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Exact Sciences Q1 Revenues Up 87 Percent

NEW YORK (GenomeWeb) – Exact Sciences reported after the close of the market on Thursday that its first quarter revenues rose 87 percent year over year, thanks to a corresponding 87 percent increase in testing volumes for its Cologuard noninvasive colon cancer screening test.

For the three months ended March 31, the molecular diagnostics company reported revenues of $90.3 million, up from $48.4 million in Q1 2017, and beating analysts' average estimate of $86.9 million.

The firm completed about 186,000 Cologuard tests during the quarter and said that nearly 9,000 healthcare providers ordered their first Cologuard during Q1. More than 110,000 clinicians have ordered Cologuard since the test was launched. The average recognized revenue per test during Q1 was unchanged at $485, Exact added.

"The Exact Sciences team delivered strong growth to start the year by remaining relentlessly focused on our core priorities. By increasing awareness and adoption of Cologuard, we are making strides toward our mission of playing a role in the eradication of colon cancer," Exact Sciences Chairman and CEO Kevin Conroy said in a statement. "The success of Cologuard also positions us to develop tests that facilitate the early, accurate detection of other forms of cancer."

On a conference call with analysts following the release of the earnings, Conroy noted that the impact of the severe flu season, which somewhat curtailed testing volumes in the fourth quarter of last year, has ended.

Going forward, the company is focusing on the newly rolled out marketing campaign, which now includes celebrity endorser Harry Connick Jr. and his wife Jill, Conroy noted. Connick, Jr. has already appeared in ads in 30 TV markets across the country, and Exact is also promoting the campaign on social media. This strategy will continue throughout 2018.

"We know that our direct-to-consumer advertising is highly effective in increasing the number of healthcare providers who order Cologuard. We plan to release new television ads this summer to support the continued success of our national television campaign," Conroy said.

He also noted that the firm has signed multiple new payor contracts for Cologuard during the first quarter, including with four Blue Cross Blue Shield plans, and that the firm is continuing its efforts to educate doctors, patients, and payors about the importance of regular screening. He said the compliance rate for Cologuard is now at 68 percent.

Exact is also continuing to invest in its lab infrastructure and has increased its annual capacity to 2 million tests. Based on the progress of construction at its new lab, Conroy said the firm now expects annual capacity to reach 3 million tests by the end of 2018 and up to 5 million tests at both labs by the end of 2019.

Conroy also discussed Exact's collaboration with the Mayo Clinic, noting that they have discovered DNA biomarkers for 10 cancers and are validating those markers in blood. Exact will also present additional data from its second case control study in its liver program at the Digestive Disease Week Conference in Washington, DC on June 4. "Our research and development team is also working to identify additional markers to improve the performance of the lung test," Conroy added.

The firm's net loss for Q1 widened to $39.4 million, or $.33 per share, from $34.9 million, or $.32 per share, a year earlier. Analysts had expected a loss per share of $.37 for Q1.

Exact's Q1 R&D costs rose 86 percent to $14.9 million from $8.0 million in the year-ago period, and its SG&A expenses rose 51 percent to $89.0 million from $58.9 million in Q1 2017.

The company ended the quarter with $148.7 million in cash and cash equivalents and $893.5 million in marketable securities.

For the second quarter, the company anticipates completing 220,000 to 230,000 Cologuard tests, and it continues to anticipate revenues of $420 million to $430 million and completed Cologuard test volume of 900,000 to 920,000 tests for full-year 2018. Analysts are expecting 2018 revenues of $431.7 million.

In a note to investors on Friday, William Blair analyst Brian Weinstein said the company delivered "a very strong start to the year with test volume of 186,000, which was above guidance of 176,000-181,000." He also noted that the firm's Q2 testing volume guidance was above consensus expectations, putting the company "well on track to hit our longer-term targets for revenue and test volume and hopefully will calm any fears about the launch trajectory. Overall, we believe the company clearly answered the skeptics about the impact of the flu season as the year has started off well and the guidance for the second quarter has the company on an impressive 900,000 annual tests completed pace."

Leerink analyst Puneet Souda concurred, noting, "We remain Outperform on [Exact] given our view that Cologuard is highly under-penetrated in an 80 million-patient strong population where we believe [Exact] could deliver 40 percent-plus penetration or $5 billion-plus in revenue longer term from just 3 percent penetration or about $308 million in sales today."

Exact's shares rose more than 13 percent to $52.72 in Friday morning trading on the Nasdaq.