HDC, NeoGenomics sign worldwide licensing agreement to develop LDT

Jan 9 2012

Health Discovery Corporation (OTCBB: HDVY), a molecular diagnostics leader in the use of patent protected advanced mathematical techniques for personalized medicine, has entered into an exclusive worldwide licensing agreement with NeoGenomics, Inc. (OTCBB: NGNM) for laboratory developed tests (LDT's) in the Field of hematopoietic and solid tumor cancers excluding breast cancer, which was previously licensed to Quest Diagnostics (NYSE:DGX) and Smart Personalized Medicine and excluding cancer of the retina which was previously committed to Retinalyze, LLC. HDC retains all rights to in-vitro diagnostic (IVD) test kit development in cancer. In addition, HDC's pre-existing licenses remain in effect.

“This License Agreement with NeoGenomics with their high complexity CLIA certified clinical laboratory represents a tremendous opportunity to complete the LDT development and commercialization of HDC's cancer related products including tests for prostate cancer, pancreatic cancer, and colon cancer, as well as, the cytogenetics and flow cytometry interpretation software”

Under the terms of the Agreement, NeoGenomics paid $1 million in cash and issued 1,360,000 (one million three hundred and sixty thousand) shares of NeoGenomics common stock to HDC in upfront licensing fees. In addition, NeoGenomics will make milestone payments, in cash or stock, based on sublicensing revenue and revenue generated from products and services developed as a result of the Agreement. Milestone payments will be in increments of $500,000 for every $2 million in revenue recognized by NeoGenomics up to a total of $5 million in total milestone payments. After $20 million in cumulative revenue has been recognized, NeoGenomics will pay a royalty of 6.5% on product sales and will share profits from sub-licensing arrangements. In addition, NeoGenomics will pay a royalty of 50% of the revenue recognized from any sub-licensing arrangements for the Cytogenetics Interpretation System and the Flow Cytometry System.

NeoGenomics, Inc. is a high-complexity CLIA-certified clinical laboratory that specializes in cancer genetics diagnostic testing, the fastest growing segment of the laboratory industry. The company's testing services include cytogenetics, fluorescence in-situ hybridization (FISH), flow cytometry, immunohistochemistry, morphology studies, anatomic pathology and molecular genetic testing. Headquartered in Fort Myers, FL, NeoGenomics has labs in Nashville, TN, Irvine, CA, Tampa, FL, and Fort Myers, FL. NeoGenomics services the needs of pathologists, oncologists, urologists and other clinicians, and hospitals throughout the United States.

"This License Agreement with NeoGenomics with their high complexity CLIA certified clinical laboratory represents a tremendous opportunity to complete the LDT development and commercialization of HDC's cancer related products including tests for prostate cancer, pancreatic cancer, and colon cancer, as well as, the cytogenetics and flow cytometry interpretation software," stated Stephen D. Barnhill, M.D., Chairman and Chief Executive Officer of Health Discovery Corporation. Dr. Barnhill added, "As a requirement of this Licensing Agreement, we are very excited that Dr. Maher Albitar will be the Chief Medical Officer and Director of Research and Development at NeoGenomics and will personally direct the final development and commercialization of these cancer products at NeoGenomics."

Dr. Barnhill continued, "Under the terms of the License Agreement, NeoGenomics has agreed to use its best efforts to complete the development of these tests and have a first commercial use of products in the next 12 months, subject to extensions if required."

Herbert A. Fritsche, Ph.D., Chief Science Officer at Health Discovery Corporation and recently retired Professor of Laboratory Medicine and Chief of the Clinical Chemistry Section at The University of Texas, M.D. Anderson Cancer Center, stated, "Now that we have our cancer products poised for final development and commercialization in the NeoGenomics CLIA certified clinical laboratory under the direction of Dr. Maher Albitar, we can now focus our attention to finalization and commercialization of our Retinalyze product for macular degeneration, as well as, move into product development for non-cancer diseases such as Alzheimer's, dementias, cardiac diseases and others. We will also be moving forward on using our SVM pattern recognition tools for radiologic interpretation techniques."