Exact Sciences creating buzz in medical and business worlds

The following is the fifth in a series of features on Wisconsin companies that are doing promising work in the global fight against cancer.

It’s hard to predict exactly what a successful launch of Exact Sciences’ colorectal cancer screening test would mean to public health and welfare, but company CEO Kevin Conroy thinks he’s hit on a fitting comparison.

“The best analogy is to cervical cancer, which has been nearly eradicated in a screened population in the U.S.,” said Conroy. “Nobody talks about that story because it’s a cancer that’s slowly gone away. That’s the impact that we would have.”

Of course, it was the Pap smear, which was introduced in the 1950s, that dramatically reduced both incidence rates and death rates of cervical cancer over the past several decades, in the process turning one of the world’s biggest cancer scourges into one of the least feared.

Today, colorectal cancer remains one of the most common and deadliest forms of cancer in the U.S. According to the American Cancer Society, 103,170 cases of colon cancer and 40,290 cases of rectal cancer are diagnosed each year. It’s expected to cause 51,690 deaths in 2012, making it the second-leading cause of cancer death in the country after lung cancer.

Much of the human toll of colorectal cancer, however, is a result of the lack of screening options (many patients still refuse colonoscopy because of the discomfort and inconvenience involved), not a lack of treatment options.

“Colon cancer is a disease that is totally preventable,” said Conroy. “It is widely recognized as the most preventable but the least prevented of cancers. A successful launch here could move toward disease prevention by adding a powerful screening tool to the mix of options that physicians and patients already have today.”

The home stretch?

Whether that happens, of course, is a question that remains in the hands of the FDA. While diagnostics like Exact Sciences’ colorectal cancer screening test don’t face quite the same gauntlet that drugs do on their way to approval – because safety is not as much of an issue – the process can still be prolonged and demanding.

Right now, Exact Sciences appears to be in the last leg of that marathon. A 10,000-patient clinical trial is winding down, and according to Conroy, the company is on track to begin its submission to the FDA in the fourth quarter of this year. After submission, the average approval time is about 10 months, said Conroy.

In the meantime, the company continues to bleed red ink. It recently reported a loss of $14.8 million for the second quarter, more than double its losses in the same quarter last year.

It’s a familiar story to those who have closely followed Exact Sciences’ journey from a Boston-area start-up in the mid-’90s to a major player in the bustling Madison biotech scene, but it’s far from a harrowing one.

While the company’s losses are typically in the millions, they’re nothing compared to the market potential of Exact Sciences’ leading diagnostic. One analyst, recently quoted in the Milwaukee Journal Sentinel, put that potential at $1.2 billion.

That’s a number that Conroy thinks is realistic – and that easily puts the company’s losses into perspective.

“I believe that is a very reasonable market size for the U.S., and if you look outside of the U.S., in Europe and in Asia, you can at least double that and to, at some point, a $3 billion market globally,” said Conroy. “This is the model of developing a new drug, medical device, or diagnostic. You spend a lot on R&D, and if you take a look at our losses, the majority of our losses directly result from R&D investment. But if you’re a billion-dollar in revenue company, you’re generating significantly more than that in a single year, so the payoff is significant with success in product development, clinical trials, and product launch.”

Needless to say, investors have also taken notice of that potential windfall. Indeed, Exact Sciences has proved itself to be one of the most lovable money losers in the financial world. After taking a beating in the mid to late-2000s and eventually trading well below $1 in 2008, the stock has steadily risen to about $10 today. In addition, a recent stock offering raised $61.7 million, more than the hoped for $50 million. Of course, while hopes remain sky high for the stock, shareholder value hinges largely on what happens in the coming year.

“The investor in Exact Sciences is largely a very sophisticated institutional investor, it’s in a mutual fund or a health care investment fund,” said Conroy. “Seventy-plus percent of our investors, of our stock base, are these very sophisticated investors, and they do their homework before they invest, and I believe that they have built into this the belief that we will be successful with those two things, with the clinical trial and the product launch.”

Investors can also look to Conroy himself for encouragement. As president and chief executive of Third Wave until July 2008, when the company was acquired by Hologic, Conroy went through a similar process in bringing a diagnostic to market.

“That experience at Third Wave directly benefits us at Exact Sciences because we’re dealing with a very similar clinical trial,” said Conroy. “The same group within the FDA, it’s called the Office of In Vitro Diagnostics, will evaluate our submission for this test as it evaluated our submission for Cervista, which is a cervical cancer screening test that we saw approved. … And there aren’t that many companies that have secured PMA [Premarket Approval] for a diagnostic, probably under 50 in the history of the FDA, so what we’re trying to do here does require experience in running a clinical trial and interacting with the FDA.”

Exploring options

Of course, the financial impact of a successful launch would be nothing compared to the human impact. Medical professionals continually emphasize the powerful effect colorectal screening has on both cancer prevention and cancer survival rates. But as Conroy notes, that means little if people still refuse to get tested. If nothing else, then, Exact Sciences’ colorectal screening test would go a long way toward removing some of the last remaining barriers to effective treatment.

“If you offer colonoscopy as a screening tool to patients, 38% of them will undergo a colonoscopy within 12 months,” said Conroy. “If you offer a patient a choice between colonoscopy and some form of a stool test, 69% will do one or the other, and there’s only a slight decrease in the percentage of patients that will undergo colonoscopy, from 38 to 32. You get another 37% of people who will do a stool test. So you’ve nearly doubled the number of people getting screened. And as a company, we want to see people screened. We want to see them screened by colonoscopy or this test, we don’t care. We want people screened and we want to be part of the solution of curing colon cancer.”

More in this series:

Developed at the UW, Quintessence Biosciences’ innovative approach to fighting cancer shows early promise

A Prudent approach: Centrose’s unique cancer therapy moves forward

SHINE brings a light of hope to cancer and heart patients

Procertus BioPharm tackles the unpleasant side effects of cancer treatment