Exact Sciences Corporation

Ladies and gentlemen, thank you for standing by and welcome to the Exact Sciences first quarter 2021 earnings call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 on your telephone. If you require any further assistance, please press star 0. Thank you. I would now like to hand the conference over to your speaker today, Mr. Eric Holtzman, Senior Financial Analyst. Sir, please begin.

Thank you, Ren, and thank all of you for joining us for Exact Sciences' first quarter 2021 conference call. On the call today are Kevin Conroy, the company's Chairman and CEO, and Jeff Elliott, our Chief Financial and Chief Operating Officer. Exact Sciences issued a news release earlier this afternoon detailing our first quarter financial results. This news release and today's presentation are available on our website at exactsciences.com. During today's call, we will make forward-looking statements based on current expectations. Our actual results may be materially different from such statements. Reconciliations to GAAP figures are available in our earnings press release, and descriptions of the risks and uncertainties associated with Exact Sciences are included in our SEC filing. Both can be accessed through our website. It is now my pleasure to introduce the company's chairman and CEO, Kevin Conroy.

Thanks, Eric, and thanks to everyone for joining us this afternoon. The first quarter demonstrated Exact Sciences' commitment to eradicating cancer and the suffering it causes. Our talented team tested over 900,000 people during one quarter. Exact Sciences is a leader in cancer diagnostics because of our people, our scientific platforms, and our powerful brands, Cologuard and Ocotype. We're developing life-changing cancer solutions that will help patients. Today, we'll review our first quarter performance, full-year guidance, and progress on our 2021 priorities. I'd also like to congratulate Jeff Elliott on his well-earned promotion to Chief Operating Officer, in addition to his current CFO responsibilities. Jeff will now review our financial results.

Thanks, Kevin. Good afternoon. First quarter revenue was $402 million, an increase of 16%. Screening contributed $240 million, or 10% growth. During the quarter, we saw improved physician office access for our teams in the field, solid contributions from three-year rescreening, and continued gains in electronic ordering rates to 43%, which was a 13-point year-over-year increase. Our deep relationships with physicians are critical as we try to get more people tested and prepare to launch solutions from our pipeline. 8,000 new healthcare providers ordered Cologuard during the quarter, and more than 235,000 have ordered since launch. Precision oncology revenue was $129 million, an increase of 1%. Mammography volumes have now largely recovered, and physicians are working through a significant backlog of people needing to be screened for breast cancer. Screening mammograms typically come before our Oncotype DX breast test. COVID testing revenue was $32 million, consistent with our guidance. First quarter gap gross margin was 68%. Non-GAAP gross margin, which excludes amortization of acquired intangibles, was 73%. Non-GAAP gross margins were impacted by lower capacity utilization and a $6 million excess inventory charge, both related to the sequential decline in COVID testing. Looking at Cologuard specifically, non-GAAP gross margins were stable year over year. Sales and marketing expense was $186 million. The year-over-year change was due to investments in our sales teams and marketing campaigns to support our growth. G&A expense was $268 million, including $118 million related to acquisition and integration costs. R&D expense was $116 million and included $52 million for the TARDIS license. Aside from TARDIS, growth in R&D was driven by the Thrive acquisition. Income tax benefit was $243 million due to the change in deferred tax asset valuation allowance resulting from the Thrive acquisition. Adjusted EBITDA was a loss of $23 million. We ended the quarter with cash insecurities of $1.4 billion. Turning to our guidance, we are increasingly optimistic about growth this year. The pandemic appears to be abating in the U.S., benefiting wellness visits and in-person access for our teams in the field. That being said, the pandemic is still here with increasing cases in many parts of the world. Physician office access and wellness visits remain muted compared to before the pandemic. Looking at March data from IQVIA, in-person sales visits were half of what they were before COVID, and patient wellness visits were down 10% to 20%. With that in mind, we expect total revenue for the year to be between $1.69 and $1.735 billion, with system screening revenue between $1.125 and $1.15 billion this year. precision oncology revenue between $515 million and $525 million, and COVID testing revenue between $50 and $60 million. For the second quarter, we expect revenue between $415 and $430 million, precision screening revenue between $270 and $275 million. persistent oncology revenue between $125 and $130 million, and COVID testing revenue between $20 and $25 million. There's no change to our annual operating expense or CapEx guidance from last quarter. I will now turn the call back to Kevin.

Thanks, Jeff. The Exact Sciences team is focused on three priorities this year, getting more people tested, enhancing our customer experience, and advancing new solutions. Starting with our first priority, as the pandemic abates, our sales team in the field are beginning to meet with healthcare providers more often than they have in the past year. In-person visits are typically the most productive way to help healthcare providers understand the benefits of Cologuard and Oncotype DX and get more people tested. Industry sources in our internal data show field team access to healthcare provider offices is improving, but far from where we were pre-pandemic. We're thrilled about the opportunity to get more people screened with Cologuard through our new women's health sales team. There are more than 40,000 OBGYNs in the U.S., and about half of them see themselves as primary care providers. They also perform about 15% of wellness checkups, and generally discuss colon cancer screening with multiple patients daily. The COVID pandemic has amplified the significant screening gap that already existed among medically vulnerable populations. Black and Hispanic Americans are more likely to be diagnosed with colorectal cancer at later stages due in part to lower screening access. For example, black Americans are 20% more likely to be diagnosed with colorectal cancer and are 40% more likely to die from it. Cologuard is an ideal solution to help address the 46 million Americans that need to be screened given its at-home convenience and superior sensitivity to the FIT test. Cologuard detects 94% of early-stage cancers, while FIT detects 70%. Cologuard also has higher patient compliance than FIT and is broadly accessible across the United States. Cologuard comes with a reminder service, educational information, and a longitudinal relationship that FIT often lacks. making Cologuard a suitable option to help improve screening rates for those populations. We are supporting Stand Up to Cancer to increase awareness about the importance of colorectal cancer screening with a focus on reaching medically vulnerable populations. Our efforts include public service announcements featuring Jamie Foxx as well as supporting teams working in local communities to improve access to screening. Our Oncotype DX breast recurrence test continues to revolutionize treatment decisions for women with early-stage breast cancer. Last month, the NCCN made the Oncotype DX breast recurrence test the preferred test for prediction of chemotherapy benefit in HR-positive, HER2-negative, postmenopausal, early-stage breast cancer patients. Patients and physicians place their trust in the Oncotype DX test because of its powerful supporting evidence, especially the TaylorX study and the more recent responder data. OncotypeMAP, our comprehensive genomic profiling test, helps late-stage cancer patients get answers quickly to make treatment decisions. After a successful pilot launch last year, we're making OncotypeMAP available to our full precision oncology sales team. That team has developed deep relationships with oncologists that span many years educating them about Oncotype. OncotypeMAP was recently included in coverage guidelines from Anthem, effective July 1st, and Cigna, adding 34 million and 14 million covered lives, respectively. Moving to our next priority. We're enhancing our customer experience to be an incredible partner to patients and providers. Guidelines recommend Cologuard's use every three years. We're implementing new ways to engage with patients electronically to get them screened on their three-year Cologuard anniversary. This year, more than 600,000 people will become eligible for their second Cologuard test, and next year, more than a million people will become eligible. We've made Cologuard easier to order by embedding it into EPIC, the leading EHR platform. We're making other significant investments in deepening our relationships with patients and their healthcare to stay in touch with these patients. By building a robust ecosystem of engagement, we're able to get more people tested with their next Cologuard test. Our goal is to have a lifelong relationship with the person to increase screening compliance and advance our mission of eradicating colon cancer through early detection. Our final priority this year is to advance new solutions addressing the largest patient impact opportunities in diagnostics. One of the greatest opportunities to eradicate cancer is through a multi-cancer screening test. More than 600,000 Americans will die this year because cancer is often detected too late. 70% of incident cancers do not have screening tests, which means patients are frequently diagnosed only after experiencing symptoms. We recently generated another set of internal validation data that appears promising. We're planning to enhance the performance of our multi-cancer screening test by bringing together the R&D expertise of Exact, Thrive, and our partners at Mayo Clinic and Johns Hopkins. Once that step is completed, we will conduct a validation study later this year. We plan to move into our prospective interventional and registrational study in the first half of next year. Cologuard 2.0 is designed to enhance an already great test, expanding our opportunity to help patients in colon cancer screening. Blue Sea is on track to complete enrollment by late this year or early next year. Blue Sea is our prospective 10,000 patient trials to support FDA approval for Cologuard 2.0. Our hope is that Blue Sea will also be used to support FDA approval for our colon cancer blood test. Today, we're announcing that we've acquired PFS Genomics. PFS Genomics is focused on reducing unnecessary radiotherapy treatment in patients with early-stage breast cancers. Studies show that the majority of patients who get radiation therapy are unlikely to benefit from it. The challenge is knowing who is likely to benefit and who isn't. The team at PFS Genomics identified a gene expression signature to predict whether women with early stage invasive breast cancer treated with breast conserving surgery are likely to benefit from the addition of radiotherapy. Similar to how the Oncotype VX breast recurrence score test answers whether a patient will benefit from chemotherapy, PFS's technology may help answer the question, who will benefit from radiotherapy? PFS's new solution could provide additional answers to more than 100,000 women in the U.S. with the opportunity to potentially be double that internationally. This week, We are making Oncoguard Liver available to healthcare providers and patients. Oncoguard Liver is a simple yet sophisticated blood test that helps detect the most common form of liver cancer, hepatocellular carcinoma. Liver cancer has the fastest growing incidence rate of any cancer in the U.S., There are more than 3 million patients eligible for testing in the U.S., and fewer than a third of them currently receive guideline-recommended testing. The current testing options for these patients also have suboptimal performance, especially for early-stage cancer detection. Oncogard liver has demonstrated high sensitivity in early stages of cancer when diagnoses are most critical. Oncogard liver, developed with Mayo Clinic, was tested across multiple studies, including marker selection, algorithm setting, and clinical validation. Results of these studies showed enhanced sensitivity and specificity for early-stage disease. We expect to publish the results of the oncogard liver validation study by year-end. The near-term goal of making Oncoguard liver available is to generate real-world evidence to support guideline inclusion, broad reimbursement, and adoption over time. Our three priorities this year will help us make progress towards accomplishing our mission of eradicating cancer and the suffering it causes. Our team's scientific capabilities and our experienced physician experience us to be a leader in advanced cancer diagnostics. Our long term outlook gives us confidence to invest in growth today and into the future. We plan to bring a full suite of life changing cancer tests to patients, helping improve outcomes through the course of their diagnosis and treatment. We're now happy to take your questions.

As a reminder, to ask a question, you will need to press star 1 on your telephone. To withdraw your question, press the pound key. Your first question comes from the line of Brian Weinstein from William Blair. Your line is open.

Hey, guys. Good afternoon. Thanks for taking the questions. You know, I'll let others kind of dissect the guide and the quarter and whatnot. I kind of wanted to ask a higher-level question or two. With the acquisition that you announced today and other deals that you've done, Kevin, I'm curious how you feel about the collection of assets that you have now in place and that you've put together over the last 20 months or so, and how you think that that really is going to differentiate you in what's becoming an ever more complicated and competitive field, and then even more broadly, as you think about uh the future here i'm curious about what the criteria is these days on m a and what the process you have because you've done scale deals product deals technology deals i'm curious what it is that you're using for a criteria to evaluate those so sneaking in a couple questions there uh for you to answer thanks

Thanks, Brian. We start by asking a simple question. Can we offer new tests or technology that will significantly impact patient care? That's where everything starts. The PFS deal is an example of that. We believe it's going to dramatically change how certain patients with breast cancer are treated. So we always start with what can we do to improve outcomes for patients? And then we look at what is this incredible platform capable of? So we have the broadest and most advanced capabilities, our relationships, our scientific platform, and our commercial organization. We believe are second to none and we have a responsibility now to bring more and better tests and services and data and data insights and artificial intelligence to the physicians that treat patients and the patients who desperately need new ways to be treated so um that's how we look at this at a higher level does it impact the mission of moving to cancer eradication and there are many opportunities that come our way that are are great companies with tremendous tests or technologies that we pass because they don't really fit into that framework. And so we're being disciplined. As we look at PFS, we're tremendously excited about PFS because this is over 100,000 women a year who are faced with a really significant decision of whether they should get radiotherapy, which is a month-long course of treatment that can cause disfigurement and health problems for life. It is also very expensive. And just like Oncotype vXpress recurrence score dramatically changed the number of women getting chemotherapy, we believe there's a possibility to do the same with BFS in the same patient population with the same customers and many of the same patients. So this is an opportunity that we have to continue to create a flywheel effect by bringing better, more impactful tests to the patients that need them over a long period of time.

The next question comes from the line of Derek De Bruin from Bank of America. Your line is open.

Hi, good afternoon. Thanks for taking my call. Can we talk a little bit about the Cologuard pacing as you sort of see it? I mean, your guide for the second quarter was pretty much spot on when we had it. I'm just sort of thinking about it for the rest of the year because they're in sort of what you're thinking and just, you know, recovery and going on. And also, you know, since we have had issue in terms of, I think there were some questions in the fourth quarter call about seasonality in the fourth quarter. Is that something else you think will be playing this year? I just would love to get your thoughts on the pacing and the level of conservatism that you think and it's built in.

Derek, this is Jeff. We were very pleased with the results the screening team delivered in the first quarter. We delivered about 10% year-on-year growth. And that's in the middle of the pandemic. And, you know, in fact, when you look year over year, the impact of the pandemic got worse. I think back, I think, three or four quarters ago, we said at that time that as a result of the pandemic, long-term colon guard adoption would be accelerated by a year or two. And sitting here today, I firmly believe that is still the case. When you look at the backdrop here, colonoscopies down 10% to 20%. wellness visits down 10% to 20%, physician office access, which is such a key contributor to the business, half of what it was before the pandemic. With all that in mind, we are very pleased with the results. Through the year, assuming that the pandemic continues to abate and access continues to improve, we expect continued growth in the business. And that's reflected in the guidance. You should think of the guidance as the most likely outcome for the year. And we're very excited about the state of this business. When you look ahead, you know, as Kevin talked about, there are 46 million Americans who today need to be screened. And in this environment where people are still shying away from in-office visits, Cologuard, we believe, is an ideal solution. And then specifically this year, there's multiple new ways that we can reach out and screen more patients, whether that's electronic ordering, which I gave an update on. We've had tremendous improvement there. Cola Guard 45, which we continue to expect to come on mid-year with the guideline update, as well as some creative new ad campaigns and an expanded sales force. We're in a very good position today, and we're just really excited about the opportunity to go out and help more people get tested with Cola Guard.

Your next question comes from the line of Dog Shankle from Cohen. Your line is open.

Hey, good afternoon, guys. Thanks for checking the questions. Kind of a follow-up to Derek's question. So just on Cologuard, given you did guide a little bit above what we were expecting for the year on screening, and just at least relative to our Q1 model, you were a little bit ahead of what we expected, but marginally. So I'm just wondering if you could comment on you know, momentum coming out of the first quarter and heading into the second quarter. And then more broadly, if you could just share any details on electronic ordering, um, and repeat order rates, um, meaning, you know, folks who got tested three years ago coming back into the system. So that those are the Polar guard questions. I'm on guidance. I apologize if I missed this, but I just wanted to see if there's been any change to how you're thinking about, um, operating line item, um, So back in February, you told us what you were expecting for different operating lines. I just want to make sure that hasn't changed. And then my final question is just on multi-cancer screening. I appreciate the updates that you have provided on process and timelines. I am just curious at this point if you are considering any biomarkers beyond genomic mutations and methylation. Or if at this point, you know, for the most part, you're pretty close to locking down in terms of the approach you're taking. Thank you.

Why don't I start it and quickly hand it over to Jeff. One of the things I think to keep Cologuard in context is the impact that it's having on patients. the incidence rate in the U.S. being at 0.6%, roughly, and then of those people with cancer, about 75% have early stage, stage 1 and 2 cancer, there are probably in the ballpark of between 1,000 and 2,000 people who were diagnosed with early-stage colon cancer because of Colgard. And one of those people, I got an email from one of our employees who took the Colgard test because he wanted to experience the customer service and actually wanted to experience the test. And that person was diagnosed with stage 1 cancer. So we're seeing the impact of the test. If you also look at the 5% prevalence rate of advanced adenomas in the over 50 population, you're looking at potentially 25,000 people who had pre-cancer removed last quarter. So the impact is significant and it's growing. And, Jeff, why don't you take Doug's specific question?

Doug, on Cologram Momentum, as I said to Dari's question, we're very pleased with the results from the quarter. You really need to keep in mind that there's a cumulative impact we've seen. Over the past year, our reps have been out of the field for much of that time period. And same with our partner. Our partner has been very conservative in terms of getting back into physicians' offices and helping educate them on Cologuard. So, to deliver the results that we did, we're very pleased with that, and I think that speaks to the underlying momentum. This is a huge market. There are many patients that need to be screened. So, we're feeling good about it. On electronic ordering, I said in my remarks that today over 43% of Cologuard orders are submitted electronically, 43%. A year ago, it was 30%. So I'm really proud of the progress the teams have made over the past year. We have over 100 health systems today who have a seamless interaction with us, a bidirectional interface where they can electronically submit an order to us. We can take care of all that patient testing and send the result back. So, this has been a very big contributor, and this is a really important aspect of our business for many years to come. As we bring on new products, they'll have this strong foundation from which to grow. On rescreens, I think it was your third question, I'm feeling very good about that. Last quarter, I had talked about expecting at least $100 million of revenue. I still believe that. The teams here have made very good progress on rescreens. This really highlights one of the most powerful features of Cologuard. is that Cologuard, not only is it getting more people tested, about 50% of all the people we screened with Cologuard had never been tested before. It also helps keep them screened for a long period of time. The recommended interval for the guidelines is three years for Cologuard. So we're keeping people screened for a longer period of time. You compare that to the FIT test, which is a one-year interval. And our rescreen compliance rate continues to grow. So feeling very good about that. On the operating lines, no change to the numbers I gave last quarter, Doug. So still feeling the same on those and CapEx for that matter. No change.

Doug, you asked about multi-cancer. The team is... tasked with bringing to physicians and patients the very best multi-cancer screening tests. I'm confident that they will do exactly that. And we haven't disclosed all of the different aspects of the test scientifically. More to come later, but really excited by the internal data that we're seeing.

Your next question comes from the line of Brandon Couillard from Jefferies. Your line is open.

Hey, thanks. Good afternoon. And, Jeff, congrats on the COO title. More work, same pay, just like when you were on the set side. You talked a lot about access this afternoon. I'm just curious, if you look at your internal sales force coupled with Pfizer reps, how much of that, team is actually able to get in the office today? And are you assuming a return to more normal activity in 3Q or 4Q? Just kind of help us understand what you've kind of assumed for the balance of the year in terms of that access.

On the return, Brandon, we've assumed a gradual return. I mean, look, everybody sees that the pandemic is clearly still here. In fact, cases are rising in many states and parts of the country. So we've got to take care of our employees just as we try to take care of patients. So we've assumed a gradual return to the field. Our partner has been very cautious at returning their sales reps to the field. All of our reps have the ability to go back to the field as it's safe to do so, and to the extent that physicians are allowing outside people into their office. And that's where we see today a lot of caution from primary care doctors. They, you know, still, per the IQVIA data I cited, physician office face-to-face visits are less than half of what they were today versus before the pandemic. So today it is still a headwind to the business. That's why I'm so pleased that we delivered 10% year-on-year growth for Cologuard despite that and despite the weather and all the other challenges out there. Over time, as the team gets back out to the field, I'm confident that this business will continue to grow and we'll help get more patients tested.

Your next question comes from the line of Dan Arias from Stifel. Your line is open.

Thanks, guys. Thanks for the questions here. Kevin, I think you said you're hoping that Blue Sea will be the trial that's necessary to allow you to bring a blood-based assay to the market. I don't know that I've heard you phrase it like that, just in terms of there being some uncertainty there. Is that a conscious change in thinking, or am I overanalyzing your words?

You know, it's interesting. As I was reading that, Dan, I was thinking, how did I let this stuff in the transcript? No, this is, we're confident because we know the data that we have with the current performance of our blood-based tests. We've been in the We've had the good fortune of not feeling like we're compelled to release our internal data, and the clinical trial is going well. So thanks for cleaning that up. There's no hope to it. We'll bring a blood-based test to physicians and patients, and we're confident about that.

Your next question comes from the line of Katherine Schultz from Baird. Your line is open.

Hey, guys, thanks for the questions, and I'll echo Brandon's congrats to Jeff on the new role. I guess first, appreciate the commentary on the progress you've made with Paradigm and OncotypeMath, but any update on the Acheion integration and the path forward for your MRD test development? And then secondly, on Oncoguard liver, any comments on the path to Medicare coverage and when you think you'll submit your dossier for a potential LCD there?

Thanks, Catherine. Taking Cheyenne first, the team there has tremendous leadership, and it's a team that has worked awfully hard to develop a high-quality whole exome test and data infrastructure and bioinformatics. And that team is going to do a lot of great things. I think beyond the tests that they currently offer today, it's going to be critically important in our minimum residual disease program. And you've got to start with a high-quality genomic analysis of the tumor as a starting point in order to be able to detect recurrence down the road. We believe that integration is going to go very smoothly because of the cultural fit of the two organizations. It's in the same building physically as our paradigm team. That's another positive. And we think that Arizona will become an increasingly important organization. R&D and product development and testing site for us. In terms of your question around liver, OncoGard liver is likely to be at least 18 months out from a time where we would expect to get Medicare coverage, which is why we are framing OncoGard liver as making it available, not as launching the test. We think of a launch as occurring around the time that you have Medicare coverage. And this gives us a period of time to work with partner health systems, individual physicians, patients, patient advocacy groups, even pharmaceutical companies, really challenged the market to adopt a new standard of care. And during that time period is when we would expect to have our data published, which we think would be the starting point for getting oncogard liver into guidelines. We're so excited about bringing this test to physicians and patients and about the data that support it and how it will change standard of care. The other thing that Oncoguard Liver does that's important is to provide a blood draw infrastructure and capability that is going to be important as we launch into multi-cancer testing.

Your next question comes from the line of Dan Brennan from UBS. Your line is open.

Great. Thanks for bringing the question, guys. Jeff, congrats as well. maybe like a three-parter, and then I'll kind of go to mute and listen. So, Kevin, we just love your latest thinking. I'm sure it hasn't changed, but nonetheless, with, you know, liquid biopsy data coming out later this year and early next, just how we should be thinking about the likely outcomes from that data from competitors. And then, B, as a follow-up to Dan's question, just on your own liquid biopsy-based approach, you sounded more definitive there in your response that that product will come to market and have a role to play, so maybe just any additional color on how you think the performance will compare with Cologuard. And then finally, just the Salesforce on the new commercial leadership, just wondering kind of how that's going. Any notable changes about go-to-market strategy or impact that you could call out? Thanks.

As it relates to CRC Blood, as we've said in the past, we expect our test to and the deep research that we have done in identifying markers and improving the platform technologies to be at least as good or better than what else is out there. We're running a study where you'll be able to evaluate CRC blood against stool-based testing. And we think that the clinical trial design is better, is the best approach here. Maybe more important than anything else is we had to platform the relationships with health care providers and health systems with payers to rapidly bring a CRC blood test to physicians and to the patients who could benefit from it. And the way that that test will be provided is – and how it will be positioned in the market is that we think that it will be a test that would be used only after a patient refuses a Cologuard or colonoscopy. It is going to be closer to where the fit test is in performance. You've seen that with data from other people trying to do the same thing. Ultimately, the ideal colon cancer screening test is one that gives you more than a one-year interval for testing. And Cologuard does that, colonoscopy does that, and we believe that Cologuard still will get to 40% overall share. In terms of sales leadership, we are really pleased with The new leadership over precision oncology and with the screening business, Matt and Pat have rapidly... assimilated into their new roles. And I think you can see the results in the first quarter are strong. And there's just a, each of those leaders have long runways. Importantly, the whole organizations that they help lead are fired up to get back into physician offices and to make a difference with these amazing products, Gologuard and Oncotype. And The team's firing on all cylinders. They're excited. They're making a difference. And you can feel the energy in your interactions with those commercial organizations. Did I answer all three of your questions, Dan?

Your next question comes from the line of Vijay Kumar from Evercore ISI. Your line is open.

Hey, guys. Thanks for taking my question, and congrats on a good quarter here. Kevin, maybe on the pan-cancer side, Any details on when we could expect the timing of the validation data? Any details around perhaps the sample size of the trial?

We will be doing additional testing this year as we head into a prospective study in the early part of next year. and so we will have that internal data when that gets published is yet to be determined that's the kind of data you want to make sure that you get published in the highest quality journal so it really depends upon the timing of us having that data internally and then the next scientific conference or venue to present that data up here. So we don't know yet when that data will be presented, but the team is working under tight timelines to be able to deliver that, and we're excited about it. So we have a plan. We're going to work that plan. We're going to deliver the results, and we're going to start a clinical trial next year that we think is going to be game-changing in terms of the early detection of cancer.

Your next question comes from the line of Patrick Donovan from City. Your line is open.

Hey, guys. Thanks for taking the question. Kevin, maybe just on the patient wellness visits, I think you guys talked about them being down maybe 10% or 20%. I know in past quarters you've talked about maybe they have a little bit different feel today where patients are going in for a very specific reason and it's not as applicable to the general kind of screening-type visit. Can you just talk through, I guess, if you're seeing any changes there, what you're hearing from the field, just trying to get a sense for kind of the visits that matter to you guys, if that makes sense.

Yeah, it's starting to change, and there's a huge backlog of people who haven't seen a primary care physician in a year. It's actually, you know, another healthcare physician uh crisis is is brewing and that is a lack of preventive care and clearly that is changing um and more people are going in for their wellness visits we think that will continue to grow throughout the year assuming that um you know there's not a new uh covid variant that um changes the landscape in a meaningful way so offices are starting to open up they they are not fully open And as Jeff mentioned, our partner is not fully in the field yet. We expect that to change quickly here. And if you combine both the increase in wellness visits with an increase in visits from our sales force, we think that's a recipe for growth now and for years to come. And another way to look at this, Patrick, is The team delivered amazing results in terms of people being tested in the first quarter. And that's despite the fact that January was still a pretty rough month in terms of the pandemic, that wellness visits were way down, that our office visits from our field force were way down. And around this time last year, we said, look, we think that the pandemic is going to change the way people think about at-home non-invasive colon cancer screening. And we think that is true. You can see it in this quarter where we're about where we expected to be last year without the pandemic. And we're coming out of the quarter with strength. And so, you know, I think long-term... we are going to be in a better position than we otherwise would have been.

Once again, to ask a question, you will need to press star 1 on your telephone keypad. Your next question comes from the line of Jack Meehan from Nefron Research. Your line is open.

Thank you. Good afternoon. Good afternoon. um jeff i was curious on the precision oncology guidance you referenced potential for some pent-up demand which makes sense you know when i look at the second quarter guidance it looks like revenue is flattish sequentially so you know why not up can you just talk about what you're seeing regionally and kevin if you don't mind me squeezing in one on multi-cancer Can you just give us your latest thoughts on the regulatory pathway? You know, one of your competitors is launching as an LDT. Do you still think the FDA route is required here?

Jack, this is Jeff. I'll start on precision oncology. Look, there's a significant amount of pent-up demand here. For much of last year, mammography vines were severely depressed. I can think back to April of last year. They were down by over 90%. So there's a big backlog for us in terms of revenue. It probably translates into easily north of $20 million of revenue, a kind of pent-up demand. And unfortunately, if a person is going to get breast cancer, they're going to get it, whether the pandemic is here or not. So that will take time to play out. When you think of the mammography capacity in this country, not all of those patients can come back and get screened right away. It will take time. And then there's a natural delay between a mammography and the time that a physician would order Aquatype CX. So I do expect to have a very strong year. I think that is reflected in the guidance. Although with the PL guidance as well, we do have to be realistic. The pandemic is, in many parts of the U.S., the pandemic is increasing. And globally, this is a global business um we had a very strong first quarter however the pandemic and outside the us is is coming on very very strong so we've tried to balance those two things very strong underlying momentum with with realism that the pandemic is still here and is likely to weigh on on the broader business for the course of the year and then kevin do you want to touch on multi-cancer testing sure um

I think the way to think about multi-cancer testing is to go forward 10 years and look at what all of the things that are going to be required to be in place to have. multi-cancer testing to be as common as a common blood test for other health conditions. And we fundamentally believe that 10 years from now, the way people are going to be diagnosed with cancer by and large is going to be with screening through a blood test. And that's not to displace other modalities of screening, but it's going to be really critical. And the way that's going to happen is starting with really strong evidence in large studies. And that, truthfully, requires multiple companies to... be out there running those studies. This is a transformative approach to screening and it's going to require many studies to convince guideline groups and payers and most importantly physicians and patients to get tested. So that evidence is going to be critical. Great technologies tests are going to be critical. And broad reimbursement is going to be important, not only of the test, but also of any downstream follow-up testing that is required, whether it's a PET-CT or a reflex test or a colonoscopy or an upper endoscopy or a CT scan. And so this is kind of a mountain of evidence leading to ultimately Medicare coverage and broad commercial insurance coverage. Medicare is highly unlikely to ever cover a test that is not FDA approved. Their policy, this was true with Cologuard, is they need a PMA before they will issue a national coverage decision, which is required. And since the majority of cancers occur in the Medicare population, we believe that FDA approval is going to be required. Participants in this testing area are likely to bring lab-developed tests. We are working in a consortium with others that have an interest in this space. And that's an opportunity for us all to make sure that it's done in a way that ultimately the greater society and consumers and physicians buy into it. So it's really important that this is done the right way. I think there's a right way and a not right way to do a lab-developed test, and it's important that all of these things are done incredibly responsibly if we're going to get trust in this kind of technology. This is not about technology as much as it is about evidence development, guideline inclusion, and ultimately the service that you're providing to patients. That's how we look at the regulatory piece, and the FDA study that we're running, it will be a pivotal study involving tens and tens of thousands of people, maybe as many as 100,000 patients, and will take a few years before it fully reads out and is submitted to the FDA.

Your next question comes from the line of Puneet Soda from SVP Lyric. Your line is open.

Okay, great. Thanks, Kevin. In terms of if I could ask about the sales reps, and I apologize if this was covered, could you remind me the number of reps that are in the Cologuard Frontline sales channel today and how you're viewing that number today? for the full year. Obviously, you know, sales reps have been key to getting the penetration of Cologuard to this point. And as you pointed out, I mean, that's the recipe for growth. But even what Jeff has said, about 50% of the sales reps are still not in person. Just wondering, you know, how you're looking at that overall frontline number for the year. And then on precision oncology, just wanted to get a sense of how did prostate do in the quarter, and are you seeing any changes in the competitive dynamics out there with another acquisition in this space recently for a prostate competitor? Thank you.

This is Jeff. I'll start on the sales reps. You asked on Cologuard frontline reps. Out in the field today, our team stands at around 500 sales reps calling on primary care physicians. We are adding this team of women's health, really OB-GYN sales reps. That team is around 50 people. The GI sales team is just over 50 people. The inside team is around 150 people. On top of that, you also have the area managers that are very important for motivating coaching and the success of this team. We also have a separate team that's dedicated to the larger health systems. It's really important. As you know, over half of the primary care physicians in this country belong to or are affiliated with or employed by a health system. So that team is crucial as we grow. On the precision oncology side, the team there, there's around 100 oncology reps, around 50 urology reps. And then, of course, we have the international team, which is over 100 people in total outside the U.S. Precision Oncology, you asked about the prostate franchise there. If you look at prostate testing, which is so important because our archetype GPS test is ordered after a patient is first diagnosed with prostate testing and done some follow-up testing. Prostate cancer diagnoses are mainly down still. They have not recovered the same way that breast cancer has. Breast cancer diagnoses have started to recover. Prostate still lags. So that business has not recovered as much as breast. It is a bit of a drag on growth right now. And look, longer term, we're confident in the outlook for this business. Temporarily, though, the pandemic has weighed on growth there.

Your next question comes from the line of Mark Massaro from BTIG. Your line is open.

Hey, guys. Thanks for taking the questions. I also have a three-parter. I guess, you know, the passing of Chadwick Boseman, you know, he's 43 years old. Is there any movement to try to get even better to increase screening to the 40 to 45 population? I also wanted to ask about PFS genomics. You know, it seems like it could be a diamond in the rough. How close is that assay either to commercial launch or reimbursement? And then I also wanted to ask about TARDIS. You know, you guys have put out data on breast cancer. When can we expect additional data readouts, and when do you think that test could commercially launch?

The Cologuard and colon cancer screening in the 40 to 45-year age group, I think eventually that could occur as the incidence rate in that population continues to increase. Obviously, somebody who's 42 years old has 40 or 50 expected life years left. So even though the incidence rate is lower, the life years gained is significant for every cancer you find. They're not there yet. They did that analysis so that as soon as there could be a change is five or six years from now. So no change in the near term there. Clearly more people are motivated to get tested earlier. In terms of PFS genomics, the There are a couple of publications that are out there already on what this team has done. There are actually two classifiers here. One is for population that looks at whether you can avoid radiotherapy, and then another classifier which suggests that the patient should definitely get or would most likely benefit from radiotherapy. there will be another retrospective set of samples from a prospected randomized study. This would be level 1A or 1B evidence that would will be tested later this year for publication sometime thereafter. That will serve as validation data to make the test available. Insurance coverage would then be the typical, call it a year to a year and a half thereafter. And so it's a couple of years before there is a true launch. It is, I think, more than a diamond in the rough. Maybe that's the right way to describe it. It is a test that could impact hundreds of thousands of women annually around the world, and these are the same customers that we work with on a daily basis in terms of the oncologists and the breast surgeons that we work with. And many of the very same patients that received the archetype DXPRESS recurrence score. So it's a big deal. We're excited. It's an amazing team of leaders, and we're excited to bring that company into the fold. And finally, your question was around TARDIS and what the data and launch. We'll provide greater perspective on that maybe in the next quarter or two because the team's really just coming together and mapping all of that out, and they might be disappointed if I got out ahead of them. So more on that later, Mark.

Your last question comes from the line of Alex Novak from Craig Hallam Capital. Your line is open.

Hey, Greg. Good afternoon, everyone. Just to go back to color of blood and just thinking about the competitive blood test, we have the guidepost now for Medicare coverage. But just remind us the process to get those blood tests, including your own, into the U.S. Preventative Services Task Force guidelines. I know it's a multiyear process. Just walk us through that timeline again and what we should expect there. Thanks.

Most likely, the next USPSTF update will be five plus years from now because we expect the USPSTF guidelines to be finalized sometime this summer, we would expect, maybe sooner. And then it's typically on a five year cycle. The last time previously was an eight year cycle. So, um, it's going to take some time before a blood based test works its way in, into the guidelines. And we expect to be part of the data that is generated and submitted to hopefully support, uh, inclusion. And, um, We'll see how that develops, but there isn't going to be a significant market opportunity for a blood-based test until and unless USPSTF includes that into the guidelines, we believe.

And then just to add to what Kevin said, after the guidelines, which are extremely important, so too are the quality measures, HEDIS, STARS ratings. Those take time. Those could take up to another two years after USPSDF guidelines. So it's a long ways to go from now until when a blood test could be widely available, reimbursed, and in the guidelines.

This concludes our Q&A session. I will turn the call over back to our presenters for our closing remarks.

Thank you for joining us to review our first quarter results for your guidance in our progress on our 2021 priorities. Thank you to all of our employees for their unwavering commitment to our mission. We've never been more excited about the future of exact sciences and have complete confidence this team will continue to advance our mission of eradicating cancer. Thank you.

Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.