Which regulatory and screening guideline milestones must be met for the deal to trigger payments, and what is the timeline for each? | EXAS (Aug 06, 2025) | Candlesense
EXAS

Which regulatory and screening guideline milestones must be met for the deal to trigger payments, and what is the timeline for each?

Regulatory and screening‑guideline milestones that trigger the payments under the Freenome ↔ Exact Sciences agreement

Milestone (what must be achieved) How the milestone is defined in the deal Approximate timing (based on the information released)
1. Completion of the “final module” submission to the U.S. FDA Freenome must file the last required regulatory package (the “final module”) for its first‑generation colorectal‑cancer (CRC) blood‑test. This filing is the formal request for FDA clearance/approval and is the prerequisite for any downstream regulatory‑based payments. Q3 2025 – The news states the final module has already been submitted (the press release is dated 6 Aug 2025).
2. FDA regulatory clearance (or approval) of the CRC test The FDA must issue a clearance (e.g., 510(k) or de‑novo) or a traditional approval for the Freenome CRC screening assay. The deal ties a tranche of the $885 M payout to the receipt of this regulatory decision. 2026 – The company expects FDA approval and a commercial launch in 2026, so the clearance is projected to occur sometime in the first half of 2026 (typical FDA review timelines for a 510(k) are 3–6 months).
3. Achievement of a U.S. guideline endorsement (screening‑guideline milestone) The test must be incorporated into a recognized national screening guideline (e.g., the U.S. Preventive Services Task Force (USPSTF) recommendation, American Cancer Society (ACS) guideline, or a similar professional‑society guideline). The agreement specifies that once the test is listed as a recommended or “acceptable” CRC screening option, a further payment is triggered. 2026–2027 – Because guideline updates usually follow the release of new evidence and FDA clearance, the earliest realistic window is the second half of 2026 or early 2027.
4. CMS (Centers for Medicare & Medicaid Services) coverage decision After FDA clearance, the test must obtain a coverage determination from CMS (e.g., a “National Coverage Determination” or a “Local Coverage Determination”). The deal links an additional payment to the receipt of this coverage decision, which is essential for large‑scale payer adoption in the United States. 2027 – CMS typically issues coverage determinations 12–18 months after FDA clearance, so the expected timeline is mid‑2027.
5. Commercial launch in the United States The product must be commercially available (i.e., marketed and sold) in the U.S. market. The agreement ties the final payment milestone to the actual launch, confirming that the regulatory and guideline steps have been successfully translated into market availability. 2026 (launch) – The press release explicitly states a “commercial launch anticipated in 2026.” The launch itself is the trigger for the last payment tranche.

How the payments are structured (based on the “up‑to $885 million” language)

Payment tranche Triggered by Approximate date of trigger
Initial upfront payment Execution of the license agreement (no regulatory condition) Already paid at signing (2025)
First milestone payment Successful submission of the final FDA module (regulatory filing) Q3 2025
Second milestone payment FDA clearance/approval of the CRC test Early‑mid 2026
Third milestone payment Inclusion of the test in a major U.S. screening guideline (USPSTF, ACS, etc.) Late 2026 – early 2027
Fourth milestone payment CMS coverage determination (or equivalent payer coverage) Mid‑2027
Final milestone payment Commercial launch of the test in the United States Late 2026 (launch) – the launch itself finalises the payment schedule, with any remaining balance paid shortly after launch.

Key points to remember

  1. Regulatory‑first: The “final module” filing is the first regulatory milestone; without it, no later payments can be earned.
  2. FDA decision is the pivotal gate: All subsequent milestones (guideline endorsement, payer coverage, launch) are contingent on FDA clearance/approval.
  3. Guideline and coverage milestones are separate: Even after FDA approval, the deal requires a recognized screening‑guideline endorsement and a CMS coverage decision before the final payment is released.
  4. Timeline alignment: The company’s public roadmap (final module submitted 2025 → FDA approval & launch 2026) fits the typical 12‑month FDA review, a 6‑12‑month guideline update cycle, and a 12‑18‑month CMS coverage process, resulting in a staggered series of payments that span roughly 2025 – 2027.

Bottom line: Payments under the Freenome‑Exact Sciences deal are tied to a step‑wise progression—first the FDA filing (already done), then FDA clearance (2026), followed by a U.S. screening‑guideline endorsement (late 2026‑early 2027), a CMS coverage decision (mid‑2027), and finally the commercial launch of the blood‑based CRC screening test (2026). Each of these milestones unlocks a portion of the total $885 million upside.

Other Questions About This News

How does the valuation of this licensing agreement compare to recent similar deals in the oncology diagnostics space? What potential revenue upside could the commercial launch of the blood-based screening test provide to Exact Sciences over the next 5 years? Are there any contingent earn‑out clauses or performance targets that could accelerate or defer payments under the agreement? How does this collaboration position Exact Sciences relative to competitors offering colorectal cancer screening solutions? Will the partnership with Freenome dilute Exact Sciences' equity or lead to future share issuances? How sensitive is the deal’s financial upside to macro‑economic factors or changes in healthcare policy? What are the expected pricing and reimbursement dynamics for the new colorectal cancer test in the U.S. market? How will the $885M milestone-based deal affect Exact Sciences' cash position and earnings forecasts? What is the probability of the FDA granting approval for Freenome's colorectal cancer test by the 2026 target? What impact could the launch have on Exact Sciences' existing product portfolio and sales focus? How might the market price of Exact Sciences' stock react to the submission of the FDA module and the subsequent approval milestones?