NEW YORK – Exact Sciences reported after the close of the market on Wednesday that its second quarter revenues rose 62 percent year over year, thanks largely to doubled revenues from its screening business.
For the three months ended June 30, the Madison, Wisconsin-based molecular diagnostics company reported revenues of $434.8 million, up from $268.9 million a year earlier, beating the average Wall Street estimate of $421.3 million.
The company "delivered record results for Cologuard and Oncotype DX," Kevin Conroy, Exact's chairman and CEO, said in a statement. "We have a strong foundation in cancer screening and precision oncology and plan to transform cancer care with Cologuard, Oncotype, and our deep pipeline of innovative tests."
Screening revenues, which include laboratory services for the Cologuard colorectal cancer screening test and Biomatrica products, doubled to $263.9 million. They included a one-time downward adjustment of $12.1 million related to a passed contractual deadline to submit claims for previously completed Cologuard tests. Precision oncology revenues, which include laboratory services from Oncotype DX products, rose 34 percent to $137.8 million, and COVID-19 testing revenues fell 4 percent to $33.1 million.
On a conference call with analysts following the release of the earnings, Exact CFO Jeff Elliott said that the downward adjustment to screening revenues represented 2 percent of those revenues during Q2.
"We are addressing this by improving our billing systems and processes, and we're confident these enhancements will support a rapid growth in new product launches," he added.
Elliott also highlighted that Q2 included the highest number of people tested with Cologuard by more than 60,000 tests, a "significant increase" in the number of lives covered for Cologuard in the 45 to 49 age group, and 8,000 new healthcare providers ordering Cologuard. Nearly 244,000 clinicians have now ordered the test since its launch, he added.
Conroy also noted the company tested 850,000 people with Cologuard, Oncotype DX, and its COVID test in Q2, adding that the firm delivered a positive quarter "in spite of limited sales force and in-person wellness visits due to COVID."
Elliott also commented on this dynamic, noting that Exact hasn't seen as much improvement in in-person wellness visits or sales team visits to clinicians as previously expected, in part due to the recent uptick in COVID cases from the SARS-CoV-2 delta variant.
Exact's Cologuard test is "very promotionally sensitive," Elliott said. "The more times we talk to a physician about Cologuard, the more tests they order. In-person sales costs have been gradually improving, but they're still well below pre-COVID levels — 55 percent of primary care physicians are not allowing sales representatives into their office according to a recent survey we conducted."
The company's survey also showed that 44 percent of primary care doctors are conducting fewer in-person wellness visits compared to pre-COVID levels, he said.
Exact's Q2 net loss widened to $176.9 million, or $1.03 per share, from $68.1 million, or $.45 per share, in the year-ago period. Analysts had expected a net loss of $.76 per share for the quarter.
The company's R&D costs for the quarter more than tripled to $106.2 million from $32.7 million in Q2 2020, and its SG&A expenses rose 61 percent to $362.5 million from $225.5 million.
Exact ended the quarter with $363.7 million in cash and cash equivalents and $943.9 million in marketable securities.
The company raised its guidance for 2021 and now expects revenues of approximately $1.71 billion to $1.75 billion, including screening revenues of $1.10 billion to $1.13 billion, precision oncology revenues of $530 million to $540 million, and COVID-19 testing revenues of $75 million to $80 million. Analysts are expecting total revenues of $1.72 billion for the year.
The updated guidance is an increase from the company's previous guidance for expected revenues of $1.69 billion to $1.74 billion, including screening revenues of $1.13 billion to $1.15 billion, precision oncology revenues of $515 million to $525 million, and COVID-19 testing revenues of $50 million to $60 million.
The company said it lowered its expectations for screening revenues primarily due to the one-time downward revenue adjustment of $12.1 million in Q2, and because of the COVID-19 pandemic negatively impacting the business, including reduced physician office access for field sales teams and fewer patient wellness visits.
In terms of its pipeline, the company is working to achieve several milestones over the next 24 months to launch six new tests, Conroy said.
Starting with the multi-cancer test, Exact expects to share case-control data in 2022 that will demonstrate "the power of combining methylation, mutation, and protein marker classes," he said. The company is also planning to initiate a prospective interventional randomized trial for registration with the US Food and Drug Administration.
For Cologuard 2.0, the company plans to share additional case-control data that Conroy claimed will support its goal of improving the test's specificity while maintaining its sensitivity. For colon cancer blood testing, the company plans to share case-control data to provide an initial look at that test's performance. He also said the firm will announce top-line results from its prospective BLUE-C study to support FDA approval of both tests "and help cement our leadership in colon cancer screening."
In the area of minimum residual disease testing, Exact expects to generate clinical validation data for tumor-informed liquid biopsy testing. The company also plans to release clinical validation data supporting a blood-based therapy selection test called Oncotype MAP.
Finally, the company is expecting a manuscript on Oncoguard Liver, its liver cancer test, to be published soon in a peer-reviewed journal. This publication, Conroy said, will support a Medicare reimbursement submission and future guideline inclusion.
Exact's shares fell nearly 4 percent to $111.68 in Thursday morning trading on the Nasdaq.