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UPDATE: Exact Sciences' Q1 Revenues Drop 23 Percent

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

By a GenomeWeb staff reporter

NEW YORK (GenomeWeb News) – Exact Sciences today reported a 23 percent drop in revenues year over year while its net loss more than doubled during the first quarter.

The Madison, Wis.-based molecular diagnostics firm said that for the three months ended March 31, revenues came in at $1 million, down from $1.3 million a year ago and short of analyst expectations of $1.1 million.

Almost all of Exact Sciences' revenues were from licensing deals, while product revenues totaled $4,000, a drop from $12,000 a year ago.

Its net loss for the quarter expanded to $4.4 million, more than double the $2.1 million net loss the firm recorded during the first quarter of 2010. On a per share basis, its loss for the quarter was $.08, compared to $.06 a year ago. Wall Street had a consensus estimate loss of $.09 per share.

As the firm continues developing its Cologuard test for colorectal cancer, the company's R&D costs ballooned to $3 million, a 67 percent increase from $1.8 million a year ago. Its SG&A spending rose to $2.5 million, a 56 percent increase from $1.6 million a year ago.

During a conference call after the earnings release, Exact Sciences President and CEO Kevin Conroy said that the company remains on track to begin enrollment of patients for a clinical trial for Cologuard in the third quarter, and anticipates finishing enrollment about a year later. Exact Sciences has submitted its final study protocol to the US Food and Drug Administration.

About three months after enrollment has wrapped up, Exact Sciences will submit its premarket approval application for Cologuard with FDA, which would put it roughly in the fourth quarter of 2012, Conroy added.

In parallel with the trial, the Centers for Medicare and Medicaid Services will conduct a parallel review of the trial for a national coverage decision on Cologuard, he said. The agency has commented on the test and Exact Sciences has incorporated its comments into its trial protocol design. CMS' comments mainly concerned the enrollment of Medicare-age population into the trial.

Between 10,000 and 12,000 patients are anticipated to be enrolled in the trial.

The primary goal of the trial is to measure how Cologuard stacks up against standard colonscopies for the detection of colon cancer, with a secondary goal to compare the test with an undisclosed commercially available fecal immunochemical test.

FDA is focusing on the test's colorectal cancer detection ability and "has set the lower bound of our confidence interval as the primary endpoint that must be exceeded in our trial," Conroy said.

"It is 65 percent at the lower bound of the 95 percent confidence interval. This means that with 85 percent point sensitivity, we expect to be well above the 65 percent lower bound," Conroy continued.

This year and in 2012, the company plans to spend about $20 million for the clinical trial, Maneesh Arora, Exact Sciences' CFO, said on the call.

The company also has begun laying a foundation for commercialization of the test and at the end of the first quarter hired John Krayacich as senior vice president of sales and marketing. Exact Sciences plans to perform pharmacoeconomic studies this year in order the measure the cost effectiveness of Cologuard, which Conroy called an important step toward the company achieving its goal of getting reimbursement for the test at $300 per test, Conroy said.

Lastly, he said that additional data for Cologuard will be coming in the second half of this year.

Exact Sciences reported about $90 million in cash, cash equivalents, and marketable securities at the end of the quarter.

Shares of Exact Sciences closed down 5 percent at $7.64 on the Nasdaq Tuesday.

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