By:
Kyran Young, AIM Student at Marquette University
Disclosure:
The AIM Equity Fund currently holds this position. This article was written by
myself, and it expresses my own opinions. I am not receiving compensation for
it and I have no business relationship with any company whose stock is
mentioned in this article.
Summary:
• Exact Sciences Corporation (NASDAQ: EXAS) is a biotechnology
company concentrating on the early detection and prevention of colorectal
cancer. They developed an accurate and non-invasive Colon screening test,
called Cologuard, for the detection of colorectal and pre-cancers. EXAS focuses
exclusively in the U.S. and does not currently have plans to expand Cologuard
internationally.
• In April, EXAS brought
in a new president, Mark Stenhouse, to lead the Cologuard functions, such as
sales, marketing, market access, commercial operations, and medical affairs.
• EXAS recently entered
into a marketing agreement with Pfizer to help promote Cologuard.
• EXAS is trading close
to their 52-week highs, but has the potential to continue to grow given the
strategic agreement with Pfizer.
Key
points:
Exact Sciences Corporation has experienced significant
success over the past couple years, largely attributed to their Cologuard
product. With their new president, Mark Stenhouse, and their new agreement with
Pfizer, EXAS will continue to grow and deliver shareholder value.
EXAS recently hired Mark
Stenhouse in April to serve as President. Prior to coming to EXAS, he led the
sales and marketing team at Abbott Laboratories/AbbVie. Throughout his 30 years
at Abbott Laboratories/AbbVie, his roles consisted of Vice President of U.S.
Immunology, Vice President of Gastroenterology, Senior Director of Immunology,
Marketing Director of Immunology, and Nationals Sales Director of Immunology.
Mr. Stenhouse brings significant experience to EXAS and will bring many new
ideas and exceptional leadership.
EXAS has entered into a
3-year relationship with Pfizer beginning in quarter 4 of 2018. Pfizer has
agreed to provide EXAS marketing support in the form of 625,000 additional
sales calls per year (double of what EXAS does annually) and advertising and
promotional dollars in the range of $20 million and $24 million through 2021.
In return, EXAS will pay Pfizer 50% of gross profits above an agreed upon
revenue baseline. This deal will significantly increase EXAS share value due to
Pfizer’s large market and respected reputation, which should help convert
physicians who remain skeptical.
Management has guided to
a successful quarter 3 as over 90% of patients do not get a bill, indicating
insurance companies are more willing to cover the costs for Cologuard. Also,
the addition of 100 new reps will help drive sales growth and volume.
What
has the stock done lately?
Since the announcement in
August to partner with Pfizer to help promote Cologuard, EXAS is up about 44.76%.
It is trading near 52 week highs with a price of $72.45. The agreement is a
strategic move by management that will help drive sales growth and increase
shareholder value.
Past
Year Performance:
EXAS has increased 57.06% over the past
year. This increase was largely driven by the agreement between Exact Sciences
and Pfizer to help promote their Cologuard product. However, with Pfizer’s
marketing help, EXAS will continue to experience positive sales growth and
increased shareholder value.
Source:
FactSet
My
Takeaway:
Mark Stenhouse’s
leadership and the agreement with Pfizer will be critical to the success of
EXAS moving forward. Pfizer has the resources and market to help EXAS continue
to implement Cologuard into hospitals and physician’s offices. With Mr.
Stenhouse’s leadership and the help of Pfizer, EXAS could continue to grow and
could push to new 52-week highs.
Source:
FactSet
