Exact Sciences’ Conroy praises ‘great news’ as federal panel reverses position

Exact Sciences CEO Kevin Conroy is hailing the “great news” from a federal task force, which reversed its preliminary position on the company’s colon cancer test.

That earlier position last year slashed the Madison company’s stock price by half. But the U.S. Preventive Services Task Force yesterday backtracked, releasing a final recommendation that’s likely to help the company’s Cologuard test get more private insurer coverage.

“That’s really wonderful news,” Conroy said at an investor conference in Chicago.

Last year, the task force’s preliminary recommendation didn’t recommend Cologuard as a screening method, instead listing it as an alternative.

Cologuard lets people send stool samples to Exact Sciences labs, where its employees screen the samples for signs of colon cancer. Conroy said last year he’d work with the task force to try to change its recommendation, though he repeatedly said he didn’t expect those requests would amount to anything.

The task force yesterday acknowledged concerns that the “recommended” and “alternative” terms “lacked clarity and were confusing to interpret.”

It removed those terms to “better communicate the primary message of importance” — that there’s strong evidence colon cancer screenings are good for those between 50 and 75 years old.

The task force of prevention experts — and Exact Sciences — is trying to ensure more Americans get screened for colon cancer, as one third of eligible adults aren’t screened. So the task force chose not to rank the multiple screening options available, saying there’s no “one size fits all” approach to screening and that patients need to make individual decisions with their doctors.

“The best screening test is the one that gets done,” the task force wrote.

The recommendation, which was published in the Journal of the American Medical Association, leaked ahead of time, JAMA spokesman Jim Michalski confirmed. The leak drove the stock up 33 percent to $9.39 per share as the markets closed Tuesday.

Yesterday, as word of the leak spread further, the stock’s price opened at $11.03 per share. The price declined slightly throughout the day, closing at $9.33 per share.

The task force’s earlier recommendation represented a significant setback for the company, dropping its stock price from about $18 per share to about $9 after the news hit in October. The stock had been below $8 per share for most days since.

Exact Sciences has cleared major hurdles, such as getting FDA approval and getting coverage from Medicare. But the company has struggled to pick up coverage from private insurers, many of whom were waiting for a final recommendation from the USPSTF before moving forward, Conroy said.

The decision means Cologuard wasn’t specifically named an A-rated test — the highest level the task force awards. But neither was any other screening option.

Instead, the USPSTF said it “found no head-to-head studies” showing any strategy is more effective than the other, noting each has its strengths and weaknesses.

Goldman Sachs analyst Isaac Ro took a more pessimistic outlook of what that means. In a note to investors, Ro said if the task force had specifically recommended Cologuard, “private payers would be required to cover the test with no copay” under the Affordable Care Act. Instead, he wrote, some insurers could continue to limit coverage of Cologuard and its usage will rise modestly.

Conroy, meanwhile, said the ruling “eliminated ambiguity” and should help discussions with insurers move forward.

“Cologuard, as of today, is one of the A-rated tests,” Conroy said. “Make no mistake about it.”

And Brandon Couillard, an analyst with Jefferies LLC, said the decision will lead to more substantive negotiations with insurers. He noted a blood test approved by the FDA in April, from the company Epigenomics, didn’t make the cut in the table of screening options.

He also pointed to language in the USPSTF statement that seemed favorable for Cologuard. The task force, for example, wrote stool-based screening “is quick and noninvasive and can be done at home.”

That’s the message reflected in Exact Sciences’ new TV ads, which the company says has increased interest from patients and orders from doctors. Instead of showing the dire statistics of colon cancer, Conroy noted the ad shows a friendly character — one of its kits — telling people how easy it is to get tested.

It’s also the message Conroy drove home at yesterday’s William Blair 2016 Growth Stock Conference, saying Cologuard could be a “change agent” like the mammogram and pap smear have become.

“It’s really, really hard to get a new screening test to become the standard of care,” Conroy said. “And as of today, we think Cologuard is now part of that process.”

— By Polo Rocha,