Exact Sciences Corporation

Good day, and thank you for standing by, and welcome to the Exact Sciences Corp Third Quarter 2021 Earnings Call. At this time, all participants are in a listen-only mode. After the speaker's remarks, 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. Please be advised that today's conference is being recorded. If you need further assistance, please press star 0. I would now like to hand the conference over to your speaker today. Megan Jones, please go ahead. Thank all of you for joining us for Exact Sciences' third 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 third 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 gap figures are available in our earnings press release, and descriptions of the risks and uncertainties associated with Exact Sciences are included in our SEC filings. Both can be accessed through our website. It's now my pleasure to introduce the company's chairman and CEO, Kevin Conroy.

Thanks, Megan, and thanks to everyone for joining us today. Exact Sciences is advancing life-changing solutions to transform cancer care. offering new hope to patients and physicians. This team has proven that they can take a test from an idea to standard of care. We're currently focused on multi-cancer early detection, colon cancer screening, and minimum residual disease and recurrence monitoring. We believe these opportunities will have the greatest impact on patients. We have a powerful commercial engine which will become more efficient as we introduce new tests from our deep pipeline. This team is committed to finding cancer earlier, even during a global pandemic. Cancer screens have been deprioritized throughout COVID, and the need to get people tested is urgent. Early detection can improve cancer outcomes, and getting more people screened is our top priority. We're also focused on enhancing our customer experience and advancing new diagnostic solutions. Executing on these priorities will ensure genomic information is routinely used to detect, diagnose, and treat cancer. Highlights from our third quarter include testing a record 950,000 patients, hiring 400 primary care field representatives from Pfizer, our co-promotion partner, increasing covered lives for the 45- to 49-year-old group to 70% for Cologuard, generating promising data in our Cologuard 2.0 program, initiating an important minimum residual disease study, publishing Oncoguard liver clinical validation data, and securing regulatory approval for Oncotype DX Breast in Japan. Today we'll discuss our third quarter performance in more detail, fourth quarter and full year guidance, and progress on our 2021 priorities. Our CFO and COO, Jeff Elliott, will now review our financial results. Thanks, Kevin.

Good afternoon. Third quarter revenue was $456 million, an increase of 12% or 39% excluding COVID testing. Security revenue contributed $280 million or 31% growth. with strong contributions from Cologuard rescreen in the 45 to 49 age group. 9,000 new healthcare providers ordered Cologuard during the quarter, and 253,000 have ordered since launch. Precision oncology revenue was $145 million, an increase of 59%, including nine points of growth from our Cheyenne acquisition. Growth is driven by archetype BX breast in the U.S. and internationally. COVID testing revenue was $31 million, as Delta variant cases increased rapidly during the quarter. Gap gross margin was 70%. Non-gap gross margin, which excludes amortization of acquired intangibles, was 75%. Margins were down two points, mainly due to lower COVID testing volume. Sales and marketing expense was $197 million. During the quarter, we made investments in our commercial team to support continued growth. G&A expense was $187 million. This includes $10 million of acquisition and integration costs and $10 million of legal settlement costs. R&D expense was $75 million. The increase was driven by our multi-cancer and colorectal cancer programs. Adjusted EBITDA was a loss of $16 million. We ended the quarter with cash insecurities of $1.2 billion. Turn to the market backdrop. Cold Guard grew slightly less than we had expected. This was due to a rapid rise in the Delta variant, as cases tripled from late July to mid-September, reducing sales force access to physician offices. Growth was also impacted by actions taken by our commercial partner during the quarter. Due to COVID concerns, Pfizer pulled their sales representatives out of the field starting in late July through September, and then reduced the size of their internal medicine team in mid-September. Combined, the Delta variant and our partner Pfizer's decision caused our in-person sales calls to decrease 70% during this time period. This led to a flattening of Cologuard orders in August and September. In October, order growth accelerated during the month, reaching new weekly records due to an improving backdrop and actions we're taking. Delta cases are coming down, in-person sales access is improving, and exact scientists hired 400 representatives from Pfizer and got them back in the field. It takes about 30 days between a Cologuard order and a completed test when we recognize revenue. This means that Cologuard orders in August and September had a modest impact on third quarter revenue and will have a bigger impact on the fourth quarter. Fourth quarter is also impacted by holidays. When seasonality leads to fewer orders around Thanksgiving and Christmas, and a temporary delay in patients returning colorectal kits. With that in mind, we're narrowing our full-year revenue guidance toward the high end of our prior range. We now expect between $1.722 and $1.737 billion. We've lowered our screening revenue assumptions and expect between $1.05 and $1.055 billion. We've increased our precision oncology revenue assumptions and now expect between $547 We've also increased our COVID testing revenue assumptions and now expect between $125 and $130 million. For the fourth quarter, we expect revenue between $429 and $444 million. This assumes screening revenue between $265 and $270 million, precision oncology revenue between $134 and $139 million, and COVID testing revenue between $29 and $34 million. Turning to operating expense, we're decreasing our guidance from our prior range. We now expect lower sales and marketing expense of $800 to $820 million. This is because our partner made fewer sales calls, reducing our fees to them. For G&A, we're raising our guidance to $635 to $655 million due to additional investment in IT and people to support growth. This number excludes acquisition, integration, and legal settlement costs. We're also lowering our R&D guidance to $370 to $390 million due to the timing of enrollment for certain clinical studies. We continue to expect to look at $95 million for intangible immunization and $125 million for CFX. I will now turn the call back to Kevin. Thanks, Jeff.

Achieving our mission of eradicating cancer starts with screening in the primary care settings. And we're taking action to get more people tested. We expanded our talented primary care sales team this quarter by welcoming more than 400 members of Pfizer's top internal medicine team to the Exact Sciences family. This is the same team we've partnered with over the past three years. They have a deep commitment to our mission and longstanding relationships with primary care physicians across the country. Our strengthened commercial engine will fuel Cologuard adoption and help reach 110 million Americans who should be screened. In the future, we expect our primary care sales team to educate physicians about Cologuard 2.0, our colon cancer screening blood test, our multi-cancer early protection blood test, and others. These tests will be easy to access, powered by our seamless customer experience IT capabilities, and deep relationships with health systems. The pandemic has changed healthcare and emphasized the importance of digital engagement and at-home solutions. Our focus on the digital customer experience will benefit Gologuard and our future screening tests. Even with a backdrop of fewer cancer screenings throughout COVID and more recently due to the Delta variant, ColaGuard is playing an important role in getting more people screened. Because ColaGuard is accurate and convenient, we have screened nearly 3 million people since the pandemic began. We're focusing on three areas where we can make an impact. One, building the best and most effective commercial organization in healthcare by investing in our leadership team, training, and Salesforce effectiveness. improving the customer experience by making it simpler to order Cologuard electronically and continue rescreening patients every three years, and three, screening more people starting at age 45 to catch cancer earlier. These Cologuard growth initiatives are outperforming and will provide benefits for years to come. Our electronic ordering rate continues to grow, rising from 40% to 48% this year. We've rescreened more people with Cologuard this year than we did in the prior three years combined. And we screened more people ages 45 to 49 in the third quarter than we did all of last year. Our precision oncology business provides a differentiated growth platform with the powerful Oncotype VX brand an experienced team, and strong evidence generation capabilities. Oncotype DX breast is the standard of care because it is supported by unmatched evidence. We've seen growth in a number of no positive patients tested with Oncotype DX since sharing the Responder study results last December. Responder definitively showed which women with no negative disease will benefit from chemotherapy similar to TaylorX for node-negative. The recent Japanese regulatory approval opens another growth opportunity for oncotype CF. Breast cancer is the most common cancer in Japanese women, with more than 90,000 new breast cancer cases diagnosed in 2020. We plan to launch in Japan early next year and look forward to guiding more patients to the most effective breast cancer treatment. We've successfully integrated new tests onto our precision oncology platform, improving our sequencing, bioinformatics, and proteomics capabilities in the process. One example is the T-metashion, which expanded our whole exome, transcriptome, and matched germline sequencing capabilities and provides the foundation for our minimum residual disease testing capabilities. Bringing a test from an idea to standard of care requires rigorous scientific evidence, and we're entering an exciting period for our pipeline in 2022. In colorectal cancer, we're thrilled by recent data generated internally for Cologuard 2.0 and plan to release that data at a conference in January. We also plan to share case-controlled data supporting our colon cancer blood test next year. Our talented clinical trials team has enrolled nearly 12,000 patients in Blue C, our pivotal prospective study. To power the study and support FDA approval for CODAR 2.0 and our colon cancer blood test, we are increasing enrollment to more than 20,000 patients due to lower than expected cancer incidence. Because it will take time to enroll more patients, We expect to read out top line blue C results for Cologuard 2.0 in late 2022 or early 2023, and our blood test in the first half of 2023. In multi-cancer, we now expect to share two sets of case control data next year. The first will show feasibility across multiple classes of markers. The second will show the power of combining the exact synthesis and thrive approaches in one test. In the area of minimum residual disease, we recently announced we're partnering with the National Surgical Adjuvant Breast and Bowel Project, or NSABP, to conduct a prospective multi-center validation study with stage 2 and 3 colorectal cancer patients. We've previously partnered with NSAVP on several important studies, including clinical validation studies for IP Express. The new study, called CORRECT-MRD2, is expected to involve 750 patients to generate clinical validation data for our two-month-informed approach. We'll guide patients with every step using the prototype test to predict recurrence risk and inform treatment decisions. and our minimum residual disease test to detect disease and guide next steps after surgery. Moving to liver cancer, clinical genital neurology and hematology published validation data showing that Oncogard liver test reliably detects early stage liver cancer. At 87% specificity, Oncogard liver demonstrated 82% early stage sensitivity. nearly 20 points higher than the current guideline recommended testing. This publication supported our submission to Ball DX for reimbursement, which we expect to receive in about 18 months. We have completed or are working on more than 220 clinical trials, generating evidence for tests across the cancer continuum from screening through late stage treatment. We're leveraging this expertise to support an outpouring of innovation from our deep pipeline. Our scientific expertise and commercial engine position exact sciences to transform cancer care and defeat this terrible disease. We envision a future where genomic information is used to detect, diagnose, and treat cancer routinely. We're at the forefront of this evolution which will help us eradicate cancer. We're now happy to take your questions.

Thank you. At this time, I would like to remind everyone, in order to ask a question, press star then the number one on your telephone keypad. Again, that is star then the number one on your telephone keypad. We'll pause for just a moment to compile the Q&A roster. We have our first question coming from the line of Matt Skyes with Goldman Sachs. Your line is open.

Hey, guys. This is Dave on for Matt. Congrats on the quarter. We were excited to see the sales folks you've hired from Pfizer and glad things are rebounding strongly there. Could you tell us a little bit more about what they're doing to adapt to some of these headwinds of getting into physicians' offices in the COVID environment? and what will be some of the main changes for these folks now being full-time exact employees instead of Pfizer?

Well, let's first start with our incredible team that we've built over the last seven years in primary care promoting Cologuard is a remarkable team, and they've worked hand-in-hand with Pfizer reps over the last three years of our partnership. This team of Pfizer reps was team one within internal medicine, an average of 16 years of primary care experience, deeply committed to our mission. And we're in the very early innings of this team coming on full time with Cologuard as their position one selling goal. And we're already seeing strong results. Just in October, the first full month of Their promotion of Cologuard is part of our team. Orders are up 10% accelerating in the back half of the month. So we couldn't be more excited about what this combined best-in-class primary care sales organization can do combined with our OBGYN sales force, our GI sales force, our health system sales force in Cologuard. So we're awfully excited about what we believe we can do next year as our country, as the U.S. comes out of the pandemic and the opportunity for screening is desperately needed.

Thank you. We have our next question coming from the line of Derek DeBrown with Bank of America. Your line is open.

Hi, good afternoon. Hey, Kevin, just why don't you think you've seen more telehealth and online ordering for Cologuard? I mean, realizing that the pandemic's been going on for a while, but I think we would have expected to just to see a little bit more pickup than that, as opposed to the FaceTime, given how long the products are on the market. And then I have a follow-up on just a little bit more clarity on the Blue Sea delay. There was some feedback on the line, and I think I missed some of that. So just to go over that and sort of the reasons why the trial is being delayed a bit. Thank you.

Well, we were thrilled with how quickly the team moved to bring up telehealth. And we're working to enhance that patient experience. We learned a lot in terms of what all is required for a telehealth solution. One of the things we learned is still cancer screening generally, whether it's mammography or colon cancer screening or cervical cancer screening, is something that is initiated in the primary care setting. And that will continue to be the biggest growth driver. With that said, we see that the most significant opportunity to generate self-initiated Cologuard testing is likely through partners that do face-to-face telehealth visits for other reasons. So just like you get screened when you go in to see your doctor, we believe you'll also get screened as you initiate a telehealth visit. We don't break this up, but we continue to see growth in this segment, and we're excited about that and what that means over the long term. The main growth drivers will continue to be our sales force and direct-to-consumer.

Thank you. We have our next question coming from the line of Brian Weinstein with William Blair. Your line is open.

Hey, guys. Thanks for taking the question. I don't know if you want to address Eric's other question before answering mine formally, but I guess as we just think more broadly on blood-based CRC screening, Kevin, if you think about this opportunity as kind of a broad class, so not company-specific here, but as a broad class, what do you think the market for these products looks like versus Cologuard if class performance is as good as Cologuard? And then if class performance is worse than Cologuard on the metrics that matter, like early detection and stage one and pre-cancer. And I'm curious what you think performance for the broad class is likely to be once all the data is in. Thanks.

Thanks, Brian. In a prospective study, class performance for a blood test is not going to be close to Cologuard. And it's not going to be close to Cologuard 1.0, our current version, and it's certainly not going to be close to 2.0. We know that because of the work that we have done in this space. However, with that said, a blood test can play an important role. There are 45 million unscreened Americans. We know that choice gets more people screened. That's why we're investing in a blood-based colon cancer screening program. We are well positioned to lead in this space with the quality of our tests. with our brand, with our sales capability, with the infrastructure that we have built from electronic ordering to being able to deliver blood results. With that said, a blood test faces real hurdles that we don't want to minimize. The data that we have seen internally and others have generated as case control data. This case control data, we would expect a significant fall off as you move into a prospective setting, more so even than in a stool study. Also, we know from our Blue C enrollment that patients prefer a stool test over a blood test. In fact, in Blue C, we're seeing that 20% of people choose to complete a Cologuard test but refuse to get a blood draw. So we know that the Cologuard brand will continue to be an incredibly important part of colorectal cancer screening for a long time to come. Finally, the main guideline group, USPSTF, won't opine on a blood-based test until likely 2026. Medicare is right now only proposing to pay for a blood test every three years, despite we believe the performance in a prospective setting will probably only justify a one-year interval. So these are some of the headwinds, which of course we'll confront and deal with. But coming back to the first point, there are 45 million unscreened Americans and blood testing hopefully will help get more people screened.

And then, Brian, to answer Derek's second question on Felicity enrollment, what we had said is that it's going to take more time to enroll a sufficient number of cancers. Really, the goal of a large prospective study like this is to power the study by getting a sufficient number of cancers. It's going to take time. We have seen lower prevalence of cancer in the patients we have enrolled thus far. So we will keep that study open, likely north of 20,000 people, to ensure we get enough cancers to move forward with testing both our Colograd 2 product as well as our colon cancer blood program.

Thank you. We have our next question coming from the line of Vijay Kumar. With Evercar ISI, your line is open.

Hey, guys. Thanks for taking my question. And I had a two-parter, one on Q4 and one bigger question on M&A. On the Q itself, Jeff, I think you mentioned a six-week or a month delay between orders and revenue recognition. Given how volumes have trended, can we quantify the impact of lower physician office with it in cq that's that impacted revenues in q4 related to that how those physician office visits uh normalized uh should there be some impact in q1 so that's the q uh question on q kevin one for you on m a is there a need for exact sciences to do a large uh a transaction at this point in time um considering that you guys have done a couple of large deals over the past 18 months uh there's a lot to digest here

I'll start on the quarter, Vijay. This is Jeff. Look, two things happened during the quarter. First was the Delta variant spike that we saw starting late in July and continuing through mid-September. That caused a significant decline in Salesforce access to physician offices. On top of that, actions taken by our partner, Pfizer, First, by starting to pull reps out of the field in late July, and that continued, and then reducing the size of their sales force in mid-September. The combination of those two things led to a 70% decline in in-person sales calls during the quarter. And look, Cologuard is promotionally sensitive. Normally, when we have access, we see a strong relationship between sales activities and orders. We are starting to see that return now. As Kevin mentioned, during October, we saw acceleration and acceleration of COVID orders with 10% growth during the month. That makes us very optimistic as we exit this year. However, as I said, there is a normal 30-day lag between an order and a completed test, which is when we recognize revenue. So the impact of orders, which was felt primarily in August and September, It impacts Q3 modestly. It has a much bigger impact on Q4. To quantify the impact, as you asked, just look at what, in Q3, we delivered 31% growth. The midpoint of guidance for Cologuard was 34% growth. And I would say that that's a pretty good indication of the impact on Q3. And then if you compare the prior guide for Q4, what we're pointing to today, that gives you a feel for the impact there. However, again, there's a lot of reasons to be optimistic here. This expanded sales team is now entirely out in the field. They are motivated. They are talented. The 400 people we welcomed from Pfizer are thrilled to be part of this mission, and, again, they are back out in the field for the first time in 18 months. We're also seeing wellness visits starting to improve. They're not back to normal yet. They're probably down 10% to 15%, but trending in a good direction. All that speaks to a very exciting year next year for Polar Garden.

And relating to your question about our M&A philosophy, our first priority is to focus on Kologuard and to continue to grow as the pandemic abates. We're thrilled with the position that we're in heading into next year and the strong performance we've seen the team have as they have come back to the field. following the abatement of the Delta variant. So we're excited about that as we head into next year. There are other highlights for next year, the multi-cancer readouts, Cologuard 2.0 data, and our CRC blood program and our minimum residual disease. So we have teams that are excited about delivering on the promise of end-to-end testing and being the platform and the solution provider of choice for cancer screening and cancer testing. If something contributes to our long-term strategy and there's a good cultural fit, we can leverage this foundation that we've built to help more patients. We consider it. Our first priority right now is to focus on the basics of our business and growing, and we're excited about that opportunity as we look at 2022. Thank you.

We have our next question coming from the line of Catherine Schultz with Baird. Your line is open.

Hey, guys. Thanks for the questions. I guess just looking at your fourth quarter guide, it looks like it implies about 6% to 8% year-over-year growth in screening revenue in the fourth quarter. Just given you're so early in terms of adoption, and I would think the environment shouldn't be worse than the fourth quarter last year, why shouldn't that growth rate be better? And does the guide incorporate any assumption around another potential wave of COVID cases?

Kevin, this is Jeff. If you look at the COVID cases, they are still very elevated, and the access to physicians is still very muted. I think right now the access is probably 50% of what it was before the pandemic. So there are still headwinds out there. I talked about the intra-quarter and Q3, and that is what the guidance assumes. It's the impact that we've already seen. As far as going forward, we do not assume another spike in COVID happens. COVID, as we know, is very difficult to predict. So we've assumed a continuation of the trends that we're currently seeing, which is slow and steady abatement of COVID cases and continued modest improvement in both in access and in patient wellness assistance.

Thank you. We have our next question coming from the line of Dan Brennan with Cowan. Your line is open. Mr. Dan Brennan, your line is open. You may ask your question.

Why don't we move on to the next question? We'll come back to Dan.

We have our next question coming from the line of Dan Arias with Stanford. Your line is open.

Good afternoon, guys. Thank you. Kevin or Jeff, on the outlook here, I know you're going to tackle 2022 and the guide next quarter. But I was kind of hoping we could maybe just touch on the beginning of the year again. And the reason I ask is because I know seasonality is a factor for you guys in 1Q. So as we think about the 4Q to 1Q transition, is Cologuard acceleration in 1Q the right way to think about it because you're still COVID-constrained in 4Q? Or is that less likely to happen just because of the way that things typically start off for you guys in the first couple of months of the year?

Again, this is Jeff. In a normal year, when you look at the impact on seasonality, the impact on revenue is larger in Q1 than Q4. So it's been normalized. Going forward, you should expect a sequential decline in Q1 revenue versus Q4 for pool of yards. There's a lot of moving pieces now. We're not prepared today to get to Q1. But, look, the trends that Kevin talked about are very exciting. I would add to that, when you look at other growth factors that we've talked about before, things like three-year restream, tracking well above the prior guidance we had to put out there, well above $100 million, and I expect significant growth next year from restreams. 45 to 49, that launch there is going exceedingly well. As Kevin mentioned in his remarks, coverage has picked up meaningfully. In fact, if you look at 45 to 49, the early pace of adoption is tracking faster than the initial launch of Cologuard did in the 50 and over population. So really good signs there. And lastly, I would add electronic ordering. Today we're up to 48% electronic ordering. That's compared to 40% to start the year. And when somebody, when a position orders electronically, they order far more than when they order via fax. So these are all very good trends. It speaks to a very exciting 22 for Cologuard.

Thank you. We have our next question coming from the line of Andrew Cooper with Raymond James. Your line is open.

Hi, everyone. Thanks for the question. Maybe first just... Andrew, are you there? Can you hear me? Yeah, we can. Sorry about that. I don't know what was going on, but maybe just asking... The near-term question a little bit differently. You know, when we think back to last year, there was definitely some impact in 1Q despite COVID really not turning on in the U.S., you know, more so into March. And then 2Q and 3Q, it feels like there's a little bit of a difference in sort of the lag that we saw. then as opposed to the sequential move in the fourth quarter. So is there any way you can just sort of help balance maybe what's a little bit different now relative to then? Is it just the seasonality? How should we be thinking about why it might look optically a little bit different from a trajectory standpoint?

The biggest difference would be seasonality, Andrew. In the initial spike of COVID, it happened kind of the back half of March and then to April. This time now we're talking about heading into Q4. So seasonality is going to be the biggest difference. Seasonally, the time period of kind of February, March, April, May is normally a very strong time for Cologuard orders. Sitting here now, we're heading into Thanksgiving when orders do decline. It's really because around the holidays, fewer patients go in for physicals. And a Cologuard is typically ordered during a physical. And so 30 days later is when you start to see a big impact. So it's a combination of the Delta variant being a very significant spike in COVID cases, and then you layer on top of that seasonality.

Thank you. We have our next question coming from the line of Puneet Soda with SVB Lyric. Your line is open.

Hi, Kevin. Thanks for taking my question. Just a brief, very quick two-parter. On the 20,000 patient update, just wondering if this is more of a class effect. There are two trials in this space that have now increased enrollment so far. Is there something about the event rate that you don't see that earlier on in the trial? And just trying to understand the dynamic there, is this something you could have seen potentially And then just for Jeff, the sales rep, as of today, how many are, would you say, what percent are in person? And apologies if I missed that. Thank you.

For the first question, yeah, we believe that other aspiring entrants into this space and we are experiencing the same dynamic that the overall prevalence rate of colon cancer appears in our studies to be significantly lower than it was in the deep sea study. There could be many reasons for that. But that's what we're seeing, and because this is an event-based study that stops enrollment once you get through a sufficient number of patients with disease, that's what is driving the need to continue enrollment. Puneet, this is Jeff.

On your second question, I believe you asked on Salesforce access to positions. Today, it's about 50% what it was prior to the pandemic started.

Thank you. We have our next question coming from the line of Patrick Donnelly with Citi. Your line is open.

Hey, guys. Thanks for taking the question. Kevin, you touched a little bit on the catalyst set for 22 on some of the other products. Can you dive into a little bit what we should expect in terms of timing? You touched on the multi-cancer. Blue Sea obviously sounds like it'll be maybe late 22 in terms of the data. And then secondarily, with the Blue Sea data delay, when do we expect Colgar 2.0 on the market commercial? Thank you.

Well, Colgar 2.0, as I mentioned, we expect to complete that study and complete testing um by the end of next year or the beginning of 2023 uh we will then need to submit to fda and i don't want to uh you know the fda is awfully busy so we'll see how long that takes following submission um it's uh the in terms of the data supporting our belief that that test will improve both sensitivity and specificity performance. We expect to present that data in January. Multi-cancer screening, we expect two different readouts of case control studies throughout the year. We haven't yet decided when we would present that data or how we would present that data, but that will occur in two different rounds of testing, one early in the year and another a little bit later in the year. Minimum residual disease testing will be most likely in the back half of next year. Data on Oncogard liver was published August 13th. We touched upon that a little bit earlier. And then also our PFS genomics team expects to present data at the San Antonio conference coming up here in early December. So lots of, I'm not sure I covered all of it, but that's the best I can do from memory. Lots of data coming next year highlighting the significant and exciting investments that we're making from early cancer all the way through minimum residual diseases.

Thank you. We have our next question coming from the line of Mark Massaro with BTIG. Your line is open.

Hey, guys. Thanks for the question. Just one quick one. Kevin, if you could just maybe clarify your comments on the MRD initiative. I think I heard you just say you're expecting data to read out in the second half of next year. And can you clarify, I think you said 700 patients in your prepared remarks. And frankly, what's the earliest time that you think you could launch this? And I would assume that you're planning an LDT. Thanks.

We are planning an LDT. The data that we release next year is not from the correct MRD2 study. It's from another study, which I haven't yet highlighted. And we are also doing that correct MRD2 or NSABP study. So that will be additional data. And we're working on other studies as well. So... The initial data will come from a separate study. Does that answer your question? Okay.

We have our next question coming from the line of Brandon Fullard with Jefferies. Your line is open.

Hey, guys. This is Matt on for Brenda. Thanks for taking the question. One for Kevin or Jeff. Curious your updated thoughts on when we may potentially return to a more normal levels of in-office access, or is there a possibility of a sort of new normal going forward the next few quarters? And please touch on the various tools you guys have at your disposal in the scenario of this kind of new normal in 4Q and then into the first half of next year. Thanks.

The team is doing a great job of getting into offices. And so things are opening up. That's a real positive. We're seeing the signal again. October was a great month of growth month over month. We expect that to continue. Many offices want reps back in. They have missed having reps in the office. And you really see it now. As physicians are trying to get their KETUS scores and their STAR scores up, they're calling and asking for help. We've had a significant number of what we would call bulk or program orders of practices that want dozens, hundreds, and in some cases over a thousand people screened all at once. You know, the signal is good. And remember, we've had 250,000 physicians order Cologuard since launch. So we know there are physicians that we can get access to. The key things that were back out in the field because of the pandemic and because we were our partnership, they made decisions that were slightly different than ours in terms of field access. And that team now being part of our team has full access to the field. And they're getting access to physician offices and face-to-face visits are now up over, I think, 70% of all visits that we're doing. And that's with the principal healthcare provider. So we're getting to offices. Another point that I find we find compelling as we look at next year is the fact that if you segment our customer base to the bottom 60% in terms of ordering frequency, they are ordering at a rate of about 50% higher than they were pre-pandemic. Now, these are physicians that typically we don't call on. The power of the Cologuard brand is evident there. our better customers who order Kroger more frequently, their ordering rate is down about 15% pre-pandemic. They are the most sensitive to promotion. And so as we get now 850 people back out in the field calling on that top 40% of ordering positions, We expect to see tremendous growth in 2022, and we're excited about that.

Thank you. We have our next question coming from the line of Jack Meehan with Nefron. Your line is open.

Thank you. Good afternoon. I had two follow-up questions on liquid biopsy. The first is in blue C. Why is the timing of the blood readout later than that for Cologuard 2.0? And then second, Kevin, you commented that you think going from case control to perspective, the blood performance in colon cancer would drop more than what you showed in stool. Could you just elaborate on why you think that?

Yeah, sure. The first question again.

I mean of colon blood versus coligary 2.0.

The key thing there is that when you enroll a patient into the study, you're asking for stool and blood. 20% of the time, they provide stool but not blood. And this is indicative of Something that we have known for a long time is patients prefer getting screened with an at-home test than getting a blood draw. We think that that is a powerful indicator of where the market is long-term. We believe that the two leading tests will continue to be colonoscopy and colivary. that is really, you know, the significant one. And then, Jeff, you want to take the second one?

Yeah, the second one really comes down to the biology of the colon relative to the biology of the bloodstream. With the stool, as stool goes to the colon, it is coming in direct contact. This is important, direct contact with polyps and small early-stage cancers and full-blown cancers. And so the stool is a more enriched sample type, and that's why we can find through a stool sample, very high levels of both pre-cancer and early-stage cancer. In blood, if you think of how the biology of the colon works, early-stage colon cancers generally do not protrude out into the outer walls of the colon. That's by design. That's to keep us all from getting sick. It's not until an early-stage cancer protrudes out into the late stage two, so stage three, where it protrudes out into the outer layer of the colon where there's muscle. That's where there's a blood supply. that's when you can start just to more reliably pick up colon cancer in a blood sample. So to sum it up, it comes down to the biology differences between a stool sample and a blood sample, which is what gives us confidence with Cologuard 2.0 and beyond, we will have the most accurate and innovative test out there.

And to add on to that, in the deep sea study, we saw 40% of all cancers being stage 1 cancers. About half of those, 20%, are typically removed during the colonoscopy procedure because they're embedded in a large polyp. Case control studies don't have access to those patients because the polyp is removed already. The cancer is gone prior to surgery, so collecting a blood sample can't be done. And that's why we see in blood studies a strong bias towards higher sensitivity for stage one than you would typically see in a prospective study. Obviously, that's not the case when you collect a stool sample before a prospective colonoscopy comparator study. So these are the types of things that we all deal with when we're looking at case control studies, and then you have to do internal modeling to figure out where the ultimate sensitivity will be. And that's where we come to the conclusion with our program that that sensitivity probably drops because of that stage one dynamic.

Thank you. We have our next question coming from the line of Dan Brennan with Cowan. Your line is open.

Hey, thanks for taking the question. I apologize about before, Kevin and Jeff and Megan. Maybe the first one, just on Pfizer, I know you talked about, Kevin, I just heard and kind of read the notes already, you know, expecting a nice impact as we head into 22. Any way to think through just how impactful it could be? I mean, certainly having You know, the work we did when this deal was first signed was that, you know, Pfizer reps having those relationships can really drive a lot of usage. So I'm just trying to think through just any way to help quantify or just the magnitude of the benefit now having your salespeople as part of the exact once things kind of normalize with COVID.

Well, you know, there's always reason to be cautious as we're coming out of a pandemic. We don't know what's around the next corner. With that said, this is an amazing opportunity. sales team that we have built in primary care, our historical team combined with the team from Pfizer, OBGYN, GI, and our net promoter score has increased from 24 a year ago to 40 today. That's among primary care physicians. That's a big deal, which is telling you that the This dynamic of Cologuard getting a lot of attention during the pandemic when screenings were uniformly down is having an impact now on how physicians think about Cologuard. And now getting this team back into the field where we know the frequency of calling absolutely correlates in a straight line with Cologuard test orders, especially among those are better customers. So when you look at those dynamics, there's every reason to be optimistic about 2022. In terms of quantifying that, we'll have an opportunity to do that as we enter next year. I'd love, Dan, to give you a number, but I think Jeff would not be happy with me if I did that.

Thank you. We have our next question coming from the line of Alex Norwex with Craig Collin. Your line is open.

Great. Good afternoon, everyone. Already a number of MRD tests out there on the market. They're already going into additional cancers and CRCs. So I just want to understand a bit better how you're positioning your recurrence tests uniquely, just by not being the first mover advantage there. Does it come down to the sales team? And then Yeah, does it come down to the sales team, or I guess what else are you trying to do to make that test unique when it comes to the market?

I think if you look at this long term, you look at where the customers start their journey. In colon cancer, many of them start with Cologuard, and so we have a relationship with the physician. In breast cancer, we're seeing almost half of all breast cancer patients and their tissue samples So we have a deep relationship in the starting point for the tissue that would be the starting point for a tissue-informed test. We also are unique in that we have deep methylation capabilities. So we have the ability to do both tissue-informed and blood-based native testing with MRD, which nobody else has that type of combined capability. And we also can leverage, and we're excited about this, the technologies that come from our acquisition of Thrive in this field, giving us great scientific capabilities. And then in addition to all of that, our infrastructure, our epic IT backbone allows us to connect from – from the initiation of testing all the way through ultimately options presented for treatment based upon the data that's generated. So we believe that this is, we're obviously not first in this space, but over the long term, we have great strengths that will allow us to lead.

Thank you. We have our next question coming from the line of Kyle Mixon with Canaccord. Your line is open.

Thanks. Hi, everyone. Thanks for taking the questions. So just had a multi-parter, fairly simple one though. So on Salesforce, just wondering what the productivity trends were that you're assuming in the fourth quarter guidance, I guess, just like, you know, just for that context, the 9,000 providers added in the third quarter, then, you know, access is still, I guess, 50% of pre-COVID data. And then similar to that, I guess, there's a broad range of companies trying to break into screening or even different cancers. Obviously, the benefit from your sales force and network of provider relations is really giving help. So would you ever consider maybe offering a portion of your sales force on a temporary contract basis maybe to a potential competitor, whether it's screening or, again, monitoring, things like that? And finally, I just think there's an important question to kind of ask and to think about. With all these pipeline tests being launched in 2023 and 2025, that kind of timeframe, there's a lot of long-term potential, obviously. What's going to be the most exciting, I guess, thing about exact between now and then from an investor perspective? Thanks.

Thanks. This is Jeff. I'll start. So on the Salesforce productivity trends question, look, we have high expectations for this team. We know what they're capable of. And this broader team now is getting back out into the field more fully relative to where we were at in August and September. So I expect productivity to improve throughout the rest of this year and into next year. So that's probably the biggest driver for the whole of our business going forward. On the second question, would we consider, I think the question is co-promoting another project? We would. We love what we have internally with this broader CS capability, the IT platforms we have, the marketing engine that we have. This is something that will only get more productive as we add other products to it. And we do have a full pipeline. Kevin talked a lot about that. The same foundation we've established for Cologuard. Down the road we'll support Cologuard 2.0, multi-cancer, colon blood, other products. And so that will allow us to leverage this and not only improve the productivity, but also improve the profitability of this investment. So we would consider it, although we love what we have internally. I'll last on the busy timeframe, 2023 through 2025. What is the most exciting? I'll answer for myself personally. I think it's the breadth of opportunities we have are really unsurpassed in this space internally, We've talked a lot today about the growth of Cologuard, the growth of our Octotype franchise. We also have a robust pipeline, and you hit on a really big period for Cologuard 2, multi-cancer, MRD. It's going to be a really exciting next few years.

Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.