It’s been a good month for Exact Sciences and its top executives.
With the Madison, WI-based company’s stock (NASDAQ: [[ticker:EXAS]]) trading near its all-time high, three executives and a board member cashed in significant chunks of their stock holdings earlier this month, earning them about $19.4 million total, according to SEC documents.
In transactions from Oct. 16 to Oct. 20, the four officials exercised their rights to buy shares of Exact stock at prices ranging from 83 cents per share to $10.18 per share, then subsequently sold those shares at prices ranging from $22.84 to $23.93. CEO Kevin Conroy netted nearly $9.1 million, COO Maneesh Arora pocketed $5.6 million, chief science officer Graham Lidgard made about $3.1 million, and board member Sally Crawford pulled in about $1.6 million. Those ranked among the biggest recent payouts for public company executives and board members selling stock, according to Thomson Reuters data published by Barron’s.
These types of insider stock sales are common, although they can sometimes raise questions about whether the sellers are simply taking advantage of a high-flying stock price or cashing in before the company takes a nosedive.
In Exact’s case, it’s almost certainly the former. (Exact executives declined to comment.)
Consider the following: In March, a U.S. Food & Drug Administration advisory panel unanimously endorsed Exact’s stool DNA-based colon cancer screening test, thanks to strong data from a 10,000-patient clinical trial. Five months later, the FDA approved the test on the same day that the Centers for Medicare & Medicaid Services (CMS) gave preliminary approval to cover the test under Medicare, thanks to a first-time simultaneous review process.
In early October, CMS officially gave the green light for Medicare coverage. One private health insurer has also agreed to cover the test, dubbed Cologuard, and more are likely to follow.
Meanwhile, Exact hit the ground running with its Cologuard marketing strategy. The company has unleashed a 120-person sales team on doctors and healthcare systems nationwide, along with an aggressive digital advertising and PR campaign.
Those efforts are starting to yield some early results. A handful of health systems have begun offering Cologuard to patients, and more than 5,000 individual doctors have signed up on Exact’s website to start prescribing it, Conroy said during a call with investor analysts this week.
Sales are starting to accelerate, too. In the two weeks after Medicare coverage was finalized, Exact received about 1,150 orders for its test, compared with about 1,000 in the previous two months, Conroy said. The list price for a Cologuard test is $599, and if all goes according to plan, insurers will pick up some or most of the tab. That’s much more expensive than the $20 to $25 for a traditional test that looks for blood in the stool, which can signal the presence or potential for colon cancer. But Exact’s 10,000-patient clinical trial showed that Cologuard was significantly better at detecting colorectal cancer than the current standard screening test.
“The past three months have been among the most significant in the company’s history,” Conroy (pictured left) said in a press release announcing third-quarter results. “We are very pleased with the significant demand from physicians and patients, and the early uptake of Cologuard since Medicare’s final national coverage decision.”
Of course, Exact still has a lot to prove. It generated no revenue in the third quarter, while bleeding more red ink—a $32.1 million net loss, or 39 cents per share—than the year-ago period, thanks mainly to a $13.2 million sales and marketing blitz.
Exact needs to continue getting buy-in from doctors, patients, and private insurers if it wants to turn into a healthy business, but observers think it’s on the right track. Financial analysts with Milwaukee-based Robert W. Baird & Co. maintained their “outperform” rating on Exact’s stock after the third-quarter results were published.
“We continue to believe that 4Q and 2015 consensus estimates are too optimistic,” Baird analysts wrote in a Tuesday report, “though early physician adoption and volumes are above market’s expectations, helped by a creative marketing campaign.”
