Cologuard® expects to make over $1 billion in 2020. 16 Takeaways you must know from Exact Sciences Q4 2019 Earnings Call
Exact Sciences continues to be upbeat about Cologuard® and its overall business. The company expects revenues of $1.61-$1.645 billion in 2020 (Screening: $1.125-$1.15 billion and Precision Oncology: $485-$495 million). They are due to launch a liver cancer test in the second half of 2020.
Exact Sciences also made some strategic moves by buying two more biotech companies (in addition to Genomic Health): Paradigm and Viomics. That expands their total addressable market to $20 billion.
First, let’s review some stats from their press release:
- Total revenue was $295.6 million (compare that to $290 million in Q3 2019 and $143 million in Q4 2018)
- Screening revenue was $229.4 million, an increase of 60%
- Cologuard® test volume was 477,000, an increase of 63% (volume of Cologuard® in Q3 2019: 456,000, in Q4 2018: 292,000)
- Average Cologuard® recognized revenue per test was $481
- Average Cologuard® cost per test was $123, an improvement of $6
- Precision Oncology revenue was $66.2 million for the period Nov. 8, 2019 through Dec. 31, 2019, following the close of the Genomic Health combination
- Oncotype DX® test volume for the full fourth quarter was 41,000, an increase of 14 percent (The cancer diagnostic test Oncotype DX® is now part of Exact Sciences via its acquisition of Genomic Health)
These takeaways are based on the Q4 2019 Earnings Call. Kevin Conroy, Chairman and CEO, Exact Sciences and Jeff Elliott, Chief Financial Officer, Exact Sciences made these remarks.
Takeaways:
1. Together with Genomic Health, Exact Sciences now has a $20 billion addressable market. The company has tested 41,000 patients with Oncotype DX® and made nearly $350 million in revenue.
2. The company is confident of reaching their long-term cost per test goal of $100 or less.
3. Cologuard®’s growth has been the result of:
◦ An expanded sales team
◦ Marketing campaigns, especially TV ads (they are already talking about Cologuard® 45)
◦ Growing payor and health system relationships
4. The company has doubled its lab capacity to conduct 7 million tests per year.
5. Exact Sciences has created a 1,000 person commercial organization (sales team). Of which, 60 sales people are focused on selling to gastroenterologists.
6. Cologuard® is very optimistic about the 45-49 years of age label expansion for screening. It expands their market to 19 million more Americans. They estimate that nearly all of them are unscreened. There’s a 50% rise in incidence in younger population.
7. According to the company, over 200,000 more patients are due for re-screening this year compared to last year. Over 370,000 patients coming up for three year repeat testing this year.
8. 106 million Americans are in the average risk screening population category of ages of 45 to 85. About 15 million are either not screened or out of compliance with screening.
9. Exact Sciences plans to further differentiate Cologuard® as a frontline screening test. The team has made progress on an enhanced version of Cologuard®.
◦ They presented data, showing new markers with improved specificity, while maintaining a high level of sensitivity in comparison to the current version of Cologuard®.
◦ Based on this study, a 10,000-patient prospective trial was kicked-off to validate Cologuard®’s performance.
10. Exact Sciences presented its third data set for its liver cancer test in November. The data showed superior performance of their test in comparison to the alpha-fetoprotein test.
◦ The test showed 80% sensitivity for all stages of liver cancer at 90% specificity.
◦ The company plans to make this test available in the second half of 2020. Total addressable market for this test is 3 million eligible Americans.
◦ Through the MolDx program, this test received local coverage determination. The test has faster turnaround time and requires less sample input.
11. They recently signed agreements to acquire Paradigm and Viomics. These companies have deep DNA sequencing capabilities.
◦ Paradigm – provides a therapy selection test for late stage cancer patients. Today, the Paradigm test is a tissue-based test. In the future, Exact Sciences plans to make a blood-based version. With the acquisition of Paradigm, the total addressable market of Exact Sciences’ Precision Oncology team is now $4 billion globally.
◦ Viomics – a team that provides critical sequencing and biomarker discovery capabilities.
12. For 2020, the three core priorities of Exact Sciences are:
◦ Deliver more answers i.e., to grow their core business through Cologuard® and Oncotype DX®.
◦ Enhance customer experience by making the testing process easy.
◦ Power new growth that’s fueled by collaboration with Mayo Clinic, their experienced R&D team and a differentiated platform. They expect their liver cancer test to be next of many innovations in cancer diagnostics.
13. Exact Sciences also talked about its sales rep productivity. They laid out three key reasons of hiring a 60-rep GI sales force:
◦ To make sure GIs have proper background and clinical evidence on Cologuard®.
◦ To increase the direct orders from GIs for the patients who feel Cologuard® is a better alternative to colonoscopy.
◦ To sell the liver test and few tests in pipeline like the esophageal cancer test and pancreatic cancer test.
14. According to the company, health systems that have implemented an electronic interface order 95% more Cologuard® tests as compared to systems with no electronic ordering capability.
15. The company invested close to $1 billion in the brand of Cologuard®.
16. Data from Act Bold (a 7,500 patient study) is intended to be used to complete the design of Cologuard® 2.0 and blood assays.
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