Exact Sciences' fourth quarter earnings call Tuesday highlighted the maturation of its marketing alliance with Pfizer and its takeover of Genomic Health as key sources of growth it expects will help bring in revenues of at least $1.61 billion in 2020.
The company forecast sales in its screening business, which sells colorectal cancer test Cologuard, to grow about 40% year over year. It anticipates its precision oncology business, which houses the Oncotype DX tests it gained from the Genomic Health acquisition, will generate up to $495 million, set to account for about 30% of 2020 revenues.
Other potential catalysts include the recent, immaterial acquisitions of DNA sequencing tech developers Paradigm and Biomics, which the company believes will help with R&D; rollout of new TV ads throughout the year, which CFO Jeff Elliott called "an absolute homerun" and said continue to be the biggest driver of new ordering physicians; physicians' increasing ability to order Cologuard within Epic; and more than 370,000 people eligible for rescreening in 2020.
Exact Sciences pre-released preliminary fourth quarter results last month. The final figures came in at the upper end of the previously shared range, meaning Exact Sciences generated revenues of $296 million in the fourth quarter. The precision oncology division, which houses the recently acquired Genomic Health, contributed $66 million to that total.
Management expects 2020 revenues to exceed $1.6 billion, around $490 million of which will come from Precision Oncology.
To hit the target, Exact Sciences will need to grow its established screening business by around 40% to add to the inorganic growth in precision oncology sales. Exact Sciences sees its partnership with Pfizer as one driver of organic growth.
The pharma giant agreed to co-promote Exact Sciences’ colorectal cancer test Cologuard in 2018. However, the initial impact of the deal was muted. Exact Sciences framed that as a normal part of getting a new sales group up to speed but analysts have also pointed to disruption at Pfizer related to the arrival of generic competitors for Lyrica.
“We believe that in 2020 there will be a greater focus within the Pfizer field force on Cologuard,” Exact Sciences CEO Kevin Conroy said on a quarterly results conference call with investors.
Exact Sciences paid Pfizer a service fee of $14 million during the quarter. Looking ahead to 2020, "We expect about $35 million in additional services fees paid to Pfizer that will see the full year impact of investments made in 2019," Elliott said.
Conroy also expects more from Exact Sciences’ own sales team, which recently added more than 150 internal sales representatives.
The expansion of the sales force will enable Exact Sciences to go after emerging opportunities. Last year, Exact Sciences won FDA approval to market Cologuard to people aged 45 to 49 years old. Exact Sciences estimates there are 19 million Americans at an average risk of colorectal cancer in that cohort, the vast majority of which are unscreened. Conroy expects Cologuard’s penetration into that population to “be a material driver of growth this year, and for many years to come.“
Other drivers identified by Conroy include the doubling in the number of people due for rescreening and the transition to an updated version of Epic EMR designed to make it easier for physicians to order Cologuard. Conroy said physicians with that technology order 95% more Cologuard tests than their peers without electronic ordering capability.
The company also plans to reach an important milestone in its blood-based cancer diagnostics business: the launch of its liver cancer test. "We plan to make our test available in the second half of this year, with the goal of generating real world evidence to support guideline inclusion, broad reimbursement, and adoption over time," Conroy told investors.