Dive Brief:
- The Food and Drug Administration approved Exact Sciences’ Cologuard Plus colorectal cancer test, the company said Friday.
- The product is an updated version of Exact Sciences’ existing stool-based cancer test. The company expects to launch the test, which has higher specificity than its predecessor, with Medicare coverage and guideline inclusion in 2025.
- Exact Sciences recently failed to land a Medicare price premium for Cologuard Plus, but Leerink Partners and William Blair analysts expect one of the company’s subsequent attempts to succeed.
Dive Insight:
Cologuard Plus “sets a new bar in non-invasive stool-based screening,” Leerink analysts said in a note to investors on Friday. Exact Sciences expects to market the test at 95% sensitivity and 94% specificity, the analysts said. Leerink analysts highlighted the improvement in specificity, which is 87% for the older test, as a “meaningful reduction in false positives” that will be important to providers.
The figures differ slightly from the results of a study published in The New England Journal of Medicine in March, when Exact Sciences reported 94% sensitivity and 91% specificity. Leerink analysts said the use of the higher figures, which cover a slightly different population than the trial, is an incremental positive for the company.
Otherwise, the approval was largely as expected. William Blair analysts framed the approval as “a nice ‘check the box’ win for the company” in a note to investors. With approval secured, Exact Sciences “can continue to pursue a pricing premium on the test while preparing to launch with its already established infrastructure with its commercial organization and technology capabilities,” William Blair analysts said.
The Centers for Medicare and Medicaid Services extinguished hopes that Cologuard Plus could receive a premium price at the first time of asking in September. In the preliminary payment determinations for its Clinical Laboratory Fee Schedule (CLFS), the CMS recommended crosswalking the price of the current test to Cologuard Plus. The CMS opted against recommending a 25% increase to the current rate.
William Blair analysts said in September the recommendation “should come as little surprise” and said the company “still has several shots on goal to obtain a pricing increase for Cologuard Plus.” The CMS is accepting comments that could lead to changes to its preliminary recommendation.
If the CMS sticks with its original recommendation, Exact Sciences could secure a higher price in the next CLFS process or via the advanced diagnostic laboratory test pathway. William Blair analysts said they “believe in the end a modest pricing premium will be achieved and roll into the model over the next several years (with minimal impact in 2025).”
Cologuard Plus could benefit Exact Sciences financially even if it misses out on a premium price. Leerink analysts said the product will drive the cost of goods sold down by 5% to 7%, helping Exact Sciences to improve its margins as it transitions customers to the updated test.
Switching to a test with higher specificity and sensitivity could also benefit the company as it works to maintain share in the face of competition from new rivals. This year, Guardant Health won FDA approval for a blood test as a primary screening option for colorectal cancer and Geneoscopy received the green light to sell its Labcorp-partnered test. Meanwhile, Freenome’s blood test data underwhelmed analysts earlier this year.