All right. Good afternoon, everyone. thanks for joining us. My name is Matthew Sykes. I'm the life science tools and diagnostic analyst at Goldman Sachs, and I have the pleasure of welcoming Kevin Conroy, the Chairman and CEO of Exact Sciences. Kevin, thanks for being here. Matt, thanks for having me. Thanks to Goldman Sachs. Thank all of you for attending. If you could just kind of set the stage for us a little bit, give us an overview of the state of the business, post your first quarter results. I know you've got an investor day coming up, but just sort of what are you seeing, you know, the trends you saw in Q1, how are you seeing the year play out? What are some of the highlights that you want to go over? You know, it's been a wonderful time of strength across all of our businesses at Exact Sciences. Our screening business with Cologuard growth, 45% year-over-year in the first quarter, our incredible strength with our precision oncology business and the platform that both businesses give us for achieving our mission of eradicating cancer through tests that help prevent it, detect it earlier, and guide therapy. What are we most excited about? Well, we're excited about the progress that we're making in precision oncology with our MRD test. More to come there. We're tremendously excited about the continued growth in Cologuard. It's still, believe it or not, nine years later, we saw 45% year-over-year growth. We believe we have the ability to get to $7 billion-$8 billion in revenue with Cologuard. We've got it to just over $1.7 billion, today and or this year. We just. It's a time. Everybody's busy, everybody's making progress at Exact. There's a lot of strength, a lot of reasons to be happy. Great. Now, you just recently, we had ASCO, and you had a number of abstracts, presented at ASCO. Maybe talk about some of your sort of high-level significant takeaways from ASCO. I think one really important study that came out was around our multi-cancer early detection test. That is the result of our Thrive acquisition, their DNA mutation platform, and our DNA methylation platform, combining that. The data that came out of that came out of the DETECT-A study, which was a study where 10,000 women in the Geisinger system were screened with a blood test while they were undergoing regular, normal screenings, breast cancer, cervical cancer, colon cancer screenings, and they had a blood-based multi-cancer screening test. The interesting thing about the data there is that the number of screen-detected cancers doubled. That is with a blood test, doubled all of those other types of screens. Then interestingly, the fall... Of the patients that had a positive blood test that were negative on imaging, four years later, only 1% of those patients developed cancer, which is about what you would expect in that age population. That means that using imaging following a positive blood test answers the question. That is subtle but tremendously important data that oncologists are going to want to know before they bless this type of approach. We presented modeling data comparing the colon cancer blood-based performance against Cologuard, and what you saw there was that Cologuard, as expected, generates more life years gained and decreases mortality over a blood-based approach. There were some other abstracts and presentations. Those were two key takeaways. Yeah. One that actually, I was interested in was in multi-cancer early detection and how it can be an effective solution, particularly for those cancers where there's no current standard of care, screening options available. Do you see those types of cancer types, whether it's pancreatic or others, as sort of being a potential driver for early adoption of multi-cancer? Given that if there's no other option, you're at least given an option, and it might not be the highest sensitivity, but at least it's better than not having a test at all. Do you see that as sort of a, an initial adoption phase of multi-cancer? Yeah, no doubt about it. 70% of people diagnosed with cancer are diagnosed with a type of cancer for which there is no screening test. If we want to make a huge impact in outcomes in cancer, number one killer of people under age 85 in the U.S., cancer. How do you move the needle? You've got to do it with early detection, and we know. Well, take a look at the DETECT-A study. The patients who were diagnosed with stage 1 or 2 cancer, all of them are alive today. 50% of the people detected with cancer in that study are still alive. You know, the model of developing therapies for people with late-stage cancer, that model isn't going away, and it's critically important. To really change outcomes in a meaningful way, the world is gonna have to go to a blood-based multi-cancer screening test, and there is no screening test for pancreatic cancer, liver cancer, uterine cancer, et cetera, et cetera, ovarian cancer. Those cancers, when you add all of them up, are 70% of the mortality. Well, we believe that we have the best solution, looking at DNA mutations and methylation, and we have built a company with an infrastructure, a commercial organization, led organization software capability to be able to deliver this. I don't know if it's gonna take 3 years or it's gonna take 10 years. We are committed to seeing this through, and we think it's the next huge leg of growth beyond Cologuard, MRD, and some of the other exciting products we're developing. Got it. You know, shifting to Cologuard, how are you seeing the penetration of market share for Cologuard in that 45 to 49 age group? You know, what kind of progress you've made, and how do you see that trending over the next 6 to 12 months? If you take a look at where, based on the first quarter, this year, we expect to have about 500,000 people screened, age 45 to 49. Okay, there are 15 million people in that age group, and 18 months ago... This may be the most important thing that has happened in the last 3 years at Exact Sciences, is the guideline group, USPSTF, lowered the screening age from age 50 to 45. There are 15 million average-risk, unscreened people in that age group, 19 million total. We expect to screen half a million of those this year, so that will be more than the number of colonoscopies performed, screening colonoscopies in that age group. We have, we're winning in terms of market share. We're having a big impact, there's a lot of room to grow, because those patients should be screened every three years for the rest of their lives, as long as they have a negative result. It is a huge part of our growth into the future. It's also been subtly important for another reason. 18 months ago, when the screening age was lowered, GIs started to see people 45-49 show up in the queue to get screened. What happened is the colonoscopy wait times across the country started to grow. After about 6 months of this, it became a big problem for health systems. Health systems started calling us. When they started calling us, they were asking us for help because they were trying to manage these long wait times, which aren't going away. There's a capacity in the U.S. for about 6 million colonoscopies for average-risk screens. In the last 18 months, we've seen a net increase of GIs by 200. We're not growing the number of people who can perform colonoscopies, but 15 million people just got added into the screening population. What has happened because of that, is these health systems have said, "We want an electronic interface to be able to order Cologuard and get a result. We need population health tools through Epic and Cerner that help us identify which patients should be prioritized for Cologuard." This is a sea change in the way that our customers are thinking about Cologuard. It's showing up in the research data, the customer satisfaction data that we do. I, a story about having a conversation with one of our salespeople. After JP Morgan, we had a big meeting of our sales leadership, and I asked one of our leaders, "Hey, what is the biggest change from one year ago?" He said, "Kevin, a year ago, if I sent 10 emails to our health systems, I'd get two responses. Now I get eight responses, plus two inbounds." I said, "What are they asking for?" "They're asking for us to give them tools to help make sense of the massive number of people they need to screen and the limited GI capacity they have to do it." It feels great that we are helping to solve this problem. Colon cancer is the number two cancer killer, and Cologuard is becoming just the standard of care, part of solving it. I mean, part of that becoming the standard of care is also converting that 10% screened population, you know, currently use FIT. I know that Everett and the team have been going after that opportunity. How do you continue to convert those folks? I mean, it's obviously awareness, talking to the doctors, but how do you see that conversion from FIT? Just because, given the metrics, it's just not really comparable, so it's. The FIT test is just a little stick that collects a tiny amount of stool sample, and it looks for hemoglobin in the stool. It is inferior to detecting cancer relative to Cologuard. It detects about 60% of stage 1 cancers versus 90% with Cologuard. It's a world of difference if you want to detect cancer earlier. Some early cancers don't bleed. This winter, I was visiting a Federally Qualified Health Center in Southern California. Chief Medical Officer showed me the data, like, they're still using the FIT test for the vast majority of their patients. I said, "Why?" She said, "Well, first of all, it's inexpensive. Second of all, it is small. People can put it in their pocket or in their purse. With the Cologuard test, it's a big box." I said, "Yeah, that's not a problem, though, with our customers." She said, "Yeah, think about the patients we serve." She said, "A typical one of our patients is living in a home with 8, 9, 10 other people, or an apartment building, and there's an embarrassment factor." She challenged me: "Come up with a smaller collection kit for Cologuard." That's one of the things. When we think about Cologuard 2.5, there are 5 million people getting a FIT test. We know that a third of people don't return a Cologuard kit. Some of them are embarrassed to take that box back to UPS or to leave it on their front porch. We are going to win the battle against the FIT test. It's an inferior test. It detects fewer than half the pre-cancers that you really should be able to detect. you know, we're just developing these insights about how we can continue to invest, invest in improving Cologuard and that experience so we win the war against the FIT test. Maybe shifting to the rescreen opportunity, which we've seen gaining traction over the last couple of quarters. Obviously, you're lapping a smaller rescreen population this year 'cause of COVID three years ago. Yeah. 'cause they're every 3 years. Maybe lay out what you think the rescreen opportunity is for this year and what it might look like next year, and sort of what's the long-term $ opportunity for rescreen for Exact Sciences? Think of the rescreen opportunity, Cologuard is recommended every 3 years. Think of the rescreen opportunity as the recurring revenue portion of our business. It's the opportunity is long-term, is that's gonna be over 50% of all of our volume in a year. Today, it's about 20%. That's a growth driver that just keeps growing over when you take a look over the next decade, it's gonna be an enormous part of our growth. We think we get to north of $7 billion a year in Cologuard revenue and rescreen. That's an ongoing relationship with your customer that isn't going away. It's growing over time. It could be $4 billion a year. What kind of impact on compliance do you think rescreen opportunity has? I would have to assume there's a greater adherence on the rescreen, and so if you're at sort of two-thirds now, with that rescreen growing the way it's growing, where do you see compliance or adherence for the Cologuard test go? Adherence for a Cologuard test today is 65%. It's almost 20 points higher in a patient that has previously had a Cologuard test. There's gonna be a lift to the overall compliance rate. We still have to do a lot of work to improve that 65%, which we know we can do, but that is gonna provide a lift overall. Got it. Maybe shift to the commercial strategy. I remember when we initiated on Exact Sciences a number of years ago, one thing that we mentioned was sort of the value of the platform. Takes a long time to build up the infrastructure, particularly on the commercial side, and I think during that time, there was a period of time where we had a lot of, you know, easy funding, and so you not only can you develop a technology, you can probably commercialize yourself. We're not in a very different environment today. I think that barrier to entry that infrastructure represents is actually even higher. But you've often talked recently about you're deploying Cologuard into the top 400 health systems. That seems to me to be a very complex sale with a lot of decision-makers and going in there. Yeah. Talk about what kind of inroads you've made into the health systems, how important those are for your growth. How do you see that as potentially a moat once you kind of get penetrated into those health systems? You know, first of all, going into primary care, generally, you have to have your head examined to launch into primary care. When we first launched into primary care, we had 80 sales reps, and we thought, "Maybe someday we'll get to 200." It's just not enough. There are 350,000 primary care physicians and over 1 million nurse practitioners. It's an enormous group that you have to influence. Now 60% plus of them are employed by large health systems. You have multiple decision makers there. Because Cologuard got into the main guidelines, we built a brand, we educated health systems, it got into the quality measures. It was perfect to be able to go and now start to build those direct connections, relationships, but also electronic connections with the large health systems. Critically important to do that, we've invested about $1 billion into our IT capabilities and our ability now to connect directly with a healthcare provider and a large health system so that they can order an advanced diagnostic electronically instead of paper and via fax, which is, in our field, is the way it's done most of the time. It's antiquated. With Cologuard, now, we've changed that, and we have about, oh, it's approaching 300 health systems that have a direct electronic connection with Exact. Think about the new tests that we can layer into that electronic platform, into the 700 person primary care sales force, the 100 person health system sales force, the 100 person oncology sales force. All of the marketing, digital marketing capabilities we have, it's a significant moat. I mean, we were very fortunate to be able to build this at a time that capital was less expensive than it is today, and we had the patience, not of everybody in the room, but of most people. We had the patience of investors to support us as we built out this vision. Now, you know, sitting here 14 years later, I'm so excited about the other tests that can go into multi-cancer testing. MRD, a colon cancer blood test for the patients who won't return a Cologuard kit, a liver cancer test, an esophageal cancer test, a hereditary cancer test. These are all capabilities that we have internal to Exact. I look at the next decade and say: We can just generate tremendous impact, cancer by cancer, multi-cancer with this platform. Maybe talk about the sales and marketing support needed for Cologuard today versus where you were a few years ago? I mean, you've got the brand recognition, the penetration. Could we continue to see moderation in sales and marketing spend for Cologuard? Interesting stat. Q1, we saw a 45% year-over-year Cologuard growth. We saw a 19% decrease in sales and marketing effort spend. Think about sales and marketing as being relatively constant, maybe in the low growth, in the low to mid-single digits. Our commercial team is an amazing team. We are not going to stop investing in them. We don't have to grow the number of people like we did in the past, and the talent that is on the team is amazing. It's never been better. That's the rough way to think about it. It's we get tremendous leverage now because of the efficiency of that commercial organization. You talked about some of the capacity constraints that within colonoscopies, there's been some recent news around the need, with one particular commercial provider, for prior authorization for colonoscopy. That's been backtracked a little bit, but even before that, there's sort of an aversion to colonoscopies. How do you think that could augment the penetration for Cologuard over the near and medium term, not only the capacity issue, but if it becomes more difficult simply to get a colonoscopy? Well, it is becoming more difficult to get a colonoscopy because there's a capacity in the U.S. for about 12 million colonoscopies, both diagnostic and screening, and that's about roughly evenly split. Think about 6 million average risk screening colonoscopies and 6 million diagnostic, or what's called surveillance colonoscopies. That 6 million for average risk screening colonoscopy, that's great. That's big capacity. There are 60 million Americans not up to date with their screening. If you stopped everybody from aging, it would take you 10 years to get caught up, but you can't stop everybody from aging, so you get another 5 million people coming into the unscreened population roughly every year. There has to be another solution, and that solution is Cologuard. We have built a big moat. We, you know, I think we have earned the place, earned this position through investment in great technology, tremendous clinical studies, regulatory capabilities, relationships with payers, to allow us to address those 60 million people who are not up to date with their screening. If there's anybody here who is 45 and older, who's not up to date with screening, or, if you have a first-degree family member who has been diagnosed with colon cancer and you're not up to date with screening, which is 10 years before their first year of diagnosis, get screened. You know, colonoscopy or Cologuard, it doesn't matter. Get screened. You know, I think that's one of the things that has finally changed. GIs don't see Cologuard as the enemy anymore. They're busy, and they know they're gonna be busy for a very, very long time. They know that colonoscopy is an unbelievably great screening tool. They also now believe that Cologuard is, and it's not a threat to their livelihood. Could you just remind us in terms of the timeline for the BLUE- C trial data, results and kind of what we should expect? I've got a follow-up on Cologuard 2.0 as well. The BLUE- C data will be available this summer. Okay. We're excited about that. BLUE C is the 20,000 patient study of what we call Cologuard 2.0, which has all new and better markers and fewer markers. It's the result of a 10-year product development collaboration with the Mayo Clinic. We think we've identified the very best markers, and there are three of them, that separate in tissue and in stool between cancer and no cancer. We expect to have a better performing Cologuard, and we expect that to hopefully set a new standard of screening. The data will be available this summer. We can't wait, and keep your fingers crossed. You're solving initially for specificity, but also some sensitivity, but specificity is really- Right. Key goal. The main thing, specificity or the false positive rate, we want to lower the false positive rate. Today, the specificity is 87%, false positive rate 13%, and that means 13% of people go unnecessarily to colonoscopy. We'd like to lower that. We're confident that we can lower the false positive rate by 20%. That means think about our rescreen population. 20% less leakage into the colonoscopy as a screening tool, and you keep those patients in the Cologuard arm over time, and that's very important. If we can improve it beyond that's a home run. If we can improve the cancer detection rate, the pre-cancer detection rate, that would be great. We'd be happy with keeping those level and not seeing any degradation. More to come, but, the data will be available this summer. Got it. One thing I don't think it gets talked about enough, I've heard, Jeff Elliott, Chief Financial Officer, talk about it in the past, is that the impact on lower COGS with Cologuard 2.0 and what that could do from a gross margin standpoint. You're already operating at pretty high gross margins on sort of a peer-by-peer basis. Could you talk about sort of the potential impact on COGS for Cologuard 2.0? Cologuard 2.0, the total COGS will decrease 5%. We've seen one of the innovations of Cologuard 2.0, we already got it built into Cologuard 1.0, so we call it Cologuard 1.5 internally, where there's less kit wastage. I won't go into all the details, but that's a nice improvement in COGS. Cologuard 2.0 only has 3 markers rather than 10, streamlining lab operations. Our goal is to get our COGS down to $100. I remember when, first starting with Exact Sciences, Manisha Arora and I sat down, and the first thing we did is said: Let's develop a test with 80% gross margins, right? 74% today, we expect to be able to drive that to 80% and beyond with Cologuard 2.0. If we can make the an option for a collection kit and make that smaller, half of our COGS is in the kit itself, and even more of that half, the majority of it goes to UPS for shipping. We want to bring that size and weight down so that we can reduce COGS even more. This is the point: we, as a company, number one priority, keep investing in the core. Just quickly on MRD. It's interesting, you know, you're doing both the tumor-naive and tumor-informed approach. How do you think about that mark in terms of the evolution? I mean, it's obviously a new technology in liquid biopsy for MRD. The tumor-naive approach, I can understand for sort of later developing mutations, you want to pick those up, but asking a doctor to adopt a new technology, first of all, and then, you know, not having the actual sequence of the tumor, not using it, seems to be a bit of a leap. Is your kind of view that the early adoption will be tumor-informed, and then you layer on tumor-naive, and you have the complete package? Just talk about sort of your thought process as you sort of... For your go-to-market strategy for MRD. Yeah, I think what we're seeing is in MRD, the tumor-informed approach is the approach that is favored by the oncologists that are starting to use MRD. It's very, very early days, but it's for the reason you just mentioned. They want to be able to see what are all of the mutations. Our methylation chemistry and intellectual property gives us an advantage that we can go combine them. If you can't get that tissue, then you still have the DNA methylation approach, so you're not left with only, you know, needing that tissue sample. I think our opinion has changed over the last 12 months, that the tumor-informed approach is probably going to be the winning approach. I think Natera has done an incredible job of building this market. It's gonna have a huge impact on patients. I have a friend who was diagnosed with stage four kidney cancer that had two mets to her pancreas. She had her resection. She went on KEYTRUDA. two years later, I don't know, half a dozen Signatera tests negative and a CT scan negative. She's still on KEYTRUDA, she has a huge smile on her face. you know, that's the benefit of this, is, you know, it starts to give you confidence that at some point, can you deescalate therapy? Or if you saw a recurrence or you saw a signal and you see it before imaging, okay, can you then do Think about a different treatment? It's MRD is gonna be an amazing, widely used technology, and I think we're convinced that it is going to be across most types of cancer. Got it. Shifting to precision oncology, maybe talk about, I know it's early, but the commercial launch of OncoExTra in therapy selection, how is that progressing, when do you kind of anticipate that to have sort of an impact on revenues? I know it's a long way off, but it's obviously an exciting launch for you guys. Our OncoExTra test is a test that would compete with the Foundation Medicine test to help guide treatment. The advantage is it has a full RNA capability, which is becoming increasingly important, especially with certain immunotherapies and guiding therapy. It's gonna take some time before we get adoption because we, you know, this test is coming to market 10 years after FoundationOne was first launched, and we have modest expectations for this year. Things are going well right now. We need to continue to engage with the oncologists, and we really need to work to make sure that we have broad-based insurance coverage, et cetera. But it's early, and we're happy with the results so far. just on for Japan Oncotype launch, you still on track for that, and what then could we expect in terms of impact from that? Believe it or not, here, 16 years after Oncotype DX was launched in the U.S., it's just now becoming available in large markets or some large markets like Japan. We would expect this summer to be able to turn that on, so we have full reimbursement in Japan. That annualizes to, at a starting point, of about a $30 million business. We've had some hiccups there in getting it turned on, and we've been providing free tests in Japan. We expect that to be solved this summer and are excited about growth opportunities beyond Oncotype into MRD and OncoExTra and other tests. One of the key stories, I think, for Exact over the past couple of quarters has been the pulling forward of expectations for the path to profitability, and now you've achieved that, and I think that's, you know, warranted a deserved premium in the market. Could you maybe talk about sort of from here, in terms of gross margins and expectations, OpEx trends, how do you maintain that? Obviously, the growth in Cologuard must have been accelerating, that's gonna be helpful. From, like, a spend standpoint and a gross margin trend standpoint, how should we think about it for this year? ... Well, first of all, it's dangerous. I'm here without our CFO, Jeff Elliott, and he usually doesn't let me open my mouth around numbers. You can pass. Oh, no, I'm joking. Like I mentioned before, our OpEx is... You can think about that in both low to mid-single digit growth, then the top line growth driven by Cologuard, Oncotype, some of these other tests, while we still have a big R&D budget. I mean, our R&D budget is ±$400 million. We're investing in a meaningful way to bring innovation to physicians and patients who need them, it's life-changing. It's a wonderful time. We've had to have some luck along the way. We've had people on the team who are working, you know, night and day to save so that we can continue to invest, so that we can grow, we're seeing that happen. One of our goals is to be incredibly profitable so that we can attract the very best people in our field. We're seeing that happen. I think I'm not supposed to say, the number of people that we have applying for jobs at Exact Sciences is at an all-time high. That's really gratifying because that's where innovation starts, with great people, and then that feeds this whole cycle of new products, greater profits, invest back into our team, and we're seeing that happen. We need to make sure that we continue to get that top-line growth and keep OpEx relatively flat. As you continue along this path, has it changed your view in the out years in terms of capital deployment, inorganic versus organic? I mean, you have the advantage of having that infrastructure we talked about earlier, and being able to drop new technologies into that and give it a platform of distribution. But as you kind of have reached this profitability and wanna continue on that path, how has it changed your view of sort of how you prioritize capital deployment? You know, we have done a number of acquisitions to build this platform that we've talked about and technologies that we have brought in, and I had ticked off some of the tests that we're working on. Cologuard 2.0, CRC blood testing, which we haven't talked about. MRD, multi-cancer early detection. We have a lot on our plate right now, that could provide... I mean, you can really look out and say, "How many companies have the opportunity to grow double digits for a decade or 2 decades with products that are in our portfolio now?" Plus the individual cancer tests that we have worked on, liver and esophageal cancer. There's another cancer that we have started a program on that's exciting. In terms of acquisitions, we'll always keep our eye out, and if it's strategic, a great strategic fit, and it's a great cultural fit, and it doesn't come with a huge number of problems, we will look at it, but, you know, I'm probably more biased towards internal development. Just lastly, in the time we have left, the financial environment, the macro environment has changed a lot, and I think that, and I kind of mentioned this before, previously, in 2019, 2021, you could raise enough money to not only develop a technology but also commercialize it. Competitive threats from the private market were something that people have talked a lot about and were concerned about. We're obviously in a very different environment now, and so given where you are in terms of your profitability, where you are in terms of the balance sheet, but also with the product set you have, do you feel like the competitive advantage- Yeah is even greater at this point, based on what you've built and how expensive it is to replicate what you've done? You know, I feel for my peers that in the next generation of innovators that are looking at building not only a technology, but a company to help diagnose cancer earlier or help to guide therapy selection. Because it's tough, yeah, the capital isn't there like it was before. One thing we know about the American engine is you find a way for great technologies to get adopted, and maybe we're part of that too, with licensing deals or smaller M&A deals. Got it. Great place to end. Great. Thank you, Kevin, very much. Appreciate it. Thank you.