This article has been updated to include comments from the company's call with analysts after the earnings release.
NEW YORK (GenomeWeb) – Exact Sciences reported before the opening of the market on Tuesday that its first quarter revenues rose more than twofold, thanks in large part to a 260 percent increase in the number of Cologuard colorectal cancer screening tests completed during the quarter.
For the three months ended March 31, the molecular diagnostics firm reported revenues of $14.8 million, up from $4.3 million a year ago, and in line with the consensus Wall Street estimate.
Exact completed approximately 40,000 Cologuard tests, up 260 percent from the 11,000 tests completed in Q1 2015. The cumulative number of physicians ordering Cologuard since its launch has expanded to more than 32,000, the firm added.
"Our first quarter performance reflects sequential growth and another significant year-over-year increase, the result of continued progress optimizing the drivers of our commercial strategy," said Exact Sciences Chairman and CEO Kevin Conroy in a statement. "Throughout the quarter, our efforts were focused on delivering compelling marketing programs, improving salesforce effectiveness, and securing broad commercial reimbursement for Cologuard. We are pleased with the progress being made in each area."
On a conference call with analysts, Conroy highlighted a study conducted in the USMD Health System in the Dallas-Forth Worth area involving 400 Medicare patients who were previously noncompliant with colon cancer screening. When given the option to use Cologuard, 88 percent of those patients completed the test and 51 percent tested positive and were referred for colonoscopy. Of those who went through with the colonoscopy, Conroy said, 21 were found to have advanced adenomas, and another five patients were found to have stage 1 or stage 2 disease.
The company also credited a recently completed nine-week, five-market television advertising test for the increase in tests being ordered. During the test period, there was an average 50 percent increase in Cologuard orders and a 100 percent increase in new ordering physicians in the test markets versus control markets.
Based on these results, Exact is launching a nationwide television campaign. On the call, Conroy said the ads' creative goals are to demonstrate how easy it is to screen with Cologuard and to reduce potential consumer fears about screening.
Conroy said the company will balance the ads' performance against the overall budget. In particular, nationwide performance will be judged on the ads' ability to fulfill three goals: increasing tests orders, increasing the number of physicians ordering the test, and increasing the order rate for physicians who have already ordered. The ads will be focused on people 50 and older, with a special emphasis on people over 65. Exact's cable buys reflect this demographic — the commercial will air mostly on CNN, HGTV, and the Golf Channel, and will be more prominently displayed during show such as Jeopardy, Wheel of Fortune, and Family Feud.
The company may make additional investments in TV ads in 2016 if this campaign is successful, Conroy added.
In the firm's statement, Conroy also highlighted Cologuard's coverage, noting recent deals with Harvard Pilgrim and Johns Hopkins Health Plans to cover the test, and pending contracts with Anthem Central States, including plans in Indiana, Kentucky, Missouri, Ohio, and Wisconsin. "As commercial insurance coverage increases, television advertising drives Cologuard orders, and our sales team continues to expand physician awareness, we believe that adoption will increase at a meaningful rate this year," he said.
The firm also calculated the compliance rate for the quarter at 69 percent, almost twice that of reported colonoscopy uptake and significantly higher than fecal blood testing.
Exact's net loss for the quarter widened to $47.5 million, or $.49 per share, from $35.8 million, or $.40 per share, a year ago, beating analysts' average estimate for a loss of $.52 per share.
Its R&D costs rose 53 percent to $10.1 million from $6.6 million in Q1 2015, and its SG&A costs rose 47 percent to $43.5 million from $29.5 million. For the second quarter, the firm expects to spend approximately $1 million less on R&D, Conroy told analysts. It anticipates focusing on sales of Cologuard, expects to increase its sales and marketing headcount, and plans to spend about $19 million on marketing, including the TV ad campaign.
Exact ended the quarter with $52.2 million in cash and cash equivalents.
For 2016, the company anticipates completing more than 240,000 Cologuard tests and generating revenues of between $90 million and $100 million. On the call, Conroy said 48,000 of those tests will be completed in the second quarter. Analysts are expecting revenues of $88.0 million for the year.
Exact's shares were down nearly 6 percent to $6.58 in afternoon trading on the Nasdaq.