BGMD BG Medicine Inc (CE)

The risks and uncertainties described below are those that we currently believe may materially affect us. If any of the following risks actually occur, they may materially harm our business, our financial condition and our results of operations.

Risks Related to Our Financial Position

We need immediate additional funding to continue our operations and support our capital expenditures, which may not be available to us. Without modifications to our existing payment obligations or receipt of additional funding, our existing cash and other sources of liquidity may only be sufficient to fund our limited operations through July 2016. If we do not receive adequate financing or engage in a strategic transaction on acceptable terms before our available cash necessary to sustain our ongoing operations is depleted, we will likely cease operations and liquidate our assets and our common stock stockholders will likely lose their entire investment in us.

Our business does not generate the cash necessary to finance our operations and has consumed substantial amounts of cash to date. We incurred net losses of $8.1 million in 2014 and $5.3 million in 2015. We expect to continue to incur losses and use cash during 2016 and beyond. Our cash utilization generally depends on the extent to which our automated partners are successful in developing and commercializing their automated versions of our tests, as well as the costs, timing and outcomes of our efforts to support the marketing and selling efforts of our automated partners, among several other factors.

Without modifications to our existing payment obligations or receipt of additional funding, we will require additional capital to continue our operations beyond July 2016. At December 31, 2015, we had cash totaling $1.5 million. At March 25, 2016, we had cash totaling $1.0 million. During the year ended December 31, 2015, we incurred a net loss totaling $5.3 million and used cash in operating activities totaling $3.7 million.

Our near-term capital needs depend on many factors, including:

As of the date of this report and since September 11, 2014, we have implemented a reduction of approximately 77% of our workforce, or 17 people, leaving five employees. We took these steps in order to reduce our operating expenses and extend our cash runway in anticipation of the commercial launch of automated versions of our galectin-3 test.

On November 13, 2014, we announced that we had retained Stifel Nicolaus & Company, Incorporated, an investment banking firm, to assist us in reviewing and evaluating strategic alternatives. We engaged in that formal process during the ten months that followed our announcement and we terminated our formal engagement with Stifel during the third quarter of 2015.

If we are unable to obtain adequate financing or engage in a strategic transaction on acceptable terms, we will be required to implement further cost reduction strategies. These reductions would significantly impact activities related to the commercialization of the BGM Galectin-3 Test and the development of additional indications for the BGM Galectin-3 Test and other pipeline products, and would result in significant harm to our business, financial condition and results of operations.

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If we do not receive adequate financing or engage in a strategic transaction on acceptable terms before our available cash necessary to sustain our ongoing operations is depleted, we will likely be forced to wind down our operations, either through liquidation, voluntary or involuntary bankruptcy or a sale of our assets. Upon liquidation, including deemed liquidations pursuant to a merger, consolidation or a sale of all or substantially all of our assets, the holders of our Series A Preferred Stock will be entitled to be paid first out of any proceeds in an amount per share equal to the price at which shares of Series A Preferred Stock were sold in the Series A Preferred Stock financing, plus all accrued but unpaid dividends on each share of Series A Preferred Stock, and prior to payment of any amounts on our common stock. Thereafter, the holders of Series A Preferred Stock will also share pro rata on an as converted to common stock basis in payments made to the holders of our common stock. Accordingly, the holders of the Series A Preferred Stock will be entitled to receive the proceeds out of any sale or liquidation of the Company before any such proceeds are paid to holders of our common stock and then share in any proceeds paid to holders of our common stock. As a result, only the sale or liquidation proceeds in excess of the liquidation preference plus accrued but unpaid dividends would be available for distribution to holders of our common stock. Therefore, if we wind down our operations for any reason, it is likely that our common stockholders will lose their entire investment in us.

There is substantial doubt concerning our ability to continue as a going concern.

Our financial statements have been prepared assuming that we will continue as a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. We expect to incur further losses in the commercialization of our cardiovascular diagnostic test and the operations of our business and have been dependent on funding our operations through the issuance and sale of equity securities. These circumstances raise substantial doubt about our ability to continue as a going concern. As a result of this uncertainty and the substantial doubt about our ability to continue as a going concern as of December 31, 2015, the Reports of Independent Registered Public Accounting Firms included immediately prior to the Consolidated Financial Statements included elsewhere in this Annual Report on Form 10-K include a going concern explanatory paragraph. Management’s plans include focusing on increasing revenue by seeking new arrangements with commercial distribution partners and the reduction of expenditures. However, no assurance can be given at this time as to whether we will be able to achieve these objectives. Our financial statements do not include any adjustment relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should we be unable to continue as a going concern.

The impact and results of our exploration of strategic alternatives are uncertain and may not be successful.

On November 13, 2014, we announced that we had retained Stifel Nicolaus & Company, Incorporated, an investment banking firm, to assist us in reviewing and evaluating strategic alternatives. We engaged in that formal process during the ten months that followed our announcement and we terminated our formal engagement with Stifel during the third quarter of 2015. Without the benefit of an outside financial advisor, however, we continue to explore possible strategic alternatives including joint ventures, strategic partnerships or alliances, or merger or sale of the Company or other possible transactions.

There can be no assurance that this exploration process will result in any initiatives, agreements or transactions that will enhance stockholder value. Further, any strategic transaction that is completed ultimately may not deliver the anticipated benefits or enhance stockholder value.

In addition, there is uncertainty regarding the length and/or complexity of the strategic-alternative exploration process. We also expect that the process will continue to distract the attention of our management from operating and growing our business and may impair our relationships with our customers, partners and employees. It is also possible that we will incur significant expenses pursuing one or more transactions unsuccessfully. We do not currently intend to disclose further developments with respect to this process, unless and until our board of directors approves a specific transaction or otherwise concludes its review of strategic alternatives.

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Due in part to our limited financial resources, we may fail to select or capitalize on the most scientifically, clinically or commercially promising or profitable indications for our product candidates, and/or we may be unable to pursue the indications that we would like to pursue.

We have limited technical, managerial and financial resources to determine the indications on which we should focus the development efforts related to our product candidates. Due to our limited available financial resources and staffing, we have had to curtail development programs for our CardioSCORE test and certain additional indications for our galectin-3 test and activities that might otherwise have led to more rapid progress of our product candidates through the regulatory and development processes.

Furthermore, we cannot assure you that we will be able to retain or regain adequate staffing levels to run our operations and/or to accomplish all of the objectives that we otherwise would seek to accomplish. The decisions to allocate our research, management and financial resources toward particular indications for our product candidates may not lead to the development of viable commercial products and may divert resources from better opportunities. Similarly, our decisions to delay or terminate certain development programs may also cause us to miss valuable opportunities.

We intend to deregister our securities under the Exchange Act. Deregistration will result in less disclosure about us and may negatively affect our ability to raise additional funds, the ability of our stockholders to sell our securities and the liquidity and trading prices of our common stock.

On March 25, 2016, our Board of Directors voted to voluntarily deregister our common stock under the Exchange Act and become a non-reporting company. In connection therewith, the Board of Directors approved the filing with the SEC of a Form 15 to voluntarily deregister our securities under Section 12(g) of the Exchange Act and suspend our reporting obligations under Section 15(d) of the Exchange Act. We expect to file the Form 15 in April 2016. We expect that our obligations to file periodic reports, such as Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, will be suspended immediately upon the filing of the Form 15 with the SEC, and our proxy statement, Section 16 and other Section 12(g) reporting responsibilities will terminate effective 90 days after the filing of the Form 15. We are eligible to deregister under the Exchange Act because our common stock is held by fewer than 300 stockholders of record. Following deregistration, we do not expect to publish periodic financial information or furnish such information to our stockholders except as may be required by applicable laws. As a result of the foregoing factors, deregistration will result in less disclosure about us and may negatively affect our ability to raise additional funds, the ability of our stockholders to sell our securities and the liquidity and trading prices of our common stock.

Risks Related to Our Business and Strategy

We are an early stage commercial company with a history of losses resulting from our research and development and early commercialization efforts, we expect to incur losses for at least the next several years, and we may never achieve profitability.

We have incurred substantial net losses since our inception in February 2000. For the years ended December 31, 2015, 2014 and 2013, we incurred net losses of $5.3 million, $8.1 million and $15.8 million, respectively. Our accumulated deficit was approximately $166.3 million at December 31, 2015. We expect to continue to incur net losses for 2016 and beyond. We will need to generate significant revenue from product sales and product fees to achieve profitability.

Historically, we have generated limited revenue from our biomarker discovery and analysis services agreements. Our current sources of revenues include product sales of our BGM Galectin-3 Test kits, partnership revenues related to modifications made to our license and distribution agreements or for achievement of specified commercial milestones, and product fees generated from the sale of automated tests for galectin-3 by our automated partners.

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We are in the process of commercializing our first product and, to date, have generated a limited amount of product revenue. Our BGM Galectin-3 Test, received clearance from the U.S. Food and Drug Administration, or FDA, in late 2010 as an aid in assessing the prognosis of patients suffering from chronic heart failure, and is commercially available in the United States. Our BGM Galectin-3 Test is also available in Europe under a CE Mark as an aid in assessing the prognosis of acute and chronic heart failure and as an aid in identifying individuals in the general population who are risk of developing heart failure. Our BGM Galectin-3 Test is being marketed in the United States through specialty, national, regional and hospital laboratories.

Automated tests for galectin-3 developed by Abbott and bioMérieux are available in Europe under a CE Mark as an aid in assessing the prognosis of chronic heart failure. The Abbott ARCHITECT automated galectin-3 test received 510(k) clearance from the FDA on December 23, 2014 as an aid in assessing the prognosis of chronic heart failure and in July 2015 became commercially available in the United States. On May 8, 2015, in anticipation of the U.S. market launch of the ARCHITECT ^® Galectin-3 assay we amended our license and development agreement with Abbott due to market dynamic considerations since the Galectin-3 assay first began development in 2009. On July 6, 2015, we announced that the ARCHITECT ^®  Galectin-3 assay is available for purchase from Abbott in the United States. This is the first automated test for galectin-3 to be introduced for commercial use in the United States. On November 24, 2015, we further amended our license and distribution agreement with Abbott, in regard to product fees paid to us by Abbott for galectin-3 tests sold by Abbott to reference laboratories, while retaining the previously negotiated product fees for the other customer segments. In consideration for the amendment, Abbott agreed to make an initial payment of $500,000 to us on November 30, 2015 and a second payment of up to $500,000 payable to us, by June 30, 2016, subject to achievement of certain commercial milestones. We expect that this modification to the agreement will expedite the transition from manual to automated testing for galectin-3. As a result, the majority of revenues currently generated from sales of manual test kits are expected to be diminished over time and we expect that any future revenues will be primarily derived from product fees that are generated from the sale of automated tests by Abbott (and our other automated partners when and if their automated tests become available). However, there can be no assurance that we will generate increased product fees from the sale of automated tests. We will need to generate significant product revenue to achieve profitability.

Even as we seek to increase our sales of our BGM Galectin-3 Test, increase product revenue from the sale of automated tests by Abbott, and launch additional automated versions of our galectin-3 test, we expect our losses to continue as a result of manufacturing, sales and marketing support of our automated partners, and other ongoing expenses. These losses, among other things, have had and will continue to have an adverse effect on our working capital, total assets and stockholders’ equity. Because of the numerous risks and uncertainties associated with our commercialization efforts, we are unable to predict when we will become profitable, and we may never become profitable. Even if we do achieve profitability, we may not be able to sustain or increase profitability on a quarterly or annual basis. If we are unable to achieve and then maintain profitability, our business, financial condition and results of operations will be negatively affected and the market value of our common stock will decline.

If we are unsuccessful in the execution of our commercial strategy, our business, financial condition, results of operations and prospects will be materially adversely affected.

We have implemented a commercial strategy that is intended to generate revenues through the widespread market adoption of our BGM Galectin-3 Test and automated galectin-3 testing. In support of this strategy, we have supported clinical research studies that have been designed to provide evidence of the clinical utility of our products, to further differentiate our products and to otherwise support the commercial introduction of our BGM Galectin-3 Test, automated galectin-3 testing and future products in our pipeline. We are unable to give any assurance that we will be successful in executing our commercial strategy or that we will be successful in providing evidence of clinical utility of our products, differentiating our products or otherwise supporting our products in the manner, timeframe or under the cost parameters we anticipate, if at all. Even if we execute this strategy as planned, we may not yield the increased revenues and market growth that we anticipate. Our failure to be commercially successful in implementing our new commercialization strategy would materially adversely impact our business, financial condition, results of operations and prospects.

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Our business is dependent on our ability to successfully commercialize novel diagnostic tests. If we fail to develop and commercialize these products, we may be unable to execute our business plan.

Historically, we have generated revenues from initiatives, collaborations and biomarker discovery and analysis services agreements with pharmaceutical companies and health care organizations. Our current business strategy, however, focuses on commercializing diagnostic tests that incorporate biomarkers that we in-license and/or identify through data mining and outsourced laboratory analysis of specific patient cohorts and specimen repositories. Beginning in November 2012, we have shifted our focus from early stage biomarker discovery toward a more commercially-oriented role in which we have generated and supported studies that have been designed to provide evidence of clinical utility, further differentiate and support the BGM Galectin-3 Test and future products in our pipeline. We expect that our commercial strategy will continue to increasingly rely on the success of our automated partners to commercialize automated versions of the galectin-3 test. We do not expect to receive future revenue from performing biomarker discovery and analysis services for third parties. The success of our business will depend on our ability to commercialize diagnostic tests based on the products in our current pipeline, as well as others that we may in-license in the future, and the ability of our automated partners to commercialize automated versions of our galectin-3 test.

Prior to commercializing our diagnostic tests, we are required to undertake time-consuming and costly development activities, sometimes including clinical studies, and to obtain regulatory clearance or approval, for which the outcome is uncertain. We have limited experience in developing and commercializing diagnostic tests and there are considerable risks involved in these activities. The science and methods that we are employing are innovative and complex, and any product development program in which we may engage in the future may not ultimately yield diagnostic tests for commercialization. Products that appear promising in early development may fail to be validated in subsequent studies, and even if we achieve positive results, we may still fail to obtain the necessary regulatory clearances or approvals. Few research and development projects result in commercial products, and perceived viability in early clinical studies often is not replicated in later studies. At any point, we may abandon development of a product candidate, or we may be required to expend considerable resources obtaining additional clinical and nonclinical data, which would adversely impact the timing for generating potential revenue from those product candidates. If our development programs yield fewer commercial products than we expect, we may be unable to execute our business plan, and our business, financial condition and results of operations may be adversely affected.

We expect that our commercial strategy will increasingly rely on the success of our automated partners to develop and commercialize automated versions of the galectin-3 test. If our automated partners fail to perform or prioritize their collaborations or terminate their agreements with us, our ability to substantially increase customer acceptance and clinical adoption of our galectin-3 test will be undermined.

Although, to date, the micro-titer plate version of the BGM Galectin-3 Test has been the primary focus of our commercialization strategy, we believe that the introduction of automated testing for galectin-3 will improve access to testing, shorten turn-around time to receive testing data, minimize objections related to the more labor intensive micro-titer plate testing method and, as a result, accelerate adoption of galectin-3 testing. To this end, we have partnered with four leading diagnostic instrument manufacturers to develop automated versions of our galectin-3 test. We also expect that the introduction of automated testing for galectin-3 will result in broader customer acceptance and clinical adoption of galectin-3 testing because the four automated partners maintain broad access to major segments of the diagnostics market, including hospital laboratories, private laboratories, reference laboratories and physician office laboratories, due to the widespread coverage of their installed bases.

Automated tests for galectin-3 developed by Abbott and bioMérieux are available in Europe under a CE Mark as an aid in assessing the prognosis of chronic heart failure. The Abbott ARCHITECT ^® automated galectin-3 test received 510(k) clearance from the FDA on December 23, 2014 as an aid in assessing the prognosis of chronic heart failure. On May 8, 2015, in anticipation of the U.S. market launch of the ARCHITECT ^® Galectin-3 assay we amended our license and development agreement with Abbott due to market dynamic considerations since the Galectin-3 assay first began development in 2009. On July 6, 2015, we announced that the ARCHITECT ^®  Galectin-3 assay is available for purchase from Abbott in the United States. This is the first automated test for galectin-3 to

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be introduced for commercial use in the United States. On November 24, 2015, we further amended our license and distribution agreement with Abbott, in regard to product fees paid to us by Abbott for galectin-3 tests sold by Abbott to reference laboratories, while retaining the previously negotiated product fees for the other customer segments. In consideration for the amendment, Abbott agreed to make an initial payment of $500,000 to us on November 30, 2015 and a second payment of up to $500,000 payable to us, by June 30, 2016, subject to achievement of certain commercial milestones. We expect that this modification to the agreement will expedite the transition from manual to automated testing for galectin-3. As a result, the majority of revenues currently generated from sales of manual test kits are expected to be diminished over time and we expect that any future revenues will be primarily derived from product fees that are generated from the sale of automated tests by Abbott (and our other automated partners when and if their automated tests become available). However, there can be no assurance that we will generate increased product fees from the sale of automated tests. We will need to generate significant product revenue to achieve profitability.

Under the agreements, our partners are responsible for developing and commercializing the tests. Accordingly, we are dependent upon our automated partners to prioritize the development of their respective automated versions and the regulatory clearance of their automated versions. Our partners may experience difficulties and delays in other segments of their businesses that may negatively impact their ability to prioritize and commercialize the automated versions of our test. Our partners’ delays, failures or unwillingness to prioritize or devote adequate resources to develop and obtain regulatory clearance for the automated versions of our galectin-3 test would result in a substantially smaller market opportunity for our galectin-3 testing business and would adversely impact our financial condition, results of operations and prospects.

We expect that our commercial strategy will increasingly rely on the success of our automated partners to develop and commercialize automated versions of the galectin-3 test. Our automated partners may be unable to develop and/or obtain regulatory clearance of galectin-3 tests that can be performed on their automated platforms, unable to gain market acceptance for their automated galectin-3 tests, unable to commercialize their galectin-3 tests or decide not to commercialize their automated galectin-3 tests.

We have entered into worldwide license, development and commercialization agreements with Abbott, bioMérieux, Siemens and Alere. Revenues generated from the sale of automated galectin-3 tests under these agreements have, thus far, been limited. To date, only bioMérieux and Abbott have launched galectin-3 tests developed for their automated platforms in Europe, under CE Mark and, on December 23, 2014, the FDA granted 510(k) clearance for Abbott Laboratories’ ARCHITECT ^® Galectin-3 assay, the first FDA cleared automated blood test for galectin-3. On May 8, 2015, in anticipation of the U.S. market launch of the ARCHITECT ^® Galectin-3 assay we amended our license and development agreement with Abbott due to market dynamic considerations since the Galectin-3 assay first began development in 2009. U.S. market introduction of Abbott’s ARCHITECT ^® Galectin-3 automated assay was initiated in July of 2015. On November 24, 2015, we amended our License and Distribution Agreement with Abbott, in regard to product fees paid to us by Abbott for galectin-3 tests sold by Abbott to reference laboratories, while retaining the previously negotiated product fees for the other customer segments. In consideration for the amendment, Abbott agreed to make an initial payment of $500,000 to us on November 30, 2015 and a second payment of up to $500,000 payable to us, by June 30, 2016, subject to achievement of certain commercial milestones. We expect that this modification to the agreement will expedite the transition from manual to automated testing for galectin-3. As a result, the majority of revenues currently generated from sales of manual test kits are expected to be diminished over time and we expect that any future revenues will be primarily derived from product fees that are generated from the sale of automated tests by Abbott (and our other automated partners when and if their automated tests become available). However, there can be no assurance that we will generate increased product fees from the sale of automated tests. We will need to generate significant product revenue to achieve profitability.

Although we expect that our commercial strategy will increasingly rely on the success of our automated partners to develop and commercialize automated versions of the galectin-3 test, we are unable to give any assurance that our automated partners will be successful in gaining market acceptance of their automated tests for galectin-3. In addition, there are a variety of risks and uncertainties that may cause delays in, or prevent our automated partners from, successfully developing or obtaining CE Mark or regulatory clearance from the FDA for automated

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versions of our galectin-3 test in the timeframes we expect, or at all. Delays may result from unanticipated problems in product development, an inability to obtain regulatory clearance or approval on a timely basis. Any material delays in our partners’ receipt of regulatory clearance or approval for the automated versions of our galectin-3 test, or their failure to obtain such clearances or approvals at all, would have a material adverse effect on our business, financial condition and results of operations.

While we intend to leverage the commercial capabilities of our automated partners to promote the utility of our tests to clinicians, laboratory decision makers, payers, patients and other stakeholders, even if we are able to implement this strategy, we will be largely dependent on these third parties for the commercial success of our products. They may not deploy the resources we would like them to, and our revenue would then suffer. In addition, we could become embroiled in disputes with these parties regarding the terms of any agreements, their performance or intellectual property rights. Any dispute could disrupt the sales of our products and adversely affect our reputation and revenue. Failure of our strategy to leverage the expertise, marketing resources and installed base of our automated partners would have a material adverse effect on our future business, financial condition and results of operations.

The product fee provisions in the agreements with our partners for the automated versions of our galectin-3 test are subject to renegotiation and following renegotiation, the royalties payable to us may not be favorable to us.

The agreements we entered into with our partners who are developing and commercializing the automated versions of our galectin-3 test contain provisions that, under certain circumstances, entitle our partners to reduce the product fee amounts payable to us on the sales of their tests in amounts that are subject to negotiation by us and our respective partners. In some cases, our partners’ rights to reduce the product fee amounts are triggered by the CMS payment rate being below certain agreed-upon thresholds and in other cases, our partners’ rights to reduce the royalty amounts payable to us are triggered by the average selling prices for the tests in certain regions being below certain agreed-upon price thresholds. Effective January 1, 2014 the payment rate at which our BGM Galectin-3 Test is reimbursed by CMS was increased to $30.01 from $17.80 per test. In 2015, the national limitation amount for our BGM Galectin-3 Test was reduced to $29.93 and applied across the U.S., except in Ohio and West Virginia where rates of $23.93 and $26.33, respectively, applied. In 2016, the national limitation amount for our BGM Galectin-3 Test was increased to $29.96 and applies across the U.S., except in Ohio and West Virginia where rates of $23.95 and $26.36, respectively, apply. Even with the increase from 2013, the CMS payment rate for calendar years 2014, 2015 and 2016 are below the agreed-upon CMS payment rate thresholds in the agreements with certain of our automated partners. Accordingly, the current royalty amounts payable to us under these agreements are subject to reduction by our partners, in amounts to be negotiated by us and our respective partners. On May 8, 2015, in anticipation of the U.S. market launch of the ARCHITECT ^® Galectin-3 assay we amended our license and development agreement with Abbott due to market dynamic considerations since the Galectin-3 assay first began development in 2009. On November 24, 2015, we further amended our license and distribution agreement with Abbott, in regard to product fees paid to us by Abbott for galectin-3 tests sold by Abbott to reference laboratories, while retaining the previously negotiated product fees for the other customer segments. There can be no assurance that in any future renegotiation of these product fee provisions we will be successful in negotiating new rates that will be favorable to us.

We may not be able to successfully commercialize our BGM Galectin-3 Test and our automated partners may not be able to successfully commercialize their automated tests for galectin-3 in the timeframes we expect, or at all.

Our first product, the BGM Galectin-3 Test, received clearance from the FDA in late 2010 and is commercially available throughout the United States as an aid in assessing the prognosis of patients suffering from chronic heart failure. In Europe, our BGM Galectin-3 Test is commercially available under a CE Mark as an aid in assessing the prognosis of patients suffering from acute and chronic heart failure and as an aid in identifying individuals in the general population who are at risk of developing heart failure. bioMérieux and Abbott have launched galectin-3 tests developed for their automated platforms in Europe, under CE Mark and, beginning in July of 2015, Abbott launched its automated ARCHITECT ^® Galectin-3 assay in the United States. In the United States, our BGM Galectin-3 Test kits and the Abbott automated galectin-3 test are purchased by clinical, hospital and reference laboratories, clinical research organizations and pharmaceutical manufacturers. In Europe, our

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BGM Galectin-3 Test kits and the bioMérieux and Abbott automated tests for galectin-3 are purchased by independent sales distributors, hospital and research laboratories, clinical research organizations and pharmaceutical manufacturers. We are unable to give any assurance that we will be successful in generating revenues from adoption of the BGM Galectin-3 Test or that our automated partners will be successful in generating revenues from adoption of their automated galectin-3 tests. Even if we are successful in generating revenue from the sale of the BGM Galectin-3 Test or our automated partners are successful in generating revenue from the sale of their automated galectin-3 tests, we may not generate the increased revenues and market growth that we anticipate. Our failure to generate revenue from the sale of the BGM Galectin-3 Test or product fees from the sale of automated tests for galectin-3 by our automated partners would materially adversely impact our business, financial condition, results of operations and prospects.

In pursuing our commercialization strategy for our BGM Galectin-3 Test for heart failure, we are particularly dependent upon True Health Diagnostics, formerly Health Diagnostic Laboratory, Inc., or HDL, which was responsible for approximately 71% of our BGM Galectin-3 Test kit sales in 2015. If True Health Diagnostics fails to purchase our galectin-3 tests at the same or greater levels as HDL purchased our tests during 2015, our results of operations could be materially adversely affected. Any disruption in True Health Diagnostic’s operations or problems that otherwise adversely affect our business relationship with them could result in a delay or interruption of the sales volume of our galectin-3 test.

In March 2011, we entered into a supply agreement with HDL, pursuant to which HDL agreed to purchase BGM Galectin-3 Test kits from us and to offer galectin-3 testing services to physicians in the United States. On June 7, 2015, HDL, the largest customer of our BGM Galectin-3 ^® Test (manual micro-titer plate platform) with sales that represented approximately 71%, 83% and 75% of our product revenues for the fiscal year ended December 31, 2015, December 31, 2014 and December 31, 2013, respectively, filed a voluntary petition for bankruptcy protection under Chapter 11 in the United States Bankruptcy Court for the Eastern District of Virginia, Richmond Division. Since HDL’s bankruptcy filing, we have received substantially smaller and less frequent orders from HDL than we had received previously. In light of this filing, we provided a provision for doubtful accounts of $151,000 in the second quarter of 2015 for sales made to HDL totaling $254,995 prior to their June 7 ^th bankruptcy filing for which we had not yet received payment. With court approval, HDL continued to operate its business, to purchase tests kits from us in the ordinary course and agreed to accelerated payment terms and a limitation on amounts owed to the Company on such new orders. Shipments of galectin-3 test kits to HDL resumed on June 15, 2015 at volumes that were initially comparable to those that had been shipped immediately prior to the June 7, 2015 bankruptcy filing, but, subsequently declined beginning in the third quarter of 2015. In accordance with the post-bankruptcy accelerated payment terms, we received timely payment from HDL for kit shipments that we made to them after June 15, 2015. On September 11, 2015, True Health Diagnostics announced the acquisition of HDL, in a court-supervised auction, pursuant to a court approved plan of liquidation or reorganization. True Health Diagnostics declined to assume our supply agreement with HDL, which expired in March of 2016, but has continued to purchase BGM Galectin-3 Test kits from us and to offer galectin-3 testing services to physicians in the United States. Such orders from True Health Diagnostics, however, remain substantially smaller and less frequent than the orders we received previously from HDL. On February 11, 2016, HDL filed its Amended Disclosure Statement, seeking solicitation in favor of its Second Amended Plan of Liquidation, or the Plan. The court approved Disclosure Statement summarized HDL’s proposed Plan, which provides that all allowed administrative expense claims will be paid in full and that all allowed general unsecured claims will be paid their pro rata portion of funds in a liquidating trust. A hearing to consider confirmation of the Plan was held on March 29, 2016. To the extent the Plan is confirmed and our administrative expense claim is allowed, we will receive a full distribution on account of such claim from HDL in the amount of $83,356.52, however, it is uncertain when HDL will make such distribution. Further, to the extent the Plan is confirmed, it is, as yet, uncertain what distribution, if any, will be made to us on account of our general unsecured claim to offset our provision for doubtful accounts on account of allowed claims related to the sale of BGM Galectin-3 Test kits to HDL prior to their filing for bankruptcy protection under Chapter 11. HDL, now True Health Diagnostics, accounted for 71% of our product revenues for the fiscal year ended December 31, 2015.

We may suffer significant losses as a result of any business interruptions experienced by True Health Diagnostics or if our relationship with them is otherwise adversely affected. Any prolonged disruption in their operations or problems that otherwise undermine our business relationship with them could have a significant negative impact

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on our ability to execute on our commercialization strategy for our galectin-3 test in the United States and to maintain or increase the sales volume of our galectin-3 test. In addition, True Health Diagnostics is not obligated to continue to purchase BGM Galectin-3 Test kits as True Health Diagnostics declined to assume our supply agreement with HDL, which expired in March 2016.

Purchases of BGM Galectin-3 Test kits by research laboratories, clinical research organizations and pharmaceutical manufacturers who are employing the test for research purposes may fluctuate and impact sales volume of our galectin-3 test.

There is considerable interest in evaluating the measurement of galectin-3 as part of both heart failure and non-heart failure related preclinical and clinical research projects. Purchases of BGM Galectin-3 kits made by research laboratories, clinical research organizations and pharmaceutical manufacturers represent a potentially significant source of our revenue. However, sales related to test kit purchases made for research purposes may fluctuate significantly over time due to the fact that these purchases are typically buyer initiated, study specific and are dependent on the availability of research funding. In addition, low cost test kits containing research grade reagents that have not been cleared by regulatory authorities may be used for non-clinical testing of galectin-3 by some investigators. Accordingly, sales related to research applications of our BGM Galectin-3 Test kits may fluctuate widely over time and negatively impact on our ability to predict, maintain or increase the sales volume of our galectin-3 test.

We may not be able to provide evidence of clinical utility or to differentiate our galectin-3 testing through clinical research studies in the timeframes we expect, or at all.

We support clinical research studies performed by third party investigators that have been designed to provide evidence of the clinical utility of our galectin-3 testing and to differentiate its performance from other diagnostic products. The results of these studies are essential to our efforts to ensure customer acceptance and clinical adoption of galectin-3 testing. The results of these studies support our efforts to promote our BGM Galectin-3 Test and to educate potential customers. We may be unable to demonstrate that galectin-3 testing provides incremental benefits over currently available heart failure diagnostic tests sufficient to ensure adoption of our test in the timeframes we expect, or at all.

Furthermore, since we have limited technical, managerial and financial resources we may be unable to support clinical research studies that have been designed to provide evidence of the clinical utility of our BGM Galectin-3 Test and to differentiate its performance from other diagnostic products. Due to our limited technical, managerial and financial resources we have had to curtail certain clinical research activities that might otherwise have led to the development of additional evidence regarding the incremental benefits associated with galectin-3 testing.

We are unable to give any assurance that we will be successful in providing sufficient evidence of clinical utility of galectin-3 testing or differentiate from other diagnostic products in the manner, timeframe or under the cost parameters we anticipate, if at all. If we are unable to provide evidence of clinical utility and differentiate galectin-3 testing, we may not be able to generate the increased revenues and market growth that we anticipate. Our failure to generate revenue from the sale of the galectin-3 tests would materially adversely impact our business, financial condition, results of operations and prospects.

We may not be able to provide evidence of clinical utility or to differentiate our future pipeline products, including new indications for galectin-3 testing.

Our ability to successfully commercialize the future pipeline products that we may develop will depend on numerous factors, including whether health care providers believe that any other diagnostic tests that we successfully develop provide sufficient incremental clinical utility; whether the medical community accepts that our diagnostic products have sufficient sensitivity, specificity and predictive value to be meaningful in patient care and treatment decisions; and whether health insurers, government health programs and other third-party payers will cover and pay for our diagnostic tests and the amount that they will reimburse. These factors may

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present obstacles to commercial acceptance of our diagnostic product candidates. To the extent these obstacles arise, we will need to devote substantial time and resources to overcome these obstacles, and we might not be successful. Failure to achieve widespread market acceptance of our diagnostic products would materially harm our business, financial condition and results of operations.

We are unable to give any assurance that we will be successful in providing sufficient evidence of clinical utility or any assurance that we will have adequate managerial, technical or financial resources to support the studies necessary to provide sufficient evidence of clinical utility of our future products including new indications for galectin-3 testing or differentiate from other diagnostic products in the manner, timeframe or cost parameters we anticipate, if at all. If we are unable to provide evidence of clinical utility and differentiate our future products including new indications for galectin-3 testing, we will not be able to generate the increased revenues and market growth that we seek. Our failure to generate revenue from the sale of current or future products including the BGM Galectin-3 Test would materially adversely impact our business, financial condition, results of operations and prospects.

We may not be able to successfully commercialize our BGM Galectin-3 Test and our automated partners may not be able to successfully commercialize their automated tests for galectin-3 because the clinical indications for use do not generate broad enough customer acceptance.

We believe that the measurement of the protein biomarker galectin-3 in patients with heart failure may facilitate treatment decisions that are made regarding the intensity, locale, and nature of a heart failure patient’s ongoing care. We believe that results obtained from testing with our BGM Galectin-3 Test or automated tests for galectin-3 generated on the testing platforms developed by our automated partners may be used to aid in the assessment of prognosis, reduce hospital readmissions, and help identify patients who may require more intense and specialized care such as referral to a heart failure specialist, the need for advanced diagnostics and therapies, and the need for other specialized forms of monitoring. We cannot be certain that these or other indications for use will generate broad enough customer acceptance to yield the increased revenues and market growth that we seek from adoption of the BGM Galectin-3 Test or automated tests for galectin-3. Our failure to generate sufficiently broad customer acceptance and widespread market adoption of the BGM Galectin-3 Test and automated testing for galectin-3 would materially adversely impact our business, financial condition, results of operations and prospects.

If the marketplace does not accept our automated partners’ automated tests for galectin-3 or our BGM Galectin-3 Test, we may be unable to generate sufficient revenue to sustain and grow our business.

Although we believe that our BGM Galectin-3 Test and automated tests for galectin-3 developed by our automated partners represent promising commercial opportunities, these products may never gain significant acceptance in the marketplace and therefore never generate substantial revenue or profits for us. As is the case with all novel biomarkers, we and our automated partners must establish markets for our diagnostic tests and build those markets through physician education and awareness programs. Our ability to market our products through physician education and awareness programs is currently limited as the result of our recent Restructuring, which eliminated our sales and marketing organization. Publication in peer reviewed journals of results from studies using our products will be an important consideration in the adoption by physicians of our products, but will be dependent on the interest of third party investigators, the funding and execution of well-designed clinical research studies, the nature of the results generated by these studies, and the extent to which third party investigators who perform these studies make the effort to communicate and publish the results of these studies. The process of publication in leading medical journals is subject to a peer review process. Peer reviewers may not consider the results of studies of our BGM Galectin-3 Test or automated tests for galectin-3 sufficiently novel or worthy of publication. Failure to have studies related to our BGM Galectin-3 Test or automated tests for galectin-3 published in peer reviewed journals may adversely affect adoption of our products.

Health insurers and other third-party payers may decide not to reimburse our diagnostic products or may provide inadequate reimbursement, which could jeopardize our commercial prospects.

In the United States, the regulatory process that allows diagnostic tests to be marketed is independent of any coverage determinations made by third-party payers. For new diagnostic tests, private and government payers

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decide whether to cover the test, the reimbursement amount for a covered test and the specific conditions for reimbursement. Physicians may order diagnostic tests that are not reimbursed by third-party payers, but coverage determinations and reimbursement levels and conditions are critical to the commercial success of a diagnostic product.

Each third-party payer makes its own decision about which tests it will cover and how much it will pay, although many payers will follow the lead of Medicare. As a result, the coverage determination process is often a time-consuming and costly process that requires us to provide scientific and clinical support for the use of each of our products to each payer separately, with no assurance that approval will be obtained. If third-party payers decide not to cover our diagnostic tests or if they offer inadequate payment amounts, our ability to generate revenue from our diagnostic tests could be limited. Even if one or more third-party payers decide to reimburse for our tests, a third-party payer may stop or lower payment at any time, which could reduce revenue. We cannot predict whether third-party payers will cover our tests or offer adequate reimbursement. We also cannot predict the timing of such decisions. In addition, physicians or patients may decide not to order our tests if third-party payments are inadequate, especially if ordering the test could result in financial liability for the patient.

In the United States, the American Medical Association assigns specific CPT codes, which are a medical nomenclature used to report medical procedures and services under public and private health insurance plans. Once the CPT code is established, the CMS establishes reimbursement payment levels and coverage rules for Medicare, and private payers establish rates and coverage rules independently. Payment for diagnostic tests furnished to Medicare beneficiaries is made based on a fee schedule set by CMS that reflects its established reimbursement payment levels and coverage rules for Medicare.

Effective January 1, 2014, the payment rate at which the blood test for galectin-3 was reimbursed by CMS was increased to $30.01 from $17.80 per test. In addition, the 2014 national limitation amount was subject to a 2% sequestration applicable to Medicare services. In 2015, the national limitation amount for the blood test for galectin-3 was reduced to $29.93 and applied across the U.S., except in Ohio and West Virginia where rates of $23.93 and $26.33, respectively, applied. In 2016, the national limitation amount for the galectin-3 blood test was increased to $29.96, which applies across the U.S., except in Ohio and West Virginia where rates were increased to $23.95 and $26.36, respectively. Additionally, any or all of our diagnostic tests developed in the future may not be approved for reimbursement or may be approved at a level that limits our commercial success.

Reimbursement decisions in the European Union and in other jurisdictions outside of the United States vary by country and region and there can be no assurance that we will be successful in obtaining adequate reimbursement.

We expect to face intense competition, often from companies with greater resources and experience than us.

The clinical diagnostics industry is highly competitive and subject to rapid change. The industry continues to expand and evolve as an increasing number of competitors and potential competitors enter the market. Many of these competitors and potential competitors have substantially greater financial, technological, managerial and research and development resources and experience than we do. Some of these competitors and potential competitors have more experience than we do in the development of diagnostic products, including validation procedures and regulatory matters. In addition, our diagnostic products compete with product offerings from large and well-established companies that have greater marketing and sales experience and capabilities than we do. We are aware of other diagnostic tests under development, which, if successfully developed and commercialized, would compete with our products.

Our competitors, some of whom we collaborate with and rely on to commercialize our products, may include established diagnostics companies, such as Abbott Diagnostics, Alere, Beckman Coulter, bioMérieux, General Electric, Mitsubishi, Ortho Clinical Diagnostics, Philips, Roche Diagnostics and Siemens. In addition, national

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commercial laboratories with extensive service networks for diagnostic tests, such as LabCorp and Quest Diagnostics, have expanded or acquired testing capabilities to include more specialized cardiovascular testing. Specialized cardiovascular CLIA laboratories such as Atherotech, Berkeley Heart Lab (now part of Quest Diagnostics), Bioreference Lab (now part of OPKO Health), Boston Heart Diagnostics (formerly Boston Heart Lab and now part of Eurofins), Cardio DX, Cleveland HeartLab, Liposcience (now part of LabCorp) and True Health Diagnostics (formerly Health Diagnostic Laboratory) have expanded their presence and product menu in the cardiovascular market and some have developed their own tests or panels. Companies that may compete with us in the cardiovascular diagnostics market include Athena Diagnostics (now part of Quest Diagnostics), Atherotech, Berkeley Heart Lab, Critical Diagnostics, Bioreference Lab (now part of OPKO Health), Dako (now part of Agilent Technologies), diaDexus, Myriad Genetics, Singulex and True Health Diagnostics (formerly HDL). Companies that may compete with us in the research market include BioVendor, DRG International, eBioscience, IBL, Kamiya, R&D Systems and Thermo Fisher Scientific.

We are dependent on third parties for the patient samples that are essential to the development and validation of our diagnostic tests.

To pursue our development and validation of our diagnostic tests, we need access, over time, to thousands of patient samples, including blood, blood plasma and serum, urine and other fluids. We do not have direct access to a supply of patient samples. As a result, we have made arrangements with third parties, such as academic medical centers, government programs and payers such as Humana that have given us access to a significant number of patient samples for the development and validation of our diagnostic tests. Most of the institutions and physicians from which we obtain biological specimens that we use in our research and validation work are “Covered Entities” under HIPAA. Under this law, these parties may have to obtain proper authorization from their patients, de-identify samples or take some other step to permit the subsequent use of those samples and associated clinical information. We are not presently a Covered Entity or a Business Associate of a Covered Entity subject to HIPAA, but we may become a Covered Entity or a Business Associate of a Covered Entity in the future. We may lose access to patient samples provided by such third parties, or have that access limited, because the third parties decrease the number of patient samples they provide, due to changes in privacy laws governing the use and disclosure of medical information or due to changes in the laws restricting our ability to obtain patient samples and associated information. In certain instances, we owe the party providing the samples for our research programs payments which may be related to the sales of products derived from those research programs. In addition, we may be forced to actively pursue patient samples from other sources for the diagnostic testing indications we pursue, which could be expensive and time consuming. If we fail to secure and maintain an adequate supply of patient samples, or if our existing supply arrangements are terminated or result in access to fewer samples than expected, our ability to pursue our development efforts may be slowed or halted, which could have a material adverse effect on our business, financial condition and results of operations. Additionally, if we engage in activities that make us a covered entity for HIPAA purposes, such as electronic billing of third party payers, we will have to implement a comprehensive HIPAA compliance program. HIPAA compliance is a costly and time consuming process. Failure to comply would have a material adverse effect on our business, financial condition and results of operations.

We are dependent on laboratory contractors for testing of patient samples that are essential to the development and validation of our diagnostic tests.

To pursue our development and validation of our diagnostic tests, we periodically need access to test results obtained from patient samples, including blood, blood plasma and serum, urine and other fluids. We do not operate a testing laboratory. As a result, we purchase testing services from third party laboratories, such as those associated with academic medical centers, hospitals and independent reference laboratories to perform testing on patient samples for the development and validation of our diagnostic tests. The testing laboratories are typically licensed, certified per the Clinical Laboratory Improvement Act (CLIA) and, often, also certified by the College of American Pathologists. All specimens and associated patient information are handled according to HIPAA and

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other regulations associated with laboratory testing. Failure to access contracted laboratory services would have a material adverse effect on our ability to develop and validate our diagnostic tests.

Risks Related To Regulatory Approval and Other Government Regulations

The process of obtaining regulatory clearances or approvals to market medical devices, including in vitro diagnostic test kits, from the FDA and similar regulatory authorities outside of the United States can be costly and time-consuming.

In pursuing our strategy of commercializing our products worldwide, we face various regulatory schemes and requirements. Each regulatory agency may impose its own requirements and may refuse to grant approval or may require additional data before granting marketing approval even if marketing approval has been granted by other agencies. For example, in seeking clearance from the FDA for our galectin-3 test, we relied on samples from previously concluded studies sponsored by other parties to determine the clinical utility of our galectin-3 test, and we may do so for our other product candidates. While the FDA accepted such data in support of our galectin-3 test, and we believe it has accepted such data in other cases, the FDA may require us to conduct our own prospective studies to support future product clearances or approvals, which would make the development and validation of our product candidates more costly and time-consuming. There can be no assurance that such clearances or approvals will be granted on a timely basis or at all.

Although we have received FDA clearance for our BGM Galectin-3 Test for use as an aid in assessing the prognosis of patients diagnosed with chronic heart failure, we and our automated partners may not obtain regulatory clearance for additional indications that we and our automated partners may seek in the future.

In the United States, we may seek FDA clearance or approval for our products prior to their launch for clinical use, whether offered as a diagnostic kit or laboratory service. The FDA process can be lengthy and unpredictable. For example, for our first product, the BGM Galectin-3 Test for heart failure, we initially filed for premarket 510(k) notification with the FDA in March 2009. Upon review of our 510(k) filing, the FDA determined that our device was not substantially equivalent to the legally marketed device to which we claimed substantial equivalence and therefore denied clearance. The FDA indicated that additional clinical and other data were required in support of our filing, and we filed a new premarket 510(k) notification in December 2009, incorporating additional data. In February 2010, we received a letter from the FDA that requested additional clinical and statistical information to support our filing. After further contact with the FDA, we submitted our formal response to the FDA letter in August 2010. We received 510(k) clearance from the FDA in November 2010 for our BGM Galectin-3 Test as an aid in assessing the prognosis of patients diagnosed with chronic heart failure. In May 2012, we filed a premarket 510(k) notification with the FDA for use of the BGM Galectin-3 Test to aid in the identification of individuals who are healthy and asymptomatic at the time of testing, but, who are at increased risk for developing heart failure in the future. In July 2012, we received a letter from the FDA regarding this 510(k) filing in which FDA requested additional information, including information regarding our analytical validation and our clinical validation study, the Framingham Heart Study. We submitted our response to the FDA in November 2012, but based on our dialogue with the FDA, the nature of the additional information requested and the time required to address the FDA’s questions regarding various matters including the age of the blood samples used to support our 510(k) filing, we allowed the 510(k) to expire on the January 23, 2013 deadline for submitting our response to the FDA.

On March 31, 2015, we filed for premarket 510(k) notification with the FDA in order to obtain regulatory clearance to market our BGM Galectin-3 Test in the United States for a new indication for use, as an aid in the assessment of near-term risk of fatal cardiovascular events in older adults who have no prior history of coronary heart disease, cerebrovascular disease, or vascular disease. In August 2015, we received a request for additional information from the FDA, including information regarding the intended use of our test for this new indication, our clinical validation study and additional statistical analyses. We submitted our response to the FDA in November 2015. On December 17, 2015, we conducted a follow up discussion with the FDA regarding our

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November 2015 response. On December 18, 2015, following that additional dialogue with the FDA, we concluded that demonstrating the clinical utility of our test for this proposed new indication would require a broadening of the defined indication to include aiding in the assessment of the near-term risk of both fatal and non-fatal cardiovascular events in our study population and, as a result, a new 510(k) submission. Accordingly, we submitted to the FDA a notice of withdrawal of the 510(k) notification that we submitted on March 31, 2015. We are evaluating what additional data, studies and analyses would be required to support a new submission and a broader indication for use if we choose to resubmit this proposed indication for use to the FDA. There can be no assurance as to when we may be in a position to submit additional new premarket 510(k) notifications for this or other indications for our galectin-3 test to the FDA, if at all, nor can there be any assurance that we will receive 510(k) clearance from the FDA for this new or other new indications for use.

Subject to obtaining substantial additional financing, we expect to pursue new clinical claims and indications for the BGM Galectin-3 Test in assessing heart failure, as well as in related disorders. Expansion of the product label to include new clinical claims and indications for use will require additional clinical studies and clearance, or approval, by regulatory bodies, such as the FDA, and inclusion in our CE Mark for use in the EU. Our ability to engage in these activities would require us to obtain substantial additional financing. There can be no assurance as to if and when we may be in a position to submit additional new premarket 510(k) notifications for new indications for our galectin-3 test to the FDA, if at all, nor can there be any assurance that we will receive 510(k) clearance from the FDA for any new indications for use.

Although we have received FDA clearance for our BGM Galectin-3 Test for heart failure, our automated partners may not obtain regulatory clearance for their automated tests for galectin-3 when expected, if at all.

We believe that automation of our galectin-3 test will broaden its acceptance by laboratory customers and, as a result, accelerate its clinical adoption. To that end, we have entered into licensing and commercialization agreements with four leading diagnostic instrument manufacturers to develop and commercialize automated instrument versions of our galectin-3 test. Commercial introduction of the automated versions of our galectin-3 test will require FDA clearance or approval. On December 23, 2014, the FDA granted 510(k) clearance for Abbott Laboratories’ (Abbott) ARCHITECT ^® Galectin-3 assay, the first FDA cleared automated blood test for Galectin-3. There can be no assurances that our other automated partners will be successful in gaining FDA clearance.

Changes in regulatory review procedures, approval requirements or enactment of additional regulatory approval requirements in Europe may delay or prevent us from marketing our proposed products.

To market our products in Europe, we must obtain a CE Mark and may, in some cases, need marketing approval from the European Medicines Agency. In October 2009, we obtained a CE Mark in Europe for our first product, the BGM Galectin-3 Test for heart failure. In December 2012, we obtained a CE Mark in Europe for our second product, the CardioSCORE test. In addition, we have partnered with four leading diagnostic instrument manufacturers to develop automated tests for galectin-3. In January 2013, bioMérieux obtained a CE Mark in Europe. In April 2013, Abbott obtained a CE mark for its automated version of our galectin-3 test. To date, we have found the CE Mark process to be an efficient means to obtain regularly approval, thereby allowing for market entry for our products in Europe and in other countries that recognize CE Mark. If, however, the CE Mark process becomes more onerous, costly or time-consuming, we will need to re-evaluate our ex-U.S. commercialization strategy and invest more of our limited resources before even entering the market with our products.

Our CardioSCORE test has not been cleared by the FDA for sale in the United States.

We do not currently receive revenue from sales of our CardioSCORE test, which currently may only be marketed in Europe and other countries that recognize CE Mark. In December 2011, we filed a premarket 510(k) notification with the FDA in order to obtain regulatory clearance to market the CardioSCORE test in the

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United States as an aid in the assessment of near-term risk for significant cardiovascular events, such as heart attack and stroke. In response to this filing, the FDA requested that we engage an independent committee of physicians to conduct a medical review and adjudication of clinical endpoints reported in the filing. Due to the time involved in responding to this request, we withdrew the 510(k) filing on August 8, 2012. Our medical review also included the assessment of sample stability and the evaluation of other technical issues raised by the FDA. The adjudication process is now complete. While we continue to explore potential opportunities to monetize CardioSCORE, we have redirected our resources to support our development and commercialization of galectin-3 testing. Currently, we are not actively engaged in development or commercialization activities related to CardioSCORE. There can be no assurance that we will receive significant revenue from sales of our CardioSCORE test in Europe, that we will succeed in otherwise monetizing CardioSCORE, that in the future we will file a premarket 510(k) notification with the FDA to obtain regulatory clearance to market the CardioSCORE test in the United States or that we will receive such clearance.

Our BGM Galectin-3 Test for heart failure and any future products cleared by the FDA will be subject to ongoing regulation by the FDA. Failure to comply with such regulation could cause a material adverse effect on our business, financial condition and results of operations.

After a device is placed on the market, numerous regulatory requirements apply. These include:

Failure to comply with applicable regulatory requirements can result in enforcement action by the FDA, which may include any of the following sanctions:

Being subject to any of these sanctions could adversely affect our business, financial condition and results of operations.

Even if we are successful in obtaining regulatory clearance or approval for our product candidates, we will be subject to regulations under additional federal and state laws.

If we develop diagnostic tests suitable for commercialization, and after receiving all necessary regulatory clearances and approvals, we will be subject to national, regional and local regulations. For example, in the United States, the regulations which we may be subject to include:

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The risk of our being found in violation of these laws and regulations is increased by the fact that many of them have not been fully interpreted by the regulatory authorities or the courts, and their provisions are open to a variety of interpretations.

Any action brought against us for violation of these laws or regulations, even if we prevail, could cause us to incur significant legal expenses and divert our management’s attention from the operation of our business. If our operations are found to be in violation of any of these laws and regulations, we may be subject to any applicable penalty associated with the violation, including civil and criminal penalties, damages and fines. We could also be required to refund any improperly received payments, and we could be required to further curtail our operations. Any of the foregoing consequences could seriously harm our business, financial condition and results of operations.

If we or our third-party manufacturer fail to comply with the FDA’s quality system regulation, the development and manufacture of our products could be delayed or interrupted and our products may be subject to product recalls.

We and our contract manufacturers are required to comply with the FDA’s QSR and other regulations which cover, among other things, the methods and documentation of the design, testing, production, control, quality assurance, labeling, packaging, storage and shipping of our products. The FDA monitors compliance with QSR through periodic inspections. If the FDA determines that we or our contractors are not in compliance with applicable regulatory standards, we could be prevented or forced to delay the development or manufacture of our products, which could have a material adverse effect on our business, financial condition and results of operations. Moreover, any failure to maintain QSR compliance could force us to cease the development or manufacture of our products and subject us to other enforcement sanctions, including withdrawal of our products from the U.S. or foreign markets, and delay or interrupt the development or manufacture of additional products.

Health care reform measures could hinder or prevent our product candidates’ commercial success.

The U.S. government and other governments have shown significant interest in pursuing health care reform. Any government-adopted reform measures could adversely impact the pricing of health care products, including our diagnostic products, and services in the U.S. or internationally and the amount of reimbursement available from governmental agencies or other third-party payers. The continuing efforts of the U.S. and foreign governments, insurance companies, managed care organizations and other payers of health care services to contain or reduce health care costs may adversely affect our ability to set prices we believe are fair for any diagnostic products we may develop and commercialize. Changes in health care policy, such as the creation of broad limits for diagnostic products, could substantially interrupt the sale of future diagnostic tests, increase costs, divert management’s attention and adversely affect our ability to generate revenues and achieve profitability.

New laws, regulations and judicial decisions, or new interpretations of existing laws, regulations and decisions, relating to health care availability, methods of delivery or payment for diagnostic products and services, or sales, marketing or pricing, may limit our potential revenue, and we may need to revise our research and development or commercialization programs. The pricing and reimbursement environment may change in the future and become more challenging due to several reasons, including policies advanced by the U.S. government, new health care legislation or fiscal challenges faced by government health administration authorities. Specifically, in both the U.S. and some foreign jurisdictions, there have been a number of legislative and regulatory proposals and initiatives to change the health care system in ways that could affect our ability to sell any diagnostic products we may develop and commercialize profitably. Some of these proposed and implemented reforms could result in reduced reimbursement rates for our diagnostic products, which would adversely affect our business

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strategy, operations and financial results. For example, in March 2010, President Obama signed into law a legislative overhaul of the U.S. health care system, known as the Patient Protection and Affordable Care Act of 2010, as amended by the Healthcare and Education Affordability Reconciliation Act of 2010, or the PPACA, which may have far reaching consequences for life science companies like us. As a result of this legislation, substantial changes could be made to the current system for paying for health care in the United States, including changes made in order to extend medical benefits to those who currently lack insurance coverage. Extending coverage to a large population could substantially change the structure of the health insurance system and the methodology for reimbursing medical services, drugs and devices. These structural changes could entail modifications to the existing system of private payers and government programs, such as Medicare and Medicaid, the creation of a government-sponsored health care insurance source, or some combination of both, as well as other changes. Restructuring the coverage of medical care in the United States could impact the reimbursement for prescribed drugs, biopharmaceuticals, medical devices or our product candidates. If reimbursement for our approved product candidates, if any, is substantially less than we expect in the future, or rebate obligations associated with them are substantially increased, our business could be materially and adversely impacted. In addition, certain members of Congress remain fixated on the repeal of some or all of PPACA, adding further uncertainty to the law’s future impact on us.

Further federal and state proposals and health care reforms could limit the prices that can be charged for the product candidates that we develop and may further limit our commercial opportunity. Our results of operations could be materially adversely affected by the PPACA, by the Medicare prescription drug coverage legislation, by the possible effect of such current or future legislation on amounts that private insurers will pay and by other health care reforms that may be enacted or adopted in the future.

Risks Related to Our Intellectual Property

If the combination of patents, trade secrets and contractual provisions that we rely on to protect our intellectual property proves inadequate, our ability to successfully commercialize our proposed products will be harmed and we may never be able to operate our business profitably.

Our success depends, in large part, on our ability to protect proprietary methods, discoveries and diagnostic tests that we develop under the patent and other intellectual property laws of the United States and other countries, so that we can seek to prevent others from unlawfully using our inventions and proprietary information. We rely on both patents and trade secrets to protect the proprietary aspects of our methods and discoveries. As of February 29, 2016, we have six issued U.S. patents and five pending patent applications filed with the USPTO. A portion of the intellectual property that we own or license relates to our galectin-3 test. This intellectual property includes U.S. Patent Nos. 7,888,137 and 8,084,276, exclusively licensed from ACS Biomarker B.V. and six corresponding patent applications pending in the United States and abroad, as well as issued patents in Europe, Australia, Canada, China, Hong Kong and Japan. U.S. Patent No. 7,888,137 is scheduled to expire in November 2026 and U.S. Patent No. 8,084,276 is scheduled to expire in September 2024. We own a U.S. patent application and corresponding foreign patents and patent applications relating to a specific method and kit for detecting galectin-3. Any patent issuing from this U.S. application could expire as early as 2029. In addition, we own one issued U.S. patent and corresponding foreign patents and patent applications related to methods for clinical evaluation of subjects based on galectin-3 measurements. A portion of the intellectual property that we own relates to our CardioSCORE test. This intellectual property includes U.S. Patent Application No. 12/946,470, an issued patent in Europe and an issued patent in Japan, and U.S. Patent Application No. 13/765,366 and one corresponding patent application abroad. Any patent issuing from the earliest-filed U.S. application could expire as early as 2030. For the diagnostic tests that we develop based on our biomarker discoveries, we expect to rely primarily on patent protection. Several of our patent applications are in an early stage of prosecution, and we cannot assure you that any of the pending patent applications will result in patents being issued. In addition, due to technological changes that may affect our proposed products or judicial interpretation of the scope of our patents, our proposed products might not, now or in the future, be adequately covered by our patents.

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The patentability of molecular biomarkers and of test methods and products based on biomarkers is well-established in most countries. However, the issuance of any patent, including the patents for which we have applied, and the validity of the resulting patent rights depend upon a detailed interpretation of the specific patent claims and prior art, among other considerations, and generally is highly uncertain because of the complex legal and factual considerations it involves. In recent years, the United States Supreme Court has rendered several decisions in patent cases limiting the types of inventions for which patent protection is available and in particular, for claimed inventions directed to a law of nature, a natural phenomenon, or an abstract idea (collectively, the “judicial exceptions” to patent eligibility). For example, on March 20, 2012, the United States Supreme Court rendered its decision in Mayo Collaborative Services v. Prometheus Laboratories, Inc., in which the Court denied patent protection for patent claims covering methods that correlate the concentration of a well-known drug metabolite to the likely harm or ineffectiveness of the drug as a means of determining proper drug dosage. At issue was whether the claimed methods transformed unpatentable laws of nature into patent-eligible applications of those laws of nature. The Court held that the patent claims at issue effectively claim the underlying laws of nature themselves and thus ran afoul of the prohibition on patenting laws of nature, were not patent eligible and therefore, were determined to be invalid. In another example, on June 19, 2014, the United States Supreme Court reaffirmed in Alice Corporation Pty. Ltd. v. CLS Bank International that a patent claim directed to a judicial exception is invalid unless the claim recites additional elements that amount to “significantly more” than a law of nature, a natural phenomenon, or an abstract idea. As a result, unless the claims of our U.S. patents contain sufficient inventive content above and beyond the natural correlations underlying our claimed processes, we will not succeed in enforcing our U.S. patents. Similarly, unless the claims of our pending U.S. patent applications that involve natural correlations contain sufficient inventive content above and beyond those natural correlations, we may be unable to obtain issued U.S. patents based on those applications, which may preclude or limit the patent protection available for our diagnostic tests and therapeutic methods.

In addition, we cannot be certain that we hold the rights to the technology covered by pending patent applications or to other proprietary technology required for us to commercialize our current and proposed products. Rights in applications filed by us or our licensors may be affected adversely by patent applications filed by others which have not yet been published. For example, because certain U.S. patent applications are confidential until patents issue, such as applications filed prior to November 29, 2000, or applications filed after that date which will not be filed in foreign countries, third parties may have filed patent applications for technology covered by our pending patent applications without our being aware of those applications, and our patent applications may not have priority over those applications. For this and other reasons, we may be unable to secure desired patent rights, thereby losing desired exclusivity or co-exclusivity. It is also possible that one or more organizations will hold patent rights to which we will need a license. If those organizations refuse to grant us a license to such patent rights on reasonable terms, we will not be able to market our products.

If third parties assert that we have infringed their patents and proprietary rights or challenge the validity of our patents and proprietary rights, we may become involved in intellectual property disputes and litigation that would be costly, time consuming, and delay or prevent the development or commercialization of our current and proposed products.

Our ability to commercialize our current and proposed products depends on our ability to develop, manufacture, market and sell our current and proposed products without infringing the proprietary rights of third parties. Third parties may allege that our proposed products or our methods or discoveries infringe their intellectual property rights. Numerous U.S. and foreign patents and pending patent applications, which are owned by third parties, exist in fields that relate to our proposed products and our underlying methodologies and discoveries, including patents and patent applications claiming methods for the discovery of biomarkers or biomarker sets and assay systems and methods designed to exploit them clinically in drug discovery efforts or in selection of patients.

A third party may sue us for infringing its patent rights. Likewise, we may need to resort to litigation to enforce a patent issued or licensed to us or to determine the scope and validity of third-party proprietary rights. In addition, a third party may claim that we have improperly obtained or used its confidential or proprietary information. The

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cost to us of any litigation or other proceeding relating to intellectual property rights, even if resolved in our favor, could be substantial, and the litigation would divert our management’s attention from other aspects of our business. Some of our competitors may be able to sustain the costs of complex patent litigation more effectively than we can because they have substantially greater resources. Uncertainties resulting from the initiation and continuation of any litigation could limit our ability to continue our operations.

If we are found to infringe upon intellectual property rights of third parties, we might be forced to pay damages, potentially including treble damages, if we are found to have willfully infringed on such parties’ patent rights. In addition to any damages we might have to pay, a court could require us to stop the infringing activity or obtain a license. Any license required under any patent may not be made available on commercially acceptable terms, if at all. In addition, such licenses are likely to be non-exclusive and, therefore, our competitors may have access to the same technology licensed to us. If we fail to obtain a required license and are unable to design around a patent, we may be unable to effectively market some or all of our products, which could limit our ability to generate revenue or achieve profitability and possibly prevent us from generating revenue sufficient to sustain our operations. Moreover, we expect that a number of our collaborations will provide that royalties payable to us for licenses to our intellectual property may be offset by amounts paid by our collaborators to third parties who have competing or superior intellectual property positions in the relevant fields, which could result in significant reductions in our revenue from products developed through collaborations.

Many of our employees were previously employed at universities or other biotechnology, pharmaceutical or diagnostic products companies, including our competitors or potential competitors. While we try to ensure that our employees do not use the proprietary information or know-how of others in their work for us, we may be subject to claims that we or these employees have inadvertently or otherwise used or disclosed the former employer’s intellectual property, trade secrets or other proprietary information. Litigation based on such allegations may be brought against us, and even if we are successful in defending ourselves, we could incur substantial costs and our management could be distracted. If we fail in defending such allegations, in addition to paying monetary damages, we may lose valuable intellectual property rights or personnel.

If we fail to comply with our obligations in the agreements under which we license development or commercialization rights to products or technology from third parties, we could lose license rights that are important to our business.

Several of our collaboration agreements provide for licenses to us of intellectual property or sharing of rights to intellectual property that is important to our business, and we may enter into additional agreements in the future that provide licenses to us of valuable technology. These licenses impose, and future licenses may impose, various commercialization milestones and other obligations on us, including the obligation to terminate our use of patented subject matter under certain contingencies. If a licensor becomes entitled to, and exercises, termination rights under a license, we would lose valuable rights and our ability to develop our products. We may need to license other intellectual property to commercialize future products. Our business may suffer if any current or future licenses terminate, if the licensors fail to abide by the terms of the license or fail to prevent infringement by third parties, if the licensed patents or other rights are found to be invalid or if we are unable to enter into necessary licenses on acceptable terms.

If we are unable to protect our trade secrets, we may be unable to protect our interests in proprietary technology, processes and know-how that is not patentable or for which we have elected not to seek patent protection.

In addition to patented technology, we rely upon unpatented proprietary technology, processes and know-how, including, particularly, our biomarker discovery methodologies. In an effort to protect our unpatented proprietary technology, processes and know-how, we require our employees, consultants, collaborators, contract manufacturers and advisors to execute confidentiality agreements. These agreements, however, may not provide us with adequate protection against improper use or disclosure of confidential information, in particular as we are

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required to make such information available to a larger pool of people as we seek to validate and commercialize our proposed products. These agreements may be breached, and we may not become aware of, or have adequate remedies in the event of, any such breach. In addition, in some situations, these agreements may conflict with, or be subject to, the rights of third parties with whom our employees and consultants have previous employment or consulting relationships. Also, others may independently develop substantially equivalent technology, processes and know-how or otherwise gain access to our trade secrets. If we are unable to protect the confidentiality of our proprietary technology, processes and know-how, competitors may be able to use this information to develop products that compete with our products, which could adversely impact our business.

Risks Related To the Growth of Our Management Team, Workforce, Manufacturing and Facilities

Following our reduction in force since September 2014, which resulted in the elimination of approximately 77% of our headcount, we may not be able to retain our remaining employees.

Since September 11, 2014, we have implemented a reduction of approximately 77% of our workforce, or 17 people, leaving five employees, which we refer to as the Restructuring. We took this step in order to reduce our operating expenses and extend our cash runway in anticipation of the commercial launch of automated versions of our galectin-3 test. The automated galectin-3 tests are being developed and commercialized by our diagnostic instrument manufacturing partners and will be performed on our partners’ automated platforms. The first automated test for galectin-3 was launched in the United States by Abbott in mid-year 2015. The Restructuring primarily eliminated our sales and marketing organization and removed certain positions in other functional areas, while preserving some senior management and other critical roles to support the clinical and commercial adoption of galectin-3 testing by generating, publishing and publicizing data derived from clinical research studies and by expanding the BGM Galectin-3 Test’s labeling indications for use through additional clinical studies and clearances by the FDA.

As a result of the Restructuring, we are heavily dependent upon our ability to retain our remaining employees. The loss of the service of any of our remaining employees may significantly delay or prevent our ability to continue our operations. Given the magnitude of our reduction in force since September 2014, the morale of our remaining employees may be lower, employees may be distracted and any one of our remaining employees could terminate his or her employment with us at any time. A departing employee’s expertise would be difficult to replace and the failure to do so on a timely basis could have a material adverse effect on our ability to achieve our business goals. There can be no assurance that we will have the financial resources or otherwise to be successful in retaining our remaining personnel and our failure to do so could have a material adverse effect on our business, financial condition and results of operations. In addition, the Restructuring may prove to be more disruptive to our operations than we anticipated. For example, cost savings measures may distract management from our core business, harm our reputation, yield unanticipated consequences, such as attrition beyond the planned Restructuring, or increased difficulties in our day-to-day operations. Any failure to retain our qualified personnel could prevent us from successfully growing our business by expanding the number of health care clinical laboratories, hospitals, and health care providers with which we do business or impair our ability to maintain sales levels of, and/or support sales growth of, our galectin-3 test.

We have only a limited number of employees to manage and operate our business.

As of March 15, 2016, we employed five full-time employees. Due to our limited cash, we have implemented a plan designed to focus our capital resources on our most promising indications and further reduce our cash utilization. Our focus on reducing our cash utilization requires us to manage and operate our business in a highly efficient manner. We cannot assure you that we will be able to retain adequate staffing levels to run our operations and/or to accomplish all of the objectives that we otherwise would seek to accomplish.

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Failures in our information technology and storage systems could significantly disrupt our operations.

Our ability to execute our business plan depends, in part, on the continued and uninterrupted performance of our information technology systems, or IT systems. Despite the implementation of security measures, IT systems are vulnerable to damage from a variety of sources, including computer viruses, unauthorized access, telecommunications or network failures, malicious human acts, terrorism and natural disasters. Moreover, despite network security and back-up measures, some of our servers are potentially vulnerable to physical or electronic break-ins, computer viruses and similar disruptive problems. Despite the precautionary measures we have taken to prevent unanticipated problems that could affect our IT systems, sustained or repeated system failures that interrupt our ability to generate and maintain data, could result in a material disruption in our operations. Furthermore, to the extent that any disruption or security breach resulted in a loss of or damage to our data or applications, or inappropriate disclosure of confidential or proprietary information, we could incur liability and our business could be significantly harmed.

We rely on a single third party to manufacture and supply our products. Any problems experienced by this vendor could result in a delay or interruption in the supply of our products to us until this vendor cures the problem or until we locate and qualify an alternative source of supply.

The manufacture of our diagnostic products requires specialized equipment and utilizes complicated production processes that would be difficult, time-consuming and costly to duplicate. Corgenix Medical Corporation is currently the sole third-party manufacturer of our BGM Galectin-3 Test. Any prolonged disruption in the operations of our third-party manufacturer could have a significant negative impact on our ability to manufacture products on our own and would cause us to seek additional third-party manufacturing contracts, thereby increasing our commercialization and any development costs, which may not be available on acceptable terms, if at all. We may suffer losses as a result of business interruptions that exceed coverage under our manufacturer’s insurance policies. Events beyond our control, such as natural disasters, fire, sabotage or business accidents could have a significant negative impact on our operations by disrupting our product development and commercialization efforts until our third-party manufacturer can repair its facility or put in place third-party contract manufacturers to assume this manufacturing role, which we may not be able to do on reasonable terms, if at all. In addition, if we are required to change manufacturers for any reason, we will be required to verify that the new manufacturer maintains facilities and procedures that comply with quality standards and with all applicable regulations and guidelines. The delays associated with the verification of a new manufacturer or the re-verification of an existing manufacturer could negatively affect our ability to develop product candidates or produce approved products in a timely manner. Any delay or interruption in our clinical studies for the validation and commercialization of our products or product candidates could negatively affect our business.

If we become subject to product liability claims, we may be required to pay damages that exceed our insurance coverage, and such claims may harm our business in other ways.

Our business exposes us to product liability claims that are inherent in the testing, production, marketing and sale of diagnostic products. Although we currently maintain limited product liability insurance, we may need to secure additional product liability insurance for the development and commercialization of our product candidates. We cannot be certain whether we will be able to secure such insurance on commercially reasonable terms, or at all. A product liability claim in excess of any insurance coverage we may obtain would have to be paid out of our cash reserves and would significantly harm our business. In addition, any injunction or other restriction on our ability to sell against one of our product candidates would also significantly harm our business.

The marketing, sale and use of our current or future diagnostic tests could lead to the filing of product liability claims if someone were to allege that our product failed to perform as it was designed. A product liability claim could result in substantial damages and be costly and time consuming for us to defend. We cannot provide assurance that our product liability insurance would protect us from the financial impact of defending a product liability claim. Any product liability claim brought against us, with or without merit, could increase our insurance

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rates or prevent us from securing insurance coverage in the future. Additionally, any product liability lawsuit could cause injury to our reputation, result in the recall of our products, or cause current collaborators to terminate existing agreements and potential collaborators to seek other partners, any of which could impact our results of operations.

Risks Related To Our Common Stock

The holders of our Series A Preferred Stock are entitled to rights and preferences that are significantly greater than the rights and preferences of the holders of our common stock, including preferential payments upon a liquidation, as well as dividend and registration rights associated with their shares.

On July 14, 2015, we issued an aggregate of 1,474,443 shares of newly designated Series A Preferred Stock, $0.001 par value per share, or Series A Preferred Stock. Holders of our Series A Preferred Stock are entitled to a number of rights and preferences which holders of our outstanding common stock do not and will not have. Among these rights and preferences is a preference on liquidation of the Company, which means that holders of the Series A Preferred Stock will be entitled to receive the proceeds out of any liquidation of the Company before any such proceeds are paid to holders of our common stock. Upon liquidation, including deemed liquidations pursuant to a merger, consolidation or a sale of all or substantially all of our assets, the holders of Series A Preferred Stock will be entitled to be paid first out of any proceeds in the amount of $1.7003 per share, which was the price at which shares of Series A Preferred Stock were sold on July 14, 2015, plus all accrued but unpaid dividends on the shares of Series A Preferred Stock, and prior to payment of any amounts on our common stock. Thereafter, the holders of Series A Preferred Stock will also share pro rata on an as converted to common stock basis in payments made to the holders of our common stock. Accordingly, the holders of the Series A Preferred Stock will be entitled to receive the proceeds out of any sale or liquidation of the Company before any such proceeds are paid to holders of our common stock and then share in any proceeds paid to holders of our common stock. As a result, only the sale or liquidation proceeds in excess of the liquidation preference plus accrued but unpaid dividends would be available for distribution to holders of our common stock. Therefore, if we wind down our operations for any reason, it is likely that our common stockholders will lose their entire investment in us.

Holders of our Series A Preferred Stock also have significant rights with respect to certain actions that the Company may wish to take from time to time. At any time prior to the conversion of the Series A Preferred Stock, the consent of the holders of at least a majority of the Series A Preferred Stock then outstanding, voting together as a single class, will be required for the Company to take certain actions, including, among other things: liquidating, dissolving or winding up the business and affairs of the Company or effecting any merger, consolidation or other liquidation event; amending, altering or repealing any provision of the Certificate of Incorporation, the Certificate of Designations of the Series A Preferred Stock or the Bylaws of the Company; creating or authorizing any class or series of capital stock ranking senior to or on parity with the Series A Preferred Stock or increasing the number of authorized shares of Series A Preferred Stock; purchasing, redeeming, paying or declaring dividends on any shares of our capital stock, with certain exceptions; increasing or decreasing the size of our board of directors; and certain other actions. As a result, we will not be able to take any of these actions without first seeking and obtaining the approval of the holders of our Series A Preferred Stock. We may not be able to obtain such approval in a timely manner or at all, even if we think that taking the action for which we seek approval is in the best interests of the Company.

On July 14, 2015, we also entered into the Fifth Amended and Restated Investor Rights Agreement, or the Investor Rights Agreement, with the holders of our Series A Preferred Stock, as well as the stockholders who hold shares of our common stock that are registrable securities our then existing Fourth Amended and Restated Investor Rights Agreement dated as of July 10, 2008. Under the terms of the Investor Rights Agreement, we granted certain demand and piggyback registration rights with respect to the shares of common stock issuable upon conversion of the Series A Preferred Stock. Sales of a substantial number of shares of our common stock in the public market could occur in the future. These sales, or the perception in the market that the holders of a large number of shares of common stock intend to sell shares, could reduce the market price of our common stock.

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The holders of the Series A Preferred Stock represent a significant voting interest in the Company.

Each share of Series A Preferred Stock is convertible into one share of our common stock, at any time at the option of each holder and automatically upon the written consent of the holders of a majority of the outstanding shares of Series A Preferred Stock. Assuming the full conversion of all of the shares of Series A Preferred Stock into our common stock, the holders of the Series A Preferred Stock and their affiliates would represent approximately 28.3% of our issued and outstanding capital stock as of March 15, 2016. Prior to such conversion, holders of Series A Preferred Stock will be entitled to vote with the holders of our common stock on an as-converted basis, except that no holder of Series A Preferred Stock will be entitled to cast votes for the number of shares of common stock issuable upon conversion of the Series A Preferred Stock held by such holder that exceeds (subject to a proportionate adjustment in the event of a stock split, stock dividend, combination or other proportionate recapitalization) the quotient of (A) the aggregate purchase price paid by such holder for its Series A Preferred Stock, divided by (B) the greater of (i) $3.20 and (ii) the closing price of our common stock on the trading day immediately prior to the date our Series A Preferred Stock was issued, which was $1.40. Therefore, as of March 15, 2016, the holders of Series A Preferred Stock and their affiliates held approximately 17.3% of the voting power of the Company.

Our common stock is quoted on the OTCQB and we expect to deregister our common stock under the Exchange Act, which could result in a limited market for our common stock. Additionally, our affiliates hold approximately 14.8% of our outstanding shares of common stock, as of March 15, 2016, which substantially reduces the liquidity of our common stock and contributes to the limited trading volume for our common stock.

Our common stock had been listed on The NASDAQ Capital Market until September 15, 2015, when it was suspended for failure to comply with The NASDAQ Capital Market continued listing standards. On September 16, 2015, our common stock began trading on the OTC Markets’ OTCQB market tier under the trading symbol “BGMD.” In addition, given the significant cost and resource demands of being a public company, we have determined that it is advisable to terminate the registration of our common stock under the Exchange Act and we anticipate filing a Form 15 with the SEC to effect the deregistration in April 2016. Upon the filing of the Form 15, our obligation to file periodic and current reports with the SEC, including Forms 10-K, 10-Q, and 8-K, will be suspended. The delisting of our common stock from The NASDAQ Capital Market and the anticipated deregistration of our common stock under the Exchange Act could substantially further reduce the liquidity of our common stock and result in a corresponding material reduction in the price of our common stock. In addition, the delisting and the anticipated deregistration could negatively affect us by reducing the number of investors willing to hold or acquire our common stock, which could negatively affect our ability to raise capital, and may result in the potential loss of confidence by investors, suppliers, customers and employees and fewer business development opportunities. We cannot predict whether a more active market for our common stock will develop in the future. An absence of an active trading market could adversely affect our stockholders’ ability to sell our common stock at current market prices in short time periods, or possibly at all. Additionally, market visibility for our common stock may be limited and such lack of visibility may have a depressive effect on the market price for our common stock.

Our affiliates hold approximately 14.8% of our outstanding shares of common stock, as of March 15, 2016, which adversely affects the liquidity of the trading market for our common stock; in as much as federal securities laws restrict sales of our shares by these stockholders. If our affiliates continue to hold their shares of common stock, there will be limited trading volume in our common stock, which may make it more difficult for investors to sell their shares or increase the volatility of our stock price.

Our stock price is likely to be volatile and the market price of our common stock may drop.

Prior to our initial public offering in February 2011, there was no public market for our common stock and having been a publicly traded company for only five years, there can be no assurance that an active trading market will develop and continue. There is a limited history, exacerbated by low average daily trading volume, on which to gauge the volatility of our stock price. The stock markets and the markets for medical diagnostics and biotechnology stocks in particular, have experienced volatility that has often been unrelated to the operating

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performance of particular companies. For example, our common stock traded as high as $2.77 per share and as low as $0.33 per share during 2015, as adjusted to reflect the 1-for-4 reverse stock split of our common stock effected in July 2015. Some of the many factors that may cause the market price of our common stock to fluctuate include:

Any broad market fluctuations may adversely affect the trading price of our common stock. Investors may not be able to sell when they desire due to insufficient buyer demand and may realize less than, or lose all of, their investment.

In the past, following periods of volatility in the market price of a company’s securities, stockholders have often instituted class action securities litigation against those companies. Such litigation, if instituted, could result in substantial costs and diversion of management attention and resources, which could significantly harm our financial condition, operating results and reputation.

Insiders control a substantial amount of our outstanding common stock and all of our outstanding preferred stock, which could delay or prevent a change in corporate control or result in the entrenchment of management and/or the board of directors.

Our executive officers, directors, principal stockholders and/or their affiliates, including Flagship Ventures, or Flagship, control approximately 14.8% of our outstanding common stock and all of our outstanding Series A Preferred Stock, representing approximately 20.3% of the voting power of the Company as of March 15, 2016. Accordingly, these stockholders, if acting as a group, or Flagship, which alone controls approximately 11.6% of our outstanding common stock and all of our outstanding Series A Preferred Stock, representing approximately 17.3% of the voting power of the Company as of March 15, 2016, will have control or substantial influence over the outcome of corporate actions requiring stockholder approval, including the election of directors and the approval of significant corporate transactions, and they may in some instances exercise this control or substantial influence in a manner that advances their best interests and not necessarily those of other stockholders. In addition, at any time prior to the conversion of the Series A Preferred Stock, the consent of the holders of at least a majority of the Series A Preferred Stock then outstanding, voting together as a single class, will be required for the Company to take certain actions, including, among other things: liquidating, dissolving or winding up the business and affairs of the Company or effecting any merger, consolidation or other liquidation event; amending, altering or repealing any provision of the Certificate of Incorporation, the Certificate of Designations of the Series A Preferred Stock or the Bylaws of the Company; creating or authorizing any class or series of capital

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stock ranking senior to or on parity with the Series A Preferred Stock or increasing the number of authorized shares of Series A Preferred Stock; purchasing, redeeming, paying or declaring dividends on any shares of our capital stock, with certain exceptions; increasing or decreasing the size of our board of directors; and certain other actions. As a result, we will not be able to take any of these actions without first seeking and obtaining the approval of Flagship, as the holder of our Series A Preferred Stock. This concentration of ownership and voting rights may have the effect of delaying, preventing or deterring a change of control, could deprive investors of the opportunity to receive a premium for our common stock as part of a sale and could adversely affect the market price of our common stock.

The requirements of being a public company require greater resources, increase our costs and distract our management, and we may be unable to comply with these requirements in a timely or cost-effective manner.

As a public company with equity securities quoted on the OTC Market’s OTCQB market tier, until we voluntarily deregister our common stock under the Exchange Act, we will continue to incur significant legal, accounting and other expenses that we did not incur as a private company. We are currently required to comply with certain rules, regulations and requirements with which we were not required to comply prior to becoming a public company.

Until we voluntarily deregister our common stock under the Exchange Act, complying with rules, regulations and requirements requires substantial effort on the part of our board of directors and management and will continue to increase our costs and expenses. As a public company, we are required to:

Compliance with these rules and regulations will continue to increase our legal and financial compliance costs and make some activities more time-consuming and costly. For example, these new rules and regulations may make it more difficult and more expensive for us to obtain director and officer liability insurance and we may be required to incur substantial costs to maintain the same or similar coverage.

Coverage of our company by securities or industry analysts is very limited and intermittent. If securities or industry analysts do not publish research or reports about our business, or if they change their recommendations regarding our common stock adversely, the price and trading volume of our common stock could decline.

The trading market for our common stock is influenced by the research and reports that a very limited number of industry or securities analysts may publish about us or our industry. If one or more analysts make unfavorable comments about our market opportunity or product candidates or downgrade our common stock, the market price of our common stock would likely decline. If one or more analysts fail to publish reports on us, we could lose visibility in the financial markets, which could cause the market price of our common stock or trading volume to decline.

Raising additional capital may cause dilution to existing stockholders, restrict our operations or require us to relinquish rights.

We may seek the additional capital necessary to fund our operations through private equity offerings, debt financings, and collaborative and licensing arrangements. To the extent that we raise additional capital through the sale of equity or convertible debt securities, existing stockholders ownership interests will be diluted and the terms may include liquidation or other preferences that adversely affect their rights as a stockholder. Additional

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debt financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions such as incurring additional debt, making capital expenditures, or declaring dividends. If we raise additional funds through collaboration and licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies or grant licenses on terms that are not favorable to us.

Because we do not intend to pay dividends for the foreseeable future, our stockholders will benefit from their investment in shares only if our common stock appreciates in value.

We have not paid dividends to our stockholders since our inception. The holders of our Series A Preferred Stock are entitled to receive, out of funds legally available for the payment of dividends under Delaware law, cumulative dividends that accrue daily at an annual rate of 8%, compounded and payable quarterly in cash or in additional shares of Series A Preferred Stock at the election of each holder. The holders of our Series A Preferred Stock will also be entitled to participate in cash dividends and in-kind distributions made on shares of our common stock. At December 31, 2015, the cumulative undeclared dividends on preferred stock total $92,000. In addition, if we declare, make or pay any dividend in respect of our common stock, the holders of our Series A Preferred Stock will be entitled to receive payment of such dividend that would be payable as if the Series A Preferred Stock had been converted into shares of common stock. The payment of cash dividends also requires the consent of the holders of our Series A Preferred Stock. We currently intend to retain all available funds and any future earnings to fund the development and expansion of our business, and we do not anticipate paying any cash dividends in the foreseeable future. As a result, the success of an investment in our common stock will depend upon any future appreciation in their value.

Provisions of our certificate of incorporation, our bylaws and Delaware law could make an acquisition of us, which may be beneficial to our stockholders, more difficult and may prevent attempts by our stockholders to replace or remove the current members of our board and management.

Certain provisions of our restated certificate of incorporation and restated bylaws could discourage, delay or prevent a merger, acquisition or other change of control that stockholders may consider favorable, including transactions in which you might otherwise receive a premium for your shares. Furthermore, these provisions could prevent or frustrate attempts by our stockholders to replace or remove members of our board of directors. These provisions also could limit the price that investors might be willing to pay in the future for our common stock, thereby depressing the market price of our common stock. Stockholders who wish to participate in these transactions may not have the opportunity to do so. These provisions:

In addition, pursuant to the Certificate of Designation of our Series A Preferred Stock, holders of our Series A Preferred Stock also have significant rights with respect to certain actions that the Company may wish to take from time to time. At any time prior to the conversion of the Series A Preferred Stock, the consent of the holders

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of at least a majority of the Series A Preferred Stock then outstanding, voting together as a single class, will be required for the Company to take certain actions, including, among other things, effecting any merger, consolidation or other liquidation event. As a result, we will not be able to take any of these actions without first seeking and obtaining the approval of the holders of our Series A Preferred Stock. In addition, we may not be able to obtain such approval in a timely manner or at all, even if we think that taking the action for which we seek approval is in the best interests of the Company.

In addition, we are governed by the provisions of Section 203 of the Delaware General Corporation Law, which may, unless certain criteria are met, prohibit large stockholders, in particular those owning 15% or more of the voting rights on our common stock, from merging or combining with us for a prescribed period of time.