Exact Sciences Corp. entered a five-year exclusive strategic partnership potentially valued at up to $75 million with Laboratory Corp. of America Holdings to commercialize PreGen-Plus, a screening test for colorectal cancer based on applied genomics.

Exact Sciences, of Maynard, Mass., was paid an initial $15 million by LabCorp., of Burlington, N.C. An additional $15 million is scheduled to be paid to Exact Sciences once the product goes on the market, which is expected in the second quarter of 2003.

Additional payments would be made based on milestones achieved related to scientific acceptance, reimbursement approval and technology improvements. Also, Exact Sciences would receive a royalty fee for each PreGen-Plus test performed by LabCorp.

As part of the partnership, Exact Sciences has issued to LabCorp a warrant to purchase 1 million shares of Exact Sciences' common stock, exercisable over the next three years at an exercise price of $16.99.

Exact Sciences' stock (NASDAQ:EXAS) rose $1.83 Thursday, or 12.4 percent, to close at $16.58.

Exact Sciences President and CEO Don Hardison said in a conference call that the collaboration is "most likely the largest molecular diagnostics deal in history." He said that it follows up on the company's promise to investors to create significant additional value.

The exclusive license will be followed by a nonexclusive license for the life of the patents.

Hardison said it represents the "first practical application of applied genomics." "The key word," he added, "is genomics.'"

Hardison explained that it was LabCorp's commitment to genomics that attracted him to that company and, along with what he saw as the two companies' cultural fit, led him to pursue an exclusive deal with LabCorp, which had annual revenues of $2.2 billion in 2001. LabCorp serves more than 200,000 clients nationwide. It operates the Center for Molecular Biology and Pathology in Research Triangle Park, N.C., and the National Genetics Institute in Los Angeles, which develops methods for testing for hepatitis C and other blood-borne diseases based on polymerase chain reaction methods.

PreGen-Plus works to analyze DNA that is shed in the colon and carried out of the body in the stool. The test analyzes the DNA for mutations associated with colon cancer.

LabCorp Chairman and CEO Tom Mac Mahon said the test has "the potential to be a blockbuster screening test as early as the second quarter of 2003."

"All the milestones are related to success, and we at LabCorp are hopeful we will achieve our milestones and will pay as much as $75 million to Exact Sciences," Mac Mahon said.

LabCorp has a sales force of some 600 people who will be making the test available to a range of physicians, including gastroenterologists, primary care physicians and gynecologists in the U.S. and Canada.

Between now and the planned launch, Mac Mahon said in the conference call, there are things that need to be done by LabCorp, including validating the PreGen-Plus test in its laboratories and educating the sales force, but he would not be more specific.

Meanwhile, Exact Sciences will be working on reimbursement issues in both the private and public sectors, Hardison said, adding that the company will continue to conduct clinical studies in order to supply medical officers with data they need to see in order to determine reimbursement status.

There are about 80 million people older than 50 who are considered "average risk" and would be candidates to undergo this test, as recommended by the American Cancer Society. If the disease were detected at an early stage, it could increase cure rates to more than 90 percent, the companies said. Colorectal cancer is the most deadly cancer among nonsmokers in the U.S., the companies said.

Hardison said the goal is not to replace colonoscopies, but to determine who are the right candidates for that procedure, of which about 4 million are conducted each year.