Aspira Womens Health Inc

Previous wording

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL COND ITION AND RESULTS OFOPERATIONS

Current wording

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Previous wording

Forward-looking statements are subject to significant risks and uncertainties, including those discussed in Part I Item 1A, “Risk Factors,” of our Annual Report on Form 10-K for the year ended December 31, 2023, as filed on April 1, 2024, as supplemented by the section titled “Risk Factors” in this Quarterly Report on Form 10-Q, that could cause actual results to differ materially from those projected in such forward-looking statements due to various factors, including our ability to continue as a going concern; our ability to comply with Nasdaq’s continued listing requirements; impacts resulting from potential changes to coverage of Ova1 through our Medicare Administrative Carrier for Ova1; anticipated use of capital and its effects; our ability to increase the volume of our product sales; failures by third-party payers to reimburse for our products and services or changes to reimbursement rates; our ability to continue developing existing technologies and to develop, protect and promote our proprietary technologies; plans to develop and perform LDTs; our ability to comply with FDA regulations that relate to our products and to obtain any FDA clearance or approval required to develop and commercialize medical devices; our ability to develop and commercialize additional diagnostic products and achieve market acceptance with respect to these products; our ability to compete successfully; our ability to obtain any regulatory approval required for our future diagnostic products; our suppliers’ ability to comply with FDA requirements for production, marketing and post-market monitoring of our products; our ability to maintain sufficient or acceptable supplies of immunoassay kits from our suppliers; in the event that we succeed in commercializing our products outside the United States, the political, economic and other conditions affecting other countries; changes in healthcare policy; our ability to comply with environmental laws; our ability to comply with the additional laws and regulations that apply to us in connection with the operation of Aspira Labs; our ability to use our net operating loss carryforwards; our ability to use intellectual property; our ability to successfully defend our proprietary technology against third parties; our ability to obtain licenses in the event a third party successfully asserts proprietary rights; the liquidity and trading volume of our common stock; the concentration of ownership of our common stock; our ability to retain key employees; our ability to secure additional capital on acceptable terms to execute our business plan; business interruptions or force majeure of acts of God; the effectiveness and availability of our information systems; our ability to integrate and achieve anticipated results from any acquisitions or strategic alliances; future litigation against us, including infringement of intellectual property and product liability exposure; and additional costs that may be required to make further imp…

Excerpt shortened here; the source contains the full paragraph.

Current wording

Forward-looking statements are subject to significant risks and uncertainties, including those discussed in Part I Item 1A, “Risk Factors,” of our Annual Report on Form 10-K for the year ended December 31, 2023, as filed on April 1, 2024, as supplemented by the section titled “Risk Factors” in this Quarterly Report on Form 10-Q, that could cause actual results to differ materially from those projected in such forward-looking statements due to various factors, including:

Previous wording

We are dedicated to the discovery, development, and commercialization of noninvasive, AI-powered tests to aid in the diagnosis of gynecologic diseases, starting with ovarian cancer.

Current wording

We are dedicated to the discovery, development, and commercialization of non-invasive, AI-powered tests to aid in the diagnosis of gynecologic diseases, starting with ovarian cancer.

Previous wording

We plan to broaden our focus to the differential diagnosis of other gynecologic diseases that typically cannot be assessed through traditional non-invasive clinical procedures. We expect to continue commercializing our existing and new technology and to distribute our tests through our decentralized technology transfer service platform, Aspira Synergy. We also intend to continue to raise public awareness regarding the diagnostic superiority of Ova1Plus as compared to cancer antigen 125 (“CA-125”) on its own for all women with adnexal masses, as well as the superior performance of our machine learning algorithms in detecting ovarian cancer in different racial and ethnic populations. We plan to continue to expand access to our tests among Medicaid patients as part of our corporate mission to make the best care available to all women, and we plan to advocate for legislation and the adoption of our technology in professional society guidelines to provide broad access to our products and services.

Current wording

We plan to broaden our focus to the differential diagnosis of other gynecologic diseases that typically cannot be assessed through traditional non-invasive clinical procedures. We expect to continue commercializing our existing and new technology and to distribute our tests through our decentralized technology transfer service platform, Aspira Synergy. We also intend to continue to raise public awareness regarding the higher sensitivity and negative predictive value for ovarian malignancy of Ova 1 as compared to cancer antigen 125 (“CA-125”) on its own for women with adnexal masses planned for surgery, as well as the performance of our machine learning algorithms in detecting ovarian cancer risk in different racial and ethnic populations. We plan to continue to expand access to our tests among Medicaid patients as part of our corporate mission to make the best care available to all women, and we plan to advocate for legislation and the adoption of our technology in professional society guidelines to provide broad access to our products and services.

Previous wording

The average number of field sales representatives during the six months ended June 30, 2024 was 16, compared with 21 representatives in the six months ended June 30, 2023. The average OvaSuite volume per field sales representative increased from 598 tests per representative in the six months ended June 30, 2023 to 769 tests per representative in the six months ended June 30, 2024, a 28.6% increase.

Current wording

The average number of field sales representatives during the nine months ended September 30, 2024 was 17, compared with 20 representatives in the nine months ended September 30, 2023. The average OvaSuite volume per field sales representative increased from 917 tests per representative in the nine months ended September 30, 2023 to 1,109 tests per representative in the nine months ended September 30, 2024, nearly a 21% increase.

Previous wording

Innovation. We believe our ability to successfully develop novel AI-powered assays is superior to others based on our know-how and extensive experience in designing and successfully launching FDA-cleared and laboratory developed blood tests to aid in the diagnosis of ovarian cancer. We own and operate Aspira Labs, Inc., a research and commercial CLIA laboratory in Texas, and have accumulated more than 110,000 patient samples in our research biobank. Moreover, our history of successfully collaborating with world-class research and academic institutions allows us to innovate and provide outstanding patient care.

Current wording

Innovation. We believe our ability to successfully develop novel AI-powered assays is superior to others based on our knowledge and extensive experience in designing and successfully launching FDA-cleared and laboratory developed blood tests to aid in the diagnosis of ovarian cancer. We own and operate Aspira Labs, Inc., a research and commercial CLIA laboratory in Texas, and have accumulated more than 110,000 patient samples in our research biobank. Moreover, our history of successfully collaborating with world-class research and academic institutions allows us to innovate and provide outstanding patient care.

Previous wording

In ovarian cancer, we have developed clinical data to support the repeated use of our OvaWatch test for the monitoring of an adnexal mass. In the second quarter of 2024, we expanded the features of our commercially available OvaWatch test for monitoring of adnexal masses through periodic testing at physician prescribed intervals, marking the successful completion of the vision for OvaSuite. The successful expansion of the OvaWatch mass monitoring feature this quarter resulted in a tenfold increase the market for our tests when compared to the addressable market for Ova1Plus of approximately 200,000 to 400,000 based on patients identified for surgery. As a result, we believe the addressable market for our tests to have increased to between 2 and 4 million tests per year.

Current wording

In ovarian cancer, we have developed clinical data to support the repeated use of our OvaWatch test for the monitoring of an adnexal mass. In the second quarter of 2024, we expanded the features of our commercially available OvaWatch test for monitoring of adnexal masses through periodic testing at physician prescribed intervals, marking the successful completion of the vision for OvaSuite. The successful expansion of the OvaWatch mass monitoring feature in the second quarter of 2024 resulted in a tenfold increase in the market for our tests when compared to the addressable market for Ova1Plus of approximately 200,000 to 400,000 based on patients identified for surgery. As a result, we believe the addressable market for our tests to have increased to between 2 and 4 million tests per year.

Previous wording

Our OvaMDx development program continues to progress. OvaMDx is a multi-marker test that combines serum proteins, clinical data (metadata) and miRNA for assessing the risk of ovarian cancer in women with an adnexal mass.

Current wording

Our OVAinform development program continues to progress. OVAinform is a multi-marker test that combines serum proteins, clinical data (metadata), and miRNA for assessing the risk of ovarian cancer in women with an adnexal mass.

Previous wording

In endometriosis, we are developing and intend to introduce a new noninvasive test to aid in the diagnosis of this debilitating disease that impacts millions of women worldwide. We completed the design of EndoCheck, a protein-based non-invasive blood test to aid the detection of endometrioma, one of the most common forms of endometriosis. The algorithm was confirmed with three independent cohorts and is an important input for our EndoMDx program focused on developing a multi-marker test that combines serum proteins, clinical data (metadata) and miRNA for the identification of endometriosis.

Current wording

In endometriosis, we are developing and intend to introduce a new non-invasive test to aid in the diagnosis of this debilitating disease that impacts millions of women worldwide. We completed the design of a protein-based non-invasive blood test to aid the detection of endometrioma, one of the most common forms of endometriosis. The algorithm was confirmed with three independent cohorts and is an important input for our ENDOinform program focused on developing a multi-marker test that combines serum proteins, clinical data (metadata) and miRNA for the identification of endometriosis.

Previous wording

Operational Excellence. During the six months ended June 30, 2024, we decreased our operating expenses by $1.6 million, when compared with the six months ended June 30, 2023. We have continued our history of opportunistically raising capital. We raised gross proceeds of $5.6 million in January 2024 in a follow-on offering. We also raised gross proceeds of approximately $1.9 million in a private placement and gross proceeds of approximately $2.1 million in a warrant inducement transaction in July 2024.

Current wording

Operational Excellence. During the nine months ended September 30, 2024, we decreased our operating expenses by $1.9 million, when compared with the nine months ended September 30, 2023. We have continued our history of opportunistically raising capital. We raised gross proceeds of $5.6 million in January 2024 in a follow-on offering. We also raised gross proceeds of approximately $1.9 million in a private placement and gross proceeds of approximately $2.1 million in a warrant inducement transaction in July 2024. Subsequent to the quarter end, we began selling shares in connection with an At-the-Market agreement, resulting in gross proceeds of $350,000 through November 18, 2024.

Previous wording

Our products are distributed through our own national sales force, including field sales, inside sales and a contracted sales team, through our proprietary decentralized testing platform and cloud service, marketed as Aspira Synergy, and through marketing and distribution agreements with BioReference Health, LLC and ARUP Laboratories.

Current wording

Our products are distributed through our own national sales force, including field sales, inside sales and a contracted sales team, through our proprietary decentralized testing platform and cloud service, marketed as Aspira Synergy, and through marketing and distribution agreements with BioReference Health, LLC (“BioReference”) and ARUP Laboratories. In November of 2024, we expanded our distribution agreement with BioReference to include OvaWatch. This timing aligns with our approval from New York State and increases our ability to market the test in New York. This important addition will allow providers who currently order Ova1 through BioReference to also order Aspira’s products for any woman with a mass within their existing BioReference workflows.

Previous wording

Our Ova1 test received FDAde novo classification in September 2009. Ova1 comprises instruments, assays, reagents, and the OvaCalc software, which includes a proprietary algorithm that produces a risk score. Our Overa test, which includes an updated version of OvaCalc, received FDA 510(k) clearance in March 2016. Ova1, Overa and OvaWatch each use the Roche Cobas 4000, 6000 and 8000 platforms for analysis of proteins. Revenue from these sources is included in the results of operations in total revenue for the three and six months ended June 30, 2024.

Current wording

Our Ova1 test received FDAde novo classification in September 2009. Ova1 comprises instruments, assays, reagents, and the OvaCalc software, which includes a proprietary algorithm that produces a risk score. Our Overa test, which includes an updated version of OvaCalc, received FDA 510(k) clearance in March 2016. Ova1, Overa and OvaWatch each use the Roche Cobas 4000, 6000 and 8000 platforms for analysis of proteins. Revenue from these sources is included in the results of operations in total revenue for the three and nine months ended September 30, 2024.

Previous wording

OvaWatch has been developed and is validated for use in Aspira’s CLIA-certified lab as a non-invasive blood-based risk assessment test for use in conjunction with clinical assessment and imaging to determine ovarian cancer risk for patients with an adnexal mass whose adnexal mass has been determined by an initial clinical assessment as indeterminate or benign. OvaWatch is the only commercially available blood test available for initial and ongoing assessment of the risk of ovarian cancer in women diagnosed with an adnexal mass considered indeterminate or benign by a physician's preliminary clinical assessment.

Current wording

OvaWatch has been developed and is validated for use in Aspira’s CLIA-certified lab as a non-invasive blood-based risk assessment test for use in conjunction with clinical assessment and imaging to determine ovarian cancer risk for patients with an adnexal mass whose adnexal mass has been determined by an initial clinical assessment as indeterminate or benign. OvaWatch is the only commercially available blood test available for assessment of the risk of ovarian cancer in women diagnosed with an adnexal mass considered indeterminate or benign by a physician’s preliminary clinical assessment.

Previous wording

The miRNAs used in the OvaMDx test were the subject of a 2017 paper, “Diagnostic potential for a serum miRNA neural network for detection of ovarian cancer” published in the peer-reviewed journal Cancer Biology. In October 2023, a poster entitled “Improving the diagnostic accuracy of an ovarian cancer triage test using a joint miRNA-protein model,” was presented at the AACR Special Conference in Cancer Research: Ovarian Cancer by senior author, Dr. Kevin Elias M.D., Director, Gynecologic Oncology Laboratory at Brigham and Women’s Hospital and Assistant Professor of Obstetrics, Gynecology and Reproductive Biology at Harvard Medical School. The poster highlighted data from a study that combined serum protein and patient clinical information (metadata) from Aspira’s ovarian cancer registry studies with miRNA determined by the Elias laboratory. The data showed using miRNA in combination with serum proteins, provided superior performance over existing ovarian cancer risk assessment blood tests.

Current wording

The miRNAs used in the OVAinform test were the subject of a 2017 paper, “Diagnostic potential for a serum miRNA neural network for detection of ovarian cancer” published in the peer-reviewed journal Cancer Biology. In October 2023, a poster entitled “Improving the diagnostic accuracy of an ovarian cancer triage test using a joint miRNA-protein model,” was presented at the AACR Special Conference in Cancer Research: Ovarian Cancer by senior author, Dr. Kevin Elias M.D., Director, Gynecologic Oncology Laboratory at Brigham and Women’s Hospital and Assistant Professor of Obstetrics, Gynecology and Reproductive Biology at Harvard Medical School. The poster highlighted data from a study that combined serum protein and patient clinical information (metadata) from Aspira’s ovarian cancer registry studies with miRNA determined by the Elias laboratory. The data showed using miRNA in combination with serum proteins, provided superior performance over existing ovarian cancer risk assessment blood tests.

Previous wording

The second manuscript, entitled “Neural Network-derived Multivariate Index Assay Demonstrates Effective Clinical Performance in Longitudinal Monitoring of Ovarian Cancer Risk” was published in the journal Gynecologic Oncology on May 3, 2024. The findings of this study demonstrate that OvaWatch could be an effective tool for the monitoring of ovarian cancer risk over time in women with indeterminate or low risk adnexal masses. Based on common practice for adnexal mass management and consistent with the study, OvaWatch can be drawn by the provider every three to six months for active surveillance of an adnexal mass.

Current wording

On May 7, 2024, we announced the publication of two peer-reviewed manuscripts. The first manuscript, entitled “Ovarian Cancer Surgical Consideration is Markedly Improved by the Neural Network Powered-MIA3G Multivariate Index Assay” was published in the peer-reviewed journal Frontiers of Medicine on May 2, 2024. The findings of this study demonstrate that use of OvaWatch to stratify risk in patients with an adnexal mass might help to reduce surgical backlogs and unnecessary surgical referrals. The second manuscript, entitled “Neural Network-derived Multivariate Index Assay Demonstrates Effective Clinical Performance in Longitudinal Monitoring of Ovarian Cancer Risk” was published in the journal Gynecologic Oncology on May 3, 2024. The findings of this study demonstrate that OvaWatch could be an effective tool for the monitoring of ovarian cancer risk over time in women with indeterminate or low risk adnexal masses. Based on common practice for adnexal mass management and consistent with the study, OvaWatch can be drawn by the provider every three to six months for active surveillance of an adnexal mass.

Previous wording

An abstract entitled “Application of a Deep Neural Network-Based Algorithm to Provide Additional Information in the Assessment of Adnexal Masses Classified as Indeterminate by Imaging” was accepted for a poster presentation at the upcoming Annual Meeting of The Menopause Society in September 2024. This presentation highlights data evaluating the use of OvaWatch to assess ovarian cancer risk in pre and post-menopausal women. The data demonstrated that in women with a adnexal mass and an indeterminate ultrasound imaging result, the OvaWatch result indicated low malignant potential of the mass in more than 70% of patients. The use of OvaWatch could provide additional information to reduce surgery.

Current wording

An abstract entitled “Application of a Deep Neural Network-Based Algorithm to Provide Additional Information in the Assessment of Adnexal Masses Classified as Indeterminate by Imaging” was presented as a poster at the Annual Meeting of The Menopause Society in September 2024. This presentation highlighted data evaluating the use of OvaWatch to assess ovarian cancer risk in pre- and post-menopausal women. The data demonstrated that in women with an adnexal mass and an indeterminate ultrasound imaging result, the OvaWatch result indicated low malignant potential of the mass in more than 70% of patients. The use of OvaWatch could provide additional information to reduce surgical referrals.

Previous wording

An EndoCheck-related abstract entitled “Association of the Endometriosis Health Profile-5 (EHP-5) with Non-Invasive Biomarkers in Patients with Suspected Endometriosis” was accepted for a poster presentation at the 27 th Annual National Association of Nurse Practitioner’s in Women’s Health (NPWH) Women’s Healthcare Conference in September 2024. This poster examined the association of biomarkers for ovarian endometriosis (endometrioma) with quality of life survey responses before and after surgical intervention. There was no association between endometrioma biomarkers and self-reported patient quality of life either prior to or after surgery, and this was consistent with other research.

Current wording

An EndoCheck-related abstract entitled “Association of the Endometriosis Health Profile-5 (EHP-5) with Non-Invasive Biomarkers in Patients with Suspected Endometriosis” was presented as a poster at the 27 th Annual National Association of Nurse Practitioner’s in Women’s Health (NPWH) Women’s Healthcare Conference in September 2024. This poster examined the association of biomarkers for ovarian endometriosis (endometrioma) with quality-of-life survey responses before and after surgical intervention. There was no association between endometrioma biomarkers and self-reported patient quality of life either prior to or after surgery, and this was consistent with other research.

Previous wording

A virtual poster entitled “A Proprietary Protein-Based Algorithm May Increase Sensitivity of Endometrioma Detection When Combined with Imaging” will be presented at the annual meeting of the American Association of Gynecologic Laparoscopists in November 2024. This poster summarizes a preliminary study on the performance of imaging combined with a protein biomarker-based algorithm. The combination of these diagnostic tools resulted in increased sensitivity of detection of endometrioma, and could be effective in risk assessment and surgical planning for this condition.

Current wording

An EndoCheck-related virtual poster entitled “A Proprietary Protein-Based Algorithm May Increase Sensitivity of Endometrioma Detection When Combined with Imaging” will be presented at the annual meeting of the American Association of Gynecologic Laparoscopists in November 2024. This poster summarizes a preliminary study on the performance of imaging combined with a protein biomarker-based algorithm. The combination of these diagnostic tools resulted in increased sensitivity of detection of endometrioma and could be effective in risk assessment and surgical planning for this condition.

Previous wording

On July 1, 2024, we received a deficiency letter from the Listing Qualifications Department of the Nasdaq Stock Market notifying the Company that, for the 30 consecutive business days prior to the date of the deficiency letter, the our Market Value of Listed Securities was below the minimum of $35 million requirement for continued inclusion on The Nasdaq Capital Market pursuant to Nasdaq Listing Rule 5550(b)(2) (the “MVLS Requirement”). In accordance with Nasdaq Listing Rule 5810(c)(3)(C), Nasdaq has provided us with 180 calendar days, or until December 30, 2024, to regain compliance with the MVLS Requirement.

Current wording

On July 1, 2024, we received a deficiency letter from the Nasdaq Stock Market notifying us that, for the 30 consecutive business days prior to the date of the deficiency letter, our Market Value of Listed Securities was below the minimum of $35 million market cap requirement for continued inclusion on The Nasdaq Capital Market pursuant to Nasdaq Listing Rule 5550(b)(2) (the “MVLS Requirement”). In accordance with Nasdaq Listing Rule 5810(c)(3)(C), Nasdaq has provided us with 180 calendar days, or until December 30, 2024, to regain compliance with the MVLS Requirement. In the event we do not regain compliance prior to December 30, 2024, we will receive written notification that our securities are subject to delisting, at which point we may appeal the delisting determination.

Previous wording

We continue to make strides to increase coverage and reimbursement of OvaSuite products by contracting with payers and gaining OvaWatch reimbursement. We recently contracted with two Anthem plans in California and the Northeast states that increased our contracted lives by 8 million. We further expect additional Anthem regions to complete contracting in the Anthem Central and Virginia geographic regions in third and fourth quarters, adding an additional 16 million lives.

Current wording

We continue to gain momentum in our activities to increase coverage and reimbursement of OvaSuite products by contracting with payers and gaining OvaWatch reimbursement. The volume of Northeast Anthem claims, contracted in August 2024, is increasing and expected to improve the reimbursement per test in upcoming quarters. We further expect additional Anthem regions to complete contracting in the Anthem Central and Virginia geographic regions in the fourth quarter, adding an additional 16 million lives.

Previous wording

To accelerate our progress in securing coverage for OvaWatch, we have initiated a comprehensive analysis of national, regional, and Integrated Delivery Network (IDN) payers with the assistance of an experienced third-party consultant. The objective of the project is to gather specific and direct insights regarding evidence requirements we must meet to support broad coverage and reimbursement for OvaWatch. The first phase of the study, which we expect to complete in the third quarter of 2024, will consist of interviews with senior stakeholders to identify evidentiary or other gaps. The findings of the first phase will be incorporated into an OvaWatch clinical utility study that meets the key requirements of payers. The timing of the study will depend on working capital available for its completion. While this project is focused on OvaWatch, we believe the output will help expand commercial coverage for Ova1 and inform our market access strategies for future product launches.

Current wording

In the third quarter we completed a comprehensive analysis of select national, regional and Integrated Delivery Network (IDN) payers with the assistance of an experienced third-party consultant. The project provided additional insights regarding evidence requirements for broad support and reimbursement of OvaWatch. The findings of the analysis are being incorporated into a clinical utility study which is currently under development, the timing of which will depend on working capital available for its completion. While this project was focused on OvaWatch, we believe the output will help us advocate for expanded coverage for Ova1 and inform future market access strategies for future product launches.

Previous wording

Product Revenue. Product revenue was $2,423,000 for the three months ended June 30, 2024, compared to $2,491,000 for the same period in 2023. Revenue for Aspira Labs is recognized when the test is completed based on estimates of what we expect to ultimately realize. The 3% product revenue decrease is due to a decrease in the AUP per test compared to the prior year. The AUP for Ova1 tests decreased primarily as a result of our quarterly adjustments to estimates of variable consideration in the second quarter of 2023. The OvaWatch AUP increased as reimbursement continues to conform with that of Ova1 as a result of additional contracts and higher collections.

Current wording

Product Revenue. Product revenue was $2,257,000 for the three months ended September 30, 2024, compared to $2,217,000 for the same period in 2023. Revenue for Aspira Labs is recognized when the test result is successfully delivered based on estimates of what we expect to ultimately realize. The 2% product revenue increase is due to an increase in OvaSuite test volume. The OvaWatch AUP increased as reimbursement continues to conform with that of Ova1 as a result of additional contracts and higher collections.

Previous wording

The number of OvaSuite tests performed increased 2.9% to 6,471 during the three months ended June 30, 2024, compared to 6,289 product tests for the same period in 2023. This increase is a result of our revised commercial strategy. We expect test volume to continue to increase for the remainder of 2024 as a result of our investment in key sales and marketing personnel and the launch of OvaWatch longitudinal testing.

Current wording

The number of OvaSuite tests performed increased 4% to 6,001 during the three months ended September 30, 2024, compared to 5,783 product tests for the same period in 2023. This increase is a result of our revised commercial strategy. We expect test volume to increase in the fourth quarter of 2024 as a result of our investment in key sales and marketing personnel and the launch of OvaWatch longitudinal testing.

Previous wording

Cost of Revenue – Product. Cost of product revenue was $1,002,000 for the three months ended June 30, 2024 compared to $941,000 for the same period in 2023, representing an increase of $61,000, or 6%, due primarily to increased shipping costs, offset by decreased consulting costs.

Current wording

***Cost of Revenue – Product.***Cost of product revenue was $902,000 for the three months ended September 30, 2024 compared to $910,000 for the same period in 2023, representing a decrease of $8,000, or 1%, due primarily to increased shipping costs, offset by decreased lab supplies and personnel costs.

Previous wording

Gross Profit Margin. Gross profit margin for product revenue decreased to 58.6% for the three months ended June 30, 2024, compared to 62.2% for the same period in 2023. The change was due to the decrease in product revenue and the increase in cost of product revenue.

Current wording

Gross Profit Margin. Gross profit margin for product revenue increased to 60.0% for the three months ended September 30, 2024, compared to 59.0% for the same period in 2023. The change was due to the increase in product revenue and the decrease in cost of product revenue.

Previous wording

Research and Development Expenses. Research and development expenses represent costs incurred to develop our technology and carry out clinical studies, and include personnel-related expenses, regulatory costs, reagents and supplies used in research and development laboratory work, infrastructure expenses, contract services and other outside costs. Research and development expenses for the three months ended June 30, 2024 increased by $259,000, or 37%, compared to the same period in 2023. This increase was primarily due to a one-time credit in 2023 of $200,000, as well as an increase in consulting costs of $75,000 and lab supplies of $71,000, offset by a decrease in personnel costs of $133,000. We expect research and development expenses to increase modestly over the third quarter of 2024, as a result of our focus on the product pipeline.

Current wording

Research and Development Expenses. Research and development expenses represent costs incurred to develop our technology and carry out clinical studies, and include personnel-related expenses, regulatory costs, reagents and supplies used in research and development laboratory work, infrastructure expenses, contract services and other outside costs. Research and development expenses for the three months ended September 30, 2024 decreased by $90,000, or 9%, compared to the same period in 2023. This decrease was primarily due to a decrease in personnel costs of $164,000, partially offset by an increase in consulting costs of $56,000. We expect research and development expenses to increase over the fourth quarter of 2024, as a result of our focus on the product pipeline for ARPA-H.

Previous wording

Sales and Marketing Expenses. Our sales and marketing expenses consist primarily of personnel-related expenses, education and promotional expenses. These expenses include the costs of educating physicians and other healthcare professionals regarding our products. Sales and marketing expenses also include the costs of sponsoring continuing medical education, medical meeting participation, and dissemination of scientific and health economic publications. Sales and marketing expenses for the three months ended June 30, 2024 increased by $365,000, or 21%, compared to the same period in 2023. This increase was primarily due to increased personnel costs of $557,000 and costs related to our contracted sales team of $274,000, offset by a decrease in consulting costs of $206,000. We expect sales and marketing expenses to modestly increase over the third quarter of 2024 as we continue to focus on the commercialization of OvaWatch.

Current wording

Sales and Marketing Expenses. Our sales and marketing expenses consist primarily of personnel-related expenses, education and promotional expenses. These expenses include the costs of educating physicians and other healthcare professionals regarding our products. Sales and marketing expenses also include the costs of sponsoring continuing medical education, medical meeting participation, and dissemination of scientific and health economic publications. Sales and marketing expenses for the three months ended September 30, 2024 increased by $441,000, or 26%, compared to the same period in 2023. This increase was primarily due to increased personnel costs of $340,000 and costs related to our contracted sales team of $123,000 and travel expenses of $121,000, offset by a decrease in other marketing costs of $82,000. We expect sales and marketing expenses to modestly increase over the fourth quarter of 2024 as we continue to focus on the commercialization of OvaWatch.

Previous wording

General and Administrative Expenses. General and administrative expenses consist primarily of personnel-related expenses, professional fees and other costs, including legal, finance and accounting expenses and other infrastructure expenses. General and administrative expenses for the three months ended June 30, 2024 decreased by $681,000, or 20%, compared to the same period in 2023. This decrease was primarily due to a decrease in personnel of $324,000 and consulting costs of $316,000. We expect general and administrative expenses to remain flat for the third quarter of 2024.

Current wording

General and Administrative Expenses. General and administrative expenses consist primarily of personnel-related expenses, professional fees and other costs, including legal, finance and accounting expenses and other infrastructure expenses. General and administrative expenses for the three months ended September 30, 2024 decreased by $675,000, or 25%, compared to the same period in 2023. This decrease was primarily due to a decrease in personnel costs of $407,000 and legal expenses of $232,000. We expect general and administrative expenses to remain flat for the fourth quarter of 2024.

Previous wording

Change in fair value of Warrant liabilities. For the three months ended June 30, 2024. there was a net decrease in fair value of $889,000. The decrease was due to the decrease in our stock price during the quarter. For the three months ended June 30, 2023 there was a net increase in fair value of $992,000.

Current wording

Change in Fair Value of Warrant Liabilities. For the three months ended September 30, 2024, there was a net decrease in fair value of warrant liabilities of $174,000. The decrease consisted of the change in warrant value of $137,000 due to the decrease in our stock price during the year and $37,000 due to the modification of certain warrants that were originally issued in 2022. For the three months ended September 30, 2023 there was a net increase in fair value of $1,201,000. The change in fair value during the three months ended September 30, 2023 was primarily due to an increase in the Company’s stock price during the quarter.

Previous wording

The selected summary financial and operating data of the Company for the six months ended June 30, 2024 and 2023 were as follows.

Current wording

The selected summary financial and operating data of the Company for the nine months ended September 30, 2024 and 2023 were as follows.

Previous wording

Product Revenue. Product revenue was $4,576,000 for the six months ended June 30, 2024, compared to $4,806,000 for the same period in 2023. The 5% product revenue decrease is due to a decrease in the AUP per test, as well as the OvaSuite test volume compared to the prior year.

Current wording

Product Revenue. Product revenue was $6,833,000 for the nine months ended September 30, 2024, compared to $7,023,000 for the same period in 2023. The 3% product revenue decrease is due to a decrease in the AUP per test, as well as the OvaSuite test volume compared to the prior year. The AUP for Ova1 tests decreased primarily as a result of our quarterly adjustments to estimates of variable consideration in 2023.

Previous wording

The number of OvaSuite tests performed decreased 2.0% to 12,300 during the six months ended June 30, 2024, compared to 12,548 product tests for the same period in 2023. This decrease is a result of our revised commercial strategy and reduced full-time field sales headcount during the first quarter.

Current wording

The number of OvaSuite tests performed decreased to 18,301 during the nine months ended September 30, 2024, compared to 18,331 product tests for the same period in 2023.

Previous wording

The volume and AUP for the six months ended June 30, 2024 and 2023 were as follows.

Current wording

The volume and AUP for the nine months ended September 30, 2024 and 2023 were as follows.

Previous wording

Cost of Revenue – Product. Cost of product revenue was $1,941,000 for the six months ended June 30, 2024 compared to $2,071,000 for the same period in 2023, representing a decrease of $130,000, or 6%, due primarily to decreased consulting costs.

Current wording

***Cost of Revenue – Product.***Cost of product revenue was $2,843,000 for the nine months ended September 30, 2024 compared to $2,981,000 for the same period in 2023, representing a decrease of $138,000, or 5%, due primarily to decreased consulting costs.

Previous wording

Gross Profit Margin. Gross profit margin for product revenue increased to 57.6% for the six months ended June 30, 2024, compared to 56.9% for the same period in 2023. The change was due to the decrease in cost of product revenue, offset by the decrease in cost of product revenue.

Current wording

Gross Profit Margin. Gross profit margin for product revenue increased to 58.4% for the nine months ended September 30, 2024, compared to 57.5% for the same period in 2023. The change was due to the decrease in cost of product revenue, offset by the decrease in product revenue.

Previous wording

Research and Development Expenses. Research and development expenses for the six months ended June 30, 2024 decreased by $102,000, or 5%, compared to the same period in 2023. This decrease was primarily due to a decrease in personnel costs of $503,000, offset by increased consulting costs of $148,000 and lab supplies of $72,000, as well as a one-time credit in 2023 of $200,000.

Current wording

Research and Development Expenses. Research and development expenses for the nine months ended September 30, 2024 decreased by $180,000, or 6%, compared to the same period in 2023. This decrease was primarily due to a decrease in personnel costs of $666,000, offset by increased consulting costs of $204,000 and lab supplies of $94,000, as well as a one-time credit in 2023 of $200,000.

Previous wording

Sales and Marketing Expenses. Sales and marketing expenses for the six months ended June 30, 2024 decreased by $341,000, or 8%, compared to the same period in 2023. This decrease was primarily due to decreased consulting costs (including stock compensation) of $735,000, subscription costs of $178,000 and travel costs of $119,000, offset by an increase in costs associated with our contracted sales team of $561,000 and personnel costs of $219,000.

Current wording

Sales and Marketing Expenses. Sales and marketing expenses for the nine months ended September 30, 2024 increased by $100,000, or 2%, compared to the same period in 2023. This increase was primarily due to an increase in costs associated with our contracted sales team of $684,000 and personnel costs of $559,000, offset by decreased consulting costs (including stock compensation) of $780,000, subscription costs of $187,000 and other marketing costs of $171,000.

Previous wording

General and Administrative Expenses. General and administrative expenses for the six months ended June 30, 2024 decreased by $1,156,000, or 16% compared to the same period in 2023. This decrease was primarily due to a decrease in consulting costs (including stock compensation) of $518,000 and personnel costs of $354,000.

Current wording

General and Administrative Expenses. General and administrative expenses for the nine months ended September 30, 2024 decreased by $1,831,000, or 19% compared to the same period in 2023. This decrease was primarily due to a decrease in personnel costs of $755,000, consulting costs (including stock compensation) of $649,000 and public company expenses of $137,000.

Previous wording

Change in fair value of Warrant liabilities. The fair values of the warrant liabilities as of June 30, 2024, and December 31, 2023 were $511,000 and $1,651,000, respectively, for a net decrease in fair value of $1,140,000. The decrease consisted of $490,000 due to the modification of certain warrants that were originally issued in 2022, offset by the change in warrant value due to the decrease in our stock price during the year. For the six months ended June 30, 2023 there was a net decrease in fair value of $968,000.

Current wording

Change in Fair Value of Warrant Liabilities. For the nine months ended September 30, 2024, there was a net decrease in fair value of warrant liabilities of $1,314,000. The decrease consisted of the change in warrant value due to the decrease in our stock price during the year of $1,768,000, offset by an increase $454,000 due to two modifications of certain warrants that were originally issued in 2022. For the nine months ended September 30, 2023 there was a net decrease in fair value of $233,000 related to the decrease in our stock price.

Previous wording

We have incurred significant net losses and negative cash flows from operations since inception, and as a result have an accumulated deficit of approximately $526,462,000 as of June 30, 2024. We also expect to incur a net loss and negative cash flows from operations for the remainder of 2024. Working capital levels may not be sufficient to fund operations as currently planned through the next twelve months, absent a significant increase in revenue over historic revenue or additional financing. Given the above conditions, there is substantial doubt about our ability to continue as a going concern within one year after the date these consolidated interim financial statements are filed.

Current wording

We have incurred significant net losses and negative cash flows from operations since inception, and as a result have an accumulated deficit of approximately $530,009,000 as of September 30, 2024. We also expect to incur a net loss and negative cash flows from operations for the remainder of 2024. Working capital levels may not be sufficient to fund operations as currently planned through the next twelve months, absent a significant increase in revenue over historic revenue or additional financing. Given the above conditions, there is substantial doubt about our ability to continue as a going concern within one year after the date these consolidated interim financial statements are filed.