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Oncimmune Reacquires Commercial Testing Facility from Health Diagnostic Laboratory

NEW YORK (GenomeWeb) – British cancer diagnostics firm Oncimmune today announced it has bought back substantially all of the assets of a CLIA-certified laboratory from Health Diagnostic Laboratory (HDL).

Under the terms of the sale, Oncimmune will reclaim ownership of Central Medical Laboratory (CML), which performs Oncimmune's EarlyCDT-Lung tests. It has granted HDL and Innovative Diagnostic Laboratory non-exclusive distribution rights to the test in the US. Oncimmune said in a statement that it is exploring further US distribution deals. CML will continue to be the central testing facility for all EarlyCDT-Lung tests sold worldwide.

HDL acquired the CML laboratory, located in De Soto, Kansas, from Nottingham, UK-based Oncimmune in October 2013 and has continually operated it as a dedicated commercial testing facility for the EarlyCDT-Lung test. The firms have terminated their original agreement, whereby Oncimmune received a "substantial purchase price" and guaranteed minimum royalty payments for tests sold exclusively by HDL in the US. The new agreement provides Oncimmune a net cash benefit of $2.3 million.

HDL declared Chapter 11 bankruptcy protection in June shortly after reaching an agreement with the US Department of Justice to settle an investigation into whether HDL's payments to doctors were essentially kickbacks to encourage them to order the firm's tests. HDL agreed to pay nearly $50 million as part of the settlement but denied wrongdoing. Last week, a US Bankruptcy Court judge approved a $37.1 million sale of substantially all of the firm to True Health Diagnostics.

"Our original agreement with HDL provided Oncimmune with significant funds through the sale of the facility and guaranteed royalties," Oncimmune CEO Geoffrey Hamilton-Fairley said in a statement. "We now have the opportunity to reacquire the facility at a time at which we are poised for growth as we realize the potential of our pioneering autoantibody approach to cancer detection."

Oncimmune said in a statement that the laboratory would support increasing sales of the EarlyCDT-Lung test as well as sales of new EarlyCDT tests. It also has assumed third- party contracts necessary for ongoing business operations and has agreed to take on all existing CML employees.