Madison, Wis.-based Exact Sciences Corp., which provided an update on promising research in a collaboration with the Mayo Clinic, saw a jump in revenue during its third quarter, with 12,000 providers ordering their initial Cologuard test during the period.
The company posted impressive numbers, with revenue increasing 85% to $219 million on Cologuard volume growth. The revenue came in $3 million above consensus, and the operational update was as expected, noted Sean Lavin, BTIG analyst.
Even though management was upbeat, "with investor sentiment fairly weak, an in-line result was simply not good enough, and we guessed that a $5 [million]-$10 [million] beat was probably needed to nudge shares," Lavin added. However, this could offer a "rare chance" to buy shares, as he foresees success in the long term.
Ahead of the call, William Blair analyst Brian Weinstein wrote that the call would not only be about Cologuard uptake, but financial performance and the Genomic Health buy. He also sounded a similar theme as Lavin about looking to the long term.
"Overall, we believe the call will be positive from a performance standpoint and should have a bullish tone on all key metrics," he wrote. "Still, we continue to implore people to avoid the quarterly volume game and instead stay focused on the longer-term opportunities this company has in front of it, which are still just beginning to play out."
During the call, Kevin Conroy, CEO of Exact Sciences, spoke about the company's three priorities for the year, including ramping up its partnership with Pfizer Inc., of New York. "The Pfizer partnership has been valuable in driving Cologuard's adoption, and the teams are working well together," he said, expressing confidence that the company can grab at least 40% of the colorectal cancer screening market in the U.S.
The company unveiled a U.S. marketing partnership with Pfizer in 2018, with an eye toward establishing its product as the first-line, noninvasive colorectal screening test. (See BioWorld MedTech, Aug. 24, 2018.)
Weinstein asked Conroy to characterize how the sales force is working with the pharma giant. Conroy noted that the teams were jelling, and "we're seeing significant progress, and we have high expectations for next year."
Next, the company has committed to enhancing Cologuard – a priority seen by its label extension to average risk patients between the ages of 45 and 49. Of note, payers have lowered their coverage age to 45.
"Over the last 25 years, colorectal cancer incidents have increased more than 50% in people under the age of 50," Conroy explained. "It's incredibly important to screen younger people earlier. I mean Cologuard is a convenient, effective option that fits well into this younger age group's busy lifestyle."
He added that Cologuard 2.0 could boost the test's economic value proposition even higher. The company is laser focused on boosting the test's specificity while keeping a high level of sensitivity.
Conroy then discussed data presented at the American College of Gastroenterology Scientific Meeting from a blinded, case-control study. The company has collaborated with the Mayo Clinic to identify novel markers and improved laboratory processes, with an eye toward meeting performance enhancement goals.
To that end, it has kicked off a prospective study to validate the performance of the novel multi-target stool DNA test, known as the BLUE-C study. Enrollment is expected to start next month, with more than 10,000 patients 40 and older and scheduled for a colorectal cancer screening colonoscopy.
Catherine Schulte with Baird asked how long BLUE-C is expected to take, and Conroy noted that the company has not provided clarity on that. Schulte also asked about the all-in cost of the study. CFO Jeff Elliot noted that another study, DeeP-C, took about 18 months to enroll, running about $50 million all-in. "Exact has gotten even more efficient at running these big studies," he added, it hopes to get this study in expeditiously.
Conroy also highlighted the importance of getting real-world evidence, highlighting the recent initiation of the 150,000-patient Voyage study. The study, expected to last seven years, will assess the real-world impact of Cologuard on screening, incidents and mortality rates.
The final focus is progressing the company's blood-based cancer diagnostics program. In July, Exact Sciences revealed that it would be picking up Genomic Health Inc., of Redwood City, Calif., in a cash and stock transaction valued at $2.8 billion. The transaction, which has been unanimously approved by the boards of both companies, is expected to be completed next month.
In a letter to employees reprinted in an Oct. 28 U.S. Securities and Exchange Commission filing, Exact Sciences provided an overview of its operating model following the close of the transaction. Of note, there will be four units focused on the Cologuard business, the Oncotype DX business, international business, and the combined pipeline opportunities for both organizations. The company will share the formal names of these units when the transaction closes.
The company also noted that several Genomic Health executives will be leaving, including Kim Popovits, chairman, CEO and president, and Fred Pla, chief operating officer.
Also of note is the company's liver cancer test, with the expected presentation of positive data at the American Association for the Study of Liver Diseases meeting next month. "We're also enrolling additional patients to finalize test development and plan to make the test available in the second half of next year," Conroy said.