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Exact Sciences Q2 Revenues Up 172 Percent

NEW YORK (GenomeWeb) – Exact Sciences reported after the close of the market on Tuesday that its second quarter revenues rose 172 percent year over year, driven by a 149 percent increase in the number of completed Cologuard colon cancer tests.

For the three months ended June 30, the molecular diagnostics company reported revenues of $57.6 million, up from $21.2 million a year earlier, and significantly beating analysts' consensus estimate of $49.8 million.

"As patient and physician demand for Cologuard continues to grow, momentum is increasing toward Cologuard becoming part of the standard of care in colon cancer screening," Exact Chairman and CEO Kevin Conroy said in a statement. "We will continue investing in the long term and sustainable growth of Cologuard to ensure the millions of people who need to be screened for colon cancer have access to our non-invasive test."

Exact completed 135,000 Cologuard tests during the quarter, with an average recognized revenue per test of $428. The company said that about 11,000 healthcare providers ordered their initial Cologuard test during Q2, and that approximately 81,000 providers have ordered the test since it was launched.

On a conference call with analysts following the release of the earnings, CFO Jeff Elliott said that the compliance rate for Cologuard at the end of Q2 was 66 percent, a slight sequential decline that was primarily due to "an increased mix of commercial volumes." He also noted that the slight decline in revenue per test was due to payor mix and volatility in customer payments, and that a scale up in manufacturing and sales personnel will lead to a temporary increase in cost per test.

The company also noted that as of July 24, approximately 235 million Americans are members of health plans that cover Cologuard, and that 86 percent of those who should be screened for colorectal cancer are covered for the test.

On the call, Conroy said Cologuard's current share of the addressable colon cancer screening market stands at about 2 percent. Given that the market continues to grow, Exact has an opportunity to continue adding Cologuard customers for a very long time, he added. To that end, the firm is making investments in its infrastructure in order to be ready for that growth, and is working to steadily increase the number of primary ordering physicians and convert unscreened people at a fast pace to keep them as users of Cologuard every three years.

Exact is increasing the size of its sales force and investing in improvements to its physical and IT infrastructure. The company plans to expand its current lab and manufacturing facility to a capacity of 2 million tests per year, and plans to break ground on a second lab later this year, Conroy said.

The company's ongoing television campaign has been "remarkably effective" at keeping patient demand high and driving physician demand at a steady pace, he added. The firm also believes that Cologuard's significant insurance coverage will increase adoption and reorder rates. Its market access team is now concentrating on signing in-network benefit contracts with payors, and Exact continues to emphasize that it takes time to progress from positive coverage decisions to contracts.

Exact's Q2 net loss narrowed to $30.8 million, or $.27 per share, from $44.8 million, or $.46 per share, in the year-ago period. Analysts had expected a loss per share of $.35.

The company's R&D costs for the quarter rose 13 percent to $9.7 million from $8.6 million in Q2 2016, and its SG&A expenses rose 29 percent to $61.3 million from $47.5 million.

The firm ended the quarter with $180.4 million in cash and cash equivalents, and $303.9 million in marketable securities.

For full-year 2017, Exact raised its guidance for both revenues and test volume. The company now anticipates revenues of $230 million to $240 million and completed Cologuard test volume of at least 550,000 tests during 2017. The company's previous guidance was for 2017 revenues of $195 million to $205 million and 470,000 completed Cologuard tests. Analysts are expecting revenues of $211.2 million for 2017.

The company also anticipates completing at least 150,000 Cologuard tests during the third quarter.

Exact is also continuing to work on its pipeline of new diagnostics, Conroy noted. The most advanced of these is a blood biomarker test the firm is developing in partnership with the Mayo Clinic for differentiating benign lung nodules from lung cancer. Current diagnostic options are invasive and expensive, Conroy said, adding that a blood-based test is needed and the market opportunity is significant. The technology could also apply to breast, liver, and other cancers, and is low cost relative to sequencing.

It "gives us an opportunity to upend the pricing approach to cancer that diagnostics companies have relied upon," he added. "We're excited about what this technology can do for other cancers."

Exact will share additional details on the test's progression in coming quarters, Conroy said.

Exact shares rose 8 percent to $40.40 in after-hours trading on the Nasdaq.

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