8. Related Party Transactions

As of June 30, 2023 and December 31, 2022, affiliates of Athyrium Capital Management, LP (“Athyrium”) held 1,694,484 shares, or 12.6%, and 1,694,484 shares, or 19.0%, respectively, of the Company's common stock outstanding and warrants to purchase up to 824,136 shares of common stock at an exercise price of $8.22.

Athyrium also holds $103.5 million aggregate principal amount of Convertible Notes as of both June 30, 2023 and December 31, 2022 (see Note 7). As of June 30, 2023 and December 31, 2022, the accrued interest expense related to the Convertible Notes held by Athyrium was $4.4 million and $0.6 million, respectively. As of June 30, 2023, $3.8 million of the interest owed is being held in an escrow account and is considered restricted cash.

In November 2022, the Company entered into a securities purchase agreement with affiliates of Athyrium relating to the offering and sale of an aggregate of 500,250 shares of common stock and accompanying warrants to purchase 500,250 shares of common stock, at a combined purchase price of $7.50 per share and accompanying warrant in a registered direct offering. The warrants have an exercise price of $8.22 per share and will become exercisable commencing six months following the date of issuance and will expire five years following the initial exercise date. The Company received approximately $3.8 million in gross proceeds from the offering as an in-kind payment. The in-kind payment was in the form of a waiver of the Company’s cash interest payment obligation of approximately $3.8 million due on certain of the Company’s 7.25% Convertible Senior Notes due 2025 held by affiliates of Athyrium for the payment date occurring on December 1, 2022. Additionally, the Company agreed with Athyrium to amend outstanding warrants previously issued in 2021 to purchase up to 323,886 shares of common stock with an exercise price of $71.00 per share. The warrants have an amended exercise price of $8.22 per share, will become exercisable on May 9, 2023 and will expire five years following the initial exercise date.

In November 2022, the Company entered into a securities purchase agreement with an institutional investor relating to the offering and sale of an aggregate of 800,000 shares of common stock and accompanying warrants to purchase 800,000 shares of common stock, at a combined purchase price of $7.50 per share and accompanying warrant in a registered direct offering (see Note 10). Following this transaction, the institutional investor became a related party due to greater than 5% ownership.

On January 12, 2023, the Company issued warrants to purchase 90,000 shares of common stock to the institutional investor in exchange for the investor’s agreement to waive the lockup provisions contained in the November 2022 Offering (as defined below) securities purchase agreement. As of March 31, 2023 this institutional investor held less than 5% of the Company's outstanding common stock and is no longer considered a related party.

In June 2023, the Company entered into a securities purchase agreement with certain institutional and accredited investors relating to the offering and sale of 1,509,434 shares of common stock in a registered direct offering at an offering price of $5.30 per share. In addition, in a concurrent private placement, the Company issued unregistered warrants to purchase 3,018,868 shares of common stock (see Note 10) to the same investors. Following this transaction, the institutional and accredited investors became related parties due to greater than 5% ownership.

1. Organization and Description of Business

Biora Therapeutics, Inc. (the “Company” or “Biora” or "Biora Therapeutics") is a biotechnology company developing oral biotherapeutics that could enable new treatment approaches in the delivery of therapeutics. The Company's therapeutics pipeline includes two therapeutic delivery platforms:

Biora Therapeutics, a Delaware corporation, was formerly known as Progenity, Inc. (“Progenity”), and commenced operations in 2010 with its corporate office located in San Diego, California. The Company's historical operations included a licensed Clinical Laboratory Improvement Amendments and College of American Pathologists certified laboratory located in Michigan specializing in molecular testing markets serving women’s health providers in the obstetric, gynecological, fertility, and maternal fetal medicine specialty areas in the United States. Previously, the Company's core business was focused on the carrier screening and noninvasive prenatal test market, targeting preconception planning and routine pregnancy management for genetic disease risk assessment. Through its former affiliation with Mattison Pathology, LLP, a Texas limited liability partnership doing business as Avero Diagnostics (“Avero”), the Company’s operations also included anatomic and molecular pathology testing products.

In order to refocus efforts and resources on its research and development pipeline, in June 2021, the Company announced a strategic transformation ("Strategic Transformation") that included the closure of the Progenity genetics laboratory and in December 2021, the Company sold Avero, together referred to as the Laboratory Operations. The Company has reported all revenues and expenses associated with its Laboratory Operations as discontinued operations, see Note 3 for additional information. In April 2022, the Company announced that it would rebrand to better reflect the current focus on its therapeutics pipeline, and changed its name to Biora Therapeutics, Inc.

On December 29, 2022, the Company filed a certificate of amendment ("the Certificate of Amendment") to its eighth amended and restated certificate of incorporation to effect, as of January 3, 2023, a 1-for-25 reverse split of the Company's common stock (the "Reverse Stock Split"). On January 3, 2023, the Company effected the Reverse Stock Split. See Note 2 for additional information.

Liquidity

As of June 30, 2023, the Company had cash and cash equivalents of $22.7 million, restricted cash of $3.8 million and an accumulated deficit of $862.1 million. For the six months ended June 30, 2023, the Company reported a net loss of $35.2 million and cash used in operating activities of $23.7 million. The Company’s primary sources of capital have historically been the sale of common stock and warrants, private placements of preferred stock and the incurrence of debt. As of June 30, 2023, the Company had $128.6 million of convertible senior notes, net ("Convertible Notes") outstanding (see Note 7). While the Company has greatly reduced its cash burn following the Strategic Transformation, management does not expect that the Company's current cash and cash equivalents will be sufficient to fund its operations for at least 12 months from the issuance date of the condensed consolidated financial statements for the three and six months ended June 30, 2023, and will require additional capital to fund the Company's operations. As a result, substantial doubt exists about the Company’s ability to continue as a going concern for 12 months following the issuance date of the condensed consolidated financial statements for the three and six months ended June 30, 2023.

The Company’s ability to continue as a going concern is dependent upon its ability to raise additional funding. Management believes that the Company’s liquidity position as of the date of this filing provides sufficient runway to achieve important research and development pipeline milestones. Management intends to raise additional capital through equity offerings and/or debt financings, or from other potential sources of liquidity, which may include new collaborations, licensing or other commercial agreements for one or more of the Company’s research programs or patent portfolios or divestitures of the Company's assets. Adequate funding, if needed, may not be available to the Company on acceptable terms, or at all. The Company’s ability to raise additional funds may be adversely impacted by potential worsening global economic conditions and the disruptions to, and volatility in, the credit and financial markets in the United States and worldwide. If the Company is unable to raise capital when needed or on attractive terms, it would be forced to delay, reduce, or eliminate its research and development programs or other operations. If any of these events occur, the Company’s ability to achieve its operational goals would be adversely affected.

10. Stockholders’ Equity

Common Stock

On January 3, 2023, the Company effected a 1-for-25 reverse stock split of the Company's common stock. The Reverse Stock Split, which has been retroactively reflected throughout the condensed consolidated financial statements, reduced the authorized shares of the Company to 164,000,000 and did not change the par value of the Company's common stock.

PIPE Financings

In February 2021, the Company entered into a securities purchase agreement for a private placement with certain institutional and accredited investors (“February Purchasers”). Pursuant to the securities purchase agreement, the February Purchasers purchased an aggregate of 174,825 units (“February Units”), representing (i) 174,825 shares of the Company’s common stock and (ii) warrants to purchase up to 174,825 shares of common stock. The warrants are exercisable for cash at an exercise price of $171.50 per share, subject to adjustments as provided under the terms of the warrants. The warrants were immediately exercisable and expire on the fifth anniversary of the date of issuance.

In June 2021, the Company entered into a securities purchase agreement for a private placement with certain institutional and accredited investors (“June Purchasers”). Pursuant to the securities purchase agreement, the June Purchasers purchased an aggregate of 647,773 units (“June Units”), representing (i) 627,773 shares of the Company’s common stock (ii) warrants to purchase up to 647,773 shares of common stock and (iii) pre-funded warrants to purchase up to 20,000 shares of common stock. The warrants are exercisable for cash at an exercise price of $71.00 per share, subject to adjustments as provided under the terms of the warrants. The warrants were immediately exercisable and expire on the fifth anniversary of the date of issuance.

Registered Offerings

In August 2021, the Company issued and sold an aggregate of (i) 1,600,000 shares of common stock and (ii) warrants to purchase 1,600,000 shares of common stock in an underwritten public offering. Each share was sold together with one warrant to purchase one share of common stock at a combined public offering price of $25.00 per share of the common stock and the accompanying warrant. The warrants have an exercise price of $25.00 per share, are exercisable at any time, and will expire five years following the date of issuance. In addition, the Company granted the underwriter a 30-day option to purchase up to 240,000 shares of common stock ("Overallotment Stock Option") and/or warrants to purchase 240,000 shares of common stock (“Overallotment Warrant Option”) at a price of $24.75 per share of common stock and/or $0.25 per warrant.

Pursuant to ASC 815, the Company deemed the Overallotment Stock Option to meet the scope exception for equity classification, and the warrants and Overallotment Warrant Option to be classified as a liability (collectively "the Warrant Liability") at fair value initially with subsequent changes in fair value recorded in earnings. The Overallotment Warrant Option was partially exercised in August 2021 for warrants to purchase an aggregate of 77,280 shares of common stock and the remaining Overallotment Warrant Option expired in September 2021. The Warrant Liability was remeasured at June 30, 2022 and the Company recognized a gain on warrant liability in the amount of $13.4 million in the condensed consolidated statements of operations during the six months ended June 30, 2022. The Warrant Liability was remeasured at $0.5 million as of both December 31, 2022 and June 30, 2023.

In November 2022, the Company entered into a securities purchase agreement with certain institutional and accredited investors relating to the offering and sale of an aggregate of (i) 1,300,250 shares of common stock and (ii) warrants to purchase 1,300,250 shares of common stock in registered direct offering (the “November 2022 Offering”). Each share was sold together with one warrant to purchase one share of common stock at a combined public offering price of $7.50 per share of the common stock and the accompanying warrant. The Company received approximately $9.0 million in net proceeds, after deducting placement agent fees and offering expenses. Approximately $3.8 million of the gross proceeds were received in the form of a waiver of the Company's December 1, 2022 interest payment on the Convertible Notes. The warrants have an exercise price of $8.22 per share, are exercisable six months following the date of issuance, and will expire five years following the initial exercise date.

Additionally, the Company agreed with certain institutional investors to amend outstanding warrants previously issued (i) in the February Units to purchase up to 104,895 shares of common stock with an exercise price of $171.50 per share and (ii) in the June Units to purchase up to 403,887 shares of common stock with an exercise price of $71.00 per share. Accordingly, the Company agreed to (i) lower the exercise price of such existing warrants to $8.22 per share, (ii) provide that such existing warrants, as amended, will not be exercisable until May 9, 2023 and (iii) extend the original expiration date of such existing warrants to May 9, 2028.

Pursuant to ASC 815, the Company deemed the warrants to be classified as a liability at fair value initially with subsequent changes in fair value recorded in earnings. The warrants were recorded at a fair value of $6.0 million determined using the Black-Scholes Model. As the total fair value of the warrant liability and common stock exceeds the in-kind payment proceeds of $3.8 million, the Company recorded an extinguishment loss of the $1.6 million excess to other income, net in the consolidated statements of operations. The Company incurred a total of $0.8 million in issuance costs, which were allocated between the warrants and common stock on a relative fair value basis. The modified warrants are equity classified both before and after the modification and were fair valued as of the date of the amendment, this resulted in an increase in the value of the warrants and an additional $0.9 million was recorded to additional paid in capital on the condensed consolidated balance sheet. The warrant liability was remeasured at $3.0 million as of December 31, 2022. The warrant liability was remeasured at $3.2 million as of June 30, 2023 and the Company recognized a loss on warrant liability in the amount of $0.2 million in the condensed consolidated statements of operations during the six months ended June 30, 2023.

In January 2023, the Company issued warrants to purchase 90,000 shares of common stock to an institutional investor in exchange for the investor’s agreement to waive the lockup provisions contained in the November 2022 Offering securities purchase agreement. The warrant has an exercise price of $8.22, is exercisable beginning on May 9, 2023 and expires on May 9, 2028. Pursuant to ASC 815, the Company deemed the warrants to be classified as a liability at fair value initially with subsequent changes in fair value recorded in earnings. The warrants were recorded at a fair value of $0.4 million determined using the Black-Scholes Model. The warrant liability was remeasured at $0.2 million as of June 30, 2023 and the Company recognized a gain on warrant liability in the amount of $0.1 million in the condensed consolidated statements of operations during the six months ended June 30, 2023.

In June 2023, the Company entered into a securities purchase agreement with certain institutional and accredited investors relating to the offering and sale of 1,509,434 shares of common stock in a registered direct offering at an offering price of $5.30 per share (the "June 2023 Offering"). In addition, in a concurrent private placement with the same investors, the Company issued unregistered warrants to purchase 3,018,868 shares of common stock. The warrants have an exercise price of $5.05 per share, are exercisable at any time, and will expire three years following the date of issuance. The Company received approximately $7.3 million in net proceeds, after deducting placement agent fees and offering expenses.

Pursuant to ASC 815, the Company deemed the warrants to be classified as a liability at fair value initially with subsequent changes in fair value recorded in earnings. The warrants were recorded at a fair value of $9.0 million determined using the Black-Scholes Model. As the total fair value of the Warrant Liability exceeds the gross proceeds of $8.0 million, the Company recorded a loss of the $1.0 million excess to gain (loss) on warrant liabilities in the consolidated statements of operations. Accordingly, there were no proceeds allocated to the common stock issued as part of this transaction. The Company incurred a total of $0.7 million in issuance costs, which were allocated between the warrants and common stock on a relative fair value basis. The warrant liability was remeasured at $6.9 million as of June 30, 2023 and the Company recognized a gain on warrant liability in the amount of $2.1 million in the condensed consolidated statements of operations during the three months ended June 30, 2023.

At-The-Market Sales Agreement and Offering

In November 2021, the Company entered into an At Market Issuance Sales Agreement ("ATM Sale Agreement") with B. Riley Securities, Inc., BTIG, LLC, and H.C. Wainwright & Co. LLC ("Agents"), pursuant to which the Company may offer and sell shares of common stock having an aggregate offering price of up to $90.0 million from time to time, in “at the market” offerings through the Agents. In connection with the November 2022 Offering, the aggregate price was reduced to $70.0 million. The Company further reduced the aggregate offering price to $12.0 million in connection with the June 2023 Offering. Sales of the shares of common stock, if any, will be made at prevailing market prices at the time of sale, or as otherwise agreed with the Agents. The Agents will receive a commission from the Company of up to 3.0% of the gross proceeds of any shares of common stock sold under the ATM Sale Agreement. During the three months ended June 30, 2022, the Company received net proceeds of $1.1 million, after deducting commissions and other offering expenses, from the sale of 63,986 shares under the ATM Sale Agreement. The Company sold such shares at a weighted average purchase price of $5.33 per share. During the six months ended June 30, 2022, the Company received net proceeds of $4.7 million, after deducting commissions and other offering expenses, from the sale of 149,199 shares under the ATM Sale Agreement. The Company sold such shares at a weighted average purchase price of $37.81 per share. The Company did not sell any shares under the ATM Sale Agreement during the three months ended June 30, 2023. During the six months ended June 30, 2023, the Company received net proceeds of $12.6 million, after deducting commissions and other offering expenses, from the sale of 2,853,109 shares under the ATM Sale Agreement. The Company sold such shares at a weighted average purchase price of $4.69 per share.

Preferred Stock

Pursuant to the Company’s eighth amended and restated certificate of incorporation, which went into effect immediately prior to the completion of the IPO, the Company was authorized to issue 10,000,000 shares of undesignated preferred stock. This amount and the par value of preferred stock remained unchanged after the Reverse Stock Split.

On November 10, 2022, the Board declared a dividend of one one-thousandth of a share of Series X Preferred Stock, par value $0.001 per share (“Series X Preferred Stock”), for each outstanding share of common stock to stockholders of record as of November 21, 2022. This Series X Preferred Stock entitled its holders to 3,000 votes per share exclusively on the vote for the proposal to approve the Reverse Stock Split. All shares of Series X Preferred Stock that were not present to vote on the Reverse Stock Split were redeemed by the Company (the “Initial Redemption”). Any outstanding shares of Series X Preferred Stock that were not redeemed pursuant to an Initial Redemption would be redeemed in whole, but not in part, (i) if such redemption is ordered by the Board in its sole discretion, automatically and effective on such time and date specified by the Board in its sole discretion or (ii) automatically upon the effectiveness of the Certificate of Amendment implementing the Reverse Stock Split. At the December 19, 2022 special meeting of the Company's stockholders, the holders of 136,961 shares of Series X Preferred Stock were represented in person or by proxy. Immediately prior to the special meeting, all 86,210 shares of Series X Preferred Stock that were not voted were redeemed. The

remaining 136,961 outstanding shares of Series X Preferred Stock were redeemed automatically upon the effectiveness of the Certificate of Amendment on January 3, 2023.

On January 9, 2023, the Company filed a Certificate of Elimination of Series X Preferred Stock with the Secretary of State of the State of Delaware, which, effective immediately upon filing, eliminated all matters set forth in the Certificate of Designation of Series X Preferred Stock filed with the Secretary of State of the State of Delaware on November 21, 2022.

Prepaid expenses and other current assets consisted of the following (in thousands):

Other assets consisted of the following (in thousands):

Other long-term liabilities consisted of the following (in thousands):

(1) Included in this amount are contracts that the Company is responsible for that were expensed in discontinued operations in 2021.

5. Balance Sheet Components

Prepaid Expenses and Other Current Assets

Property and Equipment, Net

Depreciation expense was $0.2 million and $0.3 million for the three and six months ended June 30, 2023, respectively, and $0.2 million and $0.5 million for the three and six months ended June 30, 2022, respectively.

Other Assets

Accrued Expenses and Other Current Liabilities

Other Long-term Liabilities