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Exact Sciences Q4 Revenues Slide 40 Percent, Cologuard Trial Progressing

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

NEW YORK (GenomeWeb News) – Exact Sciences today reported a 40 percent drop year over year in fourth-quarter revenues, though its CEO said that the clinical trial for its colorectal cancer screening test "remains on track."

For the three months ended Dec. 31, 2011, the Madison, Wis.-based firm said that revenues totaled $1.0 million, down from $1.4 million a year ago but in line with consensus analyst estimates.

Product royalties increased to $6,000 from $2,000, while licensing fees shrank to $1.0 million from $1.4 million a year ago.

The company more than tripled its R&D spending to $7.7 million, compared to $2.5 million a year ago, and increased SG&A spending 22 percent to $3.3 million from $2.7 million during Q4 2010.

In addition to the sharp rise in R&D costs, the company's ongoing Deep-C clinical trial for its Cologuard colorectal screening test caused the increase in total operational expenses, Exact Sciences said.

In a conference call after the release of the company's earnings, COO Maneesh Arora reiterated that the company expects to spend a total of $25 million on the trial, of which $8 million was spent in 2011.

He added that in 2012 the company anticipates spending a total of between $36 million and $39 million, driven mainly by an increase in clinical trial costs.

The firm's net loss for the fourth quarter increased to $9.9 million, or $.18 per share, from $3.6 million, or $.08 per share a year ago, just missing Wall Street estimates for a loss per share of $.17.

On the conference call Exact Sciences' President and CEO Kevin Conroy said that after discussions with the US Food and Drug Administration, the company anticipates it will be making a modular submission of its pre-market approval application for Cologuard to the agency. A manufacturing modular submission is expected early in the fourth quarter of this year, followed by an analytical modular submission late in the fourth quarter. Finally, a clinical module will be submitted early in the first quarter of 2013.

Meanwhile, Exact Sciences also is preparing to market the test and marketing priorities include completing a healthcare economic study showing the cost effectiveness of Cologuard and preparing an application to the Centers for Medicare and Medicaid Services for national coverage of the test, Conroy said.

The firm will also be "engaging" target primary-care physician groups and gastroenterology groups about the test, submitting two or three new scientific and medical publications, and initiating the CE marking process.

For full-year 2011, Exact Sciences brought in $4.2 million in revenues, down 21 percent from $5.3 million in 2010, but even with analyst expectations. Product royalty fees decreased to $20,000 from $26,000, and licensing fees dropped to $4.1 million from $5.3 million.

R&D costs more than doubled during the year to $22.0 million from $9.0 million. SG&A expenses rose 36 percent to $11 million from $8.1 million.

Net loss for 2011 increased to $28.7 million, or $.55 per share, from $11.6 million, or $.29 per share, in 2010, missing analyst estimates of a loss per share of $.53.

The company finished the year with $35.8 million in cash and cash equivalents, and $57.6 million in marketable securities.

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