Exact Sciences Corp (EXAS) 2020 Q4 法說會逐字稿

Ladies and gentlemen, thank you for standing by, and welcome to the Exact Sciences Corp. Fourth Quarter 2020 Earnings Call. (Operator Instructions) Please be advised that today's conference is being recorded. (Operator Instructions) I would now like to hand the conference over to your speaker, Mr. Erik Holznecht. Thank you. Please go ahead, sir.

Thank you, Cathy, and thank all of you for joining us for Exact Sciences' Fourth Quarter 2020 Conference Call. On the call today are Kevin Conroy, the company's Chairman and CEO; and Jeff Elliott, our Chief Financial Officer.

Exact Sciences issued a news release earlier this afternoon detailing our fourth quarter financial results. This news release and today's presentation are available on our website at exactsciences.com.

During today's call, we will make forward-looking statements based on current expectations. Our actual results may be materially different from such statements. Reconciliations to GAAP figures are available in our earnings press release, and descriptions of the risks and uncertainties associated with Exact Sciences are included in our SEC filings. Both can be accessed through our website.

It is now my pleasure to introduce the company's Chairman and CEO, Kevin Conroy.

Thanks, Erik. We are thrilled to announce that Megan Jones, our Head of Investor Relations, had healthy twin girls on Friday, and we congratulate Megan and her husband, Chris, on this great news.

Last year, we continued to transform Exact Sciences and advance our mission to eradicate cancer. We strengthened our R&D capabilities in our cancer test menu by adding the Thrive, Base Genomics, Paradigm and Biomics teams to the Exact Sciences family. Because of our team's resilience throughout the pandemic, we tested more than 4 million people across all of our tests and generated nearly $1.5 billion in total revenue. We'll talk today about how we've evolved into a leading cancer diagnostics company with the broadest and most advanced capabilities, relationships and foundation.

Backed by these strengths, we're confident in the long-term growth of Cologuard, Oncotype DX and our future tests, including minimum residual disease, liquid biopsy and multi-cancer screening tests.

We plan to extend our leadership throughout the cancer continuum, addressing the largest patient impact opportunities in diagnostics. Cumulatively, this represents a combined total opportunity of $60 billion. Our people, scientific platform and leading tests place us at the forefront of earlier cancer detection and precision medicine.

Our CFO, Jeff Elliott, will now review our financials.

Thanks, Kevin. Good afternoon. Fourth quarter revenue was $466 million. Screening revenue was $250 million, a 9% increase, driven by Cologuard volume growth. 8,000 new health care providers ordered Cologuard during the quarter, and nearly 227,000 have ordered since launch.

Precision Oncology revenue was $118 million. COVID testing revenue was $99 million, consistent with our guidance.

Fourth quarter GAAP gross margin was 74%. Non-GAAP gross margin, which excludes amortization of acquired intangibles, was 79%. Non-GAAP gross margin increased 2 points sequentially on volume leveraged in screening and Precision Oncology. Sales and marketing expense was $167 million. G&A expense was $145 million, including $12 million related to the termination of the Biocartis agreement.

R&D expense was $446 million. Based on the relevant accounting rules, the Base Genomics acquisition was expensed rather than capitalized. Excluding this impact, R&D expense was $34 million.

Net loss was $437 million, also impacted by the Base Genomics acquisition. Adjusted EBITDA was $88 million, bringing the full year amount to $169 million. This demonstrates the profit-generating potential of our business model and the robustness of our foundation.

We ended the quarter with cash and securities of $1.8 billion. On a pro forma basis, factoring in the January acquisition of Thrive and TARDIS license, our year-end cash balance was $1.4 billion.

Turning to our 2021 outlook. Due to COVID uncertainties, we are not providing formal revenue guidance. We expect first quarter Screening revenue to decline sequentially because of typical seasonal trends. Primary care utilization is lower in December and early January because of the holidays. This impacts screening revenue in the first quarter due to the normal lag between a Cologuard order and a completed test.

In 2020, first quarter screening revenue was down 4% sequentially. We expect the sequential decline to be slightly more this year because of the year-end spike in COVID that lasted through January and is now tapering off measurably. As a result, we have a positive growth outlook for 2021 as the COVID vaccine becomes more widely available and other growth drivers take hold.

For Precision Oncology, we expect to see modest sequential growth in the first quarter as breast cancer diagnoses continue to recover. We expect COVID testing revenue to be down sequentially in the first quarter. COVID testing in the state of Wisconsin, where most of our volume is from, has decreased about 50% from its peak. And COVID cases are down nearly 90%. Year-to-date, we've done approximately $15 million in COVID testing revenue. Based on recent trends in COVID cases, we expect our COVID testing revenue to decline further going forward. We plan to continue offering COVID testing as needed to help support our employees and communities.

Moving to OpEx. This year, we plan to increase our investment in growth given our confidence in the long-term outlook for Cologuard and Oncotype and the potential of our pipeline. For the full year, we expect sales and marketing expense of $800 million to $850 million. This includes expanded advertising for Cologuard with a campaign to reach the 45 to 49 age group and the addition of a women's health field sales team.

We've also assumed Pfizer field sales activity starts to normalize in the first half of the year. Due to the nature of this partnership, as Pfizer's field activity increases, so will our partnership fees.

For G&A, we expect $550 million to $575 million before considering integration costs. Investments include headcount to support growth, multiple IT projects and the Thrive acquisition.

For R&D, we expect $375 million to $400 million, including roughly $50 million related to the TARDIS license. R&D includes investments to support our multi-cancer and MRD programs and the full year impact of BLUE-C, which is our study for Cologuard 2.0 and our colon cancer blood test. We expect around $95 million for intangible amortization, and we expect CapEx to be around $125 million.

I will now turn the call back to Kevin.

Thanks, Jeff. Our mission is to eradicate cancer and the suffering it causes. Our teams are working to bring to patients and physicians a complete end-to-end menu of life-changing cancer tests. Achieving this starts with great science and scientists. We have an accurate and adaptable platform to support tests at every step from screening to recurrence monitoring.

Our scientific platform is matched by the depth and breadth of our sales and marketing capabilities. We have more than 1,000 team members in our global commercial organization with deep relationships spanning 5 specialties and large health systems. Our lab and IT systems deliver valuable patient insights and a seamless customer experience, allowing us to be an end-to-end provider of cancer diagnostics for patients and physicians. Each new test we develop will be supported by this unrivaled foundation.

Cologuard has several exciting long-term growth drivers, including the opportunity to screen people earlier and positively impact an alarming trend in colon cancer incidents. Since the mid-'90s, there has been a 51% rise in colon cancer in adults younger than 50. There are nearly 19 million eligible Americans aged 45 to 49, and most of them have never been screened. As a result of this, the United States Preventive Services Task Force issued draft guidelines lowering their recommended screening age to 45, which we expect to be finalized by the middle of this year.

Last month, we shared prospective data showing Cologuard's specificity was over 95% for patients aged 45 to 49. That means the false positive rate was only 5% in that age group. This very low false positive rate, combined with the convenient at-home nature of Cologuard, makes it very well suited to screen this age group.

While commercial payers typically follow finalized guidelines, we're excited to see that Humana, last week, started covering Cologuard at age 45, joining Aetna as the other major health plan to do so. This is a step in the right direction for patients who prefer an accurate noninvasive screening option.

We have an innovative and comprehensive marketing plan to -- in place to emphasize the importance of getting screened earlier and to make Cologuard their #1 choice. Cologuard is a highly sensitive and specific test, and Cologuard 2.0 raises the accuracy bar, expanding the growth opportunity in colon cancer screening. Our goals with Cologuard 2.0 are to at least maintain cancer sensitivity, increase precancer sensitivity and decrease false positives by 30%. We expect these enhancements to improve revenue and cost of goods by 5% to 10% per test.

We're also developing a colon cancer blood test to provide another option for patients to get screened. Our goal is for BLUE-C, our prospective 10,000-patient trial to support FDA approval for both Cologuard 2.0 and our colon cancer blood test. BLUE-C will collect blood and stool for our blood test. Cologuard and a FIT test, allowing us to compare performance of all 3 in 1 trial. The study is progressing with more than 100 high-quality sites enrolling patients. These programs will deepen our leadership in colon cancer screening over the long term.

We believe multi-cancer screening will be an incredibly impactful weapon in the war on cancer. We are thrilled to have a team of talented scientists and leaders from Thrive join us as we expand on the power of early detection from colon cancer to multiple cancers at once. We believe combining Exact Sciences' methylation-focused approach with Thrive's mutation approach will provide a powerful screening test to patients. We plan to make our multi-cancer screening test available through our screening teams. We'll leverage our primary care sales and marketing, lab, IT, regulatory and customer experience capabilities to offer the best solution to patients and physicians.

Our Precision Oncology team is a foundation we can build on as we expand into minimum residual disease, recurrence monitoring and therapy selection. With Oncotype DX, we have a world-class brand, deep relationships with oncologists, international strength and an unmatched evidence generation engine. The Oncotype DX tests also generate durable high-margin revenue and powerful cash flow to support future tests.

We're thrilled to announce we've agreed to acquire Ashion Analytics to help accelerate the development of our oncology portfolio, including minimum residual disease and other sequencing-based tests. Ashion is a CLIA-certified and CAP-accredited sequencing lab based in Phoenix, Arizona. Ashion developed GEM ExTra, one of the most comprehensive genomic cancer tests available and provides access to whole exome, matched germline and transcriptome sequencing capabilities. This breadth of knowledge will support our efforts to develop innovative diagnostics across the continuum.

Ashion was borne out of Translational Genomics Research Institute, or TGen, as was our recently licensed TARDIS technology. TARDIS is a highly sensitive patient-specific approach that can detect very small amounts of tumor DNA in blood. The talented team at Ashion will be instrumental in advancing TARDIS for minimum residual disease testing.

With Ashion, we've added a high-quality team, lab and unique capabilities to help us lead in precision oncology. We also announced plans for a 10-year research collaboration bringing in the expertise of TGen and City of Hope. City of Hope is a National Cancer Institute-designated comprehensive cancer center. This collaboration complements our continued relationships with Mayo Clinic and Johns Hopkins University, better positioning us for years to come.

We transformed Exact sciences in the past year and are now well positioned to fulfill our mission of eradicating cancer and the suffering it causes. By detecting cancer earlier across the continuum, we can drastically improve outcomes and significantly decrease treatment costs. The acquisitions of Ashion, Thrive, Base Genomics, Paradigm and Biomics enhance our R&D capabilities and add to our deep pipeline of life-changing cancer diagnostics. These enhanced capabilities, along with our established lab, IP and commercial infrastructure will allow us to deliver a complete end-to-end menu of high-quality cancer tests to patients in need.

We're now happy to take your questions.

(Operator Instructions) And your first question is from Vijay Kumar from Evercore ISI.

Maybe I'll start with the high level one. The guidance, I understand, the reluctance for the annual guide, but perhaps Q1, I guess, worse than down 4% sequential, what we saw last year. If I'm looking at the comps here, perhaps the comps do get easier in Q1. So I'm just curious because the math implies -- looks like you guys are guiding to 235-ish on screening revenues. Street's around 255-ish. So I'm curious on the sequential commentary here on screening revenues?

Yes. Vijay, I'll start with that. So on the guidance, it's really important to keep in mind here the impact of the holidays. I've said this before, and I'll say it for future years, for the Cologuard business, our screening business, you should expect Q1 below Q4. And that's because of this timing impact, the holidays, and all the winter weather and all the travel around that affects us in Q1 more. There's about a 30-day lag between an order and a completed test. We recognize revenue on a completed test. And so the impact of the holidays and this year and spike that we had in COVID is felt on that business more so in Q1. So that's all that's happening here.

When you look now at the case count, both in the -- in Wisconsin and nationally, the case counts are coming down meaningfully. So there's a lot of reason for optimism as you look ahead to the rest of the year.

At the same time, we have material growth drivers coming on: Cologuard 45, which is a $3 billion addressable market coming on with the guideline update we expect mid-year; the 3-year rescreen opportunity. We expect, this year, over $100 million of revenue from rescreening, and the number grows from there. On top of that, electronic ordering is a major growth driver that we expect to see more so in the back half of this year. So there's a lot of reason for optimism here, and longer term, this market is enormous. There's 45 million Americans who need to be screened right now, so we've never been more confident in the growth outlook for Cologuard. The Q1 commentary is really just related to the seasonal impact of holidays and this transitory impact from COVID.

And Vijay, let me add to that. One of -- throughout 2020, we stated our belief that COVID would actually start to move people more towards to noninvasive at-home screening method. And if you take a look at Q4, even though wellness visits were off appreciably, maybe up to 40%. Access by our field team was significantly off and colonoscopy screening was down 25%. Cologuard utilization was up 9% year-over-year.

So that tells us that this trend that we see of pulling forward or Cologuard to address this big screening gap and to change the paradigm in colon cancer screening is starting to occur, plus those other additional drivers that Jeff highlighted.

Understood. And then for my follow-up, Kevin, just on the data side, the clinical side. I guess it's a two-part question. What is the timing on the validation of the pan-cancer test? I know it's expected at some point this year.

In -- related to that, I guess, BLUE-C, you did mention the blood-based results will be out. It's 3 trials under 1, I guess, trial, 3 different tests if you will. What is -- I guess I know CMS asked for 74% sensitivity. Given Cologuard has done so well plus 90%, is there a sense on where the blood-based test, what it should look like in your BLUE-C study?

So I'll try to take each of those questions in turn. First of all, as it relates to our multi-cancer test, CancerSEEK, we're first focused on developing additional capabilities with that test by combining the best of Exact and Thrive. So the Exact methylation approach and the Thrive mutation approach plus the protein elements, we believe, will improve sensitivity while holding specificity relatively constant. That's important.

So that's what the team is focused on now. We'll be conducting additional studies in the second half to validate this approach. And then we expect to launch the pivotal study to support FDA approval next year. That's the path, and we'll let you know. As we are able to present that data in scientific forums, that's most likely to occur next year.

Second question around blood-based testing for colon cancer, the CMS is looking for a minimum of 74% sensitivity. The challenge, of course, with any blood-based test is to detect the rare event in stage 1 cancers. We believe that we have equal to or better than performance with our approach using methylation markers, and that will be part of our study. We would expect to be able to meet that overall sensitivity based on the data that we have internally today. But of course, proof is in the prospective study, and there are no guarantees for anybody as you move into a prospective setting.

Was there a third question that was embedded there, Vijay? Or did I get both of those?

No, you did, Kevin.

The next question is from Dan Arias from Stifel.

Kevin, just thinking about some of the things that go into a proper liquid assay for colorectal cancer. There was some data presented by Freenome in January on adenoma detection. So I'm just curious about your latest thoughts on polyps and polyp detection maybe in the context of sensitivity that you saw or that you've see for Cologuard but also the mid-60s for the initial 2.0 data and just where you think the bar is headed there for adenoma detection capabilities?

Well, I think, for anybody who's participating in this space, a truly prospective study of the ability to detect precancerous polyps, that remains to be seen. That study was not a prospective study in the sense that one would normally use that word. And so there is going to be -- the FIT test sets the bar there. So the FIT test detects about 24% of advanced adenomas. And there just isn't much data on a blood-based test in that prospective setting. We do know that what we saw in our DeeP-C study, which was our original study, is the polyps, the advanced adenomas in a prospective study are smaller than you see in case-control studies. And the sensitivity for stool test is directly proportional to the size of those advanced adenomas. So it really remains to be seen and requires a large effort to get to a sufficient number of samples to see what the performance is.

I would be surprised to see sensitivity equivalent to the FIT test. But if so, then what you basically have is a test that is equivalent to the FIT test; and it's going to be hard because to displace the FIT test with a blood-based test if you have equivalent performance, in part, just because of the $25 cost of the FIT test.

Lots of challenges to address this market. We're intent on delivering the very best tests to patients and physicians.

Okay. Very helpful. If I could just stick with the blood-based assay line of questioning, and then touch on the MRD assay. I mean I know things are still coming together there, but just given how quickly the market is evolving here, the technologies are evolving, what kind of time line should we be thinking about commercialization there? And is the strategy to offer a customized assay? Or is it more of an off-the-shelf type of assay that you'll be coming to market with there?

With our MRD assay, we'll be in a better position to talk about the product configuration, the product performance in the coming quarters. We have a robust team, clinical trials and sample collections that are already underway. And as we mentioned, because of the Ashion acquisition and the TARDIS license, we believe we have just tremendously sensitive and specific technology. And we can combine that with this leading platform that we have in connection to oncologists.

And for example, with our market-leading position in early-stage breast cancer testing, one of the things that we're able to do is to leverage that tissue sample as a starting point in that patient's journey. We also know which patients are at the highest risk of recurrence. So our collaborators are really excited about the opportunity to work with us in the breast and colon space and then expand beyond. We'll get into some of the time lines and details in the coming quarters.

Our next question is from Derik De Bruin from Bank of America.

So Dan just took my MRD question. So let me -- let me think of something quick here. So I guess can we talk a little bit about some of the other aspects? I mean is liver still on track for this year, I believe?

It is -- we'll make our liver test available in the first half of this year. We're very excited about that, so we have a lot of things to talk with customers about, and we've built one of the leading health systems, sales forces, field forces and diagnostics. I don't think there's a close second. And so we just have a number of things to talk with them about from Cologuard to Oncotype DX to MRD to CancerSEEK and now the liver test. So we're excited about the impact that we can have at the health system level, which is critical.

So there are a number of companies that are targeting the liver market. Can you just be a little bit more specific on how you're differentiated from some of the competition based on some of the data that's out there?

Sure. Derik, this is Jeff. Well, the portion of the liver market that we are approaching is those that are at high risk of liver disease. That typically means those with cirrhosis and hepatitis B. In the U.S., that's 3 million people. That's where you test because that's where 90-plus percent of all liver disease happens.

So the goal here is to get more people tested because, today, fewer than 1 out of 3 people are tested in this market, and we know that testing helps save lives. The differentiator here is that we bring this broad platform. As Kevin talked about, we've got deep relationships with the GIs, health systems, primary care, all those who come into play in liver disease.

We also downstream our developing test for recurrence. We have a test for therapy selection. So we are differentiated in that we have an end-to-end platform, we have an end-to-end fleet of tests and deep relationships.

On top of that, I think our team is very, very good at generating the clinical evidence that's so important for getting the early test launched, getting adoption, securing reimbursement and guidelines. So I love how we're positioned for liver test and other new tests that we bring to market.

Great. And if I can sneak one final one in on the Oncotype portfolio. You said modest growth in the first quarter. How should we think about that for the full year?

Not giving that, Derik. But I think the near-term drivers are really tied to cancer diagnoses. We've seen breast cancer diagnoses come back, and you've seen this business perform very well in Q4 relative to Q3. We do see those diagnoses come back. Obviously, mammography volumes are impacted by COVID.

Back in April last year, they were down 95%. But they've come a long ways back, so too has our business. Over the course of the year, I expect growth to improve as they come back the rest of the way.

On the prostate side there, prostate cancer diagnoses are down more. And so that business is more impacted. But this is a very, very strong business. The evidence behind these tests are incredibly strong. And now with the RxPONDER study that came out late last year, that is helping open up the node-positive market. We're seeing geographies around the world start to move as far as reimbursement, which will help growth, especially as we exit this year and into next year.

You have a question from Doug Schenkel from Cowen.

I want to start on guidance, and then I just want to ask, I guess, what are kind of a couple of pipeline or product development questions. So first on guidance, I mean, this has been touched on a couple of times, Jeff, but I just want to be clear. The seasonality dynamic that you walked through earlier in asking about screening and trailing Cologuard guidance makes sense, and you've talked about it in the past, that said, as we think about Q4 of 2020, people weren't traveling as much for the holidays. So that would seem to suppress that holiday dynamic that we've always talked about in December. I think there's still need for screening catch-ups, as you guys talked about in response to at least one other question.

Colonoscopy capacity is constrained and the positivity rates are now just starting to come down again. So to be clear, are you simply guiding like this is kind of a regular year with a regular seasonal pattern, but leaving room for upside to account for all the things that you mentioned and I just mentioned, which could result in upside relative to these targets? Is that the right way to think about it?

Well, Doug, we wanted to give very clear guidance on Q1 given the different dynamics here. The biggest dynamic is the seasonal trend. I mentioned last year, down 4% in Q1 versus Q4. This year, we expect a similar trend, perhaps a bit more because of what we saw with COVID.

To your point on the holidays, yes, people weren't traveling as much. But you still lose that week during -- you lose at least a week in Q4 because during Christmas, New Year's and the holidays, people aren't going in for wellness visits.

So wellness visit volumes, which we can track closely, are down meaningfully. Kevin talked before, colonoscopy volumes down at least 25%. So we are seeing the backlog, this catch-up happening. There's well over 1 million people still in the backlog. We are capturing that. That's why we saw a 9% year-on-year growth in Cologuard. And with colonoscopies down where they were, this really sets the stage for an exciting year this year and next year and beyond given that you've got this backlog that we're starting to capture. As Kevin talked about, we're pulling ahead Cologuard growth. This growth we talked about over time is being pulled head.

At the same time, over the course of this year, all these new drivers we've talked about are really starting to take hold. Things like Cologuard 45, again, the midyear guidance update that we expect should help unlock that major new market, a $3 billion opportunity. This year, we expect, I would say, at least $40 million of revenue from that 45 to 49. So there's a long ways for us to grow there.

Electronic ordering, we expect the biggest year in the company's history as far as converting fax orders to electronic ordering. And then lastly, rescreening. I mentioned before, we expect over $100 million of revenue this year from rescreening, and the opportunity is even bigger next year.

So I want to make sure I gave a little color on what to expect in Q1. I think some folks, when they updated their models last in October after our third quarter call, obviously hadn't factored in the big spike in COVID because that happened after the call. And then some folks I think forgot how the holiday dynamic plays for Cologuard, which is a bit different than some companies because of that 30-day lag.

No. Understood. And that's all super helpful, Jeff. It's just -- I'm sure, as you can appreciate, it's -- on one hand, it seems like you're trying to do some model cleanup and set expectations in a way that you normally would Q4 to Q1. That kind of reflects that pattern. It's just not clear the way you're describing it, that Q1 guidance captures all those other positive things that I mentioned and you just mentioned again. So I guess we're just trying to figure out how to balance those things. But I get it.

And then I guess on the pipeline, really, just a couple. On Oncotype MAP, I know it's early to give a whole lot on new details, and I know Dan asked about this earlier. But I'm just -- I just want to make sure, is there any reason you wouldn't follow the somewhat typical pattern we've seen with others where tissue launches first and then there's liquid? And then did -- would you expect to be able to piggyback existing LCDs? And as you're designing the assay, is it designed with both U.S. and international markets in mind? So those are the Oncotype MAP questions.

And then on Ashion, it sounds exciting. I'm admittedly just starting to learn more about the asset and their offerings. I'm curious if this acquisition is at all motivated by a desire to be better positioned to address both centralized as well as decentralized markets depending on how this market evolves over time?

Why don't we take Ashion first? It's -- the Ashion cancer panel is nearly 20,000 genes and about 170 introns. It is a robust panel. Now that's primarily used by academic centers and more in terms of research. It also serves as a foundation for a tissue-first and then liquid approach to MRD. It can provide that basis.

It has -- it's differentiated in terms of its quality, both because of its approach of germline subtraction, which reduces false positives. And also the bioinformatics that are tremendously powerful, and it has this evidence curation software, which allows for automated interpretation. And that's very complementary with Oncotype MAP. We'll be able to offer it through our Precision Oncology sales team. And both of these labs happen to be in the same physical building in Phoenix, Arizona. It's important to note that the GEM ExTra panel has mulled DX reimbursement today, so that's helpful.

As it relates to MRD, we just licensed the TARDIS technology. We just announced that we will be acquiring Ashion. So give us a little bit of time here before we roll out exactly what the product strategy is. We will be doing that. And the first people that we want to lay that out to are our prospective customers and collaborators. Suffice it to say, we have the ability to be very impactful in a quick way here.

Your next question is from Catherine Schulte from Baird.

I guess, first, Jeff, I think I heard you say you expect over $100 million in rescreens this year, which implies recapturing maybe 20% to 25% of the people who got screened in 2018. Is that the right ballpark to be thinking about? And where do you think that recapture rate can go over the next couple of years?

Catherine, on rescreen, I've said, long term, I think at least half of our revenue will come from rescreening. So this is a huge opportunity. The teams have made tremendous strides at capturing even more of these patients. Longer term, where it goes, I think we'll capture at least 50% of the patients, knowing that you have to exclude patients that have a positive, in patients that drop out of the pool for other factors. So we've made some good progress there. I'm not going to give you the specific number as far as the recapture rate, but it continues to move higher thanks to all the tools we've put in place and the efforts of our team to go out and capture these people.

Okay. Great. Helpful. And then with the leadership change in the screening franchise, can you talk to any top priorities for Pat or strategic changes as she takes over for Mark? And if you see things start to reopen more, do you have an appetite for expanding the sales force? Or are you happy with the size now?

Pat's strategic priorities are the same as Mark's. It is to continue to be obsessive about improving the customer experience and how well we are to reach customers with a message of screening. There are 45 million unscreened Americans. 19 million in that 45- to 49-year-old group, so there's an immense focus on making sure that we get to that group. We're kicking off our campaign with -- that we're supporting, Stand Up To Cancer, to focus on underserved populations, which is a really important initiative for the company this year.

In terms of expanding the sales force, yes, one of the things that we highlighted here is that we're building a women's health team. There are about 25%, maybe more than that now with 45 year olds included in the guidelines of typical patients of an OB/GYN, about 25% or more are in the colon cancer screening population. And it's typically their only physician. So getting to women who are currently maybe only getting the FIT tests or not being referred to colonoscopy, getting them to get a Cologuard test is how -- one of the examples of us expanding.

We're really pleased with how Pfizer now is starting to have more activity in the field, and we expect that throughout the year that, that will increase. We're working together very closely with Pfizer. And Pat having come from Pfizer, I think, is in a unique position to build the collaborative efforts of the 2 teams.

So Pat is -- one of the things she did is she moved people around in the organization and flattened that organization, and you're seeing a tremendous amount of energy as we start this year. Mark built an incredible team, and that team is -- remains incredibly hungry to make a difference.

We have a question from Brian Weinstein from William Blair.

First and perhaps most importantly, congrats to Megan. I'm sure she's listening. I hope everybody is doing well and healthy.

So first question on Thrive. You only had it under the hood here for a little bit. Can you talk about some of the things that maybe you didn't appreciate ahead of time? As we think about the pathway here, it sounds like you're pretty convinced that the FDA path is the way to go. Is there any chance you would launch within LVT? And as you think about the FDA, how to think about the potential for what that trial even looks like in terms of size, scale, cost, those kinds of things? I know it's down the road, but it's an important one.

Well, let's start with the fact that getting broad-based reimbursement for a multi-cancer screening test without FDA approval and well-designed randomized studies is just not realistic. And getting patients to pay out of pocket for any type of medical service, we know is very difficult.

There is a role, though, for making CancerSEEK available as a lab-developed test potentially in a way that could help develop real-world evidence and work with health systems that are our customers today in a way that could advance their goals of research and getting more people familiar with the new technology and ironing out all of the finer aspects of a service offering.

For example, it's important to be able to educate people what a positive and negative result means and what happens to the patient in each case. So in terms of conducting a study for such a transformative test as CancerSEEK, we intend to do a randomized study. It will be a very large population that we study, and it will include average risk patients and also higher risk patients most likely in that study.

That study will start next year. We will do it the right way. If we -- if anybody expects to get a test into guidelines in an average risk population, an average risk study is going to be needed.

And so just like with Cologuard, we'll do this the right way. We'll open up large abilities or significant abilities to positively impact patient populations. And we believe that CancerSEEK can be one of the most impactful diagnostic tests ever developed because of its ability to detect asymptomatic people with cancer earlier.

Yes, makes sense. A follow-up here, thinking about the pipeline a little bit. You've talked a lot about the various MRD products that you're looking at. And of course, we just talked about pan cancer, but you do have this initiative with Mayo that we haven't heard a whole lot about other than the liver product. Can you give us any kind of an update on kind of where some of those key products are in that relationship with Mayo and when we might get an update on something like lung or pancreatic or anything else?

Thanks, Brian. I think we should probably wait to talk about the collaboration with Mayo until we can do that with Mayo. Some of those tests, we're working with Mayo Medical Labs and Dr. Bill Morice and his team. They are to bring some tests that maybe we wouldn't be able to focus on as we would like to, to have their pretty remarkable R&D teams and evidence generation capabilities, bring some of those tests forward. Maybe at one of these, sometime in the future, we'll do an R&D Day where we can share more of that information, but right now, we don't have a lot to share on that front. The teams have started to work, and we're excited about what that could do outside of the core areas that we have decided to focus on.

And you have a question from Patrick Donnelly from Citi.

Maybe just one on the order side. Can you talk through, I guess, the traction you've seen on some of the website electronic ordering? Obviously, kind of launched that early mid last year, decent round of marketing around it seemed like a great fit given what was happening on the primary care visit side. So I'm just wondering any metrics you look at, you can kind of help share with us on that front?

Yes. Patrick, this is Jeff. Electronic ordering in total is right around 40% for Cologuard orders. This year, we expect it to exceed 50% as we exit the year, so that's in total when you look at across all electronic ordering types.

I think what you're talking about is our website where a patient could go on and on to request Cologuard, the consumer site. There -- it's a relatively small part of the business still. It is gaining traction. What's happened is we've added new features to that site and made it easier to use. Over time, there's some additional things we're going to branch off and do to help us tap into the payer channel and the employer channel. So stay tuned there. We're just really glad that the team could respond so quickly early in the pandemic and bring this new capability out. It gives us one more way to go out and get more patients screened. And the traction here does continue to increase.

Okay. That's helpful, Jeff. And then maybe just one on kind of the full year. I know people have kind of asked about it a bit here. But the first quarter makes sense, obviously, the holiday impact. I guess, if you think about the full year on Cologuard volumes, you have all the tailwinds you've gone through a few times here. The pandemic seems to be lingering a bit here in terms of primary care visit headwinds. I guess when you guys try to kind of balance that out for the year, what does the visibility look like kind of going forward outside of 1Q? And how are you thinking about the tailwinds and headwinds kind of outside of Cologuard being positive? How do you think about those kind of forces offsetting here?

Let me take that, Patrick. Again, I'll point to the fact that although colonoscopy screenings were off 25% in the fourth quarter, Cologuard was up 9%. That tells us that the underlying growth is significant and wellness visits, our best data say they were still off 40% in the last quarter.

If you've been to a primary care office recently, I have been because I had to get a shingles vaccine, fortunately, no COVID vaccine yet, but it is a very different environment. And it's pretty clear that the people are -- that are there are for a very specific reason. And until you get people back into the office before wellness visits, you're going to see a diminish impact across screening.

I think what we're happy about is that we know that Cologuard is solving some of this problem. So we're getting a greater share of screening than we did this time last year. We're tracking that, and then the 45 to 49 opportunity, this rescreen opportunity that Jeff talked about. The Epic and HL7 integrations that we have seen are really having an impact.

And then the field force coming back to live in-person visits to a much greater degree and Pfizer, which is largely today, still doing mostly visits through Zoom or telephone or email, all of that coming to bear this year, we're truly optimistic about what the year looks like because of those factors. Some of these things we've been working on for years. And put this year aside, some of these things are going to power us into 2022 and 2023 and beyond.

Jeff, I don't know if you have anything to add to that.

I would just add normally -- Patrick, ignore the dynamic. Normally, this is a very, very predictable business model given that we've got this massive base of order providers that we can model out. I can see how a typical primary care doctor performs over time.

And you've heard me talk before about, well, I can see that doctors, let's say, whether they're 1 year or 2 years or 3 years into ordering Cologuard. Across all those time horizons, they continue to order more. Again, before the pandemic, we had never seen any physician flatten out. They always keep ordering more and more.

And now we're layered in things like 45 in electronic ordering. So once this pandemic really subsides, we're extremely excited about what the longer term has in store for Cologuard. Nearer term, COVID makes things a little harder to predict, but longer term, we can see where this is heading.

And you have a question from Dan Brennan from UBS.

Megan, congratulations. I guess, first one, Jeff, you quantified the reorder opportunity in the 45 to 49 opportunity on the call. I was hoping you can do the same with Epic. Obviously, this has been discussed for a while and the potential impact it could have given fax orders. So any way to think about the revenue and their test impact from Epic's rollout this year?

Yes. Dan, this is Jeff. So Epic, around 50% of primary care doctors in this country use Epic. So this is a huge opportunity for us and really, more importantly, for patients to get more patients tested. Our -- what we have done now is because we are live on Epic and because Epic has been a good partner to Exact Sciences, any doctor, any health system who now upgraded to the latest version of Epic that came out late last year will have the ability to order Cologuard through the click of a button. When the order then comes to us, we take care of all that testing and that goes right back to the patients -- right back to the doctor.

So again, that's about half of doctors out there. We are rapidly working to help those systems make sure that they're aware that Cologuard is going to be available electronically and then work to pull through Cologuard ordering once they convert again to this latest version.

As far as revenue, I mentioned before, 40% of our orders at year-end last year came in electronic. We expect it to be at least 50% this year. And I've said before, when a physician orders electronically, they order at least 50% more than when they order through fax. Now that doesn't happen overnight. It takes time. But that's -- if you look at when somebody has scaled to order electronically, they order far more. So this is a huge opportunity to see order rates go up.

And also it's helping bring more physicians onto ordering Cologuard. Imagine a health system where you can have thousands of providers. They may not order tests through fax. They may not be allowed to order a test through fax. However, once you put Cologuard on to the ordering platform, you open up a whole brand-new world. So not only do you get more orders per physician. You also get more physicians who are now going to order Cologuard. So we're extremely excited about what this means for the long term.

Great. Appreciate it. And maybe just one follow-up. Kevin, I know I think there was a question early on in the call about CancerSEEK and the potential, as you combine it with your own markets, where that could go. But I'm just wondering, is it -- I don't think you gave any numbers, which I didn't expect, but I know you've sounded very constructive about the ability to take an already good test and make it even better now that you have some time. I'm just wondering if you can help us think through what the potential magnitude of that improvement could be or just kind of what might be necessary in order to see this become a successful test.

Yes. Thanks, Dan. Just last week, in a meeting with the Thrive team, they laid out what each of the potential new marker classes could -- how that could impact the overall sensitivity and holding specificity positive. I won't share that with you though. And at the end of the day, first, we'll do work in a -- with case control samples to validate each of these approaches, putting them together and doing a larger study in the second half where we will lock our algorithm before we start an interventional study in a randomized study next year.

Suffice it to say, you can take a look at the case-controlled study that we showed the data last September, where there was significant -- over 80% cancer detection. Now those samples were biased towards later stage. That means that the sensitivity is higher, but they made a significant contribution, similar to the case control data that Thrive saw previously.

So clearly, as we could see from Cologuard, methylation and mutation are typically not directly overlapping. Some of those markers may be, but as classes, they typically are not directly overlapping. So there is going to be some improvement there. And we just have to wait to see what that is. So I'm not giving you much help other than very qualitatively, and we're confident that there will be an improvement.

And let me just point out one other thing, Dan, is that -- I'll go back to why we were so excited about Thrive in the first place. They did the prospective study in an average risk population. In fact, it might be somewhat of a low risk population because there were people who were in for other screenings. And that gives us a leg up as we begin to have conversations with policymakers, with potential customers. They see that Thrive is committed and now Exact Sciences is committing to doing those prospective studies in an average risk population, and that's critical. That average risk population is critical if we're ever going to access those markets.

And you have a question from Puneet Souda from SVB Leerink.

Jeff, just first one, as a clarification question, and I apologize if you provided this. Wondering if you could give us a sense of where you stand with the Cologuard screening reps today?

And maybe just around what percent of those reps are able to do any physician visits currently. Obviously, with COVID ongoing, my expectation on that number is low, but just wanted to get a sense if they are able to do any visits today versus the online visits that they're currently doing? And we're fully aware that oncology reps are still restricted around oncology clinics, so just wondering if you're seeing any movement in that.

On the Cologuard field force sizing, we have about 500 primary care reps in the field. We have nearly 150 more on the inside. Those teams work very well together, onco and then doctors.

In terms of the access, it's still less than 50% face-to-face relative to where it was before COVID started. The teams make the most of it though and do what they can over the phone and through virtual visits. So the team is very, very motivated to get back out there.

This team is talented. They really want to help patients. And they know the best way to do that is through face-to-face conversations. On the -- we also have another 50-or-so GI reps. And we've said before, we're adding a team of about 50 women's health reps. So this is a big investment because the market is so large, and we know that reps are a highly effective way to educate doctors on Cologuard.

At the -- on the oncology side, I'll say rep access generically depends on the territory. It depends on the COVID cases in an area. We have, as a company, said that reps are free to go back out there. Last March, we had pulled all of our reps in the field. Now typically, our territories are open, but we only let our reps go back out there where it's safe to do so, independent on what the access is in their territory.

Got it. That's very helpful. And Kevin, a big picture question for you. Obviously, you highlighted a few years back your ambition to be a leading diagnostic company in this space, and you are well on your way there, if one could argue, already there. And just help me understand in terms of the product portfolio. Obviously, you have colorectal screening, breast with Oncotype, strong position in prostate, now multicancer. So -- and with the acquisitions of Paradigm, Base and TGen and Ashion, you really have quite a bit of capabilities here. It looks like it's a full plate. But just wondering, are there other areas in oncology or beyond oncology, which remain a key priority for you to build out as areas of potential investments?

Thanks, Puneet. We, several years ago, looked at a lot of different paths that we could take strategically, and we decided to stay focused in cancer diagnostics. And ultimately, that led us to the conclusion that we had to be the very best and most connected, highest quality service, highest quality test, best evidence, best commercial teams, best clinical, regulatory, IT capabilities if we were truly going to serve patients that need help. And so that means that the tests that you think about in oncology, we will bring to physicians and patients who need them, tissue-based therapy selection, liquid-based therapy selection, MRD, colon cancer screening, multi-cancer screening.

And I guess what I'd like to really highlight are there are 3 huge opportunities. Colon cancer screening, which we've obviously started to make progress, we believe we have a very long way to grow there. Multi-cancer screening, which is a game changer in MRD, which you put those 3 opportunities together, and it's about $60 billion in total available market opportunity. And more importantly, the chance to impact millions and millions of people around the world.

And we do have global aspirations. The team that Kim Popovits built at Genomic Health outside the U.S. and is a remarkable team, and that will be our -- the basis and foundation upon which we build for both multi-cancer screening, colon cancer screening and MRD.

Then when you layer on top of it, the ability to mine the data, do deep learning on the data, then prompt and make suggestions to oncologists and to patients based upon that combined data, it gets pretty powerful. You can imagine a day when you have millions or tens of millions of sequential blood draws from patients that you store the genomic information, and then you can look back in time and ask the question, and this will be on an automated basis, do you see a signal in people 2 years, 4 years, 8 years before they are diagnosed with pancreatic cancer? And if so, what is that signal? And so then how can you better inform patients and physicians going forward?

We will uniquely have that data because of the full range of tests that we offer, the Epic platform that we're on, et cetera. So that's why we're so excited about this. We're convinced this is the right strategy. We have an incredible team of people, and I would say that's the other critical thing is our people, we believe, are the best in this field broadly across the spectrum and that the culture is a culture that people want to work at.

And that's something that we need to continue to be great at. So 10 years from now or 20 years from now, we can say if you're a salesperson at Exact Sciences, you know that you've had the very best training. It's considered the crème de la crème. That's our aspiration, and we think we have a good chance to be successful at it.

Your final question is from Sandy Draper from Truist Securities.

A lot of the questions obviously been asked and answered very well. So maybe one, Kevin, for you. On your comment on the 5% to 10%, I think, revenue lift from Cologuard 2, when that comes out, I just would love some thoughts. Is that more on just incremental volume and you're going to get it from that? Is there any price component? But just want to make sure I understand that comment and what's driving that. That's the first question.

And then maybe the second question, the step-up in sales and marketing, understandable, a little bit bigger than I thought, maybe started with the Super Bowl ad. But could you sort of, Jeff, maybe talk about when I think about getting back with Pfizer out there, adding the women's sales force, overall marketing, sort of how to sort of rank order where the big step-up in spend is coming?

Yes. Sandy, this is Jeff. I'll take those 2. On the 5% to 10%, really, this gets at the heart of what Kevin talked about. The reduction in false positives of at least 30%, when you think about what that means for patients, that's 3 percentage points overall fewer patients getting a false positive. When you compound that over time, not only is it a great thing for patients. It also helps drive our revenue. So 3% more patients stick with us as they repeat Cologuard every 3 years. So that's part of the 5% to 10% lift.

There's also a benefit from a lower spoilage rate. There is a low single-digit percent of samples that come back that are spoiled, and we can't get a result on. No result, no revenue. So as we address those 2 things, it's at least 5% combined.

Longer term, perhaps the biggest benefit of Cologuard 2.0 is not from the lower spoilage rate or the 3% revenue. It's that as we raise the bar even further on this test, I think that will help our positioning with physicians and help us take an even bigger share of this market. So I think that's the biggest driver of value for Cologuard 2.0.

On sales and marketing, a few things on the step-up. One is, as we've talked about before, we are resuming getting more reps back out in the field. We expect to over the course of this year. And as reps get back out there, there's a little more spending involved with that. Pfizer, the same case. We expect Pfizer sales activities to normalize over the course of the year. And of course, under our partnership now, Pfizer is paid for the activities that they perform. We also have now with Cologuard 45 in major new opportunities to help test more patients.

I talked before about a $3 billion market opportunity to help us catalyze that market and help overall raise the education in that market, so people know that they should be screened earlier. We have a marketing campaign targeted directly at that part of the market. So those are some of the bigger initiatives.

Again big new market toward 45. You're starting to see a normalization of sales and marketing activities because we expect the pandemic to decline. And those are the big drivers.

We have no other questions in queue.

Thank you for joining us to review our fourth quarter results, progress made in 2020 and our plan for 2021 and beyond. Special thanks to all of our employees for their unwavering commitment to our mission. We've never been more excited about the future of Exact Sciences and have confidence this team will continue to advance our mission of eradicating cancer and the suffering it causes. Thank you.

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