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UPDATE: Exact Sciences Posts 17 Percent Q4 Revenue Increase

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

By a GenomeWeb staff reporter

NEW YORK (GenomeWeb News) – Exact Sciences today reported revenues of $1.4 million for the fourth quarter, an increase of almost 17 percent from revenues of $1.2 million for the fourth quarter of 2009.

The firm beat consensus Wall Street expectations of $1.3 million.

Fourth quarter revenues were made up almost exclusively of licensing fees. The Madison, Wis.-based molecular diagnostics company also reported $2,000 in product royalty fees for the quarter, compared to a cost of $2,000 for such fees a year ago.

Exact Sciences spent $2.5 million on R&D in the fourth quarter, a 92 percent uptick from $1.3 million a year ago, while SG&A costs totaled $2.7 million, up 50 percent from $1.8 million.

The firm's net loss for the three months ended Dec. 31 was $3.6 million, or $0.08 per share, which matched analysts' estimates. Its net loss for Q4 2009 was $1.9 million, or $0.05 per share.

During the quarter, the company reported validation study results for its flagship product, the Cologuard stool-based DNA colorectal cancer screening test. On a conference call after the release of its earnings, company officials laid out plans for 2011 as the firm prepares to submit the test in 2012 for pre-market approval from the US Food and Drug Administration.

In all, the company plans to spend about $29 million in cash in 2011. About $20 million will be spent during the year and 2012 for a clinical trial on Cologuard, said Exact Sciences CFO Maneesh Arora.

Enrollment for the trial is expected to begin in the third quarter and include between 30 and 60 sites, company President and CEO Kevin Conroy said during the call. The trial will be directed at average risk patients over the age of 50. Each participant will receive the Cologuard test and a separate commercially available fecal immunochemical test. Participants will also receive a colonoscopy.

In total, the trial is anticipated to involve between 8,600 and 12,000 patients. About 15 months after enrollment begins, Exact Sciences anticipates submitting Cologuard to the FDA, Conroy said.

In 2011, the company will also make market development a priority and plans to hire a senior vice president in the second quarter to oversee commercialization of the test.

The company will also build out automation of the test "that … makes the test easier to run for our laboratory customers and … makes the test more reproducible and repeatable," Conroy said.

Further validation studies will be conducted during the year, and Exact Sciences is currently enrolling patients at 14 sites to collect 300 additional cancers.

"That will give us an opportunity to … conduct additional product development testing internally and also do validation study testing," Conroy said, adding that its partner on Cologuard, the Mayo Clinic, is enrolling pre-cancerous patients in its Arizona and Minnesota sites.

He declined to give guidance on when the validation study will be done.

For full-year 2010, Exact Sciences reported $5.3 million in revenues, up around 10 percent from $4.8 million in 2009, and beating Wall Street estimates of $5.2 million. Revenues from licensing fees rose 13 percent to $5.3 million from $4.7 million a year ago, while product royalty fees inched up to $26,000 from $25,000.

Its R&D costs more than doubled to $9.0 million for the year from $4.2 million, and SG&A costs dipped 17 percent to $8.1 million in 2010 from $9.8 million in 2009.

The company posted a net loss of $11.6 million for the year, or $0.29 per share, compared to a net loss of $9.1 million, or $0.28 per share, for 2009. The 2010 loss matched Wall Street expectations.

As of Dec. 31, Exact Sciences had $95.4 million in cash, cash equivalents, and marketable securities.

In Tuesday morning trade on the Nasdaq, shares of Exact Sciences were down 1 percent at $6.20.

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