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ProPhase Labs to Acquire Stella Diagnostics Esophageal Cancer Screening Test for $4.5M

NEW YORK – ProPhase Labs said Monday it had agreed to a $4.5 million deal to buy the exclusive rights to Stella Diagnostics' BE-Smart Esophageal Pre-Cancer screening test and related intellectual property assets.

Under the terms of the agreement, Salt Lake City-based Stella will receive $3.5 million in cash and $1 million in ProPhase common stock. Stella will receive another $2 million of ProPhase common stock upon achievement of a revenue-based commercial milestone within five years after closing, and will receive a 5 percent royalty on the adjusted gross margin from commercialization of the intellectual property. The transaction is expected to close in early January 2023, pending approval by Stella's shareholders.

Doylestown, Pennsylvania-based ProPhase plans to validate the BE-Smart mass spec-based proteomic assay as a laboratory-developed test, and the company predicts it will commercialize the test within 18 months. The company has set a reimbursement goal of $1,000-$3,000 per test.

ProPhase said study results published in 2018 suggest the BE-Smart test can detect protein expressions of cells at high risk of cancer development with 99 percent sensitivity and specificity. Researchers with the company mProbe and the Mayo Clinic have been conducting further testing of tissue samples collected during endoscopies to confirm and optimize the assay, and early data demonstrate the test's accuracy and reproducibility and show potential at identifying biomarkers that could serve as therapeutic targets for development of esophageal cancer treatments, ProPhase said.

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