August 22, 2018 / 10:03 AM / in 2 months

Exact Sciences surges after marketing deal with Pfizer for cancer test

(Reuters) - Exact Sciences Corp’s shares shot up as much as 26 percent on Wednesday after the company said Pfizer Inc would share marketing expenses and co-promote the company’s stool screening test for colorectal cancer.

The companies will invest a combined $48 million, shared equally, next year to market the non-invasive DNA screening test Cologuard, Exact Sciences Chief Executive Officer Kevin Conroy told Reuters in an interview.

“The marketing effort will begin in the fourth quarter (and) we expect the impact (of it) to occur next year,” Conroy said, adding that the company is currently investing about $80 million in advertising and promoting Cologuard.

Approved in the United States in 2014 to screen adults aged 50 or older at average risk for colorectal cancer, sales of the diagnostic test jumped 78 percent to nearly $103 million in the latest reported quarter.

The company reiterated its revenue forecast for 2018 and said it expects about $700 million in 2019. Analysts on average have forecast 2019 revenue of $611 million, according to Thomson Reuters I/B/E/S.

The diagnostics firm will continue to manufacture the test, with Pfizer chipping in with its sales force to boost marketing to primary care clinics and large hospitals.

“This story has always been about driving uptake more so than profitability over the next few years, and this should accomplish this nicely,” William Blair analyst Brian Weinstein said.

Pfizer will receive 50 percent of gross profit above an agreed-upon baseline, Conroy said.

Colorectal cancer is the third-leading cause of cancer-related deaths in men and women in the United States and is expected to cause about 50,630 deaths in 2018.

Earlier this year, the American Cancer Society recommended people at risk of the disease start regular screening at 45 rather than 50, as studies increasingly show a rise in cases among younger individuals.

Exact Sciences shares were up 23 percent at $61.57 in early trading on Wednesday.

Reporting by Tamara Mathias and Saumya Sibi Joseph in Bengaluru; Editing by Sriraj Kalluvila

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