EXACT Sciences Corporation (EXAS)

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EXACT Sciences Corporation (EXAS)

Q4 2007 Earnings Call

February 5, 2008 8:30 am ET


Charles Carelli - CFO

Patrick Zenner - Exec Chairman and Interim CEO

Jeffrey Luber - President


Leah Hartman – CRT Capital

Michael Moskoff – MRM Capital

Yogi Parikh – Azar Incorporated



Good day, ladies and gentlemen, and welcome to the fourth quarter 2007 EXACT Sciences Corporation Earnings Conference Call. My name is Katine and I will be your coordinator for today.. At this time, all participants are in a listen-only mode. We will conduct a question-and-answer session towards the end of this conference. (Operator Instructions.) As a reminder, this conference is being recorded for replay purposes.

I would now like to turn the presentation over to your host for today's call, Mr. Chuck Carelli, Chief Financial Officer. Please proceed.

Chuck Carelli

Thank you. Good morning everyone, and thank you for joining us today. With me on the call are Pat Zenner, our Executive Chairman and Interim Chief Executive Office r,and Jeff Luber, our President. Certain matters we'll discuss today, other than historical information, consists of forward-looking statements relating to, among other things, our expectations concerning our financial results, cash preservation, and commercial and regulatory strategies. These forward-looking statements are not guarantees of future performance, and are subject to a variety of risks and uncertainties that could cause actual results to differ materially from the results contemplated by the forward-looking statements. These risks and uncertainties are described in our annual report on form 10-K, for the the year ended December 31, 2006, and subsequent forms 10-Q. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of today. We undertake no obligation to update or revise the information provided in this call, whether as a result of new information, future events or circumstances, or otherwise.

I'm not going to turn the call over to Pat.

Pat Zenner

Thanks Chuck, and good morning everyone. Initially we thought that we'd be having this call with the updated colorectal cancer screening guidelines having been announced, and that way we would be celebrating the success of stool-based DNA's inclusion in the guidelines. As we await the news of the guidelines, we are no less confident in the potential of our DNA technology to improve screening rates and to save lives.

Given the breadth of medical evidence that EXACT has presented to the American Cancer Society and the U.S. Multisociety Task Force for Colorectal Cancer screening, we remain very confident that it's merit inclusion as an important screening option. This key event of guidelines inclusion is a necessary first step towards greater awareness and eventual broad-based adoption of our technology. With more than half of the 87 million people in this country over the age of 50, who should be screened for colorectal cancer, not getting any screening at all, new options are needed now.

There are two other major initiatives that the company has focused on intently, and which we believe will further pave the way for the commercial success of our DNA technology. The first of these is our pursuit of FDA approval for stool-based DNA testing for colorectal cancer. We are working aggressively and collaboratively with the FDA to obtain approval as quickly as possible The second is working closely with Medicare to obtain future reimbursement for our technology. Jeff will describe each of these objectives in greater detail in his remarks.

It's important to remember, however, that the fundamentals of our company have not changed since EXACT was founded. Millions of people continue to resist current screening methods and too few cancers are caught early, at more manageable stages. After all, this is a cancer that is greater than 90% curable if detected early.

We believe that non-invasive DNA-based screening offers certain characteristics that are lacking in the traditional screening methods, and unless there are new, less invasive approaches such as DNA technology more widely available, it's unlikely that screening rates will improve. As a result, more lives may be lost unnecessarily, and the burden to the healthcare system in treating this disease will continue to rise. We believe that our technology offers an opportunity to change the way people think about screening, and will provide them with an important, patient-friendly option that may prompt more screening and ultimately, save more lives. Our mission is clear, our objectives are focused and we continue to work vigorously to position the company for future success.

Now I'm going to turn the call back to Chuck, who will review the financials and then Jeff will give you a more detailed update on our business. Thank you. Chuck?

Chuck Carelli

Thanks Pat. For Q4 2007, the company generated a net loss of $4 million, compared to a net loss of $2.4 million for Q4 2006. For the year ended December 31, 2007, the company generated a net loss of $12 million, compared to a net loss of $12.9 million for the year ended December 31, 2006. This translates into a net loss of $0.15 per share, and $0.44 per share for Q4 2007 and the year ended December 31, 2007, respectively, compared to a net loss of $0.09 per share, and $0.49 per share for the respective comparable prior year periods. The increase in net loss for Q4 2007 when compared to Q4 2006 was primarily driven by lower royalty revenues and non-cash license fee amortization in connection with the June 2007 amendment to our license agreement with LabCorp, which I'll explain in a minute.

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