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Exact Sciences Details Late-Year MRD Testing Plans, Highlights Cologuard Growth


NEW YORK – Exact Sciences expanded this week on evolving plans for the residual cancer testing market as it highlighted milestones for its flagship colorectal cancer screening assay, Cologuard.

The company's Cologuard screening revenue during the second quarter of 2023 was $462.8 million, up 31 percent from $353.9 million in the same period last year.

Exact reported total Q2 revenue of $622.1 million, up 19 percent year over year from $521.6 million and besting analysts' consensus estimate of $600.1 million. Its non-GAAP core revenue — calculated to adjust for recent divestitures, COVID-19 testing revenue declines, and foreign currency exchange rate fluctuations — rose 24 percent to $617.5 million.

Precision Oncology, under which the new molecular residual disease (MRD) test will fall, saw revenue of $157.2 million, up 2 percent year over year, or 7 percent on a core basis.

On a call with investors on Tuesday discussing the Q2 financial results, Exact CEO Kevin Conroy said that the company expects its first foray into molecular residual disease testing (often also called minimal residual disease testing) to launch this winter in the form of a tumor-informed, patient-personalized circulating tumor DNA (ctDNA) assay platform, now named OncoDetect.

Conroy estimated that the new MRD test will most likely be available later rather than earlier in the fourth quarter of this year. At that point it will still take some time to begin to gather physician feedback, and the company doesn't expect to apply for a local coverage determination under the Centers for Medicare and Medicaid Services' MolDx program till midyear or later in 2024.

"In terms of being able to offer this test to patients covered by Medicare, that will take about a year. And also, as you know, commercial payors today aren't broadly covering MRD, so this is an opportunity that is going to take a little bit of time to play out," he said.

This first version of OncoDetect will reflect internal research and development on Exact's part. It won't include the MAESTRO technology that the company said it had licensed from the Broad Institute earlier this year.

"This is the base version of the technology. Think of the Broad technology as an extension and enhancement, using more mutations, creating greater sensitivity at a similar specificity," Conroy said, adding that this new tech is already being used in ongoing studies.

As plans for the MRD space advance, Exact executives highlighted drivers for continued expansion of the company's colorectal cancer screening business.

As it has stressed before, Exact believes that demand for Cologuard will continue to receive a boost from the revision of US guidelines to recommend colorectal cancer screening beginning at age 45 rather than 50, as well as adjustments to Medicare reimbursement that increase the coverage frequency of screening.

During the call on Tuesday, Exact CFO Jeff Elliott said that while the total number of patients eligible for three-year rescreening is flat year over year at 1.2 million in 2023, that number is expected to jump to 1.6 million next year. Meanwhile, the 45-year-old age group is currently approaching 20 percent of all Cologuard revenue, suggesting that this group favors the firm's stool-based product over colonoscopy even more than the larger screen-eligible population.

Chief Commercial Officer Everett Cunningham added that Exact's marketing teams continue to evolve their approach to both of these newer market opportunities. He also suggested that even if all of these individuals wanted a colonoscopy, there are signs that the healthcare system might not be able to meet that demand.

"We're seeing a trend of health systems coming to us to help them with getting people screened for colorectal cancer screening," Cunningham said. "They [have a colonoscopy backlog] so they know that they can't do it alone."

In June, Exact announced preliminary results from the BLUE-C study validating a second-generation Cologuard test, which showed improvement over the first generation across all top-line metrics, including a 30 percent lower false positive rate.

During the call this week, Conroy said that the company is currently finalizing its submission to the US Food and Drug Administration and believes it can get the new version of the test "in patients' hands in early 2025."

He added that Exact has already been fielding feedback from opinion leaders, payors, and others. "People are elated," he said.

According to Conroy, a major aspect of this relates to a reduction in the false positive rate without a drop in sensitivity for either cancer or pre-cancer.

"There's a lot of work to do. But the initial feedback, we couldn't be more pleased with," he said. As such, Exact believes that the next-generation Cologuard assay should enjoy the same guideline endorsements that its current assay holds.

"We also believe that payors will be receptive to very quickly getting Cologuard 2.0 adopted and paid for," Conroy said, adding that Exact is already working with the American Medical Association CPT coding group to "make sure that the coding is smooth."

"We've been down this road before," he said. "We know how to do it, and the team has partnered up to make sure that we do this in an efficient and impactful way [so that] patients will benefit."

Regarding the blood-based version of Cologuard that Exact has been developing for several years, Conroy said that the company expects data to read out in the middle of next year. As other blood-based tests from competitors like Guardant Health have begun to enter the market, Exact has stressed that their poorer sensitivity, especially for earlier-stage tumors and precancerous lesions, means they pose little threat to Exact's business.

But with the launch of its own blood-based assay nearing, the firm is taking care to explain that it sees a niche for blood tests in the market.

"The role for a blood test, we believe, will be for patients who refuse a frontline recommended screening test per USPSTF guidelines," Conroy said. "There are people right now who refuse all forms of colon cancer screening, and for those patients, a blood test, even though it is not going to be as good as detecting precancerous polyps or stage I cancers … there's still a role for that [because] it's important to screen those individuals."

Other Q2 numbers

Exact posted a Q2 net loss of $81.0 million, or $.45 per share, compared to a loss of $166.1 million, or $.94 per share, in the same quarter last year. Exact did not provide an adjusted loss per share figure, but analysts on average had expected an LPS of $.51.

The company's R&D spending shrank slightly to $104.1 million from $106.1 million in Q2 2022. It's SG&A expenses rose about 4 percent to $414.5 million from $397.6 million.

Exact has raised its full-year revenue guidance to between $2.44 billion and $2.47 billion, from a previous range of $2.38 billion to $2.42 billion.

The firm ended Q2 with cash and cash equivalents totaling $604.4 million and marketable securities of $171.3 million.

In morning trade on the Nasdaq, Exact's shares were down about 9 percent at $87.68.