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Exact Sciences To Sell 7 to 8 Million Shares in Stock Offering

Xconomy Wisconsin — 

 Exact Sciences today announced that it is selling 7 million shares of common stock at $35 per share, a 4.5 discount off of Tuesday’s closing price. The offering is underwritten by Bank of America Merrill Lynch, Jefferies, and Robert W. Baird & Co., which have the option to purchase up to 1.05 million additional shares.

Madison, WI-based Exact (NASDAQ: EXAS) is developing several screening tests for cancer patients. Its flagship product is Cologuard, a non-invasive, stool-based DNA test for colorectal cancer. The company said it plans to use some of the proceeds from the offering to fund product development, add more laboratory space, and increase manufacturing capacity.

Shares in Exact closed the trading day Tuesday at $36.59 apiece. The company’s stock price fell 5.1 percent on Wednesday, closing at $34.70 a share. This is still dramatically above the stock’s closing price of $7.16 one year ago today. Exact’s current market cap is about $3.8 billion.

In an prospectus filed yesterday with the SEC, the company said that its laboratory in Madison is able to process about 1 million Cologuard tests per year.

“We are currently exploring opportunities to increase our capacity to 2 million tests per year at our existing lab facility, which includes expanding our current lab,” Exact said in the prospectus. “We are also evaluating options for a second lab facility to add capacity in excess of 2 million tests per year.”

In April, Exact projected that it would complete at least 470,000 Cologuard tests this year

In the prospectus, Exact also provided information on its collaboration with the Mayo Foundation for Medical Education and Research, which is affiliated with the Rochester, MN-based Mayo Clinic. The foundation is working with Exact to develop additional diagnostic tests for other types of cancer.

One of them is a blood-based test for lung cancer. Exact has said previously that computed tomography (CT) scans, currently the primary mode of screening patients for lung cancer, turn up lots of false positives. Some CT scans find potentially cancerous nodules, or clumps of cells, in the lungs; however, the vast majority of all nodules found by CT scans are benign, Exact said in 2015. The company said in the prospectus that there are too many unnecessary biopsies and other follow-up procedures done after lung nodules are discovered through a CT scan. The test for assessing nodules that the Mayo Foundation and Exact are developing could eliminate the need for some of these follow-up procedures, the company said.

The Mayo Foundation and Exact have together “successfully performed validation studies on tissue samples for seven major cancers,” Exact said in the prospectus.

Exact had also been working with the University of Texas MD Anderson Cancer Center to develop diagnostic tests for lung cancer, but terminated that partnership last year.