Exact Sciences Corp (EXAS) 2013 Q2 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the Exact Sciences' second-quarter 2013 earnings call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, with instructions to be given at that time. Should anyone require operator assistance, (Operator Instructions). As reminder, today's call is being recorded.

I'd now like to turn the conference over to your host for today, Ms. Cara Tucker. Ma'am, you may begin.

Thank you. And thank you for joining us for Exact Sciences' second-quarter 2013 conference call. On the call today are Kevin Conroy, the Company's President and Chief Executive Officer, and Maneesh Arora, our Chief Operating and Financial Officer.

Exact Sciences issued a news release earlier this morning detailing our second-quarter 2013 financial results. If you have not seen it, please go to our website at exactsciences.com, or call 608-284-5700 and I will send a copy to you. Following the Safe Harbor statement, Maneesh will provide a summary of our second-quarter financial results. Next, Kevin will provide an update on our corporate priorities.

Before we get underway, I'd ask everyone to take note of the Safe Harbor paragraph that appears at the end of the news release issued this morning covering the Company's financial results. This paragraph states that any forward-looking statements that we make, one, speak only as of the date made; two, are subject to inherent risks and uncertainties, including those described in our most recently filed Annual Report on Form 10-K, and our subsequently filed Quarterly Reports on Form 10-Q; and, three, should not be unduly relied upon.

Except as otherwise reported by the federal securities laws, we disclaim any obligation or undertaking to publicly release any updates or revisions to any forward-looking statement contained herein or elsewhere, to reflect any change in our expectations with regard thereto to any change in events, conditions or circumstances on which any such statement is based.

It is now my pleasure to introduce our Chief Operating and Financial Officer, Maneesh Arora.

Thank you, Cara, and good morning, everyone. During the second quarter, we were pleased to announce the completion of our PMA submission to the FDA for Cologuard. Our completed submission is the culmination of a massive effort by the entire Exact team and our collaborators that involve 90 sites and more than 10,000 patients. Our commercial and operations teams continue to focus on our readiness to launch Cologuard once it's approved by the FDA.

These activities include not only scaling up our manufacturing and lab capacity, but also ensuring that Cologuard will receive reimbursement from public and private payers that's valued appropriately. We ended the quarter with a strong cash balance of $157.7 million. We expect our cash balance at the end of the year to be approximately $130 million, which includes $5 million to build out our clinical lab, which Kevin will discuss in a moment. Our final cash utilization total remains dependent on the timing of the FDA's review of our PMA submission and the potential approval of our tests.

It's now my pleasure to introduce Exact's President and CEO, Kevin Conroy. Kevin?

Thanks, Maneesh. And thanks, everyone, for joining us this morning. As a company, you know we are guided by our three clearly defined corporate priorities -- launch readiness, operational excellence, and innovation. We are pleased to report that we are on track with each of these priorities. And we will now update you on our progress toward these priorities in the second quarter.

As Maneesh said, our FDA submission was completed after an incredible effort by the team here at Exact and our collaborators across the country. We continue to have positive productive interactions with the Agency on the Cologuard submission. With the DeeP-C trial and submission completed, we have prepared our analysis of the trial's full data set in collaboration with principal investigators, and submitted a manuscript in June to a premier peer-reviewed medical journal. We hope to have the paper published before the end of the year.

We continue to engage very positively with CMS on Medicare coverage and reimbursement for Cologuard. We believe Cologuard will provide physicians with a truly unique colon cancer screening test. As result, Cologuard has the potential to reduce healthcare costs and increase the number of patients getting screened. It has the potential to detect colon cancer and pre-cancer at its earliest stages. We further believe that CMS's recently updated approach to reimbursing molecular diagnostic tests will appropriately and fairly value Cologuard from a reimbursement perspective.

We are pleased to report that we have made the decision to build our own CLIA lab facility, and we expect to have the lab operational by the end of this year. The lab facility will have an annual capacity of 1 million tests per year.

We have also made strong progress in advancing the plan for the commercial launch of Cologuard. We have hired an experienced Vice President of Sales, and we are beginning to build our field sales leadership team. We have segmented the market to target the physician systems and commercial payers most likely to be first movers in the adoption and reimbursement of Cologuard. As you know, we successfully completed a capital raise in June that put us in a strong financial position to launch Cologuard.

We have a two-pronged strategy for that launch in the early adoption of Cologuard. First, our strategy is focused on large healthcare systems and groups. These networks employ a high percentage of the physicians in the United States. The networks typically have a strong screening program that is driven by centralized systemwide decisions. This concentration of physicians and strong centrally-controlled testing programs presents a great opportunity for Exact Sciences to drive significant adoption of Cologuard.

Another key element of our strategy is aimed at the highest prescribing physicians. 2000 physicians, for example, account for 1.2 million FOBT and FIT tests per year. Our market research provides us with the names and locations of these high-prescribing physicians, who we intend to target upon approval. This clustering of the highest colon cancer screening test prescribers presents another robust early-adoption opportunity similar to that of the largest healthcare networks.

Let's now take a look at our strategy to improve compliance by implementing a high-touch, unique service offering that benefits primary care physicians and their patients. This service will include a call center, education for physicians and patients, automated reminders and robust reports available to physicians, healthcare systems and payers on the status of their colon cancer screening compliance. We know that, currently, compliance with colon cancer screening is poor. Our goal is to significantly increase the compliance rate through this robust and unique service offering.

We're making it as easy as possible for a physician to order Cologuard. All a physician has to do is place an order with our lab, and we will do the rest of the work to ensure that the patient gets screened. The physician will not deal with sample collection or patient reminders. We'll do that for them. This alleviates a significant burden currently placed on physicians. Our market research tells us that the service offering is highly attractive to the physicians most likely to order our test.

A further goal of the service is to make the screening process easy for the patient. We will send the sample collection kit to the patient, send automated reminders, and answer any follow-up questions through our call center and secure messaging. Our robust reporting system will help provide the physicians with the data needed to significantly increase patient compliance.

Let's now turn to key Company milestones. We completed the final component of our module -- modular PMA submission to the FDA in June. We believe that this modular submission has already provided efficiencies in the agent's review of the submission. We have received Agency comments on the first two modules of our submission, and we have fully responded to the comments on the first module, and are in the process of completing our responses to the second module. The Agency is now focused on the third clinical module of our submission.

The Agency has not yet set a date for the expected Advisory Panel hearing. And as soon as they do, we will inform investors. We are appreciative of the FDA's intense engagement on this submission. We continue to work on our Medicare national coverage application, which will be reviewed in parallel with our PMA submission. Our discussions with CMS are ongoing, and we expect a potential national coverage decision within 90 days of a potential FDA approval of Cologuard.

As I've said earlier, we have submitted a manuscript on the DeeP-C data to a premier peer-reviewed medical journal for publication. We look forward to letting you know when it will be published. We believe the quality, size, and results of our clinical trial will make this publication one of the most important in the field.

In conclusion, I would like to remind you that we will be updating our investors and looking back at our execution of our corporate priorities over the past year at our annual shareholders meeting this Thursday morning. I would like to thank the dedicated efforts of the extended Exact Sciences team, including all of our employees, and our scientific and medical collaborators.

Thank you. And we will be happy to take your questions.

(Operator Instructions). Jeff Elliott, Robert W. Baird.

Morning, guys, and thanks for the question. Kevin, I'm wondering if you can talk a little bit about reimbursement? And, specifically, can you talk about how your thoughts have changed on the process over the past couple of months?

Over the past couple of months, our thoughts have not changed. The way that we see the process, based upon our communication with CMS, is that there are two different groups that make decisions around coverage, coding and reimbursement within CMS. The Coverage and Analysis Group makes the decision whether to cover a test. And that is the first decision that is made in the process. Once that decision is made, then the Hospital Ambulatory Policy Group, HAPG, makes the decision issuing a temporary G-code, and also setting the reimbursement level.

HAPG will further -- they have indicated to us that they look at this as an opportunity to crosswalk to the new molecular diagnostic codes. Now, this is not set into stone, but based on our discussions with HAPG, we would expect that the Agency would utilize the new CPT codes for molecular diagnostics, and crosswalk to those codes.

Now we expect that those national limitation amounts for those new molecular diagnostic codes would be set by HAPG before the end of this year. So the timing is -- works well for us. And if you crosswalk to those codes, you end up with what we think is a fair value for the overall reimbursement value for Cologuard.

We remain deeply engaged with both the Coverage and Analysis Group, and the Hospital Ambulatory Policy Group. And we are also appreciative of the fact that those groups are working in parallel with the FDA, and would expect a tight sequencing of events following a hopeful FDA approval in terms of, again, a coverage decision, a coding decision, and a reimbursement value.

Got it. Okay, thanks for that. And just shifting gears, I realized you just raised some additional capital. Given that, I'd like to hear your updated thoughts on acquisitions, potentially your appetite for them and what you may look at?

We're not looking at anything at this point in time. We are focused on preparing for the launch of Cologuard. It's not to rule out anything in the future, but it certainly hasn't been our focus in the past, and isn't presently.

Got it. Just sneak one more in here. Can you talk about any of the feedback you have gotten from the FDA up until this point?

We've had a very positive set of interactions with them. They are -- in the comments that they have provided, there are no showstoppers. And we -- the team here has been diligently responding to the request for additional information, that they've been pretty routine from our perspective.

But I guess the one comment that I would make is that the timeliness of those response and the engagement of the Agency is faster than anything that we've experienced before. We sense a high level of commitment on the Agency's part to review our submission in a timely way, and we are greatly appreciative of that.

Okay, thank you.

Brian Weinstein, William Blair.

Thanks for taking the questions. Good morning. Wondering if you guys could talk a little bit about if you have an opinion on the likelihood of getting your NCD with a coverage of evidence that development is part of that? And then, secondly, if you do end up with a gap-filled process, can you talk about the mechanics that go around that, and the timing difference? And kind of what you expect to happen in the meantime as that process plays out? Thanks.

Yes. So we do not expect -- and based in our discussions with the Coverage and Analysis Group, we do not expect that there would be coverage with evidence development. It's not impossible that that would occur, but based upon our discussions, that doesn't appear to be the direction that this -- that the coverage application would go. So -- and it also doesn't fit well with this parallel review. Coverage with evidence development can include evidence development anywhere from very minor evidence development to very restrictive conditions upon which Medicare would cover a test, and that neither of those options have been favored by CMS today.

Again, they can make -- ultimately, it's their decision to make. And your second question, Brian, was on what?

Yes, if you do end up going down the gap-filled process, can you just talk about the mechanics of that process, and what would happen kind of as far as the reimbursement goes in the meantime as that process plays out? Thanks.

Yes. So, the gap-filled process is described right in the Code of Federal Regulations on reimbursement for new diagnostic tests. And the framework for that process for paying for new diagnostic tests is to, first, to look to a crosswalk process. And by crosswalking, it means crosswalking to existing CPT codes -- codes that already exist. As you know, CPT codes have been laid out -- new CPT codes for molecular diagnostics have been laid out. And if you take a look at those codes, they fit the various components of our test. And when you put those together, you end up with a fair value for Cologuard.

Should CMS decide not to utilize the crosswalk process, they would then utilize a gap-filled process. And gap-fill is used when you can't crosswalk. Should they utilize the gap-filled process, they would look at all of the costs associated with running our test. And, in addition, typically, they would look at the value of any algorithm that is associated with the test, and, also, the significant R&D investments made, amortized over a five-year period of time, estimating the number of tests that would be offered or conducted in the first five years.

You put that together, add in a profit margin, and that's how you get to a gap-filled process -- or to a gap-filled result. And our analysis of the crosswalk process and the gap-filled process ends up awfully close to the same place, which is, theoretically, how the system should work. So, we're comfortable going in either direction and we will be prepared to work with the Agency on either approach.

Okay, I'll just jump back in the queue. Thanks.

Thank you, Brian.

Brandon Couillard, Jefferies.

Kevin, it sounds like you've decided to keep 100% of the testing volume in-house. First, is that correct? And then in terms of establishing the CLIA facility, would that be located in Wisconsin? And will you build that from scratch? Just some color around that plan.

Sure. The location of the facility, it's just a few miles from our headquarters in Madison, Wisconsin. And it's roughly a 40,000 square foot facility that will be able to process about 1 million tests per year. And in terms of handling all of the volume, I believe that there are going to be certain situations where large systems may want to -- that are integrated in nature, may want to take this test in-house and we may consider that.

We will also have a backup facility or an additional facility to handle additional volume, and be an alternative facility to the Madison facility, which will be a partnered lab. We expect that the Madison lab will handle the majority of the volume, but not 100% of the volume.

Thanks. And then, Maneesh, how should we be thinking about the fully loaded COGS per test upon launch, including the effects of the internal testing capacity and the service offering? And should we expect some initial inefficiencies and for that COGS-per-test to decline as volume scales? Just any color you can give us on sort of the initial launch expectations.

Yes, Brandon, that's very, very consistent with how you should think about it and how we've thought about it. What we have always said is, we expect gross margins of 65% or better at launch -- not at launch, excuse me, but at a run rate. And so, you could expect, over time, us to get to that, so let's say by year three, us to be able to attain that 65%, with some modest inefficiencies as we approach that.

So as we get closer to launch, we will be discussing that in more detail. But the best way to think about it is still consistent with what we've said about that 65% gross margin -- once it is penetrated into year three and approaching that, it would be modest inefficiencies, but not far from that.

Thanks. And then just an update around the health economic studies that I think you've been conducting. Have you completed these studies yet? And at what time do you feel like you'll be in a position to present some of that data?

Yes, so we have a draft manuscript. We continue to make tweaks to it. And we hope to have that economic study published by the end of the year. That study will focus on the cost-effectiveness of Cologuard. And I can confidently say that Cologuard is a cost-effective screening test, including that the price range we think that Medicare will reimburse the test at.

I don't want to go into too many of the details of that paper, but I will say that Cologuard is significantly more cost-effective than, say, for example, Pap screening and also mammography. And we're really enthusiastic about the impact that the paper will have.

Great. Thank you.

Peter Lawson, Mizuho Securities.

Just wondering if you could talk about the geographical focus of the initial sales force?

Sure. So, going back to the two-pronged strategy of the systems and the high-prescribing physicians, as we think about the territory managers that would be calling on those physicians, we have those addresses, those locations. So that has been a relatively straightforward exercise. And, as you can imagine, it's centered around population centers, with focus on locations where the Medicare population is going to be -- so, Florida, Texas, California, Arizona.

And so you can expect to see the territory managers displayed that way. And similarly, if you think about the systems, the integrated systems, as we have initiated with a couple of the industry associations -- AMGA, more broadly, as well as CAPG in California -- to really start to better understand these integrated systems. And so the key account managers are folks that will be calling on those systems will be, again, in those major areas that have the integrated system.

So we've got a map of that, Peter. And we are well-prepared at the appropriate time to hire the team necessary. Right now, as Kevin alluded to in his comments, we've brought in an experienced veteran Vice President of Sales, and beginning to hire the sales leadership team. We will expound on that as we progress through the year.

Kevin, I just wonder, just looking to the molecular codes, does that make the new codes, are they more favorable for pricing fee?

As you know, we have a seven mutation K-ras assay as part of the Cologuard test. And there is a code for K-ras testing. And the average MAC reimbursement of K-ras testing is about $235. There is a code for testing one methylated variant of DNA, and that code, the average is about $140 per variant. We have two methylation markers, and then also the FIT test.

So those are, we believe, the most relevant codes to look at, with pretty straightforward analysis, if you look at those codes, which would reimburse the test in the range of $550. Now there could be variants from that. CMS hasn't yet applied those codes at the national level, but we think that is a fair way to look at the value of Cologuard.

You know, putting that in perspective, the cost of colonoscopy is -- and we have recent data on this indicating the all-in cost of colonoscopy paid for by one of the largest health insurers in the country is $1600, including the cost of pathology, including the cost of anesthesia. And around the country, it can exceed the $1600 by a longshot.

So we think that this process that CMS went through is one that does rationalize how molecular tests are paid for. Not everybody is happy with those, and we think that they could evolve. We're pretty comfortable with where things are today.

But it does seem more favorable versus the rest of the industry for you?

I think that -- one thing that we focus on, Peter, is making sure that we provide a valuable test at a -- clinically valuable test at a reasonable price point. We know that to get -- if you want to save a lot of people's lives and move towards disease eradication, you need to have a test that's widely utilized. And one of the problems today is that colonoscopy is a very expensive test, so it's not accessible to everybody. And we see data now showing that, in a population of over 100,000 people, 60% of people aren't being screened appropriately for colon cancer, which is worse than what the public data is. So, we think you have to price this fairly, and we think that the current codes do just that.

Got you. And then just around the Panel meeting, when are you expecting that? Any idea? And then around the trial data, when is that?

You know, our outlook for the Panel hasn't changed, but we expect to have discussions with the Agency soon on that. And we don't want to speak for the Agency. So we hope to have a solid date by our Q3 call. And we look forward to the Advisory Panel.

Some people have asked the question of whether, are we really going to have an Advisory Panel? We think there will be an Advisory Panel. And right now, the Agency and our Clinical Affairs team is focused on the various aspects of the submission, but we expect to have that conversation soon.

Got you. And then just on the trial data, any likely venue for that to be presented? And how is the publication going for that data?

The publication manuscript was submitted in June. Presently, we don't plan to show -- highlight the data at a scientific conference -- although we may. We have a couple of targeted later this year before publication, and we will let you know as soon as we make that decision.

The data is really positive, as you know, and really highlights the stark improvement that Cologuard provides over fecal blood testing. And we think that that data and the publication will be a really positive development for the launch of Cologuard.

Got you. Thanks much.

Mark Massaro, Canaccord Genuity.

This is Mark in for Jeff. Wanted to follow-up on your comment, Kevin, about the partner lab. So my question is, in the past, you talked about potentially a partner lab helping out on more of an operational front. And, if I understood correctly, this morning, you mentioned that the lab may help out with manufacturing. Could you just provide a little more color around whether or not this is the same partner? And any additional color on that would be helpful. Thanks.

Okay, to clarify there, the partner lab will not play any role in the manufacturing of Cologuard. They would simply provide testing services to Exact, as they -- as an alternative lab in a second site to have testing performed. The manufacturing will be performed and the kitting will occur here at our facility in Madison. Most of the components are manufactured by third parties, and then they go through a quality process, quality review and check coming into Exact, where they will be kitted.

Got it. Thank you for the clarification. And have you identified who that partner lab is? And have you made that known?

We have identified two labs, and there could be more labs down the road that offer the test. Again, the majority of the testing volume will be conducted within the Exact Sciences laboratory.

Great. And maybe if you could -- I know it's kind of far-off down the road and not the primary focus, but could you offer any additional steps you might have taken with respect to developing your pancreatic cancer test?

The work that we have done in the pancreatic and esophageal cancer area is to identify the markers and apply for patent protection on those methylated -- the process for detecting those methylated markers. I am very happy to report that the markers that we have identified are even better markers for those diseases than the markers we have for Cologuard. They are highly, highly specific for those diseases. And we think that there could be tremendous value created by the ability to screen -- from the same sample -- screen for upper GI cancers. This, we believe, is -- will take a lot of work, but it would revolutionize the screening of GI cancers.

There is today no effective broad-based screening method for pancreatic cancer. Broad-based screening for esophageal cancer is -- it is done with an upper endoscopy, so something that is not widely available to the population. And we know that those two cancers, pancreatic cancer and esophageal cancer rates continue to climb. And if you take a look at the esophageal cancer numbers, pancreatic cancer numbers, and colon cancer numbers, you're looking at a significant percentage of all cancer -- new cancer cases and cancer deaths in the US and globally.

So this is a significant opportunity over the long haul. We have to stay focused on Cologuard, but our collaboration with the Mayo Clinic has just been tremendous, because they have continued to churn out innovations in this area that we think will bear fruit for years to come.

Great. Thank you.

Zarak Khurshid, Wedbush Securities.

Thanks for taking the questions, guys. With respect to just the R&D spend, any thoughts on the evolution of that run rate for next year?

You know, one of the things we've talked about historically is, after the clinical trial, is that it would return to, let's call it, right before the clinical trial, Q2 2010 levels. So we would anticipate a base run rate of, call it, 4 to 5 for base R&D. And then, on top of that, it would be based on our development programs.

So we will provide more guidance as we get closer, Zarak, but it's really going to depend on the speed and additional trials that come into play for some of the pipeline products that Kevin alluded to. We're really focused on Cologuard, and so we will provide more visibility as we get closer to that point next year.

Great, thanks for that. And then just curious, where do things stand with the IBD study that you are working on? Is that kind of de-prioritized as part of the kind of initial commercial rollout?

Well, actually, not at all. One of the things that we can stay focused on is Cologuard here at the Company, while that enrollment continues at these external sites. So what we got into was completing enrollment, and really enrolling subjects. And it's a very similar situation to Cologuard, where most of the time is accruing and finding the patients, and enrolling those subjects.

So that's the process that we're in right now with the Oceania Study. And so we still expect to complete enrollment by the end of this year. As you know, it's a much smaller study. It's much more controlled study. It's only 300 patients. So we expect to complete that enrollment at the end of this year, and provide a fuller update next year, and hopefully, report on that early next year.

Understood, thanks for the clarity there. And then, lastly, just curious with respect to the current FIT test out there, have any of these technology-driven tools been used to increase compliance? Any sense for how effective they've been with the other players out there? Or perhaps they haven't been used? And if you could comment on why that is, that would be great. Thanks.

Zarak, so it's really interesting if you -- there isn't a lot of data on what percentage of tests -- the fecal blood tests that are handed out actually come back. But if you survey physicians, and anecdotally, when you talk to physicians, nobody believes that that rate is higher than 50%. And some physicians say the rate in their offices is down in the 30% range.

Why is this? Well, it's a pretty inexpensive and not very accurate test. And there is a very fragmented market. So the FIT players are not investing much in terms of sales and marketing; much less into an inexpensive compliance program. So that they're certainly not willing for a test that they made $10 from a healthcare provider for; they're certainly not willing to invest in a compliance program.

And, you know, and taking a look at the performance of those tests, those tests miss a significant percentage of cancers and the vast majority of pre-cancers. So, if you could offer a nationwide screening program, the most rational way to do that is to do it with a test that detects the vast majority of cancers. And that's why we think we're in such a unique position from a product standpoint, but also from a proprietary business standpoint.

And that's really unique about what we're doing with this model. And we think that it will give us the ability to really provide an incredibly valuable services to the healthcare system and to patients, and hopefully, someday will lead to a significant reduction in the colon cancer incidence rate.

Great, thank you.

Raymond Myers, Alere Financial Partners.

Thanks very much, and for clarification it's Alere Financial Partners. Maneesh, could you describe what is the reimbursement rate behind your 65% gross margin forecast?

You know, the reimbursement rate that we started at really for conservativism that we plug in is $300 -- which is far more conservative than the number that Kevin was alluding to. And so the way to think about costs all-in is it's around $100. That's the best way that I can lay it out.

Okay, that's very clear. Thank you. And then, Kevin, I was hoping you might drill into a little bit more of your studies that you have done of these high-prescribing physicians. How much does the compliance engine save them time or other resources versus what they would -- have to expend if there were using FIT? Do you have any more qualitative data around that?

Wait, I'm sorry, the first part of that I missed.

Oh, sorry, I'm not being clear. I was hoping you might give us a little more clarity around the resource savings to high-prescribing physicians of FIT that you would expect to be driven by your compliance engine.

Great question. So today, primary care physicians keep track of colon cancer screening in a variety of ways -- from doing nothing at all, to handing a patient a fecal blood test, asking them to take it home and hope -- crossing their fingers and hoping that they return it -- but not keeping track of it, which is -- we think the majority of primary care physicians; to having a spreadsheet that they keep track of patients who they've handed tests to, to see whether they've returned them. And only a very few keep track of it in a more robust way.

So, what they're doing is they are deploying resources, trying to keep track of it in a very, very manual way. And the next time they get to interact with the patient is when the patient returns. Now, anecdotally, some providers have said the way they get patients to do the FIT test is that they tell them if they don't get a returned FIT test, they're going to schedule them for colonoscopy -- which is a motivator for some people to complete the FIT test.

But what you have is a very diverse set of ways that primary care physicians generate compliance. Most of them cross their fingers and hope. And that's why this service is so valuable, because primary care physicians would like to document their compliance and the steps that they've taken. Colon cancer is one of the most highly litigated of all cancers, and the peace of mind that a primary care physician gets from knowing that this is all documented, is an additional value that primary care docs have told us they see in this service offering.

Great. Thank you, Kevin.

Thanks, Ray.

That's all my questions.

Chris Lewis, ROTH Capital Partners.

Hi, guys, thanks for taking the questions. Can you first just remind us of the plan for the size of the sales force in the first year of commercial launch?

Sure. So what we've talked about is a fully loaded sales and marketing commercial team of around 100. Of that, think about that as three-quarters of that being the sales force -- that is, that's inclusive of the territory managers, the key account managers, as well as sales leadership. That's at launch. So the way -- that's, excuse me, not at launch, but that's at the end of the first full year. As we scale through the first year, assuming it will build, it will build gradually up to that.

Okay, great. Thanks. And then assuming the DeeP-C data publication in the peer-reviewed journal later this year, can you just talk about how that plays into the timing related to the preventative services task force review process next year?

Well, the USPSTF process will kick off at the end of this year with the peer review -- they will review the peer-review publication over the course of next year. And hopefully, by the end of next year or the beginning of 2015, we would have a USPSTF review of Cologuard.

Presently, the fecal blood test is rated A, and we have no reason to believe that Cologuard would be rated anything other than that. So what does that do for us? What does a USPSTF endorsement of Cologuard do?

First of all, under the Affordable Care Act, it mandates that all payers in the US cover our test, and that there be no out-of-pocket costs imposed or co-pays imposed upon the patient. That's a significant benefit when you combine that -- the fact that CMS coverage would cover almost 50% of the targeted patient population. Combined with USPSTF coverage, you would get to 100% within the first 12 months of launch. That's unheard of in diagnostics, to achieve that level of reimbursement that quickly.

The other thing that USPSTF does is builds credibility with primary care physicians. And we are very focused on making sure that the manuscript is published in a high-quality journal that will have an impact on that group.

Okay, thank you.

Thank you.

Thank you. And with no further questions in queue, I'd like to turn the conference back over to Mr. Kevin Conroy for any closing remarks.

I would just, once again, like to thank the extended team at Exact Sciences, including all of our employees and our scientific and medical collaborators. We look forward to our annual shareholders meeting in two days. And we look forward to our Q3 earnings call in three months. Thank you very much.

Ladies and gentlemen, thank you for your attendance in today's conference. This does conclude the program, and you may all disconnect. Have a great rest of the day.