Transaction is extended through 2010.
Exact Sciences inked an expanded license agreement with LabCorp that allows for broader distribution of Exact’s DNA technology for colorectal cancer (CRC) screening. Exact has agreed to extend LabCorp’s exclusivity period through 2010 in exchange for other terms, including Exact’s right to also license the technology to select organizations and other commercial service laboratories.
“Our proactive pursuit of these new licensing terms offers Exact the flexibility we need to expand the distribution of our DNA CRC screening technology with LabCorp,” says Don Hardison, president and CEO of Exact Sciences.
“I believe this is in the best interests of our technology and the company, given LabCorp’s national distribution capabilities, capacity to process large test volumes, their sales force of more than 1,000 and numerous managed care contracts.”
Prior to this amendment with LabCorp, Exact was eligible to receive up to $45 million in milestone-based payments, including $30 million relating to the achievement of sales targets and $15 million for policy-level reimbursement approval from key payors. In the new agreement, $40 million in potential milestone payments will be payable upon achievement of significant sales thresholds.
LabCorp also gave up any rights it had to receive approximately $3 million from Exact in connection with certain historical third-party royalty amounts. Exact could now potentially be obligated to reimburse LabCorp for certain third-party royalties up to $1 million annually.
LabCorp retains early termination rights under the agreement if stool-based DNA screening is not included in upcoming colorectal cancer screening guidelines; if Exact’s Version 2 technology does not achieve certain sensitivity and specificity thresholds; or if it is not ready for commercial launch in the near term.