NEW YORK – Exact Sciences has big plans to build an end-to-end cancer testing pipeline, for everything from early disease detection to detection of minimal residual disease. And although the company has faced some headwinds during the COVID-19 pandemic that have affected its screening revenues, CEO Kevin Conroy said Exact's pipeline is deep and the firm is focused on spending the next couple of years delivering new tests for cancer patients.
In reporting third quarter earnings on Tuesday, Exact said screening revenues, which include its Cologuard colorectal cancer screening test, rose 31 percent to $280.4 million, but this was below what most analysts had expected. Adding to the disappointment, Exact CFO Jeff Elliott said during a conference call with analysts that the flattening of Cologuard orders in August and September, caused mostly by a surge in COVID-19 cases, will have a bigger effect on fourth quarter revenues, which will also be affected by the holidays. This all led to the company lowering its expectations for screenings revenues for the full year.
Conroy said cancer screens have been deprioritized during the pandemic, and the need to get people tested is urgent, which is a priority the company is looking to act on in the coming year. He added that Exact is also focused on enhancing its customer experience and advancing new diagnostic solutions.
On a positive note, he said that the company's electronic ordering rate continues to grow, rising to 48 percent in 2021. Further, Exact has rescreened more people with Cologuard this year than it did in the prior three years combined, and it screened more people ages 45 to 49 for colorectal cancer in the third quarter than it did in all of last year.
Conroy also said that Exact has successfully integrated new tests into its precision oncology platform, which has improved its sequencing, bioinformatics, and proteomics capabilities. One example is technology from sequencing lab Ashion Analytics, which Exact acquired in February. It has expanded the firm's whole-exome, transcriptome, and matched germline sequencing capabilities and provides the foundation for its minimum residual disease testing capability, Conroy added.
In early 2022, the company plans to release recent data generated internally for an enhanced version of Cologuard — Cologuard 2.0 — at a conference.
Exact is also still working on BLUE-C, a trial to support US Food and Drug Administration approval of Cologuard 2.0 and a blood-based colorectal cancer screening test. The clinical trial team has enrolled nearly 12,000 patients in BLUE-C and is increasing the size of the trial to more than 20,000 patients due to lower-than-expected cancer incidents.
But because it will take time to enroll more patients, the company said it will take longer to release results from the study than originally expected — Conroy said the company now plans to release top-line BLUE-C results for Cologuard 2.0 in late 2022 or early 2023, and results from the blood test in the first half of 2023.
In the area of multicancer testing, the company anticipates sharing two sets of case-control data next year. The first will show the test's feasibility across multiple classes of biomarkers. The second will show the power of combining Exact's technology with that of Thrive Earlier Detection in one test.
In the area of minimum residual disease, Exact recently announced that it is partnering with the National Surgical Adjuvant Breast and Bowel Project to demonstrate the ability of Exact's circulating tumor DNA test to detect minimal residual disease in colorectal cancer patients. The study, called CORRECT-MRD II, is expected to enroll approximately 750 patients with stage II and III CRC at 35 study sites in the US and Canada. The company will likely present data from this study in the back half of next year, Conroy said.
In notes to investors on Wednesday, analysts said that although the company's screening revenues were disappointing, its long-term prospects are still sound, even with the delay in results from the BLUE-C trial.
"We firmly believe the Cologuard business is nicely positioned for a rebound in 2022," Canaccord Genuity analyst Kyle Mikson wrote in his note. "Additionally, Exact aims to announce important data from key pipeline products over the next few years. This should help bridge the catalyst gap between now and the ultimate launch timeframe for these tests."
He further noted that although the delay for the BLUE-C trial results is disappointing, it is due to the need to enroll more patients and increase the number of cancer incidents in the trial, which are factors outside Exact's control. In total, he added, Exact's current and potential addressable market is about $60 billion, and the trial readouts and announcements related to the firm's pipeline and studies could be meaningful catalysts for the shares in the near term.
BTIG analyst Mark Massaro wrote that Exact needing to expand its study because of a lower prevalence of colorectal cancer is consistent with what Freenome experienced — that company recently had to increase enrollment in its PREEMT CRC study to about 25,000 patients from its previous goal of 14,000 patients.