Collaboration and Commercial Technology Licensing Agreements	6 Months Ended
Jun. 30, 2014
Collaboration and Commercial Technology Licensing Agreements
Collaboration and Commercial Technology Licensing Agreements	Note 4. Collaboration and Commercial Technology Licensing Agreements The Company has entered into a variety of collaboration and specimen transfer agreements relating to its development efforts. The Company recorded collaboration expenses of $1.0 million and $2.2 million for the three and six months ended June 30, 2014 and $639,000 and $1.1 million for the three and six months ended June 30, 2013, respectively, relating to services provided in connection with these agreements. In addition to these expenses, some of the agreements contain provisions for royalties from inventions resulting from these collaborations. The Company has specified options and rights relating to joint inventions arising out of the collaborations. In August 2013, the Company entered into a collaboration agreement to conduct an additional large DCIS clinical study to validate the relationship between the Oncotype DX DCIS score and the likelihood of local recurrence in patients with DCIS. The agreement, which is estimated to be completed in 2017, includes a study fee and milestone payments dependent on the completion of certain key milestones. In 2013, the Company capitalized the milestone payments of $392,000 related to this agreement. During the three and six months ended June 30, 2014, the Company recorded collaboration expenses related to this agreement of $164,000 and $401,000, respectively. All future milestone payments are contingent on certain accomplishments, and therefore the timing for any related payments cannot be estimated. In November 2013, the Company entered into an exclusive license agreement to develop and commercialize a test to predict benefit from DNA damage-based chemotherapy drugs, such as anthracycline-based regimens, in high risk breast cancer. The Company made an up-front payment of $9.0 million, which was recognized in research and development expense in the fourth quarter of 2013, and will make milestone payments as certain clinical and commercial endpoints are achieved in the future. All future milestone payments are contingent on certain milestone accomplishments, and therefore the timing for future milestone payments cannot be estimated. With successful commercialization of a test, the Company will be obligated to pay royalties. In January 2014, the Company entered into a collaboration agreement to conduct a prostate study with a goal to determine the association between the Genomic Prostate Score, or GPS provided by the assay and the likelihood of experiencing disease progression while on active surveillance. In February 2014, the Company capitalized a milestone payment of $367,000 related to this agreement which is included in the other assets in the accompanying condensed consolidated balance sheets. All future milestone payments to be received under this agreement are contingent on certain accomplishments, and therefore the timing for any related payments cannot be estimated. The Company is a party to various agreements under which it licenses technology on a non-exclusive basis in the field of human diagnostics. Access to these licenses enables the Company to process its Oncotype DX tests. While certain agreements contain provisions for fixed annual payments, license fees are generally calculated as a percentage of product revenues, with rates that vary by agreement and may be tiered, and payments that may be capped at annual minimum or maximum amounts. The Company recognized costs recorded under these agreements totaling $2.5 million and $4.8 million for the three and six months ended June 30, 2014 and $2.3 million and $4.4 million for the three and six months ended June 30, 2013, respectively, which were included in cost of product revenues. At June 30, 2014, fixed future annual payments, exclusive of royalty payments, relating to the launch and commercialization of the Oncotype DX colon cancer test and the Oncotype DX prostate cancer test totaled $550,000 and are fully payable in 2015. These payments are recorded in cost of product revenues as license fees. If at any time the Company discontinues the sale of the products covered by the agreement, no future annual payments will be payable and the Company will have no further obligation under the applicable agreement. *Contract Research Arrangements* In November 2007, the Company entered into a Collaborative Diagnostic Development Agreement with Pfizer Inc. to provide research and development services for the development of a diagnostic product for renal cell cancer. The Company received an initial payment of $1.5 million and was initially eligible to receive a payment of $2.2 million upon joint agreement on a gene identification plan, $5.0 million in additional payments upon the earlier of Pfizer’s election to initiate the next phase of development or a specified number of months from the date the Company received the sample set and related clinical data necessary to conduct the first phase of development, and a final payment of $1.5 million upon completion of clinical validation. The Company recognized the final $1.5 million substantive milestone payment upon completion of clinical validation in December 2013. The Company did not recognize any revenue related to substantive milestones under this agreement during the three and six months ended and June 30, 2013.

Note 4. Collaboration and Commercial Technology Licensing Agreements

The Company has entered into a variety of collaboration and specimen transfer agreements relating to its development efforts. The Company recorded collaboration expenses of $1.0 million and $2.2 million for the three and six months ended June 30, 2014 and $639,000 and $1.1 million for the three and six months ended June 30, 2013, respectively, relating to services provided in connection with these agreements. In addition to these expenses, some of the agreements contain provisions for royalties from inventions resulting from these collaborations. The Company has specified options and rights relating to joint inventions arising out of the collaborations.

In August 2013, the Company entered into a collaboration agreement to conduct an additional large DCIS clinical study to validate the relationship between the Oncotype DX DCIS score and the likelihood of local recurrence in patients with DCIS. The agreement, which is estimated to be completed in 2017, includes a study fee and milestone payments dependent on the completion of certain key milestones. In 2013, the Company capitalized the milestone payments of $392,000 related to this agreement. During the three and six months ended June 30, 2014, the Company recorded collaboration expenses related to this agreement of $164,000 and $401,000, respectively. All future milestone payments are contingent on certain accomplishments, and therefore the timing for any related payments cannot be estimated.

In November 2013, the Company entered into an exclusive license agreement to develop and commercialize a test to predict benefit from DNA damage-based chemotherapy drugs, such as anthracycline-based regimens, in high risk breast cancer. The Company made an up-front payment of $9.0 million, which was recognized in research and development expense in the fourth quarter of 2013, and will make milestone payments as certain clinical and commercial endpoints are achieved in the future. All future milestone payments are contingent on certain milestone accomplishments, and therefore the timing for future milestone payments cannot be estimated. With successful commercialization of a test, the Company will be obligated to pay royalties.

In January 2014, the Company entered into a collaboration agreement to conduct a prostate study with a goal to determine the association between the Genomic Prostate Score, or GPS provided by the assay and the likelihood of experiencing disease progression while on active surveillance. In February 2014, the Company capitalized a milestone payment of $367,000 related to this agreement which is included in the other assets in the accompanying condensed consolidated balance sheets. All future milestone payments to be received under this agreement are contingent on certain accomplishments, and therefore the timing for any related payments cannot be estimated.

The Company is a party to various agreements under which it licenses technology on a non-exclusive basis in the field of human diagnostics. Access to these licenses enables the Company to process its Oncotype DX tests. While certain agreements contain provisions for fixed annual payments, license fees are generally calculated as a percentage of product revenues, with rates that vary by agreement and may be tiered, and payments that may be capped at annual minimum or maximum amounts. The Company recognized costs recorded under these agreements totaling $2.5 million and $4.8 million for the three and six months ended June 30, 2014 and $2.3 million and $4.4 million for the three and six months ended June 30, 2013, respectively, which were included in cost of product revenues.

At June 30, 2014, fixed future annual payments, exclusive of royalty payments, relating to the launch and commercialization of the Oncotype DX colon cancer test and the Oncotype DX prostate cancer test totaled $550,000 and are fully payable in 2015. These payments are recorded in cost of product revenues as license fees. If at any time the Company discontinues the sale of the products covered by the agreement, no future annual payments will be payable and the Company will have no further obligation under the applicable agreement.

Contract Research Arrangements

In November 2007, the Company entered into a Collaborative Diagnostic Development Agreement with Pfizer Inc. to provide research and development services for the development of a diagnostic product for renal cell cancer. The Company received an initial payment of $1.5 million and was initially eligible to receive a payment of $2.2 million upon joint agreement on a gene identification plan, $5.0 million in additional payments upon the earlier of Pfizer’s election to initiate the next phase of development or a specified number of months from the date the Company received the sample set and related clinical data necessary to conduct the first phase of development, and a final payment of $1.5 million upon completion of clinical validation. The Company recognized the final $1.5 million substantive milestone payment upon completion of clinical validation in December 2013. The Company did not recognize any revenue related to substantive milestones under this agreement during the three and six months ended and June 30, 2013.