EXACT CORP, S-1/A, 2001-01-08

EXACT CORP
S-1/A, 2001-01-08
COMMERCIAL PHYSICAL & BIOLOGICAL RESEARCH

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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 8, 2001

REGISTRATION NO. 333-48812
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--------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
------------------------

AMENDMENT NO. 4
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

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

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

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

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

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)

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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:

<TABLE>
<S> <C>
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
</TABLE>

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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/

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

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.

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<PAGE>
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.
<PAGE>
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.
<PAGE>
SUBJECT TO COMPLETION

PRELIMINARY PROSPECTUS DATED JANUARY 8, 2001

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.

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

<TABLE>
<CAPTION>
PER SHARE TOTAL
--------- -----
<S> <C> <C>
Public offering price....................................... $ $

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

Proceeds, before expenses, to EXACT......................... $ $
</TABLE>

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 , 2001.

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

MERRILL LYNCH & CO.

CIBC WORLD MARKETS

THOMAS WEISEL PARTNERS LLC

-----------

The date of this prospectus is , 2001.

<PAGE>
[EXACT SCIENCES LOGO]
<PAGE>
TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
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<S> <C>
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...................................... 47
Description of Capital Stock................................ 49
Shares Eligible for Future Sale............................. 53
Material United States Federal Tax Considerations for
Non-United States Holders................................. 55
Underwriting................................................ 59
Legal Matters............................................... 63
Experts..................................................... 63
Where You Can Find Additional Information................... 63
Index to Financial Statements............................... F-1
</TABLE>

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

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.

i
<PAGE>
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 SEPTEMBER 30, 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 flexible sigmoidoscopy and colonoscopy,
which are procedures in which an endoscope is inserted into the colon, 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 January 5, 2001, we had
ten issued U.S. patents and 23 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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<PAGE>
- 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.

2
<PAGE>
THE OFFERING

<TABLE>
<S> <C>
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........... 18,632,884 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
</TABLE>

The share data in the table above is based on shares outstanding as of
January 5, 2001 and excludes:

- 1,810,570 shares of common stock issuable upon exercise of options
outstanding with a weighted average exercise price of $3.06 per share;

- 386,166 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; and

- 48,125 shares of common stock issuable upon the exercise of an outstanding
warrant.

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.

3
<PAGE>
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.

<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEARS ENDED DECEMBER 31, SEPTEMBER 30,
------------------------------- ---------------------
1997 1998 1999 1999 2000
-------- -------- --------- -------- ----------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
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) (7,776)
Net loss................................. (1,883) (3,578) (4,964) (3,629) (6,784)
Net loss per share:
Basic and diluted...................... ($10.70) ($6.08) ($5.32) ($4.34) ($5.48)
Pro forma basic and diluted(3)......... (0.56) (0.58)
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
</TABLE>

<TABLE>
<CAPTION>
AS OF SEPTEMBER 30, 2000
---------------------------
ACTUAL AS ADJUSTED(2)
---------- --------------
<S> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents................................. $30,228 $85,028
Total assets.............................................. 31,943 86,743
Total stockholders' equity................................ 31,038 85,838
</TABLE>

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

(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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<PAGE>
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 $18.0 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, such as the Mayo
Clinic, that we believe are key to establishing tests using our technologies as
a standard of care for colorectal cancer screening. We have

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<PAGE>
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. 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 cancers of the lung, pancreas, esophagus, stomach and gall bladder. 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 PENALTIES.

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, 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 could

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<PAGE>

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. We have no employment agreements with any of
Messrs. Lapidus, Hardison, McCarthy or Shuber, however each has signed a
non-disclosure and assignment of intellectual property agreement and non-compete
agreement. We also have a severance agreement with each of Messrs. Lapidus,
Hardison, McCarthy and Shuber that provides for twelve months severance under
certain circumstances. 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

8
<PAGE>

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.

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 January 5, 2001, we had ten issued patents in the United States, four
issued foreign patents, twenty-three pending patent applications in the United
States, three of which have been allowed, and forty-one 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. We cannot guarantee you that
we will be successful in defending this or other challenges made in connection
with our patents and patent applications. Any successful third-party challenge
to our patents could result in co-ownership of such patents with a third party
or the unenforceability or invalidity of such patents. In addition, we and a
third-party institution have filed a joint patent application that will be
co-owned by us and that third-party institution relating to the use of various
DNA markers, including one of our detection methods, to detect cancers of the
lung, pancreas, esophagus, stomach, small intestine, bile duct, naso-pharyngeal,
liver and gall bladder in stool under the Patent Cooperation Treaty. This patent
application designates the United States, Japan, Europe and Canada. Co-ownership
of a patent allows the co-owner to exercise all rights of ownership, including
the right to use, transfer and license the rights protected by the applicable
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.

9
<PAGE>
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.
patents and twenty-three 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.

10
<PAGE>
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. 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 49.8% 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;

11
<PAGE>
- 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;

- 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 18,632,884 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 14,632,884, or
78.5%, of our outstanding common stock will be subject to restrictions on resale
under U.S. securities laws. Holders of 99.4% 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. Based on shares outstanding as of September 30, 2000 and 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,"

12
<PAGE>
"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.

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 currently expect to use approximately $19.0 million of the net proceeds
of this offering to fund clinical studies and trials, $24.0 million of the net
proceeds to fund other research and development and the balance of the net
proceeds for working capital and other general corporate purposes. The actual
amounts expended for each purpose may vary significantly depending on a number
of factors, including the results of our clinical studies and trials and other
unforeseen circumstances. 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
<PAGE>
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.

<TABLE>
<CAPTION>
AS OF SEPTEMBER 30, 2000
----------------------------------
ACTUAL PRO FORMA AS ADJUSTED
-------- --------- -----------
(DOLLARS IN THOUSANDS,
EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C>
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, 14,507,759 shares issued and outstanding pro
forma; 100,000,000 shares authorized, 18,507,759 shares
issued and outstanding as adjusted........................ 26 145 185
Subscriptions receivable.................................... (590) (590) (590)
Deferred compensation....................................... (7,034) (7,034) (7,034)
Additional paid in capital.................................. 56,593 56,517 111,277
Deficit accumulated during the development stage............ (18,000) (18,000) (18,000)
-------- -------- --------
Total stockholders' equity................................ 31,038 31,038 85,838
-------- -------- --------
Total capitalization...................................... $31,038 $31,038 $85,838
======== ======== ========
</TABLE>

--------------------------
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;

- 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; and

- 48,125 shares of common stock issuable upon the exercise of a warrant
issued subsequent to September 30, 2000.

14
<PAGE>
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:

<TABLE>
<S> <C> <C>
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
======
</TABLE>

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.

<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION
--------------------- ----------------------- AVERAGE PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
---------- -------- ------------ -------- -------------
<S> <C> <C> <C> <C> <C>
Existing stockholders........ 14,507,759 78.4% $48,383,111 44.6% $3.33
New investors................ 4,000,000 21.6 60,000,000 55.4 15.00
---------- ----- ------------ -----
Totals................... 18,507,759 100.0% $108,383,111 100.0%
========== ===== ============ =====
</TABLE>

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;

- 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; and

- 48,125 shares of common stock issuable upon the exercise of a warrant
issued subsequent to September 30, 2000.

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
<PAGE>
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.

<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEARS ENDED DECEMBER 31, SEPTEMBER 30,
---------------------------------------------------------- -------------------------
1995 1996 1997 1998 1999 1999 2000
-------- --------- --------- --------- ----------- --------- -------------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
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 1,519
-------- --------- --------- --------- ----------- --------- ------------
Loss from operations................ (144) (678) (2,037) (4,021) (5,263) (3,877) (7,776)
Interest income..................... 6 26 154 443 299 248 992
-------- --------- --------- --------- ----------- --------- ------------
Net loss............................ ($138) ($652) ($1,883) ($3,578) ($4,964) ($3,629) ($6,784)
======== ========= ========= ========= =========== ========= ============
Net loss per common share:
Basic and diluted(2).............. ($1.69) ($6.77) ($10.70) ($6.08) ($5.32) ($4.34) ($5.48)
======== ========= ========= ========= =========== ========= ============
Pro forma, basic and diluted(3)... ($0.56) ($0.58)
=========== ============
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
=========== ============
</TABLE>

<TABLE>
<CAPTION>
AS OF DECEMBER 31, AS OF
----------------------------------------------------- SEPTEMBER 30,
1995 1996 1997 1998 1999 2000
-------- -------- -------- -------- --------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
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 31,943
Stockholders' equity........................ 40 4,010 2,305 9,298 4,410 31,038
</TABLE>

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

<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
Research and development................... $-- $-- $1 $2 $9 $9 $197
General and administrative................. -- -- -- -- 5 5 1,322
------- ------- ------- ------- --------- ------- ---------
Total.................................... 0 $0 $1 $2 $14 $14 $1,519
</TABLE>

(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
<PAGE>
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 $18.0 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. As of January 5, 2001, we expect to
recognize amortization expense of deferred compensation recorded related to
employee and director options of approximately $2,400,000, $4,200,000,
$2,400,000, $1,500,000, $715,000 and $188,000 during the years ended
December 31, 2000, 2001, 2002, 2003, 2004 and 2005, respectively. In addition,
we

17
<PAGE>

expect to recognize research and development stock-based compensation expense of
approximately $410,000 in December 2000 related to the issuance of a warrant.

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
$1.5 million for the nine months ended September 30, 2000, of which $200,000
related to research and development personnel and $1.3 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.

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<PAGE>
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 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 $650,000 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.

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<PAGE>
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 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 did not have an 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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<PAGE>
BUSINESS

OVERVIEW

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--the development of novel
technologies for the application of genomics to the detection and management of
disease.

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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<PAGE>
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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<PAGE>
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:

<TABLE>
<CAPTION>
SENSITIVITY SPECIFICITY
METHOD PROCEDURE DESCRIPTION (APPROXIMATE) (APPROXIMATE)
---------------------- ------------------------------- ------------- -------------
<S> <C> <C> <C>
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
</TABLE>

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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<PAGE>
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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<PAGE>
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 ten 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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<PAGE>
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.

<TABLE>
<CAPTION>
NAME ROLE IN DETECTION OUR SCIENTIFIC ADVANCE
------------------ ---------------------------------- ----------------------------------
<S> <C> <C>
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
</TABLE>

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

27
<PAGE>
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 at academic institutions, including the
Mayo Clinic and The 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 have an agreement with Mayo Clinic, that expires on
December 31, 2001, under which Dr. Ahlquist, a member of our scientific advisory
board and a director of the Colorectal Neoplasia Clinic at Mayo, assists us in
our clinical trials and the use of our technologies in the detection of
colorectal cancer. 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;

28
<PAGE>
- enable the laboratories to differentiate themselves technologically; and

- offer potentially higher gross margins than most existing tests.

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:

<TABLE>
<CAPTION>
NUMBER OF
STUDY COMPLETION DATE PATIENTS SAMPLE TYPE SENSITIVITY SPECIFICITY
------------------------- --------------- ---------- -------------------- ----------- -----------
<S> <C> <C> <C> <C> <C>
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%
</TABLE>

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

29
<PAGE>
will provide additional medical value for our technologies. We intend to test
for adenomas in our planned 5,300-patient clinical trial.

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 current
procedural terminology codes which facilitate 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.

30
<PAGE>
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.

<TABLE>
<CAPTION>
NUMBER DETECTED/
LOCATION OF CANCER NUMBER WITH CANCER PERCENT DETECTED
---------------------------------------------- ------------------- ----------------
<S> <C> <C>
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%
</TABLE>

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.

31
<PAGE>
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 certified 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

32
<PAGE>
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 January 5, 2001, we had ten issued patents in the United States, four issued
foreign patents, twenty-three pending patent applications in the United States,
three of which have been allowed, and forty-one pending foreign applications.
Our success depends to a significant degree upon our ability to develop
proprietary

33
<PAGE>

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.

A 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. To date, no legal proceedings have been
initiated by this third party. If any third party, including the third party
discussed above, asserting co-inventorship rights with respect to any patent is
successful in challenging our inventorship determination, such patent may become
unenforceable or we may be required to add that third party inventor to the
applicable patent, resulting in co-ownership of such patent with the third
party. Co-ownership of a patent allows the co-owner to exercise all rights of
ownership, including the right to use, transfer and license the rights protected
by the applicable patent.

We and a third-party institution have filed a joint patent application that
will be co-owned by us and that third-party institution relating to the use of
various DNA markers, including the DNA Integrity Assay, to detect cancers of the
lung, pancreas, esophagus, stomach, small intestine, bile duct, naso-pharyngeal,
liver and gall bladder in stool under the Patent Cooperation Treaty. This patent
application designates the United States, Japan, Europe and Canada.

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 The 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 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.

34
<PAGE>
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 December 28, 2000, we had 44 employees, six of whom have Ph.Ds.
Twenty-eight persons are engaged in research and development, four persons in
sales and marketing and twelve 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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<PAGE>
MANAGEMENT

EXECUTIVE OFFICERS, KEY EMPLOYEES AND DIRECTORS

The following table sets forth specific information regarding our executive
officers, key employees and directors as of January 5, 2001:

<TABLE>
<CAPTION>
NAME AGE POSITION
---- -------- --------
<S> <C> <C>
Stanley N. Lapidus............................. 51 Chairman and Director
Don M. Hardison................................ 50 President and Director
John A. McCarthy, Jr.(1)....................... 42 Vice President and Chief Financial Officer
Anthony P. Shuber.............................. 42 Vice President of Molecular Biology
Barry M. Berger, MD............................ 49 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
</TABLE>

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

(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 17 issued U.S. patents and several 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
worked with InfoMedtrics, Inc., a developer of integrated data warehouse and
decision support systems for large self-insured employers and managed care
organizations, as President, Chief Operating Officer and Director and, following
its merger in July 2000, as a consultant. 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 disability marketplaces, most recently as

36
<PAGE>
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, our principal scientific officer, 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. From 1983 to 1989, Mr. Shuber was a research
scientist at Genetics Institute. Mr. Shuber holds 17 U.S. patents and has
several pending U.S. patent applications in the area of applied genomics.
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.

37
<PAGE>
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 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.

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<PAGE>
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 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.

<TABLE>
<CAPTION>
NAME POSITION AND AFFILIATION
---- ------------------------
<S> <C>
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 The Johns Hopkins University School
of Medicine

Bert Vogelstein, MD...... Professor of Oncology and Pathology at The 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
</TABLE>

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

39
<PAGE>
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 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.

We have also executed a severance agreement with Mr. Lapidus that provides
that we will pay twelve months severance to Mr. Lapidus in the event that within
the one-year period following a sale of all or substantially all of our assets
or a merger or consolidation resulting in a change of control, any one of the
following events occur:

- the termination of Mr. Lapidus' employment for any reason other than gross
negligence or criminal misconduct, each in connection with the performance
of his duties;

- a diminution in Mr. Lapidus' job responsibility or reduction in his
compensation; or

- a change in location of Mr. Lapidus' employment more than 35 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.

<TABLE>
<CAPTION>
ANNUAL
COMPENSATION
-------------------
NAME AND PRINCIPAL POSITION YEAR SALARY
--------------------------- -------- --------
<S> <C> <C>
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
</TABLE>

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

40
<PAGE>
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.

<TABLE>
<CAPTION>
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
---- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Stanley N. Lapidus.......... -- -- -- -- -- --
Barry M. Berger, MD......... -- -- -- -- -- --
Anthony P. Shuber........... -- -- -- 68,750 -- $959,063
</TABLE>

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, generally
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

41
<PAGE>
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 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.

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<PAGE>
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.

<TABLE>
<CAPTION>
SERIES C SERIES D
NAME PREFERRED PREFERRED
---- --------- ---------
<S> <C> <C>
Stanley N. Lapidus.......................................... 12,381 --
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
</TABLE>

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

(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

43
<PAGE>
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 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 diminution in Mr. Lapidus' job responsibility or his compensation; or

- a change in location of Mr. Lapidus' employment more than 60 miles from
our current location.

- the termination of Mr. Lapidus' employment for any reason other than gross
negligence or criminal misconduct, each in connection with the performance
of his duties;

- a diminution in Mr. Lapidus' job responsibility or reduction in his
compensation; or

- a change in location of Mr. Lapidus' employment more than 35 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, upon the sale of all or
substantially all of our assets or a merger or consolidation resulting in a
change of control, our right to repurchase shares granted under an option to
Mr. Hardison will terminate with respect to all shares for which our right to
repurchase would have terminated within one year following the change of
control. Finally, following the sale of all or substantially all of our assets
or a merger or consolidation resulting in a change of control, our right to
repurchase shares granted under an option to Mr. Hardison will lapse in its
entirety upon:

- 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 diminution in Mr. Hardison's job responsibility or reduction in his
compensation; or

- a change in location of Mr. Hardison's employment more than 60 miles from
our current location.

We have also executed a severance agreement with Mr. Hardison that provides
that we will pay Mr. Hardison twelve months severance in the event he is
terminated without cause before June 1, 2001. We have also agreed to pay twelve
months severance to Mr. Hardison in the event that during the one-

44
<PAGE>

year period following a sale of all or substantially all of our assets or a
merger or consolidation resulting in a change of control, any one of the
following events occurs:

- termination of Mr. Hardison's employment for any reason other than gross
negligence or criminal misconduct, each in connection with the performance
of his duties;

- a diminution in Mr. Hardison's job responsibility or reduction in his
compensation; or

- a change in location of Mr. Hardison's employment more than 35 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.

John McCarthy, our Vice President and Chief Financial Officer, executed a
promissory note, effective November 2000, in favor of us in the aggregate
principal amount of $300,000. As of December 31, 2000, $225,000 remains
outstanding on the note. The note provides for 9.5% interest and is payable on
October 2010. Mr. McCarthy used the proceeds of the note to exercise options to
purchase 41,250 shares of our common stock. In addition, Mr. McCarthy executed a
pledge agreement granting us a security interest in 30,938 shares. In connection
with the issuance of these shares, Mr. McCarthy executed a restricted stock
purchase agreement under which we have the right to repurchase 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 25% of the shares originally
granted. Thereafter, our right to repurchase terminates monthly over each of the
next thirty-six months with respect to 2.083% of the shares originally granted
under the option. In addition, upon the sale of all or substantially all of our
assets or a merger or consolidation resulting in a change of control, our right
to repurchase shares granted under an option to Mr. McCarthy will terminate with
respect to all shares for which our right to repurchase would have terminated
within one year following the change of control. Finally, following the sale of
all or substantially all of our assets or a merger or consolidation resulting in
a change of control, our right to repurchase shares granted under an option to
Mr. McCarthy will lapse in its entirety upon:

- termination of Mr. McCarthy's employment for any reason other than gross
negligence or criminal misconduct, each in connection with the performance
of his duties;

- a diminution in Mr. McCarthy's job responsibility or reduction in his
compensation; or

- a change in location of Mr. McCarthy's employment more than 35 miles from
our current location.

We have also executed a severance agreement with Mr. McCarthy that provides
that we will pay twelve months severance to Mr. McCarthy in the event he is
terminated without cause before October 1, 2001. We have also agreed to pay
twelve months severance to Mr. McCarthy in the event that during the one-year
period following a sale of all or substantially all of our assets or a merger or
consolidation resulting in a change of control, any one of the three events
described above occurs.

We have also executed a severance agreement with Anthony P. Shuber, our Vice
President of Molecular Biology, that provides that we will pay twelve months
severance to Mr. Shuber in the event that during the one-year period following a
sale of all or substantially all of our assets or a merger or consolidation
resulting in a change of control, any one of the following events occurs:

- termination of Mr. Shuber's employment for any reason other than gross
negligence or criminal misconduct, each in connection with the performance
of his duties;

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<PAGE>

- a diminution in Mr. Shuber's job responsibility or reduction in his
compensation; or

- a change in location of Mr. Shuber's employment more than 35 miles from
our current location.

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. In addition,
The Mayo Foundation holds a warrant to purchase 48,125 shares of our common
stock at an exercise price of $10.9091 per share. We expect to record research
and development stock-based compensation expense, in accordance with EITF 96-18,
of approximately $410,000 in December 2000 related to this warrant. Our existing
collaboration agreement with the Mayo Clinic expires on December 31, 2001. 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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<PAGE>
PRINCIPAL STOCKHOLDERS

The following table sets forth certain information regarding beneficial
ownership of our common stock as of January 5, 2001, 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.

<TABLE>
<CAPTION>
PERCENT OF COMMON
STOCK OUTSTANDING
-------------------
SHARES BEFORE AFTER
NAME AND ADDRESS OF BENEFICIAL OWNER HELD OFFERING OFFERING
------------------------------------ --------- -------- --------
<S> <C> <C> <C>
The OneLiberty Fund Entities(1)
150 CambridgePark Drive
Cambridge, MA 02140 ...................................... 2,614,023 17.9% 14.0%
Greylock Equity Limited Partnership
One Federal Street
Boston, MA 02110 ......................................... 2,218,128 15.2% 11.9%
The Highland Capital Partners Entities(2)
2 International Place
Boston, MA 02110 ......................................... 1,658,041 11.3% 8.9%
Edwin M. Kania, Jr.(3) ..................................... 2,614,023 17.9% 14.0%
William W. Helman(4) ....................................... 2,218,128 15.2% 11.9%
Wycliffe K. Grousbeck(5) ................................... 1,658,041 11.3% 8.9%
Stanley N. Lapidus(6) ...................................... 1,474,915 10.1% 7.9%
Lance Willsey(7)
One Newbrook Circle
Brookline, MA 02167 ...................................... 611,107 4.2% 3.3%
Anthony P. Shuber(8) ....................................... 304,791 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. ..................................... 41,250 * *
All executive officers and directors as a group
(11 persons)(10) ......................................... 9,367,103 63.3% 49.8%
</TABLE>

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

* Indicates ownership of less than 1%

FOOTNOTES ON FOLLOWING PAGE

47
<PAGE>
(1) Includes 2,138,233 shares beneficially owned by OneLiberty Fund III, L.P,
of which One Liberty Partners III, L.P. is the general partner. Also
includes 465,096 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 1,591,721 shares beneficially owned by Highland Capital Partners
III Limited Partnership, of which Highland Management Partners III Limited
Partnership is the general partner. Also includes 66,318 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 2,218,128 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 213,886 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 29,791 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) 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 January 5, 2001 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.

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<PAGE>
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 14,507,759 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.

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<PAGE>

WARRANTS

As of December 31, 2000, we had one outstanding warrant to purchase 48,125
shares of common stock at an exercise price of $10.9091 per share. This warrant
is exercisable, in whole or in part, at any time or from time to time until the
earlier of December 28, 2005 and eighteen months following our initial public
offering, but in any case must be exercised prior to the sale of substantially
all of our assets or a merger resulting in a change of control. The warrant
contains protections against dilution resulting from stock splits and stock
dividends.

REGISTRATION RIGHTS

Holders of 12,975,384 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

50
<PAGE>
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 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

51
<PAGE>
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 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.

52
<PAGE>
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 and based on shares outstanding on
December 31, 2000, we will have 18,632,884 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 14,632,884 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.
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. Merrill
Lynch may in its sole discretion, at any time without notice, consent to the
release of all or any portion of the shares subject to lock-up agreements.
Merrill Lynch does not have any current intention to release shares of common
stock subject to these lock-up agreements. Any determination to release any
shares subject to the lock-up agreements would be based on a number of factors
at the time of any such determination, possibly including, but not limited to,
the market price of the common stock, the liquidity of the trading market for
the common stock, general market conditions, the number of shares proposed to be
sold and the timing of the proposed sale. See "Underwriting." Taking into
account the lock-up agreements, and assuming Merrill Lynch 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, 18,495,612 shares
will be eligible for sale, 14,495,612 of which will be subject to volume,
manner of sale and other limitations under Rule 144.

- The remaining 137,272 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.

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<PAGE>
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 186,329 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 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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<PAGE>
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

55
<PAGE>
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.

56
<PAGE>
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%.

57
<PAGE>
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.

58
<PAGE>
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.

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

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 153
completed transactions, and has acted as a syndicate member in an additional 135
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
pursuant to the underwriting agreement entered into in connection with this
offering.

59
<PAGE>
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.

<TABLE>
<CAPTION>
PER SHARE WITHOUT OPTION WITH OPTION
--------- -------------- -----------
<S> <C> <C> <C>
Public offering price............................ $ $ $
Underwriting discount............................ $ $ $
Proceeds, before expenses, to EXACT.............. $ $ $
</TABLE>

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.

60
<PAGE>
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. See "Shares Eligible for Future
Sale." 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.

61
<PAGE>
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.

62
<PAGE>
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 12,221
shares of our common stock under the name High Street Investors 2000. Edmund R.
Pitcher, a partner at Testa, Hurwitz & Thibeault, LLP beneficially owns 17,762
shares of our common stock, and Thomas C. Meyers, also a partner at Testa,
Hurwitz & Thibeault, LLP beneficially owns 2,750 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.

63
<PAGE>

EXACT SCIENCES CORPORATION

INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
--------
<S> <C>
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
</TABLE>

F-1
<PAGE>
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
<PAGE>
EXACT SCIENCES CORPORATION
(A DEVELOPMENT STAGE COMPANY)

BALANCE SHEETS

<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30, 2000
------------------------ -------------------------
1998 1999 ACTUAL PRO FORMA
ASSETS ---------- ----------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C>
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............................. 219,902 255,161 329,050 329,050
Leasehold improvements.................................... 90,955 125,688 179,306 179,306
Furniture and fixtures.................................... 83,858 114,618 158,404 158,404
---------- ----------- ----------- -----------
797,669 1,089,852 1,483,194 1,483,194
Less--Accumulated depreciation and amortization........... (321,835) (663,397) (887,827) (887,827)
---------- ----------- ----------- -----------
475,834 426,455 595,367 595,367
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 $31,942,789 $31,942,789
========== =========== =========== ===========
</TABLE>

F-3
<PAGE>
EXACT SCIENCES CORPORATION
(A DEVELOPMENT STAGE COMPANY)

BALANCE SHEETS

<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30, 2000
------------------------ -------------------------
1998 1999 ACTUAL PRO FORMA
LIABILITIES AND STOCKHOLDERS' EQUITY ---------- ----------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C>

Current Liabilities:
Capital lease obligations................................. $ 5,005 $ -- $ -- $ --
Accounts payable.......................................... 180,565 196,895 495,434 495,434
Accrued expenses.......................................... 223,487 146,993 409,509 409,509
---------- ----------- ----------- -----------
Total current liabilities............................... 409,057 343,888 904,943 904,943
---------- ----------- ----------- -----------
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 2,618,625 shares at
December 31, 1998 and 1999 and September 30, 2000,
respectively, 14,507,759 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) (589,974) (589,974)
Deferred compensation....................................... (15,991) (54,482) (7,034,642) (7,034,642)
Additional paid-in capital.................................. 15,567,566 15,674,878 56,592,800 56,517,141
Deficit accumulated during the development stage............ (6,251,636) (11,215,561) (17,999,757) (17,999,757)
---------- ----------- ----------- -----------
Total stockholders' equity.............................. 9,298,471 4,410,015 31,037,846 31,037,846
---------- ----------- ----------- -----------
$9,707,528 $ 4,753,903 $31,942,789 $31,942,789
========== =========== =========== ===========
</TABLE>

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

F-4
<PAGE>
EXACT SCIENCES CORPORATION
(A DEVELOPMENT STAGE COMPANY)

STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
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)
<S> <C> <C> <C> <C> <C> <C>
Operating Expenses:
Research and
development......... $ 1,221,504 $ 2,848,763 $ 3,688,796 $ 2,738,085 $ 3,815,122 $ 11,939,989
General and
administrative...... 814,407 1,170,366 1,560,368 1,124,715 2,441,916 6,442,893
Stock-based
compensation(1)..... 845 1,902 13,780 13,780 1,519,145 1,535,672
----------- ----------- ----------- ----------- ----------- ------------
Loss from
operations........ (2,036,756) (4,021,031) (5,262,944) (3,876,580) (7,776,183) (19,918,554)
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) $(6,784,196) $(17,999,757)
=========== =========== =========== =========== =========== ============
Net Loss per Share:
Basic and diluted..... $ (10.70) $ (6.08) $ (5.32) $ (4.34) $ (5.48)
=========== =========== =========== =========== ===========
Pro forma basic and
diluted
(unaudited)......... $ (0.56) $ (0.58)
=========== ===========
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 $ 196,913 $ 207,742
General and
administrative..... 262 475 4,961 4,961 1,322,232 1,327,930
----------- ----------- ----------- ----------- ----------- ------------
Total.............. $ 845 $ 1,902 $ 13,780 $ 13,780 $ 1,519,145 $ 1,535,672
=========== =========== =========== =========== =========== ============
</TABLE>

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

F-5
<PAGE>
EXACT SCIENCES CORPORATION
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
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
---------- --------- ---------- --------- ---------- --------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
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
---------- --------- ---------- -------- ------------ ------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
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..................... -- -- -- -- -- -- --
--------- ------- ------- ------ --------- ----------- -----------

<CAPTION>
DEFICIT
ACCUMULATED
DURING THE TOTAL
DEVELOPMENT STOCKHOLDERS'
STAGE EQUITY
------------ -------------
<S> <C> <C>
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)
------------ -----------
</TABLE>

F-6
<PAGE>
EXACT SCIENCES CORPORATION
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF STOCKHOLDERS' EQUITY (CONTINUED)
<TABLE>
<CAPTION>
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
---------- --------- ---------- --------- ---------- --------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
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
---------- --------- ---------- -------- ------------ ------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
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..................... (27,841) (278) (27,844) 5,215 -- -- (4,937)
Exercise of common stock
options................... 1,015,493 10,155 -- -- (662,080) -- 697,305
Repayment of subscription
receivable................ -- -- -- -- 111,812 -- --
Compensation expense related
to issuance of stock
options................... -- -- -- -- -- (6,980,160) 8,499,305
Net loss.................... -- -- -- -- -- -- --
---------- -------- ------- ------ --------- ----------- -----------
Balance, September 30, 2000
(unaudited)................. 2,618,625 26,186 -- -- (589,974) (7,034,642) 56,592,800
Conversion of convertible
preferred stock into
common stock.............. 11,889,134 118,892 -- -- -- -- (75,659)
---------- -------- ------- ------ --------- ----------- -----------
Pro Forma Balance,
September 30, 2000
(unaudited)............... 14,507,759 $145,078 -- $ -- $(589,974) $(7,034,642) $56,517,141
========== ======== ======= ====== ========= =========== ===========

<CAPTION>
DEFICIT
ACCUMULATED
DURING THE TOTAL
DEVELOPMENT STOCKHOLDERS'
STAGE EQUITY
------------ -------------
<S> <C> <C>
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................... -- 45,380
Repayment of subscription
receivable................ -- 111,812
Compensation expense related
to issuance of stock
options................... -- 1,519,145
Net loss.................... (6,784,196) (6,784,196)
------------ -----------
Balance, September 30, 2000
(unaudited)................. (17,999,757) 31,037,846
Conversion of convertible
preferred stock into
common stock.............. -- --
------------ -----------
Pro Forma Balance,
September 30, 2000
(unaudited)............... $(17,999,757) $31,037,846
============ ===========
</TABLE>

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

F-7
<PAGE>
EXACT SCIENCES CORPORATION

(A DEVELOPMENT STAGE COMPANY)

STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
PERIOD FROM
NINE MONTHS ENDED INCEPTION
YEAR ENDED DECEMBER 31, SEPTEMBER 30, (FEBRUARY 10, 1995) TO
--------------------------------------- -------------------------- SEPTEMBER 30,
1997 1998 1999 1999 2000 2000
----------- ----------- ----------- ----------- ------------ ----------------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
Cash Flows from Operating
Activities:
Net loss........................ $(1,883,073) $(3,578,380) $(4,963,925) $(3,628,836) $ (6,784,196) $(17,999,757)
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 1,519,145 1,535,672
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) 293,324 495,434
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) (4,573,539) (14,661,351)
----------- ----------- ----------- ----------- ------------ ------------
Cash Flows from Investing
Activities:
Purchases of property and
equipment..................... (340,142) (355,201) (292,183) (292,441) (393,342) (1,466,243)
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) (649,922) (2,595,736)
----------- ----------- ----------- ----------- ------------ ------------
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 45,380 127,017
Repayment of stock subscription
receivable.................... 25,000 3,802 4,072 2,672 111,812 147,358
----------- ----------- ----------- ----------- ------------ ------------
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
=========== =========== =========== =========== ============ ============
</TABLE>

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

F-8
<PAGE>
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 11,889,137 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
<PAGE>
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:

<TABLE>
<CAPTION>
ESTIMATED
ASSET CLASSIFICATION USEFUL LIFE
-------------------- -------------
<S> <C>
Laboratory equipment........................................ 3 years
Office and computer equipment............................... 3 years
Leasehold improvements...................................... Life of lease
Furniture and fixtures...................................... 3 years
</TABLE>

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
<PAGE>
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:

<TABLE>
<CAPTION>
YEAR ENDED NINE MONTHS ENDED
DECEMBER 31, SEPTEMBER 30,
1999 2000
------------ -----------------
<S> <C> <C>
Net loss....................................... $(4,963,925) $(6,784,196)
----------- -----------
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) $ (0.58)
=========== ===========
</TABLE>

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
<PAGE>
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 adoption of this guidance
did not have an impact on the Company's 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

F-12
<PAGE>
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 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 did not have an 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:

<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------
1998 1999
---------- ----------
<S> <C> <C>
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............................... $ -- $ --
========== ==========
</TABLE>

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.

(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.

F-13
<PAGE>
EXACT SCIENCES CORPORATION
(A DEVELOPMENT STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

(INCLUDING DATA APPLICABLE TO UNAUDITED PERIODS)

(4) SUBSCRIPTIONS RECEIVABLE (CONTINUED)
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.

In December 2000, the Company issued a warrant to the same shareholder to
purchase 48,125 shares of common stock at an exercise price of $10.9091 per
share. See Note 6.

(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
<PAGE>
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:

<TABLE>
<CAPTION>
NUMBER OF WEIGHTED AVERAGE
SHARES EXERCISE PRICE
---------- ----------------
<S> <C> <C>
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
========== =====
</TABLE>

F-15
<PAGE>
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:

<TABLE>
<CAPTION>
OUTSTANDING EXERCISABLE
---------------------------------------------------- --------------------------
WEIGHTED
AVERAGE
REMAINING WEIGHTED WEIGHTED
EXERCISE NUMBER OF CONTRACTUAL AVERAGE NUMBER OF AVERAGE
PRICE SHARES LIFE (YEARS) EXERCISE PRICE SHARES EXERCISE PRICE
-------- --------- ------------ -------------- --------- --------------
<S> <C> <C> <C> <C> <C>
$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
========= ===== ===== ======= =====
</TABLE>

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 $396,652 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
$8,102,653 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 related to employee and Director
options of approximately $2,061,000, $2,854,000, $1,671,000, $990,000, $465,000
and $100,000 during the years ending December 31, 2000, 2001, 2002, 2003, 2004
and 2005, respectively. In addition, the Company expects to recognize research

F-16
<PAGE>
EXACT SCIENCES CORPORATION
(A DEVELOPMENT STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

(INCLUDING DATA APPLICABLE TO UNAUDITED PERIODS)

(6) STOCKHOLDERS' EQUITY (CONTINUED)

and development stock-based compensation expense of approximately $410,000 in
December 2000 related to the issuance of a warrant.

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:

<TABLE>
<CAPTION>
NINE MONTHS
ENDED
DECEMBER 31, SEPTEMBER 30,
------------------------------------------ 2000
1997 1998 1999 (UNAUDITED)
------------ ------------ ------------ --------------
<S> <C> <C> <C> <C>
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
</TABLE>

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

<TABLE>
<CAPTION>
NINE MONTHS
ENDED
YEARS ENDED DECEMBER 31, SEPTEMBER 30,
--------------------------------------- 2000
1997 1998 1999 (UNAUDITED)
----------- ----------- ----------- --------------
<S> <C> <C> <C> <C>
Net loss as reported.................... $(1,883,073) $(3,578,380) $(4,963,925) $(6,784,196)
Pro forma............................... $(1,884,473) $(3,581,433) $(4,993,586) $(6,821,815)
Basic and Diluted Net Loss per Share--
As reported........................... $ (10.70) $ (6.08) $ (5.32) $ (5.48)
Pro forma............................. $ (10.71) $ (6.08) $ (5.35) $ (5.51)
</TABLE>

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
<PAGE>
EXACT SCIENCES CORPORATION
(A DEVELOPMENT STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

(INCLUDING DATA APPLICABLE TO UNAUDITED PERIODS)

(6) STOCKHOLDERS' EQUITY (CONTINUED)

WARRANT

In December 2000, the Company issued a warrant to the Mayo Foundation to
purchase 48,125 shares of common stock at an exercise price of $10.9091 per
share. The warrant is execisable immediately. The Company has valued the warrant
using the Black-Scholes Model in accordance with EITF 96-18 and will record
research and development stock-based compensation of approximately $410,000 in
December 2000.

(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:

<TABLE>
<S> <C>
Year ending December 31,
2000...................................................... 59,000
2001...................................................... 236,000
2002...................................................... 236,000
2003...................................................... 118,000
--------
Total lease payments.................................... 649,000
========
</TABLE>

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. Roche may
terminate this license upon notice if the Company fails to pay royalties, fails
to submit reports or breaches a material term of the license. Royalty payments
will be expensed as they become due.

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 The 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. In addition, the Company 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 the
Company fails to pay milestone payments and royalties,

F-18
<PAGE>
EXACT SCIENCES CORPORATION
(A DEVELOPMENT STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

(INCLUDING DATA APPLICABLE TO UNAUDITED PERIODS)

(8) ROYALTY AGREEMENTS (CONTINUED)
achieve a stated level of sales and submit reports. In addition, if the Company
fails to request FDA clearance for a diagnostic test as required by the
agreement, Genzyme may terminate the license. 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.
Milestone payments will be expensed as milestones are achieved. Royalties will
be expensed as they become due.

(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.

(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.

F-19
<PAGE>
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)
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 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:

<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER
------------------- 30,
1998 1999 2000
-------- -------- ---------
<S> <C> <C> <C>
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
======== ======== ========
</TABLE>

F-20
<PAGE>
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

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

, 2001

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--------------------------------------------------------------------------------
<PAGE>
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.
<PAGE>
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS DATED JANUARY 8, 2001

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.

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

<TABLE>
<CAPTION>
PER SHARE TOTAL
--------- -----
<S> <C> <C>
Public offering price....................................... $ $

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

Proceeds, before expenses, to EXACT......................... $ $
</TABLE>

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.

The shares will be ready for delivery on or about , 2001.

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

MERRILL LYNCH INTERNATIONAL

CIBC WORLD MARKETS

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

The date of this prospectus is , 2001.
<PAGE>
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.

<TABLE>
<CAPTION>
NUMBER
INTERNATIONAL MANAGER OF SHARES
--------------------- ---------
<S> <C> <C>
Merrill Lynch International..............................................
CIBC World Markets plc...................................................
Thomas Weisel Partners LLC...............................................
-------
Total....................................................... 800,000
=======
</TABLE>

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.

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

59
<PAGE>
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.

<TABLE>
<CAPTION>
PER SHARE WITHOUT OPTION WITH OPTION
--------- -------------- -----------
<S> <C> <C> <C>
Public offering price............................. $ $ $
Underwriting discount............................. $ $ $
Proceeds, before expenses, to EXACT............... $ $ $
</TABLE>

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

60
<PAGE>
Incorporated. See "Shares Eligible for Future Sale." 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

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.

- 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.

61
<PAGE>
PRICE STABILIZATION, SHORT POSITIONS AND PENALTY BIDS

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

62
<PAGE>
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

LEGAL MATTERS

EXPERTS

WHERE YOU CAN FIND ADDITIONAL INFORMATION

63
<PAGE>
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

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

, 2001

--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<PAGE>
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:

<TABLE>
<S> <C>
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
==========
</TABLE>

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
<PAGE>
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.

In December 2000, the Company issued a warrant to purchase 48,125 shares of
common stock at an exercise price of $10.9091 per share to one investor.

As of January 5, 2001, the Company had granted options to purchase an
aggregate of 3,730,818 shares of common stock under its 1995 stock option plan,
of which 1,790,764 have been exercised at exercise prices ranging from $0.04 to
$7.27 for an aggregate purchase price of $1,435,385.80.

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:

II-2
<PAGE>

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S> <C>
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
10.15+ Letter Agreement by and between The Mayo Foundation for
Medical Education and Research and the Registrant dated
February 4, 1998
10.16+ Form of Consulting Agreement by and between the Registrant
and certain members of the scientific advisory board
10.17*++ Restricted Stock Purchase Agreement between the Registrant
and John A. McCarthy, Jr. dated as of November 28, 2000
10.18*++ Full Recourse Promissory Note between the Registrant and
John A. McCarthy, Jr. dated as of November 28, 2000
10.19*++ Pledge Agreement between the Registrant and John A.
McCarthy, Jr. dated as of November 30, 2000
10.20*++ Severance Agreement between the Registrant and Stanley N.
Lapidus dated January 4, 2001
10.21*++ Severance Agreement between the Registrant and Don M.
Hardison dated January 4, 2001
10.22*++ Severance Agreement between the Registrant and John A.
McCarthy, Jr. dated January 4, 2001
10.23*++ Severance Agreement between the Registrant and Anthony P.
Shuber dated January 4, 2001
10.26++ Warrant Agreement between the Registrant and The Mayo
Foundation for Medical Research dated December 28, 2000
21.1+ Subsidiaries of the Registrant
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)
</TABLE>

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

* Indicates a management contract or any compensatory plan, contract or
arrangement.

+ Previously filed.

++ Filed herewith.

@ 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.

II-3
<PAGE>
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-4
<PAGE>
SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended, the
registrant has duly caused this Amendment No. 4 to the Registration Statement to
be signed on its behalf by the undersigned, thereunto duly authorized, in
Boston, Massachusetts, on the 5th day of January 2001.

<TABLE>
<S> <C> <C>
EXACT SCIENCES CORPORATION

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

Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 4 to the registration statement has been signed by the following persons on
behalf of the registrant in the capacities and on the dates indicated.

<TABLE>
<CAPTION>
SIGNATURE TITLE(S) DATE
--------- -------- ----
<C> <S> <C>
*
--------------------------------- Chairman of the Board and Director January 5, 2001
Stanley N. Lapidus (PRINCIPAL EXECUTIVE OFFICER)

*
--------------------------------- President and Director January 5, 2001
Don M. Hardison

* Vice President and Chief Financial
--------------------------------- Officer (PRINCIPAL FINANCIAL AND January 5, 2001
John A. McCarthy, Jr. ACCOUNTING OFFICER)

*
--------------------------------- Director January 5, 2001
Noubar B. Afeyan

*
--------------------------------- Director January 5, 2001
Richard W. Barker

*
--------------------------------- Director January 5, 2001
Sally W. Crawford

*
--------------------------------- Director January 5, 2001
Wycliffe K. Grousbeck

*
--------------------------------- Director January 5, 2001
William W. Helman

*
--------------------------------- Director January 5, 2001
Edwin M. Kania, Jr.

*
--------------------------------- Director January 5, 2001
Lance Willsey
</TABLE>

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

II-5
<PAGE>
EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S> <C>
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
4.2++ Warrant issued to The Mayo Foundation for Medical Research
dated December 28, 2000
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, as amended
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
10.15+ Letter Agreement by and between The Mayo Foundation for
Medical Education and Research Foundation and the Registrant
dated February 4, 1998
10.16+ Form of Consulting Agreement by and between the Registrant
and certain members of the scientific advisory board
10.17*++ Restricted Stock Purchase Agreement between the Registrant
and John A. McCarthy, Jr. dated as of November 28, 2000
10.18*++ Full Recourse Promissory Note between the Registrant and
John A. McCarthy, Jr. dated as of November 28, 2000
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S> <C>
10.19*++ Pledge Agreement between the Registrant and John A.
McCarthy, Jr. dated as of November 30, 2000
10.20*++ Severance Agreement between the Registrant and Stanley N.
Lapidus dated January 4, 2001
10.21*++ Severance Agreement between the Registrant and Don M.
Hardison dated January 4, 2001
10.22*++ Severance Agreement between the Registrant and John A.
McCarthy, Jr. dated January 4, 2001
10.23*++ Severance Agreement between the Registrant and Anthony P.
Shuber dated January 4, 2001
10.26++ Warrant Agreement between the Registrant and The Mayo
Foundation for Medical Research dated December 28, 2000
21.1+ Subsidiaries of the Registrant
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)
</TABLE>

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

* Indicates a management contract or any compensatory plan, contract or
arrangement.

+ Previously filed.

++ Filed herewith.

@ Confidential Treatment requested for certain portions of this Agreement.