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UPDATE: Exact Sciences Q4 Revenues Balloon on Cologuard Sales

This article has been updated to include information from Exact's analyst conference call.

NEW YORK (GenomeWeb) – Exact Sciences reported today that its fourth quarter revenues grew nearly 10-fold year over year thanks to completing 38,000 Cologuard colorectal cancer screening tests.

For the three months ended Dec. 31, 2015, the company reported revenues of $14.4 million compared to $1.5 million in Q4 2014, and in line with its preliminary earnings announcement in January. The company narrowly missed analysts' consensus estimate of $14.8 million for the quarter. Laboratory services accounted for all of the revenue in the quarter.

Exact's Q4 net loss widened to $40.0 million, or $.41 per share, compared to a loss of $32.4 million, or $.38 per share, a year ago. However, the company beat analysts' consensus estimate for a net loss of $.47 per share for the quarter.

Exact reported that its R&D expenses nearly doubled to $9.4 million from $5.0 million, while its SG&A expenses rose 47 percent to $37.8 million from $25.7 million. 

For full-year 2015, Exact reported that total revenues rose more than 20-fold to $39.4 million from $1.8 million in 2014, narrowly missing the consensus Wall Street estimate of $39.8 million. The company credited this result to the completion of more than 104,000 Cologuard tests during the year.

The cumulative number of physicians ordering Cologuard grew 27 percent from Q3 to Q4 to nearly 27,000 physicians, the company noted. An average of 500 new physicians ordered Cologuard each week and 75 percent of physicians re-ordered it. The patient compliance rate with Cologuard at the end of 2015 was 71 percent, almost twice the rate of reported colonoscopy uptake in a given year and significantly higher than fecal blood testing, Exact added.

"Patients and physicians showed strong demand for Cologuard and extraordinary satisfaction with its screening and compliance process during its first year on the market," said CEO and Chairman Kevin Conroy in a statement. "We expect to build on this momentum during 2016 by educating an increasing number of America's primary care physicians about Cologuard and advancing our efforts to reach the 80 million people who need to be screened for colon cancer."

On a call with analysts, Conroy said Cologuard met or exceeded the expectations of physicians and patients, and identified about 600 people with cancer in 2015, including 500 people with early-stage, curable disease.

The firm's net loss for the year widened to $157.8 million, or $1.71 per share, from $100.5 million, or $1.25 per share, the year before. Analysts, on average, had expected a net loss of $1.77 for the year.

The company's R&D expenses rose to $33.9 million from $28.7 million in the year-ago period, and its SG&A expenses rose to $140.1 million from $136.9 million in 2014.

Exact ended the year with cash and cash equivalents of $41.1 million, and marketable securities of $265.7 million.

For 2016, the company said it expects to complete more than 240,000 Cologuard tests, generating revenues of $90 million to $100 million. Analysts have estimated revenues of $94.1 million for 2016.

On the call, Conroy cautioned that the company expects testing volume in the first quarter to be flat or only slightly higher than Q4 2015. The last weeks of December and first weeks of January experienced a downtick in orders and collections of the tests, which has had a "significant impact" on anticipated completed tests in Q1, Conroy said. Further, many patients who ordered tests in January have yet to return them to the company. Those circumstances, combined with a refocused sales strategy, will all contribute to how many tests are performed in Q1.

However, when asked how the company expects to complete 240,000 tests for the year with a flat first quarter, Conroy and Exact CFO John Bakewell said they expect testing volume to significantly ramp up in the second and third quarters, as they did in 2015.

Conroy also touted his company's deals with insurers such as Anthem and Aetna in 2015, and said Exact is in talks with Anthem Blue Cross Blue Shield in Virginia and Georgia to expand coverage and bring other states under the same in-network coverage deal. Eventually, Conroy added, he expects Cologuard to be covered by all insurers in the US, though this will take a great deal of time.

Besides the insurance coverage strategy, Conroy also talked about two other growth opportunities for Cologuard in 2016. One is a strong marketing plan that will now include TV ads. The second is a new sales approach called the total office call, wherein Exact sales reps will visit multiple doctors in a single practice to talk to them about the test.

Conroy also said Exact plans to build on the success of the Cologuard platform, and is currently developing simple blood tests that can differentiate between lung nodules and lung cancer, and between benign pancreatic masses and cysts, and pancreatic cancer. He added that more details on those projects will be forthcoming in 2016.

However, Conroy revealed that Exact had terminated the agreement it signed in June 2015 with the University of Texas MD Anderson Cancer Center to develop and commercialize blood-based screening and diagnostic tools for the early detection of lung cancer. Instead, the company is planning to concentrate on improving and optimizing Cologuard alongside the development of the new tests, with measures such as finding a replacement for the NDRG4 biomarker, which will take approximately 18 to 24 months to complete.

When pressed on why the company has chosen to end the MD Anderson project, Conroy said part of the reasoning was related to the US Preventive Services Task Force's October draft recommendation in which it included fecal DNA testing in an alternative category of strategies to be used in "select clinical circumstances." The ruling demonstrated that one clinical study, even one as comprehensive as the MD Anderson project, is likely not enough to convince the task force to recommend a lung cancer screening test, which would then have an impact on whether the test gets adopted and covered by insurers, Conroy added. 

Exact shares were down nearly 8 percent to $5.92 in afternoon trading on the Nasdaq.