PART 1/ AT A GLANCE

• 1. Message from the chairman and CEO
• 2. Who we are
• 3. Share and share capital
• 4. Key achievements in 2021
• 5. Impact of COVID-19
• 6. Impact of the war in Ukraine

PART 1/

at a glance

About this report

The board of directors of Biocartis Group NV (the ‘Company’) is responsible for the contents of this document and declares that, having taken all reasonable care to ensure that such is the case, the information contained in this Biocartis annual report 2021 is, to the best of its knowledge, in accordance with the facts, contains no omissions likely to affect it materially and contains the required information in accordance with applicable Belgian Law. In accordance with Article 3:32 of the Belgian Code of Companies and Associations, the annual reports on the statutory and consolidated annual accounts have been combined.

As a company with less than 500 employees in 2021, Biocartis is not yet legally required to report on its environmental, social and governance (ESG)/sustainability performance according to the EU Non-Financial Reporting Disclosure (NFRD) and EU Taxonomy regulation. However, since 2020, Biocartis has been gradually expanding its disclosures on sustainability. The disclosures on sustainability in this 2021 annual report are based, similar to previous years, on the Sustainable Development Goals¹ (SDG), the Global Reporting Initiative (GRI) guidelines² as well as the SASB (Sustainability Accounting Standards Board) framework and several principles of the Task-Force on Climate-Related Financial Disclosures. Additionally, certain information requested by SRI (Socially responsible investment) shareholders have been taken into account,

According to the European Single Electronic Format issuers on EU regulated markets are required to prepare their annual financial reports in an electronic reporting format with the intention to make reporting easier for issuers and to facilitate accessibility, analysis, and comparability of annual financial reports. This annual report was prepared both in XHTML format (using the Inline XBRL technology, which allows XBRL tagged data) as well as an easily downloadable or printable PDF format. In case of difference in interpretation, the formal XBRL version shall prevail. According to the According to Belgian law, Biocartis must publish its annual report in Dutch. Biocartis also provides an English version. In case of difference in interpretation, the English version shall prevail. An electronic version of the annual report 2021 is available on Error! Hyperlink reference not valid.http://www.biocartis.com/ under ‘investors’. Other information on the website of Biocartis or on other websites is not a part of this annual report. The annual report reflects the performance and results of Biocartis in the period between 1 January 2021 and 31 December 2021. An overview of the securities legislation and listed company reporting requirements can be found on the Belgian Financial Authorities’ website, www.fsma.be.

About Biocartis

Biocartis Group NV is a limited liability company organized under the laws of Belgium and has its registered office at Generaal de Wittelaan 11 B, 2800 Mechelen, Belgium. Throughout this report, the term ‘Biocartis NV’ refers to the Belgian subsidiary on a standalone basis and references to ‘the Group’ or ‘Biocartis’ include Biocartis Group NV together with its subsidiaries.

Forward-looking statement

Certain statements, beliefs and opinions in this report are forward-looking, which reflect the Company's or, as appropriate, the Company directors’ or managements’ current expectations and projections concerning future events such as the Company's results of operations, financial condition, liquidity, performance, prospects, growth, strategies and the industry in which the Company operates. By their nature, forward-looking statements involve a number of risks, uncertainties, assumptions and other factors that could cause actual results or events to differ materially from those expressed or implied by the forward-looking statements. These risks, uncertainties, assumptions and factors could adversely affect the outcome and financial effects of the plans and events described herein. A multitude of factors including, but not limited to, changes in demand, competition and technology, can cause actual events, performance or results to differ significantly from any anticipated development. Forward-looking statements contained in this report regarding past trends or activities are not guarantees of future performance and should not be taken as a representation that such trends or activities will continue in the future. In addition, even if actual results or developments are consistent with the forward-looking statements contained in this report, those results or developments may not be indicative of results or developments in future periods. As a result, the Company expressly disclaims any obligation or undertaking to release any updates or revisions to any forward-looking statements in this report as a result of any change in expectations or any change in events, conditions, assumptions or circumstances on which these forward-looking statements are based, except if specifically required to do so by law or regulation. Neither the Company nor its advisers or representatives nor any of its subsidiary undertakings or any such person’s officers or employees guarantees that the assumptions underlying such forward-looking statements are free from errors nor does either accept any responsibility for the future accuracy of the forward-looking statements contained in this report or the actual occurrence of the forecasted developments. You should not place undue reliance on forward-looking statements, which speak only as of the date of this report.

Use of the Idylla™ trademark, logo and product labeling

Biocartis and Idylla™ are registered trademarks in Europe, the United States and other countries. The Biocartis trademark and logo and the Idylla™ trademark and logo are used trademarks owned by Biocartis. Please refer to the product labeling for applicable intended uses for each individual Biocartis product. This report is not for distribution, directly or indirectly, in any jurisdiction where to do so would be unlawful. Any persons reading this report should inform themselves of and observe any such restrictions. Biocartis takes no responsibility for any violation of any such restrictions by any person. This report does not constitute an offer or invitation for the sale or purchase of securities in any jurisdiction. No securities of Biocartis may be offered or sold in the United States of America absent registration with the United States Securities and Exchange Commission or an exemption from registration under the U.S. Securities Act of 1933, as amended.

1.1 Message from the CHAIRMAN and the CEO

“2021 has proven to be an eventful year. A fire and a shortage of raw cartridge materials significantly troubled our cartridge manufacturing, but our teams managed through the situation extremely well and minimized impact to our loyal customers. We were undeniably held back in our ambition to grow much faster. Nonetheless, we were able to deliver a robust 40% volume growth in commercial cartridges for the full year and built out an installed base of close to 2,000 Idylla™ instruments, while exceeding EUR 50m in revenue from core activities. Simultaneously, 2021 was a year of menu expansion: we launched two new tests and signed new partnerships, including the partnership in melanoma with SkylineDx, for high-value test content on Idylla™. We also made important progress in the US, where we submitted our first oncology assay with the US FDA and our partner Immunexpress obtained US FDA 510(k) clearance for SeptiCyte® RAPID on Idylla™. Finally, the continued positive feedback from our customers and new studies re-confirmed the value of Idylla™ to patients. These growth drivers are all important as we pursue our mission to bring more, better, and faster molecular diagnostics to patients across the globe, through the offering of tests across the entire spectrum of cancer care, from prognosis to surveillance, and in infectious diseases. Looking ahead at 2022, we will continue to grow revenues and lay a solid foundation for profitable growth as we scale our manufacturing capabilities and significantly reduce the cash burn while developing, together with partners, new high value tests on Idylla™.”

growing with and through challenges

In 2021, Biocartis continued its growth pace and placed 331 net new Idylla™ instruments reaching a total global installed base of close to 2,000 Idylla™ instruments at year-end. We also delivered on our target of 40% commercial cartridge growth. We are proud of this growth, despite the many unexpected challenges that Biocartis was presented with during the year 2021. After a very strong performance in the first half of 2021, the fire that broke out at one of the warehouse facilities in Mechelen (Belgium) end of July, and the disrupted supply of cartridge reagent supplies due to the pandemic limited our production capacity. Consequently, we were held back in serving customer demand that remained very strong throughout the year. Nevertheless, our teams did a tremendous job to restart production in two months, once again showing incredible resilience in times of adversity. We believe that as a company, we grew with and through these challenges and came out stronger, ready for the future.

towards more high-value test content on Idylla™

We are committed to grow towards profitability and keep our focus on adding more high-value test content on Idylla™. In oncology, we launched our unique Idylla™ GeneFusion Assay (RUO) as a rapid lab workflow solution for gene fusion testing of ALK, ROS1, RET, NTRK 1/2/3, as well as MET exon 14 skipping which is increasingly used in research covering lung, thyroid and other cancers. Our new partnerships also supported us towards more high-value test content. We signed an agreement with Dutch and US based SkylineDx in April 2021 for the development of the Merlin Assay on Idylla™, aimed at predicting a patient’s risk of nodal metastasis in melanoma. This proprietary test has the potential to make a real difference as a rapid and easy-to-use tool for physicians to identify patients who may safely forgo a biopsy procedure, which is an invasive surgical intervention under general anesthesia often used today to determine prognosis and treatment decisions. Finally, we also expanded our partnership with AstraZeneca with a new commercial agreement to increase access to rapid and easy-to-use Idylla™ EGFR testing products for patients with non-small cell lung cancer that have tumor mutations suitable for a more targeted treatment approach. In infectious diseases, we equally stepped up our efforts and launched our combination panel, the Idylla™ SARS-CoV2/Flu/RSV Panel (CE-IVD), which detects, in a single cartridge, SARS-CoV-2, Flu A/B and RSV nucleic acids, with results in approximately 90 minutes.

US: first oncology assay submission and US FDA cleared partner test

In our mission to decentralize molecular diagnostic testing and allow in-house testing at virtually any lab, large or small, it is important to obtain regulatory clearance for our in vitro diagnostics (IVD) assays. In April 2021 we submitted our Idylla™ MSI Test to the US FDA for 510(k) clearance. This was a milestone for Biocartis, as it was our first US FDA oncology assay submission. Once the 510(k) clearance is obtained, both large and smaller US labs are expected to benefit from this fast and easy to use Idylla™ MSI testing thanks to the fully automated sample-to-result nature of our platform. As such, we expect to appeal to and penetrate a considerably larger target market. In November 2021, our partner Immunexpress announced that the US FDA granted 510(k) clearance for SeptiCyte® RAPID. Following the commercial launch of this test in Europe in 2020, the US FDA 510(k) clearance opened the path for a full commercial roll-out of this test in the US. This shows how our partners can really benefit from developing their test content on our decentralized Idylla™ platform. For Biocartis, Immunexpress’ and Biocartis’ commercialization efforts of this test in the US are expected to expand the US Idylla™ installed base and to strengthen cartridge volume growth.

SOLID foundation for an attractive growth strategy

The past years we have worked hard to build strong fundamentals: a solid menu of 10+ Idylla™ tests offered in over 70 countries across the world, a healthy pipeline of novel high value-added tests, an installed base of close to 2,000 Idylla™ instruments mainly in oncology, a strongly validated technology and scalable fully automated cartridge manufacturing. Looking ahead to 2022, we will continue to build on those fundamentals, and we are committed to grow revenues, scale manufacturing, improve gross margins and reduce our cash burn on our way to profitability.

Yours sincerely,

Herman VerrelstChristian Reinaudo
CEOChairman of the Board of Directors

1.2 who we ARE

Biocartis is an innovative molecular diagnostics (MDx) company providing next generation diagnostic solutions with its unique proprietary Idylla™ platform, aimed at improving clinical practice for the benefit of patients, clinicians, payers and the healthcare industry.

Biocartis’ proprietary MDx Idylla™ platform is a fully automated sample-to-result, real-time PCR (Polymerase Chain Reaction) system that offers accurate, highly reliable molecular information from virtually any biological sample, in virtually any setting, allowing fast and effective treatment selection and treatment progress monitoring.

The headquarters of Biocartis Group NV are located in Mechelen, Belgium. The Company was incorporated on 24 November 2014 and is registered in Belgium under enterprise number 0505.640.808 (register of legal entities Antwerp, division Mechelen). In general, the majority of operational activities are centralized in Mechelen (Belgium) on several premises with a total size of approx. 7,000 sqm. In addition, Biocartis has an own team in the US to support its US commercialization, regulatory and clinical efforts. Furthermore, Biocartis’ joint venture, WondfoCartis Ltd., was established in 2018 in China as a joint venture owned 50% by Biocartis Group and 50% by Wondfo Biotech (HK) Co., Ltd.

1.3 Share and share capital

Major shareholders

Biocartis has an international shareholder structure with both large and smaller specialized shareholders in healthcare and life sciences, and a broad base of retail investors. Based on the number of shares as of 31 December 2021 and the transparency notifications received until that date, the shareholder structure of the Company was as follows:

(1) Invesco, Ltd. is not a controlled entity

(2) Johnson & Johnson Innovation-JJDC, Inc., is a wholly owned subsidiary of Johnson & Johnson. Johnson & Johnson is not a controlled entity

(3) The Flemish Region controls ParticipatieMaatschappij Vlaanderen NV

(4) Credit Suisse Group AG controls Credit Suisse Group AG, Credit Suisse AG, Credit Suisse AG, Dublin Branch / Credit Suisse Group AG, Credit Suisse AG, Credit Suisse Asset Management International Holding Ltd., Credit Suisse Asset Management & Investor Service (Schweiz) Holding AG, Credit Suisse Fund Management S.A. / Credit Suisse Group AG, Credit Suisse AG, Credit Suisse International

The articles of association of Biocartis Group NV provide for shareholders notification threshold of 3%, 5% or a multiple of 5% (i.e. 10%, 15%, 20%, etc) of the total number of existing voting rights. All transparency notifications are available under the ‘investor relations’ section on www.biocartis.com. More details on the outstanding shares, share capital and stock-based incentive plans can be found in the Corporate Governance Report.

Share performance

Below is an overview of Biocartis’ share price performance compared to three relevant stock indices:

• Nasdaq Biotechnology Index (US focused)
• Next Biotech Index (European focused)
• BEL20 Index (Belgium focused)

Biocartis’ closing share price on 31 December 2021 was EUR 3.61.

Trading volume

Below is a summary of the 2021 trading volumes of Biocartis’ share.

Source: Bloomberg

Analyst coverage

The Biocartis share was covered by five analysts end of 2021. For more recent information about financial analyst ratings, please see the Biocartis investor website.

Financial calendar 2022

• 24 February 2022 Full year results 2021

• 31 March 2022 Publication Annual Report 2021

• To be determined Q1 2022 Business Update

• 13 May 2022 Annual General Meeting Biocartis Group NV

• 1 September 2022 H1 2022 results

• To be determined Q3 2022 Business Update

Investor relation details

For any investor relation related questions, please contact Renate Degrave, Biocartis, Generaal de Wittelaan 11 B, 2800 Mechelen (Belgium), tel. +32 15 631 729, rdegrave@biocartis.com.

• 1.4 key achievements in 2021

• Installed base of 1,912 Idylla™ instruments and 323 cartridges sold in 2021, +40% versus 2020
• Revenue from product sales and Idylla™ system services amounted to EUR 42.2m, a year-over-year increase of 27%
• Total revenue of EUR 48.3m, up 12% from 2020
• New partnership agreement with SkylineDx for the development of the Merlin Assay on Idylla™
• Expanded partnership with AstraZeneca to improve access to rapid and easy-to-use Idylla™ EGFR testing products
• Launch of the Idylla™ GeneFusion Assay (RUO)
• First oncology assay US FDA submission with the 510(k) submission of the Idylla™ MSI Test
• Launch of the Idylla™ SARS-CoV2/Flu/RSV Panel (CE-IVD)
• US FDA 510(k) clearance for SeptiCyte® RAPID on Idylla™ (CE-IVD, US FDA 510(k)) obtained by partner Immunexpress
• 407 employees⁶, over 30 nationalities & balanced 50-50% gender diversity

COMMERCIAL HIGHLIGHTS

• Global – The number of commercial cartridges sold in 2021 grew by 40% to 323k from 230k in 2020. Oncology volumes were driven by a strong customer demand in all regions, resulting in +96% growth in the first half of 2021. Cartridge volumes also included a continued contribution from the Idylla™ SARS-CoV-2 Test that was comparable to the second half of 2020. Nevertheless, the global supply of reagents was already disrupted in the first half of 2021, and the fire at one of the Biocartis facilities at the end of July 2021 only added to a constrained production capacity on the Company’s high-throughput manufacturing line (ML2). The production on the ML2 line had to be halted for two months and the replenishment of raw materials restrained the growth of the commercial cartridge volume for the full year to 40% as customer demand could only be partly met. The pace at which new Idylla™ instruments were installed equally slowed down because of insufficient cartridge supply needed to onboard new customers. Net new placements of 331 instrument were nevertheless in line with the stated objective for the year and strengthened the global installed base to 1,912 Idylla™ instruments. The ASP of commercial cartridges in 2021 amounted to EUR 96. As expected, the ASP for Idylla™ oncology assays of EUR 105 was diluted by lower prices for the Idylla™ SARS-CoV-2 Test as compared to 2020. Sales related to the Idylla™ SARS-CoV-2 products amounted to 14% of total revenues in 2021.

• Europe – Sales in Europe exceeded expectations with a year-over-year overall growth of 69%, driven by continued high growth in oncology as well as a strong sale of the Idylla™ SARS-CoV-2 tests to new, large customers in Norway, the UK and Italy.
• US – In the US, the commercialization of Idylla™ products to new customers has not entirely normalized across the country. The Company took the opportunity to restructure its US commercial operations, putting in place new sales leadership to reorientate, expand and retrain its commercial staff. This restructuring, in combination with the overall market environment, temporarily paused new Idylla™ instrument placements and cartridge volumes in oncology stabilized. However, the ASP significantly increased, leading to robust double-digit growth of oncology cartridge revenue. As expected, demand for the Idylla™ SARS-CoV-2 Test reduced from the strong demand in the fourth quarter of 2020 which was characterized by a capacity constrained testing market.
• Distributor markets – Of all geographies, in oncology, the distributor markets grew the fastest 2021. Except for a few smaller countries, demand bounced back strongly from 2020, including in Latin-America that was hit hard by the pandemic. Initial commercial sales were accomplished in Russia and Taiwan, following product registrations in these markets in Q1 2021⁴. Additionally, further to new UK regulations, market authorizations for the Idylla™ platform and oncology assays have been granted by the UK MHRA regulatory agency in December 2021. Furthermore, in November 2021, the Idylla™ SARS-CoV-2 Test was submitted with the UK CTDA and the registration is expected in Q1 2022. Finally, in December 2021, Kazakhstan granted the registration of the Idylla™ platform and oncology assays.

• Japan commercialization – After successfully completing the clinical performance evaluation studies in Japan, Biocartis’ partner Nichirei Biosciences submitted in Q4 2021 the registration applications of the Idylla™ MSI Test, the Idylla™ KRAS Mutation Test and the Idylla™ NRAS-BRAF Mutation Test with the Japanese PMDA agency. Initial Idylla™ assay registrations in Japan are expected earliest end of 2022.
• China commercialization – Following the submission of the Idylla™ Instrument and Console with the China NMPA early 2021, Biocartis received initial feedback. The set-up of local manufacturing capability is nearing completion. Initial Idylla™ assays registrations in China are however not expected before late 2023 due to changed regulatory requirements regarding clinical validation.

TEST MENU AND PARTNERSHIP HIGHLIGHTS

• Oncology: In 2021, Biocartis progressed both in its test menu and partnerships:
• Idylla™ GeneFusion Assay – In March 2021, Biocartis launched the Idylla™ GeneFusion Assay (RUO) as a rapid lab workflow solution for gene fusion testing of ALK, ROS1, RET, NTRK 1/2/3, as well as MET exon 14 skipping which is increasingly used in research related to multiple cancer types including lung cancer, thyroid cancer and others. A CE-IVD launch of the Idylla™ GeneFusion Assay is expected in 2022;
• 510(k) submission Idylla™ MSI Test – In April 2021, Biocartis announced its first US FDA submission of an oncology assay with the 510(k) submission of its Idylla™ MSI Test for use as an in vitro diagnostic device intended for the identification of microsatellite instability (MSI) status in colorectal (colon) cancer (CRC) to aid in the differentiation between sporadic CRC and potential Lynch syndrome;
• Partnership SkylineDx – Also in April 2021, Biocartis announced the signing of a partnership agreement with SkylineDx which targets the development of their novel proprietary test, the Merlin Assay, on the Idylla™™ platform, which is aimed at predicting a patient’s risk of nodal metastasis in melanoma. The CE-IVD launch of the manual kit of the Merlin Assay in collaboration with SkylineDx for commercialization in Europe by Biocartis is expected this year ;
• Partnership AstraZeneca – In May 2021, Biocartis announced its expanded partnership with AstraZeneca to improve access to rapid and easy-to-use Idylla™ EGFR testing products at selected hospital sites in European and global distributor markets;
• VLAIO grant – Also in May 2021, Biocartis announced the EUR 1.4 million grant it received from VLAIO, the Flanders organization for Innovation & Entrepreneurship, for the ongoing development of a highly innovative technology to be deployed on the Idylla™ platform aimed at enabling the off-line customization of the Idylla™ cartridge;
• Partnership Ophiomics – Post the reporting period, on 8 February 2022, Biocartis announced it had signed an agreement with Ophiomics, a Lisbon (Portugal) based biotech company developing a precision medicine portfolio focused on liver cancer. The collaboration will initially focus on the commercialization of HepatoPredict™, a prognostic gene expression signature test to help identify which patients will benefit from curative-intent surgery, in particular liver transplantation. HepatoPredict™ will be distributed by Biocartis in Europe as a manual kit mainly addressing centralized expert laboratories, and the test may later be translated into a version on the Idylla™ platform;
• Partnership GeneproDx – RUO launch of the ThyroidPrint^© on Idylla™ in collaboration with GeneproDx is expected in 2022;
• Partnership LifeArc – RUO launch of the Idylla™™ ABC (Advanced Breast Cancer) Assay in collaboration with LifeArc is expected in 2022.

• Infectious diseases: In 2021 Biocartis further strengthened its infectious disease menu:

• Launch Idylla™ SARS-CoV2/Flu/RSV Panel – In September 2021, Biocartis announced the launch of its Idylla™ SARS-CoV2/Flu/RSV Panel (CE-IVD) which detects, in one single cartridge, SARS-CoV-2, Flu A/B and RSV nucleic acids, with results in approximately 90 minutes;
• 510(k) clearance for SeptiCyte® RAPID – In November 2021, Biocartis announced the US FDA granted 510(k) clearance for SeptiCyte® RAPID⁵ (CE-IVD, US FDA 510(k)) which runs on the Idylla™ platform⁶ and was developed under the partnership with Immunexpress⁷. The SeptiCyte^® RAPID is a fully automated, rapid host-response test⁸ that distinguishes sepsis from infection negative systemic inflammation in patients suspected of sepsis, providing actionable results in approximately 1 hour, enabling physicians to optimize patient management decisions. In 2022, SeptiCyte^® RAPID PLUS, an assay based on SeptiCyte^® RAPID that can also distinguish between bacterial and viral infections, is expected to be launched as a CE-IVD.

• Idylla™ performance data: During 2021, 34 new Idylla™ papers were published, bringing the total number of Idylla™ papers published end of 2021 to 123. Idylla™’s excellence along with the performance of Idylla™’s EGFR⁹ testing solutions was emphasized through several studies and abstracts:
  • In February 2021, Biocartis announced the publication of two studies¹⁰ by Memorial Sloan Kettering Cancer Center (‘MSKCC’, New York, US) on the use of Biocartis’ Idylla™ EGFR Mutation Assay (RUO) as a rapid first-line testing method before using next-generation sequencing (NGS). Both studies concluded that Idylla™ EGFR testing enables rapid assessment of the most common EGFR mutations with low sample input, even on different sample types, without compromising subsequent more comprehensive NGS testing¹¹;
  • In November 2021, Biocartis announced the publication of a study¹² which concluded that the Idylla™ platform contributes to improving patient management decisions for patients with non-small cell lung cancer (NSCLC) through the faster screening of EGFR mutations.

ORGANIZATIONAL AND OPERATIONAL HIGHLIGHTS

• Fire incident –During the night of 30 July 2021, a fire broke out at one of the warehouse facilities in Mechelen (Belgium), causing the loss of finished products and raw materials as well as the temporary unavailability of the high-throughput ML2 manufacturing line. Cartridge manufacturing was suspended on the ML2 line for nearly two months and the time needed to replenish available stocks of raw materials caused order backlogs across a variety of Idylla™ assays in the second half of the year.
• Cartridge manufacturing – Transfer of the Idylla™ EGFR Mutation Test (CE-IVD) to the ML2 line was completed during H1 2021, as such concluding the transfer of Biocartis’ main oncology assays to the fully automated ML2 line. This is a key driver of cost optimizations within the Company’s cartridge manufacturing activities and was demonstrated by a 33% gross margin on assays produced on the ML2 line, despite lower-than-expected production volumes on this line throughout 2021. The Idylla™ SARS-CoV-2 Test and Idylla™ SARS-CoV-2/Flu/RSV Panel are being transferred to the ML2 line in the first half of 2022 and this is expected to further contribute to absorbing fixed manufacturing costs awaiting full capacity utilization of the ML2 line that can produce up to 1m tests annually.
• Ordinary and Extraordinary General Shareholders’ Meetings – During the ordinary shareholders’ meeting held on 14 May 2021, the shareholders of the Company approved all items on the agenda of the annual shareholders' meeting including the approval of the remuneration policy and report, the re-appointment of Herman Verrelst, Chief Executive Officer of the Company, as director of the Company for a term of four years, and the re-appointment of Christian Reinaudo as independent director of the Company for a term of three years. Since there was no deliberation and voting on the items on the agenda of the extraordinary shareholders’ meeting because the attendance quorum for such meeting was not reached, Biocartis convened a second extraordinary shareholders’ meeting with the same agenda items, for which no attendance quorum applied. During this extraordinary general shareholders’ meeting held on 4 June 2021, the shareholders of the Company approved all agenda items, including the renewal of the authorization to the Board of Directors to increase the share capital of the Company by up to 75% of the then current amount of the share capital, during a period of five years.

FINANCIAL HIGHLIGHTS

• Product sales revenues – Total product sales increased to EUR 40.5m in 2021, a 27% increase from EUR 31.9m in 2020.
  • Income from cartridge sales amounted to EUR 31.6m and grew 27% year-over-year. Total cartridge volume of 326k cartridges (+34%) included 323k commercial cartridges (+40%) and 4k R&D cartridges (-69%). As expected, the commercial ASP of EUR 105 in oncology was diluted by the lower pricing of the Idylla™ SARS-CoV-2 Test, resulting in an overall commercial ASP of EUR 96 compared to EUR 102 in 2020. Revenue generated by sales of the Idylla™ SARS-CoV-2 products represented 14% of total revenue.
  • The 331 net new installations of the Idylla™ platform was relatively consistent with 2020 (335), but the revenue increased by 25% to EUR 8.9m. The increase was primarily driven by a higher ASP while the proportion of capital sales in total placements of 51% remained comparable (2020: 49.5%).
• Total operating income – Total operating income amounted to EUR 54.9m in 2021 compared to EUR 55.6m in 2020. In addition to grant income of EUR 2.0m, other income included the insurance claim of EUR 4.6m for damages caused by the fire, including the impact of lost revenue. 2020 included a one-off settlement payment of EUR 10.3m (USD 12.0m) received in connection with the termination of the collaboration with Genomic Health, Inc. for the development of the Oncotype DX Breast Recurrence Score^® test on Idylla™. The continued growth of the installed base led to a 39% increase in income from system servicing (2021: EUR 1.7m; 2020: EUR 1.2m). Income from collaborations decreased from EUR 10.0m in 2020 to EUR 6.1m in 2021, in the absence of licensing fees (2020: EUR 1.8m) and because of lower R&D services provided to partners. Despite a growing number of collaborations, the recognition of revenue is strongly depending on and varying with the specific stage of the various development projects.
• Cost of goods sold – Cost of goods sold increased to EUR 33.9m, 29% higher than in 2020, driven by 40% higher commercial cartridge volumes. Despite higher cartridge volumes, the gross margin on product sales amounted to 16% in 2021 compared to 18% in 2020. The utilization of the high-throughput automated manufacturing line ML2 was significantly lower than planned as a direct result of the fire and constrained supply of certain reagents. During the forced two-month production stop of the ML2 line, the production of certain assays was transferred to the ML1 line to preserve customer supply as much as possible. The manufacturing capacity on the ML1 line is however significantly lower and the manufacturing cost significantly higher than on the ML2 line. However, even with low production volumes on the ML2 line throughout 2021, the gross margin on assays produced on the ML2 line already reached 33%, clearly demonstrating the Company’s ability to scale with unhindered and increasing production on the ML2 line. Additionally, the gross margin also slightly decreased because of lower pricing of the Idylla™ SARS-CoV-2 test products in 2021. Both tests are being transferred to the ML2 line in the first half of 2022 and will generate a contribution to the absorption of fixed manufacturing costs awaiting full capacity utilization of the ML2 line that can produce up to 1m tests annually.
• OPEX – Total operating expenses (excluding cost of sales) amounted to EUR 83.6m included a write-off of EUR 3.2m on raw materials and cartridges lost in the fire. Excluding the impact of the fire, operating expenses increased by EUR 4.2m or 6% from EUR 76.1m in 2020. As announced at the beginning of 2021, the Company allowed for exceptional investment in menu expansion and diversification. The pandemic and prioritizing the development of the Idylla™ SARS-CoV-2 Test in 2020 also led to the delay and carry-over of certain projects into 2021.
• Operational cash flow – Lower total operating income, higher operating expenses and the outstanding collection of most of the fire insurance claim caused the total cash flow used in operating and investing activities to increase from EUR 43.3m in 2020 to EUR 69.5m in 2021.
• Cash position - Biocartis’ cash position as per 31 December 2021 amounted to EUR 53.5m and included EUR 6.0m drawn-down on short-term credit facilities. Biocartis intends to significantly reduce its cash burn in 2022 and is investigating multiple options to strengthen its cash position the course of 2022.

Key figures 2021

The tables below show an overview of the key figures and a breakdown of operating income for 2021. A consolidated income statement, balance sheet, cash flow statement and statement of changes in shareholder equity of Biocartis Group NV is presented in part 5, Consolidated financial accounts.

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Income statement

Total operating income decreased by EUR 0.7m to EUR 54.9m in 2021. Collaboration revenue amounted to EUR 6m, a decrease of 39% from 2020. License fees amounted to EUR 0.2m compared to EUR 1.8m in 2020, while R&D service revenue decreased by EUR 2.3m from EUR 8.2m in 2020 to EUR 5.9m in 2021.

Revenue from product sales increased with EUR 8.6m or 27% from EUR 31.9m in 2020 to EUR 40.5m in 2021. Both Idylla™ cartridge sales and Idylla™ system revenues increased to EUR 31.6m and EUR 8.9m, respectively (2020: EUR 24.8m and EUR 7.1m). Idylla™ cartridge sales included revenue from the sale of 323k commercial cartridges and of 4k R&D cartridges. Services revenue amounted to EUR 1.7m in 2021 versus EUR 1.2m in 2020, a 39% increase in line with the growing installed base of Idylla™ systems.

Grant income increased to EUR 2.0m in 2021, an increase of EUR 0.9m compared to EUR 1.2m in 2020, and related to the recognition of subsidies awarded in relation to the establishment of a second cartridge manufacturing line, to the development of the Idylla™ SARS-CoV-2 Test and the Idylla™ GeneFusion Assay (RUO), as well as the highly innovative technology to be deployed on the Idylla™ platform aimed at enabling the off-line customization of the Idylla™ cartridge. Other income included a EUR 4.6m insurance claim for damages caused by the fire on 30 July 2021. In 2020, other income included a settlement fee of EUR 10.3m paid by Genomic Health (Exact Sciences) following the termination of the development of the Oncotype DX Breast Recurrence Score^® test on Idylla™, and the proceeds of a USD 1.0m loan received under the US Paycheck Protection Program (‘PPP’), that was entirely forgiven.

Total operating expenses amounted to EUR 117.5m in 2021, compared to EUR 102.4m in 2020. Within operating expenses, the cost of goods sold increased by EUR 7.6m from EUR 26.3m in 2020 to EUR 33.9m in 2021 as commercial cartridge volumes increased by 40%. The resulting gross margin on product sales amounted to 16% compared to 18% in 2020. The decrease of the gross margin resulted from a lower ASP on the Idylla™ SARS-CoV-2 Test compared to 2020. Prices for COVID-19 testing reduced as expected because the testing capacity was expanded. The lower than planned utilization of the high-throughput automated manufacturing line ML2 also caused gross margin on cartridges to be lower than expected. Production on the ML2 line was constrained because of the shortage of reagents during the first half of the year and because of the forced 2-month production stop after the fire on 30 July 2021. The production of certain assays was transferred to the ML1 line to preserve customer supply as much as possible, but the manufacturing capacity on the ML1 line is significantly lower and the manufacturing cost significantly higher than on the ML2 line.

Total operating expenses, excluding the cost of goods sold, increased by EUR 7.5m from EUR 76.1m in 2020 to EUR 83.6m in 2021 (including EUR 3.2m inventory write-off from the fire). R&D expenses amounted to EUR 48.1m, an increase of EUR 2.3m compared to 2020. In 2020, several projects were delayed and carried over to 2021. Furthermore, the Company invested in further menu expansion and diversification. These investments included the preparatory work to apply for conformity of our CE-IVD assays under the In Vitro Diagnostic Medical Devices Regulation (EU) 2017/746 (IVDR) that establishes a new regulatory framework for in vitro diagnostic medical devices. In addition to ongoing projects to broaden the core oncology test menu on Idylla™ and upgrading the functionality of the Idylla™ platform, the Company also developed and launched its Idylla™ SARS-CoV2/Flu/RSV Panel (CE-IVD) which detects, in one single cartridge, SARS-CoV-2, Flu A/B and RSV nucleic acids. Finally, R&D included the continued investment in the transfer of assays from the ML1 line to the ML2 line as well as continuous improvement projects with a view to optimize the manufacturing output. S&M and G&A expenses increased by EUR 1.0m and EUR 0.9m, respectively, reflecting inflation, the restructuring of the US commercial team and increased facility costs. Other expenses of EUR 3.2m entirely related to the write-off of materials and finished products lost in the fire.

The operating loss for 2021 amounted to EUR 62.6m compared to EUR 46.9m in 2020. Excluding the impact of the settlement fee of EUR 10.3m paid by Exact Sciences in 2020, the increase of EUR 5.5m resulted from higher and exceptional investment in various development projects and the build-out of the commercial and organizational infrastructure.

Net financial expenses in 2021 amounted to EUR 8.4m of which EUR 8.3m related to the outstanding balance of EUR 135m on the convertible bond. In 2020, net financial expenses amounted to EUR 15.8m, which included EUR 9.0m interest and debt appreciation expense and a cash payment of EUR 4.3m in connection with the incentivized exercise of conversion rights in relation to EUR 15 million aggregate principal amount of the convertible bonds.

Balance sheet

On 31 December 2021, total assets amounted to EUR 142.5m, compared to EUR 210.5m at the end of 2020. Non-current assets amounted to EUR 47.4m, compared to EUR 50.5m, mostly because of the net reduction of intangible assets and property, plant and equipment (EUR 3.5m) and an impairment charge of EUR 1.4m, offset by an investment in a convertible note issued by GeneproDx in lieu of payment for the technology access fee due under the collaboration agreement. Financial assets amounting to EUR 2.3m (2020: EUR 2.9m) included the investment in the China joint venture Wondfo-Cartis, which was adjusted by EUR 0.7m for our share in the loss for the year.

End 2021, current assets amounted to EUR 95.1m, a decrease of EUR 64.9m from EUR 160.0m in 2020, mainly because of the reduction in cash and cash equivalents of EUR 70.1m. Trade receivables increased by EUR 2.7m, an increase of 20% year-on-year which mainly resulted from the 27% increase in product revenues compared to 2020. Inventory only increased by EUR 0.4m. Stock levels of finished cartridges and raw materials decreased as a result of the fire and the insufficient supply of reagents to deliver all open customer orders. On the other hand, the inventory of Idylla™ instruments increased awaiting the availability of sufficient cartridges to onboard new customers. Other receivables increased by EUR 2.7m from EUR 4.0m in 2020 to EUR 6.6mn 2021 and included EUR 3.8m of uncollected insurance claims for fire damages. Other current assets decreased by EUR 0.4m.

On 31 December 2021, total financial debt amounted to EUR 154.2 compared to EUR 150.6m end of 2020. The increase resulted from the appreciation of the convertible bond by EUR 2.9m and a EUR 6.0m draw-down on working capital facilities, offset by the scheduled repayment of leasing obligations of EUR 5.2m.

Trade payables decreased by EUR 2.3m to EUR 11.6m in 2021. Other current liabilities increased by EUR 0.9m to EUR 8.4m, partly related to VAT payable as a result of Brexit and increased payroll related provisions as the number of employees (FTE or Full Time Equivalent) increased from 366 in 2020 to 407 in 2021.

Cash flow statement

The cash flow from operating activities in 2021 increased by EUR 26.4m to EUR 65.7m compared to EUR 39.3m in 2020. Apart from the collection of the EUR 10.3m settlement fee paid by Exact Sciences, 2020 was characterized by more cautious spending because of the pandemic and several projects being carried over to 2021, causing the operating loss to increase by EUR 15.8m to EUR 62.6m in 2021. Investments in working capital amounted to EUR 9.6m, a year-on-year increase of EUR 13.0m, in line with the expansion of our commercial activity and a significantly higher amount of trade payables at the end of last year. Furthermore, EUR 3.8m of losses caused by the fire were not yet collected from the insurance carriers on 31 December 2021. Interest expense was EUR 0.9m lower than in 2020 following the decrease of the convertible bond by EUR 15.0m in 2020.

The cash flow from investing activities in 2021 amounted to EUR -3.7m, compared to EUR -4.0m in 2020. Investments in property, plant and equipment amounted to EUR 3.7m in 2021, an increase of EUR 0.7m compared to 2020 and including capitalized Idylla™ systems as well as investments in laboratory and manufacturing equipment.

The cash flow from financing amounted to EUR -1.2m as a result of the scheduled repayment of lease and other obligations offset by the drawdown of EUR 6.0m on existing working capital facilities.

The total cash flow for 2021 amounted to EUR 70.7m compared to EUR -54.8m in 2020.

1.5 impact of COVID-19

Business impact and recovery from COVID-19

Since its outbreak in 2020, the pandemic impacted our business in various respects. Initially, the pandemic deprioritized and disrupted cancer care globally. Patient access to hospitals was significantly restricted throughout almost the entire first half of 2020 and customer prospection was severely hampered. Throughout the second half of 2020, testing volumes started to recover and gradually normalized to pre-pandemic levels. In 2021, patient access to hospitals was more sporadically restricted in specific regions with a high surge of COVID-19 cases, which resulted in an overburdened healthcare system and required cancer diagnosis and treatment to be delayed.

The pandemic also brought an opportunity to strengthen our offering in infectious diseases. In order to respond to our customers’ needs for COVID-19 testing, and to bridge the shortfall in oncology testing, we developed the Idylla™ SARS-CoV-2 Test (CE-IVD). The demand for this Test was particularly strong during the fourth quarter of 2020 in the US. In 2021, we upgraded the test and launched the Idylla™ SARS-CoV-2/Flu/RSV Panel (CE-IVD) which detects, in one single cartridge, SARS-CoV-2, Flu A/B and RSV¹³ nucleic acids. Together with Septicyte^® RAPID, developed in collaboration with Immunexpress, both tests added to the build-out of a broader infectious disease test menu on Idylla™. Furthermore, the partnership with Endpoint Health to develop and commercialize a novel test on Idylla™ will support therapeutic decisions for critical illnesses, adding to our suite of rapid response testing in acute settings such as ICUs for rapid triage and therapy selection for critically ill patients. Furthermore, Idylla™’s unique multiplexing platform capabilities can bring clear unique benefits to partners in the area of syndromic panel testing, one of the fastest growing MDx segments.

Supplier impact

Since the start of the pandemic, we raised our efforts to strengthen our supply chain and mitigate the risk of disruptions that could affect the supply of Idylla™ products to our customers. In 2021, we were nevertheless affected by the worldwide reagent supply shortages caused by the growing and worldwide need for COVID-19 PCR testing, one of the most effective components in the fight against the pandemic. The shortfall in critical reagents constrained our production capacity during the first half of 2021. Furthermore, a fire in one of our warehouses destroyed a significant part of reagent inventory that was difficult to replenish. As such, we were not able to serve all customer demand in 2021. We have increased our efforts to:

• Improve internal communications between sales and manufacturing teams to better align supply and demand
• Increase inventory levels where possible to ensure availability of raw materials by working closely with existing suppliers and by identifying new suppliers
• Increase safety stock levels of finished goods, where possible
• Work closely with preferred transportation partners to continue shipments to our partners and customers across the globe
• Raise our supply chain monitoring systems with weekly and even daily updates by our supply chain teams
• Work with main suppliers to further improve our ability to respond quickly to changing demand

Environmental impact

Just as in 2020, the main environmental impact of COVID-19 on our activities resulted from restricted travel by our sales teams (sales related travel), general management (business development and investor roadshow travel) as well as employees (commuting to the workplace). In 2021 we continued to limit travel due to a more engrained culture of virtual meetings. Less frequent employee commuting, and the lower utilization of office floor space positively impacted related energy, water use and carbon emissions at Biocartis sites. We also offered employees reusable masks to limit the amount of waste related to the continued pandemic.

Social impact

We supported our employees in a continued pandemic situation with varying COVID-19 measures:

• Our HR and Health & Safety teams continued to closely follow-up on safe working conditions for employees that needed to be on site (including production and technical teams) in full compliance with applicable regulations such as social distancing
• HR & internal communication teams regularly launched internal communication updates on safety measures, travel guidelines and other COVID-19 related rules
• Revision of HR policies and practices including on more flexible telework
• Transformation to a hybrid workspace with appropriate workstations at home and in the office, supported with the right digital communications tools. Office spaces were transformed to blend flex desks, dedicated team meeting rooms, individual workspaces as well as several large new meeting rooms were installed with enhanced digital working tools
• Launch of the employee wellbeing strategy and online platform ‘My Health Partner’ supporting on mental health and the hybrid way of working. Initiatives included online workshops, webinars, e-learning modules and monthly newsletters for employees and management, as well as the start of several workshop series on home office ergonomics and healthy hybrid working habits
• Further roll-out of a hybrid recruitment and training strategy, blending on-site and virtual activities
• (Re)connection moments for employees through team days on-site or ‘virtual coffee moments’ online

We will continue our wellbeing program in 2022 by continuously adding new information to the platform, complemented with regular newsletters to keep employees informed of new initiatives.

Long-term impact of COVID-19

• The pandemic clearly demonstrated the need for more, better and faster diagnostic testing. With the spread of COVID-19, the demand for molecular assays, particularly those involving PCR, has exploded and is expected to keep growing. In response to faster screening, the volume of point-of-care testing has also significantly risen. The pandemic may therefore lead to the broader adoption of decentralized PCR testing, and positively impact the demand for Idylla™, a fully automated platform with rapid turn-around time and unmatched ease-of-use. Idylla™ is ideally suited to capitalize on the trend for more personalized medicine in oncology while addressing the need for fast-response infectious disease testing in acute settings at the same time.
• The growing demand for PCR testing has led to a significant expansion of testing capacity, which will likely remain in place as the pandemic subsides. Furthermore, the shortage of reagent supplies and the growing demand have garnered regulatory support for the use of new technologies as an alternative to PCR-based COVID-19 testing, including NGS. Both could lead to increased competition, including in our core oncology activities, as the additional capacity and new technologies search for alternative ways of deployment in a post-pandemic environment.
• The pandemic has made Biocartis more resilient and efficient. Among others, the afore-mentioned positive environmental and social impact is expected to have a sustainable long-term impact on how we operate. The pandemic increased awareness in multiple areas such as business risk, mental well-being, cost-effective ways of working, supply continuity, etc. Many business practices and processes have developed throughout the pandemic and are expected to improve our ability to adapt to rapidly changing circumstances and more adequately respond to crisis.

Government support measures

In 2020, our US subsidiary, Biocartis Inc., received a loan of USD 1m under the US Paycheck Protection Program (‘PPP’), established as part of the Coronavirus Aid, Relief and Economic Security Act (‘CARES Act’). On 29 October 2020, Biocartis Inc. submitted a loan forgiveness application for the full amount of the loan plus applicable interest to its lender. The lender approved the forgiveness application and recommended full forgiveness to the Small Business Administration (‘SBA’). On 31 March 2021, the loan was effectively forgiven. In 2021 Biocartis did not benefit from any other government support measures related to the COVID-19 pandemic.

1.6 impact of the war in ukraine

Biocartis has no sales in Ukraine. In Russia, Biocartis works through a local sales distributor who realized first commercial sales in H1 2021 following completion of first product registrations in Russia in Q1 2021. The impact to expected revenue for 2022 from Russian distributor sales that were projected prior to the start of the war, is not material. Supplier exposure is limited to 1 indirect supplier for Idylla™ instrument sub-parts who is based in Russia. Based on the current level of inventory on-hand and on various alternative sources of supply that were identified and are currently being assessed, Biocartis does not expect any material adverse impact on the continued supply of instruments.

PART 2/

strategy

2.1 market of Molecular diagnostics

what is Molecular diagnostics?

The study of diseases has led to the discovery of macromolecules associated with specific diseases or treatment response. These macromolecules can be used as biomarkers and can be detected in patient samples such as blood, urine, sputum, saliva or tissue such as tumor tissue. Molecular testing or diagnostics (MDx) is the primary tool used to identify the presence of molecular biomarkers in these patient samples. In cancer, measuring the presence of a biomarker associated with a patient’s tumor can provide crucial information on the applicability of a new generation of more effective targeted treatments, providing an opportunity for better health outcomes and reduced healthcare costs. Tailoring treatment to the genetic profile of a patient is part of a trend towards personalized medicine.

Speed is of the essence. Rapid access to accurate data about the relevant pathogens in infectious diseases, or about the relevant cancer mutations or treatment resistance in oncology, is vital. Early disease interception¹⁴ reduces the anxiety while waiting for results and the time before starting the best possible treatment. In molecular diagnostics, current technologies are often complex, require a lot of hands-on time and are difficult to implement in the local laboratory. As a consequence, most laboratories do not perform molecular tests in-house, but send samples out to specialized centers, where they are batched in order to optimize costs¹⁵. This delays the fast delivery of results, preventing rapid initiation of the most beneficial therapy.

MDx testing today still suffers from many inefficiencies, which delay results and impacts patients. The Idylla™ platform provides a unique solution offering results available in minutes or hours instead of days or weeks, a fully automated workflow with little to no hands-on time and superior performance in a single proprietary and versatile platform that can be used both in oncology and infectious diseases. Biocartis has a focus in oncology since 2017 where Idylla™ can make the biggest difference because of its unique features including:

Rapid and fully automated testing

Decentralized testing with the performance of lab reference testing

On both solid and liquid biopsies

“Idylla™ is a revolutionary, fully automated system that makes molecular testing convenient, affordable & exceptionally fast. Suitable for any lab.”

Idylla™ platform, roIdylla™echnology with validated performance

The Idylla™ platform is a fully automated, real-time PCR-based molecular diagnostics system that provides same-day results enabling physicians to make timely decisions on patients’ therapy. Idylla™ can be used with multiple sample types, including solid and liquid biopsies.

This flexibility allows use of Idylla™ for diagnosis, research or possibly future monitoring applications with its compact scalable design and outstanding ease-of-use, Idylla™ overcomes the traditional barriers of molecular diagnostics, allowing it to be used in virtually any laboratory setting. The simplified four-step Idylla™ workflow drastically limits the number and duration of operator steps that have traditionally led to high labor costs and risks of errors for MDx tests, and generally take no longer than two minutes:

• The Idylla™ platform is composed of a console (display), an instrument (stackable up to eight) and a disposable cartridge, a plastic consumable with all necessary reagents on board to process a clinical sample and to detect the molecular biomarkers of interest. All cartridges share a common hardware design but are made application-specific by their reagent content, test execution protocol (software) and labeling.
• The Idylla™ platform in combination with the Idylla™ assays or tests differs from other technologies in its outstanding ease-of-use, leading to an unsurpassed level of standardization, short turnaround time, enabling fast results and allowing a more rapid start of the appropriate targeted therapy.

The Idylla™ technology has been validated by 34 new published Idylla™ papers in 2021, bringing the total number of Idylla™ papers to 123 end of 2021.

BROAD MENU IN Oncology

Idylla™ solutions today include a broad menu of +10 on-market tests positioned within the entire spectrum of cancer care - from prognosis to surveillance - as well as infectious diseases, thanks to the leveraging of our network of partnerships.

Serving needs across the cancer treatment continuum

Throughout the treatment continuum, a cancer patient is confronted with cancer diagnostic testing at several points. Molecular tests are indeed used to diagnose cancer, to determine the exact stage of the disease and to select the right therapy. Later, testing occurs to amongst others measure the response to treatment, the presence of residual tumor and eventually to monitor the potential recurrence of the cancer and the need to restart therapy.

Across the cancer treatment continuum, there are five important strategic trends where Idylla™ can play a unique role:

Targeted therapies: Biocartis’ current products are primarily geared at therapy selection. Especially within colorectal and lung cancer, Biocartis has built a comprehensive actionable panel of first-line tests.

Pan-tumor: An adjacent trend is the application of targeted therapies in a pan-tumor setting, where therapy selection is increasingly driven by the genetic make-up of the tumor rather than its tissue of origin within the body. This allows the use of treatments and their corresponding tests across different cancer types, which leads to a broader applicability of our Idylla™ test menu.

Gene signatures: Gene signatures have popped up as an important new class of molecular diagnostic test, offering applications beyond therapy selection, such as cancer risk or prognostics. The value of these tests is potentially high, but their development and validation is long and costly. As such, Biocartis is tackling these developments through a partnership strategy whereby validated, proprietary and high-value oncology gene signature tests are ported onto the Idylla™ platform. The growing Idylla™ installed base then facilitates the global roll-out of these high-value gene signature tests.

Immuno-oncology: This is a rapidly rising new class of cancer treatments, based on therapies that harness the immune system to fight cancer. In particular, Biocartis aims at a test menu for two major therapeutic classes: immune checkpoint inhibitors and cell-based therapy. The three primary components of this menu include (1) MSI validation for immune checkpoint inhibitor selection in colorectal cancer and later pan-cancer settings, (2) immune signatures that provide information about the immune system’s activity within a tumor, and (3) tests that can predict the response or resistance of the tumor to immune therapies.

Liquid-biopsy based monitoring applications: Liquid biopsy testing continues to gain a lot of momentum. Today, it is already being used for therapy selection when insufficient tumor tissue is available. Beyond diagnosis, liquid biopsy can also be used in prognosis and therapy response. Within liquid biopsy, Biocartis will focus on key applications where Idylla™’s speed is required and thus represents a critical competitive advantage, including on-therapy monitoring and post-treatment MRD (Minimal Residual Disease) assessment for solid tumors, as well as select long-term recurrence monitoring applications in hematological cancers where guidelines already exist.

broad oncology program and test menu

Idylla™ solid biopsy tests for mCRC provide fast, reliable information on tumor mutation status for KRAS, NRAS and BRAF reducing the clinical turnaround time significantly to 1-2 days. In an independent comparison study, the Idylla™ KRAS Mutation Test outperformed several NGS technologies as well as other PCR-based technologies with regard to sensitivity, turn-around-time and ease of use³⁵. The Idylla™ mCRC solid biopsy panel includes 3 different RAS mutation tests:

• Idylla™ KRAS Mutation Assay: fully automated detection of 21 KRAS mutations directly from a single slice of FFPE tissue
• Idylla™ ctKRAS Mutation Assay: fully automated detection of 21 KRAS mutations directly from 1mL plasma
• Idylla™ BRAF Mutation Assay: fully automated detection of 7 BRAF mutations directly from a single slice of FFPE tissue
• Idylla™ ctBRAF Mutation Assay: covers 7 BRAF mutations and showed a 100% concordance compared to plasma-based reference technologies
• Idylla™ EGFR Mutation Assay: fully automated detection of 51 EGFR mutations directly from a single slice of FFPE tissue
• Idylla™ ctEGFR Mutation Assay: covers 49 EGFR mutations and showed high concordance compared to NGS
• Idylla™ NRAS-BRAF-EGFR- S492R Mutation Assay: fully automated detection of 18 mutations in NRAS and 5 mutations in BRAF as well as 2 EGFR mutations directly from a single slice of FFPE tissue
• Idylla™ ctNRAS-BRAF-EGFR- S492R Mutation Assay: fully automated detection of 18 mutations in NRAS and 5 mutations in BRAF as well as 2 EGFR mutations directly from 1mL plasma
• Idylla™ GeneFusion Assay: fully automated detection of ALK, ROS1, RET, NTRK1/2/3 rearrangements and MET exon 14 skipping in a single cartridge

Infectious diseases

The pandemic context brought about a higher need for decentralized molecular diagnostic testing, which matches Biocartis’ ambition to build an installed base in acute settings where rapid diagnostic information is needed most, such as in the intensive care unit (ICU).

On 12 March 2019, Biocartis announced the signing of a collaboration agreement with Bristol-Myers Squibb Company (NYSE: BMY), a global biopharmaceutical company, aimed at the potential registration as a companion diagnostic and use of the Idylla™ MSI test in connection with immuno-oncology therapies. The collaboration agreement allows for joint developments and registrations of the Idylla™ MSI test for use in a variety of indications, commercial settings and geographies. The first focus under the agreement is expected to be the registration in the US of the Idylla™ MSI test as a companion diagnostic test in mCRC. On 5 March 2020, Biocartis announced to have signed a new immune-oncology project with Bristol-Myers Squibb Company aimed at the registration of the Idylla™ MSI test in the People’s Republic of China. On 1 October 2020, Biocartis joined the COVID-19 Industry Testing Consortium led by BMS with the aim to improve, innovate and accelerate all aspects of testing, including research, regulatory oversight, clinical implications, reliability and access.

COVANCE

On 23 April 2019, Biocartis announced the global strategic commercialization agreement with Covance, LabCorp’s Drug Development business, which has the leading central laboratory network serving the biopharma industry, across multiple therapeutic areas, with a specific focus on precision medicine. The agreement aims at offering the Idylla™ platform and its existing Idylla™ oncology assay menu (research use only) to Covance’s customer base to support global oncology trials and, when appropriate, to validate and implement companion diagnostic applications.

Endpoint Health

On 3 November 2020, Biocartis announced a partnership agreement with Endpoint Health, a Palo Alto, CA (USA) based company developing personalized care solutions and targeted therapies for critically ill patients. The partnership targets the development and commercialization of a novel companion diagnostic (CDx) test on the Idylla™ platform and will further strengthen the CDx business and infectious disease test menu on Idylla™. Under the terms of the agreement, Endpoint Health will lead the development and registration of the Idylla™ Endpoint test in interventional trials across a range of interventions including targeted immunotherapy and coagulation therapy indications.

geneproD_x

On 3 November 2020, Biocartis announced a license, development and commercialization agreement with GeneproDx, a molecular diagnostics company based in Santiago, Chile, for the development of GeneproDx’s novel genomic test ThyroidPrint® on the Idylla™ platform. ThyroidPrint^® is a quantitative RT-PCR⁴⁴ based mRNA-expression classifier⁴⁵ test that helps to determine whether a thyroid nodule with an indeterminate cytology result is benign or malignant⁴⁶. A benign test result⁴⁷ allows physicians to recommend watchful waiting as an alternative to diagnostic surgery and prevents exposing patients to surgical risks and permanent thyroid hormone supplementation. Under the terms of the agreement, GeneproDx will take the lead in the development of the Idylla™ ThyroidPrint® test, whereas Biocartis will be responsible for the distribution of the ThyroidPrint® on Idylla™ through its growing commercial infrastructure of Idylla™ instruments across the globe.

Immunexpress

Biocartis and Immunexpress Pty Ltd (‘Immunexpress’), a host response molecular diagnostic company committed to improving clinical and economic outcomes for suspected sepsis patients, collaborate since 24 January 2018 on the development and commercialization of Immunexpress’ SeptiCypte® test for use on the Idylla™ platform. On 26 March 2020, Biocartis announced the expansion of its Immunexpress partnership with a co-commercialization agreement for the SeptiCyte® RAPID test for use on the Idylla™ platform, in which Biocartis will lead commercialization in Europe as the exclusive distributor of the SeptiCyte® RAPID on Idylla™, while Immunexpress will lead commercialization of the SeptiCyte® RAPID on Idylla™ in the US. The SeptiCyte® RAPID on Idylla™ was released on market as a CE-marked IVD test on 6 October 2020 and Immunexpress received 510(k) clearance by the US FDA for this test on 30 November 2021.

KITE/Gilead

On 1 June 2019, Biocartis announced a Master Development and Commercialization Agreement with Kite, a Gilead Company (a pharmaceutical company engaged in the development of innovative cancer cell therapies). The agreement aims at developing molecular-based assays on the Idylla™ platform that are supportive to Kite’s therapies. The collaboration with Kite is Biocartis’ second assay development partnership (next to the partnership with BMS) in the immunotherapy domain, a fast-growing market and one of the key strategic focus areas of the Idylla™ assay menu.

LIFEARC
On 7 June 2017, Biocartis announced its agreement with LifeArc, a medical research charity, for the development of selected MDx tests for Idylla™. For each selected test, LifeArc will act as a development contractor, whereas Biocartis will be responsible for the commercialization of the tests under its own label. Biocartis and LifeArc are developing the Idylla™ Advanced Breast Cancer Panel which is positioned to target a multi-gene panel of predictive and resistance-inducing mutations based on an FFPE sample type. The Idylla™ Advanced Breast Cancer Panel is being prepared for use in research setting (RUO). On 1 September 2020, Biocartis announced to have expanded its agreement with LifeArc. Under the new agreement, LifeArc obtains a non-exclusive license to use the Idylla™ platform for the development of Idylla™ assays in the area of infectious and immune related diseases, aimed at supporting patient stratification and treatment monitoring of patients with, amongst others, bacterial, fungal and viral infections.

NICHIREI BIOSCIENCES
On 7 January 2019, Biocartis announced to have signed an agreement with Nichirei Biosciences for the product registrations and distribution of the Idylla™ platform in Japan. In October 2019, Nichirei Bio completed the registration of the Idylla™ Instrument and Idylla™ Console with the Pharmaceuticals and Medical Devices Agency (PMDA) in Japan. With that, Nichirei Biosciences will now be able to offer the Idylla™ platform in combination with Idylla™ RUO assays to local pathology laboratories in Japan. Nichirei Biosciences submitted in Q4 2021 the registration applications of the Idylla™ MSI Test, the Idylla™ KRAS Mutation Test, and the Idylla™ NRAS-BRAF Mutation Test with the PMDA.

Firstly, Biocartis targets the central MDx testing labs and mid and large sized pathology laboratories that already perform oncology MDx testing today. One of the biggest challenges these large pathology labs face with biomarker testing is the ability to obtain samples of sufficient size and quality. With Idylla™, only a minimal amount of sample is needed. Compared with NGS and other RT-PCR testing methods, Idylla™ also eliminates the need for the use of multiple instruments, large quantities of consumable items and increased square footage of laboratory space. Everything the lab needs is provided in a single disposable cartridge, making it also fast and easy to use compared to existing molecular diagnostic workflows. Secondly, Biocartis targets the smaller sized pathology laboratories and hospitals that today do not yet perform MDx testing. The unique features and ease of use of the Idylla™ platform allows these customers to bring MDx testing in-house.

2.4 MARKET ACCESS

regulatory compliance

Although Biocartis directly invoices its customers, prices for its products are driven by the level of reimbursement to which its customers are entitled either by public payers or private insurance companies. Each national health system and private insurer considers different aspects when deciding whether or not to reimburse an IVD test, such as the cost to society or the price. Although most Idylla™ assays in Biocartis’ product offering today contain biomarkers that are already included in the clinical guidelines and are as such mostly already reimbursed by third-party payers, changes in reimbursement levels or methods may positively or negatively affect sales of Idylla™ products. Through its partners or directly, Biocartis therefore works with several specialized consulting companies that also have specialized skills in reimbursement and market access, or contacts with payors.

Below is an overview of the main MDx markets and their reimbursement systems.

Biocartis faces intense competition from a number of companies that offer solutions and technologies in its target markets, covering both oncology and infectious disease applications. Although the Idylla™ platform is the first random-access sample-to-result platform to offer a broad menu of MDx tests in the oncology field, it could be that other random-access sample-to-result platforms will be brought to the market along with a broad menu of MDx tests in the oncology field in the future or that existing random-access sample-to-result platforms that are currently deployed in other MDx markets could extend their focus to the oncology MDx market. Given that Biocartis is extending its offering with tests that target proprietary biomarkers of its partners (be it plate-based tests or tests to be performed on the Idylla™ platform), it will also face competition from companies that offer tests that target competing biomarkers to be run on a random-access MDx platform or as a plate-based test. Biocartis' primary competitors within the oncology and infectious disease MDx industry, some of which have substantially greater financial resources and larger, more established marketing, sales and service organizations than those of Biocartis, include:

• Larger and/or more established diagnostic companies with existing installed bases of plate-based MDx systems, high-throughput batch-based MDx systems and existing menus of tests;
• Clinical service laboratories that provide entire MDx service solutions to customers, including tests, which they may themselves perform on commercially available instruments and test platforms or on internally developed manual test protocols, also known as ‘homebrew’ tests;
• Companies that market and/or develop integrated random-access sample-to-result systems that may directly compete with Idylla™;
• Companies that market and/or develop sequencing-, qPCR, digital PCR-, or mass spectrometry-based detection systems for use in MDx testing; and
• Companies developing tests for the above-mentioned systems.

The commercial success of Biocartis will depend on the market acceptance of the Idylla™ platform, the menu of IDYLLA™ AND PARTNER tests it offers and the relevance thereof.

Biocartis launched its Idylla™ platform and its first test, the Idylla™ BRAF Mutation Test, for commercial sale in countries recognizing CE-marked in vitro diagnostic (‘IVD’) devices at the end of 2014. The CE-mark is a mandatory conformance mark on many products placed on the market in the European Union (‘EU’). The letters ‘CE’ stand for 'Conformité Européenne' ('European Conformity'). Since the end of 2014, Biocartis has launched several additional Idylla™ tests, and it intends to continue to broaden its commercial offering with additional Idylla™ tests and with tests that target proprietary biomarkers of its partners (be it as plate-based tests or tests to be performed on the Idylla™ platform). There can however be no assurance that Biocartis' current products or any such future products will gain acceptance by the market. A number of factors, many of which are outside the control of Biocartis, may affect the market acceptance of such products, including:

• The speed and breadth of building an installed base of Idylla™ platforms, which will, in part, depend on the ability of Biocartis and its partners to commercialize the Idylla™ platform;
• The speed at which customers start using the Idylla™ platform after installation, and the volume of tests they consume on their Idylla™ platform;
• The performance of the products as compared to competing products;
• The breadth and quality of the menu of tests offered by Biocartis and the timing of their development, including as compared to the test menus that competitors are developing;
• Potential delays in the launch of new tests (for further information, see risk factor ‘Delays in the development of tests may occur and cause a slower availability of a broad and clinically relevant menu of tests, which may result in increased costs and/or jeopardize Biocartis' ability to obtain market acceptance and/or relevant regulatory approvals in line with its strategy. Biocartis cannot give assurance that it will be able to launch new tests as quickly as it anticipates.’);
• The accurate anticipation of patients', healthcare providers' and third party payers' needs and emerging clinical and technological trends;
• The competition (for further information, see risk factor ‘The molecular diagnostics industry is highly competitive and characterized by rapid technological changes, and Biocartis may be unable to keep pace with its competitors.’);
• The unavailability of the products offered by Biocartis due to regulatory barriers (for further information, see risk factor ‘Biocartis' business could be significantly and negatively affected by substantial changes to government regulations, particularly in the European Union and the United States.’);
• The market perception of the performance and quality of the products offered by Biocartis;
• The fact that healthcare providers typically take a long time to adopt new products and testing practices, partly because of uncertainties around third-party coverage and reimbursement, which may be of particular importance for the partner products that Biocartis manufactures and/or commercializes;
• The quality of the current and future service and maintenance organization of Biocartis to support customers;
• The price and reimbursement level from third party payers (for further information, see risk factor ‘Biocartis faces uncertainties over the reimbursement for the products that it offers by third party payers and may be subject to strict price controls. Biocartis' potential customers are in part dependent on such reimbursement from third party payers, and inadequate coverage of reimbursement may compromise Biocartis' commercial success, which may adversely affect its future profitability.’);
• The ability to demonstrate to potential customers the benefits and cost-effectiveness of the products and services it offers relative to others available on the market;
• The ability of Biocartis to develop and maintain relationships with key opinion leaders;
• The ability of Biocartis to hire new sales and marketing personnel where needed and their effectiveness in executing its business strategy; and
• Other potential advantages and disadvantages over alternative (MDx) products and services.

These and other factors present obstacles to commercial market acceptance of the products offered by Biocartis, as well as any future products launched, for which Biocartis will have to spend substantial time and resources to overcome them.

Biocartis faces uncertainties over the reimbursement for THE products IT OFFERS by third party payers and may be subject to strict price controls. Biocartis' potential customers are in part dependent on such reimbursement from third party payers, and inadequate coverage of reimbursement may compromise Biocartis' commercial success, which may adversely affect its future profitability.

The commercial success of Biocartis' Idylla™ platform, the Idylla™ tests and any future Biocartis or partner products depends, in part, on the degree to which they are reimbursed by government and private payors (‘third party payers’) in the countries in which Biocartis operates. Physicians and hospitals are unlikely to use the Idylla™ platform, the Idylla™ tests and/or any future products offered by Biocartis, at all or to a material extent, if they do not receive adequate reimbursement.

To date, in most countries where Biocartis is commercializing its Idylla™ products, these are covered by existing ‘reimbursement codes’. However, it may be that in some countries reimbursement for the Idylla™ platform, the current Idylla™ tests and/or any future products offered by Biocartis will depend on obtaining a ‘reimbursement code’ for such product. Obtaining a reimbursement code can be a lengthy process (which can take months to years) and there is no guarantee that such a code can be obtained at satisfactory pricing levels, or at all. Following the grant of a ‘reimbursement code’, third party payers have to agree to provide coverage. Moreover, even if a ‘reimbursement code’ is in place for a product, governments may decide to change the reimbursement levels or stop reimbursement altogether for such product. Failure to obtain attractive reimbursement may materially and adversely affect Biocartis' business, financial condition, results of operations and prospects. There is a risk that a portion of the patients that could benefit from the products offered by Biocartis will not have any form of health insurance, and that those patients will not seek treatment for their conditions, which could have a negative impact on the estimated market sizes for Biocartis.

Reimbursement procedures in most countries where Biocartis is or will be active are highly complex and third party payer health plans are fragmented, which makes systematic reimbursement arrangements for new products that do not yet have an existing reimbursement difficult to establish. Consequently, Biocartis and, as the case may be, its partners could be faced with significant efforts and expenses to establish, and may never succeed in establishing, widespread or systematic reimbursement arrangements for their products.

Furthermore, reimbursement levels are set by parties outside the control of Biocartis and they may change over time. Generally, third party payers are increasingly exerting downward pressure on pricing and reviewing the cost effectiveness of medical products and services. With this global pressure on healthcare costs, third party payers are attempting to contain costs by, for example, limiting coverage and the level of reimbursement for new products. A reduction in reimbursement levels may affect the price that Biocartis is able to obtain for the products it offers.

Biocartis has entered into, and relies upon, a number of partnerships and alliances, including joint ventures, the termination of which may have negative effects on Biocartis.

To develop, commercialize and distribute the Idylla™ platform and tests, Biocartis has entered into several commercial and strategic partnerships and alliances, including joint ventures. Biocartis has also entered into, and intends to continue to enter into, partnerships with third parties who own or have rights to proprietary biomarkers. Such partnerships and alliances could be terminated, as the case may be outside the control of Biocartis, which could lead to reputational damages, increased investments and costs to be incurred by Biocartis, as well as other commercial prejudice. Moreover, finding alternatives for such partnerships might be difficult, time-consuming and may not be successful. Furthermore, as Biocartis relies on certain partners, the development and commercialization of the Idylla™ platform and tests and the proprietary partner tests that Biocartis offers or will offer in the future, could be substantially delayed or impaired if such partners:

• Fail to comply with their regulatory obligations;
• Do not successfully develop or commercialize the tests or commercialize the Idylla™ platform;
• Do not conduct their collaborative activities in a timely manner;
• Do not devote sufficient time and resources to the partnership;
• Develop, either alone or with others, products that may compete with the Idylla™ platform or the tests offered by Biocartis;
• Dispute Biocartis' respective allocations of rights to any products or technology developed during the collaboration;
• Change their business strategy;
• Fail to attract sufficient funding to continue to perform their obligations under the partnership;
• Merge with, or are acquired by, a third party that wants to terminate the collaboration with Biocartis;
• Do not properly maintain or defend Biocartis' intellectual property rights or use proprietary information in such a way as to invite litigation that could jeopardize or invalidate Biocartis' intellectual property or proprietary information or expose Biocartis to potential litigation; or
• Infringe the intellectual property rights of third parties, which may expose Biocartis to litigation and potential liability.

For example, Biocartis had a collaboration with Genomic Health, Inc. (now part of Exact Sciences Corporation) which was focused on the development of the Oncotype DX Breast Recurrence Score® test on the Idylla™ platform. On 29 October 2020, however, the Company and Genomic Health, Inc. announced that they jointly agreed to terminate, with immediate effect, their collaboration due to changed market circumstances.

These and similar situations, as well as possible disagreements with partners, could lead to delays in the collaborative research, development or commercialization of the Idylla™ platform and tests or the proprietary partner tests that Biocartis offers or intends to offer in the future, and may materially and adversely affect Biocartis' business, prospects, financial condition and results of operations. Furthermore, disagreements with these partners could require or result in litigation or arbitration, which would be time-consuming, distracting and expensive.

Although Biocartis has a dedicated and experienced research and development team in place to develop tests, there can be no assurance that it will be able to launch new tests as quickly as it anticipates. Biocartis' in-house R&D team is complemented by external development partners. Additionally, Biocartis has established partnerships to develop and commercialize Idylla™ compatible tests and, in some cases, will also allow such partners to distribute the Idylla™ instrumentation. Biocartis also entered into partnerships to commercialize proprietary plate-based tests. Biocartis intends to enter into additional (strategic) relationships with third parties for future tests. However, establishing such relationships can be difficult and time-consuming and may not be successful. To the extent Biocartis agrees to work exclusively with a party in a given area, opportunities to collaborate with others or develop opportunities independently could be limited. Furthermore, the development and commercialization of Idylla™ compatible tests or proprietary plate-based tests via partners is outside of Biocartis' control (for further information, please see risk factor ‘Biocartis has entered into, and relies upon, a number of partnerships and alliances, including joint ventures, the termination of which may have negative effects on Biocartis’).

Furthermore, Biocartis may experience unexpected delays or difficulties in the development and/or commercialization of tests (both on a standalone basis and together with partners), which may jeopardize and/or delay market acceptance of the Idylla™ platform. This could also jeopardize Biocartis' ability to enter into additional partnerships for the development and commercialization of tests and could consequently affect future revenue growth. A number of factors, many of which are outside the control of Biocartis, may result in delays or difficulties in the development or commercialization of tests by Biocartis and/or its partners, including:

• The launch of a competing test by a competitor with similar or better performance, which could require a new development phase for Biocartis' tests in order to meet, among others, the desired performance levels;
• Technical or performance setbacks that require additional development work to be performed in order to meet the desired test specifications;
• Biocartis' delays in, or poor performance of, verification, validation or clinical studies for any number of reasons, including a lack of sufficient numbers of testing samples, or a failure to meet the product specifications;
• Unexpected manufacturing or process flaws, which may require modifications to the test, platform or manufacturing processes (for further information, see risk factor ‘Biocartis may not be able to manufacture or outsource manufacturing of its products in sufficient quantities, in a timely manner or at a cost that is economically attractive.’);
• A changing regulatory environment, or delays in obtaining regulatory approval (for further information, see risk factor ‘Biocartis' business could be significantly and negatively affected by substantial changes to government regulations, particularly in the European Union and the United States’);
• Biocartis' partners may have different strategies (including due to conflicts of interest), may not exercise the same level of diligence, or may have a lower success rate than Biocartis, when developing tests for the Idylla™ platform, or may choose to stop developing tests with Biocartis altogether.

Each of these factors could result in increased costs for Biocartis and/or jeopardize Biocartis' ability to obtain market acceptance of, or relevant regulatory approvals for, the Idylla™ platform and its menu of tests in line with its strategy, which could have a materially adverse effect on Biocartis' business, financial condition and results of operations.

Biocartis relies on multiple suppliers to produce the individual components required for its Idylla™ platform and Idylla™ tests, some of whom are single source suppliers.

The nature of Biocartis' products requires customized components that are currently available from a limited number of sources. For a number of components, Biocartis relies on single source suppliers. Although management believes that current capacity and required production equipment at Biocartis' suppliers is sufficient to support Biocartis' commercial supply of the Idylla™ platform and Idylla™ tests, there can be no assurance that Biocartis' suppliers will at all times be able or willing to continue to provide the components Biocartis needs, at suitable prices or in sufficient quantity or quality. This could affect Biocartis' ability to continue supply to its customers which could result in financial and reputational damages. If Biocartis needs alternative sources for key components, for any reason, these alternative components may not be available on short notice, on acceptable terms, or at all. Furthermore, alternative components may require Biocartis to modify its products which is likely to result in important re-design and approval costs and delays in supply. For instances where Biocartis relies on a single source supplier for a critical component, even if additional suppliers are available to provide a secondary source for these critical components, the addition of a new supplier to the production process generally requires extensive evaluations, testing and potentially regulatory approval, making it difficult and costly for Biocartis to diversify its exposure to single source suppliers.

A breach of security in Biocartis' products or computer systems may compromise the integrity of Biocartis' products, harm Biocartis' reputation, create additional liability and have a material adverse impact on Biocartis' results of operations.

Biocartis relies heavily on IT systems for its daily operations. The risk of a security breach or disruption, particularly through cyber-attack or cyber intrusion, including by computer hackers, foreign governments and cyber terrorists, has increased as the number, intensity and sophistication of attempted attacks and intrusions from around the world have increased. These threats include identity theft, unauthorized access, domain name system attacks, wireless network attacks, viruses and worms, advanced persistent threat, application centric attacks, peer-to-peer attacks, phishing, backdoor trojans and distributed denial of service attacks. Any of the foregoing could attack Biocartis' products and computer systems. Despite significant efforts to create security barriers to such programs, it is virtually impossible to entirely eliminate this risk. Like all software products and computer systems, Biocartis' software products and computer systems are vulnerable to cyber-attacks. The impact of cyber-attacks could disrupt the proper functioning of Biocartis' software products and computer systems (including Idylla™ Connect and Idylla™ Explore), cause errors in the output of Biocartis' systems, allow unauthorized access to sensitive, proprietary or confidential information of Biocartis, its customers or the patients that Biocartis' customers serve. If any of the foregoing were to occur, Biocartis' ability to manufacture, release and ship products and its ability to access, operate or service its installed base of Idylla™ platforms may be impacted, Biocartis' reputation may suffer, customers may stop buying Biocartis' products, Biocartis could face lawsuits and potential liability, and Biocartis' business, financial condition and results of operations could be materially adversely affected.

Potential liability related to the PROTECTION of personal DATA Biocartis collects.

Although the Idylla™ platform is designed to process pseudonymized personal data, in which the data cannot be attributed to a specific data subject without the use of separately kept additional information, in particular for data concerning health, genetic data, and biometric data for the purpose of uniquely identifying a natural person, Biocartis may inadvertently gain access, or be determined to have access to personal information that is subject to a number of US federal and state laws, EU laws (such as the General Data Protection Regulation (EU) 2016/679 of 27 April 2016) and other applicable foreign laws protecting the confidentiality of certain patient health or other private information, and restricting the use and disclosure of that protected information. If Biocartis would be alleged to have breached any such laws, it may be subject to substantial sanctions and irreparable harm to its reputation.

If Biocartis would fail to accurately anticipate the application or interpretation of such laws when developing its products, if it would fail to comply with their requirements (such as evolving encryption and security requirements) or in case of an allegation that defects in Biocartis' products have resulted in non-compliance by Biocartis' customers, this could create material civil and criminal liability, resulting in adverse publicity and material adverse effects on Biocartis' business. Any legislation or regulation in the area of privacy and security of personal information could affect the way Biocartis operates and could harm Biocartis' business. The costs of compliance with, and the other burdens imposed by, these and other laws or regulatory actions may prevent Biocartis from selling its products, or increase the costs associated with selling its products, and may affect Biocartis' ability to invest in, or jointly develop, Biocartis' products in the United States, the EU and in foreign jurisdictions. Further, Biocartis cannot ensure that Biocartis' privacy and security policies and practices will be found sufficient to protect it from liability or adverse publicity relating to the privacy and security of personal information.

Uncertainties due to COVID-19 pandemic

Public health epidemics or pandemics, such as the COVID-19 pandemic, could cause significant disruptions to the global economy, including in countries in which Biocartis operates its business. Since its outbreak in 2020, the pandemic impacted our business in various respects. Initially, the pandemic deprioritized and disrupted cancer care globally. Patient access to hospitals was significantly restricted throughout almost the entire first half of 2020 and customer prospection was severely hampered. Throughout the second half of 2020, testing volumes started to recover and gradually normalized to pre-pandemic levels. In 2021, patient access to hospitals was more sporadically restricted in specific regions with a high surge of COVID-19 cases, which resulted in overburdened healthcare systems and required cancer diagnosis and treatment to be delayed. As the duration and severity of the pandemic cannot be predicted with confidence, there can be no assurance that the Company will be able to run its operations without disruptions, as a prolonged impact of the pandemic or the emergence of new variants of the virus may result in increased absence of employees in manufacturing, development and other key positions. The Company’s suppliers and partners may be exposed to similar risks, or may be exposed to risks relating to their financial position as a result of the pandemic. This could lead to a disruption in the supply of components in sufficient quantity and quality required to manufacture the Idylla™ platform and Idylla™ tests, result in disruptions in ongoing development and partner activities, or adversely affect the Company’s ability to manufacture its products and deliver them to its customers. These and other risks related to the pandemic could materially and adversely affect the business, financial position, result of operations and prospects of the Company.

On 31 December 2021, the value of the Idylla™ platform was protected by a group of 53 patent families (31 proprietary patent families and 22 in-licensed patent families), comprising issued patents and pending patent applications worldwide, covering the platform technology (basic system, fluidics, ultra-sonification, thermal control, downstream analysis, signal processing and assay design technology) and its associated biochemistry (test design, reagent storage, sample intake, etc.).

In addition to patents, Biocartis also relies on a combination of trade secrets, know-how, trademarks, design rights, copyrights, non-disclosure agreements and other contractual provisions and technical measures. Management believes that protecting the IP rights that it owns and licenses from other parties is critical to its success, but this will depend on a number of complex legal and factual questions.

• Firstly, there can be no assurance that pending patent applications (whether submitted by Biocartis, or a third party licensor) will result in granted patent rights, as the examination may lead to the conclusion that no patent will be granted. The process of obtaining patents involves filing applications in multiple jurisdictions, and may take many years. Success in one jurisdiction does not guarantee success in another jurisdiction, particularly as different jurisdictions may apply different legal principles. Therefore, there may be circumstances where an invention is patentable in one jurisdiction but a patent cannot be obtained in other jurisdictions. In responding to a patent application, a patent office may reject one or more claims of the application. This may lead to an extensive and time consuming dialogue between Biocartis and the patent office in an effort by Biocartis to reach agreement with regard to the issuance of some of its claims. There is no assurance that such efforts will successfully result in issued patent claims, whether or not of any value.
• Secondly, once a patent has been granted, third parties may initiate opposition proceedings (for example, in the case of a patent granted under the European Patent Convention, third parties have until nine months after publication of the grant to oppose it), or may intervene in pending proceedings, either of which may lead to the revocation of the patent. Biocartis' patents have received a couple of non-substantial oppositions to date. All these oppositions were unsuccessful or closed without loss of substantial patent rights. Biocartis cannot guarantee that no further oppositions will occur in the future. In addition, even after the term for initiating opposition proceedings has expired, third parties may initiate court proceedings seeking the nullity of the relevant patent. Generally, the existing license agreements entered into by Biocartis with third parties do not provide for any warranty as to the validity of the licensed IP rights.

There is no assurance that Biocartis' IP rights will not be challenged, invalidated, circumvented or rendered unenforceable. Biocartis' competitors or other third parties may successfully challenge and invalidate or render unenforceable Biocartis' issued patents, including any patents that may be issued in the future. This could prevent or limit Biocartis' ability to stop competitors from marketing products that are identical or substantially equivalent to the Idylla™ platform, the Idylla™ tests and/or any future products. In addition, competitors may be able to design around Biocartis' patents or develop products that provide outcomes that are comparable to the Idylla™ platform, the Idylla™ tests and/or any future products but that are not covered by Biocartis' patents. Much of Biocartis' value is in its IP, and any challenge to Biocartis' intellectual property portfolio (whether successful or not) may impact its value.

Biocartis may initiate patent litigation against third parties to protect or enforce its patent rights, which may be expensive and divert management's attention from other business concerns. Litigation may also put its patents at risk of being invalidated or narrowly interpreted, and its patent applications at risk of not being granted. There can be no assurance that Biocartis would prevail in any such litigation, or that the damages or other remedies awarded, if any, would be adequate. The loss of a lawsuit, failure to obtain adequate remedies and/or negative publicity in connection with litigation could have a material adverse effect on Biocartis' business, financial condition and results of operations.

Biocartis decides on a case by case basis the countries in which to seek patent protection. It is not economically feasible or practical to seek patent protection in every country, and it is possible that one or more third parties may develop and market devices similar or identical to the Idylla™ platform, the Idylla™ tests and/or any future products in countries where Biocartis has not obtained patent protection. Biocartis may not be able to prevent such third party action, which may limit Biocartis' ability to pursue those markets.

Biocartis is dependent on (sub)licenses for key technologies from third parties and may require additional (sub)licenses. There can be no assurance that Biocartis will be able to comply with its obligations under the (sub)licenses, or the (sub)licensors will be able to maintain and adequately protect their intellectual property rights.

Biocartis relies on key technologies from third parties and has entered into (sub)license agreements with a number of (sub)licensors. Various license agreements impose on Biocartis various development obligations, payment of royalties and fees obligations, as well as other obligations. If Biocartis fails to comply with any of its obligations under these agreements, the (sub)licensor may have the right to terminate the (sub)license. In addition, if the (sub)licensor fails to comply with its license or the licensor fails to enforce its IP, the (sub)licensed rights may not be adequately maintained. The termination of any (sub)license agreements, or the failure to adequately protect the IP rights which are the subject matter of such (sub)license agreements, could prevent Biocartis from commercializing products covered by the (sub)licensed IP or have another negative impact on such commercialization, which, in turn, could have a material adverse effect on Biocartis' business, financial condition and results of operations.

In addition, Biocartis may require access to additional third party technologies for which an additional (sub)license, or (sub)licenses, need to be obtained in order to be able to sell certain of its products. If Biocartis is unable to sustain or enter into adequate (sub)licensing agreements to access these technologies, either on acceptable terms or at all, it may be unable to sell all, or certain of, its products, or access some geographic or industry markets, which could have a material adverse effect on Biocartis' business, financial condition and results of operations.

Certain technologies and patents have been developed with collaboration partners, and Biocartis may be limited by restrictions on this jointly developed intellectual property.

Biocartis has entered into collaboration agreements with a number of industrial, pharmaceutical and other companies, research institutions and academic partners. Biocartis has, in some cases individually and, in other cases, along with Biocartis' collaboration partners, filed for patent protection for a number of technologies developed under these agreements and may, in the future, file for further IP protection and/or seek to commercialize such technologies. Under some of these agreements, certain IP developed by Biocartis and the relevant partner may be subject to joint ownership by Biocartis and the partner and Biocartis' commercial use of such IP may be restricted, or may require written consent from, or a separate agreement with, the partner. In other cases, Biocartis may not have any rights to use IP solely developed and owned by the partner. If Biocartis cannot obtain commercial use rights for such jointly-owned IP or partner-owned IP, Biocartis' product development and commercialization plans may be adversely affected.

Intellectual property infringement claims from third parties could be time-consuming and costly to defend and may result in liability for damages, or prevent Biocartis from commercializing its products.

The MDx industry is characterized by a large number of patents, claims of which appear to come close to one another or overlap in certain cases. Furthermore, certain proprietary rights of third parties may be unknown to Biocartis up until the point of enforcement. As a result, there is a degree of uncertainty regarding the extent of patent protection and infringement. Biocartis may have unknowingly infringed in the past, and may still be infringing, the proprietary rights of third parties. In addition, third parties may have pending patent applications, which are typically confidential for the first eighteen months following filing, and which may cover technologies Biocartis and/or its partners incorporate in their MDx platforms and tests. Following the publication of such patent applications, Biocartis may need to obtain additional third party licenses, but may not be able to obtain these on acceptable terms, or at all.

To date, no intellectual property infringement claims from third parties have been initiated against Biocartis. In the event that third parties accuse Biocartis of infringing their patents, Biocartis could incur substantial costs and consume substantial resources in defending against these claims. If such claims prove to be valid, this could lead to significant damages, royalty payments or an injunction preventing the sale of certain of Biocartis' products, which could have a materially adverse effect on Biocartis' business, financial condition and results of operations.

Certain of Biocartis' past and present employees were previously employed at Biocartis' competitors and executed proprietary rights, non-disclosure and non-competition agreements in connection with such previous employment. Although Biocartis tries to ensure that Biocartis' employees do not use the proprietary information or know-how of others in their work for Biocartis, Biocartis may be subject to claims that it, or these employees, have used or disclosed IP, including trade secrets or other proprietary information, of any such employee's former employer, which may have a material adverse effect on Biocartis' business, financial condition and results of operations.

Biocartis' employees, independent contractors, investigators, consultants, commercial collaborators, service providers, distributors and other counterparties may engage in misconduct or other improper activities, including non-compliance with APPLICABLE LAWS AND REGULATIONS, WHICH may result in the imposition of significant fines or other sanctions and have an adverse effect on Biocartis' results of operations.

Biocartis and its employees, independent contractors, investigators, consultants, commercial collaborators, service providers, distributors and counterparties are, or may be, subject to numerous regulations in the countries in which they operate, such as anti-bribery, anti-corruption, anti-kickback, competition, fraud, insider trading, data protection, health information privacy and security, adulteration related to quality manufacturing deficiencies, misbranding related to unlawful marketing or promotion beyond the scope of a marketing authorization, or environmental and health and safety laws. The costs of compliance with applicable regulations, requirements, guidance, or guidelines could be substantial, and failure to comply could result in sanctions, civil penalties, injunctions, criminal penalties, or disgorgement, which could significantly increase Biocartis' costs, delay the development and commercialization of its products and may have a material adverse impact on its reputation, business, financial condition and results of operations.

Biocartis is also exposed to the risk that such persons may engage in fraudulent or other illegal activity. Acts or omissions of any of the parties Biocartis relies on could potentially cause Biocartis to incur liability under applicable laws and regulations, such as the US Foreign Corrupt Practices Act (the ‘FCPA’), the UK Bribery Act, the OECD Anti-Bribery Convention and other anti-bribery laws and regulations, export and import control laws in the EU, US and other jurisdictions, and sanctions programs, including those administered by the US Office of Foreign Asset Controls and the European Commission. Misconduct by these parties could include intentional, reckless or negligent conduct or other unauthorized activities that violate laws and regulations, including those laws that require the reporting of true, complete and accurate information to such regulatory bodies, manufacturing standards, healthcare fraud and abuse and health regulatory laws, or laws that require the true, complete and accurate reporting of financial information or data.

Sales, marketing and business arrangements in the healthcare industry are subject to extensive laws and regulations intended to prevent fraud, misconduct, kickbacks, false claims, self-dealing and other abusive practices, and to promote transparency. These laws and regulations may restrict or prohibit a wide range of pricing, discounting, marketing and promotion, sales commission, customer incentive programs and other business arrangements. For example, Biocartis' dependence on the distribution efforts of its commercialization partners creates the risk of non-compliance by these and other future distributors with local anti-corruption laws, the FCPA, and other local and international regulations. It is not always possible to identify and deter third-party misconduct, and the precautions Biocartis takes to detect and prevent this activity may not be effective in controlling unknown or unmanaged risks or losses or in protecting Biocartis from governmental investigations or civil or criminal liability, fines and/or prohibitions stemming from a failure to be in compliance with such laws or regulations.

Additionally, Biocartis is subject to the risk that a person or government could allege fraud or other misconduct, even if none occurred. If any such actions are instituted against Biocartis, and Biocartis is not successful in defending itself or asserting its rights, those actions could have a significant impact on Biocartis' business and financial results, including the imposition of significant civil, criminal and administrative penalties, damages, monetary fines, possible exclusion from participation in healthcare programs and tenders, reputational harm, diminished profits and future earnings, and curtailment of Biocartis' operations, any of which could materially and adversely affect Biocartis' business, financial condition, results of operations and prospects.

• Stricter rules for placing devices on the market with increased requirements for CE-marking, as well as subsequent post-market surveillance and clinical follow-up once they are on the market;
• Explicit provisions on the responsibilities of manufacturers and other supply chain actors for the follow-up of the quality, performance and safety of devices placed on the market;
• Better traceability of medical devices throughout the supply chain to the end-user or patient through a unique identification number;
• A central database and increased transparency requirements to provide patients, healthcare professionals and the public with comprehensive information on products available in the EU;
• Stricter rules for the assessment of certain high-risk devices, which may have to undergo additional testing (for example, on safety or efficacy) and may be subject to additional scrutiny by independent experts before they are placed on the market; and
• Re-approval requirements for medical devices currently on the market in the EEA (such as the Idylla™ platform and each of the currently CE-marked IVD tests) and for the organizations responsible for assessing whether manufacturers and their medical devices meet applicable regulatory requirements (the ‘Notified Bodies’).

As set out above, market clearance for Biocartis' products is achieved in the EU through CE-marking, currently via the European Directive 98/79/EC on in vitro diagnostic medical devices (the ‘IVD Directive’) and in the future via the IVD Regulation. Under the IVD Directive, the Idylla™ platform and current Idylla™ tests can be CE-marked following a self-certification process conducted by the manufacturer. For compliance with the IVD Regulation, Idylla™ oncology tests are classified as high-risk (class C under the IVD Regulation), thereby requiring the services of a Notified Body for their CE-marking. A sub-set of Idylla™ oncology tests are classified as high-risk companion diagnostic (CDx) assays requiring additional review by a competent authority or the European Medicine Agency (EMA). The change in classification of a sub-set of Idylla™ oncology tests from a molecular diagnostic claim under IVD Directive to a CDx claim under IVD Regulation increases the level of clinical performance data required. Existing data may need to be supplemented with new studies. The required scope and size of a study may be larger than expected as the application of class C CDx regulations in the EU is evolving. Studies performed for such regulatory clearance are expensive and time-consuming. Based upon experience with markets that have similar regulations, management currently anticipates that obtaining CE-marking clearance from a Notified Body will increase the time it takes to bring a product to market in the European Union by around three to four quarters, and for tests classified as Class C CDx the additional review by the competent authorities or the EMA may add an additional 1 to 2 quarters. Any failure or material delay in obtaining such certification for a new product could have a material adverse impact on Biocartis' business, financial condition and results of operations while any failure or material delay in obtaining such certification for the currently CE-marked Idylla™ tests, or any other tests which Biocartis commercializes in the European Union between now and the entry into force of the IVD Regulation, may require Biocartis to cease marketing and selling those tests until certifications in compliance with the IVD Regulation are obtained. For further information see Risk Factor ‘Seeking and obtaining regulatory approval under the IVD Regulation is a new and uncertain process, and Notified Bodies may have limited resources and experience backlogs in the transition period leading up to the May 2022 effective date of the new regulation’.

The majority of Biocartis' current and planned Idylla™ tests will require US FDA 510(k) clearance or premarket approval (‘PMA’) before marketing is permissible in the United States. Although the Idylla™ platform, an automated PCR system, is exempt from 510(k) notification requirements (with limitations), each of the Idylla™ tests will need to undergo significant technical and clinical studies to support submissions for 510(k) clearance or PMA approval. The required scope and size of a study may be larger than expected for this product or for any future products. Studies performed for such regulatory clearance are expensive and time-consuming. The studies may fail to demonstrate substantial equivalence to the safety and effectiveness of a predicate product (for 510(k) clearance), or be determined by US FDA reviewers as insufficient to demonstrate safety and effectiveness supporting of a PMA. FDA regulation of IVDs, and in particular companion diagnostic (CDx) products, is evolving and not fully clear depending upon the specific product and claimed indications. In the recent past, FDA has required PMA's for genetic mutation tests which require demonstration of a clinical benefit -- either prolongation of life or an effect on treatment. Such studies might require significant follow-up beyond the resources of Biocartis. New legislation has been introduced (sponsored by FDA) that may ease the pathway to commercialization but neither the passage of such legislation, nor the ultimate requirements for approval set out therein, can be predicted. Biocartis attempts to curb this uncertainty by utilizing the Pre-Submission process to gain FDA agreement on requirements in advance, yet regulations and expectations may change during the execution of product studies, significantly changing the requirements applicable to the effort.

Moreover, design controls and manufacturing that is compliant with EU regulations may not be compliant with US regulations. Marketing and promotional requirements are significantly different from those in the EU under the IVD Directive. In addition, the commencement or completion of any study may be delayed or halted for any number of reasons. There can be no assurance that FDA 510(k) clearance or a PMA approval will be obtained for any of Biocartis' products, on a timely basis, or at all. Any failure or material delay in obtaining clearance or approval may have a material adverse effect on Biocartis' business, financial condition and results of operations. In addition, once a FDA 510(k) or PMA clearance has been obtained, any subsequent modifications to such product (which may be required due to evolving treatment protocols or standards of care), may require new FDA 510(k) clearance or PMA, or may require Biocartis to cease marketing or recall the modified products until clearances are obtained, which may have a material adverse effect on Biocartis' business, financial condition and results of operations.

Similarly, even if Biocartis obtains the relevant marketing authorizations in the European Union or the United States, changes to regulatory requirements in other markets could prevent completion of product registrations in those markets. Biocartis may not obtain regulatory authorizations elsewhere on a timely basis, if at all.

In addition, it is possible that the current regulatory framework could change, or additional regulations could arise, at any stage during development or marketing, which may adversely affect Biocartis' ability to obtain or maintain approval of its products, or to comply with ongoing regulations in the countries in which it operates, which, in turn, may have a material adverse effect on its business, financial condition and results of operations.

Seeking and obtaining regulatory approval under the IVD Regulation is a new and uncertain process, and Notified Bodies may have limited resources and experience backlogs in the transition period leading up to the May 2022 effective date of the new regulation.

Notified Bodies are designated by the competent authority in the Member State in which they are based to assess whether manufacturers and their medical devices meet the regulatory requirements as defined in the applicable EEA regulations. Notified Bodies must submit applications for designation under the IVD Regulation to their local competent authority and the European Commission Medical Device Coordination Group (the body tasked with assisting the European Commission and Member States in ensuring a harmonized implementation of the IVD Regulation), which may be a lengthy and uncertain process. In these applications, Notified Bodies are required to demonstrate increased technical expertise in their scope of designation, as well as improved quality management systems. At present, only a few Notified Bodies have been designated under the IVD Regulation. Despite Regulation 2022/112 amending the IVD Regulation as regards the transitional provisions for certain IVD medical devices, there is still a significant risk that the number of Notified Bodies designated for the IVD Regulation will not be sufficient for the anticipated workload created by the IVD Regulation requirements. Some existing Notified Bodies may be judged unfit for designation under the IVD Regulation, or may choose not to request designation, which would decrease the overall capacity. This could lead to significant backlogs for IVD certifications as the number of Notified Bodies capable of assessing the sufficiency of medical devices under the IVD Regulation would be further diminished and the workload would need to be absorbed by the remaining Notified Bodies.

Moreover, only limited specific guidance from Notified Bodies regarding expectations for CE-marking have been published. In addition to new medical devices, devices currently on the market in the EEA (such as the Idylla™ platform and certain Idylla™ tests) will need to be evaluated and approved in accordance with the new requirements of the IVD Regulation. There can be no assurance that any Notified Body will provide the requisite certification for the currently CE-marked Idylla™ tests, or any of Biocartis' other products which may require certification from a Notified Body in the future, on a timely basis, or at all. In the event the Idylla™ platform and tests are not approved under the IVD Regulation, on a timely basis or at all, the marketing and sale of the Idylla™ platform and tests in Member States may be temporarily or permanently prohibited.

Additionally, Biocartis' third party distributors in the Member States will also need to be compliant with the new IVD Regulation. If any of Biocartis' third party distributors in Member States fail to meet the requirements of the IVD Regulation, on a timely basis or at all, the marketing and sale of the Idylla™ platform and tests in those Member States by the affected distributor or distributors may be temporarily or permanently prohibited.

Any of the foregoing could be detrimental to Biocartis' reputation and product availability and could materially and adversely affect Biocartis' business, financial condition, results of operations and prospects.

If Biocartis' products are defective, or otherwise pose safety risks, the relevant governmental authorities could require their recall, or Biocartis may initiate a recall of Biocartis' products voluntarily.

The relevant governmental authorities may require the recall of commercialized products in the event of material deficiencies, or defects in design or manufacture, or in the event that a product poses an unacceptable risk to health. Manufacturers, on their own initiative, may recall a product if any material deficiency in a device is found. A government mandated or voluntary recall could occur as a result of an unacceptable risk to health, component failures, manufacturing errors, design or labelling defects or other deficiencies and issues. Recalls of any of Biocartis' products would divert managerial and financial resources and have a material adverse effect on Biocartis' business, financial condition and results of operations. In addition, any product recall may result in irreparable harm to Biocartis' reputation. Any product recall could impair Biocartis' ability to produce Biocartis' products in a cost-effective and timely manner in order to meet Biocartis' customers' demands. Biocartis may also be required to bear other costs, or take other actions that may have a negative impact on Biocartis' future revenue and Biocartis' ability to generate profits. Biocartis may initiate voluntary recalls involving Biocartis' products in the future that Biocartis determines does not require notification of the relevant regulatory body. If a governmental agency disagrees with Biocartis' determination, it could require Biocartis to report such actions as recalls. A future recall announcement could harm Biocartis' reputation with customers and may have a material adverse effect on Biocartis' business, financial condition and results of operations. In addition, the relevant authority could take enforcement action for failing to report the recalls when they were conducted.

If Biocartis' products cause or contribute to a death or a serious injury, or malfunction in certain ways, Biocartis will be subject to medical device reporting regulations, which can result in voluntary corrective actions or agency enforcement actions. Any corrective action, whether voluntary or involuntary, as well as defending Biocartis in a lawsuit, would require the dedication of Biocartis' time and capital, distract management from operating Biocartis' business, and may materially harm Biocartis' reputation, business, financial condition and results of operations.

Healthcare policy changes, including legislation to reform the US healthcare system, could have a material adverse effect on Biocartis' business.

From time to time, legislation is enacted that could significantly change the statutory provisions governing the clearance or approval, manufacture or marketing of Biocartis' products. In addition, regulations and guidance are often revised or reinterpreted in ways that may significantly affect Biocartis' products (e.g. healthcare systems related legislation). It is impossible to predict whether legislative changes will be enacted or regulations, guidance or interpretations changed, and what the impact of such changes, if any, may be.

Biocartis cannot predict what healthcare programs and regulations will be ultimately implemented at the US federal or state level, or at the EU level, or within the implementing legislation of the individual EU Member States, or the effect of any future legislation or regulation. However, these types of provisions, as adopted, could materially change the way in which healthcare is delivered and financed, and may materially impact numerous aspects of Biocartis' business. In particular, any changes that lower reimbursements (for further information, see risk factor ‘Biocartis faces uncertainties over the reimbursement for the products it offers by third party payers and may be subject to strict price controls. Biocartis' potential customers are in part dependent on such reimbursement from third party payers, and inadequate coverage of reimbursement may compromise Biocartis' commercial success, which may adversely affect its future profitability.’) or impose increased regulatory requirements for Biocartis' products could materially adversely affect Biocartis' business, financial condition and results of operations.

In addition, in the future there may continue to be additional proposals relating to the reform of the healthcare systems of the US, the EU, any individual Member State or any other jurisdiction where Biocartis may operate in the future. Certain of these proposals could limit the prices Biocartis is able to charge for its products, or the amounts of reimbursement available for its products, and could limit the acceptance and availability of its products. The adoption of some or all of these proposals could have a material adverse effect on Biocartis' business, financial position and results of operations.

Changes in currency exchange rates could have a material negative impact on the profitability of Biocartis.

Biocartis records its transactions, prepares its financial statements and incurs substantially all of its costs in euros and enters into certain sale and purchase transactions in US dollars and other currencies. In addition, in view of Biocartis' global commercialization strategy and the range of markets in which it intends to operate, more and more transactions entered into by Biocartis may be in foreign currencies. The relationships between different currencies may be volatile and vary based on a number of interrelated factors, including the supply and demand for each currency, political, economic, legal, financial, accounting and tax matters and other actions that Biocartis cannot control. If the currencies in which Biocartis earns its revenues and/or holds its cash balances weaken against the currencies in which it incurs costs and expenses, this could lead to Biocartis suffering exchange rate losses, and declines in such currencies against the euro would negatively impact Biocartis' results when translated into euro for reporting purposes. Biocartis has a subsidiary in the US and the conversion of its financial statements for purposes of preparing Biocartis’ consolidated financial statements is subject to fluctuations of the US dollar against the euro. Any of the foregoing could have a materially adverse effect on Biocartis' financial condition and results of operations.

Part 3/

sustainability

3.1 approach to sustainability

As a molecular diagnostics company, our Idylla™ products focus on providing more, better and faster molecular diagnostics solutions to patients across the globe to support optimal treatment decisions. This has the potential to positively impact the overall healthcare cost for society.

“One Idylla™ test can bring one patient one step closer towards getting the right treatment, with the best possible health outcome.”
Herman Verrelst, CEO Biocartis

sustainability Governance

Sustainability is integrated in the governance of our organization, under the responsibility of our board and executive management. At management level, the Chief Operations Officer holds an oversight role in all social and environmental related matters. He is supported by a team of operational managers including the Head of Facilities for environmental matters, the Head of HR for employee matters and the Head of Supply Chain for supply chain matters.

sustainability Strategy and management

In 2021 Biocartis initiated a program with a view of developing an integrated sustainability strategy and define relevant KPIs to monitor and measure sustainability in the years to come. As a medical device company, Biocartis’ key focus is on enabling more, better and faster molecular diagnostics solutions for patients across the globe. Our current environmental activities are focused on compliance with a large set of European, national and regional regulations covering the environmental impact of our products and their waste. See section ‘Climate change and environment’ for more information. Social activities are focused on creating a healthy and safe working environment for our employees in a hybrid working environment with increased attention to topics such as training, talent management and wellbeing.

As such our current sustainability approach addresses 7 of the 17 Sustainable Development Goals (SDGs). The SDGs were adopted by the United Nations Member States in 2015 and are intended to be reached by 2030.

SDG 3: Ensure healthy lives and promote well-being for all at all ages	Enabling personalized medicine for patients worldwide through rapid, easy & highly accurate MDx testing In 2021: - Installed base of 1,912 Idylla™ instruments - Commercial cartridge volume of 323k cartridges sold - Expansion of the infectious disease test menu on Idylla™ with 510(k) clearance for the SeptiCyte® RAPID on Idylla™ (Immunexpress) and launch of the Idylla™ SARS-CoV-2/Flu/RSV Panel (CE-IVD)
SDG 4: Ensure inclusive and equitable quality education and promote lifelong learning opportunities for all	Promoting lifelong learning of its employees In 2021: - 15,842 training hours amongst others through an integrated Quality Management System - On average 32 training hours per employee
SDG 5: Achieve gender equality and empower all women and girls	A balanced gender diversity In 2021: - 407 employees6 across more than 30 nationalities - 50% men – 50% women balanced gender diversity
SDG 8: Promote sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all SDG 9: Build resilient infrastructure, promote inclusive and sustainable industrialization and foster innovation	Delivering growth In 2021: - Revenue from product sales and Idylla™ system services amounted to EUR 42.2m, a year-over-year increase of 27% - + 40% Idylla™ cartridge volume or 323k cartridges sold - + 331 Idylla™ instruments added to the installed base
SDG 13: Take urgent action to combat climate change and its impacts	Reducing our environmental impact In 2021: - Full compliance with all applicable new environmental legislation – - Installation of five renewable energy air heat pumps were installed with a total capacity of 96 kW - Launch of the electric mobility project with a first focus on electric bicycle leasing
SDG 17: Strengthen the means of implementation and revitalize the global partnership for sustainable development	Building a global Idylla™ ecosystem with partners In 2021: - New partnership with SkylineDx (melanoma) - Expanded partnership with AstraZeneca (lung cancer) - 510(k) clearance for SeptiCyte® RAPID on Idylla™ with Immunexpress (sepsis) - 34 new Idylla™ papers were published, to a total of 123 end of 2021 - Employee fundraising activities for Villa Clementina, working around inclusiveness for children with a disability

3.2 code of conduct

With activities in over 70 countries worldwide, in 2018 Biocartis established a Code of Conduct to assist its employees in making ethical decisions which comply with applicable laws, regulations and codes when conducting Biocartis’ business and when interacting with stakeholders (including colleagues, business partners, suppliers or other third parties).

Biocartis has established several business continuity workstreams that aim at establishing appropriate processes and procedures to ensure business can continue, even in adverse circumstances, and which enable us to respond to unexpected events. This includes risk assessments with regards to incident management within the domains of IT, manufacturing and operations, supply chain, legal and regulatory and product quality. In 2020 and 2021, business continuity plans demonstrated their effectiveness in the context of several events such as continuity of operations during the COVID-19 pandemic as well as the rapid restart of manufacturing following the fire incident in Biocartis’ warehouse facilities in the summer of 2021. Lessons learned from the fire incident have been incorporated into our business continuity plans.

3.3 product responsibility

ethical marketing

Both its Code of Conduct and its Code of IVD Compliance, included the principle of ethical marketing in which Biocartis states that it strives to market and sell its products in compliance with all applicable rules and regulations, in accordance with high ethical standards. The Biocartis Code of IVD Compliance provides guidance for all employees with regard to all types of interactions with Healthcare Professionals and with the outside world and with regard to legal use of human biological material. This includes the granting of research grants, educational grants, charitable donations, the provision of training and/or demonstration or evaluation of products, the offering of gifts and entertainment to Healthcare Professionals, the organization of sales and promotional meetings, the visits to Healthcare Professionals by sales representatives, the diffusion of scientific or advertising material, the invitation of Healthcare Professionals to Biocartis organized scientific events (internal events) and to third party organized scientific events (external events), the vigilance requirements and the incident reporting obligations and the collecting and handling of human biological samples. The key principle is that offering or granting any gift or advantage to Healthcare Professionals to encourage the purchase, prescription or use of medical devices is prohibited and that the use of human biological samples is subject to specific legal requirements.

Biocartis Biobank

The Biobank of Biocartis manages the acquisition and use of Human Biospecimen necessary for all research and development activities within Biocartis. The biobank is notified to the Federal Agency for Medicine and Health products of Belgium (FAMHP) and safeguards all aspects required in the management of Human Biospecimen in accordance with the Belgian biobank legislation and international standards of ethics and protection of privacy and personal data and the General Data Protection Regulation (GDPR). In 2021, the biobank registered more than 6,000 samples (clinical and reference materials) and shipped more than 1,000 samples worldwide. Finally, the biobank also introduced a new tool to facilitate the access of external sample data, which will support a more accurate way of sample selection and the standardization of data management generated at external parties.

Furthermore, the Biocartis Code of IVD Compliance also describes the prohibition of any form of promotion of use of IVD products which may deviate from the intended purpose described in the Instructions for Use (IFU’s) or promotion of RUO products for clinical use. When advertising its products, Biocartis commits to not mislead the audience as to the intended purpose of its products. Adherence to the Biocartis Code of IVD Compliance is monitored by the Biocartis Regulatory Affairs and Legal Department and by the Compliance Officer. Training is provided at a minimum every two years to all employees with roles in which they interact with doctors and hospitals for any reason.

As Member of Medtech Europe, Biocartis also closely follows the ‘Medtech Europe Code of Ethical Business Practice Guidelines’. Furthermore, since 2017, Biocartis complies with the legal obligation to disclose premiums and benefits granted to Healthcare Professionals, Healthcare Organizations and/or Patient Organizations according to the Belgian beMedtech reporting requirements.

* Reporting for 2020 was EUR O due to government shutdown related to the COVID-19 pandemic

**Reporting for 2021 will be completed in 2022. An overview of payments made in line with the Belgian beMedtech reporting can be found on the website of the Belgian Transparency Register here.

In the US, Biocartis has taken the necessary actions since 2018 to ensure transparency on certain payments or other transfers of value provided to US physicians or teaching hospitals and other research entities in accordance with the US Sunshine Act. An overview of payments made in the US can be found below:

* Reporting for 2020 was EUR 0 due to government shutdown related to the COVID-19 pandemic

**Reporting for 2021 will be completed in 2022. An overview of payments made in line with the US Sunshine Act can be found on the website of the US Federal Government ‘Open Payments Data’ here.

Biocartis has never been subject to any legal proceedings associated with misleading or inaccurate marketing claims.

quality and product safety

Key processes for the management of product quality are defined in a Quality Manual, described in procedures
and work instructions and deployed throughout the organization.

CYBERSECURITY
In an increasingly digitized world, Biocartis’ management is committed to keep information secure and private, specifically when dealing with sensitive patient information entrusted to Biocartis by its customers. Personal data accessible to Biocartis employees is highly pseudonymized, meaning re-identification is virtually impossible. Moreover, Biocartis can only act by means of documented instructions, meaning that the customer will always be in charge of determining the purposes and the means of processing patient information.

Operating at the intersection of technology and molecular diagnostics, attracting, developing and retaining a diverse, global team of highly skilled employees is what makes Biocartis grow and thrive. Therefore, Biocartis encourages a work environment that empowers all of its employees. The Biocartis HR strategy is supported by five pillars:

• 1. A competency-based approach that supports our strategic objectives. Core behavioral competencies, cross-functional teamwork, accountable and a result-driven approach while striving for continuous improvement, using the right quality mindset and focus on the customer
• 2. A management structure where employees are accountable and empowered to take decisions at the right level, with fast escalation for issue resolution when needed
• 3. A focus on project execution skills including competences in clinical validity, regulatory compliance, and quality
• 4. A succession planning and talent acquisition program
• 5. A learning & development framework that challenges employees to grow every day

In 2021, we further progressed our HR strategy with key developments in:

• Adoption of the hybrid way of working within our organizational matrix structure
• Further developing our Learning & Development program with new competencies and skills
• Improving our workforce and succession planning
• Launching our wellbeing strategy based on the pillars ‘My Body, My Mind, My Connections, My Environment’

Diversity

With 407 employees⁶ of over 30 different nationalities across more than 70 countries at the end of 2021, Biocartis displays an inclusive company culture where every employee is valued, heard and empowered as an individual belonging to a community that is passionate about bringing rapid and easy molecular diagnostic solutions to patients across the world. Biocartis does not tolerate any form of harassment or discrimination based on, among others, race, sex, age, nationality, ethnic background, skin color, political persuasion, sexual orientation, religious conviction, social background or disability. Biocartis values the diversity of its workforce as it brings diverse perspectives and strong teamwork to deliver better solutions to our customers across the globe.

In 2021, the gender split across Biocartis remained stable with 50% men and 50% women. In management positions we counted 37% women, a slight decrease from 2020.

Biocartis has several programs ongoing that promote flexible working regimes including parental leave, different (full or part time) working regimes and increased flexible working measures. The COVID-19 pandemic accelerated our transition to a hybrid way of working, providing more flexible work options for our employees.

Gender wage gap

The gender pay gap in the EU stands at 14.1% and in the US at 16% and has only changed minimally over the last decade⁵⁸. It means that women earn 14.1% on average less per hour than men in EU and 16% less per hour than men in the US. Although the gender pay gap measures a broader concept than pay discrimination alone, and is also connected to e.g., the industry or overrepresentation of women in relatively low-paying sectors, it is important for companies to monitor and improve their gender balance.

In the development of its Compensation policy, Biocartis makes use of a compensation structure that combines pay grades with benchmarking methods, independent of gender or other diversity characteristics.

Corporate citizenship

Every year, Biocartis employees join forces in November and December to fund-raise for a good cause. In 2021, the Biocartis ‘soup team’ got together to cook and sell healthy winter soups on site in Mechelen for the benefit of Villa Clementina, a non-profit project aimed at integrated and inclusive childcare for children with and without disabilities up to the age of 6 years old.

Training & development

Biocartis cultivates learning and career development not only as an integral part of the employee experience but also as a fundamental building block of our continuous growth. Learning & development activities include:

• For new employees: welcome days are often organized in a hybrid way, physical and virtual. 20 sessions were set up in 2021
• For existing employees:

• The Biocartis Academy is our core learning & development program which included trainings on business & financial acumen, process ownership, leadership development and communication skills. These programs are rolled out across different functions within Biocartis.
• Biocartis also offers open learning through a.o. Learn & Grow sessions, and ad hoc expert speaker events led by key opinions leaders. In 2021, 3 Learn & Grow sessions took place.
• On an individual level, employees can define a personal learning & development path together with their manager, which is based on goals, competence, and career development.
• Leadership development: Since 2020, Biocartis has an active Leadership development program addressing talented employees to support them in their career growth. In 2021, 44 employees followed a Leadership training including modules on leadership styles, connecting & feedback and dealing with change.

• In 2020, Biocartis implemented an online tool to facilitate regular employee engagement meetings and create a forum for giving and receiving feedback across functions. In 2021, a Learning Management System (LMS) module was added, making trainings, tutorials, webinars, etc accessible for employees.

Employee wellbeing

At Biocartis, we promote wellbeing and recognize the importance of a positive physical and mental health environment in the workplace to enable our people to thrive. Being active in a rapidly changing environment which requires agility and resilience, Biocartis has increasingly focused on the wellbeing of its employees in the past years. By empowering our employees to be the best version of themselves, especially in pandemic times, we help everyone to work safely and effectively.

In 2021, the COVID-19 pandemic provided the impetus for Biocartis’ employee wellbeing strategy based on four pillars: My Body, My Mind, My Connections, My Environment. This strategy aims at launching initiatives focused on mental health and the hybrid way of working. The wellbeing program in 2021 consisted of:

• Launch of the online website ‘My Health Partner’ offering information and materials around a wide range of wellbeing initiatives
• Online workshops, webinars, interesting articles, e-learning modules, tips & tricks, quizzes and monthly newsletters for employees and management to support the new way of more remote working
• Start of several workshop series on home office ergonomics, healthy hybrid habits, a ‘disconnect to re-connect challenge’ and even individual screenings on ‘how to stay fit and avoid burn out’. The workshop ‘healthy hybrid habits’ was set up in partnership with AG Health and focused on four topics: ‘hybrid working’, ‘focused homeworking’, ‘from difficult to possible’ and ‘building a healthy routine’. On average 40 employees participated per workshop.

Launch of the new hybrid working culture

Because of the pandemic, Biocartis launched a new hybrid workplace in 2021 that combines teleworking with working at the office, especially for those functions that require on-site presence. This included:

• Revision of policies and practices
• Creation of a hybrid workspace with appropriate workstations at home and in the office, supported with the right digital communications tools. Office spaces were transformed to blend flex desks, dedicated team meeting rooms, individual workspaces as well as several large new meeting rooms with enhanced digital working tools
• Supporting our managers and the new management style required in this hybrid working context through our leadership and wellbeing programs
• (Re)connection moments were created through team days on-site or ‘virtual coffee moments’ online

Biocartis will continue its wellbeing program in 2022 by continuously adding new information to the platform, complemented with regular newsletters to keep employees informed of new initiatives.

Flex income plaN

The Flex Income Plan (FIP) was launched in 2021, giving employees the possibility to convert part of their salary into benefits that fit their personal healthcare and hybrid working needs. Benefits offered in the FIP store include electric bicycle leasing, bicycle repair or bike clothing, ergonomic office supplies, sports membership or equipment, mindfulness trainings or workshops, personal IT devices, etc.

Health & safety

Biocartis is committed to invest in a safe, healthy and environmentally (HS&E) friendly workplace through several tools & activities:

• The Biocartis HS&E Policy aims at compliance with HS&E regulatory requirements and all relevant HS&E risks through a dynamic risk assessment
• Biocartis strives to continuously reduce HS&E risks and improve workplace safety and HS&E culture by following up and analyzing key HS&E performance indicators, such as accidents and unsafe conditions
• Biocartis welcomes ideas from employees on how to improve safety and implements these where found appropriate
• Within the Biocartis Safety Management System, HS&E requirements are included in design & development, action plans and goals & objectives, so safe work will be made possible by providing safe tools, personal protective equipment, procedures and other preventive measures, infrastructural as well as organizational, to tackle the identified risks
• Biocartis also commits to train and inform all its employees, contractors, visitors and partners worldwide to ensure safe working is possible through the understanding and respecting of safety rules, through the preventing of safety risks in every business initiative, and through the active tackling of unsafe conditions towards continuous improvement
• A cross-functional HS&E leadership team has the governance over this HS&E Policy

In 2021:

• Safety management risk assessments are performed annually. No legal HS&E regulation breaches were reported in 2021.
• Biocartis employees followed several virtual H&S trainings, including basic rescue trainings, first-aid refreshment trainings, fire safety & spill training and machine & electrical safety. Furthermore, a lot of attention was paid to ergonomics at work through a.o. internal awareness raising campaigns

Nine occupational accidents with minor injuries occurred in 2021. There were no lethal accidents or working accidents causing disability. Each occurrence led to a root cause analysis and measures were taken to prevent future work accidents, among which a presentation to management with an updated H&S action plan that included:

• Increased H&S awareness raising for employees through monthly ‘walks & talks’ within the manufacturing areas
• Integrating safety as a topic in check-in meetings at the beginning of every production shift
• Monthly discussions on safety related KPIs with management

KPIs

(*) No data available for 2019 and 2020 due to change in the reporting scope (reporting scope 2019-2020 only included employees on the Belgian payroll)

• Compliance verifications with ‘VLAREM II - Order of the Flemish Government of 1 June 1995 concerning General and Sectoral provisions relating to Environmental Safety’ and biocides regulation
• Updates to the regional Flemish ‘Materials Decree/VLAREMA’ regulation requirements
• Updates to the regional Flemish regulation for sustainable management of materials and waste

In 2021, one external review of the environmental legislation was performed by the external environmental coordinator (IDEWE).

operational management of climate change & environmental matters

Biocartis is working closely with its direct suppliers to ensure that they meet Biocartis’ requirements in terms of quality, safety and environmental compliance. Business Continuity workstreams have been further updated in 2021 to minimize future supply risks as well as to support our growing cartridge sales.

Supply chain continuity during the COVID-19 pandemic

Since the start of the pandemic, we raised our efforts to strengthen our supply chain and avoid any disruptions that could affect the supply of Idylla™ products to our customers. These efforts included:

• 1 Improved internal communications between sales and manufacturing teams to better align supply and demand
• 1 Increasing inventory levels where possible to ensure availability of raw materials by working closely with both existing and new suppliers
• 1 Increasing safety stock levels of finished goods, where possible
• 1 Working closely with preferred transportation partners to continue shipments to our partners and customers across the globe
• 1 Raising our supply chain monitoring systems with weekly and even daily updates by our supply chain teams
• 1 Working with main suppliers to further improve our ability to respond quickly to changing demand

We also refer to the chapter ‘Impact of COVID-19’, supplier impact.

Supplier risk assessments, approval process and audits

Since the beginning of its operations in Mechelen (BE), Biocartis installed a rigorous Supplier Approval Process for its direct suppliers. Before the start of every supplier contract, a risk assessment is implemented to screen on several criteria. Quality is the main focus of our risk assessments, which includes checks on a.o. the verification of ISO certificates. For large suppliers, although this is not included yet in our Supplier Approval Process, compliance with environmental legislation such as ROHS on the Restriction of Hazardous Substances or REACH legislation on the restriction of chemicals can also be checked, as well as the screening of broader sustainability criteria such as proximity which is becoming increasingly important.

Biocartis today has not set specific social or environmental targets with its suppliers but consider it business-critical to work with suppliers who share our commitment to integrity. Therefore, we have put a Code of Conduct in place which covers all external parties, including its suppliers, to adhere to the same high standards of business conduct including respect for human rights, non-discrimination and ethical business behavior.

Supplier audits, business reviews and dialogue

Our direct supplier approach is underpinned by the implementation of supplier audits. Every year, an audit plan is established, and several supplier audits are executed to ensure all materials meet expectations for technical specifications and quality. Biocartis’ main direct suppliers are submitted to an annual Supplier Business Review. Furthermore, Biocartis actively monitors the performance of its direct suppliers on various topics and is continuously in dialogue to ensure they meet the required performance, such as product specification documents and audit action plans.

An average of 10 audits/year are conducted at direct suppliers. Since 2020, under impulse of the pandemic, audits are now being implemented in a hybrid way, combining on-site and remote inspections. No critical observations were made during the past years.

Further key manufacturing & supply chain focus areas in 2021 were:

• Focused actions to ensure supply chain continuity during the pandemic (see text box)
• Further preparing our supply chain program in the context of anticipated US FDA audit inspections and IVDR regulations

PART 4/

corporate governance report

4.1 Introduction

During 2021, the Company applied the Belgian Code on Corporate Governance 2020 (the ‘Corporate Governance Code 2020’), which can be consulted on the website of the Belgian Corporate Governance Committee. In accordance with the Corporate Governance Code 2020, the Company has adopted a corporate governance charter which describes the main aspects of the corporate governance of the Company, including its governance structure, the terms of reference of the board of directors and its committees and other important governance topics. The Company’s corporate governance charter was last updated at the meeting of the board of directors held on 31 March 2020 to bring the corporate governance charter in line with the provisions of the Corporate Governance Code 2020. The corporate governance charter must be read together with the articles of association of the Company. The articles of association and the corporate governance charter are available on the Company’s investor website.

The Company strived to comply with the rules of the Corporate Governance Code 2020 as much as possible. Nonetheless, the board of directors is of the opinion that a deviation from the provisions of the Corporate Governance Code 2020 is justified with respect to the granting of shares of the Company to non-executive directors as part of their remuneration as the Company does not own treasury shares and is currently legally not in a position to acquire treasury shares. This deviation is described below in the Remuneration Report.

4.2 Board of directors

Herman Verrelst was appointed as chief executive officer of the Company effective as of 31 August 2017. He is a seasoned executive and technology entrepreneur with a proven international commercial track-record in molecular diagnostics. Prior to joining Biocartis, Herman Verrelst held the position of vice president and general manager of the genomics and clinical applications division of Agilent Technologies, a global leader in life sciences, diagnostics and applied chemical markets. Mr. Verrelst joined Agilent following Agilent's acquisition of Cartagenia, a spin-off of Katholieke Universiteit Leuven (Belgium) focused on software solutions for clinical genetics and molecular oncology, of which Herman Verrelst was CEO and founder. Prior to that, Herman Verrelst was CEO of Medicim, a medical imaging company acquired by Nobel Biocare, now part of Danaher, as well as founder and CEO of DATA4s, a financial services software company acquired by Norkom Technologies, now part of BAE Systems.

Luc Gijsens is a highly experienced international executive with deep knowledge in a wide range of areas in finance and capital markets, asset management, corporate and investment banking in Belgium and abroad. He served KBC Group, a leading bank & insurance group in Belgium and Central Europe for 40 years in a wide range of responsibilities. Mr. Gijsens retired from KBC Group in 2017 as CEO of the business unit International Markets and executive director of KBC Bank & Insurance, responsible for the market activities of KBC Group. He acted as chairman of the board of KBC Securities and KBC Asset Management and as chairman of the board of the banking and insurance subsidiaries in Ireland, the Slovak Republic, Hungary and Bulgaria. Prior to that, Mr. Gijsens served as senior general manager of KBC Bank, responsible for corporate banking in Belgium, Western Europe, Asia Pacific and the US.

Ann-Christine Sundell has more than 30 years of experience in the diagnostics and life science sector, where she held various global senior positions. For 10 years she served as president for the Genetic Screening (diagnostics) strategic business unit within PerkinElmer, one of the world’s leading life science companies. Mrs. Sundell has deep strategic and operational experience from building, developing and managing global growth businesses. She serves as vice chairman and chairman of the audit committee of Raisio Oyj, chairman of Medix Biochemica Group Oy, board member, chairman of the remuneration and nomination committee and member of the audit committee of Revenio Oyj, member of the board and chairman of the remuneration committee of Immunovia AB, member of the board of Förlags Ab Sydvästkusten, chairman of Actim Oy and holder of AConsult. Mrs. Sundell holds an MSc in biochemistry from Åbo Akademi, Turku, Finland.

Christine Kuslich, PhD, is an in vitro diagnostic senior executive and strategic leader with a particular focus on advancing clinical diagnostics, novel assay and device development as well as quality executive leadership. As a passionate inventor with more than 40 pending and issued patents, Dr. Kuslich has a proven track record of identifying and developing new technologies with the greatest market potential with particular focus on the oncology diagnostics and therapeutic spaces. Dr. Kuslich held several positions as Chief Scientific Officer developing breakthrough diagnostics at companies including Hologic, GE Healthcare and Caris Life Sciences. Her areas of expertise include medical device development & commercialization, companion diagnostics, molecular profiling in oncology and circulating tumor detection and sequencing technologies. Dr. Kuslich holds a Ph.D. degree in Genetics from the University of Hawaii John A. Burns School of Medicine and a B.S. degree in Microbiology from Arizona State University.

Roald Borré started his professional career at the Financieel Economische Tijd newspaper as a financial analyst specialized in high-tech companies, particularly in the ICT and biotech fields. He was responsible for the launch of Wall Street Invest, a weekly with a focus on Nasdaq-listed (mainly) biotech and ICT companies. In 1999, he joined Puilaetco Private Bankers as senior fund manager, where he was in charge of the Biotechnology Fund and managed various investments in the therapeutics and diagnostics field, a position he held until 2006. In 2011, after five years as an entrepreneur, Mr. Borré joined the ParticipatieMaatschappij Vlaanderen as business and fund manager of the TINA fund that focused on industrial projects with a high degree of innovation and the potential to transform, also adding head of equity investments to his responsibilities. Roald is Group Manager Venture Capital at PMV and member of the management committee op PMV NV and PMV FM NV, responsible for the management of Welvaartsfonds. He is on the board of different PMV portfolio companies and a member of several advisory boards. Mr. Borré holds a Masters in financial and commercial sciences (specialization accountancy) from EHSAL Management School, Belgium.

The business address of each of the directors for the purpose of their mandate is Generaal de Wittelaan 11B, 2800 Mechelen, Belgium.

The board of directors must be composed in a manner compliant with the diversity principles applicable to listed companies. Moreover, the board aims to be composed in a manner that allows it to support in all relevant material aspects the success of Biocartis as a commercial-stage innovative molecular diagnostics company that operates internationally. Four main diversity criteria have been identified by the board of directors: functional background and expertise, gender, age and nationality/international experience. The board will reassess these criteria as often as required.

Notes:

(1) Permanently representing Luc Gijsens BV.

Belgian company law requires at least one third of the directors of a listed company to be of a different gender than the other directors. Currently, the Company has two female directors on its board of directors on a total of six directors. The board is of the opinion that there is currently sufficient diversity in terms of age. It however believes that in terms of ‘functional background and expertise’ it could benefit from additional profiles with relevant industry background and expertise in other go-to-market models, partnering and/or diagnostic service models, digitalization and/or AI.

ACTIVITY REPORT

In 2021, the board of directors held thirteen meetings. The attendance rate (i.e. the attending of board meetings in person or by written proxy to a fellow director) for the board members in function as at 31 December 2021 was 100%, save for Christine Kuslich, Ann-Christine Sundell and Roald Borré who were excused during one board meeting. This can be explained by the need to sometimes convene certain board meetings on short notice.

During the meetings of the board of directors, the board among others reviewed Biocartis’ oncology and infectious disease strategy, operations, commercial performance, ongoing menu development and the impact of the COVID-19 pandemic and a fire at one of its warehouses on its business. It discussed business development and strategic opportunities and the status of ongoing collaborations, as well as regular updates of the implementation of the integrated quality plan and the cartridge design and manufacturing strategy. The board also discussed various corporate governance, as well as nomination and remuneration matters, such as board evaluation, the establishment of the company goals and objectives and executive remuneration, and the proposal to the shareholders’ meeting to reappoint certain directors and to approve the Company’s remuneration policy. Moreover, the board discussed the regular updates of the financial performance and the budget for financial year 2022 as well as the Company’s long-term financial plan and financing strategy. The board also discussed and approved the full year and half year financial statements and reports, and the Q1 and Q3 business updates and related communication. In addition, the board approved the proposal to the shareholders to renew the authorized capital.

Notes: (1) Representing SBV NV, (2) Representing Heran Partners BV.

CONFLICTS OF INTEREST

Directors are expected to arrange their personal and business affairs so as to avoid any conflicts with the interests of the Company. Any director with a financial interest that is conflicting with the interests of the Company based on a decision or a transaction that belongs to the authority of the board of directors must, in accordance with Article 7:96 of the Belgian Code of Companies and Associations, inform his or her fellow directors and the statutory auditor thereof and may not take part in the deliberations or voting related to such matter.

The conflict of interest procedure pursuant to Article 7:96 of the Belgian Code of Companies and Associations was applied twice in 2021 during the meetings held on 23 February 2021 and 20 April 2021. The extract of the minutes of those meetings is as follows:

Meeting 23 February 2021

“Following the recommendations of the Remuneration and Nomination Committee, the Board discussed the goals for the CEO relating to performance year 2020 (consisting for 50% of the 1-year targets defined in the beginning of 2020, for 25% of the 2-year targets defined in 2019, and for 25% of the 3-year targets defined in 2018) and assessed the degree to which these goals were achieved. The Board was of the opinion that overall 100% of the 1-year targets was achieved, 30% of the 2-year targets was achieved, 40% of the 3-year targets was achieved, and resolved to approve the amount of the variable remuneration for the CEO relating to performance year 2020 on this basis (i.e., an amount of EUR 126,563).

Subsequently, and following the recommendations of the Remuneration and Nomination Committee, the Board discussed the KPIs relating to the vesting of maximum 167,500 performance-based share options under the share option plan 2017 for the CEO for performance year 2020. The Board considered that overall 100% of the KPIs were achieved. Therefore, after discussion, the Board resolved to approve that 167,500 performance-based share options under the share option plan 2017 relating to the performance year 2020 have vested.

The Board decided to discuss the variable remuneration for the members of the executive management for 2021 during the next Board meeting, it being understood that for the 2-year and 3-year KPIs a phantom stock plan is in place.”

Meeting 20 April 2021

“Following the recommendations of the Remuneration and Nomination Committee, the Board of Directors discussed and deliberated on the variable remuneration for the CEO for performance year 2021. For the 1-year target (for 2021), the proposal is to use the same KPIs categories as for 2020, namely the following KPI categories, each time consisting of the specific KPIs as proposed by the Remuneration and Nomination Committee:

• Financial performance as KPI category (consisting of KPIs relating to operational income growth, gross margin improvement and capping the net cash burn) having a total weight of 30%. In case of achievement of any of the KPIs in this category of 75%, 75% of the percentage of the variable remuneration will be payable, while every incremental percentage of achievement will result in 1% extra being payable (linear increase), provided that the maximum amount payable shall be equal to 125%. In case of an achievement of less than 75% of a certain KPI, no variable remuneration to which such KPI relates shall be payable.
• Commercial success as KPI category (consisting of KPIs relating to commercial cartridge volume and installed base growth, as well as relating to growth in the partner business topline) having a total weight of 30%.
  • In case of achievement of the KPI relating to commercial cartridge volume and installed base growth of 90%, 90% of the percentage of the variable remuneration will be payable, while every incremental percentage of achievement will result in 1% extra being payable, provided that for achievement above 100% every incremental percentage of achievement will result in 10% extra being payable, and provided that the maximum amount payable shall be equal to 200%. In case of an achievement of less than 90% of this KPI, no variable remuneration to which such KPI relates shall be payable.
  • In case of achievement of the KPI relating to growth in the partner business topline of 75%, 75% of the percentage of the variable remuneration will be payable, while every incremental percentage of achievement will result in 1% extra being payable (linear increase), provided that the maximum amount payable shall be equal to 125%. In case of an achievement of less than 75% of this KPI, no variable remuneration to which such KPI relates shall be payable.
• Execution and delivery on projects in support of financial and commercial growth and development and running a highly performing manufacturing capability as the two KPI categories having a total weight of 12.5% each. No minimum achievement threshold applies to these KPIs.
• Advancement of organizational capabilities as KPI category having a total weight of 15%. No minimum achievement threshold applies to these KPIs.

For the vesting of the CEO’s performance-based share options regarding performance year 2021, the Board decided to use the same evaluation mechanism as the mechanism for the 2021 annual bonus plan set out above.

The Board considered the proposed variable remuneration mechanism and the KPIs that will be used to measure and determine the variable remuneration for the CEO to be fully in line with the Company's interests. Therefore, after discussion, the Board resolved to approve the variable remuneration mechanism for the CEO as discussed.”

More information on the remuneration of Herman Verrelst in 2021 can be found in the Remuneration Report below.

The procedure pursuant to Article 7:97 of the Belgian Code of Companies and Associations was not applied in 2021.

4.3 Committees of the board of directors

The board of directors has established two board committees: an audit committee and a remuneration and nomination committee. The terms of reference of these board committees are set out in the Company’s corporate governance charter.

In 2021, the remuneration and nomination committee held five meetings which were attended by all members, resulting in a 100% attendance rate for the remuneration and nomination committee meetings. The remuneration and nomination committee discussed the composition of the board of directors and executive management, discussed and approved the achievement of the 2020 company goals and related variable remuneration of the executive management, and set the 2021 company goals (the progress of which was reviewed by the committee throughout the year). It discussed the HR and operational strategy of the Company, as well as the workplace transformation program following COVID-19 and health and safety at work, supported a board evaluation exercise, and reviewed and discussed the remuneration policy and the individual remuneration of the members of board, the board committees and the executive management. It approved the remuneration report included in the 2020 annual report. The remuneration and nomination committee reported systematically to the board of directors and ensured the co-operation of the executive management and the HR department of the Company where required.

4.4 Executive management

REMUNERATION OF THE DIRECTORS

The table below provides an overview of the number of share options (taking the form of subscription rights, formerly called warrants) of the directors on 31 December 2021:

Notes:

• (1) Pursuant to the 2018 Plan, the share options of the directors vest in X equal instalments on each anniversary date of the date of his or her appointment as director of the Company, whereby X shall be equal to the duration of his or her director’s mandate expressed in years.
• (2) The valuation method used is the fair value method following IFRS 2 guidance (Black & Scholes) as of the relevant offer date of the share options. It is to be noted however that the exercise price of the share options held by the directors is above the current share price of the Company.
• (3) During 2021, no share options were exercised or became null and void for any reason.

• (1) Amounts mentioned are gross amounts in Euro.
• (2) Amounts mentioned in this column relate to the non-deferred short-term variable remuneration (cash bonus).
• (3) Amounts mentioned in this column relate to the deferred short-term variable remuneration. The deferred variable remuneration of the executive management is structured by way of phantom stock under the phantom stock plan which was created in 2020, except for the 3-year targets for the CEO for 2021 which were defined in 2019 (for more information, see below). The value of any share options vested in 2021 have not been taken into account. See the table below for more information on the share options of the executive management as per 31 December 2021.

The remuneration of the members of the executive management is in line with the Company’s remuneration policy. By creating a balanced mix between fixed and variable remuneration, as well as between short-term and long-term remuneration, the Company strives to create a focus not only on short-term operational performance but also on the long-term objective of creating sustainable value. The goals and objectives of the members of the executive management determined to evaluate their variable remuneration have been established in order to support the Company’s long-term performance as they focus on the key metrics to achieve such long-term performance.

Non-Deferred and Deferred Short-Term Variable Remuneration

The short-term variable remuneration for the CEO can be maximum 50% of his annual fixed remuneration of the year for which the variable remuneration is awarded. The short-term variable remuneration for the other members of the executive management can be maximum 30% of their respective annual fixed remuneration of the year for which the variable remuneration is awarded.

In accordance with applicable law, 50% of the short-term variable remuneration of the members of the executive management is linked to performance criteria measured over one performance year. Such non-deferred short-term variable remuneration is settled in cash. For the remaining 50% of the short-term variable remuneration, 25% is linked to performance criteria measured over two performance years and another 25% is linked to performance criteria measured over three performance years.It is to be noted that in the course of 2020, the Company decided to structure the deferred short-term variable remuneration for the members of the executive management by way of a grant of phantom stock. For more information on the phantom stock mechanism, please see the Company’s remuneration policy.

The table below provides an overview of the total non-deferred short-term variable remuneration for performance year 2021⁽¹⁾.

Notes (1): Amounts mentioned are gross amounts in Euro.

The table below provides an overview of the total deferred short-term variable remuneration for 2021⁽¹⁾.

• (1) Amounts mentioned are gross amounts in Euro.

Long-Term Variable Remuneration (share options)

The table below provides an overview of the number of share options (taking the form of subscription rights, formerly called warrants) of the members of the executive management on 31 December 2021: