EXACT SCIENCES CORP (Form: 10-Q, Received: 05/04/2015 16:39:08)

EXACT SCIENCES CORPORATION

IN DEX


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		Number

	Part I - Financial Information

Item 1.	Financial Statements

	Condensed Consolidated Balance Sheets (unaudited) as of March 31, 2015 and December 31, 2014	3

	Condensed Consolidated Statements of Operations (unaudited) for the Three Months Ended March 31, 2015 and 2014	4

	Condensed Consolidated Statements of Comprehensive Loss (unaudited) for the Three Months Ended March 31, 2015 and 2014	5

	Condensed Consolidated Statements of Cash Flows (unaudited) for the Three Months Ended March 31, 2015 and 2014	6

	Notes to Condensed Consolidated Financial Statements (unaudited)	7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	20

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	28

Item 4.	Controls and Procedures	29

	Part II - Other Information

Item 1.	Legal Proceedings	29

Item 1A.	Risk Factors	29

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	29

Item 3.	Defaults Upon Senior Securities	30

Item 4.	Mine Safety Disclosures	30

Item 5	Other Information	30

Item 6.	Exhibits	30

	Signatures	31

	Exhibit Index	32

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Part I — Financial Informatio n

EXACT SCIENCES CORPORATION

Condensed Consolidated Balance Sheets

(Amounts in thousands, except share data - unaudited)



	March 31,		December 31,
	2015		2014
ASSETS
Current Assets:
Cash and cash equivalents	$	40,679	$	58,131
Marketable securities		204,472		224,625
Accounts receivable		1,581		1,376
Inventory, net		5,423		4,017
Prepaid expenses and other current assets		3,892		3,528
Total current assets		256,047		291,677
Property and Equipment, at cost:
Laboratory equipment		10,932		10,381
Assets under construction		2,946		1,552
Computer equipment and computer software		8,818		7,577
Leasehold improvements		5,965		5,937
Furniture and fixtures		933		939
		29,594		26,386
Less—Accumulated depreciation		(8,027)		(6,439)
Net property and equipment		21,567		19,947
Other long-term assets		1,200		1,200
Total assets	$	278,814	$	312,824
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Accounts payable	$	2,001	$	2,647
Accrued liabilities		11,652		13,960
Capital lease obligation, current portion		269		360
Lease incentive obligation, current portion		554		554
Total current liabilities		14,476		17,521
Long-term debt		1,000		1,000
Long-term accrued interest		112		106
Other long-term liabilities		3,541		3,599
Lease incentive obligation, less current portion		1,476		1,614
Total liabilities		20,605		23,840

Commitments and contingencies

Stockholders’ Equity:
Preferred stock, $0.01 par value Authorized— 5,000,000 shares Issued and outstanding— no shares at March 31, 2015 and December 31, 2014		—		—
Common stock, $0.01 par value Authorized— 200,000,000 shares Issued and outstanding — 88,913,304 and 88,626,042 shares at March 31, 2015 and December 31, 2014		889		887
Additional paid-in capital		713,858		709,019
Accumulated other comprehensive income (loss)		70		(115)
Accumulated deficit		(456,608)		(420,807)
Total stockholders’ equity		258,209		288,984
Total liabilities and stockholders’ equity	$	278,814	$	312,824

The accompanying notes are an integral part of these condensed consolidated financial statements.

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EXACT SCIENCES CORPORATION

Condensed Consolidated Statements of Operations

(Amounts in thousands, except per share data - unaudited)


	Three Months Ended March 31,
	2015		2014
Laboratory service revenue	$	4,266	$	—
License fees		—		294
Total revenue		4,266		294

Cost of sales		4,212		—
Gross margin		54		294

Operating expenses:
Research and development		6,571		7,430
General and administrative		12,971		4,586
Sales and marketing		16,524		4,456
Total operating expenses		36,066		16,472
Loss from operations		(36,012)		(16,178)

Other income (expense)
Investment income		222		86
Interest expense		(11)		(15)
Total other income		211		71

Net loss	$	(35,801)	$	(16,107)

Net loss per share—basic and diluted	$	(0.40)	$	(0.23)

Weighted average common shares outstanding—basic and diluted		88,662		70,987

The accompanying notes are an integral part of these condensed consolidated financial statements.

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EXACT SCIENCES CORPORATION

Condensed Consolidated Statements of Comprehensive Loss

(Amounts in thousands - unaudited)


	Three Months Ended March 31,
	2015		2014
Net loss	$	(35,801)	$	(16,107)
Other comprehensive loss, net of tax:
Unrealized gain on available-for-sale investments		195		8
Foreign currency translation loss		(10)		—
Comprehensive loss	$	(35,616)	$	(16,099)

The accompanying notes are an integral part of these condensed consolidated financial statements.

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EXACT SCIENCES CORPORATION

Condensed Consolidated Statements of Cash Flows

(Amounts in thousands, except share data - unaudited)


	Three Months Ended March 31,
	2015		2014
Cash flows from operating activities:
Net loss	$	(35,801)	$	(16,107)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization of fixed assets		1,587		656
Stock-based compensation		3,620		1,995
Amortization of deferred license fees		—		(294)
Amortization of other long-term liabilities		(58)		—
Amortization of premium on short-term investments		377		145
Changes in assets and liabilities:
Prepaid expenses and other current assets		(364)		(643)
Accounts receivable		(205)		—
Inventory, net		(1,406)		—
Accounts payable		(646)		570
Accrued liabilities		(1,473)		1,456
Lease incentive obligation		(138)		(135)
Accrued interest		6		6
Net cash used in operating activities		(34,501)		(12,351)
Cash flows from investing activities:
Purchases of marketable securities		(11,145)		(2,352)
Maturities of marketable securities		31,116		24,419
Purchases of property and equipment		(3,207)		(4,763)
Net cash provided by investing activities		16,764		17,304
Cash flows from financing activities:
Proceeds from exercise of common stock options		386		88
Payments on capital lease obligations		(91)		(86)
Net cash provided by financing activities		295		2

Effects of exchange rate on cash and cash equivalents		(10)		—

Net increase (decrease) in cash and cash equivalents		(17,452)		4,955
Cash and cash equivalents, beginning of period		58,131		12,851
Cash and cash equivalents, end of period	$	40,679	$	17,806
Supplemental disclosure of non-cash investing and financing activities:
Unrealized gain (loss) on available-for-sale investments	$	195	$	8
Issuance of 21,826 and 32,666 shares of common stock to fund the Company’s 401(k) matching contribution for 2014 and 2013, respectively	$	835	$	456

The accompanying notes are an integral part of these condensed consolidated financial statements.

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EXACT SCIENCES CORPORATION

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(1) ORGANIZATION AND BASIS OF PRESENTATION

Organization

Exact Sciences Corporati on (together with its subsidiaries , “Exact”, “we”, “us” or the “Company”) was incorporated in February 1995. Exact is a molecular diagnostics company currently focused on the early detection and prevention of colorectal cancer. The Company's non-invasive stool-based DNA (sDNA) screening technology includes proprietary and patented methods that isolate and analyze human DNA present in stool to screen for the presence of colorectal pre-cancer and cancer.

Basis of Presentation

The accompanying condensed consolidated financial statements, which include the accounts of Exact Sciences Corporation and thos e of its wholly-owned subsidiaries , Exact Sciences Laboratories, LLC, Exact Sciences Finance Corporation, Exact Sciences Europe LTD, and variable interest entities are unaudited and have been prepared on a basis substantially consistent with the Company’s audited financial statements and notes as of and for the year ended December 31, 2014 included in the Company’s Annual Report on Form 10-K (the “201 4 Form 10-K”). These condensed financial statements are prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and follow the requirements of the Securities and Exchange Commission (“SEC”) for interim reporting. In the opinion of management, all adjustments (consisting only of adjustments of a normal and recurring nature) considered necessary for a fair presentation of the results of operations have been included. The results of the Company’s operations for any interim period are not necessarily indicative of the results of the Company’s operations for any other interim period or for a full fiscal year. The statements should be read in conjunction with the audited financial statements and related notes included in the 201 4 Form 10-K. Management has evaluated subsequent events for disclosure or recognition in the accompanying financial statements up to the filing of this report.

(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of the Company’s wholly-owned subsidiaries, Exact Sciences Laboratories, LLC, Exact Sciences Finance Corporation, Exact Sciences Europe LTD, and variable interest entities. All significant intercompany transactions and balances have been eliminated in consolidation.

References to “Exact”, “we”, “us”, “our”, or the “Company” refer to Exact Sciences Corporation and its wholly owned subsidiaries.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Cash and Cash Equivalents

The Company considers cash on hand, demand deposits in bank, money market funds, and all highly liquid investments with an original maturity of 90 days or less to be cash and cash equivalents. The Company had no restricted cash at March 31, 2015 and December 31, 2014 .

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Marketable Securities

Management determines the appropriate classification of debt securities at the time of purchase and re-evaluates such designation as of each balance sheet date. Debt securities carried at amortized cost are classified as held-to-maturity when the Company has the positive intent and ability to hold the securities to maturity. Marketable equity securities and debt securities not classified as held-to-maturity are classified as available-for-sale. Available-for-sale securities are carried at fair value, with the unrealized gains and losses, net of tax, reported in other comprehensive loss. The amortized cost of debt securities in this category is adjusted for amortization of premiums and accretion of discounts to maturity computed under the straight-line method, which approximates the effective interest method. Such amortization is included in investment income. Realized gains and losses and declines in value judged to be other-than-temporary on available-for-sale securities are included in investment income. The cost of securities sold is based on the specific identification method. Interest and dividends on securities classified as available-for-sale are included in investment income.

At March 31, 2015 and December 31, 2014 , the Company’s investments were comprised of fixed income investments and all were deemed available-for-sale. The objectives of the Company’s investment strategy are to provide liquidity and safety of principal while striving to achieve the highest rate of return consistent with these two objectives. The Company’s investment policy limits investments to certain types of instruments issued by institutions with investment grade credit ratings and places restrictions on maturities and concentration by type and issuer. Investments in which the Company has the ability and intent, if necessary, to liquidate in order to support its current operations (including those with a contractual term greater than one year from the date of purchase) are classified as current. All of the Company’s investments are considered current. There were no realized losses for the three months ended March 31, 2015 and 2014 . Realized gains were $3.0 thousand and $6.3 thousand for the three months ended March 31, 2015 and 2014, respectively. Unrealized gains or losses on investments are recorded in other comprehensive loss.

We periodically review our investments in unrealized loss positions for other-than-temporary impairments. This evaluation includes, but is not limited to, significant quantitative and qualitative assessments and estimates regarding credit ratings, collateralized support, the length of time and significance of a security’s loss position, our intent not to sell the security, and whether it is more likely than not that we will have to sell the security before recovery of its cost basis. For the three months ended March 31, 2015, no investments were identified with other-than-temporary declines in value.

Available-for-sale securities at March 31, 2015 consisted of the following:


	March 31, 2015
			Gains in Accumulated		Losses in Accumulated
			Other Comprehensive		Other Comprehensive		Estimated Fair
(In thousands)	Amortized Cost		Income		Income		Value
Corporate bonds	$	133,395	$	59	$	(16)	$	133,438
U.S. government agency securities		14,151		7		—		14,158
Asset backed securities		52,850		37		(8)		52,879
Commercial paper		3,996		1		—		3,997
Total available-for-sale securities	$	204,392	$	104	$	(24)	$	204,472

Available-for-sale securities at December 31, 2014 consisted of the following:


	December 31, 2014
			Gains in Accumulated		Losses in Accumulated
			Other Comprehensive		Other Comprehensive		Estimated Fair
(In thousands)	Amortized Cost		Income		Income		Value
Corporate bonds	$	141,239	$	21	$	(136)	$	141,124
U.S. government agency securities		18,687		8		(7)		18,688
Certificates of deposit		60,821		17		(18)		60,820
Commercial paper		3,993		—		—		3,993
Total available-for-sale securities	$	224,740	$	46	$	(161)	$	224,625

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Changes in Accumulated Other Comprehensive Income (Loss)

The amounts recognized in accumulated other comprehensive income (loss) (AOCI) for the three months ended March 31, 2015 were as follows (in thousands):


					Accumulated
	Cumulative		Unrealized		Other
	Translation		Gain (Loss)		Comprehensive
	Adjustment		on Securities		Income (Loss)
Balance at December 31, 2014	$	—	$	(115)	$	(115)
Other comprehensive (loss) income before reclassifications		(10)		192		182
Amounts reclassified from accumulated other comprehensive loss		—		3		3
Net current period change in accumulated other comprehensive income (loss)		(10)		195		185
Balance at March 31, 2015	$	(10)	$	80	$	70

The amounts recognized in AOCI for the three months ended March 31, 2014 were as follows (in thousands):


					Accumulated
	Cumulative		Unrealized		Other
	Translation		Gain (Loss)		Comprehensive
	Adjustment		on Securities		Income (Loss)
Balance at December 31, 2013	$	—	$	125	$	125
Other comprehensive (loss) income before reclassifications		—		14		14
Amounts reclassified from accumulated other comprehensive loss		—		(6)		(6)
Net current period change in accumulated other comprehensive income (loss)		—		8		8
Balance at March 31, 2014	$	—	$	133	$	133

Amounts reclassified from accumulated other comprehensive income (loss) for the three months ended March 31, 2015 were as follows (in thousands):


	Affected Line Item in the	Three Months Ended March 31,
Details about AOCI Components	Statement of Operations	2015		2014
Change in value of available-for-sale investments
Sales and maturities of available-for-sale investments	Investment income	$	3	$	(6)
Total reclassifications		$	3	$	(6)

Property and Equipment

Property and equipment are stated at cost and depreciated using the straight-line method over the assets’ estimated useful lives. Maintenance and repairs are expensed when incurred; additions and improvements are capitalized. The estimated useful lives of fixed assets are as follows:


		Estimated
Asset Classification		Useful Life
Laboratory equipment		3 - 5 years
Computer equipment and computer software		3 years
Leasehold improvements		Lesser of the remaining lease term or useful life
Furniture and fixtures		3 years

At March 31, 2015, the Company had $2.9 million of assets under construction which consisted of $1.6 million of capitalized costs related to software projects, $0.9 million of costs related to machinery and equipment, and $0.4 million of costs related to leasehold improvement projects. Depreciation will begin on these assets once they are placed into

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service. We expect to incur minimal costs to complete the leasehold improvement , machinery and equipment, and the software projects, and these projects are expected to be completed in 2015.

Software Capitalization Policy

Software development costs related to internal use software are incurred in three stages of development: the preliminary project stage, the application development stage, and the post-implementation stage. Costs incurred during the preliminary project and post-implementation stages are expensed as incurred. Costs in the application development stage that meet the criteria for capitalization are capitalized and amortized using the straight-line basis over the estimated economic useful life of the software.

Net Loss Per Share

Basic net loss per common share was determined by dividing net loss applicable to common stockholders by the weighted average common shares outstanding during the period. Basic and diluted net loss per share are the same because all outstanding common stock equivalents have been excluded, as they are anti-dilutive due to the Company’s losses.

The following potentially issuable common shares were not included in the computation of diluted net loss per share because they would have an anti-dilutive effect due to net losses for each period:


	March 31,
	2015	2014
Shares issuable upon exercise of stock options	5,222	6,261
Shares issuable upon exercise of outstanding warrants(1)	—	155
Shares issuable upon the release of restricted stock awards	2,305	1,519
Shares issuable upon the vesting of restricted stock awards related to licensing agreement	24	49
	7,551	7,984

(1)

At March 31, 2014, represents warrants to purchase 80,000 shares of common stock issued under a license agreement and warrants to purchase 75,000 shares of common stock issued under a consulting agreement.

Revenue Recognition

Laboratory Service Revenue. The Company’s revenues will be generated primarily by the Cologuard test. Revenues are recognized when persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, the price is fixed or determinable, and collectability is reasonably assured. The Company assesses whether the fee is fixed or determinable and if the collectability is reasonably assured based on the nature of the fee charged for the laboratory services delivered and whether there are existing contractual arrangements with customers, third-party commercial payors (insurance carriers and health plans) or coverage of the test by Centers for Medicare & Medicaid Services (CMS). In addition, when evaluating collectability, the Company considers factors such as collection experience for the healthcare industry, the financial standing of customers or third-party commercial payors, and whether it has sufficient collection history to reliably estimate a payor's individual payment patterns.

A significant portion of laboratory service revenues earned by the Company will be initially recognized on a cash basis because the above criteria will not have been met at the time the test results are delivered. The Company generally bills third-party payors upon generation and delivery of a test result to the ordering physician following completion of a test. As such, the Company takes assignment of benefits and risk of collection with the third-party payor. Patients may have out-of-pocket costs for amounts not covered by their insurance carrier and the Company bills the patient directly for these amounts in the form of co-pays and deductibles in accordance with their insurance carrier and health plans. Some third-party payors may not cover the Cologuard test as ordered by the physician under their reimbursement policies. Consequently, the Company pursues reimbursement on a case-by-case basis directly from the patient.

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For laboratory services performed, where the collectability is not reasonably assured, the Company will continue to recognize revenues upon cash collection until it can reliably estimate the amount that would be ultimately collected for the Cologuard test. In order to begin to record revenue on an accrual basis in these scenarios, the Company expects to use at least several months of payment history, review the number of tests paid against the number of tests billed, and consider the payor's outstanding balance for unpaid tests to determine whether payments are being made for a consistently high percentage of tests billed and at appropriate amounts given the contracte d or historical payment amount . With regard to Cologuard tests covered by Medicare, the national coverage determination for Cologuard was released by CMS on October 9, 2014.

The Company recognized approximately $4.3 million in laboratory service revenue for the three months ended March 31, 2015.

License fees. License fees for the licensing of product rights are recorded as deferred revenue upon receipt of cash and recognized as revenue on a straight-line basis over the license period. As more fully described in the 2014 Form 10-K, in connection with the Company’s January 2009 strategic transaction with Genzyme Corporation, the Company deferred the initial $16.65 million in cash received at closing and amortized that up-front payment on a straight-line basis into revenue over the initial five-year collaboration period which ended in January 2014. In addition, in 2010 the Company received holdback amounts of $1.85 million, which were deferred at the time of receipt and were amortized on a straight-line basis into revenue over the then remaining term of the collaboration period.

In addition, the Company deferred $1.53 million premium related to common stock purchased by Genzyme and amortized that amount on a straight-line basis into revenue over the initial five -year collaboration period which ended in January 2014.

The Company did not recognize revenue in connection with the amortization of the up-front payments from Genzyme during the three months ended March 31, 2015. The Company recognized approximately $0.3 million in license fee revenue in connection with the amortization of the up-front payments from Genzyme during the three months ended March 31, 2014.

Inventory

Inventory is stated at the lower of cost or market value (net realizable value). The Company determines the cost of inventory using the first-in, first out method (FIFO). The Company estimates the recoverability of inventory by reference to internal estimates of future demands and product life cycles, including expiration. The Company periodically analyzes its inventory levels to identify inventory that may expire prior to expected sale or has a cost basis in excess of its estimated realizable value, and records a charge to cost of sales for such inventory as appropriate. In addition, the Company's products are subject to strict quality control and monitoring which the Company performs throughout the manufacturing process. If certain batches or units of product no longer meet quality specifications or become obsolete due to expiration, the Company records a charge to cost of sales to write down such unmarketable inventory to its estimated realizable value.

Direct and indirect manufacturing costs incurred during process validation and for other research and development activities, which are not permitted to be sold, have been expensed to research and development. Raw material inventory that was purchased in prior periods, and expensed to research and development, may still be on hand and used toward the production of commercial Cologuard, provided it has an appropriate remaining shelf life. This inventory is expected to provide a gross margin benefit to the Company in future periods of $0.6 million if the entirety of those balances were allocated to inventory produced for resale and not allocated to research and development activities.

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Inventory consist of the following (amount in thousands):


	March 31,
	2015		2014
Raw Materials	$	2,305	$	—
Semi-finished and finished goods		3,118		—
Total inventory	$	5,423	$	—

Foreign Currency Translation

For the Company’s international subsidiary, the local currency is the functional currency. Assets and liabilities of this subsidiary are translated into United States dollars at the period-end exchange rate or historical rates as appropriate. Consolidated statements of earnings amounts are translated at average exchange rates for the period. The cumulative translation adjustments resulting from changes in exchange rates are included in the consolidated balance sheet as a component of accumulated other comprehensive income in total Ex act Sciences Corporation’s shareholders’ equity. Transaction gains and losses are included in the consolidated statement of operations in 2015.

Reclassifications

Certain prior period amounts have been reclassified to conform to the current period presentation in the consolidated financial statements and accompanying notes to the consolidated financial statements.

(3) MAYO LICENSE AGREEMENT

Overview

As more fully described in the 2014 Form 10-K, in June 2009 the Company entered into a license agreement (the “MAYO Agreement”) with MAYO Foundation for Medical Education and Research (“MAYO”). Pursuant to the MAYO Agreement, the Company granted MAYO two common stock purchase warrants with an exercise price of $1.90 per share covering 1,000,000 and 250,000 shares of common stock, respectively. The MAYO Agreement required the Company to make payments to MAYO for up-front fees, fees upon the achievement of certain milestones, and certain other payments. In addition to the license to intellectual property owned by MAYO, MAYO agreed to make available personnel to provide the Company product development and research and development assistance. The Company agreed to make royalty payments to MAYO on potential future net sales of any products developed from the licensed technology. The Company sought rights to the MAYO intellectual property for the specific purpose of developing a non-invasive, stool-based DNA screening test for colorectal cancer. At the time the MAYO A greement was executed, the Company’s sole focus was the development of such a test. Accordingly, the Company recognized the initial payments and expenses related to the warrants at the time of the transaction and the amounts were expensed to research and development as there were no anticipated alternative future uses associated with the intellectual property.

Warrants

The warrants granted to MAYO were valued based on a Black-Scholes pricing model at the date of the grant. The warrants were granted with an exercise price of $1.90 per share of common stock. The grant to purchase 1,000,000 shares was immediately exercisable and the grant to purchase 250,000 shares vests and becomes exercisable over a four year period.

MAYO exercised the warrant to purchase 1,000,000 shares through several partial exercises. As of September 2011, the warrant covering 1,000,000 shares was fully exercised.

MAYO exercised the warrant to purchase 250,000 shares through partial exercises, the last of which occurred in June 2014. In June 2014, MAYO exercised the remaining shares of this warrant by utilizing the cashless exercise provision contained in the warrant. As a result of this exercise for a gross amount of 80,000 shares, in lieu of paying a

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cash exercise price, MAYO forfeited its right with respect to 10,587 shares leaving it with a net amount of 69,413 shares. Following this exercise, all of MAYO’s warrants to purchase the Company’s common stock were fully exercised.

Royalty Payments

Under the MAYO Agreement, the Company agreed to make royalty payments to MAYO based on a percentage of net sales of products developed from the licensed technology starting in the third year of the agreement. In 2012, minimum royalty payments were $10,000. For each year from 2015 through 2033 (the year the last patent expires), the minimum royalty payments are $25,000 per year.

Other Payments

Other payments under the MAYO Agreement include an upfront payment of $80,000, a milestone payment of $250,000 on the commencement of patient enrollment in a human cancer screening clinical trial, and a $500,000 payment upon FDA approval of the Company’s Cologuard test. The upfront payment of $80,000 was made in the third quarter of 2009 and expensed to research and development in the second quarter of 2009. The Company began enrollment in human cancer screening clinical trial in June 2011 and the milestone payment of $250,000 was made and expensed to research and development in June 2011. The Company received FDA approval for its Cologuard test in August 2014, and the milestone payment of $500,000 was made and expensed to research and development in August 2014.

In addition, the Company pays MAYO for research and development efforts. During the three months ended March 31, 2015, the Company made payments of $1.2 million. At March 31, 2015 the Company recorded an estimated liability in the amount of $0.5 million for MAYO’s research and development efforts. During the three months ended March 31, 2014, the Company made research and development payments to MAYO of $0.3 million. At March 31, 2014 the Company recorded an estimated liability in the amount of $0. 7 million for research and development efforts.

May 2012 Amendment

In May 2012 the Company expanded the relationship with MAYO through an amendment to the MAYO Agreement. As part of the amendment, MAYO expanded the Company’s license to include all gastrointestinal cancers and diseases, and new cancer screening applications of stool- and blood-based testing.

As part of the amendment, the Company agreed to make restricted stock grants to MAYO upon the achievement of certain milestones with respect to commercial launch of the Company’s second and third licensed products. Additionally, the Company agreed to make milestone payments once certain sales levels are reached on licensed products. It is uncertain as to when or if these milestones will be met; therefore, the milestone payments have not been recorded as a liability. The Company evaluates the status of the milestone payments at each reporting date to determine if a liability should be recorded for the milestone payment.

February 2015 Amendment

In February 2015 the Company amended and restated the MAYO Agreement to extend the Company’s arrangement with MAYO for an additional five years and to broaden the Company’s and MAYO’s collaboration efforts to develop screening, surveillance and diagnostic tests and tools for use in connection with gastrointestinal cancers, precancers, diseases and conditions. Under the amended and restated agreement (the “Restated MAYO Agreement”), MAYO agreed to continue to make personnel available during the additional five year period to provide the Company product development and research and development assistance. The Restated MAYO Agreement defines “gastrointestinal” to include certain airway organs (including the pharynx, larynx, trachea, bronchi and lungs) and certain head and neck organs (including nasal passages, mouth and throat). The Restated MAYO Agreement also reflects an expanded list of patent rights that MAYO licenses to the Company.

Pursuant to the Restated MAYO Agreement, the Company agreed to pay MAYO an additional $5.0 million payable in five annual $1.0 million installments, the first of which was due February 10, 2015. The first $1.0 million payment was made to MAYO in February 2015 and was capitalized to pre-paid assets and will be amortized to research and

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development expenses straight-line over the initial 12 month research period. Additionally, the Company will make milestone payments once certain sales levels are reached on licensed products. It is uncertain as to when or if these milestones will be met; therefore, the milestone payments have not been recorded as a liability. The Company evaluates the status of the milestone payments at each reporting date to determine if a liability should be recorded for the milestone payment.

(4) STOCK-BASED COMPENSATION

Stock-Based Compensation Plans

The Company ’s stock-based compensation plans include the 2010 Omnibus Long-Term Incentive Plan, the 2010 Employee Stock Purchase Plan, the 2015 Inducement Grant Plan and the 2000 Stock Option and Incentive Plan (collectively, the “Stock Plans”).

Stock-Based Compensation Expense

The Company recorded $3.6 million in stock-based compensation expense during the three months ended March 31, 2015 in connection with the amortization of restricted stock and restricted stock unit awards, stock purchase rights granted under the Company’s employee stock purchase plan and stock options granted to employees, non-employee consultants and non-employee directors, and warrants granted to non-employee consultants. The Company recorded $2.0 million in stock-based compensation expense during the three months ended March 31, 2014 in connection with the amortization of restricted stock and restricted stock unit awards, stock purchase rights granted under the Company’s employee stock purchase plan and stock options granted to employees and non-employee directors.

Warrant Expense

Warrants to purchase 75,000 shares of common stock were issued in connection with a consulting agreement in 2009 to provide specific assistance to the Company in attaining FDA approval of Cologuard. The 75,000 warrants vested in the third quarter of 2014 upon successful FDA approval for Cologuard. The Company recorded $1.3 million, the fair value of the warrant on the vesting date as stock-based compensation expense during the third quarter of 2014 in connection with the vesting of this warrant.

Determining Fair Value

Valuation and Recognition – The fair value of each option award is estimated on the date of grant using the Black-Scholes option pricing model based on the assumptions in the table below. The estimated fair value of employee stock options is recognized to expense using the straight-line method over the vesting period.

Expected Term – Expected term is based on the Company’s historical life data and is determined using the average of the vesting period and the contractual life of the stock options granted.

Expected Volatility - Expected volatility is based on the Company’s historical stock volatility data over the expected term of the awards.

Risk-Free Interest Rate - The Company bases the risk-free interest rate used in the Black-Scholes valuation model on the implied yield currently available on U.S. Treasury zero-coupon issues with an equivalent expected term.

Forfeitures - The Company records stock-based compensation expense only for those awards that are expected to vest. A forfeiture rate is estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from initial estimates. The Company’s forfeiture rate used in the three months ended March 31, 2015 and 2014 was 4.99% .

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The fair value of each restricted stock and restricted stock unit award is determined on the date of grant using the closing stock price on that day.


	Three Months Ended
	March 31,
	2015	2014
Option Plan Shares
Risk-free interest rates	1.5% - 1.92%	1.96%
Expected term (in years)	6.25 - 6.6	6.25
Expected volatility	67.1% - 73.2%	80.8%
Dividend yield	0 %	0%
Weighted average fair value per share of options granted during the period	$ 15.81	$ 9.86
ESPP Shares
Risk-free interest rates	(1)	(1)
Expected term (in years)	(1)	(1)
Expected volatility	(1)	(1)
Dividend yield	(1)	(1)
Weighted average fair value per share of stock purchase rights granted during the period	(1)	(1)

(1)

The Company did not issue stock purchase rights under its 2010 Employee Stock Purchase Plan during the respective period.

Stock Option and Restricted Stock Activity

A summary of stock option activity under the Stock Plans during the three months ended March 31, 2015 is as follows:


				Weighted
		Weighted		Average
		Average		Remaining	Aggregate
		Exercise		Contractual	Intrinsic
Options	Shares	Price		Term (Years)	Value(1)
(Aggregate intrinsic value in thousands)
Outstanding, December 31, 2014	4,934,317	$	3.63	5.2
Granted	340,978		23.51
Exercised	(28,375)		10.72
Forfeited	(25,000)		14.44
Outstanding, March 31, 2015	5,221,920	$	4.83	5.2	$	90,249
Exercisable, March 31, 2015	4,419,801	$	2.66	4.6	$	85,576
Vested and expected to vest, March 31, 2015	5,181,894	$	4.74	5.2	$	89,532

(1)

The aggregate intrinsic value of options outstanding, exercisable and vested and expected to vest is calculated as the difference between the exercise price of the underlying options and the market price of the Company’s common stock for options that had exercise prices that were lower than the $22.02 market price of the Company’s common stock at March 31, 2015. The total intrinsic value of options exercised during the three months ended March 31, 2015 and 2014 was $ 0.4 million and $0.3 million, respectively.

As of March 31, 2015, there was $42.3 million of total unrecognized compensation cost related to non-vested share-based compensation arrangements granted under all Stock Plans. Total unrecognized compensation cost will be adjusted for future changes in forfeitures. The Company expects to recognize that cost over a weighted average period of 3.3 years.

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A summary of restricted stock activity under the Stock Plans during the three months ended March 31, 2015 is as follows:


		Weighted
	Restricted	Average Grant
	Shares	Date Fair Value
Outstanding, January 1, 2015	1,541,114	$	13.86
Granted	1,045,486		23.67
Released	(237,061)		11.98
Forfeited	(44,556)		14.01
Outstanding, March 31, 2015	2,304,983	$	20.28

(5) FAIR VALUE MEASUREMENTS

The FASB has issued authoritative guidance which requires that fair value should be based on the assumptions market participants would use when pricing an asset or liability and establishes a fair value hierarchy that prioritizes the information used to develop those assumptions. Under the standard, fair value measurements are separately disclosed by level within the fair value hierarchy. The fair value hierarchy establishes and prioritizes the inputs used to measure fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs. Observable inputs are inputs that reflect the assumptions that market participants would use in pricing the asset or liability developed based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances.

The three levels of the fair value hierarchy established are as follows:


Level 1		Quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access as of the reporting date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis.

Level 2		Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.

Level 3		Unobservable inputs that reflect the Company’s assumptions about the assumptions that market participants would use in pricing the asset or liability. Unobservable inputs shall be used to measure fair value to the extent that observable inputs are not available.

Fixed-income securities and mutual funds are valued using a third party pricing agency. The valuation is based on observable inputs including pricing for similar assets and other observable market factors. There has been no material change from period to period. The estimated fair value of the Company’s long-term debt based on a market approach was approximately $1.0 million as of March 31, 2015 and December 31, 2014 and represent Level 2 measurements. When determining the estimated fair value of the Company’s long-term debt, the Company used market-based risk measurements, such as credit risk.

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The following table presents the Company’s fair value measurements as of March 31, 2015 along with the level within the fair value hierarchy in which the fair value measurements in their entirety fall. Amounts in the table are in thousands.


			Fair Value Measurement at March 31, 2015 Using:
			Quoted Prices		Significant
			in Active		Other		Significant
			Markets for		Observable		Unobservable
	Fair Value at		Identical Assets		Inputs		Inputs
Description	March 31, 2015		(Level 1)		(Level 2)		(Level 3)
Cash and cash equivalents
Cash and money market	$	40,679	$	40,679	$	—	$	—
Available-for-Sale
Marketable securities
Corporate bonds		133,438		—		133,438		—
U.S. government agency securities		14,158		—		14,158		—
Asset backed securities		52,879		—		52,879		—
Commercial paper		3,997		—		3,997		—
Total	$	245,151	$	40,679	$	204,472	$	—

The following table presents the Company’s fair value measurements as of December 31, 2014 along with the level within the fair value hierarchy in which the fair value measurements in their entirety fall. Amounts in the table are in thousands.


			Fair Value Measurement at December 31, 2014 Using:
			Quoted Prices		Significant
			in Active		Other		Significant
			Markets for		Observable		Unobservable
	Fair Value at		Identical Assets		Inputs		Inputs
Description	December 31, 2014		(Level 1)		(Level 2)		(Level 3)
Cash and cash equivalents
Cash and money market	$	53,569	$	53,569	$	—	$	—
Corporate bonds		4,562		—		4,562		—
Available-for-Sale
Marketable securities
Corporate bonds		141,124		—		141,124		—
U.S. government agency securities		18,688		—		18,688		—
Asset backed securities		60,820		—		60,820		—
Commercial paper		3,993		—		3,993		—
Total	$	282,756	$	53,569	$	229,187	$	—

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The following table summarizes gross unrealized losses and fair values of our investments in an unrealized loss position as of March 31, 2015, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position:


		March 31, 2015
		Less than 12 months			12 months or greater				Total
(In thousands)		Fair Value		Gross Unrealized Loss		Fair Value		Gross Unrealized Loss		Fair Value		Gross Unrealized Loss
Marketable Securities
Corporate bonds	$	47,902	$	(16)	$	—	$	—	$	47,902	$	(16)
Asset backed securities		23,755		(8)		—		—		23,755		(8)
Total	$	71,657	$	(24)	$	—	$	—	$	71,657	$	(24)

The following summarizes contractual underlying maturities of the Company’s available-for-sale investments in debt securities at March 31, 2015 (in thousands):


		Due one year or less			Due after one year through two years
Description		Cost		Fair Value		Cost		Fair Value
Marketable Securities
U.S. government agency securities	$	10,252	$	10,257	$	3,899	$	3,901
Corporate bonds		116,067		116,091		17,328		17,347
Commercial paper		3,996		3,997		—		—
Asset backed securities		—		—		52,850		52,879
Total	$	130,315	$	130,345	$	74,077	$	74,127

(6) NEW MARKET TAX CREDIT

During the fourth quarter of 2014, the Company received approximately $2.4 million in net proceeds from financing agreements related to working capital and capital improvements at one of its Madison, Wisconsin facilities. This financing arrangement was structured with an unrelated third party financial institution (the “Investor”), an investment fund, and its majority owned community development entity in connection with the Company’s participation in transactions qualified under the federal New Markets Tax Credit (NMTC) program, pursuant to Section 45D of the Internal Revenue Code of 1986, as amended. Through its participation in this program, the Company has secured low interest financing and the potential for future debt forgiveness related to the Madison, Wisconsin facility. Upon closing of this transaction, the Company provided an aggregate of approximately $5.1 million to the Investor, in the form of a loan receivable, with a term of seven years, bearing an interest rate of 2.74% per annum. This $5.1 million in proceeds plus capital from the Investor was used to make an aggregate $7.5 million loan to a subsidiary of the Company. This financing arrangement is not secured by any assets of the Company. On December 1, 2021, the Company would receive a repayment of its approximately $5.1 million loan. The $5.1 million is eliminated in the consolidation of the financial statements. This transaction also includes a put/call feature that becomes enforceable at the end of the seven-year compliance period. The Investor may exercise its put option or the Company can exercise the call, both of which will serve to trigger forgiveness of the net debt. The value attributable to the put/call is nominal. The $2.4 million is recorded in Other Long-Term Liabilities on the consolidated balance sheets. The benefit of this net $2.4 million contribution will be r ecognized as a decrease in expense s, included in cost of sales, as we amortize the contribution liability over the seven-year compliance period as it is being earned through our on-going compliance with the conditions of the NMTC program. At March 31, 2015, the remaining balance is $2.3 million. The Company incurred approximately $0.2 million of debt issuance costs related to the above transactions, which are being amortized over the life of the agreements.

The Investor is subject to 100% recapture of the NMTC it receives for a period of seven years as provided in the Internal Revenue Code and applicable U.S. Treasury regulations. The Company is required to be in compliance with various regulations and contractual provisions that apply to the NMTC arrangement. Noncompliance with applicable

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requirements could result in the Investor’s projected tax benefits not being realized and, therefore, require the Company to indemnify the Investor for any loss or recapture of NMTC related to the financing until such time as the recapture provisions have expired under the applicable statute of limitations. The Company does not anticipate any credit recapture will be required in connection wi th this financing arrangement.

The investment fund and the community development entity are considered Variable Interest Entities (VIEs) and the Company is the primary beneficiary of the VIEs. This conclusion was reached based on the following:

The ongoing activities of the VIEs—collecting and remitting interest and fees and NMTC compliance—were all considered in the initial design and are not expected to significantly affect performance throughout the life of the VIE;

Contractual arrangements obligate the Company to comply with NMTC rules and regulations and provide various other guarantees to the Investor and community development entity;

The Investor lacks a material interest in the underling economics of the project; and

The Company is obligated to absorb losses of the VIEs.

Because the Company is the primary beneficiary of the VIEs, they have been included in the consolidated financial statements. There are no other assets, liabilities or transactions in these VIEs outside of the financing transactions executed as part of the NMTC arrangement. The $5.1 million is eliminated in consolidation of the financial statements.

Also in December 2014, in connection with the NMTC transaction, the Company entered into a land purchase option agreement with the owner of certain real property (land) adjacent to the Company’s current Madison, Wisconsin facilities. The option is renewable annually in exchange for a fee. If the Company exercises its land purchase option, they will pay a fixed amount for the land. That fixed amount approximates the current fair value of the land. If the Company decides not to exercise its option, then on December 31, 2021 (which is after the seven year compliance period of the NMTC program) the Company must pay $1.2 million to the community development entity. As discussed below, the community development entity is a variable interest entity consolidated into the Company. The community development entity would then distribute this money to its members. The majority member of the community development entity is also the owner of the land subject to the land purchase option. The Company has recorded the obligation and the land purchase option asset for $1.2 million to reflect the Company’s assessment that it is probable that at least $1.2 million will be paid in the future based on resolution of the land purchase option. The asset is included in Other Long-Term Assets and the liability is included in Other Long-Term Liabilities on the consolidated balance sheet.

( 7 ) RECENT ACCOUNTING PRONOUNCEMENTS

In May 2014, the Financial Accounting Standards Board issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers . ASU 2014-09 is a comprehensive new revenue recognition model requiring a company to recognize revenue to depict the transfer of goods or services to a customer at an amount reflecting the consideration it expects to receive in exchange for those goods or services. ASU 2014-09 may be applied using either a full retrospective or a modified retrospective approach and is effective for fiscal years, and interim periods within those years, beginning after December 15, 2016, and early adoption is not permitted. We are currently evaluating the impact of this amendment on our financial position and results of operations .

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Item 2. Management’s Discussion and Analysi s of Financial Condition and Results of Operations

The following discussion of the financial condition and results of operations of Exact Sciences Corporation (together with its subsidiaries, “Exact,” “we,” “us”, “our” or the “Company”) should be read in conjunction with the condensed financial statements and the related notes thereto included elsewhere in this Quarterly Report on Form 10-Q and the audited financial statements and notes thereto and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the year ended December 31, 2014, which has been filed with the SEC (the “2014 Form 10-K”).

Forward-Looking Statements

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities and Exchange Act of 1934, as amended, that are intended to be covered by the “safe harbor” created by those sections. Forward-looking statements, which are based on certain assumptions and describe our future plans, strategies and expectations, can generally be identified by the use of forward-looking terms such as “believe,” “expect,” “may,” “will,” “should,” “could,” “seek,” “intend,” “plan,” “estimate,” “anticipate” or other comparable terms. All statements other than statements of historical facts included in this Quarterly Report on Form 10-Q regarding our strategies, prospects, financial condition, operations, costs, plans and objectives are forward-looking statements. Examples of forward-looking statements include, among others, statements we make regarding expected future operating results, anticipated results of our sales and marketing efforts, expectations concerning payor reimbursement and the anticipated results of our product development efforts. Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on our current beliefs, expectations and assumptions regarding the future of our business, future plans and strategies, projections, anticipated events and trends, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of our control. Our actual results and financial condition may differ materially from those indicated in the forward-looking statements. Therefore, you should not rely on any of these forward-looking statements. Important factors that could cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements include, among others, the following: our ability to successfully and profitably market our products; the acceptance of our products by patients and health care providers; the amount and nature of competition from other cancer screening products and procedures; our ability to maintain regulatory approvals and comply with applicable regulations; our success establishing and maintaining collaborative and licensing arrangements; our ability to successfully develop new products; and the other risks and uncertainties described in the Risk Factors and in Management's Discussion and Analysis of Financial Condition and Results of Operations sections of our most recent Annual Report on Form 10 ‑ K and our subsequently filed Quarterly Reports on Form 10-Q. We undertake no obligation to publicly update any forward-looking statement, whether written or oral, that may be made from time to time, whether as a result of new information, future developments or otherwise.

Overview

We are a molecular diagnostics company currently focused on the early detection and prevention of colorectal cancer. We have developed a non-invasive, patient friendly screening test called Cologuard® to meet our primary goal of becoming the market leader in non-invasive colorectal cancer screening products.

Our strategic roadmap to achieve this goal includes the following key components:

commercialize an FDA-approved product that detects colorectal pre-cancer and cancer;

successfully operate a Federal Clinical Laboratory Improvement Amendments (CLIA) certified laboratory facility to process Cologuard tests and provide patient results; and

secure favorable reimbursement for our laboratory services from payors.

Our Cologuard test is a non-invasive stool-based DNA (sDNA) screening test designed to detect DNA markers, which in published studies have been shown to be associated with colorectal cancer. In addition to DNA markers, our test includes a protein marker to detect blood in the stool, utilizing an antibody-based fecal immunochemical test (FIT).

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On August 11, 2014 the U.S. Food and Drug Administration (FDA) approved Cologuard for use as the first and only sDNA non-invasive colorectal cancer screening test. In addition, on October 9, 2014 the Centers for Medicare and Medicaid Services (CMS) issued a final National Coverage Determination (NCD) extending coverage for Cologuard as a colorectal cancer screening test for asymptomatic, average risk Medicare beneficiaries, aged 50 to 85 years. CMS has established reimbursement for Cologuard (CPT Code G0464) at $492.72 in the CMS 2015 Clinical Lab Fee Schedule. Payments from CMS are subject to sequestration.

Colorectal cancer is the second leading cause of cancer deaths in the United States and the leading cause of cancer deaths among non-smokers. Each year there are:

137,000 new cases in the U.S.

50,000 deaths in the U.S.

1,200,000 new cases worldwide

600,000 deaths worldwide

Colorectal cancer treatment represents a significant growing healthcare cost. Annually, $14 billion is spent in the U.S. on colorectal cancer treatment and the projected annual treatment costs are expected to be $20 billion in 2020. The incidence of colorectal cancer in Medicare patients is expected to rapidly rise from 106,000 cases in 2010 to more than 180,000 cases in 2030.

It is widely accepted that colorectal cancer is among the most preventable, yet least prevented cancers. Colorectal cancer can take up to 10-15 years to progress from a pre-cancerous lesion to metastatic cancer and death. Patients who are diagnosed early in the progression of the disease—with pre-cancerous lesions or polyps, or early-stage cancer—are more likely to have a complete recovery and to be treated less expensively. Accordingly, the American Cancer Society (ACS) recommends that all people age 50 and older undergo regular colorectal cancer screening. Of the more than 80 million people in the U.S. for whom routine colorectal cancer screening is recommended, nearly 47 percent have not been screened according to current guidelines. Poor compliance has meant that nearly two-thirds of colorectal cancer diagnoses are made in the disease’s late stages. The five-year survival rates for stages 3 and 4 are 67 percent and 12 percent, respectively. We believe the large underserved population of unscreened and inadequately screened patients represents a significant opportunity for a patient friendly screening test.

Professional colorectal cancer screening guidelines in the U.S., including those of the ACS, the American College of Gastroenterology, and the American Gastroenterological Association, recommend regular screening by a variety of methods. Historically, these recommendations consisted of colonoscopy, flexible sigmoidoscopy and fecal occult blood testing (FOBT) as well as combinations of some of these methods. On March 4, 2008, the ACS and the U.S. Multi-Society Task Force on Colorectal Cancer included sDNA screening technology in an updated national colorectal cancer screening guidelines as a screening option for the detection of colorectal cancer in average risk, asymptomatic individuals age 50 and older. The U.S. Multi-Society Task Force on Colorectal Cancer is a consortium of several organizations that includes representatives of the American College of Gastroenterology, American Gastroenterological Association, American Society for Gastrointestinal Endoscopy and the American College of Physicians/Society of Internal Medicine. In November 2014 the ACS updated the colorectal cancer screening guidelines to specifically include Cologuard as a recommended sDNA screening test.

The competitive advantages of sDNA-based screening provide a significant market opportunity. Assuming a 30-percent test adoption rate and a three-year screening interval, we estimate the potential U.S. market for sDNA screening to be more than $2 billion and we estimate the potential global market opportunity to be greater than $3 billion.

On August 11, 2014, the FDA approved Cologuard for use as the first and only sDNA non-invasive colorectal cancer screening test. Our submission to the FDA for Cologuard included the results of our pivotal DeeP-C clinical trial that had over 10,000 patients enrolled at 90 enrollment sites in the U.S. and Canada. The results of our DeeP-C clinical trial for Cologuard were published in the New England Journal of Medicine in April 2014. The peer-reviewed study, “Multi-target Stool DNA Testing for Colorectal-Cancer Screening,” highlighted the performance of Cologuard in the trial population:

Cancer Sensitivity: 92%

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High-Grade Dysplasia Sensitivity: 69%

Specificity: 87%

We believe having FDA approval of Colguard is a prerequisite for building broad consumer and physician demand and successfully commercializing our sDNA colorectal cancer screening technology.

On October 9, 2014, the CMS issued a final NCD for Cologuard. As outlined in the NCD, Medicare Part B will cover Cologuard once every three years for beneficiaries who meet all of the following criteria:

Age 50 to 85 years,

Asymptomatic (no signs or symptoms of colorectal disease including but not limited to lower gastrointestinal pain, blood in stool, positive guaiac fecal occult blood test or fecal immunochemical test), and

At average risk for developing colorectal cancer (no personal history of adenomatous polyps, colorectal cancer, or inflammatory bowel disease, including Crohn’s Disease and ulcerative colitis; no family history of colorectal cancers or adenomatous polyps, familial adenomatous polyposis, or hereditary non-polyposis colorectal cancer).

In the 2015 Clinical Laboratory Fee Schedule, CMS has established reimbursement for Cologuard (CPT Code G0464) at $492.72. Payments from CMS are subject to sequestration. We believe that obtaining a favorable national coverage decision and a commercially viable reimbursement rate from CMS for Cologuard are necessary to achieve material commercial success. Medicare covers 43% of patients in the screening population for Cologuard. We believe the favorable CMS coverage decision may also aid in securing positive coverage decisions from major national and regional managed care organizations, insurance carries, and self-insured employer groups.

We also believe it will be necessary to secure favorable coverage and reimbursement from commercial payors to achieve commercial success. We believe that third-party payors’ reimbursement of Cologuard will depend on a number of factors, including payors’ determination that it is: sensitive for colorectal cancer; not experimental or investigational; approved by major guidelines organizations; reliable, safe and effective; medically necessary; appropriate for the specific patient; and cost-effective.

Cologuard is currently recommended for colorectal cancer screening in ACS guidelines, which is a significant preliminary step to securing coverage with commercial payors.

A critical part of the value proposition of Cologuard is our physician and patient engagement team which helps to drive compliance for Cologuard as the team actively engages with patients to help them get screened. This activity is focused on having patients complete Cologuard tests that have been ordered for them by their physicians and supporting physicians in their efforts to have their patients screened. In addition, monthly compliance reports are provided to physicians relevant to their patient population.

Our sales and marketing strategy includes three main elements with a focus on physicians, patients, and payors.

We are engaging physicians with several strategies. We have a 180 person sales t eam, including approximately 140 in a direct field sales force, actively engaging with physicians and their staffs to emphasize the need for colorectal cancer screening, educate them on the value of Cologuard, and enroll them in our physician ordering system to enable them to prescribe the test. We are focused on specific physicians based on specialty and propensity to prescribe colorectal cancer screening tests. We are also focused on physician groups and larger regional and national health systems. Further, to build awareness, we have launched a medical education program that includes on-line training and peer-to-peer presentations.

After the launch of Cologuard we initiated a significant public relations effort to engage patients and we have also targeted direct to patient advertising through social media and targeted print and media advertising.

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One of the key components to engaging with payors was securing coverage from CMS which we did in October of 2014. Additionally, we are providing cost effectiveness data to payors to make the case for Cologuard reimbursement. We are focusing our efforts on large national and regional insurers, states that require health insurers to cover colorectal cancer screening consistent with the ACS guidelines and health plans that have affiliated health systems.

As part of our commercialization strategy, we also established a state of the art, highly automated lab facility that is certified pursuant to applicable CLIA regulations to process Cologuard tests and provide patient results. Our commercial lab operation is housed in a 32,000 square foot facility in Madison, Wisconsin. We have the capacity at our lab to process approximately one million tests per year.

We have generated limiting operating revenues since inception and, as of March 31, 2015, we had an accumulated deficit of approximately $456. 6 million. We expect to continue to incur losses for the next several years, and it is possible we may never achieve profitability.

2015 Priorities

Our top priorities for 2015 include growing revenue for Cologuard, continuing to provide world class service as order volume grows, and developing our product pipeline for future products.

We plan to grow Cologuard revenue through the continued efforts of our sales force to work with physicians and systems to adopt Cologuard for colorectal cancer screening. In addition, we are working with payors to secure favorable reimbursement for Cologuard which will be a key component to growing revenue for 2015.

Another key priority for 2015 is to continue to provide world class service to patients and achieve a greater than 70% compliance rate for patients who are prescribed Cologuard and to whom we ship a Cologuard test kit.

We also plan on continuing to collaborate with MAYO on future products related to early detection of gastrointestinal (GI) cancers specifically in the areas of esophageal and pancreatic cancers. GI cancers account for 145,000 or 25% of all U.S. cancer deaths annually and represent a significant market opportunity for future products. In February 2015 we amended and restated our license agreement with MAYO to extend our arrangement with MAYO for an additional five years and broaden our collaboration efforts to develop screening, surveillance and diagnostic tests and tools for use in connection with gastrointestinal cancers, precancers, diseases and conditions.

Additionally, we will continue to explore opportunities for expanding the indications of Cologuard such as for patients between the ages of 40-50 or for high risk patients like those with inflammatory bowel disease.

Financial Overview

Laboratory service revenue. Total laboratory service revenue was $4.3 million for the three months ended March 31, 2015. Our laboratory service revenue is generated primarily by the Cologuard test. Cologuard became available to be marketed and sold upon FDA approval on August 11, 2014.

License fee revenue. There was no license fee revenue for the three months ended March 31, 2015 and $0.3 million for the three months ended March 31, 2014. License fee revenue is composed of the amortization of up-front technology license fee payments associated with our collaboration, license and purchase agreement with Genzyme. The previously unamortized Genzyme up-front payment and holdback amounts were amortized on a straight-line basis over the initial Genzyme collaboration period, which ended in January 2014 therefore leading to a decline in revenue when compared to the prior year. Due to completion of the collaboration period in January 2014, we do not expect to recognize further significant revenues under this agreement.

Our Cost Structure. Our selling, general and administrative expenses consist primarily of non-research personnel salaries, office expenses, professional fees, sales and marketing expenses incurred in support of our commercialization efforts and non-cash stock-based compensation.

Cost of sales includes costs related to inventory production and usage and the cost of laboratory services to process tests and provide results to physicians. Gross margin as a percentage of laboratory service revenue is also affected by our

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current revenue recognition policy, which may result in costs being incurred in one period that relate to revenues recognized in a later period.

We expect that gross margin for our laboratory services will continue to fluctuate and be affected by the adoption rates of the Cologuard test, our revenue recognition policy, the levels of reimbursement, and payment patterns of third-party payors and patients.

Critical Accounting Policies and Estimates

Management’s discussion and analysis of our financial condition and results of operations is based on our condensed consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States (GAAP). The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements as well as the reported revenues and expenses during the reporting periods. On an ongoing basis, we evaluate our estimates and judgments, including those related to revenue recognition, tax positions and stock-based compensation. We base our estimates on historical experience and on various other factors that are believed to be appropriate under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

While our significant accounting policies are more fully described in Note 2 of our financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2014, we believe that the following accounting policies and judgments are most critical to aid in fully understanding and evaluating our reported financial results.

Revenue Recognition.

Laboratory service revenue. Our revenues will be generated primarily by the Cologuard test. Revenues are recognized when persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, the price is fixed or determinable, and collectability is reasonably assured. We assess whether the fee is fixed or determinable based on the nature of the fee charged for the laboratory services delivered and whether there are existing contractual arrangements with customers, third-party commercial payors (insurance carriers and health plans) or coverage of the test by CMS. When evaluating collectability, we consider factors such as collection experience for the healthcare industry, the financial standing of customers or third-party commercial payors, and whether we have sufficient collection history to reliably estimate a payor’s individual payment patterns.

A significant portion of laboratory service revenues earned by us will initially be recognized on a cash basis because the above criteria will not have been met at the time the test results are delivered. We generally bill third-party payors upon generation and delivery of a test result to the ordering physician following completion of a test. As such, we take assignment of benefits and risk of collection with the third-party payor. Patients may have out-of-pocket costs for amounts not covered by their insurance carrier and we bill the patient directly for these amounts in the form of co-pays and deductibles in accordance with their insurance carrier and health plans. Some third-party payors may not cover the Cologuard test as ordered by the physician under their reimbursement policies. Consequently, we pursue reimbursement on a case-by-case basis directly from the patient.

For laboratory services performed, where the collectability is not reasonably assured, we will continue to recognize revenues upon cash collection until it can reliably estimate the amount that would be ultimately collected for the Cologuard test. In order to begin to record revenue on an accrual basis in these scenarios, we expect to use at least several months of payment history, review the number of tests paid against the number of tests billed, and consider the payor’s outstanding balance for unpaid tests to determine whether payments are being made for a consistently high percentage of tests billed and at appropriate amounts given the contracted or historical payment amount. Our Cologuard test became available upon FDA approval on August 11, 2014. The national coverage decision was released by CMS on October 9, 2014. Total laboratory service revenue for the three months ended March 31, 2015 was $4.3 million.

License fees. License fees for the licensing of product rights on initiation of strategic agreements are recorded as deferred revenue upon receipt of cash and recognized as revenue on a straight-line basis over the license period.

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As more fully described in our 2014 Form 10-K, in connection with our January 2009 strategic transaction with Genzyme Corporation, we deferred the initial $16.65 million in cash received at closing and amortized that up-front payment on a straight-line basis into revenue over the initial five-year collaboration period which ended in January 2014. In addition, in 2010 we received holdback amounts of $1.85 million, which were deferred at the time of receipt and were amortized on a straight-line basis into revenue over the then remaining term of the collaboration period.

In addition, we deferred a $1.53 million premium related to common stock purchased by Genzyme and amortized that amount on a straight-line basis into revenue over the initial five-year collaboration period which ended in January 2014.

We did not recognize revenue in connection with the amortization of the up-front payments from Genzyme during the three months ended March 31, 2015. We recognized approximately $0.3 million in license fee revenue in connection with the amortization of the up-front payments from Genzyme during the three months ended March 31, 2014.

Inventory. Inventory is stated at the lower of cost or market value (net realizable value). We determine the cost of inventory using the first-in, first out method (FIFO). We estimate the recoverability of inventory by reference to internal estimates of future demands and product life cycles, including expiration. We periodically analyze our inventory levels to identify inventory that may expire prior to expected sale or has a cost basis in excess of its estimated realizable value, and record a charge to cost of sales for such inventory as appropriate. In addition, our products are subject to strict quality control and monitoring which we perform throughout the manufacturing process. If certain batches or units of product no longer meet quality specifications or become obsolete due to expiration, we record a charge to cost of sales to write down such unmarketable inventory to its estimated realizable value.

In connection with the launch of Cologuard, we have invested in its manufacturing operations to support future demand for Cologuard. Because of this investment in the future, we are not currently operating at normal capacity. Charges related to excess capacity are included as current period charges to cost of sales, and are not capitalized into inventory.

Stock-Based Compensation. In accordance with GAAP, all stock-based payments, including grants of employee stock options, restricted stock and restricted stock units and shares purchased under an employee stock purchase plan (ESPP) (if certain parameters are not met), are recognized in the financial statements based on their fair values. The following assumptions are used in determining fair value for stock options, restricted stock and ESPP shares:

Valuation and Recognition — The fair value of each option award is estimated on the date of grant using the Black-Scholes option pricing model. The estimated fair value of employee stock options is recognized to expense using the straight-line method over the vesting period.

Expected Term - Expected term is based on the Company’s historical life data and is determined using the average of the vesting period and the contractual life of the stock options granted.

Expected Volatility - Expected volatility is based on the Company’s historical stock volatility data over the expected term of the awards.

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The fair value of each restricted stock award and restricted stock unit is determined on the date of grant using the closing stock price on that day. The fair value of each option award is estimated on the date of grant using the Black-Scholes option pricing model based on the assumptions in Note 4 to our condensed financial statements.

Results of Operations

Laboratory service revenue. Our laboratory service revenues will be generated primarily by the Cologuard test. Our Cologuard test became available upon FDA approval on August 11, 2014. Total laboratory service revenue for the three months ended March 31, 2015 was $4.3 million.

License fee revenue. There was no license fee revenue for the three months ended March 31, 2015. Total license fee revenue was $0.3 million for the three month periods ended March 31, 2014. License fee revenue is composed of the amortization of up-front technology license fee payments associated with our collaboration, license and purchase agreement with Genzyme. The previously unamortized Genzyme up-front payment and holdback amounts were amortized on a straight-line basis over the initial Genzyme collaboration period, which ended in January 2014 therefore leading to a decline in revenue when compared to the prior year.

Cost of Sales. Cost of sales includes costs related to inventory production and usage and the cost of laboratory services to process tests and provide results to physicians. Gross margin as a percentage of laboratory service revenue is also affected by our current revenue recognition policy, which may result in costs being incurred in one period that relate to revenues recognized in a later period. Cost of sales was $4.2 million for the three months ended March 31, 2015 compared to none in the comparable prior year period. The increase in cost of sales is related to the production of our Cologuard test which obtained FDA approval during the third quarter of 2014.


	Three Months Ended March 31,
	2015		2014		Change
Personnel expenses	$	1.5	$	—	$	1.5
Direct production costs		1.0		—		1.0
Depreciation expense		0.7		—		0.7
Professional fees		0.3		—		0.3
Other cost of sales		0.3		—		0.3
Facility costs		0.2		—		0.2
Stock-based compensation		0.1		—		0.1
Royalty fees		0.1		—		0.1
Total cost of sales expenses	$	4.2	$	—	$	4.2

Research and development expenses . Research and development expenses decreased to $6.6 million for the three months ended March 31, 2015 from $7.4 million for the three months ended March 31, 2014. This was primarily due to a decrease in personnel expenses, lab expenses, clinical trial expenses, and research collaborations expenses due to production expenses shifting to cost of sales upon FDA approval during the third quarter in 2014.


	Three Months Ended March 31,
	2015		2014		Change
Personnel expenses	$	2.3	$	2.5	$	(0.2)
Professional fees		1.1		0.3		0.8
Other research and development		0.9		1.4		(0.5)
Clinical trial expenses		0.8		0.9		(0.1)
Stock-based compensation		0.7		0.7		—
Research collaborations		0.5		0.6		(0.1)
Lab expenses		0.3		1.0		(0.7)
Total research and development expenses	$	6.6	$	7.4	$	(0.8)

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General and administrative expenses . General and administra tive expenses increased to $13.0 million for the three months ended March 31, 2015 compared to $4.6 million for the three months ended March 31, 2014. The increase in general and administrative expenses was primarily a result of increased legal and professional fees, increased personnel costs and stock-based compensation expense due to increased headcount, additional information technology costs, increased depreciation expense, and other general and administrative expenses to support the overall growth of the Company.


	Three Months Ended March 31,
	2015		2014		Change
Personnel expenses	$	4.1	$	1.2	$	2.9
Legal and professional fees		3.6		1.3		2.3
Stock-based compensation		1.7		1.0		0.7
Information technology costs		1.6		0.2		1.4
Other general and administrative		1.0		0.6		0.4
Depreciation expense		0.8		0.2		0.6
Facility costs		0.2		0.1		0.1
Total general and administrative expenses	$	13.0	$	4.6	$	8.4

Sales and marketing expenses. Sales and marketing expenses increased to $16. 5 million for the three months ended March 31, 2015, from $4.5 million for the three months ended March 31, 2014. The increase in sales and marketing expense was a result of hiring additional sales and marketing personnel and increasing our advertising and patient marketing efforts to prepare for the commercialization of our Cologuard test.


	Three Months Ended March 31,
	2015		2014		Change
Personnel expenses	$	9.6	$	1.4	$	8.2
Professional fees		4.8		2.6		2.2
Other sales and marketing		1.1		0.3		0.8
Stock-based compensation		1.0		0.2		0.8
Total sales and marketing expenses	$	16.5	$	4.5	$	12.0

Investment income . Investment income increased to $222.0 thousand for the three months ended March 31, 2015 compared to $86.0 thousand for the three months ended March 31, 2014. This is primarily due to an increase in the average investment balance for the three months ended March 31, 2015 when compared to the same period in 2014. This is primarily the result of our larger issuances of common stock in 2014 as compared to 2013.

Interest expense. Interest expense decreased to $11.0 thousand for the three months ended March 31, 2015 from $15.0 thousand for the three months ended March 31, 2014. This decrease is primarily due to less interest expense recognized for our capital lease during the three months ended March 31, 2015 when compared to the same period in 2014.

Liquidity and Capital Resources

We have financed our operations since inception primarily through private and public offerings of our common stock. As of March 31, 2015, we had approximately $40.7 million in unrestricted cash and cash equivalents and approximately $204.5 million in marketable securities.

All of our investments in marketable securities are comprised of fixed income investments and all are deemed available-for-sale. The objectives of this portfolio are to provide liquidity and safety of principal while striving to achieve the highest rate of return, consistent with these two objectives. Our investment policy limits investments to certain types of instruments issued by institutions with investment grade credit ratings and places restrictions on maturities and concentration by type and issuer.

Net cash used in operating activities was $34. 5 million for the three months ended March 31, 2015 as compared to $12.4 million for the three months ended March 31, 2014. The principal use of cash in operating activities for the three months ended March 31, 2015 was to fund our net loss which increased from the three months ended March 31, 2014

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primarily due to increased sales and marketing efforts and general and administrative costs due to the commercial launch of Cologuard and to support the overall growth of the Company.

Net cash provided by investing activities was $16.8 million for the three months ended March 31, 2015 as compared to $17.3 million of cash provided by investing activities for the three months ended March 31, 2014. The decrease in cash provided by investing activities for the three months ended March 31, 2015 compared to the same period in 2014 was primarily the result of the timing of purchases and maturities of marketable securities. Excluding the impact of purchases and maturities of marketable securities, net cash used in investing activities consisted of purchases of property and equipment of $3.2 million for the three months ended March 31, 2015 and $4.8 million for the same period in 2014. The decrease in property and equipment purchases during the three months ended March 31, 2015 was primarily the result of decreased laboratory equipment purchases. During the three months ended March 31, 2014 our laboratory equipment purchases were significant to build a fully functioning facility.

Net cash provided by financing activities was $295 .0 thousand for the three months ended March 31, 2015, as compared to net cash provided by financing activities of $2.0 thousand for the three months ended March 31, 2014. The increase in cash provided by financing activities for the three months ended March 31, 2015 was due to the receipt of $386.0 thousand from stock option exercises slightly offset by capital lease payments of $91.0 thousand compared to the receipt of $88.0 thousand from stock option exercises slightly offset by capital lease payments of $86.0 thousand for the same period in 2014.

We expect that cash and cash equivalents and marketable securities on hand at March 31, 2015, will be sufficient to fund our current operations for at least the next twelve months, based on current operating plans. However, since payments for our Cologuard test will be our only material revenue source and we have just begun to collect such payments and do not know the timing or amount of any such payments, it is possible that we may need to raise additional capital to fully fund our current strategic plan. If we are unable to obtain sufficient additional funds to enable us to fund our operations through the completion of such plan, our results of operations and financial condition would be materially adversely affected and we may be required to delay the implementation of our plan and otherwise scale back our operations. Even if we successfully raise sufficient funds to complete our plan, we cannot assure that our business will ever generate sufficient cash flow from operations to become profitable.

Recent Accounting Pronouncements

Off-Balance Sheet Arrangements

As of March 31, 2015, we had no off-balance sheet arrangements.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Our exposure to market risk is principally confined to our cash, cash equivalents and marketable securities. We invest our cash, cash equivalents and marketable securities in securities of the U.S. government and its agencies and in investment-grade, highly liquid investments consisting of commercial paper, bank certificates of deposit, asset backed securities and corporate bonds, which, as of March 31, 2015 were classified as available-for-sale. We place our cash equivalents and marketable securities with high-quality financial institutions, limit the amount of credit exposure to any one institution and have established investment guidelines relative to diversification and maturities designed to maintain safety and liquidity.

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Based on a hypothetical ten percent adverse movement in interest rates, the potential losses in future earnings, fair value of risk-sensitive financial instruments, and cash flows are immaterial, although the actual effects may differ materially from the hypothetical analysis.

Item 4. Controls and Procedures

As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our management, including our principal executive officer and our principal financial officer, of the effectiveness of our disclosure controls and procedures, as defined in Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Based upon that evaluation, our principal executive officer and our principal financial officer concluded that, as of March 31, 2015, our disclosure controls and procedures were effective. Disclosure controls and procedures enable us to record, process, summarize and report information required to be included in our Exchange Act filings within the required time period. Our disclosure controls and procedures include controls and procedures designed to ensure that information required to be disclosed by us in the periodic reports filed with the SEC is accumulated and communicated to our management, including our principal executive, financial and accounting officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

During the fiscal quarter covered by this report, there have been no significant changes in internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Part II - Other Informatio n

Item 1. Legal Proceedings

We are not currently a party to any pending legal proceedings that we believe will have a material adverse effect on our business, financial condition or results of operations. We may, however, be subject to various claims and legal actions arising in the ordinary course of business from time to time .

Item 1A. Risk Factors

We operate in a rapidly changing environment that involves a number of risks that could materially affect our business, financial condition or future results, some of which are beyond our control. In addition to the other information set forth in this report, the risks and uncertainties that we believe are most important for you to consider are discussed in Part I, “Item 1A. Risk Factors” in our most recent Annual Report on Form 10-K. There have been no material changes to the risk factors described in that report.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

On February 26, 2015, we issued Restricted Stock Unit awards to sixty-six new non-executive employees as inducement grants to enter into employment with the Company. These awards cover a total of 133,154 shares of the Company’s common stock. These awards vest in four equal annual installments beginning on the first anniversary of the date of grant. These new hire inducement awards were granted pursuant to NASDAQ Listing Rule 5635(c)(4) and Section 4(a)(2) of the Securities Act of 1933. The Company intends to file a registration statement on Form S-8 to register the shares of common stock underlying these awards prior to the time at which they vest.

On March 9, 2015, we issued Restricted Stock Unit awards to one hundred sixty-six new non-executive employees as inducement grants to enter into employment with the Company. These awards cover a total of 125,661 shares of the Company’s common stock. These awards vest in four equal annual installments beginning on the first anniversary of the date of grant. These new hire inducement awards were granted pursuant to NASDAQ Listing Rule 5635(c)(4) and Section 4(a)(2) of the Securities Act of 1933. The Company intends to file a registration statement on Form S-8 to register the shares of common stock underlying these awards prior to the time at which they vest.

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Item 3. Defaults Upon Senior Securities

Not applicable.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

Not applicable.

Item 6. Exhibits

The exhibits required to be filed as a part of this report are listed in the Exhibit Index.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


		EXACT SCIENCES CORPORATION

Date: May 4, 2015	By:	/s/ Kevin T. Conroy
		Kevin T. Conroy

		President and Chief Executive Officer
		(Principal Executive Officer)


Date: May 4, 2015	By:	/s/ William J. Megan
		William J. Megan
		Senior Vice President, Finance
		(Principal Financial Officer)

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EXHIBIT INDEX


Exhibit Number		Description

3.1		Sixth Amended and Restated Certificate of Incorporation of the Registrant (previously filed as Exhibit 3.3 to the Registrant’s Registration Statement on Form S ‑ 1 (File No. 333 ‑ 48812), filed on October 27, 2000, and incorporated herein by reference).

3.2		First Amendment to Sixth Amended and Restated Certificate of Incorporation of the Registrant (previously filed as Appendix A to the Definitive Proxy Statement for the Company’s 2014 Annual Meeting of Stockholders, filed on June 20, 2014, and incorporated herein by reference).

3.3		Amended and Restated By-Laws of the Registrant (previously filed as Exhibit 3.1 to the Registrant’s Report on Form 10-Q for the period ended March 31, 2009 and incorporated herein by reference)

10.1*		Amended and Restated License Agreement between the Registrant and MAYO Foundation for Medical Education and Research dated February 2, 2015 .

31.1		Certification Pursuant to Rule 13(a)-14(a) or Rule 15d-14(a) of Securities Exchange Act of 1934.

31.2		Certification Pursuant to Rule 13(a)-14(a) or Rule 15d-14(a) of Securities Exchange Act of 1934

32.1		Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101		Interactive Data Files

*Confidential Treatment requested for certain portions of this Agreement.

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body of such corporation or other entity is controlled by a corporation within the controlled group of corporations of MAYO or Mayo Clinic. MAYO’s Affiliates include, but are not limited to: Mayo Clinic; Mayo Collaborative Services, LLC; Mayo Clinic Hospital–Rochester; Mayo Clinic Rochester; Mayo Clinic Florida; Mayo Clinic Arizona; and its Mayo Health System entities. MAYO will provide EXACT with a list of current Affiliates by January 31 of each calendar year.

For EXACT, “Affiliate” : any corporation or other entity that controls, is controlled by, or is under common control with, EXACT. For purposes of this definition, “control” means ownership of: (a) at least 50% of the outstanding voting securities of such entity; or (b) at least 50% of the decision-making authority of such entity.

1.02 “Change of Control” : a merger, acquisition, consolidation or other transaction or series or related transactions following which the holders of EXACT’s outstanding voting securities prior to such transaction hold less than 50% of the outstanding voting securities of the acquiring or surviving corporation or a sale, license or transfer of all or substantially all of EXACT’s assets to which this Restated Agreement relates to a third party that is not an Affiliate of EXACT.

1.03 “Cologuard” : non-invasive colon cancer screening test developed by EXACT and approved by the U.S. Food and Drug Administration on August 19, 2014, including any Update, Improvement or Replacement of Cologuard.

1.04 “Confidential Information” : any information or material disclosed by one Party, the disclosing party, to the other, the receiving party, identified in writing as confidential at the time of disclosure or, if first disclosed orally, identified as confidential and confirmed in writing within forty-five days. Confidential Information expressly includes Know How and data and inventions generated in connection with the Sponsored Research Agreement, activities pursuant to Section 2.06 hereto, and employing materials or data transferred from EXACT to MAYO. Confidential Information does not include any information or material that the receiving party evidences is: (a) already known to the receiving party at the time of disclosure (other than from the disclosing party); (b) publicly known other than through acts or omissions of the receiving party; (c) disclosed to the receiving party by a third party who was not and is not under any obligation of confidentiality; or (d) independently developed by employees of the receiving party without knowledge of or access to the Confidential Information.

1.05 “Effective Date” : January 31, 2015.

1.06 “Gastrointestinal” : any organ that exfoliates cells into the lumen of the gastrointestinal tract (i.e. (a) primary GI organs: esophagus, stomach, pancreas, small intestine, liver, bile duct, colon and rectum; (b) airway: pharynx, larynx, trachea, bronchi and lungs; and (c) head and neck: nasal passages, mouth and throat).

1.07 “FDA” : the United States Food and Drug Administration or any successor agency.

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1.08 “Field” : any screening, surveillance or diagnostic test or tool intended for use in connection with any Gastrointestinal cancer, Gastrointestinal precancer, Gastrointestinal disease or Gastrointestinal condition.

1.09 “Know-How” :

(a) research and development information, materials, technical data, unpatented inventions, know-how and supportive information of Dr. Ahlquist and his laboratory as of the Original Agreement Effective Date and also as of the Effective Date of this Restated Agreement to the extent it is necessary for the development or manufacture of a Licensed Product. As of the Effective Date of the Restated Agreement, such Know-How includes MAYO File numbers:

2009-128 - “Method to Enrich Genomic DNA in Stool”;

ii.

2009-130 - “In Vivo Approaches to Improve Fecal Recovery of Nucleic Acids Exfoliated for Aerodigestive Neoplasms”;

iii.

2013-179 – “Novel Methylated Markers for the Detection of Stomach Cancer”;

iv.

2014-068 - “Universal Neoplasm Detection and Site-Prediction by Assay of Highly Discriminant Methylated DNA Markers in Buffy Coat”;

2014-069 - “Novel Methylated DNA Markers for Detection of Colorectal Neoplasia from Common Buffy Coat Samples”;

vi.

2014-372 – “Novel Methylated DNA Markers for the Detection of Adenocarcinoma and Squamous Carcinoma of the Esophagus”;

vii.

2015-040 – “Methylated DNA Markers for the Detection of Barrett’s Esophagus (BE) and Barrett’s Esophagus with Dysplasia (BED)”;

viii.

2015-041 – “Combining Stool-Based Non-Coding Small RNA and DNA Biomarkers for the Detection of Pancreatic Cancer”;

ix.

2015-042 – “DNA Methylation Markers for Universal and Site Prediction of Human Neoplasia”; and

2015-043 – “Cell-Specific Methylation Markers to Enhance Disease Detection”.

(b) research and development information, technical data, unpatented inventions, know-how and supportive information developed by Dr. Ahlquist and/or other individuals as a result of Dr. Ahlquist’s activities pursuant to Section 2.06 to the extent it is necessary for the development or manufacture of a Licensed Product; and

(c) research and development information, technical data, unpatented inventions, know-how and supportive information developed by MAYO as a result of MAYO’s activities under the Sponsored Research Agreement to the extent it is necessary for the development or manufacture of a Licensed Product.

1.10 “Lung Cancer Collaboration Licensed Product” : any Licensed Product relating to

screening for, or the diagnosis of, lung cancer or precancer that is developed in whole or in part pursuant to a collaboration between EXACT and a third party.

1.11 “Licensed Product” : any product or process: (a) described by a pending claim of the Patent Rights; (b) infringing an issued claim of the Patent Rights, or that would infringe but for the exception in 35 U.S.C. §271(e)(1), or similar exception in the United States or other

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countries; (c) the development, manufacture, use, sale, offer for sale or importation of which incorporates, uses, was derived from, identified by, validated, or developed in whole or in part using the Know-How; and/or (d) the manufacture, use, sale, offer for sale or importation of which incorporates, uses, or was derived from MAYO Materials.

1.12 “Materials” :

(a) MAYO Materials are biological specimens of human origin, including without limitation tissues, blood, plasma, urine, stool and derivatives thereof used by MAYO pursuant to work in Dr. Ahlquist’s laboratory within the Field pursuant to Section 2.06 hereto or provided by MAYO (including without limitation by Dr. Ahlquist) to EXACT for use within the Field.

(b) EXACT Materials include any material provided to MAYO pursuant to Section 2.06 hereto.

1.13 “Net Sales” : the amount invoiced by EXACT or Sublicensee for the transfer of a Licensed Product to a third party less documented: (a) sales, excise or use taxes shown on the face of the invoice, excluding value-added tax; (b) credits for defective or returned Licensed Products actually given; and (c) regular trade and discount allowances given. Leasing, lending, consigning or any other activity by means of which a third party acquires the right to possess or use a Licensed Product is a transfer for the purpose of determining Net Sales. Net Sales on Licensed Products transferred as part of a non-cash exchange or other than to third parties shall be calculated at the then-current customary sales price invoiced to third parties or fair market value if there are no current invoices to third parties. Net Sales accrues with the first of delivery or invoice.

1.14 “Original Agreement Effective Date” : June 12, 2009

1.15 “Patent Rights” :

(a) U.S. patents and applications listed in Exhibit A hereto, together with divisionals, continuations, and continuations-in-part (but only for subject matter supported pursuant to 35 U.S.C. §112 by the foregoing) therefrom, patents issuing thereon, re-examinations and re-issues thereof, as well as extensions and supplementary protection certificates and any foreign counterpart of any of the foregoing;

(b) Any patent applications filed as a result of Dr. Ahlquist’s, or any other, Gastrointestinal-related activities pursuant to Section 2.06 hereto, together with divisionals, continuations, and continuations-in-part (but only for subject matter supported pursuant to 35 U.S.C. §112 by the foregoing) therefrom, patents issuing thereon, re-examinations and re-issues thereof, as well as extensions and supplementary protection certificates and any foreign counterpart of any of the foregoing;

(c) Any patent applications filed with MAYO inventors as a result of activities performed by MAYO under the work plans that are part of the Sponsored Research Agreement, together with divisionals, continuations, and continuations-in-part (but only for subject matter

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supported pursuant to 35 U.S.C. §112 by the foregoing) therefrom, patents issuing thereon, re-examinations and re-issues thereof, as well as extensions and supplementary protection certificates and any foreign counterpart of any of the foregoing; and

(d) Any patent applications filed disclosing or describing data generated using EXACT materials or reagents provided by EXACT to MAYO

Exhibit A shall be updated on a semi-annual basis. A patent or patent application shall be added, or deemed added, to Exhibit A if either: i) it is a patent or patent application defined by any of 1.15(b), (c) or (d); or ii) MAYO provides written confirmation that the patent or patent application is within Patent Rights.

1.16 “PMA” : FDA Premarket Approval Application.

1.17 “Sponsored Research Agreement” : the agreement outlining the research to be funded by EXACT and performed at MAYO, as agreed upon by the Parties in accordance with the Original Agreement. The Sponsored Research Agreement is also the mechanism whereby MAYO bills EXACT on a monthly or quarterly basis, as needed, for support of research expenses for mutually agreed upon protocols/budgets for EXACT-MAYO collaborations.

1.18 “Sublicensee” : any third party or any Affiliate to whom EXACT has conveyed rights or the forbearance of suit under the Patent Rights, Know-How & Materials.

1.19 “Term” : begins on the Original Agreement Effective Date and ends, subject to Article 10, upon the date of the last to expire of the Patent Rights, unless the Know-How or Materials are still in use in a manner generating Net Sales, in which case upon the earlier of five (5) years following the last to expire of the Patent Rights or the date upon which EXACT ceases such use of the Know-How or Materials.

1.20 “Territory” : worldwide.

1.21 “Update, Improvement or Replacement” : an assay that modifies an existing FDA-approved assay and is FDA compliant without the requirement of a de novo PMA.

Article 2.00 — Grant of Rights

2.01 GRANT. Subject to the terms and conditions of this Restated Agreement, MAYO grants to EXACT: (a) an exclusive license with the right to sublicense, within the Field and Territory, under the Patent Rights to make, have made, use, offer for sale, sell, and import Licensed Products; and (b) a nonexclusive license with the right to sublicense, within the Field and Territory, to use the Know-How to develop, make, have made, use, offer for sale, sell, and import Licensed Products.

2.02 RESERVATION OF RIGHTS. All rights herein are subject to (a) the rights and obligations to and requirements of the U.S. government, if any have arisen or may arise, regarding the Patent Rights, including as set forth in 35 U.S.C. §§200 et al., 37 C.F.R. Part 401 et

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al. (“Bayh-Dole Act”); and (b) MAYO’s and its Affiliates’ reserved, irrevocable right to practice and have practiced the Patent Rights in connection with MAYO’s and its Affiliates’ educational, research and non-commercial, and non-competitive with EXACT, clinical programs (for the avoidance of doubt, MAYO will not practice the Patent Rights to develop or offer to third parties products or services that are competitive to any product or service offered or sold by EXACT or its Affiliates). EXACT agrees to comply with the provisions of the Bayh-Dole Act, to the extent such act applies, including promptly providing to MAYO with information requested to enable MAYO to meet its compliance requirements and substantially manufacturing Licensed Product in the U.S.

2.03 NO OTHER RIGHTS GRANTED. This Restated Agreement does not grant any right, title or interest in or to any tangible or intangible property right of MAYO or its Affiliates, including any improvements thereon, or to any Patent Rights or Know-How & Materials outside the Field or Territory that is not expressly stated in Section 2.01 or 2.07. All such rights, titles and interests are expressly reserved by MAYO and EXACT agrees that in no event will this Restated Agreement be construed as a sale, an assignment, or an implied license by MAYO or its Affiliates to EXACT of any such tangible or intangible property rights. This Restated Agreement does not grant any right, title or interest in or to any tangible or intangible property right of EXACT or its Affiliates, including rights in jointly owned intellectual property, unless expressly recited herein.

2.04 SUBLICENSES. Any sublicense by EXACT shall be to a Sublicensee that agrees in writing to be bound by substantially the same terms and conditions as EXACT herein, and with the financial terms and conditions at least as favorable to MAYO as set forth in the Restated Agreement, or such sublicense shall be null and void. Sublicenses granted hereunder shall not be transferable, including by further sublicensing, delegatable or assignable without the prior written approval of MAYO. EXACT will provide MAYO with a copy of each sublicense agreement promptly after execution. EXACT is responsible for the performance of all Sublicensees as if such performance were carried out by EXACT itself, including the payment of any royalties or other payments provided for hereunder triggered by Sublicensee, regardless of whether the terms of any sublicense require that Sublicensee pay such amounts (such as in a fully paid-up license), or that such amounts be paid by the Sublicensee directly to MAYO. Each sublicense agreement shall name MAYO as a third party beneficiary and unless MAYO has provided written consent, all rights of Sublicensees shall terminate when EXACT’s rights terminate.

2.05 USE OF MATERIALS.

(a) MAYO Materials.

i. Use of the MAYO Materials by MAYO or EXACT shall be subject to the prior approvals of MAYO’s Institutional Review Board and the Mayo Clinic Research Biospecimen Subcommittee.

ii. MAYO Materials are owned by MAYO and any transfer of such MAYO Materials to EXACT under the terms of this Restated Agreement shall not affect MAYO’s

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ownership interest therein. MAYO shall clearly mark and identify all MAYO Materials transferred to EXACT. All MAYO Materials will be maintained by EXACT so that such MAYO Materials are readily identifiable. The transfer of MAYO Materials to EXACT gives EXACT no rights in such MAYO Materials other than those specifically set forth in this Restated Agreement. EXACT agrees to use the MAYO Materials solely for research purposes and shall not transfer, deliver or otherwise release such Materials to a third party without the express prior written consent of MAYO. Upon expiration of a project and at the instructions of MAYO, EXACT shall either return to MAYO or destroy all unused MAYO Materials.

iii. EXACT agrees to use the MAYO Materials in accordance with the rights granted to EXACT under this Restated Agreement. All research conducted by EXACT using the MAYO Materials shall be conducted in accordance with all applicable state and federal laws regarding such research.

iv. Nothing in this Restated Agreement provides EXACT the right to transfer nucleic acids or any other material extracted from MAYO Materials to any third-party.

(b) EXACT Materials.

i. MAYO agrees to use the EXACT Materials solely for purposes pursuant to Section 2.06 hereto. Upon expiration of a project and at the instructions of EXACT, MAYO shall either return to EXACT or destroy all unused EXACT Materials.

ii. All research conducted by MAYO using the EXACT Materials shall be conducted in accordance with all applicable state and federal laws regarding such research.

iii. MAYO shall not transfer, deliver or otherwise release EXACT Materials to a third party without the express prior written consent of EXACT.

iv. MAYO shall treat the EXACT Materials and related information as Confidential Information under Article 8 hereto.

2.06 MAYO AND AHLQUIST COMMITMENT TO CONFER.

(a) MAYO will collaborate with EXACT on the development of Licensed Products, including sharing Know-How and providing access to MAYO Materials and laboratory equipment, conducting scientific studies, providing biostatistical support, and making submissions for peer-reviewed publications (MAYO file #2009-169; Know-How Related to Development, with Exact Sciences, of a Product for the Screening of Patients for Colorectal and other Aerodigestive Cancers Using Stool Samples”).

(b) For five (5) years after the Effective Date, subject of MAYO approval, and for so long as Dr. Ahlquist is an employee of MAYO, Dr. Ahlquist will consult on, collaborate with, and oversee EXACT on product development efforts, as a special advisor to the EXACT board of directors and senior management. EXACT will confer with Dr. Ahlquist in person in Rochester, MN, Madison, WI or as mutually agreed, or by telephone. All travel expenses

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incurred by Dr. Ahlquist in this role as advisor shall be paid by EXACT. EXACT anticipates Dr. Ahlquist will contribute up to 100% of his time to services for EXACT. MAYO shall be solely responsible for compensating Dr. Ahlquist, provided, however, that in consideration of the services provided under this Section 2.06(b), EXACT shall pay MAYO the amounts set forth in Section 3.05. If for any reason Dr. Ahlquist becomes unavailable to direct the performance of the work under this Restated Agreement, MAYO shall notify Exact and the Parties will work together to identify a mutually acceptable successor to provide the advisory services formerly provided by Dr. Ahlquist, as well as mutually acceptable compensation to replace that described in Section 3.05 for Dr. Ahlquist, with the intent to keep Dr. Ahlquist’s research team and projects intact; provided, however, if the Parties fail to agree on a mutually acceptable successor within a reasonable period of time, Exact may, upon written notice to MAYO, terminate the Parties’ obligations under this Section 2.06(b) as well as EXACT’s payment obligations under Section 3.05 (for the avoidance of doubt, any such terminations shall not have the effect of terminating EXACT’s other rights under this Restated Agreement, including without limitation its license rights).

(c) Notwithstanding EXACT’s rights to sublicense pursuant to Section 2.01 hereto, EXACT shall not have the right to sublicense any obligation of Dr. Ahlquist to confer. In addition, in the event of a Change of Control, MAYO may, within thirty (30) days of the effective date of such Change of Control, terminate the Parties’ obligations under Section 2.06(b), which shall automatically result in the termination of EXACT’s payment obligations under Section 3.05 (for the avoidance of doubt, any such terminations shall not have the effect of terminating EXACT’s other rights under this Restated Agreement, including without limitation its license rights).

2.07 LICENSE GRANT FOR NEW MARKERS. MAYO grants to EXACT a perpetual exclusive license with the right to sublicense, to make, have made, use, offer for sale, sell, and import Licensed Products that incorporate, use, or derive from any markers identified by MAYO during the period specified as “MAYO and Ahlquist Commitment to Confer” in Section 2.06 hereto, whether such markers are patented or unpatented. MAYO represents and warrants that all such markers that have been identified as of the Effective Date are listed on Exhibit B hereto, and MAYO agrees that it shall update Exhibit B from time to time to include all new markers within the Field. Exhibit B shall be updated on a semi-annual basis. All rights granted under this Section 2.07 are subject to MAYO’s and its Affiliates’ reserved, irrevocable right to use such markers in connection with MAYO’s and its Affiliates’ educational, research and non-commercial, and non-competitive with EXACT, clinical programs (for the avoidance of doubt, MAYO will not use such markers to develop or offer to third parties products or services that are competitive to any product or service offered or sold by EXACT or its Affiliates).

Article 3.00 —Consideration and Royalties

3.01 INITIAL CONSIDERATION AND OTHER PAYMENTS TO MAYO

(a) The Parties acknowledge that on July 9, 2009, following execution of the Original Agreement, EXACT paid MAYO an up-front payment of EIGHTY THOUSAND DOLLARS (US $80,000) as consideration for entering into the Original Agreement. This initial payment is

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nonrefundable and is not an advance or creditable against any royalties otherwise due under this Restated Agreement.

(b) The Parties acknowledge that on June 10, 2009, following execution of the Original Agreement, EXACT issued to MAYO the following nonrefundable and noncreditable warrants:

(i) 1,000,000 warrants (as consideration for the licenses granted under the Original Agreement) under the terms and conditions of the warrant agreement attached to the Original Agreement as Exhibit C; and

(ii) 250,000 warrants (as partial consideration for the Know-How services provided pursuant to Section 2.06) with a four-year vesting schedule under the terms and conditions of the warrant agreement attached to the Original Agreement as Exhibit D.

The strike price of the warrants was based on an average of the daily closing price of EXACT shares for the two weeks prior to the Original Agreement Effective Date. The warrant agreements included a cashless exercise provision and a six year term extending from the date of issuance of the warrant or, in the case of warrants subject to vesting, the date the warrants vest.

(c) The Parties acknowledge that on July 21, 2011, EXACT paid a nonrefundable and noncreditable milestone fee to MAYO of TWO HUNDRED FIFTY THOUSAND DOLLARS (US $250,000) for commencement of patient enrollment in the human cancer screening clinical trial, in support of a PMA for Cologuard.

(d) The Parties acknowledge that on September 8, 2014, EXACT paid a nonrefundable and noncreditable milestone fee to MAYO of FIVE HUNDRED THOUSAND DOLLARS (US $500,000) upon FDA approval of Cologuard.

(e) The Parties acknowledge that EXACT has provided MAYO with the following additional consideration in connection with the Original Agreement: ONE MILLION DOLLARS (US $1,000,000) in restricted stock (97,460 shares) was granted on 15 May 2012 (Mayo file 2012-130). Such restricted stock vests over four (4) years from 15 May 2012 (with one quarter (¼) vested on 15 May 2012, one quarter (¼) vested on 15 May 2013; one quarter (¼) vested on 15 May 2014 and one quarter (¼) to vest on 15 May 2015), subject to MAYO’s continued compliance with its obligations under the Restated Agreement). .

(f) The Parties acknowledge that EXACT paid MAYO minimum, annual, nonrefundable, noncreditable royalties of (i) TEN THOUSAND DOLLARS (US $10,000) on June 12, 2012; (ii) TWENTY-FIVE THOUSAND DOLLARS (US $25,000) on September 18, 2013; and (iii) TWENTY-FIVE THOUSAND DOLLARS (US $25,000) on June 26, 2014.

(g) ADDITIONAL CONSIDERATION . As additional consideration for the services provided under Section 2.06(b) of this Restated Agreement, EXACT shall make five (5) annual payments to MAYO of ONE MILLION DOLLARS ($1,000,000) each, commencing on February 10, 2015 (with the second such payment due on January 31, 2016, the third such

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payment due on January 31, 2017, the fourth annual payment due on January 31, 2018 and the fifth annual payment due on January 31, 2019); provided, however, that EXACT’s obligation to make the payments set forth in this Section 3.01(g) shall terminate upon EXACT’s termination of the Parties’ obligations under Section 2.06(b) pursuant to its termination rights under Section 2.06(b); and provided further, however, that the payments set forth in this Section 3.01(g) shall accelerate and become due and payable in full within thirty (30) days following the effective date of MAYO’s termination of the Parties’ obligations under Section 2.06(b) pursuant to its termination rights under Section 2.06(c) resulting from a Change of Control. Within MAYO, this additional consideration shall be equally divided among MAYO files 2010-325, 2014-068, 2014-069, 2015-040, 2015-041, 2015-042 and 2015-043.

3.02 MILESTONE FEES. EXACT will pay the following nonrefundable and noncreditable milestone fees to MAYO:

(a) TWO HUNDRED THOUSAND DOLLARS (US $200,000) cash payment, paid in two annual installments of ONE HUNDRED THOUSAND DOLLARS ($100,000) each, over a two (2) year period, upon each Licensed Product (other than a Lung Cancer Collaboration Licensed Product) launched after the Effective Date reaching FIVE MILLION DOLLARS (US $5,000,000) in cumulative Net Sales;

(b) SEVEN HUNDRED FIFTY THOUSAND DOLLARS (US $750,000) cash payment, paid in two annual installments of THREE HUNDRED SEVENTY-FIVE THOUSAND DOLLARS ($375,000) each, over a two (2) year period, upon each Licensed Product (other than a Lung Cancer Collaboration Licensed Product) launched after the Effective Date reaching TWENTY MILLION DOLLARS (US $20,000,000) in cumulative Net Sales;

(c) TWO MILLION DOLLARS (US $2,000,000) cash payment, paid in two annual installments of ONE MILLION DOLLARS ($1,000,000) each, over a two (2) year period, upon each Licensed Product (other than a Lung Cancer Collaboration Licensed Product) launched after the Effective Date reaching FIFTY MILLION DOLLARS (US $50,000,000) in cumulative Net Sales.

(d) For the avoidance of doubt, the Parties acknowledge and agree that Cologuard was launched prior to the Effective Date.

3.03 EARNED ROYALTIES. EXACT will make nonrefundable and noncreditable earned royalty payments to MAYO of a percentage of Net Sales of Licensed Products (“Earned Royalties”). The Earned Royalties are payable as described in Section 4.01. Licensed Products transferred to MAYO or its Affiliates are not considered transfers for purposes of determining Net Sales or for calculating Earned Royalties. No Earned Royalties are due MAYO on transfers to MAYO or MAYO Affiliates. In addition, no Earned Royalties are due MAYO with respect to Licensed Products, or transfers of Licensed Products, that are used or made in connection with orders made by MAYO, a MAYO Affiliate or any physician, healthcare provider or other party associated with MAYO or a MAYO Affiliate. Notwithstanding the foregoing, however, transfers by EXACT of Licensed Products to Mayo Collaborative Services, LLC shall be considered transfers for purposes of determining Net Sales and for calculating Earned Royalties

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in those instances in which such Licensed Product is used as a test for a patient and ordered by a third party other than MAYO, a MAYO Affiliate or any physician or other party associated with MAYO or a MAYO Affiliate.

The Earned Royalties shall be paid as follows:

(a) [***] percent ([***]%) of the Net Sales of Cologuard;

(b) [***] percent ([***]%) of Net Sales of Licensed Products, other than Lung Cancer Collaboration Licensed Products, that are commercially launched after Cologuard;

(c) [***] percent ([***]%) of the Net Sales of any Lung Cancer Collaboration Licensed Product, if , and only if, such Lung Cancer Collaboration Licensed Product (I) is (i) described by a pending claim of the Patent Rights; or (ii) would infringe an issued claim of the Patent Rights, or that would infringe but for the exception in 35 U.S.C. §271(e)(1), or similar exception in the United States or other countries; or (II) is developed, in material part, based on the research and development efforts of MAYO in collaboration with EXACT and a third party pursuant to Section 2.06 of this Restated Agreement, the Sponsored Research Agreement or a separate agreement between EXACT and MAYO; provided, however, that for purpose of this subsection, the definition of “Patent Rights” shall exclude 1.15(d); and

(d) If Cologuard is subject to an Update, Improvement or Replacement that includes a new biological marker or material technical improvement that is developed or identified by MAYO alone or in collaboration EXACT, the royalty payments to MAYO on Net Sales of Cologuard will increase [***]% for each such marker or technical improvement, with a maximum total royalty payment of [***]% of Net Sales. Such increased royalty shall be effective as of the commercial launch of such Licensed Product.

3.04 MINIMUM ROYALTIES. EXACT shall pay MAYO an annual minimum royalty (“Annual Minimum Royalty”) of TWENTY-FIVE THOUSAND DOLLARS (US $25,000) during the Term. Beginning with calendar year 2015, if in any calendar year during the Term the aggregate amount of the Earned Royalty payments made during such year is less than the applicable Annual Minimum Royalty for such year (a “Shortfall”), then EXACT shall make an additional payment to MAYO in the amount of the Shortfall together with the fourth quarter Earned Royalty payment for such year. For the avoidance of doubt, TWELVE THOUSAND FIVE HUNDRED DOLLARS ($12,500) of the TWENTY-FIVE THOUSAND DOLLAR ($25,000) payment received on June 26 2014 shall be applied to calendar year 2015.

3.05 COMPENSATION TO MAYO FOR AHLQUIST KNOW-HOW. For the 2014 calendar year, EXACT will pay MAYO a total of [***] DOLLARS (US $[***]; $[***] per day) [***]. This amount will be payable following receipt by EXACT of an invoice from MAYO. The financial information in this Section 3.05 is MAYO’s Confidential Information.

This amount will be adjusted each calendar year based on that year’s rate of salary and benefits for Dr. Ahlquist.

3.06 TAXES. EXACT is responsible for all taxes, duties, import deposits, assessments, and other governmental charges, however designated, which are now or hereafter imposed by any

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authority on EXACT: (a) by reason of the performance by MAYO of its obligations under this Restated Agreement, or the payment of any amounts by EXACT to MAYO under this Restated Agreement; (b) based on the Patent Rights; or (c) related to use, sale or import of the Licensed Product. Any withholding taxes which EXACT is required by law to withhold on remittance of the royalty payments shall be deducted from the royalty paid and EXACT shall promptly furnish MAYO with original copies of all official receipts for such taxes. EXACT will obtain, or assist MAYO in obtaining, any tax reduction (including avoidance of double taxation), tax refund or tax exemption available to MAYO by treaty or otherwise. Notwithstanding the foregoing, MAYO shall be responsible for paying and withholding all employment related taxes with respect to the services of Dr. Ahlquist and his laboratory staff.

3.07 U.S. CURRENCY. All payments to MAYO under this Restated Agreement will be made by draft drawn on a U.S. bank, and payable in U.S. dollars. In the event that conversion from foreign currency is required in calculating a payment under this Restated Agreement, the exchange rate used shall be the Interbank rate quoted by Citibank at the end of the last business day of the quarter in which the payment accrued.

3.08 OVERDUE PAYMENTS. If overdue, the payments due under this Restated Agreement shall bear interest until paid at a per annum rate two percent (2%) above the prime rate in effect at Citibank on the due date and MAYO shall be entitled to recover, in addition to all other remedies, reasonable attorneys’ fees and costs related to the administration or enforcement of this Restated Agreement, including collection of payments, following such failure to pay. The acceptance of any payment, including of such interest shall not foreclose MAYO from exercising any other right or seeking any other remedy that it may have as a consequence of the failure of EXACT to make any payment when due.

Article 4.00 — Accounting and Reports

4.01 REPORTS AND PAYMENT. EXACT will deliver to MAYO on or before the following dates: 1 February, 1 May, 1 August, and 1 November, a written report setting forth a full accounting showing how any Earned Royalties due to MAYO for the preceding calendar quarter have been calculated as provided in this Restated Agreement, including an accounting of total Net Sales with a reporting of any applicable foreign exchange rates, deductions, allowances, and charges. If no Licensed Product transfers have occurred and no other amounts are due to MAYO, EXACT will submit a report so stating. Each such report will be accompanied by the payment of all amounts due for such calendar quarter.

4.02 ACCOUNTING. EXACT will keep complete, continuous, true, and accurate books of accounts and records sufficient to support and verify diligence and the calculation of Net Sales, all royalties and any other amount believed due and payable to MAYO under this Restated Agreement. Such books and records will be kept at EXACT’s principal place of business for at least three years after the end of the calendar year to which they pertain, and will be open at all reasonable times for inspection by a representative of MAYO for verification of royalty statements or compliance with other aspects of this Restated Agreement. The MAYO representative will treat as confidential all relevant matters and will be a person or firm reasonably acceptable to EXACT. In the event such audit reveals an underpayment by EXACT,

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EXACT will within thirty (30) days pay the royalty due in excess of the royalty actually paid. In the event the audit reveals an underpayment by EXACT of more than five percent (5%) of the amount due, EXACT will pay interest on the royalty due in excess of the royalty actually paid at a per annum rate two per cent (2%) above the prime rate in effect at Citibank on the date notice of the deficiency is provided to EXACT, and EXACT will pay all of MAYO’s costs in conducting the audit.

Article 5.00 — Diligence

5.01 DEVELOPMENT PLAN. EXACT will make commercially reasonable efforts to bring Licensed Products to market.

5.02 DEVELOPMENT MILESTONES. In partial satisfaction of its obligations to bring Licensed Products to market, EXACT will provide MAYO with development milestones within six (6) months of the Effective Date. EXACT will promptly notify MAYO upon the achievement each of the development milestones, identify whether EXACT or a Sublicensee is responsible for the achievement of such milestone, and the actual date of such achievement.

5.03 DILIGENCE REPORTS. EXACT will provide MAYO with annual reports within thirty (30) days of each anniversary of the Effective Date describing in detail: (a) as of that reporting period, all development and marketing activities for each Licensed Product (other than Lung Cancer Collaboration Licensed Products) and the names of all Sublicensees, including which of the Sublicensees are Affiliates; and (b) an updated development plan for the next annual period.

5.04 THIRD PARTY COLLABORATIONS REGARDING ANCILLARY PRODUCTS. To the extent EXACT does not have currently-available resources to develop and bring to market a commercially-viable new product identified by the Parties pursuant to their work under this Restated Agreement, which is covered by a jointly owned Patent Right, and which is not competitive with any existing or planned EXACT product (an “Ancillary Product”), the Parties agree to use their good faith, commercially reasonable efforts to explore entering into an agreement with a third party pursuant to which such third party would undertake such development and/or marketing activities and would provide the Parties with royalties, milestone payments, and/or such other consideration upon which the Parties may agree between themselves and with such third party. The Parties will schedule a meeting or phone conference to discuss this topic at least once per year.

Article 6.00 — Intellectual Property Management

6.01 CONTROL.

(a) EXACT shall diligently prosecute and maintain the United States and foreign patents and patent applications covering Patent Rights as it deems appropriate, at EXACT’s expense, using counsel of its choice and after due consultation with MAYO. EXACT shall provide MAYO with copies of all relevant documentation so that MAYO may be informed and apprised of the continuing prosecution and MAYO agrees to keep this documentation

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confidential. EXACT shall also notify MAYO of its intention to not apply for patent protection for any invention with a MAYO inventor or to abandon the prosecution of any patent within the Patent Rights thirty (30) days prior to any applicable deadlines affecting such application or abandonment. Following such written notification and discussion between the Parties, MAYO shall be entitled to take over prosecution of such patent, at its own expense, of those patents within the Patent Rights that EXACT has elected not to pursue and, for MAYO owned patents and patent applications, EXACT shall then have no further rights to any patent that issues under such prosecution. For jointly owned patents and patent applications, EXACT shall retain its ownership rights.

(b) The Parties shall take commercially reasonable steps to ensure that the Know-How & Materials remain confidential in accordance with Article 8.

6.02 PATENT TERM EXTENSION. EXACT shall consult with MAYO in selecting the patent within the Patent Rights covering each Licensed Product for term extension for or supplementary protection certificate under in accordance with the applicable laws of any country. Each Party agrees to execute any documents and to take any additional actions as the other Party may reasonably request in connection therewith.

6.03 PATENT MARKING. To the extent commercially feasible, EXACT will mark all Licensed Products that are manufactured or sold under this Restated Agreement with the number of each issued patent within the Patent Rights that covers such Licensed Product(s). Any such marking will be in conformance with the patent laws and other laws of the country of manufacture or sale.

6.04 ENFORCEMENT. EXACT shall promptly inform MAYO in writing of any alleged or threatened infringement of any of the Patent Rights and/or Know-How & Materials and provide MAYO with any available evidence of such infringement.

(a) First Right. EXACT shall have the first right, but not the obligation, to enforce the Patent Rights so long as MAYO is kept fully informed and given the right and opportunity to advise and comment. MAYO shall reasonably cooperate in any such action at EXACT’s expense but shall not be required to join such action unless: (i) it has agreed to do so in writing prior to commencement thereof, or (ii) EXACT determines that MAYO is a necessary party in the action. EXACT shall pay to MAYO twenty-five percent (25%) of any recovery or damages, net of all reasonable costs and expenses associated with each suit or settlement.

(b) Non-Election to Enforce. If EXACT elects not to enforce the Patent Rights, it shall so notify MAYO in writing within ninety (90) days of receiving notice that an infringement may exist, and MAYO may, in its sole judgment and without any obligation, enforce, settle, and defend the Patent Rights and keep for its own account any recovery and damages. EXACT shall reasonably cooperate in any such actions if requested to do so by MAYO, at MAYO’s expense.

6.05 DEFENSE. EXACT will have the first right, but not the obligation, to take any measures deemed appropriate by EXACT in consultation with MAYO, regarding challenges to the Patent Rights, Know-How or Materials brought (including interferences in the U.S. Patent

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and Trademark Office and oppositions in foreign jurisdictions) and defense of the Patent Rights, Know-How or Materials required (including declaratory judgment actions). MAYO shall reasonably cooperate in any such measures if requested to do so by EXACT at EXACT’s expense, but shall not be required to join any action unless: (i) it has agreed to do so in writing prior to commencement thereof, or (ii) the court determines that MAYO is a necessary party in the action. EXACT shall be entitled to retain any related recovery, provided that all costs of MAYO related to such action have been fully paid by EXACT. If EXACT elects not to defend the Patent Rights, it shall so notify MAYO in writing within ninety (90) days of receiving notice that a challenge has been made, and MAYO may, in its sole judgment and without any obligation, enforce, settle, and defend the Patent Rights and keep for its own account any related recovery. EXACT shall reasonably cooperate in any such actions if requested to do so by MAYO, at MAYO’s expense.

6.06 THIRD PARTY LITIGATION. In the event a third party institutes a suit against EXACT for patent infringement involving a Licensed Product, EXACT will so inform MAYO within fifteen (15) business days and keep MAYO regularly informed of the proceedings.

Article 7.00 — Use of Name

7.01 USE OF NAME AND LOGO. Neither Party will use for publicity, promotion, or otherwise, any logo, name, trade name, service mark, or trademark of the other party or its Affiliates (in the case of MAYO, including, but not limited to, the terms “MAYO®,” “MAYO Clinic®,” and the triple shield MAYO logo, or any simulation, abbreviation, or adaptation of the same and in the case of EXACT, including, but not limited to, the terms “Exact Sciences” and “Cologuard”), or the name of any of the other Party’s employees or agents, without the other Party’s prior, written, express consent. Each Party may withhold such consent in its absolute discretion. With regard to the use of MAYO’s name, all requests for approval pursuant to this Section must be submitted to the Mayo Clinic Public Affairs Business Relations Group, at the following e-mail address: BusinessRelations@MAYO.edu at least five (5) business days prior to the date on which a response is needed. Notwithstanding the foregoing, Dr. Ahlquist and his MAYO colleagues may use EXACT’s corporate name and any trademarked name relating to a product developed under this Agreement in any non-commercial academic publications, educational settings, professional engagements, or in a conflict-of-interest disclosure

Article 8.00 — Confidentiality

8.01 TREATMENT OF CONFIDENTIAL INFORMATION. Except as provided for in Section 8.02, neither Party will disclose, use or otherwise make available the other’s Confidential Information during Term or for three years thereafter and will use the same degree of care it employs to protect its own confidential information.

8.02 RIGHT TO DISCLOSE.

(a) To the extent it is reasonably necessary or appropriate to fulfill its obligations or exercise its rights under this Restated Agreement; a Party may use or disclose Confidential Information to its Sublicensees, consultants, and outside contractors on the condition that each

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such entity agrees to obligations of confidentiality and non-use at least as stringent as those therein.

(b) If a Party is required by law, regulation or court order to disclose any of the Confidential Information, it will have the right to do so, provided it: (i) promptly notifies the disclosing party; and (ii) reasonably assists the disclosing party to obtain a protective order or other remedy of disclosing party’s election and at disclosing party’s expense.

8.03 CONFIDENTIALITY OF AGREEMENTS. Except as otherwise required by law, the specific terms and conditions of this Restated Agreement shall be Confidential Information but the existence and Field of this Restated Agreement will not be Confidential Information and the Parties may state that EXACT is licensed under the Patent Rights. Notwithstanding the foregoing, a Party may disclose the contents of this Restated Agreement to its actual or prospective investors, professional advisors, and as required by law or the rules of any applicable securities exchange.

8.04 PUBLICATION. To enable the receiving Party to secure adequate intellectual property protection that would be affected by a public disclosure, MAYO and EXACT will submit any manuscript or material for any proposed academic publication, meeting, conference, or talk (“Public Disclosure”) of research underlying Patent Rights to the other Party at least 30 days before transmission of any manuscript or material to a third party (or at least 30 days before Public Disclosure where no manuscript or material exists), and the receiving Party shall have the right to review and comment upon the Public Disclosure in order to protect confidential information. Upon the receiving Party’s request, publication will be delayed up to 60 additional days. Notwithstanding the above, the Public Disclosure shall not include EXACT Confidential Information without prior approval by EXACT.

Article 9.00 — Warranties, Representations, Disclaimers and Indemnification

9.01 REPRESENTATIONS AND WARRANTIES OF EXACT. EXACT warrants and represents to MAYO that:

(a) it is experienced in the development, production, quality control, service, manufacture, marketing, and sales of products similar to the subject matter of the Patent Rights, and that it will commit itself to a thorough, vigorous, and diligent program of developing and marketing Licensed Products;

(b) it has independently evaluated the Patent Rights, Know-How, Materials and Confidential Information, if any, their applicability or utility in EXACT’s activities, is entering into this Restated Agreement on the basis of its own evaluation and not in reliance of any representation by MAYO, and assumes all risk and liability in connection with such determination;

(c) the execution and delivery of this Restated Agreement has been duly authorized and no further approval, corporate or otherwise, is required in order to execute this binding Restated Agreement;

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(d) it shall comply and require its Sublicensees to comply with all applicable international, national, and state laws, ordinances and regulations in its performance under this Restated Agreement; and

(e) its rights and obligations under this Restated Agreement do not conflict with any contractual obligation or court or administrative order by which it is bound.

9.02 REPRESENTATIONS AND WARRANTIES OF MAYO. MAYO warrants and represents to EXACT that:

(a) it is the owner of the Patent Rights and has full power and authority to grant the licenses which are provided for in this Restated Agreement;

(b) the execution and delivery of this Restated Agreement has been duly authorized and no further approval, corporate or otherwise, is required in order to execute this binding Restated Agreement;

(c) to the best of its internal counsel’s knowledge, its rights and obligations under this Restated Agreement do not conflict with any contractual obligation or court or administrative order by which it is bound;

(d) no claim, suit or action has been made or initiated alleging that the Patent Rights are invalid or that the practice of the Patent Rights will infringe the rights of any third party; and

(e) to the best of its internal counsel’s knowledge the Patent Rights are valid and subsisting.

9.03 DISCLAIMERS.

(a) EXCEPT AS EXPRESSLY SET FORTH HEREIN, NEITHER PARTY HAS MADE ANY PROMISES, COVENANTS, GUARANTEES, REPRESENTATIONS OR WARRANTIES OF ANY NATURE, DIRECTLY OR INDIRECTLY, EXPRESS, STATUTORY OR IMPLIED, INCLUDING WITHOUT LIMITATION, MERCHANTABILITY, OR FITNESS FOR A PARTICULAR PURPOSE, SUITABILITY, DURABILITY, CONDITION, QUALITY, OR ANY OTHER CHARACTERISTIC OF THE LICENSED PRODUCT, KNOW-HOW, MATERIALS OR PATENT RIGHTS.

(b) KNOW-HOW, MATERIALS, CONFIDENTIAL INFORMATION AND PATENT RIGHTS ARE PROVIDED “AS IS,” “WITH ALL FAULTS,” AND “WITH ALL DEFECTS,” AND EXACT EXPRESSLY WAIVES ALL RIGHTS TO MAKE ANY CLAIM WHATSOEVER AGAINST MAYO FOR MISREPRESENTATION OR FOR BREACH OF PROMISE, GUARANTEE, REPRESENTATION OR WARRANTY OF ANY KIND RELATING TO THE LICENSED PRODUCTS, KNOW-HOW, MATERIALS, CONFIDENTIAL INFORMATION OR PATENT RIGHTS, EXCEPT AS EXPRESSLY SET FORTH HEREIN. MAYO EXPRESSLY DISCLAIMS ANY IMPLIED WARRANTIES

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ARISING FROM ANY COURSE OF DEALING, USAGE, OR TRADE PRACTICE, WITH RESPECT TO: THE SCOPE, VALIDITY OR ENFORCEABILITY OF THE PATENT RIGHTS, KNOW-HOW, OR MATERIALS; THAT ANY PATENT WILL ISSUE BASED UPON ANY PENDING PATENT APPLICATION; OR THAT THE MANUFACTURE, USE, SALE, OFFER FOR SALE OR IMPORTATION OF THE LICENSED PRODUCTS WILL NOT INFRINGE OTHER INTELLECTUAL PROPERTY RIGHTS. NOTHING IN THIS RESTATED AGREEMENT WILL BE CONSTRUED AS AN OBLIGATION FOR MAYO TO BRING, PROSECUTE OR DEFEND ACTIONS REGARDING THE PATENT RIGHTS, KNOW-HOW OR MATERIALS.

(c) EXACT AGREES THAT MAYO AND ITS AFFILIATES WILL NOT BE LIABLE FOR ANY LOSS OR DAMAGE CAUSED BY OR ARISING OUT OF ANY RIGHTS GRANTED OR PERFORMANCE MADE UNDER THIS RESTATED AGREEMENT, WHETHER TO OR BY EXACT, A SUBLICENSEE OR A THIRD PARTY. IN NO EVENT WILL MAYO’S LIABILITY OF ANY KIND INCLUDE ANY SPECIAL, INDIRECT, INCIDENTAL, CONSEQUENTIAL OR PUNITIVE LOSSES OR DAMAGES, EVEN IF MAYO HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES, OR EXCEED THE TOTAL AMOUNT OF ROYALTIES WHICH HAVE ACTUALLY BEEN PAID TO MAYO BY EXACT AS OF THE DATE OF FILING AN ACTION AGAINST MAYO WHICH RESULTS IN THE SETTLEMENT OR AWARD OF DAMAGES TO EXACT.

9.04 INDEMNIFICATION AND INSURANCE.

(a) EXACT will defend, indemnify, and hold harmless MAYO, MAYO’s Affiliates and their respective trustees, officers, agents, independent contractors and employees (“MAYO Indemnitees”) from any and all claims, actions, demands, judgments, losses, costs, expenses, damages and liabilities (including attorneys’ fees, court costs and other expenses of litigation), regardless of the legal theory asserted, arising out of or connected with: (a) the practice or exercise of any rights granted hereunder by or on behalf of EXACT or any Sublicensee; (b) research, development, design, manufacture, distribution, use, sale, importation, exportation or other disposition of Licensed Products; and (c) any act or omission of EXACT or any Sublicensee hereunder, including the negligence or willful misconduct thereof. MAYO and MAYO Affiliates shall have no obligation to indemnify EXACT hereunder. Notwithstanding the foregoing, the indemnity obligations of EXACT shall not apply with respect to any claims, actions, demands, judgments, losses, costs, expenses, damages and liabilities which arise due to a breach of this Restated Agreement by MAYO or the gross negligence or willful misconduct of MAYO or its agents or employees.

(b) The Parties agree that this indemnity should be construed and applied in favor of maximum indemnification of MAYO Indemnitees.

(c) Commencing on the date of first commercial sale of a Licensed Product by EXACT, EXACT will continuously carry claim-based liability insurance, including products liability and contractual liability, in an amount and for a time period sufficient to cover the liability assumed by EXACT hereunder during the Term and after, such amount being at least

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THREE MILLION DOLLARS (US $3,000,000). In addition, such policy will name MAYO and its Affiliates as additional-named insureds. In such case, EXACT will self-insure or obtain, at its cost, an extended reporting endorsement upon termination of this Restated Agreement sufficient to cover the liability assumed by EXACT hereunder for as long as the appropriate statute of limitations. The minimum limits of any insurance coverage required herein shall not limit EXACT’s liability.

9.05 PROHIBITION AGAINST INCONSISTENT STATEMENTS. EXACT shall not make any statements, representations or warranties, or accept any liabilities or responsibilities whatsoever which are inconsistent with any disclaimer or limitation included in this section or any other provision of this Restated Agreement. EXACT shall not settle any matter that will incur liability for MAYO or require MAYO to make any admission of liability without MAYO’s prior written consent.

Article 10.00 — Term and Termination

10.01 TERM. This Restated Agreement will expire at the end of the Term.

10.02 TERMINATION FOR BREACH. If EXACT commits a material breach of this Restated Agreement, including without limitation, the failure to make any required royalty or fee payments hereunder, MAYO will notify EXACT in writing of such breach and EXACT will have thirty (30) days after such notice to cure such breach to MAYO’s satisfaction. If EXACT fails to cure such breach, MAYO may, at its sole option, terminate this Restated Agreement in whole or in part by sending EXACT written notice of termination.

10.03 TERMINATION FOR SUIT. MAYO does not license entities that bring suit against MAYO or its Affiliates and as such, MAYO may immediately terminate this Restated Agreement if EXACT or any Sublicensee directly or indirectly brings any action or proceeding against MAYO or its Affiliates, except for an uncured material breach of this Restated Agreement by MAYO.

10.04 TERMINATION BY EXACT. Subject to the terms of the Sponsored Research Restated Agreement, EXACT may without cause terminate this Restated Agreement at any time following payment and delivery of the compensation provided for in Section 3.01, upon written notice to MAYO.

10.05 INSOLVENCY OF EXACT. This Restated Agreement terminates immediately without an obligation of notice of termination to EXACT in the event EXACT ceases conducting business in the normal course, becomes insolvent or bankrupt, makes a general assignment for the benefit of creditors, admits in writing its inability to pay its debts as they are due, permits the appointment of a receiver for its business or assets, or avails itself of or becomes subject to any proceeding under any statute of any governing authority relating to insolvency or the protection of rights of creditors.

10.06 SURVIVAL. The termination or expiration of this Restated Agreement does not relieve either Party of its rights and obligations that have previously accrued. After the Term, all rights

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granted immediately revert to MAYO. All Confidential Information of the other Party shall be returned or destruction certified, at the disclosing party’s election. Rights and obligations that by their nature prescribe continuing rights and obligations shall survive the termination or expiration of this Restated Agreement including Sections 4.02, 9.04, 10.05 and Articles 7, 8 and 11. EXACT and its Sublicensees shall provide an accounting for and pay, within thirty (30) days of termination or expiration, all amounts due hereunder. Upon any termination of this Restated Agreement, the licenses granted hereunder shall cease. Upon expiration of this Restated Agreement, the licenses granted hereunder shall become fully paid up.

Article 11.00 — General Provisions

11.01 ASSIGNMENT AND TRANSFER. Each Party is strictly prohibited from assigning, delegating or otherwise transferring any of its obligations or rights under this Restated Agreement without the other Party’s prior, express and written consent, which shall not be unreasonably withheld. Any assignment, delegation or transfer in contravention hereof is null and void. Notwithstanding the foregoing, EXACT may assign this Restated Agreement to an Affiliate and either Party may assign this Restated Agreement, in whole or in part, without approval in connection with a sale, merger or other transaction which involves the transfer of substantially all of the assets of a Party used in connection with any business of such Party that relates to this Restated Agreement. Any assignment shall not in any manner relieve the assignor from liability for the performance of this Restated Agreement by its assignee and shall not otherwise affect the terms or conditions under this Restated Agreement. The assignor shall provide prompt notice to the other Party upon making such assignment.

11.02 WAIVER. No part of this Restated Agreement may be waived except by the further written agreement of the Party granting such waiver. Forbearance in any form from demanding the performance of a duty owed under this Restated Agreement is not a waiver of that duty. Until complete performance of a duty owed under this Restated Agreement is accomplished, the Party to which that duty is owed may invoke any remedy under this Restated Agreement or under law, despite its past forbearance in demanding performance of that duty.

11.03 GOVERNING LAW AND JURISDICTION. This Restated Agreement is made and performed in Minnesota. The terms and conditions of this Restated Agreement, as well as all disputes arising under or relating to this Restated Agreement, shall be governed by Minnesota law, specifically excluding its choice-of-law principles, except that the interpretation, validity and enforceability of the Patent Rights will be governed by the patent laws of the country in which the patent application is pending or issued. This is not an agreement for the sale of goods and as such Article 2 of the Uniform Commercial Code as enacted in Minnesota does not apply.

11.04 HEADINGS. The headings of articles and sections used in this document are for convenience of reference only.

11.05 NOTICES. Any notice required to be given under this Restated Agreement is properly provided if in writing and sent to the Party at its address or facsimile number below, or as otherwise designated by the Party in accordance with this provision, and duly given or made: (a) on the date delivered in person; (b) on the date transmitted by facsimile, if confirmation is

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received; (c) three (3) days after deposit in the mail if sent by certified U.S. mail postage prepaid, return receipt requested; and (d) one (l) day after deposit with a nationally recognized overnight carrier service with charges prepaid.

For MAYO:


Mayo Foundation for Medical Education and Research
Mayo Clinic Ventures -BB4
200 First Street SW
Rochester, Minnesota 55905-0001
Attn:		Ventures Operations
Phone:		(507) 293-3900
Facsimile:		(507) 284-5410
Email:		intellectualproperty@mayo.edu
Fed Tax ID:		41-1506440

For EXACT:


Exact Sciences Corporation
441 Charmany Drive,
Madison, WI 53719
Attn:		Maneesh Arora
Phone:		(508) 683-1200
Fax:		(508) 683-1201
Email:		marora@exactsciences.com

11.06 LIMITATION OF RIGHTS CREATED. This Restated Agreement is personal to the Parties and shall be binding on and inure to the sole benefit of the Parties and their permitted successors and assigns and shall not be construed as conferring any rights to any third party. Specifically, no interests are intended to be created for any customer, patient, research subjects, or other persons (or their relatives, heirs, dependents, or personal representatives) by or upon whom the Licensed Products may be used.

11.07 INDEPENDENT CONTRACTORS. EXACT and any Sublicensee is an independent contractor not an agent, employee, partner, joint venturer or servant of MAYO and has no right to obligate or bind MAYO in any manner.

11.08 ENTIRE AGREEMENT. This Restated Agreement states the entire agreement and understanding between the Parties about its subject matter. All past and contemporaneous discussions, writings, agreements, proposals, promises, covenants, warranties, representations, guarantees, correspondence, and understandings, whether oral or written, formal or informal, are entirely superseded by this Restated Agreement, with the exception of (a) the material transfer agreement for 200 stool and tissue samples, effective 9 November 2000 and attached hereto as Exhibit E (MAYO agreement # 1683); and (b) the material transfer agreement for 80 blood samples, effective 9 November 2000 and attached hereto as Exhibit F (MAYO agreement # 1684). For the avoidance of doubt, (a) the letter to Don Hardison regarding prosecution of joint

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intellectual property, dated 3 January 2003 and attached hereto as Exhibit G (MAYO agreement # 1685); and (b) the confidentiality agreement effective 16 February 2009 and attached hereto as Exhibit H (MAYO agreement # 6049) are entirely superseded by this Restated Agreement.

11.09 SEVERABILITY. If any terms or conditions of this Restated Agreement are or become in conflict with the laws, regulations or court order of any jurisdiction or any governmental entity having jurisdiction over the Parties or this Restated Agreement, those terms and conditions shall be deemed automatically deleted in such jurisdiction(s) only, and the remaining terms and conditions of this Restated Agreement shall remain in full force and effect. If such a deletion is not so allowed in a given jurisdiction or if such a deletion leaves terms and conditions thereby made clearly illogical or inappropriate in effect, the Parties agree to substitute new terms and conditions as similar in effect to the present terms of this Restated Agreement as may be allowed under the applicable laws, regulations or court order of such jurisdiction. The Parties desire the terms and conditions herein to be valid and enforced to the maximum extent not prohibited by law, regulation or court order in a given jurisdiction.

11.10 CHANGES TO AGREEMENT. No terms or conditions of this Restated Agreement may be changed except in writing, through another document signed by both Parties, and expressly referencing this Restated Agreement.

11.11 CONSTRUCTION. Each Party acknowledges that it was provided an opportunity to seek advice of counsel and as such this Restated Agreement shall not be construed for or against either Party.

11.12 REGISTRATION OF LICENSES. EXACT will register and give required notice concerning this Restated Agreement, at its expense, in each country in the Territory where an obligation under law exists to so register or give notice.

11.13 EXPORT CONTROL. MAYO is subject to U.S. laws and regulations controlling the export of technical data, computer software, laboratory prototypes, and other commodities that may require a license from the applicable agency of the United States government and/or may require written assurances by EXACT that it will not export data or commodities to certain foreign countries without prior approval of such agency. MAYO neither represents that a license is required, nor that, if required, it will be issued.

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The Parties execute this Restated Agreement in one or more counterparts, each of which shall be deemed an original but all of which taken together constitute one and the same instrument, as of the Effective Date.


Mayo Foundation for Medical Education and Research		Exact Sciences Corporation:

/ s/ Daniel D. Estes		/s/ Kevin Conroy
Daniel D. Estes		Name: Kevin Conroy
Assistant Treasurer		Title: Chief Executive Officer

Date	January 30, 2015	Date	February 2, 2015

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Exhibit A

Licensed Patents

Mayo Owned IP


App or Patent #	Domain	Patent Title	Filing or Issue Date	MAYO file #
7,785,772	USA	Detecting Methylated Mammalian Nucleic Acid	8/31/2010	2006-274
12/851,872	USA	in Stool	8/6/2010
60/886,278	USA		1/23/2007
8,673,555	USA	Detecting Neoplasm	3/18/2014	2007-312
PCT/US2009/033793	USA		2/11/2009	2007-312
09711056.3	EPO		2/11/2009	2007-312
11189541.3	EPO		2/11/2009	2007-312
61/029,221	USA		2/15/2008	2007-208
				2007-209
				2007-210
				2007-211
				2007-212
				2007-213
8,722,330	USA	Collecting and Processing Complex	5/13/2014
12/555,672	USA	Macromolecular Mixtures	9/8/2009
PCT/US2009/056252	USA		9/8/2009
61/094,770	USA		9/5/2008	2007-211
				2008-147
				2008-199
13/072,047	USA	Methods and Materials for Detecting Colorectal	3/25/2011	2009-133
PCT/US2011/029959	USA	Neoplasm	3/25/2011	2009-133
2011230633	Australia		3/25/2011
2790416	Canada		3/25/2011
11760295.3	EPO		3/25/2011
61/318,077	USA		3/26/2010	2009-133
61/452,350	USA	Methods and Materials for Using the Contents	3/14/2011	2010-325
14/004,952	USA	of Phagocytes to Detect Neoplasms	3/14/2012
PCT/US2012/029073	USA		3/14/2012
60/989,578	USA	Removing Polypeptide from Stool	11/21/2007	2007-207
8,735,168	USA		5/27/14
PCT/US2008/084278			11/21/2008
61/611,310	USA	Methods and Materials for Noninvasive Detection	3/15/2012	2010-046
13/773,791	USA	of Colorectal Neoplasia Associated with	2/21/2013
PCT/US13/27227	USA	Inflammatory Bowel Disease	2/21/2013
61/784,429	USA	Detecting Neoplasm	3/14/2013	2012-250
14/206,596	USA		3/12/2014
PCT/US14/024582	USA		3/12/2014
PCT/US14/024589	USA		3/12/2014
61/452,350	USA	Materials and Methods for Using the Contents of	3/14/2011	2010-325
PCT/US2012/029073	USA	Phagocytes to Detect Neoplasms
14/004,952	USA
62/055,737	USA	Detecting Cholangiocarcinoma	9/26/2014	2014-350

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Jointly (Mayo & Exact) Owned IP


App or Patent #	Domain	Patent Title	Filing or Issue Date	MAYO file #
47142/01	Australia	Supracolonic Aerodigestive Neoplasm Detection	12/7/2000	2000-026
2394921	Canada		12/7/2000
00992876.3	EPO		12/7/2000
2001-544020	Japan		12/7/2000
PCT/US00/42683	USA		12/7/2000
7,981,612	USA	Methods of Screening for Supracolonic	7/19/2011	2000-026
7,368,233	USA	Neoplasms Based on Stool Samples Containing a	5/6/2008
60/196,074	USA	Nucleic Acid Marker Indicative of a Neoplasm	4/10/2000
60/169,457	USA		12/07/1999
13/364,978	USA	Digital Sequence Analysis of DNA Methylation	2/2/2012	2011-036
PCT/US12/23646	USA		2/2/2012
61/438,649	USA		2/2/2011
13/575,831	USA	Methods and Materials for Detecting Colorectal	9/4/2012
PCT/US2011/029982	USA	Cancer and Adenoma	3/25/2011	2009-134
61/318,670	USA		3/29/2010	2009-134
PCT/US13/33047	USA	Marker Panel for Detecting Cancer	3/20/2013	2012-085
61/613,252	USA		3/20/2012
14/386,554	USA		9/19/14
PCT/US14/24589	USA	Detecting Neoplasm	3/12/2014
61/972,942	USA	Detecting Colorectal Neoplasm	3/31/2014	2013-178
61/977,954	USA		4/10/2014
62/091,053	USA	Compositions and Methods for Performing Methylation Detection Assays	12/12/2014

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Exhibit B

Markers

Markers identified by MAYO and subject to the agreement are found in the following disclosures and related patent applications:


Mayo File #	Related Patent Applications
2012-250	61/784,429; 14/206,596; PCT/US14/024582; PCT/US14/024589
2013-178	61/972,942; 61/977,954
2013-179
2014-068
2014-069
2014-350	62/055,737
2014-372
2015-040
2015-042
2015-043

DELAWARE		02-0478229
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification Number)

441 Charmany Drive, Madison WI		53719
(Address of principal executive offices)		(Zip Code)

Large accelerated filer ☒		Accelerated filer ☐

Non-accelerated filer ☐		Smaller reporting company ☐
(Do not check if a smaller reporting company)