Exact Sciences CEO Kevin Conroy typically chooses his words carefully in interviews and public statements to investors, but he isn’t shy about making bold statements when it comes to the potential impact of his company’s newly-approved diagnostic test for colon cancer.
“Cologuard may represent one of the most significant advancements in cancer screening in the last couple of decades,” Conroy tells Xconomy.
That remains to be seen, but the Food & Drug Administration saw enough promise to approve Cologuard earlier this week, making it the first non-invasive, stool-based DNA screening test approved for colorectal cancer. Also this week, the Centers for Medicare & Medicaid Services (CMS) issued its proposal to cover the Cologuard test—which the company priced at $599 per patient—once every three years for Medicare patients who meet certain criteria. A final coverage decision is expected in October or November, after a public comment period, Exact says.
Exact’s stock (NASDAQ: EXAS) closed Wednesday at $17.55 per share, trailing the 52-week peak of $19.15, but well above the 52-week low of $9.53. The company is valued at $1.44 billion.
But for months, Wall Street investors have viewed these federal approvals as simply a matter of time. Now, it’s finally time for Madison, WI-based Exact to prove itself in the marketplace.
“It’s now incumbent upon the [Exact] team to deliver on the promise of Cologuard,” Conroy says. “And we look forward to that challenge.”
First on the agenda is unleashing Exact’s beefed up sales and marketing team on primary care physicians and large healthcare systems, working to convince them that Cologuard should be recommended to at-risk patients as a screening option and should be considered as a possible replacement for fecal blood tests, Conroy says. The wording of the FDA’s approval should help because it “clearly positions Cologuard as a primary screening option, rather than a secondary option” to be used only if the patient refuses to undergo a colonoscopy, according to a note to investors from analyst Jeffrey Elliott at Milwaukee-based Robert W. Baird.
Also on Exact’s checklist is persuading private health insurers to cover the test. That might not be a huge challenge since private insurers often follow CMS’s lead.
Cologuard is also new territory for patients, who will be expected to ship their own stool samples to labs for analysis. Conroy doesn’t think that will be a “meaningful barrier” for patient adoption. He sees Cologuard as more patient-friendly than existing options for colon cancer screening, such as the need to take time off of work and other hassles involved with colonoscopies. (It’s important to note that Cologuard isn’t meant to replace colonoscopies, but rather to offer a non-invasive test that would encourage more people to get screened for colon cancer and, if Cologuard detects the disease, to provide a more compelling reason to undergo a colonoscopy.)
“There is no method of colon cancer screening that is a pleasant method,” Conroy (pictured left) says. “Cologuard is very attractive because it can occur in the privacy of your own home.”
As Exact begins to market the test, it’s also ramping up staff. It already employs about 300 people, and plans to add 20 more sales reps by the end of the year, Conroy says. Exact may also hire more lab and customer service employees, depending on demand for its product.
Exact has come a long way from where it was five years ago. Once located in the Boston area, it was down to $30 million in cash, its stock was trading as low as 80 cents per share, and it had no clinical trial data it could leverage into a commercial diagnostic test.
Exact convinced Conroy and chief operating officer Maneesh Arora to take over the company in 2009. The pair had previously steered Madison-based Third Wave Technologies to a $580 million acquisition by Bedford, MA-based Hologic (NASDAQ: HOLX). Aided by a $1 million loan from the state of Wisconsin, Exact moved operations from Boston to Madison.
The company hasn’t looked back, creating Cologuard through a combination of Exact’s existing technology, licensing some technology from the Mayo Clinic in 2009, and further developing the test in-house with help from Mayo Clinic researchers, Conroy says.
“Obviously everybody is thrilled,” he says. “It’s a validation of five and a half years of tremendously hard work.”