TalisBiomedicalCorporationNASDAQ_TLIS_202310-K.pdf

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1、 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington,D.C.20549 FORM 10-K (Mark One)ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31,2023OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT

2、OF 1934 FOR THE TRANSITION PERIOD FROM TOCommission File Number:001-40047 Talis Biomedical Corporation(Exact name of Registrant as specified in its Charter)Delaware(State or other jurisdiction ofincorporation or organization)46-3122255(I.R.S.EmployerIdentification No.)1375 West Fulton Market,Suite 7

3、00Chicago,Illinois 60607(Address of principal executive offices)(Zip Code)(650)433-3000 (Registrants telephone number,including area code)Securities registered pursuant to Section 12(b)of the Act:Title of each class TradingSymbol(s)Name of each exchange on which registeredCommon Stock,$0.0001 par va

4、lue per share TLIS The Nasdaq Stock Market LLC Securities registered pursuant to Section 12(g)of the Act:NoneIndicate by check mark if the Registrant is a well-known seasoned issuer,as defined in Rule 405 of the Securities Act.YES NO Indicate by check mark if the Registrant is not required to file r

5、eports pursuant to Section 13 or 15(d)of the Act.YES NO Indicate by check mark whether the Registrant:(1)has filed all reports required to be filed by Section 13 or 15(d)of the Securities Exchange Act of 1934 during the preceding 12 months(or for such shorter period that the Registrant was required

6、to file such reports),and(2)has been subject to such filing requirements for the past 90 days.YES NO Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T(232.405 of this chapter)during t

7、he preceding 12 months(or for such shorter period that the Registrant was required to submit such files).YES NO Indicate by check mark whether the Registrant is a large accelerated filer,an accelerated filer,a non-accelerated filer,smaller reporting company,or an emerging growth company.See the defi

8、nitions of“large accelerated filer,”“accelerated filer,”“smaller reporting company,”and“emerging growth company”in Rule 12b-2 of the Exchange Act.Large accelerated filer Accelerated filer Non-accelerated filer Smaller reporting company Emerging growth company If an emerging growth company,indicate b

9、y check mark if the Registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a)of the Exchange Act.Indicate by check mark whether the Registrant has filed a report on and attestation to its m

10、anagements assessment of the effectiveness of its internal control over financial reporting under Section 404(b)of the Sarbanes-Oxley Act(15 U.S.C.7262(b)by the registered public accounting firm that prepared or issued its audit report.Indicate by check mark whether the Registrant is a shell company

11、(as defined in Rule 12b-2 of the Exchange Act).YES NO If securities are registered pursuant to Section 12(b)of the Act,indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements.Indicat

12、e by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrants executive officers during the relevant recovery period pursuant to 240.10D-1(b).The aggregate market value of the voting and no

13、n-voting common equity held by non-affiliates of the Registrant,based on the closing price of the Registrants common stock on The Nasdaq Stock Market on June 30,2023(the last business day of its most recently completed second quarter),was$8,151,667,restated for the 1-for-15 Reverse Stock Split effec

14、tive July 5,2023.The calculation of the aggregate market value of voting and non-voting common equity excludes shares held by executive officers,directors and stockholders that the Registrant concluded were affiliates of the Registrant on such date.Exclusion of such shares should not be construed to

15、 indicate that any such person possesses the power,direct or indirect,to direct or cause the direction of the management or policies of the Registrant or that such person is controlled by or under common control with the Registrant.2025/1/17 22:2410-Khttps:/www.sec.gov/Archives/edgar/data/1584751/00

16、0095017024037648/tlis-20231231.htm1/1662025/1/17 22:2410-Khttps:/www.sec.gov/Archives/edgar/data/1584751/000095017024037648/tlis-20231231.htm2/166As of March 19,2024,there were 31,685,660 shares of the Registrants common stock and preferred stock outstanding,consisting of 1,821,986 shares of common

17、stock and 29,863,674 shares of Series 1 convertible preferred stock which is convertible into 1,990,914 shares of common stock,as adjusted for the 1-for-15 Reverse Stock Split effective July 5,2023.The conversion ratio of the outstanding Series 1 convertible preferred stock increased and the number

18、of shares of common stock issuable upon conversion of such Series 1 convertible preferred stock decreased in proportion to the 1-for-15 ratio of the Reverse Stock Split.Our Series 1 convertible preferred stock is a voting common stock equivalent,subject to certain limitations.2025/1/17 22:2410-Khttp

19、s:/www.sec.gov/Archives/edgar/data/1584751/000095017024037648/tlis-20231231.htm3/166 Table of Contents PageSpecial Note Regarding Forward-Looking Statements1Summary of Risk Factors2 PART I Item 1.Business3Item 1A.Risk Factors18Item 1B.Unresolved Staff Comments65Item 1C.Cybersecurity65Item 2.Properti

20、es66Item 3.Legal Proceedings66Item 4.Mine Safety Disclosures66 PART II Item 5.Market for Registrants Common Equity,Related Stockholder Matters and Issuer Purchases of Equity Securities67Item 6.Reserved68Item 7.Managements Discussion and Analysis of Financial Condition and Results of Operations69Item

21、 7A.Quantitative and Qualitative Disclosures About Market Risk79Item 8.Financial Statements and Supplementary Data80Item 9.Changes in and Disagreements With Accountants on Accounting and Financial Disclosure104Item 9A.Controls and Procedures104Item 9B.Other Information104 Item 9C.Disclosure Regardin

22、g Foreign Jurisdictions that Prevent Inspections105 PART III Item 10.Directors,Executive Officers and Corporate Governance106Item 11.Executive Compensation117Item 12.Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters132Item 13.Certain Relationships and Rel

23、ated Transactions,and Director Independence133Item 14.Principal Accountant Fees and Services137 PART IV Item 15.Exhibit and Financial Statement Schedules138Item 16.Form 10-K Summary142 Signatures143 i2025/1/17 22:2410-Khttps:/www.sec.gov/Archives/edgar/data/1584751/000095017024037648/tlis-20231231.h

24、tm4/166 Special Note Regarding Forward-Looking StatementsThis Annual Report on Form 10-K(this Annual Report)contains forward-looking statements.The forward-looking statements are contained principally in the sections entitled“Risk Factors,”“Managements Discussion and Analysis of Financial Condition

25、and Results of Operations”and“Business.”These statements relate to future events or to our future financial performance and involve known and unknown risks,uncertainties and other factors which may cause our actual results,performance or achievements to be materially different from any future result

26、s,performance or achievements expressed or implied by the forward-looking statements.Forward-looking statements include,but are not limited to,statements about:the timing and availability of strategic alternatives being reviewed by our Board of Directors and our ongoing efforts to significantly redu

27、ce our expenditures on research and development activities and taking other cost cutting measures;our decision to cease operations in our Redwood City,CA laboratory and office facility and consolidate our operations to our Chicago facility due to unforeseen operational challenges,setbacks in product

28、 development timelines and volatile market conditions;our expectations regarding our ability to complete a strategic transaction within estimated timeframes or at all;our ability to retain key personnel;regulatory clearance pathways for our products;clinical trials and studies necessary to develop a

29、nd commercialize our products and services;our expectations of the reliability,accuracy and performance of our products and services,as well as expectations of the benefits to patients,clinicians and providers of our products and services;impact from future regulatory,judicial,and legislative change

30、s or developments in the United States and foreign countries;the costs and success of our research and development efforts,including the potential effects of inflation;andthe impact on our business and the completion of any possible strategic transaction of economic or political events or trends.In

31、some cases,you can identify these statements by terms such as“anticipate,”“believe,”“could,”“estimate,”“expects,”“intend,”“may,”“plan,”“potential,”“predict,”“project,”“should,”“will,”“would”or the negative of those terms,and similar expressions that convey uncertainty of future events or outcomes.Th

32、ese forward-looking statements reflect our managements beliefs and views with respect to future events and are based on estimates and assumptions as of the date of this Annual Report and are subject to risks and uncertainties.In addition,statements that“we believe”and similar statements reflect our

33、beliefs and opinions on the relevant subject.These statements are based upon information available to us as of the date of this Annual Report,and while we believe such information forms a reasonable basis for such statements,such information may be limited or incomplete,and our statements should not

34、 be read to indicate that we have conducted an exhaustive inquiry into,or review of,all potentially available relevant information.These statements are inherently uncertain and investors are cautioned not to unduly rely upon these statements.We discuss many of the risks associated with the forward-l

35、ooking statements in this Annual Report in greater detail under the heading“Risk Factors.”Moreover,we operate in a very competitive and rapidly changing environment.New risks emerge from time to time.It is not possible for our management to predict all risks,nor can we assess the impact of all facto

36、rs on our business or the extent to which any factor,or combination of factors,may cause actual results to differ materially from those contained in any forward-looking statements we may make.Given these uncertainties,you should not place undue reliance on these forward-looking statements.You should

37、 carefully read this Annual Report and the documents that we reference in this Annual Report and have filed as exhibits to this Annual Report completely and with the understanding that our actual future results may be materially different from what we expect.We qualify all of the forward-looking sta

38、tements in this Annual Report by these cautionary statements.Except as required by law,we assume no obligation to update these forward-looking statements publicly,or to update the reasons actual results could differ materially from those anticipated in any forward-looking statements,whether as a res

39、ult of new information,future events or otherwise.12025/1/17 22:2410-Khttps:/www.sec.gov/Archives/edgar/data/1584751/000095017024037648/tlis-20231231.htm5/166 Summary of Risk Factors Below is a summary of material factors that make an investment in our common stock speculative or risky.Importantly,t

40、his summary does not address all of the risks and uncertainties that we face.Additional discussion of the risks and uncertainties summarized in this risk factor summary,as well as other risks and uncertainties that we face,can be found under“Risk Factors”in Part I,Item 1A of this Annual Report.The b

41、elow summary is qualified in its entirety by that more complete discussion of such risks and uncertainties.You should carefully consider the risks and uncertainties described under“Risk Factors”in Part I,Item 1A of this Annual Report as part of your evaluation of an investment in our common stock.We

42、 have ceased substantially all of our research and development and manufacturing activities while our Board of Directors considers strategic alternatives.If we are unable to complete a strategic transaction within a reasonable timeframe or at all,then we may cease all operations and seek stockholder

43、 approval to voluntarily dissolve and liquidate the Company.There is no set timetable for the overall process given the anticipated timelines for different strategic alternatives may vary,and there can be no assurance that this process will result in us pursuing a transaction or that any transaction

44、,if pursued,will be completed on attractive terms or at all.Commercialization of the Talis One system,if continued,will require pursuing marketing authorization through the FDAs standard 510(k)clearance process.We may not be able to obtain marketing authorization for these tests,which would adversel

45、y affect our business,financial condition and results of operations.We would need to raise additional capital to fund our existing operations,further develop our diagnostic system,commercialize products,if and when approved,and expand our operations,and there can be no assurance that we can raise ad

46、ditional capital given current market volatility.We have no products approved for commercial sale.We have no or limited experience in developing,marketing and commercializing diagnostic systems and tests.It may not be possible to validate manufacturing for the Talis One instrument and cartridges at

47、scale,which may have a material adverse effect on any efforts to commercialize our products.If our products do not perform as expected,including due to errors,defects or reliability issues,our reputation and market acceptance of our products could be harmed,and our operating results,reputation and b

48、usiness will suffer.The commercial success of the Talis One system and products could be compromised if customers do not receive coverage and adequate reimbursement for our products,if and when approved.Modifications to our products may require new 510(k)clearances,PMA approvals,or other marketing a

49、uthorizations,or may require us to cease marketing or recall the modified products until clearances,approvals,or other marketing authorizations are obtained.If we are not able to obtain,maintain,defend or enforce patent and other intellectual property protection for products,or if the scope of the p

50、atent and other intellectual property protection obtained is not sufficiently broad,our competitors could develop and commercialize products and technology similar or identical to ours,which could have a material adverse effect on our competitive position,business,financial conditions,results of ope

51、rations,and prospects.Some of our intellectual property has been discovered through government funded programs and thus may be subject to federal regulations such as“march-in”rights,certain reporting requirements and a preference for U.S.-based companies,and compliance with such regulations may limi

52、t our exclusive rights and our ability to contract with non-U.S.manufacturers.We have incurred significant losses since our inception,and we anticipate that we will continue to incur losses for the foreseeable future,which could harm our future business prospects.22025/1/17 22:2410-Khttps:/www.sec.g

53、ov/Archives/edgar/data/1584751/000095017024037648/tlis-20231231.htm6/166 Part IItem 1.Business.All references to“Talis Biomedical,”“Talis,”“the Company,”“we,”“our,”and“us”in this Annual Report refer to Talis Biomedical Corporation.Overview Talis aimed to transform diagnostic testing by developing an

54、d commercializing innovative products that were designed to enable accurate,reliable,low cost and rapid molecular testing for infectious diseases and other conditions at the point of care.While timely diagnosis of infectious diseases is critically important to enable effective treatment,testing is p

55、rimarily performed in centralized laboratories,which require samples to be shipped for processing,delaying the return of results by days.Point-of-care testing solves this problem by delivering the timely information necessary for clinical care.We developed the Talis One system,a sample-to-answer,clo

56、ud-enabled molecular diagnostic system to be deployed to a variety of testing settings in the United States and around the world to diagnose infectious disease in the moment of need,at the point of care.The Talis One system comprises a compact instrument,single-use test cartridges and software suppo

57、rting a central cloud database which work together.The system was designed to provide central laboratory levels of accuracy and to be operated by an untrained user.In November 2023,due to unforeseen operational challenges,setbacks in product development timelines and volatile market conditions,the C

58、ompany decided to cease operations in its Redwood City,CA laboratory and office facility and consolidate operations to its Chicago facility and to consider strategic alternatives.In addition,on November 14,2023,we announced that we retained TD Cowen,an investment bank,to lead a comprehensive review

59、of strategic alternatives focusing on maximizing stockholder value,including but not limited to,an acquisition,merger,reverse merger,divestiture of assets,licensing or other strategic transactions and a voluntary dissolution or liquidation of the Company.However,there is no set timetable for the ove

60、rall process given the anticipated timelines for different strategic alternatives may vary,and there can be no assurance that this process will result in us pursuing a transaction or that any transaction,if pursued,will be completed on attractive terms or at all.We have ceased substantially all of o

61、ur research and development and manufacturing activities while our Board of Directors considers strategic alternatives.If we are unable to complete a strategic transaction within a reasonable timeframe or at all,then we may cease all operations and seek stockholder approval to voluntarily dissolve a

62、nd liquidate the Company.Corporate Information We were formed as a limited liability company under the Illinois Limited Liability Company Act in March 23,2010 under the name SlipChip LLC.In June 2013,SlipChip LLC merged with and into SlipChip Corporation,a Delaware corporation,with each member of Sl

63、ipChip LLC exchanging their respective membership interest for shares of common stock of SlipChip Corporation.In February 2018,we changed our corporate name to Talis Biomedical Corporation.Our principal executive offices are located at 1375 West Fulton Market,Suite 700,Chicago,IL 60607,and our telep

64、hone number is(650)433-3000.Our corporate website address is http:/.This Annual Report contains references to our trademarks,including Talis,Talis One,and Sia DxTM and to trademarks belonging to other entities.Solely for convenience,trademarks and trade names referred to in this Annual Report,includ

65、ing logos,artwork and other visual displays,may appear without the or TM symbols,but such references are not intended to indicate,in any way,that their respective owners will not assert,to the fullest extent under applicable law,their rights thereto.We do not intend our use or display of other compa

66、nies trade names or trademarks to imply a relationship with,or endorsement or sponsorship of us by,any other companies.General Previous surveys of womens and sexual health providers that we conducted confirmed the continued and strong interest in adoption of point-of-care systems,such as the Talis O

67、ne system.We believe the Talis One system was well positioned to meet this growing demand in both traditional and non-traditional care settings.Although there are 32025/1/17 22:2410-Khttps:/www.sec.gov/Archives/edgar/data/1584751/000095017024037648/tlis-20231231.htm7/166 several commercially availab

68、le point-of-care systems,we believe that few,if any,sufficiently meet the needs of healthcare providers to drive broad adoption of,and transition to,point-of-care testing from central lab testing for a broad range of infectious diseases.We believe that the ideal point-of-care technology for diagnosi

69、ng infectious diseases would not only be highly accurate and rapid,but would also be easy to use,low cost,cloud-compatible and enable multiplexing to detect multiple pathogens at the same time.We developed Talis One tests to address some of the most critical infectious diseases in womens and sexual

70、health,initially with a panel for Chlamydia trachomatis,Neisseria gonorrhoeae,and Trichomonas vaginalis(CT/NG/TV),as well as a respiratory panel consisting of tests for influenza A,influenza B and COVID-19(Respiratory Panel).In order to bring the Talis One system to market as soon as possible,we lev

71、eraged progress made to-date and directed our efforts on the pursuit of 510(k)clearances under the federal Food,Drug and Cosmetic Act(FDCA)for our highly differentiated platform and development of multiple test panels.We planned to conduct clinical trials to support clearance of the Respiratory Pane

72、l and CT/NG/TV test,as well as other sexually transmitted infections(STIs),such as herpes simplex virus(HSV),vaginal infections including bacterial vaginosis(Vaginal Infections Panel),and urinary tract infections(UTI).We designed the Talis One system to address limitations of existing point-of-care

73、diagnostic testing technologies for infectious diseases.Our system combines robust sample preparation with highly optimized and rapid isothermal nucleic acid amplification technology to enable rapid detection of infectious pathogens in a variety of unpurified patient sample types.We designed the Tal

74、is One system to have the following capabilities which we believed would create a competitive advantage over other commercially available point-of-care technologies:Highly accurateThe Talis One system incorporates a shelf-stable,single-use test cartridge designed to fully integrate a nucleic acid am

75、plification test(NAAT)with sample preparation,including nucleic acid extraction and purification.Sample preparation is well known to be a critical factor to achieve high sensitivity and specificity,along with low limits of detection for target pathogens,in molecular diagnostics.We believe this sampl

76、e preparation step,which is performed in an automated fashion on our cartridge,has the potential to result in higher sensitivity and specificity than point-of-care technologies that do not perform the sample preparation step.Our Talis One system reaches limits of detection as low as 500 viral partic

77、les per milliliter.We can achieve similarly high performance on the Talis One system for bacteria with limits of detection of bacterial pathogens as low as one infectious unit per milliliter(IFU/mL)in a variety of unpurified patient sample types,including nasal swab,vaginal swab,saliva and urine.Rap

78、id turnaround timeThe Talis One system is designed to provide a positive or negative result in less than 30 minutes,depending upon the test and the concentration of the pathogen in the sample.We believe this turnaround time meets target customers needs for a system fast enough to fit into their clin

79、ical practice.Ease of useWe designed the Talis One system for operation by untrained users and to function in a CLIA-waived environment such as physicians offices,urgent care clinics,and decentralized care settings and hospitals.The Talis One system is designed to be a fully integrated sample-to-ans

80、wer system requiring two minutes or less of hands-on time by users running the test.The intuitive workflow of the Talis One system is also designed to facilitate the chain of custody of the sample without extensive tracking or handling by the user.Cartridge CapabilitiesThe cartridge is designed with

81、 five separate reaction chambers and the ability to add up to an additional nine chambers for a total of 14 reaction chambers,which we believe could potentially enable a full menu of detection modes,from single organism to syndromic panel tests.The cartridge design allows for both robust sample puri

82、fication and multiplexing capabilities that are both not generally offered by other point-of-care diagnostic platforms.Cloud-enabledUnlike other point-of-care instruments,the Talis One system incorporates a cellular modem within the instrument,designed to connect to the cloud to help customers manag

83、e clinical data and workflow using our Sia Dx feature.Sia Dx is designed to allow(i)remote and secure access to the cloud to obtain key data required to collect,screen,collate,report and monitor disease infection and pandemic spread on a micro and macro level and(ii)remote management of instruments

84、in the field,such as providing automated software updates and enabling customers to track and manage instruments 42025/1/17 22:2410-Khttps:/www.sec.gov/Archives/edgar/data/1584751/000095017024037648/tlis-20231231.htm8/166 they have across their networks.For instances where cellular connectivity is u

85、navailable or undesired,the instrument is designed to permit secure connectivity via ethernet.Sia Dx has been built into the Talis One system but will require that we submit additional data to the FDA for review prior to implementation.Scalable for different throughput requirementsThe Talis One syst

86、em is designed to provide a scalable system for different volume and throughput requirements.The instruments are portable and designed for multi-instrument deployments to satisfy different testing volume requirements and can be stacked three instruments by three instruments without disturbing the ce

87、llular connection to the cloud.Low cost to manufactureWe designed the Talis One system to be low-cost and manufactured at scale.We believe this could facilitate(i)scale-up in manufacturing and provide a competitive advantage in cost-sensitive environments and(ii)customers acquiring multiple Talis On

88、e instruments to meet their volume requirements.Our Business Strategy Prior to the announcement in November 2023 to consider strategic alternatives,our strategy was to transform diagnostic testing by developing and commercializing innovative products that were designed to enable accurate,reliable,lo

89、w cost and rapid molecular testing for infectious diseases and other conditions at the point of care.Since November 2023,while we have maintained limited manufacturing capabilities to have the ability to support minimal research and development functions,our primary business strategy consists of:Con

90、sidering strategic alternatives focusing on maximizing stockholder value,including but not limited to,equity or debt financing alternatives,an acquisition,merger,reverse merger,divestiture of assets,licensing or other strategic transactions and a voluntary dissolution or liquidation of the Company;a

91、ndIf we are unable to complete a strategic transaction within a reasonable timeframe or at all,then our Board of Directors intends to cease all operations and seek stockholder approval to voluntarily dissolve and liquidate the Company.There is no set timetable for the overall process given the antic

92、ipated timelines for different strategic alternatives may vary,and there can be no assurance that this process will result in us pursuing a transaction or that any transaction,if pursued,will be completed on attractive terms or at all.Industry background Infectious disease remains among the top heal

93、th problems facing populations around the world.Mortality rate for all infectious disease in the United States ranged between 42 and 63 deaths per 100,000 population,accounting for 5.4%of overall mortality for the period of 1980-2014.The drawbacks of centralized laboratory testingThe need to send sa

94、mples to a central location for testing introduces delays in treatment or incentivizes prescribing treatment in the absence of a definitive diagnosis.The turnaround time for centralized lab tests is typically one to five days and can often be longer.Therefore,physicians are faced with one of two cho

95、ices:either wait days for test results before initiating treatment and risk that an infected patient may continue to spread the infection and suffer increasingly negative health effects from delayed treatment or treat empirically while the patient is in front of them.Smaller hospital and clinic labo

96、ratories,many in rural settings,may not have the testing volume to justify investing in high throughput molecular diagnostic instruments,requiring smaller hospitals to send out molecular testing to reference laboratories and wait for the results.We believe that immediate access to high-quality diagn

97、ostic test results will improve medical treatment of disease and avoid inappropriate prescription of antibiotics,which can amplify the growing problem of antibiotic resistant bacteria.In a 2016 study of 1,103 emergency room patients at St.John Hospital&Medical Center in Detroit,440 patients who had

98、a suspected chlamydia or gonorrhea infection were treated with antibiotics even though the vast majority,323 patients(74%),ultimately tested negative for the infection.Similarly,in some cases,test result delays lead to patients who do not return after the initial visit,resulting in the health care p

99、rovider losing these patients to 52025/1/17 22:2410-Khttps:/www.sec.gov/Archives/edgar/data/1584751/000095017024037648/tlis-20231231.htm9/166 follow-up and unnecessarily exposing additional individuals to detectable and treatable infections.This is particularly problematic in pediatric care and for

100、urgent care and community care clinics.Limitations of current point-of-care diagnostic technologiesThere are a broad range of point-of-care technologies available for use in physician offices for a variety of applications,ranging from glucose strips for diabetes to lateral flow immunoassays for dete

101、cting high pathogen load infections,such as Strep A or influenza.Molecular testing is less common in point-of-care settings,despite being highly accurate.We believe that this is due to a lack of available point-of-care molecular technologies that sufficiently balance speed,accuracy and cost to meet

102、customer needs and drive broad adoption.We believe that most molecular diagnostic solutions currently being marketed for use at the point-of-care each have one or more of the following limitations:Low performance as measured by sensitivity,specificity and limit of detection can result in misdiagnosi

103、s and poor clinical outcomes.Several point-of-care molecular diagnostic systems provide results in less than 30 minutes but achieve this speed by performing nucleic acid amplification on samples,foregoing sample preparation,which is known to limit the sensitivity,specificity and limit of detection o

104、f these nucleic acid tests.Slow turnaround time can extend beyond the time a patient will wait for results and potentially result in loss of patient to follow-up.Other available point-of-care systems may provide reliable,high performance results,but these tests can take 45 to 90 minutes to return a

105、result.While results returned within hours is better than days,we believe that the longer a test takes,the less willing patients will be to wait at the clinical site for results,thereby risking patients failing to return after the initial visit and unnecessarily exposing additional individuals to a

106、detectable infectious agent.Systems requiring significant user interaction or monitoring will not work well with clinical workflow.Some sold as point-of-care solutions require users to transfer solutions midway through a run or handle the instrument,test cartridge and/or sample multiple times,in ord

107、er to process one test.The typical physicians office does not have laboratory personnel who can monitor an instrument,nor personnel trained in sample custody tracking.Systems that are difficult to manufacture at low cost or at scale can limit adoption.We believe that the cost of purchasing and using

108、 diagnostic testing systems and consumables is a primary concern for customers.Limited test menus fail to meet the needs of clinicians.The adoption of diagnostic technologies is contingent upon the technology having both clinical utility,and economic rationale.Without a broad and relevant testing me

109、nu,testing systems may not sufficiently meet the clinical needs of customers to justify the expense.We believe the ability to develop a menu of tests would create a competitive barrier to entry for other systems.The Talis One system We developed the Talis One system to address the limitations of exi

110、sting point-of-care diagnostic testing technologies for infectious diseases.Our system combines robust sample preparation with highly-optimized and rapid isothermal nucleic acid amplification technology to enable rapid detection of infectious pathogens in a variety of unpurified patient sample types

111、.The Talis One system is an integrated system that includes a compact instrument,single-use test cartridges and software,including a central cloud database.Talis One cartridge At the core of our system is the Talis One cartridge,a versatile shelf-stable and single-use test cartridge designed to full

112、y integrate proprietary highly-optimized nucleic acid isothermal amplification tests with sample preparation.The cartridge was designed to handle a wide range of sample types,including nasal swab,vaginal swab,saliva,urine,whole blood,plasma,serum and sputum.It was also designed to be compatible with

113、 chemical,enzymatic,and mechanical lysis,e.g.,by bead-beating in order to process a wide range of pathogens,including viral,bacterial and 62025/1/17 22:2410-Khttps:/www.sec.gov/Archives/edgar/data/1584751/000095017024037648/tlis-20231231.htm10/166 hard-to-lyse fungal pathogens.The cartridge design i

114、ncorporates a patented rotary valve that integrates sample purification and is easily adaptable to alternate fluidic layouts to accommodate alternate testing methods that may require pre-treatment of specimens,pre-amplification and/or multiple purification steps to facilitate expansion of the testin

115、g menu.The cartridge also incorporates reagent plug technology,which is designed to enable implementation of new tests on the same cartridge backbone simply by inserting plugs with different target test reagents.The reagent plugs in our cartridges are optically clear,permitting the instrument to vis

116、ualize and detect fluorescent signals from the amplification test.Patented test wells employ a fluidic design and include a mechanism to heat-seal the cartridge for amplicon containment designed to prevent contamination of the work surfaces.The cartridge,with modifications,is designed to support up

117、to 14-well multiplexing,which we believe will enable development of expanded panels and syndromic applications.The specific cartridge that we developed for the CT/NG/TV test provides 5-fold multiplexing,which we believe was sufficient to meet our product plans.Talis One instrumentThe Talis One instr

118、ument is designed to enable sample-to-answer capabilities without user intervention.We designed the instrument to be low cost,portable and easy to use.We believe the modular design,which is divided into major subsystems for performing cartridge handling,sample preparation,amplification and detection

119、,would facilitate automated assembly and low-cost manufacturing.The compact size,approximately 7 x 10 x 14 inches,is designed to enable portability and use in various front-line locations.The instrument incorporates a touchpad interface for easily communicating instructions,information and results t

120、o the user.An integrated camera that reads and enables registration of a label on the cartridge facilitates sample custody by linking an image of the cartridge label with test results.The instruments are designed for multi-instrument deployments to satisfy different testing volume requirements and c

121、an be stacked three-by-three without disturbing the cellular connection to the cloud.Talis One software and ITThe Talis One system incorporates the Sia Dx software which enables the communication of test results to a central cloud database that can be remotely and securely accessed to obtain key dat

122、a required to collect,screen,collate,report,and monitor disease infection and pandemic spread on a micro and macro level.The cellular and ethernet connectivity built into each Talis One instrument is also designed to enable Health Insurance Portability and Accountability Act of 1996(HIPAA)-compliant

123、 transmission,storage,and review.Such centralized storage could permit(i)creation of a public health interface granting access to select information to governmental entities and/or(ii)automatic transmission of notifiable diseases to public health authorities.The cloud-based data could serve to help

124、institutions better manage clinical practice and also to improve infection control.With substantially increased adoption over time,the data may offer a mapping of infection patterns that public health and research institutions can use to address care on a larger scale.Additionally,for organizations

125、that may desire several instrument placements in multiple exam rooms,departments or distributed testing sites,authorized administrators may be able to monitor,in real-time,the status of any instrument in the organization,as well as manage users,passwords,and certain security features.The continuous

126、connectivity of the Talis One instruments is also designed to enable automated updates including security patches,instrument configurations,and firmware and software updates,the latter of which could be deployed to enable the instrument to recognize and run newly released tests.Talis One workflowThe

127、 Talis One system is capable of being integrated into the clinical workflow as follows:(1)label cartridge with patient information,(2)dispense sample into loading port and close lid,(3)insert cartridge into instrument,and(4)follow on-instrument instructions to initiate testing,results will automatic

128、ally display after less than 30 minutes.The workflow may vary for alternate sample types.The Talis One workflow follows a few simple steps from sample preparation to results.The system is designed to return results in less than 30 minutes and requires two minutes or less of hands-on time for the ope

129、rator.After the sample is collected and the cartridge is introduced into the instrument,the instrument confirms the operability of the cartridge,runs the test and communicates the test result to the instrument display.We believe the ease of use,compact size and speed could enable near-patient diagno

130、sis in a broad range of settings.72025/1/17 22:2410-Khttps:/www.sec.gov/Archives/edgar/data/1584751/000095017024037648/tlis-20231231.htm11/166 Infectious DiseasesWe developed our Talis One system to be used for infections related to womens health,STIs and respiratory infections.We intended to comple

131、te clinical development of our Talis One system for CT/NG/TV and submit a 510(k)pre-market notification to the FDA after the successful completion of our clinical trials.We further intended to explore authorization to affix a CE Mark from the EMA soon after 510(k)clearance,if obtained.If cleared or

132、otherwise authorized for marketing,this would be our first commercial offering in our womens health menu.We planned to develop additional tests for infections related to womens health,including a panel for STIs and other infections,such as the Vaginal Infection Panel,UTI and HSV.The American Congres

133、s of Obstetricians and Gynecologists recommends annual CT/NG screening of all sexually active women age 25 and younger and for women over age 25 with risk factors.In addition to promoting our test menu to our existing customers,we planned to engage in a focused commercialization effort directed towa

134、rds obstetricians and gynecologists,where we estimate that a substantial majority of CT/NG testing occurs.Traditionally,testing is carried out by centralized laboratories,and we believed that there is a significant opportunity to move these tests to the point-of-care at the office of the obstetricia

135、n and gynecologist or in urgent care clinics or primary care facilities.We believe testing at the point-of-care could(i)improve decision making and enable the provider to use this information to treat the patient in the same visit and(ii)improve the patient experience and empower providers and patie

136、nts to adhere to screening guidelines and improve outcomes.We also believe that care providers may be able to create profit opportunities by bringing testing in-house to the point-of-care.We believe the tests that we were developing for our Talis One system would have had established reimbursement c

137、odes,enabling healthcare providers to submit for reimbursement.The Talis One COVID-19 test was the first product that we developed for respiratory infections.Although we did not plan a broad commercial launch for the stand-alone COVID-19 test,we intended to seek marketing authorization for the Respi

138、ratory Panel through a 510(k)clearance process.Commercialization and Manufacturing We developed relevant in-vitro diagnostic tests for a variety of respiratory infections and infections related to womens health and STIs.We estimated that the total potential annualized addressable global market oppor

139、tunity for molecular testing of infectious diseases to be over$5.4 billion for 2022 and expected to grow to over$7.1 billion by 2026.In 2022,we discontinued further investment in commercializing our stand-alone COVID test.In conjunction with this decision,we eliminated our sales force and reduced th

140、e commercial team supporting our product development and marketing needs.Leveraging progress made at that time with our stand-alone COVID test,we conducted investigational field studies with the Talis One system to gain user experience and feedback on the platforms physical components,workflow,and s

141、oftware.Results from these studies were intended to help inform the development of our planned product roadmap.To support future commercialization of the Talis One system,we invested in automated manufacturing to provide the advantages of quality,speed and cost at full scale.In 2022,we demonstrated

142、our ability to manufacture cartridges and instruments at the quality and pace needed with a clear path to what we believed would be attractive gross margins in the future.In order to drive further efficiency and cost reduction in the manufacturing process,we restructured relationships with our contr

143、act manufacturing partners in 2023.Our commercialization and manufacturing strategies are uncertain at this time pending completion of a review of strategic alternatives by our Board of Directors.CompetitionThe in vitro diagnostics industry is characterized by rapidly advancing technologies,intense

144、competition and a strong emphasis on proprietary intellectual property.Due to the significant interest and growth in diagnostics,we expect ongoing intense competition primarily from centralized laboratories and diagnostic companies offering both point-of-care and at-home solutions.We believe key com

145、petitive factors include the accuracy,utility,turnaround time and economics of our products,and commercial execution.We also believe our ability to succeed in the future 82025/1/17 22:2410-Khttps:/www.sec.gov/Archives/edgar/data/1584751/000095017024037648/tlis-20231231.htm12/166 depended on the timi

146、ng of obtaining regulatory clearances and approvals,as well as the timing of our ability to deliver instruments and consumables into the marketplace in significant volumes.Our competitors include those offering molecular,antibody and antigen tests.Competitors in the reference lab category include La

147、boratory Corporation of America Holdings(commonly referred to as LabCorp)and Quest Diagnostics Incorporated,along with many hospital laboratories.Our competitors in the point-of-care and/or at-home category,for molecular and/or antigen tests include Abbott Laboratories,bioMrieux SA,Cepheid(a subsidi

148、ary of Danaher Corporation),Thermo Fischer Scientific Inc.,Roche Molecular Systems,Inc.,and QuidelOrtho.Many of our current or potential competitors,either alone or with their collaboration partners,have significantly greater financial resources and expertise in research and development,manufacturin

149、g,regulatory clearance approval and compliance,and sales and distribution than we do.Smaller or early-stage companies developing tests may also prove to be significant competitors,particularly through collaborative arrangements with large and established companies or customer networks.If our competi

150、tors(i)develop and commercialize diagnostic products or services that are more accurate,more convenient to use or more cost-effective than our products or services and/or(ii)obtain FDA or other regulatory clearance or approval for their products more rapidly than we may obtain clearance or approval

151、or other marketing authorizations for ours,our commercial opportunity could be reduced or eliminated,especially if our competitors establish a strong market position before we are able to enter a particular market.Government ContractNational Institutes of Health-Rapid Acceleration of Diagnostics(RAD

152、x)In July 2020,we were awarded a$25.4 million contract from the National Institutes of Health(NIH)for Phase 2 of its RADx initiative(NIH Contract),of which$9.6 million had been received as of December 31,2022,for the validation,approval,and scale-up of capacity for manufacturing of the Talis One ins

153、trument and test cartridges.Due to delays in meeting certain milestones,we received several extensions to the NIH Contract that concomitantly extended the time to perform the remaining milestones and reduced the potential milestone payments.The NIH Contract expired on January 30,2022,and we did not

154、achieve the final two milestones.Operations Our products have been manufactured by several third parties.The instrument assembly is largely manual with some automation in testing.We had various suppliers that provide molded parts and reagents that are assembled by two contract manufacturers for the

155、cartridge.We have made significant investments to scale up cartridge manufacturing including high cavity count molding capability and automation of significant portions of the cartridge assembly process.In addition to restructuring and streamlining our contract manufacturing relationships,we focused

156、 on developing more internal expertise in manufacturing and have developed internal pilot manufacturing lines.Supply chain managementWe utilized multiple vendors for our supply chain.Currently,many of the materials,enzymes and reagents used in our systems and cartridges are from single source suppli

157、ers.Supply Agreement with thinXXS Microtechnology AG(thinXXS)In May 2020,we entered into a supply agreement with thinXXS(thinXXS Agreement),a wholly-owned subsidiary of IDEX Corporation(NYSE:IEX),for the purchase of certain materials,including single-use cartridges for use with the Talis One system

158、and components and subassemblies of such single-use cartridges.In March 2023,we entered into a termination agreement with thinXXS,pursuant to which we(i)terminated the thinXXS Agreement,(ii)received possession and title to automated manufacturing lines and certain related materials,and(iii)entered i

159、nto a license agreement under which we received a patent license to thinXXS intellectual property that may be incorporated into the Talis One system.92025/1/17 22:2410-Khttps:/www.sec.gov/Archives/edgar/data/1584751/000095017024037648/tlis-20231231.htm13/166 Intellectual propertyOur intellectual pro

160、perty strategy is focused on protecting our core technologies,including target-specific amplification reagents,integrated cartridges and components thereof,and related instrumentation and software applications through patents and other intellectual property rights.In addition,we protect our ongoing

161、research and development into the detection of infectious diseases through patents and other intellectual property rights in the United States and foreign jurisdictions,such as Japan,China,the United Kingdom and the European Union(through shared registration or examination agencies such as the Europ

162、ean Patent Office or European Intellectual Property Office).Patents As of March 1,2024,we solely own 17 issued U.S.patents,22 pending U.S.patent applications,41 issued foreign patents,and 124 pending foreign patent applications.Our patent portfolio generally includes patents and patent applications

163、relating to microfluidic systems,our rapid isothermal amplification method,integrated cartridges and instrument for the Talis One system,as well as components thereof and methods of operating the same.In addition to patents and applications related generally to the Talis One system,our portfolio inc

164、ludes patents and applications drawn to test reagents for specific targets,including CT and NG.Issued U.S.patents in our portfolio of company-owned and in-licensed patents and patent applications(if issued)are expected to expire between 2035 and 2045.TrademarksOur trademark portfolio is designed to

165、protect the brands of our current and future products and includes U.S.trademark applications for registration for our company name,Talis,and the product names,Talis One and Sia Dx.Trade secretsWe also rely on trade secrets,including know-how,unpatented technology and other proprietary information,t

166、o strengthen our competitive position.We have determined that certain technologies,such as aspects of our amplification chemistry,some bioinformatics,data processing and analysis techniques,and manufacturing processes are better kept as trade secrets,rather than pursuing patent protection.To prevent

167、 disclosure of trade secrets to others,it is our policy to enter into nondisclosure,invention assignment and confidentiality agreements with parties who have access to trade secrets,such as our employees,collaborators,outside scientific collaborators,consultants,advisors and other third parties.Thes

168、e agreements also provide that all inventions resulting from work performed for us or relating to our business and conceived or completed during the period of employment or assignment,as applicable,are our exclusive property.In addition,we take other appropriate precautions,such as physical and tech

169、nological security measures,to guard against misappropriation of our proprietary information by third parties.In addition to Talis-owned intellectual property,we may also in-license third party intellectual property for use in our products through both exclusive and non-exclusive licensing agreement

170、s.Although we have been able to obtain licenses on commercially reasonable terms,there is no guarantee that we may obtain such licenses in the future on reasonable terms or at all.Government regulation and product approval Our products under development and our operations are subject to significant

171、government regulation.Regulation in the United StatesIn the United States,our products are regulated as medical devices by the FDA and other federal,state,and local regulatory authorities.Numerous laws and regulations govern the processes by which medical devices are brought to market and marketed,i

172、ncluding the FDCA and the FDAs implementing regulations,among others.The FDA regulates the preclinical and clinical testing,approval,manufacture,labeling,distribution,and promotion of medical devices.The FDA enforces these requirements by inspection and market surveillance.Failure to comply with app

173、licable regulatory requirements may result in enforcement action by the FDA,which may include fines,injunctions,civil penalties,recall or seizure of products,total or partial suspension of production,refusing our request for 510(k)clearance or pre-market authorization(PMA)of new product versions,rev

174、ocation of 510(k)clearance or PMAs previously granted,and criminal prosecution and penalties.The FDA classifies all medical devices into one of three classesClass I,Class II or Class IIIdepending on the degree of risk associated with each medical device and the extent of manufacturer and regulatory

175、control needed to 102025/1/17 22:2410-Khttps:/www.sec.gov/Archives/edgar/data/1584751/000095017024037648/tlis-20231231.htm14/1662025/1/17 22:2410-Khttps:/www.sec.gov/Archives/edgar/data/1584751/000095017024037648/tlis-20231231.htm15/166 ensure its safety and effectiveness.Class I and Class II device

176、s are subject to the FDAs General Controls,and special controls as deemed necessary by the FDA to ensure the safety and effectiveness of Class II devices,including performance standards,post-market surveillance,clinical investigations,patient registries and additional conditions set forth in FDA gui

177、dance documents.While most Class I devices are exempt from the 510(k)pre-market notification requirement,manufacturers of most Class II devices are required to submit to the FDA a pre-market notification under Section 510(k)of the FDCA requesting permission to commercially distribute the device.The

178、FDAs permission to commercially distribute a device subject to a 510(k)pre-market notification is generally known as a 510(k)clearance.Devices deemed by the FDA to pose the greatest risks are placed in Class III,requiring approval of a PMA application.At this time,we have no Class III devices in the

179、 pipeline nor plans to add Class IIIs.In addition,EUAs and other forms of approval or clearance may be limited for use with tests by authorized laboratories certified under CLIA to perform moderate and high-complexity tests.In order for a test to be used at the point-of-care,the FDA must grant the t

180、est waived status under CLIA,which would permit any laboratory with a Certificate of Waiver to perform the test.The U.S.Secretary of the Department of Health and Human Services(HHS)may declare public health emergencies that have a significant potential to affect national security or the health and s

181、ecurity of U.S.citizens.On February 4,2020,the novel coronavirus was declared a public health emergency,and it was declared that circumstances existed justifying the authorization of emergency use of in vitro diagnostics for detection and/or diagnosis of the novel coronavirus that causes COVID-19.Th

182、ese EUAs will terminate upon declaration that the public health emergency circumstances have ceased,or the product provided pursuant to EUA has otherwise achieved commercial authorization for the emergency indication for use,such as through 510(k)clearance,de novo process,or PMA approval.In order to

183、 be the subject of an EUA,the FDA Commissioner(under authority delegated by the Secretary of the HHS)must conclude that,based on the totality of scientific evidence available,it is reasonable to believe that the product may be effective in diagnosing,treating,or preventing a disease attributable to

184、the agents described above,that its known and potential benefits outweigh its known and potential risks,and that there is no adequate,approved and available alternative.The FDA may revise or revoke an EUA to protect the public health.510(k)clearance processTo obtain 510(k)clearance,we must submit a

185、pre-market notification to the FDA demonstrating that the proposed device is substantially equivalent to a previously-cleared 510(k)device,a pre-amendment device that was in commercial distribution before May 28,1976 for which the FDA has not yet called for the submission of a 510(k)or PMA applicati

186、ons,or is a device that has been reclassified from Class III to either Class II or I.In rare cases,Class III devices may be cleared through the 510(k)process.The FDAs 510(k)clearance process usually takes from three to twelve months from the date the application is submitted and filed with the FDA b

187、ut may take significantly longer.Although many 510(k)pre-market notifications are cleared without clinical data,in some cases,the FDA requires significant clinical data to support substantial equivalence.In reviewing a pre-market notification submission,the FDA may request additional information,inc

188、luding clinical data,which may significantly prolong the review process.If the FDA agrees that the device is substantially equivalent to a predicate device currently on the market,it will grant 510(k)clearance to commercially market the device.If the FDA determines that the device is not substantial

189、ly equivalent to a previously cleared device,the device is automatically designated as a Class III device.The device sponsor must then fulfill more rigorous PMA requirements,or can request a risk-based classification determination for the device in accordance with the de novo classification process,

190、which is a route to market for novel medical devices that are low to moderate risk and are not substantially equivalent to a predicate device.Once a de novo application is reviewed and approved,it results in the device having a Class II status and future devices from the company or a competitor may

191、use the companys de novo-classified device as a 510(k)predicate.After a device receives 510(k)clearance,any subsequent modification of the device that could significantly affect its safety or effectiveness,or that would constitute a major change in its intended use,will require a new 510(k)clearance

192、 or could require a PMA.The FDA requires each manufacturer to make this determination initially,but the FDA may review any such decision and may disagree with a manufacturers determination.If the FDA disagrees with a manufacturers determination,the FDA may require the manufacturer to cease marketing

193、 and/or recall the modified device until 510(k)clearance or approval of a PMA is obtained.Under these circumstances,the FDA may also subject a manufacturer to significant regulatory fines or other penalties.112025/1/17 22:2410-Khttps:/www.sec.gov/Archives/edgar/data/1584751/000095017024037648/tlis-2

194、0231231.htm16/166 Over the last several years,the FDA has proposed reforms to its 510(k)clearance process,and such proposals could include increased requirements for clinical data and a longer review period,or could make it more difficult for manufacturers to utilize the 510(k)clearance process for

195、their products.For example,in November 2018,FDA officials announced forthcoming steps that the FDA intends to take to modernize the pre-market notification pathway under Section 510(k)of the FDCA.Among other things,the FDA announced that it planned to develop proposals to drive manufacturers utilizi

196、ng the 510(k)pathway toward the use of newer predicates.These proposals included plans to potentially sunset certain older devices that were used as predicates under the 510(k)clearance pathway,and to potentially publish a list of devices that have been cleared on the basis of demonstrated substanti

197、al equivalence to predicate devices that are more than 10 years old.The FDA also announced that it intends to finalize guidance to establish a pre-market review pathway for“manufacturers of certain well-understood device types”as an alternative to the 510(k)clearance pathway and that such pre-market

198、 review pathway would allow manufacturers to rely on objective safety and performance criteria recognized by the FDA to demonstrate substantial equivalence,obviating the need for manufacturers to compare the safety and performance of their medical devices to specific predicate devices in the clearan

199、ce process.In May 2019,the FDA solicited public feedback on its plans to develop proposals to drive manufacturers utilizing the 510(k)pathway toward the use of newer predicates,including whether the FDA should publish a list of devices that have been cleared on the basis of demonstrated substantial

200、equivalence to predicate devices that are more than 10 years old.These proposals have not yet been finalized or adopted,and the FDA may work with Congress to implement such proposals through legislation.More recently,in September 2019,the FDA finalized the aforementioned guidance to describe an opti

201、onal“safety and performance based”pre-market review pathway for manufacturers of“certain,well-understood device types”to demonstrate substantial equivalence under the 510(k)clearance pathway,by demonstrating that such device meets objective safety and performance criteria established by the FDA,obvi

202、ating the need for manufacturers to compare the safety and performance of their medical devices to specific predicate devices in the clearance process.Pervasive and continuing FDA regulationAfter a medical device is placed on the market,numerous FDA regulatory requirements apply,including,but not li

203、mited to the following:the Quality System Regulation(QSR),which requires manufacturers to follow design,testing,control,documentation and other quality assurance procedures during the manufacturing process;establishment registration,which requires establishments involved in the production and distri

204、bution of medical devices,intended for commercial distribution in the United States,to register with the FDA;medical device listing,which requires manufacturers to list the devices they have in commercial distribution with the FDA;clearance or approval of product modifications to 510(k)-cleared devi

205、ces that could significantly affect safety or effectiveness or that would constitute a major change in intended use of one of our cleared devices;medical device reporting regulations,which require that a manufacturer report to the FDA if a device it markets may have caused or contributed to a death

206、or serious injury,or has malfunctioned and the device or a similar device that it markets would be likely to cause or contribute to a death or serious injury,if the malfunction were to recur;correction,removal and advisory notification reporting regulations,which require that manufacturers report to

207、 the FDA field corrections and product recalls or removals if undertaken to reduce a risk to health posed by the device or to remedy a violation of the FDCA that may present a risk to health;complying with the new federal law and regulations requiring Unique Device Identifiers(UDI)on devices and als

208、o requiring the submission of certain information about each device to the FDAs Global Unique Device Identification Database;the FDAs recall authority,whereby the agency can order device manufacturers to recall from the market a product that is in violation of governing laws and regulations;122025/1

209、/17 22:2410-Khttps:/www.sec.gov/Archives/edgar/data/1584751/000095017024037648/tlis-20231231.htm17/166 labeling regulations,which prohibit“misbranded”devices from entering the market,as well as prohibit the promotion of products for unapproved or“off-label”uses and impose other restrictions on label

210、ing;andpost-market surveillance including the clinical performance of the product after introduction into the market and Medical Device Reporting,which requires manufacturers report to the FDA if their device may have caused or contributed to a death or serious injury,or malfunctioned in a way that

211、would likely cause or contribute to a death or serious injury if it were to recur.The FDA enforces these requirements by inspection and market surveillance.Failure to comply with applicable regulatory requirements may result in enforcement action by the FDA,which may include one or more of the follo

212、wing sanctions:warning letters;customer notifications for repair,replacement or refunds;fines,injunctions,consent decrees and civil penalties;mandatory recall or seizure of our products;administrative detention or banning of our products;operating restrictions,partial suspension or total shutdown of

213、 production;refusing our request for 510(k)clearance or PMA of new product versions;revocation of 510(k)clearance or PMAs previously granted;andcriminal prosecution and penalties.International RegulationSales of medical devices outside the United States are subject to foreign government regulations

214、and international standards compliance,which vary substantially from country to country.In order to market our products in other countries,we must obtain regulatory approvals and comply with extensive safety and quality regulations in other countries.The time required to obtain approval by a foreign

215、 country may be longer or shorter than that required for FDA clearance or approval,and the requirements may differ significantly.Other healthcare laws Our current and future business activities are subject to healthcare regulation and enforcement by the federal government and the states and foreign

216、governments in which we conduct our business.These laws include,without limitation,state and federal anti-kickback,fraud and abuse,false claims,physician sunshine transparency,and healthy information privacy and security laws and regulations.The federal Anti-Kickback Statute(AKS)prohibits,among othe

217、r things,any person or entity from knowingly and willfully offering,soliciting,receiving or providing remuneration,directly or indirectly,overtly or covertly,in cash or in kind,to induce either the referral of an individual,for an item or service or the purchasing,leasing,ordering,or arranging for o

218、r recommending the purchase,lease or order of any good,facility,item or service,for which payment may be made,in whole or in part,under federal healthcare programs such as the Medicare and Medicaid programs.The term remuneration has been interpreted broadly to include anything of value.Although ther

219、e are a number of statutory exceptions and regulatory safe harbors protecting some common activities from prosecution,the exceptions and safe harbors are drawn narrowly.Practices that involve remuneration that may be alleged to be intended to induce prescribing,purchases or recommendations may be su

220、bject to scrutiny if they do not qualify for an exception or safe harbor.Failure to meet all of the requirements of a particular applicable statutory exception or regulatory safe harbor does not make the conduct per se illegal under the AKS.Instead,the legality of the arrangement will be evaluated o

221、n a case-by-case basis based on a cumulative review of all its facts and circumstances.Several courts have interpreted the statutes intent requirement to mean that if any one purpose of an arrangement involving remuneration is to induce referrals of federal healthcare covered business,the AKS has be

222、en violated.In addition,a person or entity does not need to have actual knowledge of this statute or specific intent to violate it in order to have committed a violation.132025/1/17 22:2410-Khttps:/www.sec.gov/Archives/edgar/data/1584751/000095017024037648/tlis-20231231.htm18/166 The federal civil a

223、nd criminal false claims laws,such as the civil False Claims Act(FCA),prohibit individuals or entities from,among other things,knowingly presenting,or causing to be presented,false,fictitious or fraudulent claims for payment or approval by the federal government,and knowingly making,using or causing

224、 to be made or used a false record or statement material to a false or fraudulent claim,or knowingly making a false statement to improperly avoid,decrease or conceal an obligation to pay money to the federal government.Additionally,the FCA authorizes actions to be brought on behalf of the federal go

225、vernment by a private party having knowledge of the alleged fraud.Because the complaint is initially filed under seal,the action may be pending for some time before the defendant is even aware of the action.If the government intervenes and is ultimately successful in obtaining redress in the matter,

226、or if the plaintiff succeeds in obtaining redress without the governments involvement,then the plaintiff will receive a percentage of the recovery.The federal government is using the FCA,and the accompanying threat of significant liability,in its investigation and prosecution of life sciences compan

227、ies throughout the country,for example,in connection with the promotion of products for unapproved uses and other sales and marketing practices.In addition,the government may assert that a claim including items or services resulting from a violation of the federal AKS constitutes a false or fraudule

228、nt claim for purposes of the civil FCA.The government has obtained multi-million and multi-billion dollar settlements under the FCA in addition to individual criminal convictions under applicable criminal statutes.Given the significant size of actual and potential settlements,it isexpected that the

229、government will continue to devote substantial resources to investigating healthcare providers and manufacturers compliance with applicable fraud and abuse laws.The civil monetary penalties statute imposes penalties against any person or entity that,among other things,is determined to have presented

230、 or caused to be presented a claim to a federal health program that the person knows or should know is for an item or service that was not provided as claimed or is false or fraudulent.The majority of states also have anti-kickback laws which establish similar prohibitions and,in some cases,may appl

231、y to items or services reimbursed by any third-party payor,including commercial insurers.HIPAA created new federal criminal statutes that prohibit,among other actions,knowingly and willfully executing,or attempting to execute,a scheme to defraud any healthcare benefit program,including private third

232、-party payors,and knowingly and willfully falsifying,concealing or covering up a material fact or making any materially false,fictitious or fraudulent statement in connection with the delivery of or payment for healthcare benefits,items or services.Like the AKS,a person or entity no longer needs to

233、have actual knowledge of the statute or specific intent to violate it in order to have committed a violation.Moreover,the federal Physician Payments Sunshine Act requires certain manufacturers of drugs,devices,biologics and medical supplies for which payment is available under Medicare,Medicaid or t

234、he Childrens Health Insurance Program,with specific exceptions,to report annually to the Centers for Medicare&Medicaid Services(CMS),information related to payments or other transfers of value made to physicians(defined to include doctors,dentists,optometrists,podiatrists and chiropractors),certain

235、other healthcare professionals(such as physician assistants and nurse practitioners),and teaching hospitals,and applicable manufacturers and applicable group purchasing organizations to report annually to CMS ownership and investment interests held by such physicians and their immediate family membe

236、rs.The Physician Payments Sunshine Act includes in its reporting requirements a broad range of transfers of value including,but not limited to,consulting fees,speaker honoraria,charitable contributions,research payments and grants.Failure to report could subject companies to significant financial pe

237、nalties.Tracking and reporting the required payments and transfers of value may result in considerable expense and additional resources.Several states currently have similar laws and more states may enact similar legislation,some of which may be broader in scope.For example,certain states require th

238、e implementation of compliance programs,compliance with industry ethics codes,implementation of gift bans and spending limits,and/or reporting of gifts,compensation and other remuneration to healthcare professionals.The shifting commercial compliance environment and the need to build and maintain ro

239、bust and expandable systems to comply with different compliance and/or reporting requirements in multiple jurisdictions increase the possibility that a healthcare company may violate one or more of the requirements.If our future operations are found to be in violation of any of such laws or any othe

240、r governmental regulations that apply to us,we may be subject to significant penalties,including,without limitation,administrative,civil and criminal penalties,damages,fines,disgorgement,imprisonment,the curtailment or restructuring of our operations,additional reporting and oversight requirements,e

241、xclusion from participation in federal and state healthcare programs and imprisonment.142025/1/17 22:2410-Khttps:/www.sec.gov/Archives/edgar/data/1584751/000095017024037648/tlis-20231231.htm19/166 Coverage and reimbursementSales of our products will depend in large part on the availability of adequa

242、te coverage and reimbursement from third-party payors,including government programs such as Medicare and Medicaid,private insurance plans and managed care programs.These third-party payors are increasingly limiting coverage and reducing reimbursement for medical products and services.In addition,the

243、 U.S.government,state legislatures and foreign governments have continued implementing cost-containment programs,including price controls and restrictions on coverage and reimbursement.Adoption of price controls and cost-containment measures,and adoption of more restrictive policies in jurisdictions

244、 with existing controls and measures,could further limit our net revenue and results.Hospitals,clinical laboratories and other healthcare provider customers that may purchase our product candidates,if approved,generally bill various third-party payors to cover all or a portion of the costs and fees

245、associated with diagnostic tests,including the cost of the purchase of our product candidates.If our product candidates are cleared or approved by the FDA as point-of-care tests and deemed CLIA-waived following market authorization,we expect that the majority of our diagnostic tests will be performe

246、d in physician offices and other point-of-care settings and billed using existing Current Procedural Terminology(CPT)codes.Our healthcare provider customers may not purchase our tests unless third-party payors cover and provide adequate reimbursement for a substantial portion of the price of the tes

247、ts.If we are not able to obtain coverage and an acceptable level of reimbursement for our tests from third-party payors,there would typically be a greater co-insurance or co-payment requirement from the patient for whom the test is ordered or the patient may be forced to pay the entire cost of the t

248、est out-of-pocket,which could dissuade practitioners from ordering our tests and,if ordered,could result in a delay in or decreased likelihood of collecting payment,whether from patients or from third-party payors.Our customers access to adequate coverage and reimbursement for our products and/or pr

249、oduct candidates by government and private insurance plans is central to the acceptance of our products.We may be unable to sell our products on a profitable basis if third-party payors deny coverage or reduce their current levels of payment,or if our costs of production increase faster than increas

250、es in reimbursement levels.The potential end-users of our Talis One system and diagnostic tests include large elder care chains where vulnerable residents have unmet needs for millions of high sensitivity tests per year;urgent care chains that serve on the front lines of COVID-19 diagnosis,needing m

251、illions of rapid tests to triage symptomatic patients;and traditional medical establishments including hospitals,ambulatory surgery centers,cancer treatment and dialysis centers,independent practice associations,accountable care organizations,and public health clinics that need rapid and high-qualit

252、y testing to best serve their patients.Hospitals,physicians and other healthcare providers who purchase diagnostic products in the United States generally rely on third-party payors,such as private health insurance plans,Medicare and Medicaid,to reimburse all or part of the cost of the product.There

253、fore,our market success is highly dependent upon government and commercial third-party payors providing coverage and adequate reimbursement for our test.While we believe our COVID-19 test will qualify for coverage that is currently available for other COVID-19 tests on the market,coverage criteria a

254、nd reimbursement rates for diagnostic tests are subject to adjustment by payors,and current reimbursement rates could be reduced,or coverage criteria restricted in the future,which could adversely affect the market for our tests.There has been federal and state legislation and other reform initiativ

255、es regarding the coverage and reimbursement for COVID-19 diagnostic testing in response to the COVID-19 outbreak.For example,the Families First Coronavirus Response Act(FFCRA)generally requires group health plans and health insurance issuers offering group or individual health insurance to cover FDA

256、 approved COVID-19 tests and associated diagnostic costs with no cost-sharing,as long as the test is deemed medically appropriate and furnished on or after March 18,2020 and during the applicable public health emergency period.The FFCRA also permits states to cover testing for the uninsured through

257、Medicaid with federal financing.Additionally,the Coronavirus Aid,Relief,and Economic Security Act expanded the FFCRA to include a broader range of diagnostic tests and services as well as requiring plans and issuers to cover out-of-network COVID-19 test claims at up to the cash price that the provid

258、er has posted on a public website.CMS announced plans in March 2020 to cover the cost of COVID-19 diagnostic testing under the Medicare program and identified the amount at which it would reimburse for such tests,which has been adjusted numerous times.For example,Medicare adjusted its payment method

259、ology effective January 1,2021,such that it will pay$100 per test only to those laboratories that complete high throughput COVID-19 diagnostic tests within two calendar days of the specimen being collected and will only pay$75 per test to laboratories that take longer than two days to complete such

260、test.This change is indicative of the evolving nature of the coverage and reimbursement of COVID-19 tests.In 152025/1/17 22:2410-Khttps:/www.sec.gov/Archives/edgar/data/1584751/000095017024037648/tlis-20231231.htm20/166 addition,there has been federal and state legislation and other reform initiativ

261、es regarding the coverage and reimbursement for COVID-19 diagnostic testing in response to the COVID-19 outbreak which continue to evolve.For example,effective January 15,2022,private health insurance companies and group health plans are required to cover eight free over-the-counter at-home COVID-19

262、 diagnostic tests authorized,cleared,or approved by the FDA per covered individual per month.Data Privacy In the ordinary course of our business,we may process personal data and,accordingly,we are,or may become,subject to numerous data privacy and security obligations,including federal,state,local,a

263、nd foreign laws,regulations,guidance,and industry standards related to data privacy,security,and protection.Such obligations may include,without limitation,the Federal Trade Commission Act,the Health Insurance Portability and Accountability Act of 1996(HIPAA),the California Privacy Rights Act of Cal

264、ifornia(CRPA),the European Unions General Data Protection Regulation 2016/679(EU GDPR),the EU GDPR as it forms part of United Kingdom(UK)law by virtue of section 3 of the European Union(Withdrawal)Act 2018(UK GDPR),and the ePrivacy Directive.In addition,several states within the United States have e

265、nacted or proposed data privacy laws,including Virginia,Colorado,Utah and Connecticut.The CRPA,EU GDPR,and UK GDPR are examples of the increasingly stringent and evolving regulatory frameworks related to personal data processing may increase our compliance obligations and exposure for any noncomplia

266、nce.For example,the CPRA,effective January 1,2023,gives,among other things,California residents the ability to limit use of certain sensitive personal data,establishes restrictions on personal data retention,expands the types of data breaches that are subject to a consumer private right of action,an

267、d establishes a new California Privacy Protection Agency to implement and enforce the new law.In addition,U.S.federal and state consumer protection laws may require us to publish statements that accurately and fairly describe how we handle personal data and choices individuals may have about the way

268、 we handle their personal data.European data privacy and security laws(including the EU GDPR and UK GDPR)impose significant and complex compliance obligations on entities that are subject to those laws.For example,the EU GDPR applies to any company established in the European Economic Area(EEA)and t

269、o companies established outside the EEA that process personal data in connection with the offering of goods or services to data subjects in the EEA or the monitoring of the behavior of data subjects in the EEA.These obligations may include limiting personal data processing to only what is necessary

270、for specified,explicit,and legitimate purposes;requiring a legal basis for personal data processing;requiring the appointment of a data protection officer in certain circumstances;increasing transparency obligations to data subjects;requiring data protection impact assessments in certain circumstanc

271、es;limiting the collection and retention of personal data;increasing rights for data subjects;formalizing a heightened and codified standard of data subject consents;requiring the implementation and maintenance of technical and organizational safeguards for personal data;mandating notice of certain

272、personal data breaches to the relevant supervisory authority(ies)and affected individuals;and mandating the appointment of representatives in the UK and/or the EU in certain circumstances.See the section titled“Risk Factors Risks related to regulatory matters”for additional information about the law

273、s and regulations to which we are or may become subject and about the risks to our business associated with such laws and regulations.Human capital resourcesAs of December 31,2023,we had a total of 99 full-time employees.Our employees are located in Chicago,Illinois and other locations within the Un

274、ited States.None of our employees are represented by any collective bargaining agreements.We believe that we maintain good relations with our employees.Our human capital resources objectives include,as applicable,maintaining adequate staffing to support the completion of a strategic transaction or t

275、he voluntary dissolution and liquidation of the Company.Available InformationOur Annual Report on Form 10-K,Quarterly Reports on Form 10-Q,Current Reports on Form 8-K,and amendments to reports filed pursuant to Sections 13(a)and 15(d)of the Securities Exchange Act of 1934,as amended(Exchange Act),ar

276、e filed with the SEC.Such reports and other information filed by us with the SEC are 162025/1/17 22:2410-Khttps:/www.sec.gov/Archives/edgar/data/1584751/000095017024037648/tlis-20231231.htm21/166 available free of charge on our website at http:/ when such reports are available on the SECs website.Th

277、e SEC maintains an internet site that contains reports,proxy and information statements and other information regarding issuers that file electronically with the SEC at www.sec.gov.The information contained on the websites referenced in this Annual Report on Form 10-K is not incorporated by referenc

278、e into this filing.Further,our references to website URLs are intended to be inactive textual references only.172025/1/17 22:2410-Khttps:/www.sec.gov/Archives/edgar/data/1584751/000095017024037648/tlis-20231231.htm22/166 Item 1A.Risk Factors.Careful consideration should be given to the following ris

279、k factors,together with the other information contained in this Annual Report,including our financial statements and the related notes.If any of the following risks occur,our business,financial condition,results of operations and future growth prospects could be materially and adversely affected.In

280、these circumstances,the market price of our common stock could decline,and you may lose all or part of your investment.This Annual Report also contains forward-looking statements that involve risks and uncertainties.Our actual results could differ materially from those anticipated in the forward-loo

281、king statements as a result of a number of factors,including the risks described below.See“Special note regarding forward-looking statements.”Risks related to our business and strategy We may not be successful in completing a strategic transaction within a reasonable timeframe,on attractive terms or

282、 at all.If we are unable to complete a strategic transaction,then we may cease all operations and seek stockholder approval to voluntarily dissolve and liquidate the Company.Since November 2023,we have ceased substantially all of our research and development and manufacturing activities while our Bo

283、ard of Directors considers strategic alternatives.We may be unable to complete a strategic transaction within a reasonable timeframe,on attractive terms or at all,and market conditions,including the historical volatility in our common stock will likely limit our ability to raise capital on favorable

284、 terms,or at all,and the terms of any public or private offerings of debt or equity securities likely would be significantly dilutive to existing stockholders.There is no set timetable for the overall process given the anticipated timelines for different strategic alternatives may vary,and there can

285、 be no assurance that this process will result in us pursuing a transaction or that any transaction,if pursued,will be completed on attractive terms or at all.Given these challenges,if we are unable to complete a strategic transaction,then we may cease all operations and seek stockholder approval to

286、 voluntarily dissolve and liquidate the Company.The completion of a strategic transaction or the voluntary dissolution and liquidation of the Company each would have a material adverse effect on our growth strategy and our results of operations and financial condition.Commercialization of the Talis

287、One system will require pursuing marketing authorization through the FDAs standard 510(k)clearance process.We may not be able to obtain marketing authorization for these tests,which would adversely affect our business,financial condition and results of operations.Our historical research and developm

288、ent efforts focused on the development of the Talis One system for FDA clearance or other marketing authorization as a point-of-care testing system for infectious diseases pursuant to 510(k)submissions to the FDA.Development of the data necessary to obtain marketing authorization of a diagnostic tes

289、t is time-consuming and carries with it the risk of not yielding the desired results.The performance achieved in initial studies may not be repeated in later studies that may be required to obtain marketing authorizations.In addition,limited results from earlier-stage verification studies may not pr

290、edict results from studies conducted to obtain marketing authorization.Unfavorable results from ongoing preclinical and clinical studies could result in delays,modifications or abandonment of ongoing analytical or future clinical studies,or abandonment of a product development program,or may delay,l

291、imit or prevent regulatory approvals or clearances or commercialization of our products,any of which may materially adversely affect our business,financial condition and results of operations.Furthermore,results that would be sufficient for regulatory approval or clearance may not demonstrate strong

292、 performance characteristics,limiting the market demand for the system,which would adversely affect our business.See“Risks related to regulatory matters.We have no experience with the entire commercialization process for the Talis One system.We have gained some experience with the initial stages of

293、the process,including demand generation,evaluations,and quoting,and we have recent commercialization experience selling and distributing the Antigen Tests as an authorized distributor.As a result,we have limited experience forecasting future financial performance for our products and our actual resu

294、lts may fall below our financial guidance or other projections,or the expectations of analysts or investors,which could cause the price of our common stock to decline.182025/1/17 22:2410-Khttps:/www.sec.gov/Archives/edgar/data/1584751/000095017024037648/tlis-20231231.htm23/166 Future commercializati

295、on of the Talis One system in the United States will require pursuing 510(k)clearance or another available approval path.The launch of new products is inherently uncertain and requires the completion of commercialization activities that are complex,costly,time-intensive and uncertain,and require us

296、to accurately anticipate patients,providers and,if applicable,payors attitudes and needs,the future competitive landscape,and emerging technology and industry trends.This process is conducted in various stages,and each stage presents the risk that we will not achieve our goals on a timely basis,or a

297、t all.Commercial success of the Talis One system depends,in part,on the acceptance of our diagnostic tests and services as being safe,accurate,and relatively simple for medical personnel to learn and use,clinically flexible,operationally versatile and,with respect to providers and payors,cost effect

298、ive.We cannot predict how quickly,if at all,payors,providers,clinics and patients will accept future diagnostic tests and services or,if accepted,how frequently they will be used.These constituents must believe that our diagnostic tests offer benefits over other available alternatives.The degree of

299、market acceptance of the Talis One system depends on a number of factors,including:whether our customers are willing to incur the upfront costs associated with purchasing Talis One instruments;whether there is adequate utilization of our tests by clinicians,health systems and other target groups bas

300、ed on the potential and perceived advantages of our diagnostic tests over those of our competitors;the convenience and ease of use of our diagnostic tests relative to those currently on the market or when our tests are launched;the effectiveness of our sales and marketing efforts;our ability to prov

301、ide incremental data that show the clinical benefits and cost effectiveness,and operational benefits,of our diagnostic tests;the coverage and reimbursement acceptance of our products and services;pricing pressure,including from group purchasing organizations(GPOs),seeking to obtain discounts on our

302、diagnostic tests based on the collective bargaining power of the GPO members;negative publicity regarding our or our competitors diagnostic tests resulting from defects or errors;the performance of our tests relative to those of our competitors;product labeling or product insert requirements by the

303、FDA or other regulatory authorities;andlimitations or warnings contained in the labeling cleared or approved by the FDA or other authorities.Additionally,even if our diagnostic tests achieve widespread market acceptance,they may not maintain that market acceptance over time if competing diagnostic t

304、ests or technologies,which are more cost effective or are received more favorably,are introduced.Failure to achieve or maintain market acceptance and/or market share would limit our ability to generate revenue and would have a material adverse effect on our business,financial condition and results o

305、f operations.Also,there may be research and development,regulatory,marketing and other difficulties that could delay or prevent the introduction of enhanced or new products and result in increased costs and the diversion of managements attention and resources from other business matters.For example,

306、any molecular diagnostic tests that we may develop or further enhance may not prove to be clinically effective,or may not meet our desired target product profile or be offered at acceptable cost and with the sensitivity,specificity and other test performance metrics necessary to address the relevant

307、 clinical need or commercial opportunity;our molecular diagnostic test performance in commercial settings may be inconsistent with our validation or other clinical data;we may not be successful in achieving market awareness and demand,whether through our own sales and marketing operations or enterin

308、g into collaborative arrangements;the collaborative arrangements we enter into may not be successful or we may not be able to maintain those that are successful;healthcare providers may not use any tests that we may enhance or develop;or we may otherwise have to abandon a product,service ore develop

309、ment program in which we have invested substantial resources.An important factor in our ability to commercialize our products is collecting data that supports the value proposition of our products,and in particular that our tests are just as accurate and reliable as central lab testing.The 192025/1/

310、17 22:2410-Khttps:/www.sec.gov/Archives/edgar/data/1584751/000095017024037648/tlis-20231231.htm24/166 data collected from any studies we complete may not be favorable or consistent with our existing data or may not be statistically significant or compelling to the medical community or to third-party

311、 payors seeking such data for purposes of determining coverage for our products.Any of the foregoing could have a negative impact on our ability to commercialize our future products,which could have a material adverse effect on our business,financial condition and results of operations.It may not be

312、 possible to validate manufacturing for the Talis One instrument and cartridges at scale,which may have a material adverse effect on any efforts to commercialize our products.In order to commercialize our products,if approved,it is necessary to manufacture the Talis One instrument and test cartridge

313、s in large quantities.We,or our manufacturing partners,may be unable to successfully increase the manufacturing capacity for any of our products in a timely or cost-effective manner,or at all.If we,or our manufacturing partners,are unable to successfully scale-up the manufacture of our products in s

314、ufficient quality and quantity,the development,testing and clinical trials of our womens health and STI products may be delayed or become infeasible,and marketing approval or commercial launch of any resulting product may be delayed or not obtained,which could significantly harm our business.If our

315、products do not perform as expected,including due to errors,defects or reliability issues,our reputation and market acceptance of our products could be harmed,and our operating results,reputation and business will suffer.Our success depends on physician and customer confidence that we can provide re

316、liable and highly accurate diagnostic tests and enable better patient care.We believe that physicians and other healthcare providers are likely to be particularly sensitive to defects,errors or reliability issues in our products,including if our products fail to accurately diagnose infections with h

317、igh accuracy from patient samples,and there can be no guarantee that our products will meet their expectations.There is no guarantee that the accuracy and reproducibility we have demonstrated to date will continue as our product deliveries increase and our product portfolio expands.Our products use

318、a number of complex and sophisticated biochemical and bioinformatics processes,many of which are highly sensitive to external factors.For example,the Talis One system,comprised of a compact instrument,universal single-use test cartridges and software,including a central cloud database,may contain un

319、detected errors or defects when first introduced or as new versions are released.Our diagnostic tests may contain errors or defects or be subject to reliability issues,and while we have made efforts to test them extensively,we cannot assure that our current diagnostic tests,or those developed in the

320、 future,will not have performance problems.An operational,technological or other failure in one of these complex processes or fluctuations in external variables may result in sensitivity or specificity rates that are lower than we anticipate,thus affecting the accuracy of a diagnostic result,or resu

321、lt in longer than expected turnaround times or they may cause our products to malfunction.Due to the complexity of our instrument and cartridge,it may be difficult or impossible to identify the reason for such performance.Performance issues would increase our costs in the near-term and accordingly a

322、dversely affect our business,financial condition and results of operations.In addition,failure to maintain high-quality customer support,or a market perception that we do not maintain high-quality customer support,could adversely affect our reputation and our ability to sell our Talis One system.We

323、may also be subject to warranty claims or breach of contract for damages related to errors,defects or reliability issues in our products.Further,our products are designed to be used at the customers location by untrained personnel.We cannot provide assurance that our products will be approved for us

324、e by untrained personnel or that our customers will always use our products in the manner in which we intend.Any intentional or unintentional misuse of our products by our customers could lead to substantial civil and criminal monetary and non-monetary penalties and could cause us to incur significa

325、nt legal and investigatory fees.If our products do not perform,or are perceived to not have performed,as expected or favorably in comparison to competitive products,our operating results,reputation,and business will suffer,and we may also be subject to legal claims arising from product limitations,e

326、rrors,or inaccuracies.Additionally,many of the pathogens for which we are developing tests may mutate over time.Such mutations may negatively affect the accuracy of our tests or even make our tests obsolete if our tests are unable to detect future variants.The failure of our products to perform as e

327、xpected could significantly impair our operating results and our reputation,including if we become subject to legal claims arising from any defects or errors in our products or test results.Operational,technical and other difficulties adversely affecting test performance may harm our reputation,impa

328、ct the commercial attractiveness of our products,increase our costs or divert our resources,including managements 202025/1/17 22:2410-Khttps:/www.sec.gov/Archives/edgar/data/1584751/000095017024037648/tlis-20231231.htm25/166 time and attention,from other projects and priorities.Any of the foregoing

329、could have a material adverse effect on our business,financial condition and results of operations.Our products may be subject to recalls in the future.A recall of products,either voluntarily or at the direction of the FDA or another governmental authority,or the discovery of serious safety issues w

330、ith our products,could have a significant adverse impact on us.The FDA has the authority to require the recall of commercialized products that are subject to FDA regulation.Manufacturers may,also,under their own initiative,recall a product or service if any deficiency is found.For reportable correct

331、ions and removals,companies are required to make additional periodic submissions to the FDA after initiating the recall,and often engage with the FDA on their recall strategy prior to initiating the recall.A government-mandated or voluntary recall by us or a distributor could occur as a result of an

332、 unacceptable health risk,component failures,malfunctions,manufacturing errors,design or labeling defects,or other deficiencies and issues.Recalls of any of our commercialized products would divert managerial and financial resources and adversely affect our business,results of operations,financial c

333、ondition and reputation.A recall of Talis One instruments could be required for any number of problems.Given the number of components,determining the cause of the malfunction may be particularly challenging and costly.In addition,any recall of Talis One instruments would decrease the market for our authorized tests given the decreased availability of such instruments.We may also be subject to liab