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NeoGenomics Ordered to Pay Health Discovery $6.6M

NEW YORK (GenomeWeb) — NeoGenomics disclosed last week that it has been ordered to pay Health Discovery $6.6 million by an arbitration panel handling a dispute between the erstwhile partners.

In early 2012, Health Discovery licensed certain biomarker-based testing tools for hematopoietic and solid tumor cancers to NeoGenomics for the development and commercialization of laboratory-developed tests.

According to court documents, Health Discovery terminated the license in 2016, claiming that NeoGenomics did not use its best efforts to develop and commercialize the technology and that it failed to pay royalties on time. Fort Myers, Florida-based NeoGenomics denied the claims and sued to force the dispute into contractually obliged arbitration.

In a filing with the US Securities and Exchange Commission last week, NeoGenomics said that the arbitration panel hearing the case terminated the license between the companies. The panel also awarded Health Discovery $1.5 million in connection with its claims that NeoGenomics' SmartFlow cytometry products infringe a valid Health Discovery patent, and that NeoGenomics' use of the patented technology was subject to milestone and royalties. Further, the panel awarded Health Discovery $5.1 million after concluding that NeoGenomics did not use its best efforts to develop and commercialize products using the licensed technology.

The panel's ruling is final.

NeoGenomics said that it is evaluating its options in regard to the panel ruling, but that it recorded a reserve in the first quarter in anticipation of the ruling. At the end of 2018, the company had cash and cash equivalents of $9.8 million.

In a filing with the SEC, Atlanta-based Health Discovery said it is evaluating its options for further commercializing its technology.