MEMORANDUM
PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT
TO: James Prentice, Sandra Tung, Leonard Cross
FROM: Andrew Fitzpatrick
CC: Tiffany Rosenthal
DATE: August 9, 2023
RE: Regulatory and Consent Tracker — Divestiture of OncuPath™ Companion Diagnostics Assay Line by Genome Dx Therapeutics Inc. to Meridian Precision Diagnostics, Inc.
Matter No.: 1013-00006&A-4471
Client: Genome Dx Therapeutics Inc. ("GDT" or "Seller")
Counterparty: Meridian Precision Diagnostics, Inc. ("Meridian" or "Buyer")
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I. Executive Summary
This memorandum serves as a comprehensive tracker of all third-party consents, governmental approvals, and regulatory notifications required in connection with the $140,000,000 asset purchase of the OncuPath™ companion diagnostics assay line (the "OncuPath Business") by Meridian Precision Diagnostics, Inc. from Genome Dx Therapeutics Inc. The transaction was consummated pursuant to the Asset Purchase Agreement dated May 11, 2023 (the "APA"), by and between GDT, as Seller, and Meridian, as Buyer. The aggregate purchase price of $140,000,000 consists of $126,000,000 in cash paid at closing, together with an earnout payment of up to $14,000,000 that may become payable upon the achievement of certain regulatory and commercial milestones as set forth in Section 2.5 of the APA.
The transaction closed on August 8, 2023, which was one week after the August 1, 2023 target closing date originally contemplated by the parties. The brief delay was attributable to the finalization of certain ancillary documents and the completion of the landlord consent process described in Section IV below; it was not the result of any failure to satisfy regulatory conditions. All closing conditions relating to third-party consents and governmental and regulatory approvals, as enumerated in Article VII of the APA, were satisfied or otherwise obtained prior to closing. No condition was waived.
Certain post-closing regulatory notifications and administrative filings remain outstanding as of the date of this memorandum. These items, which are primarily the responsibility of Meridian as the new owner and operator of the OncuPath Business, are identified and tracked in Section V below. None of these post-closing items were conditions to closing under the APA, and none presents a material risk to the continued operation of the OncuPath Business during the applicable transition periods. Calderwood & Harkness LLP ("C&H") will continue to monitor these items and update this tracker on a periodic basis.
This memorandum is organized into the following sections:
(A) Antitrust / Hart-Scott-Rodino Act Approval (Section II);
(B) Third-Party Contractual Consents (Section III);
(C) Real Property / Lease Consents (Section IV);
(D) Healthcare Regulatory Transfers and Notifications (Section V); and
(E) Post-Closing Action Items and Responsibilities (Section VII).
A consolidated summary tracker table is set forth in Section VI for ease of reference and ongoing monitoring.
Throughout the transaction, C&H coordinated closely with Whitfield Sayer & Gregg LLP ("WSG"), counsel to Meridian, on joint filings and shared regulatory notifications. The lead partner at WSG was Jonathan Whitfield, and the senior associate principally responsible for day-to-day coordination was Rachel Dempsey. Joint filings and shared notifications are identified as such throughout this memorandum. All references to sections of the APA are to the executed version of the Asset Purchase Agreement dated May 11, 2023, as filed in the closing binder.
II. Antitrust / Hart-Scott-Rodino Act Approval
A. HSR Act Applicability Analysis
This Section provides a summary of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (15 U.S.C. § 18a) (the "HSR Act"), analysis conducted by C&H in connection with the transaction. A detailed HSR Filing Analysis Memorandum, prepared by Andrew Fitzpatrick and dated May 14, 2023, is maintained in the matter file and should be consulted for the full analysis, including the product market and competitive overlap assessment. The key conclusions of that analysis are summarized below.
The HSR Act requires that parties to certain mergers, acquisitions, and asset purchases file premerger notification forms with the Federal Trade Commission ("FTC") and the Antitrust Division of the U.S. Department of Justice ("DOJ") and observe a statutory waiting period before consummating the transaction. The filing requirement applies when the transaction meets applicable size-of-transaction and, in certain cases, size-of-person thresholds, as adjusted annually by the FTC.
Size-of-Transaction Threshold. For transactions closing in calendar year 2023, the applicable size-of-transaction threshold was $111.4 million. The aggregate purchase price for the OncuPath Business is $140,000,000, inclusive of the $14,000,000 maximum earnout. Even excluding the earnout and considering only the $126,000,000 cash closing payment, the purchase price materially exceeds the 2023 threshold. Accordingly, the size-of-transaction test was satisfied.
Size-of-Person Test. Because the purchase price exceeded the $111.4 million threshold but did not exceed the $445.5 million threshold for 2023 (above which no size-of-person test applies), the size-of-person test was also analyzed. GDT reported total assets or annual net sales of approximately $312,000,000 for its fiscal year ended December 31, 2022. Meridian reported total assets or annual net sales of approximately $589,000,000 for the same fiscal year. Under the applicable size-of-person thresholds for 2023, one party must have total assets or annual net sales of at least $222.7 million, and the other party must have total assets or annual net sales of at least $22.3 million. Both GDT and Meridian exceeded the higher threshold. Accordingly, the size-of-person test was also satisfied.
Conclusion. Based on the foregoing analysis, C&H concluded that HSR notification and filing was required for both GDT (as the acquired person) and Meridian (as the acquiring person) prior to the consummation of the asset purchase. This conclusion was confirmed by WSG on behalf of Meridian. The HSR filing requirement was identified as a Closing Condition under Section 7.1(a) of the APA, which conditioned closing on the expiration or early termination of the HSR waiting period.
B. Filing Details
The HSR premerger notification forms were prepared and filed as follows:
Filing Date: May 18, 2023, seven calendar days after the execution of the APA on May 11, 2023. The filing was made promptly following execution in order to commence the waiting period as early as practicable and preserve the parties' ability to close on or near the target closing date.
Filing Parties: GDT filed as the Seller/Acquired Person. Meridian filed as the Buyer/Acquiring Person. Each party was responsible for the preparation and submission of its own notification form, with coordination between C&H and WSG to ensure consistency of transactional information, including the description of the acquired assets and applicable NAICS codes.
Filing Fee: Pursuant to Section 9.3(b) of the APA, the HSR filing fee was allocated to and paid by Meridian (Buyer). For transactions valued at more than $111.4 million but less than $500 million in 2023, the applicable filing fee was $125,000. Meridian remitted the filing fee to the FTC concurrently with the submission of its notification form.
Filing Agency: The notification forms were filed with the Premerger Notification Office of the Federal Trade Commission, 600 Pennsylvania Avenue, NW, Washington, DC 20580, with copies transmitted simultaneously to the Antitrust Division of the U.S. Department of Justice, as required by the HSR Act and the implementing rules at 16 C.F.R. Parts 801–803.
Initial Waiting Period: The initial statutory waiting period under the HSR Act is 30 calendar days following the date on which both parties' notification forms have been filed and received by both agencies. Based on the May 18, 2023 filing date, the initial waiting period would have expired on June 17, 2023, absent early termination or the issuance of a request for additional information (a "Second Request").
C. Early Termination
Concurrently with the filing of the notification forms, C&H, in coordination with WSG, submitted a joint request for early termination of the HSR waiting period on behalf of both GDT and Meridian. The request was made pursuant to 16 C.F.R. § 803.11, which authorizes either party to request that the FTC and DOJ terminate the waiting period before its expiration if the agencies have completed their review and determined that no further action is warranted.
The FTC granted early termination of the waiting period on June 22, 2023. Notice of the grant of early termination was published in the Federal Register in accordance with standard FTC practice. No Second Request was issued by either the FTC or the DOJ. Neither agency initiated any substantive inquiry, request for voluntary information, or other investigative action in connection with the transaction.
The absence of agency interest was anticipated based on C&H's competitive analysis, which concluded that the asset purchase of the OncuPath™ companion diagnostics line did not raise material competitive concerns. GDT and Meridian have complementary, rather than overlapping, product portfolios in the companion diagnostics space. GDT's OncuPath™ assay portfolio focuses on tissue-based companion diagnostics for targeted oncology therapies, while Meridian's existing product line is concentrated in liquid biopsy and circulating tumor DNA (ctDNA) assays. The acquisition enhances Meridian's platform capabilities without eliminating direct head-to-head competition in any relevant product market. This analysis is discussed in greater detail in the separate HSR Filing Analysis Memorandum referenced above.
D. Status
STATUS: COMPLETED — No further action required.
The HSR waiting period was terminated early on June 22, 2023, and the antitrust condition to closing under Section 7.1(a) of the APA was fully satisfied. No ongoing antitrust reporting, hold-separate, or other obligations arose in connection with the transaction. No state attorney general or foreign competition authority had jurisdiction over, or expressed interest in, the transaction. The executed HSR notification forms and the FTC's early termination grant notice are maintained in the closing binder and are attached as Appendix B to this memorandum.
III. Third-Party Contractual Consents
A. Consent to Assignment — Vantage Molecular Sciences, Inc. License Agreement
1. Background. GDT is party to that certain License Agreement dated September 12, 2019 (the "Vantage License Agreement"), by and between GDT, as licensee, and Vantage Molecular Sciences, Inc. ("Vantage"), a Massachusetts corporation headquartered at 75 Hayden Avenue, Lexington, MA 02421, as licensor. The Vantage License Agreement grants GDT an exclusive, worldwide license to certain proprietary probe-labeling technology developed by Vantage (the "Vantage Technology"), which technology is integral to the manufacture and performance of the OncuPath™ companion diagnostics assay portfolio.
The Vantage Technology is used across substantially all of the OncuPath™ assays, including the three FDA-cleared 510(k) assays (K201847, K193215, and K210562) and the OncuPath-HER3™ assay that is the subject of the pending PMA supplement (P230014). The loss or impairment of the Vantage license would have a material adverse effect on the OncuPath Business and was accordingly identified as a significant risk item early in the transaction planning process.
The Vantage License Agreement is designated as a material Assumed Contract under the APA and is listed in Disclosure Schedule 3.8 (Material Contracts). Under the terms of the APA, the Vantage License Agreement is being assigned from GDT to Meridian as part of the Purchased Assets, and Meridian is assuming all of GDT's obligations thereunder pursuant to the Assignment and Assumption Agreement dated August 8, 2023.
2. Consent Requirement
Section 12.3 of the Vantage License Agreement provides, in relevant part:
"This Agreement and the rights and obligations hereunder may not be assigned or otherwise transferred by either party without the prior written consent of the other party, whether by operation of law or otherwise, and any purported assignment or transfer without such consent shall be null and void."
Based on this provision, the assignment of the Vantage License Agreement from GDT to Meridian as part of the asset purchase required the prior written consent of Vantage. Without such consent, the assignment would constitute a breach of the Vantage License Agreement and could trigger Vantage's termination rights under Section 13.2 thereof. Accordingly, obtaining Vantage's consent was identified as a critical path item and was designated as a specific Closing Condition under Section 7.2(e) of the APA, which provided that the obligation of Meridian (Buyer) to consummate the closing was conditioned upon the receipt of Vantage's written consent to the assignment of the Vantage License Agreement.
3. Consent Process
C&H prepared an initial draft of the consent letter in May 2023, promptly following the execution of the APA. The draft was transmitted to Vantage's outside counsel, Quelston Paige LLP (Attention: Catherine Engel), on May 22, 2023, together with a summary of the transaction structure and the relevant provisions of the APA.
Negotiations with Vantage's counsel extended over approximately seven weeks and primarily involved the following issues:
(a) Assumption of Obligations. Vantage requested written confirmation that Meridian would assume all of GDT's obligations under the Vantage License Agreement, including ongoing royalty payment obligations (currently set at a rate of 3.5% of net sales of licensed products), quarterly royalty reporting requirements, and compliance with Vantage's quality control and audit provisions. Meridian, through WSG, provided a written assumption undertaking dated June 15, 2023, confirming its agreement to assume all such obligations effective upon closing.
(b) Financial Capability. Vantage's counsel requested, and Meridian provided, audited financial statements for Meridian's fiscal year ended December 31, 2022, as well as a representation regarding Meridian's financial ability to satisfy the ongoing royalty and other payment obligations under the license.
(c) Scope of Consent. Vantage initially proposed that its consent be conditioned on Meridian's agreement not to further assign the license without Vantage's consent and on the execution of a direct acknowledgment agreement between Vantage and Meridian. After negotiation, the parties agreed that the existing anti-assignment provision in Section 12.3 of the Vantage License Agreement would remain in full force and effect as to any future assignment by Meridian, and that a separate direct acknowledgment was unnecessary in light of the Assignment and Assumption Agreement.
Throughout the consent process, C&H maintained regular communication with WSG to ensure that Meridian was responsive to Vantage's requests and that the consent process did not delay the anticipated closing timeline.
4. Consent Obtained
Vantage's written consent to the assignment of the Vantage License Agreement was executed on July 14, 2023, by David Moriarty, Executive Vice President and General Counsel of Vantage Molecular Sciences, Inc., an authorized officer of Vantage. The consent letter was countersigned by authorized representatives of both GDT and Meridian.
The consent is unconditional and is effective upon the closing of the asset purchase contemplated by the APA. There are no ongoing conditions, restrictions, or additional obligations imposed by the consent beyond those already contained in the Vantage License Agreement itself. The original executed consent letter has been filed in the closing binder (Tab 14) and is referenced in the Assignment and Assumption Agreement dated August 8, 2023, at Exhibit D thereto. A copy of the executed consent letter is included in Appendix A to this memorandum.
5. Status. STATUS: COMPLETED — Consent obtained July 14, 2023. No further action required.
B. Other Material Contract Consents
In connection with the due diligence review and the preparation of the Disclosure Schedules to the APA, C&H conducted a comprehensive review of all contracts related to the OncuPath Business that were listed in Disclosure Schedule 3.8 (Material Contracts). Each material contract was reviewed on a contract-by-contract basis to identify anti-assignment provisions, change-of-control triggers, consent requirements, and notice obligations. The results of that review are summarized in the table below.
In addition to the Vantage License Agreement addressed in Section III.A above, the review identified a limited number of contracts with anti-assignment or notice provisions. For contracts that were not designated as Closing Conditions under the APA, Section 6.4(b) of the APA provides that GDT (Seller) agreed to use commercially reasonable efforts to obtain any required consents prior to or promptly after closing, and that the failure to obtain any such consent would not relieve Meridian of its obligation to close (provided that the applicable contract was not listed as a Closing Condition consent in Section 7.2(e)).
The following table summarizes the status of all material contract consents reviewed in connection with the transaction:
All material contract consents that were identified as Closing Conditions have been obtained. All other material contract consents or notices that were identified through the diligence review have been obtained or provided prior to or at closing. No counterparty has objected to the assignment or indicated an intention to exercise any termination or other remedy in connection with the change of ownership of the OncuPath Business.
IV. Real Property / Lease Consents
A. Consent to Assignment of Lease — Towne Centre Properties LLC (4820 Towne Centre Drive, San Diego)
1. Background. GDT leases the OncuPath reference laboratory and research and development facility located at 4820 Towne Centre Drive, Suite 200, San Diego, California 92121 (the "Towne Centre Facility") pursuant to that certain Commercial Lease Agreement dated March 1, 2018, as amended by the First Amendment to Lease dated February 15, 2020 and the Second Amendment to Lease dated September 30, 2021 (collectively, the "Towne Centre Lease"). The landlord under the Towne Centre Lease is Towne Centre Properties LLC, a California limited liability company, with its principal office at 2300 Kettner Boulevard, Suite 400, San Diego, California 92101.
The Towne Centre Facility is the primary operational location for the OncuPath Business, housing the CLIA-certified reference laboratory, the assay development and validation laboratories, and certain administrative functions. The Towne Centre Lease covers approximately 18,500 square feet of laboratory and office space, with a current base monthly rent of $58,775 ($38.12 per square foot per annum, triple net). The current term of the Towne Centre Lease expires on February 28, 2027, with one five-year renewal option remaining.
The Towne Centre Lease is being assigned from GDT to Meridian as part of the Purchased Assets under the APA. The assignment is documented in the Assignment and Assumption of Lease dated August 8, 2023, which is filed in the closing binder.
2. Consent Requirement
The Towne Centre Lease contains a standard anti-assignment clause at Article 15, Section 15.1, which provides:
"Tenant shall not assign this Lease or any interest herein, or sublet the Premises or any part thereof, or permit the use of the Premises by any party other than Tenant, without the prior written consent of Landlord, which consent shall not be unreasonably withheld, conditioned, or delayed."
Notwithstanding the reasonableness standard, the landlord's prior written consent was required before the assignment could be effectuated. This consent was identified as a specific Closing Condition under Section 7.2(f) of the APA, which provided that the obligation of Meridian to consummate the closing was conditioned upon the receipt of the written consent of Towne Centre Properties LLC to the assignment of the Towne Centre Lease.
3. Consent Process
C&H prepared a formal request letter and draft landlord consent form and transmitted these to Towne Centre Properties LLC, with a copy to the landlord's property manager (CBRE, Inc., Attention: Michael Sandoval), on June 5, 2023. The request was accompanied by a summary description of the transaction and the identity of the proposed assignee (Meridian).
The landlord's review and consent process extended over approximately eight weeks, during which the following matters were addressed:
(a) Financial Review. Towne Centre Properties LLC, through its property manager, requested and reviewed Meridian's audited financial statements for the two most recent fiscal years (2021 and 2022), a current certificate of insurance, and a Dunmore Enterprises credit report. The landlord's review confirmed that Meridian's financial condition was equal to or greater than that of GDT, satisfying the reasonableness standard under the lease.
(b) Assumption of Lease Obligations. The landlord required confirmation that Meridian would assume all of GDT's obligations under the Towne Centre Lease for the remaining term, including base rent, additional rent (operating expenses, taxes, and insurance), and the obligation to restore the premises at lease expiration.
(c) Release of GDT. GDT requested a full release from all obligations under the Towne Centre Lease effective upon the assignment. The landlord initially declined to provide a full release. After negotiation, the parties agreed to a partial release structure under which GDT remains secondarily liable for Meridian's lease obligations for a period of twelve (12) months following the closing date (i.e., through August 8, 2024). Thereafter, GDT is fully released from all obligations under the Towne Centre Lease. This arrangement is documented in the landlord consent letter and is consistent with Section 6.7(c) of the APA, which contemplated a post-assignment guaranty period of up to twelve months.
(d) Consent Fee. Towne Centre Properties LLC requested a consent processing fee of $2,500, which was paid by GDT in accordance with the Towne Centre Lease and reimbursed by Meridian at closing pursuant to Section 9.3(d) of the APA.
4. Consent Obtained
The landlord consent to the assignment of the Towne Centre Lease was executed on July 28, 2023, by Richard Amato, Managing Member of Towne Centre Properties LLC. The consent was countersigned by authorized representatives of both GDT and Meridian. The consent is effective upon the closing of the asset purchase.
The executed landlord consent letter is filed in the closing binder (Tab 16) and is referenced in the Assignment and Assumption of Lease dated August 8, 2023. A copy of the executed consent letter is included in Appendix A to this memorandum.
The one-week delay in closing (from the August 1, 2023 target date to the actual closing date of August 8, 2023) was attributable in part to the finalization of this landlord consent and the associated documentation regarding GDT's secondary liability period.
5. Status. STATUS: COMPLETED — Consent obtained July 28, 2023. No further action required (subject to GDT's secondary liability period through August 8, 2024).
B. Assignment of Sublease — 925 Industrial Court, Carlsbad, CA 92010
1. Background. GDT subleases approximately 6,200 square feet of warehouse and manufacturing/kitting space at 925 Industrial Court, Carlsbad, California 92010 (the "Carlsbad Facility") pursuant to that certain Sublease Agreement dated July 1, 2022 (the "Carlsbad Sublease"), by and between GDT, as subtenant, and Pacific Coast BioFacilities, Inc. ("PCBF"), a California corporation, as sublandlord. The Carlsbad Facility is used for the packaging, kitting, and distribution of the OncuPath™ assay products.
The Carlsbad Sublease has a remaining term expiring on December 31, 2025, with no renewal option. Monthly base rent under the Carlsbad Sublease is $12,090 ($23.40 per square foot per annum, modified gross).
The Carlsbad Sublease is being assigned from GDT to Meridian as part of the Purchased Assets under the APA.
2. Consent / Notice Requirement
Section 9.1 of the Carlsbad Sublease requires that the subtenant provide written notice to the sublandlord of any proposed assignment at least thirty (30) days prior to the effective date of the assignment, together with reasonable information regarding the proposed assignee. The sublandlord's consent is required, but the sublease provides that such consent "shall not be unreasonably withheld or delayed."
In addition, Section 9.3 of the Carlsbad Sublease requires that the consent of the master landlord, Industrial Court Associates, LP (a California limited partnership), be obtained for any assignment of the sublease, to the extent such consent is required under the master lease. C&H reviewed the master lease and confirmed that the master lease contains a consent-to-sublease/assignment provision requiring the master landlord's written approval.
C&H transmitted the requisite notice and consent request to PCBF (sublandlord) on June 20, 2023, with a copy to Industrial Court Associates, LP (master landlord). Meridian's financial information was provided to both parties. The sublandlord's consent was received on July 18, 2023. The master landlord's consent was received on July 27, 2023. No conditions were imposed on either consent beyond Meridian's assumption of the remaining sublease obligations.
The Carlsbad Sublease assignment was not designated as a separate Closing Condition under the APA; however, the assignment was included within the general Closing Condition relating to the assignment of Assumed Contracts under Section 7.2(d).
3. Status. STATUS: COMPLETED — Sublandlord consent obtained July 18, 2023; master landlord consent obtained July 27, 2023. Assignment of Sublease executed at closing on August 8, 2023. No further action required.
The executed Assignment of Sublease and the sublandlord and master landlord consent letters are filed in the closing binder (Tab 17) and are included in Appendix A to this memorandum.
V. Healthcare Regulatory Approvals and Notifications
A. CLIA Certificate Transfer — OncuPath Reference Laboratory
1. Background. GDT holds a Clinical Laboratory Improvement Amendments ("CLIA") certificate of accreditation for the OncuPath reference laboratory located at the Towne Centre Facility, 4820 Towne Centre Drive, Suite 200, San Diego, California 92121. The certificate was issued by the Centers for Medicare & Medicaid Services ("CMS") and is identified by CLIA ID No. 05D2178493. The certificate was most recently renewed effective April 1, 2022, with a two-year validity period.
CLIA certificates are facility-specific, meaning they are issued to a particular laboratory at a particular location. However, the certificate is also tied to the identity of the laboratory operator and owner. A change in the ownership or operational control of a CLIA-certified laboratory constitutes a change of ownership under the CLIA regulations at 42 C.F.R. Part 493 and requires notification to and approval by CMS. The transfer of the OncuPath Business from GDT to Meridian constitutes such a change of ownership.
Continued CLIA certification is essential to the operation of the OncuPath reference laboratory, as CLIA certification is a prerequisite to performing clinical laboratory testing on human specimens in the United States and to receiving reimbursement from Medicare and Medicaid programs.
2. Transfer Process
Under 42 C.F.R. § 493.1840, a change of ownership of a CLIA-certified laboratory requires the new owner to submit a completed CMS Form 116 (Application for Clinical Laboratory Certification or Registration) to the applicable CMS regional office. The application must identify the new owner/operator and provide all required information regarding the laboratory's location, personnel (including the laboratory director), types of testing performed, and accreditation status.
The CMS Form 116 was prepared jointly by GDT and Meridian, with regulatory counsel at both C&H and WSG coordinating on the content and supporting documentation. The application identifies Meridian Precision Diagnostics, Inc. as the new laboratory operator and owner, effective as of August 8, 2023 (the closing date). The application designates Dr. Priya Venkataraman, Meridian's Vice President of Laboratory Operations, as the interim laboratory director, pending the formal appointment of a permanent director.
Under CMS regulations and applicable guidance, the existing CLIA certificate (ID No. 05D2178493) remains in effect during the change-of-ownership processing period, provided that:
(a) laboratory operations continue without material interruption at the same location;
(b) the application for a new certificate is submitted within the prescribed timeframe (generally within 30 days of the change of ownership); and
(c) the laboratory continues to comply with all applicable CLIA quality standards and conditions of certification.
Accordingly, the OncuPath reference laboratory is authorized to continue operations under the existing CLIA ID during the transition period while CMS processes the change-of-ownership application.
3. Filing Status
CMS Form 116 was submitted to the CMS San Francisco Regional Office (Region IX) on or about August 8, 2023, the closing date. Submission was made by Meridian's regulatory affairs team, with copies provided to C&H and WSG. The application was submitted via the CMS-approved electronic submission portal, with a hard copy mailed to the regional office as a backup.
Based on C&H's experience with similar change-of-ownership filings, the expected processing time is approximately 60 to 90 days from the date of submission. Accordingly, we anticipate that the new CLIA certificate will be issued in Meridian's name by approximately October to November 2023. CMS may conduct a site survey as part of the change-of-ownership review, although such surveys are not always required where the laboratory continues to operate at the same location with substantially the same personnel and testing capabilities.
4. Status. STATUS: POST-CLOSING — CMS Form 116 application submitted August 8, 2023. Awaiting CMS processing. Laboratory operations continue under existing CLIA ID No. 05D2178493 during transition. Expected completion: October–November 2023.
B. FDA Establishment Registration Update
1. Background. GDT is currently registered as a medical device establishment with the U.S. Food and Drug Administration ("FDA") for the manufacture and distribution of the OncuPath™ diagnostic products. The establishment registration covers the Towne Centre Facility (4820 Towne Centre Drive, Suite 200, San Diego, CA 92121) and the Carlsbad Facility (925 Industrial Court, Carlsbad, CA 92010), as applicable.
The OncuPath™ portfolio includes three diagnostic assays that have received FDA clearance through the 510(k) premarket notification process:
K201847 — OncuPath™ EGFR Companion Diagnostic Assay (cleared February 12, 2021)
K193215 — OncuPath™ ALK/ROS1 Fusion Diagnostic Assay (cleared September 18, 2020)
K210562 — OncuPath-GENOMARK™ Multi-Analyte Tumor Profiling Assay (cleared November 3, 2021)
Additionally, GDT submitted a Premarket Approval ("PMA") supplement for the OncuPath-HER3™ Companion Diagnostic Assay (PMA Supplement No. P230014) to the FDA on January 30, 2023. As of the closing date, this PMA supplement remains pending review by the FDA's Center for Devices and Radiological Health ("CDRH"). A PDUFA (Prescription Drug User Fee Act) date had not yet been assigned as of closing. The status of this PMA supplement is of particular significance to the transaction because FDA clearance or approval of the OncuPath-HER3™ assay constitutes Earnout Milestone 1 under Section 2.5(a) of the APA, which provides for an earnout payment of $7,000,000 upon the achievement of such clearance or approval on or before August 8, 2025 (the second anniversary of the closing date).
2. Registration Transfer Requirements
Under the Federal Food, Drug, and Cosmetic Act and the implementing regulations at 21 C.F.R. Part 807, the owner or operator of a medical device establishment engaged in the manufacture, preparation, propagation, compounding, or processing of devices intended for commercial distribution in the United States must register the establishment with the FDA and list the devices manufactured or distributed by the establishment.
Upon a change of ownership of a registered establishment, the new owner (here, Meridian) is required to update the FDA establishment registration to reflect the change in ownership. Pursuant to 21 C.F.R. § 807.22, registration information must be updated within 30 calendar days of any change that renders the existing registration information inaccurate, including a change in the identity of the owner or operator.
Device listing information maintained by the FDA must also be updated to reflect Meridian as the new manufacturer and/or specification developer for each of the OncuPath™ products. The device listing update is submitted through the same system as the establishment registration update.
Meridian is responsible for filing the updated establishment registration and device listing information through the FDA's Unified Registration and Listing System ("FURLS"), the FDA's online portal for establishment registration and device listing. GDT's existing FURLS account credentials and registration records have been provided to Meridian's regulatory affairs team as part of the closing deliverables.
3. 510(k) Holder Transfer
The three FDA-cleared 510(k) assays identified above (K201847, K193215, and K210562) were cleared in GDT's name, with GDT identified as the applicant and 510(k) holder in the FDA's records. Upon the transfer of the OncuPath Business to Meridian, Meridian succeeds to GDT's rights and obligations as the holder of these 510(k) clearances.
It is important to note that the FDA does not formally "transfer" 510(k) clearances from one entity to another. Rather, the 510(k) clearance pertains to the device itself (including its intended use, indications for use, and technological characteristics), and the new owner of the device line succeeds to the clearance by operation of the ownership transfer. There is no formal FDA application or approval process required to effectuate the transfer of a 510(k) clearance.
However, it is customary practice—and consistent with FDA guidance—for the new owner to submit a letter to the applicable FDA review division (here, CDRH) notifying the FDA of the change of ownership and requesting that the FDA update its records to reflect the new 510(k) holder. This notification letter facilitates the FDA's maintenance of accurate records and ensures that future communications regarding the cleared devices (including adverse event reporting, recalls, and post-market surveillance) are directed to the appropriate entity.
C&H has prepared a template notification letter for Meridian's use, which is included in Appendix C to this memorandum. The letter should be submitted by Meridian on its letterhead, addressed to the appropriate CDRH division, and should reference each of the three 510(k) clearance numbers along with the relevant device names and product codes.
4. PMA Supplement — OncuPath-HER3™ (P230014)
The pending PMA supplement (P230014) for the OncuPath-HER3™ Companion Diagnostic Assay was submitted by GDT to CDRH on January 30, 2023. As of the closing date, the submission remains in active review. GDT received an acknowledgment of receipt from the FDA and a file number assignment, but no substantive review correspondence (including any major deficiency or additional information request) had been received as of the closing date. A PDUFA target action date had not been assigned to the submission as of closing.
As a result of the transfer of the OncuPath Business to Meridian, Meridian is now the successor-in-interest to GDT's rights and obligations with respect to the pending PMA supplement. Meridian, as the new applicant and sponsor for the submission, will need to notify the FDA of the change in applicant/sponsor identity. This notification is necessary to ensure that all future FDA communications regarding the PMA supplement—including review questions, deficiency letters, and the ultimate approval decision—are directed to Meridian rather than GDT.
A transfer-of-ownership notification letter should be submitted by Meridian (or WSG on Meridian's behalf) to the applicable CDRH review division. The letter should:
(a) identify the PMA supplement number (P230014) and the underlying PMA application number;
(b) describe the change of ownership and identify Meridian as the new applicant/sponsor;
(c) provide updated contact information for the new applicant, including the regulatory affairs point of contact; and
(d) confirm that Meridian assumes all of GDT's obligations and responsibilities as the applicant/sponsor, including compliance with all conditions of approval, post-approval reporting requirements, and any commitments made in the original PMA application or supplement.
C&H has prepared a template transfer-of-ownership notification letter, which is included in Appendix C. Timely submission of this notification is important not only as a regulatory compliance matter but also because the PMA supplement is directly relevant to Earnout Milestone 1 under the APA. Specifically, Earnout Milestone 1 provides for an earnout payment of $7,000,000 if the OncuPath-HER3™ assay receives FDA clearance or approval on or before August 8, 2025. Any delays in the FDA's review or communication attributable to a failure to timely update the applicant/sponsor information could prejudice the timeline for achieving this milestone.
5. Status. STATUS: POST-CLOSING — Meridian is responsible for filing the updated FDA establishment registration and device listing (via FURLS) and for submitting ownership-change notification letters to CDRH for the three 510(k) clearances and the pending PMA supplement (P230014). C&H will provide transition support under the TSA if requested by Meridian or WSG. Target completion for all FDA-related filings and notifications: within 30 days post-closing (by September 7, 2023).
C. FDA 510(k) and Device Listing Updates
As noted in Section V.B above, each of the three FDA-cleared 510(k) assays transferred as part of the OncuPath Business must be updated in the FDA's device listing records to reflect Meridian as the new owner and specification developer. The following table summarizes the relevant clearances and their current listing status:
The device listing updates should be filed through FURLS concurrently with the establishment registration update. The intellectual property rights associated with these assays, including all regulatory submissions, clearances, and related documentation, have been assigned to Meridian pursuant to the intellectual Property Assignment Agreement dated August 8, 2023 (the "IP Assignment Agreement"), which is filed in the closing binder at Tab 10.
In addition to the regulatory clearances, the following registered trademarks associated with the OncuPath™ assay portfolio have been transferred to Meridian under the IP Assignment Agreement:
• OncuPath™ — U.S. Trademark Registration No. 5,847,321
• OncuPath-HER3™ — U.S. Trademark Registration No. 6,412,088
• OncuPath-GENOMARK™ — U.S. Trademark Registration No. 6,118,754
The trademark assignments have been recorded with the U.S. Patent and Trademark Office and are reflected in the IP Assignment Agreement. C&H's intellectual property team (contact: Marissa Cheng) handled the trademark assignment recordation and has confirmed that all filings have been submitted.
D. State Laboratory Licensing Notifications
In addition to federal CLIA certification, certain states require separate clinical laboratory licenses or permits for laboratories performing diagnostic testing on specimens collected from patients in those states, even where the testing is performed at a laboratory located in a different state. The OncuPath reference laboratory at the Towne Centre Facility performs testing on specimens received from healthcare providers and institutions across the United States, and GDT accordingly holds state clinical laboratory licenses in the following jurisdictions:
The requirements and processes for each state vary. Of particular note:
California: The California Department of Public Health, Laboratory Field Services Division, requires notification of a change of ownership of a licensed clinical laboratory within 30 days of the effective date of the change. The notification must include the identity of the new owner, updated laboratory director information, and evidence that the new owner meets applicable licensure requirements. The existing license remains in effect during the transition period, provided the notification is timely filed.
New York: The New York State Department of Health Clinical Laboratory Evaluation Program ("CLEP") maintains one of the most rigorous state laboratory oversight programs in the country. A change of ownership of a CLEP-permitted laboratory generally requires the submission of a new permit application in the name of the new owner, rather than a simple notification or transfer. Meridian should engage with CLEP promptly to initiate the application process, as processing times for new permit applications can be extended (often six months or more). During the transition period, the existing permit in GDT's name remains in effect, provided that CLEP is notified of the pending change of ownership and the application for a new permit is submitted in a timely manner. Given the length of the New York process, this item requires priority attention.
Pennsylvania, Florida, Maryland, and Rhode Island: Each of these states requires notification of a change of ownership within 30 to 60 days of the effective date, with specific requirements varying by state. C&H has prepared template notification letters for each state, which are included in Appendix C.
Status. STATUS: POST-CLOSING — Notifications to be filed by Meridian, with C&H assistance as needed under the TSA. California, Pennsylvania, Maryland, and Rhode Island notifications due by September 7, 2023. Florida notification due by October 7, 2023. New York new permit application to be initiated as soon as practicable. C&H will coordinate with WSG on preparation and filing of all state notifications.
VI. Summary Tracker Table
The following consolidated table summarizes all consent, approval, and regulatory items tracked in this memorandum:
VII. Post-Closing Action Items and Responsibilities
A. Allocation of Responsibility
Responsibility for the remaining post-closing regulatory tasks is allocated between the parties as follows:
Meridian Precision Diagnostics, Inc. / Whitfield Sayer & Gregg LLP. As the new owner and operator of the OncuPath Business, Meridian bears primary responsibility for all post-closing regulatory filings, notifications, and registrations described in Section V of this memorandum. Meridian's regulatory affairs team, under the supervision of Dr. Priya Venkataraman (Vice President, Laboratory Operations), will coordinate the preparation and submission of all filings. WSG will provide legal support and coordination on regulatory matters requiring legal counsel involvement, including the FDA PMA supplement sponsor transfer and the New York CLEP permit application.
Genome Dx Therapeutics Inc. / Calderwood & Harkness LLP. GDT has agreed to cooperate with Meridian in connection with the post-closing regulatory transition, as set forth in Section 6.5 of the APA (Cooperation) and the Transition Services Agreement dated August 8, 2023 (the "TSA"). Under the TSA, GDT will provide transitional regulatory support services to Meridian for a period of up to nine (9) months following the closing date (i.e., through May 8, 2024), at a fee equal to GDT's fully loaded cost plus a five percent (5%) markup. Transitional regulatory support services include, without limitation:
(a) access to GDT's regulatory affairs personnel with knowledge of the OncuPath Business and the relevant regulatory filings;
(b) assistance in the preparation of applications, notifications, and correspondence to regulatory agencies;
(c) provision of historical regulatory files, correspondence, and records to the extent not already transferred as part of the Purchased Assets; and
(d) cooperation in responding to any regulatory inquiries or requests directed to GDT that pertain to the OncuPath Business.
C&H will continue to serve as GDT's outside counsel for purposes of GDT's cooperation obligations under the APA and the TSA, and will coordinate with WSG on joint regulatory matters as needed.
B. Key Deadlines
The following summarizes the key deadlines for remaining post-closing regulatory items:
1. FDA Establishment Registration Update (FURLS). Due within 30 calendar days of closing, per 21 C.F.R. § 807.22. Deadline: September 7, 2023.
2. FDA 510(k) Holder Notification Letters (K201847, K193215, K210562). While there is no statutory deadline for submitting ownership-change notification letters to the FDA for 510(k) clearances, best practice dictates that such letters be submitted concurrently with or promptly after the establishment registration update. Target: September 7, 2023.
3. FDA PMA Supplement Sponsor Transfer (P230014 — OncuPath-HER3™). There is no fixed regulatory deadline for notifying the FDA of a change of sponsor for a pending PMA supplement. However, timely notification is critical to avoid disruption to the FDA's review process and to preserve the timeline for Earnout Milestone 1 (FDA clearance or approval of OncuPath-HER3™ by August 8, 2025). Target: As soon as practicable, no later than September 7, 2023.
4. CLIA Certificate Transfer (CMS Form 116). Application submitted on August 8, 2023. CMS processing is expected to take approximately 60 to 90 days. Estimated completion: October–November 2023. No additional action required from Meridian unless CMS requests supplemental information or schedules a site survey.
5. State Laboratory License Notifications. Deadlines vary by state:
• California — 30 days post-closing — September 7, 2023
• New York — As soon as practicable (new permit application required; extended processing expected)
• Pennsylvania — 30 days post-closing — September 7, 2023
• Florida — 60 days post-closing — October 7, 2023
• Maryland — 30 days post-closing — September 7, 2023
• Rhode Island — 30 days post-closing — September 7, 2023
C. Ongoing Monitoring and Updates
C&H will maintain this Regulatory and Consent Tracker as a living document and will update it on a periodic basis as post-closing items are completed. The next scheduled update of this tracker is September 15, 2023. At that time, we will report on the status of all pending post-closing items, including confirmation of filings made by Meridian, any responses received from regulatory agencies, and any new issues that may have arisen during the post-closing transition period.
To facilitate the ongoing monitoring process, C&H requests that WSG provide status updates on Meridian's post-closing regulatory filings on a biweekly basis, or more frequently as circumstances warrant. GDT's regulatory affairs team (contact: Dr. Helen Park, Senior Director, Regulatory Affairs) should be copied on all correspondence with regulatory agencies relating to the OncuPath Business during the TSA period.
VIII. Conclusion
Based on the foregoing, we confirm the following:
1. All pre-closing regulatory approvals and third-party consents required as Closing Conditions under Articles VII of the APA have been obtained. This includes the HSR early termination (June 22, 2023), the Vantage Molecular Sciences license consent (July 14, 2023), and the Towne Centre Properties landlord consent (July 28, 2023), as well as the additional contractual and lease consents described in Sections III.B and IV.B.
2. Closing occurred on August 8, 2023. The one-week delay from the target closing date of August 1, 2023 was attributable to the finalization of certain ancillary documentation and did not result from the failure to satisfy any closing condition.
3. Remaining items are post-closing regulatory notifications and transfers. These items are the primary responsibility of Meridian as the new owner and operator of the OncuPath Business, with cooperation from GDT as required under the APA and the TSA. The key post-closing items include the CLIA certificate transfer (CMS processing underway), FDA establishment registration and device listing updates, FDA ownership-change notifications for the 510(k) clearances and the pending PMA supplement, and state laboratory license notifications.
4. No material risks have been identified with respect to the pending post-closing items. All such items are ministerial and administrative in nature. The OncuPath reference laboratory is authorized to continue operations under the existing CLIA certificate, FDA registration, and state licenses during the applicable transition periods, provided that timely filings are made by Meridian. C&H has reviewed the regulatory frameworks and transition provisions and has confirmed that there is no anticipated interruption to laboratory operations or commercial distribution of the OncuPath™ products during the post-closing transition.
5. Calderwood & Harkness LLP will continue to monitor and assist as requested by GDT under the TSA and as needed to fulfill GDT's cooperation obligations under Section 6.5 of the APA. This tracker will be updated on a periodic basis, with the next scheduled update on September 15, 2023.
This memorandum is provided for the internal use of the client and its authorized representatives and is protected by the attorney-client privilege and the attorney work product doctrine. It should not be disclosed to third parties without the prior authorization of C&H.
Questions or comments regarding this memorandum should be directed to Andrew Fitzpatrick at afitzpatrick@calderwoodharkness.com or (212) 555-0147, or to Tiffany Rosenthal at trosenthal@calderwoodharkness.com or (212) 555-0193.
Appendices (Referenced)
The following appendices are referenced in this memorandum and are maintained in the matter file and closing binder. Copies are available upon request from C&H's document management team (Matter No. 1013-00006&A-4471).
Appendix A — Executed Consent Documents