Exact Sciences ($EXAS) President and CEO Kevin Conroy previously promised that 2014 will be all about getting the company's Cologuard colon cancer test to market. Now, the company will be armed with close to $120 million to get the job done.
The Wisconsin company announced recently that it would unleash a public offering of 10 million shares of common stock, priced at $12.75 apiece. The grand total raised, after deducting commissions and other expenses, should be about $119.7 million, and the offering was expected to close by April 9. Just last June, Exact Sciences brought in $63.7 million through a stock sale intended to keep the FDA process moving.
News of the company's decision to seek more funding came just days after the FDA's Molecular and Clinical Genetics Panel of the Medical Devices Advisory Committee voted 10-0 that Cologuard's benefits outweighed any risks. The cutting-edge stool test, which identifies colorectal cancer through 11 biomarkers, has a much higher sensitivity to colon cancer than current standards of care and performed generally well in a 10,000-patient trial. But it wasn't perfect, showing low sensitivity to precancerous polyps and mixed results when used to test polyps two centimeters in size or bigger. That data initially spooked shareholders last April and caused a 30% dip in share price. A rebound followed. Even with the test's data shortfalls, it generated better results than the current standard of care, which includes less sensitive fecal tests or colonoscopies, both of which don't often don't spot cancers until they are more advanced.
A positive FDA panel vote isn't binding, but regulators usually follow the panel's recommendations. Investors, however, have been mixed about Exact since that milestone. The company's stock traded at $12.90 late morning on April 8, down slightly from the previous day's close, but the number represents a decline of more than 5% from that initial March 27 surge in the wake of the panel vote.
Exact has been aiming for a U.S. market launch for months, having submitted the final module of its Cologuard premarket approval application on June 7, 2013. With that goal in mind, Conroy, speaking in the context of the company's 2013 year-end financials, assured investors that all eyes are on making a 2014 commercial launch for Cologuard happen.
"During 2013 we … focused on commercial readiness and operational excellence, and are well prepared for Cologuard's launch, pending FDA approval," Conroy said in a statement issued in February. He added, "During 2014, we are focused on the launch of Cologuard, providing world-class service through our clinical lab to physicians and patients that increases screening compliance, and continuing to innovate to build future value."
Exact's ability to raise nearly $120 million in financing from the public markets shows that investors, hesitations aside, see the company as having a good shot at getting there.
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