A Medical Device Daily

Colon cancer test developer Exact Sciences (Marlborough, Massachusetts) reported that the company has formed a strategic relationship with Genzyme (Cambridge, Massachusetts) in which it granted that company certain intellectual property assets related to the fields of prenatal and reproductive health as well as 3 million shares of Exact common stock for a total value of about $24.5 million.

News of the agreement came just a day after rival suitor Sequenom (San Diego) commenced a tender offer to acquire all the shares of Exact for $1.50 a share in cash, or about $41 million total (Medical Device Daily, Jan. 28, 2009). Earlier this month, Exact's board rejected the Sequenom offer, saying that it was actively pursuing an alternative that it believed provided greater value to Exact and its shareholders (MDD, Jan. 14, 2009). Sequenom reported in a press release that it had dropped its bid in response to the Genzyme agreement.

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 Luber, Exact's president/CEO, 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. 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 Hart, senior VP/GM, 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."

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 million shares of EXACT common stock at $2 per share for an aggregate purchase price of $6 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 Jan. 26.

The companies 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 also have 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.

In conjunction with the completion of this transaction Luber said he intends to resign as Exact's CEO, and will work with the company's board to find a replacement.

As of Sept. 30, 2008, Exact had about $6.1 million in unrestricted cash and equivalents to fund its operations through the end of 2Q09 based on the company's current cost structure and operating assumptions.

Now, the company believes it will have cash resources to last into 2011. That same year, the company plans to submit an application to the FDA for its next-generation non-invasive colorectal screening test, Version 3.

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.

Exact intends to resume sample collection for a clinical trial aimed at securing 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.

Merriman Curhan Ford & Co. delivered an opinion to the board of Exact as to the fairness of the transaction.

In other dealmaking news:

• Research Corporation Technologies (RCT; Tucson, Arizona) said it has granted Toshiba America Medical Systems (Tustin, California) a nonexclusive license to pioneering patents owned by RCT that broadly cover ultrasound tissue harmonic imaging (THI). Toshiba is a leader in diagnostic and medical imaging technology.

RCT manages the THI technology for its partner, the University of Rochester (Rochester, New York). RCT received U.S. patent No. 7,104,956 in September 2006; U.S. patent No. 7,004,905 in February 2006; and U.S. patent No. 6,206,833 in March 2001. Two other U.S. patents are pending.

In addition to Toshiba, Acuson, a Siemens company, Royal Philips Electronics, General Electric Biosound Esaote and Medison are licensees of the THI technology. RCT continues its efforts to license the technology broadly to the ultrasound industry. All licensing agreement terms are confidential.

"This license to Toshiba marks the sixth license under RCT's program and confirms the importance of these patents and the value of THI," said RCT President/CEO Shaun Kirkpatrick.

• MyMedicalRecords (MMR; Los Angles), a company that offers products that facilitate consumer access to medical records and vital documents, and Favrille (San Diego)reported the completion of the previously-disclosed merger that makes MyMedicalRecords a wholly-owned subsidiary of Favrille (MDD, Oct. 27, 2008).

Current MMR President/CEO Robert Lorsch will lead the combined company as chairman, president/CEO. The headquarters of the company will now be in Los Angeles, and the company will also now conduct all business under MyMedicalRecords' brands and identity. The company said it intends to promptly change its legal name to "MMR Information Systems, Inc.," and until a new trading symbol is obtained, will continue to trade on the OTC Bulletin Boards under the symbol "FVRL.OB."

Favrille has issued (or reserved for issuance) 92,599,196 shares of its common stock to former shareholders (and option holders and warrant holders) of MMR. After closing the merger and on a fully diluted basis, the former holders of MMR's equity now own (or have the right to acquire) about 60% of the company's equity.

As contemplated by the merger agreement, Lorsch, Hector Barreto Jr., David Boyden, Douglas Helm, George Rebensdorf, Bernard Stolar and Jack Zwissig will serve as directors of the company, with Naj Allana serving as CFO.

John Longenecker, PhD, has resigned as president/CEO of Favrille and Tamara Seymour has resigned as CFO/secretary. Both have agreed to serve in a transition role during the integration of the companies, after which time each will resign from the company.

In addition, as contemplated by the merger agreement, the transactions contemplated by the company's creditor plan were entered into, including the issuance to creditors of Favrille of warrants to acquire up to 10 million shares of common stock at an exercise price of 12 cents per share.

• Mercury Computer Systems (Chelmsford, Massachusetts), a provider of embedded, high-performance computing systems and software for complex image, sensor, and signal-processing applications, reported that it signed a definitive agreement and closed on the sale of its wholly-owned subsidiaries, Visage Imaging, and its affiliate Visage Imaging GmbH, to Pro Medicus (Melbourne, Australia). The financial terms of the transaction were not disclosed.

"This transaction is a major step toward our goal of divesting our unprofitable and non-core businesses by the end of this fiscal year," said Mark Aslett, president/CEO of Mercury. "Pro Medicus is a public entity in the healthcare industry that is keenly interested in and well-positioned to pursue the full growth potential of the Visage Imaging technologies within the life sciences domain."

Visage Imaging is a provider of scalable, enterprise-wide advanced visualization and image distribution solutions for hospitals and imaging centers.