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TABLE OF CONTENTS
INDEX TO FINANCIAL STATEMENTS

As filed with the United States Securities and Exchange Commission on October 11, 2019.

Registration No. 333-            


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549



FORM F-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933



CENTOGENE B.V.*
(Exact name of Registrant as specified in its charter)

Not Applicable
(Translation of Registrant's name into English)

The Netherlands
(State or other jurisdiction of
incorporation or organization)
  8071
(Primary Standard Industrial
Classification Code Number)
  Not Applicable
(I.R.S. Employer
Identification Number)

Am Strande 7
18055 Rostock, Germany
+49 (381) 80113400

(Address, Including Zip Code, and Telephone Number, Including Area Code, of Registrant's Principal Executive Offices)



Cogency Global Inc.
10 E 40th Street, 10th floor
New York, New York 10016
+1 (800) 221-0102

(Name, address, including zip code, and telephone number, including area code, of agent for service)



Copies of all communications, including communications sent to agent for service, should be sent to:

Leo Borchardt
Richard D. Truesdell, Jr.
Davis Polk & Wardwell LLP
450 Lexington Avenue
New York, NY 10017
+1 (212) 450-4000

 

Paul van der Bijl
NautaDutilh N.V.
Beethovenstraat 400
1082 PR Amsterdam
The Netherlands
+31 (20) 717-1000

 

Michael D. Maline
Edwin M. O'Connor
Goodwin Procter LLP
620 Eighth Avenue
New York, NY 10018
+1 (212) 813-8800



Approximate date of commencement of proposed sale to the public:
As soon as practicable after the effective date of this registration statement.

           If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box.    o

           If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.    o

           If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.    o

           If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.    o

           Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933.

Emerging growth company ý

           If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 7(a)(2)(B) of the Securities Act. o

           † The term "new or revised financial accounting standard" refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.



CALCULATION OF REGISTRATION FEE

       
 
Title of each class of securities
to be registered

  Proposed maximum
aggregate offering
price(1)

  Amount of
registration fee(2)

 

Common shares, par value €0.12 per share

  $69,000,000   $8,956.20

 

(1)
Estimated solely for the purpose of computing the amount of the registration fee pursuant to Rule 457(o) under the Securities Act of 1933, as amended. Includes the offering price of additional shares that the underwriters have the option to purchase.
(2)
Calculated pursuant to Rule 457(o) based on an estimate of the proposed maximum aggregate offering price.

           The Registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the registration statement shall become effective on such date as the Commission, acting pursuant to such Section 8(a), may determine.

   


(*)
We intend to convert the legal form of our company under Dutch law from a private company with limited liability (besloten vennootschap met beperkte aansprakelijkheid) to a public company (naamloze vennootschap) and to change our name from Centogene B.V. to Centogene N.V. prior to the closing of this offering.

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The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

Preliminary Prospectus (Subject to Completion) Dated October 11, 2019

                    Shares

LOGO

CENTOGENE B.V.


to be converted into and renamed


CENTOGENE N.V.


(incorporated in the Netherlands)


Common Shares



        This is the initial public offering of our common shares. We are offering a total of          common shares, €0.12 par value per share.

        We intend to apply to list our common shares on the Nasdaq Global Market under the symbol "CNTG" . We are both an "emerging growth company" and a "foreign private issuer" as defined under the federal securities laws and, as such, will be subject to reduced public company reporting requirements. See "Prospectus Summary—Implications of Being an Emerging Growth Company" and "—Implications of Being a Foreign Private Issuer."

        Investing in our common shares involves risks. See "Risk Factors" beginning on page 12 of this prospectus.

        Neither the U.S. Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

 
  Per Share   Total

Public offering price

  $   $

Underwriting discounts and commissions

  $   $

Proceeds, before expenses, to us

  $   $
(1)
We refer you to "Underwriting" beginning on page 204 for additional information regarding underwriting compensation.

        Certain of our existing institutional or other investors or their affiliates have committed to, or indicated an interest in, purchasing common shares in this offering in an aggregate amount of up to $30 million. Because indications of interest are not binding agreements or commitments to purchase, the underwriters may determine to sell more, less or no common shares in this offering to any of these investors, or any of these investors may determine to purchase more, less or no common shares in this offering, including as a result of the pricing terms. See "Summary—The Offering."

        We have granted the underwriters the right for 30 days from the date of this prospectus to purchase up to an additional            common shares from us at the initial public offering price less underwriting discounts and commissions.

        The underwriters expect to deliver the common shares against payment in New York, New York on        , 2019.

SVB Leerink   Evercore ISI

Baird

 

BTIG

                  , 2019


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TABLE OF CONTENTS



 
  Page  

Summary

    1  

The Offering

    8  

Summary Financial Information

    10  

Risk Factors

    12  

Cautionary Statement Regarding Forward-Looking Statements

    68  

Use of Proceeds

    70  

Dividends and Dividend Policy

    71  

Corporate Reorganization

    72  

Capitalization

    74  

Dilution

    76  

Selected Financial Information

    78  

Management's Discussion and Analysis of Financial Condition and Results of Operations

    80  

Business

    112  

Management

    153  

Principal Shareholders

    163  

Certain Relationships and Related Party Transactions

    165  

Description of Share Capital and Articles of Association

    167  

Common Shares Eligible for Future Sale

    185  

Taxation

    187  

Underwriting

    204  

Expenses of the Offering

    210  

Legal Matters

    211  

Experts

    211  

Enforcement of Judgments

    212  

Where You Can Find More Information

    214  

Index to Financial Statements

    F-1  



        We and the underwriters have not authorized anyone to provide any information other than that contained in this prospectus or in any free writing prospectus prepared by or on behalf of us or to which we may have referred you. We take no responsibility for, and can provide no assurance as to the reliability of, any other information that others may give you. We and the underwriters have not authorized any other person to provide you with different or additional information. Neither we nor the underwriters are making an offer to sell the common shares in any jurisdiction where the offer or sale is not permitted. This offering is being made in the United States and elsewhere solely on the basis of the information contained in this prospectus. You should assume that the information appearing in this prospectus is accurate only as of the date on the front cover of this prospectus, regardless of the time of delivery of this prospectus or any sale of the common shares. Our business, financial condition, results of operations and prospects may have changed since the date on the front cover of this prospectus.

        For investors outside the United States: Neither we nor any of the underwriters have done anything that would permit this offering or possession or distribution of this prospectus or any free writing prospectus in any jurisdiction where action for that purpose is required, other than in the United States. Persons outside the United States who come into possession of this prospectus or any free writing prospectus must inform themselves about, and observe any restrictions relating to, the offering of the common shares and the distribution of this prospectus and any free writing prospectus outside the United States.


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ABOUT THIS PROSPECTUS

        Unless otherwise indicated or the context otherwise requires, all references in this prospectus to "Centogene" or the "Company," "we," "our," "ours," "us" or similar terms refer to (i) Centogene AG, together with its subsidiaries, prior to the completion of the exchange of all of the equity interests of Centogene AG for newly issued common shares of Centogene B.V., (ii) Centogene B.V., together with its subsidiaries, as of the completion of the exchange of all of the equity interests of Centogene AG for newly issued common shares of Centogene B.V. and (iii) Centogene N.V., together with its subsidiaries, after giving effect to the conversion of Centogene B.V. into Centogene N.V. In connection with the corporate reorganization, Centogene AG will take initial steps of its conversion into a German private limited liability company (Gesellschaft mit beschränkter Haftung), ("GmbH"). However, such transformation will only be completed following the consummation of the offering. See "Corporate Reorganization."

        We are incorporated in the Netherlands, and a majority of our outstanding securities are owned by non-U.S. residents. Under the rules of the U.S. Securities and Exchange Commission (the "SEC"), we are currently eligible for treatment as a "foreign private issuer." As a foreign private issuer, we will not be required to file periodic reports and financial statements with the SEC as frequently or as promptly as domestic registrants whose securities are registered under the Securities Exchange Act of 1934, as amended (the "Exchange Act").


PRESENTATION OF FINANCIAL INFORMATION

        We report under International Financial Reporting Standards ("IFRS"), as issued by the International Accounting Standards Board (the "IASB"). We present our consolidated financial statements in accordance with IFRS. We have made rounding adjustments to some of the figures included in this prospectus. Accordingly, numerical figures shown as totals in some tables may not be an arithmetic aggregation of the figures that preceded them.

        Our financial statements included in this prospectus are presented in euro and, unless otherwise specified, all monetary amounts are in euro. All references in this prospectus to "$," "U.S. dollars" and "dollars" means U.S. dollars and all references to "€" and "euro" mean euro, unless otherwise noted.

        In this prospectus, unless otherwise indicated, some euro amounts have been translated into U.S. dollars at the rate of $1.00 to €            , the official exchange rate quoted as of                                    , 2019 by the U.S. Federal Reserve Bank.

        This prospectus contains the historical financial statements and other financial information of Centogene AG, which is expected to be acquired by Centogene B.V. prior to the closing of this offering. Centogene B.V.'s common shares are being offered hereby. Centogene B.V. is a newly incorporated holding company incorporated for the purpose of effecting the offering and has not engaged in any activities except those incidental to its formation, the corporate reorganization and the initial public offering of our common shares. Centogene B.V. has no assets, liabilities or contingent liabilities and will have no assets, liabilities or contingent liabilities until the completion of our corporate reorganization. Following the corporate reorganization, Centogene N.V. will become the holding company of Centogene AG and the historical consolidated financial statements of Centogene AG included in this prospectus will become the historical consolidated financial statements of Centogene B.V. In connection with the corporate reorganization, Centogene AG will take initial steps of its conversion into a GmbH under German law. However, such transformation will only be completed following the consummation of the offering. See "Corporate Reorganization".

(ii)


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TRADEMARKS

        CENTOGENE™ is our main trademark. The trademarks, trade names and service marks appearing in this prospectus are property of their respective owners. Solely for convenience, the trademarks and trade names in this prospectus are referred to without the symbols ® and ™, but such references should not be construed as any indication that their respective owners will not assert, to the fullest extent under applicable law, their rights thereto.


MARKET, INDUSTRY AND OTHER DATA

        Unless otherwise indicated, information contained in this prospectus concerning our industry and the markets in which we operate, including our general expectations and market position, market opportunity and market size estimates, is based on information from independent industry analysts, third-party sources and management estimates. Management estimates are derived from publicly available information released by independent industry analysts and third-party sources, as well as data from our internal research, and are based on assumptions made by us based on such data and our knowledge of such industry and market, which we believe to be reasonable. In addition, while we believe the market opportunity information included in this prospectus is generally reliable and is based on reasonable assumptions, such data involves risks and uncertainties and is subject to change based on various factors, including those discussed under the heading "Risk Factors" and "Cautionary Statement Regarding Forward-Looking Statements."

(iii)


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SUMMARY

        This summary highlights information contained elsewhere in this prospectus. This summary may not contain all the information that may be important to you, and we urge you to read this entire prospectus carefully, including the "Risk Factors," "Business" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" sections, and our consolidated financial statements and notes to those statements included elsewhere in this prospectus, before deciding to invest in our common shares.

Overview

        We are a commercial-stage company focused on rare diseases that transforms real-world clinical and genetic data into actionable information for patients, physicians and pharmaceutical companies. Our goal is to bring rationality to treatment decisions and to accelerate the development of new orphan drugs by using our knowledge of the global rare disease market, including epidemiological and clinical data and innovative biomarkers. We have developed a global proprietary rare disease platform based on our real-world data repository with over 2.0 billion weighted data points from over 450,000 patients representing 115 different countries as of August 31, 2019, or an average of over 500 data points per patient. Our platform includes epidemiologic, phenotypic and genetic data that reflects a global population, and also a biobank of these patients' blood samples.

        We believe this represents the only platform that comprehensively analyzes multi-level data to improve the understanding of rare hereditary diseases, which can aid in the identification of patients and improve our pharmaceutical partners' ability to bring orphan drugs to the market. As of August 31, 2019, we collaborated with over 35 pharmaceutical partners for over 30 different rare diseases.

        A rare disease, by definition in the United States, is a disease that affects 200,000 or fewer people. However, with over 7,000 currently identified rare diseases, they in aggregate affect over 350 million people globally. Rare diseases can be severe and often take years to diagnosis—on average it takes five to seven years for a patient with a rare disease to be diagnosed. This underscores the significant unmet need for high-quality genetic information in the rare disease space for the early identification and effective treatment of patients. Despite legislative initiatives and continued investment in rare disease drug development, significant unmet need still exists. Of the 7,000 identified rare diseases, it is estimated that 80%, or 5,600, have a genetic origin and, of these rare hereditary diseases, only approximately 230 rare hereditary diseases, or 4%, have an FDA approved treatment. The introduction of new treatments and development of cost-effective drugs are constrained by a number of factors including: a lack of high-quality information regarding the clinical heterogeneity of medical symptoms, lack of comprehensive and curated medical data, difficulties in the early identification of patients, lack of biomarkers and difficulties in understanding market size and epidemiology.

        We have an integrated approach with a detailed, global understanding of the genetic basis and the clinical phenotype of rare hereditary diseases, which we believe will unlock the ability to target rare diseases and provide critical knowledge that will guide drug development and monitoring, and ultimately improve patient care. Our business is comprised of complementary solutions for both physicians and their patients, as well as pharmaceutical companies. Our diagnostics solution typically starts with specialist physicians requesting diagnostic information to identify or confirm a rare disease by sending us their patients' blood samples on our proprietary dried blood spot collection kit that bears the European Conformity Marking (the "CE Mark")—the CentoCard. With highly advanced technology, our proprietary database and our team of medical experts, we then deliver reports back to the physicians that contain what we believe is critical information containing genetic, proteomic, metabolomic information, or some combination, depending on what is most salient for each case. We also input this data to our CentoMD platform, which enriches our understanding of rare diseases broadly.

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        For our pharmaceutical partners, we are able to provide various valuable information using our platform. For instance, with the access to the data in our repository and biomaterials in our biobank, we have successfully developed biomarkers by applying highly sophisticated tools, including mass spectrometry technologies, together with artificial intelligence capabilities in an efficient and cost effective manner. Biomarkers are important in orphan drug development as well as post-commercialization monitoring, by demonstrating the efficacy of the drugs, performing longitudinal monitoring and informing necessary titration for individual rare disease patients. As of August 31, 2019, we had over 30 biomarkers under development and had commercialized ten biomarkers covering eight rare diseases, including Aromatic l-amino acid decarboxylase ("AADC") deficiency, Cystic Fibrosis, Fabry disease, Faber disease, Gaucher disease, Hereditary Angioedema ("HAE"), Niemann-Pick Type A/B, and Niemann-Pick Type C.

        Our database is also valuable beyond drug discovery as the biomarkers can be relevant for patient stratification and monitoring. Our database has multiple additional applications such as patient identification for therapeutic trials and treatment. For example, identifying patients with a specific rare disease that are eligible for a clinical trial, which can reduce the time of clinical trial patient enrollment for our pharmaceutical partners. Reducing this enrollment time is often critically important in rare diseases as the small number of patients of each disease can cause long enrollment periods.

        We were founded in 2006 in Rostock, Germany and currently have more than 400 highly qualified personnel (including consultants) across offices in Austria, Germany, India, the United Arab Emirates and the United States, from over 55 nationalities. Since 2012, we have received more than 450,000 patient samples. We generated total revenue of €31.7 million and €40.5 million in the years ended December 31, 2017 and 2018, respectively, and of €17.0 million and €21.2 million in the six months ended June 30, 2018 and 2019, respectively. We also incurred net comprehensive losses of €5.5 million and €11.3 million in the years ended December 31, 2017 and 2018, respectively, and of €6.6 million and €11.6 million in the six months ended June 30, 2018 and 2019, respectively.

Our Platform—An Integrated, Knowledge-Based System

        We have developed a global proprietary rare disease platform that we believe will improve methods for identifying and monitoring rare hereditary diseases and provide solutions that accelerate the development of orphan drugs. At the core of our platform is our real-world data repository, which includes epidemiologic, phenotypic and heterogenetic data, and allows us to assemble an extensive knowledge base in rare hereditary diseases. We collect this detailed level of data in our repository through our easy-to-use CentoCard, a CE-Marked dried blood spot collection kit, which captures blood samples of potential rare disease patients with a low cost of distribution, accompanied by the patients' medical histories and completed consent forms from the physicians. The data is then validated by professionals using a systematic and scientific approach prior to feeding it into our repository and our central CentoMD database, which we believe is the world's largest curated mutation database for rare diseases. As of September 30, 2019, our CentoMD 5.5 database included curated data from over 375,000 patients from over 120 countries. We received express consent from the majority of patients allowing us to retest their biomaterials in our biobank, with over 10 million unique variants and over 3,500 disease-associated phenotypes, with the following geographical distribution:

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GRAPHIC

        This systematic process results in information-based services that are beneficial for rare disease drug development by our biotech and pharmaceutical partners. These include providing epidemiological insights about rare diseases, further identification of rare disease patients as well as the ability to identify new biomarkers. The additional rare disease patients identified through these partnerships can fuel clinical trial enrollment which, in turn, adds more diagnostic information to our repository. This synergistic model allows us to continuously enhance our own expertise and support pharmaceutical knowledge in the rare disease field. As of September 30, 2019, our repository included data from patients with metabolic (40%), neurologic (23%), malformation (10%), bone, skin and immunity (7%), liver and kidney and endocrinological (6%) and tumoral (5%) diseases, among others, covering over 3,000 diseases.

        A graphical description of our platform is shown below:

GRAPHIC

        The strengths of our platform include the following:

    Extensive repository to identify rare disease patients, containing phenotypic, genomic and epidemiological data from over 450,000 patients and a biobank which holds biomaterials from the blood samples of these patients;
    Ethnically diverse datasets with patients from over 115 countries;
    Highest level of quality through data curation and process standardization; and

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    Enhancement of biomarker discovery.

Our Solutions

    Pharmaceutical

        Our pharmaceutical segment provides a variety of services to our pharmaceutical partners, including early patient recruitment and identification, epidemiological insights, biomarker discovery and patient monitoring. Our information platforms, our deep access to rare disease patients and our ability to develop proprietary technologies including biomarkers enable us to provide services to our pharmaceutical partners in all phases of the drug development process as well as post-commercialization. Revenues in our pharmaceutical segment are generated primarily from collaboration agreements with our pharmaceutical partners, which are structured on a fee per sample basis, milestone basis, fixed fee basis, royalty basis or a combination of these. For the year ended December 31, 2018, €17.3 million, or 42.8%, of our total revenues were derived from our pharmaceutical segment. For the six-months ended June 30, 2019, €8.7 million, or 39.7%, of our total revenues were derived from our pharmaceutical segment.

    Diagnostics

        Our clinical diagnostics segment provides targeted genetic sequencing and diagnostics services to patients through our distribution partners and clients, who are typically physicians, labs or hospitals. As of August 31, 2019, we believe we offer the broadest diagnostic testing portfolio for rare diseases, covering over 6,500 genes using over 10,000 different tests. Revenues from our diagnostics segment are typically generated by set fees per diagnostic test or per bundle of diagnostic tests under contracts with our clients. In turn, the data collected from our diagnostic services allow us to continue to grow our repository and our CentoMD database. For the year ended December 31, 2018, €23.2 million, or 57.2%, of our total revenues were derived from our diagnostics segment. For the six-months ended June 30, 2019, €13.2 million, or 60.3%, of our total revenues were derived from our diagnostics segment.

Strategy

        Our objective is to improve the diagnosis and treatment of rare diseases by unlocking critical knowledge that will guide drug development and patient stratification, identification and monitoring. To achieve this objective our strategy is to:

    Transform the rare diseases landscape by applying precision medicine more comprehensively.
    Further our leadership position in rare diseases and continue to build upon the largest, most comprehensive repository for rare diseases patient data.
    Accelerate the discovery and development of orphan drugs for new and existing pharmaceutical partners.
    Evolve our business to share in more of the value we provide to our pharmaceutical partners.

Risks Associated with Our Business

        Our business is subject to a number of risks of which you should be aware before making an investment decision. These risks are discussed more fully in the "Risk Factors" section of this prospectus immediately following this prospectus summary. These risks include the following:

    We have a history of losses and we may incur losses in the future. We may fail to generate sufficient revenue from our relationships with our clients or pharmaceutical partners to achieve and maintain profitability;
    We may fail to maintain our current relationships with pharmaceutical companies, or enter into new relationships on a similar scale;

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    Because the identified patient populations for rare diseases are relatively small, it may be difficult to successfully identify patients for our pharmaceutical partners;
    We are dependent on uninterrupted access to highly specialized laboratory facilities, storage facilities and equipment, and depend upon our information technology systems and a limited number of suppliers for some of our laboratory equipment;
    The loss or transition of any member of our senior management team, in particular our current CEO, or our inability to attract and retain new talent, could adversely affect our business;
    The knowledge and interpretation-based solutions we provide to our pharmaceutical partners may not achieve significant commercial market acceptance, and any failure to keep pace with the rapidly evolving industry in which we operate could make us obsolete;
    We derive a large proportion of our revenues from agreements with a limited number of pharmaceutical partners and clients;
    International expansion of our business exposes us to new and complex business, regulatory, political, operational, financial, and economic risks, and our global operations expose us to numerous and sometimes conflicting legal and regulatory requirements, and violation of these requirements could harm our business;
    We have failed to meet certain covenants under our syndicated loan facility, which limits our liquidity and could result in the lenders accelerating amounts we owe to them under the facility;
    We may be unable to obtain, maintain, protect and enforce patent and other intellectual property protection for any products or solutions we develop and for our technology, or the scope of intellectual property protection obtained may not be sufficient;
    If we are unable to protect the confidentiality of our trade secrets, know-how, and other confidential and proprietary information, our business and competitive position would be harmed; and
    We have broad discretion in the use of the net proceeds from this offering and may invest or spend the proceeds in ways with which you do not agree and in ways that may not yield a return on your investment.

Corporate Reorganization

        We were incorporated pursuant to the laws of the Netherlands as Centogene B.V. on October 11, 2018 to become a holding company for Centogene AG. Pursuant to the terms of a corporate reorganization that will be completed prior to the closing of this offering, all of the equity interests in Centogene AG will be exchanged for newly issued common shares of Centogene B.V. and, as a result, Centogene AG will become a wholly owned subsidiary of Centogene B.V. and the current shareholders of Centogene AG will become the shareholders of Centogene B.V. Prior to the closing of this offering, we intend to convert from Centogene B.V. into Centogene N.V. In connection with the corporate reorganization, Centogene AG will take initial steps of its conversion into a GmbH under German law. However, such transformation will only be completed following the consummation of the offering. See "Corporate Reorganization."

Corporate Information

        Our principal executive offices are located at Am Strande 7, 18055 Rostock, Germany. Our telephone number at this address is +49 (381) 80113400. Investors should contact us for any inquiries through the address and telephone number of our principal executive office. Our principal website is www.centogene.com.

        We intend to make our periodic reports and other information filed with or furnished to the SEC, pursuant to Section 13(a) or 15(d) of the Exchange Act, available free of charge through our website as

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soon as reasonably practicable after those reports and other information are electronically filed with or furnished to the SEC. The SEC maintains a website at http://www.sec.gov that contains reports and other information regarding issuers that file electronically with the SEC.

        Information on our website or any other website is not incorporated by reference into this prospectus and does not constitute a part of this prospectus. We have included our website address as an inactive textual reference only.

Implications of Being an Emerging Growth Company

        As a company with less than $1.07 billion in revenue during our last fiscal year, we qualify as an "emerging growth company" as defined in the Jumpstart Our Business Startups Act of 2012 (the "JOBS Act"). As an emerging growth company, we may take advantage of specified reduced disclosure and other requirements that are otherwise applicable generally to public companies. These provisions include:

    the ability to present only two years of audited financial statements in addition to any required interim financial statements and correspondingly reduced disclosure in management's discussion and analysis of financial condition and results of operations in this prospectus;
    exemption from the auditor attestation requirement of Section 404 of the Sarbanes-Oxley Act of 2002 (the "Sarbanes-Oxley Act"), in the assessment of our internal controls over financial reporting; and
    to the extent that we no longer qualify as a foreign private issuer, (i) reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements and (ii) exemptions from the requirements of holding a non-binding advisory vote on executive compensation, including golden parachute compensation.

        We may take advantage of these exemptions for up to five years or until such earlier time that we are no longer an emerging growth company. We will cease to be an emerging growth company upon the earliest to occur of (i) the last day of the fiscal year in which we have more than $1.07 billion in annual revenue; (ii) the date we qualify as a "large accelerated filer" with at least $700 million of equity securities; (iii) the issuance, in any three-year period, by our company of more than $1.0 billion in nonconvertible debt securities held by non-affiliates; and (iv) the last day of the fiscal year ending after the fifth anniversary of our initial public offering.

        We may choose to take advantage of some but not all of these reduced burdens. For example, we intend to take advantage of the exemption from auditor attestation on the effectiveness of our internal control over financial reporting in our annual report on Form 20-F. Accordingly, the information that we provide to shareholders may be different than you might obtain from other public companies.

        In addition, Section 107 of the JOBS Act provides that an emerging growth company can use the extended transition period provided in Section 7(a)(2)(B) of the Securities Act of 1933, as amended (the "Securities Act") for complying with new or revised accounting standards. Given that we currently report and expect to continue to report under IFRS as issued by the IASB, we have irrevocably elected not to avail ourselves of this extended transition period and, as a result, we will adopt new or revised accounting standards on the relevant dates on which adoption of such standards is required by the IASB. Since IFRS makes no distinction between public and private companies for purposes of compliance with new or revised accounting standards, the requirements for our compliance as a private company and as a public company are the same.

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Implications of Being a Foreign Private Issuer

        We are also considered a "foreign private issuer." In our capacity as a foreign private issuer, we are exempt from certain rules under the Exchange Act that impose certain disclosure obligations and procedural requirements for proxy solicitations under Section 14 of the Exchange Act. In addition, members of our management board, supervisory board and our principal shareholders are exempt from the reporting and "short-swing" profit recovery provisions of Section 16 of the Exchange Act and the rules under the Exchange Act with respect to their purchases and sales of our common shares. Moreover, we are not required to file periodic reports and financial statements with the SEC as frequently or as promptly as U.S. companies whose securities are registered under the Exchange Act. In addition, we are not required to comply with Regulation FD, which restricts the selective disclosure of material information.

        We may take advantage of these exemptions until such time as we are no longer a foreign private issuer. We will remain a foreign private issuer until such time that more than 50% of our outstanding voting securities are held by U.S. residents and any of the following three circumstances applies: (i) the majority of the members of our management board or supervisory board are U.S. citizens or residents; (ii) more than 50% of our assets are located in the United States; or (iii) our business is administered principally in the United States.

        We have taken advantage of certain reduced reporting and other requirements in this prospectus. Accordingly, the information contained herein may be different than the information you receive from other public companies.

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THE OFFERING

Issuer

  Centogene B.V., to be converted into and renamed Centogene N.V. prior to the closing of this offering.

Common shares offered

 

We are offering      common shares.

Underwriters' option to purchase additional common shares

 

We have granted the underwriters the right to purchase up to an additional      common shares from us within 30 days of the date of this prospectus.

Common shares to be outstanding after this offering

 

      common shares (      common shares if the underwriters' option to purchase additional common shares is exercised in full).

Voting rights

 

Our common shares have one vote per share.

Listing

 

We intend to apply to list our common shares on the Nasdaq Global Market, or Nasdaq under the symbol "CNTG".

Use of proceeds

 

We estimate that the net proceeds to us from the offering will be approximately $        ($        if the underwriters' option to purchase additional common shares is exercised in full).

 

We currently expect to use the net proceeds from this offering for research and development in our pharmaceutical segment and for the development of our knowledge-driven information platform, as well as for working capital and other general corporate purposes. See "Use of Proceeds."

Dividend policy

 

Under Dutch law, we may only pay dividends following the closing of the offering to the extent our shareholders' equity (eigen vermogen) exceeds the sum of the paid-up and called-up share capital plus the reserves required to be maintained by Dutch law or by our articles of association. Subject to such restrictions, the amount of any distributions will depend on many factors, such as our results of operations, financial condition, cash requirements, prospects and other factors deemed relevant by our management board and supervisory board. We have not adopted a formal dividend policy with respect to future dividends. We may adopt such a policy in the future, in which case we intend either to place a discussion of such policy on the agenda for our annual general meetings of shareholders, consistent with the Dutch Corporate Governance Code (the "DCGC") or to disclose a deviation from the DCGC in this respect in our statutory annual report.

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Lock-up agreements

 

We have agreed with the underwriters, subject to certain exceptions, not to offer, sell or dispose of any shares of our share capital or securities convertible into or exchangeable or exercisable for any shares of our share capital during the 180-day period following the date of this prospectus. Members of our management board, our supervisory board and our executive officers, as well as certain of our existing shareholders, have agreed to substantially similar lock-up provisions, subject to certain exceptions.

Indications of interest

 

Certain of our existing institutional or other investors or their affiliates have committed to, or indicated an interest in, purchasing common shares in this offering in an aggregate amount of up to $30 million. Because indications of interest are not binding agreements or commitments to purchase, the underwriters may determine to sell more, less or no common shares in this offering to any of these investors, or any of these investors may determine to purchase more, less or no common shares in this offering, including as a result of the pricing terms. The underwriters will receive the same underwriting discounts on any common shares purchased by these investors as they will on any other common shares sold to the public in this offering.

Risk factors

 

See "Risk Factors" and the other information included in this prospectus for a discussion of factors you should consider before deciding to invest in our common shares.

        The above number of common shares to be outstanding after this offering is based on 322,007 common and Series A preferred shares of Centogene AG outstanding as of June 30, 2019 and excludes:

    16,374 common shares of Centogene AG issuable upon the exercise of virtual share options outstanding under our 2017 Virtual Share Option Plan as of June 30, 2019, which options will be converted into awards exercisable for common shares of Centogene N.V. on a                to                basis, and after the consummation of this offering; and
    Any common shares to be issued pursuant to our 2019 Equity Incentive Plan, which will become effective prior to the completion of this offering and includes provisions that automatically adjust the number of common shares reserved for issuance thereunder each year (See "Management—Compensation of Managing Directors, Supervisory Directors and Officers—2019 Equity Incentive Plan").

        Unless otherwise indicated, all information contained in this prospectus also reflects and assumes:

    no common shares issuable upon the exercise of outstanding virtual share options after June 30, 2019;
    the completion, prior to the closing of this offering, of our corporate reorganization, as further described under the section titled "Corporate Reorganization";
    an initial public offering price of $          per common share, which is the midpoint of the price range set forth on the cover page of this prospectus; and
    no exercise of the option granted to the underwriters to purchase up to          additional common shares in connection with the offering.

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SUMMARY FINANCIAL INFORMATION

        The following summary consolidated statement of comprehensive loss for the years ended December 31, 2016, 2017 and 2018 of Centogene AG is derived from the consolidated financial statements included elsewhere in this prospectus, which have been audited by Ernst & Young GmbH Wirtschaftsprüfungsgesellschaft ("Ernst & Young").

        The following summary interim condensed consolidated statement of financial position as of June 30, 2019 and the summary interim condensed consolidated statement of comprehensive loss for the six-months ended June 30, 2018 and 2019 of Centogene AG are derived from the unaudited interim condensed consolidated financial statements included elsewhere in this prospectus. The unaudited interim condensed consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements referred to above except as disclosed therein for the adoption of new accounting standards as of January 1, 2019 and, in the opinion of management, reflect all adjustments necessary to state fairly our financial position as of June 30, 2019 and our results of operations for the six-months ended June 30, 2018 and 2019. Our historical results for the six-months ended June 30, 2018 and 2019 are not necessarily indicative of results to be expected for a full year or any other interim period. We maintain our books and records in euros, and we prepare our financial statements under IFRS as issued by the IASB.

        Centogene B.V. is a newly formed holding company formed for the purpose of effecting the offering and has not engaged in any activities except those incidental to its formation, the corporate reorganization and the initial public offering of our common shares. Centogene B.V. has no assets, liabilities or contingent liabilities and will have no assets, liabilities or contingent liabilities until the completion of our corporate reorganization. Accordingly, summary financial information for Centogene B.V. is not presented. Centogene AG's financial statements, including the notes thereto, are included elsewhere in this prospectus. See "Corporate Reorganization."

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        This financial information should be read in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations" and our consolidated financial statements, including the notes thereto included elsewhere in this prospectus.

 
  For the Years Ended
December 31,
  For the Six-Months
Ended June 30,
 
 
  2016   2017   2018   2018   2019  
 
  (€ in thousands)
  (unaudited)
 

Consolidated statement of comprehensive loss:

                               

Revenue

    27,669     31,689     40,478     17,012     21,921  

Cost of sales

    12,856     14,939     19,941     9,126     12,858  

Gross profit

    14,813     16,750     20,537     7,886     9,063  

Research and development expenses

    5,885     6,396     6,300     2,356     4,108  

General administrative expenses

    8,888     9,498     18,610     9,030     11,603  

Selling expenses

    5,364     5,897     7,474     2,848     4,356  

Other operating income

    1,295     1,043     2,306     953     1,688  

Other operating expenses

    908     457     1,065     665     464  

Real estate transfer tax expenses

                    1,200  

Operating loss

    (4,937 )   (4,455 )   (10,606 )   (6,060 )   (10,980 )

Interest and similar income

    26     14     33     14     12  

Interest and similar expense

    856     1,021     1,075     686     431  

Finance costs, net

    (830 )   (1,007 )   (1,042 )   (672 )   (419 )

Loss before taxes

    (5,767 )   (5,462 )   (11,648 )   (6,732 )   (11,399 )

Income tax (benefits)/expenses

    (408 )   14     (310 )   (110 )   163  

Loss for the period

    (5,359 )   (5,476 )   (11,338 )   (6,622 )   (11,562 )

Other comprehensive income/(loss)

    9     10     (8 )   44     10  

Total comprehensive loss for the period

    (5,350 )   (5,466 )   (11,346 )   (6,578 )   (11,552 )


 
  As of June 30, 2019  
 
  Actual   Pro Forma   Pro Forma As
Adjusted(1)(2)
 
 
  (€ in thousands)
 
 
  (unaudited)
 

Consolidated statement of financial position:

                   

Cash and cash equivalents

    3,564                                

Total assets

    75,309              

Total liabilities

    59,849              

Total equity

    15,460              

(1)
Pro forma as adjusted to give effect to the corporate reorganization and the issuance and sale of common shares in this offering at the assumed initial public offering price of $            per common share, after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us, assuming no exercise of the underwriters' option to purchase additional common shares. The as adjusted information presented above is illustrative only and will vary based on the actual public offering price, the actual number of common shares offered by us and the other terms of the offering determined at pricing.
(2)
Each $1.00 increase (decrease) in the assumed initial public offering price per common share would increase (decrease) our as adjusted cash and cash equivalents, total assets and total equity by approximately €            , assuming that the number of common shares offered by us, as set forth on the cover page of this prospectus, remains the same after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us. Similarly, each increase (decrease) of 1.0 million shares offered by us at the assumed initial public offering price would increase (decrease) each of cash and cash equivalents, total assets and total equity by approximately €            . U.S. dollar amounts have been translated into euros at a rate of USD      to €1.00, the exchange rate quoted as of              , 2019 by the U.S. Federal Reserve. This as adjusted information is illustrative only and will vary based on the actual initial public offering price, the actual number of common shares offered by us and other terms of the offering determined at pricing.

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RISK FACTORS

        You should carefully consider the following risks and all of the other information set forth in this prospectus before deciding to invest in our common shares. If any of the following risks actually occurs, our business, financial condition or results of operations would likely suffer. In such case, the trading price of our common shares could decline, and you may lose all or part of your investment.

Certain Factors Relating to Our Business and Strategy

We may fail to generate sufficient revenue from our relationships with our clients or pharmaceutical partners to achieve and maintain profitability.

        We believe our commercial success is dependent upon our ability to successfully market and sell our products and solutions to clients and pharmaceutical partners, to continue to sell our suite of diagnostic tests, to continue to expand our current relationships and to develop new relationships with pharmaceutical partners. The demand for our existing services may decrease or may not continue at historical rates for a number of reasons, including, among others, the development by competitors of new products or solutions that we are not able to commercialize, and increased competition from companies that offer similar products and solutions. In addition to reducing our revenue, if our pharmaceutical partners or clients decide to decrease or discontinue their partnerships or relationships with us, and their use of our knowledge and interpretation-based solutions, this may reduce our access to research and patient data that facilitates the incorporation of newly developed information about rare diseases into our data repository. Our business model and strategy depend on the continued input of new data into our repository, and any such reduction in access to research and patient data could affect our ability to offer the same quality and scope of solutions to our pharmaceutical partners and other clients, which could adversely affect or business, prospects, financial condition and results of operations.

        We are currently not profitable. Even if we succeed in increasing adoption of our existing solutions by pharmaceutical partners or tests by our clients or pharmaceutical partners, we may fail to generate sufficient revenue to achieve and maintain profitability.

We may fail to maintain our current relationships with pharmaceutical companies, or enter into new relationships on a similar scale.

        Our success in the future depends in part on our ability to maintain relationships and to enter into new relationships with pharmaceutical partners. Partnerships are complex and time-consuming to negotiate and document. Whether we reach a definitive agreement for a partnership will depend on a number of factors, including, among other things, upon our partners' assessment of our industry knowledge, data repository, logistical resources and expertise, the terms and conditions of the proposed partnership, and our partners' evaluation of the potential value added from our rare disease knowledge and insights. If we are unable to do so, we may have to curtail our research on a particular rare disease or increase our expenditures and undertake research and development activities at our own expense. Further, there have been a significant number of recent business combinations among large pharmaceutical companies that have may resulted in a reduced number of potential future partners.

        Our ability to maintain our current relationships with our pharmaceutical partners, or enter into new relationships, can be difficult due to several factors, including that:

    our products and solutions are focused towards facilitating the development of rare disease treatments which limits our market to pharmaceutical partners active in the rare disease space;
    orphan drug development is complex, expensive and time-consuming due to limited identified patient populations and limited industry knowledge of rare diseases;

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    our pharmaceutical partners may decide to decrease or discontinue their use of our rare disease information platform due to circumstances outside of our control, including changes in their research and development plans, whether they can obtain positive data or regulatory approval in clinical trials or successfully commercialize a treatment, changes in the regulatory environment, or utilization of internal testing resources or genetic tests performed by other parties, among others;
    internal and external constraints may be placed on potential pharmaceutical partners that can limit the number and type of relationships with companies like us they can consider and consummate; and
    our pharmaceutical partners may be dissatisfied with our products or solutions or that we may fail to deliver expected benefits from our products or solutions.

        Additionally, some of our pharmaceutical partners have contracted with us to provide testing for large numbers of samples or to focus our research on a particular rare disease, which could restrict our ability to perform tests for other clients or pharmaceutical partners or limit our ability to expand our data repository outside of a specified patient population or rare disease. If we fail to maintain our current relationships with our pharmaceutical partners, or enter into new partnerships, our business could suffer.

Because the identified patient populations for rare diseases are relatively small, it may be difficult to successfully identify patients for our pharmaceutical partners.

        Our inability to identify a sufficient number of patients for our partners' clinical trials could result in significant delays and could require our partners to abandon one or more clinical trials altogether. Enrollment delays in our partners' clinical trials may result in increased development costs for our partners' drug candidates, which would cause the value of the solutions which we offer to our pharmaceutical partners to decline. If we are unable to identify patients with a specified driver of disease or applicable genomic alteration, this could compromise our ability to add value to our partners' clinical trials by accelerating clinical development and regulatory timelines. In addition, our projections of both the number of people who have these diseases, as well as the subset of people with these diseases who have the potential to benefit from treatment with our partners' existing treatments or drug candidates, are based on our internal estimates derived from data in our repository. These estimates may prove to be incorrect, and new studies may reduce the estimated incidence or prevalence of these diseases. The number of patients in the United States, European Union and elsewhere may turn out to be lower than expected, may not be otherwise amenable to treatment with our partners' drug candidates or patients may be difficult to identify and access, all of which would adversely affect our business, prospects and ability to achieve or sustain profitability.

We may fail to generate sufficient volumes of data from our diagnostic tests for inclusion in our data repository.

        Our business model assumes that we will be able to continue to generate significant diagnostic test volume in order to maintain the generation of data that feeds into our data repository, which is necessary for the development of new products and solutions for our pharmaceutical partners and clients. We may not succeed in continuing to drive clinical adoption of our tests to achieve sufficient volumes. Inasmuch as detailed genetic data from our tests have only recently become available at relatively affordable prices, the pace and degree of clinical acceptance of the utility of such testing is uncertain. Specifically, it is uncertain how much genetic data will be accepted as necessary or useful, as well as how detailed that data should be, particularly since medical practitioners may have become accustomed to genetic testing that is specific to one or a few genes. To generate demand for our tests, we will need to continue to make our diagnostics clients, as well as physicians and key opinion leaders, aware of the benefits of our tests, including the price, the breadth of our testing options, and the

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benefits of having additional genetic data available from which to make treatment decisions. In addition, physicians in other areas of medicine may not adopt genetic testing for certain rare diseases as readily as it has been adopted for some more well-known rare diseases and our efforts to sell our tests to physicians outside of a set number of rare diseases may not be successful. A lack of or delay in increased clinical acceptance of our diagnostic tests would negatively impact sales and market acceptance of our tests and limit our ability to expand on the scope and quality of knowledge and interpretation-based solutions offered to our pharmaceutical partners, which could in turn impact our revenue growth and potential profitability.

        In addition, genetic testing is still relatively expensive and many potential pharmaceutical partners and clients may be sensitive to pricing concerns. Potential pharmaceutical partners or clients may not adopt our tests if adequate reimbursement is unavailable, or if we are not able to maintain low prices in the future relative to our competitors. If we are not able to generate demand for our tests at sufficient volume, or if it takes significantly more time to generate this demand than we anticipate, our business, prospects, financial condition and results of operations could be materially harmed.

We derive a large proportion of our revenues from agreements with a limited number of pharmaceutical partners and clients.

        We have historically earned a large proportion of our revenue from a limited number of pharmaceutical partners and diagnostic testing clients. In the six-months ended June 30, 2019 and year ended December 31, 2018, our top five pharmaceutical partners, in the aggregate, accounted for 35.1% and 39.0% of our revenues, respectively. The loss of, or material reduction in, revenues from any one of our major pharmaceutical partners or clients could materially reduce our total revenues, harm our reputation in the industry and/or reduce our ability to accurately predict our revenue, net income and cash flow. The loss of, or material reduction, in revenue from any one of our major pharmaceutical partners or clients could also adversely affect our gross profit and utilization as we seek to redeploy resources previously dedicated to that partner. We cannot assure you that revenue from our major pharmaceutical partners or clients will not be significantly reduced in the future. We also may not be able to maintain our relationships with our major pharmaceutical partners or clients on existing or on continued favorable terms and our major pharmaceutical partners or clients may not renew their agreements with us, in which case our business, financial condition and results of operations would be adversely affected.

        In particular, during the six-months ended June 30, 2019, our collaboration with Shire International GmbH ("Shire") represented 27.1% of our total revenues. We expect that our collaboration with Shire will continue to account for a material portion of our revenue in 2019. The revenue attributable to Shire may fluctuate in the future, which could have an adverse effect on our financial condition and results of operations. In addition, changes in the terms of our agreements with Shire, or a modification or termination of our relationship with Shire, could result in delays in the receipt of revenue by us, or a temporary or permanent loss of revenue to us. In addition, certain pharmaceutical companies, including those with which we currently have agreements, may choose not to do business with us or may seek out other partners for genetic rare disease information due to our strategic collaboration with Shire, particularly if they are actual or potential competitors with Shire. If we are unable to continue to grow our business with other pharmaceutical companies, our business and results of operations would be adversely affected.

        Our client concentration may also subject us to perceived or actual leverage that our pharmaceutical partners or clients may have, given their relative size and importance to us. If our pharmaceutical partners or clients seek to negotiate their agreements on terms less favorable to us and we accept such unfavorable terms, this may have a material adverse effect on our business, financial condition and results of operations. Accordingly, unless and until we diversify and expand our client

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base, our future success will significantly depend upon the timing and volume of business from our largest pharmaceutical partners and clients and the financial and operational success of these pharmaceutical partners and clients.

We may face restrictions or delays in the receipt of patient samples to our laboratories for genetic testing.

        Our business depends on our ability to quickly and reliably receive samples from physicians. Our CentoCard product is typically sent from locations worldwide to our laboratory in Rostock, Germany as well as our Cambridge, Massachusetts facility. Disruptions in delivery, whether due to factors beyond our control such as natural disasters, terrorist threats, political instability, governmental policies, failures by physicians to properly label or package the samples, failure by postage services, labor disruptions, bad weather or other factors could adversely affect the receipt by us of samples or specimen integrity and could impact our ability to process samples in a timely manner and to provide our services to our clients and pharmaceutical partners. In particular, there is a general trend in certain countries, for example in China and certain countries in South America, where policies have been introduced that restrict the processing of genetic testing outside the country in which the patient is located. This could disrupt the transportation of samples to our testing facilities in Germany and the United States from such countries, and could adversely impact our current business operations or prevent us from expanding into certain new regions.

        In addition, the majority of our samples are delivered to us via regular postal services worldwide. If such services are disrupted, or if we are unable to continue to obtain expedited delivery services or specialized delivery services for certain products, such as our prenatal algorithmic test, on commercially reasonable terms, our operating results may be adversely affected.

We may become subject to substantial product liability or professional liability claims that could exceed our resources.

        The marketing, sale and use of our products and solutions could lead to the filing of product liability claims if someone were to allege that our products and solutions identified inaccurate or incomplete information regarding the genomic alterations of the rare disease indication analyzed, reported inaccurate or incomplete information concerning the available treatments for a certain type of rare disease or otherwise failed to perform as designed. For example, we have been subject to a claim from a client that our prenatal diagnostic test conducted at their request failed to identify a specific mutation present in a patient. See "Business—Legal Proceedings." We may also be subject to liability for errors in, a misunderstanding of, or inappropriate reliance upon, the information we provide in the ordinary course of our business activities. A product liability or professional liability claim could result in substantial damages and be costly and time-consuming for us to defend.

        Our service and professional liability insurance may not fully protect us from the financial impact of defending against product liability or professional liability claims. Any product liability or professional liability claim brought against us, with or without merit, could increase our insurance rates or prevent us from securing insurance coverage in the future. Additionally, any product liability lawsuit could damage our reputation or cause current clients or pharmaceutical partners to terminate existing agreements and potential clients or pharmaceutical partners to seek other partners, any of which could impact our results of operations.

If the validity of a consent from a patient was challenged, we could be forced to stop using certain of our data resources, which would impede our rare disease information development efforts.

        We provide diagnostic testing services to patients of our pharmaceutical partners and diagnostics clients worldwide. We also provide products and solutions, including biomarker development and testing, to our pharmaceutical partners. Such products and solutions involve the aggregation of data

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obtained from patients in our existing data repository and data obtained from new tests conducted both on patients whose samples remain in our biobank or new patients from whom we collect samples.

        To a large extent, we also rely upon our pharmaceutical partners, our clients and, in some cases, third-party laboratories to collect the subject's informed consent and comply with applicable local laws and international regulations. Although we maintain policies and procedures designed to monitor the collection of consents by both ourselves and such third parties, we or third parties may not obtain the required consents in a timely manner, or at all. In addition, consents that we have obtained or will obtain may not meet the existing or future standards required by relevant governmental authorities.

        The collection of data and samples in many different countries results in complex legal questions regarding the adequacy of consent and the status of genetic material under a large number of different legal systems. In some jurisdictions, tissue samples that contain a person's DNA might irrevocably qualify as personal data, as in theory such samples can never be completely anonymized. Legitimate interests of the donor might cause a "revival" of his or her personal rights in the future and limit our rights of utilization. The subject's consent obtained in any particular country could be withdrawn or challenged in the future, and those consents could prove invalid, unlawful, or otherwise inadequate for our purposes. Furthermore, we may face disputes with patients should their data be used in a manner which they did not expect or if the consent was recorded incorrectly or obtained fraudulently. Any findings against us, or our pharmaceutical partners, clients or distributors, could deny us access to or force us to stop using certain of our clinical data or samples, which would impede our genetic information solution development efforts. We could become involved in legal challenges, which could consume our management and financial resources.

If access to our highly specialized laboratory facilities, storage facilities or equipment is interrupted or damaged, our business could be negatively impacted.

        Our diagnostic testing products and pharmaceutical solutions are rendered at our laboratory facilities. We currently run the majority of our diagnostic testing at our laboratory in Rostock, Germany, and we also commenced operations at our laboratory in Cambridge, Massachusetts in August 2018. If one or more of our laboratories, and particularly our facility in Rostock, become inoperable or some or all of our key equipment ceases to function even for a short period of time, we may be unable to perform our genetic tests or develop solutions in a timely manner or at all, which may result in the loss of clients and pharmaceutical partners or harm to our reputation, and we may be unable to regain those clients and pharmaceutical partners or repair our reputation in the future. Our facilities and equipment could be harmed or rendered inoperable by natural or man-made disasters, including war, fire, earthquake, flood, power loss, communications or internet failure or interruption, or terrorism, which may render it difficult or impossible for us to operate our genetic rare disease information platform for some period of time.

        In particular, the biomaterials that are stored in our biobank are located in our Rostock facility. Should the biomaterials that we store there be damaged or destroyed, we would lose part or all of our existing biomaterials and as a result we would not be able to retest this material for future research and development uses.

        Furthermore, our facilities and the equipment we use to perform our research and development work could be unavailable or costly and time-consuming to repair or replace. It would be difficult, time-consuming, and expensive to rebuild any of our facilities or license or transfer our proprietary technology to a third party, particularly in light of the licensure and accreditation requirements and specific equipment needed for laboratories like ours. Even in the unlikely event we are able to find a third party with such qualifications to enable us to perform our genetic tests or develop our solutions, we may be unable to negotiate commercially reasonable terms with such third parties. Any interruption

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of our laboratory operations could harm relationships with our clients and pharmaceutical partners or regulatory authorities, which could adversely affect our ability to generate revenue or maintain compliance with regulatory standards.

        While we carry insurance for damage to our property and laboratory and the disruption of our business, such insurance may not cover all of the risks associated with damage to our property or laboratory or disruption to our business, may not provide coverage in amounts sufficient to cover our potential losses, may be challenged by insurers underwriting the coverage, and may not continue to be available to us on acceptable terms, if at all.

We depend upon our information technology systems, and any failure of these systems could harm our business.

        We depend on information technology and telecommunications systems for significant elements of our operations, including our repository, our CentoMD database, our CentoPortal client-facing platform, our laboratory information management system, our third-party datacenter solutions, our broadband connections and our client relationship management system. We have installed a number of enterprise software systems that affect a broad range of business processes and functional areas, including, for example, systems handling human resources, financial controls and reporting, contract management and other infrastructure operations. These information technology systems support a variety of functions, including laboratory operations, test validation, sample tracking, quality control, customer service support, billing and reimbursement, research and development activities, scientific and medical curation, and general administrative activities. In addition, our system is backed up by two offsite data centers that offer a disaster recovery system for our database in separate locations near Frankfurt. Any technical problems that may arise in connection with third-party data center hosting facilities could result in interruptions in our service.

        Our information technology systems are vulnerable to damage from a variety of sources, including network failures, malicious human acts, and natural disasters. Our business will also be harmed if our laboratory partners and potential laboratory partners believe our service is unreliable. Moreover, despite network security and back-up measures, some of our servers are potentially vulnerable to physical or electronic break-ins, malicious computer software (malware), and similar disruptive problems. Failures or significant downtime of our information technology systems, or those used by our third-party service providers, could prevent us from conducting our comprehensive genomic analyses, preparing and providing reports and data to partners and physicians, billing payors, processing reimbursement appeals, handling patient or physician inquiries, conducting research and development activities, and managing the administrative aspects of our business. Additionally, to the extent that any disruption or security breach results in a loss or damage to our data or applications, or inappropriate disclosure of confidential or proprietary information, we may incur significant liability. Any disruption or loss of information technology or telecommunications systems on which critical aspects of our operations depend could have an adverse effect on our business.

We rely on a limited number of suppliers or, in some cases, a sole supplier, for some of our laboratory equipment and may not be able to find replacements or immediately transition to alternative suppliers.

        We believe that there are only a few equipment manufacturers that are currently capable of supplying and servicing the sequencing equipment necessary for our laboratory operations. Therefore, we may not be able to obtain acceptable substitute equipment from another supplier on the same basis or at all. Even if we are able to obtain acceptable substitutes from replacement suppliers, their use could require us to significantly alter our laboratory operations. An interruption in our laboratory operations could occur if we encounter delays or difficulties in securing or maintaining the proper function of this laboratory equipment. Any such interruption could negatively impact research and

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development and launches of new products or solutions, and significantly affect our business, financial condition, results of operations, and reputation.

        We rely on a key supplier, Illumina, for certain sequencing equipment used for our processes. We also rely on a sole supplier for our CentoCard, which is our main sample collection method for our diagnostic tests.

        Transitioning to a new supplier would be time-consuming and expensive, may result in interruptions in our laboratory operations, would likely affect the performance specifications of our laboratory operations, and would require that we revalidate our existing assays. There can be no assurance that we would be able to secure alternative equipment, reagents, and other materials, and bring such equipment, reagents, and materials on line and revalidate them without experiencing interruptions in our workflow. In the case of an alternative supplier for Illumina, there can be no assurance that replacement diagnostic sequencing equipment would be available or would meet our quality control and performance requirements for our laboratory operations. If we should encounter delays or difficulties in securing, reconfiguring, or revalidating the equipment and reagents we require for our assays, our business, financial condition, results of operations, and reputation could be adversely affected.

The loss or transition of any member of our senior management team, in particular our CEO, or our inability to attract and retain new talent, could adversely affect our business.

        Our success depends on the skills, experience, and performance of key members of our senior management team, and in particular our CEO, Prof. Arndt Rolfs. The individual and collective efforts of these employees will be important as we continue to develop our rare disease genetic information platform and additional products and solutions, and as we expand our commercial activities. The loss or incapacity of existing members of our senior management team could adversely affect our operations if we experience difficulties in hiring qualified successors.

        The complexity inherent in integrating a new key member of the senior management team with existing senior management may limit the effectiveness of any such successor or otherwise adversely affect our business. Leadership transitions can be inherently difficult to manage and may cause uncertainty or a disruption to our business or may increase the likelihood of turnover of other key officers and employees. Specifically, a leadership transition in the commercial team may cause uncertainty about or a disruption to our commercial organization, which may impact our ability to achieve sales and revenue targets.

        Our research and development programs and laboratory operations depend on our ability to attract and retain highly skilled scientists and technicians. We may not be able to attract or retain qualified scientists and technicians in the future due to the intense competition for qualified personnel among life science businesses globally We also face competition from universities and public and private research institutions in recruiting and retaining highly qualified scientific personnel. We may have difficulties locating, recruiting, or retaining qualified sales people. Recruitment and retention difficulties can limit our ability to support our research and development and sales programs.

International expansion of our business exposes us to new and complex business, regulatory, political, operational, financial, and economic risks.

        Our business strategy incorporates plans for significant expansion in the countries in which we currently operate and internationally. Doing business internationally involves a number of risks, including:

    multiple, conflicting, and changing laws and regulations such as data protection laws, privacy regulations, tax laws, export and import restrictions, employment laws, regulatory requirements

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      (including requirements related to patient consent, testing of genetic material and reporting the results of such testing) and other governmental approvals, permits, and licenses, or government delays in issuing such approvals, permits, and licenses;

    failure to obtain regulatory approvals for the manufacture and sale of our products and use of our products and solutions in various countries;
    transition and management of our former distribution relationships in various countries;
    potentially relevant third-party intellectual property rights;
    difficulties in staffing and managing foreign operations;
    complexities and difficulties in obtaining, maintaining, protecting and enforcing our intellectual property rights;
    logistics and regulations associated with preparing, shipping, importing and exporting tissue and blood samples, including infrastructure conditions, transportation delays, and customs;
    limits in our ability to penetrate new geographical regions due to competition;
    logistical issues or increases in costs of transporting tests and samples since our diagnostic tests are conducted primarily in Germany;
    financial risks, such as the impact of local and regional financial crises on demand and payment for our products and solutions, and exposure to foreign currency exchange rate fluctuations;
    risks associated with operations in countries which have experienced, or are currently experiencing, high rates of inflation which increase our costs, inhibit economic growth and could lead to reduced demand for our products and solutions;
    natural disasters, political, and economic instability, including wars, terrorism, and political unrest, outbreak of disease, boycotts, curtailment of trade, and other business restrictions; and
    regulatory and compliance risks that relate to maintaining accurate information and control over sales and distribution activities that may fall within the purview of the United States Foreign Corrupt Practices Act (the "FCPA") or comparable foreign regulations, including its books and records provisions, or its anti-bribery provisions.

        Any of these factors could significantly harm our future international expansion and operations and, consequently, our revenue and results of operations. The difference in regulations under the laws of the countries in which we may expand and the laws of the countries in which we currently operate may be significant and, in order to comply with such new laws, we may have to implement global changes to our products and solutions or business practices. Such changes may result in additional expense to us and either reduce or delay development of our products and solutions, commercialization of our biomarkers and other solutions or expansion of our data repository and biobank. In addition, any failure to comply with applicable legal and regulatory obligations could affect us in a variety of ways that include, but are not limited to, significant criminal, civil and administrative penalties and restrictions on certain business activities. Also, the failure to comply with applicable legal and regulatory obligations could result in the disruption of our activities in these countries.

        Failure to manage these and other risks may have a material adverse effect on our operations in any particular country and on our business as a whole.

Implementation of partnership agreements with our pharmaceutical partners may result in material unanticipated problems, expenses, liabilities, competitive responses, loss of client relationships and diversion of management's attention.

        The negotiation of our existing partnership agreements, as well as any new partnership agreements that we enter into, take up significant management time and resources. Moreover, in part due to the complex nature of our partnership agreements which typically provide for research and development collaboration as well as utilization of our genetic patient screening processes, we may need to expend capital and dedicate manpower to meeting the requirements of our pharmaceutical partners. Any

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partnership agreements that we enter into in the future may contain restrictions on our ability to enter into potential collaborations with other third parties, or to otherwise provide products and solutions in connection with a particular rare disease indication. As a result of these and other factors, our partnership agreements may result in material unanticipated problems, expenses, liabilities, competitive responses, loss of client relationships and diversion of management's attention.

        Many of these factors will be outside of our control, and any one of them could result in increased costs, decreases in the amount of expected revenues and diversion of management's time and energy, which could materially impact our business, financial condition and results of operations. As a result, we cannot assure you that our relationship with any pharmaceutical partner will result in the realization of the anticipated benefits.

If our products and solutions do not perform as expected, we may fail to achieve or maintain sales of our products and solutions.

        Our success depends on the market's confidence that we can provide accurate diagnostic testing products and reliable, high-quality rare disease information solutions. Our partnerships with our pharmaceutical partners and clients are typically designed to provide results in respect of a particular rare disease, and our preliminary assessments or knowledge about such disease may necessarily be limited by the amount of information currently available. As a result, the work we undertake on behalf of our pharmaceutical partners and clients may not yield the results that our pharmaceutical partners and clients expect or anticipate. We believe that our pharmaceutical partners and clients are likely to be particularly sensitive to solution and testing service defects and errors, including if our products or services fail to detect genomic alterations with high accuracy from clinical specimens or if we fail to accurately develop a biomarker.

        Moreover, we may fail to maintain the accuracy and reproducibility we have demonstrated to date with our genetic testing services, particularly for clinical samples, as our test volume increases. The sequencing process yields that we achieve depend on the design and operation of our sequencing process, which uses a number of complex and sophisticated biochemical, informatics, optical, and mechanical processes, many of which are highly sensitive to external factors. An operational or technological failure in one of these complex processes or fluctuations in external variables may result in sequencing processing yields that are lower than we anticipate or that vary between sequencing runs. In addition, we are regularly evaluating and refining our sequencing process. These refinements may initially result in unanticipated issues that further reduce our sequencing process yields or increase the variability of our sequencing process yields. Errors, including if our products or solutions fail to detect genomic variants with high accuracy, or mistakes, including if we fail to or incompletely or incorrectly identify the significance of gene variants, could have a significant adverse impact on our business.

        Hundreds of genes can be implicated in some disorders, and overlapping networks of genes and symptoms can be implicated in multiple conditions. As a result, a substantial amount of judgment is required in order to interpret testing results for an individual patient and to develop an appropriate patient report. As a result, we may make errors in our interpretation of testing results, which could impair the results of our tests and (as such results are typically stored in our CentoMD database) adversely impact the quality of our overall knowledge base. The failure of our products or solutions to perform as expected would significantly impair our operating results and our reputation. We may also be subject to legal claims arising from, or loss of business as a result of, any defects or errors in our products and solutions.

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We may fail to manage our future growth effectively, which could make it difficult to execute our business strategy.

        We anticipate growth in our business operations. This future growth could create strain on our organizational, administrative and operational infrastructure, including laboratory operations, quality control, customer service, and sales force management. We may fail to maintain the quality or expected turnaround times of our products and services, or satisfy customer demand as it grows. Our ability to manage our growth properly will require us to continue to improve our operational, financial and management controls, as well as our reporting systems and procedures.

        We also plan to expand our laboratory and technical operations as our business grows. In August 2018, we opened a new facility in Cambridge, Massachusetts, in the United States and recently expanded our clinical studies team to support our U.S. operations. This or other future expansion strategies and any future growth could create strain on our organizational, administrative and operational infrastructure, including laboratory operations, quality control, customer service and sales force management. We may not be able to maintain the quality or expected turnaround times of our testing services or satisfy client demand as our business grows. Our ability to manage our growth properly will require us to continue to improve our operational, financial, and managerial controls, as well as our reporting systems and procedures, and to obtain appropriate regulatory approvals and meet regulatory standards applicable for the operation of our business.

The development of new products and solutions is a complex process, and we may be unable to successfully commercialize new products or solutions on a timely basis or at all.

        New diagnostic test products and our interpretation-based solutions, including our biomarkers, take time to develop and commercialize. We may fail to develop and commercialize new diagnostic tests or solutions on a timely basis. Moreover, there can be no assurance that our products or solutions will be capable of meeting the needs of our clients and pharmaceutical partners, or that we will be able to commercialize them at all. Before we can commercialize any new products or solutions, we need to expend significant funds in order to:

    conduct substantial research and development, including epidemiology and validation studies and potentially patient scope analyses;
    further develop our laboratory processes or equipment;
    allocate laboratory space for new solutions or further scale our infrastructure to accommodate research and development or new equipment;
    in the case of products or solutions for which we are seeking regulatory or marketing approval, such as biomarkers, pursue such regulatory approval.

        The development of new products and solutions involves risk, and development efforts may fail for many reasons, including the failure of any product or solution to perform as expected, a lack of validation or reference data, failure to demonstrate utility of a test or solution, or, in the case of solutions for which we are seeking or have received the Food and Drug Administration ("FDA"), European Commission and European Medicines Agency ("EMA"), German Federal Institute for Medicinal Products and Medical Devices (Bundesinstitut für Arzneimittel und Medizinprodukte), or comparable authorities' or agencies' approval, the inability to obtain such approval or the loss of such approval. In particular, our biomarker development and patent processes are subject to review by regulatory agencies and governing bodies. We cannot predict whether or when we will successfully complete development of each biomarker and if we will receive patent protection on any biomarkers that we develop.

        As we develop new products and solutions, we will have to make significant investments in development, marketing, and selling resources. Any failure to develop or deliver adequate products or

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solutions to our clients and pharmaceutical partners on a timely basis or at all could significantly affect our business, financial condition, results of operations, and reputation.

We have limited experience in marketing and selling our products and solutions and we may fail to expand our direct sales and marketing force to adequately address our pharmaceutical partners' and clients' needs.

        We have limited experience in marketing and selling our products and solutions to pharmaceutical partners, and currently rely on our CEO and our Chief Business Officer ("CBO") along with a small sales force to sell our products and solutions. We may not be able to market, sell, or distribute our existing products and solutions or other services we may develop effectively enough to support our planned growth.

        Our future sales and further business growth will depend in large part on our ability to develop, and expand, our sales force and to increase the scope of our marketing efforts, particularly in the United States. Our target market of pharmaceutical partners and clients is a diverse market with particular, individualized needs. As a result, we believe it is necessary to develop a sales force that includes sales representatives with specific rare disease technical backgrounds. We will also need to attract and develop marketing personnel with industry expertise. Competition for such employees is intense. We may not be able to attract and retain personnel or be able to build an efficient and effective sales and marketing force, which could negatively impact sales and market acceptance of our products or solutions and limit our revenue growth and potential profitability. Our expected future growth will impose significant added responsibilities on members of management, including the need to identify, recruit, maintain, and integrate additional employees. Our future financial performance will depend in part on our ability to manage this potential future growth effectively, without compromising quality.

        If we believe a significant market opportunity for our products or solutions exists in a particular jurisdiction in which we do not have direct access through one of our existing offices, from time to time we may enlist distribution partners and local laboratories to assist with sales, distribution, and client support. We may not be successful in finding, attracting, and retaining distribution partners or laboratories, or we may not be able to enter into such arrangements on favorable terms. Sales practices utilized by our distribution partners that are locally acceptable may not comply with sales practices standards required under German, Dutch, United States or other laws that apply to us, which could create additional compliance risk. If these additional sales and marketing efforts are not successful, we may not achieve significant market acceptance for our solutions in these markets, which could harm our business.

The knowledge and interpretation-based solutions we provide to our pharmaceutical partners may not achieve significant commercial market acceptance.

        Our knowledge and interpretation-based solutions may not gain significant acceptance in the orphan drug development market and, therefore, may not generate substantial revenue or profits for us. Our ability to achieve increased commercial market acceptance for our existing knowledge and interpretation-based solutions will depend on several factors, including:

    our ability to convince the medical and pharmaceutical community of the clinical utility of our solutions and their potential advantages over existing and new solutions;
    the willingness of our pharmaceutical partners, as well as their physicians and patients, to utilize our solutions; and
    the agreement by commercial third-party payors and government payors to reimburse any treatments provided by our pharmaceutical partners, the scope and amount of which will affect a partners' willingness or ability to pay for our solutions and will influence physicians' decisions to recommend our solutions.

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        We believe that the successful completion of clinical trials by partners that use our solutions, publication of scientific and medical results based on the information gained from our repository in peer-reviewed journals, and presentations at leading conferences are critical to the broad adoption of our solutions. Publication in leading medical journals is subject to a peer-review process, and peer reviewers may not consider the results of studies involving our solutions sufficiently novel or worthy of publication.

        The failure to be listed in physician guidelines or the failure of our solutions to produce favorable results for our partners or to be published in peer-reviewed journals could limit the adoption of our solutions. Failure to achieve widespread market acceptance of our solutions would materially harm our business, financial condition, and results of operations.

Failure to keep pace with the rapidly evolving industry in which we operate could make us obsolete.

        Our business relies on commercial activities in the rare disease genetic testing and diagnosis field. In recent years, there have been numerous advances in methods used to analyze very large amounts of genomic information and the role of genetics and gene variants in rare diseases and treatments, including through the development of biomarkers. Our industry has and will continue to be characterized by rapid technological change, increasingly larger amounts of data, frequent new testing service introductions and evolving industry standards. Our future success will also depend on our ability to keep pace with the evolving needs of our clients and pharmaceutical partners on a timely and cost-effective basis and to pursue new market opportunities that develop as a result of technological and scientific advances. Our current products and solutions could become obsolete unless we continually update our offerings to reflect new scientific knowledge about genes and genetic variations and their role in rare diseases and treatments. If we fail to anticipate or respond adequately to technological developments, demand for our products and solutions will not grow and may decline, and our business, revenue, financial condition and operating results could suffer materially.

        Moreover, many companies in this market are offering, or may soon offer, products and solutions that compete with our products and solutions, in some cases at a lower cost than ours. We cannot assure you that research and discoveries by other companies will not render our existing or potential products and solutions uneconomical or result in tests superior to our existing tests and those we may develop. We also cannot assure you that any of our existing products and solutions, or those that we develop in the future, will be preferred by our clients, pharmaceutical partners, physicians or other payors to any existing or newly developed technologies or tests. If we fail to maintain competitive test products, our business, prospects, financial condition and results of operations could be adversely affected.

We may fail to successfully respond to increasing demand for our products and solutions.

        As our sales volume grows, we will need to continue to increase our infrastructure for sample intake, customer service, billing and general process improvements, expand our internal quality assurance program, and extend our platform to support comprehensive genomic analyses at a larger scale within expected turnaround times. We will need additional certified laboratory scientists and other scientific and technical personnel to process higher volumes of our products and solutions. Portions of our process cannot be fully automated and will require additional personnel to scale. We will also need to purchase additional equipment, some of which can take a long time to procure, set up, and validate, and increase our software and computing capacity to meet increased demand.

        We may fail to successfully implement any of these increases in scale, expansion of personnel, equipment, software and computing capacities, or process enhancements and we may have inadequate space in our laboratory facilities to accommodate such required expansion.

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        As additional products and solutions are commercialized, we will need to incorporate new equipment, implement new technology systems and laboratory processes, and hire new personnel with different qualifications. Failure to manage this growth or transition could result in turnaround time delays, higher product costs, declining product quality, deteriorating customer service, and slower responses to competitive challenges. A failure in any one of these areas could make it difficult or impossible for us to meet market expectations for our products and solutions, and could damage our reputation and the prospects for our business.

We may fail to obtain favorable pricing for our products and solutions and to meet our profitability expectations.

        If we are not able to obtain favorable pricing for our products and solutions to enable us to meet our profitability expectations, our revenues and profitability could materially suffer. The rates we are able to charge for our products and solutions are affected by a number of factors, including:

    general economic and political conditions in the countries in which we operate;
    the competitive environment in our industry, as described below;
    our clients' and pharmaceutical partners' cost sensitivities;
    our ability to accurately estimate, attain and sustain revenues and royalties, margins and cash flows over the full partnership period for our solutions, which includes our ability to estimate the impact of inflation and foreign exchange on our margins over long-term contracts; and
    procurement practices of our pharmaceutical partners and clients and their use of third-party advisors.

        The competitive environment in our industry affects our ability to obtain favorable pricing in a number of ways, all of which could have a material negative impact on our results of operations. The less we are able to clearly convey the value of our products and solutions or differentiate our products and solutions, the more risk we have that they will be seen as commodities, with price being the driving factor in selecting us as a partner. Competitors may be willing, at times, to price contracts or products lower than we do in an effort to enter the market or increase market share. Further, if competitors develop and implement methodologies that yield greater efficiency or efficacy, they may be able to offer products and solutions similar to ours at lower prices.

Ethical, legal and social concerns related to the use of genomic information could reduce demand for our genetic rare disease knowledge and interpretation-based products and solutions.

        Genomic testing, like that conducted for our pharmaceutical partners and clients using our genetic rare disease information platform, has raised ethical, legal and social issues regarding privacy and the appropriate uses of the resulting information. Governmental authorities could, for social or other purposes, limit or regulate the use of genomic information or genomic testing or prohibit testing for genetic predisposition to certain conditions, particularly for those that have no known cure. Similarly, these concerns may lead patients to refuse to use genomic tests even if permissible.

        Ethical and social concerns may also influence United States and foreign patent offices and courts with regard to patent protection for technology relevant to our business. These and other ethical, legal and social concerns may limit market acceptance of our products and solutions or reduce the potential markets for products and solutions enabled by our genetic rare disease information platform, either of which could have an adverse effect on our business, financial condition, or results of operations.

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We have limited resources to be expended on research programs and biomarker development. Our resource allocation decisions may lead us to focus on research programs and biomarkers which are not commercially viable, and as a result we may be unable to recover the costs incurred under these efforts.

        Because we have limited financial and managerial resources, we focus on research programs and biomarker development that we identify for rare diseases in collaboration with our pharmaceutical partners, or based on our assessment of the market needs. As a result, we may forego or delay pursuit of opportunities with other orphan drug candidates or for other indications that later prove to have greater commercial potential. Our resource allocation decisions may cause us to fail to capitalize on viable commercial drugs or profitable market opportunities. Our spending on current and future research and development programs and biomarker development for specific diseases may not yield any relevant results that are helpful to our existing programs or assist in the creation of any commercially viable drugs. If we do not accurately evaluate the commercial potential or target market for a particular drug candidate, we may relinquish valuable rights to that drug candidate through collaboration, licensing or other royalty arrangements.

If we fail to compete successfully with our competitors, including new entrants in the market, we may be unable to increase or sustain our revenue or achieve and sustain profitability.

        While personalized genomic diagnostics is a relatively new area of science, we face competition from companies that offer tests or have conducted research to profile genes and gene expression in various rare diseases. Our principal competition comes from diagnostic companies that offer diagnostic tests that capture genetic, phenotypic and epidemiological data, as well as laboratories and academic research centers. Many hospitals and academic medical centers may also seek to perform the type of genetic testing and knowledge and interpretation-based solutions we offer at their own facilities or using their own research capabilities.

        Some of our present and potential competitors may have substantially greater financial, marketing, technical or manufacturing resources than we do. Our competitors may also be able to respond more quickly to new technologies or processes and changes in client demands. They may also be able to devote greater resources towards the development, promotion and sale of their products or solutions for pharmaceutical partners than we can. As competition in our market increases, we may also be subject to increased litigation risk, including in connection with patents as well as our marketing practices and other promotional activities. In addition, our current and potential competitors may make strategic acquisitions or establish cooperative relationships among themselves or with third parties that increase their ability to address the needs of our physicians or partners. If we fail to compete successfully against current or future competitors, our business will be harmed.

        Because our genetic testing and knowledge and interpretation-based solutions and products, in particular our CentoMD database, have limited patent protection, new and existing companies worldwide could seek to develop genetic tests or similar products and solutions that compete with ours. These competitors could have technological, financial, and market access advantages that are not currently available to us and they could develop and commercialize competing products and solutions faster than we are able to do so. Increased competition, including price competition, could have a material adverse impact on our net revenues and profitability.

If our pharmaceutical partners experience any of a number of possible unforeseen events in connection with their clinical trials, our ability to commercialize future solutions or improvements to existing solutions could be delayed or prevented.

        Our pharmaceutical partners may experience numerous unforeseen events during, or as a result of, clinical trials that could delay or prevent their ability to continue or conduct further clinical trials or obtain regulatory approval of or commercialize future orphan drugs. Unforeseen events that could

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delay or prevent our pharmaceutical partners' ability to conduct or support clinical trials, obtain regulatory approval of or commercialize future orphan drugs include:

    regulatory authorities or ethical review boards, including IRBs, may not authorize the commencement of a clinical trial or may not accept clinical trial protocols;
    clinical trials may produce negative or inconclusive results, and our pharmaceutical partners may decide, or regulatory authorities may require them to, to abandon development programs;
    the number of patients, or amount of data, required for clinical trials may be larger than we or our pharmaceutical partners anticipate, or patient enrollment in clinical trials may be slower than we or our pharmaceutical partners anticipate or patients may drop out of these clinical trials at a higher rate than we or our pharmaceutical partners anticipate;
    failure to conduct our clinical trials in accordance with applicable regulatory requirements of the FDA and of the regulatory authorities responsible for authorization or oversight of the conduct of clinical trials in other countries;
    inability to develop companion diagnostic tests for a particular rare disease or to add companion diagnostic claims to existing tests, and/or obtain regulatory approval to market any such test on a timely basis or at all;
    clinical trials of our pharmaceutical partners for which we are developing companion diagnostic tests may suggest or demonstrate that our partners' treatments are not as efficacious and/or as safe as other similar treatments or that our companion diagnostic test is not essential to determine which patients would benefit from these treatments; and
    our pharmaceutical partners may decide, or regulatory authorities or institutional review boards may require them, to suspend or terminate clinical research for various reasons, including cost, adequate end market size, available data or noncompliance with regulatory requirements.

        If our pharmaceutical partners choose not to conduct clinical trials for treatments in the rare disease space due to the above factors or otherwise, they may have less need of our products and solutions and may therefore choose not to partner with us. Our ability to continually expand our existing data repository depends on our ability to maintain partnerships with our pharmaceutical clients. Should our partners delay or cancel their ongoing existing trials or choose not to begin new trials for treatments in the rare disease industry, our ability to commercialize future solutions or improvements to existing solutions could be delayed or prevented.

Our employees, principal investigators, consultants, and commercial partners may engage in misconduct or other improper activities, including non-compliance with regulatory standards and requirements and insider trading.

        We are exposed to the risk of fraud or other misconduct by our employees, principal investigators, consultants, and commercial partners, including our distributors in our diagnostics business and pharmaceutical partners in our pharmaceutical business. Misconduct by these parties could include intentional failures to comply with the regulations of applicable regulatory authorities (including the FDA and the European Commission and EMA), comply with healthcare fraud and abuse laws and regulations, report financial information or data accurately, or disclose unauthorized activities to us. In particular, sales, marketing, and business arrangements in the healthcare industry are subject to extensive laws and regulations intended to prevent fraud, misconduct, bribery, kickbacks, self-dealing, and other abusive practices. These laws and regulations may restrict or prohibit a wide range of pricing, discounting, marketing and promotion, sales commission, client incentive programs, and other business arrangements. Such misconduct could also involve the improper use of information obtained in the course of clinical studies, which could result in regulatory sanctions and cause serious harm to our reputation. We currently have a code of conduct applicable to all of our employees and conduct a background check before entering into any new contracts with third party distributors, but it is not always possible to identify and deter employee or third party misconduct, and our code of conduct, due

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diligence and the other precautions we take to detect and prevent this activity may not be effective in controlling unknown or unmanaged risks or losses, or in protecting us from governmental investigations or other actions or lawsuits stemming from a failure to comply with these laws or regulations. If any such actions are instituted against us, and we are not successful in defending ourselves or asserting our rights, those actions could result in the imposition of significant fines or other sanctions, which could have a significant impact on our business. Whether or not we are successful in defending against such actions or investigations, we could incur substantial costs, including legal fees, and divert the attention of management in defending ourselves against any of these actions or investigations.

We may lose the support of key thought leaders and fail to establish our products and solutions as a standard of care for patients with rare diseases, which may limit our revenue growth and ability to achieve future profitability.

        We have established relationships with leading rare disease thought leaders at premier institutions and rare disease networks. If we suffer harm to our reputation, whether due to actions outside of our control or otherwise, our relationships with these persons may suffer which could adversely impact our business, including our key pharmaceutical partnerships and diagnostic client relationships. Moreover, if these key thought leaders determine that our platform (including CentoMD), our existing products or solutions or other new products or solutions that we develop are not useful to our partners' development of treatments for rare diseases, that alternative technologies are more effective, or if they elect to use internally developed products or solutions, we could encounter significant difficulty validating our testing platform, driving adoption, or establishing our genetic knowledge and interpretation-based solutions and tests as a standard of care, which would limit our revenue growth and our ability to achieve profitability.

Security breaches, loss of data, and other disruptions could compromise sensitive information related to our business or prevent us from accessing critical information and expose us to liability, which could adversely affect our business and our reputation.

        In the ordinary course of our business, we collect and store sensitive data, including legally protected health information, personally identifiable information, intellectual property, and proprietary business information owned or controlled by us or physicians, pharmaceutical partners and other clients. We manage and maintain our applications and data utilizing a combination of on-site systems, managed data center systems, and cloud-based data center systems. We also communicate, and facilitate the exchange of, sensitive patient data to and between ourselves and physicians of the patients for whom we conduct diagnostic tests through an online client-facing portal, CentoPortal. These applications and related data encompass a wide variety of business-critical information including legally protected health information, personally identifiable information, research and development information, commercial information, and business and financial information. We face a number of key risks related to the protection of this information, including: unauthorized access risk; inappropriate or unauthorized disclosure risk; inappropriate modification risk; and the risk of our being unable to adequately monitor our controls.

        The secure processing, storage, maintenance, and transmission of this critical information is vital to our operations and business strategy. Our information technology and infrastructure, and that of our third-party disaster recovery back-up providers, may be vulnerable to attacks by hackers or malicious software or breached due to personnel error, unauthorized access, malfeasance, or other disruptions. Any such breach or interruption could compromise the security or integrity of our networks, and the information stored there could be accessed by unauthorized parties, publicly or incorrectly disclosed, corrupted, lost, or stolen. Any such access, disclosure, corruption, other loss, or theft of information could result in governmental investigations, class action legal claims or proceedings, liability under laws that protect the privacy of personal information, such as but not limited to the Health Insurance

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Portability and Accountability Act ("HIPAA"), the General Data Protection Regulation (EU 2016/679) ("GDPR")) and regulatory penalties. Although we have implemented security measures and a formal, dedicated enterprise security program to prevent unauthorized access to patient data, applications such as our online client-facing portals are currently accessible through public web portals and may, in the future, be accessible through dedicated mobile applications, and there is no guarantee we can absolutely protect our online portals or our mobile applications from breach. Unauthorized access to, or loss or dissemination of, the data embedded in or transferred via these applications could also disrupt our operations, including our ability to conduct our analyses, provide test results, bill our pharmaceutical or other partners, provide client assistance solutions, conduct research and development activities, collect, process, and prepare company financial information, provide information about our products and solutions and other pharmaceutical partner and physician education and outreach efforts through our website, manage the administrative aspects of our business, and damage our reputation, any of which could adversely affect our business.

        We are a "covered entity" as defined under HIPAA, and the United States Office of Civil Rights may impose penalties on a covered entity for a failure to comply with a requirement of HIPAA. Penalties will vary significantly depending on factors such as the date of the violation, whether the covered entity knew or should have known of the failure to comply, or whether the covered entity's failure to comply was due to willful neglect. A person who knowingly obtains or discloses individually identifiable health information in violation of HIPAA may face a criminal penalty of up to $50,000 and imprisonment up to one year. The criminal penalties increase to $100,000 and up to five years' imprisonment if the wrongful conduct involves false pretenses, and to $250,000 and up to 10 years' imprisonment if the wrongful conduct involves the intent to sell, transfer, or use identifiable health information for commercial advantage, personal gain, or malicious harm. The United States Department of Justice (the "DOJ") is responsible for criminal prosecutions under HIPAA. Furthermore, in the event of a breach as defined by HIPAA, the covered entity has specific reporting requirements under HIPAA regulations. In the event of a significant breach, the reporting requirements could include notification to the general public.

        In addition, the interpretation and application of consumer, health-related, and data protection laws in the United States, Europe, and elsewhere are often uncertain, contradictory, and in flux. It is possible that these laws may be interpreted and applied in a manner that is inconsistent with our practices. If so, this could result in government-imposed fines or orders requiring that we change our practices, which could adversely affect our business. In addition, these privacy regulations may differ from country to country, and may vary based on whether testing is performed in the United States or in the local country. Our operations or business practices may not comply with these regulations in each country, and complying with these various laws could cause us to incur substantial costs or require us to change our business practices and compliance procedures in a manner adverse to our business.

We may be adversely affected by volatile, negative or uncertain economic, political or social conditions and the effects of these conditions on our pharmaceutical partners' and diagnostics clients' businesses and levels of business activity.

        Global economic conditions affect our pharmaceutical partners' and diagnostic clients' businesses and the markets they serve, and volatile, negative or uncertain economic conditions may have an adverse effect on our revenue growth and profitability. Volatile, negative or uncertain economic conditions in our significant markets, in particular in our North America, Middle East or European regions, where we generated 44.1%, 30.9% and 16.8% of our total revenues for the six-months ended June 30, 2019, respectively, could undermine business confidence, both in those markets and other markets, and cause our pharmaceutical partners or clients to reduce or defer their spending on new technologies or initiatives or terminate existing contracts, which would negatively affect our business. Growth in the markets we serve could be at a slow rate, or could stagnate, for an extended period of

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time. Differing economic conditions and patterns of economic growth and contraction in the geographical regions in which we operate and the industries we serve may affect demand for our products and solutions. Weakening in these markets as a result of high government deficits, credit downgrades or otherwise could have a material adverse effect on our results of operations. Ongoing economic volatility and uncertainty affects our business in a number of other ways, including making it more difficult to accurately forecast partner demand beyond the short term and effectively build our revenue and resource plans, particularly given the iterative nature of the negotiation of new contracts with our pharmaceutical partners. This could result, for example, in us not having the level of appropriate personnel where they are needed, and could have a significant negative impact on our results of operations.

        Moreover, acts of terrorist violence, political unrest, armed regional and international hostilities and international responses to these hostilities, natural disasters, global health risks or pandemics or the threat of or perceived potential for these events could have a negative impact on us. These events could adversely affect our pharmaceutical partners' levels of business activity and precipitate sudden significant changes in regional and global economic conditions and cycles. These events also pose significant risks to our people and to physical facilities and operations around the world, whether the facilities are ours or those of our distributors, pharmaceutical partners or physicians that utilize our diagnostic testing services. By disrupting communications and travel and increasing the difficulty of obtaining and retaining highly skilled and qualified personnel, these events could make it difficult or impossible for us to deliver products and solutions to our clients and pharmaceutical partners. Extended disruptions of electricity, other public utilities or network services at our facilities, as well as system failures at, or security breaches in, our facilities or systems, could also adversely affect our ability to serve our clients and pharmaceutical partners. We might be unable to protect our people, facilities and systems against all such occurrences. We generally do not have insurance for losses and interruptions caused by terrorist attacks, conflicts and wars. If these disruptions prevent us from effectively serving our clients and pharmaceutical partners, our results of operations could be adversely affected.

We are subject to significant foreign currency exchange controls in certain countries in which we operate.

        We are in some countries, and could become elsewhere, subject to strict restrictions on the movement of cash and the exchange of foreign currencies, which limits our ability to use this cash across our global operations. We also face risks related to the collection of payments due to us from our major pharmaceutical partners or clients that are located in certain geographical regions with foreign currency or international monetary controls. This risk could increase as we continue our geographic expansion. In particular, for the year ended December 31, 2018 and the six-months ended June 30, 2019, we derived 30.6% and 30.9%, respectively, of our total revenues from our Middle East region. Certain Middle East economies have adopted or been subject to international restrictions on the ability to transfer funds out of the country and convert local currencies into euros. This may increase our costs and limit our ability to convert local currency into euros and transfer funds out of certain countries. Any shortages or restrictions may impede our ability to convert these currencies into euros and to transfer funds, including for the payment of dividends or interest or principal on our outstanding debt.

We may acquire assets or other businesses that could negatively affect our operating results, dilute our shareholders' ownership or increase our debt.

        In addition to organic growth, we may pursue growth through the acquisition of assets or other businesses that may enable us to enhance our technologies and capabilities, expand our geographic market, add experienced management personnel or add new or improve our existing products and solutions. We also may pursue strategic alliances and joint ventures that leverage our technical platform

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and industry knowledge to expand our products and solutions. Negotiating these transactions and the formation of strategic alliances or joint ventures can be time-consuming and expensive, and may be subject to third-party approvals as well as approvals from governmental authorities, which are beyond our control. In addition, some third parties may choose not to enter into partnership or collaboration agreements with us because of our existing relationships with other pharmaceutical partners. Consequently, we may not be able to complete any contemplated transactions on favorable terms or at all, and we can make no assurance that such transactions, once undertaken and announced, will close.

        An acquisition or investment may result in unforeseen operating difficulties and expenditures, including in integrating businesses, products and solutions, personnel, operations, and financial, accounting and other controls and systems, and retaining key employees, with the assumption of unknown liabilities or known liabilities that prove greater than anticipated, and in retaining the clients of any acquired business. Any such difficulties could disrupt our ongoing operations or require management resources that we would otherwise focus on developing our existing business. Future acquisitions could result in the use of our available cash and marketable securities, potentially dilutive issuances of equity securities, the incurrence of debt, contingent liabilities, or impairment expenses related to goodwill, and impairment or amortization expenses related to other intangible assets, which could harm our financial condition. As a result, we may not realize the anticipated benefits of any acquisition, technology license, strategic alliance, or joint venture. These challenges related to acquisitions or investments could adversely affect our business, results of operations, and financial condition.

Certain Factors Relating to Our Industry

Regulatory Risks

Our global operations expose us to numerous and sometimes conflicting legal and regulatory requirements, and violation of these requirements could harm our business.

        We are subject to numerous, and sometimes conflicting, legal regimes in the countries in which we operate, including on matters as diverse as health and safety standards, marketing and promotional activities, anticorruption, import/export controls, content requirements, trade restrictions, tariffs, taxation, sanctions, immigration, internal and disclosure control obligations, securities regulation, anti-competition, data privacy and labor relations. This includes in emerging markets where legal systems may be less developed or familiar to us. We strive to abide by and maintain compliance with these laws and regulations. Compliance with diverse legal requirements is costly, time-consuming and requires significant resources. Violations of one or more of these regulations in the conduct of our business could result in significant fines, criminal sanctions against us or our supervisory board or officers, prohibitions on doing business and damage to our reputation. Violations of these regulations in connection with the performance of our obligations to our clients or pharmaceutical partners also could result in liability for significant monetary damages, fines and/or criminal prosecution, unfavorable publicity and other reputational damage, restrictions on our ability to process information and allegations by our clients or pharmaceutical partners that we have not performed our contractual obligations. Due to the varying degrees of development of the legal systems of the countries in which we operate, local laws might be insufficient to protect our rights.

        Our international operations could be affected by changes in laws, trade regulations, labor and employment regulations, and procedures and actions affecting approval, products and solutions, pricing, reimbursement and marketing of our products and solutions, as well as by inter-governmental disputes. Any of these changes could adversely affect our business. The imposition of new laws or regulations, including potential trade barriers, may increase our operating costs, impose restrictions on our operations or require us to spend additional funds to gain compliance with the new rules, if possible, which could have an adverse impact on our financial condition.

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Current and future legislation, in particular legislation related to orphan drugs, may impact overall investment and activity in the rare disease space or our ability to obtain regulatory approvals.

        In the United States, the European Union, its member states and some other foreign jurisdictions, there have been a number of legislative and regulatory changes and proposed changes regarding the healthcare system. These changes could affect our ability to sell profitably any products for which we require approvals. Among policy makers and payors in the United States and elsewhere, there is significant interest in promoting changes in healthcare systems with the stated goals of containing healthcare costs, improving quality and/or expanding access to healthcare.

        Specifically, regulatory authorities in some jurisdictions, including the United States and the European Union, may designate drugs for relatively small patient populations as orphan drugs. Under the Orphan Drug Act, the FDA may designate a drug as an orphan drug if it is a drug intended to treat a rare disease or condition, which is generally defined as a patient population of fewer than 200,000 individuals annually in the United States, or a patient population of greater than 200,000 in the United States where there is no reasonable expectation that the cost of developing the drug will be recovered from sales in the United States. In the United States, orphan drug designation entitles a party to financial incentives such as opportunities for grant funding towards clinical trial costs, tax advantages and user-fee waivers.

        Similarly, in the European Union, the European Commission grants orphan drug designation after receiving the opinion of the EMA's Committee for Orphan Medicinal Products on an orphan drug designation application. Orphan drug designation is intended to promote the development of drugs that are intended for the diagnosis, prevention or treatment of life-threatening or chronically debilitating conditions affecting not more than five in 10,000 persons in the European Union and for which no satisfactory method of diagnosis, prevention, or treatment has been authorized (or the product would be a significant benefit to those affected). In addition, designation is granted for drugs intended for the diagnosis, prevention, or treatment of a life-threatening, seriously debilitating or serious and chronic condition and when, without incentives, it is unlikely that sales of the drug in the European Union would be sufficient to justify the necessary investment in developing the drug. In the European Union, orphan drug designation entitles a party to financial incentives, such as reduction of fees or fee waivers, and a ten-year market exclusivity once the drug is on the market.

        These legislative initiatives have led to an increase in investment and activity in the rare disease drug development space. If these and other legislative initiatives were to change to become less favorable to orphan drug developers and researchers, it could harm our business, results of operations and financial condition.

We may fail to comply with the complex federal, state, local and foreign laws and regulations that apply to our business and become subject to severe financial and other consequences.

        Our laboratory in the United States is subject to the Clinical Laboratory Improvement Amendments of 1998 ("CLIA"), a United States federal law that regulates all clinical diagnostic laboratories that perform testing on specimens derived from humans for the purpose of providing information for the diagnosis, prevention, or treatment of disease. CLIA regulations mandate specific standards in the areas of personnel qualifications, administration, participation in proficiency testing, patient test management, quality control, quality assurance, and inspections. Our laboratory facilities located in Rostock, Germany and Cambridge, Massachusetts, United States each have a current certificate of accreditation under CLIA to conduct all genetic and biochemical analyses offered through our accreditation by the College of American Pathologists ("CAP"). To renew the CLIA certificates, we are subject to survey and inspection every two years. Moreover, CLIA inspectors may make unannounced inspections of our clinical laboratories at any time.

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        Any sanction imposed under CLIA, its implementing regulations, or state or foreign laws or regulations governing licensure, or our failure to renew a CLIA certificate, a state or foreign license, or accreditation, could have a material adverse effect on our business. Most CLIA deficiencies are not classified as "condition-level" deficiencies, and there are no adverse effects upon the laboratory operations as long as the deficiencies are corrected. Remediation of these deficiencies are routine matters, with corrections occurring within several hours or weeks. More serious CLIA deficiencies could rise to the level of "condition-level" deficiencies, and CMS has the authority to impose a wide range of sanctions, including revocation of the CLIA certification along with a bar on the ownership or operation of a CLIA certified laboratory by any owners or operators of the deficient laboratory. There is an administrative hearing procedure that can be pursued by the laboratory in the event of imposition of such sanctions, during which the sanctions are stayed, but the process can take a number of years to complete. If we were to lose our CLIA certification or CAP accreditation, we would not be able to operate our clinical laboratories and perform our genetic tests, which would result in material harm to our business and results of operations.

        We are also required to maintain a license for our Cambridge laboratory facility to perform testing in Massachusetts. Massachusetts laws establish standards for day-to-day operation of our clinical laboratory, including the training and skills required of personnel and quality control over and above that required by CLIA. We are also licensed to perform testing in our Cambridge laboratory facility by the states of California, Pennsylvania and Maryland. We are in the process of obtaining a New York State license to perform testing and deliver the related test report for specimens originating from New York.

        For samples tested in the U.S., we are also subject to HIPAA, under which the Department of Health and Human Services established comprehensive federal standards with respect to the privacy and security of protected health information and requirements for the use of certain standardized electronic transactions; certain of our services, including our online client-facing portals for reporting and research, are subject to these standards and requirements. Amendments to HIPAA under the Health Information Technology for Economic and Clinical Health Act (the "HITECH Act"), and related regulatory amendments, which strengthen and expand HIPAA privacy and security standards, increase penalties for violators, extend enforcement authority to state attorneys general, and impose requirements for breach notification.

        We furnish to pharmaceutical partners genomic information that has been de-identified in accordance with HIPAA or pseudonymized in accordance with GDPR and relevant international health information privacy regulations. The laws of certain states and countries may require specific consent from the individual either to retain or utilize certain genetic information for research or other purposes even if such information has been de-identified, or may require that we obtain a waiver of such consent from an ethical or privacy review board. Even where we furnish to pharmaceutical partners and academic researchers genomic information that has been de-identified or pseudonymized in accordance with applicable laws and regulations, pharmaceutical partners or academic researchers may use technology or other methods to link that de-identified or pseundonymized genomic information to the patient from whom it was obtained in contravention of one or more applicable laws and regulations. Similarly, as we expand our decision support applications and offerings, we may encounter greater regulatory risk, such as compliance with HIPAA, GDPR and other regulations governing the use of protected health information and the promotion of FDA approved drugs. A finding that we have failed to comply with any such laws and any remedial activities required to ensure compliance with such laws could cause us to incur substantial costs, to be subject to unfavorable publicity or public opinion, to change our business practices, or to limit the retention or use of genetic information in a manner that, individually or collectively, could be adverse to our business.

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        In the European Union, various regulations apply to genetic testing and the use of genomic information. In Germany, the Genetic Diagnosis Act (Gendiagnostikgesetz) (the "GenDG") and guidelines and written opinions on novel genetic screenings developed by the Commission on Genetic Testing, an interdisciplinary independent commission established in 2009 in accordance with the GenDG, apply to such testing. The GenDG prohibits us from communicating results of genetic tests directly to a patient located within Germany. Instead, the results may only be provided to a physician who is a qualified genetic counsellor under applicable rules.

        In addition to CLIA, GDPR, HIPAA and the GenDG, our operations are subject to other extensive federal, state, local, and foreign laws and regulations, all of which are subject to change. Our failure to comply with any such laws and regulations could lead to civil or criminal penalties, exclusion from participation in government healthcare programs, or prohibitions or restrictions on our ability to conduct commercial activities. We believe that we are in material compliance with all statutory and regulatory requirements, but there is a risk that one or more government agencies could take a contrary position. These laws and regulations are complex and are subject to interpretation by the courts and by government agencies. If one or more such agencies allege that we may be in violation of any of these requirements, regardless of the outcome, it could damage our reputation and adversely affect important business relationships with third parties.

We may fail to comply with evolving European and other privacy laws.

        On May 25, 2018, Regulation (EU) 2016/679 of the European Parliament and of the Council of April 27, 2016 on the protection of natural persons with regard to the processing of personal data and on the free movement of such data (the "GDPR") went into effect. The GDPR imposes a broad range of strict requirements on companies subject to the GDPR, such as us, including requirements relating to having legal bases for processing personal information relating to identifiable individuals and transferring such information outside the European Economic Area (the "EEA"), including to the United States, providing details to those individuals regarding the processing of their personal information, keeping personal information secure, having data processing agreements with third parties who process personal information, responding to individuals' requests to exercise their rights in respect of their personal information, reporting security breaches involving personal data to the competent national data protection authority and affected individuals, appointing data protection officers, conducting data protection impact assessments, and record-keeping. The GDPR increases substantially the penalties to which we could be subject in the event of any non-compliance, including fines of up to 10,000,000 Euros or up to 2% of our total worldwide annual turnover for certain comparatively minor offenses, or up to 20,000,000 Euros or up to 4% of our total worldwide annual turnover for more serious offenses. Given the new law, we face uncertainty as to the exact interpretation of the new requirements and we may be unsuccessful in implementing all measures required by data protection authorities or courts in interpretation of the new law.

        In particular, national laws of member states of the European Union are in the process of being adapted to the requirements under the GDPR, thereby implementing national laws which may partially deviate from the GDPR and impose different obligations from country to country, so that we do not expect to operate in a uniform legal landscape in the European Union. Also, in the field of handling genetic and health data, the GDPR specifically allows national laws to impose additional and more specific requirements or restrictions, and European laws have historically differed quite substantially in this field, leading to additional uncertainty.

        Further complicating compliance efforts, on June 23, 2016, the electorate in the United Kingdom voted in favor of the United Kingdom leaving the European Union, commonly referred to as "Brexit." Thereafter, on March 29, 2017, the country formally notified the European Union of its intention to withdraw pursuant to Article 50 of the Lisbon Treaty. The United Kingdom's exit from the European

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Union is scheduled to occur on October 31, 2019. The withdrawal of the United Kingdom from the European Union will take effect either on the scheduled date of the withdrawal or an extended departure date as agreed between the United Kingdom and the European Union. Since the regulatory framework for pharmaceutical products in the United Kingdom covering quality, safety and efficacy of pharmaceutical products, clinical trials, marketing authorization, commercial sales and distribution of pharmaceutical products is derived from European Union directives and regulations, Brexit could materially impact the future regulatory regime which applies to products and the approval of product candidates in the United Kingdom. It remains to be seen how, if at all, Brexit will impact regulatory requirements for product candidates and products in the United Kingdom.

        We must also ensure that we maintain adequate safeguards to enable the transfer of personal data outside of the EEA, in particular to the United States in compliance with European data protection laws. We expect that we will continue to face uncertainty as to whether our efforts to comply with our obligations under European privacy laws will be sufficient. If we are investigated by a European data protection authority, we may face fines and other penalties. Any such investigation or charges by European data protection authorities could have a negative effect on our existing business and on our ability to attract and retain new clients or pharmaceutical partners. We may also experience hesitancy, reluctance, or refusal by European or multinational clients or pharmaceutical partners to continue to use our products and solutions due to the potential risk exposure as a result of the current (and, in particular, future) data protection obligations imposed on them by certain data protection authorities in interpretation of current law, including the GDPR. Such clients or pharmaceutical partners may also view any alternative approaches to compliance as being too costly, too burdensome, too legally uncertain, or otherwise objectionable and therefore decide not to do business with us. Any of the foregoing could materially harm our business, prospects, financial condition and results of operations.

We could be adversely affected by violations of worldwide anti-bribery laws, including the U.S. Foreign Corrupt Practices Act.

        We are subject to a variety of anti-bribery and anti-corruption laws in the jurisdictions in which we operate. In particular, we are subject to Germany's Anti-Bribery Act of 2015 (Gesetz zur Bekämpfung der Korruption im Gesundheitswesen), which implements EU anti-corruption laws and the European legislation and the Criminal Law Convention on Corruption of the Council of Europe into German law, and the FCPA, which prohibits companies and their intermediaries from making payments in violation of law to non-United States government officials for the purpose of obtaining or retaining business or securing any other improper advantage. We are also subject to similar anti-bribery laws in the jurisdictions in which we operate, including the United Kingdom's Bribery Act of 2010, which prohibits commercial bribery and makes it a crime for companies to fail to prevent bribery.

        We use third-party collaborators, strategic partners, law firms and other representatives for patent registration and other purposes in a variety of countries, including those that are known to present a high corruption risk. We also use third-party distributors worldwide as part of our diagnostics business. Our reliance on third parties to sell our products and solutions internationally demands a high degree of vigilance because we can be held liable for the corrupt or other illegal activities of these third-party collaborators, or their or our employees, representatives, contractors, partners, and agents, even if we do not explicitly authorize such activities. In addition, although we have implemented policies and procedures to ensure compliance with anti-corruption and related laws and maintain a code of conduct, there can be no assurance that all of our employees, representatives, contractors, partners, or agents will comply with these laws at all times. Other United States companies in the medical device and pharmaceutical fields have faced criminal penalties under the FCPA for allowing their agents to deviate from appropriate practices in doing business with these individuals.

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        These laws are complex and far-reaching in nature, and, as a result, we cannot assure you that we would not be required in the future to alter one or more of our practices to be in compliance with these laws, any changes in these laws, or the interpretation thereof. Non-compliance with these and other relevant laws could subject us to whistleblower complaints, investigations, sanctions, settlements, prosecution, other enforcement actions, disgorgement of profits, significant fines, damages, other civil and criminal penalties or injunctions, suspension and debarment from contracting with certain governments or other persons, the loss of export privileges, reputational harm, adverse media coverage, and other collateral consequences. If any subpoenas or investigations are launched, or governmental or other sanctions are imposed, or if we do not prevail in any possible civil or criminal litigation, our business, results of operations, and financial condition could be materially harmed. In addition, responding to any action will likely result in a materially significant diversion of management's attention and resources and significant defense costs and other professional fees. Enforcement actions and sanctions could further harm our business, results of operations, and financial condition.

Transactions involving Iran or other countries or parties that are targets of U.S. or other economic sanctions could expose us to certain risks and may lead some potential customers and investors to avoid doing business with us or investing in our securities.

        U.S. law generally prohibits U.S. persons, and in some cases non-U.S. entities owned or controlled by U.S. persons, from doing business with countries, territories, individuals and entities that are the target of sanctions administered by the U.S. Department of the Treasury's Office of Foreign Assets Control, including Iran. Other countries also maintain certain economic sanctions targeting certain counties, territories and parties. The United States has also implemented certain sanctions targeting non-U.S. persons for activities conducted outside the United States "secondary sanctions" that involve specific sanctions targets or certain activities, including, among other things, certain transactions related to Iran. Further, certain countries maintain and enforce export controls regulating trade in items that originate in, incorporate content from, or are produced on the basis of technology developed in such country "export controls".

        Centogene AG, which is not a U.S. person and is not owned or controlled by U.S. persons, has contracts with several laboratories and one distributor in Iran through which it provides diagnostic tests to patients in Iran, primarily non-invasive prenatal testing ("NIPT") for pregnant women. To our knowledge, neither we nor our distributor have entered into any arrangements with or sold any products to persons included on the Specially Designated Nationals and Blocked Persons List maintained by the U.S. Department of the Treasury's Office of Foreign Asset Control. During the years ended December 31, 2016, 2017 and 2018, revenues from Iran amounted to €139 thousand, €300 thousand and €2,950 thousand, respectively, and for the six-months ended June 30, 2019, €1,041 thousand. In the year ended December 31, 2018 and the six-months ended June 30, 2019, revenues were higher than in prior periods because of a new contract with the distributor under which the volume of NIPT tests performed increased. Our assets receivable from or attributable to our contacts in Iran as of December 31, 2016, 2017 and 2018 amounted to €67 thousand, €77 thousand and €1,351 thousand, respectively, and as of June 30, 2019 amounted to €1,848 thousand. We had no liabilities due from or attributable to our contacts in Iran for these periods. Centogene believes that its business with Iranian parties is conducted in compliance with all applicable sanctions and export controls and that such activities, which involve providing genetic testing services to patients, are not sanctionable under U.S. secondary sanctions targeting Iran. However, U.S. sanctions are subject to change and if we were then determined to have engaged in activities targeted by certain U.S. sanctions, we could be exposed to the possible imposition of sanctions on us. We may also face reputational damage due to our sales to Iran. The above circumstances could have an adverse effect on our business or results of operations.

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We may fail to adhere to regulations of promotional claims and activities regarding our products and solutions.

        Once a patient has been identified and diagnosed through our diagnostics testing, we provide each patient's physician with a diagnostic report. If a positive diagnosis is confirmed, we provide the physician with information on relevant treatment options, although the physician is responsible for ultimately making clinically relevant decisions for the treatment of his or her patient.

        In the United States, the FDA and other regulatory agencies strictly regulate the promotional claims that may be made about prescription drugs and devices. In particular, a device may not be promoted for uses or indications beyond those contained in the device's approved labeling, or "off-label" uses. Similar laws and regulations exist in other jurisdictions where we promote our products. If the FDA determines that we have promoted our products for off-label use, it could request that we modify those promotional materials or take regulatory or enforcement actions, including the issuance of an untitled letter, warning letter, injunction, seizure, civil fine and criminal penalties. It is also possible that other federal, state or foreign enforcement authorities may take action if they consider our promotional or training materials to constitute promotion of an unapproved use. If not successfully defended, enforcement actions related to off-label promotion could result in significant fines or penalties. The U.S. government has levied large civil and criminal fines against companies for alleged improper promotion and has entered into corporate integrity agreements and deferred prosecution agreements with companies that engaged in off-label promotion. The FDA has also requested that such companies enter into consent decrees and has taken other enforcement action. If the DOJ or FDA determines that we have engaged in off-label promotion in our test reports, we may be subject to civil or criminal fines. Although our policy is to refrain from statements that could be considered off-label promotion of third parties, the regulatory standards regarding off-label promotion are ambiguous, and the FDA or another regulatory agency could conclude that we have engaged in off-label promotion.

        In addition to promoting our devices in a manner consistent with their approved indications, we must have adequate substantiation for the claims we make for our products or solutions. If any of our claims are determined to be false, misleading or deceptive, our products or solutions could be considered to be misbranded under the Federal Food, Drug, and Cosmetic Act (the "FDC Act") or to violate the Federal Trade Commission Act. We could also face lawsuits from our competitors under the Lanham Act, alleging that our marketing materials are false or misleading. Such lawsuits, whether with or without merit, are typically time-consuming, costly to defend, and could harm our reputation.

        Federal and state legislation regulate interactions between medical device manufacturers and healthcare professionals. We are subject to federal and state laws targeting fraud and abuse in healthcare, including anti-kickback laws, false claims laws, and other laws constraining or otherwise related to financial arrangements manufacturers may enter into with healthcare professionals. For example, the Physician Payments Sunshine Act requires device manufacturers to report and disclose payments or other transfers of value made to physicians and teaching hospitals. Violations of these laws can result in criminal or civil sanctions, including fines, imprisonment, and exclusion from government reimbursement programs, all of which could materially harm our business.

        In addition, incentives exist under applicable laws that encourage competitors, employees, and physicians to report violations of law governing promotional activities for pharmaceutical products and solutions. These incentives could lead to so-called whistleblower lawsuits as part of which such persons seek to collect a portion of monies allegedly overbilled to government agencies due to, for example, promotion of pharmaceutical products and solutions beyond labeled claims. These incentives could also lead to lawsuits that claim we have mischaracterized a competitor's service in the marketplace and, as a result, we could be sued for alleged damages to our competitors. Such lawsuits, whether with or

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without merit, are typically time-consuming and costly to defend. Such lawsuits may also result in related shareholder lawsuits, which may also be costly to defend.

Changes in the way that the FDA and the European Union regulate laboratory developed tests, manufactured, validated, and performed by laboratories like ours could result in additional expense in offering our current and any future products and solutions or even possibly delay or suspend development, manufacture, or commercialization of such products and solutions.

        The FDA does not currently regulate most laboratory developed tests ("LDTs"). We believe that the tests we currently offer meet the definition of LDTs, as they have been designed, developed and validated for use in a single CLIA-certified laboratory. If our tests are qualified as LDTs, they are currently not subject to FDA regulation as medical devices. Since the early 1990s, the FDA has taken the position that, although LDTs are medical devices, it would exercise enforcement discretion by not requiring compliance with the FDC Act, or its regulations for LDTs. That remains the guidance of the FDA today. However, the FDA has taken certain actions in the past that, if renewed by the FDA, could result in a new regulatory approach for LDTs. In October 2014, the FDA published two draft guidance documents that, if finalized, would implement a regulatory approach for most LDTs. The draft guidance documents proposed to impose a risk-based, phased-in approach for LDTs similar to the existing framework for in vitro diagnostic devices. In January 2017, the FDA released a discussion paper synthesizing public comments on the 2014 draft guidance documents and outlining an updated possible approach to regulation of LDTs. Although the discussion paper has no legal status and does not represent a final version of the LDT draft guidance documents, it proposes a risk-based framework that would require most LDTs to comply with most of the FDA's regulatory requirements for medical devices. In March 2017, a discussion draft of the Diagnostic Accuracy and Innovation Act ("DAIA") was circulated, which, if enacted, would implement a regulatory scheme for all diagnostic tests, including both in vitro diagnostic devices and LDTs. Under DAIA, CMS would have jurisdiction over laboratory operations under an amended CLIA, and the FDA would regulate the design, development and validation of diagnostic tests under an amended FDC Act. We cannot predict whether this bill or any other any other legislative proposal will be enacted into law or the impact such new legal requirements would have on our business. We also cannot predict whether the FDA will take action to regulate LDTs or what approach the FDA will seek to take.

        In addition, in November 2013, the FDA finalized guidance regarding the sale and use of products labeled for research or investigational use only. Among other things, the guidance states that the FDA continues to be concerned about distribution of research- or investigational-use only products intended for clinical diagnostic use. The guidance states that the FDA will assess whether a manufacturer of such research- or investigational-use only products intends that its products be used for clinical diagnostic purposes by examining the totality of circumstances, including advertising, instructions for clinical interpretation, presentations that describe clinical use, and specialized technical support such as assistance performing clinical validation, surrounding the distribution of the product in question. The FDA has advised that if evidence demonstrates that a product is inappropriately labeled for research-or investigational-use only, the device could be deemed misbranded and adulterated within the meaning of the FDC Act. If the FDA were to undertake enforcement actions, some of our suppliers may cease selling research-use only ("RUO") products to us, and any failure to obtain an acceptable substitute could significantly and adversely affect our business, financial condition and results of operations.

        In the European Union LDTs are similarly exempt from the regulations that govern medical devices and in-vitro diagnostics ("IVDs") under certain conditions. The European Union and German legislation on in-vitro diagnostic medical devices ("IVD-MDD") applies. According to the recitals of the Council Directive 98/79/EC on IVD-MDD, reagents which are produced within "health-institution laboratories" for use in that environment and which are not subject to commercial transactions are not covered by the Directive. However, the legal framework for applying the exemption clauses for LDTs is

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not entirely clear as the IVD-MDD lacks an explicit definition and there is no related case law. On May 26, 2022, when the new Regulation (EU) 2017/746 of the European Parliament and of the Council of 5 April 2017 on in-vitro diagnostic medical devices (IVD-MDR) becomes applicable, diagnostic tests manufactured "on an industrial scale" will thereafter qualify as IVDs and will need a conformity assessment. If we were not able to qualify for an exemption, we would be subject to regulation in the European Union. We also cannot predict whether the EU will amend or implement new laws which may impact our current operations.

For tests that are subject to FDA or EU regulation, we may not be able to obtain timely approvals for our tests or for modifications to our tests, which could delay or prevent us from commercializing our tests and harm our business.

        The diagnostic tests we currently offer might meet the definition of LDTs, as they have been designed, developed and validated for use in a single CLIA-certified laboratory. If our tests are LDTs, they are currently not subject to FDA or EU regulation as an in-vitro-diagnostic. In May 2022 when the new IVD Regulation 2017/746/EU comes into force in the European Union, a qualification of our diagnostic tests as IVD-MDs becomes more likely as the manufacture of diagnostic tests "on an industrial scale" will not qualify as LDTs. If the FDA or EU takes action to finalize and implement a regulatory system for LDTs, or if legislation is enacted that subjects LDTs to FDA regulation, we would need to comply with the FDA regulatory requirements for our LDTs. If the FDA takes action to regulate LDTs as devices, we believe that our LDTs would likely be regulated as Class II devices.

        In the EU, genetic tests on humans and prenatal tests for genetically caused disorders are regulated as Class C devices under the IVD Regulation. If our LDTs are subject to the IVD Regulation, our tests that qualify as Class C devices will be subject to conformity assessments performed by a notified body.

        If services that are currently marketed as LDTs become subject to FDA requirements for in-vitro-diagnostics or are qualified as being subject to the European Union regulations on in vitro diagnostic medical devices, including requirements for premarket clearance or approval, we may not be able to obtain such clearance or approvals on a timely basis, or at all. Our business could be negatively impacted if we are required to stop selling genetic rare disease knowledge and interpretation-based products and solutions pending their clearance or approval, or the launch of any new products and solutions that we develop could be delayed. Likewise, for tests that are regulated as medical devices, we may not be able to obtain clearance or approval of new devices or modifications to marketed devices on a timely basis, or at all, which could delay or prevent us from commercializing our tests and harm our business.

        Class II medical devices must obtain FDA clearance of a premarket notification, or 510(k), prior to marketing, unless the FDA has exempted the device from this requirement. Under the 510(k) process, we must demonstrate that our test is substantially equivalent in technological characteristics and intended use to a legally marketed predicate device. The FDA's review and clearance of a 510(k) usually takes from four to twelve months, but it can take longer. Any modifications to an FDA-cleared device that could significantly affect its safety or effectiveness or that would constitute a major change in its intended use would require a new 510(k) clearance or, if the modified device is not substantially equivalent, possibly a de novo classification request or a premarket approval application ("PMA").

        If we are unable to identify an appropriate predicate that is substantially equivalent to our device, we would be required to submit a PMA application or a de novo reclassification request, because devices that have not been classified are automatically categorized as Class III. Under the de novo process, we may request that the FDA classify a new low or moderate risk device that lacks an appropriate predicate as a Class I or Class II device. The de novo process typically requires the

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development of clinical data and usually takes between six to twelve months from the time of submission of the de novo application, but it can take longer.

For tests that are subject to FDA or EU regulation, if we do not comply with FDA or EMA regulatory requirements, we may be subject to enforcement action, with severe consequences for our business.

        After approval, devices subject to FDA or EMA regulation are required to comply with post-market requirements. Among the requirements, we and our suppliers must comply with the FDA's Quality System Regulations ("QSRs"), which set forth requirements for the design and manufacture of devices, including the methods and documentation for the design, control testing, quality assurance, labeling, packaging, storage, and shipping of our devices. Our limited experience in complying with these requirements may lead to operational challenges as we increase the scale of our QSR-compliant operations in the United States and develop and refine our policies and procedures for evaluating and mitigating issues we encounter with our processes. Further, if there are any modifications made to the manufacturing of our PMA-approved marketed solutions, a PMA supplement may be required to be submitted to, and approved by, the FDA before the modified device may be marketed.

        Other post-market requirements include the reporting of adverse events and malfunctions of which we become aware within the prescribed time frame to the FDA, post-approval studies, establishment registration and device listing, and restrictions on advertising and promotion. We may fail to meet these requirements, which could subject our business to further regulatory risks and costs.

        The FDA enforces the post-market requirements of the FDC Act through announced and unannounced inspections. Failure to comply with applicable regulatory requirements could require us to expend time and resources to respond to the FDA's observations and to implement corrective and preventive actions, as appropriate. If we cannot resolve such issues to the satisfaction of the FDA, we may be subject to enforcement actions, including untitled or warning letters, fines, injunctions, or civil or criminal penalties. In addition, we could be subject to a recall or seizure of current or future solutions, operating restrictions, a partial suspension, or a total shutdown of service. Any such enforcement action would have a material adverse effect on our business, financial condition, and results of operations.

In the future, we may fail to achieve coverage or adequate reimbursement for our products and solutions by commercial third-party payors or government payors.

        As we expand our operations globally, and in particular to the United States, sales of our existing and any future products and solutions we develop, in particular our diagnostic testing services, in the future may depend upon the availability of adequate reimbursement from third-party payors. These third-party payors include government healthcare programs and/or statutory health insurance schemes in various markets, such as Medicare and Medicaid in the United States and statutory health funds in Germany (the "GKV"), managed care providers, accountable care organizations, private health insurers, and other organizations. We believe that obtaining a positive Medicare Local Coverage Determination, or National Coverage Determination and a favorable Medicare reimbursement rate, and obtaining the agreement of established commercial third-party payors to provide coverage and adequate payment, for each of our existing diagnostic testing services, and any future products and solutions we develop, will be an important element in achieving material commercial success in the United States. Physicians may not order our products and solutions unless commercial third-party payors and government payors authorize coverage and pay for all, or a substantial portion, of the rates established for our products and solutions.

        Commercial third-party payors and government payors internationally increasingly attempt to contain healthcare costs by lowering reimbursement rates, limiting coverage of diagnostic test services,

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and creating conditions of reimbursement, such as requiring participation in clinical evidence development involving research studies and the collection of physician decision impact and patient outcomes data. As a result of these cost-containment trends, commercial third-party payors and government payors that currently provide, or in the future may provide, reimbursement for one or more of our services may propose and/or actually reduce, suspend, revoke, or discontinue payments or coverage at any time. Payors may also create conditions for coverage or may contract with third-party vendors to manage laboratory benefits, in both cases creating administrative hurdles for ordering physicians and patients that may make our products and solutions more difficult to sell. The percentage of submitted claims that are ultimately paid, the length of time to receive payment on claims, and the average reimbursement of those paid claims is likely to vary from period to period.

        There is significant uncertainty surrounding whether the use of diagnostic tests that incorporate new technology will be eligible for coverage by commercial third-party payors and government payors or, if eligible for coverage, what the reimbursement rates will be for these services. In Germany, the majority of patients are insured via the GKV. The benefit catalogue defining which services in medical care are reimbursed by the GKV is specified by the directives of the Federal Joint Committee as the highest decision-making body of the joint self-government of physicians, dentists, hospitals and health insurance funds in Germany. The fact that a diagnostic test has been approved for reimbursement in the past, has received approval from the FDA or has been certified by a notified body, or has obtained coverage for any particular rare disease indication or in any particular jurisdiction, does not guarantee that such diagnostic service will remain covered and/or reimbursed or that similar or additional diagnostic tests and/or related rare disease types will be covered and/or reimbursed in the future.

        As a result, if adequate third-party coverage and reimbursement are unavailable, we may not be able to maintain volume and price levels sufficient to realize an appropriate return on investment in our diagnostic testing services or to advance our research and development solutions for our pharmaceutical partners.

        We cannot predict what future healthcare initiatives will be introduced or implemented in the jurisdictions in which we operate, or how any future legislation or regulation may affect us. Any taxes imposed by legislation, as well as changes to the reimbursement amounts paid by payors for our existing and future products and solutions, could have a material adverse effect on our business, financial condition and results of operations.

Intellectual Property Risks Related to Our Business

If we are unable to obtain and maintain patent and other intellectual property protection for any products or solutions we develop and for our technology, or if the scope of intellectual property protection obtained is not sufficient, our competitors could develop and commercialize products and solutions similar or identical to ours, and our ability to successfully commercialize any products or solutions we may develop may be adversely affected.

        Our success depends in large part on our ability to obtain and maintain patent and other intellectual property protection in the United States and other countries for our biomarkers and other products and solutions. Patent law relating to the scope of claims in the fields in which we operate is complex and uncertain, so we cannot make any assurances that we will be able to obtain or maintain patent or other intellectual property rights, or that the patent and other intellectual property rights we may obtain will be valuable, provide an effective barrier to competitors or otherwise provide competitive advantages. In particular, our Lyso-Gb3 biomarker, which we use to support the diagnosis of Fabry disease, is not protected by any patents or included in any pending patent applications, and its successful commercialization by one of our competitors or by other third parties could materially harm our business or results of operations. Moreover, patent applications that we have made in the past have

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been subject to comment and revision by the relevant patent offices, which have resulted in our withdrawal of certain patent applications. If we are unable to obtain or maintain patent or other intellectual property protection with respect to our proprietary products and solutions, our business, financial condition, results of operations, and prospects could be materially harmed.

        The scope of patent protection outside of the United States is uncertain. Changes in either the patent laws or their interpretation in the United States and other countries may diminish our ability to protect our inventions, obtain, maintain, and enforce our intellectual property rights and, more generally, could affect the value of our intellectual property or narrow the scope of our patents. We cannot predict whether the patent applications we are currently pursuing will issue as patents in any particular jurisdiction or whether the claims of any issued patents will provide sufficient protection from competitors.

        The patent prosecution process is expensive, time-consuming, and complex, and we may not be able to file, prosecute, maintain, enforce, or license all necessary or desirable patent applications at a reasonable cost or in a timely manner. It is also possible that we will fail to identify patentable aspects of our research and development output in time to obtain patent protection. Parties who have access to confidential or patentable aspects of our research and development output, such as our employees, advisors, and other third parties, and who are party to non-disclosure and confidentiality agreements with us, may breach such agreements and disclose such output before a patent application is filed, thereby jeopardizing our ability to seek patent protection. In addition, publications of discoveries in the scientific literature often lag behind the actual discoveries, and patent applications in the United States and other jurisdictions are typically not published until 18 months after filing, or in some cases not at all. Therefore, we cannot be certain that we were the first to make the inventions claimed in our patents or pending patent applications, or that we were the first to file for patent protection of such inventions.

        The patent position of companies in our industry generally is unsettled, involves complex legal and factual questions, and has been the subject of much litigation in recent years. As a result, the issuance, scope, validity, enforceability, and commercial value of our patent rights are highly uncertain. Our pending and future patent applications may not result in patents being issued that protect our products or solutions or which effectively prevent others from commercializing competitive products and solutions.

        Moreover, the coverage claimed in a patent application can be significantly reduced before the patent is issued, and its scope can be reinterpreted after issuance. Even if patent applications issue as patents, they may not issue in a form that will provide us with any meaningful protection, prevent competitors or other third parties from competing with us, or otherwise provide us with any competitive advantage. Any patents that we hold may be challenged, narrowed, circumvented, or invalidated by third parties. In particular, for more information regarding U.S. patent law decisions that negatively impact the patentability of biomarkers, diagnostic products and diagnostic methods, and the validity of granted U.S. patents covering such subject matter, see "—Developments in patent law could have a negative impact on our business" below. Consequently, we do not know whether any of our biomarkers or other products and solutions will be protectable or remain protected by valid and enforceable patents. Our competitors or other third parties may be able to circumvent our patents by developing similar or alternative products and solutions in a non-infringing manner. Any of the foregoing could have a material adverse effect on our business, financial condition, results of operations, and prospects.

If we are unable to protect the confidentiality of our trade secrets, know-how, and other confidential and proprietary information, our business and competitive position would be harmed.

        In addition to seeking patent protection for our products and solutions, we also rely upon trade secret protection and non-disclosure agreements and invention assignment agreements with our

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employees, consultants and other third parties to protect our unpatented know-how, technology, and other confidential or proprietary information. For example, significant elements of our proprietary platform and some of our tests, including aspects of sample preparation, computational-biological algorithms, and related processes and software, are based on unpatented trade secrets and know-how that are not publicly disclosed. In addition to contractual measures, we try to protect the confidential nature of our proprietary information using physical and technological security measures. Such measures may not provide adequate protection for our proprietary information; for example, in the case of misappropriation of intellectual rights by an employee, consultant, or other third party with authorized access.

        Trade secrets and know-how can be difficult to protect. We cannot guarantee that we have entered into applicable non-disclosure agreements and invention assignment agreements with our employees, consultants and other third parties who have had access to our trade secrets or other proprietary information. Our security and contractual measures may not prevent an employee, consultant, or other third party from misappropriating our trade secrets and providing them to a competitor, and any recourse we take against such misconduct, including litigation, may not provide an adequate remedy to protect our interests fully. Enforcing a claim that a party illegally disclosed or misappropriated intellectual property can be difficult, expensive, and time-consuming, and the outcome is unpredictable. Due to variation in the degree of protection afforded to intellectual property of this nature under the laws and regulations applicable to different international markets where our services are sold, our ability to pursue and obtain an adequate remedy may depend significantly on the jurisdiction in which the misconduct takes place and our ability to enforce a favorable judgment against the offending party in a jurisdiction in which such party has substantial assets. In addition, trade secrets may be independently developed by others in a manner that could prevent legal recourse by us. If any of our confidential or proprietary information, such as our trade secrets, were to be disclosed or misappropriated, or if any such information were independently developed by a competitor, our competitive position could be harmed.

Patents covering our products or solutions could be found invalid or unenforceable if challenged.

        The issuance of a patent is not conclusive as to its inventorship, scope, validity, or enforceability, and our patents may be challenged in the courts or patent offices in the United States and abroad. Others have filed, and in the future are likely to file, patent applications that are similar or identical to ours. To determine the priority of inventions, demonstrate that we did not derive our invention from another individual or entity, or defend third-party challenges to the validity or enforceability of our patent rights, we may have to participate in opposition, derivation, revocation, reexamination, post-grant and inter partes review, or interference proceedings at the U.S. Patent and Trademark Office (the "USPTO") or similar offices in Europe or other jurisdictions. For example, we are aware of an opposition proceeding filed in the European Patent Office ("EPO") by Sanofi against EP Patent No. 2 718 725 B1 (the "'725 Patent"), a European patent that we own relating to our biomarker for Gaucher disease. The EPO opposition proceeding challenges the patentability of the '725 Patent in its entirety. We cannot predict the outcome of the opposition proceeding and any party may appeal the opposition decision to the Boards of Appeal at the EPO. If we are unsuccessful in defending this opposition, the '725 Patent may be revoked or maintained in amended form, in whole or in part, which could limit our ability to stop others from using or commercializing similar or identical products and solutions to ours, or limit the duration of the patent protection of our products and solutions. For more information regarding this proceeding, see "Business—Legal Proceedings." Sanofi or other third parties may file future oppositions or other challenges, in Europe or other jurisdictions, against other patents that we own. An adverse determination in any such proceeding or litigation could reduce the scope of, or invalidate, our patent rights, allow third parties to commercialize our products or solutions and compete directly with us, without payment to us, or result in our inability to commercialize our products or solutions without infringing third-party patent rights. Moreover, we may have to participate in interference proceedings declared by the USPTO to

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determine priority of invention or in post-grant challenge proceedings, such as oppositions in a foreign patent office or nullity or entitlement proceedings, that challenge priority of invention or other features of patentability. Such challenges may result in loss of patent rights, loss of exclusivity, or in patents being cancelled, narrowed, amended, invalidated, revocated or held unenforceable, in whole or in part, which could limit our ability to stop others from using or commercializing similar or identical products and solutions, or limit the duration of the patent protection of our products and solutions. Such proceedings could also result in substantial costs in legal fees and require significant time from our management and employees, even if the eventual outcome is favorable to us. In addition, there could be public announcements of the results of hearings, motions or other interim proceedings or developments, and if securities analysts or investors perceive these results to be negative, it could have a substantial adverse effect on the price of our common shares. Any of the foregoing could have a material adverse effect on our business, financial condition, results of operations, and prospects.

        In addition, if we initiate legal proceedings against a third party to enforce a patent covering our products or solutions, the defendant could counterclaim that such patent is invalid or unenforceable. In patent litigation in the United States, defendant counterclaims alleging invalidity or unenforceability are commonplace. Grounds for a validity challenge could be an alleged failure to meet any of several statutory requirements, including lack of novelty, obviousness, or non-enablement. Grounds for an unenforceability assertion could be an allegation that someone connected with prosecution of the patent withheld relevant information from the USPTO, or made a misleading statement, during prosecution. In other jurisdictions, defendants have and/or may have comparable grounds for defending against such claims, especially with regard to claims that a patent is invalid. The outcome following legal assertions of invalidity and unenforceability is unpredictable. With respect to the validity question, for example, we cannot be certain that there is no invalidating prior art of which we and the patent examiner were unaware during prosecution. Such challenges could result in the revocation of, cancellation of, or amendment to our patents in such a way that they no longer sufficiently cover our products and solutions. If a third party were to prevail on a legal assertion of invalidity or unenforceability, we would lose at least part, and perhaps all, of the patent protection on our products or solutions. Such a loss of patent protection would materially harm our business, prospects, financial condition and results of operations.

Litigation or other proceedings or third-party claims of intellectual property infringement could require us to spend significant time and money and could prevent us from selling our products and solutions or impact our share price.

        Our commercial success depends upon our ability to develop and commercialize products and solutions and use our proprietary technologies without infringing, misappropriating or otherwise violating the intellectual property and proprietary rights of third parties. We could become party to, or threatened with, adversarial proceedings or litigation regarding intellectual property rights with respect to our technology and any products or solutions we may develop, including interference proceedings, post-grant review, inter partes review, and derivation proceedings before the USPTO and similar proceedings in foreign jurisdictions, such as oppositions before the EPO or nullity or entitlement proceedings. Third parties may assert infringement and other claims against us based on existing patents or patents that may be granted in the future, regardless of their merit, and we may assert infringement and other claims against third parties. As we continue to commercialize our genetic rare disease information solutions (including our biomarkers), launch new solutions and enter new markets, we expect that competitors will claim that our products or solutions infringe or otherwise violate their intellectual property rights, including as part of business strategies designed to impede our successful commercialization and entry into new markets. Third parties may have obtained, and may in the future obtain, patents under which such third parties may claim that the use of our technologies constitutes patent infringement. Third parties have in the past asserted and may in the future assert that we are employing their proprietary technology without authorization, and we occasionally receive letters from

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third parties inviting us to take licenses under, or alleging that we infringe, their patents. Depending upon the circumstances, we may elect to remove a particular biomarker from one of our products or solutions.

        Even if we believe that third-party intellectual property claims are without merit, there is no assurance that a court would find in our favor on questions of infringement, validity, enforceability, or priority. A court of competent jurisdiction could hold that these third-party patents are valid, enforceable, and infringed, which could materially and adversely affect our ability to commercialize any products or solutions we may develop. In order to successfully challenge the validity of any such U.S. patent in federal court or in courts in other jurisdictions, we would need to overcome a presumption of validity. As this burden is a high one, requiring us to present clear and convincing evidence as to the invalidity of any such U.S. patent claim, there is no assurance that a court of competent jurisdiction would invalidate the claims of any such U.S. patent. The same applies to other jurisdictions. If we are found to infringe a third party's intellectual property rights, and we are unsuccessful in demonstrating that such patents are invalid or unenforceable, we could be required to obtain a license from such third party to continue commercializing our products or solutions. However, we may not be able to obtain any required license on commercially reasonable terms, or at all and therefore may be unable to develop, sell or otherwise commercialize our products or solutions. Even if we were able to obtain a license, it could be non-exclusive, thereby giving our competitors and other third parties access to the same technologies licensed to us, and it could require us to make substantial licensing, royalty and other payments. Furthermore, parties making claims against us may be able to obtain injunctive or other relief, which could block our ability to develop, commercialize, and sell our products and solutions, and could result in the award of substantial damages against us. In the event of a successful claim of infringement, misappropriation or other intellectual property violation against us, we may be required to pay damages and obtain one or more licenses from third parties, or be prohibited from developing, commercializing and selling certain products or solutions. In addition, we could be found liable for significant monetary damages, including treble damages and attorneys' fees, if we are found to have willfully infringed a patent or other intellectual property right.

        Even if resolved in our favor, litigation or other legal proceedings relating to intellectual property claims may cause us to incur significant expenses and could distract our personnel from their normal responsibilities. In addition, there could be public announcements of the results of hearings, motions, or other interim proceedings or developments, and if securities analysts or investors perceive these results to be negative, it could have a substantial adverse effect on the price of our shares. Such litigation or proceedings could substantially increase our operating losses and reduce the resources available for development activities or any future sales, marketing, or distribution activities. We may not have sufficient financial or other resources to conduct such litigation or proceedings adequately. Some of our competitors may be able to sustain the costs of such litigation or proceedings more effectively than we can because of their greater financial resources and more mature and developed intellectual property portfolios. Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some of our confidential information could be compromised by disclosure during this type of litigation. We also could incur substantial costs and divert the attention of our management and other employees in participating in litigation or proceedings of this nature, and an adverse ruling or perception of an adverse ruling in could have a material adverse impact on our cash position and share price. Any of the foregoing could materially harm our business, prospects, financial condition and results of operations.

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Obtaining and maintaining our patent protection depends on compliance with various procedural, document submission, fee payment, and other requirements imposed by government patent agencies, and our patent protection could be reduced or eliminated for non-compliance with these requirements.

        Obtaining and maintaining a patent portfolio entails significant expense and resources. Part of the expense includes periodic maintenance fees, renewal fees, annuity fees and various other governmental fees associated with patents and patent applications due in several stages over the lifetime of patents and patent applications. The USPTO and various non-U.S. government agencies require compliance with several procedural, documentary, fee payment, and other similar provisions during the patent application process. We may or may not choose to pursue or maintain protection for particular inventions. In addition, there are situations in which failure to make certain payments or noncompliance with certain requirements in the patent process can result in abandonment or lapse of a patent or patent application, resulting in partial or complete loss of patent rights in the relevant jurisdiction. If we choose to forego patent protection or allow a patent application or patent to lapse purposefully or inadvertently, our competitive position could suffer. In such an event, potential competitors might be able to enter the market with similar or identical products and solutions. If we fail to obtain, maintain, protect or enforce our intellectual property rights successfully, our competitive position could suffer. Any of the foregoing could materially harm our business, prospects, financial condition and results of operations.

Our rights to develop and commercialize our technology, products and solutions may in the future be subject, in part, to the terms and conditions of licenses granted to us by others.

        In connection with the development of new products and solutions we may license intellectual property from third parties in the future, or may deem it necessary to do so in order to commercialize our products or solutions. We may be unable to obtain these licenses at a reasonable cost, or at all. We could, therefore, incur substantial costs related to royalty payments or other payments for licenses obtained from third parties. We may also be unable to obtain exclusive rights to use such intellectual property or technology in all relevant fields of use and in all territories in which we may wish to develop or commercialize our products and solutions in the future and, as a result, we may not be able to prevent competitors from developing and commercializing competitive products or solutions. Moreover, we could encounter delays in introducing new products or solutions while we attempt to develop alternative products and solutions, and the defense of any lawsuit or failure to obtain any of these licenses on favorable terms could prevent us from commercializing our products and solutions, which would materially affect our ability to grow.

        Our licensors might conclude that we have materially breached our license agreements and might therefore terminate the license agreements, thereby removing our ability to develop and commercialize products and solutions covered by such agreements. If these in-licenses are terminated, or if the underlying patents fail to provide the intended exclusivity, competitors might have the freedom to market competing products and solutions identical or similar to ours. Disputes may arise regarding intellectual property subject to a licensing agreement, including:

    the scope of rights granted under the license agreement and other interpretation-related issues;
    the extent to which our products and solutions infringe on intellectual property of the licensor that is not subject to the licensing agreement;
    the sublicensing of patent and other rights under our collaborative development relationships;
    our diligence obligations under the license agreement and what activities satisfy those diligence obligations;
    the inventorship and ownership of inventions and know-how resulting from the joint creation or use of intellectual property by our licensors and us and our partners; and
    the priority of invention of patented technology.

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        In addition, agreements under which we license intellectual property or technology from third parties could be complex, and certain provisions in such agreements may be susceptible to multiple interpretations. The resolution of any contract interpretation disagreement that may arise could narrow what we believe to be the scope of our rights to the relevant intellectual property or technology, or increase what we believe to be our financial or other obligations under the relevant agreement. Moreover, if disputes over intellectual property or technology that we have licensed prevent or impair our ability to maintain other licensing arrangements on commercially acceptable terms, defending our position could materially harm our business, prospects, financial condition and results of operations.

Developments in patent law could have a negative impact on our business.

        Changes in either the patent laws or interpretation of patent laws could increase the uncertainties and costs surrounding the prosecution of patent applications and the enforcement or defense of issued patents. From time to time, the United States Supreme Court (the "Supreme Court"), other federal courts, the U.S. Congress, the USPTO, or other foreign patent offices or courts may change the standards of patentability and any such changes could have a negative impact on our business. Assuming that other requirements for patentability are met, prior to March 2013, in the United States, the first to invent the claimed invention was entitled to the patent, while outside the United States, the first to file a patent application was entitled to the patent. After March 2013, under the Leahy-Smith America Invents Act (the "America Invents Act"), enacted in September 2011, the United States transitioned to a first inventor to file system in which, assuming that other requirements for patentability are met, the first inventor to file a patent application will be entitled to the patent on an invention regardless of whether a third party was the first to invent the claimed invention. The America Invents Act also includes a number of significant changes that affect the way patent applications will be prosecuted and also may affect patent litigation. These include allowing third-party submission of prior art to the USPTO during patent prosecution and additional procedures to attack the validity of a patent by USPTO-administered post-grant proceedings, including post-grant review, inter partes review, and derivation proceedings. However, the America Invents Act and its implementation could increase the uncertainties and costs surrounding the prosecution of our patent applications and the enforcement or defense of our issued patents, all of which could have a material adverse effect on our business, financial condition, results of operations, and prospects.

        In addition, the patent positions of companies in our industry are particularly uncertain. Recent U.S. Supreme Court rulings have narrowed the scope of patent protection available in certain circumstances and weakened the rights of patent owners in certain situations. For example, diagnostic method claims and "gene patents" were considered in two landmark Supreme Court cases, Mayo Collaborative v. Prometheus Laboratories ("Prometheus"), and Association for Molecular Pathology v. Myriad Genetics ("Myriad"). In Prometheus, a case involving patent claims over a medical testing method directed to optimizing the amount of drug administered to a specific patient, Prometheus' claims failed to incorporate sufficient inventive content above and beyond merely describing underlying natural correlations to allow the claimed processes to qualify as patent-eligible processes that apply natural laws. In Myriad, a case brought by multiple plaintiffs challenging the validity of patent claims held by Myriad Genetics, Inc. relating to the breast cancer susceptibility genes BRCA1 and BRCA2, the court held that isolated genomic DNA that exists in nature, such as the DNA constituting the BRCA1 and BRCA2 genes, is not patentable subject matter, but that cDNA, which is an artificial construct created from RNA transcripts of genes, may be patent eligible. The Federal Circuit has begun to apply the holdings in Prometheus and Myriad. In 2015, the Federal Circuit, in Ariosa v. Sequenom, applying Prometheus, found claims to a prenatal diagnostic method that relied on a natural product to be patent ineligible, and clarified that the absence of preemption of a natural phenomenon was not sufficient to demonstrate patent eligibility.

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        In response to the Supreme Court decisions in Prometheus, Myriad, and Alice Corporation Pty. Ltd. v. CLS Bank International ("Alice Corp."), and others, the USPTO has updated the Manual of Patent Examination Procedure to provide guidance to USPTO personnel in determining the eligibility of patent claims reciting judicially recognized exceptions to patentable subject matter, including laws of nature, natural phenomena, or abstract ideas, for patent eligibility. The USPTO guidance indicates that claims reciting a judicial exception to patent-eligible subject matter must amount to significantly more than the judicial exception itself in order to be patent-eligible subject matter. We cannot assure you that our efforts to seek patent protection for our products and solutions will not be negatively impacted by this interim guidance issued by the USPTO, the decisions described above, rulings in other cases, or changes in guidance or procedures issued by the USPTO.

        We cannot fully predict what impact the Supreme Court's decisions in Prometheus, Myriad, Alice Corp., and other decisions may have on our ability or the ability of companies or other entities to obtain or enforce patents relating to DNA, genes, or genomic-related discoveries in the future. Despite the USPTO's interim guidance and Federal Circuit cases described above, the contours of when claims reciting laws of nature, natural phenomena, or abstract ideas may meet the patent eligibility requirements are not clear and may take years to develop via interpretation at the USPTO and in the courts. There are many previously issued patents claiming nucleic acids and diagnostic methods based on natural correlations that issued before the recent Supreme Court decisions discussed, and although many of these patents may be invalid under the standards set forth in the Supreme Court's recent decisions, until successfully challenged, these patents are presumed valid and enforceable, and certain third parties could allege that we infringe, or request that we obtain a license to, these patents. Whether based on patents issued prior to or after these Supreme Court decisions, we might have to defend ourselves against claims of patent infringement, or choose to license rights, if available, under patents claiming such methods. In particular, although the Supreme Court has held in Myriad that isolated genomic DNA is not patent-eligible subject matter, certain third parties could allege that activities that we may undertake infringe other classes of gene-related patent claims, and we could have to defend ourselves against these claims by asserting non-infringement and/or invalidity positions, or pay to obtain a license to these claims. In any of the foregoing or in other situations involving third-party intellectual property rights, if we are unsuccessful in defending against claims of patent infringement, we could be forced to pay damages or be subjected to an injunction that would prevent us from utilizing the patented subject matter in question if we are unable to obtain a license on reasonable terms or at all. Such outcomes could materially affect our ability to offer our products and solutions and have a material adverse impact on our business. Even if we are able to obtain a license or successfully defend against claims of patent infringement, the cost and distraction associated with the defense or settlement of these claims could have a material adverse impact on our business. Any of the foregoing could materially harm our business, prospects, financial condition and results of operations.

We may not be able to enforce our intellectual property rights throughout the world.

        Many companies have encountered significant problems in protecting and defending intellectual property rights in certain foreign jurisdictions. Accordingly, we may face an increased risk in these jurisdictions that unauthorized parties may attempt to copy or otherwise obtain or use our patented technology, trademarks, formulations or other intellectual property. The laws of some foreign countries do not protect intellectual property rights to the same extent as the laws of Germany or the United States. Specifically, the legal systems of some countries, particularly developing countries, do not favor the enforcement of patents and other intellectual property protection, especially those relating to biotechnology. This could make it difficult for us to stop the infringement of our patents or other intellectual property rights and to prevent third parties from selling or importing products made using our inventions in and to the United States, Germany or other jurisdictions. Competitors may use our technologies in jurisdictions where we have not obtained patent or other protection to develop their own products and, further, may export otherwise infringing products to territories where we have

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patent protection but enforcement is not as strong as that in Germany or the United States. These products may compete with our products and solutions, and our patents or other intellectual property rights may not be effective or sufficient to prevent them from competing. Additionally, many foreign countries have compulsory licensing laws under which a patent owner must grant licenses to third parties or limit the enforceability of patents against third parties, including government agencies or government contractors. In these countries, patents may provide limited or no benefit. Patent protection must ultimately be sought on a country-by-country basis, which is an expensive and time-consuming process with uncertain outcomes. Accordingly, we may choose not to seek patent protection in certain countries, and we will not have the benefit of patent protection in such countries.

        Monitoring infringement and misappropriation of intellectual property can be difficult and expensive, and we may not be able to detect every instance of infringement or misappropriation of our proprietary rights. Even if we do detect infringement or misappropriation of our proprietary rights, proceedings to enforce our intellectual property rights in foreign jurisdictions could result in substantial costs, divert the efforts and attention of our employees and management from other aspects of our business, put our patents at risk of being invalidated or construed narrowly or provoke third parties to assert claims against us. We may not prevail in any lawsuits that we initiate, and the damages or other remedies awarded, if any, may not be commercially meaningful. Accordingly, our efforts to enforce our intellectual property and proprietary rights around the world may be inadequate to obtain a significant commercial advantage from the intellectual property that we develop. In addition, changes in the law and legal decisions by courts in Germany, the United States and other jurisdictions may affect our ability to obtain adequate protection for our products and solutions and to enforce our intellectual property rights. Any of the foregoing could materially harm our business, prospects, financial condition and results of operations.

Third parties may assert ownership or commercial rights to inventions we develop.

        Third parties may in the future make claims challenging the inventorship or ownership of our intellectual property. For example, we rely on certain third parties to provide us with biological materials that we use to conduct our genomic analyses. We have written agreements with collaborators that provide for the ownership of intellectual property arising from our collaborations. These agreements provide that we must negotiate certain commercial rights with collaborators with respect to joint inventions or inventions made by our collaborators that arise from the results of the collaboration. In some instances, there may not be adequate written provisions to address clearly the resolution of intellectual property rights that may arise from a collaboration. If we cannot successfully negotiate sufficient ownership and commercial rights to the inventions that result from our use of a third-party collaborator's materials where required, or if disputes otherwise arise with respect to the intellectual property developed with the use of a collaborator's samples, we may be limited in our ability to capitalize on the market potential of these inventions. In addition, we may face claims that our agreements with employees, contractors, or consultants obligating them to assign intellectual property to us are ineffective, or in conflict with prior or competing contractual obligations of assignment, which could result in ownership disputes regarding intellectual property we have developed or will develop and interfere with our ability to capture the commercial value of such inventions. Litigation may be necessary to resolve an ownership dispute, and if we are not successful, we may be precluded from using certain intellectual property, or may lose our exclusive rights in that intellectual property. Any of the foregoing could materially harm our business, prospects, financial condition and results of operations.

Most of our employees and inventions are subject to German law.

        Most of our personnel, including our directors, work in Germany and are subject to German employment law. Inventions which may be the subject of a patent or of protection as a utility model

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and which are or were made by personnel working in Germany (except for legal representatives of our respective legal entities, for example managing directors) are subject to the provisions of the German Act on Employees' Inventions (Gesetz über Arbeitnehmererfindungen) (the "German Inventions Act"), which regulates the ownership of, and compensation for, inventions made by employees. We face the risk that disputes may occur between us and our current or past employees pertaining to the sufficiency of compensation paid by us, allocation of rights to inventions under this act or alleged non-adherence to the provisions of this act, any of which may be costly to resolve and take up our management's time and efforts whether we prevail or fail in such dispute. In addition, under the German Inventions Act, certain employees retain rights to patents they invented or co-invented and disclosed to us prior to October 1, 2009. If we are unable to obtain an exclusive license to any such third-party co-owners' or owners' interest in such patents, such co-owners or owners may be able to license their rights to other third parties, including our competitors. In addition, we may need the cooperation of any such co-owners or owners to enforce any such patents against third parties, and such cooperation may not be provided to us. While we believe that all of our current and past German employee inventors have subsequently assigned to us their interest in inventions or patents they invented or co-invented, there can be no assurance that all such assignments are fully effective, which can lead to unexpected costs or economic disadvantages. Even if we lawfully own all inventions created by our employees who are subject to the German Inventions Act, we are required under German law to reasonably compensate such employees for the use of the inventions and intellectual property rights related thereto. If we are required to pay compensation or face other disputes under the German Inventions Act, our results of operations could be adversely affected. Legal representatives of legal entities, for example managing directors, whose contractual relationships with the respective entity are subject to German law and that are not subject to the German Inventions Act as well as consultants must assign and transfer their interest in inventions and/or patents they invent or co-invent to us in order for us to have any rights to such inventions or patents. While we believe that all assignments have been made, there can be no assurance that all such assignments are fully effective, which may harm our business, prospects, financial condition and results of operations.

        If any of our current or past employees, legal representatives of our legal entities or consultants obtain or retain ownership or co-ownership of any inventions or related intellectual property rights that we believe we own, we may lose valuable intellectual property rights and be required to obtain and maintain licenses from such employees or legal representatives of legal entities or consultants to such inventions or intellectual property rights, which may not be available on commercially reasonable terms or at all, or may be non-exclusive. If we are unable to obtain and maintain a license to any such employee's, legal representative's of legal entities or consultant's interest in such inventions or intellectual property rights, we may need to cease the development, manufacture, and commercialization of one or more of the products or solutions we may develop or may have developed. In addition, any loss of exclusivity of our intellectual property rights could limit our ability to stop others from using or commercializing similar or identical products and solutions. Any of the foregoing events could materially harm our business, prospects, financial condition and results of operations.

Third parties may assert that our employees or consultants have wrongfully used or disclosed confidential information or misappropriated trade secrets.

        Many of our employees and consultants are currently or were previously employed at universities or other diagnostic or biopharmaceutical companies, including our competitors or potential competitors. Although we try to ensure that our employees and consultants do not use the proprietary information or know-how of others in their work for us, we may be subject to claims that we or these individuals have inadvertently or otherwise used or disclosed intellectual property, including trade secrets or other proprietary information, of a current or former employer or other third parties. Litigation may be necessary to defend against these claims. If we fail in defending any such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights or personnel.

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Even if we are successful in defending against such claims, litigation could result in substantial costs and be a distraction to management and other employees. Such claims could materially harm our business, prospects, financial condition and result of operations.

        In addition, while it is our policy to require our employees and consultants who may be involved in the conception or development of intellectual property to execute agreements assigning such intellectual property to us, we may be unsuccessful in executing such an agreement with each party who, in fact, conceives or develops intellectual property that we regard as our own. The assignment of intellectual property rights may not be self-executing, or the assignment agreements may be breached, and we may be forced to bring claims against third parties, or defend claims that they may bring against us, to determine the ownership of what we regard as our intellectual property. Such claims could materially harm our business, prospects, financial condition and results of operations.

Intellectual property rights do not necessarily address all potential threats.

        The degree of future protection afforded by our intellectual property rights is uncertain because intellectual property rights have limitations and may not adequately protect our business or permit us to maintain our competitive advantage. For example:

    others may be able to make products or solutions that are similar to any products or solutions we develop or commercialize or utilize similar technology but that are not covered by the claims of our patents or patents that we might own or license in the future;
    we might not have been the first to make the inventions covered by the issued patents or pending patent applications that we own or may own or license in the future;
    we might not have been the first to file patent applications covering certain of our inventions;
    others may independently develop similar or alternative technologies or duplicate any of our technologies without infringing our intellectual property rights;
    it is possible that our pending patent applications or those that we may own or license in the future will not lead to issued patents;
    our issued patents may be held invalid or unenforceable, including as a result of legal challenges by our competitors;
    our competitors might conduct research and development activities in countries where we do not have patent rights and then use the information learned from such activities to develop competitive products or solutions for sale in our major commercial markets;
    we may not develop additional proprietary technologies that are patentable;
    the patents of others may harm our business; and
    we may choose not to file a patent in order to maintain certain trade secrets or know-how, and a third party may subsequently file a patent covering such intellectual property.

        Should any of these events occur, they could materially harm our business, prospects, financial condition and results of operations.

Risks Relating to Our Financial Condition and Capital Requirements

We have a history of losses and we may incur losses in the future.

        We have historically incurred losses, including total comprehensive losses of €11,552 thousand in the six-months ended June 30, 2019, €11,346 thousand in the year ended December 31, 2018, €5,466 thousand in the year ended December 31, 2017 and €5,350 thousand in the year ended December 31, 2016. We expect our losses to continue as a result of ongoing research and development expenses and increased selling and marketing costs. These losses have had, and will continue to have, an adverse effect on our working capital, total assets, and shareholders' equity. Because of the numerous risks and uncertainties associated with our research, development, and efforts to commercialize our solutions, we are unable to predict when we will become profitable, and we may

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never become profitable. Even if we do achieve profitability, we may not be able to sustain or increase profitability on a quarterly or annual basis. Our inability to achieve and then maintain profitability would negatively affect our business, financial condition, results of operations, and cash flows.

Covenant restrictions under debt agreements limit our ability to operate our business.

        Our debt agreements contain covenants that restrict our ability to, among other things, use the funds for specified purposes, incur additional indebtedness, pay dividends or engage in certain business activities. In particular, our syndicated loan facility provides that we may not (i) assume further indebtedness or grant security interests or any guarantees above certain thresholds, (ii) dispose of or acquire further assets exceeding certain limits or (iii) pay dividends if in breach of certain financial covenants. In addition, our CEO, Prof. Arndt Rolfs, must obtain the consent of the lenders prior to the sale of more than 10% of his shares in our Company. In addition, our secured loan facilities and municipal loans require us to maintain specified financial ratios and tests, which may require that we or they take action to reduce debt or to act in a manner contrary to our business objectives. Events beyond our control, including changes in general business and economic conditions, may affect our ability to meet those financial ratios and tests. We may not meet those ratios and tests, and our lenders may not waive any failure to meet those ratios and tests.

        A breach of any of these covenants or restrictions, or failure to maintain these ratios, would result in an event of default under the relevant debt facility, and any such event of default or resulting acceleration under such debt facility could negatively affect our financial condition or result in an event of default under other debt agreements. If we are not able to repay the loans, this may lead to the commencement of foreclosure or other enforcement actions against any of our assets securing such debt. Even if the bank would waive a covenant breach, we may be subject to an increase of interest rates or margins, respectively, as well as the payment of a waiver fine. Furthermore, the covenants as well as the breach of the covenants may impose restrictions on the way we can operate and may limit our ability to finance our future operations and capital needs and our ability to pursue business activities that may be in our interests.

We have failed to meet certain covenants under our syndicated loan facility, which limits our liquidity and could result in the lenders accelerating amounts we owe to them under the facility.

        At June 30, 2019, we had €15,242 thousand of loans outstanding under our syndicated loan facility including bank overdrafts of €2,296 thousand. We did not satisfy certain financial covenants under this facility during the years ended December 31, 2016, December 31, 2017 and December 31, 2018. To respond to and resolve our covenant non-compliance, as discussed under "Management's Discussion and Analysis of Financial Condition and Results of Operations—Contractual Obligations and Commitments," we obtained waivers from the various lenders under this facility for the years ended December 31, 2016 and December 31, 2017. The waivers impose various conditions on us, including an increase in the applicable interest rate for tranches B, C and D and payment of certain waiver fees. On April 6, 2018, the net-debt ratio financial covenant requirement was again waived for the period from December 31, 2017 to December 31, 2018, with an incremental increase in the applicable interest rate for tranches B and D. We repaid all outstanding amounts under tranche A in September 2019 upon completion of the sale and leaseback transaction of our headquarters building in Rostock.

        We are otherwise in compliance with the syndicated loan facility as of the date of this prospectus and we have obtained a further waiver of certain covenants of the facility for the year ending December 31, 2019. This waiver applies to the financial covenants of the facility which we expect to no longer be in compliance with following this offering. However, we may not be able to secure a waiver or amendment for any future period we may not be able to otherwise refinance our debt going forward on terms acceptable to us, or at all. As a result, we may not be able to meet our obligations under the

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syndicated loan facility and the lenders would have the right to further raise the applicable interest rates or to cause the amounts outstanding under the facility to become due and payable by terminating the agreement. If we were unable to pay such amounts, the lenders could recover amounts owed to them by foreclosing against the collateral pledged to them, which would have a material adverse effect on our financial position. The syndicated loan facility was secured by a land charge in the amount of €19,910 thousand, a cash pledge in the amount of €2,500 thousand related to tranche D as of July 1, 2019 and assignments of certain laboratory equipment and trade and other receivables. In September 2019, the land charge was fully released upon repayment of the outstanding amounts under tranche A noted above.

We may need to raise additional capital to fund our existing operations, develop our genetic information platform, commercialize new products and solutions and expand our operations.

        If our available cash balances and anticipated cash flow from operations are insufficient to satisfy our liquidity requirements, including because of lower demand for our products or solutions as a result of other risks described herein, we may seek to sell common or preferred equity or convertible debt securities, enter into another credit facility or another form of third-party funding, or seek other debt financing.

        Our ongoing efforts to expand our business will require substantial cash resources. We may consider raising additional capital in the future to expand our business, to pursue strategic investments, to take advantage of financing opportunities, or for other reasons, including to:

    increase our sales and marketing efforts to drive market adoption of our products and solutions and address competitive developments;
    fund development and marketing efforts of any future products and solutions;
    further expand our laboratory operations;
    expand our technologies into other types of diseases;
    obtain, maintain, protect and enforce existing or new intellectual property rights;
    acquire, license or invest in technologies, including information technologies;
    acquire or invest in complementary businesses or assets; and
    finance capital expenditures and general and administrative expenses.

        Our present and future funding requirements will depend on many factors, including:

    our ability to achieve revenue growth;
    the cost of expanding our laboratory operations and offerings, including our sales and marketing efforts;
    our rate of progress in, and cost of the sales and marketing activities associated with, establishing adoption of our products and solutions;
    our rate of progress in, and cost of research and development activities associated with, products and solutions in research and early development;
    the effect of competing technological and market developments;
    costs related to international expansion; and
    the potential cost of and delays in research and development as a result of any regulatory oversight applicable to our products and solutions.

        If we raise funds by issuing debt securities, those debt securities would have rights, preferences, and privileges senior to those of holders of our common shares. The terms of debt securities issued or borrowings pursuant to a credit or similar agreement could impose significant restrictions on our operations. Such financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring debt, making capital expenditures or declaring dividends. If additional funds are raised by issuing equity securities, existing shareholders may suffer significant dilution. If we raise funds through collaborations and licensing arrangements, we

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might be required to relinquish significant rights to our platform technologies or solutions, or grant licenses on terms that are not favorable to us.

        Additional equity or debt financing might not be available on reasonable terms or at all. Because of our potential long-term capital requirements, we may access the public or private equity or debt markets whenever conditions are favorable, even if we do not have an immediate need for additional capital at that time. If we cannot secure additional funding when needed, we may have to delay, reduce the scope of, or eliminate one or more research and development programs or sales and marketing initiatives. In addition, we may have to work with a partner on one or more of our development programs, which could lower the economic value of those programs to us. Lastly, if we are unable to obtain the requisite amount of financing needed to fund our planned operations, it could have a material adverse effect on our business and financial position.

We may be required to refund grants and subsidies.

        We have received various grants and subsidies to fund our research and development programs from various funding organizations. However, the Company continues to engage in efforts to secure further grants and subsidies for the next development steps of its product candidates. In the year ended December 31, 2018, we have received a total of €3,420 thousand in grants for our activities. Some of these grants and subsidies provide for certain requirements in respect of the utilization of proceeds generated as a result of the publicly sponsored projects. For example, we received grants from the European Regional Development Fund in order to fund our Rostock facility, which grants are limited in purpose to development and innovation in the state of Mecklenburg-Western Pomerania, Germany. Other grants which we obtain may impose restrictions on our operations, and if we are in noncompliance with the restrictions and conditions of any grant or subsidy program, a partly or complete repayment cannot be excluded. This may also apply to grants and subsidies we may apply for in the future. If we are required to refund grants or subsidies, this could have a material adverse effect on our liquidity and cash flow position and may negatively affect our business, prospects and financial conditions.

We will incur significant costs as a result of operating as a public company and our management will need to devote substantial time to public company compliance programs.

        As a public company, we incur significant legal, accounting, and other expenses due to our compliance with regulations and disclosure obligations applicable to us, including compliance with the Sarbanes-Oxley Act, as well as rules implemented by the SEC, and the Nasdaq Global Market ("Nasdaq"). The SEC and other regulatory authorities have continued to adopt new rules and regulations and make additional changes to existing regulations that require our compliance. In July 2010, the Dodd-Frank Wall Street Reform and Consumer Protection Act (the "Dodd-Frank Act") was enacted. There are significant corporate governance- and executive compensation-related provisions in the Dodd-Frank Act that have required the SEC to adopt additional rules and regulations in these areas. Shareholder activism, the current political environment, and the current high level of government intervention and regulatory reform may lead to substantial new regulations and disclosure obligations, which may lead to additional compliance costs and impact, in ways we cannot currently anticipate, and the manner in which we operate our business. Our management and other personnel will need to devote a substantial amount of time to these compliance programs and monitoring of public company reporting obligations, and as a result of the new corporate governance- and executive compensation-related rules, regulations, and guidelines prompted by the Dodd-Frank Act, and further regulations and disclosure obligations expected in the future, we will likely need to devote additional time and costs to comply with such compliance programs and rules. These rules and regulations will cause us to incur significant legal and financial compliance costs and will make some activities more time-consuming and costly.

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        To comply with the requirements of being a public company, we may need to undertake various actions, including implementing new internal controls and procedures and hiring new accounting or internal audit staff. The Sarbanes-Oxley Act requires that we maintain effective disclosure controls and procedures and internal control over financial reporting. We are continuing to develop and refine our disclosure controls and other procedures that are designed to ensure that information required to be disclosed by us in the reports that we file with the SEC is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms, and that information required to be disclosed in reports under the Exchange Act is accumulated and communicated to our principal executive and financial officers. Our current controls and any new controls that we develop may become inadequate, and weaknesses in our internal control over financial reporting may be discovered in the future. Any failure to develop or maintain effective controls could adversely affect the results of periodic management evaluations and annual independent registered public accounting firm attestation reports regarding the effectiveness of our internal control over financial reporting, which we may be required to include in the periodic reports we file with the SEC under Section 404 of the Sarbanes-Oxley Act, and could harm our operating results, cause us to fail to meet our reporting obligations, or result in a restatement of our prior period financial statements. In the event that we are not able to demonstrate compliance with the Sarbanes-Oxley Act, that our internal control over financial reporting is perceived as inadequate, or that we are unable to produce timely or accurate financial statements, investors may lose confidence in our operating results, and the price of our common shares could decline.

        We are required to comply with certain of the SEC rules that implement Section 404 of the Sarbanes-Oxley Act, which requires management to certify financial and other information in our quarterly and annual reports and provide an annual management report on the effectiveness of our internal control over financial reporting. This assessment needs to include the disclosure of any material weaknesses in our internal control over financial reporting identified by our management or our independent registered public accounting firm. During the evaluation and testing process, if we identify one or more material weaknesses in our internal control over financial reporting or if we are unable to complete our evaluation, testing, and any required remediation in a timely fashion, we will be unable to assert that our internal control over financial reporting is effective.

        Our independent registered public accounting firm will not be required to formally attest to the effectiveness of our internal control over financial reporting until the first annual report required to be filed with the SEC following the date we are no longer an "emerging growth company" as defined in the JOBS Act. We cannot assure you that there will not be material weaknesses or significant deficiencies in our internal controls in the future. If we are unable to assert that our internal control over financial reporting is effective, or if our independent registered public accounting firm is unable to express an opinion on the effectiveness of our internal control over financial reporting, we could lose investor confidence in the accuracy and completeness of our financial reports, which could have a material adverse effect on the price of our common shares.

Raising additional capital may cause dilution to our shareholders, restrict our operations or require us to relinquish rights to our technologies or drug candidates.

        To the extent that we choose or need to raise additional capital through the sale of common shares or securities convertible or exchangeable into common shares, the ownership interest of our shareholders will be diluted, and the terms of these securities may include liquidation or other preferences that materially adversely affect the rights of our common shareholders. Debt financing, if available, would increase our fixed payment obligations and may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends.

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        If we raise funds through additional collaborations, strategic alliances or licensing arrangements with third parties, we may have to relinquish valuable rights to our intellectual property, future revenue streams, research programs or drug candidates or to grant licenses on terms that may not be favorable to us. If we are unable to raise additional funds through equity or debt financings when needed, we may be required to delay, limit, reduce or terminate our drug development or future commercialization efforts or grant rights to develop and market drug candidates that we would otherwise prefer to develop and market ourselves.

Our results of operations could be materially adversely affected by fluctuations in foreign currency exchange rates.

        Although we report our results of operations in euro, not all of our net revenues are denominated in the euro. Unfavorable fluctuations in foreign currency exchange rates could have a material adverse effect on our results of operations.

        Because our consolidated financial statements are presented in euro, we must translate revenues, expenses and income, as well as assets and liabilities, into euros at exchange rates in effect during or at the end of each reporting period. Therefore, changes in the value of the euro against other currencies will affect our net revenues, operating income and the value of balance-sheet items originally denominated in other currencies. These changes cause our growth in consolidated earnings stated in euro to be higher or lower than our growth in local currency when compared against other periods.

        As we continue to leverage our global delivery model, more of our expenses are incurred in currencies other than those in which we bill for the related services. An increase in the value of certain currencies against the euro could increase costs for delivery of services at off-shore sites by increasing labor and other costs that are denominated in local currency. There can be no assurance that our contractual provisions will offset their impact, or that our currency hedging activities, which are designed to partially offset this impact, will be successful. In addition, our currency hedging activities are themselves subject to risk. These include risks related to counterparty performance under hedging contracts and risks related to currency fluctuations. We also face risks that extreme economic conditions, political instability or hostilities or disasters of the type described below could impact our underlying exposures, perhaps eliminating them. Such an event could lead to losses being recognized on the currency hedges then in place, not offset by anticipated changes in the underlying hedge exposure.

Certain Factors Relating to Our Common Shares and the Offering

There is no existing market for our common shares, and we do not know whether one will develop to provide you with adequate liquidity. If our share price fluctuates after this offering, you could lose a significant part of your investment.

        Prior to this offering, there has not been a public market for our common shares. If an active trading market does not develop, you may have difficulty selling any of our common shares that you buy. We cannot predict the extent to which investor interest in our company will lead to the development of an active trading market on Nasdaq, or otherwise or how liquid that market might become. The initial public offering price for the common shares will be determined by negotiations between us and the underwriters and may not be indicative of prices that will prevail in the open market following this offering. Consequently, you may not be able to sell our common shares at prices equal to or greater than the price paid by you in this offering. In addition to the risks described above, the market price of our common shares may be influenced by many factors, some of which are beyond our control, including:

    the failure of financial analysts to cover our common shares after this offering or changes in financial estimates by analysts;
    actual or anticipated variations in our operating results;

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    changes in financial estimates by financial analysts, or any failure by us to meet or exceed any of these estimates, or changes in the recommendations of any financial analysts that elect to follow our common shares or the shares of our competitors;
    announcements by us or our competitors of significant contracts or acquisitions;
    future sales of our shares; and
    investor perceptions of us and the industries in which we operate.

        In addition, the stock market in general has experienced substantial price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of particular companies affected. These broad market and industry factors may materially harm the market price of our common shares, regardless of our operating performance. In the past, following periods of volatility in the market price of certain companies' securities, securities class action litigation has been instituted against these companies. This litigation, if instituted against us, could adversely affect our financial condition or results of operations.

Sales of substantial amounts of our common shares in the public market, or the perception that these sales may occur, could cause the market price of our common shares to decline.

        Sales of substantial amounts of our common shares in the public market, or the perception that these sales may occur, could cause the market price of our common shares to decline. This could also impair our ability to raise additional capital through the sale of our equity securities. Under our articles of association as they will read upon the closing of this offering, we are authorized to issue up to            common shares, of which            common shares will be outstanding following this offering. We, our management board members, supervisory board members and certain of our shareholders have agreed with the underwriters, subject to certain exceptions, not to offer, sell, or dispose of any shares of our share capital or securities convertible into or exchangeable or exercisable for any shares of our share capital during the 180-day period following the date of this prospectus. See "Underwriting." If, after the end of such lock-up agreements, these shareholders sell substantial amounts of common shares in the public market, or the market perceives that such sales may occur, the market price of our common shares and our ability to raise capital through an issue of equity securities in the future could be adversely affected. We also intend to enter into a registration rights agreement upon consummation of this offering pursuant to which we will agree under certain circumstances to file a registration statement to register the resale of the common shares held by certain of our existing shareholders, as well as to cooperate in certain public offerings of such common shares. In addition, upon consummation of this offering, we intend to cease any new grants under our existing equity incentive plans and to adopt a new omnibus equity incentive plan under which we would have the discretion to grant a broad range of equity-based awards to eligible participants. We intend to register all common shares that we may issue under this equity compensation plan. Once we register these common shares, they can be freely sold in the public market upon issuance, subject to volume limitations applicable to affiliates. If a large number of our common shares or securities convertible into our common shares are sold in the public market after they become eligible for sale, the sales could reduce the trading price of our common shares and impede our ability to raise future capital. We cannot predict the size of future issuances of our shares or the effect, if any, that future sales and issuances of shares would have on the market price of our common shares.

We have broad discretion in the use of the net proceeds from this offering and may invest or spend the proceeds in ways with which you do not agree and in ways that may not yield a return on your investment.

        Although we currently intend to use the net proceeds from this offering in the manner described in the section titled "Use of proceeds" in this prospectus, our management will have broad discretion in the application of the net proceeds from this offering and could spend the proceeds in ways that do not improve our results of operations or enhance the value of our common shares. For example, we

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intend to use the net proceeds from this offering for research and development in our pharmaceutical segment and for the development of our knowledge-driven information platform, as well as for working capital and other general corporate purposes. You will not have the opportunity to influence our decisions on how to use our net proceeds from this offering. The failure by our management to apply these funds effectively could result in financial losses that could harm our business, cause the price of our common shares to decline and delay the development of our product candidates. Pending their use, we may invest the net proceeds from this offering in a manner that does not produce income or that loses value.

Transformation into a public company may increase our costs and disrupt the regular operations of our business.

        This offering will have a significant transformative effect on us. Our business historically has operated as a privately owned company, and we expect to incur significant additional legal, accounting, reporting and other expenses as a result of having publicly traded common shares. We will also incur costs which we have not incurred previously, including, but not limited to, costs and expenses for managing directors' and supervisory directors' fees, increased directors and officers insurance, investor relations, and various other costs of a public company.

        We also anticipate that we will incur costs associated with corporate governance requirements, including requirements under the Sarbanes-Oxley Act, as well as rules implemented by the SEC and Nasdaq. We expect these rules and regulations to increase our legal and financial compliance costs and make some management and corporate governance activities more time-consuming and costly, particularly after we are no longer an "emerging growth company." These rules and regulations may make it more difficult and more expensive for us to obtain director and officer liability insurance, and we may be required to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. This could have an adverse impact on our ability to retain, recruit and bring on a qualified management board and a qualified independent supervisory board. We expect that the additional costs we will incur as a public company, including costs associated with corporate governance requirements, will be considerable relative to our costs as a private company.

        The additional demands associated with being a public company may disrupt regular operations of our business by diverting the attention of some of our senior management team away from revenue producing activities to management and administrative oversight, adversely affecting our ability to attract and complete business opportunities and increasing the difficulty in both retaining professionals and managing and growing our businesses. Any of these effects could harm our business, financial condition and results of operations.

        Furthermore, after the date we are no longer an emerging growth company, our independent registered public accounting firm will only be required to attest to the effectiveness of our internal control over financial reporting depending on our market capitalization. Even if our management concludes that our internal controls over financial reporting are effective, our independent registered public accounting firm may still decline to attest to our management's assessment or may issue a report that is qualified if it is not satisfied with our controls or the level at which our controls are documented, designed, operated or reviewed, or if it interprets the relevant requirements differently from us. In addition, in connection with the implementation of the necessary procedures and practices related to internal control over financial reporting, we may identify deficiencies that we may not be able to remediate in time to meet the deadline imposed by the Sarbanes-Oxley Act for compliance with the requirements of Section 404. Failure to comply with Section 404 could subject us to regulatory scrutiny and sanctions, impair our ability to raise revenue, cause investors to lose confidence in the accuracy and completeness of our financial reports and negatively affect our share price.

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We are an "emerging growth company" and we cannot be certain if the reduced disclosure requirements applicable to emerging growth companies will make our common shares less attractive to investors.

        We are an "emerging growth company," as defined in the JOBS Act, and we intend to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not "emerging growth companies." For example, for as long as we are an "emerging growth company" under the recently enacted JOBS Act, our independent registered public accounting firm will not be required to attest to the effectiveness of our internal control over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act. We could be an emerging growth company for up to five years. See "Prospectus Summary—Implications of Being an Emerging Growth Company." We cannot predict if investors will find our common shares less attractive because we will rely on these exemptions. If some investors find our common shares less attractive as a result, there may be a less active trading market for our common shares and our share price may be more volatile.

        In addition, Section 107 of the JOBS Act provides that an emerging growth company can use the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. Given that we currently report and expect to continue to report under IFRS as issued by the IASB, we have irrevocably elected not to avail ourselves of this extended transition period and, as a result, we will adopt new or revised accounting standards on the relevant dates on which adoption of such standards is required by the IASB. Since IFRS makes no distinction between public and private companies for purposes of compliance with new or revised accounting standards, the requirements for our compliance as a private company and as a public company are the same.

We are a foreign private issuer and, as a result, we are not subject to U.S. proxy rules and are subject to Exchange Act reporting obligations that, to some extent, are more lenient and less frequent than those of a U.S. domestic public company.

        We will report under the Exchange Act as a non-U.S. company with foreign private issuer status. Because we qualify as a foreign private issuer under the Exchange Act, we are exempt from certain provisions of the Exchange Act that are applicable to U.S. domestic public companies, including (i) the sections of the Exchange Act regulating the solicitation of proxies, consents or authorizations in respect of a security registered under the Exchange Act, (ii) the sections of the Exchange Act requiring insiders to file public reports of their share ownership and trading activities and liability for insiders who profit from trades made in a short period of time and (iii) the rules under the Exchange Act requiring the filing with the SEC of quarterly reports on Form 10-Q containing unaudited financial and other specified information, or current reports on Form 8-K, upon the occurrence of specified significant events. In addition, foreign private issuers are not required to file their annual report on Form 20-F until four months after the end of each fiscal year, while U.S. domestic issuers that are accelerated filers are required to file their annual report on Form 10-K within 75 days after the end of each fiscal year. Foreign private issuers are also exempt from the Regulation Fair Disclosure, aimed at preventing issuers from making selective disclosures of material information. As a result of the above, you may not have the same protections afforded to shareholders of companies that are not foreign private issuers.

We may lose our foreign private issuer status, which would then require us to comply with the Exchange Act's domestic reporting regime and cause us to incur significant legal, accounting and other expenses.

        We are a foreign private issuer and therefore we are not required to comply with all of the periodic disclosure and current reporting requirements of the Exchange Act applicable to U.S. domestic issuers. If in the future we are not a foreign private issuer as of the last day of the second fiscal quarter in any fiscal year, we would be required to comply with all of the periodic disclosure, current reporting requirements and proxy solicitation rules of the Exchange Act applicable to U.S. domestic issuers. In order to maintain our current status as a foreign private issuer, either (a) a majority of our common

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shares must be either directly or indirectly owned of record by non-residents of the United States or (b)(i) a majority of our directors and executive officers may not be United States citizens or residents, (ii) more than 50% of our assets cannot be located in the United States and (iii) our business must be administered principally outside the United States. If we were to lose this status, we would be required to comply with the Exchange Act reporting and other requirements applicable to U.S. domestic issuers, which are more detailed and extensive than the requirements for foreign private issuers. We may also be required to make changes in our corporate governance practices in accordance with various SEC and stock exchange rules. The regulatory and compliance costs to us if we are required to comply with the reporting requirements applicable to a U.S. domestic issuer may be significantly higher than the costs we would incur as a foreign private issuer. As a result, we expect that a loss of foreign private issuer status would increase our legal and financial compliance costs and would make some activities highly time consuming and costly. These rules and regulations could also make it more difficult for us to attract and retain qualified directors.

As a foreign private issuer and as permitted by the listing requirements of Nasdaq, we follow certain home country governance practices rather than the corporate governance requirements of the Nasdaq.

        We will be a foreign private issuer. As a result, in accordance with the listing requirements of Nasdaq we will rely on home country governance requirements and certain exemptions thereunder rather than relying on the corporate governance requirements of Nasdaq. In accordance with Dutch law and generally accepted business practices, our Articles of Association do not provide quorum requirements generally applicable to general meetings of shareholders. To this extent, our practice varies from the requirement of Nasdaq Listing Rule 5620(c), which requires an issuer to provide in its bylaws for a generally applicable quorum, and that such quorum may not be less than one-third of the outstanding voting shares. Although we must provide shareholders with an agenda and other relevant documents for the general meeting of shareholders, Dutch law does not have a regulatory regime for the solicitation of proxies and the solicitation of proxies is not a generally accepted business practice in the Netherlands, thus our practice will vary from the requirement of Nasdaq Listing Rule 5620(b). As permitted by the listing requirements of Nasdaq, we have also opted out of the requirements of Nasdaq Listing Rule 5605(d), which requires, among other things, an issuer to have a compensation committee that consists entirely of independent directors, Nasdaq Listing Rule 5605(e), which requires independent director oversight of director nominations, and Nasdaq Listing Rule 5605(b)(2), which requires an issuer to have a majority of independent directors on its board. We will also rely on the phase-in rules of the SEC and Nasdaq with respect to the independence of our audit committee. These rules require that a majority of our directors must be independent and all members of our audit committee must meet the independence standard for audit committee members within one year of the effectiveness of the registration statement of which this prospectus forms a part. In addition, we have opted out of shareholder approval requirements, as included in the Nasdaq Listing Rules, for the issuance of securities in connection with certain events such as the acquisition of shares or assets of another company, the establishment of or amendments to equity-based compensation plans for employees, a change of control of the Company and certain private placements. To this extent, our practice varies from the requirements of Nasdaq Rule 5635, which generally requires an issuer to obtain shareholder approval for the issuance of securities in connection with such events. For an overview of our corporate governance principles, see "Description of Share Capital and Articles of Association." Accordingly, you may not have the same protections afforded to shareholders of companies that are subject to these Nasdaq requirements.

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If we fail to implement effective internal controls over financial reporting, such failure could result in material misstatements in our financial statements, cause investors to lose confidence in our reported financial and other public information and have a negative effect on the trading price of our common shares.

        Effective internal controls over financial reporting are necessary for us to provide reliable financial reports and, together with adequate disclosure controls and procedures, are designed to prevent fraud. Any failure to implement required new or improved controls, or difficulties encountered in their implementation could cause us to fail to meet our reporting obligations. Section 404 of the Sarbanes-Oxley Act of 2002 requires management of public companies to develop and implement internal controls over financial reporting and evaluate the effectiveness thereof. If we fail to design and operate effective internal controls, it could result in material misstatements in our financial statements, impair our ability to raise revenue, result in the loss of investor confidence in the reliability of our financial statements and subject us to regulatory scrutiny and sanctions, which in turn could harm the market value of our common shares.

        We will be required to disclose changes made in our internal controls and procedures and our management will be required to assess the effectiveness of these controls annually. However, for as long as we are an "emerging growth company" under the JOBS Act, our independent registered public accounting firm will not be required to attest to the effectiveness of our internal controls over financial reporting pursuant to Section 404. We could be an "emerging growth company" for up to five years after this offering. An independent assessment of the effectiveness of our internal controls could detect problems that our management's assessment might not. Undetected material weaknesses in our internal controls could lead to financial statement restatements and require us to incur the expense of remediation. See "Prospectus Summary—Implications of Being an Emerging Growth Company."

We have identified material weaknesses in our internal control over financial reporting and may identify additional material weaknesses in the future that may cause us to fail to meet our reporting obligations or result in material misstatements of our financial statements. If we fail to remediate our material weakness or if we fail to establish and maintain an effective system of internal control over financial reporting, we may not be able to report our financial results accurately or to prevent fraud.

        Effective internal controls over financial reporting are necessary for us to provide reliable financial reports and, together with adequate disclosure controls and procedures, are designed to prevent fraud. Any failure to implement required new or improved controls, or difficulties encountered in their implementation could cause us to fail to meet our reporting obligations. Section 404 of the Sarbanes-Oxley Act of 2002 requires management of public companies to develop and implement internal controls over financial reporting and evaluate the effectiveness thereof. A material weakness is a deficiency or a combination of deficiencies in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our financial statements will not be prevented or detected on a timely basis.

        In connection with the preparation of our unaudited interim condensed consolidated financial statements as of and for the nine month period ended September 30, 2018, we identified a material weakness in our internal controls as of December 31, 2017, related to the lack of effective review controls over closing entries in our financial statement close process. The material weakness was not fully remediated as of December 31, 2018. See "Management's Discussion and Analysis of Financial Condition and Results of Operations—Internal control over financial reporting."

        In response to such material weakness, management hired appropriate accounting and financial professionals with the experience and knowledge necessary to review the accounting and internal control processes and procedures to address the material weakness identified. In addition, further internal control procedures were implemented to improve the financial reporting process and additional

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trainings are planned for our accounting and financial reporting personnel. Although we are working to remediate the material weakness as quickly and efficiently as possible, we cannot at this time estimate how long it will take, and our initiatives may not prove to be successful in remediating the material weakness. If we are unable to successfully remediate our identified material weakness, if we discover additional material weaknesses or if we otherwise are unable to report our financial statements accurately or in a timely manner, we would be required to continue disclosing such material weaknesses in future filings with the SEC, which could adversely affect our business, investor confidence in our company and the market price of our common shares and could subject us to litigation or regulatory enforcement actions. As a result, shareholders could lose confidence in our financial and other public reporting, which would harm our business and the market value of our common shares.

        We will be required to disclose changes made in our internal controls and procedures and our management will be required to assess the effectiveness of these controls annually. However, for as long as we are an "emerging growth company" under the JOBS Act, our independent registered public accounting firm will not be required to attest to the effectiveness of our internal controls over financial reporting pursuant to Section 404. We could be an "emerging growth company" for up to five years. An independent assessment of the effectiveness of our internal controls could detect problems that our management's assessment might not. Undetected material weaknesses in our internal controls could lead to financial statement restatements and require us to incur the expense of remediation.

Insiders will continue to have substantial control over us after this offering and could limit your ability to influence the outcome of key transactions, including a change of control.

        Our principal shareholders, directors and executive officers and entities affiliated with them will own approximately        % of the outstanding common shares after this offering. As a result, these shareholders, if acting together, would be able to influence or control matters requiring approval by our general meeting of shareholders, including the election of managing directors and supervisory directors, changes to our articles of association and the approval of mergers or other extraordinary transactions. They may also have interests that differ from yours and may vote in a way with which you disagree and which may be adverse to your interests. The concentration of ownership may have the effect of delaying, preventing or deterring a change of control of our company, could deprive our shareholders of an opportunity to receive a premium for their common shares as part of a sale of our company and might ultimately affect the market price of our common shares.

We do not anticipate paying any cash dividends in the foreseeable future.

        We currently intend to retain our future earnings, if any, for the foreseeable future, to repay indebtedness and to fund the development and growth of our business. We do not intend to pay any dividends to holders of our common shares. As a result, capital appreciation in the price of our common shares, if any, will be your only source of gain on an investment in our common shares.

If we do pay dividends, we may need to withhold tax on such dividends payable to holders of our shares in both Germany and the Netherlands.

        As an entity incorporated under Dutch law, any dividends distributed by us are subject to Dutch dividend withholding tax on the basis of Dutch domestic law. On the basis of the 2012 Convention between the Federal Republic of Germany and the Kingdom of the Netherlands for the avoidance of double taxation with respect to taxes on income (the "double tax treaty between Germany and the Netherlands"), however, the Netherlands will be restricted in imposing these taxes if the Company is also a tax resident of Germany and its effective management is located in Germany. See "Risk factors—We may become taxable in a jurisdiction other than Germany and this may increase the aggregate tax burden on us." Dutch dividend withholding tax is, however, still required to be withheld from dividends if and when paid to Dutch resident holders of our common shares (and non-Dutch

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resident holders of our common shares that have a permanent establishment in the Netherlands to which their shareholding is attributable). As a result, upon a payment of dividends, we will be required to identify our shareholders in order to assess whether there are Dutch residents (or non-Dutch residents with a permanent establishment in the Netherlands to which the common shares are attributable) in respect of which Dutch dividend tax has to be withheld. Such identification may not always be possible in practice. As the dividend withholding tax liability of a Dutch resident shareholder can generally be credited against such shareholder's (corporate) income tax liability, we may approach the Dutch tax authorities prior to a payment of dividends to apply for a tax ruling confirming that no withholding of any Dutch withholding tax is required. The outcome of such tax ruling request is, however, uncertain. If a favorable tax ruling cannot be obtained and if the identity of our shareholders cannot be determined, withholding of both German and Dutch dividend tax may occur upon a payment of dividends.

New investors in our common shares will experience immediate and substantial book value dilution after this offering.

        The initial public offering price of our common shares will be substantially higher than the pro forma net tangible book value per share of the outstanding common shares immediately after the offering. Based on an assumed initial public offering price of $            per share (the midpoint of the price range set forth on the cover of this prospectus) and our net tangible book value as of June 30, 2019, if you purchase our common shares in this offering you will pay more for your shares than the amounts paid by our existing shareholders for their shares and you will suffer immediate dilution of $            per share in pro forma net tangible book value. As a result of this dilution, investors purchasing shares in this offering may receive significantly less than the full purchase price that they paid for the shares purchased in this offering in the event of a liquidation.

        We also have approximately            outstanding share options to purchase common shares with exercise prices that are below the assumed initial public offering price of the common shares. To the extent that these options are exercised, there will be further dilution.

Shareholders may not be able to exercise preemptive rights and, as a result, may experience substantial dilution upon future issuances of common shares

        In the event of an issuance of common shares, subject to certain exceptions, each shareholder will have a pro rata preemptive right in proportion to the aggregate nominal value of the common shares held by such holder. These preemptive rights may be restricted or excluded by a resolution of the general meeting of shareholders or by another corporate body designated by the general meeting of shareholders. Prior to the closing of this offering, our management board, subject to approval of our supervisory board, will be authorized, for a period of five years to issue shares or grant rights to subscribe for shares up to our authorized share capital from time to time and to limit or exclude preemptive rights in connection therewith. This could cause existing shareholders to experience substantial dilution of their interest in us.

If equity and industry research analysts publish negative evaluations of or downgrade our common shares, the price of our common shares could decline.

        The trading market for our common shares relies in part on the research and reports that equity and industry research analysts publish about us or our business. We do not control these analysts. If one or more of the analysts covering our business downgrade their evaluations of our common shares, the price of our common shares could decline. If one or more of these analysts cease to cover our common shares, we could lose visibility in the market for our common shares, which in turn could cause our common shares price to decline.

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We may become taxable in a jurisdiction other than Germany and this may increase the aggregate tax burden on us.

        Since our incorporation we have had, on a continuous basis, our place of "effective management" in Germany. We will therefore qualify as a tax resident of Germany on the basis of German domestic law. As an entity incorporated under Dutch law, however, we also qualify as a tax resident of the Netherlands on the basis of Dutch domestic law. However, based on our current management structure and the current tax laws of the United States, Germany and the Netherlands, as well as applicable income tax treaties, and current interpretations thereof, we should qualify solely as a tax resident of Germany for the purposes of the double tax treaty between Germany and the Netherlands due to the "effective management" tie-breaker. The test of "effective management" is largely a question of fact and degree based on all the circumstances, rather than a question of law. Nevertheless, the relevant case law and OECD guidance suggest that the Company is likely to be regarded as having become German tax resident from incorporation and remaining so if, as the Company intends, (i) most meetings of its management board are held in Germany (and none will be held in the Netherlands) with a majority of directors present in Germany for those meetings; (ii) at those meetings there are full discussions of, and decisions are made regarding, the key strategic issues affecting the Company and its subsidiaries; (iii) those meetings are properly minuted; (iv) at least some of the directors of the Company, together with supporting staff, are based in Germany; and (v) the Company has permanent staffed office premises in Germany. We may, however, become subject to limited income tax liability in other countries with regard to the income generated in the respective other country, for example, due to the existence of a permanent establishment or a permanent representative in such other country.

        The applicable tax laws or interpretations thereof may change. Furthermore, whether we have our place of effective management in Germany and are as such tax resident in Germany is largely a question of fact and degree based on all the circumstances, rather than a question of law, which facts and degree may also change. Changes to applicable laws or interpretations thereof and changes to applicable facts and circumstances (for example, a change of board members or the place where board meetings take place), may result in us becoming a tax resident of a jurisdiction other than Germany. As a consequence, our overall effective income tax rate and income tax expense could materially increase, which could have a material adverse effect on our business, results of operations, financial condition and prospects, which could cause our share price and trading volume to decline. However, if there is a double tax treaty between Germany and the respective other country, the double taxation of income may be reduced or avoided entirely.

Our ability to use our net operating loss carryforwards and other tax attributes may be limited.

        Our ability to utilize our net operating losses ("NOLs") is currently limited, and may be limited further, under Section 8c of the German Corporation Income Tax Act (Körperschaftsteuergesetz, the "KStG") and Section 10a of the German Trade Tax Act (Gewerbesteuergesetz, the "GewStG"). These limitations apply if a qualified ownership change, as defined by Section 8c KStG, occurs and no exemption is applicable.

        Generally, a qualified ownership change occurs if more than 50% of the share capital or the voting rights are directly or indirectly transferred to a shareholder or a group of shareholders within a period of five years. A qualified ownership change may also occur in case of a transaction comparable to a transfer of shares or voting rights or in case of an increase in capital leading to a respective change in the shareholding. In the case of such a qualified ownership change tax loss carryforwards expire in full. To the extent that the tax loss carryforwards do not exceed hidden reserves (stille Reserven) taxable in Germany, they may be further utilized despite a qualified ownership change. In case of a qualified ownership change within a group, tax loss carryforwards will be preserved if certain conditions are satisfied. In case of a qualified ownership change, tax loss carryforwards will be preserved (in the form

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of a "fortführungsgebundener Verlustvortrag") if the business operations have not been changed and will not be changed within the meaning of Section 8d KStG.

        According to another appeal filed by the fiscal court of Hamburg dated August 29, 2017, Section 8c, paragraph 1, sentence 1 KStG is not in line with the German constitution. The appeal is still pending. It is unclear when the Federal Constitutional Court will decide this case. According to statements in German legal literature, there are good reasons to believe that the Federal Constitutional Court may come to the conclusion that Section 8, paragraph 1, sentence 1 KStG is not in line with the German constitution.

        As of December 31, 2018, we had unrecognized NOL carryforwards for German tax purposes of €21,728 thousand available. Future changes in share ownership may also trigger an ownership change and, consequently, a Section 8c KStG or a Section 10a GewStG limitation. Any limitation may result in the expiration of a portion or the complete tax operating loss carryforwards before they can be utilized. As a result, if we earn net taxable income, our ability to use our pre-change net operating loss carryforwards to reduce German income tax may be subject to limitations, which could potentially result in increased future cash tax liability to us.

Although we do not believe that we were a "passive foreign investment company," or a PFIC, for U.S. federal income tax purposes in 2018, we may be a PFIC in 2019 or one or more future taxable years. If we are a PFIC in 2019 or any future taxable year, U.S. shareholders may be subject to adverse U.S. federal income tax consequences.

        Under the Internal Revenue Code of 1986, as amended (the "Code"), we will be a PFIC for any taxable year in which, after the application of certain look-through rules with respect to subsidiaries, either (i) 75% or more of our gross income consists of passive income or (ii) 50% or more of the average quarterly value of our assets consists of assets that produce, or are held for the production of, passive income. Passive income includes, among other things, dividends, interest, certain non-active rents and royalties, and capital gains. Based on our current operations, income, assets and certain estimates and projections, including as to the relative values of our assets and the treatment of our grants received as gross income that is not passive income, we do not believe that we were a PFIC for our 2018 taxable year. However, there can be no assurance that the Internal Revenue Service (the "IRS") will agree with our conclusion. In addition, whether we will be a PFIC in 2019 or any future taxable year is uncertain because, among other things, (i) we currently own, and will own after the closing of this offering, a substantial amount of passive assets, including cash, (ii) the valuation of our assets that generate non-passive income for PFIC purposes, including our intangible assets, is uncertain and may vary substantially over time, and (iii) the composition of our income may vary substantially over time. Accordingly, there can be no assurance that we will not be a PFIC for any taxable year.

        If we are a PFIC for any taxable year during which a U.S. investor holds common shares, we would continue to be treated as a PFIC with respect to that U.S. investor for all succeeding years during which the U.S. investor holds common shares, even if we ceased to meet the threshold requirements for PFIC status, unless certain exceptions apply. Such a U.S. investor may be subject to adverse U.S. federal income tax consequences, including (i) the treatment of all or a portion of any gain on disposition as ordinary income, (ii) the application of a deferred interest charge on such gain and the receipt of certain dividends and (iii) compliance with certain reporting requirements. We do not intend to provide the information that would enable investors to make a qualified electing fund election (a "QEF Election") that could mitigate the adverse U.S. federal income tax consequences should we be classified as a PFIC.

        For further discussion, see "Taxation—Material U.S. Federal Income Tax Considerations for U.S. Holders."

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Upon the closing of this offering, we will be a Dutch public company. The rights of our shareholders may be different from the rights of shareholders in companies governed by the laws of U.S. jurisdictions and may not protect investors in a similar fashion afforded by incorporation in a U.S. jurisdiction.

        Upon the closing of this offering, we will be a public company (naamloze vennootschap) organized under the laws of the Netherlands. Our corporate affairs are governed by our articles of association and by the laws governing companies incorporated in the Netherlands. A further summary of applicable Dutch company law is contained in this prospectus under "Description of Share Capital and Articles of Association." However, there can be no assurance that Dutch law will not change in the future or that it will serve to protect investors in a similar fashion afforded under corporate law principles in the United States, which could adversely affect the rights of investors.

        The rights of shareholders and the responsibilities of managing directors and supervisory directors may be different from the rights and obligations of shareholders and board members in companies governed by the laws of U.S. jurisdictions. In the performance of their duties, our managing directors and supervisory directors are required by Dutch law to consider the interests of our company, its shareholders, its employees and other stakeholders, in all cases with due observation of the principles of reasonableness and fairness. It is possible that some of these parties will have interests that are different from, or in addition to, your interests as a shareholder.

        For more information, we have provided summaries of relevant Dutch corporation law and of our articles of association under "Description of Share Capital and Articles of Association."

Provisions of our articles of association or Dutch corporate law might deter acquisition bids for us that might be considered favorable and prevent, delay or frustrate any attempt to replace or remove the members of our management board or supervisory board.

        Under Dutch law, various protective measures are possible and permissible within the boundaries set by Dutch law and Dutch case law. In this respect, certain provisions of our articles of association may make it more difficult for a third party to acquire control of us or effect a change in our management board and supervisory board. These include:

    a provision that our managing directors and supervisory directors are appointed on the basis of a binding nomination prepared by our supervisory board which can only be overruled by a two-thirds majority of votes cast representing more than 50% of our issued share capital;
    a provision that our managing directors and supervisory directors may only be dismissed by the general meeting of shareholders by a two-thirds majority of votes cast representing more than 50% of our issued share capital (unless the dismissal is proposed by the supervisory board in which case a simple majority of the votes would be sufficient); and
    a requirement that certain matters, including an amendment of our articles of association, may only be brought to our shareholders for a vote upon a proposal by our management board with the approval of our supervisory board.

We are not obligated to, and do not, comply with all best practice provisions of the Dutch Corporate Governance Code.

        Upon the closing of this offering, we will be subject to the DCGC. The DCGC contains both principles and best practice provisions that regulate relations between the management board, the supervisory board and the shareholders. The DCGC is based on a "comply or explain" principle. Accordingly, companies are required to disclose in their annual reports, filed in the Netherlands, whether they comply with the provisions of the DCGC. If they do not comply with those provisions (for example, because of a conflicting Nasdaq requirement), the company is required to give the reasons for such non-compliance. The DCGC applies to Dutch companies listed on a government-recognized stock exchange, whether in the Netherlands or elsewhere, including Nasdaq. We do not comply with all best

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practice provisions of the DCGC. For further information, see "Description of Share Capital and Articles of Association." This may affect your rights as a shareholder and you may not have the same level of protection as a shareholder in a Dutch company that fully complies with the DCGC.

Claims of U.S. civil liabilities may not be enforceable against us.

        We are incorporated under the laws of the Netherlands, and our headquarters is located in Germany. Most of our assets are located outside the United States. The majority of our management board and supervisory board reside outside the United States. As a result, it may not be possible for investors to effect service of process within the United States upon such persons or to enforce against them or us in U.S. courts, including judgments predicated upon the civil liability provisions of the federal securities laws of the United States.

        There is currently no treaty between the United States and the Netherlands for the mutual recognition and enforcement of judgments (other than arbitration awards) in civil and commercial matters. Therefore, a final judgment for the payment of money rendered by any federal or state court in the United States based on civil liability, whether or not predicated solely upon the U.S. federal securities laws, would not be enforceable in the Netherlands unless the underlying claim is relitigated before a Dutch court of competent jurisdiction. Under current practice, however, a Dutch court will generally, subject to compliance with certain procedural requirements, grant the same judgment without a review of the merits of the underlying claim if such judgment (i) is a final judgment and has been rendered by a court which has established its jurisdiction vis-à-vis the relevant Dutch companies or Dutch company, as the case may be, on the basis of internationally accepted grounds of jurisdiction, (ii) has not been rendered in violation of principles of proper procedure (behoorlijke rechtspleging), (iii) is not contrary to the public policy of the Netherlands, and (iv) is not incompatible with (a) a prior judgment of a Netherlands court rendered in a dispute between the same parties, or (b) a prior judgment of a foreign court rendered in a dispute between the same parties, concerning the same subject matter and based on the same cause of action, provided that such prior judgment is capable of being recognized in the Netherlands. Dutch courts may deny the recognition and enforcement of punitive damages or other awards. Moreover, a Dutch court may reduce the amount of damages granted by a U.S. court and recognize damages only to the extent that they are necessary to compensate actual losses or damages. Enforcement and recognition of judgments of U.S. courts in the Netherlands are solely governed by the provisions of the Dutch Code of Civil Procedure.

        The United States and Germany currently do not have a treaty providing for the reciprocal recognition and enforcement of judgments, in civil and commercial matters. Consequently, a final judgment for payment or declaratory judgments given by a court in the United States, whether or not predicated solely upon U.S. securities laws, would not automatically be recognized or enforceable in Germany. German courts may deny the recognition and enforcement of a judgment rendered by a U.S. court if they consider the U.S. court not to be competent or the decision to be in violation of German public policy principles. For example, judgments awarding punitive damages are generally not enforceable in Germany. A German court may reduce the amount of damages granted by a U.S. court and recognize damages only to the extent that they are necessary to compensate actual losses or damages.

        In addition, actions brought in a German court against us, our directors, our senior management and the experts named herein to enforce liabilities based on U.S. federal securities laws may be subject to certain restrictions. In particular, German courts generally do not award punitive damages. Litigation in Germany is also subject to rules of procedure that differ from the U.S. rules, including with respect to the taking and admissibility of evidence, the conduct of the proceedings and the allocation of costs. German procedural law does not provide for pre-trial discovery of documents, nor does Germany support pre-trial discovery of documents under the 1970 Hague Evidence Convention. Proceedings in

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Germany would have to be conducted in the German language and all documents submitted to the court would, in principle, have to be translated into German. For these reasons, it may be difficult for a U.S. investor to bring an original action in a German court predicated upon the civil liability provisions of the U.S. federal securities laws against us, our directors, our senior management and the experts named in this prospectus.

        Based on the foregoing, there can be no assurance that U.S. investors will be able to enforce against us or directors, executive officers or certain experts named herein who are residents of or possessing assets in the Netherlands, Germany, or other countries other than the United States any judgments obtained in U.S. courts in civil and commercial matters, including judgments under the U.S. federal securities.

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

        This prospectus contains statements that constitute forward-looking statements. All statements other than present and historical facts and conditions contained in this prospectus, including statements regarding our future results of operations and financial position, business strategy, plans and our objectives for future operations, are forward-looking statements. When used in this prospectus, the words "anticipate," "believe," "can," "could," "estimate," "expect," "intend," "is designed to," "may," "might," "plan," "potential," "predict," "objective," "should," or the negative of these and similar expressions identify forward-looking statements.

        Forward-looking statements are based on our management's beliefs and assumptions and on information currently available to our management. Such statements are subject to risks and uncertainties, and actual results may differ materially from those expressed or implied in the forward-looking statements due to various factors, including, but not limited to, those identified under the section entitled "Risk Factors" in this prospectus. These risks and uncertainties include factors relating to:

    our ability to effectively manage our future growth and to execute our business strategy;
    our ability to generate sufficient revenue from our relationships with our pharmaceutical partners and clients, and to otherwise maintain our current relationships, or enter into new relationships, with pharmaceutical partners and clients;
    our expectations for our products and solutions achieving commercial market acceptance, and our ability to keep pace with the rapidly evolving industry in which we operate;
    our assumptions regarding market size in the rare disease industry and our growth potential;
    our pharmaceutical partners' and clients' need for rare disease information products and solutions and any perceived advantage of our products over those of our competitors;
    our ability to manage our international expansion, including our exposure to new and complex business, regulatory, political, operational, financial, and economic risks, and numerous and conflicting legal and regulatory requirements;
    our continued reliance on our senior management team, in particular our CEO, and other qualified personnel and our ability to retain such personnel;
    our ability to obtain, maintain, protect and enforce sufficient patent and other intellectual property protection for any products or solutions we develop and for our technology;
    the ongoing protection of our trade secrets, know-how, and other confidential and proprietary information;
    our ability to remediate our material weakness on internal control over financial reporting;
    general economic, political, demographic and business conditions in North America, the Middle East, Europe and other regions in which we operate;
    changes in government and industry regulation and tax matters;
    other factors that may affect our financial condition, liquidity and results of operations; and
    other risk factors discussed under "Risk Factors."

        You should refer to the section of this prospectus titled "Risk Factors" for a discussion of important factors that may cause our actual results to differ materially from those expressed or implied by our forward-looking statements. As a result of these factors, we cannot assure you that the forward-looking statements in this prospectus will prove to be accurate. Furthermore, if our forward-looking statements prove to be inaccurate, the inaccuracy may be material. In light of the significant uncertainties in these forward-looking statements, you should not regard these statements as a representation or warranty by us or any other person that we will achieve our objectives and plans in any specified time frame or at all. We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. The Private Securities Litigation Reform Act of 1995 and Section 27A of the Securities Act do not protect any forward-looking statements that we make in connection with this offering.

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        You should read this prospectus and the documents that we reference in this prospectus and have filed with the SEC as exhibits to the registration statement of which this prospectus is a part with the understanding that our actual future results, levels of activity, performance, events and circumstances may be materially different from what we expect. We qualify all of our forward-looking statements by these cautionary statements.

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USE OF PROCEEDS

        We estimate that the net proceeds to us from the issuance and sale of            common shares in this offering will be approximately $             million (or $             million if the underwriters exercise in full their option to purchase additional shares), assuming an initial public offering price of $            per common share, which is the midpoint of the price range set forth on the cover page of this prospectus, and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us.

        We currently expect to use the net proceeds from this offering as follows:

    approximately $             million for research and development under our pharmaceutical segment, including the development of biomarkers, as well as for growth of our partnership opportunities through sales and marketing investments;
    approximately $             million for the development of our knowledge-driven information platform, including investments in new information technology, artificial intelligence and other software solutions that improve our processes and enhance our data documentation, and for the development of solutions driving precision medicine based treatments; and
    the remainder for working capital and other general corporate purposes.

        This expected use of the net proceeds from the offering represents our intentions based upon our current plans and business conditions. As of the date of this prospectus, we cannot predict with certainty all of the particular uses for the net proceeds to be received upon the completion of the offering or the amounts that we will actually spend on the uses set forth above. The amounts and timing of our actual expenditures may vary significantly depending on numerous factors, including the progress of our research and development efforts and the expansion of our suite of solutions, as well as any collaborations that we may enter into with new or existing pharmaceutical partners and any unforeseen cash needs. As a result, our management will retain broad discretion over the allocation of the net proceeds from the offering.

        Pending our use of the net proceeds from the offering, we intend to invest the net proceeds in a variety of capital preservation investments, including short-term, investment-grade, interest-bearing instruments.

        Each $1.00 increase (decrease) in the assumed initial public offering price of $            per share would increase (decrease) the net proceeds to us from this offering by approximately $             million, assuming the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us. Each increase (decrease) of 1.0 million in the number of shares we are offering would increase (decrease) the net proceeds to us from this offering, after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us, by approximately $             million, assuming the assumed initial public offering price remains the same. The actual net proceeds payable to us will adjust based on the actual number of common shares sold by us, the actual public offering price and other terms of the offering determined at pricing.

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DIVIDENDS AND DIVIDEND POLICY

        Under Dutch law, we may only pay dividends following the closing of the offering to the extent our shareholders' equity (eigen vermogen) exceeds the sum of the paid-up and called-up share capital plus the reserves required to be maintained by Dutch law or by our articles of association. Subject to such restrictions, the amount of any distributions will depend on many factors, such as our results of operations, financial condition, cash requirements, prospects and other factors deemed relevant by our management board and supervisory board. We have not adopted a formal dividend policy with respect to future dividends. We may adopt such a policy in the future, in which case we intend either to place a discussion of such policy on the agenda for our annual general meetings of shareholders, consistent with the DCGC, or to disclose a deviation from the DCGC in this respect in our statutory annual report.

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CORPORATE REORGANIZATION

Introduction

        Centogene B.V. is a Dutch private company with limited liability (besloten vennootschap met beperkte aansprakelijkheid) that was incorporated for the purpose of making this offering. Upon the incorporation of Centogene B.V., Prof. Arndt Rolfs, our CEO, became the sole director and the sole shareholder of Centogene B.V., holding one common share in the capital of Centogene B.V., the nominal value of which (in the amount of €0.12) has not been paid up. Centogene B.V. has no assets, liabilities or contingent liabilities and will have no assets, liabilities or contingent liabilities until the completion of our corporate reorganization. As part of the corporate reorganization, all of the interests in Centogene AG will be exchanged for new common shares of Centogene B.V. to be issued to the existing security holders of Centogene AG in the course of such exchange, and as a result, Centogene AG will become a wholly owned subsidiary of Centogene B.V., while the current shareholders of Centogene AG will become the shareholders of Centogene B.V. In connection with such exchange, the common share in Centogene B.V. held by Prof. Rolfs will be cancelled (ingetrokken). Subsequently, Centogene B.V. will convert into a Dutch public company (naamloze vennootschap) and change its name to Centogene N.V. Therefore, investors in this offering will only acquire, and this prospectus only describes the offering of, common shares of Centogene N.V. We refer to the reorganization described above as our "corporate reorganization."

        In connection with the corporate reorganization, Centogene AG will take initial steps of its conversion into a GmbH under German law. However, such transformation will only be completed following the consummation of the offering.

        The corporate reorganization will take place in several steps, as described below.

Exchange of Centogene AG Securities for Centogene B.V. Common Shares

        Immediately following the pricing of this offering, the existing shareholders of Centogene AG will each become a party to a separate notarial deed of issue under Dutch law, the existing shareholders will (i) subscribe for new common shares in Centogene B.V. and (ii) agree to transfer their respective shares (both common and preferred) in Centogene AG to Centogene B.V. as a contribution in kind on the aforementioned common shares in Centogene B.V. The actual amount of common shares in Centogene B.V. which the holders of common shares in Centogene AG on the one hand and the holders of preferred shares in Centogene AG on the other hand may subscribe for, will be calculated pursuant to and consistent with the liquidation preference arrangement included in the Shareholders Agreement (as defined in "Certain Relationships and Related Party Transactions—Investment and Shareholders Agreement). Immediately thereafter, the existing shareholders of Centogene AG will effect such transfer of their respective shares (both common and preferred) in Centogene AG to Centogene B.V. in accordance with German law. As a result thereof, Centogene B.V. will become the sole shareholder of Centogene AG.

Shares of Centogene B.V. to be Outstanding After the Corporate Reorganization

        Preferred shares of Centogene AG will be exchanged for common shares of Centogene B.V. on a             -to-             basis as provided for in each notarial deed of issue.

        Common shares of Centogene AG will be exchanged for common shares of Centogene B.V. on a            -to-            basis as provided for in each notarial deed of issue

        Upon completion of this share exchange (and prior to the closing of this offering), the current shareholders of Centogene AG will hold an aggregate of            common shares of Centogene B.V.

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Conversion of Centogene B.V. into Centogene N.V.

        As part of the corporate reorganization, the legal form of Centogene B.V. will be converted from a Dutch private company with limited liability (besloten vennootschap met beperkte aansprakelijkheid) to a Dutch public company (naamloze vennootschap), and the articles of association of Centogene N.V. will become effective. Such final step will take place by means of the execution of a notarial deed of conversion and amendment, which will take place prior to the listing of our common shares on Nasdaq. This deed of conversion and amendment shall be executed following the delivery of a Dutch auditor's statement confirming that, on a day within five months prior to the conversion, our shareholders' equity was at least equal to the paid-up part of our issued share capital as set forth in the deed of conversion and amendment. The conversion will result in a name change from Centogene B.V. to Centogene N.V. Our articles of association, as they will read upon the closing of this offering, are further described in the section "Description of Share Capital and Articles of Association" and are filed (as an English translation of the official Dutch version) as an exhibit to the registration statement of which this prospectus forms a part.

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CAPITALIZATION

        The table below sets forth our capitalization (defined as long-term debt and shareholders' equity) as of June 30, 2019 derived from our unaudited interim condensed consolidated financial statements prepared in accordance with IFRS:

    on an actual basis;
    on a pro forma basis to give effect to our corporate reorganization; and
    on a pro forma as adjusted basis to give further effect to the issuance and sale of            common shares in this offering, assuming an initial public offering price of $            per common share, after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us.

        This table should be read in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations," "Corporate Reorganization," "Certain Relationships and Related Party Transactions" and the consolidated financial statements and notes thereto appearing elsewhere in this prospectus.

 
  June 30, 2019
 
  Actual   Pro Forma   Pro Forma
As Adjusted(1)
 
  (€ in thousands)
 
  (unaudited)

Cash and cash equivalents

    3,564                              

Liabilities

             

Non-current loans

    12,025        

Current loans

    5,524        

Total debt

    17,549        

Equity

             

Issued capital

    322        

Capital reserve

    47,411        

Retained earnings and other reserves

    (31,390 )      

Non-controlling interests

    (883 )      

Total shareholders' equity

    15,460        

Total capitalization

    33,009        

(1)
Each $1.00 increase (decrease) in the assumed initial public offering price of $            per share would increase (decrease) the net proceeds to us from this offering by approximately $             million, assuming the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us. Each increase (decrease) of 1.0 million in the number of shares we are offering would increase (decrease) the net proceeds to us from this offering, after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us, by approximately $             million, assuming the assumed initial public offering price remains the same. The actual net proceeds payable to us will adjust based on the actual number of common shares sold by us, the actual public offering price and other terms of the offering determined at pricing.

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        The above table is based on 322,007 common and Series A preferred shares of Centogene AG outstanding as of June 30, 2019 and excludes:

    16,374 common shares of Centogene AG issuable upon the exercise of virtual share options outstanding under our 2017 Virtual Share Option Plan as of June 30, 2019, which options will be converted into awards exercisable for common shares of Centogene N.V. on a      to      basis, and after the consummation of this offering; and
    Any common shares to be issued pursuant to our 2019 Equity Incentive Plan, which will become effective prior to the completion of this offering and includes provisions that automatically adjust the number of common shares reserved for issuance thereunder each year (see "Management—Compensation of Managing Directors, Supervisory Directors and Officers—2019 Equity Incentive Plan").

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DILUTION

        If you invest in our common shares in this offering, your ownership interest will be diluted to the extent of the difference between the initial public offering price per share and the as adjusted net tangible book value per common share after this offering.

        At June 30, 2019, we had a pro forma net tangible book value of $             million (€             million), corresponding to a pro forma net tangible book value of $            per common share (€            per common share). Pro forma net tangible book value represents the amount of our total assets less our total liabilities, excluding intangible assets, divided by            , the number of common shares issued and outstanding, after giving effect to the corporate reorganization.

        After giving further effect to the sale of the                        common shares offered by us in the offering, and considering an offering price of $            per common share (€            per common share), after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us, our pro forma as adjusted net tangible book value estimated at June 30, 2019 would have been $            (€            ), representing $            per common share (€            per common share). This represents an immediate increase in pro forma net tangible book value of $            per common share (€             per common share) to existing shareholders and an immediate dilution in net tangible book value of $            per common share (€            per common share) to new investors purchasing common shares in this offering. Dilution for this purpose represents the difference between the price per common shares paid by these purchasers and net tangible book value per common share immediately after the completion of the offering.

        The following table illustrates this dilution to new investors purchasing common shares in the offering.

 
  $    

Assumed initial public offering price per common share

                                 

Pro forma net tangible book value per common share at June 30, 2019 after giving effect to the corporate reorganization

           

Increase in net tangible book value per common share attributable to new investors

           

Pro forma as adjusted net tangible book value per common share at June 30, 2019 after giving effect to the corporate reorganization and the offering

           

Dilution per common share to new investors

           

Percentage of dilution per common share to new investors

           

        Each $1.00 increase (decrease) in the offering price per common share, respectively, would increase (decrease) the pro forma as adjusted net tangible book value after this offering by $            per common share (€            per common share) and the dilution to new investors purchasing common shares in the offering by $            per common share (€            per common share). Each increase (decrease) of 1.0 million in the number of shares we are offering would increase (decrease) the pro forma as adjusted net tangible book value after this offering by $            per common share (€            per common share) and the dilution to new investors purchasing common shares in the offering by $            per common share (€            per common share).

        If the underwriters were to fully exercise their option to purchase additional shares, the pro forma as adjusted net tangible book value per common share after the offering would be $            per common share (€            per common share), and the dilution per common share to new investors would be $            per common share (€            per common share), in each case at the initial public offering price of $            per common share (€            per common share).

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        The above table is based on 322,007 common and Series A preferred shares of Centogene AG outstanding as of June 30, 2019 and excludes:

    16,374 common shares of Centogene AG issuable upon the exercise of virtual share options outstanding under our 2017 Virtual Share Option Plan as of June 30, 2019, which options will be converted into awards exercisable for common shares of Centogene N.V. on a      to      basis, and after the consummation of this offering; and
    Any common shares to be issued pursuant to our 2019 Equity Incentive Plan, which will become effective prior to the completion of this offering and includes provisions that automatically adjust the number of common shares reserved for issuance thereunder each year (see "Management—Compensation of Managing Directors, Supervisory Directors and Officers—2019 Equity Incentive Plan").

        Certain of our existing institutional or other investors or their affiliates have committed to, or indicated an interest in, purchasing common shares in this offering in an aggregate amount of up to $30 million. Because indications of interest are not binding agreements or commitments to purchase, the underwriters may determine to sell more, less or no common shares in this offering to any of these investors, or any of these investors may determine to purchase more, less or no common shares in this offering, including as a result of the pricing terms. The foregoing discussion and tables do not reflect any potential purchases by these investors to the extent any such investor is an existing investor or affiliate thereof.

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SELECTED FINANCIAL INFORMATION

        The following selected consolidated statement of financial position as of December 31, 2017 and 2018, and the consolidated statement of comprehensive loss for the years ended December 31, 2016, 2017 and 2018 of Centogene AG are derived from the consolidated financial statements included elsewhere in this prospectus, which have been audited by Ernst & Young.

        The following selected interim condensed consolidated statement of financial position as of June 30, 2019 and the interim condensed consolidated statement of comprehensive loss for the six-months ended June 30, 2018 and 2019 of Centogene AG are derived from the unaudited interim condensed consolidated financial statements included elsewhere in this prospectus. The unaudited interim condensed consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements referred to above except as disclosed therein for the adoption of new accounting standards as of January 1, 2019 and, in the opinion of management, reflect all adjustments necessary to state fairly our financial position as of June 30, 2019 and our results of operations for the six-months ended June 30, 2018 and 2019. Our historical results for the six-months ended June 30, 2018 and 2019 are not necessarily indicative of results to be expected for a full year or any other interim period. We maintain our books and records in euros, and we prepare our financial statements under IFRS as issued by the IASB.

        Centogene B.V. is a newly formed holding company formed for the purpose of effecting the offering and has not engaged in any activities except those incidental to its formation, the corporate reorganization and the initial public offering of our common shares. Centogene B.V. has no assets, liabilities or contingent liabilities and will have no assets, liabilities or contingent liabilities until the completion of our corporate reorganization. Accordingly, summary financial information for Centogene B.V. is not presented. Centogene AG's financial statements, including the notes thereto, are included elsewhere in this prospectus.

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        This financial information should be read in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations" and our consolidated financial statements, including the notes thereto, included elsewhere in this prospectus.

 
  For the Years Ended
December 31,
  For the Six-Months
Ended June 30,
 
 
  2016   2017   2018   2018   2019  
 
  (€ in thousands)
 
 
   
   
   
  (unaudited)
 

Consolidated statement of comprehensive loss:

                               

Revenue

    27,669     31,689     40,478     17,012     21,921  

Cost of sales

    12,856     14,939     19,941     9,126     12,858  

Gross profit

    14,813     16,750     20,537     7,886     9,063  

Research and development expenses

    5,885     6,396     6,300     2,356     4,108  

General administrative expenses

    8,888     9,498     18,610     9,030     11,603  

Selling expenses

    5,364     5,897     7,474     2,848     4,356  

Other operating income

    1,295     1,043     2,306     953     1,688  

Other operating expenses

    908     457     1,065     665     464  

Real estate transfer tax expenses

                    1,200  

Operating loss

    (4,937 )   (4,455 )   (10,606 )   (6,060 )   (10,980 )

Interest and similar income

    26     14     33     14     12  

Interest and similar expense

    856     1,021     1,075     686     431  

Finance costs, net

    (830 )   (1,007 )   (1,042 )   (672 )   (419 )

Loss before taxes

    (5,767 )   (5,462 )   (11,648 )   (6,732 )   (11,399 )

Income tax (benefits)/expenses

    (408 )   14     (310 )   (110 )   163  

Loss for the period

    (5,359 )   (5,476 )   (11,338 )   (6,622 )   (11,562 )

Other comprehensive income/(loss)

    9     10     (8 )   44     10  

Total comprehensive loss for the period

    (5,350 )   (5,466 )   (11,346 )   (6,578 )   (11,552 )

Loss per share—Basic and diluted

    (25 )   (22 )   (40 )   (25 )   (36 )

 

 
  As of
December 31,
   
 
 
  As of
June 30,
2019
 
 
  2017   2018  
 
  € in thousand
 
 
   
   
  (unaudited)
 

Consolidated statement of financial position:

                   

Cash and cash equivalents

    3,157     9,222     3,564  

Total assets

    55,486     76,674     75,309  

Total current liabilities

    23,808     24,283     35,509  

Total non-current liabilities

    15,324     25,867     24,340  

Total equity

    16,354     26,524     15,460  

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

        The following discussion of our financial condition and results of operations should be read in conjunction with Centogene AG's unaudited interim condensed consolidated financial statements as of June 30, 2019 and for the six-months ended June 30, 2018 and 2019, as well as the audited consolidated financial statements as of December 31, 2017 and 2018 and for the years ended December 31, 2016, 2017 and 2018 and the notes thereto, included elsewhere in this prospectus, as well as the information presented under "Selected Financial Information." The following discussion is based on our financial information prepared in accordance with IFRS as issued by the IASB, which may differ in material respects from generally accepted accounting principles in the United States and other jurisdictions. The following discussion includes forward-looking statements that involve risks, uncertainties and assumptions. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of many factors, including but not limited to those described under "Risk Factors" and elsewhere in this prospectus.

        On October 11, 2018, Centogene B.V. was incorporated under the laws of the Netherlands to become the holding company for Centogene AG in connection with this offering pursuant to the corporate reorganization. Please see "Corporate Reorganization." Centogene B.V. has not engaged in any activities except those incidental to its formation, the corporate reorganization and the initial public offering of our common shares. Centogene B.V. has no assets, liabilities or contingent liabilities and will have no assets, liabilities or contingent liabilities until the completion of our corporate reorganization. Accordingly, financial information for Centogene B.V. and a discussion and analysis of its results of operations and financial condition for the period of its operations prior to the corporate reorganization would not be meaningful and are not presented. Following the corporate reorganization, Centogene N.V. will become the holding company of Centogene AG and the historical consolidated financial statements of Centogene AG included in this Registration Statement will become part of the historical consolidated financial statements of Centogene N.V.

Overview

        We are a commercial-stage company focused on rare diseases that transforms real-world clinical and genetic data into actionable information for patients, physicians and pharmaceutical companies. Our goal is to bring rationality to treatment decisions and to accelerate the development of new orphan drugs by using our knowledge of the global rare disease market, including epidemiological and clinical data and innovative biomarkers. We have developed a global proprietary rare disease platform based on our real-world data repository with over 2.0 billion weighted data points from over 450,000 patients representing 115 different countries as of August 31, 2019, or an average of over 500 data points per patient. Our platform includes epidemiologic, phenotypic and genetic data that reflects a global population, and also a biobank of these patients' blood samples. We believe this represents the only platform that comprehensively analyzes multi-level data to improve the understanding of rare hereditary diseases, which can aid in the identification of patients and improve our pharmaceutical partners' ability to bring orphan drugs to the market.

        We have identified two reportable segments:

    Pharmaceutical.    Our pharmaceutical solutions provide a variety of services to our pharmaceutical partners, including early patient recruitment and identification, epidemiological insights, biomarker discovery and patient monitoring. Our information platforms, access to rare disease patients and their biomaterials, and ability to develop proprietary technologies and biomarkers enable us to provide services to our pharmaceutical partners in all phases of the drug development process as well as post-commercialization. Revenues from our pharmaceutical segment are generated primarily from collaboration agreements with our pharmaceutical partners. As of August 31, 2019, we collaborated with over 35 pharmaceutical partners for over 30 different rare diseases. In addition, we had over 30 biomarkers under

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      development and had commercialized ten biomarkers for eight rare diseases as of August 31, 2019.

    Diagnostics.    Our diagnostics segment provides targeted genetic sequencing and diagnostics services to our clients worldwide, who are typically physicians, laboratories or hospitals, either directly or through distributors. As of August 31, 2019, we believe we offer the broadest diagnostic testing portfolio for rare diseases, covering over 6,500 genes using over 10,000 different tests. In turn, the data collected from our diagnostics services allow us to continue to grow our repository and our CentoMD database.

        Our business has recently seen notable expansion. In the six-months ended June 30, 2019, we received approximately 62,500 test requests, representing an approximate 33.1% increase as compared to approximately 46,900 test requests received during the six-months ended June 30, 2018, and in the year ended December 31, 2018, we received over 105,300 test requests, representing an approximate 26.9% increase as compared to approximately 83,000 test requests received during the year ended December 31, 2017. Test requests received during the year ended December 31, 2017 represented an increase of approximately 1.7% as compared to approximately 81,600 test requests received during the year ended December 31, 2016.

        Our revenue for the six-months ended June 30, 2019 was €21,921 thousand, an increase of €4,909 thousand, or 28.9%, from €17,012 thousand for the six-months ended June 30, 2018. Our pharmaceutical and diagnostics segments contributed 39.7% and 60.3%, respectively, of our total revenues for the six-months ended June 30, 2019, as compared to 36.9% and 63.1%, respectively, of our total revenues for the six-month ended June 30, 2018. Test requests received by our pharmaceutical and diagnostics segments for the six-months ended June 30, 2019 were approximately 29,800 and 32,700, respectively, representing increases of approximately 8.3% and 68.3%, respectively, as compared to approximately 27,500 and 19,400 test requests, respectively, received during the six-months ended June 30, 2018.

        Our revenue for the year ended December 31, 2018 was €40,478 thousand, an increase of €8,789 thousand, or 27.7%, from €31,689 thousand for the year ended December 31, 2017. Revenue for the year ended December 31, 2017 increased by €4,020 thousand, or 14.5%, from €27,669 thousand for the year ended December 31, 2016. Our pharmaceutical and diagnostics segments contributed 42.8% and 57.2%, respectively, of our total revenues for the year ended December 31, 2018, as compared to 44.0% and 56.0%, respectively, of our total revenues for the year ended December 31, 2017, and 44.6% and 55.4%, respectively, of our total revenues for the year ended December 31, 2016. Test requests received by our pharmaceutical and diagnostics segments for the year ended December 31, 2018 were approximately 57,400 and 47,900, respectively, representing increases of approximately 1.4% and 82.6%, respectively, as compared to approximately 56,900 and 26,100 test requests, respectively, received for the year ended December 31, 2017. Test requests received by our pharmaceutical segment for the year ended December 31, 2017 represented a decrease of approximately 6.5% as compared to approximately 60,800 test requests received by our pharmaceutical segment for the year ended December 31, 2016. Test requests received by our diagnostics segment for the year ended December 31, 2017 represented an increase of approximately 25.9% as compared to approximately 20,800 test requests received by our diagnostics segment for the year ended December 31, 2016.

        Since the inception of our business, our research and development has been substantially devoted to our biomarkers and interpretation-based solutions. For the six-months ended June 30, 2019, we incurred research and development expenses of €4,108 thousand, an increase of €1,752 thousand, or 74.4%, from €2,356 thousand for the six-months ended June 30, 2018. For the year ended December 31, 2018, we incurred research and development expenses of €6,300 thousand, a decrease of €96 thousand, or 1.5%, from €6,396 thousand for the year ended December 31, 2017. Our research and

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development expenses for the year ended December 31, 2017 increased by €511 thousand, or 8.7%, from €5,885 thousand for the year ended December 31, 2016.

        For the six-months ended June 30, 2019, our loss before taxes was €11,399 thousand, an increase of €4,667 thousand, or 69.3%, from €6,732 thousand for the six-months ended June 30, 2018. The loss before tax for the six-months ended June 30, 2019 included share-based compensation expenses of €4,828 thousand, as compared to €2,272 thousand for the six-months ended June 30, 2018. Loss before tax for the six-months ended June 30, 2019 also reflected a real estate transfer tax of €1,200 thousand on the intercompany transfer of land and building in preparation for a sale and leaseback transaction, which transaction was then executed in September 2019.

        Our loss before taxes for the year ended December 31, 2018 was €11,648 thousand, an increase of €6,186 thousand, or 113.3%, from €5,462 thousand for the year ended December 31, 2017. The loss before taxes for the year ended December 31, 2017 decreased by €305 thousand, or 5.3%, from €5,767 thousand for the year ended December 31, 2016. Our loss before taxes for the year ended December 31, 2018 included share-based compensation expenses of €5,521 thousand, as compared to €894 thousand for the year ended December 31, 2017, and €964 thousand for the year ended December 31, 2016.

Financial Operations Overview

    Revenue

        Our revenue is principally derived from the provision of pharmaceutical solutions and diagnostic tests enabled by our knowledge and interpretation-based platform.

        We expect our revenue to increase over time as we continue to expand our commercial efforts internationally with a focus on further growth in our pharmaceutical segment. As a result, we expect revenue from the pharmaceutical segment to increase as a proportion of total revenue over time. We expect revenue from our diagnostics segment to grow in absolute terms but decrease as a percentage of revenue as we focus on growth in our pharmaceutical segment.

        Changes in revenue mix between our pharmaceutical and diagnostics segments can impact our results period over period. We typically incur lower costs for the provision of solutions in our pharmaceutical segment and therefore generate higher returns from our pharmaceutical segment contracts than from our diagnostics segment contracts. As a result, we anticipate our gross profit as a percentage of revenues to improve in the future.

    Pharmaceutical

        We generate revenue in our pharmaceutical segment from the solutions we provide to our pharmaceutical partners to accelerate their development of treatments for rare hereditary diseases. Our biomarkers can be used not only in effective identification of rare disease patients, but also used to demonstrate the efficacy of the drugs, perform longitudinal monitoring and titrate the dosage needed of individual rare disease patients. Our partnership agreements are structured on a fee per sample basis, milestone basis, fixed fee basis, royalty basis or a combination of these. We recognize our revenue from the rendering of solutions to our pharmaceutical partners as such service is performed, or upon the achievement of certain milestones if applicable to the partnership agreement.

        The timing of entry into new contracts with our pharmaceutical partners can be difficult to predict. Accordingly, we can experience different revenue patterns quarter-to-quarter and year-over-year due to the satisfaction of performance obligations involving significant upfront and milestone fees due from our pharmaceutical partners. We recognize revenue for upfront fees at a point in time when the right

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to use the intellectual property is transferred to the customer, while revenue for milestone payments is recognized over time using an input method based on the work rendered by us, or at a point in time when the applicable provisions for over-time recognition per IFRS 15 are not present (e.g., the sale of CentoCards). For the six-months ended June 30, 2019, we entered into agreements for further services with an existing pharmaceutical partner, in respect of which revenues of €430 thousand were recognized during the period representing the transaction price to be allocated in relation to the provision of epidemiological insights of the relevant rare diseases. For the year ended December 31, 2018, we entered into two collaboration agreements with Evotec International GmbH ("Evotec") and Denali Therapeutics Inc. ("Denali"). Under the terms of these collaboration agreements, we received upfront payments totaling €4,000 thousand in relation to the licensing by Evotec and Denali of certain of our intellectual property. We expect such fluctuations will grow as we expand our pharmaceutical segment.

    Diagnostics

        We generate revenue in our diagnostics segment primarily from targeted genetic sequencing and diagnostics services, such as whole exome sequencing ("WES") and whole genome sequencing ("WGS"). Among the approximately 32,600 test requests received by our diagnostics segment for the six-months ended June 30, 2019, approximately 22.6% were WES and WGS, 20.9% were standard genetic testing (which includes our single gene, CNV and mutation quantification products), 16.0% were panel sequencing, 36.0% were non-invasive pre-natal testing ("NIPT") and 4.2% were biochemistry. Among the approximately 47,800 test requests received by our diagnostics segment for the year ended December 31, 2018, approximately 25.1% were WES and WGS, 22.6% were standard genetic testing, 15.9% panel sequencing, 33.0% were NIPT and 3.3% were biochemistry.

        For the six-months ended June 30, 2019, our total diagnostic segment revenues were split amongst our primary testing products as follows: 33.4% WES, 21.4% standard genetic testing, 20.0% panel sequencing, 12.7% NIPT, 12.2% WGS and 0.3% biochemistry. For the year ended December 31, 2018, our total diagnostic segment revenues were split amongst our primary testing products as follows: 34.7% WES, 20.9% panel sequencing, 19.3% standard genetic testing (which includes our single gene, CNV and mutation quantification products), 14.3% NIPT, 10.5% WGS and 0.3% biochemistry.

        We provide these services in over 115 countries either through third party distributors or directly to our diagnostics clients, who are typically physicians, labs or hospital facilities. Revenues are based on a negotiated price per test or on the basis of agreements to provide certain testing volumes over defined periods. Revenue from the rendering of clinical diagnostic services (sequencing, interpretation and reporting) is recognized over time by reference to the percentage of completion of the service on the reporting date, assessed on the basis of the work rendered. We strategically focus on countries around the globe where the prevalence of rare hereditary diseases is high or the availability of national genetic testing and interpretation is to some extent limited and therefore the complete reimbursement or partial payment by the government for our services is more likely. The major markets for our diagnostics business currently include the Middle East and North Africa region, Scandinavia, parts of Central and Eastern Europe, Latin America, North America and parts of Asia. In most of our markets, our diagnostics tests are billable directly to the party submitting the request for a test to us and we have less than 1% bad debts written off since the inception of our business.

    Cost of Sales and Operating Expenses

        Our cost of sales and our operating expenses support all of the products and services that we provide to our customers and, as a result, are presented in an aggregate total for both business segments. We allocate certain overhead expenses, such as maintenance and depreciation to cost of sales and operating expense categories based on headcount and facility usage. As a result, overhead expense allocation is reflected in cost of sales and each operating expense category.

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    Cost of Sales

        Cost of sales consists of cost of consumables, supplies and other direct costs such as personnel expenses, depreciation of laboratory equipment, amortization of biomarkers, repair and maintenance costs, shipping costs and certain allocated overhead expenses.

        We expect these costs in absolute terms will increase as we grow our revenue but decrease as a percentage of revenue over time as our pharmaceutical segment revenue increases and as we continue to implement operational efficiencies. For the six-months ended June 30, 2019, our cost of sales represented 58.7% of our total revenue, as compared to 53.6% for the six-months ended June 30, 2018. During the year ended December 31, 2018, our cost of sales represented 49.3% of our total revenue, as compared to 47.1% for the year ended December 31, 2017, and 46.5% for the year ended December 31, 2016.

    Research and Development Expenses

        Our research and development ("R&D") expenses consist primarily of costs incurred for the development of new products and solutions, in particular our biomarkers, and the development of our IT driven and interpretation-based solutions, including our CentoMD database. In the six-months ended June 30, 2019, we spent €7,224 thousand on research and development, of which €3,116 thousand were capitalized as intangible assets. In the three fiscal years ended December 31, 2018, we spent €27,839 thousand on research and development, of which €9,258 thousand was capitalized as intangible assets.

        Expenses for research activities are recognized through profit or loss in the period in which they are incurred, unless they reach the development stage and prove to be technically and commercially feasible, upon which the expenses are capitalized. With respect to biomarkers, expenses are capitalized when the target validation process is completed and commercialization is probable. With respect to IT driven solutions, expenses are capitalized upon the completion of our internal validation test. Before such dates, any development costs are recognized in profit or loss.

        Research and development which we conduct pursuant to our pharmaceutical partnership agreements is typically limited to a specified rare disease. As a result, our research and development expenses may vary substantially from period to period based on the timing of our research and development activities or our pharmaceutical partners, including due to the entry into, renegotiation of or termination of our partnership agreements. Our research and development expenses may also be impacted by changes in regulatory requirements and healthcare policies globally, particularly in respect of the validation and patent application processes that we conduct for our biomarkers.

        For the six-months ended June 30, 2019, our research and development expenses represented 18.7% of our total revenue, as compared to 13.8% for the six-months ended June 30, 2018. During the year ended December 31, 2018, our research and development expenses represented 15.6% of our total revenue, as compared to 20.2% for the year ended December 31, 2017, and 21.3% for the year ended December 31, 2016. We expect that our overall research and development expenses will increase in absolute terms as we continue to innovate our information platform, develop additional products and solutions and expand our data management resources.

    General Administrative Expenses

        Our general administrative expenses include costs for our personnel, premises, IT operations, accounting and finance, legal and human resources functions. These expenses consist principally of salaries, bonuses, employee benefits, travel, and share-based compensation, as well as professional services

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fees such as consulting, audit, tax and legal fees and general corporate costs and allocated overhead expenses. We account for all general administrative expenses as incurred.

        During the six-months ended June 30, 2019, our general administrative expenses represented 52.9% of our total revenue, as compared to 53.1% during the six-months ended June 30, 2018. During the year ended December 31, 2018, our general administrative expenses represented 46.0% of our total revenue, as compared to 30.0% for the year ended December 31, 2017, and 32.1% for the year ended December 31, 2016. The increases in general administrative expenses for the year ended December 31, 2018 as compared to the year ended December 31, 2017, as well as for the increase for the six-months ended June 30, 2019 as compared to the six-months ended June 30, 2018, was primarily attributable to an increase in share-based compensation expenses across each of the periods and the expenses incurred for the preparation of the offering to which this prospectus relates. As a result of our continued international growth, including the expansion of our laboratory in Rostock, Germany and the opening of our new laboratory in Cambridge, Massachusetts in October 2018, we expect our general administrative costs to increase relative to prior periods. We also expect that our general administrative expenses will increase due to the costs of operating as a public company, such as additional legal, accounting, corporate governance and investor relations expenses, and higher directors' and officers' insurance premiums.

    Selling Expenses

        Our selling expenses consist of costs from our sales organization, which includes our direct sales force and sales management, client services, distributor relations, marketing and business development personnel. These expenses primarily include salaries, commissions, bonuses, employee benefits and travel, as well as marketing and educational activities and allocated overhead expenses. We expense all sales and marketing costs as incurred.

        During the six-months ended June 30, 2019, our selling expenses represented 19.9% of our total revenue, as compared to 16.7% during the six-months ended June 30, 2018. During the year ended December 31, 2018, selling expenses accounted for 18.5% of our total revenue, as compared to 18.6% for the year ended December 31, 2017, and 19.4% for the year ended December 31, 2016. We expect that our selling expenses will continue to grow as we continue to increase our business footprint and expand our business development efforts in our pharmaceutical segment.

    Other Operating Income / (Expenses)

        Other operating income primarily includes government grants and exchange rate gains. Our other operating expenses include currency losses, expected credit loss allowances on trade receivables and loss on the sale of property, plant and equipment, among others.

        Government grants contain performance-based grants to subsidize research, development and innovation in the state of Mecklenburg-Western Pomerania from funds granted by the European Regional Development Fund. Furthermore, government grants contain the release of deferred income from investment related grants. Government grants that compensate for our research and development expenses are recognized directly in profit or loss, while grants relating to an asset are initially recognized as deferred income and subsequently released to profit or loss on a systematic basis over the useful life of the asset. We received different government grants in the state of Mecklenburg-Western Pomerania from funds granted by the European Regional Development Fund to subsidize our research, development and innovation. For the six-months ended June 30, 2019, we received €341 thousand investment-related government grants that we used for the purchase of certain items of property, plant and equipment, including the development of our facilities in Rostock and €915 thousand in R&D-related grants, as compared to investment-related government grants of €1.2 million and €340 thousand in R&D-related grants received for the six-months ended June 30, 2018. During the year ended December 31, 2018, we

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received investment-related government grants of €3.0 million and €378 thousand in R&D-related grants of the same nature, as compared to €6.8 million and €224 thousand, respectively, for the year ended December 31, 2017 and €2.8 million and €473 thousand, respectively, for the year ended December 31, 2016. The investment-related grant amounts were included in other liabilities and will be recognized in other operating income throughout the useful life of the facilities. The R&D-related grant amounts are recognized in consolidated statements of comprehensive loss. The government grants which we receive can fluctuate from period to period.

Results of Operations

    Six-Months Ended June 30, 2018 Compared to Six-Months Ended June 30, 2019

 
  For the Six-
Months Ended
June 30,
 
 
  2018   2019  
 
  (unaudited,
€ in thousands)

 

Consolidated statement of comprehensive loss:

             

Revenue

    17,012     21,921  

Cost of sales

    9,126     12,858  

Gross profit

    7,886     9,063  

Research and development expenses

    2,356     4,108  

General administrative expenses

    9,030     11,603  

Selling expenses

    2,848     4,356  

Other operating income

    953     1,688  

Other operating expenses

    665     464  

Real estate transfer tax expenses

        1,200  

Operating loss

    (6,060 )   (10,980 )

Interest and similar income

    14     12  

Interest and similar expenses

    686     431  

Finance costs, net

    (672 )   (419 )

Loss before taxes

    (6,732 )   (11,399 )

Income tax (benefits)/expenses

    (110 )   163  

Loss for the period

    (6,622 )   (11,562 )

Other comprehensive income

    44     10  

Total comprehensive loss for the period

    (6,578 )   (11,552 )

    Revenue

        Revenue increased by €4,909 thousand, or 28.9%, to €21,921 thousand for the six-months ended June 30, 2019 from €17,012 thousand for the six-months ended June 30, 2018, principally due to improvements in performance by both pharmaceutical and diagnostics businesses, with increases in both pharmaceutical services provided and test requests received from both new and existing partners and clients during the period. Test requests received from our pharmaceutical and diagnostics segments for the six-months ended June 30, 2019 were approximately 29,800 and 32,600, respectively, representing increases of approximately 8.3% and 68.3%, respectively, as compared to approximately 27,500 and 19,400 test requests, respectively, received during the six-months ended June 30, 2018.

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        The breakdown of our revenue by segment was as follows:

 
  For the Six-
Months Ended
June 30,
 
 
  2018   2019  
 
  (unaudited,
€ in thousands)

 

Revenue by segment:

             

Pharmaceutical

    6,270     8,698  

Diagnostics

    10,742     13,223  

Total Revenue

    17,012     21,921  

        Revenues from our pharmaceutical segment were €8,698 thousand for the six-months ended June 30, 2019, an increase of €2,428 thousand, or 38.7%, from €6,270 thousand for the six-months ended June 30, 2018. This increase was primarily attributable to the expansion of our collaborations with our existing pharmaceutical partners. As of June 30, 2019, we collaborated with over 30 pharmaceutical partners, as compared to over 20 pharmaceutical partners as of June 30, 2018. During the six-months ended June 30, 2019, the Company entered into over ten additional collaborations with existing and new pharmaceutical partners, among which, according to the terms of two collaborations with an existing pharmaceutical partner, upfront fees of €430 thousand were recognized as revenue representing the transaction price to be allocated in relation to the provision of epidemiological insights of the relevant rare diseases. During the six-months ended June 30, 2019, revenues from one pharmaceutical partner represented 27.1% of our total revenues, as compared to 32.6% for the six-months ended June 30, 2018.

        Revenues from our diagnostics segment were €13,223 thousand for the six-months ended June 30, 2019, an increase of €2,481 thousand, or 23.1%, from €10,742 thousand for the six-months ended June 30, 2018. The increase in revenues was primarily attributable to the new NIPT contract entered into in June 2018, which brought in revenues of €810 thousand for the six-months ended June 30, 2019. The increase in revenues from our diagnostics segment was also attributable to an increase in revenues from sales of our standard genetic, WES and WGS products for the six-months ended June 30, 2019, mainly driven by growth in the number of test requests in the Middle East, Europe and Asia Pacific regions, growth in the number of WES test requests in the Europe and North America regions, and growth in the number of WGS test requests in the Middle East and North America regions.

        Test requests received in the diagnostics segment for the six-months ended June 30, 2019 were approximately 32,600, representing an approximate 68.3% increase as compared to approximately 19,400 test requests received during the six-months ended June 30, 2018. The total number of NIPT test requests received for the six-months ended June 30, 2019 was approximately 11,700, an increase of approximately 7,000 requests as compared to approximately 4,700 requests for the six-months ended June 30, 2018. In addition, the total number of standard genetic, panel and WES test requests for the six-months ended June 30, 2019 were approximately 6,800, 5,200 and 6,600 requests, respectively, representing increases of approximately 52.3%, 38.8% and 25.3%, respectively, as compared to the six-months ended June 30, 2018.

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        The breakdown of our revenue from both of our segments, in the aggregate, by geographical region was as follows:

 
  For the Six-
Months Ended
June 30,
 
 
  2018   2019  
 
  (unaudited,
€ in thousands)

 

Revenue by geographical region:

             

Europe

    3,226     3,691  

Of which: Germany

    234     328  

Middle East

    5,450     6,772  

of which: Saudi Arabia

    2,989     3,182  

North America

    6,764     9,678  

of which: United States

    6,274     9,329  

Latin America

    1,081     1,319  

Asia Pacific

    491     461  

Total Revenue

    17,012     21,921  

        In cases where our pharmaceutical partners are developing a new rare disease treatment, we generally anticipate that the final approved treatment will be made available globally. As a result, we allocate the revenues of our pharmaceutical segment by geographical region by reference to the location where each pharmaceutical partner mainly operates, which is based on the region from which most of their revenues are generated. The allocation of revenues in our diagnostics segment is based on the location of each customer. Our North America region contributed €9,678 thousand to revenue for the six-months ended June 30, 2019, an increase of €2,914 thousand, or 43.1%, from €6,764 thousand for the six-months ended June 30, 2018, primarily driven by the increase in revenues from our pharmaceutical segment, of which almost all are allocated to the North America region. Revenues from the North America region represented 44.2% of our total revenues for the six-months ended June 30, 2019 as compared to 39.8% for the six-months ended June 30, 2018.

        Our Middle East region contributed €6,772 thousand to revenue for the six-months ended June 30, 2019, an increase of €1,322 thousand, or 24.3%, from €5,450 thousand for the six-months ended June 30, 2018. This was primarily attributable to an increase in sales of NIPT tests, mainly due to an increase in test requests received under the NIPT contract entered into in June 2018, as well as an increase in sales of standard genetic tests and WGS, mainly due to expansion of business in the region through distributors.

        Our Europe region contributed €3,691 thousand to revenue for the six-months ended June 30, 2019, an increase of €465 thousand, or 14.4%, from €3,226 thousand for the six-months ended June 30, 2018.

    Cost of Sales

        Cost of sales increased by €3,732 thousand, or 40.9%, to €12,858 thousand for the six-months ended June 30, 2019, from €9,126 thousand for the six-months ended June 30, 2018. This increase was primarily attributable to an increase in the volume of test requests processed for the diagnostics segment, resulting in an increase in costs incurred for consumables. The increase of 40.9% in total cost of sales for the six-months ended June 30, 2019 from six-months ended June 30, 2018 was lower than the 68.3% increase in test requests in the diagnostics segment for the same period. The increase in test requests for the six-months ended June 30, 2019 was driven primarily by an increase in sales of NIPT products, for which the consumables cost is relatively lower than our other diagnostics products. The consumable costs

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incurred for the tests processed in the pharmaceutical segment is comparatively low due to the use of different technology.

        Share-based compensation expenses of €859 thousand, primarily related to options granted to an employee, were included in cost of sales for the six-months ended June 30, 2019, which also contributed to the increase in cost of sales. Share-based compensation expenses of €276 thousand, relating to the same employee, were included in cost of sales for the six-months ended June 30, 2018.

    Gross Profit

        Our gross profit increased by €1,177 thousand, or 14.9%, to €9,063 thousand for the six-months ended June 30, 2019, from €7,886 thousand for the six-months ended June 30, 2018. The gross profit margin decreased to 41.3% for the six-months ended June 30, 2019, from 46.4% for the six-months ended June 30, 2018, which was mainly due to increases in consumable and staff costs (including share-based compensation expenses) for the diagnostics segment.

    Research and Development Expenses

        Research and development expenses increased by €1,752 thousand, or 74.4%, to €4,108 thousand for the six-months ended June 30, 2019, from €2,356 thousand for the six-months ended June 30, 2018, primarily attributable to an increase in IT-related expenses and research that does not qualify for capitalization. The amount also includes consumable costs, software and hardware costs, personnel costs, consultation and legal expenses and depreciation of equipment.

    General Administrative Expenses

        General administrative expenses increased by €2,573 thousand, or 28.5%, to €11,603 thousand for the six-months ended June 30, 2019, from €9,030 thousand for the six-months ended June 30, 2018, principally due to an increase in share-based compensation expenses. Share-based compensation expenses for the period were calculated based on the estimated fair values of the share-based awards at June 30, 2019 and 2018, as well as the estimated number of awards expected to vest. The share-based compensation expenses for the six-months ended June 30, 2019 included in general administrative expenses amounted to €3,969 thousand, an increase of €2,027 thousand as compared to €1,996 thousand for the six-months ended June 30, 2018.

    Selling Expenses

        Selling expenses increased by €1,508 thousand, or 52.9%, to €4,356 thousand for the six-months ended June 30, 2019, from €2,848 thousand for the six-months ended June 30, 2018, principally due to further expansion of the marketing and sales team in both of the pharmaceutical and diagnostic segments, in particular the hiring of our new Chief Business Officer in November 2018, as well as an increase in attendance at conferences and exhibitions.

    Other Operating Income / (Expenses)

        Other operating income increased by €735 thousand, or 77.1%, to €1,688 thousand for the six-months ended June 30, 2019, from €953 thousand for the six-months ended June 30, 2018, principally due to an increase in the recognition of grant income.

        Other operating expenses decreased by €201 thousand, or 30.2%, to €464 thousand for the six-months ended June 30, 2019, from €665 thousand for the six-months ended June 30, 2018, mainly relating to credit loss allowances on trade receivables recognized in accordance with IFRS 9.

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    Real estate transfer tax

        During the six-months ended June 30, 2019, we sold our land and building, which had a carrying value of €22,778 thousand, to a subsidiary in preparation of a potential sale and leaseback transaction. As the sale and leaseback transaction with a third party was entered into in July 2019, the intercompany transaction was irreversible and a real estate transfer tax expense of €1,200 thousand related to the intercompany transaction was recognized accordingly.

    Interest and Similar Income / (Expenses)

        Interest and similar income decreased by €2 thousand, or 14.3%, to €12 thousand for the six-months ended June 30, from €14 thousand for the six-months ended June 30, 2018.

        Interest and similar expenses decreased by €255 thousand, or 37.2%, to €431 thousand for the six-months ended June 30, 2019, from €686 thousand for the six-months ended June 30, 2018, principally due to interest expenses from loans related to the development of our new laboratory in Rostock, Germany, which was completed in 2018.

    Loss Before Taxes for the Year

        As a result of the factors described above, our loss before taxes for the six-months ended June 30, 2019 was €11,399 thousand, an increase of €4,667 thousand, or 69.3%, from a loss before taxes of €6,732 thousand for the six-months ended June 30, 2018.

    Segment Adjusted EBITDA

        We evaluate segment performance based on segment results and measure it with reference to Adjusted EBITDA, which we define as operating loss presented in the consolidated statements of comprehensive loss, adjusted for corporate expenses, depreciation and amortization as well as share-based payment expenses. Our Segment Adjusted EBITDA was as follows:

 
  For the Six-
Months Ended
June 30,
 
 
  2018   2019  
 
  (€ in thousands)
 

Segment Adjusted EBITDA:

             

Pharmaceutical

    4,757     6,161  

Diagnostics

    1,576     541  

        Adjusted EBITDA from our pharmaceutical segment was €6,161 thousand for the six-months ended June 30, 2019, an increase of €1,404 thousand, or 29.5%, from €4,757 thousand for the six-months ended June 30, 2018. This increase was primarily attributable to the increase in revenues from the pharmaceutical segment during the period, as a result of the increase in services provided to new or existing pharmaceutical partners described above.

        Adjusted EBITDA from our diagnostics segment was €541 thousand for the six-months ended June 30, 2019, a decrease of €1,035 thousand, from €1,576 thousand for the six-months ended June 30, 2018. The decrease was primarily attributable to the increase in revenues during the period, offset by increase in cost of sales as a result of the increase in number of test requests, related in particular to test requests of NIPT products discussed above, of which the gross margin is relatively low (as the average sales price of NIPT is comparatively low) as compared to our other products in the diagnostics segment.

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    Year Ended December 31, 2017 Compared to Year Ended December 31, 2018

 
  For the
Years Ended
December 31,
 
 
  2017   2018  
 
  (€ in thousands)
 

Consolidated statement of comprehensive loss:

             

Revenue

    31,689     40,478  

Cost of sales

    14,939     19,941  

Gross profit

    16,750     20,537  

Research and development expenses

    6,396     6,300  

General administrative expenses

    9,498     18,610  

Selling expenses

    5,897     7,474  

Other operating income

    1,043     2,306  

Other operating expenses

    457     1,065  

Operating loss

    (4,455 )   (10,606 )

Interest and similar income

    14     33  

Interest and similar expenses

    1,021     1,075  

Finance costs, net

    (1,007 )   (1,042 )

Loss before taxes

    (5,462 )   (11,648 )

Income tax expenses/(benefits)

    14     (310 )

Loss for the period

    (5,476 )   (11,338 )

Other comprehensive income/(loss)

    10     (8 )

Total comprehensive loss for the period

    (5,466 )   (11,346 )

    Revenue

        Revenue increased by €8,789 thousand, or 27.7%, to €40,478 thousand for the year ended December 31, 2018 from €31,689 thousand for the year ended December 31, 2017, principally due to improvement in performance by both pharmaceutical and diagnostics businesses, with new partnerships and clients gained during the period.

        The breakdown of our revenue by segment was as follows:

 
  For the
Years Ended
December 31,
 
 
  2017   2018  
 
  (€ in thousands)
 

Revenue by segment:

             

Pharmaceutical

    13,931     17,307  

Diagnostics

    17,758     23,171  

Total Revenue

    31,689     40,478  

        Revenues from our pharmaceutical segment were €17,307 thousand for the year ended December 31, 2018, an increase of €3,376 thousand, or 24.2%, from €13,931 thousand for the year ended December 31, 2017. This increase was primarily attributable to new pharmaceutical partnerships. As of December 31, 2018, we collaborated with over 30 pharmaceutical partners, as compared to 19 pharmaceutical partners

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as of December 31, 2017. During the year ended December 31, 2018, we entered into two major collaborations, one with Evotec and the other with Denali. Under the terms of these collaborations, upfront payments totaling €4,000 thousand were received related to certain of our intellectual property. These upfront fees were recognized as revenues during the period as they represented the transaction price to be allocated to the grant of licenses, which are distinct and allow for use of such intellectual property for an unlimited period or for the time specified in the agreements. During the year ended December 31, 2018, revenues from one pharmaceutical partner represented 27.3% of our total revenues, as compared to 37.7% for the year ended December 31, 2017.

        Revenues from our diagnostics segment were €23,171 thousand for the year ended December 31, 2018, an increase of €5,413 thousand, or 30.5%, from €17,758 thousand for the year ended December 31, 2017. The total number of test requests received in the diagnostics segment for the year ended December 31, 2018 was approximately 48,000 tests, an increase of approximately 84.9% as compared to approximately 26,000 test requests received for the year ended December 31, 2017. The increases in both revenues and number of tests were primarily attributable to strong growth in sales of our NIPT diagnostic test products, a product that was launched in July 2017. Within the diagnostics segment, revenue from sales of NIPT products was €3,288 thousand for the year ended December 31, 2018, an increase of €3,155 thousand from €133 thousand for the year ended December 31, 2017. The sales growth was primarily driven by both a change in our unit pricing strategy for NIPT products and a new contract for the product which was entered into in June 2018. The growth in the volume of sales of such product was the main contributor to the 30.5% increase in diagnostics segment revenue across the periods, partially offset by a decrease in the average price of NIPT products. The total number of NIPT test requests received for the year ended December 31, 2018 was nearly 15,800, an increase of approximately 15,350 orders as compared to nearly 450 orders for the year ended December 31, 2017. In our other diagnostic product categories, changes in price had a minimal impact on diagnostics segment revenue.

        The breakdown of our revenue from both of our segments, in the aggregate, by geographical region was as follows:

 
  For the
Years Ended
December 31,
 
 
  2017   2018  
 
  (€ in thousands)
 

Revenue by geographical region:

             

Europe

    5,676     6,850  

Of which: Germany

        1,061  

Middle East

    8,846     12,401  

of which: Saudi Arabia

    4,926     5,475  

North America

    14,897     18,113  

of which: United States

    13,482     17,296  

Latin America

    1,474     2,185  

Asia Pacific

    796     929  

Total Revenue

    31,689     40,478  

        Our North America region contributed €18,113 thousand to revenue for the year ended December 31, 2018, an increase of €3,216 thousand, or 21.6%, from €14,897 thousand for the year ended December 31, 2017, primarily driven by revenues from our pharmaceutical business, including revenues from the Denali collaboration. Revenues from the North America region represented 44.7% of our total revenues for the year ended December 31, 2018 as compared to 47.0% for the year ended December 31, 2017.

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        Our Middle East region contributed €12,401 thousand to revenue for the year ended December 31, 2018, an increase of €3,555 thousand, or 40.2%, from €8,846 thousand for the year ended December 31, 2017. This revenue growth was primarily attributable to an increase in sales of NIPT tests during the period based on a fixed fee contract.

        Our Europe region contributed €6,850 thousand to revenue for the year ended December 31, 2018, an increase of €1,174 thousand, or 20.7%, from €5,676 thousand for the year ended December 31, 2017, primarily driven by an increase in the number of clients within our diagnostics segment and revenues from our pharmaceutical business, including revenues from the Evotec collaboration.

    Cost of Sales

        Cost of sales increased by €5,002 thousand, or 33.5%, to €19,941 thousand for the year ended December 31, 2018, from €14,939 thousand for the year ended December 31, 2017. This increase was primarily attributable to an increase in the volume of test requests processed, of which the largest contributor was consumables and direct personnel costs attributed to the diagnostics segment. Cost of sales increased at a lower rate as compared to the volume of test requests for the year ended December 31, 2018, when compared to the year ended December 31, 2017, because the increase in the volume of test requests was primarily driven by an increase in sales of NIPT products, for which the consumables costs in absolute amount is relatively lower than other diagnostics products. Certain stock-based compensation of €646 thousand related to options granted to production staff also contributed to the increase.

    Gross Profit

        As a result of these and other factors, our gross profit increased by €3,787 thousand, or 22.6%, to €20,537 thousand for the year ended December 31, 2018, from €16,750 thousand for the year ended December 31, 2017.

    Research and Development Expenses

        Research and development expenses remained largely unchanged, at €6,300 thousand for the year ended December 31, 2018, from €6,396 thousand for the year ended December 31, 2017. This represents IT-related expenses and research that does not qualify for capitalization and includes consumable costs, software and hardware costs, personnel costs, consultation and legal expenses and depreciation of equipment.

    General Administrative Expenses

        General administrative expenses increased by €9,112 thousand, or 95.9%, to €18,610 thousand for the year ended December 31, 2018, from €9,498 thousand for the year ended December 31, 2017, principally due to an increase in general expenses, such as IT-related costs, as a result of the expansion of the business. The general administrative expenses included share-based compensation expenses of €4,875 thousand for the year ended December 31, 2018, an increase of €3,981 thousand as compared to €894 thousand for the year ended December 31, 2017.

    Selling Expenses

        Selling expenses increased by €1,577 thousand, or 26.7%, to €7,474 thousand for the year ended December 31, 2018, from €5,897 thousand for the year ended December 31, 2017, principally due to the expansion of our business development team for the pharmaceutical segment, as well as additional marketing expenses.

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    Other Operating Income / (Expenses)

        Other operating income increased by €1,263 thousand, or 121.1%, to €2,306 thousand or the year ended December 31, 2018, from €1,043 thousand for the year ended December 31, 2017, principally due to an increase in recognition of grant income.

        Other operating expenses increased by €608 thousand, or 133.0%, to €1,065 thousand for the year ended December 31, 2018, from €457 thousand for the year ended December 31, 2017, principally due to the recognition of impairment losses on trade and other receivables in line with IFRS 9, a new accounting standard effective from January 1, 2018, resulting from an increased aging in our trade and other receivables due from customers in the Middle East region in our diagnostics segment.

    Interest and Similar Income / (Expenses)

        Interest and similar income increased by €19 thousand to €33 thousand for the year ended December 31, 2018, from €14 thousand for the year ended December 31, 2017.

        Interest and similar expenses increased by €54 thousand, or 5.3%, to €1,075 thousand for the year ended December 31, 2018, from €1,021 thousand for the year ended December 31, 2017, mainly relating to the interest expenses from loans relating to the development of our new laboratory in Rostock.

    Loss Before Taxes for the Year

        As a result of the factors described above, our loss before taxes for the year ended December 31, 2018 was €11,648 thousand, an increase of €6,186 thousand, or 113.3%, from €5,462 thousand for the year ended December 31, 2017.

    Segment Adjusted EBITDA

        Our Segment Adjusted EBITDA was as follows:

 
  For the
Years Ended
December 31,
 
 
  2017   2018  
 
  (€ in thousands)
 

Segment Adjusted EBITDA:

             

Pharmaceutical

    10,870     13,641  

Diagnostics

    2,552     2,285  

        Adjusted EBITDA from our pharmaceutical segment was €13,641 thousand for the year ended December 31, 2018, an increase of €2,771 thousand, or 25.5%, from €10,870 thousand for the year ended December 31, 2017. This increase was primarily attributable to an increase in revenues during the year.

        Adjusted EBITDA from our diagnostics segment was €2,285 thousand for the year ended December 31, 2018, a decrease of €267 thousand, or 10.5%, from €2,552 thousand for the year ended December 31, 2017. The decrease was primarily attributable to the increase in cost of sales in 2018, as a result of increase in direct personnel costs and consumable costs.

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    Year Ended December 31, 2016 Compared to Year Ended December 31, 2017

 
  For the Years Ended
December 31,
 
 
  2016   2017  
 
  (€ in thousands)
 

Consolidated statement of comprehensive loss:

             

Revenue

    27,669     31,689  

Cost of sales

    12,856     14,939  

Gross profit

    14,813     16,750  

Research and development expenses

    5,885     6,396  

General administrative expenses

    8,888     9,498  

Selling expenses

    5,364     5,897  

Other operating income

    1,295     1,043  

Other operating expenses

    908     457  

Operating loss

    (4,937 )   (4,455 )

Interest and similar income

    26     14  

Interest and similar expenses

    856     1,021  

Finance costs, net

    (830 )   (1,007 )

Loss before taxes

    (5,767 )   (5,462 )

Income tax (benefits)/expenses

    (408 )   14  

Loss for the period

    (5,359 )   (5,476 )

Other comprehensive income

    9     10  

Total comprehensive loss for the period

    (5,350 )   (5,466 )

    Revenue

        Revenue increased by €4,020 thousand, or 14.5%, to €31,689 thousand for the year ended December 31, 2017 from €27,669 thousand for the year ended December 31, 2016, principally due to new pharmaceutical partnerships as well as further expansion in our diagnostics business.

        The breakdown of our revenue by segment was as follows:

 
  For the Years Ended
December 31,
 
 
  2016   2017  
 
  (€ in thousands)
 

Revenue by segment:

             

Pharmaceutical

    12,348     13,931  

Diagnostics

    15,321     17,758  

Total Revenue

    27,669     31,689  

        Revenues from our pharmaceutical segment were €13,931 thousand for the year ended December 31, 2017, an increase of €1,583 thousand, or 12.8%, from €12,348 thousand for the year ended December 31, 2016. This increase was primarily attributable to four new pharmaceutical partnerships. During the year ended December 31, 2017, we collaborated with 19 pharmaceutical partners in all phases of the drug development process as well as post-commercialization, as compared to 15 partners during the year ended December 31, 2016. During the year ended December 31, 2017,

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revenues from one pharmaceutical partner represented 37.7% of our total revenues, flat compared to the prior year.

        Revenues from our diagnostics segment were €17,758 thousand for the year ended December 31, 2017, an increase of €2,437 thousand, or 15.9%, from €15,321 thousand for the year ended December 31, 2016. The total number of test requests received from the diagnostics segment for the year ended December 31, 2017 was for over 26,000 tests, which represented an increase of 25% as compared to approximately 21,000 test requests received for the year ended December 31, 2016. The increases in both revenues and number of tests were primarily attributable to strong growth in sales of our WES and WGS diagnostic test products in 2017. During the year ended December 31, 2017, revenues from sales of WES and WGS tests contributed 40% and 12% of the revenues in our diagnostics segment, respectively (as compared to 36% and 6% during the year ended December 31, 2016, respectively). The total number of WGS and WES test requests received for the year ended December 31, 2017 was nearly 11,500, an increase of 27.7% as compared to year ended December 31, 2016.

        The breakdown of our revenue from both of our segments, in the aggregate, by geographical region was as follows:

 
  For the Years Ended
December 31,
 
 
  2016   2017  
 
  (€ in thousands)
 

Revenue by geographical region:

             

Europe

    5,281     5,676  

Middle East

    7,014     8,846  

of which: Saudi Arabia

    3,728     4,926  

North America

    14,033     14,897  

of which: United States

    12,158     13,482  

Latin America

    747     1,474  

Asia Pacific

    594     796  

Total Revenue

    27,669     31,689  

        Our North America region contributed €14,897 thousand to revenue for the year ended December 31, 2017, an increase of €864 thousand, or 6.2%, from €14,033 thousand for the year ended December 31, 2016. Revenues from the North America region represented 47.0% of our total revenues for the year ended December 31, 2017 as compared to 50.7% for the year ended December 31, 2016, primarily driven by revenues from our pharmaceutical segment.

        Our Middle East region contributed €8,846 thousand to revenue for the year ended December 31, 2017, an increase of €1,832 thousand, or 26.1%, from €7,014 thousand for the year ended December 31, 2016. This revenue growth was primarily attributable to an increase in number of clients within our diagnostics segment.

        Our Europe region contributed €5,676 thousand to revenue for the year ended December 31, 2017, an increase of €395 thousand, or 7.5%, from €5,281 thousand for the year ended December 31, 2016, primarily driven by an increase in the number of clients within our diagnostics segment.

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    Cost of Sales

        Cost of sales increased by €2,083 thousand, or 16.2%, to €14,939 thousand for the year ended December 31, 2017, from €12,856 thousand for the year ended December 31, 2016, largely in line with the increase in test requests received and revenues. This increase was primarily attributable to an increase in the cost of consumables for our diagnostic business, in particular as more WGS and WES tests were received. In addition, depreciation expense increased due to the purchase of new sequencing equipment at the end of 2016.

    Gross Profit

        As a result of these and other factors, our gross profit grew by €1,937 thousand, or 13.1%, to €16,750 thousand for the year ended December 31, 2017, from €14,813 thousand for the year ended December 31, 2016.

    Research and Development Expenses

        Research and development expenses increased by €511 thousand, or 8.7%, to €6,396 thousand for the year ended December 31, 2017, from €5,885 thousand for the year ended December 31, 2016, principally due to an increase in IT-related expenses and other research which does not qualify for capitalization. This includes costs, personnel costs, consultation and legal expenses and depreciation of equipment.

    General Administrative Expenses

        General administrative expenses increased by €610 thousand, or 6.9%, to €9,498 thousand for the year ended December 31, 2017, from €8,888 thousand for the year ended December 31, 2016, principally due to an increase in general expenses in line with the expansion of the business, offset by the decrease in share-based compensation of €70 thousand to €894 thousand for the year ended December 31, 2017 from €964 thousand for the year ended December 31, 2016.

    Selling Expenses

        Selling expenses increased by €533 thousand, or 9.9%, to €5,897 thousand for the year ended December 31, 2017, from €5,364 thousand for the year ended December 31, 2016, principally due to the expansion of our sales team and additional marketing efforts, including an increase in personnel attendance at conferences and exhibitions.

    Other Operating Income / (Expenses)

        Other operating income decreased by €252 thousand, or 19.5%, to €1,043 thousand for the year ended December 31, 2017, from €1,295 thousand for the year ended December 31, 2016, principally due to a reduction in income related to government grants.

        Other operating expenses decreased by €451 thousand, or 49.7%, to €457 thousand for the year ended December 31, 2017, from €908 thousand for the year ended December 31, 2016, principally due to an impairment of trade receivables recognized in 2016.

    Interest and Similar Income / (Expenses)

        Interest and similar income decreased by €12 thousand, or 46.2%, to €14 thousand for the year ended December 31, 2017, from €26 thousand for the year ended December 31, 2016.

        Interest and similar expenses increased by €165 thousand, or 19.3%, to €1,021 thousand for the year ended December 31, 2017, from €856 thousand for the year ended December 31, 2016, principally

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due to an increase in interest expenses from loans relating to the development of our new laboratory in Rostock, Germany in 2017.

    Loss Before Taxes for the Year

        As a result of the factors described above, our loss before taxes for the year ended December 31, 2017 was €5,462 thousand, a decrease of €305 thousand, or 5.3%, from €5,767 thousand for the year ended December 31, 2016.

    Segment Adjusted EBITDA

        Our Segment Adjusted EBITDA was as follows:

 
  For the
Ended Years
December 31,
 
 
  2016   2017  
 
  (€ in thousands)
 

Segment Adjusted EBITDA:

             

Pharmaceutical

    10,865     10,870  

Diagnostics

    (122 )   2,552  

        Adjusted EBITDA from our pharmaceutical segment was €10,870 thousand for the year ended December 31, 2017, a slight increase of €5 thousand from €10,865 thousand for the year ended December 31, 2016. This increase was primarily attributable to an increase in revenue as described above, offset by an increase in personnel costs for production and business development.

        Adjusted EBITDA from our diagnostics segment was €2,552 thousand for the year ended December 31, 2017, an increase of €2,674 thousand from negative €122 thousand for the year ended December 31, 2016. This increase was primarily attributable to an increase in revenues due to strong growth in sales of our WES and WGS diagnostic test products in 2017.

Liquidity and Capital Resources

    Overview

        Our cash requirements are principally for working capital and capital expenditures, including expansions and improvements to our laboratory facilities, technology infrastructure and research and development activities. In fiscal year 2019 and beyond, we anticipate that our capital expenditures will increase from prior periods as we continue to increase our research and development efforts. Historically, our main source of liquidity has been our secured loans, municipal loans and government funding of research programs, proceeds from our shareholders and the private financings in 2017 and 2018.

        Our financial condition and liquidity are and will continue to be influenced by a variety of factors, including our ability to continue to generate cash flows from our operations, our capital expenditure requirements and changes in exchange rates which will impact our generation of cash flows from operations when measured in euros.

        Our known material liquidity needs for periods beyond the next twelve months are described below in "Contractual Obligations and Commitments." We believe cash generated from our operations, cash equivalents and financial instruments, together with government funding of research programs will be sufficient to fund our operations for at least 12 months.

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    Comparative Cash Flows

    Comparison of the Six-Months Ended June 30, 2018 and 2019

        The following table sets forth our cash flows for the periods indicated:

 
  For the
Six-Months
Ended June 30,
 
 
  2018   2019  
 
  (unaudited, € in
thousands)

 

Consolidated statement of cash flows:

             

Cash flow used in operating activities

    (3,402 )   (1,907 )

Cash flow used in investing activities

    (6,279 )   (3,603 )

Cash flow provided by/(used in) financing activities

    9,119     (148 )

Net decrease in cash and cash equivalents

    (562 )   (5,658 )

Cash and cash equivalents at the beginning of the period

    3,157     9,222  

Cash and cash equivalents at the end of the period

    2,595     3,564  

    Operating Activities

        Our cash flow used in operating activities primarily relates to changes in the components of our working capital, including cash received from our pharmaceutical partners and diagnostics clients, and payments made to our suppliers.

        For the six-months ended June 30, 2019, cash used in operating activities was €1,907 thousand, a decrease of €1,495 thousand as compared to €3,402 thousand for the six-months ended June 30, 2018. This change was principally due to a reduction of payments to our suppliers as part of working capital management.

    Investing Activities

        Our cash flow used in investing activities for the six-months ended June 30, 2019 consisted of investments in intangible assets and plant, property and equipment. These mainly included the purchase of laboratory equipment and the development of new biomarkers and interpretation-based solution products development, such as our CentoPortal online platform and CentoMD database. Cash flow used in investing activities for the six-months ended June 30, 2018 also included investments in the development of our new headquarters in Rostock, Germany and the grants received for such investments.

        For the six-months ended June 30, 2019, cash flow used in investing activities was €3,603 thousand, a decrease of €2,676 thousand as compared to €6,279 thousand for the six-months ended June 30, 2018, mainly due to reduced property, plant and equipment capital expenditures as a result of the completion of the construction of our new headquarters in Rostock, Germany in 2018.

    Financing Activities

        Our cash flow used in financing activities for the six-months ended June 30, 2019 consisted of repayments of secured bank loans related to the development of our new headquarters in Rostock, Germany, drawing of overdrafts, proceeds and repayments of finance leases, as well as interest payments.

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        For the six-months ended June 30, 2019, cash used in financing activities was €148 thousand, a change of €9,267 thousand as compared to €9,119 thousand generated from financing activities for the six-months ended June 30, 2018. Cash generated from financing activities for the six-months ended June 30, 2018 also included net proceeds received from an external private financing of €9,999 thousand, cash received from secured bank loans relating to the construction of our new headquarters, as well as cash received from overdrafts related thereto. Upon the completion of the construction of our headquarters in 2018, repayment of the secured bank loan commenced in the six-months ended June 30, 2019. Such repayment, together with the repayment of finance leases, offset the cash received from the overdraft and resulted in a cash outflow from financing activities for the period.

    Comparison of the Year Ended December 31, 2017 and 2018

        The following table sets forth our cash flows for the periods indicated:

 
  For the Years
Ended
December 31,
 
 
  2017   2018  
 
  (€ in thousands)
 

Consolidated statement of cash flows:

             

Cash flow used in operating activities

    (4,336 )   (4,577 )

Cash flow used in investing activities

    (11,154 )   (8,694 )

Cash flow provided by financing activities

    17,682     19,336  

Net increase in cash and cash equivalents

    2,192     6,065  

Cash and cash equivalents at the beginning of the period

    965     3,157  

Cash and cash equivalents at the end of the period

    3,157     9,222  

    Operating Activities

        Our cash flow used in operating activities primarily relates to changes in the components of our working capital, including cash received from our pharmaceutical partners and diagnostics clients, and payments made to our suppliers.

        For the year ended December 31, 2018, cash used in operating activities was €4,577 thousand, an increase of €241 thousand as compared to €4,336 thousand for the year ended December 31, 2017. This change was principally due to an increase in trade receivables from our diagnostics clients.

    Investing Activities

        Our cash flow used in investing activities for the year ended December 31, 2018 consists of investments in intangible assets, and plant, property and equipment, grants received for investments in property, plant and equipment and cash used in disposals of property, plant and equipment. These include investments in the development of new facilities, including our new headquarters in Rostock, Germany, our new facility in Cambridge, Massachusetts, the purchase of laboratory equipment, and the development of new biomarkers and interpretation-based solution products development such as our CentoPortal online platform and CentoMD database.

        For the year ended December 31, 2018, cash flow used in investing activities was €8,694 thousand, a decrease of €2,460 thousand as compared to €11,154 thousand for the year ended December 31, 2017. This change was principally due to decrease in investment in property, plant and equipment as the development of our new headquarters in Rostock, Germany was completed in early 2018.

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    Financing Activities

        Our cash flow provided by financing activities for the year ended December 31, 2018 consists of proceeds we received from our shareholders and investors through private financing, along with cash obtained from secured bank loans which contributed to the construction of our new facility in Rostock.

        For the year ended December 31, 2018, cash generated from financing activities was €19,336 thousand, an increase of €1,654 thousand as compared to €17,682 thousand for the year ended December 31, 2017. In 2017, we received a capital injection of €5,125 thousand from one of our shareholders and two current employees. In addition, in 2017, we completed an external private financing with a consortium of investors for an investment of €15,000 thousand, of which proceeds of €14,325 thousand were received net of transaction costs incurred by the investors and bank charges.

        In 2018, an additional investment of €20,000 thousand (€19,974 thousand net of bank charges) was received from certain of the investors that had participated in the 2017 consortium referenced in the paragraph above (see "Certain Relationships and Related Party Transactions—Investment and Shareholder Agreement").

    Comparison of the Year Ended December 31, 2016 and 2017

        The following table sets forth our cash flows for the periods indicated:

 
  For the Years
Ended
December 31,
 
 
  2016   2017  
 
  (€ in thousands)
 

Consolidated statement of cash flows:

             

Cash flow provided by/(used in) operating activities

    1,390     (4,336 )

Cash flow used in investing activities

    (8,687 )   (11,154 )

Cash flow provided by financing activities

    7,867     17,682  

Net increase in cash and cash equivalents

    570     2,192  

Cash and cash equivalents at the beginning of the period

    395     965  

Cash and cash equivalents at the end of the period

    965     3,157  

    Operating Activities

        Our cash flow used in operating activities primarily relates to changes in the components of our working capital, including cash received from our pharmaceutical partners and diagnostics clients, and payment made to our suppliers.

        For the year ended December 31, 2017, cash used in operating activities was €4,336 thousand, an increase in outflow of €5,726 thousand as compared to cash provided by operating activities of €1,390 thousand for the year ended December 31, 2016. This change was principally due to the difference in timing between the receipt of revenues in our diagnostics business and the payment of our suppliers. Our payment terms with our diagnostics clients typically range from 30 to 90 days and may extend to 120 days in some circumstances, particularly for our clients in the Middle East region. However, because our typical payment terms for our suppliers range from 30 to 60 days, the timing differences result in short term capital requirements to finance our operations.

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    Investing Activities

        Our cash flow used in investing activities consists of investments in the development of new facilities, including our new facility in Rostock, Germany, the purchase of laboratory equipment, research and development of new biomarkers, interpretation-based solution products development and IT improvements such as our CentoPortal online platform and CentoMD database, as well as other research and development activities.

        For the year ended December 31, 2017, cash used in investing activities was €11,154 thousand, an increase of €2,467 thousand as compared to €8,687 thousand for the year ended December 31, 2016. The increase was principally a result of an increase in investment in our new facility in Rostock in 2017, which is partially subsidized by government grants, with the remaining investment financed by long-term bank loans.

    Financing Activities

        Our cash flow generated from financing activities consists of the proceeds we received from our shareholders through a private financing in January 2017, along with cash obtained from secured bank loans which contributed to the construction of our new facility in Rostock. In addition, we completed an additional private financing in June 2017.

        For the year ended December 31, 2017, cash generated from financing activities was €17,682 thousand, an increase of €9,815 thousand as compared to €7,867 thousand for the year ended December 31, 2016. This increase was principally as a result of net proceeds received from an external private financing of €14,325 thousand.

Off-Balance Sheet Arrangements

        We did not have during the periods presented, and we do not currently have, any off-balance sheet arrangements, as defined in the rules and regulations of the Securities and Exchange Commission.

Contractual Obligations and Commitments

        The table below presents the residual contractual terms of the financial liabilities on the reporting date, including estimated interest payments. The figures are undiscounted gross amounts, including estimated interest payments and interest on undrawn loan funds, but without showing the impact of offsetting.

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        The following table presents information relating to our contractual obligations (including estimated interest payments) as of December 31, 2018:

 
   
  Payments due by Period  
 
  Total   Less than
1 year
  Between 1
and
3 years
  Between 3
and
5 years
  More than
5 years
 
 
   
  (€ in thousands)
 

Secured bank loans(1)

    15,985     2,201     3,975     1,833     7,976  

Bank overdraft

    1,915     1,915              

Finance lease liabilities

    3,234     1,435     1,799          

Municipal loans(2)

    1,273                 1,273  

Trade payables

    5,429     5,429              

Operating leases

    252     197     55