NEW YORK – Exact Sciences reported after the close of the market on Tuesday that its fourth quarter revenues rose 58 percent year over year, in line with preliminary results announced last month. Revenues from cancer screening, the firm's largest business segment, increased 9 percent during the quarter.
In a separate announcement, the company said it has agreed to acquire CLIA-certified and CAP-accredited sequencing lab Ashion Analytics from the Translational Genomics Research Institute (TGen) for an undisclosed amount.
For the three months ended Dec. 31, 2020, Madison, Wisconsin-based Exact reported revenues of $466.3 million, up from $295.6 million a year earlier, beating the average Wall Street estimate of $446.2 million.
"Exact Sciences finished another transformative year by delivering strong fourth quarter results against a challenging backdrop because of the pandemic," Exact Chairman and CEO Kevin Conroy said in a statement. "We are a leader in cancer diagnostics because of our people, scientific platform, and market-leading Cologuard and Oncotype tests. We aim to extend this leadership throughout the cancer continuum and bring additional tests to patients to help improve cancer outcomes."
Screening revenues rose to $249.7 million in Q4 while precision oncology revenues totaled $117.6 million and COVID-19 testing revenues were $99.1 million. Screening revenues included laboratory service revenues from Exact's Cologuard colorectal cancer screening test and revenues from Biomatrica products, the company said, and precision oncology revenues included laboratory service revenues from global Oncotype DX products.
On a conference call with analysts following the release of the earnings, Exact CFO Jeff Elliott said 8,000 new healthcare providers ordered Cologuard during the quarter and nearly 227,000 have ordered the test since it was launched.
Exact said that Arizona-based Ashion has the genomics testing capabilities required to address the needs of clinical, academic, and biopharma customers focused on precision cancer treatments, and will help accelerate the development of Exact's precision oncology portfolio, including minimal residual disease (MRD) and other sequencing-based tests.
The deal, expected to close in the second quarter, comes one month after Exact announced that it had secured a worldwide exclusive license to the Targeted Digital Sequencing (TARDIS) liquid biopsy method from TGen for use in MRD testing.
The Ashion acquisition will also strengthen the relationship between Exact and TGen through a planned 10-year research collaboration to develop differentiated MRD testing capabilities for patients and establish the clinical evidence necessary to drive widespread clinical adoption of MRD testing.
Ashion has developed a comprehensive cancer test called GEM ExTra and provides access to whole-exome, matched germline, and transcriptome sequencing capabilities, Exact said, and Ashion researchers will help to incorporate TARDIS technology into Exact's MRD test.
Exact reported a Q4 net loss of $436.8 million, or $2.79 per share, compared to income of $78.0 million, or $.54 per share, in the year-ago period. Analysts had expected a loss of $.22 per share. Elliott noted that the net loss was affected by the $410 million acquisition of Base Genomics during the quarter, which was treated as an expense rather than capitalized.
The company's R&D costs for the quarter rose more than tenfold to $446.4 million from $43.2 million in Q4 2019 due to the Base Genomics acquisition, and its SG&A expenses rose 18 percent to $312.3 million from $264.3 million. The acquisition was recorded as an R&D expense, Elliott explained, and without it, R&D costs for the quarter would have been $34 million.
In full-year 2020, the company's revenues rose 70 percent to $1.49 billion from $876.3 million in 2019, beating the Wall Street estimate of $1.47 billion.
Exact's net loss for the year widened to $848.5 million, or $5.61 per share, from a loss of $84.0 million, or $.64 per share, in 2019. Analysts had expected a loss of $2.89 per share for the year.
The company's R&D costs for the year quadrupled to $554.1 million from $139.7 million in 2019, and its SG&A expenses rose 45 percent to $1.07 billion from $737.7 million.
Exact ended the year with $1.49 billion in cash and cash equivalents and $348.7 million in marketable securities.
Due to uncertainties surrounding the pandemic, Exact isn't providing formal revenue guidance for 2021, Elliott said. The company does expect first quarter screening revenues to decline sequentially because of seasonal trends.
"Primary care utilization is lower in December and early January because of the holidays. This impacts screening revenue in the first quarter, due to the normal lag between a Cologuard order and a completed test," he said. "In 2020, first quarter screening revenue was down 4 percent sequentially. We expect the sequential decline to be slightly more this year because of the year-end spike in COVID that lasted through January."
Elliott noted that Exact has a positive growth outlook for the screening business in 2021, as COVID vaccines become more widely available. For precision oncology, the company expects to see modest sequential growth in Q1 as breast cancer diagnosis continues to recover, but it expects COVID testing revenues to be down sequentially.
Exact's shares fell more than 4 percent to $147.56 in Wednesday morning trading on the Nasdaq.