NeoGenomics, Abbot partner to develop melanoma test

Ft. Myers, Fla. - NeoGenomics, a provider of cancer genetics testing services, announced that it has entered into a Strategic Supply Agreement with Abbott. The agreement provides for Abbott to supply materials for NeoGenomics to develop its own FISH (fluorescence in situ hybridization)-based test for the diagnosis of melanoma.

In a separate transaction, Abbott has also acquired 9.6 percent of NeoGenomicscommon stock for $4.8 million.

Under terms of the agreement, NeoGenomics will evaluate and select from Abbott’s proprietary single FISH probes to develop and commercialize a test for melanoma diagnosis in the United States. Once the probes have been identified by NeoGenomics, Abbott will supply them (some on an exclusive basis) over the course of a 10-year term. The agreement may be expanded, under certain circumstances, to include up to two additional tests for other cancers, according to company reports.

According to the American Cancer Society, approximately 68,000 new cases of invasive melanoma will be diagnosed this year in the United States. Melanoma typically starts as an abnormal mole on the skin and is easily cured ifcaught and removed early. Once it spreads to other parts of the body, however, it is particularly deadly.

NeoGenomics intends to develop the FISH test to distinguish benign versusmalignant melanoma. The goal for the new test is to provide the ability to more accurately diagnose malignant melanoma and provide more accurate prognostic information, thus assisting dermatologists in better managing patient care.

With more than one million skin cancers diagnosed annually, distinguishingmelanoma from other less severe forms of skin cancer is vital. Inparticular, it has been reported that current diagnostic tools and techniques for detecting cutaneous melanoma can be especially difficult in cases arising in association with a nevus (mole), and that 30-50 percent of cutaneous melanomas occur with an associated nevus.

A FISH test for melanoma has the potential to improve existing diagnostic techniques in cases that are ambiguous, borderline or difficult to diagnose, according to company reports. NeoGenomics estimates that this new melanomatest represents a $50-$100 million annual revenue opportunity in the next four to six years.

"Influencing the existing cancer testing market in the U.S. is a challenge, but all of us here at NeoGenomics believe the timing, scientific literatureand market conditions are right for this new melanoma FISH test," said Robert Gasparini, President and Chief Scientific Officer of NeoGenomics. "We believe this new melanoma FISH test will complement our existing portfolio of FISH products. We also believe dermatopathologists will have a high level of interest in offering this test to their customers."

While this new test is still in the development phase, NeoGenomics currently anticipates bringing a FISH test to market in early 2010 after completing a rigorous validation process. In the event that Abbott develops and obtainsFDA approval for its own FISH-based melanoma test, the Strategic Supply Agreement provides a means by which NeoGenomics may offer the FDA-approved test to its customers instead of the laboratory-developed test being offered by NeoGenomics.

In addition to the Strategic Supply Agreement, NeoGenomics and Abbott executed a Common Stock Purchase Agreement and a Registration RightsAgreement pursuant to which Abbott has invested $4.8 million to acquire 3,500,000 common shares of NeoGenomics at a price of $1.362 per common share. These Agreements prohibit Abbott from selling or otherwise transferring its shares at any time during the 180-day period immediately following the closing of the transaction.