### POS AM - POST-EFFECTIVE AMENDMENT NO. 1 TO FORM F-1
As filed with the Securities and Exchange Commission on May 26,
2026.
Registration No. 333-290471
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
POST-EFFECTIVE AMENDMENT NO. 1
to
FORM F-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
YD Bio Limited
( Exact name of registrant as specified in
its charter )
Cayman Islands | | 2835 | | Not Applicable |
(State or other jurisdiction of
incorporation or organization) | | (Primary Standard Industrial
Classification Code Number) | | (I.R.S. Employer
Identification Number) |
12F., No. 3, Xingnan St.,
Nangang Dist.,
Taipei City 115001, Taiwan
+(886) 2382-0330
(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)
Cogency Global Inc.
122 East 42 nd Street, 18 th Floor
New York, NY 10168
(212) 947-7200
(Name, address, including zip code, and telephone
number, including area code, of agent for service)
Copies to:
Michael J. Blankenship
Winston & Strawn LLP
800 Capitol Street, Suite 2400
Houston, Texas 77002
(713) 651-2600
Approximate date of commencement
of proposed sale to the public: As soon as practicable after this registration statement becomes effective.
If any of the securities
being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933
check the following box: ☒
If this Form is filed to
register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
If this Form is a post-effective
amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement
number of the earlier effective registration statement for the same offering. ☐
If this Form is a post-effective
amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement
number of the earlier effective registration statement for the same offering. ☐
Indicate by check mark whether
the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging
growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting
company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | Accelerated filer | ☐ |
| Non-accelerated filer | ☒ | Smaller reporting company | ☒ |
| | | Emerging growth company | ☒ |
If an emerging growth company,
indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial
accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. ☐
† | The term “new or revised financial accounting standard”
refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5,
2012. |
This Post-Effective Amendment No. 1 shall hereafter become effective in accordance with Section 8(c) of the Securities Act of 1933, as amended, on such date as the Securities and Exchange Commission, acting pursuant to Section 8(c) of the Securities Act, may determine.
EXPLANATORY NOTE
This Post-Effective Amendment
No. 1 to the Registration Statement on Form F-1 (File No. 333-290471) (as amended, the “Registration Statement”) of YD Bio
Limited (the “Registrant” or the “Company”), as originally became effective on November 13, 2025 pursuant to
Section 8(a) of the Securities Act of 1933, as amended, is being filed to update the Registration Statement to reflect the Registrant’s
recently filed Annual Report on Form 20-F for the fiscal year ended December 31, 2025, filed with the SEC on April 30, 2026, and certain
other updated information. No additional securities are being registered under this Post-Effective Amendment No. 1. All applicable registration
fees were paid at the time of the original filing of the Registration Statement.
The information in
this preliminary prospectus is not complete and may be changed. The selling shareholders may not sell these securities until the registration
statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell, nor does
it seek an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.
SUBJECT TO COMPLETION,
DATED MAY 26, 2026.
PRELIMINARY PROSPECTUS
YD BIO LIMITED
Prospectus for
11,436,270 Ordinary Shares Issuable Upon Exercise
of Public Warrants
58,571,199 Ordinary Shares by the Selling Shareholders
3,136,056 Ordinary Shares Issuable upon Exercise
of Warrants
This prospectus relates to the issuance by us
of up to an aggregate of up to 11,436,270 ordinary shares, par value $0.0001 per share (“Ordinary Shares”), that are issuable
upon the exercise of 11,436,270 warrants, each exercisable for one Ordinary Share at an exercise price of $11.50 per share (the “Public
Warrants”). 11,500,000 Public Warrants were originally issued in connection with the completion of our business combination with
Breeze Holdings Acquisition Corp. (“Breeze”) and YD Biopharma Limited (the “Business Combination”) on August 28,
2025. The Public Warrants are exercisable 30 days after the closing of the Business Combination and will expire five years from the closing
of the Business Combination.
This prospectus relates to the resale, from time to time, by the Selling
Shareholders of up to 58,571,199 Ordinary Shares and 3,136,056 Ordinary Shares issuable upon exercise of certain outstanding warrants
(the “Private Warrants,” and together with the Public Warrants, the “Warrants”), issued to certain of the Selling
Shareholders in connection with the Business Combination in exchange for warrants issued by Breeze on November 25, 2020 in connection
with a private placement transaction (the “Private Placement Transaction”). 5,425,000 Private Warrants were initially
sold pursuant to the Private Placement Transaction with an initial exercise price equal to $11.50 per share, are exercisable 30 days after
the closing of the Business Combination, and will expire five years from the closing of the Business Combination.
We are not selling any securities under this prospectus
and will not receive any of the proceeds from the sale of our Ordinary Shares by the Selling Shareholders. We will receive proceeds from
any cash exercise of the Public Warrants and the Private Warrants, which, if exercised in cash with respect to all of the 11,436,270 Public
Warrants would result in $131,517,105 and if exercised in cash with respect to all of the 3,136,056 Private Warrants, would result in
gross proceeds to us of a maximum of $36,064,644; however, we cannot predict when and in what amounts or if the Warrants will be exercised
and it is possible that the Warrants may expire and never be exercised, in which case we would not receive any cash proceeds.
The Selling Shareholders may sell the Ordinary
Shares offered by this prospectus from time to time on terms to be determined at the time of sale through ordinary brokerage transactions
or through any other means described in this prospectus under the caption “Plan of Distribution.” The Ordinary Shares
may be sold at fixed prices, at market prices prevailing at the time of sale, at prices related to prevailing market price or at negotiated
prices.
We will pay the expenses incurred in registering
under the Securities Act, the offer and sale of the Ordinary Shares to which this prospectus relates by the Selling Shareholders, including
legal and accounting fees. See “Plan of Distribution” beginning on page 137.
Our Ordinary Shares are listed on the Nasdaq Global
Market under the symbol “YDES.” On May 22, 2026, the last sale price for our Ordinary Shares as reported on the Nasdaq
Global Market was $4.75 per share.
We are a “smaller reporting company”
as defined under the federal securities laws and, as such, have elected to comply with certain reduced public company reporting requirements
for this prospectus and may elect to do so in future filings.
Investing in our securities involves a high
degree of risk. See the section entitled “ Risk Factors ” appearing on page 5 of this
prospectus for a discussion of information that should be considered in connection with an investment in our securities.
Neither the Securities and Exchange Commission
nor any other regulatory body has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus.
Any representation to the contrary is a criminal offense.
The date of this prospectus is ,
2026
TABLE OF CONTENTS
|
Page |
ABOUT THIS PROSPECTUS |
ii |
MARKET AND INDUSTRY DATA |
iii |
PROSPECTUS SUMMARY |
1 |
THE OFFERING |
2 |
RISK FACTORS |
5 |
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS |
42 |
USE OF PROCEEDS |
44 |
CAPITALIZATION |
45 |
DIVIDEND POLICY |
46 |
MARKET INFORMATION |
47 |
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
48 |
BUSINESS |
62 |
MANAGEMENT |
115 |
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT |
123 |
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS |
124 |
CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT |
130 |
SELLING SHAREHOLDERS |
132 |
PLAN OF DISTRIBUTION |
137 |
DESCRIPTION OF SECURITIES |
139 |
LEGAL MATTERS |
153 |
EXPERTS |
153 |
WHERE YOU CAN FIND MORE INFORMATION |
154 |
INDEX TO FINANCIAL INFORMATION |
F-1 |
You should rely only on the information contained
in this prospectus or any amendment or supplement to this prospectus. This prospectus is an offer to sell only the securities offered
hereby, but only under the circumstances and in jurisdictions where it is lawful to do so. Neither we nor the Selling Shareholders have
authorized anyone to provide you with information different from that contained in this prospectus or any amendment or supplement to this
prospectus. Neither we nor the Selling Shareholders take any responsibility for, or can provide any assurance as to the reliability of,
any information other than the information in this prospectus or any amendment or supplement to this prospectus. The information in this
prospectus or any amendment or supplement to this prospectus is accurate only as of its date, regardless of the time of delivery of this
prospectus or any amendment or supplement to this prospectus, as applicable, or any sale of the securities offered by this prospectus.
Our business, financial condition, results of operations and prospects may have changed since that date.
For Investors Outside the United States:
The Selling Shareholders are offering to sell, and seeking offers to buy, the securities offered by this prospectus only in jurisdictions
where offers and sales are permitted. Neither we nor the Selling Shareholders have done anything that would permit this offering or the
possession or distribution of this prospectus in any jurisdiction where action for that purpose is required, other than in the United States.
Persons outside the United States who come into possession of this prospectus must inform themselves about, and observe any restrictions
relating to, the offering of the securities offered by this prospectus and the distribution of this prospectus outside the United States.
i
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement
that we filed with the SEC. The Selling Shareholders may, from time to time, sell the securities offered by them described in this
prospectus through any means described in the section titled “ Plan of Distribution .” We will not receive any proceeds
from the sale by the Selling Shareholders of the securities offered by them described in this prospectus.
We may also file a prospectus supplement or post-effective
amendment to the registration statement of which this prospectus forms a part that may contain material information relating to these
offerings. The prospectus supplement or post-effective amendment may also add, update or change information contained in this prospectus
with respect to that offering. If there is any inconsistency between the information in this prospectus and the applicable prospectus
supplement or post-effective amendment, you should rely on the prospectus supplement or post-effective amendment, as applicable. Any statement
so modified will be deemed to constitute a part of this prospectus only as so modified, and any statement so superseded will be deemed
not to constitute a part of this prospectus. Before purchasing any securities, you should carefully read this prospectus, any post-effective
amendment, and any applicable prospectus supplement, together with the additional information described under the heading “Where
You Can Find More Information” and “Incorporation of Certain Information by Reference.”
This prospectus contains summaries of certain
provisions contained in some of the documents described herein, but reference is made to the actual documents for complete information.
All of the summaries are qualified in their entirety by the actual documents. Copies of some of the documents referred to herein have
been filed, will be filed, or will be incorporated by reference as exhibits to the registration statement of which this prospectus forms
a part, and you may obtain copies of those documents as described below under “Where You Can Find More Information.”
You should assume that the information in this prospectus is accurate only as of the date on the front of the document and that any information
we have incorporated by reference is accurate only as of the date of the document incorporated by reference, regardless of the time of
delivery of this prospectus or any sale of a security.
The distribution of this prospectus and the issuance
of the securities in certain jurisdictions may be restricted by law. Persons outside the United States who come into possession of
this prospectus must inform themselves about, and observe any restrictions relating to, the issuance of the securities and the distribution
of this prospectus outside the United States. This prospectus does not constitute, and may not be used in connection with, an offer
to sell, or a solicitation of an offer to buy, the securities offered by this prospectus by any person in any jurisdiction in which it
is unlawful for such person to make such an offer or solicitation.
ii
MARKET AND INDUSTRY DATA
Unless otherwise indicated, information contained
in this prospectus or incorporated into this prospectus by reference regarding the Company’s industry and the regions in which it
operates, including market research, estimates, and forecasts, is based on information obtained from industry publications and reports
and forecasts from third-party sources. In some cases, the Company does not expressly refer to the sources from which this information
is derived. This information is subject to significant uncertainties and limitations and is based on assumptions and estimates that may
prove to be inaccurate. Neither we nor the Selling Shareholders can guarantee the accuracy or completeness of any such information contained
in this prospectus or incorporated into this prospectus by reference. You are therefore cautioned not to give undue weight to this information.
The Company has not independently verified the
accuracy or completeness of any such information. Similarly, internal surveys, industry forecasts and market research, which the Company
believes to be reliable based upon its management’s knowledge of the industry, have not been independently verified. While the Company
believes that the market data, industry forecasts and similar information included in this prospectus are generally reliable, such information
is inherently imprecise. In addition, assumptions and estimates of the Company’s future performance and growth objectives and the
future performance of its industry and the markets in which it operates are necessarily subject to a high degree of uncertainty and risk
due to a variety of factors, including those discussed under the headings “Risk Factors,” “Cautionary Note Regarding
Forward-Looking Statements,” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations”
in this prospectus.
iii
PROSPECTUS SUMMARY
This summary highlights information contained
elsewhere in this prospectus. This summary does not contain all of the information that you should consider before deciding to invest
in our securities. You should read this entire prospectus carefully, including the “ Risk Factors ” section
in this prospectus and under similar captions in the documents incorporated by reference into this prospectus. The terms the “ Company ” ,
“ our ” , or “ we ” refer to YD Bio Limited and its subsidiaries.
Overview
On August 28, 2025 (the “Closing Date”),
YD BIOPHARMA LIMITED (“YD Biopharma”), a direct wholly-owned subsidiary of YD Bio Limited, a Cayman Islands exempted company,
formerly known as “TRUE VELOCITY, INC.” (“YD Bio” or the “Company”), consummated a business combination
(the “Business Combination”) with Breeze Holdings Acquisition Corp., a Delaware company (“Breeze Holdings”), pursuant
to a merger agreement and plan of reorganization dated September 24, 2024 by and among YD Biopharma, Breeze Holdings and Breeze Merger
Sub, Inc., formally a Delaware corporation and a direct wholly owned subsidiary of the Company (“Parent Merger Sub”), as supplemented
by (i) an joinder to such agreement dated November 20, 2024 by and among the Company, BH Biopharma Merger Sub Limited, formally a Cayman
Islands exempted company and a direct wholly-owned subsidiary of the Company (“Company Merger Sub”), YD Biopharma, Breeze
Holdings and the Parent Merger Sub, and (ii) the amendment No.1 to such merger agreement and plan of reorganization dated May 30, 2025
by and among YD Biopharma, Breeze Holdings, the Parent Merger Sub, the Company and Company Merger Sub (collectively, the “Merger
Agreement”).
The Business Combination involved (i) the merger
of Breeze Merger Sub with and into Breeze Holdings, upon which, Breeze Merger Sub ceased to exist with Breeze Holdings continuing as the
surviving corporation and becoming a wholly-owned subsidiary of the Company (“Parent Merger”), and (ii) the merger of Company
Merger Sub with and into YD Biopharma, upon which, Company Merger Sub ceased to exist, with YD Biopharma continuing as the surviving company
and becoming a wholly-owned subsidiary of the Company (the “Company Merger”, together with Parent Merger, the “Mergers”),
pursuant to the terms of the Merger Agreement and in accordance with the Companies Act of the Cayman Islands (the “Companies Act”).
As a result of the Business Combination, the Company owns 100% of the outstanding ordinary shares of YD Biopharma and ordinary shares,
warrants, and rights of Breeze.
We are a publicly listed biotechnology company
focused on regulated diagnostics, life science clinical services, and healthcare product commercialization. Our operations include DNA
methylation-based oncology testing programs in the United States conducted under a LDT framework in collaboration with CLIA-certified
and CAP-accredited laboratory partners. In addition to our diagnostics activities, we provide regulated life science distribution and
clinical trial supply chain services to pharmaceutical and biotechnology companies, including procurement, logistics coordination, and
compliance-focused support for clinical development programs. We also maintain ocular health product commercialization operations in the
United States and consumer healthcare distribution activities in Asia under applicable regulatory and market requirements. Through our
combined diagnostics platform, clinical service infrastructure, and healthcare commercialization capabilities, we seek to develop a scalable
operating model designed to support growth across multiple regulated healthcare segments.
Corporate Information
Our principal executive offices are located at
12F., No. 3, Xingnan St., Nangang Dist., Taipei City 115001, Taiwan, and our telephone number is +(886) 2382-0330. Our website address
is www.ydesgroup.com . Information on our website is not part of this prospectus. We have included our website address as an inactive
textual reference only. The information on or accessible through our website is not part of this prospectus supplement and the accompanying
prospectus.
1
THE OFFERING
Ordinary Shares offered by the Selling Shareholders |
|
Up to 58,571,199 Ordinary Shares by the Selling Shareholders, 3,136,056
Ordinary Shares issuable upon exercise of the Private Warrants. |
|
|
|
Ordinary Shares offered by us |
|
11,436,270 Ordinary Shares issuable upon exercise of the Public Warrants. |
|
|
|
Ordinary Shares outstanding (as of May 18, 2026) |
|
70,831,346 Ordinary Shares |
|
|
|
Ordinary Shares outstanding after giving effect to the issuance of the shares registered hereunder: |
|
85,403,672 Ordinary Shares (assuming the full exercise of the Warrants) |
|
|
|
Use of proceeds |
|
We will not receive proceeds from the sale of Ordinary Shares in this offering. We will receive proceeds from any cash exercise of the Warrants, which, if exercised in cash with respect to all of the 14,572,326 Ordinary Shares offered hereby, would result in gross proceeds to us of a maximum of $167,581,749; however, we cannot predict when and in what amounts or if the Warrants will be exercised and it is possible that the Warrants may expire and never be exercised, in which case we would not receive any cash proceeds. |
|
|
|
Terms of this offering |
|
The Selling Shareholders, including their transferees, donees, pledgees, assignees and successors-in-interest, may sell, transfer or otherwise dispose of any or all of the Ordinary Shares offered by this prospectus from time to time on The Nasdaq Global Market or any other stock exchange, market or trading facility on which the shares are traded or in private transactions. The Ordinary Shares may be sold at fixed prices, at market prices prevailing at the time of sale, at prices related to prevailing market price or at negotiated prices. |
|
|
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Nasdaq symbol |
|
Our Ordinary Shares are listed on the Nasdaq Global Market under the symbol “YDES”. |
|
|
|
Risk Factors |
|
Investing in our securities involves a high degree of risk and purchasers of our securities may lose their entire investment. See “Risk Factors” for a discussion of factors you should carefully consider before deciding whether to invest in our securities. |
2
Summary of Risk Factors:
The following is a summary of certain, but not
all, of the risks that could adversely affect our business, operations and financial results. Additional discussion of the risks summarized
in this risk factor summary, and other risks that we face, can be found below, after this summary, and should be carefully considered,
together with other information in our other filings with the SEC before making an investment decision in our securities.
Risks Related to Our Business and Operations
● | YD
Bio’s future success depends, in part, on its ability to develop new products and new technologies and maintain technologies, facilities
and equipment to meet the needs of its customers. |
● | We
are dependent on our license agreements with third parties that are critical to our business. |
● | Our
third-party manufacturers may not have the manufacturing and processing capacity to meet the production requirements of consumer demand
or clinical testing in a timely manner. |
|
● |
YD Bio needs to expand to succeed, but it may not be able to successfully manage its growth |
|
● |
The execution of our strategy to drive growth through strategic acquisitions and partnerships is subject to various risks which could adversely affect our business, financial condition, results of operations and our prospects. |
|
● |
Substantial doubt exists regarding our ability to continue as a going concern, and YD Bio may need additional financing to implement its business plan. |
|
● |
If we are unable to establish effective sales, marketing, and distribution capabilities or enter into agreements with third parties with such capabilities, we may not be successful in commercializing our cancer blood tests or medical products if and when they are cleared or approved. |
|
● |
If we are unable to convince physicians of the benefits of our proposed cancer blood tests or medical products, we may incur delays or additional expense in our attempt to establish market acceptance. |
|
● |
YD Bio may fail to comply with regulations governing the sales of drugs and medical related materials. |
|
● |
A failure of YD Bio’s information technology systems, or an interruption in its operation due to internal or external factors including cyber-attacks, could have a material adverse effect on its business, reputation, financial condition or results of operations. |
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● |
The success of YD Bio depends upon certain key personnel, including product development and engineering staff. |
|
● |
The loss of sales, or significant reductions in orders from, any major customers may have a material adverse effect on us. |
|
● |
YD Bio’s management team has limited experience managing a public company. |
Regulatory Risks
● | Securing
FDA clearance or approval of our products and products we may develop, license, or acquire is a complex process requiring substantial
time, commitment of resources and expense without any assurance that the FDA will grant such clearance or approval. |
● | Failure
to obtain regulatory approvals in foreign jurisdictions will prevent us from marketing our products internationally. |
| ● | Many aspects of our business are subject to complex, intertwined, costly
and/or burdensome federal health care laws and regulations which may be open to interpretation and be subject to varying levels of discretionary
enforcement. If we fail to comply with these laws and regulations, we could face substantial penalties and our business, operations and
financial condition could be adversely affected. |
● | The
regulations that govern pricing and reimbursement for new products vary widely from country to country, and may adversely affect the
pricing, coverage and reimbursement rates of our products in other countries. |
● | Healthcare
reform measures could hinder or prevent our products’ commercial success. |
● | We
face uncertainty related to healthcare reform, pricing, coverage, and reimbursement, which could reduce our revenue. |
● | Our
products may cause serious adverse side effects or even death or have other properties that could delay or prevent their regulatory clearance
or approval, limit the commercial desirability of an approved label or result in significant negative consequences following any marketing
clearance or approval. |
|
● |
Our medical products may in the future be subject to product recalls that could harm our reputation, business, and financial results. |
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● |
Our medical products may in the future be subject to import alerts. |
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● |
If our medical products cause or contribute to a death or a serious injury, or malfunction in certain ways, we will be subject to medical device or drug reporting regulations, which can result in voluntary corrective actions or agency enforcement actions. |
|
● |
Product liability lawsuits against us could cause us to incur substantial liabilities and to limit commercialization of our products. |
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● |
Compliance with the HIPAA security, privacy and breach notification regulations may increase our costs. |
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● |
Our employees, independent contractors, consultants, commercial partners, and vendors may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements. |
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● |
Recent reductions in force across the U.S. federal government may impact our ability to secure necessary meetings to discuss, obtain guidance on, and receive clearances or approvals for our products. |
Industry and Market Risks
|
● |
The development of new medical products and services requires significant investments, and we may experience difficulties that delay or prevent its success. |
|
● |
Even if our cancer blood tests or medical products receive marketing clearance or approval, they may fail to achieve the degree of market acceptance by physicians, patients, third-party payors and others in the medical community necessary for commercial success. |
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● |
We face intense competition in the biotechnology and pharmaceutical/medical device industries. |
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● |
The market for our proposed tests and products is competitive and rapidly changing, and new cancer detection technologies that may be developed by others could impair our ability to maintain and grow our business and remain competitive. |
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● |
Negative developments in the field of exosomes could damage public perception of any product candidates that we develop, which could adversely affect our ability to conduct our business or obtain regulatory clearances or approvals for such product candidates. |
|
● |
The sizes of the markets for our current and future products have not been established with precision and may be smaller than we estimate. |
Risks Related to Taiwan
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● |
Your investment may be adversely affected by the strained relations between Taiwan and China. |
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● |
Currency fluctuations and restrictions on currency exchange may adversely affect our business. |
3
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● |
Currency fluctuations and restrictions on currency exchange may adversely affect our business. |
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● |
Due to our major subsidiary’s location in Taiwan, natural disasters and other events outside of our control, including fires, floods, typhoons, earthquakes, power loss, telecommunications failures, wars, riots, or terrorist attacks, may seriously disrupt our business operations. |
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● |
You may not be able to enforce a judgment of a foreign court in Taiwan |
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● |
Any further economic downturn or decline in the growth of the population in Taiwan may materially and adversely affect YD Bio’s financial condition, results of operations, and prospects. |
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● |
Uncertainties about the “trade war” between the United States and Mainland China may materially and adversely affect our results of operations. |
Risks Related to Intellectual Property Rights
|
● |
YD Bio may incur substantial litigation costs related to intellectual property, and if YD Bio is unable to protect its intellectual property, it may lose its competitive advantage. |
|
● |
Intellectual property rights do not necessarily address all potential threats to our competitive advantage. |
|
● |
Changes in patent law in the United States and other jurisdictions could diminish the value of patents in general, thereby impairing our ability to protect our diagnostic tests and therapeutic product candidates. |
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● |
Obtaining and maintaining patent protection depends on compliance with various procedural, document submissions, fee payment, and other requirements imposed by governmental patent agencies, and our patent protection could be reduced or eliminated for non-compliance with these requirements. |
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● |
Patent terms may be inadequate to protect our competitive position on our diagnostic tests or therapeutic product candidates for an adequate amount of time. |
|
● |
Issued patents covering our product candidates could be found invalid or unenforceable if challenged in court or the USPTO. |
|
● |
YD Bio’s efforts to avoid the patent, trademark, and copyright rights of others may not provide notice to it of potential infringements in time to avoid investing in product development and promotion that must later be abandoned if suitable license terms cannot be reached. |
General Tax Risk Factors
|
● |
Unanticipated changes in effective tax rates or adverse outcomes resulting from examination of YD Bio’s income or other tax returns could adversely affect its financial condition and results of operations. YD Bio may be subject to income taxes, and its tax liabilities will be subject to the allocation of expenses in differing jurisdictions. |
|
● |
The IRS may not agree that YD Bio should be treated as a non-U.S. corporation for U.S. federal income tax purposes, and Section 7874 of the Code contains rules that may cause a non-U.S. corporation to be treated as a U.S. corporation, which could subject YD Bio to substantial U.S. tax liability. |
|
● |
The IRS may take the position that Section 367(a) of the Code requires a U.S. Holder to recognize gain with respect to the exchange of shares of Breeze Common Stock for Ordinary Shares pursuant to the Merger. |
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● |
If YD Bio were a passive foreign investment company (“PFIC”) for United States federal income tax purposes for any taxable year, U.S. Holders of Ordinary Shares could be subject to adverse United States federal income tax consequences, such as taxation at the highest marginal ordinary income tax rates on capital gains and on certain actual or deemed distributions. |
Risks Related to Ownership of Our Securities
|
● |
Future sales of a substantial amount of our Ordinary Shares may cause our stock price to decline. |
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● |
Our stock price has been and may continue to be volatile and may result in substantial losses. |
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● |
We are a “controlled company” as defined under the NASDAQ Stock Market Rules. As a result, we may rely on exemptions from certain corporate governance requirements and holders of our Ordinary Shares may not have the same protections generally available to stockholders of other companies listed on stock exchanges in the United States. |
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● |
Our Ordinary Shares may be thinly traded and you may be unable to sell at or near ask prices or at all if you need to sell your shares to raise money or otherwise desire to liquidate your shares. |
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● |
If securities or industry analysts do not publish research or reports about us, or publish negative reports, our share price and trading volume could decline. |
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● |
There are no current plans to pay cash dividends. |
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You may face difficulties in protecting your interests, and your ability to protect your rights through U.S. courts may be limited, because YD Bio is incorporated under Cayman Islands law. |
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We are a foreign private issuer within the meaning of the rules under the Exchange Act, and as such we are exempt from certain provisions applicable to United States domestic public companies. |
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Because we are a foreign private issuer and are exempt from certain NASDAQ corporate governance standards applicable to U.S. issuers, you may have less protection than you would have if we were a domestic issuer. |
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If YD Bio cannot continue to satisfy the listing requirements and other rules of the Nasdaq Global Market, our securities may be delisted, which could negatively impact the price of its securities and your ability to sell them. |
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We are an “emerging growth company” within the meaning of the Securities Act, and if we take advantage of certain exemptions available to emerging growth companies, this could make it less attractive to investors. |
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We will incur increased costs as a result of being a public company, particularly after we cease to qualify as an “emerging growth company.” |
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We are obligated to develop and maintain proper and effective internal control over financial reporting. |
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We may not complete our analysis of our internal control over financial reporting in a timely manner, or these internal controls may not be determined to be effective, which may adversely affect investor confidence in our Company and, as a result, the value of our Ordinary Shares. |
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If the PCAOB Is Unable to Inspect or Investigate Completely Our Independent Registered Public Accounting Firm, Trading in Our Common Stock Could Be Prohibited Under the Holding Foreign Companies Accountable Act. |
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If YD Bio fails to implement and maintain an effective system of internal controls, YD Bio may be unable to accurately report its results of operations, meets its reporting obligations or prevent fraud, and investor confidence and the market price of YD Bio’s Ordinary Shares may be materially and adversely affected. |
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YD Bio’s Public Warrants and Private Warrants are exercisable for Ordinary Shares, which would increase the number of shares eligible for future sales and resale in the public market and result in dilution to our shareholders. |
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YD Bio’s warrant agreement designates the courts of the State of New York located in the County of New York or the United States District Court for the Southern District of New York as the sole and exclusive forum. |
4
RISK FACTORS
Investing in our securities includes a high
degree of risk. Prior to making a decision about investing in our securities, you should consider carefully the specific factors discussed
below, together with all of the other information contained in this prospectus. If any of the following risks actually occurs, our business,
financial condition, results of operations and future prospects would likely be materially and adversely affected. This could cause the
market price of our Ordinary Shares to decline and could cause you to lose all or part of your investment.
You should consider carefully the following
risk factors, together with all of the other information included in this prospectus. If any of the following risks, either alone or taken
together, or other risks not presently known to us or that we currently believe to not be significant, develop into actual events, then
our business, financial condition, results of operations or prospects could be materially adversely affected. If that happens, the market
price of our common stock could decline, and shareholders may lose all or part of their investment.
Risks Related to Our Business and Operations
YD Bio’s future success depends, in
part, on its ability to develop new products and new technologies and maintain technologies, facilities and equipment to meet the needs
of its customers.
Many of the markets in which YD Bio operates are
characterized by rapidly changing technologies. The product, program and service needs of its customers change and evolve regularly. YD
Bio’s success in the cancer detection industry depends upon its ability to identify emerging technological trends, develop technologically
advanced, innovative and cost-effective products and services and market these products and services to its customers in the U.S. and
internationally. In addition, YD Bio’s ability to develop innovative and technologically advanced products depends on continued
funding for, and investment in, research and development projects. YD Bio’s success also depends on its continued access to assured
suppliers of important technologies and components and its ability to provide the people, technologies, facilities, equipment and financial
capacity needed to deliver those products and services with maximum efficiency. YD Bio’s customers and markets also increasingly
require it to be agile and efficient, digitally enabled and able to harness integrated digital technologies and capabilities to deliver
solutions with the agility and affordability that its customers seek. If YD Bio is unable to continue to develop new products and technologies
in a timely fashion, and successfully to effect digital transformation, or if YD Bio fails to achieve market acceptance more rapidly than
its competitors, it may be unable to maintain a competitive position and YD Bio’s future success could be materially adversely affected.
If it fails to maintain its competitive position, YD Bio could lose a significant amount of future business to its competitors, which
also could have a material adverse effect on its ability to generate favorable financial results and maintain market share and on its
financial position, results of operations and/or cash flows.
We are dependent on our license agreements
with third parties that are critical to our business.
Termination of our current or future partner agreements
could cause us to have to negotiate new or amended agreements with less favorable terms or cause us to lose our rights under the original
agreements. In the case of a loss of intellectual property rights relating to technology used in our systems, we may not be able to continue
to manufacture certain components for our product or for our operations or may experience disruption to our manufacturing processes as
we test and re-qualify any potential replacement technology. Even if we retain the licenses, the licenses may not be exclusive with respect
to such component design or technologies, which could aid our competitors and have a negative impact on our business.
EG BioMed
We are highly dependent on the intellectual property
licensed from EG BioMed, pursuant to which we license DNA methylation analysis technology for application in pancreatic cancer and breast
cancer (the “ EG BioMed License Agreements ”). Other products or services we may develop also may rely on the same technology.
Any disruption or discontinuation of the EG BioMed
License Agreements prior to their expiration can have a significant impact on the revenue, cash flow and future viability of YD Bio.
5
In the event that we default in the payment of
any amount when due under the EG BioMed License Agreements, and such amount is not paid within 30 days of notice of nonpayment, EG BioMed
may terminate the exclusivity of the licenses or terminate the EG BioMed License Agreements in full. The loss of the licensed rights would
prevent us from marketing and selling our DNA methylation analysis technology and any other products or services we may develop based
on the same underlying technology. Any termination of the exclusivity of the licenses could damage our competitive position within the
marketplace. In addition, the EG BioMed License Agreements impose significant obligations on us. We are required to notify EG BioMed in
writing on a quarterly basis of our total sales revenue for sales of the products using EG BioMed’s licensed patents and technology
and pay a 7% and 20% product royalty on our total sales revenue each quarter under each license agreement. Additionally, we are required
to pay patent application fees (if any) and patent maintenance fees for the licensed patents and technology, and any patents derived from
the licensed patents and technology. Accordingly, we could be obligated to pay fees or other amounts to EG BioMed even though we have
generated no or limited revenue.
3D Global
We are also highly dependent on the intellectual
property licensed from 3D Global, pursuant to which we have licensed patented and proprietary technology to develop new drugs for dry
eye disease, glaucoma, and corneal repair (the “ 3D Global License Agreement ”). In the event that we default in the
payment of any amount when due under the 3D Global License Agreement, and such amount is not paid within 30 days of notice of nonpayment,
3D Global may terminate the exclusivity of the license or terminate the agreement in full. Furthermore, if we breach the agreement, including
by failing to use our commercially best efforts to achieve the milestones prescribed by the agreement, and we do not cure such breach
within the applicable time period, in addition to seeking damages, 3D Global could terminate the agreement. Any termination of the 3D
Global License Agreement resulting in the loss of the licensed rights would prevent us from marketing and selling our drugs related to
dry eye disease, glaucoma, and corneal repair, and any other products or services we may develop based on the same underlying technology.
Any termination of the exclusivity of the license could damage our competitive position within the marketplace.
In addition, the 3D Global License Agreement imposes
significant obligations on us. We are required to make milestone payments, patent application fees (if any), patent maintenance fees,
and project development fees. Accordingly, we could be obligated to pay fees or other amounts to 3D Global even though we have generated
no or limited revenue.
Our third-party manufacturers may not have
the manufacturing and processing capacity to meet the production requirements of consumer demand or clinical testing in a timely manner.
YD Bio relies on third-party suppliers for most
of the manufacturing necessary to produce its products. The failure of suppliers to supply manufacturing components in a timely manner
or on commercially reasonable terms could delay YD Bio’s plans to expand its business and otherwise disrupt production schedules
and increase manufacturing costs.
Our capacity to commercialize our products and
conduct any clinical trials required for additional regulatory clearances or approvals will depend in part on our ability to manufacture
or provide our products on a large scale, at a competitive cost and in accordance with regulatory requirements. We have no direct experience
in large-scale product manufacturing, nor do we currently have the internal resources or facilities to manufacture most of our products
on a commercial scale. Accordingly, we expect to rely on third party manufacturers. We cannot guarantee that our third-party manufacturers
will be able to establish or increase production and processing capacity in a timely or cost-effective manner, or at all. Our third-party
manufacturers may encounter delays or other difficulties in establishing or in increasing production or processing capacity at any time
that could result in delays in the commercialization of our products, in the distribution of our products, in the clinical trials for
our products or in the submissions for additional regulatory clearances or approvals for our products. Any such delays could have an adverse
effect on our ability to obtain regulatory clearance or approval for, commercialize and secure sales of our products.
6
YD Bio needs to expand to succeed, but it
may not be able to successfully manage its growth.
For YD Bio to succeed, it needs to experience
significant expansion. Although management is experienced in the industry and in operating companies at a similar stage of growth, there
can be no assurance that it will achieve this expansion. This expansion, if accomplished, may place a significant strain on YD Bio’s
management, operational and financial resources. To manage any material growth, YD Bio will be required to continue to implement operational
and financial systems, procedures and controls. It also will be required to expand its finance, administrative and operations staff. There
can be no assurance that YD Bio’s current and planned personnel, systems, procedures and controls will be adequate to support its
future operations at any increased level. YD Bio’s failure to manage growth effectively could have a material adverse effect on
its business, results of operations and financial condition.
The execution of our strategy to drive growth
through strategic acquisitions and partnerships is subject to various risks which could adversely affect our business, financial condition,
results of operations and our prospects.
YD Bio continues to pursue growth and expansion
through strategic acquisition, partnerships and similar transactions. These transactions could be material to our business, financial
condition and results of operations. However, there can be no assurance that we will be able to consummate any such transactions on commercially
reasonable terms or at all, nor can there be any assurance that the Company will be able to realize the anticipated benefits of such transactions
even if consummated.
The identification of suitable acquisition candidates
and strategic partners can be difficult, time-consuming, and costly, and we may enter into negotiations for transactions that are not
ultimately consummated, diverting significant costs and management’s time and attention. Furthermore, any such transactions we announce
could be viewed negatively by partners, investors or other stakeholders, and the process of integrating an acquired company, business,
new processes or technology may create unforeseen operating difficulties and expenditures. If we are unable to successfully address any
of these risks, our business, results of operations, financial condition and our prospects could be materially adversely affected.
Substantial doubt exists regarding our ability
to continue as a going concern, and YD Bio may need additional financing to implement its business plan.
YD Bio continues to expand the scope of its business
and product offerings. The development of YD Bio’s business requires, and will continue to require, significant expenditures, a
substantial portion of which must be made before any material profits may be realized. YD Bio incurred recurring losses and negative cash
flows from operations for the years ended December 31, 2025 and 2024, and will likely continue to experience significant negative cash
flow and operating losses until an adequate revenue base is established. These conditions raise substantial doubt about the Company’s
ability to continue as a going concern.
Accordingly, YD Bio will require additional funds
to satisfy outstanding payables, fund working capital, and implement our business plan. Management plans to finance our cash needs through
public or private equity offerings or debt financings and to continue developing strategies for our operations; however, there is no assurance
that we will be able to raise additional capital, generate revenues, or achieve profitability. Our consolidated financial statements have
been prepared on a going concern basis and do not include any adjustments that might result from the outcome of this uncertainty.
7
YD Bio may not be able to secure additional debt
or equity financing in a timely basis or on favorable terms or at all. Such financing could result in substantial dilution of the equity
interests of existing shareholders. YD Bio has no commitments for any additional financing should the need arise. If YD Bio is unable
to secure any necessary additional financing, it may need to delay expansion plans, conserve cash, and reduce operating expenses. There
is no assurance that any additional financing will be sufficient, that the financing will be available on terms favorable to YD Bio or
to existing shareholders and at such times as required, or that YD Bio will be able to obtain the additional financing required for the
continued operation and growth of YD Bio’s business. Any debt financing obtained by YD Bio in the future could involve restrictive
covenants relating to its capital raising activities and other financial and operational matters, which may make it more difficult for
it to obtain additional capital and to pursue business opportunities. If YD Bio raises additional funds through further issuances of equity,
convertible debt securities, or other securities convertible into equity, YD Bio’s existing shareholders could suffer significant
dilution in their percentage ownership of our company, and any new equity securities it issues could have rights, preferences, and privileges
senior to those of holders of its Ordinary Shares. If YD Bio is unable to obtain adequate financing or financing on terms satisfactory
to it, when YD Bio requires it, its ability to grow or support its business and to respond to business challenges could be significantly
limited.
If we are unable to establish effective
sales, marketing, and distribution capabilities or enter into agreements with third parties with such capabilities, we may not be successful
in commercializing our cancer blood tests or medical products if and when they are cleared or approved.
We do not have a sales or marketing infrastructure
and have limited experience in the sale, marketing, or distribution of our cancer blood tests and medical products. To achieve commercial
success for any cancer blood test or medical product for which we obtain marketing clearance or approval, we will need to successfully
establish and maintain relationships directly and with third parties to perform sales and marketing functions.
Factors that may inhibit our efforts to commercialize
our cancer blood tests or medical products on our own include:
● | our
inability to recruit, train, and retain adequate numbers of effective sales, technical support, and marketing personnel; |
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inability of sales personnel to obtain access to or educate physicians on the benefits of our cancer blood tests or medical products; |
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the lack of complementary cancer blood tests or medical products to be offered by sales personnel, which may put us at a competitive disadvantage relative to companies with more extensive cancer blood tests or medical product lines; |
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unforeseen costs and expenses associated with creating an independent sales, technical support, and marketing organization; and |
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the inability to obtain sufficient coverage and reimbursement from third-party payors and governmental agencies. |
If we do not establish sales, marketing, and distribution
capabilities successfully, either on our own or in collaboration with third parties, we will not be successful in commercializing our
cancer blood tests or medical products.
If we are unable to convince physicians
of the benefits of our proposed cancer blood tests or medical products, we may incur delays or additional expense in our attempt to establish
market acceptance.
Broad use of our proposed cancer blood tests and
products may require pathology laboratories and physicians to be informed regarding our proposed cancer blood tests and products and their
intended benefits. Inability to carry out this physician education process may adversely affect market acceptance of our proposed cancer
blood tests or medical products. We may be unable to timely educate physicians regarding our proposed cancer blood tests or medical products
in sufficient numbers to achieve our marketing plans or to achieve acceptance of our cancer blood tests or medical products. Any delay
in physician education may materially delay or reduce demand for our cancer blood tests or medical products. In addition, we may expend
significant funds toward physician education before any acceptance or demand for our proposed cancer blood tests or medical products is
created, if at all.
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YD Bio may fail to comply with regulations
governing to the sales of drugs and medical-related materials.
Pharmaceutical/medical device companies are required
to comply with extensive regulations and hold a number of permits and licenses to carry on their business. Our ability to obtain and maintain
these regulatory approvals will be subject to additional burdens placed by government regulation from time to time.
The pharmaceutical/medical device industry is
heavily regulated by the government authorities, covering the clearance, approval, registration, production, packaging, licensing, distribution,
storage, sales and manufacture and promotion of medicinal products and medical devices in various jurisdictions. In recent years, the
regulatory framework regarding the pharmaceutical/medical device industry has undergone significant changes as the authorities tend to
implement stricter requirements to ensure effect and safety of medicinal products and medical devices, and we expect that such trends
will continue in the future. Any changes could lead to higher compliance costs for our current businesses of sales of pharmaceutical products
and medical devices, as well as potential delays or obstacles in the successful development and commercialization of our drug/medical
device candidates and could reduce the benefits we receive from drug/medical device development and manufacturing. In addition, even if
we receive regulatory approval or clearance from competent authorities for any of our pharmaceutical products or medical devices, we will
be subject to ongoing obligations and continued regulatory review in order to maintain the clearance or approval, which may result in
significant additional expenses if new requirements are implemented. Any failure by us or our collaborators to maintain compliance with
applicable laws and regulations or obtain and maintain required licenses and permits may result in administrative fines and/or the suspension
or termination of our business activities. We believe our strategy and approach is aligned with the relevant government regulatory requirements
and policies, but we cannot ensure that our strategy and approach will continue to be aligned.
A failure of YD Bio’s information
technology systems, or an interruption in its operation due to internal or external factors including cyber-attacks, could have a material
adverse effect on its business, reputation, financial condition or results of operations.
YD Bio’s operations depend on its ability
to protect its information systems, computer equipment, and information databases from systems failures. YD Bio relies on its information
technology systems generally to manage the day-to-day operations of its business, operate elements of its manufacturing facility, manage
relationships with its customers, fulfill customer orders, and maintain its financial and accounting records. Failure of YD Bio’s
information technology systems could be caused by internal or external events, such as incursions by intruders or hackers, computer viruses,
cyber-attacks, failures in hardware or software, or power or telecommunication fluctuations or failures.
There have been an increasing number of cyber
security incidents affecting companies around the world, which have caused operational failures or compromised sensitive corporate data.
Although YD Bio does not believe its systems are at a greater risk of cyber security incidents than other similar organizations, such
cyber security incidents may result in: the loss or compromise of customer, financial, or operational data; disruption of billing, collections,
or normal operating activities; disruption of electronic monitoring and control of operational systems; and delays in financial reporting
and other management functions. Possible impacts associated with a cyber-security incident may include, among others: remediation costs
related to lost, stolen, or compromised data; repairs to data processing systems; increased cyber security protection costs; reputational
damage; and adverse effects on YD Bio’s ability to comply with applicable privacy and other laws and regulations. The failure of
YD Bio’s information technology systems to perform as anticipated for any reason could disrupt its business and result in numerous
adverse consequences, including reduced effectiveness and efficiency of operations or increased costs, any of which could have a material
adverse effect on its business, operating results and financial condition. Any technology and information security processes and disaster
recovery plans YD Bio uses to mitigate its risk to these vulnerabilities may not be adequate to ensure that its operations will not be
disrupted should such an event occur.
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The success of YD Bio depends upon certain
key personnel, including product development and engineering staff.
The success of YD Bio will depend in large part
upon the skill and expertise of certain key personnel, including product development and engineering staff. The competition for qualified
management and such key personnel is intense. There can be no assurance that any such individuals will continue to be associated with
or employed by YD Bio throughout their respective lives. The loss of services of one or more of such key personnel or the inability to
hire, train and retain additional such key personnel could delay the development and sale of its products, disrupt its business, and interfere
with its ability to execute our business plan. The loss of key personnel could also have a material adverse effect on YD Bio.
The loss of sales, or significant reductions
in orders from, any major customers may have a material adverse effect on us.
YD Bio’s top three corporate customers —
Novartis, Zuelling and Alcon — accounted for approximately 53.7% of the company’s total revenue for the year ended December
31, 2025. In any one reporting period, our major customers may contribute an even larger percentage of our consolidated sales. The loss,
or any significant reduction in orders from, any of these customers, including reductions due to economic, market or competitive conditions
or regulatory requirements, would likely have a material adverse effect on our business, financial condition and results of operations.
None of our significant customers has entered into an agreement with us requiring it to purchase any minimum quantity of our products.
Attempts to lessen the adverse effect of any loss
or reduction of sales through the rapid addition of new customers would be difficult because customers typically require lengthy qualification
periods prior to placing volume orders with a new supplier. Our future success will continue to depend upon: our ability to maintain relationships
with existing key customers; our ability to attract new customers and satisfy any required qualification periods; and our ability to introduce
new products in a timely manner.
YD Bio’s management team has limited
experience managing a public company.
The members of YD Bio’s management team
have limited or no experience managing a publicly-traded company, interacting with public company investors, and complying with the increasingly
complex laws, rules and regulations that govern public companies. There are significant obligations it will now be subject to relating
to reporting, procedures and internal controls, and will require significant attention from management and could divert their attention
away from the day-to-day management of YD Bio’s business, which could adversely affect its business, financial condition and operating
results. YD Bio may not have adequate personnel with the appropriate level of knowledge, experience, and training in the accounting policies,
practices or internal controls over financial reporting required of public companies in the U.S. The development and implementation of
the standards and controls necessary for YD Bio to achieve the level of accounting standards required of a public company in the U.S.
may require costs greater than expected. It is possible that YD Bio will be required to expand its employee base and hire additional
employees to support its operations as a public company, which will increase its operating costs in future periods.
Regulatory Risks
Securing FDA clearance or approval of our
products and products we may develop, license, or acquire is a complex process requiring substantial time, commitment of resources and
expense without any assurance that the FDA will grant such clearance or approval.
We have not yet obtained FDA clearance or approval
for any of our cancer detection test products. In March 2025, a U.S. federal district court held that Laboratory Developed Tests (LDTs)
performed at the request of a healthcare provider (HCP) (collectively, HCP LDTs) are not medical devices and, as such, the FDA does not
have jurisdiction over them. Accordingly, such tests do not currently require FDA clearance or approval. This decision has not been appealed
by the government, and the deadline to do so has passed. The March 2025 ruling did not explicitly address DTC LDTs. It is therefore arguable
that the court’s order applies only to LDTs for which there is some involvement from a HCP ( i.e ., HCP LDTs). This means that
the FDA may view DTC LDTs as subject to the FDA’s full regulatory oversight and all applicable regulatory requirements.
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YD Bio’s commercially available assay is
currently offered as an LDT performed solely at the request of a prescribing HCP ( i.e ., it is not a DTC LDT). On March 31, 2026,
the Company and EG BioMed launched the EG Telehealth Platform, an online portal integrated with an independent telehealth physician network.
Although this platform allows patients to initiate testing online, all orders will still be reviewed and authorized by a licensed HCP
prior to sample collection ( i.e ., such tests are not DTC LDTs). Should YD Bio eventually receive FDA clearance or approval for
our tests, it still does not intend to offer them as fully DTC products, but instead intend to offer them as products that require an
order from a licensed HCP ( i.e ., again, such tests will not be DTC LDTs).
It is possible — though unlikely, given
that the government has not appealed the March 2025 ruling, and the deadline to do so has passed — that the FDA could determine
that tests initiated by consumers are still subject to the Agency’s regulatory oversight, despite the involvement of a HCP and the
March 2025 ruling. In this event, YD Bio may be required to obtain regulatory approval or clearance for its test products.
By statute, all new medical devices are initially
placed in Class III. Nonetheless, and based on the FDA’s current practices, YD Bio expects that if it is required to obtain regulatory
clearance or approval for its cancer detection tests, such tests will ultimately be regulated as Class II devices, requiring either a
510(k) notification or, more likely, a de novo application. However, it is possible that the FDA may determine that these products
should be regulated as Class III medical devices under 21 U.S.C. § 360c (Section 513 of the FDCA). Class III devices are those that
sustain or support life, are implanted, or present potential risks of serious illness or injury. These products typically require a PMA
to demonstrate safety and effectiveness before they can be marketed. Some of our products may be subject to approval under a PMA, the
most stringent FDA premarket medical device scientific and regulatory review process, which requires sufficient valid scientific evidence
in addition to general and special controls to assure that it is safe and effective for its intended use(s).
The process of securing FDA PMA approval is complex
and requires substantial time, commitment of resources and expense. The process may take many years to complete, and approval may never
be obtained. It requires us to demonstrate with substantial evidence, gathered in preclinical and large, complex well-controlled clinical
trials, that the planned product is safe and effective for use as intended. We may not conduct such a trial or may not successfully enroll
or complete any such trial, if required. Any products we may develop may not achieve the required primary endpoint in the clinical trial
and may not receive regulatory approval. We must also demonstrate that the manufacturing facilities, processes, and controls for any products
we may develop are adequate.
We may need to seek approval of a de novo
classification request from FDA. Under the de novo classification process, a manufacturer whose device is not eligible for a 510(k)
Notification or whose device under the FDCA would otherwise be automatically classified into Device Class III and require the submission
and approval of a PMA prior to marketing is able to request down-classification of the device to Class I or Class II on the basis that
the device presents a low or moderate risk. If the FDA grants the de novo classification request, the applicant will receive authorization
to market the device. This device type may be used subsequently as a predicate device for future 510(k) submissions.
Even if our products are not required to obtain
a PMA or de novo classification, they may instead require a 510(k) Notification. In the 510(k) clearance process, before a device
may be marketed, the FDA must determine that a proposed device is “substantially equivalent” to a legally marketed “predicate”
device, which includes a device that has been previously cleared through the 510(k) process, a device that was legally marketed prior
to May 28, 1976 (pre-amendments device), a device that was originally on the U.S. market pursuant to an approved PMA and later down-classified,
or a 510(k)-exempt device. To be “substantially equivalent,” the proposed device must have the same intended use as the predicate
device, and either have the same technological characteristics as the predicate device or have different technological characteristics
and not raise different questions of safety or effectiveness than the predicate device. Clinical data are sometimes required to support
substantial equivalence.
There can be no assurance that FDA will ever permit
us to market any new product or service that we develop. Also, any regulatory clearance or approval of a product, once obtained, may be
withdrawn. If we are unable to successfully obtain or maintain regulatory clearance or approval to sell any products in the U.S. we may
develop, our business, financial condition, results of operations and growth prospects could be adversely affected. Furthermore, delays
in receipt of clearances or approvals could materially delay or prevent us from commercializing our products and services or result in
substantial additional costs that could decrease our profitability. Even if we were to successfully obtain and maintain regulatory clearance
or approval for a product, any clearance or approval might contain significant limitations related to use restrictions for specified age
groups, warnings, precautions or contraindications, or may be subject to burdensome post-approval study or risk management requirements.
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FDA can delay, limit, or deny clearance or approval
of a future product for many reasons, including but not limited to:
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a future product may not be deemed to be safe and effective; |
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FDA officials may not find the data from clinical and preclinical studies sufficient; |
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FDA may not approve our or our third-party manufacturer’s processes or facilities; or |
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FDA may change its clearance or approval policies or adopt new regulations. |
If any products we may develop fail to demonstrate
safety and efficacy, or otherwise do not gain regulatory clearance or approval, our business and results of operations will be materially
and adversely harmed.
Failure to obtain regulatory approvals in
foreign jurisdictions will prevent us from marketing our products internationally .
We intend to seek distribution and marketing partners
for one or more of the products we are developing in foreign countries. The approval procedures vary among countries and can involve additional
clinical testing, and the time required to obtain approval may differ from that required to obtain FDA clearance or approval. Moreover,
clinical studies or manufacturing processes conducted in one country may not be accepted by regulatory authorities in other countries.
Clearance or approval by FDA does not ensure clearance or approval by regulatory authorities in other countries, and approval by one or
more foreign regulatory authorities does not ensure clearance or approval by regulatory authorities in other foreign countries or by FDA.
In addition, a failure or delay in obtaining regulatory approval in one country may have a negative effect on the regulatory process in
others. The foreign regulatory approval process may include all of the risks associated with obtaining FDA clearance or approval. We may
not obtain foreign regulatory approvals on a timely basis, if at all. We may not be able to file for regulatory approvals and even if
we file, we may not receive necessary approvals to commercialize our products in any market.
Modifications to our cleared or approved products
may require new clearances or approvals, or may require us to cease marketing or recall the modified products until clearances are obtained.
For any product approved pursuant to a PMA, we
are required to seek supplemental approval for many types of changes to the approved product, for which we will need to determine whether
a PMA supplement or other regulatory filing is needed or whether the change may be reported via the PMA Annual Report. Similarly, any
modification to a 510(k)-cleared device that could significantly affect its safety or effectiveness, or that would constitute a major
change in its intended use, design, or manufacture, requires new 510(k) clearance or, possibly, approval of a new PMA. The same is true
for a device approved via the de novo pathway; any modification to a device approved via this pathway that could significantly
affect its safety or effectiveness, or that would constitute a major change of its intended use, design, or manufacture, may require a
new de novo classification or a new 510(k) Notification or even a PMA. If the FDA requires us to seek approvals or clearances for
modifications to our previously approved or cleared products, for which we concluded that new approvals or clearances are unnecessary,
we may be required to cease marketing or distribution of our products or to recall the modified product until we obtain the approval or
clearance, and we may be subject to significant regulatory fines or penalties. Foreign regulatory regimes may have comparable requirements,
which present the same or substantially similar risks.
Clinical trials necessary to support regulatory
submission will be expensive and could require the enrollment of large numbers of patients. Suitable patients may be difficult to identify
and recruit. Delays or failures in our clinical trials will prevent us from expanding our commercial efforts and will adversely affect
our business, operating results and prospects.
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Initiating and completing clinical trials necessary
to support regulatory submission will be time-consuming and expensive and their outcome uncertain. Moreover, the results of early clinical
trials are not necessarily predictive of future results, and any product we advance into clinical trials may not have favorable results
in early or later clinical trials.
Conducting successful clinical studies could require
the enrollment of large numbers of patients, and suitable patients may be difficult to identify and recruit. Patient enrollment in clinical
trials and completion of patient participation and follow-up depend on many factors, including the size of the patient population, the
nature of the trial protocol, the attractiveness of, or the discomforts and risks associated with, the treatments received by patients
enrolled as subjects, the availability of appropriate clinical trial investigators, support staff, and proximity of patients to clinical
sites and ability to comply with the eligibility and exclusion criteria for participation in the clinical trial and patient compliance.
For example, patients may be discouraged from enrolling in our clinical trials if the trial protocol requires them to undergo extensive
post-treatment procedures or follow-up to assess the safety and effectiveness of our products or if they determine that the treatments
received under the trial protocols are not attractive or involve unacceptable risks, discomforts or expenditures. Patients may also not
participate in our clinical trials if they choose to participate in contemporaneous clinical trials of competitive products. In addition,
patients participating in clinical trials may die before completion of the trial or suffer adverse medical events unrelated to investigational
products.
Development of sufficient and appropriate clinical
protocols to demonstrate safety and efficacy may be required and we may not adequately develop such protocols to support clearance and
approval. Further, FDA may require us to submit data on a greater number of patients than it originally anticipated and/or for a longer
follow-up period or change the data collection requirements or data analysis for any clinical trials. Delays in patient enrollment or
failure of patients to continue to participate in a clinical trial may cause an increase in costs and delays in the approval and attempted
commercialization of our products or result in the failure of the clinical trial. FDA may not consider our data adequate to demonstrate
safety and efficacy. Such increased costs and delays or failures could adversely affect our business, operating results and prospects.
We expect to depend on clinical investigators,
medical institutions, and contract research organizations (“CROs”) to perform the clinical trials. If these parties do not
successfully carry out their contractual duties or obligations or meet expected deadlines, or if the quality, completeness, or accuracy
of the clinical data they obtain is compromised due to the failure to adhere to our clinical protocols or for other reasons, our clinical
trials may have to be extended, delayed, or terminated. Many of these factors would be beyond our control. We may not be able to enter
into replacement arrangements without undue delays or considerable expenditures. If there are delays in testing or approvals as a result
of the failure to perform by third parties, our research and development costs would increase, and we may not be able to obtain regulatory
clearance or approval for our current products and any other products we may develop. In addition, we may not be able to establish or
maintain relationships with these parties on favorable terms, if at all. Each of these outcomes would harm our ability to market our current
products and any other products we may develop, license, or acquire, or to achieve sustained profitability.
The results of our clinical trials may not support
our product candidate claims or may result in the discovery of adverse side effects.
Even if any of our clinical trials are completed
as planned, it cannot be certain that study results will support product candidate claims or that FDA or foreign regulatory authorities
will agree with our conclusions regarding them. Success in pre-clinical evaluation and early clinical trials does not ensure that later
clinical trials will be successful, and we cannot be sure that the later trials will replicate the results of prior trials and pre-clinical
studies. The clinical trial process may fail to demonstrate that our product candidates are safe and effective for the proposed indicated
uses, which could cause us to abandon a product candidate and may delay development of others. Any delay or termination of our clinical
trials will delay the filing of our product submissions and, ultimately, our ability to commercialize our product candidates and generate
revenues. It is also possible that patients enrolled in clinical trials will experience adverse side effects that are not currently part
of the product candidate’s profile.
If our clinical studies do not satisfy providers,
payors, patients and others as to the reliability and performance of our tests, or any other product or service we may develop and seek
to commercialize, we may experience reluctance or refusal on the part of physicians to order, and third-party payors to pay for, such
test.
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If the validity of an informed consent for a clinical
trial of one of our products was to be challenged, we could be subject to fines, penalties, litigation, or regulatory sanctions, or other
adverse consequences, including invalidating or requiring us to repeat clinical trials which could negatively affect our business and
results of operations.
Our products are the subject of multiple clinical
trials, and we anticipate they will continue to be so in the future. We have implemented measures to ensure that data and biological samples
that we receive have been collected from, and any procedures that have been performed using our products have been on, subjects who have
provided appropriate informed consent. We also act as a sponsor of clinical trials in connection with the development of our tests, which
are frequently conducted in collaboration with different parties. We seek to receive approval from an ethical review board, or institutional
review board, or “IRB,” for projects that meet the definition of “human subjects research,” which includes review
and approval of processes for subject informed consent and authorization for use of personal information or waivers thereof. We could
conduct clinical trials in a number of different countries. When we utilize clinical research contractor or partner with other third parties,
we rely upon them to comply with the requirements to obtain the subject’s informed consent and to comply with applicable laws and
regulations. The collection of data and samples in many different countries results in complex legal questions regarding the adequacy
of informed consent and the status of genetic material under a large number of different legal systems. Those informed consents could
be challenged and prove invalid, unlawful, or otherwise inadequate for our purposes. Any such findings against us, could force us to stop
accessing or using data and samples or servicing or conducting clinical trials, which would hinder our product offerings or development.
We could also become involved in legal actions, which could consume our management and financial resources.
Our business and reputation will suffer if we
are unable to establish and comply with, stringent quality standards to assure that the highest level of quality is observed in the performance
of our tests.
Inherent risks are involved in providing and marketing
cancer detection tests and related services. Patients and HCPs rely on us to provide accurate clinical and diagnostic information that
may be used to make critical healthcare decisions. As such, users of our tests may have a greater sensitivity to errors than users of
some other types of products and services.
We must maintain top service standards and FDA-mandated
and other quality controls. Past or future performance or accuracy defects, incomplete or improper process controls, excessively slow
turnaround times, unanticipated uses of our tests, or mishandling of samples or test results (whether by us, patients, HCPs, courier delivery
services or others) can lead to adverse outcomes for patients and interruptions to our services. These events could lead to voluntary
or legally mandated safety alerts relating to our tests or our laboratory facilities and could result in the removal of our products and
services from the market or the suspension of our laboratories’ operations. Insufficient quality controls and any resulting negative
outcomes could result in significant costs and litigation, as well as negative publicity that could reduce demand for our tests and payers’
willingness to cover our tests. Even if we maintain adequate controls and procedures, damaging and costly errors may occur.
Our current products and any other products we
develop that receive regulatory clearance or approval will be subject to ongoing regulatory obligations and continued regulatory review,
which may result in significant additional expense and subject us to penalties if we fail to comply with applicable regulatory requirements.
Even after regulatory clearance or approval has
been obtained for our products, the cleared or approved product and its manufacturer remain subject to continual review by FDA or non-U.S.
regulatory authorities. Our cleared or approved products may be subject to limitations on the indicated uses for which the product may
be marketed. Furthermore, future approvals may contain requirements for potentially costly post-marketing follow-up studies to monitor
the safety and efficacy of the approved product. There is a risk that FDA may modify or withdraw the clearance or approval of a product
if the results of a post-clearance or post-approval study are not satisfactory or are inconsistent with previous studies. We may rely
on third parties, such as contract research organizations, medical institutions and clinical investigators to conduct any post-approval
studies. We will have limited control over the activities of these third parties and any post-approval studies may be delayed or halted
prior to its completion for reasons outside our control.
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In addition, we and our cleared or approved products
will be subject to extensive and ongoing regulatory requirements by FDA and other regulatory authorities with regard to the labeling,
packaging, adverse event reporting, storage, advertising, promotion, and recordkeeping for our products. We and our contract manufacturers
also will be required to comply with current good manufacturing practice, or “cGMP,” regulations regarding the manufacture
of our products, which include requirements related to quality control and quality assurance as well as the corresponding maintenance
of records and documentation. Further, regulatory authorities may need to approve these manufacturing facilities before they can be used
to manufacture medical devices and/or other medical products, and these facilities are subject to continual review and periodic inspections
by FDA and other regulatory authorities for compliance with cGMP regulations. Operations at these facilities could be interrupted or halted
if FDA or other governmental agency deems the findings of such inspections unsatisfactory.
Failure to comply with FDA or other regulatory
requirements could result in fines, unanticipated compliance expenditures, recall or seizures of our products, import alerts preventing
the importation of products from other countries, total or partial suspension of production or distribution, restrictions on labeling
and promotion, termination of ongoing research, disqualification of data for submission to regulatory authorities, enforcement actions,
injunctions and criminal prosecution. If we or a third party discover previously unknown problems with a product, such as adverse events
of unanticipated severity or frequency, or problems with the facility where the product is manufactured, a regulatory authority may impose
restrictions on that product, the manufacturer or us, including requiring recall of the product from the market or suspension of manufacturing
and distribution of the product. We also may voluntarily recall a product. Any recalls could have an adverse effect on our ability to
provide our products, which in turn would adversely affect our financial condition.
If we are found to be promoting the use of our
devices for unapproved or “off-label” uses or engaging in other noncompliant activities, we may be subject to recalls, import
alerts, seizures, fines, penalties, injunctions, adverse publicity, prosecution, or other adverse actions, resulting in damage to our
reputation and business.
Our labeling, advertising, promotional materials
and user training materials must comply with FDA and other applicable laws and regulations, including the prohibition of the promotion
of a medical device for a use that has not been cleared or approved by FDA. Obtaining 510(k) clearance, de novo approval, or PMA
approval only permits us to promote our products for the uses specifically cleared or approved by FDA. Use of a device outside its cleared
or approved indications is known as “off-label” use. Physicians and consumers may use our products off-label because FDA does
not restrict or regulate a physician’s choice of treatment within the practice of medicine nor is there oversight on patient use
of over-the-counter devices. Although we may request additional cleared or approved indications for our current products, FDA may deny
those requests, require additional expensive clinical data to support any additional indications or impose limitations on the intended
use of any cleared or approved product as a condition of clearance. Even if regulatory clearance or approval of a product is granted,
such clearance or approval may be subject to limitations on the intended uses for which the product may be marketed and reduce our potential
to successfully commercialize the product and generate revenue from the product.
If FDA or another regulatory authority determines
that our labeling, advertising, promotional materials, or user training materials, or representations made by our personnel, include the
promotion of an off-label use for the medical product, or that we have made false or misleading or inadequately substantiated promotional
claims, or claims that could potentially change the regulatory status of the product, the authority could take the position that these
materials have misbranded our products and request that we modify our labeling, advertising, or user training or promotional materials
and/or subject us to regulatory or legal enforcement actions, including the issuance of an Untitled Letter or a Warning Letter, injunction,
seizure, recall, import alert, adverse publicity, civil penalties, criminal penalties, or other adverse actions. It is also possible that
other federal, state, or foreign enforcement authorities might take action if they consider our labeling, advertising, promotional, or
user training materials to constitute promotion of an unapproved use, which could result in significant fines, penalties, or other adverse
actions under other statutory authorities, such as laws prohibiting false claims for reimbursement. In that event, we could be subject
to extensive fines and penalties and our reputation could be damaged and adoption of the products would be impaired. Although we intend
to refrain from statements that could be considered off-label promotion of our products, FDA or another regulatory agency could disagree
and conclude that we have engaged in off-label promotion. In addition, any such off-label use of our products may increase the risk of
injury to patients, and, in turn, the risk of product liability claims, and such claims are expensive to defend and could divert our management’s
attention and result in substantial damage awards against us.
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Clinical laboratories and medical diagnostic companies
are subject to extensive and frequently changing federal, state, and local laws. We could be subject to significant fines and penalties
if we or our third-party laboratory partners fail to comply with these laws and regulations.
As a provider of clinical cancer detection products
and services, we and our third-party laboratory partners are subject to extensive and frequently changing federal, state, and local laws
and regulations governing various other aspects of our business. In particular, the clinical laboratory industry is subject to significant
governmental certification and licensing regulations, as well as federal and state laws regarding:
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test ordering and billing practices; |
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marketing, sales and pricing practices; |
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health information privacy and security, including the Health Insurance Portability and Accountability Act of 1996, or HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act of 2009, or HITECH, and comparable state laws; |
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insurance; |
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anti-markup legislation; and |
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consumer protection. |
We are also required to comply with FDA regulations,
including with respect to our labeling and promotion activities. In addition, advertising of our tests is subject to regulation by the
Federal Trade Commission, or FTC, and advertising of laboratory services is regulated by certain state laws. Violation of any FDA requirement
could result in enforcement actions, such as seizures, injunctions, civil penalties and criminal prosecutions, and violation of any FTC
or state law requirement could result in injunctions and other associated remedies, all of which could have a material adverse effect
on our business. Most states also have similar regulatory and enforcement authority for devices. Additionally, most foreign countries
have authorities comparable to FDA and processes for obtaining marketing approvals. Obtaining and maintaining these approvals, and complying
with all laws and regulations, may subject us to similar risks and delays as those we could experience under FDA, FTC and state regulation.
We incur various costs in complying and overseeing compliance with these laws and regulations.
Healthcare policy has been a subject of extensive
discussion in the executive and legislative branches of the federal and many state governments and healthcare laws and regulations are
subject to change. Development of the existing commercialization strategy for our current products has been based on existing healthcare
policies. We cannot predict what additional changes, if any, will be proposed or adopted or the effect that such proposals or adoption
may have on our business, financial condition and results of operations.
If we or our partners fail to comply with these
laws and regulations, we could incur significant fines and penalties, and our reputation and prospects could suffer. Additionally, any
such partners could be forced to cease offering our products and services in certain jurisdictions, which could materially disrupt our
business.
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Many aspects of our business are subject to
complex, intertwined, costly and/or burdensome federal health care laws and regulations which may be open to interpretation and be subject
to varying levels of discretionary enforcement. If we fail to comply with these laws and regulations, we could face substantial penalties
and our business, operations and financial condition could be adversely affected.
Even though we do not and do not expect to control
referrals of healthcare services or bill directly to Medicare, Medicaid or other third-party payors, certain federal and state healthcare
laws and regulations pertaining to fraud and abuse and patients’ rights are and will be applicable to our business. We could be
subject to healthcare fraud and abuse and patient privacy regulation by both the federal government and the states in which we conduct
our business. The regulations that may affect our ability to operate include, without limitation:
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the federal healthcare program Anti-Kickback Statute, which prohibits, among other things, any person from knowingly and willfully offering, soliciting, receiving, or providing remuneration, directly or indirectly, in exchange for or to induce either the referral of an individual for, or the purchase, order or recommendation of, any good or service for which payment may be made under federal healthcare programs, such as the Medicare and Medicaid programs; |
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the U.S. Foreign Corrupt Practices Act, or “FCPA,” which prohibits payments or the provision of anything of value to foreign officials for the purpose of obtaining or keeping business; |
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the federal False Claims Act, or “FCA,” which prohibits, among other things, individuals or entities from knowingly presenting, or causing to be presented, false claims, or knowingly using false statements, to obtain payment from the federal government, and which may apply to entities like us which provide coding and billing advice to customers; |
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federal criminal laws that prohibit executing a scheme to defraud any healthcare benefit program or making false statements relating to healthcare matters; |
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the federal transparency requirements under the Health Care Reform Law requires manufacturers of drugs, devices, biologics and medical supplies to report to the Department of Health and Human Services information related to physician payments and other transfers of value and physician ownership and investment interests; |
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the federal Health Insurance Portability and Accountability Act of 1996, as amended by the Health Information Technology for Economic and Clinical Health Act, which governs the conduct of certain electronic healthcare transactions and protects the security and privacy of protected health information, and |
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state law equivalents of each of the above federal laws, such as anti-kickback and false claims laws which may apply to items or services reimbursed by any third-party payor, including commercial insurers. |
The Patient Protection and Affordable Care Act,
as amended by the health Care and Education Affordability Reconciliation Act, or “PPACA,” among other things, amends the intent
requirement of the Federal Anti-Kickback Statute and criminal healthcare fraud statutes. A person or entity no longer needs to have actual
knowledge of this statute or specific intent to violate it. In addition, the PPACA provides that the government may assert that a claim
including items or services resulting from a violation of the Federal Anti-Kickback Statute constitutes a false or fraudulent claim for
purposes of the FCA.
In 2018, Congress passed Eliminating Kickbacks
in Recovery Act, or “EKRA,” as part of the Substance Use-Disorder Prevention that Promotes Opioid Recovery and Treatment for
Patients and Communities Act. Similar to the Anti-Kickback Statute, EKRA imposes criminal penalties for knowing or willful payment or
offer, or solicitation or receipt, of any remuneration, whether directly or indirectly, overtly or covertly, in cash or in kind, in exchange
for the referral or inducement of laboratory testing (among other healthcare services) unless a specific exception applies. However, unlike
the Anti-Kickback Statute, EKRA is not limited to services covered by federal or state healthcare programs but applies more broadly to
services covered by “healthcare benefit programs,” including commercial insurers. As currently drafted, EKRA potentially expands
the universe of arrangements that could be subject to government enforcement under federal fraud and abuse laws. In addition, while the
Anti-Kickback Statute includes certain exceptions that are widely relied upon in the healthcare industry, not all of those same exceptions
apply under EKRA. Because EKRA is a relatively new law, there is no agency guidance or court precedent to indicate how and to what extent
it will be applied and enforced. We cannot assure you that our relationships with HCPs, sales representatives, hospitals, customers, or
any other party will not be subject to scrutiny or will survive regulatory challenge under EKRA.
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Recently, the medical device industry has been
under heightened scrutiny as the subject of government investigations and regulatory or legal enforcement actions involving manufacturers
who allegedly offered unlawful inducements to potential or existing customers in an attempt to procure their business, including arrangements
with physician consultants. If our operations or arrangements are found to be in violation of any of the laws described above or any other
governmental regulations that apply to us, we may be subject to penalties, including civil and criminal penalties, damages, fines, exclusion
from the Medicare and Medicaid programs and the curtailment or restructuring of our operations. Any penalties, damages, fines, exclusions,
curtailment or restructuring of our operations could adversely affect our ability to operate our business and our financial results. The
risk of us being found in violation of these laws is increased by the fact that many of these laws are broad and their provisions are
open to a variety of interpretations. Any action against us for violation of these laws, even if we successfully defend against that action
and the underlying alleged violations, could cause us to incur significant legal expenses and divert our management’s attention
from the operation of our business. If the physicians or other providers or entities with whom we do business are found to be non-compliant
with applicable laws, they may be subject to sanctions, which could also have a negative impact on our business. Moreover, achieving and
sustaining compliance with applicable federal and state privacy, security and fraud laws may prove costly.
The regulations that govern pricing and
reimbursement for new products vary widely from country to country, and may adversely affect the pricing, coverage and reimbursement rates
of our products in other countries.
The regulations that govern pricing and reimbursement
for new products vary widely from country to country. Some countries require approval of the sale price of a product before it can be
marketed. In many countries, the pricing review period begins after marketing clearance or approval is granted. In some foreign markets,
pricing remains subject to continuing governmental control even after initial approval is granted. As a result, we might obtain regulatory
clearance or approval for a product in a particular country, but then be subject to price regulations that delay our commercial launch
of the product and negatively impact the revenue we are able to generate from the sale of the product in that country. In addition, to
obtain reimbursement or pricing approval in some countries, we may be required to conduct a clinical trial that compares the cost-effectiveness
of our product to other available therapies. Adverse pricing limitations may hinder our ability to recoup our investment in our products
and any other products, tests, or services we develop, even if our products obtain regulatory approval.
Healthcare reform measures could hinder
or prevent our products’ commercial success.
In the U.S., there have been, and we expect there
will continue to be, ongoing legislative and regulatory changes to the healthcare system which could affect our future revenue and profitability.
Federal and state lawmakers regularly propose and, at times, enact legislation that could result in significant changes to the healthcare
system, some of which are intended to contain or reduce the costs of medical products and services. For example, one of the most significant
healthcare reform measures in decades, the PPACA, was enacted in 2010. The PPACA contains a number of provisions, including those governing
enrollment in federal healthcare programs, reimbursement changes and fraud and abuse measures, all of which will impact existing government
healthcare programs. The PPACA, among other things, also could result in the imposition of injunctions.
While the U.S. Supreme Court has repeatedly upheld
the constitutionality of most elements of the PPACA, other legal challenges are still pending final adjudication in several jurisdictions.
Although efforts in Congress to repeal the PPACA have repeatedly fallen short, there are a number of ongoing legislative initiatives to
modify it. At this time, it remains unclear whether there will be any changes made to the PPACA. We cannot assure you that the PPACA,
as currently enacted or as amended in the future, will not adversely affect our business and financial results and we cannot predict how
future federal or state legislative or administrative changes relating to healthcare reform will affect our business.
In addition, other legislative changes have been
proposed and adopted since the PPACA was enacted. There likely will continue to be legislative and regulatory proposals at the federal
and state levels directed at containing or lowering the cost of health care. Medicare reimbursement for all products and services, including
ours, remains highly susceptible to threats of automatic reductions triggered by budgetary shortfalls. Such payments are subject to recovery
of purported overpayment for several years. We cannot predict the initiatives that may be adopted in the future or their full impact.
We cannot predict whether any additional legislative changes will affect our business.
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The continuing efforts of the government, insurance
companies, managed care organizations and other payors of healthcare services to contain or reduce costs of health care may adversely
affect:
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our ability to set a price that we believe is fair for our products; |
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our ability to generate revenue and achieve or maintain profitability; and |
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the availability of capital. |
Further, changes in regulatory requirements and
guidance may occur, both in the United States and in foreign countries, and we may need to amend clinical study protocols to reflect these
changes. Amendments may require us to resubmit our clinical study protocols to an IRB for reexamination, which may impact the costs, timing
or successful completion of a clinical study. In light of widely publicized events concerning the safety risk of certain drug and medical
device products, regulatory authorities, members of Congress, the Governmental Accounting Office, medical professionals and the general
public have all raised concerns about potential safety issues. These events have resulted in the recall and withdrawal of medical device
products, revisions to product labeling that further limit use of products and establishment of risk management programs that may, for
instance, restrict distribution of certain products or require safety surveillance or patient education. The increased attention to safety
issues may result in a more cautious approach by FDA or other regulatory authorities to clinical studies and the medical device clearance
or approval process. Adverse event data from clinical studies may receive greater scrutiny with respect to product safety, which may make
FDA or other regulatory authorities more likely to terminate or suspend clinical studies before completion, or require longer or additional
clinical studies that may result in substantial additional expense and a delay or failure in obtaining approval or approval for a more
limited indication than originally sought.
Given the serious public health risks of high
profile adverse safety events with certain products, FDA or other regulatory authorities may require, as a condition of approval, costly
risk evaluation and mitigation strategies, which may include safety surveillance, restricted distribution and use, patient education,
enhanced labeling, special packaging or labeling, expedited reporting of certain adverse events, preapproval of promotional materials
and restrictions on direct-to-consumer advertising.
We face uncertainty related to healthcare
reform, pricing, coverage, and reimbursement, which could reduce our revenue.
Healthcare reform laws, including the PPACA and
PAMA, are significantly affecting the U.S. healthcare and medical services industry. Recently passed legislation and possible future legal
and regulatory changes, including potential repeal or modification of the PPACA, or approval of health plans that allow lower levels of
coverage for preventive services, could substantially change the structure and finances of the health insurance system and the methodology
for reimbursing medical services, drugs and devices, including our current and future products and services. Healthcare reforms, which
may intend to reduce healthcare costs, may have the effect of discouraging third-party payors from covering certain kinds of medical products
and services, particularly newly developed technologies, such as our current products, or any other products or services we develop. We
cannot predict whether future healthcare reform initiatives will be implemented at the federal or state level or the effect any such future
legislation or regulation will have on us. The taxes imposed by new legislation, cost reduction measures and the expansion in the government’s
role in the U.S. healthcare industry may result in decreased profits to us, which may adversely affect our business, financial condition
and results of operations.
Because Medicare currently covers a significant
portion of the patients in the current targeted screening population for our products, any reduction in the CMS reimbursement rate for
our products would negatively affect our revenues and our business prospects. There can be no assurance under PAMA that adequate CMS reimbursement
rates will initially be assigned or will continue to be assigned to our tests. Further, it is possible that Medicare or other federal
payors that provide reimbursement for our tests in the future may later suspend, revoke or discontinue coverage at any time, may require
co-payments from patients, or may reduce the reimbursement rates payable to us. Any such action could have a negative impact on our revenues.
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Our products may cause serious adverse side
effects or even death or have other properties that could delay or prevent their regulatory clearance or approval, limit the commercial
desirability of an approved label or result in significant negative consequences following any marketing clearance or approval.
All clinical trials have a substantial risk of
failing to meet their safety or effectiveness endpoints. It is impossible to predict when or if our current products, or any other products
we develop, license or acquire will prove safe and effective and receive regulatory approval. Undesirable side effects caused by any products
we are developing could cause us or regulatory authorities to interrupt, delay or halt any required clinical trials. They could also result
in a more restrictive label or the delay or denial of regulatory clearance or approval by FDA or other comparable foreign regulatory authority.
Additionally, after receipt of marketing clearance
or approval of any products we may develop, if we or others later identify undesirable side effects or even deaths caused by such products,
a number of potentially significant negative consequences could result, including:
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we may be forced to recall such product and suspend the marketing of such product; |
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FDA may issue an Import Alert preventing the importation of a product into the United States from another country; |
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regulatory authorities may withdraw their clearance or approval of such product; |
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regulatory authorities may require additional warnings on the label that could diminish the usage or otherwise limit the commercial success of such products; |
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FDA or other regulatory bodies may issue safety alerts, Dear Healthcare Provider letters, press releases or other communications containing warnings about such product; |
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FDA may require the establishment or modification of Risk Evaluation Mitigation Strategies, or a comparable foreign regulatory authority may require the establishment or modification of a similar strategy that may, for instance, restrict distribution of our products and impose burdensome implementation requirements on us; |
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we may be required to change the way the product is administered or conduct additional clinical trials; |
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we could be sued and held liable for harm caused to subjects or patients; |
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we may be subject to litigation or product liability claims; and |
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our reputation may suffer. |
Any of these events could prevent us from achieving
or maintaining market acceptance of the particular product.
Our medical products may in the future be
subject to product recalls that could harm our reputation, business, and financial results.
FDA has the authority to request and/or require
the recall of commercialized medical products in the event of material deficiencies or defects in design or manufacture. Manufacturers
may, under their own initiative, recall a product if any material deficiency in a medical product is found. A government-mandated or voluntary
recall by us or one of our distributors could occur as a result of component failures, manufacturing errors, design or labeling defects
or other deficiencies and issues. Recalls of any of our products would divert managerial and financial resources and have an adverse effect
on our financial condition and results of operations. FDA requires that certain classifications of recalls be reported to FDA within ten
working days after the recall is initiated. Companies are required to maintain certain records of recalls, even if they are not reportable
to FDA. We may initiate voluntary recalls involving our products in the future that we determine do not require notification of FDA. If
FDA disagrees with our determinations, they could require us to report those actions as recalls. A future recall announcement could harm
our reputation with customers and negatively affect its sales. In addition, FDA could take enforcement action for failing to report the
recalls when they were conducted. No recalls of our medical products have been reported to FDA.
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Our medical products may in the future be
subject to import alerts.
FDA has the authority to place products and companies
on an import alert if the Agency believes that there has been a violation of FDA laws and/or regulations. Import alerts allow FDA to detain
future shipments from another country without testing or otherwise physically examining them. If a company on an import alert attempts
to import product, or if a product on an import alert is nonetheless offered for import, the product will be detained and refused entry
into the U.S. unless the importer can demonstrate to FDA that the product and/or company is not in violation of FDA laws and regulations.
If our medical products cause or contribute
to a death or a serious injury, or malfunction in certain ways, we will be subject to medical device or drug reporting regulations, which
can result in voluntary corrective actions or agency enforcement actions.
Under FDA medical device reporting regulations,
medical device manufacturers are required to report to FDA information that a device has or may have caused or contributed to a death
or serious injury or has malfunctioned in a way that would likely cause or contribute to death or serious injury if the malfunction of
the device or one of our similar devices were to recur. Similarly, under FDA drug reporting regulations, drug manufacturers are required
to submit to FDA information that a drug has or may have caused an unanticipated experience or side effect that places a patient at risk
of, or results in, death or serious injury. If we fail to report these events to FDA within the required timeframes, or at all, FDA could
take enforcement action against us. Any such adverse event involving our products also could result in future voluntary corrective actions,
such as recalls or customer notifications, or agency action, such as inspection or enforcement action. Any corrective action, whether
voluntary or involuntary, as well as defending ourselves in a lawsuit, will require the dedication of our time and capital, distract management
from operating our business, and may harm our reputation and financial results.
Product liability lawsuits against us could
cause us to incur substantial liabilities and to limit commercialization of our products.
We face an inherent risk of product liability
exposure related to the sale of certain of our products and any other products we develop. The marketing, sale and use of our products
could lead to the filing of product liability claims against us if someone alleges product failures, product malfunctions, manufacturing
flaws, or design defects resulted in injury to patients. We may also be subject to liability for a misunderstanding of, or inappropriate
reliance upon, the information we provide. If we cannot successfully defend ourselves against claims that a product we developed caused
injuries, we may incur substantial liabilities. Regardless of merit or eventual outcome, liability claims may result in:
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decreased demand for our products; |
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injury to our reputation and significant negative media attention; |
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withdrawal of patients from clinical studies or cancellation of studies; |
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significant costs to defend the related litigation and distraction to our management team; |
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substantial monetary awards to patients; |
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loss of revenue; and |
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the inability to commercialize any products that we may develop. |
In addition, insurance coverage is increasingly
expensive. We may not be able to maintain insurance coverage at a reasonable cost or in an amount adequate to satisfy any liability that
may arise.
21
Compliance with the HIPAA security, privacy
and breach notification regulations may increase our costs.
The HIPAA privacy, security and breach notification
regulations, including the expanded requirements under HITECH, establish comprehensive federal standards with respect to the uses and
disclosures of protected health information, or “PHI,” by health plans, HCPs and healthcare clearinghouses, in addition to
setting standards to protect the confidentiality, integrity and security of PHI. The regulations establish a complex regulatory framework
on a variety of subjects, including:
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the circumstances under which uses and disclosures of PHI are permitted or required without a specific authorization by the patient, including but not limited to treatment purposes, activities to obtain payments for our services, and our healthcare operations activities; |
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a patient’s rights to access, amend and receive an accounting of certain disclosures of PHI; |
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requirements to notify individuals if there is a breach of their PHI; |
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the contents of notices of privacy practices for PHI; |
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administrative, technical and physical safeguards required of entities that use or receive PHI; and |
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the protection of computing systems maintaining electronic PHI. |
We have implemented practices intended to meet
the requirements of the HIPAA privacy, security and breach notification regulations, as required by law. We are required to comply with
federal privacy, security and breach notification regulations as well as varying state privacy, security and breach notification laws
and regulations, which may be more stringent than federal HIPAA requirements. In addition, for healthcare data transfers from other countries
relating to citizens of those countries, we must comply with the laws of those countries. The federal privacy regulations restrict our
ability to use or disclose patient identifiable data, without patient authorization, for purposes other than payment, treatment, healthcare
operations and certain other specified disclosures such as public health and governmental oversight of the healthcare industry.
HIPAA provides for significant fines and other
penalties for wrongful use or disclosure of PHI, including potential civil and criminal fines and penalties. Computer networks are always
vulnerable to breach and unauthorized persons may in the future be able to exploit weaknesses in the security systems of our computer
networks and gain access to PHI. Additionally, we share PHI with third-parties who are legally obligated to safeguard and maintain the
confidentiality of PHI. Unauthorized persons may be able to gain access to PHI stored in such third-parties computer networks. Any wrongful
use or disclosure of PHI by us or such third-parties, including disclosure due to data theft or unauthorized access to our or our third-parties
computer networks, could subject us to fines or penalties that could adversely affect our business and results of operations. Although
the HIPAA statute and regulations do not expressly provide for a private right of damages, we could also incur damages under state laws
to private parties for the wrongful use or disclosure of confidential health information or other private personal information.
Our employees, independent contractors,
consultants, commercial partners, and vendors may engage in misconduct or other improper activities, including noncompliance with regulatory
standards and requirements.
We are exposed to the risk of fraud, misconduct,
or other illegal activity by our employees, independent contractors, consultants, commercial partners, and vendors. Misconduct by these
parties could include intentional, reckless and negligent conduct that fails to: comply with the rules and regulations of the CMS, FDA,
and other comparable foreign regulatory authorities; provide true, complete and accurate information to such regulatory authorities; comply
with manufacturing and clinical laboratory standards; comply with healthcare fraud and abuse laws in the United States and similar foreign
fraudulent misconduct laws; or report financial information or data accurately or to disclose unauthorized activities to us. In particular,
research, sales, marketing, education, and other business arrangements in the healthcare industry are subject to extensive laws designed
to prevent fraud, kickbacks, self-dealing, and other abusive practices, as well as off-label product promotion. These laws and regulations
may restrict or prohibit a wide range of pricing, discounting, educating, marketing and promotion, sales and commission, certain customer
incentive programs, and other business arrangements generally. Activities subject to these laws also involve the improper use of information
obtained in the course of participant recruitment for clinical studies, which could result in regulatory sanctions and cause serious harm
to our reputation. We have adopted a code of business conduct and ethics, but it is not always possible to identify and deter misconduct
by employees and third parties, and the precautions we take to detect and prevent this activity may not be effective in controlling unknown
or unmanaged risks or losses or in protecting us from governmental investigations or other actions or lawsuits stemming from a failure
to be in compliance with such laws. If any such actions are instituted against us, and we are not successful in defending ourselves or
asserting our rights, those actions could have a significant impact on our business, including the imposition of significant fines or
other sanctions. Even if it is later determined after an action is instituted against us that we were not in violation of these laws,
we may be faced with negative publicity, incur significant expenses defending our actions, and have to divert significant management resources
from other matters.
22
Recent reductions in force across the U.S.
federal government may impact our ability to secure necessary meetings to discuss, obtain guidance on, and receive clearances or approvals
for our products.
Actions by the Trump administration may fundamentally
impact the FDA, CMS, and other federal agencies with jurisdiction over our products. Among other things, the issuance of Executive Order
(“EO”) 14192, “Unleashing Prosperity Through Deregulation” (January 31, 2025), EO 14212, “Establishing the
President’s Make America Healthy Again Commission” (February 13, 2025), and EO 14219, “Ensuring Lawful Governance and
Implementing the President’s ‘Department of Government Efficiency’ Deregulatory Initiative” (February 21, 2025)
could have a significant impact on the manner in which the FDA conducts its operations and engages in regulatory and oversight activities.
For example, on March 27, 2025, the US Department
of Health and Human Services (“HHS”), which houses both CMS and the FDA, announced significant restructuring in accordance
with EO 14219. Among other changes, HHS announced that it intends to reduce its workforce by approximately 10,000 full-time employees,
consolidate 28 existing divisions into 15 new divisions, and centralize certain core functions. Notably, this restructuring plan is in
addition to other downsizing efforts at HHS, which in combination, will result in a reduction of force by 20,000 employees.
There is substantial uncertainty regarding how
these changes will impact the FDA. HHS has stated that it intends to reduce the FDA’s workforce by 3,500 individuals, which represents
approximately 18% of FDA full-time employees. This restructuring could lead to significant disruptions and delays at the FDA, including
impeding the agency’s ability to meet with industry participants and provide feedback, review and/or approve submissions, conduct
inspections, issue regulatory guidance, or take other actions that facilitate the development, approval, and marketing of regulated products.
All of this could adversely affect our business.
Industry And Market Risks
The development of new medical products
and services requires significant investments, and we may experience difficulties that delay or prevent its success.
Developing new or improved cancer detection and
other medical products and services, and drugs are speculative and risky endeavors. Candidate products and services that may initially
show promise may fail to achieve the desired results in larger clinical studies or may not achieve acceptable levels of clinical accuracy.
Any test we develop will need to demonstrate a high level of accuracy in clinical studies. If in a clinical study a candidate product
or service fails to identify even a small number of cases, the sensitivity rate may be materially and adversely affected, and we may have
to abandon the candidate product or service.
We may need to explore a number of different designs,
methods or technologies, alter our candidate products or services, and repeat clinical studies before we identify a potentially successful
candidate. We may need to acquire, whether through purchase, license or otherwise, technologies owned by third parties, and we may not
be able to acquire such technologies on commercially reasonable terms or at all. Product development is expensive, may take years to complete
and can have uncertain outcomes. Failure can occur at any stage of the development. If, after development, a candidate product or service
appears successful, we may, depending on the nature of the product or service, still need to obtain FDA and other regulatory clearances
or approvals before we can market it. FDA’s clearance or approval pathways are likely to involve significant time, as well as additional
research, development and clinical study expenditures. There can be no guarantee that FDA would clear or approve any future product or
service we may develop. Even if FDA clears or approves a new product or service we develop, we would need to commit substantial resources
to commercialize, sell and market it before it could be profitable, and the product or service may never be commercially viable. Additionally,
development of any product or service may be disrupted or made less viable by the development of competing products or services.
Commitments to develop new products must be made
well in advance of any resulting sales, and technologies and standards may change during development, potentially rendering our products
outdated or uncompetitive before their introduction. Our ability to develop products to meet evolving industry requirements and at prices
acceptable to our customers will be significant factors in determining our competitiveness. We may expend considerable funds and other
resources on the development of our products without any guarantee that these products will be successful. If we attempt to bring, but
are not successful in bringing, one or more products to market, whether because we fail to address marketplace demand, fail to develop
viable products or otherwise, our results of operations could be seriously harmed.
If we determine that any of our current or future
development programs is unlikely to succeed, we may abandon it without any return on our investment into the program. We may need to raise
significant additional capital to bring any new products or services to market, which may not be available on acceptable terms, if at
all.
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Even if our cancer blood tests or medical
products receive marketing clearance or approval, they may fail to achieve the degree of market acceptance by physicians, patients, third-party
payors and others in the medical community necessary for commercial success.
Even if our medical products receive marketing
clearance or approval, if needed, they may nonetheless fail to gain sufficient market acceptance by physicians, patients, third-party
payors, and others in the medical community. If we do not generate significant product revenues, we may not become profitable. The degree
of market acceptance of our products and tests, if approved for commercial sale, will depend on a number of factors, including:
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their efficacy, safety, and other potential advantages compared to alternative tests or medical products; |
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our ability to offer them for sale at competitive prices; |
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their convenience and ease of administration compared to alternative cancer detection or treatments; |
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the willingness of the target patient population to try new medical products and of physicians to order these products; |
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the willingness of the target patient population to try new therapies and of physicians to prescribe these therapies; |
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the strength of marketing and distribution support; |
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the availability of governmental agencies and third-party medical insurance and adequate reimbursement for our cancer blood tests or medical products; |
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any restrictions on the use of our cancer blood tests or medical products together with other cancer detection methods or therapeutic treatments; |
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any restrictions on the use of our cancer blood tests or medical products together with other medications; |
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inability of certain types of patients to produce adequate samples for analysis in the use of our cancer blood tests; |
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inability of certain types of patients to use our cancer blood tests or other medical products; and |
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the prevalence and severity of side effects from our medical products. |
If we are unable to address and overcome these
and similar concerns, our business and results of operations could be substantially harmed.
We face intense competition in the biotechnology
and pharmaceutical industries.
The biotechnology and pharmaceutical industries
are intensely competitive. We face direct competition from U.S. and foreign companies focusing on cancer blood tests and pharmaceutical
products, which are rapidly evolving. Our competitors include major multinational diagnostic and pharmaceutical companies, specialized
biotechnology firms, and universities and other research institutions. Many of these competitors have greater financial and other resources,
larger research and development staffs, and more effective marketing and manufacturing organizations than we do. In addition, academic
and government institutions are increasingly likely to enter into exclusive licensing agreements with commercial enterprises, including
our competitors, to market commercial tests or products based on technology developed at such institutions. Our competitors may succeed
in developing or licensing technologies, tests, and products that are more effective or less costly than ours or succeed in obtaining
FDA or other regulatory approvals for diagnostic test and medical product candidates before we do. Acquisitions of, or investments in,
competing diagnostic, pharmaceutical, or biotechnology companies by large corporations could increase such competitors’ financial,
marketing, manufacturing, and other resources.
24
Our ExoLens product faces significant competition
in the glaucoma and dry eye syndrome treatment markets from the following:
The market for our proposed tests and products
is competitive and rapidly changing, and new cancer detection technologies which may be developed by others could impair our ability to
maintain and grow our business and remain competitive.
The cancer detection, pharmaceutical, and biotechnology
industries are subject to rapid and substantial technological change. Developments by others may render our proposed tests or products
noncompetitive or obsolete, or we may be unable to keep pace with technological developments or other market factors. Technological competition
from diagnostic, pharmaceutical and biotechnology companies, universities, governmental entities, and others diversifying into the field
is intense and is expected to increase.
As a company engaged in the development of cancer
detection technology with limited revenue generated to date, our resources are limited, and we may experience technical challenges inherent
in such technologies. Competitors have developed or are in the process of developing technologies that are, or in the future may be, the
basis for competition. Some of these technologies may have an entirely different approach or means of accomplishing similar diagnostic
efficacy compared to our proposed tests or products. Our competitors may develop cancer detection technologies that are more effective
or less costly than our proposed tests or products and therefore present a serious competitive threat.
The potential widespread acceptance of cancer
blood tests or therapies that are alternatives to ours may limit market acceptance of our proposed tests or products, even if commercialized.
Many of our targeted diseases and conditions can also be detected by other tests or treated by other medications. These tests and treatments
may be widely accepted in medical communities and have a longer history of use. The established use of these competitive technologies
may limit the potential for our technologies, formulations, tests, and products to receive widespread acceptance if commercialized.
Negative developments in the field of exosomes
could damage public perception of any product candidates that we develop, which could adversely affect our ability to conduct our business
or obtain regulatory approvals for such product candidates.
Exosome therapeutics are novel and unproven therapies,
with no exosome therapeutic approved to date. Exosome therapeutics may not gain the acceptance of the public or the medical community.
To date, other efforts to leverage natural exosomes have generally demonstrated an inability to generate exosomes with predictable biologically
active properties or to manufacture exosomes at suitable scale to treat more than a small number of patients. Some studies used natural
exosomes without an intended or understood mechanism of action or pharmacology. Other studies included payloads but generated inconclusive
results. Our success will depend on our ability to demonstrate that our exosomes can overcome these challenges.
25
If one of our current or future product candidates
is unable to successfully target a certain cell type or pathway and establish proof of concept in a certain disease, it may indicate that
we will not be able to apply our technology to other diseases mediated by that cell type or pathway. This may also indicate a decrease
in the probability of our success for other targets using the same modality in the same or different cell types, as well as for our engineered
exosome approach more generally. Such failures could negatively affect the public or medical community’s perception of our technology
and exosome therapeutics in general.
Additionally, our success will depend upon physicians
who specialize in the treatment of diseases targeted by our product candidates, if approved, prescribing testing or treatments that involve
the use of our product candidates, if cleared or approved, in lieu of, or in addition to, existing treatments with which they are more
familiar and for which greater clinical data may be available. Adverse events in clinical trials of our product candidates or in clinical
trials of others developing similar products and the resulting publicity, as well as any other adverse events in the field of exosome
therapeutics, could result in a decrease in demand for any product that we may develop. These events could also result in the suspension,
discontinuation, or clinical hold of, or modification to, our clinical trials. Any future negative developments in the field of exosomes
and their use as therapies could also result in greater governmental regulation, stricter labeling requirements and potential regulatory
delays in the testing or approvals of our product candidates. Any increased scrutiny could delay or increase the costs of obtaining marketing
approval for any of our product candidates.
The sizes of the markets for our current
and future products have not been established with precision and may be smaller than we estimate.
Our estimates of the annual total addressable
markets for our current products are based on a number of internal and third-party estimates, including, without limitation, the number
of patients with pancreatic and breast cancers and precancer, the number of individuals who are at a higher risk for developing cancer,
and the assumed prices at which we can sell tests for markets that have not been established. While we believe our assumptions and the
data underlying our estimates are reasonable, these assumptions and estimates may not be correct and the conditions supporting our assumptions
or estimates may change at any time, thereby reducing the predictive accuracy of these underlying factors. As a result, our estimates
of the annual total addressable market for our current or future products may prove to be incorrect. If the actual number of patients
who would benefit from our products, the price at which we can sell our products, or the annual total addressable market for our products
is smaller than we have estimated, it may impair our sales growth and have an adverse impact on our business.
Risks Related to Taiwan
Your investment may be adversely affected
by the strained relations between Taiwan and China.
Taiwan has a unique international political status.
The People’s Republic of China (“PRC”) claims that Taiwan is part of China. Although significant economic and cultural
relations have been established during recent years between Taiwan and the PRC, relations have often been strained. The PRC government
has refused to renounce the use of military force to gain control over Taiwan. Furthermore, the PRC government passed an Anti-secession
Law in March 2005, which authorizes non-peaceful means and other necessary measures should Taiwan move to gain independence from the PRC.
Relations between the PRC and Taiwan have at times been strained. Strained relations could result in future military actions or economic
sanctions or other disruptive activities undertaken by either government. Past tensions between them have on occasion depressed the market
prices of the securities of companies in Taiwan. As the headquarters of our major subsidiary (i.e., Yong Ding Biopharm Co., Ltd.) is based
in Taiwan, relations between Taiwan and the PRC and other factors affecting military, political or economic conditions in Taiwan could
materially and adversely affect our financial condition and results of operations. There can be no assurance that the present tensions
will not worsen, which could have a significant adverse impact on our financial condition, results of operations and future prospects.
26
Currency fluctuations and restrictions on
currency exchange may adversely affect our business.
Our reporting currency is the U.S. dollar and
our operations in Taiwan uses the NTD as the functional currencies. The majority of our revenues derived and expenses incurred are in
NTD. We are subject to the effects of exchange rate fluctuations with respect to any of these currencies.
Apart from trade-related or service-related foreign
exchange transactions, Taiwanese companies may, without foreign exchange approval, remit foreign currency of up to US$100 million (or
its equivalent) to and from Taiwan (or such other amount as determined by the Central Bank of the Republic of China (Taiwan) from time
to time at its discretion in consideration of the economic and financial conditions of Taiwan) in each calendar year. The above limits
apply to remittances involving either a conversion of NT dollars into a foreign currency or a conversion of foreign currency into NT dollars.
Taiwan government may impose further foreign exchange
restrictions in certain emergency situations, including situations where there are sudden fluctuations in interest rates or exchange rates,
where Taiwan government experiences extreme difficulty in stabilizing the balance of payments or where there are substantial disturbances
in the financial and capital markets in Taiwan. There can be no assurance that these restrictions, if imposed, will not adversely affect,
among other things, the Company’s ability to repatriate its and/or its subsidiary’s funds in Taiwan, which may in turn limit
our ability to receive and use our revenue effectively.
Due to our major subsidiary’s location
in Taiwan, natural disasters and other events outside of our control may seriously disrupt our business operations.
Taiwan is vulnerable to natural disasters and
other calamities. Fire, floods, typhoons, earthquakes, nuclear and radiation accidents, power loss, telecommunications failures, break-ins,
wars, riots, terrorist attacks or similar events may give rise to server interruptions, breakdowns, system failures or internet failures,
which could cause, including but not limit to, the damage or destruction of real or personal property, the loss or corruption of data
or malfunctions of software or hardware, disruption of our major subsidiary’s business operation, interruption of ongoing development
of the biopharmaceutical products as well as adversely affect our business. Although we have not been adversely affected in the past by
natural disasters and other calamities, natural disasters and other events outside of our control in Taiwan in the future could seriously
disrupt our business operations.
You may not be able to enforce a judgment
of a foreign court in Taiwan.
Our major subsidiary (i.e., Yong Ding Biopharm
Co., Ltd.) is a company limited by shares and incorporated under the Taiwan Company Act. Also, all our directors and management, with
the exception of our CFO who is located in Hong Kong, are located in Taiwan, and a certain portion of our assets and the assets of such
persons are located in Taiwan. As a result, it may be difficult for investors to enforce judgments obtained outside Taiwan against us,
our major subsidiary or such persons in Taiwan, including those predicated upon the civil liability provisions of the federal securities
laws of the United States.
27
Any further economic downturn or decline
in the growth of the population in Taiwan may materially and adversely affect YD Bio’s financial condition, results of operations
and prospects.
YD Bio conducts most of our operations and generates
most of our revenues in Taiwan. As a result, any decline in the Taiwan economy or a decline in the growth of the population in Taiwan
may materially and adversely affect their financial condition, results of operations and prospects. For example, the global slowdown in
technology expenditures has from time to time adversely affected the Taiwan economy, which is highly dependent on the technology industry.
There is considerable uncertainty over the long-term effects of the expansionary monetary and fiscal policies that have been adopted by
the central banks and financial authorities of some of the world’s leading economies. There have also been concerns over unrest
in the Middle East, Africa and Ukraine, which has resulted in higher oil prices and significant market volatility.
As the Company’s business is significantly
dependent on economic growth, any uncertainty or further deterioration in economic conditions could have a material adverse effect on
the Company’s financial condition and results of operations. YD Bio cannot assure that economic conditions in Taiwan will continue
to improve in the future or that our business and operations will not be materially and adversely affected by deterioration in the Taiwan
economy.
Uncertainties about the “trade war”
between the United States and Mainland China may materially and adversely affect our results of operations.
Changes in U.S. trade policy could trigger retaliatory
actions by affected countries, e.g., Mainland China, resulting in ‘trade wars,’ increased costs for goods imported into the
United States, which may reduce customer demand for these products if the parties having to pay tariffs increase their prices, or trading
partners limiting their trade with the United States. Decreasing demand from our customers or increased prices quoted by our suppliers
may materially and adversely affect our future results of operations.
Risks Related to Intellectual Property Rights
YD Bio may incur substantial litigation
costs related to intellectual property, and if YD Bio is unable to protect its intellectual property, it may lose its competitive advantage.
YD Bio’s future success depends in part
upon its ability to protect its intellectual property. YD Bio’s protective measures, including patents, trademarks, copyrights,
trade secret protection and internet identity registrations, may prove inadequate to protect its proprietary rights and market advantage.
The right to stop others from misusing its trademarks and service marks in commerce depends, to some extent, on YD Bio’s ability
to show evidence of enforcement of its rights against such misuse in commerce. YD Bio’s failure to stop the misuse by others of
our trademarks and service marks may lead to its loss of trademark and service mark rights, brand loyalty and notoriety among its customers
and prospective customers. The scope of any patent to which YD Bio has or may obtain rights may not prevent others from developing and
selling competing products. In addition, YD Bio’s patents may be held invalid upon challenge, or others may claim rights in, or
ownership of, its patents. Moreover, YD Bio may become subject to litigation with parties that claim, among other matters, that it infringed
on their patents or other intellectual property rights. The defense and prosecution of patent and other intellectual property claims are
both costly and time-consuming and could result in a material adverse effect on YD Bio’s business and financial position.
Additionally, any intellectual property infringement
claims against YD Bio, with or without merit, could be costly and time-consuming to defend and divert its management’s attention
from its business. If YD Bio’s products were found to infringe a third-party’s proprietary rights, it could be forced to enter
into costly royalty or licensing agreements in order to be able to continue to sell its products or discontinue use of the protected technology.
Such royalty and licensing agreements may not be available on terms acceptable to YD Bio or at all. Rights holders may demand payment
for past infringements or force it to accept costly license terms or discontinue use of protected technology or works of authorship.
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YD Bio may become involved in litigation regarding
patents and other intellectual property rights. Other companies, including its competitors, may develop intellectual property that is
similar or superior to its intellectual property, duplicate its intellectual property or design around its patents, and may have or obtain
patents or other proprietary rights that would prevent, limit or interfere with its ability to make, use or sell its products. Effective
intellectual property protection may be unavailable or limited in some foreign countries in which YD Bio sells or will sell products or
from which competing products may be sold.
Unauthorized parties may attempt to copy or otherwise
use aspects of YD Bio’s intellectual property and products that we regard as proprietary. YD Bio’s means of protecting its
proprietary rights in the U.S. or abroad may prove to be inadequate, and competitors may be able to develop similar intellectual property
independently. If its intellectual property protection is insufficient to protect its intellectual property rights, YD Bio could face
increased competition in the markets for its products.
Should any of YD Bio’s competitors file
patent applications or obtain patents that claim inventions also claimed by it, YD Bio may choose to participate in an interference proceeding
to determine the right to a patent for these inventions, because its business could be harmed if it fails to enforce and protect its intellectual
property rights. Even if the outcome is favorable, an interference proceeding could result in substantial costs to YD Bio and disrupt
its business.
In the future, YD Bio also may need to file lawsuits
to enforce its intellectual property rights, to protect its trade secrets or to determine the validity and scope of the proprietary rights
of others. Any such litigation, whether successful or unsuccessful, could result in substantial costs and diversion of resources, which
could have a material adverse effect on its business, financial condition or results of operations.
Intellectual property rights do not necessarily
address all potential threats to our competitive advantage.
The degree of future protection afforded by intellectual
property rights is uncertain because intellectual property rights have limitations and may not adequately protect our business or permit
us to maintain our competitive advantage. For example:
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others may be able to make diagnostic tests and therapeutic product candidates that are the same as or similar to ours but that are not covered by the claims of the patents that we own or have exclusively licensed; |
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we or our licensors or future collaborators might not have been the first to make the inventions covered by the issued patents or pending patent applications that we own or have exclusively licensed; |
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we or our licensors or future collaborators might not have been the first to file patent applications covering certain inventions; |
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others may independently develop similar or alternative technologies or duplicate any of our technologies without infringing intellectual property rights we own or have exclusively licensed; |
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it is possible that noncompliance with the U.S. Patent and Trademark Office (“USPTO”) and foreign governmental patent agencies requirement for a number of procedural, documentary, fee payment, and other provisions during the patent process can result in abandonment or lapse of a patent or patent application, and partial or complete loss of patent rights in the relevant jurisdiction for patents that we own or have exclusively licensed; |
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it is possible that pending patent applications that we have exclusively licensed will not lead to issued patents; |
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issued patents that we own or have exclusively licensed may be revoked, modified, or held invalid or unenforceable, as a result of legal challenges by our competitors; |
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our competitors might conduct research and development activities in countries where we do not have patent rights and then use the information learned from such activities to develop competitive tests and products for sale in our major commercial markets; |
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we may not develop additional proprietary technologies that are patentable; |
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we cannot predict the scope of protection of any patent issuing based on pending patent applications, including whether the patent applications that we own or license will result in issued patents with claims that are directed to our diagnostic tests and product candidates or uses thereof in the U.S. or foreign countries; |
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there may be significant pressure on the U.S. government and international governmental bodies to limit the scope of patent protection both inside and outside the U.S. for disease treatments that prove successful, as a matter of public policy regarding worldwide health concerns; |
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countries other than the U.S. may have patent laws less favorable than those upheld by U.S. courts, allowing foreign competitors a better opportunity to create, develop, and market competing diagnostic tests and product candidates; and |
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if enforced, a court may not hold that patents we own or have exclusively licensed are valid, enforceable, and infringed. |
Changes in patent law in the United States
and other jurisdictions could diminish the value of patents in general, thereby impairing our ability to protect our diagnostic tests
and therapeutic product candidates.
As is the case with other biopharmaceutical companies,
our success is heavily dependent on intellectual property, particularly patents. Obtaining and enforcing patents in the biopharmaceutical
industry involves both technological and legal complexity and is therefore costly, time consuming and inherently uncertain. Changes in
either the patent laws or interpretation of the patent laws in the U.S. could increase the uncertainties and costs, and may diminish our
ability to protect our inventions, obtain, maintain, enforce, and license intellectual property rights and, more generally, could affect
the value of our intellectual property or narrow the scope of any owned and licensed patents.
In addition, the patent positions of companies
in the development and commercialization of biologics and pharmaceuticals are particularly uncertain. The U.S. Supreme Court has ruled
on several patent cases in recent years, either narrowing the scope of patent protection available in certain circumstances or weakening
the rights of patent owners in certain situations. Depending on future actions by the U.S. Congress, the U.S. courts, the USPTO and the
relevant law-making bodies in other countries, the laws and regulations governing patents could change in unpredictable ways that would
weaken our ability to obtain new patents or to enforce our existing owned or licensed patents.
Obtaining and maintaining patent protection
depends on compliance with various procedural, document submissions, fee payment, and other requirements imposed by governmental patent
agencies, and our patent protection could be reduced or eliminated for non-compliance with these requirements.
Periodic maintenance fees, renewal fees, annuities
fees, and various other governmental fees on patents and/or patent applications are due to be paid to the USPTO and foreign patent agencies
in several stages over the lifetime of the patent and/or patent application. The USPTO and various foreign governmental patent agencies
also require compliance with a number of procedural, documentary, fee payment, and other similar provisions during the patent application
process. While an inadvertent lapse can in many cases be cured by payment of a late fee or by other means in accordance with the applicable
rules, there are situations in which noncompliance can result in abandonment or lapse of the patent or patent application, resulting in
partial or complete loss of patent rights in the relevant jurisdiction. Non-compliance events that could result in abandonment or lapse
of a patent or patent application include, but are not limited to, failure to respond to official actions within prescribed time limits,
non-payment of fees, and failure to properly legalize and submit formal documents. If we or our licensors fail to maintain the patents
and patent applications covering our diagnostic tests or therapeutic product candidates, our competitive position would be adversely affected.
30
Patent terms may be inadequate to protect
our competitive position on our diagnostic tests or therapeutic product candidates for an adequate amount of time.
The term of any individual patent depends on applicable
law in the country where the patent is granted. In the U.S., provided all maintenance fees are timely paid, a patent generally has a term
of 20 years from its application filing date or earliest claimed non-provisional filing date. Extensions may be available under certain
circumstances, but the life of a patent and, correspondingly, the protection it affords is limited. Even if we or our licensors obtain
patents covering our diagnostic tests and therapeutic product candidates, when the terms of all patents covering a diagnostic test or
therapeutic product expire, our business may become subject to competition from our competitors. Given the amount of time required for
the development, testing, and regulatory review and approval of new diagnostic test or therapeutic product candidates, patents protecting
such candidates may expire before or shortly after such candidates are commercialized. As a result, our owned and licensed patent portfolio
may not provide us with sufficient rights to exclude others from commercializing diagnostic tests and therapeutic products similar or
identical to ours.
Issued patents covering our product candidates
could be found invalid or unenforceable if challenged in court or the USPTO.
If we or a licensor initiate legal proceedings
against a third party to enforce a patent covering one of our diagnostic tests or therapeutic product candidates, the defendant could
counterclaim that the patent covering our diagnostic tests or therapeutic product candidate, as applicable, is invalid and/or unenforceable.
In patent litigation in the U.S., defendant counterclaims alleging invalidity and/or unenforceability are commonplace, and there are numerous
grounds upon which a third party can assert invalidity or unenforceability of a patent. Third parties may also raise similar claims before
administrative bodies in the U.S. or abroad, even outside the context of litigation. Such mechanisms include re-examination, inter partes
review, post grant review, and equivalent proceedings in foreign jurisdictions (i.e., opposition proceedings). Such proceedings could
result in revocation or amendments to our owned or licensed patents in such a way that they no longer cover our diagnostic tests or therapeutic
product candidates. The outcome following legal assertions of invalidity and unenforceability is unpredictable. If a defendant were to
prevail on a legal assertion of invalidity and/or unenforceability, we would lose at least part, and perhaps all, of the patent protection
on our diagnostic tests or therapeu
### EX-23.2 - CONSENT OF MALONEBAILEY LLP, INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR Y
EX-23.2
2
ea029120901ex23-2.htm
CONSENT OF MALONEBAILEY LLP, INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR YD BIO LIMITED
Exhibit 23.2
CONSENT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
We consent to the inclusion in
this Post-Effective Amendment No. 1 to the Registration Statement on Form F-1 of our report dated April 30, 2026 with respect to the audited
consolidated financial statements of YD Bio Limited for the year ended December 31, 2025.
We also consent to the references
to us under the heading “Experts” in such Registration Statement.
/s/ MaloneBailey, LLP
www.malonebailey.com
Houston, Texas
May 26, 2026
### EX-23.3 - CONSENT OF ARK PRO CPA & CO
EX-23.3
3
ea029120901ex23-3.htm
CONSENT OF ARK PRO CPA & CO
Exhibit 23.3
|
|
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM
We hereby consent to the inclusion
in the Registration Statement of YD Bio Limited on Post-Effective Amendment No. 1 to Form F-1/A (File No. 333-290471) of our report dated
April 30, 2025, with respect to our audits of the consolidated financial statements of YD Biopharma Limited and subsidiary (collectively
the “Company”) as of December 31, 2024 and for each of the two years in the period ended December 31, 2024 which appears in
the Annual Report on Form 20-F of YD Bio Limited for the year ended December 31, 2025.
We also consent to the reference to our Firm under
the caption “Experts” in such Registration Statement.
/s/ ARK Pro CPA & Co
ARK Pro CPA & Co
Hong Kong, China
May 26, 2026