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Exact Sciences Q1 Revenues Up 79 Percent

NEW YORK (GenomeWeb) – Exact Sciences reported after the close of the market on Tuesday that its first quarter revenues rose 79 percent year over year, thanks to a corresponding 79 percent increase in testing volumes for its Cologuard colorectal cancer screening test.

For the three months ended March 31, the Madison, Wisconsin-based molecular diagnostics company reported revenues of $162.0 million, compared to $90.3 million a year earlier, and beating the average Wall Street analyst estimate of $153.0 million.

Test volume for the quarter rose to 334,000. The company said nearly 14,000 healthcare providers ordered their first Cologuard test during Q1, and more than 160,000 clinicians have ordered the test since it was launched. This brings Cologuard's estimated market share to 4.6 percent, up from the 4 percent market share the company reported at the end of 2018.

On a conference call following the release of the earnings, Exact CFO Jeff Elliott said that the compliance rate for Cologuard was 65 percent in Q1, up from 64 percent in the fourth quarter. The company expects a compliance rate of 67 percent in Q2 and continues to anticipate a long-term compliance rate of more than 70 percent.

The company further reported it has submitted an application to the US Food and Drug Administration to expand Cologuard's label to the 45 to 49 age group. As Exact Chairman and CEO Kevin Conroy noted in the company's presentation at the JP Morgan Healthcare Conference in January, this is expected to increase the market opportunity for the test by 19 million people, or a potential $4 billion.

The average Cologuard recognized revenue per test was trimmed $2 to $483 in Q1, and the average cost per test to the company rose $4 to $128, Exact said. Elliott noted that the company expects cost-per-test in the second quarter to be in the low $130 range.

"Cologuard is changing how Americans get screened for colorectal cancer," Conroy said in a statement. "The strong start to 2019 gives us confidence our investments in people, facilities, and partnerships will help us achieve our goal of screening at least 40 percent of the eligible US population with Cologuard."

On the call, Conroy noted that the company is seeing a positive effect from its Cologuard comarketing agreement with Pfizer. The drug company began selling Cologuard through its women's health sales force in January, and the number of OB/GYN providers ordering their initial Cologuard test doubled in the first quarter, Conroy said.

"More than 5,000 [OB/GYNs] in total have ordered since launch," he added. "There are more than 30,000 OB/GYNs in the US and approximately 25 percent of their patients are 50 years and older, making them an important market segment to help screen more people with Cologuard."

Conroy also said that Exact's marketing team introduced new television ads for Cologuard in the first quarter to maintain the firm's national advertising campaign. Exact is also working with Pfizer's marketing team to enhance the advertisements and raise Cologuard awareness.

"Gastroenterologists are key influencers in colon cancer screening, and partnering with them will play an important role in achieving our long-term goal of capturing at least 40 percent of the colon cancer screening market," Conroy noted. "We're hiring a GI sales team, so we can reach them more frequently and expect them to be in the field in the third quarter. We're also implementing a robust peer-to-peer program to educate primary care providers about the value of Cologuard. This program will provide a new format for providers to learn about Cologuard's benefits from their peers."

Exact's Q1 net loss widened to $83.1 million, or $.66 per share, from a net loss of $39.4 million, or $.33 per share, in the year-ago period. Analysts had expected a loss of $.65 per share.

The company's R&D costs for the quarter rose 115 percent to $32.0 million from $14.9 million in Q1 2018, and its SG&A expenses rose 74 percent to $154.9 million from $89.0 million. Elliott said that increased G&A expenses included additional investments in personnel and IT, and that R&D costs increased primarily due to the firm's pipeline developments.

Exact ended the quarter with $285.2 million in cash and cash equivalents, and $997.5 million in marketable securities.

The company revised its guidance for full-year 2019, and now expects revenue of $725 million to $740 million, compared to a previous guidance of $710 million to $730 million. On the call, Elliott noted that the new guidance assumes the company will complete 1.52 million to 1.54 million Cologuard tests during the year. He also added that the firm expects revenues of $178 million to $183 million and Cologuard volume of 372,000 to 382,000 completed tests for the second quarter.

On average, analysts expect revenues of $729.5 million for the year and $173.1 million for Q2.

Exact's shares rose more than 1 percent to $99.70 in Wednesday morning trading on the Nasdaq.