Thursday, March 6, 2014

Exact Sciences Corporation

I will attempt to make a short and succinct overview of Exact Sciences Corporation in this post.  Please do your own due diligence.  I would recommend listening to their presentations, they present the information on their product better than I can.  Disclosure I have a position in this company.


Exact Sciences prior to 2009 was a typical biotech stock full of hype but little substance.  They had a great idea, but incompetent management and perhaps their technology was just a little ahead of it's time.  If you view a chart of the stock from inception, this becomes clear (p.s. don't let the early stock price fool you, the market cap back then compared to now is like a pebble besides a boulder).  Their idea was to create a non-invasive colorectal cancer test based on DNA shed by pre-cancerous lesions and cancerous lesions in the stool.  However, they elected not to go the difficult, time consuming, and expensive route of FDA approval via PMA, which means that their test could not be marketed by law.  Long story short, they really botched it, and their product was not ready for primetime anyway, as it was more or less a "laboratory experiment" that required time consuming manual laboratory work.

In 2009 the board of directors hired a new CEO, Kevin Conroy, who had successfully led a small company, Third Wave Technologies, with a medical diagnostics test for HPV through the FDA process and his Company was bought out by Hologic.  Kevin Conroy and some of his top executives brought in Graham Lidgard, one of the world's foremost experts on molecular DNA diagnostics and established a great working relationship with the Mayo Clinic.

Through their relationship with the Mayo Clinic, Exact has been able to completely renovate the Cologuard test to the point that it can't be compared with the technology that existed in 2008 and prior.  Their test and all the 2 DNA methylated markers (BMP3 & NDRG4) and 7 KRAS mutations, Beta-Actin & hemaglobin for a total of 11 different metrics.  This is cutting edge and patented.  Not only that, but during their 10,000 patient Deep-C trial which reported it's Phase 3 results back in April 2013 and beat its primary endpoints, the testing procedures were fully automated just like they will be when the test goes public after pending FDA approval.

Their Deep-C trial was the first colorectal trial of it's size, ever.  It directly compared Cologuard to both Colonoscopy and FIT.  FIT is a stool test that tests for blood in stool, and has rather poor sensitivity for cancer, let alone pre-cancer.  Their primary endpoints were met with a CRC sensitivity of 92% and specificity of 87%.  Precancerous sensitivity was 42% for polyps of <1cm, 66% for polyps >2cm, and even higher for high grade dysplasia (which is when a polyp is on the verge of becoming cancerous).


Exact Sciences has withheld all the data, aside from their top line numbers, pending peer-reviewed publication in a top medical journal.  This publication will be in this quarter.  It will directly compare Cologuard to FIT and colonoscopy.  At their last presentation, Kevin seemed to believe it would be sooner, rather than later.  Their FDA panel review is scheduled for March 27th.  It should also be mentioned that EXAS is the first company involved in a pilot program with medicare for joint review with the FDA, and that this program will allow for them to drastically reduce the time and cost associated with achieving medicare approval for their test.


Exact intends to develop and patent stool DNA markers for the entire digestive tract, and ultimately down the road we could see a single stool sample allow for screening of colorectal cancer and precancer, pancreatic cancer, stomach cancer, and esophageal cancer.  This test could also conceivably end up screening for lung cancer as well.

Exact is also currently enrolling patients for their IBD (Inflammatory Bowel Disease) Oceana study.  IBD currently inflicts over a million people in the USA, and because of the severe inflammation of the bowel in these patients, regular colonoscopy is not very effective as the Doctor can not see into the inflamed tissue folds well, nor is virtual colonoscopy an option for these people.  Not only that, but if you compare the symptoms of colorectal cancer to the symptoms of IBD, they are virtually identical.


Exact Sciences has states that through a crosswalk analysis of medicare's current billing codes, they expect their test will be reimbursed somewhere between $400 and $500.  Currently there are 10 million FIT tests performed annually in the USA, and Exact knows which doctors (by name and address) perform the bulk of these tests.  FIT tests perform poorly and require annual screening to be even moderately effective.  The compliance with these tests has been proven to be dismal.  Exact's obvious first target market will be to replace these FIT tests.

Their FDA Advisory Committee meeting is coming up on March 27th, and Peer Review publication in a top shelf medical journal is due out any time, but may not come out until right around the FDA meeting at this point.

Well.. that's it for now.  If you have any questions feel free to ask!