NEW YORK (GenomeWeb) – Exact Sciences reported before the opening of the market on Wednesday that third quarter revenues increased 123 percent, due to a 100 percent uptick in the number of Cologuard colon cancer tests it completed during the quarter.
For the quarter ended Sept. 30, the molecular diagnostics company reported revenues of $28.1 million, up from $12.6 million in the year-ago quarter, and beating the average Wall Street analyst estimate for revenues of $25.3 million.
"Our sales and marketing campaigns continue to complement each other, driving growth in ordering providers, completed tests, and revenues, which grew significantly from the same period of last year," said Exact Chairman and CEO Kevin Conroy in a statement. "This continuing strength is yielding not only good sequential and annual revenue growth, but expanding penetration in the large market for colon cancer screening. Cologuard and our compliance service, which helps to ensure patients are screened with our test, position Exact Sciences well for long-term growth."
The company completed approximately 68,000 Cologuard tests during the quarter, and said that nearly 50,000 providers have now ordered the test since its launch. Since the test was included in the US Preventive Services Task Force colorectal cancer screening guidelines, Exact also reported that commercial insurance coverage accelerated in the third quarter, with more than 144 million people now covered through various insurance companies and Medicare. Cologuard's compliance rate was 67 percent as of Sept. 30, 2016.
On a call with analysts following the release of the earnings, Conroy said the growth in Cologuard sales is largely due to the efforts of the company's sales team, and the ongoing success of its television marketing campaign. More than 9,000 new providers ordered Cologuard in Q3, he added. The sales and marketing team is recruiting nearly 700 new providers each week, which is consistent with the second quarter and represents an increase of 200 to 300 doctors a week since the start of the TV campaign. The company will continue to invest in the TV commercials.
The commercial strategy is now focused on expanding awareness of the test for doctors and patients, according to Conroy.
On the call Exact CFO John Bakewell said the company saw an increase in average revenue per test to $412 during Q3, thanks to increased cash collections. The average selling price (ASP) for the year so far is $395, he added, which positions the company to exceed its ASP goals for the full year. However, Bakewell also said that cash collections tend to be unpredictable quarter to quarter, so the company doesn't necessarily anticipate continuing Q3's ASP into Q4.
Exact's Q3 net loss narrowed to $37.8 million, or $.36 per share, from $42.9 million, or $.45 per share, a year earlier. Analysts had expected a loss per share of $.42 for the quarter.
The company's R&D expenses for Q3 fell 23 percent to $7.6 million from $9.9 million in Q3 2015. SG&A costs rose 21 percent to $46.6 million from $38.4 million.
Exact ended the quarter with $63.4 million in cash and cash equivalents and $274.4 million in marketable securities.
For FY2016, the company continues to anticipate completing approximately 240,000 Cologuard tests, and reporting revenues of $93 million to $95 million. Analysts expect revenues of $90.9 million for the year.
For Q4, the company is expecting to see some reduction in the number of tests completed, especially in the last two weeks of the quarter. This is due to the ongoing challenge of getting patients to return the test kits during and after the holidays, Conroy said. Exact is preparing some marketing strategies to address this specific challenge, but the company is expecting some impact from the yearly headwind.
However, Conroy also said the company has started Q4 with "real strength," thanks to a higher level of TV ads. Exact is setting daily and weekly records for growth, and is expecting a strong Q4. Looking even further ahead, Conroy added, Exact has an opportunity to penetrate the colon cancer market at 30 percent — a $4 billion opportunity. The company's market penetration is currently 3 percent.
Exact's shares fell 12 percent to $17.23 in morning trading on the Nasdaq. In a note to investors, Goldman Sachs analyst Isaac Ro noted that although Exact reiterated its FY2016 volume guidance of 240,000 tests, the fact that revenue guidance was narrowed to a range of $93 million to $95 million from a previous range of $90 million to $100 million implies a 15 percent sequential increase in test volume but only a 6 percent sequential increase in revenue. This suggests Exact will see a 7 percent sequential decline in ASPs in Q4, Ro said.