Exact Sciences capitalizes on Cologuard approval, reimbursement with $179M follow-on

Exact Sciences' Cologuard test--Courtesy of FDA.gov

Exact Sciences ($EXAS) had a great 2014--it garnered an FDA approval for the first stool-based DNA colorectal cancer screening test in August and snagged reimbursement approval for a specific patient population served by the Centers for Medicare & Medicaid Services (CMS) in October.

But this year, investors are hesitant to drive its valuation up further--as they wait to see how commercialization proceeds. Still, Exact Sciences had ample traction to raise $179 million in a follow-on offering that sold 7 million shares at a price of $25.50 each.

Underwriters Jefferies and Robert Baird have the option to sell another more than 1 million shares--which if executed would push the financing total to in excess of $200 million.

Wall Street punished Exact Sciences for the dilution--sending it down 6% to below the offer price in early trading after the offering was proposed. That puts the company's shares down roughly 7% in 2015, but still up by more than half in the last year. It has maintained quite a respectable market cap, for an unprofitable med tech, of about $2.3 billion.

Exact Sciences ended the second quarter with around $210 million in cash and a net loss of $39 million for the quarter--so, that means that with the latest infusion it will have roughly 10 quarters of runway at the current burn rate.

Last quarter, Exact Sciences had $8.1 million in revenue. That was based on more than 21,000 completed Cologuard tests for the quarter, which was a gain of more than 90% over the first quarter. The number of ordering physicians also grew by 77% over the quarter to 14,700.

Since its 1995 inception through the end of last year, it had already spent $421 million and it hasn't quite seen its way to breakeven yet. One accomplishment that it expects this year is obtaining a universal CPT code from the American Medical Association (AMA), which would make it easier for insurers to reimburse for the Cologuard test.

CMS already committed to reimbursing once every three years for the Cologuard test in patients who are age 50 to 85 years old, asymptomatic and with an average risk of developing colorectal cancer but without a family history of the disease.

The company estimates that with a 30% test adoption rate and a three-year screening interval that the sDNA market in the U.S. is more than $2 billion, with the global market topping $3 billion. Exact Sciences hopes to expand Coloplast into the population in their 40s, as well as into related indications. It's also developing additional products, such as esophageal and pancreatic cancer detection with the Mayo Clinic and blood-based lung cancer screening with the MD Anderson Cancer Center.

- here is the release

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