EXACT SCIENCES CORP University Research Park

Innovation One, as shown in this rendering, will be a five-story, 138,000-square-foot building that will serve as Exact Sciences Corp.’s headquarters in University Research Park. Construction began on the $60 million project in August and is expected to be finished in early 2020.

Exact Sciences Corp. has forged a relationship with Epic Systems Corp., the electronic health records giant in neighboring Verona.

“Epic will become a core component of our IT (information technology) system, from order entry all the way through revenue cycle and customer care,” Exact CEO Kevin Conroy told financial analysts in a conference call last week.

“It will help us deepen our connection with customers of Cologuard and other future (diagnostic) tests,” Conroy said.

Exact Sciences will be an Epic client using Epic’s software in the same way as Epic’s hospital clients do.

But the arrangement does not mean patients will start seeing notes on MyChart pushing Cologuard, Exact spokesman Scott Larrivee said.

Larrivee said Epic’s software already is designed to handle large patient volumes and will ease the IT burden for Exact Sciences as Cologuard use increases.

“Working with our Madison neighbors in the fight against colorectal cancer, Exact Sciences joins the Epic community as our first diagnostic specialty customer,” Alan Hutchison, Epic vice president of population health, said. “We’re eager to expand this work as we continue to move further into genomic medicine and providing molecular insights.”

Conroy said using Epic technology should give Exact “a competitive advantage.”

That’s because eventually, it will be easier to incorporate prescriptions for Cologuard and test results into patients’ electronic medical records since more than 200 million people worldwide have their health history on Epic’s software.

Acquisitions

In another type of growth, Exact Sciences has added a subsidiary — Biomatrica, a San Diego company that makes blood and saliva sample collection tubes.

Terms of the transaction were not made public as part of the announcement. But in its quarterly report filed with federal regulators, Exact disclosed that it paid $20 million for Biomatrica and could pay another $20 million if milestones are met.

Exact said it plans to use Biomatrica’s “proprietary technology to support ongoing and future development of its own blood-based cancer detection tests.”

In addition to Cologuard, Exact is working with Mayo Clinic to develop blood-based tests to screen for several diseases including liver cancer.

“The ability of Biomatrica’s chemistry to preserve biomarkers at the molecular and cellular level in blood and saliva is unmatched in the industry,” said Biomatrica general manager and former CEO Nick Ecos.

Biomatrica will remain in San Diego and will continue to supply other businesses, as well. The company, founded in 2005, has 25 employees and, on its website, lists Roche and Thermo Fisher Scientific among its customers.

The acquisition has no impact on Exact employment in Madison, spokesman Larrivee said.

Exact has more than 1,800 employees, including 1,300 in the Madison area, and wants to fill 400 open positions, Larrivee said.

Research analyst Brian Weinstein, with the William Blair investment firm, said the Biomatrica purchase is “not surprising.” In a research note, Weinstein said he thinks Exact is “aggressively looking for ways to optimize its future products in any way possible and the collection tubes are a critical component of that effort.”

Weinstein said he thinks the deal “marks an important step for the company in that it shows a growing confidence in the pipeline opportunities the company has in front of it.”

This is not Exact Science’s first acquisition. Last year, it bought rights to a Cologuard biomarker from MDx Health, of California and Belguim; acquired Sampleminded, a Salt Lake City information technology company; and Armune BioScience, a Michigan company with protein biomarkers.

While terms of the Sampleminded deal were not revealed, Exact’s third-quarter report said the company paid MDx $15 million, and Armune was a $12 million purchase with an additional $17.5 million promised if milestones are met.

Losses grow

With a big jump in expenses for marketing its Cologuard DNA stool test for colorectal cancer, Exact Sciences Corp. racked up bigger losses for the third quarter, but investors were not dismayed.

Exact Sciences reported a net loss of $45.4 million, or 37 cents a share, for the three months that ended Sept. 30, nearly 69 percent wider than its loss of $26.9 million, or 23 cents a share, for the same period last year.

But financial analysts expected even more red ink, and the Madison company’s revenue of $118.3 million — up from $72.6 million for the year-ago period — topped expectations, so the third-quarter report boosted Exact’s stock about 10 percent after the figures were announced late Tuesday.

Operating expenses were $129.2 million for the quarter, up from $80.3 million in the 2017 third quarter, mainly to boost advertising, chief financial officer Jeffrey Elliott told analysts. He said fourth-quarter expenses will be $20 million higher than that, thanks to the addition of 100 sales people and a marketing agreement with Pfizer.

Conroy also told analysts that expansion of Exact’s processing lab on Badger Road is now complete. The lab can handle 2.5 million Cologuard tests a year and will get more equipment that will raise capacity to 3 million by the end of 2018.

A second lab, under construction at 1 Exact Lane, will be ready by the end of 2019 and able to tackle 2 million tests a year, with room to expand, as well.

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Judy Newman is a business reporter for the Wisconsin State Journal.