Pfizer sales reps to sell Exact Sciences’ cancer test
Sales representatives of Pfizer Inc., the world’s largest pharmaceutical company, will join Exact Sciences Corp.’s sales representatives in selling the company’s non-invasive screening test for colorectal cancer to physicians and health systems under an agreement announced Wednesday.
Pfizer will make at least 625,000 sales calls a year for Exact Sciences under the agreement.
The two companies also committed to spending an additional $174 million, including $48 million this year, on marketing over four years. The additional spending for advertising and other sales campaigns will be in addition to a baseline of $80 million a year that Exact Sciences spends on marketing for its Cologuard test.
“This partnership enables us, we believe, to permanently alter the trajectory of Cologuard,” Kevin Conroy, chairman and chief executive officer of Exact Sciences, said in a conference call with Wall Street analysts Wednesday morning.
Exact Sciences stock opened $10 a share, or 25 percent, higher Wednesday after the announcement. It closed at $65.32 a share, up $15.27, or 30.5 percent. The stock traded for less than $1 a share when Conroy became CEO in 2009.
Exact Sciences, based in Madison, has developed a non-invasive test that analyzes stool samples for blood cells and DNA associated with colon cancer and precancerous growths.
The company has done 1.3 million tests to date and expects to do 900,000 to 920,000 this year.
Exact Sciences employs about 1,700 people, up from 677 at the end of 2015. It projects revenue of $420 million to $430 million this year, up from $39.4 million in 2015.
Pfizer will receive half of the gross profit margin from sales above Exact Sciences’ projected baseline revenue for the next four years. The baseline revenue is set at $622 million next year and increases to $1.2 billion in 2021.
“We’ve done all the math,” Conroy said. “The math says you can have a greater impact with this approach than if we had hired a significant number of reps on our own and increased marketing on our own in the short haul.
“We’ve looked at this every way you can imagine,” he added, “and we are confident that this is a tremendous opportunity for us.”
Pfizer, which had revenue of $52.5 billion last year, is known in the industry for its marketing capabilities.
“We believe that there is a near-term opportunity to create broad awareness and drive adoption of Cologuard as a first-line non-invasive screening option of choice,” Nick Lagunowich, regional president of Pfizer Internal Medicine for North America, said during the conference call.
More than 120,000 physicians, nurse practitioners and physician assistants have ordered Exact Sciences’ Cologuard test. But Conroy said the company is reaching only about a third of the country’s primary care physicians and other clinicians.
“Pfizer brings the experience and relationships that are really hard to develop over a short period of time,” Conroy said.
Pfizer also has stronger relationships with health systems. About half of primary care physicians are employed by health systems.
Many health systems now bar sales representatives from their clinics.
Those health systems still are in the minority — albeit “not a small minority,” Conroy said in an interview.
“It’s a challenge,” he said. “It’s a challenge that’s surmountable.”
Physicians, he said, want to learn about the Cologuard test.
Exact Sciences and Pfizer are not disclosing how many Pfizer sale representatives will sell the Cologuard test.
Exact Sciences has about 350 field sales representatives who call on physicians and health systems and an additional 150 sales representatives who work out of Madison.
“We know that frequent sales force contact with health care providers drives increased Cologuard ordering,” Conroy said during the conference call. “Health care providers reached by our sales force every other week order at several times the rate of those health care providers not reached.
“The addition of the Pfizer sales team will significantly broaden the reach of the sales force and the frequency of calls being made for Cologuard,” he said.
Under the agreement, Pfizer will begin selling and marketing the test in the fourth quarter of this year.
Cologuard, which was approved by the Food and Drug Administration in 2014, is included in the recommended screening methods for colorectal cancer of the U.S. Preventive Services Task Force and in the American Cancer Society’s colorectal cancer screening guidelines.
More than 50,000 people a year die from colon cancer, yet it is considered the most preventable form of cancer.
Nine out of 10 people survive more than five years when colorectal cancer is diagnosed in Stages I or II. Yet roughly one-third of the people who should be screened — typically those 50 to 75 year old — are not current on the recommended guidelines.
Exact Sciences estimates about half of the people who have used its test had never been tested for colon cancer. To date, its tests have detected an estimated 6,500 colon cancers in Stage I and II.
Close to 95 percent of patients who should be screened have no out-ofpocket costs for the test, Conroy said.
Last week, Exact Sciences broke ground on a building in Madison for its new corporate headquarters and research and development. It also is building a new laboratory in Madison and plans to build a manufacturing plant at the site. The company employs about 1,200 people in the Madison area.
Exact Sciences reported a net loss of $114.4 million last year and has yet to turn a profit. But it has $1.2 billion in cash and cash equivalents.
The agreement with Pfizer does not include new tests that Exact Sciences may develop but instead focuses on the Cologuard test and colon cancer.