AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 4, 2000
REGISTRATION NO. 333-48812

SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, DC 20549
AMENDMENT NO. 1
TO
 FORM S-1
 REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

EXACT SCIENCES CORPORATION
 (Exact name of registrant as specified in its charter)

             DELAWARE                                8731                               02-0478229
   (State or other jurisdiction          (Primary Standard Industrial                (I.R.S. Employer
of incorporation or organization)        Classification Code Number)              Identification Number)	

EXACT SCIENCES CORPORATION
63 GREAT ROAD
MAYNARD, MASSACHUSETTS 01754
 (978) 897-2800
(Address, including zip code, and telephone number, including area code, of registrant's principal executive offices)

STANLEY N. LAPIDUS
CHAIRMAN
EXACT SCIENCES CORPORATION
63 GREAT ROAD
MAYNARD, MASSACHUSETTS 01754
 (978) 897-2800
(Name, address, including zip code, and telephone number, including area code, of agent for service)

COPIES TO:

 WILLIAM J. SCHNOOR, JR., ESQ.                             ROHAN S. WEERASINGHE, ESQ.
TESTA, HURWITZ & THIBEAULT, LLP                               SHEARMAN & STERLING
        125 High Street                                       599 Lexington Avenue
  Boston, Massachusetts 02110                                  New York, NY 10022
      Tel: (617) 248-7000                                     Tel: (212) 848-4000
      Fax: (617) 248-7100                                     Fax: (212) 848-7179	

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after this registration statement becomes effective.

If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. / /
If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. / / __________________ If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. / / __________________ If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. / / __________________ If delivery of the prospectus is expected to be made pursuant to Rule 434, check the following box. /X/
CALCULATION OF REGISTRATION FEE

                                                                 PROPOSED MAXIMUM        PROPOSED MAXIMUM
TITLE OF EACH CLASS OF SECURITIES TO       AMOUNT TO BE           OFFERING PRICE            AGGREGATE               AMOUNT OF
           BE REGISTERED                    REGISTERED             PER SHARE(1)         OFFERING PRICE(1)      REGISTRATION FEE(2)
Common Stock, $.01 par value...             4,600,000                 $16.00               $73,600,000               $19,430	

(1) Estimated solely for the purpose of calculating the registration fee in accordance with Rule 457(o) under the Securities Act of 1933.
(2) Previously paid $18,216. Other expenses of the offering aggregate $1,000,000 and are itemized under Item 13 of Part II of this Registration Statement.

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.

EXPLANATORY NOTE
This registration statement contains two forms of prospectus: one to be used in connection with a United States and Canadian offering of the registrant's common shares and one to be used in connection with a concurrent international offering of common shares. The U.S. prospectus and the international prospectus will be identical in all respects except that they will have different front and back cover pages and a different "Underwriting" section. The form of the U.S. prospectus is included herein and is followed by the alternate front cover page to be used in the international prospectus. The form of the front cover page of the international prospectus is labeled "Alternate Front Cover Page for International Prospectus", and the form of the back cover page for the international prospectus is labelled "Alternate Back Cover Page for International Prospectus." The form of the Underwriting section for the international prospectus is labelled "Alternate 'Underwriting' Section for International Prospectus." Final forms of each prospectus will be filed with the Securities and Exchange Commission under Rule 424(b) of the General Rules and Regulations under the Securities Act of 1933.

The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS DATED DECEMBER 4, 2000
P_R_O_S_P_E_C_T_U_S
4,000,000 SHARES
[LOGO]
COMMON STOCK

This is EXACT's initial public offering of common stock. EXACT is selling all of the shares of common stock. The U.S. underwriters are offering 3,200,000 shares in the U.S. and Canada and the international managers are offering 800,000 shares outside the U.S. and Canada.
We expect the public offering price to be between $14.00 and $16.00 per share. Currently, no public market exists for the shares. After pricing of the offering, we expect that the common stock will trade on The Nasdaq National Market under the symbol "EXAS."
INVESTING IN OUR COMMON STOCK INVOLVES RISKS THAT ARE DESCRIBED IN THE
"RISK FACTORS" SECTION BEGINNING ON PAGE 5 OF THIS PROSPECTUS.

                                                               PER SHARE              TOTAL
                                                               ---------              -----
Public offering price.......................................       $                    $

Underwriting discount.......................................       $                    $

Proceeds, before expenses, to EXACT.........................       $                    $	

The U.S. underwriters may also purchase up to an additional 480,000 shares from EXACT at the public offering price, less the underwriting discount, within 30 days from the date of this prospectus to cover over-allotments. The international managers may similarly purchase up to an additional 120,000 shares from EXACT.
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

      The shares will be ready for delivery on or about         , 2000.

                               ------------------

MERRILL LYNCH & CO.

             CIBC WORLD MARKETS

                                                      THOMAS WEISEL PARTNERS LLC

                                  -----------

                 The date of this prospectus is         , 2000.	

The inside front cover art has the word "EXACT Sciences Corporation" across the top center. The sentence "We have developed proprietary technologies in applied genomics that we believe will: - Revolutionize the early detection of colorectal and several other common cancers. - Reduce mortality, morbidity and the costs associated with these cancers." and "We have selected colorectal cancer as the first application of our technology platform. - Over 56,000 people die each year from colorectal cancer, according to the American Cancer Society, making it the most deadly cancer among non-smokers. - The American Cancer Society and the National Cancer Institute recommend regular colorectal cancer screening for the 74 million Americans age 50 and above."
In the center of the page is a box with the words "Our First Application:
Early Detection of Colorectal Cancer" and graphics consisting of the image of a human being with the colon highlighted and a box with the word "Colon" in it pointing to the colon followed by an expanded picture of the colon with a box with the words "Cancer or pre-cancerous lesion" in it pointing into the colon, followed by an expanded view of a cluster of DNA with a box with the words "Normal DNA shed from normal colon tissue" pointing towards them followed by an expanded picture of a DNA strand with a box below that with the words "Mutated DNA from lesion identified" in it pointing to the DNA.
Beneath the box is the sentence "We have developed proprietary technologies that isolate human DNA shed from the colon into stool. We then identify mutations in DNA shed from abnormal cells associated with the colorectal cancer and pre-cancerous lesions."

TABLE OF CONTENTS

                                                                PAGE
                                                              --------
Summary.....................................................      1
Risk Factors................................................      5
Use of Proceeds.............................................     13
Dividend Policy.............................................     13
Capitalization..............................................     14
Dilution....................................................     15
Selected Historical Financial Data..........................     16
Management's Discussion and Analysis of Financial Condition
  and Results of Operations.................................     17
Business....................................................     21
Management..................................................     36
Related Party Transactions..................................     43
Principal Stockholders......................................     45
Description of Capital Stock................................     47
Shares Eligible for Future Sale.............................     51
Material United States Federal Tax Considerations for
  Non-United States Holders.................................     53
Underwriting................................................     57
Legal Matters...............................................     60
Experts.....................................................     61
Where You Can Find Additional Information...................     61
Index to Financial Statements...............................    F-1	

You should rely only on the information contained in this prospectus. We have not, and the underwriters have not, authorized any other person to provide you with different information. If anyone provides you with different or inconsistent information, you should not rely on it. We are not, and the underwriters are not, making an offer to sell these securities in any jurisdiction where the offer or sale is not permitted. You should assume that the information appearing in this prospectus is accurate only as of the date on the front cover of this prospectus or other date stated in this prospectus. Our business, financial condition, results of operations and prospects may have changed since that date.
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SUMMARY
THE FOLLOWING SUMMARY HIGHLIGHTS INFORMATION CONTAINED ELSEWHERE IN THIS PROSPECTUS. YOU SHOULD READ THE ENTIRE PROSPECTUS CAREFULLY, INCLUDING OUR
FINANCIAL STATEMENTS AND ACCOMPANYING NOTES. IN ADDITION, YOU SHOULD REVIEW THE RISKS OF INVESTING IN OUR COMMON STOCK DISCUSSED UNDER "RISK FACTORS." WE ARE A DEVELOPMENT STAGE COMPANY THAT OPERATES IN A HIGHLY COMPETITIVE MARKET AND HAVE NOT YET OFFERED ANY OF OUR PRODUCTS OR SERVICES FOR SALE. WE HAVE INCURRED LOSSES SINCE OUR INCEPTION AND AS OF DECEMBER 31, 2000 HAVE INCURRED A TOTAL DEFICIT OF $18.0 MILLION.
EXACT SCIENCES CORPORATION
We have developed proprietary technologies in applied genomics that we believe will revolutionize the early detection of colorectal cancer and several other types of common cancers. We believe that medical practitioners will order tests based on our technologies as part of a regular screening program for the early detection of such cancers and pre-cancerous lesions. We also believe that the widespread and periodic application of these tests will reduce mortality, morbidity and the costs associated with these cancers.
We have selected colorectal cancer as the first application of our technology platform because the target market is large and not well served. Colorectal cancer is the most deadly cancer among non-smokers, curable if detected early and well understood from a genomics point of view. Detection of colorectal cancer in its early stages increases the number of patients who survive and reduces the cost of care. As a result, the American Cancer Society and National Cancer Institute recommend that the roughly 74 million Americans age 50 and above undergo regular colorectal cancer screening tests.
Despite the availability of colorectal cancer screening and diagnostic tests for more than 20 years, the rate of early detection of colorectal cancer remains low. Medical practitioners principally use fecal occult blood testing, which detects traces of blood in stool, and invasive endoscopic procedures, such as flexible sigmoidoscopy and colonoscopy, to detect colorectal cancer. Each of these methods is either inadequate in detecting the presence of disease, unable to efficiently screen the large number of patients in the recommended population or so invasive as to seriously deter its use as a screening method. We therefore believe that no screening method is commercially available today that allows for the effective early detection of colorectal cancer in a manner that is acceptable to patients, medical practitioners and payors.
We believe that our technologies will enable early genomics-based detection of colorectal cancer and several other types of common cancer so that more people can be treated effectively. We believe that our technologies isolate human DNA shed from the colon into stool and then detect the minute amount of abnormal DNA associated with colorectal cancer. As of December 1, 2000, we had ten issued U.S. patents and 21 pending U.S. patent applications for our technologies and processes.
In conjunction with the Mayo Clinic, we have conducted three blinded clinical studies since the fall of 1998. In a blinded clinical study, we do not know whether a stool sample is from a patient who has been diagnosed with colorectal cancer until the testing of all samples in the study has been completed. In these studies, screening tests using our technologies demonstrated an ability to detect the presence of colorectal cancer that we believe is superior to that of current early detection screening methods. We intend to initiate a multi-center blinded clinical trial in the fourth quarter of 2001, expected to include approximately 5,300 patients. The goal of this trial is to compare the accuracy of our colorectal cancer screening tests to that of existing technologies for an average-risk population.
Our goal is to become the leading company applying genomics to the early detection of cancer.
The key components of our business strategy are to:
- commercialize our colorectal cancer screening technologies;
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- extend our genomics technologies to other cancers; and
- continue to make scientific and technological advances in applied genomics.
If successful, we believe our strategies will lead to regular screening of large portions of the population for colorectal cancer and several other types of cancer, which would result in a significant recurring revenue stream for us.
We were incorporated in the State of Delaware on February 10, 1995 as Lapidus Medical Systems, Inc. We changed our corporate name to EXACT Laboratories, Inc. on December 11, 1996, to EXACT Corporation on September 12, 2000 and to EXACT Sciences Corporation on December 1, 2000. Our executive offices are located at 63 Great Road, Maynard, Massachusetts 01754. Our telephone number is (978) 897-2800. Our web address is www.exactsciences.com and is not a part of this prospectus.
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THE OFFERING

Common stock offered by EXACT:
  U.S. offering.................................  3,200,000 shares
  International offering........................
                                                  800,000 shares
                                                  ---------
      Total.....................................  4,000,000 shares

Shares outstanding after the offering...........  18,656,278 shares

Use of proceeds.................................  We will use the net proceeds from this offering
                                                  for clinical studies and trials, research and
                                                  development activities, working capital and
                                                  other general corporate purposes. See "Use of
                                                  Proceeds."

Risk factors....................................  You should review and consider risks discussed
                                                  under "Risk Factors" and other information
                                                  included in this prospectus before deciding to
                                                  invest in shares of the common stock.

Proposed Nasdaq National Market symbol..........  EXAS	

The share data in the table above is based on shares outstanding as of December 1, 2000 and excludes:
- 1,620,820 shares of common stock issuable upon exercise of options outstanding with a weighted average exercise price of $2.55 per share; and
- 552,541 shares of common stock reserved for future issuance upon exercise of additional grants which may be made under our 1995 stock plan. In addition, we have reserved 1,000,000 shares of common stock for future issuance upon exercise of grants which may be made under our 2000 option plan and 300,000 shares of common stock for future issuance under our 2000 purchase plan. No options have been granted under our 2000 option plan or 2000 purchase plan.
Except as otherwise indicated, all information in this prospectus:
- assumes the underwriters will not exercise their over-allotment option;
- reflects the conversion of each outstanding share of convertible preferred stock into 2.75 shares of common stock upon the completion of this offering; and
- reflects the 2.75 for one stock split effected on December 1, 2000.
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SUMMARY HISTORICAL FINANCIAL DATA
You should read the following summary financial data together with "Management's Discussion and Analysis of Financial Condition and Results of Operations" and our financial statements and the related notes included elsewhere in this prospectus.

                                                                                 NINE MONTHS ENDED
                                                YEARS ENDED DECEMBER 31,           SEPTEMBER 30,
                                             -------------------------------   ---------------------
                                               1997       1998       1999        1999        2000
                                             --------   --------   ---------   --------   ----------
                                                  (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
STATEMENT OF OPERATIONS DATA:
  Research and development expenses........  $ 1,222    $ 2,849    $   3,689   $ 2,738    $    3,815
  Loss from operations.....................   (2,037)    (4,021)      (5,263)   (3,877)       (8,204)
  Net loss.................................   (1,883)    (3,578)      (4,964)   (3,629)       (7,212)
  Net loss per share:
    Basic and diluted......................  $(10.70)   $ (6.08)   $   (5.32)  $ (4.34)   $    (5.83)
    Pro forma basic and diluted(3).........                            (0.56)                  (0.61)
  Weighted average common shares
    outstanding:
    Basic and diluted(1)...................  175,953    588,143      932,593   836,728     1,237,267
    Pro forma basic and diluted(3).........                        8,923,532              11,741,343	

                                                               AS OF SEPTEMBER 30, 2000
                                                              ---------------------------
                                                                ACTUAL     AS ADJUSTED(2)
                                                              ----------   --------------
BALANCE SHEET DATA:
  Cash and cash equivalents.................................    $30,228       $85,028
  Total assets..............................................     31,940        86,740
  Total stockholders' equity................................     31,038        85,838	

(1) Computed as described in Note 1 to the financial statements included elsewhere in this prospectus.
(2) Presented on an as adjusted basis to give effect to the automatic conversion of each outstanding share of convertible preferred stock into 2.75 shares of common stock upon the closing of this offering and the sale of 4,000,000 shares of common stock at an assumed initial public offering price of $15.00 per share, the mid-point of the expected range, after deducting the estimated underwriting discount and commissions and offering expenses payable by us.
(3) Assumes the conversion of all outstanding shares of preferred stock into common stock upon the completion of this offering.
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RISK FACTORS
AN INVESTMENT IN OUR COMMON STOCK INVOLVES A HIGH DEGREE OF RISK. YOU SHOULD CAREFULLY CONSIDER THE RISKS DESCRIBED BELOW, TOGETHER WITH ALL OF THE OTHER INFORMATION IN THIS PROSPECTUS, BEFORE MAKING AN INVESTMENT DECISION.
RISKS RELATING TO OUR BUSINESS
WE ARE A DEVELOPMENT STAGE COMPANY AND MAY NEVER COMMERCIALIZE ANY OF OUR PRODUCTS OR SERVICES OR EARN A PROFIT.
We are a development stage company and have incurred losses since we were formed. From our date of inception on February 10, 1995 through September 30, 2000, we have accumulated a total deficit of approximately $18.4 million. Since our colorectal cancer screening tests are still in development, we do not expect to have any material revenue from the sale of our products and services until 2003. Even after we begin selling our products and services, we expect that our losses will continue and increase as a result of continuing high research and development expenses, as well as increased sales and marketing expenses. We cannot assure you that we will ever commercialize any of our products or services, or that the revenue from any of our products or services will be sufficient to make us profitable.
IF OUR CLINICAL STUDIES DO NOT PROVE THE SUPERIORITY OF OUR TECHNOLOGIES, WE MAY NEVER SELL OUR PRODUCTS AND SERVICES.
In the fourth quarter of 2001, we intend to initiate a blinded multi-center clinical trial that will include approximately 5,300 patients with average risk profiles. The results of this clinical trial may not show that tests using our technologies are superior to existing screening methods. In that event, we will have to devote significant financial and other resources to further research and development. In addition, we may experience delays in the commercialization of tests using our technologies or commercialization may never occur. Our earlier clinical studies were small and included samples from high-risk patients. The results from these earlier studies may not represent the results we obtain from any future studies, including our planned clinical trial, which will include substantially more samples and average-risk patients. See "Business--Clinical Studies."
WE MAY BE UNABLE TO RECRUIT A SUFFICIENT NUMBER OF PATIENTS FOR OUR PLANNED AVERAGE-RISK CLINICAL TRIAL.
We intend to conduct a blinded multi-center clinical trial of approximately 5,300 average-risk patients. If we are unable to enroll the required number of average risk patients, we will be unable to validate the superiority of our technologies, which would make it difficult to sell our products and services. Despite the availability of colorectal cancer screening methods today, most Americans who are recommended for colorectal cancer screening do not get screened. Participants in our clinical trial will only have an average risk of developing colorectal cancer, yet will have to undergo a colonoscopy. This procedure requires sedation and causes patient discomfort. We cannot guarantee that we will be able to recruit patients on a timely basis, if at all.
IF MEDICARE AND OTHER THIRD-PARTY PAYORS, INCLUDING MANAGED CARE ORGANIZATIONS, DO NOT PROVIDE ADEQUATE REIMBURSEMENT FOR OUR PRODUCTS AND SERVICES, MOST CLINICAL REFERENCE LABORATORIES WILL NOT USE OUR PRODUCTS OR LICENSE OUR TECHNOLOGIES TO PERFORM CANCER SCREENING TESTS.
Most clinical reference laboratories will not perform colorectal cancer screening tests using our products and licensing our technologies unless they are adequately reimbursed by third-party payors such as Medicare and managed care organizations. There is significant uncertainty concerning third-party reimbursement for the use of any test incorporating new technology. Reimbursement by a third-party payor may depend on a number of factors, including a payor's determination that tests using our
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products and technologies are sensitive for colorectal cancer, not experimental or investigational, medically necessary, appropriate for the specific patient and cost-effective. To date, we have not secured any reimbursement approval for tests using our products and technologies from any third-party payor, nor do we expect any such approvals in the near future.
Reimbursement by Medicare will require approval by the Secretary of Health and Human Services, or HHS. The Federal Budget Act of 1997 provides for reimbursement of new technologies such as ours, but only with action of the Secretary of HHS. We cannot guarantee that the Secretary of HHS will act to approve tests based on our technologies on a timely basis or at all. In addition, the assignment of a current procedural terminology code facilitates Medicare reimbursement. The process to obtain this code is lengthy and we cannot guarantee that we will receive a current procedural terminology code on a timely basis, or at all.
Since reimbursement approval is required from each payor individually, seeking such approvals is a time-consuming and costly process. If we are unable to obtain adequate reimbursement by Medicare and managed care organizations, our ability to generate revenue and earnings from the sale of our products or licenses to our technologies will be limited.
WE WILL NOT BE ABLE TO COMMERCIALIZE OUR TECHNOLOGIES IF WE ARE NOT ABLE TO LOWER COSTS THROUGH AUTOMATING AND SIMPLIFYING KEY OPERATIONAL PROCESSES.
Currently, colorectal cancer screening tests using our technologies are very expensive because they are labor-intensive and use highly complex and expensive reagents. In order to price our products and services competitively, we will need to reduce substantially the costs of tests using our technologies through significant automation of key operational processes and other cost savings procedures. If we fail to sufficiently reduce costs, tests using our technologies either may not be commercially viable or may generate little, if any, profitability.
OUR INABILITY TO ESTABLISH STRONG BUSINESS RELATIONSHIPS WITH LEADING CLINICAL REFERENCE LABORATORIES TO PERFORM COLORECTAL CANCER SCREENING TESTS USING OUR TECHNOLOGIES WILL LIMIT OUR REVENUE GROWTH.
A key step in our strategy is to sell reagents and license our proprietary technologies to leading clinical reference laboratories that will perform colorectal cancer screening tests. We currently have no business relationships with these laboratories and have limited experience in establishing these business relationships. If we are unable to establish these business relationships, we will have limited ability to obtain revenues beyond revenue we can generate from our limited in-house capacity to process tests.
OUR FAILURE TO CONVINCE MEDICAL PRACTITIONERS TO ORDER TESTS USING OUR TECHNOLOGIES WILL LIMIT OUR REVENUE AND PROFITABILITY.
If we fail to convince medical practitioners to order tests using our technologies, we will not be able to sell our products or license our technologies in sufficient volume for us to become profitable. We will need to make leading gastroenterologists aware of the benefits of tests using our technologies through published papers, presentations at scientific conferences and favorable results from our clinical studies. Our failure to be successful in these efforts would make it difficult for us to convince medical practitioners to order colorectal cancer screening tests using our technologies for their patients.
IF WE LOSE THE SUPPORT OF OUR KEY SCIENTIFIC COLLABORATORS, IT MAY BE DIFFICULT TO ESTABLISH TESTS USING OUR TECHNOLOGIES AS A STANDARD OF CARE FOR COLORECTAL CANCER SCREENING, WHICH MAY LIMIT OUR REVENUE GROWTH AND PROFITABILITY.
We have established relationships with leading scientists, including members of our scientific advisory board, and research institutions, including the Mayo Clinic and Johns Hopkins University, that we believe are key to establishing tests using our technologies as a standard of care for colorectal
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cancer screening. We have consulting agreements with all but one member of our scientific advisory board, each of which may be terminated by us or the scientific advisory board member with 30 or 60 days notice. Our existing collaboration agreement with the Mayo Clinic expires on December 31, 2001. We have no written agreement with Johns Hopkins University with respect to our past collaborations. If any of our collaborators determine that colorectal cancer screening tests using our technologies are not superior to available colorectal cancer screening tests or that alternative technologies would be more effective in the early detection of colorectal cancer, we would encounter difficulty establishing tests using our technologies as a standard of care for colorectal cancer screening, which would limit our revenue growth and profitability.
WE MAY EXPERIENCE LIMITS ON OUR REVENUE AND PROFITABILITY IF ONLY AN INSIGNIFICANT NUMBER OF PEOPLE DECIDE TO BE SCREENED FOR COLORECTAL CANCER.
Even if our technologies are superior to alternative colorectal cancer screening technologies, adequate third-party reimbursement is obtained and medical practitioners order tests using our technologies, an insignificant number of people may decide to be screened for colorectal cancer. Despite the availability of current colorectal cancer screening methods as well as the recommendation of the American Cancer Society and the National Cancer Institute that all Americans age 50 and above be screened for colorectal cancer, most of these individuals decide not to complete a colorectal cancer screening test. If only an insignificant portion of the population decides to complete colorectal cancer screening tests, we may experience limits on our revenue and profitability.
OUR INABILITY TO APPLY OUR PROPRIETARY TECHNOLOGIES SUCCESSFULLY TO DETECT OTHER COMMON CANCERS MAY LIMIT OUR REVENUE GROWTH AND PROFITABILITY.
While to date, we have focused substantially all of our research and development efforts on colorectal cancer, we have used our technologies to detect aerodigestive cancers at sites other than the colon. As a result, we intend to devote significant personnel and financial resources in the future to extending our technology platform to the development of screening tests for these common cancers and pre-cancerous lesions. To do so, we may need to overcome technological challenges to develop reliable screening tests for these cancers. We may never realize any benefits from these research and development activities. See "Business--Research and Development."
IF WE FAIL TO OBTAIN THE APPROVAL OF THE U.S. FOOD AND DRUG ADMINISTRATION, OR FDA, OR COMPLY WITH OTHER FDA REQUIREMENTS, WE MAY NOT BE ABLE TO MARKET OUR PRODUCTS AND SERVICES AND MAY BE SUBJECT TO STRINGENT APPROVAL.
The FDA does not actively regulate laboratory tests that have been developed and used by the laboratory conducting the test. Although the FDA does regulate reagents, such as ours, that react with a biological substance to identify a specific DNA sequence or protein, used in such tests, its regulations provide that most such reagents, which the FDA refers to as analyte specific reagents, are exempt from the FDA's premarket review requirements. If the FDA were to decide to regulate in-house developed laboratory tests, decide to require premarket approval or clearance of our analyte specific reagents, conclude that our reagents do not meet the requirements for analyte specific reagents, or conclude that licensing our intellectual property constitutes non-compliant labeling, the commercialization of our products and services could be delayed, halted or prevented. In addition, the FDA may impose penalties on us or seek other enforcement actions. Similarly, if the FDA were to determine that our stool collector requires premarket approval or clearance, the sale of our products and services could be delayed, halted or prevented and the FDA could impose penalties on us or seek other enforcement action. Finally, our analyte specific reagents will be subject to a number of FDA requirements, including a requirement to comply with the FDA's quality system regulation which establishes extensive regulations for quality control and manufacturing procedures. Failure to comply with these regulations
7

could subject us to enforcement action. Adverse FDA action in any of these areas could significantly increase our expenses and limit our revenue and profitability.
IF WE FAIL TO COMPLY WITH REGULATIONS RELATING TO CLINICAL LABORATORIES, WE MAY BE PROHIBITED FROM PROCESSING OUR OWN TESTS IN-HOUSE, BE REQUIRED TO INCUR SIGNIFICANT EXPENSE TO CORRECT NON-COMPLIANCE, OR BE SUBJECT TO OTHER REQUIREMENTS OR PENALTIES.
We are subject to U.S. and state laws and regulations regarding the operation of clinical laboratories. For example, the federal Clinical Laboratory Improvement Act imposes certification requirements for clinical laboratories, and establishes standards for quality assurance and quality control, among other things. Clinical laboratories are subject to inspection by regulators, and the possible sanctions for failing to comply with applicable requirements include prohibiting a laboratory from running tests, requiring a laboratory to implement a corrective plan, and imposing civil money or criminal penalties. In May 2000, we received a clinical laboratory certificate of compliance. However, if we fail to meet the requirements of the Clinical Laboratory Improvement Act in the future, we could be required to halt providing services and incur significant expense, thereby limiting our revenue and profitability.
OTHER COMPANIES MAY DEVELOP AND MARKET METHODS FOR DETECTING COLORECTAL CANCER, WHICH MAY MAKE OUR TECHNOLOGIES LESS COMPETITIVE, OR EVEN OBSOLETE.
The market for colorectal cancer screening is large, approximating 74 million Americans age 50 and above, and has attracted competitors, some of which have significantly greater resources than we have.
Currently, we face competition from alternative procedures-based detection technologies such as flexible sigmoidoscopy and colonoscopy, as well as traditional screening tests such as the fecal occult blood test marketed by Beckman Coulter, Inc. Other entities are developing new colorectal screening methods such as virtual colonoscopy, an experimental procedure being developed at research institutions in which a radiologist views the inside of the colon through a scanner. In addition, competitors, including Bayer Corporation, diaDexus, Inc., Matritech, Inc. and Millennium Predictive Medicine, Inc., are developing serum-based tests, a screening test based on the detection of proteins or nucleic acids produced by colon cancer. These and other companies may also be working on additional methods of detecting colon cancer that have not yet been announced. We may be unable to compete effectively against these competitors either because their test is superior or because they may have more expertise, experience, financial resources and business relationships.
THE LOSS OF KEY MEMBERS OF OUR SENIOR MANAGEMENT TEAM COULD ADVERSELY AFFECT OUR BUSINESS.
Our success depends largely on the skills, experience and performance of key members of our senior management team, including Stanley N. Lapidus, our Chairman, Don M. Hardison, our President, John A. McCarthy, Jr., our Vice President and Chief Financial Officer, and Anthony P. Shuber, our Vice President of Molecular Biology. Messrs. Lapidus and Shuber have been critical to the development of our technologies and business. Mr. Hardison, who joined us in May 2000, and Mr. McCarthy, who joined us in October 2000, are key additions to our management team and will be critical to directing and managing our growth and development in the future. Each of Messrs. Lapidus, Hardison, McCarthy and Shuber have signed non-disclosure and assignment of intellectual property agreements and non-compete agreements. The efforts of each of these persons will be critical to us as we continue to develop our technologies and our testing process and as we attempt to transition from a development company to a company with commercialized products and services. If we were to lose one or more of these key employees, we may experience difficulties in competing effectively, developing our technologies and implementing our business strategies.
8

IF WE ARE UNABLE TO PROTECT OUR INTELLECTUAL PROPERTY EFFECTIVELY, WE MAY BE UNABLE TO PREVENT THIRD PARTIES FROM USING OUR TECHNOLOGIES, WHICH WOULD IMPAIR OUR COMPETITIVE ADVANTAGE.
We rely on patent protection as well as a combination of trademark, copyright and trade secret protection, and other contractual restrictions to protect our proprietary technologies, all of which provide limited protection and may not adequately protect our rights or permit us to gain or keep any competitive advantage. If we fail to protect our intellectual property, we will be unable to prevent third parties from using our technologies and they will be able to compete more effectively against us.
As of December 1, 2000, we had ten issued patents in the United States, three issued foreign patents, twenty-one pending patent applications in the United States, three of which have been allowed, and thirty-eight pending foreign applications. We cannot assure you that any of our currently pending or future patent applications will result in issued patents, and we cannot predict how long it will take for such patents to be issued. Further, we cannot assure you that other parties will not challenge any patents issued to us, or that courts or regulatory agencies will not hold our patents to be invalid or unenforceable.
A third-party institution has asserted co-inventorship rights with respect to one of our issued patents relating to pooling patient samples in connection with our loss of heterozygosity detection method. A second third-party institution has asserted co-inventorship rights with respect to one of our pending patent applications relating to our DNA integrity assay detection method. We cannot guarantee you that we will be successful in defending these or other challenges made in connection with our patents and patent applications. These third-party assertions, if successful, would result in co-ownership of such patents with a third party that may allow the third party to fully exploit these technologies or might result in the unenforceability of the challenged patent.
In addition to our patents, we rely on contractual restrictions to protect our proprietary technology. We require our employees and third parties to sign confidentiality agreements and employees to also sign agreements assigning to us all intellectual property arising from their work for us. Nevertheless, we cannot guarantee that these measures will be effective in protecting our intellectual property rights.
We cannot guarantee you that the patents issued to us will be broad enough to provide any meaningful protection nor can we assure you that one of our competitors may not develop more effective technologies, designs or methods to test for colorectal cancer or any other common cancer without infringing our intellectual property rights or that one of our competitors might not design around our proprietary technologies.
WE MAY INCUR SUBSTANTIAL COSTS TO PROTECT AND ENFORCE OUR PATENTS.
We have pursued an aggressive patent strategy designed to maximize our patent protection against third parties in the U.S. and in foreign countries. We have filed patent applications that cover the methods we have designed to detect colorectal cancer and other cancers, as well as patent applications that cover our testing process. In order to protect or enforce our patent rights, we may initiate actions against third parties. Any actions regarding patents could be costly and time-consuming, and divert our management and key personnel from our business. Additionally, such actions could result in challenges to the validity or applicability of our patents.
WE MAY BE SUBJECT TO SUBSTANTIAL COSTS AND LIABILITY OR BE PREVENTED FROM SELLING OUR SCREENING TESTS FOR CANCER AS A RESULT OF LITIGATION OR OTHER PROCEEDINGS RELATING TO PATENT RIGHTS.
Third parties may assert infringement or other intellectual property claims against our licensors or us. We pursue an aggressive patent strategy that we believe provides us with a competitive advantage in the early detection of colorectal cancer and other common cancers. We currently have ten issued U.S.
9

patents and twenty-one pending patent applications in the United States. Because the U.S. Patent & Trademark Office maintains patent applications in secrecy until a patent issues, others may have filed patent applications for technology covered by our pending applications. There may be third-party patents, patent applications and other intellectual property relevant to our potential products that may block or compete with our products or processes. Even if third-party claims are without merit, defending a lawsuit may result in substantial expense to us and may divert the attention of management and key personnel. In addition, we cannot assure you that we would prevail in any of these suits or that the damages or other remedies if any, awarded against us would not be substantial. Claims of intellectual property infringement may require us to enter into royalty or license agreements with third parties that may not be available on acceptable terms, if at all. These claims may also result in injunctions against the further development and use of our technology, which would have a material adverse effect on our business, financial condition and results of operations.
Also, patents and applications owned by us may become the subject of interference proceedings in the United States Patent and Trademark Office to determine priority of invention, which could result in substantial cost to us, as well as a possible adverse decision as to the priority of invention of the patent or patent application involved. An adverse decision in an interference proceeding may result in the loss or rights under a patent or patent application subject to such a proceeding.
OUR BUSINESS WOULD SUFFER IF CERTAIN LICENSES WERE TERMINATED.
We license certain technologies from Roche Molecular Systems, Inc. and Genzyme Corporation that are key to our technologies. The Roche license, which relates to a gene amplification process used in almost all genetic testing, is a non-exclusive license through 2004, the date on which the patent that we utilize expires. Roche may terminate the license upon notice if we fail to pay royalties, submit certain reports or breach any other material term of the license agreement. The Genzyme license is a non-exclusive license to use the APC and P53 genes and methodologies relating to the genes in connection with our products and services through 2013, the date on which the term of the patent that we utilize expires. Genzyme may terminate the license upon notice if we fail to pay milestone payments and royalties, achieve a certain level of sales, submit certain reports. In addition, if we fail to use reasonable efforts to make products and services based on these patents available to the public or fail to request FDA clearance for a diagnostic test kit as required by the agreement, Genzyme may terminate the license. If either Roche or Genzyme were to terminate the licenses, we would incur significant delays and expense to change a portion of our testing methods and we cannot guarantee that we would be able to change our testing methods without affecting the sensitivity of our tests.
CHANGES IN HEALTHCARE POLICY COULD SUBJECT US TO ADDITIONAL REGULATORY REQUIREMENTS THAT MAY DELAY THE COMMERCIALIZATION OF OUR TESTS AND INCREASE OUR COSTS.
Healthcare policy has been a subject of discussion in the executive and legislative branches of the federal and many state governments. We developed a staged commercialization strategy for our colorectal cancer screening tests based on existing healthcare policies. Changes in healthcare policy, if implemented, could substantially delay the use of our tests, increase costs, and divert management's attention. We cannot predict what changes, if any, will be proposed or adopted or the effect that such proposals or adoption may have on our business, financial condition and results of operations.
OUR INABILITY TO RAISE ADDITIONAL CAPITAL ON ACCEPTABLE TERMS IN THE FUTURE MAY LIMIT OUR GROWTH.
We may need to raise additional funds to execute our business strategy. We expect that the proceeds of this offering, together with our current working capital, will fund our operations through 2003, at which time we will need to raise additional capital. If we have to accelerate our research and development efforts or expand our clinical trials however, we will need to raise additional capital at an earlier date. Our inability to raise capital would seriously harm our business and development efforts.
10

In addition, we may choose to raise additional capital due to market conditions or strategic considerations even if we believe we have sufficient funds for our current or future operations. To the extent that additional capital is raised through the sale of equity or convertible debt securities, the issuance of these securities could result in dilution to our stockholders.
We currently have no credit facility or committed sources of capital. If our capital resources are insufficient to meet future requirements, we will have to raise additional funds to continue the development and commercialization of our technologies. These funds may not be available on favorable terms, or at all. If adequate funds are not available on attractive terms, we may have to restrict our operations significantly or obtain funds by entering into agreements on unattractive terms.
RISKS RELATING TO OUR COMMON STOCK
OUR EXECUTIVE OFFICERS, DIRECTORS AND PRINCIPAL STOCKHOLDERS OWN A SIGNIFICANT PERCENTAGE OF OUR COMPANY AND COULD EXERT SIGNIFICANT INFLUENCE OVER MATTERS REQUIRING STOCKHOLDER APPROVAL.
After this offering, our executive officers, directors and principal stockholders and their affiliates will together control 50.4% of our outstanding common stock, without giving effect to the exercise of outstanding options under our stock plans and to the exercise of the underwriters' over-allotment options. As a result these stockholders, if they act together, will have significant influence over matters requiring stockholder approval, such as the election of directors and approval of significant corporate transactions. This concentration of ownership may have the effect of delaying, preventing or deterring a change in control, could deprive you of the opportunity to receive a premium for your common stock as part of a sale and could adversely affect the market price of our common stock.
CERTAIN PROVISIONS OF OUR CHARTER, BY-LAWS AND DELAWARE LAW MAY MAKE IT DIFFICULT FOR YOU TO CHANGE OUR MANAGEMENT AND MAY ALSO MAKE A TAKEOVER DIFFICULT.
Our corporate documents and Delaware law contain provisions that limit the ability of stockholders to change our management and may also enable our management to resist a takeover. These provisions include a staggered board of directors, limitations on persons authorized to call a special meeting of stockholders and advance notice procedures required for stockholders to make nominations of candidates for election as directors or to bring matters before an annual meeting of stockholders. These provisions might discourage, delay or prevent a change of control or in our management. These provisions could also discourage proxy contests and make it more difficult for you and other stockholders to elect directors and cause us to take other corporate actions. In addition, the existence of these provisions, together with Delaware law, might hinder or delay an attempted takeover other than through negotiations with our board of directors.
OUR STOCK PRICE MAY BE VOLATILE.
The market price of our stock is likely to be highly volatile and could fluctuate widely in price in response to various factors, many of which are beyond our control, including:
- technological innovations or new products and services by us or our competitors;
- clinical trial results relating to our tests or those of our competitors;
- reimbursement decisions by Medicare and other managed care organizations;
- FDA regulation of our products and services;
- the establishment of partnerships with clinical reference laboratories;
- health care legislation;
- intellectual property disputes;
11

- additions or departures of key personnel; and
- sales of our common stock.
Because we are a development stage company with no material revenue expected until 2003, you may consider one of these factors to be material. Our stock price may fluctuate widely as a result of any of the above.
In addition, the Nasdaq National Market and the market for applied genomics companies in particular, have experienced significant price and volume fluctuations that have often been unrelated or disproportionate to the performance of those companies.
THE MARKET PRICE OF OUR COMMON STOCK MAY DROP SIGNIFICANTLY WHEN THE RESTRICTIONS ON SALE BY OUR EXISTING STOCKHOLDERS LAPSE.
Following this offering, we will have approximately 18,507,778 shares of common stock outstanding. Sales of substantial amounts of our common stock after this offering, or the possibility of such sales, could adversely affect the market price of our common stock. All of the shares of common stock to be sold in this offering will be freely tradable without restriction or further registration under the federal securities laws. The remaining 14,507,778, or 78.4%, of our outstanding common stock will be subject to restrictions on resale under U.S. securities laws. Holders of 90.9% of these shares have agreed not to sell these shares for at least 180 days following the date of this prospectus.
We intend to file a registration statement on Form S-8 to register approximately 5,287,500 shares of our common stock that are reserved for issuance or sale under our existing stock plans. Once registered, these shares will be freely tradable without restriction or further registration under the federal securities laws unless purchased by one of our affiliates.
INVESTORS WILL EXPERIENCE IMMEDIATE AND SUBSTANTIAL DILUTION IN THE BOOK VALUE OF THEIR INVESTMENT.
If you purchase shares of our common stock in this offering, you will experience immediate and substantial dilution because the price you pay will be substantially greater than the net tangible value per share of the shares you acquire. Assuming a public offering price of $15.00 per share, investors who purchase shares in this offering will pay 55.4% of the aggregate proceeds we have received from the sale of our capital stock but will own only 21.6% of our outstanding shares. This is due, in large part, to the fact that our current investors paid substantially less than the public offering price when they purchased our stock. In addition, the issuance of additional shares of our common stock or of securities convertible into our common stock or the exercise of outstanding options on our common stock could result in the substantial dilution of the percentage ownership of holders of our common stock at the time of any such issuance and substantial dilution of our earnings per share.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus includes forward-looking statements. These statements relate to future events or our future financial performance. We have attempted to identify forward-looking statements by terminology such as "anticipates", "believes," "can," "continue," "could," "estimates," "expects," "intends," "may," "plans," "potential," "predicts," "should" or "will" or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks outlined under "Risk Factors," that may cause our or our industry's actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements.
Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. We are under no duty to update any of the forward-looking statements after the date of this prospectus or to conform such statements to actual results, unless required by law.
12

USE OF PROCEEDS
We estimate the aggregate net proceeds of the offering to be approximately $54,800,000, after deducting the estimated underwriting discount and offering expenses. If the underwriters' over-allotment option is exercised in full, we estimate that such net proceeds will be approximately $63,170,000. See "Underwriting."
We intend to use the net proceeds for clinical studies and trials, research and development activities, working capital and other general corporate purposes. We have not yet finalized the amount of net proceeds we will use specifically for each of the foregoing purposes. Accordingly, our management will have significant flexibility in applying the net proceeds of the offering. Pending such uses, we will invest the proceeds of the offering in short-term, interest-bearing, investment-grade securities, certificates of deposit or direct or guaranteed obligations of the United States.
DIVIDEND POLICY
We have never declared or paid dividends on our capital stock, and we do not anticipate paying any cash dividends in the foreseeable future. We currently intend to retain any future earnings to fund the development of our business.
13

CAPITALIZATION
The following table sets forth our capitalization as of September 30, 2000:
- on an actual basis;
- on a pro forma basis to give effect to the automatic conversion of each outstanding share of convertible preferred stock into 2.75 shares of common stock; and
- on an as adjusted basis to adjust the pro forma information to give effect to the sale of 4,000,000 shares of common stock at an assumed initial public offering price of $15.00 per share, the mid-point of the expected range, after deducting the estimated underwriting discount and commissions and offering expenses payable by us.
This table should be read together with "Management's Discussion and Analysis of Financial Condition and Results of Operations" and our financial statements, notes thereto and other financial information included elsewhere in this prospectus.

                                                                   AS OF SEPTEMBER 30, 2000
                                                              ----------------------------------
                                                               ACTUAL    PRO FORMA   AS ADJUSTED
                                                              --------   ---------   -----------
                                                                    (DOLLARS IN THOUSANDS,
                                                                  EXCEPT PER SHARE AMOUNTS)
Cash and cash equivalents...................................  $ 30,228   $ 30,228     $ 85,028
                                                              ========   ========     ========
Stockholders' equity:
  Series A--1,000,000 shares authorized, 902,414 shares
    issued and outstanding actual; none authorized, issued
    or outstanding pro forma or as adjusted.................  $      9   $     --     $
  Series B--1,250,000 shares authorized, 996,196 shares
    issued and outstanding actual; none authorized, issued
    or outstanding pro forma or as adjusted.................        10         --
  Series C--1,015,000 shares authorized, 1,007,186 shares
    issued or outstanding; none authorized, issued or
    outstanding pro forma or as adjusted....................        10         --
  Series D--1,435,373 shares authorized, 1,417,534 shares
    issued and outstanding actual; none authorized, issued
    or outstanding pro forma or as adjusted.................        14         --
Common stock, 7,500,000 shares authorized, 2,618,622 shares
  issued and outstanding actual; 100,000,000 shares
  authorized, 14,507,778 shares issued and outstanding pro
  forma; 100,000,000 shares authorized, 18,507,778 shares
  issued and outstanding as adjusted........................        26        145          185
Subscriptions receivable....................................      (589)      (589)        (589)
Deferred compensation.......................................    (6,621)    (6,621)      (6,621)
Additional paid in capital..................................    56,607     56,531      111,291
Deficit accumulated during the development stage............   (18,428)   (18,428)     (18,428)
                                                              --------   --------     --------
  Total stockholders' equity................................    31,038     31,038       85,838
                                                              --------   --------     --------
  Total capitalization......................................  $ 31,038   $ 31,038     $ 85,838
                                                              ========   ========     ========	

The share data in the table above is based on shares outstanding as of September 30, 2000 and excludes:
- 1,409,070 shares of common stock issuable upon exercise of options outstanding with a weighted average exercise price of $1.11 per share; and
- an aggregate of 225,291 shares available for future issuance upon exercise of additional grants which may be made under our 1995 stock plan. Subsequent to September 30, 2000, we reserved, for future issuance upon exercise of grants which may be made, an additional 687,500 shares of common stock under our 1995 stock plan, 1,000,000 shares of common stock under our 2000 option plan and 300,000 shares of common stock for our 2000 purchase plan. No options have been granted under our 2000 option plan or the 2000 purchase plan.
14

DILUTION
Our pro forma net tangible book value at September 30, 2000 was approximately $30.1 million, or approximately $2.08 per share, after giving effect to the conversion of all outstanding shares of convertible preferred stock into common stock upon the closing of the offering. Pro forma net tangible book value per share represents the amount of our total tangible assets less total liabilities, divided by the number of shares of common stock outstanding before giving effect to the sale of the shares of our common stock in the offering. See "Capitalization." After giving effect to the sale of the 4,000,000 shares of common stock in the offering, assuming a public offering price of $15.00 per share, less the estimated underwriting discount and commissions and other expenses of the offering, our pro forma net tangible book value as of September 30, 2000 would have been $4.59 per share. This represents an immediate increase in net tangible book value per share of $2.51 to existing stockholders and immediate dilution in net tangible book value of $10.41 per share to new investors purchasing our common stock in the offering at the public offering price. The following table illustrates the per share dilution without over-allotment options:

Assumed initial public offering price per share.............          $15.00
  Pro forma net tangible book value per share at
    September 30, 2000......................................  $2.08
  Increase per share attributable to new investors..........   2.51
                                                              -----
Pro forma net tangible book value per share after the
  offering..................................................            4.59
                                                                      ------
Dilution per share to new investors.........................          $10.41
                                                                      ======	

Dilution per share to new investors is determined by subtracting pro forma net tangible book value per share after the offering from the public offering price per share paid by a new investor. If any shares are issued in connection with outstanding options or the underwriters' over-allotment options, you will experience further dilution.
The following table summarizes the number of shares of common stock purchased from us, the total consideration paid and the average price per share paid by the existing stockholders and by new investors in the offering, before deduction of the estimated underwriting discount and commissions and other expenses of the offering.

                                 SHARES PURCHASED           TOTAL CONSIDERATION
                               ---------------------      -----------------------      AVERAGE PRICE
                                 NUMBER     PERCENT          AMOUNT      PERCENT         PER SHARE
                               ----------   --------      ------------   --------      -------------
Existing stockholders........  14,507,778     78.4%       $ 48,383,111     44.6%          $ 3.33
New investors................   4,000,000     21.6          60,000,000     55.4            15.00
                               ----------    -----        ------------    -----
    Totals...................  18,507,778    100.0%       $108,383,111    100.0%
                               ==========    =====        ============    =====	

The share data in the table above is based on shares outstanding as of September 30, 2000 and excludes:
- 1,409,070 shares of common stock issuable upon exercise of options outstanding with a weighted average exercise price of $1.11 per share; and
- 225,291 shares of common stock reserved for future issuance upon exercise of additional grants which may be made under our 1995 stock plan. Subsequent to September 30, 2000, we reserved, for future issuance upon exercise of grants which may be made, an additional 687,500 shares of common stock for issuance under our 1995 stock plan, 1,000,000 shares of common stock under our 2000 option plan and 300,000 shares of common stock for our 2000 purchase plan. No options have been granted pursuant to our 2000 option plan or 2000 purchase plan.
If the underwriters' over-allotment option is exercised in full, the following will occur:
- the percentage of shares of common stock held by existing stockholders will decrease to approximately 75.9% of the total number of shares of our common stock outstanding after the offering; and
- the number of shares held by new investors will be increased to 4,600,000 or approximately 24.1% of the total number of shares of our common stock outstanding after the offering.
15

SELECTED HISTORICAL FINANCIAL DATA
The selected historical financial data set forth below as of December 31, 1998 and 1999 and for the years ended December 31, 1997, 1998 and 1999, are derived from our financial statements, which have been audited by Arthur Andersen LLP, independent public accountants, and which are included elsewhere in this prospectus. The selected historical financial data as of December 31, 1996 and for the year ended December 31, 1996 are derived from our financial statements, which have been audited by Arthur Andersen LLP, independent public accountants and which are not included elsewhere in this prospectus. The selected historical financial data as of December 31, 1995 and for the year ended December 31, 1995 are derived from our unaudited financial statements which are not included elsewhere in this prospectus. The selected historical financial data as of September 30, 2000 and for the nine months ended September 30, 1999 and 2000 are derived from our unaudited financial statements which are included elsewhere in this prospectus. The unaudited financial statements include, in our opinion, all adjustments, consisting only of normal, recurring adjustments, necessary for a fair presentation of our financial position and the results of our operations for those periods.
The selected historical financial data should be read in conjunction with, and are qualified by reference to "Management's Discussion and Analysis of Financial Condition and Results of Operations," our financial statements and notes thereto and the report of independent public accountants included elsewhere in this prospectus. Operating results for the nine months ended September 30, 2000 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2000.

                                                                                                         NINE MONTHS ENDED
                                                         YEARS ENDED DECEMBER 31,                          SEPTEMBER 30,
                                        ----------------------------------------------------------   -------------------------
                                          1995       1996        1997        1998         1999         1999          2000
                                        --------   ---------   ---------   ---------   -----------   ---------   -------------
                                                            (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
STATEMENT OF OPERATIONS DATA:
  Research and development............  $     --   $     366   $   1,222   $   2,849   $     3,689   $   2,738   $      3,815
  General and administrative..........       144         312         814       1,170         1,560       1,125          2,442
  Stock-based compensation(1).........        --          --           1           2            14          14          1,947
                                        --------   ---------   ---------   ---------   -----------   ---------   ------------
  Loss from operations................      (144)       (678)     (2,037)     (4,021)       (5,263)     (3,877)        (8,204)
  Interest income.....................         6          26         154         443           299         248            992
                                        --------   ---------   ---------   ---------   -----------   ---------   ------------
  Net loss............................  $   (138)  $    (652)  $  (1,883)  $  (3,578)  $    (4,964)  $  (3,629)  $     (7,212)
                                        ========   =========   =========   =========   ===========   =========   ============
  Net loss per common share:
    Basic and diluted(2)..............  $  (1.69)  $   (6.77)  $  (10.70)  $   (6.08)  $     (5.32)  $   (4.34)  $      (5.83)
                                        ========   =========   =========   =========   ===========   =========   ============
    Pro forma, basic and diluted(3)...                                                 $     (0.56)              $      (0.61)
                                                                                       ===========               ============
  Weighted Average Common Shares
    outstanding:......................
    Basic and diluted.................    81,780      96,250     175,953     588,143       932,593     836,728      1,237,267
                                        ========   =========   =========   =========   ===========   =========   ============
    Pro forma basic and diluted(3)....                                                   8,923,532                 11,741,343
                                                                                       ===========               ============	

                                                                 AS OF DECEMBER 31,                                    AS OF
                                                -----------------------------------------------------              SEPTEMBER 30,
                                                  1995       1996       1997       1998       1999                      2000
                                                --------   --------   --------   --------   ---------              --------------
BALANCE SHEET DATA:
  Cash and cash equivalents...................  $    53    $ 3,896    $ 1,792    $ 8,826    $   3,553                $  30,228
  Total assets................................       62      4,119      2,417      9,708        4,754                   31,940
  Stockholders' equity........................       40      4,010      2,305      9,298        4,410                   31,038	

(1) The following summarizes the departmental allocation of stock-based compensation:

Research and development...............       --         --          1          2            9         9            217
General and administrative.............       --         --         --         --            5         5          1,730
                                         -------    -------    -------    -------    ---------   -------      ---------
    Total..............................        0          0          1          2           14        14          1,947	

(2) Computed as described in Note 2 to the financial statements included elsewhere in this prospectus.
(3) Assumes the conversion of all outstanding shares of preferred stock into common stock upon the completion of this offering.
16

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
THE FOLLOWING DISCUSSION SHOULD BE READ IN CONJUNCTION WITH OUR FINANCIAL
STATEMENTS AND RELATED NOTES APPEARING ELSEWHERE IN THIS PROSPECTUS.
OVERVIEW
We apply proprietary genomics technologies to the early detection of common cancers. We have selected colorectal cancer screening as the first application of our technology platform. Since our inception on February 10, 1995, our principal activities have included:
- researching and developing our technologies for colorectal cancer screening;
- conducting clinical studies to validate our colorectal cancer screening tests;
- negotiating licenses for intellectual property of others incorporated into our technologies;
- developing relationships with opinion leaders in the scientific and medical communities;
- conducting market studies and analyzing potential approaches for commercializing our technologies;
- hiring research and clinical personnel;
- hiring management and other support personnel; and
- raising capital.
Initially, we intend to offer colorectal cancer screening services ourselves to establish the market. We then intend to license our proprietary technologies and sell reagents to leading clinical reference laboratories to enable them to develop tests. We may also package our technologies and seek approval for diagnostic test kits with which any clinical laboratory could conduct our tests.
We have generated no operating revenues since our inception and do not expect operating revenues for the foreseeable future. As of September 30, 2000, we had an accumulated deficit of approximately $18.4 million. Our losses have resulted principally from costs incurred in conjunction with our research and development initiatives.
Research and development expenses include costs related to scientific and laboratory personnel, clinical studies and reagents and supplies used in the development of our technologies. We expect that the cost of our research and development activities will increase substantially as we continue activities relating to the development of our colorectal cancer screening tests and the extension of our technologies to several other forms of common cancers and pre-cancerous lesions. We are currently conducting a clinical study which includes a population of both high-risk and average-risk patients and thereafter intend to conduct a clinical trial that will include approximately 5,300 average-risk patients at an estimated forty locations, the costs of which will be borne by us.
General and administrative expenses consist primarily of non-research personnel salaries, office expenses and professional fees. We expect general and administrative expenses to increase significantly as we hire additional personnel and build our infrastructure to support future growth.
Stock-based compensation expense represents the difference between the exercise price and fair value of common stock on the date of grant. The stock compensation is being amortized over the vesting period of the applicable options, which is generally 60 months.
17

RESULTS OF OPERATIONS
COMPARISON OF THE NINE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999
RESEARCH AND DEVELOPMENT EXPENSES. Research and development expenses increased to $3.8 million for the nine months ended September 30, 2000 from $2.7 million for the nine months ended September 30, 1999, excluding departmental allocations of stock-based compensation. This increase was primarily the result of $650,000 incurred in connection with two multi-center clinical studies, an additional $206,000 in compensation for research and development personnel, $23,000 incurred in connection with leasing additional laboratory space and $74,000 in professional and consulting fees.
GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expenses increased to $2.4 million for the nine months ended September 30, 2000 from $1.1 million for the nine months ended September 30, 1999, excluding departmental allocations of stock-based compensation. This increase was primarily the result of $49,000 incurred in connection with the initiation of our marketing program, an additional $495,000 in salaries for general and administrative personnel, including the hiring of our president, $21,000 incurred in connection with leasing additional administrative space, an additional $137,000 in legal fees related to our patent portfolio and $554,000 in other professional and consulting fees.
STOCK-BASED COMPENSATION. Stock-based compensation expense increased to $1.9 million for the nine months ended September 30, 2000, of which $200,000 related to research and development personnel and $1.7 million related to general and administrative personnel. For the nine months ended September 30, 1999, stock-based compensation expense was $14,000, of which $9,000 related to research and development personnel and $5,000 related to general and administrative personnel.
INTEREST INCOME. Interest income increased to $992,000 for the nine months ended September 30, 2000 from $248,000 for the nine months ended September 30, 1999. This increase was primarily due to an increase in our cash and cash equivalents balances resulting from the issuance of $31.7 million of preferred stock in April 2000.
COMPARISON OF THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
RESEARCH AND DEVELOPMENT EXPENSES. Research and development expenses, excluding departmental allocations of stock-based compensation, increased to $3.7 million for the year ended December 31, 1999 from $2.8 million for the year ended December 31, 1998, and increased in 1998 from $1.2 million for the year ended December 31, 1997. Each of these expense increases was attributable primarily to an increase of $303,000 in 1999 and $634,000 1998 in research and development personnel and an additional $53,000 in 1999 and $18,000 in 1998 related to the leasing of additional laboratory space. In addition, we incurred $782,000 in connection with the initiation of our clinical studies in 1998 and an additional $429,000 in connection with the ongoing clinical studies during 1999.
GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expenses, excluding departmental allocations of stock-based compensation, increased to $1.6 million for the year ended December 31, 1999 from $1.2 million for the year ended December 31, 1998, and increased in 1998 from $814,000 for the year ended December 31, 1997. Each of these expense increases was attributable primarily to an increase of $200,000 in 1999 and $105,000 in 1998 in general and administrative personnel, an increase of $76,000 in 1999 and $177,000 in 1998 in legal and consulting fees and an increase of $55,000 in 1999 and $53,000 in 1998 in amortization and depreciation expense.
STOCK-BASED COMPENSATION. Stock-based compensation expense increased to $14,000 for the year ended December 31, 1999, of which $9,000 related to research and development personnel and $5,000 related to general and administrative personnel. Stock-based compensation expense was $2,000 for the year ended December 31, 1998, of which $1,500 was related to research and development personnel
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and $500 related to general and administrative personnel. Stock-based compensation was $900 for the year ended December 31, 1997, of which $600 related to research and development expense and $300 related to general and administrative personnel.
INTEREST INCOME. Interest income decreased to $299,000 for the year ended December 31, 1999 from $443,000 for the year ended December 31, 1998, and increased in 1998 from $154,000 for the year ended December 31, 1997. The decrease in 1999 was primarily due to a decrease in our cash and cash equivalents balances as a result of losses from operations. The increase during 1998 was primarily due to an increase in our cash and cash equivalents balances resulting from the issuance of preferred stock in March 1998.
LIQUIDITY AND CAPITAL RESOURCES
We have financed our operations since inception primarily through private sales of preferred stock. As of September 30, 2000, we had received net proceeds of $47.2 million from the issuance of preferred stock. As of September 30, 2000, we had approximately $30.2 million in cash and cash equivalents.
Net cash used in operating activities was $4.6 million for the nine months ended September 30, 2000, $4.6 million in 1999, $3.0 million in 1998 and $1.8 million in 1997. These increases are primarily due to the increase in our research and development activities.
Net cash used in investing activities was $647,000 for the nine months ended September 30, 2000, $722,000 in 1999, $496,000 in 1998 and $499,000 in 1997. For each of these periods, cash used in investing activities reflected increased investment in our intellectual property portfolio and the expansion of our laboratory and office space.
Net cash provided by financing activities was $31.9 million for the nine months ended September 30, 2000, $57,000 in 1999, $10.6 million in 1998 and $171,000 in 1997. Cash provided during these periods resulted from the sale of our preferred stock during the nine months ended September 30, 2000 and the year ended 1998.
We expect that the proceeds from this offering, together with our current working capital, will fund our operations through 2003. Our future capital requirements include, but are not limited to, launching our marketing efforts, supporting our clinical trial efforts, and continuing our research and development programs. Our future capital requirements will depend on many factors, including the following:
- the success of our clinical studies;
- the scope of and progress made in our research and development activities; and
- the successful commercialization of colorectal cancer screening tests based on our technologies.
NET OPERATING LOSS CARRYFORWARDS
As of December 31, 1999, we had net operating loss carryforwards of $10.7 million and research and development tax credit carryforwards of $389,000. The net operating loss and tax credit carryforwards will expire at various dates through 2019, if not utilized. The Internal Revenue Code and applicable state law impose substantial restrictions on a corporation's utilization of net operating loss and tax credit carryforwards if an ownership change is deemed to have occurred.
RECENT ACCOUNTING PRONOUNCEMENTS
In June 1998, the Financial Accounting Standards Board, or the FASB, issued Statement of Financial Accounting Standards (SFAS) No. 133, ACCOUNTING FOR
DERIVATIVE INSTRUMENTS AND HEDGING
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ACTIVITIES. This statement established accounting and reporting standards for derivative instruments and hedging activities. SFAS 133, as amended by SFAS 137, will be effective for our financial reporting beginning in the first quarter of 2001. SFAS 133 will require that we recognize all derivatives as either assets or liabilities on the balance sheet and measure those instruments at fair value. The accounting for gains and losses from changes in the fair value of a particular derivative will depend on the intended use of that derivative. We believe the adoption of this statement will not have a significant impact on our financial position, results of operations or cash flows.
In December 1999, the SEC issued Staff Accounting Bulletin No. 101, REVENUE RECOGNITION. This bulletin establishes guidelines for revenue recognition and is in effect for periods beginning October 1, 2000. We do not expect that the adoption of this guidance will have a material impact on our financial condition or results of operations.
In March 2000, the FASB issued Interpretation No. 44, ACCOUNTING FOR CERTAIN TRANSACTIONS INVOLVING STOCK COMPENSATION--AND INTERPRETATION OF APB OPINION NO. 25. The interpretation clarifies the application of APB Opinion No. 25 to accounting for stock issued to employees. The interpretation is effective July 1, 2000, but covers events occurring during the period between December 15, 1998 and July 1, 2000. If events covered by the interpretation occur during this period, the effects of applying the interpretation to the events would be recognized on a prospective basis from July 1, 2000. As a result, the interpretation will not require that any adjustments be made to our consolidated financial statements for periods before July 1, 2000 and no expense would be recognized for any additional compensation cost measured that is attributable to periods before July 1, 2000. We believe the adoption of this interpretation will not have a significant impact on our financial position, results of operations or cash flows.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS
We have no derivative financial instruments in our cash and cash equivalents. We invest our cash and cash equivalents in securities of the U.S. governments and its agencies and in investment-grade, highly liquid investments consisting of commercial paper, bank certificates of deposit and corporate bonds. We anticipate investing our net proceeds from this offering in investment-grade and highly liquid investments pending their use as described in this prospectus.
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BUSINESS
OVERVIEW
We have developed proprietary technologies in applied genomics that we believe will revolutionize the early detection of colorectal cancer and several other types of common cancers. We believe that medical practitioners will order tests based on our technologies as part of a regular screening program for the early detection of such cancers and pre-cancerous lesions. We also believe that the widespread and periodic application of these tests will reduce mortality, morbidity and the costs associated with these cancers.
We have selected colorectal cancer as the first application of our technology platform because it is the most deadly cancer among non-smokers, curable if detected early and well understood from a genomics point of view. There are an estimated 74 million Americans age 50 and above for whom the American Cancer Society and National Cancer Institute recommend regular colorectal cancer screening. Moreover, current detection methods for colorectal cancer have proven to be inadequate screening tools.
We have developed proprietary technologies that isolate the human DNA shed from the colon into stool. We then identify mutations in DNA shed from abnormal cells associated with colorectal cancer and pre-cancerous lesions. We have conducted blinded clinical studies at the Mayo Clinic that we believe indicate that our tests are able to detect colorectal cancer more accurately in patients who have the disease at an earlier stage than existing methods available for mass screening for colorectal cancer. Early detection results in less expensive and more effective treatment of patients. While our tests are more technically complex for a laboratory to perform and may be more expensive than some current colorectal screening methods, we believe that the benefits of early detection will convince medical practitioners and patients to use tests using our technologies. We are currently conducting an additional clinical study for colorectal cancer screening tests using our technologies and are seeking to develop commercial products and services based on these technologies.
Our goal is to become the leading company applying genomics to the early detection of cancer. The key components of our business strategy are as follows:
- commercialize our colorectal cancer screening technologies;
- extend our genomics technologies to other cancers; and
- continue to make scientific and technological advances in applied genomics.
If successful, we believe our strategies will lead to regular screening of large portions of the population for colorectal cancer and several other types of cancer, which would result in a significant recurring revenue stream for us.
GENOMICS AND COLORECTAL CANCER
Genomics, broadly defined, is the study of the genome and its importance in human physiology and disease. Initial efforts in genomics centered on identifying the definitive sequence of every gene in the human genome. Scientists are now focusing on applied genomics--understanding the function of individual genes and the role of genetic variation in disease and disease management.
Cancer develops when the DNA in a single normal cell mutates or changes to encourage uncontrolled cell growth. In a ground-breaking paper published in the NEW ENGLAND JOURNAL OF MEDICINE in 1988, Dr. Bert Vogelstein, one of our scientific collaborators, and his colleagues described a multi-step model of colorectal cancer development. In 1990, Dr. Eric Fearon, a former member of our scientific advisory board, and Dr. Vogelstein published a diagram depicting the development of
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colorectal cancer. An updated version of this diagram showing many of the genomic events involved in the development of colorectal cancer is shown below:
The graphic on this page consists of the words "Chromosome" and "Mutation" on the left side of the chart with the word "Chromosome" listed above "Mutation". Equally spaced and in line with the word "Chromosome" from left to right are the phrases "5q loss", "18q loss", "17p loss" and "8p loss". Equally spaced in line with the word "Mutation" from left to right are "Apc" directly underneath "5q loss", with the word "Beta-Catenin" directly underneath "Apc", "K-ras" directly underneath "18q loss", "Bat-26" directly underneath "17p loss", with "p53" directly underneath "Bat-26". Below these words are 5 equally spaced boxes connected by arrows from left to right. The following phrases are in the indicated box: "Normal Epithelium" in the first box, "Early Adenoma" in the second box, "Late Adenoma" in the third box, "Early Cancer" in the fourth box and "Late Cancer" in the fifth box. There is also an arrow connecting the corresponding chromosome and mutations to the space between the boxes.
The diagram illustrates that cancer develops in steps, and that it arises from alterations in multiple genes in an individual cell, frequently with chromosome loss. The diagram shows that these alterations lead to pathologic changes in the colon from normal epithelium--the tissue that lines the surface of the colon--through early and late adenomas, which are a form of pre-cancerous growth, to early cancer and late cancer. These alterations, shown in the above diagram, usually accumulate over many years, and are typically due to:
- mutations in individual genes, such as the APC, K-RAS and P53 genes;
- larger scale effects in which large parts of a chromosome or even entire chromosome arms, such as 5q, 18q, 17p and 8p, are deleted; or
- deletions in DNA regions such as BAT-26.
The multi-step process provides genomic targets for the early detection of cancer. The detection of genetic alterations associated with cancer allows for the direct, early detection of cancer before the onset of symptoms.
COLORECTAL CANCER
OVERVIEW
Colorectal cancer is the most deadly cancer in the U.S. among non-smokers and the second most deadly cancer overall. Only lung cancer kills more people each year. The American Cancer Society estimates that in the U.S. there will be approximately 136,000 new cases and approximately 57,000 deaths in the year 2000 from colorectal cancer. Almost 50% of the patients with a new diagnosis of colorectal cancer will die within five years.
Medical practitioners commonly classify colorectal cancer into four stages at the time of diagnosis as shown in the following table:
The chart is a rectangle with six vertical columns and three horizontal rows. The vertical columns, from left to right, are titled as follows: Column one is titled "Stage"; Column two is titled "Classification"; Column three is titled "Extent of Disease"; Column four is titled "% of Patients Diagnosed at This Stage"; Column five is titled "5-Year Survival Rates (approximate)"; and Column six is titled "Typical Treatment". The first row has the words: "Early" in the first column; the second column, which is subdivided into two rows, has the phrases "Dukes' A" in the top subdivison and "Dukes' B" in the bottom subdivision; the third column, which is subdivided into two rows, has the phrases "Confined to the surface lining of the colon" in the top subdivision and "Below the surface; no lymph node involvement" in the bottom subdivision; the fourth column has the percentage "37%" in the first row; the fifth column, which is subdivided into two rows, has the percentages "95%" in the top subdivision and "85%" in the bottom subdivision; the sixth column has the word "Surgery". The second row has the word "Late" in the first column; the second column, which is subdivided into two rows, has the words "Dukes' C" in the top subdivision and "Dukes' D" in the bottom subdivision; the third column, which is also subdivided into two rows, has the phrases "Lymph node involvement" in the top subdivision and "Metastatic disease" in the bottom subdivision; the fourth column has the percentage "63%"; the fifth column, which is subdivided into two rows, has the percentages "50%-60%" in the top subdivision and "10%" in the bottom subdivision; and the sixth column has the phrase "Surgery and chemotherapy".
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Detection of pre-cancerous adenomas and cancer in its earliest stages increases the number of patients who survive and reduces the cost of treatment and care. As a result, the American Cancer Society and National Cancer Institute recommend that the 74 million Americans age 50 and above undergo regular colorectal cancer screening tests.
PROBLEMS WITH CURRENT DETECTION METHODS FOR SCREENING
Medical practitioners principally use fecal occult blood testing, flexible sigmoidoscopy and colonoscopy to detect colorectal cancer. Despite the availability of these and other screening and diagnostic tests for more than 20 years, the rate of early detection of colorectal cancer remains low, with only limited effect on mortality. In 1999, Medicare reimbursement records showed that only 14% of Americans over age 65 were screened for colorectal cancer. We believe that no screening strategy is commercially available today that allows for the highly sensitive, early detection of colorectal cancer in a manner that is acceptable to patients, medical practitioners and payors.
Medical practitioners characterize cancer-screening tests using three principal parameters: sensitivity, specificity and compliance. Sensitivity measures a test's ability to detect the presence of disease when the patient has disease. Specificity measures a test's ability to correctly identify individuals who are disease-free. A failure of specificity, commonly referred to as a false positive, is the failure of a test to correctly identify an individual who is disease-free. Compliance rates measure the percentage of patients for whom screening is recommended that are screened at the recommended interval.
FECAL OCCULT BLOOD TESTING (FOBT). FOBT does not detect cancer directly but rather detects the presence of blood in stool. Typically, a patient must retrieve two small portions of stool from the toilet on each of three successive days and smear each portion onto a small chemically impregnated card. The patient must modify his or her diet to eliminate red meat and certain fruits and vegetables and also eliminate the use of certain medications such as aspirin for three days prior to the stool sample collection, as well as during the three days of stool sample collection. If the FOBT results are positive, medical practitioners refer the patient for colonoscopy for a definitive diagnosis.
Although FOBT is non-invasive, it has the following limitations:
- LOW SENSITIVITY. FOBT detects on average only 25%-30% of patients with cancer in any stage and only approximately 12% of patients with pre-cancerous adenomas greater than one centimeter.
- LOW RATE OF EARLY-STAGE DETECTION. FOBT is less effective in detecting Dukes' A and B cancers, for which survival rates are higher and treatment costs are less expensive, than in detecting Dukes' C and D cancers.
- LOW SPECIFICITY. Because blood can be present in the stool for many reasons other than colorectal cancer, such as hemorrhoids or red meat in the diet, FOBT has a reported false positive rate of approximately 7%, based on Medicare claims data. We estimate that six to ten million FOBT tests are completed each year. This means approximately 420,000-700,000 patients per year are unnecessarily referred for follow-up colonoscopies.
- LOW COMPLIANCE. Of the 74 million Americans age 50 and above who should be annually screened, only 20 million receive FOBT cards annually and we estimate only six to ten million of those complete the FOBT test. This means less than 15% of those Americans who should be screened each year complete an FOBT test. We believe this low compliance is a result of low sensitivity at detecting early stages of cancer, the dietary restrictions and unappealing nature of the process.
FLEXIBLE SIGMOIDOSCOPY. Flexible sigmoidoscopy is a procedure performed without sedation, and after an often unpleasant bowel preparation, in which a physician inserts a fiber-optic endoscope one to
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two feet into the colon to explore the lower third of the colon. If flexible sigmoidoscopy results are positive, medical practitioners refer patients for colonoscopy for further diagnosis.
Although flexible sigmoidoscopy is more sensitive and more specific than FOBT, it has the following limitations:
- INVASIVE PROCEDURE. Before a flexible sigmoidoscopy procedure, a patient must undergo a bowel preparation procedure to remove stool from the lower third of the colon to make a visual examination possible. Since medical practitioners perform flexible sigmoidoscopy without sedation, patients feel varying degrees of pain and embarrassment.
- LOW SENSITIVITY. Flexible sigmoidoscopy at best can directly visualize no more than half of all colorectal cancers and adenomas. The other half of cancers are located in the upper two thirds of the colon, beyond the range of the endoscope. A patient's inability to tolerate the procedure and incomplete bowel preparation further limit sensitivity.
The above current screening methodologies are summarized below:

                                                          SENSITIVITY    SPECIFICITY
        METHOD               PROCEDURE DESCRIPTION       (APPROXIMATE)  (APPROXIMATE)
----------------------  -------------------------------  -------------  -------------
FOBT                    - Detects presence of blood in      25%-30%          93%
                          stool
                        - Non-invasive
                        - Three days of retrieving
                          stool

FLEXIBLE SIGMOIDOSCOPY  - Physician inserts endoscope         48%            95%
                        one
                          to two feet into colon
                        - Performed without sedation
                        - Unpleasant bowel preparation	

COLONOSCOPY. Colonoscopy is a procedure that allows a physician to visualize the entire length of the colon and, during the same procedure, remove some cancerous and pre-cancerous lesions. A colonoscope is identical to a flexible sigmoidoscope except that its insertion depth is approximately six feet instead of one to two feet. Medical practitioners perform colonoscopy with the patient under sedation after undergoing a thorough bowel preparation prior to the procedure.
Although medical practitioners view colonoscopy as the definitive method for diagnosis, we believe it is not a practical method for mass screening. The short supply of skilled clinicians, the cost of the procedure and patient discomfort, as well as a small risk of complications and death have limited the use of colonoscopy as a screening test. If opinion leaders were to recommend colonoscopy for screening of average-risk individuals, we estimate that it would take more than a decade to perform a first round of screening on every one of the recommended 74 million Americans age 50 and above.
OUR SOLUTION
Many non-invasive cancer screening methods are not effective early detection methods. For example, PSA for prostate cancer screening, mammography and FOBT find only indirect evidence of cancer and suffer from lack of sensitivity or specificity. As a result, mortality, morbidity and the cost of treatment of many cancers remain high. We have made significant scientific advances that we believe will allow for the direct early detection of several types of common cancers. Our business opportunity is to use our technologies to lower mortality, morbidity and the costs associated with these cancers.
The first application of our technologies is colorectal cancer screening. We believe medical practitioners will order tests using our technologies every one to three years to screen for the presence of colorectal cancer. Using our proprietary genomic technologies, a laboratory will isolate the human
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DNA shed into the stool from the colon. The laboratory will then use our technologies to identify mutations in the genome shed from abnormal cells associated with adenomas and colorectal cancer. When individuals test positive in these tests, medical practitioners will refer them for colonoscopy for follow-up. Through regular screening, we believe that tests using our technologies will enable the detection of colorectal cancer and adenomas earlier so that patients can be treated effectively.
We believe colorectal cancer screening tests using our technologies will become a widely-accepted and regularly-used screening tool as a result of the following features and benefits:
- EARLIER DETECTION. Early detection saves lives. We believe colorectal cancer screening tests using our technologies will detect Dukes' A and B cancers, as well as some pre-cancerous lesions. We believe that this will represent a marked improvement over current colorectal cancer screening methods.
- HIGHER SENSITIVITY. Since the fall of 1998, we have conducted a series of blinded clinical studies at the Mayo Clinic using our colorectal cancer screening tests. In these clinical studies, the sensitivity of our tests for colorectal cancer substantially exceeded the sensitivity reported for FOBT and flexible sigmoidoscopy.
- HIGHER COMPLIANCE. We designed our technologies to detect colorectal cancer from a single whole stool sample obtained non-invasively. Patients are not required to touch their stool, modify their diet or undergo bowel preparation. Moreover, we believe that, based on the results of our clinical studies and trials, opinion leaders will educate primary care physicians, about the potential for improving detection of colorectal cancer with our technologies. We also believe that this will lead many primary care physicians to make regular testing based on our technologies a part of their physical examinations of patients aged 50 and above who, upon learning of the benefits, will be likely to submit to such testing.
- COST-EFFECTIVE PREVENTION AND TREATMENT. We believe that colorectal cancer screening tests using our technologies will detect early stage lesions more effectively than current screening methods. As a result of this early detection, medical practitioners can treat early stage colorectal cancer and pre-cancerous lesions in a less expensive and more effective manner than late stage cancer.
- SCALABILITY. Screening 74 million Americans age 50 and above requires a process that is able to efficiently test a large population. Procedures such as flexible sigmoidoscopy and colonoscopy suffer problems of scalability because of the short supply of skilled clinicians. We believe tests using our technologies will enable mass screening on a regular basis.
OUR STRATEGY
Our goal is to become the leading company applying genomics to the early detection of cancer. The key components of our strategy are as follows:
- COMMERCIALIZE OUR COLORECTAL CANCER SCREENING TECHNOLOGIES. We selected colorectal cancer as the first application of our technologies because the target market is large and not well served. We intend to commercialize our products and services through a staged market entry. Initially, we intend to offer colorectal cancer screening services ourselves to establish the market. We then intend to license our proprietary technologies and sell reagents to leading clinical reference laboratories to enable them to develop tests. We may also package our technologies and seek approval for diagnostic test kits with which any clinical laboratory could conduct our tests.
- EXTEND OUR GENOMICS TECHNOLOGIES TO OTHER CANCERS. We believe that our current technologies will be applicable to the early detection of several other types of common cancers. We believe that certain of our technologies allow for the early detection of cancers without knowledge of the precise genomic basis of the cancer. As a result, we may be able to develop tests for cancers before the genomic basis of such cancers is discovered. While our clinical studies have focused
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primarily on the detection of colorectal cancer, we have achieved promising results in detecting certain aero-digestive cancers. We intend to test for these and other types of common cancers in future clinical trials and will commercialize tests using our technologies to detect cancers that we believe have the most potential. See "Business--Research and Development."
- CONTINUE TO MAKE SCIENTIFIC AND TECHNOLOGICAL ADVANCES IN APPLIED GENOMICS. Our proprietary sample preparation and detection methods have enabled us to produce significant improvements in the early detection of cancer from a minute amount of altered DNA. Because we believe our detection methods are novel, we are developing and testing multiple detection methods to minimize our technical and business risk. We intend to continue to develop additional proprietary sample preparation and detection methods for the early detection of common cancers.
If successful, we believe our strategies will lead to regular screening of large portions of the population for colorectal cancer and several other types of cancer, which would result in a significant recurring revenue stream for us.
OUR TESTING PROCESS
Diagnostic tests typically require sample collection and preparation procedures as well as detection methods. We have overcome significant technical challenges in the development of a three-step sample collection and preparation process and four detection methods that apply genomics to the early detection of colorectal cancer. We have eight issued U.S. patents and 23 pending U.S. patent applications relating to our testing process.
This chart has three boxes and one oval connected by arrows from left to right with the following words in each box or oval: "Specimen Collection and Transportation", "Representative Sampling", "DNA Extraction, Purification and Amplification" and "Cancer Detection Methods".
SPECIMEN COLLECTION AND TRANSPORTATION. We have based our tests on collecting a single whole stool in a self-contained device. Patients will bring the samples to their physicians who will forward them to the laboratory performing the colorectal cancer screening test.
REPRESENTATIVE SAMPLING. In the past, DNA testing using stool samples lacked sensitivity. We believe that this was due to the non-uniform distribution of abnormal DNA in stool. We have invented proprietary methods to assure that the portion of stool that is processed at the laboratory is representative of the entire stool. We believe these methods lead to increased sensitivity.
DNA EXTRACTION, PURIFICATION AND AMPLIFICATION. The isolation and amplification of human DNA found in stool is technically challenging because over 99% of DNA is not human DNA, but is DNA from bacteria normally found in the colon. In addition, there are substances in stool that make the isolation and amplification of human DNA a difficult task. Our proprietary technologies simplify the isolation and amplification of human DNA found in stool.
CANCER DETECTION METHODS. We have designed four proprietary methods for detecting and identifying genomic markers associated with colorectal cancer that can be performed on instruments commonly available in clinical laboratories conducting molecular testing.
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OUR PROPRIETARY CANCER DETECTION METHODS
Our technology platform consists of the proprietary cancer detection methods set forth in the table below. Each of these methods enables the early detection of cancer in a minute amount of altered DNA obtained from a sample that is composed of DNA largely from normal cells.

       NAME                 ROLE IN DETECTION                 OUR SCIENTIFIC ADVANCE
------------------  ----------------------------------  ----------------------------------
MULTIPLE MUTATION   - Each element of MuMu detects a    - Sensitive and specific detection
DETECTION (MUMU)      single mutation of a              of single DNA mutations
                      cancer-related gene

DELETION            - Detects short deletions and       - Distinguishes between deletions
TECHNOLOGY            insertions in the BAT-26 region     and insertions resulting from
                      of a specific gene                  the testing itself, and those
                                                          associated with mismatch-repair
                                                          cancers

DNA INTEGRITY       - Detects longer human DNA          - Proprietary marker associated
ASSAY (DIA)           fragments associated with         with cancer that does not require
                      abnormality                         knowledge of which genes cause
                                                          cancer

ENUMERATED LOSS OF  - Enumerates ratio of paternal DNA  - Statistical method that applies
HETEROZYGOSITY        as compared to maternal DNA at a  a commonly used analytical
(E-LOH)               given genomic site to identify      technique to indicate a missing
                      chromosomal loss that is            gene and does not require
                      characteristic of many cancers      knowledge of which genes cause
                                                          cancer	

MULTIPLE MUTATION. Multiple Mutation, or MuMu, identifies DNA mutations at specific sites. We have selected 15 sites that are commonly mutated in the colorectal cancer-related genes APC, P53 and K-RAS. We have designed our proprietary MuMu method to allow simultaneous probing of different DNA sequences and to allow analysis even though only a small amount of DNA in the sample is derived from abnormal cells while the vast majority is derived from normal human cells or bacteria.
DELETION TECHNOLOGY. Deletion Technology detects short deletions and insertions in segments of DNA that are indications of defects in cellular mechanisms for DNA repair. Approximately 15% of colorectal cancers, referred to as mismatch-repair cancers, result from inactivation of the proteins that normally repair errors in DNA after DNA replication. We have developed a proprietary method for identifying this condition by detecting the presence of short deletions and insertions in a DNA segment known as BAT-26. This altered gene segment appears in virtually all colorectal cancers resulting from defects in the mismatch repair mechanism.
DNA INTEGRITY ASSAY. DNA recovered from the stool of many cancer patients contains a small but detectable population of DNA that is longer than DNA recovered from individuals who are normal and have never had cancer or an adenoma. Use of this proprietary detection method does not require knowledge of which genes cause cancer. In addition to its utility for our colorectal cancer tests, we believe that this discovery may lead us to the development of a marker for other cancers, including lung, pancreas, gall bladder and bile duct cancers.
ENUMERATED LOSS OF HETEROZYGOSITY. In normal cells, the quantity of DNA inherited from each parent is generally equal. This is not true for cells from many different types of cancers, including virtually all non-mismatch repair colorectal cancers. This condition, which is an imbalance of maternal
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and paternal chromosomal fragments, is called loss of heterozygosity, or LOH. Prior to our development efforts, we believe that scientists were unable to detect LOH in stool samples. We have developed proprietary methods for detecting LOH in a highly heterogeneous DNA sample such as stool by enumerating the ratio of fragments of DNA that are inherited from each parent at defined locations in the genome. We call this detection method e-LOH. Use of this detection method does not require knowledge of which genes cause cancer. We believe that our novel e-LOH detection method may be broadly applicable to early cancer detection from many body sites.
SALES AND MARKETING
We are building our organization and programs to support our commercialization strategy--applying our proprietary technologies to the early detection of colorectal cancer initially and then extending our technologies to several other types of cancers. We believe that opinion leaders in genomics, gastroenterology and primary care are key to establishing tests using our technologies as a standard of care for colorectal cancer screening. We have worked closely with leading researchers and academic institutions, including the Mayo Clinic and Johns Hopkins University, since our inception to evaluate our technologies and our colorectal cancer screening tests, and to gain support for our clinical studies. We participate in conferences and scientific meetings. The journal GASTROENTEROLOGY published our first full-length peer-reviewed article in November 2000. We also believe our continuing efforts will make our products and services attractive to third-party payors, medical practitioners and patients.
In addition, we intend to build upon public awareness about colorectal cancer. Several stories of high profile individuals with colorectal cancer have increased public awareness about colorectal cancer and the need for effective early detection. We believe that this publicity has a heightened effect on the public given an increasing perception that people wish to take more control over decisions relating to their medical care.
We intend to commercialize our products and services through a staged market entry. Initially, we intend to offer colorectal cancer screening services ourselves to establish the market. We then intend to license our proprietary technologies and sell reagents to leading clinical reference laboratories to enable them to develop their own tests. We may also package our technologies and seek approval for diagnostic test kits with which any clinical laboratory could conduct tests using our technologies.
In support of our staged market entry strategy, we plan to execute a multi-channel sales approach. Initially, we intend to create our own dedicated business development team whose efforts will focus on securing adequate reimbursement for our products and services. This team will also educate senior staff of the Health Care Financing Administration, large managed care organizations, insurance companies, large employers and large physician groups about the cost effectiveness of using our products and services. In parallel with this effort, we intend to enter into business relationships with leading clinical reference laboratories that will market their own tests utilizing our technologies through their dedicated sales forces. In addition, we may enter into business relationships with distributors of other medical products to distribute our products and services.
We believe that our business relationships with leading clinical reference laboratories will support the strategies of these laboratories to expand their molecular diagnostic businesses. In addition, we believe that tests utilizing our technologies will be attractive to the clinical reference laboratories because such tests:
- enable laboratories to perform higher volumes of testing with their existing infrastructure;
- enable the laboratories to differentiate themselves technologically; and
- offer potentially higher gross margins than most existing tests.
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CLINICAL STUDIES
COLORECTAL CANCER
In conjunction with the Mayo Clinic, we have conducted three blinded clinical studies since the fall of 1998. These clinical studies included stool samples from 219 patients of the Mayo Clinic, 58 of whom had cancer. Each patient participating in our clinical studies received a colonoscopy at the Mayo Clinic to determine whether cancer was present. The first two clinical studies were conducted using frozen, partial stool samples. The Mayo Clinic sent stool samples to us for testing and we analyzed the testing results jointly with the Mayo Clinic. The sensitivity for each of these two clinical studies was 91% and 67%, respectively. When excluding the data from patients who began bowel preparation before their stool samples were collected, which we believe may have lowered sensitivity, sensitivity was 91% and 72%, respectively. In the spring of 2000, we conducted a third clinical study at the Mayo Clinic in which we collected fresh, whole stool. The sensitivity for this clinical study was 78%. These sensitivity rates are superior to the 25%-30% sensitivity of FOBT and the approximately 48% sensitivity of flexible sigmoidoscopy for colorectal cancers located throughout the colon. Specificity ranged from 95% to 100% across all three clinical studies. These specificity rates are comparable or superior to rates reported for FOBT and flexible sigmoidoscopy.
The results of these three blinded clinical studies are set forth in the table below:

                                             NUMBER OF
          STUDY            COMPLETION DATE    PATIENTS        SAMPLE TYPE       SENSITIVITY   SPECIFICITY
-------------------------  ---------------   ----------   --------------------  -----------   -----------
Mayo Clinic I Pilot Study  November 1999         61       Frozen partial stool     91%         95-100%

Mayo Clinic II Study       April 2000           129       Frozen partial stool    67-72%         95%

Mayo Clinic III Study      June 2000             29       Fresh whole stool        78%           100%	

Based on these results, in August 2000 we initiated a multi-center clinical study for the primary purpose of establishing certain technological benchmarks for our DIA detection method on whole stools in anticipation of our multi-center clinical trial.
We intend to initiate a blinded multi-center clinical trial in the fourth quarter of 2001 that will include an estimated 5,300 patients age 50 and older with average-risk profiles from approximately 40 academic and community-based practices. The goal of this clinical trial will be to compare the sensitivity and specificity of our tests for colorectal cancer to that of existing technologies on average-risk individuals. We intend to conduct this clinical trial in accordance with the applicable guidelines of the Food and Drug Administration, or FDA, so that the results may be used in any application that we may make to the FDA.
ADENOMAS
While most adenomas do not progress to cancer in a patient's lifetime, those that do are more likely to have villous features characterized by an irregular surface and associated with more rapid growth. In the Mayo Clinic II study, there were 24 patients with adenomas greater than one centimeter. The sensitivity of our screening tests in detecting these adenomas with villous features was 56%. The sensitivity results for villous adenomas are much better than those obtained with FOBT and are comparable to those obtained by flexible sigmoidoscopy. We believe that by detecting adenomas more likely to progress to cancer during a patient's lifetime through a non-invasive screening procedure we will provide additional medical value for our technologies. We intend to test for adenomas in our planned 5,300-patient clinical trial.
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REIMBURSEMENT
We intend to obtain reimbursement for tests using our technologies from Medicare, major national and regional managed care organizations and insurance carriers. We currently do not have reimbursement approval from any organization. Medicare and other third-party payors will independently evaluate our technologies by reviewing the published literature with respect to the results obtained from our clinical studies. We intend to assist them in evaluating our technologies by providing scientific and clinical data to support our claims regarding the superiority of our technologies. In addition, we intend to present analysis showing the benefits of early disease detection and the resulting cost-effectiveness of our technologies. We also intend to apply for a current procedural terminology code which facilitates Medicare reimbursement.
The Federal Balanced Budget Act of 1997 required Medicare to reimburse for colorectal cancer screening for average-risk patients beginning on January 1, 1998 and mandated Medicare coverage for FOBT and flexible sigmoidoscopy. Based on evidence provided by the Black Caucus and the Black Caucus Health Brain Trust, Congress amended the Budget Act of 1997 to include coverage for double contrast barium enema, a radiographic imaging test used to detect colorectal cancer in areas beyond the reach of flexible sigmoidoscopy. We believe these actions provide evidence of the public interest in new colorectal cancer screening methods and the federal government's willingness to fund these methods.
Most importantly, the Budget Act of 1997 allows new technologies to be included as colorectal cancer screening tests by action of the Secretary of Health and Human Services without the need for additional Congressional action. In the spring of 1999, we met with senior staff members of the Health Care Financing Administration to apprise them of our progress and to determine the steps we would need to take prior to a reimbursement determination. Following that meeting, we successfully petitioned the Health Care Financing Administration staff to cover all medical expenses of a patient participating in our clinical studies who tests positive for colorectal cancer, which we believe is a departure from the Health Care Financing Administration's policy of not reimbursing for these costs.
In addition, we have met with several members of Congressional staffs and national organizations with an interest in colorectal cancer. In October 1999, we testified before the Subcommittee on Health of the House Ways and Means Committee in support of the Eliminate Colorectal Cancer Act of 1999, sponsored by Senators Edward Kennedy and Jesse Helms. The Eliminate Cancer Act of 1999 requires private insurers to cover colorectal cancer screening tests deemed appropriate by the third-party payors and patients. In addition, we have worked with the Black Caucus and the Black Caucus Health Brain Trust.
We are also meeting with senior executives, medical directors and chiefs of service in gastroenterology and primary care at managed care organizations, insurance companies, large employers and large physician groups. The person in each of these positions will play a key role in the reimbursement determination for tests using our technologies.
We believe that colorectal cancer screening tests based on our technologies will save more lives more cost-effectively than any other colorectal cancer screening method available today. Reimbursement for FOBT tests ranges from $5 to $30, but FOBT is most effective in detecting later stage cancers where survival rates are low and treatment costs are high. Reimbursement for flexible sigmoidoscopy ranges from $180 to $500, but flexible sigmoidoscopy at best can directly detect no more than half of all colorectal cancers and adenomas. We believe that reimbursement for colonoscopy for cancer screening will be approved in the near future. The cost of this procedure ranges from $700 to $2,000, and while colonoscopy is sensitive, the use of colonoscopy as a screening test has been limited.
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RESEARCH AND DEVELOPMENT
Our research and development efforts aim to develop multiple genomics methods for the early detection of cancer and pre-cancerous lesions. We believe that the evaluation of these methods in a clinical setting will determine the best approaches for commercialization. Finally, we believe it is necessary to develop methods to automate and simplify the collection, preparation and analysis of samples to produce cost-effective commercial tests.
PROCESS DEVELOPMENT. We have undertaken a multi-year effort to automate our testing process and reduce the cost of processing stool samples. Our objectives include eliminating many of the manual steps, reducing the use of expensive reagents and increasing screening throughput. This effort is important so that we will be able to offer our products and services at commercially reasonable prices in our own laboratory and then enter into business relationships with leading clinical reference laboratories.
EXTENSIONS TO OTHER CANCERS. Our proprietary DIA detection method uses a marker that may be broadly applicable to the detection of cancers other than colorectal cancer. In the course of our blinded clinical studies at the Mayo Clinic, we tested 50 stool samples from patients diagnosed with aero-digestive cancers at sites other than the colon, such as cancer in the lung, pancreas, esophagus, stomach and duodenum, gall bladder and bile ducts. The results are shown in the table below.

                                                 NUMBER DETECTED/
LOCATION OF CANCER                              NUMBER WITH CANCER    PERCENT DETECTED
----------------------------------------------  -------------------   ----------------
Lung, non-adenocarcinoma                                 7/8                 88%
Lung, adenocarcinoma                                    3/13                 23%
Pancreas                                               10/11                 91%
Esophagus                                                3/7                 43%
Stomach/Duodenum                                         1/5                 20%
Gall Bladder/Bile Ducts                                  6/6                100%	

Combined, these cancers kill more people than colorectal cancer. We intend to collect additional data on these aero-digestive cancers in our planned 5,300-patient clinical trial. If the results are promising, we will develop methods and technologies to detect these cancers.
ADENOMAS. While our research focus has been the detection of cancer, we intend to conduct research on improved methods for adenoma detection as well, particularly those adenomas with villous features. We have invented a new method for scanning regions of DNA at which mutations associated with adenoma development are often found.
NEW TECHNOLOGY PLATFORM. As part of this effort, we are also conducting research on a new technology that may enable us to develop new instrumentation and methods for life sciences research. If successful, we believe this technology may be used in both clinical and research laboratories for detecting abnormalities in DNA, identifying single nucleotide polymorphisms in populations of individuals and for high throughput screening in the pharmaceutical industry.
RESOURCES AND EXPENSES. As of September 30, 2000, we had 23 employees engaged in research and development. For the year ended December 31, 1999, research and development expenses were approximately $3.7 million. For the nine months ended September 30, 2000, research and development expenses were approximately $3.8 million.
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GOVERNMENT REGULATION
We are subject to extensive regulation by the FDA under the Federal Food, Drug and Cosmetic Act and regulations thereunder, including regulations governing the development, marketing, labeling, promotion, manufacturing and export of our products. Failure to comply with these requirements can lead to stringent sanctions, including withdrawal of products from the market, recalls, refusal to authorize government contracts, product seizures, civil money penalties, injunctions and criminal prosecution.
We intend to offer colorectal cancer screening services performed in our own laboratories. We then intend to license our intellectual property and sell our reagents that target specific areas in the genome to leading clinical reference laboratories to enable them to perform their own colorectal cancer screening services, using their own test methods, equipment and additional reagents. We may also package our technologies in the form of diagnostic test kits with which clinical laboratories could conduct colorectal cancer screening tests.
Generally, medical devices, a category that includes our products, require FDA approval or clearance before they may be marketed. The FDA has not, however, actively regulated laboratory tests that have been developed and used by the laboratory conducting the tests. The FDA does regulate the sale of reagents, including our reagents, used in laboratory tests. The FDA refers to the reagents used in these tests as analyte specific reagents. Analyte specific reagents react with a biological substance to identify a specific DNA sequence or protein. They generally do not require FDA approval or clearance if they are used in in-house laboratories or are sold to clinical laboratories licensed by the government to perform high complexity testing and are labeled in accordance with FDA requirements, including a statement that their analytical and performance characteristics have not been established. A similar statement would also be required on all advertising and promotional materials relating to analyte specific reagents such as ours. Laboratories also are subject to restrictions on the labeling and marketing of tests that have been developed using analyte specific reagents. The analyte specific reagent regulatory category is relatively new and its boundaries are not well defined, and there has been some discussion within the government of changing the analyte specific reagent regulation, although it is not certain whether any such changes would affect our tests. We believe that our in-house testing and the analyte specific reagents that we intend to sell to leading clinical reference laboratories do not require FDA approval or clearance. We cannot be sure, however, that the FDA will not assert that our tests or one or more of our reagents require premarket approval or clearance. In addition, we cannot be sure that the FDA would not treat the licensing of our intellectual property as labeling that would subject the reagent to premarket approval or clearance and other FDA regulation. In addition, we cannot be sure that the FDA will not change its position in ways that could negatively affect our operations.
Any diagnostic test kits that we may sell would require FDA approval or clearance before they could be marketed. There are two review procedures by which a product may receive such approval or clearance. Some products may qualify for clearance under a premarket notification, or 510(k) procedure, in which the manufacturer provides to the FDA a premarket notification that it intends to begin marketing the product, and demonstrates to the FDA's satisfaction that the product is substantially equivalent to a legally marketed product, which means that the product has the same intended use as, is as safe and effective as, and does not raise different questions of safety and effectiveness than a legally marketed device. A 510(k) submission for an in vitro diagnostic device generally must include manufacturing and performance data, and in some cases, it must include data from human clinical studies. Marketing may commence when FDA issues a clearance letter.
If a medical device does not qualify for the 510(k) procedure, the FDA must approve a premarket approval application, or PMA, before marketing can begin. PMA applications must demonstrate, among other matters, that the medical device is safe and effective. A PMA application is typically a
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complex submission, usually including the results of preclinical and extensive clinical studies. Before FDA will approve a PMA, the manufacturer must pass an inspection of its compliance with the requirements of the FDA's quality system regulations.
We believe that most, if not all, of our products sold in diagnostic test kit form will require PMA approval. The PMA process is lengthy and costly, and we cannot be sure that the FDA will approve PMAs for our products in a timely fashion, or at all. FDA requests for additional studies during the review period are not uncommon, and can significantly delay approvals. Even if we were able to gain approval of a product for one indication, changes to the product, its indication, or its labeling would be likely to require additional approvals.
Physicians who order colorectal cancer screening tests using our technologies will need to provide patients a specimen container to collect stool. Specimen transport and storage containers are also medical devices regulated by the FDA although they generally have been exempted by regulation from the FDA's premarket clearance or approval requirement. We believe that our specimen container falls within the exemption, but we cannot be sure that the FDA will not assert that our container is not exempt and seek to impose a premarket clearance or approval requirement.
Regardless of whether a medical device requires FDA approval or clearance, a number of other FDA requirements apply to its manufacturer and to those who distribute it. Device manufacturers must be registered and their products listed with the FDA, and certain adverse events and product malfunctions must be reported to the FDA. The FDA also regulates the product labeling, promotion, and in some cases, advertising, of medical devices. Manufacturers must comply with the FDA's quality system regulation which establishes extensive requirements for quality control and manufacturing procedures. Thus, manufacturers and distributors must continue to spend time, money and effort to maintain compliance, and failure to comply can lead to enforcement action. The FDA periodically inspects facilities to ascertain compliance with these and other requirements.
We are also subject to U.S. and state laws and regulations regarding the operation of clinical laboratories. The federal Clinical Laboratory Improvement Act and laws of certain other states, impose certification requirements for clinical laboratories, and establish standards for quality assurance and quality control, among other things. Clinical laboratories are subject to inspection by regulators, and the possible sanctions for failing to comply with applicable requirements. Sanctions available under the Clinical Laboratory Improvement Act include prohibiting a laboratory from running tests, requiring a laboratory to implement a corrective plan, and imposing civil money penalties. If we fail to meet the requirements of the Clinical Laboratory Improvement Act or state law, it could cause us to incur significant expense.
INTELLECTUAL PROPERTY
In order to protect our proprietary technologies, we rely on combinations of patent, trademark, copyright, and trade secret protection, as well as confidentiality agreements with employees, consultants, and third parties.
We have pursued an aggressive patent strategy designed to maximize our patent position with respect to third parties. Generally, we have filed patents and patent applications that cover the methods we have designed to detect colorectal cancer as well as other cancers, including lung, pancreas, gall bladder and bile duct cancers. We have also filed patent applications covering the preparation of stool samples and the extraction of DNA from heterogeneous stool samples. As part of our strategy, we seek patent coverage in the United States and in foreign countries on aspects of our technologies that we believe will be significant and that provide barriers to entry for our competition. As of December 1, 2000, we had ten issued patents in the United States, three issued foreign patents, twenty-one pending patent applications in the United States, three of which have been allowed, and thirty-eight pending foreign applications. Our success depends to a significant degree upon our ability to develop
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proprietary products and technologies and to obtain patent coverage for such products and technologies. We intend to continue to file patent applications covering any newly-developed products or technologies.
Each of our patents has a term of 20 years from their respective priority filing dates. Consequently, our first patents are set to expire in 2016. We have filed terminal disclaimers in certain later-filed patents, which means that such later-filed patents will expire earlier than the twentieth anniversary of their priority filing dates, from 2016 through 2017.
Two third-party institutions have asserted co-inventorship rights in our patents and patent applications. One third-party institution has asserted co-inventorship rights with respect to one of our issued patents relating to use of our e-LOH detection method on pooled samples from groups of patients. Our current cancer screening detection methods do not include pooled samples. A second third-party institution has asserted co-inventorship rights in a pending patent application owned by us relating to our DIA detection method using stool in the detection of cancer other than colorectal cancer, and filed a later-dated patent application covering substantially the same claims we made in our patent application relating to our DIA detection method. To date, no legal proceedings have been initiated by either third party.
If any third party, including the third parties discussed above, asserting co-inventorship rights is successful in challenging our inventorship determination, we may be required to add that third party inventor to the applicable patents, resulting in co-ownership of such patents with the third party. Co-ownership of a patent would allow the co-inventor to exercise all rights of ownership, including the right to use the rights protected by the applicable patent and, if we do not have a previously filed patent, to transfer and license the rights protected by the applicable patent. In addition, a challenge of our inventorship determination under any patent or patent application by any third party, if successful, may result in the unenforceability of the challenged patent or patents.
We license on a non-exclusive basis technology for performing a step in our testing methods from Roche Molecular Systems, Inc. This license relates to a gene amplification process used in almost all genetic testing, and the patent that we utilize expires in mid-2004. In exchange for the license, we have agreed to pay Roche a royalty based on net revenues we receive from tests using our technologies. Roche may terminate this license upon notice if we fail to pay royalties, fail to submit reports or breach a material term of the license agreement.
We license on a non-exclusive basis technology for performing a step in our testing methods from Genzyme Corporation, the exclusive licensee of patents owned by Johns Hopkins University and of which Dr. Vogelstein is an inventor. This license relates to the use of the APC and P53 genes and methodologies related thereto in connection with our products and services and lasts through 2013, the life of the patent term of the last-licensed Genzyme patent. In exchange for the license, we have agreed to pay Genzyme a royalty based on net revenues we receive from performing our tests and the sale of our reagents and diagnostic test kits, as well as certain milestone payments and maintenance fees. In addition, we must use reasonable efforts to make products and services based on these patents available to the public. Genzyme may terminate this license upon notice if we fail to pay milestone payments and royalties, achieve a stated level of sales and submit reports. In addition, if we fail to request FDA clearance for a diagnostic test as required by the agreement, Genzyme may terminate the license.
COMPETITION
To our knowledge, none of the large genomics or diagnostics companies is developing tests to conduct stool-based DNA testing; however, companies may be working on such tests that have not yet been announced. In addition, other companies may succeed in developing or improving technologies and marketing products and services that are more effective or commercially attractive than ours. Some
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of these companies may be larger than we are and can commit significantly greater financial and other resources to all aspects of their business, including research and development, marketing, sales and distribution.
We face potential competition from alternative procedures-based detection technologies such as sigmoidoscopy, colonoscopy and virtual colonoscopy as well as traditional screening tests such as the FOBT marketed by Beckman Coulter, Inc. Virtual colonoscopy involves a new and experimental approach being developed at research institutions that requires patients to undergo bowel preparation similar to a colonoscopy after which they are scanned by a spiral CT scanner. Three-dimensional images are constructed to allow a radiologist to virtually travel through the colon.
In addition, our competitors, including Bayer Corporation, diaDexus, Inc., Matritech, Inc., Millennium Predictive Medicine, Inc., are developing serum-based tests, an alternative cancer-screening approach that is based on detection of proteins or nucleic acids that are produced by colon cancers and may be found circulating in blood. We believe serum-based testing is not able to detect disease at the earliest stages of cancer at levels of sensitivity and specificity comparable to that of stool-based testing.
We believe the principal competitive factors in the cancer screening market include:
- improved sensitivity;
- non-invasiveness;
- acceptance by the medical community and primary care medical practitioners;
- adequate reimbursement from Medicare and other third-party payors;
- cost-effectiveness; and
- patent protection.
EMPLOYEES
As of September 30, 2000, we had 35 employees, six of whom have Ph.Ds. Twenty-three persons are engaged in research and development, three persons in sales and marketing and nine persons in general and administration. None of our employees is represented by a labor union. We consider our relationships with our employees to be good.
FACILITIES
We lease approximately 17,185 square feet of space in our headquarters located in Maynard, Massachusetts. The lease expires on June 30, 2003. We have an option to extend the lease for an additional three-year term and have a right of first refusal on approximately 11,000 square feet of space as it becomes available in the building. We believe that this facility is adequate to meet our current and foreseeable requirements and that suitable additional or substitute space will be available on commercially reasonable terms if needed.
LEGAL PROCEEDINGS
From time to time we are a party to various legal proceedings arising in the ordinary course of our business. We are not currently a party to any legal proceedings.
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MANAGEMENT
EXECUTIVE OFFICERS, KEY EMPLOYEES AND DIRECTORS
The following table sets forth specific information regarding our executive officers, key employees and directors as of September 30, 2000:

NAME                                               AGE      POSITION
----                                             --------   --------
Stanley N. Lapidus.............................     51      Chairman and Director
Don M. Hardison................................     50      President and Director
John A. McCarthy, Jr.(1).......................     41      Vice President and Chief Financial Officer
Anthony P. Shuber..............................     42      Vice President of Molecular Biology
Barry M. Berger, MD............................     48      Vice President of Laboratory Medicine
Robert B. Rochelle.............................     38      Vice President of Marketing
Noubar B. Afeyan, Ph.D.........................     38      Director
Richard W. Barker, Ph.D.(2)....................     52      Director
Sally W. Crawford(3)...........................     47      Director
Wycliffe K. Grousbeck(2).......................     39      Director
William W. Helman..............................     42      Director
Edwin M. Kania, Jr.(2)(3)......................     43      Director
Lance Willsey, MD(3)...........................     39      Director	

(1) Mr. McCarthy joined us as Vice President and Chief Financial Officer on October 2, 2000.
(2) Member of Compensation Committee.
(3) Member of Audit Committee.
STANLEY N. LAPIDUS, our founder, has served as a director since our inception in February 1995, as President since our inception to May 2000 and as Chairman since May 2000. Mr. Lapidus was an entrepreneur-in-residence at OneLiberty Ventures in 1995 which led to the founding of EXACT. In 1987, Mr. Lapidus founded Cytyc Corporation and served as its President through 1994. In addition, Mr. Lapidus has been a Research Assistant Professor in the pathology department of Tufts University Medical School in Boston since Fall of 1994. Mr. Lapidus is an advisor of the Harvard MIT Division of Health Services and Technology and has served on the advisory board of Cooper Union School of Engineering since 1999. Mr. Lapidus has also served on the advisory board of the Harvard School of Public Health's Center for Cancer Prevention since 1995. Mr. Lapidus holds 15 issued U.S. patents and 14 pending U.S. patent applications. Mr. Lapidus holds a BS degree in electrical engineering from Cooper Union.
DON M. HARDISON has served as President and Director since May 2000. From August 1998 to April 2000, Mr. Hardison was Managing Partner for Siebel Systems, Inc. From January 1996 to February 1998, Mr. Hardison was Vice President of Sales and Marketing for Quest Diagnostics Inc. From April 1978 to December 1995, Mr. Hardison held various positions at SmithKline Beecham Corporation, most recently as Vice President of Sales and Marketing for SmithKline Beecham Clinical Laboratories. Mr. Hardison has an AB in political science from the University of North Carolina, Chapel Hill.
JOHN A. MCCARTHY, JR. has served as Vice President and Chief Financial Officer since October 2000. From October 1999 to October 2000, Mr. McCarthy was President, Chief Operating Officer and Director for InfoMedtrics, Inc., a developer of integrated data warehouse and decision support systems for large self-insured employers and managed care organizations. From January 1998 to August 1999, Mr. McCarthy was general partner of Crescent Gate, L.P., a private equity fund that he co-founded. From August 1994 to January 1998, Mr. McCarthy was employed by Concentra Managed Care, Inc., a nationwide provider of managed care services to the workers' compensation, auto and
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disability marketplaces, most recently as President of the Managed Care Services Division. From June 1992 through July 1994, Mr. McCarthy served as Senior Vice President and Chief Financial Officer of MedChem Products, Inc., a specialty medical device and biomaterial company. Mr. McCarthy holds a BS degree in finance from Lehigh University and an MBA from Harvard Business School.
ANTHONY P. SHUBER has served as Vice President of Molecular Biology since January 1998 and as Director of Molecular Biology from June 1996 to January 1998. From October 1993 to June 1996, Mr. Shuber was Senior Scientist and Manager of the Technical Development Laboratory for Genzyme Corporation. Mr. Shuber holds a BS and MS degree in biology from Marquette University.
BARRY M. BERGER, MD has served as Vice President of Laboratory Medicine since January 1999. Dr. Berger has served on the faculty of Harvard Medical School since 1979. From January 1988 to January 1999, Dr. Berger was Director of Pathology and Laboratory Medicine for Harvard Pilgrim Healthcare, a healthcare delivery and insurance managed care organization. Dr. Berger is a board certified pathologist. Dr. Berger holds a BS in biology and chemistry from the University of Miami and an MD degree from the University of Pennsylvania School of Medicine.
ROBERT B. ROCHELLE has served as Vice President of Marketing since February 2000. Mr. Rochelle worked at the Pharmaceutical Products Division at Abbott Laboratories as Director of Managed Care Marketing from December 1998 to January 2000, as Senior Product Manager from October 1997 to December 1998, as the Senior Product Manager of the Antimicrobial Business Unit from April 1996 to October 1997 and as the Manager of Business Development from May 1995 to April 1996. Mr. Rochelle holds a BS degree in biology and psychology from Trinity College and an MBA from the Tuck School of Business of Dartmouth College.
NOUBAR B. AFEYAN, PH.D. has served as a director since September 1997. Dr. Afeyan is the President and CEO of NewcoGen Group Inc., a new ventures firm he founded in August 1999. NewcoGen Group Inc. is comprised of NewcoGen, a venture firm focusing on information technology and life science fields, as well as AGTC Funds, a new venture capital fund for the genomics industry. From January 1998 to August 1999, Dr. Afeyan served as Senior Vice President and Chief Business Officer of Applera Corporation (formerly PE Corporation), and remains affiliated with Applera Corporation in an advisory capacity. In November 1987, Dr. Afeyan founded PerSeptive Biosystems, Inc. and served as its Chairman and Chief Executive Officer until it was acquired by PE Corporation in January 1998. Dr. Afeyan is also a director of Antigenics Inc. Dr. Afeyan holds a degree in chemical engineering from McGill University and a Ph.D. in biochemical engineering from Massachusetts Institute of Technology.
RICHARD W. BARKER, PH.D. has served as a director since November 1999. Since January 2000, Dr. Barker has served as President and Chief Executive Officer of iKnowMed, Inc., a clinical knowledge network. From June 1996 to December 1999, Dr. Barker worked at Chiron Diagnostics Corporation, a medical diagnostics technology company, as Senior Vice President of Corporate Development from November 1998 to December 1999 and as President and Chief Executive Officer from June 1996 to November 1998. From May 1994 to May 1996, Dr. Barker served as Worldwide General Manager for Healthcare Solutions, IBM, a healthcare and information solution company. Dr. Barker is also a director of Sunquest Information Systems, Inc. Dr. Barker holds a Ph.D. in biophysics from Oxford University.
SALLY W. CRAWFORD has served as a director since August 1999. Ms. Crawford has been an independent healthcare consultant since January 1997. From April 1985 to January 1997, Ms. Crawford served as Chief Operating Officer for Healthsource, Inc., a managed care organization which she co-founded. Ms. Crawford is also a director of Chittenden Corp. and Cytyc Corporation. Ms. Crawford holds a BA in English from Smith College and a MS in communications from Boston University.
WYCLIFFE K. GROUSBECK has served as a director since December 1996. Mr. Grousbeck has been a general partner of Highland Capital Partners, a venture capital fund, since August 1996 and was an
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associate of Highland Capital Partners from July 1995 to August 1996. Mr. Grousbeck is also a director of LivePerson, Inc. Mr. Grousbeck holds an AB in history from Princeton University, a JD from the University of Michigan and an MBA from Stanford Graduate School of Business.
WILLIAM W. HELMAN has served as a director since May 1996. Mr. Helman has served as general partner of Greylock X Limited Partnership since 2000 and Greylock IX Limited Partnership since 1997, both venture capital funds. Mr. Helman has been a general partner of Greylock Equity GP Limited Partnership, a venture capital fund, since 1994. Mr. Helman is also a director of Jupiter Media Metrix, Inc. Mr. Helman holds a BA from Dartmouth College and an MBA from Harvard Business School.
EDWIN M. KANIA, JR. has served as a director since September 1995. Mr. Kania has been managing general partner of OneLiberty Ventures, a venture capital firm which he co-founded, since January, 1995. Mr. Kania also serves as a Special Partner for AGTC Funds, a specialty genomics venture capital fund. Mr. Kania is also a director of Aspect Medical Systems. Mr. Kania holds a degree in physics from Dartmouth College and an MBA from Harvard Business School.
LANCE WILLSEY, MD has served as a director since May 2000. Dr. Willsey has been a founding partner of DCF Capital since July 1998. From July 1997 to July 1998, Dr. Willsey served on the Staff Department of Urologic Oncology at Dana Farber Cancer Institute at Harvard University School of Medicine. From July 1996 to July 1997, Dr. Willsey served on the Staff Department of Urology at Massachusetts General Hospital at Harvard University School of Medicine, where he was a urology resident from July 1992 to July 1996. Dr. Willsey is also a director of Exelixis, Inc. Dr. Willsey holds a BS in physiology from Michigan State University and an MS in biology and an MD from Wayne State University.
Upon the completion of the offering, Messrs. Afeyan, Hardison and Helman will become Class I directors, Messrs. Barker, Grousbeck and Willsey will become Class II directors and Ms. Crawford and Messrs. Kania and Lapidus will become Class III directors.
COMMITTEES OF THE BOARD OF DIRECTORS
Our compensation committee consists of Dr. Barker, Mr. Grousbeck and Mr. Kania. The compensation committee reviews and evaluates the compensation and benefits of all of our officers, reviews general policy matters relating to compensation and benefits of our employees and makes recommendations concerning these matters to the board of directors. Our compensation committee will also administer our 1995 stock plan, 2000 option plan and 2000 purchase plan.
Our audit committee consists of Ms. Crawford, Mr. Kania and Dr. Willsey. The audit committee reviews with our independent auditors the scope and timing of the auditors' services, the auditors' report on our financial statements following completion of our auditors' audit, and our internal accounting and financial control policies and procedures. In addition, the audit committee will make annual recommendations to the board of directors for the appointment of independent auditors for the ensuing year.
DIRECTOR COMPENSATION
Our directors are reimbursed for out-of-pocket expenses incurred in attending meetings of the board of directors. In addition, directors are also eligible to participate in the 1995 stock plan and the 2000 option plan. In accordance with a policy approved by our board of directors, our current directors will be granted an option to purchase 10,000 shares of common stock under the 2000 option plan on the date the shares issued in connection with this prospectus are sold to the underwriters. All of these options will be fully vested. In addition, new directors will be granted options to purchase 10,000 shares of common stock under the 2000 option plan on the date they are elected to the board of directors. Each director will be granted an additional option to purchase 5,000 shares of common stock at the first meeting of the board of directors following each annual stockholders meeting. Options granted to
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new directors and options granted at the first meeting of the board of directors following an annual stockholders meeting will be exercisable immediately, subject to our right to repurchase 100% of the shares. Our right to repurchase terminates monthly over each of the following twelve months with respect to 8.33% of the shares.
SCIENTIFIC ADVISORY BOARD
We have assembled a distinguished group of scientific advisors covering all aspects of our scientific, medical and technical activities. Our scientific advisory board provides advice and guidance to our board of directors on strategic matters including research and development and clinical studies. Our scientific advisory board serves only in an advisory capacity and has no managerial responsibility or authority. The members of our scientific advisory board are listed below.

NAME                                         POSITION AND AFFILIATION
----                                         ------------------------
David A. Ahlquist, MD....  Professor of Medicine at Mayo Medical School and Director of
                           the Colorectal Neoplasia Clinic of Mayo, GI Division

Kenneth Kinzler, Ph.D....  Professor of Oncology at Johns Hopkins University School of
                           Medicine

Bert Vogelstein, MD......  Professor of Oncology and Pathology at Johns Hopkins
                           University School of Medicine and Investigator at Howard
                           Hughes Medical Institute

C. Richard Boland, MD....  Professor of Medicine and Chief, Division of
                           Gastroenterology at the University of California, San Diego

George Q. Daly, MD.......  Whitehead Fellow and Primary Investigator for the Whitehead
                           Institute for Biomedical Research

David A. Lieberman, MD...  Chief, Division of Gastroenterology at Oregon Health
                           Sciences University and Section Chief, Gastroenterology at
                           Portland VA Medical Center

David F. Ransohoff, MD...  Professor of Medicine and Clinical Professor of Epidemiology
                           at the University of North Carolina at Chapel Hill

James Winkelman, MD......  Vice President of Clinical Laboratories at Brigham & Women's
                           Hospital and Professor of Pathology at Harvard Medical
                           School	

Under our 1995 stock plan, we have granted options to purchase common stock to each member of our scientific advisory board other than Dr. Ahlquist. These options vest over 2 to 5 years. In addition, we have consulting agreements with each of Drs. Boland, Daly, Kinzler, Lieberman, Ransohoff, Vogelstein and Winkelman whereby we have agreed to pay consulting fees or reimburse out-of-pocket expenses for their service on our scientific advisory board. These agreements may be terminated by us or a member on 30 or 60 days notice to the other party. Dr. Ransohoff is a principal investigator in the multi-center blinded clinical study that we initiated in August 2000.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Our board of directors reviewed salaries and incentive compensation for our employees and consultants during 1999. Stanley N. Lapidus, our Chairman, participated in deliberations of our board of directors concerning executive compensation in 1999. None of our executive officers has served as a director or member of the compensation committee, or other committee serving an equivalent function, of any other entity, whose executive officers served as a director or member of our compensation committee. In March 2000, Mr. Lapidus executed a promissory note in favor of us in the aggregate principal amount of $104,000. The note provides for 9% interest and is payable on the earlier of March 2010, two years following the closing of our initial public offering or upon the termination of
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Mr. Lapidus' employment. Mr. Lapidus used the proceeds of the note to exercise options to purchase 275,000 shares of our common stock. In connection with the issuance of the note and the exercised options, Mr. Lapidus executed a pledge agreement granting us a security interest in these shares. In addition, he executed a restricted stock purchase agreement with respect to 206,250 of the shares, under which our right to repurchase terminates monthly over each of the next forty-five months with respect to 4,584 of the shares originally granted under the option. In addition, our right to repurchase shares granted under an option to Mr. Lapidus will terminate upon:
- the sale of all or substantially all of our assets, a merger or consolidation resulting in a change of control, or a sale, or a series of sales, of our capital stock resulting in a change of control;
- the termination of Mr. Lapidus' employment without cause or for cause other than gross negligence or criminal misconduct, each in connection with the performance of his duties;
- a substantial diminution in job responsibility or reduction in compensation; or
- a change in location of Mr. Lapidus' employment more than 60 miles from our current location.
EXECUTIVE COMPENSATION
The following table sets forth the compensation paid to our Chairman and each of our two most highly-compensated named executive officers whose total compensation exceeded $100,000 during the year ended December 31, 1999.

                                                                   ANNUAL
                                                                COMPENSATION
                                                             -------------------
NAME AND PRINCIPAL POSITION                                    YEAR      SALARY
---------------------------                                  --------   --------
Stanley N. Lapidus ........................................    1999     $210,000
  Chairman & Director

Barry M. Berger, MD .......................................    1999      210,000
  Vice President of Laboratory Medicine

Anthony P. Shuber .........................................    1999      160,000
  Vice President of Molecular Biology	

OPTION GRANTS
No stock options were granted during the year ended December 31, 1999 to Mr. Lapidus, Dr. Berger or Mr. Shuber.
YEAR-END OPTION TABLE
The following table sets forth information regarding exercisable and unexercisable stock options held as of December 31, 1999 by each of the named executive officers. There was no public trading market for the common stock as of December 31, 1999. Accordingly, as permitted by the rules of the Securities and Exchange Commission, the value of unexercised in-the-money options has been calculated by determining the difference between the exercise price per share payable upon exercise of such options and an assumed initial public offering price of $15.00.

                                                          NUMBER OF SECURITIES          VALUE OF UNEXERCISED
                                                         UNDERLYING UNEXERCISED        IN-THE-MONEY OPTIONS AT
                                SHARES                 OPTIONS AT FISCAL YEAR-END          FISCAL YEAR-END
                               ACQUIRED      VALUE     ---------------------------   ---------------------------
NAME                          ON EXERCISE   REALIZED   EXERCISABLE   UNEXERCISABLE   EXERCISABLE   UNEXERCISABLE
----                          -----------   --------   -----------   -------------   -----------   -------------
Stanley N. Lapidus..........         --          --           --             --             --              --
Barry M. Berger, MD.........         --          --           --             --             --              --
Anthony P. Shuber...........         --          --           --         68,750             --        $959,063	

40

OUR STOCK PLANS
1995 STOCK OPTION PLAN. Our 1995 stock plan was adopted by our board of directors and approved by the stockholders on February 24, 1995. A total of 3,987,500 shares of common stock has been authorized and reserved for issuance under the 1995 stock plan. As of September 30, 2000, there were outstanding options to purchase a total of 1,409,070 shares of common stock at a weighted average exercise price of $1.11. As of September 30, 2000, 1,665,640 shares of common stock had been issued in connection with the exercise of options. Under the terms of the 1995 stock plan, we are authorized to grant incentive stock options as defined under the Internal Revenue Code and non-qualified options to our officers, directors, consultants and other employees.
The 1995 stock plan is administered by our compensation committee. The board of directors selects the individuals to whom options will be granted and determines the option exercise price and other terms of each award, subject to the provisions of the 1995 stock plan. Options generally provide that 20% of the shares exercisable under each option will vest one year following either the date of grant or the optionee's date of employment and thereafter vest in equal monthly installments over the next 48 months. However, some options granted under our 1995 stock plan are immediately exercisable subject to our right to repurchase 100% of the shares until one year following the date of grant, at which time our right to repurchase terminates, generally with respect to 20% of the shares originally granted. Thereafter, our right to repurchase terminates monthly in equal installments over each of the next 48 months. In addition, options held by certain employees, including our key employees, provide that our right to repurchase shares granted will terminate upon the sale of all or substantially all of our assets, a merger or consolidation resulting in a change of control, or a sale or series of sales of our capital stock resulting in a change of control and:
- termination of employment without cause or for any reason other than negligence or criminal misconduct, each in connection with the performance of duties;
- substantial diminution in job responsibility; or
- a change in location of employment more than 60 miles from our current location.
An option is not transferable by the recipient except by will or by the laws of descent and distribution, or, in the case of non-qualified stock options, only to the extent set forth in the agreement relating to the non-qualified stock option or pursuant to a valid domestic relations order. The 1995 stock plan will terminate upon the effective date of the registration statement of which this prospectus is a part. Options granted prior to the date of termination will remain outstanding and may be exercised in accordance with their terms, unless sooner terminated by vote of our board of directors.
2000 STOCK OPTION AND INCENTIVE PLAN. Our 2000 stock option and incentive plan was adopted by our board of directors and approved by the stockholders on October 17, 2000. A total of 1,000,000 shares of common stock has been authorized and reserved for issuance under the 2000 option plan. The 2000 option plan provides that the number of shares authorized for issuance will automatically increase each January 1 (beginning in 2002) by the greater of 5% of the outstanding number of shares of common stock on the immediately preceding December 31 and the aggregate number of shares made subject to equity-based awards during the one year prior to such January 1, or such lesser number as may be approved by the board of directors. The maximum number of shares that may be authorized for issuance under the 2000 option plan is 20,000,000. Under the terms of the 2000 option plan, we are authorized to grant incentive stock options as defined under the Internal Revenue Code, non-qualified options, stock awards or opportunities to make direct purchases of common stock to our or our subsidiary's employees, officers, directors, consultants and advisors.
The 2000 option plan is administered by our compensation committee. Our compensation committee determines the individuals to whom equity-based awards will be granted and the option exercise price and other terms of each award, subject to the provisions of the 2000 option plan. The
41

2000 option plan provides that upon an acquisition, all equity-based awards will accelerate by a period of one year. In addition, upon the termination of an employee without cause or for good reason prior to the first anniversary of the completion of an acquisition, all equity-based awards then outstanding under the 2000 option plan held by that employee will immediately become exercisable.
An option is not transferable by the recipient except by will or by the laws of descent and distribution order. The term of the 2000 option plan is ten years, unless sooner terminated by vote of the board of directors. To date, no options have been granted under the 2000 option plan.
2000 EMPLOYEE STOCK PURCHASE PLAN. The 2000 purchase plan was adopted by the board of directors and received stockholder approval on October 17, 2000. A total of 300,000 shares of common stock have been authorized and reserved for issuance under the 2000 purchase plan. The 2000 purchase plan provides that the number of shares authorized for issuance will automatically increase on each February 1 (beginning in 2002) by the greater of 0.75% of the outstanding number of shares of common stock on the immediately preceding December 31 and that number of shares made subject to options under the 2000 option plan during the one year prior to such February 1, or such lesser number as may be approved by the board of directors. The maximum number of shares that may be authorized for issuance under the 2000 purchase plan is 1,000,000.
The 2000 purchase plan will be administered by our compensation committee. Generally, all employees who have completed three months of employment and whose customary employment is more than twenty hours per week and for more than five months in any calendar year are eligible to participate in the purchase plan. The right to purchase common stock under the 2000 purchase plan will be made available through a series of offerings. On the first day of an offering period, we will grant to each eligible employee who has elected in writing to participate in the 2000 purchase plan an option to purchase 1,000 shares of common stock. The employee will be required to authorize an amount, between 1% and 10% of the employee's compensation, to be deducted from the employee's pay during the offering period. On the last day of the offering period, the employee will be deemed to have exercised the option, at the option exercise price, to the extent of accumulated payroll deductions. Under the terms of the 2000 purchase plan, the option exercise price is an amount equal to 85% of the fair market value of one share of common stock on either the first or last day of the offering period, whichever is lower. No employee may be granted an option that would permit the employee's rights to purchase common stock to accrue in excess of $25,000 in any calendar year. The first offering period under the 2000 purchase plan will commence on the date the shares issued in connection with this prospectus are sold to the underwriters and continues through July 31, 2001. Thereafter, the offering periods will begin on each February 1 and August 1. Options granted under the 2000 purchase plan terminate upon an employee's voluntary withdrawal from the plan at any time or upon termination of employment. No options have been granted to date under the 2000 purchase plan.
401(k) PLAN. We maintain a 401(k) plan intended to qualify under Section 401(k) of the Internal Revenue Code. Under the 401(k) plan, a participant may contribute a maximum of 15% of his or her pre-tax salary through payroll deductions up to the statutorily prescribed annual limit. The percentage of more highly compensated participants may be required to be lower. In addition, at the discretion of our board of directors, we may make discretionary matching or profit-sharing contributions to the 401(k) plan. We have not made any such contributions to the 401(k) plan to date.
42

RELATED PARTY TRANSACTIONS
From December 31, 1996 through September 30, 2000, we issued shares of preferred stock in private placement transactions as follows:
- an aggregate of 31,645 of Series B convertible preferred stock at $3.95 per share in February 1997;
- an aggregate of 1,007,186 of Series C convertible preferred stock at $10.50 per share in March 1998; and
- an aggregate of 1,417,534 shares of Series D convertible preferred stock at $22.50 per share in April 2000.
The following table summarizes the shares of preferred stock purchased since December 31, 1996 and held as of September 30, 2000 by our executive officers, directors, holders of more than 5% of our outstanding stock and their affiliates.

                                                              SERIES C    SERIES D
NAME                                                          PREFERRED   PREFERRED
----                                                          ---------   ---------
Stanley N. Lapidus..........................................    12,657          --
Affiliates of the OneLiberty Ventures Entities(1)...........   190,476      77,776
Greylock Equity Limited Partnership(2)......................   190,476      57,777
Affiliates of the Highland Capital Entities(3)..............   266,666      57,778
Affiliates of DCF Capital(4)................................        --     222,221	

(1) Mr. Edwin M. Kania, Jr., a director, is a general partner of OneLiberty Partners III, L.P., the general partner of OneLiberty Fund III, L.P. Mr. Kania is also managing member of OneLiberty Partners IV, L.L.C., the general partner of OneLiberty Fund IV, L.P. and a general partner of OneLiberty Advisors Fund IV, L.P.
(2) Mr. Wycliffe K. Grousbeck, a director, is a general partner of Highland Management Partners III Limited Partnership, the general partner of Highland Capital Partners III Limited Partnership. Mr. Grousbeck is also a member of HEF III L.L.C., the general partner of Highland Entrepreneurs' Fund III Limited Partnership.
(3) Mr. William W. Helman, a director, is a general partner of Greylock Equity GP, Limited Partnership, the general partner of Greylock Equity Limited Partnership.
(4) Dr. Lance Willsey, a director, is a limited partner of DCF Partners L.P. Dr. Willsey is also a limited partner of DCF Life Sciences Fund Limited and a non-managing member of DCF Capital Advisors Inc., the investment advisor of DCF Life Sciences Fund.
As set forth in our certificate of incorporation, each share of Series A convertible preferred stock, Series B convertible preferred stock, Series C convertible preferred stock and Series D convertible preferred stock will automatically convert into 2.75 shares of common stock upon the closing of this offering.
In connection with the preferred stock financings, we granted registration rights to preferred stockholders. See "Description of Capital Stock--Registration Rights."
OTHER RELATED PARTY TRANSACTIONS
In March 2000, Stanley N. Lapidus executed a promissory note in favor of us in the aggregate principal amount of $104,000. The note provides for 9% interest and is payable on the earlier of March 2010, two years following the closing of our initial public offering or upon the termination of Mr. Lapidus' employment. Mr. Lapidus used the proceeds of the note to exercise options to purchase 275,000 shares of our common stock. In connection with the issuance of the note and the exercise of
43

options, Mr. Lapidus executed a pledge agreement granting us a security interest in these shares. In addition, he executed a restricted stock purchase agreement with respect to 206,250 of the shares, under which our right to repurchase terminates monthly over each the next forty-five months with respect to 4,584 of the shares originally granted under the option. In addition, our right to repurchase shares granted under an option will terminate upon:
- the sale of all or substantially all of our assets, a merger or consolidation resulting in a change of control or a sale, or series of sales, of our capital stock resulting in a change of control;
- the termination of Mr. Lapidus' employment without cause or for cause other than gross negligence or criminal misconduct, each in connection with the performance of his duties;
- a substantial diminution in job responsibility or compensation; or
- a change in location of Mr. Lapidus' employment more than 60 miles from our current location.
In June 2000, Don M. Hardison, our President, executed a promissory note in favor of us in the aggregate principal amount of $299,999. The note provides for 9.5% interest and is payable on June 2010. Mr. Hardison used the proceeds of the note to exercise options to purchase 195,555 shares of our common stock. In connection with the issuance of these shares, Mr. Hardison executed a restricted stock purchase agreement under which we have the right to repurchase the common stock 100% of the shares until one year following the date of the option grant, at which time our right to repurchase terminates with respect to 20% of the shares originally granted. Thereafter, our right to repurchase terminates monthly over each the next forty-eight months with respect to 1.666% of the shares originally granted under the option. In addition, our right to repurchase shares granted under an option to Mr. Hardison will terminate upon the sale of all or substantially all of our assets or a merger or consolidation resulting in a change of control and
- termination of Mr. Hardison's employment without cause or for any reason other than negligence or criminal misconduct, each in connection with the performance of his duties;
- a substantial diminution in job responsibility or reduction in compensation; or
- a change in location of Mr. Hardison's employment more than 60 miles from our current location.
We believe that all of the transactions set forth above were made on terms fair to us as to the time they were authorized, approved or ratified. We have adopted a policy whereby all future transactions between us and our officers, directors and affiliates will be on terms fair to us as to the time they are authorized, approved or ratified and will be approved by a majority of disinterested members of our board of directors.
The Mayo Foundation for Medical Education and Research, an affiliate of the Mayo Clinic, holds 103,125 shares of our common stock, 80,952 shares of our Series C convertible preferred stock and 5,494 shares of our Series D convertible preferred stock. Each share of Series C convertible preferred stock and Series D convertible preferred stock will automatically convert into 2.75 shares of our common stock upon the completion of this offering. Although we conducted our clinical studies with the Mayo Clinic, we have no written agreement with respect to our collaboration. Dr. Ahlquist, a member of our scientific advisory board, was a principal investigator on the Mayo clinical studies. While Dr. Ahlquist holds none of our common stock directly, the Mayo Clinic has informed us that in connection with an existing policy, it will pay to Dr. Ahlquist, subject to his consent, an amount equal to the aggregate value of 41,250 shares of common stock held by the Mayo Clinic based on the closing price of our common stock on the first day that such shares are freely tradable. Dr. Ahlquist has received no consulting fees from us.
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PRINCIPAL STOCKHOLDERS
The following table sets forth certain information regarding beneficial ownership of our common stock as of September 30, 2000, and as adjusted to reflect the sale of common stock in the offering assuming no exercise of the underwriters' over-allotment option, by:
- each person or group of affiliated persons known by us to be the beneficial owner of more than 5% of our common stock;
- each person who is an executive officer or key employee;
- each of our directors; and
- all executive officers and directors as a group.
Unless otherwise noted below, the address of each person listed on the table is c/o EXACT Sciences Corporation, 63 Great Road, Maynard, Massachusetts 01754.

                                                                           PERCENT OF COMMON
                                                                           STOCK OUTSTANDING
                                                                          -------------------
                                                               SHARES      BEFORE     AFTER
NAME AND ADDRESS OF BENEFICIAL OWNER                            HELD      OFFERING   OFFERING
------------------------------------                          ---------   --------   --------
The OneLiberty Fund Entities(1)
  150 CambridgePark Drive
  Cambridge, MA 02140 ......................................  2,614,064     18.0%      14.1%
Greylock Equity Limited Partnership
  One Federal Street
  Boston, MA 02110 .........................................  2,218,128     15.3%      12.0%
The Highland Capital Partners Entities(2)
  2 International Place
  Boston, MA 02110 .........................................  1,658,041     11.4%       9.0%
Edwin M. Kania, Jr.(3) .....................................  2,614,064     18.0%      14.1%
William W. Helman(4) .......................................  2,218,128     15.3%      12.1%
Wycliffe K. Grousbeck(5) ...................................  1,658,041     11.4%       9.0%
Stanley N. Lapidus(6) ......................................  1,474,916     10.2%       7.8%
Lance Willsey(7)
  One Newbrook Circle
  Brookline, MA 02167 ......................................    611,108      4.2%       3.3%
Anthony P. Shuber(8) .......................................    302,500      2.1%       1.6%
Barry M. Berger ............................................    209,000      1.4%       1.1%
Noubar B. Afeyan(9)
  c/o NewcoGen Group, Inc.
  150 CambridgePark Drive
  Cambridge, MA 02140 ......................................    203,643      1.4%       1.1%
Don M. Hardison ............................................    154,305      1.1%         *
Robert B. Rochelle .........................................    137,500        *          *
Richard W. Barker
  2239 Fifth Street
  Berkeley, CA 94710 .......................................     45,650        *          *
Sally W. Crawford
  140 High Street
  Exeter, NH 03833 .........................................     41,250        *          *
John A. McCarthy, Jr.(10)  .................................         --        *          *
All executive officers and directors as a group
  (10 persons)(11) .........................................  9,323,564     63.5%      50.4%	

* Indicates ownership of less than 1%
FOOTNOTES ON FOLLOWING PAGE
45

(1) Includes 2,138,235 shares beneficially owned by OneLiberty Fund III, L.P, of which One Liberty Partners III, L.P. is the general partner. Also includes 465,097 shares beneficially owned by OneLiberty Fund IV, L.P., of which One Liberty IV, L.L.C. is the general partner, and 10,692 shares beneficially owned by OneLiberty Advisors Fund IV, L.P.
(2) Includes 1,591,722 shares beneficially owned by Highland Capital Partners III Limited Partnership, of which Highland Management Partners III Limited Partnership is the general partner. Also includes 66,319 shares beneficially owned by Highland Entrepreneurs' Fund III Limited Partners, of which HEF III L.L.C. is the general partner.
(3) Includes shares owned by the OneLiberty Fund entities as set forth in note 1. Mr. Kania is a general partner of OneLiberty Partners III, L.P. and a general partner of OneLiberty Advisors Fund IV, L.P. Mr. Kania may be deemed to share voting and investment power with respect to such shares and disclaims any beneficial ownership of such shares.
(4) Includes 2,218,073 beneficially owned by Greylock Equity Limited Partnership, of which Greylock Equity GP, Limited Partnership is the general partner. Mr. Helman is a general partner of Greylock Equity GP, Limited Partnership. Mr. Helman may be deemed to share voting and investment power with respect to such shares and disclaims any beneficial ownership of such shares.
(5) Includes shares owned by the Highland Capital Partner entities as set forth in note 2. Mr. Grousbeck is a general partner of Highland Management Partners III Limited Partnership and a member of HEF III L.L.C. Mr. Grousbeck may be deemed to share voting and investment power with respect to such shares and disclaims any beneficial ownership of such shares.
(6) Includes 68,750 shares held by David D. Lapidus and 68,750 shares held by Joel B. Lapidus.
(7) Includes 397,221 shares beneficially owned by DCF Partners L.P., of which DCF Advisors, L.L.C. is the general partner. Dr. Willsey is a limited partner of DCF Partners L.P. and a non-managing member of DCF Advisors, L.L.C. Also includes 213,887 shares beneficially owned by DCF Life Sciences Fund, of which DCF Capital Advisors Inc. is the investment advisor. Dr. Willsey is a limited partner of DCF Life Sciences Fund Limited and a non-managing member of DCF Capital Advisors Inc. Dr. Willsey disclaims any beneficial ownership of the shares.
(8) Includes 27,500 shares issuable to Mr. Shuber in connection with options that are currently exercisable.
(9) Includes 144,375 shares issuable to Dr. Afeyan in connection with options that are currently exercisable.
(10) Mr. McCarthy joined us as Vice President and Chief Financial Officer on October 2, 2000.
(11) Includes shares pursuant to notes 3-9.
Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission. For the purposes of calculating the number of shares and the percentage beneficially owned by a person or entity, shares of common stock issuable by us to that person or entity pursuant to options which may be exercised within 60 days after September 30, 2000 are deemed to be beneficially owned and outstanding. Except as otherwise indicated, each stockholder named in the table has sole voting and investment power with respect to the shares set forth opposite that stockholder's name.
46

DESCRIPTION OF CAPITAL STOCK
The following description of our capital stock and provisions of our amended and restated certificate of incorporation and amended and restated by-laws are summaries and are qualified by reference to the certificate of incorporation and the by-laws that will become effective upon the effective date of the registration statement registering shares included in this offering. Copies of these documents have been filed with the Securities and Exchange Commission as exhibits to our registration statement, of which this prospectus forms a part. The descriptions of the common stock and preferred stock reflect changes to our capital structure that will occur upon the closing of this offering.
Upon the completion of this offering, our authorized capital stock will consist of 100,000,000 shares of common stock, par value $0.01 per share, and 5,000,000 shares of preferred stock, par value $0.01 per share.
COMMON STOCK
As of September 30, 2000, there were 14,507,778 shares of common stock outstanding held of record by 149 stockholders, after giving effect to the conversion of all of the outstanding shares of preferred stock upon the closing of this offering.
Holders of common stock are entitled to one vote for each share of common stock held on all matters submitted to a vote of stockholders and do not have cumulative voting rights. Directors are elected by a plurality of the votes of the shares present in person or by proxy at the meeting and entitled to vote. Holders of common stock are entitled to receive ratably any dividends as may be declared by the board of directors out of funds legally available for distribution, after provision has been made for any preferential dividend rights of outstanding preferred stock, if any. Upon our liquidation, dissolution or winding up, the holders of common stock are entitled to receive ratably the net assets available after the payment of all of our debts and other liabilities, and after the satisfaction of the rights of any outstanding preferred stock, if any. Holders of the common stock have no preemptive, subscription, redemption or conversion rights, nor are they entitled to the benefit of any sinking fund. The outstanding shares of common stock are, and the shares offered by us in this offering will be, when issued and paid for, validly issued, fully paid and non-assessable. The rights, powers, preferences and privileges of holders of common stock are subordinate to, and may be adversely affected by, the rights of the holders of shares of any series of preferred stock which we may designate and issue in the future. Upon the closing of this offering, there will be no shares of preferred stock outstanding.
PREFERRED STOCK
Upon the closing of the offering, our board of directors will be authorized, without further vote or action by the stockholders, to issue from time to time up to an aggregate of 5,000,000 shares of preferred stock in one or more series. Each series of preferred stock shall have such number of shares, designations, preferences, voting powers, qualifications and special or relative rights or privileges as shall be determined by our board of directors, which may include, among others, dividend rights, voting rights, redemption and sinking fund provisions, liquidation preferences, conversion rights and preemptive rights.
The issuance of preferred stock, while providing desired flexibility in connection with possible acquisitions and other corporate purposes, could adversely affect the voting power or other rights of the holders of common stock, and could make it more difficult for a third party to acquire, or could discourage a third party from attempting to acquire, a majority of our outstanding voting stock. We have not issued and have no present plans to issue any shares of preferred stock.
47

REGISTRATION RIGHTS
Holders of 11,889,156 shares of common stock are entitled to require us to register the sale of their shares under the Securities Act. Under the terms of an agreement between us and the holders of the registrable securities, if we propose to register any of our securities under the Securities Act, either for our own account or for the account of other security holders exercising registration rights, these holders are entitled to notice of and to include their shares of common stock in the registration statement. The underwriters may limit the number of shares included in such offering held by these holders, provided that such shares shall not be less than one-third of such offering. All registration rights have been waived in connection with this offering.
Additionally, these holders of our common stock are entitled to specified demand registration rights at any time following 180 days after the effective date of the registration statement registering the shares included in this offering, as follows:
- The holders of at least 30% of the then outstanding registrable securities may require, on three occasions beginning six months after the effective date of any registration statement, including this registration statement, that we use our best efforts to register the registrable securities for public resale, provided that the proposed aggregate selling or offering price is at least $10,000,000.
- The holders of the then outstanding registrable securities may require us, on up to four occasions, to register all or a portion of their registrable securities on a registration statement on Form S-3 when use of such form becomes available to us, provided that the proposed aggregate selling or offering price is at least $5,000,000.
We are generally required to bear the expenses of such registration, except underwriting discounts and commissions.
ANTI-TAKEOVER EFFECTS OF PROVISIONS OF DELAWARE LAW AND OUR CERTIFICATE OF INCORPORATION AND BY-LAWS
We are subject to the provisions of Section 203 of the Delaware General Corporation Law. Subject to certain exceptions, Section 203 of Delaware law prohibits a publicly-held Delaware corporation from engaging in a "business combination" with an "interested stockholder" for a period of three years after the date of the transaction in which the person became an interested stockholder, unless the interested stockholder attained such status with the approval of our board of directors or unless the business combination is approved in a prescribed manner. A "business combination" is defined as a merger, asset sale or other transaction resulting in a financial benefit to the interested stockholder. Subject to various exceptions, an "interested stockholder" is a person who, together with affiliates and associates, owns, or within the past three years did own, 15% or more of a corporation's voting stock. This statute could prohibit or delay the accomplishment of mergers or other takeover or change in control attempts with respect to us and, accordingly, may discourage attempts to acquire us.
In addition, some provisions of our amended and restated certificate of incorporation and amended and restated by-laws may be deemed to have an anti-takeover effect and may delay, defer or prevent a tender offer or takeover attempt that a stockholder might deem to be in his or her best interest. The existence of these provisions could limit the price that investors might be willing to pay in the future for shares of our common stock. These provisions include:
STOCKHOLDER ACTION; SPECIAL MEETING OF STOCKHOLDERS. Our certificate provides that stockholders may not take action by written consent, but only at a duly called annual or special meeting of stockholders. The certificate further provides that special meetings of our stockholders may be called only by the Chairman of the board of directors or a majority of the board of directors, and in no event may the
48

stockholders call a special meeting. Thus, without approval by the Chairman of the board of directors or a majority of the board of directors, stockholders may take no action between meetings.
ADVANCE NOTICE REQUIREMENTS FOR STOCKHOLDER PROPOSALS AND DIRECTOR NOMINATIONS. Our by-laws provide that a stockholder seeking to bring business before an annual meeting of stockholders, or to nominate candidates for election as directors at an annual meeting of stockholders, must provide timely notice of this intention in writing. To be timely, a stockholder's notice must be delivered to our secretary at our principal executive offices not less than 120 days prior to the first anniversary of the date of our notice of annual meeting provided with respect to the previous year's annual meeting of stockholders. However, if no annual meeting of stockholders was held in the previous year or the date of the annual meeting of stockholders has been changed to be more than 30 calendar days from the time of the previous year's proxy statement, then a proposal shall be received no later than the close of business on the tenth day following the date on which notice of the date of the meeting was mailed or a public announcement was made, whichever occurs first. The amended and restated by-laws also include a similar requirement for making nominations at special meetings and specify requirements as to the form and content of a stockholder's notice. These provisions may preclude stockholders from bringing matters before an annual meeting of stockholders or from making nominations for directors at an annual or special meeting of stockholders.
AUTHORIZED BUT UNISSUED SHARES. The authorized but unissued shares of common stock and preferred stock are available for future issuance without stockholder approval, subject to any limitations imposed by the Nasdaq National Market. These additional shares may be utilized for a variety of corporate acquisitions and employee benefit plans. The existence of authorized but unissued and unreserved common stock and preferred stock could make more difficult or discourage an attempt to obtain control of us by means of a proxy contest, tender offer, merger or otherwise.
SUPER-MAJORITY VOTING. Delaware law provides generally that the affirmative vote of a majority of the shares entitled to vote on any matter is required to amend a corporation's certificate of incorporation or by-laws, unless a corporation's certificate or by-laws requires a greater percentage. We have provisions in our certificate which require 75% of the voting power of all of the then outstanding shares of our capital stock to amend or repeal certain provisions in our certificate which include, but are not limited to, provisions which would reduce or eliminate the number of authorized common or preferred shares and all indemnification provisions. We also have provisions in our certificate which require 80% of the voting power of all of the then outstanding shares of our capital stock to adopt, amend or repeal any provision of our by-laws.
STAGGERED BOARD. Our certificate and by-laws provide for the division of our board of directors into three classes, as nearly equal in size as possible, with staggered three-year terms. In addition, our certificate and by-laws provide that directors may be removed without cause only by the affirmative vote of the holders of 75% of the shares of capital stock entitled to vote for the election of director at an election of directors. Any one or more or all of the directors may be removed with cause only by the holders of at least a majority of the shares then entitled to vote at an election of directors. Under our certificate and by-laws, any vacancy on the board of directors, for the election of directors, including a vacancy resulting from an enlargement of the board, may only be filled by vote of a majority of the directors then in office. The classification of the board of directors and the limitations on the removal of directors and filling of vacancies would have the effect of making it more difficult for a third party to acquire control of us, or of discouraging a third party from acquiring control of us.
LIMITATION OF LIABILITY
Our certificate provides that no director shall be personally liable to us or to our stockholders for monetary damages for breach of fiduciary duty as a director, except that the limitation shall not
49

eliminate or limit liability to the extent that the elimination or limitation of such liability is not permitted by the Delaware General Corporation Law as the same exists or may hereafter be amended.
Our certificate of incorporation further provides for the indemnification of our directors and officers to the fullest extent permitted by Section 145 of the Delaware General Corporation Law, including circumstances in which indemnification is otherwise discretionary. A principal effect of these provisions is to limit or eliminate the potential liability of our directors for monetary damages arising from breaches of their duty of care, subject to certain exceptions. These provisions may also shield directors from liability under federal and state securities laws.
TRANSFER AGENT AND REGISTRAR
Upon the closing of this offering, the transfer agent and registrar for the common stock will be American Stock Transfer & Trust Company.
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SHARES ELIGIBLE FOR FUTURE SALE
Prior to the offering, there has been no market for our common stock. Future sales of substantial amounts of common stock in the public market could adversely affect prevailing market prices. Sales of substantial amounts of our common stock in the public market after the restrictions lapse could adversely affect the prevailing market price and impair our ability to raise equity capital in the future.
Upon completion of the offering, we will have 18,507,778 outstanding shares of common stock. Of these shares, the 4,000,000 shares sold in the offering, plus any shares issued upon exercise of the underwriters' over-allotment option, will be freely tradable without restriction under the Securities Act, unless purchased by our affiliates as that term is defined in Rule 144 under the Securities Act. In general, affiliates include officers, directors and 10% stockholders.
The remaining 14,507,778 shares outstanding are "restricted securities" within the meaning of Rule 144. Restricted securities may be sold in the public market only if they are registered or if they qualify for an exemption from registration under Rules 144, 144(k) or 701 promulgated under the Securities Act, which are summarized below. Sales of the restricted securities in the public market, or the availability of such shares for sale, could adversely affect the market price of the common stock.
Our directors, officers and security holders have entered into lock-up agreements in connection with these offering generally providing that they will not offer, sell, contract to sell or grant any option to purchase or otherwise dispose of our common stock or any securities exercisable for or convertible into our common stock owned by them for a period of 180 days after the date of this prospectus without the prior written consent of Merrill Lynch & Co. Notwithstanding possible earlier eligibility for sale under the provisions of Rules 144, 144(k) and 701, shares subject to lock-up agreements will not be salable until such agreements expire or are waived by Merrill Lynch & Co. Taking into account the lock-up agreements, and assuming Merrill Lynch Co. does not release stockholders from these agreements, the following shares will be eligible for sale in the public market at the following times:
- Beginning on the date of this prospectus, 4,000,000 shares sold in the offering will be immediately available for sale in the public market.
- Beginning 180 days after the date of this prospectus, 18,300,077 shares will be eligible for sale, 14,300,077 of which will be subject to volume, manner of sale and other limitations under Rule 144.
- The remaining 207,701 shares will be eligible for sale pursuant to Rule 144 upon the expiration of various one-year holding periods during the six months following 180 days after the effective date.
In general, under Rule 144 as currently in effect, after the expiration of the lock-up agreements, a person who has beneficially owned restricted securities for at least one year would be entitled to sell within any three-month period a number of shares that does not exceed the greater of:
- one percent of the number of shares of common stock then outstanding which will equal approximately 185,077 shares immediately after the offering; or
- the average weekly trading volume of the common stock during the four calendar weeks preceding the sale.
Sales under Rule 144 are also subject to requirements with respect to manner of sale, notice and the availability of current public information about us. Under Rule 144(k), a person who is not deemed to have been our affiliate at anytime during the three months preceding a sale, and who has beneficially owned the shares proposed to be sold for at least two years, is entitled to sell such shares
51

without complying with the manner of sale, public information, volume limitation or notice provisions of Rule 144.
Rule 701, as currently in effect, permits our employees, officers, directors or consultants who purchased shares pursuant to a written compensatory plan or contract to resell such shares in reliance upon Rule 144 but without compliance with specific restrictions. Rule 701 provides that affiliates may sell their Rule 701 shares under Rule 144 without complying with the holding period requirement and that non-affiliates may sell such shares in reliance on Rule 144 without complying with the holding period, public information, volume limitation or notice provisions of Rule 144.
In addition, we intend to file a registration statement under the Securities Act on the effective date of the registration statement of which this prospectus is a part to register shares to be issued pursuant to our employee benefit plans. As a result, any options or rights exercised under the 1995 stock plan, the 2000 option plan, the 2000 purchase plan, or any other benefit plan after the effectiveness of the registration statement will also be freely tradable in the public market, subject to the terms of the lock-up agreements. However, shares held by affiliates will still be subject to the volume limitation, manner of sale, notice and public information requirements of Rule 144 unless otherwise resalable under Rule 701. As of September 30, 2000 there were outstanding options for the purchase of 1,409,070 shares of common stock, of which options to purchase 394,977 shares were exercisable.
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MATERIAL UNITED STATES FEDERAL TAX CONSIDERATIONS FOR
NON-UNITED STATES HOLDERS
The following is a general discussion of the material U.S. federal income and estate tax consequences of the ownership and disposition of our common stock by a non-U.S. holder. As used in this discussion, the term non-U.S. holder means a beneficial owner of our common stock that is not, for U.S. federal income tax purposes:
- an individual who is a citizen or resident of the United States;
- a corporation, an entity taxable as a corporation, or a partnership created or organized in or under the laws of the United States or of any political subdivision of the United States, other than a partnership treated as foreign under U.S. Treasury regulations;
- an estate whose income is includible in gross income for U.S. federal income tax purposes regardless of its source; or
- a trust, in general, if a U.S. court is able to exercise primary supervision over the administration of the trust and one or more U.S. persons have authority to control all substantial decisions of the trust.
An individual may be treated as a resident of the United States in any calendar year for U.S. federal income tax purposes, instead of as a nonresident, by, among other things, being present in the United States on at least 31 days in that calendar year and for an aggregate of at least 183 days during a three-year period ending on December 31 of the current calendar year. For purposes of this calculation, you should count all of the days present in the current year, one-third of the days present in the immediately preceding year and one-sixth of the days present in the second preceding year. Residents are taxed for U.S. federal income purposes as if they were U.S. citizens.
This discussion does not consider:
- U.S. state and local or non-U.S. tax consequences;
- specific facts and circumstances that may be relevant to a particular non-U.S. holder's tax position, including, if the non-U.S. holder is a partnership or trust, the fact that the U.S. tax consequences of holding and disposing of our common stock may be affected by certain determinations made at the partner or beneficiary level;
- the tax consequences to the stockholders, partners or beneficiaries of a non-U.S. holder;
- special tax rules that may apply to particular non-U.S. holders, such as financial institutions, insurance companies, tax-exempt organizations, U.S. expatriates, broker-dealers, and traders in securities; or
- special tax rules that may apply to a non-U.S. holder that holds our common stock as part of a straddle, hedge, conversion transaction, synthetic security or other integrated investment.
The following discussion is based on provisions of the U.S. Internal Revenue Code of 1986, as amended, applicable U.S. Treasury regulations and administrative and judicial interpretations, all as in effect on the date of this prospectus, and all of which are subject to change, retroactively or prospectively. The following summary assumes that a non-U.S. holder holds our common stock as a capital asset for U.S. federal income tax purposes. EACH NON-U.S. HOLDER SHOULD CONSULT A TAX ADVISOR REGARDING THE U.S. FEDERAL, STATE, LOCAL, ESTATE, GIFT AND
53

NON-U.S. INCOME, ESTATE, GIFT AND OTHER TAX CONSEQUENCES OF ACQUIRING, HOLDING AND DISPOSING OF SHARES OF OUR COMMON STOCK.
DIVIDENDS
We do not anticipate paying cash dividends on our common stock in the foreseeable future. In the event, however, that we pay dividends on our common stock, we will have to withhold a U.S. federal withholding tax at a rate of 30%, or a lower rate under an applicable income tax treaty, from the gross amount of the dividends paid to a non-U.S. holder. A non-U.S. holder who claims the benefit of an applicable income tax treaty rate generally will be required to satisfy applicable certification and other requirements. Non-U.S. holders should consult their tax advisors regarding their entitlement to benefits under a relevant income tax treaty.
Dividends that are effectively connected with a non-U.S. holder's conduct of a trade or business in the United States and, in the event that an income tax treaty applies, are also attributable to a permanent establishment maintained by the non-U.S. holder in the United States, are taxed on a net income basis at the regular graduated rates and in the manner applicable to U.S. persons. In that case, we will not have to withhold U.S. federal withholding tax if the non-U.S. holder complies with applicable certification and disclosure requirements. In addition, a branch profits tax may be imposed at a 30% rate, or a lower rate under an applicable income tax treaty, on dividends received by a foreign corporation that are effectively connected with such foreign corporation's conduct of a trade or business in the United States.
Dividends paid prior to 2001 to an address in a foreign country are presumed, absent actual knowledge to the contrary, to be paid to a resident of such country for purposes of the withholding discussed above and for purposes of determining the applicability of an income tax treaty rate. For dividends paid after 2000, a non-U.S. holder who claims the benefit of an applicable income tax treaty rate generally will be required to satisfy applicable certification and other requirements. However,
- in the case of common stock held by a foreign partnership, the certification requirement will generally be applied to the partners of the partnership and the partnership will be required to provide certain information;
- in the case of common stock held by a foreign trust, the certification requirement will generally be applied to the trust or the beneficial owners of the trust depending on whether the trust is a foreign complex trust, foreign simple trust, or foreign grantor trust as defined in the U.S. Treasury regulations; and
- look-through rules will apply for tiered partnerships, foreign simple trusts and foreign grantor trusts.
A non-U.S. holder which is a foreign partnership or a foreign trust is urged to consult its own tax advisor regarding its status under these U.S. Treasury regulations and the certification requirements applicable to it.
A non-U.S. holder that is eligible for a reduced rate of U.S. federal withholding tax under an income tax treaty may obtain a refund or credit of any excess amounts withheld by filing an appropriate claim for a refund with the U.S. Internal Revenue Service.
54

GAIN ON DISPOSITION OF COMMON STOCK
A non-U.S. holder generally will not be taxed on gain recognized on a disposition of our common stock unless:
- the gain is effectively connected with the non-U.S. holder's conduct of a trade or business in the United States and, in the event that an income tax treaty applies, is also attributable to a permanent establishment maintained by the non-U.S. holder in the United States; in these cases, the gain will be taxed on a net income basis at the regular graduated rates and in the manner applicable to U.S. persons, unless an applicable treaty provides otherwise, and, if the non-U.S. holder is a foreign corporation, the branch profits tax described above may also apply;
- the non-U.S. holder is an individual who holds our common stock as a capital asset, is present in the United States for 183 or more days in the taxable year of the disposition and meets other requirements; or
- we are or have been a U.S. real property holding corporation for U.S. federal income tax purposes at any time during the shorter of the five-year period ending on the date of disposition or the period that the non-U.S. holder held our common stock.
Generally, a corporation is a U.S. real property holding corporation if the fair market value of its U.S. real property interests equals or exceeds 50% of the sum of the fair market value of its worldwide real property interests plus its other assets used or held for use in a trade or business. The tax relating to stock in a U.S. real property holding corporation generally will not apply to a non-U.S. holder whose holdings, direct and indirect, at all times during the applicable period, constituted 5% or less of our common stock, provided that our common stock was regularly traded on an established securities market. We believe that we are not currently, and we do not anticipate becoming in the future, a U.S. real property holding corporation.
FEDERAL ESTATE TAX
Our common stock that is owned or is treated as owned by an individual who is a non-U.S. holder at the time of death will be included in that individual's gross estate for U.S. federal estate tax purposes, unless an applicable estate tax or other treaty provides otherwise and, therefore, may be subject to U.S. federal estate tax.
INFORMATION REPORTING AND BACKUP WITHHOLDING TAX
We must report annually to the U.S. Internal Revenue Service and to each non-U.S. holder the amount of dividends paid to that holder and the tax withheld from those dividends. Copies of the information returns reporting those dividends and withholding may also be made available to the tax authorities in the country in which the non-U.S. holder is a resident under the provisions of an applicable income tax treaty or agreement.
Under some circumstances, U.S. Treasury regulations require additional information reporting and backup withholding at a rate of 31% on some payments on our common stock. Under currently applicable law, non-U.S. holders generally will be exempt from these additional information reporting requirements and from backup withholding on dividends paid prior to 2001 if we either were required to withhold a U.S. federal withholding tax from those dividends or we paid those dividends to an address outside the United States. After 2000, however, the gross amount of dividends not otherwise subject to U.S. federal withholding tax paid to a non-U.S. holder that fails to certify its non-U.S. holder status in accordance with applicable U.S. Treasury regulations generally will be reduced by backup withholding at a rate of 31%.
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The payment of the proceeds from the disposition of our common stock by a non-U.S. holder to or through the U.S. office of a broker generally will be reported to the U.S. Internal Revenue Service and reduced by backup withholding at a rate of 31% unless the non-U.S. holder either certifies its status as a non-U.S. holder under penalties of perjury or otherwise establishes an exemption and the broker has no actual knowledge to the contrary. The payment of the proceeds from the disposition of our common stock by a non-U.S. holder to or through a non-U.S. office of a non-U.S. broker will not be reduced by backup withholding or reported to the U.S. Internal Revenue Service unless the non- U.S. broker is a U.S. related person. In general, the payment of the proceeds from the disposition of our common stock by or through a non-U.S. office of a broker that is a U.S. person or a U.S. related person will be reported to the U.S. Internal Revenue Service and, after 2000, may in limited circumstances be reduced by backup withholding at a rate of 31%, unless the broker receives a statement from the non-U.S. holder, signed under penalties of perjury, certifying its non-U.S. status or the broker has documentary evidence in its files that the holder is a non-U.S. holder and the broker has no actual knowledge to the contrary. For this purpose, a U.S. related person is generally:
- a controlled foreign corporation for U.S. federal income tax purposes;
- a foreign person 50% or more of whose gross income from all sources for the three-year period ending with the close of its taxable year preceding the payment, or for such part of the period that the broker has been in existence, is derived from activities that are effectively connected with the conduct of a U.S. trade or business; or
- effective after 2000, a foreign partnership if, at any time during the taxable year, (A) at least 50% of the capital or profits interest in the partnership is owned by U.S. persons, or (B) the partnership is engaged in a U.S. trade or business.
Non-U.S. holders should consult their own tax advisors regarding the application of the information reporting and backup withholding rules to them, including changes to these rules that will become effective after 2000.
Any amounts withheld under the backup withholding rules from a payment to a non-U.S. holder will be refunded, or credited against the holder's U.S. federal income tax liability, if any, provided that the required information or appropriate claim for refund is furnished to the U.S. Internal Revenue Service.
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UNDERWRITING
We intend to offer the shares in the U.S. and Canada through the U.S. underwriters and elsewhere through the international managers. Merrill Lynch, Pierce, Fenner & Smith Incorporated, CIBC World Markets Corp. and Thomas Weisel Partners LLC are acting as U.S. representatives for each of the U.S. underwriters named below. Subject to the terms and conditions set forth in a U.S. purchase agreement between us and the U.S. underwriters, and currently with the sale of 800,000 shares of common stock to the international managers, we have agreed to sell to the U.S. underwriters, and the U.S. underwriters severally have agreed to purchase from us, the number of shares of common stock set forth opposite their names below.

                                                               NUMBER
U.S. UNDERWRITER                                              OF SHARES
----------------                                              ---------
Merrill Lynch, Pierce, Fenner & Smith
          Incorporated......................................
CIBC World Markets Corp. ...................................
Thomas Weisel Partners LLC..................................
                                                              ---------
          Total.............................................  3,200,000
                                                              =========	

We have also entered into an international purchase agreement with the international managers for whom Merrill Lynch International, CIBC World Markets plc and Thomas Weisel Partners LLC are acting as lead managers for sale of the shares outside the U.S. and Canada. Subject to the terms and conditions set forth in the international purchase agreement, and concurrently with the sale of 3,200,000 shares to the U.S. underwriters pursuant to the U.S. purchase agreement, we have agreed to sell to the international managers, and the international mangers have agreed to purchase from us, an aggregate of 800,000 shares. The initial public offering price per share and the underwriting discount per share are identical under the U.S. purchase agreement and the international purchase agreement.
The U.S. underwriters and the international managers have agreed to purchase all of the shares sold under the U.S. and international purchase agreements if any of these shares are purchased. If an underwriter defaults, the U.S. and international purchase agreements provide that the purchase commitments of the nondefaulting underwriters may be increased or the purchase agreements may be terminated. The closings for the sale of shares to be purchased by the U.S. underwriters and the international managers are conditioned upon one another.
We have agreed to indemnify the U.S. underwriters and the international managers against certain liabilities, including liabilities under the Securities Act, or to contribute to payments the U.S. underwriters and international managers may be required to make in respect of those liabilities.
The underwriters are offering the shares, subject to prior sale, when, as and if issued to and accepted by them, subject to approval of legal matters by their counsel, including the validity of the shares, and other conditions contained in the purchase agreements, such as the receipt by the underwriters of officer's certificates and legal opinions. The underwriters reserve the right to withdraw, cancel or modify offers to the public and to reject orders in whole or in part.
Thomas Weisel Partners LLC, one of the representatives of the underwriters, was organized and registered as a broker-dealer in December 1998. Since December 1998, Thomas Weisel Partners has been named as a lead or co-manager on 146 completed transactions and has acted as a syndicate member in an additional 128 public offerings of equity securities. Thomas Weisel Partners does not have any material relationship with us or any of our officers, directors or other controlling persons, except with respect to its contractual relationship with us under the U.S. purchase agreement entered into in connection with this offering.
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COMMISSIONS AND DISCOUNTS
The U.S. representatives have advised us that the U.S. underwriters propose initially to offer the shares to the public at the initial public offering price set forth on the cover page of this prospectus and to certain dealers at that price less a concession not in excess of $ per share of common stock. The U.S. underwriters may allow, and such dealers may reallow, a discount not in excess of $ per share of common stock on sales to certain other dealers. After the initial public offering, the public offering price, concession and discount may be changed.
The following table shows the public offering price, underwriting discount and proceeds before expenses to EXACT. The information assumes either no exercise or full exercise by the U.S. underwriters and the international managers of their over-allotment options.

                                                   PER SHARE   WITHOUT OPTION   WITH OPTION
                                                   ---------   --------------   -----------
Public offering price............................     $             $               $
Underwriting discount............................     $             $               $
Proceeds, before expenses, to EXACT..............     $             $               $	

The expenses of the offering, not including the underwriting discount, are estimated at $ and are payable by us.
OVER-ALLOTMENT OPTION
We have granted an option to the U.S. underwriters to purchase up to 480,000 additional shares at the public offering price less the underwriting discount. The U.S. underwriters may exercise this option for 30 days from the date of this prospectus solely to cover any over-allotments. If the U.S. underwriters exercise this option, each will be obligated, subject to conditions contained in the purchase agreements, to purchase a number of additional shares proportionate to such U.S. underwriter's initial amount reflected in the table above.
We have also granted an option to the international managers, exercisable for 30 days from the date of this prospectus, to purchase up to an aggregate of 120,000 additional shares to cover any over-allotments on terms similar to those granted to the U.S. underwriters.
INTERSYNDICATE AGREEMENT
The U.S. underwriters and the international managers have entered into an intersyndicate agreement that provides for the coordination of their activities. Under the intersyndicate agreement, the U.S. underwriters and the international managers may sell shares to each other for purposes of resale at the initial public offering price, less an amount not greater than the selling concession. Under the intersyndicate agreement, the U.S. underwriters and any dealer to whom they sell shares will not offer to sell or sell shares to persons who are non-U.S. or non-Canadian persons or to persons they believe intend to resell to persons who are non-U.S. or non-Canadian persons, except in the case of transactions under the intersyndicate agreement. Similarly, the international managers and any dealer to whom they sell shares will not offer to sell or sell shares to U.S. or Canadian persons or to persons they believe intend to resell to U.S. or Canadian persons, except in the case of transactions under the intersyndicate agreement.
RESERVED SHARES
At our request, the U.S. underwriters have reserved for sale, at the initial public offering price, up to 200,000 shares offered by this prospectus for sale to some of our directors, officers, employees and business associates. If these persons purchase reserved shares, this will reduce the number of shares available for sale to the general public. Any reserved shares that are not orally confirmed for purchase within one day of the pricing of this offering will be offered by the underwriters to the general public on the same terms as the other shares offered by this prospectus.
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NO SALES OF SIMILAR SECURITIES
We and our executive officers and directors and most of our existing stockholders have agreed, with limited exceptions, not to sell or transfer any common stock for 180 days after the date of this prospectus without first obtaining the written consent of Merrill Lynch. Specifically, we and the above- named individuals have agreed not to directly or indirectly
- offer, pledge, sell or contract to sell any common stock;
- sell any option or contract to purchase any common stock;
- purchase any option or contract to sell any common stock;
- grant any option, right or warrant for the sale of any common stock;
- lend or otherwise dispose of or transfer any common stock;
- request or demand that we file a registration statement related to the common stock; or
- enter into any swap or other agreement that transfers, in whole or in part, the economic consequence of ownership of any common stock whether any such swap or transaction is to be settled by delivery of shares or other securities, in cash or otherwise.
This lock-up provision applies to common stock and to securities convertible into or exchangeable or exercisable for or repayable with common stock. It also applies to common stock owned now and, with respect to our executive officers, directors and their affiliates, to common stock acquired later by the person executing the agreement or for which the person executing the agreement later acquires the power of disposition.
QUOTATION ON THE NASDAQ NATIONAL MARKET
We expect the shares to be approved for quotation on the Nasdaq National Market, subject to notice of issuance, under the symbol EXAS.
Before this offering, there has been no public market for our common stock. The initial public offering price will be determined through negotiations among us, the U.S. representatives and lead managers. In addition to prevailing market conditions, the primary factors to be considered in determining the initial public offering price are
- the valuation multiples of publicly traded companies that the U.S. representatives and the lead managers believe to be comparable to us;
- our financial information;
- the history of, and the prospects for, our company and the industry in which we compete;
- an assessment of our management, its past and present operations, and the prospects for, and timing of, our future revenues;
- the present state of our development; and
- the above factors in relation to market values and various valuation measures of other companies engaged in activities similar to ours.
An active trading market for the shares may not develop. It is also possible that after the offering the shares will not trade in the public market at or above the initial public offering price.
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The underwriters do not expect to sell more than 5% of the shares in the aggregate to accounts over which they exercise discretionary authority.
PRICE STABILIZATION, SHORT POSITIONS AND PENALTY BIDS
Until the distribution of the common stock is completed, SEC rules may limit the underwriters from bidding for or purchasing our common stock. However, the representatives may engage in transactions that stabilize the price of the common shares, such as bids or purchases that peg, fix or maintain that price.
The underwriters may purchase and sell the common shares in the open market. These transactions may include short sales, stabilizing transactions and purchases to cover positions created by short sales. Short sales involve the sale by the underwriters of a greater number of shares than they are required to purchase in the offering. "Covered" short sale are sales made in an amount not greater than the underwriters' option to purchase additional shares from the issuer in the offering. The underwriters may close out any covered short position by either exercising their option to purchase additional shares or purchasing shares in the open market. In determining the source of shares to close out the covered short position, the underwriters will consider, among other things, the price of shares available for purchase in the open market as compared to the price at which they may purchase shares through the over-allotment option. "Naked" short sales are any sales in excess of such option. The underwriters must close out any naked short position by purchasing shares in the open market. A naked short position is more likely to be created if the underwriters are concerned that there may be downward pressure on the price of the common shares in the open market after pricing that could adversely affect investors who purchase in the offering. Stabilizing transactions consist of various bids for or purchases of common shares made by the underwriters in the open market prior to the completion of the offering.
The underwriters may also impose a penalty bid. This occurs when a particular underwriter repays to the underwriters a portion of the underwriting discount received by it because the representatives have repurchased shares sold by or for the account of such underwriter in stabilizing or short covering transactions.
Similar to other purchase transactions, the underwriters' purchases to cover the syndicate short sales may have the effect of raising or maintaining the market price of the common shares or preventing or retarding a decline in the market price of the common shares. As a result, the price of the common shares may be higher than the price that might otherwise exist in the open market.
Neither we nor any of the underwriters make any representation or prediction as to the direction or magnitude of any effect that the transactions described above may have on the price of the common shares. In addition, neither we nor any of the representatives make any representation that the representatives will engage in these transactions or that these transactions, once commenced, will not be discontinued without notice.
ELECTRONIC PROSPECTUS
Merrill Lynch will be facilitating Internet distribution for this offering to certain of its Internet subscription customers. Merrill Lynch intends to allocate a limited number of shares for sale to its online brokerage customers. An electronic prospectus is available on the Internet Web site maintained by Merrill Lynch. Other than the prospectus in electronic format, the information on the Merrill Lynch Web site is not intended to be part of this prospectus.
LEGAL MATTERS
The validity of the common stock offered hereby will be passed upon for Exact by Testa, Hurwitz & Thibeault, LLP, Boston, Massachusetts. As of the date of this prospectus, Testa, Hurwitz & Thibeault, LLP beneficially owns 4,444 shares of our common stock under the name High Street
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Investors 2000. Edmund R. Pitcher, a partner at Testa, Hurwitz & Thibeault, LLP beneficially owns 6,459 shares of our common stock, and Thomas C. Meyers, also a partner at Testa, Hurwitz & Thibeault, LLP beneficially owns 1,000 shares of our common stock. Legal matters in connection with this offering will be passed upon for the underwriters by Shearman & Sterling, New York, New York.
EXPERTS
The financial statements included in this prospectus and elsewhere in the Registration Statement, to the extent and for the periods indicated in their reports, have been audited by Arthur Andersen LLP, independent public accountants, as indicated in their reports with respect thereto, and are included herein in reliance upon the authority of said firm as experts in giving said reports.
WHERE YOU CAN FIND ADDITIONAL INFORMATION
We have filed with the SEC a registration statement on Form S-1 under the Securities Act with respect to the common stock. This prospectus does not contain all of the information contained in the registration statement, and the exhibits and schedules to the registration statement. For further information with respect to us and our common stock, we refer you to the registration statement, and the exhibits and schedules filed as part of the registration statement. Statements in this prospectus concerning the contents of any contract or any other document are not necessarily complete. If a contract or document has been filed as an exhibit to the registration statement, we refer you to that exhibit. Each statement in this prospectus relating to a contract or document filed as an exhibit to the registration statement is qualified by the filed exhibits.
In addition, we file reports, proxy statements and other information with the SEC. You may read and copy any document we file, including the registration statement, at the SEC's public reference rooms in New York, New York. Please call the SEC at 1-800-SEC-0330 for further information on the public reference rooms. Our SEC filings are also available to the public on the SEC's website at http://www.sec.gov.
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EXACT CORPORATION
INDEX TO FINANCIAL STATEMENTS

                                                                PAGE
                                                              --------
Report of Independent Public Accountants....................    F-2
Balance Sheets..............................................    F-3
Statements of Operations....................................    F-5
Statements of Stockholders' Equity..........................    F-6
Statements of Cash Flows....................................    F-8
Notes to Financial Statements...............................    F-9	

F-1

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To EXACT Sciences Corporation:
We have audited the accompanying balance sheets of EXACT Sciences Corporation (a Delaware corporation in the development stage) as of December 31, 1998 and 1999 and the related statements of operations, stockholders' equity and cash flows for each of the three years in the period ended December 31, 1999. These financial statements are the responsibility of management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of EXACT Sciences Corporation as of December 31, 1998 and 1999 and the results of its operations and its cash flows for each of the three years in the period ended December 31, 1999 in conformity with accounting principles generally accepted in the United States.

/s/ Arthur Andersen LLP
Boston, Massachusetts
March 14, 2000	

F-2

EXACT SCIENCES CORPORATION
 (A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS

                                                                    DECEMBER 31,            SEPTEMBER 30, 2000
                                                              ------------------------   -------------------------
                                                                 1998         1999         ACTUAL       PRO FORMA
ASSETS                                                        ----------   -----------   -----------   -----------
                                                                                                (UNAUDITED)
Current Assets:
  Cash and cash equivalents.................................  $8,825,738   $ 3,553,257   $30,227,893   $30,227,893
  Prepaid expenses..........................................       5,270        26,843       185,438       185,438
                                                              ----------   -----------   -----------   -----------
    Total current assets....................................   8,831,008     3,580,100    30,413,331    30,413,331
Property and Equipment, at cost:
  Laboratory equipment......................................     402,954       594,385       816,434       816,434
  Office and computer equipment.............................     219,902       255,161       329,048       329,048
  Leasehold improvements....................................      90,955       125,688       158,404       158,404
  Furniture and fixtures....................................      83,858       114,618       176,688       176,688
                                                              ----------   -----------   -----------   -----------
                                                                 797,669     1,089,852     1,480,574     1,480,574
  Less--Accumulated depreciation and amortization...........    (321,835)     (663,397)     (887,827)     (887,827)
                                                              ----------   -----------   -----------   -----------
                                                                 475,834       426,455       592,747       592,747
Patent costs, net of accumulated amortization of
  approximately $43,000, $126,000 and $195,000 at December
  31, 1998, 1999 and September 30, 2000, respectively (Note
  2)........................................................     394,700       609,991       778,105       778,105
Other assets................................................       5,986       137,357       155,986       155,986
                                                              ----------   -----------   -----------   -----------

                                                              $9,707,528   $ 4,753,903   $31,940,169   $31,940,169
                                                              ==========   ===========   ===========   ===========	

F-3

EXACT SCIENCES CORPORATION
 (A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS

                                                                    DECEMBER 31,            SEPTEMBER 30, 2000
                                                              ------------------------   -------------------------
                                                                 1998         1999         ACTUAL       PRO FORMA
LIABILITIES AND STOCKHOLDERS' EQUITY                          ----------   -----------   -----------   -----------
                                                                                                (UNAUDITED)

Current Liabilities:
  Capital lease obligations.................................  $    5,005   $        --   $        --   $        --
  Accounts payable..........................................     180,565       196,895       492,455       492,455
  Accrued expenses..........................................     223,487       146,993       409,509       409,509
                                                              ----------   -----------   -----------   -----------
    Total current liabilities...............................     409,057       343,888       901,964       901,964
                                                              ----------   -----------   -----------   -----------
Commitments (Note 7)
Stockholders' Equity:
Series A convertible preferred stock,
  $0.01 par value--Authorized--1,000,000 shares
  Issued and outstanding--902,414 shares actual (liquidation
    preference of $1,046,800), none pro forma...............       9,024         9,024         9,024            --
Series B convertible preferred stock,
  $0.01 par value--Authorized--1,250,000 shares
  Issued and outstanding--996,196 shares actual (liquidation
    preference of $3,934,974), none pro forma...............       9,962         9,962         9,962            --
Series C convertible preferred stock,
  $0.01 par value--Authorized--1,015,000 shares
  Issued and outstanding--1,007,186 shares (liquidation
    preference of $10,575,453), none pro forma..............      10,072        10,072        10,072            --
Series D convertible preferred stock,
  $0.01 par value--Authorized--1,435,373 shares
  Issued and outstanding--1,417,534 shares actual at
    September 30, 2000 (liquidation preference of
    $31,894,515), none pro forma............................          --            --        14,175            --
Common stock, $0.01 par value-
  Authorized--100,000,000 shares
  Issued--1,445,232, 1,582,848 and 2,618,622 shares at
    December 31, 1998 and 1999 and September 30, 2000,
    respectively, 14,507,778 shares pro forma...............      14,452        15,828        26,186       145,078
Treasury stock, 8,250 shares of common stock at
  December 31, 1998, at cost................................      (1,200)           --            --            --
Subscriptions receivable....................................     (43,778)      (39,706)     (588,985)     (588,985)
Deferred compensation.......................................     (15,991)      (54,482)   (6,621,459)   (6,621,459)
Additional paid-in capital..................................  15,567,566    15,674,878    56,606,734    56,531,075
Deficit accumulated during the development stage............  (6,251,636)  (11,215,561)  (18,427,504)  (18,427,504)
                                                              ----------   -----------   -----------   -----------
    Total stockholders' equity..............................   9,298,471     4,410,015    31,038,205    31,038,205
                                                              ----------   -----------   -----------   -----------
                                                              $9,707,528   $ 4,753,903   $31,940,169   $31,940,169
                                                              ==========   ===========   ===========   ===========	

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
F-4

EXACT SCIENCES CORPORATION
 (A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS

                                                                                                 PERIOD FROM
                                                                                                  INCEPTION
                                                                        NINE MONTHS ENDED       (FEBRUARY 10,
                                  YEAR ENDED DECEMBER 31,                 SEPTEMBER 30,            1995) TO
                          ---------------------------------------   -------------------------   SEPTEMBER 30,
                             1997          1998          1999          1999          2000            2000
                          -----------   -----------   -----------   -----------   -----------   --------------
                                                                           (UNAUDITED)           (UNAUDITED)
Operating Expenses:
  Research and
    development.........  $ 1,221,504   $ 2,848,763   $ 3,688,796   $ 2,738,085   $ 3,815,063    $ 11,939,930
  General and
    administrative......      814,407     1,170,366     1,560,368     1,124,715     2,441,616       6,442,593
  Stock-based
    compensation(1).....          845         1,902        13,780        13,780     1,947,251       1,963,778
                          -----------   -----------   -----------   -----------   -----------    ------------
    Loss from
      operations........   (2,036,756)   (4,021,031)   (5,262,944)   (3,876,580)   (8,203,930)    (20,346,301)
Interest Income.........      153,683       442,651       299,019       247,744       991,987       1,918,797
                          -----------   -----------   -----------   -----------   -----------    ------------
    Net loss............  $(1,883,073)  $(3,578,380)  $(4,963,925)  $(3,628,836)  $(7,211,943)   $(18,427,504)
                          ===========   ===========   ===========   ===========   ===========    ============
Net Loss per Share:
  Basic and diluted.....  $    (10.70)  $     (6.08)  $     (5.32)  $     (4.34)  $     (5.83)
                          ===========   ===========   ===========   ===========   ===========
  Pro forma basic and
    diluted
    (unaudited).........                              $     (0.56)                $     (0.61)
                                                      ===========                 ===========
Weighted Average Common
  Shares Outstanding:
  Basic and diluted.....      175,953       588,143       932,593       836,728     1,237,267
                          ===========   ===========   ===========   ===========   ===========
  Pro forma basic and
    diluted
    (unaudited).........                                8,923,532                  11,741,343
                                                      ===========                 ===========

(1) The following summarizes the departmental allocation of stock-based compensation:
   Research and
     development........  $       583   $     1,427   $     8,819   $     8,819   $   217,323    $    228,152
   General and
     administrative.....          262           475         4,961         4,961     1,729,928       1,735,626
                          -----------   -----------   -----------   -----------   -----------    ------------
     Total..............  $       845   $     1,902   $    13,780   $    13,780   $ 1,947,251    $  1,963,778
                          ===========   ===========   ===========   ===========   ===========    ============	

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
F-5

EXACT SCIENCES CORPORATION
 (A DEVELOPMENT STAGE COMPANY)

STATEMENTS OF STOCKHOLDERS' EQUITY

                                  SERIES A CONVERTIBLE     SERIES B CONVERTIBLE     SERIES C CONVERTIBLE     SERIES D CONVERTIBLE
                                    PREFERRED STOCK          PREFERRED STOCK          PREFERRED STOCK          PREFERRED STOCK
                                 ----------------------   ----------------------   ----------------------   ----------------------
                                 NUMBER OF    $0.01 PAR   NUMBER OF    $0.01 PAR   NUMBER OF    $0.01 PAR   NUMBER OF    $0.01 PAR
                                   SHARES       VALUE       SHARES       VALUE       SHARES       VALUE       SHARES       VALUE
                                 ----------   ---------   ----------   ---------   ----------   ---------   ----------   ---------
Inception, February 10, 1995...         --     $   --            --     $   --            --     $    --           --     $    --
  Sale of Series A convertible
    preferred stock, net of
    issuance costs of $6,665...    159,308      1,593            --         --            --          --           --          --
  Sale of common stock.........         --         --            --         --            --          --           --          --
  Net loss.....................         --         --            --         --            --          --           --          --
                                  --------     ------      --------     ------     ----------    -------    ----------    -------
Balance, December 31, 1995.....    159,308      1,593            --         --            --          --           --          --
  Sale of Series A convertible
    preferred stock, net of
    issuance costs of
    $12,321....................    743,106      7,431            --         --            --          --           --          --
  Sale of Series B convertible
    preferred stock, net of
    issuance costs of
    $36,892....................         --         --       964,551      9,646            --          --           --          --
  Sale of common stock.........         --         --            --         --            --          --           --          --
  Net loss.....................         --         --            --         --            --          --           --          --
                                  --------     ------      --------     ------     ----------    -------    ----------    -------
Balance, December 31, 1996.....    902,414      9,024       964,551      9,646            --          --           --          --
  Sale of Series B convertible
    preferred stock, net of
    issuance costs of $4,138...         --         --        31,645        316            --          --           --          --
  Sale of common stock.........         --         --            --         --            --          --           --          --
  Exercise of common stock
    options....................         --         --            --         --            --          --           --          --
  Compensation expense related
    to issuance of stock
    options....................         --         --            --         --            --          --           --          --
  Repayment of subscription
    receivable.................         --         --            --         --            --          --           --          --
  Net loss.....................         --         --            --         --            --          --           --          --
                                  --------     ------      --------     ------     ----------    -------    ----------    -------
Balance, December 31, 1997.....    902,414      9,024       996,196      9,962            --          --           --          --
  Sale of Series C convertible
    preferred stock, net of
    issuance costs of
    $37,414....................         --         --            --         --     1,007,186      10,072           --          --
  Sale of common stock.........         --         --            --         --            --          --           --          --
  Exercise of common stock
    options....................         --         --            --         --            --          --           --          --
  Repayment of subscription
    receivable.................         --         --            --         --            --          --           --          --
  Compensation expense related
    to issuance of stock
    options....................         --         --            --         --            --          --           --          --
  Repurchase of common stock...         --         --            --         --            --          --           --          --
  Net loss.....................         --         --            --         --            --          --           --          --
                                  --------     ------      --------     ------     ----------    -------    ----------    -------

                                      COMMON STOCK           TREASURY STOCK
                                 ----------------------   ---------------------                                  ADDITIONAL
                                 NUMBER OF    $0.01 PAR   NUMBER OF               SUBSCRIPTION     DEFERRED        PAID-IN
                                   SHARES       VALUE       SHARES     AT COST     RECEIVABLE    COMPENSATION      CAPITAL
                                 ----------   ---------   ----------   --------   ------------   -------------   -----------
Inception, February 10, 1995...         --     $    --          --      $   --     $      --      $        --    $        --
  Sale of Series A convertible
    preferred stock, net of
    issuance costs of $6,665...         --          --          --          --            --               --        176,574
  Sale of common stock.........     96,250         963          --          --            --               --           (613)
  Net loss.....................         --          --          --          --            --               --             --
                                 ---------     -------     -------      ------     ---------      -----------    -----------
Balance, December 31, 1995.....     96,250         963          --          --            --               --        175,961
  Sale of Series A convertible
    preferred stock, net of
    issuance costs of
    $12,321....................         --          --          --          --       (25,000)              --        842,617
  Sale of Series B convertible
    preferred stock, net of
    issuance costs of
    $36,892....................         --          --          --          --            --               --      3,763,444
  Sale of common stock.........    550,000       5,500          --          --            --               --         18,500
  Net loss.....................         --          --          --          --            --               --             --
                                 ---------     -------     -------      ------     ---------      -----------    -----------
Balance, December 31, 1996.....    646,250       6,463          --          --       (25,000)              --      4,800,522
  Sale of Series B convertible
    preferred stock, net of
    issuance costs of $4,138...         --          --          --          --            --               --        120,500
  Sale of common stock.........    203,607       2,036          --          --            --               --         27,580
  Exercise of common stock
    options....................     23,375         233          --          --            --               --            787
  Compensation expense related
    to issuance of stock
    options....................         --          --          --          --            --           (9,310)        10,155
  Repayment of subscription
    receivable.................         --          --          --          --        25,000               --             --
  Net loss.....................         --          --          --          --            --               --             --
                                 ---------     -------     -------      ------     ---------      -----------    -----------
Balance, December 31, 1997.....    873,232       8,732          --          --            --           (9,310)     4,959,544
  Sale of Series C convertible
    preferred stock, net of
    issuance costs of
    $37,414....................         --          --          --          --            --               --     10,527,979
  Sale of common stock.........     55,000         550          --          --            --               --          7,450
  Exercise of common stock
    options....................    517,000       5,170          --          --       (47,580)              --         64,010
  Repayment of subscription
    receivable.................         --          --          --          --         3,802               --             --
  Compensation expense related
    to issuance of stock
    options....................         --          --          --          --            --           (6,681)         8,583
  Repurchase of common stock...         --          --       8,250      (1,200)           --               --             --
  Net loss.....................         --          --          --          --            --               --             --
                                 ---------     -------     -------      ------     ---------      -----------    -----------

                                   DEFICIT
                                 ACCUMULATED
                                  DURING THE        TOTAL
                                 DEVELOPMENT    STOCKHOLDERS'
                                    STAGE          EQUITY
                                 ------------   -------------
Inception, February 10, 1995...  $        --     $        --
  Sale of Series A convertible
    preferred stock, net of
    issuance costs of $6,665...           --         178,167
  Sale of common stock.........           --             350
  Net loss.....................     (138,163)       (138,163)
                                 ------------    -----------
Balance, December 31, 1995.....     (138,163)         40,354
  Sale of Series A convertible
    preferred stock, net of
    issuance costs of
    $12,321....................           --         825,048
  Sale of Series B convertible
    preferred stock, net of
    issuance costs of
    $36,892....................           --       3,773,090
  Sale of common stock.........           --          24,000
  Net loss.....................     (652,020)       (652,020)
                                 ------------    -----------
Balance, December 31, 1996.....     (790,183)      4,010,472
  Sale of Series B convertible
    preferred stock, net of
    issuance costs of $4,138...           --         120,816
  Sale of common stock.........           --          29,616
  Exercise of common stock
    options....................           --           1,020
  Compensation expense related
    to issuance of stock
    options....................           --             845
  Repayment of subscription
    receivable.................           --          25,000
  Net loss.....................   (1,883,073)     (1,883,073)
                                 ------------    -----------
Balance, December 31, 1997.....   (2,673,256)      2,304,696
  Sale of Series C convertible
    preferred stock, net of
    issuance costs of
    $37,414....................           --      10,538,051
  Sale of common stock.........           --           8,000
  Exercise of common stock
    options....................           --          21,600
  Repayment of subscription
    receivable.................           --           3,802
  Compensation expense related
    to issuance of stock
    options....................           --           1,902
  Repurchase of common stock...           --          (1,200)
  Net loss.....................   (3,578,380)     (3,578,380)
                                 ------------    -----------	

F-6

EXACT SCIENCES CORPORATION
 (A DEVELOPMENT STAGE COMPANY)

STATEMENTS OF STOCKHOLDERS' EQUITY (CONTINUED)

                                 SERIES A CONVERTIBLE     SERIES B CONVERTIBLE     SERIES C CONVERTIBLE     SERIES D CONVERTIBLE
                                   PREFERRED STOCK          PREFERRED STOCK          PREFERRED STOCK          PREFERRED STOCK
                                ----------------------   ----------------------   ----------------------   ----------------------
                                NUMBER OF    $0.01 PAR   NUMBER OF    $0.01 PAR   NUMBER OF    $0.01 PAR   NUMBER OF    $0.01 PAR
                                  SHARES       VALUE       SHARES       VALUE       SHARES       VALUE       SHARES       VALUE
                                ----------   ---------   ----------   ---------   ----------   ---------   ----------   ---------
Balance, December 31, 1998....    902,414      9,024       996,196      9,962     1,007,186      10,072           --          --
  Exercise of common stock
    options...................         --         --            --         --            --          --           --          --
  Repayment of subscription
    receivable................         --         --            --         --            --          --           --          --
  Compensation expense related
    to issuance of stock
    options...................         --         --            --         --            --          --           --          --
  Repurchase of common stock..         --         --            --         --            --          --           --          --
  Retirement of treasury
    stock.....................         --         --            --         --            --          --           --          --
  Net loss....................         --         --            --         --            --          --           --          --
                                 --------     ------      --------     ------     ----------    -------    ----------    -------
Balance, December 31, 1999....    902,414      9,024       996,196      9,962     1,007,186      10,072           --          --
  Sale of Series D convertible
    preferred stock, net of
    issuance costs of
    $171,985..................         --         --            --         --            --          --    1,417,534      14,175
  Sale of common stock........         --         --            --         --            --          --           --          --
  Repurchase of common stock..         --         --            --         --            --          --           --          --
  Retirement of treasury
    stock.....................         --         --            --         --            --          --           --          --
  Exercise of common stock
    options...................         --         --            --         --            --          --           --          --
  Repayment of subscription
    receivable................         --         --            --         --            --          --           --          --
  Compensation expense related
    to issuance of stock
    options...................         --         --            --         --            --          --           --          --
  Net loss....................         --         --            --         --            --          --           --          --
                                 --------     ------      --------     ------     ----------    -------    ----------    -------
Balance, September 30, 2000
  (unaudited).................    902,414      9,024       996,196      9,962     1,007,186      10,072    1,417,534      14,175
  Conversion of convertible
    preferred stock into
    common stock..............   (902,414)    (9,024)     (996,196)    (9,962)    (1,007,186)   (10,072)   (1,417,534)   (14,175)
                                 --------     ------      --------     ------     ----------    -------    ----------    -------
  Pro Forma Balance,
    September 30, 2000
    (unaudited)...............         --     $   --            --     $   --            --     $    --           --     $    --
                                 ========     ======      ========     ======     ==========    =======    ==========    =======

                                     COMMON STOCK           TREASURY STOCK
                                ----------------------   ---------------------                                  ADDITIONAL
                                NUMBER OF    $0.01 PAR   NUMBER OF               SUBSCRIPTION     DEFERRED        PAID-IN
                                  SHARES       VALUE       SHARES     AT COST     RECEIVABLE    COMPENSATION      CAPITAL
                                ----------   ---------   ----------   --------   ------------   -------------   -----------
Balance, December 31, 1998....  1,445,232      14,452       8,250      (1,200)      (43,778)         (15,991)    15,567,566
  Exercise of common stock
    options...................    155,491       1,555          --          --            --               --         57,462
  Repayment of subscription
    receivable................         --          --          --          --         4,072               --             --
  Compensation expense related
    to issuance of stock
    options...................         --          --          --          --            --          (38,491)        52,271
  Repurchase of common stock..         --          --       9,625      (1,400)           --               --             --
  Retirement of treasury
    stock.....................    (17,875)       (179)    (17,875)      2,600            --               --         (2,421)
  Net loss....................         --          --          --          --            --               --             --
                                ----------   --------     -------      ------     ---------      -----------    -----------
Balance, December 31, 1999....  1,582,848      15,828          --          --       (39,706)         (54,482)    15,674,878
  Sale of Series D convertible
    preferred stock, net of
    issuance costs of
    $171,985..................         --          --          --          --            --               --     31,708,355
  Sale of common stock........     48,125         481          --          --            --               --         17,894
  Repurchase of common stock..         --          --      27,844      (5,215)           --               --             --
  Retirement of treasury
    stock.....................    (27,844)       (278)    (27,844)      5,215            --               --         (4,937)
  Exercise of common stock
    options...................  1,015,493      10,155          --          --      (662,080)              --        696,316
  Repayment of subscription
    receivable................         --          --          --          --       112,801               --             --
  Compensation expense related
    to issuance of stock
    options...................         --          --          --          --            --       (6,566,977)     8,514,228
  Net loss....................         --          --          --          --            --               --             --
                                ----------   --------     -------      ------     ---------      -----------    -----------
Balance, September 30, 2000
  (unaudited).................  2,618,622      26,186          --          --      (588,985)      (6,621,459)    56,606,734
  Conversion of convertible
    preferred stock into
    common stock..............  11,889,156    118,892          --          --            --               --        (75,659)
                                ----------   --------     -------      ------     ---------      -----------    -----------
  Pro Forma Balance,
    September 30, 2000
    (unaudited)...............  14,507,778   $145,078          --      $   --     $(588,985)     $(6,621,459)   $56,531,075
                                ==========   ========     =======      ======     =========      ===========    ===========

                                  DEFICIT
                                ACCUMULATED
                                 DURING THE        TOTAL
                                DEVELOPMENT    STOCKHOLDERS'
                                   STAGE          EQUITY
                                ------------   -------------
Balance, December 31, 1998....   (6,251,636)      9,298,471
  Exercise of common stock
    options...................           --          59,017
  Repayment of subscription
    receivable................           --           4,072
  Compensation expense related
    to issuance of stock
    options...................           --          13,780
  Repurchase of common stock..           --          (1,400)
  Retirement of treasury
    stock.....................           --              --
  Net loss....................   (4,963,925)     (4,963,925)
                                ------------    -----------
Balance, December 31, 1999....  (11,215,561)      4,410,015
  Sale of Series D convertible
    preferred stock, net of
    issuance costs of
    $171,985..................           --      31,722,530
  Sale of common stock........           --          18,375
  Repurchase of common stock..           --          (5,215)
  Retirement of treasury
    stock.....................           --              --
  Exercise of common stock
    options...................           --          44,391
  Repayment of subscription
    receivable................           --         112,801
  Compensation expense related
    to issuance of stock
    options...................           --       1,947,251
  Net loss....................   (7,211,943)     (7,211,943)
                                ------------    -----------
Balance, September 30, 2000
  (unaudited).................  (18,427,504)     31,038,205
  Conversion of convertible
    preferred stock into
    common stock..............           --              --
                                ------------    -----------
  Pro Forma Balance,
    September 30, 2000
    (unaudited)...............  $(18,427,504)   $31,038,205
                                ============    ===========	

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
F-7

EXACT SCIENCES CORPORATION
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS

                                                                                                                PERIOD FROM
                                                                                  NINE MONTHS ENDED              INCEPTION
                                            YEAR ENDED DECEMBER 31,                    JUNE 30,            (FEBRUARY 10, 1995) TO
                                    ---------------------------------------   --------------------------       SEPTEMBER 30,
                                       1997          1998          1999          1999           2000                2000
                                    -----------   -----------   -----------   -----------   ------------   ----------------------
                                                                                     (UNAUDITED)                (UNAUDITED)
Cash Flows from Operating
  Activities:
  Net loss........................  $(1,883,073)  $(3,578,380)  $(4,963,925)  $(3,628,836)  $ (7,211,943)       $(18,427,504)
  Adjustments to reconcile net
    loss to net cash used in
    operating activities--
    Depreciation and
      amortization................      114,692       243,832       424,285       300,484        294,267           1,083,229
    Non-cash stock-based
      compensation expense........          845         1,902        13,780        13,780      1,947,251           1,963,778
    Changes in assets and
      liabilities--
      Prepaid expenses............           --        (5,270)      (21,573)      (20,707)      (158,595)           (185,438)
      Cash overdraft..............      (17,293)           --            --            --             --                  --
      Accounts payable............      (41,000)      137,106        16,330       (58,555)       290,345             492,455
      Accrued expenses............       49,972       166,515       (76,494)      (37,817)       262,516             409,509
                                    -----------   -----------   -----------   -----------   ------------        ------------
        Net cash used in operating
          activities..............   (1,775,857)   (3,034,295)   (4,607,597)   (3,431,651)    (4,576,159)        (14,663,971)
                                    -----------   -----------   -----------   -----------   ------------        ------------
Cash Flows from Investing
  Activities:
  Purchases of property and
    equipment.....................     (340,142)     (355,201)     (292,183)     (292,441)      (390,722)         (1,463,623)
  Increase in patent costs and
    other assets..................     (159,059)     (140,312)     (429,385)     (347,312)      (256,580)         (1,129,493)
                                    -----------   -----------   -----------   -----------   ------------        ------------
        Net cash used in investing
          activities..............     (499,201)     (495,513)     (721,568)     (639,753)      (647,302)         (2,593,116)
                                    -----------   -----------   -----------   -----------   ------------        ------------
Cash Flows from Financing
  Activities:
  Payments on capital lease
    obligations...................       (5,437)       (7,709)       (6,405)       (3,353)            --             (27,439)
  Net proceeds from sale of
    convertible preferred stock...      120,816    10,538,051            --            --     31,722,530          47,157,703
  Net proceeds from sale of common
    stock.........................       29,616         8,000            --            --         18,375              80,341
  Proceeds from exercise of common
    stock options.................        1,020        21,600        59,017        38,369         44,391             126,028
  Repayment of stock subscription
    receivable....................       25,000         3,802         4,072         2,672        112,801             148,347
                                    -----------   -----------   -----------   -----------   ------------        ------------
        Net cash provided by
          financing activities....      171,015    10,563,744        56,684        37,688     31,898,097          47,484,980
                                    -----------   -----------   -----------   -----------   ------------        ------------
Net (Decrease) Increase in Cash
  and Cash Equivalents............   (2,104,043)    7,033,936    (5,272,481)   (4,033,716)    26,674,636          30,227,893
Cash and Cash Equivalents,
  beginning of period.............    3,895,845     1,791,802     8,825,738     8,825,738      3,553,257                  --
                                    -----------   -----------   -----------   -----------   ------------        ------------
Cash and Cash Equivalents, end of
  period..........................  $ 1,791,802   $ 8,825,738   $ 3,553,257   $ 4,792,022   $ 30,227,893        $ 30,227,893
                                    ===========   ===========   ===========   ===========   ============        ============
Supplemental Disclosure of Noncash
  Investing and Financing
  Activities:
  Sale of restricted stock through
    issuance of notes
    receivable....................  $        --   $    47,580   $        --   $        --   $    662,079        $    709,659
                                    ===========   ===========   ===========   ===========   ============        ============
  Purchase of Treasury shares
    through forgiveness of note
    receivable....................  $        --   $     1,200   $     1,400   $     1,400   $      5,215        $      7,815
                                    ===========   ===========   ===========   ===========   ============        ============
  Equipment purchased through
    capital lease obligations.....  $    16,951   $        --   $        --   $        --   $         --        $     16,951
                                    ===========   ===========   ===========   ===========   ============        ============	

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
F-8

EXACT SCIENCES CORPORATION
 (A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
(INCLUDING DATA APPLICABLE TO UNAUDITED PERIODS)
(1) ORGANIZATION
EXACT Sciences Corporation (the Company) was incorporated on February 10, 1995. The Company is in the development stage and applies proprietary genomics technologies to the early detection of several types of common cancers. The Company has selected colorectal cancer as the first application of its technology platform.
The Company is devoting substantially all of its efforts toward product research and development, raising capital and marketing products under development. The Company has not generated revenue to date and is subject to a number of risks similar to those of other development-stage companies, including dependence on key individuals, the need for the continued development of commercially usable products and the need to obtain adequate additional financing necessary to fund the development of its products. To date, the Company has raised capital principally through private placements of its preferred stock. The Company believes that proceeds from these financings will be adequate to fund operations through the next fiscal year.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
UNAUDITED INTERIM FINANCIAL STATEMENTS
The financial statements as of September 30, 2000 and for the nine months ended September 30, 1999 and 2000 are unaudited. These unaudited financial statements have been prepared on the same basis as the audited financial statements and in the opinion of management include all adjustments, consisting only of normal recurring adjustments, that are necessary for a fair presentation of the financial position, results of operations and cash flows for the interim periods presented. The results of operations for the interim period ended September 30, 2000 are not necessarily indicative of the results to be expected for the entire fiscal year.
UNAUDITED PRO FORMA PRESENTATION
All outstanding shares of Series A, B, C and D convertible preferred stock will convert into 11,889,157 shares of common stock upon the closing of the Company's proposed initial public offering. The unaudited pro forma consolidated balance sheet as of September 30, 2000 reflects this conversion.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
CASH AND CASH EQUIVALENTS
The Company considers all highly liquid investments with maturities of 90 days or less at the time of acquisition to be cash equivalents. Cash equivalents consist primarily of money market funds at December 31, 1998 and 1999 and at September 30, 2000.
F-9

EXACT SCIENCES CORPORATION
 (A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(INCLUDING DATA APPLICABLE TO UNAUDITED PERIODS)
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) DEPRECIATION AND AMORTIZATION
Depreciation and amortization are computed using the straight-line method based on the estimated useful lives of the related assets, as follows:

                                                                ESTIMATED
ASSET CLASSIFICATION                                           USEFUL LIFE
--------------------                                          -------------
Laboratory equipment........................................        3 years
Office and computer equipment...............................        3 years
Leasehold improvements......................................  Life of lease
Furniture and fixtures......................................        3 years	

NET LOSS PER SHARE
Basic and diluted net loss per share is presented in conformity with Statement of Financial Accounting Standards (SFAS) No. 128, EARNINGS PER SHARE, for all periods presented. In accordance with SFAS No. 128, basic and diluted net loss per common share was determined by dividing net loss applicable to common stockholders by the weighted average common shares outstanding during the period, less shares subject to repurchase. Basic and diluted net loss per share are the same because all outstanding common stock equivalents have been excluded as they are antidilutive. All shares issuable upon conversion of outstanding preferred stock and options to purchase a total of 558,250, 1,150,080, 1,097,830, 1,163,143 and 1,409,070 common shares and 540,967, 800,568, 555,900, 638,301 and 1,066,532 unvested restricted shares have therefore been excluded from the computations of diluted weighted average shares outstanding for the years ended December 31, 1997, 1998 and 1999 and for the nine months ended September 30, 1999 and 2000, respectively.
In accordance with the Securities Exchange Commission (SEC) Staff Accounting Bulletin (SAB) No. 98, EARNINGS PER SHARE IN AN INITIAL PUBLIC OFFERING, the Company has determined that there were no nominal issuances of the Company's common stock prior to the Company's initial public offering.
The Company's historical capital structure is not indicative of its capital structure after the proposed initial public offering due to the automatic conversion of all shares of preferred stock into common stock concurrent with the closing of the Company's proposed initial public offering. Accordingly, pro forma net loss per share is presented for the year ended December 31, 1999 and the nine months ended September 30, 2000 assuming the conversion of all outstanding shares of preferred stock into common stock upon the closing of the Company's initial public offering using the if-converted method from the respective dates of issuance.
F-10

EXACT SCIENCES CORPORATION
 (A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(INCLUDING DATA APPLICABLE TO UNAUDITED PERIODS)
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) The following table reconciles the weighted average common shares outstanding to the shares used in the computation of pro forma basic and diluted net loss per share:

                                                  YEAR ENDED    NINE MONTHS ENDED
                                                 DECEMBER 31,     SEPTEMBER 30,
                                                     1999             2000
                                                 ------------   -----------------
Net loss.......................................  $(4,963,925)      $(7,211,943)
                                                 -----------       -----------
Weighted average shares outstanding............      932,593         1,237,267
Conversion of preferred stock to common
  stock........................................    7,990,939        10,504,076
                                                 -----------       -----------
    Pro forma weighted average shares
      outstanding..............................    8,923,532        11,741,343
                                                 ===========       ===========
Pro forma basic and diluted net loss per
  share........................................  $     (0.56)      $     (0.61)
                                                 ===========       ===========	

PATENT COSTS AND OTHER ASSETS
Patent costs, which consist primarily of related legal fees, are capitalized as incurred and are amortized beginning when patents are approved over an estimated useful life of five years. Other assets consist principally of deposits.
The Company applies SFAS No. 121, ACCOUNTING FOR THE IMPAIRMENT OF LONG-LIVED ASSETS AND FOR LONG-LIVED ASSETS TO BE DISPOSED OF. SFAS No. 121 requires the Company to continually evaluate whether events or circumstances have occurred that indicate that the estimated remaining useful life of long-lived assets and certain identifiable intangibles and goodwill may warrant revision or that the carrying value of these assets may be impaired. To compute whether assets have been impaired, the estimated gross cash flows for the estimated remaining useful life of the assets are compared to the carrying value. To the extent that the gross cash flows are less than the carrying value, the assets are written down to the estimated fair value of the asset. The Company does not believe that its long-lived assets have been impaired.
RESEARCH AND DEVELOPMENT EXPENSES
The Company charges research and development expenses to operations as incurred.
COMPREHENSIVE INCOME
In June 1997, the Financial Accounting Standards Board (FASB) issued SFAS No. 130, REPORTING COMPREHENSIVE INCOME. SFAS No. 130 requires disclosure of all components of comprehensive income on an annual and interim basis. Comprehensive income is defined as the change in equity of a business enterprise during a period from transactions and other events and circumstances from nonowner sources. Comprehensive net loss is the same as reported net loss for all periods presented.
STOCK SPLIT
The Company effected a 2.75-for-1 common stock split on December 1, 2000. All common share and per share amounts in the accompanying financial statement have been retroactively adjusted to reflect this stock split.
F-11

EXACT SCIENCES CORPORATION
 (A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(INCLUDING DATA APPLICABLE TO UNAUDITED PERIODS)
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) FAIR VALUE OF FINANCIAL INSTRUMENTS
SFAS No. 107, DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS, requires disclosures about fair value of financial instruments. Financial instruments consist of cash equivalents, accounts payable and capital lease obligations. The estimated fair value of these financial instruments approximates their carrying value.
CONCENTRATION OF CREDIT RISK
SFAS No. 105, DISCLOSURE OF INFORMATION ABOUT FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK AND FINANCIAL INSTRUMENTS WITH CONCENTRATIONS OF CREDIT RISK, requires disclosure of any significant off-balance-sheet and credit risk concentration. The Company has no significant concentrations of credit risk, such as foreign exchange contracts or other hedging arrangements. Financial instruments that subject the Company to credit risk consist of cash and cash equivalents.
SEGMENT INFORMATION
The Company has adopted SFAS No. 131, DISCLOSURES ABOUT SEGMENTS OF AN ENTERPRISE AND RELATED INFORMATION, which requires companies to report selected information about operating segments, as well as enterprise-wide disclosures about products, services, geographic areas and major customers. Operating segments are determined based on the way management organizes its business for making operating decisions and assessing performance. The Company's chief decision-maker, as defined under SFAS No. 131, is a combination of the chairman, vice president and chief financial officer and president. The Company has determined that it conducts its operations in one business segment. The Company conducts its business primarily in the United States.
As a result, the financial information disclosed herein represents all of the material financial information related to the Company's principal operating segment.
RECENT ACCOUNTING PRONOUNCEMENTS
In June 1999, the FASB issued SFAS No. 137, ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES--DEFERRAL OF THE EFFECTIVE DATE OF FASB STATEMENT NO. 133, which defers the effective date of SFAS No. 133 to all fiscal quarters of all fiscal years beginning after June 15, 2000. SFAS No. 133, ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES, issued in June 1998, establishes accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts, and hedging activities. It requires an entity to recognize all derivatives as either assets or liabilities in the statement of financial position and measure those instruments at fair value. The Company does not expect adoption of this statement to have any impact on its financial position or results of operations.
In December 1999, the SEC issued SAB No. 101, REVENUE RECOGNITION. This bulletin establishes guidelines for revenue recognition and is effective for all fiscal years beginning after December 15, 1999. The Company does not expect that the adoption of this guidance will have a material impact on its financial condition or results of operations.
F-12

EXACT SCIENCES CORPORATION
 (A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(INCLUDING DATA APPLICABLE TO UNAUDITED PERIODS)
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
In March 2000, the FASB issued Interpretation No. 44, ACCOUNTING FOR CERTAIN TRANSACTIONS INVOLVING STOCK COMPENSATION--AND INTERPRETATION OF APB OPINION NO. 25. The interpretation clarifies the application of APB Opinion No. 25 to accounting for stock issued to employees. The interpretation is effective July 1, 2000, but covers events occurring during the period between December 15, 1998 and July 1, 2000. If events covered by the interpretation occur during this period, the effects of applying the interpretation to the events would be recognized on a prospective basis from July 1, 2000. As a result, the interpretation will not require that any adjustments be made to our consolidated financial statements for periods before July 1, 2000 and no expense would be recognized for any additional compensation cost measured that is attributable to periods before July 1, 2000. We believe the adoption of this interpretation will not have a significant impact on our financial position, results of operations or cash flows.
(3) INCOME TAXES
The Company accounts for income taxes under SFAS No. 109, ACCOUNTING FOR INCOME TAXES. Under SFAS No. 109, deferred tax assets or liabilities are computed based on the differences between the financial statement and income tax bases of assets and liabilities using the enacted tax rates. Deferred income tax expense or credits are based on changes in the asset or liability from period to period. At December 31, 1999, the Company had net operating loss and research tax credit carryforwards of approximately $10,654,000 and $389,000, respectively, for financial reporting purposes, which may be used to offset future taxable income.
The components of the net deferred tax asset with the approximate income tax effect of each type of carryforward, credit and temporary difference are as follows:

                                                            DECEMBER 31,
                                                       -----------------------
                                                          1998         1999
                                                       ----------   ----------
Operating loss carryforwards.........................  $2,325,000   $4,262,000
Tax credit carryforwards.............................     206,000      389,000
Temporary differences................................    (270,000)    (127,000)
                                                       ----------   ----------
                                                        2,261,000    4,524,000
Less--Valuation allowance............................   2,261,000    4,524,000
                                                       ----------   ----------
Net deferred tax asset...............................  $       --   $       --
                                                       ==========   ==========	

The Company has recorded a full valuation allowance against its deferred tax assets because, based on the weight of available evidence, the Company believes it is more likely than not that the deferred tax assets will not be realized in the near future. The carryforwards expire from 2010 to 2019 and are subject to review and possible adjustment by the Internal Revenue Service. The Internal Revenue Code contains provisions that may limit the net operating loss and research tax credit carryforwards in the event of certain changes in the ownership interests of significant stockholders.
F-13

EXACT SCIENCES CORPORATION
 (A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(INCLUDING DATA APPLICABLE TO UNAUDITED PERIODS)
(4) SUBSCRIPTIONS RECEIVABLE
In February 1998, the Company issued full recourse notes receivable to several employees totaling $47,580 for the exercise of stock options. The notes bear interest at 8.5% with principal and interest payments due monthly over a five-year period.
In March 2000, the Company issued full recourse notes receivable to several employees totaling $262,080 for the exercise of stock options. The notes bear interest at 9.0% with interest payments due monthly over a five-year period and are collateralized by the underlying stock. Notes representing an aggregate principal amount of $69,680 are payable monthly. Notes representing an aggregate principal amount of $192,400 are payable in March 2005. In June 2000, the Company issued full recourse notes receivable to an executive totaling $299,999 to purchase restricted stock. The note bears interest at 9.5% with interest and principal due on June 23, 2010.
(5) RELATED PARTY TRANSACTION
In February 1998, the Company entered into a letter agreement with one of its shareholders. The Company paid approximately $143,000 and $114,000 in connection with a clinical study during the years ended December 31, 1998 and 1999, respectively, which represents the total amount to be paid under the agreement. Such amounts have been charged to research and development expenses as incurred.
(6) STOCKHOLDERS' EQUITY
CONVERTIBLE PREFERRED STOCK
The Company has authorized 4,700,373 shares of $0.01 par value convertible preferred stock, of which 1,000,000 are designated as Series A convertible preferred stock (Series A preferred), 1,250,000 are designated as Series B convertible preferred stock (Series B preferred), 1,015,000 are designated as Series C convertible preferred stock (Series C preferred) and 1,435,373 are designated as Series D convertible preferred stock (Series D preferred).
In February 1995 and May through November 1996 the Company issued 159,308 and 743,106 shares, respectively, of Series A preferred for $1.16 per share. In December 1996 and February 1997, the Company issued 964,551 and 31,645 shares, respectively, of Series B preferred for $3.95 per share. In March 1998, the Company issued 1,007,186 shares of Series C preferred for $10.50 per share. In April 2000, the Company issued 1,417,534 shares of Series D preferred for $22.50 per share.
DIVIDENDS
The holders of Series A, B, C and D preferred are entitled to receive dividends, as defined, if and when declared by the Company's Board of Directors. To date, no dividends have been declared.
VOTING RIGHTS
Each holder of outstanding shares of Series A, B, C and D preferred is entitled to a number of votes equal to the number of whole shares of common stock into which such preferred shares are then convertible. All outstanding holders of convertible preferred stock shall vote together with the holders of common stock as a single class.
F-14

EXACT SCIENCES CORPORATION
 (A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(INCLUDING DATA APPLICABLE TO UNAUDITED PERIODS)
(6) STOCKHOLDERS' EQUITY (CONTINUED) LIQUIDATION
In the event of any voluntary or involuntary dissolution of the Company and before any distribution or other payment is made to any holders of any class or series of capital stock of the Company, the holders of each share of Series A, B, C and D preferred shall be entitled to receive $1.16, $3.95, $10.50 and $22.50, respectively, plus any dividends declared but unpaid.
CONVERSION
Each share of Series A, B, C and D preferred is convertible, at the option of the holder, into such number of shares of common stock as is determined by dividing $1.16, $3.95, $10.50 and $22.50 per share, respectively, by the conversion price, as defined. Series A, B, C and D preferred will automatically convert into common stock upon the closing of an underwritten public offering, as defined.
STOCK OPTION PLAN
The Company has a stock option plan (the Plan) under which the Board of Directors may grant incentive and nonqualified stock options to purchase an aggregate of 3,987,500 shares of common stock to employees and consultants of the Company. Nonqualified stock options may be granted to any employee or consultant of the Company. The exercise price of each option is determined by the Board of Directors. Incentive stock options may not be less than the fair market value of the stock on the date of grant, as defined by the Board of Directors.
Options granted under the Plan vest over a three-to-five-year period and expire 10 years from the grant date. At September 30, 2000, 225,291 shares were available for future grant under the Plan.
Information with respect to activity under the Plan is as follows:

                                                              NUMBER OF    WEIGHTED AVERAGE
                                                                SHARES      EXERCISE PRICE
                                                              ----------   ----------------
Outstanding, December 31, 1997..............................     558,250        $0.09
  Granted...................................................   1,122,580         0.32
  Exercised.................................................    (517,000)        0.13
  Canceled..................................................     (13,750)        0.15
                                                              ----------
Outstanding, December 31, 1998..............................   1,150,080         0.30
  Granted...................................................     132,000         0.38
  Exercised.................................................    (155,491)        0.38
  Canceled..................................................     (28,759)        0.15
                                                              ----------
Outstanding, December 31, 1999..............................   1,097,830         0.30
  Granted...................................................   1,377,613         1.43
  Exercised.................................................  (1,015,493)        0.70
  Canceled..................................................     (50,880)        0.38
                                                              ----------
Outstanding, September 30, 2000.............................   1,409,070        $1.11
                                                              ==========        =====
Exercisable, December 31, 1998..............................     130,144        $0.08
                                                              ==========        =====
Exercisable, December 31, 1999..............................     623,587        $0.19
                                                              ==========        =====
Exercisable, September 30, 2000.............................     394,977        $0.16
                                                              ==========        =====	

F-15

EXACT SCIENCES CORPORATION
 (A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(INCLUDING DATA APPLICABLE TO UNAUDITED PERIODS)
(6) STOCKHOLDERS' EQUITY (CONTINUED)
The following table summarizes information relating to currently outstanding and exercisable stock options as of September 30, 2000:

                    OUTSTANDING                               EXERCISABLE
----------------------------------------------------   --------------------------
                         WEIGHTED
                         AVERAGE
                        REMAINING        WEIGHTED                     WEIGHTED
EXERCISE   NUMBER OF   CONTRACTUAL       AVERAGE       NUMBER OF      AVERAGE
 PRICE      SHARES     LIFE (YEARS)   EXERCISE PRICE    SHARES     EXERCISE PRICE
--------   ---------   ------------   --------------   ---------   --------------
 $0.04       196,625       6.55            $0.04        196,625         $0.04
 $0.15        93,500       7.49             0.15         95,334          0.15
 $0.38       450,313       9.01             0.38        103,018          0.38
 $2.05       668,632       10.0             2.05             --          2.05
           ---------      -----            -----        -------         -----
           1,409,070       8.81            $1.11        394,997         $0.16
           =========      =====            =====        =======         =====	

ACCOUNTING FOR STOCK-BASED COMPENSATION
The Company accounts for its stock-based compensation plan under APB Opinion No. 25. SFAS No. 123, ACCOUNTING FOR STOCK-BASED COMPENSATION, establishes the fair-value-based method of accounting for stock-based compensation plans. The Company has adopted the disclosure-only alternative for options granted to employees and directors under SFAS No. 123, which requires disclosure of the pro forma effects on earnings as if SFAS No. 123 had been adopted, as well as certain other information. Options granted to scientific advisory board members and other nonemployees are recorded at fair value based on the fair value measurement criteria of paragraphs 8-12 of SFAS No. 123 and Emerging Issues Task Force 96-18. Compensation expense, computed using the Black-Scholes option pricing model, of $1,902, $13,780 and $789,628 was recorded in the accompanying statements of operations for the years ended December 31, 1998 and 1999 and the nine months ended September 30, 2000, respectively. The following assumptions were used for 1998, 1999 and 2000: (1) expected lives of the options of seven years; (2) no dividend yield; (3) expected volatility of 70% to 100%; and (4) risk-free interest rate of 4.65% to 6.16%.
In connection with certain 1999 and 2000 stock option grants to employees and Directors, the Company recorded deferred compensation of $52,271 and $7,724,600 during the year ended December 31, 1999 and the nine months ended September 30, 2000, respectively. The deferred compensation represents the aggregate difference between the option exercise price and the estimated fair value of the common stock on the date of grant and is being charged to operations over the related vesting period using the accelerated method prescribed under FASB Interpretation 28, ACOUNTING FOR STOCK APPRECIATION RIGHTS AND OTHER VARIABLE STOCK OPTION OR AWARD PLANS--AN INTERPRETATION OF APB OPINION NOS. 15 AND 25. All stock options granted and stock sold prior to 1999 were at fair market value and therefore did not result in a compensation charge.
As of September 30, 2000, the Company expects to recognize amortization expense of deferred compensation recorded of approximately $1,924,000, $2,746,000, $1,606,000, $953,000, $450,000 and $84,000 during the years ending December 31, 2000, 2001, 2002, 2003, 2004 and 2005, respectively.
F-16

EXACT SCIENCES CORPORATION
 (A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(INCLUDING DATA APPLICABLE TO UNAUDITED PERIODS)
(6) STOCKHOLDERS' EQUITY (CONTINUED)
The Company has computed the pro forma disclosures required under SFAS No. 123 for all stock options granted to employees and Directors of the Company as of December 31, 1997, 1998 and 1999 and September 30, 2000 using the Black-Scholes option pricing model prescribed by SFAS No. 123.
The assumptions used for the years ended December 31, 1997, 1998 and 1999 and for the nine months ended September 30, 2000 are as follows:

                                                                                  NINE MONTHS
                                                                                     ENDED
                                                   DECEMBER 31,                  SEPTEMBER 30,
                                    ------------------------------------------        2000
                                        1997           1998           1999        (UNAUDITED)
                                    ------------   ------------   ------------   --------------
Risk-free interest rates..........  5.90%-6.65%    4.65%-5.62%    5.44%-5.97%    5.65%-6.16%
Expected lives....................      7 years        7 years        7 years         7 years
Expected volatility...............           0%             0%             0%            100%
Dividend yield....................           0%             0%             0%              0%
Weighted average remaining
  contractual life of options
  outstanding.....................         9.21           9.30           8.33            8.81
Weighted average fair value of
  grants..........................  $      0.05    $      0.11    $      0.13     $      1.35	

The effect of applying SFAS No. 123 would be as follows:

                                                                                     NINE MONTHS
                                                                                        ENDED
                                                 YEARS ENDED DECEMBER 31,           SEPTEMBER 30,
                                          ---------------------------------------        2000
                                             1997          1998          1999        (UNAUDITED)
                                          -----------   -----------   -----------   --------------
Net loss as reported....................  $(1,883,073)  $(3,578,380)  $(4,963,925)   $(7,211,943)
Pro forma...............................  $(1,884,473)  $(3,581,433)  $(4,993,586)   $(7,249,562)
Basic and Diluted Net Loss per Share--
  As reported...........................  $    (10.70)  $     (6.08)  $     (5.32)   $     (5.83)
  Pro forma.............................  $    (10.71)  $     (6.08)  $     (5.35)   $     (5.86)	

RESTRICTED COMMON STOCK
On May 10, 1996, the Company sold 550,000 shares of restricted common stock to a key employee. In 1997, the Company sold 68,750 shares of restricted common stock to a key employee and 134,857 restricted common shares to another employee. In February 1998, the Company sold 492,250 shares of restricted common stock to employees of the Company pursuant to the exercise of options, 368,500 shares of which were purchased through issuance of notes receivable (See Note 4). During 2000, the Company sold 960,055 shares of restricted common stock to employees of the Company pursuant to the exercise of options, 888,555 shares of which were purchased through issuance of notes receivable (See Note 4). The shares were sold at the then fair market value and vest over a five-to-seven-year period. At September 30, 2000, 1,139,380 shares were vested.
F-17

EXACT SCIENCES CORPORATION
 (A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(INCLUDING DATA APPLICABLE TO UNAUDITED PERIODS)
(7) COMMITMENTS
The Company leases certain equipment and conducts its operations in a leased facility under noncancelable operating leases expiring through June 2003. Future minimum rental payments under the operating leases as of September 30, 2000 are approximately as follows:

Year ending December 31,
2000......................................................    59,000
2001......................................................   236,000
2002......................................................   236,000
2003......................................................   118,000
                                                            --------
  Total lease payments....................................   649,000
                                                            ========	

Rent expense included in the accompanying statements of operations was approximately $65,000, $84,000 and $146,000 for the years ended December 31, 1997, 1998 and 1999, respectively. Rent expense for the nine months ended September 30, 1999 and 2000 was approximately $156,000 and $113,000, respectively.
(8) ROYALTY AGREEMENTS
ROCHE LICENSE. The Company licenses, on a non-exclusive basis, technology for performing a step in its testing methods from Roche Molecular Systems, Inc. (Roche). This license relates to a gene amplification process used in almost all genetic testing, and the patent that the Company utilizes expires in mid-2004. In exchange for the license, the Company agreed to pay Roche a royalty based on net revenues received from tests using the Company's technologies.
GENZYME LICENSE. The Company licenses, on a non-exclusive basis, technology for performing a step in its testing methods from Genzyme Corporation (Genzyme), the exclusive licensee of patents owned by Johns Hopkins University and of which Dr. Vogelstein is an inventor. This license relates to the use of the APC and P53 genes and methodologies related thereto in connection with its products and services and lasts for the life of the patent term of the last licensed Genzyme patent. In exchange for the license, the Company has agreed to pay Genzyme a royalty based on net revenues received from performing the Company's tests and the sale of its reagents and diagnostic test kits, as well as certain milestone payments and maintenance fees. To date, the Company has paid an initial license fee, which was charged to research and development expense in the accompanying statement of operations for the year ended December 31, 1999. Revenue from milestone payments will be recognized in accordance with SAB No. 101 REVENUE RECOGNITION.
(9) EMPLOYEE BENEFIT PLAN
The Company maintains a qualified 401(k) retirement savings plan (the 401(k) Plan) covering all employees. Under the 401(k) Plan, the participants may elect to defer a portion of their compensation, subject to certain limitations. Company matching contributions may be made at the discretion of the Board of Directors. There have been no discretionary contributions made by the Company to the 401(k) Plan to date.
F-18

EXACT SCIENCES CORPORATION
 (A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(INCLUDING DATA APPLICABLE TO UNAUDITED PERIODS)
(10) 2000 STOCK OPTION AND INCENTIVE PLAN
The Company adopted the 2000 Stock Option and Incentive Plan (the 2000 Option Plan) on October 17, 2000. A total of 1,000,000 shares of common stock have been authorized and reserved for issuance under the 2000 Option Plan. The 2000 Option Plan provides that the number of shares authorized for issuance will automatically increase on each January 1 by the greater of 5% of the outstanding number of shares of common stock on the preceding December 31 or that number of shares underlying option awards issued during the one-year period prior to such January 1, or such lesser number as may be approved by the Board of Directors. Under the terms of the 2000 Option Plan, the Company is authorized to grant incentive stock options as defined under the Internal Revenue Code, non-qualified options, stock awards or opportunities to make direct purchases of common stock to employees, officers, directors, consultants and advisors.
The 2000 Option Plan is administered by the compensation committee of the Board of Directors, which selects the individuals to whom equity-based awards will be granted and determines the option exercise price and other terms of each award, subject to the provisions of the 2000 Option Plan. The 2000 Option Plan provides that upon an acquisition, all options to purchase common stock will accelerate by a period of one year. In addition, upon the termination of an employee without cause or for good reason prior to the first anniversary of the completion of the acquisition, all options then outstanding under the 2000 Option Plan held by that employee will immediately become exercisable. To date, no options have been granted under the 2000 Option Plan.
(11) 2000 EMPLOYEE STOCK PURCHASE PLAN
The 2000 Employee Stock Purchase Plan (the 2000 Purchase Plan) was adopted on October 17, 2000. The 2000 Purchase Plan provides for the issuance of up to an aggregate of 300,000 shares of common stock to participating employees. The 2000 Purchase Plan provides that the number of shares authorized for issuance will automatically increase on each February 1 by the greater of 0.75% of the outstanding number of shares of common stock on the immediately preceding December 31 or that number of shares issued during the one-year period prior to such February 1, or such lesser number as may be approved by the Board of Directors.
The 2000 Purchase Plan is administered by the compensation committee of the Board of Directors. Generally, all employees who have completed three months of employment and whose customary employment is more than 20 hours per week and for more than five months in any calendar year are eligible to participate in the 2000 Purchase Plan. The right to purchase common stock under the 2000 Purchase Plan will be made available through a series of offerings. Participating employees will be required to authorize an amount, between 1% and 10% of the employee's compensation, to be deducted from the employee's pay during the offering period. On the last day of the offering period, the employee will be deemed to have exercised the option, at the option exercise price, to the extent of accumulated payroll deductions. Under the terms of the 2000 Purchase Plan, the option exercise price is an amount equal to 85% of the fair market value of one share of common stock on either the first or last day of the offering period, whichever is lower. No employee may be granted an option that would permit the employee's rights to purchase common stock to accrue in excess of $25,000 in any calendar year. The first offering period under the 2000 Purchase Plan will commence on the date the shares issued in connection with the Company's proposed initial public offering of its common stock are sold to the underwriters and continues through July 31, 2001. Thereafter, the offering periods will
F-19

EXACT SCIENCES CORPORATION
 (A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(INCLUDING DATA APPLICABLE TO UNAUDITED PERIODS)
(11) 2000 EMPLOYEE STOCK PURCHASE PLAN (CONTINUED) begin on each February 1 and August 1. Options granted under the 2000 Purchase Plan terminate upon an employee's voluntary withdrawal from the plan at any time or upon termination of employment.
(12) ACCRUED EXPENSES
Accrued expenses at December 31, 1998 and 1999 and September 30, 2000 consisted of the following:

                                                   DECEMBER 31,       SEPTEMBER
                                                -------------------      30,
                                                  1998       1999       2000
                                                --------   --------   ---------
Payroll and payroll-related...................  $ 83,000   $ 47,000   $ 17,000
Professional fees.............................    43,070     48,265    228,540
Consulting....................................    30,000     20,000     54,900
Travel and entertainment......................    25,000      6,800      8,974
Research......................................    30,000         --     46,196
Occupancy.....................................     1,000     19,500     45,770
Other.........................................    11,417      5,428      8,129
                                                --------   --------   --------
                                                $223,487   $146,993   $409,509
                                                ========   ========   ========	

F-20

Through and including (the 25th day after the date of this prospectus), all dealers effecting transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealers' obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.
4,000,000 SHARES
[LOGO]
COMMON STOCK

P R O S P E C T U S
MERRILL LYNCH & CO.
CIBC WORLD MARKETS
THOMAS WEISEL PARTNERS LLC
, 2000

The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is
effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS DATED DECEMBER 4, 2000
P_R_O_S_P_E_C_T_U_S
4,000,000 SHARES
[LOGO]
COMMON STOCK

This is EXACT's initial public offering of common stock. EXACT is selling all of the shares of common stock. The international managers are offering 800,000 shares outside the U.S. and Canada and the U.S. underwriters are offering 3,200,000 shares in the U.S.
We expect the public offering price to be between $14.00 and $16.00 per share. Currently, no public market exists for the shares. After pricing of the offering, we expect that the shares will be quoted on the Nasdaq National Market under the symbol "EXAS."
INVESTING IN OUR COMMON STOCK INVOLVES RISKS THAT ARE DESCRIBED IN THE
"RISK FACTORS" SECTION BEGINNING ON PAGE 5 OF THIS PROSPECTUS.

                                                               PER SHARE              TOTAL
                                                               ---------              -----
Public offering price.......................................       $                    $

Underwriting discount.......................................       $                    $

Proceeds, before expenses, to EXACT.........................       $                    $	

The international managers may also purchase up to an additional 120,000 shares from EXACT at the public offering price, less the underwriting discount, within 30 days from the date of this prospectus to cover over-allotments. The U.S. underwriters may similarly purchase up to an additional 480,000 shares from EXACT.
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

      The shares will be ready for delivery on or about         , 2000.

                               ------------------

MERRILL LYNCH INTERNATIONAL

             CIBC WORLD MARKETS

                                                      THOMAS WEISEL PARTNERS LLC
                                  -----------

                 The date of this prospectus is         , 2000.	

UNDERWRITING
We intend to offer the shares outside the U.S. and Canada through the international managers and in the U.S. and Canada through the U.S. underwriters. Merrill Lynch International, CIBC World Markets plc and Thomas Weisel Partners LLC are acting as lead managers for the international managers named below. Subject to the terms and conditions described in an international purchase agreement among us and the international managers, and concurrently with the sale of 3,200,000 shares of common stock to the U.S. underwriters, we have agreed to sell to the international managers, and the international managers severally have agreed to purchase from us, the number of shares of common stock set forth opposite their names below.

                                                                            NUMBER
             INTERNATIONAL MANAGER                                         OF SHARES
             ---------------------                                         ---------
Merrill Lynch International..............................................
CIBC World Markets plc...................................................
Thomas Weisel Partners LLC...............................................
                                                                            -------
             Total.......................................................   800,000
                                                                            =======	

We have also entered into a U.S. purchase agreement with the U.S. underwriters, for whom Merrill Lynch, Pierce, Fenner & Smith Incorporated, CIBC World Markets and Thomas Weisel Partners LLC are acting as U.S. representatives, for sale of the shares in the U.S. and Canada. Subject to the terms and conditions set forth in the U.S. purchase agreement, and concurrently with the sale of 800,000 shares to the international managers pursuant to the international purchase agreement, we have agreed to sell to the U.S. underwriters, and the U.S. underwriters severally have agreed to purchase from us, an aggregate of 3,200,000 shares. The initial public offering price per share and the underwriting discount per share are identical under the international purchase agreement and the U.S. purchase agreement.
The international managers and the U.S. underwriters have agreed to purchase all of the shares sold under the international and U.S. purchase agreements if any of these shares are purchased. If an underwriter defaults, the international and U.S. purchase agreements provide that the purchase commitments of the nondefaulting underwriters may be increased or the purchase agreements may be terminated. The closings for the sale of shares to be purchased by the international managers and the U.S. underwriters are conditioned on one another.
We have agreed to indemnify the international managers and the U.S. underwriters against certain liabilities, including liabilities under the Securities Act, or to contribute to payments the international managers and U.S. underwriters may be required to make in respect of those liabilities.
The underwriters are offering the shares, subject to prior sale, when, as and if issued to and accepted by them, subject to approval of legal matters by their counsel, including the validity of the shares, and other conditions contained in the purchase agreements, such as the receipt by the underwriters of officer's certificates and legal opinions. The underwriters reserve the right to withdraw, cancel or modify offers to the public and to reject orders in whole or in part.
Thomas Weisel Partners LLC, one of the lead managers for the international managers, was organized and registered as a broker-dealer in December 1998. Since December 1998, Thomas Weisel Partners has been named as a lead or co-manager on 146 completed transactions and has acted as a syndicate member in an additional 128 public offering of equity securities. Thomas Weisel Partners does not have any material relationship with us or any of our officers, directors or other controlling persons, except with respect to its contractual relationship with us under the international purchase agreement entered into in connection with this offering.
COMMISSIONS AND DISCOUNTS
The lead managers have advised us that the international managers propose initially to offer the shares to the public at the initial public offering price on the cover page of this prospectus and to
57

dealers at that price less a concession not in excess of $ per share of common stock. The international managers may allow, and such dealers may reallow, a discount not in excess of $ per share of common stock on sales to certain other dealers. After the initial public offering, the public offering price, concession and discount may be changed.
The following table shows the public offering price, underwriting discount and proceeds before expenses to EXACT. The information assumes either no exercise or full exercise by the international managers and the U.S. underwriters of their over-allotment options.

                                                    PER SHARE   WITHOUT OPTION   WITH OPTION
                                                    ---------   --------------   -----------
Public offering price.............................     $             $               $
Underwriting discount.............................     $             $               $
Proceeds, before expenses, to EXACT...............     $             $               $	

The expenses of the offering, not including the underwriting discount, are estimated at $ and are payable by us.
OVER-ALLOTMENT OPTION
We have granted an option to the international managers to purchase up to 120,000 additional shares at the public offering price less the underwriting discount. The international managers may exercise this option for 30 days from the date of this prospectus solely to cover any over-allotments. If the international managers exercise this option, each will be obligated, subject to conditions contained in the purchase agreements, to purchase a number of additional shares proportionate to such international manager's initial amount reflected in the table above.
We have also granted an option to the U.S. underwriters, exercisable for 30 days from the date of this prospectus, to purchase up to an aggregate of 480,000 additional shares to cover any over-allotments on terms similar to that granted to the international managers.
INTERSYNDICATE AGREEMENT
The international managers and the U.S. underwriters have entered into an intersyndicate agreement that provides for the coordination of their activities. Under the intersyndicate agreement, the international managers and the U.S. underwriters may sell shares to each other for purposes of resale at the initial public offering price, less an amount not greater than the selling concession. Under the intersyndicate agreement, the international managers and any dealer to whom they sell shares will not offer to sell or sell shares to persons who are U.S. or Canadian persons or to persons they believe intend to resell to persons who are U.S. or Canadian persons, except in the case of transactions under the intersyndicate agreement. Similarly, the U.S. underwriters and any dealer to whom they sell shares will not offer to sell or sell shares to non-U.S. persons or non-Canadian persons or to persons they believe intend to resell to non-U.S. or non-Canadian persons, except in the case of transactions under the intersyndicate agreement.
RESERVED SHARES
At our request, the underwriters have reserved for sale, at the initial public offering price, up to 200,000 shares offered by this prospectus for sale to some of our directors, officers, employees and business associates. If these persons purchase reserved shares, this will reduce the number of shares available for sale to the general public. Any reserved shares that are not orally confirmed for purchase within one day of the pricing of this offering will be offered by the underwriters to the general public on the same terms as the other shares offered by this prospectus.
NO SALES OF SIMILAR SECURITIES
We and our executive officers and directors and most of our existing stockholders have agreed, with limited exceptions, not to sell or transfer any common stock for 180 days after the date of this
58

prospectus without first obtaining the written consent of Merrill Lynch, Pierce, Fenner & Smith Incorporated. Specifically, we and the above-named individuals have agreed not to directly or indirectly
- offer, pledge, sell or contract to sell any common stock;
- sell any option or contract to purchase any common stock;
- purchase any option or contract to sell any common stock;
- grant any option, right or warrant for the sale of any common stock;
- lend or otherwise dispose of or transfer any common stock;
- request or demand that we file a registration statement related to any common stock; or
- enter into any swap or other agreement that transfers, in whole or in part, the economic consequence of ownership of any common stock whether any such swap or transaction is to be settled by delivery of shares or other securities, in cash or otherwise.
This lock-up provision applies to common stock and to securities convertible into or exchangeable or exercisable for or repayable with common stock. It also applies to common stock owned now and, with respect to our executive officers, directors and their affiliates, to common stock acquired later by the person executing the agreement or for which the person executing the agreement later acquires the power of disposition.
QUOTATION ON THE NASDAQ NATIONAL MARKET
We expect the shares to be approved for quotation on The Nasdaq National Market, subject to notice of issuance, under the symbol EXAS.
Before this offering, there has been no public market for our common stock. The initial public offering price will be determined through negotiations among us, the U.S. representatives and lead managers. In addition to prevailing market conditions, the primary factors to be considered in determining the initial public offering price are
- the valuation multiples of publicly traded companies that the U.S. representatives and the lead managers believe to be comparable to us;
- our financial information;
- the history of, and the prospects for, our company and the industry in which we compete;
- an assessment of our management, its past and present operations, and the prospects for, and timing of, our future revenues;
- the present state of our development; and
- the above factors in relation to market values and various valuation measures of other companies engaged in activities similar to ours.
An active trading market for the shares may not develop. It is also possible that after the offering the shares will not trade in the public market at or above the initial public offering price.
The underwriters do not expect to sell more than 5% of the shares in the aggregate to accounts over which they exercise discretionary authority.
59

PRICE STABILIZATION, SHORT POSITIONS AND PENALTY BIDS
Until the distribution of the common stock is completed, SEC rules may limit the underwriters from bidding for or purchasing our common stock. However, the representatives may engage in transactions that stabilize the price of the common shares, such as bids or purchases that peg, fix or maintain that price.
The underwriters may purchase and sell the common shares in the open market. These transactions may include short sales, stabilizing transactions and purchases to cover positions created by short sales. Short sales involve the sale by the underwriters of a greater number of shares than they are required to purchase in the offering. "Covered" short sale are sales made in an amount not greater than the underwriters' option to purchase additional shares from the issuer in the offering. The underwriters may close out any covered short position by either exercising their option to purchase additional shares or purchasing shares in the open market. In determining the source of shares to close out the covered short position, the underwriters will consider, among other things, the price of shares available for purchase in the open market as compared to the price at which they may purchase shares through the over-allotment option. "Naked" short sales are any sales in excess of such option. The underwriters must close out any naked short position by purchasing shares in the open market. A naked short position is more likely to be created if the underwriters are concerned that there may be downward pressure on the price of the common shares in the open market after pricing that could adversely affect investors who purchase in the offering. Stabilizing transactions consist of various bids for or purchases of common shares made by the underwriters in the open market prior to the completion of the offering.
The underwriters may also impose a penalty bid. This occurs when a particular underwriter repays to the underwriters a portion of the underwriting discount received by it because the representatives have repurchased shares sold by or for the account of such underwriter in stabilizing or short covering transactions.
Similar to other purchase transactions, the underwriters' purchases to cover the syndicate short sales may have the effect of raising or maintaining the market price of the common shares or preventing or retarding a decline in the market price of the common shares. As a result, the price of the common shares may be higher than the price that might otherwise exist in the open market.
Neither we nor any of the underwriters make any representation or prediction as to the direction or magnitude of any effect that the transactions described above may have on the price of the common shares. In addition, neither we nor any of the representatives make any representation that the representatives will engage in these transactions or that these transactions, once commenced, will not be discontinued without notice.
UK SELLING RESTRICTIONS
Each international manager has agreed that
- it has not offered or sold and will not offer or sell any shares of shares of our common stock to persons in the United Kingdom, except to persons whose ordinary activities involve them in acquiring, holding, managing or disposing of investments (as principal or agent) for the purposes of their businesses or otherwise in circumstances which do not constitute an offer to the public in the United Kingdom within the meaning of the Public Offers of Securities Regulations 1995;
- it has complied and will comply with all applicable provisions of the Financial Services Act 1986 with respect to anything done by it in relation to the common stock in, from or otherwise involving the United Kingdom; and
- it has only issued or passed on and will only issue or pass on in the United Kingdom any document received by it in connection with the issuance of common stock to a person who is of
60

a kind described in Article 11(3) of the Financial Services Act 1986 (Investment Advertisements) (Exemptions) Order 1996 as amended by the Financial Services Act 1986 (Investment Advertisements) (Exemptions) Order 1997 or is a person to whom such document may otherwise lawfully be issued or passed on.
NO PUBLIC OFFERING OUTSIDE THE UNITED STATES
No action has been or will be taken in any jurisdiction (except in the United States) that would permit a public offering of the shares of common stock, or the possession, circulation or distribution of this prospectus or any other material relating to us or shares of our common stock in any jurisdiction where action for that purpose is required. Accordingly, the shares of our common stock may not be offered or sold, directly or indirectly, and neither this prospectus nor any other offering material or advertisements in connection with the shares of our common stock may be distributed or published, in or from any country or jurisdiction except in compliance with any applicable rules and regulations of that country or jurisdiction.
You may be required to pay stamp taxes and other charges in accordance with the laws and practices of the country of purchase in addition to the offering price on the cover of this prospectus.
ELECTRONIC PROSPECTUS
Merrill Lynch will be facilitating Internet distribution for this offering to certain of its Internet subscription customers. Merrill Lynch intends to allocate a limited number of shares for sale to its online brokerage customers. An electronic prospectus is available on the Internet Web site maintained by Merrill Lynch. Other than the prospectus in electronic format, the information on the Merrill Lynch Web site is not intended to be part of this prospectus.
61

Through and including (the 25th day after the date of this prospectus), all dealers effecting transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealers' obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.
4,000,000 SHARES
[LOGO]
COMMON STOCK

P R O S P E C T U S
MERRILL LYNCH INTERNATIONAL
CIBC WORLD MARKETS
THOMAS WEISEL PARTNERS LLC
, 2000

PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
Estimated expenses (other than the underwriting discount and commissions) payable in connection with the sale of the common stock offered hereby are as follows:

SEC registration fee........................................  $   19,430
NASD filing fee.............................................       7,860
Nasdaq National Market listing fee..........................      95,000
Printing and engraving expenses.............................     150,000
Legal fees and expenses.....................................     400,000
Accounting fees and expenses................................     250,000
Blue Sky fees and expenses (including legal fees)...........      15,000
Transfer agent and registrar fees and expenses..............      15,000
Miscellaneous...............................................      47,710
                                                              ----------
  Total.....................................................  $1,000,000
                                                              ==========	

The Company will bear all expenses shown above.
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Delaware General Corporation law and the Company's certificate of incorporation and by-laws provide for indemnification of the Company's directors and officers for liabilities and expenses that they may incur in such capacities. In general directors and officers are indemnified with respect to actions taken in good faith in a manner reasonably believed to be in, or not opposed to, the best interests of the Company and, with respect to any criminal action or proceeding, actions that the indemnitee had no reasonable cause to believe were unlawful. Reference is made to the Company's charter and by-laws filed as Exhibits 3.1, 3.2, 3.3 and 3.4 hereto, respectively.
The Purchase Agreement and the International Purchase Agreement provide that the Underwriters are obligated, under certain circumstances, to indemnify directors, officers and controlling persons of Exact against certain liabilities, including liabilities under the Securities Act of 1933, as amended (the "Securities Act"). Reference is made to the forms of Purchase Agreement and International Purchase Agreement filed as Exhibits 1.1 and 1.2 hereto.
In addition, the Company has an existing directors and officers liability insurance policy.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
In the three years preceding the filing of this registration statement, the Company has issued the following securities that were not registered under the Securities Act:
In November 1997, the Company sold an aggregate of 68,750 shares of common stock to one investor at a price of $0.15 per share.
In February 1998, the Company sold an aggregate of 55,000 shares of common stock to one investor at a price of $0.15 per share.
In March 1998, the Company sold an aggregate of 1,007,186 shares of Series C convertible preferred stock to 17 investors at a price of $10.50 per share.
In March 2000, the Company sold an aggregate of 48,125 shares of common stock to one investor at a price of $0.38 per share.
II-1

In April 2000, the Company sold an aggregate of 1,417,534 shares of Series D convertible preferred stock to 75 investors at a price of $22.50 per share.
As of September 30, 2000, the Company had granted options to purchase an aggregate of 3,074,709 shares of common stock under its 1995 stock option plan, of which 1,665,639 have been exercised at exercise prices ranging from $0.04 to $2.05 for an aggregate purchase price of $828,423.33.
No underwriters were involved in the foregoing sales of securities. Such sales were made in reliance upon an exemption from the registration provisions of the Act set forth in Section 4(2) thereof relative to sales by an issuer not involving any public offering or the rules and regulations thereunder, or, in the case of options to purchase common stock, Rule 701 of the Act. All of the foregoing securities are deemed restricted securities for the purposes of the Securities Act.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENTS
(a) EXHIBITS:

    EXHIBIT
    NUMBER           DESCRIPTION
    -------          -----------
 1.1                 Form of Purchase Agreement
 1.2                 Form of International Purchase Agreement
 3.1++               Fifth Amended and Restated Certificate of Incorporation, as
                     amended, of Registrant
 3.2*                By-Laws of Registrant
 3.3++               Form of Sixth Amended and Restated Certificate of
                     Incorporation of the Registrant to become effective upon the
                     closing of the offering under this Registration Statement
 3.4++               Form of Amended and Restated By-Laws of the Registrant to
                     become effective upon the closing of the offering under this
                     Registration Statement
 4.1                 Specimen certificate representing the Registrant's Common
                     Stock
 5.1                 Opinion of Testa, Hurwitz & Thibeault, LLP regarding the
                     legality of the securities being issued
10.1*+               1995 Stock Option Plan
10.2*+               2000 Stock Option and Incentive Plan
10.3*+               2000 Employee Stock Purchase Plan
10.4*                Sixth Amended and Restated Registration Rights Agreement
                     between the Registrant and the parties named therein dated
                     as of April 7, 2000
10.5*+               Restricted Stock Purchase Agreement between the Registrant
                     and Stanley N. Lapidus dated February 11, 1998
10.6*+               Restricted Stock Purchase Agreement between the Registrant
                     and Stanley N. Lapidus dated as of March 31, 2000
10.7*+               Restricted Stock Purchase Agreement between the Registrant
                     and Don M. Hardison dated as of June 23, 2000
10.8*+               Secured Promissory Note between the Registrant and Stanley
                     N. Lapidus dated as of March 31, 2000
10.9*+               Pledge Agreement between the Registrant and Stanley N.
                     Lapidus dated March 31, 2000
10.10*+              Secured Promissory Note between the Registrant and Don M.
                     Hardison dated as of June 23, 2000
10.11*               Lease Agreement, dated December 10, 1996, between C.B.
                     Realty Limited Partnership and the Registrant, as amended	

II-2

    EXHIBIT
    NUMBER           DESCRIPTION
    -------          -----------
10.12@               License Agreement between the Registrant and Genzyme
                     Corporation dated as of March 25, 1999
10.13@               PCR Diagnostic Services Agreement between the Registrant and
                     Roche Molecular Systems, Inc.
10.14++              Mayo Foundation for Medical Education and Research (the
                     "Foundation") Technology License Contract between the
                     Registrant and the Foundation dated as of July 7, 1998, as
                     amended
23.1++               Consent of Arthur Andersen LLP
23.2                 Consent of Testa, Hurwitz & Thibeault, LLP (included in
                     Exhibit 5.1)
24.1++               Power of Attorney (included on signature page of
                     Registration Statement)
27.1*                Financial Data Schedule (EDGAR version only)	

++ Filed herewith.
* Previously filed.
+ Indicates a management contract or any compensatory plan, contract or arrangement.
@ Confidential Treatment requested for certain portions of this Agreement.
(b) FINANCIAL STATEMENTS SCHEDULES:
All schedules for which provision is made in the applicable accounting regulation of the Securities and Exchange Commission are not required under the related instructions or are inapplicable, and therefore have been omitted.
ITEM 17. UNDERTAKINGS
Insofar as indemnification for liabilities arising under the Act may be permitted to directors, officers and controlling persons of the registrant pursuant to provisions described in Item 14 above, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.
The undersigned registrant hereby undertakes to provide to the underwriters at the closing specified in the underwriting agreement certificates in such denominations and registered in such names as required by the underwriters to permit prompt delivery to each purchaser.
The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of a registration statement in reliance upon Rule 430A and contained in the form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial BONA FIDE offering thereof.
II-3

SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the registrant has duly caused this Amendment No. 1 to the Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in Boston, Massachusetts, on the 4th day of December 2000.

EXACT SCIENCES CORPORATION

By:          /s/ JOHN A. MCCARTHY, JR.
     -----------------------------------------
               John A. McCarthy, Jr.
     VICE PRESIDENT AND CHIEF FINANCIAL OFFICER	

Pursuant to the requirements of the Securities Act of 1933, this Amendment No. 1 to the registration statement has been signed by the following persons on behalf of the registrant in the capacities and on the dates indicated.

            SIGNATURE                                 TITLE(S)                      DATE
            ---------                                 --------                      ----
                *
---------------------------------       Chairman of the Board and Director    December 4, 2000
        Stanley N. Lapidus                (PRINCIPAL EXECUTIVE OFFICER)

                *
---------------------------------       President and Director                December 4, 2000
         Don M. Hardison

                *                       Vice President and Chief Financial
---------------------------------         Officer (PRINCIPAL FINANCIAL AND    December 4, 2000
      John A. McCarthy, Jr.               ACCOUNTING OFFICER)

                *
---------------------------------       Director                              December 4, 2000
         Noubar B. Afeyan

                *
---------------------------------       Director                              December 4, 2000
        Richard W. Barker

                *
---------------------------------       Director                              December 4, 2000
        Sally W. Crawford

                *
---------------------------------       Director                              December 4, 2000
      Wycliffe K. Grousbeck

                *
---------------------------------       Director                              December 4, 2000
        William W. Helman

                *
---------------------------------       Director                              December 4, 2000
       Edwin M. Kania, Jr.

                *
---------------------------------       Director                              December 4, 2000
          Lance Willsey	

*By:                /s/ JOHN A. MCCARTHY, JR.
             --------------------------------------
                      John A. McCarthy, Jr.
           VICE PRESIDENT AND CHIEF FINANCIAL OFFICER	

II-4

EXHIBIT INDEX

    EXHIBIT
    NUMBER           DESCRIPTION
    -------          -----------
 1.1                 Form of Purchase Agreement
 1.2                 Form of International Purchase Agreement
 3.1++               Fifth Amended and Restated Certificate of Incorporation, as
                     amended, of Registrant
 3.2*                By-Laws of Registrant
 3.3++               Form of Sixth Amended and Restated Certificate of
                     Incorporation of the Registrant to become effective upon the
                     closing of the offering under this Registration Statement
 3.4++               Form of Amended and Restated By-Laws of the Registrant to
                     become effective upon the closing of the offering under this
                     Registration Statement
 4.1                 Specimen certificate representing the Registrant's Common
                     Stock
 5.1                 Opinion of Testa, Hurwitz & Thibeault, LLP regarding the
                     legality of the securities being issued
10.1*+               1995 Stock Option Plan
10.2*+               2000 Stock Option and Incentive Plan
10.3*+               2000 Employee Stock Purchase Plan
10.4*                Sixth Amended and Restated Registration Rights Agreement
                     between the Registrant and the parties named therein dated
                     as of April 7, 2000
10.5*+               Restricted Stock Purchase Agreement between the Registrant
                     and Stanley N. Lapidus dated February 11, 1998
10.6*+               Restricted Stock Purchase Agreement between the Registrant
                     and Stanley N. Lapidus dated as of March 31, 2000
10.7*+               Restricted Stock Purchase Agreement between the Registrant
                     and Don M. Hardison dated as of June 23, 2000
10.8*+               Secured Promissory Note between the Registrant and Stanley
                     N. Lapidus dated as of March 31, 2000
10.9*+               Pledge Agreement between the Registrant and Stanley N.
                     Lapidus dated March 31, 2000
10.10*+              Secured Promissory Note between the Registrant and Don M.
                     Hardison dated as of June 23, 2000
10.11*               Lease Agreement, dated December 10, 1996, between C.B.
                     Realty Limited Partnership and the Registrant, as amended
10.12@               License Agreement between the Registrant and Genzyme
                     Corporation dated as of March 25, 1999
10.13@               PCR Diagnostic Services Agreement between the Registrant and
                     Roche Molecular Systems, Inc.
10.14++              Mayo Foundation for Medical Education and Research (the
                     "Foundation") Technology License Contract between the
                     Registrant and the Foundation dated as of July 7, 1998, as
                     amended
23.1++               Consent of Arthur Andersen LLP
23.2                 Consent of Testa, Hurwitz & Thibeault, LLP (included in
                     Exhibit 5.1)
24.1++               Power of Attorney (included on signature page of
                     Registration Statement)
27.1*                Financial Data Schedule (EDGAR version only)	

* Previously filed.
+ Indicates a management contract or any compensatory plan, contract or arrangement.
++ Filed herewith.
@ Confidential Treatment requested for certain portions of this Agreement

Exhibit 3.1
FIFTH AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF EXACT LABORATORIES, INC.
A DELAWARE CORPORATION
Exact Laboratories, Inc., a corporation organized and existing under the General Corporation Law of the State of Delaware (the "Corporation"), DOES
HEREBY CERTIFY:
1. The name of the Corporation is Exact Laboratories, Inc.
2. The Certificate of Incorporation of the Corporation was filed with the Secretary of State of Delaware on February 10, 1995 under the name "Lapidus Medical Systems, Inc.". A Certificate of Amendment to the Certificate of Incorporation of the Company was filed with the Secretary of State of Delaware on February 24, 1995. A Certificate of Amendment to the Certificate of Incorporation of the Company was filed with the Secretary of State of Delaware on January 12, 1996. A Certificate of Amendment filed February 27, 1996. The First Amended and Restated Certificate of Incorporation was filed with the Secretary of State of Delaware on May 10, 1996. The Second Amended and Restated Certificate of Incorporation of the Company was filed with the Secretary of State of Delaware on September 23, 1996. The Third Amended and Restated Certificate of Incorporation of the Company was filed with the Secretary of State of Delaware on December 11, 1996. The Fourth Amended and Restated Certificate of Incorporation of the Company was filed with the Secretary of State of Delaware on March 17, 1998. A Certificate of Amendment to the Fourth Amended and Restated Certificate was filed with the Secretary of State of Delaware on March 31, 2000.
3. The provisions of the Fourth Amended and Restated Certificate of Incorporation, as herein amended, are hereby restated and integrated into the single instrument which is hereinafter set forth, and which is entitled the Fifth Amended and Restated Certificate of Incorporation of Exact Laboratories, Inc.
4. The amendments and the restatement of the Fifth Amended and Restated Certificate of Incorporation have been authorized in accordance with Sections 228, 242 and 245 of the General Corporation Law of the State of Delaware.
5. The Fourth Amended and Restated Certificate of Incorporation, as amended and restated herein, shall upon the effective date of this Fifth Amended and Restated Certificate of Incorporation, read as follows:
FIRST. The name of this corporation is Exact Laboratories, Inc.
SECOND. The address of the registered office of the Corporation in the State of Delaware is 1209 Orange Street, in the City of Wilmington, New Castle County, Delaware 19801. The name of its registered agent at such address is The Corporation Trust Company.

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THIRD. The nature of the business or purposes to be conducted or promoted by the Corporation is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of the State of Delaware.
FOURTH. The total number of shares of all classes of capital stock which the Corporation shall have authority to issue is 12,155,929 shares, consisting of 7,500,000 shares of Common Stock with a par value of one cent ($.01) per share (the "Common Stock") and 4,655,929 shares of preferred stock with a par value of one cent ($.01) per share, of which 1,000,000 shares shall be designated as shares of Series A Convertible Preferred Stock (the "Series A Preferred Stock"), 1,250,000 shares shall be designated as shares of Series B Convertible Preferred Stock (the "Series B Preferred Stock"), 1,015,000 shares shall be designated as shares of Series C Convertible Preferred Stock (the "Series C Preferred Stock") and 1,390,929 shares shall be designated as shares of Series D Convertible Preferred Stock (the "Series D Preferred Stock" and together with the Series A Preferred Stock, the Series B Preferred Stock and the Series C Preferred Stock, the "Preferred Stock").
Notwithstanding the provisions of Section 242(b)(2) of the General Corporation Law of the State of Delaware, the holders of Common Stock shall vote together with the holders of the Preferred Stock as a single class with respect to any proposed amendment hereto that would increase the number of authorized shares of Common Stock or Preferred Stock with each such share being entitled to such number of votes per share as is provided in this Article Fourth, and the holders of the Common Stock shall not be entitled to a separate class vote with respect thereto.
A description of the respective classes of stock and a statement of the designations, preferences, voting powers (or no voting powers), relative, participating, optional or other special rights and privileges and the qualifications, limitations and restrictions of the Preferred Stock and Common Stock are as follows:
A. PREFERRED STOCK
The Preferred Stock may be issued in one or more series at such time or times and for such consideration or considerations as the Corporation's Board of Directors may determine. Each series of Preferred Stock shall be so designated as to distinguish the shares thereof from the shares of all other series and classes. Except as otherwise provided in this Amended and Restated Certificate of Incorporation, different series of Preferred Stock shall not be construed to constitute different classes of shares for the purpose of voting by classes.
Except as otherwise expressly provided in this certificate of incorporation the Board of Directors is expressly authorized to provide for the issuance of all or any shares of the Preferred Stock in one or more series, each with such designations, preferences, voting powers (or no voting powers), relative, participating, optional or other special rights and privileges and such qualifications, limitations or restrictions thereof as shall be stated in the resolution or resolutions adopted by the Board of Directors to create such series, and a certificate of said resolution or resolutions shall be filed in accordance with the General Corporation Law of the

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State of Delaware. The authority of the Board of Directors with respect to each such series shall include, without limitation of the foregoing, the right to provide that the shares of each such series MAY: (i) have such distinctive designation and consist of such number of shares; (ii) be subject to redemption at such time or times and at such price or prices; (iii) be entitled to the benefit of a retirement or sinking fund for the redemption of such series on such terms and in such amounts; (iv) be entitled to receive dividends (which may be cumulative or non-cumulative) at such rates, on such conditions, and at such times, and payable in preference to, or in such relation to, the dividends payable on any other class or classes or any other series of stock; (v) be entitled to such rights upon the voluntary or involuntary liquidation, dissolution or winding up of the affairs, or upon any distribution of the assets of the Corporation in preference to, or in such relation to, any other class or classes or any other series of stock; (vi) be convertible into, or exchangeable for, shares of any other class or classes or any other series of stock at such price or prices or at such rates of exchange and with such adjustments, if any;
(vii) be entitled to the benefit of such conditions, limitations or restrictions, if any, on the creation of indebtedness, the issuance of additional shares of such series or shares of any other series of Preferred Stock, the amendment of this certification of incorporation or the Corporation's By-Laws, the payment of dividends or the making of other distributions on, or the purchase, redemption or other acquisition by the Corporation of, any other class or classes or series of stock, or any other corporate action; or (viii) be entitled to such other preferences, powers, qualifications, rights and privileges, all as the Board of Directors may deem advisable and as are not inconsistent with law and the provisions of this certificate of incorporation.
The designations, preferences, voting powers, relative, participating, optional or other special rights and privileges of the Preferred Stock are as follows:
1. DESIGNATION. One million (1,000,000) shares of the Preferred Stock, $.01 par value per share, authorized under the certificate of incorporation shall be designated the Series A Preferred Stock. One million two hundred fifty thousand (1,250,000) shares of the Preferred Stock authorized under the certificate of incorporation shall be designated the Series B Preferred Stock. One million fifteen thousand (1,015,000) shares of the Preferred Stock authorized under the Restated Certificate of Incorporation shall be designated the Series C Preferred Stock. One million three hundred ninety thousand nine hundred twenty-nine (1,390,929) shares of the Preferred Stock authorized under the certificate of incorporation, shall be designated the Series D Preferred Stock.
2. DIVIDENDS. In the event the Corporation declares any dividend (other than dividends payable in shares of capital stock of the Corporation, provision for which is made in Section 5 below) on the shares of Common Stock, the holders of the outstanding shares of Preferred Stock shall be entitled to receive, out of any funds legally available therefor, dividends per share of Preferred Stock as would be declared payable on the largest number of whole shares of Common Stock into which such share of Preferred Stock could be converted pursuant to
Section 5 below, such number determined as of the record date for the determination of holders of Common Stock entitled to receive such dividend. Except as set forth in the preceding sentence, the shares of Preferred Stock shall have no right to receive dividends from the Corporation.

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3. LIQUIDATION, DISSOLUTION OR WINDING UP. In the event of any liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary, before any distribution or other payment is made to any holders of any class or series of capital stock of the Corporation, the holders of each share of Preferred Stock shall be entitled to be paid first (before any distribution or other payment is made to any holders of any class or series of capital stock of the Corporation) out of the assets of the Corporation available for distribution to holders of the Corporation's capital stock of all classes, whether such assets are capital, surplus, or capital earnings, an amount equal to $ 22.50 per share in the case of Series D Preferred Stock, $10.50 per share in the case of Series C Preferred Stock, $3.95 per share in the case of Series B Preferred Stock and $1.16 per share in the case of Series A Preferred Stock (which amounts shall be subject to equitable adjustment whenever there shall occur a stock split, combination, reclassification or other similar event involving the Preferred Stock) plus, in the case of each such Series, all declared and unpaid dividends thereon. The consolidation or merger of the Corporation into or with any other entity or entities which results in the exchange of outstanding shares of the Corporation for cash, securities or other consideration issued or paid or caused to be issued or paid by any such entity or affiliate thereof (other than a merger to reincorporate the Corporation in a different jurisdiction or a merger or consolidation in which the holders of outstanding shares of the Corporation become, solely by means of such merger or consolidation, the holders of a majority of the voting securities of such other entity), and the sale, lease, abandonment, transfer or other disposition by the Corporation of all or substantially all its assets, shall be deemed to be a liquidation, dissolution or winding up of the Corporation within the meaning of the provisions of this Section 3.
If, upon liquidation, dissolution or winding up of the Corporation, the assets of the Corporation available for distribution to its stockholders shall be insufficient to pay the holders of shares of Preferred Stock the full amounts to which they shall be entitled, the holders of Preferred Stock shall share ratably in any distribution of assets according to the respective amounts which would be payable with respect to the shares of Preferred Stock held by them upon such distribution if all amounts payable on or with respect to said shares were paid in full.
After such payment shall have been made in full to the holders of the Preferred Stock or funds necessary for such payment shall have been set aside by the Corporation in trust for the account of holders of the Preferred Stock so as to be available for such payment, the holders of the Preferred Stock shall be entitled to no further participation in the distribution of the assets of the Corporation and shall have no further rights of conversion, and the remaining assets available for distribution shall be distributed ratably among the holders of the Common Stock.
(b) DISTRIBUTIONS OTHER THAN CASH. Whenever the distribution provided for in this Section 3 shall be payable in property other than cash, the value of such distribution shall be the fair market value of such property as determined in good faith by the Board of Directors of the Corporation.
4. VOTING POWER. (a) Except as expressly required by law, each holder of Preferred Stock shall be entitled to vote on all matters and shall be entitled to that number of votes equal to

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the largest number of whole shares of Common Stock into which such holder's shares of Preferred Stock could be converted, pursuant to the provisions of
Section 5 hereof, at the record date for the determination of shareholders entitled to vote on such matter or, if no such record date is established, at the date such vote is taken or any written consent of shareholders is solicited. Except as expressly required by law and except as provided in Section 4(b), the holders of shares of Preferred Stock and Common Stock shall vote together as a single class on all matters.
(b) PROTECTIVE PROVISIONS. In addition to any vote of the holders of any class or series of stock of the Corporation provided by law, approval of at least two-thirds of the number of shares of Common Stock issuable upon conversion of all Preferred Shares will be required for any amendment of the Corporation's certificate of incorporation or by-laws that is adverse to the Preferred Stock and this approval shall be in addition to any other vote required by state law. Approval of at least two-thirds of the number of shares of Common Stock issuable upon conversion of all Preferred Shares will be required for approval of (i) the payment of any dividend or distribution on any shares of capital stock of the Corporation except for dividends or other distributions payable on the Common Stock solely in the form of additional shares of Common Stock, (ii) any repurchase by the Corporation of any of its capital stock except such shares of Common Stock which are repurchased by the Corporation from such persons after such date pursuant to contractual rights held by the Corporation and at repurchase prices not exceeding the respective original purchase prices paid by such persons to the Corporation thereof, (iii) the sale of all or substantially all of the assets of the Corporation, and (iv) the merger or consolidation of the Corporation. The foregoing approvals shall be in addition to any other vote required by state law.
5. CONVERSIONS. The holders of shares of Preferred Stock shall have the following conversion rights:
5A. RIGHT TO CONVERT. Subject to the terms and conditions of this paragraph 5, the holder of any share or shares of Preferred Stock shall have the right, at its option at any time, to convert any such shares of Preferred Stock (except that upon any liquidation of the Corporation the right of conversion shall terminate at the close of business on the business day fixed for payment of the amount distributable on the Preferred Stock) into such number of fully paid and nonassessable shares of Common Stock as is obtained by (a) in the case of the Series A Preferred Stock (i) multiplying the number of shares of Series A Preferred Stock to be so converted by $1.16 and (ii) dividing the result by the conversion price of $1.16 per share or, in case an adjustment of such price has taken place pursuant to the further provisions of this paragraph 5, then by the conversion price as last adjusted and in effect at the date any share or shares of Series A Preferred Stock are surrendered for conversion (such price, or such price as last adjusted, being referred to as the "Series A Conversion Price"), (b) in the case of the Series B Preferred Stock (i) multiplying the number of shares of Series B Preferred Stock to be so converted by $3.95 and (ii) dividing the result by the conversion price of $3.95 per share or, in case an adjustment of such price has taken place pursuant to the further provisions of this paragraph 5, then by the conversion price as last adjusted and in effect at the date any share or shares of Series B Preferred Stock are surrendered for conversion (such price, or such price as

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last adjusted, being referred to as the "Series B Conversion Price"), (c) in the case of the Series C Preferred Stock (i) multiplying the number of shares of Series C Preferred Stock to be so converted by $10.50 and (ii) dividing the result by the conversion price of $10.50 per share or, in case an adjustment of such price has taken place pursuant to the further provisions of this paragraph 5, then by the conversion price as last adjusted and in effect at the date any share or shares of Series C Preferred Stock are surrendered for conversion (such price, or such price as last adjusted, being referred to as the "Series C Conversion Price") and (d) in the case of the Series D Preferred Stock (i) multiplying the number of shares of Series D Preferred Stock to be so converted by $22.50 and (ii) dividing the result by the conversion price of $22.50 per share or, in case an adjustment of such price has taken place pursuant to the further provisions of this paragraph 5, then by the conversion price as last adjusted and in effect at the date any share or shares of Series D Preferred Stock are surrendered for conversion (such price, or such price as last adjusted, being referred to as the "Series D Conversion Price"). Such rights of conversion shall be exercised by the holder thereof by giving written notice that the holder elects to convert a stated number of shares of Preferred Stock into Common Stock and by surrender of a certificate or certificates for the shares so to be converted to the Corporation at its principal office (or such other office or agency of the Corporation as the Corporation may designate by notice in writing to the holders of the Preferred Stock) at any time during its usual business hours on the date set forth in such notice, together with a statement of the name or names (with address) in which the certificate or certificates for shares of Common Stock shall be issued.
5B. ISSUANCE OF CERTIFICATES; TIME CONVERSION EFFECTED. Promptly after the receipt of the written notice referred to in subparagraph 5A and surrender of the certificate or certificates for the share or shares of Preferred Stock to be converted, the Corporation shall issue and deliver, or cause to be issued and delivered, to the holder, registered in such name or names as such holder may direct, a certificate or certificates for the number of whole shares of Common Stock issuable upon the conversion of such share or shares of Preferred Stock. To the extent permitted by law, such conversion shall be deemed to have been effected and the Series A Conversion Price, Series B Conversion Price, Series C Conversion Price and/or Series D Conversion Price shall be determined as of the close of business on the date on which such written notice shall have been received by the Corporation and the certificate or certificates for such share or shares shall have been surrendered as aforesaid, and at such time the rights of the holder of such share or shares of Preferred Stock shall cease, and the person or persons in whose name or names any certificate or certificates for shares of Common Stock shall be issuable upon such conversion shall be deemed to have become the holder or holders of record of the shares represented thereby.
5C. FRACTIONAL SHARES; DIVIDENDS; PARTIAL CONVERSION. No fractional shares shall be issued upon conversion of Preferred Stock into Common Stock and no payment or adjustment shall be made upon any conversion on account of any cash dividends on the Common Stock issued upon such conversion. At the time of each conversion, the Corporation shall pay in cash an amount equal to all dividends accrued and unpaid on the shares of Preferred Stock surrendered for conversion to the date upon which such conversion is deemed to take place as provided in subparagraph 5B. In case the number of shares of Preferred Stock represented by the certificate or certificates surrendered pursuant to subparagraph 5A exceeds the number of shares

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converted, the Corporation shall, upon such conversion, execute and deliver to the holder, at the expense of the Corporation, a new certificate or certificates for the number of shares of Preferred Stock represented by the certificate or certificates surrendered which are not to be converted. If any fractional share of Common Stock would, except for the provisions of the first sentence of this subparagraph 5C, be delivered upon such conversion, the Corporation, in lieu of delivering such fractional share, shall pay to the holder surrendering the Preferred Stock for conversion an amount in cash equal to the current market price of such fractional share as determined in good faith by the Board of Directors of the Corporation.
5D. ADJUSTMENT OF CONVERSION PRICE UPON ISSUANCE OF COMMON STOCK. Except as provided in subparagraph 5F, if and whenever the Corporation shall issue or sell, or is, in accordance with subparagraphs 5D(1) through 5D(7), deemed to have issued or sold, any shares of Common Stock for a consideration per share less than the Series B Conversion Price, the Series C Conversion Price or the Series D Conversion Price, as the case may be, in effect immediately prior to the time of such issue or sale, then, forthwith upon such issue or sale, the Series B Conversion Price, the Series C Conversion Price or the Series D Conversion price, as the case may be, shall be reduced to the price determined by dividing (i) an amount equal to the sum of (a) the number of shares of Common Stock outstanding immediately prior to such issue or sale multiplied by the then existing applicable Conversion Price and (b) the consideration, if any, received by the Corporation upon such issue or sale, by
(ii) the total number of shares of Common Stock outstanding immediately after such issue or sale; PROVIDED, HOWEVER, in no case shall the Series B Conversion Price, the Series C Conversion Price or the Series D Conversion price, as the case may be, be less than the Series A Conversion Price.
For purposes of this subparagraph 5D, the following subparagraphs 5D(1) to 5D(7) shall also be applicable:
5D(1) ISSUANCE OF RIGHTS OR OPTIONS. In case at any time the Corporation shall in any manner grant (whether directly or by assumption in a merger or otherwise) any warrants or other rights to subscribe for or to purchase, or any options for the purchase of, Common Stock or any stock or security convertible into or exchangeable for Common Stock (such warrants, rights or options being called "Options" and such convertible or exchangeable stock or securities being called "Convertible Securities") whether or not such Options or the right to convert or exchange any such Convertible Securities are immediately exercisable, and the price per share for which Common Stock is issuable upon the exercise of such Options or upon the conversion or exchange of such Convertible Securities (determined by dividing (i) the total amount, if any, received or receivable by the Corporation as consideration for the granting of such Options, plus the minimum aggregate amount of additional consideration payable to the Corporation upon the exercise of all such Options, plus, in the case of such Options which relate to Convertible Securities, the minimum aggregate amount of additional consideration, if any, payable upon the issue or sale of such Convertible Securities and upon the conversion or exchange thereof, by (ii) the total maximum number of shares of Common Stock issuable upon the exercise of such Options or upon the conversion or exchange of all such Convertible Securities issuable upon the exercise of such Options) shall be less than the Series B Conversion Price, the Series C

-8-
Conversion Price or the Series D Conversion price, as the case may be, in effect immediately prior to the time of the granting of such Options, then the total maximum number of shares of Common Stock issuable upon the exercise of such Options or upon conversion or exchange of the total maximum amount of such Convertible Securities issuable upon the exercise of such Options shall be deemed to have been issued for such price per share as of the date of granting of such Options or the issuance of such Convertible Securities and thereafter shall be deemed to be outstanding. Except as otherwise provided in subparagraph 5D(3), no adjustment of the Series B Conversion Price, the Series C Conversion Price or the Series D Conversion price, as the case may be, shall be made upon the actual issue of such Common Stock or of such Convertible Securities upon exercise of such Options or upon the actual issue of such Common Stock upon conversion or exchange of such Convertible Securities.
5D(2) ISSUANCE OF CONVERTIBLE SECURITIES. In case the Corporation shall in any manner issue (whether directly or by assumption in a merger or otherwise) or sell any Convertible Securities, whether or not the rights to exchange or convert any such Convertible Securities are immediately exercisable, and the price per share for which Common Stock is issuable upon such conversion or exchange (determined by dividing (i) the total amount received or receivable by the Corporation as consideration for the issue or sale of such Convertible Securities, plus the minimum aggregate amount of additional consideration, if any, payable to the Corporation upon the conversion or exchange thereof, by (ii) the total maximum number of shares of Common Stock issuable upon the conversion or exchange of all such Convertible Securities) shall be less than the Series B Conversion Price, the Series C Conversion Price or the Series D Conversion price, as the case may be, in effect immediately prior to the time of such issue or sale, then the total maximum number of shares of Common Stock issuable upon conversion or exchange of all such Convertible Securities shall be deemed to have been issued for such price per share as of the date of the issue or sale of such Convertible Securities and thereafter shall be deemed to be outstanding, provided that (a) except as otherwise provided in subparagraph 5D(3), no adjustment of the Series B Conversion Price, the Series C Conversion Price or the Series D Conversion price, as the case may be, shall be made upon the actual issue of such Common Stock upon conversion or exchange of such Convertible Securities and (b) if any such issue or sale of such Convertible Securities is made upon exercise of any Options to purchase any such Convertible Securities for which adjustments of the Series B Conversion Price, the Series C Conversion Price or the Series D Conversion price, as the case may be, have been or are to be made pursuant to other provisions of this subparagraph 5D, no further adjustment of the Series B Conversion Price, the Series C Conversion Price or the Series D Conversion price, as the case may be, shall be made by reason of such issue or sale.
5D(3) CHANGE IN OPTION PRICE OR CONVERSION RATE. Upon the happening of any of the following events, namely, if the purchase price provided for in any Option referred to in subparagraph 5D(1), the additional consideration, if any, payable upon the conversion or exchange of any Convertible Securities referred to in subparagraph 5D(1) or 5D(2), or the rate at which Convertible Securities referred to in subparagraph 5D(1) or 5D(2) are convertible into or exchangeable for Common Stock shall change at any time (including, but

-9-
not limited to, changes under or by reason of provisions designed to protect against dilution), the Series B Conversion Price, the Series C Conversion Price or the Series D Conversion price, as the case may be, in effect at the time of such event shall forthwith be readjusted to the Series B Conversion Price, the Series C Conversion Price or the Series D Conversion price, as the case may be, which would have been in effect at such time had such Options or Convertible Securities still outstanding provided for such changed purchase price, additional consideration or conversion rate, as the case may be, at the time initially granted, issued or sold, but only if as a result of such adjustment the Series B Conversion Price, the Series C Conversion Price or the Series D Conversion price, as the case may be, then in effect hereunder is thereby reduced; and on the termination of any such Option or any such right to convert or exchange such Convertible Securities, the Series B Conversion Price, the Series C Conversion Price or the Series D Conversion price, as the case may be, then in effect hereunder shall forthwith be increased to the Series B Conversion Price, the Series C Conversion Price or the Series D Conversion price, as the case may be, which would have been in effect at the time of such termination had such Option or Convertible Securities, to the extent outstanding immediately prior to such termination, never been issued.
5D(4) STOCK DIVIDENDS. In case the Corporation shall declare a dividend or make any other distribution upon any stock of the Corporation (other than the Common Stock) payable in Common Stock, Options or Convertible Securities, then any Common Stock, Options or Convertible Securities, as the case may be, issuable in payment of such dividend or distribution shall be deemed to have been issued or sold at the fair market value thereof as determined in good faith by the Board of Directors.
5D(5) CONSIDERATION FOR STOCK. In case any shares of Common Stock, Options or Convertible Securities shall be issued or sold for cash, the consideration received therefor shall be deemed to be the amount received by the Corporation therefor, without deduction therefrom of any expenses incurred or any underwriting commissions or concessions or placement agency fees paid or allowed by the Corporation in connection therewith. In case any shares of Common Stock, Options or Convertible Securities shall be issued or sold for a consideration other than cash, the amount of the consideration other than cash received by the Corporation shall be deemed to be the fair value of such consideration as determined in good faith by the Board of Directors of the Corporation, without deduction of any expenses incurred or any underwriting commissions or concessions paid or allowed by the Corporation in connection therewith. In case any Options shall be issued in connection with the issue and sale of other securities of the Corporation, together comprising one integral transaction in which no specific consideration is allocated to such Options by the parties thereto, such Options shall be deemed to have been issued for such consideration as determined in good faith by the Board of Directors of the Corporation.
5D(6) RECORD DATE. In case the Corporation shall take a record of the holders of its Common Stock for the purpose of entitling them (i) to receive a dividend or other distribution payable in Common Stock, Options or Convertible Securities or (ii) to subscribe for or purchase Common Stock, Options or Convertible Securities, then such record date

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shall be deemed to be the date of the issue or sale of the shares of Common Stock deemed to have been issued or sold upon the declaration of such dividend or the making of such other distribution or the date of the granting of such right of subscription or purchase, as the case may be.
5D(7) TREASURY SHARES. The number of shares of Common Stock outstanding at any given time shall not include shares owned or held by or for the account of the Corporation and treated as treasury shares for purposes of generally accepted accounting principles, and the disposition of any such shares shall be considered an issue or sale of Common Stock for the purpose of this subparagraph 5D.
5E. CERTAIN ISSUES OF COMMON STOCK EXCEPTED. Anything herein to the contrary notwithstanding, the Corporation shall not be required to make any adjustment of the Series B Conversion Price, the Series C Conversion Price or the Series D Conversion Price in the case of the issuance from and after the date of filing of this certificate of incorporation of securities issued (A) upon conversion of any of the Preferred Shares, (B), securities issued pursuant to an acquisition transaction approved by the Company's Board of Directors and pursuant to which the Company acquires not less than 51% of the voting power of the acquisition target and after giving effect to such transaction the stockholders of the Company prior to such transaction continue to hold at least fifty-one (51%) of the voting power of the Company (on a fully diluted basis after giving effect to the exercise or conversion of all options, warrants and other convertible securities then outstanding), (C) pursuant to a firm commitment public offering, (D) pursuant to the sale of common stock or the exercise of options to purchase Common Stock granted to directors, officers, employees or consultants of the Corporation in connection with their service to the Corporation issued prior to or after the date hereof (or retention as consultants), not to exceed in the aggregate 1,200,000 shares of Common Stock (appropriately adjusted to reflect stock splits, stock dividends, combinations of shares and the like with respect to the Common Stock), plus such number of shares of Common Stock which are repurchased by the Corporation from such persons after such date pursuant to contractual rights held by the Corporation and at repurchase prices not exceeding the respective original purchase prices paid by such persons to the Corporation therefor); provided, however, that the aggregate number of shares of common stock and options to purchase common stock may be increased with the consent of a majority of the directors who were designated as Investor Nominees pursuant to the Second Amended and Restated Stockholders Agreement dated as of April 6, 2000 (the "Investor Nominees") or (E) to such strategic partners and in such amounts as may be approved with the consent of a majority of the directors who were designated as Investor Nominees.
5F. SUBDIVISION OR COMBINATION OF COMMON STOCK. In case the Corporation shall at any time subdivide (by any stock split, stock dividend or otherwise) its outstanding shares of Common Stock into a greater number of shares, the Series A Conversion Price, the Series B Conversion Price, the Series C Conversion Price and/or the Series D Conversion Price in effect immediately prior to such subdivision shall be proportionately reduced, and, conversely, in case the outstanding shares of Common Stock shall be combined into a smaller number of shares, the Series A Conversion Price, Series B Conversion Price, Series C Conversion Price and/or the Series D Conversion Price in effect immediately prior to such combination shall be

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proportionately increased. In the case of any such subdivision, no further adjustment shall be made pursuant to subparagraph 5D(4) by reason thereof.
5G. REORGANIZATION OR RECLASSIFICATION. If any capital reorganization or reclassification of the capital stock of the Corporation shall be effected in such a way that holders of Common Stock shall be entitled to receive stock, securities or assets with respect to or in exchange for Common Stock, then, as a condition of such reorganization or reclassification, lawful and adequate provisions shall be made whereby each holder of a share or shares of Preferred Stock shall thereupon have the right to receive, upon the basis and upon the terms and conditions specified herein and in lieu of the shares of Common Stock immediately theretofore receivable upon the conversion of such share or shares of Preferred Stock, such shares of stock, securities or assets as may be issued or payable with respect to or in exchange for a number of outstanding shares of such Common Stock equal to the number of shares of such Common Stock immediately theretofore receivable upon such conversion had such reorganization or reclassification not taken place, and in any such case appropriate provisions shall be made with respect to the rights and interests of such holder to the end that the provisions hereof (including without limitation provisions for adjustments of the Series A Conversion Price, the Series B Conversion Price, the Series C Conversion Price and/or the Series D Conversion Price) shall thereafter be applicable, as nearly as may be, in relation to any shares of stock, securities or assets thereafter deliverable upon the exercise of such conversion rights.
5H. NOTICE OF ADJUSTMENT. Upon any adjustment of the Series A Conversion Price, Series B Conversion Price, the Series C Conversion Price and/or the Series D Conversion Price, then and in each such case the Corporation shall give written notice thereof, by delivery in person, certified or registered mail, return receipt requested, telecopier or telex, addressed to each holder of shares of Preferred Stock at the address of such holder as shown on the books of the Corporation, which notice shall state the Series A Conversion Price, the Series B Conversion Price, the Series C Conversion Price and/or the Series D Conversion Price resulting from such adjustment, setting forth in reasonable detail the method upon which such calculation is based.
5I. OTHER NOTICES. In case at any time:
(1) the Corporation shall declare any dividend upon its Common Stock payable in cash or stock or make any other distribution to the holders of its Common Stock;
(2) the Corporation shall offer for subscription PRO RATA to the holders of its Common Stock any additional shares of stock of any class or other rights;
(3) there shall be any capital reorganization or reclassification of the capital stock of the Corporation, or a consolidation or merger of the Corporation with or into another entity or entities, or a sale, lease, abandonment, transfer or other disposition of all or substantially all its assets; or
(4) there shall be a voluntary or involuntary dissolution, liquidation or winding up of the Corporation;

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then, in any one or more of said cases, the Corporation shall give, by delivery in person, certified or registered mail, return receipt requested, telecopier or telex, addressed to each holder of any shares of Preferred Stock at the address of such holder as shown on the books of the Corporation, (a) at least 20 days' prior written notice of the date on which the books of the Corporation shall close or a record shall be taken for such dividend, distribution or subscription rights or for determining rights to vote in respect of any such reorganization, reclassification, consolidation, merger, disposition, dissolution, liquidation or winding up and (b) in the case of any such reorganization, reclassification, consolidation, merger, disposition, dissolution, liquidation or winding up, at least 20 days' prior written notice of the date when the same shall take place. Such notice in accordance with the foregoing clause (a) shall also specify, in the case of any such dividend, distribution or subscription rights, the date on which the holders of Common Stock shall be entitled thereto and such notice in accordance with the foregoing clause (b) shall also specify the date on which the holders of Common Stock shall be entitled to exchange their Common Stock for securities or other property deliverable upon such reorganization, reclassification, consolidation, merger, disposition, dissolution, liquidation or winding up, as the case may be.
5J. STOCK TO BE RESERVED. The Corporation will at all times reserve and keep available out of its authorized Common Stock, solely for the purpose of issuance upon the conversion of the Preferred Stock as herein provided, such number of shares of Common Stock as shall then be issuable upon the conversion of all outstanding shares of Preferred Stock. The Corporation covenants that all shares of Common Stock which shall be so issued shall be duly and validly issued and fully paid and nonassessable and free from all taxes, liens and charges with respect to the issue thereof, and, without limiting the generality of the foregoing, the Corporation covenants that it will from time to time take all such action as may be requisite to assure that the par value per share of the Common Stock is at all times equal to or less than the Series A Conversion Price, the Series B Conversion Price, the Series C Conversion Price and/or the Series D Conversion Price in effect at the time. The Corporation will take all such action as may be necessary to assure that all such shares of Common Stock may be so issued without violation of any applicable law or regulation, or of any requirement of any national securities exchange upon which the Common Stock may be listed.
5K. ISSUE TAX. The issuance of certificates for shares of Common Stock upon conversion of Preferred Stock shall be made without charge to the holders thereof for any issuance tax in respect thereof, provided that the Corporation shall not be required to pay any tax which may be payable in respect of any transfer involved in the issuance and delivery of any certificate in a name other than that of the holder of the Preferred Stock which is being converted.
5L. CLOSING OF BOOKS. The Corporation will at no time close its transfer books against the transfer of any Preferred Stock or of any shares of Common Stock issued or issuable upon the conversion of any shares of Preferred Stock in any manner which interferes with the timely conversion of such Preferred Stock, except as may otherwise be required to comply with applicable securities laws.

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5N. DEFINITION OF COMMON STOCK. As used in this paragraph 5, the term "Common Stock" shall mean and include the Corporation's authorized Common Stock, par value $.01 per share, as constituted on the date of filing of this Fifth Amended and Restated Certificate of Incorporation, and shall also include any capital stock of any class of the Corporation thereafter authorized which shall not be limited to a fixed sum or percentage in respect of the rights of the holders thereof to participate in dividends or in the distribution of assets upon the voluntary or involuntary liquidation, dissolution or winding up of the Corporation; provided that the shares of Common Stock receivable upon conversion of shares of Preferred Stock shall include only shares designated as Common Stock of the Corporation on the date of filing of this instrument, or in case of any reorganization or reclassification of the outstanding shares thereof, the stock, securities or assets provided for in subparagraph 5G.
5O. MANDATORY CONVERSION. If at any time the Corporation shall effect a firm commitment underwritten public offering of shares of Common Stock in which (i) the aggregate price paid for such shares by the public shall be at least $10,000,000 and (ii) the price paid by the public for such shares shall be at least $32.14 per share (appropriately adjusted pro rata and pursuant to this
Section 5 to reflect the occurrence of any event described in subparagraphs 5D, 5E and 5F), then effective upon the closing of the sale of such shares by the Corporation pursuant to such public offering, all outstanding shares of Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock and Series D Preferred Stock shall automatically convert to shares of Common Stock on the basis set forth in this paragraph 5. Holders of shares of Preferred Stock so converted may deliver to the Corporation at its principal office (or such other office or agency of the Corporation as the Corporation may designate by notice in writing to such holders) during its usual business hours, the certificate or certificates for the shares so converted. As promptly as practicable thereafter, the Corporation shall issue and deliver to such holder a certificate or certificates for the number of whole shares of Common Stock to which such holder is entitled, together with any cash dividends and payment in lieu of fractional shares to which such holder may be entitled pursuant to subparagraph 5C. Until such time as a holder of shares Preferred Stock shall surrender his or its certificates therefor as provided above, such certificates shall be deemed to represent the shares of Common Stock to which such holder shall be entitled upon the surrender thereof.
6. NO REISSUANCE OF PREFERRED STOCK. No share or shares of Preferred Stock acquired by the Corporation by reason of purchase, conversion or otherwise shall be reissued, and all such shares shall be canceled, retired and eliminated from the shares which the Corporation shall be authorized to issue. The Corporation may from time to time take such appropriate corporate action as may be necessary to reduce the authorized number of shares of the Preferred Stock accordingly.
7. NOTICES OF RECORD DATE. In the event of
(a) any taking by the Corporation of a record of the holders of any class of securities for the purpose of determining the holders thereof who are entitled to receive any

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dividend or other distribution, or any right to subscribe for, purchase or otherwise acquire any shares of stock of any class or any other securities or property, or to receive any other right, or
(b) any capital reorganization of the Corporation, any reclassification or recapitalization of the capital stock of the Corporation, any merger or consolidation of the Corporation, or any transfer of all or substantially all of the assets of the Corporation to any other corporation, or any other entity or person, or
(c) any voluntary or involuntary dissolution, liquidation or winding up of the Corporation,
then and in each such event the Corporation shall mail or cause to be mailed to each holder of Preferred Stock a notice specifying (i) the date on which any such record is to be taken for the purpose of such dividend, distribution or right and a description of such dividend, distribution or right, (ii) the date on which any such reorganization, reclassification, recapitalization, transfer, consolidation, merger, dissolution, liquidation or winding up is expected to become effective and (iii) the time, if any, that is to be fixed, as to when the holders of record of Common Stock (or other securities) shall be entitled to exchange their shares of Common Stock (or other securities) for securities or other property deliverable upon such reorganization, reclassification, recapitalization, transfer, consolidation, merger, dissolution, liquidation or winding up. Such notice shall be mailed at least twenty (20) days prior to the date specified in such notice on which such action is to be taken.
B. COMMON STOCK
1. RELATIVE RIGHTS OF PREFERRED STOCK AND COMMON STOCK. All preferences, voting powers, relative, participating, optional or other special rights and privileges, and qualifications, limitations, or restrictions of the Common Stock are expressly made subject and subordinate to those that may be fixed with respect to any shares of the Preferred Stock.
2. VOTING RIGHTS. Except as otherwise required by law or this certificate of incorporation, each holder of Common Stock shall have one vote in respect of each share of stock held by him of record on the books of the Corporation for the election of directors and on all matters submitted to a vote of stockholders of the Corporation. Notwithstanding the provisions of Section 242(b)(2) of the Delaware General Corporation Law, the number of authorized shares of Common Stock may be increased or decreased (but not below the number of shares then outstanding) by the affirmative vote of the holders of a majority of the outstanding shares of capital stock of the Corporation, with each such share being entitled to such number of votes per share as is provided in this Article FOURTH.
3. DIVIDENDS. Subject to the preferential rights of the Preferred Stock, if any, the holders of shares of Common Stock shall be entitled to receive, when and if declared by the Board of Directors, out of the assets of the Corporation which are by law available therefor, dividends payable either in cash, in property or in shares of capital stock.

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4. DISSOLUTION, LIQUIDATION OR WINDING UP. In the event of any dissolution, liquidation or winding up of the affairs of the Corporation, after distribution in full of the preferential amounts, if any, to be distributed to the holders of shares of the Preferred Stock, holders of Common Stock shall be entitled, unless otherwise provided by law or this certificate of incorporation, to receive all of the remaining assets of the Corporation of whatever kind available for distribution to stockholders ratably in proportion to the number of shares of Common Stock held by them respectively.
FIFTH. The Corporation is to have perpetual existence.
SIXTH. In furtherance and not in limitation of the powers conferred by the laws of the State of Delaware:
A. The Board of Directors of the Corporation is expressly authorized to adopt, amend or repeal the By-Laws of the Corporation.
B. Elections of directors need not be by written ballot unless the By-Laws of the Corporation shall so provide.
C. The books of the Corporation may be kept at such place within or without the State of Delaware as the By-Laws of the Corporation may provide or as may be designated from time to time by the Board of Directors of the Corporation.
SEVENTH. The Corporation eliminates the personal liability of each member of its Board of Directors to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, provided, however, that, to the extent provided by applicable law, the foregoing shall not eliminate the liability of a director (i) for any breach of such director's duty of loyalty to the Corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of Title 8 of the Delaware Code or (iv) for any transaction from which such director derived an improper personal benefit. No amendment to or repeal of this provision shall apply to or have any effect on the liability or alleged liability of any director for or with respect to any acts or omissions of such director occurring prior to such amendment or repeal.
EIGHTH. The corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the corporation to procure a judgment in its favor by reason of the fact that he is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against expenses (including attorneys' fees) actually and reasonably incurred by him in connection with the defense or settlement of such action or suit if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the corporation and except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable unless and

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only to the extent that the Court of Chancery of the State of Delaware or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the Court of Chancery of the State of Delaware or such other court shall deem proper. Such indemnification is not exclusive of any other right to indemnification provided by law or otherwise. Expenses incurred in defending a pending or threatened civil or criminal action, suit or proceeding may be paid by the corporation in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of any person described in this Article VIII to repay such amount if it shall ultimately be determined that he is not entitled to indemnification by the corporation as authorized in this Article VIII. The right to indemnification and advancement of expenses on the condition specified herein conferred by this Article VIII shall be deemed to be a contract between the Corporation and each person referred to herein.
NINTH. Subject to this Fifth Amended and Restated Certificate of Incorporation, as it may be amended from time to time in accordance herewith, the Corporation reserves the right to amend or repeal any provision contained in this Certificate of Incorporation, in the manner now or hereafter prescribed by statute, and all rights conferred upon a stockholder herein are granted subject to this reservation.
[Remainder of Page Intentionally Left Blank]

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IN WITNESS WHEREOF, the undersigned has executed this certificate on April 7, 2000.
EXACT LABORATORIES, INC.

/s/ Stanley N. Lapidus
------------------------------
President	

CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
EXACT LABORATORIES, INC.
EXACT Laboratories, Inc., a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware (the "Corporation") DOES HEREBY CERTIFY:
FIRST: That the Board of Directors of EXACT Laboratories, Inc. (the "Corporation") at a meeting of the Board of Directors, by at least a majority of its members, duly adopted resolutions in accordance with Section 242 of the General Corporation Law of the State of Delaware, (i) proposing an amendment to the Fifth Amended and Restated Certificate of Incorporation of the Corporation,
(ii) declaring such amendment to be advisable and in the best interests of the Corporation, and (iii) directing that such amendment be submitted to the stockholders of the Corporation for approval thereby. The resolutions setting forth the amendment and directing that such amendment be submitted to the stockholders are as follows:

RESOLVED:            That, subject to stockholder approval, the Corporation
                     amend its Fifth Amended and Restated Certificate of
                     Incorporation, as filed with the Secretary of State of the
                     Sate of Delaware (the "Certificate of Incorporation") so
                     that, as amended, Article FIRST of the Certificate of
                     Incorporation shall be read in its entirety as set forth
                     below, and such amendment is hereby recommended to the
                     stockholders of the Corporation (the "Stockholders") as
                     being advisable and in the best interests of the
                     Corporation and its Stockholders.

                             "FIRST.  The name of the corporation is EXACT
                             Corporation (The "Corporation").

RESOLVED:             That the proposal to amend the Certificate of
                      Incorporation, as set forth in the preceding resolution,
                      be submitted to the Stockholders of the Corporation
                      entitled to vote thereon for their approval in compliance
                      with Sections 228 and 242 of the General Corporation Law
                      of the State of Delaware.

RESOLVED:             That, subject to the approval by the Stockholders of the
                      proposal to amend the Certificate of Incorporation as
                      described in the foregoing resolution, the Secretary
                      hereby is, authorized and directed to amend the
                      Certificate of Incorporation as set forth above and to
                      file such amendment with the Secretary of State of the
                      State of Delaware.	

                                      -2-

         SECOND: That stockholders of the Corporation holding the necessary	

number of shares of the outstanding capital stock of the Corporation as required by statute and the Certificate of Incorporation of the Corporation approved said amendment by written consent effective September 12, 2000, in accordance with Sections 228 and 242 of the General Corporation Law of the State of Delaware and written notice of such action by written consent of stockholders has been given in accordance with said Section 228.
THIRD: That the aforesaid amendment was duly adopted in accordance with the applicable provisions of Section 242 of the General Corporation Law of the State of Delaware.
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IN WITNESS WHEREOF, said EXACT Laboratories, Inc. has caused this certificate to be executed by Stanley N. Lapidus, its secretary, on this 12th day of September 2000.
EXACT LABORATORIES, INC.

By: /s/ Stanley N. Lapidus
   -----------------------
Name:  Stanley N. Lapidus
Title: Secretary	

CERTIFICATE OF AMENDMENT
OF THE
FIFTH AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
EXACT CORPORATION
Exact Corporation, a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware (the "Corporation") DOES HEREBY CERTIFY:
FIRST: That the Board of Directors of Exact Corporation (the "Corporation") at a meeting of the Board of Directors, by at least a majority of its members, duly adopted resolutions in accordance with Section 242 of the General Corporation Law of the State of Delaware, (i) proposing an amendment to the Fifth Amended and Restated Certificate of Incorporation, as amended, (ii) declaring such amendment to be advisable and in the best interests of the Corporation, and (iii) directing that such amendment be submitted to the stockholders of the Corporation for approval thereby. The resolutions setting forth the amendment and directing that such amendment be submitted to the stockholders are as follows:

RESOLVED:            That, subject to stockholder approval, the first paragraph
                     of Article FOURTH (the "CERTIFICATE OF INCORPORATION") of
                     the Corporation's Fifth Amended and Restated Certificate of
                     Incorporation, as amended, be further amended by deleting
                     such paragraph in its entirety and replacing it with the
                     following:

                             "FOURTH: The total number of shares of all classes
                             of capital stock which the Corporation shall have
                             authority to issue is 104,700,373 shares,
                             consisting of 100,000,000 shares of Common Stock
                             with a par value of $.01 per share (the "Common
                             Stock") and 4,700,373 shares of Preferred Stock
                             with a par value of $.01 per share, (the "Preferred
                             Stock"), of which 1,000,000 shares are designated
                             as Series A Convertible Preferred Stock, 1,250,000
                             shares are designated as Series B Convertible
                             Preferred Stock, 1,015,000 shares are designated as
                             Series C Convertible Preferred Stock and 1,435,373
                             shares are designate as Series D Convertible
                             Preferred Stock."

RESOLVED:             That the proposal to amend the Certificate of
                      Incorporation, as set forth in the preceding resolution,
                      be submitted to the Stockholders of the Corporation
                      entitled to vote thereon for their approval in compliance
                      with Sections 228 and 242 of the General Corporation Law
                      of the State of Delaware.	

RESOLVED:             That, subject to the approval by the Stockholders of the
                      proposal to amend the Certificate of Incorporation as
                      described in the foregoing resolution, the Secretary
                      hereby is, authorized and directed to amend the
                      Certificate of Incorporation as set forth above and to
                      file such amendment with the Secretary of State of the
                      State of Delaware.

         SECOND: That stockholders of the Corporation holding the necessary	

number of shares of the outstanding capital stock of the Corporation as required by statute and the Certificate of Incorporation of the Corporation approved said amendment by written consent effective October __, 2000, in accordance with Sections 228 and 242 of the General Corporation Law of the State of Delaware and written notice of such action by written consent of stockholders has been given in accordance with said Section 228.
THIRD: That the aforesaid amendment was duly adopted in accordance with the applicable provisions of Section 242 of the General Corporation Law of the State of Delaware.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

IN WITNESS WHEREOF, said Exact Corporation has caused this certificate to be executed by Stanley N. Lapidus, its Secretary, on this 20th day of October 2000.
EXACT CORPORATION

By: /s/ Stanley N. Lapidus
    ----------------------
    Stanley N. Lapidus
    Secretary	

CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
EXACT CORPORATION
EXACT Corporation, a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware (the "Corporation") DOES HEREBY CERTIFY:
FIRST: That the Board of Directors of EXACT Corporation (the "Corporation") at a meeting of the Board of Directors, by at least a majority of its members, duly adopted resolutions in accordance with Section 242 of the General Corporation Law of the State of Delaware, (i) proposing an amendment to the Fifth Amended and Restated Certificate of Incorporation of the Corporation,
(ii) declaring such amendment to be advisable and in the best interests of the Corporation, and (iii) directing that such amendment be submitted to the stockholders of the Corporation for approval thereby. The resolutions setting forth the amendment and directing that such amendment be submitted to the stockholders are as follows:

RESOLVED:            That, subject to stockholder approval, the first paragraph
                     of Article FIRST (the "Certificate of Incorporation") of
                     the Corporation's Fifth Amended and Restated Certificate of
                     Incorporation, as amended, be further amended by deleting
                     such paragraph in its entirety and replacing it with the
                     following:

                             "FIRST.  The name of the corporation is EXACT
                             SCIENCES CORPORATION (The "Corporation").

RESOLVED:             That the proposal to amend the Certificate of
                      Incorporation, as set forth in the preceding resolution,
                      is hereby recommended to the Stockholders of the
                      Corporation as being advisable and in the best interests
                      of the Corporation and its Stockholders and

RESOLVED:             That the proposal to amend the Certificate of
                      Incorporation, as set forth above, be submitted to the
                      Stockholders of the Corporation entitled to vote thereon
                      for their approval in compliance with Sections 228 and 242
                      of the General Corporation Law of the State of Delaware.

RESOLVED:             That, subject to the approval by the Stockholders of the
                      proposal to amend the Certificate of Incorporation as
                      described in the foregoing resolution, the Secretary
                      hereby is, authorized and directed to amend the
                      Certificate of	

-2-
Incorporation as set forth above and to file such amendment with the Secretary of State of the State of Delaware.
SECOND: That stockholders of the Corporation holding the necessary number of shares of the outstanding capital stock of the Corporation as required by statute and the Certificate of Incorporation of the Corporation approved said amendment by written consent effective December 1, 2000, in accordance with Sections 228 and 242 of the General Corporation Law of the State of Delaware and written notice of such action by written consent of stockholders has been given in accordance with said Section 228.
THIRD: That the aforesaid amendment was duly adopted in accordance with the applicable provisions of Section 242 of the General Corporation Law of the State of Delaware.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

-3-
IN WITNESS WHEREOF, said EXACT Corporation has caused this certificate to be executed by Stanley N. Lapidus, its secretary, on this 1st day of December 2000.
EXACT CORPORATION

By: /s/ STANLEY N. LAPIDUS
    ----------------------
Name:  Stanley N. Lapidus
Title: Secretary	

Exhibit 3.3
SIXTH AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
EXACT SCIENCES CORPORATION
(INCORPORATED FEBRUARY 10, 1995)
* * * * * *
I, Don M. Hardison, President of EXACT Corporation (the "Corporation"), a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware, do hereby certify that the Certificate of Incorporation of EXACT Sciences Corporation, as amended, (originally incorporated under the name Lapidus Medical Systems, Inc.), has been further amended, and restated as amended, in accordance with provisions of Sections 242 and 245 of the General Corporation Law of the State of Delaware, and, as amended and restated, is set forth in its entirety as follows:
FIRST. The name of the Corporation is EXACT Sciences Corporation.
SECOND. The address of the registered office of the Corporation in the State of Delaware is 1209 Orange Street, Wilmington, New Castle County, Delaware 19801. The name of its registered agent at such address is The Corporation Trust Company, Wilmington, County of New Castle, Delaware 19801.
THIRD. The nature of the business or purposes to be conducted or promoted is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of the State of Delaware.
FOURTH. The total number of shares of all classes of capital stock which the Corporation shall have authority to issue is 105,000,000 shares, consisting of 100,000,000 shares of Common Stock with a par value of $.01 per share (the "Common Stock") and 5,000,000 shares of Preferred Stock with a par value of $.01 per share (the "Preferred Stock").
A. COMMON STOCK
1. GENERAL. All shares of Common Stock will be identical and will entitle the holders thereof to the same rights, powers and privileges. The rights, powers and privileges of the holders of the Common Stock are subject to and qualified by the rights of holders of the Preferred Stock.

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2. DIVIDENDS. Dividends may be declared and paid on the Common Stock from funds lawfully available therefor as and when determined by the Board of Directors and subject to any preferential dividend rights of any then outstanding Preferred Stock.
3. DISSOLUTION, LIQUIDATION OR WINDING UP. In the event of any dissolution, liquidation or winding up of the affairs of the Corporation, whether voluntary or involuntary, each issued and outstanding share of Common Stock shall entitle the holder thereof to receive an equal portion of the net assets of the Corporation available for distribution to the holders of Common Stock, subject to any preferential rights of any then outstanding Preferred Stock.
4. VOTING RIGHTS. Except as otherwise required by law or this Sixth Amended and Restated Certificate of Incorporation, each holder of Common Stock shall have one vote in respect of each share of stock held of record by such holder on the books of the Corporation for the election of directors and on all matters submitted to a vote of stockholders of the Corporation. Except as otherwise required by law or provided herein, holders of Common Stock shall vote together with holders of the Preferred Stock as a single class, subject to any special or preferential voting rights of any then outstanding Preferred Stock. There shall be no cumulative voting.
B. PREFERRED STOCK
The Preferred Stock may be issued in one or more series at such time or times and for such consideration or considerations as the Board of Directors of the Corporation may determine. Each series shall be so designated as to distinguish the shares thereof from the shares of all other series and classes. Except as otherwise provided in this Sixth Amended and Restated Certificate of Incorporation, different series of Preferred Stock shall not be construed to constitute different classes of shares for the purpose of voting by classes.
The Board of Directors is expressly authorized to provide for the issuance of all or any shares of the undesignated Preferred Stock in one or more series, each with such designations, preferences, voting powers (or special, preferential or no voting powers), relative, participating, optional or other special rights and privileges and such qualifications, limitations or restrictions thereof as shall be stated in the resolution or resolutions adopted by the Board of Directors to create such series, and a certificate of said resolution or resolutions (a "Certificate of Designation") shall be filed in accordance with the General Corporation Law of the State of Delaware. The authority of the Board of Directors with respect to each such series shall include, without limitation of the foregoing, the right to provide that the shares of each such series may be: (i) subject to redemption at such time or times and at such price or prices; (ii) entitled to receive dividends (which may be cumulative or non-cumulative) at such rates, on such conditions, and at such times, and payable in preference to, or in such relation to, the dividends payable on any other class or classes or any other series; (iii) entitled to such rights upon the dissolution of, or upon any distribution of the assets of, the Corporation; (iv) convertible into, or exchangeable for, shares of any other class or classes of stock, or of any other series of the same or any other class or classes of stock of the Corporation at such price or prices or at such rates of exchange and with such adjustments, if any; (v) entitled to the benefit of such limitations, if any,

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on the issuance of additional shares of such series or shares of any other series of Preferred Stock; or (vi) entitled to such other preferences, powers, qualifications, rights and privileges, all as the Board of Directors may deem advisable and as are not inconsistent with law and the provisions of this Sixth Amended and Restated Certificate of Incorporation.
FIFTH. The Corporation is to have perpetual existence.
SIXTH. The following provisions are included for the management of the business and the conduct of the affairs of the Corporation, and for further definition, limitation and regulation of the powers of the Corporation and of its Board of Directors and stockholders:
1. The business and affairs of the Corporation shall be managed by or under the direction of the Board of Directors of the Corporation.
2. The Board of Directors of the Corporation is expressly authorized to adopt, amend or repeal the by-laws of the Corporation, subject to any limitation thereof contained in the by-laws. The stockholders shall also have the power to adopt, amend or repeal the by-laws of the Corporation; PROVIDED, HOWEVER, that, in addition to any vote of the holders of any class or series of stock of the Corporation required by law or by this Sixth Amended and Restated Certificate of Incorporation, the affirmative vote of the holders of at least eighty percent (80%) of the voting power of all of the then outstanding shares of the capital stock of the Corporation entitled to vote generally in the election of directors, voting together as a single class, shall be required to adopt, amend or repeal any provision of the by-laws of the Corporation.
3. Stockholders of the Corporation may not take any action by written consent in lieu of a meeting.
4. Special meetings of stockholders may be called at any time only by the Chairman, President, the Chairman of the Board of Directors (if any) or a majority of the Board of Directors. Business transacted at any special meeting of stockholders shall be limited to matters relating to the purpose or purposes stated in the notice of meeting.
5. The books of the Corporation may be kept at such place within or without the State of Delaware as the by-laws of the Corporation may provide or as may be designated from time to time by the Board of Directors of the Corporation.
SEVENTH.
1. NUMBER OF DIRECTORS. The number of directors which shall constitute the whole Board of Directors shall be determined by resolution of a majority of the Board of Directors, but in no event shall the number of directors be less than three. The number of directors may be decreased at any time and from time to time by a majority of the directors then in office, but only to eliminate vacancies existing by reason of the death, resignation, removal or expiration of the term of one or more directors. The directors shall be elected at the annual meeting of

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stockholders by such stockholders as have the right to vote on such election. Directors need not be stockholders of the Corporation.
2. CLASSES OF DIRECTORS. The Board of Directors shall be and is divided into three classes: Class I, Class II and Class III. No one class shall have more than one director more than any other class.
3. ELECTION OF DIRECTORS. Elections of directors need not be by written ballot except as and to the extent provided in the by-laws of the Corporation.
4. TERMS OF OFFICE. Each director shall serve for a term ending on the date of the third annual meeting following the annual meeting at which such director was elected; provided, however, that each initial director in Class I shall serve for a term ending on the date of the annual meeting next following the end of the Corporation's fiscal year ending December 31, 2000; each initial director in Class II shall serve for a term ending on the date of the annual meeting next following the end of the Corporation's fiscal year ending December 31, 2001; and each initial director in Class III shall serve for a term ending on the date of the annual meeting next following the end of the Corporation's fiscal year ending December 31, 2002.
5. ALLOCATION OF DIRECTORS AMONG CLASSES IN THE EVENT OF INCREASES OR DECREASES IN THE NUMBER OF DIRECTORS. In the event of any increase or decrease in the authorized number of directors, (i) each director then serving as such shall nevertheless continue as director of the class of which he or she is a member until the expiration of such director's current term or his or her prior death, removal or resignation and (ii) the newly created or eliminated directorships resulting from such increase or decrease shall be apportioned by the Board of Directors among the three classes of directors so as to ensure that no one class has more than one director more than any other class. To the extent possible, consistent with the foregoing rule, any newly created directorships shall be added to those classes whose terms of office are to expire at the earliest dates following such allocation, unless otherwise provided for from time to time by resolution adopted by a majority of the directors then in office, though less than a quorum. No decrease in the number of directors constituting the whole Board of Directors shall shorten the term of an incumbent Director.
6. TENURE. Notwithstanding any provisions to the contrary contained herein, each director shall hold office until his or her successor is elected and qualified, or until his or her earlier death, resignation or removal.
7. VACANCIES. Unless and until filled by the stockholders, any vacancy in the Board of Directors, however occurring, including a vacancy resulting from an enlargement of the Board of Directors, may be filled only by vote of a majority of the directors then in office, even if less than a quorum, or by a sole remaining director. A director elected to fill a vacancy shall be elected for the unexpired term of his or her predecessor in office, if applicable, and a director chosen to fill a position resulting from an increase in the number of directors shall hold office until the next election of the class for which such director shall have been chosen and until his or her successor is elected and qualified, or until his or her earlier death, resignation or removal.

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8. QUORUM. A majority of the total number of the whole Board of Directors shall constitute a quorum at all meetings of the Board of Directors. In the event one or more of the directors shall be disqualified to vote at any meeting, then the required quorum shall be reduced by one for each such director so disqualified; provided, however, that in no case shall less than one-third (1/3) of the number so fixed constitute a quorum. In the absence of a quorum at any such meeting, a majority of the directors present may adjourn the meeting from time to time without further notice other than announcement at the meeting, until a quorum shall be present.
9. ACTION AT MEETING. At any meeting of the Board of Directors at which a quorum is present, the vote of a majority of those present shall be sufficient to take any action, unless a different vote is specified by law or the Corporation's by-laws.
10. REMOVAL. Any one or more or all of the directors may be removed without cause only by the holders of at least seventy-five percent (75%) of the shares then entitled to vote at an election of directors. Any one or more or all of the directors may be removed with cause only by the holders of at least a majority of the shares then entitled to vote at an election of directors.
11. STOCKHOLDER NOMINATIONS AND INTRODUCTION OF BUSINESS, ETC. Advance notice of stockholder nominations for election of directors and other business to be brought by stockholders before a meeting of stockholders shall be given in the manner provided in the by-laws of the Corporation.
12. RIGHTS OF PREFERRED STOCK. The provisions of this Article are subject to the rights of the holders of any series of Preferred Stock from time to time outstanding.
EIGHTH. No director (including any advisory director) of the Corporation shall be personally liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director notwithstanding any provision of law imposing such liability; provided, however, that, to the extent provided by applicable law, this provision shall not eliminate the liability of a director (i) for any breach of the director's duty of loyalty to the Corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law,
(iii) under Section 174 of the General Corporation Law of the State of Delaware, or (iv) for any transaction from which the director derived an improper personal benefit. No amendment to or repeal of this provision shall apply to or have any effect on the liability or alleged liability of any director for or with respect to any acts or omissions of such director occurring prior to such amendment or repeal.
NINTH. The Board of Directors of the Corporation, when evaluating any offer of another party (a) to make a tender or exchange offer for any equity security of the Corporation or (b) to effect a business combination, shall, in connection with the exercise of its judgment in determining what is in the best interests of the Corporation as whole, be authorized to give due consideration to any such factors as the Board of Directors determines to be relevant, including, without limitation:

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(i) the interests of the Corporation's stockholders, including the possibility that these interests might be best served by the continued independence of the Corporation;
(ii) whether the proposed transaction might violate federal or state laws;
(iii) not only the consideration being offered in the proposed transaction, in relation to the then current market price for the outstanding capital stock of the Corporation, but also to the market price for the capital stock of the Corporation over a period of years, the estimated price that might be achieved in a negotiated sale of the Corporation as a whole or in part or through orderly liquidation, the premiums over market price for the securities of other corporations in similar transactions, current political, economic and other factors bearing on securities prices and the Corporation's financial condition and future prospects; and
(iv) the social, legal and economic effects upon employees, suppliers, customers, creditors and others having similar relationships with the Corporation, upon the communities in which the Corporation conducts its business and upon the economy of the state, region and nation.
In connection with any such evaluation, the Board of Directors is authorized to conduct such investigations and engage in such legal proceedings as the Board of Directors may determine.
TENTH.
1. ACTIONS, SUITS AND PROCEEDINGS OTHER THAN BY OR IN THE RIGHT OF THE CORPORATION. The Corporation shall indemnify each person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the Corporation), by reason of the fact that he is or was, or has agreed to become, a director or officer of the Corporation, or is or was serving, or has agreed to serve, at the request of the Corporation, as a director, officer or trustee of, or in a similar capacity with, another corporation, partnership, joint venture, trust or other enterprise (including any employee benefit plan) (all such persons being referred to hereafter as an "Indemnitee"), or by reason of any action alleged to have been taken or omitted in such capacity, against all expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him or on his behalf in connection with such action, suit or proceeding and any appeal therefrom, if he acted in good faith and in a manner he reasonably believed to be in, or not opposed to, the best interests of the Corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction or upon a plea of NOLO CONTENDERE or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which he reasonably believed to be in, or not opposed to, the best interests of the Corporation, and, with respect to any criminal action or proceeding, had reasonable cause to believe that his conduct was unlawful. Notwithstanding anything to the contrary in this Article, except as set forth in Section 6 below, the Corporation shall not indemnify an Indemnitee seeking

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indemnification in connection with a proceeding (or part thereof) initiated by the Indemnitee unless the initiation thereof was approved by the Board of Directors of the Corporation.
2. ACTIONS OR SUITS BY OR IN THE RIGHT OF THE CORPORATION. The Corporation shall indemnify any Indemnitee who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the Corporation to procure a judgment in its favor by reason of the fact that he is or was, or has agreed to become, a director or officer of the Corporation, or is or was serving, or has agreed to serve, at the request of the Corporation, as a director, officer or trustee of, or in a similar capacity with, another corporation, partnership, joint venture, trust or other enterprise (including any employee benefit plan), or by reason of any action alleged to have been taken or omitted in such capacity, against all expenses (including attorneys' fees) and amounts paid in settlement actually and reasonably incurred by him or on his behalf in connection with such action, suit or proceeding and any appeal therefrom, if he acted in good faith and in a manner he reasonably believed to be in, or not opposed to, the best interests of the Corporation, except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the Corporation unless and only to the extent that the Court of Chancery of Delaware or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of such liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses (including attorneys' fees) which the Court of Chancery of Delaware or such other court shall deem proper.
3. INDEMNIFICATION FOR EXPENSES OF SUCCESSFUL PARTY. Notwithstanding the other provisions of this Article, to the extent that an Indemnitee has been successful, on the merits or otherwise, in defense of any action, suit or proceeding referred to in Sections 1 and 2 of this Article, or in defense of any claim, issue or matter therein, or on appeal from any such action, suit or proceeding, he shall be indemnified against all expenses (including attorneys' fees) actually and reasonably incurred by him or on his behalf in connection therewith. Without limiting the foregoing, if any action, suit or proceeding is disposed of, on the merits or otherwise (including a disposition without prejudice), without (i) the disposition being adverse to the Indemnitee, (ii) an adjudication that the Indemnitee was liable to the Corporation, (iii) a plea of guilty or NOLO CONTENDERE by the Indemnitee, (iv) an adjudication that the Indemnitee did not act in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Corporation, and (v) with respect to any criminal proceeding, an adjudication that the Indemnitee had reasonable cause to believe his conduct was unlawful, the Indemnitee shall be considered for the purpose hereof to have been wholly successful with respect thereto.
4. NOTIFICATION AND DEFENSE OF CLAIM. As a condition precedent to his right to be indemnified, the Indemnitee must notify the Corporation in writing as soon as practicable of any action, suit, proceeding or investigation involving him for which indemnity will or could be sought. With respect to any action, suit, proceeding or investigation of which the Corporation is so notified, the Corporation will be entitled to participate therein at its own expense and/or to assume the defense thereof at its own expense, with legal counsel reasonably acceptable to the Indemnitee. After notice from the Corporation to the Indemnitee of its election so to assume such defense, the Corporation shall not be liable to the Indemnitee for any legal or other expenses

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subsequently incurred by the Indemnitee in connection with such claim, other than as provided below in this Section 4. The Indemnitee shall have the right to employ his own counsel in connection with such claim, but the fees and expenses of such counsel incurred after notice from the Corporation of its assumption of the defense thereof shall be at the expense of the Indemnitee unless (i) the employment of counsel by the Indemnitee has been authorized by the Corporation,
(ii) counsel to the Indemnitee shall have reasonably concluded that there may be a conflict of interest or position on any significant issue between the Corporation and the Indemnitee in the conduct of the defense of such action or
(iii) the Corporation shall not in fact have employed counsel to assume the defense of such action, in each of which cases the fees and expenses of counsel for the Indemnitee shall be at the expense of the Corporation, except as otherwise expressly provided by this Article. The Corporation shall not be entitled, without the consent of the Indemnitee, to assume the defense of any claim brought by or in the right of the Corporation or as to which counsel for the Indemnitee shall have reasonably made the conclusion provided for in clause
(ii) above.
5. ADVANCE OF EXPENSES. Subject to the provisions of Section 6 below, in the event that the Corporation does not assume the defense pursuant to
Section 4 of this Article of any action, suit, proceeding or investigation of which the Corporation receives notice under this Article, any expenses (including attorneys' fees) incurred by an Indemnitee in defending a civil or criminal action, suit, proceeding or investigation or any appeal therefrom shall be paid by the Corporation in advance of the final disposition of such matter, PROVIDED, HOWEVER, that the payment of such expenses incurred by an Indemnitee in advance of the final disposition of such matter shall be made only upon receipt of an undertaking by or on behalf of the Indemnitee to repay all amounts so advanced in the event that it shall ultimately be determined that the indemnitee is not entitled to be indemnified by the Corporation as authorized in this Article. Such undertaking may be accepted without reference to the financial ability of such person to make such repayment.
6. PROCEDURE FOR INDEMNIFICATION. In order to obtain indemnification or advancement of expenses pursuant to Section 1, 2, 3 or 5 of this Article, the Indemnitee shall submit to the Corporation a written request, including in such request such documentation and information as is reasonably available to the Indemnitee and is reasonably necessary to determine whether and to what extent the Indemnitee is entitled to indemnification or advancement of expenses. Any such indemnification or advancement of expenses shall be made promptly, and in any event within 60 days after receipt by the Corporation of the written request of the Indemnitee, unless with respect to requests under Section 1, 2 or 5 the Corporation determines, by clear and convincing evidence, within such 60-day period that the Indemnitee did not meet the applicable standard of conduct set forth in Section 1 or 2, as the case may be. Such determination shall be made in each instance by (a) a majority vote of the directors of the Corporation who are not at that time parties to the action, suit or proceeding in question ("disinterested directors"), even though less than a quorum, (b) if there are no such disinterested directors, or if such disinterested directors so direct, by independent legal counsel (who may be regular legal counsel to the corporation) in a written opinion, (c) a majority vote of a quorum of the outstanding shares of stock of all classes entitled to vote for directors, voting as a single class,

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which quorum shall consist of stockholders who are not at that time parties to the action, suit or proceeding in question, or (d) a court of competent jurisdiction.
7. REMEDIES. The right to indemnification or advances as granted by this Article shall be enforceable by the Indemnitee in any court of competent jurisdiction if the Corporation denies such request, in whole or in part, or if no disposition thereof is made within the 60-day period referred to above in
Section 6. Unless otherwise provided by law, the burden of proving that the Indemnitee is not entitled to indemnification or advancement of expenses under this Article shall be on the Corporation. Neither the failure of the Corporation to have made a determination prior to the commencement of such action that indemnification is proper in the circumstances because the Indemnitee has met the applicable standard of conduct, nor an actual determination by the Corporation pursuant to Section 6 that the Indemnitee has not met such applicable standard of conduct, shall be a defense to the action or create a presumption that the Indemnitee has not met the applicable standard of conduct. The Indemnitee's expenses (including attorneys' fees) incurred in connection with successfully establishing his right to indemnification, in whole or in part, in any such proceeding shall also be indemnified by the Corporation.
8. SUBSEQUENT AMENDMENT. No amendment, termination or repeal of this Article or of the relevant provisions of the General Corporation Law of the State of Delaware or any other applicable laws shall affect or diminish in any way the rights of any Indemnitee to indemnification under the provisions hereof with respect to any action, suit, proceeding or investigation arising out of or relating to any actions, transactions or facts occurring prior to the final adoption of such amendment, termination or repeal.
9. OTHER RIGHTS. The indemnification and advancement of expenses provided by this Article shall not be deemed exclusive of any other rights to which an Indemnitee seeking indemnification or advancement of expenses may be entitled under any law (common or statutory), agreement or vote of stockholders or disinterested directors or otherwise, both as to action in his official capacity and as to action in any other capacity while holding office for the Corporation, and shall continue as to an Indemnitee who has ceased to be a director or officer, and shall inure to the benefit of the estate, heirs, executors and administrators of the Indemnitee. Nothing contained in this Article shall be deemed to prohibit, and the Corporation is specifically authorized to enter into, agreements with officers and directors providing indemnification rights and procedures different from those set forth in this Article. In addition, the Corporation may, to the extent authorized from time to time by its Board of Directors, grant indemnification rights to other employees or agents of the Corporation or other persons serving the Corporation and such rights may be equivalent to, or greater or less than, those set forth in this Article.
10. PARTIAL INDEMNIFICATION. If an Indemnitee is entitled under any provision of this Article to indemnification by the Corporation for some or a portion of the expenses (including attorneys' fees), judgments, fines or amounts paid in settlement actually and reasonably incurred by him or on his behalf in connection with any action, suit, proceeding or investigation and any appeal therefrom but not, however, for the total amount thereof, the Corporation shall

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nevertheless indemnify the Indemnitee for the portion of such expenses (including attorneys' fees), judgments, fines or amounts paid in settlement to which the Indemnitee is entitled.
11. INSURANCE. The Corporation may purchase and maintain insurance, at its expense, to protect itself and any director, officer, employee or agent of the Corporation or another corporation, partnership, joint venture, trust or other enterprise (including any employee benefit plan) against any expense, liability or loss incurred by him in any such capacity, or arising out of his status as such, whether or not the Corporation would have the power to indemnify such person against such expense, liability or loss under the General Corporation Law of the State of Delaware.
12. MERGER OR CONSOLIDATION. If the Corporation is merged into or consolidated with another corporation and the Corporation is not the surviving corporation, the surviving corporation shall assume the obligations of the Corporation under this Article with respect to any action, suit, proceeding or investigation arising out of or relating to any actions, transactions or facts occurring prior to the date of such merger or consolidation.
13. SAVINGS CLAUSE. If this Article or any portion hereof shall be invalidated on any ground by any court of competent jurisdiction, then the Corporation shall nevertheless indemnify each Indemnitee as to any expenses (including attorneys' fees), judgments, fines and amounts paid in settlement in connection with any action, suit, proceeding or investigation, whether civil, criminal or administrative, including an action by or in the right of the Corporation, to the fullest extent permitted by an applicable portion of this Article that shall not have been invalidated and to the fullest extent permitted by applicable law.
14. DEFINITIONS. Terms used herein and defined in Section 145(h) and
Section 145(i) of the General Corporation Law of the State of Delaware shall have the respective meanings assigned to such terms in such Section 145(h) and
Section 145(i).
15. SUBSEQUENT LEGISLATION. If the General Corporation Law of the State of Delaware is amended after adoption of this Article to expand further the indemnification permitted to Indemnitees, then the Corporation shall indemnify such persons to the fullest extent permitted by the General Corporation Law of the State of Delaware, as so amended.
ELEVENTH. The Corporation reserves the right to amend or repeal any provision contained in this Sixth Amended and Restated Certificate of Incorporation in the manner prescribed by the laws of the State of Delaware and all rights conferred upon stockholders are granted subject to this reservation, PROVIDED, HOWEVER, that in addition to any vote of the holders of any class or series of stock of the Corporation required by law, this Sixth Amended and Restated Certificate of Incorporation or a Certificate of Designation with respect to a series of Preferred Stock, the affirmative vote of the holders of shares of voting stock of the Corporation representing at least seventy-five percent (75%) of the voting power of all of the then outstanding shares of the capital stock of the Corporation entitled to vote generally in the election of directors, voting together as a single class, shall be required to (i) reduce or eliminate the number of authorized shares of Common Stock or the number of authorized shares of Preferred Stock set

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forth in Article FOURTH or (ii) amend or repeal, or adopt any provision inconsistent with, Parts A and B of Article FOURTH and Articles FIFTH, SIXTH, SEVENTH, EIGHTH, NINTH, TENTH and this Article ELEVENTH of this Sixth Amended and Restated Certificate of Incorporation.
IN WITNESS WHEREOF, the undersigned has hereunto signed his name and affirms that the statements made in this Sixth Amended and Restated Certificate of Incorporation are true under the penalties of perjury this ____ day of ____, 2000.

/s/ Don M. Hardison
------------------------------
Don M. Hardison
President	

Exhibit 3.4
AMENDED AND RESTATED
BY-LAWS
OF
EXACT SCIENCS CORPORATION

BY-LAWS
TABLE OF CONTENTS

                                                                                                      PAGE
ARTICLE 1 - STOCKHOLDERS.................................................................................1

   1.1     PLACE OF MEETINGS.............................................................................1
   1.2     ANNUAL MEETING................................................................................1
   1.3     SPECIAL MEETINGS..............................................................................1
   1.4     NOTICE OF MEETINGS............................................................................1
   1.5     VOTING LIST...................................................................................1
   1.6     QUORUM........................................................................................2
   1.7     ADJOURNMENTS..................................................................................2
   1.8     VOTING AND PROXIES............................................................................2
   1.9     ACTION AT MEETING.............................................................................3
   1.10    INTRODUCTION OF BUSINESS AT MEETINGS..........................................................3
   1.11    ACTION WITHOUT MEETING........................................................................5

ARTICLE 2 - DIRECTORS....................................................................................6

   2.1     GENERAL POWERS................................................................................6
   2.2     NUMBER; ELECTION AND QUALIFICATION............................................................6
   2.3     CLASSES OF DIRECTORS..........................................................................7
   2.4     TERMS IN OFFICE...............................................................................7
   2.5     ALLOCATION OF DIRECTORS AMONG CLASSES IN THE EVENT OF INCREASES OR
           DECREASES IN THE NUMBER OF DIRECTORS..........................................................7
   2.6     TENURE........................................................................................7
   2.7     VACANCIES.....................................................................................7
   2.8     RESIGNATION...................................................................................8
   2.9     REGULAR MEETINGS..............................................................................8
   2.10    SPECIAL MEETINGS..............................................................................8
   2.11    NOTICE OF SPECIAL MEETINGS....................................................................8
   2.12    MEETINGS BY TELEPHONE CONFERENCE CALLS........................................................8
   2.13    QUORUM........................................................................................8
   2.14    ACTION AT MEETING.............................................................................9
   2.15    ACTION BY WRITTEN CONSENT.....................................................................9
   2.16    REMOVAL.......................................................................................9
   2.17    COMMITTEES....................................................................................9
   2.18    COMPENSATION OF DIRECTORS.....................................................................9	

                                      -ii-

ARTICLE 3 - OFFICERS....................................................................................10

   3.1     ENUMERATION..................................................................................10
   3.2     ELECTION.....................................................................................10
   3.3     QUALIFICATION................................................................................10
   3.4     TENURE.......................................................................................10
   3.5     RESIGNATION AND REMOVAL......................................................................10
   3.6     VACANCIES....................................................................................10
   3.7     CHAIRMAN OF THE BOARD AND VICE-CHAIRMAN OF THE BOARD.........................................11
   3.8     PRESIDENT....................................................................................11
   3.9     VICE PRESIDENTS..............................................................................11
   3.10    SECRETARY AND ASSISTANT SECRETARIES..........................................................11
   3.11    TREASURER AND ASSISTANT TREASURERS...........................................................12
   3.12    SALARIES.....................................................................................12
   3.13    ACTION WITH RESPECT TO SECURITIES OF OTHER CORPORATIONS......................................12

ARTICLE 4 - CAPITAL STOCK...............................................................................12

   4.1     ISSUANCE OF STOCK............................................................................12
   4.2     CERTIFICATES OF STOCK........................................................................12
   4.3     TRANSFERS....................................................................................13
   4.4     LOST, STOLEN OR DESTROYED CERTIFICATES.......................................................13
   4.5     RECORD DATE..................................................................................13

ARTICLE 5 - GENERAL PROVISIONS..........................................................................14

   5.1     FISCAL YEAR..................................................................................14
   5.2     CORPORATE SEAL...............................................................................14
   5.3     NOTICES......................................................................................14
   5.4     WAIVER OF NOTICE.............................................................................14
   5.5     EVIDENCE OF AUTHORITY........................................................................14
   5.6     FACSIMILE SIGNATURES.........................................................................14
   5.7     RELIANCE UPON BOOKS, REPORTS AND RECORDS.....................................................15
   5.8     TIME PERIODS.................................................................................15
   5.9     CERTIFICATE OF INCORPORATION.................................................................15
   5.10    TRANSACTIONS WITH INTERESTED PARTIES.........................................................15
   5.11    SEVERABILITY.................................................................................16
   5.12    PRONOUNS.....................................................................................16

ARTICLE 6 - AMENDMENTS..................................................................................16

   6.1     BY THE BOARD OF DIRECTORS....................................................................16
   6.2     BY THE STOCKHOLDERS..........................................................................16	

AMENDED AND RESTATED
BY-LAWS
OF
EXACT SCIENCES CORPORATION (the "Corporation")
ARTICLE 1 - STOCKHOLDERS
1.1 PLACE OF MEETINGS. All meetings of stockholders shall be held at such place within or without the State of Delaware as may be designated from time to time by the Chairman of the Board (if any), the board of directors of the Corporation (the "Board of Directors") or the President or, if not so designated, at the registered office of the Corporation.
1.2 ANNUAL MEETING. The annual meeting of stockholders for the election of directors and for the transaction of such other business as may properly be brought before the meeting shall be held on a date to be fixed by the Chairman of the Board (if any), Board of Directors or the President (which date shall not be a legal holiday in the place where the meeting is to be held) at the time and place to be fixed by the Chairman of the Board, the Board of Directors or the President and stated in the notice of the meeting.
1.3 SPECIAL MEETINGS. Special meetings of stockholders may be called at any time by the Chairman of the Board (if any), a majority of the Board of Directors or the President and shall be held at such place, on such date and at such time as shall be fixed by the Board of Directors or the person calling the meeting. Business transacted at any special meeting of stockholders shall be limited to matters relating to the purpose or purposes stated in the notice of meeting.
1.4 NOTICE OF MEETINGS. Except as otherwise provided by law, written notice of each meeting of stockholders, whether annual or special, shall be given not less than 10 nor more than 60 days before the date of the meeting to each stockholder entitled to vote at such meeting. The notices of all meetings shall state the place, date and hour of the meeting. The notice of a special meeting shall state, in addition, the purpose or purposes for which the meeting is called. If mailed, notice is given when deposited in the United States mail, postage prepaid, directed to the stockholder at his or her address as it appears on the records of the Corporation.
1.5 VOTING LIST. The officer who has charge of the stock ledger of the Corporation shall prepare, at least 10 days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least 10 days prior to the meeting, either at a place within the metropolitan area of the city where the meeting is to be held, which

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place shall be specified in the notice of the meeting, or if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the whole time of the meeting, and may be inspected by any stockholder who is present. This list shall presumptively determine the identity of the stockholders entitled to vote at the meeting and the number of shares held by each of them.
1.6 QUORUM. Except as otherwise provided by law, the Certificate of Incorporation or these By-Laws, the holders of a majority of the shares of the capital stock of the Corporation issued and outstanding and entitled to vote at the meeting, present in person or represented by proxy, shall constitute a quorum for the transaction of business. Shares held by brokers which such brokers are prohibited from voting (pursuant to their discretionary authority on behalf of beneficial owners of such shares who have not submitted a proxy with respect to such shares) on some or all of the matters before the stockholders, but which shares would otherwise be entitled to vote at the meeting ("Broker Non-Votes") shall be counted, for the purpose of determining the presence or absence of a quorum, both (a) toward the total voting power of the shares of capital stock of the Corporation and (b) as being represented by proxy. If a quorum has been established for the purpose of conducting the meeting, a quorum shall be deemed to be present for the purpose of all votes to be conducted at such meeting, provided that where a separate vote by a class or classes, or series thereof, is required, a majority of the voting power of the shares of such class or classes, or series, present in person or represented by proxy shall constitute a quorum entitled to take action with respect to that vote on that matter. If a quorum shall fail to attend any meeting, the chairman of the meeting or the holders of a majority of the voting power of the shares of stock entitled to vote who are present, in person or by proxy, may adjourn the meeting to another place, date, or time.
1.7 ADJOURNMENTS. Any meeting of stockholders may be adjourned to any other time and to any other place at which a meeting of stockholders may be held under these By-Laws by the stockholders present or represented at the meeting and entitled to vote, although less than a quorum, or, if no stockholder is present, by any officer entitled to preside at or to act as Secretary of such meeting. It shall not be necessary to notify any stockholder of any adjournment of less than 30 days if the time and place of the adjourned meeting are announced at the meeting at which adjournment is taken, unless after the adjournment a new record date is fixed for the adjourned meeting. At the adjourned meeting, the Corporation may transact any business which might have been transacted at the original meeting.
1.8 VOTING AND PROXIES. At any meeting of the stockholders, each stockholder shall have one vote for each share of stock entitled to vote at such meeting held of record by such stockholder and a proportionate vote for each fractional share so held, unless otherwise provided in the Certificate of Incorporation. Each stockholder of record entitled to vote at a meeting of stockholders, or to express consent or dissent to corporate action in writing without a meeting (to the extent not otherwise prohibited by the Certificate of Incorporation or these By-laws), may vote or express such consent or dissent in person or may authorize another person or persons to vote or act for such stockholder by written proxy executed by such stockholder or his or her authorized agent or by a transmission permitted by law and delivered to the Secretary of the Corporation. No such proxy shall be voted or acted upon after three years from the date of its

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execution, unless the proxy expressly provides for a longer period. Any copy, facsimile telecommunication or other reliable reproduction of the writing or transmission created pursuant to this Section 1.8 may be substituted or used in lieu of the original writing or transmission for any and all purposes for which the original writing or transmission could be used, provided that such copy, facsimile telecommunication or reproduction shall be a complete reproduction of the entire original writing or transmission.
In the election of directors, voting shall be by written ballot, and for any other action, voting need not be by ballot.
1.9 ACTION AT MEETING. When a quorum is present at any meeting of stockholders, the holders of a majority of the stock present or represented and voting on a matter (or if there are two or more classes of stock entitled to vote as separate classes, then in the case of each such class, the holders of a majority of the stock of that class present or represented and voting on such matter) shall decide any matter to be voted upon by the stockholders at such meeting (other than the election of directors), except when a different vote is required by express provision of law, the Certificate of Incorporation or these By-Laws. Any election of directors by the stockholders shall be determined by a plurality of the votes cast by the stockholders entitled to vote at such election, except as otherwise provided by the Certificate of Incorporation. For the purposes of this paragraph, Broker Non-Votes represented at the meeting but not permitted to vote on a particular matter shall not be counted, with respect to the vote on such matter, in the number of (a) votes cast, (b) votes cast affirmatively, or (c) votes cast negatively.
1.10 INTRODUCTION OF BUSINESS AT MEETINGS.
A. ANNUAL MEETINGS OF STOCKHOLDERS.
(1) Nominations of persons for election to the Board of Directors and the proposal of business to be considered by the stockholders may be made at an annual meeting of stockholders (a) pursuant to the Corporation's notice of meeting, (b) by or at the direction of the Board of Directors or (c) by any stockholder of the Corporation who was a stockholder of record at the time of giving of notice provided for in this Section 1.10, who is entitled to vote at the meeting and who complies with the notice procedures set forth in this Section 1.10.
(2) For nominations or other business to be properly brought before an annual meeting by a stockholder pursuant to clause (c) of paragraph (A)(1) of this Section 1.10, the stockholder must have given timely notice thereof in writing to the Secretary of the Corporation and such other business must otherwise be a proper matter for stockholder action. To be timely, a stockholder's notice shall be delivered to the Secretary at the principal executive offices of the Corporation not later than the close of business on the one hundred twentieth (120th) day nor earlier than the close of business on the one hundred fiftieth
(150th) day prior to the first anniversary of the date of the proxy statement delivered to stockholders in connection with the preceding year's annual meeting, provided, however, that if either
(i) the date of the annual

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meeting is more than thirty (30) days before or more than sixty
(60) days after the first anniversary date of the preceding year's annual meeting or (ii) no proxy statement was delivered to stockholders in connection with the preceding year's annual meeting, notice by the stockholder to be timely must be so delivered not earlier than the close of business on the ninetieth
(90th) day prior to such annual meeting and not later than the close of business on the later of the sixtieth (60th) day prior to such annual meeting or the close of business on the tenth (10th) day following the day on which public announcement of the date of such meeting is first made by the Corporation. Such stockholder's notice shall set forth (a) as to each person whom the stockholder proposes to nominate for election or reelection as a director, all information relating to such person that is required to be disclosed in solicitations of proxies for election of directors, or is otherwise required, in each case pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended (the "Exchange Act") (including such person's written consent to being named in the proxy statement as a nominee and to serving as a director if elected); (b) as to any other business that the stockholder proposes to bring before the meeting, a brief description of the business desired to be brought before the meeting, the reasons for conducting such business at the meeting and any material interest in such business of such stockholder and the beneficial owner, if any, on whose behalf the proposal is made; and (c) as to the stockholder giving the notice and the beneficial owner, if any, on whose behalf the nomination or proposal is made (i) the name and address of such stockholder, as they appear on the Corporation's books, and of such beneficial owner and (ii) the class and number of shares of capital stock of the Corporation that are owned beneficially and held of record by such stockholder and such beneficial owner.
(3) Notwithstanding anything in the second sentence of paragraph (A)(2) of this Section 1.10 to the contrary, in the event that the number of directors to be elected to the Board of Directors of the Corporation is increased and there is no public announcement by the Corporation naming all of the nominees for director or specifying the size of the increased Board of Directors at least seventy (70) days prior to the first anniversary of the preceding year's annual meeting (or, if the annual meeting is held more than thirty (30) days before or sixty
(60) days after such anniversary date, at least seventy (70) days prior to such annual meeting), a stockholder's notice required by this Section 1.10 shall also be considered timely, but only with respect to nominees for any new positions created by such increase, if it shall be delivered to the Secretary at the principal executive office of the Corporation not later than the close of business on the tenth (10th) day following the day on which such public announcement is first made by the Corporation.
B. SPECIAL MEETINGS OF STOCKHOLDERS. Only such business shall be conducted at a special meeting of stockholders as shall have been brought before the meeting pursuant to the Corporation's notice of meeting. Nominations of persons for election to the Board of Directors may be made at a special meeting of stockholders at which directors are to be elected pursuant to the Corporation's notice of meeting (a) by or at the direction of the Board of Directors or (b) provided that the Board of

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Directors has determined that directors shall be elected at such meeting, by any stockholder of the Corporation who is a stockholder of record at the time of giving of notice of the special meeting, who shall be entitled to vote at the meeting and who complies with the notice procedures set forth in this Section
1.10. If the Corporation calls a special meeting of stockholders for the purpose of electing one or more directors to the Board of Directors, any such stockholder may nominate a person or persons (as the case may be), for election to such position(s) as specified in the Corporation's notice of meeting, if the stockholder's notice required by paragraph (A)(2) of this Section 1.10 shall be delivered to the Secretary at the principal executive offices of the Corporation not earlier than the ninetieth (90th) day prior to such special meeting nor later than the later of (x) the close of business on the sixtieth (60th) day prior to such special meeting or (y) the close of business on the tenth (10th) day following the day on which public announcement is first made of the date of such special meeting and of the nominees proposed by the Board of Directors to be elected at such meeting.
C. GENERAL.
(1) Only such persons who are nominated in accordance with the procedures set forth in this Section 1.10 shall be eligible to serve as directors and only such business shall be conducted at a meeting of stockholders as shall have been brought before the meeting in accordance with the procedures set forth in this Section 1.10. Except as otherwise provided by law, the Certificate of Incorporation or these By-Laws, the chairman of the meeting shall have the power and duty to determine whether a nomination or any business proposed to be brought before the meeting was made or proposed, as the case may be, in accordance with the procedures set forth in this Section 1.10 and, if any proposed nomination or business is not in compliance herewith, to declare that such defective proposal or nomination shall be disregarded.
(2) For purposes of this Section 1.10, "public announcement" shall mean disclosure in a press release reported by the Dow Jones News Service, Associated Press, PR Newswire, Reuters or comparable national news service or in a document publicly filed by the Corporation with the Securities and Exchange Commission pursuant to Section 13, 14 or 15(d) of the Exchange Act.
(3) Notwithstanding the foregoing provisions of this
Section 1.10, a stockholder shall also comply with all applicable requirements of the Exchange Act and the rules and regulations thereunder with respect to the matters set forth herein. Nothing in this Section 1.10 shall be deemed to affect any rights of the holders of any series of Preferred Stock to elect directors under specified circumstances.
1.11 ACTION WITHOUT MEETING. Stockholders of the Corporation may not take any action by written consent in lieu of a meeting. Notwithstanding any other provision of law, the Certificate of Incorporation or these By-Laws, and notwithstanding the fact that a lesser

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percentage may be specified by law, the affirmative vote of the holders of at least seventy-five percent (75%) of the votes which all the stockholders would be entitled to cast at any annual election of directors or class of directors shall be required to amend or repeal, or to adopt any provision inconsistent with, this Section 1.11.
ARTICLE 2 - DIRECTORS
2.1 GENERAL POWERS. The business and affairs of the Corporation shall be managed by or under the direction of a Board of Directors, who may exercise all of the powers of the Corporation except as otherwise provided by law or the Certificate of Incorporation. In the event of a vacancy in the Board of Directors, the remaining directors, except as otherwise provided by law or the Certificate of Incorporation, may exercise the powers of the full Board of Directors until the vacancy is filled. Without limiting the foregoing, the Board of Directors may:
(a) declare dividends from time to time in accordance with law;
(b) purchase or otherwise acquire any property, rights or privileges on such terms as it shall determine;
(c) authorize the creation, making and issuance, in such form as it may determine, of written obligations of every kind, negotiable or non-negotiable, secured or unsecured, to borrow funds and guarantee obligations, and to do all things necessary in connection therewith;
(d) remove any officer of the Corporation with or without cause, and from time to time to devolve the powers and duties of any officer upon any other person for the time being;
(e) confer upon any officer of the Corporation the power to appoint, remove and suspend subordinate officers, employees and agents;
(f) adopt from time to time such stock option, stock purchase, bonus or other compensation plans for directors, officers, employees, consultants and agents of the Corporation and its subsidiaries as it may determine;
(g) adopt from time to time such insurance, retirement, and other benefit plans for directors, officers, employees, consultants and agents of the Corporation and its subsidiaries as it may determine; and
(h) adopt from time to time regulations, not inconsistent herewith, for the management of the Corporation's business and affairs.
2.2 NUMBER; ELECTION AND QUALIFICATION. The number of directors which shall constitute the whole Board of Directors shall be determined by resolution of the Board of

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Directors, but in no event shall be less than three. The number of directors may be decreased at any time and from time to time by a majority of the directors then in office, but only to eliminate vacancies existing by reason of the death, resignation, removal or expiration of the term of one or more directors. The directors shall be elected at the annual meeting of stockholders (or, if so determined by the Board of Directors pursuant to Section 10 hereof, at a special meeting of stockholders), by such stockholders as have the right to vote on such election. Directors need not be stockholders of the Corporation.
2.3 CLASSES OF DIRECTORS. The Board of Directors shall be and is divided into three classes: Class I, Class II and Class III. No one class shall have more than one director more than any other class.
2.4 TERMS IN OFFICE. Each director shall serve for a term ending on the date of the third annual meeting following the annual meeting at which such director was elected; provided, however, that each initial director in Class I shall serve for a term ending on the date of the annual meeting next following the end of the Corporation's fiscal year ending December 31, 2000 each initial director in Class II shall serve for a term ending on the date of the annual meeting next following the end of the Corporation's fiscal year ending December 31, 2001; and each initial director in Class III shall serve for a term ending on the date of the annual meeting next following the end of the Corporation's fiscal year ending December 31, 2002.
2.5 ALLOCATION OF DIRECTORS AMONG CLASSES IN THE EVENT OF INCREASES OR DECREASES IN THE NUMBER OF DIRECTORS. In the event of any increase or decrease in the authorized number of directors, (i) each director then serving as such shall nevertheless continue as a director of the class of which he or she is a member until the expiration of such director's current term or his or her prior death, removal or resignation and (ii) the newly created or eliminated directorships resulting from such increase or decrease shall be apportioned by the Board of Directors among the three classes of directors, subject to the second sentence of Section 2.3. To the extent possible, consistent with the foregoing rule, any newly created directorships shall be added to those classes whose terms of office are to expire at the earliest dates following such allocation, unless otherwise provided for from time to time by resolution adopted by a majority of the directors then in office, although less than a quorum. No decrease in the number of directors constituting the whole Board of Directors shall shorten the term of an incumbent Director.
2.6 TENURE. Notwithstanding any provisions to the contrary contained herein, each director shall hold office until his or her successor is elected and qualified, or until his or her earlier death, resignation or removal.
2.7 VACANCIES. Unless and until filled by the stockholders, any vacancy in the Board of Directors, however occurring, including a vacancy resulting from an enlargement thereof, may be filled by vote of a majority of the directors then in office, although less than a quorum, or by a sole remaining director. A director elected to fill a vacancy shall be elected for the unexpired term of his or her predecessor in office, if any, and a director chosen to fill a position resulting from an increase in the number of directors shall hold office until the next election of directors of

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the class for which such director was chosen and until his or her successor is elected and qualified, or until his or her earlier death, resignation or removal.
2.8 RESIGNATION. Any director may resign by delivering his or her written resignation to the Corporation at its principal office or to the President or Secretary. Such resignation shall be effective upon receipt unless it is specified to be effective at some other time or upon the happening of some other event.
2.9 REGULAR MEETINGS. Regular meetings of the Board of Directors may be held without notice at such time and place, either within or without the State of Delaware, as shall be determined from time to time by the Board of Directors; provided that any director who is absent when such a determination is made shall be given notice of the determination. Regular meetings of the Board of Directors shall be held at such place or places, on such date or dates, and at such time or times as shall have been established by the Board of Directors and publicized among all directors. A notice of each regular meeting shall not be required.
2.10 SPECIAL MEETINGS. Special meetings of the Board of Directors may be held at any time and place, within or without the State of Delaware, designated in a call by the Chairman of the Board (if any), the President, two or more directors, or by one director in the event that there is only a single director in office.
2.11 NOTICE OF SPECIAL MEETINGS. Notice of any special meeting of directors shall be given to each director by the Secretary or by the officer or one of the directors calling the meeting. Notice shall be duly given to each director (i) by giving notice to such director in person or by telephone at least 48 hours in advance of the meeting, (ii) by sending a telegram or delivering written notice by facsimile transmission or by hand, to his or her last known business or home address at least 48 hours in advance of the meeting, or (iii) by mailing written notice to his or her last known business or home address at least 72 hours in advance of the meeting. A notice or waiver of notice of a meeting of the Board of Directors need not specify the purposes of the meeting.
2.12 MEETINGS BY TELEPHONE CONFERENCE CALLS. Directors or any members of any committee designated by the Board of Directors may participate in a meeting of the Board of Directors or such committee by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and participation by such means shall be deemed to constitute presence in person at such meeting.
2.13 QUORUM. A majority of the total number of the whole Board of Directors shall constitute a quorum at all meetings of the Board of Directors. In the event one or more of the directors shall be disqualified to vote at any meeting, then the required quorum shall be reduced by one for each such director so disqualified; provided, however, that in no case shall less than one-third (1/3) of the total number of the whole Board of Directors constitute a quorum. In the absence of a quorum at any such meeting, a majority of the directors present may adjourn the meeting from time to time without further notice other than announcement at the meeting, until a quorum shall be present.

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2.14 ACTION AT MEETING. At any meeting of the Board of Directors at which a quorum is present, the vote of a majority of those present shall be sufficient to take any action, unless a different vote is specified by law, the Certificate of Incorporation or these By-Laws.
2.15 ACTION BY WRITTEN CONSENT. Any action required or permitted to be taken at any meeting of the Board of Directors or of any committee of the Board of Directors may be taken without a meeting, if all members of the Board of Directors or committee, as the case may be, consent to such action in writing, and the written consents are filed with the minutes of proceedings of the Board of Directors or committee.
2.16 REMOVAL. Unless otherwise provided in the Certificate of Incorporation, any one or more or all of the directors may be removed, without cause only by the holders of at least seventy-five percent (75%) of the shares then entitled to vote at an election of directors. Any one or more or all of the directors may be removed with cause only by the holders of at least a majority of the shares then entitled to vote at an election of directors.
2.17 COMMITTEES. The Board of Directors may, by resolution passed by a majority of the whole Board, designate one or more committees, each committee to consist of one or more of the directors of the Corporation. The Board of Directors may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of such committee. In the absence or disqualification of a member of a committee, the member or members of such committee present at any meeting and not disqualified from voting, whether or not such member or members constitute a quorum, may unanimously appoint another member of the Board of Directors to act at such meeting in the place of any such absent or disqualified member. Any such committee, to the extent provided in the resolution of the Board of Directors and subject to the provisions of the General Corporation Law of the State of Delaware, shall have and may exercise all the powers and authority of the Board of Directors in the management of the business and affairs of the Corporation and may authorize the seal of the Corporation to be affixed to all papers which may require it. Each such committee shall keep minutes and make such reports as the Board of Directors may from time to time request. Except as the Board of Directors may otherwise determine or as provided herein, any committee may make rules for the conduct of its business, but unless otherwise provided by the directors or in such rules, its business shall be conducted as nearly as possible in the same manner as is provided in these By-Laws for the Board of Directors. Adequate provisions shall be made for notice to members of all meeting of committees. One-third (1/3) of the members of any committee shall constitute a quorum unless the committee shall consist of one (1) or two (2) members, in which event one (1) member shall constitute a quorum; and all matters shall be determined by a majority vote of the members present. Action may be taken by any committee without a meeting if all members thereof consent thereto in writing, and the writing or writings are filed with the minutes of the proceedings of such committee.
2.18 COMPENSATION OF DIRECTORS. Directors may be paid such compensation for their services and such reimbursement for expenses of attendance at meetings as the Board of Directors may from time to time determine. No such payment shall preclude any director from

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serving the Corporation or any of its parent or subsidiary corporations in any other capacity and receiving compensation for such service.
ARTICLE 3 - OFFICERS
3.1 ENUMERATION. The officers of the Corporation shall consist of a President, a Secretary, a Treasurer and such other officers with such other titles as the Board of Directors shall determine, including, but not limited to, a Chairman of the Board, a Vice-Chairman of the Board, and one or more Vice Presidents, Assistant Treasurers and Assistant Secretaries. The Board of Directors may appoint such other officers as it may deem appropriate.
3.2 ELECTION. The President, Treasurer and Secretary shall be elected annually by the Board of Directors at its first meeting following the annual meeting of stockholders. Other officers may be appointed by the Board of Directors at such meeting or at any other meeting.
3.3 QUALIFICATION. No officer need be a stockholder. Any two or more offices may be held by the same person.
3.4 TENURE. Except as otherwise provided by law, by the Certificate of Incorporation or by these By-Laws, each officer shall hold office until his or her successor is elected and qualified, unless a different term is specified in the vote choosing or appointing such officer, or until his or her earlier death, resignation or removal.
3.5 RESIGNATION AND REMOVAL. Any officer may resign by delivering his or her written resignation to the Chairman of the Board (if any), to the Board of Directors at a meeting thereof, to the Corporation at its principal office or to the President or Secretary. Such resignation shall be effective upon receipt unless it is specified to be effective at some other time or upon the happening of some other event.
Any officer may be removed at any time, with or without cause, by vote of a majority of the entire number of directors then in office.
Except as the Board of Directors may otherwise determine, no officer who resigns or is removed shall have any right to any compensation as an officer for any period following his or her resignation or removal, or any right to damages on account of such removal, whether his or her compensation be by the month or by the year or otherwise, unless such compensation is expressly provided in a duly authorized written agreement with the Corporation.
3.6 VACANCIES. The Board of Directors may fill any vacancy occurring in any office for any reason and may, in its discretion, leave unfilled for such period as it may determine any offices other than those of President, Treasurer and Secretary. Each such successor shall hold office for the unexpired term of his predecessor and until his or her successor is elected and qualified, or until his or her earlier death, resignation or removal.

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3.7 CHAIRMAN OF THE BOARD AND VICE-CHAIRMAN OF THE BOARD. The Chairman of the Board, if any, shall preside at all meetings of the Board of Directors and stockholders at which he or she is present and shall perform such duties and possess such powers as are designated by the Board of Directors. If the Board of Directors appoints a Vice-Chairman of the Board, he or she shall, in the absence or disability of the Chairman of the Board, perform the duties and exercise the powers of the Chairman of the Board and shall perform such other duties and possess such other powers as may from time to time be designated by the Board of Directors.
3.8 PRESIDENT. The President shall, subject to the direction of the Board of Directors, have general charge and supervision of the business of the Corporation. Unless otherwise provided by the Board of Directors, and provided that there is no Chairman of the Board or that the Chairman and Vice-Chairman, if any, are not available, the President shall preside at all meetings of the stockholders, and, if a director, at all meetings of the Board of Directors. The Board of Directors shall designate the Chief Executive Officer of the Corporation. The President shall perform such other duties and shall have such other powers as the Board of Directors may from time to time prescribe. The President shall have the power to enter into contracts and otherwise bind the Corporation in matters arising in the ordinary course of the Corporation's business.
3.9 VICE PRESIDENTS. Any Vice President shall perform such duties and possess such powers as the Board of Directors or the President may from time to time prescribe. In the event of the absence, inability or refusal to act of the President, the Vice President (or if there shall be more than one, the Vice Presidents in the order determined by the Board of Directors) shall perform the duties of the President and, when so performing, shall have all the powers of and be subject to all the restrictions upon the President. The Board of Directors may assign to any Vice President the title of Executive Vice President, Senior Vice President or any other title selected by the Board of Directors. Unless otherwise determined by the Board of Directors, any Vice President shall have the power to enter into contracts and otherwise bind the Corporation in matters arising in the ordinary course of the Corporation's business.
3.10 SECRETARY AND ASSISTANT SECRETARIES. The Secretary shall perform such duties and shall have such powers as the Board of Directors or the President may from time to time prescribe. In addition, the Secretary shall perform such duties and have such powers as are incident to the office of secretary, including without limitation the duty and power to give notices of all meetings of stockholders and special meetings of the Board of Directors, to attend all meetings of stockholders and the Board of Directors and keep a record of the proceedings, to maintain a stock ledger and prepare lists of stockholders and their addresses as required, to be custodian of corporate records and the corporate seal and to affix and attest to the same on documents.
Any Assistant Secretary shall perform such duties and possess such powers as the Board of Directors, the President or the Secretary may from time to time prescribe. In the event of the absence, inability or refusal to act of the Secretary, the Assistant Secretary (or if there shall be more than one, the Assistant Secretaries in the order determined by the Board of Directors) shall perform the duties and exercise the powers of the Secretary.

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In the absence of the Secretary or any Assistant Secretary at any meeting of stockholders or directors, the person presiding at the meeting shall designate a temporary secretary to keep a record of the meeting.
3.11 TREASURER AND ASSISTANT TREASURERS. The Treasurer shall perform such duties and shall have such powers as the Board of Directors or the President may from time to time prescribe. In addition, the Treasurer shall perform such duties and have such powers as are incident to the office of treasurer, including without limitation the duty and power to keep and be responsible for all funds and securities of the Corporation, to deposit funds of the Corporation in depositories selected in accordance with these By-Laws, to disburse such funds as ordered by the Board of Directors, to make proper accounts for such funds, and to render as required by the Board of Directors statements of all such transactions and of the financial condition of the Corporation.
The Assistant Treasurers shall perform such duties and possess such powers as the Board of Directors, the President or the Treasurer may from time to time prescribe. In the event of the absence, inability or refusal to act of the Treasurer, the Assistant Treasurer (or if there shall be more than one, the Assistant Treasurers in the order determined by the Board of Directors) shall perform the duties and exercise the powers of the Treasurer.
3.12 SALARIES. Officers of the Corporation shall be entitled to such salaries, compensation or reimbursement as shall be fixed or allowed from time to time by the Board of Directors.
3.13 ACTION WITH RESPECT TO SECURITIES OF OTHER CORPORATIONS. Unless otherwise directed by the Board of Directors, the President or any officer of the Corporation authorized by the President shall have power to vote and otherwise act on behalf of the Corporation, in person or by proxy, at any meeting of stockholders of or with respect to any action of stockholders of any other corporation in which the Corporation may hold securities and otherwise to exercise any and all rights and powers which this Corporation may possess by reason of its ownership of securities in such other corporation.
ARTICLE 4 - CAPITAL STOCK
4.1 ISSUANCE OF STOCK. Unless otherwise voted by the stockholders and subject to the provisions of the Certificate of Incorporation, the whole or any part of any unissued balance of the authorized capital stock of the Corporation or the whole or any part of any issued, authorized capital stock of the Corporation held in its treasury may be issued, sold, transferred or otherwise disposed of by vote of the Board of Directors in such manner, for such consideration and on such terms as the Board of Directors may determine.
4.2 CERTIFICATES OF STOCK. Every holder of stock of the Corporation shall be entitled to have a certificate, in such form as may be prescribed by law and by the Board of Directors,

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certifying the number and class of shares owned by such stockholder in the Corporation. Each such certificate shall be signed by, or in the name of the Corporation by, the Chairman or Vice-Chairman, if any, of the Board of Directors, or the President or a Vice President, and the Treasurer or an Assistant Treasurer, or the Secretary or an Assistant Secretary of the Corporation. Any or all of the signatures on such certificate may be a facsimile.
Each certificate for shares of stock which are subject to any restriction on transfer pursuant to the Certificate of Incorporation, the By-Laws, applicable securities laws or any agreement among any number of shareholders or among such holders and the Corporation shall have conspicuously noted on the face or back of such certificate either the full text of such restriction or a statement of the existence of such restriction.
4.3 TRANSFERS. Except as otherwise established by rules and regulations adopted by the Board of Directors, and subject to applicable law, shares of stock may be transferred on the books of the Corporation by the surrender to the Corporation or its transfer agent of the certificate representing such shares, properly endorsed or accompanied by a written assignment or power of attorney properly executed, and with such proof of authority or the authenticity of signature as the Corporation or its transfer agent may reasonably require. Except as may be otherwise required by law, by the Certificate of Incorporation or by these By-Laws, the Corporation shall be entitled to treat the record holder of stock as shown on its books as the owner of such stock for all purposes, including the payment of dividends and the right to vote with respect to such stock, regardless of any transfer, pledge or other disposition of such stock, until the shares have been transferred on the books of the Corporation in accordance with the requirements of these By-Laws.
4.4 LOST, STOLEN OR DESTROYED CERTIFICATES. The Corporation may issue a new certificate of stock in place of any previously issued certificate alleged to have been lost, stolen, or destroyed, upon such terms and conditions as the President may prescribe, including the presentation of reasonable evidence of such loss, theft or destruction and the giving of such indemnity as the President may require for the protection of the Corporation or any transfer agent or registrar.
4.5 RECORD DATE. The Board of Directors may fix in advance a date as a record date for the determination of the stockholders entitled to notice of or to vote at any meeting of stockholders or, to the extent permitted by the Certificate of Incorporation and these By-laws, to express consent (or dissent) to corporate action in writing without a meeting, or entitled to receive payment of any dividend or other distribution or allotment of any rights in respect of any change, conversion or exchange of stock, or for the purpose of any other lawful action. Such record date shall not be more than 60 nor less than 10 days before the date of such meeting, nor more than 60 days prior to any other action to which such record date relates.
If no record date is fixed, the record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the day before the day on which notice is given, or, if notice is waived, at the close of business on the day before the day on which the meeting is held. The record date for determining stockholders entitled to

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express consent to corporate action in writing without a meeting (to the extent permitted by the Certificate of Incorporation and these By-laws) when no prior action by the Board of Directors is necessary, shall be the day on which the first written consent is expressed. The record date for determining stockholders for any other purpose shall be at the close of business on the day on which the Board of Directors adopts the resolution relating to such purpose.
A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting.
ARTICLE 5 - GENERAL PROVISIONS
5.1 FISCAL YEAR. The fiscal year of the Corporation shall be fixed by resolution of the Board of Directors.
5.2 CORPORATE SEAL. The corporate seal shall be in such form as shall be approved by the Board of Directors.
5.3 NOTICES. Except as otherwise specifically provided herein or required by law or the Certificate of Incorporation, all notices required to be given to any person pursuant to these by-laws shall be in writing and may in every instance be effectively given by hand delivery to the recipient thereof, by depositing such notice in the mails, postage paid, or by sending such notice by prepaid telegram or facsimile transmission. Any such notice shall be addressed to such person at his or her last known address as the same appears on the books of the Corporation. The time when such notice is received shall be deemed to be the time of the giving of the notice.
5.4 WAIVER OF NOTICE. Whenever any notice whatsoever is required to be given by law, by the Certificate of Incorporation or by these By-Laws, a waiver of such notice either in writing signed by the person entitled to such notice or such person's duly authorized attorney, or by telegraph, facsimile transmission or any other available method, whether before, at or after the time stated in such waiver, or the appearance of such person or persons at such meeting in person or by proxy, shall be deemed equivalent to such notice.
5.5 EVIDENCE OF AUTHORITY. A certificate by the Secretary, or an Assistant Secretary, or a temporary Secretary, as to any action taken by the stockholders, directors, a committee or any officer or representative of the Corporation shall, as to all persons who rely on the certificate in good faith, be conclusive evidence of such action.
5.6 FACSIMILE SIGNATURES. In addition to the provisions for use of facsimile signatures elsewhere specifically authorized in these By-Laws, facsimile signatures of any officer or officers of the Corporation may be used whenever and as authorized by the Board of Directors or a committee thereof.

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5.7 RELIANCE UPON BOOKS, REPORTS AND RECORDS. Each director, each member of any committee designated by the Board of Directors, and each officer of the Corporation shall, in the performance of his or her duties, be fully protected in relying in good faith upon the books of account or other records of the Corporation and upon such information, opinions, reports or statements presented to the Corporation by any of its officers or employees or committees of the Board of Directors so designated, or by any other person as to matters which such director or committee member reasonably believes are within such other person's professional or expert competence and who has been selected with reasonable care by or on behalf of the Corporation.
5.8 TIME PERIODS. In applying any provision of these By-Laws that requires that an act be done or not be done a specified number of days prior to an event or that an act be done during a period of a specified number of days prior to an event, calendar days shall be used, the day of the doing of the act shall be excluded, and the day of the event shall be included.
5.9 CERTIFICATE OF INCORPORATION. All references in these By-Laws to the Certificate of Incorporation shall be deemed to refer to the Certificate of Incorporation of the Corporation, as amended and in effect from time to time.
5.10 TRANSACTIONS WITH INTERESTED PARTIES. No contract or transaction between the Corporation and one or more of the directors or officers, or between the Corporation and any other corporation, partnership, association, or other organization in which one or more of the directors or officers are directors or officers, or have a financial interest, shall be void or voidable solely for this reason, or solely because such director or officer is present at or participates in the meeting of the Board of Directors or a committee of the Board of Directors which authorizes the contract or transaction or solely because his, her or their votes are counted for such purpose, if:
(1) The material facts as to his or her relationship or interest and as to the contract or transaction are disclosed or are known to the Board of Directors or the committee, and the Board or committee in good faith authorizes the contract or transaction by the affirmative vote of a majority of the disinterested directors, even though the disinterested directors be less than a quorum;
(2) The material facts as to his or her relationship or interest and as to the contract or transaction are disclosed or are known to the stockholders entitled to vote thereon, and the contract or transaction is specifically approved in good faith by vote of the stockholders; or
(3) The contract or transaction is fair as to the Corporation as of the time it is authorized, approved or ratified, by the Board of Directors, a committee of the Board of Directors, or the stockholders.
Common or interested directors may be counted in determining the presence of a quorum at a meeting of the Board of Directors or of a committee which authorizes the contract or transaction.

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5.11 SEVERABILITY. Any determination that any provision of these By-Laws is for any reason inapplicable, illegal or ineffective shall not affect or invalidate any other provision of these By-Laws.
5.12 PRONOUNS. All pronouns used in these By-Laws shall be deemed to refer to the masculine, feminine or neuter, singular or plural, as the identity of the persons or persons so designated may require.
ARTICLE 6 - AMENDMENTS
6.1 BY THE BOARD OF DIRECTORS. Except as is otherwise set forth in these By-Laws, these By-Laws may be altered, amended or repealed, or new by-laws may be adopted, by the affirmative vote of a majority of the directors present at any regular or special meeting of the Board of Directors at which a quorum is present.
6.2 BY THE STOCKHOLDERS. Except as otherwise set forth in these By-Laws, these By-Laws may be altered, amended or repealed or new by-laws may be adopted by the affirmative vote of the holders of eighty percent (80%) of the shares of the capital stock of the Corporation issued and outstanding and entitled to vote at any regular meeting of stockholders, or at any special meeting of stockholders, provided notice of such alteration, amendment, repeal or adoption of new by-laws shall have been stated in the notice of such special meeting.

EXHIBIT 10.14
MAYO FOUNDATION FOR MEDICAL EDUCATION AND
RESEARCH TECHNOLOGY LICENSE CONTRACT

                      Article 1.00 - Preliminary Provisions

1.01     DATE. The Effective Date of this contract is July 7, 1998.

1.02     PARTIES.  There are two parties to this contract.  They are:

(a)      MAYO FOUNDATION FOR MEDICAL EDUCATION AND RESEARCH, a Minnesota
         nonprofit corporation, located at 200 First Street SW, Rochester,
         Minnesota 55905-0001 (called "MAYO" in this contract), and

(b)      EXACT Laboratories, Inc., a Delaware for-profit corporation, located at
         63 Great Road, Maynard, Massachusetts 01754, (called the "COMPANY" in
         this contract).	

1.03 PURPOSE OF CONTRACT. Whereas the COMPANY owns and has independently developed its proprietary technology directed to the diagnosis of colorectal disease, including cancer, for eventual approval by the medical community and health regulatory agencies and then for clinical use; and is producing improvements, enhancements and inventions related to that technology including developing diagnostic tests based upon detecting the loss of heterozygosity and/or various genetic markers in stool samples for the early detection of colorectal cancer; and has been interested in obtaining information related to patient attitudes, hospital procedures and/or requirements and information related to its own technology and know-how in comparison with other methods of patient management; and,
Whereas MAYO is a foundation for medical education and research and has the knowledge, know-how and personnel to discuss, conduct, evaluate, implement and clinically assess the value, benefit and technical advantages of diagnostic procedures in colorectal disease, including the technology of the COMPANY,
The COMPANY and MAYO are mutually interested in (a) determining whether the COMPANY's technology is effective and predictive; and in (b) the successful implementation of the COMPANY's technology, products, processes and methods in the medical community for public use and benefit.
MAYO, therefore, intends to grant a license for certain of its know-how to the COMPANY. Both parties acknowledge that MAYO has carefully selected the COMPANY because of the COMPANY's unique characteristics and proprietary technology which make the COMPANY especially suitable as a licensee of such know-how. The COMPANY enters this licensing contract with MAYO for use of the Licensed Know-how on a non-exclusive basis.
Article 2.00 - Definitions.
2.01 LICENSED KNOW-HOW means the know-how of David Ahlquist, M.D. of Mayo Rochester used by the COMPANY between January 1, 1996 and December 31, 1997 to assist in the successful clinical evaluation, regulatory approval and implementation of the COMPANY's

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technology within the medical community and by the health regulatory agencies and in the marketing and manufacture of the Technology. Such Know-how includes Mayo information that is publicly available as well as information related to the work of Dr. Ahlquist in the Field of Use. The Know-how includes knowledge of research and clinical investigations and studies, patient needs and attitudes, hospital procedures and needs, statistical evaluations, market size and characteristics, knowledge of vendors and suppliers of alternative technology, general experience in the medical field, as well as the results of Dr. Ahlquist's interactions with research, academic, clinical and other medical personnel.
2.02 AFFILIATE means a legal entity controlled by, or controlling, another legal entity, or which is an Affiliate of an Affiliate, or an Affiliate of an Affiliate of an Affiliate, "control" means direct or indirect beneficial ownership of at least fifty (50) percent of the voting stock of a corporation; direct or indirect ownership of at least fifty (50) percent of the income of a legal entity; or possession of at least fifty (50) percent of the voting rights of the members of a nonprofit or nonstock corporation. MAYO's Affiliates include, but are not limited to: Mayo Foundation; Rochester Methodist Hospital; Saint Mary's Hospital; Mayo Clinic Jacksonville, Florida; St. Luke's Hospital, Jacksonville, Florida; Mayo Clinic Arizona; Mayo Clinic Hospital, Arizona, Mayo Regional Practices, P.C., Decorah, Iowa; and Mayo Regional Practices of Wisconsin, Ltd.
2.03 FIELD OF USE means the application of the COMPANY's technology for the detection of colorectal cancer.
2.04 MATERIAL BREACH means breaches of this contract which are specified in this contract as being material breaches, and in addition any breach of this contract which the non-breaching party in the exercise of its good faith discretion determines is so injurious to the relationship between the parties that this contract should be liable to immediate termination.
2.05 MAYO INFORMATION includes the information embodied in the Licensed Know-how or expressly marked, labeled, referenced in writing, or otherwise designated by MAYO as confidential, which is disclosed to the COMPANY by MAYO, relating to MAYO's markets, customers, patients, parents, inventions, products, procedures, designs, plans, organization, employees, or business in general, but does not include:
(a) any information which is publicly available or becomes publicly available as a matter of due course and/or MAYO disclosure; or
(b) information which is or becomes part of the public domain through no action, omission or fault attributable to the COMPANY; or
(c) information which the COMPANY had or could have had in its possession before disclosure by MAYO to the COMPANY; or
(d) information which is received, was received or could have been received by the COMPANY from a third party having a legal right to transmit such information; or
(e) information that is or was developed by the COMPANY independent of any disclosure by MAYO or Dr. Ahlquist.

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Nothing in this agreement shall prevent the COMPANY from disclosing licensed know-how received from Dr. Ahlquist, under this agreement, to an affiliate of the COMPANY.
2.06 TERMINATION of this contract means the ending, expiration, recession, or any other discontinuation of this contract for any reason whatsoever.
2.07 TERRITORY means worldwide.
2.08 COMPANY INFORMATION means any and all information that is proprietary to the COMPANY. MAYO and Dr. Ahlquist herein agree to obtain the COMPANY's consent prior to disclosure of the COMPANY's information, which consent will not be unreasonably withheld. MAYO and Dr. Ahlquist shall disclose such information only as and when reasonably necessary and shall require the persons to whom such information is disclosed to agree to maintain the information confidential.
Article 3.00 - Grant of Rights.
3.01 GRANT, MAYO grants to the COMPANY a nonexclusive license to use the licensed know-how, in the territory within the field of use, according to the terms of this contract.
Article 4.00 - Consideration.
4.01 CONSIDERATION. On February 4, 1998, the COMPANY granted MAYO twenty thousand (20,000) shares of the COMPANY common stock as a consideration for entering into the contract. This is a nonrefundable and fully paid consideration for this license.
Article 5.00 - Warranties and Indemnification.
5.01 USE OF NAME AND LOGO. The COMPANY shall not use publicly for publicity, promotion, or otherwise, any logo, name, trade name, service mark, or trademark of Mayo or its Affiliates, including, but not limited to, the terms "Mayo," "Mayo Clinic," or any simulation, abbreviation, or adaptation of the same, or the name of any Mayo employee or agent, without MAYO's prior, written, express consent, which consent shall not be unreasonably withheld. MAYO may withhold such consent in MAYO's absolute discretion. Violation of this Section 5.01 is a Material Breach of this contract, entitling MAYO to appropriate equitable or legal relief.
5.02 INDEMNIFICATION. The COMPANY shall defend, indemnify, and hold harmless MAYO and MAYO's Affiliates from all liability, demands, expresses, losses, fees (including attorneys' fees) and settlements, for death, personal injury, illness, or property damage arising out of use by the COMPANY of information furnished under this contract.
As used in Sections 5.01 and 5.02, MAYO and its Affiliates include the trustees, officers, agents, and employees of MAYO and its Affiliates, and the COMPANY includes not only its Affiliates as defined in the contract, but also any of its contractors and subcontractors.
5.03 WAIVER OF SUBROGATION. The COMPANY expressly waives any right of subrogation that it may have against MAYO resulting from any claim, demand, liability,

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judgment, settlement, costs, fees (including attorneys' fees), and expenses for which the COMPANY has agreed to indemnify MAYO and its Affiliates or hold MAYO and its Affiliates harmless under Section 6.04 of this contract.
5.04 ADDITIONAL WAIVERS. THE COMPANY AGREES THAT MAYO SHALL NOT BE LIABLE FOR ANY LOSS OR DAMAGE CAUSED BY DELAY IN FURNISHING PRODUCTS OR SERVICE` OR ANY OTHER PERFORMANCE UNDER THIS CONTRACT, UNLESS RESULTING FROM MAYO'S NEGLIGENCE OR WILLFUL AND WANTON MISCONDUCT. IN NO EVENT SHALL MAYO'S LIABILITY OF ANY KIND INCLUDE ANY SPECIAL, INDIRECT, INCIDENTAL, OR CONSEQUENTIAL LOSSES OR DAMAGES, EVEN IF MAYO HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. IN NO CASE SHALL. MAYO'S LIABILITY FOR DAMAGES OF ANY TYPE EXCEED THE TOTAL VALUE OF EQUITY WHICH HAS ACTUALLY BEEN GRANTED TO MAYO BY THE COMPANY AS OF THE DATE OF FILING OF THE ACTION AGAINST MAYO WHICH RESULTS IN THE SETTLEMENT OR AWARD OF DAMAGES.
Article 6.00 -- Term and Termination.
6.01 TERM. This contract will terminate on December 31, 2001, unless extended by mutual agreement of the parties.
6.02 SURVIVAL. The COMPANY's obligations stated in Section 2.05 of this contract survive the Termination of this contract.
Article 7.00 -- General Provisions.
7.01 ASSIGNMENT AND SUBCONTRACT. The COMPANY is strictly prohibited horn assigning.; or subcontracting any of its obligations or rights under this contract without MAYO's prior, express, written consent, which consent shall not be unreasonably withheld by MAYO. Any other attempted assignment or subcontract is void. The contract is personal to the COMPANY.
7.02 WAIVER. No part of this contract may be waived except by the further written agreement of the parties. Forbearance in any form from demanding the performance of a duty owed under this contract is not a waiver of that duty. Until complete performance of a duty owed under this contract is accomplished, the party to which that duty is owed may invoke any remedy under this contract or under law, despite its past forbearance in demanding performance of that duty.
7.03 GOVERNING LAW AND JURISDICTION. This Agreement and its effects are subject to and shall be construed and enforced in accordance with the laws of the State of Minnesota, excluding its conflict of laws and choice of law provisions. All disputes shall be resolved by arbitration or mediation.
7.04 HEADINGS. The headings of articles and sections used in this document are for convenience of reference only, and are not a part of this contract.

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7.05 NOTICES. Any notice required to be given under this contract is properly provided if in writing and either personally delivered, or sent by express or certified trail, postage prepaid, to the parties at the following addresses, Unless other addresses are provided consistent with this section 7.05.
Mayo Foundation for Medical Education and Research 200 First Street SW
Rochester, Minnesota 559050001
Attn: Technology Transfer Division, Mayo Medical Ventures
EXACT Laboratories, Inc.
63 Great Road
Maynard, Massachusetts 01754
Attn: Stanley N. Lapidus, President
Unless otherwise expressly specified in this contract, notices sent by mail arc considered effective upon the earlier of: the fifth (5th) day after dispatch (or the tenth (10th) day after dispatch if dispatched by air mail other than in the United States) or the day of actual receipt. Notices personally delivered are considered effective upon the date of delivery. It is the responsibility of the party giving notice to obtain a receipt for delivery of the notice, if that party considers such a receipt advisable.
7.06 LIMITATION OF RIGHTS CREATED. This contract is intended only to benefit the two parties to it. They have no intention to create any interests for any other party. Specifically, no interests are intended to be created for any customer, patient, research subjects, or other persons (or their relatives, heirs, dependents, or personal representatives) by or upon whom the Licensed Invention may be used.
7.07 INDEPENDENT CONTRACTOR. In the performance of their respective duties under this contract, the parties are independent contractors of each other. Neither is the agent, employee, or servant of the other.! Each is responsible only for its own conduct. 7.08 ENTIRE CONTRACT. This document states the entire contract between the parties about its subject matter. All past and contemporaneous discussions, agreements, proposals, promises, warranties, representations, guarantees, correspondence, and understandings, whether oral or written, formal or informal, with respect to the subject matter of this contract, are entirely superseded by this contract.
7.09 UNENFORCEABLE PROVISION. The unenforceability of any part of this contract will not affect any other part. This contract will be construed as if the unenforceable parts had been omitted.
7.10 CHANGES TO CONTRACT. No part of this contract, including this Section 10.10, may be changed except in writing, through another document signed by both parties.
7.17 CONSTRUCTION. Both parties agree to all of the terms of this contract. Both parties execute this contract only after reviewing it thoroughly. That one party or the other may have

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drafted all or part of this contract will not cause this contract to be read more strictly against the drafting party. This contract, and any chances to it, will be interpreted on the basis that both parties contributed equally to the drafting of each of its parts.
7.12 NONDISCLOSURE. Neither party shall disclose any of the terms of this contract without the express, prior, written consent of the other party, or unless required by law.
7.13 COMPANY KNOW-HOW. This agreement does not provide MAYO with rights to use any of the COMPANY's technology; know-how or other intellectual property.
MAYO FOUNDATION FOR MEDICAL EDUCATION AND RESEARCH:
Signed:_________________________________________________________________________
Printed Name:___________________________________________________________________
Title:__________________________________________________________________________
Date:___________________________________________________________________________
EXACT LABORATORIES, INC.:
Signed:_________________________________________________________________________
Printed Name:___________________________________________________________________
Title:__________________________________________________________________________
Date:___________________________________________________________________________

AMENDMENT No. 1
TO THE TECHNOLOGY LICENSE AGREEMENT BETWEEN
MAYO FOUNDATION FOR MEDICAL EDUCATION AND RESEARCH
AND EXACT LABORATORIES
Effective as of 20 March 2000, the Technology License Agreement dated ,July 7, 1998 between Mayo Foundation for Medical Education and Research (MAYO) and EXACT Laboratories (COMPANY) is hereby amended under the following terms:
Section 2.01 LICENSED KNOW-HOW is amended by substituting the following sentences within that Section, with the remainder of Section 2.01 remaining unchanged:
(a) "Licensed Know-How means the know-how of David Ahlquist, M.D. of Mayo Rochester used by the COMPANY between January 1, 1998 and December 31, 1997 to assist in the successful clinical evaluation, regulatory approval and implementation of the COMPANY's technology within the medical community and by the health regulatory agencies and In the marketing and manufacture of the technology." is DELETED;
(b) and REPLACED with: "Licensed Know-How means the know-how of David Ahlquist, M.D. of Mayo Rochester used by the COMPANY between January 1, 1996 and December 31, 1999 to assist in the successful clinical evaluation, regulatory approval and implementation of the COMPANY's technology within the medical community and by the health regulatory agencies and in the marketing and manufacture of the technology.
AND
Section 4.01 CONSIDERATION is amended as follows:
(a) "On February 4, 1998, the COMPANY granted MAYO twenty thousand (20,000) shares of the COMPANY common stock as a consideration for entering into the contract. This is a nonrefundable and fully paid consideration for this license." is DELETED;
(b) and REPLACED with: "On February 4, 1998, the COMPANY granted MAYO twenty thousand (20,000) shares and on March 20th, 2000 the COMPANY granted MAYO an additional seventeen thousand five hundred (17,500) shares of the COMPANY common stock as a consideration for entering into the contract. This is a nonrefundable and fully paid consideration for this license:'

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The terms of this Amendment No. 1 supersede any conflicting or inconsistent terms in the Technology License Agreement. All other provisions of the original Technology License Agreement effective July 7, 1998 remain in full force and effect.

MAYO FOUNDATION FOR MEDICAL                 EXACT LABORATORIES
EDUCATION AND RESEARCH

--------------------------------            ----------------------------------
Signature                                   Signature

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Name                                        Name

--------------------------------            ----------------------------------
Title                                       Title

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Date                                        Date	

EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our report and to all references to our Firm included in or made a part of this Amendment No. 1 to the Registration Statement.

/s/ Arthur Andersen LLP
Boston, Massachusetts
December 1, 2000