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UPDATE: Exact Sciences Q3 Revenues Flat, Net Loss Narrows

The story has been updated to include comments from Exact Sciences' conference call this morning.

NEW YORK (GenomeWeb News) – Exact Sciences today said that revenues for its third quarter were flat, while its net loss narrowed.

The company reported that for the three months ended Sept. 30, revenues remained at $1 million, in line with the average Wall Street estimate. All revenues were derived from licensing fees.

Its net loss for the quarter was $11.2 million, or $.16 per share, down from a net loss of $13.0 million, or $.21 per share, a year ago, and beating the consensus analyst estimate of $.18 per share.

Exact's R&D spending shrank 33 percent to $7.0 million from $10.5 million in the year-ago period, while SG&A spending ticked up 47 percent to $5.3 million from $3.6 million.

In June, the Madison, Wis.-based firm completed its submission to the US Food and Drug Administration for premarket approval of its Cologuard colorectal screening test. On a conference call following the release of Exact Sciences' earnings today, company President and CEO Kevin Conroy said that the firm hosted the first of two inspections with FDA required for approval last week.

"We are pleased to report the inspection went well," he said, and the company expects to meet with the agency in early November to review its responses to FDA's comments on three modules submitted to the agency as part of the PMA submission. During the meeting FDA could also make final requests for data or information from Exact Sciences related to Cologuard.

Exact Sciences is participating in the joint FDA-Medicare parallel review program, and the company expects to make a national coverage decision submission to the Centers for Medicare and Medicaid Services during the first quarter of 2014 "shortly before an FDA advisory committee meeting." A preliminary Medicare decision on Cologuard is expected around the same time as FDA approval, and about 90 days later, a final decision by Medicare is anticipated along with a final reimbursement rate.

On receipt of the final Medicare decision, the company plans to launch Cologuard, Conroy said.

Along with a coverage decision, CMS is expected to issue a billing code "to ensure Cologuard is reimbursed properly by both Medicare and commercial payors," he said.

The company anticipates the reimbursement rate for the test to be set based on a crosswalk analysis of the billing codes for the components of Cologuard. Exact Sciences estimated the total reimbursed value of Cologuard to be $501, Conroy said. The final reimbursement rate will be determined by Hospital and Ambulatory Policy Group within CMS.

Asked on the call why he believes the test will be reimbursed based on a crosswalk analysis rather than a gap-fill process, Conroy said Exact Sciences has had extensive discussions with CMS, "and what has gone on in the background … is that there's been a lot of effort to create a system by which molecular tests can be reimbursed.

"This crosswalk process to these new molecular pathology codes is the way that that will occur. Our test is, fortunately, a very straightforward test with a limited number of biomarkers in it, and we, unlike other new molecular tests, are not looking to be reimbursed based upon the value of an algorithm," he said. "Rather, we are looking to be reimbursed for these specific codes which have been, fortunately, listed in these Tier 1 and Tier 2 codes that have been created."

Exact Sciences is building its own CLIA laboratory in preparation of the Cologuard launch at a cost of between $4 million and $5 million, and Conroy said that the lab is on track to be completed by December. When fully operational it will have the capacity to process 1 million tests annually.

CLIA certification of the lab is anticipated in the first quarter of 2014, he added.

Additionally, Conroy said that the company's study detailing its Deep-C clinical trial for Cologuard has been provisionally accepted by a "preeminent peer-review journal," and its publication is anticipated in the first quarter of 2014.

"The combination of Cologuard and our service that will make it easy for physicians to order and patients to use our test is a powerful one," Conroy said in a statement. "We believe that this combination will increase the colorectal cancer screening rate and positively impact patient health."

The company ended the third quarter with $9.7 million in cash and cash equivalents, and $138.1 million in marketable securities.

In Tuesday morning trading on the Nasdaq, shares of Exact Sciences were up a fraction of 1 percent $11.15.

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