BIOCARTIS ANNUAL REPORT 2022 2
Part 1
At a glance
Part 4
Corporate governance report
1. Message from the chairman and CEO
2. Who we are
3. Share and capital
4. Key achievements in 2022
5. Macroeconomic environment
1. Introduction
2. Board of directors
3. Committees of the board of directors
4. Executive management
5. Remuneration report
6. Share capital and shares
7. External and internal control
Part 2
Strategy
Part 5
Financial report
1. Market of molecular diagnostics
2. Product strategy
3. Commercial strategy
4. Market access
5. Risks related to our business
1. Consolidated annual accounts 2022
2. Notes to the consolidated financial statements
3. Statuary annual accounts
4. Auditor’s report
Part 3
Sustainability
Part 6
Glossary & bibliography
1. Approach to sustainability
2. Code of conduct
3. Product responsibility
4. Employees
5. Climate change and environment
6. Supply chain
1. Glossary
2. Bibliography
BIOCARTIS ANNUAL REPORT 2022 3
1 At a glance
2 Strategy
3 Sustainability
4 Corporate governance report
5 Financial report
6 Glossary & bibliography
BIOCARTIS ANNUAL REPORT 2022 4
BIOCARTIS ANNUAL REPORT 2022 5
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 2022 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 2022, Biocartis is not yet legally required to report on its environmental, social
and governance (ESG)/sustainability performance according to the EU Corporate Sustainability Reporting Directive (CSRD) and
EU Taxonomy Regulation. Since 2020, Biocartis has been gradually expanding its disclosures on sustainability and in 2022 it
performed a materiality analysis. Sustainability disclosures in this report are based, similar to previous years, on the Sustainable
Development Goals (SDG), the Global Reporting Initiative (GRI) guidelines as well as the SASB (Sustainability Accounting Standards
Board) framework and several principles of the Taskforce on Climate-Related Financial Disclosures.
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 (Inline XBRL
technology with XBRL tagged data) and in PDF. In case of differences between both versions, 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 differences between both versions, the English version shall prevail. An electronic version of the annual report
2022 is available on http://investors.biocartis.com/en. Except if information is explicitly incorporated herein by reference, 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 2022 and 31 December 2022. An overview of the securities
legislation and listed company reporting requirements can be found on the website of the Financial Services and Markets
Authority, www.fsma.be.
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.
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
BIOCARTIS ANNUAL REPORT 2022 6
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 labelling
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 labelling for
applicable intended uses for each individual Biocartis product.
BIOCARTIS ANNUAL REPORT 2022 7
1.1. Message from the Chairman and the CEO
“2022 was a successful year, both operationally and financially. In a troubled macroeconomic environment, we
continued to scale our core oncology business and delivered on our financial objectives with strong 30% growth of oncology
revenues, a doubling of the gross margin on product sales to 34%, and a sizeable EUR 18.1m or 32% reduction of our operating
cash burn. Furthermore, we laid solid foundation for continued future growth. The regulatory approval of the Idylla™ instrument
in China and of the Idylla™ MSI Test as a companion diagnostic test (CDx) in Japan will broaden our global commercial footprint.
The extension of the collaboration with AstraZeneca aimed at developing a CDx for Tagrisso
®
and the commercialization of
SkylineDx’s Merlin™ Assay and Ophiomics’ HepatoPredict show that partnerships are a powerful means to rapidly expand the
menu of oncology tests and to make it available to any lab. Now that we also successfully recapitalized the company with EUR
66m of gross cash proceeds and a strengthened capital structure, we are in a strong position to take another significant step
towards profitability. Several new regulatory approvals and new product launches are planned for 2023, including the launch of
the Idylla™ IDH1-2 Mutation Assay Kit (RUO), the first assay developed with our new Idylla™ FLEX technology that significantly
shortens development times and that will allow us to bring more tests to the market faster. While we are likely to operate in a
continued unstable economic climate, we took measures towards the end of 2022 to weather the impact of significant cost
inflation, and we are confident that in 2023 we will continue to grow product related revenues, again improve the gross margin
on product sales and further reduce the operating cash burn.”
Strong operational performance in a troubled economic environment
Following two years of COVID-19 pandemic, during which global cancer care was often severely hampered and we endured the
global shortage of reagent supplies, we were committed to continue to grow and scale on our journey towards profitability. The
war in Ukraine very rapidly brought on renewed economic uncertainty. In today’s world, our partners and customers thread
carefully when taking decisions to invest in the development of new diagnostic tests or to onboard our Idylla™ technology. We
nevertheless honored our commitment and delivered very strong operational and financial performance that demonstrated our
ability to grow and scale at a continuously high pace. Revenues in our core oncology business grew 30%, only partly offset by
logically decreasing sales of the Idylla™ SARS-CoV-2 Test and the Idylla™ SARS-CoV-2 Panel. In addition to additional cartridge
volumes in oncology, the average selling price of our tests continued to increase thanks to the growing contribution of sales in
de US and the addition of higher-priced tests with high clinical value such as our CE-marked IVD Idylla™ GeneFusion Panel. In
2022, we also demonstrated that we can deliver profitable growth. The increased utilization of our automated high-throughput
manufacturing line ML2 allowed us to more than double the gross margin on products from 16% in 2021 to 34% in 2022. In 2023,
we will decommission our older manufacturing line ML1 and exclusively produce on ML2, which will cater for the further
improvement of our gross margins in 2023 and beyond. Finally, we rigorously managed our available cash, and reduced the
operating cash burn
1
to EUR 38.5 million, beyond an initial expectation of EUR 41 million to EUR 47 million.
Continued menu expansion
While focusing on improving our financial performance in 2022, we also continued to lay a solid foundation for future growth.
Partnerships remain a key attribute of our strategy to expand our menu of tests and making it available to any lab. In 2022, we
expanded our collaboration with AstraZeneca aimed at developing a companion diagnostic test (CDx) for use with Tagrisso
®
. We
also started the commercialization of SkylineDx’s Merlin assay, ahead of the launch of an Idylla™ version of the assay, and
Ophiomics’ HepatoPredict
2
. Building menu across various cancer programs is essential to future growth with both existing as well
as new customers. Over the past two years we have focused on the new Idylla™ FLEX technology that significantly reduces
development times and that will allow us to bring more tests to the market faster. The technology combines a generic Idylla™
cartridge, which can be mass-manufactured on Biocartis’ high-throughput manufacturing line at low cost, with the test-specific
components that are provided in a separate vial of which the content can be added into the generic Idylla™ cartridge by the user
together with the sample. We recently launched the Idylla™ IDH1-2 Mutation Assay Kit (RUO), the first assay ever developed with
BIOCARTIS ANNUAL REPORT 2022 8
this new technology. Ultimately, we believe that the off-line customization of the Idylla™ cartridge has significant potential to be
deployed in the vast market of frequent and repeated liquid biopsy-based testing of patients.
Successful refinancing
In very challenging financial markets, we managed to implement a comprehensive recapitalization that not only strengthened
our cash resources with EUR 66 million of gross proceeds, but also improved our financing structure by pushing out the maturity
date of the convertible debt. In a fundamental rehaul, the existing convertible debt of EUR 135 million was first extended and
reduced through a partial equitization and repurchase at significant discounts, to then be exchanged for a new and upsized new
convertible bond. Together with a new secured convertible term loan, the bond restructuring brought EUR 41 million of newly
available cash and was complemented by new equity of EUR 25 million. This refinancing will support our future growth for the
foreseeable future.
Making a mark in molecular diagnostics
After a successful year 2022, we have deployed a broad menu of 13 oncology tests on a global installed base of 2,085 Idylla™
instruments. The future looks bright. Not only will we launch an increasing number of novel high value-added tests, but the new
Idylla™ FLEX technology will increase the pace at which we build out our franchise of decentralized molecular testing in oncology.
We will continue to build on those fundamentals and are confident that in 2023 we will grow revenues, improve gross margins
and further reduce our cash burn on our way to profitability.
Yours sincerely,
Herman Verrelst
CEO
Christian Reinaudo
Chairman of the Board of Directors
BIOCARTIS ANNUAL REPORT 2022 9
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.
Biocartis’ vision is to enable universal access to personalized medicine for patients around the world. Our mission is to make
molecular testing actionable, convenient, fast and suitable for any lab. Biocartis was founded in Switzerland in 2007 and acquired
its technology in 2010 from Koninklijke Philips NV. In 2011, Biocartis moved to Mechelen, Belgium from where it launched its first
commercial products in December 2014, the Idylla™ platform (CE-IVD) and its first Idylla™ BRAF Mutation Test (CE-IVD). In April
2015, Biocartis launched its Initial Public Offering (IPO) and is since then listed on Euronext Brussels. In 2017, Biocartis US, Inc.
was established in the US. While Biocartis has mainly focused its efforts on developing and commercializing oncology tests, the
2020 pandemic clearly showed opportunities to grow in infectious diseases for which the speed and simplicity of Idylla™ equally
make a true difference.
The structure of the Biocartis group consisting of the holding company, Biocartis Group NV, and three wholly owned subsidiaries
as of 31 December 2022 is as follows:
BIOCARTIS ANNUAL REPORT 2022 10
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). The
majority of operational activities are centralized in Mechelen (Belgium). In addition, Biocartis has a team in the US to support its
US commercialization and which provides amongst others regulatory and clinical support. Furthermore, Biocartis’ joint venture,
WondfoCartis Ltd., was established in 2018 as a joint venture owned 50% by Biocartis Group NV and 50% by Wondfo Biotech (HK)
Co., Ltd.
BIOCARTIS ANNUAL REPORT 2022 11
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 2022 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) SFPI-FPIM is 100% controlled by the Belgian State.
(3) Heights Capital Management, Inc. controls CVI Investments, Inc. Heights Capital Management Inc. is not a controlled entity.
(4) Johnson & Johnson Innovation-JJDC, Inc., is a wholly owned subsidiary of Johnson & Johnson. Johnson & Johnson is not a controlled entity
(5) 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 Statement.
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 30 December 2022 was EUR 0.53.
BIOCARTIS ANNUAL REPORT 2022 12
Trading volume
Below is a summary of the 2022 trading volumes of Biocartis’ share.
Source: Bloomberg
Analyst coverage
The Biocartis share was covered by four analysts end of 2022. For more recent information about financial analyst ratings, please
see the Biocartis investor website.
Broker
Analyst
Rating end 2022
Degroof Petercam
Laura Roba
Hold
KBC Securities
Thomas Vranken
Buy
Van Lanschot - Kempen
Suzanne van Voorthuizen
Neutral
Bryan-Garnier
Alexandru Cogut
Neutral
BCART
2022
2021
Change %
Average daily volume
132,422
81,743
62%
Average daily value
1,57
4.11
-62%
Total traded volume
34,429,824
21,089,678
63%
Total traded value
49,755,443
89,305,435
-31%
BIOCARTIS ANNUAL REPORT 2022 13
Financial calendar 2023
Date
Event
23 February 2023
Full year results 2022
11 April 2023
Publication Annual Report 2022
20 April 2023
Q1 2023 Business Update
12 May 2023
Annual General Meeting Biocartis Group NV
31 August 2023
H1 2023 results
9 November 2023
Q3 2023 Business Update
Investor relation details
For any investor relation related questions, please contact Biocartis Group, Generaal de Wittelaan 11B, 2800 Mechelen (Belgium),
tel. +32 15 632 600, ir@biocartis.com.
BIOCARTIS ANNUAL REPORT 2022 14
1.4. Key achievements in 2022
▪ Continued strong growth of product revenues in the core oncology business
▪ Product revenue amounted to EUR 45m, of which EUR 35.9m from 334k cartridges sold and EUR 9.2m from
instrument rentals and sales
▪ EUR 31.3m cartridge revenue in oncology, a 30% year-on-year increase, double-digit growth across all regions,
led by the US, both in cartridge volumes and in average selling price (ASP)
▪ Continued increase of ASP per commercial cartridge to EUR 106 (2021: EUR 96). Oncology ASP at EUR 116
(+11%)
▪ Global Idylla™ installed base of 2,085 instruments, 173 net new instruments placed
▪ Significant economies of scale unlocked on the automated manufacturing line ML2
▪ Transfer of more than 90% of all assays transferred to ML2
▪ Gross profit on product sales increased by 132% from EUR 6.6m in 2021 to EUR 15.2m 2022
▪ Gross margin on product sales doubled from 16% in 2021 to 34% in 2022
▪ Cash runway extended
▪ Operating cash burn reduced by EUR 18.1m to EUR 38.5m
▪ Comprehensive recapitalization: EUR 66m additional gross cash proceeds and restructuring of the convertible
debt, which was extended by 2.5 years
▪ New tests, partnerships and regulatory approvals lay solid foundation for continued growth
▪ Extended collaboration with AstraZeneca aimed at developing a new companion diagnostic test for use with
Tagrisso
®
(osimertinib), AstraZeneca’s third-generation EGFR-TKI (tyrosine kinase inhibitor) treatment
3
▪ Start of commercialization of SkylineDx’s Merlin Assay as a CE-IVD, ahead of the launch of an Idylla™ version
of the Assay
▪ Launch of the CE-marked IVD Idylla™ GeneFusion Panel
▪ Regulatory approval of the Idylla™ instrument in China and the Idylla™ MSI test as a CDx in Japan
▪ New Idylla™ FLEX technology: first assay launched (Idylla™ IDH1-2 Mutation Assay Kit (RUO))
Commercial highlights
▪ 334k cartridges sold in 2022, compared to 326k in 2021: 14% year-on-year growth in oncology, offset by the continued
decrease of COVID-19 testing, causing volumes in infectious disease to decrease by 36% year-on-year
▪ Oncology cartridge revenues grew 30% in 2022: double-digit growth of cartridge volumes across all regions coupled
with a consistently increasing ASP of EUR 116 (+11%):
BIOCARTIS ANNUAL REPORT 2022 15
▪ Sustained growth across Europe with growing adoption of the higher-priced Idylla™ GeneFusion Panel in
routine clinical use since its launch in June 2022
▪ The US continues to combine the highest growth of oncology cartridge volumes with sustained pricing
discipline. Several new customers among the top 10 cancer centers adopted Idylla™ in 2022. The ASP in
oncology, traditionally higher in the US than in our other markets, benefitted from a favorable product mix
and a smaller proportion of free-of-charge cartridge volumes for market seeding and the initial validation of
assays
▪ Strong performance of the distributor markets supported by the commercial agreement with AstraZeneca
aimed at increasing access to Idylla™ EGFR testing products for patients with non-small cell lung cancer
▪ Total revenue from Idylla™ instruments increased by 3% to EUR 9.2m in 2022, including instruments sold to content
partners:
▪ Revenue generated from instrument placements at end customers increased by 36% year-on-year, against a
9% increase of the installed base of Idylla™ instruments, which is evenly split between sold and rented
instruments
▪ Certain clinical trials that were planned to start in 2022 and requiring the sale of a significant number of Idylla™
instruments were delayed by our content partners in light of the uncertain economic environment
▪ Instrument revenue in the US more than doubled, even though several new customers deferred the
investment decision and adopted Idylla™ through Biocartis’ free-of-charge evaluation program under which
they can temporarily use the instrument while only paying for the cartridge consumption. Subject to the
favorable outcome of the evaluation, revenues from the ultimate sale or rental of such instruments are
therefore delayed by 6 months on average
▪ 173 net new instruments placed. Several instruments were reclaimed following a focused review of non-
performing reagent rental agreements to eliminate non-profitable investments in capital expenditure
Test menu and partnership highlights
Test menu:
▪ Launch of the fully automated, CE-marked IVD Idylla™ GeneFusion Panel
4
on 20 June 2022
▪ Launch of new SeptiCyte RAPID
®
5
(CE-IVD) EDTA
6
blood compatible cartridges by Biocartis’ partner Immunexpress
7
on
23 August 2022
▪ Start of the commercialization on 1 September 2022 in Europe of SkylineDx’s innovative Merlin test as a CE-IVD
marked manual kit, ahead of the launch of an Idylla™ version of the test. The test aims at predicting a patient’s risk
of nodal metastasis in melanoma
Product registrations:
▪ Japan – On 29 August 2022, Nichirei Biosciences, Biocartis’ distribution partner in Japan, received approval by the
Japanese regulatory authorities (Ministry of Health, Labor and Welfare) for the commercialization of the Idylla™ MSI
Test in Japan. Nichirei Biosciences plans the commercial launch of the Idylla™ MSI Test as a CDx in Japan in Q1 2023
▪ China – Regulatory approval of the Idylla™ instrument on 16 September 2022 by the Chinese regulatory authorities
NMPA, an important step towards the further regulatory and commercialization of Idylla™ assays in China
BIOCARTIS ANNUAL REPORT 2022 16
Partnerships:
▪ Announcement of a new partnership on 8 February 2022 between Biocartis and Ophiomics, a Lisbon (Portugal) based
biotech company with an initial focus on the commercialization of HepatoPredict. The commercialization in Europe
of the test as a CE-marked IVD kit started on 10 October 2022
▪ Announcement of an extension of the collaboration with AstraZeneca on 22 June 2022 highlighting the development
and planned premarket submission to the US FDA of a novel CDx test on the Idylla™ platform for AstraZeneca’s third-
generation EGFR-TKI (tyrosine kinase inhibitor) treatment
Publications - During 2022, 42 new papers with excellent data were published on several new Idylla™ studies, including:
▪ A study
8
(announced 4 May 2022) by Memorial Sloan Kettering Cancer Center (NY, US), in the Journal of Molecular
Diagnostics on the Idylla™ GeneFusion Assay (RUO), highlighting the quicker turnaround and the lower tissue
requirements compared to immunohistochemistry and molecular methods, while also circumventing the
infrastructure dependencies associated with NGS and fluorescence in situ hybridization
▪ A large prospective study
9
(announced 8 November 2022) demonstrating that the Idylla™ EGFR Mutation Test (CE-
IVD) leads to the significant reduction of the time-to-treatment by on average 16.8 days or 48% compared to NGS
testing for EGFR positive patients
Organizational and operational highlights
▪ Commercial milestones – Double milestone announced on 15 June 2022 with the selling of the 1,000,000th
commercial Idylla™ cartridge and the placement of the 2,000th Idylla™ instrument since commercial launch
▪ Shareholders’ Meetings – All agenda items were approved during the ordinary shareholders’ meeting held 13 May
2022 and the extraordinary shareholders’ meeting held 14 November 2022 which approved the various components
of the Company’s comprehensive recapitalization
▪ Cartridge manufacturing – Except for the SeptiCyte RAPID
®
test, the transfer of all assays to the second cartridge
manufacturing line (‘ML2’) was completed during 2022, further unlocking economies of scale and reducing
manufacturing costs
▪ ISO 27001 certification – ISO 27001 certification of Biocartis announced on 24 August 2022 for the design,
development, maintenance, service provision and support of the Idylla™ platform and associated customer-facing
software
▪ Management team – Biocartis aligned its organizational structure to deliver on its strategic priorities and has
appointed, effective as from 1 September 2022:
▪ Global Head of Partnering: Madhushree (Madhu) Ghosh, PhD, MS, joined Biocartis as Global Head of
Partnering. Dr. Ghosh brings a wealth of experience to successful commercial and strategic team leadership
in global strategic alliance management, P/L business unit leadership and IVD and CDx product development
for more than 20 years spent in molecular diagnostics and clinical assay development with a focus on Next
Generation Sequencing, real-time PCR, multiplex PCR, oncology and infectious disease diagnostics. Previously,
Dr. Ghosh held senior roles at Thermo Fisher Scientific, NeoGenomics Laboratories Inc., QIAGEN, and
AltheaDx.
▪ Global Head of Sales: David Dejans, previously Head of Sales Europe and Distributor markets, moved into the
role of Global Head of Sales
BIOCARTIS ANNUAL REPORT 2022 17
▪ In Q4 2022, the organization was streamlined across all areas of the business to withstand the impact of the significant
cost inflation. Compared to 31 December 2021, the workforce decreased by 16%
Financial highlights
▪ Total operating income – Total operating income amounted to EUR 58m, compared to EUR 54.9m in 2021, and
included EUR 45m from product sales (2021: EUR 40.5m; +11%), EUR 11.1m from various collaborations with partners
(2021: EUR 6.1m; +83%), EUR 1.4m from instrument servicing (2021: EUR 1.7m; -20%) and EUR 0.5m other income
(2021: EUR 6.6m; -93%)
▪ Revenues from cartridge sales grew 13% year-on-year to EUR 35.9m. Cartridge sales in the core oncology
business increased by 30%, while sales of the SARS-CoV-2 cartridges decreased by 49% and only represented
7.7% of total product revenues. 334k cartridges were sold in 2022 (2021: 326k) at an ASP of EUR 106 (2021:
EUR 96)
▪ The strong 30% growth of oncology cartridge revenue resulted from growing cartridge volumes (+14% year-
on-year) and an increased ASP of EUR 116, compared to EUR 105 in 2021. The ASP in oncology continues to
develop favorably as the contribution from high value-adding assays such as the Idylla™ GeneFusion Assay
(RUO) continues to increase. A continued focus on pricing discipline and a gradually increasing contribution
from sales in the US where prices are generally higher than in Europe and other parts of the world, also
support the steady increase of the cartridge ASP. Conversely, the fading COVID-19 testing need resulted in
36% lower cartridge volumes in infectious diseases, while the ASP of EUR 63 also decreased 18% year-on-year
▪ Revenues from the sale and rental of the Idylla™ instrument amounted to EUR 9.2m, a 3% increase year-on-
year. The installed base grew with 173 instruments to 2,085 instruments, net of conversions from instruments
previously placed free-of-charge under short-term evaluation programs and returns of non-performing
instruments under reagent rental agreements aimed at reducing non-profitable capital investments. As a
direct result of the uncertain economic climate, the planned sale of a significant number of instruments was
delayed following the decision by certain content partners to delay clinical trials that were planned to start in
2022
▪ Income from collaborations amounted to EUR 11.1m compared to EUR 6.1m in 2021, and mainly included
R&D services provided to our pharma and content partners, aimed at expanding the Idylla™ test menu and at
developing companion diagnostic tests that will unlock additional market potential in the US and in other
markets
▪ Other income of EUR 0.5m related to grants received in connection with the development of the new Idylla™
FLEX technology that is expected to facilitate the use of Idylla™ tests in therapy decisions and molecular
surveillance. The first product that is based on this Idylla™ FLEX technology, the Idylla™ IDH1-2 Mutation Assay
Kit (RUO), was launched in 2023. In 2021, other income included an insurance claim of EUR 4.6m for damages
caused by the fire in a warehouse in July 2021
▪ Cost of goods sold – Cost of goods sold decreased by 12% to EUR 29.8m, while cartridge volumes and the number of
newly placed instruments remained comparable to 2021. Contrary to 2021, a year of disrupted reagent supply and
the temporary unavailability of manufacturing capacity caused by the fire in one of Biocartis’ warehouses, most
cartridges were produced on the high-throughput automated manufacturing line ML2 in 2022, unlocking significant
economies of scale. The gross margin on product sales more than doubled from 16% in 2021 to 34% in 2022, as a
BIOCARTIS ANNUAL REPORT 2022 18
direct result of lower manufacturing costs per cartridge and the
lower contribution of low-priced SARS-CoV-2 tests. In the first
quarter of 2023, more than 90% of the commercial cartridge
production will have been transferred to ML2 and a plan to fully
decommission ML1 will be implemented over the year
▪ OPEX – Total operating expenses, excluding the cost of goods
sold, decreased 10% year-on-year from EUR 83.6m to EUR
75.2m. Apart from the fire damages of EUR 3.2m incurred in
2021, operating expenses decreased by EUR 5.2m, despite the
impact of global inflation. Investments in various R&D programs
were cut back by EUR 9.7m. The increase of EUR 3.8m in sales &
marketing reflected normalized commercial activities post the
pandemic and the full year impact of the restructuring of the US
commercial operations implemented at the end of 2021. General
& administrative spending levels remained stable at EUR 16.2m,
an increase of 4% year-on-year that merely reflected cost
inflation. In Q4 of 2022, the organization was streamlined to
offset the expected continued inflation of costs in 2023, including
the mandatory indexation of salaries in Belgium of 11%, effective
January 2023. Among others, the workforce was reduced by 16% across the entire organization since 31 December
2021
▪ Recapitalization – On 1 September 2022, Biocartis launched a comprehensive recapitalization, providing EUR 66m of
gross proceeds and comprising:
▪ The amendment of the existing 4% convertible bonds of EUR 135m, including a.o. the mandatory conversion
of 10% of these convertible bonds into common shares at the conversion rate of EUR 12.89 and the extension
of the maturity date until 9 November 2027
▪ A new first lien secured convertible term loan of EUR 30.1m, partly used for the buy-back of EUR 16.3m of
existing 4% convertible bonds for EUR 13.7m in cash
▪ An offer to exchange the amended existing convertible bonds for new 4.5% second lien secured convertible
bonds, subject to the subscription of EUR 25m of additional newly issued 4.5% convertible bonds
▪ A rights offering with extra-legal preferential rights for the existing shareholders of the Company of EUR 25.1m
On 31 December 2022, the recapitalization transactions were partly completed. Following the amendment, the buy-
back and the exchange offer, EUR 14.8m of existing 4% convertible bonds remained outstanding and EUR 92.1m of
these convertible bonds had been exchanged for the new 4.5% convertible bonds. EUR 18.1m was drawn under the
new convertible term loan and 33,476,932 new shares were issued on 2 December 2022 through a rights offering of
EUR 25.1m. Post year-end, the recapitalization completed on 16 January 2023 with the second drawdown of EUR 12m
under the new convertible term loan and the funding of the additional new 4.5% convertible bonds for EUR 25m
▪ Financial results – The net financial expense of EUR 17.7m included the impact of the recapitalization. In accordance
with IFRS, the amendment and the exchange were considered as an extinguishment of the existing 4% convertible
bond and the issuance of the new 4.5% convertible bond. The difference between the derecognition of the existing
convertible bond and the new convertible bond was recorded as a loss of EUR 7.3m in the income statement including
transaction expenses of EUR 6.5m. The interest and debt appreciation expense associated with the convertible term
loan and the two convertible bonds amounted to EUR 10.2m
BIOCARTIS ANNUAL REPORT 2022 19
▪ Cash flows and cash balance – The cash flow from operating and investing activities amounted to EUR -50.3m, a
significant reduction of EUR 19.2m compared to EUR 69.5m in 2021. The reduction resulted from a.o. (a) EUR 15.6m
improvement of the operating result, (b) EUR 5.8m lower investments in working capital, (c) EUR 1.8m lower capital
expenditure, offset by (d) investments in the Chinese joint venture Wondfo-Cartis (EUR 1m) and in a convertible note
issued by SkylineDx (of which EUR 2.5m was already made available by Biocartis). The net proceeds from financing
activities of EUR 22.5m reflected (a) a net new drawdown of EUR 9m on working capital facilities from KBC Bank, (b)
EUR 18.1m proceeds from the first drawdown under the new convertible term loans, (c) the cash buy-back of existing
convertible bonds for EUR 13.7m, (d) the scheduled reimbursement of EUR 6.6m of lease obligations, € EUR 25.1m
proceeds of the rights issue, net of (f) EUR 9.6m fees associated with the recapitalization transactions. The cash and
cash equivalents at 31 December 2022 amounted to EUR 26.1m
Post year-end, the recapitalization transaction was completed on 16 January 2023, adding EUR 36.1m of net cash,
from the second drawdown on the convertible term loan and the issuance of EUR 25m of additional 4.5% convertible
bonds
▪ Balance sheet – In accordance with IFRS 9, the new 4.5% convertible bonds were partly recorded as a liability and
partly as equity. Following the recapitalization transactions, the financial indebtedness at 31 December 2022
amounted to EUR 122.4m compared to EUR 154.2m at 31 December 2021. The shareholders’ equity increased by EUR
3.6m as a result of a.o. (a) the recognition of EUR 33.1m equity value attributed to the new convertible bond, (b) the
issuance of new shares for EUR 23m, net of fees, following the rights offering and (c) the loss for the year of EUR
63.4m
Key figures 2022
The tables below show an overview of the key figures and a breakdown of operating income for 2022. 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.
Key figures (EUR 1,000)
2022
2021
% Change
Total operating income
57,976
54,898
6%
Cost of sales
-29,799
-33,922
-12%
Research and development expenses
-38,393
-48,054
-20%
Sales and marketing expenses
-20,595
-16,763
23%
General and administrative expenses
-16,236
-15,560
4%
Other expenses
-
-3,244
Operating expenses
-105,023
-117,543
-11%
Operating result
-47,047
-62,645
-25%
Net financial result
17,690
-8,411
-100%
Share in the result of associated companies
-884
-659
34%
Income tax
240
243
-1%
Net result
-65,381
-71,472
-33%
Cash flow from operating activities
-44,855
-65,716
-32%
Cash flow from investing activities
-5,431
-3,748
45%
Cash flow from financing activities
22,463
-1,204
-1,965%
Net cash flow
1
-27,823
-70,668
-61%
Cash and cash equivalents
2
26,125
53,522
-51%
Financial debt
122,356
154,162
-21%
1 Excludes the effect of exchange rate differences on the cash balances held in foreign currencies
2 Including EUR 1.2m of restricted cash in 2022 and 2021
BIOCARTIS ANNUAL REPORT 2022 20
Operating income (EUR 1,000)
2022
2021
% Change
Collaboration revenue
11,068
6,053
83%
Idylla™ system sales and rentals
9,172
8,869
3%
Idylla™ cartridge sales
35,864
31,618
13%
Product sales revenue
45,036
40,486
11%
Service revenue
1,377
1,730
-20%
Total revenue
57,481
48,269
19%
Grants and other income
495
6,629
-93%
Total operating income
57,976
54,898
6%
Income statement
Total operating income increased by EUR 3.1m to EUR 58m in 2022. Collaboration revenue increased by EUR 5m, or 83% to EUR
11.1m and predominantly consisted of development services provided to partners. Revenue from such services amounted to EUR
10.5m compared to EUR 5.9m in 2021, an increase of 79%. Collaboration income further included license revenue of EUR 0.1m
and EUR 0.5m related to certain development milestones achieved in 2022.
Revenue from product sales amounted to EUR 45m and increased with EUR 4.6m or 11% from EUR 40.5m in 2021. Within revenue
from product sales, cartridge sales accounted for EUR 35.9m and the sale and rental of Idylla™ systems represented EUR 9.2m.
The revenue from the sale of 334k cartridges increased by EUR 4.2m or 13% from EUR 31.6m in 2021. The strong increase in the
sale of cartridges in the core oncology business of 30% was partly offset by a decrease of the sale of the Idylla™ SARS-CoV-2 test
as a direct result of fading global COVID-19 testing needs. The increase in oncology cartridge revenue was driven by increasing
cartridge volumes (+14%) and an average selling price (ASP) that increased from EUR 105 in 2021 to EUR 116 in 2022. Oncology
cartridges represented EUR 31.3m or 87% of total cartridge revenue. The revenue from the sale and rental of Idylla™ systems
increased from EUR 8.9m to EUR 9.2m and reflected the increase of the installed base from 1,912 on 31 December 2021 to 2,085
on 31 December 2022. Included in the system revenues is the income from the rental of Idylla™ systems for a total amount of
EUR 5m, an increase of 31% compared to EUR 3.8m in 2021. The revenue from servicing the Idylla™ systems decreased from EUR
1.7m in 2021 to EUR 1.4m in 2022.
Grant income decreased to EUR 0.5m in 2022 compared to EUR 2.1m in 2021, and related to the recognition of subsidies awarded
in relation to the highly innovative Idylla™ FLEX technology to be deployed on the Idylla™ platform aimed at enabling the off-line
customization of the Idylla™ cartridge. A first assay developed with this new technology, the Idylla™ IDH1-2 Mutation Assay Kit
was launched among selected customers as a Research Use Only product and will be made available globally during the second
half of 2023. In 2021, other income included a EUR 4.6m insurance claim for damages caused by the fire on 30 July 2021.
Total operating expenses decreased from EUR 117.5m in 2021 to EUR 105m in 2022. Within operating expenses, the cost of goods
sold decreased by EUR 4.1m or 12% from EUR 33.9m in 2021 to EUR 29.8m in 2022, while product revenue increased by 11%.
The decrease of the cost of goods sold is attributable to economies of scale resulting from the increased utilization of the
automated high-throughput manufacturing line ML2. In 2021, production on the ML2 line was constrained because of the global
shortage of reagents during the first half of the year caused by the pandemic, and because of the forced 2-month production
stop after the fire in one of the warehouses in July 2021. Following this fire, 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. In 2022, more than 90% of all assays were transferred
from the older manufacturing line ML1 to ML2, resulting in a significant reduction of the manufacturing cost per cartridge. In
2023, ML1 will be decommissioned. Together with the increasing ASP, the decrease of the manufacturing cost of cartridges,
resulted in an increase of the gross margin on product sales from 16% in 2021 to 34% in 2022.
Total operating expenses, excluding the cost of goods sold, decreased by EUR 8.4m or 10% from EUR 83.6m in 2021 to EUR 75.2m
in 2022. R&D expenses amounted to EUR 38.4m, a decrease of EUR 9.7m compared to 2021. 2021 was a year of exceptional
investment in R&D, in part because of the carry-over of projects that were delayed in 2020 following the pandemic outbreak, but
BIOCARTIS ANNUAL REPORT 2022 21
also because of increased investments in further menu expansion and diversification, including a.o. the development of the
Idylla™ SARS-CoV2/Flu/RSV Panel (CE-IVD) and the continued investment in the transfer of assays from the ML1 line to the ML2
line. In 2022, investments in R&D were cut back and included the development and the launch of the CE-IVD Idylla™ GeneFusion
panel, the Idylla™ IDH1-2 Mutation Assay Kit (RUO) and certain content partner tests. S&M expenses increased by EUR 3.8m to
EUR 20.6m because of the post-pandemic normalization of commercial activities and the full year impact of the restructuring of
the US commercial operations implemented at the end of 2021. The increase of EUR 0.7m in G&A expenses from EUR 15.6m in
2021 to EUR 16.2m in 2022 is largely attributable to inflation. At the end of 2022, the organizational structure was streamlined
to withstand the impact of the expected continued cost inflation in 2023.
The operating result for 2022 improved by EUR 15.6m from EUR -62.6m in 2021 to EUR -47m in 2022, as a result of the significantly
improved gross profit and the decrease of operating expenses.
In addition to interest and other financial expenses of EUR 3.5m, the financial result the impact of the recapitalization
transactions. The recapitalization included the partial equitization of 10% of the 4% convertible bonds (10%), the buy-back of EUR
16.3m of the 4% bonds for cash consideration of EUR 13.7m and the exchange of EUR 92.1m of such convertible bonds for new
4.5% convertible bonds. In accordance with IFRS 9, this exchange was accounted for as an extinguishment of the existing
convertible bonds and the recognition of the new convertible bonds, resulting in a loss of EUR 7.3m in the income statement..
The recapitalization included the partial equitization of 10% of the 4% convertible bonds (10%), the buy-back of EUR 16.3m of
the 4% bonds for cash consideration of EUR 13.7m and the exchange of EUR 92.1m of such convertible bonds for new 4.5%
convertible bonds. These transactions were recorded as an extinguishment of the 4% convertible bonds and the resulting
derecognition of such bonds resulted in a loss of EUR 7.3m. Interest expenses in 2022 amounted to EUR 11.2m, an increase of
EUR 1.9m compared to 2021, reflecting the net drawdown of EUR 9m on working capital facilities, the first drawdown of a new
convertible term loan for an amount of EUR 18.1m and the increased interest expense on the convertible bonds following the
exchange of the existing 4% convertible bonds for new 4.5% convertible bonds. The net financial expenses also included EUR
0.8m of foreign currency exchange gains.
Balance sheet
On 31 December 2022, total assets amounted to EUR 114.3m, a decrease of EUR 28.2 m from EUR 142.5m on 31 December 2021.
Non-current assets decreased by EUR 3m as a result of the net reduction of intangible assets and property, plant and equipment
of EUR6m, offset by an investment of EUR 2.5m in a convertible note issued by SkylineDx. The company agreed to invest up to
EUR 10m in SkylineDx’s convertible notes as part of the collaboration announced on 22 April 2021. The investment will be made
available in different project-based milestones throughout the collaboration. The investment in the China joint venture Wondfo-
Cartis amounted to EUR 2.5m compared to EUR 2.3m on 31 December 2021 following an additional capital injection of EUR 1m,
which was offset by Biocartis’ share of EUR 0.9m in the joint venture’s loss of 2022.
Current assets at the end of 2022 amounted to EUR 69.9m, a decrease of EUR 25.2m from EUR 95.1m in 2021, driven by a
reduction in cash and cash equivalents of EUR 27.4m. Trade receivables and inventories increased by EUR 3.3m, an increase which
is fully in line with the growing commercial activity. Other receivables decreased by EUR 4.3m from EUR 6.6m in 2021 to EUR
2.2m in 2022, mostly reflecting the collection of the remaining balance of EUR 3.8m of insurance claims for fire damages. Other
current assets increased by EUR 3.2m to EUR 6m following the deferral of costs related to the issuance of new 4.5% convertible
bonds and the second drawdown of the new convertible term loan which only completed on 16 January 2023. These costs will
be capitalized as part of the recognition of these financial obligations in 2023.
The financial debt reduced from EUR 154.2m at the end of 2021 to EUR 122.4m on 31 December 2022. On 1 September 2022,
Biocartis launched a comprehensive recapitalization, which included the restructuring of the existing convertible debt and the
provision of new convertible debt, summarized as follows:
▪ The amendment of the existing 4% convertible bonds of EUR 135m, including a.o. the mandatory conversion of 10%
of these convertible bonds into common shares at the conversion rate of EUR 12.89 and the extension of the maturity
date until 9 November 2027.
BIOCARTIS ANNUAL REPORT 2022 22
▪ A new first lien secured convertible term loan of EUR 30.1m, partly used for the buy-back of EUR 16.3m of existing
4% convertible bonds for EUR 13.7m in cash.
▪ An exchange of the amended existing convertible bonds for new 4.5% second lien secured convertible bonds, subject
to the subscription of EUR 25m of additional newly issued 4.5% convertible bonds.
On 31 December 2022, the recapitalization transactions were partly completed. Following the amendment, the buy-back and the
exchange offer, EUR 14.8m of existing 4% convertible bonds remained outstanding and EUR 92.1m of these convertible bonds
had been exchanged for the new 4.5% convertible bonds. EUR 18.1m was drawn under the new convertible term loan. In
accordance with IFRS 9, the convertible bonds have been partly recorded as a liability and partly as equity to reflect the value of
the embedded derivative. The liability associated with both convertible bonds and the new convertible term loan amounted to
EUR 92.7m. In addition to the convertible debt, total financial liabilities of EUR 122.4m included EUR 14.6m lease obligations
(2021: EUR 20m) and EUR 15m of bank debt (2021: 6m). Post year-end, the recapitalization completed on 16 January 2023 with
the second drawdown of EUR 12m under the new convertible term loan and the funding of the additional new 4.5% convertible
bonds for EUR 25m.
Trade payables of EUR 11.7m only marginally increased by EUR 0.2m, while other current liabilities, which mainly include payroll
related obligations such as vacation pay and year-end premiums, increased from EUR 8.4m at the end of 2021 to EUR 8.9m at the
end of 2022.
Cash flow statement
The cash flow from operating activities in 2022 benefitted from the improved operating result and reduced by EUR 20.9m from
EUR -65.7m in 2021 to EUR -44.9m in 2022. Investments in working capital decreased from EUR 9.6m in 2021 to EUR 3.9m in
2022. The decrease related to the reduction of trade and other receivables of EUR 7.5m (of which EUR 3.8m related to the
collection of the outstanding balance of the insurance claim for fire damages), an increase in trade and other payables with EUR
2.1m, partly offset by increased investments in the replenishment of inventories by EUR 2.6m that were depleted following the
fire in 2021.
The cash flow from investing activities in 2022 amounted to EUR -5.4m, compared to EUR -3.7m in 2021. The increase resulted
from the investments in the convertible note issued by SkylineDx (EUR 2.5m) and in Wondfo-Cartis (EUR 1m), offset by EUR 1.8m
lower investments in property, plant and equipment and intangible assets.
The cash flow from financing amounted to EUR 22.5m as a result of the net repayment of lease and other obligations for EUR
11.3m, offset by the net proceeds of the rights offering and the first drawdown under the new convertible term loan for EUR
33.8m in aggregate.
The total cash flow for 2022 amounted to EUR -27.8m compared to EUR -70.7m in 2021 and resulted in cash and cash equivalents
of EUR 26.1m on 31 December 2022.
BIOCARTIS ANNUAL REPORT 2022 23
1.5. Macroeconomic environment
While still recovering from the impact of more than two years of COVID-19 pandemic, the macroeconomic environment was
significantly impacted by the war in Ukraine. The war in Ukraine added to the disruption in supply of multiple materials initially
caused by pent up demand in the aftermath of the pandemic. Soaring commodity and energy prices and an increasingly uncertain
economic outlook led to extremely high inflation rates. Global cancer care normalized to pre-pandemic levels with few and
sporadic restrictions to patient access to hospitals. While our core oncology business therefore strongly grew, the overall
economic environment impacted us in various respects.
COVID-19
In 2020, as a direct result of the outbreak of the COVID-19 pandemic, cancer care was significantly disrupted, and customer
prospection severely hampered. Patient access to hospitals was restricted and the surge of COVID-19 cases resulted in an
overburdened healthcare system, requiring 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 RSV
10
nucleic acids. In 2022, the demand for both tests gradually decreased following the fading need for COVID-19 testing. Moreover,
the average selling price of the tests eroded because there was more than enough testing capacity. In 2022, the revenue from
the sale of the Idylla™ SARS-CoV-2 Test (CE-IVD) and the Idylla™ SARS-CoV-2/Flu/RSV Panel (CE-IVD) decreased to EUR 3.5 million,
representing less than 8% of total product revenues, compared to EUR 6.8 million, or 17% in 2021. In light of the gradually
reducing gross margins on the sale of both tests, the prospection of new customers was deprioritized in 2022 and the contribution
of both tests to product revenue is expected to further decrease in 2023. Nevertheless, the pandemic is expected to have
continued long-term impact:
▪ 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
BIOCARTIS ANNUAL REPORT 2022 24
Supplier impact
Even though we raised our efforts at the start of the pandemic to strengthen our supply chain and mitigate the risk of disruptions
that could affect the supply of Idylla™ products to our customers, we were nevertheless affected in 2021 by the worldwide
shortages of reagent supply 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. Despite the additional impact of the war in Ukraine
on global supply, the supply of raw material was largely undisrupted in 2022 as we benefitted from several actions taken in 2021,
including:
▪ Improvement of internal communications between sales and manufacturing teams to better align supply and demand
▪ Increase of inventory levels where possible to ensure availability of raw materials by working closely with existing
suppliers and by identifying new suppliers
▪ Increase of safety stock levels of finished goods, where possible
▪ Close collaboration with preferred transportation partners to continue shipments to our partners and customers
across the globe
▪ Heightened supply chain monitoring systems with weekly and even daily updates by our supply chain teams
▪ Interaction with main suppliers to further improve our ability to respond quickly to changing demand
Biocartis had one indirect supplier for Idylla™ instrument sub-parts based in Russia. An alternative supplier was identified and
qualified in 2022 to ensure the continued supply of instruments.
Inflationary impact
The Russian invasion of Ukraine magnified the impact from pent-up demand following more than two years of pandemic, resulting
in a very significant increase of the price of commodities and causing soaring global inflation. Biocartis’ costs predominantly
consist of personnel costs, raw materials used in the manufacturing of the Idylla™ instrument and the Idylla™ cartridges and
energy costs. In 2022, Biocartis took several measures to withstand the impact of inflation, such as the mandatory indexation of
Belgian salaries and increased manufacturing costs:
▪ Selling prices of Biocartis’ products were increased within the boundaries of existing levels of reimbursement and to
the extent price increase are contractually allowed.
▪ Biocartis streamlined its organization and reduced its workforce. The number of employees on 31 December 2022
was reduced by 16% compared to 31 December 2021.
Commercial impact of the war in Ukraine
Biocartis has no sales in Ukraine. In Russia, we operate through a local sales distributor who realized first sales in 2021 following
the completion of the first product registrations in Russia. Sales in Russia are not subject to sanctions taken against Russia. Sales
amounted to EUR 0.3 million in 2022 and are subject to prepayment before delivery.
BIOCARTIS ANNUAL REPORT 2022 25
Government support measures
In 2020, our US subsidiary, Biocartis US 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 US 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. Biocartis US Inc. also applied for an Employee Retention Tax Credit under the CARES Act in 2021,
aimed at encouraging companies to retain employees on their payroll to compensate for business losses. A tax credit of USD 223
thousand was approved and collected in 2022.
BIOCARTIS ANNUAL REPORT 2022 26
1 At a glance
2 Strategy
3 Sustainability
4 Corporate governance report
5 Financial report
6 Glossary & bibliography
BIOCARTIS ANNUAL REPORT 2022 27
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 interception
11
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 costs
12
. This delays the fast delivery of results, preventing
rapid initiation of the most beneficial therapy.
In the case of cancer, this means the tumor has time to grow or spread. Fast initiation of
immunotherapy or targeted therapy as first-line treatment is crucial for cancer patients,
as it increases overall survival rates
13
. Timely detection of biomarkers therefore is very
important. Today, turnaround times of reference technologies are on average 18 days,
with 14% of patients waiting longer than a month to be able to start treatment. 95% of
the patients must wait more than a week in order to receive the biomarker results
14
. This
means that precious time is lost whereas treatment initiation could have been started
and unnecessary use of chemotherapy with its side effects could have been avoided.
Vast addressable market
The worldwide COVID-19 pandemic has created an increased demand for molecular diagnostic testing. The global molecular
diagnostics market, estimated at USD 17.2bn in 2022, is expected to grow at a 7.7% compound annual growth rate (CAGR)
15
between 2021-2026. Oncology reached a value of USD 3.2bn in 2022 and is expected to reach USD 7.3bn by 2027, exhibiting a
CAGR of 14.7%
16
.
Biocartis’ oncology products target a large, global customer base of pathology labs with the opportunity to unlock new customer
segments. The current on-market Idylla™ test menu serves a market of nearly 6 million tests per annum
17
, increasing to at least
10 million by 2026 with tests in the pipeline. The market potential is vast
18
:
▪ Therapy selection market of USD 6bn
▪ Recurrence monitoring market of USD 15+bn
BIOCARTIS ANNUAL REPORT 2022 28
▪ Early detection (screening) market of USD 50bn
This is complemented with the ongoing expansion of the oncology test menu through
novel gene signature tests and liquid biopsy based personalized patient monitoring tests.
The global infectious disease diagnostics market is estimated at USD 35.5bn in 2022.
Market growth, which is expected to stabilize towards 2027, is driven by the global
prevalence of infectious diseases and the growing awareness for early diagnosis and a
shift in focus from centralized laboratories to decentralized point-of-care testing
19
.
Thanks to the build out of its pandemic response test menu, Biocartis developed a proven
market access to the infectious disease market and is now broadening its test menu with
a focus on COVID-19 and sepsis testing to support patient journey in hospital ICU. Longer
term opportunities exist for partner collaboration around the development of broad
syndromic panels leveraging the unique multiplexing-related capacity of Idylla™.
Within the market of infectious diseases, sepsis testing represents a high unmet need, as
current markers are not rapid (blood cultures) or are non-specific (PCT, CRP)
20
. Since
sepsis is the final common pathway to death from most infectious diseases worldwide,
including viral infections such as SARS-CoV-2 (COVID-19) there is an increased risk in
pandemic times. Fast clinical decisions are essential for a positive impact on the patient’s
outcome, which matches Idylla™’s key characteristics.
Sepsis arises when the body’s response to an infection injures its own tissues and organs.
It may lead to shock, multi-organ failure, and death – especially if not recognized early and treated promptly. Sepsis is responsible
for an estimated 11 million deaths/year globally
21
, with annual healthcare costs estimated at over USD 65 billion in the US alone
22
.
BIOCARTIS ANNUAL REPORT 2022 29
2.2. Product strategy
Biocartis’ vision is to enable universal access to personalized medicine for patients around the world. Our mission is to make
molecular testing convenient, fast and suitable for any lab.
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 and Idylla™ technology
Robust technology 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:
BIOCARTIS ANNUAL REPORT 2022 30
▪ 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 42 new published Idylla™ papers in 2022, bringing the total number of Idylla™
papers to 166 end of 2022.
The new Idylla™ FLEX technology
In recent years, Biocartis has continued to invest in its technology and developed the new Idylla™ FLEX technology that separates
the generic components of an Idylla™ test from the test-specific components. The Idylla™ FLEX technology shortens the
development time of new Idylla™ assays, allowing to bring them to the market much faster. The technology combines a generic
Idylla™ cartridge, which can be mass-manufactured on Biocartis’ high-throughput manufacturing line at low cost, with the test-
specific components that are provided in a separate vial of which the content can be added into the generic Idylla™ cartridge by
the user together with the sample. The Idylla™ FLEX technology will first be deployed for tests that use FFPE, peripheral blood
BIOCARTIS ANNUAL REPORT 2022 31
mononuclear cells, bone marrow mononuclear cells, whole blood or extracted DNA as sample type. In a next step, it is intended
to be deployed for tests that can use up to 4 ml of plasma as sample type.
In a next phase, the off-line customization of the Idylla™ cartridge could be deployed in the rapidly growing field of molecular
surveillance, where patients are monitored with molecular tests. The Idylla™ FLEX technology is ideally suited for both tumor-
informed (aka bespoke or personalized) as well as tumor-naïve panels, both of which have shown promise for molecular
surveillance. Moreover, Idylla™ FLEX will be a major steppingstone to testing liquid biopsy samples, which is expected to account
for the largest share within the vast market opportunity of molecular surveillance monitoring.
The Idylla™ IDH1-2 Mutation Assay Kit (RUO) is the first test developed using the Idylla™ FLEX technology. The assay was launched
among selected customers and will be made available for partnerships with pharmaceutical companies, clinical research
organizations and reference labs conducting research in the course of 2023.
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.
BIOCARTIS ANNUAL REPORT 2022 32
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 (Molecular 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
Today, Biocartis’ on-market tests cover a broad range of programs including melanoma, colorectal and lung cancer, with tests in
breast cancer, thyroid cancer and brain cancer/hematology in development.
▪ Melanoma is the deadliest form of skin cancer. Prognosis depends on disease staging. BRAF testing has become a
common practice in the diagnosis of patients with advanced BRAF-mutated melanoma, for which multiple effective
1st-line treatment options exist. The Merlin Test (CE-IVD), of which an Idylla™ version is under development in
collaboration with SkylineDx, reduces unnecessary lymph node surgeries and rapidly and easily identifies patients at
low risk of nodal metastasis.
▪ Colorectal cancer is the third most frequent cancer and the fourth leading cause of cancer-deaths worldwide. RAS
mutations occur in approximately 50% of colorectal cancers. Biocartis has an agreement for the registration and
potential use of a CDx of the Idylla™ MSI Test in connection with immuno-oncology therapies in metastatic colorectal
cancer (mCRC) of Bristol-Myers Squibb in the US and in the People’s Republic of China.
BIOCARTIS ANNUAL REPORT 2022 33
▪ Within lung cancer and specifically within non-small cell lung cancer (NSCLC), mutations in the EGFR gene occur as
the 2nd most common cancer driver mutation. Approximately 50% of NSCLC patients have tumor mutations that
could inform targeted treatment, but many are not tested. A key issue is insufficient or low-quality samples, often
leading to sample failure which results in high rejection rate for NGS testing, the recommended testing method for
NSCLC. Today Biocartis has a partnership with AstraZeneca, lung cancer therapy leader, aimed at facilitating rapid and
easy access to EGFR testing products with Idylla™. On 22 June 2022, Biocartis extended its collaboration with
AstraZeneca aimed at the development and applicable pre-market notification or approval with the US FDA of a novel
companion diagnostic (CDx) test on the Idylla™ platform, for use with Tagrisso
®
(osimertinib), AstraZeneca’s third-
generation EGFR-TKI (tyrosine kinase inhibitor) treatment.
▪ Within thyroid cancer, approximately 1.2 million thyroid cytology evaluations are reported as indeterminate each
year
23
, regularly leading to unnecessary surgical intervention or removal of the thyroid. Biocartis has an ongoing
partnership with GeneproDx: their proprietary ThyroidPrint
®
test is being ported on Idylla™. This is a quantitative RT-
PCR based mRNA-expression classifier test which helps call an indeterminate cytology result as benign or malignant.
▪ Breast cancer is the most common cancer among women worldwide. Activating mutations in the (PI3K)/AKT/mTOR
pathway are present in the majority of breast cancers and are therefore a major focus of drug development and
clinical trials. Biocartis has the Idylla™ PIK3CA-AKT1 Mutation Assay under development for the molecular
characterization of hormone receptor positive (HR+) HER2 negative (HER2-) metastatic breast cancer.
▪ Brain cancer is the biggest cancer killer of children and adults under 40 for which several targeted treatments exist.
This is also one of the focus areas for the Idylla™ test menu.
▪ Hematologic or blood cancer is a cancer that begins in blood-forming tissue, such as the bone marrow, or in the cells
of the immune system. Examples of hematologic cancer are leukemia, lymphoma, and multiple myeloma
24
. An
estimated 1.24 million blood cancer cases occur annually worldwide, accounting for approximately 6% of all cancer
cases
25
.
▪ Primary liver cancer is the sixth most common and third most lethal cancer in the world, with more than 900,000 new
cases per year and resulting in more than 800,000 deaths per year
26
. Hepatocellular carcinoma (HCC) is the most
common type of primary liver cancer that frequently occurs in people with chronic liver diseases, such as cirrhosis.
As per end 2022, Biocartis offered oncology tests for melanoma, colorectal, lung and liver cancer.
BIOCARTIS ANNUAL REPORT 2022 34
Metastatic colorectal cancer (mCRC)
Clinical information
RAS - Colorectal cancer (CRC) remains the third most frequent and the fourth leading cause of
cancer-associated mortalities worldwide. Oncogenic mutations in the RAS gene have been identified
in ~50% of CRC with activating KRAS mutations identified in 46% and NRAS mutations in 5% of CRC
cases
27
. RAS mutations are important drivers of tumor resistance against anti-EGFR therapies.
Therefore, testing of mutations in exons 2, 3 and 4 of KRAS and NRAS is a requirement prior to
initiating treatment with anti-EGFR therapy
28
.
BRAF - BRAF mutations are present in 8-15% of CRC cases
29
. The presence of a BRAF V600E mutation
shows to be a poor prognostic factor in patients with mCRC
30
. BRAF V600E status can be assessed
alongside RAS to guide therapeutic decision making for patients with mCRC
31
.
MSI - MSI status is a critical marker for the screening of Lynch syndrome and can provide valuable
information for prognosis and treatment stratification in colorectal cancers
32
. Guidelines
recommend assessing the MSI status for all patients with colorectal or endometrial carcinomas for
screening for Lynch syndrome as well as for prognostic stratification and potential eligibility for
immunotherapy
33
. Research studies have shown that MSI-High patients respond favorably to
immune checkpoint inhibitors, and checkpoint blockade therapy has recently been incorporated
into clinical care for gastrointestinal cancers
34
.
In vitro diagnostic tests
KRAS and NRAS-BRAF Mutation Tests - 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 use
35
. The Idylla™ mCRC solid biopsy panel includes 3
different RAS mutation tests:
▪ Idylla™ KRAS Mutation Test
▪ Idylla™ NRAS-BRAF Mutation Test
MSI Test - The fully automated Idylla™ MSI Test provides fast and accurate information on MSI status
directly from 1 FFPE sample from human colorectal cancer. The Idylla™ MSI Test shows high
concordance (>97%) and lower failure rates compared to standard methods
36
. The 7 novel
biomarkers used for the Idylla™ MSI Test are tumor-specific eliminating the need for paired normal
tissue samples leading to an improved operational efficiency. The Idylla™ MSI Test provides
unbiased result reporting without the need for visual interpretation.
BIOCARTIS ANNUAL REPORT 2022 35
Lung cancer
Clinical information
Lung cancer is the most common cancer worldwide, contributing for 13% of all cancer types. 85% of
lung cancers are non-small cell lung cancers (NSCLC), of which histologically adenocarcinoma is the
most prevalent. EGFR mutations in exons 18-21 have been associated with sensitivity and resistance
to a number of targeted anti-cancer therapeutics and testing is recommended in all patients with
advanced NSCLC of a non-squamous subtype
37
. Exon 19 deletion and exon 21 (L858R, L861Q), exon
18 (G719X), and exon 20 (S768I) mutations are associated with sensitivity to EGFR tyrosine kinase
inhibitors (TKIs) whereas exon 20 insertion mutations may predict resistance to TKIs. EGFR T790M
mutation is the main cause of acquired resistance to TKI therapy and has been reported in about
55% of patients with disease progression after initial response to 1st or 2nd generation TKIs
38
.
Prevalence of EGFR mutations in NSCLC adenocarcinomas is 10-15% in Western and up to 50% in
Asian patients
39
.
In vitro diagnostic tests
The Idylla™ EGFR Mutation Test -The Idylla™ EGFR Mutation Test provides fast, reliable information
on the EGFR tumor mutation status reducing the clinical turnaround time from sample to result
report significantly. Insufficient samples are a persistent problem in lung cancer genomic profiling
resulting in a high invalid/ rejection rate. Idylla™ EGFR only requires 1 tissue section (5-10 µm) per
assay and shows a significant lower invalid rate compared to other methods.
GeneFusion Panel - The Idylla™ GeneFusion Panel consolidates traditional testing workflows into
one streamlined, fully automated process providing reliable, objective information on ALK, ROS1,
RET and METex14 skipping in about 180 minutes. The Panel provides simultaneous detection of
internationally recommended biomarkers from a limited amount of sample thereby saving valuable
tissue specimens and is a rapid actionable solution which can be seamlessly integrated into virtually
any laboratory workflow. The Panel demonstrated high concordance results in a clinical comparison
study where ALK was compared with IHC and ROS1, RET and METex14 skipping were compared with
NGS
40
.
BIOCARTIS ANNUAL REPORT 2022 36
Melanoma
Clinical information
BRAF - Somatic mutations in BRAF have been found in 37-50% of all malignant melanomas
(mycancergenome.org). Multiple effective first-line systemic treatment options are available for
patients with advanced BRAF-mutated melanoma including BRAF/MEK as well as PD-L1 inhibitors.
Current guidelines recognize the importance of BRAF V600 testing for patients with metastatic
disease recommending BRAF mutation status assessment
41
.
In vitro diagnostic tests
BRAF Test - The Idylla™ BRAF Mutation Test provides fast, reliable information on the BRAF tumor
mutation status reducing the clinical turnaround time significantly. The Idylla™ BRAF Mutation Test
only requires 1 tissue section (5-10 µm) per sample and independent studies have shown that the
test is able to detect mutations in samples with as low as 2% neoplastic cells. Even for challenging
samples with high melanin content the Idylla™ BRAF Mutation Test ensures consistent high
sensitivity and accuracy
42
.
Partner test: Merlin™ Assay - On 1 September 2022, Biocartis announced the start of the
commercialization in Europe of SkylineDx’s innovative Merlin™ Assay as a CE-IVD marked manual kit.
The test, developed by SkylineDx together with the Mayo Clinic (US), aims to predict a melanoma
patient’s risk of nodal metastasis and may help safely forgo an invasive surgery, which is now often
performed to determine metastatic spread of the cancer for staging purposes. In approximately 80%
of surgeries, the biopsy comes back negative for metastasis, where it does not further impact the
patient pathway. The Merlin™ Assay provides a more personalized insight, identifying patients with
a low-risk tumor that could avoid the surgery
43.
The Merlin™ Assay will be commercialized in Europe
by Biocartis as a CE-IVD marked manual kit, ahead of the launch of an Idylla™ version of the test
which is under development.
BIOCARTIS ANNUAL REPORT 2022 37
Liver cancer
Clinical information
Primary liver cancer is the sixth most common and third most lethal cancer in the world, with more
than 900,000 new cases per year and resulting in more than 800,000 deaths per year. HCC is the
most common type of primary liver cancer that frequently occurs in people with chronic liver
diseases, such as cirrhosis44. Liver transplantation is the best curative treatment for HCC patients.
The current criteria used to identify patients for transplantation are either too strict (by rejecting
patients that could benefit from the transplant) or overestimate the benefit from a liver
transplantation (by selecting patients that will relapse afterwards).
In vitro diagnostic tests
Partner test: HepatoPredict - On 10 October 2022, Biocartis announced the start of the
commercialization in Europe of the HepatoPredict test as a CE-IVD marked manual kit. The test,
developed by Ophiomics, is a prognostic diagnostic test that supports the decision of liver
transplantation in patients with Hepatocellular Carcinoma (HCC). HepatoPredict employs a machine
learning algorithm combining tumor gene expression with clinical variables to accurately identify
hepatocellular carcinoma patients for liver transplantation. The test, requiring 1 to 2 FFPE tissue
sections, is an IVD with a 5-hour hands-on time providing an easy-to-interpret report.
Research
Biocartis encourages the research into new and emerging uses for different biomarkers. In this regards we offer the following
assays for research use only:
Idylla™ MSI Assay
Fully automated detection of mutations in 7 novel MSI loci.
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.
BIOCARTIS ANNUAL REPORT 2022 38
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.
Idylla™ IDH1-2 Mutation Assay Kit
Fully automated detection of 5 mutations in IDH1 and 10
mutations in IDH2
45
directly from FFPE tissue or extracted
DNA.
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).
▪ Idylla™ SARS-CoV-2 Test: Fully automated rRT-PCR test intended for the qualitative detection of SARS-CoV-2 RNA in
nasopharyngeal swab specimens from individuals suspected of COVID-19 by their healthcare provider. Results are
obtained in as soon as 90 minutes using 200 μl of viral transport media (VTM) with less than 2 minutes hands-on time.
▪ Idylla™ SARS-CoV-2/Flu/RSV Panel: Fully automated rRT-PCR test intended for the detection of SARS-CoV-2, Flu A, Flu
B and RSV nucleic acids in nasopharyngeal swab specimens from individuals suspected of respiratory infections by
their healthcare provider. Results are obtained in as soon as 90 minutes with less than 2 minutes hands-on time, using
400 μl of viral transport media (VTM).
Both tests are CE-IVD marked.
▪ SeptiCyte
®
RAPID
46
: Fully automated rapid host-response test that distinguishes sepsis from non-infectious systemic
inflammation (INSI/SIRS), developed on Idylla™ in collaboration with Immunexpress. The test provides actionable
results in about one hour enabling physicians to optimize their patient management decisions. The test is CE-IVD
BIOCARTIS ANNUAL REPORT 2022 39
marked and received 510(k) clearance by the US FDA in December 2021. On 23 August 2022, Immunexpress launched
a new version of the SeptiCyte RAPID
®
EDTA (CE-IVD) blood compatible cartridges.
▪ Endpoint Health: Biocartis is developing a test together with Endpoint Health aimed at informing biomarker-based
therapeutic decisions in patients with critical illnesses, such as sepsis.
The pandemic test menu on Idylla™ has the potential to be a steppingstone towards the development of a broader Biocartis
infectious disease menu with partners, aimed at supporting the patient journey with easy and rapid Idylla™ testing in acute
settings, including rapid triage and therapy selection for critically ill patients. Furthermore, Biocartis sees that Idylla™’s unique
multiplexing-related platform capabilities can bring clear distinctive benefits in the area of syndromic panel testing, one of the
fastest growing MDx segments.
Leveraging novel partner test content
Partnerships are essential to the continued expansion of the test menu on Idylla™. Together with development partners, we offer
proprietary third-party content on the Idylla™ platform, expanding our menu with tests that appeal to a larger audience and with
an attractive margin profile, while facilitating global roll-out of the test content for the partner. With leading pharmaceutical
partners, we develop companion diagnostic tests that allow fast pinpointing of therapy selection for eligible patients, while
Biocartis benefits from increased commercial adoption of its Idylla™ tests with higher market shares.
End of 2022, Biocartis had the following active key partnerships in place (selection, in alphabetical order):
ASTRAZENECA - Biocartis and AstraZeneca, a global science-led biopharmaceutical company (LSE/STO/Nasdaq: AZN), announced
their first partnership agreement on 29 November 2018, focused on overcoming the current complexity and long turnaround
time of biomarker testing for lung cancer patients. In January 2020, the collaboration expanded to a master collaboration
agreement, including the large prospective lung cancer FACILITATE study with the Idylla™ ctEGFR Mutation Assay (Research Use
Only). The study was presented at the renowned ESMO Virtual Congress in September 2020 (poster 1205P) and concluded that
Idylla™ EGFR testing may add value in a clinical setting to generate actionable EGFR mutation results for non-small cell lung cancer
(NSCLC) patients faster than routinely used methods. On 4 May 2021, Biocartis and AstraZeneca announced a new agreement
aimed at providing access to rapid and easy-to-use Idylla™ EGFR testing products at selected hospital sites in Biocartis’ European
and global distributor markets to support the identification of patients with EGFR mutations. On 22 June 2022, Biocartis
announced the extension of its collaboration with AstraZeneca aimed at the development and US FDA premarket approval of a
novel companion diagnostic (CDx) test for use with Tagrisso
®
(osimertinib), AstraZeneca’s third-generation EGFR-TKI (tyrosine
kinase inhibitor) treatment. Under the terms of the agreement, Biocartis and AstraZeneca will co-lead the development and
applicable premarket approval of the Idylla™ EGFR CDx Assay intended to aid in identifying patients with non-small cell lung
cancer (NSCLC) who may respond to treatment with Tagrisso
®
. In addition to formalin fixed, paraffin embedded (FFPE) tissue,
Biocartis will seek to validate the use of less invasive cytology samples such as fine needle aspirates for use with the Idylla™ EGFR
CDx Assay, to expand patient access to testing.
BRISTOL-MYERS SQUIBB (BMS) - 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.
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
BIOCARTIS ANNUAL REPORT 2022 40
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.
GENEPRODX - 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-PCR
47
based mRNA-expression classifier
48
test that helps
to determine whether a thyroid nodule with an indeterminate cytology result is benign or malignant
49
. A benign test result
50
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’ SeptiCyte
®
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. On 23 August 2022, Immunexpress launched a new version
of the SeptiCyte RAPID
®
EDTA (CE-IVD) blood compatible cartridges.
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.
LABCORP - On 23 April 2019, Biocartis announced the global strategic commercialization agreement with Labcorp Drug
Development (formerly Covance), 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.
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™ PIK3CA-
AKT1 Mutation Assay which is positioned to target a multi-gene panel of predictive and resistance-inducing mutations based on
an FFPE sample type for use in research setting (RUO). On 1 September 2020, Biocartis announced to have expanded its
agreement with LifeArc. Under the new agreement, LifeArc obtained 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.
MERCK KGAA (DARMSTADT, GERMANY) - Biocartis announced a partnership with Merck KGaA (Darmstadt, Germany) in January
2016 to improve access to easy, rapid and low invasive blood-based molecular diagnostic testing for mCRC patients through liquid
biopsy testing. The Idylla™ ctKRAS Mutation Assay and the Idylla™ ctNRAS-BRAF Mutation Assay are used to detect RAS and BRAF
mutations.
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,
BIOCARTIS ANNUAL REPORT 2022 41
Nichirei Biosciences will now be able to offer the Idylla™ platform in combination with Idylla™ RUO assays to local pathology
laboratories in Japan. On 29 August 2022, Nichirei Biosciences received approval by the Japanese regulatory authorities (Ministry
of Health, Labor and Welfare) for the commercialization of the Idylla™ MSI Test in Japan.
OPHIOMICS - On 8 February 2022, Biocartis and Ophiomics (a Lisbon, Portugal based biotech company developing a precision
medicine portfolio focused on liver cancer) announced their partnership agreement. Under the terms of this agreement, Biocartis
is leading the commercialization of the manual HepatoPredict kit in Europe, of which the start of the commercialization was
announced on 10 October 2022. Depending on the successful commercial uptake of the kit, Ophiomics and Biocartis aim to initiate
the development of a fully automated version of the test on Biocartis’ decentralized Idylla™ platform.
SKYLINEDx - On 22 April 2021, Biocartis and SkylineDx, a Dutch (Rotterdam) and US (San Diego, California) based private
biotechnology company, announced a partnership agreement which targets the development of SkylineDx’ novel proprietary
test, the Merlin™ Assay, on the Idylla™ platform. This assay is designed to predict a patient’s risk of nodal metastasis in melanoma.
Under the terms of the partnership agreement, SkylineDx will lead the development of the Merlin™ Assay on Idylla™, while
Biocartis will lead the commercialization in Europe through its growing Idylla™ network. The start of the commercialization in
Europe of SkylineDx’s Merlin™ Test as a CE-IVD marked manual kit was announced on 1 September 2022.
WONDFO - On 3 September 2018, Biocartis announced to have established a joint venture with Guangzhou Wondfo Biotech Co.,
Ltd. (‘Wondfo’, SHE: 300482), a fast-growing diagnostics leader in China. The joint venture Wondfo-Cartis is 50% owned by
Biocartis and 50% owned by Wondfo. On 16 September 2022 the Idylla™ Instrument and Console was approved by the Chinese
regulatory authorities NMPA, an important step towards the further regulatory approval and commercialization of Idylla™ assays
in China. The set-up of local manufacturing capability is nearing completion.
BIOCARTIS ANNUAL REPORT 2022 42
Intellectual property
The protection of Biocartis’ intellectual property rights, which form the basis of its products and technologies, is a critical factor
for Biocartis’ commercial success. Biocartis’ intellectual property portfolio is managed by our IP department. The current patent
portfolio was built through acquisitions of third-party patents, patent applications and know-how, as well as through creation of
new intellectual property. Furthermore, Biocartis also has in-licensed specific third-party technologies. On 31 December 2022,
Biocartis' patent portfolio consisted of 30 proprietary patent families comprising issued and pending patents worldwide with
patent lives which will expire between 2026 and 2041, and 31 exclusively and non-exclusively in-licensed patent families providing
additional strength to the patent portfolio. The patent portfolio covers various aspects of the Idylla™ platform technology (basic
system, fluidics, ultra-sonification, thermal control, downstream analysis, signal processing and assay design technology), its
associated biochemistry (test design, reagent storage, sample intake, etc.) and biomarkers. In addition to its patent portfolio,
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.
BIOCARTIS ANNUAL REPORT 2022 43
2.3. Commercial strategy
A multi-pronged approach to adoption
Building on Idylla™’s key features of enabling faster local testing which drives quicker treatment and may lower healthcare costs,
Biocartis deploys a multi-pronged approach in three key markets where Idylla™ represents exceptional benefits:
▪ Large hospitals, reference labs and cancer centers: Idylla™ offers fast turnaround-time and delivers directly actionable
test results, as an ideal complementary first-line testing solution ahead of NGS.
▪ Regional hospital labs & specialized group practices: Idylla™ enables in-house MDx testing through an easy-to-use
platform, with no technical skills required while retaining control of the sample.
▪ Community setting hospitals and medical offices: Idylla™ integrates a fully automated local, decentralized MDx testing
solution in the physicians’ earnings model.
Users
Oncology: pathology labs & hospitals
Oncology MDx testing today is performed by molecular pathologists who determine the molecular changes present in tumors for
diagnostic, prognostic or predictive purposes. Pathologists increasingly use different MDx testing technologies, depending on the
specific patient case. An easy and fully automated workflow and highly accurate, easily interpretable test results, in combination
with a comprehensive test menu in oncology are key Idylla™ features for the pathologist in an increasingly complex molecular
testing scene. On the other end of the spectrum, the oncologist, who is in contact with the patient, is a key user of MDx
information to determine the best treatment plan for each individual patient. Obtaining fast test results for rapid treatment
initiation is of the essence for the oncologist.
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. Biocartis entered into multiple collaborations
with various development partners aimed at developing Idylla™ versions of such partners’ tests. Biocartis may commercialize of
certain tests that are already available as CE-IVD marked manual kits awaiting the development of the Idylla™ version, allowing
customers early access to these novel tests. In 2022, Biocartis started the commercialization of the manual CE-IVD marked kit
versions of the Merlin™ Assay and of HepatoPredict from SkylineDx and Ophiomics, respectively.
Infectious diseases: microbiology labs
Infectious disease MDx testing is implemented in microbiology laboratories. Molecular diagnostic techniques are used in the
microbiology lab to identify the most common infectious organisms by their DNA or RNA. The clinical microbiologist participates
in decisions regarding adoption of testing platforms and training of front-line providers on appropriate use of testing
methodologies. Clinical microbiologists also consult on individual patients providing advice on which microbiologic studies should
be performed, the type and timing of specimens to be collected, the conditions for their transportation and storage, and
interpretation of laboratory results. With the Idylla™ rapid response pandemic test menu, Biocartis aims to make a difference in
BIOCARTIS ANNUAL REPORT 2022 44
acute settings such as the hospital intensive care unit (ICU) with combined
COVID-19 and sepsis testing on Idylla™ to identify patients with severe disease,
as recent data indicate that sepsis is the most frequently observed complication
in COVID-19.
Direct and indirect sales channels
End 2022, Biocartis was active in over 70 countries through a combination of
direct sales and (distribution) partners.
Direct sales strategy: In all key European countries, US and Canada, Biocartis has
a go-to-market strategy based on a direct sales force. The Biocartis direct sales
force is in direct contact with a vast network of pathology labs and hospitals for
its oncology products, as well as an expanding network of microbiology labs for
its infectious disease products.
▪ Distributor sales strategy in distribution markets and Japan: In
distribution market countries
51
, Biocartis collaborates with a vast
network of distributors. Since 2017, Biocartis focuses on working
with its distribution partners to support commercial market
adoption of the Idylla™ platform, for oncology especially in countries
where pharmaceutical oncology treatment companies could benefit
from Idylla™ MDx testing. Biocartis has set up an efficient
organization to manage distributor business, including quality
control, logistics, registration, customer care and a dedicated team
of sales employees. The sales team organizes a number of activities,
including product trainings, regular distributor update meetings,
access to an online marketing platform and occasional joint visits to
individual key hospitals. The experience built since 2017 allows for
efficient market and product updates and the fast roll out new tests.
▪ Joint venture: In 2018, Biocartis established WondfoCartis, a joint
venture with Wondfo, a fast-growing diagnostics leader in China,
aimed at the commercialization and local manufacturing of Idylla™
oncology products in mainland China.
▪ Pharmaceutical and diagnostic test development content partners:
Biocartis also partners with a number of pharmaceutical oncology
treatment companies such as with Amgen. This allows the
pharmaceutical partners to benefit from an increased number of
eligible patients for their targeted therapies driven by the key
benefits of the Idylla™ platform, such as fast turnaround times.
Partnerships with diagnostic test development content partners who
port their proprietary biomarker panels to the Idylla™ platform (such
as the partnership with Immunexpress for the SeptiCyte RAPID
®
on
Idylla™) benefit from an accelerated global roll-out of their test
content, cost efficiencies and faster customer adoption since no
platform education is needed.
BIOCARTIS ANNUAL REPORT 2022 45
Strong validation by customers and key opinion
leaders
Biocartis is in continuous dialogue with KOLs who serve as true Idylla™
ambassadors in the market. The KOLs play an important role in providing
continuous feedback on the Idylla™ product offering. In 2022, oncology
activities here consisted of:
Papers, abstracts and posters
During 2022, 42 new Idylla™ papers were published, bringing the total
number of Idylla™ papers to 166. Some highlights:
▪ In May 2022, Biocartis announced the publication of a study by
Memorial Sloan Kettering Cancer Center (‘MSKCC’, New York, US) on the
use of Biocartis’ Idylla™ GeneFusion Assay (RUO) highlighting the quicker
turnaround and the lower tissue requirements compared to
immunohistochemistry and molecular methods, while also circumventing
the infrastructure dependencies associated with NGS and fluorescence in
situ hybridization.
▪ In November 2022, Biocartis announced the publication of a large
prospective study demonstrating that the Idylla™ EGFR Mutation Test (CE-
IVD) leads to the significant reduction of the time-to-treatment by on
average 16.8 days or 48% compared to NGS testing for EGFR positive
patients.
▪ In the context of measuring and improving customer experience, end
of 2022, Biocartis launched a first customer centricity survey among
approx. 7,000 customers and prospects in Europe, US and distributor
countries.
Key expert meetings
In 2022, Biocartis organized a KOL meeting in Paris, France with experts,
oncologists and pathologists, to assess current trends and market
opportunities in oncology MDx testing. The meeting focused on lung
cancer, colorectal cancer and potential new cancer areas for Biocartis,
including breast, brain and endometrial cancer as well as new targeted
therapies and biomarkers in these areas. Liquid biopsy and molecular
surveillance testing was also on the agenda. In lung cancer, experts
endorsed the Idylla™ GeneFusion Panel and confirmed its strong
positioning.
In total, 13 experts from different European countries attended and shared
their insights and vision on the evolution of molecular diagnostics and
therapeutics in cancer care.
BIOCARTIS ANNUAL REPORT 2022 46
2.4. Market access
Regulatory compliance
Regulatory compliance is a key condition for market access in MDx. Depending on the type of product and the geography, various
regulatory processes exist subject to which certain MDx devices need to be approved or cleared by regulators. An overview of
Biocartis’ Idylla™ products and their label is available under the section ‘Products’ above or on the Biocartis website.
IVD products
EU: CE-MARK - Market clearance for Biocartis' products is achieved in the EU through CE-marking, previously via the European
Directive 98/79/EC on in vitro diagnostic medical devices (the "IVD Directive") and as of 26 May 2022 via the IVD Regulation
(subject to transitional measures). Under the IVD Directive, the Idylla™ platform and Idylla™ tests were CE-marked following a
self-certification process conducted by Biocartis. 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 under the IVD
Regulation latest by 26 May 2026. 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").
US: FDA MARKETING AUTHORIZATION - In the United States, IVDs are regulated by FDA as medical devices under the Federal
Food, Drug, and Cosmetic Act (the "FDCA"), and may also be regulated as biological products subject to the Public Health Service
Act. The US FDA is the federal agency of the United States Department of Health and Human Services, responsible for protecting
and promoting public health through the control and supervision of food safety, pharmaceutical drugs and medical devices
52
.
Like other medical devices, IVDs are subject to FDA's premarket and post market controls, including labeling requirements,
provisions against adulteration and misbranding, good manufacturing practices, establishment registration, medical device
listing, records and medical device reporting, and notification, amongst other things. IVDs are generally also subject to regulation
under the Clinical Laboratory Improvement Amendments of 1988 Act (the "CLIA" Act), which establishes quality standards for
laboratory testing and an accreditation program for clinical laboratories. IVD tests are categorized into CLIA test complexity
categories: (1) waived tests, (2) tests of moderate complexity, and (3) tests of high complexity.
Under the FDCA, certain medical devices require US FDA 510(k) clearance or premarket approval ("PMA") prior to marketing in
the United States. CLIA categorization is determined after the FDA has cleared or approved a medical device marketing
submission, or upon request for a legally marketed device. The majority of Biocartis' current and planned Idylla™ tests is expected
to require US FDA 510(k) clearance or PMA approval before marketing is permissible in the United States. These tests will also be
categorized under the CLIA Act.
CHINA - In China, the National Medical Products Administration (NMPA) is the administrative body responsible for the regulation
of medical devices on the Chinese mainland. WondfoCartis, the joint venture with Guangzhou Wondfo Biotech Co., Ltd.
(‘Wondfo’, SHE: 300482), a fast-growing diagnostics leader in China, is responsible for the commercialization of the Idylla™
platform in China. On 16 September 2022, Biocartis received approval from NMPA to commercialize the Idylla™ platform in China.
JAPAN - All medical devices in Japan require registration with the Ministry of Health, Labor and Welfare via the Pharmaceuticals
and Medical Devices Agency (PMDA). Biocartis’ partner in Japan, Nichirei Biosciences, completed the registration of the Idylla™
Instrument and Idylla™ Console with the PMDA as a General medical device (Class I) in Japan in October 2019 and is responsible
for further Idylla™ product registrations and 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. On 29 August 2022,
approval to commercialize the Idylla™ MSI Test was achieved in Japan.
BIOCARTIS ANNUAL REPORT 2022 47
DISTRIBUTION MARKETS - In many distribution markets, the IVD products with CE-marking are accepted. Various markets also
have their own specific local authorization requirements, in which case additional product registration efforts are required. Every
individual market is therefore assessed in terms of efforts needed to comply with these local market authorizations.
Research use only products
In addition to IVD medical devices, Biocartis also offers products for Research Use Only (RUO), meaning they may only be used in
research applications, as opposed to clinical applications where patients are managed. In many of the markets in which Biocartis
operates, such RUO products may be offered for sale if for example IVD products are not yet approved for sale or distribution.
Reimbursement
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.
Biocartis’ product offering today includes both tests with biomarkers that are already included in the clinical guidelines and are
as such already reimbursed by third-party payers, and tests with novel content that is not yet under reimbursement. As such,
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.
EUROPE - In Europe, diagnostics expenses are mostly publicly funded and paid for by public health authorities usually within a
third-party payer system. Each European market however has its own unique characteristics. In some countries, reimbursement
decisions are made by regional authorities while in others these are made at national level
53
. Within Europe, reimbursement
schemes are varying, influencing who within the healthcare system actually performs the testing. In the past years, changes have
occurred regularly in the reimbursement policies in a number of European countries, sometimes favoring highly centralized
testing and sometimes favoring highly decentralized testing, with many variations in between. Biocartis was able to navigate this
diverse reimbursement landscape, as the use of our highly flexible Idylla™ platform can be adapted to various reimbursement
scenarios and settings.
US - In the US, reimbursement is typically higher in comparison with Europe, driven by the fact that the reimbursement system
is a mixed payment system where both the government, employers and individuals share the costs of healthcare. Here, private
insurance is the most common form of coverage, with insurance premiums being paid by individuals or employers. In 2018, PAMA
(Protecting Access to Medicare Act) came into force in the US to normalize the price between government reimbursement and
that of the private sector. Under PAMA, many (but not all) clinical laboratories must report their private payer rates on a test-by-
test basis along with associated test volumes
54
. Save for the Idylla™ GeneFusion test, all of Biocartis’ current products are eligible
for reimbursement using established codes.
CHINA - In China, every citizen is entitled to receive basic health care services which is paid for by the central government and
financed by local governments. The publicly financed health insurance covers most diagnostics for some 95% of the population,
including most diagnostics. IVD reimbursement is entirely done at provincial level. The reimbursement processes amongst the
provinces are similar but can result in different reimbursement amounts
55
. As such, the adoption level of tests can differ per
cancer type and per province.
JAPAN - Cost of services for the health care system in Japan is covered partly by patients via mandatory health care insurance and
partly by the government. Medical service fees (reimbursement) are controlled by the government at a national fixed level for
each molecular diagnostic test.
BIOCARTIS ANNUAL REPORT 2022 48
DISTRIBUTION MARKETS - Reimbursement in distribution countries varies per region and is dependent on the local healthcare
and insurance system. In several geographies pharmaceutical companies support the local availability of MDx testing should
reimbursement policies be insufficient.
BIOCARTIS ANNUAL REPORT 2022 49
2.5. Risks related to our business
The following risk factors may affect the future operating and financial performance of Biocartis and the value of an investment
in the Company's securities. Examples of past experience have been included where material in aiding the understanding of the
risks. If any of these risks actually occurs, Biocartis' business, results of operations, financial condition and prospects could be
adversely affected. These risks and uncertainties are not the only ones Biocartis faces. Additional risks and uncertainties not
presently known, or that management currently believes to be immaterial, could have the effects set forth above. If any of those
risks or uncertainties occur, the price of the Company's securities may decline and subscribers for the Company's securities could
lose all or part of their investment. The risk factors presented herein have been divided into five categories based on their nature
(i.e., strategic and commercial risks, operational risks, legal and intellectual property related risks, regulatory risks and financial
risks).
Strategic and commercial risks
Biocartis’ past growth is not indicative (nor a guarantee) of future growth. Biocartis may be unable to
manage its growth effectively, and may not be successful in further growing its commercialization
infrastructure.
Since the Company's initial public offering and listing on Euronext Brussels in 2015, Biocartis has experienced significant growth
in revenues, Idylla™ installed base and cartridge volumes, including in the areas of development (Idylla™ menu expansion and
improvement of the Idylla™ platform), quality control, regulatory and clinical affairs, customer service and support, and
commercialization. This growth may not continue in the future and past growth is not necessarily indicative (nor a guarantee) of
future growth. To reach profitability, the Company needs to continue to grow.
To manage Biocartis' anticipated future growth, it must continue to implement and improve its managerial, operational, financial,
data security and data protection systems, and continue to recruit and train additional qualified personnel. The growth of
Biocartis and the execution of its strategy might require additional capabilities that may not exist yet in the organization,
especially when new proprietary or partner tests are being developed, manufactured and/or commercialized. The growth of
Biocartis might also require an increased number of employees and a growth in the scope of operations. An inability to access
these capabilities, either by engaging additional employees or through partnerships, in a timely manner or at all, or to integrate
these additional capabilities in its organization and further developing its processes while maintaining its efficiency, may limit the
ability for Biocartis to growth further. Biocartis may not be able to effectively manage such expansion of its operations or recruit
and train additional qualified personnel. An expansion of Biocartis' operations may lead to significant costs, while the Company
may not have the required funds to finance such costs. Any inability to manage (or finance) growth could delay the execution of
Biocartis' business plans or disrupt its operations.
As mentioned, Biocartis is continuing to expand its commercialization infrastructure for the Idylla™ platform and tests and the
partners' tests which Biocartis has agreed to distribute. Furthermore, to commercialize the Idylla™ platform and tests, Biocartis
will need to further build a maintenance and service organization in order to ensure adequate installation and servicing of its
installed base. Biocartis will also need to coordinate commercialization with its partners, distributors and other third parties
outside of its control. Biocartis must ensure that its commercialization infrastructure is adequately equipped and its staff is
adequately trained to distribute such products.
In addition, relative to some of its competitors and partners, Biocartis is limited in size and resources. It may not be able to
compete under favorable conditions when it comes to selling the Idylla™ platform in comparison with larger companies that are
able to propose to customers a broader portfolio of MDx products, on potentially more favorable conditions.
Furthermore, part of Biocartis' commercial strategy is placing its diagnostic platform with clients under, among others, reagent
rental or operational lease contracts. As of the end of 2021 and 2022, the installed base consisted of 1,912 and 2,085 instruments,
respectively. As of the end of 2021, 46% of the installed base consisted of capital sales and 46% consisted of lease agreements.
BIOCARTIS ANNUAL REPORT 2022 50
As of the end of 2022, 50% of the installed base consisted of capital sales and 44% consisted of lease agreements. Under such
operational lease contracts, the customers are entitled to return the platform to Biocartis under certain conditions, which could
have an impact on Biocartis' installed base and could result in a loss in product revenues.
The Company continues to attract and onboard new customers. An increasing number of such new customers onboard the
Idylla™ platform™ through a free-of-charge Idylla™ instrument evaluation program before purchasing or renting new systems.
Under such program, clients can make use of the Idylla™ platform™ while only paying for the cartridge consumption. Revenues
from the sale or the rental of these instruments are therefore delayed by an average of six months, subject to the satisfactory
outcome of the evaluation of the Idylla™ platform.
See also risk factor "The molecular diagnostics (MDx) industry is highly competitive and characterized by rapid technological
changes, and Biocartis may be unable to keep pace with its competitors." and "The commercial success of Biocartis will depend
on the continued growth in market acceptance of the Idylla™ platform, the menu of Idylla™ and partner tests it offers and the
relevance thereof.".
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 MDx industry is characterized by a rapid and continuous drive for technological innovation, new biomarker discovery,
evolving market standards, changes in customer needs, reimbursement uncertainty, emerging competition and new product
launches that could impact the competitive positioning of Biocartis' current and future products and the competitive positioning
of proprietary products of its partners which Biocartis manufactures and/or commercializes. Biocartis may need to develop or in-
license new technologies, biomarkers and solutions, or enter into new partnerships with third parties who own or have rights to
proprietary biomarker content, to remain competitive, at which it may not succeed or which could come with significant
investments. Current or future competitors may succeed, or may have already succeeded, in developing solutions or services that
are more effective or affordable, which could render Biocartis' or its partners' present or future solutions obsolete or
uneconomical. In addition, the introduction or announcement of new solutions by Biocartis, or others, could result in a delay of,
or decrease in, sales of existing solutions, as Biocartis, or others, await marketing authorizations and as customers evaluate these
new solutions.
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. Biocartis is extending its offering with tests that target its partners' proprietary biomarkers (either plate-
based tests or tests to be performed on the Idylla™ platform), and consequently will also face competition from companies that
offer tests targeting 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™
BIOCARTIS ANNUAL REPORT 2022 51
▪ 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 abovementioned systems
▪ If Biocartis is unable to compete successfully, it will not be able to achieve profitability
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.
The MDx industry is characterized by a rapid and continuous drive for technological innovation, new biomarker discovery,
evolving market standards, changes in customer needs, reimbursement uncertainty, emerging competition and new product
launches that could impact the competitive positioning of Biocartis' current and future products and the competitive positioning
of proprietary products of its partners which Biocartis manufactures and/or commercializes. Biocartis may need to develop or in-
license new technologies, biomarkers and solutions, or enter into new partnerships with third parties who own or have rights to
proprietary biomarker content, to remain competitive, at which it may not succeed or which could come with significant
investments. Current or future competitors may succeed, or may have already succeeded, in developing solutions or services that
are more effective or affordable, which could render Biocartis' or its partners' present or future solutions obsolete or
uneconomical. In addition, the introduction or announcement of new solutions by Biocartis, or others, could result in a delay of,
or decrease in, sales of existing solutions, as Biocartis, or others, await marketing authorizations and as customers evaluate these
new solutions.
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. Biocartis is extending its offering with tests that target its partners' proprietary biomarkers (either plate-
based tests or tests to be performed on the Idylla™ platform), and consequently will also face competition from companies that
offer tests targeting 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 abovementioned systems.
If Biocartis is unable to compete successfully, it will not be able to achieve profitability.
BIOCARTIS ANNUAL REPORT 2022 52
Biocartis has entered into, and relies upon, a number of partnerships and alliances, including joint
ventures, and the termination of such partnerships or alliances or disagreements with these partners, 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. In particular, as a result of COVID-19, the project had been suspended earlier
in 2020, with the project plan and timing under evaluation. The decision to terminate the collaboration was driven by the
uncertain timing of a product market release because of the pandemic and a decision by Exact Sciences to shift priorities to other
initiatives. In addition, Biocartis previously had a distribution collaboration with Fisher Healthcare (part of Thermo Fisher Scientific
Inc.) for the US market, pursuant to which Fisher Healthcare had exclusive distribution rights on the Idylla™ tests and non-
exclusive distribution rights on the Idylla™ instruments. In September 2019, the Company and Fisher Healthcare jointly agreed to
terminate their collaboration for distribution for the US market.
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. Furthermore, disagreements with these partners could require or result in litigation or arbitration,
which would be time-consuming, distracting and expensive.
BIOCARTIS ANNUAL REPORT 2022 53
Biocartis faces uncertainties over the reimbursement by third party payers for the products it offers 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 and financial results.
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 such as health insurers, managed care
organizations and others ("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, third party payers regularly review reimbursement levels and 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' ability to achieve profitability. 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 intends to 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 and negatively impact Biocartis' financial results.
The Idylla™ platform requires sophisticated computer systems and software, which continuously need to
be updated and monitored. The inability to update computer systems and software as quickly or cost
efficiently as competitors and inability to monitor such computer systems and software may have a
material adverse effect on operating results and financial condition of Biocartis.
Biocartis intends to continue to invest in molecular diagnostics, among others by improving the Idylla™ platform and the Idylla™
tests. The Idylla™ platform and Idylla™ tests require sophisticated computer systems and software, as well as periodic updates
and risk assessments (to evaluate, predict and prevent the occurrence of potential technological failures or bugs). Some of the
technologies underlying the Idylla™ platform are changing rapidly, and Biocartis must continue to adapt to these changes in a
timely and effective manner at an acceptable cost. Biocartis may not be able to develop, acquire, enhance, deploy or integrate
new technologies, or to do so as quickly or as cost-effectively as its competitors, and these new technologies may not meet its
needs or achieve its expected goals. Significant technological change could render the Idylla™ platform obsolete. Biocartis'
continued success will depend on its ability to adapt to changing technologies, manage and process ever-increasing amounts of
data and information and improve the performance features of the Idylla™ platform and Idylla™ tests in response to an ever-
changing patient population. Biocartis may experience difficulties that could delay or prevent the successful design, development,
testing, and introduction of advanced versions of the Idylla™ platform, limiting its ability to be compatible with new tests. Any of
these failures could have a material adverse effect on its operating results and financial condition. See also risk factor "A breach
BIOCARTIS ANNUAL REPORT 2022 54
of security in Biocartis' products or computer systems may compromise the integrity of Biocartis' products, harm Biocartis'
reputation and create additional liability."
Operational risks
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.
Biocartis' revenues and other operating results going forward will depend, in large part, on its ability to manufacture and deliver
its Idylla™ platform in sufficient quantities and quality, in a timely manner, and at a cost that is economically attractive. The
Idylla™ platform currently comprises three components: the instrument, the console and the cartridge-based test. The
manufacturing or assembly of the instrument and the console has been outsourced to a contract manufacturing partner ("CMO").
The manufacturing of the bill of materials for the tests, including the test's plastic parts, are also outsourced to third parties. The
assembly of the cartridge is currently performed in-house at Biocartis' facilities in Mechelen (Belgium).
Due to the high level of complexity of the cartridge manufacturing process, Biocartis may not be able to continue manufacturing
products in sufficient quantities, to the same standards and at an economically attractive cost compared to Biocartis' competitors,
or at all. If there are any unexpected stoppages or interruptions in production caused by, among other things, mechanical
breakdown, a fire or other incident at Biocartis' facilities in Mechelen or at the facilities of a CMO, or a delay in supply of
components, this may lead to Biocartis failing to meet its obligations under any existing or future contracts it is a party to,
customer complaints and delays in Biocartis' ability to realize revenues. For example, on 30 July 2021 a fire broke out at one of
Biocartis' 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 2021. This resulted in lost revenue, a write-off of EUR 3.2 million on raw materials
and cartridges lost in the fire, and Biocartis submitting and collecting an insurance claim for EUR 4.6 million for damages caused
by the fire, including the impact of lost revenue. Although Biocartis maintains insurance policies (such as fire insurance and
business continuity insurance) at levels which management believes are in line with market practice, and such insurance policies
helped Biocartis to mitigate the losses caused by the Mechelen warehouse fire in July 2021, not all damages which may occur
may be fully covered by insurance policies, and the process for payment of insurance claims is often a long process with an
uncertain outcome which may require significant financial and managerial resources and may limit Biocartis' ability to obtain, or
increase the cost of obtaining, renewal of its insurance policies on acceptable terms.
Contracted third parties may not deliver products on time, or in compliance with the standards that are required by the relevant
regulatory authorities, or they may not be able to manufacture Biocartis' products in sufficient quantities, to the same standards
and at an economically attractive cost compared to Biocartis' competitors, or at all. In all these cases, the successful
commercialization of Biocartis' products may be adversely affected.
Furthermore, Biocartis may need to enter into contractual relationships with other manufacturers for future increased demand
of its products or to replace certain aging components of the Idylla™ platform, and it may not be able to do so on a timely basis,
in sufficient quantities or on commercially reasonable terms. Accordingly, Biocartis may not be able to establish or maintain
reliable, high-volume manufacturing at commercially reasonable costs, which in turn may have an adverse impact on Biocartis'
manufacturing ability.
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 marketing authorizations in line with its strategy. Biocartis may not
be able to launch new tests as quickly as it anticipates.
The availability of a broad and clinically relevant menu of tests that are approved for clinical use is an important factor in the
decision to acquire and use a diagnostic platform, and management believes that offering a broader menu of such tests, including
obtaining the required marketing authorizations, in combination with making such tests globally available will be a key driver of
BIOCARTIS ANNUAL REPORT 2022 55
demand for the Idylla™ platform. The continued development and commercialization of additional tests and geographical
expansion are therefore a key part of Biocartis' strategy. In addition, Biocartis intends to seek marketing authorization for the
Idylla™ platform and its menu of tests in a broad range of jurisdictions, which could come with significant investments and
registration timelines. These products and any further products launched by Biocartis may not gain market acceptance.
Although Biocartis has a dedicated and experienced research and development team in place to develop tests, it may nevertheless
not 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 has 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 diagnostic 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,
and the termination of such partnerships or alliances or disagreements with these partners, 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 marketing authorization (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, the United Kingdom 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 marketing authorizations for, the Idylla™ platform and its menu of tests in line with its strategy.
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, and issues with suppliers may impact the
BIOCARTIS ANNUAL REPORT 2022 56
ability of Biocartis to continue supply to its customers, lead to additional costs, or require additional
managerial resources.
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 are sufficient to support Biocartis' commercial supply of the Idylla™
platform and Idylla™ tests, Biocartis' suppliers may not be able or willing to continue to provide the components Biocartis needs,
at suitable prices, in a timely fashion, 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.
In addition, 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 marketing authorization, making it difficult and costly for Biocartis to diversify its exposure to single source
suppliers.
If Biocartis fails to attract or retain key personnel, its ability to conduct and expand its business could be
negatively affected.
The performance of Biocartis is dependent, to a certain extent, on the members of its management team and its technical and
scientific personnel. Biocartis does not maintain "key man" insurance policies on the lives of these individuals or the lives of any
other employees. Biocartis relies on personnel with experience in the development, registration, manufacturing and
commercialization of complex MDx products. Competition for personnel with the appropriate skill set and experience is intense
and may limit Biocartis' ability to hire and retain highly qualified personnel on acceptable terms, or at all. Many competitors have
greater financial and other resources, different risk profiles and a longer history than Biocartis. In addition, Biocartis' anticipated
growth and expansion in accordance with its strategy is expected to place greater demands on its resources, requiring the
addition of new skilled personnel. Attracting, retaining and training personnel with the requisite skills could therefore be
challenging. In addition, Biocartis relies on consultants who may have commitments to, or advisory or consulting agreements
with, other entities that may limit their availability to Biocartis. If, at any point, Biocartis is unable to hire, train and retain a
sufficient number of qualified personnel to support its growth, this could have a material adverse effect on its ability to implement
its business strategy.
A breach of security in Biocartis' products or computer systems may compromise the integrity of Biocartis'
products, harm Biocartis' reputation and create additional liability.
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 and Biocartis being ISO 27001 certified for the Idylla platform™ and associated customer-facing
software, 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.
BIOCARTIS ANNUAL REPORT 2022 57
Biocartis is exposed to 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 fails to accurately anticipate the application or interpretation of such laws when developing its products, fails to
comply with their requirements (such as evolving encryption and security requirements) or becomes subject to 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 European Union (the "EU") and in foreign jurisdictions. Further,
Biocartis' privacy and security policies and practices may not be sufficient to protect it from liability or adverse publicity relating
to the privacy and security of personal information.
Biocartis is exposed to risks associated with macroeconomic and geopolitical turbulence, including supply
chain disruptions.
Biocartis' business environment can be adversely impacted by macroeconomic and geopolitical conditions in individual and global
markets. There is general uncertainty with regard to macroeconomic factors, such as rapidly rising inflation, monetary and
healthcare policies, regulatory change, public capital investments in healthcare ecosystems, consumer confidence and spending,
pandemics, civil unrest and war amongst other things. Geopolitical tensions and protectionism have intensified generally in
recent years, and in particular following the escalation of the conflict between Russia and Ukraine in February 2022. Although
difficult to predict, these tensions and potential further escalation of the conflict may increasingly affect policies on trade,
production, duties and taxation globally, and may also disrupt the Biocartis' supply chain and create bottleneck situations for
components as well as raw materials. Higher cyber risks also cannot be ruled out.
The factors described above, or other factors which may impact conditions relevant to Biocartis' business environment, are
difficult to predict. They can also make it more difficult to budget and make reliable financial forecasts or could have a negative
impact on the Biocartis' access to funding. These factors may also adversely affect Biocartis' ability to secure additional financing
rounds or undertake future capital market transactions.
Biocartis may continue to be exposed to risks associated with the COVID-19 pandemic, including supply
chain shortages.
The COVID-19 pandemic impacted Biocartis' business in various respects. Initially, the pandemic deprioritized and disrupted
cancer care globally, with patient access to hospitals significantly restricted throughout much of H1 2020, as well as resulting in
a severe hampering of seeking new customers. Testing volumes started to recover and gradually normalized to pre-pandemic
levels in the second half of 2020. 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 resulted in delays to cancer diagnosis and
treatment. In 2021, Biocartis was also 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 Biocartis' production capacity during H1 2021. As of today, Biocartis is no longer materially impacted by the
aforementioned supply constraints.
BIOCARTIS ANNUAL REPORT 2022 58
Biocartis may not be able to run its operations without future disruptions from a potential resurgence of COVID-19, as new
variants of the virus may result in increased absence of employees in manufacturing, development and other key positions.
Biocartis' suppliers and partners may be exposed to similar risks, which 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 Biocartis' ability to manufacture its products and deliver them to its
customers. Conversely, with the progression of the response to the pandemic COVID-19 testing using the Idylla™ SARS-COV-2
assay have declined.
Legal and intellectual property related risks
Biocartis faces an inherent risk of product liability claims and may not have adequate insurance coverage.
Biocartis is exposed to potential product liability or public liability claims that are inherent in clinical testing and MDx. Biocartis
faces the risk of liability for damages if there are deficiencies with any of its products, affecting among others product
performance, due to component failures, manufacturing errors, design or labelling defects or other deficiencies and issues.
Biocartis could also be exposed to potential litigation or liability if patients, hospitals, physicians or other parties were to
improperly rely on the products for clinical decisions. Biocartis cannot be certain that it will be able to successfully defend any
product liability or public liability lawsuit brought against it. Regardless of merit or eventual outcome, product liability claims may
result in decreased demand, reputational damage, litigation costs and potential monetary awards.
Biocartis maintains product liability and public liability insurance at levels which management believes are in line with market
practice. However, not all claims and damages may be covered fully, or at all, in case of a product liability or public liability lawsuit.
As a consequence, Biocartis might have to face liabilities for a claim that may not be covered by its insurance or its liabilities could
exceed the limits of its insurance. Moreover, product liability claims or public liability claims may require significant financial and
managerial resources and may limit or prevent the further development or commercialization of Biocartis' products.
To date, no product liability or public liability claims have been initiated against Biocartis, however claims may be brought in the
future, and Biocartis may not be able to maintain sufficient insurance coverage on commercially acceptable terms or with
adequate protection against all potential risks. In addition, Biocartis' insurance policies will not protect Biocartis against any
reputational harm that it may suffer if the market perceives its products to be unreliable or defective.
If Biocartis fails to obtain patent protection for the products it develops or otherwise fails to maintain and
adequately protect its intellectual property rights, Biocartis' business could suffer.
Biocartis' intellectual property ("IP") rights form the basis of its products and technologies. Biocartis invests in different forms of
IP right development and has set up an internal IP department that overlooks the different IP related activities. The patent
portfolio of Biocartis consists of various proprietary families comprising issued and pending patents worldwide. The portfolio
further includes multiple in-licensed patent families. On 31 December 2022, Biocartis' patent portfolio consisted of 30 proprietary
patent families comprising issued and pending patents worldwide whose patent life will expire between 2026 and 2041, and
multiple in-licensed patent families providing additional strength to the patent portfolio.
On 31 December 2022, the value of the Idylla™ platform was protected by a group of 61 patent families (30 proprietary patent
families and 31 exclusively and non-exclusively 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.
BIOCARTIS ANNUAL REPORT 2022 59
▪ Firstly, pending patent applications (whether submitted by Biocartis or a third party licensor) may not 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. Such
efforts may not 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 of which were
unsuccessful or closed without loss of substantial patent rights. Further oppositions may 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.
Biocartis' IP rights may 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. Biocartis may not prevail in any such litigation, and
the damages or other remedies awarded, if any, as set off by negative publicity, if any, may not be adequate.
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. Biocartis may not be able to comply with its obligations under the (sub)licenses, or the
(sub)licensors may not 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.
BIOCARTIS ANNUAL REPORT 2022 60
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.
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.
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.
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.
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 and delay the
development and commercialization of its products.
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.
BIOCARTIS ANNUAL REPORT 2022 61
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.
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 can, in some cases individually and, in other cases, along with Biocartis' collaboration
partners, file for patent protection for a number of technologies developed under these agreements and may, in the future, 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.
Regulatory RISKS
Biocartis' business could be significantly and negatively affected by substantial changes to government
regulations, particularly in the European Union, the United Kingdom and the United States.
Biocartis launched its Idylla™ platform and its first assay, the Idylla™ BRAF Mutation Test, for commercial sale in the European
Union and countries recognizing CE-marked IVD devices in September 2014. Since that time it has launched several further tests
in these countries and it intends to launch its products in other regions over the next few years. In each country in which Biocartis
is currently active, or may become active in the future, Biocartis' products, including the Idylla™ platform and its menu of tests,
are subject to material government regulations and review by a number of governmental authorities. Such regulations govern
activities such as product development, testing, labelling, storage, premarket clearance or approval, manufacturing, advertising,
promotion, sales, interaction with healthcare practitioners, permissible reimbursement, reporting of certain product failures and
distribution. In many markets, the regulations applicable to IVDs are being developed or modified to align with global
harmonization efforts.
In Europe, Biocartis is required to comply with the In Vitro Diagnostic Medical Devices Regulation (Regulation 2017/746) (the
"IVD Regulation"). Unlike directives, which must be transposed into the national laws of the Member States, new regulations are
directly applicable (i.e., without the need for adoption of Member State laws implementing them) in all Member States and are
intended to eliminate current differences in the regulation of medical devices among Member States. The IVD Regulation, among
other things, is intended to establish a uniform, transparent, predictable and sustainable regulatory framework across the EEA
for in vitro diagnostic medical devices and ensure a high level of safety and health while supporting innovation. Seeking and
obtaining marketing authorization under the IVD Regulation is a new and uncertain process, and Notified Bodies (as defined
below) may have limited resources and experience backlogs (see risk factor "Seeking and obtaining marketing authorization under
BIOCARTIS ANNUAL REPORT 2022 62
the IVD Regulation is a new and uncertain process, and Notified Bodies designated under the IVD Regulation may have limited
resources and experience backlogs, which may delay product availability"). New devices will need to be CE-marked under the IVD
Regulation after the date of application of the IVDR Regulation (i.e., 26 May 2022). This includes any device which is not CE-
marked under the IVD Directive before the IVDR date of application, and hence has an impact on any new tests that Biocartis
wishes to place on the market. The Idylla™ instrument, console and associated system software (which are class A non-sterile)
have been CE-marked under the IVD Regulation before the date of application. However, Regulation 2022/112 amended the IVD
Regulation regarding the transitional provisions, and allows most devices with CE-Mark under the IVD Directive to be placed on
the market or put into service for an additional timeframe which depends on their respective risk class under the IVD Regulation,
provided that there are no significant changes in the design and intended purpose of those devices.
The IVD Regulation influences the way Biocartis conducts business in Europe, and includes, among other things, the following:
▪ 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 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, previously via the European
Directive 98/79/EC on in vitro diagnostic medical devices (the "IVD Directive") and as of 26 May 2022 via the IVD Regulation
(subject to transitional measures). Under the IVD Directive, the Idylla™ platform and Idylla™ tests were 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
under the IVD Regulation latest by 26 May 2026. 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"), which
is a new review model with related uncertainties. There are limited CDx assays that have successfully achieved the CE mark under
the IVD Regulation leading to limited intelligence to leverage. 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 since a link with the intended use population from the drug study is 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 will delay or terminate
plans of bringing new tests to the market without recovery of costs incurred while any failure or material delay in obtaining such
certification for the currently CE-marked Idylla™ tests may require Biocartis to cease marketing and selling those tests until
BIOCARTIS ANNUAL REPORT 2022 63
certifications in compliance with the IVD Regulation are obtained. For further information see Risk Factor "Seeking and obtaining
marketing authorization under the IVD Regulation is a new and uncertain process, and Notified Bodies designated under the IVD
Regulation may have limited resources and experience backlogs, which may delay product availability".
Starting from 1 July 2024, IVDs bearing the CE-Mark under the IVD Directive or IVD Regulation will no longer be accepted in the
UK. This represents a one year extension from the previously targeted implementation date of 1 July 2023. From 1 July 2024, the
IVDs placed on the UK market must comply with Medical Devices Regulations 2002 (SI 2002 No 618, as amended) and bear UKCA
(UK Conformity Assessed) marking. IVD manufacturers may only apply UKCA after the UK organizations responsible for assessing
whether manufacturers and their medical devices meet applicable regulatory requirements in the UK certify compliance of
respective IVDs (except general IVDs) with the Medical Devices Regulations 2002. General IVDs may bear UKCA following
manufacturer's self-certification. Hence, Biocartis may need to ensure that the currently CE-marked Idylla™ products, or any
other IVDs which Biocartis commercializes in the UK are certified under the Medical Devices Regulations 2002 before 1 July 2024.
Failure or material delay in obtaining such certification for the currently CE-marked Idylla™ tests, or any other IVDs which Biocartis
commercializes in the UK between now and the application date of the Medical Devices Regulations 2002, may require Biocartis
to cease marketing and selling those IVDs until certifications in compliance with the Medical Devices Regulations 2002 are
obtained. Any failure or material delay in obtaining certification under the Medical Devices Regulations 2002 for new products
will delay or terminate plans of bringing new products to the market without recovery of costs incurred.
In the United States, IVDs are regulated by FDA as medical devices under the Federal Food, Drug, and Cosmetic Act (the "FDCA"),
and may also be regulated as biological products subject to the Public Health Service Act. Like other medical devices, IVDs are
subject to FDA's premarket and postmarket controls, including labeling requirements, provisions against adulteration and
misbranding, good manufacturing practices, establishment registration, medical device listing, records and medical device
reporting, and notification, amongst other things. IVDs are generally also subject to regulation under the Clinical Laboratory
Improvement Amendments of 1988 Act (the "CLIA" Act), which establishes quality standards for laboratory testing and an
accreditation program for clinical laboratories. IVD tests are categorized into CLIA test complexity categories: (1) waived tests, (2)
tests of moderate complexity, and (3) tests of high complexity.
Under the FDCA, certain medical devices require US FDA 510(k) clearance or premarket approval ("PMA") prior to marketing in
the United States. CLIA categorization is determined after the FDA has cleared or approved a medical device marketing
submission, or upon request for a legally marketed device. The Idylla™ Respiratory (IFV-RSV) Panel is a 510(k) cleared Class II
device. The majority of Biocartis' current and planned Idylla™ tests is expected to require US FDA 510(k) clearance or PMA
approval before marketing is permissible in the United States. These tests will also be categorized under the CLIA Act.
Each of the Idylla™ tests will need to undergo significant evaluation and testing to support submissions for 510(k) clearance or
PMA approval. For 510(k) clearance, these requirements include an evaluation of the analytical performance characteristics of
the device compared to a predicate and studies to demonstrate substantial equivalence to the predicate device. In most cases
for IVDs, analytical studies using clinical samples are sufficient, but some IVDs also require clinical information if the link between
analytical performance and clinical performance is not well defined. For PMA approval, the applicant will need to provide
sufficiently valid scientific evidence to provide assurances that the device is safe and effective for its intended use. A PMA includes
a technical section that is typically divided into non-clinical laboratory studies and clinical studies.
The required scope and size of a clinical study to support a PMA approval will need to meet regulatory requirements, and, when
necessary, may be expanded to a larger cohort than anticipated. A clinical study may be expensive and time-consuming and may
require significant follow-up beyond the resources of Biocartis. An evaluation or study 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 to support a PMA. FDA regulation of IVDs, and in particular companion
diagnostic (CDx) products, is evolving and FDA requirements may vary depending upon the specific product and claimed
indications. Recent legislation was also introduced that, if passed, would reform FDA's regulatory framework for in vitro diagnostic
tests, which may create a less burdensome pathway to commercialization for certain IVDs. The passage of such legislation, and
the ultimate requirements for approval set out therein, cannot be predicted.
BIOCARTIS ANNUAL REPORT 2022 64
Biocartis utilizes FDA's Pre-Submission review process to gain FDA feedback on specific questions related to product development
and/or application preparation or other requirements in advance. Notably, this process is voluntary and non-binding and
regulations and expectations may change during the execution of product studies, significantly changing the requirements
applicable to the effort. In addition, securing FDA's feedback under the Pre-Submission process and, ultimately, obtaining the
510(k) clearance or PMA approval for Idylla™ tests may be delayed if FDA is backlogged in reviewing a large number of Pre-
Submission requests.
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 Regulation. In addition,
the commencement or completion of any study may be delayed or halted for any number of reasons. FDA 510(k) clearance or a
PMA approval may not be obtained for any of Biocartis' products, on a timely basis, or at all. In addition, once a FDA 510(k)
clearance or PMA approval has been obtained, any significant change or modification in design, components, method of
manufacture, or intended use (which may be required due to evolving treatment protocols or standards of care), may require
submission of a 510(k) for a change to an existing device or a new FDA 510(k) clearance or PMA. The change or modification may
require Biocartis to cease marketing or recall the modified products until clearances or approvals are obtained.
Similarly, even if Biocartis obtains the relevant marketing authorizations in the EU or the United States, changes to regulatory
requirements in other markets could prevent completion of product registrations in those markets. Biocartis may not obtain
marketing authorizations elsewhere on a timely basis, if at all. Based on current COVID-19 trends, the Department of Health and
Human Services (HHS) is planning for the federal Public Health Emergency (PHE) for COVID-19, declared under Section 319 of the
Public Health Service (PHS) Act, to expire at the end of the day on 11 May 2023. Biocartis has relied on the Policy for Coronavirus
Disease-2019 Tests, Guidance for Developers and Food and Drug Administration Staff established during the Public Health
Emergency to market the Idylla™ SARS-CoV-2 Test in the US. The continued ability of Biocartis to continue to market that test
when the Public Health Emergency ends will be at risk.
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 or clearance of its
products, or to comply with ongoing regulations in the countries in which it operates.
Regulatory agencies such as the US Food and Drug Administration ("FDA") strictly regulate the claims that
may be made about medical devices or related products placed on their market. If Biocartis is found to
have made false or misleading claims about its products, or otherwise have violated promotion,
advertising or distribution restrictions, Biocartis may become subject to significant fines and/or other
enforcement action or liabilities, including being prohibited from importing into these markets.
In the markets in which Biocartis operates, Biocartis' promotional materials and training methods must comply with numerous
applicable laws. Relevant governmental authorities may also hold Biocartis responsible for training its sales force and employees
regarding these applicable laws. A relevant governmental authority may determine that an IVD's labeling violates applicable
statutory requirements if the labeling is determined to be false or misleading, the labeling fails to bear adequate directions for
use, there is inadequate data to substantiate the claims made, or the labeling constitutes off-label promotion (e.g., the promotion
of an IVD device for a use that has not been cleared or approved by the relevant regulator or supervisory body).
If a relevant governmental authority determines that Biocartis' promotional materials, training or distribution practices violate
applicable legal requirements, the relevant governmental authority could request that Biocartis modify its training or promotional
materials, make other corrections or restitutions, or subject Biocartis to regulatory or enforcement actions, including the issuance
of a warning or untitled letter, injunction, seizure, civil fine and criminal penalties. Other US (federal or state), EU or other
applicable foreign governmental authorities might also take action if they consider Biocartis' promotion or training materials to
constitute promotion of an un-cleared or unapproved use, such as laws prohibiting false claims for reimbursement, which could
result in significant fines or penalties under other statutory rules and regulations. For example, in the US, off-label promotion of
a medical device may subject Biocartis to Federal False Claims Act liability. The Federal False Claim Act prohibits, among other
BIOCARTIS ANNUAL REPORT 2022 65
things, individuals or entities from knowingly presenting, or causing to be presented, false claims, or knowingly using false
statements, to obtain payment from the federal government.
Violations of the applicable requirements related to promotional materials, training or distribution practices, including laws
prohibiting false claims for reimbursement purposes, could result in negative publicity. This could result in potential reputational
damage and subsequent impairment of product sales. Furthermore, although Biocartis trains its sales force not to promote
Biocartis' products for 'off-label' uses, and Biocartis' instructions for use in all markets specify that Biocartis' products are not
intended for use outside of those indicated on the label, competent governmental authorities may nevertheless hold it
responsible for engaging in 'off-label' promotion or other practices if an off-label message is construed as being delivered on
Biocartis' behalf, or if Biocartis is otherwise determined to have control over the messaging.
Seeking and obtaining marketing authorization under the IVD regulation is a new and uncertain process,
and notified bodies designated under the IVD regulation may have limited resources and experience
backlogs, which may delay product availability.
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 minimal number of 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. Biocartis has
entered into contractual arrangements with a Notified Body securing the capacity of that Notified Body for IVD certification of
certain Idylla™ tests. Nevertheless, a Notified Body may not provide the requisite certification for the currently CE-marked Idylla™
tests, and Biocartis' other products may require certification from a Notified Body in the future, which it may not receive 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.
Additional obligations of the distributors, including as regards post-market surveillance, IVD traceability and cooperation between
distributors, Biocartis and the regulatory authorities need to be documented in the agreements between Biocartis and
distributors, which may require substantial resources of Biocartis. If any of Biocartis' third party distributors in Member States
fail to meet the requirements of the IVD Regulation and additional national legislation (including any national registration
requirements for distributors), 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.
Performance of obligations concerning post-market surveillance and post-market performance follow up
under the IVD regulation and applicable laws in other jurisdictions require significant resources. Failure to
comply with such obligations may result in sanctions and prohibition of the marketing and sale of Biocartis’
IVDs.
BIOCARTIS ANNUAL REPORT 2022 66
The IVD Regulation imposed additional obligations on IVD manufacturers to systematically and proactively collect and review
experience gained from the IVDs they place on the market. To that end, IVD manufacturers must establish, maintain and update
a post-market surveillance system based on a post-market surveillance plan for gathering data on the quality, performance and
safety of an IVD throughout its entire lifetime. The post-market surveillance plan must address the collection and analysis of
information concerning incidents, undesirable side-effects, relevant specialist or technical literature, complaints and publicly-
available information about similar IVDs. The manufacturer must also proactively collect and evaluate performance and relevant
scientific data from the use of an IVD placed on the market to confirm the safety, performance and scientific validity throughout
the expected lifetime of the IVD, ensure the continued acceptability of the benefit-risk ratio and detect emerging risks on the
basis of factual evidence. The results of the post-market surveillance activities must be documented in reports to be drawn by
the IVD manufacturer. IVD manufacturers may also need to update technical documentation and take corrective and preventive
measures.
The obligations concerning post-market surveillance apply from 26 May 2022 with respect to new IVDs that are placed on the
market and with respect to IVDs that were CE-marked under the IVD Directive and that benefit from the transitional application
of the IVD Regulation. Performance of such obligations, and any similar obligations under applicable laws in other jurisdictions,
on an ongoing basis requires significant time, and managerial and financial resources. Failure to comply with such obligations
may result in sanctions and prohibition of the marketing and sale of Biocartis' IVDs.
Data generated from post market surveillance and follow up may lead to a technical review of the IVDs, restriction or loss of
market access or changes in IVDs across markets, which in turn may negatively impact Biocartis' revenue and/or cost basis.
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 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. 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.
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 ANNUAL REPORT 2022 67
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, changes may lower
reimbursements (for further information, see risk factor "Biocartis faces uncertainties over the reimbursement by third party
payers for the products it offers 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 and financial results.") or impose increased regulatory requirements for Biocartis' products.
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.
Biocartis is subject to laws prohibiting healthcare fraud and abuse and other laws applicable to Biocartis'
business activities. If Biocartis is unable to comply with such laws, it could face substantial penalties.
Biocartis' and its partners' operations are subject to various fraud and abuse laws. Such laws include anti-kickback laws, physician
payment transparency laws and false claims laws. These laws may impact, among other things, Biocartis and its partners'
proposed sales and marketing and education programs and require them to implement additional internal systems for tracking
certain marketing expenditures and to report to governmental authorities. In addition, Biocartis and its partners may be subject
to patient privacy and security regulations in the countries in which Biocartis conducts its business. The laws that may affect
Biocartis' or its partners' ability to operate include, inter alia:
▪ laws which prohibit, among other things, persons or entities from knowingly or wilfully soliciting, receiving, offering
or paying any remuneration, overtly or covertly, directly or indirectly, in cash or in kind, in return for or to induce
either the referral of an individual for, or the purchase, lease, order, arrange for, or recommendation of, any good,
facility, item or services for which payment may be made, in whole or in part, under certain healthcare programs
▪ false claims laws, which prohibit, among other things, individuals or entities from knowingly presenting, or causing to
be presented, claims for payment from or approval by a governmental payer program that are false or fraudulent
▪ laws which establish crimes for, among other things, knowingly and wilfully executing, or attempting to execute, a
scheme to defraud any healthcare benefit program, wilfully obstructing a criminal investigation of a healthcare
offense, concealing a material fact, or making materially false statements in connection with the delivery of or
payment for healthcare benefits, items or services
▪ laws that require manufacturers to provide reports to governments on pricing and marketing information. Several
jurisdictions have enacted legislation requiring healthcare and medical devices companies to, among other things,
establish marketing compliance programs, file periodic reports with the state, make periodic public disclosures on
sales and marketing activities, and to prohibit or limit certain other sales and marketing practices; and
▪ "Sunshine" laws, which require certain manufacturers of drugs, devices, biologicals, and medical supplies to report
annually to certain agencies and centers information related to payments and other transfers of value to physicians
and teaching hospitals, and ownership and investment interests held by physicians and their immediate family
members. This is for example the case in the United States, France and Belgium
For example, in the EU, the provision of benefits or advantages of any kind to physicians to induce or encourage the prescription,
recommendation, endorsement, purchase, supply, order or use of medicinal products is generally prohibited. Moreover,
agreements with physicians often must be the subject of prior notification and approval by the physician's employer, his or her
competent professional organization and/or the regulatory authorities of the individual EU Member States. These requirements
are provided in the national laws, industry codes or professional codes of conduct, applicable in the EU Member States.
BIOCARTIS ANNUAL REPORT 2022 68
If Biocartis' or its partners' operations are found to be in violation of any of the laws described above or any other governmental
regulations that apply to them, they may be subject to penalties, including administrative, civil and criminal penalties, damages,
fines, disgorgement, the curtailment or restructuring of Biocartis' or its partners operations, the exclusion from participation in
government healthcare programs and individual imprisonment.
Patients, hospitals, physicians or other parties may try to hold Biocartis responsible for all, or part, of the
medical decisions underlying the treatment of patients, which could lead to litigation or governmental
action against Biocartis.
The existing Idylla™ products on the market are designed to detect the presence or levels of certain specific biomarkers. These
products are not designed to specify the treatment necessary for each patient, which remains the responsibility of relevant
medical personnel. Although Biocartis indicates in its marketing materials and in the labelling of its products (which indicates,
among other things, the relevant test's accuracy rate) that its products are not designed to specify the course of treatment for
patients and although Biocartis has not yet encountered such actions to date, patients, hospitals, physicians or other parties may
nevertheless try to hold Biocartis responsible for all or a part of the medical decisions underlying the treatment of patients,
exposing Biocartis to potential litigation or civil or criminal liability. Such actions or liability could lead governmental agencies to
conclude that Biocartis' products or services are no longer to be used or used improperly, all of which could significantly damage
Biocartis' reputation and could materially impair the continued adoption of Biocartis' product offering in the market.
Financial risks
Biocartis has incurred operating losses, negative operating
cash flow and an accumulated deficit since inception and
may never become profitable.
Biocartis has incurred operating losses and negative operating cash flow
in each period since it was founded. Operating loss for the year ended
31 December 2022 was EUR 47 million (rounded). As of 31 December
2022, Biocartis had an accumulated deficit of EUR 443 million (rounded).
These losses have resulted principally from costs incurred in the design,
industrialization and commercialization of the Idylla™ platform, the
development and commercialization of tests, the establishment of its
manufacturing facilities, as well as from general and administrative costs
associated with Biocartis' operations. Biocartis intends to continue to
develop MDx tests, and to conduct regulatory activities and sales and
marketing activities that, together with anticipated further investments
in manufacturing capabilities and general and administrative expenses,
will likely result in Biocartis incurring further losses for at least the next
few years. In addition, macroeconomic factors, including a continued
recessionary and/or inflationary environment, combined with austerity
measures by certain European governments, and restrictive monetary
policies, may further negatively impact Biocartis' operating results. In
particular, the rising inflation leads to significant higher costs (in
particular for raw materials and labor), which cannot be passed on to the Company's customers through price increases; which
in turn has an impact on the Company's profitability.
Biocartis may never achieve profitability, which could impair its ability to sustain operations or obtain any required additional
funding. If Biocartis does achieve profitability in the future, it may not be able to sustain profitability in subsequent periods, and
it may suffer net losses and/or negative operating cash flows in subsequent periods.
BIOCARTIS ANNUAL REPORT 2022 69
It is possible that Biocartis will experience fluctuating revenues, operating results and cash flows. In that case, as a result, period-
to-period comparisons of financial results are not necessarily meaningful, and results of operations in prior periods should not be
relied upon as an indication of future performance.
Biocartis might require substantial additional funding to respond to business challenges, take advantage
of new business opportunities or repay or refinance its outstanding convertible bonds, which may not be
available on acceptable terms, or at all.
Biocartis intends to continue to make appropriate investments to support the execution of its business plan and its growth.
Existing sources of financing and any funds generated from operations may not provide Biocartis with sufficient capital. Biocartis
may require additional equity or debt funding from time to time to meet funding needs; to repay or refinance both its old and its
new outstanding convertible bonds and its credit facilities; to respond to business challenges; or to take advantage of new
business opportunities. Equity and debt financing, however, might not be available when needed or, if available, might not be
available on acceptable terms. In addition, to the extent that additional capital is raised through the issuance of equity or
convertible debt securities, the issuance of these securities could result in the dilution of the interests of Biocartis' existing
shareholders and may provide for rights, preferences or privileges senior to those of holders of common stock. In addition, these
securities may be sold at a discount from the market price of Biocartis' common stock. If additional funds are raised by issuing
debt securities, these debt securities would have rights, preferences and privileges senior to those of shareholders, and the terms
of the debt securities issued could impose significant restrictions on Biocartis' operations. If Biocartis is unable to obtain adequate
financing as a result of increasing interest rates in many jurisdictions, including the Eurozone, or otherwise, its ability to continue
to support its business growth and to respond to business challenges could be significantly limited. Moreover, the Company’s
loan and credit agreements are linked to floating Euribor rates and consequently any increase in interest rates will result in an
additional interest cost. Existing sources of cash and any funds generated from operations may not provide Biocartis with
sufficient capital and may result in delays in its operations that could affect its operational and financial performance.
Biocartis' finance agreements contain restrictive covenants that may limit its ability to respond to changes
in market conditions or pursue business opportunities.
Biocartis and its material subsidiaries are currently subject to restrictive covenants, including a financial covenant linked to a
minimum liquidity amount equal to at least EUR 10,000,000, as well as certain general undertakings including a limit on the ability
to do any of the following, subject to exceptions:
▪ create or permit to subsist any security over any of its assets or sell, transfer or otherwise dispose of any of its assets
or receivables on recourse terms
▪ whether voluntary or involuntary, sell, lease, transfer, grant, lease or license out, lend or otherwise dispose of all or
any part of its respective assets, except in the ordinary course of business
▪ make any acquisition of, or participate in, any company, business, or undertaking, incorporate a company, or invest
in any joint venture (other than the Company's existing joint venture Wondfo-Cartis)
▪ incur, create or permit to subsist or have outstanding certain additional financial indebtedness, subject to material
exceptions
▪ make any loans, grant any credit or provide any other financial accommodation to or for the benefit of any person,
including any of its shareholders
▪ grant, incur or allow to remain outstanding any guarantee, surety or indemnity (including by way of letters of comfort)
or other similar assurance in respect of obligations of any other person which could result in a payment claim by the
beneficiary against the grantor thereof
▪ declare, make or pay any dividend (save where such dividend is capitalized) or similar distribution (or interest on any
unpaid dividend or similar distribution whether in cash or in kind) on or in respect of its issued share capital (or any
BIOCARTIS ANNUAL REPORT 2022 70
class of its share capital) save where the same is made or paid to another member of the group; (b) repay or distribute
any dividend or share premium reserve, or make any other payment to its shareholders; (c) redeem, repurchase,
retire or repay any of its share capital or resolve to do so; or (d) redeem, repurchase, retire or repay prior to its stated
maturity date, or make any other payment of any of its convertible bonds, or resolve to do so
▪ issue any shares or grant any conditional or unconditional option, warrant or other right to call for the issue or
allotment of, subscribe for, purchase or otherwise any share of any member of the group or alter any right attaching
to any share capital of any member of the group, except in the framework of a broad set of agreed permitted share
issues, including share issuances by the Company that do not result in a change of control
▪ make any substantial change to the general nature of the business of the group as a whole from that which is carried
on at the date the relevant covenant was agreed upon; and
▪ enter into any treasury transaction other than spot and forward delivery foreign exchange contracts or contracts
against fluctuation of any interest rate, in each case entered into in the ordinary course of business and not for
speculative purposes
These limitations are subject to a number of important qualifications and exceptions. Complying with the restrictions may
materially and adversely affect Biocartis' ability to react to changes in market conditions, take advantage of business
opportunities it believes to be desirable, obtain future financing, fund needed capital expenditures, or withstand a continuing or
future downturn in its business.
Biocartis' operating results could be materially and adversely affected by unanticipated changes in tax
laws and regulations, adjustments to its tax provisions and its allocation of income, exposure to additional
tax liabilities, or forfeiture of its tax assets.
The determination of Biocartis' provision for income taxes and other tax liabilities requires significant judgment, including the
adoption of certain accounting policies and Biocartis' determination of whether its deferred tax assets are, and will remain, tax
effective. Although management believes its determinations, its estimates and its judgment are reasonable, they remain subject
to review by the relevant tax authorities. Biocartis' interpretations, determinations, estimates and judgment may be questioned
by the relevant tax authorities, positions taken by the relevant tax authorities in different jurisdictions may not be consistent, and
the relevant tax laws and regulations, and the interpretation thereof by the relevant tax authorities across all jurisdictions where
Biocartis is active or may be subject to tax, is subject to change, including changes that may have a retroactive effect. Any adverse
outcome of such a review may lead to adjustments in the amounts recorded in Biocartis' financial statements, and could have a
materially adverse effect on Biocartis' operating results and financial condition.
Biocartis is subject to laws and regulations on tax levies and other charges or contributions in different countries, including
transfer pricing, custom duties, sales taxes and tax regulations for the compensation of personnel and third parties. Biocartis' tax
structure involves a number of transfers and transfer price determinations between the parent company and its subsidiaries or
other affiliates.
Biocartis' effective tax rates could be adversely affected by changes in tax laws, treaties, guidelines and regulations, both
internationally and domestically, including possible changes to the patent income deduction regime, the innovation deduction
regime, the tax credit for R&D investments and wage withholding tax incentive for qualified research and development personnel
in Belgium and other tax incentives, or the way they proportionally impact Biocartis' effective tax rate.
In addition, Biocartis may not be able to use, or changes in tax regulations may affect the use of, certain tax assets or credits that
it has built over the years. For instance, some of Biocartis' entities have significant tax loss carry forwards. Some of these tax loss
carry forwards may be forfeited in whole, or in part in, as a result of transactions, or their utilization may be restricted by statutory
law in the relevant jurisdiction. Any corporate reorganization within the group or relating to Biocartis' shareholding structure may
result in partial or complete forfeiture of tax loss carry forwards. The tax burden would increase if profits could not be set off
against tax loss carry forwards.
BIOCARTIS ANNUAL REPORT 2022 71
Furthermore, Biocartis' increasing international business may make it subject to income tax, custom duties, sales taxes and other
direct or indirect taxes in countries where it was previously not the case.
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 United States 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.
Biocartis may face risks associated with previous or future acquisitions and disposals of companies, assets,
solutions and technologies, and its business could be harmed if Biocartis is unable to address these risks.
Since its incorporation, Biocartis has grown through licensing and asset acquisition transactions with third parties. If, in the future,
Biocartis is presented with appropriate opportunities, it may acquire or make other investments in complementary companies,
solutions or technologies. Biocartis may not be able to realize the anticipated benefits of the assets it secured, or may fail to
secure or assess, through its past or future licensing transactions or acquisitions, the actual value of the assets or technology
(which could result in impairments), or may fail to further use and develop or integrate these assets or technology into its existing
business or may face claims from third parties. Moreover, Biocartis may have to incur debt or issue further equity to pay for any
additional future acquisitions or investments, the issuance of which could dilute the interests of its existing shareholders. Biocartis
has also made disposals of assets that it deemed no longer core, and may decide to do so in the future with other assets. When
disposing of assets, Biocartis may not be able to complete the disposal at terms deemed acceptable, may be required to give
guarantees, and may expose itself to claims from purchasers, as well as creditors of the transferred business.
The processes by which Biocartis acquires or disposes of businesses, licenses assets or technologies may be lengthy and complex
and may result in a diversion of management's attention from other business concerns. All of the foregoing could have a material
adverse effect on Biocartis' financial condition and results of operations.
BIOCARTIS ANNUAL REPORT 2022 72
1 At a glance
2 Strategy
3 Sustainability
4 Corporate governance report
5 Financial report
6 Glossary & bibliography
BIOCARTIS ANNUAL REPORT 2022 73
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
BIOCARTIS ANNUAL REPORT 2022 74
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 2022 Biocartis took further steps in its sustainability approach through the set-up of a sustainability ambassadors’ team and
the implementation of a sustainability materiality review that led to the development of a materiality matrix.
Sustainability: roadmap/journey towards materiality
The main objective in 2022 for Biocartis was to establish a management process to support the implementation of the Biocartis
sustainability projects. By means of the Sustatool, developed by the University of Antwerp, sponsored by the Belgium
Government, and based on academic research and management literature, an AS-IS analysis of the Biocartis management
processes was initiated.
The Sustatool is a 5-stage management process and consists of a fully customized dashboard of 15 sustainability and optimization
themes across 3 organizational levels:
▪ Product & Service Excellence
▪ Operational Excellence
▪ Organizational Excellence
This AS-IS analysis resulted into 31 sustainability topics that were prioritized with a focus on Biocartis’ contribution to sustainable
development, taking into consideration the various categories found in the international sustainability standards such as the
Sustainability Development Goals (SDGs) and the GRI (Global Reporting Initiative) and SASB (Sustainability Accounting Standards
Board) standards.
In a next step the prioritized sustainability topics were used as input to the materiality matrix. The matrix visualizes Biocartis
priority topics as shown below:
BIOCARTIS ANNUAL REPORT 2022 75
The priority topics in the right upper corner of the materiality matrix were then translated into the 3 core and 3 supporting topics:
In the first half of 2023, Biocartis will further translate these materiality topics in a multi-year sustainability action plan; focusing
on 9 of the 17 Sustainability Development Goals (SDGs).
BIOCARTIS ANNUAL REPORT 2022 76
A key element of this action plan will address Biocartis approach to baselining, measurement, action planning, reduction, and
reporting of Scope 1, 2 and 3 Greenhouse Gas Emissions, in line with the Greenhouse Gas (GHG) Protocol.
The current sustainability approach focuses on 6 Sustainability Development Goals (SDGs) with progress reported on each of
these SDG’s as summarized below:
BIOCARTIS ANNUAL REPORT 2022 77
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 2022:
▪ Installed base of 2,085 Idylla™ instruments
▪ Instrument Registration in China in September
▪ Commercial cartridge volume of 321k cartridges
▪ SkylineDx Launch in September
▪ HepatoPredict launch in October
▪ MSI CDx approval Japan in October
Investing in the health and well-being of all staff members
In 2022:
▪ Globetrotter Challenge resulting in 248 trees planted in collaboration with BOS+
▪ Lunch boxes made from sustainable materials
▪ Healthy Habits for operators related to ‘sleep’ – ‘positive mindset’ – ‘rest/recuperation’
▪ After two years of COVID related absence, the Fruit@Work initiative has been relaunched
▪ Boost my lifestyle – AG Health
▪ Sponsoring this year’s Music for Life initiative against poverty
SDG 4: Ensure inclusive and equitable quality education and promote lifelong learning opportunities for
all
Promoting lifelong learning of its employees
In 2022:
▪ 18,630 training hours amongst others through an integrated Quality Management System
▪ On average 46 training hours per employee
SDG 5: Achieve gender equality and empower all women and girls
A balanced gender diversity
In 2022:
▪ 420 employees across more than 30 nationalities
▪ 53% women – 47% men balanced gender diversity
BIOCARTIS ANNUAL REPORT 2022 78
SDG 9: Build resilient infrastructure, promote inclusive and sustainable industrialization and foster
innovation
Delivering growth
In 2022:
▪ 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 2022:
▪ Yield improvement ML2, transfer of products from ML1 to ML2 such that ML1 can be
discontinued in 2023
▪ Energy efficiency audit conducted, and plan defined to implement recommendations
▪ More detailed measuring tools implemented to better understand consumption and actions
defined to impact / reduce consumption
▪ Increased awareness within the organization to measure carbon footprint scope 1, 2 & 3.
External party defined to support Biocartis in this exercise
SDG 17: Strengthen the means of implementation and revitalize the global partnership for sustainable
development
Building a global Idylla™ ecosystem with partners
In 2022:
8 events were announced:
▪ Feb - Ophiomics new deal
▪ Apr - Merlin study published
▪ Apr - IXP publications ECCMID
▪ June – Astra Zeneca agreement
▪ Sep – Idylla Instrument registration China
▪ Sep - SkylineDx launch,
▪ Oct - MSI CDx approval Japan
▪ Oct - HepatoPredict launch
BIOCARTIS ANNUAL REPORT 2022 79
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).
Principles
Conduct at Biocartis is based on several principles, including:
▪ Non-Discrimination, respect, diversity and inclusiveness: Biocartis does not tolerate any form of harassment, or any
form of 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 and encourages professional behavior where people treat each other with dignity, fairness and mutual
respect.
▪ Respect for human rights: Biocartis strives to ensure that the activities within its sphere of influence do not negatively
impact fundamental human rights, as set out in among others the core conventions of the international labor
organization (ILO), both directly and through the Biocartis business relations. This includes but is not limited to the
principles set out in the ILO conventions regarding the freedom of association and protection of the right to organize,
the abolition of forced labor, minimum age, equal remuneration and non-discrimination.
▪ Freedom of opinion, speech and association: Biocartis respects the right of employees to choose to join a union,
provided that applicable law is complied with. Biocartis engages in constructive dialogue with its employees and their
representatives and recognizes that every employee is entitled to freedom of opinion, expression and speech.
▪ Financial and scientific integrity: Biocartis requires that its employees uphold the highest degree of integrity, reliability
and accuracy when drafting financial statements, performing research activities or developing products.
▪ No bribery or fraud: Biocartis does not permit any employee to commit any form of bribery or participate in any form
of fraud or money laundering or induce another employee or third party to do so.
▪ Ethical marketing practices: Biocartis strives to market and sell its products in compliance with all applicable rules and
regulations, and in line with high ethical standards. In this respect, Biocartis also adopted a Code of IVD Compliance
which provides guidance for all employees with regards to all types of interactions with healthcare professionals and
with the outside world.
Compliance with the code & whistleblowing procedure
Every employee is provided with a copy of the Code of Conduct at the start of his or her contractual relationship with Biocartis
and every time the code is revised thereafter (and at least every two years), and employees receive training on it. All employees
are required to review the code and sign an acknowledgement with respect thereto.
A whistleblowing procedure exists within Biocartis as every employee is strongly encouraged to report any actual or potential
breaches of the Code of Conduct or any applicable laws, regulations, policies, guidelines or procedures, and no retaliation against
such employee will be taken by Biocartis merely because of the whistleblowing. The employee can report such breach with its
manager, the Compliance Officer (being the Biocartis CFO) or the Chairman of the Audit Committee, depending on the
circumstances. Reports can be made anonymously and upon receipt of a report an investigation of the report is initiated to
resolve the matter as quickly as possible. All reports and/or related actions and status is reported in an internal whistleblowing
register which is presented to the Audit Committee or Board of Directors for discussion and resolution.
BIOCARTIS ANNUAL REPORT 2022 80
In 2020, 2021 and 2022, no reports were filed in accordance with the whistleblowing policy. Biocartis did not have any legal
proceedings associated with bribery or corruption. An update of the Code of Conduct and the whistleblowing procedure is
planned early 2023.
Business continuity - 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 supply chain. In 2022, particular attention was given to elimination of a limited amount of upstream supply risks associated
with the Ukraine crisis.
BIOCARTIS ANNUAL REPORT 2022 81
3.3. Product responsibility
Ethical marketing
Both in its Code of Conduct and in its Code of IVD Compliance, Biocartis included the principle of ethical marketing in which it
states to strive 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 2022, the biobank registered more than 14,000 samples (clinical and reference materials) and
shipped more than 3,000 samples worldwide. Finally, in 2022, process improvements were implemented with respect to the
qualification of suppliers of Human Biospecimen as well as to the more accurate identification and selection of Human
Biospecimen for use in development projects. Several agreements were reached with the Ethics committee of the AFMHP
enabling adherence to the increasingly stringent application of applicable laws.
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’
and the reporting obligations. The overview of the reporting is as follows:
2020
2021
2022
EUR 0*
GBP 2000
**
* Reporting for 2020 was EUR 0 due to government shutdown related to the COVID-19 pandemic
**Reporting for 2022 will be uploaded in August 2023. An overview of payments made in line with the Medtech Europe reporting can be found on the website of the Transparency Medtech here
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.
2019
2020
2021
2022
EUR 11,035.25
EUR 3,206,6
EUR 4,870
*
*Reporting for 2022 will be completed in 2023. An overview of payments made in line with the Belgian beMedtech reporting can be found on the website of the Belgian Transparency Register here.
BIOCARTIS ANNUAL REPORT 2022 82
In France, Biocartis complies with the transparency obligations required by the French Public Health Code. Biocartis has reported
the following payments starting from 2017:
2017
2018
2019
2020
2021
2022
EUR 12,000
EUR 36,919
EUR 19,598
EUR 10,700
EUR 2,575
EUR 3,654
An overview of payments made in line with the French Public Health Code can be found 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:
2019
2020
2021
2022
USD 986.99
USD 0*
USD 521.31
**
* Reporting for 2020 was EUR 0 due to government shutdown related to the COVID-19 pandemic
**Reporting for 2022 will be completed in 2023. 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
Quality
Quality plays a crucial role in Biocartis’ ambition to enhance the healthcare outcome
for patients through the use of its unique Idylla™ products.
▪ We have established a Quality Management System (QMS) which provides a
framework to consistently develop, manufacture and deliver safe, effective and
compliant products (i.e. product quality)
▪ 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.
▪ The CEO has ultimate responsibility for Quality. He has delegated the daily
management to the Head of Quality, who also oversees that all employees understand
their own responsibilities within their work areas to help ensure that Quality is
embedded within the entire company
▪ Biocartis complies with the following international standards and regulations:
▪ Regulation (EU) 2017/746 of the European Parliament and of the council of 5
April 2017 on in vitro diagnostic medical devices (IVDR) and repealing Directive
98/79/EC and Commission Decision 2010/227/EU (IVDR)
▪ Full set of MDSAP regulations (Australia, Brazil, Canada, Japan, USA FDA 21 CFR
part 820)
▪ ISO 13485:2016 (Medical devices—Quality management systems—
Requirements for regulatory purposes)
▪ EN ISO 14971:2019 (Medical devices—Application of risk management to
medical devices)
BIOCARTIS ANNUAL REPORT 2022 83
▪ EN IEC 62304:2006 (Medical device software—Software life cycle processes)
▪ EN IEC 62366:2015 (Medical devices—Application of usability engineering to medical devices)
In 2022, we achieved recertification of the Biocartis QMS against the IVDR requirements. We also successfully passed surveillance
on our certification against the ISO 13485:2016 standard and full set of MDSAP regulations (Australia, Brazil, Canada, Japan, USA).
Product safety
In line with the abovementioned international standards and regulations, safety, effectiveness and compliance of our products is
fully embedded in our product realization processes. The expectations from a safety, customer and regulatory point of view are
defined at the onset of product development and serve as input for product design. Product performance in relation to these
needs and requirements is subsequently verified and validated, and corresponding performance specifications and residual risks
are disclosed to the customer. Production, purchasing and service controls further safeguard that each manufacturing lot up to
delivery to the customers is safe and effective.
We are committed to continuous improvement. The Quality management system includes key processes for measuring and
improving performance of our products and processes and to leverage customer feedback for continuous improvement.
▪ Biocartis has established an Internal Audit Program to verify compliance with the QMS, the planned arrangements
for product realization, the requirements from relevant standards and regulations and internal processes
▪ A Post Market Surveillance process is in place to measure and evaluate on-market performance of our products
▪ Every employee at Biocartis is obliged to report potential issues related to the safety or effectiveness of our products
and any deviation from our processes
▪ When a customer reports an event, we immediately register the event and assess patient safety in relation to the
known safety profile of the product. In case of an adverse event, product recall processes are initiated, including
relevant reports to the regulatory authorities as per country-specific regulations
All feedback loops within Biocartis’ process model for measurement, analysis and improvement have been set up to interface
with the determination of corrective and preventive actions to eliminate the cause of potential nonconformities and feed the
continuous improvement process.
The suitability and effectiveness of our Quality Management System to ensure safe and effective products is reflected by our
solid on- market product performance: 1 product recall in 2022, 0 product recalls in 2021, 1 in 2020. For none of these cases,
patient harm was confirmed.
To ensure that every Idylla™ product is both effective and safe, we have established a systematic process designed to optimize
safety throughout the lifecycle of an Idylla™ product. Clinical trials provide important information on the clinical value of a
diagnostic test during the clinical management of a patient. They are essential to determine whether diagnostics are safe and
effective when used.
▪ We conduct each trial according to a comprehensive plan or protocol and Good Clinical Practice (GCP) guidelines that
regulators require in order to protect patient safety. The plan outlines the patient population to be tested, the type(s)
of specimens to be evaluated and the endpoint used to determine acceptable performance of the diagnostic test
when compared to other state of the art devices.
▪ After rigorous testing and data analysis by Biocartis biostatisticians, clinical, medical and regulatory professionals, the
information is shared with regulatory authorities, such as the US Food and Drug Administration, Competent
Authorities in the EU and local agencies from other countries to obtain marketing approval.
BIOCARTIS ANNUAL REPORT 2022 84
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.
To enhance the protection of personal data, Biocartis installed a wide range of technical and organizational measures and
implemented an Information Security Management System (ISMS) according to the ISO 27001 certification standard. The main
goal of the ISMS is to protect Biocartis’ information assets against all internal, external, deliberate, or accidental threats.
The ISMS aims to:
▪ Foster a company culture with a high level of information security awareness and maturity
▪ Assure and maintain a high level of compliance with business, legal, and contractual requirements, and data
protection regulations
▪ Receive from customers a high level of confidence and trust in Biocartis information security management practices
Our commitment to information security warrants that:
▪ Technical and organizational measures shall be put in place and appropriately kept up to date to protect information
assets, driven by business needs, in accordance with the reference controls as stated in the ISO 27001 standard
applicable to Biocartis
▪ Data protection requirements shall be captured and serve as input requirements to the design stage of each product.
▪ Information security awareness training shall be provided to employees and all relevant controls, policies, and
procedures shall be regularly communicated through team meetings and briefing documents
▪ Procedures shall be put into place to correct and prevent any deviations and information security incidents
Biocartis strives for a high standard in data protection by continually monitoring and improving the effectiveness and efficiency
of the ISMS. To this purpose, the following has been put in place:
▪ Risk assessments, risk treatment plans and the associated mitigating information security controls are reviewed on a
regular basis
▪ Information security objectives and related KPIs are defined and monitored regularly as part of management reviews
▪ Ideas for continuous improvement are proactively obtained and reviewed for implementation as part of management
reviews
▪ Employee awareness and training initiatives were set up including employee awareness campaigns such as the
sending of ‘mystery’ phishing emails and information security classroom trainings
▪ A disaster recovery procedure has been put in place
▪ In terms of third-party vulnerability analysis including simulated hacker attacks, Biocartis has performed several
penetration tests on the Idylla™ Console device and Idylla™ Explore web application. These activities have been
BIOCARTIS ANNUAL REPORT 2022 85
initiated in the context of a continuous effort to improve the cyber security and vulnerability status of Biocartis’
products and added value services
▪ Biocartis has worldwide insurance coverage for information security breaches or other cybersecurity incidents
From a governance point of view, Biocartis’ Information Security Officer manages the set-up and management of the ISMS and
reports to the Head of IT who reports directly to the Chief Operations Officer. In 2022, Biocartis obtained the ISO 27001
certification for the design, development, maintenance, service provision and support of the Idylla™ platform and associated
customer-facing software.. The scope includes Biocartis’ Belgian and US offices and relates to its commercial products, services
and support, covering both Biocartis’ cloud production environments used by customers and partners (‘primary assets’) as well
as Biocartis’ office infrastructure such as its network, systems, devices and applications (‘supporting assets’).
2020
2021
2022
Total number of personal data breaches
1
0
0
Total number of customers and employees
affected by company's personal data breach
No third-party
impact
N/A
N/A
In 2022, Biocartis continued the further fine-tuning of its information security processes, including monitoring, reporting and
awareness raising around the topic.
BIOCARTIS ANNUAL REPORT 2022 86
3.4. Employees
“In this new post-pandemic world of remote and hybrid working regimes, we continued to pivot our people
strategy to meet new challenges and keep our employees thriving.”
Susy Spruyt, Head of People & Organization Biocartis
People strategy
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 innovation and 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 2022, we further progressed our HR strategy with key developments in:
▪ Initiatives to propagate the company strategy and to embed it in day-to-day practices across the entire organization
▪ 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
▪ Adoption of a hybrid way of working within our organizational matrix structure
▪ Anchoring various wellbeing initiatives into our people strategy
▪ Streamlining the organizational structure to withstand the impact of the current economic environment
Diversity
With 420 employees of over 30 different nationalities across more than 20 countries at the end of 2022, 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
BIOCARTIS ANNUAL REPORT 2022 87
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 2022, the gender split across Biocartis remained relatively stable with 47% men and 53% women. In management positions we
counted 38% women, a slight increase from 37% in 2021.
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. Since the pandemic, Biocartis accelerated its transition to a
hybrid way of working, providing more flexible work options for our employees.
Gender wage gap
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 2022, the Biocartis employee
volunteering teams got together to serve soup,
desserts, or Tajine lunches on site in Mechelen for
the benefit of ’the Warmest Week’, a non-profit
project organized in Flanders, Belgium. Some of
the sportier colleagues also gathered to run a
locally organized ‘Warmathon’ on 22 December
2022.
BIOCARTIS ANNUAL REPORT 2022 88
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. 17 sessions were set up
in 2022
▪ For existing employees:
▪ In collaboration with a reputable business school, several initiatives were taken to enhance strategy
formulation and planning for execution at managerial level
▪ Through the Biocartis Academy, the company’s core learning & development program, we continued to offer
training programs with a focus 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
▪ 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 2022, 30 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. In 2022, more than
300 employees attended a variety of facilitator-led and e-learning trainings via the LMS platform
BIOCARTIS ANNUAL REPORT 2022 89
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.
Looking ahead at how work will continue to change, we further progressed the initiatives to support employee wellbeing based
on the pillars: My Body, My Mind, My Connections, My Environment.
Through the wellbeing program ‘My Health Partner’ we continued to offer a series of educational programs and workshops
focused on social, physical, and mental health, and covering specific topics such as nutrition, stress management, burnout, sleep
and professional development. In 2022 we participated to the Globetrotter Challenge, a well-rounded virtual experience, putting
the four pillars of My Body, My Mind, My Connections, My Environment at work for the good cause of planting trees with BOS+.
Biocartis also received the certificate of Pioneering Employer 2023 (“Baanbrekende Werkgever 2023”) through the completion
in 2022 of a learning path that was focused on hybrid working and sustainable mobility.
Flex income plan
In 2022, Biocartis continued to add new options to the Flex Income Plan (FIP) that was launched in 2021. By offering a Flex Income
Plan, employees have the possibility to tailor a part of their salary package to their personal healthcare and hybrid working needs.
Benefits added are primarily related to alternative mobility, multimedia and educational programs related to wellbeing.
Health & safety
Biocartis is committed to invest in a safe, healthy workplace, while operating in an environmentally responsible manner through
several tools & activities:
▪ The Biocartis Health Safety and Environmental (HS&E) Policy aims at compliance with HS&E regulatory requirements
and to be able to demonstrate our compliance at any time.
▪ Through a dynamic risk assessment, Biocartis strives to continuously reduce health and safety risks.
▪ Biocartis fosters an 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
▪ 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
BIOCARTIS ANNUAL REPORT 2022 90
In 2022:
▪ Biocartis invested into an internal HSE team consisting of 2 FTEs: one senior HSE Manager and one Safety Advisor.
Besides this, there is still support of external specialists in case a specific expertise is not available within the HSE
team, such as a company doctor, psychologist, environmental specialist, biosafety expert.
▪ A detailed review against Belgian safety law was performed. No major legal HS&E regulation breaches were found,
nor were any breaches reported during 2022.
▪ Biocartis employees followed several virtual H&S trainings, including basic rescue trainings, first-aid refreshment
trainings, fire safety & spill training and machine & electrical safety.
Four occupational accidents with minor injuries occurred in 2022. There were no lethal accidents or working accidents causing
disability. This translates into a severity rate of 0, which is a decrease versus 2021 and below average of our industry. A continued
effort during the monthly ‘walks & talks’ (Gemba walks) resulted in a significant increase of reporting on unsafe situations.
Findings are closely followed up to continuously improve safety.
KPIS
Workforce
Status as per 31 Dec
2020
2021
2022
Total number of employees (FTE)
366.3
407.1
420.2
Biocartis Group NV
21.0
23.5
23,9
Biocartis NV
300.9
341.8
347,2
Biocartis US, Inc.
44.4
39.2
46
Biocartis Italy srl
0
2.6
3,1
Total number of employees (FTE) by gender
366.3
407.1
420.2
Male
182.4 (50%)
201.9 (50%)
199.1 (47%)
Female
183.9 (50%)
205.2 (50%)
221.1 (53%)
Total number of employees (FTE) by level
56
383.8
427
414.3
Management positions
57
64.3
69.1
77.4
Other employees
319.5
357.9
336.9
Total share of women in management positions
43%
37%
38%
Total number of employees (FTE) by age group
366.3
407.1
420.2
Under 30
31.2
48
47
30-50
249.2
275.6
289.2
Over 50
85.9
83.5
84
Average age workforce
42.3
41.3
41.7
Average age in management positions
44.4
44.3
45.4
Total number of employees (FTE) by work
regime
383.8
427
414.3
Full time
355 (92%)
389 (91%)
381 (91%)
Part time
28.8 (8%)
38 (9%)
33.3 (8%)
Total number of new fixed employee hires
94
106
67
Total number of fixed employee departures
56
58
77
BIOCARTIS ANNUAL REPORT 2022 91
Training
2020
2021
2022
Total training hours followed by employees
(*)
15,842
18,630
Share of employees who benefited from a training
during the financial year (training ratio all employees)
(*)
95%
96%
Average number of training hours per employee
(*)
32
46
Share of employees who had an individual
engagement conversation
(*)
88%
90%
(*) 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)
Health & safety
2020
2021
2022
Absenteeism rate
(in % as nr of absenteeism days versus total working days)
4.25%
4.24%
4.63%
Accident frequency rate
(Number of lost time accidents x 1,000,000 / number of
hours worked, for fixed employees)
2.07
17.0
3.65
Accident severity rate
(Number of days lost to accidents or occupational diseases
x 1000 / number of hours worked, for fixed employees)
0.09
0.19
0
BIOCARTIS ANNUAL REPORT 2022 92
3.5. Climate change and environment
Climate change causes extreme natural events, deviations in temperatures and precipitation patterns, and rising sea levels.
Biocartis acknowledges it has a role to play in the reduction of its environmental footprint. The ongoing transition to a lower
carbon economy is also presenting Biocartis with opportunities while expanding its business of decentralized molecular
diagnostics solutions.
Climate change & environmental governance
At executive management level, climate change is under the leadership of our Chief Operations Officer who holds a management
oversight role in all environmental related matters and reports to the board when questions on climate change or environmental
related matters arise.
Climate change & environmental strategy and management
Biocartis’ aim is to provide a safe and healthy work environment for its employees by systematically identifying and managing
health, safety and environmental risks in its activities and proactively fostering and encouraging a culture of safe behavior.
Biocartis strives to make efficient use of natural resources and to minimize the environmental impact of its activities. This is
achieved through Biocartis’ climate change & environmental strategy which is currently focused on compliance with a set of
European, national and regional regulations covering the environmental impact of our products and their waste. In this respect,
Biocartis’ Environmental Management System ensures environmental compliance and keeps track of all activities reducing our
environmental footprint. Operational activities are led by Biocartis’ Head of HS&E and Facilities, supported by an external
environmental coordinator, who is responsible to stay up-to-date with all legislative changes, actions and results.
As a medical device company producing Idylla™ instruments and cartridges, Biocartis complies with the following environmental
directives addressing the environmental impact of its products and their waste:
▪ The RoHS
58
directive regarding the Restriction of Hazardous Substances in electrical and electronic equipment
▪ The WEEE directive
59
to improve the environmental management of electrical and electronic waste, contribute to a
circular economy and enhance resource efficiency
▪ The Battery directive to protect, preserve and improve the quality of the environment by minimizing the negative
impact of batteries and accumulators and waste batteries and accumulators
▪ The Packaging and packaging waste directive to improve recovery and recycling of packaging waste
▪ The REACH regulation which restricts the use of chemical substances that could have an impact on human health and
the environment
60
▪ The Contained Use Directive aimed at limiting contact of the environment with genetically modified and infectious
microorganisms
▪ The Biocidal Products Regulation (BPR, Regulation (EU) 528/2012) aimed at a sustainable management of biocides
and reduce the risk and impact of it on the environment and human and animal health
▪ The Waste Directive aimed at improving the recovery and recycling of waste
▪ The Energy Efficiency Directive aimed at a more efficient use of energy at all stages of the energy chain, from
production to final consumption
BIOCARTIS ANNUAL REPORT 2022 93
Biocartis performed detailed review against REACH and CLP Regulation. REACH Regulation (Regulation (EC) No 1907/2006 of the
European Parliament and of the Council of 18 December 2006 concerning the Registration, Evaluation, Authorization and
Restriction of Chemicals) aims to improve the protection of human health and the environment from the risks that can be posed
by chemicals, while enhancing the competitiveness of the EU chemicals industry. The CLP Regulation requires manufacturers,
importers or downstream users of substances or mixtures to classify, label and package their hazardous chemicals appropriately,
providing relevant safety information, before placing them on the market. No major non-compliances were found.
In 2022, Biocartis successfully adjusted its environmental permit for the rebuilt of the warehouse according to ‘VLAREM II - Order
of the Flemish Government of 1 June 1995 concerning General and Sectoral provisions relating to Environmental Safety’.
In 2022, no significant changes in the environmental legislation occurred that had an impact on Biocartis’ activities.
Operational management of climate change & environmental matters
Biocartis’ largest environmental impact results from (a) the use of energy and greenhouse gas emissions (GHG) caused by
cartridge manufacturing, and office occupancy, (b) waste associated with the production of cartridges, and (c) the use of water.
Energy
Scope: Biocartis NV, consisting of the company’s headquarters and the cartridge manufacturing activities in Mechelen, Belgium
(97% of total scope).
Description:
▪ Biocartis uses energy both for its cartridge production as well as its office activities.
▪ Due to the lack of individual energy meters in the different Biocartis buildings of the Mechelen campus, which are
often shared with other companies, a detailed split registration of energy use is not possible.
Actions and results in 2022:
▪ Energy use: Today, Biocartis’ electricity comes from 39% green and 61% grey energy sources.
▪ Measurement energy consumption: In August 2022, individual energy meters were installed in different Biocartis
buildings of the Mechelen campus. This will give us better understanding of consumption by enabling the
measurement of the effectiveness of implemented improvements, and by having a detailed understanding of the
consumption including the shared buildings.
▪ Energy efficiency: In 2022 Biocartis completed an energy efficiency audit on site in Mechelen. Suggested
improvements will be implemented during 2023.
Waste
Scope: Biocartis NV, consisting of the company’s headquarters and the cartridge manufacturing activities in Mechelen, Belgium
(97% of total scope)
Description:
▪ Biocartis’ waste streams come from its cartridge production, R&D labs as well as from its office activities.
▪ All waste is sorted into hazardous and non-hazardous waste:
BIOCARTIS ANNUAL REPORT 2022 94
▪ Hazardous waste comes from its cartridge production and R&D activities and consists of individual units of,
or cartridges filled with chemicals, medical waste and chemicals (solvents, acids, bases). Different types of
Idylla™ cartridges use a different mix of raw materials. All on-site hazardous waste is collected by certified,
external waste collectors.
▪ Non-hazardous waste consists of plastics, paper and carton, both from production activities (mainly packaging
from raw materials for cartridges) as well as office waste.
Actions and results in 2022:
In tons
2020
2021
2022
Hazardous waste
24.3
33.5
37.6
Non-hazardous waste
86.5
119.2
96.9
The year-on-year increase in waste is directly related to growing commercial activities and the resulting increased cartridge
production. The increase in hazardous and non-hazardous waste was particularly strong in 2021 because of the fire in the
warehouse facilities in the summer of 2021, and increased packaging waste related to the redesign and refurbishment of the
office space following the implementation of a hybrid way of working. The amount of 2022 is more in line with 2019 and 2020
years taking the increased production into account.
Water
Scope: Biocartis NV, consisting of the company’s headquarters and the cartridge manufacturing activities in Mechelen, Belgium
(97% of total scope)
Description:
▪ Biocartis’ main water use comes from office occupancy. Our cartridge production does not have any wet processes
and water is only used for cooling and air moisturizing of our manufacturing clean rooms. All water used is therefore
municipal water. This wastewater stream is transported through a separate sewer system to the Mechelen Noord
wastewater treatment plant.
▪ Other wastewater originating from production or R&D is collected and sent for further treatment to certified
professionals. The volumes are part of waste fraction reported in the waste section.
Actions and results in 2022:
m
3
/year
2020
2021
2022
Water use
1,611
1,620
1,297
Greenhouse Gas Emissions (GHG)
Scope: Biocartis NV, consisting of the company’s headquarters and the cartridge manufacturing activities in Mechelen, Belgium
(97% of total scope). No information is available on emissions from US locations.
Description:
▪ Biocartis’ main GHG emissions come from its use of gas and electricity.
▪ GHG emissions include emissions both from cartridge production as well as from office occupancy.
BIOCARTIS ANNUAL REPORT 2022 95
Actions and results in 2022:
In tons CO
2
2020
2021
2022
GHG emissions from
production and office
activities
137.9
144.2
111
GHG emissions from
employee business travel -
flights
256
171
560
After a decrease of GHG emissions in 2020 because of the pandemic, they slightly increased again in 2021 since more employees
came back to the office and cartridge production increased. Furthermore, employee travel decreased strongly in 2020 and in
2021 due to pandemic related travel restriction. In 2022 there was a shift in production from manufacturing line ML1 to the more
efficient manufacturing line ML2, leading to a reduction in shifts and thus less on-site occupancy.
Electric mobility
In 2021, Biocartis launched its electric mobility project with a first focus on electric bicycle leasing and the expansion of the
offering of reimbursement of kilometers travelled by (electric) bicycle, now also for employees that have a company car. This
resulted in a significant increase of 77,990 kilometers travelled by bicycle in 2022, or 190,706km compared to 112,716 km in
2021. Biocartis aims at gradually greening the Biocartis employee car fleet towards a 100% green fleet. The goal is to have a zero
emission for cars that are ordered from 1 January 2026. The following table provides the evolution of maximal allowed emissions,
according to WLTP norm, when ordering a new car in a specific year.
Year
Max CO
2
emission
(WLTP norm)
2022
100
2023
60
2024
40
2025
25
2026
0
BIOCARTIS ANNUAL REPORT 2022 96
3.6. Supply chain
Our suppliers are critical to delivering on our mission. Biocartis’ global supply chain consists of approximately 30 suppliers of
various materials, our manufacturing site in Mechelen (Belgium) as well several service providers and sub-contractors.
▪ Most of Biocartis’ direct suppliers are based in Europe, including its subcontractor who manufactures the Idylla™
instruments and console.
▪ In 2022, Biocartis had 1 direct supplier based in China. Additionally, our joint venture WondfoCartis is based in China.
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 remains a key area of focus and continuous improvement to minimize the
risk of disrupted supply and to ensure the continuity in the manufacturing and sale of Idylla™ instruments and cartridges.
Post the pandemic, Biocartis’ successful efforts to overcome the impact of globally disrupted supply and to ensure the continued
supply of Idylla
™
products to its customers included:
▪ Strengthening the governance around the internal sales and operations (S&OP) planning focusing on close alignment
of demand and supply
▪ Re-establishing inventory levels of raw materials and finished goods to ensure consistent supply to partners and
customers
▪ Installation of a supply chain monitoring system (OTIF, on time in full) to measure performance of supply to customers
▪ Working closely with main suppliers to further improve our ability to respond quickly to changing demand
BIOCARTIS ANNUAL REPORT 2022 97
Supplier risk assessments, evaluation and approval process
In accordance with quality requirements, Biocartis installed a rigorous Supplier Approval Process for its direct suppliers since the
start of Biocartis’ commercial activities. As part of the approval process of suppliers, Biocartis applies a risk-based approach to
screen on several criteria, with a high focus on quality, including the verification of ISO certificates, safety and compliance with
environmental legislation such as ROHS3 on the Restriction of Hazardous Substances or REACH legislation on the restriction of
chemicals and the European Directive on Waste Electrical and Electronical Equipment (WEEE). An evaluation of suppliers is
performed and reviewed together with the supplier.
Biocartis today has not set specific social or environmental targets with its suppliers but considers it business-critical to work with
suppliers who share our commitment to integrity. In 2023, Biocartis intends to extend its Supplier Approval Process and include
additional ethical and environmental criteria. Similarly, the Code of Conduct will be updated to a higher ethical standard, such as
the Modern Slavery Act.
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’ key 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 on-site or remotely. No critical observations were made during the past years.
Further key manufacturing & supply chain focus areas in 2022 included:
▪ Downscaling of the older manufacturing line ML1 in favor of the more efficient and automated high-throughput
cartridge manufacturing line ML2
▪ Securing the supply of one component of our Idylla™ system affected by the war in Ukraine
▪ Re-establishing the on time in full (OTIF) supply performance to our customers after the fire incident that occurred in
2021 and disrupted the manufacturing of cartridges for 2 months
▪ Establishing a cold chain kit distribution process for certain collaboration partners
BIOCARTIS ANNUAL REPORT 2022 98
1 At a glance
2 Strategy
3 Sustainability
4 Corporate governance report
5 Financial report
6 Glossary & bibliography
BIOCARTIS ANNUAL REPORT 2022 99
4.1. Introduction
During 2022, 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.
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100
4.2. Board of directors
Composition
The table below gives an overview of the members of the Company’s board of directors.
Name
Position
Start of mandate
End of term
Christian Reinaudo
Chairman, independent director
2018
2024
Herman Verrelst
(1)
Chief executive officer, executive director
2017
2025
Luc Gijsens
(2)
Non-executive, independent director
2018
2024
Ann-Christine Sundell
Non-executive, independent director
2018
2024
Christine Kuslich
Non-executive, independent director
2020
2024
Bryan Dechairo
(3)
Non-executive, independent director
2023
2024
(1) Permanently representing South Bay Ventures (SBV) BV; (2) Permanently representing Luc Gijsens BV; (3) Mr. Dechairo was appointed by the board of directors with effect as of 21 February 2023, replacing Mr. Roald Borré who
resigned as director with effect as of the same date. Mr. Dechairo’s appointment will be submitted for confirmation by the annual shareholders’ meeting which is to be held in May 2023. The annual shareholders’ meeting will resolve
on the duration of Mr. Dechairo’s mandate, upon proposal by the board of directors.
Christian Reinaudo joined the Company’s board of directors as independent chairman in May 2018. Mr. Reinaudo started his
career with Alcatel in 1978 at the research center at Marcoussis, France. In 1984, he joined Alcatel's cable activities where he
became responsible for research associated with fiber optics and cable for undersea applications. In 1997, he became president
of Alcatel's Submarine Networks Division. From 1999 to 2003, he was president of the Alcatel Optics Group, which comprises all
activities in terrestrial and submarine transmission networking and optoelectronic components. In 2003, he was appointed
president of Alcatel Asia Pacific and moved to Shanghai (China), where he stayed until 2006, also serving as vice chairman of the
board of directors of Alcatel Shanghai Bell, the Chinese joint venture between Alcatel and the Chinese government. In his latest
position at Alcatel, he was president Europe & North for Alcatel-Lucent and was responsible for the integration and transition
process during the merger of Alcatel with Lucent Technologies. Mr. Reinaudo joined Agfa-Gevaert, a leading e-health & digital
imaging solutions provider, as president of the Agfa HealthCare business group and member of the executive committee, on 1
January 2008. In 2010, Mr. Reinaudo was appointed CEO of Agfa-Gevaert (a position he held until January 2020) and became a
member of the board. Mr. Reinaudo is also member of the supervisory board of Domo Chemicals Holding NV.
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.
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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 on several boards and board committees, and 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.
Bryan Dechairo is the chief executive officer of Sherlock Biosciences, and also serves on its board of directors. He has more than
25 years of experience developing and commercializing revenue generating clinical innovations that improve patient lives. Prior
to joining Sherlock Biosciences, Mr. Dechairo served as executive vice president of clinical development at Myriad Genetics,
where he oversaw the development portfolio, delivering business-critical evidentiary data for value-based reimbursement and
market acceptance of commercial and novel diagnostic products across six business units globally. Before joining Myriad Genetics,
he was chief medical officer, chief scientific officer and senior vice president of research and development at Assurex Health,
which was acquired by Myriad in 2016. During his extensive career, Mr. Dechairo held roles of increasing responsibility at Medco,
Pfizer, Oxagen, Sequana and Roche, where he established a proven track record of funding and scaling businesses from venture
backed start-ups to profitable fortune 50 public companies. He also authored more than 50 academic and research-based
publications, and earned a Ph.D. in Common Complex Human Genetics from the Institute of Child Health at University College
London and a B.A. in Integrative Biology from the University of California, Berkeley.
The business address of each of the directors for the purpose of their mandate is Generaal de Wittelaan 11B, 2800 Mechelen,
Belgium.
Procedure for the appointment of directors
The directors are appointed for a term of maximum four years by the general shareholders’ meeting. They may be re-elected for
a new term. When a legal entity is appointed as director, it must appoint a permanent representative charged with the
performance of the mandate in the name and for the account of the legal entity-director. This permanent representative must
be a natural person. In the event the office of a director becomes vacant, the remaining directors can appoint a successor
temporarily filling the vacancy until the next general shareholders’ meeting. The general shareholders’ meeting can in principle
dismiss the directors at any time.
Changes to the composition of the board of directors
The annual shareholders’ meeting held on 13 May 2022 reappointed Ann-Christine Sundell, Christine Kuslich, and Luc Gijsens BV,
permanently represented by Luc Gijsens, as independent directors, and reappointed Roald Borré as non-executive director, for a
term of two years, up to and including the closing of the annual shareholders' meeting to be held in 2024 which will have decided
upon the financial statements for the financial year ended on 31 December 2023. The shareholders’ meeting also confirmed the
appointment of South Bay Ventures (SBV) BV, permanently represented by Herman Verrelst, as executive director for a term of
three years up to and including the closing of the annual shareholders' meeting to be held in 2025 which will have decided upon
the financial statements for the financial year ended on 31 December 2024.
BIOCARTIS ANNUAL REPORT 2022
102
Diversity
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.
Name
Functional background and expertise
Gender
Age
Nationality
Christian Reinaudo
E-health & digital imaging solutions
Managing companies
International business
Male
68
France
Herman Verrelst
(1)
Molecular diagnostics
Software solutions
Entrepreneurship
Male
49
Belgium
Luc Gijsens
(2)
Finance
Capital markets
Corporate and investment banking
Male
69
Belgium
Ann-Christine Sundell
Life sciences
Diagnostics
Strategy and operations
Female
58
Finland
Christine Kuslich
Molecular diagnostics
Oncology & Infectious disease
Strategy & investment
Female
55
USA
Bryan Dechairo
(3)
Business and R&D strategy
Molecular Diagnostics
Market Access and Reimbursement
Male
50
USA
(1) Permanently representing South Bay Ventures (SBV) BV; (2) 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.
Gender
Nationality
Age
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103
Activity report
In 2022, the board of directors held twelve 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 2022 was 100%, save for Roald Borré
who was excused during one board meeting (illness).
During the meetings of the board of directors, the board among others discussed Biocartis’ financing strategy and the
comprehensive refinancing transactions which were announced on 1 September 2022. The board also reviewed Biocartis’
strategy, operations, commercial performance and ongoing proprietary and partner menu development. It discussed business
development and strategic opportunities and the status of ongoing collaborations, as well as regular updates on the quality plan
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. Moreover, the board discussed the regular updates of the
financial performance and the budget for financial year 2023, as well as the Company’s long-term financial plan. 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.
Other board mandates
Apart from their mandate within Biocartis, the directors of the Company held the following board mandates (directly or via a
management company) on 31 December 2022:
Christian Reinaudo
Agfa Gevaert NV
Domo Chemicals Holding NV
Herman Verrelst
(1)
South Bay Ventures (SBV) BV
Opdorp Finance BV(1)
Heran Partners BV
Icometrix NV(2)
Medvia VZW
Luc Gijsens
(2)
Luc Gijsens BV
Arvesta BV
PMV NV
KMDA VZW
KMDA NV
Global Rental Properties NV
Ann-Christine Sundell
Raisio Oyj
Medix Biochemica Group Oy
Revenio Oyj
Actim Oy
Acmer Ab Oy
ÅU Media Ab
SynthticMR AB
Christine Kuslich
N/A
Bryan Dechairo
Sherlock Biosciences Inc.
(1) Representing SBV NV, (2) Representing Heran Partners BV.
BIOCARTIS ANNUAL REPORT 2022
104
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 once
in 2022 during the meeting held on 22 February 2022. The extract of the minutes of this meeting is as follows:
“Following the recommendations of the Remuneration and Nomination Committee, the Board discussed the goals for the CEO
relating to performance year 2021 (consisting for 50% of the 1-year targets defined in the beginning of 2021, for 25% of the 2-
year target taking the form of phantom stock, and for 25% of the 3-year targets defined in 2019), and assessed the degree to
which these goals were achieved. The Board resolved that overall 63.9% of the 1-year targets was achieved (corresponding to a
pay-out of EUR 59,906), and 38% of the 3-year targets was achieved (corresponding to a pay-out of EUR 17,813). The Board further
resolved that the 2-year target taking the form of phantom stock resulted in a pay-out of EUR 42,337.
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 2021. The Board considered that overall 63.9% of the KPIs were achieved. Therefore, after discussion, the
Board resolved to approve that 107,033 performance-based share options under the share option plan 2017 relating to the
performance year 2021 have vested.
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 2022. For the 1-year target (for 2022), the proposal is
to use the below KPIs categories, each time consisting of the specific KPIs as proposed by the Remuneration and Nomination
Committee:
▪ ‘Realize a strong financial performance’ as KPI category (consisting of KPIs relating to growth of product revenue,
gross margin improvement on product sales and capping the operating cash burn) having a total weight of 40%
(10%-10%-20%).
▪ For growth of product revenue, a minimum threshold of 85% must be achieved. In case of achievement of this
KPI of 85%, 85% 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 the maximum amount payable
shall be equal to 125%. In case of an achievement of less than 85% of this KPI, no variable remuneration to which
such KPI relates shall be payable.
▪ For gross margin improvement on product sales, a minimum threshold of 73% must be achieved. In case of
achievement of this KPI of 73%, 73% 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 the maximum
amount payable shall be equal to 125%. In case of an achievement of less than 73% of this KPI, no variable
remuneration to which such KPI relates shall be payable.
▪ For capping of the operating cash burn, a minimum threshold of 122% of the target must be achieved (taking into
account that the operating cash burn target is a negative number). In case the operating cash burn is 122% of the
target amount, 100% of the percentage of the variable remuneration will be payable, with 1% extra being
payable for every 1% that the operating cash burn is lower than 122% of the target. The maximum amount
payable shall be equal to 147% of the target variable remuneration relating to this KPI, namely if the operating
cash burn equals 75% of the target operating cash burn.
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105
▪ ‘Achieve commercial success’ as KPI category (consisting of KPIs relating to commercial cartridge volume growth
and generating a positive financial contribution to operational burn rate from the partner business) having a
total weight of 20%. For the KPI relating to commercial cartridge volume growth, a minimum threshold of 90%
must be achieved. In case of achievement of this KPI 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.
▪ ‘Execution and delivery on projects in support of financial and commercial growth and business expansion and
customer satisfaction’ as KPI category having a total weight of 12.5%. The variable remuneration payable for
project-based KPIs can be between 0% and 150% depending on (timing of) project delivery.
▪ ‘Developing and running a highly performing manufacturing and supply capability’ as KPI category having a total
weight of 12.5%.
▪ ‘Advancement of organizational capabilities’ as KPI category having a total weight of 15%.
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 2022 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 2022.
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106
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.
Audit committee
Composition
According to Belgian company law, the audit committee consists of non-executive directors only, at least one member of the
audit committee must be an independent director, the members of the audit committee must have a collective expertise relating
to the activities of the Company, and at least one member of the audit committee must have the necessary competence in
accounting and auditing. The following three directors are members of the audit committee: Luc Gijsens BV, permanently
represented by Luc Gijsens (chairman), Christian Reinaudo and Bryan Dechairo (who replaced Mr. Roald Borré as of 21 February
2023). The members of the audit committee have adequate expertise in financial matters to discharge their functions and have
a collective expertise relating to the activities of the Company. The members of the audit committee are competent in accounting
and auditing as evidenced by their previous and current roles.
Activity report
In 2022, the audit committee held six meetings which were attended by all members, except for one meeting during which Mr.
Borré was excused (illness). During its meetings, the audit committee among others reviewed and discussed the financial
reporting process, the internal control processes and the privacy program management. The audit committee assessed the
declarations regarding internal control and risk management in the annual report 2021. It also discussed the cooperation with
the external auditor of the Company, Deloitte Bedrijfsrevisoren BV, represented by Nico Houthaeve. The audit committee
approved certain non-audit services which were provided by the external auditor, among others relating to the comprehensive
refinancing transactions which were announced on 1 September 2022. The external auditor attended the meetings of the audit
committee that reviewed the full year and half year results and reports. It also presented the audit plan 2022 during the last
meeting of the audit committee held in 2022. The audit committee reported systematically to the board of directors and ensured
the co-operation of the executive management and the finance department of the Company where required.
Remuneration and nomination committee
Composition
According to Belgian company law, the remuneration and nomination committee consists of non-executive directors only, of
which a majority must be independent directors. The committee has the required expertise in terms of remuneration policy. The
remuneration and nomination committee consists of three directors: Christian Reinaudo (chairman), Ann-Christine Sundell and
Christine Kuslich. All members of the remuneration and nomination committee are independent directors. The chief executive
officer participates to the meetings of the remuneration and nomination committee in an advisory capacity each time the
remuneration of another member of the executive management is discussed.
Activity report
In 2022, 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, lead the search for open senior leadership
positions, discussed board composition, discussed and approved the achievement of the 2021 company goals and related variable
remuneration of the executive management, and set the 2022 company goals and objectives (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 succession
BIOCARTIS ANNUAL REPORT 2022
107
planning, wellbeing of the workforce and health and safety at work. Moreover, it 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 2021 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.
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4.4. Executive management
Composition
The executive management is composed of the CEO, CFO and COO.
(1) Permanently representing South Bay Ventures (SBV) BV; Permanently representing Marcofin BV; (2) Permanently representing Scmiles BV.
Herman Verrelst is the chief executive officer (CEO) of the Company. See his biography under ‘board of directors’.
Jean-Marc Roelandt is a senior executive with an established track record of more than 25 years as Chief Financial Officer in
globally active publicly listed companies. With a focus on M&A, capital market transactions and the implementation of adequate
financial management infrastructure in dynamic and fast-growing companies, he built up a solid expertise in various industries.
Prior to joining Biocartis, he was Chief Financial Officer of MDxHealth, a multinational healthcare company that provides
actionable genomic information to personalize the diagnosis and treatment of cancer. Mr. Roelandt holds a master’s Degree in
Applied Economics from the University of Ghent (Belgium).
Piet Houwen is the chief operating officer (COO). He has more than 29 years of experience in various operational and general
management roles. Piet Houwen has a strong track record in manufacturing, process engineering, project and people
management. Mr. Houwen has gained broad operational experience in dynamic international environments, including in fast
moving consumer goods, food manufacturing, biopharmaceuticals and consulting. Prior to joining Biocartis, Piet Houwen was
chief operations officer at Ablynx and prior to that, he held global roles for Sanofi/Genzyme and Janssen Pharmaceutica (part of
Johnson & Johnson family of companies) where he was active in pharmaceutical manufacturing of large and small molecules,
stent coating and medical devices. Piet Houwen holds a Master’s Degree in Mechanical Engineering from the Delft University of
Technology (The Netherlands).
The business address of each of the members of the executive management for the purpose of their mandate is Generaal de
Wittelaan 11B, 2800 Mechelen, Belgium.
Diversity
End 2022, the executive management consisted of the CEO, CFO and COO. The board values diversity as a key business driver and
focuses on a diverse set of skills and inclusive leadership throughout the Company when composing the executive management.
There were no changes in 2022 as compared to 2021 in this respect. The executive management is surrounded by a diverse senior
and middle management team. More information on this can be found under Part 3, sustainability, section 3.4.
Name
Age
Function
Herman Verrelst
(1)
49
Chief executive officer (CEO)
Jean-Marc Roelandt
(2)
58
Chief financial officer (CFO)
Piet Houwen
(3)
55
Chief operating officer (COO)
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4.5. Remuneration report
Introduction
This remuneration report provides an overview of the key aspects of the remuneration of Biocartis’ directors and members of
the executive management in 2022. Following a clear positive vote by Biocartis’ shareholders on the remuneration report of 2021
and the Biocartis remuneration policy, the changes to the remuneration of the directors and members of the executive
management in 2022 as compared to 2021 have been kept to a minimum. This remuneration report must be read together with
Biocartis’ remuneration policy which can be found on its website, as well as with the performance of Biocartis in 2022 as set out
in detail in this annual report. In 2022, there were no deviations from the remuneration policy.
The remuneration of the directors and members of the executive management, and in particular the goals and objectives of the
members of the executive management determined to evaluate their variable remuneration, as explained in more detail below,
have been established in order to support the Company’s long-term performance as it focuses on the key metrics to achieve such
long-term performance.
Remuneration of the directors
Principles
The remuneration of the non-executive directors is composed of a fixed fee and an attendance fee. The amount of such fees was
set by the annual shareholders’ meeting. The CEO, who is also a director of the Company, is remunerated for his executive
management mandate only, and not for his director mandate.
Annual fixed fees:
▪ Chairperson of the board: EUR 36,000
▪ Chairperson of the audit committee: EUR 18,000
▪ Chairperson of the remuneration and nomination committee: EUR 14,000
▪ Other non-executive directors: EUR 12,000
Attendance fees: In addition to the annual fixed fees mentioned above, each non-executive director receives an attendance fee
of EUR 3,000 per regular meeting of the board of directors or EUR 1,500 per ad hoc board meeting with a more limited agenda
(to be increased, as the case may be, with a fee for travel time of EUR 1,500 for Ann-Christine Sundell and EUR 2,500 for Christine
Kuslich per meeting of the board attended in person), EUR 1,000 per meeting of the audit committee attended by the director
who is a member of such committee, and EUR 500 per meeting of the remuneration and nomination committee attended by the
director who is a member of such committee.
No share-based awards: As from 1 January 2020, the Company no longer grants share options to non-executive directors.
However, certain directors do hold share options (taking the form of subscription rights, formerly called warrants) granted to
them under the 2018 Plan (see below).
The board of directors, upon recommendation of the remuneration and nomination committee, decided to deviate from
provision 7.6 of the Belgian Code on Corporate Governance 2020, which provides that shares of the Company should be granted
to non-executive directors as part of their remuneration. The reason for this deviation is that the Company currently does not
own treasury shares, and is currently legally not in a position to acquire treasury shares.
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The Company also reimburses the directors for reasonable out of pocket expenses (including travel expenses) incurred while
performing their mandate.
Remuneration of the members of the board of directors in 2022
Based on what is set out above, the remuneration of the directors for the performance of their director mandate in 2022 is as
follows
(1)
:
Name of Director
Fixed remuneration
Variable remuneration
Extra-
ordinary
items
Total
remune-
ration
Proportion of
fixed and
variable
remuneration
Fixed fees
(2)
Attendance
fees
(3)
Fringe
benefits
One-year
variable
Multi-year
variable
Christian
Reinaudo
50,000
34,000
0
0
0
0
84,000
Fixed: 100%
Variable: 0%
Luc Gijsens BV,
repr. by Luc
Gijsens
18,000
31,500
0
0
0
0
49,500
Fixed: 100%
Variable: 0%
Ann-Christine
Sundell
12,000
35,500
0
0
0
0
47,500
Fixed: 100%
Variable: 0%
Christine Kuslich
12,000
35,500
0
0
0
0
47,500
Fixed: 100%
Variable: 0%
Roald Borré
(4)
12,000
30,500
0
0
0
0
42,500
Fixed: 100%
Variable: 0%
(1) Amounts mentioned are gross amounts in Euro.
(2) Amounts mentioned in this column relate to the directors’ annual fixed fees.
(3) Amounts mentioned in this column relate to the attendance fees of the members of the board and its committees.
(4) Mr. Borré renounced his remuneration as director and member of the audit committee of the Company, and indicated that these amounts are to be paid to charity. Mr. Borré resigned from the board with effect as of 21 February
2023, and was replaced by Mr. Dechairo with effect as of the same date.
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 2022:
Name of
Director
The main conditions of share option plans
Information regarding the reported financial year
Opening
balance
During the year
(2)
Closing
balance
Specification
of plan
Award date
Vesting
date
(1)
End of
holding
period
Exercise
period
Strike
price
Share
options
held (of
which
vested)
Share
options
awarded
Share
options
vested
Share
options
held (of
which
vested)
Christian
Reinaudo
2018 Plan
10/09/2018
1/3rd in
each of
2019,
2020
and
2021
N/A
1/1/2022 –
9/9/2025
EUR
11.93
15,000
(15,000)
0
0
15,000
(15,000)
Luc Gijsens
BV, repr. by
Luc Gijsens
2018 Plan
10/09/2018
1/2nd in
each of
2019
and
2020
N/A
1/1/2022 -
9/9/2025
EUR
11.93
10,000
(10,000)
0
0
10,000
(10,000)
Ann-
Christine
Sundell
2018 Plan
10/09/2018
1/2nd in
each of
2019
and
2020
N/A
1/1/2022 -
9/9/2025
EUR
11.93
10,000
(10,000)
0
0
10,000
(10,000)
BIOCARTIS ANNUAL REPORT 2022
111
Christine
Kuslich
N/A
N/A
N/A
N/A
N/A
N/A
0
0
0
0
Roald Borré
N/A
N/A
N/A
N/A
N/A
N/A
0
0
0
0
(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) During 2022, no share options were exercised or became null and void for any reason.
Remuneration of the members of the executive management
Principles
The remuneration of the members of the executive management consists of the following remuneration components:
▪ Annual fixed cash remuneration
▪ Non-deferred short-term variable remuneration (cash bonus)
▪ Deferred short-term variable remuneration (since 2020 in the form of phantom stock)
▪ Long-term variable remuneration (share options)
▪ Certain other components
The Company’s remuneration policy provides that as from 31 December 2024 the members of the executive management must
hold a number of shares in the Company which is equivalent to at least one year fixed remuneration for the CEO, and 50% of one
year fixed remuneration for the CFO and COO. The value of the shares held is calculated based on the average closing price of
the Company’s share on Euronext Brussels during the 30-day period prior to 31 December of the previous calendar year (i.e.,
2022). As of 31 December 2022, Mr. Verrelst held 100,000 shares in the Company with a value of approximately 57,000 euro.
Remuneration of the members of the executive management in 2022
Total Remuneration: The total remuneration of the members of the executive management in 2022 is as follows
(1)
:
Name of
Executive
Fixed remuneration
Variable remuneration
Extraordinary
items
Pension
expense
Total
remuneration
Proportion of
fixed and
variable
remuneration
Base
salary
Fees
Fringe
benefits
One-year
variable
(2)
Multi-
year
variable
(3)
SBV BV,
repr. by
Herman
Verrelst
(CEO)
375,000
0
0
61,781
0
0
0
436,781
Fixed: 85.9%
Variable: 14.1%
Other
executives
(CFO and
COO)
678,775
0
0
124,904
0
0
0
803,679
Fixed: 84.5%
Variable: 15.5%
(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. The value of any share options vested in 2022 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 2022.
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
BIOCARTIS ANNUAL REPORT 2022
112
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 2022
(1)
.
Name of
Executive
Description of the
performance criteria
Relative
weighting of
the
performance
criteria
Information on Performance Targets
Measured (weighted)
performance and total
remuneration
Minimum
threshold
performance
Maximum
performance
SBV BV, repr. by
Herman Verrelst
(CEO)
Financial performance
(consisting of KPIs
relating to growth of
product revenue, gross
margin improvement
on product sales and
capping the operating
cash burn)
40%
(10%-10%-20%
respectively)
For growth of
product revenue:
85%.
For gross margin
improvement on
product sales: 73%
For capping the
operating cash burn
(taking into account
that this is a
negative number):
122%.
For growth of product
revenue and gross
margin improvement on
product sales: 125%.
For capping the
operating cash burn
(taking into account that
this is a negative
number): 147% (i.e., if
amount equals 75% of
target operating cash
burn).
28.1%
Commercial success
(consisting of KPIs
relating to commercial
cartridge volume
growth, as well as
generating a positive
financial contribution to
operational burn rate
from the partner
business)
20%
For commercial
cartridge volume
growth: 90%
For positive financial
contribution to
operational burn
rate from the
partner business:
N/A
For commercial cartridge
volume growth:
200%
For positive financial
contribution to
operational burn rate
from the partner
business: N/A
0%
Execution and delivery
on projects in support
of financial and
commercial growth and
business expansion and
customer satisfaction
12.5%
N/A
150%
11.3%
Development and
running a highly
performing
manufacturing
capability
12.5%
N/A
100%
13.7%
BIOCARTIS ANNUAL REPORT 2022
113
Advancement of
organizational
capabilities
15%
N/A
100%
12.8%
Total weighted
performance: 65.9%
%, corresponding to
EUR 61,781
Other executives (CFO
and COO)
Company goals account for 80% of the non-deferred short-term variable remuneration of these
executives, for which the same mechanism as for the CEO (see above) applies. The other 20% of the non-
deferred short-term variable remuneration of these executives is linked to individual goals of the relevant
executives.
EUR 72,929
(1) Amounts mentioned are gross amounts in Euro.
The table below provides an overview of the total deferred short-term variable remuneration for 2022
(1)
.
Name of
executive
Description of the
performance criteria
Relative
weighting of
the
performance
criteria
Information on Performance
Targets
Measured
performance and
total remuneration
Minimum
threshold
performance
Maximum
performance
SBV BV, repr. by
Herman Verrelst
(CEO)
2-year KPIs (set in 2021)
in the form of phantom
stock
N/A
50%
150%
Total pay-out: 0%,
corresponding to
EUR 0
3-year KPIs (set in 2020)
in the form of phantom
stock
N/A
50%
150%
Total pay-out 0%,
corresponding to
EUR 0
Total weighted
pay-out: 0%,
corresponding to
EUR 0
Other executive
management (CFO
and COO)
2-year KPIs (set in 2021)
in the form of phantom
stock
N/A
50%
150%
Total payout: 0%,
corresponding to
EUR 0
3-year KPIs (set in 2020)
in the form of phantom
stock
N/A
50%
150%
Total pay-out 0%,
corresponding to
EUR 0
Total weighted
pay-out: 0%,
corresponding to
EUR 0
(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 2022:
BIOCARTIS ANNUAL REPORT 2022
114
Name of
Executive
The main conditions of share option plans
Information regarding the reported financial year
Opening
balance
During the year
(1)(2)
Closing balance
Specification
of plan
Award
date
Vesting
date
End of
holding
period
Exercise
period
Strike
price
Share
options
held (of
which
vested)
(3)
Share
options
awarded
Share
options
vested
Share options
held (of which
vested)
SBV BV,
repr. by
Herman
Verrelst
2017 Plan
11-09-
2017
2018-
2021
N/A
1/1/2021
–
11/9/2022
EUR
9.92
1,151,898
(1,151,898
)
0
0
0
2020B Plan
30/4/20
20
1/1/202
4
N/A
1/1/2024 -
29/4/2027
EUR
4.18
300,000
(0)
0
0
300,000 (0)
2020B Plan
27/4/20
21
1/1/202
5
N/A
1/1/2025
–
26/4/2028
EUR
4.45
60,000 (0)
0
0
60,000 (0)
Marcofin BV,
repr. by
Jean-Marc
Roelandt
2020B Plan
30/4/20
20
1/1/202
4
N/A
1/1/2024 -
29/4/2027
EUR
4.18
100,000
(0)
0
0
100,000 (0)
2020B Plan
27/4/20
21
1/1/202
5
N/A
1/1/2025
–
26/4/2028
EUR
4.45
30,000 (0)
0
0
30,000 (0)
Scmiles BV,
repr. by Piet
Houwen
2018 Plan
9/5/201
9
2020-
2023 (4)
N/A
1/1/2023
–
8/5/2026
EUR
11.93
65,000
(44,687)
0
16,250
(EUR
38,025)
65,000
(60,937)
2020B Plan
30/4/20
20
1/1/202
4
N/A
1/1/2024
–
29/4/2027
EUR
4.18
50,000 (0)
0
0
50,000 (0)
(1) 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 certain share options held by
the members of the executive management is above the current share price of the Company (see column 7 of the table).
(2) During 2022, no share options were exercised by any members of the executive management. All share options held by Mr. Verrelst under the 2017 plan expired and became null and void.
(3) The amount of share options mentioned in this column relates to the total amount initially awarded minus any share options which were already exercised or became null and void before 1 January 2022.
(4) These share options awarded under the 2018 Plan vest as follows: 25% of the share options vest on March 30 of the year following the year in which the award occurred, and 6.25% of the share options vest at the end of each
subsequent calendar quarter.
Yearly changes in remuneration and performance of Biocartis
The chart below shows the evolution in the performance of Biocartis over the past five years, expressed by way of key
performance indicators which were used in the relevant period for determining the variable remuneration of the executive
management.
BIOCARTIS ANNUAL REPORT 2022
115
(1) Gross margin is defined as total operating income less cost of sales.
(2) Product related gross margin is defined as product sales and system service income less cost of sales.
(3) Cash burn is defined as operating and investing cash flow.
(4) Share price is calculated as the average of the share price of the Company in the period between 1 December and 30 December of the relevant year (in line with the relevant share price calculation under the phantom stock plan).
The chart below shows the changes in the remuneration of the directors and the members of the executive management and the
changes in the average remuneration of the employees of Biocartis over the past five years.
The average remuneration of the employees (for the avoidance of doubt, excluding directors and members of the executive
management) is calculated based on the total remuneration as of 31 December of the relevant year for the employees of Biocartis
BIOCARTIS ANNUAL REPORT 2022
116
Group NV, Biocartis NV and Biocartis US Inc. The total remuneration of the employees includes base remuneration, short term
variable remuneration (bonus plan) and benefits (such as pension plan, company car, commuting allowances, disability insurance
and health insurance).
It is to be noted that over the past five years the composition of the workforce (e.g., relative weight of the number of manual
workers versus cognitive workers, establishment of a US workforce) and the changes in the composition of the executive
management had an impact on the average remuneration evolution as shown in the above. For consistency of the calculations
over the years, only the members of the executive management as it was composed in 2021 (i.e., CEO, CFO and COO) have been
taken into account, it being understood that the role of COO was only created in April 2019. Share options are excluded from the
calculations. The increase in director remuneration can be explained by the decision of the annual shareholders’ meeting of 2021
in the framework of the COVID-19 pandemic to set the attendance fee for the regular Board meetings (irrespective of whether
such meetings are held physically or virtually) to EUR 3,000, whereas before that shareholder decision a distinction was made
between the attendance fees payable for physical and virtual Board meetings. Certain directors also receive a fee for travel time,
as approved by the Company’s shareholders’ meeting. As more directors are travelling from outside of Belgium, fees are
increasing. For more detailed information on the remuneration of the directors and the members of the executive management
over the past five years, reference is made to the remuneration reports as included in the Company’s annual reports over the
past five years.
Pay ratio
The ratio between the highest remuneration of the members of executive management and the lowest remuneration (in full-
time equivalent) of Biocartis’ employees amounts to 10 to 1. Share options are excluded from the calculations.
Severance payments for departing members of the executive Management
No members of the executive management have left Biocartis in 2022.
BIOCARTIS ANNUAL REPORT 2022
117
4.6. Share capital and shares
Issue of shares by the company in 2022
On 1 January 2022, the share capital of the Company amounted to EUR 575,456.63, represented by 57,545,663 shares. In the
course of 2022, shares were issued at the following occasions:
▪ On 6 September 2022, 810,734 new shares were issued to certain funds and accounts managed or advised by
Highbridge Capital Management LL and to certain funds managed or advised by Whitebox Advisors LLC (together the
“Lenders”) to settle the fee payable by the Company to Lenders for certain backstop commitments provided by them
in connection with the recapitalization transactions which were announced by the Company on 1 September 2022;
▪ On 27 October 2022 and 4 November 2022, a certain portion of the receivables due by the Company to the Lenders
under the senior secured convertible term loan entered into with the Lenders on 1 September 2022 was contributed
in kind against issuance of, in the aggregate, 228,234 shares;
▪ On 2 December 2022, the Company issued 33,476,932 shares following the successful completion of a capital increase
through the offering of new shares with extra-legal preferential rights for existing shareholders of the Company;
▪ On 16 December 2022, 928,136 new shares were issued as a result of the completion of the mandatory conversion
of 10% of the principal amount outstanding under the Company's 4.00% convertible bonds due 2027 and the
Company's 4.50% second lien secured convertible bonds due 2026.
On 14 November 2022, the extraordinary shareholders’ meeting of the Company resolved to increase the capital of the Company
in an amount of EUR 43,974,595.37 without issuance of new shares by incorporating a part of the issuance premium into the
capital of the Company, and immediately thereafter to decrease the capital of the Company in the same amount by way of
incorporation of a part of the losses incurred.
Consequently, on 31 December 2022, the share capital of the Company amounted to EUR 929,896.99, represented by 92,989,699
shares.
An overview of the major shareholders of the Company on 31 December 2022 based on the transparency notifications received
until that date can be found in the section ‘Major Shareholders’ under the chapter ‘Share and share capital. The Company is not
aware of any shareholders’ agreements with respect to the Company.
Number and form of shares of the company
Of the 92,989,699 shares of the Company outstanding at 31 December 2022, 47,931 were registered shares and 92,941,768 were
dematerialized shares. All shares belong to the same class and are freely transferable. All shares are issued and fully paid-up.
Rights attached to shares of the company
Each share in the Company (i) entitles its holder to one vote at the general shareholders’ meetings, (ii) represents an identical
fraction of the Company’s share capital and has the same rights and obligations, and shares equally in the profits and losses of,
the Company, and (iii) gives its holder a preferential subscription right to subscribe for new shares, convertible bonds or
subscription rights in proportion to the part of the share capital represented by the shares already held. The preferential
subscription right can be restricted or cancelled by a resolution approved by the general shareholders’ meeting, or by the board
of directors subject to an authorization of the general shareholders’ meeting, in accordance with the provisions of Belgian
company law and the Company’s articles of association. Pursuant to Article 11 of the articles of association, the exercise of the
BIOCARTIS ANNUAL REPORT 2022
118
voting rights of all shares owned by the relevant shareholder are suspended if and as long as the board of directors calls for the
payment of shares which are not fully paid-up and such calls have not been performed by such shareholder. However, all shares
in the Company are currently fully paid-up. Pursuant to Article 12 of the articles of association, the Company may suspend all
rights attached to a security when such security is held by more than one person, until such time as one sole person has been
identified to the Company as the holder of the security.
Subject to certain exceptions, no shareholder may cast a greater number of votes at a general shareholders' meeting of the
Company than those voting rights that such shareholder has notified to the Company and the Belgian Financial Services and
Markets Authority ('FSMA'), in accordance with the applicable rules laid down in the Belgian Law of 2 May 2007 on the disclosure
of major shareholdings, at least 20 calendar days prior to the date of the general shareholders' meeting. In general, pursuant to
the aforementioned Law of 2 May 2007 and the Company's articles of association, a notification to the Company and the FSMA
is required by all natural and legal persons in each case where the percentage of voting rights in the Company held by such
persons reaches, exceeds or falls below the threshold of 3%, 5%, 10%, and every subsequent multiple of 5%, of the total number
of voting rights in the Company. Furthermore, in certain instances, voting rights can be suspended by a competent court or by
the FSMA.
Right of the board of directors to increase the share capital of the company
On 4 June 2021, the general shareholders’ meeting renewed the authorization to the board of directors to increase the share
capital of the Company within the framework of the authorized capital. Such authorization was granted with a maximum of 75%
of the share capital at the time of the convening of the shareholders' meeting granting such authorization (i.e., EUR 431,592.47).
The general shareholders’ meeting further decided that the board of directors, when exercising its powers under the authorized
capital, is authorized to restrict or cancel the statutory preferential subscription rights of the shareholders (within the meaning
of Belgian company law). This authorization includes the restriction or cancellation of the preferential subscription rights for the
benefit of one or more specific persons (whether or not employees of the Company or its subsidiaries). The authorization is valid
for a term of five years as from the date of the publication of the authorization in the Annexes to the Belgian State Gazette
(Belgisch Staatsblad), i.e., until 22 June 2026. The board used its authorization with respect to 1,038,968 shares in 2022, resulting
in a remaining authorization for the board to issue 42,120,279 shares.
Modifications to the articles of association and share capital
Amendments to the articles of association, other than certain specific amendments such as an amendment of the Company’s
purpose, require the presence or representation of at least 50% of the share capital of the Company at an extraordinary
shareholders' meeting to be held before a notary public, and a majority of at least 75% of the votes cast at such meeting. An
amendment of the Company’s corporate purpose requires the approval of at least 80% of the votes cast at an extraordinary
shareholders’ meeting to be held before a notary public, which can only validly pass such resolution if at least 50% of the share
capital of the Company and at least 50% of the profit certificates, if any, are present or represented. In the event where the
required attendance quorum is not present or represented at the first meeting, a second meeting needs to be convened. The
second general shareholders’ meeting may validly deliberate and decide regardless of the number of shares present or
represented. The special majority requirements, however, remain applicable.
The above also applies to any changes of the Company’s share capital as such changes amount to an amendment of the
Company’s articles of association. There are no conditions imposed by the Company’s articles of association that are more
stringent than those required by law. Within the framework of the powers granted to it under the authorized capital, the board
of directors may also increase the Company’s share capital as specified in the articles of association.
BIOCARTIS ANNUAL REPORT 2022
119
Purchase and sale of treasury shares
The Company may purchase, subject to the provisions of the Belgian company law, its own shares if authorized by a prior decision
of an extraordinary shareholders’ meeting approved by a majority of 75% of the votes cast, at a meeting where at least 50% of
the share capital of the Company and at least 50% of the profit certificates, if any, are present or represented. In the event where
the required attendance quorum is not present or represented at the first meeting, a second meeting needs to be convened. The
second general shareholders' meeting may validly deliberate and decide regardless of the number of shares present or
represented. The special majority requirements, however, remain applicable. The aforementioned rules are also applicable to
the acquisition of shares of the Company by its subsidiaries. The sale of treasury shares is also subject to the provisions of the
Belgian Code of Companies and Associations. The board of directors is currently not authorized by an extraordinary shareholders’
meeting to purchase or sell its own shares. On 31 December 2022, neither the Company nor any subsidiary of the Company held
any shares in the Company.
Public takeover bids
Public takeover bids for the Company’s shares and other securities giving access to voting rights (such as subscription rights and
convertible bonds) are subject to supervision by the FSMA. Any public takeover bid must be extended to all of the Company’s
voting securities, as well as all other securities giving access to voting rights. Prior to making a bid, a bidder must publish a
prospectus which has been approved by the FSMA prior to publication.
The Belgian Law on public takeover bids of 1 April 2007 provides that a mandatory bid must be launched if a person, as a result
of its own acquisition or the acquisition by persons acting in concert with it or by persons acting for their account, directly or
indirectly holds more than 30% of the voting securities in a company having its registered office in Belgium and of which at least
part of the voting securities are admitted to trading on a regulated market or on a multilateral trading facility designated by the
Belgian Royal Decree of 27 April 2007 on public takeover bids. The mere fact of exceeding the relevant threshold through the
acquisition of shares will give rise to a mandatory bid, irrespective of whether the price paid in the relevant transaction exceeds
the then current market price. The duty to launch a mandatory bid does not apply in certain cases set out in the aforementioned
Belgian Royal Decree of 27 April 2007 such as (i) in case of an acquisition if it can be shown that a third-party exercises control
over the Company or that such party holds a larger stake than the person holding 30% of the voting securities or (ii) in case of a
capital increase with preferential subscription rights decided by the Company’s general shareholders’ meeting.
There are several provisions of Belgian company law and certain other provisions of Belgian law, such as the obligation to disclose
significant shareholdings and merger control, which may apply to the Company and which may create hurdles to an unsolicited
tender offer, merger, change in management or other change in control. These provisions could discourage potential takeover
attempts that other shareholders may consider to be in their best interest and could adversely affect the market price of the
Company’s shares. These provisions may also have the effect of depriving the shareholders of the opportunity to sell their shares
at a premium.
Pursuant to Belgian company law, the board of directors of Belgian companies may in certain circumstances, and subject to prior
authorization by the shareholders, deter or frustrate public takeover bids through dilutive issuances of equity securities (pursuant
to the authorized capital) or through share buy-backs (i.e. purchase of own shares). In principle, the authorization of the board
of directors to increase the share capital of the Company through contributions in kind or in cash with cancellation or limitation
of the preferential subscription right of the existing shareholders is suspended as of the notification to the Company by the FSMA
of a public takeover bid on the securities of the Company. The general shareholders’ meeting can, however, under certain
conditions, expressly authorize the board of directors to increase the capital of the Company in such case by issuing shares in an
amount of not more than 10% of the existing shares of the Company at the time of such public takeover bid. Such authorization
has not been granted to the board of directors of the Company.
The Company’s articles of association do not provide for any specific protective mechanisms against public takeover bids.
BIOCARTIS ANNUAL REPORT 2022
120
The Company is a party to the following significant agreements which take effect, alter or terminate upon a change of control
over the Company following a takeover bid:
▪ The EUR 16.9m credit contract as last amended on 11 August 2022 entered into between KBC Bank NV, the Company
and Biocartis NV, which provides that KBC Bank NV is entitled, without the need to have prior recourse to the courts
or to give prior notice, to terminate or suspend both the utilized and the unutilized portion of the credit facility and
its forms of utilization in whole or in part with immediate effect from the date the letter advising such termination or
suspension is sent upon a substantial change in the shareholder structure of the borrowers that could affect the
composition of the management bodies or the overall risk assessment by the bank.
▪ The terms and conditions of the amended 4.00% convertible bonds due 2027, which provide that if a change of control
shall occur and the full outstanding principal amount of all indebtedness secured by any assets of the Company and
its subsidiaries has not yet been and will not be paid in full, the principal amount outstanding of such convertible
bonds (including any capitalised interest) and any accrued and uncapitalized interest will be automatically and
unconditionally deemed to be zero.
▪ The terms of the senior secured convertible term loan entered into among others with the Lenders dated 1 September
2022 which provide that a change of control would result in an event of default under such agreement.
▪ The terms and conditions of the 4.50% convertible bonds due 2026, whereby bondholders will have the right to
require the Company to redeem their convertible bonds at their principal amount together with accrued and unpaid
interest following the occurrence of a change of control of the Company.
In addition, the Company’s share option plans provide for an accelerated vesting of the share options in case of a change of
control event.
BIOCARTIS ANNUAL REPORT 2022
121
4.7. External and internal control
External control
In 2022, the Company’s statutory auditor was Deloitte Bedrijfsrevisoren BV, represented by Nico Houthaeve. The statutory
auditor performs the external audit of the consolidated and statutory accounts of the Company and of its Belgian subsidiary
(Biocartis NV), and audits specified account balances of Biocartis US Inc. For 2022, the audit fee amounted to EUR 118,240, and
the fees for audit related services performed by the statutory auditor amounted to EUR 213,555 (mainly with respect to the
comprehensive recapitalization transactions announced by the Company on 1 September 2022).
Internal control
Biocartis has taken different steps to identify the most important risks that it is exposed to and to keep these risks at an acceptable
level. The different risks have been identified in this annual report under the section ‘risks related to our business’. The control
activities of Biocartis include the measures taken by it to ensure that the most important risks which were identified are controlled
or mitigated. Biocartis manages some of these risks by entering into insurance contracts covering such risks.
As indicated in this annual report, the board of directors has set up an audit committee that gives guidance and controls the
financial reporting of the Group. It ensures the presence of sufficient internal control mechanisms and, in co-operation with the
statutory auditor of the Group, investigates questions in relation to accounting and valuation rules. The audit committee more
specifically reviews the financial accounts of the Company, the management reporting and budgets and gives its recommendation
with regard to these documents to the board of directors. Given the current size and complexity of the Company’s business, as
well as the policies and internal processes it has in place, no independent internal audit function has been established. The need
for this function has been reviewed in 2022 and will continue to be reviewed annually.
Biocartis has set up control policies and risk management systems to ensure that the main business risks are properly identified,
managed and disclosed. The objectives of the Biocartis internal control framework are achieving effectiveness and efficiency of
operations, reliability of financial reporting, compliance with applicable laws and regulations and the safeguarding of assets. To
this end, Biocartis has established a number of instruments that are discussed on a regular basis in the audit committee and are
presented to the board of directors:
▪ Long term financial planning and annual budgets: at least once per year, the management of Biocartis prepares the
annual budget. This is an important instrument to control activities of the Group and combines strategy, risk, business
plans and intended results. The budget is also used as a basis to define the most important company goals for the
financial year. The performance against the budget and Company goals is monitored monthly by the finance and
business team and discussed on a monthly basis in the executive management meetings. Quarterly business reviews
are conducted with all relevant stakeholders for more in depth analysis and for forecast updates. It is also presented
to the audit committee and the board of directors. In addition, the management and board of directors prepare and
update a longer term financial plan to crystalize the longer term strategy of Biocartis.
▪ Monthly management information reports and financial accounts to monitor (actual) performance versus (budget)
objectives: every month management prepares a detailed management information report (‘MIR’) covering all
activities of the Group (commercial, development, production, strategic, IP, HR, etc.). The MIR also maps the
Company’s ongoing progress against the yearly budget and longer term strategic and R&D development goals.
▪ Time registration on projects and activities to monitor staff resource allocation as compared to planning.
▪ Statutory financial and tax reporting per legal entity and IFRS financial accounts on a consolidated level: management
prepares and presents to the audit committee and the board of directors these accounts at least every six months.
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122
In order to ensure the quality and reliability of the financial information, Biocartis has established and is continuously improving
and further automating its key standardized information flow processes, consistent throughout the organization. The most
important financial processes are designed to ensure data consistency and comparability, as well as to detect potential anomalies.
These processes include amongst others expenditure, revenue, inventory, fixed assets, financial closing and treasury processes.
Management defines the values as well as the skills and job descriptions needed for all functions and tasks within the
organization.
In addition, Biocartis has developed a vast set of procedures and workflows on key business cycles that are all documented
through a unique IT system. The system is designed to help meet the quality levels required for Biocartis’ products and is one of
the elements used by the quality department to ensure product and process compliance with the regulatory framework. Further
details on the quality management system are provided under Part 3, Sustainability.
Before commercializing its products, Biocartis performs the necessary tests to reach the level of quality acceptance. In order to
try to assure the best possible quality standards during production, Biocartis has installed an in-house quality team that is present
in the different stages of product development and manufacturing.
BIOCARTIS ANNUAL REPORT 2022 123
1 At a glance
2 Strategy
3 Sustainability
4 Corporate governance report
5 Financial report
6 Glossary & bibliography
BIOCARTIS ANNUAL REPORT 2022 124
124
BIOCARTIS ANNUAL REPORT 2022 125
125
CONSOLIDATED ANNUAL ACCOUNTS
2022
5.1. Consolidated financial statements as of and for the years ended 31
December 2022 and 2021
5.1.1. Consolidated income statement
Years ended 31 December,
In EUR 000
Notes
2022
2021
Collaboration revenue
5.2.4
Product sales revenue
5.2.4
Service revenue
5.2.4
Total revenue
Other operating income
Grants and other income
5.2.5
Total operating income
Cost of sales
5.2.6
-29,799
-33,922
Research and development expenses
5.2.7
-38,393
-48,054
Sales and marketing expenses
5.2.8
-20,595
-16,763
General and administrative expenses
5.2.9
-16,236
-15,560
Other expenses
5.2.9
-3,244
Total operating expenses
-105,023
-117,543
Operating loss for the year
-47,047
-62,645
Financial expense
5.2.11
-21,179
-9,488
Other financial results
5.2.11
Financial result, net
-17,690
-8,411
Share in the result of joint venture
-884
-659
Loss for the year before taxes
-65,621
-71,715
Income taxes
5.2.28
Loss for the year after taxes
-65,381
-71,472
Attributable to owners of the Group
-65,381
-71,472
Earnings per share
Basic and diluted loss per share
5.2.12
-1.08
-1.24
BIOCARTIS ANNUAL REPORT 2022 126
126
5.1.2. Consolidated statement of comprehensive income
Years ended 31 December,
In EUR 000
Notes
2022
2021
Loss for the year
-65,381
-71,472
Other comprehensive income (loss), not to be reclassified to profit or loss:
Re-measurement gains and losses on defined benefit plan
5.2.24
-385
-595
Income taxes on items of other comprehensive income
Other comprehensive income (loss), that may be reclassified to profit and
loss:
Exchange differences on translation of foreign operations
Total comprehensive loss for the year
-65,274
-71,481
Attributable to owners of the Group
-65,274
-71,481
BIOCARTIS ANNUAL REPORT 2022 127
127
5.1.3. Consolidated statement of financial position
As of 31 December,
In EUR 000
Notes
2022
2021
Assets
Non-current assets
Intangible assets
5.2.13
Property, plant and equipment
5.2.14
Financial assets
5.2.15
Investment in joint ventures
5.2.16
Other non-current assets
5.2.24
Deferred tax assets and R&D Investment tax credit
5.2.17
Current assets
Inventories
5.2.18
Trade receivables
5.2.19
Other receivables
5.2.19
Other current assets
5.2.20
Cash and cash equivalents*
5.2.21
Total assets
Equity and liabilities
Capital and reserves
Share capital
5.2.22
-220,302
-220,657
Share premium
5.2.22
Share based payment reserve
5.2.22
Accumulated deficit
5.2.22
-443,363
-526,405
Other comprehensive income
5.2.22
-5,843
-5,571
Total equity attributable to owners of the Group
-30,284
-33,897
Non-current liabilities
Provisions
5.2.24
Borrowings and lease liabilities
5.2.25
Convertible debt
5.2.25
Deferred income
5.2.27
Current liabilities
Borrowings and lease liabilities
5.2.25
Trade payables
5.2.26
Deferred income
5.2.27
Other current liabilities
5.2.26
Total equity and liabilities
*Cash and cash equivalents for 31 December 2021 and 2022 include EUR 1.2 million restricted cash related to KBC Lease
financing
BIOCARTIS ANNUAL REPORT 2022 128
128
5.1.4. Consolidated cash flow statement
Years ended 31 December,
In EUR 000
Notes
2022
2021
Operating activities
Loss for the year
-65,381
-71,472
Adjustments for
Depreciation and amortization
5.2.13/5.2.14
Impairment losses
5.2.7/5.2.14
Income taxes in profit and loss
5.2.29
-240
-243
Financial result, net
5.2.11
Unrealized exchange gains/ losses
Net movement in defined benefit obligation
5.2.24
-143
Share of net profit of associate and joint venture
5.2.16
Share based payment expense
5.2.23
Other
-78
-162
Changes in working capital
Net movement in inventories**
5.2.18
-5,297
-2,737
Net movement in trade and other receivables and other current assets
5.2.19/5.2.17
-5,916
Net movement in trade payables & other current liabilities
5.2.26
-1,489
Net movement in deferred income
5.2.27
-791
Cash flow from operating activities before interest and taxes paid
-38,826
-59,285
Interest paid
-6,027
-6,429
Taxes paid
5.2.29
-2
-2
Cash flow used in operating activities
-44,855
-65,716
Investing activities
Interest received
Acquisition of property, plant & equipment**
5.2.14
-1,569
-3,686
Acquisition of intangible assets
5.2.13
-368
-69
Investment in joint venture
5.2.16
-1,000
Investment convertible note
5.2.15
-2,500
Cash flow used in investing activities
-5,431
-3,748
Financing activities
Proceeds from borrowings
5.2.25
Refinancing convertible bond and convertible term loan
5.2.25
Net proceeds from the issue of common shares, net of transaction costs
5.2.25
Repayment of borrowings
5.2.25
-26,301
-7,089
Bank charges
-73
-115
Cash flow used in financing activities
-1,204
Net decrease in cash and cash equivalents
-27,823
-70,668
Cash and cash equivalents at the beginning of the period
Effects of exchange rate changes on the balance of cash held in foreign
currencies
Cash and cash equivalents at the end of the period*
* Including EUR 1.2 million restricted cash related to KBC Lease financing
** Including Idylla instruments placed under reagent rental agreements that were held in inventory
on 31 December 2021
BIOCARTIS ANNUAL REPORT 2022 129
129
5.1.5. Consolidated statement of changes in equity
In EUR 000
Notes
Share capital
Share
premium
Share based
payment
reserve
Other
comprehensiv
e income
Accumulated
deficit
Total equity
attributable
to the owners
of the Group
Total equity
Balance as at 1 January 2021
-220,657
-5,153
-455,343
Loss for the period
-71,472
-71,472
-71,472
Re-measurement gains and losses on defined benefit plan
5.2.24
-419
-419
-419
Consolidation translation difference
Total comprehensive income
-419
-71,062
-71,481
-71,481
Share-based payment expense
5.2.23
Balance as at 31 December 2021
-220,657
-5,572
-526,405
-33,897
-33,897
Balance as at 1 January 2022
-220,657
-5,572
-526,405
-33,897
-33,897
Loss for the period
-65,381
-65,381
-65,381
Re-measurement gains and losses on defined benefit plan
5.2.24
-271
-271
-271
Consolidation translation difference
Total comprehensive income
-271
-65,003
-65,274
-65,274
Share-based payment expense
5.2.23
Convertible bond conversion old bond
5.2.21
Convertible bond issue new bond
5.2.21
Capital increase by contribution in kind
5.2.21
-104,071
Share issue - contribution in kind 6 September 2022
5.2.21
Capital decrease by incorporation of accumulated losses 14 November 2022
5.2.21
-43,975
Share issue - rights offering 2 December 2022
5.2.21
Costs related to rights offering
5.2.21
-2,053
-2,053
-2,053
Share issue - conversion convertible term loan
5.2.21
Share issue - mandatory conversion convertible bond 16 December 2022
5.2.21
Balance as at 31 December 2022
-220,302
-5,843
-443,363
-30,284
-30,284
BIOCARTIS ANNUAL REPORT 2022 130
130
5.2. Notes to the consolidated financial statements
5.2.2. Summary of significant accounting policies
5.2.2.2. BASIS OF PREPARATION
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131
5.2.2.3. CONSOLIDATION PRINCIPLES
5.2.2.4. FOREIGN CURRENCY TRANSLATION
BIOCARTIS ANNUAL REPORT 2022 132
132
5.2.2.5. JOINT VENTURES
5.2.2.6. INTANGIBLE ASSETS
BIOCARTIS ANNUAL REPORT 2022 133
133
5.2.2.7. PROPERTY, PLANT AND EQUIPMENT
BIOCARTIS ANNUAL REPORT 2022 134
134
5.2.2.8. IMPAIRMENT OF TANGIBLE AND INTANGIBLE ASSETS, OTHER THAN GOODWILL
5.2.2.9. INVENTORY
5.2.2.10. FINANCIAL INSTRUMENTS
BIOCARTIS ANNUAL REPORT 2022 135
135
BIOCARTIS ANNUAL REPORT 2022 136
136
5.2.2.11. CASH AND CASH EQUIVALENTS
5.2.2.12. INCOME TAXES
BIOCARTIS ANNUAL REPORT 2022 137
137
5.2.2.13. EMPLOYEE BENEFITS
BIOCARTIS ANNUAL REPORT 2022 138
138
5.2.2.14. PROVISIONS
5.2.2.15. REVENUE RECOGNITION
BIOCARTIS ANNUAL REPORT 2022 139
139
BIOCARTIS ANNUAL REPORT 2022 140
140
BIOCARTIS ANNUAL REPORT 2022 141
141
5.2.2.16. GRANTS
5.2.2.17. LEASES
BIOCARTIS ANNUAL REPORT 2022 142
142
5.2.2.18. BORROWING COSTS
5.2.3. Critical accounting estimates, assumptions and judgments
BIOCARTIS ANNUAL REPORT 2022 143
143
BIOCARTIS ANNUAL REPORT 2022 144
144
5.2.3.2. OPERATING SEGMENTS
5.2.4. Revenue
BIOCARTIS ANNUAL REPORT 2022 145
145
5.2.4.1. SUMMARY OF COLLABORATION REVENUES
BIOCARTIS ANNUAL REPORT 2022 146
146
5.2.4.2. REVENUES BY MAJOR COUNTRIES AND CUSTOMERS
BIOCARTIS ANNUAL REPORT 2022 147
147
5.2.5. Other operating income
5.2.6. Cost of sales
BIOCARTIS ANNUAL REPORT 2022 148
148
5.2.7. Research & development expenses
5.2.8. Sales & marketing expenses
BIOCARTIS ANNUAL REPORT 2022 149
149
5.2.9. General & administrative expenses
5.2.10. Employee benefit expenses
BIOCARTIS ANNUAL REPORT 2022 150
150
5.2.11. Financial income and expense
BIOCARTIS ANNUAL REPORT 2022 151
151
5.2.12. Loss per share
BIOCARTIS ANNUAL REPORT 2022 152
152
5.2.13. Intangible assets
5.2.14. Property, plant and equipment
BIOCARTIS ANNUAL REPORT 2022 153
153
BIOCARTIS ANNUAL REPORT 2022 154
154
BIOCARTIS ANNUAL REPORT 2022 155
155
5.2.15. Financial participation
5.2.16. Investments in joint ventures
BIOCARTIS ANNUAL REPORT 2022 156
156
BIOCARTIS ANNUAL REPORT 2022 157
157
5.2.17. Deferred tax assets and r&d investment tax credit
5.2.18. Inventories
5.2.19. Trade and other receivables
BIOCARTIS ANNUAL REPORT 2022 158
158
5.2.20. Other current assets
BIOCARTIS ANNUAL REPORT 2022 159
159
5.2.21. Cash and cash equivalents
5.2.22. Share capital
BIOCARTIS ANNUAL REPORT 2022 160
160
5.2.23. Share based payments
BIOCARTIS ANNUAL REPORT 2022 161
161
BIOCARTIS ANNUAL REPORT 2022 162
162
BIOCARTIS ANNUAL REPORT 2022 163
163
BIOCARTIS ANNUAL REPORT 2022 164
164
BIOCARTIS ANNUAL REPORT 2022 165
165
5.2.24. Defined benefit plans
BIOCARTIS ANNUAL REPORT 2022 166
166
5.2.25. Financial liabilities
BIOCARTIS ANNUAL REPORT 2022 167
167
BIOCARTIS ANNUAL REPORT 2022 168
168
BIOCARTIS ANNUAL REPORT 2022 169
169
5.2.26. Trade payables and other current liabilities
BIOCARTIS ANNUAL REPORT 2022 170
170
5.2.27. Deferred income
5.2.28. Income taxes
BIOCARTIS ANNUAL REPORT 2022 171
171
5.2.29. Financial risk management
5.2.29.2. FINANCIAL RISK FACTORS
BIOCARTIS ANNUAL REPORT 2022 172
172
5.2.29.3. MARKET RISK
BIOCARTIS ANNUAL REPORT 2022 173
173
5.2.30. Fair value
BIOCARTIS ANNUAL REPORT 2022 174
174
5.2.31. Contingencies
5.2.32. Commitments
BIOCARTIS ANNUAL REPORT 2022 175
175
5.2.32.3.1. REMUNERATION OF DIRECTORS AND MEMBERS OF THE EXECUTIVE MANAGEMENT
5.2.32.3.2. JOINT VENTURES
5.2.32.3.3. SUBSIDIARIES
Suite 970
Vercelli 40 CAP
5.2.33. Events after the balance sheet date
BIOCARTIS ANNUAL REPORT 2022 176
176
5.2.34. Relevant standards and interpretations published, but not yet
BIOCARTIS ANNUAL REPORT 2022 177
177 BIOCARTIS ANNUAL REPORT 2022
5.3. Statutory annual accounts
5.3.2. Activity biocartis group nv
BIOCARTIS ANNUAL REPORT 2022 178
178 BIOCARTIS ANNUAL REPORT 2022
BIOCARTIS ANNUAL REPORT 2022 179
179 BIOCARTIS ANNUAL REPORT 2022
BIOCARTIS ANNUAL REPORT 2022 180
5.4. Auditor’s report
Biocartis Group NV
Statutory auditor’s report to the shareholders’ meeting for the year ended 31 December 2022 – Consolidated financial
statements
The original text of this report is in Dutch.
In the context of the statutory audit of the consolidated financial statements of Biocartis Group NV (“the company”) and its
subsidiaries (jointly “the group”), we hereby submit our statutory audit report. This report includes our report on the
consolidated financial statements and the other legal and regulatory requirements. These parts should be considered as
integral to the report.
We were appointed in our capacity as statutory auditor by the shareholders’ meeting of 14 May 2021, in accordance with the
proposal of the board of directors (“bestuursorgaan” / “organe d’administration”) issued upon recommendation of the audit
committee. Our mandate will expire on the date of the shareholders’ meeting deliberating on the financial statements for the
year ending 31 December 2023. We have performed the statutory audit of the consolidated financial statements of Biocartis
Group NV for 8 consecutive periods.
Report on the consolidated financial statements
Unqualified opinion
We have audited the consolidated financial statements of the group, which comprise the consolidated statement of financial
position as at 31 December 2022, the consolidated income statement and consolidated statement of comprehensive income,
the consolidated statement of changes in equity and the consolidated cash flow statement for the year then ended, as well as
the summary of significant accounting policies and other explanatory notes. The consolidated statement of financial position
shows total assets of 114 277 (000) EUR and the consolidated income statement shows a loss for the year then ended of 65 381
(000) EUR.
In our opinion, the consolidated financial statements give a true and fair view of the group’s net equity and financial position as
of 31 December 2022 and of its consolidated results and its consolidated cash flow for the year then ended, in accordance with
International Financial Reporting Standards (IFRS) as adopted by the European Union and with the legal and regulatory
requirements applicable in Belgium.
Basis for the unqualified opinion
We conducted our audit in accordance with International Standards on Auditing (ISA), as applicable in Belgium. In addition, we
have applied the International Standards on Auditing approved by the IAASB applicable to the current financial year, but not yet
approved at national level. Our responsibilities under those standards are further described in the “Responsibilities of the
statutory auditor for the audit of the consolidated financial statements” section of our report. We have complied with all ethical
requirements relevant to the statutory audit of consolidated financial statements in Belgium, including those regarding
independence.
We have obtained from the board of directors and the company’s officials the explanations and information necessary for
performing our audit.
We believe that the audit evidence obtained is sufficient and appropriate to provide a basis for our opinion. We believe that the
audit evidence obtained is sufficient and appropriate to provide a basis for our opinion.
BIOCARTIS ANNUAL REPORT 2022 181
Material uncertainty relating to going concern
We draw attention to note 5.2.3.1 to the consolidated financial statements, which indicates that the Company needs to respect
a covenant of maintaining a minimal liquidity of EUR 10 million to avoid its borrowings under the convertible bonds agreements
to become payable. In the event that its projected future cashflows and potential cost saving measures are not or not timely
realized, or that no alternative financing measures are found, the company’s ability to continue operating as a going concern
will depend on obtaining a waiver from the lenders. This indicates that a material uncertainty exists that may cast significant
doubt on the Company’s ability to continue as a going concern. Our opinion is not modified in respect of this matter.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the
consolidated financial statements of the current period. These matters were addressed in the context of our audit of the
consolidated financial statements as a whole and in forming our opinion thereon, and we do not provide a separate opinion on
these matters. In addition to the matter described in section “Material uncertainty relating to going concern”, we have
determined the following key audit matter in our audit.
Key audit matters
How our audit addressed the key audit matters
Recapitalization transaction
The Group completed a comprehensive recapitalization
transaction (the ‘Recapitalization Transaction’) in January
2023 through which the Group obtained capital to support its
near-term liquidity position and its growth for the
foreseeable future.
The Recapitalization Transaction provided for the following:
• Deleveraging via a partial equitization of the 4.00%
convertible bonds due 2024 equal to 10% of notional
amounts outstanding, and maturity extension by 3,5 years to
November 2027.
• Allowing holders of the existing convertible bonds to
exchange into new second lien secured convertible bonds,
subject to their commitment to participate pro-rata in a fully
backstopped EUR 25 million investment into additional new
convertible notes.
• Allowing existing shareholders to participate in the growth
of the Company by taking part in a fully covered rights issue
of EUR 25 million, which was backstopped in full by certain
new investors and an investment banking institution.
• Certain existing holders of new convertible notes providing
a new senior secured term loan of EUR 30 million.
The Recapitalization Transaction is non-recurring in nature
and involved significant amounts as it relates to presentation
and disclosure in the annual report for the current period.
Significant accounting and valuation judgments from
management are required in order to prepare the financial
statements in accordance with International Financial
We regularly interacted with management and the board on
the group’s initiatives around financing and liquidity, of which
the comprehensive Recapitalization Transaction was an
integral aspect. We have read relevant meeting minutes to
assess accuracy and completeness of the various components
of the Recapitalization Transaction.
We reviewed and evaluated for accounting considerations
the contractual terms of the financial instruments involved in
the Recapitalization Transaction through our independent
review of the various agreements.
We utilized our internal specialists that specialize in
International Financial Reporting Standards (IFRS) with
regards to accounting for financial instruments. Their
involvement encompassed inquiries of the Company and its
external accounting advisor of probing questions around the
accounting for the Recapitalization Transaction and assisting
the core audit engagement team in forming a conclusion on
the appropriate accounting and disclosure of the
Recapitalization Transaction.
We utilized our internal valuation specialists in order to assist
us with forming a conclusion on the appropriate use of key
valuation assumptions and judgments in the measurement of
the various components of the Recapitalization Transaction.
We critically assessed the adequacy of the company’s
disclosures on the Recapitalization Transaction as disclosed
in the annual report.
BIOCARTIS ANNUAL REPORT 2022 182
Reporting Standards (IFRS) linked to the accounting and
disclosure of the Recapitalization Transaction therein.
As a result of the foregoing, the audit of the accounting
consequences of the Recapitalization Transaction required
specific audit procedures to be performed in response to the
associated accounting and measurement judgments used by
management. Our audit procedures were tailored to be
responsive to the complexities involved in the accounting,
therefore, making it a key audit matter for our audit.
The company’s disclosure in relation to the Recapitalization
Transaction is in part 5, note 5.2.25 Financial Liabilities.
BIOCARTIS ANNUAL REPORT 2022 183
Responsibilities of the board of directors for the preparation of the consolidated financial
statements
The board of directors is responsible for the preparation and fair presentation of the consolidated financial statements in
accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union and with the legal and
regulatory requirements applicable in Belgium and for such internal control as the board of directors determines is necessary to
enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or
error.
In preparing the consolidated financial statements, the board of directors is responsible for assessing the group’s ability to
continue as a going concern, disclosing, as applicable, matters to be considered for going concern and using the going concern
basis of accounting unless the board of directors either intends to liquidate the group or to cease operations, or has no other
realistic alternative but to do so.
Responsibilities of the statutory auditor for the audit of the consolidated financial statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from
material misstatement, whether due to fraud or error, and to issue a statutory auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISA will
always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the
basis of these consolidated financial statements.
During the performance of our audit, we comply with the legal, regulatory and normative framework as applicable to the audit
of consolidated financial statements in Belgium. The scope of the audit does not comprise any assurance regarding the future
viability of the company nor regarding the efficiency or effectiveness demonstrated by the board of directors in the way that the
company’s business has been conducted or will be conducted.
As part of an audit in accordance with ISA, we exercise professional judgment and maintain professional skepticism throughout
the audit. We also:
▪ identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud
or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and
appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud
is higher than for one resulting from an error, as fraud may involve collusion, forgery, intentional omissions,
misrepresentations, or the override of internal control;
▪ obtain an understanding of internal control relevant to the audit in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the group’s
internal control;
▪ evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related
disclosures made by the board of directors;
▪ conclude on the appropriateness of the use of the going concern basis of accounting by the board of directors and,
based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may
cast significant doubt on the group’s ability to continue as a going concern. If we conclude that a material uncertainty
exists, we are required to draw attention in our statutory auditor’s report to the related disclosures in the consolidated
financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the
audit evidence obtained up to the date of our statutory auditor’s report. However, future events or conditions may
cause the group to cease to continue as a going concern;
BIOCARTIS ANNUAL REPORT 2022 184
▪ evaluate the overall presentation, structure and content of the consolidated financial statements, and whether the
consolidated financial statements represent the underlying transactions and events in a manner that achieves fair
presentation.
▪ obtain sufficient appropriate audit evidence regarding the financial information of the entities and business activities
within the group to express an opinion on the consolidated financial statements. We are responsible for the direction,
supervision and performance of the group audit. We remain solely responsible for our audit opinion.
We communicate with the audit committee regarding, amongst other matters, the planned scope and timing of the audit and
significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide the audit committee with a statement that we have complied with relevant ethical requirements regarding
independence, and we communicate with them about all relationships and other matters that may reasonably be thought to
bear on our independence, and where applicable, related safeguards.
From the matters communicated to the audit committee, we determine those matters that were of most significance in the audit
of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters
in our report unless law or regulation precludes any public disclosure about the matter.
Other legal and regulatory requirements
Responsibilities of the board of directors
The board of directors is responsible for the preparation and the content of the directors’ report on the consolidated financial
statements and other matters disclosed in the annual report on the consolidated financial statements.
Responsibilities of the statutory auditor
As part of our mandate and in accordance with the Belgian standard complementary to the International Standards on Auditing
(ISA) as applicable in Belgium, our responsibility is to verify, in all material respects, the director’s report on the consolidated
financial statements and other matters disclosed in the annual report on the consolidated financial statements, as well as to
report on these matters.
Aspects regarding the directors’ report on the consolidated financial statements
In our opinion, after performing the specific procedures on the directors’ report on the consolidated financial statements, this
report is consistent with the consolidated financial statements for that same year and has been established in accordance with
the requirements of article 3:32 of the Code of companies and associations.
In the context of our statutory audit of the consolidated financial statements we are also responsible to consider, in particular
based on information that we became aware of during the audit, if the directors’ report on the consolidated financial statements
is free of material misstatement, either by information that is incorrectly stated or otherwise misleading. In the context of the
procedures performed, we are not aware of such material misstatement.
Statements regarding independence
▪ Our audit firm and our network have not performed any prohibited services and our audit firm has remained
independent from the group during the performance of our mandate.
▪ The fees for the additional non-audit services compatible with the statutory audit, as defined in article 3:65 of the Code
of companies and associations, have been properly disclosed and disaggregated in the notes to the consolidated
financial statements.
BIOCARTIS ANNUAL REPORT 2022 185
Single European Electronic Format (ESEF)
In accordance with the draft standard on the audit of the compliance of the financial statements with the Single European
Electronic Format ("ESEF"), we have also performed the audit of the compliance of the ESEF format and of the tagging with the
technical regulatory standards as defined by the European Delegated Regulation No. 2019/815 of 17 December 2018 ("Delegated
Regulation").
The board of directors is responsible for the preparation, in accordance with the ESEF requirements, of the consolidated financial
statements in the form of an electronic file in ESEF format (“digital consolidated financial statements”) included in the annual
financial report.
Our responsibility is to obtain sufficient and appropriate evidence to conclude that the format and the tagging of the digital
consolidated financial statements comply, in all material respects, with the ESEF requirements as stipulated by the Delegated
Regulation.
Based on our work, in our opinion, the format and the tagging of information in the English language version of the digital
consolidated financial statements included in the annual financial report of Biocartis Group NV as of 31 December 2022 are, in
all material respects, prepared in accordance with the ESEF requirements as stipulated by the Delegated Regulation.
Other statements
This report is consistent with our additional report to the audit committee referred to in article 11 of Regulation (EU) No
537/2014.
Signed at Zaventem,
The statutory auditor
Deloitte Bedrijfsrevisoren/Réviseurs d’Entreprises BV/SRL
Represented by Nico Houthaeve
BIOCARTIS ANNUAL REPORT 2022 186
1 At a glance
2 Strategy
3 Sustainability
4 Corporate governance report
5 Financial report
6 Glossary & bibliography
BIOCARTIS ANNUAL REPORT 2022 187
6. Glossary
Assay
In the field of diagnostics, an assay is a process or method aimed at determining the presence or
amount (quantitative assay) of a certain substance in a sample.
Application
In the context of the Idylla™ platform, an application is a specific Nucleic Acid detection assay (test)
that is to run on the system. Applications have their own specific requirements.
Batch Record
The set of records of all relevant process information in any physical or electronic format
Biopsy (solid/liquid)
The Idylla™ platform is capable of processing both solid biopsies (FFPE tissue which is the standard
tissue type for solid tumor diagnostics, and fresh (frozen) tissue samples) and liquid biopsies.
These are easier to obtain sample types such as blood plasma or urine. Liquid biopsy based assays
will facilitate monitoring of treatments and disease progression, and possible earlier disease
detection.
Serine/threonine-
protein kinase B-raf
(BRAF)
BRAF is a protein that, in humans, is encoded by the BRAF gene. The BRAF protein is involved in
sending signals within cells and in cell growth. Certain inherited BRAF mutations cause birth
defects. Alternatively, other acquired mutations in adults may cause cancer.
CE-mark
The CE-mark is a mandatory conformance mark on many products placed on the market in the
European Union. With the CE-marking on a product, the manufacturer ensures that the product is
in conformity with the essential requirements of the applicable European Union directives. The
letters “CE” stand for ‘Conformité Européenne’ (‘European Conformity’).
Clinical data
Safety and/or performance information that are generated from the clinical use of a medical
device.
Companion Diagnostics
(CDx)
A companion diagnostic (CDx) is a medical device, often an in vitro device, which provides information
that is essential for the safe and effective use of a corresponding drug or biological product
CLIA
The Clinical Laboratory Improvement Amendments of 1988 (CLIA) regulations include federal
standards applicable to all U.S. facilities or sites that test human specimens for health assessment
or to diagnose, prevent, or treat disease (source: https://wwwn.cdc.gov/clia/).
Consumables
Materials that are in direct or indirect contact with final product.
COVID-19
In 2019, a new coronavirus was identified as the cause of a disease outbreak that originated in
China. The virus is now known as the severe acute respiratory syndrome coronavirus 2 (SARS-CoV-
2). The disease it causes is called coronavirus disease 2019 (COVID-19) (source: mayoclinic.org).
ctDNA
This is circulating tumor DNA.
BIOCARTIS ANNUAL REPORT 2022 188
Deoxyribonucleic acid
(DNA)
DNA is a nucleic acid molecule that contains the genetic instructions used in the development
and functioning of living organisms.
Distributor
Person or legal entity that furthers the marketing and/or selling of a device from the original
place of manufacture to the ultimate user without modifying the device, its packaging or its
labelling.
EDTA
EDTA represents Ethylenediaminetetraacetic acid, which is the anticoagulant used for most
hematology procedures (like identifying and counting blood cells, blood typing, etc.). Source:
ksmedical.com, last consulted on 19 January 2023
Epidermal growth factor
receptor (EGFR)
EGFR is a protein found on the surface of certain cells which can cause them to divide. It is found
in abnormally high levels on the surface of many types of cancer cells.
Export or distributor
markets
Defined as the world excluding European direct markets, US, China and Japan.
Emergency Use
Authorization (EUA)
This is an authorization given by the FDA Commissioner pursuant to section 564 of the US
Federal Food, Drug, and Cosmetic Act, as amended (the ‘FD&C Act’), which allows unapproved
medical products or unapproved uses of approved medical products to be used in the United
States in an emergency to diagnose, treat, or prevent serious or life-threatening diseases or
conditions caused by chemical, biological, radiological or nuclear threat agents when there are
no adequate, approved, and available alternatives.
US Food and Drug
Administration (FDA)
The FDA is a federal agency of the United States Department of Health and Human Services
responsible for protecting and promoting public health through the regulation and supervision
of, among other things, medical devices.
Formalin fixed, paraffin
embedded (FFPE)
FFPE tissues are samples, typically from suspected tumors, that are fixed or mixed with formalin
to preserve the structural integrity of the sample. The sample is then embedded into a type of
paraffin wax so that it can be sliced into very fine slices, 5-10 microns thick. Treating samples in
this manner enables the samples to be stained with dyes to analyze abnormalities in tissue that
is suspected of cancer.
Gene signature
RNA expression or gene signature tests are particularly interesting since these often have a high
market value. These are based on the differential mRNA expression levels that are calculated
into a clinically meaningful score, namely the ‘signature’ that guides patient management
decisions.
Gene fusions
Gene fusions represent an important class of somatic alterations in cancer and have become
important biomarkers for cancer diagnosis, prognosis and the selection of targeted therapies. The
discovery and research for further understanding of fusion genes across multiple cancer types may
provide more effective therapies in the future
61
.
ICU
Intensive Care Unit.
BIOCARTIS ANNUAL REPORT 2022 189
Idylla™ Platform
Combination of the Idylla™ Instrument (hardware and software) and the Idylla™ Console
(hardware and software) using the Idylla™ cartridge technology.
Idylla™ Cartridge
Refers to the disposable container containing the necessary reagents to perform a test with the
Idylla™ system.
Immunoassay
Immunoassays are assays that measure biomarkers through antigen-antibody interaction
technologies. In most cases such assays are used to measure biomarkers of the immune system
itself, e.g. HCV or HIV antibodies produced by the bodies, which are detected by means of HCV or
HIV antigens.
Influenza
Also known as ‘the flu’ is a highly contagious respiratory tract infection caused by the family of
influenza viruses.
In vitro diagnostics or
In vitro diagnosis (IVD)
IVD is a diagnostic test outside of a living body in contrast to “in vivo”, in which tests are conducted
in a living body (for example an X-ray or CT-scan).
Investigational Use Only
(IUO)
An Investigational Use Only (IUO) product is an IVD product, in the testing phase of product
development that is being shipped or delivered for product testing prior to full commercial
marketing.
Kirsten rat sarcoma-2
virus oncogene (KRAS)
KRAS is a protein that, in humans, is encoded by the KRAS gene. Like other members of the Ras
family, the KRAS protein is a GTPase (a large family of hydrolase enzymes that can bind and
hydrolyse guanosine triphosphate), and is an early player in many signal transduction pathways.
The protein product of the normal KRAS gene performs an essential function in normal tissue
signalling, and the mutation of a KRAS gene is associated with the development of many cancers.
KOL
Key Opinion Leader.
Manufacturer
Natural or legal person responsible for the design, manufacture, fabrication, assembly, packaging
or labelling of a medical device, for assembling a system, or adapting a medical device before it is
placed on the market and/or put into service, regardless of whether these operations are carried
out by that person or on their behalf by a third party.
MDSAP (Medical Device
Single Audit Program)
The MDSAP allows medical device manufacturers can be audited once for compliance with the
standard and regulatory requirements of up to five different medical device markets: Australia,
Brazil, Canada, Japan and the United States. The program’s main mission is to “…jointly leverage
regulatory resources to manage an efficient, effective, and sustainable single audit program
focused on the oversight of medical device manufacturers.”
BIOCARTIS ANNUAL REPORT 2022 190
Medical Device
Any instrument, apparatus, implement, machine, appliance, implant, in vitro reagent or calibrator,
software, material or other similar or related article, intended by the manufacturer to be used,
alone or in combination, for human beings for one or more of the specific purpose(s) of - diagnosis,
prevention, monitoring, treatment or alleviation of disease, - diagnosis, monitoring, treatment,
alleviation of or compensation for an injury, - investigation, replacement, modification, or support
of the anatomy or of a physiological process, - supporting or sustaining life, - control of conception,
- disinfection of medical devices, - providing information for medical purposes by means of in vitro
examination of specimens derived from the human body, and which does not achieve its primary
intended action in or on the human body by pharmacological, immunological or metabolic means,
but which may be assisted in its function by such means.
Metastatic Colorectal
Cancer (mCRC)
Colorectal Cancer (CRC) is the second most common cancer worldwide, with an estimated
incidence of more than 1.36 million new cases annually. According to the International Agency for
Research on Cancer, an estimated 694,000 deaths from CRC occur worldwide every year,
accounting for 8.5% of all cancer deaths and making it the fourth most common cause of death
from cancer.
Molecular Residual
Disease (MRD)
Molecular Residual Disease is a small number of cancer cells left in the body after treatment. These
cells have the potential to cause relapse in patients
Molecular diagnostics
(MDx)
MDx is a form of diagnostic testing used to detect specific sequences in DNA or RNA that may or
may not be associated with disease. Clinical applications of MDx include infectious disease testing,
oncology, pharmacogenomics and genetic disease screening.
Micro satellite
instability (MSI)
MSI is a genetic hyper-mutability condition resulting from MMR that is functioning abnormally.
Multiplexing
The simultaneous detection of more than one analyte or biomarker from a single sample.
Neuroblastoma RAS
viral (v-ras) oncogene
(NRAS)
NRAS is a protein that is encoded, in humans, by the NRAS gene. Like other members of the Ras
family, the NRAS protein is a GTPase (a large family of hydrolase enzymes that can bind and
hydrolyse guanosine triphosphate) and is an early player in many signal transduction pathways.
The protein product of the normal NRAS gene performs an essential function in normal tissue
signaling, and the mutation of a NRAS gene is associated with the development of many cancers.
Next-Generation
Sequencing
(NGS)
Sequencing is the process of determining the precise order of nucleotides within a DNA molecule.
It includes any method or technology that is used to determine the order of the four bases—
adenine, guanine, cytosine, and thymine—in a strand of DNA. The high demand for low-cost
sequencing has driven the development of high-throughput sequencing technologies that
parallelize the sequencing process, producing thousands or millions of sequences concurrently.
High-throughput sequencing technologies are intended to lower the cost of DNA sequencing
beyond what is possible with standard dye-terminator methods.
Performance study
Performance study means a study undertaken to establish or confirm the analytical or clinical
performance of a device.
BIOCARTIS ANNUAL REPORT 2022 191
Polymerase chain
reaction (PCR)
The specific and exponential amplification of DNA sequences by consecutive thermal cycling steps.
Real-time PCR is a form of PCR whereby the amplified sequences are made visible by means of
fluorescent labelling in real time, i.e., as they become synthesized. Real-time PCR can be used to
estimate the quantity of target DNA sequences in a multiplexed way. PCR and real-time PCR can
also be used to detect and quantify RNA sequences after a DNA copy has been made from the RNA
sequence by means of a reverse transcriptase enzyme.
Protein
Polypeptide chain built from the 20 natural amino acids. Proteins are synthesized from a
messenger RNA copy of a gene and can have many functions in the cytoskeleton of the cell,
enzymatic, messenger functions in cells and blood such as immune cytokines, DNA binding
proteins that regulate expression, etc.
Prototype
(First) materialization of the intended product.
Regulatory authority
A government agency or other entity that exercises a legal right to control the use or sale of
medical devices within its jurisdiction, and can take legal action to ensure that medical devices
marketed within its jurisdiction comply with legal requirements.
Respiratory Syncytial
Virus (RSV)
RSV is a major cause of lower respiratory tract infection that is a frequent infection in children.
Research Use Only
(RUO)
This is a category of non-approved (i.e. no CE-marking and FDA approval) medical device products
that can solely be used for research purposes. Many producers introduce their products first as
RUO and/or IUO products, prior to obtaining 510(k) clearance or PMA approval.
Ribonucleic acid (RNA)
RNA, like DNA, is a nucleic acid molecule. RNAs have a variety of different functions in living cells.
They can have a scaffolding role in the build-up of complexes (ribosomes, SNRPs), provide
sequence recognition (translation, RNA spicing), have catalytic function (ribozymes), act as
messengers for protein synthesis (mRNAs), regulate gene expression (miRNAs) or make up the
genome of certain viruses.
SARS-CoV-2
The virus that causes COVID-19.
Screening Test
An initial or preliminary test. Screening tests do not tell you if you definitely have a disease or
condition. Rather, positive results indicate that you may need additional tests or a doctor's
evaluation to see if you have a particular disease or condition.
Sepsis
Sepsis is a potentially life-threatening condition that occurs when the body's response to an
infection damages its own tissues. When the infection-fighting processes turn on the body, they
cause organs to function poorly and abnormally. Sepsis may progress to septic shock. This is a
dramatic drop in blood pressure that can lead to severe organ problems and death. Early
treatment with antibiotics and intravenous fluids improves chances for survival (source:
mayoclinic.org).
BIOCARTIS ANNUAL REPORT 2022 192
Serine/threonine-
protein kinase
B-raf (BRAF)
BRAF is a protein that, in humans, is encoded by the BRAF gene. The BRAF protein is involved in
sending signals within cells and in cell growth. Certain inherited BRAF mutations cause birth
defects. Alternatively, other acquired mutations in adults may cause cancer.
Stakeholder
Interested party.
Surveillance monitoring
Molecular surveillance, where every patient is monitored repeatedly using a molecular test, is a
rapidly growing field and represents a significant market opportunity in oncology. The
development of an easy-to-use testing solution that can detect patient-specific biomarkers by
using a new generation Idylla™ technology aims at decentralizing customized testing and
personalized monitoring
White Paper
Customer documentation that explains a specific issue and presents Biocartis standpoint on the
matter.
BIOCARTIS ANNUAL REPORT 2022 193
Bibliography
1
EBITDA + CAPEX (operating loss (EUR 47,047k) plus acquisition of
property, plant and equipment (EUR 1,569k) and intangible assets
(EUR 368k) minus depreciation and amortization (EUR 10,481k).
2
HepatoPredict is 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.
HepatoPredict is a prognostic gene expression signature test to
help identify which patients will benefit from curative-intent
surgery, in particular liver transplantation.
3
AstraZeneca is marketing Tagrisso®, a leading lung cancer therapy
approved for patients with resectable and locally advanced or
metastatic NSCLC whose tumors have EGFR mutations. EGFR
activating mutations are important biomarkers in NSCLC, occurring
in 10-15% of all NSCLC patients in the US and the EU, and in 30-40%
of all NSCLC patients in Asia (Source:
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2022.
4
The CE-marked IVD Idylla™ Genefusion Panel detects in one single
cartridge ALK, ROS1, RET and METex14 skipping, a wide range of
actionable targets relevant in non-small cell lung cancer (NSCLC).
Designed for use in clinical laboratories, the Panel provides
comprehensive testing results within 180 minutes, significantly
faster than currently available testing methods which often take
days or even weeks before results are available.
5
The SeptiCyte® RAPID is a fully automated, rapid host-response
test
5
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. Host-response based tests focus on
measuring biomarkers that are indicative of the response of a
patient’s immune system to an infection rather than measuring
pathogens that are the cause of the infection.
6
In addition to blood samples collected in PAXgene blood RNA
tubes (per the manufacturer’s instructions), this test is now also
able to process undiluted EDTA blood samples which are commonly
used for most hematology procedures, with results available in
about one hour.
EDTA represents Ethylenediaminetetraacetic acid,
which is the anticoagulant used for most hematology procedures
(like identifying and counting blood cells, blood typing, etc.).
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7
Immunexpress Pty Ltd is a Seatle-based molecular diagnostic
company focused on improving outcomes for suspected sepsis
patients.
8
M. Arcila et al., ‘Clinical Utility and Performance of an Ultrarapid
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19
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20
PCT = Procalcitonin (PCT) assay is a biomarker for systemic
inflammation; CRP = C-reactive protein, a biomarker for systemic
inflammation. Positive bacteriological cultures, including blood
cultures, may not be available before 24 to 48 hours; interpretation
of local colonization may be ambiguous; and traditional markers of
infection, such as body temperature and white blood cell (WBC)
count, may not be specific.
21
The Lancet,
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Practice Guidelines in Oncology: Non-small cell lung cancer Version
6.
2017. http://www.nccn.org/professionals/physician_gls/pdf/nscl.
pdf. Accessed August 2018; Novello S. et al. Metastatic non-small-
cell lung cancer: ESMO Clinical Practice Guidelines for diagnosis,
treatment and follow-up. Ann Oncol (2016) 27 (suppl 5): v1-v27;
Accessed August 2018.
38
National Comprehensive Cancer Network website. NCCN Clinical
Practice Guidelines in Oncology: Non-small cell lung cancer Version
6.
2017. http://www.nccn.org/professionals/physician_gls/pdf/nscl.
pdf. Accessed August 2018; Novello S. et al. Metastatic non-small-
cell lung cancer: ESMO Clinical Practice Guidelines for diagnosis,
treatment and follow-up. Ann Oncol (2016) 27 (suppl 5): v1-v27;
Accessed August 2018.
39
Cooper WA et al. J Thorac Dis 2013; 5 (S5): S479-490. Molecular
Biology of lung cancer.
40
More info on Idylla™ GeneFusion-Panel_IVD_Leaflet.pdf
(biocartis.com)
41
National Comprehensive Cancer Network (NCCN). Practice
Guidelines in Oncology: Melanoma - Version 2.2018, available
from https://www.nccn.org/professionals/physician_gls/pdf/mela
noma.pdf (accessed June 2018); Dummer et al. Cutaneous
melanoma: ESMO clinical practice guidelines for diagnosis,
treatment, and follow-up. Ann Oncol 2016; Suppl 5:126–132, Garbe
et al. Diagnosis and treatment of melanoma. European consensus-
based interdisciplinary guideline-update 2016. Eur J Cancer 2016;
63:201–217.
42
Bisshop et al. Melanoma Research 2018, 28(2): 96–104.
43
Bellomo et al., Model combining tumor molecular and
clinicopathologic risk factors predicts sentinel lymph node
metastasis in primary cutaneous melanoma. JCO Precision
Oncology (2020). https://doi.org/10.1200/PO.19.00206.
44
Cirrhosis is a late-stage liver disease that is characterized by
fibrosis (scarring) of the liver tissue. Main causes include alcoholic
liver disease (resulting from long term alcohol overconsumption),
non-alcoholic steatohepatitis (NASH; linked to obesity and type 2
diabetes) and chronic hepatitis B or hepatitis C infection.
45
Mutations in the isocitrate dehydrogenase 1 (IDH1) and 2 (IDH2)
genes are oncogenic drivers that are frequently found in a variety
of human malignancies, including gliomas, acute myeloid leukemia,
cholangiocarcinoma, chondrosarcoma and thyroid carcinoma.
Source: Han et al. 2020, IDH mutation in glioma: molecular
mechanisms and potential therapeutic targets, British Journal of
Cancer.
46
SeptiCyte® RAPID is a CE-marked IVD, developed by
Immunexpress Inc in collaboration with Biocartis. Biocartis has the
exclusive distribution rights for the EU. The test is not available in
all countries. Availability to be checked with local Biocartis
representative. The SeptiCyte® RAPID uses SuperScript™ III. The
SuperScript III trademark is owned by Life Technologies
Corporation.
47
Quantitative Reverse Transcription PCR. PCR or Polymerase chain
reaction is an efficient and cost-effective way to copy (amplify)
small segments of DNA or RNA. As such, millions of copies of a
section of DNA are made in just a few hours, allowing further
analysis for clinicians to diagnose and monitor diseases using a
minimal amount of sample, such as blood or tissue. Source:
www.genome.gov, last consulted on 22 October 2020.
48
Based on RT-qPCR analysis, combined with an advanced machine
learning algorithm.
BIOCARTIS ANNUAL REPORT 2022 195
49
This means that the probability of the nodule being malignant
drops from 25% to less than 5%, allowing follow-up to be
recommended as an alternative to surgery. Info and source:
https://thyroidprint.com/en/home-us/, last consulted on 22
October 2020
50
NPV (Negative Predictive Value) > 95%.
51
And some European countries.
52
US FDA, https://www.fda.gov/
53
Source: MedTech Europe,
https://www.medtecheurope.org/news-and-
events/default/funding-and-reimbursement/
54
Source: NILA USA, https://www.nila-usa.org/nila/PAMA.asp
55
Source: Pacific Bridge Medical,
https://www.pacificbridgemedical.com/publication/ivd-
registration-reimbursement-china/
56
FTEs on 31 December of each year (as level may change
throughout the year)
57
Employee with direct reports.
58
RoHS stands for Restriction of Hazardous Substances. RoHS, also
known as Directive 2002/95/EC, originated in the European Union
and restricts the use of specific hazardous materials found in
electrical and electronic products (known as EEE). Source:
www.rohsguide.com
59
WEEE stands for the Waste of Electrical and Electronic
Equipment. The Waste Electrical and Electronic Equipment
Directive (WEEE Directive) is the European Community Directive
2012/19/EU on waste electrical and electronic equipment (WEEE)
which, together with the RoHS Directive 2011/65/EU, became
European Law in February 2003
60
REACH stands for Registration, Evaluation, Authorisation and
Restriction of Chemicals (REACH) and is a European Union
regulation dated 18 December 2006
61
Source: Stransky et al. The landscape of kinase fusions in cancer.
Nat Commun. 5, 4846, 2014; Mertens et al. The emerging
complexity of gene fusions in cancer. Nat Rev Cancer 15, 371-381,
2015