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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.
 Filed Pursuant to Rule 424(b)(3)
 Registration No. 333-260828
Subject to Completion, dated April 8, 2022
P R O S P E C T U S
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Science 37 Holdings, Inc.
103,576,231 Shares of Common Stock
This prospectus relates to the offer and sale from time to time by the selling securityholders named in this prospectus (the “Selling Securityholders”) of up to 103,576,231 shares of common stock, par value $0.0001 per share, consisting of (i) 20,000,000 shares of common stock (the “PIPE shares”) issued in a private placement pursuant to subscription agreements entered into on March 5, 2021 (the “PIPE Investment”); (ii) 2,002,260 shares of common stock (the “founder shares”) issued in connection with the consummation of the Business Combination (as defined below), in exchange for 2,002,260 shares of Class B common stock of LifeSci Acquisition II Corp. (“LSAQ”) originally issued in a private placement to LifeSci Holdings, LLC (the “Sponsor”) and certain other holders of LSAQ’s Class B common stock; (iii) 3,146,453 shares issued to the Sponsor in exchange for private warrants underlying shares of common stock (the “LSAQ warrants”) in connection with the Business Combination defined and described herein; and (iv) up to 78,427,518 shares of common stock issued or issuable to certain former stockholders and other securityholders of Science 37 (the “Science 37 Holders”) in connection with or as a result of the consummation of the Business Combination (as defined below), consisting of (a) up to 56,977,921 shares of common stock (the “Science 37 Shares”); (b) up to 12,500,000 shares of common stock (the “Earn-Out Shares”) that certain Science 37 Holders have the contingent right to receive upon the achievement of certain stock price-based vesting conditions, and (c) 8,949,597 outstanding options to purchase shares of common stock.
On October 6, 2021, we consummated the business combination, or the Business Combination, contemplated by the Agreement and Plan of Merger, dated May 6, 2021, by and among LSAQ, LifeSci Acquisition II Merger Sub, Inc., a Delaware corporation and wholly-owned subsidiary of LSAQ (“Merger Sub”), and Science 37, Inc., a Delaware corporation (“Legacy Science 37”) (the “Merger Agreement”). Pursuant to the Merger Agreement, Merger Sub was merged with and into Legacy Science 37, with Legacy Science 37 surviving the merger as a wholly owned subsidiary of LSAQ (the “Business Combination”). Upon the closing of the Business Combination (the “Closing”), we changed our name to Science 37 Holdings, Inc.
We will not receive any proceeds from the sale of the shares by the Selling Securityholders. We will bear all costs, expenses and fees in connection with the registration of the shares of common stock. The Selling Securityholders will bear all commissions and discounts, if any, attributable to their sales of the shares of common stock.
Our common stock is listed on The Nasdaq Stock Market, LLC, or Nasdaq, under the symbol “SNCE”. On April 7, 2022, the closing sale price of our common stock as reported on the Nasdaq was $4.40.
We are an “emerging growth company” under applicable Securities and Exchange Commission rules and, as such, have elected to comply with certain reduced public company disclosure requirements for this prospectus and future filings. See “Prospectus Summary — Implications of Being an Emerging Growth Company.”
Our business and investment in our common stock involve significant risks. These risks are described in the section titled “Risk Factors” beginning on page 4 of this prospectus.
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense.
The date of this prospectus is            , 2022.

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ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement on Form S-1 that we filed with the Securities and Exchange Commission (the “SEC”) using the “shelf” registration process. Under this shelf registration process, the Selling Securityholders may, from time to time, sell or otherwise distribute the securities offered by them as described in the section titled “Plan of Distribution” in this prospectus. We will not receive any proceeds from the sale by such Selling Securityholders of the securities offered by them described in this prospectus.
We may also file a prospectus supplement or post-effective amendment to the registration statement of which this prospectus forms a part that may contain material information relating to these offerings. The prospectus supplement or post-effective amendment may also add, update or change information contained in this prospectus with respect to that offering. If there is any inconsistency between the information in this prospectus and the applicable prospectus supplement or post-effective amendment, you should rely on the prospectus supplement or post-effective amendment, as applicable. Before purchasing any securities, you should carefully read this prospectus, any post-effective amendment, and any applicable prospectus supplement, together with the additional information described under the heading “Where You Can Find More Information.”
Neither we, nor the Selling Securityholders, have authorized anyone to provide you with any information or to make any representations other than those contained in this prospectus, any post-effective amendment, or any applicable prospectus supplement prepared by or on behalf of us or to which we have referred you. We and the Selling Securityholders 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 Selling Securityholders will not make an offer to sell these securities in any jurisdiction where the offer or sale is not permitted. You should assume that the information appearing in this prospectus, any post-effective amendment and any applicable prospectus supplement to this prospectus is accurate only as of the date on its respective cover. Our business, financial condition, results of operations and prospects may have changed since those dates. This prospectus contains, and any post-effective amendment or any prospectus supplement may contain, market data and industry statistics and forecasts that are based on independent industry publications and other publicly available information. Although we believe these sources are reliable, we do not guarantee the accuracy or completeness of this information and we have not independently verified this information. In addition, the market and industry data and forecasts that may be included in this prospectus, any post-effective amendment or any prospectus supplement may involve estimates, assumptions and other risks and uncertainties and are subject to change based on various factors, including those discussed under the heading “Risk Factors” contained in this prospectus, any post-effective amendment and the applicable prospectus supplement. Accordingly, investors should not place undue reliance on this information.
We own or have rights to trademarks, trade names and service marks that we use in connection with the operation of our business. In addition, our name, logos and website name and address are our trademarks or service marks. Solely for convenience, in some cases, the trademarks, trade names and service marks referred to in this prospectus are listed without the applicable ®,™ and SM symbols, but we will assert, to the fullest extent under applicable law, our rights to these trademarks, trade names and service marks. Other trademarks, trade names and service marks appearing in this prospectus are the property of their respective owners.
As used in this prospectus, unless otherwise indicated or the context otherwise requires, references to “we,” “us,” “our,” the “company” and “S37” refer to the consolidated operations of Science 37 Holdings, Inc. and its subsidiaries. References to “LSAQ” refer to the company prior to the consummation of the Business Combination and references to “Legacy Science 37” refer to Science 37, Inc. prior to the consummation of the Business Combination.
 
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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus contains forward-looking statements. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. All statements other than statements of historical facts contained in this prospectus, including statements regarding our future results of operations and financial position, business strategy, plans and prospects, existing and prospective products, research and development costs, timing and likelihood of success, and plans and objectives of management for future operations and results, are forward-looking statements. These statements involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements.
Factors that may impact such forward-looking statements include:

expectations regarding the Company’s strategies and future financial performance, including its future business plans or objectives, prospective performance and opportunities and competitors, revenues, backlog conversion, products and services, pricing, operating expenses, market trends, liquidity, cash flows and uses of cash, capital expenditures, and ability to invest in growth initiatives and pursue acquisition opportunities;

risks related to the Company’s technology, intellectual property and data privacy practices;

risks related to the Company’s reliance on third parties;

risks related to the general economic and financial market conditions; political, legal and regulatory environment; and the industries in which the Company operates;

the ability to recognize the anticipated benefits of the Business Combination;

the risk that the Company will need to raise additional capital to execute its business plan, which may not be available on acceptable terms or at all;

limited liquidity and trading of the Company’s securities;

volatility in the price of Science 37’s securities due to a variety of factors, including changes in the competitive and highly regulated industries in which Science 37 plans to operate, variations in performance across competitors and changes in laws and regulations affecting Science 37’s business;

geopolitical risk and changes in applicable laws or regulations;

the possibility that the Company may be adversely affected by other economic, business, and/or competitive factors;

operational risks;

the risks that the COVID-19 pandemic, and local, state, and federal responses to addressing the pandemic, may have an adverse effect on our business operations, as well as our financial condition and results of operations; and

litigation and regulatory enforcement risks, including the diversion of management time and attention and the additional costs and demands resulting therefrom on the Company’s resources.
The forward-looking statements contained in this prospectus are based on the Company’s current expectations and beliefs and are based upon information available to us as of the date of this prospectus, and while we believe such information forms a reasonable basis for such statements, there can be no assurance that future developments affecting the Company will be those that the Company has anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond the Company’s control) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. Forward-looking statements are inherently uncertain, and investors are cautioned not to unduly rely upon these statements.
 
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These risks and uncertainties include, but are not limited to, those factors described or incorporated by reference under the heading “Risk Factors” below. Should one or more of these risks or uncertainties materialize, or should any of the assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. The Company will not and does not undertake any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.
 
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FREQUENTLY USED TERMS
Unless otherwise stated in this prospectus, the terms, “we,” “us,” or “our” refer to Science 37 Holdings, Inc., a Delaware corporation. Further, in this document:

“Board” means the board of directors of Science 37 Holdings, Inc.

“Business Combination” means the merger contemplated by the Merger Agreement.

“Certificate of Incorporation” or the “Charter” means our Second Amended and Restated Certificate of Incorporation.

“Closing Date” means the date of the consummation of the Business Combination.

“Code” means the Internal Revenue Code of 1986, as amended.

“Bylaws” means our Amended and Restated Bylaws.

“common stock” or “Science 37 Common Stock” means the shares of common stock, par value $0.0001 per share, of Science 37.

“Effective Time” means the time at which the Business Combination became effective.

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

“founder shares” means the outstanding shares of common stock issued to the Sponsor for an aggregate purchase price of $25,000 on January 1, 2020.

“GAAP” means accounting principles generally accepted in the United States of America.

“IPO” refers to the initial public offering of 7,500,000 shares of common stock consummated on November 24, 2020.

“LSAQ” means LifeSci Acquisition II Corp, a Delaware corporation, prior to the consummation of the Business Combination.

“Merger Agreement” means that certain Merger Agreement, dated as of May 6, 2021, by and among LSAQ, Merger Sub and Science 37.

“Merger Sub” means LifeSci Acquisition II Merger Sub, Inc., a Delaware corporation and wholly- owned subsidiary of LSAQ.

“PIPE Investment” means the issuance of 20,000,000 shares of common stock to certain investors for an aggregate of $200,000,000 in a private placement immediately prior to the closing of the Business Combination.

“SEC” means the U.S. Securities and Exchange Commission.

“Securities Act” means the Securities Act of 1933, as amended.

“Science 37” means Science 37 Holdings, Inc., a Delaware corporation.

“Sponsor” means LifeSci Holdings, LLC, a Delaware limited liability company.
 
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PROSPECTUS SUMMARY
This summary highlights, and is qualified in its entirety by, the more detailed information and financial statements included elsewhere in this prospectus. This summary does not contain all of the information that may be important to you in making your investment decision. You should read this entire prospectus carefully, especially the “Risk Factors” section beginning on page 4 and our consolidated financial statements and the related notes appearing at the end of this prospectus, before deciding to invest in our common stock.
Overview
Founded in 2014, Science 37 pioneered the concept of agile clinical trials with a very simple premise: that clinical trials should begin with the patient. With approximately $195 billion spent annually in biopharmaceutical research and development and approximately $60 billion spent annually in serviceable clinical trials, Science 37 is disrupting a large market.
Today, Science 37 continues to be a leader in agile clinical trials and in supporting decentralization approaches to clinical trials. We believe Science 37 is uniquely positioned as an operating system with both end-to-end technology to enable agile clinical trials and specialized networks to orchestrate trial execution. We also believe that Science 37 has more scale to manage and more experience in conducting agile clinical trials than any other company, having executed more than 100 clinical trials with over 500,000 patients engaged to date. By bringing research to patients and providers more directly, Science 37 helps sponsors speed patient enrollment, enable better retention and increase accessibility for representative patient populations, all of which helps accelerate the development of potentially life-saving treatments through faster study timelines and a more diverse patient population. Compared to the traditional model, Science 37 has been able to initiate clinical trials up to four times faster, recruit patients up to 15 times faster and retain patients at up to 28% higher rates. Additionally, enrollment through Science 37 has resulted in up to three times more diverse participant pools, better representing the real world population. As the commercial value of a drug is highest prior to its patent expiry date, these efficiency gains are critical.
Science 37 is addressing an industry that it believes is ripe for disruption, with the clinical trial model having been largely unchanged over the past 60 to 90 years. The traditional clinical trial model relies on a network of physical clinical research sites for trial execution, requiring patients to travel to a site for each visit. The infrastructure required for each site to operate, in addition to the fragmentation that results from each site using their own processes and technology tools, has given rise to a myriad of challenges, including slow start up, poor enrollment, high patient drop-out rates, and lack of diversity, all of which affect the timelines to launch life-saving drug treatments for patients. Only about 8% of patients are approached to join a clinical trial because most do not live near a participating research site. About 19% of the patients recruited do not complete the full study. In parallel, only about 5% of providers participate in clinical research due to the high cost and low incentives to house clinical teams or send patients out of their practice for a clinical trial. In the end, approximately 85% of trials experience delays, 94% of them greater than one month, resulting in timelines as long as 13 years to launch drug treatments globally.
Through its direct-to-patient approach, Science 37 seeks to reduce the impact of the geographic barriers associated with conventional physical clinical trial sites, enable recruitment of virtually any patient, and provide patients with personalized support throughout the clinical trial journey. Science 37 believes that bringing the clinical trial directly to the patient addresses traditional-model problems around patient retention and engagement head on. Furthermore, Science 37 aims to offer a model for providers to seamlessly participate as investigators without all of the site infrastructure costs.
Science 37’s patient-centric model is powered by a category-defining clinical trial operating system and its team of approximately 600 employees with significant subject matter expertise. The backbone of the operating system is a unified technology platform, which is combined with Science 37’s specialized network of patient communities, on-demand telemedicine investigators, flexible mobile nurse networks, scalable remote coordinators and robust connected technologies.
Background
We were incorporated as LifeSci Acquisition II Corp. on December 18, 2019. On October 6, 2021, we closed the Business Combination with Legacy Science 37, as a result of which Legacy Science 37 became a
 
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wholly-owned subsidiary of ours, and we changed our name to Science 37 Holdings, Inc. While we are the legal acquirer of Legacy Science 37 in the Business Combination, Legacy Science 37 is deemed to be the accounting acquirer, and the historical financial statements of Legacy Science 37 became the historical financial statements of our company upon the closing of the Business Combination.
Pursuant to the Merger Agreement, the following actions were taken, and the following consideration was paid, in connection with the Business Combination:
Preferred Stock.   Immediately prior to the Effective Time and subject to the consent of the holders of a majority of the then outstanding shares of Science 37’s Series A, Series B, Series C, Series D and Series D-1 redeemable convertible preferred stock, par value $0.0001 per share (collectively, the “Science 37 Preferred Stock”), voting together as a single class on an as-converted basis, each issued and outstanding share of Science 37 Preferred Stock was converted into shares of the common stock, par value $0.0001 per share, of Science 37 (the “Science 37 common stock”) at the then-applicable conversion rates (the “Science 37 Preferred Stock Conversion”).
Common Stock.   At the Effective Time, following the Science 37 Preferred Stock Conversion, each share of Science 37 Common Stock (including shares of Science 37 Common Stock outstanding as a result of the Science 37 Preferred Stock Conversion, but excluding shares the holders of which perfect rights of appraisal under Delaware law) was converted into the right to receive such number of shares of LSAQ Common Stock equal to the Exchange Ratio (subject to rounding mechanisms as described in the Merger Agreement) and a number of Earn-Out Shares (as defined below).
Stock Options.   At the Effective Time, each outstanding option to purchase shares of Science 37 Common Stock (a “Science 37 Option”), whether or not then vested and exercisable, was converted automatically (and without any required action on the part of such holder of outstanding option) into an option to purchase shares of LSAQ Common Stock equal to the number of shares subject to such option prior to the Effective Time multiplied by the Exchange Ratio, with the per share exercise price equal to the exercise price prior to the Effective Time divided by the Exchange Ratio.
Earn-Out Shares.   Following the closing of the Business Combination, former holders of shares of Science 37 Common Stock (including shares received as a result of the Science 37 Preferred Stock Conversion) and former holders of Science 37 Options will be entitled to receive their pro rata share of up to 12,500,000 additional shares of LSAQ Common Stock (the “Earn-Out Shares”) if, within a three-year period following the signing date of the Merger Agreement, the closing share price of the LSAQ Common Stock equals or exceeds any of two thresholds over any 20 trading days within a 30-day trading period (each, a “Triggering Event”) and, in respect of a former holder of Science 37 Options, the holder continues to provide services to LSAQ or one of its subsidiaries at the time of such Triggering Event.
In May 2021, we entered into the Subscription Agreements, pursuant to which certain investors (the “PIPE Investors”) agreed to subscribed for an aggregate of 20,000,000 shares of our common stock at a purchase price of $10.00 per share. Immediately prior to the closing of the Business Combination, we issued and sold 20,000,000 shares of our common stock to the PIPE Investors for aggregate gross proceeds to us of $200 million.
The rights of holders of our common stock are governed by our amended and restated certificate of incorporation, or the certificate of incorporation, our amended and restated bylaws, or the bylaws, and the Delaware General Corporation Law, or the DGCL. See the section entitled “Description of Capital Stock.”
Risk Factors
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:

Science 37 has a limited operating history on which to assess the prospects for Science 37’s business, Science 37 has generated limited revenue from sales of Science 37’s products and related services, and Science 37 has incurred losses since inception. As such, you cannot rely upon its historical operating performance to make an investment decision regarding Science 37. Science 37 anticipates that it will
 
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continue to incur significant losses for at least the next several years as it continues to commercialize its existing products and services and seeks to develop and commercialize new products and services.

Science 37 may need to raise additional funding to strengthen its core business, expand into additional markets, and extend the reach of its operating system. This additional financing may not be available on acceptable terms, or at all. Failure to obtain this necessary capital, when needed may force Science 37 to delay, limit or terminate Science 37’s product commercialization or development efforts or other operations.

The potential loss or non-renewal of Science 37’s contracts, any delay in its customers’ clinical trials or non-payment by its customers for services that Science 37 has performed, could negatively affect its business, results of operations and financial results.

Science 37 depends entirely on the clinical trial market, and a downturn in this market could cause its revenues to decrease.

Science 37 may face political, legal and compliance, operational, regulatory, economic and other risks associated with the international expansion of its operations that Science 37 does not currently face or that are more significant than in its domestic operations.

Science 37’s business depends on the continued effectiveness and availability of its information systems, including the information systems Science 37 uses to provide its services to its customers, and failures of these systems may materially limit its operations.

Science 37 relies on third parties for important products, services and licenses to certain technology and intellectual property rights, and there might be problems with such products or services or it might not be able to continue to obtain such products, services and licenses.

Failure to comply with data privacy and security laws, regulations, and industry standards could have a material adverse effect on our reputation, results of operations or financial condition, or have other adverse consequences.

Science 37 incurs significant costs and obligations as a result of being a newly public company.

The market price of our common stock is likely to be highly volatile, and you may lose some or all of your investment.

Volatility in our share price could subject us to securities class action litigation.
Corporate Information
Science 37 is a Delaware company founded in September 2014. Science 37’s principal office and mailing address is 800 Park Offices Drive, Suite 3606, Research Triangle Park, North Carolina, 27709, its telephone number is (984) 377-3737 and its website is www.science37.com. The information contained on, or accessible through, Science 37’s website is not incorporated by reference into this prospectus, and you should not consider any information contained on, or that can be accessed through, Science 37’s website as part of this prospectus.
 
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RISK FACTORS
You should carefully consider the risks and uncertainties described below and the other information in this prospectus before making an investment in our common stock. Our business, financial condition, results of operations, or prospects could be materially and adversely affected if any of these risks occurs, and as a result, the market price of our common stock could decline and you could lose all or part of your investment. This prospectus also contains forward-looking statements that involve risks and uncertainties. See “Cautionary Statement Regarding Forward-Looking Statements.” Our actual results could differ materially and adversely from those anticipated in these forward-looking statements as a result of certain factors, including those set forth below.
Risks Related to Science 37’s Limited Operating History and Early Stage of Growth
Science 37 has a limited operating history on which to assess the prospects for Science 37’s business, Science 37 has generated limited revenue from sales of Science 37’s products and related services and Science 37 has incurred losses since inception. Science 37 anticipates that it will continue to incur significant losses for at least the next several years as it continues to commercialize its existing products and services and seeks to develop and commercialize new products and services.
Since inception, Science 37 has devoted substantially all of its financial resources to develop its products and related services. Science 37 has financed its operations primarily through the issuance of equity securities. Science 37 has generated limited revenue from the sale of its products and services to date and has incurred significant losses. Science 37 has incurred net losses of $94.3 million and $31.7 million in the years ended December 31, 2021 and 2020, respectively. Science 37’s accumulated deficit as of December 31, 2021 was $202.1 million. These losses and accumulated deficit reflect the substantial investments Science 37 made to acquire new clients and partners and to develop its Agile Clinical Trial Operating SystemTM (“OS”). Science 37’s ability to generate revenue and achieve profitability and sustain or increase profitability depends upon its ability to accelerate and expand the commercialization of its products and service offerings in line with the demand from new partnerships and its business strategy. Science 37 may be unable to achieve any or all of these goals.
The amount of Science 37’s future net losses will depend, in part, on sales and on-going development of its products and related services, the rate of its future expenditures and its ability to obtain funding through the issuance of the Company’s securities, strategic collaborations or grants. Science 37 expects to continue to incur significant losses for at least the next several years as it continues to commercialize its existing products and services and seeks to develop and commercialize new products and services. Science 37 anticipates that its expenses will increase substantially if and as Science 37 continues to develop its products and services; continues to build its sales, marketing and distribution infrastructure to commercialize its products and services; seeks to identify, assess, acquire, license and/or develop other products and services and subsequent generations of its current products and services; seeks to maintain, protect and expand its intellectual property portfolio; seeks to attract and retain skilled personnel; and supports its operations as a public company.
Science 37 has experienced rapid growth and expects to invest in growth for the foreseeable future. If Science 37 fails to manage its growth effectively, its business, operating results and financial condition would be adversely affected.
Science 37 has experienced rapid growth and expansion of its operations. Science 37’s revenues, customer count, employee count, product and service offerings, geographies of operation, and computing infrastructure needs have all increased significantly, and Science 37 expects them to increase in the future. As Science 37 continues to grow, both organically and through acquisitions, Science 37 must effectively integrate, develop, and motivate an increasing number of employees, while executing its growth plan and maintaining the beneficial aspects of its culture. Any failure to preserve Science 37’s culture could negatively affect its future success, including its ability to attract and retain highly qualified employees and to achieve its business objectives.
Science 37’s rapid growth has placed, and will continue to place, a significant strain on its management capabilities, administrative and operational infrastructure, facilities, IT and other resources. Science 37
 
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anticipates that additional investments in its computing infrastructure and facilities will be required to scale its operations. To effectively manage growth, Science 37 must continue to improve its key business applications, processes and computing infrastructure; enhance information and communication systems, and ensure that its policies and procedures evolve to reflect its current operations and are appropriately communicated to and observed by employees. These enhancements and improvements will require additional investments and allocation of valuable time, effort and expense. Failure to effectively manage growth could result in difficulty or delays in deploying Science 37’s solutions, declines in quality or customer satisfaction, increases in costs, difficulties in introducing new features or other operational difficulties, and any of these difficulties could adversely impact its business performance and results of operations.
Risks Related to Science 37’s Business and Operations
Science 37 may experience significant quarterly and annual fluctuations in its results of operations due to a number of factors.
Science 37’s quarterly and annual results of operations may fluctuate significantly due to a variety of factors, many of which are outside of its control. This variability may lead to volatility in Science 37’s stock price as investors and research analysts respond to quarterly fluctuations. In addition, comparing Science 37’s results of operations on a period-to-period basis, particularly on a sequential quarterly basis, may not be meaningful. You should not rely on Science 37’s past results as an indication of its future performance.
Factors that may affect Science 37’s results of operations include, but are not limited to, fluctuations in its quarterly volume of bookings, fluctuations in its backlog conversion rate, and variability in the types of clinical trials for which Science 37 is awarded contracts. For example, certain clinical trials require significant upfront expenditures by Science 37 for patient recruitment. These expenditures may not always be recouped from Science 37’s customers, which could adversely affect Science 37’s revenue and gross margins. The revenue Science 37 derives from the contracts for such clinical trials could therefore be heavily concentrated in one quarterly period. Booking one or more trials with revenue heavily concentrated in one quarter could cause a temporary spike in Science 37’s quarterly results, which would not be repeated if Science 37 booked fewer or no such trials in subsequent quarters. The foregoing factors are difficult to forecast, and these, as well as other factors, could materially adversely affect Science 37’s quarterly and annual results of operations.
Science 37 may need to raise additional capital, and such additional capital may not be available on acceptable terms, or at all. Failure to obtain this necessary capital when needed may force Science 37 to delay, limit or terminate Science 37’s product commercialization or development efforts or other operations.
Science 37’s operations have consumed substantial amounts of cash since inception. Science 37 expects to expend substantial additional amounts to strengthen its core business, expand into additional markets, and extend the reach of its operating system. Science 37 may require additional capital to expand the commercialization of Science 37’s existing products and services and to develop new products and services. In addition, Science 37’s operating plans may change as a result of many factors that may currently be unknown to Science 37, and Science 37 may need to seek additional funds sooner than planned.
Science 37 cannot guarantee that future financing will be available in sufficient amounts or on terms acceptable to it, if at all. Moreover, the terms of any future financing may adversely affect the holdings or the rights of Science 37’s stockholders and the issuance of additional securities, whether equity or debt, by Science 37, or the possibility of such issuance may cause the market price of its common stock to decline. Incurring indebtedness could result in increased fixed payment obligations. The terms of a capital raising transaction could require Science 37 to agree to stringent financial and operating covenants that could limit its flexibility in operating its business. Science 37 could also be required to seek funds through arrangements with collaborative partners or otherwise at an earlier stage than otherwise would be desirable, and Science 37 may be required to relinquish rights to some of its technologies or products or otherwise agree to terms that are unfavorable to Science 37, any of which may have a material adverse effect on its business, operating results and prospects. In addition, raising additional capital through the issuance of equity or convertible debt securities would cause dilution to holders of Science 37’s equity securities.
 
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Science 37’s actual operating results may differ significantly from guidance provided by its management.
From time to time, Science 37 may release guidance in its earnings releases, earnings conference calls, or otherwise, regarding its future performance that represent its management’s estimates as of the date of release. This guidance, if released, would include forward-looking statements and would be based on projections prepared by Science 37’s management. Science 37’s guidance will not be prepared with a view toward compliance with published accounting and reporting guidelines, and neither its registered public accountants nor any other independent expert or outside party will compile or examine the projections and, accordingly, no such person will express any opinion or any other form of assurance with respect thereto. Guidance will be based upon a number of assumptions and estimates that, while presented with numerical specificity, are inherently subject to significant business, economic, and competitive uncertainties and contingencies, many of which are beyond Science 37’s control and are based upon specific assumptions with respect to future business decisions, some of which will change. Science 37 will generally state possible outcomes as high and low ranges which are intended to provide a sensitivity analysis as variables are changed, but are not intended to represent that actual results could not fall outside of the suggested ranges. The principal reason that Science 37 would release guidance would be to provide a basis for Science 37’s management to discuss its business outlook with analysts and investors. Science 37 will not accept any responsibility for any projections or reports published by analysts. Guidance is necessarily speculative in nature, and it can be expected that some or all of the assumptions of the guidance furnished by Science 37 will not materialize or will vary significantly from actual results. Accordingly, Science 37’s guidance will only be an estimate of what management believes is realizable as of the date of release. Actual results will vary from Science 37’s guidance and the variations may be material. In light of the foregoing, investors are urged to put the guidance in context and not to place undue reliance on any such guidance. Any failure to successfully implement Science 37’s operating strategy or the occurrence of any of the events or circumstances discussed therein could result in the actual operating results being different from its guidance, and such differences may be adverse and material.
The potential loss or non-renewal of Science 37’s contracts, any delay or halt in its customers’ clinical trials or non-payment by its customers for services that Science 37 has performed, could negatively affect its business and financial results.
Science 37 from time to time experiences termination, cancellation and non-renewals of contracts by its customers in the ordinary course of business, and the number of cancellations can vary significantly from year to year and could increase in the future. Most of Science 37’s customers for project-based clinical trial services can terminate their contracts without cause upon 30 to 90 days’ notice. For example, Science 37’s cancellation percentage for project-based Phase I through IV trials for the years ended December 31, 2021 and 2020 was 9.2% and 9.9%, respectively. Science 37’s project-based customers may delay, terminate, or reduce the scope of their contracts for a variety of reasons beyond Science 37’s control, including but not limited to:

decisions to forgo or terminate a particular clinical trial;

amendments to a clinical trial protocol and/or the procedures required to support it;

lack of available financing, budgetary limits, or changing priorities;

actions by regulatory authorities;

production problems resulting in shortages of the drug being tested or other supplies required for the operation of the trial;

failure of the drug being tested to satisfy safety requirements or efficacy criteria;

unexpected or undesired clinical results, including adverse side effects caused by our customers’ product candidates;

insufficient patient enrollment in a trial;

insufficient investigator recruitment;

patient safety concerns;
 
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decisions to downsize product development portfolios;

dissatisfaction with its performance, including the quality of services provided and its ability to meet agreed upon schedules;

shift of business to another life sciences technology provider or to a contract research organization (“CRO”);

decisions to shift from a decentralized clinical trial model to a traditional clinical trial model;

product withdrawal following market launch in conjunction with late-phase research; or

shut down of its customers’ manufacturing facilities.
In the event of termination, Science 37’s contracts often provide for fees for winding down the study, but these fees may not be sufficient for Science 37 to maintain its profit margins, and termination or non-renewal may result in lower resource utilization rates, including with respect to personnel who Science 37 is not able to place on another customer engagement.
Clinical trials can be costly and a material portion of Science 37’s revenue is derived from emerging biotechnology and small to mid-sized pharmaceutical companies, which may have limited access to capital. In addition, Science 37 provides services to such companies before they pay Science 37 for some of its services. There is a risk that Science 37 may initiate a clinical trial for a customer, and the customer subsequently becomes unwilling or unable to fund the completion of the trial. There is also a risk that Science 37 could miscalculate the expenses of executing a trial and agree with a customer to execute such trial at a price that proves insufficient to cover its expenses. In either situation, notwithstanding the customer’s ability or willingness to pay for or otherwise facilitate the completion of the trial, Science 37 may be legally or ethically bound to complete or wind down the trial at its own expense.
Because the contracts included in Science 37’s backlog can generally be terminated without cause, Science 37 does not believe that its backlog as of any date is necessarily a meaningful predictor of future results. In addition, Science 37 may not realize the full benefits of its backlog of contractually committed services if its customers cancel, delay, or reduce their commitments under its contracts with them. In addition, the terminability of Science 37’s contracts puts increased pressure on its quality control efforts, since not only can its contracts be terminated by customers as a result of poor performance, but any such termination may also affect its ability to obtain future contracts from the customer involved and others. Science 37 believes the risk of loss or delay of multiple contracts is even greater in those cases where Science 37 is party to broader partnering arrangements with global biopharmaceutical companies.
Science 37’s backlog may not convert to revenue at a predictable rate, or at all.
Backlog represents anticipated revenue from contracted new business awards, excluding reimbursable out-of-pocket costs or reimbursable investigator fees, that either have not started or are in process but have not been completed. Backlog varies from period to period depending upon new business awards and contract modifications, cancellations, and the amount of revenue recognized under existing contracts. Science 37’s backlog was $163.9 million and $59.6 million at December 31, 2021 and 2020, respectively. Science 37’s revenue conversion rate is based on a financial and operational analysis performed by its project management teams and represents the level of effort expected to be expended at a specific point in time. Once work begins on a project, revenue is recognized over the duration of the project. Projects may be terminated or delayed by the customer or delayed by regulatory authorities for reasons beyond Science 37’s control. To the extent projects are delayed, the timing of Science 37’s revenue could be affected. In the event that a customer cancels a contract, Science 37 has no contractual right to the full amount of the revenue reflected in its backlog. The duration of the projects included in its backlog and the related revenue recognition range from a few months to many years. Science 37’s backlog may not be indicative of its future results, and Science 37 may not realize all the anticipated future revenue reflected in its backlog. A number of factors may affect the realization of its revenue from backlog, including:

the size, complexity, and duration of the projects;

the cancellation or delay of projects; and
 
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changes in the scope of work during the course of a project.
Fluctuations in Science 37’s reported backlog levels also result from the fact that it may receive a small number of relatively large orders in any given reporting period that may be included in its backlog. Revenue recognition on larger, more global projects could be slower than on smaller, less global projects for a variety of reasons including, but not limited to, an extended period of negotiation between the time the project is awarded to Science 37 and the actual execution of the contract, as well as an increased time frame for obtaining the necessary regulatory approvals. Fluctuations in Science 37’s reported backlog levels could also result from a number of factors including, but not limited to, differences in recruiting rates for trials, its entry into new markets or geographies, evolution of both its and its competitors’ technologies, and varying rates of adoption of Science 37’s services by clinical sites or investigators, or as a result of its reliance on third parties for various products and services.
The relationship of backlog to realized revenues is indirect and may vary over time. As Science 37 increasingly competes for and enters into large contracts that are more complex in nature, there can be no assurance about the rate at which its backlog will convert into revenue. A decrease in this conversion rate would mean that the rate of revenue recognized on contracts may be slower than what Science 37 has experienced in the past, which could materially and adversely impact its revenue and results of operations on a quarterly and annual basis. Additionally, delayed projects will remain in backlog and will not generate revenue at the rate originally expected, which could impair Science 37’s cash flows and results of operations in the short-term. Because of these large orders, Science 37’s backlog in that reporting period may reach levels that may not be sustained in subsequent reporting periods.
If Science 37 is unable to successfully develop and market new services or enter new markets, Science 37’s growth, results of operations or financial condition could be adversely affected.
A key element of Science 37’s growth strategy is the successful development and marketing of new services or entering new markets that complement or expand its existing business. As Science 37 develops new services or enters new markets, Science 37 may not have or may not adequately build the competencies necessary to perform such services satisfactorily, may not receive market acceptance for such services or may face increased competition. If Science 37 is unable to succeed in developing new services, entering new markets or attracting a customer base for its new services or in new markets, Science 37 will be unable to implement this element of its growth strategy, and its future business, reputation and results of operations could be adversely impacted.
Science 37 may be unsuccessful in achieving broad market education and changing potential customers’ habits.
Science 37’s success and future growth largely depend on its ability to increase awareness of the potential benefits of the decentralized clinical trial model and of Science 37’s operating system, and on the willingness of current and potential customers to utilize its operating system. To effectively market Science 37’s operating system, Science 37 must educate potential customers, as well as healthcare providers and other participants that interact with potential customers, about the benefits of using its operating system in lieu of conducting a clinical trial through traditional methods. However, Science 37 cannot assure that it will be successful in changing potential customers’ habits or that it will achieve broad market education or awareness. Even if Science 37 is able to raise awareness among potential customers, they may be slow in changing their habits and may be hesitant to use Science 37’s operating system for a variety of reasons, including:

lack of experience with Science 37 and its operating system, and concerns that Science 37 is relatively new to the industry;

perceived health, safety or quality risks associated with the use of a new operating system and applications for clinical trials;

existing relationships with clinical investigators;

concerns about the privacy and security of the data that patients share with or through its operating system;

competition and negative selling efforts from competitors, including competing platforms and price matching programs; and
 
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perception regarding the time and complexity of using its operating system.
If Science 37 fails to achieve broad market education of its operating system, or if Science 37 is unsuccessful in changing potential customers’ habits, its business, financial condition and results of operations would be adversely affected.
Science 37’s relationships with existing or potential customers who are in competition with each other may adversely impact the degree to which other customers or potential customers use its services, which may adversely affect its results of operations.
The biopharmaceutical industry is highly competitive. Science 37 regularly provides services to biopharmaceutical companies who compete with each other, and sometimes provides services to such customers regarding competing drugs in development. Science 37’s existing or future relationships with its biopharmaceutical customers may therefore deter other biopharmaceutical customers from using Science 37’s products or services, or may result in its customers reducing the scope of services that Science 37 provides to them or seeking to place limits on Science 37’s ability to serve other biopharmaceutical industry participants in connection with drug development activities.
If Science 37 is unable to attract suitable patients, investigators and mobile nurses for its clinical trials, its clinical development business may suffer.
The recruitment of patients, investigators and mobile nurses for clinical trials is essential to Science 37’s business. Science 37’s clinical development business could be adversely affected if Science 37 is unable to attract suitable and willing investigators or patients for clinical trials on a consistent basis. For example, Science 37 has in the past used, and may in the future use, social media as part of its omnichannel approach to marketing and outreach to patients. Changes to these social networking services’ terms of use or terms of service that limit promotional communications, restrictions that would limit Science 37’s ability or Science 37’s customers’ ability to send communications through their services, disruptions or downtime experienced by these social networking services or reductions in the use of or engagement with social networking services by current and potential investigators and patients could also harm its business. Even in the absence of such changes or restrictions, it is possible that the marketing methods Science 37 has chosen to employ may prove ineffective due to patient preferences or other factors. If Science 37 is unable to engage and enroll sufficient patients or engage investigators and nurses in clinical trials, Science 37 may need to expend additional funds to obtain access to resources or else be compelled to delay or modify the clinical trial plans, which may result in additional costs to Science 37, or to consider termination of ongoing clinical trials, which would result in its failure to convert the related portion of its backlog. These considerations might result in Science 37 being unable to successfully achieve its projected development timelines, or potentially even lead Science 37 to consider the termination of development of a product.
If Science 37 loses the services of key personnel or is unable to recruit and retain experienced personnel, its business could be adversely affected.
Science 37’s success substantially depends on the collective performance, contributions and expertise of its personnel including senior management and key personnel, qualified professional, scientific and technical operating staff and qualified sales representatives for its contract sales services. There is significant and increasing competition for qualified personnel, particularly those with higher educational degrees, such as a medical degree, a Ph.D. or an equivalent degree, or relevant experience in the industry. In addition, the departure of Science 37’s key employees, or its inability to continue to identify, attract and retain qualified personnel or replace any departed personnel in a timely fashion, may impact its ability to grow its business and compete effectively in its industry and may negatively affect Science 37’s ability to meet financial and operational goals.
Science 37’s insurance may not cover all of its indemnification obligations and other liabilities associated with its operations.
Science 37 maintains insurance designed to provide coverage for ordinary risks associated with its operations and its ordinary indemnification obligations. The coverage provided by such insurance may not
 
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be adequate for all claims Science 37 may make or may be contested by Science 37’s insurance carriers. If Science 37’s insurance is not adequate or available to pay liabilities associated with its operations, or if Science 37 is unable to purchase adequate insurance at reasonable rates in the future, Science 37’s business, results of operations, and financial condition may be adversely impacted.
Science 37 derives a significant percentage of its revenues from a concentrated group of customers and the loss of one or more major customers could materially and adversely affect its business, results of operations or financial condition.
For the year ended December 31, 2021, three customers individually accounted for greater than 10% of annual revenue and together, accounted for over 57% of our annual revenue. Science 37 derived revenue of $13.7 million of revenue from Pharmaceutical Products Development, LLC representing approximately 22.9% of total annual revenues. The loss of any of Science 37’s major customers could have a material adverse effect on its results of operations and financial condition. Science 37 may not be able to maintain its customer relationships, and its customers may delay payment under, or fail to renew, their agreements with it, and any resulting reduction in the amounts of revenue that Science 37 derives from these customers could adversely affect Science 37’s business, results of operations, or financial condition. A significant change in the liquidity or financial position of Science 37’s customers could also have a material adverse effect on the collectability of its accounts receivable, its liquidity, and its future operating results.
Additionally, conducting multiple clinical trials for different customers in a single therapeutic class involving drugs with the same or similar chemical method of action may in the future adversely affect Science 37’s business if some or all of the clinical trials are canceled because of new scientific information or regulatory judgments that affect the drugs as a class, or if industry consolidation results in the rationalization of drug development pipelines.
Similarly, some or all of the clinical trials could be canceled as a result of successful development of other competing drugs; for example, further clinical development of vaccines to treat COVID-19 or another future pandemic disease could be slowed or canceled if the outbreak of such pandemic is deemed to have been adequately brought under control, such that further clinical development of vaccines is no longer necessary or desirable.
Litigation and other legal proceedings against Science 37, which may arise in the ordinary course of Science 37’s business, could be costly and time consuming to defend.
Science 37 is from time to time subject to legal proceedings and claims that arise in the ordinary course of business, such as claims brought by its customers in connection with commercial disputes and employment claims made by its current or former employees. From time to time, third parties have asserted and may in the future assert intellectual property rights to technologies that are important to Science 37’s business and have demanded and may in the future demand that we license their technology. Litigation may result in substantial costs and may divert management’s attention and resources, which may seriously harm Science 37’s business, overall financial condition and operating results.
Risks Related to the General Economic and Financial Market Conditions and the Industries in which Science 37 Operates
Science 37’s operations might be affected by the occurrence of natural disasters, pandemics, such as the COVID-19 pandemic, or other catastrophic events.
Science 37 depends on its customers, investigators and patients for the continued operation of its business. Natural disasters or other catastrophic events, including terrorist attacks, hurricanes, fires, floods, ice and snowstorms, and pandemics, such as the COVID-19 pandemic, may result in interruptions in Science 37’s ability to provide services to its customers. Disruptions in infrastructure, laboratory, clinic or office closures, mandatory stay at home orders or other social distancing measures and disruptions caused by such events could adversely affect Science 37 or its customers, investigators, patients or infrastructure, and could have a significant negative impact on its operations or financial performance. In addition, Science 37’s business interruption insurance policies might not respond or be adequate to compensate Science 37 for all losses that may occur, including those relating to the COVID-19 pandemic.
 
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Science 37’s business could also be adversely affected by positive developments regarding, or the resolution of, the COVID-19 pandemic or another future pandemic. The various restrictions imposed by various government entities in response to the COVID-19 pandemic, including social distancing and “stay-at-home” orders, likely bolstered the level of decentralized clinical trial activity in the past two years, which benefited Science 37. As these restrictions are relaxed or lifted, there can be no assurance that the level of agile clinical trial activity will remain elevated. Additionally, in light of the COVID-19 pandemic and recent logistical technology developments, the U.S. Food and Drug Administration (“FDA”) and European Medicines Agency (“EMA”) other foreign regulatory authorities have issued guidance documents recommending sponsors implement decentralized clinical trial (“DCT”) techniques in order to maintain study continuity during the COVID-19 pandemic, and supporting DCT techniques as potential, long-term solutions for study design and evidence generation. If the FDA and/or EMA or other foreign regulatory authorities withdraw such guidance documents supporting the use of DCT techniques or otherwise restrict the use of DCT techniques in clinical trials, the level of decentralized trial activity could decrease. If the level of decentralized clinical trial activity decreases, Science 37’s business and results of operations would be adversely affected.
Unfavorable general economic conditions could negatively affect Science 37’s business, results of operations and financial condition.
Unfavorable global economic conditions and other adverse macroeconomic factors on global and domestic markets could negatively affect Science 37’s business, results of operations and financial condition. While it is difficult for Science 37 to predict the impact of general economic conditions on its business, unfavorable economic conditions could reduce customer demand for some of its services, which could cause its revenue to decline. For example, Science 37’s customers, particularly those that are especially reliant on the credit and capital markets, might not be able to raise money to conduct existing clinical trials, or to fund new drug development and related future clinical trials. In addition, economic or market disruptions could negatively impact Science 37’s vendors, contractors, or principal investigators which might have a negative effect on its business. For these reasons, among others, if economic conditions stagnate or decline, its operating results and financial condition could be adversely affected.
Science 37 faces significant competition, which could cause Science 37 to lose business or achieve lower margins.
The market for Science 37’s clinical trial solutions is intensely competitive and characterized by rapidly changing technologies, evolving industry standards, and frequent new product and service introductions and enhancements that may render existing products and services obsolete. Accordingly, Science 37’s market share and margins are subject to sudden declines. Some of Science 37’s competitors have longer operating histories, greater financial, technical, marketing and other resources, and greater name recognition than Science 37 has. These competitors may respond more quickly than Science 37 can to new and emerging technologies and changing customer and regulatory requirements, or devote greater resources to the development, promotion, and sale of their solutions. New competitors may enter Science 37’s market in the future, as barriers to entry are relatively low in its industry. Increased competition may result in pricing pressures, which could negatively impact Science 37’s sales, gross margins, or market share. In addition, current and potential competitors have established, and may in the future establish, relationships with vendors of complementary products, technologies, or services to increase the penetration of their products in the marketplace. Even if Science 37’s products and services are more effective than the products or service offerings of its competitors, current or potential customers might accept competitive products and services in lieu of purchasing its cloud-based solutions and services. Science 37’s failure to compete effectively could materially adversely affect its business, financial condition or results of operations.
Science 37 depends entirely on the clinical trial market, and a downturn in this market could cause its revenues to decrease.
Science 37’s business depends entirely on the clinical trials conducted or sponsored by pharmaceutical, biotechnology, and medical device companies, CROs, and other entities. Science 37’s revenues may decline as a result of conditions affecting these industries, including general economic downturns, increased consolidation, decreased competition, or fewer products under development. Other developments that may
 
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affect these industries and harm Science 37’s operating results include, but are not limited to, product liability claims, changes in government regulation, changes in governmental price controls or third-party reimbursement practices, and changes in medical practices. Disruptions in the world credit and equity markets may also result in a global downturn in spending on research and development and clinical trials and may impact Science 37’s customers’ access to capital and their ability to pay for Science 37’s solutions. Any decrease in research and development expenditures or in the size, scope, or frequency of clinical trials could materially adversely affect Science 37’s business, results of operations, or financial condition.
Consolidation among Science 37’s customers may cause Science 37 to lose customers, decrease the market for its products and services and result in a reduction of its revenues.
Science 37’s customer base may decline because of industry consolidation, and Science 37 may not be able to expand sales of its products and services to new customers. Consolidation within the biopharmaceutical industry, including among CROs, has accelerated in recent years, and this trend may continue. In addition, new companies or organizations that result from such consolidation may decide that Science 37’s products and services are no longer needed because of their own internal processes or the use of alternative systems they have in place or may choose to develop or acquire. As these entities consolidate, competition to provide products and services to industry participants will become more intense and the importance of establishing relationships with large industry participants will become greater. These industry participants may try to use their market power to negotiate price reductions for Science 37’s products and services. In addition, if large life sciences companies merge, it would have the potential to reduce per-unit pricing for Science 37’s products and services for the merged companies or to reduce demand for one or more of its products and services as a result of potential personnel reductions over time.
Outsourcing trends in the biopharmaceutical industry and changes in spending and research and development budgets could adversely affect Science 37’s operating results and growth rates.
Science 37 is dependent upon the ability and willingness of biopharmaceutical companies to continue to spend on research and development and to outsource the services that Science 37 provides. Science 37 is therefore subject to risks, uncertainties and trends that affect companies in the biopharmaceutical industry that Science 37 does not control. Science 37 has benefited to date from the tendency of biopharmaceutical companies to outsource clinical research projects. Any downturn in these industries or reduction in spending or outsourcing could materially adversely affect Science 37’s business.
Science 37’s estimate of the market size for its products and services may prove to be inaccurate, and even if the market size is accurate, there can be no assurance that its business will serve a significant portion of the market.
Science 37’s estimate of the market size for its products and services that Science 37 has provided publicly, sometimes referred to as its serviceable addressable market (“SAM”), is subject to significant uncertainty and is based on assumptions and estimates, including Science 37’s internal analysis and industry experience, which may not prove to be accurate. These estimates are, in part, based upon the size of the general application areas Science 37 targets. Science 37’s ability to serve a significant portion of this estimated market is subject to many factors, including its success in implementing its business strategy, which is subject to many risks and uncertainties. For example, in order to address the entire SAM Science 37 has identified, Science 37 must continue to enhance and add functionality to its existing products and services and introduce new products and services. Accordingly, even if Science 37’s estimate of the market size is accurate, there can be no assurance that its business will serve a significant portion of this estimated market for its solutions.
Risks Related to Technology, Intellectual Property and Data Privacy and Security
Science 37’s business depends on the continued effectiveness and availability of its information systems, including the information systems Science 37 uses to provide its services to its customers, and failures of these systems may materially limit its operations.
Due to the global nature of Science 37’s business and its reliance on information systems to provide its services, Science 37 has increased, and intends to continue to increase, its use of integrated information
 
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systems in delivering its services. Science 37 also provides access to similar information systems to certain of its customers in connection with the services Science 37 provides them. As the breadth and complexity of Science 37’s information systems continue to grow, it will increasingly be exposed to the risks inherent in the development, integration and ongoing operation of evolving information systems, including:

disruption, impairment, or failure of data centers, telecommunications facilities, or other key infrastructure platforms;

security breaches of, ransomware extortion-based attacks, or other cyberattacks on, and other failures or malfunctions in Science 37’s critical application systems or their associated hardware; and

excessive costs, excessive delays, or other deficiencies in systems development and deployment.
The materialization of any of these risks may impede the processing of data, the delivery of databases and services, and the day-to-day management of Science 37’s business and could result in the corruption, loss, or unauthorized disclosure of proprietary, confidential, or other data. Damage from fire, floods, hurricanes, power loss, telecommunications failures, computer viruses, information system security breaches, and similar events at Science 37’s various computer facilities could result in interruptions in the flow of data to its servers and from its servers to its customers. Corruption or loss of data may result in the need to repeat a trial at no cost to the customer, but at significant cost to Science 37, or result in the termination of a contract or damage to its reputation. Additionally, significant delays in system enhancements or inadequate performance of new or upgraded systems once completed could damage Science 37’s reputation and harm its business. Finally, long-term disruptions in the infrastructure caused by events such as natural disasters, the outbreak of war, the escalation of hostilities and acts of terrorism, particularly involving cities in which Science 37 has offices, could adversely affect its business.
A failure or breach of Science 37’s or its vendors’ IT systems or technology could result in sensitive customer information being compromised or otherwise significantly disrupt its business operations, which would negatively materially affect its reputation and/or results of operations.
Science 37 increasingly relies on information technology systems to perform necessary business functions. There are threats that could impact Science 37’s ability to protect its data and systems, including criminal hackers, hacktivists, state-sponsored intrusions, industrial espionage, employee malfeasance, and human or technological error. Computer hackers and others routinely attempt to breach the security of technology products, services and systems, and to fraudulently induce employees, customers or others to disclose information or unwittingly provide access to systems or data. Science 37 collects, uses, stores or transmits a large amount of confidential, proprietary and other information (including personal information of customers, medical professionals, patients and employees) in connection with the operation of its business as well as sensitive proprietary data related to clinical trials. Unauthorized disclosure of such sensitive or confidential data, whether through system failure or employee negligence, fraud, or misappropriation, could damage Science 37’s reputation and cause it to lose customers. Moreover, the risk of unauthorized circumvention of Science 37’s security measures or those of the third parties on whom it relies has been heightened by advances in computer and software capabilities and the increasing sophistication of hackers who employ complex techniques, including, without limitation, “phishing” or social engineering incidents, ransomware, extortion-based attacks, account takeover attacks, denial or degradation of service attacks, and malware. Unauthorized access to or through Science 37’s information systems or those Science 37 develops for its customers, whether by its employees or third parties, including a cyberattack by computer programmers and hackers who may develop and deploy viruses, worms, or other malicious software programs, could cause several negative consequences, including the following, among others: negative publicity, loss of customer confidence, significant remediation costs, time-consuming and costly regulatory investigations, legal liability, and damage to Science 37’s reputation. Any of these could contribute to a loss of customers or substantial costs for Science 37, which could have a material adverse effect on Science 37’s results of operations. Additionally, the costs of mitigating cybersecurity risks are significant and are likely to increase in the future. These costs include, but are not limited to, retaining the services of cybersecurity providers; compliance costs arising out of existing and future cybersecurity, data protection and privacy and security laws and regulations; and costs related to maintaining redundant networks, data backups and other damage-mitigation measures. In addition, Science 37’s cyber liability insurance might
 
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not be sufficient in type or amount to adequately cover Science 37 against claims related to security breaches, cyberattacks and other related breaches, in addition to the risk that the insurer will deny coverage of any future claim.
Due to the evolving nature of security threats and the potential negative consequences of a cybersecurity attack outlined above, the impact of any future incidents cannot be reasonably predicted. Science 37’s customers are also increasingly requiring cybersecurity protections and mandating cybersecurity standards in its products, and Science 37 may incur additional costs to comply with such demands. In addition, Science 37’s efforts to address a cybersecurity attack may not be successful, potentially resulting in the theft, loss, destruction or corruption of information Science 37 stores electronically, as well as unexpected interruptions, delays, or cessation of service. Any of these outcomes could cause serious harm to Science 37’s business operations and materially adversely affect its financial condition and results of operations.
In addition, some of Science 37’s vendors have significant responsibility for the security of certain of its data centers and computer-based platforms or software-as-a-service (“SaaS”) applications upon which Science 37’s businesses rely to host or process data or to perform various functions. Also, Science 37’s data suppliers have responsibility for security of their own computer and communications environments. These third parties face risks relating to cybersecurity similar to Science 37’s, which could disrupt their businesses and therefore materially impact Science 37’s. Accordingly, Science 37 is subject to any flaw in or breaches to its computer and communications systems or those that its vendors operate for Science 37, which could result in a material adverse effect on its business, operations and financial results.
Science 37’s products and services are subject to rapid technological changes and evolving industry standards. If Science 37 does not keep pace with rapid technological changes, its products and services may become less competitive or obsolete, which could have a material adverse effect on its business, results of operations and financial condition.
The biopharmaceutical industry generally, including the market for Science 37’s clinical trial products and services, is characterized by evolving industry standards and frequent new product and service introductions and enhancements. Science 37’s current competitors or other businesses might develop technologies or services that are more effective or commercially attractive than, or render obsolete, Science 37’s current or future technologies and services. If Science 37’s competitors introduce superior technologies or services and if Science 37 cannot make enhancements to remain competitive, its competitive position would be harmed. If Science 37 is unable to compete successfully, it may lose customers or be unable to attract new customers, which could lead to a decrease in its revenue and financial condition.
Science 37’s proprietary software may not operate properly, which could damage its reputation, give rise to claims against Science 37 or divert application of its resources from other purposes, any of which could harm Science 37’s business, results of operations and financial condition.
Proprietary software development is time-consuming, expensive and complex, and may involve unforeseen difficulties. Science 37 encounters technical obstacles from time to time, and it is possible that Science 37 may discover additional problems that prevent its proprietary applications from operating properly. If Science 37’s solution does not function reliably or fails to achieve customer expectations in terms of performance, customers could assert liability claims against Science 37 or attempt to cancel their contracts with Science 37. This could damage Science 37’s reputation and impair its ability to attract or maintain customers. Moreover, data services are complex and those Science 37 offers have in the past contained, and may in the future develop or contain, undetected defects or errors. Material performance problems, defects or errors in Science 37’s existing or new software-based products and services may arise in the future and may result from interface of Science 37’s solution with systems and data that it did not develop and the function of which is outside of its control or undetected in its testing. These defects and errors, and any failure by Science 37 to identify and address them, could result in loss of revenue or market share, diversion of development resources, harm to Science 37’s reputation and increased service and maintenance costs.
Science 37 has only a limited ability to protect its intellectual property rights, both domestically and internationally, and these rights are important to its success.
Science 37’s success depends, in part, upon its ability to develop, use and protect its proprietary methodologies, analytics, systems, technologies and other intellectual property. Science 37 relies upon a
 
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combination of trade secrets, confidentiality policies, nondisclosure, invention assignment and other contractual arrangements, and copyright, trademark, patent and trade secret laws, to protect its intellectual property rights. These laws are subject to change at any time and certain agreements may not be fully enforceable, which could further restrict Science 37’s ability to protect its innovations. Further, these laws may not provide adequate protection for Science 37’s intellectual property, particularly in countries in which the legal system provides less protection for intellectual property rights. For example, the laws of some foreign countries, especially certain developing countries with emerging economies in Asia, Eastern Europe and Latin America, do not protect intellectual property rights to the same extent as federal and state laws in the United States. Science 37’s intellectual property rights may not prevent competitors from independently developing services similar to, or duplicative of, Science 37’s. For instance, unauthorized parties may attempt to copy or reverse engineer certain aspects of Science 37’s products that it considers proprietary or its proprietary information may otherwise become known or may be independently developed by its competitors or other third parties. Further, the steps Science 37 takes in this regard might not be adequate to prevent or deter infringement or other misappropriation of its intellectual property by competitors, former employees or other third parties, and Science 37 might not be able to detect unauthorized use of, or take appropriate and timely steps to enforce, its intellectual property rights. Enforcing Science 37’s rights might also require considerable time, money and oversight, and Science 37 may not be successful in enforcing its rights. It may not be possible to enforce intellectual property rights in some countries at all or to the same extent as in the United States and other countries, and many companies have encountered significant problems in protecting and defending intellectual property rights in foreign jurisdictions.
Depending on the circumstances, Science 37 might need to grant a specific customer greater rights in intellectual property developed in connection with a contract than it otherwise generally would. In certain situations, Science 37 might forgo all rights to the use of intellectual property it creates, which would limit its ability to reuse that intellectual property for other customers. Any limitation on Science 37’s ability to provide a service or solution could cause Science 37 to lose revenue generating opportunities and require Science 37 to incur additional expenses to develop or license new or modified solutions for future projects.
Science 37 may be subject to claims that it or its technologies infringe upon the intellectual property or other proprietary rights of a third party. Any such claim may require Science 37 to incur significant costs, to enter into royalty or licensing agreements, or to develop or license substitute technology.
Third parties may assert claims that Science 37’s technologies infringe upon their intellectual property or other proprietary rights. Science 37 cannot assure you that its cloud-based solutions and the technologies used in its product offerings do not infringe upon patents held by others or that they will not so infringe in the future. Any future claim of infringement could cause Science 37 to incur substantial costs defending against the claim, even if the claim is without merit, and could distract its management from its business. Moreover, any settlement or adverse judgment resulting from the claim could require Science 37 to pay substantial amounts or obtain a license to continue to use the technology that is the subject of the claim, or otherwise restrict or prohibit Science 37’s use of the technology. Any required licenses may not be available to Science 37 on acceptable terms, if at all. If Science 37 does not obtain any required licenses, it could encounter delays in product introductions if it attempts to design around the technology at issue or attempt to find another provider of suitable alternative technology to permit Science 37 to continue offering the applicable solution. In addition, Science 37 generally provides in its customer agreements that Science 37 will indemnify its customers against third-party infringement claims relating to its technology provided to the customer, which could obligate Science 37 to fund significant amounts. Infringement claims asserted against Science 37 or against its customers or other third parties that Science 37 is required or otherwise agreed to indemnify may have a material adverse effect on its business, results of operations or financial condition.
Confidentiality arrangements with employees and others may not adequately prevent disclosure of trade secrets and other proprietary information.
Science 37 has devoted substantial resources to the development of its technology, business operations and business plans. In order to protect Science 37’s trade secrets and proprietary information, Science 37 relies in significant part on confidentiality arrangements with its employees, licensees, independent contractors, advisors, reseller partners and customers. These arrangements may not be effective to prevent disclosure of
 
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confidential information, including trade secrets, and may not provide an adequate remedy in the event of unauthorized disclosure of confidential information. In addition, if others independently discover trade secrets and proprietary information, Science 37 would not be able to assert trade secret rights against such parties. Effective trade secret protection may not be available in every country in which Science 37’s products are available or where Science 37 has employees or independent contractors. The loss of trade secret protection could make it easier for third parties to compete with Science 37’s products by copying functionality. In addition, any changes in, or unexpected interpretations of, the trade secret and employment laws in any country in which Science 37 operates may compromise its ability to enforce its trade secret and intellectual property rights. Costly and time-consuming litigation could be necessary to enforce and determine the scope of Science 37’s proprietary rights, and failure to obtain or maintain trade secret protection could adversely affect its competitive business position.
Science 37 may enter into collaborations, in-licensing arrangements, joint ventures, strategic alliances or partnerships with third parties that may not result in the development of commercially viable solutions or the generation of significant future revenues.
In the ordinary course of Science 37’s business, Science 37 may enter into collaborations, in-licensing arrangements, joint ventures, strategic alliances, partnerships or other arrangements to develop products and to pursue new markets. Proposing, negotiating and implementing collaborations, in-licensing arrangements, joint ventures, strategic alliances or partnerships may be a lengthy and complex process. Other companies, including those with substantially greater financial, marketing, sales, technology or other business resources, may compete with Science 37 for these opportunities or arrangements. Science 37 may not identify, secure, or complete any such transactions or arrangements in a timely manner, on a cost-effective basis, on acceptable terms or at all. Science 37 has limited institutional knowledge and experience with respect to these business development activities, and Science 37 may also not realize the anticipated benefits of any such transaction or arrangement. In particular, these collaborations may not result in the development of products that achieve commercial success or result in significant revenues and could be terminated prior to developing any products. Additionally, Science 37 may not own, or may jointly own with a third party, the intellectual property rights in products and other works developed under its collaborations, joint ventures, strategic alliances or partnerships.
Additionally, Science 37 may not be in a position to exercise sole decision making authority regarding the transaction or arrangement, which could create the potential risk of creating impasses on decisions, and its future collaborators may have economic or business interests or goals that are, or that may become, inconsistent with its business interests or goals. It is possible that conflicts may arise with Science 37’s collaborators, such as conflicts concerning the achievement of performance milestones, or the interpretation of significant terms under any agreement, such as those related to financial obligations or the ownership or control of intellectual property developed during the collaboration. If any conflicts arise with any future collaborators, they may act in their self-interest, which may be adverse to Science 37’s best interest, and they may breach their obligations to Science 37. In addition, Science 37 may have limited control over the amount and timing of resources that any future collaborators devote to Science 37’s or their future products. Disputes between Science 37 and its collaborators may result in litigation or arbitration which would increase Science 37’s expenses and divert the attention of its management. Further, these transactions and arrangements will be contractual in nature and will generally be terminable under the terms of the applicable agreements and, in such event, Science 37 may not continue to have rights to the products relating to such transaction or arrangement or may need to purchase such rights at a premium.
Risks Related to Science 37’s Reliance on Third Parties
Science 37 relies on third parties for important products, services and licenses to certain technology and intellectual property rights, and there might be problems with such products or services or it might not be able to continue to obtain such products, services and licenses.
Science 37 depends on certain third parties to provide it with products and services critical to its business. Such third parties include, among others, suppliers of drugs for patients participating in trials; the nurses, investigators and coordinators involved in executing clinical trials; and common carriers to ship drugs and other products. The failure of even one of these third parties to adequately provide the required
 
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products or services, or to do so in compliance with applicable regulatory requirements, could have a material adverse effect on Science 37’s business. For example, a distributor could ship the wrong drug product to a patient, a common carrier could fail to properly adhere to the specific handling requirements of the drug product during shipping, or a mobile nurse could improperly administer the drug product to a patient. Any of these or other potential failures could result in patient harm or death, which could give rise to legal claims against Science 37, damage its reputation, or otherwise adversely affect its business, financial condition and results of operations.
Science 37 also relies on third-party platforms or marketplaces, including the Apple App Store and Google Play App Store, which serve as online distribution platforms for Science 37’s mobile application. As a result, the expansion and prospects of Science 37’s business and its mobile application depend on its continued relationships with these providers and any other emerging platform providers that are widely adopted by consumers. Science 37 is subject to the standard terms and conditions that these providers have for application developers, which govern the content, promotion, distribution and operation of mobile applications on their platforms or marketplaces, and which the providers can change unilaterally on short or no notice. Thus, Science 37’s business could suffer materially if platform providers change their standard terms and conditions, interpretations or other policies and practices in a way that is detrimental to Science 37 or if platform providers determine that Science 37 is in violation of its standard terms and conditions and prohibit it from distributing Science 37’s apps on their platforms.
In addition, Science 37’s business would be harmed if the providers discontinue or limit Science 37’s access to their platforms or marketplaces; the platforms or marketplaces decline in popularity; the platforms modify their algorithms, communication channels available to developers, respective terms of service or other policies, including fees; the providers adopt changes or updates to their technology that impede integration with other software systems or otherwise require Science 37 to modify its technology or update its mobile application in order to ensure that users can continue to access and use its services.
If alternative providers increase in popularity, Science 37 could be adversely impacted if it fails to create compatible versions of its mobile application in a timely manner, or if it fails to establish a relationship with such alternative providers. Likewise, if Science 37’s current providers alter their operating platforms, Science 37 could be adversely impacted as its offerings may not be compatible with the altered platforms or may require significant and costly modifications in order to become compatible. If Science 37’s providers do not perform their obligations in accordance with its platform agreements, Science 37 could be adversely impacted. In the past, some of these platforms or marketplaces have been unavailable for short periods of time. If this or a similar event were to occur on a short- or long-term basis, or if these platforms or marketplaces otherwise experience issues that impact the ability of consumers to download or access Science 37’s mobile application and other information, it could have a material adverse effect on Science 37’s brand and reputation, as well as its business, financial condition and operating results.
Some of Science 37’s services rely on intellectual property, technology and other similar property owned and/or controlled by third parties. Science 37’s licenses to this property and technology could terminate or expire and Science 37 might not be able to replace these licenses in a timely manner. Also, Science 37 might not be able to renew these licenses on similar terms and conditions. Failure to renew these licenses, or renewals of these licenses on less advantageous terms, could have a material adverse effect on Science 37’s business, results of operations, financial condition or cash flow.
Science 37 relies on third parties to provide certain data and other information to Science 37. Science 37’s suppliers or providers might increase its cost to obtain, restrict its use of, or refuse to license data, which could lead to its inability to access certain data or provide certain services and, as a result, materially and adversely affect its operating results and financial condition.
Science 37’s services are derived from, or include, the use of data Science 37 collects from third parties. Science 37 has several data suppliers that provide Science 37 a broad and diverse scope of information that Science 37 collects and uses in its business. Science 37 generally enters into long-term contractual arrangements with many of its data suppliers. At the time Science 37 enters into a new data supply contract or renew an existing contract, suppliers may increase its cost to obtain and use the data provided by such supplier, increase restrictions on its ability to use such data, or altogether refuse to license the data to Science 37. Also, Science 37’s data suppliers may fail to meet or adhere to Science 37’s quality control standards or fail to
 
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deliver the data to Science 37. If suppliers that collectively provide a significant amount of the data Science 37 receives or uses were to increase its costs to obtain or use such data, further restrict its access to or use of such data, fails to meet or adhere to its quality control standards, refuses to provide data, or fails to deliver data to Science 37, its ability to provide data-dependent services to Science 37’s customers may be adversely impacted, which could have a material adverse effect on its business, results of operations, financial condition or cash flow.
Science 37’s products and services utilize open source software, and any failure to comply with the terms of one or more of these open source licenses could adversely affect its business.
Science 37’s products and services utilize software covered by open source licenses. Open source software is typically freely accessible, usable and modifiable, and is used by Science 37’s development team in an effort to reduce development costs and speed up the development process. Certain open source software licenses require a user who intends to distribute the open source software as a component of the user’s software to disclose publicly part or all of the source code to the user’s software. In addition, certain open source software licenses require the user of such software to make any derivative works of the open source code available to others on unfavorable terms or at no cost. This can subject previously proprietary software to open source license terms. While Science 37 monitors the use of all open source software in Science 37’s products, processes and technology and tries to ensure that no open source software is used in such a way as to require Science 37 to disclose or make available the source code to the related product or solution, such use could inadvertently occur. This could harm Science 37’s intellectual property position and have a material adverse effect on its business.
Risks Related to Political, Legal and Regulatory Environment
Science 37 may face political, legal and compliance, operational, regulatory, economic and other risks associated with the international expansion of its operations that Science 37 does not currently face or that are more significant than in its domestic operations.
As Science 37 expands its operations into new international geographic areas, Science 37 may be subject to political, legal and compliance, operational, regulatory, economic and other risks that it does not face or that are more significant than in Science 37’s domestic operations. These risks may vary widely by country and include varying regional and geopolitical business conditions and demands, government intervention and censorship, discriminatory regulation, nationalization or expropriation of assets and pricing constraints. Science 37’s future international services and products may need to meet country-specific user preferences as well as country-specific legal requirements, including those related to healthcare regulatory laws governing telemedicine, licensing, privacy, security, data storage, location, protection and security. The interpretation of these laws is evolving and varies significantly from country to county and are enforced by governmental, judicial and regulatory authorities with broad discretion. Science 37 cannot be certain that its interpretation of such laws and regulations will be correct in how Science 37 plans to structure its international operations, as well as its international services agreements and customer arrangements.
Science 37’s international operations may require it to overcome logistical and other challenges based on differing languages, cultures, legal and regulatory schemes and time zones. Science 37’s international operations may encounter labor laws, customs and employee relationships that can be difficult, less flexible than in its domestic operations and expensive to modify or terminate. In some countries Science 37 may be required to, or choose to, operate with local business partners, which will require Science 37 to manage its partner relationships and may reduce its operational flexibility and ability to quickly respond to business challenges.
Science 37’s international operations may be subject to particular risks in addition to those faced by its domestic operations, including:

the need to localize and adapt its solution for specific countries, including translation into foreign languages and associated expenses;

potential loss of proprietary information due to misappropriation or laws that may be less protective of its intellectual property rights than U.S. laws or that may not be adequately enforced;
 
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requirements of foreign laws and other governmental controls, including cross-border compliance challenges related to the complexity of multiple, conflicting and changing governmental laws and regulations, including employment, healthcare, tax, privacy, security, and data protection laws and regulations;

requirements of foreign laws and other governmental controls applicable to its ability to conduct telehealth internationally, specifically laws governing remote care and the practice of medicine in such locations;

data privacy and security laws that require that customer data be stored and processed in a designated territory;

new and different sources of competition and laws and business practices favoring local competitors;

local business and cultural factors that differ from its normal standards and practices, including business practices that Science 37 is prohibited from engaging in by the U.S. Foreign Corrupt Practices Act of 1977 (“FCPA”) and other anti-corruption laws and regulations;

changes to export controls and economic sanctions laws and regulations;

central bank and other restrictions on its ability to repatriate cash from international subsidiaries;

tax issues, such as tax law changes and variations in tax laws as compared to the United States;

fluctuations in currency exchange rates, economic instability and inflationary conditions, which could make its solution more expensive or increase its costs of doing business in certain countries;

limitations on future growth or inability to maintain current levels of revenues from international sales if Science 37 does not invest sufficiently in its international operations;

different pricing environments, longer sales cycles and longer accounts receivable payment cycles and collections issues;

difficulties in staffing, managing and operating its international operations, including difficulties related to administering its stock plans in some foreign countries and increased financial accounting and reporting requirements and complexities;

difficulties in coordinating the activities of its geographically dispersed and culturally diverse operations; and

political unrest, war, terrorism or regional natural disasters, particularly in areas in which Science 37 has facilities.
Science 37’s overall success regarding its operations in international markets will depend, in part, on its ability to anticipate and effectively manage these risks and there can be no assurance that Science 37 will be able to do so without incurring unexpected costs. If Science 37 is not able to manage the risks related to its international operations, Science 37 may not achieve the expected benefits of these operations and its business, financial condition and results of operations may be harmed.
Due to the global nature of Science 37’s business, Science 37 is subject to various anti-corruption laws, including the United States Foreign Corrupt Practices Act, the United Kingdom Bribery Act (the “UK Bribery Act”) and various international anti-corruption laws, and any allegation or determination that Science 37 violated these laws could have a material adverse effect on its business.
Science 37 is required to comply with the FCPA, the UK Bribery Act and other international anti-corruption laws, which prohibit companies from engaging in bribery including corruptly offering, promising, or providing money or anything else of value to non-United States officials and certain other recipients. In addition, the FCPA imposes certain books, records, and accounting control obligations on public companies and other issuers. Science 37 operates in parts of the world in which corruption can be common and compliance with anti-bribery laws may conflict with local customs and practices. Science 37’s global operations face the risk of unauthorized payments or offers being made by employees, consultants, sales agents, and other business partners outside of Science 37’s control or without its authorization. Science 37 has implemented policies and procedures to prohibit these practices by its employees and business partners
 
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with respect to its operations. However, irrespective of these safeguards, or as a result of monitoring compliance with such safeguards, it is possible that Science 37 or certain other parties may discover or receive information at some point that certain employees, consultants, sales agents, or other business partners may have engaged in corrupt conduct for which Science 37 might be held responsible. Violations of the FCPA, the UK Bribery Act or other international anti-corruption laws may result in restatements of, or irregularities in, Science 37’s financial statements as well as severe criminal or civil fines, penalties and other sanctions, collateral litigation, and Science 37 may be subject to other liabilities, which could negatively affect its business, operating results and financial condition. In some cases, companies that violate the FCPA may be debarred by the United States government and/or lose their United States export privileges. Changes in anti-corruption laws or enforcement priorities could also result in increased compliance requirements and related costs which could adversely affect Science 37’s business, results of operations and financial condition. In addition, the United States or other governments may seek to hold Science 37 liable for successor liability FCPA violations or violations of other anti-corruption laws committed by companies in which Science 37 invests or that Science 37 acquired or will acquire.
Science 37’s employees may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements, which could have a material adverse effect on its business.
Science 37 is exposed to the risk of employee fraud or other misconduct. Misconduct by employees could include intentional failures to comply with governmental regulations, comply with federal and state health-care fraud and abuse laws and regulations, report financial information or data accurately or disclose unauthorized activities to Science 37. In particular, sales, marketing and business arrangements in the healthcare industry are subject to extensive laws and regulations intended to prevent fraud, kickbacks, self-dealing and other abusive practices. Employee misconduct could also involve the improper use of information obtained in the course of clinical studies or data or documentation fraud or manipulation, which could result in regulatory sanctions and serious harm to Science 37’s reputation. It is not always possible to identify and deter employee misconduct, and such misconduct may result in losses or in governmental investigations or other actions stemming from a failure to be in compliance with laws or regulations. If any such actions are instituted against Science 37, those actions could have a significant adverse impact on Science 37’s business and results of operations, including the imposition of significant fines or other sanctions.
If Science 37 fails to comply with certain healthcare laws, including fraud and abuse laws, Science 37 could face substantial penalties and its business, results of operations, financial condition, and prospects could be adversely affected.
Even though Science 37 does not order healthcare services or bill directly to Medicare, Medicaid or other third-party payers, certain federal, state and foreign healthcare laws and regulations pertaining to fraud and abuse are and will be applicable to Science 37’s business. Science 37 could be subject to healthcare fraud and abuse laws of both the federal government and the states and in foreign countries in which Science 37 conducts its business. Because of the breadth of these laws and the narrowness of available statutory and regulatory exceptions, it is possible that some of Science 37’s business activities could be subject to challenge under one or more of such laws.
If Science 37 or its operations are found to be in violation of any of the laws described above or any other governmental regulations that apply to Science 37, Science 37 may be subject to penalties, including civil and criminal penalties, damages, fines, imprisonment, and the curtailment or restructuring of Science 37’s operations, any of which could materially adversely affect its ability to operate its business and its financial results.
Extensive governmental regulation of the clinical trial process and Science 37’s products and services could require significant compliance costs and have a material adverse effect on the demand for its solutions.
The clinical trial process is subject to extensive and strict regulation by the FDA and other regulatory authorities worldwide. Science 37’s products and services are complex and subject to contractual requirements, regulatory standards, and ethical considerations. For example, Science 37 must adhere to applicable regulatory requirements such as those required by the FDA and EMA, including those laws and regulations governing the development and testing of biopharmaceutical products, and Good Clinical Practice
 
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(“GCP”) requirements, which govern, among other things, the design, conduct, performance, monitoring, auditing, recording, analysis, and reporting of clinical trials. Once initiated, clinical trials must be conducted pursuant to and in accordance with the applicable investigational new drug application or clinical trial application, the requirements of the relevant institutional review boards , and GCP regulations. If Science 37 fails to conduct or market its products services in accordance with these requirements, regulatory agencies may take action against Science 37 or its customers. Such actions may include sanctions such as injunctions or failure of such regulatory authorities to grant marketing approval of products, imposition of clinical holds or delays, suspension or withdrawal of approvals, rejection of data collected in clinical studies, license revocation, product seizures or recalls, operational restrictions, civil or criminal penalties or prosecutions, damages, or fines. Additionally, there is a risk that actions by regulatory authorities, if they result in significant inspectional observations or other measures, could harm Science 37’s reputation and cause customers not to award future contracts or to cancel existing contracts. Customers may also bring claims against Science 37 for breach of its contractual obligations, and patients in the clinical trials and patients taking drugs approved on the basis of those trials may bring personal injury claims against Science 37. Any such action could have a material adverse effect on our business, financial condition, results of operations, cash flows, or reputation.
The demand for Science 37’s products and services is largely a function of such government regulation, which is subject to change at any time. Changes in the level of regulation, including a relaxation in regulatory requirements or the introduction of simplified drug approval procedures, could have a material adverse effect on the demand for Science 37’s products or services. Proposals to place caps on drug prices could limit the profitability of existing or planned drug development programs, making investment in new drugs and therapies less attractive to pharmaceutical companies. Similarly, the requirements in the United States, the European Union, the Asia Pacific region, and elsewhere to create a detailed registry of all clinical trials could have an impact on customers’ willingness to perform certain clinical studies. Additionally, if we are slow or unable to adapt to changes in existing requirements or the adoption of new requirements or policies governing clinical trials, our business may be impacted.
Failure to comply with data privacy and security laws, regulations, and industry standards could have a material adverse effect on our reputation, results of operations or financial condition, or have other adverse consequences.
As part of our normal business activities, we collect, use, process, store and transmit personal information with respect to our customers, medical professionals, patients and employees, as well as health information from third parties (including research institutions from which it obtains clinical trial data).
As such, we are subject to various federal, state, local, and international laws, rules, and regulations, as well as contractual obligations, industry standards, codes of conduct, and regulatory guidance, relating to the collection, receipt, use, maintenance, storage, use, retention, security, disclosure, transfer and other processing of confidential, sensitive, and personal information. In addition, existing laws and regulations are constantly evolving, and new laws and regulations that apply to our business are being introduced at every level of government in the United States, as well as internationally. Any failure, or perceived failure, by us to comply with any federal or state privacy or security laws, regulations, industry self-regulatory principles, or codes of conduct, regulatory guidance, orders to which we may be subject, or other legal obligations relating to data privacy or security could adversely affect our reputation, brand and business, and may result in claims, liabilities, proceedings or actions against us by governmental entities, customers or others. Any such claims, proceedings or actions could hurt our reputation, brand and business, force us to incur significant expenses in defense of such proceedings or actions, distract our management, increase our costs of doing business, result in a loss of customers and result in the imposition of monetary penalties.
In the United States, there are numerous federal and state privacy and data security laws and regulations governing the collection, use, disclosure and protection of such information, including federal and state health information privacy laws, federal and state security breach notification laws, and federal and state consumer protection laws. In addition, Science 37 may obtain health information from third parties (including research institutions from which it obtains clinical trial data) that are subject to privacy and security requirements under HIPAA, as amended by HITECH and regulations promulgated thereunder.
 
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In the European Economic Area (the “EEA”), Science 37 is subject to the EU General Data Protection Regulation (the “GDPR”) which imposes a number of obligations on companies, including, inter alia: (i) accountability and transparency requirements, and enhanced requirements for obtaining valid consent; (ii) obligations to consider data protection as new products or services are developed and to limit the amount of personal data processed; and (iii) obligations to implement appropriate technical and organizational measures to safeguard personal data and to report certain personal data breaches to the supervisory authority without undue delay (and no later than 72 hours where feasible). In addition, the GDPR prohibits the transfer of personal data from the EEA to the United States and other jurisdictions that the European Commission does not recognize as having “adequate” data protection laws unless a data transfer mechanism has been put in place, such as the use of standard contractual clauses (“SCCs”) and other requirements. These include a requirement for companies to carry out a transfer privacy impact assessment which, among other things, assesses the laws governing access to personal data in the recipient country and considers whether supplementary measures that provide privacy protections additional to those provided under SCCs will need to be implemented to ensure an essentially equivalent level of data protection to that afforded in the EEA. The GDPR imposes substantial fines for breaches and violations (up to the greater of €20 million or 4% of consolidated annual worldwide gross revenue), and confers a private right of action on data subjects and consumer associations to lodge complaints with supervisory authorities, seek judicial remedies and obtain compensation for damages resulting from violations of the GDPR. Relatedly, the UK GDPR sits alongside the UK Data Protection Act 2018 which implements certain derogations in the GDPR into UK law. Under the UK GDPR, companies not established in the UK but who process personal data in relation to the offering of goods or services to individuals in the UK, or to monitor their behavior, will be subject to the UK GDPR and as such, may lead to similar compliance and operational costs with potential fines of up to £17.5 million or 4% of global turnover.
Compliance with these and any other applicable privacy and data security laws and regulations is a rigorous and time-intensive process, and Science 37 may be required to put in place additional mechanisms ensuring compliance with the new data protection rules. Furthermore, the laws are not consistent, and compliance in the event of a widespread data breach is costly. In addition, states are constantly proposing new laws, adopting new laws or amending existing laws, requiring attention to frequently changing regulatory requirements. In addition, as new laws are passed, such laws may have potentially conflicting requirements that would make compliance challenging.
Any actual or perceived failure by Science 37 to comply with applicable privacy and data security laws and regulations could result in regulatory investigations, reputational damage, orders to cease/change Science 37’s processing of its data, enforcement notices, and/or assessment notices (for a compulsory audit). Science 37 may also face civil claims including representative actions and other class action-type litigation (where individuals have suffered harm), potentially amounting to significant compensation or damage liabilities, as well as associated costs, diversion of internal resources, and reputational harm.
Changes in U.S. tax laws, and the adoption of tax reform policies or changes in tax legislation or policies in jurisdictions outside of the United States, could adversely affect Science 37’s operating results and financial condition.
Science 37 is subject to federal and state income and non-income taxes in the United States. Tax laws, regulations, and administrative practices in various jurisdictions may be subject to significant change, with or without notice, due to economic, political, and other conditions, and significant judgment is required in evaluating and estimating these taxes. Science 37’s effective tax rates could be affected by numerous factors, such as entry into new businesses and geographies, changes to Science 37’s existing business and operations, acquisitions and investments and how they are financed, changes in its stock price, changes in its deferred tax assets and liabilities and their valuation, and changes in the relevant tax, accounting, and other laws, regulations, administrative practices, principles and interpretations. Science 37 is required to take positions regarding the interpretation of complex statutory and regulatory tax rules and on valuation matters that are subject to uncertainty, and tax authorities may challenge the positions that Science 37 takes.
Certain U.S. state and local tax authorities may assert that Science 37 has a nexus with such states or localities and may seek to impose state and local income taxes on its income allocated to such state and localities.
There is a risk that certain state tax authorities where Science 37 does not currently file a state income tax return could assert that Science 37 is liable for state and local income taxes based upon income or gross
 
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receipts allocable to such states or localities. States and localities are becoming increasingly aggressive in asserting nexus for state and local income tax purposes. Science 37 could be subject to additional state and local income taxation, including penalties and interest attributable to prior periods, if a state or local tax authority in a state or locality where Science 37 does not currently file an income tax return successfully asserts that Science 37’s activities give rise to nexus for state income tax purposes. Such tax assessments, penalties and interest may adversely affect Science 37’s cash tax liabilities, results of operations and financial condition.
Taxing authorities may successfully assert that Science 37 should have collected or in the future should collect sales and use or similar taxes for its services which could adversely affect Science 37’s results of operations.
State taxing authorities may assert that Science 37 had economic nexus with their state and were required to collect sales and use or similar taxes with respect to past or future services that Science 37 has provided or will provide, which could result in tax assessments, penalties and interest. The assertion of such taxes against Science 37 for past services, or any requirement that Science 37 collect sales taxes on the provision of future services, could have a material adverse effect on its business, cash tax liabilities, results of operations, and financial condition.
Science 37’s ability to use net operating losses (NOLs) to offset future income may be subject to certain limitations.
As of December 31, 2021, Science 37 had NOLs to offset future taxable income of approximately $176.1 million, of which approximately $30.2 million will begin to expire in 2034, if not utilized. A lack of future taxable income would adversely affect Science 37’s ability to utilize these NOLs. In addition, under Section 382 of the Internal Revenue Code of 1986, as amended, or the Code, a corporation that undergoes an “ownership change” is subject to limitations on its ability to utilize its pre-change NOLs and other pre-change tax attributes (such as research tax credits) to offset post-change taxable income. For these purposes, an ownership change generally occurs where the equity ownership of one or more stockholders or groups of stockholders who owns at least 5% of a corporation’s stock increases its ownership by more than 50 percentage points over its lowest ownership percentage within a three-year period (calculated on a rolling basis). Science 37’s existing NOLs may be subject to limitations arising out of previous ownership changes and Science 37 may be limited as to the amount that can be utilized each year as a result of such previous ownership changes. In addition, future changes in Science 37’s stock ownership, including future offerings, as well as other changes that may be outside of its control, could result in additional ownership changes under Section 382 of the Code. Science 37’s NOLs may also be impaired under similar provisions of state law. Science 37 has not completed a formal study to determine if any ownership changes within the meaning of Sections 382 and 383 of the Code have occurred. If such ownership change has occurred, Science 37’s ability to use its NOLs or tax credit carryforwards may be restricted, which could require Science 37 to pay federal or state income taxes earlier than would be required if such limitations were not in effect. Science 37 has recorded a full valuation allowance related to its NOLs and other deferred tax assets due to the uncertainty of the ultimate realization of the future benefits of those assets.
In addition to the limitations discussed above under Sections 382 of the Code, the utilization of NOLs incurred in taxable years beginning after December 31, 2017, are subject to limitations adopted by the Tax Cuts and Jobs Act enacted in 2017 (the “TCJA”), as modified by the Coronavirus Aid, Relief, and Economic Security Act enacted in March 2020 (the “CARES Act”). Under the TCJA, in general, NOLs generated in taxable years beginning after December 31, 2017 may offset no more than 80% of such year’s taxable income and there is no ability for such NOLs to be carried back to a prior taxable year. The CARES Act modifies the TCJA with respect to the TCJA’s limitation on the deduction of NOLs and provides that NOLs arising in taxable years beginning after December 31, 2017 and before January 1, 2021, may be carried back to each of the five taxable years preceding the tax year of such loss, but NOLs arising in taxable years beginning after December 31, 2020 may not be carried back. In addition, the CARES Act eliminates the limitation on the deduction of NOLs to 80% of current year taxable income for taxable years beginning before January 1, 2021. As a result of such limitation, Science 37 may be required to pay federal income tax in some future year notwithstanding that it had a net loss for all years in the aggregate.
 
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Science 37’s reported financial results may be adversely affected by changes in accounting principles generally accepted in the United States.
U.S. generally accepted accounting principles (“GAAP”) are subject to interpretation by the Financial Accounting Standards Board (“FASB”), the SEC, and various bodies formed to promulgate and interpret appropriate accounting principles. A change in these principles or interpretations could have a significant effect on Science 37’s reported results of operations and could affect the reporting of transactions already completed before the announcement of such change.
Risks Related to the Company’s Common Stock
Science 37 incurs significant costs due to operating as a newly public company and its management will be required to devote substantial time to compliance with the regulatory requirements placed on public companies.
As a newly public company with substantial operations, Science 37 incurs significant legal, accounting and other expenses. The costs of preparing and filing annual, quarterly and current reports, proxy statements and other information with the SEC and furnishing audited reports to stockholders will be time-consuming and costly.
It is also time-consuming, difficult and costly for Science 37 to develop and implement the internal controls and reporting procedures required by the Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act. Certain members of Science 37’s management have limited or no experience operating a company whose securities are listed on a national securities exchange or with the rules and reporting practices required by the federal securities laws as applied to a publicly traded company. Science 37 may need to recruit, hire, train and retain additional financial reporting, internal control and other personnel in order to develop and implement appropriate internal controls and reporting procedures.
Failure to maintain an effective system of internal control over financial reporting may have an adverse effect on Science 37’s stock price.
Pursuant to Section 404 of the Sarbanes-Oxley Act and the related rules and regulations of the SEC, we are required to provide, among other things, an annual management assessment of the effectiveness of our internal control over financial reporting in future annual reports on Form 10-K that we file with the SEC and to report any material weakness in our internal controls. If we fail to maintain the adequacy of our internal control over financial reporting, as such standards are modified, supplemented or amended from time to time, we may not be able to ensure that we can conclude on an ongoing basis that we have effective internal control over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act and the related rules and regulations of the SEC. If we cannot in the future favorably assess the effectiveness of our internal control over financial reporting, investor confidence in the reliability of our financial reports may be adversely affected, which could have a material adverse effect on our common stock price.
Because the Company became a public reporting company by means other than a traditional underwritten initial public offering, the Company’s stockholders may face additional risks and uncertainties.
Because the Company did not become a public reporting company by means of a traditional underwritten initial public offering, security or industry analysts may not provide, or be less likely to provide, coverage of the Company. Investment banks may also be less likely to agree to underwrite secondary offerings on behalf of the Company than they might if the Company became a public reporting company by means of a traditional underwritten initial public offering, because they may be less familiar with the Company as a result of more limited coverage by analysts and the media. The failure to receive research coverage or support in the market for the Company’s common stock could have an adverse effect on the Company’s ability to develop a liquid market for the Company’s common stock. See “— If securities or industry analysts do not publish research or reports about the Company, or publish negative reports, the Company’s stock price and trading volume could decline.”
There can be no assurance that we will be able to comply with the continued listing standards of Nasdaq.
There can be no assurances that we will be able to maintain the listing of our common stock on the Nasdaq in the future. If we fail to maintain the listing, and if Nasdaq or another national securities exchange
 
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does not list our common stock on its exchange, our stockholders could face significant material adverse consequences, including:

a limited availability of market quotations for our common stock;

reduced liquidity for our common stock;

a determination that our common stock is a “penny stock” which will require brokers to adhere to more stringent rules and possibly result in a reduced level of trading activity

in the secondary trading market for our common stock;

a limited amount of news and analyst coverage; and

a decreased ability to issue additional securities or obtain additional financing in the future.
The National Securities Markets Improvement Act of 1996, which is a federal statute, prevents or preempts the states from regulating the sale of certain securities, which are referred to as “covered securities.” If our common stock were not listed on the Nasdaq, such securities would not qualify as covered securities and we would be subject to regulation in each state in which it offers securities because states are not preempted from regulating the sale of securities that are not covered securities.
The Sponsor, stockholders of Legacy Science 37 and the PIPE Investors beneficially own a significant equity interest in the Company and may take actions that conflict with the interests.
The interests of LifeSci Holdings, LLC (the “Sponsor”), stockholders of Legacy Science 37 and the PIPE Investors (defined below) may not align with the interests of the Company and its other stockholders. The Sponsor, certain stockholders of Legacy Science 37 and the PIPE Investors are each in the business of making investments in companies and may acquire and hold interests in businesses that compete directly or indirectly with the Company. As such, they may also pursue acquisition opportunities that may be complementary to the Company’s business and, as a result, those acquisition opportunities may not be available to the Company.
We may issue additional shares of common stock or other equity securities, in certain circumstances, without your approval, which issuances would dilute your ownership interests and may depress the market price of your shares.
We may issue additional shares of our common stock or other equity securities of equal or senior rank in the future in connection with, among other things, future acquisitions or repayment of indebtedness that may be outstanding at such time or under our 2021 Plan and our ESPP, without stockholder approval, in a number of circumstances. In addition, we may issue up to 12,500,000 shares of our common stock as Earn-Out Shares (defined below) that certain Science 37 Holders have the contingent right to receive following the Business Combination upon the achievement of certain stock price-based vesting conditions.
Our issuance of additional shares of our common stock or other equity securities of equal or senior rank could have the following effects:

your proportionate ownership interest in us will decrease;

the relative voting strength of each previously outstanding share of our common stock may be diminished; or

the market price of shares of our common stock may decline.
The market price of our common stock is likely to be highly volatile.
The trading price of our common stock could be volatile and subject to wide fluctuations. The trading price of our common stock will depend on many factors, including those described in this “Risk Factors” section, many of which will be beyond our control and may not be related to our operating performance. These fluctuations could cause you to lose all or part of your investment in our common stock since you might be unable to sell your shares at or above the price you paid for them. Any of the factors listed below could have a material adverse effect on your investment in our common stock, which may trade at prices significantly
 
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below the price you paid for them. In such circumstances, the trading price of our common stock may not recover and may experience a further decline.
Factors affecting the trading price of our common stock may include:

actual or anticipated fluctuations in our quarterly financial results or the quarterly financial results of companies perceived to be similar to ours;

changes in the market’s expectations about our operating results;

the public’s reaction to our press releases, other public announcements and filings with the SEC;

speculation in the press or investment community;

actual or anticipated developments in our business, competitors’ businesses or the competitive landscape generally;

the operating results failing to meet the expectation of securities analysts or investors in a particular period;

changes in financial estimates and recommendations by securities analysts concerning Science 37 or the market in general;

operating and stock price performance of other companies that investors deem comparable to ours;

changes in laws and regulations affecting our business;

commencement of, or involvement in, litigation involving us;

changes in our capital structure, such as future issuances of securities or the incurrence of debt;

the volume of our common stock available for public sale;

any major change in our board of directors or management;

sales of substantial amounts of our common stock by our directors, officers or significant stockholders or the perception that such sales could occur;

general economic and political conditions such as recessions, interest rates, “trade wars,” pandemics (such as COVID-19) and acts of war or terrorism; and

other risk factors listed under “Risk Factors.”
Broad market and industry factors may materially harm the market price of our common stock irrespective of our operating performance. The stock market in general and the Nasdaq have experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of the particular companies affected. The trading prices and valuations of these stocks, and of our common stock, may not be predictable. A loss of investor confidence in the market for the stocks of other companies which investors perceive to be similar to us could depress our stock price regardless of our business, prospects, financial condition or results of operations. Broad market and industry factors, including, most recently, the impact of the novel coronavirus, COVID-19, and any other global pandemics, as well as general economic, political and market conditions such as recessions or interest rate changes, may seriously affect the market price of our Common Stock, regardless of our actual operating performance. A decline in the market price of our common stock also could adversely affect our ability to issue additional securities and our ability to obtain additional financing in the future.
Volatility in the Company’s share price could subject the Company to securities class action litigation.
In the past, following periods of volatility in the overall market and the market prices of particular companies’ securities, securities class action litigations have often been instituted against these companies. Litigation of this type, if instituted against the Company, could result in substantial costs and a diversion of our management’s attention and resources, which could harm our business. Any adverse determination in any such litigation or any amounts paid to settle any such actual or threatened litigation could require that we make significant payments.
 
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Since we have no current plans to pay regular cash dividends on the Company’s common stock, stockholders may not receive any return on investment unless they sell their common stock for a price greater than that which they paid for it.
We do not currently anticipate paying any regular cash dividends on the Company’s common stock. Any decision to declare and pay dividends in the future will be made at the discretion of the Board and will depend on, among other things, our results of operations, financial condition, cash requirements and other factors that the Board may deem relevant. In addition, our ability to pay dividends is, and may be, limited by covenants of any future outstanding indebtedness we or our subsidiaries incur. Therefore, any return on investment in our common stock is solely dependent upon the appreciation of the price of our common stock on the open market, which may not occur.
Future sales of shares of the Company’s common stock may depress its stock price.
Sales of a substantial number of shares of the Company’s common stock, or the perception that these sales might occur, could depress the market price of the Company’s common stock and could impair its ability to raise capital through the sale of additional equity securities.
Delaware law, the Company’s Charter and Bylaws contain certain provisions, including anti-takeover provisions that limit the ability of stockholders to take certain actions and could delay or discourage takeover attempts that stockholders may consider favorable.
The Company’s Charter, Bylaws and the Delaware General Corporation Law (DGCL) contain provisions that could have the effect of rendering more difficult, delaying, or preventing an acquisition that stockholders may consider favorable, including transactions in which stockholders might otherwise receive a premium for their shares. These provisions could also limit the price that investors might be willing to pay in the future for shares of the Company’s common stock, and therefore depress the trading price of the Company’s common stock. These provisions could also make it difficult for stockholders to take certain actions, including electing directors who are not nominated by the current members of our Board or taking other corporate actions, including effecting changes in our management. Among other things, the Company’s Charter and Bylaws include provisions regarding:

a staggered Board whereby the directors are divided into three classes, with each class subject to retirement and re-election once every three years on a rotating basis;

the ability of the Board to issue shares of preferred stock and to determine the price and other terms of those shares, including preferences and voting rights, without stockholder approval, which could be used to significantly dilute the ownership of a hostile acquirer;

the election of directors to be determined by a plurality of votes cast by the stockholders;

the limitation of the liability of, and the indemnification of, the Company’s directors and officers;

the Company’s election to not be governed by Section 203 of the DGCL;

the limitation on the stockholders’ ability to act by written consent;

the ability of the Board to amend the bylaws, which may allow the Board to take additional actions to prevent an unsolicited takeover and inhibit the ability of an acquirer to amend the bylaws to facilitate an unsolicited takeover attempt;

advance notice procedures with which stockholders must comply to nominate candidates to the Board or to propose matters to be acted upon at a stockholders’ meeting, which could preclude stockholders from bringing matters before annual or special meetings of stockholders and delay changes in the Board and also may discourage or deter a potential acquirer from conducting a solicitation of proxies to elect the acquirer’s own slate of directors or otherwise attempting to obtain control of the Company; and

the ability to call special meetings of the stockholders which can be exercised only by a majority of the Board, the chairperson of the Board, the chief executive officer or the president.
 
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These provisions, alone or together, could delay or prevent hostile takeovers and changes in control or changes in the Board or management.
LSAQ entered into a Director Nomination Agreement with certain of Legacy Science 37 stockholders which, together with the Company Bylaws, provides such stockholders with certain governance rights with respect to the Company.
LSAQ, the Sponsor, Legacy Science 37 and certain stockholders of Legacy Science 37 entered into a Director Nomination Agreement, pursuant to which each party agreed that our board of directors would initially, upon the effectiveness of the Business Combination, consist of at least seven members,

one of which will be appointed by LSAQ pursuant to the Merger Agreement, and the remainder of which would be appointed by Legacy Science 37.
The Director Nomination Agreement provides, among other things, that from and after the closing of the Business Combination and until such time as it beneficially owns less than 10.0% of our then-issued and outstanding shares of common stock, each of the applicable stockholders will be entitled to nominate one person for election as a director of our Board at the applicable meeting of our stockholders, and subject to our Board’s fiduciary duties, our Board will recommend these directors for stockholder approval.
The provision of the Company Bylaws requiring exclusive forum in certain courts in the State of Delaware or the federal district courts of the United States for certain types of lawsuits may have the effect of discouraging lawsuits against our directors and officers.
The Company’s Bylaws will require, to the fullest extent permitted by law, that (i) any derivative action or proceeding brought on our behalf, (ii) any action asserting a claim of breach of a fiduciary duty owed by any of our directors, officers or stockholders to us or our stockholders, (iii) any action asserting a claim against us arising pursuant to any provision of the DGCL, the Company’s Charter or Bylaws or (iv) any action asserting a claim against us governed by the internal affairs doctrine will have to be brought in a state court located within the state of Delaware (or if no state court of the State of Delaware has jurisdiction, the federal district court for the District of Delaware), in all cases subject to the court’s having personal jurisdiction over the indispensable parties named as defendants. The foregoing provision will not apply to claims arising under the Securities Act, the Exchange Act or other federal securities laws for which there is exclusive federal or concurrent federal and state jurisdiction.
Additionally, unless we consent in writing to the selection of an alternative forum, the federal district courts of the United States of America shall be the exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act. Section 22 of the Securities Act creates concurrent jurisdiction for federal and state courts over all suits brought to enforce any duty or liability created by the Securities Act or the rules and regulations thereunder. Stockholders cannot waive compliance with the federal securities laws and the rules and regulations thereunder. Any person or entity purchasing or otherwise acquiring or holding any interest in shares of the Company’s capital stock will be deemed to have notice of and consented to the forum provisions in the Company’s Charter. The enforceability of similar choice of forum provisions in other companies’ organizational documents has been challenged in legal proceedings, and it is possible that, in connection with claims arising under federal securities laws, a court could find the choice of forum provisions contained in the Company’s Bylaws to be inapplicable or unenforceable.
Although we believe these exclusive forum provisions benefit us by providing increased consistency in the application of Delaware law and federal securities laws in the types of lawsuits to which each applies, the exclusive forum provisions may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or any of our directors, officers or stockholders, which may discourage lawsuits with respect to such claims. Further, in the event a court finds either exclusive forum provision contained in the Company’s Charter to be unenforceable or inapplicable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could harm our business, operating results and financial condition.
We are an emerging growth company, and the reduced reporting requirements applicable to emerging growth companies may make our shares less attractive to investors.
We are an emerging growth company, as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). For as long as we continue to be an emerging growth company, we may take advantage
 
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of exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies,” including exemption from compliance with the auditor attestation requirements of Section 404, reduced disclosure obligations regarding executive compensation and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. We will remain an emerging growth company until the earlier of (i) the last day of the fiscal year (a) following the fifth anniversary of the IPO of LSAQ, (b) in which we have total annual gross revenue of at least $1.07 billion or (c) in which we are deemed to be a large accelerated filer, which means the market value of shares of our common stock that are held by non-affiliates exceeds $700 million as of the prior June 30th, and (ii) the date on which we have issued more than $1.0 billion in non-convertible debt during the prior three-year period.
In addition, under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards until such time as those standards apply to private companies.
Even after we no longer qualify as an emerging growth company, we may still qualify as a “smaller reporting company,” which would allow us to take advantage of many of the same exemptions from disclosure requirements.
We cannot predict if investors will find our common stock less attractive because we may rely on these exemptions. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and the market price may be more volatile.
 
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USE OF PROCEEDS
All of the securities offered by the Selling Securityholders pursuant to this prospectus will be sold by the Selling Securityholders for their respective accounts. We will not receive any of the proceeds from these sales.
The Selling Securityholders will pay any underwriting discounts and commissions and expenses incurred by the Selling Securityholders for brokerage, accounting, tax or legal services or any other expenses incurred by the Selling Securityholders in disposing of the securities. We will bear the costs, fees and expenses incurred in effecting the registration of the securities covered by this prospectus, including all registration and filing fees, Nasdaq listing fees and fees and expenses of our counsel and our independent registered public accounting firm.
 
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DIVIDEND POLICY
We have never declared or paid any cash dividends on our capital stock. We currently intend to retain all available funds and future earnings, if any, for the operation and expansion of our business and do not anticipate declaring or paying any dividends in the foreseeable future. Any future determination related to our dividend policy will be made at the discretion of our board of directors after considering our financial condition, results of operations, capital requirements, business prospects and other factors the board of directors deems relevant, and subject to the restrictions contained in any financing instruments. Our ability to declare dividends may be limited by restrictive covenants pursuant to any future debt financing agreements.
 
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MARKET INFORMATION
Our common stock is listed on the Nasdaq under the symbol “SNCE.” Prior to the consummation of the Business Combination, our common stock, warrants and units were listed on the Nasdaq under the symbols “LSAQ”, “LSAQW” and “LSAQWU,” respectively. As of December 31, 2021 there were 221 holders of record of our common stock. The actual number of stockholders of our common stock is greater than the number of record holders and includes stockholders whose common stock is held in street name by brokers and other nominees.
 
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SELECTED CONSOLIDATED FINANCIAL DATA
The following table contains selected historical consolidated financial data of Science 37 as of and for the years ended December 31, 2021 and 2020. Such data as of and for the years ended December 31, 2021 and 2020 have been derived from the audited financial statements of Science 37, which are included elsewhere in this prospectus.
Science 37’s historical results are not necessarily indicative of the results to be expected in the future or for any full year period. The information presented below should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations of Science 37,” and Science 37’s audited financial statements and notes thereto included elsewhere in this prospectus.
Year Ended
December 31,
2021
2020
Consolidated Statements of Operations and Comprehensive Loss
(In thousands, except share and per share data)
Revenues (including amounts with related parties)
$ 59,597 $ 23,704
Operating expenses:
Cost of revenues (including amounts with related parties)
42,394 22,597
Selling, general and administrative
73,122 28,351
Depreciation and amortization
7,799 4,447
Restructuring Costs
772
Total operating expenses
123,315 56,167
Loss from operations
(63,718) (32,463)
Other income (expense):
Interest income
3 77
Sublease income (including amounts with related parties)
685 709
Change in fair value of earn-out liability
(31,300)
Other income (expense)
3
Total other income (expense)
(30,612) 789
Loss before income taxes
(94,330) (31,674)
Income tax expense
1
Net loss and comprehensive loss
$ (94,331) $ (31,674)
Net loss per share:
Basic and diluted
$ (2.89) $ (2.13)
Weighted average common shares outstanding:
Weighted average shares used to compute basic and diluted net loss per share
32,679,105 14,869,184
Balance Sheet Data:
December 31,
2021
2020
Total assets
$ 260,798 $ 57,031
Total liabilities
139,199 20,080
Total liabilities, redeemable covertible preferred stock and stockholders’ equity (deficit)
260,798 57,031
 
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
On October 6, 2021, Science 37 Holdings, Inc. consummated a merger (“Merger Transaction”) by and among LifeSci Acquisition II Corp. (“LSAQ”), LifeSci Acquisition II Merger Sub, Inc., a wholly owned subsidiary of LifeSci Acquisition II Corp. (“Merger Sub”) and Science 37, Inc. (“Legacy Science 37”). A business combination (“Business Combination”) between LifeSci Acquisition II Corp. and Legacy Science 37 was effected through the merger of Merger Sub with and into Legacy Science 37, with Legacy Science 37 as the surviving company and a wholly-owned subsidiary of LifeSci Acquisition II Corp. In conjunction with the merger, LifeSci Acquisition II Corp. changed its name to Science 37 Holdings, Inc.
The Business Combination was accounted for as a reverse recapitalization in accordance with Accounting Standards Codification (“ASC”) 805, Business Combinations. Under this method of accounting, LifeSci Acquisition II Corp. was treated as the “acquired” company and Legacy Science 37 was treated as the acquirer for financial reporting purposes. Except as otherwise provided herein, our financial statements presentation includes (1) the results of Legacy Science 37 as our accounting predecessor for periods prior to the completion of the Business Combination and (2) the results of Science 37 Holdings, Inc. for periods after the completion of the Business Combination.
The following discussion and analysis provides information that management believes is relevant to an assessment and understanding of our results of operations and financial condition. The following discussion should be read in conjunction with the Company’s financial statements and notes thereto included elsewhere in this prospectus. This discussion contains forward-looking statements which involve risks and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements for many reasons, including the risks faced by us described in “Risk Factors” and elsewhere in this prospectus. See “Cautionary Note Regarding Forward-Looking Statements” elsewhere in this prospectus. Unless the context otherwise requires, references in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” to “we,” “us,” “our,” and “the Company” are intended to mean the business and operations of Legacy Science 37 prior to the Business Combination and to Science 37 Holdings, Inc. following the closing of the Business Combination.
Overview of Our Business and Services
Science 37 is a leading provider of technology-based solutions that enable agile clinical trials and decentralized approaches on behalf of biopharmaceutical sponsors. The Company pioneered agile and decentralization methods and developed the industry’s first Agile Clinical Trial Operating System™ (“OS”) combining its unified technology platform, which orchestrates workflows, generates evidence and harmonizes data seamlessly, with its expansive centralized networks of patient communities, telemedicine investigators, mobile nurses, provider communities, remote coordinators and data and device. By bringing research to patients and providers more directly, we believe the OS helps sponsors speed patient enrollment, enable better retention and increase accessibility for representative patient populations, all of which helps accelerate the development of potentially life-saving treatments through faster study timelines and a more representative and diverse patient population.
Key Factors Affecting Science 37’s Performance
We derive our revenue primarily from contractual arrangements to enable and enhance clinical trials through technology and services as well as licensing our proprietary technology platform to a variety of life science institutions. Thus, the following factors have been important to our business and we expect them to impact our business, results of operations and financial condition in future periods:
Core business growth and expansion of technology capabilities
Our sustained growth will require continued adoption and utilization of our products and service offerings by new and existing customers. Our revenue growth rate and long-term profitability are affected by our ability to expand our customer base through market penetration and drive broader adoption of our technology platform. Our financial performance will depend on our ability to attract, retain and sell additional solutions to our customers under favorable contractual terms.
 
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Expansion into adjacent markets
Maintaining our growth will require additional expansion of our offerings across key verticals, including CRO partnerships, electronic clinical outcome assessment capabilities, real-world evidence, clinical care, and diversity in clinical research. Our financial performance will depend on our ability to continue to execute our expansion across these key verticals with favorable contractual terms.
Continued investment in growth
We plan to continue investing in our business, including our internally developed OS, so we can capitalize on our market opportunity and increase awareness of the value that can be realized with decentralized clinical trials. We also expect to continue to make focused investments in marketing to drive brand awareness, increase the number of opportunities and further penetrate the market. We also intend to make certain investments in our general and administrative functions as we scale to meet our reporting, compliance and other obligations as a public company. Although we expect these activities will negatively impact our results in the near term, we believe that these investments will contribute to our long-term growth and positively impact our business and results of operations.
Key Performance Measures
We review certain key performance measures, discussed below, to evaluate our business and results, measure performance, identify trends, formulate plans and make strategic decisions. We believe that the presentation of such metrics is useful to the Company’s investors because they are used to measure and model the performance of companies such as ours.
Backlog and Net Bookings
Our backlog represents anticipated revenue for work not yet completed or performed (i) under signed contracts, letters of intent and, in some cases, bookings that are supported by other forms of written communication and (ii) where there is sufficient or reasonable certainty about the customer’s ability and intent to fund and commence the services within six months. Backlog and backlog conversion (defined as quarterly revenue for the period divided by opening backlog for that period) vary from period to period depending upon new authorizations, contract modifications, cancellations and the amount of revenue recognized under existing contracts.
We continually evaluate our backlog to determine if any previously awarded work is no longer expected to be performed. If we determine that previously awarded work is no longer probable of performance, we will remove the value from our backlog based on the risk of cancellation. We recognize revenue from these bookings as services are performed, provided the Company has received proper authorization from the customer. We exclude from backlog revenues that have been recognized and reported in the statement of operations.
Although an increase in backlog will generally result in an increase in future revenue to be recognized over time (depending on future contract modifications, contract cancellations and other adjustments), an increase in backlog at a particular point in time does not necessarily correspond to an increase in revenue during a particular period. The timing and extent to which backlog will result in revenue depends on many factors, including the timing of commencement of work, the rate at which services are performed, scope changes, cancellations, delays, receipt of regulatory approvals and the nature, duration, size, complexity, and phase of the studies. The Company’s contracts generally have terms ranging from several months to several years. In addition, delayed projects remain in backlog unless they are canceled. As a result of these and other factors, our backlog might not be a reliable indicator of future revenue and we might not realize all or any part of the revenue from the authorizations in backlog as of any point in time.
Net bookings represent new business awards, net of contract modifications, contract cancellations, and other adjustments. Net bookings represent the minimum contractual value for the initial planned duration of a contract as of the contract execution date. The minimum fixed fees, upfront implementation fees and technology and support fees are included in net bookings. Estimates of variable revenue for utilization in excess of the contracted amounts is not included in the value of net bookings. Net bookings vary from period
 
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to period depending on numerous factors, including customer authorization volume, sales performance and the overall health of the life sciences industry, among others.
Our backlog as of December 31, 2021 and 2020 and net bookings for the years ended December 31, 2021 and 2020 were as follows:
(In thousands)
2021
2020
Change
Backlog
$ 163,884 $ 59,596 $ 104,288 175.0%
Net bookings
163,900 55,732 108,168 194.1%
The increase in net bookings for the year ended December 31, 2021 and the increase in backlog as of December 31, 2021 as compared to the prior period were primarily due to new business as a result of increased demand for the Company’s remote clinical trial support. We expect this growth to continue as companies are pursuing and realizing the many benefits of decentralized trials.
Components of Results of Operations
Revenues
The Company derives its revenues primarily from two sources: (i) contractual arrangements to enable and enhance clinical trials through technology and services, and (ii) licensing of its proprietary technology platform to a variety of life science institutions.
Total revenues are comprised of revenues from the provision of the Company’s decentralized services, including enhanced services from the use of the Company’s hosted proprietary software. Revenues also include reimbursable and out of pocket expenses provided for in the Company’s contracts with its customers.
See “Critical Accounting Policies and Estimates — Revenue Recognition,” below, for a more detailed discussion of our revenue recognition policy.
Cost of Revenues
Cost of revenues include the direct costs to conduct the Company’s trials remotely and make available the Company’s technology solutions. Cost of revenues consist primarily of compensation, benefits, and other employee-related costs, including expenses for stock-based compensation, contract labor, trial advertising and marketing, investigator payments, and reimbursable out-of-pocket expenses directly related to delivering on the Company’s contracts. Cost of revenues is driven primarily by the number of clinical trials in which the Company is contracted to provide services, and it typically increases or decreases with changes in revenue but may fluctuate from period to period as a percentage of revenue due to project labor utilization and mix, the type of services, changes to the timing of work performed and project inefficiencies, among other factors. Our business and operational models are designed to be highly scalable and leverage variable costs to support revenue-generating activities.
Selling, General and Administrative Expenses
Selling, general and administrative expenses include costs related to sales, marketing, and administrative functions (including human resources, legal, finance, and general management) such as compensation and benefits, travel, professional services, facilities, recruiting and relocation, training, sales commissions and expenses for stock-based compensation, and information technology.
Depreciation and Amortization
Depreciation and amortization represent the costs charged for the Company’s property, equipment and capitalized software development. The Company records depreciation and amortization on property and equipment using the straight-line method, based on the estimated useful lives of the respective assets. The Company depreciates leasehold improvements over the shorter of the lease term or the estimated useful lives of the improvements. The Company amortizes software development costs over three years. We will continue to invest additional resources in our technology platform, to expand its capabilities and ensure that
 
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customers are realizing the full benefit of our offerings. The level and timing of investment in these areas could affect our depreciation and amortization expense in the future.
Restructuring Costs
Restructuring costs consist of employee severance and benefits. The Company carried out a reduction in force in administrative positions in the first quarter of 2020 to better align resources with its then-current needs.
Other Income (Expense), Net
Other income (expense), net, consists of interest income, sublease income, and the change in the fair value of the earn-out liability.
We determined that the contingent obligation to issue Earn-Out Shares to existing Legacy Science 37 shareholders is not indexed to our stock under ASC Topic 815-40 and is therefore required to be accounted for as a liability and remeasured at fair value each reporting period, with changes in fair value reported as a component of other income (expense), net.
Results of Operations
Comparison of the Years Ended December 31, 2021 and December 31, 2020
The following table sets forth our consolidated statements of operations data for the years ended December 31, 2021 and 2020:
Year Ended
December 31,
(In thousands)
2021
2020
Consolidated Statement of Operations and Comprehensive Loss:
Revenues:
Revenues (including amounts with related parties)
$
59,597
$ 23,704
Operating expenses:
Cost of revenues (including amounts with related parties)
42,394
22,597
Selling, general and administrative
73,122
28,351
Depreciation and amortization
7,799
4,447
Restructuring costs
772
Total operating expenses
123,315
56,167
Loss from operations
(63,718)
(32,463)
Other income (expense):
Interest income
3
77
Sublease income (including amounts with related parties)
685
709
Change in fair value of earn-out liability
(31,300)
Other income
3
Total other income (expense)
(30,612)
789
Income tax expense
1
Net loss and comprehensive loss
$ (94,331)
$
(31,674)
Revenue
Revenue for the years ended December 31, 2021 and 2020 was as follows:
(In thousands)
2021
2020
Change
Revenues
$ 59,597 $ 23,704 $ 35,893 151.4%
 
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Revenue increased $35.9 million, or 151.4%, to $59.6 million for the year ended December 31, 2021 as compared to $23.7 million in the year ended December 31, 2020. This increase was primarily driven by organic volume growth seen in higher opening backlog at the beginning of the period as compared to the prior year, as well as from more bookings and associated revenue related to significant and continuing growth in demand for the Company’s core competency, decentralized clinical trial and clinical trial support.
Cost of Revenues
Cost of revenues for the years ended December 31, 2021 and 2020 was as follows:
(In thousands)
2021
2020
Change
Cost of revenues
$ 42,394 $ 22,597 $ 19,797 87.6%
% of revenue
71.1% 95.3%
Cost of revenues increased $19.8 million, or 87.6% to $42.4 million for the year ended December 31, 2021 as compared to $22.6 million for the year ended December 31, 2020, primarily to support revenue growth during 2021. To support this growth, the Company experienced increases in compensation-related expenses including pass-through costs and costs for nurses for trial-related patient activity. Staffing also increased to enable more rapid expansion of our offerings across key verticals and new markets.
Selling, General and Administrative Expenses
Selling, general and administrative expenses for the years ended December 31, 2021 and 2020 was as follows:
(In thousands)
2021
2020
Change
Selling, general and administrative
$ 73,122 $ 28,351 $ 44,771 157.9%
% of revenue
122.7% 119.6%
Selling, general and administrative expenses increased by $44.8 million, or 157.9%, to $73.1 million for the year ended December 31, 2021 as compared to $28.4 million for the year ended December 31, 2020, mainly due to investments to support significant company growth and becoming a publicly traded company in conjunction with the merger with LSAQ. This resulted in increased headcount leading to increases in salaries and benefits, web services, software, employee recruiting costs, and transaction costs. Stock-based compensation also increased due to an increase in the value of the Company’s stock during 2021 in anticipation of the merger with LSAQ and the issuance of Earn-Out Shares to existing Legacy Science 37 option holders in conjunction with the Merger Transaction. Consulting services increased to support further enhancement and development of the Company’s internal proprietary technology, human resources consulting to assist with the Company’s expansion, and non-facilitative merger related consulting. Capitalized sales commissions amortization expense increased due to significantly more bookings and related revenue for the year ended December 31, 2021 compared to the year ended December 31, 2020.
Depreciation and Amortization
Depreciation and amortization expense for the years ended December 31, 2021 and 2020 was as follows:
(In thousands)
2021
2020
Change
Depreciation and amortization
$ 7,799 $ 4,447 $ 3,352 75.4%
% of revenue
13.1% 18.8%
Depreciation and amortization expense increased by $3.4 million, or 75.4%, to $7.8 million for the year ended December 31, 2021 as compared to $4.5 million for the year ended December 31, 2020 due to amortization on a larger capitalized software balance year over year consistent with the Company’s focus on continuous development of new features and functionality within its proprietary software.
 
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Restructuring Costs
There were no restructuring activities for the year ended December 31, 2021 and approximately $0.8 million in activities for the year ended December 31, 2020. Restructuring costs decreased for the year ended December 31, 2021 as compared to the year ended December 31, 2020, due to a reduction in force in administrative positions in early 2020 to better align resources with then-current needs and future growth strategy.
Other Income (Expense)
Other income (expense) for the year ended December 31, 2021 was an expense of $30.6 million as compared to income of $0.8 million for the year ended December 31, 2020. The decrease in other income was primarily due to the loss on the change in fair value of the earn-out liability for the period of $31.3 million.
Non-GAAP Financial Measures
In addition to our results determined in accordance with U.S. generally accepted accounting principles (“GAAP”), Adjusted EBITDA, adjusted gross profit, and adjusted net income (loss), all of which are non-GAAP financial measures, are useful in evaluating our business, results of operations, and financial condition.
We use these non-GAAP measures to evaluate our ongoing operations and for internal planning and forecasting purposes. We believe that non-GAAP financial information, when taken collectively with GAAP financial information, may be helpful to investors in assessing our operating performance. These results should be considered in addition to, not as a substitute for, nor superior to, results reported in accordance with GAAP. Since adjusted EBITDA, adjusted gross profit, and adjusted net income (loss) are not measurements determined in accordance with GAAP, they are susceptible to varying methods of calculation. These metrics, as presented, may not be comparable to other similarly titled measures of other companies.
Adjusted EBITDA is defined as net income (loss), adjusted for income tax benefit (expense), franchise tax expense, depreciation and amortization, interest expense (net), stock-based compensation, other income (expense), net, restructuring and related charges, and certain other non-cash or non-recurring items impacting net income (loss) such as those associated with the Business Combination.
Adjusted gross profit is defined as gross profit (loss) adjusted for stock-based compensation included in direct labor.
Adjusted Net Income (Loss) (including adjusted diluted earnings per share) is defined as net income (loss) excluding transactions that the Company believes are not representative of our core operations, including, restructuring, transaction and integration-related expenses, share-based compensation expense, other income (expense), net; and gain or loss on extinguishment of debt, when applicable.
Adjusted EBITDA, adjusted gross profit, and adjusted net income (loss) are intended as supplemental measures of the Company’s performance that are neither required by, nor presented in accordance with, GAAP. The Company believes that the use of Adjusted EBITDA, adjusted gross profit, and adjusted net income (loss) provides an additional tool for investors to use in evaluating ongoing operating results and trends since they are used as a metric by management to track business performance and compensation related incentives. They may also be used by investors in comparing the Company’s financial measures with those of comparable companies, which may present similar non-GAAP financial measures to investors. However, you should be aware that, when evaluating Adjusted EBITDA, adjusted gross profit, and adjusted net income (loss), the Company may incur future expenses similar to those excluded when calculating these measures. In addition, the Company’s presentation of these measures should not be construed as an inference that the Company’s future results will be unaffected by unusual or non-recurring items. The Company’s computation of Adjusted EBITDA, adjusted gross profit, and adjusted net income (loss) may not be comparable to other similarly titled measures computed by other companies, because all companies may not calculate Adjusted EBITDA, adjusted gross profit, and adjusted net income (loss) in the same fashion.
Because of these limitations, Adjusted EBITDA, adjusted gross profit, and adjusted net income (loss) should not be considered in isolation or as a substitute for performance measures calculated in accordance with GAAP. The Company compensates for these limitations by relying primarily on the Company’s GAAP
 
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results and using Adjusted EBITDA, adjusted gross profit, and adjusted net income (loss) on a supplemental basis. You should review the reconciliation of net loss to Adjusted EBITDA, gross profit to adjusted gross profit, and net loss to adjusted net loss below and not rely on any single financial measure to evaluate the Company’s business.
The following tables reconcile net loss to Adjusted EBITDA, gross profit to adjusted gross profit, and net loss to adjusted net loss for the years ended December 31, 2021 and 2020:
Adjusted EBITDA
(In thousands)
2021
2020
Net loss and comprehensive loss
$
(94,331)
$ (31,674)
Interest income
(3)
(77)
Depreciation and amortization
7,799
4,447
Other income(1)
30,615
(712)
Stock-based compensation expense
8,407
122
Restructuring costs
772
Transaction related expenses
3,185
Franchise taxes
241
78
Provision for income taxes
1
Adjusted EBITDA
$
(44,086)
$ (27,044)
(1)
Includes $31.3 million associated with the change in the fair value of the earn-out liability.
Adjusted gross profit
(In thousands)
2021
2020
Gross profit
$
17,203
$ 1,107
Stock-based compensation expense (direct)
846
(65)
Adjusted gross profit
$
18,049
$ 1,042
Adjusted net loss
(In thousands, except share and per share data)
2021
2020
Net loss and comprehensive loss
$
(94,331)
$ (31,674)
Interest income
(3)
(77)
Other income(1)
30,615
(712)
Stock-based compensation expense
8,407
122
Restructuring costs
772
Transaction related expenses
3,185
Adjusted net loss and comprehensive loss
$
(52,127)
$ (31,569)
Adjusted basic and diluted EPS
$
(1.60)
$ (2.12)
Weighted average common shares outstanding
32,679,105
14,869,184
(1)
Includes $31.3 million associated with the change in the fair value of the earn-out liability.
Liquidity
As of December 31, 2021, the Company had cash and cash equivalents of $214.6 million. For the year ended December 31, 2021, the Company incurred a net loss of $94.3 million and used $36.5 million and
 
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$20.6 million of net cash in operating and investing activities, respectively, while financing activities provided $238.2 million of net cash. The Company’s net loss and negative cash flows from operations are due to the start-up and growing nature of our business.
During the year ended December 31, 2020 and through the date of the merger with LSAQ, on October 6, 2021, the Company had primarily been financed with net proceeds from the issuance of multiple series of redeemable preferred stock in the private market. In conjunction with the merger of the Company with LSAQ, which was consummated on October 6, 2021, the Company received $200.0 million in PIPE financing from leading institutional and strategic investors to further fund the Company’s decentralized clinical trial technology platform and extend into new adjacencies. As a result of the Merger Transaction and inclusive of the PIPE financing, the Company received $233.5 million, net of fees and expenses paid in connection with the closing of the Business Combination.
As of December 31, 2021, the Company’s principal source of liquidity was cash and cash equivalents provided from the Merger Transaction and PIPE financing. Science 37 is required to perform an evaluation of its ability to continue as a going concern for twelve months after the issuance of its financial statements, and the Company believes that its cash flows from financing combined with its current cash level will be adequate to support its ongoing operations, capital expenditures and working capital for at least the next twelve months. Future capital requirements will depend on many factors, including investments in growth and technology. In the future, the Company may enter arrangements to acquire or invest in complementary businesses, services, and technologies which may require it to seek additional equity or debt financing.
Cash Flows
Our cash flows from operating, investing, and financing activities for the years ended December 31, 2021 and 2020 were as follows (amounts in thousands):
(In thousands)
2021
2020
Net cash used in operating activities
$
(36,478)
$ (25,476)
Net cash used in investing activities
(20,576)
(6,166)
Net cash provided by financing activities
238,172
36,317
Net increase in cash, cash equivalents, and restricted cash
$
181,118
$ 4,675
Operating activities
Net cash used in operating activities for the year ended December 31, 2021 was $36.5 million, consisting primarily of a net loss of $94.3 million and changes in working capital of $8.9 million offset by non-cash charges of $48.9 million. The changes in working capital were primarily due to increases in accounts payable, deferred revenue, and accrued expenses partially offset by increases in prepaid expenses. Changes in working capital were impacted by the timing of and receipt of payments in conjunction with the overall continued growth of our operations. The non-cash charges primarily consisted of a loss recorded from the change in fair value of the earn-out liability, stock-based compensation expense, depreciation, and amortization.
Net cash used in operating activities for the year ended December 31, 2020 was $25.5 million, consisting primarily of a net loss of $31.7 million and changes in working capital of $0.3 million offset by net non-cash charges of $6.5 million. The changes in working capital were primarily due to an increase in accounts payable and accrued liabilities and a decrease in accounts receivable due to timing of and receipt of payments in conjunction with the growth of our operations. The non-cash charges primarily consisted of depreciation and amortization as well as stock-based compensation.
Investing activities
Net cash used in investing activities for the year ended December 31, 2021 was $20.6 million consisting of $19.3 million in capitalized software development costs and $1.2 million in purchases of property and equipment.
 
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Net cash used in investing activities in the year ended December 31, 2020 was $6.2 million consisting of $5.8 million in capitalized software development costs and $0.4 million in purchases of property and equipment.
Investing activities for the years ended December 31, 2021 and 2020 reflect the Company’s continued focus on the development of new features and functionality within its proprietary software platform, and the year ended December 31, 2021 also reflects computer purchases due to headcount increases as the Company continued to scale and expand its operations.
We expect to make expenditures for additions and enhancements to our proprietary technology platform and for purchases of property and equipment. The amount, timing and allocation of capital expenditures are largely discretionary and within management’s control. Depending on market conditions, we may choose to defer a portion of our budgeted expenditures until later periods to achieve the desired balance between sources and uses of liquidity and prioritize capital projects that we believe have the highest expected returns and potential to generate cash flow.
Financing activities
Net cash provided by financing activities in the year ended December 31, 2021 was $238.2 million consisting primarily of net proceeds from the Merger Transaction, inclusive of the PIPE financing, of $236.7 million and $1.4 million cash received from stock option exercises.
Net cash provided by financing activities in the year ended December 31, 2020 was $36.3 million consisting of net proceeds of $39.9 million from the issuance of Series D-1 redeemable preferred stock offset by the repurchase of common stock of $3.7 million.
Inflation
Our long-term contracts generally include inflation or cost of living adjustments for the portion of the services to be performed beyond one year from the contract date. In the event actual inflation rates are greater than our contractual inflation rates or cost of living adjustments, inflation could have a material adverse effect on our operations or financial condition.
Contractual Obligations and Commitments
Please refer to Note 7 in the notes to consolidated financial statements for details surrounding lease commitments and Note 16 in the notes to consolidated financial statements for information regarding the contingent obligation regarding the Earn-Out shares.
Critical Accounting Policies and Estimates
Management’s discussion and analysis of our financial condition and results of operations is based on our financial statements, which have been prepared in accordance with GAAP. The preparation of these financial statements requires us to make estimates and assumptions for the reported amounts of assets, liabilities, revenue, expenses, and related disclosures. Our estimates are based on our historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions and any such differences may be material.
While our significant accounting policies are more fully described in Note 2 “Summary of Significant Accounting Policies” of our consolidated financial statements included elsewhere in this report, the following discussion addresses our most critical accounting policies, which are those that are most important to our financial condition and results of operations and require our most difficult, subjective, and complex judgments.
Revenue Recognition
The majority of our contracts are service contracts for clinical trial support that represent a single performance obligation. Science 37 provides a significant integration service resulting in a combined
 
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output, which is clinical trial data that meets the relevant regulatory standards and can be used by the customer to progress to the next phase of a clinical trial or solicit approval of a treatment by the applicable regulatory body. The performance obligation is satisfied over time as the output is captured in data and documentation that is available for the customer to consume over the course of the arrangement and furthers progress of the clinical trial. We recognize revenue over time using a cost-based input method since there is no single output measure that would fairly depict the transfer of control over the life of the performance obligation. Progress on the performance obligation is measured by the proportion of actual costs incurred to the total costs expected to complete the contract. Costs included in the measure of progress include direct labor and third-party costs (such as payments to investigators and other pass-through expenses related to clinical activities). This cost-based method of revenue recognition requires us to make estimates of costs to complete projects on an ongoing basis. Significant judgment is required to evaluate assumptions related to these estimates as they are based on various assumptions to project future outcomes of events that often span several years. The effect of revisions to estimates related to the transaction price or costs to complete a project are recorded in the period in which the estimate is revised. Most contracts may be terminated upon 30 to 90 days’ notice by the customer; however, in the event of termination, most contracts require payment for services rendered through the date of termination, as well as for subsequent services rendered to close out the contract.
Capitalized Software and the Recognition of Related Amortization to Expense
Science 37’s internal use proprietary software organizes workflows, captures real-time evidence, and harmonizes data during clinical trial support or enhancement. As such, we capitalize software development costs related to the development of our proprietary platform in accordance with ASC Topic 350-40, Internal Use Software. Capitalized software is recorded at cost less accumulated amortization. Costs incurred during the development stage are capitalized and consist of payroll labor and benefits, to the extent of time spent directly on the development of software, and external direct costs of materials and labor. Payroll and benefits are allocated based on the percentage of technical employees’ time spent directly on the software which involves some level of estimation. Vacation, holidays, sick time, extended leave, training, and administrative meetings are considered and excluded from the percent capitalized. Training and maintenance costs are expensed as incurred. Amortization commences once the respective assets are placed into service. The amortization of these capitalized software costs for internal use proprietary software is included in depreciation and amortization over an estimated life of three years. The determination of the useful life for capitalized software involves some level of judgment. Amortization expense can be affected by various factors, including new software releases, acquisitions or divestitures of software, and/or impairments.
The Company reviews capitalized software for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. If the expected undiscounted future cash flow from the use of the capitalized software and its eventual disposition is less than the carrying value, an impairment loss is recognized and measured using the fair value of the related asset. No impairments were recognized in 2021 or 2020.
Stock-based Compensation
We recognize the cost of share-based awards granted to employees and directors based on the estimated grant-date fair value of the awards. Cost is recognized on a straight-line basis over the service period, which is generally the vesting period of the award. We reverse previously recognized costs for unvested awards in the period that forfeitures occur. We determine the fair value of stock options using the Black-Scholes option pricing model, which is impacted by the following assumptions:

Expected Term — We use the simplified method when calculating the expected term due to insufficient historical exercise data.

Expected Volatility — Given the limited market trading history of our common stock, volatility is based on a benchmark of comparable companies within the traditional CRO and health technology industries.

Expected Dividend Yield — We have not paid any cash dividends on common stock and do not anticipate doing so in the foreseeable future.
 
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Risk-Free Interest Rate — The interest rates used are based on the implied yield available on U.S. Treasury zero-coupon issues with an equivalent remaining term equal to the expected life of the award.
Prior to the Merger Transaction, due to the absence of an active market for Legacy Science 37’s common stock, the fair value of the common stock for purposes of determining the common stock price for stock option grants was determined by Science 37’s Board of Directors. Science 37’s Board of Directors set the exercise price of stock options at least equal to the fair value of its common stock on the date of grant. Legacy Science 37’s Board of Directors exercised judgment while considering numerous objective and subjective factors in order to determine the fair market value on each date of grant in accordance with the guidance in the American Institute of Certified Public Accountants Technical Practice Aid entitled, Valuation of Privately-Held-Company Equity Securities Issued as Compensation, or the AICPA Practice Aid, including the receipt of a valuation prepared by an independent third party with extensive experience valuing common stock of privately held companies.
Earn-Out Shares
Former holders of shares of Legacy Science 37 common stock (including shares received as a result of the conversion of Legacy Science 37 preferred stock) and former holders of options to purchase shares of Legacy Science 37 are entitled to receive their respective pro rata shares of up to 12,500,000 additional shares of SNCE Common Stock (the “Earn-Out Shares”) if, during the period beginning on the Merger Transaction date and ending on October 6, 2024, the share price equal to the volume weighted average price of Science 37’s Common Stock for a period of at least 20 days out of 30 consecutive trading days (each, a “Triggering Event”):

is equal to or greater than $15.00, a one-time aggregate issuance of 5,000,000 Earn-Out Shares will be made; and

is equal to or greater than $20.00, a one-time aggregate issuance of 7,500,000 Earn-Out Shares will be made.
In respect of former holders of Legacy Science 37 options, receipt of the Earn-Out Shares is subject to continued services to the Company or one of its subsidiaries at the time of the applicable Triggering Event. If there is a change of control of Science 37 within the three-year period following the closing of the Business Combination that will result in the holders of Science 37 Common Stock receiving a per share price equal to or in excess of any Triggering Event threshold, then immediately prior to such change of control, any Triggering Event that has not previously occurred shall be deemed to have occurred and Science 37 shall issue the Earn-Out Shares to the former holders of shares of Legacy Science 37 Common Stock and former holders of Legacy Science 37 options in accordance with their respective pro rata shares. The estimated fair value of the Earn-Out Shares was determined using a Monte Carlo simulation valuation model using a distribution of potential outcomes over the earn-out period using the most reliable information available.
The Company determined that the contingent obligation to issue Earn-Out Shares to existing Legacy Science 37 shareholders is not indexed to the Company’s stock under ASC Topic 815-40 and therefore equity treatment is precluded. The Triggering Event(s) that determine the issuance of the Earn-Out Shares include terms that are not solely indexed to our common stock, and as such liability classification is required. Equity-linked instruments classified as liabilities are recorded at their estimated fair value on the date of issuance and are revalued at each subsequent balance sheet date, with fair value changes recognized in other income (expense), net in the accompanying statements of operations and comprehensive income (loss).
The Company determined that the contingent obligation to issue Earn-Out Shares to existing Legacy Science 37 option holders falls within the scope of ASC Topic 718, Share-based Compensation, because the option holders are required to continue providing service until the occurrence of the Triggering Event(s). The fair value of the option holder Earn-Out Shares is recorded as share-based compensation on a straight-line basis over the derived service period determined using the Monte Carlo simulation valuation model and recognized in selling, general and administrative expenses in the accompanying consolidated statements of operations and comprehensive income (loss).
 
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Emerging Growth Company Status
Section 102(b)(1) of the Jumpstart Our Business Startups Act (“JOBS Act”) exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can choose not to take advantage of the extended transition period and comply with the requirements that apply to non-emerging growth companies, and any such election to not take advantage of the extended transition period is irrevocable.
The Company is an “emerging growth company” as defined in Section 2(a) of the Securities Act and has elected to take advantage of the benefits of the extended transition period for new or revised financial accounting standards. The Company expects to remain an emerging growth company at least through the end of 2022 and expects to continue to take advantage of the benefits of the extended transition period, although it may decide to early adopt such new or revised accounting standards to the extent permitted by such standards. This may make it difficult or impossible to compare our financial results with the financial results of another public company that is either not an emerging growth company or is an emerging growth company that has chosen not to take advantage of the extended transition period exemptions because of the potential differences in accounting standards used.
Recently Issued Accounting Standards
Information relating to recently issued accounting standards is included in Note 2 “Summary of Significant Accounting Policies” of our consolidated financial statements included elsewhere in this report.
 
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BUSINESS
Science 37’s Mission
Science 37’s mission is to accelerate clinical research by enabling universal access for patients and providers.
Science 37’s Vision
Science 37’s vision is to be the category-defining operating system that powers every clinical trial.
Overview
Founded in 2014, Science 37 pioneered the concept of agile clinical trials with a very simple premise: that clinical trials should begin with the patient. With approximately $195 billion spent annually in biopharmaceutical research and development and approximately $60 billion spent annually in serviceable clinical trials, Science 37 is disrupting a large market.
Today, Science 37 continues to be a leader in agile clinical trials and in supporting decentralization approaches to clinical trials. We believe Science 37 is uniquely positioned as an operating system with both end-to-end technology to enable agile clinical trials and specialized networks to orchestrate trial execution. We also believe that Science 37 has more scale to manage and more experience in conducting agile clinical trials than any other company, having executed more than 100 clinical trials with over 500,000 patients engaged to date. By bringing research to patients and providers more directly, Science 37 helps sponsors speed patient enrollment, enable better retention and increase accessibility for representative patient populations, all of which helps accelerate the development of potentially life-saving treatments through faster study timelines and a more diverse patient population. Compared to the traditional model, Science 37 has been able to initiate clinical trials up to four times faster, recruit patients up to 15 times faster and retain patients at up to 28% higher rates. Additionally, enrollment through Science 37 has resulted in up to three times more diverse participant pools, better representing the real world population. As the commercial value of a drug is highest prior to its patent expiry date, these efficiency gains are critical.
Science 37 is addressing an industry that it believes is ripe for disruption, with the clinical trial model having been largely unchanged over the past 60 to 90 years. The traditional clinical trial model relies on a network of physical clinical research sites for trial execution, requiring patients to travel to a site for each visit. The infrastructure required for each site to operate, in addition to the fragmentation that results from each site using their own processes and technology tools, has given rise to a myriad of challenges, including slow start up, poor enrollment, high patient drop-out rates, and lack of diversity, all of which affect the timelines to launch life-saving drug treatments for patients. Only about 8% of patients are approached to join a clinical trial because most do not live near a participating research site. About 19% of the patients recruited do not complete the full study. In parallel, only about 5% of providers participate in clinical research due to the high cost and low incentives to house clinical teams or send patients out of their practice for a clinical trial. In the end, approximately 85% of trials experience delays, 94% of them greater than one month, resulting in timelines as long as 13 years to launch drug treatments globally.
Through its direct-to-patient approach, Science 37 seeks to reduce the impact of the geographic barriers associated with conventional physical clinical trial sites, enable recruitment of virtually any patient, and provide patients with personalized support throughout the clinical trial journey. Science 37 believes that bringing the clinical trial directly to the patient addresses traditional-model problems around patient retention and engagement head on. Furthermore, Science 37 aims to offer a model for providers to seamlessly participate as investigators without all of the site infrastructure costs.
Science 37’s patient-centric model is powered by a category-defining clinical trial operating system and its team of approximately 600 employees with significant subject matter expertise. The backbone of the operating system is a unified technology platform, which is combined with Science 37’s specialized network of patient communities, on-demand telemedicine investigators, flexible mobile nurse networks, scalable remote coordinators and robust connected technologies.
 
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Technology Platform:   Science 37’s full-stack technology platform is purpose-built for agile clinical trial execution and is designed to provide an end-to-end, single stop solution. The platform seeks to enable modern, digital approaches to clinical research by bringing together all parties, including the patient and trial investigators, nurses, coordinators and sponsors, to power workflows, centralize evidence generation and harmonize data. Configurable, pre-defined workflows ensure that patients and remote clinical trial teams remain in sync, enforce a standard operating process and facilitate ease of use, compliance and consistency. Science 37’s powerful data capture tools are designed to provide flexibility to support complex evidence generation. Virtually any assessment that is performed on paper can be digitized into Science 37’s platform. As soon as the information is submitted in the applications, data is automatically loaded into the platform with compliant audit trails and reporting for close monitoring throughout the study. Science 37 believes that its technology platform provides a common data infrastructure to enable the harmonization of data, both for internal monitoring and management as well as external data flows. Open Application Programming Interface (“API”) allows for the structured exchange of data in nearly real-time, including Electronic Data Capture (“EDC”) and Electronic Health Record (“EHR”) integrations. Architecturally, Science 37’s platform is cloud-based and multi-tenant with appropriate data segregation. Availability, scalability, and security are fundamental characteristics of the architecture.

Specialized Networks:   Science 37’s networks of patient communities, telemedicine investigators, mobile nurses, remote coordinators and connected devices are designed for the purpose of orchestrating agile clinical trials. Science 37 believes that these networks are unique in the agile clinical trial delivery space, and Science 37 has developed Standard Operating Procedures (“SOPs”) and comprehensive training on its proprietary methods of trial conduct. The power of Science 37’s networks is unlocked by its technology platform, which is designed to enable a centralized and unified clinical trial experience. Science 37’s networks continue to grow globally and across therapeutic areas to enable increasingly complex agile clinical trial designs.

Extensive Configuration:   Science 37’s operating system is highly configurable to support virtually any phase of clinical study and any indication. Science 37’s deep experience in executing agile clinical trials enables it to quickly and effectively activate its operating system to meet the specific needs of each customer.
Science 37 believes its strong relationships with its customers and its purpose-driven culture focused on democratizing clinical research have contributed to its rapid growth and strong repeat business. Science 37 forms close partnerships with its customers from the start, advising on best practices for clinical trial design all the way through execution. Science 37’s customers consist of large and mid-sized pharmaceutical companies, biotech companies, Contract Research Organizations (“CROs”) as well as academic institutions. Science 37’s numerous strategic collaborations, including its enterprise technology collaborations and its Science 37 Certified program, empower Science 37’s customers and enable Science 37 to deliver agile clinical trials at scale.
Science 37 believes the concept of agile clinical trials is at an inflection point, with significant growth opportunities ahead. Science 37 intends to continue to invest in its core business, geographically, commercially and technologically, to reinforce its position in the market. Science 37 plans to capitalize on its specialized networks and proprietary technology to continue to expand its offerings across key verticals — including CRO partnerships, electronic clinical outcome assessment (“eCOA”) capabilities, real-world evidence, clinical care and diversity in clinical research. Science 37 has further stressed the importance of diversity, having established a Diversity in Clinical Research Foundation aimed at making clinical trial research more accessible to underserved populations. Finally, Science 37 believes the future of clinical trials will continue to evolve to include agile and decentralization approaches in tandem with traditional approaches, on virtually every trial — requiring networks of traditional providers, telemedicine providers, mobile nurses and remote coordinators, as well as a flexible operating system to seamlessly navigate between the on-premise and off-premise experience while capturing all the data in one unified platform. Science 37 expects to continuously extend the reach of both its technology platform and specialized network accordingly.
Science 37 has experienced significant growth in bookings and revenues over a short period of time:

Gross bookings increased $118.7 million, or 192%, to $180.5 million for the year ended December 31, 2021 as compared to the year ended December 31, 2020.
 
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Average contract value in Science 37’s qualified funnel increased from $2.4 million for the year ended December 31, 2020 to $2.6 million for the year ended December 31, 2021.

Net new customers remained strong at 15 for the year ended December 31, 2021 as compared to 21 for the year ended December 31, 2020.

Revenues increased 151.4% from FY 2020 to FY 2021, from $23.7 million to $59.6 million, respectively.

From FY 2020 to FY 2021, net loss increased from $(31.7) million to $(94.3) million, respectively, as the Company significantly increased its staffing levels, investment in technology, and its commercial infrastructure to enable more rapid expansion of its offerings across key verticals and new markets and to become a publicly traded company. Additionally, the net loss was negatively impacted by the change in fair value of the earn-out liability for the period following the Merger Closing Date to December 31, 2021.
Traditional Clinical Trial Operations Have Many Challenges
With redundant processes, excessive resourcing and multitudes of disparate technologies, the traditional clinical trial model faces a number of challenges, resulting in slow start up, poor enrollment, high patient drop-out rates, and lack of diversity, all of which can affect the timelines to launch potentially life-saving drug treatments for patients.
Central to the traditional clinical trial model is the establishment of a network of clinics, hospitals or hospital systems (commonly referred to as “sites”) across the countries of interest. It is from these sites the biopharmaceutical company who is sponsoring the study (known as the “sponsor”) collects evidence of drug efficacy.
To facilitate this network, as illustrated in Exhibit 1 below, the sponsor typically employs large teams or hires a Contract Research Organization (“CRO”) to identify which sites are the most promising in terms of ability to recruit patients into the study. Then, another team often conducts feasibility assessments by contacting each of these sites to determine its interest and number of patients it believes it will recruit. The site identification and feasibility teams often continue this process until there are enough sites to secure the number of patients needed to fulfill the study protocol requirements.
The site management team then typically contracts with each of the participating sites and trains the sites on the protocol before the sites can begin enrolling patients into the study. Once enrollment commences, on average 48% of these sites will fail to hit their patient recruitment targets and 11% will fail to enroll a single patient.
Each individual site or site network often has its own silo of processes, procedures, technology and staff to choreograph the patient visits, procedures and evidence generation required to determine efficacy of the investigational product. Much of the clinical data is captured on paper at the site and then re-entered into an Electronic Data Collection (“EDC”) system. To reduce re-entry error, clinical operations teams often deploy an eCOA solution to capture some of the more critical outcomes data; however, this usually entails procuring, programming, and shipping a data collection tool to each site or patient, and then coordinating return of the data collection tool at the end of the study.
 
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Exhibit 1
[MISSING IMAGE: tm2131243d1-fc_trial4clr.jpg]
To ensure that each of these sites apply consistent measurement techniques, are compliant with the protocol, and properly re-enter evidence into the system of record, the traditional clinical trial design requires clinical research associates to travel (often great distances) and audit each individual site regularly throughout the duration of the study.
All of this infrastructure is designed to enroll patients into the clinical trial as quickly as possible; however, only about 8% of eligible patients are ever even approached to join a clinical trial, because most do not live near a participating research site. Only about 14% of all patients who are recruited into clinical research studies come from communities of color, creating a sample that does not represent the commercial patient population which is about three times greater. Then, about 19% of the patients recruited fail to matriculate through the full study.
In the end, approximately 85% of trials experience delays, 94% of them greater than one month, resulting in timelines as long as 13 years to launch drug treatments for patients globally.
Agile Clinical Trials Start with the Patient
Since its founding in 2014, Science 37 has championed the agile clinical trial model. Agile clinical trials recruit patients into clinical trials independent from a given site (often via media or referrals from patient associations, providers, pharmacies and payers). These patients are serviced by remote coordinators, telemedicine investigators, and mobile nurses who conduct visits from the comfort of the patient’s own home, eliminating the dependency on a physical site for clinical trial execution. Agile clinical trials can range from being fully virtual, in which all visits occur outside of an investigational site, to hybrid, in which a portion of the trial is conducted remotely.
Benefit for Patients:   The Science 37 model is designed to remove the geographic barriers associated with traditional sites and enable recruitment of virtually any patient, in contrast to only about 8% of the eligible population that has ever been reached through the traditional model. In addition, Science 37 offers a patient-first approach, with easy-to-use technology for data collection, telemedicine for remote visits, and home visits planned around the patient’s schedule. This approach to bring the clinical trial directly to the patient’s home seeks to address historical problems around patient retention and engagement.
Benefit for Providers:   The agile model aims to address system constraints to participate in research for providers as well. Today, only approximately 5% of providers participate in clinical research due to the
 
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high cost and low incentives to house clinical teams, establish in-house SOPs and invest in technology. Science 37 offers a model for providers to seamlessly participate as investigators without the typical infrastructure cost. Science 37 provides easy-to-use technology for workflow orchestration, evidence generation and data harmonization; remote site staff to enable high quality trial conduct; and training and support from Science 37’s agile clinical trial experts.
Benefit for Sponsors:   Coupled with unified SOPs and a technology platform to directly capture all data electronically, Science 37 believes that this agile clinical trial approach eliminates the need for clinical research associates to fly around the world to compensate for disconnected processes, procedures and manual re-entry of data that is typical of a traditional site network. In addition, as illustrated in Exhibit 2 below, it aims to eliminate the need for the infrastructure required to identify sites, conduct site feasibility, site contracting and training, so that sponsors can move directly to patient enrollment and evidence generation, saving both time and money. Additionally, the agile clinical trial model enables access to a larger patient population along with a less burdensome participation experience, all driving toward improved recruitment and retention and, ultimately, more time savings for sponsors.
Exhibit 2
[MISSING IMAGE: tm2210439d1-fc_decent4clr.jpg]
Utilizing the agile clinical trial, patient-centered design approach, Science 37 has been able to start up trials up to four times faster, enroll patients up to 15 times faster, and retain patients at up to 28% higher rates, which are critical in the drug development process given that the commercial life of a drug is limited by its patent expiry date. If a typical drug can get to market three months earlier, it is estimated that between $54 million and $720 million of additional revenue can be generated over the life of that drug.
In addition to speed and patient retention, Science 37 has generated three times the participation from diverse patient communities, which not only represents a more socially conscious solution, but also one that takes into account a more representative sample that is more predictive of how a drug will act in the true commercial population that will be using the drug.
Disrupting a $195 Billion Total Addressable Market
Global annual research and development spending has increased from $33.4 billion in 1993 to current annual spending of approximately $195 billion, growing at a 4% to 5% compounded annual growth rate
 
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(“CAGR”). Based on its management team’s experience and knowledge of this market, Science 37 estimates that approximately 31% of this spending will be outsourced, resulting in a serviceable available market of approximately $60 billion. Science 37 expects this serviceable available market to grow at an approximate 6% CAGR over the next five years. See “Risk Factors — Risks Related to the General Economic and Financial Market Conditions and the Industries in which Science 37 Operates — Science 37’s estimate of the market size for its products and services may prove to be inaccurate, and even if the market size is accurate, there can be no assurance that its business will serve a significant portion of the market.”
Exhibit 3
[MISSING IMAGE: tm2131243d1-pc_market4clr.jpg]
As illustrated in Exhibit 3 above, this current market is largely being serviced today by CROs (50%), home health vendors (17%) and Recruitment & eClinical solutions (33%).

CROs provide sponsors with an outsourced suite of research services for clinical trial execution from drug conception through approval, including but not limited to trial feasibility and design, site selection, study startup and execution, biostatistics and submission support.

Home health vendors typically provide medical staff that visit patients directly in the home to collect trial related data points, such as mobile nurses, physicians or phlebotomists.

Recruitment and eClinical solutions provide point technology solutions often for the purpose of enabling data collection.
Science 37 believes it is well-positioned to benefit from several market trends, including outsourcing and clinical trial technology adoption:

Outsourcing:   Outsourcing has steadily increased over the last decade and remained consistent through the pandemic. Outsourcing trends are driven by biopharmaceutical companies’ desire to focus on core expertise and avoid capital intensive investments; comply more easily with global regulatory requirements; and realize cost efficiencies in trial conduct. Outsourcing as a percentage of total development spending by biopharmaceutical companies continues at 49%, compared to 36% in 2011 and 21% in 2001. CROs and sponsors expect outsourcing for early-stage and late-stage development (which includes real-world studies) to jump to 56% and 61%, respectively, within three to five years.

Technology Adoption:   Biopharmaceutical companies are increasingly bringing technology workflows and solution capabilities into the decision making process for trial execution support. In addition to Artificial Intelligence and big data, APIs for connectivity, real world evidence and wearable tech are of high focus for target investment areas. The increased investment and adoption of these technologies is expected to result in additional use in clinical trials, accelerating adoption of agile decentralized clinical trials.
 
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Acceleration of Agile Clinical Trial Adoption
Much of the growth in agile clinical trials was catalyzed by the COVID-19 pandemic in early 2020 and, eventually, nearly all clinical research sites were completely shut down. The U.S. Food and Drug Administration (“FDA”), European Medicines Agency (“EMA”), and other foreign regulatory authorities have issued guidance directing sponsors to implement agile clinical trial and decentralization approaches in order to maintain study continuity, and endorsed such techniques as viable, long-term solutions for study design and evidence generation. During this time, the traditional clinical trial model became largely inoperable, while Science 37 was able to continue to execute most of its studies without disruption.
The overall uptick in the adoption of agile clinical trials and decentralization approaches has been widely recognized and confirmed by industry leaders. According to an Industry Standard Research (“ISR”) survey of biopharmaceutical executives commissioned by Science 37, more than 60% indicate that their respective company conducted a clinical trial using at least some agile or decentralized clinical trial elements within the last year, with 4% reporting they conducted a fully virtual decentralized clinical trial. More than 80% expected to conduct a clinical trial using at least some agile and decentralized clinical trial elements in 2021, with close to one-in-six of these studies expected to be fully virtual, representing a 325% increase in fully virtual clinical trials conducted compared to 2020.
Over 95% of pharmaceutical executives agree that the agile and decentralized clinical trial technologies and methodologies adopted during the pandemic are here to stay. In the ISR survey, 17% of participants expected the increased adoption to fully remain; 26% expected adoption to further increase; 57% expected some elements to remain; and none of the participants expected adoption to revert to pre-pandemic levels once COVID-19 is under control.
Based on an industry survey of R&D decision makers, the majority of pharma and CRO companies are investing in efforts to accelerate decentralized clinical trial adoption, namely adopting patient facing technologies (64%), redesigning trial protocols (63%), and adopting investigator facing technologies (53%).
However, according to the ISR survey, 60% of sponsors indicate they have no infrastructure to execute decentralized clinical trials, making an outsourced operating system, such as Science 37’s, critical to clinical trial success.
Science 37 Agile Clinical Trial Operating System (“OS”)
Science 37’s patient-centric model leverages Science 37’s proprietary Agile Clinical Trial Operating System (“OS”), the backbone of which is Science 37’s technology platform, which is combined with Science 37’s specialized network capabilities.
Unified, Full-Stack, End-to-End Technology Platform
Science 37’s technology platform serves as the core of its operating system, designed to provide an end-to-end solution for trial execution. The platform aims to enable modern, digital approaches to clinical research by bringing together all participants to unify workflows, centralize evidence generation and deliver data harmonization.
Workflow Orchestration
Science 37’s technology platform offers a unique and effective user experience to orchestrate agile clinical trials. The workflow for each of the participants – the patient, the investigator, the nurse and the coordinator – has to be carefully choreographed to ensure simple, high quality and seamless interactions.
Patients use study-specific clinical trial landing pages to learn about clinical trials and sign up to participate. They create an account via the Science 37 web interface or by downloading a mobile application through which they are able to consent to participate. The mobile application is available in both iOS and Android and can be used on a personal smartphone; Science 37 can also ship a provisioned device if needed. Over the course of the clinical trial, patients engage via the Science 37 platform to seamlessly connect with the investigator and the rest of the clinical trial team. The platform is used for all clinical trial participation, including data collection, telemedicine visits, tracking appointments and communication with the clinical
 
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trial team. Over the course of the clinical trial, Science 37 employs proprietary Customer Relationship Management (“CRM”) capabilities for automated and efficient recruitment and retention practices.
Science 37’s technology platform is designed to enable clinical trial-specific workflow configuration, enforcing SOPs across all clinical trial investigators and facilitating ease of use, compliance and consistency. The platform lays out all visits, assessments and procedures, essentially prescribing the necessary steps, so investigators can quickly conduct appropriate actions in accordance with the clinical trial schedule of assessments. The platform progresses with each patient visit, so the investigator knows exactly where the patient is in the clinical trial journey and there is little ambiguity around what must occur in each patient visit. Furthermore, platform workflows aim to enable easy data review and approvals, with appropriate guardrails and signature requirements for increased compliance. By comparison, in the traditional model, a clinical trial site is typically given instructions for the procedures required at each visit, but is subject to their own processes and technology, resulting in an increased risk of poor compliance and thus the need for clinical research monitors to conduct regular on-site audits.
Through the Science 37 technology platform, Science 37 believes that investigators are able to perform all necessary clinical trial activities including conducting telemedicine visits and completing eCOA. Medical records can be pulled in from the patient’s EHR system via API automation, enabling expedited review of medical record information. Workflows also seek to provide easy tracking of Serious Adverse Events, Adverse Events and progress notes over the course of the clinical trial.
The nurse workflows are designed for high quality clinical coordination at every step. More specifically, the platform supports Investigational Medicinal Product (“IMP”) management, collecting lab data and the ability to input Clinician Reported Outcomes (“ClinROs”). Mobile nurses access the technology platform through mobile devices, enabling data collection easily in remote locations. Remote coordinators have the ability to schedule home visits, as well as coordinate scheduling across Science 37’s network of mobile nurses or nurses that may be facilitated by a sponsor, CRO or third-party home health provider.
The remote coordinator experience is centered around the ability to provide a concierge patient experience. The coordinator is able to manage the logistics of the clinical trial, including managing nurses, scheduling telemedicine or home visits, and the overall visit calendar providing maximum scheduling flexibility for the patient, allowing visits to occur at the most convenient time including evenings or weekends. The coordinator workflows support the telemedicine investigator as well, with coordinators completing assessment and direct data entry in concert with the investigator.
Finally, all workflows are supported for global conduct. This includes translation of the full patient experience in over 40 languages, including right-to-left languages. The technology platform also supports language translations for nurses, investigators, and coordinators in over 20 languages.
Evidence Generation
The Science 37 platform is designed to generate high quality evidence. With built-in configurations, virtually any assessment that is performed on paper can be digitized into Science 37’s operating system. Evidence generation includes patient reported evidence, clinical conduct evidence, device and wearable evidence, and real-world evidence. As soon as the information is submitted in the application, whether from a patient or another role, the data is automatically locked into the platform with a timestamp for audit purposes. Compliant audit trails and reporting allow for close tracking of data capture throughout the study. Digitizing evidence generation eliminates the need for manual data re-entry, associated data integrity risk or need for validation by clinical research associates on-site.
Patient evidence is captured through the mobile application, including electronic Patient Reported Outcomes (“ePRO”), Quality of Life assessments (“QOL”), health status information and symptom reporting. Notifications through the mobile application allow for compliance with clinical trial schedules of assessments. The Science 37 platform enables clinical conduct through digital means, including Remote eConsent, eSource, and ClinROs. Real world evidence can be supported by the Science 37 platform, including long-term follow-up studies, post-marketing safety, longitudinal data aggregation or observational assessments. Finally, device and wearable data can be supported, enabling remote monitoring and ongoing data collection (for example, looking at captivity or sleep monitors).
 
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Data Harmonization
The Science 37 platform seeks to provide a common data infrastructure to support the harmonization of data, both for internal monitoring and management as well as external data flows.
Science 37’s rapid trial builder feature is designed to accelerate clinical trial start-up times with an easy-to-use, nocode end-user interface and form libraries that can be used to configure study-specific user permissions, clinical trial workflows and data capture assessments. Built-in previews allow users designing the clinical trial to confirm rendering across mobile and desktop devices. Unlike many data capture platforms, new assessments can be built significantly faster than traditional means and, due to Science 37’s modern infrastructure, updated in real-time, with verified changes immediately propagated across all applications. All improvements to the platform are made under strict change control, are validated using Computer System Validation best practices and pass User Acceptance Testing before being deployed to production. Finally, the platform allows for appropriate monitoring and oversight including remote monitoring capabilities, query management and real-time performance analytics.
Science 37’s technology infrastructure is also designed to enable seamless data flows and analyses. Open APIs allow for the structured exchange of data in near real-time, including EDC and EHR integrations. A sponsor may use an EDC to centralize data captured across sites, in addition to data collected via Science 37. Science 37’s platform integration capability eliminates the need for re-entry from Science 37 to EDC, removing this data integrity risk and providing sponsors with visibility into clinical trial data in near-real time as it is captured in Science 37’s platform. EHR integrations in the Science 37 platform allow for the immediate retrieval and centralization of a patient’s up-to-date and comprehensive medical records in the platform, providing investigators with a holistic view of a patient for clinical trial eligibility and conduct. Finally, the Science 37 technology platform supports broader data aggregation and analysis to support real-world data studies, including tokenization capabilities to allow for the de-identification of patient data across other large, diverse data sets, including medical records, claims, lab data, consumer data and more, to be combined with Science 37-captured data, so patients can be tracked over longer periods of time across multiple health data inputs.
Architecture, Security and Compliance
Science 37’s platform is a cloud-based software platform hosted by Amazon Web Services. Availability, scalability, and security are fundamental characteristics. The platform leverages a multi-tenant architecture where data is segregated between tenants. Science 37 takes a Security by Design approach to development and operation of the platform. Software engineering is performed in compliance with Open Web Application Security Project (OWASP) secure coding standards. Risk is managed through a combination of security tools and SOPs that require a complete risk assessment of the platform prior to a production release. Science 37 employs a layered defense model to mitigate the risk related to malicious activity. Access to the platform is restricted to authenticated users using multi-factor authentication. Role-based access controls are enforced to restrict access to functionality and data so that only the appropriate users have access. All activity on the platform is logged and monitored to rapidly identify and respond to high-risk user behavior.
The platform is routinely subject to internal and third-party audits by Science 37’s customers in which the platform is assessed against Science 37’s security SOPs. The platform was designed and is maintained with consideration of FDA’s 21 CFR Part-11 regulations and related guidance, which address electronic documentation and signatures, and validation expectations, for records subject to FDA oversight. The platform is also designed to comply with HIPAA and General Data Protection Regulation (“GDPR”) privacy standards. Science 37 operates product engineering functions in accordance with International Conference on Harmonization (“ICH”) Good Clinical Practice (“GCP”) guidelines and prioritizes compliance with applicable laws, regulations, and regulatory requirements and guidance relating to data protection and privacy globally including, but not limited to, the GDPR.
Specialized Network Capabilities
Science 37’s specialized network consists of patient communities, telemedicine investigators, mobile nurses, remote coordinators and connected technologies and devices. Each aspect of these networks work
 
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seamlessly with Science 37’s technology platform and is designed for the purpose of orchestrating agile clinical trials. Science 37’s networks continue to grow to power increasingly complex agile clinical trial designs.
Patient Communities
Without the geographic restrictions of a brick and mortar site, Science 37 targets patients who are interested in participating in research without regard to location. This enables greater access to diverse patient populations including those who are not located near traditional clinical trial sites as well as those for whom traveling to a physical location might present a barrier to participation.
Science 37 utilizes an adaptive approach, powered by Science 37’s in-house clinical experts and data driven marketing plans, to deliver effective, efficient and seamless engagement campaigns. Science 37 regularly accesses its patient database of more than 500,000 patients to conduct feasibility surveys in advance of planning its outreach campaigns. The Company combines targeted patient research with deep clinical and marketing expertise to develop comprehensive strategies, tactical communication and outreach plans for each study.
Science 37 uses diversified, multi-channel programs to identify patients who fit the profile for each of its projects. This includes Science 37’s database of opted-in individuals interested in clinical research. Digital media supports the targeting of the right messages for the right audience at the right time and Science 37 uses artificial intelligence and machine learning to target its outreach to attract individuals who are the most likely to participate in the study. Additionally, Science 37 partners with its global network of healthcare providers to identify and recruit participants based on medical criteria. Through Science 37’s network it is able to identify specific providers who are best suited to bring on potentially eligible participants, and work hand in hand through the recruitment process. Finally, Science 37 has a series of partnerships that help ensure it is able to target patients through trusted channels. This includes partnerships with large national pharmacies, labs and health plans who have processes in place to refer highly qualified participants to clinical research studies, as well as large digital health portals with access to broad audiences.
Identifying patients is only the beginning of the journey. Science 37’s specialized team of patient engagement coordinators follow up with patients by phone, email and text/SMS to guide them through the pre-screening process, answer questions and support them as they consider study participation. The patient engagement coordinators utilize Science 37’s technology to create a personalized journey for patients to help bring awareness, educate and assess fit for clinical trial participation. Science 37’s model is flexible and reduces drop off in patient interest by ensuring rapid patient follow-up and allowing for warm hand offs from providers and other partners to create a seamless patient experience.
Telemedicine Investigators
Science 37’s network of telemedicine investigators are sourced on demand and across any therapeutic area and geography, which enables Science 37 to access patients from virtually anywhere. Science 37’s U.S. investigator network allows Science 37 to consent, enroll, and support study participants in any state and Washington D.C. The Science 37 global investigator network comprises independent GCP-trained investigators in Canada, Europe and Asia Pacific as well as telemedicine-based investigators who work with Science 37 through a broader institutional partnership model.
All Science 37 investigators are board-certified in their chosen therapeutic specialties and have appropriate medical licensure and certifications. All Science 37 investigators go through rigorous investigator onboarding and training on Company SOPs, GCP/ICH guidelines, FDA and other applicable regulations (global, state, etc.). They are also trained on the Science 37 platform. This training ensures they have the necessary clinical research foundation to be effective agile clinical trial expert investigators.
Investigator oversight responsibilities for an agile clinical trial are the same as those at brick and mortar sites, and are facilitated through the Science 37 study team and organizational personnel, along with the Science 37 technology platform. Through role-based permissioning, investigators have real-time access to all study data in the platform, which ensures participant safety and data integrity.
 
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Mobile Nurses and Other Home Health Providers
Science 37 has an expansive global network of specially trained, mobile nurse providers who complete procedures within the participants’ homes and collect study data directly in the Science 37 platform. Science 37’s core nurse team consists of licensed RNs or providers with equivalent ex-U.S. credentials.
Science 37 mobile nurses are specially trained to complete procedures and capture data within participant homes. Depending on the study, mobile nurses may complete the collection of vitals, blood draws and other activities. Additionally, mobile nurses may take part as facilitators of physical exams, which can be performed by study investigators via telemedicine. Mobile nurses may also facilitate the unpacking, packing, and shipping of IMP in participants’ homes, as well as administration of IMP. Certain data collection and source documentation activities may also be completed by mobile nurses, as required for the study.
Science 37 mobile nurses operate under a single set of SOPs to create patient-focused and repeatable experiences. To ensure the highest and consistent quality, mobile nurses complete a mandatory, comprehensive training program, which includes remote and occasional in-person activities with a member of Science 37’s Medical Affairs team. Essential clinical skills required for specific protocols are validated through a robust demonstration and evaluation process. All mobile healthcare providers must demonstrate the ability to perform the tasks/skills independently and proficiently before being assigned to a Science 37 study.
In addition to mobile nurses, Science 37’s network includes additional mobile providers such as occupational therapists, physician assistants and nurse practitioners.
Remote Coordinators
Science 37’s remote coordinators choreograph Science 37’s clinical trials virtually. They are highly trained in the realm of clinical research as well as agile clinical trials. They ensure that all of Science 37’s processes are confirmed and consistent. Unlike some traditional site networks, where each site has their own processes, Science 37 uses standard processes across all remote coordinators for every clinical trial that utilize its services.
The remote coordinator fulfills the requirements for clinical trial execution, i.e., consenting, screening, enrolling participants, scheduling study visits, data entry, etc. Furthermore, remote coordinators orchestrate patient activity in all phases of the clinical trial and are responsible for the continued engagement of study participants in clinical trials under the supervision of the investigator. All remote coordinators are trained on compliance requirements and expectations under Science 37 SOPs, GCP/ ICH guidelines, FDA laws and regulations and other applicable requirements (supranational, state, etc.). Finally, the remote coordinator is a key member of the Study Management Team, actively contributing to and meeting clinical trial execution goals and timelines, ensuring compliance with the study protocol, and ultimately securing a successful project.
Connected Devices
Science 37 connects into clinical devices to be able to support clinical data generation in a robust fashion. Science 37 has demonstrated the use of technologies and devices in clinical trials, with use cases ranging from occasional data to serial data collection. Examples include accelerometers, smart pill boxes, glucometers, blood pressure cuffs, ECGs, heart rate monitors and more.
Three Offerings Enabled by Extensive Configuration
Science 37 derives its revenues primarily from two sources: (i) contractual arrangements to enable and enhance clinical trials through technology and/or services (Full Decentralized Clinical Trial and Metasite), and (ii) licensing of its proprietary Technology Platform to a variety of life science institutions. Science 37 focuses on three offerings, all with Science 37’s clinical trial operating system serving as the foundation:
1.
Full Decentralized Clinical Trial.   In this offering, Science 37 is the sole provider delivering for a sponsor. Science 37 is performing the entire clinical trial on its technology platform, including orchestrating all of the visits and activities.
2.
Metasite.   In this case, Science 37 acts as a virtual site to supplement a network of traditional
 
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sites. Science 37 leverages its technology platform and orchestrates the clinical trial, but is responsible for only a portion of the total patients associated with a clinical trial.
3.
Technology.   Science 37 is not conducting the trial, nor is it a Metasite, but configures the technology to support patient engagement, remote eConsent, eSource (eCOA, eCRF), telemedicine and/or 3rd party integrations as part of a broader trial solution. Science 37 has a Software-as-a-Service (“SaaS”) option should the sponsor or CRO wish to deploy the technology themselves. Science 37 also has a “Technology Plus” model, in which specialized networks can be added to the technology solution, including patient communities, telemedicine investigators, mobile nurses, remote coordinators and connected devices.
This level of agility and high configuration capability enabled by Science 37’s specialized network of patient communities, on-demand telemedicine investigators, flexible mobile nurse networks, scalable remote coordinators and robust connected technologies enables Science 37 to support any phase of clinical study and nearly all indications.
Competitive Strengths
Science 37 is uniquely positioned as an operating system with both end-to-end technology to enable decentralized clinical trials and specialized networks to orchestrate trial execution. Combined with Science 37’s experience as an industry pioneer and having run more DCTs than any other company, Science 37 believes it is well-positioned to continue leading the category.
Proprietary End-to-End Technology Platform:   Science 37 designed its platform from the ground up, hand in hand with Science 37 practitioners who are establishing how decentralized clinical trials are best executed. For this reason, Science 37’s technology platform is purpose built and incorporates Science 37’s years of experience. The end-to-end nature of the platform aims to eliminate the need to string together technology point solutions and disparate data sets; rather Science 37 has built a full-stack, unifying platform that serves as the backbone to Science 37’s operating system. Science 37’s technology platform is designed to bring together workflow orchestration, evidence generation and data harmonization to power the decentralized clinical trial experience.
Expansive, Specialized DCT Networks:   Complementing Science 37’s technology platform are its expansive and specialized networks of patient communities, telemedicine investigators, mobile nurses, remote coordinators and connected devices. These networks are unique to decentralized clinical trial delivery — they are guided by standard SOPs and processes and trained on Science 37’s proprietary methods of clinical trial conduct. The power of Science 37’s networks is underpinned by the technology platform, which seeks to bring together the various parties for a centralized and unified clinical trial experience.
Leading Experience in DCT:   Science 37 believes that it has more experience in conducting decentralized trials than any other company, having executed more than 95 trials with more than 475,000 patients engaged to date. As the company who pioneered the model, Science 37 believes it holds the most knowledge around the best delivery solutions for decentralized clinical trials. These learnings are embedded in Science 37’s processes as well as how Science 37 activates and configures its operating system for each and every clinical trial. Science 37 contributes to the category as an active thought leader around DCT best practices and the need for a configurable operating system.
Experienced Management Team:   Science 37’s leaders have extensive experience, and collectively represent expertise from eClinical technology companies, SaaS and Application Platform as a Service (“aPaaS”) solutions, CROs, digital health providers and academic medical centers. With this extensive experience in clinical trials and the curiosity to change the status quo, this team has the unique ability to rethink the processes and technology that impact traditional clinical research today and transition it to a model that benefits all players in the clinical research process: patients, providers, CROs, sponsors and more. The management team models Science 37’s company values; fosters a passion for science and innovation; and creates a highly positive environment from which to deliver results.
Strong Values Guide Science 37 Toward its Mission and Vision:   Science 37 has built a distinct culture with core values that include: intentional focus, breaking barriers, making a difference, gratitude and respect. By applying intentional focus, Science 37 aligns its organization in an unambiguous manner toward its
 
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goals. Giving permission to break barriers every day has resulted in creative thinking and a persistent pursuit of new, robust solutions that push the boundaries of the status quo. Science 37 encourages its teams to think big, take action and make a difference with aspirations to higher standards. Most importantly, Science 37 fosters an environment of mutual gratitude and respect in all its interactions — with its customers, patients, and one another. These values together ensure that Science 37 effectively and relentlessly advances its mission and vision.
The ‘Science 37 Way’ — Science 37’s Exclusive Delivery Model:   Leaning on its years of experience, Science 37 has developed a proprietary process from initial customer contact through clinical trial close — what Science 37 calls the ‘Science 37 Way.’ The first phase is Science 37’s Contact to Kickoff Process, which covers the initial point of contact through the clinical trial kickoff. This phase includes Science 37’s strategic solutioning methodology for every opportunity, which leverages a deep knowledge base and proven frameworks for how Science 37 activates its operating system for each unique clinical trial. The second phase is Science 37’s Kickoff to Conduct Process, from external kickoff with the customer through the initiation of the clinical trial. Science 37 uses its detailed SOPs and procedures to enable an accelerated clinical trial startup process across platform configuration, automated clinical trial building and activation of its global networks. All steps happen in lockstep across Science 37’s technology and operations experts to ensure high quality planning and risk mitigation. The final phase is Science 37’s Conduct to Close Out Process, which covers clinical trial initiation through close out of the clinical trial. Science 37’s technology platform and networks come together during this phase to enable synchronized, reliable clinical trial execution. As Science 37’s business grows, its continuous learnings and process improvements are built back into its standardized and proprietary ‘Science 37 Way.’
Trusted, Deep Relationships with Science 37’s Large and Growing Customer Base:   Science 37 works closely with its customers to successfully execute their clinical trials, across therapeutic areas, trial phases and countries. Science 37 partners with its customers from the start, advising on best practices for clinical trial design all the way through execution. As DCT leaders, Science 37 has worked with many of its customers through their own change management processes to incorporate DCT expertise within their organizations and shift thinking, process and organizational structure toward the future of clinical trials. Science 37’s deep customer relationships are evidenced by its repeat business and high customer satisfaction.
Science 37’s numerous strategic collaborations demonstrate its strong relationships with customers. For example, Science 37’s publicly announced technology enterprise collaboration with Boehringer Ingelheim positions both companies in the forefront of the global digital health transformation, and allows them to work together on protocol development, regulatory strategy and the application of Science 37’s operating system to accelerate enrollment and improve the participant experience. Similarly, innovative collaborations as part of the Science 37 Certified program allow Science 37 to work hand in hand and empower CROs to deliver decentralized clinical studies at scale, most recently as announced with PPD and Syneos Health.
A Commitment to Diversity:   Science 37 believes that its dedication to and performance around diversity sets it apart from other clinical trial solutions companies. Science 37 has consistently demonstrated the ability to recruit from diverse patient populations, as well as bring on diverse investigators, mobile nurses and remote coordinators as part of its specialized networks. Science 37 continues to heavily invest in its tools to access harder to reach patient groups and attract minority investigators. Science 37’s diversity initiative is a top priority, minority led, and promotes the advancement of diversity in clinical trials. Science 37 has also established a Diversity in Clinical Research Foundation to make clinical trial research more accessible to underserved populations. This foundation will work with associations, organizations, and other entities to provide grants to increase the participation of underserved populations.
Growth Strategy: Strengthen Core, Expand, and Extend Capabilities
To achieve its vision of being the operating system that powers every clinical trial, Science 37 intends to invest in its core operating system, expand into adjacent markets, and extend its capabilities to enable the clinical trial of the future. As Science 37 executes its roadmap, it will assess opportunities for building capabilities, forming smart partnerships and evaluating synergistic acquisitions.
Strengthen the core business to reinforce Science 37’s market foothold.   Science 37 plans to continue to invest in its core business geographically, commercially and technologically and to reinforce its position in the market.
 
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SaaS and aPaaS:   Science 37 expects to continue the development of its technology platform as a SaaS and aPaaS solution for broader use across the industry. This includes infrastructure investments, simplifying the administration functions, extending Science 37’s Open APIs, and establishing a Developer Program to facilitate the integration of 3rd party technology solutions into Science 37’s operating system.

Patient Platform:   Science 37 continues to invest in its patient platform, including technology, partnerships and methodology for recruitment, enrollment and engagement of patients across all trials. For example, this includes building deeper partnerships across payers, pharmacies and other institutions to bolster Science 37’s patient community. Science 37 also continues to invest in its digital patient portal, layering on additional capabilities for seamless patient engagement.

Globalization of Metasite:   Science 37 intends to continue to expand its Metasite delivery model globally, through the growth of its specialized networks as well as the continued globalization of its technology platform.

Connected Devices at Scale:   Science 37 expects to scale the connected devices that it supports, ensuring it can serve the broader universe of devices for evidence generation. Science 37 plans to continue to invest both in wearable integration as well as device data analysis (as digital biomarkers).

Expanded Commercial Presence:   Science 37 continues to invest in its commercial presence across solution specialty and geography to drive therapeutic area penetration and its top line growth.
Expand into adjacent markets.   Science 37 plans to capitalize on its specialized networks and proprietary technology to continue to expand its offerings across key verticals.

CRO Partnerships:   Science 37 established its Science 37 Certified program to empower CROs with access, training and commercial support required to deliver DCTs for sponsors. As part of the program, CROs and key members of their innovation, technology, and clinical operations teams, along with key investigators, are trained on Science 37’s operating system and can access its network and DCT consulting services. Partnerships with PPD and Syneos have been established to date, and Science 37 intends to continue growing through this channel.

eCOA:   Science 37 continues to invest in its eCOA capabilities, including its technology support for new assessments across therapeutic areas as well as more extensive libraries, branching logic, engagement mechanisms and tools for User Acceptance Testing (“UAT”).

Real-World Evidence:   Science 37 intends to expand its real-world evidence capabilities, leveraging the modularity and flexibility of its technology platform to support broad types of data collection as well as automated patient engagement. With its growing data sets, Science 37 plans to continue to collect data ongoing for new studies and continue to append data to its existing participant database to facilitate future research.

Clinical Care:   Science 37’s flexible operating system is well suited to extend into the home health sector to facilitate monitoring and care for post-procedure or post-hospitalization. Science 37 plans to seek additional product and commercial expertise in this area to penetrate this entirely new market for Science 37.

Diversity:   Science 37 intends to invest in its diversity business, including the continued build-out of tools to access harder to reach patient groups, as well as attract minority investigators, coordinators and nurses to its network. This work has begun with the establishment of Science 37’s Diversity in Clinical Research Foundation to make clinical trial research more accessible to underserved populations.
Extend the reach of Science 37’s operating system.   Science 37 believes the future of clinical trials will continue to evolve to include decentralization approaches, often in tandem with traditional approaches, on virtually every trial.
In the future, as illustrated in Exhibit 5 below, Science 37 anticipates providers will be able to participate as investigators from a traditional site, research-naive facility or telemedicine clinic. Similarly, patients may be participating from their home, a site, or a combination of the two; and procedures will be done in
 
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combination with home, site and/or nearby point of care (“PoC”) facilities. In the future, providers and patients can be activated to participate in trials, which will further accelerate the speed of development, bringing more life-changing therapies to market faster. Science 37 calls this model the Agile Clinical Trial (“ACT”).
Exhibit 5
[MISSING IMAGE: tm2131243d1-fc_agile4clr.jpg]
Achieving this agile clinical trial status will require networks of traditional providers, telemedicine providers, mobile nurses and remote coordinators, as well as a flexible operating system to seamlessly navigate between the on premise and off premise experience while capturing all the data directly into one unified platform. Science 37 is already executing on ACTs today.
In this pursuit, Science 37 expects to continuously extend the reach of both its technology platform and specialized network.

Provider Technology Enablement:   Science 37 is committed to being the single stop for sponsors and CROs and thus expects to continue investing in key technology capabilities to provide the full suite of eClinical capabilities.

Provider Network Sources:   As noted in its Core strategy, Science 37 intends to invest in extending its telemedicine investigator network, both globally and across therapeutic expertise. In addition, Science 37 plans to invest in a broader provider network that can access Science 37 studies as a care option, referring patients to Science 37 or becoming study investigators (on premise or via telemedicine). Finally, Science 37 anticipates that it will explore partnerships with traditional research sites to enable them to conduct ACTs independently and in collaboration with Science 37.

Performance & Risk Management:   Science 37 plans to continue to invest in risk-based management and trial performance analytics, providing trial teams with real-time information and tools to manage their trials smartly, whether these trials are performed as a traditional clinical trial, a DCT or an ACT.
Acquire capabilities to position Science 37 for continued leadership.   Science 37 intends to actively seek acquisition targets to supplement its organic growth strategies across the Core, Expand and Extend growth areas. This may include companies that provide Science 37 with increased presence or scale, or companies that provide Science 37 with new capabilities to better serve its customers.
Comprehensive Go-to-Market Strategy
As the industry embraces DCTs and ACTs, Science 37 believes sponsors need an experienced and flexible partner with in-depth expertise necessary to solution protocols, influence study design, configure
 
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requisite technologies and confidently operationalize studies to enable on-time, high-quality clinical trial delivery. Science 37’s go-to-market strategies strive to demonstrate its expertise, experience and leadership; broaden sponsors’ understanding, usage and adoption of decentralized or agile methodologies and simplify customers’ need to effectively deliver clinical trials more quickly.
Science 37’s matrixed commercial organization focuses on penetrating and growing Science 37’s strategic accounts; expanding and building new business with dedicated business development, subject matter expertise and inside sales support; broadening and increasing into market adjacencies; and enabling and developing Science 37’s channel partnerships with CROs.
Science 37’s Commercial team routinely provides solutions and proposals, working with external partners such as CROs and Science 37’s internal Technology, Delivery and Medical Affairs teams to activate Science 37’s operating system required for study protocol. This sales cycle can involve a variety of sponsor decision makers, varying by sponsor size, that can include medical directors, therapeutics heads, technologists, clinical operations and procurement. Through the proposal and bid defense process, Science 37’s Commercial team leverages the expertise of Science 37’s Technology, Delivery and Medical Affairs teams to answer sponsors’ questions, and provide details about the ‘Science 37 Way’.
Science 37’s Marketing & Communication programs, designed to highlight the in-depth expertise of Science 37 medical affairs, real-world evidence, technology and delivery specialists, focus on demonstrating thought-leadership through targeted content marketing, generating white papers and insight briefs, participating as speakers and panelists for industry events, and hosting webinars to share case studies and insights gleaned from having conducted more than 95 studies across various therapeutic areas, for all phases of drug development, as well as late phase and real-world evidence. Increased efforts on public relations and social media are in place to effectively build broader brand awareness of Science 37 and its technology- fueled efforts to power clinical trials.
Science 37’s Customers
The configurability of the Science 37 operating system allows Science 37 to meet the needs of each customer in a customized manner. Science 37’s platform accounts for the trial design, number of participants, therapeutic area, study complexity and use of home visits and electronic assessments for remote data capture. Science 37 is recognized as the leader in agile clinical trial solutions among its customers, providing a leading offering rooted in strong experience, and an architect of the future clinical trial design.
Science 37’s customers consist of large and mid-sized pharmaceutical companies, biotech customers, CROs as well as academic institutions. For the year ended December 31, 2021, three customers (PPD Development, L.P., Freenome Holdings, Inc., and Adagio Therapeutics, Inc.) each individually represented greater than 10% of revenue. For the year ended December 31, 2020, three customers (Boehringer Ingelheim, Freenome Holdings, Inc. and PPD Development, L.P.) each individually represented greater than 10% of revenue.
As demand for Science 37’s capabilities has expanded, so has the depth and breadth of Science 37’s customer relationships. Science 37 has seen a 9.8% increase in average contract value in its qualified pipeline, from $2.4 million in the year ended December 31, 2020 to $2.6 million in the same period of 2021. Science 37 booked contracts with 15 new customers during the year ended December 31, 2021. On a dollar basis, Science 37’s total qualified pipeline has grown 65.0% across Phase II and Phase III trials during the year ended December 31, 2021 since the prior year end. Science 37’s representative bookings during the year ended December 31, 2021 demonstrate the diversification in its business, with trials across all three offerings, a wide range of indications, diversity across Phases II through IV, US only and global, and contract values up to $22.6 million.
The majority of Science 37’s contracts with its customers range in duration from a few months to several years. Science 37 generally receives compensation based on measuring progress toward completion using anticipated project budgets and direct labor and prices for each service offering. In addition, in certain instances, a customer contract may include forms of variable consideration such as incentive fees, volume rebates or other provisions that can increase or decrease the transaction price. This variable consideration is generally awarded upon achievement of certain performance metrics, program milestones or cost targets.
 
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Most of Science 37’s contracts can be terminated by the customer without cause with a 30-day notice. In the event of termination, Science 37’s contracts generally provide that the customer pay Science 37 for: (i) fees earned through the termination date; (ii) fees and expenses for winding down the project, which include both fees incurred and actual expenses; (iii) non-cancellable expenditures; and (iv) in some cases, a fee to cover a portion of the remaining professional fees on the project.
Competition
Science 37 competes at the intersection of companies that orchestrate clinical trials and companies with technology to support the orchestration of clinical trials.
Along the clinical trial orchestration dimension, CROs are typically engaged to execute the full trial on behalf of sponsors. Since CROs are predominantly service companies that are designed to orchestrate traditional, site-based clinical trials, technology is usually not core to their business, so they typically license these capabilities. In addition, the agile clinical trial model requires significantly different processes and SOPs than are utilized for traditional clinical trials, creating internal barriers to shifting models. While some CROs refer to Science 37 as a competitor, Science 37 views CROs as potential partners and a sales channel. This enables CROs to leverage Science 37’s operating system to help manage the shift in the industry to more agile, remote, decentralized trials. Science 37 has demonstrated its success with this strategy through its partnerships with and associated revenue from PPD and Syneos, and continues to engage additional CROs through the Science 37 Certified program. Other categories of potential competitors along the orchestration continuum include clinical home health and site management companies, neither of which typically own technology and manage only a fraction of what CROs typically manage.
On the other end of the spectrum are companies who provide technology solutions to support clinical trials. The vast majority of these companies, known as eClinical companies, are focused on making the traditional site model more efficient. Many of these companies have unique capabilities that can plug into Science 37’s operating system and, as such, have become partners, including physIQ Inc, Signant Health, ERT and AI Cure.
There are a handful of smaller companies who provide technology to enable decentralized clinical trials such as Medable and Thread. These companies have not existed as long as, and have not invested as much in their platforms, as Science 37 has. There are also full-suite technology players such as Veeva, Oracle and Medidata with more traditional, site-based solutions that may wish to compete with Science 37 in the future. Since none of these companies own similar specialized networks, have experience orchestrating agile clinical trials or have the same feedback loop as Science 37 to inform the user experience, Science 37 believes it has created a significant, long-term competitive advantage.
There are emerging players that have less developed orchestration and technology capabilities that are trying to emulate the Science 37 model; however, they are several years behind Science 37 and do not possess the same scale.
Social Responsibility: Democratizing Clinical Research
Social responsibility is core to Science 37’s mission-oriented corporate culture. Science 37 was founded to address structural hurdles in today’s clinical landscape that drive low patient and provider participation and result in slow timelines in getting life-changing therapies to market. Science 37’s model is designed to empower the patient while deeply engaging the clinical trial team of investigators, nurses, and coordinators, in order to disrupt the traditional trial delivery system and ultimately drive better outcomes.
Culture and Employees
As of December 31, 2021, Science 37 had 601 employees. Science 37 also maintains flexibility in staffing through use of contractors and consultants. Science 37’s employees are integral to the success of the Company. With their support, Science 37 has built a work environment based on mutual trust, high collaboration and inclusion, which provides opportunities for continued growth and exceptional performance. Science 37 believes that its commitment to building a great company centered around its people has accelerated its path in disrupting the status quo.
 
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Science 37 recruits new employees that wish to pursue its mission to democratize clinical research, enabling it as a care option for everyone, everywhere. Equally, Science 37 looks for employees who are passionate in the pursuit of its vision to define the category and be the operating system to enable any and every trial.
Science 37 holds itself to four core values to guide its actions:

Intentional Focus:   Science 37 has a clear North Star in its mission and vision. Science 37 is explicit regarding the market it is pursuing and in its value proposition to address that market. Science 37’s employees are given SMART (Specific, Measurable, Attainable, Relevant and Time-Bound) goals on which to base their activities, and are intentional about focusing on ways to deliver efficiently.

Breaking Barriers:   Science 37’s commitment to breaking barriers every day has resulted in creative thinking and a persistent pursuit of new, robust solutions across process, technology, partnerships and organizational design that enable Science 37 to push the boundaries of the status quo. Science 37’s employees think differently, are empowered to make decisions and achieve transformational results.

Making a Difference:   Making a difference captures the action-mindedness of Science 37’s culture. It embodies the constant pursuit of better outcomes through commitment, sweating the details, ensuring clear lines of accountability, and adding a personal touch that builds better relationships. It is a pursuit of excellence, not only by each individual themselves, but also supporting colleagues to help everyone reach higher standards, all of which creates a virtuous cycle toward better outcomes.

Gratitude and Respect:   Most importantly, Science 37’s leaders, managers, and individual contributors take the time to say “thank you” for a job well done, for bold decision making and for supporting each other in the pursuit of its common goals. Science 37 treats others how it would like to be treated, and promotes gratitude and respect in all its interactions with its customers, its patients, and one another.
Science 37 has built its culture by recruiting and developing employees who are passionate about the Science 37 mission and its values. Science 37 strongly supports diversity efforts through its hiring process, employee training and awareness, and continues to foster professional growth opportunities within its diverse employee base. Science 37 has a collaborative and supportive remote work environment that encourages retention and engagement.
Science 37 is a performance-driven environment, and provides employees with goals and objectives aligned with driving customer success and shareholder value. Science 37 has a competitive pay practice, including performance-based awards for the purpose of attracting, retaining and motivating employees, executive officers and directors. None of Science 37’s employees are represented by a labor union, and it has never experienced a work stoppage.
Quality
Science 37 is profoundly dedicated to providing the highest level of clinical and operational quality. In Science 37’s culture of quality, every employee is dedicated to protecting and improving the experience of all stakeholders (patients, providers, CROs, sponsors and more) in clinical research. Quality is woven into every step – what Science 37 calls the ‘Science 37 Way’ – to ensure that trial planning and conduct meet Science 37’s commitments to all stakeholders from initial contact of a prospective sponsor to the final closeout of a study.
Contact to Kickoff:   From the moment of first contact with a prospective sponsor through the deal process, and project initiation, Science 37’s team of subject matter experts, including medical directors, therapeutic heads, technologists, clinical operations and procurement, undertake in-depth and detailed solutioning for each project. To minimize risk and ensure confidence and quality, Science 37 accounts for its previous learnings, leveraging its knowledge base around best practices by phase, therapeutic area and protocol construct. Science 37 conducts risk planning from the onset, outlining assumptions, potential risks, and detailed mitigation plans, which Science 37 corroborates with its customers during a highly formalized kickoff meeting to ensure alignment, minimize ambiguity and forge a partnership in support of quality.
 
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Kickoff to Conduct:   After a formal kickoff meeting, as Science 37 prepares for project initiation, its cross-functional team works in lockstep to ensure they plan across every dimension. Science 37 develops project-specific execution plans to ensure alignment and proper escalation paths, and tracks progress against predefined operational and quality metrics. Science 37 leverages tools that reflect its experience in delivery, such as its detailed RACIs and step-by-step operational flows, which enable it to startup trials efficiently, in compliance and in accordance with its customer kickoff discussions. As part of conduct readiness, Science 37 Study Teams undergo training on all its SOPs, GCP/ICH guidelines, FDA regulations, data privacy, diversity and any other applicable topics related to both broader trial conduct and study-specific conduct. Additional periodic training is conducted to ensure comprehension. Science 37 investigators are board-certified in their chosen therapeutic specialties and have appropriate medical licensure and certifications. All Science 37 investigators go through rigorous investigator onboarding and training on company SOPs, GCP/ ICH guidelines, FDA and other applicable regulations. Similar certification is required of Science 37’s nursing network, and similar training is required across all other trial team roles.
Conduct to Closeout:   In the third and final stage, Science 37 follows its detailed SOPs to ensure it stays compliant and can pivot as the trial progresses. Patient safety remains Science 37’s top priority. Science 37’s policies govern how it operates in all patient-centric touchpoints, particularly in the development of its technology platform and conduct of research; regular training for its employees ensures compliance with these processes. Science 37 is governed by a holistic Quality Management System (QMS) that meets the requirements of 21 CFR 820 Subpart B – Quality System Requirements. As independent oversight, the Science 37 Quality and Compliance function develops and executes an Internal Clinical Quality Audit Plan for each study. At the cornerstone of the QMS is the Quality Management Review, during which executive management reviews and discusses the overall health of the QMS. The QMS is designed to ensure, and seeks to demonstrate, that any issues encountered are addressed with an appropriate solution.
Intellectual Property
In the course of conducting its business, Science 37 develops and uses proprietary software, systems, processes, databases and other intellectual property. It seeks to protect its proprietary and confidential information and trade secrets through confidentiality agreements with employees, customers and other third parties, as well as implementing administrative and technical safeguards to protect the security of such information and trade secrets. Science 37 also relies on trademark laws to protect its brand, names, and logos. For example, Science 37 has applied for and/or obtained and maintains registration in the United States and other countries for numerous trademarks. Science 37 also enters into agreements with third parties for the license and use of their intellectual property, although no one such license is considered to be material to the business as a whole. Science 37 does not have any material patents or copyright; however, in the future, Science 37 may rely on patent and copyright laws, as may be appropriate and applicable, to protect its intellectual property rights.
Government Regulation
Regulation of Clinical Trials
The biopharmaceutical industry is subject to a high degree of governmental regulation in both domestic and international markets. Regardless of the country or region in which approval is sought, before a marketing application for a product candidate is ready for submission to regulatory authorities, the product candidate must undergo rigorous testing in pre-clinical studies and clinical trials. The clinical trial process must be conducted in accordance with the Federal Food, Drug and Cosmetic Act in the United States and similar laws and regulations in the relevant foreign jurisdictions. These laws and regulations require the product candidate to be tested and studied in certain ways prior to submission for approval.
In the United States, the FDA regulates the conduct of clinical trials of drug products in human subjects, and the form and content of regulatory applications. The FDA also regulates the development, approval, manufacture, safety, labeling, storage, record keeping, import, export, distribution, advertising, sale, and marketing of drug products. The FDA has similar authority and similar requirements with respect to the clinical testing of biological products and medical devices. Within the European Union, these requirements are enforced by the EMA, and requirements vary slightly from one member state to another. In the United
 
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Kingdom (“UK”), the requirements are enforced by the Medicines and Healthcare products Regulatory Agency (the “MHRA”). Similar requirements also apply in other jurisdictions where Science 37 operates or where its customers intend to apply for marketing authorization.
Some of these regulations apply directly to Science 37, as a clinical trial operator; others apply to Science 37’s customers, as pharmaceutical companies, and contractually to Science 37 as their service provider.
Clinical trials conducted outside the United States are subject to the laws and regulations of the country where the trials are conducted. These laws and regulations might differ from the laws and regulations administered by the FDA and other laws and regulations regarding the protection of patient safety and privacy and the control of study pharmaceuticals, medical devices or other materials. FDA laws and regulations may apply to clinical studies conducted outside the United States if, for example, such studies are conducted under an Investigational New Drug Application (“IND”). It is the responsibility of the study sponsor or the parties conducting the studies to ensure that all applicable legal and regulatory requirements are fulfilled.
Science 37’s services are subject to various regulatory requirements designed to ensure the quality and integrity of the clinical trial process. In the United States, Science 37 must perform its clinical development services in compliance with applicable laws, rules and regulations, including Good Clinical Practice, or GCP, and Good Pharmacovigilance Practice. The industry standard for the conduct of clinical trials is embodied in the FDA’s regulations for IRB, investigators and sponsor/monitors, regulations collectively termed GCP by industry, and the GCP guidelines issued by the ICH of Technical Requirements for Pharmaceuticals for Human Use, which have been agreed upon by industry and regulatory representatives from the United States, the European Union, and Japan. GCP requirements address, among other things, IRBs, qualified investigators, informed consent, recordkeeping and reporting. Regulatory authorities enforce GCP requirements through periodic inspections. Violations of GCP requirements could result in enforcement actions including the issuance of warning letters, civil penalties, product recalls, criminal prosecutions or debarment, suspension or exclusion from involvement in future clinical trials or the submission of pre-market approval applications. Science 37 monitors its clinical trials to test for compliance with applicable laws and regulations in the United States and the foreign jurisdictions in which it operates. Science 37 has adopted standard operating procedures that are designed to satisfy regulatory requirements and serve as a mechanism for controlling and enhancing the quality of its clinical trials. Science 37’s current operating procedures are written in accordance with all applicable FDA, GCP, and ICH requirements and Science 37 is in the process of updating them to reflect EMA and MHRA requirements. This enables Science 37’s work to be conducted locally, regionally and globally in adherence to standards that meet all currently applicable regulatory requirements. Science 37 must also maintain reports in compliance with applicable regulatory requirements for each study for auditing or inspection by the customer and regulatory authorities.
Prior to commencing human clinical trials, a company developing a new drug must file an IND with the FDA or, in the case of certain new devices, an Investigational Device Exemption (“IDE”). The IND or IDE must include information about pre-clinical tests, chemistry, manufacturing and control data, and a study protocol for the proposed clinical trial of the drug or device in humans. If the FDA does not object in writing within 30 days after filing, the IND or IDE becomes effective and the clinical trial may begin. If the FDA determines that there are deficiencies or other concerns with an IND or IDE for which modification is required, the FDA may permit a clinical trial to proceed under a conditional approval. Clinical holds may also be imposed by the FDA at any time before or during trials due to safety concerns or non-compliance. Submission of an IND or IDE therefore may or may not result in FDA authorization to begin or continue a clinical trial. A separate submission to an existing IND or IDE must also be made for each successive clinical trial conducted during product development. Each clinical trial must be conducted in accordance with an effective IND or IDE.
Clinical studies must be approved by, and conducted under the oversight of, an Institutional Review Board, or IRB, for each clinical site. The IRB is responsible for the initial and continuing review, approval, and monitoring, and may impose additional requirements for the conduct of the study. In some cases, an IND or IDE supplement must be submitted to, and approved by, the FDA before a sponsor or investigator may make a change to the investigational plan that may affect its scientific soundness, study plan or the rights,
 
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safety or welfare of human subjects. The FDA, the IRB, or the sponsor may suspend or terminate a clinical trial at any time on various grounds, including a finding that the study subjects are being exposed to an unacceptable health risk.
During a study, the sponsor is required to comply with the applicable FDA requirements, including, for example, trial monitoring, selecting clinical investigators and providing them with the investigational plan, ensuring IRB review, adverse event reporting, record keeping and prohibitions on the promotion of investigational devices or on making safety or effectiveness claims for them. The clinical investigators in the clinical study are also subject to FDA’s regulations and must obtain patient informed consent, rigorously follow the investigational plan and study protocol, control the disposition of the investigational device, and comply with all reporting and recordkeeping requirements.
In order to comply with GCP and other regulations, sponsors of clinical trials must, among other things:

comply with specific requirements governing the selection of qualified principal investigators and clinical research sites;

obtain specific written commitments from the investigators;

obtain review, approval and supervision of clinical trials by an IRB or ethics committee;

obtain favorable opinion from regulatory agencies to commence a clinical trial;

verify that appropriate patient informed consent is obtained before the patient participates in a clinical trial;

ensure adverse drug reactions resulting from the administration of a drug or biologic during a clinical trial are medically evaluated and reported in a timely manner;

monitor the quality, validity and accuracy of data;

maintain records regarding drug or biologic dispensing and disposition;

verify that principal investigators and study staff maintain records and reports; and

permit appropriate governmental authorities access to data for review.
In operating clinical trials on behalf of sponsors, Science 37 is required, either by contract or direct regulation, to comply with these requirements as well. Science 37 may be subject to regulatory action if it fails to comply with applicable rules and regulations. Failure to comply with certain regulations can also result in the termination of ongoing research and disqualification of data collected during the clinical trials. If a clinical trial is not conducted in accordance with regulatory requirements, the applicable regulatory agency may require that a clinical trial be modified, suspended or terminated, and Science 37 or its customers may be subject to a variety of enforcement actions. For example, violations could result, depending on the nature of the violation and the type of product involved, in the issuance of a warning letter; suspension or termination of a clinical study; refusal of the FDA to authorize a sponsor to proceed under an IND or IDE for a clinical trial; refusal of the FDA to approve marketing applications, or withdrawal of such marketing applications; injunction, seizure of investigational products; civil penalties; criminal prosecutions; or debarment from assisting in the submission of new drug applications. IRBs may also suspend or terminate research not conducted in accordance with IRB requirements or that has been associated with unexpected serious harm to subjects.
Regulation of Personal Information
Science 37 holds confidential personal health and other information relating to persons who have been, are and may in the future be involved in clinical trials or otherwise. The collection, possession, retention, use, transmission and disclosure of such information is highly regulated, both in the United States and the other jurisdictions where Science 37 operates, and Science 37 is subject to Section 5(a) of the Federal Trade Commission Act, the Telephone Consumer Protection Act of 1991 and all regulations promulgated thereunder, and the Controlling the Assault of Non-Solicited Pornography And Marketing Act of 2003, among others. Additionally, Science 37 may be subject to State-level privacy, security and breach notification and healthcare information laws, including, but not limited to, the California Consumer Privacy Act
 
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of 2018, the California Privacy Rights Act of 2020 and the California Online Privacy Protection Act. Depending on the services provided, Science 37’s operations outside the United States may be subject to privacy regulations and laws such as the GDPR in the European Union, the UK’s data protection regime consisting primarily of the UK General Data Protection Regulation (the “UK GDPR”) and the UK Data Protection Act 2018 or the Personal Information Protection and Electronic Documents Act (“PIPEDA”) in Canada. Such laws and regulations may place restrictions or conditions on the export of personal data outside their applicable geographies, and/or impose additional requirements on service providers. In particular, the GDPR and UK GDPR include obligations and restrictions concerning the consent and rights of the individuals to whom the personal data relates, the transfer of personal data out of the European Economic Area (the “EEA”) or UK (respectively), security breach notifications and the security and confidentiality of personal data. The GDPR authorizes fines for certain violations of up to 4% of global annual revenue or €20 million, whichever is greater. Additionally, the UK GDPR authorizes fines for certain violations of up to 4% of global annual revenue or GBP 17.5 million, whichever is greater. European and UK data protection authorities may interpret the GDPR and national laws (including the UK GDPR) differently and impose additional requirements, which contributes to the complexity of processing personal data in or from the EEA and/or UK. Guidance on implementation and compliance practices is often updated or otherwise revised.
Other Regulations
The foregoing descriptions do not include an exhaustive list of the laws and regulations governing or impacting our business. Science 37 also must comply with other related international, federal, state and local regulations that govern the practice of medicine (by trial investigators) and nursing (by mobile research nurses), as well as regulations that apply to employers and businesses generally, including, but not limited to, labor and employment and tax laws.
Any failure on Science 37’s part to comply with applicable regulations could result in the termination of ongoing research, the disqualification of data for submission to regulatory authorities, fines and other sanctions, as well as liability to Science 37’s customers. Furthermore, any issuance of a notice of finding by a governmental authority against either Science 37 or its customers, based upon a material violation by Science 37 of any applicable regulation, could materially and adversely affect Science 37’s reputation and business. See Part I, Item 1A. “Risk Factors” for information regarding how actions by regulatory authorities or changes in legislation and regulation in the jurisdictions in which we operate or failure to comply with such legislation and regulations may have a material adverse effect on our business.
Facilities
Science 37’s corporate headquarters is located in Research Triangle Park, NC, where it leases office space. Science 37 holds leases to office spaces in Culver City, San Francisco and Torrance, California. The master leases expire on June 30, 2022, October 31, 2024, October 31, 2022 and January 31, 2026, respectively.
Legal Proceedings
From time to time, Science 37 may become involved in legal proceedings arising in the ordinary course of its business. Science 37 is not presently a party to any legal proceedings that, in the opinion of its management, would individually or taken together have a material adverse effect on its business, financial condition, results of operations or cash flows. Regardless of outcome, litigation can have an adverse impact on Science 37 due to defense and settlement costs, diversion of management resources, negative publicity, reputational harm and other factors. See Note 15 to Science 37’s consolidated financial statements located elsewhere in this prospectus.
Indemnification and Insurance
Science 37’s business exposes it to potential liability. In certain circumstances, Science 37 may also be liable for the acts or omissions of others, such as suppliers of goods or services.
Science 37 attempts to manage its potential liability to third parties through contractual protection (such as indemnification and limitation of liability provisions) in its contracts with customers and others, and through insurance. The contractual indemnification provisions vary in scope and generally do not protect
 
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Science 37 against all potential liabilities, such as liability arising out of its gross negligence or willful misconduct. In addition, in the event that Science 37 seeks to enforce such an indemnification provision, the indemnifying party may not have sufficient resources to fully satisfy its indemnification obligations or may otherwise not comply with its contractual obligations.
Science 37 generally requires its customers and other counterparties to maintain adequate insurance, and currently maintains errors, omissions and professional liability insurance coverage, as well as cybersecurity coverage, with limits Science 37 believes to be appropriate. This insurance provides coverage for vicarious liability due to the negligence of the investigators who contract with Science 37, as well as claims by Science 37’s customers that a clinical trial was compromised due to an error or omission by Science 37. The coverage provided by such insurance may not be adequate for all claims made and such claims may be contested by applicable insurance carriers.
 
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MANAGEMENT
The following table sets forth, as of the date of this prospectus, certain information regarding our executive officers and directors who are responsible for overseeing the management of our business.
Name
Age
Position
David Coman
52
Chief Executive Officer and Director
Jonathan Cotliar
51
Chief Medical Officer
Darcy Forman
47
Chief Delivery Officer
Steven Geffon
44
Chief Commercial Officer
Christine Pellizzari
54
Chief Legal Officer
Mike Zaranek
50
Chief Financial Officer
Bhooshitha B. De Silva
47
Director
Robert Faulkner
59
Chairman and Director
Adam Goulburn
40
Director
John W. Hubbard
65
Director
Emily Rollins
52
Director
Neil Tiwari
35
Director
David Coman.   David Coman has been Science 37’s Chief Executive Officer since November 2019 and is also a director on our Board. Prior to joining Science 37, Mr. Coman served as Chief Strategy Officer of ERT, a global data and technology company, from 2016 to 2019. Prior to that, Mr. Coman was Chief Marketing Officer of IQVIA, formerly Quintiles and IMS Health, Inc., a leading global provider of advanced analytics, technology solutions, and clinical research services, where he was also the founder of its Digital Patient business. Prior to Quintiles, Mr. Coman was the Chief Marketing Officer at Dendrite International, a company that develops and services software for the pharmaceutical industry. Earlier in his career, Mr. Coman held a variety of marketing leadership roles in telecommunications, including AOL Local & Long Distance (Talk America), Excel Communications, and Aerial Communications. Mr. Coman received a Bachelor of Art in Advertising from Michigan State University and a Master of Business Administration degree in Marketing, Entrepreneurship, and Finance from the Kellogg Graduate School of Management at Northwestern University. We believe that Mr. Coman is qualified to serve on our board of directors based on his expertise in product and business development and strategy.
Jonathan Cotliar.   Jonathan Cotliar has been Science 37’s Chief Medical Officer since May 2019. Prior to assuming the role of Chief Medical Officer, Dr. Cotliar served as Vice President of Medical Affairs of Science 37 from November 2016 to May 2019. Dr. Cotliar previously served as director of inpatient dermatology at Harbor-UCLA Medical Center and also previously held full-time faculty appointments at the David Geffen School of Medicine at UCLA, Northwestern University Feinberg School of Medicine, and City of Hope National Medical Center, where he was chief of the Division of Dermatology. Dr. Cotliar received a Bachelor of Art from Trinity College, a Doctor of Medicine degree from the University of Kentucky College of Medicine, and completed his training in dermatology and internal medicine at the David Geffen School of Medicine at UCLA. While at UCLA, Dr. Cotliar completed an NIH-sponsored K30 Fellowship in translational investigation. He is also board-certified in both internal medicine and dermatology.
Darcy Forman.   Darcy Forman has been employed by Science 37 since January 2020 and has served as Chief Delivery Officer since January 2021. Prior to joining Science 37, Mrs. Forman served as Vice President of Corporate Development of Firma Clinical Research, a contract research company, from July 2016 to September 2019. Mrs. Forman previously served in multiple clinical operations and project management positions at various CROs spanning large, mid-size, and niche including i3 Research (now Syneos), Health Decisions and Clinipace. Prior to that, Mrs. Forman served as Bench Scientist before transitioning to the Clinical Research division of Pfizer, Inc. (NYSE: PFE), a pharmaceutical corporation, from June 1997 to January 2007. Mrs. Forman received a Bachelor of Art in chemistry from Lake Forest College.
Steven Geffon.   Steve Geffon has been Science 37’s Chief Commercial Officer since December 2019. Before joining Science 37, Mr. Geffon served as Chief Commercial Officer at Medrio, a cloud-based electronic
 
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data capture platform for clinical trial and registry studies, from October 2018 to December 2019. Prior to Medrio, Mr. Geffon spent more than 15 years with ERT, a global data and technology company, from January 2004 to October 2018. Mr. Geffon has nearly 20 years of experience with technology-enabled solution providers and SaaS organizations. Mr. Geffon received a Bachelor of Science in biology from Stockton University.
Christine Pellizzari.   Christine Pellizzari has been Science 37’s Chief Legal Officer since July 2021. Ms. Pellizzari served as the General Counsel and Corporate Secretary of Insmed, Inc. from 2013 to 2021 and as Chief Legal Officer from 2018 to July 2021. Prior to joining Insmed, from 2007 through 2012, Ms. Pellizzari held various legal positions of increasing responsibility at Aegerion Pharmaceuticals, Inc., most recently as Executive Vice President, General Counsel and Secretary. Prior to Aegerion, Ms. Pellizzari served as Senior Vice President, General Counsel and Secretary of Dendrite International, Inc. Ms. Pellizzari joined Dendrite from the law firm of Wilentz, Goldman & Spitzer where she specialized in health care transactions and related regulatory matters. She previously served as law clerk to the Honorable Reginald Stanton, Assignment Judge for the Superior Court of New Jersey. Ms. Pellizzari received her Bachelor of Arts, cum laude, from the University of Massachusetts, Amherst and her Juris Doctor degree from the University of Colorado, Boulder.
Mike Zaranek.   Mike Zaranek has been Science 37’s Chief Financial Officer since April 2020, and he also serves as a member of our senior executive team. Prior to joining Science 37, Mr. Zaranek served as Vice President, Finance for the Contract Sales and Medical Solutions Global Business unit of IQVIA from May 2015 to April 2020. Previously, Mike spent almost two decades in corporate development roles. In the aggregate, Mr. Zaranek has experience in excess of $20 billion in inorganic and capital market transactions. Mr. Zaranek received a Bachelor of Science degree in Accounting from The Pennsylvania State University and a Master of Business Administration degree from Duke University.
Bhooshitha B. De Silva.   Bhooshitha B. De Silva is a director on our Board. Mr. De Silva has been Senior Vice President, Global Head of Corporate Development and Strategy, at Pharmaceutical Product Development, a global contract research organization providing drug development, laboratory and lifecycle management services, since 2014. Prior to that, Mr. De Silva served as Vice President, Corporate Development and Head of International, of Optimer, a materials research, development, and testing laboratory, from 2011 to 2014 and Vice President, Head of Business Development and Strategy, of Pfizer, Inc. (NYSE: PFE), a pharmaceutical corporation, from 2000 to 2011. Mr. De Silva received a Master of Engineering degree from Imperial College London in 1995, a Master of Science degree in Economics from the London School of Economics in 1997 and a Master of Science degree in Management Science from Stanford University in 2000. We believe that Mr. De Silva is qualified to serve on our Board based on his extensive operational, managerial and strategic experience.
Robert Faulkner.   Robert Faulkner is a director on our Board. Mr. Faulkner has been a Managing Director at Redmile Group, LLC, a health care- focused investment firm, since February 2008. Prior to Redmile, Mr. Faulkner was a sell-side equity analyst for 16 years, from 1992 to 2008, including at Hambrecht & Quist (now JPMorgan), Thomas Weisel Partners (now Stifel Financial Corp.) and SG Warburg & Co. (now UBS). Mr. Faulkner has also served as a director of MedAvail Holdings, Inc. since November 2020. Mr. Faulkner received a Bachelor of Arts in Government in 1984 from Harvard College and a Master of Business Administration from the Tuck School of Business at Dartmouth College in 1990. We believe that Mr. Faulkner is qualified to serve on our Board based on his extensive strategic, investment and operational experience in the healthcare industry.
Adam Goulburn.   Adam Goulburn is a director on our Board. Mr. Goulburn has been a Partner at Lux Capital, a venture capital firm, since November 2011. Mr. Goulburn has also served and serves on the boards of directors of various privately held companies in the healthcare industry, including AllStripes, Atavistik, Careguardian, Drone Racing League, Mahana Therapeutics, Pager, Plexium, TranSend Therapeutics, Vesta Healthcare and Rivet Health. During his directorship at these companies, Mr. Goulburn has served on numerous Audit Committees. Mr. Goulburn received a Bachelor of Commerce / Bachelor of Science degree in Commerce and Science from the University of New South Wales in 2005 and a Doctor of Philosophy degree from Monash University in 2010. We believe Mr. Goulburn is qualified to serve on our Board based on his extensive experience and service as a director at numerous companies.
 
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John W. Hubbard.   John W. Hubbard is a director on our Board. Prior to joining Science 37, Mr. Hubbard was the President and Chief Executive Officer of Bioclinica, Inc., an integrated clinical life science solutions provider, from 2015 to 2018, during which he also served as a member of Bioclinica’s board of directors and audit committee. Prior to Bioclinica, Mr. Hubbard held senior executive positions with Pfizer, ICON plc, Parexel, and Hoechst Marion Roussel Pharmaceuticals (now Sanofi). Mr. Hubbard has also served and serves on the boards of directors of various companies, including Agile Therapeutics, Inc. (Nasdaq: AGRX) since October 2014, Signant Health (formerly CRF Health and Bracket) since July 2018, where he also serves as the Chairman of the Board of Directors, and Advarra, Inc. since July 2019, where he also serves as independent director. Mr. Hubbard currently serves as Healthcare Strategic Advisory Board Member of Genstar Capital, a leading middle-market private equity firm, since 2018. Mr. Hubbard has also served as Chairman of the Science & Technology Committee of Agile Therapeutics, from June 2015 to June 2020, where he currently serves as Chairman of the Nominating and Governance Committee since June 2020, and member of the Audit Committee since January 2015 and the Finance Committee since June 2015. Mr. Hubbard received a Bachelor of Science degree from Santa Clara University and a Doctor of Philosophy degree from the University of Tennessee. We believe that Mr. Hubbard is qualified to serve on our board of directors based on his 35 years of expertise in the healthcare industry, as well as his extensive service in boards and committees of numerous companies.
Emily Rollins.   Emily Rollins is a director on our Board. Ms. Rollins has served in various positions at Deloitte & Touche LLP (“Deloitte”) beginning in 1992, including as an Audit and Assurance Partner from 2006 to 2020. At Deloitte, Ms. Rollins served technology, media, and life sciences companies and guided hundreds of clients through complex audit and reporting processes. Ms. Rollins also served in positions of increasing responsibility, including leadership roles in Deloitte’s U.S. Technology, Media, and Telecommunications industry group, Audit Innovation and Transformation, and Diversity and Inclusion. She led firm-wide initiatives to recruit, develop and retain women and diverse professionals as well as transform and modernize Deloitte’s audit platform. Ms. Rollins currently serves on the boards of directors of Dolby Laboratories, Inc. (NYSE:DLB) and Xometry, Inc. (Nasdaq: XMTR). In addition, Ms. Rollins serves on the boards of several non-profit entities and associations. Ms. Rollins is a Certified Public Accountant and holds a B.A. degree in Accounting and International Relations from Claremont McKenna College. We believe Ms. Rollins is qualified to serve on our Board based on her extensive experience and service as a director at numerous companies.
Neil Tiwari.   Neil Tiwari is a director on our Board. Mr. Tiwari has served as a Partner of Private Healthcare Ventures at Magnetar Capital, a global hedge fund with over $14 billion of assets under management, based in Evanston, IL, since May 2021. Prior to this role, Mr. Tiwari served as Managing Director of dRx Capital, the digital health venture arm for Novartis, a global healthcare company based in Switzerland, from April 2019 to May 2021. Prior to that, Mr. Tiwari served as Principal of dRx Capital from September 2017 to April 2019, and served in senior product development roles from April 2015 to September 2017. Mr. Tiwari has served on the boards of directors of multiple companies, where he also served as a member of the Compensation and Mergers and Acquisitions Committees. Mr. Tiwari received a Bachelor of Science degree in Biomedical Engineering from Northwestern University in 2008, a Master of Science degree in Biomedical Engineering from Northwestern University in 2008 and a Master of Business Administration degree from the Haas School of Business at the University of California, Berkeley in 2018.
We believe that Mr. Tiwari is qualified to serve on our Board based on his expertise in the healthcare industry, as well as his extensive service in boards and committees of numerous companies.
Board Composition and Election of Directors
Director Independence
Nasdaq listing rules require that a majority of the board of directors of a company listed on Nasdaq be composed of “independent directors,” which is defined generally as a person other than an officer or employee of the company or its subsidiaries or any other individual having a relationship, which, in the opinion of the company’s board of directors, would interfere with the director’s exercise of independent judgment in carrying out the responsibilities of a director. Our Board has determined that each of the directors
 
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on our Board, other than Mr. Coman, are independent directors under the Nasdaq listing rules and Rule 10A-3 of the Exchange Act. Our independent directors will have regularly scheduled meetings at which only independent directors are present.
Classified Board of Directors
In accordance with our certificate of incorporation, our board of directors is divided into three classes with staggered, three-year terms. At each annual meeting of stockholders, the successors to directors whose terms then expire are elected to serve from the time of election and qualification until the third annual meeting following election. Our directors are divided among the three classes as follows:

the Class I directors are David Coman, John Hubbard and Emily Rollins, and their terms will expire at our 2022 annual meeting of stockholders;

the Class II directors are Bhooshitha B. De Silva and Adam Goulburn, and their terms will expire at our 2023 annual meeting of stockholders; and

the Class III directors are Robert Faulkner and Neil Tiwari, and their terms will expire at the 2024 annual meeting of stockholders.
Our certificate of incorporation provides that the authorized number of directors may be changed only by resolution of the board of directors. Any additional directorships resulting from an increase in the number of directors will be distributed among the three classes so that, as nearly as possible, each class will consist of one-third of the directors. The division of our board of directors into three classes with staggered three-year terms may delay or prevent a change of our management or a change in control of our company.
Board Committees
Our board of directors directs the management of our business and affairs, as provided by Delaware law, and conducts its business through meetings of the board of directors and standing committees. We have a standing audit committee, nominating and corporate governance committee, compensation committee and technology sub-committee. In addition, from time to time, special committees may be established under the direction of the board of directors when necessary to address specific issues.
Audit Committee
Our audit committee is responsible for, among other things:

appointing, compensating, retaining, evaluating, terminating and overseeing our independent registered public accounting firm;

discussing with our independent registered public accounting firm their independence from management;

reviewing, with our independent registered public accounting firm, the scope and results of their audit;

approving all audit and permissible non-audit services to be performed by our independent registered public accounting firm;

overseeing the financial reporting process and discussing with management and our independent registered public accounting firm the quarterly and annual financial statements that we file with the SEC;

overseeing our financial and accounting controls and compliance with legal and regulatory requirements;

reviewing our policies on risk assessment and risk management;

reviewing related person transactions; and

establishing procedures for the confidential anonymous submission of concerns regarding questionable accounting, internal controls or auditing matters.
 
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Our audit committee consists of Emily Rollins, Neil Tiwari and John Hubbard, with Emily Rollins serving as chair. Rule 10A-3 of the Exchange Act and the Nasdaq rules require that our audit committee have at least one independent member, have a majority of independent members and be composed entirely of independent members. Our board of directors has affirmatively determined that Emily Rollins, Neil Tiwari and John Hubbard each meet the definition of “independent director” for purposes of serving on the audit committee under Rule 10A-3 of the Exchange Act and the Nasdaq rules. Each member of our audit committee also meets the financial literacy requirements of Nasdaq listing standards. In addition, our board of directors has determined that Emily Rollins qualifies as an “audit committee financial expert,” as such term is defined in Item 407(d)(5) of Regulation S-K, and under the similar Nasdaq Rules requirement that the Audit Committee have a financially sophisticated member. Our board of directors has adopted a written charter for the audit committee.
Compensation Committee
Our compensation committee is responsible for, among other things:

reviewing and approving the corporate goals and objectives, evaluating the performance of and reviewing and approving, (either alone or, if directed by our board of directors, in conjunction with a majority of the independent members of the board of directors) the compensation of our Chief Executive Officer;

overseeing an evaluation of the performance of and reviewing and setting or making recommendations to our board of directors regarding the compensation of our other executive officers;

reviewing and approving or making recommendations to our board of directors regarding our incentive compensation and equity-based plans, policies and programs;

reviewing and approving all employment agreement and severance arrangements for our executive officers;

making recommendations to our board of directors regarding the compensation of our directors; and

retaining and overseeing any compensation consultants.
Our compensation committee consists of John Hubbard, Neil Tiwari and Bhooshitha B. De Silva, with John Hubbard serving as chair. Our board of directors has affirmatively determined that John Hubbard, Neil Tiwari and Bhooshitha B. De Silva each meet the definition of “independent director” for purposes of serving on the compensation committee under the Nasdaq rules, including the heightened independence standards for members of a compensation committee, and are “non-employee directors” as defined in Rule 16b-3 of the Exchange Act. Our board of directors has adopted a written charter for the compensation committee.
The Compensation Committee generally considers the Chief Executive Officer’s recommendations when making decisions regarding the compensation of non-employee directors and executive officers (other than the Chief Executive Officer). Pursuant to the Compensation Committee’s charter, the Compensation Committee has the authority to retain or obtain the advice of compensation consultants, legal counsel and other advisors to assist in carrying out its responsibilities.
In 2021, the Company’s management engaged Aon’s Human Capital Solutions practice, a division of Aon plc (“Aon”), as its compensation consultant to assist management in making decisions regarding the amount and types of compensation to provide our executive officers, including assisting in developing our peer group composition. Aon reported directly to the Company’s management. All executive compensation services provided to the Company by Aon during 2021 were conducted under the direction or authority of the Company’s management, and all work performed by Aon was approved by the Company’s management. Other than advising the Company’s management with respect to compensation matters, neither Aon nor any of its affiliates maintains any other direct or indirect business relationships with us or any of our subsidiaries. Pursuant to SEC rules, the Company evaluated whether any work provided by Aon raised any conflict of interest for services performed during 2021 and determined that it did not. During 2021, Aon did not perform any additional services for the Company.
 
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The Compensation Committee may delegate its authority under its charter to one or more subcommittees as it deems appropriate from time to time. The Compensation Committee may also delegate to an officer the authority to grant equity awards to certain employees, as further described in its charter and subject to the terms of our equity plans.
Nominating and Corporate Governance Committee
Our nominating and corporate governance committee is responsible for, among other things:

identifying individuals qualified to become members of our board of directors, consistent with criteria approved by our board of directors;

overseeing succession planning for our Chief Executive Officer and other executive officers;

periodically reviewing our board of directors’ leadership structure and recommending any proposed changes to our board of directors;

overseeing an annual evaluation of the effectiveness of our board of directors and its committees; and

developing and recommending to our board of directors a set of corporate governance guidelines.
Our nominating and corporate governance committee consists of Robert Faulkner, John Hubbard and Adam Goulburn, with Robert Faulkner serving as chair. Our board of directors has affirmatively determined that Robert Faulkner, John Hubbard and Adam Goulburn each meet the definition of “independent director” under the Nasdaq rules. Our board of directors has adopted a written charter for the nominating and corporate governance committee.
Risk Oversight
Our board of directors is responsible for overseeing our risk management process. Our board of directors focuses on our general risk management strategy, the most significant risks facing us, and oversees the implementation of risk mitigation strategies by management. Our audit committee is also responsible for discussing our policies with respect to risk assessment and risk management. Our board of directors believes its administration of its risk oversight function has not negatively affected our board of directors’ leadership structure.
Compensation Committee Interlocks and Insider Participation
None of our executive officers serves as a member of the board of directors or compensation committee (or other committee performing equivalent functions) of any entity that has one or more executive officers serving on our board of directors or compensation committee.
Code of Business Conduct and Ethics
Upon the consummation of the Business Combination, we adopted a new code of conduct and ethics for our directors, officers, employees and certain affiliates following the Business Combination in accordance with applicable federal securities laws, a copy of which is available on our website at www.science37.com. We will make a printed copy of the code of conduct and ethics available to any stockholder who so requests. Requests for a printed copy may be directed to: Science 37, Inc., 600 Park Offices Drive, Suite 300, Durham, NC 27709, Attention: Investor Relations.
If we amend or grant a waiver of one or more of the provisions of our Code of Ethics, we intend to satisfy the requirements under Item 5.05 of Form 8-K regarding the disclosure of amendments to or waivers from provisions of our Code of Ethics that apply to our principal executive officer, principal financial officer and principal accounting officer by posting the required information on our website at www.science37.com. The information on this website is not part of this prospectus.
 
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EXECUTIVE AND DIRECTOR COMPENSATION
This section discusses the material components of the executive compensation program for our executive officers who are named in the “2021 Summary Compensation Table” below. In 2021, our “named executive officers” and their positions were as follows:

David Coman, our Chief Executive Officer;

Steven Geffon, our Chief Commercial Officer; and

Christine Pellizzari, our Chief Legal Officer.
Summary Compensation Table
The following table shows information regarding the compensation earned by or paid to our named executive officers during the fiscal years ended December 31, 2021 and 2020.
Name and Principal
Position
Year
Salary
($)
Bonus
($)
Stock
Awards ($)(1)
Option
Awards ($)(2)
Non-Equity
Incentive Plan 
Compensation
($)(3)
All Other
Compensation
($)
Total
($)
David Coman
2021 435,227 3,013,314 4,632,383 289,500 62,321(4) 8,432,745
Chief Executive Officer
2020 400,000 453,602 208,000 53,220 1,114,822
Steven Geffon
2021 334,922 716,365 4,801,897 250,100 16,089(5) 6,119,373
Chief Commercial Officer
2020 325,000 100,000 90,721 134,000 10,350 660,071
Christine Pellizzari
2021 192,574(6) 53,162 6,744,384 200,000 6,743(7) 7,196,863
Chief Legal Officer
2020
(1)
In accordance with SEC rules, this column reflects the aggregate grant-date fair value computed in accordance with ASC Topic 718 of the Earn-Out Shares (as defined below) that may be issuable to each named executive officer with respect to outstanding stock options held by the executive as of the consummation of the Business Combination if a Triggering Event (as defined below) occurs within the Earn-Out Period (as defined below), subject to the executive’s continued services through the time of such Triggering Event. The Earn-Out Shares will also be earned and issuable in the event of a change in control during the Earn-Out Period that results in the holders of our common stock receiving a per-share price equal to or in excess of any Triggering Event threshold. The Earn-Out Shares are described below under “Narrative to Summary Compensation Table — Equity Compensation.
We have determined that the contingent obligation to issue Earn-out Shares to former Legacy Science 37 option holders, including the named executive officers, falls within the scope of ASC Topic 718 for stock-based compensation transactions because the option holders are required to continue providing service until the occurrence of the applicable Triggering Event. The fair value of the Earn-Out Shares was determined using a Monte Carlo simulation valuation model using a distribution of potential outcomes over the Earn-Out Period using the most reliable information available. Assumptions used in the calculation of these amounts are included in Note 16 to our consolidated financial statements included elsewhere in this prospectus.
(2)
Amounts represent the aggregate grant date fair value of stock options granted to our named executive officers computed in accordance with ASC Topic 718. Assumptions used to calculate these amounts are included in Note 17 to our consolidated financial statements included elsewhere in this prospectus.
(3)
Amounts represent bonuses earned by each named executive officer under our annual bonus plan and paid in cash. For additional information on these payments, see “- Narrative to Summary Compensation Table — 2021 Bonuses” below.
(4)
Amount represents employer matching contributions under our 401(k) plan ($13,000), housing reimbursements ($41,220), group life insurance premiums paid by employer ($441), and imputed
 
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income for supplemental individual disability insurance ($7,660). For details of Mr. Coman’s housing reimbursements, see the section titled “Executive Compensation Arrangements — David Coman Offer Letter.”
(5)
Amount represents employer matching contributions under our 401(k) plan ($9,750), group life insurance premiums paid by employer ($441) and imputed income for supplemental individual disability insurance ($5,898).
(6)
Ms. Pellizzari commenced employment as our Chief Legal Officer, effective as of July 8, 2021. This amount represents the base salary amount received by Ms. Pellizzari during fiscal year 2021, which was pro-rated for the time served in her position during fiscal year 2021.
(7)
Amount represents group life insurance premiums paid by employer ($184) and imputed income for supplemental individual disability insurance ($6,559).
Narrative to Summary Compensation Table
2021 Salaries
The named executive officers receive a base salary to compensate them for services rendered to our Company. The base salary payable to each named executive officer is intended to provide a fixed component of compensation reflecting the executive’s skill set, experience, role and responsibilities. The base salaries of our named executive officers are reviewed from time to time and adjusted when our Board or Compensation Committee determines an adjustment is appropriate.
In connection with the Business Combination, in October 2021, the Board increased the compensation of certain members of our senior leadership team, including Messrs. Coman and Geffon, in order to bring their compensation in line with market compensation packages for public company executives within our industry. Specifically, in October 2021, the annual base salaries for Messrs. Coman and Geffon were increased from $400,000 and $325,000 to $550,000 and $400,000, respectively. Ms. Pellizzari’s annual base salary for 2021, which was established in connection with her commencement of employment with us in July 2021, was $400,000.
2021 Bonuses
We maintained an annual performance-based cash bonus program for 2021 in which each of our named executive officers participated. Bonus payments under the 2021 bonus program were determined based on achievement of certain corporate performance goals approved by the Board, subject to the applicable executive’s continued employment through the payment date. On October 2021, in connection with the closing of the Business Combination, the annual target bonuses for Messrs. Coman and Geffon, expressed as a percentage of base salary, were increased from 50% to 100% and from 70% to 75%, respectively. Ms. Pellizzari’s annual target bonus for 2021 was 50% of her base salary.
Under our 2021 annual bonus program, each named executive officer’s target bonus was based on the attainment of the following performance metrics: (i) net bookings, gross bookings, net revenue and technology sales (weighted at fifty percent (50%)), (ii) EBITDA, net profit margins, on-time patient enrollment and net promoter score (weighted at thirty percent (30%), (iii) innovation and quality goals, (weighted at fifteen percent (15%)), and (iv) employee engagement, strategy comprehension and collaboration (weighted at five percent (5%)). Earned bonuses under the 2021 bonus program were paid following the end of calendar year 2021. The actual aggregate bonuses paid to our named executives under our 2021 bonus program, as determined by our Board based on the level at which the applicable performance goals were attained, are set forth above in the Summary Compensation Table in the column titled “Non-Equity Incentive Plan Compensation.”
Equity Compensation
Prior to the consummation of the Business Combination, we granted stock options to certain of our employees under our 2015 Stock Plan (the “2015 Plan”). In connection with the Business Combination, the Board adopted, and our stockholders approved, the Science 37 Holdings, Inc. 2021 Incentive Award Plan
 
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(the “2021 Plan”) in order to facilitate the grant of cash and equity incentives to directors, employees (including our named executive officers) and consultants of our Company and certain of our affiliates and to enable our Company and certain of our affiliates to obtain and retain services of these individuals, which is essential to our long-term success. These awards of stock options are at-risk compensation and are designed to provide our executives with a continuing stake in our long-term success. No further awards have been or will be made under our 2015 Plan following the effectiveness of the 2021 Plan.
During 2021, in connection with Ms. Pellizzari’s commencement of employment with us, Ms. Pellizzari was granted (i) an option under our 2015 Plan to purchase 1,270,739 shares of our Common Stock at an exercise price of $9.49 per share and (ii) an option under our 2021 Plan to purchase 247,000 shared of our Common Stock at an exercise price of $10.05 per share, in each case with a vesting start date of July 8, 2021. Ms. Pellizzari’s options will vest and become exercisable with respect to 25% of the underlying shares subject to the option on the first anniversary of the vesting start date, and with respect to 1/48th of the shares subject to the option on each monthly anniversary of the applicable vesting start date thereafter, for a total vesting period of 4 years, subject to Ms. Pellizzari’s continued employment through each applicable vesting date. If Ms. Pellizzari’s employment is terminated by us without “cause” or by Ms. Pellizzari for “good reason,” ​(each as defined in Ms. Pellizzari’s employment agreement), in either case, within thirty days prior to, or twelve months following, a “change in control” ​(as defined in Ms. Pellizari’s employment agreement), then all of the stock options then-held by Ms. Pellizzari will become vested and exercisable in full.
In October 2021, the Board granted stock options under the 2021 Plan to each of Messrs. Coman and Geffon covering 981,437 and 1,017,351 shares of our Common Stock, respectively, at an exercise price of $10.05 per share, with vesting start dates of October 7, 2021 (collectively, the “October 2021 Options”). The October 2021 Options will vest and become exercisable as to 25% of the underlying shares subject to the option on the first anniversary of the vesting start date, and with respect to 1/48th of the shares subject to the option on each monthly anniversary of the applicable vesting start date thereafter, for a total vesting period of 4 years, subject to the applicable executive’s continued service through the applicable vesting date. If an executive’s employment is terminated by is without “cause”, or for Mr. Coman, by him for “good reason” ​(as each such term is defined Mr. Coman’s offer letter), in either case, within thirty days prior to, or twelve months following, a “change in control” ​(as defined in the 2021 Plan), then all of the October 2021 Options then-held by such executive will become vested and exercisable in full.
The following table sets forth the stock options granted to our named executive officers in the 2021 fiscal year.
Named Executive Officer
2021 Stock Options Granted
David Coman
981,437
Steven Geffon
1,017,351
Christine Pellizzari
1,517,739
Earn-Out Shares
Former holders of shares of Legacy Science 37 common stock (including shares received as a result of the conversion of Legacy Science 37 preferred stock) and former holders of options to purchase shares of Legacy Science 37 are entitled to receive a pro rata share of up to 12,500,000 additional shares of our common stock (the “Earn-Out Shares”) if, during the three years following the consummation of the Business Combination (the “Earnout Period”), the volume weighted average share price of our common stock equals or exceeds the thresholds set forth below for a period of at least 20 days out of 30 consecutive trading days (each, a “Triggering Event”). The number of Earn-Out Shares issued upon the occurrence of a Triggering Event will be determined as follows:

If the volume weighted average share price is equal to or greater than $15.00, a one-time aggregate issuance of 5,000,000 Earn-Out Shares will be made; and

If the volume weighted average share price is equal to or greater than $20.00, a one-time aggregate issuance of 7,500,000 Earn-Out Shares will be made.
 
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In respect of former holders of Legacy Science 37 options, receipt of the Earn-Out Shares is subject to continued services to the Company or one of its subsidiaries at the time of the applicable Triggering Event. If there is a change of control of Science 37 during the Earn-Out Period that will result in the holders of common stock receiving a per share price equal to or in excess of any Triggering Event threshold, then immediately prior to such change of control, any Triggering Event that has not previously occurred shall be deemed to have occurred and Science 37 shall issue the Earn-Out Shares to the former holders of shares of Legacy Science 37 Common Stock and former holders of Legacy Science 37 options in accordance with their respective pro rata shares. The Outstanding Equity Awards at Fiscal Year-End table below shows the number of Earn-Out Shares each named executive officer is eligible to earn in respect of outstanding stock options held as of immediately prior to the consummation of the Business Combination.
Other Elements of Compensation
Retirement Plan
We currently maintain a 401(k) retirement savings plan for our employees, including our named executive officers, who satisfy certain eligibility requirements. Our named executive officers are eligible to participate in the 401(k) plan on the same terms as other full-time employees. The Code allows eligible employees to defer a portion of their compensation, within prescribed limits, on a pre-tax basis through contributions to the 401(k) plan. In 2021, we made discretionary matching contributions in respect of certain contributions made by participants in the 401(k) plan (up to a specified percentage of the employee contributions), and any such matching contributions will become fully vested after an employee has provided one (1) year of service. We believe that providing a vehicle for tax-deferred retirement savings through our 401(k) plan adds to the overall desirability of our executive compensation package and further incentivizes our employees, including our named executive officers, in accordance with our compensation policies.
Employee Benefits
All of our full-time employees, including our named executive officers, are eligible to participate in our health and welfare plans, including:

medical, dental and vision benefits;

medical and dependent care flexible spending accounts;

short-term and long-term disability insurance;

life insurance; and

employee assistance program.
We believe the benefits described above are necessary and appropriate to provide a competitive compensation package to our named executive officers.
No Tax Gross-Ups
We do not make gross-up payments to cover our named executive officers’ personal income taxes that may pertain to any of the compensation or perquisites paid or provided by our company.
 
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Outstanding Equity Awards at Fiscal Year-End
The following table summarizes the number of shares of Science 37’s common stock underlying outstanding equity incentive plan awards for each named executive officer as of December 31, 2021.
Option Awards
Stock Awards
Name
Grant Date
Vesting Start
Date(1)(2)
Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable
Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable
Equity
Incentive
Plan
Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options (#)
Option
Exercise
Price ($)
Option
Expiration
Date
Equity
Incentive
Plan
Awards:
Number of
Unearned
Shares That
Have Not
Vested (#)(3)
Equity
Incentive
Plan
Awards:
Market
Value of
Shares That
Have Not
Vested ($)(4)
David Coman
4/22/2020
11/18/2019
1,656,530 2,192,038 $ 0.28
4/21/2030
10/6/2021
577,984 7,207,460
10/7/2021
10/7/2021
981,437 10.05
10/6/2031
Steven Geffon
4/22/2020
12/9/2019
457,468 457,469 0.28
4/21/2030
10/6/2021
115,079 1,435,035
10/7/2021
10/7/2021
1,017,351 10.05
10/6/2031
Christine Pellizzari
7/21/2021
7/8/2021
1,270,739 9.49
7/20/2031
10/6/2021
8,541 106,506
10/7/2021
7/8/2021
247,000 10.05
10/6/2031
(1)
These stock options each vest with respect to 25% of the shares underlying such option on the first anniversary of the applicable vesting start date, and with respect to 1/48th of the underlying shares on each monthly anniversary of the applicable vesting start date thereafter, for a total vesting period of 4 years, subject to the applicable executive’s continued service through the applicable vesting date.
(2)
If the applicable executive’s employment is terminated by Science 37 without cause or, for Mr. Coman and Ms. Pellizzari, by the executive for good reason, in either case, within thirty days prior to or twelve months following a change in control, such executive’s stock options will vest and become fully exercisable.
(3)
Represents the Earn-Out Shares each named executive officer is eligible to receive with respect to Legacy Science 37 stock options held by the executive immediately prior to the consummation of the Business Combination, if a Triggering Event occurs within the Earn-Out Period, subject to the executive’s continued services through the time of such Triggering Event. The Earn-Out Shares will also be earned and issuable in the event of a change in control during the Earn-Out Period that results in the holders of our common stock receiving a per-share price equal to or in excess of any Triggering Event threshold. The Earn-Out Shares are described above under “Narrative to Summary Compensation Table — Equity Compensation.”
(4)
The market value was computed using $12.47 per share, which is the closing price per share of our Common Stock on December 31, 2021.
Executive Compensation Arrangements
Offer of Employment Letters
During 2021, we were party to offer of employment letters with each of Messrs. Coman and Geffon and an employment agreement with Ms. Pellizzari, the material terms of which are summarized below.
David Coman Offer Letter
We entered into an employment offer letter with Mr. Coman in November 2019, pursuant to which Mr. Coman serves as our Chief Executive Officer. Mr. Coman’s offer letter sets forth the terms and conditions
 
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of his initial employment, including his initial base salary, target annual bonus opportunity, a $120,000 signing bonus, an initial stock option grant and eligibility to participate in our employee benefit plans. Mr. Coman’s offer letter also provides for company reimbursement of travel expenses incurred in connection with Mr. Coman’s travel from his residence in North Carolina to Science 37’s office in Los Angeles, California and for rental housing expenses in Los Angeles, California, in each case, for up to 24 months following his commencement of employment with Science 37.
Mr. Coman’s offer letter provides for his participation in Science 37’s Severance Policy as a
“C-Level” employee, as defined in the Severance Policy. Mr. Coman will become entitled to severance benefits under the Severance Policy if his employment is terminated by Science 37 without “cause” ​(as defined in the Severance Policy) or if Mr. Coman resigns for “good reason” ​(as defined in Mr. Coman’s offer letter). For a description of the Severance Policy, see the section below entitled “Executive Compensation Arrangements — Severance Policy.”
Pursuant to the terms of his offer letter, Mr. Coman also entered into a separate agreement which includes a standard invention assignment, confidential information covenant, an employee non-solicitation covenant for one (1) year following the termination of Mr. Coman’s employment, and a covenant not to compete with Science 37 during the term of Mr. Coman’s employment.
Steven Geffon Offer Letter
We entered into an employment offer letter with Mr. Geffon in November 2019, pursuant to which Mr. Geffon serves as our Chief Commercial Officer. Mr. Geffon’s offer letter sets forth the terms and conditions of his initial employment, including his initial base salary, target annual bonus opportunity, an initial stock option grant and eligibility to participate in our employee benefit plans. Mr. Geffon’s offer letter does not provide for severance upon a termination of his employment; however, Mr. Geffon participates in our Severance Policy. For a description of the Severance Policy, see the section below entitled “Executive Compensation Arrangements – Severance Policy.”
Pursuant to the terms of his offer letter, Mr. Geffon also entered into a separate agreement which includes a standard invention assignment, confidential information covenant, an employee non-solicitation covenant for one (1) year following the termination of Mr. Geffon’s employment, and a covenant not to compete with Science 37 during the term of Mr. Geffon’s employment.
Christine Pellizzari Employment Agreement
We entered into an employment agreement with Ms. Pellizzari in July 2021, pursuant to which Ms. Pellizzari serves as our Chief Legal Officer. Ms. Pellizzari’s offer letter sets forth the terms and conditions of her initial employment, including her initial base salary, target annual bonus opportunity, eligibility to participate in Science 37’s equity incentive plan and other employee benefit plans, eligibility to receive an initial stock option grant, and eligibility to receive a stock option grant upon the closing of the Business Combination.
Ms. Pellizzari’s employment agreement provides that upon a termination of Ms. Pellizzari’s employment by Science 37 without “cause”, or by Ms. Pellizzari for “good reason,” as each such term is defined in her employment agreement, (i) Ms. Pellizzari will be entitled to receive twelve months of her then-current base salary, as well as her full target annual bonus for the year of termination, both payable in equal monthly installments during the twelve-month period following such termination, and (ii) solely if the termination occurs thirty days prior to, or twelve months following, a change in control, all of her equity awards that are outstanding and unvested as of the date of such termination will accelerate and vest in full upon such termination. Ms. Pellizzari also participates in our Severance Policy, which provides that if Ms. Pellizzari becomes entitled to severance under both her employment agreement and the Severance Policy, she will receive the greater of the severance under her employment agreement or the severance under the Severance Policy. For a description of the Severance Policy, see the section below entitled “Executive Compensation Arrangements — Severance Policy.
Pursuant to the terms of her employment agreement, Ms. Pellizzari also entered into a separate agreement which includes a standard invention assignment, confidential information covenant, an employee
 
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non-solicitation covenant for one (1) year following the termination of Ms. Pellizzari’s employment, and a covenant not to compete with Science 37 during the term of Ms. Pellizzari’s employment.
Severance Policy
In October 2021, the Board adopted the Executive Severance Policy (the “Severance Policy”) under which Science 37’s Chief Executive officer and other members of Science 37’s senior executive team, including our named executive officers, are eligible to receive certain severance payments and benefits upon a termination of employment without “cause” ​(as defined in the Severance Policy). The Severance Policy is administered by the Compensation Committee, which has the authority to (among other things) determine who will be eligible for payments and benefits under the Severance Policy.
The Severance Policy provides that, in the event that an applicable executive’s employment with Science 37 is terminated without “cause” more than thirty days before or more than twelve months after a “change in control” of Science 37 (as defined in the 2021 Plan), he or she will receive the following severance payments and benefits: (i) six months’ continued payment of base salary, (ii) any earned, unpaid annual bonus for the calendar year immediately prior to the year in which the termination occurs, and (iii) Company-subsidized COBRA coverage for up to six months following termination.
In the event that the applicable executive’s employment is terminated without “cause” within thirty days before or twelve months after a change in control, he or she will instead receive the following severance payments and benefits: (i) twelve months’ continued payment of base salary, (ii) any earned, unpaid annual bonus for the calendar year immediately prior to the year in which the termination occurs, (iii) a pro-rated target cash performance bonus for the calendar year in which the termination occurs, (iv) Company-subsidized COBRA coverage for up to twelve months following termination, and (v) full acceleration of all then-outstanding equity awards held by such executive.
If an executive participating in the Severance Policy is eligible to receive severance benefits or payments under an individual employment agreement, severance agreement or offer letter or, if he or she resides outside of the United States, under applicable law, then such executive will receive the greater of his or her individual severance provided under any individual arrangement or under applicable law (as applicable) or the severance under the Severance Policy, so long as the executive does not receive a duplication of benefits.
All payments and benefits under the Severance Policy are subject to the applicable executive’s timely execution and non-revocation of a release of claims in favor of Science 37 and continued compliance with applicable restrictive covenants.
The Severance Policy contains an Internal Revenue Code Section 280G “best pay” provision, pursuant to which any payments or benefits under the Severance Policy will be paid in full or reduced to the extent that such payments and benefits will not be subject to the excise tax under Internal Revenue Code Section 4999, whichever results in the better after-tax treatment for the applicable executive.
2021 Director Compensation Table
In connection with the Business Combination, we adopted a non-employee director compensation program which provides for annual cash retainer fees and long-term equity awards for our eligible non-employee directors. For details of our director compensation program, see “Director Compensation Program” below. Our Chief Executive Officer, Mr. Coman, does not receive any additional compensation for serving on our Board.
The following table sets forth compensation earned by our non-employee directors during the fiscal year ended December 31, 2021:
 
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Name
Fees
Earned or
Paid in
Cash ($)(1)
Stock
Awards
($)(2)
Option
Awards
($)(3)
Total ($)
Bhooshitha B. De Silva(4)
Robert Faulkner(5)
21,205 187,499 208,704
Adam Goulburn(6)
9,425 124,998 134,423
John W. Hubbard