The Prospects for EXACT Sciences Corporation (NASDAQ:EXAS)

Even though it reported a third-quarter loss that exceeded Wall Street’s expectations, EXACT Sciences Corporation (NASDAQ:EXAS) received good news on two fronts this month.

First, Medicare officially made Cologuard, the company’s noninvasive colorectal cancer screening test, available to its beneficiaries on Oct. 9 and issued a preliminary pricing decision. The company said it was pleased with the early uptake of Cologuard since Medicare's final national coverage decision.

More good news followed on Oct. 22, when MDVIP, the leader in personalized preventive medicine with a nationwide network of over 750 affiliated primary care physicians, agreed to make Cologuard available by prescription. The agreement with MDVIP reflects Exact’s strategy of targeting large groups and systems across the United States that offer centralized decision making for new screening methods like Cologuard.

The Madison, Wis.-based molecular diagnostics company’s offering is the first and only FDA-approved stool-based DNA test.  Stool-based DNA (sDNA) technology is included in the colorectal cancer screening guidelines of the American Cancer Society and the U.S. Multi-Society Task Force on Colorectal Cancer.

Over the past year, Exact shareholders have been rewarded with stock price that has more than doubled. They can expect an even bigger payoff if the company can achieve its goal of becoming the market leader for a diagnostic screening product for the early detection of colorectal pre-cancer and cancer.

The disease remains a daunting challenge.

Even though colorectal cancer is highly preventable with screening, an estimated 23 million Americans between ages 50 and 75 are not getting screened as recommended. As a result, colorectal cancer remains the second-leading cause of cancer-related deaths in the United States. For those whose cancer is detected at an earlier stage, the five-year survival rate can be greater than 90 percent. Colorectal cancer is often considered the most preventable, yet least prevented cancer due to the lack of patient compliance with screening.

Exact hopes to substantially boost compliance with its simple-to-use test. Once a physician orders the test, a kit is mailed directly to the patient's home. Cologuard does not require dietary restrictions or bowel preparation prior to taking the test. The patient then collects a stool sample in the Cologuard collection kit and sends the kit back in a pre-paid mailer to the Exact Sciences lab for testing.

At the lab, the stool sample is analyzed to yield a single test result—positive or negative for the presence of precancerous polyps or cancer. Patients learn of their results from their physician in as little as two weeks. Cologuard analyzes both stool-based DNA and blood biomarkers and is designed to detect DNA alterations and blood released from cancer and precancerous colon lesions. If a patient has a positive result, the patient will need to undergo colonoscopy.

In a 10,000-patient clinical study Cologuard detected 93 percent of curable stage cancers, a 25 percent improvement from the most commonly used fecal blood test called FIT.

The company believes that Cologuard has the following advantages over other screening options:

• It detects both pre-cancers and cancers.

• It is non-invasive and requires no bowel preparation or dietary restrictions like some other


• The sample can be collected easily at home and shipped to the laboratory, where the testing

would be conducted.

Because of its superiority, Exact believes Colonguard offers a substantial market opportunity.

Assuming a 30 percent test adoption rate and a three-year screening interval, the company estimates the potential U.S. market for sDNA screening to be more than $2 billion and the potential global market opportunity to be greater than $3 billion.