NEW YORK (GenomeWeb News) — Exact Sciences today said that Laboratory Corporation of America has extended a license to distribute the company’s PreGen-Plus colorectal cancer screening test.
Under the expanded deal, LabCorp can now exclusively license the test through 2010, and Exact gets the right to license the technology to “select organizations and other commercial service laboratories.”
Exact said it was previously eligible to receive as much as $45 million from LabCorp for “related objectives,” including $30 million for hitting sales targets and $15 million for Medicare reimbursement and other “key payors.”
In the new agreement, $40 million in “potential” milestone payments remains, all of which is now payable to Exact once it achieves undisclosed “significant sales thresholds.”
In exchange for the extended exclusivity, LabCorp also gave up any rights it had to receive approximately $3 million from Exact in connection with certain historical third-party royalty amounts. Under the terms of the revised agreement, Exact will “potentially be obligated” to reimburse LabCorp for certain third-party royalties up to a maximum of $1 million annually.
LabCorp holds the right to kill the agreement if stool-based DNA screening is not included under impending guidelines from the American Cancer Society and the US Multi-Society Task Force.
LabCorp could also walk away if Exact’s Version 2 technology doesn't achieve certain sensitivity and specificity thresholds, or if it is not ready for commercialization “in the near term.”
The amended agreement also requires LabCorp to pay Exact a 15-percent royalty on LabCorp's net revenues from sales of PreGen-Plus. That amount that could increase to 17 percent if annual net revenues exceed an undisclosed threshold. LabCorp also retains preferential pricing terms as compared to third parties to whom Exact may license its stool-based DNA-screening technology.
LabCorp will hold the “preferential pricing terms” in relation to other parties to whom Exact may license its stool-based DNA screening technology in the future.
In a statement, LabCorp CEO David King said the new deal, with its “provisions for LabCorp to allow additional labs to distribute the technology," will facilitate further market penetration for the assay.
The new deal also provides “expanded testing opportunities for what we hope will be a positive decision by the ACS and the US Multi-Society Task Force to include stool-based DNA testing in their updated CRC screening guidelines.”