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Exact Sciences Q4 Revenues Jump 144 Percent

This article has been updated to include comments from the company's analyst conference call.

NEW YORK (GenomeWeb) – Exact Sciences reported before the opening of the market on Tuesday that its fourth quarter revenues rose 144 percent, due to a 114 percent uptick year over year in the number of Cologuard colon cancer tests it completed during the quarter.

For the quarter ended Dec. 31, the molecular diagnostics company reported revenues of $35.2 million, up from $14.4 million in the year-ago quarter, and beating the average Wall Street analyst estimate for revenues of $33.2 million.

The company completed approximately 82,000 Cologuard colon cancer tests during the quarter, and said that more than 9,500 healthcare providers ordered Cologuard for the first time during Q4. Average cost per test during the quarter was $170, down from $201 in Q4 2015.

Exact's Q4 net loss narrowed to $37.2 million, or $.34 per share, from $40.0 million, or $.41 per share, in the year-ago period. Wall Street analysts had expected a loss per share of $.39.

The firm's R&D costs for the quarter fell 24 percent to $7.1 million from $9.4 million a year earlier. SG&A costs rose 38 percent to $52.0 million from $37.8 million.

For full-year 2016, revenues rose 152 percent to $99.4 million from $39.4 million in 2015, beating the average analyst estimate for revenues of $97.5 million.

The company completed approximately 244,000 Cologuard tests during the year, a 135 percent increase in test volume from 2015. The number of providers who have ordered Cologuard since it was launched grew 123 percent to nearly 60,000 during 2016.

The company further said that as of Feb. 20, 2017, approximately 171 million people participate in health plans that cover Cologuard and 72 percent of the addressable population is covered for the screening test.

"Cologuard's strong performance during 2016 reflects the accelerating demand for our non-invasive colon cancer screening test and positions us well for long-term, sustainable growth," said Exact Chairman and CEO Kevin Conroy in a statement. "Our annual revenue met the high end of our original expectations for 2016."

On a conference call with analysts following the release of the earnings, Conroy said that the company sees a "long runway for [Cologuard] growth." There are more than 200,000 primary care physicians in the US, he noted, and the company is making efforts to target as many of them as possible.

He further noted that Cologuard detected cancer in an estimated 1,500 people in 2016, 1,100 of whom had early-stage or curable disease. Conroy said the compliance rate for the test is "encouraging," and estimated that Cologuard had a 67 percent compliance rate as of the end of 2016 compared to a compliance rate of about 40 percent for colonoscopy. Exact estimates that the compliance rate will trend in the low 60 percent range in 2017 as more commercially covered patients gain access to the test — patients covered by insurance companies tend to comply at a lower rate than Medicare patients, Conroy explained, so the compliance rate may drop a little bit as more commercially covered patients gain access to the test. The compliance rate is expected to increase over the long term, however.

Exact will also continue to invest in commercialization of Cologuard, including continuing with its television ad campaign. Goals for the TV campaign include growing the number of physicians and patients ordering the test for the first time and increasing the compliance rate.

Exact's 2016 net loss widened to $167.2 million from $157.8 million a year ago. However, the company's loss per share narrowed to $1.63 per share from $1.71 per share, beating the average analyst estimate of a loss per share of $1.69.

Its R&D costs for the year fell slightly to $33.5 million from $33.9 million a year earlier, while its SG&A costs rose 35 percent to $189.7 million from $140.1 million.

Exact ended the year with $48.9 million in cash and cash equivalents and $262.2 million in marketable securities.

For 2017, the company anticipates revenue of $170 million to $180 million, and expects to complete at least 415,000 Cologuard tests. During the first quarter of 2017, the company expects Cologuard volume of at least 88,000 completed tests. Analysts expect 2017 revenues of $163.2 million.

The company is also investing resources into developing its pipeline and is currently working with the Mayo Clinic to create tests for other cancers, Conroy said, including lung, liver, and pancreatic cancers. Exact will present data from a lung cancer study at the American Association for Cancer Research's annual meeting in April, and will provide updates on this and other tests in the pipeline as 2017 progresses.

"We intend to build on last year's success by contracting with additional payors, increasing awareness about Cologuard's inclusion in healthcare quality measures, and making it easier for physicians to order our test," Conroy said in the statement. "Based on the financial strength of Exact Sciences and the power of the Cologuard technology platform, we will continue investing prudently to support our growth and bring new cancer diagnostics to patients."

The company's shares were up 10 percent to $21.92 in midday trading on the Nasdaq.

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