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Atossa Inks Deal for MASCT System; Buys Assets of Intraductal Dx, Therapy Firm

NEW YORK (GenomeWeb News) – Atossa Genetics disclosed in a regulatory filing that it has entered into a co-exclusive marketing deal for the MASCT System and acquired the assets of intraductal diagnostic and therapeutic firm Acueity Healthcare.

In a Form S-1/A filed with the US Securities and Exchange Commission on Wednesday, Seattle-based Atossa, which has filed for an initial public offering, said it entered into the marketing deal with Diagnostics Test Group last month for the supply and distribution of the MASCT (Mammary Aspirate Specimen Cytology Test System) System.

MASCT is a device and method for the collection, shipment, and clinical analysis of nipple aspirate fluid which contains cells and biomarkers that may be used to detect breast cancer and cellular changes that may be associated with the disease.

Under the terms of the agreement, the system will be distributed under the DTG Clarity name. DTG will purchase the MASCT System from Atossa and establish product codes and contracted agreements for the sale and placement of the Clarity-branded MASCT product line with a number of distributors.

Those distributors include Henry Schein; McKesson; PSS World Medical; Cardinal Health; VWR International; VaxServe; Mercedes Medical; Fisher Scientific; NDC members; Independent Medical Co-Op members; B&H Surgical; Marshall Medical Systems & Equipment; and Cascade HealthCare Products.

Collectively, the distributors have more than 5,000 employee sales representatives and/or independent sales representatives.

Atossa said that it will coordinate the sales and marketing effort, plan, and budget with DTG, and will pay agreed expenses to DTG. Atossa will also pay DTG a minimum cash fee for each test performed by Atossa on MASCT samples sold by DTG.

It also is granting DTG warrants to purchase Atossa's common stock. The number of warrants issued to DTG will be based on the annual number of ForeCYTE tests performed by the National Reference Laboratory for Breast Health, but the total number cannot exceed 1 million. Each warrant has an exercise price equal to the fair market value of Atossa's common stock on the day of issuance.

The ForeCYTE test provides information about the 10-year and lifetime risk of breast cancer for women between 18 and 65 years of age. Atossa said that it plans to launch the test under the DTG Clarity name by the end of this year.

Atossa can terminate its agreement if DTG does not meet certain sales figures, it said.

The company also disclosed that on Sept. 30, it bought substantially all the assets of Acueity Healthcare through an asset purchase of 35 issued patents, including 18 in the US, and 41 patent applications, including 32 in the US.

The patents and patent applications pertain to intraductal diagnostic and therapeutic devices and methods of use.

Atossa also acquired six FDA 510(k) marketing authorizations related to the Viaduct Miniscope and accessories; the Manoa Breast Biopsy system; the Excisor Bioptome; the Acueity Medical Light Source; and the Viaduct Microendoscope and accessories. Acueity also paid Atossa $400,000 in cash.

In return Acueity received 862,500 shares of Atossa's common stock and warrants to purchase up to 325,000 shares of stock at an exercise price of $5 per share, subject to a six-month lock-up agreement.

The warrants have a five-year term and do not have a cashless exercise provision.

Atossa said it assumed no liabilities as part of the deal and it has no financial obligations to Acueity for the commercialization of the acquired assets.

It added that the purchase did not include diagnostic tools, manufacturing capabilities, or personnel to market and sell the tools. The company intends to "complete the steps" necessary to commercialize the tools in late 2013.

As it awaits completion of its IPO, the company also said that its common stock has been approved for listing on the Nasdaq Capital Market under ticker symbol "ATOS" provided it raises at least $6 million in gross proceeds from the offering.

Last month Atossa lowered the expected share price for the IPO to between $4 and $6 from an earlier range of $5 and $7. At the midpoint of the most recent share price range, the IPO would bring in $4.9 million, or $5.7 million if underwriters exercise an over-allotment option in full.

Dawson James Securities is listed as the underwriter.

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