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Second-quarter revenue increased 94 percent to $200 million and Cologuard test volume increased 93 percent to 415,000

On July 29, 2019 Exact Sciences Corp. (Nasdaq: EXAS) reported that the company generated revenue of $199.9 million and screened approximately 415,000 people with Cologuard during the quarter ended June 30, 2019 (Press release, Exact Sciences, JUL 29, 2019, View Source [SID1234537842]). Second-quarter 2019 revenue and test volume grew 94 percent and 93 percent, respectively, from the same period of 2018.

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"The Exact Sciences team delivered another strong quarter, bringing us closer to our goal of capturing at least 40-percent share of the U.S. colorectal cancer screening market with Cologuard, from about 6 percent today," said Kevin Conroy, chairman and CEO of Exact Sciences. "The foundation we’ve built with our team, infrastructure, and commercial scale positions Exact Sciences well for continued growth."

Second-Quarter 2019 Financial Results

For the three-month period ended June 30, 2019, as compared to the same period of 2018 (where applicable):

Revenue was $199.9 million, an increase of 94 percent, and test volume was 415,000, an increase of 93 percent
Average Cologuard recognized revenue per test was unchanged at $479
Average Cologuard cost per test was $123, an improvement of $2 per test
Gross margin was 74 percent, an increase of 30 basis points
Operating expenses were $182.1 million, an increase of 68 percent
Net loss was $38.4 million, or $0.30 per share, compared to $36.4 million, or $0.30 per share
Non-cash interest expense related to convertible debt was $19.8 million, or $0.16 per share
Cash utilization was $43.3 million, compared to $45.3 million
Cash, cash equivalents and marketable securities were $1.2 billion at the end of the quarter
More than 13,000 healthcare providers ordered their first Cologuard test during the second quarter, and nearly 174,000 have ordered since the test was launched
2019 Outlook

The company anticipates revenue of $800-$810 million during 2019, an increase from prior guidance of $725-$740 million. The company’s updated guidance does not include the impact of the pending combination with Genomic Health.
The company’s guidance for revenue is a forward-looking statement. It is subject to various risks and uncertainties that could cause the company’s actual results to differ materially from the anticipated targets. There can be no assurance the company will meet these financial projections. See the cautionary information about forward-looking statements in the "Forward-Looking Statements" section of this news release.

Second-Quarter and Genomic Health Combination Conference Call & Webcast

In light of the combination with Genomic Health announced separately today, Exact Sciences will not hold its previously announced earnings conference call that had been scheduled for July 30, 2019. The two companies will host a joint conference call today at 8:00 a.m. ET to discuss the transaction as well as each companies’ second-quarter 2019 financial results. The webcast will be available at www.exactsciences.com. Domestic callers should dial 877-201-0168 and international callers should dial +1-647-788-4901.

An archive of the webcast will be available at www.exactsciences.com. A replay of the conference call will be available by calling 800-585-8367 domestically or 416-621-4642 internationally. The access code for the replay of the call is 8288326. The webcast, conference call, and replay are open to all interested parties.

About Cologuard

Cologuard was approved by the FDA in August 2014 and results from Exact Sciences’ prospective 90-site, point-in-time, 10,000-patient pivotal trial were published in the New England Journal of Medicine in March 2014. Cologuard is included in the American Cancer Society’s (2018) colorectal cancer screening guidelines and the recommendations of the U.S. Preventive Services Task Force (2016) and National Comprehensive Cancer Network (2016). Cologuard is indicated to screen adults of either sex, 50 years or older, who are at average risk for colorectal cancer. Cologuard is not for everyone and is not a replacement for diagnostic colonoscopy or surveillance colonoscopy in high-risk individuals, including those with a history of colorectal cancer and advanced adenoma, a family history of colorectal cancer, IBD or certain hereditary syndromes. False positives and false negatives do occur. Any positive test result should be followed by a diagnostic colonoscopy. Following a negative result, patients should continue participating in a screening program at an interval and with a method appropriate for the individual patient. Cologuard performance when used for repeat testing has not been evaluated or established. Medicare and most major insurers cover Cologuard. For more information about Cologuard, visit www.cologuardtest.com. Rx Only.

Exact Sciences and Genomic Health to Combine, Creating Leading Global Cancer Diagnostics Company

On July 29, 2019 Exact Sciences Corp. (NASDAQ: EXAS) and Genomic Health, Inc. (NASDAQ: GHDX) reported that the companies have entered into a definitive agreement under which Exact Sciences will combine with Genomic Health for $72.00 per share in a cash and stock transaction valued at $2.8 billion (Press release, Exact Sciences, JUL 29, 2019, View Source [SID1234537841]). The transaction, which has been unanimously approved by the Boards of Directors of both companies, is expected to be completed by the end of 2019.

Together, Exact Sciences and Genomic Health will create a leading global cancer diagnostics company. The combined company will offer two of the strongest and fastest growing brands in cancer diagnostics, Cologuard and Oncotype DX, providing a robust platform for continued growth. With this enhanced platform, including a commercial presence in more than 90 countries, the combined company expects to continue to increase adoption of current tests, and to bring new innovative cancer diagnostics to patients throughout the world.

On a pro forma basis, the combined company expects to generate revenue of approximately $1.6 billion and gross profit of approximately $1.2 billion in 2020. Additionally, the combination is expected to generate annualized cost synergies of approximately $25 million within the third full year following close, primarily through reducing public company costs and purchasing optimization.

"Uniting the best minds and molecular diagnostics capabilities will advance the fight against cancer. Combining industry pioneers Exact Sciences and Genomic Health is a pivotal step toward building the leading cancer diagnostics company in the world," said Kevin Conroy, chairman and CEO of Exact Sciences. "Exact Sciences is continuing to grow sales and expand adoption of Cologuard at a rapid pace, and Genomic Health’s Oncotype DX is the global standard of care to inform treatment decisions for women with breast cancer. Together, with our collective resources and broader platform, we will be able to provide our existing tests to more people, while also accelerating the development and launch of future cancer diagnostic tests. We are excited to join together two teams who are united in their dedication to making a positive impact on patients’ lives."

"We are very pleased to join forces with Exact Sciences, a company and team with which we have a shared vision to revolutionize the way cancer is diagnosed and treated," said Kim Popovits, chairman of the board, chief executive officer and president of Genomic Health. "Genomic Health has achieved incredible success over nearly two decades in pioneering cancer diagnostics, and the recent landmark TAILORx trial results set a new standard of care for the use of the Oncotype DX test for women with early-stage invasive breast cancer. This transaction provides immediate value to Genomic Health stockholders through an upfront cash payment, as well as ownership in a combined company with enhanced financial strength and the commercial and R&D capabilities to continue to drive significant growth into the future."

Combining Talented Teams with Proven Capabilities to Create a Leading Cancer Diagnostics Company

Joins two of the strongest brands in cancer diagnostics into one entity and provides platform for continued growth: Cologuard and Oncotype DX, the companies’ leading brands, will respectively continue to help detect colorectal cancer and inform treatment decisions in colorectal, breast and prostate cancer, which collectively represent approximately 40% of all solid tumor incidence.

Exact Sciences’ Cologuard has a total available U.S. screening market of $15 billion, with an additional potential $3 billion opportunity among people ages 45-491. To date, Cologuard has captured less than 6% of the large addressable market of people over 50 years old, and is rapidly building on its 174,000 health care provider customer base, with a goal of reaching 40% share of the market over the long-term. In the second quarter of 2019, Cologuard revenue grew 94% year-over-year.

Genomic Health’s Oncotype IQ portfolio has guided personalized treatment decisions for more than one million cancer patients worldwide, and delivered more than 19% year-over-year overall revenue growth in the second quarter of 2019. Genomic Health estimates that its Oncotype DX suite of products in oncology and urology have a total available market of $2 billion.

Forms best-in-class commercial, R&D and clinical organization, with enhanced scale and scope in cancer diagnostics: The transaction will create a combined R&D team with extensive clinical capabilities and a robust evidence generation engine, complemented by proven regulatory expertise, and key relationships with oncologists. The combined commercial organization will have more than 1,000 team members inclusive of sales, marketing and reimbursement teams. The combined company will have the financial strength to support a high level of investment in R&D. This will support the development of innovative products across the diagnostic paradigm, including the ongoing work to identify proprietary biomarkers across the world’s 15 deadliest cancers, while continuing to advance the adoption of current products.

Provides global infrastructure to accelerate the ability to provide new innovative cancer diagnostics to patients: The combined company will have a commercial presence in more than 90 countries and expanded reach across primary care, oncology, OB/GYN, gastroenterology, and urology to support growth of existing and future cancer tests. The combined company will build upon Genomic Health’s presence in the San Francisco Bay Area, providing lab infrastructure in a state where the Medicare Administrative Contractor participates in the MolDx program, which may facilitate reimbursement of future liquid biopsy products.
Transaction Terms

Under the terms of the agreement, for each share of Genomic Health common stock they own, Genomic Health stockholders will receive $27.50 in cash and $44.50 in shares of Exact Sciences stock, subject to a 10% collar centered on Exact Sciences’ volume-weighted average price for the 45 trading days ended July 26, 2019.

Based on the parties’ closing stock prices as of July 26, 2019, the last trading day prior to today’s announcement, the total per-share consideration represents a premium of approximately 19% to Genomic Health’s volume-weighted average price ("VWAP") for the last 30 trading days. Upon closing, Exact Sciences shareholders are expected to own approximately 91% of the combined company, and Genomic Health stockholders are expected to own approximately 9%.

Transaction Approvals

The transaction is subject to customary closing conditions and regulatory approvals, including the approval of stockholders of Genomic Health. Felix and Julian Baker and certain funds advised by entities with whom they are affiliated, which collectively own approximately 25.3% of the outstanding shares of Genomic Health common stock, have entered into agreements to vote in favor of the transaction.

Advisors

Centerview Partners and XMS Capital Partners are serving as financial advisors to Exact Sciences and Skadden, Arps, Slate, Meagher & Flom LLP is serving as legal advisor. Goldman Sachs & Co. LLC is serving as financial advisor to Genomic Health and Sullivan & Cromwell LLP and Pillsbury Winthrop Shaw Pittman LLP are serving as legal advisors.

Conference Call Information and Transaction Website

Associated presentation materials and an infographic regarding the transaction will be available on the investor relations section of each company’s website at View Source and View Source as well as a joint transaction website at www.leadingcancerdiagnostics.com.

The two companies will host a joint conference call today at 8:00 a.m. ET to discuss this transaction. The call will include a slide presentation and participants are encouraged to view the presentation via webcast at View Source

Date:

Monday, July 29, 2019

Time:

8 a.m. ET, 7 a.m. CT, 5 a.m. PT

Webcast:

The live webcast can be accessed at www.exactsciences.com and
www.genomichealth.com

Domestic callers, dial 877-201-0168

International callers, dial +1 647-788-4901

Access code for both domestic and international callers: 8288326

An archive of the webcast will be available at www.exactsciences.com. A replay of the conference call will be available by calling 800-585-8367 domestically or 416-621-4642 internationally. The access code for the replay is 8288326. The webcast, conference call and replay are open to all interested parties.

Exact Sciences and Genomic Health Second Quarter 2019 Earnings Results

In separate news releases, Exact Sciences and Genomic Health today both announced their financial results for the second quarter of 2019, ended June 30, 2019. Exact Sciences and Genomic Health will address any questions regarding their earnings on the joint transaction call at 8 a.m. ET. Exact Sciences and Genomic Health have cancelled their previously scheduled earnings calls on July 30, 2019, and August 1, 2019, respectively.

Bristol-Myers Squibb Announces European Commission Approval of Pending Acquisition of Celgene

On July 29, 2019 Bristol-Myers Squibb Company (NYSE: BMY) reported that the European Commission (EC) has granted unconditional approval of Bristol-Myers Squibb’s pending acquisition of Celgene Corporation (NASDAQ:CELG) (Press release, Bristol-Myers Squibb, JUL 29, 2019, View Source [SID1234537840]).

"Clearance from the European Commission is an important milestone toward completing our combination with Celgene and moves us one step closer to creating a leading biopharma company that is well positioned to develop and deliver innovative, meaningful medicines to patients," said Giovanni Caforio, M.D., Chairman and Chief Executive Officer of Bristol-Myers Squibb.

The transaction remains subject to additional customary closing conditions and other regulatory approvals. Bristol-Myers Squibb intends to close the Celgene transaction at the earliest possible date, which it currently expects to be by the end of 2019 or the beginning of 2020.

Anixa Biosciences Announces VA North Texas Health Care System to Join Cchek™ Prostate Cancer Study

On July 29, 2019 Anixa Biosciences, Inc. (NASDAQ: ANIX), a biotechnology company focused on harnessing the body’s immune system to fight cancer, reported that the VA North Texas Health Care System and its non-profit affiliate, the Dallas VA Research Corporation, have joined Anixa’s ongoing prostate cancer Cchek study (Press release, Anixa Biosciences, JUL 29, 2019, View Source [SID1234537839]). Study enrollment will be led by Dr. Manoj Reddy, Radiation Oncologist, and Dr. Jeffrey Gahan, Chief of Robotic Surgery.

"We are pleased to see the continued expansion in Cchek collaboration partners to now include the VA North Texas Health Care System. We look forward to working with Dr. Reddy and Dr. Gahan as we further the development of our artificial intelligence based prostate cancer diagnostic test," stated Dr. Amit Kumar, CEO of Anixa.

Inovio’s Cancer Immunotherapy (INO-5151) Targeting Prostate Cancer in Innovative Cancer Combination Trial

On July 29, 2019 Inovio Pharmaceuticals, Inc. (NASDAQ: INO) reported that as part of its clinical collaboration agreement with Parker Institute for Cancer Immunotherapy (PICI) and the Cancer Research Institute (CRI), Inovio’s prostate cancer immunotherapy INO-5151 will be combined with an immune modulator (CDX-301, FLT3 ligand, a dendritic cell mobilizer) and a PD-1 checkpoint inhibitor (nivolumab) targeting metastatic castration resistant prostate cancer (mCRPC) in a PICI sponsored platform study (Press release, Inovio, JUL 29, 2019, View Source [SID1234537835]).

This innovative combination trial is an open-label, non-randomized, exploratory platform study designed to assess the safety and antitumor activity of multiple immunotherapy based combinations in participants with mCRPC who have received prior secondary androgen inhibition. Evaluating biomarkers of immune activity and clinical outcomes using a multi-omic, multi-parameter approach is an important aspect of the study. INO-5151 is a combined formulation of INO-5150 (with SynCon antigens encoding for PSA and PSMA) and INO-9012 (DNA vector expressing interleukin 12). Inovio’s immunotherapy is one arm (Cohort C) of this broad PICI-supported study which is a multi-arm, multi-stage platform design (called PORTER Study: ClinicalTrials.gov Identifier: NCT03835533).

Dr. J. Joseph Kim, Inovio’s President and CEO, said, "Inovio is pleased that PICI selected our novel DNA-based immunotherapies to join in this unique combination trial targeting a major unmet medical need. This study demonstrates how Inovio is working with top cancer immunotherapy pioneers to investigate the potential significance of Inovio’s T cell activating immunotherapy in an innovative immuno-oncology combination regimen. Our collaboration with PICI allows us to leverage strategic partnerships with academia, non-profits, and pharma while working with PICI’s team of world-renowned experts from leading cancer centers at the forefront of cancer research."

Metastatic castration resistant prostate cancer, the lethal form of prostate cancer, has shown limited benefit from immune checkpoint inhibition as a monotherapy, with two randomized Phase 3 trials with ipilimumab failing to show a clinically meaningful survival benefit, and a large Phase 2 trial with pembrolizumab demonstrating a modest rate of objective responses.

Under the agreement, PICI will design and execute the clinical study, working in collaboration with its established network of the most pre-eminent clinical academic and industry cancer centers, and with funding support from CRI. Based on PICI’s novel approach to accelerating studies of cancer immunotherapies, Inovio will provide financial contributions if Inovio’s product(s) studied under the collaboration reaches the initiation of a Phase 3 study.