Q2 2021 Exact Sciences Corp Earnings Call
Good day, and thank you for standing by welcome to the exact sciences.
This corporations second quarter 2021 earnings call.
At this time all participants are in a listen only mode. After the speaker's presentation. There will be a question and answer session to ask the question do you mean that session you will meet the press the star 1 on your telephone please be advised of today's call is being.
Hi, and supported if you require any further assistance during the call. Please press the star Zero I would now like to hand, the conference over to your speaker today Ms. Megan Jones of please go ahead ma'am.
Thank you, Matt and thank all of you for joining us for exact Sciences second quarter 2021 conference call on the call today are Kevin Conroy.
The weakness chairman and CEO, Jeff Elliott, our Chief financial and Chief operating Officer, and Jake Orville <unk> General manager of our pipeline.
Exact times of issued a news release earlier this afternoon detailing our second quarter financial results. This release and today's presentation are available on our website at exact sciences dotcom.
Mhm.
On 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 on descriptions of the risks and uncertainties associated with exact sciences are included in our SEC filings.
It can be accessed through our website.
It is now my pleasure to introduce the company's chairman and CEO Kevin Conroy.
Megan and thanks to everyone for joining us. This afternoon, we tested 850000 people on the second quarter with Cologuard Oncotype Dx and our Covid test the exact sciences team remained unwavering in.
Their dedication to our mission and delivered record results for Cologuard and Oncotype.
The team delivered in spite of limited sales force access and in person wellness visits due to COVID-19.
Exact sciences is a leader in advanced cancer diagnostics because of our people.
Our capabilities our scientific.
The form and our powerful brands.
We will transform cancer care with the strong foundation and screening in precision oncology and our pipeline of innovative test.
We have a relentless focus on creating a great company.
Culture with the best team.
We are inspired to achieve our mission of cancer eradication.
Cause of this passion and engagement exact sciences was recently certified as a great place to work for the third year in a row.
Today, We will review our second quarter performance third.
Third quarter, and full year guidance and our progress for 2021 priorities.
For our CFO and COO, Jeff Elliott will now review our financial results.
Kevin Good afternoon second quarter revenue was $435 million, an increase of 62% screening revenue was $264 million.
An increase of 101% screen.
The screening revenue would have been $276 million, but for onetime downward adjustment of $12 million. The downward adjustment was taken because we missed the contractual deadline for submitted insurance claims on the small percentage of previously completed Cologuard test the.
The adjusted represents 2% of screening revenue during the relevant time periods. We're addressing this by improving our billing systems and processes and we're confident these enhancements will support our rapid growth and new product launches highlights.
Highlights for the second quarter include the highest number of people tested for cologuard by more than 60000 test.
A significant increase in the number of lives covered for Cologuard and the 45 to 49 age group.
<unk> contributions from 3 year re screening of 2 point improvement in the Cologuard electronic ordering rate to 45%.
8000, new health care providers ordered cologuard during the quarter and nearly 2.
244000 of orders since launch.
Turning to precision oncology second quarter revenue was $138 million an increase of 34%.
Growth was primarily driven by Oncotype Dx breast in the U S and internationally.
Covid testing revenue was $33 million.
The.
The second quarter GAAP gross margin was 69%.
Non-GAAP gross margin, which excludes amortization of acquired intangibles was 74%.
Sales and marketing expense was $195 million the increase was due to investments in our sales and marketing campaigns to support growth.
G&A expense was 100.
Of the $8 million, including $13 million of acquisition integration cost.
R&D expense was $106 million and included $33 million for the acquisition of PFS genomics.
Aside from PFS growth was driven by our multi cancer screening test.
Adjusted EBITDA with the loss of <unk>.
<unk> hundred $6 million and we ended the quarter with cash and securities of $1.3 billion.
Turning to our 2021 outlook, we now expect revenue between 1 point of 1705 and $1.74 of $5 billion.
An increase of $10 million to $15 million for the year, we slightly lowered our screening.
<unk> set of assumption and now expect between 1.1 and $1 <unk> 5 billion.
We've increased our precision oncology revenue assumption and now expect between 530 and $540 million. We've also.
Increased our Covid test and revenue assumption and now expect between 75 and $85 million.
Revenue for the third quarter, we expect revenue between 420 and $435 million.
This assumes screening revenue of 285% of between 285% of $290 million.
The precision oncology revenue between 130, and $135 million and Covid testing revenue between <unk>.
And $10 million.
There are 2 main pandemic related dynamics impacting the screening business reduced physician office access for our field teams and fewer in person of wellness visits since.
Since our last earnings call, we have not seen as much improvement in these 2 factors as previously expected. This.
This is in part due to the recent uptick in Covid cases.
$5 from the highly contagious Delta variance.
Starting with field team access Cologuard is very promotional sensitive the more times, we talk to physicians about cologuard the more test the order.
In person sales cost have been gradually improving but the.
They are still well below pre COVID-19 levels.
55% of primary.
<unk> are not allowing sales representatives into their office. According to a recent survey we conducted.
In offices, where we have physician access we're seeing faster growth in Cologuard orders.
Secondly in person wellness visits are limited cash.
Screening of conversations and Cologuard orders typically occur.
Care for us in the routine wellness visit that's different from most advanced diagnostics, which are the ordered outside of wellness visits.
Our survey showed 44% of primary care doctors are doing fewer in person in wellness visits when compared to pre COVID-19 levels.
Turning to operating expense for the full year, we expect to we expect.
Sales and marketing expense of $800 million to $850 million for.
For G&A, we are raising our guidance to $600 million to $625 million excluding.
Excluding the integration costs. The increase is mainly due to investments in our it and customer service teams to support our continued growth.
For R&D, we expect 410.
To $435 million the.
The acquisition of PFS genomics was expense during the second quarter, adding $33 million in R&D cost not contemplated in prior guidance.
We continue to expect for a $95 million for intangible amortization and capex of around $125 million I will.
Now I'll turn the call back to Kevin.
Thanks, Jeff exact sciences is focused on 3 priorities this year getting more people tested enhancing our customer experience and advance the new solutions.
Starting with our first priority.
Cologuard was designed to help screen more people.
Rectal cancer and find it earlier when it is terrible. According to recent CDC data between 2015, and 2018 Cologuard helped improve screening rates for Americans 50, and older by 4 percentage points.
Our survey data show nearly.
For color off of Cologuard users have never been screened for colorectal cancer.
Since Cologuard was made available we estimate it is help detect precancerous polyps and more than 200000 people in early stage treatable cancer and more than 30000 people.
Cologuard.
<unk> had especially well positioned to help screen the 19 million Americans ages 45 to 49.
The final USPS TF recommendations expanded the screening population by lowering the starting age from 50 to 45.
Colon cancer incidence in this age.
The guard has increased more than 50% since the mid 19 nineties.
People on their late Forty's typically lead busy lives and cologuard accuracy and convenience make it an ideal option to keep them screened for decades.
A recent study published in cancer Prevention research.
Showed that cologuard specificity is greater than 95% and the.
This age group.
This means that fewer than 1 out of 20 people will receive an unnecessary colonoscopy following cologuard, helping screen many people without pressuring colonoscopy capacity.
Group has since the guidelines were finalized we've seen a significant increase in cologuard coverage for 45% to 49 year olds.
We recently launched a national Cologuard television digital and social media advertising campaign aimed at educating 45% to 49 year olds about the importance of screening.
Screening and the benefits of Cologuard.
We're making it easier for people to stay up to date with screening after an initial cologuard test.
The number of re screened eligible patients as growth this year more than 600000 people will become eligible for.
For another Cologuard test.
Next year more than 1 million people become eligible.
We're investing in technology to stay connected with our customers and make ordering easier.
This gives us confidence we can help keep people screened with cologuard for years to come.
Our precision oncology team is providing better information to guidance patients and their cancer treatment decisions.
We have established deep relationships with oncologists pathologists and surgeons.
Nearly half of our oncology sales representatives have been educating physicians.
The above our Oncotype test for at least 9 years.
<unk> strong brand recognition.
Following our acquisitions of paradigm and of Cheyenne, We're now offering therapy selection tests for patients with advanced cancer, providing even more value to oncologists.
Researchers and pharma partners.
Our international team and the powerful evidence backing our Oncotype Dx breast test.
Our enabling new areas of growth around the globe.
Supported by the tail of Rx in the responder studies, our Oncotype Dx breast test.
Test was recently approved for national reimbursement in Italy.
This makes oncotype accessible to nearly 25000 breast cancer patients in Italy.
Our international presence will accelerate the availability of future advanced cancer test all around the world.
Moving.
The next priority exact sciences plans to transform cancer care by providing patients valuable insights at every step of their diagnosis and treatment.
We are working to build the best digital infrastructure in diagnostics.
Our vision has 2 main elements first enabling patients.
To take a more proactive role in their care.
Second, making it easy for physicians to order tests interpret results and personalized medicine by applying real world evidence and guideline recommendations.
Imagine a world where a patient uses an interface.
The 2 iPhone to interact with the physicians for cancer prevention diagnosis and follow up.
They completed an exact sciences multi cancer screening test and can monitor the status of the results virtually.
If the test result is positive of support system can help schedule of pet Cts.
On their confirm their diagnosis, if cancerous phone and Oncotype test may be offered to help determine disease aggressiveness and treatment options.
In the coming years, we will remind the patient to complete testing periodically through the same interface monitoring for residual disease.
And cancer recurrence.
If the cancer returns after initial treatment oncotype map can be ordered to help quickly guide them to potential treatments.
Our powerful systems will make working with exact sciences, an easy decision.
The information.
And collected across the patient's health record will automatically translate into actionable options for physicians.
We will help provide the right test of the right time partnering with providers to help bring guideline recommendations.
The life within their made of electronic medical Records system.
<unk> turning to our next priority.
Over the next 24 months, we're planning several key milestones to bring 6 innovative cancer diagnostics from our pipeline to patients in need.
This is a culmination of more than a decade of work by the exact sciences team and our partners, including the Mayo clinic.
The top gains and now city of hope.
Starting with multi cancer next year, we ex we expect to share case control data demonstrating the power of combining methylation mutations and protein marker classes.
We also plan to initiate a prospective interventional.
It'll randomized trial for FDA registration.
Moving to Cologuard 2 <unk>, we plan to share additional case control data supporting our goal to improve the specificity of cologuard, while maintaining sensitivity.
For colon cancer blood testing, we plan to share of case control data provided.
John.
And the initial look at test performance.
For Cologuard, 2 <unk> and colon cancer blood, we plan to announce top line results from our prospective Blue C study to support FDA approval of both test and helped cement our leadership in colon cancer screening.
Provided in the area of minimum residual disease testing, we expect to generate clinical validation data for our tumor informed liquid biopsy test.
And therapy selection, we plan to release clinical validation data supporting a blood based version of our tissue test on <unk>.
Tight ma'am.
Finally, we expect our on.
Our encore guard liver manuscript to be published in a peer reviewed journal. This publication will support of Medicare reimbursement submission and future guideline inclusion.
We're excited about the depth and breadth of our pipeline our scientific capabilities.
Find with our commercial scale will help us provide several new life changing cancer solutions to patients in need.
The exact sciences team is energized to continue growing cologuard and oncotype and bring new innovative tests to patients throughout their diagnosis and treatment.
<unk>, our capabilities relationships and foundation will help us achieve our mission of eradicating cancer through the power of advanced diagnostics, We're now happy to take your questions.
And as a reminder to ask the question you will need to.
The press <unk>, 1 on your telephone keypad COVID-19.
1 of your question press the pound key.
Please be advised that you are only allowed to ask 1 question and please standby now will become part of the Q&A roster.
Okay.
And your first question comes from the line of Brandon Couillard from Jefferies. Please go ahead Sir.
Thanks, Good afternoon.
Jeff in terms of the screening guidance for the back half of the year. It would imply that for Q growth sequentially steps up to something like 11%. Despite what is.
It's typically weaker seasonality can you just talk about kind of what went into your assumptions for <unk> and <unk> and your level of comfort with.
That's an area of the kind of what it contemplates in terms of of access and maybe an uptick in wellness visits.
So first just starting on the the guidance.
<unk> adjustment for the second half of the year. This is overall of $25 million adjustment for screening of about half of that relates to the 12 million dollar of onetime adjustment, we took during the quarter and the other half really relates to some pandemic related factors that we believe are temporary, namely physician office access and wellness visits.
So to your question Brett on assumptions for that for the back half of the year. What we're assuming is that we see continued modest improvement in both the access to physician offices and overall wellness visits and we know that when our reps get into a doctor's office theyre very good educated the doctor and the more times, we call on the Doctor the more.
Of the order that correlation is true today. It has been historically again it is true today, where we can see of physician.
What we're seeing right now of though is that 55% of physicians, we surveyed our underlying reps in so again assume modest continued improvement in these trends I also assume that the strong momentum we had on the second quarter again.
Again, this was a record quarter.
More than 60000 people over any of the prior quarter.
I assume that that underlying momentum continues so the things like 3 of <unk>, we are making very good progress there that things are on track for the the guidance. We outlined previously with the re screened Cologuard 45, we've got very.
The good momentum there I expect that to continue for the rest of the year and overall, there's a lot of the reasons to be excited on the back half I think the implied growth rate for Q4 is fairly similar to the rates. We've seen in other years. So I am confident that we will achieve these numbers that are implied in guidance.
And your next question comes from the line of Derrick. The browse. Please go ahead, Sir for Bank of America.
Hi, good afternoon.
Hey, Derik.
So.
Just.
Can you talk a little bit of about the precision medicine.
On franchise, how much of that was.
Oncotype and how much of that was sort of like some contributed for some of the acquired products you've had and can you also talk a little about the competitive landscape. There there's been some chatter from some private companies about some potential share shifts in that market can you sort of highlight and update us on what's going on in the Oncotype business. Thanks.
It is the Oncotype business globally had a very very strong quarter again, a record quarter for the organic business.
There was of a small contribution non material, but there was a small contribution from from acquisitions and the overall of the constant currency growth of north of 30% I feel very good about the say this business.
It really boils down to Derek is the strong evidence the unmatched evidence out there from both the U K the rack study and the responder studies. This gives the.
The teams in the field robust evidence to talk to physicians about an oncotype Dx is really of the standard of care.
So no change to that I feel very good what the service business.
And what it really provides a very robust foundation for us to grow from.
Whether it's the Oncotype map business that we launched just in May that has now launched zone to the entire sales force or the the gym extra product that we acquired last quarter the <unk>.
Sort of extra product is off to a very good start but most of the growth here was organic.
<unk> and net debt franchises in very good shape.
And your next question comes from the line of Brian Weinstein from William Blair. Please go ahead Sir.
Hey, guys. Thanks for taking the question.
With Jacob on the.
On the call here I think.
It's a good opportunity to at least ask him for his thoughts about that long list of things that Kevin that you highlighted as far as what that pipeline really looks like and really starting to rounding the shape here. So the question for you Jacob what are you. Most excited about here in the pipeline and why and then I'm also curious.
Your view about sort of the biggest challenges that you guys faced from a technology standpoint, as you look to develop these products.
Sure Brian.
What excites me is really the themes you've already heard from from Kevin and Jeff were just so unique in the both the breadth and the depth of our pipeline.
We have a full portfolio of high impact test across the entire cancer care continuum.
Screening prognosis minimal residual disease recurrence therapy selection.
Just really means a lot that we're going to continue to be the the trusted source for innovation to both patients and providers across that.
Care continuum.
Brian In addition to the portfolio, we now have the team the talent and the scientific expertise that gives us the confidence we're not just kind of has a portfolio, but we're going to of a portfolio of the best test and we know on the long run the best test always wins, we're going to continue to bring these test the market the right way.
Now with the right evidence so.
The strong portfolio strong talent wonderful expertise gives us confidence kind of the best test and we're going to support the evidence to make sure that we demonstrate the utility what really excites me at this stage is the fact that now we can also innovate at scale. So all of these.
Solutions are now completely turnkey and seamless as they transition into our lab infrastructure as we leverage the connectivity and as we bring these to our industry, leading commercial team and that's not just the United States, Brian That's globally, we already operate in 90 countries. So I feel great about how the pipeline.
Way and can now truly make a huge impact in the patient care and at scale.
And your next question comes from the line of Doug Schenkel from Cowen. Please go ahead Sir.
Okay.
Pipelines for Doug Schenkel of your line is open please ask your question.
Okay, Hi, everybody Hey, sorry.
Problems with the mute button.
I just wanted to talk a little bit more about the cologuard. So first question screening revenue grew I think it was around 10% sequentially based on your commentary on just.
From a quick map.
It seems like volume growth sequentially was 15% to 20% I just want to make sure I have that right and then.
Higher level, but bigger maybe more of a question I think we all appreciate the dynamic associated with lack of access for.
Physicians offices, especially given.
Fortunately the reality of that things seem to be trending in the wrong direction in the United States. When it comes to Covid that being said 1 might think that things like increased cologuard from its efforts the repeat of testing opportunity of backed up colonoscopy infrastructure amongst other things some of which you.
2 on site in your prepared remarks would all be positive offsets.
Especially given the need for more screening and low market penetration. So really the my questions are are you fully confident there is nothing hindering the.
<unk> mission of practice access.
We don't hear similar commentary from our peers over the course.
<unk> sizing season.
Sure.
Range and do you of any concern that some of your efforts to make cologuard less dependent longer term on physician detailing.
Not be proceeding as quickly as we hoped thank you.
For.
Why don't I take that.
The <unk>.
Of we're tremendously excited about Cologuard and where we are in delivering this record quarter is.
Driven by.
The fact that there are so many primary care physicians and.
And nurses.
And when you look at the base.
Based on who's ordering and Jeff can give more details on.
This.
The.
The health care providers, who typically have ordered the least are ordering at a higher.
The rate than previously, especially compared to historically, our most frequent.
Recently.
Ordering physicians and what this tells you is that yes.
On Cologuard is always going to be sensitive to.
2 visits by our field force and that's because of the nature of the patient the patient here is a patient who.
It comes in who isn't the sick.
And in a time like this there is of triage of occurring in the primary care setting focusing on problems with diabetes and obesity and high blood pressure and other.
Serious conditions that.
Frequent of physicians and nurses are triaging and so they get around to prevention and screening after all of that.
And what this tells you the net of this is that there is tremendous strength in cologuard and that strength of broadening and deepening and we know as these offices start to.
The open.
And as we see more of the appropriate wellness visit patients into the offices that we will see even stronger growth because again, it's the the.
For the best customers are the ones who aren't growing.
At the pace that you would expect of maybe Jeff could add to that yes, so just to add to that the.
The day that Kevin referred to as we looked at different Quintiles of doctors and what we see as very very encouraging the.
Bottom of 60% of doctors based on pre COVID-19 ordering levels when.
When you look back at them over time they.
<unk> to ramp throughout the Covid pandemic effect in the second quarter. The order rates are at the highest season of event. So that group is driving the growth in these of the physicians who had not previously fully adopted cologuard where.
Where we see is a slightly different dynamic as the top 40%. These are the true believers the.
The.
They are some of the strongest ordering physicians their orders are down on average of about 15%.
And why that is is because the wellness visit volumes are down probably the somewhere in that range and recall of Cologuard is ordered primarily during the wellness visits.
Non difference between Cologuard.
And most of the diagnostics out there as of Cologuard is ordered for the asymptomatic average risk person. These are people who think they are healthy we're trying out the fine cancer early.
In diagnostics you ordering the test for somebody who is already sick or they have already been diagnosed with something so of Cologuard is unique the top 40% of doctors.
They will come back this is a temporary of dynamic they'll come back as wellness visits return.
And all of US access improves so I am confident that will happen.
Where it is happening and where our reps can get back in there. This correlation we've talked about for many years. The more times you call. It a doctor of the more of the order that is returning so.
Doctors very optimistic that as things open up cologuard robust growth will continue.
And your next question comes from the line of Catherine Schulte from Baird. Please go ahead ma'am.
Hey, guys. Thanks for the questions towards the beginning of the year you talked about expect dailies 40 million from.
We're $5.49 in over $100 million from re screens, how are those 2 drivers progressing relative to your expectations on related to that I believe we should be getting the technical update for next years heating measures pretty soon what are your expectations around 45 to 49 getting included in those following the USPS.
For an update on how big of an impact could that have next year.
Sure Kevin This is Jeff on.
<unk> is a very exciting opportunity there's a lot of the good news there I am very confident that we will achieve at least the 100 million of revenue this year and for Cologuard and next year that number will continue to grow.
Do you have the as you know next year of over 1 billion more people become eligible for re screening.
On top of that way why Reskins are so exciting is that those patients the.
Good day risk in the order comply at a much higher rate over 10 points higher than the first time screening.
The team we have dedicated to this is doing a fantastic job.
Going out and getting more people retested.
Cologuard 45 off to another very good start in 1 of this is so excited of the 19 million people ages 45 to 49.
Essentially the Olin screened and we believe of Cologuard is the ideal test for that age group things are off to a very good start there on.
If you compare the initial trajectory of the adoption for that age group. It is pacing above the trajectory of the Cologuard had and the 15 over age group. When it was first launched so things are off to a very good start there and I am confident we will achieve at least $40 million for that age group.
And your next question comes from the line of Dan Arias from Stifel. Please go ahead Sir.
Good afternoon, guys. Thanks for the question, Kevin or Jeff I know the situation is fluid and so confidence around the number is certainly not 100%, but can you just give us a sense of how in your mind, you're thinking about sales force.
The activity in the rebound there just through the end of the year when it comes to the screening outlook on when you're assuming that you are back to 3 quarter strength by <unk> or by year end I mean, what's the base case right now.
Well I don't think its going to be at that level before the end of the year, it's taken a step back.
With.
The uptick in.
Covid over the last month.
And we expect that to accelerate just like we've seen it previously we.
We expect that offices are going to continue to be conservative.
We don't.
Don't have.
With the visibility into this then.
Probably what you have which is.
This is an important driver long term and also long term keep in mind that we.
There are 45 million Americans that remained on on screen Colin.
Great is the perfect solution to catch up on the backlog to capture the 45% to 49 population.
And when things do start to open up.
We believe that we will.
It will ramp up our growth beyond even what it is today.
No.
We don't have visibility into how these offices are going to open up we just hope people go out and get vaccinated and Thats, our message and our message to our employees and to their families.
That is the solution.
Once that starts to occur we will all be in a better place.
And your next question comes from the line of Vijay Kumar from Evercore ISI. Please go ahead Sir.
Hey, guys. Thanks for taking my question.
Jeff on 1 on the guidance here.
If I understood you correctly.
The the 12 million of reduction in the quarter that was just on the reimbursement.
Right.
Non op ex.
<unk> revenues would have been.
Basically implies your volumes for <unk>.
Pretty strong in the quarter.
So I don't understand the of the I.
I guess the back half when Youre, saying there is another 30 million reduction is that the reimbursement issue on.
You are just being cautious on the volume side of the equation.
So.
Thanks, Vijay the overall guidance adjusted of $25 million.
Half of that is related to the $12 million onetime adjustment in Q2, the other half call it $12 million to $13 million is based on our updated look at the.
The back half of the year, so what Kevin just talked about.
Sales force access it on the field and wellness visits given the recent spike in Covid cases things are not improving at the pace of we had previously expected. So we continue to expect growth on the back half.
We don't expect as much growth as previously based on this recently.
Spike in Covid.
Understood.
And your next question comes from the line of Andrew Cooper from Raymond James. Please go ahead Sir.
Hi, everyone and thanks for the question.
Maybe just to take a little bit different angle on on some of the same topics.
The precision oncology.
The space was strong you talked about Oncotype Dx breast.
And a lot of that volume comes from screenings that needed to occur kind of flowing through the pipeline. So maybe just walk us through why is it that business is coming back stronger versus youre getting more cautious on the screening side is there of timing dynamic.
We should be thinking about in terms of just flowing through that funnel or anything else. We should think about in terms of why 1 working through the backlog might be happening a little bit faster than 1.
Yes. This is Jeff the different businesses.
On the precision oncology business is more heavily dependent on mammograms.
Of which are largely back to normal did return to normal earlier in the year. So that's a different dynamic also you have the.
The fact that around 40% of breast cancer diagnoses in this country has started home through a self exam or pain.
Which is different in colon cancer.
Colon cancer overall is still muted.
In this country. It has been so the backlog Kevin referenced continues to grow cologuard as the solution here Cologuard has been growing.
Year on year since June of a year ago. So of Cologuard is helping address this problem, but it is a different animal.
Animal.
The headwinds that we are up against and Cologuard are wellness visits decline in sales force access declines again, both temporary and the teams are doing a nice job on overcoming those.
And I think this is Kevin I think it really highlights the strength of the Oncotype Dx brand for somebody who has been diagnosed.
<unk> with.
The early stage breast cancer friend of mine was.
Recently diagnosed in the.
Early stage breast cancer and Oncotype was just automatically ordered in that case by the surgeon.
And it's.
It is different because that page.
Patient.
Was diagnosed vs.
On screen healthy patients, many of whom arent going back.
Into a physicians office and we think that we are being appropriately.
Realistic about those 2 dynamics offices.
And patients' willingness to go back into a primary care setting, especially older patients, which comprised of significant percentage of our screw.
Screening population.
And your next question comes from the line of Mike Matson Sykes from Goldman Sachs. Please go ahead.
Sure Yes.
Thanks very much for the question.
Just on the Pfizer sales force they've been a little bit more conservative in the past about kind of returning back to the field as they are they still back deployed and if we get a resurgence may they pull back and then secondly are you seeing the correlation on our regionally and theres been a lot of differences in terms of vaccination.
Nation rates are you seeing any correlation between access the doctor's offices and wellness visits in areas that have higher rates of vaccination. So we can kind of extrapolate that as we see vaccination rates rise.
Yes.
Sure.
Our partner Pfizer has been a great partner they have an amazing field force with the.
On an average.
14 years of <unk>.
Experienced in the primary care setting they've been an amazing partner.
They did come back to the field in late May truthfully. That's later than we would've hoped but we understand every company has to make their own decisions.
And.
But certainly as the dynamic because it takes time for them to then.
Does that have an impact on people who is the test get completed Theres obviously.
A lag between the time of test is ordered and the time the time that the test is completed.
Price or helps us reach more of physicians.
<unk>.
And we're always evaluating ways to make.
Make that partnership better and stronger.
And.
We think that their team will help us.
The deliver good results this year and well into the future.
Matt This is Jeff I'll take the other part of the question, which I believe was on vaccination rates and the impact yes.
Correlation of really comes down to where you have higher vaccination rates you have lower.
I'll say fewer new cases, being diagnosed and when you see hotspots form and we've seen this.
Well of course of the pandemic, where hotspots of rise that's when you see behavior changed behavior in terms of physicians being more cautious in terms of letting.
Sales force Representatives into the office also patients are also are more cautious on going.
Over the Honeywell missed visits.
Do you think you are healthy.
You're not worried about anything right now and there is of Covid Spike you are less likely to go out there and then get the physical so yes. There is a strong correlation between vaccination rates and COVID-19 and our ability to go out and educate doctors.
And your.
Your next question comes from the line of Patrick Donnelly from Citi. Please go ahead true.
Thanks, guys maybe.
Maybe just following up on on early on Jeff on the re screening opportunity can you just talk about how momentum is building there how you refined your message to increase kind of the capture of compliance rate there kind of keep it.
As of close to the 3 year Mark as possible and then secondarily just on electronic ordering how you are progressing there and again trying to push push volumes that direction.
Patrick I've never been more excited about risk weighted this is a hugely important part of our business. Our goal is to get more people screened and keep them screened.
Of course of their lives and we are getting more successful really by the weekend of doing just that.
As you know over 600000 more people become eligible this year. So it is something we've invested in and we're seeing improvement in.
What it boils down to is that when a patient gets that risk in order the <unk>.
Comply at a day.
Over the very high rate for our communication with patients has been exceptional.
Where we've seen even more improvement as of late is our communication to physicians. The goal here is to make re screen re screening of reordering. If you will automatic we went it makes it exceptionally easy for physicians to identify who needs to be test it again.
And for them to place that repeat order, so thats, where the efforts have been and I'm really proud of what this team has accomplished there's even more in store with next year over 1 million more people, becoming eligible this team is going to get it right and we're also seeing the the time.
After they become eligible at the time to them actually completing.
On the test is is improving so theres a lot of good news to report on risk screening.
And your next question comes from the line of Dan Leonard from Wells Fargo. Please go ahead Sir.
Great. Thank you just 2 quick ones for me 1 Jeff what would you say the your guidance of.
Again at this point, if we were to have a real flu season in the fourth quarter or is it looks like we might or is that still something which could impact access and then secondarily. How sensitive do you think your clinical trial and clinical research timelines would be too to the current case rates are you able to to manage with the current infection rates are you.
The revision.
There is some correlation between case rates on your ability to enroll in your in your studies.
Data on the first 1.
Guidance bakes in everything we know as of today clearly in the middle of the pandemic with more head fakes than we could probably count right now there's a lot of uncertainty out there. So we've baked in everything.
Now I can't predict what's going to happen with flu or COVID-19 months from now so we've taken everything thats out there on the news that you and I can both see on the.
On the case rates.
Can't impact of enrollment you recall last year.
We're trying to enroll our Blue C study, which will get us for Cologuard, 2 <unk> and our colon blood product.
We know we did pause blue C for about 5 months last year because of this massive spike in cases, so it can impact.
We do see of big spiked it will continue to impact enrollment in some of our key studies.
And your next question comes from the line of Mark Massaro.
<unk> from <unk>. Please go ahead Sir.
Hey, guys. Thanks for taking the question.
I wanted to ask maybe of 2 partner I guess the first is obviously there is a lot of investor interest in the margin space.
You acquired the of shy on Jim extra test.
Curious how that integration.
<unk> is going I believe you are trying to merge that.
And to the target's technology, and so I guess can you maybe comment about timing of data or potential submission to <unk>.
And then another another question I had is can you just over the years <unk> been certainly looking at a lot of assets.
<unk>.
Last 2 years <unk> been pretty highly acquisitive can you just give us a sense for.
On bids Dev and just looking at other assets.
It would be super helpful. Thanks.
Sure. Thanks Mark.
So with minimum residual disease testing we are for.
Focused on delivering the very best test for patients and we love how we're positioned from a scientific expertise and technology standpoint, the <unk>.
Combination of of Cheyenne.
And the TARDIS technology with the proven evidence generation capability and the deep commercial relationships.
That we exist. So the next steps then would be to optimize the test generate validation data.
Prepare to make that test available to patients.
The natural fit with our breast cancer capabilities Oncotype Dx, we're seeing about half of all of breast cancer.
Patient tissue samples.
Tumor informed approach.
It starts with that tissue.
The deep relationships, we have with oncologists.
And then tired of so TARDIS is a really powerful targeted sequencing chemistry, and we believe it will allow.
Answer to achieve.
The highest level of sensitivity.
Without sacrificing sacrificing specificity.
And then of Cheyenne has this proven ability to do this difficult sequencing is not just the sequencing capabilities as the bioinformatics.
Low us.
And this is a well oiled machine.
Our partnership with city of hope and other.
Teams around the country are important and we have already signed.
Signed partnerships relating to multiple studies to.
On to prove out the capability that we have.
With targets and of Cheyenne.
It's important it's about a $15 billion total available market and to day. The class is less than 1% penetrated it's going to change the way that cancer is.
<unk> treated is monitored.
After treatment.
And we plan to play a very important role in how this technology is adopted both in the U S and globally.
And your next question comes from the line of Jack Meehan from net research. Please go ahead.
Okay.
Thank you.
I.
Was hoping you could give us some updates on oncotype mapped.
Weather.
<unk> lives how much revenue of might've contributed after the May launch and then also I know its going through the code pricing process now at CMS any sort of bogey, you're thinking about where that could shake out in terms of pricing.
Jack This is Jeff I'll take that 1 other.
All of the type of map is off to a very very good start recall the the 2 key differentiators for that product.
1 of the turnaround time the majority of our tests are reported result within 3 to 5 working days of a very quick turnaround time and the sample input.
The requirement for the test is very low which allows us to report the result out on a very high percentage of patients you think about the average person who uses of this test.
The stage cancer, they need an accurate result quickly and we can help play a very important role in that decision.
Average off to a very good start here, we've had multiple large.
Large payers started covering the test. It is also covered by Medicare already.
This really speaks to the power of the exact sciences platform here, we've got deep relationships with payers. When you think about the Cologuard business Oncotype Dx breast prostate and now map the.
The broad on.
Deep relationships behalf all of us to achieve a high level of coverage as we bring new products to market. So things are off to a very good start with map in the may timeframe.
<unk> has now been launched to the entire precision oncology sales force. So about a 100 reps as Kevin talked in his remarks, he's a very experienced reps and they are hungry.
For new product.
This team is going to do a very good job and much of that test.
And your next question comes from the line of <unk> <unk> from SVP Leerink. Please go ahead.
Alright, great. Thanks, Kevin.
Kevin and Jeff.
2 part question here.
I think you were saying that they are obviously in the number of drivers and we all recognize that I mean, the first reported back year olds coming into the mix. The 3 years for Reorders. There is electronic ordering there is greater recognition for cologuard. So.
But despite all of that the rep access the low end and I. Appreciate your details on the lowering of the guidance the.
In the second half for Cologuard.
But we're seeing the short there is some hesitancy for the oncology reps too.
For the clinics because these patients are immunocompromised, but primary care practices are just trying to open more broadly they're trying to get back to normal of.
Jeff I think you talked about maybe I think at the last.
That you are heading closer to sort of 50% sales reps sort of doing in person. So just trying to understand.
That out maybe second half doesn't recover 100%, maybe it gets the 70% to 80% but.
And I appreciate your survey and I appreciate the Delta of air into the still out there, but Y axis of primary.
Caldera practices would continue to sort of decline in the second half and then just a quick clarification on the clinical data for the blood based on the CRC screening.
Hey, Tony I mean, let's take the is 1 at a time.
So so we are to make it clear we are not per.
Primary themes that access declines in the second half, it's not increasing at the rate that we would have expected to largely because of the current situation with the pandemic.
Correct, Puneet I think to put some numbers behind it.
The data.
Project noted on prior calls was the total number of face to face details in primary care.
And then it did improved modestly during the second quarter to Kevin's point I expect it to improve in the back half of the year interest with the ryzen Delta and the huge spike in case counts.
We had and for.
What we're seeing just worth of their own data I don't expect it to improve as much as we previously thought.
I wanted to make sure we got that question for me before we took the second 1.
Yes.
Yes.
To the person who would you let punit finished the second question since I rudely interrupted.
Sure, Sir and mischief of credit. Please press star 1 again for you to be placed on Q.
Okay.
Well, we'll we hope the next person ask the same question. So whoever is up next.
I don't want to go.
Okay.
And im not seeing his line from Star 1 again for the second question is James should we proceed Oh I'm sorry, yes.
The.
Yeah.
But let's keep moving forward here.
Mr Soda plus from SVP Leerink. Please go ahead Sir.
Yeah, Hey, guys sorry.
Thank you Kevin for setting the backend just a quick clarification on the data for the blood based the CRC screening study in the second half.
Is that just wanted to get the sort of the timing on that and is that something you can present at a venue like the ACG.
On a conference like that just wanted to get the timing on that and thank you again for the great. No question. Thank you know, which the blood based colon or multi cancer.
Okay.
Yes.
Yes.
Putting the likely timing I guess this is dependent on publication and acceptance of <unk> conference, but these are likely timing for our CRC of blood product is in the sometime in the next year. The first half of next year. This is case control data.
Multi cancer case control data also likely to.
English at a scientific forum in the first half of next year.
Okay I appreciate it guys. Thank you.
Thanks for joining.
And your next question comes from the line of Alex Nowak from Craig Hallum. Please go ahead Sir.
Hey, good afternoon, everyone just a follow up the Canadian question there.
To be part of the case control data for CRC blood.
Kevin you said on the prepared remarks, it's going to be.
On an initial look the.
<unk> initial seems to be new around the case control data. So am I right, there and if not do you still expect the data to support the ultimately the FDA approval and reimbursement of that pass or do you need more data do you think.
Or just the.
So with CRC blood, we're excited about the opportunity as we've said in the past we believe that we the.
For the test that we developed with the curated methylation panel.
And potentially other marker classes that we havent disclosed.
We'll generate.
Sensitivity and specificity equal to or better than others that have shown their data publicly.
Ben we've had the luxury of not having to show our data and.
When I say initial I don't mean initial to us I mean initial to the public.
<unk>.
That data, we think will support.
Continued progress as we move forward with our Blue C study and ultimately FDA approval and making that test available now.
It's also makes sense to comment on.
On where we think of blood test fits into the overall.
Schema of the.
Colon cancer screening modality to day, clearly the 2 best test or.
For the 2 best ways to get screened for colon cancer or colonoscopy and Cologuard why.
Early detection is what matters, the most and with <unk>.
<unk> and Cologuard.
On the guideline groups.
0.2, 95% sensitivity for colonoscopy, 94% sensitivity for Cologuard for stage, 1 and 2 that's a high bar for a blood test.
And nobody has been able to show show anything close to that if you're on your loved 1 once get screened for colon cancer opt for the most sensitive test.
And we.
We believe that Cologuard in particular of Cologuard to point on it is going to set yet a new bar for noninvasive colon.
Screening and the ease of use is actually easier than the blood draw. So there's been a thesis out there that blood kind of reinvent the game the data arent there to <unk>.
So that either from a sensitivity specificity standpoint or from an ease of use standpoint. It's why we believe we will have a range of test available we continue to believe.
If youre going to get screen is either with cologuard or colonoscopy and donut for the fit test or blood test.
That is present today so.
Hopefully that answers not only the question you asked but also a question you didn't ask.
And your last.
Last question comes from the line of Kyle <unk> from Canaccord Genuity. Please go ahead Sir.
Thanks, Hey, guys. Thanks for taking the questions. So on the slide $13 million headwind on the second half in your opinion is that weighted more towards the willingness or the.
Sales force access just wanted to know how we should kind of perceived those on those.
Going forward and if you could also like similarly rank order maybe some of the drivers of upside that give you some more optimism, whether that's epic or re screening et cetera, that'd be helpful. And then just 1 timing question on the margin clinical validation data is there any.
The timing could kind of tell us the better understand how to think of it as well. Thank.
Thank you.
This is Jeff on the $13 million.
If you think of the 2 pandemic related factors sales force access in wellness visits of both of our very important here.
What I want to make that clear the.
If you look at the where we are relative to pre pandemic levels sales force axis is for.
Far more impacted.
55% of primary care doctors, we surveyed say they are not aligned primary care reps into their offices, so that 1 month.
Much further from where it would have been wellness visits are back to call it 80%, 90% of prepaid and the levels.
As far.
As MLD data timing I think it was 1 of them.
The timing of that at some point next year, we haven't been more specific on that but next year very good progress being made in MLD.
As far as growth drivers of it looked at the beauty of this model is that for screening. There's many growth drivers out there. There are 45 million people today, who need to be screened that's.
That's a big opportunity.
Sales force is always 1 of the top drivers in health care for US I think it certainly is and Thats why getting the reps back out there in front of physicians is so important.
For 3 of <unk> screening this year of guided to at least the $100 million. So that's another really big 1 longer term.
<unk> re screens become I would think of at least half of our revenue. So that 1 will be a big driver for many years to come.
Electronic ordering.
Up 5 points year to date, that's of a nice tailwind and we continue to expect at least 50% of cologuard orders to be electronic by year end. So these factors are all very important in the.
They actually work together, so it's hard to say, which ones of the most important but they are all important together I do want to clear up 1 thing I said in my remarks.
Guidance for Covid testing for the year is $75 million to $80 million I think in my remarks, I said, 75% to 85% we're looking for 75 to 80.
Yeah.
Yeah.
[laughter].
[laughter].
And this concludes today's conference call. Thank you all for participating you may now all disconnect.
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Yes.
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Good day.
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