Contract analysis

I. Executive Summary The purpose of this memorandum is to set forth the preliminary purchase price allocation ("PPA") for the $140,000,000 asset purchase of the OncuPath™ companion diagnostics business line (the "OncuPath Business") by Meridian Precision Diagnostics, Inc. ("Buyer" or "Meridian") from Genome Dx Therapeutics Inc. ("Seller" or "GDT"), pursuant to Section 2.6 of the Asset Purchase Agreement dated May 11,

II. Transaction Overview A. Parties Seller. Genome Dx Therapeutics Inc. ("GDT") is a Delaware corporation headquartered at 10250 Science Center Drive, Suite 600, San Diego, California 92121. GDT's Employer Identification Number is 47-3892061. GDT is a privately held C corporation engaged in the development, manufacturing, and commercialization of molecular diagnostic products, including the OncuPath companion diagnos

III. Legal Framework — IRC § 1060 and the Residual Method A. Statutory and Regulatory Framework IRC § 1060(a) provides that in the case of any "applicable asset acquisition," the transferee's basis in the acquired assets — and the gain or loss of the transferor — shall be determined by allocating the consideration paid among the acquired assets in the same manner as amounts are allocated under IRC § 338(b)(5). This a

IV. Treatment of Earnout Consideration A. Inclusion in Allocable Consideration The total consideration for purposes of the purchase price allocation is $140,000,000, comprising the $126,000,000 closing cash payment and the $14,000,000 maximum earnout. A threshold question in structuring the allocation is whether the $14,000,000 earnout should be included in the aggregate consideration at the time of closing (i.e., tr

V. Preliminary Purchase Price Allocation A. Methodology The preliminary fair market values assigned to each class of Purchased Assets were estimated based on the following sources and methodologies: (a) Haverford & Lane LLP's carve-out financial statements and asset appraisals prepared in connection with the OncuPath Business carve-out, including depreciated replacement cost analyses for tangible personal property, r

1. Intellectual Property (Patents, Trade Secrets, Know-How, and Vantage License): $52,600,000 The intellectual property component of the Class V allocation, valued at $52,600,000, represents the single largest asset or asset group in the entire purchase price allocation. This subcategory includes the following: Issued Patents. Fourteen (14) issued United States patents covering various aspects of the OncuPath diagnos

2. Customer Relationships and Contracts: $27,800,000 The customer relationships and contracts component of the Class V allocation, valued at $27,800,000, reflects the value of the OncuPath Business's established customer base and the associated contracted revenue streams. The Purchased Assets include all customer contracts transferred pursuant to the Assignment and Assumption Agreement, encompassing relationships wit

3. Real Property Interests (Leasehold Improvements and Interests): $3,400,000 The real property interests component of the Class V allocation, valued at $3,400,000, includes the following: Below-Market Lease Value — 4820 Towne Centre Drive. The assigned leasehold interest at 4820 Towne Centre Drive, Suite 200, San Diego, California 92121 (the primary OncuPath reference laboratory and R&D facility) carries contractual

VI. Tax Implications for Seller (GDT) A. Character of Gain by Asset Class The character of GDT's recognized gain from the sale of the Purchased Assets varies by asset class, depending on the nature of the assets and the applicable recapture provisions: Class IV — Tangible Personal Property ($18,200,000). Gain recognized on the disposition of Class IV assets is subject to IRC § 1245 depreciation recapture to the exten

VII. Tax Implications for Buyer (Meridian) A. Step-Up in Basis One of the primary tax advantages of the asset purchase structure for Meridian is the full step-up in tax basis for all Purchased Assets to their allocated fair market values. Unlike a stock acquisition (in which the acquired corporation's historical tax bases in its assets generally carry over to the new owner), an asset acquisition under IRC § 1012 prov