Pharma Business Line – Tenil http://www.tenil.net/ Thu, 11 Aug 2022 18:18:23 +0000 en-US hourly 1 https://wordpress.org/?v=5.9.3 https://www.tenil.net/wp-content/uploads/2021/05/tenil-icon-150x150.png Pharma Business Line – Tenil http://www.tenil.net/ 32 32 Patients will bear the heaviest consequences of proposed cuts to home healthcare https://www.tenil.net/patients-will-bear-the-heaviest-consequences-of-proposed-cuts-to-home-healthcare/ Thu, 11 Aug 2022 18:18:23 +0000 https://www.tenil.net/patients-will-bear-the-heaviest-consequences-of-proposed-cuts-to-home-healthcare/

In today’s market where inflation and healthcare costs continue to rise, it is constantly difficult to identify where best to allocate a limited amount of funds.

Of course, there are no easy decisions, but consumer demand and ultimately what will make healthcare more accessible, convenient, cost-effective and better for patients must guide us.

Thus, there are some areas of care where a reduction in federal funding is simply not feasible or reasonable. Topping the list is home healthcare, a sector that has seen significant growth during and after the peak of Covid-19 and continues to innovate for the benefit of its patients.

Despite this, the US Centers for Medicare & Medicaid Services (CMS) recently proposed a permanent 7.69% reduction in Medicare home care providers, as well as a future “clawback” of provider payments for care provided in 2020 and 2021. In total, these reductions are expected to reach $18 billion in over the next 10 years, starting in 2023.

Not only do these cuts dramatically restrict the ability to provide the quality home health care that America’s seniors deserve, but they also directly contradict current home health trends and consumer preferences.

In a study this year of physicians who primarily treat Medicare fee-for-service (FFS) and Medicare Advantage (MA) patients, McKinsey estimated that $265 billion in US healthcare services for FFS and MA recipients could move from traditional facilities to patients’ homes by 2025, with no reduction in quality or access to care.

In addition, a growing number of seniors prefer to age in place with home care. End of 2021 study conducted by Interim HealthCare Inc.79% of people aged 65 and over said their quality of life would be significantly better if they could receive health care at home rather than in a hospital or nursing home.

In response to this growing and anticipated demand, providers have increasingly recognized the important role that digital health technology plays in scaling efficient and cost-effective home health services for the benefit of patients.

While much of this technology has focused on the important function of caregiving, home care providers and others are increasingly investing in “interoperability technologies” that better connect them with their acute care counterparts, and vice versa.

This idea of ​​interoperability creates a more robust healthcare ecosystem, where the exchange of patient data and health outcomes between systems enables a smoother care experience for patient, payer and provider. These are long-awaited advances for the home health industry, and the entire continuum of care, that could be halted by reduced funding.

For the patient, this could mean delays in phone calls and faxes or days (or weeks) of waiting for referral documents to be processed so they can get much-needed care faster. after leaving the hospital or seeing their primary care physician.

For providers and payers, this data exchange allows payers to better see and measure the quantifiable value of home care providers that payers have been missing, helping them provide appropriate reimbursement rates based on data and facts. .

And beyond a more integrated system, this technology has automated administrative tasks and fostered a leaner business model for vendors. For example, in 2020, VNS Health reduced its accounts receivable by 50%, from $16 million to $8 million, by integrating interoperability technology. They also saved $90,000 by eliminating temporary staffing departments dedicated to administrative work.

All of these factors translate into a more connected and robust healthcare ecosystem, where patients avoid unnecessarily long and costly hospital stays and have access to convenient and timely post-acute care. In addition, payers and suppliers benefit from a healthier bottom line.

The cuts offered by CMS stop that momentum in its tracks and reverse the growth and innovation that results in better, more efficient home healthcare. Recently introduced legislation that proposes delay cuts until 2026 is a more reasonable approach.

Payers must remain well-equipped to respond to these changing patient preferences, just as providers have. If they don’t, patients and their loved ones bear the brunt of fragmented and costly care.

Photo: Nuthawut Somsuk, Getty Images

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INVITAE CORP – 10-Q – Management’s Discussion and Analysis of Financial Condition and Results of Operations – InsuranceNewsNet https://www.tenil.net/invitae-corp-10-q-managements-discussion-and-analysis-of-financial-condition-and-results-of-operations-insurancenewsnet/ Tue, 09 Aug 2022 21:16:30 +0000 https://www.tenil.net/invitae-corp-10-q-managements-discussion-and-analysis-of-financial-condition-and-results-of-operations-insurancenewsnet/
The following discussion of our financial condition and results of operations
should be read in conjunction with our condensed consolidated financial
statements and the related notes and other financial information included in
Part I, Item 1. of this Form 10-Q, and together with our audited consolidated
financial statements and the related notes and other information included in our
Annual Report on Form 10-K for the year ended December 31, 2021. Historic
results are not necessarily indicative of future results.

This report contains forward­looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. All statements in this report
other than statements of historical fact, including statements identified by
words such as "believe," "may," "will," "estimate," "continue," "anticipate,"
"intend," "expect" and similar expressions, are forward­looking statements.
Forward­looking statements include, but are not limited to, statements about:

• our views on the future of genetic testing and its role in
medical practice;

•the impact of the COVID-19 pandemic on our business and the actions we have taken
taken or likely to be taken in response thereto;

•our mission and strategy for our business, products and technology;

•the implementation of our business model and our success in new markets;

•the expected costs and benefits of our recently announced strategic strategy
realignment;

•expected benefits and our ability to integrate our acquisitions;

•our ability to obtain regulatory approvals for our tests;

• the rate and degree of market acceptance of our tests and genetic tests
in general;

• our ability to scale our infrastructure and operations cost-effectively
way;

•our expectations regarding our platform and our future offerings;

•the schedule and results of studies relating to our trials;

• developments and expectations regarding our competitors and our industry;

•our competitive strengths;

•the extent to which individuals will share genetic information in general, such as
as well as share with us any related potential economic opportunities;

•our commercial projects;

• our ability to obtain and maintain adequate reimbursement for our tests;

• regulatory, political and other developments in United States and foreign
countries;

•our ability to attract and retain scientists, salespeople, engineers or
Staff management;

• our expectations regarding our ability to obtain and maintain
protecting property and not infringing on the rights of others;

•the effects of litigation or investigations on our business;

•our ability to obtain financing for our operations and the growth of our
Company;

•our future financial performance;

•our beliefs about our future growth and the drivers of that growth;

•our expectations in environmental, social and governance matters;

•the impact of accounting statements and our critical accounting policies,
judgments, estimates and assumptions about our financial results;

• our expectations regarding our future revenues, cost of revenues,
expenditures and capital expenditures, and our future capital requirements; and

•the impact of tax laws on our activities.

Forward­looking statements are subject to a number of risks and uncertainties
that could cause actual results to differ materially from those expected. These
risks and uncertainties include, but are not limited to, those risks discussed
in Part II, Item 1A. "Risk Factors" in this Quarterly Report on Form 10-Q.
Although we believe that the expectations and assumptions reflected in the
forward­looking statements are reasonable, we cannot guarantee future results,
level of activity, performance or achievements. Any forward­looking statements
in this report speak only as of the date of this report. We expressly disclaim
any obligation or undertaking to update any forward­looking statements.

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In this report, all references to “Guests,” “we”, “us”, “our” or “the Company”
mean Invitee Corporation.

Invitae and the Invitae logo are trademarks of Invitae Corporation. AMP™,
LiquidPlex™, VariantPlex® and FusionPlex®, are the property of ArcherDX, LLC, a
wholly-owned subsidiary of Invitae Corporation. We also refer to trademarks of
other companies and organizations in this report.

Summary of risk factors

Our business is subject to numerous risks and uncertainties that could affect
our ability to successfully implement our business strategy and affect our
financial results. You should carefully consider all of the information in this
Quarterly Report and, in particular, the following principal risks and all of
the other specific factors described in Part II, Item 1A. "Risk Factors" in this
Quarterly Report on Form 10-Q before deciding whether to invest in our company.

• We expect to continue to incur significant losses, and we may not succeed
execute our plan to achieve or maintain profitability.

•We have a large amount of debt, servicing our debt requires a significant
amount of cash, we may not have sufficient cash flow from our business to
service our debt, and we may need to refinance all or a significant portion of
our debt.

• Our inability to raise additional capital on acceptable terms in the future may
limit our ability to develop and commercialize new tests and expand our
operations.

•Our recently-announced strategic realignment and the associated headcount
reduction are expected to significantly change our business, result in
significant expense, may not result in anticipated savings, and will disrupt our
business.

•We rely on highly skilled personnel in a broad array of disciplines and, if we
are unable to hire, retain or motivate these individuals, or maintain our
corporate culture, we may not be able to maintain the quality of our services or
grow effectively.

•We have acquired and may continue to acquire businesses or assets, form joint
ventures or make investments in other companies or technologies that could harm
our operating results, dilute our stockholders' ownership, or cause us to incur
debt or significant expense.

•We need to scale our infrastructure in advance of demand for our tests and
other products and services, and our failure to generate sufficient demand for
our products and services would have a negative impact on our business and our
ability to attain profitability.

•We face risks related to health epidemics, including the ongoing COVID-19
pandemic, which could have a material adverse effect on our business and results
of operations.

•If third-party payers, including managed care organizations, private health
insurers and government health plans, do not provide adequate reimbursement for
our tests or we are unable to comply with their requirements for reimbursement,
our commercial success could be negatively affected.

•We face intense competition, which is likely to intensify further as existing
competitors devote additional resources to, and new participants enter, the
markets in which we operate. If we cannot compete successfully, we may be unable
to increase our revenue or achieve and sustain profitability.

• The patient data software market is competitive and our business will be
negatively if we are unable to compete successfully.

•Security breaches, privacy issues, loss of data and other incidents could
compromise sensitive or personal information related to our business or prevent
us from accessing critical information and expose us to liability, which could
adversely affect our business and our reputation.

• If we are unable to continue to generate substantial demand for our tests, our
commercial success will be negatively affected.

•Our success will depend on our ability to use rapidly changing genetic data to
interpret test results accurately and consistently, and our failure to do so
would have an adverse effect on our operating results and business, harm our
reputation and could result in substantial liabilities that exceed our
resources.

• Impairment of the value of our goodwill or other intangible assets has and may
in the future have a material adverse effect on our results of operations and
financial condition.

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• If the FDA regulates the tests we currently offer as LDTs ​​as medical devices,
we could incur substantial costs and our business, financial condition and
operating results could be affected.

•One of our competitors has alleged that our Anchored Multiplex PCR, or AMP,
chemistry and products using AMP are infringing on its intellectual property,
and we may be required to redesign the technology, obtain a license, cease using
the AMP chemistry altogether and/or pay significant damages, among other
consequences, any of which would have a material adverse effect on our business
as well as our financial condition and results of operations.

Mission and strategy

Invitae's mission is to bring comprehensive genetic information into mainstream
medical practice to improve the quality of healthcare for billions of people.
Our goal is to aggregate a majority of the world's genetic information into a
comprehensive network that enables sharing of data among network participants to
improve healthcare and clinical outcomes.

We were founded on four fundamental principles:

•Patients must own and control their own genetic information;

• Health professionals play a fundamental role in the ordering and interpretation of
information;

• Lowering the price of genetic information will increase its clinical effectiveness and
personal utility; and

•Genetic information is more valuable when shared.

Our long-term growth strategy is built around five key drivers of our business,

 which we believe work in conjunction to create a flywheel effect extending our
             leadership position in the new market we are building:

                    [[Image Removed: nvta-20220630_g2.jpg]]

•Refocusing our content offering. We intend to prioritize our core genome
sequencing platform and streamline our product portfolio to focus on core
testing opportunities among oncology, women's health, rare disease and
pharmacogenomics, ultimately leading to affordable and ongoing access to the
molecular information that enables personalized medicine. Sharpening our focus
on our content offering is a core and central contribution to an improved user
experience and the potential for better health outcomes.

•Creating a unique user experience. We are committed to continue our expansion
and integration of key digital health-based technologies and services in order
to create a differentiated model in genetic health. A state-of-the-art
interactive platform will enhance our service offering, leverage the uniquely
empowering characteristics of online sharing of genetic information and, we
believe, enable a superior economic offering to clients. We intend to continue
to expend efforts developing and implementing technology-driven improvements to
our customers' experience. We believe that an enhanced user experience and the
resulting benefits to our brand and reputation will help draw customers to us
over and above our direct efforts to do so.

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•Increasing volume. We intend to increase our brand equity and visibility
through a commitment to precision testing results, excellent service and a
variety of marketing and promotional techniques, including scientific
publications and presentations, sales, marketing, public relations, social media
and web technology vehicles. Our ability to increase billable volume will depend
in part on our success achieving broad reimbursement coverage and laboratory
service contracts for our tests from third-party payers and agreements with
institutions and partners.

•Attracting partners. As we add more customers to our platform, we believe our
business becomes particularly attractive to potential partners that can help the
patients in our network further benefit from their genetic information or that
provide us access to new customers who may wish to join our network. We believe
the cumulative effect of the increased billable volume brought by these
strategic components will allow us to lower the cost of our service and expand
patient access globally.

•Achieving scale. Our goal is to provide customers with a broad menu of genetic
content at a reasonable price and rapid turn-around times in order to grow
billable volume and, in turn, achieve greater economies of scale. As our
customers and our business benefit from further cost savings, we expect that
those cost savings will further improve the customer experience, allowing us to
reap the cumulative benefits from all of the efforts outlined above.

Company presentation

We are focused on making comprehensive, high-quality genetic information more
accessible and instrumental to the healthcare ecosystem and stakeholders,
including patients, providers and physicians, payers, pharmaceutical partners
and more. Our comprehensive and convenient physical and digital platform of risk
assessment and the resulting data that is actionable and guided is designed to
power healthcare decisions across our stakeholders, importantly providing
patients a lifetime partner in Invitae to best guide and manage their personal
and familial health decisions. We offer genetic testing across multiple clinical
areas, including hereditary cancer, personalized oncology, women's health,
pediatrics and rare diseases. Medical genetics is central to health outcomes and
we are bringing it to the mainstream by lowering the costs and removing barriers
to adoption, which is driven by our user-friendly and comprehensive Invitae
Digital Health Platform. Ultimately, the utility of the accumulated data will
compound, enabling improved individual and population health and advancing the
benefits of molecular medicine around the globe.

For the years ended December 31, 2021, 2020 and 2019, our revenue was $460.4
million, $279.6 million, and $216.8 million, respectively, and we incurred net
losses of $379.0 million, $602.2 million, and $242.0 million, respectively. For
the six months ended June 30, 2022 and 2021, our revenue was $260.3 million and
$219.9 million, respectively, and we recognized a net loss of $2.7 billion and
net income of $24.3 million, respectively. At June 30, 2022, our accumulated
deficit was $4.4 billion.

In 2021, 2020 and 2019, we generated 1,169,000, 659,000 and 469,000 billable
units, respectively. In the six months ended June 30, 2022, we generated 666,000
billable units compared to 546,000 billable units in the same period in 2021. We
calculate volume using billable units, which are billable events that include
individual test reports released and individual reactions shipped. We refer to
the set of reagents needed to perform a next generation sequencing ("NGS") test
as a "reaction." Approximately 56% of the billable volume generated in the first
six months of 2022 were billable to patients, biopharmaceutical partners and
other business-to-business customers (e.g., hospitals, clinics, medical
centers), and the remainder were billable to government and private insurance
payers. Many of the gene tests on our assays are reimbursable by health
insurance companies. However, when we do not have reimbursement policies or
contracts with private insurers, our claims for reimbursement may be denied upon
submission, and we must appeal the claims. The appeals process is time consuming
and expensive, and may not result in payment. Even if we are successful in
achieving reimbursement, we may be paid at lower rates than if we were under
contract with the third-party payer. When there is not a contracted rate for
reimbursement, there is typically a greater payment requirement from the patient
that may result in further delay in payment for these tests.

We believe that the keys to long-term profitable growth will be to align our
cost structure with our streamlined product portfolio and implement operational
discipline, increase billable volume, achieve broad reimbursement coverage for
our tests from third-party payers and increase the amount we receive from other
types of payers, advance digital health solutions and data services, drive down
the price for genetic analysis and interpretation, reduce the costs associated
with performing our genetic tests, steadily increase the amount of genetic
content we offer and is used by providers across the range of healthcare
platforms, consistently improve the client experience, drive physician and
patient utilization of our platform for ordering and delivery of results, and
increase the number of strategic partners working with us to add value for our
clients. We also believe that providing a unique genetic testing platform that
is agnostic to stage of life or disease category will deliver unique benefits to
customers, payers

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and other institutions that are seeking to make genetic information a standard
element of healthcare decisions in the future. The accumulation of genetic and
patient information will ultimately enable the healthcare ecosystem and
stakeholders, including patients, providers and physicians, payers,
pharmaceutical partners and more to achieve improved outcomes.

On July 18, 2022, we announced plans to strategically realign our operations and
implement cost reduction programs in order to accelerate our path to positive
operating cash flow. We plan to eliminate non-core operations while realigning
and sharpening our focus on the portfolio of businesses that can generate
sustainable margins and deliver returns to fuel future investment. In the
testing business, we will shift operational and commercial efforts to accelerate
positive cash flow by maintaining robust support of the higher-margin,
higher-growth testing opportunities among oncology, women's health, rare disease
and pharmacogenomics. We also plan to continue our expansion and integration of
key digital health-based technologies and services in order to create a
differentiated model in genetic health. Longer-term, we remain committed to our
genomic management business. We believe that we hold significant growth
potential and intend to continue to prioritize the tools, partnerships and
applications that support the development of genome management as the catalyst
for the future of healthcare.

The realignment plan includes a reduction in workforce, lab and office space
consolidation, portfolio optimization, decrease in other operating expenses, as
well as a reduced international footprint. The plan is anticipated to result in
approximately $326 million in annualized cash savings, which is expected to be
fully realized by 2023. We currently expect that the realignment plan will be
completed by June 30, 2023 and estimate we will incur cash charges ranging
between approximately $75 to $100 million for associated severance, professional
service fees and lease and contract exit costs related to the realignment plan,
in addition to non-cash charges, which we are currently not able to estimate.

We expect to incur short-term operating losses as we launch
strategic realignment of our activities. If we are unable to reach these
objectives and manage our costs successfully, we may not be able to achieve
positive operating cash flow in the short term or not at all.

Russia and the Ukrainian conflict

During the first quarter of 2022, Russia commenced a military invasion of
Ukraine, and the ensuing conflict has created disruption in the region and
around the world. We have suspended operations in Russia, which has not had and
is not expected to have a material impact on our operating results. We serve
customers globally across a broad geographic base. Neither Russia nor Ukraine
has comprised or is expected to comprise a material portion of our total
revenue, net loss, or net assets. We continue to closely monitor the ongoing
conflict and related sanctions, which could impact our financial results in the
future. Other impacts due to this evolving situation are currently unknown and
could potentially subject our business to adverse consequences should the
situation escalate beyond its current scope. See Part II, Item 1A. "Risk
Factors" in this Quarterly Report on Form 10-Q for additional information about
the conflict between Russia and Ukraine and its potential effect on our business
and results of operations.

Impact of COVID-19

We expect the COVID-19 pandemic to continue to impact our business. We have
reviewed and adjusted, if necessary, for the impact of COVID-19 on our
estimates related to revenue recognition and expected credit losses.

In response to the pandemic we have implemented measures to protect the health
of all of our employees during this time with additional measures in place to
better protect our on-site lab production and support teams. Our production
facilities currently remain fully operational. Substantially all of the
Company's offices have re-opened in a hybrid working model, subject to operating
restrictions which adhere to healthcare guidelines to protect public health and
the health and safety of employees. While we have not experienced significant
disruption in our supply chain, we have experienced supply delays and higher
logistics costs as a result of the COVID-19 pandemic and have also had to obtain
supplies from new suppliers. We have increased our inventory on hand to respond
to potential future disruptions that may occur to ensure we are able to meet
customer demand.

As a result of government-imposed restrictions, many announced healthcare
guidelines resulted in a shift of regular physician visits and healthcare
delivery activities to remote/telehealth formats. This was particularly
important for patients who, despite the fall-out from COVID-19, continued to be
diagnosed with critical diseases, like cancer, and for women who are pregnant or
are trying to conceive. We believe our investments in new access platforms and
technologies has and will continue to position us well to provide a range of
testing to clinicians and patients using a "clinical care from afar" model. An
example is our rollout in April 2020 of our Gia telehealth platform,

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that expands access to remote interaction between patients and clinicians
as well as the direct ordering of genetic tests.

Although many government-imposed restrictions have been reduced or eliminated,
the future impact of the COVID-19 pandemic continues to be highly
uncertain. Given the unknown duration and extent of COVID-19's impact on our
business, and the healthcare system in general, we continue to monitor evolving
market conditions and have pivoted our focus and investments on the commercial
execution of workflows that support remote ordering, online support and
telehealth.

In March 2020, the Coronavirus Aid, Relief, and Economic Security Act ("CARES
Act") was signed into law as a stimulus bill intended to bolster the economy,
among other things, and provide assistance to qualifying businesses and
individuals. The CARES Act included an infusion of funds into the healthcare
system and in January 2021 we received $2.3 million as part of this initiative.
This payment was recognized as other income, net in our consolidated statement
of operations in the period received.

Factors affecting our performance

Number of billable units

Our centralized test revenue is tied to the number of tests which we bill
third-party payers, biopharmaceutical partners, other business-to-business
customers (e.g., hospitals, clinics, medical centers), or patients. Our
decentralized product revenue is based upon the number of individual reactions
we ship biopharmaceutical partners and other business-to-business customers. We
refer to the set of reagents needed to perform an NGS test as a "reaction," and
we refer to billable events that include individual test reports released and
individual reactions shipped as billable units. We typically bill for our
services following delivery of the billable report derived from testing samples
and interpreting the results. For units manufactured for use by customers in
distributed facilities, we typically bill customers upon shipment of those
units. Test orders are placed under signed requisitions or contractual
agreements, as we often enter into contracts with biopharmaceutical partners,
other business-to-business customers and insurance companies. We incur the
expenses associated with a unit in the period in which the unit is processed
regardless of when payment is received with respect to that unit. We believe the
number of billable units in any period is an important indicator of the growth
in our testing business, and with time, this will translate into the number of
customers accessing our platform.

Number and size of research and commercial partnerships

Pharma development service revenue, which we recognize within other revenue in
our consolidated statements of operations, is generated primarily from services
provided to biopharmaceutical companies and other partners and is related to
companion diagnostic development, clinical research, and clinical trial services
across the research, development and commercialization phases of collaborations.
The result of these relationships may include the development of new targeted
companion diagnostics, which underscore and expand the need for genetic testing
and in some cases may lead to intellectual property and/or revenue sharing
opportunities with third-party partners.

In addition to research partnerships, we also seek to grow the number of
biopharmaceutical partners and other business-to-business customers for whom we
provide testing technologies, analysis, supplies and expertise to institutions
that provide independent testing services to customers in their respective
regions.

Success in Obtaining and Maintaining Reimbursement

Our ability to increase volume and revenue will depend in part on our success
achieving broad reimbursement coverage and laboratory service contracts for our
tests from third-party payers and agreements with institutions and partners.
Reimbursement may depend on a number of factors, including a payer's
determination that a test is appropriate, medically necessary and
cost-effective, as well as whether we are in contract, where we get paid more
consistently and at higher rates. Because each payer makes its own decision as
to whether to establish a policy or enter into a contract to reimburse for our
testing services and specific tests, seeking these approvals is a time-consuming
and costly process. In addition, clinicians and patients may decide not to order
our tests if the cost of the test is not covered by insurance. Because we
require an ordering physician to requisition a test, our revenue growth also
depends on our ability to successfully promote the adoption of our testing
services and expand our base of ordering clinicians. We believe that
establishing coverage and obtaining contracts from third-party payers is an
important factor in gaining adoption by ordering clinicians. Our arrangements
for laboratory services with payers cover approximately 330 million lives,
comprised of Medicare, all national commercial health plans, and Medicaid in
most states, including California (Medi-Cal), our home state.

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Ability to reduce the costs associated with performing our tests

Reducing the costs associated with performing our genetic tests is both a focus
and a strategic objective of ours. Over the long term, we will need to reduce
the cost of raw materials by improving the output efficiency of our assays and
laboratory processes, modifying our platform-agnostic assays and laboratory
processes to use materials and technologies that provide equal or greater
quality at lower cost, improve how we manage our materials, port some tests onto
a next generation sequencing platform and negotiate favorable terms for our
materials purchases. We also intend to continue to design and implement hardware
and software tools that are designed to reduce personnel-related costs for both
laboratory and clinical operations/medical interpretation by increasing
personnel efficiency and thus lowering labor costs per test.

Ability to expand our genetic content and create new pathways to test

We believe our focus on reducing the average cost per test will have a
countervailing force - increasing the number of tests we offer, the content of
each test and the means to connect our testing services with patients and
physicians. We intend to continue to expand our test menus by steadily releasing
additional genetic content for affordable prices, ultimately leading to
affordable whole genome services. The breadth and flexibility of our offering
will be a critical factor in our ability to address new markets for genetic
testing services. Both of these, in conjunction with our continued focus on
strategic partnerships, will be important to our ability to continue to grow the
volume of billable tests we deliver. We have and intend to continue to identify
new ways to connect our testing services and information to patients. These
include direct patient outreach and ordering capacity, the use of automated
assistants for physician customers to improve the ease of ordering and
processing genetic tests and programs designed to reach underserved patient
populations with genetic testing.

Realignment of our activities and expenditure schedule

As part of the strategic business realignment of our operations announced in
July 2022, we initiated a comprehensive plan focused on supporting business
lines and geographies that can generate sustainable margins, provide the best
return to fuel future investment and accelerate the company's path to positive
cash flow. We believe the plan further helps ensure we remain at the forefront
of innovation and advancements in genomics by allocating resources towards our
core genetic testing and genome management platforms that have the potential to
improve healthcare outcomes.

We have conducted an assessment of our product portfolio as well as the
associated research and development and commercial spending. Our new plan shifts
the focus to programs relevant to the core testing business to drive near-term
cost of revenue reductions. We have also performed an extensive review of
internal and external costs and how those costs align with the new business
structure. Additional savings are expected to be generated through the ongoing
digitization of workflows, elimination of duplication and streamlined processes
across the core platforms and rationalization of technology and external
services.

As we refocus our operations on our core genomic testing platform, we also plan
to continue to invest in our genetic testing and information management business
to drive long-term profitable growth. We deploy state-of-the-art technologies in
our genetic testing services, and we intend to continue to scale our
infrastructure, including our testing capacity and capabilities as well as our
information systems. We also expect to incur software development costs as we
seek to further digitize and automate our laboratory processes and our genetic
interpretation and report sign-out procedures, scale our customer service
capabilities to improve our customers' experience, and expand the functionality
of our website. We will continue to incur costs related to marketing and
branding as we spread our initiatives beyond our current customer base and focus
on providing access to customers through our website. In addition, we will incur
ongoing expenses as a result of operating as a public company. The expenses we
incur may vary significantly by quarter as we focus on different aspects of our
business.

How we recognize revenue

We generally recognize revenue on an accrual basis, which is when a customer
obtains control of the promised goods or services, typically a test report, or
upon shipment of our precision oncology products. Accrual amounts recognized are
based on estimates of the consideration that we expect to receive, and such
estimates are adjusted and subsequently recorded until fully settled. Changes to
such estimates may increase or decrease revenue recognized in future periods.
Revenue from our tests may not be equal to billed amounts due to a number of
factors, including differences in reimbursement rates, the amounts of patient
payments, the existence of secondary payers and claim denials. Some test orders
are placed under signed requisitions or contractual agreements, and we often
enter into contracts with biopharmaceutical partners, other business-to-business
customers and insurance companies that include pricing provisions under which
such tests are billed.

                                       33
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Pharma development service revenue is generated primarily from custom assay
design services, sample processing activities and consultative inputs, which is
separate from revenue generated by any related or unrelated product component.
Revenue is recognized as samples are processed or scope of work is completed
based on contracted agreements with those biopharmaceutical customer companies.

Under these collaborations, we also generate revenue from achievement of
milestones, provision of on-going support, and related pass-through costs and
fees. We generally have distinct performance obligations for development
milestones related to our development of a companion diagnostic device. We use a
cost plus a margin approach to estimate the standalone value of our companion
diagnostic development service performance obligations. Revenue is recognized
over time using input or output methods based on our assessments of performance
completed to date toward each milestone.

Financial overview

Revenue

We primarily generate revenue from testing services and sales of distributed
precision oncology products. Customers are typically billed upon delivery of
test results or shipment of products. We also generate revenue from development
agreements, access to data, data analytics and other related services provided
for biopharmaceutical partners and other parties. Our ability to increase our
revenue will depend on our ability to increase our market penetration, obtain
FDA approval, obtain contracted reimbursement coverage from third-party payers,
and grow our relationships with biopharmaceutical customers.

Revenue cost

Cost of revenue reflects the aggregate costs incurred in delivering our products
and services and includes expenses for materials and supplies, personnel-related
costs, freight, costs for lab services, genetic interpretation and clinical
trial support, equipment and infrastructure expenses and allocated overhead
including rent, information technology, equipment depreciation, amortization of
acquired intangibles, and utilities. We expect cost of revenue to generally
increase in line with the increase in billable volume, however, we expect a
future increase in amortization of acquired intangible assets that is not
dependent on billed volume. We anticipate our cost per unit for existing tests
will generally decrease over time due to the efficiencies we expect to gain as
volume increases and from automation and other cost reductions. These reductions
in cost per unit will likely be offset by new offerings, which often have a
higher costs per unit during the introductory phases before we are able to gain
efficiencies. The cost per unit may fluctuate significantly from quarter to
quarter.

Operating Expenses

Our operating expenses are classified into three categories: research and
development, selling and marketing, and general and administrative. For each
category, the largest component is generally personnel-related costs, which
include salaries, employee benefit costs, bonuses, commissions, as applicable,
and stock-based compensation expense.

Research and development

Research and development expenses represent costs incurred to develop our
technology and future offerings. These costs are principally for process
development associated with our efforts to expand the number of genes we can
evaluate, our efforts to lower the costs per unit and our development of new
products to expand our platform. We have and may continue to partner with other
companies to develop new technologies and capabilities we expect to invest
capital and incur significant operating costs to support these development
efforts. In addition, we incur process development costs to further develop the
software we use to operate our laboratories, analyze generated data, process
customer orders, validate clinical activities, enable ease of customer ordering,
deliver reports and automate our business processes. These costs consist of
personnel-related costs, laboratory supplies and equipment expenses, consulting
costs, amortization of acquired intangible assets, and allocated overhead
including rent, information technology, equipment depreciation and utilities.

We expense all research and development costs in the periods in which they are
incurred. We expect our research and development expenses to decrease as a
percentage of revenue as we streamline our product portfolio, shift investments,
including exiting certain business lines and commercial geographies, and reduce
labor costs through a reduction in workforce. We expect to make investments to
reduce costs and streamline our technology to provide patients access to testing
aligned to scale with our long-term profitable growth targets.

                                       34

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Sales and marketing

Selling and marketing expenses consist of personnel-related costs, including
commissions, client service expenses, advertising and marketing expenses,
educational and promotional expenses, market research and analysis, and
allocated overhead including rent, information technology, equipment
depreciation, amortization of acquired intangibles, and utilities. We expect our
selling and marketing expenses to decrease as a percentage of revenue as a
result of a reduction in workforce, targeted sales force expansion and lower
marketing spending as we implement a more efficient sales and marketing approach
to support our core genetic testing platform.

general and administrative

General and administrative expenses include executive, finance and accounting,
billing and collections, legal and human resources functions as well as other
administrative costs. These expenses include personnel-related costs; audit,
accounting and legal expenses; consulting costs; allocated overhead including
rent, information technology, equipment depreciation, and utilities; costs
incurred in relation to our co-development agreements; and post-combination
expenses incurred in relation to companies we acquire. We expect our general and
administrative expenses to decrease as a percentage of revenue as a result of
our cost reduction plan including a reduction in workforce, consolidation of
underutilized facilities, digitization of workflows, elimination of duplication
and streamlined processes, and rationalization of technology and external
services spending.

Asset impairment

Asset impairment expense includes the impairment loss recognized on goodwill,
the IPR&D indefinite-lived intangible asset initially recognized as part of the
acquisition of Singular Bio and specific equipment that is no longer being
utilized on this project and has no alternative future use. Goodwill and
indefinite-lived intangible assets are assessed for impairment on an annual
basis and whenever events and circumstances indicate that these assets may be
impaired. We compare the fair value of our reporting unit to its carrying value,
including goodwill. If the carrying value, including goodwill, exceeds the
reporting unit's fair value, we will recognize an impairment loss for the amount
by which the carrying amount exceeds the reporting unit's fair value.

Change in fair value of contingent consideration

Changes in fair value of contingent consideration are adjustments related to
contingent consideration related to business combinations. We expect these
expenses to fluctuate significantly period to period due to fair value
adjustments that are dependent on many factors, including the value of our
common stock and our assessment of the probability of meeting certain
acquisition-related milestones within the terms of the respective acquisition
agreements, including certain prescribed deadlines for achievement.

With respect to the ArcherDX Final Milestone, the liability was reduced to nil
as of June 30, 2021, with the offsetting change recorded as changes in fair
value of contingent consideration in our consolidated statements of operations.
The removal of the liability balance and the associated change in fair value of
contingent consideration was a result of our reassessment of the steps necessary
to achieve clearance or approval based on FDA feedback received principally in
the three months ended June 30, 2021. In April 2022, an agreement was entered
into with previous ArcherDX stockholders to extend the date of achievement of
the ArcherDX Final Milestone to March 31, 2023. We do not believe achievement of
the conditions prescribed in the acquisition agreement will occur within this
timeframe. As such, no liability was recorded as of June 30, 2022.

Other income, net

Other income, net, primarily consists of adjustments to the fair value of our
stock payable liabilities arising from business combinations, and we expect it
to fluctuate significantly from period to period due to the volatility of our
common stock. Other income, net also includes income generated from our cash
equivalents and marketable securities and amounts received under the CARES Act.

Interest expense

Interest expense is primarily attributable to interest incurred related to our
debt and finance leases. See Note 8, "Commitments and contingencies" in Notes to
Consolidated Financial Statements in Part I, Item 1. of this Quarterly Report on
Form 10-Q for additional information.

                                       35

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Tax benefit

Since we generally establish a full valuation allowance against our deferred tax
assets, our income tax benefit primarily consists of changes in our deferred tax
realization assessments as a result of taxable temporary differences assumed in
connection with our acquisitions and changes in the expected timing of the
reversal of taxable temporary differences.

Significant Accounting Policies and Estimates

Management's discussion and analysis of our financial condition and results of
operations is based on our consolidated financial statements, which have been
prepared in accordance with U.S. generally accepted accounting principles, or
U.S. GAAP. The preparation of these financial statements requires us to make
judgments, estimates and assumptions that affect the reported amounts of assets
and liabilities and the disclosure of contingent assets and liabilities at the
date of the financial statements, as well as the reported revenue generated and
expenses incurred during the reporting periods. We evaluate our estimates on an
ongoing basis. Our estimates are based on current facts, our historical
experience and on various other factors that we believe are reasonable under the
circumstances, the results of which form the basis for making judgments about
the carrying value of assets and liabilities that are not readily apparent from
other sources. Actual results may differ from these estimates under different
assumptions or conditions and any such differences may be material. We believe
that our accounting policies discussed below are critical to understanding our
historical and future performance, as these policies relate to the more
significant areas involving management's judgments and estimates.

The following updates our discussion of impairment testing as of June 30, 2022,
and should be read in conjunction with our critical accounting policies and
estimates disclosed in our Annual Report on Form 10-K for the fiscal year ended
December 31, 2021. Except as presented below, there have been no material
changes from the critical accounting policies and estimates described in our
Annual Report on Form 10-K. See Note 2, "Summary of significant accounting
policies" in the Notes to Condensed Consolidated Financial Statements in Part I,
Item 1. of this Quarterly Report on Form 10-Q for information regarding recent
accounting pronouncements.

Good will and intangible assets with an indefinite useful life

In accordance with ASC 350, Intangibles - Goodwill and Other we do not amortize
goodwill or other intangible assets with indefinite lives, including IPR&D, but
rather test them for impairment. ASC 350 requires us to perform an impairment
review of our goodwill and indefinite-lived intangible balances at least
annually, which we do in the fourth quarter of each year for our single
consolidated reporting unit, and whenever events or changes in circumstances
indicate that the carrying amount of these assets may not be recoverable.

Factors that may indicate potential impairment and trigger an interim impairment
test include, but are not limited to, current economic, market and geopolitical
conditions, including a significant, sustained decline in our stock price and
market capitalization compared to the net book value, an adverse change in legal
factors, business climate or operational performance of the business, or
significant changes in the ability of a particular asset (or group of assets) to
generate positive cash flows for our strategic business objectives. During the
three months ended June 30, 2022, as a result of significant, sustained decline
in our stock price and related market capitalization and lower than expected
financial performance, we performed an impairment assessment of goodwill, IPR&D
intangibles, and long-lived assets, including definite-lived intangibles.

During the three months ended June 30, 2022, the Company completed a
quantitative impairment test for goodwill. In performing the goodwill impairment
test, we estimated the fair value of the reporting unit by utilizing the
discounted cash flow method under the income approach. The determination of the
fair value of the reporting unit requires significant estimates and assumptions,
including significant unobservable inputs. The key inputs to this valuation
approach include, but were not limited to, management's forecast of projected
revenues associated with future cash flows, discount rates, and control
premiums.

When performing our income approach for the reporting unit, we incorporate the
use of projected financial information and a discount rate that is developed
using market participant-based assumptions. The cash flow projections are based
on an 11 year financial forecast developed by management that includes
projections of billable units, revenue by test type and mix, rate changes,
capital spending trends, investments in working capital to support future
revenue and projected cash flow sources and needs, among others. The selected
discount rate then considers the risk and nature of the reporting unit's cash
flows and rates of return market participants would require to invest capital in
the reporting unit.

Based on this analysis, we recognized a goodwill impairment charge of $2.3
billion
in the three and six months ended June 30, 2022which was included
impairment of assets in the condensed consolidated financial statements

                                       36

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of operations. We also identified indicators of impairment related to the IPR&D
intangible asset initially recognized as part of the acquisition of Singular Bio
that is more likely than not that the asset is impaired. The Company identified
conditions during the period ended June 30, 2022 such as alternative
technologies and uncertainties around the desired outcome of our in-development
asset and other economic factors that raised issues with the realizability of
our asset. As a result of our evaluation, we also recognized a non-cash, pre-tax
impairment loss of $30.0 million during the three and six months ended June 30,
2022. Additionally, we recognized an impairment loss of $4.8 million during the
three and six months ended June 30, 2022 related to specific equipment that is
also no longer being utilized on this project and has no alternative future use.
The impairment is recorded in asset impairment in the condensed consolidated
statements of operations. We did not record an impairment for long-lived assets
during the three or six months ended June 30, 2022.

Impairment assessment of long-lived assets

A recoverability test was performed for the long-lived assets, including
definite-lived intangibles, using the undiscounted cash flows approach, which
included significant unobservable inputs including management's forecasts of
projected revenue associated with future cash flows and residual value. The cash
flow estimates reflected the Company's assumptions about its use of the
long-lived assets and eventual disposition of the asset group. We determined
that our long-lived assets held and used, including intangible assets that are
subject to amortization, did not have identifiable cash flows that are largely
independent of the cash flows of other assets and liabilities and of other asset
groups, because the assets are highly interrelated and interdependent.
Therefore, the Company evaluated its long-lived assets for impairment on an
entity-wide level. The long-lived assets passed the recoverability test as of
June 30, 2022.

Results of operations

Three months completed June 30, 2022 and 2021

The following sets forth our consolidated statements of operations data for each
of the periods indicated (in thousands, except percentage changes). Our
historical results are not necessarily indicative of our results of operations
to be expected for any future period.

                                                        Three Months Ended June 30,                     Dollar                  %
                                                         2022                       2021                Change               Change
Revenue:
Test revenue                                   $         133,182               $   111,496          $     21,686               19%
Other revenue                                              3,440                     4,816                (1,376)             (29)%
Total revenue                                            136,622                   116,312                20,310               17%

Cost of revenue                                          110,340                    89,331                21,009               24%
Research and development                                 115,146                   106,454                 8,692               8%
Selling and marketing                                     62,749                    56,964                 5,785               10%
General and administrative                                52,858                    38,303                14,555               NM
Asset impairment                                       2,317,864                         -             2,317,864              100%
Change in fair value of contingent
consideration                                             (2,004)                 (303,349)              301,345               99%

(Loss) income from operations                         (2,520,331)                  128,609            (2,648,940)              NM
Other income, net                                          7,326                     2,024                 5,302               NM
Interest expense                                         (14,019)                  (13,407)                 (612)             (5)%
Net (loss) income before taxes                        (2,527,024)                  117,226            (2,644,250)              NM
Income tax benefit                                        (3,563)                  (16,560)               12,997               78%
Net (loss) income                              $      (2,523,461)              $   133,786          $ (2,657,247)              NM


NM - Not Meaningful

                                       37
--------------------------------------------------------------------------------

Revenue

The increase in total revenue of $20.3 million for the three months ended
June 30, 2022 compared to the same period in 2021 was primarily due to an
increase in billable volume due to growth in our business, partially offset by a
lower average revenue per billable unit. Billable volume increased to
approximately 344,000 in the three months ended June 30, 2022 compared to
287,000 in the same period of 2021, an increase of 20 percent. Average revenue
per billable unit was $387 per unit in the three months ended June 30, 2022
compared to $388 per unit in the comparable prior period.

Revenue cost

The increase in the cost of revenue of $21.0 million for the three months ended
June 30, 2022 compared to the same period in 2021 was primarily due to an
increase in billable volume and a higher cost per billable unit. Cost per unit
was $320 in the three months ended June 30, 2022 compared to $310 for the same
period in 2021. The cost per unit increased primarily due to an increase in
amortization of acquired intangible assets of $16.6 million, an increase in
write downs of certain inventory items of $2.4 million, and higher shipping
costs of $2.2 million.

Research and development

The increase in research and development expense of $8.7 million for the three
months ended June 30, 2022 compared to the same period in 2021 was due to growth
in the business as well as the impact of acquisitions. The increase in research
and development expenses principally consisted of the following elements:
personnel-related costs increased $16.4 million primarily driven by
acquisition-related stock-based compensation expenses as well as headcount
growth; other expenses increased $4.9 million; and depreciation and amortization
increased $0.3 million. These increases were offset by decreases in professional
fees of $5.7 million; facilities-related expenses of $3.1 million; technology
costs of $2.1 million; and lab-related expenses of $2.0 million.

Sales and marketing

The increase in selling and marketing expense of $5.8 million for the three
months ended June 30, 2022 compared to the same period in 2021 was primarily due
to an increase in personnel-related costs of $6.3 million due to headcount
growth and higher travel-related expenses of $1.6 million resulting from more
in-person travel due to reduced COVID-19 restrictions. These increases were
partially offset by decreases in professional fees, facilities-related and other
expenses of $2.1 million.

general and administrative

The increase in general and administrative expense of $14.6 million for the
three months ended June 30, 2022 compared to the same period in 2021 was
primarily due to an increase in personnel-related costs of $10.2 million driven
by acquisition-related stock-based compensation as well as headcount growth; an
increase in facilities-related expenses of $4.9 million due to lease expenses
and higher security and building support costs; and other corporate expenses
increased $2.7 million. These increases were partially offset by a decrease in
acquisition-related expenses of $3.2 million.

Asset impairment

During the three months ended June 30, 2022, we completed an interim impairment
test for goodwill and the IPR&D indefinite-lived intangible asset acquired as
part of the Singular Bio acquisition and as a result, recorded a non-cash
impairment charge of $2.3 billion. Additionally, we recognized an impairment
loss of $4.8 million related to specific equipment that is no longer being
utilized on this project. See Critical accounting policies and estimates above
and Note 5, "Goodwill and intangible assets" in Notes to the Condensed
Consolidated Financial Statements in "Part 1, Item 1. Condensed Consolidated
Financial Statements" of this Quarterly Report on Form 10-Q for further
information.

Change in fair value of contingent consideration

The change in fair value of contingent consideration represented income of $2.0
million and $303.3 million for the three months ended June 30, 2022 and 2021,
respectively. The prior year period includes fair value adjustments to reduce
our contingent consideration liability primarily related to our acquisition of
ArcherDX and the remaining development milestones resulting from a decrease in
the value of our common stock and the removal of our contingent consideration
liability relating to the outstanding milestone for FDA clearance or approval of
a therapy

                                       38
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DIV selection. Prior year adjustments to reduce our quota
consideration were due to our determination that this step will not be
carried out within the deadlines prescribed in the acquisition contract.

Other income, net

The increase in other income, net of $5.3 million for the three months ended
June 30, 2022 compared to the same period in 2021 was primarily due to increases
in fair value adjustments of $3.8 million related to our stock payable
liabilities due to the decrease in the price of our common stock as well as
higher interest income associated with marketable securities investments in the
current year.

Interest expense

The increase in interest charges of $0.6 million for the three months ended
June 30, 2022 compared to the same period in 2021 was due to an increase in debt
in circulation compared to the period of the previous year.

Tax benefit

The decrease in income tax benefit for the three months ended June 30, 2022
compared to the same period in 2021 was primarily due to a $13.0 million
reduction in the valuation allowance on our legacy deferred tax assets primarily
as a result of net deferred tax liabilities of $17.6 million assumed in
connection with our acquisition of Genosity in April 2021. There was no similar
income tax benefit in the current period for the three months ended June 30,
2022.

Semester completed June 30, 2022 and 2021

The following sets forth our consolidated statements of operations data for each
of the periods indicated (in thousands, except percentage changes). Our
historical results are not necessarily indicative of our results of operations
to be expected for any future period.

                                                      Six Months Ended June 30,                   Dollar                  %
                                                      2022                    2021                Change               Change
Revenue:
Test revenue                                   $        252,679          $   210,772          $     41,907               20%
Other revenue                                             7,634                9,161                (1,527)             (17)%
Total revenue                                           260,313              219,933                40,380               18%

Cost of revenue                                         207,456              164,822                42,634               26%
Research and development                                243,382              186,812                56,570               30%
Selling and marketing                                   122,893              108,204                14,689               14%
General and administrative                              104,132              110,820                (6,688)             (6)%
Asset impairment                                      2,317,864                    -             2,317,864              100%
Change in fair value of contingent
consideration                                            (1,850)            (366,970)              365,120               99%

(Loss) income from operations                        (2,733,564)              16,245            (2,749,809)              NM
Other income, net                                        17,765                6,489                11,276               NM
Interest expense                                        (28,004)             (21,800)               (6,204)             (28)%
Net (loss) income before taxes                       (2,743,803)                 934            (2,744,737)              NM
Income tax benefit                                      (38,483)             (23,360)              (15,123)             (65)%
Net (loss) income                              $     (2,705,320)         $    24,294          $ (2,729,614)              NM


NM - Not Meaningful

Revenue

The increase in total revenue of $40.4 million for the six months ended June 30,
2022 compared to the same period in 2021 was due primarily to increased billable
volume, partially offset by lower average revenue per billable unit. Billable
volume increased to 666,000 in the six months ended June 30, 2022 compared to
546,000 in the same period of 2021, an increase of 22 percent, due to growth in
the business. Average revenue per billable unit decreased to $379 per unit in
the six months ended June 30, 2022 compared to $386 per unit in the comparable
prior period primarily due to changes in payer and product mix.

                                       39

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Revenue cost

The increase in the cost of revenue of $42.6 million for the six months ended
June 30, 2022 compared to the same period in 2021 was primarily due to increased
billable volume and higher cost per billable unit. Cost per billable unit was
$311 in the six months ended June 30, 2022 compared to $300 for the same period
in 2021. The increase in cost per unit in the six months ended June 30, 2022 was
primarily attributable to an increase in amortization of acquired intangible
assets of $24.8 million, an increase in shipping costs of $5.6 million, and
IT-related expenses of $4.6 million, as well as changes in product mix.

Research and development

The increase in research and development expense of $56.6 million for the six
months ended June 30, 2022 compared to the same period in 2021 was due to the
growth of the business as well as the impact of business acquisitions. The
increase in research and development expenses principally consisted of the
following elements: personnel-related costs increased $53.0 million primarily
driven by acquisition-related stock-based compensation expenses as well as
headcount growth; acquisition and other expenses increased $9.3 million;
professional fees increased $3.1 million due to higher contract labor; and
depreciation and amortization increased $0.9 million. These increases were
offset by decreases in lab-related expenses of $6.8 million; facilities-related
expenses of $2.4 million and technology costs of $0.5 million.

Sales and marketing

The increase in selling and marketing expense of $14.7 million for the six
months ended June 30, 2022 compared to the same period in 2021 was due primarily
to the growth of the business. The increase in selling and marketing expenses
principally consisted of the following elements: personnel-related costs
increased by $13.1 million reflecting headcount growth; travel-related expenses
increased $2.7 million resulting from more in-person travel due to reduced
COVID-19 restrictions; and information technology costs increased $1.3 million
due to higher spending on software licenses associated with headcount growth.
These increases were offset by decreases in brand initiatives and advertising
costs of $1.3 million and professional and other expenses of $1.1 million.

general and administrative

The decrease in general and administrative expense of $6.7 million for the six
months ended June 30, 2022 compared to the same period in 2021 was primarily due
to decreases in personnel-related costs of $15.0 million due to lower
acquisition-related stock-based compensation, partially offset by headcount
growth and a decrease in acquisition-related expenses of $4.0 million. These
decreases were offset by increases in other corporate expenses of $4.8 million;
facilities-related expenses of $4.3 million due to lease expenses and higher
security and building support costs; and information technology costs increased
$3.2 million due to higher spending on software licenses associated with
headcount growth.

Asset impairment

During the six months ended June 30, 2022, we completed an interim impairment
test for goodwill and IPR&D indefinite-lived intangible asset and as a result,
recorded a non-cash impairment charge of $2.3 billion. Additionally, we
recognized an impairment loss of $4.8 million during related to specific
equipment that is no longer being utilized on this project. See Critical
accounting policies and estimates above and Note 5, "Goodwill and intangible
assets" in Notes to the Condensed Consolidated Financial Statements in "Part 1,
Item 1. Condensed Consolidated Financial Statements" of this Quarterly Report on
Form 10-Q for further information.

Change in fair value of contingent consideration

The change in fair value of contingent consideration represented income of $1.9
million and $367.0 million for the six months ended June 30, 2022 and 2021,
respectively. The prior year period includes fair value adjustments to reduce
our contingent consideration liability primarily related to our acquisition of
ArcherDX and the remaining development milestones resulting from a decrease in
the value of our common stock and the removal of our contingent consideration
liability relating to the outstanding milestone for FDA clearance or approval of
a therapy selection IVD. The prior year adjustments to decrease our contingent
consideration were due to our determination that this milestone will not be
achieved in the timeframe prescribed in the acquisition agreement, although we
expect to receive FDA clearance or approval at a later date.

                                       40

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Other income, net

The increase in other income, net of $11.3 million for the six months ended
June 30, 2022 compared to the same period in 2021 was primarily due to increases
in fair value adjustments of $10.4 million related to our stock payable
liabilities due to the decrease in the price of our common stock as well as
higher interest income associated with marketable securities investments in the
current year.

Interest expense

The increase in interest charges of $6.2 million for the six months ended
June 30, 2022 compared to the same period in 2021 was due to an increase in debt
in circulation compared to the period of the previous year.

Tax benefit

The increase in income tax benefit of $15.1 million for the six months ended
June 30, 2022 was primarily due to a $34.6 million release of federal and state
valuation allowances as a result of the reclassification of ArcherDX's
STRATAFIDE and PCM in-process research and development intangibles from
indefinite-lived intangibles to developed technology, which enabled the
associated deferred tax liability to serve as a source of income to existing
finite-lived deferred tax assets for which a valuation allowance had previously
been established. There was no similar income tax benefit in the prior year
period. The income tax benefit of $23.4 million for the six months ended June
30, 2021 was primarily due to reduction in the valuation allowance on our legacy
deferred tax assets as a result of net deferred tax liabilities assumed in
connection with our acquisitions of One Codex and Genosity in 2021.

Cash and capital resources

Cash and capital expenditures

We have generally incurred net losses since our inception. For the six months
ended June 30, 2022 and 2021, we had a net loss of $2.7 billion and net income
of $24.3 million, respectively, and we expect to incur additional losses in the
future. At June 30, 2022, we had an accumulated deficit of $4.4 billion. While
our revenue has increased over time, we may never achieve revenue sufficient to
offset our expenses.

Since the beginning, our operations have been financed mainly by royalties collected
from our customers, the net proceeds from the sale of our share capital as well as
borrowing under credit facilities and issuing convertible senior notes.

In January 2021, we issued, in an underwritten public offering, an aggregate of
8.9 million shares of our common stock at a price of $51.50 per share, for gross
proceeds of $460.0 million and net proceeds of $434.3 million.

In September 2019, we issued $350.0 million of aggregate principal amount of
convertible senior notes due 2024, which bear cash interest at a rate of 2.0%
per year. Also in September 2019, we used the funds received through the
issuance of our convertible senior notes due 2024 to settle our Note Purchase
Agreement we entered into in November 2018. In April 2021, we issued
$1,150.0 million of aggregate principal amount of convertible senior notes due
2028, which bear cash interest at a rate of 1.5% per year. Our ability to make
scheduled payments of the principal of, to pay interest on or to refinance our
indebtedness depends on our future performance, which is subject to economic,
financial, competitive and other factors beyond our control. Our business may
not generate cash flow from operations in the future sufficient to service our
debt, including paying off the principal when due, and make necessary capital
expenditures. Holders of our convertible senior notes have the right to require
us to repurchase all or any portion of their notes upon the occurrence of a
fundamental change at a fundamental change repurchase price equal to 100% of the
principal amount of the notes to be repurchased, plus accrued and unpaid
interest, if any. In addition, upon conversion of the notes, unless we elect to
deliver solely shares of our common stock to settle such conversion (other than
paying cash in lieu of delivering any fractional share), we will be required to
make cash payments, which could adversely affect our liquidity. However, we only
have limited ability to make those cash payments under our credit agreement and,
even if the credit agreement limitations are no longer in effect, we may not
have enough available cash or be able to obtain financing at the time we are
required to make repurchases of notes surrendered or notes being converted.

In October 2020, in connection with our acquisition of ArcherDX, we entered into
a credit facility to borrow $135.0 million which closed concurrently with the
merger. The terms of this credit facility restrict our ability to incur certain
indebtedness, pay dividends, make acquisitions and take other actions.

                                       41

--------------------------------------------------------------------------------

To June 30, 2022 and December 31, 2021we have had $736.8 million and $1.1 billion,
respectively, cash, cash equivalents, restricted cash and marketable cash
securities.

Our primary uses of cash are to fund our operations as we continue to grow our
business, enter into partnerships and acquire businesses and technologies. Cash
used to fund operating expenses is affected by the timing of when we pay
expenses, as reflected in the change in our outstanding accounts payable and
accrued expenses.

We have incurred substantial losses since inception, and we expect to continue
to incur losses in the near future. We believe our existing cash, cash
equivalents and marketable securities as of June 30, 2022 and fees collected
from the sale of our products and services will be sufficient to meet our
anticipated cash requirements for at least the next 12 months.

We may need or choose to raise additional funding to finance operations and
service debt obligations prior to achieving profitability or should we make
additional acquisitions. We regularly consider fundraising opportunities and
expect to determine the timing, nature and size of future financings based upon
various factors, including market conditions, debt maturities and our operating
plans. We may in the future elect to finance operations by selling equity or
debt securities or borrowing money. We also may elect to finance future
acquisitions. If we issue equity securities, dilution to stockholders may
result. Any equity securities issued may also provide for rights, preferences or
privileges senior to those of holders of our common stock. If we raise funds by
issuing additional debt securities, these debt securities would have rights,
preferences and privileges senior to those of holders of our common stock. In
addition, the terms of additional debt securities or borrowings could impose
significant restrictions on our operations. If additional funding is required,
there can be no assurance that additional funds will be available to us on
acceptable terms on a timely basis, if at all. If we are unable to obtain
additional funding when needed, we may need to curtail planned activities to
reduce costs. Doing so will likely have an unfavorable effect on our ability to
execute on our business plan and have an adverse effect on our business, results
of operations and future prospects.

On July 18, 2022, we announced plans to strategically realign our operations and
implement cost reduction programs in order to accelerate our path to positive
operating cash flow. We plan to eliminate non-core operations while realigning
and sharpening our focus on the portfolio of businesses that can generate
sustainable margins and deliver returns to fuel future investment. In the
testing business, we will shift operational and commercial efforts to accelerate
positive cash flow by maintaining robust support of the higher-margin,
higher-growth testing opportunities among oncology, women's health, rare disease
and pharmacogenomics. The realignment plan includes a shift in investments as we
exit certain business lines and commercial geographies, portfolio optimization,
reduction in workforce, lab and office space consolidation, decrease in other
operating expenses including lower sales and marketing spending as we implement
a more efficient go-to market strategy, and optimize and reassess external
spending on professional services and technology. The plan is anticipated to
result in initial cash charges ranging between approximately $75 to $100 million
and approximately $326 million in annualized cash savings, which is expected to
be fully realized by 2023.

The following table summarizes our cash flows (in thousands):

Semester completed June 30th,

                                                                         2022                     2021
Net cash used in operating activities                            $     (282,232)             $  (218,845)
Net cash used in investing activities                                  (340,491)                (354,259)
Net cash provided by financing activities                                 2,850                1,559,644

(decrease) net increase in cash, cash equivalents and
cash

                                                             $     (619,873)             $   986,540


Cash flow from operating activities

For the six months ended June 30, 2022, cash used in operating activities of
$282.2 million principally resulted from our net loss of $2.7 billion, an asset
impairment of $2.3 billion, a $38.5 million income tax benefit and non-cash
charges for remeasurements of liabilities in connection with business
combinations of $18.0 million. These were partially offset by non-cash charges
of $103.9 million for stock-based compensation, $64.2 million for depreciation
and amortization, $7.8 million for amortization of debt discount and issuance
costs related to our outstanding debt and $3.3 million of post-combination
expense. The net effect on cash for changes in net operating assets was a
decrease of cash of $22.4 million.

                                       42

--------------------------------------------------------------------------------


For the six months ended June 30, 2021, cash used in operating activities of
$218.8 million principally resulted from our net income of $24.3 million,
non-cash charges of remeasurements of liabilities in connection with business
combinations of $372.7 million, primarily relating to ArcherDX development
milestones and a $23.4 million income tax benefit primarily generated from our
acquisitions of One Codex and Genosity. These were partially offset by non-cash
charges of $106.3 million for stock-based compensation, $35.3 million for
depreciation and amortization, $6.5 million for amortization of debt discount
and issuance costs related to our outstanding debt and $3.0 million of
post-combination expense related to the acceleration of unvested equity from our
acquisition of One Codex. The net effect on cash of changes in net operating
assets was a decrease of cash of $3.4 million.

Cash flow from investing activities

For the six months ended June 30, 2022, cash used in investing activities of
$340.5 million was primarily due to net purchases and maturities of marketable
securities of $303.5 million and cash used for purchases of property and
equipment of $37.0 million.

For the six months ended June 30, 2021, cash used in investing activities of
$354.3 million was due primarily to net purchases of marketable securities of
$198.2 million, net cash used to acquire One Codex and Genosity of $134.0
million and cash used for purchases of property and equipment of $20.2 million.

Cash flow from financing activities

For the six months ended June 30, 2022, cash provided by financing activities of
$2.9 million primarily consisted of cash received from issuances of common stock
of $6.2 million; partially offset by finance lease principal payments of $2.7
million.

For the six months ended June 30, 2021, cash provided by financing activities of
$1.6 billion primarily consisted of net proceeds from the issuance of our 2028
Notes of $1.1 billion and the public offering of common stock of $434.3 million
as well as cash received from issuances of common stock of $11.7 million;
partially offset by finance lease principal payments of $2.1 million.

Contractual obligations

The following table summarizes our contractual obligations, including interest,
of the June 30, 2022 (in thousands):

                                              Remainder of
Contractual obligations:                          2022              2023 and 2024           2025 and 2026           2027 and beyond              Total
Operating leases                             $    12,101          $       52,484          $       50,607          $             97,424       $   212,616
Finance leases                                     3,140                   8,939                     495                             -            12,574
Convertible senior notes                               -                 349,996                       -                     1,150,000         1,499,996
2020 Term Loan                                         -                 135,000                       -                             -           135,000
Purchase commitments                              15,390                  40,701                   3,216                             -            59,307
Total                                        $    30,631          $      587,120          $       54,318          $          1,247,424       $ 1,919,493


See Note 8, "Commitments and contingencies" in the Notes to Condensed
Consolidated Financial Statements in Part I, Item 1. of this Quarterly Report on
Form 10-Q for additional details regarding our leases, convertible senior notes,
2020 Term Loan and purchase commitments.

Off-balance sheet arrangements

We have not entered into any off-balance sheet arrangements.

Recent accounting statements

See "Recent accounting pronouncements" in Note 2, "Summary of significant
accounting policies" in the Notes to Condensed Consolidated Financial Statements
in Part I, Item 1. of this Quarterly Report on Form 10-Q for a discussion of
recently adopted accounting pronouncements and accounting pronouncements not yet
adopted, and their expected effect on our financial position and results of
operations.

                                       43

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Creso Pharma Ltd raises 7 million Australian dollars to continue its expansion in the United States https://www.tenil.net/creso-pharma-ltd-raises-7-million-australian-dollars-to-continue-its-expansion-in-the-united-states/ Thu, 04 Aug 2022 02:30:49 +0000 https://www.tenil.net/creso-pharma-ltd-raises-7-million-australian-dollars-to-continue-its-expansion-in-the-united-states/

Creso Pharma Ltd (ASX:CPH, OTCQB:COPHF) has secured firm commitments to raise approximately A$7 million from institutional, professional and sophisticated investors through the issuance of 175 million fully paid ordinary shares at 0, 04 Australian dollar per share.

The total amount raised includes commitments totaling A$1.74 million assumed by company directors Bruce Linton, Adam Blumenthal and William Lay, subject to shareholder approval.

Creso anticipates that the funds raised will be used to continue its expansion in the United States with the pending acquisition target, Sierra Sage Herbs LLC.

The company also continues to reduce cash burn across the business, in line with its goal of having three to four quarters of positive cash flow.

“Accretive acquisition opportunities”

Creso CEO and Managing Director, William Lay, said: “The company has received strong support from a range of new and existing investors for this placement, which is reinforced by commitments from Creso Pharma’s directors. .

“We continue to focus on accretive acquisition opportunities, reducing operating expenses and accelerating product adoption across each operating division, and we are confident that the funding commitments from the recent placement will support the Creso Pharma’s objective of achieving a positive cash flow position for the group.

“Creso Pharma expects to be well funded to advance several near-term opportunities and I look forward to providing updates as the opportunities continue to materialize.”

Location Summary

Subject to shareholder approval, investors will also receive one option for each investment share purchased, exercisable at A$0.08 and expiring four years from the date of issue.

The equity investment with unrelated parties is expected to settle in two tranches, with approximately 109 million shares to be settled on or about August 8, 2022 and 22.5 million shares to be settled on or about August 11, 2022.

EverBlu Capital Corporate Pty Ltd acted as lead manager and Perth-based CPS Capital Group Pty Ltd acted as co-investment manager.

The issue price represents a discount of 18.37% from the last closing price of AU$0.049 on July 26, 2022.

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Sun Pharma Q1FY23 figures: Exceed expectations, but with room for improvement https://www.tenil.net/sun-pharma-q1fy23-figures-exceed-expectations-but-with-room-for-improvement/ Tue, 02 Aug 2022 08:13:30 +0000 https://www.tenil.net/sun-pharma-q1fy23-figures-exceed-expectations-but-with-room-for-improvement/

Sun Pharma released its Q1FY23 results last Friday with an overall pace – 4.8% revenue, 6.6% EBITDA and 17.8% PAT. Revenue growth of 10% YoY to ₹10,761 crore was on a Covid high basis last year. Adjusted for the same, it comes in at 14% higher. EBITDA margins were 26%, despite higher operating expenses. The overall results indicate a positive start to exercise, as well as areas where there may be improvements. The stock’s reaction was mixed. On Friday, when the results were announced, the stock closed up 5.5% from Thursday, but on Monday it shed 2.9% of the gains.

Sun Pharma’s global specialty sales (13% of revenue in Q1FY23) grew 29% year-on-year to $191 million. But moderate sequential growth (3% QoQ) for the second consecutive quarter should be noted. The portfolio consists of fast growing products Ilumya, Cequa, Odomzo and the recently added Winlevi.

Sun Pharma’s US generics portfolio (nearly 8% of revenue) Ex-Taro also saw strong growth (both year-on-year and quarter-on-quarter) as a major launch – gPentasa – helped the good performance. This indicates that with a strong product line, it is possible to overcome price erosion, even for other companies. Sun Pharma’s dermatology subsidiary – Taro – continues to face headwinds. Taro’s sales growth has been declining over the past two years, and in Q1FY23, sales growth was 6.5% year-on-year, even after including an entity consolidated from March 2022 (Alchemee). Overall, Sun Pharma’s US segment (30% of revenue) reported sales of $420 million, an 11% year-on-year growth.

India saw 2.4% YoY growth from the high Q1FY22 Covid base, but sequential growth was strong at 9% QoQ. With the completion of the addition of 10% of the sales force over the past two years, revenue momentum should be higher as the associated costs have already been reflected in operations. Sun Pharma’s emerging markets business, which includes Japan, Australia and other markets, continues to show strong growth (17.8% in Q1FY23) driven by Ilumya’s expansion into , among other products.

Sun Pharma’s gross margins were stable QoQ and YoY. Price increases for branded generics, which are typically made in the first quarter, may have offset higher input costs. Other expenses and personnel costs were slightly higher, due to higher costs related to the standardization of promotion and marketing activities and the increase in the national sales force.

R&D spending at 4.2% of sales was down, which contributed to the EBITDA margin. Still, the standardization of clinical trial centers in Russia and Ukraine, where Ilumya’s phase 3 psoriartic arthritis trials are taking place, may have dampened costs. Overall, EBITDA margins at 26% were within the range of consensus estimates, but due to lower R&D and foreign exchange gains in the quarter. This results in a slightly lower quality beat. Moderate margin gains were amplified by lower tax expenditures (8% effective tax rate in the quarter), which contributed to the 17% PAT overrun.

Valuation and outlook

Sun Pharma is trading at 27 times FY23 expected earnings (Bloomberg consensus), which is closer to its historical range (5-year average of 26.8). Revenue growth levers from India, emerging markets and the US specialty business appear to be intact. Margins reached 26%, although they were helped by lower R&D spending, but overcoming higher operating and material costs (yet to normalize). We reiterate our hold call given on the Sun Pharma share dated January 1, 2022.

Published on

August 02, 2022

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Zenara Pharma receives Nirmatrelvir and Ritonavir tablets https://www.tenil.net/zenara-pharma-receives-nirmatrelvir-and-ritonavir-tablets/ Thu, 28 Jul 2022 08:28:39 +0000 https://www.tenil.net/zenara-pharma-receives-nirmatrelvir-and-ritonavir-tablets/

Hyderabad, July 28

Zenara Pharma, a subsidiary of Biophore India Pharmaceuticals, has received approval from the Central Drugs Standard Control Organization (CDSCO) to manufacture and market Nirmatrelvir and Ritonavir tablets in a combination pack as a treatment option for patients with symptoms mild to moderate Covid-19.

The tablets, which will be sold under the brand name “Paxzen”, are manufactured at Zenara’s US FDA-approved facility in Hyderabad.

“We plan to launch Paxzen in the coming weeks and are in talks with several institutions and hospitals in India to ensure the product is readily available to patients in need,” said Srinivas Arutla, CEO of Zenara Pharma.

“This approval by CDSCO has been granted under the emergency clearance pathway considering the unmet medical need in Covid-19 for an effective and affordable therapy for patients in India,” said Jagadeesh Babu Rangisetty , co-founder and CEO of Zenara Pharma, said.

“We believe Paxzen is an extremely effective treatment option for Covid-19. It is a very complex product to develop and manufacture. We brought this product to market in record time, and this is one of the first approvals of this product in India,” he said in a statement on Thursday.

The product, being the first oral pill, received FDA approval in December 2021 in the United States.

Published on

July 28, 2022

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Business news live today: latest economic news, market news, economic and financial news https://www.tenil.net/business-news-live-today-latest-economic-news-market-news-economic-and-financial-news/ Tue, 26 Jul 2022 10:53:49 +0000 https://www.tenil.net/business-news-live-today-latest-economic-news-market-news-economic-and-financial-news/













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