Mayo Strikes Multi-Product Licensing Agreement With Exact Sciences

Mayo Strikes Multi-Product Licensing Agreement With Exact Sciences

Exact Sciences is already using Mayo research to roll out an at-home colorectal cancer screening kit.

The Mayo Clinic and a company that produces a home colorectal cancer-screening kit based on its patents have deepened their financial and research ties, according to the newly filed SEC documents.

Exact Sciences Corp. (NASDAQ: EXAS) of Madison, Wis., maker of the Cologuard multi-target stool DNA test, revealed in a quarterly report filed last week that it has amended its licensing agreement with Mayo to cover not only Cologuard but also future products based on the clinic’s know-how.

Those include a new test designed specifically to detect lung cancer as well as a “pan-cancer” screening product. Together they represent a significant expansion of Exact’s current relationship with the Rochester nonprofit.

“In January 2016, we … amended our license agreement to broaden our collaboration efforts to develop screening, surveillance and diagnostic tests and tools to cover all types of cancers, pre-cancers, diseases and conditions, not just those affecting gastrointestinal organs,” the company stated in a 10-Q report released May 3. 

The amended licensing agreement refers to a “lung cancer collaboration,” a “pan-cancer” product, and other unnamed future products, in addition to the existing Cologuard arrangement.

Meanwhile, the adjustments have also ratcheted up the royalties paid to Mayo for Cologuard just as Exact is launching a nationwide TV advertising campaign to tout it as a reliable, non-invasive alternative to colonoscopies for detecting colorectal cancer.

The filing doesn’t reveal the former or current royalty percentages Mayo is getting from Cologuard sales, except to say they are in the “low single-digits.” But it does indicate the rate has “increased” as a result of the re-jiggered agreement, adding that if improvements are made to Cologuard in the future, “the royalty rate may further increase.”

When it gained FDA approval in 2014, Cologuard’s makers heralded the decision as a game-changer in colorectal cancer: The availability of an accurate, non-invasive alternative to colonoscopies for screening purposes. Its inventor, Mayo gastroenterologist Dr. David Ahlquist, called it a “revolutionary new tool” to detect and prevent colorectal cancer, which is one of most common cancers partly due to patients’ reluctance to undergo colonoscopies.

The test allows users to mail fecal samples in for analysis. Questions about its accuracy, the company claims, have been allayed with tests showing it to be more accurate and producing fewer false positives than existing fecal immunochemical tests, which are also home-based and involve detecting blood in stool samples. 

Other potential financial rewards to Mayo were also spelled out in the 10-Q filing.

For instance, Exact Sciences is required to issue Mayo common stock worth $200,000 upon the commercial launch of each of the future cancer screening products, as well as to pay it $200,000 if a product’s sales reach $5 million; $750,000 if they reach $20 million, and $2 million at the $50 million milestone.

Mayo is already receiving $1 million per year over five years as part of an earlier licensing deal amendment struck last year.

Exact Sciences reported it lost $47.5 million on revenues of $14.8 million in the most recent quarter ending March 31. Part of that loss was from $10.1 million spent on research and development, including $4.2 million in direct R&D costs, presumably to fund continuing studies at Mayo Clinic. Some $25 million was spent on sales and marketing to back the looming nationwide advertising rollout of Cologuard.

The company reported $52 million cash on hand at the end of the quarter.