Contract analysis

From: Miriam Calloway <mcalloway@calderwoodharkness.com> To: Harrison Whitford <hwhitford@whitfordsable.com> Cc: Theresa Nakamura <tnakamura@genomedx.com> Date: Fri, 24 May 2024 10:47:00 -0000 Subject: GDT Board Decision — OncoPrecise GXP-47 Launch Deferral and PCNB Covenant Coordination [C&H Matter No. 1043-00002]

I hope this finds you well. I'm writing to coordinate with you and your team following the GDT board's decision on Wednesday and to flag a downstream issue that I believe requires our joint attention before GDT takes any next steps with its lender.

As you may already be aware, the GDT board met on May 22 and resolved to defer the commercial launch of OncoPrecise GXP-47 indefinitely. Theresa notified us yesterday afternoon and instructed Calderwood & Harkness to wind down our Medicare coverage and coding engagement for the product.

By way of brief background for your team's reference — and Danielle's in particular, since I know she handles much of the day-to-day on GDT corporate matters — Calderwood & Harkness was engaged pursuant to an engagement letter executed February 14, 2024 to develop and execute a comprehensive Medicare coverage and coding strategy for GDT's OncoPrecise GXP-47 test. GXP-47 is a 47-gene RNA expression panel designed for

The deferral was driven by inconclusive results from CLARITY-LUNG (NCT05891247), GDT's prospective, multi-site, blinded clinical validation study. The interim analysis released March 29, 2024 — at 50% enrollment (n=600) — reported a positive predictive value of 0.68 against a pre-specified target of ≥ 0.75 and a negative predictive value of 0.71 against a target of ≥ 0.80. Neither primary endpoint met its performance

The Data Safety Monitoring Board, chaired by Dr. Evelyn Matsuda of the Carrington Cancer Institute, met on April 5 and recommended continuing enrollment but characterized the results as "inconclusive and below pre-specified performance benchmarks." As of this month, 847 of 1,200 target patients have been enrolled (approximately 70.6%), and the final data readout has been revised from Q4 2024 to Q2 2025. Trial expendi

The deferral recommendation originated with Pinnacle Health Ventures — GDT's majority investor at 41.3% fully diluted equity following the $78 million Series C in March 2022 — through board representative Elena Marchetti, who formally recommended deferring the launch on May 17. For our part, Calderwood & Harkness had already delivered a Revised LCD/MolDx Strategy Memorandum on April 22 recommending that GDT defer the

Our engagement scope is effectively complete. The following key deliverables will not be completed or submitted:

- **PLA Code Application** to the AMA CPT Editorial Panel — a draft was delivered March 22, but the submission deadline of June 28, 2024 (for the September 2024 panel meeting) will not be met. - **LCD Request Letter** to Cascade Fiscal Intermediaries (Dr. William Hargrove, Medical Director; Sandra Phu, LCD Analyst) — drafted but never sent; target filing had been August 2024. - **MolDx Technical Assessment Dossier**

Our reimbursement strategy had targeted a Medicare rate of $3,850 per test based on crosswalk analysis, with Year 1 total projected revenue of $34,502,500 — figures that I understand Verdant Life Sciences Capital (Christine Lau) had incorporated into GDT's forward financial models. Those projections are obviously now on hold, but I flag them because they bear on the covenant issue below.

We are preparing a comprehensive Matter Wind-Down Memorandum and work product preservation summary, which I expect to deliver to Theresa early next week — targeting May 28. A final invoice will follow, and the matter will formally close upon completion of administrative wind-down.

**Section 7.14 Milestone Covenant — Pacific Coast National Bank**

Harrison, this is the issue I most want to flag for your attention, as it falls squarely within your corporate practice scope and will require a coordinated approach.

As you know, GDT maintains a $15,000,000 revolving credit facility with Pacific Coast National Bank under Credit Agreement Ref. PCNB-GDT-RF-2023-0922, executed September 22, 2023, maturing September 22, 2026, bearing interest at SOFR + 3.75%. My understanding is that approximately $9,200,000 is currently drawn.

Section 7.14 of the credit agreement contains a milestone covenant requiring GDT to "obtain a final Medicare coverage determination (whether by LCD, NCD, or equivalent published coverage policy) for at least one proprietary laboratory-developed test developed by Borrower" on or before December 31, 2024.

The OncoPrecise GXP-47 LCD was the anticipated path to satisfying this covenant. With the launch deferred indefinitely and no LCD filing planned, GDT will not obtain a new Medicare coverage determination by the December 31, 2024 testing date. The credit agreement provides a 90-day cure period from the covenant testing date, meaning the cure period would expire March 31, 2025 — which is *before* the revised CLARITY-LU

**The GXP-12 LCD — A Potential Argument**

There is a potential interpretive argument worth exploring. GDT's existing commercial product, OncoPrecise GXP-12 — the 12-gene panel for early-stage breast cancer prognosis — already has a local coverage determination: LCD L38472, effective August 15, 2021, issued by Cascade Fiscal Intermediaries. LCD L38472 is a valid, active local coverage determination for a proprietary LDT developed by GDT, and from a Medicare r

The interpretive question is whether the existing GXP-12 LCD satisfies the covenant language. The covenant requires GDT to "obtain" a final Medicare coverage determination. The use of "obtain" — in what reads as a forward-looking obligation — arguably contemplates a *new* determination, not one that was already in existence at the time the credit agreement was executed on September 22, 2023, more than two years after

I want to be clear that this is primarily a credit agreement interpretation question that falls within your practice, and I defer to your reading of Section 7.14 in the context of the full agreement, including any relevant definitions, interpretive provisions, and negotiating history. What I can contribute is Calderwood & Harkness's perspective on the Medicare regulatory side: we can confirm the status, validity, and

I would note that the relationship manager at PCNB is Thomas Becerra. The timing and approach for notifying PCNB of the potential covenant issue is a decision point that GDT's team — likely Raymond Ota and Theresa — will need to address, and I think it would be best if we have a coordinated position developed before that conversation takes place. I would also flag that given PHV's board-level involvement in the defer

1. **Your review of Section 7.14:** I'd appreciate it if you and Danielle could review the covenant language and provide your reading of the "obtain" requirement in the context of the full credit agreement — particularly whether the existing GXP-12 LCD can be argued to satisfy it and, if not, what waiver or amendment options may be available.

2. **Calderwood & Harkness regulatory analysis:** We will prepare a brief analysis confirming the status and validity of LCD L38472 and addressing the regulatory dimension of the "obtain" question. This can be incorporated into any position presented to PCNB. We plan to include this as a standalone PCNB Covenant Analysis Memorandum in our wind-down deliverables package, targeting delivery on May 28 alongside the Wind

3. **Strategy call:** I'd like to propose a call among you, me, Theresa, and Raymond Ota to align on the approach to PCNB — ideally early next week, Monday or Tuesday if schedules permit.

A brief housekeeping note: this communication is protected by attorney-client privilege and, as between our two firms, by the common interest doctrine, given that both Calderwood & Harkness and Whitford & Sable represent GDT's interests in related matters. I'm comfortable with the current distribution — Theresa as client and Danielle as your team member working on GDT matters — but please let me know if you would pre

Harrison, I appreciate your partnership on GDT matters, and I'm glad we're able to flag this issue early enough to develop a thoughtful approach before any lender notification is required. I'm available to discuss by phone at your convenience — please don't hesitate to reach out directly.

Miriam Calloway Partner Calderwood & Harkness LLP 1700 K Street NW, Suite 900 Washington, DC 20006 Direct: (202) 555-4183 Mobile: (202) 555-7291 mcalloway@calderwoodharkness.com

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