Dear Theresa,
Thank you for the wind-down instruction we received on May 23, 2024, following the GDT board's May 22 resolution to defer the commercial launch of OncoPrecise GXP-47 indefinitely. Per that instruction, Calderwood & Harkness has prepared and is transmitting herewith the final deliverables for the engagement. I want to ensure these materials provide you and the team with a complete and well-organized record of the work performed and a clear roadmap for reactivation when the time is right.
**Attached Documents**
Please find the following three documents enclosed with this email:
**(1) Matter Wind-Down Memorandum (dated May 28, 2024)**
This memorandum provides a comprehensive summary of all work product delivered during the course of the engagement, from execution of the engagement letter on February 14, 2024 through the present date. The memorandum also identifies the following pending deliverables that will not be completed as a result of the matter termination:
- **PLA Code Application.** The PLA code application was targeted for submission to the AMA CPT Editorial Panel by the June 28, 2024 deadline for the September 2024 meeting. This application will not be submitted. The draft application and proposed code descriptor have been preserved in our files.
- **LCD Request Letter to Cascade Fiscal Intermediaries, LLC.** The LCD request letter addressed to Dr. William Hargrove and Sandra Phu at Cascade Fiscal Intermediaries had a target filing date of August 2024. This letter will not be filed.
- **MolDx Technical Assessment Dossier.** Finalization of the MolDx Technical Assessment Dossier for submission to Ridgeline Administrative Services, LLC (Dr. Catherine Embry) will not proceed. Version 1.0 was delivered to GDT on April 30, 2024, but the dossier was never finalized or submitted to Ridgeline.
The memorandum further outlines work product preservation and document retention arrangements consistent with Calderwood & Harkness's standard policies, and sets forth our recommendations for reactivation of the coverage and coding strategy, which I summarize below.
**(2) Work Product Index and Deliverables Tracker (Excel Workbook)**
The attached Excel workbook provides a complete catalog of all work product created during the engagement under Matter No. 1043-00002. Each deliverable is listed with the date delivered, a description, its current status (delivered, draft, or not submitted), and the corresponding file reference. For ease of reference, the major deliverables cataloged include:
- Coding Strategy Memorandum (March 11, 2024) - Draft PLA Code Application (March 22, 2024) - Draft PLA Code Application Cover Letter (draft, never sent) - Clinical Evidence Gap Analysis Memorandum (April 15, 2024) - Revised LCD/MolDx Strategy Memorandum (April 22, 2024) - Draft MolDx Technical Assessment Dossier, Version 1.0 (April 30, 2024) - MolDx Dossier Bibliography (43 publications) - Draft LCD Request Letter to CFI (draft, never sent) - NCD Feasibility Assessment Memorandum (May 10, 2024) - Reimbursement Rate Analysis Memorandum (May 14, 2024) - Reimbursement Rate Crosswalk Model (Excel workbook) (May 14, 2024) - LCD Regulatory Landscape Memorandum (late February 2024) - GDT Board Presentation — Coverage Strategy Overview (April 9, 2024) - Review Memorandum — Larkfield Health Economics HEOR Analysis - PCNB Covenant Analysis Memorandum (May 28, 2024)
**(3) Analysis of Pacific Coast National Bank Milestone Covenant (dated May 28, 2024)**
As we discussed, the deferral of the GXP-47 launch raises a question under the milestone covenant in Section 7.14 of the PCNB Revolving Facility Credit Agreement (Ref. PCNB-GDT-RF-2023-0922). That covenant requires 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.
Our analysis examines whether the existing LCD for OncoPrecise GXP-12 — LCD L38472, effective August 15, 2021, issued by Cascade Fiscal Intermediaries — may satisfy this covenant. While there is a reasonable argument that it does, we flag a significant interpretive risk: the covenant's use of "obtain" in the future tense may be construed to require a *new* coverage determination obtained after the credit agreement's September 22, 2023 execution date. If that construction prevails, the GXP-12 LCD would not satisfy the covenant.
Key financial parameters to keep in mind: GDT currently has $9,200,000 outstanding under the $15,000,000 facility, and the covenant provides a 90-day cure period following the December 31, 2024 testing date, with the cure period expiring March 31, 2025.
We recommend that GDT consult promptly with Whitford & Sable LLP — specifically Harrison Whitford, as your regular corporate counsel — regarding the covenant issue, and that GDT consider proactive engagement with PCNB's relationship manager, Thomas Becerra, well in advance of the testing date. I have separately reached out to Harrison regarding coordination on this matter (per my May 24, 2024 email to him), and he is aware of the issue.
**Recommendations for Reactivation**
The Wind-Down Memorandum sets forth our detailed recommendations for reactivating the Medicare coverage and coding strategy when conditions permit. In summary:
- **Trigger Event.** The key trigger for reactivation is the availability of final data from the CLARITY-LUNG trial (NCT05891247), currently projected for Q2 2025. This represents a revision from the original Q4 2024 projection. As of May 2024, enrollment stands at 847 of 1,200 patients (approximately 70.6%).
- **Clinical Data Thresholds.** Final CLARITY-LUNG data should meet or exceed the pre-specified performance benchmarks — PPV ≥ 0.75 and NPV ≥ 0.80 — in order to support a viable LCD application. As you know, the interim results (PPV = 0.68, NPV = 0.71) fell below these thresholds, which was the primary driver of the board's deferral recommendation.
- **PLA Code Application.** Upon reactivation, a PLA code application would need to be filed for the next available AMA CPT Editorial Panel meeting cycle. The draft application and proposed code descriptor are preserved in our files and can be updated relatively efficiently.
- **LCD / MolDx Dossier.** The draft MolDx Technical Assessment Dossier (Version 1.0) and the draft LCD request letter to CFI are preserved. Upon reactivation, the dossier would need to be updated to incorporate final CLARITY-LUNG data, any additional retrospective studies published in the interim, and an updated HEOR analysis from Larkfield Health Economics.
- **Reimbursement Rate.** The crosswalk analysis supporting the $3,850/test target rate — based on the weighted average of $3,622.33 derived from Elara 0250U at $3,742, CPT 81455 at $2,919, and Marlowe Asset Management 0239U at $4,206, with a 6.28% premium — would need to be refreshed against then-current Medicare fee schedule rates at the time of reactivation.
- **NCD Pathway.** The NCD Feasibility Assessment, which estimates a timeline of 18–24 months from LCD issuance to NCD consideration, remains a viable long-term strategy component and should be revisited as part of any reactivation effort.
**Coordination with Other Advisors**
Two coordination items for your attention:
First, Carraway Regulatory Advisors (Janet Carraway) and Larkfield Health Economics (Dr. Nathan Ostroff) should be informed of the wind-down so that their parallel work streams are paused accordingly. Could you or Kevin confirm whether GDT has already communicated with Janet and Nathan directly, or whether you would prefer Calderwood & Harkness to reach out on your behalf? We are happy to do either.
Second, as you will recall, the Verdant Life Sciences Capital financial models prepared by Christine Lau's team incorporated the Medicare reimbursement assumptions from our rate analysis. We would suggest that GDT coordinate with Verdant regarding any updates to revenue projections and forward modeling that may be warranted in light of the deferral.
**Final Invoice and Billing**
A final invoice (Invoice No. INV-1043-00002-003), covering the period from April 15 through June 3, 2024, will be issued shortly. As you know, Invoices 1 and 2 — INV-1043-00002-001 ($62,437.50) and INV-1043-00002-002 ($78,747.62), respectively — have been paid in full, and we appreciate GDT's prompt attention to those.
The final invoice will include remaining professional fees and disbursements, including Westlaw research charges, printing and copying costs, and travel expenses. Total fees incurred through matter termination are approximately $218,437.50, with disbursements of approximately $2,340.18. I would note that actual fees incurred came in well below the budgeted fee estimate of $475,000–$575,000 set forth in the engagement letter, reflecting the early termination of the engagement prior to the LCD filing and NCD pursuit phases.
**Matter Closure**
Matter No. 1043-00002 (Client No. 47832) will be formally closed upon completion of the administrative wind-down, which I anticipate will occur by early June 2024. A formal matter closure letter will follow at that time. Our document retention policy is outlined in the Wind-Down Memorandum for your reference.
**Closing**
Theresa, it has been a genuine privilege to work with you, Kevin, Dr. Raval, Dr. Sundaram, Raymond, and the entire GDT team on this matter. While the timing was not right for GXP-47 to move forward at this stage, I remain confident that OncoPrecise GXP-47 has strong potential for Medicare coverage once the clinical evidence base is solidified through the completion of the CLARITY-LUNG trial. The work product we have developed together over these past several months provides a substantial foundation for that effort.
Calderwood & Harkness stands ready to reengage at any time when GDT is prepared to resume the commercialization and reimbursement strategy. Please do not hesitate to call me directly if you have any questions about the enclosed materials or the wind-down process.
With warm regards,
**Miriam Calloway** Partner, Healthcare & Life Sciences Calderwood & Harkness LLP 1700 K Street NW, Suite 900 Washington, DC 20006 Tel: (202) 555-4180 Email: mcalloway@calderwoodharkness.com www.calderwoodharkness.com
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