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Exact Sciences Q1 Revenues Triple

NEW YORK (GenomeWeb) – Exact Sciences reported before the opening of the market on Thursday that its first quarter revenues rose 226 percent year over year, driven by a 150 percent increase in the number of completed Cologuard colon cancer tests.

For the three months ended March 31, the diagnostics company reported revenues of $48.4 million, up from $14.8 million a year earlier, and blowing away the analyst estimate of $37.3 million.

Exact completed 100,000 Cologuard tests during the quarter, with an average recognized revenue per test of $485.

"Our team is proud of the impact we are having on the early detection of colon cancer," Exact Chairman and CEO Kevin Conroy said in a statement. "More than 450,000 people have been screened using Cologuard since it was launched, including many patients who had never previously been screened. We believe that increasing patient demand and physician awareness, and Cologuard's recent inclusion in the Star Ratings position our test well for long-term, sustainable growth."

The company said that about 10,000 health care providers ordered their initial Cologuard test during Q1, and that approximately 70,000 providers have ordered the test since it was launched.

On a conference call with analysts following the release of the financial results, Conroy estimated, based on colon cancer prevalence rates, that Cologuard has helped detect 450 early-stage cancers and over 600 total cancers during the quarter. The compliance rate remained at 67 percent, which he said is significantly higher than compliance rates for colonoscopy and fecal immunochemical tests (FIT). This rate is consistent with the last two quarters, he added, but an ongoing shift in payor mix could cause the rate to drift lower temporarily.

Conroy said Exact will continue its efforts to reach out to and educate healthcare providers about Cologuard, and added that he is confident that new customers will continue to adopt the test at a strong pace. The firm is expanding its sales force, and will refresh and continue to air the national TV campaign it has been running.

Exact's long-term goal is to capture about 30 percent of the colon cancer testing market, translating to about $4 billion of revenue, according to Conroy. He sees a path to eventually being able to complete 8 million or more Cologuard tests per year. To that end, the company is expanding its laboratory and manufacturing facilities and expects that it will have the capacity to complete 2 million tests per year in the near term.

Conroy also discussed the company's path to more insurance coverage for Cologuard. Approximately 197 million Americans are members of health plans that cover Cologuard as of April 26. The company is now focused on turning positive coverage decisions into payor contracts. Conroy noted that it takes about a year to turn positive decisions into contracts.

Exact's Q1 net loss narrowed to $34.9 million, or $.32 per share, from $47.5 million, or $.49 per share, in the year-ago period. Analysts had expected a loss per share of $.41.

The company's R&D costs for the quarter fell 21 percent to $8.0 million from $10.1 million in Q1 2016, and its SG&A expenses rose 35 percent to $58.9 million from $43.5 million. On the conference call, Exact CFO Jeff Elliott said efficiency improvements in the firm's lab and manufacturing operations have allowed the company to offset costs from scale-up investments. Higher SG&A costs were driven in part by the cost of the TV ad campaign and added headcount.

The firm ended the quarter with $39.2 million in cash and cash equivalents, and $235.5 million in marketable securities.

For full-year 2017, Exact raised its guidance for both revenues and test volume. The company now anticipates revenues of $195 million to $205 million and completed Cologuard test volume of at least 470,000 tests during 2017. Analysts are expecting revenues of $178 million for 2017. Previous guidance was $170 million to $180 million in revenues and 415,000 completed Cologuard tests.

For the second quarter, the company anticipates at least 115,000 completed Cologuard tests. Elliott said that this guidance implies an annual average selling price of $415 to $435 per test.

Conroy also noted the company is working on developing a blood-based lung cancer test. The test's biomarkers could identify high-risk lung nodules found by screening, and could provide another screening option for lung cancer in the long term.

Exact also announced today that it has signed a five-year epigenetics and molecular diagnostics collaboration agreement with MDxHealth. The companies will share their proprietary technologies with the goal of developing biomarkers and clinical diagnostics for urologic and lung cancers.

Further, Exact is acquiring MDxHealth patents for colorectal cancer, including its DNA methylation biomarker NDRG4, and technology covering the use of FIT in combination with methylation. These acquisitions include one-time fees totaling $15 million, including payments accrued since July 2016, the firms said.

Exact's shares rose 27 percent to $30.13 in afternoon trading on the Nasdaq.