Q4 2020 Exact Sciences Corp Earnings Call
Ladies and gentlemen, thank you for standing by and welcome to the exact Sciences Corporation fourth quarter 2020 earnings calls.
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The conference over to your Speaker, Mr. Eric Hose net thank you. Please go ahead Sir.
Thank you Cathy and thank all of you for joining us for exact Sciences fourth quarter 2020 conference call on the call today are Kevin Conroy, the company's chairman and CEO and Jeff Elliott, Our Chief Financial Officer exact Sciences issued a news release earlier. This afternoon detailing our fourth quarter financial results. This news release and today's presentation are avail.
On our website at exact sciences Dot com.
During today's call we will make forward looking statements based on current expectations. Our actual results may be materially different from such statements reconciliations to GAAP figures are available in our earnings press release and descriptions of the risks and uncertainties associated with exact sciences are included in our SEC filings both can be accessed through our website. It is now my.
Pleasure to introduce the company's chairman and CEO, Kevin Conroy.
Thanks, Eric.
We are thrilled to announce that Megan Jones, our head of Investor Relations at healthy twin girls on Friday, and we congratulate Megan and her husband, Chris on this great news.
Last year, we continued to transform exact sciences and advance our mission to eradicate the cancer, we strengthened our R&D capabilities and our cancer test menu by adding the thrive based genomics paradigm and by AUM ex teams to the exact sciences family.
Because of our team's resilience throughout the pandemic, we tested more than 4 million people across all of our tests and generated nearly $1 5 billion in total revenue.
We will talk today about how we've evolved into a leading cancer diagnostics company with the broadest and most advanced capabilities relationships and foundation.
Backed by the strengths, we're confident in the long term growth of Cologuard, Oncotype, Dx and our future tests, including minimum residual disease liquid biopsy and multi cancer screening tests.
We plan to extend our leadership throughout the cancer continuum addressing the largest patient impact opportunities in diagnostics.
Cumulatively. This represents a combined total opportunity of $60 billion.
Our people scientific platform and leading tests place us at the forefront of earlier cancer detection and precision medicine.
Our CFO, Jeff Elliott will now review our financials. Thanks, Kevin Good afternoon fourth quarter revenue was $466 million screening revenue was $250 million of 9% increase driven by Cologuard volume growth.
8000, do health care providers ordered cologuard during the quarter and nearly 227000 have ordered since launch.
Precision oncology revenue was $118 million.
Covid testing revenue was $99 million consistent with our guidance.
Fourth quarter GAAP gross margin was 74% net.
Non-GAAP gross margin, which excludes amortization of acquired intangibles was 79%.
Non-GAAP gross margin increased two points sequentially.
Volume leverage and screening and precision oncology sales.
Sales and marketing expense was $167 million G&A expense was $145 million, including $12 million related to the termination of the biocatalyst agreement.
R&D expense was $446 million based on the relevant accounting rules. The base genomics acquisition was expensed rather than capitalized excluding this impact R&D expense was $34 million net.
Net loss was $437 million also impacted by the base genomics acquisition.
Adjusted EBITDA was $88 million, bringing the full year amount to $169 million. This demonstrates the profit generating potential of our business model and the robustness of our foundation.
We ended the quarter with cash and securities of $1 8 billion.
On a pro forma basis factoring in the January acquisition of thrive and hardest license our yearend cash balance was $1 4 billion.
Turning to our 2021 outlook due to Covid uncertainties, we are not providing formal revenue guidance. We expect first quarter of screening revenue to decline sequentially because of typical seasonal trends primary.
Primary care utilization is lower in December and early January because of the holidays. This impact of screening revenue in the first quarter due to the normal lag between of Cologuard order and of completed test.
In 2021st quarter of screening revenue was down 4% sequentially.
We expect the sequential decline to be slightly more this year because of the yearend spike in Covid. The lasted through January and is now tapering off measurably.
As a result, we have a positive growth outlook for 2021 as the Covid vaccine becomes more widely available and other growth drivers take hold.
Precision oncology, we expect to see modest sequential growth in the first quarter as breast cancer diagnosis continued to recover.
We expect Covid testing revenue to be down sequentially in the first quarter Covid testing in the state of Wisconsin, where most of our volume is from has decreased about 50% from its peak and Covid cases are down nearly 90% year to date, we've done approximately $15 million and Covid testing revenue.
Based on recent trends in Covid cases, we expect our Covid testing revenue to decline further going forward, we plan to continue offering COVID-19 testing as needed.
The port our employees the communities.
Moving to Opex. This year, we plan to increase our investment in growth given our confidence in the long term outlook for Cologuard and Oncotype and the potential of our pipeline.
For the full year, we expect sales and marketing expense of $800 million to $850 million. This.
This includes expanded advertising for Cologuard with the campaign to reach the 45% to 49, the age group and the addition of of women's health field sales team.
We've also assumed Pfizer field sales activity starts to normalize in the first half of the year.
Due to the nature of this partnership as Pfizer It feels activity increases so will our partnership fees.
For G&A, we expect $550 to $575 million before considering the integration costs.
Investments include head count to support growth multiple projects and the thrive acquisition.
For R&D, we expect $375 million to $400 million, including roughly $50 million related to the TARDIS license.
R&D includes investments to support our multi cancer and <unk> programs and the full year impact of Blue C, which is our study for Cologuard two point, though in a colon cancer blood test.
We expect the run $95 million for intangible amortization, and we expect capex to be around $125 million I will now turn the call back to Kevin.
Thanks, Jeff our mission is to eradicate cancer and the suffering of causes our teams are working to bring to patients and physicians a complete end to end menu of life changing cancer tests.
Achieving this starts with great science and scientists.
We have an accurate and adaptable platform to support tests at every step from screening to recurrence monitoring.
Our scientific platform is matched by the depth and breadth of our sales and marketing capabilities. We have more than 1000 team members in our global commercial organization with deep relationships spanning five specialties and large health systems.
Our lab and our it systems deliver valuable patient insights and a seamless customer experience, allowing us to be an end to end provider of cancer diagnostics for patients and physicians.
Each new test, we develop will be supported by this unrivaled Foundation.
Yes.
Cologuard has several exciting long term growth drivers, including the opportunity the screen people earlier and positively impact an alarming trend in colon cancer incidence.
Since the mid Ninety's, there has been a 51% rise in colon cancer in adults younger than 50.
There are nearly 19 million eligible Americans, aged 45 to 49 and most of them have never been screened.
As a result of this the United States Preventive services Task Force issued draft guidelines lowering their recommended screening age of 45, which we expect to be finalized by the middle of this year.
Last month, we share prospective data showing cologuard specificity was over 95% per patients aged 45 to 49 that means the false positive rate was only 5% in that age group.
Very low false positive rate combined with the convenient at home nature of Cologuard makes it very well suited to screen. This age group.
While commercial payers typically follow finalized guidelines were excited to see that Humana last week started covering cologuard at age 45, joining aetna as the other major health plan to do so.
This is a step in the right direction for patients who prefer an accurate non invasive screening option.
We have an innovative and comprehensive marketing plan in.
In place to emphasize the importance of getting screened earlier and to make Cologuard there number one choice.
Cologuard is a highly sensitive and specific test in Cologuard two <unk> no raises the accuracy bar expanding the growth opportunity in colon cancer screening.
Our goals with Cologuard, two <unk> or to at least maintain cancer sensitivity.
Increased pre cancer sensitivity and decreased false positives by 30%.
We expect these enhancements to improve revenue and cost of goods by 5% to 10% per test.
We're also developing a colon cancer blood test to provide another option for patients to get screened.
Our goal is for Blue C. Our prospective 10000 patient trial to support FDA approval for both Cologuard, two <unk> and our colon cancer blood test blue.
Lucy will collect blood and stool for a blood test.
Cologuard and a fit test, allowing us to compare performance of all three in one trial.
The study is progressing with more than 100 high quality sites enrolling patients. These programs will deepen our leadership in colon cancer screening over the long term.
We believe multi cancer screening will be incredibly impactful weapon in the war on cancer. We are thrilled to have a team of talented scientists and leaders from thrive join us as we expand on the power of early detection from colon cancer to multiple cancers at once.
We believe combining the exact sciences methylation focused approach with thrives mutation approach will provide a powerful screening tests to patients.
We plan to make our multi cancer screening test available to our screening teams.
We will leverage our primary care sales and marketing lab.
Regulatory and customer experience capabilities to offer the best solution.
Patients and physicians.
Our precision oncology team is the foundation, we can build on as we expand into minimum residual disease recurrence monitoring and therapy selection.
With Oncotype Dx, we have a world class brand deep relationships with oncologists international strength and an unmatched evidence generation engine.
The Oncotype Dx tests also generate durable high margin revenue and powerful cash flow to support future tests.
We're thrilled to announce we have agreed to acquire.
Our Cheyenne analytics to help accelerate the development of our oncology portfolio, including minimum residual disease and other sequencing based tests.
<unk> is a CLIA certified and cap accredited sequencing lab based in Phoenix, Arizona.
Shai undeveloped Jim extra one of the most comprehensive genomic cancer tests available and provides access to whole exome matched germline and true.
Transcriptome sequencing capabilities. This breadth of knowledge will support our efforts to develop innovative diagnostics across the continuum.
Of Cheyenne was born out of translational genomics Research Institute or <unk>.
As was our recently licensed <unk> technology.
Part of this is a highly sensitive patient specific approach that can detect very small amounts of tumor DNA in blood.
The talented team at of Cheyenne will be instrumental in advancing targets for minimum residual disease testing.
With the Cheyenne, we've added a high quality team lab and unique capabilities to help us lead and precision oncology.
We also announced plans for a 10 year research collaboration.
Bringing in the expertise of T Jen and city of hope.
City of hope is of National Cancer Institute designated comprehensive Cancer Center.
This collaboration complements our continued relationships with Mayo clinic, and Johns Hopkins University, better positioning us for years to come.
We transformed exact sciences in the past year and are now well positioned to fulfill our mission of eradicating cancer and the suffering of causes.
By detecting cancer earlier across the continue continuum, we can drastically improve outcomes and significantly decrease treatment costs.
The acquisitions of of Cheyenne thrive based genomics paradigm and <unk> enhance our R&D capabilities and add to our deep pipeline of life changing cancer diagnostics.
Of these enhanced capabilities along with our established lab.
And commercial infrastructure will allow us to deliver a complete end to end menu of high quality cancer tests to patients in need.
We're now happy to take your questions.
As a reminder to ask a question you will need to press star one on your telephone.
Your question press the pound the case please name into one question and one follow up question.
We'll pause for just a moment to compile the Q&A roster.
And your first question is from Vijay Kumar from Evercore ISI.
Hey, guys. Thanks for taking my question.
I'll start with the high level one.
The guidance I understand.
Of the reluctance of the annual guide, but perhaps out of Q1.
I guess.
The worst.
The down 4% sequential of what we saw last year, if I'm looking at the comps here.
Perhaps the comps do get easier in Q1 some of them.
I'm just curious because the math implies it looks like you guys of guiding to $2 35 ish in screening revenues streets around 255 ish. So I'm curious on.
On the sequential commentary here on non screening revenues.
Yeah, Vgl's I'll start with that so on the guidance, it's really important to keep in mind here the impact of the holidays. So I've said this of forward I'll say it for future years for the Cologuard business. Our screening business you should expect Q1 below Q4.
And thats because of the timing impact of the holidays and all of the winter.
Of the winter weather in all of the travel around that affects us in Q1 more there is about a 30 day lag between an order and a complete of test we recognize revenue on a completed test.
And so the impact of the holidays and this year in Spike that we had and Covid is felt on that business more so in Q1.
So.
That's all that's happening here when you look now at the the case count.
In the Wisconsin and nationally the case counts are coming down meaningfully so.
So there is a lot of reason for optimism as you look ahead to the rest of the year. The same time, we have material growth drivers coming on Cologuard 45, which is the $3 billion addressable market coming on with the guideline update we expect mid year.
The three year re screened opportunity we expect this year over $100 million of revenue from re screening and the number of growth from there on.
On top of that electronic ordering is of major growth driver that we expect to see more so in the back half of this year. So there's a lot of reason for optimism here and longer term. This market is enormous there's 45 million Americans, who need to be screened right. Now so we've never been more confident in the growth outlook for Cologuard the Q1 commentary.
Really just related to the seasonal impact of holidays and this transitory impact from Covid.
And Vijay let me add to that one of them.
Throughout 2020.
Stated our belief that Covid would actually start to move people more towards the noninvasive at home screening.
Method and if you take a look at Q4, even though.
The wellness visits were off of appreciably, maybe up to 40%.
Access by our field team was significantly off.
And colonoscopy screening was down 25% Cologuard utilization was up 9% year over year.
So that tells us that this trend that we see of pulling forward of.
Cologuard to address this big screening GAAP and to change the paradigm in colon cancer screening is starting to occur plus the those other additional drivers that Jeff highlighted.
Understood and then for my follow up Kevin just on the data side of the clinical site.
I guess.
It's the Coupar question, what is the timing on the.
The validation of the Pan cancer test.
No it's expected at some point of this year.
And the related to that I guess out Lucy you Didnt mentioned, the blood blood based off the results will be out it's at three trials.
Under one I guess.
Ah trial.
The different types of if you will what is the I guess Sam.
Non CMS ask for 74% sensitivity given the Cologuard has done so well plus 19 is there a sense on where the blood based tests, what it should look like in your Blue C study.
So the.
Ill try to take each of those questions in turn first of all as it relates to our multi cancer test cancer of Sig. We're first focused on developing additional cash.
Capabilities with that task by combining the best of exact and thrive so the.
Exact methylation of approach and the thrive mutation of approach plus that the protein elements, we believe will improve sensitivity, while holding the specificity relatively constant that's important so that's what the team is focused on now we'll be conducting additional studies in the second half.
Salivate this approach and then.
We expect to launch of the pivotal study to support FDA approval next year.
That's the path and.
We will.
Let you know as we are able to percent of that data and scientific forums, that's most likely to occur next year.
Second question around blood based testing for.
Colon cancer.
The CMS is looking for a minimum of 74% sensitivity.
The challenge of course with any blood based test is to detect the rare event.
In stage, one cancers, we believe that we have.
Equal to or better than non performance with our approach using methylation markers.
And that will be part of our study.
We would expect to be able to meet that overall sensitivity based on the data that we have internally today, but of course proof is in the prospective study.
And.
There are no guarantees for anybody as you move into a prospective setting.
Is there a third question that was embedded there Vijay or did I get both of those.
Now you did the Kevin appreciate your taking my questions I'll step back in the line. Thank you.
The next question is from Dan Arias from Stifel.
Yeah, Hi, guys. Good afternoon, Kevin just thinking about some of the things that go into.
Proper liquid assay for colorectal cancer, there was some data presented by screen of them in January.
On adenoma detection. So I'm just curious about your latest thoughts on polyps can power protection, maybe in the context of sensitivity that you saw any of that you'd see for cologuard.
But also of the mid <unk> for the initial two point out of data and just where you think the bar is headed there for adenoma detection capabilities.
Well I think.
For anybody who is participating in this space.
A truly prospective study.
The ability to detect precancer.
Precancerous polyps that remains to be seen.
That study was not a.
A prospective study.
In the sense that one would normally use that word.
And so.
There is going to be the fit test sets the bar there. So the fit test detects about 24% of advanced Adenomas and there just isn't much data on a blood based test in that prospective setting we do know that what we saw in our deep C study, which was our original stuff.
<unk> is the polyps.
The advanced Adenomas and a prospective study are smaller than you see in case control studies and the sensitivity.
Four of stool test is directly proportional to the size of those advanced Adenomas.
So it really remains to be seen and requires.
A large effort to get to a sufficient number of samples to see what the performances I would be surprised to see.
Sensitivity.
Equivalent to the fit test.
But if so then what you basically have is.
The test that is equivalent to the fit test and it's going to be hard because two to displace the fit test what the blood based test. If you have equivalent performance in part just because of the 25 dollar cost of the fit test.
Lots of challenges to address this market, we're intent on delivering the the very best tests to patients.
Patients and physicians.
Okay very helpful. If I could just stick with the the blood based assay line of questioning and then.
Touch on the <unk> I mean, I know things are still coming together, there, but just given how quickly the market is evolving here of the technologies are evolving.
What kind of timeline should we be thinking about commercialization there and is the strategy to offer of customized assay or is it more of an off the shelf type of assay.
We'll be coming to market with there. Thanks.
With our mrna assay will be in a better position to talk about the product configuration the product performance.
In the coming quarters, we have a robust team clinical trials.
Sample collections that are already underway.
And as we mentioned because of the of Cheyenne acquisition and the TARDIS.
License, we believe we have just tremendously sensitive and specific technology.
And we can combine that with this.
Leading platform that we have in connection to oncologists and for example, with our <unk>.
Market, leading position in early stage of breast cancer testing one of the things that we're able to do is to leverage that tissue sample as a starting point and that patient journey. We also know which patients are at the highest risk of recurrence.
Our collaborators are really excited about the opportunity to work with us in the breast and colon space and then expand beyond we'll get into some of the timelines and details and the.
The coming quarters.
The next question is from Derik de Bruin from Bank of America Bank of America.
Hi, good afternoon.
So Dan just took my question. So let me maybe think of something let me think of something quick here.
No.
I guess can we talk a little bit about some of the other.
Capex I mean, it is liver still on track for.
This year I believe.
It is we will make our liver test available in the first half of the share we're very excited about that.
So we have a lot of things to talk with customers about.
And we've built one of the leading health system sales forces of field forces.
Gnostics I don't think there is a close second and so we just have a number of things to talk with them about from Cologuard to Oncotype Dx to MRV to cancer seek.
And now with the liver test. So we were excited about the impact that we can have at the health system level, which is critical.
So there are a number of companies that are targeting the liver market can you just be a little bit more specific on how you are differentiated from some of the competition based on some of the data that's out there.
Sure. Jerry this is Jeff the portion of the liver market. We are approaching the Steve those that are at high risk of liver disease that typically means those with cirrhosis in hepatitis B.
In the U S. Thats 3 million people, that's where your test because that's where 90% of all liver disease happens so.
The goal here is to get more people tested.
Because today fewer than one of the three people are tested in this market and we know the tested help save lives. The differentiator here is that we bring the broad platform as Kevin talked about we've got deep relationships with the <unk> health systems primary care all of those who come into play and liver disease. We also.
Non stream of our developing tests for recurrence, we have of test for therapy selection. So we will we are differentiated in that we have an end to end platform with the <unk> suite of tests and deep relationships on top of that I think our team is very very good at generating the clinical evidence that is so important for getting the.
The early test launched get an adoption of securing reimbursement and guidelines. So I love, how we're positioned for liver tests and other new tests that we bring to market.
Great.
If I can sneak one final one in on the Oncotype portfolio.
You said modest growth in the fourth quarter, how should we think about that for the full year.
Of that get into that Eric, but I think the near term drivers are really tied to cancer diagnosis, we've seen breast cancer diagnoses come back you've seen this business performed very well in Q4 relative to Q3, we do see those diagnosis comeback.
Obviously of mammography volumes are impacted by Covid.
Back in April of last year, they were down 95%, but they've come a long ways back so too has our business over the course of the year I expect growth to improve as they come back of the rest of the way on the prostate side their prostate cancer diagnosis.
And more and so that business is more impacted but this is a very very strong business. The evidence behind these tests are incredibly strong and now with the responder study that came out late last year that is helping to open up the node positive market, we're seeing geographies around the world start to move as far as reimbursement.
Which will help growth, especially as we exit this year and into next year.
Great. Thank you very much.
Sure.
When you have a question from Doug Schenkel from Cowen.
Yeah.
Good day. Thank you for taking my questions I wanted to start on guidance and then I just wanted to ask I guess, what are kind of a couple of pipeline or product.
Product development questions. So first on guidance I mean, this has been touched on a couple of times, Jeff, but I just wanted to be clear the.
The seasonality dynamic that you walked through earlier and asking about screening and fairly cologuard guidance makes sense of you've talked about it in the past.
That said as we think about Q4 of 2020, you know people aren't traveling as much for the holidays.
So that would seem to suppress that holiday dynamic that we've always talked about in December.
I think there is still need for screening catch ups as you guys talked about in response to at least one other question on coal.
Colonoscopy capacity is constrained.
The positivity rates are now just starting to come down again, so to be clear are you simply guiding like this is kind of a regular you're with the regular seasonal pattern, but leaving room for upside to account for all the things that you mentioned that I just mentioned.
Which could result in upside relative to these targets is that the right way to think about it.
Well, Doug we wanted to give very clear guidance on Q1, given the different dynamics here. The biggest dynamic is the seasonal trend.
Mentioned last year down 4% in Q1 versus Q4. This year, we expect the similar trend, perhaps a bit more because of what we saw with COVID-19.
To your point on the holidays, yes people weren't traveling as much but you still lose that week. During you lose at least the week in Q4, because during Christmas new years from the holidays people arent going in for wellness visits.
The wellness visit volumes, which we could track closely are down meaningfully.
Kevin talked before colonoscopy volume is down at least 25%. So we are seeing the backlog this catch up happening, there's well over 1 million people still in the backlog.
We are capturing that that's why we saw a 9% year on year growth in Cologuard and with colonoscopy is down where they were.
This really sets the stage for an exciting year of this year and next year and beyond given that you've got this backlog that we're starting to capture as Kevin talked about we're pulling ahead.
All of the guard growth this growth we've talked about over time is being pulled ahead the <unk>.
Same time over the course of this year all of these new drivers we've talked about are really starting to take hold things like Cologuard 45 again, the mid year guidance update we expect should help unlock that major new market of $3 billion opportunity.
This year, we expect I would say at least $40 million of revenue from the 45% to 49, so there's a long ways for us to grow their electronic ordering we.
We expect the biggest year in the company's history as far as converting fax orders to electronic ordering.
And then lastly re screening I mentioned before we spent over $100 million of revenue. This year from re screening and the opportunity is even bigger next year. So.
I wanted to make sure I give a little color on what to expect in Q1.
I think some folks when they update their models last in October after our third quarter call, obviously hadn't factored in the big Spike in Covid because that happened after the call and then some folks have forgotten how the holiday dynamic plays for Cologuard, which is a bit different than some companies because of the 30 day lag.
No understood and that's all Super helpful. Geoff It's Jeff.
I'm sure you can appreciate it.
On one hand, it seems like you are trying to do some model cleanup and set expectations in a way that you'd normally what Q4 to Q1 that kind of reflects of that pattern. Its just not clear the way of describing at the Q1 guidance captures all of those other positive things that I mentioned and you just mentioned the guidance. So we're just try.
The figure out how to balance of those things, but I get it. Thank you for that and then I guess on the on the pipeline.
Really just a couple of oncotype of map.
I know, it's early to give a whole lot on new details and I know Dan asked about this earlier, but I just I just wanted to make sure of is there any reason you wouldn't follow the somewhat typical pattern, we've seen with others, where tissue launches first and then theres liquid and then.
Would you expect to be able to piggyback existing LCD.
As you are designing the assay is the design with both U S and international markets in line. So those are the Oncotype map questions and then on the shy on.
It sounds exciting I'm I'm admittedly just starting to learn more about the asset and their offerings I'm curious if this acquisition is the all motivated by our desire to be better positioned to address both centralized as well as decentralized markets depending on how this market evolves over time. Thank you.
Why don't we take share.
First it's the of Cheyenne cancer panel is nearly 20.
And genes and about 170 in trends.
It is a robust panel that's primarily used by academic centers and more in terms of research. It also.
<unk> serves as the foundation for a tissue first and then liquid.
Approach to <unk>.
D. It can provide that that basis.
It has.
It's differentiated in terms of its quality, both because of its approach of Germline subtraction, which reduces false positives and also the bioinformatics that are tremendously powerful and it has this evidence of curation software, which allows for automated interpretation.
And that's that's very complementary with Oncotype map will be able to offer through our precision oncology sales team.
And.
Both of these labs happened to be in the same physical building in Phoenix, Arizona.
It is important to note that the.
Jim extra panel has mol Dx reimbursement today.
So that's helpful.
As it relates to MRC.
We just licensed the hardest technology, we just announced that we will be acquiring of Cheyenne, So give us a little bit of time here before we rollout of exactly what the profit product strategy as we will be doing that in the first people that we want to lay that out to our.
The prospective customers and collaborators.
Suffice it to say, we have the ability to be very impactful in a quick way here.
Your next question is from Katherine Shelty from Baird.
Hi, Thanks for the questions I guess first Geoff I think I heard you say you expect over $100 million in re screen, the sphere, which implies recapturing maybe 28 out of 25% of of the people who've got screens in 2018 is that the right ballpark to be thinking about and where do you think that re.
Capture rate can go over the next couple of years.
Kevin unrest screening I've said long term I think at least half of our revenue will come from <unk>. So this is a huge opportunity. The teams have made tremendous strides at capturing even more of these patients longer term, where it goes I think we will capture at least 50% of the patients knowing that you have to.
Excluded patients that of a positive and patients that dropped out of the pool for other factors. So we've made some good progress there.
Im not kind of give you the specific number as far as the recapture rate, but it continues to move higher thanks to all the tools, we've put in place and the efforts of our team to go out and capture these people.
Okay great helpful.
With the leadership change in the screening franchise can you talk to any top priorities for for Pat or strategic changes as she takes over from Mark and if you see things start to reopen more do you have an appetite for expanding the sales force or are you happy with with the size now.
Pat strategic priorities are the same as marks.
It is to continue to.
Be obsessive about improving the customer experience.
How well we are to reach customers with the message of screening there are 45 million Unscreened Americans.
The $19 million in that 45% to 49 euro of groups. So there is.
Immense focus on making sure that we get to that group.
We're kicking off our campaign with the stance that we're supporting stand up to cancer.
To focus on underserved populations, which.
<unk> is a really important initiative for the company. This year in terms of expanding the sales force, yes, one of the things that we highlighted here is that we're building of women's health team.
There are about 25% maybe more than that now with 45 year olds.
<unk> guidelines of.
Typical patients in and of the obgyn about 25% or more are in the colon cancer screening population.
And it's typically the only position so.
Getting to women, who are currently maybe only getting the fit test sort of not being referred to colonoscopy getting them to get a cologuard test is.
One of the examples of us expanding.
We're really pleased with.
How Pfizer now is starting to have more activity in the field and we expect that throughout the year that will increase.
We're working together very closely with Pfizer and Pat having come from Pfizer I think is in a unique position to.
Build the collaborative efforts of the two teams so.
Oh of Pet is one of the thing she did is she.
Moved people around in the organization and flattened that organization and yours Youre seeing a tremendous amount of energy as as we start this year.
Mark built an incredible team.
And that team is remains incredibly hungry to make a difference.
Okay, great. Thank you.
Do you have a question from Brian Weinstein from William Blair.
Hey, guys. Thanks for taking the question per.
And perhaps most importantly, congrats from Morgan.
I hope everybody is doing well and healthy.
I'm, Brian <unk> better not be listening.
And for sure some of the transcripts.
Whenever that is.
So.
The first question on thrive.
You've only had it.
Under the line here for a little bit, but can you talk about some of the things that maybe you didn't depreciate ahead of time and as we think about the pathway here. It sounds like you're pretty convinced that the FDA path is the way. The gallery is there any chance you would launch within the L. T.
As you think about the FDA.
How to think about the.
The potential for what that trial, even looks like in terms of size scale costs those kinds of things I know, it's down the road, but it's an important one.
Well, let's start with the fact that.
Getting broad based reimbursement for a multi cancer screening tests without FDA approval and well designed.
Randomized studies is just not realistic.
And.
Getting patients to pay out of pocket for any type of medical service, we know is.
It's very difficult.
There is of rolled off for making.
The cancer seek available as a lab developed test potentially.
In the.
In a way that could help develop real world evidence and.
Work with health systems that our customers today in a way that could.
Advance their goals of research and getting more people familiar with the new technology and Irene.
Ironing out all of the final aspects of our service offering.
For example, it's important to be able to educate people what of positive and negative result means and what happens to the patient in each case.
So in terms of conducting a study for such a transformative test.
<unk> cancer seek.
We intend to do a randomized study.
It will be of very large.
The.
Asian that we study and it will include average risk patients and also higher risk patients most likely in that study.
The study will start next year, we will do it the right way.
If we if anybody's expects to get a test in the guidelines in an average risk population and average risk study is going to be needed.
So just like with Cologuard, we will do this the right way will open up.
Large abilities of our significant abilities to positively impact patient populations and we still we believe the.
Cancer seek can be one of the most impactful diagnostic tests ever developed because of its ability to detect asymptomatic people with cancer earlier.
Yes, it makes sense.
Follow up you're thinking about the pipeline of little bit you've talked a lot about the various.
All of our E products that you are looking at of.
Of course, we just talked about pan cancer, but.
You have this initiative with Mayo that we haven't heard of a whole lot about other than the liver product can you give us any kind of an update on kind of where some of those key products are in that relationship with the Mayo and when we might get an update on on something like like lung or pancreatic.
Pancreatic or anything else thanks, guys.
Thanks, Brian I think we should probably wait to talk about the collaboration with Mayo until we can do that with mail. Some of those tests were working with Mayo Medical labs and.
Dr Bill Murray and his team.
There to bring some tests that maybe we wouldn't be able to focus on as we would like to.
They're pretty remarkable R&D teams.
Evidence generation capabilities bring some of those tests forward.
Maybe at one of these.
Sometime in the future, we will do an R&D day, where we can share more of that information, but right. Now we don't have a lot to share on that front with the teams have.
It started to work and.
We're excited about what that could do outside of the core areas that we have decided to focus on.
Got it thank you.
Thanks, Brian.
And you have a question from Patrick Donnelly from Citi.
Hey, guys. Thanks for taking the question.
Just one on the order side can you talk through I guess, the traction you've seen on some of the website and electronic ordering obviously kind of launch that early.
Early mid last year, the decent amount of marketing around it seemed like a great fit given given what was happening on the primary care of visit side. So I'm. Just wondering any metrics you look at that you can kind of help share with us on that from.
Yes, Patrick this is Jeff electronic ordering in total.
As of right around 40% for Cologuard orders. This year, we expect it to exceed 50% as we exit the year. So thats in total when you look at across all electronic ordering types. I think what you were talking about as are our website, where a patient could go on and on to request of Cologuard the consumer site.
There, it's a relatively small part of the business still it is gaining traction.
What's happened is we've added new features to the site and made it easier to use over time, there's some additional things we can of branch often do to help us.
Tap into the the payer channel and the employer channel.
So stay tuned there were just really glad that the team could respond so quickly early in the pandemic and bringing this new capability out it gives us one more way to to go out and get more patient screened and the attraction here does continue to increase.
Okay. That's helpful. Jeff and then maybe just one on kind of the full year and I know people of kind of asked us about it a bit here, but.
The first quarter makes sense, obviously of the holiday impact I guess, when you think about the full year on Cologuard volumes you have all of the tailwind that you've gone through a few times here.
The pandemic seems to be lingering a bit here in terms of in terms of primary care of visit headwinds I guess when you guys tried to kind of the balanced that out for the year. What does the visibility look like kind of going forward outside of <unk> and how are you thinking about the tailwind the headwinds kind of outside of the cologuard being positive.
How do you think about those those kind of forces offsetting here.
Let me take the Patrick.
You know again I'll point to the fact that although colonoscopy screenings were off 25% of the fourth quarter.
All of guard was up 9% that tells us that the underlying growth is significant and wellness visits our best data.
I would say they were still of 40% in the last quarter, if you've been to a primary care office recently I have been because of shingles vaccine Fortunately no no COVID-19 vaccine yet but.
It is of very different environment and.
It's pretty clear that the people that are they are there for a very specific reason and until you get people back into the office of for wellness visits youre going to see.
A diminished impact of cross screening.
Think what we're happy about is that.
We know that Cologuard is solving some of this problem. So we're getting a greater share of screening than we did this time last year, we're tracking that.
And then the 45% to 49 opportunity this re screen the op op.
Our opportunity that Jeff talked about the.
Epic in HL seven integrations that we have seen are really having an impact.
And then the field force coming back to live in person visits to a much greater degree and Pfizer, which was.
Is largely today is still doing mostly.
It.
Visits through zoom or telephone or email.
All of that coming to bear this year were.
We're truly optimistic about what the year looks like because of those factors. Some of these things we've been working on per years and.
Put this year of side. Some of these things are going to power us into 2022, and 2023 and beyond.
Jeff I don't know if you have anything to add to that I would just add normally Patrick ignore the pandemic normally this is a very very predictable business model given that we've got this massive base of ordering providers that so we can model out I can see how a typical primary care doctor performance overtime.
And you've heard me talk before about I can see the doctors, let's see whether the one year or two years from three years into ordering cologuard.
Across all of those time horizons to continue the order more.
Again before the pandemic, we had never seen any physicians flatten out they always keep ordering more and more.
And now were layered in things like 45 of electronic ordering so once the pandemic really subsides. We are extremely excited about what the the longer term past the store for Cologuard near term Covid. It makes things a little harder to predict but longer term, we can see where this is heading.
That's helpful. Thanks, Kevin and Jeff I appreciate it.
And you have a question from Dan Brennan from UBS.
Great. Thank you and thanks for taking the questions Maggie and congratulations.
I guess the first one Jeff you want you quantified the reorder opportunity being in the 45% of 49 the opportunity on the call I spoke.
You can do the same with epic. Obviously this has been discussed for a while and the potential impact that could have given fax orders. So any any way to think about the revenue end of our test impact from epic rollout this year.
Yes, Dan this is Jeff so I think of around 50% of primary care doctors in this country use epic.
So this is a huge opportunity for us and really more importantly for patients to get more patients tested.
Are we have done now is because we are in line on epic and because epic has been a good partner to the exact sciences.
Any doctor and the health system, who upgrade to the latest version of epic that came out of late last year, we will have the ability to order cologuard through the click of a button.
On the order then comes to US we take care of all of that testing and that goes right back to the patient right back to the the Doctor. So again, that's about half of doctors out there.
Our rapidly working to help those systems.
Sure that there were the Cologuard is going to be available electronically and then work to pull through of Cologuard ordering once the convert again to this latest version.
As far as revenue.
I mentioned before of 40% of our orders at year end last year came in electronic we expect it to be at least 50% this year.
And I have said before when a physician orders of electronically the order.
At least 50% more than when the order through facts now that doesn't happen overnight. It takes time, but thats. If you look at when somebody is scaled to ordering electronically the order far more. So this is a huge opportunity to to see order rates go up. It also is helping bring more physicians onto ordering cologuard.
Imagine a health system, where you can have thousands of providers.
Net order tests through facts.
May not be allowed to order the test test the effects.
However, once you put cologuard onto the ordering platform you open up a whole brand new world.
So not only do you get more orders per physician you also get more physicians, who are now going to order cologuard. So we're extremely excited about what this means for the long term.
Great. Thanks, Kevin I appreciate it and maybe just one follow up on Kevin.
Kevin I know I think there was the question early on in the.
In the call of that Kansas seek and the potential as you combine that with your own markets, where that could go but I'm just wondering is it.
I think if you gave any numbers, we can expect but I know you've kind of very constructive about the ability to take an already good cash and make it even better now that you have some time.
Wonder if you can help us think through what the potential magnitude of that improvement could be or just kind of.
What what might be necessary in order to see that become a successful okay. Thank you.
Yeah. Thanks, Dan just last week and meeting with the thrive team they laid out what each of the potential new marker.
Mark or classes could how that could impact the overall sensitivity and holding specificity of positive.
I won't share of that with you though.
And.
At the end of the day, we will.
Do work in a.
With the case control samples to validate each of these approaches putting them together and doing the.
A larger study in the second half where we will.
Locke, our algorithm before we see.
The start and interventional study.
A randomized study next year.
Suffice it to say you can take a look of the case control.
Ah study that we.
We showed the data last September.
Where there was.
Significant.
Over.
80% cancer detection, although samples or <unk>.
Biased towards later stage that means that the sensitivity is higher but they made a significant contribution similar to the case control data.
Net.
Thrive saw previously so clearly as we can see from Cologuard methylation and mutational.
Rotation are typically.
Not directly overlapping some of those markers, maybe but as of as classes. They typically are not directly overlapping so there is going to be so.
Some improvement there.
And we just have to wait to see what that is so.
I am not giving you much help other than very qualitatively and we're confident that there will be an improvement.
No that's great. Thanks, a lot Kevin.
Let me just point out one other thing Dan is that.
Go back to why we were so excited about drive in the first place. They did the prospective study and an average risk population.
And in fact, it might be somewhat of a low risk population because there were people who are in four other screenings.
<unk>.
And that gives us a leg up as we begin to have conversations with policymakers with.
With cost of potential customers. They see that thrive is committed and know exact sciences is committing to doing those prospective studies in an average risk population and that's critical that average risk population is critical if we're ever going to access those markets.
Excellent. Thank you.
When you have a question from Puneet <unk> from SBB Leerink.
Yeah, Hi, Kevin Jeff Thanks for taking the questions.
Jeff just first one of the clarification question and then I apologize if you've provided this I'm wondering if you could give us a sense of where you stand with the cologuard screening reps today and.
Maybe just around what percentage of those reps are able to do any of physician visits currently obviously with the Covid ongoing my expectation on that number is low but just wanted to get a sense.
If they are able to do any visits today versus the.
Online visits that are that they're currently doing and and we're fully aware of that oncology reps are still restricted around oncology clinics of just wondering if youre seeing any movement in that.
On the Cologuard field force sizing, we have about 500 primary care reps in the field.
Nearly 150 more on the inside those teams work very well together I am calling on doctors in terms of the access.
Still less than 50% face to face relative to where it was before COVID-19 started the teams to make the most of it though and do what they can over the phone and through virtual visits so the.
The team is very very motivated to get back out. There. This team is talented they really want to help patients and they know the best way to do that is through face to face of conversations.
On the we also have another 50 or so Gi reps and we've said before we're adding a team of about 50 women's health reps. So this is it.
A big investment because the market is so large and we know the Rev. Sorry of highly effective way to to educate doctors on cologuard.
On the oncology side I'll.
I will say rep access of generically depends on the territory. It depends on the Covid cases, and an area we have as a company to.
So the reps are free to go back out there.
The last March we had pulled all of the rest of the field now typically our territories are open, but we only let our reps, Quebec out there where it's safe to do so independent of what the access is in their territory.
Got it that's very helpful.
And Kevin a big picture question for you.
Obviously, you highlighted a few years back your ambition to be a leading diagnostic company in the space and you're well on your way there because one could argue already there.
And just help me understand.
And in terms of the product portfolio, obviously of Colo colorectal screening breast with Oncotype <unk> strong position in prostate.
Multi cancer so.
And with the acquisitions of paradigm Basin T Jen.
You really have quite of bit of capabilities here. It looks like it's a full plate, but just wondering are there other areas in oncology or beyond oncology, which remain a key priority for you to build out.
Areas of potential investments. Thank you.
Thanks Penni.
Several years ago looked at a lot of different paths that we could take strategically and we decided to stay focused in cancer diagnostics and ultimately.
That led us to the conclusion that we had to be the very best and most connected highest quality service highest quality tests best evidenced best commercial team's best clinical and regulatory capabilities.
If we were truly going to serve patients that need help.
And so that means that the tests that you.
Think about in oncology, we will bring to physicians and patients who need them.
Tissue base.
Therapy selection liquid based therapy selection Emaar D.
Colon cancer screening multi cancer screening and I guess, what I'd like to really highlight are there are three huge opportunities.
Colon cancer screening, which.
We've obviously started to make progress we believe we of all very long wait to grow their multi cancer screening, which is a game changer and MLR D, which youll.
You put those three opportunities together and its about $60 billion.
Total available market opportunity and more importantly.
The chance to impact millions and millions of people around the world and we do have.
Global aspirations.
The team that Kim <unk> built at genomic health outside the U S.
And.
Is a remarkable team and that will be our the basis and foundation upon which we build for both multi cancer screening colon cancer screening and Mardi.
Then when you layer on top of it the ability to it.
Mine the data do deep learning on the data then prompt and make suggestions to oncologists and to patients based upon that combined data. It gets pretty powerful you can imagine a day when you have.
Millions or tens of millions of sequential blood draws from Ah patients that you store. The genomic information and then you can look back in time and ask the question and this will be on an automated basis do you see of signal and people two years four years.
Eight years before they are diagnosed with pancreatic cancer and if so what is that signal and so then how can you better inform patients and physicians going forward, we will uniquely have that data because of the full range of tests that we offer the epic platform that were on et cetera.
So that's why we're so excited about this we're convinced this is the right strategy we have the <unk>.
Credible team of people and I would say that's the other critical thing is is our people. We believe are the best in this field broadly.
Across the spectrum and the culture is a culture that people want want to work at the.
That is something that we need to continue to be great. At so 10 years from now or 20 years from now we can say it.
If youre a sales person exact sciences, you know that you've had the very best training. It's considered the criminal law Crim, that's our aspiration and we think we have a good chance to be successful at it.
That's great. Thank you thanks for all of the comprehensive detail okay. Thank you.
Your final question is from Sandy Draper from choice.
Guarantee.
Thanks, so much and thanks for squeezing me in a lot of the questions obviously the.
Asked and answered very well so maybe one.
Kevin for you on your comment on.
The 5% to 10% I think revenue lift from from Cologuard two <unk>.
When that comes out just would love some thoughts is that more on just incremental volume and youre going to get it from that is there any price component, but just wanted to make sure I understand that comment and whats driving that that's the first question and then maybe.
The second question.
The step up in sales and marketing understandable little bit bigger than I thought maybe starting with the Super Bowl AD.
Could you sort of Jeff maybe talk about when I think about the.
Getting back with Pfizer out there, adding the women's sales force.
Overall marketing, so I had a sort of rank order, where the big step up in spend is coming thanks.
Yes, Sam this is Jim.
Jeff I'll take those two on the 5% to 10% really this gets at the heart of what Kevin talked about the reduction in false positives of at least 30%. When you think about what that means for patients. That's three percentage points overall fewer patients getting a false positive when you compound that over time not only.
Is that of grid thing for patients. It also helps drive our revenue so the 3% more patients stick with us as the repeat Cologuard every three years.
That's part of the 5% to 10% lift there is also of benefit from a lower spoilage rate. There is the low single digit percent of samples that come back that are that are spoiled. The we can't get a result on the result.
No revenue.
The address those two things at the at least 5% combined.
Longer term, perhaps the biggest benefit of Cologuard two <unk> is not from the the lower the lower spoilage rate or the 3% revenue it's the.
As we've raised the bar even further on this test I think that will help our positioning with physicians and help us take an even bigger share of this market. So I think that's the biggest driver of value for Cologuard two <unk>.
Sales and marketing.
A few things on the on the step up.
One is as we've talked about before we are.
Presuming.
Get them more of spec out in the field, we expect to over the course of this year and as reps get back out there there's a little more spending involvement that Pfizer. The same case, we expect Pfizer sales activities to normalize over the course of the year and of course under our partnership now Pfizer has paid for the activities that they perform.
We also have now with Cologuard 45 in major new opportunity to help help test more patients I talked before but of $3 billion market opportunity to.
To help us catalyze that market overall raise the education in that market. So people know that this should be screened earlier, we have a marketing campaign targeted directly at that that part of the market. So those are some of the bigger initiatives.
Again.
The big new market.
45, you are starting to see a normalization of sales and marketing activities, because we expect the pandemic to decline and those.
Those of the big drivers.
Thanks, so much I appreciate it.
You have no other questions in queue.
Thank you for joining us to review our fourth quarter results progress made in 2020, and our plan for 2021 and beyond special Thanks to all of our employees for their unwavering commitment to our mission. We have never been more excited about the future of exact sciences and have confidence. This team will continue to advance our <unk>.
Mission of eradicating cancer and the suffering of causes thank you.
Ladies and gentlemen, this concludes today's conference call. Thank you for participating you may now disconnect.
Okay.
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