PRIVILEGED & CONFIDENTIAL — ATTORNEY WORK PRODUCT
MEMORANDUM
TO: Howard Quinn, Responsible Partner, Calderwood & Harkness LLP
FROM: Wendy Schultz, Lead Associate, and Omar Siddiqui, Working Associate, Calderwood & Harkness LLP
DATE: September 11, 2025
RE: Transaction Summary — Genome Dx Therapeutics Inc. Convertible Note Bridge Financing ($8,000,000)
Matter No.: 1013-00003
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I. Executive Summary
This memorandum provides a comprehensive summary of the proposed convertible note bridge financing (the "Transaction") by Genome Dx Therapeutics Inc. ("GenomeDx" or the "Company"), a Delaware corporation headquartered at 4710 Torrey Pines Road, Suite 300, San Diego, California 92130. The Company proposes to issue convertible promissory notes (the "Notes") in an aggregate principal amount of Eight Million Dollars ($8,000,000) to a group of four insider purchasers (the "Noteholders" or "Purchasers"), as more particularly described below.
The principal purpose of the Transaction is to provide bridge financing to extend the Company's cash runway from approximately seven (7) months, based on current burn rates as of September 2025, to approximately fourteen (14) months, thereby affording the Company adequate operating capital to continue operations — most critically, to sustain its ongoing clinical programs — pending the Company's anticipated Series C preferred stock financing, which is targeted for the first quarter of 2026. Without the bridge financing, management has determined that the Company's existing cash and cash equivalents would be insufficient to fund operations beyond approximately April 2026, creating meaningful risk to the Company's ability to negotiate a Series C financing from a position of financial stability.
GenomeDx is a clinical-stage biotechnology company developing next-generation CRISPR-based gene therapies for rare neurodegenerative disorders. The Company's lead therapeutic candidate, GDT-401, is a CRISPR-Cas9-based gene editing therapy currently being evaluated in a Phase 1b clinical trial for the treatment of a rare lysosomal storage disorder. The Company's Investigational New Drug Application ("IND") for GDT-401 was filed with the United States Food and Drug Administration in March 2024, and the Phase 1b trial is currently enrolling patients at three clinical sites in the United States. The proceeds from this bridge financing will be used primarily to fund the continued conduct of the Phase 1b clinical trial, as well as general working capital needs and pre-Series C corporate development activities.
All four Noteholders are existing officers, directors, or affiliated funds of the Company, rendering the Transaction a related-party or insider transaction. This insider character necessitates heightened procedural safeguards under both Delaware General Corporation Law ("DGCL") and sound corporate governance practice, including recusal of interested directors from the board approval process, retention of independent legal counsel on both sides of the Transaction, and documentation of the arm's-length nature of the Transaction's economic terms. The conflict-of-interest considerations are analyzed in detail in Section VII below.
Calderwood & Harkness LLP represents GenomeDx in its capacity as issuer's counsel. Ashford, Blake & Tan LLP represents the Noteholders collectively, having obtained a joint representation conflict waiver among the four Purchasers. The Transaction has been negotiated between the parties with the benefit of independent legal representation on each side.
Closing of the Transaction is scheduled for September 12, 2025 (the "Closing Date"). On the Closing Date, the Note Purchase Agreement ("NPA") and the individual Convertible Promissory Notes will be executed and delivered, and funds totaling $8,000,000 will be wired by the Purchasers to the Company's operating account. There is no escrow arrangement; funds will flow directly to the Company upon closing.
The offering of the Notes is being conducted as a private placement in reliance on Section 4(a)(2) of the Securities Act of 1933, as amended (the "Securities Act"), and Rule 506(b) of Regulation D promulgated thereunder. All four Purchasers are "accredited investors" as defined in Rule 501(a) of Regulation D, and no general solicitation or general advertising has been or will be employed in connection with the offering. The Company intends to file a Form D with the Securities and Exchange Commission ("SEC") within fifteen (15) days after the first sale of securities and to make any required state "blue sky" notice filings in California and New York.
II. Parties
A. Issuer. Genome Dx Therapeutics Inc. is the issuer of the Notes. The Company is a corporation organized under the laws of the State of Delaware, having been incorporated on or about 2018. The Company's Federal Employer Identification Number ("EIN") is 84-3921076. GenomeDx is registered to do business in the State of California and maintains its principal executive offices at 4710 Torrey Pines Road, Suite 300, San Diego, California 92130.
The Company's registered agent for service of process in the State of Delaware is Pacific Corporate Services Inc., located at 1209 Orange Street, Wilmington, Delaware 19801.
The Company's current executive officers and key personnel relevant to this Transaction are as follows:
Chief Executive Officer and Co-Founder: Dr. Lena Vasquez, Ph.D.
Chief Financial Officer: Marcus Eaton
General Counsel: Priya Raghavan
Chief Scientific Officer and Co-Founder: Dr. Franklin Osei, Ph.D.
The Company's independent auditor is Carver & Hollis LLP, with Rachel Dimitriou, CPA, serving as the engagement partner. The Company's fiscal year ends on December 31 of each calendar year.
The Company's transfer agent is Meridian Transfer Services Inc., which maintains the Company's stock ledger and equity records.
The most recent valuation of the Company's common stock for purposes of Section 409A of the Internal Revenue Code of 1986, as amended, was performed by Ridgeline Valuation Partners LLC (lead appraiser: Thomas Greenfield, ASA) as of June 30, 2025, yielding a fair market value of $1.18 per share of common stock.
B. Noteholders (Insider Purchasers)
The four Noteholders (each, a "Purchaser" and collectively, the "Purchasers") are as follows:
Stonebridge Capital Partners Fund III, L.P. ("Stonebridge Fund III") is a Delaware limited partnership, having Federal Employer Identification Number 87-2104538. Its sole general partner is Stonebridge Capital Management III LLC, a Delaware limited liability company. James Calloway serves as the Managing Partner of Stonebridge Capital Management III LLC and has sole investment authority over Stonebridge Fund III with respect to investments of this nature.
For purposes of analyzing the aggregate insider exposure, the combined commitment of James Calloway and his affiliated entity, Stonebridge Fund III, totals $6,000,000 ($1,000,000 in his individual capacity and $5,000,000 through Stonebridge Fund III). This combined amount represents 75% of the total offering.
The aggregate Note commitments across all four Purchasers total $8,000,000. Four separate convertible promissory notes will be issued, one to each Purchaser in the principal amount of such Purchaser's commitment as set forth above.
All four Purchasers have represented, and will confirm at closing through executed accredited investor questionnaires, that they are "accredited investors" as defined in Rule 501(a) of Regulation D under the Securities Act. Dr. Vasquez and Dr. Osei each qualify as accredited investors based on individual net worth and/or income thresholds. James Calloway qualifies as an accredited investor in his individual capacity on the same basis. Stonebridge Fund III qualifies as an accredited investor as an entity with total assets in excess of $5,000,000 that was not formed for the specific purpose of acquiring the securities offered.
C. Non-Participating Stakeholder
Whitepine Ventures Fund II, L.P. ("Whitepine") is a Delaware limited partnership whose general partner is Whitepine Ventures Management LLC. The Managing Director of Whitepine Ventures Management LLC is Nadia Chowdhury. Whitepine's principal office is located at 600 Battery Street, Suite 1400, San Francisco, California 94111.
Whitepine served as the lead investor in the Company's Series A preferred stock financing and currently holds 15,800,000 shares of Series A Preferred Stock, representing approximately 69.9% of the outstanding Series A Preferred Stock. Whitepine also holds certain board observer rights pursuant to the Series A Investor Rights Agreement, and Nadia Chowdhury serves on the Company's Board of Directors as the Series A Director.
Whitepine is not a Noteholder and is not participating in the bridge financing. However, Whitepine holds contractual consent rights under the existing Series A Investor Rights Agreement that are implicated by the Transaction, specifically the requirement to obtain the consent of holders of a majority of outstanding Series A Preferred Stock for incurrence of indebtedness exceeding $5,000,000. Whitepine's consent has been obtained, as discussed in greater detail in Section VI below.
D. Counsel. Issuer's Counsel: Calderwood & Harkness LLP serves as counsel to GenomeDx in connection with the Transaction. The firm's address is 555 Mission Street, Suite 3200, San Francisco, California 94105. The engagement team consists of the following professionals:
Howard Quinn — Responsible Partner
Patricia Dunmore — Billing Partner
Wendy Schultz — Lead Associate
Omar Siddiqui — Working Associate
Noteholders' Counsel: Ashford, Blake & Tan LLP serves as counsel to the Noteholders in connection with the Transaction. The firm's address is 1999 Avenue of the Stars, Suite 2700, Los Angeles, California 90067. The lead attorney is Daniel Nakamura, Partner, assisted by Stephanie Forrest, Associate. Ashford, Blake & Tan LLP represents all four Noteholders jointly in connection with the Transaction, having obtained a written conflict waiver from each of the four Purchasers acknowledging the joint representation and waiving any potential conflicts arising therefrom. To date, no issues have arisen among the Noteholders requiring differential treatment or creating adversity among the jointly represented clients; all four Purchasers are acquiring Notes on identical terms and under the same NPA.
III. Capitalization Overview (Pre-Note)
The following is a summary of the Company's capitalization as of the date of this memorandum, prior to giving effect to the issuance of the Notes and any future conversion thereof. This summary is based on information provided by the Company's General Counsel, Priya Raghavan, and the Company's transfer agent, Meridian Transfer Services Inc., and has not been independently verified by this firm.
Common Stock Outstanding: Approximately 48,200,000 shares of Common Stock are issued and outstanding. These shares are held by the Company's founders, early employees, and certain individual investors.
Series A Preferred Stock: 22,600,000 shares of Series A Preferred Stock are issued and outstanding, having been issued on March 22, 2021 in connection with the Company's Series A preferred stock financing, which raised aggregate gross proceeds of approximately $12,000,000. The Series A Preferred Stock is convertible into Common Stock on a one-for-one basis, subject to customary anti-dilution adjustments. Whitepine Ventures Fund II, L.P. holds 15,800,000 of the 22,600,000 outstanding Series A Preferred shares, representing approximately 69.9% of the outstanding Series A Preferred Stock. The Series A financing was documented pursuant to a Series A Stock Purchase Agreement, a Series A Investor Rights Agreement ("Series A IRA"), a Series A Right of First Refusal and Co-Sale Agreement, and a Series A Voting Agreement, each dated March 22, 2021.
Series B Preferred Stock: 31,400,000 shares of Series B Preferred Stock are issued and outstanding, having been issued on August 15, 2023 in connection with the Company's Series B preferred stock financing, which raised aggregate gross proceeds of approximately $38,000,000. The Series B Preferred Stock is convertible into Common Stock on a one-for-one basis, subject to customary anti-dilution adjustments. Stonebridge Capital Partners Fund III, L.P. holds 18,900,000 of the 31,400,000 outstanding Series B Preferred shares, representing approximately 60.2% of the outstanding Series B Preferred Stock and reflecting an aggregate investment by Stonebridge Fund III of approximately $22,800,000 in the Series B round. The Series B financing was documented pursuant to a Series B Stock Purchase Agreement, a Series B Investor Rights Agreement ("Series B IRA"), a Series B Right of First Refusal and Co-Sale Agreement, and a Series B Voting Agreement, each dated August 15, 2023.
Option Pool and Other: Approximately 10,600,000 shares are reserved under the Company's equity incentive plan or are subject to outstanding options, restricted stock units, warrants, or other convertible securities (excluding the Notes). This figure includes both vested and unvested equity awards.
Fully Diluted Share Count: Based on the foregoing, the Company's fully diluted share count (including all outstanding Common Stock, all outstanding Preferred Stock on an as-converted basis, and all shares reserved under equity incentive plans and other convertible securities, but excluding the Notes) is approximately 112,800,000 shares.
Most Recent 409A Valuation: As noted above, the most recent 409A fair market value of the Company's Common Stock is $1.18 per share, as determined by an independent valuation report prepared by Ridgeline Valuation Partners LLC (lead appraiser: Thomas Greenfield, ASA) as of June 30, 2025. This valuation is relevant context for assessing the conversion economics of the Notes, although the conversion price of the Notes is determined by the valuation cap and discount mechanisms described in Section IV below, rather than by the 409A valuation.
Board of Directors
The Company's Board of Directors currently consists of five (5) members, as follows:
The composition of the Board is governed by the Company's Voting Agreement, pursuant to which each series of Preferred Stock has the right to designate one director, the founders collectively designate two directors, and the remaining seat is designated as an independent director seat to be filled by mutual agreement. Each of these directors is currently serving and no vacancies exist on the Board as of the date hereof.
IV. Key Economic Terms of the Convertible Notes
The following is a detailed summary of the material economic terms of the Notes, as set forth in the NPA and the form of Convertible Promissory Note attached thereto as Exhibit A. This summary is qualified in its entirety by reference to the definitive Transaction documents.
A. Principal and Interest
The aggregate principal amount of the Notes is Eight Million Dollars ($8,000,000), allocated among four individual Notes issued to the Purchasers in the amounts set forth in the Schedule of Purchasers (Exhibit B to the NPA).
Interest accrues on the outstanding principal amount of each Note at a rate of 7.00% per annum (700 basis points). Interest is calculated as simple interest on the basis of a 365-day year and the actual number of days elapsed. The Notes do not provide for scheduled or periodic interest payments during their term. Rather, all accrued and unpaid interest compounds and is payable in full at the earlier of (a) the Maturity Date (as defined below), (b) the date of conversion of the Notes, or (c) the date of repayment of the Notes in connection with a Change of Control or prepayment event.
For reference, the total accrued interest at the full eighteen-month maturity, assuming no prior conversion or prepayment, would be calculated as follows:
$8,000,000 × 7.00% × 1.5 years = $840,000
Accordingly, the total repayment obligation at the Maturity Date, if no conversion has occurred, would be:
$8,000,000 (principal) + $840,000 (accrued interest) = $8,840,000
The 7.00% interest rate was negotiated between the parties and is within the market range for convertible bridge notes issued by clinical-stage biotechnology companies. Based on our review of comparable transactions and market data from recent bridge financings, interest rates in this context typically range from 5.00% to 8.00% per annum, with 6.00% to 7.00% being the most common range for insider bridge rounds.
B. Maturity. The Notes mature on March 12, 2027 (the "Maturity Date"), which is eighteen (18) months from the issuance date of September 12, 2025. On the Maturity Date, all outstanding principal and accrued and unpaid interest on the Notes becomes immediately due and payable in full, unless previously converted into equity securities of the Company pursuant to the conversion provisions described below. The eighteen-month maturity period is intended to provide adequate runway beyond the Company's targeted Series C timeline (Q1 2026) while affording a reasonable buffer in the event the Series C timeline extends.
C. Prepayment. The Notes are prepayable at the option of the Company, in whole or in part, upon not less than fifteen (15) calendar days' prior written notice to the Noteholders. No prepayment premium or penalty is payable in connection with any prepayment.
However, any prepayment requires the prior written consent of the "Majority Holders," defined in the NPA as holders of Notes representing more than $4,000,000 in aggregate principal amount of outstanding Notes. Given the allocation of Notes among the four Purchasers, the Majority Holders threshold can be satisfied only with the consent of Stonebridge Fund III (which holds a $5,000,000 Note) or the combination of any three of the remaining Purchasers together with Stonebridge Fund III. In practical terms, no prepayment may occur without the approval of Stonebridge Fund III, as no combination of the remaining three Purchasers alone would exceed the $4,000,000 threshold ($1,500,000 + $500,000 + $1,000,000 = $3,000,000).
D. Conversion Terms
The Notes contain three distinct conversion mechanisms, depending on the occurrence (or non-occurrence) of certain triggering events. Each is described below.
1. Automatic Conversion Upon Qualified Financing. A "Qualified Financing" is defined in the NPA as the next bona fide round of equity financing by the Company yielding aggregate gross proceeds to the Company of at least Twenty-Five Million Dollars ($25,000,000), exclusive of any proceeds attributable to the conversion of the Notes themselves and exclusive of any proceeds from the conversion of any other outstanding convertible debt or Simple Agreements for Future Equity ("SAFEs") of the Company. The $25,000,000 threshold is intended to ensure that conversion is triggered only by a financing of sufficient magnitude to reflect a meaningful, arms-length market valuation of the Company — consistent with the Company's anticipated Series C preferred stock financing.
Upon the closing of a Qualified Financing, all outstanding Notes automatically convert into shares of the series of Preferred Stock issued and sold in the Qualified Financing (the "Next Round Securities"), without any further action or election required on the part of the Noteholders. The conversion is mandatory and applies to the entire outstanding principal amount of each Note plus all accrued and unpaid interest thereon.
The Conversion Price applicable to the automatic conversion upon a Qualified Financing is the lesser of:
(a) 80% of the per-share price paid by new cash investors in the Qualified Financing (i.e., the Noteholders receive a 20% discount to the price paid by new investors); or
(b) the price implied by a $95,000,000 pre-money valuation cap divided by the Company's fully diluted capitalization as calculated immediately prior to the closing of the Qualified Financing (the "Cap Price").
The 20% discount and $95,000,000 valuation cap operate as alternative price protections for the Noteholders, ensuring that the Noteholders convert at a price that is no higher than the more favorable of the two calculations. In practice, the operative conversion price at the time of a Qualified Financing will depend on the actual per-share price negotiated in the Qualified Financing: if the Qualified Financing prices the Company at a pre-money valuation above approximately $118,750,000 (i.e., $95,000,000 ÷ 0.80), the valuation cap will be the operative price protection; if the Qualified Financing prices the Company at a pre-money valuation below approximately $118,750,000, the 20% discount may yield a lower (and therefore more favorable) conversion price.
For illustrative purposes, based on the Company's current fully diluted share count of approximately 112,800,000 shares, the Cap Price would be calculated as follows:
$95,000,000 ÷ 112,800,000 shares = approximately $0.8422 per share
We note that this illustrative Cap Price is below the current 409A fair market value of the Common Stock ($1.18 per share), which reflects the fact that the valuation cap is intended to provide the Noteholders with a conversion price that represents a meaningful discount to the anticipated Series C pricing, compensating them for the risk of providing bridge financing to the Company at a time of capital need.
The total amount converting upon an automatic conversion at a Qualified Financing consists of the outstanding principal ($8,000,000) plus all accrued and unpaid interest as of the conversion date. The converted amount is applied to the purchase of Next Round Securities at the applicable Conversion Price.
2. Optional Conversion at Maturity (No Qualified Financing). In the event that no Qualified Financing has occurred on or before the Maturity Date, the Majority Holders (as defined above, holders of more than $4,000,000 in aggregate principal amount of outstanding Notes) may elect to convert all outstanding Notes into shares of a newly created series of Preferred Stock designated as "Series B-1 Preferred Stock." This conversion is optional, not automatic, and requires an affirmative election by the Majority Holders. If the Majority Holders do not elect conversion, the Notes remain outstanding as debt obligations due and payable in cash on the Maturity Date.
If the Majority Holders elect optional conversion at maturity, the conversion price shall be the Cap Price (i.e., the price implied by the $95,000,000 pre-money valuation cap divided by the Company's fully diluted capitalization as calculated immediately prior to the conversion), and the Notes shall convert into Series B-1 Preferred Stock having the same rights, preferences, privileges, and restrictions as the Series B Preferred Stock, except as otherwise agreed by the Company and the Majority Holders at the time of conversion. The specific terms of the Series B-1 Preferred Stock will be set forth in a certificate of designation to be filed with the Delaware Secretary of State at the time of conversion.
For illustrative purposes, assuming a Cap Price of approximately $0.8422 per share and a total conversion amount of $8,840,000 (principal plus accrued interest at the full eighteen-month maturity), the total number of shares of Series B-1 Preferred Stock issuable upon conversion at maturity would be:
$8,840,000 ÷ $0.8422 per share = approximately 10,496,319 shares of Series B-1 Preferred Stock
This is an illustrative calculation only; the actual number of shares issuable will depend on the Company's fully diluted capitalization at the time of conversion, which may differ from the current figure due to option exercises, new equity issuances, or other changes to the capitalization in the interim period.
3. Change of Control Conversion / Repayment. In the event of a "Change of Control" (as defined in the NPA, generally including a merger, consolidation, sale of substantially all assets, or transfer of a majority of the Company's voting power) occurring prior to conversion of the Notes, each individual Noteholder may elect, at such Noteholder's sole discretion, one of the following two alternatives:
(i) Repayment at 2.0× Principal: Repayment in cash of an amount equal to two times (2.0×) the outstanding principal amount of such Noteholder's Note, plus all accrued and unpaid interest thereon; or
(ii) Conversion at Cap Price: Conversion of the Note (principal plus accrued interest) into equity securities of the Company at the Cap Price, with such shares participating in the Change of Control consideration on the same basis as other holders of the applicable series of Preferred Stock.
The election is made on a Noteholder-by-Noteholder basis, meaning that some Noteholders could elect repayment while others elect conversion, depending on their individual assessment of the relative value of each alternative in light of the Change of Control transaction terms.
The maximum aggregate Change of Control repayment amount, assuming all Noteholders elect repayment and the Change of Control occurs at or near the Maturity Date (when accrued interest is at its maximum), would be:
(2.0 × $8,000,000) + $840,000 = $16,840,000
The 2.0× multiple is intended to compensate the Noteholders for the loss of the upside conversion opportunity in the event of a Change of Control at a valuation below the level at which equity conversion would be more favorable.
E. Subordination and Security
The Notes are general unsecured obligations of the Company. The Notes are not secured by any assets, property, or collateral of the Company, and the Noteholders do not have any lien, security interest, or encumbrance on any of the Company's assets in connection with the Notes.
The Notes are subordinated to up to $3,000,000 in aggregate principal amount of future senior indebtedness of the Company. This subordination provision is intended to preserve the Company's ability to obtain a venture debt facility or similar senior secured credit facility from an institutional lender, which is a financing avenue the Company may pursue in parallel with or in addition to the Series C preferred stock financing. The subordination is automatic and does not require further consent of the Noteholders, provided that the aggregate amount of senior indebtedness to which the Notes are subordinated does not exceed the $3,000,000 threshold.
The subordination mechanics are set forth in the NPA and provide that, in the event of any payment default, insolvency, or liquidation of the Company, the holders of permitted senior indebtedness (up to $3,000,000) shall be entitled to receive payment in full before any payment is made to the Noteholders on account of the Notes.
F. Most Favored Nation (MFN) Provision
The NPA contains a "most favored nation" provision for the benefit of the Noteholders. Pursuant to this provision, if the Company issues any additional convertible promissory notes, Simple Agreements for Future Equity (SAFEs), or other convertible debt instruments at any time following the closing of the Transaction and prior to the occurrence of a Qualified Financing, on terms that are more favorable to the holders of such subsequent instruments than the terms of the Notes, then the Noteholders shall have the right, exercisable upon written notice to the Company within thirty (30) days of receiving notice of such subsequent issuance, to amend their Notes to incorporate the more favorable terms.
The MFN right applies to economic and structural terms of the subsequent instruments, including but not limited to interest rate, conversion discount, valuation cap, maturity date, and change of control provisions. However, the MFN right does not apply to the principal amount of the subsequent instruments — i.e., the Noteholders may not use the MFN provision to increase the principal amount of their existing Notes.
The MFN provision provides a degree of downside protection to the Noteholders against the possibility that the Company might issue subsequent convertible instruments on more favorable terms, which could dilute the relative value of the Noteholders' investment. From the Company's perspective, the MFN provision may constrain flexibility in structuring subsequent interim financings, but this is a common and expected feature in convertible bridge note transactions.
G. Information Rights
Pursuant to the NPA, the Company covenants to provide the Noteholders with the following financial information during the period that any Notes remain outstanding:
Quarterly Financial Statements: Within forty-five (45) days after the end of each fiscal quarter, the Company shall deliver to each Noteholder unaudited financial statements consisting of a balance sheet, income statement, and statement of cash flows for the most recently completed fiscal quarter, prepared in accordance with generally accepted accounting principles ("GAAP"), consistently applied, subject to normal year-end adjustments and the absence of footnotes.
Annual Financial Statements: Within one hundred twenty (120) days after the end of each fiscal year (the Company's fiscal year ends on December 31), the Company shall deliver to each Noteholder audited financial statements consisting of a balance sheet, income statement, statement of cash flows, and statement of stockholders' equity for the most recently completed fiscal year, audited by the Company's independent certified public accounting firm. The Company's current auditor is Carver & Hollis LLP, with Rachel Dimitriou, CPA, serving as engagement partner.
These information rights are in addition to, and not in lieu of, any information rights that the Noteholders may hold in their capacities as stockholders, directors, or officers of the Company, or pursuant to any existing investor rights agreements.
V. Securities Law Analysis
The offering and sale of the Notes is being conducted as a private placement exempt from the registration requirements of Section 5 of the Securities Act of 1933, as amended (the "Securities Act"). The Company is relying on the exemption from registration provided by Section 4(a)(2) of the Securities Act (the statutory exemption for transactions by an issuer not involving any public offering) and Rule 506(b) of Regulation D promulgated thereunder.
The basis for the exemption is as follows:
Accredited Investors. All four Purchasers are "accredited investors" as defined in Rule 501(a) of Regulation D. As noted above, Dr. Vasquez, Dr. Osei, and Mr. Calloway each qualify individually as accredited investors, and Stonebridge Fund III qualifies as an entity accredited investor. No non-accredited investors are participating in the offering. The Company will obtain executed accredited investor questionnaires from each Purchaser at or prior to the closing to document their accredited investor status.
No General Solicitation. No form of general solicitation or general advertising has been or will be used in connection with the offering of the Notes. The offering has been made exclusively through direct, pre-existing relationships between the Company and its existing officers, directors, and affiliated funds. No public advertisements, postings on internet platforms, or communications to persons outside the circle of the Company's existing insiders have been made in connection with the offering.
Representations and Warranties. The NPA contains customary representations and warranties by the Company regarding, among other things, its organization, authorization, capitalization, compliance with laws, and the valid issuance of the Notes. The NPA also contains representations and warranties by each Purchaser regarding, among other things, its accredited investor status, investment intent, sophistication, access to information, and understanding of the restricted nature of the Notes and any underlying conversion shares.
Regulatory Filings. Following the closing, the Company will be required to file a Form D (Notice of Exempt Offering of Securities) with the SEC within fifteen (15) days after the first sale of securities in the offering. Based on the anticipated Closing Date of September 12, 2025, the Form D must be filed no later than September 27, 2025. The Form D will be filed electronically through the SEC's EDGAR system.
In addition, state securities or "blue sky" notice filings may be required in the states where the Purchasers reside or maintain their principal offices. Based on the addresses of the Purchasers, notice filings may be required in California (where Dr. Vasquez and Dr. Osei reside and where the Company is headquartered) and New York (where Mr. Calloway and Stonebridge Fund III maintain their principal offices). We will assess the specific filing requirements in each state following the closing and make timely filings as required.
The shares of Preferred Stock issuable upon conversion of the Notes (the "Conversion Shares") will be issued in reliance on the same Section 4(a)(2) / Rule 506(b) exemption, or on Section 3(a)(9) of the Securities Act (exemption for exchanges by an issuer with its existing security holders where no commission or other remuneration is paid), as applicable. The NPA includes appropriate provisions restricting transfer of the Notes and the Conversion Shares and requiring restrictive legends on all certificates or book-entry positions representing such securities.
VI. Consent and Governance Requirements
A. Board Approval
The issuance of the Notes pursuant to the NPA requires the approval of the Board of Directors of GenomeDx. Given the insider nature of the Transaction, the approval process was conducted with heightened attention to corporate governance best practices and compliance with the DGCL's interested-director transaction provisions (Section 144).
Three of the five members of the Board of Directors have a direct personal or economic interest in the Transaction, as each is either a Noteholder or an affiliate of a Noteholder:
Dr. Lena Vasquez — CEO, Co-Founder, and Director; purchasing $1,500,000 in Notes in her individual capacity.
Dr. Franklin Osei — CSO, Co-Founder, and Director; purchasing $500,000 in Notes in his individual capacity.
James Calloway — Series B Director; purchasing $1,000,000 in Notes individually and $5,000,000 through Stonebridge Capital Partners Fund III, L.P., of which he is the Managing Partner and the sole person with investment authority — totaling $6,000,000 in commitments by Calloway and his affiliated entity.
In accordance with sound corporate governance practice and the requirements of DGCL § 144, each of Dr. Vasquez, Dr. Osei, and Mr. Calloway recused themselves from all Board deliberations concerning the Transaction and did not participate in the vote approving the Transaction. The recusal extended to both discussion and voting; the interested directors were not present during the substantive deliberations of the disinterested directors regarding the merits and terms of the Transaction.
The two remaining disinterested directors — Nadia Chowdhury (Series A Director, designated by Whitepine Ventures) and Dr. Renata Moss (Independent Director) — constitute a quorum of the Board for purposes of acting on the Transaction, as the Company's Amended and Restated Bylaws provide that a majority of the total number of directors shall constitute a quorum, and a quorum of disinterested directors may act on behalf of the Board with respect to interested-director transactions. With three of five directors recused, the remaining two directors constitute a quorum of the disinterested directors authorized to act.
On September 11, 2025, the Board acted by written consent in lieu of a meeting, with both disinterested directors — Nadia Chowdhury and Dr. Renata Moss — voting unanimously in favor of the Transaction. The written consent authorizes the execution and delivery of the NPA, the Notes, and all ancillary documents in connection with the Transaction. The written consent further designates Marcus Eaton (Chief Financial Officer) and Priya Raghavan (General Counsel) as the authorized signatories to execute and deliver the Transaction documents on behalf of the Company and to take such further actions as may be necessary or appropriate to consummate the Transaction.
Prior to executing the written consent, the disinterested directors were provided with complete copies of the draft NPA and form of Note, a summary of terms, a description of the related-party nature of the Transaction and the identities and commitments of each Noteholder, the Company's current capitalization table, the Company's most recent financial projections and cash runway analysis, and a memorandum from this firm regarding the conflict-of-interest considerations. Both disinterested directors confirmed their understanding of the material facts and the related-party nature of the Transaction before approving the written consent.
B. Stockholder / Preferred Stock Consents
In addition to Board approval, the Transaction requires certain contractual consents under the Company's existing investor rights agreements, as the issuance of $8,000,000 in convertible promissory notes constitutes incurrence of indebtedness that triggers consent thresholds in both the Series A IRA and the Series B IRA.
Series B Preferred Consent. The Series B Investor Rights Agreement, dated August 15, 2023 (the "Series B IRA"), contains a negative covenant requiring the Company to obtain the prior written consent of the holders of a majority of the outstanding shares of Series B Preferred Stock before the Company may incur, guarantee, or assume any indebtedness in an aggregate amount exceeding $2,000,000. The issuance of $8,000,000 in convertible promissory notes exceeds this threshold and therefore requires the written consent of the holders of a majority of the Series B Preferred Stock.
Stonebridge Capital Partners Fund III, L.P. holds 18,900,000 of the 31,400,000 outstanding shares of Series B Preferred Stock, representing approximately 60.2% of the outstanding Series B Preferred Stock. As the holder of a majority of the Series B Preferred Stock, Stonebridge Fund III's consent alone is sufficient to satisfy this consent requirement.
The written consent of Stonebridge Fund III was executed on September 10, 2025, signed by James Calloway in his capacity as Managing Partner of Stonebridge Capital Management III LLC, the general partner of Stonebridge Fund III.
We note that Stonebridge Fund III occupies a dual role in this Transaction: it is both the consenting holder providing the Series B Preferred consent and the largest Noteholder ($5,000,000 in principal amount). This dual role is contractual in nature — the consent right under the Series B IRA is a contractual protection that does not impose fiduciary obligations on Stonebridge Fund III in exercising it. The consent is not a fiduciary vote, and Stonebridge Fund III is entitled under the Series B IRA to exercise its consent rights in its own interest. Nevertheless, the dual role has been fully disclosed to the Board, and the implications are discussed further in the conflict-of-interest analysis in Section VII below.
Series A Preferred Consent. The Series A Investor Rights Agreement, dated March 22, 2021 (the "Series A IRA"), contains a negative covenant requiring the Company to obtain the prior written consent of the holders of a majority of the outstanding shares of Series A Preferred Stock before the Company may incur, guarantee, or assume any indebtedness in an aggregate amount exceeding $5,000,000. The issuance of $8,000,000 in convertible promissory notes exceeds this threshold and therefore requires the written consent of the holders of a majority of the Series A Preferred Stock.
Whitepine Ventures Fund II, L.P. holds 15,800,000 of the 22,600,000 outstanding shares of Series A Preferred Stock, representing approximately 69.9% of the outstanding Series A Preferred Stock. As the holder of a majority of the Series A Preferred Stock, Whitepine's consent alone is sufficient to satisfy this consent requirement.
The written consent of Whitepine Ventures Fund II, L.P. was delivered on September 10, 2025, signed by Nadia Chowdhury in her capacity as Managing Director of Whitepine Ventures Management LLC, the general partner of Whitepine Ventures Fund II, L.P.
Importantly, Whitepine is not a Noteholder and has no financial interest in the Transaction as a purchaser of Notes. Whitepine's consent is therefore not conflicted, and Whitepine's delivery of its consent was given on a fully independent and unconflicted basis. We understand that Whitepine's willingness to consent was informed by its assessment that the bridge financing serves the Company's interest by extending its cash runway and preserving the value of Whitepine's existing Series A investment.
Stockholder Approval Under DGCL. No approval by the Company's common stockholders is required under the Delaware General Corporation Law for the issuance of debt instruments, including convertible promissory notes. The issuance of the Notes does not require a stockholder vote or written consent of the common stockholders under Section 242 (amendment of certificate of incorporation), Section 251 (merger), or any other provision of the DGCL. Accordingly, no stockholder approval has been sought or obtained.
We note that if and when the Notes convert into shares of Preferred Stock (whether upon a Qualified Financing, at maturity, or upon a Change of Control), the issuance of such Preferred Stock may require the filing of a Certificate of Designation (or an amendment to the Company's Certificate of Incorporation) with the Delaware Secretary of State and may require additional stockholder or preferred stockholder consents at that time, depending on the terms of the conversion and the Company's charter documents then in effect. These requirements will be assessed and addressed at the time of any conversion event.
VII. Conflict-of-Interest Analysis
A. Nature of the Conflicts
This Transaction presents significant related-party considerations that warrant careful analysis and documentation. The Transaction is, in its entirety, an insider transaction: three of the Company's five directors and/or their affiliated entities are on both sides of the Transaction — as fiduciaries of the Company on one hand and as purchasers of Notes from the Company on the other. The specific interests are as follows:
Dr. Lena Vasquez serves as the Company's Chief Executive Officer and as a member of the Board of Directors. She is purchasing $1,500,000 in Notes in her individual capacity. As CEO, Dr. Vasquez has a fiduciary duty to act in the best interests of the Company and its stockholders; as a Noteholder, she has a personal financial interest in the terms of the Notes being favorable to the Purchasers.
Dr. Franklin Osei serves as the Company's Chief Scientific Officer and as a member of the Board of Directors. He is purchasing $500,000 in Notes in his individual capacity. As CSO and director, Dr. Osei has similar fiduciary duties; as a Noteholder, he has a similar personal financial interest.
James Calloway serves as the Series B Preferred Director on the Company's Board, designated by Stonebridge Capital Partners. He is purchasing $1,000,000 in Notes individually and $5,000,000 through Stonebridge Capital Partners Fund III, L.P., of which he is the Managing Partner with sole investment authority. The combined commitment of Mr. Calloway and his affiliated entity is $6,000,000, representing 75% of the total offering. As a director, Mr. Calloway owes fiduciary duties to the Company and all of its stockholders; as a Noteholder (both individually and through Stonebridge Fund III), he has a substantial personal and economic interest in the terms of the Notes.
Collectively, the interested parties control $8,000,000 of the $8,000,000 in Notes — meaning that 100% of the offering is sold to insiders. There are no arms-length third-party participants in the Transaction, which heightens the importance of the procedural safeguards described below.
B. Procedural Safeguards
The Company and its counsel have implemented the following procedural safeguards to address the related-party nature of the Transaction and to establish compliance with applicable law, including DGCL § 144:
Interested-Director Abstention. As described in Section VI.A above, all three interested directors — Dr. Vasquez, Dr. Osei, and Mr. Calloway — recused themselves from Board deliberations and voting on the Transaction. The Transaction was approved solely by the two disinterested directors, Nadia Chowdhury and Dr. Renata Moss, acting with full knowledge of all material facts concerning the Transaction, including the identities and commitments of all Noteholders and the economic terms of the Notes.
Compliance with DGCL § 144. Section 144 of the Delaware General Corporation Law provides that a contract or transaction between a corporation and one or more of its directors or officers, or between a corporation and any entity in which one or more of its directors or officers has a financial interest, shall not be void or voidable solely because of the interested director's or officer's participation, provided that one of three conditions is satisfied:
(a) The material facts as to the director's or officer's relationship or interest and as to the contract or transaction are disclosed or are known to the board of directors or the committee thereof, and the board or committee in good faith authorizes the contract or transaction by the affirmative vote of a majority of the disinterested directors, even though the disinterested directors be less than a quorum;
(b) The material facts as to the director's or officer's relationship or interest and as to the contract or transaction are disclosed or are known to the stockholders entitled to vote thereon, and the contract or transaction is specifically approved in good faith by vote of the stockholders; or
(c) The contract or transaction is fair as to the corporation as of the time it is authorized, approved, or ratified, by the board of directors, a committee thereof, or the stockholders.
In this case, the Company is relying on path (a) — approval by a majority of disinterested directors with full knowledge of the material facts. The two disinterested directors (Chowdhury and Moss) were provided with complete information regarding the Transaction, including the identities and financial interests of each interested director, the terms of the Notes, the Company's financial position and capital needs, and the market context for the Transaction's economic terms. Both disinterested directors approved the Transaction by written consent on September 11, 2025, representing the unanimous approval of all disinterested directors. Additionally, as discussed below, the terms of the Transaction appear to be fair to the Company, which would independently satisfy the safe harbor under path (c).
Independent Legal Representation. The Company is represented by this firm, Calderwood & Harkness LLP, which has no relationship with any of the Noteholders and is acting solely in the interest of the Company. The Noteholders are separately represented by Ashford, Blake & Tan LLP (Daniel Nakamura, Partner), which has negotiated the Transaction terms on behalf of the Purchasers. The presence of independent counsel on each side of the Transaction ensures that the terms have been the product of genuine negotiation and that both parties' interests have been independently advocated.
Arm's-Length Terms. The economic terms of the Notes — including the 7.00% per annum interest rate, the 20% conversion discount, and the $95,000,000 pre-money valuation cap — are within the range of market terms for comparable convertible bridge note transactions in the clinical-stage biotechnology sector. Based on our review of publicly available and proprietary transaction data, comparable insider bridge notes in the clinical-stage biotech space typically feature interest rates of 5.00%–8.00%, conversion discounts of 15%–25%, and valuation caps that imply a modest discount to the anticipated next-round pre-money valuation. The terms of the Notes fall squarely within these ranges. These market comparables were presented to and reviewed by the disinterested directors prior to their approval of the Transaction.
No Special Pricing or Preference. No individual Noteholder receives terms more favorable than any other Noteholder. All four Purchasers participate under the same NPA and the same form of Note. The economic terms (interest rate, conversion discount, valuation cap, maturity, subordination, MFN, and information rights) are identical for each Noteholder. There are no side letters, separate agreements, or undisclosed arrangements providing any Noteholder with differential or preferential treatment.
C. Stonebridge Dual-Role Consideration
As noted in Section VI.B above, Stonebridge Capital Partners Fund III, L.P. occupies a dual role in this Transaction: it is both (i) the holder of a majority of the Series B Preferred Stock whose written consent was required and obtained for the Company's incurrence of indebtedness exceeding $2,000,000, and (ii) the largest Noteholder, with a $5,000,000 commitment representing 62.5% of the total offering.
This dual role merits specific acknowledgment. As the consenting Series B majority holder, Stonebridge Fund III was not acting in a fiduciary capacity; its consent right under the Series B IRA is a contractual protection that Stonebridge Fund III is entitled to exercise in its own interest. The consent does not constitute a board-level or fiduciary approval and is not subject to the same disinterested-approval requirements as a board vote. Accordingly, the fact that Stonebridge Fund III is simultaneously a Noteholder does not, in itself, create a conflict that would invalidate its consent or require that it be supplemented by additional consents.
Nevertheless, the dual role has been fully disclosed to the Board, including to the disinterested directors, and is documented in this memorandum. Mr. Calloway's recusal from the Board vote on the Transaction mitigates the governance-level conflict, and the independent consent of Whitepine Ventures (which has no financial interest in the Transaction) under the Series A IRA provides an additional layer of unconflicted stakeholder oversight.
D. Remaining Risk Factors
While the procedural safeguards described above substantially mitigate the legal and governance risks associated with the insider nature of the Transaction, the following residual risk factors should be noted:
General Insider Transaction Risk. All insider transactions carry inherent reputational and litigation risk. A dissatisfied stockholder could potentially challenge the Transaction as self-dealing, although the procedural safeguards — disinterested director approval, independent counsel, and market-rate terms — would provide strong defenses against such a challenge under Delaware law. The burden of proof in any such challenge would rest on the plaintiff to demonstrate that the Transaction was not entirely fair to the Company, given that the disinterested director approval under DGCL § 144(a) has been obtained.
Series C Investor Scrutiny. Future investors in the anticipated Series C preferred stock financing may scrutinize the terms of the bridge Notes, particularly the 20% conversion discount and the $95,000,000 pre-money valuation cap, as potentially dilutive to new investors entering in the Series C. Prospective Series C investors may view the bridge notes as having been priced at an overly generous discount to the benefit of insiders, particularly given that 100% of the offering was sold to insiders. The Company should be prepared to defend the reasonableness of the bridge terms and should ensure complete and transparent disclosure of the insider bridge financing in any future offering documents, term sheets, or investor presentations provided in connection with the Series C.
Disclosure Obligations. The Company should ensure that the existence, terms, and insider nature of the bridge financing are fully disclosed in all future securities offering documents, board materials, and financial statements where related-party transactions are required to be disclosed. Failure to provide adequate disclosure could create liability for the Company and its officers and directors.
VIII. Key Transaction Documents
The following is a list of the principal documents to be executed and/or delivered in connection with the closing of the Transaction, together with a brief description of each:
1. Note Purchase Agreement (dated September 12, 2025). The principal transaction document governing the issuance and sale of the Notes. The NPA sets forth the terms and conditions of the offering, including the representations and warranties of the Company and each Purchaser, the covenants of the Company (including the financial information delivery obligations), the conditions precedent to closing, the conversion mechanics (including the definitions of Qualified Financing, Change of Control, Majority Holders, and related terms), and the miscellaneous provisions (including governing law, amendment, and waiver). The NPA is governed by the laws of the State of Delaware.
2. Form of Convertible Promissory Note (Exhibit A to the NPA). The form of note instrument evidencing the Company's obligation to repay the principal amount and accrued interest, and setting forth the conversion, prepayment, subordination, and other provisions applicable to each individual Note. Four separate Notes will be executed and delivered at closing, one to each Purchaser, in the principal amounts set forth in the Schedule of Purchasers.
3. Schedule of Purchasers (Exhibit B to the NPA). A schedule setting forth the name, address, and commitment amount of each of the four Purchasers. The Schedule of Purchasers is incorporated by reference into the NPA and the form of Note.
4. Action by Written Consent of the Board of Directors (dated September 11, 2025). The written consent in lieu of a meeting by which the disinterested directors of GenomeDx approved the Transaction. The written consent reflects the recusal of the three interested directors (Dr. Vasquez, Dr. Osei, and Mr. Calloway) and the unanimous approval of the two disinterested directors (Nadia Chowdhury and Dr. Renata Moss). The written consent authorizes the execution and delivery of the NPA, the Notes, and all ancillary documents and designates Marcus Eaton (CFO) and Priya Raghavan (General Counsel) as authorized signatories.
5. Written Consent of Holders of Series B Preferred Stock (dated September 10, 2025). The written consent of Stonebridge Capital Partners Fund III, L.P., as the holder of a majority of the outstanding Series B Preferred Stock, consenting to the Company's incurrence of indebtedness in excess of $2,000,000 as required under Section [_] of the Series B IRA. Signed by James Calloway as Managing Partner of Stonebridge Capital Management III LLC, the general partner of Stonebridge Fund III.
6. Written Consent of Holders of Series A Preferred Stock (dated September 10, 2025). The written consent of Whitepine Ventures Fund II, L.P., as the holder of a majority of the outstanding Series A Preferred Stock, consenting to the Company's incurrence of indebtedness in excess of $5,000,000 as required under Section [_] of the Series A IRA. Signed by Nadia Chowdhury as Managing Director of Whitepine Ventures Management LLC, the general partner of Whitepine Ventures Fund II, L.P.
7. Secretary's Certificate (dated September 12, 2025). A certificate executed by Priya Raghavan, in her capacity as the Company's General Counsel and acting Secretary, certifying as to (a) the Company's Amended and Restated Certificate of Incorporation and Amended and Restated Bylaws (attaching copies thereof), (b) the Board written consent authorizing the Transaction, (c) the incumbency and specimen signatures of the Company's authorized officers, and (d) the Company's good standing in the State of Delaware and the State of California.
8. Legal Opinion of Calderwood & Harkness LLP (dated September 12, 2025). A legal opinion letter addressed to the Purchasers, delivered by this firm on behalf of the Company. The opinion letter will opine as to, among other things, (a) the due incorporation and valid existence of the Company under the laws of the State of Delaware, (b) the valid authorization of the Transaction by all necessary corporate action, (c) the binding nature of the NPA and the Notes as enforceable obligations of the Company (subject to customary exceptions for bankruptcy, equity principles, and similar limitations), (d) the absence of conflicts between the Transaction and the Company's charter documents, material agreements, and applicable law, and (e) the due reservation and valid issuance of the shares of Preferred Stock issuable upon conversion of the Notes, when issued in accordance with the terms of the Notes and any applicable certificate of designation.
9. Wire Transfer Instructions / Funds Flow Memorandum. A memorandum setting forth the wire transfer instructions for each incoming wire from the four Purchasers to the Company's designated operating account, including the Company's bank name, account number, ABA routing number, and reference information. The funds flow is direct from the Purchasers to the Company; no escrow account or third-party intermediary is being used in connection with the Transaction.
10. Closing Checklist. A comprehensive closing checklist prepared by Omar Siddiqui, Working Associate, itemizing all deliverables required for the closing, including executed documents, certificates, consents, questionnaires, wire confirmations, and post-closing items, with the current status of each item.
11. Accredited Investor Questionnaires. Individual accredited investor questionnaires to be completed and executed by each of the four Purchasers, confirming their status as "accredited investors" under Rule 501(a) of Regulation D and providing the factual basis for such qualification. One questionnaire is required from each of Dr. Vasquez, Dr. Osei, Mr. Calloway (in his individual capacity), and Stonebridge Capital Partners Fund III, L.P.
IX. Timeline of Key Dates
The following table summarizes the key dates in the history of the Company and the Transaction:
X. Engagement and Fee Summary
Calderwood & Harkness LLP was engaged as counsel to GenomeDx (as issuer's counsel) in connection with the Transaction pursuant to an engagement letter dated September 8, 2025, addressed to Priya Raghavan, General Counsel of GenomeDx. The engagement is assigned Matter Number 1013-00003.
The fee arrangement for the Transaction is as follows:
Fee Cap: The firm's fees for the Transaction are capped at $85,000. This cap covers all attorney time and professional fees incurred in connection with the drafting, negotiation, and closing of the Transaction, including the preparation and delivery of the legal opinion letter. The fee cap does not include disbursements, filing fees, or expenses, which are billed separately at cost.
Hourly Rates: The hourly rates for the engagement team members are as follows:
• Howard Quinn (Responsible Partner): $1,150 per hour
• Patricia Dunmore (Billing Partner): $1,050 per hour
• Wendy Schultz (Lead Associate): $725 per hour
• Omar Siddiqui (Working Associate): $575 per hour
Retainer: A retainer of $15,000 was received from the Company upon execution of the engagement letter. The retainer will be applied against the final invoice for the Transaction.
Calderwood & Harkness LLP does not represent any of the Noteholders in connection with the Transaction or in any other matter. The Noteholders are separately repr