8-K

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of

the Securities Exchange Act of 1934

Date of report (Date of earliest event reported): October 23, 2006

EXACT SCIENCES CORPORATION

(Exact Name of Registrant as Specified in its Charter)

Delaware

(State or Other Jurisdiction of Incorporation)

000-32179	02-0478229
(Commission File Number)	(IRS Employer Identification No.)
100 Campus Drive, Marlborough, Massachusetts	01752
(Address of Principal Executive Offices)	(Zip Code)

Registrant’s telephone number, including area code: (508) 683-1200

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

oWritten communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

oSoliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

oPre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

oPre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01               Entry into a Material Definitive Agreement.

On October 23, 2006, EXACT Sciences Corporation (the “Company”) entered into retention agreements with each of Jeffrey R. Luber, the Company’s Senior Vice President, Chief Financial Officer, Treasurer, General Counsel, and Secretary, and Charles R. Carelli, Jr., the Company’s Vice President Finance.  Under the Retention Agreements, Mr. Luber and Mr. Carelli will be entitled to a retention bonus in the amount of $122,500 and $90,000, respectively, to be paid at the earlier of (i) December 31, 2007, provided each continues to be employed by the Company as of such date, and (ii) their earlier termination by the Company without cause.  Additionally, the Retention Agreements provide that upon the occurrence of certain triggering events, such as change of control or termination without cause, Mr. Luber and Mr. Carelli will also be entitled to receive severance payments for the earlier of (i) 12 months or (ii) their subsequent employment by a third-party, at a rate equal to their respective base salaries at the time of termination of employment.  The retention agreements also supercede and replace the Company’s prior severance and change of control agreements with Messrs. Luber and Carelli.

Item 1.02               Termination of a Material Definitive Agreement.

On October 23, 2006, upon the effectiveness of the retention agreements set forth under Item 1.01 above, the Company’s prior executive agreement with Jeffrey R. Luber, Senior Vice President, Chief Financial Officer, Treasurer, General Counsel and Secretary, dated as of September 28, 2004and the Company’s prior executive agreements with Charles R. Carelli, Vice President Finance, dated as of November 12, 2004 and April 13, 2006, respectively, were automatically superceded and replaced.

Item 2.02               Results of Operations and Financial Condition.

On October 23, 2006, EXACT Sciences Corporation announced its financial results for the quarter ended September 30, 2006.  A copy of the press release is being furnished as Exhibit 99.1 to this Report on Form 8-K.

The information in this Report on Form 8-K and Exhibit 99.1 attached hereto is intended to be furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, except as expressly set forth by specific reference in such filing.

Item 9.01               Financial Statements and Exhibits.

(d)           Exhibits:

99.1         Press Release issued by the Company on October 23, 2006, furnished herewith.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	EXACT Sciences Corporation
October 23, 2006	By:	/s/ Don Hardison
		Don Hardison
		President and Chief Executive Officer

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EX-99.1

Exhibit 99.1

Press Release

For further information:

Jeffrey R. Luber
SVP, Chief Financial Officer and General Counsel
EXACT Sciences Corporation
P: (508) 683-1211
E: jluber@exactsciences.com

EXACT SCIENCES ANNOUNCES THIRD QUARTER 2006 RESULTS

Marlborough, MA - (October 23, 2006) - EXACT Sciences Corporation (NASDAQ: EXAS) announced today its financial results for the third quarter ended September 30, 2006.

Net loss for the quarter ended September 30, 2006 totaled $3.1 million, or $0.12 per share, compared to a net loss of $3.3 million, or $0.13 per share, for the same quarter last year.  The decrease in net loss from the comparable quarter last year was primarily the result of Effipure™ write-offs of $0.3 million recorded in the quarter ended September 30, 2005 in connection with excess inventory levels.

For the quarter ended September 30, 2006, total revenues of $1.2 million were equal to the total revenues for the quarter ended September 30, 2005.  These revenues primarily reflect the amortization of up-front license fee payments from Laboratory Corporation of America® Holdings (LabCorp®) and, to a lesser extent, royalties on LabCorp’s sales of PreGen-Plus™ (LabCorp’s colon cancer testing service) and sales of Effipure units to LabCorp.

Total operating expenses were $4.5 million in the quarter ended September 30, 2006, including $0.7 million of non-cash stock-based compensation, as compared to $4.4 million in the same quarter of 2005, which included a $0.1 million non-cash stock-based compensation credit.  The increase in non-cash stock-based compensation of $0.8 million was due primarily to the Company’s adoption of SFAS No. 123(R) on January 1, 2006. The impact from the adoption of SFAS No. 123(R) on total operating expenses was partially offset by lower sales and marketing and research and development spending in the quarter ended September 30, 2006 as compared to the same quarter of 2005.

For the quarter ended September 30, 2006, 802 PreGen-Plus tests were accessioned by LabCorp, compared to 954 and 1,069 for the quarters ended September 30, 2005 and June 30, 2006, respectively.  As of September 30, 2006, the Company had approximately $24.4 million in cash, cash equivalents and marketable securities.

As previously announced, the Company initiated a plan to reduce its cost structure by eliminating 21 positions across all departments, effective October 20, 2006.  Estimated restructuring charges of approximately $700,000 will be recorded in the fourth quarter of 2006 in connection with one-time employee termination benefits, including severance, outplacement and other fringe benefits.  All of the charges will result in future cash expenditures.  Additionally, the Company is currently reviewing its facility needs and may record additional restructuring charges related to potential facility consolidations.

Third Quarter 2006 Conference Call

EXACT Sciences will host a conference call to discuss its third quarter 2006 financial and operating results, its business outlook and the topics outlined below on Tuesday, October 24, 2006 at 8:30 a.m. ET.  A live web cast of the conference call can be accessed at EXACT Sciences’ web site, www.exactsciences.com, through the Investor Relations link.  The conference call and the web cast are open to all interested parties.  An archived version of the web cast will be available at www.exactsciences.com, through the Investor Relations link, for one month.  A replay of the conference call also will be available for 48 hours, beginning two hours after the completion of the live call.

The following will be among the topics discussed on the Company’s conference call on October 24, 2006 at 8:30 a.m. ET:

·Third quarter 2006 financial and operating results;

·The Company’s recent restructuring;

·A colorectal cancer screening guidelines update; and

·The status of the Medicare application for stool-based DNA colon cancer screening.

Information for the call is as follows:

Domestic callers:  866-831-6224
International callers:  617-213-8853
Participant Passcode:  36770327

The conference call replay information is as follows:

Domestic callers:  888-286-8010
International callers:  617-801-6888
Participant Passcode:  56284683

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About EXACT Sciences Corporation

EXACT Sciences Corporation uses applied genomics to develop effective, patient-friendly screening technologies for use in the detection of cancer.  Certain of its technologies have been licensed to Laboratory Corporation of America Holdings (LabCorp) for a stool-based DNA screening assay for colorectal cancer in the average-risk population.  Colorectal cancer, which is the most deadly cancer among non-smokers, is generally curable if detected early.  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, and deaths from colorectal cancer remain high.  EXACT Sciences believes its genomics-based technologies will help enable detection of colorectal cancer so that more people can be effectively treated.  Founded in 1995, EXACT Sciences is based in Marlborough, Mass.  PreGen-Plus(TM) has not been approved or cleared by the Food & Drug Administration.

Certain statements made in this press release that are not based on historical information are express or implied forward-looking statements relating to, among other things, EXACT Sciences’ expectations concerning, among other things, its restructuring charges and plans.  These statements are neither promises nor guarantees, but are subject to a variety of risks and uncertainties, many of which are beyond EXACT Sciences’ control, and which could cause actual results to differ materially from those contemplated in these forward-looking statements. Existing and prospective investors are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof.  EXACT Sciences undertakes no obligation to update or revise the information contained in this press release, whether as a result of new information, future events or circumstances or otherwise.  For additional disclosure regarding the risks faced by EXACT Sciences, see the disclosure contained in EXACT Sciences’ public filings with the Securities and Exchange Commission including, without limitation, its most recent Annual Report on Form 10-K and subsequent quarterly reports on Form 10-Q filed with the SEC.

(tables follow)

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EXACT SCIENCES CORPORATION
Selected Unaudited Financial Information
Statements of Operation Data

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
In thousands, except per share data	2006			2005			2006			2005
Revenue:
Product royalty fees	$	40		$	51		$	162		$	165
License fees	1,091			1,111			3,273			2,737
Product	24			33			135			163
	1,155			1,195			3,570			3,065
Gross profit (loss):
Product royalty fees	37			49			151			156
License fees	1,091			1,111			3,273			2,737
Product	(75		)	(297		)	(637		)	(340		)
	1,053			863			2,787			2,553
Operating Expenses:
Research and development (1)	1,705			1,907			5,583			6,143
Sales and marketing (1)	1,051			1,181			3,809			4,457
General and administrative (1)	1,700			1,354			4,838			3,949
Restructuring	—			—			—			626
	4,456			4,442			14,230			15,175
Loss from operations	(3,403		)	(3,579		)	(11,443		)	(12,622		)
Interest income	320			290			951			797
Net loss	$	(3,083	)	$	(3,289	)	$	(10,492	)	$	(11,825	)
Net loss per share - basic and diluted	$	(0.12	)	$	(0.13	)	$	(0.40	)	$	(0.45	)
Weighted average common shares outstanding - basic and diluted	26,562			26,291			26,448			26,248
(1) Non-cash stock-based compensation expense included in these amounts are as follows:
Research and development	$	82		$	(30	)	$	452		$	50
Sales and marketing	258			(10		)	962			48
General and administrative	329			(41		)	1,031			176
Total	$	669		$	(81	)	$	2,445		$	274

EXACT SCIENCES CORPORATION
Condensed Unaudited Balance Sheet Data
(In thousands)

	September 30,		December 31,
	2006		2005
Assets
Cash and cash equivalents	$	7,991	$	13,007
Short-term investments	16,384		21,112
Prepaid expenses	517		1,158
Property and equipment, net	841		1,149
Patent costs, net and other assets	839		1,419
Total assets	$	26,572	$	37,845
Liabilities and stockholders’ equity
Total current liabilities	$	6,086	$	6,316
Deferred licensing fees, less current portion	3,636		6,908
Total stockholders’ equity	16,850		24,621
Total liabilities and stockholders’ equity	$	26,572	$	37,845

This selected financial information should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2005, and the Company’s subsequent reports on Form 10-Q.

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