Exact Sciences Corporation (EXAS) Earnings Call Transcript & Summary

Hey, good afternoon. Welcome. Dan Brennan, coming up towards the back end of day 2 of the UBS Healthcare Conference. Really pleased to be joined with me here with senior management of Exact Sciences. We have CFO, Jeff Elliott. Jeff, actually you have more titles than CFO now I know you've taken on. And Megan Jones, who I don't think will be with us on video who's back from maternity leave, IR, after having twins. So listen, Jeff, really pleased you could be with us, obviously, and I'm excited to get into the conversation here today.

Dan, thanks for having us. It's good to be back.

Awesome. Maybe just kicking off, Jeff, from a high level. We could jump into Cologuard and a lot of the details of the quarter and the year. But just kind of let's just step back a little bit. I remember sitting on my computer when you get to the Genomic Health field and thinking like, "Wow, this is a big move." And then subsequent to that, obviously, the latest one or the biggest one has been Thrive, but in between, you guys have added a bunch of new capabilities with PFS Genomics and Ashion and Base and TARDIS. So maybe just give us a sense of just how we should think about like the evolution of Exact Sciences today and kind of discuss kind of what the future opportunity looks like.

So Dan, Exact Sciences is -- wants to be the partner for patients and physicians all the way from cancer treatment through cancer -- or from cancer diagnosis all the way through cancer treatment. And why that's so important is today, for people under the age of 85, cancer is the leading killer. So we want to lead the fight against this horrible disease and all the suffering that it causes. To do that, we've rebuilt capabilities across the whole cancer continuum. From screening, we can help today with Cologuard. Down the road, we are developing a multi-cancer test. So it's getting more people screened for this disease. Over time, we'll add additional tests to help further inform the diagnosis of the disease, to help inform the outlook, right? So I mentioned somebody's diagnosed with disease, they often ask, "Doctor, how bad is it?" Well, that's where Exact Sciences comes in. We can come in with our Oncotype test today to predict the risk of recurrence and whether somebody will benefit the chemo. After that, patients often ask, "Doctor, did you get it all?" Or "Doctor, is there cancer is still in my body?" Well, that's also where Exact will come in, through a residual disease test that we're developing. Today, unfortunately, patients often turn to different doctors, they have different sources to find out, "Oh, what do I do next?" They often don't know, right? They want to know, "Is my cancer likely to recur?" Okay, we'll Exact can come in there, too. We can offer recurring tests to find as a cancer recur. Ultimately, if it does recur, we have a test for therapy selection. We can help inform the treatment outlook for somebody, get them the right care at the right time. All this is underpinned by what we believe is to be the strongest infrastructure, the strongest foundation in cancer diagnostics. And with that, I mean the IT platform, the IT platform that is geared to provide information to patients and physicians throughout this whole process, right? We also have what I believe to be the strongest lab network. We have now, in the United States, 5 labs that are geared for serving patients across that whole series of tests. We bring these products to market through the best sales and marketing team in the business. Our team out in the field, combined with the best marketing team, as there were tons of people today. They're educated patients and physicians and all the tests that we have to help inform screening, treatment and that whole continuum. So that is the longer-term vision. Today, we've got a very strong foundation from what's to build. I'm thrilled to talk to you more about that today, Dan.

Great. Well, thanks, Jeff. Yes, a bunch of my questions are going to revolve around Cologuard, but we definitely want to take some time to understand some of the key signposts, if you will, obviously, liver is something this year. Oncotype is cruising along. That's been out there for, I guess, over 10 years. But we'd also want to understand maybe the signposts for some of these future products and what we're going to get visibility on maybe revenue contribution. But I thought we'd start with Cologuard, which is the biggest driver, obviously, of the business today. And the kind of first question I wanted to ask you was this idea of kind of utilization. I know in the past, the company has talked about increasing sales frequency does lead to an inflection in usage. And maybe that got a bit disjointed with COVID and given the ability to get in doctor's offices. So I was always under the presumption like Cologuard just becomes the vernacular. You kind of tackle reimbursement. You have messaging. You have an increased sales force and that utilization ticks up. So how should we think about the use case for Cologuard from this kind of utilization standpoint? And where we are kind of on that kind of growth curve?

So Dan, we're very pleased by the results that Cologuard has put up. When you think about where we've come from and where we're heading, we're pleased with that growth. So Cologuard got approval from the FDA back in 2014. However, I often view 2019 as the first year the product was on the market for the real launch. And I say that because it took until 2019 to get FDA approval; Medicare coverage; guideline inclusion; robust reimbursement; and ultimately, all the things you need to really initiate a robust launch. And that included what we'll talk about later, sure is our partnership with Pfizer. So 2019 was the first year where we had all the key pieces in place to really drive home the message on Cologuard and really to get more people tested for this terrible disease. So from that, we've had what I thought was very good growth. The pandemic did set us back quite a bit. Really, that wasn't unique to Cologuard. That was really more health care utilization broadly. That said, with -- despite all these headwinds, things like limited rep access to physician offices, limited health care wellness visit activity, despite all these headwinds, Cologuard has shown a pretty robust year-on-year growth, including about 10% growth in the first quarter. So we are getting more patients tested. We are out there helping engage in this fight against cancer. However, there's some severe headwinds out there that we have to overcome. I think we are coming out of this pandemic even stronger. So that we've had over the past year, things like electronic ordering set us up for an even better future. I think that will accelerate our ultimate growth towards our long-term ambitious targets by at least a year or 2. If we're going to look over the course of 2021, there's a lot to be excited about. Not only are we coming out of the pandemic, we have big gains ahead for electronic ordering. Over the past year, we've made huge strides and even more expected this year. 3-year rescreening has been a huge win for patients and a nice contributor to Exact Sciences. And recently, the key clinical guidelines for screening at age 45 were issued, that will help get more people tested at that age group and help contribute to more sales of Cologuard. So I'm very excited about the state of the business and the future of Cologuard.

Got it. In terms of that, just maybe one more question on the sales force relationship with the doctor, and then we'll get into Pfizer a little bit. But is it still the case, even with the history of Cologuard on the market now and everything you said, Medicare coverage, FDA-approved coverage, all the marketing, do you still have that same intensity in detail where the sales force needs to be in front of the doctor 6, 7, 8, 9 times for when the infection occurs? Or are you finding that we are at a point where maybe that use case picks up faster just given the awareness and appreciation for Cologuard?

Well, the sales teams in the field are one of the most important ways that we can educate physicians on how Cologuard performs and all the other things around it, like insurance coverage, electronic ordering. So that team is crucial, which is part of why over the past year, I've been so pleased with the growth. Over the past year, our sales teams have largely been out in the field. And our partner in this, Pfizer, is 100% out of the field today. They've been doing calls over the phone, but they have not been in the field. The face-to-face relationship with the physician is so important for seeing broader adoption and utilization of new health care products. So I expect that, that relationship between sales activity and lose of Cologuard to recover over time. What we're seeing now is that our reps are going out there a little bit more often each week, right? Our sales access in the field is improving each week. Wellness visits were physical. So that's where typically you see Cologuard orders happen. Wellness is -- it's already increasing such that I think we are coming out of this pandemic. Over time, the sales force, I think, will be one of the most important ways to continue to grow Cologuard and get more people tested. The productivity of sales service, we track that extremely closely. And what I've seen really before the pandemic, reps who have been out of the field even 4 or 5 years, those reps, the productivity from that team on the field with greater tenure continues to improve. After a year, it gets better. After 2, it gets better, continues to improve, which is unique. Typically, in health care, what you see is some sort of plateau. Maybe it's after a year or 2, rep productivity starts to plateau, not with Cologuard. That really speaks to how many people need to get tested for [ colon ] cancer. There's over 100 million people in this opportunity. Today, 45 million of them need to be tested. So this is a large market. And our sales team, it will be important for many, many years to come.

And maybe just one more, when we think about the year, in terms of the normalcy that's baked in the guidance in terms of like the openness of the economy, whether it be from wellness visits or in-person doctor visits, is it -- I mean, can you remind us like by Q4, implied in your full year guidance, are we back to normal? Is there still a drag from COVID? How would you describe maybe using some of those metrics? Or just how would you describe it otherwise?

I mean the pandemic is still here. That's clear. There's -- you're still seeing tens of thousands of new cases every day in this country. So the pandemic is still here. Wellness visits are probably down 10% to 20% overall right now, probably more in our target age group, which is skews older. Our average customer is about 62 years old. So wellness, if it's in that population done more. Our physician office access for the teams in the field, it's still probably half of what it was prepandemic. I do expect things to improve over the balance of the year. I don't think we're fully back to normal. I think there's adjustments that people have made to their lifestyles. There's adjustments at hospitals and doctors have made in terms of the number of patients who can come in with the number of external guests that can come in like a sales team. So I don't think we're fully back to normal this year. That's okay, though. The team -- our teams are not sitting by idly. They're using this as a chance to harden our message, to harden what we do. That's why I'm so excited. I'm so excited about the chance that we have coming out of this pandemic to get more and more people tested.

Excellent. Okay. Maybe we touched upon Pfizer briefly, but you signed the contract extension. I think the base case is that, that relationship probably won't be, I guess, re-extended. When that contract comes up, you obviously have been beefing up your own internal sales force. Just talk a little bit about Pfizer, how that's gone? And kind of what it means going forward in terms of, ultimately, is that the right base case to think that when the contract comes due, that you guys will move on and just sell the product on your own.

Pfizer has been a fantastic partner. We signed the initial partnership agreement back in 2018. Since then, we've learned a lot together. We've also -- we've grown Cologuard and gotten many more people tested. We've -- on the Exact side, we've expanded our own sales capabilities. We've added to our marketing expertise to the point now where I feel very confident about our team's ability to continue to grow Cologuard and getting more people [ tested ]. Pfizer has been a great partner, and there could be room to continue this partnership after next year. We've got a ways to go between here and there. But there could be a path forward. As you mentioned, Dan, though, the partnership agreement does expire as of now at the end of next year.

Got it. Okay. Maybe just a question or 2 just on CRC liquid biopsy. So I think I asked Kevin this question. I know it's been asked by others. But I'm just wondering, like how do you guys think about the relative performance gap that a blood-based test could have versus Cologuard where it would still be deemed like a strong competitor? Obviously, the communities of the blood-based test would be a benefit. But at the same time, if they can't achieve your performance characteristics, that's going to be a detriment. But is there a gap below which you think from your diligence with doctors and/or payers or even individuals that if it's 300 or 400 or 500 basis or more below what Cologuard's performance is, it would still deem to be like close to as good?

So Dan, I think the blood test could serve an important role in this market once they're finally on the market and through the guidelines and Medicare and FDA, all the things that are needed to be successful, but I think they will serve an important role. The accuracy of these tests is likely something closer to the FIT test. When you look at all the data we've seen, published all the data we've seen externally, it still needs to -- there's still a ways to go for it to reach the same level of the FIT test. And as you evaluate these tests, it's important to include pre-cancer and also a focus on early-stage cancer. The FIT test can find 24% of pre-cancer as demonstrated in a prospective study. That's the gold standard here. You've got to run a prospective study for comparison purposes. Stage 1 performance, also very important. The FIT test can find about 2 out of 3 stage 1 cancers. In a screening setting, stage 1 represents 45% of all the cancers you find. When you think of case-control data, case-control data generally includes very few, if any, stage 1 cancers and really never do include precancers. So it's really hard to evaluate a case-control study. And compare that, you need to see this prospect of data. So ultimately, I think the blood-based test will serve an important role given their performance is likely to only be at the FIT level. I think they'll compete primarily with the FIT portion of the market. Again, it's an important part of the market. It represents about 10 million people. There's about 10 million FIT tests done each year. This is a group of people that care about convenience really more than anything else. The majority of the market really values sensitivity. Their patients, physicians want to see at least 90% sensitivity for early-stage cancers and a high level of sensitivity for precancer. Today, there's only colonoscopy and Cologuard. Cologuard can find 94% of all early-stage cancers as demonstrated in a prospective study. They also find 42% of all precancers and nearly 70% of more advanced precancers. So Cologuard set a very high bar for noninvasive testing for colon cancer. It also offers high levels of convenience. As a data point here, Dan, we're enrolling our study called BLUE-C. BLUE-C is our study for -- a prospective study for both Cologuard 2.0, which is an enhanced version of Cologuard, and our colon blood test. In that study, we're asking patients who have already signed up for a colonoscopy. We're asking patients to give stool and blood. Well, the stool portion of that study is enrolling over 20% faster than the blood portion. That speaks to the convenience of stool, which can be collected at home. Blood has to be collected through an extra step. You have to go to a phlebotomist. So it still has many advantages for convenience, and Cologuard set a very high bar when it comes to accuracy.

Interesting. That's good stuff, Jeff. What -- so I think just on your own Cologuard blood test, you basically said consistently that you think it's the best on the market. But until it's at a point where you think it's really truly competitive or maybe if you're just at the right time, you will reveal data on that. I mean is that a 2021 event? Is that a 2022 event? Obviously, the prospective study will take time. But in terms of whatever data you've generated so far, will we get a sense of that anytime soon?

So Dan, we've taken a very thoughtful approach to developing our colon blood test. We've run multiple large case-control studies internally. We have another one planned for later this year. The plan right now is to release that data. It may come up later this year, perhaps next year. And we want to make sure this is a robust study. And the reason I say that is because when you go from a case-control study to a prospective study, you almost always see significant degradation. We did this back with Cologuard. When we developed Cologuard, we ran at least 3 large case control studies. The last 1 was published at AACR back in the fall of 2012. That study included precancerous polyps, included benign polyps. That included stage 1 cancers in really all the important stages. That study was -- I believe, was very representative of the real world. It was run on United States -- in the United States on patients here. The reason I bring this up is because even though we ran a very robust case-control study at that point, when we went to a prospective study, we lost 6 points of sensitivity on cancer and we lost 3 points of sensitivity on -- or 3 points of specificity and about 15 points of precancer sensitivity. Again, that was from going from a very robust, real-world like case-control study to a prospective study. If you don't include all those things, all those important subcategories, you'll likely see much bigger degradation. So as we run these case-control studies for our colon blood test, we want to make sure that we run robust case-control studies to limit that degradation that we'll see.

Got it. Right. You guys are still in the mindset that even with the improvements in whatever markets or analysis and sensitivity and capture that you've been able to do, that your blood-based test will be able to get on par with Cologuard. It's still going to be like a FIT test is what you're saying effectively?

Correct. The goal for a blood-based test should be to do at least as well as the FIT test. You really should do better. Keep in mind that the FIT test has been in the market for decades. There's robust evidence around it. The FIT test is also reimbursed at about $16. So if you want to come into the market and displace the FIT test or compete with the FIT test on an annual basis, the economics here are important. We're designing our test to have a cost of goods below $100. That way, when the ultimate pricing comes down, the pricing will likely be in the $150 to $200 range. That allows you to earn some sort of return on that test and get more people tested. The cost of goods here is very, very important. If you have a test platform with a cost of goods north of 200, that presents a challenge from an economic standpoint for an annual test. This blood test almost certainly are going to have to be run annually given that the performance is -- it will likely be similar to the FIT test.

Got it. Okay. So obviously, you talked about the rescreen. What is it that's allowing you now? It seems like to be more constructive on rescreen. Look, what did -- what could Exact not figure out? So [ treating ] in generating revenue from the rescreen. This is the first time we've heard you be a lot more positive about this opportunity. Why is it this year or not -- but why is it this year now we hear more about it in terms of -- clearly, you have a bigger end, no doubt about it because every year, you're generate more and more Cologuard patients, so 3 years later. But nonetheless, it feels like you guys figured something out at this point where you're able to capture a higher percentage of that population.

Well, Dan, during the pandemic, the team found different ways to go on and reach patients and making sure that not only do we get them tested for the first time, but we keep them screened over time, which is important for colon cancer. Most colon cancers form spontaneously. So you can't just screen once and be done. You've got to continue to keep that person tested. So over the past year, what we did is we combined a real -- a SWAT team, a team from marketing, analytics, from IT, from our customer service team, brought them together, and formed this dedicated team, finding new and innovative ways to help keep people rescreened or screened over time. Thus, through a series of different efforts, we've made it much more automatic, automatic for the patient to know when they're due for repeat testing and automatic and easy for the physician to place that repeat order. So this team really has led the charge. But over the past year, we've seen the best improvement that we've ever seen in our rescreen capture rate. And what I mean there, Dan, is if you look at the percent of patients that we test for Cologuard on a repeat basis, after 3 or 6 months of them becoming due, that rate continues to improve. And now as of today, we're in the best position we got our bet in. That's so exciting, not only did it went for patients, also for Exact Sciences, because the number of people who become eligible for rescreening is growing. This year, over 600,000 people became newly eligible for repeat testing. Next year, 1.1 million people become eligible. So this is a big opportunity for patients and for us. We've got to get this right. We've made very good progress on it.

Right. So the 600,000, obviously, there's a bit of a daisy chain where you look at the Cologuard test 3 years ago, you take out the positive, you take out people, right? So there's a bit of a -- because I would calculate that 3 years ago, there was 930,000 patients that get screened with Cologuard. So the 600,000, there's some level of drop-off given those factors, right?

That's right, Dan. So Cologuard is positive between [ 50% ] and 20% of the time. Those patients go on to a colonoscopy. And ultimately, they're out of the Cologuard pool for a time -- for at least a short period of time. So what we do is we typically adjust for the positives. We adjust for people who perhaps age out. So once you become, say, 86, you're less likely to be screened again. That's when it comes down to the doctor-patient relationship. So we've made some adjustments. And what we think is the real pool of patients who become eligible for Cologuard this year, it's around 600,000. But keep in mind that there's patients who became eligible last year and the year before. So we'll continue to work with them and their physician to try to get them screened again. So the true pool of patients eligible this year, when you look at prior years, patients who we haven't yet helped get rescreened, it's closer to 1 million people, 1 million total people this year who are due for repeat testing.

Right. So the capture on the 600,000 [ pioneering ] your 100 million this year is roughly, I don't know, 20% or something? Well, 20% of the 930,000 patients, but it's assuming that same level of shift. But I'm wondering, like, I guess, a high way of saying in terms of -- if you think about that capture rate, so the volume of patients available goes up every year, do you think your capture rate has a lot of upside as well?

No doubt. And Dan, the actual capture rate, to use such a term, is higher than that. Let's say, our success rate, a success rate on helping these patients get tested for their 3-year retest is higher than the math you just did. And the reason is because sometimes, somebody -- let's say they become eligible in November, December, late in the year. Well, that person is probably more worried about Thanksgiving and Christmas rather than getting tested again. But we made our success after -- 3 or 6 months after somebody becomes eligible, and our success rate is higher in terms of getting people retested. Can it go higher? Absolutely. It can and it will. It has been trending nicely higher across all those time frames, 3, 6, 12 months, it is trending nicely higher. I'm the most optimistic I have ever been on our rate -- on our ability to push this rate higher. I think we'll get it above 50%. Ambitiously, I'm hoping 75%.

Interesting. Okay. Good stuff. So maybe just asking, obviously, the 45% to 49% is really big opportunity. I think you've guided, right, $40 million, right, this year? We see most of that occurs in the second half of the year. So I'm just wondering, how do we think through like maybe just give us the bottom line math on what kind of penetration you're assuming implicit in that $40 million for this year, given, again, there's a timing element this year. So when we think about 2022, we can use that as maybe a jumping-off point for our model.

Absolutely. Dan, $40 million is for the entire year. We have incurred -- we've recognized revenue in the first half. So it's not all back-end loaded. But keep in mind that it was 3 years ago now, that the American Cancer Society lowered its recommended screening age to 45. They did that because this massive rise in incidents, we've seen about a 50% rise in incidents in this younger population over the past 20 years. So today, there's 19 million people who need to be tested in this younger age group. For men in this age group, colon cancer is the #1 cancer killer. For women, it's #3. So there's a clear need here to get more people tested. That's where Exact comes in. Cologuard is a convenient at-home test with a high level of accuracy, can help in this younger population, get more people screened and keep them screened over time. Now the USPSTF, as of last week, now also recommends screening at a younger age. We expect insurance coverage to improve. Insurance coverage is so important because in preventative medicine, patients and physicians want confidence that a test or service is going to be covered. So today, insurance coverage is relatively low. A couple of the bigger payers cover it, multiple smaller payers do. But now, thanks to the robust evidence and the guidelines, we expect big increases in insurance coverage over the next year. That will help lift adoption as too, well, our teams in the field [ out there ], educating physicians and our talented marketing team. We already have launched now a new TV ad campaign targeted at raising awareness for this younger screening age across the country. Because historically, we taught people, "Get screened once you turn 50." Well, now 45 is the new 50, and we need to make sure people are aware of that.

Do you feel like this -- I mean, Kevin's in. You made the point that this population can be more amenable to a noninvasive test as opposed to the older generation. So if we look out and counted forward from when Cologuard launched and the penetration you've gotten, at this point, in your 50-year-old population, would you reach that same penetration faster in the 45 to 49 given, a, the brand awareness already and then, b, that factor about maybe interest level from this population?

Well, another teams will work to do that, Dan. If you look back to 2015, that was the first full year that Cologuard was on the market. In 2015, Cologuard generated sales of around $40 million. The next year, it was nearly $100 million. So our teams will certainly try to get as many people tested as possible on this age group. Part of why I'm so optimistic here is that awareness for Cologuard is already very, very high, probably 90% plus right now. So awareness is there. What we need here is to make sure people know about this new lowered screening age. That's where the TV ad comes in. That's where the sales teams come in to make sure people are aware. When you look at preference studies, preference on people in the younger age group versus the older age group. In both groups, people prefer Cologuard over invasive testing. However, the relative preference is even higher in the younger population. It just makes sense. If you're in nearly 40s, you're probably busy with work, with children, other activities. You've got a busy life. Okay, for those people, Cologuard fits into the lifestyle even better. So I'm optimistic here. I don't want to put a guidance up for next year, but I'm excited about the opportunity here to get those 19 million more people tested.

Got it. So obviously, electronic ordering, you guys have given a lot of color on that. I guess my question is when you look at electronic ordering, I think in 1Q, it was 43%. At the end of last year, it was 30%. And I think you've talked about doctors' order 50% more when they -- when it's electronic versus fax. So when you take all that together, I would think there could be a bigger inflection in Cologuard volume this year than at least when I solve for the guidance what state did. So maybe just give us a flavor for like how the electronic ordering impact is really included in guidance?

So Dan, those numbers were 30% electronic ordering for Cologuard as of a year ago, 43% as of end of Q1. So we've made significant progress here. It's part of what the teams were doing over the past year. When access to physicians that are in the field was limited, those teams, again, they didn't just sit there. Those teams went out there and made sure they work with the office staff and the nurses. We did everything we could to connect electronically with our customers. An electronic connection is easier for the physician. It's easier for us. And we do see a meaningful lift in orders [indiscernible]. From fax, which is cumbersome and who really sends faxes anymore, to electronic ordering, it's a better experience. And ultimately, it's the right thing to do, not only for Cologuard but for all the new products we bring to market, all the new services. So as we launch multi-cancer or liver test, they'll have this robust electronic platform to bring -- to launch through. Cologuard, back in 2014, was launched into a world of faxes. So back in the day, 100% of our orders came in through fax, which is an obstacle. A lot of physicians say, "Look, if I had to send a fax, I just will not order your test. But if I can do it electronically, okay, now you've gotten my attention." So what we see when we connect electronically, whether that's through an HL7 interface or through Epic, we see more physicians order, and that's important. More physicians order and the rate of ordering is much higher than it was when they ordered through fax. So this is a big win. It's something that it is baked into guidance, Dan. It's part of why we are seeing year-on-year growth in Cologuard in a world so affected by the pandemic, in a world where colonoscopies are down at least 10% to 20%, wellness visits down at similar level, Cologuard growing. In large part, the electronic order is helping.

Got it. Okay. That makes sense. Okay. Maybe just switching gears for a moment, and then we could talk about Thrive and some of the new products as well some of the new deals that you got. We still have about 12 minutes left. So just on Thrive, I guess, Kevin and yourself have obviously talked about the opportunity to improve the already good performance of CancerSEEK through combining your own methylation approach. I'm just wondering, why wouldn't -- would specificity normally suffer as you're putting more markets into the equation? Or is it that you're going to be displacing some of their existing markets at your sub methylation? I guess we'll see when we see it, but how do we think about the potential toggle between the improvement in sensitivity and specificity as you look to enhance their test?

So Dan, what we're doing with Thrive is we're combining all the expertise Exact have built up over the years working with the Mayo Clinic. This is primarily around methylation markers. So we have looked at the top 15 to 16 cancers, discovered proprietary markers at the tissue level to help detect cancer versus healthy tissue. You look at what Thrive had done, partnered with Johns Hopkins and Bert Vogelstein and team, this is decades of research discovering very accurate mutation markers and protein markers. Now we're combining that expertise, again, robust know-how on both sides, bringing that together. The teams are working to combine all the best of both sides, bringing that together to bring the best test to patients. From a performance standpoint, we'll likely gear the test to have at least 99% specificity. The reason why -- in a screening setting, you want to limit the number of false positives. So at 99%, that means about a 1% false positive rate. I think that's probably acceptable to most patients. Then the goal is to do -- once you fix that, which we'll demonstrate through multiple case-control studies, then the goal is to maximize the sensitivity that you can achieve at that fixed level of specificity. So I'm confident that we'll achieve that high level of specificity, sensitivity. That's where we're working to lift performance as much as possible. If this approach sounds familiar, bringing together methylation markers, mutation markers and proteins, it should sound familiar. That's what we did with Cologuard back in the day. We combined 11 different markers to achieve high levels of performance. So we think taking multiple different classes of markers will give us robust coverage. We think that's the right approach.

Okay. And in terms of -- I know you said like, I guess, we'll see it when we see it. But is there an expectation maybe you clarify this, and I apologize. Is there an expectation this year, we would get an update on what the enhanced version? Or would that be something -- I know you're going to enter a pivotal study first half next year. So I assume at some point before that, we have to see or we'd likely see something on what this new improved test look like.

So Dan, these teams are absolutely busy right now running case-control studies now to show at least internally, how much incremental performance can we generate. Later this year, we'll plan a very large, robust case-control study. That will be used to lock down this assay. Before then, we move into our prospective study next year. We plan to publish the results from that large case-control study. That may come up later this year, perhaps next year, but we will publish that data. And then as you mentioned, the pivotal study will start next year. That's likely a 2- to 3-year study. Imagine a study of 100,000 patients, it's a robust study. The initial work we've done with the FDA, we're approaching the [ finalist act ] of the study. We're optimistic here that we can get this new test to market with robust evidence to really help in the fight against this terrible disease.

And then I think you guys have left a door open a little bit for an LDT. But obviously, that CFO trail is taking. Is the door closed? Or would you potentially suddenly take this to do both run a -- kind of run the large study and then maybe look to launch it selectively as an LDT?

So Dan, we want to do everything possible to ensure the ultimate success of a multi-cancer test. It's important that we bring this product to market the right way. To be successful down the road, you have to have FDA approval. The FDA has been a great partner with Cologuard. They've been a great partner to Exact Sciences over the years. And we think they'll be a great partner throughout the ultimate launch, the development of a multi-cancer test. So the FDA approval is extremely important here for ultimate success. Right now, we're evaluating all paths forward, including the potential LDT launch. The reason why we launched as an LDT is really to make sure that we're doing everything to generate evidence to ensure that this market and the KOLs and people are ready for this workflow, for these new categories of test. That's why you would do an LDT launch is to make sure everything is ready for the ultimate commercial launch, which is likely in the 2025 time frame. So anything we do now to help out with the ultimate success, we'll do. If we do an LDT launch, I don't think it's going to be a revenue generator. I don't think this would be a huge launch. It's really to make sure that the workflow is solid, that we're generating more evidence, again, to help support the ultimate launch down the road.

Got it. Well, maybe we can go back to one more question on Thrive if we have time. But maybe just in the interest of time here, just kind of wrapping it up in terms of some of the other -- we started off about the evolution of the company with all the deals that you've done and the kind of continuum of cancer from screening to diagnosis. Maybe walk through a little bit of the -- well, you touched upon liver maybe at the end. But when you think about a lot of the deals that you've done, what's the current table at which we'll start to see more kind of visibility, if you will, about the time lines for those products to get to market? And just kind of walk us through how you think about the impact they could have on your model over the next couple of years.

Well, Dan, the first of the larger combinations we did with Genomic Health, as you know, that was back in late 2019. That, in my view, has spent an absolute home run of a combination. That team is highly talented. That product is top-notch. And we just came off of like Q1, which we're -- where we delivered the best results in history for that product. So I feel very good about that foundation. That foundation is so important when you look to the future. Other tests that I think you alluded to, things like our test for MRD, residual disease testing. That's a test that we expect to bring out in the market in the next year or 2. We expect to have data for that test out available next year, I should say, additional data. We do have some data on it already, but we plan to publish additional data next year. Last year, we acquired a company called Paradigm. Paradigm got us added a test for a late-stage cancer therapy selection. That test is on the market. That precision oncology team had exactly has done a fabulous job bringing that test to physicians and patients. I'm very excited about what that test has to bear. We are also working on converting that test or we're expanding that test to a blood-based version. Today, it's tissue-based. Down the road, it will be blood-based. The team is working hard at bringing that new test to work. So there's already a quite a bit of revenue in the base from these acquisitions in next year and the year beyond, expect a lot more.

Have you sized the Paradigm therapy selection as what you ultimately think that could be for you?

We haven't yet, Dan. No. I may see it, too, we will over time.

Got it. Okay. And on the MRD side, if you can give any color on that as well? Like obviously, it's a nascent market, but one that's growing rapidly.

Yes. I mean longer term, Dan, I think if you look at our investor deck, we talked about 3 of the largest growth opportunities for Exact Sciences. It's multi-cancer screening, colon cancer screening and that MRD market, which I think is at least a $15 billion market. So I'm very optimistic there. I think we're well positioned. When you think of this broader portfolio of tests where we could help patients and physicians from screening, all the way through treatment with late-stage cancer, MRD will play a core part of that, and this could be a very big contributor before too long.

Got it. In terms of more M&A, like what -- I mean, you guys have been very active. I presume you're not done. Kind of how do we think about future cap deployment opportunities? Types of size of deals that you would consider doing? I mean, are big deals behind you? Is it now more like tuck-ins given the platform that you have? Or just what should we be expecting?

Well, again, the first priority is to make sure that we execute on the assets that we already have: Cologuard, Oncotype, MRD, multi-cancer. We've got to make sure that we continue to deliver on those tests to the extent that we're confident in what we have, that we're confident in the outlook for the business. If we find technologies, we find talent, we find things that we can add to the broader mix, if it makes sense for patients and it makes sense for shareholders, then we would consider it. We do consider a lot of deals that we ultimately don't go forward with for whatever reason. We have to make sure things like the culture are right. Not every combination makes sense from a cultural standpoint. And those are deals that we don't want to do. So over time, I think we will continue to round out the portfolio. I feel very good about what we have. But look, this is still in the early days. When you think of the diagnostics market, more broadly, I think we're setting out now for the next 10 to 20 years to what I view is the golden era for molecular diagnostics. And we intend to be the leader over time in molecular diagnostics.

Got it. Maybe just one more question on Thrive, Jeff. So would you guys consider doing tissue of origin? Or do you think -- I know you spoke in the past a little bit about maybe it creates too many false positives, unnecessarily downstream diagnostic test. But nonetheless, you've got the global expert teams inside both companies. I'm just wondering how we should think about that feature.

Dan, one of the big learnings from Cologuard was its simplicity. Primary care physicians want simplicity, and a screen test patients want simplicity also. So Cologuard is simple. And what I mean there is that if Cologuard is positive, it's either positive or negative. If it's positive, the patient is then recommended to go for a diagnostic colonoscopy. If it's negative, then the patient is due again in 3 years according to the guidelines. So that's easy. What a physician doesn't want is complexity. If the test is positive, and there could be 1 of 20 different things that they do next, okay, that's challenging. And a primary care doc is more likely to refer that patient right to a specialist. So the part of simplicity of what the Thrive team have developed is an approach where a positive [ patient ] reflects to a full-body PET/CT. The reason why that's so important to get is simplicity. The physician doesn't have to wonder, "Okay, do I do an upper endoscopy? A lower endoscopy? What do I do?" You get that patient to an answer quickly. And it's generally the right answer. PET/CT is a very accurate technology. So we think this is the right workflow. It's the right workflow for patients. It's the right workflow for physicians. Tumor of origin data, we have generated some over the years. The big challenge is that in the real world, when the initial test is positive, you don't know whether the 2 are -- so you've got to make sure that you include all of the true positives and false positives when evaluating tumor-of-origin data. In the real world, after a positive, you don't know at that time, whether it's a true positive or false positive. In the case of a false positive, all of your tumor of origin data will not be right. It'll all be inaccurate. And then you send this patient on this diagnostic odyssey, where you don't know where they're going to go. And what happens is almost everybody who gets a test ends up going to imaging anyway, and that's more of a cumbersome workflow. So we think sending people right to an imaging test is the right workflow.

Got it. Okay. Well, we're just out of time, Jeff. So I appreciate, obviously, bearing with all the questions. I feel like you're on the firing line, but obviously, always great to see you even in virtually. And good luck with the rest of the conference, and I hope to hopefully see you in person at some point soon.

Thanks, Dan. Take care.

All right. take care, everyone.