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Exact Sciences' Q3 Revenues Drop 29 Percent

The story has been updated with comments from company officials during a conference call.

NEW YORK (GenomeWeb News) – Exact Sciences today reported a 29 percent drop year over year in third-quarter revenues as the firm matched Wall Street forecasts on both the top and bottom line.

For the three months ended Sept. 30, revenues came in at $1 million, even with analyst predictions, but down from $1.4 million a year ago. Licensing fees comprised the vast bulk of total revenues while product royalty fees totaled $4,000, down 20 percent from $5,000 a year ago.

Kevin Conroy, president and CEO of the Madison, Wis.-based firm said in a statement that the clinical trial for its Cologuard colorectal cancer screening test continues on track and that its successful completion "remains Exact's top priority. As the trial continues, we also remain focused on the commercialization plan that will deliver to market our patient-friendly screening test that enables the early detection of the disease."

On a conference call following the release of the earnings results, Conroy added that the company is ahead of schedule in its plan to enroll 10,000 patients across about 60 sites for the trial, which began in July, with enrollment expected to be completed in nine to 12 months.

The enrollment goal is centered on the number of patients who are diagnosed with cancer during the colonoscopy procedure, he said, and a minimum of 56 patients with cancer and between 400 and 500 pre-cancerous patients are expected to be enrolled in the trial.

In addition to the Cologuard test, Exact Sciences is developing an automation solution, a high-throughput instrument to perform DNA extraction and plate setup for incubation and detection. The firm's automation and integration program are on schedule to be completed before the end of the clinical trial, and the company plans to seek US Food and Drug Administration approval of the instrument in parallel with its submission for Cologuard next year, Conroy said.

The company also is conducting a pharmacoeconomic study to measure the cost-effectiveness of Cologuard and anticipates publication in about one year to 18 months. The study, Conroy said, will support Exact Sciences' pricing for the test.

Exact Sciences has been in discussions with approximately 30 payors about Cologuard for potential reimbursement upon launching of the test. Conroy said that the company is modeling about a $300 reimbursement for each Cologuard, but added that it has been told that that figure may be "too low" and may be raised based on the results from its pharmacoeconomic study.

During the third quarter, Exact Sciences' R&D spending more than doubled in the third quarter to $6.1 million from $2.6 million a year ago, and its SG&A spending rose 33 percent to $2.8 million from $2.1.

On the call, CFO Maneesh Arora said the sharp uptick in R&D expenses was due to the clinical trial. As patient enrollment increases, R&D spending will continue to rise. That is expected last through the first three quarters of 2012 but in the fourth quarter, when a premarket approval submission to FDA is expected, that expense will drop.

Exact Sciences' net loss in the period rose to $7.8 million, or $.15 per share, from $3.4 million, or $.08 per share, matching analyst estimates.

The firm finished the quarter with $5 million in cash and cash equivalents, and $70.4 million in short-term marketable securities.

In late-morning trading on Nasdaq, shares of Exact Sciences rose 4 percent to $8.33.