Exact Sciences Corp (EXAS) 2014 Q1 法說會逐字稿

Good day, ladies and gentlemen, and welcome to Exact Sciences Corp. First Quarter 2014 Earnings Conference Call. (Operator Instructions) As a reminder, this conference is being recorded. I'd like to turn the call over to Rod Hise. Mr. Hise, you may begin.

Thank you, and thank you all for joining us today for Exact Sciences First Quarter 2014 Conference Call. On the call today are Kevin Conroy, the Company's Chairman and Chief Executive Officer; Maneesh Arora, our Chief Operating Officer; and Bill Megan, our Senior Vice President of Finance.

Exact Science issued a news release earlier this morning detailing our first quarter 2014 financial results. If you've not seen it, please go to our website at ExactSciences.com or call 608-807-4607, and I'll send it to you. Following the Safe Harbor statement, Bill will provide a summary of our first quarter financial results. Next, Kevin will provide an update on our corporate priorities.

Before we get underway, I'd like to 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 required by the federal securities laws, we disclaim any obligation or undertaking to publicly release any updates or revisions to any forward-looking statements contained herein or elsewhere to reflect any change in our expectations with regard thereto or to any change in events, conditions, or circumstances on which any such statement is based.

It is my pleasure now to introduce our Senior Vice President of Finance, Bill Megan.

Thank you, Rod, and good morning, everyone. With the publication of the DeeP-C data in the New England Journal of Medicine, in a positive FDA Advisory Committee review, we've achieved two important strategic milestones. We also continue to make good progress on our commercialization and [watch] plan for Cologuard, our non-invasive colorectal cancer screening test. Kevin will discuss each of these in more detail in a moment.

From a financial perspective, a quick note on revenue. During the past five years, our revenue is being comprised of the noncash amortization of up-front license fee payments paid to us by Genzyme Corporation related to a noncore intellectual property transaction completed in early 2009. These payments were amortized over a five-year period that ended in January 2014.

During the first quarter, we used $17 million of cash ending the quarter with $116 million. Our recent equity offering generated $138 million in net proceeds. Our plan for the use of these proceeds includes continuing to work to obtain approvals from FDA and CMS, funding commercialization of Cologuard pending FDA approval and, finally, funding our continuing product development work.

Specifically, we have previously talked about hiring 50 sales reps to call on high-prescribing FIT and FOBT physicians. Because of our confidence in converting these physicians to Cologuard, we now intend to hire 80 sales reps to call on them at launch with a number of reps scaling to 100 by the end of the year. The total size of the salesforce will then be approximately 140 including key account executives and sales support and management plus, roughly, 20 in marketing. We believe this will help fuel our commercial success following Cologuard's launch.

We continue to be pleased with the progress that's being made to ready the Exact Sciences lab for launch. The IT system, lab equipment, and lab processes are in place and are being validated by the team. In addition, we continue to invest in our R&D efforts, which supports the future launch of Cologuard and our pipeline of new products.

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

Thank you, Bill, and good morning, everyone. We achieved two very important milestones during the first quarter. First, the publication of our DeeP-C data in the New England Journal of Medicine. We've had great feedback on the Journal article from key opinion leaders, policymakers, and medical societies in the United States and around the world.

Second, we are very pleased with the outcome of the FDA Advisory Committee meeting in late March. I want to thank everyone on the Exact Sciences team for their contributions to both accomplishments. We continue to work with the FDA to move approval of Cologuard forward. As part of the parallel review process, we are working closely with CMS on securing coverage of Cologuard. We expect this process to be completed within 90 days of FDA approval.

Now I'll talk about the strategy we're actually achieving to launch Cologuard. The Cologuard launch strategy is aimed at driving demand from physicians, promoting compliance among patients, and securing payment from both Medicare and private payors. The strategy will be supported by public relations activities, advocacy, Cologuard marketing campaigns, and a strong presence on the Web.

In addition to devoting significant resources to physician and system outreach, we also will undertake an active medical education program. We also expect to expand on our New England Journal of Medicine data with additional publications that highlight Cologuard's advantages.

We intend to reach patients through direct advertising, public relations placement in print, radio, TV, and digital and other efforts. These campaigns are designed to encourage patients to ask about being screened for colorectal cancer with Cologuard. Once patients are aware of Cologuard, our customer service center will be another way we can educate them about screening and ensure that they are screened.

On the payor side, we continue to work with the CMS parallel review process, which is a great advantage to the company. We are building the capacity to obtain reimbursement from private payors once Cologuard is approved. Taken together, this is a comprehensive program that we believe will successfully raise awareness of Cologuard and drive its adoption.

Let's turn now to our target customer segments. Our commercial strategy targets two customer segments. The first is physicians who prescribe the highest number of FIT and FOBT tests. These are primary care physicians. The second is large health care networks and practice groups with centralized control of colorectal cancer screening. Based on our market research, we are targeting specific physicians based on our analysis of their FIT usage. This research has shown that 5,000 physicians represent approximately 2 million FIT and FOBT tests per year. We will focus intently on converting this highly concentrated customer base to Cologuard and data from our DeeP-C clinical study strongly supports this conversion.

As a reminder, Cologuard outperformed FIT in the detection of cancers in stage 1 and 2 by 94% to 70%. This significant performance difference for curable stage cancer highlights the superiority of Cologuard over FIT testing. Even when lowering the cost value of the comparator FIT test to the low end of its measurement range, which is below 100 mcg per ml that is FDA cleared, the sensitivity of the FIT test improved only slightly.

At the lower end of that range, the specificity of the comparator FIT test in Cologuard are similar. We expect to see this data published in the future. As Bill mentioned, we are doubling the size of the physician salesforce. As a result, we will be able to more actively address this significant opportunity among primary care physicians. We believe these physicians will adopt Cologuard because of its superior performance and because of the added value that our compliance engine will provide to them and their patients.

The second important customer segment is large practice groups and health care systems. These large practice groups offer centralized decision-making for new screening methods. We will focus our initial efforts on the largest 200 of more than 1,100 group practices around the country that employ more than 125,000 primary care physicians.

We've done extensive market research in this customer segment as well. These large groups and system are highly innovative and want the best test available. They are looking for a highly sensitive test that enables them to successfully address their colonoscopy-averse patients and other patient populations that they have difficulty getting screened.

Finally, they are dedicated to patient satisfaction and believe that Cologuard and our customer service center will help them deliver it. Our lab and customer service centers are key differentiators. Our goal with (inaudible) is to make sure that Cologuard is easy for physicians to order and patients to use. The 30,000 square foot lab has the capacity to scale to 1 million tests per year. It is state-of-the-art and connected with our 24/7 customer service center, a big part of our patient compliance engine. Both the lab and the customer service center will be ready to meet the demand for Cologuard at launch.

Digestive Disease Week, or DDW, is being held this weekend in Chicago. It is the world's largest gathering of physicians and researchers in gastroenterology. In collaboration with our partners at the Mayo Clinic, we will be giving a number of presentations and poster sessions at the meeting. They highlight advances in our pipeline across the GI tract including the detection of pancreatic cancer from pancreatic juice, DNA detection of Barrett's esophagus, which increases esophageal cancer risk and then non-invasive detection of upper GI cancers.

These three posters complement the work that we are continuing to do on colorectal cancer. Although we have not spoken at great length about our pipeline, these presentations highlight the power of Exact Science's exclusive collaboration with the Mayo Clinic for the development of screening and diagnostic tests for the early detection and prevention of GI cancers. A full list of the posters and presentations can be found on our website.

In conclusion, Exact approaches the launch of Cologuard in a strong financial position. We have a commercial strategy focused on physicians, patients, and payors that is well supported by a comprehensive plan. Based our assessment of the market, we are making additional investments in our salesforce. Our lab and customer service center will be ready for the demand at launch. We are excited to present the advances in our product pipeline being made to our collaboration with the Mayo Clinic at DDW later this week.

We appreciate everyone's continue support of Exact as we work to bring Cologuard to patients and physicians. We are now happy to answer your questions.

(Operator Instructions) [Jeff Hitt, William Baird].

So, Kevin, my first question is on reimbursement. Can you talk about, in your latest conversations with CMS, how has the process changed? Are you still thinking they'll use a crosswalk? What's the latest update there?

Yes, well, we've been having very active discussions with CMS, and we are confident in where we are progressing. As we had discussed before, we would expect to have a national coverage decision being made within 90 days of FDA approval. We remain more confident of that now than we were even before. So we're really looking forward to that decision and that process. It highlights the benefit of the parallel review process, which Cologuard was the first product invited into that newly created process.

On the payment side, we are also working very closely with the payment group within CMS, and we are very confident that there will be a crosswalking analysis performed as part of that process and that CMS will eventually put out a payment level that we are pleased with. We are having very active dialogs on both fronts, and we're confident in the outcome.

Good, and then shifting over to the pipeline -- thanks for the color there, and I look forward to hearing more about it at DDW -- but can you talk about the timing of when we could see some of these products perhaps come to market?

At this point, Jeff, we're not ready to talk about the specific products that will come out of the work. Let me start by saying the collaboration has been occurring in the background without the company talking a lot about it, and we have identified very powerful biomarkers throughout the GI tract, G&A methylation markers, for each of the GI sites where cancers develop.

As we hone our strategy, we will focus on that more. I suspect, by the end of the year, we will lay out much more clarity on the pipeline strategy that we have.

Brian Weinstein, William Blair.

Kevin, can you remind us about how you and CMS kind of work together in determining cost effectiveness, and can you discuss any of the parameters and comparisons that were done with other screening methodologies at this point? Thanks.

Sure. There are two groups within CMS. One is the coverage group, and the coverage group typically looks at cost effectiveness as part of their coverage determination.

We have provided very detailed, thorough cost effectiveness data to CMS that they will use as part of the decision to cover Cologuard. That is very different than what is presented to the payment group. The payment group, as you know, looks at new molecular tests with a new approach that was first laid out in 2012 in a collaboration with the AMA. There were codes that were issued for individual DNA markers, and payment levels have been ascribed to those markers through a robust process that included the AMA, CMS National, and the regional mix.

That is a way to create a more standard approach to CMS paying for molecular tests. We are very pleased with that process and believe that we can get very good value out of it. That process does not include the cost effectiveness analysis that is provided to the coverage group. And that's an important distinction that has to be made when looking at this, and sometimes people get confused about that.

Does that answer your question, Brian?

Yes, it does, thanks. And as a follow-up, if, for some reason, a crosswalk is not used, can you talk about your comfort in getting satisfactory reimbursement in a gap fill methodology and any assumptions that you can share about getting us comfortable around that? Thanks.

Sure. So we, of course, have done both the gap fill analysis as well as the crosswalk analysis, and we are very comfortable that we would get an acceptable price for Cologuard with the gap fill approach. The gap fill approach looks at the resources utilized to create a -- to both develop and run a new diagnostic test. Both of these processes are built right into the coded federal regulations, and I will point you to that. That is 414.508 payment for a new clinical diagnostic laboratory test, and it lays out the approach to gap filling. We are very comfortable should this test be gap filled, although we don't think that it will be given the new approach to paying for molecular diagnostic tests laid out by CMS over a two-year period of time.

Brandon Couillard, Jefferies.

Kevin or Maneesh, can you give us a sense of how we should expect the productivity per sales rep to look upon launch and how we should expect that to develop, let's say, over the next six to 12 months?

Sure, Brandon. So at the outset, we have done an immense amount of work to really understand. We [bought] the data we know who these high-prescribing FIT and FOBT physicians are. And so we have developed target lists, call lists, for all of the reps. They will have call lists of 300, but they'll have a focused list of 75. So we are not -- you just turn back the page to 20 years ago where you hired a rep and said, hey, go get some business. We have a very, very focused list, and we're incenting the reps on converting those high-volume physicians.

These physicians -- to profile these physicians is a minimum of 400 FIT and FOBT tests per year, so they are going to be extremely motivated and focused on targeting these physicians. So if you could imagine a rep in a very, very focused geography, we are working with an appointment service to make sure that they have appointments as soon as they get hired. So we have the flexibility with the contract salesforce to bring them up upon FDA approval in the geographies that we need, but we also will have these tools available to make sure that they're focused.

So -- from a load standpoint, while we haven't provided that guidance, you can imagine the leverage that we have pulling on just high-prescribing physicians. If one rep -- and I'll just walk you through an example -- one rep was able to convert one doc that's a high-prescribing doc per week, you would get to pretty substantial numbers. Now, obviously, that's not a target. The target is higher.

We believe that these reps will be able to reach a run rate of somewhere between $1.5 million to $2 million per rep at peak, but it will obviously ramp to that. And we'll provide more color through the launch as to how we will get to that.

Thanks that's helpful. And then, Bill, could you give us some parameters around what to expect for the cash burn in the second half of the year as the commercial organization ramps? And is it too soon to start thinking about magnitude of the DTC marketing support, let's say, in the first 12 months of launch?

So, Brandon, I can provide general color. So there's several critical unknowns. [You said] timing of the FDA approval and CMS coverage and pricing decisions, and those are going to materially impact our launch and the timing of our spend, the timing of revenues. So we can't reasonably guide to specific numbers, but in more general terms, you can see that operating expense in cash burn in the first quarter was about $17 million. That's an increase of about $4 million from the last quarter of 2013.

We expect to see that continue to ramp as we move closer to launch. And so, as an example, right, so if you take sales and marketing, expense ramp is $4.5 million in the first quarter, and we talked about in our prepared remarks, the size of the salesforce. So -- and you can do some math here. The salesforce of 120 at launch, that's 80 sales reps calling on the high-prescribing FIT and FOBT primary care physicians that we just talked about, with a balance in the account execs, sales support staff, the sales management team, and then we expect about 100 sales reps by year-end.

So, again, the cost of that and how it impacts our income statement, our balance sheet will be reflected in the timing of the launch. We can't determine that, so we can't give you specifics on what that's going to look like, but you can see that it is going to ramp up if you do that math.

Into that, you also have to add the development of our -- and execution -- of our marketing plan. So you have contact creation, you have the campaigns, the advertising to impact the market, and add those in as well. Timing of those, again, will depend upon launch timing.

If you think about G&A, right, into G&A we are now building in our customer support team that will help deliver the compliance engine that we've talked about extensively. We're building our billing team, and that will also come into G&A. And so you can see G&A is increased to, roughly, $4.5 million in the first quarter relative to a little less than $4 million in the fourth quarter of last year. That is going to be -- continue to ramp up as we head toward launch -- again, timing undetermined.

[Non affects] but still cash impacting CapEx. We spent a little less than $5 million in the first quarter. If you look at all of last year, we spent a little less than $10 million. We expect to spend a bit more in 2014, and so that $5 million is going to continue to -- we're going to continue to invest because the rest of the year it will be not quite the $5 million level but somewhere in that range. We'll end up with a little bit more than the, roughly, $10 million we spent in 2013.

And then, lastly, inventory -- so as we head towards launch, we'll begin to build our reagent inventory, our collection kit inventory that we are prepared to fulfill on demand and, again, the amount and timing will depend upon those key decisions.

Does that help?

That's great, thank you.

Jeff Frelick, Canaccord.

Maybe this one (echo) (inaudible), but the several thousand PC, primary care docs, will be focused (audio break). Is the concentration there, is there anything unique that you're seeing in these docs?

We've done a whole bunch of work, and what we know is these are physicians that don't -- that believe in non-invasive testing. They have tried and tried to get their patients, over time, to go to get colonoscopy, and they've given up on it, quite honestly, and so that's why we see such high volumes because they're big believers in non-invasive testing. And what we've seen is these are folks that have shifted from using the old fecal occult blood test to the best non-invasive test prior to Cologuard that's available.

And so our focus is pretty simple to them that we've done market research on. If you believe in a non-invasive test, you should be offering the best non-invasive test. And so that's really the common theme, and that's what we're going to focus on as we launch.

Do you know what their return rate is with the patient compliance (echo) ?

It's all over the board, it's all over the board, but we do know, when we talk to them through -- again, because there are great metrics out there, this is market research that we've done. But in the best case they're going to get half of them back, but the predominant case is some people will say I'll get one in 10 back, because they don't have comprehensive compliance programs.

So we remain optimistic, and this is really where, as we built the value proposition and when we talk to physicians about our ability to tell them the colon cancer screening status of someone who offers Cologuard on a real-time basis, that's really compelling to them. So we think the numbers are relatively modest for FIT, and that's one of the reasons we believe we can improve that.

And then just a follow-up on the sales rep (echo) so the 80 reps initially going to 100 by year-end, will these be Exact Sciences direct employees, or are these (audio break).

These are contract sales reps, Jeff. So that's really what gives us the flexibility to put them where we need to put them and grow them very, very quickly. Eventually, these will be -- our intentions are for these to be Exact Sciences employees, but when we're referring to this physician field force of 100 that we increased and doubled based on our confidence in our market research and the discussions we've been having, those are contract sales folks that will eventually be Exact Sciences employees.

But they report into your area managers and regional managers?

Yes. So they will be reporting to area managers that are Exact Sciences' [exterior] managers. So they will be giving direction from folks that are Exact Sciences' employees.

Peter Lawson, Mizuho Securities.

Kevin, just on the Florida pipeline -- when should we -- you said year-end we should hear about that. Is that going to be as an Analyst Day or a conference or just kind of (inaudible)?

Bill -- Peter, we haven't decided yet. Our focus really has been on making sure that the panel meeting went really well; that the New England Journal publication was published in the first quarter. As we move into launch, what we're really doing is focusing a significant amount of the company and resources on Cologuard, as you would expect, while creating a team that will -- including marketing leadership that will lay out this pipeline strategy internally first in a real, thoughtful way. And then once we are confident -- and let's call it our first couple of pipeline products, and there are really many that we could choose from, to come out of that pipeline, we will lay that out to the Street.

We just want to be very -- we want to focus on Cologuard, and then make sure, as we talk about the pipeline, as in the past, we do think that we say we're going to do. So we don't want to get out ahead of ourselves there. I do expect that it would be at the end of the year. It very well may be at an Investor Day so that we can go (inaudible).

Thank you. And then just getting back to the sales ads, (inaudible) because of the timing and how you're thinking of adding people. Are you adding them now? Or is it kind of a more of a 3Q event? And just to clarify this -- so it's 80 reps, 40 managers at launch and then you go to 100 sales reps. Is it still 40 managers at that point at year-end?

So, Peter, great question. This really goes back to one of the reasons we elected to go with a contract sales approach, because it gives us the flexibility to bring these folks on at or really close to FDA approval -- get them trained and get them -- so that we have flexibility. Depending upon that timing, that's really where we'll start at the 80 and between now -- between whenever that happens and the end of the year, our plan is to scale that up, and that would be to contract sales reps.

As Bill said, just for span of control because those managers for those 100 reps, by the end of the year, will be Exact Sciences folks -- those folks need to -- that's part of the 40 that are sales management, sales infrastructure, sales operations, sales support is -- key account executives are included in that. Those are the folks that form a really important part of our strategy, that whole portion that's calling on large systems and networks.

So that's really the composition and the timing by the end of the year.

And should we just be thinking about 2Q costs jumping up again, or is it (electronic noise).

Peter, I think you should think about its continuing to ramp, you see a ramp, a significant ramp from fourth quarter to first quarter, so sequentially you're going to see that accelerate. And as we get into launch mode, it will accelerate even more.

Thank you, that's helpful. And then just the cell phones. Is that more of a 3Q event now?

We aren't providing guidance at this point, but we're working intently with FDA on approval and CMS on coverage, and we expect to ramp up very rapidly. Upon FDA approval would be official launch being on the CMS coverage date.

Got you. And then, just the cost differential between these -- the reps and the managers. What price points should we be thinking about those?

Peter, I think the FDA average over the entire workforce and -- you think about the compensation arrangements -- there's base, there's bonus incentives -- there's a lot of P&E that will be related to these guys. If you think about it all up, you're going to be somewhere in the $200,000 average across that population.

Zarak Khurshid, Wedbush Securities.

Can you help us understand where you are in the buildout of IT around the compliance engine and if you could put some numbers around the required investment there? And the recurring costs, going forward, that would be great. Thanks.

Sure, Zarak. So we -- we're really pleased that, as Bill mentioned in his update, that we have built the back end IT systems. We are putting it through its paces. Right now we're going to be doing some testing and validation, so that's the space that we're in.

No, we're not trying to do things that have never been done. We are simply putting together systems that exist to make sure that it will support our business. So, at the end of the day, we have built it, it's included in the vast majority of the numbers that you see from a CapEx perspective. I'll let Bill speak to ongoing costs, but it's ready to go.

We incurred about $5 million in CapEx on an investment in the first quarter. And, as I mentioned just a moment ago, we expect to move up that $10 million a bit overall in the year. You'll see that the investments start to dip down a bit, but we'll continue to invest, particularly, we'll ramp the equipment load in the manufacturing operation, then in the lab as we begin to get near to launch and build up processing capacity. So you'll see that the systems are largely built and we're in validation and testing of those systems, the integration testing, the at-scale impact testing, and so forth.

So -- framing it out, about $5 million in this first quarter, and that will begin to dip down a bit in the next three quarters.

Great, thanks for that. And then just following up on the last question -- I'm curious, how many people you had at the end of Q1 in the commercial team? And where are you with the 40 or so managers and key account execs -- how many of those are onboard currently?

I would say that -- so we made really good progress and, obviously, we're not going to bring all of those managers on. We're ramping this as we go. I would say that we've got about half of that team onboard now and are continuing to make those investments before FDA approval.

That's right. Half of that support team, that leadership team, the management team, that's about right -- so in the 20 range.

Chris Lewis, Roth Capital Partners.

I wanted to start on the testing interval. Can you walk us through the process there? And I was wondering, as part of the CMS decision to come out, will a testing interval be included in their coverage decision?

Yes. We expect that there will be a testing interval. We think, from the company's perspective, that the right answer is about every three years. And that is based upon very sophisticated modeling that looks at the costs associated with colon cancer screening and, importantly, the costs of colon cancer treatment. And taking a look at the performance of Cologuard and, of course, other various tests as well.

When you look at that, what you see is that doing Cologuard testing at various price points over multiple intervals -- so intervals from one to, say, five years. You see, there isn't a huge difference in the cancer prevention capability of Cologuard going from one to three years. But it starts to drop going from three to five years. So three years is, we think, the most optimal method.

There is one guideline group, the American College of Gastroenterology that has weighed in with stool DNA testing at a three-year recommended period. It is kind of the reasonable period of time. We do think that CMS, which has access to all of the data that has been generated through this modeling exercise will issue, as part of their coverage decision, how frequently they will pay for the test.

After that, we expect guideline committees to weigh in, and there are really two ways that intervals are determined. One is through this modeling exercise, and, two, is through long-term, 10-, 20-year government-funded studies. So we think that the guideline committees will act pretty quickly after FDA approval.

Okay, great, thanks for the color there. And then can you talk on the private pay side? Maybe just talk through, maybe the discussions you're having with the private payors now? What are they going to be looking for in order to provide coverage, over time? And how does the publication advance those conversations?

Well, obviously, the publication helps significantly. We've had extensive conversations with private payors. We just had a Board meeting this week with three people from private payors coming in to talk to our Board of Directors. We have done a significant amount of research in this area, and we've been out talking to groups.

And one of the things that's very important to know is that these payors are aware that under the Affordable Care Act, a test that is rated A or B by the United States Preventative Services Task Force, which we would expect our test to be rated A or B, we expect Cologuard to be rated A or B by, call it, the end of 2015. Under the Affordable Care Act, any colon cancer screening test rated A or B has to be covered.

So that puts us in a very strong position to have conversations with the payors now. Many of them are following our progress very closely, and those payors want to get more people screened, and they want to get them screened in a cost-effective way, and our data supports that Cologuard is a very cost effective way of screening for colon cancer.

So without providing more color there, we think this test is going to eventually be covered by all of the payors in the US, and that puts us in a very good position to drive adoption of the test.

I think it's great. As a follow-up to that, just on the task force, can you remind us when they are scheduled to meet, I guess, and are you going to be able to submit all that data in the publication by the time they meet for the next review?

Sure. So we have submitted the data to the United States Preventative Service Task Force -- I know it's a mouthful -- USPSTF -- which kicked off their process, and it's public, so you can Google it and find the criteria and the subjects that they are looking at. Stool DNA is one of many subjects that they are considering. We would expect that process to be completed sometime next year. We think, for our planning purposes, we're assuming the end of 2015.

Raymond Myers, Alere Financial.

Kevin, one of the remarks you made today struck a chord. I am interested in your comment that you're even more confident than before in the FDA approval and CMS reimbursement under parallel review within 90 days. Can you expand upon that a little bit? What makes you even more confident? Something must have happened.

Well, let's make sure that you understand really clearly what I said about the 90 days. We would expect the coverage decision to occur within 90 days of FDA approval. I want to make sure that nobody misunderstands guiding to FDA approval within 90 days. We're working with the FDA, and that will occur when it occurs.

But under the review process, we would expect the coverage decision to occur within 90 days. We've just been having very active conversations with both agencies. You may have listened to the Advisory Panel, but it went very well. The agency was complimentary of the data that was presented and the study and the study design. I don't want to get into any specific conversations that we've had with either agency. Suffice it to say is our confidence level is increased.

Mr. Conroy, I am not showing any further questions at this time. Please proceed with any further remarks.

Thank you very much. One thing that I'd really like to drive home is the performance difference that we showed in this DeeP-C study. There are 10 million FIT and FOBT tests used every year in the US. And they suffer from a lack of solid performance. Only 70% of cancers, early stage, stage 1 and 2 cancers are detected in a prospective setting with the current FIT test, and it's recommended FDA covered versus 94% for Cologuard in stage 1 and 2 cancers.

This is really important. There is another problem with FIT testing that we think Cologuard will solve, and that is -- and there's a huge study done by the VA that showed the repeat usage of the FIT test every year drops to 14% -- 14% after four years. You can't rely on an inferior test that is required to be used every year to get to basic decent performance. It's just not a viable way to screen for colon cancer.

Cologuard represents a significant advancement. One of the members of the panel approached me after the FDA panel meeting and said this is the most significant improvement in cancer screening in two decades. So we are excited to get this data in front of primary care physicians and to begin to change the landscape for colon cancer screening. That's our goal. We are totally committed to it, and we really look forward to talking to you three months from now. Thank you.

Ladies and gentlemen, thank you for participating in today's conference. This does conclude the program. You may all disconnect. Everyone have a great day.