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UPDATE: Exact Sciences Reports $8.1M in Q1 Revenues

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

NEW YORK(GenomeWeb) – Exact Sciences today reported $8.1 million in second quarter revenues as the firm beat analysts' consensus estimates on the top and bottom lines.  

The revenue figure for the three months ended June 30 compared to zero revenues for Q2 2014. It beat the consensus Wall Street estimate of $8.0 million. All revenues were derived from laboratory services related to its Cologuard colorectal screening test, which was approved by the US Food and Drug Administration in August 2014 and received a final national coverage decision from the Centers for Medicare and Medicaid Services two months later. 

The Madison, Wisconsin-based firm said that in the second quarter there were 21,000 completed Cologuard tests, a 90 percent increase sequentially from the first quarter and matching a previous estimate that the firm issued in June. Additionally, the cumulative number of order physicians rose to 14,700 in Q2, a 77 percent jump sequentially. 

The firm added that the compliance rate for Cologuard inched up to 73 percent from 71 percent in the first quarter. The compliance rate is defined as the number of valid test results generated from collection kits shipped to patients 60 or more days prior to June 30.  

On a conference call following the release of the financial results, Exact Sciences Principal Financial Officer William Megan said that the average recognized revenue per Cologuard was $386 in the quarter. 

Exact Sciences Chairman and CEO Kevin Conroy added that the firm anticipates the number of completed Cologuard tests in the third quarter to increase to 32,000. 

Also, on July 16 the company met with CMS officials about getting a CPT code for Cologuard to replace the so-called G code under which the test is currently reimbursed. Exact Sciences presented a proposal to CMS to crosswalk Cologuard to a new universal CPT code that was created by the American Medical Association specifically for the test, Conroy said. 

While the new code is not anticipated to materially impact pricing for the test, it will improve efficiency around getting reimbursement for the test. 

"The CPT code for Cologuard will facilitate more efficient claims processing [for both] Medicare Advantage plans and commercial payors," he said, noting that a G code typically triggers a manual review, which slows down the reimbursement process "and also becomes a series of one-off discussions, appeals, et cetera, working with those payors." 

By comparision, a CPT code is effectively a seal of approval signaling that AMA supports the test, and that eventually it will no longer be considered experimental or unusual, Conroy said. 

Exact Sciences anticipates CMS will reach a decision about the new code in the fall, with a potential effective date of Jan. 1, 2016. 

Conroy also provided an update on the firm's product pipeline, including efforts to expand indications for Cologuard to address two patient groups in the US, those between 40 to 49 years of age, and those considered to be at higher risk for developing colon cancer. CMS currently covers the test for Medicare patients 50 years of age and older at an average risk for developing colorectal cancer. 

The firm is also collaborating 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. "Our goal … is to pair novel biomarkers and our technology with the low-dose CT scan … to accelerate [the detection] of lung cancer in its most curable form," Conroy said.  

On the pancreatic cancer front, Exact Sciences has an ongoing collaboration with the Mayo Clinic to improve diagnosis and to differentiate between benign and malignant cysts and masses. Current methods have issues around accuracy resulting in both the under- and overtreatment of patients, Conroy said. 

Lastly, the company also is working with Mayo to develop an early detection test for esophageal cancer "through the monitoring of patients with pre-malignant changes in the lining of the esophagus called Barrett's esophagus," he said. 

Together, the tests would provide 18 million testing opportunities for Exact Sciences each year with a multibillion-dollar US market opportunity, Conroy added. 

The firm also is preparing to branch outside the US with Cologuard in Europe this year and Asia afterward. In Europe the goal is to implement the test and make it available through laboratory partnerships. Testing will be performed in the US. 

Exact Sciences also plans to run studies targeted to European populations. For example, the firm is starting a study for the Italian population and plans to run one or two additional studies in the nearer term, with more studies eventually. 

"The goal is to build a consensus of evidence in the European population," he said adding Cologuard will likely be targeted at patients at higher risk for colon cancer and who need to be followed on a more regular basis. He noted that colonoscopy is not used as commonly in Europe as it is in the US, and Cologuard represents a "significant opportunity to have an impact on this disease among the people who are at the highest risk," Conroy said. 

In Asia, meanwhile, the goal is to design and begin a clinical trial that will get Cologuard included in guidelines for colorectal cancer screening and then make it available in China. 

Exact Sciences posted a net loss of $39.1 million, or $.44 per share, compared to a net loss of $19.4 million, or $.24 per share, in the year-ago quarter, and beat the average analysts' estimate of a loss of $.45 per share. 

The company's R&D spending increased almost 13 percent to $8.1 million from $7.2 million, while its SG&A costs rose sharply to $34.3 million from $12.4 million. 

"Physician and patient demand are increasing while our compliance rate continues moving upward as well," Conroy said in a statement. "We're now building on the success of Cologuard to develop tests that will detect lung, pancreatic, and esophageal cancers at their earliest stages."  

The firm exited Q2 with $33.8 million in cash and cash equivalents, and $177.1 million in marketable securities.  

In afternoon trading on the Nasdaq today, Exact Sciences' shares were down more than 2 percent at $26.92.