EXACT Sciences in strategic relationship with Genzyme for DNA
diagnostics technology
9 February 2009
EXACT Sciences Corporation (NASDAQ: EXAS) has formed a strategic
relationship with Genzyme Corp. (NASDAQ: GENZ) in which Genzyme has
acquired intellectual property assets related to prenatal and
reproductive health as well as three million shares of EXACT common
stock for $24.5 million.
Under the transaction, EXACT retained exclusive worldwide rights to
its colorectal cancer screening and stool-based DNA testing intellectual
property, and will receive a share of Genzyme’s sublicensing income
derived from the purchased intellectual property outside the fields of
prenatal and reproductive health.
Jeffrey R. Luber, EXACT's President and Chief Executive Officer,
said, “This strategic relationship with Genzyme is an important
milestone in EXACT’s continued evolution and will serve as a solid
platform for us to grow our oncology diagnostics business. Genzyme is
one of the world’s leading biotechnology companies and this transaction
offers an ideal relationship for EXACT. In addition to the substantial
infusion of capital into EXACT, we believe that our ability to access
Genzyme’s extensive development and regulatory expertise will facilitate
our efforts toward the introduction of our next-generation platform for
colorectal cancer screening.”
“This transaction will bring Genzyme intellectual property in support
of our development of non-invasive prenatal testing and other advanced
diagnostic testing services,” said Jon L. Hart, Senior Vice President
and General Manager, Genzyme Genetics. “We have a responsibility to
bring forward more advanced testing options for physicians and families
and we are strongly committed to driving continued innovation in this
field. We are pleased to be shareholders in EXACT and believe that our
relationship may facilitate their important mission to bring novel
stool-based cancer diagnostics to the public.”
Terms of the transaction
The transaction provides for EXACT to receive $24.5 million in cash
in total. At closing, EXACT received $16.65 million, with an additional
$1.85 million to be received over the next 18 months, contingent upon
the non-occurrence of certain events, in exchange for the sale and
license of certain of EXACT’s intellectual property assets, including
those relating to reproductive and prenatal health. In addition, Genzyme
purchased 3.0 million shares of EXACT common stock at $2.00 per share
for an aggregate purchase price of $6.0 million. The per share purchase
price represents a 127% premium to the 30-day average closing price of
EXACT shares as of Market close on Monday, January 26th.
EXACT will retain rights to the technology for stool-based detection
of any disease and stool or blood-based screening assays for colorectal
cancer in patient samples. Further, EXACT will receive exclusive rights
in these fields to improvements to the purchased intellectual property
that may be developed by Genzyme. EXACT will also receive rights in
these fields to improvements resulting from any joint developments
between EXACT and Genzyme.
In addition, EXACT and Genzyme have amended their March 1999 license
to provide EXACT with the additional rights necessary to distribute FDA
approved kits for stool-based detection of disease and colorectal cancer
screening based on the detection of APC and P53 mutations. The license
amendment as well as the ongoing assumption by Genzyme of certain patent
costs will reduce EXACT’s cash outlays going forward.
The companies have also agreed to form a joint advisory committee to
assist both parties in the achievement of product development goals
related to the purchased IP and to assist EXACT with its regulatory
goals. Genzyme and EXACT’s joint advisory committee will consist of
internal experts and outside advisors who are recognized leaders in the
technological, clinical, and regulatory aspects of diagnostic testing
who will advise both organizations on their product development
objectives. Finally, Genzyme has agreed to pay EXACT a double digit
percentage of any sublicensing income that it receives outside the field
of reproductive and prenatal health which utilize the intellectual
property.
EXACT’s strategic plan
Going forward, EXACT plans to focus on the development of a Version 3
colorectal cancer screening test based on an improved DNA detection
technology developed by Johns Hopkins University in the US.
Previously, EXACT announced the published results from a proof of
concept study using the BEAMing technology, an advanced form of digital
PCR, in which stool and blood plasma were assessed in a head-to-head
comparison for the detection of colorectal cancer (CRC).
Study results demonstrated 92% sensitivity for detecting CRC in stool
samples. These data were published in the August 2008 issue of
Gastroenterology in a paper entitled Analysis of Mutations in
DNA Isolated from Plasma and Stool of Colorectal Cancer Patients.
The newly expanded APC/P53 gene license with Genzyme to the key genetic
markers used in the August BEAMing publication will facilitate the
Company’s efforts to offer FDA-approved kits based on such a Version 3
technology.
EXACT intends to resume sample collection for a clinical trial aimed
at securing US FDA clearance or approval for a new Version 3 technology
for non-invasive colorectal cancer screening. The Company currently
plans to design the trial based on its extensive discussions held with
the FDA in mid 2008 and will seek input from Genzyme through the joint
advisory committee.
EXACT intends to re-start the sample accrual process during the
current fiscal quarter. This should allow EXACT to submit an application
for FDA approval in 2011, assuming its platform development and sample
collection goals have been met prior to this date. Achieving development
goals more quickly may allow EXACT to pursue CLIA launch of a Version 3
test by early 2011, an opportunity the company plans to evaluate as part
of its strategic plan.
The Company also intends to continue its evaluation of related
technologies, resources, and relationships that can accelerate its
overall progress and allow it to access adjacent opportunities such as
aero-digestive cancer screening.
EXACT remains encouraged by the recent momentum in state-based
mandates for coverage of sDNA testing following its inclusion in the
March 2008 American Cancer Society guidelines recommendation. The
Company intends to continue its work with US health insurers and other
third party payors around the country to expand coverage.
Based on current expectations, EXACT believes that its cash resources
should last into 2011, which would allow the Company to be opportunistic
in seeking the further financing that will be needed to develop and
launch a Version 3 test. The Company is continuing to develop a detailed
implementation plan for its Version 3 technology.
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