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Health Discovery, NeoGenomics Sign Cancer Testing License Pact

NEW YORK (GenomeWeb News) – Molecular diagnostic technologies developer Health Discovery said today that it has licensed some of its biomarker-based testing tools for hematopoietic and solid tumor cancers to NeoGenomics for $1 million in cash, 1.4 million shares in NeoGenomics stock, milestone payments of up to $5 million, and ensuing royalties.

Under the agreement, NeoGenomics will commercialize laboratory-developed tests based on HDC technologies for a range of cancer types, but HDC retains the rights to in vitro diagnostic test development and its pre-existing licenses remain in effect.

The license does not cover use of HDC's testing tools for breast cancer, which it previously licensed to Quest Diagnostics and Smart Personalized Medicine, or its test for retina cancer, which it has licensed to Retinalyze.

HDC Chairman and CEO Stephen Barnhill said in a statement that the agreement covers tests for prostate cancer, pancreatic cancer, colon cancer, and cytogenenetics and flow cytometry software systems.

On top of the cash and common stock at the front of the deal, NeoGenomics will make milestone payments in cash or stock based on sublicensing and other revenues generated from products and services.

NeoGenomics will pay HDC milestone payments in increments of $500,000 for every $2 million in revenue up to a total of $5 million. After a total of $20 million in cumulative revenue has been recognized, NeoGenomics will pay a royalty of 6.5 percent on product sales and it will share profits from sub-licensing agreements. NeoGenomics also will pay a royalty of 50 percent of the revenue coming from any sub-licensing arrangements for the Cytogenetics Interpretation System and the Flow Cytometry System.

Headquartered in Fort Myers, Fla., CLIA-certified NeoGenomics also has labs in Nashville, Tenn.; Irvine, Calif.; and Tampa, Fla.

Barnhill said that NeoGenomics "has agreed to use its best efforts to complete the development of these tests and have a first commercial use of products in the next 12 months, subject to extensions if required."