ProPhase Labs acquires rights to BE-Smart Esophageal Pre-Cancer test

ProPhase Labs announced that it has entered into an asset purchase agreement to acquire from Stella Diagnostics world-wide exclusive rights to Stella’s BE-Smart Esophageal Pre-Cancer diagnostic screening test and related intellectual property assets for approximately $4.5 million dollars, comprised of approximately $3.5 million in cash and $1 million in ProPhase common stock. Under the terms of the agreement, an additional $2 million of Company common stock may be issued to Stella in the future upon the achievement of a revenue-based commercial milestone within the five-year period following the closing. Stella will also receive a 5% royalty based on adjusted gross margin generated from the commercialization of the intellectual property acquired from Stella. The transaction is subject to approval by Stella shareholders and is expected to close in early January 2023. ThinkEquity acted as advisor to ProPhase Labs in the transaction. The BE-Smart test is intended to provide health care providers and patients with data to help determine treatment options, including whether patients not believed to be at risk for esophageal cancer should continue to be monitored or, alternatively, to provide patients who might otherwise have been undiagnosed early treatment before esophageal cells become cancerous. "We have built a great platform at ProPhase with valuable assets that we believe have significant current and future potential, infrastructure, experience, expertise, and unlike most other development stage life sciences companies, revenues with positive earnings and cash flow," stated Ted Karkus, CEO of ProPhase Labs. "The two-year bear market for biotech and life sciences companies has created some tremendous opportunities to leverage the ProPhase platform. We believe that the IP that we have either licensed or acquired to date, including the Stella Diagnostics Esophageal Cancer Test that we are acquiring, can be efficiently developed and that we can easily fund the near-term development of such IP out of a small portion of our current working capital. After exploring more than 50 potential opportunities this past year, the Stella Diagnostics Esophageal Cancer Test is exactly the kind of asset that we have been looking for to continue to build our portfolio of IP that has the potential to generate significant returns."