREVENT-PTB, study was a prospective randomized controlled intervention study conducted at Intermountain Healthcare in Salt Lake City, Utah. We enrolled a total of 1,208 patients beginning in May 2018 with the last patient enrolled in February 2019. The study enrolled women who were 18 years or older, with a singleton pregnancy between 19 weeks and five days and 20 weeks and six days gestational age and with no history of prior preterm birth and normal cervical length at or before the time of enrollment. The purpose of the study was to evaluate the impact on the health and economics of applying the PreTRM test to screen pregnant women for risk of spontaneous preterm delivery and treating women identified at higher risk with proactive interventions. The clinical impact and outcomes evaluated included:

•length of stay in neonatal intensive care unit, or NICU

•overall hospital length of stay

•neonatal health improvement,

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•NICU preterm cost reduction, and

•reduction in the rate of preterm delivery.

The PREVENT-PTB trial, using a pre-test randomization, strictly followed a NAM recommendation to assess the clinical impact of identifying higher risk patients coupled with simultaneous proactive interventions. Women who enrolled were randomized 1:1 into two groups — screened and control groups. The screened group was assessed by the PreTRM test, and those who were identified by the test as being at higher risk of preterm birth were offered a bundle of proactive interventions. These included weekly contact with a care management nurse, two preterm prevention clinic visits, cervical length monitoring, weekly injection of 17-α-hydroxyprogesterone caproate, daily administration of low-dose aspirin and the administration of corticosteroid treatment at a lower threshold if patients indicated clinical signs or symptoms of imminent delivery. Patients in the screened group that were found not to be at higher risk by the PreTRM test received standard obstetrical care. The control group did not receive the PreTRM test and received standard pregnancy care only. The diagram below illustrates the study design for PREVENT-PTB:

Study Design of PREVENT-PTB

The PREVENT-PTB results published on August 16, 2021 in the American Journal of Perinatology. The key reported findings were:

•Hospital and NICU length-of-stay reduced by more than 70% in preterm infants;

•Severe neonatal morbidity or death was reduced by 66% across infants affected by complications of prematurity;

•Significantly faster discharge rates of preterm deliveries from the NICU; and

•Observed 23-80% reduction in preterm delivery rates occurring before 37, 35, and 32 weeks of pregnancy, even though the study was not statistically powered to definitively answer whether rate reductions were possible.

AVERT PRETERM TRIAL

The Serum Assessment of Preterm Birth Outcomes Compared to Historical Controls, or AVERT PRETERM TRIAL, is a prospective, historically-controlled intervention trial conducted at Christiana Care Health System in Newark, Delaware. The purpose of the study is to evaluate the impact on health and economics by applying the PreTRM test to screen pregnant women for risk of spontaneous preterm delivery and to proactively intervene in individuals who are shown by the PreTRM

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test to be at higher risk of sPTB. The two co-primary endpoints are total neonatal hospital length of stay and composite neonatal morbidity and mortality in the PreTRM-screened group versus the historical control group, which did not have a PreTRM test. A number of secondary clinical impact and outcomes observations include reduction in total preterm births, a reduction in total hospital stay for sPTB and reduction in total hospital stay for any preterm birth, measures of neonatal health assessed as a composite neonatal morbidity/mortality index and NICU preterm costs.

In this trial, we are comparing a screened group that is assessed with a PreTRM test and where higher risk patients receive intensive interventions, to a historical control group where patients do not receive PreTRM testing and receive usual standard of care treatment. Eligible women were screened using the PreTRM test taken during week 19 or 20 of pregnancy, and those identified as having a higher risk were offered a bundle of interventions, including daily vaginal progesterone, daily low-dose aspirin, closer monitoring by their clinicians and case management nurses.

Design of the AVERT PRETERM TRIAL

Health and economic outcomes of the screened group are being compared with those of the historical control arm. Due to the COVID-19 pandemic, trial enrollment of the prospective arm was stopped in March 2020. We expect topline results of the study to be available in the first half of 2022.

PRIME Study

In collaboration with Anthem, we are conducting Prematurity Risk Assessment Combined With Clinical Interventions for Improving Neonatal outcoMEs, or PRIME, study, which is a prospective randomized controlled study of up to 6,500 enrolled pregnancies in approximately 14 respected maternal fetal medicine centers located within Anthem’s insurance network. We began enrollment in November 2020, and enrollment is ongoing.

After enrollment, all subjects will have a blood specimen collected once during either week 19 and 20 of pregnancy. Prospectively enrolled pregnant women will be randomized 1:1 to either a screened arm, called the PTB Prevention arm, or a control arm that receives standard obstetrical care. Only subjects randomized to the PTB Prevention arm will receive the results of the PreTRM test. Those women randomized to the PTB Prevention arm will receive either routine standard care pregnancy management or a multimodal intervention protocol reserved for higher risk pregnancies based on the results of the PreTRM test. The design of the PRIME study is illustrated below.

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Design of the PRIME Study

In the PTB Prevention arm, PreTRM test results will be reported to the subject, the study investigator and the subject’s primary pregnancy care provider. A woman with a reported “Higher Risk” test result, at or above the 15% threshold (which is equivalent to more than a doubling of average population risk of spontaneous preterm delivery less than 37 weeks’ gestation), will receive multiple interventions, including weekly nurse case management contact, daily vaginal progesterone, daily low dose aspirin and additional vaginal ultrasound cervical length determinations, with cerclage considered for cervical lengths less than 10 millimeters. Subjects in the “Not Higher Risk” group will receive standard obstetrical care for the duration of pregnancy through hospital discharge.

Major perinatal outcomes to be evaluated in each group include length of NICU and total hospital stay, measures of neonatal health, NICU preterm costs and preterm delivery rates. All subjects will be followed through the duration of the pregnancy and delivery, and neonates will be followed until initial hospital discharge to assess the course of pregnancy, labor and any related maternal or fetal complications. Readmission of infants will also be assessed at 180 days, 1 year and 3 years of life using the Anthem/HealthCore Integrated Research Database to evaluate longer-term outcomes and costs associated with preterm delivery.

The study has a pre-specified interim look to evaluate the two co-primary endpoints, total neonatal hospital length of stay and composite neonatal morbidity and mortality, with a stopping criterion of statistical significance being reached by either one or the other of these outcomes, which is envisioned to take place at 2,800 deliveries completed. Enrollment of 2,800 PRIME study patients is expected in late 2022, and the interim analysis is expected to occur in the first half of 2023, depending on disruption due to COVID-19 conditions.

Other Relevant Studies and Publications

Healthcore/Anthem Health and Economic Study

HealthCore, Inc., a subsidiary of Anthem, conducted an insurance claims data analysis on the cost-effectiveness of screening more than 40,000 mothers and babies within Anthem’s commercially insured membership. The model evaluated the cost impact to be expected from screening with the PreTRM test, and from then providing a bundle of interventions to PreTRM-higher risk patients as compared to the effect of standard care without a PreTRM test. The model predicted that these interventions would result in:

•a 20% reduction in preterm birth before 37 weeks’ gestation;

•$1,608 in gross savings per pregnant woman tested (accounting for all costs except that of a $745 list price cost modeled for the PreTRM test);

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•a 10% reduction in neonatal intensive care admissions;

•a 7% reduction in overall hospital length-of-stay; and

•a 33% reduction in births at less than 32 weeks’ gestation.

The authors concluded that the PreTRM test and treat strategy demonstrated cost savings across a variety of reasonable assumptions and scenarios examined. An abstract reporting these results was presented at the 2021 International Society for Pharmacoeconomics and Outcomes health economic conference on May 18, 2021, and a manuscript was published on the results on September 14, 2021 in the journal ClinicoEconomics and Outcomes Research. Grabner et al., Cost-Effectiveness of a Proteomic Test for Preterm Birth Prediction; Clinicoecon. Outcomes Res. (2021) 13:809-820.

Clinical and cost impact analysis of a novel prognostic test for early detection of preterm birth

In 2015, health economic and maternal fetal medicine experts built and published an independent model to analyze health and economic benefits of a novel mid-pregnancy preterm delivery risk biomarker test and treat strategy for the United States, where women at higher risk of preterm delivery would receive daily vaginal progesterone as a sole intervention. At a biomarker test sensitivity and specificity of 80%, the model predicted that identifying and intervening on higher risk pregnancies resulted in a 7% decrease in preterm birth rate, a 23.5% decrease in infant mortality, a 27% decrease in acute complications at birth and a 13% decrease in the rate of developmental disabilities, accompanied by a gross health economics savings, exclusive of the cost of testing, of $1,395 per pregnancy screened. These experts concluded that this approach could be a dominant strategy to improve health and decrease health care costs.

Product Pipeline

While we have leveraged our technology platform to currently pursue the development and commercialization of the PreTRM test, we believe our technology platform has broad applicability across a wide array of pregnancy-related conditions. We and our clinical trial collaborators are also continuing to conduct analyses by combining biobank data from the PAPR and TREETOP studies, to provide new insights into the predictive capabilities of the PreTRM test and other predictive biomarker algorithms. We are discovering, developing and validating a broad portfolio of product candidates including those focused on the conditions listed below:

When we refer to “discovering, developing and validating” our product candidates, we are referring to the three phases of work for development of predictive tests as published in the NAM guidelines, as summarized below.

In the “discovery” phase, we analyze a set of biologic specimens from patients whose pregnancy outcomes are already known to find biomarker differences between individuals who had an adverse pregnancy outcome versus individuals who did not have an adverse pregnancy outcome (e.g., pregnancies that delivered preterm versus pregnancies that lasted to term). We then build predictive algorithms, based on high performing predictions, to be tested in the next phase.

In the “verification” phase, we apply the high performing predictive algorithms selected during the discovery phase to a completely independent set of new biologic specimens that were not tested during the discovery phase. An independent, external statistician then verifies, or confirms, the performance of the algorithms, and ranks them according to predictive accuracy. Once they are verified through this process, the highest performing algorithms are “locked down” in the form of optimized tests that can be validated in a final phase, prior to commercialization.

In the “validation” phase, a third, entirely independent set of biologic specimens that were not tested during either the discovery phase or the verification phase are tested in a laboratory, with the laboratory blinded to patient outcomes. The laboratory data are time-stamped and are transferred to an external statistician, who applies the pre-specified algorithms to the laboratory measurements and independently validates the performance of the test by breaking the blind. At this point, a prediction that has been independently and rigorously validated can be used for clinical decision-making in trials and/or commercialization.

Preeclampsia

Condition. Preeclampsia, estimated to affect 5% - 8% of pregnancies in the United States, is a complication characterized by high blood pressure and signs of damage to one or more organs, including liver, brain and kidneys, and may also have adverse effects on blood coagulation. Preeclampsia usually begins after 20 weeks of pregnancy in women

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whose blood pressure had been normal, but it can also arise earlier in pregnancies. Left untreated, preeclampsia can lead to serious, even fatal, complications for both the mother and baby. Once a pregnant woman is diagnosed with preeclampsia, a common treatment is to deliver the baby; however, if the delivery occurs before the infant reaches term, complications of preterm birth can ensue. We believe that a biomarker test to better identify women who are at higher risk of preeclampsia earlier in pregnancy could lead to better management of this serious condition. It is estimated that the U.S. annual cost of preeclampsia is approximately $5 billion.

Objective for a Biomarker Test. We are working to develop a protein biomarker test that can identify women at higher risk of developing preeclampsia as a means to enable earlier proactive interventions to mitigate the complications that occur as a result of this condition. We believe that such interventions could also prevent preeclampsia in certain patients, which has the potential of lowering the long-term risk of cardiovascular disease and stroke that occur later in life in women who suffer preeclampsia. There is also potential for a predictive biomarker test to inform therapeutic development to address this condition.

Development Status. We have conducted discovery, verification and validation activities for a variety of preeclampsia biomarker predictions, some of which have been published. Some of these predictions include the use of our PreTRM test biomarkers as well as others. We are in the process of selecting which predictions will be validated in specimens of our second TREETOP cohort prior to commercialization, based on the NAM guidelines described above.

Molecular Time-to-Birth

Problem and Need. We have already developed a high performing biomarker signature in our PreTRM test for spontaneous preterm birth risk. For a pregnant woman who is not at higher risk of preterm birth by our PreTRM test, she would typically like to know how much time is remaining in her pregnancy until delivery. Unfortunately, current methods for predicting the length of gestation, including due date prediction from last menstrual period and ultrasound dating based on fetal measurements early in pregnancy, lack precision and provide inaccurate dating as to when delivery will occur. We have identified biomarker signatures that predict the time remaining in a pregnancy with greater accuracy than is available from current methods.

Objective for a Biomarker Test. Our objective is to develop a more accurate time-to-birth prediction for women not at higher risk of PTB. We believe this will be of great interest to pregnant women as a consumer test that may serve as an aid to decision-making for travel, work, vacation planning and other life-scheduling decisions.

Development Status. Using our proprietary biobanks and proteomics platform, we have discovered and verified biomarkers with superior time-to-birth predictive performance, as compared to current dating methods. We have developed the ability to determine more precisely how much time is remaining in a woman’s pregnancy based on her individual biology at the time of her blood draw, for example, during weeks 23 through 25 of pregnancy. We plan to validate a molecular time-to-birth predictor and publishing its performance data prior to making it available commercially, based on the NAM guidelines described above.

Gestational Diabetes Mellitus

Condition. Gestational diabetes mellitus, or GDM, is characterized by high blood sugar levels, or hyperglycemia, during pregnancy in a woman who was not diabetic before her pregnancy. GDM is estimated to affect approximately 10% of pregnancies and cost $1.6 billion annually in the United States as a result of short- and long-term maternal and child complications. GDM increases the risk of preeclampsia, depression, and the need for Caesarean sections. Babies born to mothers with poorly treated GDM are at increased risk of being too large, having low blood sugar after birth, and jaundice. If untreated, GDM can also result in stillbirth. Children born from mothers with GDM are also at risk of being overweight and developing type 2 diabetes. We believe that knowing who is at high risk of GDM earlier in pregnancy would be of great benefit given that interventions could significantly reduce the adverse effects of this condition. Current methods for identifying GDM in most patients typically take place between 24-26 weeks’ gestation, missing opportunities to allow such women to receive proactive interventions earlier in pregnancy that may be effective in preventing or mitigating GDM.

Objective for a Biomarker Test. Our goal is to develop a blood-based biomarker test that can identify earlier in pregnancy which women are likely to develop GDM. We believe that such information will enable earlier interventions to mitigate risks and help focus resources on higher risk pregnancies as a means to improve the health of mothers and babies.

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Development Status. We have discovered and verified high performing biomarker prediction of GDM by applying our proteomics platform technologies to specimens from our PAPR and TREETOP biobanks. We plan on further verifying and ultimately validating a GDM predictor and publishing its performance data prior to making it available commercially, based on the NAM guidelines described above.

Growth Restriction

Condition. Fetal growth restriction, or FGR, is estimated to affect as many as approximately 3%-7% of pregnancies worldwide. There are immediate consequences of FGR, including fetal challenges in withstanding the stresses of vaginal delivery, decreased oxygen levels and brain injury, hypoglycemia (low blood sugar), lower resistance to infection, difficulty in maintaining body temperature and abnormally high red blood cell counts. Longer-term, infants can have neurodevelopment issues, metabolic and cardiovascular complications.

Objective for a Biomarker Test for FGR. By identifying molecular events that precede measurable changes in fetal size, we aim to address the placental dysfunction and other growth restriction etiologies that lead to fetal growth restriction and thereby enable earlier proactive interventions.

Development Status. We have discovered placental dysfunction biomarkers as a first step to predicting fetal growth restriction. We are working to discover additional biomarkers that illustrate expression differences in normal and growth-restricted pregnancies. We believe that this work could lead to improved detection of FGR pregnancies earlier and may lead to proactive interventions to better address this problem. Verification and validation phases and publication of our findings, based on the NAM guidelines described above, will be required before such testing can be commercialized.

Stillbirth

Condition. Stillbirth is a heartbreaking and tragic outcome, with a reported incidence of 5.7 per 1,000 pregnancies in the United States. Stillbirth is typically defined as fetal loss occurring after 20 weeks’ gestation. Causes of stillbirth include placental or umbilical cord problems, preeclampsia, lupus, clotting disorders, lifestyle choices, and infection, among others. Approximately one-third of U.S. stillbirth cases occur without any known cause.

Objective for a Biomarker Test for Stillbirth. Our goal is to discover biomarker expression changes that occur early during pregnancy that are highly predictive of changes taking place in the mother and/or the fetus that increase the risks of stillbirth, so that appropriate interventional strategies can be developed to address this condition. Given that our vision is to comprehensively profile the biology of pregnancy by leveraging our platform technologies to characterize disruption of normal developmental biology in both the mother and the fetus, we believe that there is a significant opportunity to improve earlier detection and the potential to develop targeted interventions to better address this serious problem.

Development Status. We have developed the ability to measure the expression of hundreds of proteins by our advanced mass spectrometry proteomic technology. These proteins are members of key biochemical proteomic pregnancy signaling pathways, including pathways that are operative in stillbirth. As we increase the density of proteins characterized in future discovery work, we believe that further characterization of pregnancy and key proteomic expression factors in stillbirths vs. normal pregnancies is a promising area for further discovery, verification and validation of high performing biomarkers predictors with potential to improve detection and enable new interventions for stillbirth. Finally, we note that development for prediction of other adverse outcomes (e.g., growth restriction) has the potential to reduce stillbirth.

Postpartum Depression

Condition. There are hormonal, physiological and psychological changes that occur in women both during and after pregnancy. Postpartum depression is a severe form of clinical depression related to pregnancy and childbirth, affecting approximately 15% of women during the year following delivery of a child. By contrast, the “baby blues” is a transient, well-known phenomenon that typically resolves on its own. The annual U.S. economic burden of postpartum depression is estimated to be approximately $2.4 billion. We believe that a biomarker test for postpartum depression is another area are where our platform can be beneficially applied. We believe that early identification of such pregnancies will enable a number of approaches that may prevent or mitigate the severity of this common condition, and that this information may also facilitate drug discovery.

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Objective for a Biomarker Test for Postpartum Depression. Our objective is to leverage our understanding of key pregnancy, pathways gained through the application of our advanced proteomic technologies and bioinformatics, to develop further insights for early identification of pregnancies that are destined to develop postpartum depression.

Development Status. In our discovery efforts, we have discovered protein expression patterns in hormone signaling pathways and other pathways of pregnancy that we believe may be operative in the development of postpartum depression. We are working to increase the coverage of biochemical signaling pathways and expression patterns related to postpartum depression in our protein expression database, which we believe will enable the development of a high performing predictor to address this area.

Timing of Pipeline Developments

In the development of high-performing biomarker signatures, the timing of when to move from the discovery phase to the verification phase to the validation phase, based on the NAM guidelines described above, is entirely dependent on the performance data. There are also the additional requirements to analytically validate the particular components measured in biomarker tests by our laboratory and to build the informatics and automation for integrating all components into new testing processes. Given the uncertainties in reliably predicting timing for these phases and additional requirements, we estimate that the timing for our next new commercially available product is a matter of years, not months. We will only advance our programs from one stage to the next if we believe that they qualify for advancement pursuant to the NAM guidelines described above. We believe that additional capital required to do this work could help to accelerate the progress on our comprehensive pregnancy pipeline.

Other Scientific Publications

We are including summaries of the following three publications because we believe that they provide evidence of, and support for, our leadership in the area of combining the disciplines of proteomics and bioinformatics with rigorous clinical testing and economic analysis to provide physicians and patients with actionable data and information designed to result in better maternal and neonatal health at lower cost.

Effects of Selective Exclusion of Patients on Preterm Birth Test Performance

In December 2019, two of our employees, Dr. Boniface and Julja Burchard, together with Dr. George R. Saade of the Department of Obstetrics & Gynecology, University of Texas Medical Branch, Galveston, Texas, published an article entitled “Effects of Selective Exclusion of Patients on Preterm Birth Test Performance” in the Journal of Obstetrics and Gynecology. This publication highlighted an erroneous practice in preterm birth research that has led to artificial increases and incorrect claims of reported biomarker test performance. Some investigators have conducted analyses of biomarker differences in preterm deliveries vs. term deliveries by examining only those subjects remaining after exclusion of some preterm and/or term births near the 37-week boundary between preterm and term deliveries. For example, an investigator may analyze those preterm deliveries occurring before 34 weeks’ gestation vs. term deliveries that occurred after 37 weeks’ gestation, which selectively excludes all preterm subjects from analysis who delivered in weeks 34 through the end of week 36. Such an incomplete analysis fails to cover the high percentage of preterm deliveries that actually occur in this interval, and does not permit an accurate assessment of the performance of a predictor that would be applied to an entire intended use pregnancy population in actual clinical practice. This approach has been termed “gapping” because the resulting distribution of births in the analysis has a gap in it after exclusion of subjects. The publication examined the impact of gapping, utilizing biomarker data from our PAPR study. The omission of later preterm births from the analysis transformed moderate biomarker performance in classification of preterm birth risk to artificially high performance, a result significantly different from measuring a biomarker classifier’s performance on an entire intended use population, which has deliveries occurring at all possible gestational ages. Further, “performance” assessment in this incomplete population generated predictions that substantially under-estimated risk of preterm birth at fewer than 37 weeks while over-estimating risk of very early preterm birth. Incorrect risk prediction could lead to both under- and over-treatment, and has potentially serious clinical implications. The authors demonstrated that performance of a test cannot be derived from a population that does not account for all gestational ages that will be found in the population who will exist in the population to be tested and offered guidance to test developers to improve the design and analyses in preterm birth biomarker studies by including representative sets of preterm subjects and term control subjects at all gestational ages in order to report unbiased and accurate test performance measures.

This publication contains principles and guidance we have given for improving the analysis and design of biomarker prediction work. The publication has generated interest in the clinical and scientific community, with letters to the editor on

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the article appearing in the Journal of Obstetrics and Gynecology. We believe that this work demonstrates the leadership position we have in pregnancy biomarker test development and validation.

Analytical Validation of Protein Biomarkers for Risk of Spontaneous Preterm Birth

In June 2017, several of our employees, including Dr. Boniface, published an article entitled “Clinical Validation of Protein Biomarkers for Risk of Spontaneous Preterm Birth” in the Journal of Clinical Mass Spectrometry, a leading mass spectrometry journal. Analytical validation is the process by which a laboratory establishes the measurement accuracy, in our case, at the biochemical level, of its laboratory processes. Analytical validation is a requirement of the authoritative NAM guidelines for multi-omics predictor development. Furthermore, analytical validity is one of the key elements that payers examine in their evaluative process for considering reimbursement.

The article referenced above described a rigorous analytical validation of our commercial mass spectrometry proteomic workflow. This work demonstrated the accuracy (when compared to a reference model), linearity, limits of quantitation, analytical specificity and resilience to differences in patient serum and common endogenous interferents for commercial processes used to report our test results. In particular, this work comprehensively examined individual proteomic analyte performance which, when combined into a proteomic score consisting of a ratio of mass spectrometric measurements, fundamentally enables the computation of risk of preterm delivery of a patient. The authors illustrated how the methodology may be used by others performing similar work in the proteomic biomarker discovery, development and clinical test production community. We believe that this work illustrates our leadership in clinical proteomics.

The Building Blocks of Successful Translation of Proteomics to the Clinic

In June 2018, Drs. Kearney and Boniface and two other experts in the field of proteomic test development published an article entitled “The Building Blocks of Successful Translation of Proteomics to the Clinic” in the journal Current Opinion in Biotechnology. To date, very few mass spectrometry-based proteomic tests have been commercialized. The common elements in the development of two commercially available proteomic clinical tests were examined in this paper, which described the experience of two organizations in bringing products from discovery to commercial availability. The authors demonstrated that the tests, the PreTRM test and a blood test used to assess the cancer risk of lung nodules discovered by radiology, covering completely different medical conditions, shared elements that elucidate their successful clinical development. The paper concludes that development of both the PreTRM test and the lung nodules test benefited from the use of an unbiased systems-biology strategy, adherence to NAM best practices, careful attention to analytic performance of biomarkers and the use of data normalization techniques. The purpose of this work was to demonstrate, both to the community and to regulators, principles that can be followed to successfully translate ‘omics research into actual clinical tests, and to offer insights to others on successful proteomic test development methods.

Commercialization

The beginning of life and end of life are widely recognized to be costly periods for health care services in the human life cycle. Health care insurers characterize preterm birth as an exceptionally costly condition, and a number of them develop data and models that underscore the economic impact of preterm births. Given the substantial economic benefits that arise from the use of the PreTRM test, we are pursuing an innovative commercialization strategy focused on accelerating broad use of the PreTRM test by collaborating with a major health benefits provider. We are collaborating with Anthem in the PRIME study to generate rigorous data across approximately 10 centers in their network. Anthem is paying us for PreTRM testing done as a part of that study at a specified rate per test, pursuant to a Laboratory Services Agreement described under "— Material Agreements" below. Furthermore, we have entered into an active commercial collaboration with Anthem to introduce PreTRM testing into its various health plans, supporting bundled payment mechanisms, including value-based contracting. We believe that entering the market with payment by a well-respected, data-driven company such as Anthem will significantly de-risk early commercialization and also strongly influence payers in their decisions to cover PreTRM testing for patients in their networks.

Generating publications and scientific presentations is a core pillar of our market awareness strategy and is important for establishing validity and utility of new products in the life sciences community. We plan to work closely with maternal fetal medicine experts, payers and key opinion leaders to generate clear use-cases, as well as peer-reviewed publications that illustrate our product performance claims and value proposition. We are working with more than 60 investigators world-wide. In addition, we plan to increase awareness by developing and deploying online and in-person training and educational tools that explain the PreTRM test and our proteomics and bioinformatics platform in easy-to-access, easy-to-understand and credible, scientifically rigorous ways.

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We plan to build the full commercial team, composed of sales, marketing, customer service, and managed care personnel, required to effectively address this large market opportunity. We anticipate that our sales force will promote our products across the United States with a targeted focus on OB/GYNs and maternal-fetal medicine providers in the women’s health market, and we are building a sales team to call on physician offices to address the large OB/GYN sales channel opportunity. We are also recruiting an experienced market access team to secure contracts with commercial and governmental payers and self-insured employer groups, and plan to construct a multi-faceted digital marketing platform to scale consumer awareness and engagement. We are also evaluating the expansion of our business internationally, with the PreTRM test representing one potential avenue for expansion.

Our Clinical Laboratory Characteristics

Our PreTRM testing laboratory is based in Salt Lake City, Utah. We operate under federal regulations as a CLIA laboratory and are approved to provide our clinical testing across all 50 states. We undergo regular inspections from federal and state regulatory authorities, and our laboratory is certified by the College of American Pathologists, or CAP.

We have optimized our mass spectrometry-based proteomics workflow to be analytically validated to produce accurate and precise patient results. To meet the demands of the large intended use population of the PreTRM test, we have developed a new state-the-art affinity-capture mass spectrometry, or AC-MS, process. This higher through-put and lower-cost improvement to our current workflow utilizes custom monoclonal antibodies and magnetic beads. Affinity capture of our PreTRM test analytes using magnetic beads coated with antibodies is amenable to automated liquid handling robots using 96 or 384 well plates. Moreover, the AC-MS process results in a large decrease in the complexity of patient serum specimens in a single highly parallel and multiplexed step, which translates to shorter mass spectrometry processing times. We believe the AC-MS process can be leveraged to enable a many-fold increase in capacity and significantly decrease turn-around time and cost of goods sold. We also believe that custom antibodies developed for the AC-MS process facilitate the development of immunoassay kits that address the world-wide market. AC-MS and immunoassay versions of the PreTRM test may be suitable for paper-based dried specimen collection, or other low-cost specimen collection devices in the future.

Material Agreements

Anthem Commercial Collaboration Agreement

On February 17, 2021, we entered into a commercial collaboration agreement with Anthem, the Commercial Collaboration Agreement, relating to the commercialization of the PreTRM test.

Under this agreement, we will provide PreTRM tests to eligible individuals enrolled in, or serviced or covered by, the health insurance products of Anthem. We have also agreed to develop a sales, marketing, and customer service program, and to provide training and marketing to duly licensed physicians specializing in obstetrics and gynecology or family medicine, or licensed nurse midwives, at the reasonable request of Anthem. Pursuant to the agreement, Anthem will purchase a specified minimum number of tests from us for each of the first three years of the term of the agreement. We will submit monthly invoices to Anthem for the sale of the PreTRM test at the negotiated rates. Additionally, Anthem has agreed to pay us a specified minimum amount per year for the first three years of the term of the agreement.

We and Anthem have also agreed to form a Joint Operating Committee to oversee the relationship, comprised of two voting members each from Anthem and us. Anthem has been participating in our PRIME study, and at the conclusion of the PRIME study, under the Commercial Collaboration Agreement, we have agreed to enter into Anthem’s standard lab provider agreement.

Unless earlier terminated due to breach, the Commercial Collaboration Agreement will remain in effect until the later of (a) the third anniversary of the effective date or (b) the date on which Anthem has purchased a fixed number of PreTRM tests as agreed by the parties.

Anthem Laboratory Services Agreement

Effective on November 10, 2020, we entered into a laboratory services agreement with Anthem, called the Laboratory Services Agreement, relating to our provision of PreTRM tests and related services during the course of the PRIME study.

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Under this agreement, we have agreed to provide clinical laboratory services as requested by participating physicians and other health care professionals, and will provide written reports to those physicians and professionals of the results of the services performed in accordance with the PRIME study. Anthem and we will collaborate on the conduct of the PRIME study, and Anthem will pay us a specified amount per test up to a specified maximum number of tests.

Unless earlier terminated due to breach, the Laboratory Services Agreement will remain in effect until the conclusion of the PRIME study, and it may thereafter be extended for additional terms of one year upon mutual agreement of the parties.

Labcorp Agreement

On January 9, 2017, we entered into a commercialization agreement, or the Commercialization Agreement, or the Agreement, with Laboratory Corporation of America Holdings, or Labcorp, whereby we appointed Labcorp as our exclusive distributor of the PreTRM test in the field of prediction of a patient’s likelihood to deliver a baby at less than 37 weeks’ gestation in the United States. On June 25, 2018, we amended the Agreement to (i) convert Labcorp's exclusive appointment to an appointment that is only exclusive with respect to certain types of laboratories and is otherwise non-exclusive, and (ii) to enable us to engage Labcorp to perform certain specimen collection, processing, and shipment services. This Agreement is automatically renewed annually unless Labcorp terminates with one year of notice or either party chooses to terminate it due to a material breach of the Agreement, an assignment, or a change in control involving us. The Agreement does not otherwise have a defined expiration date.

Pursuant to the Agreement, Labcorp shall perform specimen collection, processing, and shipment services in support of PreTRM tests as may be requested by us and our other distributors from time to time in accordance with the established Labcorp terms and conditions. We will perform the PreTRM test on each received specimen and thereafter provide the result.

Competition

The life science industry, including companies engaged in molecular diagnostics and proteomics, is characterized by rapidly advancing technologies, intense competition, substantial resources devoted to securing strong intellectual property protection and a focus on developing innovative, proprietary products. To our knowledge, however, there have been few successful efforts by others to date to discover, verify and validate prognostic biomarker tests to predict conditions of pregnancy, and we are aware of no competitors that have discovered, verified and broadly validated a blood-based biomarker test to predict a pregnant woman’s risk of a spontaneous preterm birth. We therefore believe that our PreTRM test has the benefit of strong first-to-market positioning and validated performance as we pursue our commercialization efforts. We consider our commercial collaboration with Anthem to be another advantageous competitive factor that we believe significantly de-risks our initial commercialization of the PreTRM test and can help encourage coverage decisions by third-party payers. In addition, we believe that our proprietary technology platform, including our extensive biobanks, advanced mass spectrometry approaches and bioinformatics capabilities, provides us with valuable competitive assets to utilize in discovering and developing other proteomics tests for pregnancy conditions, several of which are already in our pipeline. Coupled with the experience and expertise of our management and scientific teams, we believe we possess meaningful potential to compete in developing and commercializing important products to improve the health of mothers and babies.

Notwithstanding the foregoing advantages, given the potential market opportunity represented by the PreTRM test and other pregnancy-related proteomic tests that we may develop, we expect competition to emerge and intensify in the coming years, with one or more competitive prognostic tests resulting from competitors’ efforts. Competing products may arise from various sources, including molecular diagnostic companies, clinical laboratory companies, life sciences tool companies, third-party service providers, academic research institutions, governmental agencies and public and private research institutions. From time to time, results of early biomarker discovery work are published in scientific literature. These publications are demonstrative of interest in the field, but they characteristically lack evidence of strict adherence to the NAM guidelines for multi-omics prediction development and have not achieved rigorous validation of predictions of interest.

Many of the potential competitors that may emerge, either alone or with their collaborators, have significantly greater resources, established presence in the market, expertise in research and development and greater experience in laboratory operations, obtaining regulatory approvals, gaining reimbursement and commercializing approved products than we do. These competitors also compete with us in recruiting and retaining qualified scientific, sales, marketing and management

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personnel, conducting clinical studies, publishing scientific research and acquiring technologies that may be complementary to, or necessary for, the ongoing robustness of our discovery, development and commercialization efforts. Other smaller or early-stage companies may also prove to be significant competitors, particularly through collaborative arrangements with large and established companies. Additional mergers and acquisitions may result in even more resources being concentrated in our competitors.

Sales and Marketing

In February 2021, we entered into a Commercial Collaboration Agreement with Anthem relating to the commercialization of the PreTRM test. Under the agreement, we will provide PreTRM tests to eligible individuals enrolled in, or serviced or covered by, the health insurance products of Anthem. Pursuant to the agreement, Anthem will purchase a certain minimum number of tests from us for each of the first three years of the term of the agreement. Additionally, Anthem has agreed to pay us a certain minimum amount per year for the first three years of the term of the Commercial Collaboration Agreement. Anthem has been participating in our PRIME study, and at the conclusion of the PRIME study, we agreed to enter into Anthem's standard lab provider agreement with longer term commercial pricing. We continue to engage with other commercial payers to close reimbursement contracts. These additional contracts could also enable an upfront negotiated reimbursement rate which could eventually result in revenues when health care providers order the PreTRM test.

Based on our commercial collaboration with Anthem, we initially deployed our U.S. based specialty OB-GYN commercial sales force to cover the key states where Anthem has a significant market share. We expect to expand our dedicated sales force into additional territories in the U.S. to cover the entire OB-GYN sales channel over time as we seek to enter into contracts with payers and employers.

Intellectual Property

We rely on a combination of patents, trade secrets, copyrights and trademarks, as well as contractual protections, to establish and protect our intellectual property rights. Our success depends in part on our ability to obtain and maintain intellectual property protection for our tests and technology. In particular, we seek to protect the PreTRM test and any potential future tests and technology related to biomarkers relevant to pregnancy and neonatal heath through a variety of methods, including seeking and maintaining patents intended to cover current and future tests and technology, their methods of use and processes for their manufacture, and any other inventions that are commercially important to the development of our business. We seek to obtain domestic and international patent protection which includes, in addition to filing and prosecuting patent applications in the United States, typically filing counterpart patent applications in additional countries where we believe such foreign filing is likely to be beneficial, including Europe, Japan, Canada, Australia and China.

As of December 31, 2021, our intellectual property portfolio encompasses two issued U.S. patents, six pending U.S. non-provisional patent applications, one international patent application under the Patent Cooperation Treaty (PCT), nine granted foreign patents in China, France, Germany, Italy, Ireland, Japan, Spain, Russia, and the United Kingdom, over thirty pending foreign patent applications, and three U.S. provisional applications. Our owned patents and patent applications, if issued, are expected to expire between 2034 and 2042, in each case without taking into account any possible patent term adjustments or extensions and assuming payment of all appropriate maintenance, renewal, annuity, or other governmental fees.

Within our intellectual property portfolio, we own two patent families that relate to our PreTRM test — a first patent family and a second patent family. The patent applications of the first patent family include composition claims directed to panels of biomarkers and corresponding method claims for determining probability for preterm birth, gestational age at birth or time to birth in a pregnant female. The first patent family includes a pending U.S. patent application, seven foreign patents granted in China, France, Germany, Italy, Ireland, Spain, and the United Kingdom, and 5 pending foreign patent applications in the EPO, China, Australia, Japan, and Canada. The granted patents and pending patent applications, if issued, are expected to expire in 2034, without taking into account maintenance, renewal, annuity, or other governmental fees. The patent applications of the second patent family include composition claims directed to compositions of biomarkers, panels of biomarkers, and corresponding method claims for determining probability for preterm birth in a pregnant female, and discloses methods for determining probability of gestational diabetes. The second patent family includes two issued U.S. patents, two foreign patents granted in Japan and Russia, one pending U.S. patent application and 10 pending foreign patent applications in the EPO, Canada, Australia, Japan, Hong Kong, Brazil, India, China, Israel and South Korea. The granted patents and pending patent applications, if issued, are expected to expire in 2036, without taking

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into account any possible patent term adjustment or extensions and assuming payment of all appropriate maintenance, renewal, annuity, or other governmental fees.

We also own pending patent applications directed to other indications. One patent family relates to determining probability for preeclampsia in a pregnant female, and includes patent applications pending in the U.S., the EPO, Australia and Canada. The pending patent applications, if issued, are expected to expire in 2034, without taking into account any possible patent term adjustment or extensions and assuming payment of all appropriate maintenance, renewal, annuity, or other governmental fees. A second patent family relates to determining probability for preterm birth associated with preterm premature rupture of membranes in a pregnant female. It includes patent applications pending in the U.S., the EPO, Canada, Australia, Japan, China and Israel. The pending patent applications, if issued, are expected to expire in 2037, without taking into account any possible patent term adjustment or extensions and assuming payment of all appropriate maintenance, renewal, annuity, or other governmental fees. A third patent family relates to determining the estimated due date for a pregnant female, and includes patent applications pending in the U.S., the EPO, Canada and Australia. The pending patent applications, if issued, are expected to expire in 2038, without taking into account any possible patent term adjustment or extensions and assuming payment of all appropriate maintenance, renewal, annuity, or other governmental fees. Two additional patent families relate to determining a pregnant female’s risk of developing placental dysfunction. It includes patent applications pending in the U.S., the EPO, Canada, Australia and Japan and one international patent application under the PCT. The pending patent applications, if issued, are expected to expire in 2039 and 2041, without taking into account any possible patent term adjustment or extensions and assuming payment of all appropriate maintenance, renewal, annuity, or other governmental fees. We also continue to file patent applications on new developments and improvements that may be important to our future business.

We cannot be sure that patents will be granted with respect to any of our pending patent applications or with respect to any patent applications we may own or license in the future, nor can we be sure that any of our existing patents or any patents we may own or license in the future will be useful in protecting our technology. Please see “Risk Factors — Risks Related to Our Intellectual Property” for additional information on the risks associated with our intellectual property strategy and portfolio.

We continually assess and refine our intellectual property strategy in order to fortify our position, and file additional patent applications when our intellectual property strategy warrants such filings. We intend to pursue additional intellectual property protection to the extent we believe it would be beneficial and cost-effective. Our ability to stop third parties from making, using, selling, offering to sell, importing or otherwise commercializing any of our patented inventions, either directly or indirectly, will depend in part on our success in obtaining, defending and enforcing patent claims that cover our technology, inventions, and improvements. With respect to our intellectual property, we cannot provide any assurance that any of our current or future patent applications will result in the issuance of patents in any particular jurisdiction, or that any of our current or future issued patents will effectively protect any of our tests or technology from infringement or prevent others from commercializing infringing tests or technology. Even if our pending patent applications are granted as issued patents, those patents may be challenged, circumvented or invalidated by third parties. Consequently, we may not obtain or maintain adequate patent protection for any of our tests or technology.

In addition to our reliance on patent protection for our inventions, tests and technology, we also rely on trade secrets, know-how, confidentiality agreements and continuing technological innovation to develop and maintain our competitive position. For example, some elements of manufacturing processes, analytics techniques and processes, as well as computational-biological algorithms, and related processes and software, are based on unpatented trade secrets and know-how that are not publicly disclosed. Although we take steps to protect our proprietary information and trade secrets, including through contractual means with our employees, advisors and consultants, these agreements may be breached and we may not have adequate remedies for any breach. In addition, third parties may independently develop substantially equivalent proprietary information and techniques or otherwise gain access to our trade secrets or disclose our technology. As a result, we may not be able to meaningfully protect our trade secrets. For further discussion of the risks relating to intellectual property, see the section titled “Risk factors — Risks Related to our Intellectual Property.”

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Government Regulation

Federal and State Regulations Related to Clinical Laboratories

Clinical Laboratory Improvement Amendments of 1988

As a clinical laboratory, we are required to hold certain federal certifications under CLIA to conduct our business. Our clinical laboratory facility located in Salt Lake City, Utah holds a CLIA Certificate of Accreditation.

We are also accredited by the CLIA to CAP. CMS has deemed CAP standards to be equally or more stringent than CLIA regulations, and CAP is authorized to inspect the laboratories that it accredits on CMS’ behalf.

Under CLIA, a laboratory is any facility that performs laboratory testing on specimens derived from human beings for the purpose of providing information for the diagnosis, prevention, or treatment of disease or the impairment or assessment of health. CLIA requires that such laboratories obtain certification from the federal government and maintain compliance with various operational, personnel qualification, facilities administration, quality control and assurance, and proficiency testing requirements intended to ensure the accuracy, reliability, and timeliness of patient test results. CMS, part of the U.S. Department of Health and Human Services, or HHS, administers the CLIA certification program. CLIA certification is also necessary to bill state and federal health care programs, as well as many private insurers, for laboratory testing services.

CLIA requires that we hold a certificate that specifies the categories of testing we perform and that we comply with certain standards applicable to such tests. In addition, CLIA specifies certain testing categories requiring periodic proficiency testing, and certified laboratories performing these tests must enroll in an approved proficiency testing program.

In addition, as a condition of CLIA certification, our laboratory is subject to survey and inspection every other year, as well as random inspections. These biannual surveys are typically conducted by CAP because we hold a CLIA Certificate of Accreditation.

Laboratories like ours that perform high-complexity testing are required to meet more stringent requirements than laboratories performing less complex tests. A high-complexity CLIA-certified laboratory may develop, validate, and use proprietary tests referred to as laboratory developed tests, or LDTs. All of our current products are LDTs (as discussed further below under “Federal Oversight of Laboratory Developed Tests”). CLIA requires laboratories to demonstrate the analytical validity of any LDT used in clinical testing.

If our laboratory is determined to be out of compliance with CLIA requirements at any inspection or otherwise, we may be subject to sanctions such as suspension, limitation or revocation of our CLIA certificate, a directed plan of correction, on-site monitoring, civil monetary penalties, civil injunctive suits, criminal penalties, among other potential penalties, as well as significant adverse publicity, all of which may have a materially adverse impact on our business.

State Regulation of Clinical Laboratories

CLIA provides that a state may adopt laboratory regulations that are more stringent than those under federal law, and a number of states have implemented their own more stringent laboratory regulatory requirements.

Our laboratory is located in Salt Lake City, Utah. Utah requires that laboratories located in this state hold a CLIA certificate (which we do), as well as approval by the Utah Department of Health, or UT DOH, to operate a laboratory. In addition to meeting CLIA requirements and holding a valid CLIA certificate, Utah requires that our laboratory timely notify the UT DOH of certain changes and demonstrate successful performance of proficiency testing in an approved proficiency testing program or approved alternative testing program. If our clinical laboratory is out of compliance with these standards, the UT DOH may revoke our approval to perform testing or potentially impose other remedial measures, any of which could materially affect our business. We maintain an approval in good standing with the UT DOH.

Additionally, several states require the licensure of out-of-state laboratories that accept specimens from those states and/or receive specimens from laboratories in those states. For example, in New York, our PreTRM test must be approved by the New York State Department of Health before it is offered in New York. As part of this process, the State of New York requires validation of our tests. New York State requires additional regulatory approvals for laboratories producing clinical results through the oversight of the NYS-CLEP program. Our laboratory is licensed by the appropriate state

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agencies in the states in which it operates, if such licensure is required. In particular, our laboratory holds state licenses or permits from and is subject to inspection by California, New York, Maryland, Pennsylvania and Rhode Island.

If a laboratory is out of compliance with state laws or regulations governing licensed laboratories, penalties may include suspension, limitation or revocation of the license, assessment of financial penalties or fines, or imprisonment. Loss of a laboratory’s state license may also result in the inability to receive payments from state and federal health care programs as well as private insurers, all of which may have a materially adverse impact on our business.

Other states beyond those from which our laboratory currently holds licenses may adopt licensure requirements in the future, which could require us to modify, delay or discontinue our operations in such jurisdictions. If we identify any other state with such requirements or if we are contacted by any other state advising us of such requirements, we intend to follow instructions from the state regulators as to how to comply with such requirements.

Regulation of Clinical Trials

We have conducted and are currently conducting a variety of studies for the PreTRM test and our other tests in development that involve clinical investigators at multiple sites in the U.S. We may need to conduct additional studies for the PreTRM test, as well as other tests we may offer in the future, to drive test adoption in the marketplace and reimbursement. 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.

The conduct of clinical trials is also subject to extensive federal and institutional regulations, which regulations are 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. 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. 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. We believe our clinical trials conducted to date have met applicable regulatory requirements. 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. 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.

The International Committee of Medical Journal Editors, or ICMJE, requires trial registration as a condition of the publication of research results generated by a clinical trial. To fulfill this obligation organizations and individuals can provide the information required by ICMJE either to ClinicalTrials.gov, which is maintained by the U.S. National Institutes of Health, or to a World Health Organization registry. In accordance with this publication policy to ensure that our investigators can publish their findings, and to further our participant enrollment activities for various studies, we register all of the clinical trials that we sponsor with ClinicalTrials.gov.

Federal Oversight of Laboratory Developed Tests

Our first commercial product, the PreTRM test, is an LDT that we process in our single CLIA-certified central laboratory. Although the Food and Drug Administration, or FDA, has asserted that it has authority to regulate LDTs, it has historically exercised enforcement discretion and is not otherwise regulating most tests developed, manufactured and performed within a single high-complexity CLIA-certified laboratory. Any changes in FDA’s approach to regulation of LDTs generally, or its approach to regulating the PreTRM test specifically, could adversely impact our business.

FDA Oversight of LDTs

While clinical laboratory tests are regulated under CLIA, which is administered by CMS, as well as by applicable state laws, the FDA separately has jurisdiction over medical devices pursuant to its authority under the Food, Drug, and Cosmetic Act, or FD&C Act. In vitro diagnostic devices, or IVDs, intended for clinical purposes are a type of medical device under the FD&C Act and thus fall within the FDA’s jurisdiction, and the agency applies its authority under the FD&C Act to those IVDs and test kits that are manufactured, packaged, and distributed in interstate commerce. LDTs are

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considered to be a subset of IVDs that are designed, manufactured, and used within a single laboratory. The FDA regulates, among other matters, the research, testing, manufacturing, safety, labeling, storage, recordkeeping, premarket clearance or approval, marketing and promotion and sales and distribution of medical devices, including IVDs, in the U.S. to ensure that such products on the domestic market are safe and effective for their intended uses. In addition, the FDA regulates the import and export of medical devices. Many of the instruments, reagents, kits or other consumable products used within our laboratory are regulated as medical devices and therefore must comply with FDA quality system regulations and certain other device requirements. We have policies and procedures in place to ensure that we source such materials from suppliers that are in compliance with any applicable medical device regulatory requirements.

Although the FDA has statutory authority to ensure that medical devices, including IVDs, are safe and effective for their intended uses, the FDA has historically exercised its enforcement discretion and not enforced applicable provisions of the FD&C Act and regulations with respect to LDTs. Despite its exercise of enforcement discretion, for the last decade there have been proposals to modify how LDTs may be brought into a harmonized paradigm for oversight by the FDA and CMS. For example, in July 2010, the FDA held a two-day public meeting to obtain input on how to apply its authority to implement a reasonable, risk-based, and effective regulatory framework for LDTs. The agency later issued draft guidance and a 2017 Discussion Paper to allow for further public discussion about an appropriate LDT oversight approach and to give congressional committees the opportunity to develop a legislative solution.

Since 2017, Congress has been working on legislation to create an LDT and IVD regulatory framework that would be separate and distinct from the existing medical device regulatory framework. In August 2018, the FDA recommended changes to draft legislation that had been released by Congress in 2017, which, if made law, would give the agency the authority to revoke approval, request raw data, and take corrective action against test developers. Legislators subsequently provided opportunities for additional stakeholders to provide input on the proposed reform legislation. In March 2020, a bipartisan group of members from both chambers of Congress formally introduced the Verifying Accurate, Leading-edge IVCT Development, or VALID Act, which would codify the term “in vitro clinical test”, or IVCT, and create a new medical product category for IVCTs separate from medical devices that includes products currently regulated as IVDs as well as LDTs, among other provisions. The VALID Act would also create a new system for laboratories 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. A substantively unchanged version of the VALID Act was re-introduced in both houses of Congress on June 24, 2021.

The future of the VALID Act is unclear. If the FDA decides to enforce regulation of all LDTs and undertakes notice-and-comment rulemaking to do so, or if the VALID Act or other legislation is passed, in either case reforming the federal government’s current oversight and regulation of LDTs, we may likely become subject to increased regulatory burdens such as registration and listing requirements, adverse event reporting requirements, and quality control requirements.

Moreover, HHS published a policy announcement in August 2020 stating that FDA must go through a notice-and-comment rulemaking process before requiring premarket review of LDTs as medical devices, rather than making such a change through guidance documents, compliance manuals, or other informal policy statements. HHS’s policy statement did not affect proposed legislation for the regulation of LDTs, such as the VALID Act described above. In November 2021, the Biden Administration withdrew that HHS policy announcement and ostensibly restored FDA's traditional regulatory oversight of LDTs. Future legislation or formal FDA regulatory framework affecting LDTs may have premarket application requirements prohibiting commercialization without FDA authorization and controls regarding modification to the tests that may require further FDA submissions. The process would likely be costly and time-consuming. We cannot be sure that the PreTRM test, or any new tests that we may develop or new uses for our products that we develop will be cleared or approved by the FDA in a timely or cost-effective manner, if cleared or approved at all. Even if such tests are cleared or approved, the products may not be cleared or approved for all indications. This could significantly limit the market for that product and may adversely affect our business.

If the FDA were to disagree with our conclusion that the PreTRM test falls within the scope of the agency’s LDT definition and that the PreTRM test is thus subject to FDA’s medical device authorities and implementing regulations, the agency could require that we obtain premarket approval or another type of device premarket authorization in order for us to commercialize the PreTRM test. As part of this process, we may also be required to conduct additional clinical testing before applying for commercial marketing authorization. Clinical trials must be conducted in compliance with FDA regulations in order to support a marketing submission to the agency for a regulated product, or the FDA may take certain enforcement actions or reject the data. Performing additional, new clinical studies and trials in order to obtain product

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approval from the FDA, if necessary, would take a significant amount of time and would substantially delay our ability to commercialize the PreTRM test, all of which would adversely impact our business.

Advertising of Laboratory Services and LDTs

Our advertising for laboratory services and tests is subject to federal truth-in-advertising laws enforced by the Federal Trade Commission, or FTC, as well as certain state laws.

Under the Federal Trade Commission Act, or FTC Act, the FTC is empowered, among other things, to (i) prevent unfair methods of competition and unfair or deceptive acts or practices in or affecting commerce; (ii) seek monetary penalties and other relief for conduct injurious to consumers; and (iii) gather and compile information and conduct investigations relating to the organization, business, practices, and management of entities engaged in commerce. The FTC has very broad enforcement authority, and failure to abide by the substantive requirements of the FTC Act and other consumer protection laws can result in administrative or judicial penalties, including civil penalties, injunctions affecting the manner in which we would be able to market services or products in the future, or criminal prosecution.

Data Privacy and Security Laws

We believe that we have taken the steps required of us to comply with both federal and state health information privacy and security statutes and regulations, including genetic testing and genetic information privacy laws. However, existing laws regulating such matters continue to evolve, including through amendments, new interpretations and guidance, and, around the world, lawmakers continue to propose new laws regulating privacy and data security, and we may not be able to maintain compliance in all jurisdictions where we do business. Failure to maintain compliance, or changes in laws regarding privacy or security could result in civil and/or criminal penalties, significant reputational damage and could have a material adverse effect on our business.

Federal Privacy and Security Laws

The Health Insurance Portability and Accountability Act of 1996, or HIPAA, established comprehensive federal standards for the privacy and security of health information. The HIPAA standards apply to health plans, health care clearing houses, and health care providers that conduct certain health care transactions electronically (Covered Entities), as well as their respective business associates that perform services for them that involve the use, or disclosure of, individually identifiable health information. Title II of HIPAA, the Administrative Simplification Act, contains provisions that address the privacy of health data, the security of health data, the standardization of identifying numbers used in the health care system and the standardization of certain health care transactions. The privacy regulations protect medical records and other protected health information by limiting their use and release, giving patients the right to access their medical records and limiting most disclosures of health information to the minimum amount necessary to accomplish an intended purpose. The HIPAA security standards require the adoption of administrative, physical, and technical safeguards and the adoption of written security policies and procedures.

In 2009, Congress enacted Subtitle D of the Health Information Technology for Economic and Clinical Health Act. or HITECH provisions of the American Recovery and Reinvestment Act of 2009. 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 for Covered Entities and Business Associates. Regulations implementing major provisions of HITECH were finalized on January 25, 2013 through publication of the HIPAA Omnibus Rule. The Omnibus Rule contained significant changes for Covered Entities and Business Associates with respect to permitted uses and disclosures of Protected Health Information.

Under HITECH’s breach notification requirements, Covered Entities must report breaches of protected health information that has not been encrypted or otherwise secured in accordance with guidance from the Secretary of HHS, or the Secretary. Required breach notices must be made as soon as is reasonably practicable, but no later than 60 days following discovery of the breach. Reports must be made to affected individuals and to the Secretary and, in some cases depending on the size of the breach, they must be reported through local and national media. Breach reports can lead to investigation, enforcement and civil litigation, including class action lawsuits. We are currently subject to the HIPAA regulations as a Covered Entity and maintain an active compliance program. We are subject to audit under the HHS’ HITECH-mandated audit program. We may also be investigated in connection with a privacy or data security complaint.

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There are significant civil and criminal fines and other penalties that may be imposed for violating HIPAA. These fines are adjusted for inflation each year. A Covered Entity or business associate is liable for civil monetary penalties for a violation that is based on an act or omission of any of its agents, including a downstream business associate, as determined according to the federal common law of agency. Penalties for failure to comply with a requirement of HIPAA and HITECH vary significantly depending on the failure and include civil monetary penalties. A single breach incident can violate multiple requirements.

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Item 1. Business

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