PreMD, a Toronto-based company that makes heart-disease and cancer screening tests, has signed a licensing agreement with big pharma for what's being touted as the world's first test to use skin cholesterol to assess heart-disease risk. In exchange for an upfront payment of $500,000 and additional milestone payments of up to $6 million, PreMD is turning over U.S. marketing and distribution rights for the test, called PREVU, to AstraZeneca. PreMD will retain rights to future applications of the technology under the PREVU brand, and to promote PREVU to the life-insurance industry; AstraZeneca will exclusively market to healthcare professionals. In addition to the upfront and milestone payments, PreMD, an 18-person company with a $26 million market cap, will receive 20% royalties on the first $30 million in sales, after which the royalty rate bumps up to 25%. AstraZeneca, which plans to start selling the test in 2008, will fund future clinical trials as well. PREVU is non-invasive -- and requires no fasting or other patient prep -- and measures the amount of cholesterol that has accumulated in the skin tissues, as opposed to blood. Clinical studies have shown that as cholesterol accumulates on artery walls it also accumulates in other tissues, including the skin. High levels of skin sterol are correlated with higher incidence of coronary artery disease. On June 6, PreMD submitted a 501(k) for an expanded claim for PREVU. The sought after indication would clear the test for assessing carotid wall thickness and the presence of carotid plaques -- established markers for future heart attacks and strokes -- in patients without known coronary artery, cerebrovascular or peripheral artery disease. Currently, it's only FDA approved for people with a history of heart attack and those suspected of having clinically significant coronary artery disease. The deal with PreMD was orchestrated by AstraZeneca's Healthcare Innovation Center, a division that's tasked with finding external partners with technologies that can enhance the efficacy of AstraZeneca's drugs. This kind of operation is an example of what's becoming an increasingly common tactic by the pharmaceutical industry to diversify product portfolios to offset dry drug pipelines. Some companies -- like AstraZeneca, as well as Roche, with its recent and much publicized takeover offer for Ventana Medical Systems -- are looking favorably on diagnostics, which are thought of as less risky than drugs to develop, and in high demand by an aging baby boomer population.