PARSIPPANY, N.J., Aug. 20, 2013 /PRNewswire/ -- PDI, Inc. (Nasdaq: PDII) today announced the signing of a collaboration agreement with a privately held molecular diagnostics company (the Company) to commercialize the Company's molecular diagnostic tests. The initial test to be commercialized is fully developed. For competitive reasons, the name of the company and the specific focus area of the initial test to be commercialized are not being disclosed at this time.
Under the terms of the collaboration agreement, PDI has paid the Company an initial fee of $1.5 million and has received an option to purchase the Company. The option price is dependent on the achievement of certain milestones during the collaboration period (the period up to the exercise of the purchase option or termination of the collaboration agreement) and could be up to $6 million if all milestones are achieved at their maximum levels. PDI can terminate the collaboration agreement if all milestones are not achieved within one year and would receive a $1 million termination fee from the Company. If all milestones are achieved within one year and PDI has not exercised its option, the Company can require PDI to exercise the option to purchase the Company or terminate the collaboration agreement and pay PDI a termination fee of approximately $2 million. If PDI purchases the Company, in addition to the option price based on the achievement of milestones, beginning in 2015, PDI would pay a royalty of 7% on annual net revenue up to $50 million with escalating royalty percentages for higher annual net revenue capped at 11% for annual net revenue in excess of $100 million.
During the collaboration period the Company and PDI will partner to pilot various sales and marketing programs and build additional supportive sales and marketing materials while working together to achieve the contract milestones which are focused on launching the test on a broad basis in the most impactful, profitable and cost effective manner.